BHG Group AB (publ)

Thank you, operator, and good morning, everyone. Moving to slide three, please. We're happy to share the highlights of the second quarter with you, a quarter in which our business saw a significant acceleration on what was already a strong first quarter of the year. With both our segments, DIY and home furnishing, performing well, the second quarter, in fact, developed into our strongest today. Today's agenda follows that of our recent earnings calls and is divided into five sections. We'll start with the results highlights, followed by a business update. I'll then hand it over to Jesper, who will walk us through the financials in more detail, after which I will summarize the quarter. We'll then end the call with a Q&A session. Slide five, please. The second quarter is our seasonally strongest one. This time around, our normal peak season combined with changed consumer behaviors in the wake of the corona pandemic, including Consumers spending more time at home, realizing that they will travel less for some time to come, and discovering the benefits of shopping online. That is what I would call the usual benefits, such as an unviable assortment at the best prices delivered to your doorstep, but now also the added benefits of not having to unnecessarily risk contracting the virus. All of this, in turn, resulted in a higher share of wallets going to products for the home than usual. As the online leader in home improvement, BHE was well-placed to benefit from these developments. Net sales came in at 2.7 billion SEC, which corresponded to total growth of 58% and organic growth of 42%. We recorded an adjusted EBIT of 233 million SEC, translating to an adjusted EBIT margin of 8.6%, and delivered by far the strongest quarterly cash flow from operating activities to date, amounting to 605 million SEC. BET's financial position is now stronger than ever and allows us to execute our organic growth initiatives robustly while combining these with a continued active acquisition strategy. Commenting briefly on segment performance, more on which later, while the home furnishing segment had a strong quarter, it was to a large extent a continuation of what the segment delivered also in the three previous ones. Rather, it was the DIY segment, which experienced an exceptionally strong demand, clearly boosted, by the changed consumer behaviors that I already mentioned, with growth figures for many of its constituent businesses of well over 100%. Although we expect to return to more normal growth levels, the demand we experienced was quite constant over the three months of the quarter, and the third quarter also started well. Slide six, please. From inception, our strategy has included being the consolidator in the growing online market for home improvement. The group's sales growth of more than 40% per annum in the past five years, is the result of combining organic growth initiatives with consistently adding new businesses under the DHE umbrella through acquisitions. When it comes to organic growth, we are now reporting our fifth consecutive quarter-on-quarter increase, following up last quarter's 22% with this quarter's 42%. And the 42% number at group level was comprised of an organic growth of 32% in the home furnishing segment and 48% in the DIY segment. As always, there's a lag between our reporting and when we can gain more comprehensive insights into overall market developments. However, judging by preliminary data, the picture that we see, just like in the first quarter of the year, is one of a continued increase in online penetration, especially for furniture and home furnishings, for which we believe the offline market was soft. On the DIY side, there's plenty of evidence that the total market, which started turning around already in the fourth quarter of 2019, grew strongly. Still, with total growth of 58% and organic growth of 42%, we are convinced that we further strengthened our leading market position. Slide 7, please. Our strategy remains focused on four cornerstones. Firstly, a continued expansion of our leading product range. Our portfolio is now approaching 1 million unique products. Secondly, scale and a high share of own brands in our sales mix. With a strong growth in the quarter, we continued building scale advantages and a significant share of the growth in the DIY segment came from our own brands, both those which we have developed organically and those which have been added through recent acquisitions. Thirdly, creating the most appealing shopping experience and dominating digitally. We grew our digital footprint significantly in the quarter, seeing more than 90 million visits to our destinations. And finally, offering the market's best professional guidance, service, and support, including our own installation network, for which we now offer services covering in excess of 100,000 products in the DIY range, as well as our own last-mile delivery on the home furnishing site, which continued expanding its coverage during the quarter. This is our ecosystem. Turning to slide 9, please. Briefly on this slide, we reported total sales in excess of 6.2 billion SEC in 2019 and are now at an LTM sales level of 7.6 billion SEC. with an EBIT margin that continues to expand. Moving to the right-hand side, we're the European leader in the online home improvement space, and our geographic composition is well balanced, with Sweden remaining our single most important market, but with even stronger organic growth in the geographies in which we have more recently established ourselves. Slide 10, please. In the first quarter earnings call, we concluded that our business was well-placed to navigate the uncertainties of the pandemic. Our performance in the second quarter now backs this conclusion up. We, of course, continue monitoring and managing developments closely. With regards to people, we're continuously adapting the measures to the specific circumstances of our various office, warehouse, and showroom environments, with the primary objective of ensuring safety and the secondary objective of securing business continuity. The measures are effective and continue allowing us to stay fully operational. With regards to operations, we worked hard in the quarter to handle various aspects linked to the exceptional demand. This has included managing inventory optimally, working closely with our logistics partners, and adding customer service capacity along the way. However, sales within some categories, such as the garden one, was somewhat held back by select product availability issues. Further, some of our logistics partners initially struggled to meet the higher volumes, and this also led to a heavy load on our customer service teams, particularly at the start of the quarter. We have now made good progress on working through the backlog that arose. Moving on to cash, we had a record cash flow in the quarter, resulting from the combination of the exceptional growth and our asset-light business model. This provides us with ample strategic flexibility moving forward. When it comes to demand, clearly the DIY segment has been positively affected, and demand within the home furnishing segment has at least not been adversely affected. With the progress achieved in the second quarter, we believe that we have established a new base from which we will continue growing. And finally, linked to demand, online migration. The underlying shift from offline to online accelerated in the quarter, especially within the home furnishing market. And this shift is set to continue. All in all, four months into the pandemic starting to affect Europe significantly, it's clear that overall our business has benefited from a higher share of consumers' wallets, uncertainties around how the pandemic will evolve remain, but we feel confident that we're well positioned in the face of this uncertainty. I'll now hand it over to Jesper, who will walk us through the financials and more details.

Thank you, Adam. The exceptional demand that we saw at the very end of the first quarter continued throughout the second quarter. As Adam mentioned, net sales increased 57.7% to reach 2.695 million SEK, and organic growth reached 41.8%. On the back of the external growth, we reported the highest EBIT and EBIT margin to date. EBIT grew by 127.6% in the quarter to reach 232.7 million SEK, corresponding to an EBIT margin of 8.6%. The high adjusted EBIT margin was the result of, one, a disciplined execution, or pricing and product mix strategies, including the continuously growing private label share of sales in the do-it-yourself segment. And two, operational leverage as a result of the exceptional growth. Finally, just as in the past three quarters, we did not treat any items as affecting comparability in the second quarter. Next slide, please. Turning to some of the sales drivers in the quarter, The number of visits to the group's destinations increased by 110% to 92 million, generating 893,000 orders during the quarter. The strong trend in the number of visits to the group's destinations, which reached an annual rate of more than 350 million, was also the reason for the slightly lower conversion rates. The group's sales mix changed during the period. Among other things, because of the sharp growth in product categories with slightly lower AOV, as well as growth in Denmark within the due-to-sale segment and Eastern Europe within the home furnishing segment, both of which are marketed with structurally lower AOVs than the group's other units. However, as the gross margin trend clearly demonstrates, this did not have any negative effect on earnings, since a large share of products with lower AOV could be sent as postal packages to a service point. which meant that a strong gross margin could be maintained. Next slide, please. Exceptional top-line growth at 57.7% resulted in strong operating leverage, translating to a gross margin increase of 69.9% and an EBIT increase exceeding 100%. The gross margin, which is impacted by the peak season and thus a higher number of sales campaigns than in the first quarter of the year, as well as the different product NICs, improved on the prior year during the quarter by 1.8 percentage points to reach 25.1%. The pure product margin, which is the measure most commonly used by our listed peers, amounted to 35.7%. Just as in the first quarter, the gross margin improvement was driven by a continued focus on cost and process efficiencies in purchasing and logistics, as well as a growing share of sales from our own brands. Before turning to the segments, a note on currency effects. The depreciating NOC primarily impacted the home furnishing segment adversely, but the net effect on the EBIT level was largely offset by rapid pricing adjustments in the period. Let us now turn to our duty sales segment. Next slide, please. The do-it-yourself segment performed exceptionally well in the quarter. Net sales grew by 73.8% to reach 1.819 million SEC and organic growth accelerated to 48.3%. Growth in the segment had already picked up towards the end of 2019 and throughout the first quarter. It subsequently accelerated sharply in the second half of March and has since continued through the second quarter and into the third. The P&L in the due-to-sale segment was nicely leveraged with a top-line growth of 74%, translating to an EBIT increase of more than 200%, reaching 162.6 million SEC, corresponding to an EBIT margin of 8.9%. The due-to-sale segment continued to consolidate its position as the leading online player in the Nordics through rapid assortment expansion, extending the range of installation services and expanding its share of own brands. Next slide, please. The home furnishing segment is now in its seventh consecutive quarter with good growth and strong margin structure. Net sales in the home furnishing segment grew by 32.3% in the quarter, reaching 886 million SEK of which organic growth amounted to 31.5%. Adjusted EBIT increased by 55.9% and reached 85.1 million SEK in the quarter, corresponding to an EBIT margin of 9.6%. All geographic markets, except Norway, with its currency headwinds, grew by more than 25% in the period, and growth was especially brisk in the segments Eastern European and Danish operations. Changed customer behaviors in the wake of the pandemic had seemingly changed less of an impact on the home furnishing segment than the do-it-yourself segment. However, we also estimate that the total market did not develop as favorable for the home furnishing segment as it did for the do-it-yourself segment. The rollout of the last mile logistics operations in Sweden is progressing according to plan. The infrastructure which was launched in southern Sweden at the end of the first quarter has now been established. And a continued rollout is planned, probably most likely with the metropolitan areas of Helsinki and Oslo next in line. Let us turn to cash flow. Next slide, please. The exceptional demand in the period strengthened the usual seasonal profile for working capital, with inventory buildups during the first quarter prior to the peak season, with high sales and thus high cash conversion during the second quarter. Cash flow from operating activities amounted to 605.1 million SEK, the strongest contribution for a single quarter to date. This corresponds to a cash conversion in relation to adjusted EBITDA of more than 220%. The right-hand graph showing the development in liquidity walks us through the starting period position of 270.3 million SEK, adding the cash flow from operations, deducting the impact of investing activities, a majority of which is M&A related, and finally, the financing activities, which consist of a mix of amortization of leasing liabilities while funding the ongoing M&A agenda through an acquisition facility, bringing us to the period end, 898.1 million SEC of liquidity at hand. Next slide, please. Our strong operating performance translated to a net cash position of 26.7 million SEK at the end of the quarter, accordingly an outperformance of the medium-term capital structure target range. On top of our liquidity at hand, we had unutilized credit facilities at the end of the quarter of 524 million SEK. Our financial position is stronger than ever, which means that we can continue to execute both organic and inorganic growth initiatives. Handing it back over to you, Adam, to summarize and conclude.

Thank you, Jesper. So summarizing on slide 20, our position was strong going into the quarter and further strengthened during it. We have our people, supply, demand, and financial position all under control. Our growth accelerated significantly, reaching the highest level on recent records. Gross and bottom-line margins are at good levels and continue moving higher on the back of strong operational control and a sound mix development. The financial position is strong with ample cash on hand and significant ongoing credit facilities. Our strategy is firmly in place, execution is ongoing, and it revolves around our four strategic pillars which make up the BHG ecosystem. And finally, with strong total and organic growth as well as expanding margins, we are on the path to reaching our mid-term financial targets, which were set in conjunction with our IPO in March 2018, and include reaching $10 billion in net sales. This concludes our presentation, and we now open up the call for questions. Over to you, operator.