BHG Group AB (publ)

Thank you, operator. Good morning, everyone. Moving to slide three, please. We came into the quarter on the back of the exceptional pandemic-infused growth from spring and early summer. And as our performance makes clear, demand has remained strong also during the third quarter, with our DIY segment continuing to be especially favorably affected by changed consumer behaviors, but our home furnishing segment also performing solidly. Today's agenda follows the format from earlier earnings calls and includes results highlights and business and financial updates, as well as a summary followed by a Q&A session. I'll kick it off, then hand it over to Jesper to cover the financials before I summarize and we launch into the Q&A. Slide five, please. Cutting straight to the chase, the business grew by almost 40% and net sales reached 2.3 billion SEC. Organic growth amounted to 32.3%. Adjusted EBIT came in at 194 million SEC, corresponding to an adjusted EBIT margin of 8.5%, and cash flow from operating activities was positive despite the exceptionally strong cash flow of the previous quarter, which in turn led to a peak in supplier payments in the third quarter. With year-to-date cash flow amounting to 774 million SEC, our financial position is solid. Clearly, many of the underlying driving forces which led to the exceptional growth that we experienced in the second quarter of the year have also had an effect on the third quarter. Consumer interest in online shopping in general and in home improvement specifically has remained on a high level, and we've been well-placed to capture the resulting demand. Commenting briefly on the segments, more on which later, the home furnishing segment has delivered very robustly for eight consecutive quarters now, and the third quarter was in many ways the carbon copy of the previous one with good growth and strong margins. It continues to be the DIY segment that is most clearly favorably affected by the unusual trading conditions in the wake of the pandemic. Our two largest platforms within DIY, BigHema.se and BHG Finland, both grew in excess of 30% in constant currencies, while some of our niche private label-based units grew at truly exceptional rates. We continue to expect a reversion to more normal trading conditions, but note that trading has remained strong thus far into the fourth quarter. Slide 16. Ever from the start, we've set out to consolidate the market for home improvement with a two-pronged approach, combining organic growth with acquisitions. And when it comes to the organic components, we're now reporting our fourth quarter in a row with growth in excess of the 15% level, which is our communicated target over a business cycle. The exceptional peak from the second quarter of 42% was followed up in this past quarter with organic growth of 32%. which in turn was comprised by the home furnishing segments 29 and the diy segments 35 but growth at these levels and although we do not yet have complete market data we're convinced that we continue to extend our market share in both segments slide seven please our strategy remains focused on four cornerstones firstly a continued expansion of our leading product range We've not reached the million skew mark yet, but we are within touching distance. Secondly, scale and a high share of own brands in our sales mix. With year-to-date growth at 45%, not least fueled by our private label range, we continue building scale advantages. Thirdly, creating the most appealing shopping experience and leading in the digital realm. We grew our digital footprint significantly in the quarter, seeing more than 76 million visits to our destinations. And finally, offering the market's best professional guidance, service and support, including in the quarter further extending the reach of our installation network within DIY, as well as the capabilities of our own last mile delivery set up on the home furnishing side. This is our ecosystem. Moving on to the business update and turning to slide nine. I've been on a path of profitable growth since inception some nine years ago. Some key metrics describing who we are today at a glance. On the left-hand side, our CAGR since 2014 amounts to 40%. In this period, EBIT has grown well in excess of 100% per annum. Our EBIT margin on an LTM basis stands at 7.2% and is generated by our over 80 customer-facing web properties. And now moving over to the right-hand side, These properties have been visited well over 200 million times here today, generating some 2 million orders from customers residing in 19 countries across Europe. And finally, our product portfolio is leading in terms of its breadth and depth. Slide 10, please. As I've already mentioned, one of our core strategy pillars is to continue expanding our product range within current categories as well as into new categories under the broad home improvement umbrella. As a result of this expansion, and primarily within the DIY segment, we have updated the assessment of our total addressable markets. Inclusions compared to our earlier estimates are fields such as leisure, household appliances, and smart homes. Based on this broader set of categories, our net sales of 8.3 billion SEK on an LTM basis should be viewed against the backdrop of a Nordic online market for home improvements worth some 35 billion SEK, which in turn forms part of the total addressable market in the Nordics, worth some 300 billion SEK, which finally, of course, is dwarfed by the almost 20 times larger EU market. And with online penetration standing below 12% still, but increasing steadily, the bulk of the growth in the total addressable market will continue to accrue to the online segment for many years to come. Moving on to slide LLM, please. Our main geographic focus to date has been on the Nordic markets. since the second half of 2018 we're also present in a number of fast-growing eastern european markets moving over to the right-hand side our current geographic base provides fertile ground for continued expansion and to sustain our long-term growth trajectory within diy the online penetration increase and product assortment expansion are perhaps the most important growth fibers whereas our home furnishing segment in addition has clear geographic acceleration opportunities both in the Nordics, and here I can mention Norway as a still significantly fragmented market, as well, of course, as in Eastern Europe. When it comes to stepping into new geographies, we certainly have the critical mass to do so, and are also already today extending the geographic reach of our private label businesses by taking them pan-Nordic in the first step, as well as selectively entering mainland markets. And we remain committed to M&A as a key accelerant of growth and strategy execution. After a somewhat slower period deal flow-wise, the pipeline is back up at healthy levels. Summing up, we are selectively pursuing geographic expansion, and we're also continuously scanning opportunities for larger geographic moves. However, we view these as optional upsides. Our approach is not reliant on them to deliver our communicated growth ambition. but we're ready to strike should the right opportunity arise. Slide 12, please. Our business model includes a multi-brand approach, which helps maximize our digital footprint and results in a customer base that is both broad and attractive. The largest cohort consists of customers who are active in the labor market and in their prime when it comes to improving home environments for their families. We have a roughly 50-50 split when it comes to gender, with men being more prevalent within DIY and women within home furnishing. We consistently grow the active customer base and did so also in the third quarter. And despite brisk growth in new customers, we grew the share of returning ones. And the importance we place on curation, the availability of product experts who can help guide customers through the buying journey, and the attractive nature of our customer base, all combined to yield return rates in the low single digits. The graph in the middle shows how we have not only maintained but actually increased the delta between our gross margin after direct selling costs and our marketing investments, partially as a result of growing the share of sales from our private labor range. The resulting marketing ROI means that we have a great return already on a customer's first purchase. And as we've seen, our growth has been boosted as a result of the pandemic. However, we've not recorded any significant changes with regards to customer mix and profiles. We're committed to constantly enhancing the customer experience, a commitment which was put to the test during the exceptional demand peak of the second quarter. We've cut lead times and clawed our way back during the third quarter, and we continue to invest in systems and processes to ensure that we meet or surpass our customers' expectations. I'll now hand it over to Jesper, who will walk us through the financials in more detail. Over to you, Jesper.

Thank you, Adam. Starting at slide 14. The strong growth in the third quarter clearly demonstrates that the Scheng customer behaviors during the early stages of the pandemic are persisting to a high degree. As Adam mentioned, net sales increased 39.7% to reach 2.290 million SEK and organic growth reached 32.3%. On the back of continued favorable market conditions, we reported the strongest EBIT and EBIT margin for a third quarter to date, reaching 194 million SEC, which corresponds to an EBIT margin of 8.5%. The high adjusted EBIT margin was the result of, one, a favorable price and product mix, including a continuously growing private label share of sales in the due to sales segment, two, operational leverage in fulfillment, logistics, and SG&A due to high growth. And three, positive currency effect, which I will get back to. Moving on to slide 15. Turning to some of the sales drivers in the quarter, similar to the performance in the second quarter, the continued strong trading conditions led to, firstly, Strong growth in the number of visits to the group destinations, which increased by 58% to 76 million during the quarter and generated 726,000 orders. Secondly, conversion rates, which were essentially at the same level as last year, despite strong growth in traffic. And thirdly, a chain product mix, which combined with the strengthening of the SEC to result in lower AOV than in the year earlier period. However, as the gross margin trend clearly demonstrates, the decrease in AOV did not have any negative effects on earnings, since an advantageous AOV structure could be maintained in relation to the delivery options relevant to a given category. In other words, the AOV for bulky products, which are sent on pallets, remained high, and the high growth for small parcels could be managed by delivering to service points. Turning to slide 16. Continued favorable market conditions and both segments' strong position contributed to the EBIT margin nearly reaching the all-time high level of the second quarter. Strong top-line growth at 39.7%, resulting in strong operating leverage, translating to a gross margin increase of 57% and an EBIT increase exceeding 100%. The gross margin improved by 2.8 percentage points to reach 25.9%, our highest gross margin to date, and the product margin amounted to 37.0%. Just as in the first six months of the year, the gross margin improvement was to some extent driven by the continued focus on cost and process efficiency in purchasing and logistics, as well as a growing share of sales from our own brands. However, in the third quarter, the gross margin improvement was also driven by strong demand, which resulted in fewer campaigns than usual and positive currency effects from the stronger SEC, resulting in a favorable impact on the gross and EBIT margin by 0.7 percentage points. Let us now turn to our due-to-sale segment. Slide 17, please. The due-to-sale segment followed up its exceptionally strong performance from the second quarter, with yet another strong quarter. Net sales grew by 46% to reach 1.464 million SEK, of which organic growth amounted to 34.6%. The segment platforms in Sweden, Finland and Denmark performed well during the quarter, while a number of the more specialized operations in Sweden, particularly those with a high private label share of sales, reported very strong growth. Once again, the P&L in the due-to-sales segment was nicely leveraged, with a top-line growth of 46%, translating to an EBIT increase of 175%, reaching 131.2 million SEK, corresponding to an EBIT margin of 9.0%, the highest we have recorded to date. During the quarter, we continue to develop our customer offering through continuous expansion with the market's leading range of external brands, strong growth for our share of own brands, a further rollout of installation services, and improvements to our delivery capabilities. Slide 18, please. The home furnishing segment is now in its eighth consecutive quarter of good growth and a strong operating margin. Net sales in the home furnishing segment grew by 29.5% in the quarter, reaching 834 million SEK, of which organic growth amounted to 28.6%. Net sales increased the most in the Eastern European, followed by the Swedish and Danish markets. The gross margin improved by 4.1 percentage points to reach 30.7%. Roughly one-third of the margin improvement is a result of the previously mentioned currency effects and two-thirds a result of continued scale improvement and inventory management, translating to lower fulfillment and postage costs in relation to sales. Adjusted EBIT increased by more than 100% and reached 82.9 million SEK in the quarter, corresponding to an EBIT margin of 9.9%. The further development of our warehouse and logistics infrastructure in the Nordics continued. With an upgraded software platform now in place at all last-mile terminals, providing the basis for improved track and trace functionality for customers and added flexibility around choosing delivery windows. Let us turn to cash flow. Slide 19, please. The exception of demand during the second quarter of the year led to an increase in working capital during the third quarter as a result of supplier payments catching up. The exceptional growth and corresponding acceleration of cash flow in the second quarter led to a partially changed seasonal profile for working capital, which usually sees inventory build-up during the first quarter prior to the peak season, with high sales and thus high cash conversion during the seasonally strong second and third quarters, after which working capital and inventories typically increase in the fourth quarter. Cash flow from operating activities amounted to 20.9 million SEK corresponding to a cash conversion in relation to adjusted EBITDA of 8%. The right hand graph showing the development in the liquidity walks us through the starting period position of 270.3 million SEK adding the cash flow from operations deducting impact of investing activities, a majority of which is M&A related. And finally, the financing activities, which consists 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, 874.2 million SEK of liquidity at hand. Slide 20, please. The group's net debt amounts to 86.5 million SEK at the end of the quarter. Our strong year-to-date operating performance meant that net debt in relation to LTN-adjusted EBITDA ended at 0.1 times a significant outperformance of the medium-term financial target range. Our financial position is strong. On top of our liquidity at hand, we had unutilized credit facilities at the end of the quarter of 434 million SEK. which means that we can continue to execute both organic and inorganic growth initiatives. Handing this back over to you, Adam, to summarize and conclude.

Thank you, Jesper. So summarizing on slide 22, our position was strong before the pandemic broke out, and it's further strengthened two quarters into it. We have our people, supply, demand, and financial position all under control. We're reporting our fourth quarter in a row with above target goals, Our gross and bottom line margins are at the industry-leading level, on the back of a sound mix development and strong operational control. The financial position, as we just saw, is strong, with ample cash on hand and significant on-demand credit facilities. Strategy execution is in motion, revolving around our four pillars, which make up the BHG ecosystem. And finally, with strong total and organic growth, as well as expanding margins, we're on the path to hitting our mid-term financial targets, including reaching 10 billion SEC in sales. Turning to our final slide before the Q&A, the call to action, slide 22, please. This is just a friendly reminder to those who may have been focusing exclusively on the Q3 earnings season until now. Black Friday is around the corner and Christmas is approaching. This concludes our presentation and we'll now open the call for questions. Over to you, operator.