BHG Group AB (publ)

Thank you, operator, and good morning, everyone. Moving to slide two, please. After our transformative performance in 2020 and into the first quarter of 2021, we are pleased to report a strong Q2. At the midway point of this year, we're demonstrating that our strategy of fueling organic growth with acquisitions continues to deliver. We have now officially surged past the 10 billion SEC sales level on an LTM basis, and we continue to capitalize on a plethora of growth opportunities. Our performance in the quarter was strong, not least given the daunting comps from the second quarter of 2020, and recent acquisitions have continued to grow very well indeed. The past seven months have seen our two largest acquisitions to date, those of Nordic Nest and Heima, which we finalized as recently as yesterday. The outlook for further acquisitions remains bright. Slide three, please. Today, as always, we will start by reviewing the results highlights. We'll then move on to the business update. I'll then hand it over to Jesper who will cover the financial update before I summarize and we launch into the Q&A session. Slide four, please. And on to the highlights then. Slide five, please. Total growth in the quarter amounted to 31.8%. taking net sales to 3.55 billion. Organic growth amounted to 14.1% and performer organic growth, including the acquisitions of the past 12 months, to 16.8%. This performance took place against the backdrop of society gradually emerging from COVID-induced lockdowns, as well as us facing the toughest comps from last year. Adjusted EBIT came in at 278 million SEK corresponding to an adjusted EBIT margin of 7.8%, and cash flow from operating activities amounted to $336 million. The second quarter was characterized by profitable cash-generating organic growth, including a continued favorably mixed shift towards a higher share of proprietary brands in DIY and a strong performance by our recently acquired operations. The quarter also saw the rollout of our fourth long-term incentive program, which is a key tool for tying outstanding leaders to the group and for underpinning the BHG culture of ownership and skin in the game. The 65 leaders who were given the opportunity to participate all made considerable personal investments into the program. Summing up, as a result of our size and of our data-driven approach, we were able to further strengthen our market position during a quarter marked by an easing of restrictions for the first time since the pandemic began, and a return to an everyday life less dominated by the pandemic. At the same time, the effects of the pandemic continue to impact the global supply chains in the form of longer lead times and bottlenecks for parts of our range. Slide six, please. As you well know, our growth journey to date has been fueled by a mix of organic initiatives and M&A, an approach we are convinced conveys unique advantages for us and which we have every intention of carrying into the future. When it comes to the organic component, the quarter came in roughly in line with our guidance over a business cycle, despite meeting the toughest comps from last year. Again, with a 14.8% organic growth this past quarter and 16.8% including Nordic Nest and the other four acquisitions of the past 12 months on a pro forma basis, it is clear that we have continued to strengthen our market position. Slide seven, please. And moving to the business update, slide eight, please. Our strategy remains focused on our four cornerstones. Firstly, the continued expansion of our leading product range, which exceeds the million skew mark. Secondly, scale and the high share of own brands in our sales mix, with the quarter seeing strong overall growth and particularly so for our proprietary brands. And we clearly continue building scale advantages. Thirdly, creating the most appealing shopping experience and leading in the digital realm, we continued growing our digital footprint in the quarter despite the tougher traffic generation market, and we saw close to 110 million visits to our destinations. And offering the market's best professional guidance, service, and support, including in the quarter continuing to extend the reach of our installation network within DIY, as well as our own last-mile delivery capabilities on the home furnishing side. This is our ecosystem with a product offering at its base and the customer always at the center. And finally, an integral part of our execution approach includes leveraging our M&A capabilities to accelerate both growth and strategy execution. Slide 19. Despite anticipating more challenging overall market conditions in the coming 12 months than in the exceptional past 12 months, we see ample growth opportunities. Our four cornerstones, which we just reviewed, continue to form the bedrock of our growth initiatives. In addition, geographic expansion in the Nordics primarily centered on spreading the footprint of our proprietary brands, but increasingly also tapping into additional European geographies. We estimate that the total European home improvement opportunity is some 15 to 20 times the size of the Nordic one. Further, we continue to build our ecosystem. Opportunities here include expanding our services offering further and making better use of customer data to tailor the offering and to enhance the customer lifetime value. As the quarter demonstrates, we are on the path of increasing the share of net sales which comes from our proprietary grants on the DIY side. And finally, M&A. As we have demonstrated, we are accelerating the pace at which we add critical mass under the BHG umbrella. Our prospects for carrying out further acquisitions of both the bolt-on and platform types are strong, thanks to our beefed-up transactions and integration organization, our financial position, and our deal flow. Turning to slide 10, I'm digging somewhat deeper into the M&A aspects of our approach. With 35 acquisitions since our inception, five of which we have completed in the past seven months, we are a serial acquirer. and our acquisition focus remains going forward. As before, we see ample opportunities in our home improvement domain. It is large enough to sustain our ambitions also in the long run, and so we will not stray away from it. As before, acquisitions will help us grow faster, both by broadening and deepening our product range, and by allowing us to jumpstart new geographies. As before, acquisitions will fall into one of two classes, Somewhat smaller, but more likely more frequent category catalysts that are bolted on to our platforms and adding new platforms to the business. Our acquisition approach, including our post-merger integration playbook, is centered on ensuring a clear rationale and a clear plan for extracting synergies. The category catalysts are bolted on to one of our main platforms, which over time allows a full set of upsides to be gained. The synergy creation around the platform acquisitions primarily aims to maximize product assortment exchange, digital traffic generation, leveraging business insights obtained from the data flowing through our growing footprint, and leveraging economies of scale in terms of purchasing and other areas. Importantly, many of the platforms that are added in turn allow us to pursue an expanded range of category catalyst opportunities, which fit well into these new platforms. A great example of this is our recent acquisition of Sven Fons, which fits hand in glove into the Nordic Nest platform, and which we would not have done had we not first secured the Nordic Nest platform. The pipeline of relevant acquisition candidates, both in our Nordic home markets and in large nearby geographies, is strong. During the quarter, we also strengthened the VHG team in both the transaction and integration side, And we significantly increased our credit lines from 2.4 billion SEC to 3.3 billion SEC, a large portion of which is currently unutilized. The conditions to further accelerate our acquisition rate are thus favorable. Turning to a brief update on Haima, our second largest acquisition to date, which we had the great pleasure of finalizing as recently as yesterday. Turning to slide 11. So Haima. We have followed Haima for a good while. and we are now delighted that we are one. We explained the rationale for us joining forces with Heima quite extensively in conjunction with communicating the deal on 9th of June. So I'll just briefly reiterate the key points here. Heima is a fast-growing online category expert, serving customers within the garden, tools and machinery, forestry, outdoor life, hunting, and leisure categories. Heima had net sales of 744 million SEK in 2020, And with the accelerated momentum that the business is enjoying, we expect net sales to exceed $1 billion this year. The fit with BHG is strong from a category and customer point of view, as well as from a company culture point of view. And synergy opportunities in areas such as geographic expansion, sourcing, cost selling, and exchanging best practices abound. Hyma will be consolidated from August 1st and form part of our DIY segment. Anders Karlsson, who is a second generation family member, will continue to run the business together with his management team. As of yesterday, our integration plan is now officially in full swing, and the collaboration with Anders and team gives me great confidence that our joint future is bright. Moving to slide 12, please. Our business model combines a multi-brand approach with acquisitions, both of which help maximize our digital footprint and result in a broad and attractive customer base. Although traffic generation conditions were more challenging in the quarter than in the preceding 12 months, our customer base continued to grow and our sound customer metrics remained intact. As you can see to the left on this slide, the increase in active customers, defined as customers who have made at least one purchase in the past 12 months, continues to underpin our goals. Over the past five quarters, our active customer base has gone by 52% and has now surpassed the 3.5 million mark. The number of new customers in the past quarter grew by more than 20% on a pro forma basis, on the back of strong organic growth as well as excellent growth in recently acquired businesses. Despite this strong growth in new customers, we maintained the share of repeat orders at around 40% of total. Our customers case on average 1.3 orders per annum, and our product assortment is dominated by consumer durables. And our return on advertising spend continues to be excellent, with significant first-order profitability, as evidenced by a marketing ROI well over 3x. Our investments into gaining further insights from customer-related data across the group continue. These will help drive customer lifetime value and so unlock further profitable cash-generating growth. This is a key focus area for group management. Slide 13, please. A quick overview of BHG as we stand today. On the left-hand side, our CAGR since 2014 exceeds 40%. In this period, EBIT has grown by more than 100% per annum. Our EBIT margin on an LTM basis stands at 7.9% and is generated by our over 100 customer-facing web properties. And now moving over to the right-hand side, these web shops have been visited over 360 million times in the past 12 months. generating some 4 million orders from customers in 24 countries. And finally, our leading product portfolio keeps expanding. Slide 14, please, and handing it over to Jesper, who will walk us through the financial update. Thank you, Adam. We are pleased with our performance in the quarter, which again should be viewed against a backdrop of particularly challenging costs. As Adam mentioned, net sales increased 31.8%, To reach 3.551 million SEK, pro-form organic growth reached 16.8%, and organic growth reached 14.1%. Adjusted EBIT amounted to 278 million SEK, corresponding to an EBIT margin of 7.8%. As in the first quarter, the high adjusted EBIT margin was mainly the result of a strong quarter for due-to-sell segments, driven by a stable price and product mix, including the continuously growing private label share of sales, as well as good operational leverage due to high growth, while the home furnishing segment faced a weaker overall market. I will get back to the performance by segment in a little while. Turn to the sales drivers, slide 16. Our market-leading traffic generation and web team successfully navigated a traffic generation market that proved to be more challenging than in the past four quarters. The number of visits to the group's destinations grew by 20% to 109 million during the quarter and generated 1.3 million orders, while the conversion rate increased. Also, the overall AOE level, excluding the mixed effect from Nordic Nest, increased compared with the year earlier period. Slide 17, please. The gross margin improved by 1.6 percentage points to reach 26.6%, and the product margin amounted to 39%. Overall, the strong gross margin was driven by one, A growing share of sales from our own brands. Two, our ability to offset cost increases in the supply chain by raising prices. Three, a continued focus on maintaining the price points for bulky products. And four, additional cost and process efficiencies in purchasing and logistics, partly as a result of the high volume. Let us now turn to our due to sell segment, slide 18, please. The due-to-sale segment reported another very strong quarter characterized by favorable growth despite particularly challenging comps, high gross margin and a record-breaking EBIT margin. Net sales grew by 20.1% to reach 2.184 million SEK, of which organic growth amounted to 14.9%. The segment's Swedish operations performed particularly well, including the Big Hema platform and the specialist units focusing on our own brands. Profitability in the do-it-yourself segment was once again fairly well impacted by a high share of sales from our own brands. The gross margin improved by 2.8 percentage points to reach 25.5% and adjusted EBIT amounted to 230 million SEK corresponding to a record high EBIT margin of 10.5%. Slide 19, please. The home furnishing segment continues to build critical mass by combining organic initiatives and acquisition. Net sales in the home furnishing segment grew by 55.6% in the quarter, reaching 1.379 million SEK, of which organic growth amounted to 12.3%. And pro-form organic growth, including Nordic Nest, amounted to 22.6%. All of the segment's units have continued to grow, and the newly acquired businesses performed very well. The gross margin for the quarter was 28.4%, adjusted EBIT amounted to 80 million SEK, corresponding to an EBIT margin of 5.8%. The lower margin compared with the year earlier period is mainly attributable to three factors. A mixed effect from Nordic Nest, which has a slightly lower gross margin than the segment's other operation. Effects from the ongoing fine-tuning of the Danish operations new warehouse. And a certain delay in price adjustment in order to offset cost increases in the production and supply chain. Finally, the strongest SEC during the period had a positive impact on EBIT. As for the cash flow, slide 20, please. Cash flow from operating activities amounted to 336 million SEC, mainly driven by the group's EBITDA. The change in working capital in the quarter was favorable, but compared to the year earlier period, the following can be noted. Last year saw an unusually favorable working capital position as a result of the exceptional growth in the quarter. Two, we continue to grow the share of sales from our own brands in the duty sales segment, which all else equal requires a higher inventory position. Three, a deliberate adjustment of the range to reduce seasonal dependency, and four, The fact that the group has chosen to actively counter the supply side disruptions and extended lead time to maintain strong growth. The right-hand graph showing the development in liquidity walks us through the starting period position of 299 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 are primarily related to the share issues completed in Q1 and the refinancing completed in the period, but also include amortization of leasing liabilities, bringing us to the period end 991 million SEK of liquidity at hand. The HEMA transaction that was completed yesterday reduced our liquidity by 582 million SEK. Slide 21 please. In the second quarter we have completed a refinancing whereby the group's existing credit facilities with SEB were replaced with new facilities provided jointly by SEB and Danske Bank. The new facilities have a total credit line of 3.3 billion SEK and a term of three years with an option to extend the agreement with two years. At the end of the quarter, we had unutilized credit facilities of 1.8 billion SEC. The group's net debt amounted to 509 million SEC at the end of the quarter, and net debt in relation to LTM-adjusted EBITDA ended at 0.5 times, a significant outperformance of the medium-term financial target range. We continue to see excellent M&A opportunities, and our strong financial position means that we can act decisively as the right opportunities materialize. Handing it back over to you, Adam, to summarize and conclude. Thank you, Jesper. Turning to slide 23 to sum up. We've now passed the midpoint of the year. After a 2020 and first quarter of 2021 in which online markets saw explosive growth, It is difficult to predict how the overall market will develop in the coming period. However, despite the strong comps of the past 12 months we now face, we are confident of our ability to continue on our path of profitable cash generating goals also in the coming 12 months and beyond. Summarizing the quarter, we surged past the 10 billion second reported LTM sales in the quarter and are now on a performer level of close to 12 billion, excluding the Heima acquisition. With Heima, we add another billion. Our approach to combining organic initiatives within M&A continues to deliver and resulted in us further extending our Nordic online lead. Our two largest acquisitions to date, Nordic Nest and Heima, were both completed in the past seven months, as were four category catalyst acquisitions. The quarter also saw us significantly extending our credit facilities, leaving us excellently placed to continue on an accelerated M&A journey. We launched the fourth iteration of our long-term incentive plan, co-founded by the 65 participating BHG leaders, and securing long-term leadership engagement. Our customer offering, the BHG ecosystem, was further expanded, and investments were made into strengthening our IT capabilities around key areas, such as customer insights and product assortment exchange. And finally, with some 13 billion second performance sales, including Heima, we have already covered a significant distance towards reaching our next milestone, i.e. becoming a 20 billion SEC net sales business. Moving to slide 24, and this concludes our presentation. We will now open up the call for questions. Over to you, operator.

Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question is from Niklas Ekman of Carnegie. Please go ahead. Your line is open.

Thank you. A couple of questions, if I may. Firstly, if you can talk a little bit about the trend seen here during the quarter. You have 14% organic growth. You said the trend was stronger at the start and then it gradually slowed. Is there any way you can quantify that or at least say if there were any tangible differences in the beginning versus the end of the quarter?