Swedencare AB (publ)

Hi and welcome to the presentation of SwedenCares Q1 report led by our CEO Håkan Lagerberg and CFO Jenny Graflind. We will have a Q&A session after the presentation so please raise your hand if you have any questions and we will answer them in the end. Over to you Jenny and Håkan.

Thank you very much Emma. Håkan Lagerberg here together with Jenny Graflind. Thank you all for listening in. We are going to present the Q1 highlights. But first of all, I would like to start off saying that we have had a successful AGM today and would like to thank all of the shareholders of SwedenCare for the confidence from the board to keep on steering the company. I would also like to inform you all that Heinz-Jürgen Bertram, the CEO of Simwise, is a new member to the board. All the other board members are the same. Okay, let's go over to Q1. A sales record, first time over 500 million SEK, 523 million SEK in sales. And also worth mentioning is that we had a record month in March, first time over 200 million SEK in sales. So we are trending in the right direction. We've seen some improvements that hit us last year in 2022, with the inventories being very high from several of our largest customers. It has started to improve. And this Q1, I would say that more or less two to three group companies affected. But we see it's a really good trend. And I'm sure that Q2 will absolutely be the last quarter we see any growth. any effects of this. The organic growth, just double digit, 10%. We are happy with that, with a shift in the trend. And we expect continued good year when it comes to organic growth. And as all of you probably know, is that the organic growth now is very similar to our sales numbers, since we don't have that much inorganic companies in the group anymore. a bit lower margins and strong cash flow for the quarter and Jenny will go through that more in detail. We have several new external internal core projects that starts to deliver. We see many synergy projects starting to bear fruit. And also when it comes on the sales side, we are introducing a lot of new products into the different brands coming from group companies. So that's really a key feature for 2023 is that we're going to continue to more than the product offering in several of our group companies' trademarks. We did send out a press release in March about a new partnership with Patterson for our animal pharmaceuticals brand, a veterinarian-focused brand that's been sold in the Veterinary Channel. for many years in the US and Paterson has always been our largest customer for this brand. But now we have come to agreement of a new sort of corporation that they have acquired exclusivity for the Animal Farm brand. And that will mean a more focused approach from Paterson Salesforce and also expanded capacity. A lot more of the Salesforce will focus on this brand. So we are... very excited about this and it will be exciting to follow the sales numbers for this brand. Lickportra has also been focused on lots of ESG, let's say finalization for many policy documents and setting out the strategy for the group. And now we have entered a new phase where we have started to identify some targets for our sustainability work, and that will be presented over the year. And you can read more about this in our quarterly report. Going over to some numbers.

Yes. So our net sales increased from 377 million, which we had in Q122, with 39% to 523 million. In our sales numbers, we have one month of organic InnoVet and two months organic of NatureVet. In our operational EBITDA went from 94.7 million last year to 107.4 million. So that's an increase of 13%, even though our EBITDA margin decreased a little bit. Some of the KPIs. So first of all, revenues with half of a billion, which is fantastic. I think for the first time, our change in revenue was 39%. And this is 80% acquired revenue. 11% currency impact and 10% organic growth. When it comes to the split of the organic growth into volume and price, NatureVet did not have any price increases in 2023. And there was only a small portion of Radio South price increases that impacted Q1. So in these two entities are of course the largest ones in our group. The rest of the entities had about maybe two or 3% increase. So I will say that the vast majority of the organic growth is definitely volume. When it comes to operational gross margin, it's a little bit lower than our average, and also I would say lower than our coming quarters. And this is due to a couple of things. First of all, we had less development work this quarter, and development work has a significantly higher margin than other groups. We also had a ramp of production at two of our facilities that impacted gross margin, and there was more freight cost. And also, we had in Q1 several product launches where we give higher discounts to new customers, and this also has an impact on margin. In addition to this, the price adjustment, which I just mentioned, will have a full effect in Q2. When it comes to operational EBITDA and expenses, it was quite an expo intensive quarter. There's a lot of expos all over the world, which impacted the external cost. We also have more marketing costs, which are connected to the Amazon sales, which have also increased during the quarter. But in total, the external expenses are still at 90% of our total revenues. So that's in line with the previous periods. When it comes to cash, we had cash of 232.2 million when we closed the quarter. And for the second quarter in a row, we have had a positive change in working capital, which has then, of course, a positive impact. And this quarter, it was 16 million. And this is despite that we have an increase in our revenue. During the quarter, we have invested 11 million in CapEx. That's about 2% of our total revenue. And during the quarter, we also had a cash outflow of 92 million SEK to the seller of NatureVet, which we have discussed in the previous report.