Swedencare AB (publ)

Hi and welcome to the presentation of SwedenCares Q1 report, led by our CEO Håkan Lagerberg and CFO Jenny Graflund. And we are pleased to have Jeff Granger with us today, the CEO of Garmin and NatureVids, who will be joining us for a presentation. We will have a Q&A after the presentations, 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 so much. A warm welcome to everyone having the Q1 report. And today, later on, we also have the annual meeting with all shareholders at one o'clock in Malmö. So looking forward to that as well. Yes, Q1 2024 highlights. It's been a very hectic and energizing quarter. We started off 2nd of January acquiring the rest of Riley's that we did present in the last report. So it's a completely new category for us and we have started or continue selling online and we have presented the The full range at Global Pet, the largest pet show in the US. So we are in dialogue with big box retailers and also have started to, or will in Q2 start to ship out to distributors for brick and mortar stores. So excited about that. uh and the numbers as such jenny will go through them in detail of course but we did have a growth of 14 percent of which organic growth was 12 percent and strong stronger margins that we did indicate for the year that last year that we focus will focus this year to keep on improving our margins very happy to be over 23 percent in operational ebitda and um and accomplishing that without having all of the factors that will contribute to an increased margin. So expecting to keep on improving the margin throughout the year. When it comes to organic growth, a bit under our yearly target, I did communicate that I expect to be around 15 and closer to 20 than 10. First quarter, 12%, but we're happy with that. Last year was 10% and we ended up full year at 15%, as you remember. And there were some issues related to the sales just around the quarter end, start of the second quarter. So very happy with the quarter, even though the organic growth was 12%. And do remember that... we are basically growing twice as much as the pet markets as a whole. New sales strategy, we've been working very hard with that, especially Jeff Granger, who you will meet later on. A very, very exciting year this year and the years to come for NatureVet, where we have laid down a new strategy, how we will grow that brand and take the full position in the market. It has been lots of business development. I'm really happy with the integration process and the synergies within the group. A lot more, let's say, collaborations between individuals in the group and also between group companies on both sides of the pond. So really thrilled about that. And many new group opportunities. We're expanding the product ranges for a couple of our brands. We are also going to present a couple of US brands at Intosu in May, the largest pet show in the world. So excited to be presenting those brands for an international market. Have also had lots of preparations for product launches. Some were launched already in Q1, but the main bulk of of the product launches will come in q2 and present it at the interzoo so very excited about that um and then uh as we grow and and keep on changing and wanting to to to improve we are uh have added a key key um key uh staff as i write here industry champions to the group we are in a very lucky position that we we do attract the top tier uh So when we do choose to expand our team, we have a very, very extensive list to choose from. So excited to what all of those new people will deliver to the group. And Jeff will present, especially in the NatureVet team, there are some key changes that he will present. concerning M&A, looking at the market as a whole, definitely more activity and not so many completed deals, but definitely more activity, especially in the US and Europe, not so much in Asia and Pacific, but definitely picking up. And as you know, we are a an M&A driven company. So we do have dialogues ongoing that we've had for several years. And we also have some new ones in discussions. But we will come back to that if and when it happens.

Some KPIs, I will go through them in a little bit more detail on the coming slides, but it's great to see that all major KPIs, with the exception of our operating cash flow, has really improved compared to the corresponding period last year. We now have double-digit growth, we have improved gross margin and our EBITDA margin, and of course, we continue to decrease our debt levels. Okay, so we have growth in all segments and in all regions except for the rest of the world. In addition, there's also growth in all but one product group, which is great. And there was a few things that impacted the growth this quarter. As Håkan said, it was 14% in total and 12% in organic growth. We have moved our UK Amazon in-house. And this has, of course, made the sales lower because we have to sell out from the Amazon warehouse. However, now we are fully up and running from the end of April. There was a shortage of a component, so production was impacted. Some of the products could not be finalized and delivered at the end of the quarter. And that sales has, of course, moved to this quarter. We are also building out our software production, which we have talked about many times. It's building out in the UK, and we're also increasing capacity of the soft tube production in Ireland. So this limited our soft tube output for the quarter. Online was very strong, super strong channel this quarter. Pharma, which is then development and manufacturing, was lower this quarter, but that was expected, as there's more development planned for the remaining quarters this year. Growth margin, as you can see, has increased as expected. And it's now at the level which we have communicated we want it to be at. And of course, as external costs has not increased with our growth. In fact, it's actually the lowest level since it's been since Q1 23. And that gives us the leverage which we have expected to grow our EBITDA. So that's where you see a growth of the EBITDA of 31%. And the margin is now at 23.2% this quarter. Some highlights when it comes to cash. As I mentioned, the operating cash flow did not improve. We had a negative change in working capital this quarter with 42 million. This was linked to the fact that we had higher inventory levels at the end of the quarter because we are preparing for the spring and summer sales. In addition, this component shortage that I mentioned has, of course, impacted this. We also have a higher level of receivables this quarter. This is mainly linked to one specific customer, which had cash flow challenges during this quarter. However, we have received a large payment in the beginning of this, the current quarter, and there's also a payment plan in place. In addition to that, we did pay the RILES acquisition, 53 million, but still we have also been able to amortize on our loans, 25 million. And we have kept our capex quite low, 1.4% of net sales. Our rolling four quarters continues to look nice. We are almost at 2.4 billion now for the rolling 12 months and 527 million for operational EBITDA for 12 months. A few comments on the product and the brand split. Being a new year, we have changed the categories a little bit. With the Rylis acquisition, we have added a category called Treats. The organic treat ones, which is mainly Rylis. We have also changed the product black off to a dental, which you can see it's 50% of the total revenue of this dental category. It's about 94%, which is product black off. So it's not that change, but it also adds a few toothpaste and other dental products. Nutraceutical has continued to grow to 16% for the quarter, and it's our biggest category. Pharma, I already spoke about. Tropicals and dermatology is one of the products that were impacted by this component shortage.