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.

Yes, looking at the different regions. So North America, almost 470 million sick in sales, 11% growth, and that's 79% of our total revenue. As Jenny said, very strong online sales. Pet retail also very strong. Very good quarter. A couple of product launches. One important one was, of course, speaking about Proton Plakoff, was that we for the first time are now into PetSmart with three products. And the launch has been really good. So better than expected. Very happy about that. The vet sales were affected primarily by the component shortages. So there were a couple of big orders that came on the other side of Easter. But so we expected to pick up in Q2. And we'd like to say also there that Concerning the vet sales, it was, yeah, let's say a mixed message. A couple of our big customers were really strong, and then there were a couple that were affected by this component shortage. So we... They are significantly lower comparing quarter by quarter because Q1 last year was strong for a couple of customers. But as I said, that will pick up in Q2. We have already delivered some of those orders. And pharma, as Jenny said, we knew from the start with our budget that Q1 came actually in on target, a bit better than budget, but still it will be the weakest quarter for the year. Very excited about the pharma development team. They have done an excellent job. A couple of projects has been actually concluded faster than timeframe. And that's not so often that that happens when it comes to pharma development. And the manufacturing has picked up and will be a lot more even this year. And then when it comes to product sales, FlavorPal, that is a flavoring enhancer, a quite unique product and a very strong brand. strong competitor when we now when we've launched it on the market, we have have really strong interest from from big pharma companies. And we have started to deliver out so so expecting more from that the years to come. And then we've added a completely new customer with a multi-product suite and multi-million development agreement that will be linked to manufacturing as well. So happy about that. And a couple of those new product developments will actually start already in Q2. Looking at the production as a whole, and predominantly VerioSouth, we did have to use VerioSouth for some European shipments due to capacity limitations in the UK since we had a complete shutdown in March. It will be up and running again in, let's say, May, I would say, but we will still utilize some US capacity for Europe and expect that until the end of this year. We have expanded the cooperation with a couple of the major distributors, including new brands. So, for example, Vet Classics have been introduced, a couple of new distributors in the US. Oryx Vitamins, for the first time, we have a national distributor in place for that brand. It was strategically decided many years ago that they wouldn't like to be at the national distributor. It's just the kind of different sales approach. But we have now... strategized and worked with that and really happy that we now have a partner for national distribution and we've already seen that the interest from many smaller veterinarian chain practices are really happy that we will be offering Oryx vitamins through a national distributor. Looking at Europe Continuing the, let's say, trend from last year with really strong growth, 37% growth, 150 million in second sales, 19% of our total net revenue. And it could actually be even stronger if we had delivered on all of the predominantly the soft shoe customers that we have. And also keep in mind that we are, as Jenny said, we have built up some... for product launches in Q2 and Q3 of our internal brands. So we've actually been preparing for that. So all group companies had growth except 3DK UK, as Jenny spoke about with Amazon change, and also a very small company deficit in France, but they have started Q2 really well. So that was more of a timing issue. The most astonishing was probably Innovet, our Italian company, had the best quarter ever. And that is actually one of the few markets where we have very detailed information about market performance. And the Italian pet health market actually declined by 2% in in Q1, and InnoVet had a record quarter, grew around 40% year on year, so fantastic performance there. Strong growth with soft juice, despite capacity limitation, as I said, both from internal but predominantly from external customers, we could have done a lot more, but we will do it the quarters to come. We've launched a completely new brand called Willy Chews, focusing on Europe, a range of five soft chews covering the most important therapy areas, being launched in pet retail and online. And then NutraVet had a... That's a good example of a group initiative. NutraVet has launched a dermatology line with four or five products with existing products from a sister companies in the US and launching was basically done in less than three months. So it's a really good example of collaboration. And then we are preparing for launching NatureVet, our biggest pet retail brand and And that will be launched at Intosu in Germany. So we're very excited about that. Has been lots of hard work by the team here in Europe and also with assistance from the US. And we're very happy also for Europe to have signed a major customer for a big product range, exclusive agreement for three years for fast-growing customers. So that will be as a base, a very important base together with our internal brands for our build-out in the Sochu capacity. And then rest of the world, let's say a... A decent quarter, a bit down, but as you know, international sales are normally a bit lumpy. But a solid quarter. South Korea continues to be the strongest export market for us. Japan, good. South America has picked up a lot over the years, the last year. So with Chile as the most important market and together with Brazil. Jens Nielsen- Australia is is also solid year after year and with growth in China is still slow but signs of come back, so we expect the definitely that 2024 will be. Jens Nielsen- be the year when we pick back up to growth, we will also be launching new products into China, we have received a. a license for our Irish plant manufacturing. We are now officially granted the export license for starting off with five products, but there will be more. So we're happy about that because that has been an issue that it is complicated getting products into China. Pet food collaborations with Proden Packoff as an ingredient keeps on growing, have delivered to all four partners in Q1. One major new global customer signed last year, and we will start delivering there in Q2. And that will actually be our biggest partner within a year. Just mentioning a new market. We started selling in Mexico last year, a complicated regulatory market, but got ProtonPack off in there. And already we have now signed an agreement with Petco Mexico. So we'll launch ProtonPack off in all, I think, around 160 stores in Mexico in Q2. Looking ahead, 2024, nothing different from the priorities that we laid down and presented at the last call. So really keep on growing with stronger profitability and lowering our debt level. That will be focus every quarter to come. Delivering on a strong pipeline. We have many opportunities within the group, and we have prepared a strong product launch from most of our brands. So really excited about that. And the move, continue to move from external suppliers to internal. We are at a good level already, but definitely more opportunities. And we have a long list of products where we focus on the bigger impact products that we will move in-house. Yeah, product launches, development, that will continue. We have exciting research in the group as well. So coming back on that one. And then one important thing that we are working more diligently with now is really solidifying and developing relationship with major customers. That's one focus area where we will improve and are really working really happy the response we get from major customers in the US and in Europe. So expect more from that. And then, as I said, corporations and M&A opportunities, always a focus from us, and especially for me, I'm working a lot with that and have dialogues. And it is always astonishing to see the width of opportunities that there is in this sector, because there are so many great companies out there that shows good growth, interesting and innovative products, and and linked with profitability. So there are lots of good targets for us, definitely. And with that, I would like to introduce Jeff Granger. He will introduce himself, but I can say that I'm really happy with the contributions that Jeff has had to the group since he joined in last August. And you will be excited to hear all the things that's happening in Nature Vet.

Awesome. Great. So perfect. Yeah, just hang on this slide for a second, then we'll roll to the next one. So yeah, good morning. I really appreciate this opportunity to present to all of you today. As a quick introduction, been the CEO of Garmin Corp, as Hoken said, since August of last year. Prior to that, I spent time with national retailers for almost 30 years, most recently with Petco for over 10 years. It was during my last six-plus years with Petco that I had the opportunity to work directly with Garmin Corp and aggressively grow the NatureVet brand in the pet supplement space. I'm very passionate about this category. I'm very passionate about this company, so I could not pass on the opportunity to join Garmin Corp and become part of the Sweet and Care family. For today... I'm going to cover a quick overview of the U.S. pet supplements market, NatureVet's position within the market, key opportunities for NatureVet, and the strategic imperatives that we're putting in place to drive meaningful and sustained NatureVet share growth. So if you go to the next slide. All right. OK, so the U.S. pet supplements category, it's quickly approaching two billion in annual sales with e-commerce, pure play. So Amazon, Chewy, Pet Meds driving two thirds of that. So now food, drug, mass and club. share is essentially aligned with the pet specialty and ag share. But the FDMC is really primed for explosive growth as traditional retailers are showing a strong appetite and significant interest in expanding into the supplements category. So if you go to the next slide, however, The $2 billion is just the start as pet supplements is very much still an emerging category. With the continued expansion of humanization in the pet space, it's just a matter of time before the supplements usage gap that you see here on this slide starts to close. How can it be that almost 80% of humans are taking supplements compared to less than 20% of pets? Why are pet parents taking a proactive approach for themselves but only being reactive with their pet's health. This is a big opportunity for someone to step in as a category thought leader to educate and guide retailers and end consumers alike. So if you go to the next slide. So NatureVet has a long history of dominating the pet specialty in ag space. So on the two slides ago, the pet, especially in ag space was only about 16% of the total market. It's almost 40. It's pretty much 48% for nature. So it's three times the penetration of the market. But what does that created then? Well, we continue to be under penetrated in the econ pure play space. That's due to lack of capabilities. And that's stuff we're working on right now to fix and the food, drug mass and club space that's remained unexplored to date. And that was also by choice. The big opportunity and the big balancing act lies within the ability to strengthen existing partnerships, protect the current business, while also making solutions available to consumers wherever they choose to find them. This balance is key and is imperative that any type of expansion benefits all that are investing in the brand. We don't want to go backwards as we push to go forward. It's a very delicate balance. So if we go to the next slide. Now, did you know that NatureVet is the number one volume brand in the pet specialty ag segment? This includes Pet Big Box, so Petco and PetSmart, Big Box Ag, Tractor Supply, regional pet chains like Pet Supplies Plus, and independent pet retailers. And even with NatureVet, not currently, I say not currently, a lot of aspiration there, not currently having an expansive presence at PetSmart, our share in the channel is still over 500 basis points above the next closest brand, which is Zesty Paws. And that's a mature brand. It's been in PetSmart for a while. So even with not having significant expansion into PetSmart, we still are sitting at the number one volume spot. Let's take a look at this another way in the next slide. So NatureVet is also the number one volume brand of what we would define as what we call bricks and click space. This includes retailers that have brick and mortar, that have a storefront, plus their applicable e-com volume. Now, this does exclude Costco. Walmart is actually included in these numbers. So that means that even without being in Walmart or any other major FDMC chain, and again, currently not having an expansive presence in PetSmart, our brand is still driving the number one volume in the segment. Now, this one concerns me more than the other one. Competition is closing fast due to FDMC expansion. And this view will likely look different in the short term. I could show this to you in a couple months and it might not look as good. But the long term, we anticipate holding, regaining, and holding the number one position as we implement our strategic imperatives. So if we go to the next slide. So while the emerging brands are driving growth in the category, they're also driving further confusion in the category. Retailers and pet parents are seeking out strategic partners to help them navigate the space. We just saw how big NatureVet can be when we focus on a particular segment. And this strength gives us license to play in Food, Drug, Mass, and Club and get more credit in .com PurePlay, the two places we're underpenetrated or don't exist at all really in FDMC. Moreover, NatureVet has a unique proposition that the others generally don't have. We control our manufacturing and quality from A to Z. In fact, we've recently coined a slogan around here that I think could resonate. We care enough to make it ourselves. None of the other competition on this slide can say that. So we go to the next slide. And we're starting to get into what are we doing about this, right? So since January of this year, we've made tremendous progress on the journey toward positioning ourselves as the strategic partner and trusted advisor of choice in this category. We overhauled our executive leadership structure to hire a chief commercial officer who is leading our sales and marketing teams and a chief operations officer to get our manufacturing operation ready for the anticipated increased volume. with both being experienced industry veterans. And we recently restructured our entire sales organization to align with the shopping channels, inclusive of dedicated directors for the e-commerce channel and the food, drug, mass, and club channels. We have never had dedicated resources for these channels. Those are the two underpenetrated channels. Now we've got people, that's all they do is live, sleep, and breathe these channels. So with just a handful of new folks that we brought into the sales organization, we are adding nearly 200 years of collective experience in sales leadership, insights and analytics, marketing, and beyond. Additionally, we're bringing on a new director of customer marketing who will lead our change in direction there, where we will be laser focused on social, digital, and influencer opportunities. Lastly, Our new executive director of product development just started earlier this month and is already making progress on a multi-year innovation pipeline. And what's very important about that is taking into consideration lifecycle management channel-based, right? Because a big part of this is keeping the existing pipeline existing partners happy, right? And, but also being able to successfully expand. So we'll be able to do that by creating innovation that starts in certain channels, then it moves out to certain channels. And also as we've had preliminary discussions with a lot of the existing partners, they understand that if we do the expansion, any kind of expansion properly, it will float all boats, right? And everybody will win. Okay. And one more key piece is, is getting access to shopper insights and market data. We recently finalized an agreement with a proven third-party data analytics resource. This will make us the smartest person in the room as we go to market and build relationships based on financial rigor and thought leadership with current and prospective partners. In conclusion, the data and analytics piece and everything else that I've already touched on here sets us up to be a genuine thought leader in the space, something that honestly no one is really doing well in the category. I know this firsthand from experience on the retailer side managing pet supplement segment. We had a tremendous relationship with partners like Garmin Corp and a few others when I was at Petco, but no one was truly helping us unlock the true potential of the category. And as our expansion strategies start to become reality, the financial impact of those plans will be included in the go-forward SwedenCare forecast. Thank you again for your time this morning. I look forward to checking in from time to time to speak to our growth journey. Have a great rest of your day. But thank you.

Thank you, Jeff. And by that, we are open for questions. And the first one comes from Richard. Please go ahead.

All right, good morning and thank you for taking my question. So hopefully you can hear me okay. So first one is on magnitude of the impact on growth from Sweden Care UK Amazon shift and the shift in the production segment of soft shoes hampering Q1 growth. So essentially I'm trying to figure out if you could estimate the impact and sort of what the growth uh would have been excluding these effects in the quarter thank you yeah it's always difficult to say say detail but i would say that we would have been on the other side of the 15 all right that's very clear um and uh Maybe you could elaborate a bit more on some of the building blocks and the visibility you have on the building blocks to achieving growth above this level going forward in the year. And are you still comfortable with the 15 plus percent organic growth outlook for the full year result?

Yes, as I said, the last year we had, after half a year, we were at 10% and we ended up at 15%. So I expect, let's say, perhaps not exactly similar quarter by quarter, but definitely that the 15% plus target is definitely achievable and what we're working for. And the visibility is always difficult because as we are working with, let's say, moving targets with lots of components. But as we did explain, the demand is a lot higher than we have really supplied on this quarter. So yes, we are in a good place and feel very confident that the The continued growth journey for Swedencare is definitely there. So lots of good things happening. And then we will be looking at some more structural changes when it comes to, let's say, online. As Jeff said, we will take back and have more control of online sales in basically all of our brands. So that is a journey that will take place this year and even next year for some of our brands. But definitely that...

that we we feel uh that we are in a good place okay cool uh and thank you for for the presentation and a bit of a deep dive on on nature vet maybe this is a question perhaps for jeff but maybe you you can help me as well so in the presentation we saw that on on competition we saw roughly 15 percent brand share in the pet specialty ag channel, how has that brand share moved in recent years and how many of the 14 competitors on the slide have emerged in the last five years or so? It would be interesting to just get a sense of how the competitive landscape have evolved and how the share of NatureVet have moved. Thank you.

Yeah. So the share has declined. So we've held the volume levels, but the share has gone a little backwards. And you have Zesty Paws kind of started about four or five years ago. You have brands like Pet Honesty that came in. Another one that came in was Native Pet. And then there's kind of a smattering of other brands that are out there as well. But there are a lot of folks out there who want to get into the supplements business, but they're not manufacturing it. They see it as an opportunity, but we see, you know, ultimately we see us as, you know, again, it happens to be, you see it on my thing, the 30 year badge, right? We're a 30 year old brand and we've continued to, you know, survive. So, you know, with a lot of the activity that's happened on e-comm, we have a big opportunity to take share back on the e-comm space as well.

That's clear. And just maybe just a quick follow up, if I could, could you add some commentary on how we should view the PetSmart commercial opportunity? You mentioned it, called it out a few times in the presentation, but maybe how we should think about that potential and the commercial potential you see there?

You're asking, alluding to, so again, we have a partnership with PetSmart. We've been in PetSmart for a while, but not in a big way in supplementation. So are you asking for probabilities on PetSmart? probabilities and the size of the channel opportunity as you see it is it very meaningful for for the nature of it it would be very meaning i'll leave it at that it would be very meaningful if we can make that happen and it's and we have a tremendous relationship with them and the leader that we brought in our chief commercial officer has a has a great partnership with them that exists and so we are set up to to figure something out with those guys so yeah

Yeah, we could also add on that, that as we said, we have made a different, worked through a different strategy now. Over the years, there has been interest also in the food market to have nature there, but that wasn't a That was an active choice, not going into that, but we have seen lots of brands going into that channel with perhaps different, a bit different products, different sizes, perhaps, or yeah, different offering a bit. So that have been very successful. So that's really the biggest opportunities I see is really expanding into that channel because that is huge channel for pet supplements and it's going to grow faster.

All right. Fantastic. Thank you. And just to squeeze one final follow up, maybe for Jenny, if I could. Question on Riley's. It seems to be like a quite low sales contribution in the quarter compared to expectations I had, at least. Could you elaborate on how we should think about the sales contribution from Riley's going forward in the coming quarters, just so we could get from modeling purposes and understanding? Thank you.

Now, I think the sales with Rylis is going to increase quarter by quarter. There's a lot of opportunities within the group. We're going to expand Rylis as well. So I'm not going to give any numbers, but I think it's going to grow quarter by quarter.

Yeah, and I can add to that. We are not manufacturing those products as of yet ourselves. So that has also had an impact on sales for this quarter. It's actually the first quarter we're taking over. We didn't take over an organization. We took over the brand and the products.

Very clear. Thank you for taking my questions.

Thank you. Your next question comes from Christian. Please go ahead. Christian, do you have a question? Okay, let's go to Adela instead. Please go ahead.

Yes, Adele here. A lot of good questions already asked and answered, but I do have one on the cash flow generation during the quarter and also the organic growth impact of these large orders that were delayed due to the component shortages. Could you speak maybe a bit more, give us some more insight on what exactly these component shortages, what areas are?

uh they refer to and what the expectations are for for this in in q2 thanks yes i can take the component charges that that's uh solely within the um the medicated liquids products so uh so vet veterinarian products that that uh waiting for for a couple of actives that uh that went from expected three months delivery time to 12 months. So the team has been working very hard end of last year. So they managed to get the ingredients, but not in time for really manufacturing. So we had to, it will be delivered now in beginning of Q2.

Okay. Got it. And then I'm sorry if you've probably already mentioned this, I joined late, but, but I saw that there's a new product category breakdown. You're now splitting dental and I'm assuming treats into two distinct categories. What remains in other from here on out in that case?

It's very small because, of course, part of the other last year was treats, for example. And also dental products that have now moved out from other. It could be, for example, veterinary equipment. It's just very small things included in there now.

Do you still have the human sales of ProDent Black Box? Okay. Thank you very much.

I believe that concludes our discussion. One more question from Rikard. Please go ahead.

A follow-up, if I could. I was just curious. It would be interesting to hear more on the reason why you're doing this restructuring and changes implemented in... in NatureVet now? Is it sort of a reaction on rising competitive landscape or is it, yeah, it would be interesting to hear a bit more in the background and do you expect it to drive costs in a way that we should perhaps expect a bit lower operating margin contribution this year owing to, you know, some restructuring and increase OPEX base? Just trying to get a sense of this initiative. Thank you.

I can start, Jeff, and then you can fill in. I will say that it's been an ongoing process since we acquired NatureVet. So I've been working with the board from the beginning and then down. So it's just been a process. You know what, we take it slow when it comes to integration and NatureVet, Garmin, Watson is a great company, but you always have to start planning for taking it to the next level. So really getting, I mean, looking at year growth last year, I mean, NatureVet grew really, really well. So that wasn't the issue, but it's just adapting and looking at the sector as such and taking the opportunities that there is. So it's really just laying down how we could expand. The organization in HVET was from a, let's say, had been growing really fast, entrepreneurial company and building a really good brand. But the structure wasn't really there for taking it to the next level. And then looking at the different competences and roles that wasn't there either, because it was a really, really strong, fantastically organized. let's say, skilled top management that were involved in basically everything. And now taking it to the next level, you need to have a better structure just going forward. So that's really to be able to take it to the next level. That was the reason. And when it comes to cost and structure, I leave it to Jeff to give some indications.

Yeah. First thing I'll say is, and I kind of mentioned this when I spoke, is Things are very different than they once were. And we have the right to meet, you know, the customer wants us to meet them where they want to be met. And we have and we should be and we should be heeding that call. And there is in terms of the traditional retailers, there's more of a receptivity towards brands. In cases, there's more receptivity towards brands expanding if the belief is it's going to float all boats and that it's going to create a critical mass for them as well. Right. Because that's going to create more marketing out there, more exposure for the brand. Whereas even in my own experience being at Petco, I tended to want no, I want an exclusive brand. I don't want it everywhere. That perception has evolved. In terms of cost structures, that's not something that I have in detail that I can speak to at this point in time. The bottom line is any decision we would make, it's obviously going to get fully vetted before we move forward. So we understand all elements of it. We would not do anything without understanding that.

Very clear. Thank you. And just a final follow up. On the slide with the sales breakdown of NatureVet, it amounted to $90 million. Is that the 2023 full year sales? That's a full year.

I'm sorry. All those numbers are full year 23.

Perfect. Very clear. Thank you very much again. Thank you for the update on NatureVet business. Much appreciated. Thank you. Yeah, sure.

Okay, thank you. That concludes our Q&A. So back to you guys for any closing comments.

Thank you so much for the attendance and looking forward to the next call. And the next call, we will have Laszlo Varga, our Chief Operating Officer for Europe.