Swedencare AB (publ)

Hi and welcome to the presentation of SwedenCare's half-year report, led by our CEO Håkan Lagerberg and CFO Jenny Graflind. We are pleased to have our European CCO Laszlo Varga joining us with a presentation during today's webinar. 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. Håkan Lagerberg and Jenny Graflind here. Thank you for your attention. And we will present the Q2 2024 report here. Yes, Q2 2024, new sales record, so showing growth and profitability and lowering our debt level. That was main areas. The growth was 10%, a bit lower than I expected. And what was the downturn in our sales was primarily the Vettner channel, not on average, but some primarily are big bigger exclusive partners taking advantage of different situations here but where we control the end sales we have had strong growth and looking at online has been fantastic for us and pet retail Overall, really good. And then you should remember that our biggest group company, NatureVet, had a bit tougher comps this quarter. And also due to some of the reorganization we did, the NatureVet as a whole had a small, small decline in sales. So, of course, that makes it tougher for us to show. So really strong growth. Many of our group companies had growth of 20 and 30%. So a bit mixed quarter, but still double digit growth and real strong efforts from all of the group companies when it comes to dedication and hard work. Looking at a record quarter for FlavorPal and Protein Plakoff as an ingredient. I would like to highlight that since it's a bit of a new area for us selling an active ingredient. And we have really strong demand for FlavorPal, record quarter in the sales. Lots of tests going around the world among many of the biggest pharma companies in the world in animal health. And we look forward to having a steady flow of sales when it comes to FlavorPal. Herd and plaque off as an ingredient is when we add it to a pet food. We have... launched together with one world-leading veterinarian brand being launched initially in Europe and looking forward to taking that all over the globe. And also we have increased our sales with our Brazilian partners. So really a good trend there. We made two smaller acquisitions in the quarter, both trademark or brands, HSP, a Generation Z-directed brand where we already are manufacturing the products being sold, primarily sold online as of now, but we see some openings in fiscal retail stores as well. And then we picked up Vetworthy, a well-known brand in both online and primarily pet retail. And we will this year sell out the inventory that we took over and then make a relaunch in Q1 2024, both online and in the pet retail channel. And then finally, just yesterday, we announced that we had signed the agreement for an acquisition in Canada, a company called Medvant, a small and lean veterinary distribution company, and also a product company. They have a product line that's really interesting. led by Brian Thomas, a seasoned leader in the vet space. He used to be the country manager for Siva in Canada, and he has built up this company for a short period of time. And they are our distributor for one of our brands, RX Vitamins. And it's a really lean and... good operation and I expect us to be able to use them for launching a lot more of our brands in Canada. Canada is an interesting pet health market, around 4 billion US dollars in sales and expected CAGR of 7% going forward and we will launch and already have launched one European brand, NutriVet, in collaboration with an IVC company in Canada and MedVent will help with that launch as well. Another happening in the quarter, Interzoo, the world's largest biannual expo. Several group brands participated for the first time in a joint booth and we had lots of activity in our booth and lots of good leads and follow-ups from that. So great happening and also good to see all of the group companies collaborating. And then an important highlight in Q2 was the NatureVet reorganization and the innovation pipeline that's set now for going forward with the NatureVet brand. Lots of things happening there, being a more focused organization, and that will definitely have a big impact on our sales going forward, primarily 2045 and onwards. We have also initiated a strategic overview of our Amazon sales of the NatureVet brand. As you know, we made a change in the UK where we took back the sales selling FBA on Amazon. That means that we control everything when it comes to sales and marketing. We also control and get the top line sales. We have a different setup for the NatureVet brand. We have a a good partner that's handling that today. But we are looking into if we want to make some more changes when it comes to the sales on Amazon. But that will be announced later on if that happens. Jenny, over to you.

Yes, Q2 of 24. Håkan will present more about the revenue for the regions. And it was another record quarter. We had 10% organic growth. Our operating growth margin increased with 17% to almost 28% compared to 54.7% last year. EBITDA is 141 million with a margin of 22.3%. We continue to decrease our net debt to EBITDA, which is now at 2.37%. And our operating cash flow amounted to 81 million. And at the end of the Q2, we had 170 million of cash. So again, I will not talk about the revenues much because Håkan is going to cover that, but we had growth in all our segments, in all our products group, and also in all our regions, except for the rest of the world, which stands for 2% of our revenue. In addition to that, we grew with 6% compared to Q1. Growth margin has increased as we expected and is now at the level which we have communicated that we wanted to be at. The OPEX cost has been slightly higher this quarter than previous quarters. About half of this increase is related to increased marketing spend and marketing cost, which is associated with the sales that we have in the online channel. And then the second half of the increased costs are more one-off costs, such as, for example, we paid severance costs for the reorganization at NatureVet. We have had some moving costs because we have just one more entity moving into our logistics center in Tampa. During the quarter. So in addition, Q2 was also the last quarter where we have double rent cost for three of our locations, which we have now left in the last nine months because they are now sublet. It's also the last quarter where we have double salary costs for some positions, which we have been phasing out. And despite the slightly higher opus cost for the quarter, I'm happy to see that we have leverage in the business when both gross margin and EBITDA margin improves and that at a higher pace than the revenue. And this trend, I expect to continue. Cash. We had a negative change in working capital this quarter with 36 million. 10 million of the increased inventory is due to this acquired inventory for a wet birthday, which I just spoke about, which we acquired during the quarter. And in addition to that, part of the higher inventory is also due to some preparation for product launches that we have in the second half of the year. And the higher level of receivables is mainly linked to the higher sales. And during the quarter, we've been able to make a dividend to our shareholders of 36.5 million. We have made these two asset acquisitions with a cash payment of 38.4 million. And we have also paid down our debt with 50 million. As I mentioned in the past and in the report, we have set up a cash pool structure in the US, which is the main reason we now have a lower cash level. And we can use much more of our available cash in the group for investments or decreasing our debt. On our net debt to EBITDA, it continues to decrease. It's down 30% compared to one year ago. And we were able to decrease this compared to Q1, despite the fact that the net debt was impacted by the purchase price of the two acquisitions. While at the same time, they did not contribute to the performance of EBITDA. For the first six months, our revenue is 1.2 billion. growth of 12%, which 11% is organic. EBITDA is 280 million. This is an increase of 25% compared to last year. And margin has also increased from 20.5% for the first six months last year to 22.8% this year. Rolling four quarters, as you can see, we continue the trend. We have now 2.5 billion in rolling 12 months revenue. Product and brand split. Like I said, growth in all product categories, which is great. Dental, which mainly then includes the Proton Black Off and a few other dental products, grew with 35%. The main contributor to this is the Proton Black Off powder and the ingredient that I mentioned, which we sell to pet food producers, as well as our soft chews. All these had growth over 40% for the quarter. And Pharma also had a record quarter, and there's both growth in development projects and manufacturing projects, as well as the sales of this company's unique flavor ingredient.