Swedencare AB (publ)

Welcome to the presentation of SwedenCare's Q3 report about our CEO Håkan Lagerberg and CFO Jenny Graflund. We are pleased to have production director John Kane joining us with a presentation during today's webinar. And as usual, we will have a Q&A after the presentation, so please raise your hand if you have any questions. Over to you, Jenny and Håkan.

Thank you so much. Håkan Lagerberg and Jenny here in Malmö, I'm pleased to present our Q3 highlights and the report. Let's kick it off. We had record net revenue and also record operative ADA. So the first time we were over 700 million SEK despite the Weak dollar and also over 500 million in operative EBITDA. So happy about that, improving the profitability as we have been working with. Highlights, of course, what we also presented in the report, two full pages about our launch in big box retailers. Happy to inform that we're now present in 1,400 Walmart stores all over the USA, 1,100 CVS pharmacies, and also a local Midwest chain called Meijer's, 140 stores there. And launch was in Q3. All of our sites are now fully propped with products. The Walmart order that we communicated in Q2 has been delivered just above half of that, and the rest will go out in Q4. And the reason for that is just... decision by Walmart to have one pack of each product instead of two. So that will go out in Q4. And we will also have an additional marketing campaign with Walmart in starting in early Q1 or end of Q4, but we will deliver it in Q4. So we'll actually have separate displays in all of those 1400 stores and adding adding 600 or 700 more Walmart stores where we're not present in the lineup. So we will be present in plus 2,000 Walmart store end of this year or early next year. So we're really thrilled about that. And worth noting about that separate campaign is that we are taking the cost for all the displays, so that will be a bit lower gross margin for that setup. Okay. And I will come back to continued launch and discussions with big box retailers. We've also had an organizational overview in the U.K. spurred off a retirement of our long term Long colleague John Leonard that will be leaving the company for retirement end of this year. And by that, we will reshape our SwedenCare UK operations into being online only, focusing on UK and rest of Europe. And the rest of the, let's say, retail sales apparatus will go over to our sister company, Nutribet. And in Tampa, we continue to streamline our organization, primarily focused on veterinary sales and also online. So we're utilizing more group resources for joint projects. We made a very small minority investment in a company called Vio. Adding a new product group is Liquid. Their main product is a recuperation product used after surgery in cats and dogs. And we've seen a big potential for us to launch this product line under a couple of our brands. We will start off with NutraVet in the UK and it will launch as early as Q1 2026. High international activity and internal collaboration. We've been traveling a lot around the world in Asia and Q3 also in South America. So we have signed a couple of new distribution agreements and and are looking forward to exploring untapped potential all over the world. Internal collaboration, we are working even more with, let's say, product development and also launch strategies together within the group. So that is something that's primarily, I would say, the U.S. market work together and then the European market. And then for For our, let's say, bigger launches and bigger brands that are international, for example, with Proton Plakoff, as you know, most of you, it's steered from our team here in Malmo, and that keeps on improving the collaboration all the time. Financial targets, as you know, we have financial targets that is by the end of 2026, so we've had... lots of discussions within the board about presenting or setting new targets for a couple of years ahead. And we are very close to finalizing that after the latest discussions at the board meeting we had in Canada. So we will be presenting those in hopefully early December, at least in December. But my guess is that it will be early December. Over to you, Jenny.

All right, some financial highlights for Q3. Revenue amounted to $712 million. For the quarter, it was the first time we were above 700, as Håkan said. This represents 11% growth, 50% was the organic growth, and we had a negative 9% impact of the currency, and then 5% acquired growth. The acquired growth came from Summit, which we acquired in April, and then we also had one month left of MedBranch, which we acquired in August last year. A fun fact about the revenue is actually that this quarter, we almost had the same revenue as we had for the full year, 2021. For the first nine months, net revenue amounted to $2 billion. That's compared to $1.9 billion for the first nine months last year, and an organic growth of 9% year-to-date. Our operating growth margin is stable, 58.5% for the quarter, so also in line with our expectations. The external costs are increasing, as we have mentioned before. With the growth of Amazon, there's costs which are directly linked to sales. This quarter, we had NatureVets Amazon account in-house for the full quarter. That's compared to two months last quarter. So we have about $10 million of additional Amazon costs for the group compared to Q2. The more variable external cost, so cost which is not related to Amazon, which is about 50% of the total external cost, which has scalability potentials. Here we can see that we have decreased this cost as a percentage of sales. Personnel cost has decreased, is lower this quarter due to reversal of bonus accruals. As a result, operational EBITDA amounted to 155 million for the quarter. This is an increase of 14% compared to last year. 21.7% EBITDA margin compared to 21.2% in Q3 last year. And for the first nine months, we have 20.1% EBITDA margin. Our net debt to EBITDA has increased compared to a year ago, and that's due to the acquisitions that we made in Q2 this year. However, it still has decreased from 2.9 to 2.7 this quarter. During the quarter, we made cash payments for acquisitions, which we do not have additional EBITDA contribution for. So that, of course, impacts this ratio in a negative way. However, as I mentioned, it still decreased in line with our expectations. Our cash conversion, 99% for the quarter, so really strong, mainly due to decreased inventory levels in the group. During the quarter, we made additional payments for the PAC-approved acquisition. We made both the second and the last payment, as well as an earn-out. In addition, as Håkan mentioned, we made the minority acquisition of VO during the quarter. We have also been able to reduce our debt with 75 million on our loans. And our interest cost has decreased with the lower interest rates. So for the first nine months, we have about $40 million interest cost compared to $57 million last year. And our CapEx, that's still below 2% of net sales, both for the quarter and for the year to date. Our rolling 12 months, as you can see, the revenue for the 12 months is increasing. However, both operating EBITDA and normal EBITDA has decreased due to the weaker profitability that we had in the first half of this year. Just as in Q2, there is a fair market adjustment of the acquired inventory for Summit. That's $24 million for the quarter and $48 million for the year. So this is the difference between the reported gross margin and the operational gross margin. This acquired inventory is now sold, so there will be no more adjustments going forward. Product and brand split. These graphs are not adjusted for acquisitions or currencies. So despite this 9% currency impact, there's actually quite a good growth in the majority of the products group. We have a decline in nutraceuticals. This is mainly due to the lower contract manufacturing we have to external customers. However, we are growing with the internal. Dental has the biggest increase in value. Still going strong. Increase of 28% compared to Q3 last year. and Pharma has the biggest increase in percentage. That's due to the fact that Summit is included in these figures this year, but we did not have that company last year. We have the brands fit to the right, same here, not currency adjusted, so the strong crown has a negative impact on the growth. Summit is included in the category Other, but as you can see, many brands have really good growth this year. Now over to Håkan.