Vimian Group AB (publ)

Good morning and welcome to our earnings call today. I'm here with Carl Johan and we're going to jump straight into it. Thank you for joining us. We have a strong quarter, great organic growth with margin expansion. The profit that we are delivering is in line with our financial targets, our three main segments. which makes up about 95% of the business, all delivered very strong performance and all made good progress on our strategic priorities and execution. We finalized the capital race in April, so our leverage is now down to about 1.4 times, which puts us in a really good position for further acquisitions. We're continuing to develop our M&A pipeline, and we have several ongoing dialogues there. So all in all, a good quarter for us. Let's jump into some of the details here. We reported 11% organic growth, double-digit growth in all of the three largest segments. Our adjusted EBITDA improved by 220 basis points from 25% to 27.2. This was driven mainly by our specialty pharma and our MedTech business. Go jump into specialty pharma. Strong performance here of 13% growth. Very solid execution of growth from all the therapeutic areas in specialty pharma. It was exceptional of the 24% in the specialty pharmaceuticals part. About one third of our revenue in this and the growth in this area came from our key strategic initiative in terms of cross-selling and internationalization. This is where we take products from companies that we bought in one part of the world and sell it somewhere else. It's good to see one third. It's about the right balance and that continues to be very positive and good momentum there. The margin development is also strong in the business here. It's driven by a positive mix, and we continue to see benefits from the integration work we're doing with the acquired businesses. Growth of the adjusted EBITDA was 27%, so significantly higher than organic growth. And I'm pleased to see the momentum, very positive momentum here in the spec form of business. If you take a closer look to our MedTech business, we delivered 10% organic growth here. We recovered the sales that we expected from the annual order program as planned in the second quarter. The margin improvement we see in this business is mainly driven by the evening out of revenue throughout the year, which has a positive effect on our earnings overall. We have nice growth here in adjusted EBITDA of 24%, again, significantly higher than our organic growth. Both our US EMEA APAC regions continue to deliver good organic growth in the quarter. As we flagged earlier here in the report, we're seeing a softness and a slowdown in the US surgical market that started in the beginning of the summer. We're countering that with an increased commercial activity. We go to our existing customers and try to gain share on those and cross-sell more of our product portfolio into them. We already have a relationship. And we also intensify and add a number of new education events to bring new doctors in and also train the ones that are doing surgeries to do more procedures and different procedures. Overall, we have a strong global position here, and we're a leading provider of veterinary orthopedics across the globe. We then turn to veterinary services. 18% growth here with good and positive development across all of our key geographies. We continue to add new memberships here. 400 new member clinics were recruited during the quarter. Our co-owned clinics that we have accelerated their growth in the quarter and are now double digit, which we believe is ahead of the veterinary clinic market. So we're very pleased about that development. The improved profitability in this segment is driven by the growth in revenue, but also we're getting good leverage on our scale here. And the adjusted EBITDA grew 25%, again, well over our organic growth. We've seen stability in the trends here in the veterinary services businesses for many quarters. We expect that to continue, and we're very pleased with the momentum we have in this business. Then turning to diagnostics, this is now 5% of our total business, so the smallest segment that we have. Our revenue here declined by 9%. The market we operate in here continues to be challenging and our performance here is a reflection of that. As you might recall from our Q1 conversation, we decided to invest and reallocate some of our earnings from the livestock market to roll out our new parasitology test device and solution into the companion animal market. So that's what's driving the lower earnings in the segment here. So with that, I want to conclude the summary of the quarter. Overall, a strong quarter. I want to hand over to Karl-Johan who will walk us through some of the details.

Thank you very much, Patrik. Let us take a more detailed view on the financials for the second quarter. The adjusted EBITDA in the second quarter was 24.7 million euro at the margin of 27.2%. This is a clear improvement from 25.0% for the same quarter last year supported by positive margin development in all our three largest segments, as we see effects from integration, economies of scale, as well as mix in the quarter. We report operating profit of 13.2 million euro, a year-over-year growth of 30%, well outpacing our double digit revenue growth. The non-recurring items of 5.8 million euros continues to be on a higher level in the quarter, with more than half of the total amount relating to legal costs for the U.S. patent litigation, as we have been in an intense phase in that process during the quarter. The net financial items of minus 5.5 million euro consists of three main elements. Finance expense of minus 5.0 million with an average interest rate of 6.3% during the quarter, offset by 0.8 million interest income on cash. Quarterly discounting impact of minus 1.5 million and no impact on probability adjustments on contingent considerations. And lastly, a positive impact of 0.2 million from exchange rates. The income tax expense for the quarter amounted to 2.7 million euro. And in total, this results in a net profit for the quarter of 5.1 million euro. an increase of 57% from 3.2 million in the same period last year. Cash flow from operating activities reached 5.9 million in the second quarter, with net working capital impacting negatively. Going forward, working capital is an area we are increasing our efforts in to ensure we drive more efficient operations and cash generation. Networking capital amounted to 82 million euro at the end of the quarter, equal to 24% of revenue. That's an increase from 75.3 million at the end of March, which equaled 22% of revenue. The increase of 6.7 million compared to the end of the first quarter is driven by an increase in inventory of 4.6 million, with equal contribution from Medtech, Specialty Pharma and Diagnostics. Accounts receivables declined 2.1 million as MedTech AOP customers paid their monthly installments, offset by higher accrued revenues in veterinary services. The lower current liabilities is primarily reflecting a timing effect of tax payments in specialty pharma. Cash flow from investing activities was minus 11.2 million, primarily reflecting earn-out payments of 13 million and capital expenditures of 2 million. The capital expenditures is split between 1.6 million investments in intangible assets and 1.4 million investments in property plans and equipment. The main areas for the investments are capitalization of R&D and expansion of laboratory capacity in specialty pharma. Cash flow from financing activities of 8 million where the proceeds of the right issue of 142.7 million has been used to repay 133.5 million of debt in the quarter. At the end of the period, net debt amounted to 144.1 million, which is down from 287.4 million at the end of the first quarter. External lending is also down to 169.7 million following repayment using the proceeds from the rights issue. Our leverage as a consequence in combination with the increased profit, has now gone down to 1.4x compared to 3x at the end of the first quarter, putting us in a strong position to pursue value-creative acquisitions. With this financial review of the quarter, I would like to hand the word back to Patrick for concluding remarks before we open up for the Q&A session.

Thank you, Carl Johan. So how do we summarize this? I think the maybe best way to do it is to do the following. I'm satisfied with the second quarter from a growth and an earnings performance perspective. I think we have work to do when it comes to our cash flow generation. I'm encouraged to see how we're making progress on our strategic initiatives and priorities across the different segments of our business. I'll look at the market overall. It's a very healthy market that we operate in with great underlying trends for growth that is sustainable for many, many years to come. I see that we have significant runway for growth in the business. We captured some of it through cross-selling this quarter. We have immense wide space to continue to go after and capture as a result. If we look at our key priorities going forward, It's driving organic growth and continue to do that in the pace that we have today. Do it at healthy margins. I think we demonstrated this quarter that we have good organic growth and we have the ability to deliver a better margin profile. We have firepower to do acquisitions. When we think about those, we think about them as being strong in terms of strategic fit, and also acquired them at defendable multiples. Just as a reminder, what is it that we're really looking for here? Well, first, we're looking for product portfolio expansion opportunities, adding capabilities to our existing specialty pharma, vet services, or med tech businesses to expand the portfolio and be a more attractive partner to our customers. We are also looking at opportunities for geographic expansion, either into a new territory that has an attractive marketplace that we don't operate in, or doubling down in geographies where we already exist, but have higher and better coverage there. We're also looking for new therapy areas, particularly in med tech and specialty pharma, to further expand and branch into new areas there. So when we look at operational improvements, we've acquired over 50 companies since the company was founded. And we have great opportunities here to continue to operationally be much more lean. We're introducing lean principles in different parts of the business. We're doing that with a mindset of continuous improvement. And that's going to be a long-term plan play, and it's going to be a grind. And then lastly, it's important for us to attract, develop, and retain top talent in this industry. And we're doing that by creating the best place to work and make sure it's something that you are attracted to come and work for Vivian, and we can do great things together. With that, I want to thank you for joining our call at this segment so far, and I'd like to open up for the Q&A at this point. Thank you very much.