Swedencare AB (publ)
STO:SECARE
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
39.82
67.5346
|
Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Hi, and welcome to the presentation of Swedencare's Q1 report led by our CEO, Hakan Lagerberg; and CFO, Jenny Graflind. We will have a Q&A session after the presentation. So please raise your hand if you have any questions, and we will answer them in the end.
Over to you, Jenny and Hakan.
Thank you very much, Emma. Welcome everybody here together with Jenny Graflind. Thank you all for listening in. We are going to present the Q1 highlights. But first of all, I would like to start off saying that we have had a successful AGM today, and we'd like to thank all of the shareholders of Sweden Care for the confidence from the Board to keep on steering the company. And I would also like to inform you all that Heinz-Juergen Bertram, the CEO of Symrise is a new member to the board. All the other board members are the same.
Okay. Let's go over to Q1. A sales record, first time over SEK 500 million, SEK 523 million in sales. And also worth mentioning is that we had a record month in March, first time over SEK 200 million in sales. So we are trending in the right direction. We have seen some improvements that hit us last year in 2022 with the inventories being very high from several of our largest customers, it has started to improve. And this Q1, I would say that more or less 2 to 3 group companies affected, but we see it's a really good trend and I'm sure that Q2 will absolutely be the last quarter we see any effects of this.
The organic growth, just double digit, 10%. We are happy with that -- with a shift in the trend. And we expect continued good year when it comes to organic growth. And as you -- all of you probably know is that the organic growth now is very similar to our sales numbers since we don't have that much inorganic companies in the Group anymore. A bit lower margins and strong cash flow for the quarter, and Jenny will go through that more in detail.
We are -- we have several new external internal cohort projects that starts to deliver. We see many synergy projects starting to bear fruit. And also when it comes from the sales side, we are introducing a lot of new products into the different brands coming from good companies. So that's really a key feature for 2023 is that we will continue to broaden the product offering in several of our group companies, the trademarks. We did send out a press release in March about the new partnership with Patterson for our Animal Pharmaceuticals Brand, a veterinarian focused brand that's been sold in the veterinary channel for many years in the U.S. And Patterson has always been our largest customer for this brand.
But now we have the come to agreement of the new sort of corporation that they have acquired exclusivity for the Animal Pharm brand, and that will mean a more focused approach from Patterson sales force and also expanded capacity. A lot more of the sales force will focus on this brand. So we are very excited about this, and it will be exciting to follow the sales numbers for this brand. The quarter has also been focused on lots of ESG, let's say, finalization for many policy documents and setting out a strategy for the Group. And now we have entered a new phase where we will -- we have started to identify some targets for our sustainability work, and that will be presented over the year. And you can read more about this in our quarterly report. Going over to some numbers.
Yes. So our net sales increased from SEK 377 million, which we had in Q1 '22 with 39% to SEK 523 million. In our sales numbers, we have 1 month of organic Inno vet and 2 months organic of NaturVet. In our operational EBITDA went from SEK 94.7 million last year to SEK 107.4 million. So that's an increase of 13%, even though our EBITDA margin decreased a little bit. Some other KPIs. So first of all, revenues with SEK 0.5 billion, which is fantastic. I think to -- for the first time, our change in revenue was 39%. This is 80% acquired revenue, 11% currency impact and 10% organic growth.
When it comes to the split of the organic growth into volume and price, NaturVet did not have any price increases in 2023, and there was only a small portion of various price increases that impacted Q1. So -- and these 2 entities are, of course, the largest ones in our Group. The rest of the entities had about maybe 2% or 3% increase. So I would say that the vast majority of the organic growth is definitely volume. When it comes to operational gross margin, it's a little bit lower than our average and also, obviously, lower than our coming quarters. And this is due to a couple of things.
First of all, we had less development work this quarter, and development work has a significantly higher margin than other groups. We also had a ramp-up of production at 2 of our facilities that impact the gross margin, and there was more freight cost. And also, we had in Q1 several product launches where we give higher discounts to new customers, and this also has the impact on margin.
In addition to this, the price adjustment, which I just mentioned, will have a full effect in Q2. When it comes to operational EBITDA and expenses, it was quite an expe -- intensive quarter. There's a lot of explosion over the world, which impacted the external cost. We also have more marketing costs, which are connected to the Amazon sales, which have also increased during the quarter. But in total, the external expenses are still at 90% of our total revenues, so that's in line with the previous periods. When it comes to cash, we had cash of SEK 232.2 million when we closed the quarter.
For the second quarter in a row, we have had a positive change in working capital, which has then, of course, a positive impact. This quarter, it was EUR 16 million. And this is despite that we have an increase in our revenue. During the quarter, we have invested SEK 11 million in CapEx. That's about 2% of our total revenue. And during the quarter, we also had a cash outflow of SEK 92 million to the seller of NaturVet, which we had discussed in the previous report.
So going through the different regions. North America being 81% of our total revenue, and of course, the most important region where we are, had a growth of 38% in sales. As I said previously, the bigger retailers are picking up month by month, so we do expect a stronger year. Vetio South, as you all know, had a tough quarter last quarter, but they bounced back really good.
And as I mentioned in the Q4 call, I did expect a 30% improvement in sales compared to Q4, and they delivered that. Low profitability due to the price increases being pushed and also improvement in the organization and run through. So they have really delivered on our plan that represented early Q1 and expected even stronger Q2 definitely, when it comes to profitability. So all let's say, really impressed by the team there and the changes they've made. So -- and the pipeline when it comes to customers, both internal and external, really strong for Vetio South.
Online being the star of the quarter for many of our brands, our online-only brand, Pet MD, had a fantastic quarter once again. Over 30% growth compared to 2022 and really just outperforming many of the competitors. So we have an excellent team working there. And we do think that this will continue over the year. ProDen PlaqueOff, yes, as we did last year, good quarters at the quarter, this was even better, both due to export sales, and I will come back to that. But also in North America, 64% just for North America, fantastic.
It's the new Soft Chews being launched. It's the original powder product that keeps on taking market share. So just continuing the growth of one of the strongest brands in the market there, definitely. NaturVet starting to come back from a bit lower growth rates due to the inventory challenges. So really, good trends for NaturVet, both online and also in the retail channel. So the team has done a fantastic job there as well. And as you know, as we presented previously, we have a big launch for the NaturVet brand, a completely new section that we present the scope of all that is a supplement in a new form that will be introduced in all of the big retailers and online and pet retail all over.
We presented it at Global Pet Expo in March and starting to deliver out to the distributors and retailers this month. So it will be exciting to see. We are also continuing to make full use of the NaturVet, the sales reps for the back of expansion and we are also introducing a dermal line under the NaturVet brand that's been released, I think, today or was yesterday on Amazon, and it will be really exciting to see that as well. Two big expos, VMX on the veterinary side and Global Pet on pet retail. Important shows start of the year, and we had really good meetings all over there. As I also mentioned previously, lots of intragroup synergies and sales project, and we're starting to see good results there, and that will continue over the year. Europe, 16% growth.
Yes, 34% growth.
Sorry, 34% growth and 60% of total revenue. So a strong quarter for Europe, even though one of our largest entities Nutravet had their, let's say, last challenge when it comes to inventory trimming in Q1, Q1 last year, they had a fantastic order from the biggest customer, and that affected this quarter. But from now on, I expect really strong growth also from Nutravet. And the Nutravet ordinary sales, including the newly started B2C website has had a really good growth in the quarter as well.
Fastest growth, Swedencare U.K. with predominantly ProDen PlaqueOff sales, 50% growth compared to Q1 2022. So fantastic quarter and record quarter definitely. And Nordic is also performing really well, a bit slower in Southern Europe, but that was expected due to strong Southern Europe ending of the year. So it will pick up in Q2. Looking at InnoVet, our Italian company, their sales in the Italian market, really strong 8% growth in the quarter in flat Italian market. We get really good statistics for the Italian market and the market is really flat or even a bit in decline.
So 8% growth is really strong, strong quarter. CVP, renamed to Vetio U.K. We acquired them in November last year and for their expertise in Soft Chews manufacturing and lots of starting up there, both external and internal customers. So from Q2, we are really picking up the volumes there, and that will continue all over the year. Lots of exposure in Europe, Crufts, the biggest dog show in the world, where we also had direct sales to consumers for both NutraVet and for ProDen PlaqueOff. So exciting to meet the end consumers. Ezy AVA, a veterinary show and [indiscernible] in Spain is [indiscernible] France and Expo.
So also overall or, I would say, Europe, there's been lots of shows. We had a successful European group meeting, gathering all of the group management for Europe visiting in the InnoVet site and just having lots of business development meetings focusing on what we can do in Europe together as a Group. So lots of good things came out of that. And as some of you may have seen on LinkedIn, we are looking for a new European -- it's a completely new position. European Chief Commercial Officer or Chief Operating Officer, depending on the background of this person, and that will be a really good position for continuing the growth in the European region.
Looking at the export markets, 3% of total revenue, but a fantastic growth, 78%. And it was basically all over, as you know, ProDen PlaqueOff is a really export oriented brand and has always been so and have had lots of success all around the world, and that continues. And we have lots of other group companies starting to export more and more. NutraVet found 2 new markets in Israel and Thailand and the existing markets for many of our brands had growth. So the most important export markets in the quarter was definitely South Korea, the biggest, and China picking up again, and that's really relieved to see that now after the COVID lockdowns that the Chinese market is back on track, and I expect the coming years, China to once again be a very important export market for us.
Japan, Australia and South America, it's good to notice, not only Brazil as it's been previously. We now have Chile and Uruguay and lots of things happening there and starting to look at some other in Central America as well. Mexico is about to start over the year. And then many of the smaller markets in Europe has also in good export orders. Outlook for 2023 is really good with both new and growing partners and opening up new markets.
I think this picture speaks for sales. We continue to have a very nice trend, both when it comes to revenue, EBITDA and operational EBITDA. And of course, now as we have not acquired a company, our operational EBITDA same thing with organic growth and the net revenue that change will be not so big anymore when it comes to operational and up.
Yes. Looking ahead, no change basically since the strategy we presented last quarter. So we're really growth focused this year along with the profitability improvements that will come. And we will use a substantial part of the cash flow that we will have to lowering our debt level.
That's a priority for us. So that will continue to -- we will continue to amortize every quarter going forward. We have a really strong pipeline for new products and also new collaborations with different partners all over the world. We continue to move from external partners to internal when it comes to suppliers. We focus a lot on of manufacturing -- all of our products ourselves. It will never be 100%, but we are back on reaching perhaps 80%, 85% this year. So that's really, really -- in the really where we want to be. Product launches and development, all of those -- most of our group companies, not say all, but have exciting products to launch over the year, and it will be product launches every quarter going forward.
So we define relationship with major customers. That is a continuation as we presented Patterson. There will be other, not only, let's say, exclusive deals, but there will be more high-level collaborations, and we are a very interesting partner to work with. So we can offer a very wide array of products and the market has started to realize that. So looking forward to presenting more and more in-depth collaborations to the market. [indiscernible] and M&A opportunities, yes, that will continue. We are, as we've said, this year, not so focused on M&A.
It could be some smaller ones, but the focus right now is really taking advantage of the group that we've created to -- and fuel the growth from there. So there are lots of opportunities, both from a growth and synergy perspective, but also when it comes down to profitability, we have a big cost improvement project for North America, where we see lots of improvements that we are going to make over the year that will have a real effect on the bottom line. And that was about it. So now we're open for questions.
Yes. And our first question comes from Adela. Please go ahead.
Hello, everyone. A few questions from me. The first one relates to the decision to postpone price increases. Could you just explain your rationale behind that? And should we have seen price increases the effect of that in Q1. Is there any way to gauge what the profitability would have looked like in Q1?
I think when it comes to the price increases that was pushed in -- that has most effect was Vetio South. We said that we were increasing prices the most for in 2023 for that those customers due to primarily price increases for ingredients. And that is a price increase of roughly 9%. But the -- since we have the manufacturing issues in Q4 we had to postpone lots of projects. And since the postponement of those projects were pushed into Q1, we couldn't apply the new prices for projects that were supposed to be delivered in Q1.
So that's the reason for postponing it to Q2. So now the backlog is over, so it will have immediate effect in Q2. When it comes to NaturVet, it was that last year, there were 2 price increases, one in January, one in 1st of July so that's why we thought that we didn't want to increase price for NaturVet in January So the other brands, as Jenny said, we have increased prices 2% to 3% to match salary increases and some other cost increases.
Got it. So does that mean that for the products that were postponed, have you been able to retroactively increase prices? Or will the price increases that take place from here on out affect new projects within Vetio South?
Yes. It's from now. As we deliver -- the projects we invoiced and delivered in Q1. They were at low prices. And so now it's -- the manufacturing from basically first of April.
Got it. And then my second question relates to the -- like how should we view organic growth going forward? I know your target is 20%. Is that reasonable in 2023 or I guess higher than what you achieved in Q1, but what would be your full year outlook on the growth?
I've learned not to say too detailed outlook since last year. So -- but I would say my expectation is that it will be stronger than Q1 for full year, but I wouldn't go a certain number, but I expect stronger.
Okay. I appreciate that. And then just lastly, you briefly mentioned that Symrise's CEO have joined your Board. Could you give any indication of what you expect Symrise agenda to be with only Swedencare?
No, it's difficult for me to say, but we appreciate since they are the largest shareholder. We really appreciate that the CEO takes time to join our Board. It's a big company, and there are lots of assignments. So I think it will be good to get in Heinz-Juergen on to the Board to really discuss synergies and business opportunities for us to collaborate with them.
And see what we can get out of the, let's say, the position that they have in Swedencare. So their strategy, you have to ask them.
Thus far, there's been no collaboration between the 2 companies, right?
Yes, there are some. We were a customer there for some ingredients, prior to them joining and there has been some, let's say, some smaller projects, but no major ones that we have presented. So I think there will be more, and we have identified some areas where there's opportunities.
Your next question comes from Rickard. Okay. Then we'll take the next one. And it comes from Christian. Please go ahead.
I hope you can hear me.
Yes.
Yes. Okay. It would be helpful if you could elaborate on the gross margin. You had some items that had adverse impact in the first quarter like higher freight costs and sales campaigns. So excluding for these items, what would the underlying gross margin have been?
Well, I haven't done removing all the, let's say, different things that impact the gross margin. But I will say half of the decrease compared to where we want to be around 58%. And is the fact that we had lower development projects this quarter.
Yes. And when it's development projects, that's basically Vetio North that has -- they had a strong growth in sales. But as Jenny said, more start-up of manufacturing and that is even lower than it should be when we're starting our projects. So that had a big effect that we had -- a large increase in sales, but with a low margin.
So I would say that's the biggest impact to the gross margin, the lower gross margin. The second thing that impacted the most -- successful that one would be a production ramp up. When there is new products, it takes a little bit more cost and then you have lower gross margin.
And your next question comes from Henry.
Can you hear me?
Yes?
Fantastic. I actually asked the same questions online. So just ignore the online questions. It concerns the balance sheet. And your total debt at the moment, if I recall correctly, it's about SEK 1.65 billion. The way -- in Q1, you didn't generate positive working capital because you have that SEK 95 million payback to one of the previous shareholders. Looking forward, do you see the cash flow generation being sufficiently strong to not only pay the interest, but also to pay down the debt without the need for a capital increase?
And in this context, and this is one of my fears is that you're going to find it more difficult going forward, managing working capital for the very simple reason that higher interest rates mean that the big retail clients who themselves have negative working capital will be inclined to delay their payment days or increase their payment days. So I'm just wondering if you have, a, seen any changes in client behavior with regards to payment terms? And the second question is, do you see yourselves managing to pay down debt without needing to revert to a further capital increase?
So the first question about, if we have seen an impact from our customers, if they are trying to delay payments, we have not seen that yet. I think we have a very good track record of collecting customer. We have almost 0 bad debt, et cetera. So far, we haven't seen anything of that. When it comes to the second question, if we can generate enough cash, we can absolutely generate enough cash to both pay the interest payments and also to amortize down the debt.
I think I communicated that last time that I expect close to SEK 50 million each quarter to be amortized, not every quarter, but at least on an average, it should be that level. We do not need to raise capital to pay down debt. We should be able to do that with our own cash generation.
So just to summarize, that's obviously very good news. And we -- I had a conference call with you about 6 weeks ago. So that's good to hear. But I'm just trying to understand, are there any other further one-off payments, which you have to make, which will impact? Because from what you're saying Q2 will be the first quarter where you will actually be in a position to pay down debt. Is that correct?
No. Actually, we did make repayment in -- for example, in Q1, we did pay SEK 92 million, and I did not increase my debt. So that was the SEK 92 million that we paid has been generated by our own cash in Q1. In Q2, we have the dividend to be paid. So that's one thing that's going to, let's say, decrease our own cash amortization. But yes, that we should be able to decrease from now.
Yes. We do not have any future big payments to make, which are, let's say, nonoperating payments.
Do you think you should still be paying a dividend? Or should you not just spend it for year?
No, we should not suspend it. It's been decided today on the AGM to pay a dividend of NOK 0.22 per share. It's about a total of [ SEK 34 million ]. So it's a lot of money, but it's not compared to what we can generate ourselves. We think that that's -- we can both do that and also to pay down our debt.
That concludes our Q&A session. So I'll hand the word back to you, Jenny and Hakan for any closing comments.
Thank you so much for listening in, and we look forward to seeing you again in 3 months or so and report the Q2 and lots of activities going on here, so it will be exciting to tell you.
Great. Thanks.