Swedencare AB (publ) (SECARE) Earnings Call Transcript & Summary

Welcome to the presentation of Swedencare's Q1 report led by our CEO, Hakan Lagerberg, and CFO, Jenny Graflind. And we are pleased to have NaturVet's CEO, Geoff Granger, joining us with the 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 and we will answer them in the end. Over to you, Jenny and Hakan.

Thank you so much, Emma. Yes, welcome to you all. Thank you for your interest. It's not only the Q1 report today. We also have our AGM here in Malmo at 1:00 today. So I'm happy to say that I will meet some of our precious shareholders today. But let's start with the Q1 '25 highlights. A solid quarter, 7% growth, 5% organic, and 19.4% EBITDA, operational EBITDA, and strong cash flow. Growth a bit softer than where we want to be, but I mentioned that in the Q4 report that we expected a softer Q1 in preparation for lots of things that will happen, and it was like that. And Jenny will explain the lower EBITDA. But we expect us to keep on improving over the year to come. Lots of talks and questions about the new tariffs from the U.S. and how that will impact Swedencare. And as many of you know, we have had a strategy of investing both in manufacturing and sales forces locally or on every continent. So we ship very few products over the Atlantic, and so we are not impacted basically at all. We ship our, let's say, raw material for ProDen PlaqueOff, we ship that from Europe. But still that's a high, high margin product, so the effect on our margin is more or less negligible. But of course, going forward, you never know what happens and how it will affect the economy as a whole. But as I wrote in my comments in the report, the pet industry has been a very solid industry since 1945 with the growth every year. So we have had lots of crises over those 80 years, basically. So it is a sturdy industry and we expect it to continue and we haven't seen any signs of weakness really due to that. Furthermore, launch of NaturVet's new brand design at Global Pet, the big event for us and we invested a lot in that. And I won't talk a lot about that, because, as you heard, Geoff Granger is joining us today and he will be talking and showing some exciting sights and pictures about that. And he will also convey the first in-store launch in the Big Box retail that we have been talking about and preparing for a year, basically. So we're very happy about that, and that will take place in Q2. We had a sneak and a small launch in Q1, but the big one is coming now in Q2. We make a biannual employee survey, and we're happy to say that we've been -- we had excellent results. 2 years ago, we had 41 in the eNPS score then, and over 20 is actually deemed as a good result. But we managed to improve from 41 to 44. And I'm especially happy since we increased the response rates a lot from just over 60% to over 80% this year. So I'm really happy about both, of course, getting a higher response rate, but managed to improve the eNPS score is really great. And I know, I mean, all of the group companies have been working a lot with these questions to improve, and also Jen and I from leadership have been working a lot to be more transparent and informative to all of the group companies and employees. So really happy with that. And also proud to say that our 2024 annual report was completely in-house produced. We have a great team for that. And basically, adding those tasks to do the normal task. So I was really impressed by the work that we performed internally. And then some really exciting news when it comes to acquisitions. They both took place now, in Q2. But we announced the acquisition and the signing of U.K. Summit Vet, and we have also just concluded the takeover of the seller account and operations for NaturVet. As you know, that was what was supposed to happen in the beginning of next year, but we managed to come to an agreement to take it over prior. Yes. So I will explain a bit about Summit Vet. We're going into a new type of business where we have not been present. It's called Animal Health Specials company, or in the US, it's more known under the name Compounding Pharmacy. So it's actually pharmaceutical products that are compounded and made due to, let's say, orders from veterinarians. It's a special pharmacy. So it's not drugs that are sold under a label. It's especially put together products that there is a demand for. Summit is working on a batch size, and there's only one other company doing that in the U.K. as well. Otherwise, it's pharmacies that make these type of products one by one, and that's very costly, of course. If you make it batch sized and have the demand for it, it becomes very financially good operations. And in 2024, Summit had a sales of GBP 7.3 million and a EBITDA of GBP 2.7 million, 37% margin. So good and over our target. So that's a great addition. And the purchase price was GBP 30 million and a 2-year earn out of maximum GBP 15 million primarily based on growth. And we do see lots of potential for growth for Summit Vet. Looking at the setup of the company. Culturally, they're very aligned with us, and that's really why we've managed to strike this deal, it's the setup that we have and the values that we have in our group that align very well with Summit Vet. The main focus for Summit Vet as of today and the bulk of the sales are directed to products for pets, dogs and cats, and that they have some equine products, but there -- and there's opportunities specifically in the equine sector for new and unique products to the market. Other synergies between us and them, since we haven't been active in this, is, of course, Vetio North. You know that's our CDMO business in Canada, where we have lots of experience in developing and manufacturing pharmaceutical products. And also I've mentioned nutravet here, is more based on that. We have a sales force in nutravet working directly to veterinarian clinics, and that is something that Summit Vet also has. And I don't see immediately that we will do -- they will continue to work separately, but from references and experience, we can have lots of knowledge transfer between the 2 organizations. And we have really kicked off in a fast pace. The most important, immediate project that we've started is the transfer and setup of Vetio's patented Soft Chew technology. There is a demand and opening for having Summit Vet's products or new products in the format of Soft Chews instead. So we really kicked that off from start. Then coming to the Amazon account, that's really a setup that we've been working with a partner for NaturVet's Amazon sales for many years, 5 years, I think. So prior to -- at least 5 years prior to us acquiring NaturVet. And that agreement was set to expire in December 31, 2021 -- '25. And as some of you may recall, is that we had some negotiations of taking back the sales last year. But at that point of time, we were not really negotiating about taking over the account. We were more negotiating of ending our agreement prior to 2026 or end of 2025. And that didn't work out due to just coming to terms of how to compensate our partner. But we reopened the negotiations this year, and actually based on that, we are taking over their legacy accounts, selling the products. They do sell some other products there, but the majority of the sales was or is NaturVet products. And we were not expecting our partner to be interested in selling, but we have had talks this year and managed to strike a very good agreement for us. And why we are able to strike this deal is really that we have an organization within the PetMD structure being able to take it over. So we basically paid the annualized additional profit due to -- and that profit is on a good margin, not diluting our group profitability. And the reason for that is really that we can add it into the PetMD team, handling lots of brands already. So we, as of yesterday, took over the account and the stock. I mean, it's good from the perspective that we take it over earlier and that we basically pay the same price as the profit. But the main goal for us and really that could have affected us very negatively is really taking over the account as is, because if we would have taken it over in 1st of January, we would have had a situation of transferring all of the sales to a completely new account, and there's a risk of losing -- subscribing the same customers. And that's a part of the business that basically a majority of the sales are on Amazon. So even though the processes for that have improved in the Amazon setup, there's always a risk. And definitely, when creating a new account, we would be hit by higher marketing costs at least for a quarter, then coming back to the more preferential rates due to the size of the business. So it's a fantastic agreement for us, and it's been the team working from NaturVet and from PetMD, and also the team from Swedencare North America have been working a lot with this together with me. So I'm really happy to announce this deal and looking forward to handling it ourselves. So Jenny, some financial comments from you.

Yes. So revenue for this quarter amounted to SEK 641 million. Like Hakan said, 7% growth, 5% was organic, 2% was currency. And of course, we have some acquired growth, but it was rounded down to 0. And the acquired growth mainly came from MedVant, a Canadian business that we acquired in August of last year. Our operating gross margin is stable. It's 58.1% this quarter compared to 57.9%. So I would say very stable within a percentage. The internal cost has been increasing. As we mentioned before, with the growth of Amazon, we have costs that are directly linked to sales. So it would automatically increase. However, in addition to that, like Hakan mentioned about the expos, we have invested more money this year compared to last year. This year it was about SEK 7 million compared to SEK 3 million last year. Our personnel cost has also increased as a percentage of sales in Q1 compared to last year, partly was due to this cautious sales growth that we had in the quarter, but it was also affected by overtime. We have written in the report that, for example, NaturVet had slow first 2 months of the quarter and then a record month in March. So that, of course, impacted overtime. And then there's also additional benefit costs in Q1 compared to last year. However, the organization is now structured for the expected revenue increase in the coming quarters. So I expect this ratio to come down again. As a result, EBITDA is reaching SEK 124.5 million this quarter. It's a decrease of 10% compared to Q1 last year, and it's a margin of 19.4%. Interest expense on loan has decreased. In Q1 last year it was SEK 20 million and this quarter it was SEK 12 million. So this is both due to lower interest rates and, of course, a lower debt level that we have. We continue to decrease our net debt to EBITDA. It's now at 2.0 compared to 2.4 1 year ago. And this quarter, we have increased our loans with a net of SEK 300 million. We took out SEK 325 million right at the end of the quarter because we prepared for the acquisition of Summit, which we closed on April 1. So that explains the high cash level we had at the quarter end. However, we have done a repayment, and we have also completed a smaller acquisition of Pack Approved during the quarter, and that impacted cash with about SEK 24 million. With the acquisition of Summit, we expect this net debt-to-EBITDA ratio to increase some. Everything else being the same, I would expect it to be at 2.5. Our operating cash flow was really strong for the quarter, SEK 96.7 million, cash conversion of 78%, and that is despite the fact that we have higher inventory levels and, like I said, with a record March for NaturVet, for example. And we also have a higher level of accounts receivable after a very strong March. CapEx remains less than 2% of sales. And this one looks a little bit different with the new year, historical and trend of revenue and EBITDA since 2020. And now this shows the annual increase and also the trend of the Q1. Product and brand split. Nutraceuticals, which you know is our largest category, it's about 50% of the revenue, it increased with 3%, and this is mainly connected with NaturVet then, who sells the products in this category. Pharma had a small decrease, and this is explained partly by the planned maintenance work that we did. We put the production on pause for a couple of weeks at the 2 facilities. Dental is always nice to see. It mainly includes the ProDen PlaqueOff and a few other dental products. It grew with 51% this quarter, and this category is now at 21% of the group's total revenue. The main contributors in this is the powder, the original one, and also the Soft Chews, that is one of the latest launches. The Treat product group is still growing very strong, 90%. Even though it's from small levels, it's nice to see. This is mainly Riley's, one of our new acquisitions, and also the newest acquisition -- not the newest one, because that's Summit. Pack Approved is also included in this product group. If we look on the right-hand side, where we have the brands, I can mention Innovet, which have had a fantastic 2024. They had a 15% decline compared to Q1 last year, and this is due to they had abnormally high orders from the largest customer in Q1 last year. On a positive note, nutravet, which is mainly selling on the veterinary market in the U.K., is back on double-digit growth after a weak 2024. So that's nice to see. And before we move over to the next slide, I will just -- which Hakan is going to talk about, I just want to mention -- I'll just move to there and just tell you. I want to explain that in the past, we have divided the group's net revenue by geographical market. So that will be North America, Europe and rest of the world. From this report, we will instead report our net sales in line with our segments, which are North America, Europe and production. So note that the segments also have sales in other geographical markets, but more details about that you can find in the report.

Thank you, Jenny. Yes, some highlights from North America, SEK 414 million, 5% growth and 65% of our total revenue. Veterinary, solid growth for all customers, except for our 2 big distributors involved in renegotiating our exclusive agreements. As some of you may know, we have exclusive agreements with MWI for the Stratford brand and with Patterson for the Animal Pharma brand. And we have not been fully satisfied with the setup of these agreements. So we have been renegotiating those in Q1 and will take effect in -- from Q2 with a different setup that will both, let's say, improve our volumes due to inventory agreements and also some new, let's say, sales approaches and adding new products. So happy to say that we have come to new and good agreements, and I expect both of those to show growth in rest of 2025 and onwards. Pet Retail, low-digit growth, except for ProDen PlaqueOff, stronger growth expected across the board in Q2. And as you know, Pet Retail is primarily the NaturVet's brand. And of our existing customers making lots of resets in Q2 and onwards, so -- and also, of course, awaiting the new design and labels for NaturVet. So more to come on that. Online, a bit soft start of the quarter, both due to the -- some reorganizations we had when it comes to warehousing and inventory, and also some product and product launches for PetMD. But it was really a strong last half of the quarter and started off really well in Q2 as well. So more to come in the year. And we have introduced a completely new product that we have started off with one version of it, Finger wipes, and it immediately got the best seller badge, and that's really, really impressive and not very common. So looking forward to introducing 4 or 5 more SKUs in the Finger wipes version, and that will become an important product or product assortment for us. Main channels, Amazon, Chewy and TikTok, no difference there. Amazon keeps on growing for us a bit faster than the others, but doing well on all 3 channels. Europe continue as it's been last 3, 4 quarters, really good growth in Europe, 14%. The strongest country is U.K., both vet and online, as Jenny mentioned. Really happy for the growth in the veterinary sector with nutravet. Nordics, primarily online, but also, of course, affecting Pet Retail when we do make campaigns online. So veterinary has been strong in the Nordics and U.K., as I said. A bit slower in Southern Europe. I mean, I would say that Greece is solid. Spain and France, a bit weaker. But there, we have new sales agreements with partners in both Spain and France going forward. So I expect more things to happen this year. And Italy, as Jenny explained, it was a special setup. Basically, all customers grew, except one, the biggest customer, and there were some reasons, that they ordered a lot in Q1 last year. So Italy will come back to growth in Q2. A look at Pet Retail, new agreement with the biggest chain in Spain, really happy for that. And also, as I said, the online campaigns we've been making both on platforms but also utilizing TikTok and Instagram and influencers has really had a strong effect on the Nordic sales. So we are launching that now, I think, this month or early next in U.K., and France is next in line for that. So excited to see the results of that, if we can get the same type of results in other markets. Amazon U.K., really, really strong, both due to the fact that they've been doing a good job, but also that the comps were low comparing Q1 last year, because that was a transition year for -- a quarter for us when it comes to taking back the sales ourselves instead of using the vendor setup on Amazon. And we are in the process of making that same switch for the other European markets. So that will happen, hopefully, in the second half in '25. Zooplus collaboration keeps on growing, come off to a good start, and they have increased their expectation -- expected volumes for the year. So very happy with that both when it comes to ProDen PlaqueOff, but also NaturVet by Swedencare is starting to pick up a lot. So happy with that. And then also all of our online marketing has had an effect of our own D2C webshops. The new -- not new, but the production segment, so now this includes both our production, manufacturing capabilities in the U.S. and in Europe, has had an increase in customer reaching out with RFPs. If it's due to the fact that all of these trade wars and uncertainties -- not all of them I don't think so, but definitely for some, we have actually had some Canadian brands reaching out to the U.K., not customers of ours, but that have bought products from the U.S. wanting to buy from Europe instead. And also have had -- we've had some U.S. customers that have bought from outside of U.S. asking for RFPs to our U.S. facilities. So there's definitely an effect of that. Let's see how it pans out. But we have a strong pipeline and on both sides of the pond. We had some planned manufacturing stops in Vetio North and South, longer in Vetio North. So now we have set up -- are in the process of setting up a more efficient production line. And we also are in the phase of expanding into sterile liquids, a feature we have not had in Vetio North before, but we have had increased customer demand for that. So we are in the process of setting up that, and expect to have projects manufactured in those lines second half of this year. We have also continued to increase the capacity in U.K. and Ireland due to demand, and that will continue. But we keep it at, let's say, fairly low CapEx spend. So we don't expect it to be -- have an effect, to be higher than what we had indicated that we will be around 2% to 3% for the year. We have just signed an agreement for an ingredient called Mesoporosil, a unique silica-based product for bone strength and mobility. And we have an exclusivity for the pet sector. So we will both be manufacturing products for our brands using this ingredient, but also for external customers, and also, let's say, selling the actual ingredient to outside as well. And the priorities for 2025 has not changed since last time. So we will continue our strong growth trajectory, focusing on present main markets and geographic expansion into Asia and South America. I will be traveling with my Export Director in a couple of weeks to Hong Kong and China and looking for expansions there. Of course, a bit special situation right now since we have been discussing some of our U.S. brands, and that's a special setup right now. So now we will focus the discussions on our European brands or European-manufactured products when it comes to China, of course. But long term, we will -- hopefully, it will pan out good. So we will be introducing some of our U.S. brands into China as well. Enhance operational efficiencies, particularly in production and supply chain optimization. That's a continuous project for lots of our group companies, and we also see some opportunities. We will continue the collaboration between the Tampa group companies, and we have more synergies and utilizing the organizations for all the group companies from different individual ones. Strengthening our online platforms and DTC sales. Of course, online is our biggest channel, still around 40%, and the other 2, 30%, 30%. So I expect online to grow faster this year than the others. And then, as we have just informed you about, to pursue new acquisitions that align with our vision with premium science-based and pet health products. But for the near future, we will definitely focus on taking good care of Summit Vet and also the new big operations that we have introduced into the PetMD organization with the NaturVet Amazon sales. So I expect the coming months to definitely be more focused on working with that instead of introducing new acquisitions, and that will probably not happen this side of half year. And with that, the most exciting presentation of this day, I introduce Geoff Granger to you. Please fire away.

All right. Good morning, and thank you for giving me this opportunity to provide you with an update on our NaturVet growth journey. It has been exactly a year since I last had the opportunity to speak to all of you, and at that time, my focus was on the people and process investments that we are on the verge of executing. And well, we've made all those changes and then some. And as I'll share in a moment, we continue to make transformational changes as we continue to set the table for meaningful and sustained growth. And as I'll cover in a moment, the growth that we committed to is beginning to transpire, again, with a record Q1 and our biggest volume month ever in March. If we can go to that. I'll go to the next slide here. All right. Actually, real quick before we get to that one. Let's go -- yes. So again, 2024 was a challenging year, a transitional year, but in that time, we've made transformational changes, and we bucketed our 2024 achievements across 3 key segments: human capital. Nothing else downstream matters unless we have the best people in place and a clear plan for retaining them. Financial capital. This is all about implementing tools and processes that will make us more efficient, and pivoting investments to make us more competitive. And intellectual capital. This is an extension of financial capital, with the level of category data, insights and recommendations that we are now able to share with new and established retail partners, truly setting us apart from our competition. So you can stay on that slide there. All right. So double-clicking into human capital. We completely transformed our sales and marketing organizations, bringing on a pet health and wellness-based veteran as our first Chief Commercial Officer, and subsequently recruiting a handful of industry leaders with over 200 years of cumulative experience across sales leadership, insights and analytics management, brand management, private label management, supply chain management, trade and customer marketing and media planning. And they've all been with the companies that we see there, that we're all very familiar with those companies. So a lot of experience with great companies. And this included bringing on a true marketer into our organization into the newly created role of Executive Director of Marketing. We also created a new Executive Director of Product Development role. And we filled a big gap in our operations leadership with the addition of our first Chief Operating Officer. And lastly -- and I'd say this is really the most important thing, because if we don't do this right, we can't do the rest right. And lastly, we leveraged the feedback from the 2023 Swedencare employee satisfaction survey, along with a number of informal internal assessments, to map out a plan for transforming our culture. And our results from the most recent February company survey illustrates the significant progress that we've made over the last 18 months, generating a record high employee Net Promoter Score that I will cover in a moment. If we go to the next slide, so financial capital. So we've optimized how we're leveraging our financial capital through the implementation of new tools and processes that improve efficiency, generate cost savings and, most importantly, allow us to invest in mission-critical initiatives. New tools like Expensify, DocLink and Acumatica provide enhanced oversight and more efficient management of expenses, documents and inventory. And we severed ties with duplicative and underperforming third-party resources to reinvest that spend into new third-party partnerships to acquire and leverage essential data and analytics. And by optimizing where we are investing, this has allowed us to begin to exponentially increase our investment in social, digital and influencer media as we push to drive meaningful and sustained growth. Go to the next slide, so intellectual capital. So lastly, it was imperative that we were able to identify and leverage an immediate key differentiator that would allow us to secure new business and expand with existing accounts. That differentiator thought leadership, leveraging data and analytics to help retailers make informed decisions for a complicated and underpenetrated category and positioning ourselves as a trusted adviser in a central resource. I was on the retail side for managing the pet health and wellness business at Petco for over 6 years, and the level of guidance and insights and recommendation that we are able to provide was never available from our competition. So it is a major differentiator. So through our partnership with +1 Insights and our investment in premier data resources like Numerator and NielsenIQ, we've become the go-to resource for current and exhaustive assessment of the supplements market. And with the partnerships that we've secured with the Seurat Group and Zappi, we're able to dig deep into consumer behavior and preference, helping our retail partners make informed decisions, and ultimately, informing our own innovation initiatives as well. And along the way, we also established essential core disciplines that we simply didn't have before with our customers that drive credibility, financial predictability and overall efficiency, such as actually doing collaborative forecasting, annual business planning and having joint branded and private label engagements. So if we go to the next slide. So as I noted at the top of the presentation, the transformational changes that we've made over the past year are now driving improvement across multiple segments. I'll be covering the next wave of transformational changes in a moment, but I think it's important to note that even before our new rebrand kicks off and before massive account expansion, we are already seeing meaningful sales growth. We generated total Q1 of 2025 year-over-year growth. It was a record volume first quarter. We just happened to go up a really strong quarter last year after a very challenging third and fourth quarter, and are forecasting double-digit growth for Q2 and beyond. And March, again, was our highest volume single month ever for the company at almost $9.5 million in wholesale sales, plus up over 36% year-over-year. And as I noted earlier, we improved our employee Net Promoter Score by 20 points from 33 in July of 2023 to 53 in the most recent February 2025 company survey. A score of 50 or above is considered excellent, an excellent rating. It indicates that our hyper focus on our culture is paying off. And what makes this improvement even more impressive is our survey participation rate increased by over 20 points to 85% from 64% in 2023, meaning that even with more participation, our score still significantly increased. Traditionally, as the participation rate increases, the overall score actually is negatively impacted, but it was just the opposite for us. And our expanded marketing activation has increased our exposure in the market and delivered us multiple industry awards for product excellence just in the first quarter of this year, including recognition for Product of the Year as the top product in the pet health category. Specifically, our NaturVet advanced probiotics and enzymes was voted on by 40,000 American shoppers conducted in partnership with Kantar, which is a global leader in consumer insights. Product of the Year is the largest consumer voted awards program dedicated to highlighting groundbreaking products. Go to the next. So the transformation continues. As I noted earlier, the transformation continues into 2025 led by our new rebrand and significant account expansion. We're going to spend a little time on the rebrand right now. So if we go to the next slide. All right. So it became very clear to us last year that our packaging update from mid-2023 was not resonating with consumers or retailers, and we're not standing out in the crowd of emerging competitors within the pet supplement space. It came to a bit of a crossroads last year with both current and prospective retail partners expressing concern over our packaging. Using a major pet retailer where we have historically had a limited presence as an example, they were very, very clear that they were not going to expand us until we updated our packaging and our overall architecture. And ultimately, we discovered that the packaging change and the overall rebranding was the absolute table stakes to get into completely new accounts as well. So to drive meaningful sustained growth, we must aggressively drive consumer acquisition. In order to increase consumer acquisition, we need to expand points of distribution. In order to expand, we had to refresh our brand in a way that addresses retailer challenges, and, most importantly, clearly differentiates us in the eyes of the consumer. Next slide. All right. So the first thing we did was leverage the shopper insights data that we get from Seurat in order to better understand the barriers associated with our current packaging architecture. The key findings were: number one, we needed to get more credit for the NaturVet brand. It shows up extremely small in the current packaging. And when we surveyed consumers, they thought the brand was the name of the product. And we needed to make sure that product names clearly correspond to what the product actually does. So we are moving away from sub-brands or whimsical names. In most cases, we're protecting them where they matter. We need to ensure that species is called out more clearly. We needed to ensure that product benefit call-outs are clear and understandable. This next one, we needed a more prominent call-out of flavor. Flavor was a major important detail for the consumer, because it means if it's a flavor my pet likes, my pet is going to actually consume it, right? And you don't go anywhere if they're not going to consume it. And we will need to ensure that we have consistent architecture across all product category segments. So without further ado, we'll go to the next slide. Here's where we landed. After months of consumer and retailer feedback, as you can see here, we've addressed all the opportunities identified in the prior slide, with the most prominent being a strong call-out for the NaturVet brand. Now everything -- if we go to the next slide. Everything that we have done here has been rooted in 3 waves of comprehensive consumer insights. The first wave was an online study that focused on determining preference between the current and proposed designs. Key learning was that the new design was disproportionately favored, generating a score that historically indicates a positive sales outcome. Then we went to the second wave. Second wave consisted of in-person focus groups across existing and new to consumers that provided feedback on multiple packaging designs. This wave affirmed the packaging architecture, identified preferred claims and taglines, confirmed that we needed to maintain some legacy elements in the packaging, which was key, and inform the direction for lifestyle imagery, product shots and then flavor preference. The third wave, another online study, ultimately confirmed we were on the right track with the optimized design with significant buy-in from both current and new to consumers. Okay. Go to the next one. As I noted earlier, we had no choice but to make this change if we wanted to grow with our current partners and expand into these spaces. These are exact quotes from some key current and new partners -- I personally enjoy the concise nature of Walmart's response, very nicely done. But this was not just about getting consumers on board. This was about getting our current folks on board and our new prospective partners on board as well. If we go to the next slide. All right. So the official unveiling of our new look was at Global Pet Expo in late March, so just about a month ago, the premier pet trade show. Our focus for the event was, of course, our rebrand, but we also unveiled our 2 new product innovations and our new celebrity ambassador partnership with Mario Lopez and his wife Courtney. If any of you are familiar with how we've showed up in the past, this was a significantly elevated experience. I personally had 2 instances where competitors pulled me aside to express how impressed they were by our transformation. Overall, this shows a great success, further strengthening our partnerships with both existing and prospective retail partners. Next slide. So I'm not going to go into this in detail, but just one -- so how did we get credit for this, right? So I wanted to flash our 360-degree approach to driving consumer acquisition by leveraging shopper education, innovation, influencer marketing, public relations, customer marketing and digital and social media. The North Star of our acquisition strategy is what we call a step ahead, which is all about empowering pet parents to take a proactive approach to their pet's health and wellness by giving pet parents the knowledge and confidence to take action before issues arise. With clear guidance and expert-backed insights, we are making proactive pet health an easy and everyday choice. And activations will start to kick off in May, with a little more aggressive activation starting in July concurrent with the 2 Big Box launches that I'll touch on in a moment. All right. So moving on to customer engagement. So I'm going to cover new account expansion on the next slide, but I want to first reiterate that growth with existing accounts has been a key part of our journey as well. We've made significant progress with PetSmart, recently securing the very first in-line and off-shelf NaturVet supplements placement in approximately 1,500 stores. Up to this point, prior to Q1, we had not had NaturVet supplements placement in PetSmart, with a further expansion planned for the back half of the year. It's important to understand that, to date, our partnership with PetSmart has been limited and only included ProDen PlaqueOff and some of NaturVet yard products. So big strides. Obviously, account acquisition is a big one, but to be able to start to significantly grow in PetSmart is key. And our partnership with Petco remains strong, with them taking all of our new innovation for their annual reset that's actually happening this month in April. Moreover, Petco continues to expand our off-shelf presence, and they've also agreed to relaunch private label supplements with us, targeting a late 2025 initial ship. And our partnership with Tractor Supply is stronger than ever, executing a significant NaturVet private label expansion at their first quarter reset and including us in a new 2,200 location private label supplements in food combo and cap later this year. All right. What's new? I've got some nice logos on here. So as you can see here, we have made significant progress with Walmart, securing our first in-store off-shelf placement earlier this year, a modest entry into the retailer. But we are expanding into their in-line supplement set in the coming months, and we'll have more to share on that in the next 60 to 90 days. And now that we have on-site placement with both Costco and Sam's Club, that's prerequisite. So we are now in active dialogue around potential in-club placement opportunities, and I hope to have more to share there very soon as well. And we have also secured NaturVet in-store placement in a national drugstore chain. Again, this one is a little fresher, so I'm not -- we're not quite as sharing what this is, but we will be able to share more on this very soon. But it's lots of really good progress here with new accounts. And then if we go to the next slide. So now what's the potential value of doing all these things that we just walked through? Without showing the exact numbers, this visual illustrates the -- look at this as if this is a bar chart. The visual illustrates relative dollar volume of a single point of market share across current NaturVet consumers, that's the far left bar, the little thin bar. Consumers who are already purchasing pet supplements but are not purchasing NaturVet. So we call that new to brand, that's the middle bar. And then consumers who are regularly purchasing other core pet categories such as food and treats, but are not purchasing pet supplements. That's what we call new to category, and that's the biggest opportunity. So as you can see here, the upside is significant with only one share point of new-to-brand users equating to 23 points of current NaturVet users, and only one share point of new-to-category users equating to 76 points of current NaturVet users. So in conclusion, the rebranding effort in combination with our marketing activation and account expansion is anticipated again to drive double-digit growth in Q2 and beyond. And with that, I will thank all of you again for giving me the opportunity to provide you with an update on the NaturVet growth journey.

And the first one comes from [ Pica ].

So starting off, Hakan, you mentioned in the CEO letter that you will achieve double-digit organic growth by the end of '25. Does that mean for the full year '25 or just in Q4? Just how should we interpret the guidance here?

For the full year of '25.

Okay. Good. Also a little bit on EBITDA. So I think it's a fourth quarter in a row where EBITDA comes in double digit below consensus. Could you help us set expectations for the operating profit and sort of margins here, both for the year and in the coming quarters?

Well, like I said, there's been some extraordinary costs and some extra investments, and we have also set an organization that is now ready for growth. So I think with the double-digit growth that we are expecting in the coming quarters, this ratio will be more positive.

Okay. And previously, you mentioned EBITDA -- adjusted EBITDA margin of around 25% as a sort of a first target to reach. When do you think you will be able to reach that?

I don't know a quarter that we will reach it. But I mean, it should be improving quarter after quarter from this quarter, I think.

Yes. And also for full year, we expect the improvement from '24.

Yes.

Okay. That's clear. And the acquisition of the Amazon partner for NaturVet here is set to improve margins. So what magnitude and timing of that? Should we see an impact already in Q2? And can you say anything about the magnitude or sort of the financial dynamics there? And also if there's any stocking impact we should keep in mind?

We are acquiring the stock that our partner had. So I don't think that, that will affect our profitability. And so what -- I mean, it will not be -- as I tried to explain, is that normally Amazon sales are at a lower margin. But this project, when we take that over, we will handle it with present organization. And our partner had -- for being, let's say, a setup selling on Amazon, they had a good agreement with high profitability when they ran it. And now we're running it with a lower organization and OpEx. So that will basically have effect from when we take it over. But of course, some initial setup costs. So I would say from Q3 and onwards, it will be a good contributor to our profitability.

But not so much on the margin level. It will continue on -- if you think about the EBITDA margin, I don't expect the EBITDA margin to have an impact of this, because like Hakan said, we can keep our existing EBITDA margin with this additional Amazon sales.

Okay. And a final one for me. Could you quantify the sales volume of the 1,400-plus Walmart stores here in Q2? And can you elaborate on the magnitude of the launch, how many categories or unique products will be rolled out?

Yes. So at this point, I don't have the volume to share. The bottom line is it's going to contribute to our double-digit growth that we talked about that will be in Q2 and beyond. The actual sales we'll get will be the initial load-in, which will be at the end of this quarter, the very last month of this quarter. So then we'll start to see the result of turn as we go in the back half. In terms of the scale of the launch, I'm going to say general here, but it's between 15 and 20 items in an average of 1,100 stores each. And there are a few items that are in lesser store counts. It's a relatively significant expansion.

And just a follow-up. Did I hear you correctly, you saw a 36% growth in March in NaturVet?

Yes.

Okay.

I'm sorry. Yes, a 36% growth in March. Yes.

Your next question comes from Christian.

I hope you can hear me.

Yes.

Okay. Great. Just one follow-up on the double-digit growth for the full year. Do you expect double-digit growth in all markets, all geographies?

Yes, our main geographies, Europe and North America. Yes.

Okay. Great. And as Geoff mentioned, NaturVet reached the highest volume in a single month ever in March. Do you expect the momentum to continue in the second quarter? Or do you see a risk of stocking effect at the start of the quarter?

Yes. Within the quarter as a whole, we anticipate the -- again, there'll be double-digit growth in Q2. It will then -- as we get deeper into the year, the growth will be larger. But within the quarter itself, we are anticipating continued strong growth. You'll have months that will ebb and flow, but as a quarter, we are anticipating strong growth.

Yes. And as we've said, I mean, it's normally -- last month of the quarter is normally the strongest, and it could be that also end of Q2 will be a record month for NaturVet.

Well, yes, I -- yes, correct. And that's -- at this point, we're looking -- it could be even higher than the 9.5% that we did in March.

Okay. Perfect. And one last question here. How should we consider the margin impact when you're scaling up the Big Box business in the second half of this year?

I want to be careful how I answer this. It should be a neutral to slightly positive impact, just the way that we have our pricing models. So it should not be a -- in terms of margin, it should not be a detriment.

Your next question comes from Adrian.

Adrian here from Nordea. I think I have 2 questions here. Maybe I'll start off with you, Jenny. Should we expect to see the personnel cost and the other OpEx cost ratios to already decline in Q2? Are you still suffering from high overtime costs now in April as well? Or was this mainly a March thing?

No, I expect it to go down a little bit in Q2 with the increased revenue.

Right. Okay. Perfect. And maybe a question here regarding Summit. How sustainable do you expect the 37% EBITDA margins to be maybe a few years out? And also how stable are the margins on, let's say, a quarterly basis?

I mean the outlook is that it should be stable or improved. So I expect good margins from Summit. As I said, there's only one competitor on the market. We are looking for expansions. We are looking for perhaps new geographies, not this year, but going forward. So over the years to come, I expect both growth and the margins to be as is or even better.

So no particular seasonality effect there?

No, not really.

Okay. Perfect. Maybe a last question here. I don't know if you can answer this really, but I recall that last conference call you gave us, Hakan, a picture on the pipeline that you have for NaturVet in Q2, Q3, especially. And now we got some pipeline from Mr. Geoff Granger here. Is there anything new here in particular that we should take note of?

No, I would say not so much new, but more confirmed than when I presented last time. So more secure. Some new volumes perhaps. But as -- customers, it's basically as is. But like Geoff said, now we're -- it's one thing to have an agreement that we will be present in a store or online, but now we actually see it and can see the results of sales. So yes.

Thank you. That concludes our Q&A session. Back to you guys for any closing comments.

Thank you so much for the interest, and congratulations to the whole organization. I think working really hard to develop our group. And I'm looking forward to our next call in July. Thank you.

Thank you.

Thank you, Geoff.