Welcome to the LMK Group Q2 2023 Presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers. CEO Walker Kinman and CFO Erik Bergman, please go ahead. Good morning to all of you joining us for this presentation of the second quarter results for the LMK Group. As mentioned, my name is Walker Kinman. I'm the CEO of the LMK Group. I'm joined by Erik Bergman, our CFO. We will give you a short intro on the company, and then take you through some prepared remarks on the second quarter development and financials before opening up for questions. First, a little bit about LMK Group and our business. For the past 15 years, we've been transforming people's eating habits, and thereby define our purpose as innovating the mealtime experience. Our local brands in Norway with Godtlevert and Adams Matkasse, in Sweden with Linas Matkasse, and in Denmark with RetNemt, all have a rich history of entrepreneurship and innovation, all geared towards making our customers' lives easier. Our focus is on delivering delicious, well-balanced, and inspiring meals that make cooking a joy, while also promoting good eating habits and freeing up valuable time for quality family moments at the dinner table. We take the stress out of meal planning and shopping so our customers can focus on enjoying their meals. Our meal kit business model is demand-driven, allowing us to maintain very low inventories and minimize food waste generated in our operations. Our local chefs and dieticians create recipes that reflect local taste preferences, while offering the best and broadest selection of recipes available in the markets where we operate. We provide a highly personalized customer experience across all our brands, powered by our in-house technology platform. The customer experience we deliver capitalizes on AI technology, driving, for example, meal selection options and our recommendation engine. This level of personalization is supported by the capability to produce each order individually using Pick-to-Light and automated production solutions. Our supply chain is well established, strong, and scalable, enabling us to efficiently purchase and distribute our products in each country where we operate. Furthermore, we are constantly integrating our supply chain, enabling us to take advantage of sourcing opportunities across the Nordic region. Turning to slide five, let's talk about some of the key figures for the quarter. Net sales for the second quarter landed at SEK 230.5 million, which was down 11.7% on a common currency basis from the same period last year. This represents a further reduction from the 17.4% contraction we saw in Q1, helped by a 13% increase in average order value due to the price increases in the second half of last year, as well as a reduction in vouchers used on a year-over-year basis. Despite the lower revenue, we delivered a record second quarter contribution margin of 31.3%, up a full 6.8 percentage points from last year, and increasing absolute contribution margin in kroner by 10.2%. This puts us well on track to achieve full year contribution margin approaching 30%, and we expect to achieve that already in Q3. Because of the solid contribution margin and reductions in structural costs related to central functions, we also delivered an adjusted EBITDA result of SEK 27.2 million, an improvement of SEK 7.4 million versus last year, despite the lower volumes and a slightly higher marketing spend. Let's focus briefly on what we did for the first half in light of our financial targets. We made it clear that we will be profitable and self-financing. The biggest driver of profitability has been a 704 basis point increase in our contribution margin during the first half, which also came in at a record level for Q2. A combination of better unit economics and cost discipline, including lower sales and marketing, resulted in a SEK 38.5 million improvement in the first half adjusted EBITDA, despite lower volumes. Cash flow improved by SEK 75.5 million in the first half due to improved profitability, lower capital expenditures, and a decrease in the dividend paid. We generated SEK 22.9 million in cash during the period. We are on track to stabilize the top line, with the contraction rate continuing to decline. We are currently at the point where we do not expect Q4 to exceed low single-digit contraction. The current sales trend has also been encouraging, with a year-over-year increase in new subscribers in Q2 of 36%, despite only a 3.6% increase in sales and marketing expenses. Average order value is also up 16% on a local currency basis, due to the repricing of our services and introduction of delivery fees in the second half of last year. The busy fall campaign season is also now underway, and we are very pleased with the development so far, which gives us confidence that we will see growth in the business already in Q1 next year, barring any unexpected deterioration in the macro environment. Let's take a close look at how the markets have been developing. Consumer confidence remains weak, but is up from their lows. I'll come back to that on the next slide. The public indexes we track for online food in Sweden and Denmark are beginning to show improvements, and Norway is probably showing a similar trend. Online groceries were down only 2.5% in Sweden during Q2. The data in Denmark for May showed an increase for the first time since August of 2021 at 7.8%. The first full quarter data available in Denmark for, was Q1, when the contraction in Denmark was a negative 8.3%. For the quarter, this means that sales by market showed a local currency decline in Norway of just under 13%, in Sweden of 12%, and in Denmark, a little over 8% during the quarter. The substantial slowing of the contraction rate in Denmark has been helped by both the acquisition of customer relationships from a competitor that is performing well and better traction on sales and marketing spending. Let's take a bit closer look at the consumer confidence metrics. As we look at the surveys on consumer confidence, we can get a sense of how low sentiment was in 2022, with the bottom well beyond what was seen in the financial crisis of 2008, and even other downturns since then. Denmark is the market that is showing the most signs of recovery currently, with consumer sentiment rising the most and inflation retreating. Sweden has met more persistent inflation influenced by the euro, strengthening against the SEK, and here, consumer confidence has risen, but still remains at a very low level. Consumers in both Norway and Sweden are also faced with rising cost of housing due to interest rate changes and more exposure to variable interest rate mortgages. We cannot influence the macroeconomic situation, which is why our must-win battles are more important than ever for securing the immediate business and strengthening our competitiveness for the future when the market does improve. The three must-win battles to stabilize and profitably grow volumes that we shared in our Q4 report are increasing marketing excellence, cultivating epic customer experiences, and increasing volumes in Denmark. A push to increase marketing excellence means we're driving efficiency measures to lower the cost for customer acquisition and retention, and note again the improvement in higher customer acquisition at a lower spend that was achieved in Q2. With epic customer experiences, we are doing our best to assure that customers have every reason to be loyal. Both production efficiency and quality have improved. While our hours worked per delivery declined by 14%, we also reduced the rate of customer reimbursements relative to net sales by 6.8% in Q2 versus last year. At the same time, the percent of deliveries with a claim also declined by 14%, improving the overall quality to our customers. Finally, we set a target to increase delivery volumes in Denmark to assure our critical mass in this market. The conversion of customers to a RetNemt brand from the acquisition of a customer relationship from a competitor has so far exceeded our estimates and is performing well. We are also pleased with the sharp reduction in the contraction rate in Denmark and are seeing good traction at the beginning of Q3 for both new customer acquisition and total order volumes. In June, we announced that we would be changing our corporate brand. What does that really mean and why do it? First, the question of why. For those of us that work in the company every day, it has been clear that LMK Group is not a name with a lot of pizzazz. It does not capture the spirit of what we do in any meaningful way, and it's difficult to develop in a direction that better represents what we do and who we are. It neither rolls off the tongue nor is it memorable. Our aim is to create a strong employer brand, which forms a common identity and is a tool in further uniting our employees of the company, a name that creates internal engagement and pride while helping to attract and retain new talent. This means that only the corporate name is affected. We will stop using the name LMK Group and start calling ourselves Cheffelo. We have reserved the ticker symbol of C-H-E-F or CHEF to replace LMKG on the Nasdaq First North Premier Exchange in Sweden. Our four commercial brands will remain unchanged and continue to be used in promoting our service. A calling to an extra shareholders meeting has gone out. That will be held on the fifteenth of September, and major shareholders have already indicated their support of the measure to change the name of the company to Cheffelo. With this, let me now turn it over to Erik to take us through the financials. Thank you, Walker, and good morning, everyone. I'm pleased to present the financial update for the Q2 2023. As you will see from the report, we have continued to deliver strong profitability with a solid cash flow. Net sales for the quarter amounted to SEK 230.5 million. Adjusted for exchange rate differences, that was 11.7% lower than last year. That is an indication that the net sales contraction is slowing, as we, in the Q1, had a contraction of 17.4%. Stabilization of the top line remains our number one priority. We are also glad to see a more efficient marketing during the period, where we saw new customer acquisition being up 32% compared to the same period last year. The success in new customer acquisition also leads to higher churn in customer portfolio. This, in combination with the customer behavior during the many holidays in the second quarter, affected the overall order frequency negatively. These are the main reasons why order frequency was 5.9% lower during the second quarter. We saw an increase the average order value by 13.1% or 60% adjusted for currency. This was to a large extent driven by the price increases during 2022. It was also a result of relatively lower overall discount levels. Although seeing the increased new customer acquisition, we have been able to be more efficient when applying discounts, which gave the discount per delivery to be lower than last year. Let's move on to take a closer look on profitability on next slide. Contribution margin, to being in control of our unit economics is a key to our profitability and establish a foundation for achieving economics of scale. That is why we are proud in delivering contribution margin of 31.3% for the quarter, which was the highest contribution margin that we have ever recorded for a second quarter. This achievement is thanks to the great effort throughout the organization. The contribution margin was improved by 6.8 percentage points for the second quarter compared to last year, and 7 percentage points higher for the first half. When put in relation to number of deliveries, this translates to that each delivery, in average, contributed by 273 SEK during the first half. This represents a growth of 45%, equivalent to an additional SEK 85 or SEK 84 per each delivery in the first half compared to the same period last year. The improvement was achieved by a higher average order value, continued production efficiency gains, and cost control discipline. We have had several initiatives that have resulted in reduced costs of non-food input costs, including a successful tender on cardboard boxes and a more efficient handling of ice in our deliveries. Let's continue on profitability on next slide. We are focused on being on top of our unit economics, and we maintain a disciplined cost structure. We have adjusted our operating expenses to reflect the lower volumes. Although net sales was SEK 37 million lower than last year, the improvement in contribution margin, in combination with a lower cost percent function, gave adjusted EBITDA improvement of SEK 7.4 million for the quarter. The improved profitability, measuring for additional push in sales and marketing during the second quarter, that allowed us to seize the opportunity to acquire customer relationship of a competitor, which we did during May. For the first half, we have achieved an EBITDA of SEK 51.2 million, which corresponds to an EBITDA margin of 9.9%. Sales and marketing spend during the first half amounted to SEK 63.8 million, which equals 12.3% of net sales. That is a relatively lower spend during the first half compared to the same period last year. That is explained by part of the spend in the first quarter has been shifted to the third quarter, as this is expected to be more efficient allocation of marketing spend. In summary, we have delivered a solid performance in a challenging quarter, and we are confident we have a strong foundation for future growth and profitability. With that said, let's move on to the next slide to have a look at the cash flow. At the end of the quarter, cash and cash equivalent amount to 75.2 million SEK. To really understand the cash flow and cash position in the LMK Group, it is important to understand the net working capital. We have a negative working capital model, where most of our customers pay shortly after the delivery, whereas we pay our suppliers later. Trade payables is the largest component in net working capital, where the timing of supplier payments around the end of the quarter being the primary determinant of the size of the trade payables. Net working capital has varied between around SEK 50 million-SEK 90 million historically. We have had a relatively high net working capital position in the end of the 1st quarter, to a large extent related to timing of trade payables. The change in the net working capital had a negative effect on cash flow, with a change amounted to -22.2% for the quarter. The fluctuation in net working capital might overshadow the positive cash flow generated from the improved profitability, excluding the changes in net working capital, operating activities generated a positive cash flow of SEK 21.9 million for the quarter, which was SEK 7.2 million higher than last year. Let's take a look at the cash flow for the first half on next slide. Looking at the first half of 2023, we have generated a solid cash flow with SEK 75.5 million higher cash flow during the H1 of 2023 compared to 2022. This is related to higher profitability during the H1, a reduction in dividend payout, and the completion of major capital investment programs in 2022. The higher profitability is reflected in operating activities, excluding the fluctuations in net working capital, which amount to SEK 38.8 million, which was an increase by SEK 39.7 million versus last year. Cash flow from investment activities during quarter were mainly related to capital development costs for the tech platform. We expect a lower CapEx in 2023, as we during 2021 and first half of 2022, have been investing in the integration of our Danish operations and the conversion to 100% customer unique production. Both investment programs were finalized during the first half of 2022. All in all, we are pleased to report that we achieved a solid cash flow performance in the first half of the year, despite the lower volumes and our challenging market conditions. Let's move on to the next slide for some forward-looking statements. We remain focused on profitable growth. On a short-term perspective, that means to stabilize revenue development, which means to stop the contracting trend. We expect the delivery volumes to continue to contract during the third quarter, although it's low single digits. We are very pleased to see the progress of the after summer volume ramp up so far. This gives us confidence that we will see a growth in the business already in the first quarter next year. One thing that we would like to highlight for those of you that are not that familiar with our yearly seasonal cycles, we don't expect to be profitable in the third quarter. This is in line with our plan as this relates to the lower volumes during the vacation period in the first half of the quarter, and the relatively higher sales and marketing spend related to after summer marketing activities in August and September. We are on track in our efforts toward a contribution margin approaching 30% on an annual basis. This is something that we expect to achieve during the third quarter, balancing profitability and customer experience. With that, I would like to hand back to Walker for a quick summary. All right, thanks, Erik, let's turn to Slide 18 to summarize, and then we'll open it up for questions. Probably most importantly, but also in line with our financial targets, we have shown solid improved profitability, both in Q1 as well as for the first half of 2023. This has largely been driven by an increase in contribution margin, where we hit a record for the second quarter. Higher profitability, lower capital investments, and a reduced dividend have led to solid cash generation in the first half. Important to both future growth and profitability has been the improvement in marketing and sales effectiveness. Encouraging Q3 sales development also makes us optimistic that we are fast approaching a stable top line, with eventual return to growth in Q1 2024, barring any unforeseen events. Finally, we have had a lot of focus on 3 must-win battles over the past 9 months, and these continue to show good progress that is having a meaningful impact on the development of our business and future competitiveness. In conclusion, the team has done a fantastic job in navigating a difficult operating environment and successfully shaping the business for the future. Their hard work and dedication are clearly apparent in these results, and I'm personally proud to be part of the future Cheffelo journey. We're now going to turn the call back to an operator to handle questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Okay, we have a few questions coming in through our portal here, we'll try to answer those in the order that they're coming in. I'll read the first question here. "Good morning, Walker and Erik. You mentioned a 32% increase in new subscriptions in Q2, but what about the quality and the retention rate of these cohorts?" The second question: "Do you have an early indicator about the performance of the back-to-school period, which is also a key in measure in, in meal kits?" Question three: "What makes you confident the retention rate will remain good throughout H2, given lengthy food disinflation and still rising interest rates?" Four: "Do you see some food input costs coming down, and if so, do you consider price reductions to help reboost volume?" Let's take a stab at the first question, the 32% increase in new subscribers. I think where what we see in general from a cohort perspective is cohorts, post-pandemic, have returned to sort of normal behavior. Cohort is, it's a solid performance, but it's nothing showing better or worse cohort performance. I think in terms of quality, it's what we expect, bearing in mind that new customers churn at a very fast rate. You know, by the time we, we have gone through two months with a new customer, we have around 50% that are left. In the back-to-school period, I think, we're, we're very pleased so far. We got an early start in the season. We've seen that with good results. We are acquiring more customers than last year, and I think we'll, we'll be able to talk about that when we talk about Q3 at, at continued improvements in our metrics around customer acquisition. We have two big drivers in that. One is the acquisition of the competitor subs, that we did there in the second quarter in Denmark. The other is, which is also standing out, is the Weight Watcher partnership, which is also showing very, very positive results. I think the underlying business is also showing good customer acquisition, so we're pleased with that. What makes us confident that the retention rate will remain good throughout H2, with food disinflation and still rising interest rates? I think one, one of the things that stands out is, is the consumer confidence, and if we're looking at measures in terms of what's going to help, consumers open their wallets again, I think consumer confidence sticks out. We see a good correlation between consumer confidence recovery in Denmark and our own ability to attract and retain customers. I think, as we see those climb in, in Sweden and Norway as well, if they climb, then I think that there we'll, we'll also likely to see that, a similar type of, of, patterns in consumer behavior. I think it's, it's naturally, it's, it's difficult to say what the macroeconomic environment will develop like. There's always a question mark there, but I think so far we're happy with what we see. I think I'll leave that last question to Erik on food inflation. Mm-hmm. When it comes to the food cost, that is something that we monitor and we monitor quite close. We try to balance both customer experience versus costs. So far, we don't see a lower cost of food in our input costs. And we don't have plan any price reductions to, no general price reductions, although we're looking to might be some options when it comes to how to handle the to meet the expectations from our customer when it comes to plus prices. Thank you for the questions. Our next question, we have one from Forbes, or a couple here. Please discuss the main drivers behind the strong profitability gain, and if you could, rank these from most to least important. What is your outlook for active customers, and is this currently at a level that you think is sustainable to reach your long-term financial targets? I think the first part of that is, what's driving profitability gain? First and foremost is a very disciplined approach to unit economics. It's without a doubt, when we talk about a 16% increase in average order value, that the repricing and the introduction of delivery fees, last year have had an impact on the average order values. We see several other indicators that, that also help with average order value, such as increase in the number of, of meals per delivery. I think there are some mix shifts that also help us in that equation. Obviously, 16% is above what we did in terms of repricing last year. I think unit economics is a big piece of that. Then don't forget that we have had huge gains in production efficiency. That 14% jump in deliveries per hour of production worked has a nice impact. We've also seen that logistics costs, we've been able to manage logistics in an environment with rising prices, in a way where our price per delivery has not increased significantly because of better management of network hubs, and work with our logistics partners. I think the second part of that question is when we look at outlook for the customers, I think when we talk about the customers in terms of active customers, there's always a correlation between how much of the active customer base is new customers and how much is loyal customers. What we're seeing with the increase in acquisitions, of course, is that the active customers are going up quite fast, but that also drives a higher churn rate in the overall portfolio. I think what we wanna emphasize here is our ability to attract, new customers is very important. As we see gains in improvements in customer acquisition at more efficiency rate, it means that we can use our money to acquire more customers. And, and I think that that's, you know... The active customer level that we're at right now needs to go up, and that's part of our growth. When we talk about growth in the future, we do expect to see active customer levels, increase from where they're at today. I think I need to add just one, one small comment to the final on the profitability, which is, when you get below unit economics and contribution margin, you can see some really good gains in cost development as well, where we've been able to reduce cost structure in general, and that also is probably the third factor behind profitability. Not by decreasing sales and marketing spend in the second quarter, but through other cost measures. All right. Let's move on to the next question. You ask: How has it gone in Denmark? This is from Marcus. Has the changes in the board affected your work in any way? So first, taking into account in Denmark, I think, first, what sticks out is the rapid decrease in the contraction rate. If we saw 8% decline in revenue, in the 2nd quarter in Denmark, that needs to be put in contrast to 20%-30% declines that we saw in Q4, Q1. That contraction rate is slowing significantly. We're very positive, confident with what we're seeing in Denmark right now, and my expectations is that when it comes to markets, we will show growth in Denmark before we do in the other two markets. I think, from a profitability perspective, I don't have the number right in front of me, but the profitability, last year, we had some significant losses in Denmark, after the integration work that was done and, and fine-tuning, both the efficiency in the market, in, in our business there, as well as adapting to new realities. We're very pleased to see also with where profitability is developing. It's still at a loss in Q2, but we see this, we don't see this as a problem child that perhaps others, thought about. We see the opportunity in Denmark as being quite big, and especially in this, in the market development right now. The question about the board, obviously, a change in the board always changes the board dynamic, and I think, what we are looking at right now is, you know, we're looking at a market which has changed significantly since the last board was put in place with the introduction. I can only thank for those, those board members leaving the board for their contribution through a tough time. I think as we look at the new composition of the board, we've got a great team in place to help the management team with looking at strategic direction for the business and prioritizing, prioritizing what's important. I appreciate and have a good dynamic with the new board. Marcus had another question here: Has the competition increased in Norway during 2023, or do we see... How, how does the market situation, or is the market situation seem unchanged? I think the big change in the Norwegian market obviously happened in 2020- let's see, it was 2021 already. I would say that the general change. There has not been a general change since last year. We have an international competitor that's very aggressive in the market and continues to be, as part of their strategy to acquire market share through losses. I think we also see a change in the capital available in general for substitutes and alternatives. Looking, looking at the business around FreePick, which is out in the market. Pure play, FreePick online players, have experienced challenges this last year with regards to their ability to obtain capital and doing so at extremely expensive rates. What we do see is a focus, not only in the Norwegian market, but in the Swedish market, on a return to profitability. That ultimately has an effect, but it's difficult to gauge if that effect is significant in the current environment. We have a question from Mats Andersson: Personal cost in relation to turnover, how come, who, how will it develop during 2024? I think when we look at personal costs, and we look at staffing in general, it's always a question of what do we need to run the business? I think we, we were able to adjust our, our cost structure through for the most part, attrition in personal turnover during 2022, and through the first part of 2023. To be quite honest, as we look at the future and we look at, you know, a, a market which is stabilizing as well or will it stabilize? I think from a growth perspective, we would expect to see personal costs will increase. Part of that has to do with general inflation in the market, and we'll see some inflationary effects that will take time to roll out. In terms of general staff, I think we, we know we have skill sets that we will benefit from in a, in a growth environment, so I would expect those to 2024 to increase from 2023. Another question from Ole Forsch: You have mentioned that the cooperation with ViktVäktarna and our Weight Watchers was more successful than expected. Can you give us numbers on that? Will the success influence strategy ahead, more collaborations? I can't disclose numbers because of the contractual relationship we have with Weight Watchers. It is more successful than what we planned, which allowed us to move faster on certain aspects of the relationship. If you're paying close attention to our site, you'll see that we're offering more recipes, which are engaging these Weight Watcher customers in the Swedish market. I think we can say that the partnership is an important part of where we are in acquiring new customers at this point. As far as influence go, We have looked at partnerships closely in the past. I think Weight Watchers is one of these coming out of that, which is working well. For me, that is an indication that partnerships in general can work well for us, and we certainly will be looking at options that may be available. A last question from Marcus: How does profitability look for your campaign customers who test 2 meal kits with 30% discount and then quit? Is that a loss affair? I think anytime that we take a single customer relationship and, and break it down into how many deliveries did they get, it's problematic. Looking at cohorts through a test cycle or through a phase is much more important. I think the dynamic of the meal kit business is looking for long-tail customers. As I, as I look at long-tail customers, we're really looking at the, the, the revenue that they're giving us 2 years down the line, as a, as a very important base of the loyal customer base. I think it's difficult to draw a conclusion that, that a individual customer is not profitable, therefore, we would give up a strategy. I think the, the biggest and most important thing here is to get customers to try the service more than once. You won't see, for new customer acquisition, you won't see big discounts coming all at once or giveaway discounts, to get people just to try the service. We're looking for getting our customers, new customers, to actually be able to try the service over several periods, or several weeks, so that they have a chance to, to really get to know the meal kit. Those, those are all the questions that we've, we've gotten through the portal. We haven't and we haven't seen any, come through on our investor relations, email. It looks like we are at the end of the call. Thanks again for everybody for tuning in. I look forward to being back here, in November to talk about the third quarter. Thank you all, and have a great day!