Musti Group Oyj — Earnings Release 2021

Nov 16, 2021

Musti Group plc Financial Statements Release 1 October 2020 – 30 September 2021

Musti Group plc Financial Statements Release 1 October 2020 – 30 September 2021

Musti Group plc Financial Statements Release              16 November 2021 at
8:30 a.m. EET

Musti Group plc Financial Statements Release 1 October 2020 – 30 September 2021

Strong growth with best-ever quarterly EBITA

July – September 2021

· Group net sales totaled EUR 91.5 million (76.9 million), an increase of
18.9%.
· Like-for-like sales growth was 10.9%.
· Adjusted EBITA was EUR 11.2 (10.1) million, up by 11.2%.
· Adjusted EBITA margin was 12.2% (13.1%).
· Operating profit increased by 10.0% to EUR 8.6 (7.8) million, representing
9.4% (10.2%) of net sales.
· Profit for the period totaled EUR 5.2 (5.9) million.
· Earnings per share, basic was EUR 0.16 (0.18).
· Number of stores grew to 312 (293).

October 2020 – September 2021

· Group net sales totaled EUR 340.9 million (284.4 million), an increase of
19.9%.
· Like-for-like sales growth was 11.8%.
· Adjusted EBITA was EUR 36.8 (29.8) million, up by 23.4%, offset by
additional costs of EUR 1.5 million due the warehouse consolidation project that
was executed in Q1.
· Adjusted EBITA margin was 10.8% (10.5%).
· Operating profit increased by 45.1% to EUR 28.4 (19.6) million, representing
8.3% (6.9%) of net sales.
· Profit for the period totaled EUR 20.9 (11.8) million.
· Earnings per share, basic was EUR 0.62 (0.37).
· Number of stores grew to 312 (293).
· Number of loyal customers grew to 1,297 thousand (1,151 thousand).
· The Board of Directors proposes to the AGM that shareholders will be paid a
capital return of EUR 0.44 per share.

The figures in parenthesis refer to the comparison period, i.e. the same period
in the previous year, unless stated otherwise. Musti Group’s financial year is
from 1 October to 30 September.

Key figures

EUR million or as 7-9/20 7-9/20 Change 10/2020 10/2019 Change %
indicated 21 20 % -9/2021 -9/2020
Net sales 91.5 76.9 18.9 340.9 284.4 19.9
Net sales growth, % 18.9% 19.2% 19.9% 15.3%
LFL sales growth, % 10.9% 12.2% 11.8% 11.5%
LFL store sales 8.2% 7.9% 8.8% 7.3%
growth, %
Online share, % 22.3% 22.1% 23.1% 22.5%
Gross margin, % 45.7% 44.0% 45.7% 43.8%
EBITA 10.3 9.4 9.4 34.9 25.5 36.6
Adjusted EBITA 11.2 10.1 11.2 36.8 29.8 23.4
Adjusted EBITA margin, 12.2% 13.1% 10.8% 10.5%
%
Operating profit 8.6 7.8 10.0 28.4 19.6 45.1
Operating profit 9.4% 10.2% 8.3% 6.9%
margin, %
Profit/loss for the 5.2 5.9 -12.1 20.9 11.8 77.8
period
Earnings per share, 0.16 0.18 -12.2 0.62 0.37 69.0
basic, EUR
Net cash flow from 15.0 20.4 -26.3 54.9 41.9 31.3
operating activities
*)
Investments in 3.2 1.9 70.1 12.9 8.9 44.5
tangible and
intangible assets
Net debt / LTM 1.9 2.0 -2.3 1.9 2.0 -2.3
adjusted EBITDA
Adjusted EBITDA 17.2 15 14.6 58.8 48.1 22.4
Number of loyal 1,297 1,151 12.6 1,297 1,151 12.6
customers, thousands
Number of stores at 312 293 6.5 312 293 6.5
the end of the period
of which directly 280 231 21.2 280 231 21.2
operated

*) Interest and other finance income received has been reclassified from net
cash flow operating activities to net cash flow from financing activities.

CEO’s comments

On behalf of the Musti team I am delighted to report that the most recent
quarter was the strongest in the group’s history.

We achieved our strongest EBITA growth; accelerated our two-year like-for-like
sales growth from 31% to 42%; gained market share in all markets; acquired a
record number of new customers, including the parents of more than 50% of
puppies welcomed into families and did so while increasing our gross margin. It
highlights that our growth investments are paying off in the front end,
supporting our short- and long-term growth goals.  We will not let it stop there
though.  We continue to seek ways to improve our customer experience and value
proposition, with a key opportunity being to improve the performance of our back
end, specifically supply chain.  During the year we commenced the next phase of
our warehouse consolidation project and it has not proceeded as quickly as we
had planned and has burdened our full year result, impacting EBITA by
approximately EUR 1.5 million. The actions we have taken today will be visible
and efficiencies gained during financial year 2022.

We are excited about what financial year 2022 holds seeing great opportunities
for continued growth coupled with efficiency gains from the firm actions that we
have and are taking.

The September quarter delivered strong quarterly growth development:

· Group net sales increased by 18.9% to EUR 91.5 million in Q4. The increase
was largely due to like-for-like growth in all countries and the increasing
number of new customers together with an increased number of directly operated
stores. Like-for-like growth amounted to 10.9%.

· Store sales increased by 21.7% to EUR 68.6 million, driven by the increased
number of stores and strong like-for-like store sales growth in all countries.
Like-for-like store sales growth amounted to 8.2% (7.9%). Store sales growth in
the comparison period were negatively impacted by restrictions relating to the
COVID-19 pandemic.

· Online sales increased by 20.4% to EUR 20.4 million. Online sales accounted
for 22.3% (22.1%) of total net sales in the fourth quarter.

All the important indicators supporting our growth are going into right
direction.

· We increased the number of our loyal customers by 13%. This was supported by
the continuous increase in puppy registrations in the Nordics and us winning
more than our market share of the new puppies by actively engaging the new puppy
parents to Musti ecosystem and putting effort on the cooperation with the
breeders.
· We grew the average spend per loyal customer by 5% to EUR 188.3.
· We overdelivered network expansion increasing the number of own directly
operated stores by 49 stores
· Our Net Promoting Score measuring customer satisfaction has remained on an
excellent level.
· We increased the share of own and exclusive products leading to a very
strong gross margin development.

Supported by the strong sales growth, Group’s adjusted EBITA increased by 11.2%
to EUR 11.2 million and was the best quarterly EBITA in Musti Group’s history.

I am extremely pleased with the gross margin development in Q4. Gross margin
increased to 45.7% (44.0%) even though slightly burdened by increasing freight
costs from Asia, supported by the favorable product mix and efficient category
management. Operating profit increased by 10.0% to EUR 8.6 million.

I want to sincerely thank all of our employees for the great engagement with
serving our customers in the best possible way. I look forward to the financial
year 2022 with a great deal of confidence, based both on the positive signals we
see in the market and on the positive energy within the organization. We are
excited to develop our ecosystem to further increase the customer experience. We
strongly believe the end-to-end ecosystem presents a unique value proposition
enhancing and strengthening sticky customer relationships and differentiating us
from the competitors.  The aim is to create a one-stop-shop for the customers –
all you need is Musti.

David Rönnberg,

CEO

Financial targets

The long-term financial targets updated by the Board of Directors on 3 May 2021
are:

Growth Net sales to reach at least EUR 500 million by the financial
year 2024 by continuation of strong customer acquisition
momentum and increasing share of wallet.
Profitability Mid- to long-term adjusted EBITA margin of at least 13 per cent
with steadily improving profile. Margin increase is expected to
be realised through steady gross margin and improving operating
leverage.
Capital Maintain net debt in relation to adjusted EBITDA below 2.5x
structure in the long term.
Dividend To pay a dividend corresponding to 60-80 per cent of net
policy profit. Any potential dividend shall take into account
acquisitions, the company’s financial position, cash flow and
future growth opportunities.

The financial targets are forward-looking statements and are not guarantees of
future financial performance.

Webcast for analysts and media

A live webcast for analysts and media will be arranged on 16 November 2021 at
14:00 EET. The event will be held in English. The report will be presented by
CEO David Rönnberg and CFO Toni Rannikko. The webcast can be followed at
https://mustigroup.videosync.fi/2021-q4-results.

A recording of the webcast will be available later at the company’s website at
www.mustigroup.com/investors/reports-and-presentations/.

The telephone conference can be participated by calling:

Finland: +358 9 817 10310

Sweden: +46 856642651

UK: +44 3333000804

US: +1 6319131422

The participants will be asked to provide the following PIN code: 67350102#

Helsinki, 16 November 2021

Board of Directors

The information in this Financial Statements Release is unaudited.

Further information:

David Rönnberg, CEO, tel. +46 70 896 6552
Toni Rannikko, CFO, tel. +358 40 078
8812

Essi Nikitin, Head of IR and Communications, tel. +358 50 581 1455

Distribution:

Nasdaq Helsinki
Main media
www.mustigroup.com

Musti Group in brief

Musti makes the life of pets and their owners easier, safer and more fun. We are
the leading Nordic pet care company, and we operate an omnichannel business
model to cater for the needs of pets and their owners across Finland, Sweden and
Norway. We offer a wide, curated assortment of pet products. We also provide pet
care services such as grooming, training and veterinary services in selected
locations.

Musti Group’s net sales were EUR 341 million in the financial year 2021. At the
end of the financial year 2021, the company had 1,397 employees, 1.3 million
loyal customers and 312 stores.

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