Release Date: October 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Venture Life Group PLC (LSE:VLG, Financial) reported an 8% growth in revenue from its brands, with a notable 15% increase in the UK market.
- The company achieved a 90 basis point improvement in gross margin, contributing to increased profitability.
- Cash generation from operations increased by 58%, allowing the company to reduce its net leverage from 1.3 times to just under 1.1 times.
- The company's 'power brands' such as Lift, Balance Activ, and Earol showed significant growth, with Lift growing by 35% in the UK.
- Venture Life Group PLC (LSE:VLG) has successfully expanded its distribution network, securing 29 new listings in the first half of the year, contributing to an annualized GBP1 million in additional revenue.
Negative Points
- The company's EBITDA margins were temporarily suppressed in the first half of the year due to increased marketing investments.
- Customer brands revenue declined by 9% in the first half of the year, attributed to a strong comparative period in H1 2023.
- The dental brand experienced a 22% decline, impacted by delistings at the end of 2023.
- There was a temporary slowdown in orders for the Gelclair product due to customer stockpiling in 2023, affecting first-half performance.
- The company faces challenges in maintaining consistent growth across all product categories, with some areas like oral care showing minimal growth.
Q & A Highlights
Q: Could we clarify whether Micro Clear has now been recategorized as private label in H1 '24?
A: Micro Clear is a foot care brand included in the overall foot care category. The majority of the foot care category is private label, sold to partners like Croyd and Superdrug. (Daniel Wells, CFO)
Q: Are there any product categories where you anticipate lower sales in H2 due to forward buying and customer overstocking similar to Gelclair in H1 '24?
A: No, we expect stronger growth in VLG brands in the second half, including the positive impact of Gelclair's timing. Customer brands will perform at normalized levels similar to H1. (Daniel Wells, CFO)
Q: Has the spare capacity been reduced by bringing Gelclair production in-house, and what is the current percentage?
A: Gelclair production was always in-house. With Earol manufacturing added, utilization is now in the early 60s percentage-wise. We still have good capacity and can expand if needed. (Jerry Randall, CEO)
Q: What potential revenue impacts do you expect from new licensing partnership agreements in the women's health category?
A: The new partnership is expected to deliver incremental revenues in seven figures after three years, providing a meaningful opportunity for us. (Jerry Randall, CEO)
Q: Can you talk through the Earol acquisition and its performance against expectations?
A: Earol has outperformed expectations with a 21% growth in H1, ahead of the planned 12% CAGR. We target a payback of less than five years, and we're on track to achieve this. (Daniel Wells, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
