LogProstyle Inc.

Good morning everyone and thank you for joining us. I'm Yasuyuki Nozawa, founder and CEO of LocalProstyle. Today we'll review our fiscal year 2026 full year results, our second year as a NYSE American listed company, and explain why we believe our model is still only beginning to be understood by the market. This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but not limited to statements regarding Low-Prostyle Inc.'s future financial performance, operating results, business strategy, capital resources, liquidity, development pipeline, operational efficiency, and long-term growth objectives. These statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include but are not limited to changes in economic conditions, real estate and hospitality market conditions, interest rate fluctuations, construction and development risks, cost inflation, regulatory changes, foreign exchange fluctuations, and other risks related to the company's business operations and other factors described in the company's filings with the U.S. Securities and Exchange Commission, including the risks detailed in the company's annual report on Form 20-F, for the fiscal year ended March 31, 2026, as followed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this press release, except as required by applicable law. Any references herein to a website have been provided as a convenience and the information contained on such website is not incorporated by reference into this presentation. Before numbers, a word on alignment. I founded Logoprostyle in 2006 and have led it ever since, and I remain its largest shareholder with roughly 69% of the company. My interests are your interests. We're governed by a six-member board, two of them independent, supported by an experienced management team. Here is the full year on a single page. Revenue of ¥22.2 billion up 7.6%, gross margin of 19.8% our strongest in three years, and adjusted EBITDA of ¥1.64 billion up 10.6%. This was our fourth consecutive year of revenue growth, with earnings growing faster than the top line. Real estate is 93% of revenues, with hotels and our other activities making up the balance. Our conviction is straightforward. Greater Tokyo Residential is the most resilient market in Japan, and the renovation opportunity remains largely untapped. The story rests on four pillars, a model we've proven over 20 years. Tokyo has a structural advantage, a dedicated tenant negotiation team that unlocks properties at a discount, and a hotel business that adds recurring income. At the core is capital recycling. We acquire pre-owned condominiums or land at disciplined prices, renovate or develop over a 1-2 year cycle, sell and reinvest. Because our cycles are short, every completed project replenishes the equity for the next, letting us grow without continuously raising outside capital. Log Suite is our renovation platform sold under the Log Mansion brand. These are full gut renovations with signature walnut and oak interiors from our own wood manufacturing, not cosmetic refurbishments. Our average unit was 188 million yen this year and we sold 41 units. Prostyle is our development platform in two formats, premium condominiums for owner-occupiers and compact rental buildings sold whole to institutional investors. We extend this through Prostyle Ryokan, where we develop a hotel asset, sell it, and lease it back to operate, capturing development profit and recurring hotel income in a single life cycle, a model that differentiates Block Prostyle. Regarding our hotel business, we operate four ryokan-style properties today, with a fifth in Asakusa opening in 2028 on land we already secured. Hotel revenue grew nearly 5% this year, and through our Chino property management business, we now manage more than 3,400 units, over 70% for third parties, the early foundation of a recurring income platform. I want to be precise here. We are not a Japan housing play. We are a greater Tokyo premium residential specialist. Tokyo benefits from continued immigration, constrained land supply, and deep liquidity, even as Japan's overall population declines. And the inbound tourism recovery, with Tokyo area hotel room rates up about 70% industry-wide, supports a hotel business where our own average daily rate grew nearly 16% this year. Now let me walk you through this section. This section covers our full year results, the balance sheet, and how we think about capital efficiency. Revenue was 22.2 billion yen, up 7.6% year-on-year. Gross margin expanded 260 basis points to 19.8%, and net income was essentially flat, up 0.8%. Adjusted EBITDA grew about 10.6% to 1.64 billion yen, and I'll explain the moving parts on the next slides. Within real estate, we operate three distinct engines. Log suite renovation is roughly 45% of real estate revenue on a one-year cycle. Prostyle development is about 40% on a 1.5 to two-year cycle. And log asset landowner direct sourcing advisory is about 15% in a fragmented market with very little large cap competition. A little more detail on the drivers. We completed 261 units, up from 187, with a clear shift toward bulk institutional sales. Our 19.8% gross margin sat at the top of our historical range, reflecting underwriting discipline. And operating income grew 17.1%, faster than revenue confirming operating leverage. On EPS, it declined 7.5% despite flat net income, purely because our share count rose about 9% after the IPO, alongside a higher tax charge. That is dilution in timing, not an earnings problem Stepping back, this is the 4-year picture. Revenue has grown from 13.3 billion yen to 22.2 billion yen. Just as important, adjusted EBITDA has grown from 998 million to 1.64 billion yen, up roughly 65% over the period, while our adjusted EBITDA margin has remained stable in a tight band around 7.2% to 7.5% in every one of those years. So this has been profitable growth, not just top line growth. Disciplined, consistent, and self-funding. On the balance sheet, total assets of 27 billion yen, shareholders equity of 4.2 billion yen, that's about 26 million US dollars, and an equity ratio of 15.6%. The essential point is that our inventory is real estate that collateralizes our borrowing. Our gross debt-to-equity of 4.1 times the deliberate asset-backed leverage, structurally comparable to a property company's loan-to-value, not a sign of distrust. To build on that, Japanese banks lend against the tangible asset, the land and the condominiums, while we fund renovation and construction with our own equity. So we believe that headline 4.1 times leverage overstays the real economic risk. In practice, our growth is disciplined by equity availability, not by expanding the balance sheet. On rates and inflation, our short cycles mean capital is repriced faster than the traditional developers, so we are structurally less exposed to sustained rate increases. Japanese rates remain low, our weighted average buying cost is below 3%, and inflation actually works in our favor. It makes renovated resale units more attractive relative to costlier new builds. Looking forward, several developments are worth watching. Sustained earnings growth, which builds a track record that directly challenges perceptions of earnings volatility, scaling of the hotel platform, broader understanding of your model, a gradual strengthening balance sheet, dividend growth. This is our second consecutive year distributions with the fiscal year 2026 dividend to be paid in full, equal quarterly installments through April 2027, an increase in institutional discovery. We address the key risks on this page, leverage, Tokyo concentration, cycle sensitivity, interest rates, and small cap liquidity. They are real, but typical of our sector and we believe they are well mitigated by our short cycles and asset-backed model. To bring it together, we have built a disciplined, founder-led platform that compounds capital through every cycle. The model is proven and we look forward to building on it over the year ahead. Thank you all for joining us today.