ITAB Shop Concept AB (publ)

Thank you very much and welcome everybody to this call. We have the Q4 result and the year end report to go through with you and also to give you a little bit update on the acquisition that we have just finalized one week ago. So let me begin. I will start as usual to do just a short introduction if we have any newcomers to to the call. So to talk a little bit about who we are and what we do and what we've been up to the last couple of years before we hand over to Ulrika to go through the numbers. And also I will do a wrap up towards the end before we open for a Q&A session. so here we have updated this slide with 2024 numbers please note that these are the adjusted numbers and let me just highlight from the very beginning what the adjustments are because they are not really anything strange or i would say debatable it is mainly adjustments for the large transaction that we finalized so it's all the transactional costs and DD costs and so on that occurs. And it's important to remember the size of the acquisition. So that's the main part of the adjustments. And the other part is sale of a company in China with a factory and that's a strategic decision. So it's truly non-recurring costs. So by that said, in 2024, we grew our sales. We are now at just above six and a half billion Swedish. And we are with an operating profit of around just north of 500 million and with an operating margin of seven point seven percent. That is in line with our financial targets of having an operating margin of our business cycle of seven to nine percent. So we are really proud over the improvement and development during the year. And we'll get back into the figures and what they where they come from later on. But I just want to highlight that ITAB today, excluding HNY, of course, because that's not part of these figures, we have a number of production facilities across mainly Europe, but also in Argentina and in China. We have operations in 23 countries, but of course we sell to many more countries and we are approximately 2,500 people. Our main customer groups are grocery, do-it-yourself, fashion, and then all other aspects of retail, I would say. And sometimes we also go into the hospitality sector. We offer a number of solutions and these are typically different types of services and then complemented with products for interiors, different types of technologies like checkout, smart gates, products to guide the customer, queuing systems and so on, different digital solutions and of course lighting. So with that then we help retailers to achieve their targets and build a physical environment in their stores. So this is just it at a glance. And we usually talk about that we are one of the leaders in Europe, but we have a global reach. So we follow our customers around the world and we have some quite known and large brands. That's mainly what we work with, the large retail chains. Grocery being more than 50% of our turnover with home improvement due to self following quite far behind. So you can see the rest of the retail sectors are then more evenly distributed. Fashion coming in just below home improvement. And then the other segment is 22% of our turnover. And maybe a shout out there to pharmacists, consumer electronics, service stations are important in that segment. But basically all aspects of retail is included in that category. And we usually say that we are what we create together with our customers. So depending on the type of relationship we have, depending on the strategic dilemma or challenge or opportunity that the customer have, and depending then on how much they engage with us, our impact can be very transactional where we just supply products to very fundamental and strategic where we develop concepts and solutions and innovation together and then implement that together with the retailer. And on these pictures, you can just see some of the different examples, everything from car dealerships to pharmacies to do-it-yourself stores and, of course, cafes and grocery. So not only retail are transforming, but also ITAB are transforming. And I will come into that in a short while. But let's begin with retail. And I think all of you know that because we are all consumers. We all know how we have changed our behavior. And we know that there are generations that are coming up behind us that have even more demands on how to be met as a consumer and what to expect from different brands. So there is a clear movement and this movement is not something that has happened and now we have a new landscape. This is a constant ongoing, very, very rapidly changing retail landscape. where consumer expectations are constantly evolving. So it's all about frictionless experiences, having the most convenient shopping experience possible. And of course these expectations comes from online where you're being more guided and then you bring that to physical retail. And also it's about the inspiration that you, when you want to learn something or when you want to invest your time, then you truly want to be inspired and you want to get more, more value for your time, so to say. And this impacts retailers. So the retailers, they need to invest in areas that they didn't use to usually invest. It could be new channels, could be new formats, could be adding things to their to their retailing mix. And while they are doing this, of course, they need help, help to develop it, help to know what will work and also help to test it and then help to deliver and scale up once they have decided. And that's basically what what we in our industry do and what we at ITAB do. So we have changed the last couple of years to become much more consumer and retail change focused and improving our, I would say, speed and agility and our service level to be more relevant and also to change how we develop our offer. So we develop that much more together with the retailers. Because the retailers, they truly have a cost versus experience dilemma where they need to invest and their costs are going up. And that is tricky. So each time they do something, it is very, very important that they get a good return on capital. That leads me into how we are positioned ourselves and how we talk about our role in helping retailers to improve their business. We talk about that we help them to rethink retail because that's basically what it's all about. We like to focus on creating value-based outcome. when we do something that it's really the retailer's KPIs that need to improve. And we focus, of course, on the consumer brand experience. We focus on and that's where you build the inspiring environments and you communicate the brand values. It's also when you create a more convenient experience through technology, but also through layouts and so on. But that's not enough. You also need to deliver solutions that drive increased sales and conversion. Otherwise, it's very hard to get the payback on the investment. And that used to be enough, but it no longer is. Now you also need to then improve the efficiency. for the retailer and for the consumer and also the service level. And by doing these three things, you really get a strong case. And if you, on top of that, also then can help to reduce the operational costs for the retailer, then you help them with their top line, you help them with their margin, and you help them to take out costs. And that's really what it's all about. So this is how we try to build our offer and present our offer. And each brand, each retailer have a different dilemma or different challenge that they want to solve. But of course, when you zoom out, many of the challenges are shared. And that's where we really have an opportunity to help them with our wide market coverage and our leadership. And this is a picture that may be not so easy to understand without my voiceover, so I will try to be pedagogic. If you look on the left side today, how we influence the consumer journey and the retail operations, we mainly do through our solutions of creating great lighting experiences that drive conversion and emphasizes the products that the retailer want to push. We build environments that are inspiring and efficient. And of course, we supply them with technology. So all transactions happen in a smooth way and that the customers are guided in a safe way and also efficient way throughout the store. So that's what we're doing today. And that influences, of course, the consumer experience, but it also influences the operations of the store and the operation of a whole fleet of stores. And we're going to continue to influence that also in the future. But we need new tools and tricks in our bag. And we believe that there will be a much bigger need for services. And it will also be much more... needed that we are able to use data created by the brands and by the brand themselves, either through other channels or open source of data, and that we also can help the retailers to get more data out of the stores and to consolidate this and drive that. So data and services will be additional venues that we add to the retailers for them to help to drive there. their efficiency and their service to the customers going forward as well. For a number of years, I would say since 2020, we launched our one ITAB strategy that really focused on two things. One was, of course, to transform ITAB, I would say internally to drive our efficiency and maybe do the things that we have not done before. So that's all about consolidation and getting the power of the whole group to meet the customers. And also we transformed how we go to market. So like I talked about just before, being much more solution oriented and outcome based in our sales and that has helped us to improve. both the re-engineered cost structure and how we go to market and how we drive and change what we offer and what we sell and what we succeed in selling that has really helped us to develop. So these seven priorities is what we've been working on. And on the next slide, I will... just go through because here I kind of put them into a different format. So really, the strategy was all about first stabilizing our performance because at the beginning of our strategy execution, we were in a financially not so strong state. So we had to do cost and capital restructuring. That was really, really important. And we did that. So it was all about simplifying the company. Then we started in parallel to invest. Of course, during the COVID years, it was hard to invest and it was important to keep control over your cash. But we have started to invest in how we go to market, how we drive our competence. We've implemented different digital systems and we are right now in the process of soon starting the implementation of a new ERP for the whole group. So there are a lot of investments that we put into the company in parallel then to doing savings and restructuring. And all of this we didn't do just to do because it was fun. It was necessary. But the purpose all along was really to expand and to grow the company both organically and through acquisitions. And that leads me into the next slide because I put a big tick box on this expand phase now because that we certainly can do. I put a bit shaded tick box on the build and invest phase because there's still more things that we need to do there. But of course, the big tick box on Xpand comes from that, as we communicated last Friday, that now our intended acquisition of HNY have gone through and we are two leaders in our industry in Europe that are now combined into one group. And that really sets us apart by far compared to the competition. I just want to highlight that these figures here are 23 figures. So it's important to bear that in mind. And what we said at the time of the acquisition and what we have communicated at that time, we talked about how complementary HNY and ITAB are to each other, that where one group has its strengths, the other one is a little bit weak geographically and vice versa. So we really complement each other, especially in Europe, Middle East and South America. Together, we also can learn because HNY has some strengths that are unique, ITEM has some other strengths that are unique, and we can learn from that and offer the best of both to the market. We will get a significant increase of scale and that will help us to become more efficient. It will help us to drive synergies, both when it comes to taking costs out and improving our capital spend. But of course, then synergies in purchasing is a is quite a big upside. We also see clear commercial upside. And I just want to highlight on this picture that the figures that we presented then are still the figures that we're presenting now. But I just want to let you know that the full synergy effect we expect to be realized during 2027. So we need to do the work before we can get the synergies in our books. But we have clear plans and the work now starts. It started this week. to deliver that. So we will follow that through the coming years. And as you know now from today, ITAB in 24, we improved our growth and we improved our profitability. So we have moved in the right direction. And I can share that also HNY have done the same. They have grown and they have improved their profitability. But we will not present official HNY figures until we present a Q1 report where we then will include February and March into the new consolidated group. And just a few words on what we now have ahead of us, because it is important to remember that this is truly transformational. So not just for HNY and ITAB, it's transformational for our industry in Europe, because it is two of the absolutely largest players that now combine. And what is really, really important for us is that we now start the work. Up until Friday last week, Friday lunch, we were competitors. And after lunch, we were in the same family and best friends. And as you all know, business is all about people. And now we need to get to know each other. And I put up some of the things that we talk about internally, because I think they're important for you guys to know that Our first focus is to ensure continuity in our business. So keep focus on our customers, continue to serve them, take good care of them and continue to drive the business. Don't jeopardize anything on the market because we are busy integrating. That's also important, but it cannot be more important than taking care of business. So that's our first priority. And of course, right now, it's important that we now become friends and we we get to know each other of course we've done a very very thorough due diligence we know what we are we know how we complement each other we have a plan but now we get into the details we we lift the cover and look at everything uh in a in an official way and it can be shared internally so we can start to drive all the projects we need to do to truly become better together And then I think this is an important message that I've said when we announced our intentions. And this is what we talk about also internally. It's important that we start delivering on the synergies directly. That's not something we can wait with until 27. That is something that is going to start as soon as possible. And I think already the first couple of months we are going to start to deliver on the synergies. And I think it's very important to highlight that we see the synergies mainly coming from procurement and cross-selling. Those are clearly the two biggest areas. And then, of course, there will also be some efficiency when we combine our two groups. So to wrap up, ITAB and HNY truly better together. And I just want to make a shout out that, of course, this is a huge acquisition. There are risks connected to that, but the two companies are performing. The value that we add per share is quite significant, and I think that's important for all the shareholders to remember. And if somebody feels that it's a pity that we don't give dividends in the coming year, it is because we want to stay focused on the financial risks and make sure that we spend the money on reducing our debt and not on paying us dividends. And since we add so much value through HNY, we think that's a really, really good way to treat the coming year. So by that, I hand over to Ulrika to help us to go through the figures for the last quarter of 24. And before we do a wrap up and take questions.

Yes, thank you Andreas. Hello everybody. Looking at the full year of ITAB, our adjusted EBIT margin shows an increase to 7.7% and we saw increasing sales and underlying profitability improvements despite the challenging market and strong second half of last year in comparison. During the year, our historically good start in 24 were followed by a somewhat weaker second half of the year. We still experience a considerable interest in our loss prevention and self-service solutions, but the outcome is impacted by timing of delivery for individual projects and the facing of deliveries were different compared to 2023. For the full year, increased volumes and margins in total favor of product mix and higher capacity utilization in our production are main drivers for the development. Our operating cash flow is positive with a cash conversion of 88%, which is above our financial target of 80% over a business cycle. And our underlying financial position is strong. Net debt is impacted by the directed share issue in September related to the acquisition of HNY, but underlying debt continues to decrease. And we are now looking forward to 2025 with integration and working together with our new colleagues at HNY. Looking at our sales in the fourth quarter, we have a growth of 11% with several of ITAB solution areas and most geographic markets reported increased sales, mainly driven by grocery, do it yourself and also the fashion sector. So basically all our important sector showed significant growth in the fourth quarter. For the full year, growth was 7%. The grocery sector is the main driver, followed also there by fashion and do-it-yourself. Most geographic markets experience growth, but especially in Northern, Central and Eastern Europe. Our sales growth in self-service solution continues with increased sales of self-checkouts and also conventional checkouts. And we also see growth in our interior solutions, while we have experienced lower volumes in loss prevention projects second half of the year. As a result, the product mix did not have the same positive effect on the gross margin and earnings during the last two quarters. Onwards, we feel the market continues to be a bit cautious, but we are fully focused on continuing serving our customers and planning for the commercial synergies together with our new colleagues in HMY. Overall profitability for the full year 2024 we improved our profitability despite a challenging market and in comparison a strong finish of 2023. The underlying improvement is mainly driven by higher gross margin and sales growth for the full year, a favorable product mix and increased capacity utilization. And as I mentioned, our margins weakened somewhat during the second half of the year, driven by the lower share of loss prevention solutions impacting the product mix negatively compared to 2023. Apart from this impact driven by project-based deliveries, we generally see increased margins across both portfolio and market geographies combined with increased operational efficiency. In quarter four, our result was positively impacted by sales growth, while product mix and compared to last year had a negative impact. Our adjusted EBIT in the fourth quarter amounted to 106 million, corresponding to an EBIT margin of 6%. In the upcoming integration process, we will, together with our colleagues in HMY, continue to focus on operational efficiency and build an even stronger platform for the future. Cash flow from operating activities in the fourth quarter was $320. 20 a bit above 320 million and we have a positive cash flow every quarter in 2024 summarizing the full year to 624 million sec which is continuously strong and corresponding to a cash conversion of 88 percent Increased profit during the year and balancing inventory levels at a lower level than last year despite our sales increase contributes positively and indicates that our efforts to increase capital efficiency are materializing. By that I thank you and leave to Andreas to conclude on the main takeaways from 2024. Thank you.

Thank you Ulrika. So I will not go through these points in detail, but I just want to kind of ask you all to zoom out and look at what we have done the last couple of years and again in 24. We improve our earnings, we have growth, and we declared our intention to do this very transformative acquisition. And that is now concluded in the beginning here. But of course, all the work has been done during 23 and 24 in that process. It has really been an eventful 2024. I'm super proud over what the teams have achieved across ITAB. I repeat again what I said previously that this improvement that ITAB has also HNY have improved their 24 compared to their 23. We are looking forward to sharing much more details around that in the future. We're very busy now ourselves getting to know the colleagues and understand all the numbers. than setting plans for the future together. There's so much talent in both our groups, and we're really looking forward to putting all that talent to work and deliver increased value for our shareholders and all our employees and customers. So I just want to do that because I think Ulrika presented really, really well the movement of our figures. And just to mention maybe that because I've gotten some questions on the quarter that people feel worried that it's slowing down a bit. But I have to remind everybody that we are a project based business almost entirely. So every year we start from scratch almost, and we need to fill up by winning all the projects. And usually we follow a year cycle, but when it comes to the more technical and digitally advanced products, they have longer sales cycles. And when they come, they usually have quite rapid implementation. And we had this 25 million euro deal that we supposed to deliver over i would say the majority of 24 but but it actually happened at almost everything during the last two quarters of last year and that's why we have very high comparable figures so we feel really really confident we we are according to our plan that we presented to um all of you guys and to our banks when we stepped into the acquisition of HNY. So we're basically spot on that plan. And we're really looking forward to delivering more earnings per share to all our shareholders going forward. So by that, I think we open up for questions and answers.