Pricer AB (publ)

Hello, everyone. This is Magnus Larsson speaking. I'm president and CEO of Pricer. With me today for today's Q3 presentation, I also have Claes Wenzel, and we have Cecilia Wienel, who's actually helping out with facilitating your questions for later. Very happy to be here today and do this Q3 report. And as always, for those of you that watched our reports before, I would like to start with our vision. to be a retail's first choice in in-store automation and communication and i think that as you might have seen we got an announcement from the s group it's an extended order it's more than 100 stores that they plan to deploy before summer and then once again to me that's also a sign of being retail's first choice now they we've been working together for for a full year we are almost done deploying their 300 initial stores and really happy to have this additional order um It's one way of showing the retail's first choice. I think that in discussions with them, we have managed to be the first choice in quite many different ways. From the initial engagement where we looked at the opportunity, we analyzed their needs, from the procurement process and eventually into actually being awarded the contract. But then constantly during the entire work together, the engagement, the overcoming things that doesn't work, fixing it, addressing it, and at the end, creating a very successful deployment in the S Group stores, improving the work for the S Group store staff, but also for the shoppers in their stores. So for those of you who don't know us that well, or that used to know us, where are we? A Swedish company. have deployed more than 300 labels, electronic shelf labels. We have a SaaS service that we call Plaza. We have more than 3,500 stores connected and some 25 million labels connected through Plaza. But all in all, 25,000 stores with more than 300 labels makes us a leader in the retail space. Looking on the market, so which market are we in and what's happening on the market? When we look at retail technology and when we look at the space where we're in, the store digitalization, and especially the shelf labels, it's a market that's been dominated by a relatively few number of countries and markets contributing to the growth and a very strong growth on the ESL side. We see that a lot of things are happening now to actually increase the speed of the market, but still, the penetration rate, as we view it, is somewhere around 10%. So given the interest that we see, it's still a low number showing that there is a huge market opportunity ahead of us. And why does people wish to actually do the digitalization? Well, there is clearly a need to create efficiency. There could be many reasons. It could be lack of staff. You need to do more with less staff. It could, of course, be to create a competitive advantage that you can actually do more with less staff. But it could also be that you want to improve the customer experience or that you want to unlock unpenetrated revenue streams. How can we get more in the shopper basket? Or how can we make sure that we actually help our retailers tag into revenue streams from the CPGs, from the suppliers? They have Coca-Cola, Unilever, et cetera. We're in the middle of our strategy work. But we can also say that, as communicated before, the markets that we believe are highly strategic, combination of high growth potential, but also that we have the ability to serve them well, we look at the UK, we look at Central Europe, it could be Germany, it's quite a few other countries, Spain, US and Australia. We have historically spoken about Japan. We believe now that these are the key markets that we focus on right now. Let's see if this will once again change after we're done with the strategy work. But we see massive potential in these markets. And we see also a lot of untapped potential. And we see a very high need from these retailers in these markets. When you digitize a retail store, I can see there are a lot of companies that feel invited to participate and they want to be part of this. And some retail tech solutions can be built easier than others. But what is really hard is to build something, build technology for the store environment that actually meets the criteria of the store environment. They have to be durable. They have to make sure they're easy to manage. You have to make sure that there is a high reliability and that they will actually stay for a long time and that whatever service you want to get out of them that they are responsive and available. It sounds fairly easy, but it's really difficult environment. From the shoppers banging stuff with a customer card, the environment, the technology environment, and that's something that we've managed to do really well. When we look into the future, what solutions are coming? We see a huge interest in any kind of solution that can reduce carbon footprint. Well, working more effectively, printing less paper, clearly does this. But we also believe that with what we provide and the solution we will provide into the future, having a clear sustainability, that we address it in a way that will actually help them reduce their carbon print, I think will be one key criteria. Very much in Europe, but we see the very same thing also in the North American market. Retail media is another area. The idea of being able to communicate in a different way in the store to actually do advertisement and promotions in a new way and capture new revenue streams. That is also creating a lot of retailer interest. And I think there is hardly any event of exhibition or keynote presentation where retail media is not mentioned one way or another. Once again, one of those areas where we can see there's a lot of untapped potential, but might still be in the early phases. So clearly something to be engaged in, but it might not actually give us the large revenues this year or next year. But clearly this is in some very early foundational years. The market is taking off. I think I covered it a bit. On the digital transformation, we also see that retailers that now engage in the transformation, they want to make sure that this investment, if they now decide to do the point of sales, they have done the back office and the ERP, they have done the ESLs. Having done all this, then I think the question is, what's next? How can we actually add tech in the store that will make the online presence and the physical presence get closer together? Can we add different devices? Can we add gadgets, engines, things that are online and connected that will add visibility to the store, visibility to the shelves that can actually detect motion? You lift something. If you go to the online platform and you actually check a product out, the supplier of the platform will clearly know that this customer was looking at this product, which has been hard in the store. But if you attach a motion sensor to, let's say, a mobile phone in a mobile phone store, well, then they can quite easily see which products are popular and whatnot. So we see that this merge with the omnichannel and both the online and the physical presence and actually try to do something is something that will generate a lot of opportunity into the future. Cost reduction, operational efficiency, that's clearly driving it. But also the technical advancements. We see some markets that have been late bloomers, they are now ready. They have done the initial investments required to actually digitize their source. We see that in the UK, we see that in North America or US as an example. They weren't really ready before, but now the readiness is in place. On the market status, so what's happening right now? Of course, we see a lot of interest in ESL across several markets, but we've also seen that some of the retailers that have now made a large investment but they're not fully deployed that they now actually aim to actually do a full deployment and in the report we mentioned that we now expect orders from one of our large customers as they plan to not fully deploy deploy all their stores they've had a partial deployment some stores without dsl some with partial deployments but now their target is to to actually improve store efficiency and to work different way with price management they will actually now by Christmas next year have all stores deployed with ESLs to actually make sure that they have an environment and a setup where they can fully benefit from all what the digitalization can give them. They were really happy for what they did in a number of stores. Now want to do it fully to reap all the rewards. We see a lot of actions in North America in general, US and Canada. we see a lot of action in the retailers in UK. Here, most of the tier one and many of the tier two retailers within several areas, grocery, do-it-yourself, home electronics, and actually quite a few other areas are now looking at or planning for an ESL deployment. So a lot of interesting discussions that will happen and business that will happen over the coming year and years. You've seen our result. It's, of course, very pleasing to report it today, but it's the effect and the result of a lot of work. You could say that we started a transformation back in 2022 with the formation of a new management team. We changed the go-to-market plan. So in 2022, we got the growth of the company started, which had somewhat stagnated. 2022, 2023, we were strengthening our balance sheet. We did a share issue last year. And at the end of the year, we communicated actually the cost reduction corporate program, but also the start of the transformation. Today, we can announce that actually in Q3, we have reached the full effect of the cost savings program. And the transformation is something that is part of the daily life at the company. We've done a lot of work. There is still a lot of work to be done, but we have done so much that we can say that we will not end up in the same situation as we did before, where we add resources to actually compensate for processes that might not work as good as they should. So we have a structure. We are working continuously, but we have actually laid the foundation. We laid the platform to actually move into the future, which would then take us to phase four, where of course we want to increase the speed of growth and we still want to continue the operational excellence to make sure that we deliver competitive growth at the high profitability. And I think that's probably a good segue over to you, Claes. Yes.

So let's start, look at the sales and the gross margin development. Large orders. customers has a big impact on each quarter. And the lack of growth is due to few large orders or customers. That was buying last year. Despite of that, we have very strong and good growth in the rest of the market. Throughout the period, not only in Q3. If you look at the gross margin for the whole period now, it's 21.3%. It's almost 5% units higher than a year ago. The reason for this is, of course, a product mix, but it's also better cost of goods serves. Then if we go to the next slide, looking at the last 12 months for EBIT and net profit development. And as you can see, we have earnings growth in EBIT since the first quarter of 2023. But the effect is much stronger now in 2024 when we have increased the gross margin and we also have the effect from our cost reduction program. The next slide is our P&L. And here is a A few interesting things down at the bottom. You see, of course, the cost reduction effect and the higher margin effect, but also on the financial items, we can see much better development compared to a year ago. And a big part of this is related to that we have reduced or amortized our factoring totally. So we have saved financial costs related to that with 8 million crowns for the whole period. And now also, when we get out of Q3, we will, going forward, have a more normal tax situation. We have had a lot of losses in the Swedish company, and that's why we have had such a low tax cost now the first nine months. Then if we go to the next slide, the cash flow from operations, and as you can see here, We expect to have higher sales now in the fourth quarter, and that's why we have increased our inventory. Another big impact on the cash flow is of course the amortization of all the factory, which is close to 170 million. So that explains the situation now. So when we come out of this year, we will not have as high inventory as we have at the moment.

All right. Thank you, Klaus. So let me summarize the third quarter. And as always, this will probably be a little bit of my bragging slide, so I hope you'll excuse me. Despite the fact that order intake was just slightly above last year's Q3, we have seen very good order intake in the French market. We've seen it in the Pacific market, we've seen it in the Nordic market, we've seen it in the Benelux market, and also, gladly enough, the US markets. But it's been offset by a decline on the Canadian market. If you look at this different market, in the Pacific, we've seen a very strong growth over the year. There has been a focus on, especially the four-color label, where we've been successful, both in New Zealand, but increasingly also in Australia. Our partner in this region, they pretty much only sell four-color labels, which is, of course, also contributing to our good profit. In the Nordic market, it would be easy to say it's the S Group that's been driving it. Sure, they've been very successful, but we've also had an increase in orders, both for Sweden and for the Norwegian market. So here we can actually say that it's been something not only thanks to one customer, but actually three different markets. And the US market, it's of course very nice to see that we are growing this market. It's still from a number that is low, but it's a very clear growth and it's a major growth compared to last year. And just like the order intake has been affected by Canada, we can see that the market in terms of net sales, France, have impacted also the result. If we would actually exclude France from the figures that would compare the quarters, there is no France in Q3 this year or last year. The growth in net sales is 37%. Driven by a Nordic market, once again, very strong net sales in the Italian market, driven by both partners and a lot of direct sales. Benelux market is kicking back, which is nice. Once again, it's not only all the countries in the Netherlands, but it's actually both in Belgium and the Netherlands that we see this growth. And just like for the order of intake, US is actually growing on the sales side as well. So at all, at large, even though I'm not happy that net sales were less than last year, we can see it has been very specific market affecting this one. And now the other markets have been healthy and growing very strongly. On the gross margin, as Klaas mentioned, we had a gross margin over the year of 21.2%. Please help me, Claus.