Rusta AB (publ)

Good morning and welcome to the presentation of Rusta's fourth quarter results. Today the presentation will be held by myself, Göran Westerberg, CEO of Rusta, and our excellent CFO, Sofie Malmunger, who will run you through the numbers. As usual, we have a quite simple agenda. I will go through a business update, telling you a little bit what's happened during the quarter and also the full year. And then we'll turn over to financial performance by Sofie and then we'll do a quick summary and open up for Q&A. As usual, we start the business update by having a look at the store network. We have at this time 225 stores operational in all our markets. During the last quarter, we opened up six new stores, which is more than the same quarter last year. We opened up one in Norway, taking us up to a total of 53 on that market, and a whole of five new stores in our home market of Sweden, taking the total up to 120. Now, the continuation of the positive development of the software rental market is continuing. So as we have seen for a number of quarters now, we have again reached an all-time high in the store pipeline. The total number of signed and ready stores is now up to 47. Last time we reported 44. So in spite of us having opened six of the stores in the pipeline, we have added another nine. Looking at the guidance, we have guided the market to the span between 50 to 80 stores in the coming three years. Now seeing that the inflow of new locations is continuing at this speed and that we're also getting close to the lower end of this span, we're now guiding the market to the upper half of this spectrum. So we believe now that it's likely that we will end up somewhere between 65 to 80 stores in the coming three years. Having a look at the numbers of the last quarter of the year, we accelerated again the sales. We're now up to 12.6% in net sales growth during Q4. And we had a very healthy 8.6% like-for-like growth in local currencies. Looking at what has happened and what's behind these numbers, we had an exchange rate negative effect. The Swedish crown has strengthened, as most of you are aware of, for the past couple of months. And we have a negative effect immediately in sales currencies. So most importantly in Norwegian crowns, but also to some extent in Euro. And that's about 1.9% negative effect in these numbers. So excluding currencies, our top line growth was 14.5%. We also had a leap year, and that means one day less of trading, which means that we had a negative effect of 1% due to that. But we also had a positive effect due to us meeting last year's IT attack. So all in all, the 3% positive impact we had from the Teto incident, together with the currency effects and the leap year, it can say that it's neutral so i think considering all of this i think this is this is a very strong quarter from a top line perspective We also increased the gross profit by 7%. As I'm sure you've noted during Q3, we also guided the market in the sense that we have transferred focus from strengthening gross margin that we have done all the way since the IPO to now shift over more to focus driving top line growth. We have succeeded with that and we have achieved the gross profit growth that we have set out to achieve. We also improved the EBITDA profitability by 1.6%. This is our smallest quarter and due to that we've always been in a situation where the last quarter has been loss-making. But we have reduced the loss during this quarter and I think we're also getting closer to a point where we will actually turn this to a positive development in the last quarter. Some of the key events during Q4, I think most notably, we had strong development in all segments. We strengthened sales and profitability across all segments. And in fact, in other markets, the new markets, the online Finland and Germany, we actually had the strongest development of all segments. Also looking under the hood of the numbers here, we can say that there's a number of things that we like. One is that we have an increased average ticket value and also that visitation increased. So basically meaning more customers coming and shopping more when they're there. We saw that both the number of items in the shopping basket increased, but also the total value of the basket. Looking even closer, we also saw another significant and important development, and that is that the share of higher ticket items increased. I think that's a sign of a healthier customer, but also that our customers have responded well to our pricing, but also our campaigning. So I think this is part of the effect of what has driven both the gross profit development, but also top line growth. Now, in line with higher or increasing number of tickets, you can also say that the inflow of new customers is also increasing. So we have a very good combination of those things. And one way that we're seeing that, except for the increasing number of tickets, is that the recruitment to our loyalty program, Klub Rustak, continues. And last time we reported 6.2 million members. Now we're up to 6.4. So it's another about 200,000 new registered members. And interesting again, if we look under the hood of these numbers, we see that it's the younger people now that is the fastest growing population. target group over here. So it's the 18 to 28 years old that is growing fastest and also that the share of men is increasing. A large chunk of our customers have been women, but now we're seeing that the men is catching up and the absolutely fastest growth we see with young men. So we really like that. We've talked about reasons for why we think Club Rusta is important to us. We've talked about it in the perspective that the traditional marketing that we have used at Rusta and also generally in low price has been the flyers that we distribute to millions of households. But that's slow, it costs money and we get absolutely no data from it. So as we can transfer more of our marketing efforts into Club Rusta or through Club Rusta, it's quicker, it's cheaper, and we get more data. That's, I would say, some of the incentives that we see working with Club Rusta. But there's also another part of it, and that is that the club members' average ticket is 35% higher versus non-members'. So that's another reason that we're driving this so hard. We also see a ramped up expansion rate, as I mentioned. We had six new stores open during Q4, and we have a continued positive view on the expansion potential. The market now is considerably softer compared to the last many years that we've seen on the market, and that seems to continue. So we have a positive outlook on the rental market. Looking at the full year, we have a total of 6.4% net sales growth during the year. We also have a like-for-like of 3.2% in local currencies. Here we have a currency effect that is negative with 0.8%. But we have increased the gross profit by 5.4% versus last year. We also strengthened the EBITDA by 12.2% during the year and the earnings per share increased by 17.4%. And I think this goes to show the scalability that we have in our business model. Some of the milestones during the year includes these points. Of course, a lot of things have happened during the years, but some of the things that I would like to underline is one, that we opened 13 stores during this year, which is more than the year before. And we also celebrated 10 years in Norway, our first international market. And during the year, we also opened the 50th store in Norway, and the growth continues. From a strategic point of view, I think it's also worth mentioning that we opened a new sourcing office in Turkey. And this is very much to address both our general strategy to be active on the global purchase market and to make sure that we work with the biggest and the best. But it's of course also something of an insurance policy for the volatile global situation in sourcing. We know that it's good to have many more options and to have people on the ground in the most important purchase market to have different options should we end up in situations that we have seen in the last couple of years again in the future. We've also been approved for science-based targets initiative, which we're really happy about. I think this is another important part from a strategic point of view for Rusta, that we are continuously moving ahead, increasing both our quality level, but also our work with sustainability. This goes in hand with the aim that we have not only to offer low prices, but actually having a really good quality and also a trustworthy agenda on sustainability. Our aim here is to be best in low price when it comes to sustainability and quality. With that, I hand over to Sofie to take us through more of the financial numbers.

So in Rusta's fourth and final quarter, we see an accelerated sales growth and an increased profitability. We have a total net sales growth of 12.6%, negatively affected with 1.9% currency effects. So the total net sales growth excluding currency effects is 14.5%. Our like-for-like growth excluding currency effects is 8.6%. We have continued to invest in our price position and decreased our sales prices in the quarter, so the sales increase is all due to higher volumes and increased average tickets, and that goes for all our segments. We are meeting last year's IT incident in this quarter, but even if we include the lost sales of last year, we have 11.5% in net sales growth excluding currency effects and 5.8% in like-for-like sales growth excluding currency effects. Our gross profit increased with 7%, but the gross margin is 2.1 percentage points lower than last year. The decrease in the margin is mainly explained by two factors. The first one is that we this year have an increase in planned campaign activity compared to last year. During the IT incident last year, campaigns could not be run, which then resulted in a comparable higher gross margin, but also lower sales. The second factor is due to negative currency effects. The strength in Swedish krona is very positive for the continued margin development, where a lower dollar has a strong positive impact. However, in the short run and in the Q4 results, we see negative effects from the weaker NOC, which will be mitigated over time. Due to the seasonality in our operations, Q4 has always been a quarter of negative profitability. The quarter starts right after the Christmas sales and ends before the summer season kicks off. We have a positive EBITDA development in the quarter and have strengthened our EBITDA margin with 1.5 percentage points, mostly driven by good cost control with a decreased OPEX share of sales. The full financial year of 2024-2025 can now be summarized and we see increased sales, continued profit growth and a strengthened EBITDA margin. We have a total net sales growth of 6.4% which is 7.3% excluding currency effects. Like for like sales excluding currency effects is 3.2%. The gross profit increased with 5.4% with a drop in gross margin of 0.4 percentage points. The EBITDA increased with 12.2% and the EBITDA margin strengthened with 0.4 percentage points to 7.2%. Earnings per share thereby increased with 17.4%. So a short summary of the full financial year is that Rusta takes clear steps towards the mid-term financial targets with increased sales and improved EBITDA margin. If we look at our segments and starts with Sweden, we see a continued positive development and a continued movement towards increased sales of high ticket items. Seasonal sales of the summer assortment started strongly in the quarter and in combination with an increased sales of DIY we get a positive product mix effect in both sales and in margin. Total net sales increased with 13.8% and like for like 9.4%. We also have a positive cost development in the quarter where OPEX has a share of sales is 4.8 percentage points lower than last year. The EBITDA margin for Sweden for the quarter is 13.7%, an increase of 3.7 percentage points. We see similar positive development among our Norwegian customers, where both the number of customers, items sold and average receipts increased in the fourth quarter. The customers also increasingly chose high ticket items. Our segment for Norway has a net sales growth excluding currency effects of 14.5% and a like-for-like excluding currency effects of 6%. OPEX as a share of sales has decreased with 2.8 percentage points and the EBITDA margin increased in the quarter with 0.6 percentage points. Other markets show a very strong development and has the highest net sales increase within our segments. Total net sales growth excluding currency effects is 16.5% and like for like excluding currency effects is 8.5%. We see the same development as in the other two segments with increased number of customers, items sold, higher average receipt and also a very positive OPEX development driven by lower costs for freight. The EBITDA margin for the quarter is strengthened with 4.2 percentage points. If we look at the full year and conclude the performance per segment, we see a continued total growth in all segments with increased sales and increased profits. We believe that Rusta is continuing to gain market shares in all markets. Sweden has a net sales growth of 7.6% and an increased profitability to 18%. During the year, we have opened eight new stores in Sweden. Norway has a sales growth of 9.7% and a profitability of 11.1%. The slightly lower EBITDA margin compared to last year is explained by the negative currency effects due to the weaker NOC. During the year, we have opened five new stores in Norway. Other markets have a total sales increase of 3.9% and a continued improved EBITDA margin for the full year of 0.8 percentage points. Our profitability has continued to increase during the year and we take a closer look at EBITDA for the fourth quarter. We see that we have a positive sales mix effect with an increased share of high ticket items. We have prioritized the core of our customer promise, the low price, to thereby drive sales, which we have succeeded with. Increased planned campaigning has had a negative effect in the gross margin, but has been very positive in driving sales, traffic and profit. Operating costs are decreasing as a share of our sales with 3.5 percentage points, which is made possible by the scalability in our business model, meaning that we sell more but without increase our total costs. Freight costs between our warehouse and our stores are one example where we have increased the cost efficiency, which has had a very positive effect in the fourth quarter. Purchase prices are in line with last year, but sea freight costs are higher in Q4 this year. For the full financial year, we have managed to increase our EBITDA margin from last year's 6.8% to 7.2%, as you can see here on the slide. The profitability drivers for the full year are higher sales where volume is the single largest driver to the overall growth, both in total and like for like numbers. Positive effects of improved purchase prices, an increased share of private label and a positive sales mix. OPEX as a share of our sales has decreased with 1 percentage point. However, we have a negative currency effect of higher dollar and a weaker NOC. The total currency effect on our EBITDA margin is negative with 0.3 percentage points. So a currency neutral EBITDA margin for the full year is at 7.5%. And then some comments on our balance sheet and cash flow. There is an increase in working capital. This is due to a planned inventory build-up since we this year have more stores and an increased demand. We have a low net debt excluding IFRS 16 of 74 million SEK. Cash flow from operating activities in the quarter is higher than last year and is explained by lower purchases of goods this quarter compared to last year. Cash flow from investment activities for the quarter amounted to 134 million SEK compared to 63 million SEK last year. And the increase is explained by the automation project in our warehouse, new stores and rebuilt stores. As for the automation in Rusta's central warehouse, it's all going well according to plan and budget and is expected to be ready in spring 26. So all in all, we continue to have a solid balance sheet and a very stable financial position which will support our increased store expansion. We have no need for bank loans and will fully finance our growth ourselves, completely in line with our set financial targets. Summarizing the year and looking at our financial targets, we can see that we are well on track to deliver on our medium term financial targets. We have an organic currency neutral net sales of 7.3% and a like-for-like growth excluding currencies of 3.2%. Our EBITDA margin has strengthened from 6.8% to 7.2% and the currency neutral is at 7.5% and well on track towards the around 8% in the medium term. Earnings per share are very much outgrowing the net sales and EBITDA with an increase of 17.4% which is the result of the scalability in the business model. We have a dividend policy with an aim to distribute 30 to 50% of net profit, which leads us to the next slide. The board proposes a dividend of 1.45 SEK per share, which is an increase of 26% compared to last year's 1.15 SEK per share. This corresponds to 47% of the net profit of the year and is thereby in the upper end of our dividend policy. And with that, I hand over to Jaram.

Thank you. Right, so a bit of a summary and also events after the quarter. And the first point is that, of course, that after 14 years here at Rusta in this position, I have informed the board during last week, as I'm sure some of you have noted, my intention to leave this position no later than the end of June in 2026. So I think this allows for ample time for the board and for the company to find and prepare the succession into a new CEO. The board has of course initiated the process to appoint a successor and I guess more of that to come after the summer. Switching over to current trading, we can say that last year we had a bit of a strange spring. For most of our sales market, we had heavy snowfall in April, basically the whole month, and then it quickly turned almost exactly between April and May into full-on summer in May, which created, I would say, lower than usual sales during April and then a very high peak in May. So, of course, what we have met here has been, of course, a stronger finish to Q4, but, of course, tougher comparables in May that we didn't really meet up with in May. But if we look at the season, the summer season, being one of our really important seasons during the year next to Christmas, you can say that if we take a full look on this and compare April plus May last year, With April and May this year, the season has started well. So the early spring has been to our advantage. And generally, but not always, this is a good sign for the rest of the season. It means that we have sold a larger share of our products and our offer early on in the segment. And that is usually very good for the business. It means less of need for sellout and so on. We can also say that looking at Q1, we have softer comps in the second half of Q1. So basically May, really, really tough peak, but then June and July significantly softer comps during the first quarter. We continue to have a very positive long-term outlook and that has of course to do with basically everything that we've seen on how the consumer responds to our campaigns and pricing and of course our range offer. But we also have a record store pipeline that continues to grow. It's really hard to predict what it's going to look like in the coming quarters but it's on a very historically high level, the highest ever. And I think that this would basically be one very important part for us to continue to drive growth and to address a larger share of the white space that we know we have in abundance in all our markets. When it comes to currency effects, the strengthened Swedish crown, you can say that there is a negative around that and there is also a positive. The negative, which is the smaller part of it, is what you see first. And that has to do with the NOC and the euro, which is basically the sale currencies. And that negative effect we've already seen, I would say, the bulk of. We will continue to see a bit of that in the coming one or two quarters. But the big positive effect of this, basically the Swedish crown compared to the US dollar, that has a big impact on almost all of our shipping, the freight cost, the containers and so on, but also a large chunk of our purchase, the COGS, the cost of goods sold. Here we have a positive effect, and that takes a little bit longer time to hit the P&L. For the simple fact that you have to place the order, the suppliers have to produce it, it has to be transported into our DC and then sold in our stores until it ends up in our results. So we have that good part left. And looking into this year, we will start to see those things. And we will see the lion's share of that in the second half of this financial year. And it will improve over time. So both from a freight point of view, but also from a sourcing point of view, that is something good that we have ahead of us. We also implemented, that we communicated earlier about a week ago, that we now have the bonded warehouse implemented. And what is that? It basically means that we don't have to pay custom duties on a part of our range. So, for example, Norway not being part of the European Union, we still hold those goods in our DC in Sweden, and we don't have to pay custom duties until we sell it. So it's a big benefit for us. We have a 7 million positive effect during this year and we believe it's going to be about 30 million in the coming years. So it's a very good thing. We've also communicated a number of, I think, very exciting initiatives. The rollout of a new store concept during the autumn where all of our 225 stores will have a new setting. We also roll out some new range offers in connection with that that we will communicate at a later stage. We also have the initiative that Sofie talked about in our DC, among other things. And all of those projects are proceeding according to plan and we are very comfortable with our guidance around all of those projects. So I think From where we're looking and looking towards the horizon, I think we like what we see. So with that, I think it's time to open up for Q&A.