RVRC Holding AB (publ)

Thank you operator and good morning everyone and welcome to this conference call where we will address the report for the second quarter of the financial year 2025 and 2026 and our financial year starts 1st of July and ends the 30th of June. So Q2 means the period from October 1st to December 31st. My name is Paul Fishbein and I am the CEO of Revolution Race and joining me today for today's conference call I have the company's Chief Financial Officer Jesper Alm. For those of you who are new to the Revolution Race story, I will start by giving you a brief introduction. Revolution Race is an international outdoor brand offering outdoor products, mainly clothing, but also shoes, footwear, bags and other outdoor products. Everything started with pants and that category is still the largest product category. We operate with a D2C business model, and this is important to understand. It means that we skip the middleman and sell our products directly to consumers. We do this mainly via our own website, Revolution Race, but also through, for example, marketplaces such as Amazon. With our D2C business model, we can secure our competitive offering and at the same time also maintain industry leading margins. Going back, our brand was very much built on our community on social media platforms. And today we have more than 2 million followers on those platforms and over 750,000 reviews on our site, product reviews. Revolution Race was founded in 2013 and launched in 2014 and we have been listed on Nasdaq Stockholm since 2021. Our headquarter is located in Sweden and we have today approximately 140 employees. This picture illustrates our international presence. We have customers today in around 40 countries. We have 19 local webshops, including that we recently opened our Canadian site. And we also currently have two physical stores. We design all our products in-house in Sweden and work together with more than 25 suppliers for the production in Asia. So let's now take a look at our performance and net sales development in the quarter. Q2 is historically the biggest quarter and we are very pleased to present a quarter with record sales and the strongest result in Revolution Race history. Net sales over the rolling 12 months, that means the full year 2025, passed for the first time 2 billion Swedish krona and that is of course a milestone for the company. Net sales in the second quarter amounted to 726 million Swedish krona resulting in sales growth of 11% in local currencies if you compare it with Q2 last year. Despite the continued uncertain market environment, this means that we continue to gain market share and we strengthen our market positions. During the quarter, net sales margins and also earnings were negatively affected by currency effects. That follows a stronger Swedish Corona as the majority of our sales are generated in other currencies than SEC. and for example we have 75 to 80 percent of our sales in euro while we are reporting the quarterly results in Swedish krona. On top of the underlying currency effects we also in this quarter we had a currency related negative item of one million SEK and compared to a positive item of five million SEK last year. So only here the difference amounts to six million compared to last year. So all in all, we would in fact have an even higher profitability if you remove these currency effects when comparing with last year. Looking at the geographic split of sales, we deliver growth across all our three reporting regions during the quarter. Sales in our largest and most important region, the DACH region, remained strong and increased by 14% in local currencies. Germany That is the largest market grew by 11% in local currency, while sales in Austria and Switzerland continue to perform very well. In the Nordics sales growth increased by 6% in local currencies and also yesterday we saw the Swedish spot index data. It was published showing that outdoor sales in Sweden declined by 9.2% in the calendar fourth quarter. In contrast, our sales increased by 2% during the same period. And I think this clearly reflects our continued and significant market share gains. Sales in the rest of the world region increased by 6% in local currencies. Excluding US, this rest of the world region would have grown by 10% in local currencies. And currently, we are not focusing on our US sales since we are revisiting our logistics setup. in order to match new tariff conditions but we hope to be able to again focus on us later this year um Let's continue to look closer at the second quarter and we continue to deliver strong industry leading margins. And once again, we show our ability to combine growth with solid profitability, even in a challenging market environment. Earnings grew faster than sales during the quarter and amounting to 180 million Swedish krona, corresponding to an adjusted EBIT margin of 24.8%. Gross margin for the quarter was 69.8%. We saw negative currency effects from the stronger Swedish krona, as most of our revenues are generated in other currencies, primarily Euro, as I mentioned, while we reported in SEC. We can move on and look at cash flow. Cash flow from operations was strong in the quarter amounting to 360 million Swedish krona. We continue to maintain as a result a solid financial position with a net cash position of 341 million Swedish krona. And that's actually despite having distributed dividends of 143 million during the quarter. And on top of that, we also repurchased shares for 39 million Swedish krona under our share repurchase mandate. So all in all, we feel that we have a healthy position. Looking also at some product development, we've continued to develop and expand our alpine segment ahead of the winter season, but we have also launched new products, for example, for cross-country skiing and also winter running that has performed well in the beginning. These launches and our new premium collection, the Ultra Series that was also launched in the quarter have been well received. And looking ahead to the coming quarters, We see further product development and launches that will strengthen the offering going into the spring season. One example of that is our best-selling outer pants, which are being updated with additional length options. And with that, I would like to hand over now to the company's CFO, Jesper Alm, who will present and walk through the financial performance. Jesper, please go ahead.

Well, thank you, Paul, and good morning, everyone. I will briefly cover the financial performance during the second quarter of the financial year, 25-26. Gross profit amounted to 506 million SEK for the quarter compared to 481 million a year ago and this equals a gross margin of 69.8% compared to 70.3% last year. The slight decrease in gross margin is mainly attributable to currency effects on net sales and goods for resale. Personnel expenses are slightly higher compared to the same quarter last year, and the number of full-time equivalents increased to 140 from 134 last year. The increase is mainly due to the hiring of staff or physical stores, but personnel expenses as share of net sales were in line with those of the same quarter last year. Other external expenses came in at 287 million compared to last year of 290 million, a slight decrease. And as a share of net sales, that was approximately 40% and obviously lower than last year. Adjusted EBIT for the quarter amounted to 180 million SEK compared to 162 million SEK a year ago. And the EBIT amounted to 177 compared to 158 a year ago. This translates to an adjusted EBIT margin of 24.8% compared to the 23.6% last year and the EBIT margin at 24.4% versus 22.9%. The adjustment in this quarter of 2 million SEK is related to an AGM approved incentive program. And normally Q2 is the only quarter where we have an adjustment. The non-favorable currency effect affecting reported sales and the gross margin had a corresponding impact on the operating profit and also noting a certain overrepresentation of SEC denominated expenses. So the underlying currency adjusted result has some upward potential compared to the reported and adjusted EBIT for the last 12 months amounts to 418 million. As Paul said, the balance sheet remains stable. Changes in line with seasonality, networking capital decreased to 81 million compared to 118 a year ago. And changes in networking capital is primarily driven by lower inventory levels and the decrease in current liabilities. The inventory amounts to 494 million at quarter end of which 378 was goods in warehouse compared to a total of 592 million a year ago. Goods in transit has decreased from 161 million to 88 million. And ahead of the quarter, we carried out the planned inventory build up to meet seasonally higher sales volumes. And we're now satisfied with the inventory levels. Our financial position is strong and we had a solid cash position of 358 million at quarter end and a net cash position of 341 million adjusting for lease liabilities. The credit facility of 600 million SEK remains available and undrawn. Cash flow from operating activities came in at a strong 360 million during the quarter, which means in conclusion that we have a strong financial position and are well prepared to manage ongoing market uncertainty while maintaining financial discipline and operational flexibility. We aim to distribute 40 to 60% of net profit annually in accordance with the dividend policy. And as a result of the company's continued growth and strong financial position, the AGM in November, we sold on a dividend of 1.35 sec per share for the previous financial year, which implies a growth of 13% compared to the dividend of 120 a year ago. The dividend in total amounted to 143 million. And in addition to the dividend paid, we continued repurchasing shares in line with the AGM mandate during the quarter, acquiring shares for a total of 39 million SEC. Also in accordance with resolutions of the AGM, we canceled 3.8 million treasury shares, which corresponded to 3.5% of the total number of shares outstanding. And with that, it's over and out for me, Paul.

Thank you, Jesper. So to sum up, The market situation and also broader conditions remain uncertain. It's difficult to assess but we believe that we are well prepared, have a strong business and a strong financial position. The outdoor market has been challenging in recent years but during this time we have shown that we have continued to strengthen our competitive position. With our strong customer offering, the industry linear margins, high customer satisfaction that gives us a solid foundation for continuing our profitable growth journey. And having said that, we can also say that we are pleased to report continued sales growth also during the first weeks of January. and that concludes our comments on the result and before we finish i would like to thank everyone who has contributed to our performance during the quarter includes employees customers important partners and also shareholders and with that we are now happy to answer questions so we have a question to the operator yeah do we have any questions