Dometic Group AB (publ)

Welcome to Dometic Q1 Report 2026. Today I am pleased to present CEO Juan Vargas, CFO Stefan Friestet, and Head of Investor Relations, Tobias Norby. For the first part of the call, all participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by pressing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Hello, good morning everybody to this Q1 report. Welcome to sunny Stockholm, by the way. Wonderful that springtime is back and we have the light back. So moving over to the highlights. We see an increased uncertainty following both the tariff situation and the geopolitical tensions in the Middle East. We see already now oil prices being very, very high. We see as well inflationary movements in terms of freight costs, in terms of raw material costs that will down the road have some kind of impact on consumer confidence. We continue to see retailers, dealers being very, very careful in building up inventories and ordering what they need. At the same time, we see also differences across regions, and most probably the region where we see confidence index being the lowest is in the American region. Looking at performance, we are very happy to communicate that finally, after many quarters of negative growth, we are standing at the same level as last year. We are very pleased seeing the service and aftermarket coming back and showing a solid growth of 5%, positive to comments that is everywhere. So we see the three regional businesses within Land Vehicles and we see as well marine everywhere also being positive from the service and aftermarket perspective. Distribution is slightly down 1%, mobile cooling being positive, which is good. We see also that the sell-through for the mobile cooling business has been very positive during the first quarter. And in reality, the one that we are still missing is the OEM that ended up at 4% down versus last year. but very much due to the RVVM in the American region. Perhaps even more positive is that both audio intake and backlog continue to develop in a positive way. Positive development on ABTA margin ending up at 10.6 and really based on two different factors. On one side, we have a positive mix which has enough to market growing. At the same time, as we also see the savings coming from the restructuring program continue to improve. At the same time, we have many product launches. We have been launching products, especially on the marine side and on the mobile cooling side during the quarter. And in connection with the extra product development costs, we also have marketing costs to launch, to have successful launches for the new products. last but not least improved free cash flow even if it's negative is quite a bit less negative than one year ago and totally in line with historical numbers so as a matter of fact better than what we have seen the last four five years in practice leverage ending up at 3.4 which which is slightly worse than one year ago, but following exactly the same historical pattern that we have seen due to obviously low invoicing levels in Q4 and low invoicing levels in Q1. If we move over to the figures, as I already commented, organic growth of zero with negative impact from currencies of 9% and then portfolio changes that continue to happen. delivering 1% in negative growth. Every day, 8% down versus last year, ending up at 10.6 in margin in comparison to 10.4. An adjusted EPS of 86 URN in comparison to 88, so very, very close now. And as I already commented, negative cash flow, but quite an improvement in comparison to last year, and a leverage is slightly higher than what we had one year ago. Looking at growth, land vehicles ending up at minus 1%, very much driven by Americas, 6% down. EMA was positive, 2%, and APAC finally minus 3%. Marine positive, 2%. So we had negative two quarters ago, positive, sorry, positive, negative, positive again, so we are hovering. around the same levels as last year. At the same time, we have a pretty good oil intake. Mobile cooling, very similar to marine, 1% positive, but also developing nicely on oil intake. And then global ventures, 7% down. Looking at the different state channels, in reality, nothing remarkable. No more that service and aftermarket is growing. By that, it's becoming 30% of the total business-wide OEM. continues to go down slightly, ending up at 38%. Perhaps one way to comment that RBOM that used to be 49% in 2017 stands today for 18%. So again, we are getting less and less exposed to the RBOM markets. Looking at the different channels, positive evolution everywhere. I do believe that looking at the different charts is very, very clear that we see a positive trend getting now into neutral growth for the group, but hopefully we will see also OEM come into positive terms in the near future. I would like to stay for a couple of seconds on this slide. What you can see, the gray line is manufacturing, the green line is registrations. It tells you a little bit where the different inventories look like in the different markets. Unfortunately, the inventories on marine are much more difficult. We get production numbers, but we don't get the retail numbers include both on manufacturing in the US as well as imports, and that distorts the picture a little bit. But if we go back to registrations on the RV side, we see that we suffer a major deterioration in the industry from 2022 to 2025, stabilized in the last couple of years, but not coming back to growth. At the same time, we see also that there is balance between retail and manufacturing. At the same time, we see that Europe, we saw Europe kind of postponing the drop simply because we had, as you may remember, problems with component delivery from the chassis producers to the OEM industry, which means that we still had pretty good years, 2022 and 2023. But we saw a major drop in the second half of 2024 and a major drop in 2025. And of course, when looking at metics evolution during the last couple of years and always commenting negative growth, what you can see is we got the heat in the US first as the US was stabilizing, then we got marine and we got as well Europe. So that has been very much the main reason for this delay in coming into neutral territory and hopefully showing growth in the quarters to come. Again, coming back to inventories, we are very much there on the AVI side. On the marine side, we still hear and read from retailers, in the US especially, that inventories are a little bit too high, while Europe looks far better. And by the way, we have seen growth on the marine side, both in Europe and APAC, during the last couple of quarters. ABTA ending up at 10.6, good progress on gross margins. It's very, very clear that the restructuring program is kicking in, showing improvements on top of all the other efficiency actions that we've taken. We have an SENA higher than one year ago, very much, as I commented, explained by the investments that we are doing. We keep doing improved development everywhere, but especially in the mobile cooling and marine area. which are reflected not just on the product development course but also on the marketing course in connection to the product launches. We see major improvements in land vehicles. We are on neutral levels on global ventures and we saw decline on marine and mobile cooling. Looking at different segments, land vehicles 1% down with good growth in service and aftermarket and again decline on the wind side very much driven by the RVWM side in Americas. Strong margin improvement, 9%, with, again, significant improvements driven by the restructuring program and all the other activities. And we continue to invest, as we have commented many times, on pro-development. Innovation is clearly the driving force behind organic growth, and that's what we are working for. worthwhile mention that we are still producing losses in americans but we see a major major cut on those losses during the last 12 months marine positive to see two percent growth with high single digit growth in service and aftermarket uh slight decline very very close now to neutral territory also on the OEM side EBITDA margins close to 18% and the reduction is very much driven again by, on one side, delays on the price increases, so time lag between price increases and the cost increases, and then, of course, all the uncertainties that we have just now with the tariff situation in the US. At the same time, we continue to invest, as I said, in product development, leading to new product launches and marketing costs. Mobile cooling, 1%. Here we see good development on the U.S. market. We see slight deterioration on the European and APAC markets. Margins are 5.7, so deterioration versus last year. We see a little bit of the same, that we have still time lags between cost increases due to the new tariff situation and price increases. and even here we keep investing in generating growth moving forward. Lastly, Global Ventures organic growth 7% down with other global verticals continue to develop positively at the same time as we see mobile power solutions still negative driven by the RBOEM that business is to a high extent linked to the to the OEM business With margins on a neutral level, on one side we see continued margin improvements on the global verticals for the same, but we see some margin deterioration for mobile power solutions, but totally speaking neutral since we are also adapting our G&A cost to the new situation. Looking at sustainability, very good progress. We feel proud of what we are doing in that territory as well with injuries coming down, have been down now below one, the target of one, for a number of quarters. We see also female managers at a decent territory. We would like obviously to improve even more, but we have seen a major progress during the last couple of years. We continue to invest in renewable energy. We are in operations and we are up to 44%. Innovation, again, the major driver behind organic growth, up to 24%, so we are very, very close to our target, 25%. And then we keep doing, assessing our suppliers for that material, and we will secure that we deliver as well on our targets. Some of the recent launches, we launched at the end of Q4 a new brand, Vaiko, which is also not just a number of products, it's also a new business model where we are addressing major wholesalers, major distributors and implementing a totally different business model generating high margins at the same time as we are capturing volumes. It is clear that we see a new demand for all the vehicles and we are addressing that new demand that we have been seeing accelerating in the last couple of years as a consequence, again, of the inflationary cost increases post-pandemic, people are looking for lower price options, and we are addressing that. Positive reaction, very positive reaction, even better than we expected during the first couple of months. Unfortunately, a little bit late, since we are already now in Q1, and customers are placing orders normally in Q4 for deliveries in Q2, and we launched the product in December. But again, so far, very, very positive reaction. Moving over to Dreamwear, another of the areas where we are investing, launching the first series of premium Dreamwear products, where we are addressing also modularity and delivering a lot of accessories, not just the bottles, but also a number of different options and we are expecting on one side good growth and good margin evolution but we're also expecting that this kind of product will reinforce our Dometic brand globally. Moving over to a new series of rooftop tents. This is also the third series of rooftop tents coming from Dometic. addressing the new market with SUVs and pickup trucks. And as a consequence of all the product launches, we keep collecting awards in different areas. In this case, we are talking about mobile cooling with the new high quality and premium Dometic branded products, both as hard coolers and soft coolers as well. that we have been launching in the last couple of quarters and are starting to kick in as well on store. Happy to report as well positive development on our restructuring program, the cost reduction program. You may remember this program will generate 750 million on running rates at the end of this year. We ended up Q4 last year at a running rate of 350. We added another 50 million in Q1 So new running rate 400 million and cash out in the quarter achieving 20 million. And with that, I would like to hand it over to you, Stefan.

Thank you very much, Juan. Moving to the income statement, starting with our gross profit margin development. This is really a very nice development that we have seen now for almost two years where we have had a continuous improvement of our gross margin. and it ends up with 29.6 percent in the quarter versus 28.7 the equivalent period last year and that has then favorably been impacted by sales mix but also the restructuring program and then partially being offset by the fact that we have still a certain lag between price increases and cost increases, including tariffs. I mean, there has happened a lot of things in the first quarter. We have always had the decision by the Supreme Court in the US and making some of the tariffs illegal. Then we have obviously had the escalating situation down in the Middle East, which has been starting to drive up input costs for our products. On operating expenses, in reported currency, we are down, but in constant currency, we are up 5%. And there is two things to that. We obviously have effects from our global restructuring program, which is driving down the cost as expected. But then we also have in the quarter some offsets for increased product development as well as marketing related to product launches. You just saw a number of the examples here in Shams presentation. Looking at net financial expenses which is on its way down as expected and driven by the gross debt reduction which is going to continue here now in the coming quarters. Tax is on the same level as last year and the effective tax rate is 33%. which is as we have communicated before affected by deductibility of interest expenses in Sweden. Moving on to cash flow summary. As Juan already mentioned, very nice to see that the free cash flow is actually quite a bit better than the same period last year. You know that we have the seasonality where Q1 is always our weakest cash flow quarter and now when we're moving into Q2 we are moving into the strongest one. the same with Q3 is also a very strong cash flow quarter here. But in the quarter, we have seen working capital on the one hand been impacted by higher inventory. It's of course measures to make sure that we have the inventory to fulfill the demand. And then we have seen on the other side improvements in trade receivables and payables. Mention was that the cash out related to the restructuring program in the quarter was 20 million. Program to date we have 256 million in payout and as you remember we have talked about it should be totally 400 million and we still stick to that so there is 140 million approximately to go which will happen in 2026. And then capex is a bit lower than the same period last year and we continue to prioritize investments in fixed assets. And we also have a new model which actually means that we have less needs to invest in fixed assets going forward. If we look then on interest expenses paid, they are down as well as tax paid. So that is also helping to drive the free cash flow. Moving on. Here you can see what Juan was alluding to, that minus 192 million in free cash flow stacks up quite well in a historical comparison here, so I'm happy with how we continue to manage this well. If we look on working capital, the last 12 months we are down to 20-25%, which is 3% units better than the same period last year. We are 26% in the quarter. Immortality balance 5.2 billion in constant currency that is then up versus last year. But as I mentioned, it's really to make sure that we can keep the service level to our customers here. So number of days, 121 days, and that's 10 days less than the same period last year. But as you can see, there is still potential to continue to drive that down towards around 100 days. On accounts payable, the movements there is very much mixed related, where do we have the major sourcing in the in the quarter so a little bit more China longer payment terms there inventory we already talked about and accounts receivable you see that the day's sales outstanding is starting to come down which I would also expect due to the AR program that we have been putting in place Okay, moving over to CAPEX and research and development cost. We ended up 72 million in the quarter, equivalent to 1.6% of net sales. And as I said before, we are making clear priorities, but we have also created a model where we underlying need to invest less in the machinery and equipment. On the R&D side, we are now on 2.9%, 132 million in the quarter and we are continuing to prioritize to invest in product development. We can also see that on our innovation index, as mentioned before, it's up to 24% now in Q1. And that is something that we will also continue to prioritize going forward. Moving on. So if we take a step over to our death maturity profile, The total gross debt is now 15 billion as of the end of Q1. We have an average maturity of 2.5 years and then we have an undrawn revolving credit facility of 300 million euro maturing in 2028. Then we will pay back the 2.2 billion in the remaining 2026 euro bond here tomorrow using cash on hand and then we also have a plan to repay the 0.8 billion which is a private placement that we have maturing in September 2026. So with this you will see the gross debt continuing to come down and also the net debt driven by the free cash flow that we are expecting to generate during 2026. Looking at the leverage ratio, it ended at 3.4 as was mentioned before. It's all the different components that is very slightly all contributing to take it up from 3.3 as we had by the end of Q4. This is not unusual that leverage ratio is moving 0.1 in the first quarter. So from now we are going to obviously come into the cash flow strong part of the year and the leverage will then start to move down here and in Q2, Q3 especially. With that, I will hand over to you, Sean, to make the summary.