Dometic Group AB (publ)

Welcome to Dometic Q2 Report 2026. Today I am pleased to present CEO Juan Vargas, CFO Pierre Collison, 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, and welcome to the presentation of the interim report for the second quarter of 2026. Let's move into the highlights. As most of you are aware of, the market conditions are still tough. uncertainty is still there. We have seen as a consequence of the situation in the Middle East, higher raw material prices that might be leading to inflation in the coming months, at the same time as the tariff volatility is still there. On one side, the American administration took away a number of tariffs but implemented some new tariffs as well, the so-called 2-3-3 tariffs. We see consumers still being cautious in the same way as our customers in the value chain, meaning OEMs and dealers and wholesalers. And we have seen as well, as a consequence of what I commented before, a situation where industry production, especially in the US, is coming down, but also in Australia as a consequence of higher interest rates implemented during Q2. and we see also kind of a slowdown, starting to see kind of a slowdown in Europe as well. Looking at our performance, we delivered a negative organic growth of 1%, with a positive single-digit growth in service and aftermarket, according to our strategy. We are happy to see as well a distribution is coming in part with last year, and we see a decline in OEM for the reasons commented before. Evitae margin coming in at 12.4 versus 14% last year, and the margin reduction is primarily driven by the increased raw material and freight costs. We see also increased LGNA, partly due to a budget provision for the Chapter 11 fight by West Marine in the U.S. affecting primarily marine, but also our mobile cooling solution segments. And then we continue to invest in product development and marketing, following, obviously, all the product launches that we have done and the ones that we have on the pipeline. And we also have had a tariff refund, which is offsetting a part of the tariff cost that we have, additional tariff cost that we have in the quarter. Pre-cap flow over 800 million in comparison to 1.3 billion last year leading to a leverage of 3.3 which is in bar with previous year but also Q4 2025. Considering the market situation especially in the US where we see the RV industry coming down additionally Just when looking at the last three months that we saw information from the American Association, manufacturing is down 16%. We will see how the numbers look in June, but we don't expect any improvements in comparison to what we have seen so far. We also decided to extend the global restructuring program. As you all know, we were expecting growth in 2026. the growth is going to be tough to achieve, and that means as well that we continue to adapt our costs to the new circumstances. In this case, we have done, in the main program, we have done a lot which is impacting our growth margins, meaning consolidating factories, consolidating distribution centers, some SG&A. In this extension of the program, we will focus more on the SG&A part of the business, especially, again, in the land vehicle segments where we see the delay in the recovery of the markets. The expected savings are going to achieve 150 million krona when we are totally done by mid-2027. And we are booking restructuring cost of 100 million, which is recorded as items affecting comparability And of course, depending a little bit on the market situation and how the market evolves all the time, we will continue to consider additional measures. Looking more at the hard numbers, sales close to 6 billion with 1% organic decline. We also had 1% due to discontinued businesses. EBITDA, 739 million. reaching a 12.4 EBITDA margin in comparison to the 14% that we achieved last year. Adjusted EPS of 1.27 EUR and a free cash flow of a little bit over 800 million in comparison to 1.3 billion. Two main reasons for that. The main reason is really high inventories in the quarter as a continuation of the high inventories that we had also in Q1. In this case, on top of the inventory that we built up on the expectation of having a much better year 2026, and remember that we are in Q2, which is a stronger quarter, and then we have Q3, which is also a strong quarter. But on top of that, we are also moving a couple of factories. We are shutting down a couple of factories as a consequence of the restructuring program that we are running. And in order to prevent problems, delivery problems during the move We are also building extra inventories just to be on the safe side. And again, leverage ending up at 3.3. Looking at the first half of the year, 11.2 billion in total revenue, or the same organic decline of 1%, and the same also 1% in negative portfolio changes. EBITDA close to 1.3 billion or 11.6 as EBITDA margin in comparison to 12.3 adjusted ETS of 2 Corona and 14 Erlen slightly below last year's numbers and Africa's flow of 650 million reaching the same leverage as we had one year ago. Looking at the breakdown of sales Again, 1% down with Land Vehicles 4%, affecting primarily Americas, negative 16% for the reasons that we already commented. APAC is also down 12%. We saw a much better Q1. We saw a deterioration in Q2 rapidly. After the interest rate increases, the industry really pulled the brake again. While EMA shows positive growth of 3%. Happy to see the marine continues to show organic growth 3% as a continuation of 2% that we saw in Q1. And even mobile cooling came in at plus 5% in comparison to the plus 1% that we were showing in Q1. While Global Ventures down 16% in comparison to minus 7% in Q1. And I will come back to those numbers later. Looking at the breakdown of sales by channel, no major changes. In reality, sales and aftermarket becoming 31% of the total group, while distribution is coming down to 31% for 33% that we were showing last year. And this will change depending on the quarters. We have sales and aftermarket distribution being very, very strong in Q2 and Q3, and then coming down in Q4 and Q1. while the OEM business is a little bit more stable during the year. Looking at the different channels, again, happy to see the second quarter of growth in terms of the market, distribution coming at the same level, and we have seen also in the last two quarters quite a bit of stability, and then the OEM. a further deterioration driven very much by North America and Australia. Just as a comparison, looking at some of the market indicators, we see the RV manufacturer in the US coming down and see the acceleration in Q2 in comparison to Q1. We see registrations in Europe being very, very strong during the cross-up, partly driven, especially in February, by the new model series, but then coming down in April, May, a little bit better in June. So it's going to be super interesting to see what happens now in Q3, whether we see stability in Europe. And I can see meeting customers across Europe in the last couple of weeks that you have a mixed bag. We see some of the customers being optimistic about the second half, while some of the OEM customers especially being more cautious. about the second half. We also see that the U.S. registrations are down in the U.S. We don't have, unfortunately, the same quality data for Europe. In Europe, we see that we are still growing quite nicely in the European side, while the OEM in the U.S. is still negative. Looking at the EDTA evolution over time, 12.4, as I commented before, versus 14%. Gross margins continue to improve, 30.1 versus 29.7 20 years ago. We have, obviously, a positive channel mix, which helps the market growing while OEM is coming down. But we also have the savings performed or delivered by the restructuring program. At the same time, moving in the opposite direction, we have raw material costs and freight kicking in, and on the list driven very much by the new oil prices. But we also see metals, aluminum coming up quite significantly. We see steel starting to point upwards as well. And then we also have tariffs and tariffs refund in the quarter, which is having a positive impact. Still, we see positive impact very much driven by the channel and the restructuring program. SG&A, on the contrary, was negative, came in with a 10% increase versus last year. Half of that is the budget provision for West Marine, that most of you are aware of, filed for Chapter 11 two months ago. In that case, we are taking obviously a cautious approach and we are booking entire risk while obviously we are still negotiating and expecting to get some of that money back at the same time as we continue to invest in product development and marketing. Moving to the segments, Land Vehicles down 4%. Again, Europe, positive, while both Americas and APAC is negative. We see a slight decline in services of the market and a continual decline in the RVVM side. Looking at EBITDA, 246 million, or 10.3%, reduced profitability very much due to the lower sales. We see also raw material costs kicking in, higher raw material costs kicking in. and we have a flat development on SG&A despite the fact that we are still investing in product development and marketing. Marine, positive. We are happy to see continuous growth with very positive service and aftermarket, driving margins for the marine business, while slight decline in UEM, driven by North America, while, again, Europe is pretty positive still today. I have commented a couple of times that the market, the boating market in the U.S. and marine are slightly different. In Europe, you have more sailing boats, but you also have the yachts. And on the yachts, we have a lot of equipment. And normally, all the boats are much, much longer than what we see in North America. So good evolution, in other words. Evitae margin coming in at 18.8. versus 19.6 last year, despite the bad debt provision for West Marine. We have higher SG&A, we continue to invest in pro development, not the least on the gyro program that we are expanding, at the same time as we are launching new broads, and therefore continue to invest in marketing as well. ABTA, as I commented, improved underline, it will exclude for a bad debt provision. Power cooling, organic growth, 5%. We see a very solid growth in North America. We see as well a good oil intake. So the season is developing in a positive way, which we are very happy about. Everyday margin, though, down to 11.5% as a consequence of significantly higher pressing prices that came just after the breakout of the war in the Middle East. And of course, we are increasing prices, but it takes a while before we see an effect. We started to see the effect in June, and our expectation is obviously that we will see these margins coming up again during Q3 and Q4. We also see in this case that we continue to invest in product development, and even the filing of Chapter 11 for West Marine did have also a negative impact. on our margins in the SG&A line. Global Ventures, 16% down, driven partly by mobile power solutions, which is very much connected to the RV industry, but also by residential in the US, where we have seen also our public competitors coming in with pretty negative numbers. So we had a pretty strong 2025, We are comparing with pretty strong numbers when you're a girl, but now is turning negative Instead every day margin nine point three and of course in this case. We are talking about the small organizations. It's a little bit more difficult to adapt But that cost so is very much and driven by the lower volumes and higher CNA as percentage of sales We can continue to to put a lot of emphasis on sustainability and innovation as part of sustainability as well. Injuries still kept at a very good level and well below our targets of one. We see shared female managers at the same level as we have on the target. Renewable energy, we continue to invest. We are up to 44%. at the end of Q1. Innovation index at the same level as Q1. And as you may remember, we have some target 25%, and we will work hard to achieve that also at the end of this year. And then we have also the share of high expense assessments on suppliers on 63%. We are coming from 53% in Q1, so even there we see improvements. in comparison to where we are coming from. Looking at some of the exciting tools that we are launching, and before that, we have been commenting, this is the second word in a row, commenting that we are investing in auto launches. We run a major campaign building up with the target of building up even more the brand awareness for Dometic, especially on the outdoor industry in Americas, and we have got a lot of good feedback after that, and we will continue to invest in the same manner moving forward as well. Looking at innovation, again, we continue to invest in our portable products, in this case, the real program. We are seeing good growth with this program and we see also very nice margins. Again, coming back to the outdoor industry, we have the introduction of a new bed slide to facilitate how to use our mobile cooling and packaging solutions. Moving into more of the RV industry, we are launching a new electric water heater. which is delivering a number of benefits in comparison to the models that we are replacing at this point. And this is specifically for North American markets. And a lot of good new product launches in the pipeline. Moving from products to the restructuring program. Again, we extended with $150 million in savings, so we will generate totally 900 million at the end of, sorry, mid-2027, and 750 by the end of this year. So far, we have closed one manufacturing site, and we have a couple of them in the pipeline to be closed before year-end, and six distribution centers. About 400 employees have been impacted so far. We ended up Q1 with savings running rates of $400 million. We extended that to $490 million at the end of this quarter, so progressing according to our expectations. We have cashed out in the quarter of $84 million, which brings the total amount to $339 since the program started in Q1 2025. And then, as I commented already, 1% in discontinued businesses was affected in both Q2 as well as year-to-date. And with that said, I would like to hand it over to Perf.

All right, thank you. Hello, everybody. I will walk you through the financials then. So, P&I-wise, top line, close to flat versus last year, where we had the sales in the service and off the market offsetting the decline on OEM, which is also then helping us on the gross margin as it is a positive margin mix for us. Gross margin up 0.4, which is burdened by some couple of significant headwinds, including then the raw material prices on the resin side and also on the metals hitting the mobile cooling and to some extent also the marine segment. We also have significant tariff costs introduced in Q2 of last year, which did not fully impact us last year, but it's a full effect this year, obviously. Offsetting that is the positive savings that we have from the restructuring program. together with the price increases, and then also the tariff refund that we booked in Q2, which is to a large extent then for the quarter also in the tariff cost. Coming down to the operating expenses, as Johan talked about, we have the bad debt provision related to West Marine filing for Chapter 11 of some 50 plus million. And then we also have an increase in product development, increasing then the SDNA compared to last year. EBITDA, before IEC, then $739 versus last year in running currency of $877, and a decline then on the operating margin of 1.6. Of course, we're not happy with the decline in the result, but at the same time, solid result, I would say, considering the environment with headwinds both in the market demand and on the cost side. We recorded the 100 million in items affecting comparability for the expansion of the 2024 restructuring program. Looking at the finance net, it's down favorably. So we have a lower debt, so lower interest expenses, and then also a positive effect on FX. on our financial assets compared to last year. Cashflow, 1,083,000,000 in operating cashflow, negatively impacted by the lower release of inventory or cash from inventory. We have a declining, we have a favorable impact on the inventory side. in the quarter, but not to the same extent as last year. And this is then due to a buildup related to the restructuring program where we have moves on the manufacturing primarily within the U.S. of some $20 million plus. We also have at a lower sales than the increase or flat sales versus an expectation of an increase in the quarter, which have resulted in a little bit of an inventory buildup. And then I think it's also worth mentioning that last year in Q2, we had a significant inventory reduction in mobile cooling due to production issues. So free cash flow then is favorably impacted by lower interest paid, partly due to a lower interest cost, but also due to timing of the interest payments actually. And looking at the financing, we repaid a 2 million Euro bond in Q2, in April actually, to reduce our debt. AR program is running, has no real significant impact net on the AR in the quarter. At the end of the quarter, we start quite strong sales in our receivables. Okay, next. So, a little bit of a trend chart here on the free cash flow. And as you see, and as you're probably aware of, Q2 and also Q3 are important cash flow quarters for us. We have a negative kind of trend here, which I would say is partly impacted by the lower sales than all the period tying up less working capital. Now we are leveling out on sales development, which is of course positive, but we continue to focus now on being efficient on our working capital, which takes us to the next slide then, where we see the overview of the working capital. And we are down in inventory days versus last year. You see a little bit of an uptick there in Q2, which I just explained. However, then partly offset then by the increase in payables related to the higher purchase system. We are at 25%, so that's a decline versus last year, an improvement versus last year, and flat versus Q1. Inventory is obviously a focus for us, which is the largest part of our working capital with 5.1 billion, so that is a significant number, and the number of days, 125, would also hopefully indicate that there is some potential for coming down going forward. And again, then accounts receivable slightly down versus less. Also related to cash flow, obviously, is the capex level. We are flat, I would say. Slight decline in terms of investments into fixed assets. We are running relatively low CapEx, I would say, in the company due to our asset-like supply chain. It's not a big burden for us cash flow-wise. R&D, as we talked about, is slightly up and actually then significantly higher than our investment into fixed assets. Moving over to the... the debt side of the balance sheet leverage is a little bit down versus Q1 down to 3.3 versus 3.4 and on par with Q2 in 2025 and we have actually a reduction of debt or net debt if you compare to that year 1.2 billion so we continue to work hard on our on our balance sheet, and this is obviously a focus area together with the working capital. And versus 2024, we are down 2.8 billion in net debt. So that's a good improvement for us, but we don't fully see that then, obviously, in the leverage ratio. Right. Next. Looking at the detail of our outstanding debt. We have a good maturity profile, I would say. The net debt of 9.3 billion. Sitting on the cash end of June of 3.6 billion. And we do plan to use some of that to pay back 750 million bond, the safe bond, here in Q3. We did pay back, as I mentioned, the 200 million euro. bond in Q4. Average maturity 2.7 years. And on top of this, we have obviously done the RCF of 300 million euro. Yeah. I think that was the conclusion of the finance side, so I'll leave it back to you, Johan.