MIPS AB (publ)

through the Q1 results presentation. And if we start with the key highlights of the quarter, as we communicated before, we expected a soft bite market to affect sales and profit in the quarter, and we did see that. Net sales was down 35%. If we adjust for currency effect, organic growth was down 41%. If we exclude the bike-related sales, we actually saw good growth in the quarters, a good performance in the rest of MIPS. We did see a soft start of the bike season due to cold weather. Assumption of gradually recovery in Q2 remains. And the good thing is, of course, that our long-term outlook hasn't changed. As you see also in the drop of EBIT and increase of our investments, we are continuing to invest behind our strategic priorities. We are almost 20% more people on board and of course we have recruited a lot of people to make sure that we can deliver on our long-term plan. we remain confident in delivering on our long-term strategy and the financial targets that we have. If we then look at sport, we are just ending a very strong winter sports season. It has actually in the US market been the best snow season in 25 years. And there is still a lot of snow in US markets and so on. We have seen, of course, a challenging market in bike, and that has resulted in a challenging quarter in sports with a decrease of net sales of 38%. Of course, this is fully explained by the soft bike market. If we look at the other two key helmets in sports, which is snow and equestrian, they actually demonstrate and showed very good growth in the quarter. We do expect gradual improvement of the bike market during the second quarter. And like we have communicated before, when we go into the second half of the year, we actually expect that also bike will be back at growth numbers. And if we look at the longer term outlook, we do see a positive view on sports as a total and especially in bike. If we then go over to moto, we saw a soft development in the quarter, still very positive on the long term outlook. And the soft development of a quarter with a decrease of 33% is fully explained on the back of a very strong prior year comparator in Q1 last year, where we grew 150%. We are really happy that we see great attention on the market, thanks to the new MotoGP helmet that we have launched that is equipped with the MIPS safety system. We have also one of the top-ranked riders that has now also joined Team MIPS. And there was a press release actually this morning that we saw that he is joining our MIPS team. So great to have one of the best riders in MotoGP also in the MIPS team. And of course, we'll remain confident on the outlook also for the Moto categories. In safety, we see strong development and of course, in line with our ambitious plan, we saw good performance in the safety category. In total, we have now 12 brands that have launched helmets and partnership with the MIPS technology inside. The one during the quarter was actually Securis, which is a smaller brand, but really interesting and with a focus especially on oil and gas industries which gives us a really nice exposure also so that type of industry we have of course invested a lot into the safety category to really make sure that we have a strong platform to generate volumes and 2023 will be all about ramping up the volumes and of course driving sales through so really happy with the performance that we see in the safety category If we then look at the development in the different categories, we saw in sports a decline of 38%, excluding bike. We actually saw good performance. Moto down 33% in the quarter, but we do expect good performance going forward. And if you also look at the rolling momentum, we have good growth in the motorcycle category. And in safety, very simple, we are following the plan that we set I will now hand over to Karin, who will take you through a bit of the financials.

Good morning. I'm Karin Rosenthal, CFO of MIPS, and I will take you through the financial part of the presentation. We saw a soft development in the first quarter with a decrease in net sales of 35%. Adjusting for FX due to a strong dollar versus SEC, sales decreased 41% organically. Gross profit was decreased with 37%, and we saw a gross margin of 70.8%, 72.5% last year, despite negative impact from the decrease in net sales. In OPEX, we continue to invest in our strategic priorities, R&D and marketing. We had a negative impact of 5 million SEC from FX under operating costs, in the quarter. EBIT was down 75% to 15 million and an EBIT margin of 17.5% versus 45.3% last year. We had a negative operating cash flow in the first quarter due to the decreased earnings and the tax payment relating to the 2021 year's profit. If we look at the financial KPIs, organic growth of minus 41%, an EBIT margin of 17.5% and an operating cash flow of minus 42 million. If we then turn to next page, we are now on page eight, balance sheet and the cash flow. We have a strong cash position with cash and cash equivalents of 487 million. And important to remind you that MIPS does not hold any loans. A negative operating cash flow in the quarter of 42 million relating to decrease in earnings and paid tax related to 2021 profit. A dividend of 5.5 SEK per share is being proposed and corresponding to 82% of net earnings for 2022. An equity ratio of 88%. Over to you, Max.

So if we then summarize the quarter, it was a challenging quarter. Good performance if we exclude bikes. We do expect a gradual recovery of the bike market already during the second quarter. Good outlook in both safety and motor in 2023. we are continuing to invest behind our strategic priorities to make sure that we can deliver on our long-term strategic plan. So when the markets will turn around in the second half of this year, we are fully equipped to deliver on our growth plan and make sure, of course, that we can improve the profitability improve the growth and so on and we are confident on delivering on our long-term financial targets so with that apologies for the delay we'd open up for questions if you wish to ask a question please dial star 5 on your telephone keypad to enter the queue