MIPS AB (publ)

Good morning everyone. My name is Max Strambits and I am the CEO of MIPS. With me today I also have Karin Rosenthal who is our CFO and we will walk you through the Q1 quarterly report. If we start with the key highlights of the quarter, we did see a stable start of the year, but actually a decrease of 6%. And of course that decrease is fully explained by a strong prior year comparator in snow. For the ones that are following us knows that we were increasing with 60% in Q1 2023. And of course we are up against that tough comparator. In terms of longer term, nothing has happened in snow that makes us worried. And of course, if we had a very strong comparator in Q1, we are up against a much softer comparator in Q2 with minus 40%. And I believe that when we are exiting Q2, we are back at growth again in snow. So nothing really that has changed and more of a phasing effect. And then why did we say stable quarter? That's because we saw good development in the other categories with continued good performance in bike. And we are now happy that we have seen two quarters with consecutive growth in bike. And also, even though it was only 3%, motor was back at growth again one quarter earlier than we anticipated ourselves. So, of course, really pleased about that. We also see good momentum in terms of projects of implementing new helmets with MIPS. Of course, that's a really important indicator for us if we are still gaining market share, if people will still increase the penetration with MIPS in their assortment. We saw an increase of 21% in the quarter, which is, of course, also a very robust indicator that we are going in the right direction. and of course we don't see any reason to change our previous assumption of recovery in 2024 and we remain confident in our long-term strategy and our financial targets in sports like i said we saw growth in bike tough competitors in snow sport was now down with nine percent and of course that's fully explained by snow, we did see growth in both bike and also equestrian, which continued to develop well in the quarter. We continue to see positive order momentum in bike and our previous assumption of recovery in bike remains. We consider the performance in snow, like I said to me, more of a facing related situation and expect to be back at normal performance when we are exiting Q2. Then, of course, we had also a great exposure of Gothenburg Horse Show, which is the largest show jumping event, which is, of course, a great event. And there we saw experience, a really high level of interest in MIPS. And also we had great interaction with the equestrian industry. And it's really good to see the level of education and awareness you see in that audience, even though equestrian is not the biggest part of our portfolio, it's still very interesting to see the interest that we are gaining in that subcategory. And of course we also see a long-term positive outlook in the sport category. If we then change to next slide. page which was Moto and there we were expecting a little bit softer Q1. As we communicated we did actually achieve a little bit of growth even though it was only three percent but growth is growth and of course if you come from a couple of soft quarters we are positive about being back in positive territory again. The retail environment is improving, especially for the important U.S. market, but it is still softer than we have seen previous years. We have implemented several initiatives to improve the sell-through, support new partnerships and model launches, and that, of course, starts to take effect. We have also announced that we will be the official safety partner of the Motocross World Championships. which was launched only a couple of days ago. And that is, of course, very important for us to drive the awareness in this category. So we will be following them through the whole season and we will also have our first safety symposium in the end of May. where we will gather all our key brand partners and also around 50 journalists in Germany and talk about how we can improve helmet safety also in that category. And that, of course, is a fantastic event, which we are really happy about. No change to the long-term outlook, strong interest for MIPS in the category. And of course, we continue to see new partnership and also models being launched during the coming quarters. In safety, we continue to see good development and of course supported also by important launches. We do see a gradual improvement of volumes and of course with more helmets being launched during the first six months. We see good interest in both the US and the important markets. We talked a little bit about delay in certifications, not the MIPS certification, but the certification of helmets in general. And those are now done. And we are looking forward, of course, to all the launches that we will continue to roll out. You did hear the announcement of Husqvarna, maybe not the biggest subcategory, but of course, really happy that we can make a difference also in the forestry industry. And of course, great to see the expansion of MIPS into new type of subcategories. And of course, we now have a very strong customer platform to really support the delivery of our longer term plan. And if we then go into next page and look at the development of net sales in our categories, We did see a decline of 9% fully explained by the soft performance in snow. Moto, even though only 3% back at growth. And also as we communicated already last quarter, we didn't expect until Q2 until we start to see the improvement in volumes. We did have 30% growth in The safety categories key certification is done as I explained before and of course really happy with the platform we have in the safety category. With that I hand over to Karin. She will talk a little bit about 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 soft development in the first quarter with a decrease in net sales of 6% and no change after adjusting for FX. Net sales also decreased 6% organically. Gross profit decreased with 8% and we had a gross margin of 69.4% in the quarter versus 70.8% last year. The decrease is mainly due to higher revenue from customer implementation projects, which has lower margins, but the positive in the long term, since that will mean that it will lead to more helmets equipped with MIPS in the future. And we also saw a product mix effect on the gross margin. In OPEX, we continued to invest in our strategic priorities, marketing and R&D. EBIT was down 12% to 14 million and with an EBIT margin of 16.5% in the quarter versus 17.5% last year. Operating cash flow amounted to minus 10 million in the quarter compared to minus 42 million last year. If we look at the financial KPIs, minus 6% organic growth, 16% EBIT margin and minus 10 million in operating cash flow. If we then turn to the next page and look at balance sheet and cash flow, we have a strong cash position with cash and cash equivalent of 400 million. And also to remember that MIPS don't hold any loans. Operating cash flow in the quarter was minus 10 million. And the board proposes a dividend payout of six SEK per share, corresponding to 249% of net earnings for 2023. And we had an equity ratio of 89%. Over to you, Max.

So if we then summarise In the first quarter we did have a stable start of the year and we are pleased to see that performance is picking up in all our categories. Our assumption remains we do expect recovery throughout 2024 and our view is that our sales will much more reflect what is actually happening on the market rather than our customers eating out of their own inventory. I think that's really important to point out that when we look at the market situation in general, we don't expect a very strong consumer in 2024. And of course, we don't want to have any bets on a strong consumer. We expect it still to be weak. Still, we expect to grow and we expect a good recovery in 2024. And that's coming from two things. First of all, if the customers buys from us rather than eating of the inventory, of course, that's a good start. And of course that's something that will generate a lot more sales for us than the previous year. And then the second one is what we have always talked about is that we are increasing the penetration with our customers. We have more MIPS models being equipped with our technology. And of course that rollout continues. And of course, increasing the penetration also generates growth. And of course, that's the key driver of us taking a lot more market share. So not a strong consumer, but we are still able to grow in 2024. And then, of course, when it comes to our financial position, we have a very sound financial position. We have confidence in the long term strategy. and our financial targets. And with that, I open up for questions.