MIPS AB (publ)

Good morning, everyone. My name is Max Janvits, and I am the CEO of MIPS. And with me today, I also have the MIPS CFO, Karin Rosenthal, and we will talk you through the presentation of the year-end report. And if we start with the key highlights of the quarter, it was another strong quarter with 58% growth in net sales. Organic growth in the quarter was 52%. Year-to-date, we have now delivered 35% organic growth. We see good development in all our categories and all the regions. We see that the consumer market remains challenging and buying behavior is still erratic, but positive trends in the recent US retail data we see that the important US market has now on a total helmet level started to grow again, which we are really happy to see after quite a lot of quarters with decline. Only one quarter, still too early to call it a trend, but at least it was a positive indication. Then, of course, the interest in implementing MIPS safety system in new helmets remained high. Market share and penetration of MIPS continue to increase throughout the world, which is of course very reassuring to see. And the amount of projects that we implemented the MIPS technology in is the highest since inception. The board is proposing a dividend of 6.5 SEC per share up versus six the year before. And that corresponds to 122% of net earnings, which is also well above our ambition. And yesterday evening, we communicated a change to one of our long-term targets. And that is something that I'm going to talk about on the following slide. So as we communicated before, we remain very confident on our strategy. We have had a strategic review during the year, very few adjustments, very few changes. And we see that we are delivering on that strategy that we also communicated in 2022. Despite the good progress and market share gains that we see, the overall consumer market has taken longer to return to normal purchasing patterns. Additionally, we also see that the restrained consumer spending and geopolitical situation have resulted in a decision to retain our net sales target, but now with the ambition to reach the target no later than 2029 instead of 2027. Their remaining two targets remain unchanged. The first one is to achieve an EBIT margin of exceeding 50% and to distribute more than 50% of annual net earnings. When we look at the three strategic pillars, they remain intact. And just to remind you, the most important one for us We have an excellent customer base and to grow with those customers is our main objective. Then we have talked about opening up new channels and that's of course also going into some of the mass opportunities, mass initiatives that we have talked about before. That's also working really, really well. And also expanding for MIPS new markets or into new markets for MIPS. which is another strategic objective for us. And the last one is, of course, to capture new opportunities within helmet safety. So just to remind everyone, the new updated targets are then to reach 2 billion on net sales by 2029, to achieve or exceed 50% EBIT margin, and to distribute more than 50% of the annual net earnings. If we then go to next slide and we go into the category development in sports, we saw strong development in all the subcategories. Just to remind you, the subcategories or main subcategories in sport is bike, it's snow, and then of course it's also equestrian. We saw good performance with 56% net sales growth. We saw that the year to date number is up 35%, so see really positive development. And we see good development in bike and also in snow, which have quite a challenge in year. But despite that, we have seen significant market share gains and also good development there. Inventory levels are much healthier. But market conditions are still challenging due to weaker consumer sentiment and the higher emphasis on working capital. Like I said in the introduction, we see that the short-term market trends showing that both Europe and US bike markets are growing again. And we are really positive on the long-term outlook of the sports category. If we then go to motor, We continue to see strong growth. We had 57% growth in the quarter and year-to-date we now see 25% growth. The situation is much more normalized with customers buying from us again, but still challenging market conditions. Great interest in our new solutions that we launched in Motul. to become a lot more relevant in the category, and especially the very important MIPS Integra TX solution, which is a fabric solution where MIPS is integrated directly into the padding, which is something that our customers appreciate a lot. And we also attended the EICMA motorcycle show in November, where we also saw a lot of attention from MIPS, which is of course very good to see. And no change in the long-term outlook. We see a good opportunity to continue to grow in the category. In safety, we continue the expansion. We see good development in safety with, again, the largest quarter ever. We saw 119% growth in the quarter, 55% increase in sales year-to-date. And of course, we now start to see also the effect of the roll out of all the new helmet models equipped with our technology. And of course, that's starting to generate a lot more volume and of course, the expected market demand. And we remain positive on the outlook for this category. We're also happy with the announcement of the mid-sized brand Hex Armor in the US, which we launched in the collaboration we launched in November, which is also another brand to add to the portfolio and will help us to be successful also on the US market. If we look at supply chain and tariffs, and of course, in conjunction with the installation of the new American precedent, tariffs of 10% have been communicated for goods imported from China. MIPS sell all products on Incoterms XWorks, which means basically delivered at MIPS warehouse, which means that the buyer takes responsibility for transport costs, fees, taxes, and tariffs, et cetera. And no further updates regarding tariffs since last communication, but we do expect the world trade to be a little bit volatile coming months. If we then go to next page and into sustainability, we saw great performance during the years and really closing in quickly on our science-based target commitment to 2030. All of the key sustainability targets in 2024 were met. We managed to reduce emissions. with 18%. And that, of course, was significantly ahead of our science-based target ambition. And including 2024, we have now achieved 43% of the ambition that we have for 2030, which we are very happy about. We have delivered all the third-party audits that we planned And another objective that we have is to increase the usage of recycled materials in the MIPS product. We had a target of 10% and actually managed to achieve 16% for the year and really happy with the performance that we had in sustainability. So if we look at the development of net sales in our three different categories, Sports, good performance across the board in bikes, no any question. 56% growth in the quarter, 35% year-to-date. Moto is really starting to accelerate again. 57% in the quarter, 25% growth year-to-date. And in safety, it was the largest quarter so far. And we saw 119% growth and 50 fans. 55% year to date. With that, I hand over to Karin, our CFO.

Good morning. I'm Karin Rosenthal, CFO of MIPS, and I will take you through the financial part of the presentation. We saw strong development in the fourth quarter with increase in net sales of 58%, and adjusting for FX due to a stronger US dollar versus SEC, net sales increased 52% organically. Gross profit increased with 64%, and we saw a gross margin of 72.9% versus 70.2% last year. And the increase is mainly due to the increase in net sales. In OPEX, we have continued to invest in our strategic priorities. We saw a strong EBIT, which was up 260% to 62 million versus 17 million last year. The EBIT margin improved by 24.1 percentage points to 42.9% versus 18.8% last year. And this shows how scalable our business model is. As net sales increases, it will have a positive effect all through our P&L. We also have good operating cash flow in the quarter with 87 million versus 31 million. And this is mainly due to good profitability and also a repayment of preliminary taxes related to 2023. So looking at our financial KPIs, 52% organic growth, an EBIT margin of 43%, and 87 million in operating cash flow. Then we turn to the next page and look at the development for the full year. Net sales increased with 35% and adjusting for FX, no change. So net sales also increased 35% organically. Gross profit increased with 38% and a gross margin of 72.5% versus 70.9% last year. And the increase is mainly due to the increase in net sales. In OPEX, we continue to invest in our strategic priorities, marketing and R&D. EBIT was up 148% to 174 million versus 70 million last year. An EBIT margin that improved with 16.4 percentage points to 36.1% versus 19.7 last year. And operating cash flow for the full year was 142 million. Looking at our financial KPIs, 35% organic growth, 36% in EBIT margin and 142 million in operating cash flow. If we then turn to next page, we are now on page 12, balance sheet and cash flow. We have a strong cash position with cash and cash equivalents of 382 million. And just to remind you, we don't have any loans. And the board proposes a dividend payout of 6.5 SEK per share versus 6 SEK per share last year. And that corresponds to 122% of net earnings. And operating cash flow in the quarter amounted to 87 million. And we have an equity ratio of 87%. Over to you, Max.

So, thank you, Karin. If we then summarize the quarter and the full year, strong delivery in the last quarter of the year with 52% organic growth year-to-date or full year performance at 35% organic growth. Good performance in all our three categories and we see growth in all the regions. A good increase in market share and penetration in the markets, which we're very happy to see. Inventory situation is now much more balanced and positive to see the improvement in consumer confidence during the last quarter. One out of our financial target has been updated with the ambition now to reach net sales of 2 billion by 2029. The other two financial targets remain unchanged. With that, I open up for questions.