MIPS AB (publ)

Good day and thank you for standing by. Welcome to the MIPS interim report Q1 2025. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone and you will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. Now I'd like to hand the conference over to your speaker today, Max Strandvits, CEO. Please go ahead.

Thank you, operator, and good morning, everyone. My name is Max Strandvits, and I am the CEO of MIPS. With me today, I also have our CFO, Karin Rosenthal, and we will take you through the presentation of the Q1 2025 interim report. And if we start with the key highlights of the quarter, so first of all, performance, we did see a continuation of the last quarter performance and growth patterns with strong performance in the quarter of 42%, of course, organic growth. We saw good development in all the three categories we operate in and good growth in most geographies. We do see strong sales to European customers fueled by improving consumer markets. Good growth also in the US despite a much more careful consumer spending versus before. Our assessment is that the near-term sales development to our customers will be more uncertain due to the lack of full understanding of the effects and implication of the implications of or implementation of tariffs. We did see a strong improvement in the quarter with 78% improvement, mainly driven by the strong net sales improvement. This was partly upset by legal costs relating to a customer's legal IP dispute. MIPS are not part of the process, but have decided to step in since NIPS has an interest in the IP-related areas. And we remain confident in our long-term strategy and our financial targets. If we look at the current situation and expected impact from tariffs, I think it's very important to spend some time in that area to explain what we mean. The rapid implementation of tariffs have brought a lot of uncertainty to our industry, and that is valid for all the three categories that we operate in, and it's valid for the US market. Our customers' main uncertainty is, of course, what is actually the right cost of the product. Most customers today They don't know how much their product will cost in one month from now when it lands somewhere in the port in the US. And of course, that creates a lot of uncertainty. If you don't know the cost of your product, it's also very difficult to assume or assess what is the right level of pricing to protect your margin and cost and what you need to take in terms of covering that part. And then, of course, the third one, If you price, how do you actually know that it's the right level of pricing? How will that affect your competitive position? And of course, in the long run, also the consumer demand. I think that's a question that everyone in the industry sits with at the moment. And we believe that that will create a lot of uncertainty. What happened last time this happened? So in 2019, Q3, we actually saw similar type of impact when the bike industry all of a sudden were hit by tariffs, which they have previously been exempted from. Then we saw a little bit of a standstill to the U.S. market for one to two months. And then after that, people took pricing and everything normalized. And we do expect a similar type of situation also this time. And just also to clarify that in 2024, 53% of MIPS net sales is to US-based brands. This is, of course, also visible in our annual report. Those brands are then distributing the products all over the world. And of course, we have other brands, especially in Europe, that is then exporting to Europe. But if we make a net calculation on our estimate on how much that actually lands in the US market when it comes to volume, it is a bit more than 50%. And we do expect short-term demand swings from the implementation of perish. So hopefully that clarifies a bit in that area. If we then go into the first category, and sports. In sport, the good progress continues. We saw strong performance in sport with 40% net sales growth. Inventory is back at healthy levels. Market conditions in Europe are improving. US consumer market a little bit more uncertain. And of course, this also fueled a bit what happened in the implementation of tariffs. We have a very strong position on the market and we are confident on the long-term outlook of the sports category also in the US market. If we then look at Moto, we saw a strong growth there and really good to see Moto getting back on track. Good performance in the quarter with 32% net sales growth. Situation is much more normalized, but it is, of course, a very tough market out there. We have also seen a very successful rollout of Integra TX product, which is our fabric solution. And to support that rollout, we also have a very strong retail activation program, which is also working very well. Also here, no change to our long-term outlook. Good opportunity to continue to grow in the category. If we look at safety, we continue to see good development. It was actually the largest quarter so far, despite that the Q1 is normally not the biggest quarter. That was actually the biggest quarter in safety Safety to date in the mix history. 60% growth in the quarter. We did roll out or continue to roll out new helmet models. And of course, also last year, we had a strong rollout program. And of course, we start to see that those models are starting to generate a lot of demand. And we are also very positive on the outlook of this category. But of course, also here, short-term demand could be impacted by the implementation of tariffs. If we then look at the development and summary of the development in our different categories, In sports, good performance with 40% net sales growth, a bit better if you adjust for forex effect. And we see a continuous strong performance, also good to see that we were growing strongly in bike, but also in snow, we showed an improvement of 20% net sales growth in the quarter, which is of course great to see, despite the fact that it has been quite a challenging snow season. Motorcycle also continued to develop well with 32% growth in the quarter. And safety, the largest quarter so far. And here, of course, we continue to see a lot of traction. With that, I hand over to Karin.

Yes. Good morning, everyone. 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 first quarter with an increase in net sales of 40% and adjusting for FX due to a strong SEC versus USD. Net sales increased with 42% organically. Gross profit increased with 46% and a gross margin of 72.1% versus 69.4% last year. and the increase is mainly due to the increase in net sales. In OPEX, we were negatively impacted by legal costs of 9 million, based on what Max presented earlier. We also continued to invest in our strategic priorities, R&D, and marketing in the quarter. EBIT was up 78% to 24 million versus 3%. 14 million last year. And EBIT margin improved by 4.5 percentage points to 20.9% versus 16.5% last year. And we saw a strong operating cash flow in the quarter with 36 million versus minus 10 last year. And if we look at the financial KPIs, 42% organic growth, 21% EBIT margin and 36 million in operating cash flow. If we then turn to next page and look at the balance sheet and cash flow, we have a strong cash position with cash and cash equivalents of 408 million. And just to remind you that we don't hold any loans. And the board proposes a dividend of 6.5 SEC per share versus 6 SEC per share last year. And that corresponds to 122% of net earnings. And operating cash flow in the quarter amounted to 36 million. And we have an equity ratio of 87%. Over to you, Max.