MIPS AB (publ)

Good day and thank you for standing by. Welcome to the MIPS interim report second quarter 2025 webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star 1 1 again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link anytime during the conference. Please be advised that this conference is being recorded. I would now like to hand the conference over to our speaker today, Max Stradowitz, CEO. Please go ahead.

Thank you, operator. Good morning, everyone. My name is Max. I am the CEO of MIPS and with me today also presenting, I have our CFO Karin Rosenthal. We will take you through the MIPS Q2 2025 result presentation. And if we start with the key highlights of the quarter, We saw good development in the quarter with 12% organic growth in the second quarter despite very challenging conditions. Year-to-date organic growth is now at 23% plus. The rapid implementation of tariffs did have a significant impact on sales across all the three categories. However, we did see that the sales improved over the course of the quarter as the effect of the tariffs became a bit more predictable. We did see volume growth on the US market despite all the challenges. We did have a slow start at the beginning of the quarter due to tariff uncertainty. Europe continued with unchanged momentum during the quarter, which we were very happy about. We did see an EBIT decrease in the quarter, fully explained by legal costs and the negative impact from the Forex effect. We will come back a little bit to that later in the presentation. And as we see these effects as temporary, we remain confident on the long-term strategy and our financial targets. In terms of the current situation and the expected impact from tariffs, We did see that the rapid implementation of tariffs brought uncertainty to the short-term outlook in all our three categories in the U.S. market. A lot of our helmet brands have taken price increases to mitigate the on-cost from tariffs, and the price increases have been well accepted by the retailers. Just for reference and important to understand that in 2022, 53% of MIPS sales was to US-based brands. These products are then of course sold all over the world. Brands from other parts of the world are then of course also exporting to the US. Our assessment is that a bit more than 50% of the volume that we do lands on the US-based market. We do see that helmet brands have started to relocate production outside China to de-risk the potential impact of further tariffs. And we continue to expect short-term demand swings from the implementation of tariffs. If we then look at sport, we are really happy to see that the progress continues. We did achieve a 3% net sales growth in sports. If we adjust for current effect in sports, we did see 13% organic growth, despite the effect of the implementation of terrace. Good performance in bike. And we did actually see growth, volume growth in the quarter for seven times in a row, which is of course extremely strong. And also, we did see strong growth in snow, despite that we had a very strong prior year comparator. Just to remind you, Q2 last year, we grew 60% in snow, so we were up against a very tough comparator. But despite that, we managed to deliver strong growth also in the snow subcategory. We did see volume growth in the US market. despite the tariff uncertainty, Europe continued to develop well and in line with our ambition. And we are happy to say that we actually managed to deliver again above 50% growth on the European market. We have just finished Eurobike a couple of weeks ago and Eurobike is the biggest bike show in the world. Two great news from us. First of all, we launched our new MIPS Air Node Pro version in Bike, which is our lightest version and belongs to the Air family with a lot of new great features. And we also launched our new mobile event concept. which will also roll out to a lot of B2C events and also part of our strategy of doing a lot of more public events and so on. And I'm sure that you will see it at an event close to you. Both of these were very well accepted both by the visitors and of course our customers at the show. And as we see that we are doing a lot of progress despite the very erratic behavior around us, we have a very long-term positive on the outlook of the sport category. In Moto, we saw softer performance with a decline of 28% in the quarter. fully explained by the implementation of Terist. Our presence in Moto is smaller and there, of course, we don't get as much priority among the brands. And of course, we also saw a negative impact from the strengthening of the Swedish crown, so the Forex impact. And as we are investing in Moto, we did welcome two new athletes during the quarter. The first one being George Prado, which is one of the most decorated MX riders in the world. Last year, he won the MXGP Circus. He now has entered into Supercross in the US, and we are really excited to have him on board as another ambassador in the MX subcategory. And then we also have managed to sign Sean Muir, which is the former world champion in MotoGP. So two great ambassadors and two great athletes that will help us building the awareness in the Moto category. Even though it was soft performance in the quarter, we expected to bounce back and no change to the long-term outlook. Still great opportunity to continue to grow in this category. In safety, Similar to Moto, we saw soft performance with 12% net sales growth. Also here, we saw an impact of the delays in ordering due to the tariff effect. No change to the assumption we still get a lot of new brands and, of course, launch a lot of new products on the market. The ones that are following us on LinkedIn did see that we last night announced a partnership with the key helmet brand Bullard. They are one of the larger helmet brands in the industry. And it's also good to know that the founder of Bullard, Edward W. Bullard, actually is considered to be the inventor of hard hats. So great to have them on board and we're really excited to partner up with this iconic helmet brand. If we then look at the development of net sales in our category. Sports, 30% organic growth, with growth both in bike and snow, which we are very pleased with, especially given the challenging situation around us. Moto, soft performance, will bounce back coming quarters. And also in safety, no change to our long-term ambition. With that, I hand over to Karin.

Good morning, I'm Karin Rosenthal, CFO of MIPS, and I will take you through the financial part of the presentation. We saw good development in the second quarter with an increase in net sales of 1%, and adjusting for currency effects, which was 11%, due to a stronger SEC versus US dollar, net sales increased 12% organically. Gross profit increased with 3%, And we saw a strong gross margin of 74.2% versus 72.9% last year. And the increase is mainly explained by the sales mix. In OPEX, we continued to invest in our strategic priorities, and it was also negatively impacted by legal costs of 14 million in the quarter. EBIT was down 22% to 41 million compared to 52 million last year. And the EBIT margin decreased by 8.8 percentage points to 30.1% compared to 38.9% last year. And operating cash flow amounted to 18 million versus 29 million last year. If we look at the financial KPIs, 12% organic growth, 30% in EBIT margin and 18 million in operating cash flow. If we then look at the development for the first six months, net sales increased with 16% and adjusting for FX due to a stronger SEC versus US dollar, net sales increased 23% organically. Gross profit increased with 19% and we saw a gross margin of 73.2% versus 71.6% last year. And the increase is mainly explained by a favorable sales mix. In OPEX, we continued to invest in our strategic priorities, R&D and marketing. and it was also negatively impacted by a legal cost of 23 million. EBIT was down 1% to 65 million, and EBIT's margin decreased by 4.4 percentage points to 25.9% versus 30.3% last year. We saw a good operating cash flow of 55 million versus 20 million last year. And the financial KPIs, organic growth of 23%, EBIT margin of 26%, and 55 million in operating cash flow. If we then look at the balance sheet and cash flow, we have a strong cash position and we don't hold any loans. We had cash and cash equivalents of 244 million. We paid out 172 million in dividend in May, corresponding to 6.5 SEC per share, or 122% of net earnings. And the operating cash flow in the quarter amounted to 18 million, and we had the equity ratio of 85%. And then I hand over to Mike.