MIPS AB (publ)

Good day, and thank you for standing by. Welcome to the MIPS Year End Report 2025 Conference Call. 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 1 on your telephone. You will then hear an automated message, your hand is raised. If you wish to ask a question via the webcast, please type it into the box and click submit. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Max Strandwitz, CEO of MIPS. Please go ahead.

Thank you, operator. Good morning, everyone. My name is Max Strandwitz, and I am the CEO of MIPS. With me today, I also have our CFO, Karin Rosenthal, and we will take you through the MIPS presentation of the Q4. year-end report of 2025. So if we start with the key highlights, it was a good end of the year. Strong development with 18% organic growth in the fourth quarter. We did grow in all categories despite the challenging conditions. And our year-to-date organic growth ended at 21% of course with year-to-date we mean full year. The good momentum in Europe continued. We saw an organic growth of Europe of a little bit more than 30%, which is of course a fantastic number given that we grew 137% the year before. So despite a very strong comparator, we continue to see good performance in Europe. And if we look at the full year split of sales, Europe actually contribute to 43% of the total net sale of MIPS, which is something that we have been very happy about. And of course, part of our ambition to be less dependent on the US market and having a better sales split between Europe and US market. But also the US sales developed well. We did grow close to 30% organically also on the US market, which is a little bit surprising, the challenging consumer market that we see. We saw a little bit of a change in momentum when it comes to the U.S. market, and I will come back to that a little bit later in the presentation, but good performance also in the U.S. market. When it comes to the Asian market, not our biggest part of our sales, We saw a softer market with soft development, especially relating to the Chinese market, where we saw a very hesitant consumer. Of course, we did a very exciting acquisition in December through the ingredient brand Koroid, great complementary portfolio to MIPS, and the brand with global potential, which is also something that we appreciate a lot. I will talk a bit more about that also later in the presentation. We had a good development of the underlying profitability. A lot of ins and outs in the quarter. The decrease in EBIT that we saw is fully explained by the impact of legal costs, the Forex headwind, and transaction costs. And if we would adjust for the negative impact of the legal cost and the transaction cost related to the acquisition of Koroid, we would actually be very close to 40% EBIT margin, actually 39.8. We have had a legal dispute that will continue. And we will continue to support our customers in the defense of the legal dispute, similar level to 2025 expected also in 2026. And just as a reminder, in 2025, we spent 43 million in this legal dispute. The board of director is proposing a dividend of 2.50 SEC per share, which is corresponding to 55% of net earnings, a little bit ahead of our financial ambition of having a dividend distribution of at least 50% of net earnings. And, of course, also adding Koroid to our business, we remain confident in our long-term strategy and the journey towards our financial targets. So if we start with the MIPS Group's acquisition of Koroid and a summary of what we actually did acquire, we see it much more as a merger rather than acquisition because, of course, it's two great companies coming together. But first of all, strategically, really important to look at the strategic fit. And actually, when it comes to the acquisition, we actually see that it's strengthened two out of three already existing strategic pillars. The first one, of course, of our pillars is to grow our existing business of rotational protection solutions in helmets for sports mode and the safety category. That, of course, will remain unchanged because that's MIPS key focus areas. But if we look at other areas like capture new opportunities within helmet safety, of course, corroid and impact technology is a great addition to that. And also the third one, when it comes to opening up new channels and markets, of course, Having the opportunity to expand into body protection, also having customers in tactical and so on, of course, opens great opportunities for further growth. If we look at the culture fit, which is, of course, extremely important when you look at acquisition, Koroid has many similarities to MIPS. First of all, It is a very vision and purpose-driven company to make active life safer. It's market leader with its niche. Ingredient Brand, which is, of course, trusted by consumers and leading product brands. It's very much a science-led and technology-driven company. They have world-class testing and simulation capability, just like MIP. Gale level asset-light supply chain, high EBIT margin despite significant R&D spend. Important to note that Koroid will continue to operate as an own brand. The current strong leadership and operational team will continue to lead the Koroid business. But, of course, both brand teams see many synergies when it comes to product development. and of course, product portfolio expansion. If we look a little bit more on the details of the transaction, the purchase price amounts to 40 million euro on a cash and debt-free basis, corresponding to a multiple of eight times adjusted 2025 EBITDA. The sellers have the possibility for an additional earn up to 25 million euro, corresponding to a multiple in total of 13 times if we compare against the same adjusted EBITDA of 2025. The transaction was financed through a combination of existing cash, and we also have arranged with a credit facility. And, of course, the acquisition is expected to contribute positively to MIPS earnings per share. EBIT sales growth both on a short and a long-term basis. And I think it's also important to note that MIPS and Koroid will be consolidated under the same group first time in the Q1 reporting. If we look at another very important area for us, it's, of course, what we do in sustainability. And we are really proud about the work that we have done there. We have had great development also in 2025. First of all, MIPS was ranked number one in Carnegie's sustainability rankings within consumer goods, which is something that we are extremely happy about. AAA rated at MSEI. and also top-rated at small and mid-cap enterprises at CDP. So really starting to get also great recognition externally for our sustainability work. Of course, when it comes to sustainability, it's not the awards that really makes a difference. It's what you actually do. And, of course, we have three key targets, which we delivered against. And the first one is, of course, to continue to reduce our emissions. And we did that during the year. And including 2025, we have now delivered 49% of our 2030 ambition. And that, of course, is in line with our long-term ambition. We have also been quite successful when it comes to increase the usage of recycled materials in our product. And today, and that is, of course, end 2025, the usage amounted to 34% of our total usage. And MIPS has also, of course, a well-developed factory audit program. And we have increased our average score from social audits to about 90, which is actually ahead of our 2030 ambition. So really happy with the progress that we did in sustainability. In sports, we see that the progress continues. We are happy with the development that we see there. Good quarter with 17% organic net sales growth in sport. We did see strong growth in the European market. And like I said, that's on the back of a very strong comparator last year where we actually grew 137% in total. So we now had six really, really strong quarters in Europe. And, of course, start to see that the impact, of course, also showing up in the total sales of MIPS as a company. We did see also good growth when it comes to the challenging U.S. markets. we saw in terms of market data a little bit of a trend shift when it comes to NIPS addressable markets. And if you look at bike, for instance, we saw actually for the first time in a long time that the addressable market grew 1% when it comes to volume in bike, and it actually grew 5% when it comes to price. So of course, a lot of the customers have initiated and taking price increases to compensate for tariffs. But good to see that also in terms of volume growth in Weichelmet, we saw that there was a positive progress. Then when it comes to snow, same ratio, 2% volume growth. If we look at the total market when it comes to US dollar in price, it actually grew with 6%. So of course, Still soft market, but at least it has started to go into positive territory. We also see that our customers coming from quite a low inventory level now have started to refill their inventory. Every one of them, as you have seen in previous quarter, has been a little bit careful in terms of filling up their inventory because of the uncertain tariff situation. And of course, it's also good to see that bike continues to develop well overall. We had the ninth quarter in a row with growth in bike, which is something that we're also happy about. And of course, we continue to see good volume growth also in snow, both in the quarter and year to date. We did launch our collaboration with Michaela Schifrin. Of course, the greatest Alpine skier of all time. So something that we think is a great ambassador for the MIPS brand that also can help us to increase the awareness of MIPS globally. And of course, committing to the overall vision of MIPS of driving the world to safer helmets. And I think it's also important to note that the shift that we have really been doing in snow, where you only take a difference of the last Olympic versus the current Olympics. When we look at our athletes this time, we actually see that a majority of the people that are wearing a ski helmet is actually a helmet equipped with MIPS. So something that, of course, we are very happy to see. And the long-term positive outlook in the sports category remains. If we look at development in Moto, we saw good development also there. 32% organic net sales in Moto in the quarter. Year-to-date net sales now amounting to 22% organic growth. And we saw good development also in both off-road and on-road category. And good to see that the volumes are coming back in Moto after a challenging period and the impact of the U.S. tariffs. We continue to roll out a lot of new innovations in the motor category and, of course, are quite excited about 2026. And no change to the long-term outlook, good opportunity to continue to grow in the category. In safety, we saw organic net sales growth of 41% in the quarter. If we look at the year-to-date performance, it's 42%. We, of course, have seen during the year and also the quarter that performance is impacted by the implementation of tariffs and related cost increases, where we have seen some delay in ordering. If we look at the underlying in-market performance, we actually see that we have great sell-out with new brand wins and also new products. And, of course, during the quarter, it was also the world's largest when it comes to occupational health and safety in Germany. It's only every second year. And there, of course, again, the interest for MIPS in the industry was confirmed. The long-term ambition remains unchanged. It's also good to see that the acquisition of Koroid can also accelerate our growth in this category and make our offering even more relevant in the category as such. So if we look at the category performance, like I said, in sports, Q4, 17% organic growth, 20% full year. In MOTO, 32% in the quarter and 22% full year. And safety, 41% and 42% full year. With that, I hand over the presentation 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 fourth quarter with an increase in net sales of 2%. And adjusting for FX due to a stronger SEC versus US dollar, net sales increased 18% organically. Gross profit increased with 2% and a good gross margin of 72.9%, same as last year. We saw an underlying improvement in profitability. EBIT was down 24% to 47 million versus 62 million last year. which is fully explained by legal costs of 7 million, transaction costs due to the acquisition of Koroid of 5 million, and Forex. EBIT margin decreased by 11 percentage points to 31.8% versus 42.9%. Excluding legal costs and transaction costs, EBIT's margin was 39.8% in the quarter. The higher spend in OPEX is fully explained by the legal costs, the acquisition costs, and the forex. So we have also continued to invest in our strategic priorities. We had a good operating cash flow in the quarter with 52 million. And if we look at the financial KPIs, organic growth of 18%, 32% EBIT margin and operating cash flow of 52 million. If we turn to the next page and look at the development for the full year, net sales increased with 10% and adjusting for the FX due to a stronger SEC versus US dollar, net sales increased 21% organically. Gross profit increased with 12%, and we saw a gross margin of 73.4% versus 72.5% last year. And the increase was mainly explained by the increase in sales and the sales mix. We have an underlying improvement in profitability. EBIT was down 11% to 156 million versus 174 million, which is mainly explained by the legal costs of 43 million and the ethics. EBIT margin decreased 6.9 percentage points to 29.2% versus 36.1%, and excluding legal costs and transaction costs, EBIT margin was 38.2% for the full year. So the higher spend in OPEX is fully explained by legal costs and the Forex, and we have continued to invest in R&D and marketing during the year. We had a strong operating cash flow of 148 million versus 142 million last year. So the financial KPIs. 21% organic growth, 29% EBIT margin, and operating cash flow of 148 million. If we look at the balance sheet and cash flow, we have cash and cash equivalents of 240 million versus 382 million last year. During December 2025, NIPS obtained a revolving credit facility of 300 million to finance the acquisition of Koroid. The net debt versus adjusted EBITDA amounted to 0.5 times. The operating cash flow in the quarter was 52 million, and the board proposes a dividend of 2.5 billion. six per share, corresponding to 55% of net earnings. And then over to you, Max.