Pierce Group AB (publ)

Good morning, everyone, and welcome to Peers Group's presentation of our Q1 results for 2026. I'm Jaron Dahlin, CEO of Peers Group, and I'm with Fredrik Kjellgren, our CFO. Thank you for joining us today. Today, we will begin with a brief recap of who we are and where we stand in the European market, followed by a summary or a recap of our transformation program, PIERS 2.0. Then we will go into a summary of our financial performance in the quarter, and then we will follow that with a look ahead to our outlook and growth drivers for the coming quarters, and we'll close with a Q&A session. So we are Europe's number one online destination for motorcycle gear and equipment. Pierce was literally founded in a garage in 2008 by two motocross enthusiasts. The company has been successful and growing for a long period and developed into European's leading e-commerce platform for motorcycle snowmobile year parts and accessories. Post-COVID, there was a tough period, but we are now back to growth and back to profitability. We operate the online stores 24MX, XLMoto and Sled Store. And 60% of our turnover is done with off-road riders, 35% with on-road riders and 5% with snowmobile riders. While on-road is 90% of the total market. That means that we have a very strong position in off-road, while we have a challenger position in on-road. We aim to grow in all our segments, but naturally the largest growth opportunity is in on-road. We operate locally adapted websites in 19 European countries, soon to be 28. And we turn over 1.8 billion SEK and we report 3.2% EBIT last 12 months, Q1 2026. We have approximately 280 employees spread over Stockholm, Stetson in Poland and Barcelona. And Peers is listed on NASDAQ since 2021. We have the broadest and most differentiated product assortment in our industry, including one of the highest shares of private label. We offer more than 200,000 articles to more than 1 million customers across Europe. And we started in Sweden, but we're now a true and the only pan-European company in the industry with 70% of our turnover being done outside the Nordics. E-commerce penetration. varies across Europe and remains higher in the Nordics and parts of Western Europe, while still lower in southern and eastern regions, creating room for continued online shift. Within our categories, e-commerce penetration is higher in off-road and lower in on-road, where the market is larger but still more under-penetrated online. Overall, the niche is well suited for e-commerce, where we can offer superior selection and availability compared to physical stores. The rider base continues to grow long-term, and electrification, we believe, will further broaden the customer base by lowering entry barriers with easier handling, less noise, lower maintenance, and improved accessibility in urban environments. This will attract younger riders and new consumer segments. A word on our logistics, because we have a truly unique logistics setup for our industry. We have one of the largest warehouses in our industry, centrally located in Europe, in Western Poland. We have 30,007 square meters, which provides ample room for growth. There we stock more than 60,000 articles and we have a deep buffer capacity also, which is very important in our industry where the leading brands have limited logistic capability. This means that we, in a superior way, can serve our customers with 20,000 orders per day that we pick and pack within 24 hours. We also have a very efficient setup with peers dedicated long distance haulers that both delivers to national injection points for last mileage and deliveries to our customers, as well as pick up, refill and cross stock orders from our suppliers. Looking at the competitive landscape, it's quite fragmented. It consists of five main segments. As you can see to the table to the right, we are one of the largest retailers in our industry and we're also the only two pan-European specialists with local sites, language, payment options, customer service and delivery partners across our markets. Most of the players are strong local champions focused on their home market, often primarily on-road and generally with a relatively low private brand share. Several are financially owned, which could facilitate future consolidation. Overall, the market structure creates a clear opportunity to build a significantly larger pan-European category leader with a scale to stock a wider assortment, offer superior availability and delivery times, as well as strengthen the private brand offer, improve purchasing power with key suppliers, and also unlock very meaningful back-office synergies. So, then I would like to spend some about Peirce 2.0. Peirce 2.0, that's our transformation journey. As I said, we started in a garage and was a successful and fast-growing company. Following the COVID period, however, the business entered a more challenging phase. Declining demand, pressure on margins and substantial losses followed. I joined Peirce in Q2 2023. two clear priorities, return to profitability and return to growth. The company was weighed down by a cost base that was too high. Decision-making was slow and cumbersome, caught in layers of hierarchy and unnecessary complexity. To address this, we initiated a major reorganization reset in Q3-Q4 2023, simplifying the structure and significantly reducing the white-collar headcount. This was made possible by introducing a new, more lean operating model with commercial teams. It's responsible for a defined business area with real business ownership and power to make decisions and expect it to move fast, take risks and learn from mistakes. At the same time, we took a hard look at our technology platform underperforming, unstable, and lacked the scalability required. And as a result, we made the tough decision to replace four of our core IT systems, including our warehouse management system and e-commerce platform. Again, this was a difficult decision. We knew it would be both costly and time-consuming, but also absolutely necessary. We simply had no alternative. Alongside this, we evaluated our private label portfolio and concluded that Salesforce less effectively in brand building. Some brands also suffer from a weakened brand perception due to inconsistent product quality in the history and the lack of clear assortment and brand identity. We therefore simplify the portfolio from 73 brands, focusing on Raven and Gear, expanding into the large but highly competitive on-road segment, and ProWorks imparts an accessory while we are keeping Coors as a tactical brand. This has been quite an effort. We have migrated several thousands products and replaced and launched several thousand new ones. We have partnered with leading designers to strengthen the overall brand and product offering. While private label growth has lately not matched the pace of external brands, we have taken the right strategic steps and remain confident that sales momentum will accelerate over time. We spent almost all 2024 cleaning up inventory through targeted sales activities for slow-moving goods and more restrictive buying. We also made a SEC 44 million write-down of obsolete inventory, mainly related to older stock that we judged could not be sold. This initially held back growth as we cleared out slow-moving inventory, but we began to recover once we rebuilt the assortment in Q4 2024, and we aimed to take the position building wider and deeper assortment than anyone else, combined with very competitive delivering lead times. Since Q4 2024, sales has grown 16% despite the challenging market clearly gaining market share. This growth combined with a stepwise reduction in white-collar headcount amounting to 40% now versus Q2 2023 has resulted in a 90% increase in sales per white-collar employee, demonstrating We reported an EBIT of minus 69 million in 2023. Since then, we have turned the business around and have been profitable in all quarters, except for a setback in Q1 2025. Adjusted EBIT improved to 25 million in 2024, 45 million in 2025. In the last 12 months, we have reached 59 million. And this is despite transformation costs related to our IT stack. implementation that cannot be activated in the balance sheet. At the same time, the underlying business has strengthened. The customer base has grown, customer satisfaction and retention has improved, and an employee net promoter score has increased significantly. And now we slowly approach the end of this program, and we are now moving into the next phase with a stronger platform and a more scalable operating model. We are in a position to expand into new markets and categories and explore consolidation opportunities in a fragmented market. Now we will walk through our Q1 financial performance. So we saw a strong improvement in adjusted EBIT during the quarter. In Q1 adjusted EBIT came in at 2 million SEK compared to minus 11 million SEK last year. And this despite approximately 6 million in temporary transformation related costs. We should also say that we report 6 million in EXO costs this quarter, but this is not the transformation cost. It just happens to be the same amount. Looking at the last 12 months, adjusted average reached 59 million or 3.2% of net revenues, even while absorbing 26 million of transformation costs. So we are stepwise moving in the right direction towards our mid-term financial targets of an EBITDA of 5 to 8%. On the top line, we continue to grow despite the challenging external environment. Q1 sales grew 5% year-over-year with 10% FX-neutral, supported by improved stock availability and strong marketing execution. Over the last 12 months, FX-neutral growth was 14%. So weather conditions, had, we believe, overall a slightly negative effect of the quarter. Q1 is the most weather-sensitive quarter of all for us. In the Nordics, conditions were very supportive, particularly for sled store, while Europe experienced the coldest January and February in 16 years. And there we don't have sled store, we only have 24MX and Exelmoto, and they were quite negatively affected in January and February. Encouragingly, weather condition improved in March, which helped demand to recover towards the end of the quarter. At the same time, the broader macro environment remains challenging. This goes without saying, with continued geopolitical uncertainty affecting consumer sentiment. And despite this backdrop, we believe that we continue to take market shares. Moving to our margins, contribution margin, which is margin after direct cost, remained stable year over year, supported by an improvement in marketing efficiency. Gross margin declined 1.3% percentage points, mainly due to higher competitiveness in the market. However, this was better And our focus remained clear, driving absolute contribution profit growth while maintaining healthy gross margin levels over time. We also continued to improve cost efficiency across the business. And despite continued growth and ongoing transformation activities, operating expenses decreased to 16.4% of sales and improvement of 1.5 percentage points year over year. And this is primarily driven by the efficiencies from the Peers 2.0 program. As mentioned earlier, Q1 still included around 6 million sec of temporary transformation costs related to the rollout of the new IT stack. These costs will gradually phase out, creating a positive effect, EBIT effect going forward through both lower transformation costs and lower depreciation and amortization. Part of the previously communicated expected 30 Remaining, we expect a further analyzed EBIT step-up of approximately 20 to 30 million once the two remaining large IT systems have been fully launched. And we expect that to happen during the first half year of 2026. So finally, we conclude that we maintain a very solid financial position. At quarter end, cash amounted to 273 million. in addition to an available 150 million set credit facility. Inventory levels were broadly stable year over year, and we expect them to remain at these levels to support continued growth going forward. Looking into some of our KPIs, private brand share over the last 12 months was 35% compared to 38% a year ago. The decline in share is mainly mixed driven as external brands have grown strongly. In absolute terms, private brand sales remain solid. We launched a large number of new products in 2025 and ramp up has been taken longer than expected. We continue to invest strategically in private label and we have high ambitions to accelerate growth, but we also need to remain realistic about the time required to build new successful products and categories. At the same time, we're unlocking significant growth within our external brand portfolio by improving availability and assortment depth. This remains an important growth driver. As we grow both private brand and external brand, we do not expect major structural shifts in private brand share long-term. And to the right, we have our Trustpilot scores, and we rank one of the highest in our industry. 2 years ago to 4.4 and will remain at 4.4 in a stable manner. Looking at our customer base, one of our most important KPIs, of course. It's very satisfying to see that we continue to grow our customer base and this is We also see a strong increase or a good increase in the number of orders, while average order value remains fairly stable over time and naturally affected by FX also. So I hereby hand over to Gevitt Kjellgev, our CFO. Thank you, Göran.

If we now zoom in a little bit on them. margin after variable costs remained stable compared to last year and profit increased in line with sales. During the period, the company had a high level of activities to support sales. This involved actively positioning of sales In addition to the agile management of pricing and marketing, we drive initiatives to improve the efficiency of our performance marketing. In total, the pressure on gross margin was offset by the improved marketing spend, resulting in a stable contribution margin. Looking ahead, we expect the market to remain price sensitive, so our focus is on maximizing contribution profits We aim to be price competitive, but not the cheapest in the market. Now, let me give you some additional context to the adjusted EBIT this quarter. The Q1 adjusted EBIT increased from a minus 11 million SEC in 2025 to a positive 2 million SEC in 2026. But in order to fully capture the underlying trend, it's also good to be aware of the other unusual items impacting the adjusted EBIT. Jonas described the transformation journey of peers. The transformation involved implementation of new SaaS systems, overlapping license fees and costs related to external consultants. The transformation costs, which are not classified, would have been approximately 8 million SEK for the quarter. The last 12 months Q1 adjusted EBIT increased from 7 million SEK in 2025 to 59 million SEK in Q1 2026. Applying the same logic with exclusion of unusual items related to transformation costs Covert costs decreased by 3 million SEK year over year to 69 million SEK, and this was despite the 6 million in transformation expenses that was included in the OPEX. Since Q3 2023, we have right-sized the company by reducing our white-collar workforce by more than 40%, while increasing net revenue by 15%. This demonstrates the scalability of our model and the efficiency gains of streamlining processes, empowering teams, reducing biocracy and empowering teams to make faster decisions. Looking at our networking capital and the development, our networking capital has increased since the exceptionally low levels that we saw back in Q2. This is mainly the result of our efforts to strengthen the assortment and improve product availability, which are key enablers of growth. As of this quarter, the year-over-year development of networking capital has stabilized as we meet relevant comps. The improved networking capital in Q1 versus last year is primarily driven by improved input returns, But we also have a contributing factor from improved supplier payment terms as well. We still see opportunities of growth by further strengthening of the assortment and improving availability. But we expect pretty stable network capital in relation to sales going forward as we balance strong availability with disciplined inventory management. Our focus remains on continuously improving our purchasing methodology to drive higher efficiency, keeping the stock fresh and healthy by acting early on slow-moving items while maintaining the right levels of inventory to support customer satisfaction and sales momentum. And with that, I hand it over back to you, Jara.

Thank you, Fredrik. So looking forward, Looking ahead, we will continue executing on PEARS 2.0. We will strengthen our fundamentals by improving customer experience, streamlining operations, and increase scalability. We target completion At the same time, we're entering a new expansion phase. The rollout of 12 localized markets and continued growth in mountain bike and scooter motor categories has begun. It will broaden our addressable market, creates cross-selling opportunities and add new revenue streams over time. This will take time to scale, but we And finally, our working direction is to participate in the consolidation of the European motorcycle market. The e-commerce market remains highly fragmented and is ripe for consolidation. We are the largest and only pan-European listed player with a scalable platform already in place. So we are uniquely positioned to participate and participate And by that, we enter into Q&A.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adrian Elmlin from Nordia. Please go ahead.

Hi, Joran and Fredrik. Good morning. I have a few questions, please. So firstly, we know that there's 6 million in item of comparability, seemingly for consultancy costs. Could you give us some more explanations for the thoughts behind these investments and basically what you expect to gain from it?

So as we write an report, you're right, these are primarily consultancy costs related to a strategic project that we have undertaken. We have completed it in Q1. The purpose was to assess different venues for growth. And its outcome may support future initiatives.

Right, okay. You also mentioned in the report that you saw encouraging momentum in the new mountain bike and scooter moped categories. Do we have any kind of, you know, ballpark figures for what you expect this to drive in terms of, if you call it incremental sales growth? Like are we talking tens of millions of SEAC or is it like above 100 million a year, that is?

I would say it would take time to grow, to scale. So to begin with, we should not have too high expectations. In the short, it's not in the hundreds of millions.

Right. Okay. Any effect we've seen in the war in Iran affecting, I don't know, freight costs or consuming spending habits or something that you've picked up on?

Yeah, in some cases, yes. What we have seen primarily is that some of our suppliers have flagged for increased purchasing prices on plastics and other oil derivatives. So there we have tried to put as much orders in as we dare to get the existing prices on freight increasing, but that's a minor part of the total cost of freight. But we keep a close eye on this, of course, and we have plans for how to act under different scenarios.

Okay. Another question regards to some kind of trading update. I know that you don't usually give any guidance here, but speaking of the weather, it seemed like March was better. Could we have any sort of weather update here in the beginning of Q2?

Yeah. Q2 is normally more weather stable and we're less dependent on the weather in Q2, Q3, which are our high season, especially Q2. Having said that, I mean, the world is a bit complicated. But you're right, the quarter ended a bit better than it started. On the other hand, we were very active with sales activities and the market was very competitive in January, February when there was small volumes. So that also explains a part of the gross margin drop that we have had. We had to remain competitive in difficult marketing in January, February especially.

Okay. I think I have one more question, if that's fine. Could we have any updates on these IT transformations, like how they are ongoing? Presumably, the warehouse management system hasn't gone live yet, if I'm not mistaken. Do you know when that is due? Or can you give a due date?

Yeah. We remain with our saying seven or eight weeks off. So that ends in the end of June. So it's quite imminent.

Okay. Thank you, Jeroen. That was all for me.

Thanks. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So thank you for your attention, and Fredrik and I wish you a great continuation of the day. Thank you. Thank you.