Thule Group AB (publ)

Hello, everyone, and thank you for joining the Tula Group Interim Report Q4 and NDU Report 2024 call. My name is Marie, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand over to your host, Matthias Ankerberg, CEO and President, to begin. Please go ahead.

Thank you very much and welcome everybody to this Q4 call. I am also here joined by Toby Lawton, our CFO, and we will do this presentation together, followed by Q&A. And as usual, we will speak to a presentation that will be available on our investor relations website. So let's start off on page two. We've had a good year. It's been really busy, to say the least, but it's also paid off. This is a year where we are back to profitable growth, despite the market being still challenging. It's the biggest product launch year in Thule history. More new products than ever. We have also entered three new product categories. In the beginning of 24, we launched dog transportation with the first product, Thule Alex Dog Crate. During the year, we have launched child car seats in Europe. And during Q4, we acquired Quadlock, the global market leader in performance phone mounts. We were also busy getting even closer to the consumer and added, as one of those initiatives, five new D2C markets via Tulu.com. We are proud to be recognized for our product design. We have received more International Design Awards Red Dot NF Design this year than ever. And we, our team also won the Red Dot Design Team of the Year earlier in the year. And just recently, we were ranked highly in the Morningstar Sustainalytics sustainability rankings. In fact, Thule was ranked one of the top 50 companies in the world according to this assessment and number one in the world of all consumer durable companies. So a busy and good year for us. Turning to page three, looking more closely at the results and starting with the quarter. It is clear that the fourth quarter is our smallest quarter due to seasonality and doesn't impact the total financial results for the year so much. But still was a good quarter for us. Growth of 7% versus the year before. We continue to see a generally tough market, particularly in North America and in RV. We'll get back more to that later. The growth is really driven from the acquired QuadLock business and new Thule products. EBIT margin increased a bit, 0.4%, and EBIT was 65 million versus 53 last year. Zooming out to the full year, we had a growth of 5%. The market conditions I just mentioned are valid largely for the full year, too. And on the full year basis, it's really new Tula products and bike-related products that are the main growth driver of those 5%. We ended the year with an EBIT margin of 17%, which is half a unit better than last year. It's an all-time high gross margin of 42.7%. And part of that is offset by higher SG&A costs due to the many product launches we have done this year. Still ending up with an EBIT margin at half a unit above last year and an EBIT of 1.6 billion Swedish. Strong cash flow from operations. And we have beaten the target to reduce inventory by 200 million, which is, of course, contributing to that cash flow. The board is proposing a dividend of 8.30 seconds per share, which is in line with the financial target of distributing 75% of net income and continues to give us lots of firepower to continue investing in growth for the future. And we will get back more to that later on as well. Zooming out a bit on page four, Tool has been a growth company for many years. This chart shows the development since the IPO in 2014. And we had a peak or a boom during the COVID years and two decline years following that. So it's nice to see that we are now back to profitable growth. Sales for the full year is up 5% and EBIT 1.6 billion. And we do that despite investing more than ever in product development. In fact, we have invested more in money than ever before and about the same in percent of sales before. We ended up the year of spending 7% of our sales on product development. This has also, of course, given positive effects for the growth in 2024. This will also have positive effects for the growth in the coming years. And in fact, when we look at our product portfolio today, product development portfolio pipeline right now. We are right now running more new product development projects than we've done ever before. So with that said, I'd like to spend a bit more time on the specificities of the product categories. We are a product category, and let's have a look at the performance of the different product categories, both for the quarter and for the year, starting off on page six. So our biggest product category, sport and cargo carriers, is really driven by bike-related products for the quarter and for the full year. The category increased sales by 1% organic for the year and 5% for the full year. The bike market has developed positively, but clearly this is also an area where we see good growth from new Tuller products. So we had a strong start for this autumn's released new vertical hanging bike carrier to the revert, which is mainly addressing the North American market. We did a soft launch of our upgrade bestseller to the easy fold during the autumn, too, which also had a really nice start. We do continue to see more generally for this category, which also includes other major subcategories like roof racks and rooftop boxes, for example, a tough market of cautious consumers and retailers, particularly in North America. We do see that the bike market in Europe is back to healthy inventory levels. And the difference, main difference, why the quarter is showing a lower growth number than the full year is that the bike-related products account for a smaller share of the sales in the fourth quarter. Fourth quarter is a winter quarter and less people bike in the winter. But overall, a good 5% growth for the full year driven by bike-related and new bike products. Packs, bags and luggage is a story of... of two parts. Net sales decreased for 7% in the quarter and 2% for the full year. As we've done for several quarters, we continue to see growth in Tula branded products, and we continue to see that growth driven by new Tula products. So in the quarter, we see good growth in the newly launched luggage product, Tula Subterra, and the new updated duffel bags, Tula Chasm. We see good growth, continuously good growth in the quarter in bike bags and bike related bags. But as for the previous comment, bike is a smaller share of the fourth quarter. The decline is driven by legacy products as we continue to wind them down and exit legacy business. And net effect of that is minus for the quarter and for the full year. Our best performing product category in terms of growth, both for the Quarter and for the full year is juvenile and pet, where we have done a lot of new things. Growth is 14% for the quarter, organic, and 10% for the full year. We launched a new generation of our best, I would say, sorry, excuse me, of our strong all-terrain stroller to the Urban Glide 3 that was launched during the first quarter of the year. And we've seen good growth from that category forward. Since then, that continued also into the fourth quarter. And we have seen several other product upgrades also supporting growth. However, this is an area where we've also launched completely new product categories. So we launched the dog transportation in the beginning of the year with our dog crate Tula Alex as the first product. And we continue to add to dog transportation with the launch of the dog trailer, the bike trailer Tula Beksi in the autumn. And we've had a really good start for dog transportation products. In fact, it's the best first year sales of any new category introduction in the history of Thule. So it's clearly contributed to the growth in this area. We also launched car seats starting in May in the German speaking countries, Germany, Austria and Switzerland. Continued throughout the autumn and had a really intense fourth quarter with introducing Thule car seats in 20 European countries in the fourth quarter. Our fourth product category is RB Products, where we continue to see a challenging market. The industry is going through a tougher period. It is, as it was in the last quarter, a story also with two sides. On the positive note, it continues as of starting of Q3 to be growth in the aftermarket channel, that is the sales to the dealers that are closest to the consumers who are still keeping a high interest in the RV business and are now also buying products more than the year before. However, there is a lot of inventory in the market and the OE customers have reduced their production plans during both the third and now continued into the fourth quarter to manage inventory levels in the industry. Hence, weak sales to the RV OE channel and that decline is bigger than the growth in the aftermarket. Net sales comes out to be 7% negative for the quarter and 3% negative for the full year. I can also comment that RV products typically and particularly owe a high share of sales in the quarter or Tula. That was some detail on the product categories, both for the quarter and the full year. Let me also present a few of the highlights for the quarter. On page eight, as mentioned briefly before, we have continued to launch car seats throughout the year. And this was the most intensive quarter in terms of launch, where we introduced the products to over 20 European countries. We have had a sequential launch starting in May, followed by Benelux in September, and then now over 20 countries in Europe. We are really proud to be recognized for having the safest child car seats in the market. And we are really proud to be able to have that recognized by the most important consumer test in the market, the German Stiva or ADAC test. That was, of course, a very good milestone for us and also a good reason for us to really launch in a very intensive way in the fourth quarter. We were having events with all major retail partners. We had PR events in 10 cities and we had a good reception from both retailers, but consumers and also media, which we're really proud about. So more to come. Now we are launched in Europe. We continue to build the category going forward. And for 2025, we will continue Of course, address this more with sales and marketing efforts and continue to work with our partners to get the Thule products in front of the consumers, but also add new products. And there will be a high back booster seat, the product for the somewhat older children released during spring 2025. So that was an intense initiative for the company. And another important event was the acquisition of Quadlock, the global market leader in performance mounts. performance phone mounts, which we announced in November and completed in December. And QuadLock, just as a quick reminder, is the market leader in three specific segments in the market, performance phone markets, for bicycle, clear number one, for motorbike, clear number one, and for off-road drive. It's a company founded in 2013, so fairly young still, turning almost one and a half billion Swedish. 25% EBTA, sales in over 100 countries and fairly distributed footprint around the world and strong in D2C. So the Quadlock digital business accounts for about 75% of the total sales. And turn to the next page. The main reason we acquired Quadlock is that it's a really strong fit with Thule and the strategy that we are executing on going forward. And there is a lot more information on this in previous events. But just to summarize the three pillars that we really build on and that Quadlock meets is that we focus on market leadership and attractive categories. Quadlock is clearly the global market leader in performance for months, as also shown on the previous page. It is, in a way, the category-defining brand in the market, and it's the most recommended brand in the market by consumers and has the widest offer. It's also a category... which is attractive. There's about a 10% growth rate in the category, and consumers choose product based on robustness, quality, safety, and ease of use, all things that are close to our Thule territory. So it's a good fit, clear market leader in an attractive category. It's a company that is also building its future on product-driven growth, which is very similar to or exactly as the Thule philosophy is. Kodlok has a really strong track record of innovation, expanding the portfolio, starting a bicycle into off-road car, motorbike, marine and more areas. It is the clear market share winner in previous years and has a strong product development team in place with much more to come. It's also a very good fit with the Thule brand and the culture that we have. have very many similarities between the consumer base of Thule and Quadlock. Both target outdoor enthusiasts willing to pay premium for the best product. Both brands are in the eyes of the consumer associated with quality, safety, enabling an active life. And we also are happy that we have a very strong cultural fit between the two teams. So Quadlock is acquired during the fourth quarter, which is, of course, another important event for Q4. And then lastly, from me before I hand over to Toby to cover the financials, we are proud to be recognized for the long-term and ambitious sustainability work that we are doing on page 11. We have some pretty ambitious goals in place, including reducing our CO2 equivalent footprint according to the SBTI goals. We've seen a good development over several years, which we continue to work hard on and improving, not the least by new products which have a lower CO2 footprint. And it's also nice to be recognized for that work. And I think the team has done a lot of good things. And it's a good recognition to be among the top 50 out of the Sustainalytics ranking globally. So with that, I hand over to Toby to cover sustainability. some of the financial aspects.

Great. Thank you, Matthias. Good morning, everybody. I'll start with slide 12. And here you can see the sales by quarter over the last six years for Thule Group. And as you can see, firstly here, of course, the last quarter, as Matthias said, is the smallest quarter. This is the low season for Thule, so it's worth remembering that. The second point, I think we had 7% growth in quarter four. So good growth. And this, of course, has been helped by Quadlock, which has been consolidated since the acquisition was closed on the 4th of December. So we basically got one month impact from Quadlock in the Q4 results. And thirdly, then organic growth was flat or slightly down, as Matthias has said. It's basically the same trends as we've had before, but the business impact is a bit different. And the main effects there are coming from The bike season, that is a weak bike season in Q4. People don't ride their bikes as much in the winter. And the bike season or the bike business has been driving growth all year. And the second point is really that RV is normally a bigger share of sales in Q4 and RV is a weak point. And even within RV, we have two channels and the OE channel of RV is the weaker channel. And it's the OE channel, which is normally bigger in Q4 as well. So all that changes. All those mix effects contribute to the overall mix in the organic growth rates. Also worth noting in Q4, we have a weaker growth from Americas versus Europe. Europe is stronger in Q4 this year. If you look back a year, it was the other way around. So to some extent, that mix just in the fourth quarter is due to comparables. But obviously, for the full year, the story still stands that we're stronger in Europe and we're basically flat in America in terms of gross. If we come to slide 13, the income statement. And here, firstly, if I point to the right-hand side at the top, you can see the revenue. And we had 9.5%. billion sec of revenue in 2024. And this is 4.5% growth versus prior year. Yeah, the organic growth then is 3.5%. And then in Q4, we had 7% growth of which the organic growth was, as I said, flat or slightly down. If we just look a bit further down to the gross margin, here you can see we had a gross margin in the fourth quarter of 41.6%. And for the full year, we had 42.7%, so a good increase versus last year. And you can see in all quarters, we're up on last year. So that trend has been carrying on through the year and is impacted positively by our product mix, our increased volumes, and the increased volumes coming through the business and being manufactured by Thule are driving a steadily lower manufacturing cost. And also in quarter four, you could say the product mix is helped by the acquisition of Quadlock, which is positive on gross margin. If we move down to EBIT, you can see we now have a line called adjusted operating income. And here we are excluding the one-off transaction costs of 100 million SEC that we had for the Quadlock acquisition, which have been taken in Q4 24. When we look at the adjusted EBIT margin, you can see for the full year, we end up at 17.0%, which is half a percent up on the prior year. And this is really driven by the improving gross margin that we've been driving, somewhat offset then by the investments we've been making in basically in selling expenses, as you see here. And those investments are primarily in development, where as Matthias showed, we've invested in development, this year for future growth we've invested more than 650 million in development this year but also marketing supporting the new products and new launches finally the effective tax rate is 22.5 percent so same same as last year and the net income for the year is yeah 1.122 billion sec i just turn over then to the cash flow and a couple of Minutes on the cash flow. Firstly, the cash flow from operations has been at 2.3 billion SEC for the year. So another strong cash flow delivered this year. A good contribution from the underlying operating results, of course, but also another good contribution from reducing inventory further during 2024. And we had a reduction of nearly 500 million SEC versus 200 million SEC target that we set for ourselves. And I can also say here we are targeting a further 200 million on inventory reduction in 2025. And finally, then the last line or second last line you can see here is the capex. And we had capex of 263 million for the year. So stable, similar level to last year, slightly under 3% of revenue. And if we turn to the next slide, slide 15, and here you can see our net debt and also our leverage or net debt to EBITDA. And of course, having made the QuadLock acquisition in Q4 and funded that acquisition, the net debt has increased due to that in the fourth quarter. But with the good underlying cash flow of the business, I think we come out with a leverage at the end of the year of net debt to EBITDA of 1.83%. which is lower than we actually guided for at the time of the acquisition due to good cash flow in Q4. And it's also very much in line with historical levels of leverage. So a normal level in line with historical average. And I would say just to mention here that when we measure net debt to EBITDA, we've obviously got the full net debt included for the QuadLock acquisition. And we also include the 12 months of EBITDA on a performer basis for the acquisition, which is a normal way to measure your leverage following an acquisition. And if I just turn to the next page, page 16 here, just to show some history on dividend as well, and our proposal on dividend, which is 8.3 sec per share. This is 75% of our net income, which is in line with the financial target, which has been in place previously. basically for the last four or five years. You could see, it's worth noting that last year was a bit higher. The leverage last year was a bit lower than the historical average. So we decided then to have a slightly higher dividend level. But this year, you can say the leverage is in line with the historical average and we followed the financial policy as we've done most years. And I think more importantly, it's a good dividend with 75% of net profit, but we also continue to have a good balance sheet and the capability to continue investing in our future growth plans. So with that, I hand back to Mattias.