Thule Group AB (publ)

Good morning. Thank you for attending today's To The Interim Report first quarter. My name is Kenneth and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity to ask for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Matthias Ankerberg. Please begin.

Thank you, operator, and welcome everybody to this Q1 call. I'm joined, as usual, here today by Toby Lawton, our CFO. And we'll take you to the material that will also be available on our investor relations website afterwards. So starting off in the first quarter of the year, TUL is growing despite a clearly weak North America. Sales increased in total 10% versus last year. The market in North America is weak, and I'm sure we'll get back to that. But there is also cautious behavior across the world after the announcement of the tariffs in the US in February. Organic growth was minus three with clear differences between the geographies. North America declined 13% versus Europe was flat. And it's nice to see, though, that we continue to see growth from new Tula products, even in this market, and also that the three new product categories that we have continue to add sales growth, including the acquired QuadLock that came at the end of last year. Gross margin increased to an all-time high of 44.8%. EBIT margin was almost two percentage points below last year at 15.1%. We are having more product launches ahead of the high season, i.e. earlier in the year this year, which shifts SG&A to H1. And there will be less product development costs versus last year H2. So that has an impact on the specific quarter one numbers, of course. Excluding that, the EBIT margin would have been in line with last year. EBIT in total was 401 million SEC versus 412 last year. Cash flow from operations was negative, 334 million, and we have seen the working capital pattern return now to the historical seasonal pattern that we've had with the buildup ahead of the high season. We still are on track to reduce inventory levels a further 200 million in 2025. From a business highlight point of view, a couple of things. First of all, we have made changes in North America to strengthen our competitiveness and increase the ability to drive profitable growth in this weak market. We'll get back to that. It's really nice to see that we continue to be recognized for our product design. We have seven new IF Design Awards announced already in 2025. And we also have several new products that have been really well received ahead of the high season, which is, of course, encouraging. On page three, we update you on the long-term financial trend. And this is the overview since the IPO in 2014. And as you can see, we continue to add profitable growth. Sales last 12 months is now 9.8 billion and an EBIT margin of 16.5%. When we look closer to the sales performance by product category in the quarter, starting on page four, It's clear that we have an effect of the weak North American market and also some different effects by category. But the common theme across is that also that new tool products continue to add growth. So if we go through them one by one, starting with our clearly biggest product category, sport and cargo carriers, the category declined by 2% in the quarter. We have a really nice sales growth from particularly bike-related and bike-carrier products, new bike-carrier products that are well-received in the market. The new updated best-selling to the Easy Fold Generation 3 is developing really nicely. Also in North America, the North American-specific Thule Revert, the hanging rack, is doing really well. And we've also had, just now in the quarter, a very nice start for our North American-specific bike-carrier Thuleverse. In this category, we've also launched our updated mid-price rooftop box to the fours. That's also done really nicely in the first quarter. So continued good growth from new products that make a difference for us. But it's clearly a challenging market. North American market has been tough for quite some time, but clearly turned tougher after the announcement of the tariffs in February. Consumer sentiment is weak and retailers are clearly cautious to build inventory ahead of high season. And that cautiousness, it can also be seen across the world, also in Europe and other places, both with retailers and consumers, but not at all to the same extent. And we actually see growth in this category, sporting cargo carriers in Europe in the quarter. RV market, sorry, RV products. The market trend continue from the last previous quarter. And the growth in the aftermarket channel offsets the decline in the OE channel in this quarter. The industry continues to go through a tougher period where the OE channels or the manufacturers of the vehicles are reducing production levels to manage inventory level in the channel. So that segment is clearly declining, that channel, I should say. But that's offset by really nice growth in the aftermarket channel for us. And same trend as in Q4, continuous in Q1 and supported by several new products also making a difference in the RV business. Moving to the next page and the next two product categories. Active with kids and dogs declined by 5% in total. Really clearly effect of really cautious retailers not wanting to take product in after the tariffs have announced and quite a big discrepancy between the retail customers and our own direct channels where we see very nice sales momentum on Thule.com in this category. We have two new product categories here that both add sales really nicely. Dog transportation is continuing to do really well and developing very nicely in the first quarter with the first two products that we have in the market. The dog crate to Alex and the dog trailer to Lubexi. And also child car seats, which you may remember was rolled out sequentially during last year. And now it's sold in 30 markets after we've completed the full launch just a couple of months ago. And that's also, of course, adding sales to this quarter. The bags and mounts category, as we now call it, we see a really big growth. But it comes, of course, from the acquired Quadlock business. The organic sales decline, again, driven by demand. a couple of really cautious retailers where we see continued growth on tour.com. But the big growth driver is the addition of Quadlock in the quarter. And on page six, this is our first full quarter together with the Quadlock team. And it's been a good quarter. And as a quick reminder for those who may feel they need it to enter this category, which is called performance phone mounts through acquisition of Quadlock in the last quarter, in Q4 of last year. And this is in line with how Tula has entered several product categories historically through acquisitions. Quadlock is the global market leader in performance phone mounts. It is a really nice fit with the strategy that we are pushing and the brand that we have. being global market leader in a growing and attractive category, very product-oriented company with the best premium products in the market, successful track record of innovation and taking market share, and brand values are very aligned, if you ask the consumers, around quality and safety and enabling an active life outdoors. So about 1.4 billion SEK Swedish business at the time of the acquisition with Very nice margin, CBT at around 25%. And the first quarter has been good. Quadlock sales momentum continues really well, over 20% after maintained high margins. We have a clear integration plan that we do step by step, and we are on track with that. And we're also importantly starting to work together as organizations, and colleagues from both organizations are now having new homes, so to say, in new countries. And you can see For example, on the pictures here, a couple of our key people interacting on the top right. We have Henrik Eriksson, who's leading our design team. They got the red dot design team of the year last year with one of the two founders, Chris Peters of Quadlock and founded the business together with Rob Ward, the other gentleman. So good first quarter with Quadlock. Turning to page seven and back to the topic of North America, we have made some changes. The market is weak in North America and we expect it to continue to be weak. And we have therefore acted to change and made some changes. And the changes are to strengthen our ability to drive profitable growth in the weak market. And they are mainly three headings. First of all, we have a new sales organization in place. Now we have a dedicated sales team for North America. We have closed the satellite office that came with an acquisition of CaseLogic quite a long time ago, and instead focusing the team on building a regional head office in Connecticut, where we also have one of our two factories. So that's number one. Number two, we are changing our growth priorities to focus the investments on the attractive pockets with the best returns. And we have already started focusing much more on bike carriers, where we are both the global and the regional market leader but there's still quite a lot of potential left. We do see really nice sales momentum from the new products in North America already in Q1 where the market is really tough and we have quite a pipeline to come both this year and in the future so we really look forward to that. We also have a new focus or renew the focus on pickup trucks. It's a category where we have a clear right to play. We haven't launched products for quite some time, so there is quite some potential for us. And we have now a new bed rack. It's called Thule Xscape coming this winter. We've also decided to stop the North American car seat project. We had a project ongoing to adapt the car seats that have been so well received in Europe to the U.S., However, we now see that the premium segment hasn't grown as we had hoped with the new regulation in place. It is, of course, a competitive category in general and a costly initiative ahead of us if we were to continue this going forward with the product development costs and sales and marketing efforts, etc. So in order to focus on the most attractive opportunities, we are stopping that project. And of course, we could pick it up at a later point if the market would change or we would see a different technological route. The good news is also that the pockets that we are focusing on, where we see nice traction, we can also produce those product categories in our factories in the US, which gives us a competitive advantage. So the third action we're taking is price increases. We do have two factories in the US. where we produce our most important product categories, but still we are impacted by the tariffs directly and indirectly, and we are making price increases as of June 1 this year. On page eight, also wanted to update you on the recognition we get for product design. We talk a lot of product. We're a product-oriented company. And in addition to commercial contribution, it's really nice to see that we're also getting recognition from the industry and from the design community. There are IF Design Awards for 2025 already out, and we have received seven new awards already this year. So really happy for the team and a nice recognition for the good work done. And then we will see what the rest of the award season will bring as the year moves on. And with that, I hand over to Toby to cover some of the financial aspects.

Thank you, Mattias. Good morning, everybody. And firstly, just a slide to introduce you to our slightly adjusted categories and sales regions, which Mattias has already talked some about. And firstly, the product categories on the left-hand side, you see the pie chart. We have sports and cargo carriers, which is 50% of our business, half of our business, the same category as before. We have RV products, which is the same category as before, is now 20% of our business. And then we have the new or renamed category bags and mounts, which includes the previous packed bags and luggage, but also the newly acquired performance phone mounts from Quadlock. This is 18% of our business. revenue, and finally active with kids and dogs, which is 12%, which we previously called juvenile and pets, but otherwise, it's the same. And then on the right hand side, you see our geographical regions, which which copy our sales structure as well. And we now have Europe, which previously we had Europe and rest of world. But now we have now we have ourselves region for Europe, which is 71% of our revenue. We have North America, where previously we had Americas, but now we have a dedicated North American sales region. And this represents 21% of our revenue. And bear in mind, this includes USA and Canada. And Matthias has talked about North America, but I think it's worth bearing in mind. It's an important market for us, but it is only 20% of our revenue. And then finally, we have the rest of the world, which is basically all other geographies, which is 8% of revenue. Okay, if I move on to the next slide, and just some details about the income statements. And firstly, if we look on the table on the top left, and mentioned revenue, we had 10% revenue in the quarter. So we had a revenue of 2.662 billion sec versus 2.4 billion sec last year. So a growth of 10% in top line. If you look on LTM revenue, we now have 9.8 billion in last 12 months revenue versus In full year 24, we had 9.5 billion. And we had organic growth, as Matthias has said, of minus 2.9%, which was basically a small plus in Europe, plus 0.4%, and a decline of 12.6% in North America, as Matthias has talked about. When it comes to gross margin, it developed well in the quarter, and we continue to see results from our drive to improve gross margin. We're now at 44.8% gross margin in quarter one versus 41.2% in quarter one last year. Quadlock, the acquisition of Quadlock has the biggest impact here. That's approximately two thirds of the increase comes from Quadlock, but we also have significant contributions from the organic business, from more annual price increases, from a better product mix and also increased product volumes. If I move on, you can see that the Q1 EBIT, if I move down to the EBIT line, we had 401 million of EBIT or operating income in the quarter versus 412 million in quarter one last year. And as Matthias says, this is impacted by the earlier phasing of costs related to product launches. And this purely comes from the fact that the timing of our product launches is earlier than it was in the prior year. And that phasing impact impacts the EBIT margin of 15.1% versus 17% last year. And without that impact, EBIT margin would have been on the same level as prior year. And this is, just to mention, this is an impact we expect to see from phasing, which brings the development costs earlier in the year in the first half, and we expect to see them being less than previous year in the second half. Then we just move on, Q1 net interest expenses, £49 million, effective tax rate 25%, and net income was £266 million in the quarter. Just moving on to the next slides, a few comments on the cash flow. We had a negative cash flow from operations in the quarter, which has been driven by the seasonal increase in working capital. And this is both inventory, but also the biggest impact from accounts receivable in the quarter. And it's also worth mentioning that we also did have an FX impact in the cash flow from operations before changes in working capital, the number in the top line you see here of 226 million SEC. And this is approximately 100 million SEC negative in the cash flow from operations before working capital, but this was offset by the positive FX impact, which you can see in the bottom of the table in the second last line where we have plus 189 million in other change in net debt and these two should be seen together because they result in the same impact. And so overall the increase in net debt you can see at the bottom of the table was 185 million SEK in the quarter. And if I just move on to the next slide to show the net debt and the net debt to EBITDA when it comes to the balance sheet. And as I just mentioned, we did increase net debt slightly in the quarter. And this is due to the seasonal seasonal pattern of our business. We do normally increase net debt slightly in quarter one. And if you go through the history on this graph, you you can see that except for the last two years during during the post pandemic, when we've been obviously reducing inventory from from the highs that we had in the pandemic. And then we now land at a net debt to performer EBITDA of 1.94 at the end of the quarter. Good. Okay. And with that, I will hand back to Mathias.