Thule Group AB (publ)

Welcome, everybody, to this Q2 call. I am, as usual, joined here by our CFO, Toby Lawton. We'll be talking to a presentation available on the screen and later on also on our website. And as usual, we will follow up with a Q&A session after the presentation. So starting with highlights on page two, it's nice to see that the positive development that we saw in Q1 continues also in the second quarter, which is our peak season and our biggest quarter. We see continued both organic growth and increased profitability. And as you may be aware, we are very focused on growing what we call champion product categories, product categories where Thule is the global market leader and can out-innovate competition with new products. And it's nice that that continues to give results, as does the efficiency agenda that we are driving. In the quarter, we see growth in all of the four product areas that we report, with the fastest growth coming from Active with Kids and Dogs, just as in Q1. And as also announced earlier in May, we have made a small acquisition in the quarter of a company called Curly, which is a leader in premium dog harnesses. Turning to page three, the financial overview. As mentioned, we saw both organic growth and increased profitability also in Q2. For the quarter, sales amounted to just over 3.4 billion and 2.5% organic growth. We continue to see a market where both consumers and retailers are cautious, both in North America. So it's nice to see the organic growth coming through even despite that backdrop. And as a continuation of trends, also Europe continues to be strong for us, growth of 4% in the quarter. North America is the toughest spot with the minus 2%. where we are making good progress on the agenda that we are driving, but it's also the toughest market that we're in, and more than happy to get into some highlights specific to North America later on. There continues to be a negative currency effect for us, and in the quarter, the impact on sales was about two percentage points. Gross margin is all-time high, up one percentage point at 47.3%. Mainly, this is positively driven by mix, both product and channel mix, and some efficiency gains in our supply chain, which more than offset some of the headwinds that we are seeing, and we will get back more to that later. In all, the adjusted EBIT margin increased to 22.8%, which is up a bit more than a percentage point versus last year. Our sales and admin costs are somewhat below last year, not as much as in Q1, which is also as planned, but a bit below. And we also have cost for the closure of a smaller satellite office in Belgium in the quarter. So there is an adjustment of 23 million SEK in these numbers. Cash flow remains good up versus last year and amounted to 824 million SEK. So for the first half of the year, we can conclude that we're growing just about 3% organically and an EBIT margin improvement of close to 1.5 percentage points. So on page four, before we dive in some more details of the quarter's performance, let's step back. This graph shows the long-term trend. It's actually the trend development since Thule became a public company back in 2014. So it's been a bit more decade. And the point is that the long-term positive trend continues also in the last couple of quarters. As you can see on the blue bars, which is the sales trend, it continues up. It's a little bit of shading there to show the negative currency impact for the first half year this year. And the green line continues to point upwards to the northeast, which is the EBIT development continuing to improve. So all in all, we have on the last 12 months basis Net sales of 10.4 billion and an adjusted EBIT margin approaching 17%, 16.8%. So with that long-term backdrop, let's dig into some of the details around the quarter. And we'll start with the performance per product area. And as I'm sure you're aware, we report four product areas. The biggest one is Sport and Cargo Carriers, which amounts to more than half of the sales in the quarter. And we have three so-called champion categories, the categories that we are focusing on for growth and where we are global market leaders. And in the quarter, we were up somewhat, 1% up and flat for the year so far. We continue to launch new products in these categories and continue to see growth as a result of that. We have maybe particularly interesting to mention around bike carriers, since bike is really high season in Q2, where we have launched both more expensive products and at lower price points, which both help us actually in the quarter very nicely. We had a very good start for our new most premium bike carrier to Epos Park Secure, which is an upgrade of our best carrier now with parking sensors, and also the lower price points which allows more consumers to access Thule products at lower price points. And the example I'd like to highlight is Thule Velolite, which has done well for us in the quarter and launched in April. But also other price points that we are now addressing with more new products. For example, the new entry-price rooftop box Thule Pulse also did well. We continue also to see good momentum in rear of car cargo products, just like some of the ones you see on the picture. And generally, we see a positive development from both new products launched, but also in the existing portfolio, the premium price points, the higher price points continue to do best where it's a bit softer in the lower and mid range. All in all, we saw just like in the total numbers, good growth in Europe for sport and cargo carriers in the quarter, but the decline in North America. The second product area for us is RV products, which is about 15% of sales in the quarter, which continued to show growth, 4% up in the quarter, 6% in the year to date. And we had another quarter with growth both to the aftermarket or the RV dealers and the OE channel or the manufacturers. And again here, a substantial part of this growth that we're seeing this year is from new products that we've launched in the last two years, which continue to drive growth for us. The market has been gradually improving over the last few quarters and consumer interest in RVing remains high. However, we are seeing a decline in RV registrations during the second quarter as a consequence of even more cautious consumers for high ticket items now following for example, the conflict in the Middle East. But overall, good growth in the quarter for RV of 4% and 6% year-to-date. The third product area is active with the kids and dogs. And this is a product area where we have three of what we call champion candidates, which are product categories that have the characteristics of the champions but are yet small or smaller, not making the bar of 500 million SEC to be called the champion. And it's nice to see that all these three product categories continue to grow really fast and really drive this product area to the best performing one in the quarter with net sales up 8% organic and 9% year to date. And just to give some color on these three champions, candidates, we continue to see really nice growth in all-terrain and running strollers, where we have launched some upgraded products in the recent year, and that continues to boost performance. Dog transportation, which we launched two years ago, is really growing strong. Continued growth in the dog crates, that was the first product in, but also with the broader product portfolio now being built out, for sure helps boost the sales as well. And then similarly, sustained momentum in the child car seat category, which was also launched 18 months ago, almost two years ago now, which also is benefiting from more new products, a broader portfolio, and a wider distribution, which continues to drive sales for us. The other category, which is worth note, is the multi-sport and bike trailers, which is also part of this product area, where the market had been really tough with lots of stock and discounting, but that product category performance turned for the positive during the second quarter, particularly driven by premium price points. So all in all, a good development in active with kids and dogs, so 8% organic growth. And the last product area for us is bags and mounts, 18% of sales in the quarter, where net sales was up 5% organic and 6% year-to-date. And two-thirds of this, actually a bit more than two-thirds of this product area is now made up of performance phone mounts, which is a result of the acquisition of QuadLock, which continues to grow well, just below 10%. We also see growth in Tulip branded bags, which is nice. Small growth, but still positive growth. And we're pleased to see some... Good reception of new products also in the Thule bags. The Thule in-lock system for bike commuting that was launched in the first quarter continues to do well and also upgrades to our Thule Chasm line with both gear holders and new duffel bags that are performing really well. However, against these two growing parts of this product area, we continue to see a decline in the Case Logic bags, which is a legacy product. legacy business that we are facing out, which I've been commenting on many times before. But overall, positive development in bags amounts of 6% for the first half year. And then before turning to some financial details, just an update on the add-on acquisition of Curly that we announced in early May. As just shared, we have a strong momentum in dog transportation products, and it's an area that we Like and believe in connects really well with our consumer and has some positive tailwinds in the category. And we have acquired a Swiss company called Curly, founded by two mountaineers used to lots of mountaineering equipment, including harnesses and took that knowledge about harnesses into the dog space and developed a company around that product and really are the global market leading position in premium dog harnesses, particularly for smaller dogs. So really complimentary to the dog transportation products that we have already. It will be integrated under the Thule brand. We will launch harnesses for larger dogs already this fall actually. And we closed the transaction at the end of June just as planned. So I'm very pleased to now welcome the Curly products and team into the Thulebranden family. And with that, I turn to Toby to give some further financial details.

Thank you, Mattias. Good morning, everybody. I'll start on the financial summary of the Income statement. And here, firstly, on the top left-hand side, on sales, we reported 3.4 billion sec of sales in this quarter, which you can see in the left-hand column and the Q2 column. And remember that Q2 is also our biggest quarter of the year. And as you can see that in the graph to the bottom left, where you can see the seasonality of the business as well. When it comes to organic growth, in the quarter we had 2.5% organic growth with growth in all four product areas. And you can also see if you move to the first half on the right hand side of the table, we had 3.1% organic growth for the first half. Gross margin increased versus the same quarter last year and now talking about quarter two. And the biggest impact here was price mix, where the mix of products and channels is now more favourable than it was in the same quarter last year. And just to give an example, we have higher than average growth in D2C and in performance phone mounts, both of which contribute to improving gross margin. And that, together with price increases as well, help the gross margins. We then continue to drive efficiency gains, which also helps gross margin. But of course, we're also incurring higher tariff costs in North America than we were in Q2 last year, because in Q2 last year, these costs were not yet fully reflected in the result. And then just talking about the first half year, gross margin is up 0.6% for the first half year, due mainly to these same effects that I just mentioned. Selling and administrative expenses were down slightly in the quarter from 841 million SEK to 838 million SEK and are now down 3.9% for the first half year. So down from 1,632,000,000 down to 1,568,000,000. And as we have said previously, we expected costs to come down in the first half year and we've delivered on that. And as we've also said previously, the reduction was bigger in Q1 than Q2 due to the different phasing of development costs compared to last year. Important to mention here is that with our focus strategy, we're focusing more of our R&D costs on champions while also bringing the total development spend down slightly. And we intend to spend at least 4% of our sales on development for the champion categories, which are really driving the growth. And at the same time, bringing the overall spend down slightly. This gives an adjusted EBIT for the quarter of 779 million SIC, with an adjusted EBIT margin of 22.8%. This is up 1.2% versus Q2 last year, and that's mainly due to the improved gross margin, but also partly due to slightly lower SG&A costs. And for the first half year, the adjusted EBIT margin is up 1.4%. So a good increase in profitability. A few things to mention here to bear in mind. Firstly, the FX impact was still negative in the second quarter. We still had headwinds, but the headwinds are somewhat less than we've had in previous quarters. And the total FX impact on the Q2 result was approximately 20 million SEC negative. Secondly, we have an adjustment item in the quarter. And this relates mainly to the closure costs for an office in Belgium, but also a small part for some transaction costs related to the Curlie acquisition, which Matthias mentioned. And the total adjustment is then 23 million SEK in the quarter. And that's all the adjustment relating to these items. I can mention that as well. Thirdly, I think important to mention that there is no impact in this result from any tariff refunds. So there's no impact in the second quarter in any way of tariff refunds. And we can come back to this in the Q&A if you like. But that also means that the... Or if I just move to the unadjusted EBIT, it's also worth mentioning the unadjusted EBIT was also up versus last year by more than 50 million sec, a similar improvement than we saw in adjusted EBIT. When it comes to net income and also earnings per share, this was up by 4.7% in the quarter and 6.6% in the first half year. Okay, if I move on to the share of sales. Here you can see that our share of sales by geography and by product area and on the left hand side here you can see that the share of sales from Europe on an LTM basis has increased and this is because this is where we have the strongest organic growth and it's very important that we perform here in Europe in our biggest and most important markets and North America and particularly USA has been more challenging as Matthias has said in the last couple of years. But the actions that we have taken here are showing traction and the trend is improved. On the right hand side, you can see the share by product area and worth noting on this pie chart I think is that the active with kids and dogs product area where we have seen a strong growth from the three champion candidates has driven the strong growth and increased share of sales from that product area. Otherwise, no big changes in these distributions. Just moving on to a graph on EBIT and EBITDA margins. And we just take a moment to look at the development of our EBIT and EBITDA margins. And this was also an item we talked about in our Capital Markets Day last November. So there's more information there if you want to go and look at it. But firstly, looking at the EBITDA margin at the top, which is the margin before depreciation. And here you can see that the LTM margin has now increased to 20.2%. So that's the last 12 months EBITDA margin versus 19.5% in 2025. And that's a level that's higher than the history in all years, except for those years where we had the pandemic effect. Secondly, looking at the EBIT margin, the line at the bottom, and this is also increased to 16.8% on a last 12 months basis versus 16.0% in 2025. So good to see that the actions we are taking are having an impact and delivering the margin improvements. And we're taking important steps then towards our EBIT margin target of 20%. If I then move on to cash flow, Firstly, here to mention that Q2 and Q3 have historically been our strongest cashflow quarters. That's due to the seasonality of the business. And you can see that in the graph on the bottom left. And then this quarter, quarter two then, we had a strong cashflow from operations in the quarter. We had 824 million sec of cashflow from operations, which is a good level driven by both the good profitability but also a reduction in working capital in the quarter. Important to note, we also had some cash outflows in the quarter. We had a capex of 70 million mainly related to the investment we are making in Poland in automating and extending the distribution warehouse in Poland. We also paid out 114 million for the acquisition of Curly and we paid 448 million SEK for the dividend in the second quarter. But with the good cash flow we had, even with these cash outflows for those items, we managed to reduce net debt with 100 million sec and improve our leverage. So our leverage net debt to EBITDA is now down to 1.9 times. And you can see that on the graph on the bottom right hand side. And just to mention here as well that we expect to further reduce the leverage with with a strong cash flow that we normally have in the quarter three as well. And obviously we have no dividend payment in quarter three. So that has no negative impact in quarter three. So the cash flow drops through. And yeah, with that, I will hand back to Matthias.

Thank you, Tobbe. Let's turn to some forward looking commentary around both our priorities and the market situation. And our focus for 2026 remains the same. We are focusing on building champion categories and driving efficiency gains. And it's nice to see the Results coming through despite a not easy market during the first half year, which is of course good evidence that the efforts we are making are giving positive effect. So as we stand right now, we see that the market is now being impacted by the conflict in the Middle East. on already cautious consumers, and likely there is both negative and positive effects for the Thule business. On the one hand, we can see that the RV segment, which had experienced a few quarters of improving market conditions, had now a quarter of declining new RV, new vehicle registrations, which is of course not positive for us. On the other hand, More consumers are saying this year that they expect to spend summer vacations closer to their home. They still expected to travel, but not long distance, rather closer to their homes, which is typically positive for Thule. So both positives and negatives there. We continue to see North America being the toughest market, although there are some bright spots, it's still the toughest market. And on the cost side, there are raw material prices, of course, that have gone up and that will impact us in the second half. And we are conducting price increases centered around August in the third quarter to mitigate those effects. So that's the market situation and sort of the short term actions. Longer term, we continue to build bigger and more champions through our product development efforts. new and upgraded products to grow both the existing champion categories that we have, but also to expand the product portfolio around the champion candidates. The dog transportations, the car seats, and the all-terrain and running strollers are continuous investment areas for us. We're also continuing to push efficiency gains. We are, as Tobbe mentioned, focusing our R&D spend more in 2026. We're actually spending more on champions, but less in total. We're continuing to push efficiency gains on the supply chain with continuous insourcing and continuous building of technology platforms, which are giving nice effect also in this quarter in, for example, bike carriers. And lastly, we are continuing the work to extend and automate our biggest DC in Poland, which is expected to go live early next year and have cash savings of 100 million SEK a year when fully operational. So that is the agenda going forward. On the next page, you can see the product launches or highlights from the product launches that support this agenda. And the launch calendar this year is really focused on supporting building champions, growing the number one positions that we have and building out the next generation champion categories. Several of these products have been launched now in H1. I'll comment on a few of them in a minute. But there are also some highlights for the second half. For example, we are rolling out our connected car seats. Just started the launch of car seats that now have sensor-based feedback to prevent misuse, which is really exciting for us. And we continue to build out the dog category with harnesses for larger dogs called Tula Dart coming here in the autumn as well. So continued high pace in the product launches also in 2026. And just to round off, to show you a few examples, we have launched several bike carriers also this year. And in the second quarter, we have continued to launch products also specifically to the North American market. Tulevero is our latest premium hitch bike carrier built for heavier bikes, e-bikes particularly, that has been well received by the US and Canadian market here during spring. We also continue to innovate and really push the limits to make Thule stand out. And we have upgraded our most premium bike carrier, Thule EPOS, with parking sensors, Thule EPOS Park Secure, which is also launched during the second quarter in April and had a really nice start. continuing to build even better products for our consumers. And on top of that, we're continuing to stretch the category also to lower price points and launched Thule Velolite in the quarter, which is the first ever one bike platform carrier that we've done. Really compact bike carrier and accessible for a very healthy price point to be a Thule product. So really nice start for Thule Velolite as well in the quarter. Bike season, sort of high season is bike season in many ways, and we have been pleased to see these bike carriers having positive effect. We've also continued building up some smaller product categories with car tents being one good example. Thule Wide Sky is our newest hard shell rooftop tent. Really well received. Very easy to install and very appreciated also for the ability to turn the bed in the tent into a sofa on the tent with a front row seat to the outdoors, as the tagline is called. That's nice to see. And then, as mentioned before, continuing now the focus going forward on building champion categories also in the candidates. So we have just launched in... We started small and are now expanding our launch here in the third quarter of the connected car seats which is upgrading our existing car seat family with sensors that provide feedback, light, sound and in the Thule app about the installation and of course the whole purpose is to prevent misuse. So really trying to push the safety standards and innovate also in the car seat category going forward. And that's going to continue to roll out here in Q3 and Q4. And also continuing to build out the dog transportation space with To The Dart, which is dog harnesses for larger dogs, which are also launched here during the autumn. So a pretty busy half year ahead of us as well. And we hope, of course, to build on the organic growth and the margin expansion we have seen here in H1. and take that into the second half as well. So with that, we conclude the presentation part and turn to operator to moderate questions.