MIPS’ presentation of the year-end report for 2019 13 February 2020
KEY HIGHLIGHTS • Good growth in the fourth quarter with +41% increase of net sales. Organic growth was +33% • Production volumes are getting back to “normal” after trade tariff slowdown in the third quarter • Strong expansion in terms of models and brands during the year • Higher trust in the MIPS brand leading to more all-in MIPS commitments from brands • Key recruitments now completed within Marketing and Sales • Adjusted EBIT margin 41.2% for the year of 2019, above our long-term ambition • Proposed dividend of SEK 3.00 per share, 89% of net earnings, well above ambition of 50% • Good momentum in the quarter and strong platform for continued growth 2 2020
MIPS CONTINUES TO EXPAND ITS CUSTOMER BASE In 2019, we have delivered MIPS BPS to 103 brands all over • 103 103 the world, and all our top 10 customers grew with MIPS in 78 active 60 45 2019 brands 28 15 8 8 4 (2019) 2011 2012 2013 2014 2015 2016 2017 2018 2019 • We grew in all categories and all geographies 583 448 583 • In 2019, we have delivered MIPS BPS to 583 different helmet 302 models 212 121 models (2019) 66 30 23 15 2011 2012 2013 2014 2015 2016 2017 2018 2019 • During 2019, we delivered 5.0m MIPS BPS units and 14.2m Thousands 4 973 3 812 since inception 5.0m 1 046 1 671 2 320 units sold (2019) 279 14 43 67 We continue to have a high inflow of new projects and a • 2011 2012 2013 2014 2015 2016 2017 2018 2019 strong pipeline of new helmet models equipped with MIPS BPS 3 2020
THE TRUST IN THE MIPS BRAND HAS INCREASED The multisport brand Bollé and the lifestyle brand Nutcase have • communicated that they will offer MIPS BPS in all their helmet models • Both brands will convert their whole range, conversion projects already started Bollé is the first brand to offer MIPS BPS in all helmets both within snow • and bike Nutcase is the first lifestyle brand committing to have MIPS BPS in all their • helmets 4 2020
UPDATE REGARDING THE CORONA VIRUS Both the main part of MIPS’ production and the helmet manufacturers are located in China • The helmet manufacturing sites are mainly located in the Guandong area (outside • Hongkong), over 1,000km from the Hubei area (Wuhan) Factories have resumed production after the Chinese holiday but still with low capacity. • Will ramp up during the coming weeks provided no virus on site • As factories are just starting up the production, it is currently difficult to foresee all effects from the virus outbreak • We are following the outbreak closely on a day-to-day basis 5 2020
NET SALES DEVELOPMENT IN FOURTH QUARTER Good performance with 41% growth in the quarter, • Net Sales development (SEKm) and quarterly growth rates* an organic growth of 33% Growth mainly driven by existing customer base • 41% expanding their assortment with MIPS 49% 88 83 • Growth in all our categories 53% 52% 3% 88% 62 Net sales growth of 39% year to date, • 91% 56 53 29% 51 organic growth of 29% 55% 45 55% 41 29% 37 12% 70% 105% 32 69% 27 24 24 21 21 Cha hang nges i in ne n net s sales % % 2019 19 2019 19 20 274% Oct-De Dec Jan an-Dec 14 13 10 3 Organic growth 33% 29% Changes in exchange rates 8% 9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Structural changes 0% 1% 2015 2016 2017 2018 2019 Total al 41% 41% 39% 9% *No u underly lyin ing growt wth r rates a availa ilable le for 2 2015 15 6 2020
DEVELOPMENT IN FOURTH QUARTER • Net Sales increased 41%, organic growth was 33% Gross profit up 41%, gross margin flat, adjusting for acquisitions gross • 33% margin up 90 bps to 75.8% OPEX – continue to invest in strategic priorities • Organic growth • Negative impact under other operating income and expenses mainly from currency derivatives and weakening of the USD with SEK 4.3m (1.8) 45.4% • Adjusted EBIT was SEK 39.7m (28.7), adjusted EBIT margin 45.4% (46.1) Cash flow – operating cash flow of SEK 19.7m (23.8) • Adjusted EBIT margin MIPS Group (SEKm) Q4 19 Q4 18 % Net sales 87.5 62.2 41 Gross profit 65.5 46.6 41 19.7 Gross margin % 74.9 74.9 - Operating profit (EBIT) 39.0 28.7 36 Operating margin (EBIT) % 44.6 46.1 - Operating cash flow Adjusted Operating profit (EBIT) 39.7 28.7 38 (SEKm) Adjusted Operating margin (EBIT) % 45.4 46.1 - 19.7 23.8 -17 Cash flow from operating activities 7 2020
FULL YEAR 2019 • Net Sales increased 39%, organic growth was 29% • Gross profit up 40%, gross margin +20 bps, adjusting for acquisitions 29% gross margin up 140 bps to 75.3% OPEX – continue to invest behind strategic priorities • Organic growth • Negative impact under other operating income and expenses mainly from currency derivatives of SEK 9.8m (3.4) • Adjusted EBIT was SEK 110.5m (73.0), adjusted EBIT margin 41.2% 41.2% (37.9) • Cash flow – operating cash flow of SEK 63.2m (69.1) Adjusted EBIT margin MIPS Group (SEKm) YTD 19 YTD 18 % Net sales 267.9 192.5 39 Gross profit 198.4 142.2 40 63.2 Gross margin % 74.1 73.9 - Operating profit (EBIT) 108.0 73.0 48 Operating margin (EBIT) % 40.3 37.9 - Adjusted Operating profit (EBIT) 110.5 73.0 51 Operating cash flow Adjusted Operating margin (EBIT) % 41.2 37.9 - (SEKm) Cash flow from operating activities 63.2 69.1 -8 8 2020
ADJUSTED EBIT AND ADJUSTED EBIT MARGIN DEVELOPMENT IN FOURTH QUARTER AND FULLYEAR • EBIT increased with SEK 10.3m to SEK 39.0m (28.7) Adjusted EBIT increased with SEK 11.0m • Adjusted EBIT (SEKm) and adjusted EBIT margin development to SEK 39.7m (28.7). Adjusted EBIT margin was 43.0 39.7 45.4% (46.1) 38.0 90.0% 38.0 70.0% 33.0 28.7 • Increase in Adjusted EBIT mainly explained by higher 46.1% 28.0 46.0% 50.0% 21.720.8 sales partly offset by investments in organization, 43.5% 45.4% 20.9 23.0 36.0% 31.2% 30.3% 40.7% 30.0% 39.5% negative effect from currency derivatives/fx and 26.3% 39.0% 18.0 31.5% 18.9% 13.7 14.6 12.7% 11.8 11.5 increase spend in marketing 10.0% 7.6% 13.0 11.2% 7.4 6.4 7.4% 0.3% 8.0 0.1 -10.0% 1.5 1.6 3.8 1.6 1.8 Adjusted EBIT for the year increased by SEK 37.5m • 3.0 -30.0% -31.8% -2.0 to SEK 110.5m (73.0) from higher sales partly offset -50.0% -7.0 -4.1 by investments in organization and negative effect -149.6% -3.3 from currency derivatives Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Adjusted EBIT margin 41.2% (37.9) • 2015 2016 2017 2018 2019 9 2020
BALANCE SHEET AND CASH FLOW Cash flow from operating activities in the quarter • SEK 19.7m (23.8), full year SEK 63.2m (69.1) Cash and Cash Equivalents at SEK 191.6m (242.5) • Cash flow from operating activities (SEKm) • Dividend of 3.00 SEK (2.50) being proposed 31.0 • Equity ratio 87% (86) 24.2 23.8 19.7 Key balance sheet items and cash flow 11.89.8 11.6 MIPS Group (SEKm) FY 19 FY 18 8.4 5.9 7.7 7.4 6.3 Total Assets 342.6 319.4 3.9 0.7 3.1 0.9 Equity 297.9 275.6 0.0 Equity ratio % 87 86 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Cash & Equivalents 191.6 242.5 -3.4 -1.6 2015 2016 2017 2018 2019 -8.8 MIPS Group (SEKm) FY 19 FY 18 Q2 Cash flow from operating 63.2 69.1 activities 10 2020
SUMMARY • Good performance in the fourth quarter ends a very Net s sales a and a d adjuste ted E d EBIT-mar argin 1 n 12 m mont nths hs r rolling ng successful year 300 45% 41 41% 41% 41 41% 41 Significant increase in models and brands 39% 39 • 40% 38% 8% 250 268 68 34% 4% 35% 241 24 243 24 0% 30% 0% 30% • More trust in MIPS brand and more 100% 28% 8% 26% 26% 200 30% 214 21 193 93 25% 23% 3% commitments 171 71 22% 22% 22% 22% 150 19% 9% 20% 147 47 26 128 28 117 126 14% 4% 117 100 15% 110 110 • No major impact from Corona virus yet, will have 97 97 87 87 7% 7% 10% 75 75 phasing effects, however difficult to predict full 50 67 67 5% 57 57 outcome 0 0% Q1 16 1 16 Q2 Q2 1 16Q3 16 16Q4 1 4 16 Q1 17 1 17 Q2 Q2 1 17 Q3 17 17 Q4 1 4 17 Q1 18 1 18 Q2 Q2 1 18Q3 18 18Q4 1 4 18 Q1 19 1 19 Q2 Q2 1 19Q3 19 19Q4 1 4 19 Net Sales SEKm Adjusted EBIT-margin* • Organization in place to deliver on strategic initiatives *Adjusted for costs in connection with the company's IPO during 2016 and 2017 and costs relating to acquisitions during 2019. Adjusted EBIT margin includes legal costs relating to company’s litigation processes. • Good position to deliver according to the 2025 plan 11 2020
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