Welcome to the Nimbus Q2 Presentation for 2024. During the question-and-answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the CEO, Jan-Erik Lindström, CFO, Rasmus Alvemyr, and Head of Investor Relations, Gunilla Öhman. Please go ahead.
Thank you. Again, welcome then to our presentation of the Q2 report. First picture, actually, we stopped there a little bit. What you see there is actually then the 495, our new, newest model, and actually then, and for us, a new segment, which is very interesting. And that particular boat you see is actually down and doing some service now during the Båstad Grand Prix here in Sweden, in tennis. A lot of expectation, but I will come back to that. Lovely picture. If we switch page, then, of course, it's me and my companion, Rasmus, that will take care of that. If we have any new listeners, who am I? I have been CEO at Nimbus for 14 years, meaning then that I have quite a lot of experience.
Of course, I have seen a lot of different things. Among other things, of course, the worst downturn that we have seen in our industry, and that was actually then connected to the Lehman Brothers crash. And that was then something completely different that we see today. That was a financial meltdown. And what we see today is maybe best described then as a mild recession, and I think that's important to take with them when you're listening to this presentation. Next page. We have done some slight changes in our presentation. I hope you like that.
So we will actually more focus then the first part of it, I will describe in more general picture, less figures, and the figures then will come on Rasmus part of the presentation, where we focus more on them. But still, we need to mention some figures, and I'll start immediately then with the sales that amounted to SEK 623 million, and then that is actually then a drop by year-over-year, a drop by 18%. 17% of that is organic. If we look at the first half year, same picture, we have a decrease of 9%. And that is also one thing that you have to keep in mind, that if we look at our peers, we actually then have a far better outcome than our peers.
I have talked a lot during these presentations that we have a momentum, and the only way I can see it at this point is that this momentum actually still is there. We had an EBITDA of SEK 45 million last year, then same period, SEK 83 million. The difference then, as we say here, mainly due to temporary effects in the Finnish operations and EdgeWater. We have talked about that before. I will not go into that again, but what's important for me is that what we have promised, that we will step by step increase our gross margin in our core business, that has actually happened. So important also, so we are strengthening our core business, the underlying core business.
On the negative side, the market in Europe is actually weaker than we anticipated, and it's down 25% for our business. That is not our performance, that is due to the softer market, but still, we expected more, and let's see now what will come for the future then. A lot of different reasons, and we talk about that in the report. You can read the report there to get some more flavor on it. The 495 again, we have had a press event for the international press, the boat trade press, and that was a success.
So now, in all the magazines around the world, we have a lot of PR for this product, which is, of course, very good, very good for us. And we have then actually delivered, during the quarter, the very first end customer sold 495. And it's more to come, we're producing it in full speed here in Sweden. And what that means then is what I said in the beginning, that we actually then officially has opened this new segment for us, and we are confident that this will be very good. And maybe then remember that we haven't had the official launch of this boat yet. That will be in the Cannes Boat Show during September.
During the quarter, we have also started production again then in EdgeWater, and it's gradually then ramped up, and we're actually running full speed from on June this year. And as you remember, or hopefully remember, we stopped the production due to, as we saw it, unhealthy inventory stock levels. We have also started the production again in Finland, and that is then what we call then the value boats. And what we have produced is, of course, ordered boats to fulfill orders, but we have also produced some of these high-volume models that we stopped at the first stage, and that is only then to fulfill the batches. But the major part is actually ordered boats. And good for us, and hopefully for you, too.
The very first Nimbus has then been built in the U.S. and will be followed of many more, and is then to be delivered here in July, or is actually delivered today. If we switch page. A short flashback of us then. Founded in 1968, a long history of international trade. I usually tell you that we started actually already the year after with the international trade, and has done so since then. We have our true house of well-known brands, and again, we do it for our dealers. We want to be a big part of our dealers' business, and that's important. And then you have to have a certain number of models depending on what boating is in their particular district.
We have then here we only mentioned the last things starting in 2022. A lot of other things has, of course, happened, but what we can say is that the three out of four is actually related to U.S. And as I point out here at the bottom, that U.S. is our today our single biggest market country-wise. And as you then probably know, North America is actually then 50% of the world market. So this is big, and this is something that we, of course, will gain from for many years to come. We then switch to page again, yes. Something about the order book development. The order book amounted then to SEK 508 million, compared then to over SEK 1 billion last year.
And then it's important that you have some background to analyze that figure. Normally, it is a seasonality in our industry, and especially for us, depending on which market we are active on. And the biggest order book we had in quarter three, and if you look at quarter two, the year that we compare with, we actually have a higher figure in quarter two than we had in quarter three. And that is depending on a couple of things, and I mentioned here that we, of course, bought EdgeWater, and then we bought the order book, which is important to keep in mind.
And then also, at that time, we get a lot of new dealers, and they, of course, did their initial orders, which is bigger than their normal order, so to say, the normal factory order. So that is affecting the quarter two, and then, of course, we have the pandemic during a couple of years, and we should not compare to that one, because that one was not what we call the normalized picture. So if we, for example, look at the quarter two 2020, then you see a normal figure. It's SEK 189. That year ended up being roughly SEK 1 billion, and that is more, so to say, the normal one.
The normal one, we say that we have a clear indication then that the pre-pandemic order book pattern, as we say here, with shorter timeframe and then the possible order intake for quarter three, is what we actually see now then. But since it not has happened, we have to then say possible order intake. But keep that in mind, the normal seasonality. And that, then, of course, it's making it less, slightly less predictable actually than now. And again, that's normal for our industry, planning for the production schedules and things like that. In the order book, we have premium boats, then at a stable figure today, actually then.
So now we are well above 90%, and this time, 94% is then related to what we say then is our core business, meaning premium boats. And of course, only confirmed orders in the order book. And again, then depending on what market, the majority of them is then prepaid as, according to our business model. And with that, I leave to you, Rasmus, for a while.
Thank you, Jan-Erik. Then I start with the sales development per market. In the second quarter, the sales in North America dropped by SEK 14 million, to SEK 138 million. The drop was driven by lower sales from EdgeWater. Sales from the Nimbus brand has remained flat, which is positive, since the U.S. market has dropped about 20%. Positive is also that the number of end customer sold boats has increased from the 50% in the quarter, year-over-year. Refers to both the EdgeWater brand. The Nordics has continued to be soft, and the sales dropped by 50% year-over-year to SEK 343 million. But there are signs indicating that we now might have the softest period behind us.
In the second quarter, we saw that order intake year-over-year increased, and that the sales drop was significantly lower than in the previous quarters, the first quarter, fourth quarter, and the third quarter. Sales in Europe dropped by 25% compared with last year and came out as a disappointment, as Jan-Erik mentioned, with almost zero in for our sales in the period, which we would have expected to see because of the quite soft order pattern since autumn 2023. Other markets went down from SEK 20 million -SEK 5 million, but from low levels. On LTM basis, other markets corresponds to 7% of the sales.
On LTM basis, it's also worth to mention that, North America has increased from SEK 287 million - SEK 619 million, corresponding to an increase of 116% year-over-year, and an organic growth of +40%. Then we move to sales development in total. The net sales amounted to SEK 623 million, which is down [80%] year-over-year. The change is driven by a softer market situation than last year. Sales to external dealers and direct sales, including spare parts, amounted to SEK 338 million, which is down 22% year-over-year. The sales from our own dealers went down by 11% from 320 - 285. On LTM basis, the net sales ended up at 1,806, which is flat year-over-year.
The EBITDA in the second quarter amounted to SEK 45 million, corresponding to an EBITDA margin of 7.2% versus SEK 83 million, and an EBITDA margin of 11% last year. In relation to last year, the EBITDA was negatively impacted from EdgeWater, and in the quarter, that figure amounted to SEK 13 million, coming from the stopped production in the first quarter. Since June, the production is now running again with normal speed, and going forward, we therefore expect that EdgeWater will deliver in a positive way to Nimbus Group. The Finnish production of value boats has also started in small series during the second quarter and had a negative impact of SEK 25 million in relation to last year.
On full year basis, I would like to mention that the EBITDA in the second quarter has been affected negatively by approximately SEK 50 million from both the EdgeWater and the value boat business. On the positive side, we see that the gross margin has recovered from the former negative currency effect that affected 2023, and partly also the first quarter this year. The margins are now restored with updated price lists, reflected in the order book. On year-over-year basis, the EBITDA amounted to SEK 39 million, and the EBITDA margin ended up at 2.2%. Then we moved to net working capital, and the net working capital improved in the second quarter and ended up at SEK 548 million, which is down SEK 78 million since the first quarter.
Net working capital in relation to LTM sales amounted to 30% versus 25% last year, and 32% in the first quarter. In relation to last year, the difference is mostly driven by high levels of inventory due to both timing effects in boats in transit to U.S. and a weak European market with less en route sales than expected, which Jan-Erik talked about earlier. Then I hand the word back to you, Jan-Erik.
Thank you, Rasmus. And then, short, about the financial targets. Simple way to put it is that they stand, we keep them, exactly the same way as we have done. Of course, we have some gaps to fulfill, but we then has as a target, then, the growth during a business cycle then of above 10%, and we have achieved that, before, but now we can then say that, it's a new start of that journey. The EBITDA margin, 10% on a midterm basis, and that is our target. That is what we want to achieve, in that perspective then. The capital structure, that, no financial debt, and we have no senior debt, and we should not have that.
The only allowed one is then except property, but we have none today. Of course, the dividend policy, 30% out of the net result, and we then, at that point, take some consideration then of the current cash flow, of course. But otherwise, this is then the same financial target, and we continue to have that as a financial target. And with that, we have had this presentation. I think I'll leave the floor quick to Gunilla to talk about the last picture then.
Yes. So thank you very much, and we will open up for questions. I just want to remind you of our third quarter report, which is due the 25th of October. So please, let's open up for questions.
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 Henrik Christiansson from Carnegie. Please go ahead.
Yes, good morning. So a question here, let's start with cost savings program. You mentioned that in the report, and you said it has some impact already, but that will come through more in the autumn. Could you quantify a bit what you're doing and the cost savings target on that, and what if there would be any costs associated with that?
The short answer is then, and we have talked about that a bit before, but since we have had this tremendous growth during the years all the way from 2012, actually, we haven't had the time to consolidate our business, so to say. As an example, then we have looked through the organization. We have some thoughts around that. I mentioned partly in my wording in the report about that. When you do such things, of course, you then see how should I put it? It's a lot of opportunities to make things more efficient. So it's not a big cut or something like that.
This is then more in a always improve mode, so to say. It will be some decent figures out of it, and it will definitely, definitely happen because we do things that we don't need to do. We do things twice, you can say, and things like that. So it's more related to the process itself than to some kind of cut of people. Then, of course, we decrease the capacity. We have done that during the year, depending on, especially maybe the soft market on the value boats, but also then rest of the capacity, so to say. So it's related to that. Was that an answer to your question?
Yes, but there's not gonna be any sort of one-off costs related to this. That was one question that wasn't answered, but-
Not planned for in that, no. Not in that respect. No.
Good. Okay, then the second question I have is on the signs you see in the recovery in the Nordic market. Could you provide a little bit more color there? You know, what are the indications that you see? You mentioned order intake looked a bit better here in Q2 in the Nordic, but is there anything else that sort of indicates that, yeah, the market is improving?
Yes, what we have seen, and that goes back actually, a half a year ago or even more, is that we gradually, month by month, see a trend in which we have more activities in the market, we have more people visiting us. And, so it's more of a soft, soft trend that we see, but we can definitely see that there are several indicators pointing out, pointing on that, the interest is increasing. But as you saw in the figures, the sales has not increased in the second quarter, but the soft indicators points in that direction. So that is what I can give you, I think.
Good. Then a question on liquidity. That's the final one for now. Liquidity, I mean, quite weak cash flow in, in Q2, of course, lower inventory release than you typically have, and then you have payables as well, which weighing a bit. So now you have SEK 77 million in liquidity, including your credit facilities. I mean, you're entering now a period that typically is a bit weaker on the cash flow side. How, how does that SEK 77 million of liquidity... Yeah, how, how is that compared to your plans? I mean, is that sufficient for the weaker cash flow quarters ahead? And what are the levers that you can use to improve liquidity or, or come through that period?
If I start then.
Yeah
... And then you can fill it up, Rasmus. But what we have done, and exactly as you said, we maybe expected a little bit more cash release from the inventory, but we have an inventory, and that is, of course, then affecting how much we should produce for the autumn. We are also quite clear, because we are a global company today, we are still selling. The European vacation period has not started yet. It's will actually start in a couple of weeks. So it's a lot of things that still will happen before the autumn, but we have also then, of course, decreased the capacity, as I mentioned before.
The picture is not from that perspective; it's not the normal picture, but the important thing to bring with you is that we have actually done an inventory that we would work with, of course.
And, if I fill in there, we, we are, of course, fully following this question very closely, and we have a very stable plan regarding our cash forecast, which we follow closely. So, so we, we don't see any issues in that on that topic at all, actually.
Okay, good. Could you perhaps provide, just to follow up there, how could you work with your inventory? I mean, in the U.S., there's a lot of floor plan financing, for example. Is that something that you could use in Europe as well? Or what are the levers that you can sort of use to improve cash flow if it is a soft season in the coming months as well?
First, it's good to have in mind that we have, as per end of June, quite many deliveries on its way to the U.S. We are expecting short-term payments now in July to happen. So, it was a bit boosted in that way, as per end of June. So, that is a temporary delay caused by delayed effects. So, that will even out, that effect, and that will improve our cash situation. So that is good to have in mind. But then, of course, we can increase floor planning to extend that to more dealers, and we can also extend our own floor planning, which we use for our own dealers. So, there we have a capacity as well.
If I add there also, we have, if you look at our inventory out at the dealerships, we have a very healthy levels, and that's also important to understand. So immediately when a boat is sold, we will then get the orders for the replacement, so to say. So the stock level is not high at any respect, it's actually then a very healthy level.
And even in some cases low, even so.
But of course, the dealers hesitate because they want to see the customer on the bridge, so to say. So it's more that effect that we need to work with to make it happen, so to say. And that we do, of course, that's a part of our daily job. But the inventory level is on a very healthy level, and so it's no space to, so to say, hide sales. It will immediately then affect the production schedule.
Perfect. That's all I had for now. Thank you.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
From the web, and one is about inventories. Maybe you elaborated a bit on that, but this question from Gratitude Capital asks if we could elaborate a bit on what we expect with regards to development in the current quarter three, that is. And also what considerations we make in terms of the overall status of the inventory, age, size, segment, et cetera. Rasmus, is that a question for you?
But maybe it's more for me Jan-Erik. Quarter three is our second biggest quarter, and a lot of things will happen, as I mentioned them before. That is then still to come. Rasmus talked about this transition that we have between us and North America. Today, we have roughly SEK 70 million locked in, in that transition process, which is important to keep in mind, but that is now on a steady level, but it will be SEK 70 million, around SEK 70 million, also for the next quarter and the quarter to follow, because that's the way the business model and the financing around it looks. So that will not differ.
And if you look at days of inventory, which is also important, that is something that the banks typically follow very closely. We have a different view of it. If we look at the U.S. side, they are talking about half a year in stock is a suitable number, which then in Europe, we more look at the specific boat in this case then. And again, as I was talking about before, we have demonstration boats on all places, which we didn't have before. So that is fulfilled, and then we also have a certain number of boats in stock. Very few in Europe because we don't have that business model.
It's definitely more in the U.S., but it's well below this half year. And if I give you some flavor, if we look at Brunswick, which is the biggest actor we have in our industry, they are talking about 36.1 weeks, which they find healthy in their last report. And that is the way the U.S. market works then. And we are well below their figures from that perspective. So we don't feel that that is an obstacle, so to say, a topic. Of course, we in a daily business follow this very closely, but the days of inventory is on a low level, both in U.S., different model, but also in Europe.
What we have then in stock, and we have talked about that before, that is unwanted stock, so to say. That is on the value boat side. We have expectation then on cash release then for this year in that industry, and we have had that, and it's actually then visible in the report. But then when we at the same time increasing our deliveries to U.S., some of that will actually then ends up in that process instead.
Okay. So another question from Gratitude Capital is about the order book in North America, that we previously reported, SEK 404 million starting the year and SEK 614 million last second quarter.
Do you have that number, Rasmus?
I'm afraid I don't have it in my head, but in general I can say it's a bit lower than what we had in the first quarter, and I don't have the exact figure, unfortunately.
Okay. We'll see if we can publish that then later on.
Yeah.
Let's do like that. That's all the questions that I had from the web. Do we have any more questions on the telephone, Hani?
There are no more questions at this time, so I hand the conference back to the speakers for any written questions or any closing comments.
Okay, then we just say thank you, and please then remember quarter three, the 25th of October.
Sorry to jump in here again. We have one more from the teleconference, just showed up.
Okay.
Hani, Hani, go ahead.
The next question comes from Henrik Christiansson from Carnegie. Please go ahead.
Yes, let's finish off with one more then. On the EdgeWater situation, you say that you're now in full production, and that will be a positive contribution going forward. So, yeah, how should we think about that going into Q3 and Q4 then? Because I guess there's a bit of seasonality as well. So it was SEK -13 million in Q2. Will that revert to positive number over in Q3, or how should we think about that? Thanks.
Yes, since we are now up and running in the production, we expect the EdgeWater to deliver in the way that they should do, so to say, since we don't have any disturbances in this from this production stop. So, that is what we mean. So, we don't give any guidance in exact profits out of EdgeWater, but they will come back to their normal contribution, so to say.
Yes, I get it right. Is Q3 typically a profitable quarter for EdgeWater, or is that SEK 13 million going to something bigger than zero?
The third quarter is a quite normal quarter for EdgeWater. They have a bit of a seasonality pattern, but it's not that strong as we have here. So the fourth quarter is a bit weaker, but the third quarter is a normal quarter, I would say.
Okay.
The ordering, my comment upon also, the order intake has increased in EdgeWater also.
Excellent. Thank you very much for that.
Thank you.
Okay. Then we say thank you.
Thank you. Bye.
Thank you. Thank you.
Bye. Bye.