Hello and welcome to Nimbus Audiocast with Teleconference for Q3 2021. Throughout the call, all participants will be in listening only mode, and afterwards there will be a question and answer session. Today, I am pleased to present CEO Jan-Erik Lindström and CFO Rasmus Alvemyr. Please go ahead.
Thank you, welcome again. First page, strong sales development in Q 3 2021. If we then switch the page, you will see, both me and Rasmus then of course. I suggest that we switch the page again, and goes to page three. Some highlights of the third quarter 2021. We had a sales increase by a fantastic 111%, so we're up to SEK 382 million. We have an EBITDA amounted to SEK 41.9 million compared then to SEK 5.6 million in same quarter 2020. We have an EBITDA margin then that is up to 11%. Big difference then compared to Q 3 2020, it was 3.1%.
We have an order book that is now SEK 960 million, and that is actually an all-time high for us, and compared to third quarter, SEK 502 million. During the third quarter, we have put in a lot of efforts to, among other things, a couple of new dealers contracted both in U.S. or actually North America and Asia. We have launched several aftermarket initiatives, and as you probably know that it's one of our focus area. It's not that cyclical that our brand or industry in general, it's important for us.
Of course, we have some capacity restrictions that have been obvious, and we have a lot of initiatives taken to actually then both invest and increase the capacity during the quarter. Page four, short reminder why invest in Nimbus, and this is then from the IPO process. We say that we have a strong underlying market, and we are talking about the recreational market, which we are a part of. We have a couple of fundamental drivers, and I will come back to them a little later in this presentation. We have our true House of Brands with a strong and distinctive brand portfolio.
We mean that we have a very attractive position in the value chain with a lot of opportunities to further improve the dealership offering, but also develop the aftermarket services. We have our asset light and flexible production platform, and we're talking a lot about scaling up, scaling down, and I will come back to that. I have an experienced management team, and we also see this excellent growth opportunities, including geographical expansion, but also in this fragmented industry, the possibility to do some consolidation. Needed consolidation, I should say. Page five, short, this is Nimbus Group. We were founded in 1968. We have a long history of international trade, important, already early 1970s, we were out there. We started to sell especially the European market.
We have our seven well-known Scandinavian brands. In 2012, we get a new main owner, R12, and with them a new business plan. As I used to say, it's actually more or less the same business plan we've been working with, but of course, it's updated with new circumstances that we need to cope with. The proof of our strategy with the House of Brands. In 2018, we acquired Alukin, aluminum maker. In 2019, a little bigger acquisition than when we bought Bella Boats with their four brands at that time. In 2021, in February we listed on the Nasdaq First North, and in May, we had an acquisition then also of MarineStore. At that time, still the biggest dealer network in Sweden.
With them, we also get a good portion of aftermarket sales because that is one thing that we're very good at. If we switch page to number six, our true House of Brands then and as we say here, for the dealer's sake, we want to be an important part of the dealer's business and actually then his wallet. To be able to be that, we need to have a relevant product portfolio. This dealer, wherever he's located, but in his boating district, he must be able then to work and sell them, of course, to live off the things he's selling. We want to be a big part of that, important for us. In the middle of this page, you see the shares of the sales.
You can see that Nimbus was the biggest one. This is sales for 2020. Nimbus was the biggest one and is still the biggest one. We also want to point out as we usually do that both Aquador and Flipper is very suitable for the European market, and this is something that we're working with already today. Actually, on page one, you saw our beautiful Flipper 900 DC.
If you look at the background, you can see it's clearly located already then in Europe, and that is an important market. I was talking about the fundamental drivers, and then the four that we used to mention is if you look at our industry, technical development, it goes very fast and if you compare with about six-seven years ago, a lot has happened. The good thing with that development is of course then it meant to make this journey with the boat less stressful and easier to handle. I mean, more to handling the easy boat and that is the key word, so to say. We have our aging boat fleet.
I don't know if it's a 2020 figure then, but at 2020, 45% of, for example, the Swedish boat fleet was more than 20 years old. If it's at that age, then you need to spend quite a lot of money to keep it really fresh. It's important for us. We also have, if you look at the big picture, the recreational business, we have this increased popularity of staycation, and please note that this trend started well before the pandemic. The pandemic has accelerated this, but still it started and it's been ongoing, so to say. This modulates the overall wealth then is increasing.
Actually if you look at the 2020 figures, it's 2.5 more in income or money in our pockets to spend on different things of course, but also the recreational business compared with the year 2000. If we switch to page 27, that is just a picture to explain the asset-light production platform I was talking about. At present, we actually buy complete boats from nine locations. You can see eight locations in this picture. Four are fully owned by us and four, or actually five, are outsourced production. Two of them are still quite small, but we are increasing.
400 employees directly in our own factories and 200 external for the moment. I was talking about scaling up, scaling down. Of course this is. We are living in a cyclical business and our way then to handle that is to look into our variable costs. We want to have a big portion of the variable cost. We are talking about the timeframe and as in this you should not say example because this is actually what we're striving for. The low variable cost, it's more than three months of course, but then we have the high variable cost and also the fully variable cost, where we're talking about roughly then around three months.
There's a part of that is then of course the outsourced production, but it's not the only one, only thing so to say. Working a lot with the production efficiency, we have our House of Brands, for example, then we use also then in a modular boat building process. We use a lot of cross-brand utilization, and that's also important. We're talking about the technical platform. That work continues, and that's just to say it starts already on the drawing table. If we flip the page to page number eight, the all-time high order book then. In the third quarter, the order book increased by 31% from Q2. If we then compare it with the Q3 2020, it's actually then up 91%.
Also important to mention is that since not all orders can be confirmed due to mostly or the major part of it is the capacity constraints. There is today a substantial amount of non-confirmed orders on top of the order books. It's not included, it's on top of the order book. That is something that we of course work hard with to be able to confirm these orders. But that is a part of the capacity. It's also a part of the supply chain difficulties you can say that we need to take and actually have worked with for more than a year at this point. Prepayment then as in every case amounts to 11% of the order book value.
As you probably know, we have a target to reach 25%, but this prepayment is divided then in two parts. First you pay 5% as a signing fee to get the production slot, and then closer to the start up of the building of this whatever model it is, you pay another part. There is the reason that it's not 25, it's actually then 11. If we look into the sales development, the market interesting figures, it's page nine. We can see then that Sweden is increasing. Please remember then that we have bought MarineStore. Part of this is then acquired organic growth or sales then.
If we look at the figures without MarineStore, we can say that the Nordics, Europe and Sweden is moving approximately at the same speed. What is interesting for us, because this is one of our focus areas, is that if you look at the other markets, and then it's mainly for us, it's mainly North America, we see an increase of 158%, and that is something that we appreciate of course, because this is what we want to see. With the strong growth on, actually, on all markets. With that, I leave the word to Rasmus.
Yes. Thank you, Jan-Erik Lindström. Then we can flip to page 10. Sales in the third quarter increased by 111%, as Jan-Erik Lindström described earlier, to SEK 382 million, compared with SEK 181 million last year. The sales through our own dealers increased to 49% compared to 44% last year. This increase comes mainly from the acquisition of MarineStore, which contributes with SEK 76 million in sales in the quarter. The LTM sales reach 1,455, which is an increase by 41% compared with the full year 2020. Flip to page 11, please. The trend of continually improving margins the last quarters has continued also in the third quarter.
The EBITDA margin LTM amounts to 10.8%, which is above our financial target of 10% now for the first time. The increased margin comes from both improved gross margin and also from scale advantages in OPEX. In the quarter, the EBITDA margin amounted to 11% compared to 3% last year. Worth to mention here is that MarineStore only sells external brands, which means that it has not contributed with any double margin in the sales in this quarter and also in the second quarter. If we flip to page 12, please. We come to net working capital. What we see here is that net working capital has increased a bit in the quarter to SEK 85 million.
The reason for this is mainly payment of trade payables from the MarineStore acquisition, where a corresponding cash was received from the acquisition. Despite this increase, net working capital is still on a very low level compared with previous periods, which you can see below. This is something that we are, of course, very satisfied with. Net working capital in relation to LTM sales now amounts to 5.8%. If we flip to page 13, this is to remind you about our financial targets that we communicated in the IPO and or to compare way with actual figures. We say that we should have an organic growth of +10% over a business cycle, including acquisitions of dealers, but not brands. Year to date, the organic growth is 53%.
We should have an EBITDA margin reaching 10% in the medium term, and now our actual figure is 10.8%, as I mentioned before. Regarding capital structure, we should have no senior debts except for real estate-related debts. Today we have only real estate debts, no senior debts. We have also a dividend policy to pay out up to 30% of our net earnings, taking into account the financial position of the company cash flow and our growth opportunities. I hand over to Jan-Erik Lindström again.
Yes. Almost finally then, page fourteen. We are delivering on our targets. What you have said with the five cornerstones actually then, difficult to find five corners that develop our current offering and organization. We are launching new boat models, important for us. We have done some very interesting recruitments, and we have continued to work hard with them with the outsourcing. We also said that we will expand and densify the dealership network in Europe, and that is exactly what we have done. We have densified the dealer network. We will continue to do that, of course, but several new dealers in Europe, in for the whole Nimbus Group. Improve aftermarket offering and presence. As I said earlier, it's a focus area for us. We have new articles and services under development.
We have our increased presence. We have also acquired actually then MarineStore, which has a quite huge part of aftermarket space. Increased presence in North America, same thing there. We have densified the dealer network. As you probably maybe remember, we said earlier that this must be done in balance with the present capacity. Now we feel that we actually then can take on more dealers again. That is of course very possible for us. Value acquisitions and forward integration, then the acquisition of MarineStore is proof of that, of course. If we then switch page to number 15, we leave the word to Gunilla.
Yes. Here is our ownership, the major owners, and it's a very stable situation since the IPO in February. What we have seen is our Finnish friends, OP-Fonden, have increased somewhat. The rest is quite stable. With that, let's go to the final page. Just reminding you that our Q4 report will be presented on February 22nd next year. With that, we open up for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad.
If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from Victor Hansén with Nordea. Please go ahead.
Thank you for taking my question. Hope you can hear me. My first question is on the order backlog. If you could provide a split between orders from end customers and if there are any pre-orders from dealerships, please.
We don't really communicate that split in between end customer and dealers. From our perspective, we consider dealer as that as the customer, but of course, several of those boats are connected to an end customer. We have not communicated that split.
Okay.
I can say in general that then, of course, our own dealers, then it must be a, an end customer, otherwise it will not be a backlog, of course. In general, you can say that small boats, they are sold to the dealers and we don't have the visibility of the end customer to the same extent as we have on the bigger boats then. It's two of our brands then we listen to them, what I call the small boats, it's that and Falcon there. The sales mechanism is slightly different there.
What we can say is also, as you pointed out, what we see in many markets is that many boats have an end customer because there are low stock levels at the dealers today. Many of the boats have an end customers, but we don't communicate an exact figure for that.
Okay. I think for instance, Beneteau mentioned -62% versus Q3 2019 in terms of dealership inventory. There should be a restocking effect once demand cools down. Thank you for the answer. You talked about increased capacity. Did you see any of this come through already in Q3, or is this more of a thing for next year? Then perhaps if you could also tell us how large you expect the capacity increase to be.
We have increased our capacity quite severely during the year, and it's actually been +30% on average. We have increased more on certain sites and less on another one. We are currently investing. That will not be during this year. It's more for the year 2022 that we will see the difference. We will continue to work also with the outsourcing part of it to put more and more things out there. On the short term and the effect on Q3, it is not that big, so to say. We have worked with it all the whole year. We have more capacity today than we had when we started.
I also want to co-comment on the stock levels because you mentioned the Beneteau. We keep track on the stock level out at our dealers, dealerships, of course. As Rasmus said, low, and I should actually say very low. Today the boats that are ordered it is to a very high extent it meant to actually deliver to the end customers. That is important to understand that there is no really stock between us and the end customer. That is the situation that we have to keep on living with for a while.
Okay. That sounds promising. If you could provide an update on M&A, if you have any live deals or ongoing discussions, and perhaps what geographies you are prioritizing M&A in?
We do not communicate so to say. I should not say that early, because this is something we're looking into all the time. This is a way of living more or less for us. We continuously are looking into potential acquisitions then of course. This is not anything, nothing that we communicate more than that we are expecting from ourselves to actually do some clever acquisitions. It is a fragmented industry that we are living in. It must come. We continue to work with it, but we do not communicate areas and things like that.
Okay. Understood. A follow-up on M&A sourcing. Are you sourcing your potential deals through brokers or proprietary? Are you contacting them yourselves? Thank you.
Both ways.
Okay. The integration of MarineStore and incorporating your own products. Could you mention anything on how that's going? Did we see any of this in Q3, or will it all come in 2022, 2023?
In the third quarter, we have not seen any effects from that. All sales in MarineStore is external sales, and it will continue to be so for a while because of the capacity restraints that we see. Of course, we have an ambition to widen their product range that they can offer also with our own brands. This is for future actually. We can really not tell today exactly when this will happen. Since the capacity is lacking for us today.
I'm wondering how will you prioritize your sales volume since, Rasmus, you just mentioned that your capacity constrained. How will you prioritize your sales volumes in terms of geography going forward? Will you allocate more to your new dealers in Asia, North America just added Canada and are growing quickly in the U.S. as well? If you do prioritize these geographies, will this be to the detriment of current dealers in Sweden, Nordics, and Europe? Or how should we think about that?
Mm-hmm. What we actually do is that this added capacity as I was talking about, we need plus 30% for this year, so to say. Also we expect some more for the next year. That is the part that we use for what we call the strategic markets as North America, for example, and possibly also Asia. Asia we will start quite slow, you could say in the same way that we started in North America. That's the thinking. Maybe we cannot provide the present markets with more, at least not for beginning of next year. They will be at least at the same level as they have seen this year.
Thank you for all the answers. Just one final question from me, and that would be if you could provide a sales growth split in terms of you adding new dealerships and more volume through your existing dealers.
Could you clarify the question a bit? We're not really sure what you were looking for.
Yeah. Yeah, sure. So, as you've grown a lot, year-over-year, for instance, and I'm wondering how much of this growth is through you adding new dealerships, and how much is through more volumes through your existing dealers.
Okay, great. We understand. What is important for us is to have a balance in between. When talking about the sales distribution, it's important for us to have the balance in between external and internal sales through own dealers. We don't want to increase that further in that way, so we want to keep that balance. When it comes to increase, I would say that most of it comes, of course, from our own production, our own brands. It's supported through the dealers.
Okay. Thank you.
Maybe I can add because I think that you maybe you asked how much of this our sales is coming from new owners. That is actually what you're asking.
Exactly. The year-over-year growth. Yeah.
Yes. Yes.
Okay.
I should say it's we are in the area of maybe 90% is still growing. We are growing in the present dealership network. Roughly maybe 10% is sold actually from what we can call new dealers. The new dealers, if the dealer arrived one month ago, well then you have of course ordered a couple of boats, but that will not be seen yet. This is the new owners that we maybe have taken on for the last year then.
Wonderful.
We don't follow.
Yeah.
We don't follow that figure, as you understand, in that way. It's thanks for pointing it. It's important. We will keep that in mind.
Yeah. Thank you for all the answers. Yeah. Thank you. That's all for me. Thank you.
Thank you.
Our next question comes from Gustav Österberg with Carnegie. Please go ahead.
Thank you, operator, and good morning, Jan-Erik, Rasmus, and Gunilla, and congratulations on a great report. Just starting off, I'd like to follow up on sort of the outsourcing strategy and maybe if you could clarify and elaborate a bit on sort of over 2021 compared to 2020, are you seeing the most of the volumes going to your existing capacity, or are you seeing sort of higher incremental share on the outsourcing production? Maybe if you could comment also what you're seeing ahead, given that you're approaching some capacity constraints in some production areas.
I think you know, Gustav, that we are striving to have roughly 50% of our production outsourced. If you look at 2019, it was roughly 40% at that point. We slightly increased that. Actually today it's more or less the same picture because we have invested in our own production capacity in a way because it's a little bit quicker to add to put some pressure on this question. At the same time, we're taking on a small outsourced unit, but also increasing the other ones.
I should say the balance, we haven't looked into that just recently, but I should say the balance is roughly the same as we had last year.
All right. Thank you very much. Then in the report, you mentioned that you're signing new dealers in North America, firstly. I was wondering if you could provide more color on sort of are we seeing new dealers in the same geographical areas as you're currently present already, or are we sort of looking at new geographical areas.
Good question. It's actually a little bit of both then, but we're talking about the 10 locations at this point, and eight of them is in, you can say, new areas then.
All right. Thank you very much. Just to be clear that it's sort of the trajectory that you see for these new locations is quite similar to what you've seen before, i.e., sort of a ramp-up period of one-three years and then reaching higher volumes in four or five years. Are there any differences compared to sort of the historical patterns we have seen before?
No.
No.
No.
Okay, great. Then there's also a mention of Asian dealers, you know, and that appears new to me. Can you elaborate a bit on kind of how you arrived at that decision and what's the strategy from here? Maybe if you could mention how many locations?
Absolutely. Well, I said at the beginning, we have a long history of international trade, and actually we have sold during the years then, sold quite a lot of boats to Asia, and maybe especially Japan, actually. We are selling boats, not that many, but we are selling every year, we're selling a couple of boats. Asia is not unknown for us, so to say. If it should be a good presence for us in Asia, we need to have a very good dealer, of course, and it needs to be a dealer with muscles. We are not focusing, not for now, that will come later on Asia. If every...
You can have a check in the box, so to say, on all these different things that we want to see from a dealer, then of course you should go ahead, and that is what we did in this case. This particular dealer then is a big one. They have muscles, and they have quite big units, but they are located in five different places around Asia. It's actually five different countries that they are presently.
All right.
For the future. Absolutely.
Yes. Sounds very interesting. Then just finally for you, Rasmus, perhaps a comment on the very strong margin in the quarter. I mean, aside from volumes and M&A, are there any one-off effects here? I mean, the year-on-year mix is not that different compared to 2020. I'm just trying to understand sort of is there any one-offs in the result?
Yes. There is, of course, a product mix effect here also. We have launched new models last year, and the demand for those increases. This is something that we can see. Our experience is also that we tend to have higher margins on new released products, so this supports us. We can say that as we become a bigger player, this also enable us to get scale advantages in the production. This also supports our gross margin. I would say those are the best, the biggest parts. We can also say that price increases from suppliers, we have managed to cover up for, we think. We have not lost money there.
I would say that those are the biggest effects here that supports the increased gross margin. We can also say that as we have become a bigger player, we also know that our OPEX costs does not increase in the same way, and this of course supports the EBITDA development. This is something that we have. This is part of our business plan to do so. This is not unexpected for us.
All right. Thank you very much. Just sort of a more long-term follow-up here on the sort of internal, external dealer mix. I mean, for a few quarters now, you've obviously increased the share of own or internal dealers. I mean, looking ahead, is this sort of a level you're comfortable with, or should we expect any larger changes here in the dealer mix going forward?
We are quite happy with that, the level that we are on at the moment. Of course, this will change over time, compared to when we do acquisitions or not. We'd like to keep this ratio as it is at the moment, fairly. That's it. We are happy with the present level.
All right. Thank you very much. That was all questions from me. Again, congratulations on a very, very strong result.
Thank you.
Thank you.
Thank you.
Next up, we have a follow-up question from Victor Hansen with Nordea. Please go ahead.
Yes. Hi again. I have a follow-up related to the global component shortages. It would be very, very interesting. If you could clarify what you are seeing, perhaps in terms of engines, specifically.
To start with, I mean, this has become quite a long story now. We have lived in this situation actually more, well more than one year then. In a way, this is the new normal, you can say. Of course, we don't want to have it like that. For us, it's more or less a daily business done. The lead time is much longer today than what the normal picture, so to say, before. If you can plan well, and that is of course then what we are striving for, it really in that respect, it doesn't matter.
Of course, from time to time that could be tougher, so to say, for a short time to reach the perfect supply chain, so to say. The logistics, the just-in-time thinking may be that we need to cover up with the security stock and things like that. But that's the way we handle it. It's a lot of work in putting to it, but so far we have managed very well. If we're looking, we should not look forward in that respect, but what we have seen then is of course, for example, the plastics, there were some shortages that was maybe half a year ago or something like that, but that has stabilized.
The price level is slightly higher, but again, the deliveries have stabilized and getting shorter. We see that also on other components. When we talk about specifically engines, we're reducing down to the Brunswick and Volvo Penta, and they are the biggest one in each of their segments outboard and inboard. The Volvo Penta had some problems with their factory then because they switched factory for certain parts of its engine. They had some startup problems, but what they're communicating is that they have that under control. Again, we have solved that with the safety stock. Hopefully we can start then to decrease the safety stocks on that side. But still, we will still keep a certain level.
The outboard more or less looking a little similar, but there it's because the outboard part of the business is growing a little bit faster than the inboard. There it's, you can say in a way, then it's a tougher picture. Again, we are one of the big, absolutely biggest in Europe. Of course, we so to say use that and again also we are able to plan quite a long term ahead, so to say. We are managing, but it's a work all the time, but work.
Thank you very much for that clarification, and have a nice day.
Okay. Thank you.
Thank you. As of right now, we have no further questions. I hand back the word to our speakers.
Okay. I didn't hear you exactly the last there, but with that, I think we can say then thank you. That's all from us for today.
Thank you for listening.
Yes. Thank you for listening.
Yes. Thank you. Bye.
Bye.