Welcome to the Nimbus Q2 presentation for 2023. During the questions and answer session, participants are able to ask questions by dialing Star 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, and again, welcome then. I start then with some highlights of the second quarter, 2023. Fairly good quarter. Sales increased by 4% to in total then SEK 756 million. We had an EBITDA that amounted to SEK 83.3 million, decreased level, but we will later on in this presentation elaborate a bit about that. EBITDA margin, 11%, compared then to 18.2% last time. Order book increased to SEK 1.103 billion. The strong order book then developed, especially then in North America, which we then, of course, is very glad for, and now actually representing 56% and is then actually then by far our biggest market today.
Continuous low demand for boats under the value of SEK 1.5 million, especially then affecting our own Nordic dealers then. It's a Nordic thing, so to say. Since we have most of our own dealers in the Nordics, that is then affecting us more. We will come back to that also later on in the presentation. During the quarter, we also finalized the acquisition of the EdgeWater Power Boats. It was completed May 31, actually, then almost a month later than we have planned for. Now they are on board, and we are, of course, very happy for that. Europe developed well during the quarter, and actually, then becoming a bigger market than Nordics, excluding Sweden.
We have also then done the divestment of the property in Långedrag. The history then, in short, as we say here, this is Nimbus Group. Founded in 1968, a long experience from boat building, and we also have a long history of international sales. We started almost immediately from we were founded to export to, especially then at that time, Europe and the other Nordic countries. We have our true house of brands, well-known brands, and that is scoring very high in the brand awareness that we do then frequently.
If we look at what we have done, I will not repeat everything that you see in front of you, if we look at the 2023, then, especially then, we have then done the presentation in Düsseldorf, actually, then in January, Düsseldorf Boat Show, where we then presented the Nimbus 465 Coupé. Besides that, it's always fun to introduce new boats. This is also a totally new segment for us, which is very important, meaning then that we are broadening our offer to the market and a special market in this case then. Then May, the acquisition of the EdgeWater Power Boats.
If then on next slide, this is an old picture, but it's almost always important to go through this because this is part of our DNA then. If we look at the left side there, the footprint, we talk a lot about our flexible production. As you probably know, we have a target that we want to have actually done more than 50% of our production outsourced. The white dots you see is our own production, then our own capacity, and the light blue is then outsourced.
There we, of course, then are happy to add to this picture, down in the picture, you see the Florida, and that's the EdgeWater premises, where we're now planning to, of course, continue to produce EdgeWater boats, but also to use some spare capacity to produce Nimbus boats then. The picture in, from the Nordic perspective or the European perspective has changed slightly, you can see that it's actually one dot in Poland that has disappeared, that is in line then with the, that we decrease the capacity for the small boats, because they are not needed in that amount, and focus then on increasing the capacity on the bigger boats. In the middle, we talk about the...
It's all about the scaling up, scaling down. From our perspective, it's important then to look at how long it will take, the time that we have for scaling up or scaling down. Then, of course, already on the drawing table, it's important then that we find as much efficiency, as much modularity as we can. If we look at what we see, what is the drivers on our industry, what, and as we say here, the fundamental global drivers, which is important. We have talked about this before, but a fact is then that the overall wealth is increasing. Of course, we have an inflation for the moment, that affects the value of the money.
But still, it's a very high numbers, if we compare to 2020, the available money in our pockets, so to say, has increased then roughly 2.8 times, according to Credit Suisse. The vacation, we discussed that a lot during the pandemic, but what the pandemic did was that it accelerated an old trend. This trend started actually way before the pandemic. And it is like that we tend to spend the money, the money from above then, on quality. And since, as I used to say, that we work a lot, and that means that when we have our spare time or free time, we want to have quality, and we are prepared then to pay for this quality.
If we look at the industry itself, also a fact then that we have an aging boat fleet, for example, North America, 45% of the fleet, is actually built before year 2000, meaning that it's older than 20 years. If we then take into consideration the last on this slide, the technical development and put them together, we will understand that the technical development is actually then done by the industry itself, and you can say that it started really maybe 10, 12 years ago, and it has the speed has increased, and it's about easy boating, and it's about in-water handling.
If you combine these two, you get for us then, a pretty nice picture, because, of course, a boat that is more than 20 years old or roughly than 20 years old, doesn't have these technical features. That makes it more easy to handle the boat and lowers the stress factor then for the driver, but also then, of course, for the passenger. These two drivers, or these four drivers then, and combine them makes from our perspective, the picture of the future, actually, then quite right. Even then, of course, if that we have challenges for the moment.
If we then look at the order book development. Again, then, we have actually then increased the order book since last month. Also, if you compare to the same quarter last year, it has increased 5%, and that is mainly then driven by North America. Again, North America, it's roughly than 50% of the world market, important for us, of course, important for everyone that in our industry. We start to talk about that last quarter, where I think we mentioned that the quarter before also, that we have a well-balanced order stock today. We have then, again, North America, slightly above 50%. We also see that Europe's part of it increasing. Actually, then, from a relative perspective, the Nordics decrease.
Of course, the Nordics is our home market, and we're keen to keep that position. From a relative perspective, we like this picture that we see that it is well-balanced, and that's also then, of course, important. EW is not easy to understand, but that's EdgeWater, and EdgeWater represent then 155 million SEK of this North American order book, also then in the total, of course. Also important maybe to keep in mind is that the order book in 2021 and the beginning of 2022 then was boosted by the pandemic that I mentioned before. Today, we have a normalized situation, still fairly low levels at dealerships, also important to keep in mind.
Of course, we only have confirmed orders in our order book, meaning that we have a production slot for this order, and we have confirmed the order to the customer. On the bottom here of the slide, we have shown then the order book, especially then from North America, North America, and we can then see that we have a good progress, a good momentum for the moment. EdgeWater, again, SEK 154 million, but the big part of this increase is then actually the, you can, we can call it then the traditional Nimbus Group approach that we started then 2017, and then has taken us then to this position that we have today. With that, I will leave the word to Rasmus for a while.
Thank you, Jan- Erik. The sales in North America continues to develop well and increased by 245% in the quarter to SEK 152 million. Out of that, EdgeWater contributed with SEK 55 million since 31st of May. On full year basis, this means that North America now has become our single largest market, as Jan- Erik mentioned before. Europe also developed well and increased by 47% to SEK 184 million, and we have seen positive sales development in particularly Southern Europe, and the increase is driven by mainly larger boats. Other markets increased from SEK 8 million-SEK 20 million, which is possible, positive, sorry, but still on low levels.
Other markets mainly refer to Oceania, and in previous quarters, North America has been part of other markets as well, but now it has been separated due to the size. Sweden and the Nordics dropped significantly compared with last year, mostly due to high sales during the pandemic, but also to the fact that the market situation today is soft. The change is mainly driven by lower sales volumes at our own dealers, and sales of smaller boats dropped by 35% compared with last year. This effect appears in Sweden, in the Nordics from our side. Most of the sales of smaller boats are on a yearly basis, normally down in the second quarter in Sweden and the Nordics.
Net sales in the second quarter amounted to SEK 756 million, compared with SEK 724 million last year, which is an increase by 4%. The sales of larger boats increased by 10%, while the sale of smaller boats decreased by 35%, as I said before. The organic growth was -5.4%, and the difference against net sales is related to the EdgeWater acquisition and currency related, mostly referring to euro. On LTM basis, the net sales ended up at SEK 1.8 billion, which is an increase by 10% year-over-year, and by 94% since the IPO in 2020. Sales to external dealers and direct sales, including spare parts, increased by 45% to SEK 436 million, including EdgeWater.
While sale through own dealers decreased by 24% to SEK 320 million. Last year, sales through own dealers represented 58% of sales, compared with 42% in the second quarter 2023. The EBITDA margin in the quarter decreased by SEK 49 million to 11%, compared with 18.2% last year, and amounted to SEK 83 million. The decrease is mainly driven by lower gross margin by 5.2%, coming from less demand for smaller boats, causing discounts on dealership business and lower share of double margin sales of own brand and products that affect the consolidated margin. And also the effect from a rapid depreciation of the SEK towards EUR that has increased our cost to an extent that we have not been able to compensate for.
Finally, the acquisition of EdgeWater has affected the gross margin negatively, since EdgeWater today has a lower gross margin than the consolidated gross margin at group level. This is, of course, something that we will work on going forward to improve. In addition to this, the OpEx was also higher due to the investments in the North American market organization. Pre-transaction costs of SEK 6.3 million for the EdgeWater acquisition and the divestment of the Långedrag property amounted to SEK 90 million, and the EBITDA margin to 11.9%. On LTM basis, the EBITDA amounted to SEK 146 million, and the EBITDA margin ended up at 8.1%.
Net working capital decreased in the quarter by SEK 42 million to SEK 478 million, including EdgeWater, corresponding to 26.5% net working capital in relation to LTM sales. In relation to last year, we still have higher levels of inventory at own dealerships due to softer market situation than both 2022 and 2021. In addition to the increased levels of finished boats, net working capital is also still affected by higher levels of safety stocks, but on lower levels than what we saw in the fourth quarter and in the first quarter. We expect this to level out gradually during 2023, the remaining part.
The temporary effect from foreign VAT has continued and amounted to SEK 27 million as per the second quarter, which is less than the first quarter, where we had SEK 47, still it affects the net working capital in relation to LTM sales by 1.5%. This is expected to be normalized during the mid-autumn of 2023. Regarding our financial targets, we still believe that these are relevant, and we see that our U.S. initiative will have a positive impact on our business going forward, and will enable us to strengthen the EBITDA margin. As part of the divestment made in April of the Långedrag property, we repaid a long-term loan of SEK 60 million. Consequently, we don't have any senior debts in the group left as per today. I hand over to you, Jan-Erik, again.
Thank you, Rasmus. Yes, the final slide, and again, the North America, which then, as you understand, is important for us, and it also has been the number one initiative from our side during the recent years. What is then important? Well, the acquisition of EdgeWater Power Boats, we have been into that before, but we, of course, get a very interesting premium brand that we will then continue to develop. We also get a full organization because if we will should be able to continue our growth in North America, it's important then that we have the right resources, and of course, also, as I mentioned before, the outsourced target, the part of how much we will produce is also important.
The ability to do that will increase, of course, if we have a full functional organization in place. We have launched recently, but also during the years, new products, and of course, already from the drawing table, again, we have taken into consideration to then try to succeed in the North American market. We have products that is fit for the market. We have also during this recent years and maybe especially last year and this year strength the dealer network.
We have also then strengthen our group presence, as we say here, with a local selling organization, aiming then for what I call then the old Nimbus Group organization before EdgeWater, and also then have a headquarter in U.S., in Annapolis. Also then, of course, the total presence then is today strong. We are definitely a player. If we then look at the key market key takeaways, as we say here, and again, then the order book is now at a very decent level. As we also say here, it's a new record level of SEK 614 million. That is actually 305% growth year-over-year then.
It is the world's largest motorboat market, as we have said here, roughly half of the market. We have then, as I also have mentioned today, the aging fleet, 46% being built before the year 2000. today's market, both for the North American market, but also the total market, is well below the record levels that we had a couple of decades ago, actually, then. It's still room to beat that target. The market itself then, of course, not all of it, but the major part of it is well suited then for the Nimbus Group products. With that, I leave over to you, Gunilla.
Yes, we open up for questions.
If you wish to ask a question, please dial Star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial Star five again on your telephone keypad. The next question comes from Victor Hansen from Nordea. Please go ahead.
Thank you, operator. Hi, Jan-Erik, Rasmus, and Gunilla. It's Victor here. Quite a few questions from my side, and I hope that's okay. The first one here, when will you start producing your existing brands in the EdgeWater facility? I'm also wondering, when will the production cost and gross margin be similar in NAS, in your current manufacturing footprint?
I think I mentioned that maybe last time or the time before that, but we are then to begin with aiming to produce, you can call it then the smaller boats, and since we have started in the U.S. only with the Nimbus brand, now we have now we're selling Alukin, for example, and we will for sure sell Aquador during the autumn. The main focus is on the Nimbus brand, and there we will start to produce the smaller boats, the boats that are more affected of the freight cost. That means that it's the 8-meter and the 9-meter Nimbus that we will start to produce in the U.S., and then in EdgeWater, we will produce the 8-meter.... In those boat, and that, planning has already started, of course, and I think I promise that, give us eight months, and then we will have the production up and running. Cost-wise, we are then, in this case, comparing with Finland, and Finland and Sweden, we have a high cost level. From that perspective, we can see it's actually done, from that perspective, the, the material is mainly the same price, but the working force is, cheaper in U.S. or where we are located or intend to produce.
Okay, great. Then, we got the Q2 sales and the net income for EdgeWater here since it's consolidation into your numbers. When I try to calculate this, I get the profit margin to just 0.3%. Is this representative for EdgeWater's run rate currently, or how should we view that?
If I start there, I think that is a quite low figure, and it's not, it should not be on that level going forward. It impact is quite small in the quarter. It only represents 55 million SEK. We have not given any official figures yet, but the actual margin is a bit higher than what you have actually calculated there.
Makes sense. I think the EBIT margin was about 6% last year. 0.3% seems very, very low compared to that.
Yeah.
It's only consolidated for one month, so.
Yep.
Yep. Yep. Okay, then, your very large backlog here in North America, when is that set to be delivered and booked as revenue? Is it H2 this year or 2024?
Well, it's actually both, and that is more related maybe to our production capacity. They will start immediately to sell, but we have talked about that also before. It's slightly different approach in the U.S. from the dealer perspective. They have more locations, or usually they have more locations. If you onboard a dealer in U.S., you can have, well, you can easily have 10, 15 locations. What they order now is that, of course, they want to have the boats as quick as possible, and the... We will then start to sell, you can say, immediately after summer. We will continue. This then backlog that we see in front of us will then be delivered in the early 2024 also then, some of it. Most of it will be during the autumn. Absolutely.
Okay.
Depending on model, of course, also.
Yeah. Okay. If I understood you correctly, it's mainly in H2 of this, some SEK 600 million in backlogs?
Well, yes, it's mainly, but we should, it's mainly could be 90%, but it could also be 52%, so to say.
Yeah.
It's the capacity that.
... will decide how quick we can do it.
Okay. Okay, understood. I'm just wondering here, how much of your inventory currently on a group level here is tied up in boats transferring to the U.S.?
Well, I should say nothing at this point. It's always a boat in transition or boats in transition that you actually see them as tied up in the net working capital because they travel over to U.S., for example, but nothing more than this transition then, or in transit, as we call it then.
Okay. How much is that, boats in transition? That impacts your inventory levels, right?
Yes.
I would assume that we are talking about that boats in transit, it was quite low at that time, and that was good period. Man, that does not figure for future. I would say it was about 15 million SEK, something like that. It was low at that point also.
Yeah, SEK 15 million.
Yeah.
It was due to logistics. We had good deliveries in just at the cutoff situation.
Yeah. Yeah, yeah. Okay, it's quite low then. That's, that's good to know.
Yeah.
Very good. Then a few more questions. I hope that's okay. You bought the property with the EdgeWater acquisition, and I believe it was $3.5 million. I'm wondering if it would be possible to do a sale-leaseback here to reduce the debt.
Absolutely, it's possible to do with such a sale-leaseback. We have not taken any decisions on that, but it's absolutely possible to do so.
Okay. Yeah, good to know.
Mm.
On a group level here, the margin declined quite a bit year on year. Would it be possible for you to say how much of this is driven by your lower sales from dealers? So you had less double margin?
You mean quantifying the amount of the double margin effect?
Yeah. How much of the margin decline can be explained by the lower sales to own dealers? That impacts your mix.
If I put it this way, the sales of own dealers decreased by approximately SEK 100 million. Most of that sales in the second quarter would come from double margin sales. We also have external brands, of course, that we sell in the second quarter. I would say that most of the sales would be related to own branded products that we actually have missed. The effect is substantial.
Good. My final question here. on the cost initiatives that you mentioned in the report, I'm just wondering what magnitude are we speaking of here in terms of savings? and timing-wise?
To begin with, of course, we look over the total picture because as I said earlier today, we have had a tremendous growth for many years. Now we then, of course, take this opportunity to look over the total picture, the total organization, where to produce, and things like that. The, the major part then will, of course, be related to smaller boats then. As we have said before, we have transferred the capacity to bigger boats because we still need more capacity on the bigger boats. We have done what we can, from that perspective.
Now we are then, of course, start to look in more to the smaller boats capacity. It's no need to have it if you cannot use it, so to say. That is where we have the major part. Roughly 15% of our business is related to small boats. Important to mention is that it's not completely dead, this market. We are selling boats. Every week, we are selling a couple of boats. We still need capacity, but we don't need that much. There is where you will see this decrease. I'm not that confident to mention figures, but it is... f rom that part of our business, it's a quite big part of it that we will then work with and decrease them, the cost levels. I don't know if that was.
Yeah.
a perfect answer, but it was an answer.
Yeah.
At least. Yeah.
Yeah. I appreciate that. That's all the questions I had, so thank you very much for answering.
Okay. Thank you. Thank you.
Thank you.
As a reminder, if you wish to ask a question, please dial Star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you very much. There are no questions on the web either. Just a gentle reminder that our third quarter report will be published on October 25th. Thank you very much for listening in.