Ladies and gentlemen, welcome to the Tully Group Interim Report Q2 Call. My name is Nadia, and I'll be coordinating the call today. I will now hand over to your host, Magnus Wallander, CEO of TULI Group to begin. So Magnus, please go ahead.
Thank you, Nadia. So good morning, everybody, and very welcome to a very positive second quarter result for the Thule Group. So I am very happy to report that our strong momentum continues. The very strong 3 quarters in a row we've had has now become a 4th very strong quarter with significant growth over the previous year. So our sales if we go to the 1st page, our sales for the 1st year was for the 2nd quarter was 3,229,000,000 which was a 69% core foreign exchange adjusted constant currency growth.
And we grew in both regions. So a faster growth in the 2nd quarter in Europe with 74% currency adjusted And 53% in Region Americas. If you take the first half year, the two regions have compared quite closely to each other as a total. Our gross margin continued to be very strong despite some challenges in terms of material cost. And we therefore also with The strong and flexible back end of our business had a very strong EBIT margin of 27.4% Versus the 21% we had in the specific Q2 of 2020.
That also means that on a rolling 12 month basis, we I have an EBIT margin of 23.6%. Also our cash flow was very strong in the quarter. And I think most importantly what a lot of people are wondering now is how will we continue to perform. And I can say that despite the fantastic efforts of the supply chain team that truly pulled out some Extraordinary work to be able to deliver the type of growth we've had. We haven't been able to fully meet The demand, there was even greater demand.
That means that we overall believe there will be a strong long Season also in 2021 similar to what happened in 2020 and that our strong momentum will continue. We do have a lot of challenges as all companies have in terms of supply chain in getting hold from our sub suppliers Of the right materials and components with the high growth we've had, but overall we feel very strong about our Quarter 3 as well. If we turn to the next page, we can look at quickly once again the growth in the quarter and the growth year to date. And very nice to see that we have year to date a constant currency growth Of 63% 100% on our EBIT level, significantly boosting our EBIT profitability margin as well. So very happy with what the team has been able to achieve in the first half.
If we go to the next slide, we can see a bit The comparative reality because we all know that we did face in quarter 2 this year an easier comp because quarter 2 in 2020 Was exceptional. We had severe lockdown measures implemented in most of our major markets In April and the first half of May, so it's obvious that although June was very strong in 2020, we were facing a much weaker comp. Therefore internally, we have focused a lot also in our comparisons on what we performed versus 2019, Which was more of a normal year. And when we look in quarter 1, we had a 45% Currency adjusted growth in 2021 versus 2019. And in quarter 2, we had a 48% currency adjusted growth.
When we then look forward, you can see that already in 2020, we were hitting those types of levels of growth. But I'm convinced that we will be able to grow in 2021 also versus the extremely strong comp of 2020 Q3. So a strong order book in the quarter, Middle East is positive to show growth also in quarter 3 despite the very Challenging comp. And the same applies actually in our thinking as we see today for quarter 4. And the reason I say as we see today is obviously the one that there is still a pandemic going around in the world And there are several reasons to be cautious on there will be supply chain disruptions.
To give you one example, In Vietnam, where we have some of our bag suppliers, there is some serious lockdown measures being implemented as we speak until end of July. And it's also of course connected not just to various COVID lockdown potential issues. There is also the whole challenge of ensuring capacity at our sub suppliers. Overall, though, with the strong work that our supply chain has been able to prove and the Team's efforts, that makes me confident that we will show growth, although at maybe not the same type of pace Year to date because the comps are much more challenging, but we will show positive development also in the second half. If we go to Page 6, we can talk about the region, and we will start with the biggest region, Europe and Rest of World.
And here, truly, it is a case of every category in every market performing well. We have very strong performance across the board, And we do know that we had a 12% currency adjusted decline in 2020 Q2 versus 2019 Q2, But still, posing a 75% 74% growth in constant currency is, of course, very impressive. It's not just bike related products, and I do want to point that out. We have had a very strong performance in bike related products. So our bike racks to bring your bike on the car, our bike trailers and child bike seats to bike with your children and bike bags and bike tannier bags.
But it's not only that category. That category has been doing extremely well in the last 4 quarters and continues to do very well. But very nice to note is also the very strong growth rate in roof racks, roof boxes and rooftop pens as a lot of consumers Around in Europe has utilized these products when they wanted to go on that shorter weekend trip or those activities closer to their home to spend an active summer this year. What is also very positive in the note is that despite challenges in their more complex Supply chains and especially with the semiconductor situation, the motorhome manufacturers have been able to ramp up production very And U. S.
Investors that follow various companies in the sector have seen very positive views on both the performance To date, but also the order books that these companies have for the coming period. And we've been able to supply With that growth, a very strong growth in our RV product portfolio in the European market. Also happy to note that our stroller sales continue to grow at a very fast pace in the region, and here it really has Nothing to do with any COVID impact here. It's truly much more about us becoming a household name and becoming a serious player And starting to take space now in a true way with our 3 different models in the market. So feel very good about our stroller category rolling forward.
And then we had an extremely weak comp in the bags sector in 2020 in Q2 and in 2021, we are showing growth. What is nice to see is that it's both in the Sport and Outdoor packs where we're having a very good momentum, But also in the more ordinary backpack that you would use and go back and forth biking or Commuting to work with your laptop and your Gen shoes maybe. So a good performance also in that category after some difficult quarters. If you go to Page 7, we can see that also in region Americas actually All markets and all categories performed very well there as well. And we posted a 53% constant currency growth.
Also here, we had a decline last year in the second quarter, but still a very strong growth. And it is a very similar picture Sure. To the one I just presented in regards to Europe, the same things apply that across the board, the same catchers Are performing very well. We also see specifically in North America, an even better pickup On our bag business and the reason for that we see is that as everybody is aware that there was a quicker rollout Initially of the vaccination programs in the North American market, especially U. S.
And as that happened also travel Much faster and with a greater share of travel totally in U. S. Being domestic air travel, The rates of traveling has been much higher and the rate of return to work has been higher. So those type of products that Your bags that you bring for your traveling or for your daily work has been picking up very nicely in the region, also here Comparing against weak comps, of course. So overall, when we look at it, I think we see a very strong Foreman's across the board in the company on all aspects of our game in the material of All the products doing really well.
So if we then look at what that has meant For the business, I will hand over to Jonas, who will talk a little bit more about the financial parts.
Thank you, Magnus. We are now on the slide called reported income statement. And as you heard, the strong development has continued and even strengthened further during the The quarter is like the previous quarter, another record And again, the highest sales in a single quarter since Thule Group was listed in 2014. The sales amounted to SEK 3,229,000,000. This is an increase excluding FX effect Of 69%.
And there are two factors to consider when looking at the quarter and comparing it to other quarters. And the first is the 2nd quarter in any given year is the strongest quarter from a seasonality point of view for Tuvrelev, With normally substantial differences between the strongest and the weakest quarter in the year. However, because of the strong demand that has picked up As of the second half of Q2 last year and with the demand that puts very high pressure on our delivery capacity, Our strongest quarters are to some extent capped, and our weaker quarters are where we are currently catch Where we currently catch up and deliver on back orders. So the seasonal pattern has evened out somewhat. The second factor to bear in mind is that the Q2 last year, as Magnus mentioned, was heavily influenced by the pandemic, at least in its First half.
As of mid May last year, the demand picked up strongly as countries opened up after lockdowns. To meet the demand in June last year, however, we sold a lot from stock, and the Q2 last year Was 12% down compared with a more normal Q2 in 2019. The gross margin in the quarter was 42.2% compared with 40.6% for the same quarter last year. The higher volumes have led to a higher absorption of production overhead costs. And this, in combination with a favorable product As well as from transportation costs, but these have in the quarter been offset by the high volumes.
The EBIT margin in the quarter was 27.4% compared with 21.0% in Q2 last year. Here, we clearly see the fall through of increased sales and gross profit to operating earnings. The increase in selling expenses is to a large extent driven by variable sales costs And launches of online and direct to customer sales. Administration expenses In the quarter are approximately on the same level as last year. There is an item, Other operating income of SEK 15,000,000 in the quarter, and this comes from the release Of the provision that relates to the acquisition of the roof tent manufacturer, TETUI.
The financial net of minus SEK 6,000,000 SEK in the quarter is considerably lower than last year, and this is because of lower utilization of our credit facilities, Well, we last year decided to secure funding in the view of the great uncertainty that was caused by the outbreak of the pandemic. In addition, there are exchange rate differences compared to the same quarter last year that explain the difference. Tax cost year to date amounts to SEK 346,000,000 And the tax rate is on our guided level and the same as for the full year 2020. That is 23.6%. And if we move over to the next slide, the working capital and cash flow.
Before going into the numbers for the current quarter, we need to remember that in Q2 last Here. As I earlier said, we met the increase in demand both by increasing our production, but also by selling from stock. The level of inventory at the end of the Q2 last year was, as a consequence of that, low. And despite the higher level of stock at the end of Q2 this year, SEK 1,267,000,000, Our operating working capital as a percentage of sales has gone down from 24% to 19% At the end of Q2 this year, the operational cash flow of SEK 801,000,000 in the period is Higher than for the same period last year when it was SEK 559,000,000. And the main driver Behind the strong cash flow is the increased profit.
It's also worth mentioning that Despite those being on the current high production level, we are still somewhat on the low side when it comes to inventory. Capital expenditure in the quarter amounted to SEK182,000,000, which is quite a bit higher than last year when it SEK 37,000,000 in the 2nd quarter and the investments relate to increased production capacity. Thank you, Magnus.
Thank you, Jonas. And then we can go to the final page before the Q and A about the focus For the coming second half of the year and it is truly a very strong operational focus to meet the strong demand. You just heard Jonas finalizing the comment on there is a need for additional capacity expansion. You can in general say that We are anticipating programs we had in place to ramp up production output in all our major plants And working with a lot of our suppliers to do the same, because we see this demand level as sustainable going forward. So our main focus is To continue on the proven strategy that we have, which is organic growth driven and we are now for an expansion at all plants.
We are continuing a very aggressive product development push. We have To say that as a percentage of sales, it is going down because we're not just throwing money at something Having a plan and with the significant top line growth as a percentage, therefore, the already ongoing and planned efforts means that our Percentage of sales is going down a little bit lower than normal, but we are pushing very hard on the product development push. We're also opening our we will be opening our new global test center in the Q1 of 20 22 and the building works are going on very nicely there. And as also Jonas mentioned, we do continue our push to support both our online retailers and our own direct to consumer with some significant investments and push in that channel. For this supply chain team that has done a tremendous job in the 1st 12 months last 12 months in handling both the second half last year The 1st 6 months this year, actually their focus remains the same.
We have a lot of daily stuff to do to ensure that we can handle all the various Logistics and supplier bottlenecks that we do have. And at the same time, they're working hard on the bigger The ramp up efforts in terms of investments and additional equipment for the midterm situation. Overall, as we know, raw material prices have been extremely high. And as I mentioned early on the call as well, that's Something that we therefore decided that we needed to mitigate, we have implemented a price increase as of July With some partial effects depending on when orders were placed and then there will be another price increase as of 1st January 2022. Because we believe that unfortunately the higher cost levels, although maybe not as extreme as some and the current plays will be significantly higher than they were 12 months ago.
If you look at therefore as a conclusion, overall, I am very confident that we will post A very strong second half of the year that we will go into a very positive 2022. But on the shorter term, there is Loads of uncertainties and specifics that means that we need to be as good at being on our toes as we've proven to be And that there will be some challenges in terms of costs to meet certain things, but we are doing our utmost to be able to Meet the demand of our customers and consumers and thereby being prepared to sometimes have to sacrifice short term cost Perfect to meet that. So overall, very happy with the results and very happy with where we stand going into the second half of the year. And with that, I leave it open for questions.
Of course. When preparing to ask your question, please ensure that your phone is unmuted locally. Our first question comes from Daniel Schmidt from Danske Bank. Daniel, please go ahead. Your line is open.
Yes. Good morning, Magnus and Jonas. And very impressive results this morning. So don't get me wrong here by asking the first Question and listening to you. To you guys through the pandemic and the numbers that you've been sort of delivering, of course, Astonishing, but at the same time, sort of compared to the call earlier this year, I think that you were Still quite hesitant on the development in the second half of this year.
And now Magnus, you are of course, I appreciate what you're saying Q3 in terms of prolonged high season and price hikes, but what gives you confidence that demand will remain very elevated Then grow in Q4 and also sort of looking into 2022, what has changed?
Good morning, Daniel. I think what has changed is clearly that as every month goes and you have lots of discussions with With retailers that were very concerned last year and maybe the least convinced that the market would continue and we as a brand were much more convinced, As these retailers have now seen very good sell through and are continuing to see good sell through, they and many investors have Lots of studies and lots of communication with consumers, and it's clear that they have changed their mind Also in a more positive sense. It's not just us saying it. I think if you listen to any of the outdoor brands like YETI Outdoors or The North Face inside BF, They will be more positive now because there is a broader positive consensus from their outdoor retail partners as well. So There is we were one of the ones that were optimistic, but now there are more people that are seeing more strong signals of continued interest in those activities.
And I know you're then saying sort of a permanent change in behavior when it comes to biking maybe And the use of your bike, but at the same time, you're also seeing a recovery in bags. And does that make sense? Or is Sense or is there a contradiction in that?
I think permanent is a very strong word to use anytime. I think there is A long term trend to say that it's permanent is difficult, but I think there is a lot of realities Capacity in bike manufacturing with a lot of demand, a very, very strong e biking trend enabling people to bike more Without getting as sweaty or tired, all of those things have come to a light Via the pandemic situation and has been extrapolated and augmented by it, I think that will continue. It doesn't mean that the growth rates as a percentage will be the same. It might But it's not that the base will go down. That's the difference of you, right?
So there is a bigger installed base and that installed I think it's also a bit of you see your friends biking more. There are better bike lanes. There is more biking. It will tempt more people to bike.
Yes, yes. And do you think that you would have sort of had a different discussion with the board if You've had these indications a couple of months ago when you laid out new financial targets for 2,030?
I think as always, it's a valid question. I think you need to be careful of extrapolating things And as we've always said, we want to beat our targets. And if we beat them, we will change them in the future.
All right. Okay. And moving on then maybe, And if I get you right, you haven't had any additional price hikes during H1. You had it at maybe the end of last year, start of this year, and then you're Having another one as of 3 weeks ago and still during Q2, we're seeing the gross margin being up Versus Q2 2019 and versus Q1 2021, is there any chance that you've overcompensated on Price, in your latest price hike at the start of the year?
First of all, I actually don't like the word price Hi, because it sounds like we're doing something extreme. We do price increases, and we did 1 1st January, and we are doing one 1st July this year, which is not our common approach. And it's all related to very, very obvious for all Parties in terms of incoming material costs and incoming logistics and transport costs. What is the situation is that We have over a number of years done very smart investments in our supply chain and in our setup and have proven a very Efficient and flexible back end of our business. We have now since more than a year one global ERP system.
We have a very well functioning back end of our business. And we've always said that that would contribute to an EBIT margin pickup as if There was a top line growth. Now the top line growth has been exceptional. And with the exceptional top line growth, you get both production overhead Absorption and very much so SG and A absorption, if you have like we have a very scalable and efficient setup. Then on top of that, as we have mentioned, we have seen a positive product mix shift as well in this period and that Also move the needle.
The product mix shift we hope to happen is that, for example, with bags growing faster Sure again, there will be slightly negative product mix shift in average margin, etcetera. So, no, I absolutely cannot say that we've Not too much. If anything, we've been quite cautious with our price increases because we are a long term player. But there has been some very, very high price increase From some of our suppliers to us on materials, so we had to do it.
Yes. No, that was, of course, My reason for asking, but clearly, you've sort of more followed it. So that has actually sort of diluted the margin, if anything, given That you've made one to one increases, is that what you're saying?
Yes. I think if you look at it, the big two Definitely the two factors that are making us pick up is a combination of strong very strong economies of scale with the type of top line growth we've had And a positive, very clear positive product mix shift and then price increases is only to compensate material increase.
Yes. And would you say has there been an exceptional development of direct to consumer during the first half? Is that driving Profitability, a bit more than it has done historically. Is that part of the explanation to the gross to the EBIT margin?
I won't say exceptional. It's all according to a logical plan of I think everybody realizes When you're starting to do something, your growth numbers will look great as a percentage, but they are from a tiny level in the beginning in Europe, for example. So the pace isn't that amazingly different. We haven't, for example, as we've seen some challenges in supplying, we haven't Focused on our own D2C versus retail, we've been very fair, so to speak. We've been penalized ourselves as well, because we see retail partners As a key going forward as well.
So no, nothing exceptional, but of course online sales in general is growing around the world And direct to consumer is a preferred choice for many consumers from strong brands. So it is a very strong growth pace And will and is helping us from a channel margin perspective, and it did in Q2, but not in an exceptional way.
Okay. And this 23.6% that you've been delivering now for the past 12 months is, of course, Quite above the level that you were last year. Is that a sustainable level? Or what's your best guess?
Yes. The only target we've set is about 20%. 23.6% is a long way above 20%. And it's clear we always have an ambition to maintain our high margins. There are There are already factors with the huge cost increases and only partial Comping up partially only because, yes, you said, if we only take the cost and pass it on, it actually dilutes our margins.
I would say, yes, there are some challenges, and it will also depend on the mix, but that we will sustain a very high margin, no doubt.
Yes. And then finally from me, you've alluded to sort of a new category being launched and Presented to your resellers during the autumn and then being sort of out in the market by the start of next year, Is this still the case? Or could you give us an update on when?
Yes. We will present A new category next year, definitely in the market. How much of the it won't be a full year sales because with everything going on And all the focus we will have, we don't want to take too much risk on throwing something out and not being able to Fulfilled demand on a new category, but we will see it in the market in 2022, and you will definitely hear more about it at our upcoming Capital Markets Day.
And that's before the year end or?
We haven't set the date yet. I think it will mostly actually be related to because we do want to show our Fantastic new facilities as well. And so it will be a lot related to simple facts like pandemic lockdown and travel possibilities. So we haven't chosen yet if it's Q4 or Q1 next year, but it's one of those two quarters.
Okay. Is it a little bit delayed? Because my impression was that you were sort of launching and telling your resellers during the sort of the autumn, and now it's And telling your resellers during sort of the autumn, and now it sounds like more the late part of the year?
Yes. We might be tactically doing The actual the development project isn't delayed, but in how we communicate in the market, we might do it a bit later because there is so much Focus on making sure the retailers don't feel that we're not focusing enough on the current business. You know the fact when a retailer is wanting to buy more from you and you struggle to keep up, they say don't think so much about the new give me what I already want. And you need to be balancing that. Yes.
Absolutely.
Okay. Thanks a lot. That's all for me. Thank you.
Thank you, Daniel. Our next question comes from Gustaf Hegus from SEB. Gustaf, please go ahead. Your line is open.
Thank you. Good morning, guys. Good morning. Very strong report indeed. My question is on sort of leverage.
When I look at the incremental EBIT margin for the 2 final quarters of last year, so incremental EBITDA or incremental sales, Incremental EBIT margin was close to 50%. And doing the same exercise now in H1, it's closer to 35%. So that makes me wonder if there's a sort of scale of economics is fading off a little bit With these type of volumes, if you're closing up on some type of capacity Constraint or how do you feel about that? Or is it other factors such as these increases in price and so forth that is Or input cost, that is the reason behind this.
You're absolutely right there, Gustav, in your analysis that As we have highlighted in both Q1 and especially now in Q2, we always try to have our Plans being able to take additional capacity and have our suppliers being able to fulfill those capacity increases. But when we've seen the type of Volume growth that we've seen with a very challenged supply chain with longer lead times than ever and more disruption than ever, We at times haven't been able to run those additional quantities as efficiently as we would have loved. And therefore, the pickup was easier, so to speak, to see it fall through in the first period in the pandemic situation, so second half last year. And it's Pinal. And that's also one of the reasons why we're CapEx so heavy at the moment is that we are truly Ramping up to have that additional capacity flexibility.
We are not a company that are matching exactly the output level in our We want to have overcapacity because we want to be able to have very short delivery times and huge flexibility. Historically, we've had that Meant that we could definitely get that pick up very nicely through our plans and our suppliers' plans. And now in some of the cases, we have truly we are running 20 fourseven now. And some of our products in lines, both us and our suppliers are running 20 fourseven on some of them the moment. When you're running 20 fourseven, you can't get that much more out of it.
So that's why we are additional adding capacity. So you're right in your analysis.
And there's no problem by adding capacity. What do you do to do that? Can you just install more robots So, Gillefrstorp, is it more of a new facility?
No, that's exactly what we're doing. So, it's a combination. As we mentioned already before, we have Structured some facilities in the past that you always have the space to add lines, but also those type of products actually We have longer lead times than normal, and we're sometimes you're getting delayed. There are some of the things we wanted already in the spring that we're only getting deliveries on now Ahead of the autumn, for example, because also those companies have struggled to keep up with capacity. So we are combining.
We have already created space that we're putting additional lines in, additional welding robots, additional laser cutters, additional thermoforming equipment, etcetera. But we are also actually extending facilities and building new space for additional things to come in 2022 and 2023 because we always want Stay ahead of the bump that might be coming up, by the way.
And you do some sourcing, especially with Active with Kits, if I recall correctly, do you could you update us a bit on what's your share of production now that is Done internally in Poland and Sweden. How much is sourced? So if you
take all the 9, because it's not only Poland, Sweden, we have 2 big facilities In the U. S, one huge one in Belgium for RV products and 2 smaller ones in Brazil and in UK for roof boxes and one big one for roof boxes in Neuromark. If you take all those 9 facilities, it's about slightly above the 80 Actually due to product mix with bags going down, it's more than 80% of what we sell is assembled in our own plants. So that's still the case. Due to product mix having done extremely well in sporting cargo carriers, several of the active kids Products also assembled in our own site and older RV product means that it's more than 8%.
That's helpful. And when you look now past your obvious exceptional margin, could you quantify roughly What has the temporary cost savings been or semi temporary from less fares, less travel, incentive programs maybe? You have a number.
Actually, incentive programs, I can tell you, we have done well as The company financially and therefore people have achieved their bonuses etcetera expense as in normal. So we didn't see any specific savings as some companies might have because we had a very strong performance And we met many targets. If you take fairs and events, it's a very small and minor saving you're getting and you're taking on an additional cost Because you're organizing many more digital events, we've constructed studios to do our digital events and other things to do them really professionally. So there is I would say the only clear saving that is a like for like true saving has been a lot less international travel, but we're talking about Rounding errors in the totality for the Tulli Group. So I don't see any huge saving realization For the Thule Group, because as we've mentioned, we've paid back what we got from Tilvik's market as support, and we Had very limited furloughs in total last year anyway.
So I would say we have a very true like for like Logic picture of where we stand as a cost base going forward.
And finally for me, with the Price increases, what do you think is a reasonable number to put in the model for price mix for H2 year over year?
It's a relatively small number, first of all, because what we've done when you do a midyear increase that wasn't planned, we didn't Take price increases on orders already placed where we were struggling to meet and ship out, which means that the type of orders that I've mentioned that are now coming into Q3 will be with the previous pricing, right? So if you look at it, it would do a low single digit Still, but it's definitely higher than the one that we normally have.
Okay, great. Thank you, Magnus. Those were all my questions.
Thank you.
Thank you, Gustav. Our next question comes from Karri Rimpur From SHB, Carey, please go ahead. Your line is open.
Yes. Thank you very much. Just two questions from me. Firstly, The difference in rate of growth in Europe and in the U. S, is this a reflection of Some differences in exposure, I.
E, that you have more RV in Europe and thereby probably benefited On those sales? Or is there any element of pandemic recovery being more advanced in the U. S. That might explain the Hi, but still somewhat lower growth than in Europe.
Yes. I think you have to look at the first half, and we see that they're very similar if you take First half as a total, and we did mention that already in the Q1 that we saw the U. S. Market especially placing very big orders. There are some major retailers in the U.
S. That when they decide to place orders, which we've commented to also in the past, like the REIs of the world, They are very big. So when they decide to go hard and believe in something and commit to a category, they do place very big orders. And we have that effect, which we sometimes have that sometimes you end the spring or start the spring early, so to Speak in one of the regions. And that was what happened in the U.
S, very strong March. If you then extrapolate it, we had instead a very strong extremely strong May in that comparable thing in Europe. So if you look at it for the first half, they're actually quite similar.
All right. Fair enough. Helpful. Then secondly, a more broader question and Related to new products and new product introductions, you were saying that now the only thing that retailers want is what they already have and what they want more of. But then next year when we can assume that international travel will pick up and then they maybe want something new that they have something new to offer to their customers.
So after this period of first having this pandemic lockdown restrictions That fairs. And now you have to just focus on churning out the product that you already have. So how confident are you that By next year, you will have a fresh set of new products that you can roll out in your
We're very confident. Yes. We had some good new products this year as well. So when I mentioned the new, it's more about new categories Because if you are a big retailer buying a lot of bike carriers and roof boxes and roof racks from Tesla, even if you might It's very nice that we come with something new. You're going to 1st and foremost say you're the world leader in this.
Make sure you can ship me all the quantities of the cool new products you just have launched In that, Casper. So we have some very exciting new bike carriers this year that are doing phenomenally well, much better than we could have ever hoped. Timing was perfect. There will be some new bike carriers next year. There will be some new roof boxes and some cargo solutions and some baskets.
So there will be lots of new products next year actually. It was more related to bringing a broad new category with what all that means. So I feel very good about our development team's efforts despite having had to work from home to a lot of degrees. We're going to bring some brilliant product next year as well.
Fair enough. Thank you.
Thank you, Carrie. And as And we've had a follow-up question from Daniel Schmidt Daniel, please go ahead.
Yes. Good morning again. Just a small follow-up, Magnus. The sort of the result provision that you're doing on Tepui, the EUR 15,000,000, is that a consequence of Tepui not developing as you planned in terms of earnout and quench of Tepu not developing as you planned in terms of earn out and so on, what's the reason?
I think if you look at earn out, You know that you can do we always want to pay the right price for somebody. If somebody has a Super, super, super optimistic plan in their mind when they pitch it to us. We say, okay, we only have 2 super in ours. We don't have 3. The category is doing fabulously well.
It was a brilliant timing to go into Rooftop Tempt, and we are growing incredibly well. But the seller had very, very optimistic plans. So we had Clearly, yes. Yes. So we decided that, That was not going to be met, and then we can release it.
Okay. Because as you say, our impression is really that it's been taking off Strongly. Phenomenal. Phenomenal. We've done incredibly well.
Okay. So he was riding high on Other assumptions, I guess?
Every person selling a company, you want to get paid in too much as a seller, and you want to pay too little as And at times, you can construct it in such a way that everybody feels happy that If that absurdly good thing happens, then I'm happy to pay you that extra, right? And that was one of these cases.
Yes. Can I just come back to the inventory? It's still up 34% versus Q2 last year. And of course, it's sort of on that very day. And of course, it could differ a lot Between the weeks and days, and you're saying that inventories were on the low side leaving Q2 this year.
And of course, you've guided for demand or top line to be higher even though comps are very difficult. But That spread in the inventory year over year is still quite significant? Or is it not telling the true story?
You have to realize, as Jena said, 2020 Q2 was absolutely wrong. We didn't want to have that low, but we had to take some steps In the spring, so you shouldn't compare anything with inventory levels in Q2 2020. It's a useless comparison. The reason why we're saying it's too low is that We are a company that historically have prided ourselves in next day deliveries of every product and fantastic delivery performance. To have that, you need to have inventory.
You can't run your production on a daily planning basis, right? So you do have inventory to flush that through. At the moment, as I have to remind my own organization on the sales and marketing side, sometimes when they feel frustrated that we don't have everything in Okay. At any given minute, it is obviously the case that with huge demand, despite producing more than ever, we've never produced as much Of any of our production lines product lines as we're doing at the moment, there are days when we don't have available what we would have liked to have available. And therefore, that's the situation that there is a lot of things on stock.
It's just that the demand is so incredibly high that Even so, there is not always that next day delivery that we would love to have.
No. I hear you. I get you. And then just a final If
I may Daniel, if I make some comments on that. If you calculate the days inventory outstanding, it's like 30% lower now than it's been in the comparison periods for previous years. So we are as DIO is pretty low.
That would make sense. Good. And then just a final. As you guys might Remember you said in the start of the pandemic that you were pulling back on investments when it came to bags, bags and luggage. And now of course, There's been a recovery in that segment, and it sounds like that will continue.
Are you redeploying sort of Money into product development in that area in the second half? Or have you done so, so far this year?
We've already done so, and it's slightly directed differently maybe than we would have said 18 months ago because there is different patterns already Coming out in traveling and what type of things, luckily for us, we feel that it's matching what we as a brand stand for well. There is a Growth of the more rolling duffel bags, those types of small smart packing solutions and things like that and a little bit less of the Classical hard case, I'm rolling it on marble floors at the airport. That trend, we believe, will continue as well, which It's good for us because that's more close to our brand. So we are deploying some really nice efforts to some very nice collections that is coming early next year In that type and style of travel, and so I feel very confident in that. The whole Global luggage market will still be in a very tough reality in 2022.
We've seen the first bankruptcies. There will be other things going on. There's a lot of discounted bags being sold and will be for a long while. So I'm not Too overly optimistic on the traditional travel, but this combined a practical bag that you can throw in the car Or on the train and in the airplane, those type of things, seeing some good positions, and so we're positive about that.
Yes. And then maybe just a final one on M and A. And you guys have always said that it's few and far in between. Has that changed?
No, there are a few, and we are close to those. We are constantly evaluating. And the small ones, there is more of them to evaluate. We've also our approach, and I always say that there are different approaches. You can win playing many different ways.
We are very clear on that. An M and A should happen. It should fit culturally. It should fit the brand. It should fit what it does because otherwise you're just buying lots of stuff.
I think those things are more difficult to do in a professional way in terms of M and A when you're in lockdown measures and pandemics and you can't travel and miss it, you can't do cultural aspect, as I've read some of the CEOs saying, you need to do that handshake over a lunch Sure. Something. I'm one of those. So many of the sellers in our category in the true outdoors category are also more like that, I would say so. I think that will pick up now as there is more open opportunities.
All right. Okay. Thanks, guys. That's all for me. Thank you.
Thank you, Daniel. That was our final question. So I'll hand the call back over to Magnus for any closing remarks.
Thank you very much. So I want to thank you all for taking the time in this Beautiful summer day and listening to a fantastic second quarter. We have a good confidence for the Second half of the year. So we look forward of picking up after Q3. And in the meantime, I urge you all Go out, enjoy that great outdoors and use lots of our products.
Thanks, guys.