Hello everyone, and thank you for joining the Thule Group Investor Meeting. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. I'll now hand over to our host, Mattias Ankarberg, CEO and President, to begin. Please go ahead, Mattias.
Thank you very much, and welcome everybody to this update call. I'm here also joined by Toby Lawton, our CFO. We will do a brief presentation, a couple of points, and then hopefully use most of this time to have a productive Q&A session. We will speak to a few slides, and we wanted in the presentation part just to cover three things: to recap the last quarter, the first quarter of the year, give you an update of the market situation as it stands now, and an update of the priorities and activities that are going on at Thule at the moment. Very briefly, and this is visible on the graph on this page, the first quarter was a quarter where we grew in a tough market.
As we covered in the last quarter, the dynamics in the quarter changed quite a bit in February when the tariffs were announced in the U.S., which created lots of uncertainty across both retailers and consumers. Thule continued to grow thanks to the new categories and new products that we have launched and entered recently. The market was clearly challenging, particularly so in North America, where we declined organically quite a bit. Europe held flat, and the acquired core book business added nice growth in the quarter. Gross margin continued to be strong and improving in the first quarter of 2025. We are growth-focused, and we have decided to be growth-focused also in 2025. We are doing many product launches this year, and we are also doing them earlier this year.
You may remember that we therefore also have higher product development costs in the first half of 2025, and we will have lower in the second half. That impacted the EBIT margin in the quarter. Would we not have had those costs earlier in the year, EBIT margin would have been in line with last year. That is largely the dynamics of the first quarter. If we move forward to where we are right now in the second quarter, from a market perspective, the trends are very similar, basically continuing. Same overall market trends. I think the good news is we are not seeing the trends go worse, so not seeing a worse climate. If you follow some of these statistics closely, you are aware that there are some recent numbers that we can refer to.
For example, on the U.S. market, there was a consumer sentiment number out on Friday, which continues to show that the consumers continue to see a tough economic climate with inflation ahead and quite low purchasing intent. I guess the good news is, again, it's not getting worse. Actually, a slight improvement from May, although it was clearly below long-term trends and also where we were already at the beginning of the year. Similarly, the RV industry has quite a few publicly listed companies, and it's also a known fact that in the quarter, the aftermarket continues to do better for RV, just like it did in the first quarter, and the OE side of things is still challenging. Market trends largely continue.
On the Thule activity side, we have made quite a lot of changes to the North American situation in the first quarter, and one of those was to increase prices, which happened as of June 1. That is a good reminder for everybody to have in mind to help offset the tariff impact. Besides managing some of the shorter-term, hopefully, challenges, we have been really focused in the second quarter on driving our long-term growth strategy despite the fact that the market is tough. We are a growth company, and we prioritize to drive sales growth and launch new products and build new categories that we believe will deliver good long-term profit ahead of anything else. We have decided to continue to do so in 2025, as I mentioned before.
We have four clear priorities that we've been driving also in the second quarter: high-pacing product development, which is more front-loaded this year. I'll come back to that in a second and show you a few examples of what we've been doing. We're scaling up our newest product categories: dog transportation and child car seats in Europe, and continue to grow the acquired performance phone mounts business that is Quad Lock. We've been more focused on being more visible for the consumer to show more what we have and sell more, and also continue the efforts to be more efficient with our capital and inventory levels and still remain focused on producing inventory another SEK 200 million in 2025. We continue to drive our long-term agenda.
To show you a few examples, on the next page, we can see that we have quite proudly been awarded the winners of the important car seat consumer test that is Stiftung ADAC in Germany. We won with our first product last year in the autumn with the first time we participated in the test. Now with the second product, we won the second time we participated in the test, which we are, of course, really proud about. Lots of details to be shared here, but it is a good, of course, sign and good statement and lots of credit to our strong R&D team that are able to develop strong products already from the get-go, which, of course, also has a nice commercial effect.
We are perhaps particularly pleased that we are recognized as the number one brand when it comes to eliminating misuse, which is one of the important elements behind the philosophy of our car seat portfolio to install something that is easy to do right, or safety starts at installation, as we call it at Thule. We are very proud of that achievement. Speaking of product recognition, on the next page, we also now have the outcome of the Red Dot Design Awards for 2025. We won seven iF Design Awards, which is the other major design award organization that was announced in the first quarter. Now we have the Red Dot Awards out, and we won 10 Red Dot Awards this year.
A lot of nice recognition, credit to many of our teams that delivered products that are not just helping driving sales growth, but also being recognized in the consumer market, but also by design experts. I think maybe we could just note that we also have several of our RV news winning awards this year, which we think is a good statement and hopefully a reason why we did quite well with RV versus the market in the first quarter. We have also launched a few of these products now in quarter two. Very briefly, just to show you what is already in or what is in the market just now, we have launched, for example, Thule Glide 3. Thule Glide is our running stroller, our best and award-winning running stroller that we have now launched a new generation of.
Just out, in case you're up for some running with small kids this summer, you know what to get. We are launching just about now the Thule Outpace, which is a mid-price bike carrier, which we think is bringing lots of nice features and functionality. Of course, easy to use and safe, but also foldable. It's easy to both store in the small compartment or space, but also folds up against the car very nicely. Very proud of that product, just hitting the market now in June. Then last but not least, in terms of building new product categories, we've also launched Thule Cappy, which is the third product in our dog transportation category, the crash tested dog harness for safe transportation of dogs inside the car.
Those are a few examples of products that we are launching now with the intensive launch schedule that we have ongoing here in the second quarter of the year. Before we turn to Q&A, I'll ask Toby, our CFO, to chime in on a few additional points.
Thanks, Mattias, and good afternoon, everyone. Maybe I'll just give a bit of color, which will maybe answer a few questions preemptively. Firstly, just things to bear in mind. When we talk about our gross profit, and we have had during the pandemic, so during the last three years, we've had a bit more volatility in our gross profit throughout the year, where we've seen quite a big jump in gross profit in the second quarter, which came from the high volumes in the pandemic primarily and the aftereffects of that last year. This jump, it goes up in the second quarter and then down in quarter three and quarter four. We expect that jump to return to pre-pandemic levels, basically.
If you take Thule excluding Quad Lock, which it obviously was in previous years, then you could say that the gross profit jumped by about two percentage points Q1- Q2, whereas pre-pandemic, it is much more flat through the year and was about 1% up in Q2 versus Q1. We expect to return more towards the pre-pandemic pattern going forward, which is, yeah, more when it is back to the normal business patterns. Just kind of bear that in mind, a bit of a technical point. Maybe a second point to bear in mind, Mattias mentioned that we had a higher development cost in Q1, and this is something we have talked about many times, but that we, because of the high level of product launches in Q1 and Q2, we do expect to have a higher development cost in Q1 and Q2.
We will have that effect also in Q2, not as high as it was in Q1, but it still will be an elevated development cost in Q2. That is all about phasing. It is about that we are taking that cost earlier in the year this year. It is not about the overall cost level for the full year. Another point to bear in mind is just regarding, yeah, Quad Lock. When we talk about trends, Quad Lock has a different margin profile when we add that on top of the legacy Thule business. Quad Lock has basically a higher gross profit margin, which also, obviously, when you add that in, it increases the gross profit margin of Thule Group, but also has a higher SG&A. That is just the margin profile, but the impact they have on overall profit margin is more or less in line. Just bear that in mind.
Quad Lock had good growth in Q1. We had about 20% organic growth in the Quad Lock business in Q1, which is good to see. Just bear in mind, growth is more like 10%-12%, we think, in performance phone mounts, the Quad Lock, yeah, the Quad Lock business. We should not expect them to continue to outgrow the market every quarter. That is another thing to bear in mind. Lastly, FX has obviously been moving a lot recently. We have a stronger Swedish krona that impacts particularly top line, where we have organic growth. We obviously take the FX effects out when we measure organic growth, but when you measure on a reported basis, just the strength of the Swedish krona will impact reported revenue. A strong Swedish krona also does have less of an effect, but still a slightly negative effect on operating profits.
You can see some, we show some of the impacts on that when you look in note four in the annual report from 2024. You can see some details of the way the different currencies impact, but this main impact is on top line. Yeah. I think those are, yeah, just a few things to kind of keep in mind. With that, maybe I can hand over to open up to the operator to open up for Q&A.
Thank you, Toby. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Daniel Schmidt from Danske Bank. Your line is open. Please go ahead.
Yes, good morning, guys. I think you commented quite clearly on the development in the U.S. so far this quarter. Could you shed some more light on sort of impact of the fact that you're hiking prices quite a bit from the 1st of June in terms of potential pre-buy? What is the underlying development you think as you exit the quarter? Also, maybe comment a little bit on the European business and the performance there.
Hi, Daniel. I can start, and Toby, you add to whatever you think is needed. It has been, of course, a dynamic U.S. market, if we use that word. I think we covered previously in sessions that in Q1, actually, the start of the year was pretty good, actually, or more than that. Things changed a lot when the tariffs were introduced and almost came to a standstill at some points, with some customers being really, I think, taking kind of a wait-and-see approach to see where things were going before placing orders again towards the end of the first quarter. Why am I saying that? That is kind of how it rolled into the second quarter. It has been, for sure, a tough market, and we can all read some tough news on both the retailer and the consumer side.
Of course, we do lots of product launches to drive growth and to try to add whatever we can do. That helps. In terms of price increases, they are valid as of June 1. It is about a 10% price increase across North America. There is a little bit of pre-buy in May. I think we will not know exactly the amount before we probably wrap up both June and July. There is some of that behavior going on, for sure. As we mentioned before, the market is not getting worse, and that is positive. We are trying to add what we can through our actions and through our growth initiatives in this tough U.S. market at the moment. That is where we are.
In Europe, it's held a bit more flat in Q1, and those trends largely continue with, yeah, some cautious retailers and consumers on some ends and some being really careful with cash and inventory levels and other sort of subsegments and specific geographies doing a bit better.
Yeah. Do you feel when it comes to the European market that you're equally well- equipped to balance the RV business because you've been quite strong on the aftermarket while the OE business has been weak?
Yes. No, you're right, Daniel. That's very much the case. I think RV is also an area where the industry doesn't change that quick. The trends continue into Q2, and our performance also continues, where we've had some nice new products that help drive some of the performance for us, probably at least a part, probably maybe a big part, where we perform a bit better than the market. Of course, we have those now also in Q2. Similar trends, both in terms of market and our own performance in RV in Q2.
Yeah. When you talk about the U.S. business not getting worse, that's you trying to sort of see through any potential pre-buy effects on your performance. That's what you think is the underlying development, basically.
I'm trying to talk to you about the market, as you talked about. Of course, our product launches come on top and can add a little bit of growth.
Okay. Yeah. Yeah. Okay. Good. Just a second question on what you communicated in connection with Q1 when it came to drawdowns in Colorado and letting people go and moving resources to Connecticut and so on. Where are you in that process? What can we expect in terms of charges or benefits on the cost side eventually? How does that kind of play out?
Yeah. I can start, and then Toby, you can add to it. The decision is taken in Q1. It is about just over 20 people in the satellite office that was in Colorado that are either relocating to the East Coast, where we have our regional headquarters in Connecticut, or a few to Sweden. Some jobs will also not be replaced. A bit of cost saving there. We are in lots of practicalities when it comes to people moving and a few of them moving to new houses. The decision is taken, and things are now being basically executed as we speak.
Yeah. Maybe I could just add that, I mean, we're still finalizing the process. Obviously, it's been announced, but it's being worked through. There will be a positive payback from that, of course, from the lower cost level. There will be some cost associated with the restructuring, and we'll show that clearly. It's not a big deal.
That is not going to be part of the Q2 numbers. That will be rather Q3 then?
It depends on the timing.
That is the cost.
It depends on the timing, but we'll be clear about it. It could be Q2, or it could be Q3, depending on when things are finalized.
Okay. Okay. You also talked about redirecting that effort into, I think you mentioned it, as a product launch when it comes to the mid-end and also sort of more U.S.-specific products on the bike side, some of them still ahead of you. Do you feel should we interpret that, that you take all the potential money that was going to be spent on car seats and the setup that you did have or still have into what you talked about? Or is that going to be a bit less being spent on those areas, but still more than you planned for six months ago, if you catch my drift?
I think so. I think, to your point, we made the decision to focus car seats, where we think we can win first and best, so to speak, and focus car seats on Europe, and to focus U.S. on the categories where we feel we have the best opportunities, which is right now in bike carriers and also pickup truck, as we communicated also in Q1. I think between those two focus areas, car seats in Europe that we will continue to drive, and you will see one new product coming out here in Q3, and then, of course, more to come. Between the U.S. growth investments in bike carriers and come end of year, also pickup trucks, and then, of course, further throughout the years, we will shift resources into that.
Yeah. That ties well with your sort of, I assume, that you stand by the 7% product development spending guidance for the full year. That relates to the legacy business, right?
Sorry, I did not hear you there. I think.
Yes.
I can hear you. Yeah. Yeah. No, only to add, I mean, it relates to, call it the legacy business, or excluding Quad Lock. Quad Lock is also very close to 7%, so it will be both including and excluding Quad Lock.
Okay. Okay. How should we think about the rest of SG&A in that context? Do you want to shed some light on that?
Yeah. I mean, if you like, the rest of SG&A for us is sales and marketing cost and administration cost, the two SG&A items. Development cost is part of sales and marketing cost in our P&L. There, as I mentioned earlier, one important impact to be aware of is that Quad Lock has a higher percentage of SG&A than excluding Quad Lock, so it will add to the overall SG&A. Excluding Quad Lock, if you like, we have this impact of development cost, which is higher in the first half of the year, but we expect for the full year to be, as we said, at 7% of revenue. It is really a phasing, the fact that it is higher in the first half of the year, which means it will be lower in the second half of the year.
When it comes to the rest of selling and marketing cost, that's a bigger percentage than just the development cost. We had about 1% higher selling and marketing cost than prior year in the first quarter. That was driven by the organic growth. It was not offsetting the investment in selling and marketing cost in the first quarter. That is really the kind of reason we're not giving guidance on that, as it really depends on the level of growth in the second half year and the level we're investing in selling and marketing to drive that growth. It's hard to give any guidance on that.
Yeah. Thank you. That's all for me.
Our next question comes from Adela Dashian from Jefferies. Your line is open. Please go ahead.
Thank you. Good afternoon, gentlemen. I'm just, I guess, trying to wrap my head around the commentary about Q2 not getting any worse than Q1. Specifically, what I have in mind here is that you mentioned that the start of the year was good, but that you saw a gradual worsening as the tariff situation materialized, which means that if that situation obviously continued in all of Q2, then I don't really understand how Q2 can't be any worse than Q1.
I can start. It's Mattias here. I think maybe just it's really good you asked the questions so we can maybe be a bit more clear. I think, first of all, when we're talking about things not getting worse, which, of course, it's a good thing at least, we're talking about the market, right? Market trends. The second point is maybe a bit of nuance and detail, but the first quarter started well, basically came to a bit of a halt as the tariffs were announced and people were waiting and seeing what's going on, but then picked up again towards the end of the first quarter. We're seeing that those trends that we wrapped up Q1 in, so to speak, are carrying forward into Q2.
Great. Okay. That's perfect color. And then just you also mentioned in the first quarter that you mainly saw more cautious or conservative behavior from the retailers, and that actually, if you took a look at your DTC channel, then the consumers were actually quite okay-ish. Have you seen the same type of trend continuing into Q2 as well?
Yes, we have. We have seen that behavior continue to a bit less extent, as is probably natural. As part of the Q1 was this kind of halt/wait-and-see behavior, and things did pick up a bit later. We are still seeing in Q2 some retailers being really, really cautious. We know that some are struggling financially and probably very, very cash-focused and rather keep inventories down than to chase the last sales dollar or euro. We do see some of that. We do see that the consumer sort of direct side, the DTC business in that case, is doing a bit better. I think, personally, consumers are also a bit cautious, but not as cautious as the total retail landscape is right now.
That makes sense. All right. Lastly, on the U.S. opportunity and the refocus on other areas than the child car seats, could you just give us the rationale for why you see pickup trucks specifically being a good business opportunity? I mean, if I think of a pickup truck, then I would not necessarily, at least from my level of knowledge, think that that is a good way of utilizing your products given the space and so on.
No, we can add to that. Just to be clear, we're making products for pickup trucks, obviously. It's.
Oh, yeah, of course. Still, I mean, you would think that.
Yeah, yeah, yeah, for sure. No, but Thule has been in selling products to pickup trucks for some time, but it's been many years since we launched anything new, to say the least. I think the way when we look at the American car fleet or we look at the kinds of vehicles that our own consumer base owns, clearly pickup truck is a big share of that. People use that to put skis or surfboards or mountain bikes or what have you on them. We haven't had as great of a product portfolio. The product we're launching towards the end of this year is called Thule Escape. It's called a bed rack. It's sort of, I guess, in the European context, it's sort of the roof racks, but for pickup trucks, if you like, which you put on top of the bed.
On that, you can mount ski carriers, rooftop tents, water sport carriers, and what have you. We think there's a good sizable business, actually, in terms of consumer use and car fleets, which is pickup trucks, particularly sort of in the outdoor community, which we can tap into.
All right. Thanks for that.
As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Mats Liss from Kepler Cheuvreux. Your line is open. Please go ahead.
Yeah. Yeah. Hi. Thank you. A couple of questions here as well. I missed a bit what you, maybe you mentioned that during the presentation, but Quad Lock, I mean, they grew 20% there in the first quarter. Is that a sustainable trend, or is it more of a sort of easy comps during the first quarter there?
I'll take this. I alluded to that in my comments. Basically, Quad Lock grew 20% in the first quarter, which is good. We're happy with 20%. The category performance phone mounts, we've estimated growth by about 10% per year going forward. We estimate about 10%-12% looking back, but about 10% per year going forward. For Quad Lock to continuously outperform the market growth is obviously very good, but I think that won't happen every quarter, that they'll be at 20%. Just to kind of, yeah, manage expectations a little bit that, yeah, if they're growing out from the category at 10%, then they're obviously doing very well.
Yeah. Sure. I mean, you talked a bit about the bike trends or improving maybe, and you have launched a lot of new features there, the bike carriers. I mean, historically, that's a high-margin segment for you. Is it sort of something that will continue here throughout the year? Did you take a lion part of it during the start? You can say something there.
Maybe just to kind of say overall, I mean, the bike area generally is delivering growth for us, is good. It is probably, on average, we have good gross margins from the bike area on average. Then the products we're launching, some of them are, I would say, a year ago, we had more products in the premium segment. This year, we're launching a bit mid-price and some premium segment. The bike overall is good for us when it comes to mix in gross margin.
Looking back, I mean, it seems like too long ago during the pandemic, I guess you're saying bike-related product was more than 50%. Maybe you have mentioned that as well. What's the part currently?
No, we don't measure that. To be honest, it's kind of a range of different products which have a relation to bikes. It doesn't really mean anything to say exactly what percentage is bike-related, but it's less than 50% for sure.
Great. Regarding this 7% product development cost that you guide for the full year, is it the level we should expect going forward as well? Is this year sort of a lot to be done, including everything? Or you can give some.
Yeah. I can start, and you can add to it, Toby. I think there are two elements to that, right? One is what we decide to do. The other one is sort of where the market situation is, which, of course, impacts the sales and the percentage points. I think we have this, at least I think, really strong R&D team that are able to deliver an organization that can commercially capitalize on good products. I think that really helps us. We try to sit down. We're a growth company, of course, but we sit down every year and say, "How do we plan for next year? Do we pull some forward? Do we push out?
What's the market like? The big learning for 2024, when we had a really intense launch year, was that, yes, it costs money, but it adds growth, and it adds competitive positions, and it adds lots of financial value. We have taken the same approach for 2025. We're also investing for growth, and we're also launching the same amount of new products, and we're even doing it earlier in the year. We'll evaluate come summer, early autumn here as well, and set sort of the detailed plan for the 2026 calendar. Then based on that plan and based on where the market is, we'll see what the, of course, exact percentage points comes out to be. I think the overall message is we are a growth company.
We will invest for growth, and we will, of course, not invest in everything, and we will make choices like we've done with North American car seats. We will try to do what's best for the coming year once we've learned more about this year. We will, as usual, get back in this autumn with our thoughts for what that means for financials in 2026.
Yeah. Thank you. Very clear. And just finally, about, I mean, you do these measures, well, adjusting the offering in the U.S. Are there similar measures to be taken in other parts of the world, or, I mean, in Europe, for instance, that could be on the agenda going forward, or is it more of a sort of one-off thing you needed to do in the U.S.?
I think the U.S. is special in the case that we've both had a very, very tough market. We haven't performed as well over time as we had done in Europe. We were also investing a lot specifically for the U.S. with the U.S. car seats and having to see how do we best win in car seats? How do we best win in the U.S.? There are a couple of sort of points that led to the same kind of prioritization. On top of that, we felt we needed to get more stronger focus on the priorities. We need to put the new sales organization in place and then price changes to counter some of the cost effects from the tariffs. A whole number of factors played into the U.S. decision at the same time, if you like.
I do not think we see anywhere else or we have that kind of number of topics needed to be addressed at the same time right now. Having said that, of course, we are humbled that we are not perfect, and there are things that we always try to do better. There are geographies where we clearly see potential to do better, and there are categories where we clearly see potential to do better. None of these major kind of packages of actions that we have planned to the same extent that we maybe was not major, but none of these sort of more longer list of joint actions that we took now in Q1 for the U.S.
Okay. Great. Thanks.
Our next question comes from Eunicia Biella from Nordea. Your line is open. Please go ahead.
Perfect. Thank you. You have received some test awards for your child car seats from Germany recently. Can you just tell us what do you believe? How important are those for creating consumer demand for those products for you?
They are important, very important for two reasons. I mean, one is clearly this is kind of a stamp of approval, and it kind of creates PR and awareness, and it sets a nice buzz around the specific product at a specific time, which we see also helps sales short term. Secondly, I think we are a new entrant into this category, and we're doing it at quite high pace. We now have two products, and both have won the award for two consecutive tests. I think that just also helps us on a broader scale. We have dialogues with potential retail partners and different types of collaborations and partnerships that we are seeking in the marketplace. We are quickly, hopefully, now seen as a serious player.
Lastly, we are also very pleased, proud that we won the award, but we are also recognized for kind of the whole thinking behind eliminating misuse, which we know is a serious factor. People not using the car seats correctly in the cars. Now Thule is recognized for that twice in a row and sets us apart a bit as a brand. It helps us also position ourselves in the market in a nice way. It is important. Yeah.
Yeah. Understood. Also, obviously, the consumer market is still quite subdued, but as you said, you have launched many new products in both 2024, now in 2025. Can you just maybe elaborate a bit more in what products and what product categories, maybe more specifically, you see most interest right now from both end consumers and retailers?
Sure. We are in 138 markets, and we are in lots of product families, if you like, if you go the level below product categories. There is lots of nuance here. I think the big pattern we have seen for a long time, but we have been particularly maybe outspoken about for the last year or two, is that we see product news really matter. New products. I think that is particularly the case in a tough market where maybe not a lot of other players and competitors are investing. We are. We are seeing, of course, good demand where we come with new things that are particularly also good things that get recognized and awarded. We do a lot this year. We do pretty much the same launch kind of pace as last year.
We do it earlier, but we do more in our traditional core categories this year in Sport & Cargo Carriers if you compare to last year. We do premium, but we also do more in mid-price this year. You will see several bike carriers. We talked a lot about bike today already, both in premium, in North America specific, and also in mid-price. You have seen new rooftop boxes. You see rear-end car boxes this year quite a lot. Of course, we also see good interest in new sales, if you like, or sales growth in the categories that are new that we keep investing in and expanding the product portfolio in both dog transportation and in car seats. The best to answer much more briefly, we see the big interest and the big demand where we invest in growth and in newness.
Great. Thank you.
We currently have no further questions, so I'd like to hand back to Mattias for some closing remarks.
Thank you very much, everybody. It is good that we have got a good Q&A session going, and I wish you all a nice day and look forward to speaking to you at the time of our Q2 conference call.
This concludes today's call. Thank you very much for joining. You may now disconnect your lines.