Roadshow Presentation

Roadshow Presentation
February 2015
Today’s Presenters
Magnus Welander
Chief Executive Officer
Slide 2
Lennart Mauritzson
Chief Financial Officer
 Joined Thule Group: 2006, CEO since 2010
 Joined Thule Group: Rejoined 2011
 Born: 1966
 Born: 1967
 Previous Experience:
Business Area President Thule Group
CEO Envirotainer Group
Various management positions at Tetra Pak
 Previous Experience:
CFO Beijer Electronics
Vice President Finance Thule Group
Vice President Finance in Cardo
The Thule Group Vision – Active Life, Simplified
Slide 3
Thule is a Global Premium Branded Sports&Outdoor Company
Net Sales by Segment 2014
Net Sales and Underlying EBIT Breakdown
2014 (SEKm)
Outdoor&Bags
Sport&Cargo
Carriers
Region
Americas
10%
34%
Bags for
Electronic
Devices
4,693
90%
Underlying EBIT Margin:
14.6% (13.6% 2013)
686
1%
99%
Region
Europe and ROW
66%
Other
Outdoor&Bags
Outdoor&Bags
Specialty
Global Reach – Sales in 136 Countries
Specialty
Work Gear
Snow
Chains
Work Gear
72%
28%
Snow Chains
Source: Company information
Slide 4
Transformation Since 2010 into a Brand-Centric Sports&Outdoor Company
2009
Point 1
​Trailer
14%
Business and
Strategy Clearly
Centered around
Outdoor Core1
Consolidated
Brand Platform
around the Thule
Lifestyle
2014
​Outdoor&Bags
58%
Specialty
10%
​Towing
20%
Outdoor&Bags
90%
​Specialty
8%

Local brand / category
approach

Cars and transport use

Focus on distributors and wholesalers
>15
Brands
Centralised brand management

Focus on consumer / emotional
connection
Retail and Distribution
Branded Consumer  Limited key account management
Driven Execution
 Seven different Thule homepages


Other
Communication

Forward integration in
key markets

Bring Your Life
communication concept

Thule Retail Partner
Program rolled out in
>2,000 stores

Truly global website

New PR approach
No social media approach

Increased control of PoS
SG&A as % of Net Sales
SG&A Focused on
Driving the
Business
16.1%
8.0%
Prod. Dev.
Sales&Mktg
+2.3pp
Admin
18.4%
-1.8pp
Prod. Dev.
Sales&Mktg
Admin
6.2%
∆ vs 2009
Source: Company information
1 Breakdown of net sales by segment.
Slide 5
A Compelling Story in the Attractive Sports&Outdoor Market
3
We Play to Win!
2
We Are a Global Leader
1
We Operate in an Attractive Market

Slide 6
Favorable Mega-Trends Driving
Long-Term Market Growth

Strong New Product Development

Differentiated Premium Brand

Global Route-to-Market Strategy and
Implementation

Strong Position in the Value Chain

Management Team with Proven
Track-Record

Multiple Avenues for Growth

Attractive Financial Performance
Market Leading Product Development with Strong User Focused DNA
2
Trade Endorsement
>20 Design and Trade Awards (2013-14)
Product Focus
Across
Organization
 Top Management focus area
 Passionate users within the company
 135 FTEs dedicated to product design & development
Media Endorsement
>100 Test Wins across Categories (2013-14)
Proven
Development
Processes
Consumer
Insights
Design
Language &
Technical
Concepts
Detailed
Design
(DFM1 and
DFA2)
Thule EasyFold
Testing
out of
“Simply the best”
2009
2013
Consumer Endorsement
Highly Rated in Open Consumer Reviews
32%
High Share of
Sales
From New
Products
46%
Share of Net
Sales generated
from products
launched in the
last 3 years
 Product replacement cycles have been reduced by 1/3 in the last
5 years
Source: Company information
1 Design for manufacturing. 2 Design for assembly.
Slide 7
2
A Modern Approach to Consumer Communication
Long-Term Brand Building Sponsoring – Thule Crew
Consumer Involvement – Social Media and Uploading
Earned Media – PR focus on Relevant Channels
Slide 8
2
A New Distribution Strategy Implemented from 2010
A Structured Go-To-Market Approach
Creating a Global Thule Retail Presence
Category Captaincy Approach
with Key Retail Chains
Thule Retail Partner Program for
Smaller Stores
Product Assortment Focus and
Support for Look&Feel in Store
Training of
Store Staff
Source: Company information
Slide 9
Outdoor&Bags
 > 2,500 Key Account doors
 > 2,100 Thule Retail Partner doors
We Have a Strong Position in the Value Chain
2
Direct Material Spend by Supplier (2014)
Top 10
Suppliers
29%
10 Thule Group Assembly Sites
Chicago
Seymour
Perry
Broad
Supply Base
Hillerstorp
Huta
Haverhill
Menen
Neumarkt
Sao Paolo
Molteno
Sales by Customer (2014)
Top 10
Customers
18%
Broad
Customer
Base
Source: Company information
Slide 10
Sales in 136 Countries
3
Multiple Avenues for Growth and Margin Expansion
Top Line Drivers
Exploit Core Product
Offering and NPD
Capabilities
Product and
Category Expansion
Continued Brand Enhancing
Retail Expansion



Market and market share
growth via NPD in existing
markets
Establish leadership position
early in new growth markets
Firmly Position Thule as a
Leading Sports&Outdoor
Brand Globally
Source: Company information
Slide 11


Strengthen position in
recently entered categories:
Sport&Travel Bags and
Active with Kids
Selectively explore new
categories


Category Captaincy
approach with brand focus in
all channels
Strategically increase direct
distribution vs. third party
distribution
Drive Profitability
Enhancements

Continued focus on costs

Implementation of efficiency
programs

Room for margin expansion
in selected categories
Strengthen multi-channel
capabilities
 Continue to implement the Bring Your Life positioning strategy
 Further deepen the emotional connection with Thule (PR, events, PoS, social media)
Future Top-line Growth Derived from Several Sources Within Outdoor&Bags
3
Sport&Cargo Carriers
Bags for Electronic Devices
A
59%
17%
 Total market of SEK 10 billion)
made up of several distinct
sub-markets
 Growth within sub-categories
vary greatly
 2-3% CAGR
 Regional brands No. 2
 High barrier to entry
 Low barrier to entry
 Continue market leading NPD,
providing functional, safe, easyto-use products with
contemporary design
 Reduced exposure to declining
product families
 3-4% CAGR
 Thule only global brand
 Continue apply Go-To Market
Approach implemented last 4
years
 Increased focus on emerging
markets
Source: Arthur D. Little analysis and Management estimates
Slide 12
C
 Very big total market (SEK 43
billion), but also very fragmented
with large low-cost volume
 SEK 5 Billion market
What We Target and
How We Plan to
Achieve It
B
13%
Share of Sales
(Thule Group)
Market
Characteristics
Other Outdoor&Bags
 Increased efforts to drive growth
in fast growing product families
(e.g. Tablet, Phone and GoPro
Cam cases) and more stable
categories (e.g. daypacks)
 Refresh of Case Logic brand
 Additional push with Thule brand
 Barrier to entry vary by subsegment
 Several new product launches
enabling us to grow our market
share from low levels as new
entrants
 Permission to Play from
retailers received at recent
trade events
Sport&Cargo Carriers – Leading Market Positions in All Regions
A
Overview of Global Market Shares for Sport&Cargo Carriers
North America
54%
Global
Europe
49%
52%
25%
9%
5%
4%
Thule
Yakima
Saris
Thule
4%
Thule
YakimaMont Blanc Atera
9%
6%
Mont Blanc
Atera
#1
#1
#1
#1
Latin America
RoW
28%
30%
Thule
27%
EqMax
18%
14%
LongLife
Thule
Thule Group Distribution
Source: 2013 Estimate, Arthur D. Little analysis
Slide 13
15%
Inno
Terzo
A
Sport&Cargo Carriers – Utilizing Market Leading Position to Drive Growth
Reference Point in the Market
 Global position
Global Leading
Brand
 High unaided brand awareness
 Premium price positioning
 Quality image
 Widest assortment in the market
Product Breadth,
Development
Competence and
Development
Spend
 Strong proven Product Development
track record
 Category Captaincy approach with major
retail chains
 Structured steps in logical forward
integration
Slide 14
Thule EasyFold
out of
 Thule Partner Program rolled out to
>2,000 retail stores
Source: Company information
Trade, Media and Consumer Recognition
 Size provides advantage in terms of
spend
 Rigorous testing standards
Structured
Route-to-Market
Approach
Products that Generate Traction
“Simply the best”
Strong Retail Presence
B
Bags for Electronic Devices – Multiple Initiatives to Drive Growth
Key Focus for Growth 2015-2017
Focus on
Growth
Categories
 Brand refresh at 30-year anniversary
 Used in category since 2012
 Mid-price brand
 Premium price brand
 Broad assortment
 Targeted assortment
 Broad distribution in CE channel
 More targeted distribution
 Young, urban, fashion
 Protective, outdoor/sport inspiration
Dual Brand
Approach
Use Economies of Scale in Sourcing
Slide 15
C
Other Outdoor&Bags – Broad New Product Expansions 2014-2015
Source: Company information
Slide 16
Other Outdoor&Bags – New Products Drive Growth
C
The Base We Start From
RV Products
Tents and Awning
in Focus
 No. 1 position in the European market for
Awnings and Bike Carriers
 Focus on awnings
and tents continues
 Tent segment represents the growth opportunity
with key launches in 2014 received well
 New target focus –
Van Campers
 Premium position in multi-functional child
carriers reaffirmed with Thule brand introduction
in category
Active with Kids
Broadened Offer
Provides Growth
 Strong reception of new bike trailers and bike
seats open up market for the future
 Addition of child carrier backpacks makes us
broadest player in category
 Distribution growing across markets
Sport&Travel
Bags
Getting Traction in
New Categories
Source: Company information
Slide 17
Key Focus for Growth
 “Permission to play” received by retail during 2014
 Focus is to continue to drive sales
 Continued growth in multifunctional child carriers
 Dedicated “category sales
specialists” supporting our
normal sales organization
 Continued push of the new
products with sales
organization experts and
broadening of range
 More focus on opening
juvenile channel
 Dedicated “category sales
specialist” supporting our
normal sales organization
 Continued push of the new
products with sales organization
experts and broadening of range
2014 Results
Q4 2014 Highlights – Mild and late winter hurts Snow Chain sales
 Net sales1 of SEK 976m (924)
 Outdoor&Bags +11,4% (+1.9% excluding currency effects)
 Specialty -15,9% (-22.5% excluding currency effects), due to late winter affecting snow chain sales
 Underlying EBIT1 of SEK 37m (45)
 Specialty Segment EBIT reduced by SEK 22m to SEK 12m (34)
 Higher SG&A expenses vs. PY in the period in Outdoor&Bags, related to product development and launch preparation
cost for new products categories that will be available in retail in first half of 2015
 Items affecting comparability of SEK -52m (-10)
 Net income1 of SEK -100m (-52)
 Earnings per share1 of SEK -1.11 (-0.62)
 Cash flow from operating activities2 was SEK -77m (106)
 Thule Group AB (publ) was stock-listed on Nasdaq Stockholm on November 26
 New 5-year financing structure in place
 New Eastern European Distribution Centre finalized in the quarter
 Thule Group chosen as Vendor of the Year in Action Sports from World’s largest Outdoor Retailer (REI)
 Thule chosen as Swedish Brand of the Year by Swedish Sport&Outdoor Retailer Association

1

2
Slide 19
Pertains to continuing operations, excluding operations discontinued during 2014. Correspondingly, the comparison periods have been divided into continuing
and discontinued operations.
Pertains to total operations, meaning both continuing and discontinued operations.
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
Q4 2014 Net Sales and EBIT by Segment
Outdoor&Bags
Oct-Dec
SEKm
2014
Change
2013
Rep.
Adjust.1
Net sales
809
726
11.4%
1.9%
- Region Europe & ROW
481
429
12.2%
6.0%
- Region Americas
328
298
10.2%
-3.5%
Operating income
25
34
-24.6%
Underlying EBIT
47
47
1.5%
Operating margin, %
3.1%
4.6%
Underlying EBIT margin, %
5.8%
6.4%
1
-5.2%
Adjustment for changes in exchange rates
Specialty
Oct-Dec
SEKm
2014
Net sales
Change
2013
Rep.
Adjust.1
166
198
-15.9%
-22.5%
- Snow Chains
76
113
-33.2%
-36.3%
- Work Gear
91
84
7.3%
-5.2%
3
34
-92.0%
12
34
-65.6%
Operating margin, %
1.7%
17.4%
Underlying EBIT margin, %
7.1%
17.4%
Operating income
Underlying EBIT
1
-67.4%
Adjustment for changes in exchange rates
Slide 20
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
2014 Q4 – Selection of Trade Introductions
Case Logic Kontrast camera bag series
Thule EnRoute daypack and Thule Vectros MacBook bumper
Thule Urban Glide jogger (introduction to European trade)
Thule Hullavator Pro Kayak Carrier with lift assist
Slide 21
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
2014 Full Year Highlights – Outdoor&Bags Segment drives profitable growth
 Net sales1 of SEK 4,693m (4,331)
 Outdoor&Bags +10.0% (+5.1% excluding currency effects)
 Specialty -3,8% (-8.4% excluding currency effects)
 Underlying EBIT1 of SEK 686m (588)
 Underlying EBIT-Margin1 of 14.6 percent (13.6)
 Net Income1 of SEK 199m (299)
 Earnings per share1 of SEK 2.32 (3.54)
 Cash flow from operating activities2 was SEK 355m (390)
 Operational cashflow1 in 2014 SEK 637m
 Cash conversion1 of LTM underlying EBITDA of 85% (80%)
 Net debt / Underlying EBITDA decreased to 3.4x (5.4x)
 Dividend of SEK 2.00 per share proposed by the Board

1

2
Slide 22
Pertains to continuing operations, excluding operations discontinued during 2014.
Correspondingly, the comparison periods have been divided into continuing and
discontinued operations.
Pertains to total operations, meaning both continuing and discontinued operations
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
Financial Highlights Full Year 2014
Reported Net Sales
SEKm
4 693
4 331
Underlying EBIT and Margin
SEKm
14.6%
13.6%
686
588
Thule Group
FY
2013
Thule Group
SEKm
FY
2014
4 205
3 824
FY
2013
SEKm
FY
2013
Outdoor&Bags
FY
2014
SEKm
506
O&B Americas
Outdoor&Bags
FY
2014
Specialty
487
31
6
FY
2014
FY
2013
FY
2014
Note: EBIT adjusted for non-recurring items & depr/amort on excess values
1 Constant currency adjustment based on average FX rates 1 January-31 December 2014.
Feb 12, 2015
774
SEKm
FY
2013
Slide 23
FY
2013
FY
2014
18.4%
17.4%
665
Outdoor
&
Bags
Specialty
Thule Group
Thule Group – Year-end Q4 2014 Results Update
Specialty
Operating Working Capital and CapEx
Operating Working Capital
Comments
SEKm
 Operating working capital as of 31 December 2014 was as
follows:
3 000
30%
23,8%
21,1%
21,4%
22,4%
2 000
20%
921
928
1 053
2012
2013
2014
981
1 000
10%
− Accounts receivables: SEK 754m
− Accounts payable: SEK 497m
 Other working capital as of December 31 was SEK -251m,
corresponding to -5.3% of LTM 2014 net sales
0%
0
2011
OWC
OWC % of Net Sales
Capital Expenditure
Comments
SEKm
 The two biggest 2014 investments were expansion driven and
pushed 2014 CapEx to higher than normal levels
4%
200
2,8%
150
100
1,7%
1,7%
50
71
73
66
2011
2012
2013
1,5%
130
3%
2%
1%
0%
0
CapEx
2014
CapEx % of Net Sales
Source: Company information
Slide 24
− Inventory: SEK 795m
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
− Eastern European Distribution Centre (in Huta, Poland)
investment of SEK 65m. Approx. SEK 63m has been
recorded during 2014 and SEK 2m was recorded during
2013.
The Distribution Centre was operational as of Jan., 2015
− Test Centre expansion investment (in Hillerstorp, Sweden)
of SEK 21m,. Approx. SEK 10m was recorded during 2014
(2014 is the first year with cash outflow).
The Test Centre expansion will be operational in Q3/2015.
Thule Group – A strong cash generator in the 2nd half of the year
SEKm
700
600
500
400
2014
300
2013
200
2012
100
0
-100
OB
Q1
Q2
-200
Source: Company information
Slide 25
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
Q3
Q4
Reported Income Statements – Thule Group
SEKm
Q4
2013
Q4
2014
Jan-Dec
2013
Jan-Dec
2014
Net sales
Cost of goods sold
Gross income
924
-618
306
976
-640
337
4,331
-2,715
1 616
4,693
-2,861
1,832
Other operating revenue
Selling expenses
Administrative expenses
Other operating expenses
EBIT
3
-202
-80
3
30
0
-259
-84
-14
-21
10
-797
-301
-14
514
5
-897
-298
-44
599
Net interest expense/income
Income before taxes
-63
-32
-109
-130
-102
413
-324
275
Taxes
-20
30
-114
-75
Net income from continued operations
-52
-100
299
199
Net income from discontinued operations
Net income
-279
-331
29
-71
-237
62
-340
-140
Consolidated net income pertaining to:
Shareholders of Parent Company
Non-controlling interest
Consolidated net income
-329
-2
-331
-71
0
-71
61
1
62
-140
0
-140
Source: Company information
Slide 26
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
2014 in Summary – Outdoor&Bags Segment drives profitable growth
Sales
 Outdoor&Bags growth of +5.1% (excl. Fx)
 Specialty business challenged after 2nd weak winter
 Positive reception from trade to our 2015 introductions
 Continued Focus on Thule Retail Partner Program
Operational
 E. European Distribution Centre operational Q1/2015
 New ERP implemented in Bags for Electronic Devices
 New structure of Hong Kong sourcing team in place
Financial
 Gross Margin increases 130 bp to 39.0 percent
 Underlying EBIT-Margin grows 100bp to 14.6 percent
 Cash flow from operating activities at SEK 355m
 Net debt / Underlying EBITDA decreased to 3.4x
 Board proposes SEK 2,00 dividend. Paid in two
occasions, SEK 1.00 in May and SEK 1.00 in October
Slide 27
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
Thule Group – 2014 Performance vs. Financial Targets
Constant Currency Net Sales Growth
≥5%
Organic
Growth
Underlying
EBIT
Margin
≥15%
Net Debt /
EBITDA
c. 2.5x
Dividend
Policy
≥50%
3.5%
5.1%
-8.4%
Thule Group
Outdoor&Bags
Specialty
14.6%
3.4x
Reduction from 5.4x (2013) in line with
plans to reach goal mid-term
51%
Dividend of SEK 2.00 per share
proposed by the Board
Source: Company information
Slide 28
Feb 12, 2015
Increase from 13.6% (2013) in line
with plans to reach goal mid-term
Thule Group – Year-end Q4 2014 Results Update
Focus 2015 is to Capture Profitable Growth with Investments made in 2013-14
2015 Focus
 Continue to Drive Profitable Organic Growth
in Outdoor&Bags Segment




Continued strong performance in Sport&Cargo
Roll-out of new Active with Kids products portfolio
Roll-out of Technical Backpacks
Get growth Bags for Electronic Devices
 Continue to manage Specialty cost efficiently
 Further steps in lean set-up in Snow Chians
 Production efficiencies in Work Gear
 Capture gains from Operational Efficiency
 Ramp-up of Eastern European distribution centre
 Closing of W. European bags distribution centre
 Capture gains from more efficient supply chain
Slide 29
Feb 12, 2015
Thule Group – Year-end Q4 2014 Results Update
Q&A
Slide 30
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