brain protection system - mipscorp.com · mips is a market leader in helmet solutions protecting...
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14,849.6 86.6
125.6
5.8%
28.0%22.1%
-20%0%20%40%
050
100150
2014 2015 2016 2017Sales (SEKm) Adj. EBIT margin
MIPS is a market leader in helmet solutions protecting the brainagainst rotational motion
Patented technology based on over 20 years of research and testing, partnered with some of the world’s leading researchers from KTH and Karolinska Institute
MIPS operates as an ingredient brand, with leading helmet brands as customers including Bell, Fox Head, Giro, Scott, Smith and Trek
MIPS BPS1 is an easily implemented safety feature, which offers helmet brands incremental safety performance and allows higher price points
MIPS in brief60
activebrands2
300+ models sold in 20172
4 8 8 1528
4560
2011 2012 2013 2014 2015 2016 2017
15 23 30 66121
212302
2011 2012 2013 2014 2015 2016 2017
Note: 1. Brain Protection System.2. Based on sold MIPS BPS units during the period. 3. CAGR for the period 2014 to 2017. EBIT margin 2014 was -89.7%.
104% sales
CAGR3
14 43 67 279
1 0461 671
2 320
2011 2012 2013 2014 2015 2016 2017
5.4m+units sold
(2017)
Thousands
2
Q2 Highlights
• Net sales growth at +52% in the quarter, +53% organic growth adjusted for currency effects
• Good growth momentum in all three key categories• Continued high inflow of projects and discussions with brands on how to
penetrate their range further• Virgina Tech University in the United States, validating the MIPS technology • Adjusted EBIT 39.0%, legal cost of SEK 2.9m included• Good progress towards 2020 target
4
Update on litigation situation
• As announced in previous Q1 report, MIPS received a judgment from the Canadian court on 8 May concerning the patent dispute with Bauer regarding MIPS patented helmet technology.
• MIPS and Bauer in agreement and all legal matters relating to the dispute now concluded
• MIPS agreed to a conciliation agreement with POC Sweden regarding the patent dispute on 19 April as communicated earlier
• MIPS is currently not party in any other patent disputes
5
3
14 13
20
10
24 21
32
21
37
27
41
24
56
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018
Q2 Net Sales development
• Strong growth in the quarter +52%, organic growth +53%
• Good performance across all three key categories Bike, Snow and Motorcycle
6
Net Sales development (SEKm) and quarterly growth rates*
*No quarterly growth rates available for 2015’
274%
70%69%
55%
105%
55%
29%
29%
12%
52%
MIPS Group (SEKm) Q2 18 Q2 17 % YTD 18 YTD 17 % FY2017Net sales 55,6 36,6 52 79,1 57,7 37 125,6Gross profit 40,9 27,6 48 58,2 42,6 37 93,3Gross margin % 73,6 75,3 - 73,5 73,8 - 74,3Adjusted operating profit (EBIT) 21,7 11,5 88 23,4 13,1 79 27,8Adjusted operating margin (EBIT) % 39 31,5 - 29,6 22,7 - 22,1Cash flow from operating activities 5,9 0,0 N/A 14,3 3,9 266 11,1
Q2 in figures
• Net Sales increased +52%, currency adjusted +53%
• Gross profit up 48%, gross margin down with -1.7 p/p
• Higher Opex• legal costs of SEK 2.9 m included• strengthening of organization• continued investment in product
development
• Adjusted EBIT SEK +21.7m, 39.0% adjusted EBIT margin
• Cash – Good improvement in operating cash flow
7
* Adjusted for items affecting comparability (IPO costs) Q218 SEK 0.0m (0.5), YTD18 SEK 0.0m (7.0), FY 2017 SEK -7.0m
Q2 Gross profit and margin development
• Gross profit up 48% to SEK 40.9m• Gross margin down -1.7 p/p vs.
Q2 2017 to 73.6%• Different sales mix key reason for the
lower gross margin
88
1.3
8.9 8.9
15.5
6.2
16.915.2
23.4
15.0
27.6
20.1
30.6
17.3
46.5%
64.3%
70.6%75.8%
60.4%
71.6%71.8%
74.2%
71.1%
75.3%
73.8%
75.2%
73.3%73.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
-3.4 -1.6
7.4 0.7 3.1
-8.8
11.8 9.8 3.9 0.0 6.3 0.9 8.4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018
40.9Gross profit (SEKm) and gross margin development
• EBIT increased with SEK 10.7m to SEK 21.7m (SEK 11.0m)• EBIT increased with 97%. EBIT margin 39.0%• Adjusted EBIT improved with SEK +10.2m to
SEK 21.7m (SEK 11.5m)• Increase in adjusted EBIT mainly explained by
higher sales partly offset by:• litigation cost• strengthening of organization • initiatives within product development -4.1
1.5 1.6 3.8
-3.3
7.4 6.4
13.7
1.6
11.5
0.1
14.6
1.8
21.7
11.2%
12.7%18.9%
-31.8%
31.2%30.3%
43.5%
7.4%
31.5%
0.3%
36.0%
7.6%
39.0%
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
-50.0%
-30.0%
-10.0%
10.0%
30.0%
50.0%
70.0%
90.0%
Q2 Adjusted EBIT margin development
9
Adjusted EBIT (SEKm) and adjusted EBIT-margin development
-149.6%
-3.4 -1.6
7.4 0.7 3.1
-8.8
11.8 9.8 3.9 0.0 6.3 0.9 8.4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018
Q2 Balance sheet and cash flow
Key balance sheet items and cash flow Cash flow after operating activities (SEK m)
• Deferred tax asset SEK 4.5m at the end of the quarter, down SEK 7.0m vs. same period last year
• Strong improvement in operating cash flow mainly from higher EBIT
• Cash and Cash Equivalents at SEK 191.9m, Equity ratio 87%
10
-3.4-1.6
7.4
0.73.1
-8.8
11.89.8
3.9
0.0
6.3
0.9
8.45.9
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018
MIPS Group (SEKm) YTD 18 YTD 17 FY2017
Total Assets 271.8 229.8 242.2Equity 236.1 210.4 220.6Equity ratio % 87 92 91Cash & Equivalents 191.9 175.2 179.8Deferred tax asset 4.5 11.5 8.7
MIPS Group (SEKm) YTD 18 YTD 17 FY2017Cash flow from operating activities
14.3 3.9 11.1
Summary
• Strong sales growth with +52%, +53% organic for the quarter
• Continued focus on increasing penetration with Customers in their range, good inflow of projects
• MIPS functionality validated by external institutes• Awareness and interest for MIPS increasing• Good progress vs. our 2020 plan
11
*Q218 LTM Adjusted EBIT includes SEK 17.7m legal costs relating to company’s litigation processes.
57 67 75 87 97110 117 126 128
147
7%
14%
19%28%
30% 30%23% 22% 22%
26%
0%
10%
20%
30%
40%
50%
0
50
100
150
200
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18
Last 12 month rolling
Net sales Adjusted EBIT margin
Disclaimer
12
Important message from MIPS AB▪ This presentation has been prepared by MIPS AB (publ) (the “Company”) solely for use at this presentation and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities. By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. ▪ Statements in this presentation, which are not historical facts, such as expectations, anticipations, beliefs and estimates, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements.▪ This presentation may contain various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or similar expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the Company’s control and may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements. These risks include but are not limited to the Company’s ability to operate profitably, maintain its competitive position, to promote and improve its reputation and the awareness of the brand, to successfully operate its growth strategy and the impact of changes in pricing policies, political and regulatory developments in the markets in which the Company operates, and other risks. ▪ The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. ▪ No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of the Company, or any of its principal shareholders or subsidiary undertakings or any of such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.
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