Thule Group AB (publ) (THULE) Earnings Call Transcript & Summary

Hello, everyone, and thank you for joining the Thule Group Interim Report Q4 and Annual Report 2024 call. My name is Marie, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Mattias Ankarberg, CEO and President, to begin. Please go ahead.

Thank you very much, and welcome, everybody, to this Q4 call. I am also here joined by Toby Lawton, our CFO, and we will do this presentation together followed by Q&A. And as usual, we will speak through presentation that will be available on our Investor Relations website. So let's start off on Page 2. We've had a good year. It's been really busy to say the least, but it's also paid off. This is a year where we are back to profitable growth despite the market being still challenging. It's the biggest product launch year in Thule history, more new products than ever. We have also entered 3 new product categories. In the beginning of '24, we launched dog transportation with the first product, Thule Allax dog crate. During the year, we have launched child car seats in Europe. And during Q4, we acquired Quad Lock, the global market leader in performance phone mounts. We're also busy getting even closer to the consumer and added as one of those initiatives, 5 new DTC markets via thule.com. We are proud to be recognized for our product design. We have received more international design awards, Red Dot and iF Design this year than ever. And we -- our team also won the Red Dot Design Team of the Year earlier in the year. And just recently, we were ranked highly in the Morningstar Sustainalytics, sustainability rankings. In fact, Thule was ranked 1 of the top 50 companies in the world according to this assessment and #1 in the world of all consumer durable companies. So a busy and a good year for us. Turning to Page 3, looking more closely at the results and starting with the quarter. It is clear that the fourth quarter is our smallest quarter due to seasonality and doesn't impact the total financial results for the year so much, but still it was a good quarter for us. Growth of 7% versus the year before. We continue to see a generally tough market, particularly in North America and in RV, and we'll get back more to that later. The growth is really driven from the acquired Quad Lock business and new Thule products. EBIT margin increased a bit, 0.4%, and EBIT was SEK 65 million versus SEK 53 million last year. Zooming out to the full year, we had a growth of 5%. The market conditions I just mentioned are valid largely for the full year, too. And on the full year basis, it's really new Thule products and bike-related products that are the main growth driver of those 5%. We ended the year with an EBIT margin of 17%, which is 0.5 unit better than last year. It's an all-time high gross margin of 42.7%. And part of that is offset by higher SG&A costs due to the many product launches we have done this year. Still ending up with an EBIT margin at 0.5 unit above last year and an EBIT of SEK 1.6 billion. Strong cash flow from operations, and we have beaten the target to reduce inventory by SEK 200 million, which is, of course, contributing to that cash flow. The Board is proposing a dividend of SEK 8.30 per share, which is in line with the financial target of distributing 75% of net income and continues to give us lots of firepower to continue to invest in growth for the future, and we will get back more to that later on as well. Zooming out a bit on Page 4. Thule has been a growth company for many years. This chart shows the development since the IPO in 2014. And we had a peak or a boom during the COVID years and 2 decline years following that. So it's nice to see that we are now back to profitable growth. Sales for the full year is up 5% and EBIT SEK 1.6 billion. And we do that despite investing more than ever in product development. In fact, we have invested more in money than ever before and about the same in percent of sales for -- we ended up the year of spending 7% of our sales on product development. This has also, of course, given positive effects for the growth in 2024. This will also have positive effects for the growth in the coming years. And in fact, when we look at our product portfolio -- product development portfolio pipeline right now, we are right now running more new product development projects than we have done ever before. So with that said, I'd like to spend a bit more time on the specificities of the product categories. We are a product category, and let's have a look at the performance of the different product categories, both for the quarter and for the year, starting off on Page 6. So our biggest product category, Sport&Cargo Carriers is really driven by bike-related products for the quarter and for the full year. The category increased sales by 1% organic for the year and 5% for the full year. The bike market has developed positively. But clearly, this is also an area where we see good growth from new Thule products. So we had a strong start for this autumn's released new vertical hanging bike carrier Thule ReVert, which is mainly addressing the North American market. We did a soft launch of our upgraded bestseller Thule Easyfold during the autumn too, which also had a really nice start. We do continue to see more generally for this category, which also includes other major subcategories like roof racks and rooftop boxes, for example. A tough market of cautious consumers and retailers, particularly in North America. We do see that the bike market in Europe is back to healthy inventory levels. And the difference -- main difference why the quarter is showing a lower growth number than the full year is that the bike-related products account for a smaller share of the sales in the fourth quarter. Fourth quarter is a winter quarter and less people bike in the winter. But overall, a good 5% growth for the full year driven by bike-related and new bike products. Packs, Bags & Luggage is a story of 2 parts. Net sales decreased for 7% in the quarter and 2% for the full year. As we've done for several quarters, we continue to see growth in Thule branded products, and we continue to see that growth driven by new Thule products. So in the quarter, we see good growth in the newly launched luggage product, Thule Subterra and the new updated duffle bags, Thule Chasm. We see good growth, continue to see good growth in the quarter in bike bags and bike-related bags. But as for the previous comment, bike is a smaller share of the fourth quarter. The decline is driven by legacy products as we continue to wind them down and exit legacy business. And net effect of that is minus for the quarter and for the full year. Our best-performing product category in terms of growth, both for the quarter and for the full year is Juvenile & Pet, where we have done a lot of new things. Growth is 14% for the quarter, organic and 10% for the full year. We launched a new generation of our best, I would say -- sorry, of our strong all-terrain stroller Thule Urban Glide 3 that was launched during the first quarter of the year. And we've seen good growth from that category since then. That continued also into the fourth quarter. And we have seen several other product upgrades also supporting growth. However, this is an area where we've also launched completely new Thule product categories. So we launched the dog transportation in the beginning of the year with our dog crate Thule Allax as the first product, and we continue to add to dog transportation with the launch of the dog trailer -- dog bike trailer Thule Bexey in the autumn. And we've had a really good start for dog transportation products. In fact, it's the best first year sales of any category introduction in the history of Thule. So it's clearly contributed to the growth in this area. We also launched car seats starting in May in the German-speaking countries, Germany, Austria and Switzerland, continued throughout the autumn and had a really intense fourth quarter with introducing to the car seats in 20 European countries in the fourth quarter. Our fourth product category is RV products, where we continue to see a challenging market. The industry is going through a tougher period. It is as it was in the last quarter, a story also with 2 sides. On a positive note, there -- it continues as of starting of Q3 to be growth in the aftermarket channel that is the sales to the dealers that are closer to the consumers who are still keeping a high interest in the RV business and are now also buying products more than a year before. However, there is a lot of inventory in the market and the OE customers have reduced their production plans during both the third and now continued into the fourth quarter to manage inventory levels in the industry. Hence, weak sales to the RV OE channel and that the decline is bigger than the growth in the aftermarket. Net sales comes to be 7% negative for the quarter and 3% negative for the full year. Can also comment that RV product is typically and particularly OE, a high share of sales in the quarter for Thule. That was some detail on the product categories, both for the quarter and the full year. Let me also present a few of the highlights for the quarter. On Page 8, as mentioned briefly before, we have continued to launch car seats throughout the year, and this was the most intensive quarter in terms of launch where we introduced the products to over 20 European countries. We have had a sequential launch starting in May, followed by Benelux in September and then now over 20 countries in Europe. We are really proud to be recognized for having the safest child car seats in the market. And we are really proud to be able to have that recognized by the most important consumer test in the market, the German StiWa or ADAC test. That was, of course, a very good milestone for us and also a good reason for us to really launch in a very intensive way in the fourth quarter. We were having events with all major retail partners. We had PR events in 10 cities, and we had a good reception from both retailers, but consumers and also media, which we're really proud about. So more to come. Now we are launched in Europe. We continue to build the category going forward. And for 2025, we will, of course, address this more with sales and marketing efforts and continue to work with our partners to get the Thule products in front of the consumers, but also add new products. And there will be a high back booster seat, the product for the somewhat older children released during spring 2025. So that was an intense initiative for the company. And another important event was the acquisition of Quad Lock, the global market leader in performance mounts, performance phone mounts, which we announced in November and completed in December. And Quad Lock, just as a quick reminder, is the market leader in 3 specific segments in the market, performance phone markets for bicycle, clear #1 for motorbike, clear #1 for off-road drive. It's a company founded in 2013, so fairly young still, turning almost SEK 1.5 billion, 25% EBITDA, sales in over 100 countries and fairly distributed footprint around the world and strong in DTC. So the Quad Lock digital business accounts for about 75% of the total sales. And turning to the next page. The main reason we acquired Quad Lock is that it's a really strong fit with Thule and the strategy that we are executing on going forward. And there is a lot more information on this in previous events. But just to summarize, the 3 pillars that we really build on and that Quad Lock meets is that we focus on market leadership in attractive categories. Quad Lock is clearly the global market leader in performance phone mounts as also shown on the previous page. It is, in a way, the category-defining brand in the market, and it's the most recommended brand in the market by consumers and has the widest offer. It's also a category which is attractive. There's about a 10% growth rate in the category and consumers choose product based on robustness, quality, safety and ease of use, all things that are close to our Thule territory. So it's a good fit, clear market leader in an attractive category. It's a company that is also building its future on product-driven growth, which is very similar to or exactly as Thule philosophy. Quad Lock has a really strong track record of innovation, expanding the portfolio, starting a bicycle into off-road car, motorbike, marine and more areas. It is a clear market share winner in previous years and has a strong product development team in place with much more to come. It's also a very good fit with the Thule brand and the culture that we have. We have very many similarities between the consumer base of Thule and Quad Lock, both target outdoor enthusiasts, willing to pay premium for the best product. Both brands are in the eyes of the consumer associated with quality, safety, enabling an active life. And we also are happy that we have a very strong cultural fit between the few teams. So Quad Lock acquired during the fourth quarter, which is, of course, another important event for Q4. And then lastly from me before I hand over to Toby to cover the financials. We are proud to be recognized for the long-term and ambitious sustainability work that we are doing on Page 11. We have some pretty ambitious goals in place, including reducing our CO2 equivalent footprint according to the SBTi goals. We've seen a good development over several years, which we continue to work hard on and improving, not the least by new products, which have a lower CO2 footprint. And it's also nice to be recognized for that work. And I think the team has done a lot of good things, and it's a good recognition to be among the top 50 out of the Sustainalytics ranking globally. So with that, I hand over to Toby to cover some of the financial aspects.

Thank you, Mattias. Good morning, everybody. First, I'll start with Slide 12. And here, you can see the sales by quarter over the last 6 years for Thule Group. And as you can see, firstly here, of course, the last quarter, as Mattias said, is the smallest quarter. This is the low season for Thule, so it's worth remembering that. The second point, I think we had 7% growth in quarter 4. It's a good growth. And of course, it's been helped by Quad Lock, which has been consolidated since the acquisition was closed on the 4th of December. So we basically got 1-month impact from Quad Lock in the Q4 results. And thirdly, then organic growth was flat or slightly down, as Mattias has said. It's basically the same trends as we've had before, but the business impact is a bit different. And the main effects there are coming from the bike season that is a weak bike season in Q4. People don't ride their bikes as much in the winter and the bike season or the bike business has been driving growth all year. And the second point is really the RV is normally a bigger share of sales in Q4 and RV is a weak point. And even within RV, we have 2 channels and the OE channel of RV is the weaker channel, and it's the OE channel, which is normally bigger in Q4 as well. So all those mix effects contribute to the overall mix in the organic growth rates. Also worth noting in Q4, we have a weaker growth or weaker growth from Americas versus Europe. Europe is stronger in Q4 this year. If you look back a year, it was the other way around. So to some extent, that mix just in the fourth quarter is due to comparables. But obviously, for the full year, the story still stands that we're stronger in Europe and we are basically flat in Americas in terms of growth. If we come to Slide 13, the income statement. And here, firstly, if I point to the right-hand side at the top, you can see the revenue, and we had SEK 9.5 billion of revenue in 2024, and this is 4.5% growth versus prior year. Yes, the organic growth then is 3.5%. And then in Q4, we had 7% growth, of which the organic growth was, as I said, flat or slightly down. If we just look a bit further down to the gross margin, here you can see we had a gross margin in the fourth quarter of 41.6%. And for the full year, we had 42.7%, so a good increase versus last year. And you can see in all quarters, we were up on last year. So that trend has been carrying on through the year and is impacted positively by our product mix, our increased volumes and the increased volumes coming through the business and being manufactured by Thule are driving a steadily lower manufacturing cost. And also in quarter 4, you could say the product mix is helped by the acquisition of Quad Lock, which is positive on gross margin. If we move down to EBIT, you can see we now have a line called adjusted operating income. And here, we are excluding the one-off transaction costs of SEK 100 million that we had for the Quad Lock acquisition, which have been taken in Q4 '24. When we look at the adjusted EBIT margin, you can see for the full year, we end up at 17.0%, which is 0.5% up on the prior year. And this is really driven by the improving gross margin that we've been driving, somewhat offset then by the investments we've been making in -- basically in selling expenses, as you see here. And those investments are primarily in development where, as Mattias showed, we've invested in development this year for future growth. We've invested more than SEK 650 million in development this year, but also marketing, supporting the new products and new launches. Finally, the effective tax rate is 22.5%, so same as last year. And the net income for the year is, yes, SEK 1.122 billion. If I just turn over then to the cash flow and a couple of minutes on the cash flow, firstly, the cash flow from operations has been at SEK 2.3 billion for the year. So another strong cash flow delivered this year. A good contribution from the underlying operating results, of course, but also another good contribution from reducing inventory further during 2024. And we had a reduction of nearly SEK 500 million versus SEK 200 million target that we set for ourselves. And I can also say here, we are targeting a further SEK 200 million on inventory reduction in 2025. And finally, then the last line or second last line you can see here is the CapEx, and we had CapEx of SEK 263 million for the year, so stable similar level to last year, slightly under 3% of revenue. And if we turn to the next slide, Slide 15. And here, you can see our net debt and also our leverage or net debt to EBITDA and, of course, having made the Quad Lock acquisition in Q4 and funded that acquisition, the net debt has increased due to that in the fourth quarter. But with a good underlying cash flow of the business, I think we come out with a leverage at the end of the year of net debt-to-EBITDA of 1.83, which is lower than we actually guided for in -- at the time of the acquisition due to good cash flow in Q4 and is also very much in line with historical levels of leverage. So a normal level in line with historical average. And I would say just to mention here that when we measure net debt to EBITDA, we've obviously got the full net debt included for the Quad Lock acquisition and we also include the 12 months of EBITDA on a pro forma basis for the acquisition, which is a normal way to measure your leverage following acquisitions. And if I just turn to the next page, Page 16. Here just to show some history on dividend as well and our proposal on dividend, which is SEK 8.3 per share. This is 75% of our net income, which is in line with the financial target, which has been in place basically for the last 4 or 5 years. You can see it's worth noting that last year was a little bit higher. The leverage last year was a bit lower than the historical average. So we decided then to have a slightly higher dividend level. But this year, you can say the leverage is in line with historical average, and we followed the financial policy as we've done most years. And I think more importantly, it's a good dividend with 75% of net profit, but we also continue to have a good balance sheet and the capability to continue investing in our future growth plans. So with that, I will hand back to Mattias.

Thank you, Toby. That concludes the 2024 part of this presentation. Let's spend a few minutes looking forward into 2025. And as we enter '25, we have a long-term view on the business, as always at Thule, and we continue to drive our long-term growth strategy. We are well positioned in what remains to be -- what remains still a challenging market. When we look at market conditions as we enter this year, we continue to see a challenging market in North America and for RV OE, specifically. It is a better market in Europe, in general, and it is a better market for premium bike-related products. And as we've said and seeing all year, we are pleased to see that new Thule products drive growth also in a tougher market. On the note of tariffs and other uncertainties, it's also worth to mention that most of what Thule sells is produced in our own factories. We have factories both in Europe and 2 factories in the U.S., and we have production of our most important sales -- product sales-wise in the U.S. are produced locally in the U.S. And we also have a wide portfolio of offers. So we have the opportunity to limit supply chain uncertainty, including tariffs, if that would arise. We have set for ourselves 4 clear priorities for 2025. Firstly, if there's one thing we learned from 2024 is that new Thule products drive growth even if the market is tough, and we see the results of that also on the bottom line. So we will continue to put our foot on the gas also for 2025. We will continue to invest in product development. We will keep the record launch pace that we've had in '24 also for 2025. And we will have a more front-loaded launch plan. That means we will launch more products earlier in the year compared to 2024. And the reason is we want to capture more of the high season with our new products that are coming out in 2025. Secondly, we have an ambition to be successful in more categories at the same time. In '25, we are focused on scaling up what we have launched and acquired in '24. You will see new products in dog transportation coming in Q2. You will see a high-back booster seat in car seats and child car seats coming also during the year. And we will, in partnership with the Quad Lock team, continue to invest and grow that performance phone mount business through new products as well. So many things to do to build a stronger market position in the areas we just have entered. Thirdly, we know we have -- we want to be closer to the consumer and more visible for the consumer. We know that we have many customers that really like Thule products, even our fans, but few are aware of the full offer that we have as a company. So we are focusing on showing more to sell more. We are continuing to focus on expanding our DTC presence, and you will also see some new marketing activities for us during 2025. Lastly, an important area is to continue to run efficiency throughout our supply chain. We have a strong in-house footprint, as we mentioned before. And we can clearly see that when we have improved efficiency over the last 2 years, we get funds to invest in growth. And as one clear target, we continue to aim to reduce the inventory levels also in 2025 on the back of SEK 1.2 billion reduction during the last 2 years. So target is to reduce a further SEK 200 million in 2025. And as this is the fourth quarter presentation, therefore, a good look into next year. I thought I'd mention just a few more highlights of what is coming ahead here as we are soon looking into high season. So on Page 18, this is examples of products that we are launching in 2025. And the headline is very clear. The high launch pace continues. We will continue to focus on upgrading versions of our best-selling products. That means many of our best products are getting upgraded. And a lot of that will happen in our core categories, Sport&Cargo Carriers, that is rooftop boxes, bike carriers and other big products. But we'll do the same also in bags and actually in RV and in Juvenile & Pet as well. We wouldn't be Thule if we wouldn't be aiming to launch some real innovations also. This year, we will see innovations more in our core Sport&Cargo Carrier category, excuse me, and I will get back to that in a minute. And as mentioned previously, we will also launch new products in our new product categories. You will see a crash-tested dog harness called Thule Cappy coming in Q2; a high-back booster seat, as mentioned, Thule Palm; and an extended version of double-door version of Thule Allax, the dog crate coming towards the end of 2025. And as we are now already in Q1, and I'm sure many are eager to go out and shop some Thule products. I thought I'd give you a highlight of some things that are either probably in a store near you or very soon to be in a store near you. So Thule Force is our best-selling mid-priced rooftop box. 2024, we upgraded Thule Motion, our best-selling premium rooftop box. And this year, we are upgrading our mid-priced rooftop box. It will get a new design, better aerodynamics, a new lock mechanism and lots more accessories to be launched at the end of quarter 1. Thule Glide is our award-winning running scroller, which we clearly think is the best one in the market. That will also get a new design. Several improved features that help the child to be more comfortable, actually also the parent to be easier to keep the child safe and in place, but also for the child to get in and out of the stroller and it will also be launched during the first quarter. And as an example of an innovation we are launching also in the first quarter Thule Santu, which is an innovation in the area we call rear of car, which we believe a lot in for the future. Thule Santu is a product that allows you to transport both your bike and cargo at the same time behind the car. It's also constructed in a way that the box can be used with many, many of the bike carriers already in the market, Thule bike carriers that is. We really look forward to this launch, and it is actually already arriving in the first stores as we speak. So in all, to sum up, the forward-looking part, we are getting ready for high season. We will have more product launches in Q1 than we've ever had before. We will add new thule.com DTC countries, and you will see new marketing campaigns coming out in '25. We're also just about to enter the peak production period for the company and that means basically all areas of the companies are really busy, and we have lots of high energy throughout our organization and excited about what's to come in 2025. And with that, we turn to moderator to take questions.

[Operator Instructions] We have a question from Fredrik Ivarsson of ABG.

I've got a few tricky questions. I'll take them one by one. And now it was, I guess, a lot of moving parts with Quad Lock and you helped us with most of it, but would be sort of helpful also to get some sense of the gross margin in Quad Lock, both for the quarter and on a full year basis, just to get some sense.

I mean Quad Lock is clearly positive to the gross margin of Thule. We're not giving out specific figure on the Quad Lock, but it's part of the mix shift within our gross profit margin that's driving improvement in gross profit margin. But I would say it's not the biggest part of the improvement, but it's a part of that improvement. The biggest part is the underlying business where we're getting improved product mix and improved manufacturing cost and volumes driving transformation costs, but it has a positive impact, absolutely.

Okay. Fair enough. And then as we look into 2025, how should we view the key drivers of the legacy Thule gross margin the way you see it?

Yes. Well, I think we had an improving gross margin trend through 2024, and that's come through improving volumes, as we said, an improved product mix. We expect to hold on to and continue that journey basically. We have some price increases coming in 2025, but we don't -- you could say some of the increase during 2024 has been kind of catching up on the manufacturing cost after the pandemic, which has driven an improvement. So it's a kind of a big improvement in 2024, but we are definitely investing to drive -- maintain and drive our gross profit as well.

Yes. Good. And then next question on bike-related sales. You mentioned that the recovery continued in Q4. Where are you now in terms of kind of normalized levels? Are you some -- are you still sort of on some kind of recovery out? Or do you feel that you're back on normalized levels now? Should we view next year as more of a normal year in terms of bike-related sales? Or yes, basically, where are you here?

Fredrik, Mattias here. Europe is good. And in the premium end, we're talking about here where we play. It's actually been fairly good since, I would say, mid '23, and it's sort of gradually improved a bit from there. But that was sort of the -- after that high season was good for bike-related. So Europe is in a good place. Premium bike is in a healthy inventory balance. North America is still a bit of a different story. I would say the big retailers have a good inventory position when it comes to premium bike-related products. The North American market also has a fairly large share of its distribution, which is what's called independent bike retailers, smaller enthusiast shops, mom-and-pop shops, and they still have lots of inventory. Some have inventory for years post this COVID boom and low consumer demand for -- since then. But Europe is in a good place. And North America is getting there, but behind it.

Okay. So still some upside in North America. That's good. And then last question from my side on the product development costs. You mentioned SEK 650 million in 2024. Is that a good number to have in mind as we look into this year as well?

I can say it was more than SEK 650 million. It's actually about SEK 670 million in 2024, which is 7% of revenue. And as Mattias said, we plan to continue to invest to drive future growth. So at around the same proportion of revenue.

We have a question from Gustav Hagéus, SEB.

If I might start with the market in U.S. on sort of bread and butter categories, through roof racks, roof boxes, is it your opinion that you've kept market shares flat or increased them or decreased them in 2024 in that specific vertical?

Gustav, Mattias here. Yes, for roof -- I'll take the big ones. For rooftop boxes, we maintain market share basically. We have a very strong position in rooftop boxes in the U.S. There could be some fluctuations around that high number, but we maintain that. For bike carriers, we're also strong and #1, but there is more competitors and also more data available. We actually take market share in 2024 and quite substantially so, but still it's been a tough market for -- yes, for North America and bike not the least.

And roof racks, is that not, I mean...

I'm sorry, roof rack is in a similar territory as rooftop boxes, where we also have a very strong presence and then hold our market share.

Okay. And then you mentioned you're running more products -- projects currently than ever historically. And given that you now started sort of [indiscernible] in the mid-price segment a little bit more with the Thule [indiscernible], could you give us a rough sense of the share of those products that you're currently running in as project that you aim to target the mid-price rather than the upper price level?

Sure. I'll do a brief overview at least. I would say that if we start with a little bit of a historical context, Thule has always played in sort of the mid-price or upper mid maybe and the premium end. During the pandemic, there was a lot more focus on premium. We could sell anything we produced basically and the premium got more attention. So now we are addressing some of the mid or upper mid segments that haven't been addressed for a little while, which are quite big volumes actually and an attractive opportunity to do some work on. Looking forward, the balance that we will have when we come out of '25 is pretty much what we look to have going forward as well. So it's so many categories for some product levels, but we are more in premium than we are in mid. I guess it depends on how you put the numbers together, but probably a 70-30 or something like that. And that's a good balance we feel going forward as well. Thule makes -- we aim to make the best product in the world that is easiest done in the premium end of the market, but we also address the upper mid or the mid-priced segments where we see that there's a good business logic and good business volumes. So that's the reasoning behind the activities we are driving right now.

And if the way you look at organic growth in 2025, does that assume positive mix?

Positive mix in what respect do you mean from?

To the organic growth, your organic growth assumptions that you have internally, I guess, are based on volume price/mix assumptions. Do you assume that mix will be positive for Thule in 2025?

Yes, it will be positive for '25, if you would look at volume and average net selling price. But you also have -- the way we look at it is simplified, just like you described, volume and average net selling price, but it's also true that when we upgrade mid-price products, we drive average net selling price. Let me give you an example. The most sold bike carrier we have is called Thule Easyfold. And we are now rolling out an upgraded version of Thule EasyFold Generation 3, which we, by the way, highly recommend everybody to buy. And it's a better product. It has 50% less CO2 footprint and several other positive aspects, but its average net selling price is EUR 100 higher than before, EUR 949 versus EUR 849 for a Thule bike. So that's a 12% price increase for a mid-priced product. So we will drive mix effects also within the mid-price segments, if that is clear, Gustav?

Yes, that's clear. I was more thinking maybe consumers trading down to mid versus premium, but it doesn't sound like that is your thinking. And if I may take just 2 more. First, if you could give us an update on your view on the launch for the new categories in the states, if that has changed? Or if you can update us on the rollout plan for car seat in particular to the state? And then if you're currently working on the additional categories that you will likely to give us some idea what the next steps will be for Thule maybe in 2026, that'd be interesting.

Sure. So we launched car seats now in basically all of Europe, and it's a European product, as you know, Gustav, according to European Regulatory Standards. We have a North American product development initiative going on since a few years. We -- there has been a new regulatory framework set, and we are still trying to see how the market reacts to that in terms of commercial offers. What we have said is that we will not launch in 2025. It will be later, and that message still holds. We have not set a new time line, so we will not do it today either, unfortunately. And on your second question, yes, we are working on new product categories. That is some of the initiatives that we now currently have ongoing. We don't foresee to launch any new product category in 2025. And of course, the boring answer is that we can, of course, not in this call, release a new product category for '26, but news will follow when the time is right.

We have a question from Carl Deijenberg of Carnegie.

So I'll come back to -- I wanted to ask on Quad Lock again. And then I heard what you said on -- and also the sourcing and production structure there in, let's say, core Thule. I recall also, Quad Lock coming quite significant sourcing from China, if I am correct. Could you talk a little bit about that on the tariff side and U.S.-China issues right now that have any impact on Quad Lock...

Yes, I can take this. A little bit hard to hear you, Carl. Just I think I made out the question. So yes, we have obviously the newly acquired Quad Lock business. They source from China, but not only from China, so China and other manufacturing suppliers in basically Asia primarily. So the tariff on China does have some impact. What I would say is they have strong gross margins and the product cost is not a big part of the cost in the P&L. So it's not -- it's a percentage on a small number. So it has some impact, but it's not a big impact.

Okay. Okay. Then I also wanted to ask, coming back a little bit to the comments you made on RV, and I appreciate the comments on the aftermarket business. But I wanted to hear a little bit on what you're seeing on the OE side right now. I mean based on the discussions that you're having with the customers there, do you appreciate that we are, let's say, close to the trough now in Europe? Or what are the tones in the industry going into '25?

Carl, Mattias here. It's an interesting one. And we should just remind everybody that our RV business is virtually European business. So we have knowledge of that market, of course. Yes, we see that basically the same trends that were in place in Q4 continue in Q1. So our view is that we will continue to see growth in the aftermarket channel in Q1. Consumer interest is actually fairly high in RV and has been throughout '24, and there were some big fares now in the beginning of the year, which have high attendance in line with previous years, but too much inventory in the market and with the production -- the reduced production that we have seen in the OE in Q4 will continue also in Q1. Everybody's hope in the industry, which we believe also is the most likely outcome is that these production stops will lead to a more balanced inventory situation as the high season kicks in when spring comes. And hopefully, the industry is then in balance and can start looking at flat and, therefore, on growth as an industry.

Okay, very well. And then just finally, I wanted to ask a little bit on the CapEx development. I mean as you pointed out there, I mean, they've been quite unchanged year-on-year '24 versus '23. Just wanted to hear a little bit your views going into '25. I mean, I guess the CapEx needs in Quad Lock is nowhere as significant as, let's say, the core business is, let's say, a similar number in terms of sales. Is that what we can also expect for this year? Or is there reason to believe anything else?

Yes. No, we don't have any formal guidance, Carl, but yes, I think we invest, like I said, a bit less than 3% on revenue. We invest a lot in developing our factories in automation and other things to drive improvements in manufacturing costs and to grow volumes, but we don't expect a dramatic change, no.

We have a question from Daniel Schmidt of Danske Bank.

Mattias, there'll be a couple of questions from me as well then. Just coming back to Quad Lock a bit more, you've had -- you've owned it now for 2 months. Could you, first of all, say anything about the growth or how did sort of December develop compared to December last year? What was sort of the exit growth rate for Quad Lock heading into '25?

Daniel, Mattias here. No, I think Quad Lock had a growth rate for most of '24, which was around that category growth we've seen of 10%. I mean Quad Lock has been a market share winner, so a little bit maybe better. And that has continued basically throughout the year, and we continue to see that same trend also now as we wrap up the year in December. So it's not an easy marketplace for any consumer company, but a good growth throughout the year that continued also in December.

So then double-digit growth also in December. Is that what you said?

Yes.

And I recollect that December is a very small month. I think Toby said that it is the smallest month of the year normally for Quad Lock. And if I got you right, you had it consolidated for 27 days. It did look like it was even potentially more than 10% growth, but that is what you're basically saying that is sort of the run rate into '25. And given that you're also saying that Quad Lock is very much a product-driven growth company like yourself, how do you view sort of the pipeline, so to speak, when it comes to Quad Lock product launches in '25 versus what they had in '24? What are you planning for?

Yes, you're right, Dan, about everything you said. And yes, there is a very good, solid product development pipeline also for Quad Lock for 2025. What you hear is right. It's a big team in place, over 40 development engineers in the Quad Lock team that is now also starting to collaborate with the Thule team, of course, to drive a lot of things. And yes, there will be some quite exciting news actually already now in Q1. But we and some have been launched. If you're a hard core mountain biker, you may have seen some of the stem mounts or the active -- some of these things, but we were thinking, Daniel, in all transparency to as of Q1 when we have a first full quarter of Quad Lock in our books to start to show you also some of the new products that have been released from the Quad Lock side. If you are curious, there is a Quad Lock website where you can search for news or call us.

Yes, yes. Okay. Okay. Good. Good. Just also coming back to the tariffs there a little bit, you charted it will have a small impact, Toby, and that is so far -- I understand that Toby, but are you also planning to pass on that effect to the end consumer?

No, I think -- yes, so far, it's still unclear, I would say, number one. And we do manufacture in the U.S. So we have a better position than virtually every competitor with regard to our ability to manage this. But yes, depending where it ends up, but there is some impact, and we do intend to mitigate that basically by price increases, depending where it lands as well. So to some extent, we have to wait and see. We've seen what's come for China, obviously, but other companies are unclear.

Yes. Okay. It's a moving target, simply.

China is not a big part of the sourcing in North America. So China on its own is not a big impact. But if it's much wider than China, then it starts to be a bit bigger number, of course. But still in the context of Thule Group, it's is not a big part of our cost base or our profit that's impacted.

Just moving on to another topic that we haven't discussed earlier today, but it's been coming out sort of you are establishing more offline stores and you've stated that it will be more -- even more in '25. What is sort of your target there? And could you shed some more light on that?

Yes, Mattias here. Yes, we have not many stores in general to give everybody the context. We have a few, not even a handful own operated, but we do have some partners who operate stores for us. And in total, if you look around the world, there are about 50 Thule branded stores. We think there is an opportunity to both improve the store format and present more of Thule in a more efficient way and with that also adding to the consumer experience in terms of support, service, repair, installation, et cetera. And we also see that in some of the cities, we have great consumer interest and good brand building and good sales in some of these stores. So we are adding a few. But in all transparency, part of that is also trying out the new, what we think is, better store format. We opened 1 store in Munich during the autumn, and we will open 2 more here in Q1 and 2 other in European cities. And yes, both to learn and to support our partners with an upgraded store format, so they can make more money, we can make more money and hopefully also see this as another growth opportunity to bring more of Thule closer to the consumer. But we shouldn't overestimate this initiative. We're not becoming a retailer or expanding a big owned store network. It's to address the specific opportunities that we see, yes, just as mentioned.

Yes. But the latest ones that you have opened, they are wholly owned Munich, Paris, Denver, Santiago or part of those franchise?

Let's see now than it was a few years ago. Santiago is a partner. Munich was this autumn, that's clearly us. Paris was just this other day, that's us. So it's a mix.

Okay. Okay. And then just finally, you clearly are very happy with the launch of dog crates, and it's been annualized in terms of sales now, and it's the best launch ever from a new category. Do you think that, that position is going to be overtaken by car seats when they annualize in May?

We hope that it will be overtaken soon. You have to remember when we were in May, we launched May 28 in 3 key countries only. So I think it's -- it looks -- I mean it's a milestone, which we're very proud of, of course, to have launched car seats in Europe. But for all practical purposes, it's, yes, few days in a few countries. So -- but give it a little bit more time than me, and we hope that the answer is a very solid, yes.

Okay. And just final one maybe. I am a little bit surprised that there's no change at all when it comes to the U.S. in terms of sentiment. Are you as well?

You mean from our numbers or the way we read the market?

Yes, I think both maybe. There was a comp base in Q4, but you have sort of flat numbers for the full year. And sort of in terms of your wording, it hasn't really changed when you talk about the U.S. now compared to 12 months ago.

Right. I get you. No, I think, again, we can be open. We may have commented or may not. But I think we did feel internally during the autumn that there were some lights in the tunnel, so to speak. You could see that consumer sentiment was picking up a bit and the discussions we had with our main retail partners, the big outdoor guys were, I think, starting to talk more about growth and growth opportunities than inventory levels and cost reduction. So we were seeing the conversation change a bit. And then, yes, when we now have a new President in place, there is, let's call it, lots of uncertainty among our retail partners. What about tariffs? What about cost? How will the consumer read these signals? Inflation has been high on everybody's agenda, I think, in the U.S. And if you read the statistics, the perceived inflation effect is holding the consumer purchase sentiment back quite a bit during 2024. So I think we were a bit more optimistic forward-looking. But then now we are saying it's a little bit harder to guess. I think over the next 1, 2, 3 years, for sure, we'll see a better market. But if that's gradual improvement quarter-by-quarter now or not is more difficult to see. So we decided to keep it simple and maintain the same general commentary around the market situation.

We have a question from Mats Liss from Kepler Cheuvreux.

Coming back to the organic growth, I mean, for the full year, you presented a 3.5% growth in the fourth quarter. It was close to 0. Could you give some indication there how much that related -- slowdown related to RV products? I mean other segments seems to maybe do a bit better, I guess.

Yes. I mean that's the message we've been -- Mats, Toby here. The message we've been kind of trying to give is the trends are the same in Q4. So it's not that the trends have changed. It's the mix that is impacting the overall growth rate primarily. So it's the fact that bike is weak, the fact that RV is a bigger share of sales in Q4 and RV is obviously the weakest point right now for us. And even within RV, also the mix that the channel that is normally bigger in Q4 is the channel that's most affected, which is the OE or the manufacturers, which are taking these production stops. So I think that's the picture. We don't see kind of a big change in the trends in Q4 from previous quarters. But it's -- the mix is different. And then always, I think, important to point out that Q4 is our smallest quarter. So it doesn't move the needle very much.

No. But I mean your bikes are slow in the fourth quarter every year. So I mean -- and RV is down quite substantially as it seems. So I mean, would the trend have been 3.5% in the fourth quarter as well? Or is it you adjust for RVs?

You would have seen a similar mix as in other quarters, Mats. You would have seen a similar total growth rate. That's correct.

Yes. Okay. Good. And then coming back to the new product a bit, I mean, so in car seat, you have -- is there any connection there between, well, parents choosing a stroller of yours? And are there more sort of inclines to choose car seats from you as well? Or is there no connection there?

There is some connection there. And there is a trend in the marketplace that I think is coming mainly from the U.S. and has migrated into Europe the last few years, young parents buy or parents to be buy bundles more. So car seats combined with strollers, they are designed to work well together and we had a lot of practical issues, but also design issues or not issues, topics. So it's a trend that came from the U.S. and picked up in, for example, the U.K., quite a lot in the consumer market a few years ago and they're now coming more across Europe as well. So clearly, the combination of having both is beneficial for us. Now we can have our own product to go with the strollers that we have.

But your car seat is sort of a flexible car seat that could be used with other stroller brands as well or...

Yes, it can. And other car seats can be used without strollers as well. And there are several adapter and connector solutions in the market and some also adhere to the same standards. But if you want the full bundle, it's now possible to get the full tool of bundle.

Okay. Great. And about the pet transport products there, I mean, you seem to have a pretty good trend in '24. And could the reason be that you have underestimated market opportunities there?

I think it's an interesting question, actually. And I think a little bit back to the strategy that we try to update or clarify. I think we shared that in some of the recent conversations that we acquired Quad Lock. We try to be big in pockets as we call it, but we try to be big in specific niches that suit us really well and that are attractive. And I do believe dog transportation is such a niche. I mean it's clearly pet safety is a team that is growing in society. People care about their pets almost as family members and want to keep them safe. The active and outdoor trend, a lot of people who like to be in the outdoors have dogs. People like to bring their dogs to things, and it's also a territory where we can, with our technological and innovation capabilities, bring the best possible product to the market. I mean the dog crate we launched early last year won the consumer tests basically right out of the gate. So I think it's a very good fit with the strategy, and we also had a great work by the product development team to bring out a really strong product and good work by the sales teams to quickly buy and cater some distribution. And we know we have some wins where the previous market-leading brands have been taken off of some of the shelves and Thule product is now on the shelves. So seems to be a good fit. And hopefully, the way we see it, a good growth category as well with positive trends around both pet and specifically thinking of pet safety.

Our last question is from Adela Dashian of Jefferies.

Just 2 quick ones from me. First on the strong growth in Pet & Juvenile. Was that entirely driven by the new product launches? And then if you could maybe provide us with an update on RV market. Did you see an improvement towards the later months or weeks of the quarter? And how should we view it as we head into 2025? Is it going to be a continuation of the weakness in the first half and then an improvement in the second half or weakness throughout the full year?

Mattias here. Let's see the first one was around, yes, Juvenile & Pet, yes. Yes, it is driven, I would say, fully by our new products. I mean there are 3 big drivers of that growth in the quarter. The Thule Urban Glide 3 that was launched earlier in the year is our -- but all-terrain stroller and our biggest stroller and has been giving really good growth all year. Number two, dog transportation, as we just talked about, is a very good first year for us, the best first year of any category. So it's clearly also supporting the growth. And then car seats, thirdly, which was rolled out in 20 more countries in Q4. So those are the actions that are driving this space. It's not an easy market in a lot of Juvenile and Juvenile retail right now, but we do a lot of things, and that's driving the pluses we see here. Secondly, on the RV market, trends are, I would say, very similar across both Q3, Q4 and what we expect for Q1. So we do see the aftermarket or the dealer channel, the one that's closest to the consumer, delivering growth quite nicely so actually. But the OE channel, the manufacturing side, is down quite a bit and more than the aftermarket is growing. And that's because these manufacturers are taking production stops or in other ways, reducing production output to manage all the inventory that is in the value chain that is RV. And we don't think that will change in Q1. We think that will continue for Q1 as well. And hopefully, by the time high season kicks in, in spring, then things should be in balance and we can be back to normal production levels and growth in the aftermarket channel.

That's super clear. And you're not seeing any at all changes to your market position or customers going with lower price guidance given the challenging environment, it's purely industry-related, right?

Yes, for sure. And we are also in very specific segments within RVs. So our 2 main product categories are ownings and by bike carriers for RV, where we are really, really strong. And there is -- yes, there's nothing of the other factors that you mentioned.

We currently have no further questions. So I will hand back to Mattias for closing remarks.

Thank you, everybody, for joining this Q4 call. Wish you all a good weekend and look forward to talk to you again at the Q1 conference call.

This concludes today's call. Thank you for joining. You may now disconnect your lines.