Thule Group AB (publ) ($THULE)

Hello, and welcome to the Interim Report Q1. My name is Ken and I will be your moderator today. [Operator Instructions]. I would now like to pass the conference over to Mattias Ankarberg to begin. Please go ahead.

Thank you, and welcome, everybody, to this call. I am, as usual, joined here by our CFO, Toby Lawton, and we will Also, as usual, speak to a presentation that we would like to be available on our website. And following that presentation, we'll open up for questions. So starting off with the highlights for the quarter. It's a good start to the year. For sure, it's still a challenging market in many ways, but we deliver organic growth of 4%, and an improved profitability. It's nice to see that the growth is driven by our focus on building what we call the champion categories. And we see the fastest growth in the quarter in the product area actually with kids and dogs, where we have invested a lot during recent years and continue to fuel the growth with new products. While the absolute number still can be improved, North America is continuing in the right direction despite the market being the most challenging space that we operate in. It's nice to see a good continued trend in the right direction. And it's also nice to see that we, again, are recognized for outstanding product design with many new design awards in Q1 2026. Turning to the financial overview on Page 3. We, as mentioned, have organic growth and higher profitability in the quarter. sales amounted to just short of SEK 2.6 billion with the organic growth being up 4%, 5% in Europe, which is pretty good. And North America is flat compared to last year. which, again, is not a number to be satisfied with, but it is continuing step-by-step quarter-by-quarter to move in the right direction, which we are pleased about. Rest of the World increased organic growth of 2%. There isn't some quite significant currency effect in the quarter, a 7 percentage point impact, which take the reported sales in SEK 2 minus 3% versus previous year. We had a really nice high gross margin in the first quarter last year, and we maintained that high level, which we are pleased with. And the EBIT margin is up almost 1.5 percentage points to 16.5%. And driven by some organic growth, of course, but also cost efficiency, reduced sales and admin costs in the quarter, particularly lower product development spend, but also some lower admin costs. And cash flow from operations was positive in the quarter, SEK 25 million, which is an improvement versus the historical trend. And Toby will get back to some further details on all these financial metrics in a little while here further on in the presentation.

And before we get into the details, let's take just a step back and remind ourselves about the long-term trend. Tula has been a listed company for over 10 years, and we have a long track record of profitable growth. And just to set the numbers straight, we now, of course, continue that trend in Q1. And on the last 12-month basis, we have net sales of SEK 10.3 billion. And then EBIT margin of 16.4%. If we move into the performance by product area, we'll talk you through all the 4 product areas one by one. And I'd like to just quickly mention that as of this report, we now refer to these 4 as product areas and product categories is a more specific term. So for example, the product area supporting cargo carriers is a collection of product categories like Ropox, Carboxes and by carriers just to clarify the terminology a bit more. . And we can start with the biggest product area, supporting cargo carriers, which is almost half the sales in the first quarter. Here is also a product area we have 3 so-called champion product categories, rope, cargo boxes and by-carrier and as a quick reminder from the CMD in November, tamping categories are categories that rules a clear global #1, and we have the capabilities to do what we call out-innovate competition, innovate more and better than competition and drive our own growth but they're also sizable enough to matter for the entire company. So about SEK 500 million or bigger. We have 6 champion categories today, a few champion candidates, and that's the #1 growth priority to grow these. So sport and cargo carriers in Q1 was flat versus last year in organic sales terms. We did see, as we always do, nice growth from contribution from new Thule products. And here recently, we have launched some new products in the quarter, which are at the entry price level obviously, sales tilted towards the premium end, but it's nice to be able to offer more consumers the option to buy into Thule. And we had a good start, both for the rooftop box to [indiscernible], and the entry price by carrier to the [indiscernible] light. We continue to see really nice momentum in what we call [indiscernible] Cargo. [indiscernible] excuse me, cargo products. which we've strengthened the offer quite a bit last year. And we -- just before the new year, in December last year, launched the first product for many years in the pickup truck space in North America, the truck bed rack to [indiscernible] escape which has also after to a nice start now in the Q1 2026. So good to see that these products are continuing to add growth to the company. We did see growth in total for the sport and cargo carrier product area in Europe, but a decline in North America. That's why it's flat in total. It is still cautious retailers and consumers, but it's nice to see that we do grow in the premium end, both in Europe and in North America. It's holding the growth back in total is the mid- and lower-priced items in North America, where the market is still the most timing. Moving on to the second product area. RV products accounted for just over 20% of the sales in the quarter. Here's a product area where we saw some good growth in the quarter, up 8% organic, and it's now the second quarter in a row where we see growth in both the aftermarket, which we've done for quite some time. but also in the OE channel market is recovering or improving. And we see that the OE customers and manufacturers are taking less and less production stops, which, of course, helps the growth to be balanced across both those channels. we should also say that the growth is, for sure, not just driven by a recovering market. We have continued to invest in product development also during tougher time for RV products. And also have some awarding products, and we can see that these products contribute really well to the growth that we're seeing now in the quarter. We see start of the year, good consumer interest still in RV in camping with good attendance to consumer fairs and general high interest, and we expect the market to be gradually improving also going forward. The third product area is our fastest-growing part area in the quarter as active with [indiscernible] there is that [indiscernible] a clear global #1, and we have the capabilities [indiscernible] or bigger. We have 6 champion categories or bigger. We have 6 champion categories today or bigger. We have growth in all 3 champion candidates. The soft spot in the category is most sport and bake in the product area -- excuse me, it's the category multisport and bike trailers, where -- there's still a lot of product in the market and quite a discount-driven segment. We do see nice growth in the premium end, but tougher on the mid-price and the lower-priced segment, just like in [indiscernible] carriers. So in all, it's nice to see that these 3 champion candidates are now growing fast, but also meaningful enough [indiscernible] they takes the whole active with kids and dogs product area to plus 11 and therefore, making a significant contribution to the total growth for the company in the quarter. Lastly, the product area of bags and men's grew by 6% organic in the quarter. We do see continued growth momentum in Performance Thule mount that came with the acquisition of Woodlock, which continues to grow well, and represents now about 2/3 of the bags and Mount product area. On the bag side, there, we are undergoing some changes. As you may remember, it's nice to see some growth in the Thule branded bags in the quarter, with well [indiscernible] new products to [indiscernible] holders has launched and got a good reception. And the new bags and rack system for bike commuting, what we call the Thule in lock system, has also had a good start. And as planned and earlier communicated, we see continued decline in Case Logic and the OE bags, which, of course, has a drag on the overall growth for the bags business and also for the full bags and [indiscernible] category. And lastly, before I hand over to Toby, we are very pleased and proud to again be recognized for our product design, having received in this quarter, 14 new product awards from the Red Dot and 8 from F design, these 2 being the 2 main award institutes, design institutes handing out awards. I believe it's a great testament to our design team, but also more generally, our brand and our full R&D team, and it's a real team effort to bring these to the market. It's also nice to see that we do get product awards and are recognized across both our existing champion categories, some of the champion candidates candidates and also some other gems in the portfolio. So very proud and pleased that the team [indiscernible] to deliver really good product and that it resonates with the consumers and also the awards. And with that, I'll hand over to Toby to take us through some more financial details. Thank you, Mattias. Thank you, and good morning, everyone. And I'll take a bit closer look at the financials and starting with slide financial summary. And if I start here at the top with the sales line, you can see sales growth organically of 3.9%. Good to see us back to a good organic growth. But we also have a currency impact, of course, which is negative, which is driven by the SEK being stronger than the dollar and the euro in the prior year, and that impact is around 7% negative. So overall, sales was minus 3% when you take those 2 effects together. Gross margin is basically flat at the same level as last year 44.8%, which is a historically high level. And this was positively impacted by price and mix and by efficiency gains, but that was offset by increased material costs and tariffs, which, of course, is versus Q1 last year, tariffs are higher as well in Q1 this year. Then we have a good positive impact from selling and administration expenses, which are SEK 60 million lower than Q1 last year. The biggest effect here is reduced to development cost, but we also see a lower administration cost in quarter 1 this year than we had in quarter 1 last year. And just one thing to note here is it's a good reduction from development costs. We have said that for the whole of 2026, the full year, we expect development costs to be lower than 2025. But I would say, we have a little bit extra in Q1 because of the -- basically the timing of the phasing where we've taken -- last year, we took quite a larger share of development cost in Q1. And this year, we have a little bit smaller share of the full year development cost in Q1. That's a part of it, but it's also underlying a good reduction in development cost and administration cost. And finally, EBIT or operating profit. We have SEK 424 million in the quarter versus SEK 401 million in the first quarter last year. This has been impacted negatively by currency as well. So approximately SEK 30 million impact of currency which is negative. But the margin is obviously higher by 1.4 percentage points, which is good to see and is due to the selling and administration expenses, which I talked about earlier. And with that also, the last 12 months, the LTM margin has also increased from -- we had 16% for the full year 2025. And now if you take the last 12 months at the end of quarter 1, we're at 16.4%. If I go on to the next slide and just taking a step back to look at the relative shares of sales of different parts of the business and starting with the geographic regions on the left side. And here, these are the share of sales over the last 12 months compared to the full year 2025. And you can see the biggest part of the pie, the dark blue is region Europe, which had 5% growth in the quarter and is now a slightly bigger share than of the LTM at 68%. Then we have North America, which was flat, and rest of the world, which had a 2% growth and is 9% of the group's revenue. Moving to the right-hand side, where you see the product areas. Firstly, starting on the left with Active with Kids and Dogs, which Mattias talked about here, it's 11% of the revenue of the company on an LTM basis, and we had good growth here. We grew by 11% in the quarter. Then bottom left, you see RV Products, where we had 8% growth, good performance. Bags & Mounts top left, we had 6% growth, and that's 21% of the company. And then the largest share with Sport&Cargo Carriers had flat growth. And here, as Matthias presented as well, we have -- is the new products that are driving the growth here, and it's also an area where we see growth in Europe but a decline in North America. And then on to the next slide and just showing a bit longer perspective of our EBIT and EBITDA development, and in particular, comparing to the levels that we had pre-pandemic, and this is something we talked about a bit more of CMD, which was held in November. So you can find information there. But firstly, you can see that the EBIT margin on a -- also on an LTM basis has increased from 16% to 16.4%. So a good step in the right direction. And then above that, you see the EBITDA margin here, which when you look at the level now we have LTM, we have 19.9%. '25, we had 19.5%, and both of those are above the level we had pre-pandemic at 19.0%. So if you look -- I mean, if you look on this level at EBITDA level of profitability were absolutely higher than we were pre-pandemic, which is, I think, important to note. And it's basically EBITDA, of course, takes out the effect of depreciation which is a noncash effect, but is particularly the depreciation, which has increased compared to the period pre-pandemic in our P&L. And this was due mainly to the significant investments that pace, particularly during the pandemic to increase manufacturing capacity in '21 and '22. So that's what's also behind the free capacity and the significant free capacity we have that we talk about sometimes as well. And then finally [indiscernible] the EBIT margin final target, of course, is 20%. We are very focused on the financial target of 20% and meeting that in the medium term, and it's good to see that we've taken a step in the right direction and the LTM as well with increasing our margin from 16% to 16.4%. Just then to go on to the cash flow. And here, you see in the table to the left that our cash flow from operations was positive at SEK 25 million for quarter 1. And just to mention that cash flow is normally quite small or even negative in quarter 1 because of seasonality. So bear that's in mind. But if you look at the graph on the bottom left, actually, it's you can see if you actually go back 2 years to 2024, we're actually back to a similar level than we were in 2024 Q1, when we actually also had a big help from inventory reduction at that time. So it's good to see we're back to that level, and we're still managing working capital very tightly to deliver the best cash flow we can. Within that cash flow, we had a working capital increase of SEK 365 million, and that's mainly due to the increase in receivables, which is a seasonal effect. But of course, even with the increase in working capital, we had a positive cash flow from operations. Then we also had a CapEx in the quarter of SEK 99 million, which is mainly related to the investment in our warehouse in Poland, where we're building an automated and extended warehouse next to our main manufacturing site in Berlin. And Altogether, those impacts increased our net debt by SEK 133 million, so a small increase in net debt and net debt-to-EBITDA ratio is slightly up versus the end of quarter 4, but 2.1x EBITDA, and this is something we're very focused on. It's a similar level to we've had during history, but we were very focused on bringing it down. And you can see, particularly from the graph that you see on the bottom left as well, that we have Q2 and Q3 ahead of us, which are the strong cash flow quarters which should really help us bring the leverage down a bit in the coming quarters. So with that, I will hand back to Mattias.

Thank you, Toby. Just a couple of forward-looking comments from us, both regarding the market and also our own priorities. Starting on the market side, I mean, we stay the sort of same message that we are well positioned in what continues to be still a balancing market, particularly in North America. We do have some highlights or more positive pockets in the market and particularly just as called out in the last quarter. marketing conditions are improving within RV products, which is nice to see. We have not seen any negative impact in the short term of on-demand of the conflict in the Middle East, which is positive. And we feel that we are well positioned moving into high season now in Q2 with an upgraded product portfolio. We have fast growth in our newest categories and active with Kids&Dogs summarizing that. and lower cost levels. So we continue to execute that and feel good about the high season that we're now moving into. Looking at the year, our priorities, they have not changed. These are executing the strategy that we have and the initiatives that we laid out in the Capital Markets Day in November. And remember, there are 2 main themes here. The priority #1 is around growth and its growth through building champion product categories. It is to launch new and upgraded products to grow the existing champion categories that we have, which we know working new to the products drive growth also in a tough market. And then secondly, it is to add more champions, grow the champion candidates by growing the product portfolio and also sales and marketing activities to increase distribution and awareness about these products. We are having a turn in the bags category. We are changing the bags category, which we also spoke to at some link at the Capital Markets Day to be more focused on outdoor products and functional accessories, which we are seeing good receipt from, but it is a bit of a journey. It's going to take about 2 years to get where we want to be. And then we are also, of course, supporting our nice products and product categories with a stronger sales marketing effort, building what we call the bigger consumer audience and continuing to expand our DTC presence and scaling up the new setup and our own presence in Australia as 2 examples. So priority #1, build bigger and more champion product categories. Priority #2 is to drive what we call efficiency gains and scale effects. And there are several things that go into this. Again, as outlined at the CMD in more detail. But just to highlight a few, we are with this strategy focusing RE spend more on the champions. We will spend more R&D and resources on the champion categories. but lower in total. And we can see that, that effect is coming through now already in the first quarter of this year, supporting the EBIT margin development. We're also taking several actions and initiatives in our supply chain driving additional in-sourcing, continuing to build up what we call technology platforms, harmonized assortment and components in our assortment in our product categories. And not the least, continuing to implement our new warehouse in Poland. That's going to go live next year, and we'll have a big savings effect, cash savings of SEK 100 million with the full effect when it's fully up and running in 2028. So that's the agenda. No change, continue to execute. And just to turn to some of the more product-oriented comments that support this growth agenda. We do have many product launches also 2026, not as many as we did in the last year or two but I think the bigger change is that we are now really supporting our champions with these product launches. So we continue to launch several products within all our champion categories and building out the next-generation camping categories. And just to take a couple of examples, as it's always fun [indiscernible] product and particularly Thule product, and we thought we'll bring up a few bike-related topics as we're now moving into high season, which is bike season. So on Page 16, we have just launched the first quarter, TuleVero, which is a North American specific product, a premium product by carrier built for transporting heavier bikes, which also comes with tilt function and can take many types of heavy bikes. And we are continuing to find new price points and new use cases in champion category. And in this quarter, we have launched both a lower-priced product and a higher priced product. So starting on the entry price side, we have launched to the Velo Light which is the new entry-level by carrier, very good quality, tool quality product platform by career behind the car, which is our first one bike version platform carrier, which comes at a low price point of 3.99 at least now for Thule standards. And on the opposite side of the price range, we have upgraded our most premium by carrier product to the EPOS that now comes with parking sensors. So it's launched here in early April, [indiscernible] Secure, which comes at a premium price of EUR 1699 for the consumer who really wants the best and are really really focused on protecting their bulk and transporting the bike in the safest possible way. So several launches around bank carriers. We have continued to push also other product categories. I mentioned quickly, we have launched Thule Pulse. It's a new upgraded version of our entry-level rooftop box, which is off to a nice start. We have some other categories that are also getting a little bit of love, and we have launched a new rooftop tent called Thule [indiscernible] just recently which we think is a really nice innovative product in this middle niche. It's a hard case, hard shell rooftop 10 which comes with the Thule quality and the functionality, easy to set up, easy to close, but also has a really nice bed that can double as as a couch or a sofa, which is as a feature really appreciated by the consumers who have voted so far. Lastly, we are investing in our so-called champion product categories in all -- sorry, in the champion candidate product categories in all -- all-terrain strollers dog transportation and car seats. And now in the second quarter, we will start the rollout of the upgraded version of our car seats, which are connected, including sensors that can give the parent feedback to prevent [indiscernible] around how the child is installed in the car seats and how the car seat is managed. So we look forward to the start of that here in just a few weeks time. So I think that gives a little bit of a flavor of the product launches that we are seeing right now in Q1 and Q2. And with that, we will conclude the presentation part of this call and turn the operator to manage questions.

Operator Instructions] we have our first question from Adela Dashian from Jefferies.

A couple for me. Firstly, on North America, flat development in Q1, is there anything you can say on trading as you entered into the second quarter of the year? And also in terms of, I guess, inventory levels at this stage of the year versus last year? .

Hi, Adela.So in general, Q2 for us, start of Q2 is sort of a continuation of Q1. So we see the same trends roughly, on North America specifically, we have seen an improved trend quarter-on-quarter, not that we're happy with the level of flat, of course, but it is going in the right direction. And we hope that, that will be the development also for Q2 Inventory levels, excuse me, was the second part of your question. I mean it's in general, inventory levels are okay. There are some brighter spots and some darker spots, if you like. But across, I would say, premium and higher price points -- there is not an inventory issue in any of our categories really. The darker tougher spots are where we play in some of the medium and lower end price points in Sport&Cargo both North America and Europe actually and bike trailers. But on the positive side, I think the most challenging space was RV for a while, where inventory levels at dealers are gradually improving, and we see that what used to be [indiscernible] stops on the OE side to manage these inventory levels is now there are still some production stops, but less and less, which is on the positive side. So the premium is okay, and a few tougher spots in the lower price points and RV is the improving trend. .

Okay. And then on the gross margin development, could you explain the drivers behind it being flat year-over-year?

Yes, I can -- so as I said, price/mix is positive, and obviously, versus Q1 last year, we are comparing to before we did the tariff-related price increase in North America. So that's one impact, but also mix is positive overall as well versus Q1 last year. So those 2 are positive. And on top of that, we do have some efficiency gains. We've been working hard to drive efficiencies. We talked about in that's contributing positively. But on the other side, we do have material cost is higher than it was a year ago. And part of that is we have -- when it comes to a margin percentage and FX impact as well, which is -- yes, really, we see in material costs, but it's a negative on gross margin. And the tariffs, of course, have also come in since Q1 last year. So those 2 -- those effects, the positive and the negative, basically counsel each other out.

Okay. And then as we -- you mentioned Harris here, there was a change to Section 232 in April. Does this have any impact on your effective tariff rates? Are you able to shed some light on what your blended rate was prior to the change? .

I mean I won't go to a specific rate, but I'll say the changes that came in impacted particularly aluminum and steel, which we do have in our products. So basically, as of today, we don't see a a big impact is -- yes, obviously, it's a moving target a little bit with the tariffs. But you can say the tariff situation we have now is is basically the same as we saw in the middle of last year, even though some of the numbers to different countries have been applied in different ways, but the impact is similar. It's not lower.

We have our next question coming from Fredrik Ivarsson from ABG.

First, Toby, you mentioned capacity utilization. At what level are you operating at the moment in terms of utilization, maybe versus you sort of believe that you want to be? Or what's an optimal level? .

Yes, I can take that straight away. But I mean, we it's -- to quote 1 figure, it's a bit simple oversimplified, but we basically say that we are at about 70% capacity utilization if you take a kind of average across product areas. So -- and we did -- I mean, the reason for that is we invested a lot of money during -- like I said, '21 and '22, we increased capacity, particularly in our biggest factories in Poland. And yes, we have considerable free capacity still.

Second question, just a clarification on what you said regarding consumer behavior. I think you said, Mattias, that you haven't really had an impact during the last couple of months on the back of the increased political turmoil. Was that correct? Did I read that right [indiscernible]?

Yes, absolutely correct. Fredrik. We have not seen any negative impact of the Iran conflict on consumer demand Obviously, if this continues, it will have sort of economic consequences and who knows what the follow-up up will be. But so far, no negative demand impact from [indiscernible]

Okay, good. And then if we could continue with the margin bridge discussion a little bit further down to the EBIT margin. How much of the 1.4 percentage point expansion was due to lower product development? And maybe also what kind of impact you saw from FX because that's been a headwind, I suppose.

Yes. Well, I would say we -- I mean when you look at our SG&A, we are down SEK 60 million in Q1 and you can see how much of that comes from -- yes, selling cost and how much comes from administration costs. So the biggest part comes in the selling cost and development is part of that reduction in in selling costs. So -- and then we manage our costs, and we have costs in different countries. We have a significant part of our SG&A in Sweden. So that means we don't get a kind of big a positive impact from FX as we -- as you might -- as we have a kind of negative impact on sales. So it's -- there is some impact, but it's mainly a real reduction in SG&A costs.

Okay. Good. And last question before I jump into the queue. Forward-looking external headwinds from tariffs and raw material inflation when we look into the rest of the year. What should we consider here? And also if you could say anything on what you're planning in terms of potential price increases midyear like we've seen in recent time on the back of, I suppose, higher raw material prices.

I'll take the first part, Fredrik. So I can say, I mean I think everyone's seen, obviously, with the crisis in the Middle East that it's impacting -- energy cost is impacting some material costs for us, particularly aluminum and steel prices, we see going up and energy cost impact on freight as well because it impacts the cost of freight. So we -- what I would say is we don't -- we haven't seen any impact on that cost side in Q1 because the costs are basically locked in. We expect little impact in Q2 because we -- yes, we're largely fixed and hedged for Q2 for those as well. But we're monitoring. We're working hard to try and counter those effects, obviously, depending how long this goes on for and what the impact is. It will impact -- have a bigger impact in Q3 and Q4, which is something we'll have to manage.

Yes. And to your second question about the possible or potential price increases, Fredrik, as Toby said, we are looking to counter these COGS increases that we expect in other ways, the best we are. We do have 9 factories in the world. We can shift a few things around and there's some initiatives we can take. So -- but having said that, I mean, we are also committed to if need be, protecting our margins through price increases. We are investing a lot in growth, and we want to have a healthy gross margins. We can continue to invest in product development and growth in our particular camping categories. But no decisions made on any price increases yet. And it is at least from a regional perspective, not as all as dramatic effect as, for example, the tariff price increases last year. This is not the same magnitude at the current raw material levels. So as of right now, to summarize, no price increases decided or announced, but monitoring carefully, and I think we have established that we have the pricing power if we decide to act in midyear.

We have our next question coming from Daniel Schmidt from Danske Bank. .

Yes. Matias and Toby, a couple of questions. Starting out maybe with the Champion candidate, would you say when you look at active with kids that you mentioned those 3, of course, are all those 3, and they are growing rapidly. They are basically making up the entire growth. I assume cost bike trailers were down .

Correct. .

Yes. And you have talked about the size of the running strollers, but we haven't really talked about what size sort of dog trades and car seats have reached in terms of sales. We're in year 3 now, I think, in terms of launch as we enter 26. Would you shed some light on that? .

Yes, that's true. We're trying to keep a few things, of course, from competition as well. But it is all these -- so I'll share what we can share, but it's very true that all 3 of these champing centers are growing very nicely, high digit, double digit, and it doesn't start with one. So it's really nice in all of them. It took us I think we talked about the Capital Markets Day using the all terrain and running strollers is a good example. And it took us sort of 10 years to come to a SEK 300 million level. And that path is also in numbers in a graph in the presentation. And we also talked about the, firstly, dog transportation that was launched 2 years ago. And then also car seats, I guess, 18 to 24 months ago, they are both developing faster versus that trend. So we are beating that development by quite a bit. So I think to summarize, you could say that taking all these 3 together, they are growing fast, they are, for sure, driving all and more of the growth in the active with kids and dogs category, and that is meaningful. That's plus the percentage point to the organic growth for the for the company in the quarter sure. And it's nice to see that the combination of the growth and meaningful size now starts matter.

Yes. It's good. And when we look at bags and amounts, which grew by 6%, then 2/3 are made up by cardlock. Is it fair to assume that they stood for the growth in the quarter and the rest of the bank's business was was flat with the OE business and Case Logic being down and [indiscernible] up a bit, they sort of cancel each other out, if you follow my drift.

Yes, that's about right. Cardlock continues to grow nicely. And Thule bags--Thule branded bag is actually up, but to your point, OE and Katogi is down. So there's a I believe it's a small positive if you look at total banks, but it's 3 very different components, continued good trend for Quadro or performance phone mounts some growth in the Toe-branded bags, but still undergoing change and then a decline in the other banks. So you are very correct. .

Okay. Okay. There's still sort of early days, of course, when it comes to this conflict in the Middle East. But clearly, sort of the world has become more uncertain. Do you see any any indications of sort of a comeback to staycation not the magnitude that we saw 4 years ago or 5 years ago, but do you see any sort of indication from consumers or retailers talking about that?

Yes. It's a very interesting point, and something that we're monitoring very carefully. There is, I would say, in summary, and then I can expand. But in summary, there's quite a bit of talk about it, but no real material sort of data to support it yet. I mean the industry is talking about Lufthansa is canceling 20,000 flights and gas prices are up. And what will people do will probably -- is there a scenario where people do a little bit more staycation or shorter trips, weekend trips, which will benefit, I think the outdoor industry in general and probably 2. So there is a bit of talk around that. I think it's not yet visible in sort of book gains or search trends to any major extent. But I also think to be -- my personal opinion, it's a little bit too early to see those trends. That would be more visible when you come to close to the vacation periods or summer vacations in the Northern Hemisphere. So a lot of talk but no real data supported yet.

Okay. Good. And then maybe just a last question on SG&A in the quarter and it was down, as you say, SEK 60 million, which is 8% and as part of that is FX, of course, but I also heard Toby say, that most of it is sort of a real shift, then you did mention lower admin costs. Are they -- what does that relate to? And is that temporary? Or is that a structural change to admin cost?

We're focused on, I mean, efficiency improvements, and we've implemented some steps we talked a bit last year about the the office we closed in Colorado in North America as well and some steps we've taken in North America, which contribute. So it's -- yes, yes, it's really efficiency initiatives that are driving the change in admin cost.

But it's predominantly the U.S. office closure or are there any other tangible things that you want to mention?

We're doing -- I would say, we're doing things across the board, but I was just decided a few of the -- probably the bigger ones, but it's things across the board, I would say.

Next question coming from [indiscernible].

[indiscernible] But I have one left. It looks like you are trying to enter the kind of entry-level segment more and more. Could you comment on the reception of those products? Also, what kind of growth do you expect they will contribute with and whether they will be margin neutral for you? And also it's kind of a way to fill up the empty capacity that you have right now?

Yes. No, that's a good question. Happy to answer. So I think if you look back a couple of years, Chile has been always playing strongest in premium, mid-price and then selectively in the sort of what we call entry level, maybe it's more of a mid-price from a sort of total market point of view. And I think during R&D programs are multiyear programs. And during COVID, what everything was fine, we were invested a lot in sort of premium. And we have, during the last 2 years, tried to balance the portfolio to be able to tap into to more consumer segments. Last year, we launched some good products in mid-price, both in the rooftop boxes and in bakeries. And this year, we are complementing that with enterprise products we just talked to. So it's had good reception, good value for money. I would say about the same margin, no tangible -- no measurable -- no real significant difference in terms of gross margin. Of course, the product is back lower than the higher end products. And we are expecting some growth. It's not sort of the core to the territory, which is still the premium end, but it's a nice addition to to the growth to be able to offer that consumer that may not maybe have yet the wallet to buy the premium to still tap into to let, add some nice volume for the factories. And also, to be frank, a little bit of a competitive moat as well because it protects our market position, if you like. We like to protect our market share and make sure we have a big moat around our champions. -- and having a wider price range also means it's tougher for competition to try to act.

We have our next question coming from Carl Deijenberg from DMB.

So I also just had one follow-up question here. And that is just a yes, general reflection or observation. I mean I guess we've seen a couple of other companies in the discretionary sector talking a little bit about potential prebuys here towards the end of Q1 and going into Q2. And I heard your comments with regards to that you haven't planned any price adjustment upwards, but I guess it's fair to assume that at least industry prices are on the way up. So have you seen any such behavior towards the end of Q1 or entering Q2 that, that could be positively impacting the organic growth for you?

Yes. So if I understood your question right, Karl, you're wondering about the price trends in the industry and if we're seeing ships up and the pre-buys, yes. Exactly. So I think in terms of pricing, if we start there, we haven't really seen -- there's talks, but there's no real announced increased prices at least in our categories. On the pre-buys. We haven't really seen any of that effect. Quite the opposite. I think retailers have been quite cautious to take in inventory before the high season and the sellout is moving. So not a dramatic effect, and if anything, more cautious.

Our next question comes from Hai Huynh from UBS.

It's Hai form UBS. On leverage, please, because I believe that the Q4 call, you said that you expect delivering to 1.7, 1.8x for this year. Q1 picked up to 2.1x. And I realize, yes, there's some seasonality in there, but that does look a little bit high to be able to achieve that range from here? Do you still expect to deliver this year? Or have any been change in your assumptions in the CapEx working capital [indiscernible]

I can say -- so yes, we have a leverage of 2.1, as you say, slightly below to 2.1%, but 2.1%. A lot of [indiscernible] history, we've been between 1.5 and 2. So it's not -- I'd say kind of level we've managed for some time. But we are focused on reducing leverage and optimizing cash flow to reduce leverage. And it's important to -- when you look at our cash flow profile, the the bulk of the cash flow comes in, in Q2 and Q3. So we do expect that number to come down with that effect from Q2 and Q3. .

Our next question comes from Andres Lundberg from SEB.

Just one on the sort [indiscernible] cargo carrier business being flat. I guess the other segments are benefiting from launches and so forth and recovery in and implications why this segment is lagging, so to say? And how do you view that here into the peak season?

No, it's a good question. I think it's for sure, the biggest part, the product area accounts for almost half the sales, and we're playing in a lot more price range than maybe in some of the newer categories, but we haven't built that presence yet. And the sporting carriers are growing in Europe, but it's North America that we see the decline. And within North America, we actually see growth in the sort of premium price point in Sport&Corporate carriers in the quarter, which is very nice to see, which is also where we have been launched North America specific products. But on the mid-end, the sort of the lower end products or price points in North America. It's a really tough market with a lot of discounting and promotions. And here, we are not seeing the growth. So that's the negative drag that we see in sporting cargo carriers here in in Q1. And then, I mean, the second part of your question, what does that mean going forward? I think that comes back to the North America topic. I mean we have seen good development in -- or good growth in Europe for quite a few quarters and this quarter as well, also in Sporting Cargo and North America is step-by-step moving in the right direction. And that will -- given the size of the sport and cargo carrier product area play into the same trend. So that's the explanation for the Q1 development, and that's also the comment on the forward-looking.

But on a follow-up there, you say weaker in mid-price entry in North America, how much is that of the total category or total segment?

Yes. So it's a sizable part within sport and cargo carriers, if you look at that specifically. I mean, premium is still the biggest part. This is where we play the most, but it is a significant part of the sport and cargo product area. .

Our last question comes from Mats Liss from Kepler Cheuvreux.

Yes. Well, coming back to the gross margin there, just a follow-up there. I mean you see the back back related accessories are moving around well, but also the RV segment. Could you say something about, well, how those trends affect the gross margin development?

I can -- maybe I can start there. But so I mean, RV, you could say, I mean, we've had good growth in RV. So that within the whole means that the gross margin of RV is a bigger share of the total, and that's actually a bit lower gross margin than the rest of the group. So that effect on its own is actually puts the gross margin down a bit just because RV operates at basically a bit lower gross margin but a bit less SG&A as well. So it's kind of a bit of a different P&L profile. Yes. .

To Toby's point earlier, I mean, there are also others. And to your point, I think with the comment around the bike growth and moving into high season. We see growth in other areas and I think it's good to keep in mind that there is not an enormous discrepancy between gross margins across our product categories. But it's nice to see that in total, the price/mix effect is positive and the efficiencies are positive, which manage or sort of support the development and offsets some of this negative impact we're seeing from aerials and currency.

Okay. Great. And then a question about tariffs there. I mean details of moving. But the 232 there in the tariffs previously, it was sort of more related to the metal component content on and now it's more full value products to be sort of tariff exposed. Do you have sort of any indication how that will affect you?

Yes. I tried to say, I think -- so the change to the [ 232 ] tariffs for which it particularly pulls out aluminum and steel from yes, from the other tariffs, the previous setup. But it's not a big change. I would say it's actually that part -- it's not a positive change either, but it's not a big change. So it's a small negative impact overall with those as they are today. And of course, this is a moving picture [indiscernible] Yes.

Thank you. I can confirm that there's no further questions.

Thank you, everybody, for joining the call. I wish you a very good day and look forward to speaking to you at the Q2 call, if not before. Thank you.