Pierce Group Ab · OMXSTO:PIERCE
Pierce Group Ab — Q3 2024 Earnings Presentation
34 slides from Pierce Group Ab's earnings presentation, Nov 15, 2024
Slide 1: Interim Report Q3 2024
Interim Report Q3 2024 November 15th 2024
Slide 2: Today's Presenters
Today's Presenters Göran Dahlin CEO Fredrik Ideström CFO
Slide 3: Agenda
Agenda 1. Pierce in Brief 2. Financial update 3. Looking forward 4. Q&A
Slide 4: This is Pierce
THIS IS PIERCE Online leader in a fragmented market Pan-European company Motorcycle specialist Net revenue split, Q3 2024 LTM Net revenue split, Q3 2024 LTM • Pierce is a leading e-tailer in the European market for Gear, Other Parts and Accessories for motorcycle riding 5% • The total European marke
Slide 5: The market for motorcycle gear, parts and accessories
THE MARKET FOR MOTORCYCLE GEAR, PARTS AND ACCESSORS The market for Gear, Parts and Accessories 1 100bn SEK market where the majority is still offline 1 ~30% • Protective clothing, such as helmets, boots, suits. Total market 2021 GEAR • High wear and tear for frequent riders (especially offroad). SEK
Slide 6: Fragmented landscape
FRAGMENTED LANDSCAPE Competitive landscape Direct Competitors Leading online retailers in Go-to- Europe Player Home market1 Ownership Comment Nordic Champion. Pierce Nordics Online Listed Pan European leader in offroad General / diversified online FC-Moto DE Online Private DE champion online, onroad
Slide 7: Q3 Summary
Q3 SUMMARY Net revenue +1% in local currencies, -1% in SEK • Q3 (together with Q1) is the seasonally smallest quarter Variance • Weaker consumer sentiment from end of Q2 continued throughout the SEKm Q3 2023 Q3 2024 Local Reported quarter currencies • Looking ahead, the global geopolitical situation
Slide 8: KPI Highlights LTM
KPI HIGHLIGHTS LTM Resilient private brand revenue Stable Trustpilot score, 4.3/5.0 Net revenues, Private brand LTM (SEKm) Aggregated Trustpilot scores Net Revenue, Private brand (% of net revenue) 637 646 650 641 640 638 635 4,3 4,3 4,3 4,3 4,3 4,3 4,3 4,3 4,3 4,3 623 631 624 39% 41% 42% 41% 41% 39
Slide 9: KPI Highlights LTM (continued)
KPI HIGHLIGHTS LTM (CONTINUED) Customer base stabilizing AOV on similar level as previous quarter Active customers LTM (000), end of period Average order value LTM (SEK) Number of orders LTM (000) +16% 1,167 1,163 1,165 1,070 1,090 1,088 1,106 1,055 1,083 1,070 999 1,021 1,021 1,016 1,004 1,001 955
Slide 10: Agenda
Agenda 1. Pierce in Brief 2. Financial update 3. Looking forward 4. Q&A
Slide 11: Quarterly Revenue Development
QUARTERLY REVENUE DEVELOPMENT Net Revenue Growth (%) Q YtY Growth in local currencies (%) Q YtY ▪ 2024 YTD has shown growth following a period of declining sales ▪ All three quarters 2024 growing in local 500 1.0 441 456 currencies 450 427 0.9 400 373 369 382 356 365 0.8 350 345 0.7 300 250 0.6 200
Slide 12: Group Financials
GROUP FINANCIALS Revenue growth in local currencies – profit improved YoY Net revenue (SEKm) Net revenue (SEKm) • Net revenue growth during Q3 by segment: Profit after variable costs (SEKm) Profit after variable costs (SEKm) ̵ Offroad -1% and 1% in local currencies Profit after variable costs (%) Pr
Slide 13: Adjusted EBIT
ADJUSTED EBIT Continuous adjusted EBIT improvement Adjusted EBIT (SEKm) Adjusted EBIT (SEKm) • Adjusted EBIT Adjusted EBIT margin (%) Adjusted EBIT margin (%) ̵ Adjusted EBIT in Q3 2024 improved from -47 SEKm last year to 0 SEKm ̵ YTD the improvement was from -61 SEKm to 24 SEKm • Q3 2023 was negati
Slide 14: Adjusted EBIT Bridge
ADJUSTED EBIT BRIDGE Gross margin improvement main driver • Adjusted EBIT improvements driven by lower in-freight and other improved gross margin factors and overheads in addition to a minor 3 obsolescence reversal 1 -5 2 1 0 • Slightly higher direct costs 1 offset the improvements 44 -47 Q3 2023 Ex
Slide 15: Gross Margin
GROSS MARGIN Trend shift in gross margin since Q3 2023 Shipping costs in relation to revenues stable in 2024 Gross margin (%), reported In-freight (SEKm) Gross margin (%), exlcluding the effect from obsolescence & scrapping Cost in relation to Net revenue (%) 30 12 30 27 45.6% 44.1% 45.5% 44.7% 10 2
Slide 16: Overhead Costs Development
OVERHEAD COSTS DEVELOPMENT Overhead costs Overhead costs % of net revenue ▪ The outcome of the restructuring program is in line with expectations 2024 YTD ▪ Savings are mitigating negative effects in 2024 25 80 YTD vs previous year such as underlying 71 72 67 69 inflationary pressure, FX and costs a
Slide 17: Net Working Capital Development
NET WORKING CAPITAL DEVELOPMENT NWC decreased in Q3 2024 despite low season Net working capital, NWC (SEKm) ▪ Net working capital (NWC) increased vs Net working capital, % of Net Revenue, LTM (%) previous quarter but remains below Q3 2023 with SEKm 52: – Total inventory increased with SEKm 23 YoY 25
Slide 18: Financial Position
FINANCIAL POSITION Debt-free, net cash positive and a solid equity position 31 Dec 30 Sep SEKm (unless stated otherwise) 2023 2024 Interest-bearing liabilities¹ - - ▪ Cash positive since new share issue in 2022. Cash and cash equivalents 222 261 Net debt excl. IFRS 16 -222 -261 ▪ Solid equity positi
Slide 19: Agenda
Agenda 1. Pierce in Brief 2. Financial update 3. Looking forward 4. Q&A
Slide 20: Pierce 2.0 - Strategic goals
Pierce 2.0 - Strategic goals Becoming “The undisputed leader in e-commerce for motorcycle equipment and accessories across the European market” Strategic Goal Progress YTD • Increased the number of MX-riders in our organization to improve our technical assortment where we have lost some To achieve u
Slide 21: Agenda
Agenda 1. Pierce in Brief 2. Financial update 3. Looking forward 4. Q&A
Slide 22: Appendix
Appendix 22
Slide 23: Q3 Summary – Profit and Loss
Q3 SUMMARY – PROFIT AND LOSS Q3 2023 Q3 2024 SEKm (unless stated otherwise) Offroad Onroad Other Intra-group Total Offroad Onroad Other Intra-group Total costs¹ costs¹ Net Revenue 238 124 6 - 369 236 123 5 - 365 Growth (y/y) (%) 3% -5% -29% -% -1% -1% 0% -16% -% -1% Gross Profit 76 36 2 -1 113 112 5
Slide 24: Consolidated Financial Information
CONSOLIDATED FINANCIAL INFORMATION SEKm (unless stated otherwise) 2022 2023 Q3 2024 LTM Net Revenue 1,670 1,537 1,559 Growth (y/y) (%) 5% -8% -1% Growth in local currencies (y/y) (%) 1% -13% -3% Growth in private brand sales (y/y) (%) 7% -1% -3% Gross Profit 657 607 701 Gross margin (%) 39.3% 39.5%
Slide 25: Segment Financial Information
SEGMENT FINANCIAL INFORMATION SEKm (unless stated otherwise) 2022 2023 Q3 2024 LTM Offroad Net Revenue 999 952 975 Growth (y/y) (%) 3% -5% 0% Gross Profit 412 393 460 Gross margin (%) 41.2% 41.3% 47.1% Variable sales- and distribution costs -235 -205 -212 Variable sales- and distribution costs (%) -
Slide 26: Quarterly Consolidated Financial Information
QUARTERLY CONSOLIDATED FINANCIAL INFORMATION 2022 2023 2024 SEKm (unless stated otherwise) Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 FY23 Q1 Q2 Q3 Q3 LTM Net Revenue 420 450 373 427 1,670 345 441 369 382 1,537 356 456 365 1,559 Growth (y/y) (%) 14% 0% 3% 3% 5% -18% -2% -1% -10% -8% 3% 3% -1% -1% Growth in local
Slide 27: Quarterly Segment Financial Information
QUARTERLY SEGMENT FINANCIAL INFORMATION 2022 2023 2024 SEKm (unless stated otherwise) Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 FY23 Q1 Q2 Q3 Q3 LTM Offroad Net Revenue 241 243 233 282 999 207 248 238 258 952 217 264 236 975 Growth (y/y) (%) 9% -9% 3% 8% 3% -14% 2% 3% -9% -5% 5% 6% -1% 0% Gross Profit 103 103 95
Slide 28: Quarterly Consolidated Net Working Capital
QUARTERLY CONSOLIDATED NET WORKING CAPITAL 2022 2023 2024 SEKm (unless stated otherwise) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Physical stock 414 420 401 317 283 274 233 280 Goods in transit 74 44 58 60 61 58 74 121 Inventory 488 464 459 377 344 332 307 400 Working capital assets 20 30 28 20 14 25 27 26 Working c
Slide 29: Condensed Consolidated Statement of Profit/Loss
CONDENSED CONSOLIDATED STATEMENT OF PROFIT/LOSS Jul-Sep Jan-Sep Oct 2023- Jan-Dec SEKm 2024 2023 2024 2023 Sep 2024 2023 Net revenue 365 369 1,177 1,154 1,559 1,537 Cost of goods sold -199 -255 -647 -718 -859 -930 Gross profit 166 113 530 436 701 607 Sales and distribution costs -120 -115 -373 -368
Slide 30: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION SEKm 30 Sep 2024 30 Sep 2023 31 Dec 2023 Intangible assets 286 335 310 Property, plant and equipment 14 13 15 Right-of-use assets 40 60 53 Financial assets 5 3 3 Deferred tax assets 7 5 8 Total non-current assets 352 417 389 Inventory 400 377 34
Slide 31: Condensed Consolidated Statement of Cash Flow
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW Jul-Sep Jan-Sep Oct 2023- Jan-Dec SEKm NOTE 2024 2023 2024 2023 Sep 2024 2023 Operating profit A 0 -47 23 -66 -21 -111 Adjustments for non-cash items B 12 53 52 86 88 122 Paid interest -1 -1 -3 -4 -4 -5 Received interest 2 1 6 1 7 3 Realised currency der
Slide 32: Reconciliation of Adjusted Financials
RECONCILIATION OF ADJUSTED FINANCIALS Jul-Sep Jan-Sep Oct 2023- Jan-Dec SEKm 2024 2023 2024 2023 Sep 2024 2023 Net revenue 365 369 1,177 1,154 1,559 1,537 Cost of goods sold -199 -255 -647 -718 -859 -930 Variable sales- and distribution costs -84 -79 -262 -260 -353 -351 Other costs¹ -82 -82 -245 -24
Slide 33: Mid to long term financial targets
Pierce Group's mid to long term financial targets Financial targets • Net revenue growth: In the medium to long term (3-5 years), organically outgrow the European online market for motorcycle gear, accessories and parts. • Adjusted operating margin (EBIT): In the medium to long term (3-5 years), ach
Slide 34: Riders in QW E-Commerce
RIDERS IN QW E-COMMERCE PIERCE