Dometic : Financial Report - PDF (20260423 dometic q1 2026 earnings call)

Transcription Dometic Q1 2026

23 April 2026

Operator: Welcome to the Dometic Q1 report 2026. Today, I am pleased to present CEO Juan Vargues, CFO Stefan Fristedt, and Head of Investor Relations Tobias Norrby. For the first part of the call, all participants will be in listen-only mode. During the question and answer session, participants are able to ask questions by pressing the pound key five on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Juan Vargues: Hello. Good morning, everybody, to this Q1 report. Welcome to sunny Stockholm, by the way. It's wonderful that springtime is back and that we have the light back. Moving over to the highlights, we see an increased uncertainty following the tariff situation and the geopolitical tensions in the Middle East. We already see now oil prices being very, very high. We see as well inflationary movements in terms of freight cost, in terms of raw material cost that will, down the road, have some kind of impact on consumer confidence. We continue to see retailers and dealers being very, very careful in building up inventories and ordering what they need. At the same time, we also see differences across regions.

Most probably, the region where we see the confidence index being the lowest is in the American region. Looking at performance, we are very happy to communicate that after many quarters of negative growth, we are standing at the same level as last year. We are very pleased to see the Service & Aftermarket coming back and showing solid growth of five percent. A positive thing is to comment that is everywhere. We see the three regional businesses within Land Vehicles, and we see, as well, Marine everywhere, also being positive from the Service & Aftermarket perspective. Distribution is slightly down one percent. Mobile Cooling is positive, which is good. We also see that the sell-through for a Mobile Cooling business has been very positive in the first quarter. In reality, the one that we are still missing is the OEM that ended up at four percent down versus last year, but very much due to the RV OEM in the American region.

Perhaps even more positive is that both order intake and backlog continue to develop in a positive way. A positive development on EBITA margin, ending up at 10.6%, is really based on two different factors. On one side, we have a positive mix with sales and the aftermarket growing, at the same time, as we also see the savings coming from the restructuring program continue to improve. At the same time, we have many product launches. We have been launching products, especially on the Marine side and on the Mobile Cooling side, during the quarter. In connection with the extra product development cost, we also have marketing costs to launch successful launches for the new products.

Last but not least, improved free cash flow, even if it's negative, is quite a bit less negative than it was one year ago, and it's totally in line with historical numbers. As a matter of fact, it is better than what we have seen in the last four or five years in practice. Leverage ended up to 3.4, which is slightly worse than one year ago, but following the same historical pattern that we have seen due to obviously low invoicing levels in Q4 and low invoicing levels in Q1. If we move over to the figures, as I already commented, organic growth of zero percent, with negative impact from

currencies of nine percent, and then portfolio changes that continue to happen, delivering one percent in negative growth. EBITA is eight percent down versus last year, ending up in about 10.6% in margin in comparison to 10.4%, and Adjusted EPS of 86 öre in comparison to 88, so it's very, very close now. As I already commented, negative cash flow, but quite an improvement in comparison to last year, and leverage is slightly higher than what we had one year ago. Looking at the growth, Land Vehicles ended up about minus one percent, very much driven by the Americas, six percent down.

EMEA was positive with two percent, and APAC, finally, was at minus three percent. Marine was positive with two percent. We had positive two quarters ago, negative, and positive again. We are hovering around the same levels as last year. At the same time, we have a pretty good order intake. Mobile Cooling is very similar to Marine, with one percent positive but also developing nicely in terms of order intake. Global Ventures is seven percent down. Looking at the different sales channels in reality, there's nothing remarkable, no more than that Service & Aftermarket is growing. By that, it is becoming 30% of the total business, while OEM continues to go down slightly, ending up at 38%. Perhaps it's worthwhile to comment that the RV OEM, which used to be 49% in 2017, stands today for 18%. Again, we are getting less and less exposed to the RV OEM market.

Looking at the different channels, there is positive evolution everywhere. I do believe that by looking at the different charts, it is very, very clear that we see a positive trend getting now into neutral growth for the group. Hopefully, we will also see OEM coming into positive terms in the near future. I would like to stay for a couple of seconds on this slide. What you can see is that the gray line is manufacturing. The green line is registrations. It tells you a little bit about what the different inventories look like in the different markets. Unfortunately, the inventories on Marine are much more difficult. We get production numbers, but we don't get... The retail numbers include both its own manufacturing in the US as well as imports, and that distorts the picture a little bit. If we go back to registrations on the RV side, we see that we suffered a major deterioration in the industry from 2022 to 2025. It stabilized in the last couple of years, but it is not coming back to growth.

At the same time, we also see that there is a balance between retail and manufacturing. At the same time, we saw a Europe kind of postponing the drop simply because we had, as you may remember, problems with component delivery from the chassis producers to the OEM industry, which means that we still had pretty good years 2022 and 2023. However, we saw a major drop in the second half of 2024 and a major drop in 2025. When looking at Dometic's evolution in the last couple of years and always commenting on negative growth, what you can see is that we got the hit in the US first. As the US was stabilizing, we got Marine, and we got Europe as well. That has been very much the main reason for this delay in coming into neutral territory and hopefully showing growth in the quarters to come.

Again, coming back to inventories, we are very much there on the RV side.

On the Marine side, we still hear and read from retailers in the US, especially that inventories are a little bit too high, while Europe looks far better. By the way, we have

seen growth on the Marine side both in Europe and APAC in the last couple of quarters. EBITA ended up about 10.6%. There is good progress on gross margins. It is very, very clear that the restructuring program is kicking in and has shown improvements on top of all the other efficiency actions that we are taking. We have an SG&A higher than one year ago, very much, as I commented, explained why the investments that we keep doing in product development everywhere, but especially in the Mobile Cooling Marine area. They are reflecting not just on the product development costs, but also on the marketing costs in connection with the product launches. We see margin improvements in Land Vehicles. We see that we are on neutral levels on Global Ventures, and we saw a decline in Marine and Mobile Cooling. Looking at different segments, Land Vehicles are one percent down with good growth in Service & Aftermarket.

Again, there is a decline on the OEM side, which is very much driven by the RV OEM side in the Americas. We have a strong margin improvement of nine percent, with significant improvements again driven by the restructuring program and all the other activities. We continue to invest, as we have commented many times, in product development. Innovation is clearly the driving force behind organic growth, and that's what we are working for. It's worthwhile to mention that we are still producing losses in the Americas, but we see a major, major cut in those losses during the last 12 months. Marine, it is positive to see a two percent growth, with high single-digit growth. In Service & Aftermarket, there's a slight decline, but it's very, very close now to neutral territory, also on the OEM side. EBITA margins are close to 18%. The reduction is very much driven by, on one side, delays in the price increases, so the time lag between price increases and the cost increases, and then all the uncertainties that we have just now with the tariff situation in the US.

At the same time, we continue to invest, as I said, in product development, leading to new product launches and marketing costs. Mobile Cooling's organic growth is one percent. Here we see good development in the US market. We see a slight deterioration in the European and APAC markets. Margins are 5.7, so deterioration versus last year. We see a little bit of the same, that we have still time lags between cost increases, and due to the new tariff situation and price increases. Even here, we keep investing in generating growth moving forward. Lastly, Global Ventures' organic growth is seven percent down, with Other Global Verticals continuing to develop positively. At the same time, we see Mobile Power Solutions still negative, driven by the RV OEM. That business is to a high extent linked to the OEM business. EBITA margins are on a neutral level. On one side, we see continued margin improvements in Other Global Verticals. They are the same, but we see some margin deterioration in Mobile Power Solutions.

Broadly speaking, they are neutral, since we are also adapting our SG&A costs to the new situation. In terms of sustainability, there is very good progress. We feel proud of what we are doing in that territory as well, with injuries coming down. They have been down now below the target of one for a number of quarters. We also see female managers in a decent territory. We would obviously like to improve even more, but we have seen major progress in the last couple of years. We continue to invest in renewable energy, in operations, and we are up to 44%. Regarding innovation, again, the major driver behind organic growth is up to 24%. We are very,

very close to our target of 25%. Then we keep assessing our suppliers for their material, and we will ensure that we deliver as well on our targets. Some of the recent launches, we launched at the end of Q4 a new brand, WAECO, which is not just a number of products. It is also a new business model where we are addressing major wholesalers, major distributors, and implementing a totally different business model, generating high margins at the same time as we are capturing volumes.

It is clear that we see a new demand for all vehicles, and we are addressing the new demand that we have been seeing accelerate in the last couple of years. As a consequence, again, of the inflationary cost increases post-pandemic, people are looking for lower price options, and we are addressing that. We have a very positive reaction, even better than we expected, during the first couple of months.

Unfortunately, it's a little bit late since we are already now in Q1 and customers are placing orders normally in Q4 for deliveries in Q2, and we launched the product in December. Again, so far, there is a very, very positive reaction. We're moving over to Drinkware, another of the areas where we are investing. We're launching the first series of premium Drinkware products, where we are addressing modularity and delivering a lot of accessories, not just the bottles, but also many different options.

We are expecting, on one side, good growth and good margin evolution, but we also expect that this kind of growth will reinforce our Dometic brand globally. Moving over to a new series of rooftop tents, this is also the third series of rooftop tents coming from Dometic, addressing the new market with SUVs and pickup trucks. As a consequence of all the product launches, we keep collecting awards in different areas. In this case, we are talking about Mobile Cooling with a new high-quality and premium Dometic-branded product, both as hard coolers and soft coolers, which we have been launching over the last couple of quarters and are starting to kick in as well in stores. We are happy to report, as well, a positive development on our restructuring program, the cost reduction program. You may remember that this program will generate 750 million on running rates at the end of this year. We ended up Q4 last year at a running rate of 350 million. We added another 50 million in Q1, so the new running rate is 400 million, and cash out in the quarter, achieving 20 million. With that, I would like to hand it over to you, Stefan.

Stefan Fristedt: Thank you very much, Juan. We're moving to the income statement, starting with our gross profit margin development. This is really a very nice development that we have seen now for almost two years, where we have had a continuous improvement of our gross margin. It ends up with 29.6% in the quarter versus 28.7% the equivalent period last year. That has then been favorably impacted by sales mix, but also the restructuring program, and then partially being offset by the fact that we still have a certain lag between price increases and cost increases, including tariffs. A lot of things happened in the first quarter. We have obviously had a decision by the Supreme Court in the US, making some of the tariffs illegal. Then we have obviously had the escalating situation down in the Middle East, which has been starting to drive up input costs for our products.

On operating expenses, in reported currency, we are down, but in constant currency, we are up five percent. There are two things to that. We obviously have effects from

our global restructuring program, which is driving down the cost as expected. We also have in the quarter some offset for increased product development, as well as marketing related to product launches. You just saw a number of examples here in Juan's presentation. Looking at net financial expenses, which is on its way down as expected and driven by the gross debt reduction, is going to continue here now in the coming quarters. Tax is on the same level as last year, and the effective tax rate is 33%, which is, as we have communicated before, affected by the deductibility of interest expenses in Sweden. We're moving on to the cash flow summary.

As Juan already mentioned, it's very nice to see that the free cash flow is actually quite a bit better than the same period last year. You know that we have the seasonality where Q1 is always our weakest cash flow quarter. Now, when we're moving into Q2, we are moving into the strongest one, and it's the same with Q3. It's also a very strong cash flow quarter here. In the quarter, we have seen working capital, on the one hand, being impacted by higher inventory. It measures to make sure that we have the inventory to fulfill the demand. Then we have seen on the other side improvements in trade receivables and payables. It was mentioned that the cash out related to the restructuring program in the quarter was 20 million. Program to date, we have 256 million in payout. As you remember, we have talked about it. It should be a total of 400 million, and we still stick to that. There is approximately 140 million to go, which will happen in 2026.

Then, CapEx is a bit lower than the same period last year, and we continue to prioritize investments in fixed assets. We also have a new model, which actually means that we have fewer needs to invest in fixed assets going forward. If we look at interest expenses paid, they are down as well as tax paid, so that is also helping to drive the free cash flow. Moving on, here you can see what Juan was alluding to, that minus 192 million in free cash flow stacks up quite well in a historical comparison here, so I'm happy with how we continue to manage this well. If we look at working capital, the last 12 months, we are down to 25%, which is 3% units better than the same period last year. We are 26% in the quarter. Inventory balance is 5.2 billion in constant currency, which is then up versus last year. As I mentioned, it's really to make sure that we can keep the service level to our customers here. The number of days is 121, and that's 10 days less than the same period last year.

As you can see, there is still potential to continue to drive that down towards around 100 days. On accounts payable, the movement there is very much mixed, where we have the major sourcing in the quarter. It's a little bit more with China, longer payment terms there. We already talked about inventory. Regarding accounts receivable, you see that the sales outstanding is starting to come down, which I would also expect due to the program that we have been putting in place. Moving over to CapEx and research and development costs, we ended up with 72 million in the quarter, equivalent to 1.6% of net sales. As I said before, we are making clear priorities, but we have also created a model where we are emphasizing the need to invest less in the machinery and equipment. On the R&D side, we are now on 2.9%, 132 million in the quarter, and we are continuing to prioritize investing in product development. We can also see that on our innovation index. As mentioned before. It's up to 24% now in Q1.

That is something that we will also continue to prioritize going forward. We're moving on. If we take a step over to our debt maturity profile, the total gross debt is now 15 billion at the end of Q1. We have average maturity of 2.5 years and an undrawn revolving credit facility of €300 million maturing in 2028. Then we will pay back the

2.2 billion in the remaining 2026 Eurobond here tomorrow using cash on hand. Then we also have a plan to repay the 0.8 billion, which is the private placement that we have maturing in September 2026. With this, you will see the gross debt continuing to come down, and also the net debt driven by the free cash flow that we are expecting to generate during 2026. Looking at the leverage ratio, it ended up at 3.4, as was mentioned before. It's all the different components that are very slightly contributing to take it up from 3.3, as we had by the end of Q4.

It is not unusual that the leverage ratio is moving 0.1 in the first quarter. From now on, we are going to obviously come into the cash flow strong part of the year, and the leverage will then start to move down here in Q2 and Q3, especially. With that, I will hand over to you, Juan, to make the summary.

Juan Vargues: Thank you, Stefan. Summarizing Q1, we are very, very happy that we are leaving a negative growth behind us and that we see as well improving gross margins and EBITA margins, positive order intake, and order backlog that continues to develop positively. We see a good sales mix with Service & Aftermarket showing solid growth with improvements in free cash flow. Leverage ended up at 3.4 versus

3.3. At the same time, we see, as well, still today, low consumer confidence, driven both by the volatility of the tariffs and, nonetheless, by the new upcoming situation in the Middle East. Due to that fact, we decided to withdraw the dividend, as you know, on the 12th of March. Already at the time, we communicated that the main reason was the risk that we saw moving forward. We also commented that it was not a profit warning. Hopefully, you realize as well, when looking at the numbers, that what we said we are not collapsing became the reality as well. Again, we feel good about Q1. We feel good about the order intake and the backlog.

Still, we don't know how the ongoing war in the Middle East is going to have an impact in Q2 or Q3. The theory is obviously that we are moving into Q2 in a positive manner with a stronger backlog. Then we will see what happens during these three months. We are still of the opinion that we will see organic growth in 2026. Of course, we are also very mindful of the situation in the Middle East and the impact on oil prices, inflation, interest rates, and consumer confidence. No matter what, we continue to invest strategically. We see the product development and innovation index coming up. With that, we also have some extra marketing costs that we are kind of happy to expand since we are starting to move into a growth phase again. We are also very pleased with the way the restructuring program is developing over time. With that said, I think that we can move into the Q&A session.

Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. Please mute your line when you have asked your question, and please limit yourself to only two questions. You can also write your

questions on the webcast page. The next question comes from Agnieszka Vilela from Nordea. Please go ahead.

Agnieszka Vilela: Thank you for taking my questions. I have two questions, so maybe I can just start with the demand outlook. In mid-March, you were quite cautious, Juan, about the demand prospects, especially in the light of the Middle East conflict, yet you finished Q1 with flat organic growth for the quarter. I wanted to ask, was there anything that really surprised you to the positive? Also, maybe follow up on that, you have built some inventories in the quarter. Should we interpret it as a sign of you expecting higher sales in Q2?

Juan Vargues: Absolutely. No surprises. Agnieszka, good morning, by the way. Again, a communication on the 12th of March was much more due to what could happen due to the war. It's very, very seldom that you see the war start on day one, and then inflation, interest rates, and consumers stop buying. You see that normally, after several months. I think we were very clear at the time of communication, and we tried to clarify even a couple of days after the announcement that we were not collapsing. I think that this is what we proved this time. We are happy to see the order intake and the backlog strengthening even more in Q1. Then the question, and I think that at least our takeaway, is that we take it in a very positive way. At the same time, I also believe that many people in the value chain are expecting to see higher prices down the road as a consequence of the higher inflation. Since we are at the beginning of Q2, it might be that we have an effect of people forward buying, so to speak. At the same time, you can take it in a negative way. You can take it in a positive way.

Nobody wants to build up inventories. People are super careful about building up inventories. We are starting the quarter. In fact, coming to the second question, we're starting the quarter with a strong backlog. In theory, we should see growth.

Stefan Fristedt: We only have one month or four to six weeks approximately.

Juan Vargues: Four to six weeks. Yes.

Agnieszka Vilela: Okay. Perfect. Thank you. My second question is on the input costs for you. We do see some inflation in the polymer prices. Maybe you could please remind us about your plastic exposure and how quickly these higher commodity prices are affecting you? Do you hedge? What kind of price increases would you need to implement to neutralize the impact?

Juan Vargues: Of course. It's not just plastics. Everything is just now going up, and we also see moving targets. Of course, we have been working very, very hard during the last few weeks, and we are implementing price increases as we speak. We have

not seen any major effect in Q1 simply because you are sitting on inventories, but it is clear that suppliers are knocking on the door, and we are already now talking to customers. Our intention is, as usual, to cover up for the potential cost increases, and the cost increases will come. It's just a matter of time. Just now, obviously, the target is to push back as much as we can at the same time, as we are sitting on inventories. At the same time, we also need to act very, very fast and start discussing with our own customers as well.

Agnieszka Vilela: Thank you.

Juan Vargues: You're welcome.

Operator: The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Daniel Schmidt: Yes. Good morning, Juan and Stefan. Sorry if I may be repeating something that you already said. I was late to the call. I hear you in terms of order intake and order backlog heading into Q2, and what you said about your announcement on the 12th of March. Am I getting it right that for March, you didn't really see any deterioration? I assumed that you did get hit by the winter storms in the US in January and February, which caused some production shutdowns.

Juan Vargues: Yes, but at the same time, I do believe that you have one side with storms, which is totally right. We also see that in retail, we are especially talking about the RV industry in the US. We see that retail was also down. I believe we that we need to be a little bit careful in the way we are interpreting the weather impact in the first two months. If we were just talking about production, I would agree with you. Of course, when you see the retail, RV retail is also down, and customers are careful, then I believe that we need to wait for some more time to understand. As you know, production was down 11%. If you look at the numbers, retail in February they were down 22%.

Daniel Schmidt: I'm just getting to your momentum in the quarter. I understand what you're saying.

Juan Vargues: Q1 was good. March order intake was good, and backlog was even better. Our backlog strengthened in March.

Daniel Schmidt: Good. Then a totally different question, maybe. In recent days, there have been confirmations from both LCI and Patrick Industries that they are talking about a possible merger, and who knows if that's going to happen or not. If that happens, do you see that, theoretically at least, as an opportunity for you guys in the

US, especially to regain some shares where they are occupied by a possible merger and internally focused?

Juan Vargues: I think that what you are saying will happen anyway. It takes a while to integrate. If that happens, it will take some momentum from the organization. At the same time, I would like to point out: we are competing with Lippert. Basically, we are not competing with Patrick. Patrick and Lippert are competing with each other. The only area where we are competing with Patrick is that Patrick acquired a company two years ago called RecPro, turning $80 million. We are talking about the OEMs.

We are competing very little with them and not saying it's nothing. On the aftermarket, it is very, very limited as well. I don't see that that will change. I think it might change in the short term, as you said, because it takes a lot of attention from the organization to integrate companies. We are talking about two major companies. This is not just the one absorbing the other, but I don't expect any major impact on the long term, simply because we are not competing with Patrick.

Daniel Schmidt: Okay, good. Thanks. Then maybe a very detailed question for Stefan. Other current liabilities are up a bit versus the end of the year, despite the currency going in the other direction. Is there anything in that number that's related to the court case, or further reservations, or anything?

Stefan Fristedt: The very simple answer to that is no.

Daniel Schmidt: No? Okay. Good. That's all from me. I just want to thank Stefan as well for good collaborations through the years, and good luck.

Stefan Fristedt: Thanks a lot, Daniel. I appreciate it.

Operator: The next question comes from Laure Courtiade from Amundi. Please go ahead.

Laure Courtiade: Good morning. Thanks for the presentation. Perhaps you mentioned it, but I didn't get it. What do you expect as a cash payout for restructuring in 2026 and PnL impact versus cash impact, and the same for 2027 if there is?

Stefan Fristedt: Yes. As I mentioned before, we have said in the past that 400 million in total cash payout of the program. We have a program to date paid out 256 million. That means that we have 144 million to go, and that is mainly going to come in 2026. I don't expect there to be anything left for 2027. Then, in terms of saving, as you know, the program in total should generate 750 million in savings. We should be on a run rate, jumping into 2027 on 750 million. We reported now, after Q1, that we are on

400 million in run-rate savings. If we overlay that with our plans, we feel that we are absolutely on track to achieve that.

Laure Courtiade: Thank you.

Juan Vargues: I could add as well that in 2026, what's going to happen is that it's going to be a little bit more backloaded than in 2025. The reason for that is that we have some major activities that we're working on, but we will see the effects later on in the year.

Operator: The next question comes from Fredrik Ivarsson from ABG. Please go ahead.

Fredrik Ivarsson: Thank you. Good morning, Team. Most of the questions I had have been asked, but I have one on Marine. I guess when we listen to all the boat manufacturers, it's a little scattered view, I think, with the high-end manufacturers being quite optimistic and talking about higher backlogs and so forth, whereas the mass market is more cautious. First, do you share this view? Second, how are you positioned towards this backdrop in that case?

Juan Vargues: I would agree that we saw... You go back to the last few years. First, we saw what Americans call blue-collar boating coming down dramatically. Then, it took about 18 months before we saw the bigger boats coming down quite a lot. Then we saw the low-priced boating stabilizing about eight months ago, and now we see the bigger boats moving upwards, really in the last six months. It feels good. Order intake has been promising. At the same time, when you read all the information about American Marine retailers, they're still cautious. I simply believe that we need to wait a little bit more, because we might be seeing what we saw with the American RV industry a couple of years ago, which went down. Manufacturing started to build up, and retail didn't come back, and then the manufacturing came down again.

We are kind of hovering at the same levels that we were manufacturing two years ago, when you look at the RV industry. I believe that we need to see this for some more months before we can see that it is now moving. The fact is that order intake has been growing. From that perspective, we feel positive, but I would like to understand a little bit more in one or two quarters, so that we see that consistency.

Stefan Fristedt: On top of that, we also feel that the inventory situation is still not at an optimal level with the dealers in North America, but it has certainly improved.

Juan Vargues: That's true. That's very much on the American market. We are looking at Europe. Europe looks good, and we have high-digit positive growth in Q1, and

even APAC looks good. Having said that, obviously, the US market accounts for 75% of the global market. We are still not there, but it is clearly improving.

Fredrik Ivarsson: Okay, great. Could you remind us of the positioning where you are?

Juan Vargues: We are very well-positioned in steering systems. We are very well-positioned in full systems. We are very well-positioned in ACs. I would say that those are the three main categories we have seen as well. That's on the OEM. We see the aftermarket side. We have seen very nice growth in Q1. We also saw growth in Q4. Aftermarket has been showing positive numbers now for a couple of quarters. Again, from the OEM perspective, we have very strong positions. We need to keep that in mind as well that the market is much more fragmented, obviously, and that we don't have any Dometic look-alike offering to put it in some way.

Fredrik Ivarsson: Perfect. Thank you so much.

Juan Vargues: You're welcome.

Stefan Fristedt: Thank you.

Operator: The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Daniel Schmidt: Yes. It's me again. Just to follow up, and another detailed question I forgot last time for Stefan. You're repaying this bond of 2.2 billion tomorrow. Could you give us any indication of how much that would change your financial net quarterly going forward?

Stefan Fristedt: That is running with a financing cost of three percent.

Daniel Schmidt: You were getting basically just 1%, 1.5% on the cash that you held?

Stefan Fristedt: Sometimes a little bit more, actually.

Daniel Schmidt: Okay, so maybe a percentage point or maybe a little bit more in a positive impact on the financial net. Is that fair?

Stefan Fristedt: Yes. We are on 4.2, 4.3 percent on average cost of our portfolio right now. This will take it up a little bit, but in absolute terms, as you are aware, it will go

down. It will continue later in the year when we have the 750 million in private placement that we are planning to pay back as well.

Daniel Schmidt: Exactly. Okay, good. Then I guess you already touched upon it, but I missed it as I missed part of the call. Are there any details on the European market, on the RV side? You grew in the quarter. Was that both OE and aftermarket? What was the momentum in the quarter?

Juan Vargues: We see the OEM business evolving in a positive way. Registrations across Europe were very positive. We see order intake as well being positive for us now for a few months, so I'm optimistic. Even the Service & Aftermarket has been absolutely improving lately. If I think about different geographies, it's clear. I feel far more optimistic about the RV and the Marine industries in Europe than I feel about the US market. I see US consumers showing much lower consumer confidence than the European ones. Europe is not flying. Don't get me wrong, but again, inventories are gone. Manufacturers are starting to build up. Service & Aftermarket are also in positive territory. What you see on the American market is that the inventories are relatively low, but retail is still negative as a consequence of consumers entering the stores but not pushing the button. As long as that doesn't happen, of course, it will be slow movement.

Daniel Schmidt: Yes. Thank you. Good.

Juan Vargues:: You're welcome.

Daniel Schmidt: That's all from me. Thank you.

Stefan Fristedt: Thank you, Daniel.

Operator: The next question comes from Agnieszka Vilela from Nordea. Please go ahead.

Agnieszka Vilela: Thank you. I have two follow-ups. Maybe starting with your SG&A development. You have quite good progress on the gross margin, but now, with the SG&A cost being higher, much of that benefit is kind of disappearing or fading away a bit, at least. Could you just tell us about your investments in marketing and product development? It's all for good reasons, but how would you evaluate the success of your initiatives there? How much should the new products add to your growth? Also, should we expect this kind of cost to be elevated for the coming quarters?

Juan Vargues: I believe that we will see that course, especially in those two segments, being higher for another one or two quarters, and then they will be coming down. At the same time, as I said, we have been investing quite a bit in product development. We believe that it is super important. We have been preparing ourselves for a growth phase. To develop the products, if you are not launching, it doesn't give you a lot. At the same time, as you know, Agnieszka, we are trying to reinforce the B2C side. The B2C side, from a marketing perspective, is simply higher cost. At the same time, it's also bringing higher margins. I believe that you need to see the combination of gross margins and SG&A. Hopefully, we will be showing a positive balance moving forward.

Agnieszka Vilela: Thank you. My second follow-up is on the Marine business. You grew organically by 2% in the quarter, but the operational leverage was quite low, with EBITA still falling 17%. Can you just remind us what the driver was behind the lower earnings and how we should think going forward about this earnings progression in the Marine?

Juan Vargues: The main issue in the Marine business is obviously that we are producing in Canada. We have a situation with the tariffs. As you know, things are changing on a continuous basis. At the same time, you also have some time lag between the cost increases and what we are provisioning on tariffs and potential tariffs, and the price increases that we are applying. It's very much a time lag. We should expect that to improve moving forward.

Agnieszka Vilela: Could you just quantify the tariffs you're paying on the Marine side, ballpark?

Juan Vargues: I don't have a number on top of my mind.

Stefan Fristedt: We don't have that available right now. We know what we are paying. What has happened now in the first quarter is that the Supreme Court was declaring some of them not appropriate, so they're obviously impacting the dialogue somewhat with some of the customers. It is a challenging environment to operate in terms of this, where things are changing very, very frequently.

Juan Vargues: It is a challenge because no customer... that's also valid for us when we are the customer. You get crazy when you get a new price list every other month. That's the reality that you just need to play now. We implemented the new prices as late as one month ago, but we are not seeing the effects on the Marine side.

Agnieszka Vilela: Understood. Thank you.

Juan Vargues: You are totally right, Agnieszka. We have a time lag in the Marine side between the tariff situation and the price increases. Again, as late as one month ago, we applied a new price.

Stefan Fristedt: Plus, what we talked about before in SG&A investment, especially in product development.

Juan Vargues: Yes, absolutely.

Agnieszka Vilela: Thank you.

Juan Vargues: You're welcome.

Tobias Norrby: We have a few questions from the webcast audience that we can take now, then. The first one relates to the backlog. How did we see a change during the quarter, and then what's the typical maturity in the backlog?

Juan Vargues: There is good progress in January, flattish in February, and better in March again. Normally, with our backlog, we are not industrial, so our backlog is somewhere between four and six weeks. We are starting Q2 in a stronger situation than we were in Q1. Again, we cannot take any conclusions on what May or June will look like. The starting point is positive.

Tobias Norrby: Thank you. Now there's a question on leverage. Do you stick to the target of 2.5, and how should we see what the fair expectation of the leverage evolving towards this 2.5?

Stefan Fristedt: We can absolutely confirm that we stick to the target of around 2.5. We are now coming into two strong cash flow quarters here. I expect that we are going to move towards 3 and potentially even slightly below, but I don't foresee that we are going to achieve around 2.5 during 2026.

Tobias Norrby: Finally, a question on CapEx. There was a mention of lower CapEx going forward. Can you please elaborate on that?

Stefan Fristedt: As we have been running the different kinds of restructuring programs, we have obviously created something where we have been outsourcing to a higher degree than we have before. That is one driver. Then, just by the fact that we have fewer factories, as we have been closing factories during these programs,

we have gone from 31 factories down to 22 now. It's obviously also reducing the need for CapEx in machinery and equipment.

Juan Vargues: It's a logical consequence. This has been very much on purpose since we introduced a new strategy. We wanted to have a similar level of CapEx, but the profile of the CapEx was going to change by investing less in maintaining factories, investing less in machinery, but investing more in tooling in connection to innovation. That's an important one.

Tobias Norrby: Good. That's it from the webcast audience then. Back to the operator, please.

Operator: The next question comes from Andreas Lundberg from Seb. Please go ahead.

Andreas Lundberg: Yes. Thank you. Andreas with Seb here. Back to the leverage question. You say you're targeting 2.5 times, you say. How comfortable are you with that, given the cyclicality of the business? Wouldn't you consider even a lower level to be more suitable?

Stefan Fristedt: The target is expressed around 2.5. At times, it could be below 2.5. In some other situations, it could be on 2.5 or even slightly above. Depending on where we are in the cycle, I can agree with your comment. Typically and historically, we have been deleveraging somewhere in the neighborhood of 0.6 times per year. Now, when things are starting to... Yes, it may be difficult to talk about normalization, but a little bit more stable. I would still say that we still have that deleveraging potential in our model.

Juan Vargues: I think things also change over time. We keep in mind that we moved from two to around two and a half over time when the market was growing, when everybody was asking Dometic: "Guys, isn't this the moment to grow additionally by acquisitions?" The market turned very, very sour. We have been fighting super hard to come down to around two and a half, and once we are approaching two and a half, then we will discuss whether it is the right target or not. Just now, we are still far away from two and a half, so we have a clear target to reach around two and a half.

Stefan Fristedt: Yes.

Juan Vargues: Yes, I think it's super important. From our side, we understand the situation. We are working extremely hard. Financial targets change all the time, but this is not a time to discuss a change. This is the time to get into the financial target.

Andreas Lundberg: Yes. Thank you. Earlier, I think it was a year ago that we talked about potential divestments or exits in certain categories. Where do you stand today, or where does your thinking stay today?

Juan Vargues: The same working, but the market hasn't been very, very positive for divestments either. It's clear that we have been talking. We have been out to the market with a couple of assets, and we have been very, very close to completing one of the deals. Then we had the famous Liberation Day. Then things changed overnight. The willingness of potential buyers to invest at that moment changed. We are working very, very hard, and hopefully, as the market stabilizes, it will be a little bit easier to divest those assets. We continue to work on that, but again, the environment has not been appropriate for money.

Stefan Fristedt: I also think it's worthwhile to mention here that what is for this to make full sense, there is a strategic assessment towards, but it should also make financial sense. We need to get a certain valuation, and it's not a fire sale in itself. That's obviously a part of it.

Andreas Lundberg: Okay. Then lastly, on the cost-saving side. What remains, and what kind of cost savings remain? Thank you.

Juan Vargues: We have several projects that are just now ongoing. As you may understand, these kinds of decisions are very, very sensitive. You don't want to communicate before you are ready to communicate. That's why I commented earlier today that they are going to be back-loaded. We are working just now on the preparations, making sure that everything is going to work out. We will communicate the different steps as they are happening in connection to these quarterly reports, but you don't want to get unnecessarily concerned.

Andreas Lundberg: Okay, great. Thank you so much.

Juan Vargues: You are welcome.

Operator: There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Juan Vargues: Thank you very much for attending the call and for showing interest in how Dometic is evolving. I would also like to take the opportunity to thank Stefan for these years. It has been a tough environment. I believe that you have contributed in a great way to our development, even if the times have been very, very tough. Thank you very much and all the best in the future.

Stefan Fristedt: Thank you very much for these kind words, Juan.

Juan Vargues: For all of you, thank you, and hopefully we'll see you soon. Bye.

Stefan Fristedt: Bye-bye.