Thule () : year-end report, fourth quarter, October–December 2020

Year-end report, fourth quarter, October-December 2020

Fourth Quarter

• ▪ Net sales for the quarter amounted to SEK 1,605m (1,211), corresponding to an increase of 32.6 percent. Adjusted for exchange rate fluctuations, sales increased 44.6 percent.

• ▪ Operating income totaled SEK 241m (47). Underlying EBIT amounted to SEK 241m (71), corresponding to a margin of 15.0 percent (5.9). Adjusted for exchange rate fluctuations, the operating margin increased 9.8 percentage points.

• ▪ Net income amounted to SEK 164m (30).

• ▪ Cash flow from operating activities totaled SEK 319m (174).

• ▪ Earnings per share before dilution amounted to SEK 1.57 (0.29).

Full year

• ▪ Net sales for the full year amounted to SEK 7,828m (7,038), corresponding to an increase of 11.2 percent. Adjusted for exchange rate fluctuations, sales increased 13.1 percent.

• ▪ Operating income totaled SEK 1,591 (1,195). Underlying EBIT amounted to SEK 1,593m (1,245), corresponding to a margin of 20.3 percent (17.7). Adjusted for exchange rate fluctuations, the operating margin increased 2.2 percentage points.

• ▪ Net income amounted to SEK 1,166m (883).

• ▪ Cash flow from operating activities totaled SEK 1,614m (1,030).

• ▪ The global pandemic impacted sales negatively in the spring, which is normally the company's peak season. A delayed season together with increased demand resulted in a substantial recovery in the second half of the year.

• ▪ The Board of Directors proposes a dividend of SEK 15.50 per share, corresponding to SEK 1,621m based on the number of shares outstanding at February 10, 2021.

Oct - Dec	Oct - Dec	Jan - Dec	Jan - Dec
2020	2019	%	2020	2019	%
Net sales, SEKm	1 605	1 211	+32.6	7 828	7 038	+11.2
Underlying EBIT, SEKm	241	71	+240.3	1 593	1 245	+27.9
Operating income (EBIT), SEKm	241	47	+415.4	1 591	1 195	+33.2
Net income, SEKm	164	30	+449.5	1 166	883	+32.0
Earnings per share, SEK	1.57	0.29	+442.3	11.23	8.56	+31.2
Cash flow from operating activities, SEKm	319	174	+83.4	1 614	1 030	+56.7
1

CEO's statement

The strong finish to 2020 enabled us to reach our profitability margin target of 20 percent

We ended a turbulent 2020 with an extremely strong fourth quarter with a growth of 45 percent after currency adjustment. The exceptionally strong second half of the year enabled us to deliver currency-adjusted growth of 13 percent for the full year. A development that was difficult to imagine in the middle of April, when society was shutting down around the world to limit the pandemic's spread, which contributed to the temporary halving of sales.

Driven by healthy sales growth, continued high gross margins, and a scalable and efficient operations, we delivered an EBIT margin of 15.0 percent (5.9) for the quarter. The strong profitability during the quarter also enabled us to deliver an EBIT margin of 20.3 percent for the year. Thereby meeting our goal of an EBIT-margin exceeding 20 percent earlier than anticipated.

The sustainability goals for 2020, which were set in 2014, have largely been met. Therefore, new long-term sustainability goals were set in December, within the framework of the Science Based Targets initiative, in line with the goal of the Paris Agreement and the UN's 2030 Agenda for Sustainable Development to limit the increase in the planet's average temperature to 1.5°C.

Region Europe & ROW - biking-related categories continue to grow

During the quarter, sales in the region rose 43 percent after currency adjustment, which meant that we posted currency-adjusted growth of 14 percent for the full year. As with the third quarter, the trend was positive in essentially all markets.

The Sport&Cargo Carriers category benefited in the quarter from a continued positive bike market, which gained a further boost from a mild autumn and winter. Sales of roof racks and rooftop tents were also healthy. However, the closure of winter sports venues in the Alps depressed sales of roof boxes and ski-racks slightly. For the full year, growth in the category was 18 percent after currency adjustment, with a clear impact from an increase in taking holidays locally.

After currency adjustment the Active with Kids category grew 33 percent in the year and the fourth quarter also performed extremely strongly in the three sub-categories: strollers, bike trailers and child bike seats.

Accessories for RVs also performed well in the fourth quarter, as many RV manufacturers ramped up production following significant challenges earlier in the year. For the full year, this category increased 7 percent after currency adjustment for the region.

However, the bag category continued to be negatively affected due to reduced international travel. For the full-year 2020, net sales declined 23 percent after currency adjustment.

Region Americas - bike products, rooftop tents and strollers the winners

In Region Americas, sales rose 48 percent in the quarter after currency adjustment and sales growth for the full year was 10 percent.

In Sport&Cargo Carriers growth was mainly driven by a high demand for bike racks, but other product categories also performed well. For the full year, we posted currency-adjusted growth of 13 percent.

The year ended very strong in the Active with Kids category and full-year sales rose 57 percent after currency adjustment.

Bag sales in this region were also weaker than prior year due to the pandemic and we ended the year with sales down 19 percent after currency adjustment.

The limited and niche targeted sales of accessories for RVs in this region grew quickly and now accounts for 3 percent of the region's sales.

Short-term uncertainty remains, but the long-term trends are positive

From a short-term view, considerable uncertainty remains regarding the scope of any pandemic-related lockdowns in a number of countries.

However, we remain convinced that the robust trend for outdoor and vacation activities closer to home will remain positive for our product categories. Our design-winning products in combination with very flexible production in and near our main markets will remain a competitive advantage.

I want to conclude by thanking all colleagues of Thule Group, who have shown fantastic drive and enormous flexibility during a very challenging year, which ended up being very successful.

Magnus Welander CEO and President

2

Financial overview

Trend for the fourth quarter

Net sales

In the fourth quarter of 2020, net sales amounted to SEK 1,605m (1,211), representing an increase of 32.6 percent. Adjusted for exchange rate fluctuations, net sales for the Group rose 44.6 percent.

In Region Europe & ROW, net sales totaled SEK 1,074m (797), up 34.9 percent, and 42.9 percent after currency adjustments. Net sales in Region Americas amounted to SEK 531m (414), up 28.2 percent and 48.0 percent after currency adjustment versus fourth quarter 2019.

Oct-DecJan-Dec
Change in net sales 2020 2020
Changes in exchange rates Structural changes Organic growth	-12.0% 0.0% 44.6%	-1.8% 0.0% 13.1%
Total	32.6%	11.2%

Gross income

Gross income for the quarter totaled SEK 643m (463), corresponding to a gross margin of 40.0 percent (38.2). After currency adjustment, the margin improved 1.5 percentage points driven by increased production volumes and an advantageous product mix.

Operating income

Operating income totaled SEK 241m (47). Underlying EBIT amounted to SEK 241m (71), corresponding to an operating margin of 15.0 percent (5.9). Operating income was positively impacted by higher sales as well as by lower overheads compared with the same period last year. Last year, operating income was impacted by restructuring costs of SEK 24m. Changes in exchange rates had a negative impact of SEK 13m.

Oct-DecJan-Dec
Change in underlying EBIT margin
Underlying EBIT 2020 Underlying EBIT margin 2020 Underlying EBIT 2019 Underlying EBIT margin 2019 Underlying EBIT 2019, currency adjusted Underlying EBIT margin 2019, currency adjusted	241 15.0% 71 5.9% 58 5.2%	1 593 20.3% 1 245 17.7% 1 254 18.1%
Change in underlying EBIT margin, currency adjusted	9.8%	2.2%

Net financial items

Net financial items for the quarter amounted to an expense of SEK 18m (expense: 14). Exchange rate differences on loans and cash and cash equivalents were an expense of SEK 10m (expense: 2). The interest expense for borrowings was SEK 8m (expense: 12).

Net income for the period

In the fourth quarter, net income was SEK 164m, corresponding to earnings per share of SEK 1.57 before and SEK 1.56 after dilution. For the year-earlier period, net income totaled SEK 30m, corresponding to earnings per share of SEK 0.29 before and after dilution.

Trend for the full year

Net sales

For the full-year 2020, net sales amounted to SEK 7,828m (7,038), representing an increase of 11.2 percent. Adjusted for exchange rate fluctuations, net sales for the Group rose 13.1 percent. Until mid-March, sales grew compared with the previous year. The outbreak of coronavirus (COVID-19) and the far-reaching quarantine measures introduced in most countries had a strongly negative impact on sales during the second half of March and the months of April and May. The latter half of the second quarter and the second half of the year posted strong growth year-on-year. A large share of the sales lost during the spring season were delayed and extended the season.

In Region Europe & ROW, net sales totaled SEK 5,721m (5,057), up 13.1 percent. After currency adjustment, net sales rose 14.2 percent. Net sales in Region Americas amounted to SEK 2,107m (1,980), an increase of 6.4 percent and 10.1 percent after currency adjustment compared with the full-year 2019.

Gross income

Gross income amounted to SEK 3,230m (2,829) corresponding to a gross margin of 41.3 percent (40.2). After currency adjustment, the margin improved 0.7 percentage points. An advantageous product mix, over absorption, lower material costs and efficiency improvements in the assembly plants made positive contributions.

Operating income

Underlying EBIT amounted to SEK 1,593m (1,245), corresponding to an operating margin of 20.3 percent (17.7). Changes in exchange rates had a positive impact of SEK 9m. The strong sales growth that occurred during the second half of the year more than compensated the weak period at the end of the first quarter and beginning of the second quarter. Operating income totaled SEK 1,591m (1,195).

Net financial items

Net financial items for the full year amounted to an expense of SEK 64m (expense: 49). Exchange rate differences on loans and cash and cash equivalents amounted to an expense of SEK 15m (0). The interest expense for borrowings was SEK 49m (expense: 49).

Net income for the year

Net income for the year was SEK 1,166m, corresponding to earnings per share of SEK 11.23 before dilution and SEK 11.21 per share after dilution. For the full-year 2019, net income was SEK 883m, corresponding to earnings per share of SEK 8.56 before dilution and SEK 8.55 after dilution.

Cash flow

Cash flow from operating activities for the quarter was SEK 319m (174). The sales increase in the quarter impacted in form of higher profits and stable working capital with lower accounts receivable as well as a somewhat higher inventory driven by the build-up of inventory in the last quarter of the year. Cash flow from operating activities was SEK 1,614m (1,030) for the full year. Investments in tangible and intangible assets amounted to SEK 170m (161). During the quarter, net debt was reduced and the utilization of the credit facility declined SEK 505m. A total of SEK 262m was issued in conjunction with the 2017/20 incentive program that concluded in July.