Earnings call transcript: Nimbus Group Q1 2025 sees sales decline

Nimbus Group AB (Market cap: $32.13 million) reported its Q1 2025 earnings, revealing a 13% decline in sales to SEK 300 million. The company faced challenges due to soft market conditions and reduced production volumes. The stock reacted negatively, with a 5.75% drop in pre-market trading. According to InvestingPro data reveals the stock's notable volatility, with a -10.45% return over the past six months. For deeper insights into Nimbus Group's valuation and growth prospects, investors can access comprehensive analysis through InvestingPro's detailed research reports, available for over 1,400 US-listed companies. The market reaction reflects investor concerns over the company's declining sales and negative EBITDA.

Outlook & Guidance

Despite the challenging quarter, Nimbus Group's financial targets remain unchanged. The company expects an inventory release in the coming quarters and anticipates orders from the Swedish Armed Forces after the summer. Key upcoming dates include the Annual General Meeting on May 16 and the Q2 report on July 17.

Executive Commentary

CEO Jan Erik Lindstrom remarked, "The picture is unpredictable for the moment," highlighting the uncertainty in the market. CFO Rasmus Alvheimr noted, "Measures implemented to adapt production volumes to demand have not yet achieved the intended effect," indicating ongoing challenges in aligning production with market demand.

Risks and Challenges

• Soft market conditions globally, particularly in recreational boating.
• Tariff situations creating customer uncertainty.
• Steep declines in the "Rest of World" markets, which constitute 4% of the business.
• Ongoing restructuring efforts in Finland and reduced production capacity.
• Potential delays in expected orders from government contracts.

Q&A

During the earnings call, analysts focused on Nimbus Group's working capital challenges and the impact of unexpected inventory levels in Nordic and U.S. markets. Discussions also covered tax payments from the previous year and interest payment expectations.

Nimbus Group's Q1 2025 results reflect a tough market environment, with sales declines and operational challenges impacting performance. The company remains focused on strategic initiatives and maintaining its financial targets. While current liquidity metrics show that liquid assets exceed short-term obligations, investors seeking detailed financial analysis and real-time updates can access additional ProTips and comprehensive metrics through an InvestingPro subscription.

Full transcript - Nimbus Group AB (BOAT) Q1 2025:

Conference Operator: Welcome to Nimbus Q1 twenty twenty five presentation. During the questions and answer session, participants are able to ask questions by dialing key five on their telephone keypad. Now I will hand the conference over to the CEO, Jan Erik Lindstrom CFO, Rasmus Alvheimr and Head of Investor Relations, Gunnila Oman. Please go ahead.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Jan Erik Lindstrom, CEO, Nimbus Group: Thank you, and good morning, and welcome. We start then with, we had a very nice picture, the first one. Actually, that is what it's all about, so to say, the recreational, the dream, so to say, of a good recreational time then. But we start then with the business update for the first quarter twenty twenty five. The sales then amounted to SEK 300,000,000, actually then down by 13%.

And so far then, in pair with our peers that we follow, both in Europe and America, It is tricky in our industry to get the total pictures so quick, so to say, but a fair guess is, well, that the market has moved down maybe a couple of percentage points more than we have done then and our peers. And actually, one of the giant in the business, Brunswick, has reported just minus 13%. So there is where the market is today. We have the EBITDA then on minus SEK 13,000,000, slightly lower loss actually then despite the decrease in volume. We had order intake of SEK $334,000,000 below last year.

And what we can say there is that we had a good start, for the year, but we then saw a slower, a soft March, that somehow then affected these figures. And what we have then is a weakening market in relation then to the estimate from year end, last year then, which has affected the commercial sales. And what we may then especially sees is this steep decline than in other markets or rest of the world. It's only representing 4% of our total business during 2024, but a lot of this market sales was then from quarter one last year. And then, of course, a lot of companies has already reported about that.

But the tariff situation fuels this uncertainty and this hesitancy among customers. So we are back again to the picture that we had during 2024. And I think it's fair to say that the picture is unpredictable for the moment. But we also have on the positive side then, we have a positive development in our retail sales, although it's a small quarter also for them, but it's good to see. They're moving according to our plans.

But then the sales level gives us then a situation where we don't have fully leveraged our investments in the business setup or you can say that meaning that we still then have capacity available. The Kopio closing project or the value boat closing then is moving according to plan. And we also then, during the quarter, we had this, our right issue process that started during the end of twenty twenty four, was then successfully completed then, during this quarter, in January, actually then, 2025. And that gave us SEK $345,000,000 after the transaction costs. During the quarter, we have also you have certainly seen the press releases, but, we have established several new markets places, actually globally then around the world, but maybe then especially Europe and also one in Stockholm.

And, of course, we're looking forward then to to see what this splendid and and first class locations can give us for the future. I have also announced and and notified the board, that I am planning to retire. Next time I celebrating my birthday, I will be 60. It's a perfect time then to to leave the baton to accessory. Of course, I will continue to support in every possible way, the company, and I will also remain then, of course, as a shareholder.

If we switch the page. A part of our history then, we're looking back. Nimbus Group, where we were founded in 1968, a long experience. We have a long history of international trade. We started actually already in the beginning of the seventies.

And we have choose the strategy, well proven and successful strategy of, House of Brands, and that we did somewhere around 2015. If we look at some highlights from this picture and the most recent ones, the last twelve months, during 2024 then, we have produced our first nimbus boat in U. S. And this is, of course, important for us. And that is not really related to the tariffs, even if that could be something, of course, but that's not the purpose.

95% of the sales in U. S. During 2024 was U. S.-made. So that is important.

And our intention then is to have U. S. As a home market. In September, we launched four ninety five in Cannes, also important. And as we say in the report that 2025 production slots is sold out, and it's exciting to see what we can do with this beautiful boat.

And that was actually the boat you saw on the first page. And in October, also an important step for us, Olekin was entering the governmental segment with the order from the Swedish Armed Forces, and we will get back to that later on in the presentation. If we then switch page, and here is something new then. From now on then and going forward, we will report our commercial sales and retail sales separately and on a more detailed level. It is good from a corporate governance perspective, of course, but we also believe that it will give our stakeholders, a better picture and understanding of what Nimbus Group really is, so to say.

And this is a project that we have worked with quite hard for the six to nine months, I should say, but important for us. And I will present the commercial sales, and later on, you will hear Erasmus present the retail sales. And if we then look at commercial sales in quarter one, and we start with the sales, the sales dropped then by 17% or SEK 51,000,000, mainly then, as I said before, driven by the rest of the world market, which then is, again, small business, 4% of our business. But if we look on the right side then and look at the net sales and comparable quarters for 2023, '20 '20 '4 and 2025, We can see then that we have these downward trends on not only other markets and then especially then between 2024 and 2025. We also see that we have a downward trend on The Nordics.

And that Nordics, to begin with that, is of course related to the fact that we are leaving the value boat segment, and is is an ongoing process, of course, but that affects that figure. Other market is the big part, minus 46 millions actually, partly then mitigated. And this, we are really happy for, of Europe that it is coming up then from, during the recent years, a very soft market. And what we see in Europe then is, of course, we are glad to see that picture. Let's see, of course, what will be the next step, so to say.

But it's satisfactory to see. If we then look on the order intake, and as we say, stronger order intake in Europe, but North America softening, and you'll find that one below to the left. Europe up, actually, the whole period, which is good. Europe was our biggest part, before, before US took over, but it was two things with that. One was, of course, that US was growing, and that was good.

But Europe also went down at the same period. But now we see this recovery, which is extremely good for us, of course. Nordics, more or less flat. And as I already said, the North America is has a downward trend for the moment. If we then jump into the order book, and again, only confirmed orders, of course, in the order book with prepayment, important step.

And also important to know is that the order from, the Swedish Armed Forces is not included, only the pre series. And, we are expecting that after the summer, we will see these orders coming into us then. But during a period of, I should say, two to three years then. If we look at the picture below to the right then, the order book, we have talked quite a lot during the recent quarters about this normalization, and that continues. It is a shorter but a good level, for the moment, and especially then and which is important compared then with the pre pandemic figures, which clearly show showing us that the things we have done, is making a difference.

The product development, the the growth, that we have had, and also the the the way we organize our business has been successful, and we are, of course, aiming to continue that journey. If we then take the next picture, and at the same time, I leave the word to Rasmus.

Rasmus Alvheimr, CFO, Nimbus Group: Yes. Thank you, Jan Erik. Then we move to the retail sales. In the retail sales, the first quarter is a seasonally very small quarter in terms of sales because of the strong presence in The Nordics. For reference, the first quarter last year represented only about 10% of the annual retail sales, and that is a fair figure.

Having that said, the sales increased by 15% in the quarter, up to SEK 57,000,000. And the increase was driven by higher sales of premium owned brand boats, Traded boats and service and accessories came out rather flat in relation to last year and amounted to SEK 30,000,000. Down to the left there, you see the order intake, and it continued on a positive trend that we saw since the second quarter twenty twenty four. And it now ended up at 120,000,000, which is up SEK 2,000,000 since last year. The order book down to the right continued to increase and reached SEK 154,000,000, which is the highest level since the first quarter twenty twenty three.

But then remember that at that time, the order book was also affected by older orders from the pandemic premium period, which increased the levels a bit. So it's not really comparable in that way. The accumulated order intake since the second quarter of twenty twenty four is now up 36% versus last year. Then we switch to the P and L development. As said, the net sales in the first quarter amounted to SEK 300,000,000, which is down 30% since last year, SEK $344,000,000.

And in beta amounted to minus 13 versus minus 14 last year. The gross margin reached 12.3%, which is the same as last year. The gross margin is still affected by the cost under absorption effect from low production volumes. And the gross margin is also affected by different market campaigns that we have done to reduce levels of inventory. Combined, those two has offset the positive effects that we have shown from Edgewater of SEK 60,000,000 on EBITA level and from the increased retail business.

OpEx amounted to SEK 50,000,000, which is an improvement by 12 since last year. The gross savings are though higher, but we have also done investments to strengthen the sales organization, which increases the cost a bit, but net minus 12%. Regarding the restructuring provision in Finland, the outcome has so far matched the estimated cost level quite well. Only minor deviations has been noted so far. Final sum up of the effects is expected to be made in the third or fourth quarter.

Regarding the finance net, I would like to mention that this has been heavily impacted by a negative currency effect from intercompany balances amounted to minus 30,000,000. And this effect comes from the U. S. Dollar development. And the opposite effect was seen in the fourth quarter, but at that time, positive.

So now they have more or less evened out in the fourth quarter and first quarter combined. And then we move to cash flow and net working capital. Due to seasonality effects, the first quarter is normally the peak in net working capital driven by retail business with who has quite high levels of inventory in front of the season this time of year. Net working capital increased in the first quarter and ended up at SEK $710,000,000, and that was driven by timing effects from receivables of SEK 91,000,000 and increased inventory of SEK 48,000,000. To mention here is that the fourth during the fourth quarter, the receivables was quite low on a normal low level.

The increased inventory is related to both those seasonal effects from the retail business, as I mentioned, but also from this unexpected sales drop in the commercial sales driven by tariffs and economic uncertainty that has pushed the anticipated inventory release forward in relation to what we expected in front of this period. Consequently, measures implemented to adapt production volumes to demand has so far not achieved the intended effect. And these are our financial targets, which remains unchanged even if we are aware of that we are a bit behind today. And with that, I leave the word to you, Jan Erik.

Jan Erik Lindstrom, CEO, Nimbus Group: Thank you, Rasmus. And then actually then, before the Q and A, from the financial calendar then, we will have here in Gothenburg actually then the annual general meeting, and that will be on the May 16 quite soon. And the quarter two report will be presented the July 17. And then we'll leave to Q and As.

Gunnila Oman, Head of Investor Relations, Nimbus Group: So we have one question from from the activity feed from George at Gratitude Capital. It's on cash flow. What can we expect with regards to cash flow from changes in working capital going forward? And to what extent are you now running with the too high working capital?

Rasmus Alvheimr, CFO, Nimbus Group: Yes. As said here, the first quarter is the peak normally in net working capital in general because of the seasonality effects. But what we expect to see is, of course, this release of inventory that we partly thought should have taken place in the first quarter. Now we see that this has been pushed forward. And if this occurs now in the second quarter or if it takes longer, it's very hard to predict right now because of the market situation.

But our forecast in that way We expect the levels of inventory to be significantly reduced, but it will take longer time than what we said in the last quarter. That is what we can say. But if it's the second quarter or later on, that's not possible to really tell right now.

Jan Erik Lindstrom, CEO, Nimbus Group: And if I may add, it's important that to understand the picture is that we have decreased our capacity down on the production sites to open up then for this inventory sales then. So our intention then is that these two curves should meet during the season.

Gunnila Oman, Head of Investor Relations, Nimbus Group: Thank you. And the next question is how come you had a payment of income taxes of 12,000,000 in spite of a negative result last year?

Rasmus Alvheimr, CFO, Nimbus Group: That is related to tax from year 2023. So that is old income tax. So it's not affected by 2024.

Gunnila Oman, Head of Investor Relations, Nimbus Group: And the next question is, what would you regard as a normalized payment of interest level, assuming no changes in interest rates?

Rasmus Alvheimr, CFO, Nimbus Group: We have because of the setup we have with floor plan, we continuously have interest payments, outgoing interest payments. But in a normal situation, it it of course, depending on the usage of the check limit. But if we exclude the Shekli meat and and you only consider the the interest cost, I would say that those would amount to a couple of millions in maximum per quarter. So the most part or the biggest part in the finance net is related to currency effects.

Gunnila Oman, Head of Investor Relations, Nimbus Group: And then gross margin, I guess, impact from reducing finished goods. Is that solely related to small boats or also inventory of premium boats?

Rasmus Alvheimr, CFO, Nimbus Group: It's a combination of both. Of course, small boats are affected, but here we also need to take into account that we did the provision last year to cover up for for as much as we could anticipate, but we have had costs. But it it's all it's also related to to big boats because of the stock stock release. So a combination of both.

Gunnila Oman, Head of Investor Relations, Nimbus Group: Okay. And then the last question from George at Gratitude is higher inventory than expected. In what regions or areas were you surprised by lower sales activities?

Jan Erik Lindstrom, CEO, Nimbus Group: We still have the major part is then, of course, the value boats, and it's not only then on our yards because that is a small part. It's at the dealerships. And then it's then the Nordic countries then, of course, on the value boat side. Then The U. S.

Situation, which has been ongoing for a while now with the softer market, I should not say it's surprising, but it's not what we hoped for, so to say. So that there is the major part of it. You, Jan think, I may add in the same question that in Europe, we have the opposite, where we actually don't more or less have any inventory at all, which should be the normal case. So it's not the normal market. It's unbalanced, so to say, from that perspective.

It's also important to bear in mind.

Gunnila Oman, Head of Investor Relations, Nimbus Group: So thank you so much, Jan Erik and Rasmus, and thank you all participants, for listening in. And welcome back on our q two, the July 17. Thank you.

Rasmus Alvheimr, CFO, Nimbus Group: Thank you. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.