MIPS AB (publ): MIPS interim report January - June 2019
- Net sales increased by 49% to SEK 82.6m (55.6). During the quarter, the organic growth was 38%
- Operating profit increased to SEK 36.8m (21.7). The adjusted operating profit* increased to SEK 38.0m (21.7)
- Operating margin increased to 44.5% (39.0). The adjusted operating margin* increased to 46.0% (39.0)
- Cash flow from operating activities increased to SEK 24.2m (5.9)
- Earnings per share diluted, amounted to SEK 1.12 (0.67)
- Two acquisitions were completed during the quarter whereby patents and certain other intellectual property rights related to the Fluid technology and GlideWear technology were acquired
- Net sales increased by 61% to SEK 127.5m (79.1). During the first six months of the year, the organic growth was 48%
- Operating profit increased to SEK 48.6m (23.4). The adjusted operating profit* increased to SEK 49.8m (23.4)
- Operating margin increased to 38.1% (29.6). The adjusted operating margin* increased to 39.1% (29.6)
- Cash flow from operating activities increased to SEK 31.9m (14.3)
- Earnings per share diluted, amounted to SEK 1.50 (0.74)
Good progress in the second quarter
During the second quarter, the company's growth continued with a strong increase in both sales and profitability. Net sales increased by 49% to SEK 82.6m (55.6). Adjusted for currency effects and acquisitions we grew organically with 38% in the quarter. I am particularly pleased with the continued positive development in the Snow category where we see that more and more customers choose to include MIPS in their full line of product offerings. As in previous quarters, the increase in revenue is primarily related to our growing sales with existing customers.
The operating profit (EBIT) for the quarter amounted to SEK 36.8m (21.7) and we achieved an operating margin of 44.5%. The adjusted operating profit increased to SEK 38.0m with an adjusted operating margin of 46.0%.
During the first six months of the year, the net sales increased with SEK 48.4m to SEK 127.5m (79.1) which corresponds to an increase of 61% and an organic growth of 48%. The operating profit for the first six months of the year increased to SEK 48.6m (23.4) meaning that we for the first time have reached an adjusted EBIT margin of over 40% during a rolling 12-month period, in line with our 2020 financial targets.
Exciting launches in categories new to Mips
During the quarter, two customers introduced products with the MIPS' technology in the Hockey and Construction categories which are categories that are new to MIPS. For a long time, our ambition has been to launch products in the Hockey category based on our belief that the MIPS' technology can make a great difference for the players' safety. A new type of helmet has been launched in the Industry category during recent years in addition to the traditional plastic (hard hat) helmet. These new helmets are made of a more durable material that enables an implementation of the MIPS' technology. Before we started to develop MIPS' offering to these two categories we, as with previous launches in new helmet categories, evaluated the relevant injury criteria and verified that MIPS' patented technology actually provides an increased protection.
Complementary strategic acquisitions
During the quarter, we completed our first two acquisitions comprising of patent portfolios and certain other intellectual property rights related to the technologies Fluid and GlideWear. These technologies have historically been licensed to a limited extent, however we do see good opportunities to develop the technologies further and becoming complementary to our already market leading portfolio of MIPS solutions.
Positive momentum towards our targets
With this first quarter behind me, being the company's CEO, I couldn't wish for a better start. We have had good progress in sales, launched MIPS' solutions in two new helmet categories and, in addition, completed two strategically important acquisitions that further strengthen our patent portfolio and future product offering.
We are getting closer to our 2020 targets, especially since we now have reached an adjusted EBIT margin during a rolling 12-month period that exceeds our target of an EBIT margin above 40%. As we have already taken major steps towards reaching our 2020 financial targets, we have commenced the work of defining new ambitions beyond 2020. We will present these ambitions in detail at our Capital Markets Day in Stockholm on 20 September 2019.
President and CEO
This information is such that MIPS AB (publ) is obliged to disclose in accordance with the EU's Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, on 23 July 2019 at 7.30 a.m. CET.