MIPS AB (publ): MIPS - Year end report 2018

CEO'S Comments

ANOTHER STRONG QUARTER BEHIND US

The strong sales momentum continued during the important fourth quarter and we increased net sales by 53% to SEK 62.2m (40.6). Adjusted for currency effect, the growth was 44% in the quarter. For the full year, sales increased by 53% to SEK 192.5m (125.6), adjusted for currency effect, the growth was 50%. Our major customers continued to be the main contributor of growth by increasing the number of helmet models they offer equipped with the MIPS Brain Protection System (BPS). It is very satisfying to see that all our 15 largest customers have grown their volumes with MIPS during the year and we see good growth in all our product categories.

In 2018 we increased our customer base with the addition of 18 new helmet brands. In total 146 new helmet models with MIPS BPS were introduced around the world. MIPS cooperates with 78 helmet brands that offer 448 models equipped with MIPS BPS. We delivered 3.8 million MIPS BPS equipped units during the year and have delivered 9.2 million units since 2011 to the market.
Our operating profit for the quarter amounted to SEK 28.7m (14.6), an increase of 96%. With an improved operating margin of 46.1%, the scalability of our business model is again confirmed. In addition, we delivered a strong cash flow from operating activities of SEK 23.8m (0.9). Looking at development for the full year, we see a similar trend with an adjusted operating profit of SEK 73.0m (27.8) and an adjusted operating margin of 37.9% (22.1). The positive development during the year enables the Board of Directors, for the first time in MIPS' history to propose a dividend to MIPS shareholders of 2.50 SEK.

POSITIVE DEVELOPMENT IN OUR MAIN CATEGORIES

In November one of the world's leading bicycle brands, Specialized, communicated that they will strengthen their safety story by launching MIPS BPS in all helmet models. This move provides important evidence that the expanded selection of MIPS BPS solutions can be implemented to increase safety across a wide range of price points. This is an important ingredient in our strategy to continue increasing penetration and growth.

INCREASED CONSUMER COMMUNICATION AND MEDIA ATTENTION

Throughout the year, we have met with many of the leading international journalists and thus had the opportunity to present the medical and scientific reasons behind the benefits of MIPS BPS rotational motion protection. This has generated several in-depth articles in world-leading publications for cycling, motorcycle, equestrian and skiing audiences. The fact-based articles help consumers understand what MIPS BPS is and how our solutions can help reduce the risk of brain damage.

 In the fourth quarter, the American Virginia Tech University published an updated report where they expanded their previous test of 20 bicycle helmets to 50. I am pleased that MIPS equipped helmets are now found in places 1 through 13 on this influential list of the safest products.

 

2020 TARGETS WITHIN REACH

2018 has been a year when we established ourselves as an important player in the helmet market. Several external institutions have validated our technology; we have successfully defended our patents; our product portfolio has expanded; collaborations with helmet brands have deepened; and the positive media exposure has been more extensive than ever. The consumer awareness of our technology has been improved and are now not just for the well informed but also something that the average consumer demands. At the same time, we have delivered rapid sales growth and greatly improved profitability. Supported by a strong 2018, we are looking forward to delivering according to our financial targets for 2020.

JOHAN THIEL
President and CEO