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1. Company Snapshot

1.a. Company Description

Thule Group AB (publ) operates as a sports and outdoor company.It offers roof racks; roof boxes; carriers for transporting bikes, water, and winter sports equipment and rooftop tents; awnings, bike carriers, and tents for RVs and caravans; bike trailers, child bike seats, and strollers; luggage, backpacks, and laptop and sport bags; and hiking backpacks, camera bags, and cases for consumer electronics.The company offers its products primarily under the Thule and Case Logic brands.


It operates in Sweden, other Nordic countries, Germany, rest of Europe, the United States, other North America, Central/South America, the Asia/Pacific Rim, and internationally.Thule Group AB (publ) was founded in 1942 and is headquartered in Malmö, Sweden.

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1.b. Last Insights on THULE

Thule Group AB's recent performance was driven by a 10% revenue increase, fueled by robust demand for its outdoor and mobility products. The company achieved record gross margins, a testament to its operational efficiency and pricing power. Despite facing headwinds in North America, Thule Group's diversified geographic presence and product portfolio helped mitigate these challenges. The company's ability to navigate a complex market landscape and capitalize on emerging trends has positioned it for continued growth.

1.c. Company Highlights

2. Thule's Q3 Earnings: A Mixed Bag with Margin Expansion

Thule's Q3 financial performance was marked by revenue growth of 13% year-over-year, excluding currency effects, despite a 4% decline in organic growth. The EBIT margin expanded to 17.9%, driven by cost efficiencies and a higher gross margin of 47.5%. Earnings per share (EPS) came in at 2.91, significantly beating estimates of 0.415. Cash flow from operations was SEK 668 million, and the company continues to reduce inventory, targeting a further SEK 200 million reduction this year.

Publication Date: Oct -27

📋 Highlights
  • Sales Growth Despite Organic Decline: 13% YoY sales growth (excluding currency), but organic sales fell 4% due to -5% currency impact.
  • Profitability Improvement: EBIT margin rose to 17.9% (up from historical averages), with EBIT at SEK 453 million (+9.7% YoY).
  • Strong Cash Flow and Inventory Reduction: Operating cash flow reached SEK 668 million, and inventory reduction of SEK 200 million remains on track.
  • Quad Lock Acquisition Impact: Quad Lock added 17% to revenue but faced FX-driven sales declines, with gross margin improving to 47.5%.
  • Strategic Cost Efficiency and Innovation: SG&A (excluding Quad Lock) decreased YoY, and automation/efficiency initiatives are expected to drive future savings and margin growth.

Regional Performance

The North America region remained challenging, with organic sales down 5% in the quarter. However, the company has seen positive effects from actions taken earlier in the year, and new North American-specific products have contributed to growth. The Active with Kids and Dogs category saw a net sales decline of 7% organically in the quarter, but premium dog products and child car seats continued to grow.

Margin Expansion Drivers

According to Toby Lawton, CFO, the gross margin increase was driven by Quad Lock, product mix, and efficiencies in factories and supply chain. As Toby Lawton stated, "We've seen a significant reduction in net debt, down by SEK 500 million in the quarter, resulting in a net debt-to-EBITDA ratio of 1.81." The company expects to maintain the gross margin trend seen over the last quarters.

Valuation Metrics

With a P/E Ratio of 26.28 and an EV/EBITDA of 19.08, the market appears to be pricing in a certain level of growth and profitability. The ROE of 13.92% and ROIC of 9.23% indicate a relatively efficient use of capital. Analysts estimate next year's revenue growth at 4.5%, which may be a reasonable expectation given the company's track record and industry trends.

Outlook and Initiatives

The company is focused on driving new product innovations, leveraging its global brand, and investing in product development and efficiency initiatives. Thule is scaling up its newest categories, including dog transportation, child car seats in Europe, and performance phone mounts business. The company expects to continue to invest in product development and efficiency initiatives, with some of this to be covered in the Capital Markets Day in November.

Cost Initiatives and Efficiency Gains

The company has implemented cost initiatives, such as increased in-sourcing and consolidation of third-party warehousing, and is driving structural cost initiatives, which will kick in later. Mattias Ankarberg mentioned that AI and digitalization will continue to drive efficiency in admin and product development, particularly in areas like imagery and technical documentation.

3. NewsRoom

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Thule Group AB (THLPF) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amidst North ...

Apr -30

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Thule Group AB (THLPF) Q4 2024 Earnings Call Highlights: Record Gross Margin and Strategic ...

Feb -08

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January 2025's Noteworthy Stocks Trading Below Estimated Value

Jan -28

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3 Stocks Trading At An Estimated Discount For Value Investors

Dec -30

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November 2024's Top Stocks Estimated To Be Priced Below Intrinsic Value

Nov -28

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Thule Group (OM:THULE) Eyes Growth with AI Investments Despite Dividend Constraints and Market Volatility

Nov -18

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Thule Group AB (THUPY) Q3 2024 Earnings Call Highlights: Record EBIT Margin and Strong Cash ...

Oct -24

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Top Swedish Dividend Stocks For October 2024

Oct -18

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.38%)

6. Segments

Sport & Cargo Carriers

Expected Growth: 4.5%

Thule Group AB's Sport & Cargo Carriers segment growth of 4.5% is driven by increasing outdoor recreational activities, rising demand for SUVs and crossovers, and growing popularity of e-bikes and cargo carriers. Additionally, Thule's strong brand reputation, innovative product offerings, and expanding online presence contribute to the segment's growth.

RV Products

Expected Growth: 4.2%

Thule Group AB's RV Products segment growth of 4.2% is driven by increasing demand for outdoor recreational activities, rising popularity of van life and adventure travel, and growing consumer preference for premium, high-quality products. Additionally, the company's strategic focus on product innovation, expansion into new markets, and strong distribution network contribute to its growth momentum.

Juvenile & Pet Products

Expected Growth: 3.8%

Thule Group AB's Juvenile & Pet Products segment growth of 3.8% is driven by increasing demand for outdoor and recreational activities, rising pet humanization, and growing popularity of SUVs and crossovers, leading to higher sales of rooftop carriers and pet travel accessories.

Packs, Bags & Luggage

Expected Growth: 4.8%

Thule Group AB's 4.8% growth in Packs, Bags & Luggage is driven by increasing outdoor activities, rising demand for premium and sustainable products, and expansion into e-commerce channels. Additionally, the company's focus on innovation, quality, and brand awareness contributes to its growth.

Other

Expected Growth: 3.5%

Thule Group AB's 'Other' segment, with 3.5% growth, is driven by increasing demand for outdoor and recreational products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, digitalization, and sustainability initiatives contribute to its growth momentum.

7. Detailed Products

Roof Racks

Thule's roof racks are designed to provide a safe and secure way to transport gear on top of a vehicle, with a range of options to fit different vehicle types and load capacities.

Hitch-Mounted Carriers

Thule's hitch-mounted carriers provide a convenient and easy way to transport gear, with a range of options for different vehicle types and load capacities.

Trailer Hitches

Thule's trailer hitches are designed to provide a safe and secure way to tow trailers, with a range of options to fit different vehicle types and towing capacities.

Cargo Carriers

Thule's cargo carriers provide a convenient and easy way to transport gear, with a range of options for different vehicle types and load capacities.

Bicycle Carriers

Thule's bicycle carriers provide a safe and secure way to transport bicycles, with a range of options to fit different vehicle types and bicycle types.

Water Sport Carriers

Thule's water sport carriers provide a convenient and easy way to transport kayaks, canoes, or paddleboards, with a range of options to fit different vehicle types and watercraft types.

Ski and Snowboard Carriers

Thule's ski and snowboard carriers provide a safe and secure way to transport winter sports equipment, with a range of options to fit different vehicle types and equipment types.

8. Thule Group AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Thule Group AB (publ) operates in a niche market with limited substitutes, but there are some alternatives available to customers.

Bargaining Power Of Customers

Thule Group AB (publ) has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Thule Group AB (publ) has a moderate level of dependence on its suppliers, but it has implemented strategies to mitigate supplier risks.

Threat Of New Entrants

Thule Group AB (publ) operates in a market with high barriers to entry, making it difficult for new entrants to compete.

Intensity Of Rivalry

Thule Group AB (publ) operates in a competitive market with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.00%
Debt Cost 9.63%
Equity Weight 77.00%
Equity Cost 10.14%
WACC 10.02%
Leverage 29.87%

11. Quality Control: Thule Group AB (publ) passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 6.6/10

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Thule

A-Score: 3.9/10

Value: 2.7

Growth: 6.1

Quality: 6.2

Yield: 3.1

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Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

247.8$

Current Price

247.8$

Potential

-0.00%

Expected Cash-Flows