Swedish helmet technology manufacturer Mips saw its turnaround efforts pick up significant momentum in the second quarter as the company posted strong growth and doubled its earnings for the three-month period ended June 30.

Sharp declines of the last year began to taper off into a less dramatic revenue decrease in the first quarter, resulting in mid-teens revenue growth for the six-month year-to-date period.

Total net sales for the second quarter jumped 31 percent to SEK 133 million, compared to SEK 102 million in the year-ago comparative quarter. Organic growth amounted to a 31 percent gain year-over-year for the quarter.

Mips had easier year-over-year comparisons in the second quarter after revenues fell 51 percent in the year-ago 2023 second quarter versus the prior-year 2022 Q2 period.

The company reports in Swedish Krona (SEK).

“Growth was primarily driven by the more normal inventory situation we’re seeing in the Sport category. We grew in all regions and categories this quarter,” reported President and CEO Max Strandwitz in his letter to investors. “In the important Bike sub-category, we’ve seen a positive growth trend since the fourth quarter of 2023, with a gradual improvement in sales. This is mainly because both the market and the inventory situations have improved, but it’s also due to the launch of many new helmet models equipped with our technology.”

Strandwitz said organic growth for the Mips business in the first half of the year was 14 percent, consistent with the company’s expectations and a return to solid organic growth once inventory levels in the bike sector normalized.

“We are seeing positive developments in all our categories, while the inventory issues that we, and the market generally, have been challenged by for so long are now substantially more limited. That’s why our sales now better reflect actual retail sales to consumers,” he noted.

The CEO said the positive trend in the Motorcycle category continued into the second quarter, and the company carried out several launches in the Safety category, together with major brands.

Operating profit amounted to SEK 52 million for the quarter, an increase of 125 percent year-over-year from SEK 23 million in Q2 2023. In the second quarter, the operating margin amounted to 38.9 percent of net sales, up 16.3 percentage points from the 22.6 percent margin in Q2 last year.

“During the first six months of the year, the operating profit has increased from SEK 38 million to SEK 65 million, and the operating margin has improved, reaching 30 percent of sales,” added Strandwitz. “This is despite the fact that we stuck to our long-term strategy and continued our ambitious investments in product development and marketing.”

Second quarter operating cash flow was SEK 29 million after negative SEK 42 million cash flow in the first quarter, resulting in a year-to-date cash flow of SEK 20 million for the first half, a SEK 53 million year-over-year increase.

Diluted earnings per share increased by 101 percent to SEK 1.53 from SEK 0.76 in the 2023 Q2 period.

Helmet Category | Sport
Mips posted 33 percent revenue growth in the Sports category in the second quarter. The company said it delivered growth in the Bike sub-category for the third consecutive quarter.

“Inventory levels at both our customers and retailers have now returned to healthier levels,” said Strandwitz. “While not all retailers and helmet brands have fully resolved their high inventory levels yet, the problem has now become more local in terms of helmets, but some challenges still remain, primarily for other bike products. This means that for stores and brands access to capital is more limited and their desire to build up helmet inventory levels is thus also less. That’s why we still believe that our sales growth this year will mainly be driven by our customers buying products from us again, along with the fact that more helmet models are being launched with our technology.”

Snow sub-category sales were said to have been “good” during the quarter, helped by a weak comparative figure from the same quarter last year. “In summary, we’ve seen good progress, also in helmets for snow sports for the first six months of the year,” the CEO offered. Positive trends also continued in the equestrian sub-category.

Helmet Category | Motorcycle
The Motorcycle category posted 14 percent sales growth in the quarter. Strandwitz said that in the future, the company believes that the consumer market in the category will be “somewhat more positive.”

“We’re seeing increased demand in the on-road sub-category, while the market in the off-road sub-category is somewhat slower, affected by a more challenging inventory situation,” he said in his letter. “Our targeted sales initiatives have started to have an impact and more helmets equipped with Mips’ technology are being launched in the market, which is driving growth despite the challenged underlying market. Our focus going forward is to continue driving consumer sell-through with our customers.”

Strandwitz said that over 60 percent of all riders in the Top 10 in world championships use helmets equipped with the Mips technology.

“Knowledge of Mips is thus constantly growing, and we are experiencing a lot of interest and curiosity in Mips as an organization, from the media, and from the sector more broadly,” he asserted. “This is an important platform for us to be able to continue our global efforts to increase awareness about the harmful effects of rotational motion.”

Helmet Category | Safety
The Mips Safety category has reportedly maintained a steady pace of launching new partnerships and helmet models with customers.

“In April, we launched our forestry partnership with the highly reputable Husqvarna brand, and in May, the first helmet equipped with Mips technology was launched in collaboration with the leading global brand MSA,” Strandwitz noted. “Even though sales volumes have been slightly slower than we would have liked, our assessment is that there will be an escalation in sales this autumn, and we, therefore, remain positive about prospects for this category.”

He said recovery aligns with expectations, and the company is confident about the rest of the year.

Strandwitz concluded his letter by saying the second quarter developed as expected, and all sub-categories grew despite a challenging consumer market.

“Our customers are still showing a great deal of interest in developing new helmets equipped with Mips’ safety system in all three categories, and we completed the highest-ever number of helmets developed with our technology this quarter,” he said. “We remain convinced that we have the right long-term strategy, with a major focus on innovation and steadily building a well-recognized ingredient brand that makes us an essential partner to the helmet sector. This strategy will also support our long-term plan going forward and our journey towards achieving our financial targets,” the CEO concluded.

Images courtesy MIPS/Kate Courtney, Team MIPS