Max Stock Ltd

good morning and good afternoon everyone and thank you all for joining us today uh with me on the call is near the gun our deputy ceo and head of finance uh and myself talia sessler uh chief corporate development and ir officer uh near will start with a review of our second quarter and first half financial results and i will be presenting the second part of the presentation Before we start, as a reminder, as always, there is a presentation accompanying today's prepared remarks, and the slides are available on our IR site at ir.maxdoc.co.il. And on slide number two, this is our standard disclaimer language, which I'm sure you're all familiar with. And with that, I'll turn the floor over to Nir to go through our financials. Nir, please.

Thanks, Talia. Turning to slide 4, Q2 2023 financial highlights. We delivered strong second quarter results highlighted by net income attributed to shareholders that increased by 46.5% to $16.6 million versus last year. Despite the impact of Passover holiday, we shifted demand out of April and into March this year and drove 2.8% decrease in same-store sales. Same-store sales for the combined main June 23 period that had no impact for the timing of the holiday was positive of almost 4% above our 3% annual target. We continue to see strong gross margin gain in the quarter with an increase of 190 basis points to 41.2%, and gross profit increased 4.9% to 104 million. Adjusted EBITDA increased 2.6% to 30.1 million. And finally, adjusted EPS, attribute to shareholder, increased 7.2% to 0.11. Slide five. We also deliver a strong first half result, highlighted by revenue growth of 5.7%, aided by steady sales growth of 3%. Gross margin expansion of 220 basis points versus this period last year. And the 48% gain in net income attribute to shareholders. On slide six. Turning now to a more detailed review of our second quarter result. Total revenue was flat compared to Q2 last year. As I mentioned, our top line results reflected a shift in the timing of Passover spending from second quarter of 23 to the first quarter of 22 compared to last year. Sandstorm sales for combined May-June 23 period increased for almost 4%, primarily reflected strong traffic growth. Gross margin was 41.2%, up 190 basis points, which is the highest second quarter gross margin we've delivered in the past four years, driven largely by efficient management of inventory and continued moderate of global shipping costs that lower our expenses as well. Adjusted EBITDA, which excluded the impact of IFRS 16 and stock-based compensation, was 30.1 million, up 2.6% compared to the second quarter of 2022, with 1.7 million in expenses primarily to support the startup of our operation in Portugal. Thalia will later speak about the two new stores in Portugal, but these expenses are largely a result of building our initial presence in the country and our store pre-opening cost. Net of these expenses, our adjusted EBITDA margin was 12.7% in lining in our 13% annual EBITDA margin that we've guided to. Finally, our adjusted EPS, which excluded the impact of share-based compensation, was 0.11 in the second quarter, representing growth of 72% compared to Q2 of 2022. This was largely driven by an expected reduction in stock-based compensation expenses that we allowed in the past few quarters. In the second quarter of 23, we had several SBC expenses in the amount of 0.7 million, while in the second quarter of 22, we had share-based compensation expenses of 3.8 million. And if we neutralize the impact of Portugal that generated a lot of about 2 million attribute to our shareholder, adjusted EPS was 0.12% up 16.5%. Slide seven. Now moving to our first off result. Total revenue was up 5.7% compared to the first half of 2022, with the same store sale growth of 3% driven by a strong gain in traffic. Our top-line growth during the period also reflected the addition of 4.5 thousand new square meters of selling space and four franchise stores. Gross margin expanded 25%. 220 basis point and gross profit was up 11.6% versus last year. As we continue to optimize our inventory position and see global shipping cost moderate compared to the year ago period. Adjusted EBITDA was up 9.3% compared to the first half of 2022 at 66.9 million and reflected an adjusted EBITDA margin of 12.6%. When looking at adjusted EBITDA excluding costs associated with the operation in Portugal, we grew adjusted EBITDA in about 13.6% for the first half to 69.5 million. finally adjusted dps shared expanded 14.3 percent compared to the last year period slide eight on slide eight we present a look on our liquidity and capital development strategy we have a net cash position at at the quarter end of 30 point 8 million during the second quarter we paid down about 12 million in debt compared to the period prior quarter to reduce interest expenses and distribute 60 million in dividend to our shareholder As you know, due to our modest capital expenditure and working capital needs, we've been able to actively return value to shareholders. Since 2017, we had returned about 309 million to our shareholders through annual dividend and our share buyback program. With that, I will turn the floor to Talia.

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