Byggmax Group AB (publ)

Hello everyone and welcome to the Big Macs Year End Report. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question, please press star, followed by one on your telephone keypad. I will now hand over to your host, Carl Sunderland, CEO to begin. Carl, please go ahead.

Well, thank you. Thank you very much. And again, a warm welcome to this conference call where we will present Big Mac's fourth quarter and year-end report of 2024. As you heard, I'm Carl Sandlund, the CEO of Big Macs, and with me is Gena Lothors, our CFO. As usual, the presentation is available on our website, and we will guide you to the correct page during this call. And I'll begin with a brief business update and also a little bit on our priorities. And after that, Helena will walk you through the financials. And once the presentations are finished, we will, as usual, open up the floor for any questions from you. And with that, let's start and go to page number two in the presentation. And, well, as you have seen, we concluded 2024. with a fourth quarter where sales and profitability continued to improve compared to the year before. Our net sales in the quarter increased by 7.6%, and the increase is driven both by more customers, but also by a higher average transaction value. And sales in Sweden and in the rest of the Nordics developed quite similar during the quarter, both increasing by 7% to 8%. The fourth quarter is always one of our smallest due to season, but profitability continued to improve for the third consecutive quarter, and the improvement is driven by increased sales in combination with a strong gross margin and high operational efficiency. In addition to a better result, we continue to strengthen our balance sheet, which have been a priority for us during the year. And we reduced our net debt by 35% compared to the year before. And as you saw with this performance and foundation, the board has proposed a dividend of 0.75 sec per share, an increase from last year's 0.5 sec per share. Before we get into more details on the quarter and the priorities and stuff, on slide three, a short overview for those who may not know us that well. Big Max was founded in 1993, and today we have grown to 211 stores across four markets, establishing ourselves as the leading discount player for consumers in the Nordic region. Our foundation, our base, is built on a strong selection of products for home renovation and maintenance, where we offer everything from building materials, paint and tiles, to flooring and more. And our in-store assortment is enhanced by smart online solutions, providing an even wider range of home delivery of heavy building materials and more customized products. We are a true discount retailer, and offering the best prices requires maintaining the lowest cost. And our store design not only keeps operational costs low, but also ensures an efficient shopping experience, something that is highly appreciated by our customers. A key part of our DNA is our culture and values, and we have a very high employee engagement. which allows us to quickly drive change and make improvements, which is a true strength, of course, but it's also a key driver for our high customer satisfaction. On page four, we have some macro context, because as you all know, we saw a deep decline in 2022. We saw a challenging 2023, and also a 2024, which got off to a slow start. The consumer market remained cautious as high inflation and interest rates continued to squeeze household purchasing power. And many consumers delayed larger renovation projects, while smaller projects, particularly maintenance and outdoor work, continued to appeal to their customers. In addition to an overall lower demand, we observed this through a shift in product mix with a relatively higher demand for items tailored to these smaller projects. During the year, we began to see a slight improvement of macro factors with inflation back to more normal levels and in some markets, reduced interest rates. And this resulted in gradually improving consumer confidence. And of course, it's always hard to estimate the future, and there are always risks related to macroeconomic factors and uncertainty. But it's encouraging to see that some of the factors which have have historically been drivers for demand in our industry, such as how transactions and consumer confidence are developing in the right direction. On page 5, you see that the sales for a full year of 2024 ended at 6 billion Swedish cents. Due to the weak market, this is a decrease by 2% compared to the year before. We had lower sales in Q1 and Q2, while the second part of the year was stronger, as Helena will come back to. Despite lower full-year sales, we managed to improve our profitability. An EBITDA of 233 million, or 3.9%, is an improvement compared to 2023. And the improvement, as you will hear later on, is primarily driven by strategic actions and operational excellence. Despite inflation and more stores, we have lower hour costs. And in addition, we have, through optimization in our offering and successful purchasing, managed to have a strong gross volume. And as you see, we have a business model which is efficient with high cash generation. seen in a strong cash flow of 860 million from operating activities during the last year. On page six, we have an overview of some of the key focus areas that we mentioned during last year. Over the past year, we have focused on these three main areas, which is strength and the balance sheet, operational excellence, and improving our customer operating. And this focus has really touched every part of the organization, from the work in our stores to e-com to admin and business development. And through hard work and dedication of our teams, we have now built a business that is both flexible and robust, making us very well prepared for the future. And to give some more flavor, please move to page 7, because one of the focus areas, as you know, are the has been to strengthen the balance sheet. An optimized inventory has been one key to succeed with this. One factor is naturally to adapt the inventory level to much lower sales. But another has been to optimize our assortment, where we have both added products, but we have also decided to discontinue certain parts of the assortment. And in addition, we have really analyzed the entire assortment even more in even more detail ensure the right inventory levels for each and every product at all times the key area during the year was to secure smart inventory build up and management throughout the high season where we achieved better result than before resulting in good product availability in stores and optimized working capital and it is something that, of course, will be important also going forward, not to least secure product availability matching the demand. And you see some of the effects on this slide, right? The total inventory is substantially reduced, and combined with a lower investment level, this has also reduced our net debt, which is 35% lower than last year and almost 50% down compared to 2022 end of year. On page eight, you see the second focus area, operational excellence. Despite last year's inflation and more stores in our portfolio, we managed to reduce our costs for the second year in a row. And all parts of the group have contributed to this. We have introduced a new way of working in the stores, improved digital tools, reduced external spend, to give some examples. And, of course, a strong focus on cost could potentially impact the customer experience or operational performance. But this is something that we have managed carefully, and our stores are in great shape. The waste levels are lower than before, and it's truly encouraging to see that we continue to maintain a very high customer satisfaction in the stores. If we move to page nine, Because while strengthening the balance sheet and achieving operational excellence, we have also made significant commercial improvements throughout the years. We opened four new stores during the year, three in Sweden, one in Norway. At the same time, two stores were closed as their lease agreement expired. And as always, we continuously aim to improve the store experience. One example last year was implementing more self-service checkouts at more stores, something that makes it more efficient for our customers, and it also frees up time for our staff to, for example, focus on serving their customers to a larger extent. And we have also made improvements to our online channels. If you please turn to page 10. One example is our major order offering, where we both have increased the number of products, such as stores, windows, sun blinds, etc. We have also improved the customer experience and the back office processes. When it comes to our modular houses, which we talked about earlier, we have added more options. Customers can choose size and design and now also add garage doors or lofts with glass panels and so on. And finally, we have also expanded our private labor range of greenhouses and conservatories with several new products ready for the 2025 season. Those improvements combined with an overall adjustment to our online assortment where we have discontinued some categories as well as optimized freight options and so on have resulted in a stronger margin. Before handing over to Helena, please turn to page 11. This year's efforts, as you have heard, have established a strong foundation to build from. We have managed to reduce our cost, and together with that, after the inventory levels and reduced net debt, we are stronger than before. And from this solid foundation, we continue to work toward our long-term targets. We have a clear roadmap, and it's built on three main pillars. First, we are a discount retailer, and we always focus on efficiency to leverage our cost position. Second, our commercial investments over the past year have significantly amplified our revenue potential, and going forward, we will strive to fully capitalize on these investments. And finally, we will continue to enhance our product offering to meet and exceed the market demands. With that, over to Helena and some more financials.

Thank you, Carl, and good morning, everyone. As mentioned, I will comment on our fourth quarter and the financial year result, with focus on our improvements in profitability, cash flow generation, and debt reduction. I start with an overview of our Sales performance in the fourth quarter. Please turn to slide 12. Sales in the fourth quarter increased by 7.6%, reaching 1,073,000,000. We saw as mentioned growth across our markets, both in Sweden and the Nordics. And the sale is mainly like-for-like increase. At the end of 2024, we had 211 stores, a net of additional two new stores contributing with 0.3 increase to the total revenue. Our gross margin remains strong, supported by three factors. Purchasing achievements, granting to improve margins, an optimized e-commerce offer, improving margins through freight pricing and delivery efficiencies. And lastly, product mixed impact. Due to the mild weather, demand for energy-related products was lower and offset by growth in other categories. Overall, this was a strong quarter with same growth across all marshes and sustained high gross margin. Moving to profitability on slide 13. Our EBITDA for the quarter increased by $22 million compared to last year. It is important to note that the fourth quarter is not a peach season or do-it-yourself project, and it is typically one of our smaller quarters in terms of revenue. However, despite this, we delivered strong results. The gross profit improvement in this quarter was driven equally by higher sales and improved gross margins. In total, a gross profit increase of 30 million in the quarter. At the same time, we continue to focus on cost efficiency. Although after two years of cost cutting, our operating expenses are slightly up versus the same period last year. Our cost focus will remain. We have created a cost structure for lean and efficient processes that allows us to scale when volume grows. On the next page, 14, looking at the bigger picture, sales gradually improved quarter by quarter in the second half of the year, as shown on this slide. Third quarter sales grew by 1.3% like-for-like, and fourth quarter sales grew by 7.6% like-for-like. The growth trend was largely driven by our Swedish market, which showed strong performance compared to the Nordic. Overall, Sweden, which is the largest and most important market, maintained stable sales levels with only a small decrease of 0.2% in 2024. Growth sales decreased by 2.1%. While a pending and volatile market, Some momentum is seen in the second half of the year. Now, please move on to slide 15, presenting our full year probability performance. For 2024, EBITDA increased by 54 million to 233 million. Our EBITDA margin improved by one percentage point, reaching 3.9%. This improvement, it is still a cautious market, and the improvement is driven by a stronger gross margin supported by better purchasing, pricing strategies, and e-commerce improvements. It is driven by cost discipline. where we maintained the lean organization, and as mentioned, efficient operations achieved an OPEX reduction of 4% in 2024 on already a reduced level. Depreciation effects from IFRS 16 increased due to inflation and increased number of stores. Largely, we improved probability despite market challenges, as a result of higher product margin and further efficient gains in both stores and administration. I will now move on to slide 16 and cash. Cash generation remains our key strength of our business. For the last 12 months, cash flow from operating activities increased to 860 million compared to 788 $781 million last year. A strong cash flow performance was driven by higher profitability, disciplined working capital management, and carefully prioritized investment. Investment levels remained low in 2024, focused on selected store openings and store upgrades. By maintaining strong cash generation, we continue to strengthen our financial position and maintain flexibility for future growth. Finally, on slide 17, we have achieved successful debt reduction in 2024. We reduced net debt by 350 million, bringing it down to 680 million from 948 million last year. Our net debt EBITDA ratio improved significantly, dropped from 2.8 times to 1.6 times. Additionally, our 12-month average net debt EBITDA ratio is now well below our financial target of 2.5 times. We continue to have strong relationships with our banks, And our long-term credit facility of SEK 1.5 billion, of which 882 million available, provides us with operational flexibility. And by that, thank you. I hand over back to Carl before we open up for questions.