Byggmax Group AB (publ)

Hello and welcome everyone to the Big Macs Interim Report Q1 2025. My name is Becky and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two. I'll now hand over to your host, Carlos Sanderland, CEO of Big Macs to begin. Please go ahead.

Thank you. Thank you very much. And again, welcome to this conference call where we will present Big Mac Group's report for the first quarter of 2025. As you heard, I'm Carl Sandlund, the CEO of Big Mac, and with me is also Hela Latvors, our CFO. And as usual, the presentation is available on our website, and we will try to guide you to the correct page during this call. And I will start with a brief business update, and after that, again, I will walk you through the Q1 financials. And as you heard, once the presentations are finished, we will open up the floor for any questions from you. But with that, I think we start. Let's go to page number two in the presentation. And as you see, we started the first quarter of 2025, like how we concluded 2024. We increased sales compared to the year before, as with a strong gross margin. And together, this meant that we continued to improve our profitability. Our net sales increased by 7.2% compared to the first quarter of last year. Our life-to-life sales is up 7.6%. We have more efforts, and we see that categories related to larger indoor projects developed in a positive way during the quarter. The sales development was quite similar in Sweden and in the rest of Norway. So quite similar pace in those two different areas. We have a high growth margin in the quarter and several reasons for this. One is that demand had been filtered towards products with high margins. Another fact is that our financial stability has enabled us to really optimize purchasing terms, both when it comes to order placement and payment. And in addition, we see that improvements within our e-comm when it comes to suffrage and logistics impact the margin positively. The first quarter of the year is one of our low season, and it's one of our smallest of the year. However, profitability continued for the fourth consecutive quarter to improve. And the EBITDA is 39 million better than the same quarter last year. And as you've seen, also last year, in addition to improve results, we continued to strengthen the balance sheet. We reduced our net net and leverage net net over EBITDA. was 1.8 at the end of the quarter, down from 3.2 the same time a year ago. So overall, our efforts to build a strong platform failed, which enabled us to have full focus ahead. And we are well prepared for a new high season. Before getting into more details, on slide three, we have an overview for those who may not know us that well. We were founded back in 1993, and today we have 211 stores across four Nordic markets. We have a strong selection of products for home renovation and maintenance, primarily for consumers. We offer everything from building materials, paint, tiles, flooring and more. And we have an in-store assortment, which is a whole type of online solutions. where we provide an even wider range, but also home delivery of heavy building materials and customized products. We are a huge expense retailer, and of course, offering the best prices requires maintaining the lowest possible cost, which is something that is really part of our DNA, and also in our store design, which not only keeps operational cost low, but also ensures efficient shopping experience, which our customers highly appreciate. In addition to the Big Mac brand, we have Right by Tide from Norway, focusing on tides and bashing, and Skålstabigboja, which offers products and buildings, a home and garden, such as conservatories and greenhouses. Actually, part of our DNA is our culture and values. We have a very high employee engagement, something that enables us to quickly make change and make improvements to strengthen our organizations. and also a key driver for our customer satisfaction. On page 4, you see that we, size-wise, is a 6 billion-page company. We delivered 272 million in EBITDA in the last four quarters, an EBITDA margin of 4.5. We have a very efficient business model with high cash generation, and this is seen in a strong cash flow, 751 million from operating activities in the last four quarters. And we really believe in the combination of online and stores, and we have a successful mix of the two. And currently, we have about 90% of our social space through our online sales channels. On phase five, you have some macro context. And as you have heard us say before, after 55 in 2022 and a challenge in 23, we began to see improvement of macro factors during last year, 24. We've been facing back to more normal levels and also reduced interest rates. And this has resulted in gradually improving consumer sentiments. And it is encouraging to see that house transactions develop in the right direction, and that real rates seem to show an upward momentum, because those are historically drivers for renovation projects. And then overall, I would say that customer behavior showed a more typical pattern in Q1. We have more customers than last year. They are returning to the physical stores, and we see the largest growth during late And as mentioned in the beginning, we also expect the customers to greatly agree both products in categories related to larger projects in the quarter. So we of course follow this development carefully and to position ourselves in the best possible way. Take six. Those of you who know We know that over the past two years, we have focused on a couple of areas, primarily to strengthen the balance sheet, to secure operational excellence, and to continue to improve our customer offering. And this has really established a strong foundation to build for. We have managed to reduce our costs from an already low level, and we have strengthened our balance sheet significantly. And this enables us to have full focus ahead in all parts of the organization. We have operational flexibility needed to meet the high season and growing demand. And from this foundation, we continue to work toward our long-term targets. And we have a clear roadmap where we will secure a strong customer focus with continuous improvement and enhancement of our offerings. We will make sure to kept live on the commercial investments made. More and upgrades to stores have significantly amplified our revenue potential. And finally, we are a discount retailer and efficiency is an important part of us and our DNA. And we will continue to leverage our cost position and secure scale in stores and logistics. And during Q1, all our MPs have made their outflows to really prepare for the coming high season. And on the next couple of slides, we will show you some examples of all the efforts made in Q1 to be prepared for the future. And start with H7, inventory and availability of products. Well, you know that optimizing Inventory has been a key focus for us for a long time, and lately we have analyzed entire sortments to ensure, even more detailed than before, the right inventory level for each and every product. This has resulted that we have been able to increase the levels for the most important products, while we have reduced products with lower demand. We have put a lot of effort into securing a smart build-up of inventory for the season, resulting in good product availability and well stocked stores, actually better than before. So even though our total inventory level is lower than last year, our actual assortment is at a higher level than it was a year ago. Page 8 illustrates how we have prepared our stores for the season. As always, we aim to improve our store experience. One accomplished checkout. The last couple of years, we have implemented more service stations. This makes the experience more efficient and frees up time for our staff to focus on the customers instead. And those checkout areas have been further involved with improved functionality and visualization to make things even easier for our customers. In addition, ahead of this season, almost half of the stores have been rearranged to better visualize our assortment. And the store layout and customer flow have been changed, and we work with lower store shelves to make it easier for the customers to navigate and find products. Again, everything to secure a smooth and easy shopping experience for the customers. And also during this time of the year, we will send many new employees to our stores and our company and further improve that introduction and also make sure that we can assist our customers even better. We have implemented a new training program or app and going forward, all employees, both new and existing, will use this app to continuously update with the support and offer. So a lot of efforts to ensure that our stores are in best possible shape. And it's truly encouraging to see that we continue to maintain a very high customer satisfaction in stores. Ahead of the coming season, we also have a range of new products that will be introduced. See page 9 for some examples. We continue to develop our modular housing software. We have added more options, and the customers can choose both types of design, but they can also add lofts, foundation, ice-making method, sandwich roofing, and together with possibilities for garage doors and glass houses, it's been a wide-ranging use of the houses. We have also expanded our private data range of greenhouses and conservatories. We're discovering new products that are ready for this system. And finally, branding and visual identity of some of the private neighbor products have been updated to modernize both the looking team. And overall, the aim is to create an attractive offering of course, and also to further reinforce the target perception. Before handing over to Lena and Fernando, just a few words on e-comm on page number 10. Well, we continue providing our major order offering online. The latest destination is a new sub-site for garden buildings. And the major order offering now covers paint, floors, windows, sunshades, and more. And it's an example of how to use strength in different parts of the group in a good way. Another example of utilizing group synergies is Denmark, where we have merged some of our sites. By doing so we increase efficiency while being able to provide a strong customer support. Finally, we have also made changes to the logistics or lost mine delivery. We have a new setup to secure better control of transportation sales. The aim is to improve our planning capabilities and also to increase efficiency. This has resulted in improved freight results and With better control over resource utilization, we also strengthen our ability to efficiently handle increased volumes going forward. To recap, our efforts during the quarter have really focused on laying the groundwork for the upcoming peak season, from continuing to strengthen our customer offering, to ensuring well-stocked stores, while leveraging our cost position and economical scale. And with that, over to Helena and more Q1 attention.

Thank you, Carl, and good morning, everyone. We are now on slide 11, where we start with an overview of sales and probability development over recent quarters. We delivered another quarter of top-line growth, with sales increasing by 7.2% compared to Q1 last year. The growth was driven by both Sweden and our other Nordic markets. At the end of Q1, we operated 211 stores, the same number as last year, meaning nearly all of the growth was organic. It is also worth noting that we faced a negative currency effect of 0.7%, primarily due to the weak Nord. This marks our second consecutive quarter of sales growth and our fourth consecutive quarter of improved profitability. It is clear at times that our strategy is delivering results in a demanding market environment. On the next slide, as mentioned, we continue to improve the availability in the store through strict inventory management with prioritized volume on team products. This has helped us to better meet customer demand and contributed to the increase in sales in this quarter, one of our smaller quarters. Growth margins continue to strengthen, supported by efficient sourcing, affordable product mix, and well-executed e-commerce logistics. Altogether, we have delivered profitable growth through increased sales while also improving growth margin. On slide 13, EBITDA improved by 39 million in the quarter as illustrated on this slide. The improvement was driven by a mix of higher safe volumes and growth margin improvements supported by continuous cost discipline. Volume growth contributed 25 million gross margin improvements, 10 million and other revenues contributed with 9 million mainly from fixed assets, disposals and currency effects related to inventory ordering. On the cost side, we have remained disciplined. Our cost structure is defined to support scalability, efficiency improvement in both scores and administration, have allowed us to scale as volume grows. On the store portfolio, inflation, the store portfolio rent is accounted for as depreciation under IFRS 16. And the inflation has been offset by moderate investment levels, and depreciation is lowered by 2 million versus the same period last year. EBITDA improved to minus 109 million, a negative margin of 11.7%, a margin improvement of 5.4%. And as said, this is a fourth consecutive quarter of profitability improvement on the line that we are delivering. not just growth, but profitable growth, even in this silencing environment. We have, in addition, continued to generate a strong cash flow that is presented on page 14. Cash flow from operating activities over the last 10 months amounted to 761 million, requesting an improved profitability effective working capital management and disciplined investment. In this quarter, we increase inventory levels in preparation for peak season while maintaining efficient use of supplier payment terms. This results in a controlled impact on working capital movement. We continue to invest prudently while ensuring operational readiness. Our strong cash generation supports our financial position and provides us with the flexibility to act when opportunities arise. The sustained strong cash generation remains a key strength. And finally, on slide 16, we have the net debt position. We have sustained decrease in net debt. Our net debt to EBITDA ratio improved significantly to 1.8 times, down from 3.2 times last year, well below our financial target of 2.5 times. This marks a substantial improvement and reflects the impact of focused execution and disciplined capital allocation. We also maintain strong long-term relations with our banks, We are well within our leverage target, and as of Q1, we had $1,700 million in available committed credit facilities, providing us with flexibility going forward. With that, I hand it back to Carl before we move on to our questions.

Thank you, Lena. And let's move to slide 16, our key messages again. We continue to increase both sales and profitability in the first quarter of 2025. Sales was up more than 7% in the quarter. And as you heard, in addition, we strengthened our balance sheet and leverage ratio is now down to 1.8 from 3.2 last year. And last year's strategic efforts have really secured a strong platform, which enables us to have full focus ads. We have the operational flexibility to meet a growing demand. And this is exemplified by well-stocked stores and the ability to optimize purchasing and replenishment. And going forward, we will continue to improve our customer offerings. We will try to capitalize on our commercial investments and drive volume in our shore network. And we will leverage our cost-efficient and logistics efficiency. During the first quarter of the year, we have put a lot of effort to help entire organizations make sure that we are ready for the peak season. And we are well-prepared. And our highly-moderated employees are already ready to welcome more customers to the different months ahead. And with that, thank you for your attention. And we are now happy to take more questions. So let's open up the floor.

Perfect. Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad now. If for any reason you want to remove your question from the key, Two tests are followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Benjamin Wellstead from ABG. Your line is now open. Please go ahead.

Thank you very much and good morning. I was wondering what are your thoughts on market growth in Q1? We know January and February grew by an average of 9%, according to Sweden's statistics. Is that a likely level for March as well, do you think?

Good morning, Benjamin. When it comes to the market growth, we haven't seen the statistics for March so far. I guess they will be ready in a couple of weeks. We had an Easter last year that might impact some of the categories. I'm not sure. But, you know, it's a small quarter, and I wouldn't say that the different models for the quarter is too much when it comes to the online market.

Perfect. Thank you. I was also wondering about your other income, other operating income, which grew by almost 10 million during the year. I was wondering if you could give some additional color on what growth has changed, please.

Yes. This is some success that the slow growth that are accounted for under revenues. And then we have the current impact in this quarter. Well, this quarter is... We are not that exposed to persuading from euro and dollar, but this quarter, before high season, we have quite a material volume coming in, and that is the revaluation of those noises.

Perfect. Thank you. Your... Ross Margin improved earlier again. Could you give us a rough idea of what part of the improvement is operational, what part is early purchasing, and what part is cash discounts, please?

Well, as I said, the Ross Margin is driven by several factors. One, just repeat them. One is that our financial stability has enabled us to really optimize the both when it comes to order placement and payment. We have ordered and paid early, and we have built stock of important products. Furthermore, demand in this work has been more weighted towards the high-margin product than usual. And then finally, in addition, we have made improvements to e-commerce. where we have insured the control tower and thereby had a better optimization of the last nine transfers. So multiple factors contributed to that outcome. It's hard to say the exact allocation between those three, but those three are the main drivers behind the higher margin.

Perfect. Thank you. And that was actually quite good. segue to my final question. In the CEO statement, you mentioned a better mix with and by consumer demand, and I was wondering what products are you referring to that you've suffered better in this quarter than previously?

We're still enjoying the quarter, as we mentioned, if you have a positive development of the indoor renovation project. So that's one part of it. We also saw that the rather warm of mind weather also resulted in a lower rate of energy products. So I guess those two are the main, you know, when it comes to demolition towards biologic products.

Perfect. Thank you. That's all from me for now. Thank you.

Thank you. Our next question comes from Nicholas Ekman from Carnegie. The line is not open. Please go ahead.

Thank you. Yes, two questions from my end. Firstly, on expansion, you have no store openings now. What do you see in terms of future expansion? And I'm thinking more when the market kind of normalizes, when you see consumption resuming. Are you expecting to resume store openings and to what magnitude? Are you looking at coming back to where you were in terms of expansion at pre-COVID levels? Or are you pretty pleased with the portfolio that you have today?

Well, thank you, Lukas. Well, our overarching strategy is remain country. We will continue to drive profitable growth and aim to outpace the margins. and store portfolio is one of the levers to secure this and then the pace of a number of new stores varies both with market conditions but also where we are in our cycle when it comes to the to the store portfolio and as I said right now at the moment we see a slow rate of store openings and we see also a significant potential to increase volume and sales within our existing store network, which is a priority right now. But our ambition is to make sure that even more customers have convenient access to an affordable, low-discount retailer when it comes to building materials, i.e. more Vismax stores. We actually will open, I guess we will send out more information within the store, a new store in Stockholm during Q2. And in QA we also opened a new showroom, a co-located showroom, Big Mac, in the Big Mac store in our room. So it's not that it's completely still, but we continue to strengthen our store network.

Very clear. Thank you. The second question is on MA. You have done a few acquisitions in the past decade, and first of all, which of these would you argue in hindsight have been the most successful? And secondly, what do you see in terms of further M&A potential? Is that a key strategy for you as well?

Well, thank you. The M&A expectations we made during 2012 to 2022 followed a clear strategy. They should either add geography, market, or... So those were, you know, well thought through strategic investments that strengthen our overall customer offering. So we're pleased with them. When it comes to, you know, future growth, we will secure to maintain continued possible growth. And we have some different levers for this. where one is, of course, to have a high customer focus and develop our assortment. Another is to continue to halt our sales channels, making sales both in stores and in our e-commerce channels very smooth and efficient. And three, we have expansion, optimization of the store portfolio. And then number four is also to make selective applications. So this is four levers we have to secure future growth. So M&A is not a separate growth strategy, but an integrated part of tools that we can use if we find it attractive for securing possible growth going forward.

Very good. Thank you very much. Thanks.

Thank you. As a reminder, to ask a question, it is star followed by one on your telephone keypad. Our next question comes from Egil Dahl from Veblengård. The line is now open. Please go ahead.

Hello, Karl and Helena. My question is about new products and mix and also customer demand. In your presentation, you are mentioning modular buildings, pergola and pergola. greenhouses and of course these are extensive products and what are your expectations for q1 q2 and q3 for these products how is that affecting margins and also do you see in general how the development of the customer basket

Thank you, Egil. Well, as you mentioned, we have a couple of interesting products used in the portfolio. And of course, when looking at the total sales, those will have a large effect on sales during this high season. But it shows that we all the time try to improve the assortment, to find new things, to make sure that we We have news in the product portfolio and also, you know, making sure to have attractive also product label things. So I would say it's more, you know, to make sure that we all always stay relevant when it comes to customer demand and so on, rather than having a huge effect during the quarters to come. When it comes to customer demand, as we mentioned, right, that we saw during Q1 that we saw a positive effect when it comes to demand for the little bit larger renovation projects indoor, which was good to see. And I guess, as you know, more house transactions and lower inflation also reduce interest rates in Sweden, maybe not in Norway for parts. uh it's also you know traditional drivers for for the model going forward and then of course it's always hard to you know predict the future right so we need to really stay stay on top of things and make adjustments to the market position thank you carl and also your expectations for the general markets going forward the general bulkhead's meaning and size of bulkhead?

Yeah, exactly. The customer bulkhead size.

But, you know, I think it's hard to tell. It's hard to predict the future. So, you know, I won't give you an exact answer on that or on the forecast. But I think, you know, the important thing for us is to always, you know, adjust and adapt to the existing market. And I think that is something that we have shown that we have really been able to do during the last two years or so, right? The market has changed a lot, and we have been able to adjust and adapt and see the fourth consecutive quarter of increased profitability. Thank you very much. Thank you.

Thank you. Our next question is from Edson Langestam from SE1 Markets. The line is now open. Please go ahead.

Hi there. Hi, Helena and Kai. I just wanted to ask a question about your strategic inventory build-up. Is this something that you've done earlier now this year compared to the previous years? And is that I was wondering if that's driven by expectations that the high season in Q2 is new earlier in the quarter, given a relatively mild weather.

Thank you, Eston. Well, we always build up inventory for the high season. Q2 and Q3 is where we have the highest amount of our core product. So during the current month of the year, it's always about filling up the inventory to the right level. What we've been able to do this year is, due to the financial stability that we have secured, that we have been able to build up earlier. We have also paid earlier, which has a good effect when it comes to our purchasing terms. So I would say that, you know, we always fill up this time of year, but due to the, or thanks to the strong stability, financial stability that we have, we can do it in a more optimal way. And we have put a lot of attention throughout the entire organization to make sure that we order the right product at the right time and also make sure that we have the best purchase in terms for days. That's one thing. And the other thing is that we have even more detail than before looking at their inventory, the top level of each and every product to make sure that we have a lot of products, so that we are well stocked with a lot of products in our stores when it comes to the products that we foresee high demand now during the, when we see the high season coming in and the morning out or early season. So I would say, you know, it's not about, you know, total demand necessarily, but broader and optimization to the long-term position that we have. Okay. We can always adjust for quality.

way forward because we you know we face order every day yes yes that makes sense thank you very much we we do hear though from from from competitors of yours in norway that the sales have started very strong in in second quarter and accelerated from march so so it's good to have a nice inventory ahead of this season um just on that as well Have your suppliers announced any price increases now from April 1st? Is that something that you've communicated?

No, we haven't communicated anything about that. I guess that, you know, prices go up and down when it comes to the limit of all time. It's just been up and normal. We haven't communicated anything especially around this CPS.

Okay, thank you. That was all from me. Thank you very much. Thank you.

Thank you. We currently have no further questions, so I'll hand back to Carl for closing remarks.

Well, thank you a lot for participation and also for your questions. And with that, we wish you a happy Easter and a wonderful spring. And if not before, we are looking forward to meeting you again often. quarter of 2025. Thank you.

This concludes today's call. You may now disconnect your lines.