Byggmax Group AB (publ)

Hello and welcome everyone to the Big Macs Group Interim Report Q2 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 1 on your keypad. If you change your mind, please press star followed by 2. I will now hand over to your host, Carl Sandlin, CEO, to begin. Please go ahead.

Thank you. Thank you very much. And again, a very warm welcome to this conference call where we will present the Q2 report for 2025 for Big Max Group. As you heard, I'm Carl Sandlund, the CEO, and with me is, again, our CFO. As usual, we have a presentation available on our website, and we try to guide you to the correct page in that presentation during the call. And I begin with a brief bit of update, and then you will hear from Elena and more Q2 financial. And once we're finished, we'll open up for your questions. So let's start and move to take number two in the presentation on our website. As you know, the second quarter marks the beginning of our high season. And those familiar with that know that the underlying demand patterns mean that sales in the second and third boards are significantly higher than in the first and fourth. And throughout this period here, we have placed strong efforts on preparing for this high season across all parts of the group. And we are now seeing the results from this. The ramp-up from low to high season was well executed, and our operational performance during the quarter has been strong. Our life-for-life sales is 7.3% higher than last year, and the sales development was quite similar in Sweden and in the rest of Norway. But changes in currency change rates impact sales increase outside of Sweden. So total sales increased by 5.6%. We see that several of our prioritized categories developed positively. For example, timber, building boards, and paint. And we also saw continued positive development in our improved offering of customized online products. Quarterly growth was solid overall, though performance varied throughout the period. The quarter started off strongly, supported by early spring. However, the overall market climate continued to be shaped by cautious consumers in response to global uncertainty. We have a high growth margin in the quarter, and there are two main reasons for this. And one is the fact that our financial stability has enabled order placement and payment. And the other is the improvement within e-commerce, especially logistics. And of course, increased sales and a strong gross margin mean better profitability. And as you see, profitability continues to improve for the consecutive quarter. And the A margin is 2 percentage points higher than last year in the second quarter. It's 10.8%. And in addition to improved results, we continued to strengthen the balance sheet. We reduced both net best and leverage, and net best over EDA was 0.8 down from 1.5 the same time a year ago. So overall, our preparations for the high season playoffs, and we remain fully focused for the remainder of the season, of course. Before getting into more details when it comes to business at the outside, just a short overview, if someone of you maybe doesn't know us that well. We were founded back in 1998, and today we have 212 stores across four Nordic markets. Our core is a strong selection of products for home renovation and maintenance, primarily to consumers. We offer everything from building materials, paint, tiles, flooring and more. And our in-floor assortment is enhanced by Holbein, providing an even wider range, but maybe more if they offer us a home delivery of heavy building materials and also customized products. We are a 2G sales and offering the best prices, the quietness and the best possible costs. And everything we do, from our store design to how we work through our processes. In addition to the Big Mac brand, we also have RidePrize Tiles in Norway, focusing on Tiles and Dastroon, and also Big Mario, which offers Tiles and the list of home and cars. On page four, you see that we price-wise, our sales last 12 months was 6.2 billion Swedish kroner, and we delivered 325 million in EBIT-A And that's an EBITDA model gain of 5.3%, from 2.4%, which is quite higher than a year ago. Our business model makes decisions with high cash generation, and this is in a strong cash flow, as you will hear more about later. And we have a strong mix of physical stores and e-commerce. Currently, we have about 80% of our total space to our online sales. On page 5, we have some general macro context. And as we all know, after a couple of 17 years, we began to see an improvement of macro factors during the second part of 2024, with inflation back to more normal levels and gradually improving consumer sentiment. The last couple months there have been some more general global uncertainty in factor consumer confidence, and I guess that the general view is that consumers continue to be cautious with increased household savings, and overall the coverage is still bad. However, it's possible to see that house transactions continue to develop in the right direction, and together with lower interest rates and improved real wages, those are historical drivers for renovation. And as always, it's very hard to predict the future while we follow the market development carefully to position ourselves in the best possible ways. We have short lead times and we are used to quickly adapting our business to different level of demand. And we've been able to successfully navigate to the last orders. If you turn to page six, I would actually give you some example of that because operation control and flexibility are among Big Mac's core strengths. Our ability to shift quickly between seasons is a fundamental capability. And this year, perhaps more than before, we have stayed focused on this core. We have dedicated time and energy to strengthen our existing business. And as you know, sales in the second quarter are more than twice as high as in the first, affecting the the seasonal nature of our industry. Because consumers carry out more renovation projects during the warmer months. And the process means that we need to be fully prepared to meet this certain demand without losing quality. And to manage this, we have built, for years, strong capabilities in hiring, in adapting work schedules, in maintaining flexibility, supply chains with frequent deliveries of goods, all to ensure a smooth and scalable operation. And looking back at the quarter, we are satisfied with ramp-up, and we continue to have strong in-store operations with low waste, satisfied customers, and well-functioning supply cells in this quarter. Being prepared for high season, of course, also means securing that we have the right page number seven. Optimizing inventory has been a key focus for us since more than a year. It started with the need to adapt inventory levels to a lower sales volume. Now it's all about facilitating growth while securing capital efficiency. And we have, as we have heard me say before, conducted a thorough review of our entire product range to to fine-tune the inventory levels with even greater precision. And for high-priority items, we have raised our stock levels while reducing inventory for products with lower turnover. Just to give a few examples, the stocks of Timber, Drywall, Paint are all up 15-20% compared to last year. At the same time, our token inventory value is lower than last year. And we have put a lot of effort into securing smart build-up of inventory for the season, resulting in good product availability and well-stocked stores. And this has been one of the drivers for poor growth. And in addition, this early ordering and also payment have had a positive impact on our growth margins. On page 8, another positive contributor to the growth margin disorder is the The set of improvements we made to our e-com logistics. Our improved structure has enhanced our planning capabilities and increased control efficiency. And as a result, we have improved our freight net. Additionally, we have optimized our assortment online by placing out selected non-core products. And finally, we continue to see positive growth in our offering of customized products on the to the garden buildings, doors, windows, and more. And we see that this initiative has been positively received by our customers and supports both margin and sales. So several different areas of improvement when it comes to e-commerce. And the same goes for stores, looking at page 9. Because, as always, we try to improve the store experience. And ahead of this season, nearly half of our stores were rearranged to better showcase our software. And we see that the response from customers has been positive. With uptake and layoffs, improved customer flow and lower shelves, it's now easier for customers to navigate the store and find what they're looking for. At the same time, we continue to invest in technology to make something with this much simpler and even more intuitive, both online and in stores. And to meet the demands for guidance from our customers, we have launched, for example, a beta version of an AI chat tool that provides personalized and advice and product recommendations directly on our website. And together with redesigned customer service cases, getting guidance and answers to questions will be even easier for our customers in the future. And ultimately, we have already improved the handheld devices, both when it comes to sales flow and also when it comes to product information. So these initiatives are all part of a broader effort to create an even smoother and a more consistent experience across all channels. And finally, during the quarter, we opened one new store in Kader.com. The new store complements our existing network in the region and includes accessibility for both new and returning customers. So even if this is a quarter primarily focused on operations, we have also made meaningful commercial improvements across channels, and we continue to strengthen the customer experience. So to summarize, and before handing over to Helena and more financials, the preparations we made ahead of high system have paid off. So we have had a smooth transition from low to high system, with growing operation execution, and also a range of commercial improvements. Thank you, and over to Helena.

Thank you, Carl. Our culture through the financial development during the second quarter, starting with a longer-term perspective. On slide 10, we look at our rolling 12 months performance over the past three years. After a period of declining sales and expensive cost-saving measures, we have now delivered a fourth consecutive quarter of organic growth. However, as Carl pointed out, in today's presentation growth varies throughout the quarter and general global uncertainty continues to influence cautious consumer behavior. What is particularly encouraging is that we have a consistent improvement in the overall margin now for the sixth consecutive quarter. This margin expansion is the result of the disciplined execution and structural improvement across their business. On the next stage, we will look more closely into sales figures and margin improvements in the quarter. Arctic's focus on improving assortment and availability of core products in stores has contributed to a top-line growth of 5.6%. Adjusted for currency, mainly from the region Corona, the light for light growth exceeds 7% across all regions. It's 7.4% in Sweden and 7.2% in the other Nordics. The increased sales are combined with an improved gross margin. We have the gross margin improvement of 0.6%. The margin expansion was driven by early supplier payments, unlocking cash discounts, and improvements in the arts for e-commerce offerings. This includes assortment, streamlining, optimizing of site terms, and the logistics setup. The combination of stable sales, An improved margin has a clear impact on the bottom line, as illustrated on the next slide. EBITDA reached $237 million, an increase of $53 million compared to the second quarter last year. EBITDA margin rose to 10.8%. up from 8.8, highlighting the impact of our focus on margin and cost discipline. The improvement in the quarter is mainly driven by higher volume, combined with gross margin expansion. We continue to manage cost with discipline. After two years of significant cost reduction, we have kept overall operating expenses to secure scalability. Costs are mainly related to salary increases and store personnel to secure service hours in high season. Moderate investment levels have also contributed to lower depreciation in the quarter. On the next page, we can see how the performance translates into cash flow and strength of balance sheet. In the quarter, we saw continued strong cash generation. Cash flow before working capital changes improved by 77 million, reflecting the stronger operating results. As expected, we had temporary negative working capital efforts from reduced accounts payable due to early payments for margin-enhancing discounts. Investment levels remain low and disciplined. We continue to invest in areas that support the customer experience, such as electric bullets, store layouts and digital tools, while at the same time ensuring that the store network is well maintained. We have also opened a new store in Stockholm during the quarter, and we continue to evaluate our store portfolio, looking for new locations. Our performance puts us in a solid financial position. And on the last slide, as we move deeper into the high season, we entered from a position of strength. Our net debt EBITDA now stands at 0.8 times, down from 1.5 times last year, and well below our long-term target of 2.5 times. This reduction reflects both improved earnings and disciplined capital allocation over the past 24 months. We maintain access to committed credit facilities and benefit from strong relationships with our banks, ensuring stability and flexibility going forward. And that concludes the update from my side, and I'll hand back to Carl before we move on to questions.

Thank you, Rene. And please move to slide, I think it's number 15 in the presentation. Our key messages again. As you have heard, we continue to increase sales and profitability in the second quarter of 2025. Life-to-life sales up 7.3% in the quarter. And we have a strong and stable position. Debit ratio down to 0.8%. Last year's strategic efforts secured a strong platform, and our preparations ahead of this season paid off. The transition from low to high season was successfully carried out with strong operational control and several commercial improvements at the same time. Going forward, we are approaching three things, and it's staying close to our customers, it's driving safe, and doing so with high operational efficiency. And we continue to focus on simplicity and speed in execution, which gives us the flexibility we need in our day-to-day operations. And with this clear operational focus, efficient supply flows, and improved in-store experience, we are now continuing to focus on the high systems. And our dedicated teams across the Nordic, they do a fantastic job every day in making sure to help our customers to make them succeed with their home improvement code. So with that, thank you for your attention, and we are happy to answer any questions. So let's open up the floor for questions, please.

Thank you. If you wish to ask a question, please press star followed by 1 on your telephone keypad now. If for any reason you want to remove your question from the key, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Benjamin Wolstad from ABG. Your line is now open. Please go ahead.

Good morning, guys. Hope you can hear me. First of all, I was wondering what is your view of the overall market growth in the quarter, please?

Hi, Benjamin. Thank you. Well, in the future, we know that the market continues to be characterized by austerity with cautious consumers and increased household savings. At the same time, key micro-indicators like interest rates, inflation, and health infrastructure have improved compared to a year ago. And again, fastback, the quarter started off strongly, partly thanks to an early spring that gave a boost in the month. That effect was strong in the beginning of the period, which means that the full quarter was lower than the strong start would suggest.

Perfect. And then... Following on that question then, the flow of Q3 was strong in the U.S. ETH was in April this year compared to March last year. Any idea of how that might have impacted you? I assume it's a positive one-off calendar effect in Q3.

I think in the combination of ETH moving from different houses but also the fact that the came early to the Nordic region this year, gave an extra boost in demand just in the beginning of this quarter.

And are you able to quantify the post-election impact?

No, we don't report. We have to with the overall growth in the quarter. It's 7.3% overall. like for life. So we're happy with the overall growth. And then we don't report sales by month. That's compared to some of the other effective biopractices, like weather, holidays, campaign timing, and number of trading days. So we compute the sales from the beginning quarter, but we are happy with the overall growth in the quarter.

Yeah, fair enough. It's a strategic point to make, actually. Another one on the gross margin. Since your balance sheet has improved, you've also started talking more about cash discounts supporting the gross margin. And I was wondering if you could give us an idea of how your use of cash discounts has developed in recent quarters, and are there more savings to be had from this use of cash discounts, please?

Yes, absolutely. We have, I would say that we have, since we have a strong balance sheet and fairly low capex, and been really focused on preparing for the high system as usual this year, we have started with the capex system earlier. It has given us the flexibility. to trigger it already at the ramp up, while we normally have it more weighted towards the third quarter of the year. But still, there are possibilities for further margin-tensing discounts. In general, volume drives possibilities for these kind of improvements.

Perfect, thank you. Could you remind us, were you getting any cash discounts in Q2 last year?

Yes, but not material.

Right, but in Q3 last year, savings from cash discounts were material, right? Yes. Perfect. I think that's all for me currently. Thank you very much. Thank you very much.

Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. We currently have no further questions, so I'll hand back to Carl for closing remarks.

Well, uh, Thank you. Thank you a lot for your participation. And I hope we wish you a wonderful summer. And if not before, we are really looking forward to meeting you again after our third quarter. So thank you.

This concludes today's call. Thank you for joining us. You may now disconnect your lines.