Byggmax Group AB (publ)

Hello, everyone, and thank you for joining the Big Max Group interim report at Q2. My name is Lucy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2 to remove yourself from the question queue. It is now my pleasure to hand over to Carl Sandland, CEO, to begin. Please go ahead when you're ready.

Thank you. Thank you very much and welcome to today's conference call where we will present Big Max Group's interim report for the second quarter of 2026. And as you heard, I'm Carl Sandlund, CEO, and with me is Helena Nahlkos, our CFO. As usual, the presentation is available on our website and we will refer to the relevant pages during this call. I will start with a short business update and then Lena will review the financials and after the presentations there will be a Q&A session as usual. So let's start and move into the presentation and please go to slide number two. Well, the second quarter marks the beginning of our high season. Our sales follow a three-hour seasonal pattern as you know. And this means that sales in the second and third quarters are significantly higher than in the first and fourth. And after a string of preparations across the entire BrickMax Group, the transition from low to high season was well executed, and our operation performance during the quarter has been strong. We improved our profitability compared to last year, with an EBITDA margin in the quarter of 12%, up from 10.8% last year, and we continue to have a very strong financial position. There continues to be a market with large variations, high demand for categories related to smaller projects, while larger projects and renovations are still more challenging. And all in all, our sales increased by 2.9% compared to last year, including positive effects from currency exchange rates. And then I will come back to the finances and give more details in a minute. So, again, a quarter with strong operational performance, improved profitability, and a solid financial position. And this makes us fully prepared for the rest of the high season and, at the same time, We are continuing to develop BigWex to enhance customer value and to further support long-term growth. Before we continue with the business update on the financial space, on slide three, a brief overview for those who might be less familiar with us. We were founded back in 1993 and has now grown to 211 stores across four Nordic markets. We serve primarily consumers, with a clear focus on building materials for home maintenance. We have high product availability in our stores. In addition to the big mix brand, we operate right-based hives in Norway, focused on hives and bathrooms, and are constantly involved in offering products such as conservatories and greenhouses. We are built for fast and easy shopping, and our driving concept makes it convenient to purchase heavy building materials, while our efficient e-comm enables customers to order large volumes for collecting collects or home delivery. And at the core of our model is commitment to the best price, and this is enabled by large-scale purchasing and a highly efficient operating model across the entire organization. On slide number four, we have a brief update on the macro environment. Well, then we're all knowing consumer markets have been in a cautious recovery, with some retail indicators pointed to a more active consumer. But at the same time, consumer confidence remained well below normal. Households remained cautious about personal finances and major purchases, suggesting still a subdued market environment. For building materials, the market showed large variations underneath. Customers are doing projects, but they are selective and more focused on smaller projects. Some categories are performing well, such as garden and outdoor, while timber and heavy building materials remain weaker. So this leads to mixed effect. Our exposure to heavy building materials give a lower overall growth. A year ago, in Q2 last year, the effect was the opposite. Turning to our priorities for the quarter, starting on slide number five, Well, at least in the beginning, at this time of the year, operational execution becomes one of our most important priorities. Summer is significantly larger than the winter season. We have more customers in our stores, more deliveries and very large volumes of material moving through the whole chain. And in this period, even small operational issues can quickly have large impact on the customer experience. That is why availability, replenishment, and staffing are so important. As mentioned, our operation performance has been strong in the quarter. We have recruited and trained many new employees for our stores, and at the same time, we have built up inventory in an efficient way, which is for strong product availability. In total, our inventory value is slightly higher than last year. Overall, we are pleased with how operations have been carried out during the quarter. Good product availability and stable supply have given us a good position to meet demand. At the same time, as we focus on operations, we are building on further on our commercial capabilities. If you move to slide number six, we have a very strong customer position. Brand awareness is at 93% in Sweden, and our store net promoter score reached 58 in Q2. So customers not only know Bibmax, they also appreciate the experience when they need us. And during the quarter, we have continued to build on that foundation. And one example is our new customer program, which will be developed step by step together with our customers with a Clear ambition to further simplify their customer journey and increase relevance and build a stronger customer base over time. We have also strengthened our marketing function by moving into a more data-driven setup with clearer channel priorities and a more systematic follow-up. And at the same time, we are enhancing our commercial activation and have more sales focus. and in selected seasonal categories, we have seen examples of how adjustment in rate mix and exposure can steer sales toward products with higher customer value. This work is still in early progress, but the direction is important. We are also enhancing our sales challenge, slide number seven. In stores, we continue to raise the baseline. through clearer seasonal areas and better product placement. And this is an effect that will come over time. But the ambition is to make it easier for customers to find the right products and to complete their projects. We are also continuing to develop our store footprint in Stjernsund, Sweden. We reopened after almost three years with an updated store with a new flooring department and our signature driving yard. We also opened the new Skånska Byggvaru showroom in Gothenburg. And in Trondheim, Norway, we relocated our right price tile store to a better location with an upgraded store experience. Online, well, last year's work to simplify and sharpen the assortment is now completed. We have a stronger digital offer, especially in building materials and garden buildings. and during the quarter e-commerce has shown good performance. So with enhanced stores, sharper online and stronger CRM, the ambition is to drive more traffic and increase conversion and to capture more of our customers' projects over time. We are also, if we move to slide number eight, we are also using AI to strengthen both customer experience and to improve efficiency. In customer service, AI is already acting as first line of support, and it solves more than 80% of the incoming cases without manual handling. In addition, we have taken a clear step forward in AI-driven sales during the quarter, and we are now live with agentic commerce, where AI moves beyond the only customer service and become also an active part of the buying journey. And instead of asking the customers to search through product lists or websites, they can describe what they want to build, and they get help with material choices, quality calculations, product recommendations, all the way to the checkout. And everything is in the same flow. And this is, of course, an early version and a very small channel so far, but conversion is around 30%, which shows that AI can make the customer journey simpler. while also, over time, maybe contributing to sales. In addition, we are taking steps in store support by launching an AI system for our store employees, and this will give our teams better support in the customer meeting, but also enable faster service and help create a more consistent customer experience. And the point is not that we are trying to become an AI company. The point is that we are using AI where it makes a bit much better, in sales and service, but also in productivity and the customer experience. With that, this is an update. I hand over to Helena and our financials.

Thank you, Carl, and good morning, everyone. Before we move into the quarter in more detail, I'd like to put the results into a broader perspective. We are on slide nine. This slide illustrates and margin progress we've made over the past three years. And despite a prolonged period of soft and volatile market demand, we have delivered a significant improvement in profitability. Our rolling 12-month EBITDA margin has now increased to 6.2 compared with 5.3 a year ago and 2.9 two years ago. This improvement has been achieved with broadly similar sales levels, reflecting structural improvements in the business rather than a recovery in market demand. That momentum continued in this quarter, where EBITDA margin increased by more than one percentage point to 12%. With that longer perspective, I'll move into the quarter in more detail, starting with the income statement on slide 10. Operating profit increased by 44 million to 267 million in the quarter. If you look at the year-on-year bridge, you can see that speed riders are combined with continued cost control and disciplined investment. Sales increased by 2.9 or 1.7, excluding currency effects. Demand remains mixed. Lower volumes in timber and heavy building materials were balanced by continued strength in garden products and smaller renovation projects, and also good in-store product availability throughout the quarter supported phase. In the quarter, gross margin continued to improve, contributing with 20 million to earnings. The improvement reflects stronger commercial execution together with underlying improvements in sourcing, logistics, and our e-commerce offering. In the quarter, product mix and early supplier payments supported margins. And some announced supplier price increases have yet to be fully reflected in the market and may put some pressure on margins in the coming quarters. We continue to do a disciplined cost management. Operating expenses increased by 3% compared with last year. This reflects annual wage increase across the Nordics, continued investment in our digital capabilities, as well as store opening activities during the quarter. This means that the organization is now leaner and more flexible, allowing us to absorb these investments while maintaining a disciplined cost base. In the quarter, depreciation and amortization also contributed to the impact on operating profit. The low reinvestment levels over the past two years have reduced depreciation expenses. In addition, amortization related to Skånska Byggvaror acquisition is completed. These positive effects of 60 million were partly offset by higher depreciation related to IFRS 16 lease agreement. So operating profit and margin improved, turning us to the cash flow on slide 11. Strong profitability combined with disciplined capital allocation continues to generate healthy cash flow. Over the last 12 months, cash flow from operating activities amounted to $808 million. We continue to invest to strengthen the business over long term. While cashbacks increased compared with last year, investment levels remain below historical levels. During the quarter, investments included continued ERP upgrade and store projects with customer-facing improvements such as store layouts and checkouts. The working capital remains well managed. Inventory levels have increased to support product availability and customer demand while we continue to balance the level of capital. So overall, strong earnings. combined with disciplined investments and effective work in capital management continues to support strong cash flow. This strong cash flow generation continues to strengthen our balance sheet, which brings me to the final slide on the next step. Net debt excluding IFRS 16 has been reduced to 186 million at the end of the quarter, and our net debt EBITDA ratio has improved to 0.4 times. Combined with committed credit facilities, we have substantial financial flexibility to support both continued investment in business and future growth opportunities. Overall, the financial development this quarter demonstrates that the operational improvements implemented over the past two years continue to translate into stronger earnings, stronger cash generation, and significantly stronger balance sheet. And with that, I hand back to Carl to conclude before we open up for questions.

Thank you, Helena. Please move to slide number 13. Well, Big Mac has a clear position, and it's to offer building materials easily and at a good price. Our drive-in model makes shopping really efficient, and together with a low cost base and an extensive store network, this provides us with a scalable business model. We delivered a solid Q2 with strong operation performance, so it improved profitability, as you've heard, at 12% EBITDA margin in the quarter, and a very robust financial position. Our services going forward are there. It's about combining continued, very strong operational performance with enhanced commercial capabilities to unlock further potential. And we aim to deepen our understanding of customer needs and improved customer insights will provide a strong foundation for how we develop our offering, both in categories where we are already strong and in related areas. Another dimension is how we activate the offer across our sales channels and at the same time improve customer communication and help driving practical sales. And the ambition is to gradually enhance the entire commercial group from customer insight and relevance to execution and value creation. Finally, all our employees, they work hard to ensure that we are fully ready during the summer season and we are really looking forward to meeting all our customers during the rest of this peak season. So this concludes our presentation and so thank you for your attention and we now welcome your questions.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2 to remove yourself from the question queue. When preparing to ask your question, please ensure your device is unmuted locally. The first question today comes from Benjamin of ABG . Your line is now open. Please go ahead.

Good morning. A couple questions for me. So, first of all, I was wondering if you could discuss a bit more the growth deviation from the DIY growth reported by Sweden Statistics. for April-May SCBE reports DIY growth roughly 9% year-on-year for context.

Good morning. Thank you, Benjamin. Well, as mentioned, we see a market with significant variations where some categories are developing well while others have to gain momentum, which makes, I guess, comparison based on aggregated sales figures quite challenging. Our exposure to heavy building materials has an effect and gives lower overall growth, while our assessment is that we remain strong in our major categories. Looking at last year, Q2, as we mentioned, the effect was the opposite, where the more heavy building materials grew a little bit more, having a higher total sales growth. But at the same time, we're not complacent, and we support our potential. mentioned in the presentation, we have a high brand awareness, a high customer satisfaction, and by improving insights and converting these customer insights and offer relevant for more customer needs, we have the potential to secure product growth.

Thank you. I was wondering as well if you could elaborate on the comment regarding cash discounts shifting gross margins in the quarter. I seem to remember you using cash discounts extensively in the comparable quarter as well.

Yes, that is totally correct. We have for a longer period used cash discounts, but it has been a larger impact, and as I commented, there are other underlying improvements that have raised the gross margin, but it still has an impact this quarter versus the same quarter last year. It has been used to a higher extent, but less impact on the margin.

Perfect, thank you. And then finally, and I understand this is more a question for the board really, but I'm sure they will listen to your input. What do you want to do with cash flows now that your balance sheet has re-strengthened?

Well, our strong financial position provides us with good and strong operational flexibility. It allows us to build inventories ahead of the season in an effective way and also to, as Helena mentioned, also fully leverage purchasing or cash discounts. Our business model is efficient and it generates strong cash flows and it enables us both to invest in the business, in the assortment, customer experience, towards an e-comp and deliver effective returns to our shareholders for our policies to distribute all of the earnings. When it comes to future capital allocation and distributions, I should say it's for the Board to decide and the Board will come back on this in due course. Perfect.

That's all I have for now. Thank you very much.

Thank you, Benjamin.

Thank you. As a reminder, to ask a question, please press star fellow 1 on your telephone keypad now. We have no further questions at this time, so I'd like to hand back to Carl for closing remarks.

Well, thanks a lot for your time, and I really hope that you will have a nice summer, and if not before, we'll look forward to connecting in October after our third quarter report. So, thank you.

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