Max Stock Limited Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Max Stock Limited reported strong financial results for Q3 2022, with revenue increasing by 14.8% to ILS 293.5 million compared to Q3 2021. Gross profit rose 19.4% to ILS 117.7 million, and gross margin improved by 150 basis points to 40.1%. Adjusted EBITDA increased by 15.4% to ILS 41.9 million, and adjusted net income grew by 10.3% to ILS 27.4 million. However, comparable store sales decreased by 1.1% for the first nine months of 2022.

Positive

• Revenue for Q3 2022 increased 14.8% to ILS 293.5 million.
• Gross profit rose 19.4% to ILS 117.7 million.
• Adjusted EBITDA grew 15.4% to ILS 41.9 million.
• Adjusted net income increased 10.3% to ILS 27.4 million.
• Comparable sales grew 3.9% in Q3.

Negative

• Adjusted EBITDA decreased 5.8% to ILS 103.1 million for the first nine months.
• Adjusted net income fell 14.5% to ILS 66.6 million for the first nine months.
• Adjusted EPS decreased 15.1% to ILS 0.39 for the first nine months.
• Comparable store sales dropped 1.1% for the first nine months.

Comparable Sales Increased 3.9%

Gross Margin Increased 150 Basis Points to 40.1%

Adjusted EBITDA Increased 15.4% to ILS 41.9 Million

CAESAREA, Israel, Nov. 28, 2022 /PRNewswire/ -- Max Stock Limited (TASE: MAXO) (the "Company") today reported financial results for third quarter ended September 30, 2022.

Third Quarter 2022 Summary

• Revenue increased 14.8% to ILS 293.5 million.
• Gross profit increased 19.4% to ILS 117.7 million.
• Comparable store sales increased 3.9%. 
• Adjusted EBITDA1 increased 15.4% to ILS 41.9 million
• Adjusted net income increased 10.3% to ILS 27.4 million.
• Adjusted EPS2 (attributable to shareholders) increased 9.9% to ILS 0.16.

First Nine Months 2022 Summary

• Revenue increased 9.0% to ILS 797.1 million.
• Gross profit increased 10.8% to ILS 314.7 million.
• Comparable store sales decreased 1.1%. 
• Adjusted EBITDA¹ decreased 5.8% to ILS 103.1 million.
• Adjusted net income decreased 14.5% to ILS 66.6 million.
• Adjusted EPS² (attributable to shareholders) decreased 15.1% to ILS 0.39.

Ori Max, Founder and Chief Executive Officer, stated, "The third quarter was highlighted by double-digit revenue growth, gross margin expansion of 150 basis points and same-store sales growth of nearly 4%. Our position as Israel's leading extreme value retailer helped attract a broad range of consumers during the back to school season, many of whom were looking for ways to save on essentials in the current inflationary environment. Our strong brand coupled with our differentiated product mix, low prices and unique in-store experience, is leading to market share gains that are being further fueled by the continued expansion of our footprint within Israel. We have grown store space by 9.3k square meters with the addition of 5 new stores (of which 3 replaced smaller existing stores) over the last four quarters, while also continuing to execute and refine our merchandise and further enhance our shopping experience. These long-term investments in our company along with our strong operational execution, position us well for continued growth through both favorable and challenging economic environments."

Third Quarter 2022 Results

Revenue increased 14.8% to ILS 293.5 million in the third quarter 2022 as compared with revenue of ILS 255.6 million in the third quarter 2021. The increase in revenue was driven by the addition of 5 new stores (of which 3 replaced smaller existing stores) and a 3.9% increase in same store sales. Same store sales benefitted from strong back-to-school sales as well as a shift in the timing of the Jewish holiday season, which occurred mostly in the fourth quarter of 2022 while in 2021 that season was included in the third quarter. 

Gross profit increased 19.4% to ILS 117.7 million in the third quarter 2022 from ILS 98.6 million in the third quarter 2021. Gross margin was 40.1% as compared to 38.6% in the prior year period. The 150-basis point improvement in gross margin year-over-year was driven primarily by a decrease in logistical expenses as a result of more efficient inventory management.   

Selling, general and administrative expenses increased to ILS 80.2 million in the third quarter 2022 from ILS 64.7 million in the third quarter 2021, primarily driven by an increase in salary and wage expenses, a high-cost relative to sales of depreciation (primarily IFRS 16 related) and increased marketing expenses. Selling, general and administrative expenses as a percentage of net sales in Q3 2022 were 27.3% compared with 25.3% in Q3 2021.

Adjusted EBITDA increased 15.4% to ILS 41.9 million in the third quarter fiscal 2022 from ILS 36.3 million in the third quarter 2021.

Adjusted net income increased 10.3% to ILS 27.4 million in the third quarter of 2022, as compared with adjusted net income of ILS 24.8 million in the third quarter of 2021.

Adjusted EPS (attributable to shareholders) increased 9.9% to ILS 0.16 in the third quarter of 2022, as compared with adjusted EPS of ILS 0.15 in the third quarter of 2021.

First Nine Months 2022 Results

Total revenue for the first nine months of 2022 increased 9.0% year-over-year to ILS 797.1 million driven primarily by the addition of 5 new stores (of which 3 replaced smaller existing stores). Revenue growth was partially offset by a 1.1% decrease in same store sales.

Gross profit increased 10.8% to ILS 314.7 million in the first nine months of 2022 from ILS 284.0 million in the first nine months of 2021. Gross margin improved 70 basis points to 39.5% from 38.8% in the year ago period.

Selling, general and administrative expenses increased to ILS 224.8 million in the first nine months of 2022 from ILS 182.4 million in the first nine months of 2021, primarily driven by an increase in salary and wage expenses, increased marketing expenses and a high cost relative to sales of depreciation (primarily IFRS 16 related). Selling, general and administrative expenses as a percentage of net sales were 28.2% compared with 24.9% in the year ago period.

Adjusted EBITDA decreased 5.8% to ILS 103.1 million in the first nine months of 2022 from ILS 109.5 million in the year ago period.

Adjusted net income decreased 14.5% to ILS 66.6 million in the first nine months of 2022 as compared with adjusted net income of ILS 77.9 million in the first nine months of 2021.

Adjusted EPS (attributable to shareholders) decreased 15.1% to ILS 0.39 in the first nine months of 2022, as compared with adjusted EPS of ILS 0.46 in the first nine months of 2021.

Balance Sheet and Cash Flow Highlights

The Company's cash and cash equivalents balance at September 30, 2022 was ILS 82.6 million compared with ILS 50.3 million at December 31, 2022 and ILS 46.9 million at September 30, 2021. The Company ended the third quarter of 2022 with total debt of ILS 48.6 million compared with total debt of ILS 70.5 million at the end of fiscal 2021.

Inventories at September 30, 2022 were ILS 166.8 million, down 21.9% compared with ILS 213.7 million at December 31, 2021 and down 16.5% compared with ILS 199.7 million at September 30, 2021.

Conference Call Information

The Company will host a conference call on November 28, 2022 at 8:30 a.m. Eastern Standard Time to discuss third quarter fiscal 2022 results. The conference call will also be accessible at https://ir.maxstock.co.il/en/event-en/.There will be a slide presentation that accompanies the call. The slides will be accessible at   https://ir.maxstock.co.il/en/presentation-en/. An archived webcast of the conference call will be available at https://ir.maxstock.co.il/en/presentation-en/.

About Max Stock

Max Stock is Israel's leading extreme value retailer, currently present in 55 locations throughout Israel. We offer a broad assortment of quality products for customers' everyday needs at affordable prices, helping customers "Dream Big, Pay Small". For more information, please visit https://ir.maxstock.co.il    

Forward-Looking Statements

It should be emphasized that this report includes forward-looking information as defined under the Securities Law, 5728-1968. Forward-looking information is uncertain information regarding the future, including forecasts, projections, estimates or other information which refer to a future event or matter, the eventuation of which is uncertain and/or not within the Company's control. The forward-looking information included in this report is based on the current information held by the Company or its current assessments, as of the publication date of this report.

1.  As used throughout this release, adjusted EBITDA Pre IFRS 16 defined as Net Income + Income Tax Expenses + Net Interest Expenses + D&A + Other Expenses – the impact of IFRS 16 + Share-based payment.
2.  As used throughout this release, adjusted EPS (attributable to shareholders) defined as Net Income + Share-based payment, multiplied by the portion attributable to shareholders and divided by the number of shares.

Company Contacts:

Talia Sessler,
Chief Corporate Development and IR Officer
talia@maxstock.co.il

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SOURCE Max Stock Limited

FAQ

What were Max Stock's Q3 2022 revenue results?

Max Stock's revenue for Q3 2022 increased by 14.8% to ILS 293.5 million.

How did Max Stock's gross margin change in Q3 2022?

The gross margin for Q3 2022 improved by 150 basis points to 40.1%.

What was Max Stock's adjusted EBITDA for Q3 2022?

Max Stock's adjusted EBITDA for Q3 2022 increased by 15.4% to ILS 41.9 million.

How did comparable store sales perform in Q3 2022?

Comparable store sales increased by 3.9% in Q3 2022.

What were the adjusted EPS results for the first nine months of 2022?

The adjusted EPS for the first nine months of 2022 decreased by 15.1% to ILS 0.39.