Max Stock Limited Reports Second Quarter and First Half Fiscal 2021 Financial Results

Second Quarter Comparable Store Sales Increased 26%

First Half Comparable Store Sales Increased 32%

CEASAREA, Israel–(BUSINESS WIRE)–Max Stock Limited (TASE: MAXO) (the “Company”) today reported financial results for the second quarter ended June 30, 2021.

Second Quarter Summary (excluding the impact of one-time sales of COVID-19 related goods in the year ago period):

• Total revenue increased 28.4% to ILS 223.6 million.
• Comparable store sales increased 26%.
• Operating income of ILS 30.2 million
• Net income was 18.4 million
• EPS was ILS 0.10
• Adjusted EBITDA¹ increased 4.4% to ILS 30.7 million.

First Half 2021 Summary: (excluding the impact of one-time sales of COVID-19 related goods in the year ago period)

• Total revenue increased 36.8% to ILS 475.6 million.
• Comparable store sales increased 32%.
• Operating income increased 24.6% to ILS 69.3 million
• Net income increased 19.5% to ILS 45.4 million
• EPS increased 13.0% to ILS 0.26
• Adjusted EBITDA¹ increased 35.8% to ILS 73.2 million.

Evan Neumann, Co – Chief Executive Officer, stated, “Our core retail business continued to perform very well during the second quarter underscored by a 26% increase in comparable store sales. We are very pleased with our recent results, especially as a portion of our stores were temporarily closed for a period in May. Over the past year, we have strengthened our foundation for growth through the successful execution of our key merchandising, in-store, and customer service initiatives combined with important infrastructure investments. With our expanding product selection and competitive pricing resonating with a broader audience and driving market share gains, we are fortifying Max Stock’s position as the leading extreme value retailer in Israel and creating an exciting future for all of our stakeholders.”

Second Quarter Results

Excluding one-time sales of COVID-19 related goods in the second quarter of 2020, second quarter 2021 total revenue increased 28.4% year-over-year to ILS 223.6 driven primarily by a 26% increase in comparable store sales and the addition of 4 new stores. Total revenue decreased 21.9% to compared with total revenue of ILS 286.4 million in the year ago period driven by PPE Transaction activities in the same period last year.

Gross profit, excluding one-time sales of COVID-19 related goods in the second quarter of 2020, increased 27.5% to ILS 85.6 million in the second quarter 2021 from ILS 67.2 million in the second quarter 2020. Gross margin was 38.3% as compared to 38.6% in the year ago period.

Selling, general and administrative expenses increased to ILS 57.0 million in the second quarter 2021 from ILS 36.9 million in the second quarter 2020, primarily driven by higher salary and wage expenses associated with new stores and higher expenses related to share-based payments, combined with lower expenses in the year ago period due to cost saving actions in response to COVID-19. Excluding one-time sales of COVID-19 related goods in the second quarter of 2020, selling, general and administrative expenses as a percentage of net sales were 25.4% compared with 21.2% in the year ago period.

Operating income was ILS 30.2 million, or 13.5% of total revenue in the second quarter of 2021 compared to operating income excluding the impact from one-time sales of COVID-19 related goods of ILS 30.7 million, or 17.6% of total revenue. Total operating income in the second quarter of 2020 was ILS 40.4 million, or 14.1% of total revenue.

Excluding one-time sales of COVID-19 related goods in the second quarter of 2020, net income was ILS 18.4 million, or ILS 0.10 per diluted share, in the second quarter of 2021 as compared with net income of ILS 18.9 million, or ILS 0.11 per diluted share, in the second quarter of 2020. Total net income in the second quarter of 2020 was 19.9 million ILS, or ILS 0.11 per diluted share. Adjusted earnings per share increased 23% to ILS 0.13.

Adjusted EBITDA in the second quarter of 2021 increased 4.4% year-over-year. to ILS 30.7 million from ILS 29.5 million in the year ago period. Adjusted EBITDA excludes the effect of IFRS16, the effect of Share-based payment and the impact from one-time sales of COVID-19 related goods.

First Half 2021 Results

Excluding one-time sales of COVID-19 related goods in 2020, total revenue for the first half of 2021 increased 36.8% year-over-year to ILS 475.6 million driven primarily by a 32% increase in comparable store sales and the addition of 4 new stores. Total revenue increased 0.7% to ILS 475.6 million in the first half of 2021 as compared with total revenue of ILS 472.4 million in the year ago period.

Gross profit, excluding one-time sales of COVID-19 related goods in 2020, increased 35.4% to ILS 185.4 million in the first half of 2021 from ILS 136.9 million in the first half of 2020. Gross margin was 39.0% as compared to 39.4% in the year ago period.

Selling, general and administrative expenses increased to ILS 117.7 million in the first half of 2021 from ILS 81.8 million in the first half of 2020, primarily driven by higher salary and wage expenses associated with new stores and higher expenses related to share-based payments, combined with lower expenses in the year ago period due to cost saving actions in response to COVID-19. Excluding one-time sales of COVID-19 related goods in 2020, selling, general and administrative expenses as a percentage of net sales were 24.8% compared with 23.5% in the year ago period.

Operating income was ILS 69.3 million, or 14.6% of total revenue in the first half of 2021 compared to operating income excluding the impact from one-time sales of COVID-19 related goods of ILS 55.6 million, or 16.0% of total revenue in 2020. Total operation income in the first half of 2020 was ILS 69.9 million, or 14.8% of total revenue.

Excluding one-time sales of COVID-19 related goods in 2020, net income increased 26.0% to ILS 45.4 million, or ILS 0.26 per diluted share, in the first half of 2021 as compared with net income of ILS 36.0 million, or ILS 0.21 per diluted share, in the first half of 2020. Total net income in the first half of 2020 was ILS 38.0 million, or ILS 0.21. Adjusted earnings per share of the first half of 2021 increased 47% to ILS 0.32.

Adjusted EBITDA increased 35.8% to ILS 73.2 million in the first half of 2021 from ILS 53.9 million in the year ago period. Adjusted EBITDA excludes the effect of IFRS16, the effect of Share-based payment and the impact from one-time sales of COVID-19 related goods.

Balance Sheet and Cash Flow Highlights

The Company’s cash and cash equivalents balance at June 30, 2021 was ILS 31.2 million, a decrease of 62.2% compared with ILS 82.5 million at June 30, 2020. The Company ended the second quarter 2021 with total debt of ILS 54.9 million compared with total debt of ILS 80.8 million at the end of the second quarter last year.

Inventories increased 78.7% to ILS 197.1 million at June 30, 2021 compared with ILS 110.3 million at June 30, 2020. The increase primarily driven by growth in volume activity and higher expenses related to shipping costs.

Conference Call Information

The Company will host a conference call on August 17, 2021 at 8:30 a.m. Eastern Standard Time to discuss second quarter fiscal 2021 results. Investors and analysts interested in participating in the call are invited to dial (877) 407-9716 (domestic) or (201) 493-6779 (international) and provide the conference identification number: 13722417. The conference call will also be available to interested parties through a live webcast at https://ir.maxstock.co.il

A telephone replay of the call will be available until August 24, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13722417.

About Max Stock

Max Stock is a leading general discount retailer of everyday essential items in Israel. We offer a broad selection of merchandise across six major categories, operating 52 stores across the country. 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 Israeli 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 defined as Net Income + Income Tax Expenses + Net Interest Expenses + D&A + Other Expenses – the impact of IFRS 16+ Share-based payment.

Condensed Consolidated Reports of Financial Position
				As of June 30						As of December 31
				2021				2020		2020
				Unaudited						Audited
Current assets				ILS 000’s
Cash and cash equivalents				31,165				82,486		118,263
Shorts term deposits				–				40,000		24,500
Trade receivables (customers)				71,881				67,602		73,740
Current tax rebates				1,579				2,835		825
Accounts receivable and credit balances				19,714				6,067 (*)		18,373
Financial derivatives				183				931 (*)		–
Inventory				197,146				110,334		127,272
				321,668				310,255		362,973
Non-Current Assets
Long-term deposit				160				160		160
Fixed assets, property, plant and equipment, net				56,439				44,257		47,329
Right of use assets				494,594				359,452		511,704
Deferred taxes				9,996				7,417		10,558
				561,189				411,286		569,751
				882,857				721,541		932,724
Current liabilities
Credit from banking corporations				32,150				57,434		15,432
Lease liabilities				53,439				48,242		53,830
Trade payables (liabilities to vendors, suppliers and service providers)				101,760				63,745 (*)		116,890
Current taxes payable				8,522				5,935		9,783
Accounts payable and debit balances				31,674				31,715 (*)		29,775
Dividend payable				–				3,767		–
Financial derivatives				–				–		2,738
				227,545				210,838		228,448
Non-Current Liabilities
Loans from banking corporations				22,768				23,354		20,622
Lease liabilities				469,482				336,910		486,126
Liabilities for employee benefits				1,936				1,964		1,936
				494,186				362,228		508,684
Equity
Shareholders’ equity				152,311				134,844		177,274
Non-controlling interests (minority rights)				8,815				13,631		18,318
Total equity				161,126				148,475		195,592
				882,857				721,541		932,724
(*) Reclassified.

 

Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Profit
			For the period of six months ended On 30 June				For the three-month period ended On 30 June				For the year ending December 31
			2021		2020		2021		2020		2020
			Unaudited				Unaudited				Audited
			ILS 000’s (save for the data about net profit per share)
	Revenues from sales		475,570		472,441		223,604		286,375		1,010,495
	Cost of goods sold		290,174		321,185 (*)		138,008		209,535 (*)		651,562
	Gross Profit		185,396		151,256		85,596		76,840		358,933
	Sales and marketing expenses		95,818		69,898 (*)		47,318		30,910 (*)		170,167
	General and administrative expenses		21,929		11,936 (*)		9,648		5,991 (*)		33,782
	Other income		(1,613)		(503)		(1,613)		(485)		(1,224)
	Other expenses		–		–		–		–		5,479
	Operating profit		69,262		69,925		30,243		40,424		150,729
	Financing revenues		(1,026)		(2,109)		–		(727)		(1,118)
	Financing expenses		8,612		10,035		4,724		6,491		20,400
	Financing expenses for extraordinary transactions		–		11,831 (*)		–		8,375 (*)		13,276
	Profits before taxes on income		61,676		50,168		25,519		26,285		118,171
	Taxes on income		16,268		12,181		7,076		6,374		30,542
	Net profit		45,408		37,987		18,443		19,911		87,629
	Total other comprehensive profit (loss):
	Amounts not to be reclassified to profit or loss:
	Remeasurement of defined benefit plan		–		–		–		–		(32)
	Total comprehensive profit		45,408		37,987		18,443		19,911		87,597
	Net profit attributable to:
	Shareholders of the Company		37,335		32,530		14,920		16,263		72,647
	Non-controlling interests (minority rights)		8,073		5,457		3,523		3,648		14,982
			45,408		37,987		18,443		19,911		87,629
	Total comprehensive profit attributable to:
	Shareholders of the Company		37,335		32,530		14,920		16,263		72,615
	Non-controlling interests (minority rights)		8,073		5,457		3,523		3,648		14,982
			45,408		37,987		18,443		19,911		87,597
	Net profit per share attributable to shareholders of the Company (ILS)
	Base net profit		0.26		0.23		0.10		0.11		0.51
	Diluted net profit		0.26		0.23		0.10		0.11		0.51
	(*) Reclassified

Condensed Consolidated Reports of Cash Flows
		For the period of six months ended On 30 June				For the three-month period ended On 30 June				For the year ending December 31
		2021		2020		2021		2020		2020
		Unaudited				Unaudited				Audited
		ILS 000’s
Cash flows from current activities:
Net profit		45,408		37,987		18,443		19,911		87,629
Adjustments required to present cash flows from current operations (a)		(54,039)		17,955 (*)		(8,556)		27,840 (*)		72,308 (*)
Net cash deriving from (utilized for) current operations		(8,631)		55,942		9,887		47,751		159,937
Cash Flows from Investment Activities
Acquisition of fixed assets (property, plant and equipment)		(12,566)		(8,924)		(6,393)		(4,118)		(17,497)
Proceeds from realizing fixed assets		–		–		–		–		640
Revenues (payments) from exercising financial derivatives		(1,897)		639 (*)		(891)		569 (*)		62 (*)
Redeeming (making) short-term deposits		24,500		(40,000)		16,500		7,300		(24,500)
Net cash deriving from (utilized for) investment activities		10,037		(48,285)		9,216		3,751		(41,295)
Cash Flows from Financing Activities
Obtaining long-term loans from banking corporations		12,000		14,500		–		2,500		20,500
Obtaining short-term loans from banking corporations		15,030		40,000		15,030		–		40,000
Repayment of long-term loans from banking corporations		(8,166)		(10,258)		(3,668)		(5,263)		(20,992)
Repayment of short-term loans from banking corporations		–		–		–		–		(40,000)
Lease payments		(19,792)		(12,122)		(10,729)		(6,606) (*)		(30,267)
Dividends paid to non-controlling (minority) interest holders		(17,576)		–		(13,011)		–		(8,606)
Dividend paid to Company shareholders		(70,000)		–		(70,000)		–		–
Acquisition of non-controlling interests (minority rights)		–		(3,348)		–		(2,332)		(7,071)
Net cash deriving from (utilized for) financing activities		(88,504)		28,772		(82,378)		(11,701)		(46,436)
Increase (decrease) in cash and cash equivalents		(87,098)		36,429		(63,275)		39,801		72,206
Balance of cash and cash equivalents at beginning of the period		118,263		46,057		94,440		42,685		46,057
Balance of cash and cash equivalents at the end of the period		31,165		82,486		31,165		82,486		118,263
(*) Reclassified.

Condensed Consolidated Reports of Cash Flows
		For the period of six months ended On 30 June				For the three-month period ended On 30 June				For the year ending December 31
		2021		2020		2021		2020		2020
		Unaudited				Unaudited				Audited
		ILS 000’s
Adjustments required to present cash flows from current operations: (a)
Adjustments to the profit or loss items:
Depreciation and amortization		24,935		19,931		12,573		9,444 (*)		45,347
Financing expenses, net		10,507		20,688 (*)		5,143		11,373 (*)		29,820 (*)
Profit from derecognizing lease liabilities		(1,613)		(503)		(1,613)		(485)		(1,224)
Decrease (increase) in fair value of financial derivatives		(2,921)		(931) (*)		(419)		2,768 (*)		2,738 (*)
Cost of share-based payments		7,702		–		3,858		–		2,345
Change in liabilities for employee benefits, net		–		–		–		–		(61)
Taxes on income		16,268		12,181		7,076		6,374		30,542
Capital loss		–		–		–		–		866
		54,878		51,366		26,618		29,474		110,373
Changes in property and liability items:
Decrease (increase) in trade receivables/customers		1,859		(13,633)		17,340		(25,171)		(19,771)
Decrease (increase) in receivables and credit balances		(1,341)		5,358 (*)		1,894		30,002 (*)		(6,948)
Decrease (increase) in inventory		(69,874)		(7,979)		(33,213)		28,975		(24,917)
Increase (decrease) in trade payables (liabilities to vendors, suppliers and service providers)		(15,130)		4,721 (*)		(976)		23,178 (*)		57,866
Increase (decrease) in creditors and debit balances		1,893		6,112 (*)		(6,160)		(41,763) (*)		9,394 (*)
		(82,593)		(5,421)		(21,115)		15,221		15,624
Cash paid and received by the Company during the year for:
Interest paid		(8,605)		(9,497)		(4,248)		(3,566)		(16,606)
Interest paid for extraordinary transactions		–		(10,331)		–		(10,331)		(13,276)
Taxes paid, net		(17,719)		(8,162)		(9,811)		(2,958)		(23,807)
Total adjustments required to present cash flows deriving from current activities		(54,039)		17,955		(8,556)		27,840		72,308
Non-cash material activity: (b)
Dividend declared		–		3,767		–		3,767		–
Recognition of a right-of-use asset against a lease liability		18,994		11,815 (*)		14,430		8,959 (*)		190,000
Derecognizing a right-of-use asset against a lease liability		(14,624)		(3,917) (*)		(14,624)		(3,839) (*)		(8,429)
Acquisition of non-controlling interests with credit		–		3,723		–		3,723		–
(*) Reclassified.
The accompanying notes are an integral part of the interim consolidated financial statements

 

Contacts

Company Contact

Ifat Nir Katz,

General Counsel & Company Secretary

[email protected]