Max Stock Limited Reports Third Quarter and Nine Month Fiscal 2021 Financial Results
CAESAREA, Israel–(BUSINESS WIRE)–Max Stock Limited (TASE:MAXO) (the “Company”) today reported financial results for the three and nine-month periods ended September 30, 2021.
First Nine Months 2021 Summary: (excluding the impact of one-time sales of COVID-19 related goods in the year ago period)
- Total revenue increased 19.9% to ILS 731.2 million.
- Comparable store sales increased 17%.
- Operating income increased 6.4% to ILS 103.2 million
- Net income increased 4.8% to ILS 66.3 million
- EPS increased 3% to ILS 0.38
- Adjusted EBITDA1 increased 9.8% to ILS 109.5 million.
Third Quarter Summary
- Total revenue decreased 2.4% to ILS 255.6 million, reflecting the impact from less operating days in 2021 versus 2020 due to timing of Jewish holyday season.
- Comparable store sales decreased 3%.
- Operating income of ILS 33.9 million
- Net income was ILS 20.9 million
- EPS was ILS 0.12
- Adjusted EBITDA1 was ILS 36.3 million.
Evan Neumann, Co – Chief Executive Officer, stated, “We are encouraged that third quarter sales nearly equaled the year ago period given the difficult comparison and fewer operating days in 2021, and very pleased that our year-to-date results are exceeding our long-term financial targets. With comparable sales increasing 17% for the first nine months of 2021, and 3 new stores opened this year including several large format locations, we have made great progress capturing market share and strengthening Max Stock’s position as leading extreme value retailer in Israel. As we continue to execute and refine our merchandise, in-store experience, and customer service initiatives and further expand our store footprint, I am confident we’ll exceed our long-term annual financial targets and generate meaningful returns for all our stakeholders.”
First Nine Months 2021 Results
Excluding one-time sales of COVID-19 related goods in 2020, total revenue for the first nine months of 2021 increased 19.9% year-over-year to ILS 731.2 million driven primarily by a 17% increase in comparable store sales and the addition of 3 new stores. Total revenue decreased 0.4% to ILS 731.2 million in the first nine months of 2021 as compared with total revenue of ILS 734.4 million in the year ago period.
Gross profit, excluding one-time sales of COVID-19 related goods in 2020, increased 18.6% to ILS 284.0 million in the first nine months of 2021 from ILS 239.4 million in the first nine months of 2020. Gross margin was 38.8% as compared to 39.3% in the year ago period.
Selling, general and administrative expenses increased to ILS 182.4 million in the first nine months of 2021 from ILS 138.3 million in the first nine months 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 24.9% compared with 22.7% in the year ago period.
Operating income was ILS 103.2 million, or 14.1% of total revenue in the first nine months of 2021 compared to operating income excluding the impact from one-time sales of COVID-19 related goods of ILS 96.9 million, or 15.9% of total revenue in 2020. Total operating income in the first half nine months of 2020 was ILS 111.3 million, or 15.2% of total revenue.
Excluding one-time sales of COVID-19 related goods in 2020, net income increased 4.8% to ILS 66.3 million, or ILS 0.38 per diluted share, in the first nine months of 2021 as compared with net income of ILS 63.3 million, or ILS 0.37 per diluted share, in the first nine months of 2020. Total net income in the first nine months of 2020 was ILS 66.3 million, or ILS 0.38. Adjusted earnings per share2 of the first nine months of 2021 increased 15% to ILS 0.46 from Adjusted earnings per share of ILS 0.40 in the same period last year.
Adjusted EBITDA, excluding the impact from one-time sales of COVID-19 related goods in 2020, increased 9.8% to ILS 109.4 million in the first nine months of 2021 from ILS 99.7 million in the year ago period.
Third Quarter Results
Third quarter 2021 total revenue was ILS 255.6 million compared to ILS 262.0 million in the year ago period. The 2.4% year-over-year decrease was driven primarily 4 fewer operating days in 2021 due to the timing of the Jewish holyday season and a 3% decrease in comparable sales, partially offset by the addition of 3 new stores.
Gross profit in the third quarter of 2021 was ILS 98.6 million compared to ILS 102.5 million in the third quarter 2020. Gross margin was 38.6% as compared to 39.1% in the year ago period with the 50-basis point decline driven by higher freight and logistic costs.
Selling, general and administrative expenses increased to ILS 64.7 million in the third quarter 2021 from ILS 56.4 million in the third quarter 2020, primarily driven by higher salary and wage expenses associated with new stores and higher expenses related to share-based payments. Excluding expenses related to share-based payments from both periods, selling, general and administrative expenses as a percentage of net sales were 23.8% compared with 21.5% in the year ago period.
Operating income was ILS 33.9 million, or 13.3% of total revenue in the third quarter of 2021 compared to operating income of ILS 41.4 million, or 15.8% of total revenue in the third quarter of 2020.
Net income was ILS 20.9 million, or ILS 0.12 per diluted share, in the third quarter of 2021 as compared with net income of ILS 26.2 million, or ILS 0.15 per diluted share, in the third quarter of 2020. Third quarter 2021 Adjusted earnings per share2 was ILS 0.15, compared to Adjusted earnings per share of ILS 0.18 in the year ago period.
Adjusted EBITDA in the third quarter of 2021 was ILS 36.3 million compared to ILS 45.8 million in the year ago period. Adjusted EBITDA excludes the effect of IFRS16 and the effect of Share-based payment.
Balance Sheet and Cash Flow Highlights
The Company’s cash and cash equivalents balance at September 30, 2021 was ILS 46.9 million compared with ILS 155.4 million at September 30, 2020, reflecting the ILS 70.0 million dividend paid to stockholders in 2021. The Company ended the third quarter 2021 with total debt of ILS 69.8 million compared with total debt of ILS 78.3 million at the end of the third quarter last year.
Inventories increased 87.6% to ILS 199.7 million at September 30, 2021 compared with ILS 106.5 million at September 30, 2020. The increase primarily driven by growth in volume activity, higher expenses related to shipping costs, and a purposeful build up of certain key inventory items in anticipation of potential supply chain disruptions.
Conference Call Information
The Company will host a conference call on November 23, 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: 13725239. 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 November 30, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13725239.
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 53 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.
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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.
2 Adjusted EPS defined as net income + share base payment/issuance cost – one-time bulk operation divided by shares number
Contacts
Company
Ifat Nir Katz
General Counsel & Company Secretary
[email protected]
