Max Stock Limited Reports Fiscal 2022 Full Year and Fourth Quarter Financial Results

Declares ILS 60 Million, ~0.43 per share One-Time Dividend

CAESAREA, Israel, March 20, 2023 /PRNewswire/ -- Max Stock Limited (TASE: MAXO) (the "Company") today reported financial results for the year and fourth quarter ended December 31, 2022.

Fourth Quarter 2022 Summary Compared with Fourth Quarter 2021

• Revenue increased 2.7% to ILS 251.7 million.
• Comparable store sales decreased 2.8%. 
• Adjusted net income increased 11.9% to ILS 22.5 million.
• Adjusted EPS1 (attributable to shareholders) increased 13.1% to ILS 0.14
• Adjusted EBITDA[1] increased 1.5% to ILS 33.9 million.

2022 Full Year Summary Compared with 2021:

• Revenue increased 7.4% to ILS 1.05 billion.
• Comparable store sales decreased 1.5%. 
• Adjusted net income decreased 9.2% to ILS 89.1 million.
• Adjusted EPS[2] (attributable to shareholders) decreased 9.2% to ILS 0.53
• Adjusted EBITDA2 decreased 4.1% to ILS 137.0 million.
• Inventories decreased 25.4% to ILS 159.4 million compared with ILS 213.7 million at the end fiscal 2021

Ori Max, Chief Executive Officer, stated, "We are pleased with our fourth quarter results as further expansion in both sales and profitability resulted in a solid finish to 2022. This quarter we delivered topline growth in-line with expectations despite a timing shift of the Jewish New Year into the third quarter that negatively impacted comparable store sales. Accounting for this shift by comparing the combined third and fourth quarters, we saw comparable store sales expanded more than 1% over the same six-month period a year ago. From a profitability standpoint, subsiding freight and inventory headwinds in the quarter drove gross margin expansion of 230 basis points, leading to better than expected profitability gains and positioning the Company for greater pricing flexibility to drive further market share expansion in the current economic environment. We are excited about the opportunities that lie ahead as we continue to execute our growth strategies, drive continued progress against our long-term targets and further solidify Max Stock's position as Israel's leading extreme value retailer."

Fourth Quarter Results (2022 compared with 2021)

Revenue increased 2.7% to ILS 251.7 million in the fourth quarter 2022 as compared with revenue of ILS 245.1 million in the fourth quarter 2021. The increase over the same period last year was driven primarily by the opening of new branches partially offset by a 2.8% decline in comparable store sales due to the timing of Jewish New Year compared to the previous year period. In the fourth quarter of 2022, there were four fewer days in which the stores were able to operate relative to the same period the previous year.

Gross profit increased 8.7% to ILS 103.6 million in the fourth quarter 2022 from ILS 95.3 million in the fourth quarter 2021. Gross margin was 41.2% as compared to 38.9% in the last year period. The 230-basis point increase in gross margin over Q4 2021 was primarily attributable to a decline in international freight costs and an improvement in inventory management. 

Selling, general and administrative expenses increased to ILS 71.2 million in the fourth quarter 2022 from ILS 68.8 million in the fourth quarter 2021, primarily driven by an increase in advertising and marketing expenses, incremental expenses resulting from the addition of new right of use assets and relatively higher municipal taxes as a percentage of sales in new branches relative to existing branches.

Adjusted net income increased 11.9% to ILS 22.5 million in the fourth quarter of 2022, as compared with net income of ILS 20.1 million in the fourth quarter of 2021.

Adjusted EPS attributable to shareholders increased 13.1% to ILS 0.14 per share, in the fourth quarter of 2022, as compared with net income of ILS 0.12 per share, in the fourth quarter of 2021.

Adjusted EBITDA increased 1.5% to ILS 33.9 million in the fourth quarter fiscal 2022 from ILS 33.4 million in the fourth quarter 2021. Adjusted EBITDA excludes the effect of IFRS16 and the effect of Share-based payment.

Full Year Results (2022 compared with 2021)

Revenue increased 7.4% to ILS 1.05 billion in fiscal 2022 as compared with revenue of ILS 976.3 million in fiscal 2021. The year-over-year increase in revenue was driven by the addition of 3 new owned stores (2 owned stores, net) and a 3.2% increase in average basket size. These factors were partially offset by a 1.5% decrease in comparable store sales when compared to the exceptional growth experienced in 2021 resulting from lingering pandemic tailwinds, and a negative impact from the Omicron variant on the Company's sales in Q1 2022.

• In H2 2022, the Company recorded an increase in comparable store sales of 1.0%, an increase of 3.8% in average basket size, an increase of 8.8% in adjusted EBITDA, and an increase of ~ 11% in adjusted net income, as compared to H2 2021.

Gross profit increased 10.3% to ILS 418.3 million in fiscal 2022 from ILS 379.3 million in fiscal 2021. Gross margin was 39.9% for fiscal 2022 as compared to 38.8% for fiscal 2021.

Selling, general and administrative expenses increased to ILS 295.9 million in 2022 from ILS 251.2 million in 2021, primarily driven by higher expenses related to an increase in salary and wage expenses associated with new stores, advertising and marketing expenses and a high depreciation rate of right of use assets (under IFRS 16) relative to sales.

Adjusted EBITDA (pre IFRS 16) was ILS 137.0 million in fiscal 2022 and ILS 142.9 million in fiscal 2021.  Adjusted EBITDA margin decreased to 13.1% in fiscal 2022 compared with 14.6% in fiscal 2021.

Adjusted net income decreased 9.2% to ILS 89.1 million in fiscal 2022, as compared with net income of ILS 98.1 million in fiscal 2021.

Adjusted EPS attributable to shareholders decreased 9.2% to ILS 0.53 per share in fiscal 2022, as compared with ILS 0.59 per share in fiscal 2021.

Balance Sheet and Cash Flow Highlights

The Company's cash and cash equivalents balance at December 31, 2022 was ILS 80.5 million compared with ILS 50.3 million at December 31, 2021. The Company ended the year with total debt of ILS 47.6 million compared with total debt of ILS 70.5 million at the end of fiscal 2021.

Inventories at the end fiscal 2022 decreased 25.4% to ILS 159.4 million compared with ILS 213.7 million at the end fiscal 2021. The decrease was primarily driven by the sale of inventories purchased as part of the Company's efforts to stock-up on inventory in previous periods in anticipation of potential supply chain disruptions.

Conference Call Information

The Company will host a conference call (Link) on March 20, 2023 at 8:30 a.m. Eastern Time / 3:30 p.m. IL to discuss its fourth quarter and full year fiscal 2022 financial results. 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 57 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.

Company Contacts:
Talia Sessler,
Chief Corporate Development and IR Officer
[email protected]

Ifat Nir Katz,
General Counsel and Corporate Secretary
[email protected]   

SOURCE Max Stock Limited