Byggmax Group AB (publ) ($BMAX)

Hello, and welcome, everyone, to the Byggmax Q1 2026 Interim Report. My name is Becky, and I will be your operator today. [Operator Instructions] I will now hand over to your host, Karl Sandlund, CEO, to begin. Please go ahead.

Thank you very much, and welcome to today's call where we will present Byggmax Group's interim report for the first quarter of 2026. As you hear, I'm Karl Sandlund, CEO; and with me is also Helena Nathhorst, our CFO. As usual, the presentation is available on our website, and we will refer to the relevant pages during the call. I will begin with the business update, followed by Helena's review of the financials. And the presentations will be followed by a Q&A session. So let's move into the presentation and please go to Slide #2. The first quarter of the year is part of our low season, and it's usually the smallest one of the quarters. Sales this quarter was SEK 880 million, 5% down from the same quarter last year. The cold weather in February had a dampening effect, especially on demand for outdoor categories, such as cement, deck logs and outdoor timber. And the cold weather also meant that the seasonal ramp-up was somewhat delayed compared to last year. That said, we continue to have a strong gross margin, high-quality and strict cost control in combination with reduced depreciation and amortization. This led to an operating profit almost in line with last year, minus SEK 4 million. And Helena will come back to the financials and give more details in a minute. As you've seen, we also continue to have a very strong financial position. Our net debt is SEK 510 million, SEK 0.25 billion lower than a year ago. Again, a seasonal small quarter with strong operational performance and a solid financial position. And we are fully prepared for the upcoming summer season. Before we continue, please go to Slide #3, it provides a brief overview for those who might be less familiar with our business. Byggmax was founded in 1993 and has grown to 211 stores across core Nordic markets. We serve primarily consumers with a clear focus on home improvement and maintenance. And in addition to the Byggmax brand, we operate Right Price Tiles in Norway, focused on tiles and bathroom and Skanska Byggvaror offering products and solutions for home and garden, such as conservatories and greenhouses. Our offer starts with a strong and relevant assortment within building materials, paint, flooring and garden with high availability in our stores. And customers can rely on finding those core products they need when they need them. We are built for fast and easy shopping, and our driving concepts make it convenient purchase, purchase heavy building materials. While in addition, our efficient e-commerce enables customers to order large volumes for direct home delivery. At the core of our model is a commitment to the best price, and this is enabled by large-scale purchasing and a highly efficient operating model across the entire organization. For an overview of our last 12 months financial performance, please refer to Slide #4, where you see that our sales was SEK 6.1 billion, and we delivered a 5.7% EBITA margin. We have a business model that is efficient with high cash conversion, and this is demonstrated by a strong cash flow, which amounted to over SEK 800 million last 12 months, and Helena will give more details later on. And as mentioned before, we have a strong financial position. Our leverage net debt over EBITDA is down to 1.1x compared to 1.8x in the same period a year ago. A brief update on the macro environment on slide 5. The Nordic consumer has been in a phase of slower, gradual recovery following several years of pressure. Inflation has normalized and real wages are once again increasing. At the same time, consumer confidence remains below historical averages, a reflecting still cautious mindset. And this is clearly visible in our segment of DIY. Smaller maintenance-related purchases have been recovering, while larger projects have been postponed. While house transaction volumes have softened somewhat in the recent months, activity remains above the lows seen a couple of years ago. And together with improved household purchasing power bolstered by policy measures, such as reduced VAT on food in Sweden and other broader fiscal stimulus, these are historically important drivers for renovation activity. At the same time, of course, external uncertainties remain high, such as the conflict in the Middle East, which could impact both inflation and consumer sentiment. But it's always hard to predict the future, but we continue to closely monitor developments to position ourselves in the best possible way. We have very short lead times, and we have the ability to quickly adapt as demonstrated over recent quarters. Turning to our priorities for the quarter, starting on Slide #6. Key focus during the quarter has been on creating the best possible conditions for the upcoming summer or high season. Operational control and flexibility are really among Byggmax's core strength and our ability to shift quickly between season is a fundamental capability we have. And the strong seasonality in our industry requires a rapid transition from winter to summer operations where we need to quickly adjust our inventory levels, secure availability of prioritized products across our over 200 stores and also adapt staffing to meet increased customer demand. This year, we have further intensified our commercial efforts. We have placed particular emphasis on enabling our store teams to focus on sales. And this includes training and improved in-store communication, all aimed at strengthening customer experience and also driving conversion. At the same time, we have maintained a high level of operational quality during the winter season. And as you've seen, the cost development has remained well under control. And taken together, this position us well for the high season with a business that is prepared to take care of our customers, while remaining flexible and ready to adapt. We have made progress towards being an even more customer-focused approach, as you see on Slide #7. A key part of our strategy is to further strengthen the connection between customer focus, volume growth and operational efficiency. One example is the launch of our customer program, and the program will be developed step-by-step together with our customers. And the aim is to further simplify the customer journey. And it includes features such as digital receipts, saved shopping list, customer accounts and simplification in store, all aiming to contribute to a more seamless and consistent experience. In parallel, we are also developing way of working by using customer insights and analytics more, we can make better decisions across assortment and customer experience. And as part of that, we'll also continue to implement more AI-driven tools to support our customers from customer service and support to also guidance in planning of projects. And we're also working on improving the relevance and positioning of our communication across channels, websites, social media and marketing. This creates better conditions for increased engagement and loyalty over time. while maintaining a clear focus on driving volume in the near term. And taken together, these initiatives are aimed at strengthening our relevance to our customers to create conditions for increased volumes and benefit from the scalability of our operating model. Further supporting customer needs. We continue to introduce new in our assortment, some examples on Slide 8. And these they stand both from smaller and larger initiatives. Just to give you some examples. We are expanding and renewing our assortment within 2 accessories, supporting customers in completing everyday projects efficiently. We are also broadening our range of smaller indoor projects, including more solutions for shelving and storage, reflecting continued demand for small and accessible home improvement. At the same time, we are launching a new generation of our sliding door system for conservatories in garden buildings with improved design, functionality and a great flexibility for customer adaptation. And we are also expanding our wall panel range refreshing parts of our flooring assortment and introducing more premium decking options. Overall, these initiatives are all aimed to at increasing relevance and price perception, driving customer interest across both smaller and larger projects. And this together makes us well prepared for the summer season. Moving to Helena and our financials.

Thank you, Karl, and good morning, everyone. I'm on Slide 9, where we show the rolling 12 months sales and margin development over the past 3 years. Sales figures improved last year, even though still strongly affected by cautious consumers and high volatility between months and quarters. At the same time, our EBITA margin strengthened during 2025 and our rolling 12-month EBITA margin is 5.7% at the end of the quarter versus -- improved from 4.5% in Q1 last year. In addition to the underlying macro and external uncertainty that continues to have an impact on consumers' behavior, our Q1 sales were impacted by cold weather and late seasonal ramp-up. Still, despite the lower sales, we maintained a strong gross margin and continue to exercise strict cost control across the organization. And as a result, our performance remains strong, given the circumstances. Q1 is seasonally a small quarter for us and focus is on the upcoming high season where most of our earnings are generated. On Slide 10, we have the operating profit bridge versus the last quarter. As outlined, net sales decreased in the quarter. The sales decreased by 5.3% and is the main factor negatively affecting performance this quarter. Currency impact on sales is minus 0.7% and like-for-like is impacted by 2 openings and 2 closed stores. We also estimate that the structural review of our drop ship assortment initiated and communicated last year in line with our strategy to simplify and focus on improved profitability has had a negative impact on the total sales of approximately 1.7%, while still contributing to improved gross margin. Sales development varied in the period, sales towards the end of the quarter were in line with last year. Looking at gross margin, it still improved in the small quarter containing seasonal impact from product and channel mix. The underlying margin remained positive, supported by continued procurement improvements, a refined e-commerce offering and low in-store waste. The operating expenses increased by 1.7% year-on-year, reflecting continued focus on the core business and simplification. Concluding cost discipline remains solid alongside ongoing investments in customer experience and digital tools to streamline operations. I will comment further on decreased depreciation and amortization on the next slide. And in summary, EBITA decreased in the quarter, while considering the lower depreciation and amortization, operating result is broadly in line with last year despite the lower sales in the quarter. On Slide 11, we have the movement in depreciation and amortization in the quarter compared to last year's quarter. We have now completed amortization related to customer relationships and brand from the Skanska Byggvaror acquisition. The remaining amortization of SEK 4 million is related to primary Right Price Time and will be concluded in 6 years' time. Depreciation related to lease agreements remained stable versus last year, and it is the disciplined lower investment levels of SEK 70 million, SEK 80 million last 2 years that continue to impact the reduced depreciation. Also in the quarter, looking at earnings per share, it's strengthened by both the lower depreciation as well as lower net debt position affecting net financial items in the period. On Slide 12, we have the strong cash flow and maintained capital efficiency. And the cash flow improvement versus same period last year is supported by improved earnings, disciplined investment and good control of working capital. Our rolling 12-month cash flow is improved versus same quarter last year as well as versus year-end and amounts to SEK 815 million. The disciplined investment and effective working capital management focus remains. CapEx in the quarter amounts to SEK 23 million. We continue to invest in electric forklift, store layouts and digital tools, while maintaining our store network and further strengthening our customer experience and supply chain efficiency. In parallel, we have focused on upgrading our back-end ERP systems and are migrating to the cloud to support future improvement and scalability and data-driven capability. We have in the quarter also further improved how we manage inventory levels, key assortment and seasonal ramp-up to minimize the capital binding. The proven sustained strong cash generation is a key strength of our business. And finally, on Slide 13, stating the net debt development and the shortening risk in the company by a sustainable reduced net debt position. Net debt to EBITDA is at 1.1x compared to 1.8x as mentioned last year and is well below our target not to exceed 2.5x in this ramp-up or high season. We also maintain strong liquidity and have available credit facility. The net debt development reflects 2 years of improved profitability, effective working capital management and disciplined investment approach, and we underlined our strong financial position and flexibility going forward. And by that, I conclude the financial update, and hand back to Karl before we open up for questions.

Thank you, Helena, and please move to Slide #15. Byggmax has a clear position to offer building materials easily and at a good price. Our driving model makes shopping efficient and together with a low cost base and an extensive store network, this provides us a scalable business model. Our ambition is to further strengthen our offering and unlock growth within existing infrastructure without adding complexity. And to deliver on this, we are sharpening our commercial execution to increase relevance and drive customer value. We are, as you heard, financially strong, and we are agile with the ability to quickly adapt. And finally, all our employees have worked hard to ensure that we are well prepared for the summer season. And we are looking forward to, and we are fully focused on securing a good peak season. This concludes our presentation. Thank you for your attention, and we now welcome your questions.

[Operator Instructions] Our first question comes from Benjamin Wahlstedt from ABG. Please go ahead.

I have 2 questions or 3 maybe. First of all, I was wondering if you could give us some idea of the sales growth per month, please? You noticed of February, and I was wondering if you could say anything at all about the other months, please?

Well, as Helena mentioned, we ended the quarter with sales in line with last year. So I think that is the relation of sales between months to do. We had a cold February dampening demand, especially for the outdoor categories, which had an effect on sales, but also on a later ramp-up for the season. But the quarter ended with sales in line with last year.

Perfect. You previously noted that smaller projects are typically gross margin accretive. And I suspect that cooler weather moves your mix in Q1 towards the smaller projects to some degree, meaning gross margins are somewhat doped in Q1. So would you agree with the statement, first of all? And second of all, how should we think about the gross margin development moving into Q2 and Q3, please?

Well, thanks, again. Yes, as Helena said, right, that in the quarter, the mix is primarily driven by -- or the increase is primarily driven by product and channel mix and how the demand is tilted, something that could have more of an impact in the smaller quarter. In the longer perspective, looking at last year, the margin is also driven by improvements we made to e-comm when it comes to both assortment and logistics, from early payment, purchasing improvements and low waste levels. So several factors contributing to the outcome. But we have also said when it comes to the product mix that it has an effect, and we also said that more demand for smaller projects and then less more postponed demand for the larger ones. But as always, right, in addition to own measures, margins are also subject to market conditions and so on. So our ambition is naturally always to optimize net income, right? Volume margin and cost are the key drivers, but we don't guide on them, but there you have, I guess, the pattern.

[Operator Instructions] Our next question comes from Niklas Ekman from DNB Carnegie.

And can I follow up on the monthly discussion here? Just for clarity, when you say that sales were flattish towards the end of the quarter, is that referring to the entire month of March? Or is it really just towards the end of the quarter, just to clarify?

It's the end of the quarter, at least the last couple of weeks.

Okay. Fair enough. And also, just to clarify, when you talk about that the seasonal ramp-up has been delayed, I'm curious here, if that means that you believe that there was a negative impact on March sales because of the weather in February as well. Otherwise, I would have thought that maybe there was some pent-up demand that could boost sales in March that otherwise would have happened in February. So if you could just elaborate on your thoughts on that.

Thanks, Niklas. Well, I think it was a delayed ramp up, not a pent-up demand, but delayed ramp-up. When it's really cold, it's hard for our customers to do their outdoor projects, right? So I think it's rather a delay of projects than a boost after a cold period.

Okay. Fair enough. And in general, you talked a little bit about the consumer here and consumer confidence still being under some pressure. What's your general view on the consumer here? Because I think you can split this both ways. On the one hand, a couple of years with a lot of pressure on the consumer. Now we should see gradual recovery. Consumer confidence has improved. We have VAT reductions in Sweden. That's from 1st of April, but nonetheless, same thing with relaxed rules on amortization of mortgages. So what do you see kind of in the year ahead here? Are you optimistic about the consumer for the remainder of the year? Or do you foresee that it's a tough and competitive market where consumers are still frugal?

Well, as you said, Niklas, throughout last year, several macroeconomic factors began actually to move in the right direction. And then in addition, it's encouraging to see that consumers are prioritized with lower VAT, the electric power subsidies, general fiscal stimulus and so on, right? Increased purchasing power is a historic factor for growth in our industry. So that's encouraging, and it's good to see. And of course, at the same time, there is global uncertainty, right, with the risk of rising inflation or impact on consumer confidence. I think as I mentioned, it's always hard to predict the future pace of improvement. For us, it's really important to remain adaptable and make sure that we adapt to the market circumstances. We have proven that we have done it before. I think we proved it last quarter as well, right? So we need really to continue to do that to make sure that we position ourselves in the best possible way. We can be profitable in both ups and downs. And we need to make sure that we take care of our destiny and do our utmost ourselves.

Very good. And a follow-up kind of on the same topic. Because you now have 8 quarters behind you with an exceptionally strong and quite impressive earnings recovery. And now in Q1, we're seeing a slight reversal. And I'm aware this is a small quarter, there's a clear weather impact, et cetera, you have tough comparisons, et cetera. But from here, do you see potential for significant further earnings improvements or are we expecting more of kind of leveling out from here?

Well, we don't guide on our earnings going forward on sales development. But while we have had important programs in the past, particularly on cost and gross margin on, there are still several years ahead, including sales development, continued scale gains and disciplined execution across the business. So we'll do our utmost to leverage on those. At the same time, there are external environment which remains uncertain and demand is yet to fully normalize. Our ambition is, of course, to reach our financial targets as soon as possible. That said, our focus remains on building sustainable improvement step by step, while maintaining a cautious and disciplined approach going forward.

[Operator Instructions] We currently have no further questions. So I will hand back over to Karl for closing remarks.

Well, thanks a lot for your time and for your questions. And if not before, we are looking forward to connecting in July after our second quarter report. Thank you very much.

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