Q2 2026 Max Stock Ltd Earnings Call

August 11, 2026

Speaker #2: Good morning and good afternoon, everyone, and thank you for joining us today. I'm Talia Sessler, Chief Corporate Development and IR Officer. With me is Paz Oz, our Chief Financial Officer.

Talia Sessler: Good morning and good afternoon, everyone, and thank you for joining us today. I'm Talia Sessler, Chief Corporate Development and IR Officer. With me is Paz Oz, our Chief Financial Officer. Paz will review our Q2 and H1 2026 results, and I'll present the second part of the presentation. Before we start the presentations accompanying today's remarks, the slides are available on our IR site at ir.maxstock.co.il. At the end of our prepared remarks, we will open the line for questions. If you would like to ask a question, please submit it through the Q&A box. On slide number two, this is our standard disclaimer language. Everyone is familiar with it. With that, I'll turn it over to Paz. Paz, please.

Talia Sessler: Good morning and good afternoon, everyone, and thank you for joining us today. I'm Talia Sessler, Chief Corporate Development and IR Officer. With me is Paz Oz, our Chief Financial Officer. Paz will review our Q2 and H1 2026 results, and I'll present the second part of the presentation. Before we start the presentations accompanying today's remarks, the slides are available on our IR site at ir.maxstock.co.il. At the end of our prepared remarks, we will open the line for questions. If you would like to ask a question, please submit it through the Q&A box. On slide number 2, this is our standard disclaimer language. Everyone is familiar with it. With that, I'll turn it over to Paz. Paz, please.

Speaker #2: Paz will review our second quarter and first half of 2026 results, and I'll present the second part of the presentation. Before we start, there's a presentation accompanying today's remarks.

Speaker #2: The slides are available on our IR site at ir dot maxstock dot co dot il. At the end of our prepared remarks, we will open the line for questions.

Speaker #2: If you would like to ask a question, please submit it through the Q&A box. And on slide number 2, this is our standard disclaimer language.

Speaker #2: Everyone is familiar with it. And with that, I'll turn it over to Paz. Paz, please.

Speaker #3: Thanks, Talia. We are pleased to report a strong second quarter. Revenue reached $379 million, representing growth of almost 13% versus last year. This performance was driven primarily by comparable store sales growth of 7%, reflecting an increase in both traffic and average basket size, with the latter continuing to benefit from a favorable product mix and growth in sales of items carrying higher average prices.

Paz Oz: Thanks, Talia. We are pleased to report a strong Q2. Revenue reached ILS 379 million, representing growth of almost 13% versus last year. This performance was driven primarily by Comparable Store Sales growth of 7%, reflecting an increase in both traffic and average basket size, with the latter continuing to benefit from a favorable product mix and growth in sales of items carrying higher average prices. Importantly, we delivered this growth despite the shift in Passover, creating a more challenging comparison as it fell in the Q1 of this year compared with the Q2 last year. We expanded gross margin by 330 basis points to 47%. This improvement was primarily attributable to the strong Israeli shekel versus the US dollar, alongside improved terms of trade with our suppliers.

Speaker #3: Importantly, we delivered this growth despite the shift in Passover creating a more challenging comparison, as it fell in the first quarter this year compared with the second quarter last year.

Speaker #3: We expanded gross margin by 330 basis points to 47%. This improvement was primarily attributable to the strong Israeli shekel versus the US dollar, alongside improved terms of trade with our suppliers.

Speaker #3: In addition, the second quarter of last year reflected elevated logistics costs tied to the transition and ramp-up of our new distribution center, which had not yet reached full capacity.

Paz Oz: In addition, the Q2 of last year reflected elevated logistic costs tied to the transition and ramp-up of our new distribution center, which had not yet reached full capacity. Looking ahead, and assuming macroeconomic conditions remain similar, we believe we can deliver a gross margin of approximately 46% in the H2 of the year. These gross margin improvements, combined with continued operating leverage, powered 37% growth in adjusted EBITDA and 360 basis points increase in adjusted EBITDA margin to 20%.

Speaker #3: Looking ahead, and assuming macroeconomic conditions remain similar, we believe we can deliver a gross margin of approximately 46% in the second half of the year.

Speaker #3: This gross margin improvement, combined with continued operating leverage, powered 37% growth in adjusted EBITDA, and a 360 basis point increase in adjusted EBITDA margin to 20%.

Speaker #3: Note that financing expenses net increased to approximately $31 million in the second quarter of 2026 from $21 million in the second quarter of 2025 due largely to a loss of approximately $27 million related to revaluation of future dollar hedging transactions, resulting from the depreciation of the US dollar against the Israeli shekel, compared to a loss of $16 million in the second quarter of last year.

Paz Oz: Note that financing expenses net increased to approximately 31 million ILS in Q2 2026 from 21 million ILS in Q2 2025, due largely to a loss of approximately 27 million ILS related to revaluation of future dollar hedging transactions, resulting from the depreciation of the US dollar against the Israeli shekel, compared to a loss of 16 million ILS in Q2 of last year. As of 30 June 2026, we hold forward hedging transactions to purchase US dollar at exchange rate ranging from 2.80 ILS to 3.43 ILS, covering approximately 34 million USD for the remainder of 2026, approximately 51 million USD in 2027, and approximately 26 million USD in 2028. As of 30 June 2026, the US dollar exchange rate stood at approximately 2.98 ILS, similar to its rate today.

Speaker #3: As of June, 32,026, we hold forward hedging transactions to purchase US dollar at exchange rate ranging from 2.80 shekels to 3.43 shekels covering approximately 34 million US dollar for the remainder of 2026, approximately 51 US dollar million US dollar million in 2027, and approximately 26 million US dollar in 2028.

Speaker #3: As of June 30, 2026, the U.S. dollar exchange rate stood at approximately 2.98 shekels, similar to its rate today. As long as the dollar-shekel exchange rate remains roughly at its current level, revaluation losses are expected to significantly decline in the coming quarters.

Paz Oz: As long as the dollar shekel exchange rate remains roughly at its current level, our evaluation losses are expected to significantly decline in the coming quarters. Even with the increase in net financing expenses, we achieved GAAP net income of 36 million ILS, an increase of 30% year over year, representing a net income margin of 9.5%. Adjusted EPS attributable to shareholders increased 35% to $23, reflecting strong profitability across the board. Looking at our Q2 trends over multiple years on slide 4, you can see the consistent momentum we have built in the business. Since 2023, revenue has grown at a CAGR of 14%, while gross profit has grown at a CAGR of 20%.

Speaker #3: Even with the increase in net financing expenses, we achieved gap net income of $36 million and increase of 30% year over year, representing a net income margin of 9.5%, adjusted EPS attributable to shareholders increased 35% to $23, reflecting strong profitability across the board.

Speaker #3: Looking at our second quarter trends over multiple years on slide 4, you can see the consistent momentum we have built in the business. Since 2023, revenue has grown at a CAGR of 14%, while gross profit has grown at a CAGR of 20%.

Speaker #3: Adjusted EBITDA has grown at an impressive CAGR of 37%, and our adjusted EPS has grown at a CAGR of 27%, underscoring our ability to scale the business profitably while delivering increasing returns to shareholders.

Paz Oz: Adjusted EBITDA has grown at an impressive CAGR of 37%, and our adjusted EPS has grown at a CAGR of 27%, underscoring our ability to scale the business profitably while delivering increasing returns to shareholders. Turning to our H1 result on slide 5, revenue reached 780 million ILS, up to 15% year over year, driven by Comparable Store Sales growth of 12%, reflecting the underlying strength of our business model. Gross margin expanded 330 basis points to 46% adjusted EBITDA growth, 46% to 153 million ILS, and GAAP net income increased 44% to 86 million ILS, representing a net income margin of 11%. Adjusted EPS attributable to shareholders increased 46% to $56. Slide 6 shows the same multi-year momentum on a H1 basis.

Speaker #3: Turning to our first half results on slide 5, revenue reached $780 million, up 15% year over year, driven by comparable store sales growth of 12%, reflecting the underlying strength of our business model.

Speaker #3: Gross margin expanded 330 basis points to 46%. Adjusted EBITDA grew 46% to $153 million, and GAAP net income increased 44% to $86 million, representing a net income margin of 11%.

Speaker #3: Adjusted EPS attributable to shareholders increased 46% to $0.56. Slide 6 shows the same multi-year momentum on a first-half basis. Since 2023, first-half revenue has grown at a CAGR of 30%, while over the same time, our CAGR for gross profit, adjusted EBITDA, and adjusted EPS is 18%, 32%, and 28%, respectively.

Paz Oz: Since 2023, H1 revenue has grown at a CAGR of 30%, while over the same time, our CAGR for gross profit, adjusted EBITDA and adjusted EPS is 18%, 32% and 28% respectively. Our capital structure remained very strong. We ended the quarter with 132 million ILS in cash and net cash of 101 million ILS after distributing 80 million ILS in dividends in April of this year. Yesterday, our board of director declared an additional one time dividend of 50 million ILS, or $36 per share, with a record date of 18 August and a payment date of 9 September, representing an LTM dividend yield of approximately 3%. Pro forma for this expected September dividend distribution, our net cash stands at approximately 51 million ILS. We remain committed to a balanced capital allocation strategy that funds our growth while consistently returning capital to shareholders.

Speaker #3: Our capital structure remained very strong at the end of the quarter, with $132 million in cash and net cash of $101 million, after distributing $80 million in dividends in April of this year.

Speaker #3: Yesterday, our board of directors declared an additional one-time dividend of $50 million, or $36 per share, with a record date of August 18 and a payment date of September 9. This represents an LTM dividend yield of approximately 3%.

Speaker #3: Performa for this expected September dividend distribution, our net cash stands at approximately $51 million. We remain committed to a balanced capital allocation strategy that funds our growth while consistently returning capital to shareholders.

Paz Oz: Pro forma for this expected September dividend distribution, our net cash stands at approximately 51 million ILS. We remain committed to a balanced capital allocation strategy that funds our growth while consistently returning capital to shareholders. I return the call back to Talya.

Speaker #3: And now, I will turn the call back to Talia.

Paz Oz: I return the call back to Talya.

Speaker #2: Thank you, Paz. And then, slide number 8. Let's discuss now what's driving this strong performance across our business. On slide number 9, our three largest categories again delivered healthy growth in the first half.

Talia Sessler: Thank you, Paz. On slide number 8, let's discuss now what's driving this strong performance across our business. On slide number 9, our three largest categories again delivered healthy growth in the H1. Housewares, our largest category, at 28% of H1 revenue, grew 10% year over year. Party supplies, storage, and consumables at 18% of revenue grew about 15%. Toys and babies at 30% of revenue grew almost 16%. Apparel basics also delivered strong growth of 16%, while arts and crafts and office and school supplies each declined modestly, down 3.5% and 1.5% respectively. Note, however, that Q3 is a relevant quarter for the office and school supplies category, driven naturally by the back-to-school season.

Speaker #2: Housewares are our largest category, at 28% of first half revenue, and grew 10% year over year. Party supplies, storage, and consumables represent 18% of revenue and grew about 15%.

Speaker #2: And toys and babies, at 30% of revenue, grew almost 16%. Apparel basics also delivered strong growth of 16%, while arts and crafts and office and school supplies each declined modestly, down 3.5% and 1.5%, respectively.

Speaker #2: Note, however, that Q3 is a relevant quarter for the office and school supplies category, driven naturally by the back-to-school season. On the next slide, slide number 10, our other category, which contributed about 31% of first-half revenue and, as you know, consists of more than 25 subcategories, grew almost 30% year over year.

Talia Sessler: On the next slide number 10, our other category, which contributed about 31% of H1 revenue, and as you know, consists of more than 25 subcategories, grew almost 30% year over year. These smaller lines of business continue to scale and provide us with another important top-line growth driver for the year ahead. On slide 11, you can see our H1 sales growth by category through a bridge analysis. Within our other category, confectionery and snacks, home and personal care, and home customs and accessories were the primary contributors to the increase. Within housewares, growth was driven primarily by furniture, which naturally carries a significantly higher average ticket price, along with textile and home decor.

Speaker #2: These smaller lines of business continue to scale and provide us with another important top-line growth driver for the year ahead. On slide 11, you can see our first half sales growth by category through a bridge analysis.

Speaker #2: Within our other category, confectionery and snacks, home and personal care, and pouring customs and accessories were the primary contributors to the increase. Within housewares, growth was driven primarily by furniture, which naturally carries a significantly higher average ticket price.

Speaker #2: Along with textiles and home decor, as you can see, our average basket size continues to benefit from growth in these items across multiple categories. Whether this reflects items with a higher price tag, the sale of multi-packs that offer a more attractive price per unit, or higher-quality merchandise that we are now venturing into and that we did not carry in the past.

Talia Sessler: As you can see, our average basket size continues to benefit from growth in these items across multiple categories, whether this reflects items with a higher price tag, the sale of multi-packs that offer a more attractive price per unit, or higher quality merchandise that we are now venturing into and that we did not carry in the past, offering it at significantly lower market prices and for which we are seeing tremendous demand. Turning to our key KPIs on slide 12, H1 Comparable Store Sales growth reached 12%, which does include any impact from the timing of the Jewish holidays, and Q2 Comparable Store Sales growth was 7%, which reflects the shift of Passover into Q1 this year, compared to a favorable impact in Q2 of last year.

Speaker #2: Offering at a signific offering it at a significantly lower market prices and for which we are seeing tremendous demand. Now turning to our key KPIs on slide 12, first half comp store sales growth reached 12%, which does include any impact from the timing of the Jewish holidays.

Speaker #2: And second quarter comp store sales growth was 7%, which reflects the shift of Passover into Q1 this year, compared to a favorable impact in Q2 of last year.

Speaker #2: We continue to see a positive mix impact on average basket size, which increased 8.5% in same stores for the first half, and 2.8% in the second quarter.

Talia Sessler: We continue to see a positive mix impact on average basket size, which increased 8.5% in same stores for the H1 and 2.8% in the Q2. The gap between the growth in average basket size and Comparable Store Sales growth, by definition, reflects an increase in the number of transactions. Accordingly, we generated a nice volume increase of approximately 3.5% in the H1 and 4.2% in the Q2. Slide 13 shows similar trends across our company-owned store base. H1 annualized sales per net square meter reached almost 22,000 ILS, up 11.3% year over year, and average basket size across increased 7.6% in the H1. This result continue to demonstrate that our value proposition resonates with Israeli consumers and that we are driving strong productivity from existing store base.

Speaker #2: The gap between the growth in average basket size and comp store sales growth by definition reflects an increase in the number of transactions accordingly, which generated a nice volume increase of approximately 3.5% in the first half and 4.2% in the second quarter.

Speaker #2: Slide 13 shows similar trends across our company-owned store base. First half annualized sales per net square meter reached almost $22,000, up 11.3% year over year.

Speaker #2: And average basket size across increased 7.6% in the first half. This result continued to demonstrate that our value proposition resonates with Israeli consumers and that we're driving strong productivity from existing store base.

Speaker #2: Looking at our store pipeline on slide 14, we have five high-quality stores and one store expansion based on signed agreements. Our new Ad Halom store is expected to open at the end of August this year, at the end of this month, and four additional stores in Gan Yavne, Nebach, Ofakim, and Tirata Carmel are expected to open in 2027.

Talia Sessler: Looking at our store pipeline on Slide 14, we have five high quality stores and one store expansion based on signed agreements. Our new Ad Halom store is expected to open at the end of August this year, at the end of this month, and four additional stores in Gan Yavne, Nahariya, Ofakim, and Tirat Carmel are expected to open in 2027. In addition, we are working on an expansion of one of our existing stores in Kiryat Yam that is expected to be ready early next year. Combined, these stores represent approximately 10,000 gross square meters or approximately 7,400 net square meters of new selling space.

Speaker #2: In addition, we're working on an expansion of one of our existing stores in Kiryat Yam that is expected to be ready early next year.

Speaker #2: Combined, these stores represent approximately 10,000 gross square meters, or approximately 7,400 net square meters, of new selling space. Also note that we expect to close our older, smaller store in Beersheba by the end of August this year, following the opening of our new 4,300 net square meter flagship location there earlier this year.

Talia Sessler: Also note that we expect to close our older, smaller store in Be'er Sheva by the end of August this year, following the opening of our new 4,300 net square meter flagship location there earlier this year, representing a reduction of approximately 2,200 net square meters. We continue to negotiate additional store opportunities across the country, keeping us on track with our target of opening three to five new company-owned stores annually. Before we move to the Q&A, I want to recognize, once again, our entire Max Stock team for their strong execution that deliver these outstanding results. The strength of our Q2 and H1 2026 performance reflects our proven business model, operational capabilities, and our disciplined growth strategy. Looking ahead, we expect business trends to remain favorable for the remainder of 2026.

Speaker #2: Representing a reduction of approximately 2,200 net square meters. We continue to negotiate additional store opportunities across the country, keeping us on track with our target of opening three to five new company-owned stores annually.

Speaker #2: Before we move to the Q&A, I want to recognize once again our entire Max Stock team for their strong execution that delivered these outstanding results.

Speaker #2: The strength of our second quarter and first half 2026 performance reflects our proven business model, operational capabilities, and our disciplined growth strategy. Looking ahead, we expect business trends to remain favorable for the remainder of 2026.

Speaker #2: We continue to invest in growth through our store expansion program, and we remain focused on delivering value to both our customers and our shareholders.

Talia Sessler: We continue to invest in growth through our store expansion program, and we remain focused on delivering value to both our customers and our shareholders. We are now ready to take any questions. Okay. Can you please discuss your pricing and value initiative for higher priced merchandise and how that is contributing to results and the expectations going forward. While this is still a relatively early initiative, hence it is difficult to project going forward, we do see a lot of potential in same store sales growth coming from some premiumization of merchandise. What we had seen so far is that there is a lot of demand for higher quality merchandise as long as it is in the right price and deeply discounted versus other alternatives. We see the cost category. It is not just one single category.

Speaker #2: And we're now ready to take any questions. Okay. Can you please discuss your pricing and value initiatives for higher-priced merchandise, and how that is contributing to results and the expectations going forward?

Speaker #3: So while this is still an a relatively early initiative, hence it is difficult to project going forward, we do see a lot of potential in sales store sales growth coming from this you know some premiumization of merchandise what we had seen so far is that there's a lot of demand for higher quality merchandise as long as it is in the right price and deeply discounted versus you know other alternatives.

Speaker #3: We see it across categories. It's not just one single category. One of the reasons we saw basic apparel grow significantly this quarter was exactly that initiative. Also, other categories reflected the same concept.

Talia Sessler: One of the reasons we saw basic apparel grow significantly this quarter was exactly that initiative. Other categories reflected the same concept. I think if in the past we were looking more just at volume growth, the additional positive mix impact can further boost our Comparable Store Sales growth going forward. That is still up to us to execute and to make sure that we still remain very true to our DNA, to our core values vis-a-vis the consumer. How should we think about the mix of comp growth between higher average basket size and traffic? We typically guide to around 3% same-store sales growth, and our mindset was more focused on volume growth.

Speaker #3: I think if in the past we were looking more just at volume growth, then the additional positive mix impact can further boost our same store sales growth going forward.

Speaker #3: But that is still up to us, you know, to execute and to make sure that we still remain very true to our DNA, to our core values vis-à-vis the consumer.

Speaker #2: How should we think about the mix of comps of comp growth between higher average basket size and traffic?

Speaker #3: I think we typically guide to around 3% same-store sales growth, and our mindset was more focused on volume growth. So, I think anything on top of that is likely to come from a positive mix impact, but it's very difficult to project going forward because it is obviously, you know, a reflection of the strength of our buying team and the strength of our initiatives.

Talia Sessler: I think anything on top of that is likely to come from a positive mix impact, but it is very difficult to project going forward because it is obviously a reflection of the strength of our buying team and the strength of our initiatives. So far, it has been very good. Yeah. Another question related to the average basket size. Do you have more opportunity to grow the average basket size? I think we do. I think that it can be done in various categories. But again, it is very early in terms of the maturity of this initiative, and we will have to make sure that we still remain very loyal to our core values and to our consumers. So it is going to take some time. I can talk about the trends that are driving your other category.

Speaker #3: So far it has been it has been very very good.

Speaker #2: Yeah. Another question related to the average basket size: do you have more opportunity to grow the average basket size? I think we do.

Speaker #2: I think we do. I think that it can be done in various categories. But again, it's very early in terms of the maturity of this initiative, and we will have to make sure that we still remain very loyal to our core values and to our consumers.

Speaker #2: So, it's going to take some time. I can talk about the trends that are driving your 'other' category. We did speak about it when we showed the bridge, but there is one element: the first one is related to dry food.

Talia Sessler: We did speak about it when we showed the bridge, but there is one element, the first one is related to dry food, so that confectionery and salty snacks and all of these dried food category. Before, it used to be as a shop within a shop, and we generated primarily commissions from this category. Now we shifted most of this category into owned category, and we see the benefit both from consolidating 100% of the sales and also from boosting the sale when measured on an apples-to-apples basis. There is more potential for growth, both in this category and in other categories that are in similar situations.

Speaker #2: So that confectionery and salty snacks and all of this dried food category. Before it used to be as a shop within a shop and we generated primarily commissions from this category.

Speaker #2: Now we shifted most of this category into the owned category, and we see the benefit both from consolidating 100% of the sales and also from boosting the sales when they are measured on an apples-to-apples basis.

Speaker #2: And there is more potential for growth both in this category and in other categories that are in the same in similar situation. So we can bring additional categories in-house and benefit from that trend.

Talia Sessler: We can bring additional categories in-house and benefit from that trend. I think that is it. All right. Thank you very much for joining us, and please feel free to reach out to us with any further questions. We will also try to set up some Zoom calls with any interested investors to speak with you directly. Thank you very much and have a great day.

Speaker #2: I think that's it. All right, thank you very much for joining us. Please feel free to reach out to us with any further questions.

Speaker #2: We will also try to set up some Zoom calls with any interested investors to speak with you directly. Thank you very much and have a great day.

Talia Sessler: We will also try to set up some Zoom calls with any interested investors to speak with you directly. Thank you very much and have a great day.

Operator: Goodbye

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