Puuilo Oyj - Interim report (Q1 and Q3)

Puuilo Plc: Business Review for Q1/2024: Steady performance - business as usual

PUUILO PLC, BUSINESS REVIEW, 12 JUNE 2024. at 8.30 am

Highlights Q1/2024

• Net sales increased by 16.1% (+10.3%) and were EUR 75.4 million (65.0)
• Like-for-like store net sales increased by 4.8% (+4.9%)
• Online store net sales decreased by 6.6% (-18.8%)
• Gross profit was EUR 27.6 million (23.7) and gross margin was 36.6% (36.5%)
• Adjusted EBITA was EUR 8.3 million (7.3), which corresponds to an adjusted EBITA margin of 11.0% (11.2%)
• EBIT was EUR 7.6 million (7.0) which corresponds to 10.1% of net sales (10.8%)
• Operating free cash flow was EUR 2.3 million (10.3)
• Earnings per share were EUR 0.06 (0.06)
• Two new stores were opened during the first quarter (one new store)

Figures are in millions of euros unless otherwise stated and have been rounded. Hence the sum of individual figures may differ from the total shown. Puuilo's financial year starts on 1 February and ends on 31 January the following year. The figures in parentheses refer to the comparison period the previous year, unless otherwise stated. The information in this report is unaudited

Key figures

EUR million	Q1/2024	Q1/2023	2023
Net sales	75.4	65.0	338.4
Net sales development (%)	16.1%	10.3%	14.2%
Like-for-like store net sales development (%)	4.8%	4.9%	5.2%
Online store net sales development (%)	-6.6%	-18.8%	-11.2%
Gross profit	27.6	23.7	123.9
Gross margin (%)	36.6%	36.5%	36.6%
Adjusted EBITA*	8.3	7.3	54.1
Adjusted EBITA* margin (%)	11.0%	11.2%	16.0%
EBITA*	8.3	7.3	54.1
EBITA* margin (%)	11.0%	11.2%	16.0%
EBIT	7.6	7.0	52.8
EBIT margin (%)	10.1%	10.8%	15.6%
Net income	5.0	4.8	38.7
EPS (EUR)	0.06	0.06	0.46
Operating free cash flow	2.3	10.3	54.8
Net debt / adjusted EBITDA	1.5	1.5	1.5
Net debt / adjusted EBITDA excl. IFRS 16 impact	0.5	0.6	0.5
Number of stores (end of period)	44	38	42
Number of personnel converted into full-time employees (FTE)	847	686	791

Puuilo's financial year starts on 1 February and ends on 31 January the following year.

* Operating profit before the amortisation and impairment of intangible rights

Outlook for the financial year 2024

Puuilo repeats the outlook for the financial year 2024 given in its financial statements release on 27 March 2024.

The company forecasts that net sales will be EUR 380 – 410 million and the adjusted operating profit (adjusted EBITA) in euros will be EUR 60 – 70 million in the financial year 2024.

The forecast includes elements of uncertainty arising from change in purchase power and customer behaviour driven by inflation and interest rate levels. In addition, strikes in Finland, geopolitical crises and tensions may have an impact on the availability and price level of goods.

Puuilo’s long-term targets

Puuilo published its updated long-term targets in April 2024.

The company’s long-term financial targets for the strategy period 2024 – 2028:

• Growth: Net sales above EUR 600 million by the end of financial year 2028 (ends in January 2029)
• Profitability: Adjusted EBITA margin above 17% of net sales
• Profit distribution: The company aims to distribute at least 80% of net income for each financial year
• Leverage: Net debt to adjusted EBITDA below 2.0x

CEO Juha Saarela’s review

The new financial year began with a steady performance – despite the turbulence in the operating environment. The first quarter’s net sales grew strongly, reaching an increase of 16.1% and a like-for-like growth of 4.8%. During Q1, the operating environment was affected by political strikes and the variable weather conditions in April, which we estimate had a slight negative impact on the Puuilo’s performance. When looking the sales development each month, company’s like-for-like net sales growth was strong in February – March but slowed down towards the end of April. The gross margin was slightly better compared to the comparison period and was 36.6%. Puuilo’s adjusted EBITA was EUR 8.3 million (11.0% of net sales). Adjusted EBITA increased exactly one million euros compared to previous year. We consider the first quarter’s performance to be consistently good.

Operating expenses excluding personnel expenses in relation to net sales decreased. The relative share of personnel expenses continued to increase primarily due to the quick openings of three new stores. We opened a new store in Nokia in February and another in Ylöjärvi in March. Additionally, the store opened in Forssa at the beginning of May, which falls in Q2, already impacted the expenses in the first quarter. All these previously mentioned stores are former Hurrikaani stores, and their start-up has been quite quick.

Customers continue to be cautious. The share of products priced over 200 euros in the sales mix has continued to decrease compared to previous year, while products at a lower price point are selling well. Puuilo’s number of customers increased by 18.7% overall and 6.6 % in comparable terms, but the previously mentioned change in sales mix lowered the basket size compared to previous year. The core of Puuilo’s product range consists specially of defensive products at a lower price point, so we do not see this development as a particular challenge for us. Products at lower price point generally have better margins.

Puuilo continues its growth according to the strategy. The total number of new stores to be opened this financial year will be at least six. In Q1, we opened stores in Nokia and Ylöjärvi followed by Forssa in the beginning of May. During the rest of the financial year, we will open stores in Tampere Lahdesjärvi, Oulu Karjasilta and Äänekoski. Kirkkonummi’s opening date will be in the beginning of 2025. If we will be able to open the store in January opening can be made in time for January, it will be the seventh opening of the financial year. The growth continues!

During the remaining period of the financial year, we will continue to invest in the previously mentioned efficiency improvements. We are working hard, especially on normalizing personnel expenses and utilizing automation solutions. As an example, I could highlight the implementation of a new scheduling system for work shifts and the status of the rollout of the automated ordering system (Relex) – already half of the store orders are processed automatically through this system, and development continues.

The spring and summer season have started well and have been in line with our expectations. We believe that the same positive trend will continue in the near future. We repeat the outlook for the financial year 2024 and estimate net sales to be between EUR 380 – 410 million and adjusted EBITA to be between EUR 60 – 70 million for the financial year 2024.

I wish a happy Midsummer and summer to all our shareholders, customers, and personnel!

Significant events of the reporting period

Performance matching share plan for key employees

The Board of Directors decided to launch a new share-based incentive plan for years 2024 – 2026. The aim of the plan is to align the objectives of the shareholders and the key employees in order to increase the value of the company in the long-term. In the plan, it is possible to earn matching reward and performance-based matching reward. The performance criteria are the Total Shareholder Return of the Puuilo share (TSR) and the Adjusted EBITA. The maximum amount of to be paid is 738,000 Puuilo Plc shares, including the proportion to be paid in cash. The final number of shares will depend on the participants’ personal share acquisitions and the achievement of the targets set for the performance criteria. (Stock exchange release 16 April 2024)

Puuilo Plc’s updated long-term financial targets for the strategy period 2024 – 2028

Puuilo released updated long-term financial targets for the strategy period 2024 – 2028. The new targets are discussed on the first page of this review. (Stock exchange release 22 April 2024)

Significant events after the end of the reporting period

Puuilo has not had any significant events after the reporting period.

Next financial reports

Puuilo's financial year starts on 1 February and ends on 31 January the following year. The company publishes Business reviews for the first and third quarter, a Half-year financial report and a financial statements release.

Half-year financial report February – July 2024 on 12 September 2024
Business review Q3 February – October 2024 on 11 December 2024

All financial reports are published in English and in Finnish and are available at: https://www.investors.puuilo.fi/en/investors/reports_and_presentations.

Conference call in English and webcast in Finnish

The report will be presented for analysts, investors, and the media on the publication date in English at 10:00 am EET (9:00 am CET) and in Finnish at 11.30 am EET (10:30 am CET).

The conference call in English can be followed live at https://puuilo.videosync.fi/2024-q1-results. Asking questions requires participation in the conference call. You can access the teleconference by registering on the link http://palvelu.flik.fi/teleconference/?id=10012284. After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask questions, please, dial *5 on your telephone keypad to enter the queue.

The webcast in Finnish will begin at 11.30 am EET at https://puuilo.videosync.fi/q1-2024.

Recordings of both events will be available later the same day at Puuilo's Investors website at https://www.investors.puuilo.fi/en/investors/reports_and_presentations.

For further information, please contact:
Juha Saarela, CEO, mobile phone: +358 50 409 7641
Ville Ranta, CFO, mobile phone: +358 40 555 4995

Attachments:

Puuilo Plc Business Review Q12024.pdf