Companhia Brasileira de Distribuicao (PCAR3) Q2 2024 earnings summary

Executive summary

• Achieved record gross margin of 28.2% in 2Q24, up 1.9 p.p. year-over-year, with strong operational progress and improved profitability.

• Adjusted EBITDA margin rose to 8.8%, a 2.1 p.p. increase vs. 2Q23, with adjusted EBITDA up 34.8% year-over-year.

• Net loss from continued operations improved to R$ (173) million, a R$ 95 million improvement year-over-year after adjusting for tax credits.

• Financial leverage (pre-IFRS 16) reduced to 2.8x from 10.6x in 2Q23, with net debt down R$ 1.2 billion year-over-year.

• Operational free cash flow reached R$ 272 million in the last 12 months, a R$ 498 million improvement year-over-year.

Financial highlights

• Gross revenue reached R$ 4.8 billion in 2Q24, up 2.1% year-over-year; same-store sales grew 3.4% excluding calendar effects.

• Gross profit was R$ 1.3 billion, with a record margin of 28.2%, up from 26.3% in 2Q23.

• Adjusted EBITDA reached R$ 396 million (8.8% margin), up 34.8% vs. 2Q23.

• Adjusted net loss from continuing operations improved to R$ (173) million, a R$ 95 million improvement year-over-year.

• Net financial expenses improved 11.9% year-over-year to R$ (199) million, reflecting lower net debt and interest rates.

Outlook and guidance

• Continued focus on premium and proximity formats, especially in São Paulo, with ongoing store refurbishments and expansion.

• E-commerce and digital channels expected to drive further growth and profitability.

• Margin improvements anticipated from retail media and promotional efficiency projects, with broader rollout in H2 2024.

• Management expects continued improvement in profitability and operational efficiency, with ongoing focus on commercial gains, digital growth, and store expansion.

• Management sees opportunities to accelerate results in the second half, consolidating market position.