Dimed (PNVL3) Q2 2024 earnings summary

Executive summary

• Q2 2024 was marked by severe floods in Rio Grande do Sul, impacting over 80 stores, the main distribution center, and more than 1,500 employees, causing significant operational and financial disruptions, yet retail gross revenue grew 11.5% year-over-year to R$1,178M.

• Net income for Q2 was R$20.1M (1.6% margin), with adjusted EBITDA at R$49.0M (4.0% margin), both down year-over-year due to extraordinary flood-related expenses.

• Market share in the Southern Region increased for the 17th consecutive quarter, with digital channels accounting for 19.1% of retail sales and app sales growing 31.5% year-over-year.

• Rapid recovery: all administrative offices reopened in 40 days, lab resumed production in 60 days, and all affected stores reopened in 70 days.

• Maintained strong engagement with associates and communities, delivering BRL 2 million in donations and sustaining high NPS scores.

Financial highlights

• Group gross revenue reached R$1,224M (+4.9% vs 2Q23); retail gross revenue R$1,178M (+11.5% vs 2Q23); wholesale sales dropped 59.6% due to halted operations.

• Adjusted EBITDA was R$49.0M (4.0% margin), with all direct flood impacts (BRL 15.2 million) fully recognized in the quarter.

• Adjusted net profit was R$20.1M (1.6% margin), maintaining one of the widest adjusted margins in pharma retail.

• Free cash flow was positive in Q2, reaching R$23.2M (+90% vs 2Q23), and net debt/EBITDA ended at 0.89x, the lowest in the industry.

• Retail gross margin was 29.8%, pressured by aggressive discounts, higher COGS, and supply chain disruptions.

Outlook and guidance

• Guidance reaffirmed for 60 new store openings in 2024, with 40 planned for H2 and 30 already signed for 2025.

• Expecting 15–17% revenue growth in H2 2024, with July already showing 15% growth and record digital participation (21.2%).

• Margins expected to recover as flood-related pressures subside and operational leverage improves.

• Continued focus on operational leverage, logistics efficiency, and expense control.

• Management considers flood impacts as seasonal and expects normalization in the following quarters.