Empreendimentos Pague Menos (PGMN3) Q2 2024 earnings summary

Executive summary

• Achieved strong revenue growth of 12.2% year-over-year in 2Q24, with same-store sales up 11.4% and market share gains in all regions.

• Adjusted EBITDA rose 15.7% to R$176.9 million, with margin expansion of 0.2 p.p.; adjusted net income reached R$44.2 million, reversing a loss from 2Q23.

• Free cash flow improved to R$74.1 million, up R$114.3 million year-over-year, and the cash cycle improved to 56 days, the best since 2020.

• Integration of Extrafarma delivered R$203 million in annualized synergies, six months ahead of schedule.

• Reinforced management team and launched operational efficiency initiatives.

Financial highlights

• Gross revenue: R$3.37 billion (+12.2% vs 2Q23); gross profit: R$1.02 billion (+9.9%).

• Adjusted EBITDA: R$176.9 million (+15.7%); adjusted EBITDA margin: 5.3% (+0.2p.p.).

• Adjusted net income: R$44.2 million (vs. -R$2.9 million in 2Q23); adjusted net margin: 1.3% (+1.4p.p.).

• Net debt/EBITDA reduced to 2.5x from 3.1x a year ago; net debt stable at R$1.35 billion.

• Free cash flow: R$74.1 million, driven by improved working capital and inventory management.

Outlook and guidance

• Targeting net debt/EBITDA below 2.0x by year-end, with operating cash flow prioritized for balance sheet strengthening.

• Updated annual synergy capture guidance to R$195–260 million by end-2024, reflecting inflation and inventory loss adjustments.

• 2024 store opening plan completed with 30 new stores; focus shifts to operational efficiency.

• Continued deleveraging and working capital optimization to support future growth.

• Preparing for a new growth phase with a "back to basics" approach.