Empreendimentos Pague Menos (PGMN3) Q3 2024 earnings summary

Executive summary

• Achieved record gross revenue of R$3.5 billion in Q3 2024, up 13.9% year-over-year, with same-store sales up 13.6% and national market share rising to 6.3%.

• Adjusted EBITDA reached R$190.7 million (+32.6% YoY), with margin at 5.4%, and adjusted net income was R$53.9 million, reversing a loss in Q3 2023.

• Free cash flow totaled R$352 million (excluding Extrafarma payment), reflecting improved working capital and inventory reductions.

• Extrafarma integration delivered R$234 million in annualized synergies, reaching 90% of the top guidance range.

• Operational excellence and digital initiatives contributed to robust cash generation and profitability.

Financial highlights

• Gross margin improved to 29.4% (+0.1p.p. YoY), with gross profit up 14.2% to R$1.03 billion.

• Selling expenses diluted to 21.5% of revenue (-0.8p.p.), with G&A expenses at 2.4% of revenue.

• Net debt/EBITDA reduced to 2.2x, with a target of below 2x by year-end.

• Free cash flow: R$352 million in Q3 2024, supported by EBITDA growth and tax credit monetization.

• Operating cash cycle improved by 9 days year-over-year to 51 days.

Outlook and guidance

• No new store openings planned for the remainder of 2024; gradual organic expansion expected to resume in 2025.

• Management projects net debt/EBITDA below 2.0x by year-end, reaffirming deleveraging focus.

• Further profitability improvements expected from Extrafarma synergies and operational efficiency.