Empreendimentos Pague Menos (PGMN3) Q4 2024 earnings summary

Executive summary

• Achieved record-breaking results in 2024, with strong growth in revenue, net income, and operational efficiency, driven by people, culture, and customer-centric strategies, and marked by the fourth consecutive quarter of growth acceleration and profitability increase.

• Integration of Extrafarma completed, delivering R$267 million in annualized synergies, exceeding projections, and strengthening leadership in North and Northeast regions.

• Market share rose to 6.5% in 4Q24, with gains in all regions, and digital channels accounted for 16% of total sales, up 41.6% year-over-year.

• Operational efficiency and disciplined cost control led to significant margin expansion, improved cash cycle, and accelerated financial deleveraging.

• Expansion plans for 2025 include opening at least 50 new stores, fully funded by operating cash flow, while maintaining disciplined capital allocation.

Financial highlights

• Gross revenue reached R$13.6 billion in 2024 (+13.5% vs. 2023), with Q4 2024 gross revenue at R$3.6 billion (+17.4% vs. 4Q23); same store sales grew 17.1% in Q4.

• Adjusted EBITDA was R$628.5 million in 2024 (+32.0% vs. 2023), with margin up 0.6 p.p. to 4.6%; adjusted net income reached R$152 million, up from R$14.2 million in 2023.

• Gross margin improved to 29.7% in 4Q24 (+0.5 p.p. vs. 4Q23), driven by better inventory management and commercial conditions.

• Free cash flow for 2024 was R$226.9 million, a R$284.1 million improvement year-over-year.

• Net debt/EBITDA reduced to 1.97x at year-end, down 0.55x from 4Q23.

Outlook and guidance

• Positive start to 2025, with strong sales momentum and continued operational improvements.

• At least 50 new store openings planned for 2025, with expansion fully funded by operating cash flow.

• Continued focus on organic growth, operational efficiency, digitalization, and further deleveraging.

• Robust pipeline for private label launches and further omnichannel development expected to drive future sales.

• Further Extrafarma banner conversions and strategic reviews planned.