Grupo Casas Bahia (BHIA3) Q3 2024 earnings summary

Executive summary

• Achieved fourth consecutive quarter of sequential margin improvement, with gross margin at 31.6% in Q3'24, up 860 bps year-over-year and 90 bps sequentially, driven by operational efficiency and cost reduction initiatives.

• Physical store sales and GMV grew, with same-store sales up 6.5% year-over-year and 3P GMV up 18.3%, while marketplace revenue rose 24.1%.

• Liquidity position increased to R$3.1 billion, marking the best cash balance variation in several years.

• BNPL/credit portfolio reached R$5.7 billion, up 7.5% year-over-year, with delinquency over 90 days at 8.4%.

• Transformation plan delivered structural adjustments, including workforce reduction, store closures, and inventory optimization.

Financial highlights

• Gross margin reached 31.6% in Q3'24, up 8.6 p.p. year-over-year and 0.9 p.p. sequentially.

• EBITDA margin at 7.7% for the quarter, up 8.7 p.p. year-over-year, marking the fourth consecutive quarter of improvement.

• Net revenue declined 16% year-over-year to R$6.4 billion, reflecting a strategic focus on profitability.

• Adjusted EBITDA rose to R$491 million in Q3'24 from -R$66 million in Q3'23.

• Free cash flow was slightly negative at R$ (179) million, but cash variation was positive at R$232 million, reflecting operational improvements.

Outlook and guidance

• Expectation of continued sequential improvement in operational margins and profitability into Q4 and 2025, with operational leverage from recent structural adjustments.

• Digital channel to focus on profitability and customer experience, aiming for growth resumption in 2025.

• Focus on expanding BNPL and credit penetration, with conservative risk management.

• Targeting positive cash flow and double-digit EBITDA by year-end, with sustainable free cash flow covering interest by 2026.

• Company prepared for Black Friday 2024 with adequate inventory and over R$1 billion in installment plan offers.