Uniao Pet Participacoes (AUAU3) Q1 2025 earnings summary

Executive summary

• B2C sales grew 9% year-over-year in Q1 2025, with inflation near 0%, indicating real growth; same-store sales increased 6% and private label sales surged 31%, reaching 11.3% of total sales.

• Physical stores grew 10.2% and digital channels 8% year-over-year, with digital penetration stabilizing at 40-45% of total sales and balanced omnichannel expansion.

• Clubz benefits club and loyalty programs expanded, driving higher customer frequency and spending.

• Launched "Seres Saúde" pet health insurance plan, reinforcing ecosystem strategy and expanding service offerings.

• Operational recovery was strong, but financial results were pressured by inflation-impacted expenses and one-off logistics events.

Financial highlights

• Total gross revenue reached R$1.01 billion, up 7.9% year-over-year, with gross profit at R$392 million and stable gross margin of 38.9%.

• Adjusted EBITDA was R$56 million, margin at 5.6% (-0.9 p.p. y/y), impacted by higher operational expenses and one-off logistics costs.

• Net profit was R$800,000, with adjusted net income at R$1.1 million, impacted by non-recurring expenses and positive FX swap effects.

• Operational cash flow was R$23.3 million, with working capital and inventory increases due to distribution center expansion.

• Net debt stood at R$75.8 million, or 0.3x LTM Adjusted EBITDA.

Outlook and guidance

• Management expects price adjustments from suppliers in Q2 2025 to help offset cost inflation and improve margins.

• EBITDA is expected to improve in subsequent quarters, with Q1 seen as the weakest quarter of the year.

• Rollout of the Seres Saúde pet health insurance plan and Clubz benefits club to physical stores is planned for coming quarters.

• Continued focus on operational efficiency, expense reduction, and digital investments to drive profitability.

• Management remains confident in CADE approval for the Petz + Cobasi merger, expecting competitive benefits.