Companhia Brasileira de Distribuicao (PCAR3) Q2 2024 earnings summary

Executive summary

• Achieved record gross margin of 28.2% in Q2 2024, up 1.9 p.p. year-over-year, with adjusted EBITDA margin at 8.8%, up 2.1 p.p., and adjusted EBITDA up 34.8% year-over-year.

• Net debt reduced by R$1.2 billion year-over-year, with pre-IFRS 16 leverage down to 2.8x from 10.6x.

• Operational free cash flow reached R$272 million in the last 12 months, a R$498 million improvement year-over-year.

• Proximity format sales grew 22.5% and e-commerce revenue increased 15.6% year-over-year, with market share gains in São Paulo.

• Casino Group reduced its stake to 22.5%, ending its control, and a new Board of Directors with a majority of independent members was appointed.

Financial highlights

• Total sales reached R$4.8 billion, up 2.1% year-over-year; same-store sales grew 3.4% excluding calendar effects.

• Gross profit was R$1.3 billion, with gross margin at 28.2%, up from 26.3% in 2Q23.

• Adjusted EBITDA was R$396 million, margin 8.8%, up 2.1 p.p. year-over-year.

• Adjusted net loss improved to R$173 million from R$272 million in Q2 2023.

• Free operational cash flow of R$272 million in the last 12 months, up R$498 million year-over-year.

Outlook and guidance

• Focus on further margin expansion, supplier negotiations, and category rebalancing for Pão de Açúcar and Extra Mercado.

• Continued maturation of promotional efficiency and retail media projects expected to drive future profitability.

• Ongoing store expansion, especially in the Proximity format, and digital channel growth are strategic priorities.

• CapEx to remain stable, with ongoing store refurbishments and e-commerce expansion.

• Labor contingencies and non-recurring expenses expected to decline, improving cash flow.