EARNINGS
RELEASE
4Q22 / 2022
Fortaleza, Ceará, March 6, 2023.
Empreendimentos Pague Menos S.A. ("the Company" or "Pague Menos"), the main Health Hub serving the Brazilian middle class, present in every state and in more than 380 municipalities, announces its results for the 4th quarter of 2022 and the 12 months ending December 31, 2022.
HIGHLIGHTS 4Q22 / 2022
STORE BASE EXPANSION | OMNICHANNEL SALES |
+500 added stores in the year, being | 11.4% of total Pague Menos sales |
399 from Extrafarma acquisition and | in 4Q22 (+2.6 p.p. vs 4Q21) |
118 openings (61 in 4Q22) |
HEALTH HUB
+2 million health care services rendered during the year (+417 thousand in 4Q22)
GROSS REVENUE
Consolidated growth of 21.8% for the year (37.0% in 4Q22), and 10.5% in standalone
Pague Menos sales (11.4% in 4Q22)
ACTIVE CUSTOMERS
19 million clients active in the last 12 months (+26% vs 2021)
ADJUSTED EBITDA
Consolidated growth of 19.9% for the year (46.2% in 4Q22), and 16.4% in standalone
Pague Menos sales (34.1% in 4Q22)
EXTRAFARMA SYNERGIES
Contracted actions resulted in BRL 8.5 million in 4Q22 (BRL 34 million on an annualized basis)
NET INCOME
BRL 192.0 million standalone Pague Menos for the year (+8.7% vs. 2021) and BRL 73.7 million in 4Q22 (+183.5% vs. 4Q21)
02
EARNINGS RELEASE 4Q22 / 2022
REPORTING CRITERIA
On August 1, 2022, the acquisition process of Imifarma Produtos Farmacêuticos e Cosméticos S.A. (Extrafarma) with Ultrapar Participações S.A. (Ultrapar) was completed. With the completion of the precedent conditions and incorporation of the equity balances, Extrafarma was consolidated and became part of the consolidated financial statements of Empreendimentos Pague Menos S.A. (the Company) that same month. Therefore, the Company's consolidated financial Statements for the 12 months ending December 31, 2022 include five months of Extrafarma's operations.
In order to facilitate the analysis of the results, we will present in this release segregated operational data for Pague Menos and Extrafarma, while the financial information is presented as Pague Menos "standalone" (ex-Extrafarma) and Consolidated (Pago Menos plus Extrafarma).
Since 2019, our financial statements have been prepared in accordance with IFRS 16, which changed the criteria for recognizing rental contracts. To demonstrate the effects of implementing this standard and facilitate comparison between periods, we present on pages 23 and 24 of this release the Income Statement for the Year excluding the effects of IFRS 16.
FINANCIAL HIGHLIGHTS PAGUE MENOS STANDALONE
in BRL million and % of Gross Revenue | 4Q21 | 4Q22 | Δ | 2021 | 2022 | Δ |
Gross Revenue | 2,074.8 | 2,310.4 | 11.4% | 8,062.9 | 8,911.3 | 10.5% |
Gross Profit | 616.7 | 688.5 | 11.6% | 2,420.6 | 2,687.4 | 11.0% |
% Gross Margin | 29.7% | 29.8% | 0.1 p.p. | 30.0% | 30.2% | 0.1 p.p. |
Contribution Margin | 221.4 | 265.9 | 20.1% | 900.4 | 1,029.7 | 14.4% |
Contribution Margin % | 10.7% | 11.5 % | 0.8 pp | 11.2% | 11.6% | 0.4 p.p. |
Adjusted EBITDA | 159.0 | 213.1 | 34.1% | 671 | 781 | 16.4% |
Adjusted EBITDA Margin % | 7.7% | 9.2% | 1.6 p.p. | 8.3% | 8.8% | 0.4 p.p. |
Adjusted Net Income | 26.0 | 73.7 | 183.5% | 176.6 | 192.0 | 8.7% |
Adjusted Net Margin % | 1.3% | 3.2% | 1.9 p.p. | 2.2% | 2.2% | 0.0 pp |
CONSOLIDATED FINANCIAL HIGHLIGHTS
in BRL million and % of G.R. | 4Q21 | 4Q22 | Δ | 2021 | 2022 | Δ |
Gross Revenue | 2,074.8 | 2,843.4 | 37.0% | 8,062.9 | 9,818.7 | 21.8% |
Gross Profit | 616.7 | 854.6 | 38.6% | 2,420.6 | 2,955.5 | 22.1% |
% Gross Margin | 29.7% | 30.1 % | 0.4 p.p. | 30.0% | 30.1% | 0.1 pp |
Contribution Margin | 221.4 | 319.7 | 44.4% | 900.4 | 1,110.3 | 23.3% |
Contribution Margin % | 10.7% | 11.2% | 0.6 p.p. | 11.2% | 11.3% | 0.1 p.p. |
Adjusted EBITDA | 159.0 | 232.5 | 46.2% | 671 | 804.8 | 19.9% |
Adjusted EBITDA Margin % | 7.7% | 8.2% | 0.5 p.p. | 8.3% | 8.2% | (0.1 p.p.) |
Adjusted Net Income | 26.0 | 46.5 | 78.9% | 176.6 | 134.8 | (23.6%) |
Adjusted Net Margin % | 1.3% | 1.6% | 0.4 p.p. | 2.2% | 1.4% | (0.8 p.p.) |
|||UNTRANSLATED_CONTENT_S | |||||
OPERATIONAL HIGHLIGHTS | |||||
TART|||DESTAQUES | |||||
Indicator / Operation | 4Q21 | 4Q22 | Δ | 4Q22 | |
TEDStores_CONTENT(units) | _END||| | 1,165 | 1,270 | 9.0% | 376 |
Average Sale/store/month (BRL thousand) | 604 | 621 | 2.9% | 468 | |
Average Ticket (BRL) | 73.60 | 77.20 | 4.9% | 67.88 | |
Employees (quantity) | 19,988 | 20,099 | 0.6% | 5,602 | |
Employees/store (quantity) | 17.2 | 15.8 | (7.8%) | 14.9 | |
Average Sale/Employee/month (R$ thousand) | 35.0 | 38.5 | 10.1% | 31.8 | |
Omnichannel Share (% retail revenue) | 8.8% | 11.4% | 2.6p.p. | 3.4% | |
Private Label (% retail revenue) | 6.2% | 7.1% | 0.9 p.p. | 2.9% | |
Pharmaceutical Clinics (units) | 879 | 988 | 12.4% | 68 | |
03
EARNINGS RELEASE 4Q22 / 2022
MESSAGE FROM THE MANAGEMENT
2022 was the third consecutive year of relevant growth, increased profitability and development of our strategy to expand our presence in the health chain, positioning Pague Menos as an important participant in primary care in the Brazilian health ecosystem.
Despite the context of strong acceleration in organic expansion, with the opening of 118 stores, and the challenging macroeconomic scenario, with unfavorable inflationary pressures and an increase in basic interest rates and borrowing costs, Pague Menos standalone revenue grew by 10.5% (a 9.5% CAGR for the last 3 years), with EBITDA expansion of 16.4% (a 15.9% in the CAGR for the last 3 years) and record net income of BRL 192 million (almost BRL 200 million above 2019). In the last 3 years, we increased the Company's EBITDA margin by 1.4 p.p. and net margin by 2.3 p.p..
In addition, we have completed the acquisition process of Extrafarma, significantly expanding our presence in the North and Northeast regions. Starting in August 2022, we initiated a complex integration process, involving almost 400 stores and 5 Distribution Centers. The start of this integration has been extremely promising, with important milestones already achieved, such as unification of the corporate organizational structures, logistics integration and migration of the technology systems being completed ahead of the original schedule. In 4Q22, we already observed a significant improvement in Extrafarma margins. Just five months after the closing of the transaction, we have recognized synergies of R$34 million on an annualized basis, equivalent to approximately 15% of the potential gains mapped out in our planning.
We have evolved and matured in our Health Hub value proposition. Even with the control of the pandemic and the drop in demand for Covid-19 rapid testing, the main health service offered on Clinic Farma in recent years, we have invested heavily in telemedicine and teleconsultation services, which we believe are innovations with the potential to change the level of health services in Brazil, in the medium term. We launched a health benefits club focused on telemedicine, Sempre Bem Saúde, which has gained traction throughout the year, and which is in the "improvements" phase. In 2023, we have already started to offer health care and services as the main tools to strengthen our bond with customers, with the relaunch of our loyalty program, Sempre Bem (Always Well).
Our digital channels have once again registered records in both growth and share of total sales, showing that our business undergoes a rapid transformation and increasingly fluid interface between our multiple complementary channels. In 4Q22, these channels represented an 11.4% share of Pague Menos sales, 2.6 p.p. above the level of the previous year and five times higher than in 2019. Our rapid growth in digital channels is accompanied by good levels of profitability and consistent improvements in the level of service, attributes that we consider non-negotiable for the long-term sustainability of these channels.
In 2022, we officially integrated the ESG Journey into our Strategic Plan, with the launch of a robust agenda with short, medium and long-term commitments and goals to increase our positive impact on society. In the first year, we reached 20% of the goals contemplated in the planning, four which had been planned for 2022 and two which had only been scheduled for 2025. Among them, we highlight the fact that 100% of mature Pague Menos stores are already supplied by solar energy, effectively contributing to a reduction in our carbon footprint.
We begin 2023, with great enthusiasm, but without exaggerated expectations, with the conviction that we are on the right path. The year holds a series of challenges for us. Our focus will be on capturing synergies with Extrafarma.
We thank our employees, suppliers, and all our partners who have contributed to these 2022 results!
04
EARNINGS RELEASE 4Q22 / 2022
OPERATIONAL DATA
STORE PORTFOLIO
2022 saw the largest annual expansion in the Company's store base, which ended the year with 1,646 points of sale (+41% vs. 2021). The growth of the chain combined the incorporation of 399 Extrafarma stores and with organic expansion of 118 store openings during the year (+47% vs 2021). In 4Q22, 61 new stores were opened.
Of the 118 stores opened in the year, 66% are located in the Northeast region and 87% in regions with demographic predominance of the expanded middle class (social classes¹ B2/C/D). The new discount store format, more economical and with a more popular profile, represented 75% of the total stores opened in the period. 2022 also marked the entry of Pague Menos in 41 new municipalities, expanding our reach to 389 cities in every state in Brazil.
In line with the portfolio optimization process, seven stores were closed in 4Q22, six of them from the Extrafarma brand and one from the Pague Menos brand. In addition, five Extrafarma stores underwent brand conversions to Pague Menos. Managerially, these stores will continue to be considered as part of the Extrafarma portfolio, for the purpose of monitoring the indicators of integration and capture of synergies.
STORE BASE EVOLUTION | PROFILE OF STORES BY AGE | ||||||||||||||||||||||||||||||||
Extrafarma | 1,592 | 1,646 | Year 1 | Year 2 | Year 3 | Mature | |||||||||||||||||||||||||||
Pague Menos | 382 | 376 | 6.9% | 7.6% | 9.3% | 7.2% | 8.4% | ||||||||||||||||||||||||||
0.3% | |||||||||||||||||||||||||||||||||
0.1% | |||||||||||||||||||||||||||||||||
1.193 | 3.1% | 1.6% | 2.3% | ||||||||||||||||||||||||||||||
1.165 | 1.169 | 0.9% | 0.6% | 0.6% | 3.6% | ||||||||||||||||||||||||||||
1.270 | 90.7% | 0.6% | |||||||||||||||||||||||||||||||
1.210 | 89.7% | 89.2% | 90.0% | ||||||||||||||||||||||||||||||
87.3% | |||||||||||||||||||||||||||||||||
4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | ||||||||||||||||||||||||
STORE BASE | INORGANIC | ORGANIC | CLOSINGS² | ||||||||||||||||||||||||||||||
EXPANSION | EXPANSION | ||||||||||||||||||||||||||||||||
BY REGION | (4Q22) | (LTM) | |||||||||||||||||||||||||||||||
(Extrafarma) | (LTM) | ||||||||||||||||||||||||||||||||
N | 11% | 14% | 6% | ||||||||||||||||||||||||||||||
NE | 15%2%15% | 19% | 19% | ||||||||||||||||||||||||||||||
34% | |||||||||||||||||||||||||||||||||
CW | 7% 1,646 | 14% | |||||||||||||||||||||||||||||||
399 | 118 | 8% | 36 | ||||||||||||||||||||||||||||||
SE | |||||||||||||||||||||||||||||||||
S | 55% | 66% | |||||||||||||||||||||||||||||||
61% | 53% | ||||||||||||||||||||||||||||||||
BY SOCIAL CLASS¹ | |||||||||||||||||||||||||||||||||
A | 6% | 9% | 1% | 7% | |||||||||||||||||||||||||||||
B1 | 33% | 25% | 12% | 25% | |||||||||||||||||||||||||||||
B2 | 28% | 43% | 29% | ||||||||||||||||||||||||||||||
1,646 | 399 34% | 118 | 36 | ||||||||||||||||||||||||||||||
C/D | |||||||||||||||||||||||||||||||||
44% |
33% | 31% | 39% |
- Predominant social class in the vicinity of each store (isochronous for 5 minutes travelling by car). Segmentation follows the IBGE criteria, where Class A comprises households with an average monthly family income above BRL 16.6 thousand, B1 above BRL 7.9 thousand, B2 above BRL 4.2 thousand and C and D below BRL 4.2 thousand
² Includes the divestment of 8 stores as part of the remedies defined by the CADE regarding the acquisition of Extrafarma.
05
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Empreendimentos Pague Menos SA published this content on 06 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 March 2023 01:12:01 UTC.