Empreendimentos Pague Menos S.A. (PGMN3) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Pague Menos' Quarter 2 2026 Earnings Call. This call is being recorded, and the replay will be available on the company's website, ri.paguemenos.com.br. [Operator Instructions] Before proceeding, please note that any forward-looking statements made during this call relative to the company's business prospects, projections and operational and financial targets as well as information about their market are based on beliefs and premises of the company's management as well as information currently available to the company. These forward-looking statements are no guarantee of future performance. They involve risks and uncertainties. Today we have with us Mr. Jonas Marques, CEO; and Luiz Novais, CFO and Investor Relations Officer. Now I'd like to hand the conference over to Mr. Jonas Marques to start his presentation. Mr. Marques, you may proceed.

Good morning, everyone. I'd like to start this day full of energy. This is our 10th call since I joined the company and took on this great mission. I'd like to start by greeting and sending a hug full of energy to all our 28,000 employees, their families and also our dear clients. Also, a special thanks to our shareholders. And today, I want to talk about Vokin. Vokin from the south of the country, one of our first shareholders after our IPO. I'd like to thank you for your support and feedback and your interest in our company. Before starting this call, I asked ChatGPT a question. And please mind that this energy is normal in our calls. And today, in the morning, I asked ChatGPT if there's any difference between working in retail and stoicism. And he said that, yes, because working in retail is accepting a simple life because we cannot control what happens in the market, and we need to have a lot of resilience. And so let's start this call today talking a little bit about culture. Fernando Pessoa, on July 1, 1916, wrote a poem, and I'm only going to cite the first part. Fernando Pessoa said, "Follow your destiny, water your plants, love your roses, because all the rest is the shade of random trees." So with this spirit, I'd like to start today's call with this quarter's highlights. Sometimes we are asked why aren't we recording the call? And I always tell people that you record things in your memory, that our days are fight and glory. So let's go over the highlights of the quarter. Our main highlights for the quarter: we had a lower growth level in the quarter. This is the reality, particularly because of the comparison basis, which are progressively stronger. I think you remember that in quarter 2 2024 we delivered 14%, quarter 2 last year 18%. So it would only be natural -- and we hate natural because we always like to be above target -- that we're growing less. We grew less than what we worked to deliver. It's not the case of the year because we have good numbers, but in the quarter, 8.3%, 11% same-store sales. And considering the situation of the retail market, these are still strong numbers. But I want to tell you that the main reasons for us not to post higher levels of growth -- our greatest competitor was ourselves. I am sure you remember that in the past 2 years, we brought to the company an additional 2.4 million customers, reaching 24 million customers. But we should have invested even more in our infrastructure. So we had some problems in the quarter. We know what happened. We are already in contact with VTEX. We already fixed the problem, and we will continue to work towards improvement. This caused a worse experience in the digital UX, and that had an impact on GLP-1 sales. Why? Because 80% of our GLP-1 sales come from digital because there's a discount, there's a lower price buying online. So this is what happened. But of course, this was still a very strong quarter, record-breaking quarter with great profitability and the consistency in our deliveries. I already mentioned our same-store sales. We continue to grow our market share in all regions in Brazil, and this is very important. The greatest growth we had was in the Midwest, but we had gains and improvements in all of them. Since I joined the company on January 1, 2024, I'm asked the same question. There's a gap between your EBITDA, your profitability and your main competitors. We were at 4-point-something, and now we have reached a record number of 6.5% with an expressive growth, even considering the strong comparison basis of last year. We also had strong cash generation. I remember that in the same period last year, we were earning BRL 30 million. So we generated record-breaking cash to the company. Our operational cash flow reached BRL 188 million in the quarter, and this is the 12th quarter of financial deleveraging. I remember that when I joined the company, I received a lot of feedback in Rio and Sao Paulo that the name of the game was that with high standard interest rates, continuing to deleverage the company is a great achievement, and this is what we continue to deliver. So this was a very positive quarter because we were able to control our expenses. This is the headline. And it's not just expense control showing that we are agile, making decisions when we're not selling. This is not what I mean. Luiz Novais will give you more color, but I want to call your attention to the great work that we have been doing to structure the company for perpetuity. We are not here for just 1 quarter. This is something I've always said. We're thinking of the mid and long term. And that is why we need to have robust processes, we need to have the best team, and we need to continue to create this culture of not accepting to be on target -- not accepting to be an average company. So what are we doing to control our expenses? In 2024, we -- well, so we're talking about centralized procurement, so transport, cleaning, payment means, all the nonproductive suppliers, only 20% would go through a centralized area, which was our procurement area. Now this year, we are at 85% of our expenses, and we will finish the year at 90% of all the bids and auctions and negotiations going through this very well-structured area with a very robust process. And the savings that we had in 2 years reached BRL 92 million. So we doubled our EBITDA in 2 years, and we continue to accelerate this growth. And that is the reason, particularly because of this structuration, not just the short-term decision that we made. So I want you to look at this in the details of our slides. So these are the main takeaways for the quarter. And now I'd like to hand the conference over to Luiz Novais. His name is credibility. And I forgot something, Novais. I focused on my introduction too much, but I want to tell you that we're very happy because we are one of the 10 greatest companies to work in Brazil in retail. And this is great. In some states, we were third, fourth among all the retail companies in that state. So this makes us very happy. Our case is about people. Since the start, it has always been about people. So this makes us very proud for our 28,000 employees. And because we are considered a citizen company, we were founded in 1981 and this has always been one of the 3 pillars. We wanted to be a citizen company that gives back to the community. Luiz, now I hand it over to you.

Thank you, Jonas. Good morning. And with all this energy and excitement that Jonas always shows in our calls, now I'd like to give you more details on our quarter results. In quarter 2, we have excellent news to share with you, just like in previous quarters. And I think the top 3 highlights of the quarter are related to our profitability and cash generation. And I will give you more details during my presentation. So let me start on Page 7. Here we have information about our gross revenue. Our gross revenue increased by 9.3% year-over-year. Next slide, please. We accumulated 44.6% in the past 3 years of growth. So from '23 to '24 12%; '24 to '25, 18%; and '25 to '26, 9.3%, with a CAGR of approximately 14% in the past 3 years. And this growth is basically equal to our same-store sales indicator. We're not opening a lot of new stores. So this quarter, we accumulated 42% of same-store sales, which is a lot. And the drivers this quarter, we have 2 highlights. The first one is telemetry. Our telemetry-assisted stores grew about 10%. We still have a lot of space to expand the use of telemetry in our pool of stores and the banners are also advancing. And the stores that were converted accounted for 14% of the growth in the quarter. On the next slide, we have more information about the quality of our growth. On the left, when compared with the rest of the market, our growth is purely based on same-store sales. We were up 8% in same-store sales and the market was 5.1%. And on the right, we're very proud to say that the total customer base was up 2.6% and our Continuous Care Client base, which has been our focus since the middle of 2024, was up 6.4%. This means that we are bringing to Pague Menos a base of customers that used to go to other drugstores. So this is because we're focusing on product availability and price perception. We're reducing the friction in our stores, and this is reflecting in retention and increasing customer loyalty. So CCC is the Continuous Care Client, the average ticket was up nearly 12% in the quarter. On the next page, we see the evolution of our growth. We grew 9.3% in the quarter, 11.7% in the first half of the year, 44% in the past 3 years with a stronger and stronger comparison base. And GLP-1 had a lower contribution to the company's growth in this quarter. So the light blue part of the chart, in quarter 1, GLP-1 accounted for 6.5% of our growth. And in quarter 2, 3.2%. So it's a smaller contribution of 3.3 percentage points. And remember that Mounjaro was launched on May 1 last year. So the comparison base starting in May this year, it is comparable to the previous year. And on the right, we see the evolution of GLP-1 penetration. So from quarter 4 last year to quarter 1 this year, it moved horizontally 9.2% to 9.1%, then it reduced in quarter 2. But the good news is that it's once again increasing in July. So the data of July 29 shows a penetration of 8.5%, and we'll give you more details on the next chart. On Slide #10, we see the trends relative to GLP-1. We thought it was interesting to share with you that at first there was a very important price dispute in April and May. And here we have the chart for semaglutide and tirzepatide comparing price and daily volume. So semaglutide had an average reduction of 50% in its price, but a volume increment of 155%. And the spike in July is very strong. And for tirzepatide, we had a 23% reduction in price and a 60% increase in volume. And this competition should increase looking forward. You heard that ANVISA last week approved another 5 companies, another 5 products, and we have 4 more waiting in line to be approved. So with more competition in this category, we tend to see an improvement in our margins and a greater product offer. On the next chart, excellent news about our market share. We are in our 11th consecutive quarter of share expansion without new openings in all regions in Brazil. In this quarter, the positive highlight was the North region, 46 bps compared to quarter 2 last year, 6.7% share nationally. And on the right, we have the evolution of our market share since the beginning of 2024, a very ascending, very positive curve. On the next chart, one of the top 3 best messages in the quarter is our volume. We have been growing purely on the basis of volume. So this is a very valuable indicator for the company. The first column here shows that the total market growth was 8.5% and minus 0.8% in volume. Except for some stores, the other stores retracted in their volume and Pague Menos was up 2.9% in volume. So much more than the market and the other chains. Here we are showing that we are attracting customers that used to go to other drugstores. So you see that in the second-to-last column, associations are not growing or are growing less than the rest of the market. And here the average price proportion was higher than that of the market because the other chains, except for the 5 largest, but the other chains started their GLP-1 stock recently. Until very recently, only the large drugstore chains had this product. Because this column represents all the chains, the average price had an increment compared to the market average. On Slide 13, we have our average sales per store. The blue line is very impressive. It's Pague Menos's evolution. In 2024, we were selling less than the other chains in Abrafarma. In the second quarter of 2024, our average sales was BRL 690,000 according to IQVIA, against BRL 760,000 in the market. And then in the end of 2025, we overcame the average of Abrafarma. And today, according to IQVIA, we're selling 888,000 per store and Abrafarma 809,000. So we had a 28.6% increase, whereas Abrafarma grew 6.4%. So we grew 4x faster than Abrafarma in this 2-year period. On Slide 14, we have information about our net income and gross margin -- sorry, gross profit and margin. So this quarter, we had a relevant pressure of noncash effects, AVP and also pressure from the presales -- from the preprice increase period. So these 2 elements contributed with about 50 bps of pressure, but we were able to nearly totally neutralize this pressure with 1 indicator that makes us really proud and is very relevant for the future of the company, which is a reduction in our stock losses. We improved 30 bps compared with quarter 2 last year, which is a lot. So the company is totally focused on this indicator. And another very positive indicator is improvement in its commercial conditions, which is always helping -- is also helping support our margins. And we're very positive about the future because the pressures in this quarter are one-off and the improvement that we had in our stock losses and the commercial conditions, they are structural changes that will remain in the upcoming quarters. On Slide 15, like you heard from Jonas, this is also excellent news, 1 of the top 3 best news in the quarter, dilution of 40 bps in our expenses. We grew our selling expenses close to inflation, 4.9%, administrative 6.6%. But the best piece of news here is the improvement in the governance of our nonproductive procurement area. So all the contracts with travel agencies, graphic services, equipment rentals. Until the end of 2024, we only had structured bids for about 30% of the nonproductive purchases of the company. In 2025, this number reached 70% to 75%, and in 2026, we want to finish the year with 95% of nonproductive procurement going through our procurement team, which has been capturing a lot of benefits in reducing our expenses. In 2025, it was about BRL 28 million in savings compared to previous contracts in the previous year about BRL 60 million of savings. On Slide 16, as a consequence of all this, one of the best highlights of the quarter is 6.5% of EBITDA margin, a historical record for us. Nominally, we grew 15.4% our EBITDA with BRL 281.7 million. And this is all a result of the operational leverage, the expense dilution. On the next chart, our net income, also very positive. We grew 22%. If you look at the first half data, 76% increase compared to the first half last year. So very strong evolution of our net income. And on the right, we also give highlights to our earnings per share. We finished the quarter 2 with BRL 0.51 per share in earnings, a 46% increase in the average earnings per share of the company year-over-year. We're very positive about this indicator because we see the company is improving its operational results, reducing its leverage, controlling its investments. So we have very good prospects for this indicator in the future. Cash cycle on Page 18. Since quarter 1, we are investing in an important transition to a very robust distribution center in Paraiba. And because of this transition, we need one-off investments and this represented in this quarter, 4 extra days of stock compared to Q2 last year. Our receivables period reduced 1 day quarter-over-quarter and increased 1 day year-over-year and this is due to the improvement in our GLP-1 mix and the growth of the category. And payables were stable. And this average stock time should be -- average inventory time should be normalized. It should stabilize in quarter 3 this year. So we will probably demobilize this investment -- this incremental investment in our stocks because of this demobilization and this will help us generate cash in quarter 3 this year. And speaking of cash generation, this next page to me is the main highlight of the quarter, something that makes us very proud, which is operating cash generation of the company. The total was BRL 573 million in quarter 2 in the past 12 months, which means 57.5% EBITDA conversion. And this was done considering that we had the 4 extra days of inventory that we showed on the previous slide. If we didn't have these 4 extra days, we would have another BRL 200 million in cash, because here we invested in 4 days more. Each day is about BRL 15 million. So we are at our peak operating cash generation despite the incremental investment made in Paraiba. And on the right, we have the free cash flow. Another important number for us: BRL 252 million. So this, combined with our capital allocation discipline, will continue to help deleverage the company, which is what is shown on the next chart. We are in our 12th consecutive quarter of deleveraging. So this also makes us very proud. We've ended the quarter with 1.8x the EBITDA, a reduction of 0.1x versus quarter 1, 1.8x versus last year. I don't know if you remember, but in the start of 2023, we were above 5x the net debt to EBITDA ratio because at the time we had installments to be paid for the Extrafarma acquisition, higher debt, and now we're closing the quarter with 1.8x, which makes us very proud. And the entire company is focusing on this indicator. And so we thank you all for your effort. We thank all our staff for your effort and this is something to be celebrated. Now, my last slide, I'd like to close talking about our ROIC, which also peaked at 21.2, a combination of all the indicators that we talked about so far: better profitability, better cash optimization or optimization of our working capital. So this is what allowed us to deliver 21.2% this quarter. Now I hand it back to Jonas and he's going to talk more about the future of the company.

Novais, thank you very much. Here we show it all, and we prove it. This was in the media yesterday, proving that we are live here, and we call ourselves giants because we were born in the Northeast, so we think big, and we have to think big in order to face the adversity. So excellent numbers, Novais. And our shares are actually cheap right now. You say, Jonas, do not say that, but they are cheap. I don't even have to mention this. I don't even have to say what we are expecting in terms of profit next year. So our shares are really cheap right now. So we want to open for questions, but I want to show you our consistent deliveries in the first half. This is my 10th quarter in the company. And besides reporting the results for the quarter, I also want to show you what the numbers look like for the first half of the year. Gross revenue, 11.7%. It's very hard to grow considering the comparison base that we have. And every day we work with our 28,000 employees, 1,700 stores. We do not accept -- our adjusted EBITDA was 23.3%, reaching BRL 486 million in the first half compared to the first half last year. Our net income was 76.3% despite the high interest rates. You know better than we do. We were also expecting this was in our projections, and we would like to have lower interest rates right now, but they are not. So the net income of 76.3% increase. And our cash flow, a great achievement, reaching 392%, reaching BRL 125 million in the first half. So now let's look forward and stop reporting on the past. So let me start with the right side of this chart. Let's talk about our strategic priorities. We are here announcing publicly that we could have done better. We made a mistake. We had an overload in our digital. This caused problems. So now we are totally focused on our CCC strategy that we started in the end of 2024 when we started to improve the UX in our digital channels. And we are working nonstop for this. Also, gradual acceleration of store openings. This doesn't mean that we will open new stores randomly. From the last 5 cohorts of stores opened, we are only ever increasing our assertiveness. I cannot tell you where the new openings will be because I know our competitors are listening to us, but we are opening new stores that become millionaire stores in a period of 5 months. So we are going to continue to be very assertive and balance out the opening of new stores. And also we want to invest in structuring projects, so rollout of structuring projects in our private labels. You're going to hear a lot of news this year about our private label supply. Also, we are visiting our stores. We're not always here at our headquarters. We're always traveling around Brazil visiting our stores. Last month we were in Belo Horizonte, Salvador and the inner part of the state of Ceara and Sao Luis, Maranhao, to look at our supply. And of course, we see products that are in our nonproductive stocks that could have higher turnover. And so I'm not going to give you details about what we're doing, but we're working on these nonproductive inventory that we have. And then we're capturing gains with AI. I want to introduce to you [ Demio ]. [ Demio ] is our AI agent, the best agent that we have, which is bringing additional productivity to our telemetry strategy, creating plans for our stores. Very straightforward plans because as I always say, we're simple people on extraordinary missions. On the left side, we see our results trends. The name of the game is market share. We're focusing on our market share. Of course, the comparison base is stronger now. We cannot support a high double-digit same-store sales with a strong comparison base, but we will continue to gain market share and grow as much as possible, without giving you guidance. About the Paraiba DC, the new DC will give us normalization of the pressures on our gross margin in the second half because the DC is already gaining efficiency. Operating deleverage is a commitment that we have and we're delivering more than delivery guys. Yes, here we promise, and we deliver. So [ 1.8 ] normalization of the stocks, which has to do with the unproductive stocks, like I said, and getting rid of excess stock so that we can gain productivity in our Paraiba DC. And so this is consistency in the delivery of results, our strategic focus. We work with a lot of energy and with a lot of transparency. We're not here just for the quarter because companies are created to be perpetual. This is the concept of what a company is today. The market is short-termish, more and more short-termish. But I've been here 10 months, Novais and me, telling you for the past 10 calls, showing what we're here for. So this reputation, this relationship that we want to continue to build with you, we always talk very clearly about where we're at and where we're heading. So Novais, I think we can open for questions now.

[Operator Instructions] Our first question is from Danni Eiger, XP.

Congratulations on your results and on the past quarters. I have 2 questions. My first question, it was nice to hear about the GLP-1s. I think a lot of people are focusing on that and trying to understand what this evolution will look like as this new demand unlocks. But can you share with us what you see in terms of the marginal evolution of your profitability? We hear in your industry that some of the previous or older drugs are already seeing an improvement in their margins. We have other entrants coming to the market, and we know that these negotiations about positioning of these products and profitability are already ongoing. So I want to hear from you what is the outlook is and how you think this profitability will evolve over time from GLP-1s. And my second question regarding the deceleration -- it was very clear what you said about GLP-1s and this is how this is a one-off effect and explained by the comparison base and the changes in pricing. But I want to better understand the other categories. We're seeing a very challenging macro scenario. You mentioned this yourself, Jonas, that some things you can control and others you cannot. But how are you seeing the consumer profile of general consumers? Because I think this has become a more challenging context lately. So how are you working on the other categories to compensate for that?

Danni, thank you for your question. I will answer the first one and then Novais will answer your second one. About GLP-1, Danni, you were right on target. We always hear that it's very important to go to the gym every day and exercise and in business there's nothing better than looking at your competition. You need to have competition and the 2 companies that are now entering the market were practically alone until they tried to develop the second brand, like Novo Nordisk and Eurofarma. And then EMS and now they approved another 5 products. The research companies, both Novo and Lilly, launched combos, combos to offer efficiency or savings to the consumer. And this has worked really well. If you go to our stores, you'll see that from Mounjaro 2.5 mg until 15 mg. And I challenge that -- I didn't think it would happen for Mounjaro [indiscernible], but they were selling them in a combo and it's working. So this was an important advancement, an important step. And now with new products, particularly Ozivy, and Ozivy we already have a stockout because when we receive it, we sell everything. EMS is producing 700,000 units per month, but we're always out. It's selling a lot. It's proven in our numbers that the price is elastic. As soon as you reduce the price, you double the volume. So in the case of Poviztra, we announced in an event that the price dropped 50% and the volume increased 100.8% immediately. And this is bringing access. This is improving access. So what to expect from this new competition? Today, one of the CEOs of one of these products will be here in Fortaleza. Yesterday, we had a meeting with another company. So what's happening in the more consolidated markets? You probably won't have the 5 products present in your stores. You will have some of them, 2 or 3. This will create competition that will improve the margins for retail. So you have increasing volume with a pressure on your margin because, of course, if you're bringing the generic, you don't need to have all of them. So this is positive for us. And this will certainly bring the research company, the pharma company, so that they can recompose the retail margins. Because today, it's a slightly smaller problem, but the theft -- the security problem. All the chains had to expand their cold chain because this product is growing acceleratedly and we're just seeing the start of this transformation. So I'd like to say that, well, thank God we are far from Paraguay. So everything that comes from Paraguay stays more in the South and Southeast of the country. So we have a better position in this sense. And with this price drop, we should probably see an acceleration in the adoption of this drug. And we are really respecting this drug. And we never switch prescription, and we really want to fill the prescription because how many diseases in the past 50 years that were a public health problem could be truly modified by a drug? And this is the case of obesity now.

Thank you, Danni, for your question. So about the market and the category, we have the privilege of being in a segment that even if growing less, it's still growing 10% compared with previous periods. So our industry is privileged in this sense and Pague Menos is even more because we're growing above the rest of the market, even without new openings. We're growing, as you said. I'm sure you heard that we grew 15% in generics, 10% in personal care and beauty, a little less in over-the-counter, but we're gaining share in practically all the categories. So in addition to gaining share in the regions, we're gaining share in all the categories. And we continue to be positive. We still have a lot of homework to do. There's a relevant volume of stores to be included in our telemetry dynamics. Our private label is going through an important transformation now. So we have high expectations of growth in this category. Digital channels, our sales dashboard, the main tool that we use in our stores. So the market is growing at a slower pace, but still at double digits, and it's still one of the best industries to be in. And we luckily are growing above the rest of the market.

The next question is from Lucas Esteves, Santander.

Thank you for delivery this quarter and your transparency. The level of details of the information is really helpful for us to do our work. One thing I'd like to ask, one positive surprise this quarter was the gain in profitability coming from continuous efficiency improvements. How much room do you still see to keep adding efficiency in the short term, both in terms of operational leverage? And another metric that is a good one to be monitored is the monthly sales per store. Where do you plan to reach with this metric in the next 12 months? And my second question is about CapEx. The technology component of your CapEx is still at higher levels than expected. Can you give us more details about the initiatives that you are rolling out and accelerating right now? And when can we expect to see a reduction in this CapEx level, particularly in technology investments? And also, considering your comment that in the short term you should not accelerate your new openings, can you please recap to us what you see as an average investment per new opening and also per store renovation as a projection for the future?

Thank you, Lucas. Novais, would you like to start?

Good morning, Lucas. Thank you for your questions. About profitability and operational leverage, the company is on a journey of profitability expansion, and we are far from our flat point or stabilization point. We still have a lot of homework to do. The procurement front is just one of the fronts. We have others in organizational structure and logistic optimization. We have fronts in pricing and many other levers. The company has 9 levers that it's been working on since 2024, and we have captured 1/3 of the benefits from these levers, but we still have a lot to capture in the future. Average sales per store, our objective is to continue to grow above the market. We, of course, do not give guidance, but our role here is even without new inaugurations, we are working towards growing more than the market -- continuing to grow more than the market. And we have a lot of room to keep increasing the sales in our stores and improving the company's margins. Now, as for investments, there's a lot going on. And in investments, Lucas, I think we are in the middle of our journey, maybe not even in the middle of the journey that we have. We still have a lot to do in our digital channels, in our ERP, in logistics systems. We also have the tax reform, which also requires additional investments for us to prepare for the new tax rules. There's a lot to be done in technology infrastructure. So a lot of work ahead. And we are far from the point when we will start to decelerate. It's the opposite, actually. We should accelerate our investments in infrastructure. And as you heard from Jonas, always balancing our investment categories. So we have the opportunity to open more stores. We also have the need to invest more in the company's infrastructure to continue supporting our growth in the future. About our CapEx metrics and cost of renovations, it's very similar to the average that you already saw. We invest BRL about 1.9 million in every new store. And then renovations, this will vary because we have different levels of intervention. There's one that's lower cost, there's a middle range and there's a higher cost. It could vary from BRL 100,000 for simpler interventions until BRL 600,000, BRL 700,000 per renovation for more complex structural renovations in our stores. I hope I have addressed all your questions.

I would just like to add, Lucas, it's been a great journey since the start of 2024. We launched our new brand, we renovated more than 500 stores in our first year. So in 45 years of history, we needed to have a much higher CapEx than what we have today. As you can imagine, companies they are cyclical. Our responsibility is to plan for the long term. So what would be the opposite line of thinking, the short-term thinking? If we already delivered everything that we could in terms of same-store sales in 2 to 3 years, let's start to open new stores now and add 5% growth from the new stores. But that would take the focus out of our leverage. That's not what we plan to do. We have been consistent since the start, and we are prioritizing correctly the investments that we make. I'm also proud, together with Novais and the rest of the team, we're very proud of not having to ask for extra money for self-funding to fund our investment. We started -- from the start, we doubled our EBITDA. We rose awareness about expenses -- both short-term and long-term expenses -- they require culture. Culture has to be present every day in our company. Sometimes we go to our stores and I'm sorry to give this example because this is a small example. When we go to a store and go to the office, there's nobody there and the air conditioning is on. So you tell them you have to turn this off. You have to open their fridge and see if they are defrosting. So these are small attitudes that will contribute every day. So this is something that we will continue to pursue. And technology is something that is very dear to our heart. I take this chance to tell you that we are bringing Fernando Schneider to the team. We're very happy to receive Fernando Schneider in our team, not just because of his technical expertise, but because he's a wonderful person. Yesterday he was in the AI Forum with Anthropic and OpenAI bringing practical solutions to the company because it's not about testing everything randomly. No, we look at applicability. And I would also like to welcome Marcel Desco, who joined us now as our new CMO. So we have 2 new people, reinforcing our staff so that we can continue to grow in the future. But we still have a lot of work ahead of us and that's a good thing because retail is always a living process, a dynamic process.

So the next question comes from Rodrigo Gastim, Itau BBA.

I have 2 questions. My first question is about your working capital. You talked about the impact of the Paraiba DC. So my question is, looking at your cash cycle, your cash cycle is close to 60-something. But when we adjust for inventory, perhaps it's closer to 65. So my question at the end of the day is, where are you aiming for this recurring cash cycle and how much more can you deliver in this sense? And my second question is about GLP-1. We were discussing with some investors the elasticity you showed in your numbers for July. So there's a question from us about the combo because most of the companies sold in a combo in June and July and that's accelerating in one end. But of course, the combo is accelerating the volume. So in terms of users, when you look at the month of July, do you see a more relevant elasticity in the number of users that are not cannibalizing your previous customer base? So these are my 2 questions.

Excellent, Gastim. Thank you for your questions. Thank you for your questions. So let me start with the working capital. We have opportunities to keep improving. So in addition to the 4 days that we invested in for the Paraiba DC transition, we have room to improve the 3 indicators, and that's what we're working towards. So average payment term, we are already revisiting the commercial conditions that we offer to customers in our stores. So we're monitoring the market, and we always try to decrease as much as possible and always measuring the impact on our sales, the reduction in the number of installments offered to our customers. We know that the population is in a very high level of debt right now. They want to pay more installments, but we are trying to hold back on this indicator because this helps our cash management. Also, in our store script, we're offering the installment sales less and less. In stock, which is our greatest lever, we are working to reduce our low turnover items in stores, but we still have a lot of them. We already did a lot in 2025, even in the end of 2024, when we started, we removed these low turnover items from our stores, but we still have a lot of them. In the last round in our stores about 3 weeks ago, we realized this. And this is not something we see only when we visit the stores. This is something that has been going on. And so it's very clear that we need to shrink our inventory of low turnover items. And about payment terms, now with the new entrants in GLP-1, the generic industry gives a much better condition in terms of payment terms than the reference industry. So this will also help prolong a category that already accounts for 8% to 9% of the total sales of the company. And not just with this movement, but our entire commercial team and procurement team besides negotiating costs to reduce our expenses, we're also negotiating the payment terms. So there's also good opportunities here. It's very hard to say where we will reach a flat point, but I can tell you that we have good opportunities in the 3 components of our cash cycle. And in GLP-1, moving on to the second part of your question, we always saw an acceleration in volume, particularly due to the combos in tirzepatide in June and July. But I think you were straight to the point in your question. So what are the customers that are buying the additional volume? I don't have the exact data, but more than 80% are new clients, new customers, even more than 80%. So we are really bringing suppliers -- retail is improving access to the products. And a much higher volume of clients are now using this category, which is an aspirational category and less than 5% of our clients are using this category. So there's a huge potential for growth.

Gastim, I would just like to confirm. Thank you for your question. As Novais said, 84% of the clients that started on Poviztra and Ozivy, 84% that never bought with us. We don't know whether they had bought from other brands, from other stores, but it's striking to see this number of people buying from new entrants.