Ladies and gentlemen, good morning. Welcome to Pague Menos' conference call to announce the results of the first quarter 2025. This call is being recorded, and the replay will be available on the company's investor relations website at ri.paguemenos.com.br, where the slide presentation is also available for download. All participants will be in a listen-only mode during the company's remarks, right after which we will open the floor for questions. At this time, further instructions will be provided. We also inform that the conference call will be conducted in Portuguese by the company's management and that you can listen to the call in English by clicking on the button "Interpretation." For those listening in English, you can silence the original audio by clicking on "Mute Original Audio." The slide presentation will be shown in Portuguese, and the English version is available for download at ri.paguemenos.com.br.
Before proceeding, let me mention that any forward-looking statements made during this conference call are based on the beliefs and assumptions of the company's management, as well as information currently available to the company. These forward-looking statements may involve risks and uncertainties since they refer to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should consider that events relative to the macroeconomic environment, the industry, and other factors may lead to results that differ materially from those expressed in said forward-looking statements. Today, we have with us Mr. Jonas Marques, CEO; Mr. Luiz Novais, CFO and Investor Relations Director of the company. I would like to hand the conference over to Mr. Jonas Marques to start his presentation. Mr. Marques, you may now proceed.
Good morning, everyone.
I am very happy to start our conference call for quarter one 2025 in a month that is iconic for our history because on May 19th, 2025, we will be celebrating 44 years. When we look at how much we've built so far and when we look at the horizon, we see our dream of perpetuity. We still have a lot to come in the future. To talk about quarter one before, I would like to send our greetings to the more than 26,000 employees and their families who have supported us every day, over and over again, so that we can fulfill our mission to bring health with love to all Brazilians, also all our shareholders, the controlling family, and especially to our more than 21.7 million customers. Yes, you heard correctly.
We had an increase in the number of customers, and these people and their families are delegating to us the extraordinary mission of taking care of their health. Let's talk about quarter one because we have a lot of figures to share with you today. Considering the feedback that we always get, we are bringing to you examples, stories, and much more content this time to share with you. Let me start by putting things in perspective. There is a concept in psychology that is called figure and background, where the figure, the subject, is the main topic, and the background puts everything into context. What was the background that we had in 2025 from January to March? It was extremely pessimistic. We had a global war starting. We had several examples of lack of reasoning, lack of negotiation. The economy was slowing down.
Our GDP was growing at 1%. We had two choices. The first one was to be pessimistic, to look at all the negatives and to play to avoid losing. The second thing we could do was to look inward and pay attention to all the work that we did last year, fine-tuning what we did last year because we were looking at our strategy, we were taking care of our people, and we were striving and really putting a lot of effort into the perfect execution. We chose the second option here, play to win, to have consistency, to have discipline, and to keep on delivering great results. Why? Because this has everything to do with our perpetuity plan. The background was not positive, but we tried to put the subject into a positive context.
I'm going to show you the intangible, our intangible assets. Please bear with me because our intangible assets are our people. When I was researching all the valuation rules of a company, I didn't find a chapter about people, teams, talents. Here at Pague Menos, we decided to do it differently. When I had the pleasure to join this company, I really found giants here. This picture here is a picture where we have our construction and culture rituals. Those are the events in which we celebrate our results and in which we combine our strategies because the strategy, as we heard from a famous CEO, is that execution eats strategy for breakfast. These are the moments. This is the intangible assets that we have. Now I'm going to start naming them. We have Carlos Fernandes. Carlos Fernandes is an attack player.
He's a polytechnical engineer who takes care of people's agenda, telemetry, and he gives life to the implementation of our strategy. He has a twin. His twin is Walace. Walace is in charge of the commercial part with his team. If you have in a company a commercial team that works really well with operations, you have the perfect combination, the perfect pair. Together with them, we have Renato Camargo. Renato Camargo is our marketing strategist who is responsible for our marketing strategy with his team. We have a lot of the same in the market. Let's forget about that. Let's remember the initials that are dear to our hearts. It's very easy to say we take care of people and we take care of their health, but it's difficult to really execute this. We have these three people.
In technology, we have an excellent team with excellent deliveries last year with no idleness in our systems, no downtime in our systems. We have downtime. We have Novais, who's going to talk about the context of our numbers, and we have Rosi, who is in the foundation of our strategy. Now let's talk about our consistent delivery of results. We had our fifth consecutive quarter of good results, a quarter that actually is the apex of all the strategies that we started implementing and adjusting last year. What makes us win the match is not the yeses, but the nos. We decided to focus on a few priorities. We have our same-store sales growth year. We had 17% same-store sales growth.
When we decide to deleverage the company and improve the return on the assets that we have, we have to work better with what we have. This is exactly what we did. For the first time last quarter, we started to break down what is the CMED increase, the first bar here. In the first quarter, 4.5% and 13.2%, which is the growth above the CMED, which composed at 17%. Our sales growth has been increasing and very consistently increasing even in this quarter. We know that the market was suffering. Sales, very positive, mature sales. We grew nearly three times as much as the market or the benchmark. When we look at our EBITDA margin, we had another excellent result. We were up by 55%, and you're going to hear the highlights later. This is progressive. Look at these numbers.
In quarter one, it reached 4.8%, and the March results are even stronger. When we look at the net income in the past 12 months, BRL 178 million. This is five times the LTM that we had in the first quarter 2024. I came here many times on behalf of the team to say that we were rationalizing our stocks. We were reducing our stocks because every day they cost us BRL 40 million. We are at 105 days. What about stockouts? Stockouts improved and reduced in number. This is very important and very difficult to do because retail is in the details, right? Our ROI reached 25.9%. I heard from an eye going to market that we should focus on our ROI. When you're over 20%, we can talk again. I sent him a text message today telling him that we're over 20% now.
Let's look at the highlights. We have the greatest highlights of the quarter, not just the numbers. You already saw the numbers, 17.1% increase in our gross revenue. How did we do this? We have very strong execution, which worked really well. We have our promotional strength. We have our marketing and digital intelligence. You're going to see that in digital, we had an increase of 53.6%. We're talking about a share of 17.6% of our sales. This is really strong. This growth in sales is miraculous. This is the main building block of our EBITDA. The EBITDA reached BRL 150.3 million, a 55.2% increase year- on- year. Here I have another takeaway for you. We have 14 managers. We have frequent meetings with them. We look at our expenses in detail.
The expenses are just like that picture we have on the wall in our home. Then when we look at it every day, in the second week, we stop seeing it. The devil is in the details. The EBITDA was one of the main growth factors for us this quarter. Now the net income comes from our sales with a one-point expansion point in our adjusted EBITDA, which resulted in a positive net income. I must remind all of you that we were able to reverse the loss that we had in quarter one last year. Now we have profit. For a first quarter of the year, this is really remarkable. A very important topic is our cash flow. LTM, BRL 487 million, a 16% increase year- on- year. Here we have the magic of stock reduction.
Let me give you some numbers. We reduced by 50% all the products that had more than 90 days of stock in our stores, a 50% reduction in products with more than 90 days stock. This is a remarkable reduction. Finally, our market share. We grew in all the regions very consistently, particularly in the North and Northeast and the Midwest. In the North and Northeast, where we have nearly 21% market share, we grew more than 80 basis points. This is really impressive. Let me go back to saying that in the company's valuation, we should always have a chapter about people and teams. Novais, now I hand it over to you for you to show us these numbers in detail so that we can really show the great quarter that we had in quarter one 2025.
All right, Jonas, good morning, everyone.
Thank you for attending our call. I'm very happy to share the results of the quarter. Jonas already showed you the highlights of the quarter. In quarter one, we really started the year really well. If we add the calendar effect, because in February, we had one day fewer than last year, we would have grown nearly 18%. The graph speaks for itself on page number eight. Jonas already showed you this in our introduction today. As you already heard, we are showing our fifth consecutive quarter of growth. We traditionally have been conservative, but after five consecutive quarters, we are really positive about the company's future because this growth is sustainable and structural. Now, on the right side, we have the same store for region.
We already heard from Jonas that we grew more in the Southeast, Midwest, and South, but also three times the inflation rates in the Northeast. In the third chart, we have the split by store portfolio. Our same-store sales by store portfolio has a balanced growth between the different stores, but Extraf arma is showing a slightly higher growth. Team engagement, and we have three other very important elements. We have store execution, we have sales campaigns, killer sales campaigns, and our digital channel that is growing exponentially. Now, on the next chart, we see the composition of our growth. All the important components in our sales growth, we see a lot of evolution, the customer base, and you already heard from Jonas, nearly 22 million active customers, the customers that have bought with us, have purchased anything with us in the past 12 months.
Here we have the split about between average ticket and growth. We grew in all these parameters, customer base, purchase frequency, an increase of 4.3% due to the CRM team work. Also, the shopping cart increased by 4.8% and a 2 percentage point increase in our positive mix effect in our RX mix, which is a key category for any drugstore. This is because of better assortment and better quality. This is structural sustainable growth that will sustain our growth in the coming quarter as well. In addition to these factors, we also have our digital channel. The digital channel was essential for our growth in the quarter. We reached the share of 17.6%, which is remarkable, nearly 54% increase compared with quarter one 2024.
Some of the record-breaking numbers that we have on the right, we increased 66% in our e-commerce sales, 78% in our app, more than 300% in WhatsApp sales. We have record-breaking share of 57% of our click and collect modality, and we had a daily sale that surpassed that of Black Friday 2024, which means the digital channel is evolving consistently and strongly. This is also due to a lot of pricing intelligence, killer sales campaigns, beautiful execution, beautiful timing, delivery timing, and assortment. As a consequence of this evolution in our sales, we see our evolution in market share, as you already heard from Jonas. We are seeing the sixth consecutive quarter of increase in our market share, even with only seven new openings this quarter, and we are growing in all regions in Brazil, particularly in the Northeast, growing 81 b ps.
On the right, we see our evolution quarter after quarter. We are seeing this strong evolution since the start of 2023. Now, on the next chart, we see the growth components with data from the IQVIA group. In the first column, we see the new stores, mature stores, and closed stores. The market increased by 11% in the IQVIA measurement. The second bar shows Pague Menos and Extraf arma, 18.5% growth. What really stands out here is the dark blue block, which is the growth of our mature stores, nearly 18%, whereas the market grew less than 7%. We grew twice as much as the market in mature stores. That is really impressive. Compared with associations and independent drug stores, we also had a much higher growth rate.
Compared with associations, independents, and chains, about half of this growth is based on new stores, and we are having a much higher increase even in our same stores. Independents, which is the last bar here, is the player that is losing space in the market now. On the next chart, we have an average sales per store comparison, also comparing with our peers. Our column is the dark blue column, so we are comparing by region, and we see that we have a much higher growth in all regions of Brazil compared with our competitors. In some regions, we are growing more than double the growth of our competitors. This means a great evolution for us.
On page 14, gross margin and gross profit, we went from BRL 903.6 million in gross profit for quarter one 2024 to BRL 1 billion, a 15% increase, but the margin decreased by 50 b ps year- on- year. Here we have important structural elements because even with this 50 b ps decrease, we are really growing in RX, which is the main element in the four bullets that we put here. We had a 24% increase in this category, which, as I said, is a key category for drug stores, and it grows because our quality of customer service and execution is increasing in our stores. We are much more focused on chronic care customers that will bring better returns to the company. We are gaining their loyalty and serving them really well.
Digital channel, the second important strategic lever for us, we had an increase of 53% year- on- year. That puts a lot of pressure on our margin, but it is how we will structurally sustain our growth in the future. The third bullet point here was really work to decrease the working capital, but for the leveraging and working capital, these are excellent results. Also, price competitiveness contributed to this decrease with a much stronger cash margin, with an increment in our gross profit and EBITDA and the results of the company as a whole. Next page, page 15, in addition to sales, this is perhaps the main positive news that we have in terms of results this quarter that we were able to dilute by 1.2 percentage points our selling expenses, which is really remarkable.
We are at our best level when we compare with quarter ones in the previous years. We are equivalent to quarter one 2021, so the best number reached in the past four years. We had a nominal increase in our expenses of about 8% comparing quarter one this year with quarter one last year. These 11% are 7% of increase in our fixed expenses and 4% in our variable expenses. Since sales are increasing remarkably, we have an increment in our variable expenses. We are diluting our expenses and at the same time improving our customer service with no detriment of our NPS. The main example is the growth in the RX category, as we already saw here. Expense dilution is the main lever that helped us improve our EBITDA now and will help us in keep improving it in the future.
Next page, G&A expenses. We closed the quarter at 2.5% of G&A expenses share in our revenue, the lowest level in the past five years. This means that we are controlling really well our G&A expenses, making adjustments and becoming more productive. We keep investing in technology. We are growing an average of 18%-20% of our technology investments, whereas we are gaining productivity in our personnel expenses. We are being very productive while controlling our expenses. On chart 17, we have the company's adjusted EBITDA. We had an increase of more than 55% in our EBITDA, a 1 percentage point increase in our margin, the fourth consecutive quarter of growth and the highest level for quarter one in the past four years. On the right side, we see our growth components. We go from 3.1% to 4.1%.
is a slight decrease in our gross margin and a strong dilution of 1.6 percentage points in our expenses, both G&A and selling expenses. This expense dilution, we have been able to do it because we continue to capture synergies from Extraf arma. We are no longer disclosing this separately, but we have a very positive momentum in the capture of synergies from Extraf arma. On chart number 18, our net income as a consequence of everything that we said until now, we ended the year of 2023 with a BRL 13.1 million positive net income versus a negative BRL 23.1 million year- on- year. We had an increase of more than BRL 50 million, a strong evolution, particularly with the margin effect. We have an increase of BRL 7 million in our financial expenses.
We end the quarter at BRL 13.1 million, a very important reversion of the situation in quarter one last year. On the next chart, we have our cash cycle and other excellent news for the quarter. We reduced by 10 days our cash cycle year- on- year. The main driver has been stock management. We were able to reduce by nine days the average stock time compared with quarter one last year. Here on the right, we see an evolution of the inventory turnover in the first quarters of previous years. We are at a very good level. Comparing with quarter one 2023, which was a year when we made a lot of investments to adjust our stocks, we have reduced our stock time by 25 days, which is equivalent to BRL 750 million.
As you heard from Jonas, we also reduced by 55% our items in stock for more than 90 days. This is a very strong work to improve our launch policy. We are much more restricted now, closer to the industry and our peers, very restrictive in terms of our launches and correctly allocating the company's capital. A lot of reverse logistics, and we are working in close proximity with our suppliers. Also, we have been doing some strong work in assortment and our logistics system. Next page, we see the company's indebtedness and cash flow, one of the main focuses for us this quarter. We finished the quarter at 2.8x and 1.9x the banking debt over EBITDA.
This was steady compared with quarter four last year, but a very remarkable reduction year- on- year of 0.7x in the net debt-EBITDA ratio and 1.1x the net debt plus over anticipations. On the right side, we see another record-breaking number for the company, which was our cash flow this quarter. Looking at the operating cash flow, excluding anticipations, in the past 12 months, we are at our best moment in the past four years. We generated nearly BRL 500 million accumulated in the last 12 months. Quarter one 2025 was a record quarter for us, and we will keep focusing on deleveraging the company. My last page, our ROI.
Resulting from this operating result, the deleveraging, reduction in our debt, we have a strong evolution of our ROI with nearly 21% in quarter one 2025, a very healthy combination of operating results, margin expansion, and reduction of employed capital. I stop here, and I hand it back to Jonas now.
Excellent presentation, Novais. As you heard, our results speak for themselves. They result from a lot of work, steady execution work, paying attention to details, paying attention to our people, and ensuring that we are creating an environment where we can get the best of our people. Here we are always challenging each other. Since I promised to bring some news from the backstage, our convention, the first picture that I showed was on April 26th. It finished at midnight. That was a Saturday. We rested on Sunday.
On Monday, we called all our executive managers and directors and all VPs to talk. The question we asked was, the post-convention plan of sharing materials with people was no longer valid because, just like teenagers, the body grew more than the clothes that had been made for them. We decided to challenge ourselves. What would be the post-convention plan? How could we bring this plan in order to ensure that this plan could reach our 26,000 employees? The feedback that I got was, "Jonas, please don't do that," because we were expecting to have a day to rest. I know it is very romantic to say that we're focusing on our people, that we want to get the best from our people, that we want to have the best environment.
Here in Pague Menos, our motto is that we should never procrastinate. Retail is made of the everyday. Women and men who work in retail, we celebrate, but on the same day, we have to start delivering. We still have a lot to come in the future, looking forward. We are very intense in what we do, and we are intense because we want to give people the possibility to be their best version. Life itself is already a great gift. Let's make of the success history of this gift success for the company and for each of us. Let me tell you what happened in the backstage. When we look at the update of our strategic plan that we're going to show to you, this is to tell you where we're coming from and where we're heading because nobody walks alone.
I would like to thank Luiz Ribeiro from General Atlantic, who gives us a lot of feedback. He is a representative of our shareholders who has really been contributing to our success. Also, Patriciana Rodrigues, the Chairwoman of our management board. She has been my business partner for many years, and now we are working really in close proximity because I want to understand the cultural roots of everything. This is a true language that allows us to communicate well with people and bring the best results to the company and not at any cost. Also, our founder, who is always thinking ahead 20 years from now, bringing a lot of energy to the team, always paying attention to what we are doing and seeing that beautiful baby that was born so many years ago grow stronger. The quarter one 2024 was a time of listening, a time of diagnosing.
Diagnosis is very important. Quarter two is a quarter of delivery of operational missions with very clear priorities and the start of formation of our C level. We finished our C levels. Rosi has been more than one year. Walace has been here for more than one year. Carlos, more than one year. We are gaining substance. Quarter three and four, we accelerate our quick wins and reinforce our culture. In quarter four, we think to ourselves, with this slowdown of the market, can we continue with the same growth rate? The answer is no. We have to grow even faster. The name of our convention, it was It's Now. It is now that we will further accelerate and speed up with more consistence, with more discipline, and with more optimism.
On May 22nd, three days after we celebrate our 44th year anniversary, we will celebrate our Pague Menos Day. Save the date. Please, if you can, be present with us, bring your questions, be part of this journey. We will have all the leaders of the company sharing with you many more examples of what we are doing and sharing with you also our main mistakes and the decisions that we made to fix them. What worked, what did not work, how we were able to pivot, and also explaining to you the importance of our intangible assets, our people. We expect to see you on our Pague Menos Day. Bring your questions, bring your comments, and please be there with us. Visit our stores, buy at our stores. Please try out this new sensation of entering a Pague Menos store.
We have a new brand that we're going to explain to you on our Pague Menos Day. On Pague Menos Day, we want you to be energized, leave the room energized with a lot more knowledge after this experience. This is the end of our call, and we will now open for questions. Novais and I are available to answer any questions you may have.
We will now open the floor for questions. We will take questions from investors and analysts. If you have a question, please click on raise hand. If at any point your question is answered, you can remove yourself from the waiting line by clicking on raise hand again. The first question is from Kelvin Dechen from Itaú BBA.
Good morning, Jonas. Luiz, thank you for taking my questions. I have two questions. The first question is about your same-store sales performance.
Your numbers are really striking, even with the headwind of the calendar effect. Who are you gaining this share from? What levers explain you outperforming the market? Do you think this is sustainable? This improvement is sustainable for the future? The cement price increase, how do you see the positioning of your suppliers? We have heard about some price adjustments over cement. I want to hear your opinion about that.
Thank you, Kelvin. Big hug to everyone in Itaú, particularly Danielle. Kelvin, you see that the same-store sales, this is not just happening now in quarter one 2025. If you go back and look at our results since quarter three last year, quarter four last year, you will see that we were already seeing this acceleration. In quarter four last year, we grew 13.6% in our mature stores.
This is three times as much as our main market competitor. The key here is our promotional strengths, execution, attention to details, and team engagement. We had lives with our teams. We answered their questions. We want them to really feel like owners. Because what really makes the difference is the everyday work that we do. We see that we never settle. Last week, we were the first drugstore chain in Brazil to offer Mounjaro for sales. We had a pre-sales activity, so this started the last holiday. We are always implementing our strategy to improve people's engagement and always looking ahead, always thinking about the future. For our anniversary campaign, I can't really disclose this right now, but we are always reinventing ourselves. I think this is the secret.
It is a marketing law that leaders, the strength they generate, for example, the leading company's same-store sales, they tend to keep growing with the same strength. Stay tuned because we already started this month with a lot of activity so that we can continue to deliver very high same-store sales. About cement, Novais, would you like to answer that one?
Yes, Kelvin, thank you for your question. Yes, we have been hearing when conversing with our commercial areas, some industries that are transferring not just the cement readjustment, but also reducing some discounts in order to offset the readjustment against inflation. Not all companies are doing that. I do not think the average readjustment was that affected, but I know that some industries and companies did reduce their discount levels in a few percentage points to offset for this effect.
Very clear. Thank you.
The next question is from Laryssa Sumer, XP.
Hello, good morning. This is Danni. Thank you for taking my question. I have two questions. My first question is about the weight loss drugs, diabetes drugs. You even mentioned that you were the first one to offer Mounjaro. First, what is the representativeness of this category for you? I know that perhaps you haven't been exploring it so well, and you're trying to improve that. Also, I have a question about the market. We know that you and at least one more company decided to provide Mounjaro, anticipate the availability of Mounjaro in your stores. Was this a strategic decision? It really sounds like an important lever looking forward. I want to know, what is your strategy in this segment?
My second question, looking at the HPC dynamics, we are seeing a lot of debate about this category and the competitive dynamics between the players and different channels, more horizontal players. I want to understand, what is your take on this subject? You talk about hair and kids' products and solar products. What is your perspective for this category? Are you starting to see a reversion of that slowdown that you saw? What are the prospects for the coming quarter?
Thank you, Danni, for your question. I'm going to answer the first part. As you know, I have a bit more than 30 years in the industry in GLP-1, and all the products in this category are a big revolution. Nobody can tell what is the size of this market today, Brazil, of the repressed market that we have.
We have some data showing that the compounding market is gigantic, that you can find semaglutide now in pills, something that does not exist in the rest of the world. We do not have this presentation in the rest of the world. The market is huge. We do not even know what the size of this market is. What I can tell you is that in our business, we are seeing more than 30% growth. This is consistent growth. What will happen? We do not know. Our expectation is that it keeps growing, taking large leaps because we do not know the size of this market. Novo Nordisk has never been able to meet the real demand of the market. As I said, I explained this because of the compounding aspect of the market. Now, in 90 days, we will have prescription retention, and we are preparing.
We're anticipating this because you know we have more than 1,100 clinics. We have telemedicine, and we are studying to see how we can make this journey of patients who are treating obesity and weight loss to see how we can avoid having any impact. Now, about Mounjaro, if there's another company, we don't know about it. We are the first and only to be offering Mounjaro to our customers since the last holiday. This is not just a marketing strategy. A health company has to do things very seriously. As you know, a problem that we have in the market, we are at the least affected by it, but we have a lot of problems with the safety in Brazil. Sorry, security in Brazil. We have stores being robbed.
We have a logistic plan and a marketing plan that will ensure a risk-free delivery to our patients and our customers. This is a heads-up to you. Really pay attention to that because security is an issue in Brazil. This has been something relevant for us in [Ozempic ]. Our losses are lower than those of the market, but security is an issue, and we have to pay attention to that. Novais, would you like to answer the second part of this question?
Yes. The HPC this quarter increased by 7%. If the company increased by 17%, it is much lower in this category than others. The surprise for us has been the branded drugs category because of the improvement in our customer service and store assortment.
In HPC, we see that there are three subcategories that had a lower performance and that actually pulled down this growth, which was solar as sunscreen that had a decrease of 5% in the sales volume this quarter compared to last quarter. This is more because of the rainy season, and we are seeing some rainfall levels higher than those of last year for this time of the year. It's hard to tell if this is the only factor. When we look at the IQVIA data, we see that it is true for the entire market. The entire market had a decrease in sunscreen and two other important categories, facial care and kids. We have these other two subcategories that had a growth level that was much lower compared to first quarter last year. We see that this is not something exclusive of Pague Menos.
It's something that we're moving, that we're seeing in the market. We are monitoring this, and we are discussing with our suppliers and the commercial team to try to pull these categories back up because if we're able to pull them up, since the other categories are growing steadily, this will be really helpful for the overall results.
Thank you.
The next question is from Vitor Fuziharo, Santander. Mr. Fuziharo, you may ask your question now.
Good morning. Congratulations on your results, and thank you for answering our questions. The first question is about the gross margin. You mentioned that there are different aspects that are impacting the gross margin, the categories, and the sales mix, and some one-off actions that you undertook.
Considering the operating leverage of this quarter, will we continue to see these numbers for the rest of the year, or was this a one-off situation in quarter one? About your cash flow, considering the improvement that you had in your average stock time, I would like to hear about the potential that can still be captured looking forward and how this will impact your operation.
Novais, I will go first. Thank you for your question, Vitor. We were very happy with this change in our margin in quarter one because this is the piece that was missing for us to be sure that our strategy is working.
In quarter four, I don't know if you remember, but in the second half of last year, we reviewed our strategy, and one thing was really clear that we needed to focus on our continuous care patients, continuous care customers that we usually call chronic patients. We don't really like that term, people who need continuous care during their lifetime. Now, when we look at these categories and when we look at the percentage of customers that fit into this classification, we had to change the mix in our stores because one prescription sometimes is for three cartridges or six cartridges. We used some artificial intelligent components even to adjust the assortment in our stores. The result of this was that we gained 2.3 percentage points of penetration in our RX in branded products, and they have smaller margins.
Of course, when you increase the sales, there's a slight change in the margin. This is proof that our strategy is working. We really believe this because these patients that come up to 48 times to our stores in the year, they have a more complete shopping cart, and they end up buying other drugs and convenience. We are one of the few drugstore chains that have a good mix in convenience. Novais will now answer the second part of your question.
Yes, you're right. Just to add to what Jonas has already said, the margin is slightly lower, particularly due to the strategic decisions made by the company. In addition to what Jonas has said, there's also the interaction with the digital channel that had very strong growth in a quarter, also low-turn item.
We had some sales campaigns with the support of the industry, and not all price reduction was supported by Pague Menos. The industry really helped us sell these stocks. Also, what Danniela asked about, the HPC category had a lower growth rate in this quarter compared with previous quarters, and that also consumed some of our margin because these items have a slightly higher margin than other categories. Everything is in line with our strategy. Last year, we delivered for the year a margin of 29.7%. Despite the pressure we suffered in quarter one, we will be working to equalize or maybe recover some of this margin to maintain our margin at similar levels in 2025. Now, about our cash cycle, there is still room to improve. We even have an internal joke that we always tell in our stock discussion meetings with Jonas.
We show an important reduction of about 50% of our stock losses. Jonas always says, "What is the next target? What is the next target?" The next target is zero. Of course, it's very difficult to reach level zero, but we're always striving to be as close to zero as possible. There is still room to be even better in stock management. We will have a new distribution center opening this year in Paraíba, which will also help us be closer to our stores and to employ less capital. In receivables, there is still some pressure. The movement in the population is still higher demand. When we think about stock, we still have opportunities to improve. As for payments, it's just like in expenses. We will continue to get better payment terms, particularly for the items that we're focusing on right now.
We have a team looking at supply items, so all the back office items that have an important share. We still have room to further improve payment conditions in these categories. Yes, we are working to further improve our cash cycle.
Thank you.
The next question is from Guilherme Vilela, JP Morgan. Mr. Vilela, you can ask your question now.
Good morning, Jonas and Novais. Thank you for answering our questions. My first question is about the leverage reduction trajectory. When we look at our leverage in adjusted terms, it is still at three times the EBITDA. What is your expectation in terms of reduction of your leverage through cash generation or EBITDA? What do you expect for the end of the year? My second question is about the last point that you talked about when you talked about your gross margin.
In your release, you showed a lower number for bonuses and budgets for this purpose in the industry. Is this affecting retail as a whole, or was this a one-off situation that applies just to you? Thank you.
Thank you, Guilherme, for your question. Novais, Guilherme, we are the first chain that published this. Others will come. They may start tonight. Take a look at the other releases and compare because that can help put things into perspective.
Thank you, Guilherme, for your question about leverage reduction. When we compare quarter one 2024 with quarter one 2025, and when we add the anticipated receivables, we go from 3.9x to 2.8x . It is a 1.1x reduction in our EBITDA in one year. This year, we will open only 50 stores, 50 new stores. This was the guidance that we published.
It's a low level of investment for us, considering our history. Since we're generating BRL 500 million in operating cash every year, the company is growing operationally. We have nearly 18% or 17% growth in our sales with much lower expenses. The operating cash generation has been strong. That helps us fund not just a small number of new openings this year, but also all the company's actions. We plan to finish 2025 with a much lower indebtedness level than in 2024. We will not give official guidance or any guidance about the size of this decrease, but it should be much lower, majorly lower. This is one of the three main priorities of the company this year to reduce our leverage. Now, about commercial budgets.
In quarter one every year, traditionally in the industry, we see a lower appetite for campaigns, and it was no different this year, although slightly lower. In March, we had good raising, and now the team is working in close proximity with the industry, recovering the support levels of the industry for sales campaigns. It was not anything striking, but yes, together with the other four elements, this was a factor that pulled our margin slightly down in quarter one this year compared with quarter one last year, but nothing that striking.
And Novais, last year, we promised to deliver under two, and we delivered 1.97x. A major reduction, both in terms of EBITDA increase and that amortization.
Yes, talking about our banking debts, we had a very strong reduction, 2.02x the banking debt over the EBITDA.
Thank you, Novis and Jonas.
Thank you, Guilherme.
This question and answer session is now closed. I'd like to turn the conference back to Mr. Jonas Marques for his final remarks.
Thank you all. I'd really like to thank you for attending. I always say that feedback is the greatest gift we can get. If we are able to close this call nine minutes earlier, this is also good feedback because numbers speak for themselves, just as some pictures speak more than a thousand words. This is the fifth consecutive quarter of good results. I trust our team. We have the best team in the market. One thing is really clear to us. On one hand, we're very proud, and on the other hand, we're very humble because our greatest competitor is ourselves, right? Our greatest competitor is within.
You, as shareholders who trust us, who have put your trust on us, and who decided to invest in our company—here I am talking about individual and small shareholders—we really have to work hard to honor your investments and your trust. The first feedback that I got was delivery, delivery, delivery, delivery. It is our fifth consecutive quarter of delivery, and we will go on to the sixth consecutive quarter. We are very optimistic. Every day in our everyday work, we are optimistic. We are treating our customers well, and we are delivering the best and the most truthful experience inside our stores. Because here in Pague Menos, customers will never be numbers. They have a name and a last name and a history, and they have needs. We want to serve them with our hearts and with a resolution and assertiveness. Thank you all for attending.
Thank you for your time. I wish you a great rest of your week, and we will see you in our quarter two presentations. Thank you all. Have a great day.