Good morning, ladies and gentlemen. Welcome to the Panvel Group's Q3 2024 earnings conference. This conference is being recorded and will be available for replay at the company's IR website, where the respective slide deck can also be downloaded. Please be advised that during the company's presentation, all participants will be connected in attendee mode. A question and answer session will be held right after that, and further instructions will be provided. Note also that the conference is being interpreted into English and Brazilian Sign Language. You can select your preferred language by clicking on the interpretation button on Zoom. Before moving on, we'd like to reinforce that any forward-looking statement made during this conference is based on Panvel's management's beliefs and assumptions, as well as information currently available to the company.
These statements may involve risks and uncertainties, seeing as they relate to future events, and therefore rely on circumstances that may or may not materialize. Investors, analysts, and journalists must understand that events relating to the macroeconomic environment, the industry, and other factors could lead to materially different results than those expressed in said forward-looking statements. Joining us today are CFO and DRI, Mr. Antonio Napp, and IR Manager, Mr. Ismael Röhrig . I will now turn over to Mr. Antonio Napp, who will begin the presentation. Mr. Napp, please proceed.
Thank you. First of all, I'd like to thank everyone for joining us and for your attention, whether now live or later when you'll be able to follow our presentation more closely and in more detail.
As you'll see in the following slides, the results that we've had and that we reported in Q3 2024 made us really happy, especially after such a challenging quarter that was Q2 2024, when our operations were deeply affected by the floods in Rio Grande do Sul. But as you'll see, we have fully moved past that event, and we're able to report very consistent growth, both in terms of revenue and otherwise as well. Before diving a little bit deeper on our figures, we always like to remember what brought us here and what will continue to drive us moving forward. We always like to repeat what our mission is, our vision is, and our values are.
Providing health and wellbeing to people and being the best in health and wellness products and services really pervades everything that we do, the way we think, and how we treat our clients. This shows in our results, our model of service, and also in how we prioritize our projects. Each one of these building blocks really conduct us to very robust figures. Here we can start to break down a little bit everything we were able to deliver over the course of the third quarter of this year. First of all, our sales revenue was very significant. We've grown substantially, by 17% over this quarter, far outpacing the industry, which was driven substantially by our performance in mature stores, which went up by 11.4%, and same store sales, which went up by 14%. This increase in sales came along with a significant increase in our margins.
Our adjusted EBITDA margin went up by 5.4% to BRL 71.8 million, and our adjusted profit has exceeded BRL 37 million, going up by over 37%. We did that by, again, breaking records on the digital side of our operations, which is something that sets us apart. In three states in Rio Grande do Sul, that was also true. We are now going to dive a little bit deeper on each one of these pillars and show our differentiators here with Panvel. Moving on to the next slide. This is a very significant overview. I always like to bring this slide in every presentation because it shows very well how we have been operating throughout our history. We are a company that is over 50 years old, and what we have here is just part of our path so far.
As you can see, our average growth over the years has been on average by 14% a year. However, ever since we had our IPO or our follow-on offering in July 2020, we began to operate at a different pace. We brought new resources, we have updated our planning strategy and added a new pace of growth to the company. As you can see with the CAGR on the right-hand side, on the third quarter of 2023, all the way back to the first quarter of 2021, there has been substantial increase in Panvel's gross revenue. That growth is accompanied by the increase in our margins, which went up by 27% during this time. This is evidence that we are actually being able to allocate our resources in a way that they bring more profit. That also shows when we look at our pipeline and the resources that we have brought.
Yeah, this also reinforces that we have a new Panvel since 2020 in terms of returns and profits as well. Absolutely. Now, going a little bit deeper into our sales, here we break down into a few other elements. As we have said before, Panvel grew by 17% during this period, which was very remarkable. But the most important thing that I would like to underscore on this slide is that we have exceeded the historic BRL 700,000 per store per month. As you well know, average same-store sales is one of the main KPIs for any retail business because this is really what allows us to unlock greater results within the company. We are sharply focused on increasing same-store sales and also improving the profile of our stores.
These details are very well represented by the graphs on the bottom hand side when we compare Q3 2023 by sales range to Q3 2024. Notice how much we have transformed Panvel. More and more, we have a higher number of stores making over BRL 700,000 per store, and more and more stores are selling only upwards of BRL 300,000. This is really impressive. These are the figures that explain the growth in our margins. Another very interesting data point that we always like to show is when we look at the southern region and compare Panvel's performance with the average performance of other players in the area, whether we are talking about Abrafarma players or other independent players, Panvel still shows that it is outperforming the industry. This is still true.
Now, this model is being built, and it needs to be in keeping with our performance, both in our new stores and our mature stores. As I said, two highlights of this quarter, growing by 14% in same-store sales and 11.4% in mature stores. That is a huge differentiator. Our real gain was by near 7% this quarter, all while keeping an extremely high CAGR during this time, and as I said, unlocking more and more value. When we look at our expansion. On Q3, we recovered our pace of expansion. If you look at Q2, when we had the floods in the area, and we talked about that in the last quarter, we were forced to hold back on our expansion because we needed to make adjustments that were not expected.
Even so, at that time, we reinforced our guidance of opening over 60 stores this quarter, and we are very close to meeting that target. We have opened 14 stores on Q3, 54 stores in the last 12 months, ending Q3 with 612 stores being open in all three states in Brazil and South, and also in the state of São Paulo. Now in Q3, we have opened 26 stores. In October alone, we have opened close to 10 stores, and we will deliver on that target. Another important topic that we always notice is how our stores are maturing. Our store portfolio by maturity level. Just to remember the concept that we adopt, we call mature stores those that have been open for over three years. Every store that has been open for less than three years are what we call maturing stores.
They need to meet the performance standards that we have set for them. We have several stores that are still maturing. Now, notice how many stores we have as they mature and the results that we are seeing of these stores that are still maturing. Which is interesting when we look at the breakdown per state by a maturity level. Moving forward, with all that sales performance, mature stores sales, there is nothing else that could have done except growing our market share. Our market share has increased across the South. We have grown by close to 4 percentage points in every state across the South, especially in Santa Catarina and Paraná, where we went up by over 7.8 points. We are performing extremely well in each one of these states and still with a lot of room to grow.
I wanted to call your attention to the fact that we do not have that in the chart because it is not in the South, but we are very proud that in this quarter, we reached 1% market share in the city of São Paulo, the largest market in Latin America. This is a place where we have been growing carefully, but with a lot of quality, which is bringing great returns. We can also see our focus on medications. Our company has really focused on customers that really consume those drugs. Chronic patients and continuous use patients that really consume those drugs. We are selling several brand name drugs and generic drugs, and this is in keeping with our strategy, which is still consistent for the quarters ahead as well.
Moving forward on sales, we always like to talk about one of the items we consider one of the company's differentiators, which is our digital strategy. We are still Brazil's most digital-oriented pharmacy network. Over 21% of Panvel's sales occurred via our digital channels. No other player in the industry can report these levels. We do notice that clients are choosing Panvel because of its digital operation. That's something that really sets us apart. We have the fastest delivery time in Brazil. We can deliver in under 60 minutes in every market where we have stores. Currently, 49% of our deliveries are actually occurring in under 60 minutes. I wanted to understress that this figure does not include click and pickup, which accounts for over 30% of our delivery format, is not included here.
We know that other players include that in this figure, but we just wanted to show you our delivery rates so that you see how differentiated we are. We talk about what we call program delivery, which occurs at the customer's discretion, but it is actually a category where we would be able to deliver even more than these 49% in under 60 minutes. This is in accordance with the customer's discretion. We want to leave all tools available to our customers. Whether they want to pick up in store or deliver or receive at home in under 60 minutes, or whether they want to receive at the end of the day, it's their decision ultimately. Our focus on the customer has actually allowed us to have an app that's been acknowledged by the industry as the best one in pharmaceutical retail.
We also have the widest customer base in the market. Currently, over 42% of our app customer base use the app every month, at least once a month. This is an extremely high level in the industry and shows that our customers are not downloading the app just because of one-off promotional sales. They download our app, and the use of our app is growing by over 40% year-over-year, and they keep using it, which is in keeping with our loyalty building strategy. It's no coincidence that we have over 30% of the entire pharmacy industry in the south of Brazil. Remembering that as a network, we have 12% market share, so we're absolutely outperforming the market. Another differentiator for Panvel are our services, such as Panvel Clinic. While service sales have not exceeded 1%, as you can see, they ended Q3 in 0.7%.
In addition to a very important avenue for growth into the future and every store we open include Panvel Clinic, they also reinforce Panvel's differentiator from the customer's perspective. Notice that we are absolute leaders in vaccination in Brazilian South, with over 44% of every vaccination in Brazilian South take place in Panvel stores and close to 20% in Brazil. What this means is our pharmacy clients, when they want to take a test or get vaccinated, they choose Panvel as opposed to the competition. This is in keeping with our brand strategy, and as I said earlier, our focus on quality service. It emerges and becomes tangible through these figures. Another fundamental building block, and I leave you with a few images, is what we couldn't be remiss in not saying, which are Panvel products. These are products that can only be purchased in Panvel.
We are the only white- label brand that actually uses their name in the market. We have an amazing host of products, a lot of new products with a lot of growth secured for 2025. When we look at the figures in 2024, we remain the benchmark in the pharma industry because of our private label. We have far and wide the widest share in this market. Naturally, between Q2 and Q3, we saw a temporary decrease in that share because of the issues we faced in our Lifar lab. As you know, we have Lifar, which is located in Porto Alegre, which was heavily affected in Q2. It was really underwater and lost a lot of inventory, which really disrupted our Panvel products inventory. Lifar produces about 30% of all the Panvel products that we sell.
Lifar is fully operative again, ever since the beginning of Q4, and inventories are already recovering. It is only natural that throughout this time, our share in sales has ticked down. Even still, we are still leaders, and when the topic is private label products in Southern Brazil, we have over 30% of the market. Clients are still going to our stores to look for Panvel products. I am fully confident that this share will continue or go back to growing in Q4, once our inventories are again normalized. To round out this client perspective, we always like to show you our NPS rate. We ended Q3 with an extremely + 78 NPS. Whether that is on our website or our app or our brick-and-mortar store, we are closing this circle, improving more and more and focusing more and more on our services.
As I said before, we are still the best-rated pharmacy network in Reclame Aqui, and we also have our pharma retail app with the best rate, whether in Android Store or the App Store. These are very encouraging figures, and we are always looking at them store by store to make sure our customers are still receiving the highest level of service whenever they step into one of our stores. In closing, we conclude this overview of sales and now begin to talk about our gross margin. What do we see for Q3 when it comes to our gross margin? When we look at Panvel's gross margin, there was slight pressure going from 30% to 29.9%, particularly because of the increase in the share of drugs within Panvel, and this was absolutely expected.
When we look at the effect for the group at large, I would like to reinforce here that as we have explained since Q2, we chose to decrease our wholesale sales rate within our gross margin. When you look at the group's gross margin, you notice strong growth by 1.2 percentage points, going from 28.2% to 29.4%. That is explained by the effect of our mix with a much larger share of retail and only a small share of wholesale. Which also helps to explain the second shift, which has to do with our expenses. Our selling expenses performed extremely well on Q3, whether we are talking about actually selling expenses or general and administrative expenses. G&A, which involve logistics and other directly relative to sales, they went up by 11.5%, actually selling expenses versus Q2 last year, and Panvel's sales 17%.
The same is true about our administrative expenses, which went up by 8.4%, whereas Panvel's went up by 17%. These shares of selling and administrative expenses versus our revenue do not really show precisely because of the decrease in wholesale sales. It is only a one-off effect that will be more than offset by the effect on the group's gross margin. Now, what is the important message that you have to take away here? We have been able to perform really well in our operations, and this becomes even clearer when we look at our EBITDA. Our EBITDA has increased significantly by 0.7 percentage points. This has been the highest nominal EBITDA with BRL 700 million in the quarter, an outstanding result, and we also expect Q4 to come up blowing off everything. When we look at retail, all of that appears on that figure.
Bearing in mind that our retail EBITDA represents precisely the results of our stores. We are talking only about store results. It has to do with the contribution margin for our stores. So it shows our stores performance and our selling expenses. We went from 10.8% in Q3 2023 to 11.7% in Q3 2024, up 0.9 percentage points. That is because we were able to dilute expenses, especially with staff and our lease. We worked really well on our mix, increased our productivity, and as we mentioned before, our mature store customer base has performed outstandingly well and paid for our extension. As you remember, we have 30% of our stores within the expansion plan, so it is only natural that the results take down. Our stores are performing really well, and with that, we can widen our margins. This rounds out with our net profit.
After looking at our sales performance, our margins, and our expenses, it could not be any different considering that our cash management has been extremely organized. So our net income has grown by 36.9 percentage points, up 0.6 percentage points, and our net income before adjustments went up by 41.7%. Delivering this bottom line result after such a challenging Q2 really filled us with pride. Rest assured about that. It really shows that as we imagined, our ability to recover proved to be right. It was one thing to project and expect and hope, but to really see this performance and see that we were right and had the ability to do that, to overcome all of that, is really exciting. We are looking at that every day so that we can serve our customers better and to also have better margins with our business.
We also wanted to reinforce that our results, whether on margins or on sales, shows the company's resilience and its power to act. The company has organized itself really fast and moved forward, even outpacing its historical records, showing our profit and the resilience of our operations. Yes, precisely. To wrap up the financials, we always like to look at our cash cycle and our debt path. We are always very careful with our cash, and in Q3, we see a few effects with a one-off pressure on our cash cycle. However, the decrease in the share of wholesale adds a benefit in terms of fewer days with our receivables. So there is a benefit on that hand.
But on the other hand, we decided to keep investing highly on our inventories, especially in our stores, to prepare for the greatest or the most intense season in the year, which is Q4. This is already showing in our Q3 figures, but it also affects our days in stock figure. Our debt level is still extremely healthy. This is one of the lowest leverage rates in the entire pharma retail market. Another thing that's interesting that we would like to share with you is we've been very successful in exchanging our gross debt for debt with a better profile, with longer maturity and lower cost, particularly incentivized lines both from Finep and the BNDES.
This is work that's being conducted by our financial team and has been delivering exceptional results both in the near and the long term, which translate into lower financial costs and a better investment capacity for the industry. These figures should become even more clear in the next few quarters. We conclude the more numeric part of the presentation and follow into our strategic pillars. If you've been with us for a while, you know that we love to talk about our strategy and explain where our mindset stands, and also give you an overview of what we expect for the future, both now at the end of 2024 and a little bit into 2025. We always like to remind you of our expansion and why we're operating in pharma retail. Every time we look at these figures, we have more strength in our conviction.
First of all, there's no better market than pharma retail in Brazil. Growth is secured in this market. It consistently outgrows inflation. When we look at the South of Brazil, the region also outgrows the country's market significantly. That's another lever. Another important lever is the fragmentation of this market. As you can see looking at the chart, when you look at the networks that are part of Abrafarma, they don't even account for 50% of the southern region. The snapshot is similar to other areas in the country. Which means there's a lot of room for consolidation where Panvel has definitely taken a stand and gaining shares as well. We have the effect of a market that's outpacing inflation, that's fragmented.
The fact that we're operating in the Brazilian South, which is outgrowing even more, and also the fact that we have more and more products and services that we are making available in our stores, meaning this is the right place to work and operate and the right place to invest, which is why we continue to invest heavily, seeking the highest possible returns within our core business. When we look at our expansion, our strategy remains unchanged. Our focus is still sharply in southern Brazil and further into Brazil with both standard and more popular store models. Panvel already has a footprint in nearly all cities with a population of over 200,000. There's obviously room to grow, but in all of that range of cities between 150,000 and 200,000 population, and maybe it's even a few cities under 150,000.
Our strategy is key and has allowed us a great number of industries. We ended with 146 cities where we are in operation. We should end the year with a much higher number than that. This translates really well how we like to work on every market. We are not a pharma network that simply pops up in every city and ultimately cannot reap the rewards, in terms of labor use, inventory, logistics, and so on and so forth. We like to be relevant in every area where we operate, and we have been very successful at that. Our figures show evidence of that success, and every quarter we make a point of breaking it down from an EBITDA standpoint and from an ROIC standpoint, how every area and every city has performed within our operations. As you see, nothing has changed.
Every crop, our EBITDA margin has increased, our returns over investment per stores also growing up. We are very encouraged when we look at state-based results, as you can see on the right-hand side of the slide. We have the EBITDA for the last 12 months based on Q3. Obviously, Rio Grande do Sul is the south that is carrying much of our EBITDA margin. But notice how Santa Catarina and Paraná are quickly approaching the same margins, and São Paulo is accelerating extremely well. We expect about BRL 1 million- BRL 1.5 million in average sales in São Paulo, so great margins. We also have a note here to say that we have already 1% market share in the capital alone. As we said earlier, this is the largest market in Latin America, and I think that we are performing really well with our brand. However, this does not change our focus.
We remain sharply focused on the South, where there is still a lot of room to grow in all three states. It is also important to say that both Santa Catarina and Paraná are performing better and better every quarter, and approaching the market in Rio Grande do Sul with a large set of stores which are still maturing. Even still, we see the very accelerated performance in these states. Exactly. We could not talk about expansion without talking about our customer. This is outstanding work that Panvel continues to do, and we like to break down some of these figures. This slide represents how we operate. Any company in retail has its first job to attract customers. You see that we have over 20 million customers registered in our customer base. That is close to 45% of the population in the South.
All these people are registered or have been registered with Panvel at some point, so they know our brand. After attracting so many clients, we need to activate those customers, which means to convert them into sales, make these clients go to our stores and make a purchase. This active base is as high as 7 million customers, is growing in a robust way, and we are focusing all our CRM tools, our digitalization efforts, are all focused on building loyalty among these customers and helping to increase their frequency in our stores and really making them loyal customers. A loyal customer is one that goes to our stores at least once every 15 days. This is a base of 1.5 million customers and with outstanding potential.
Growing from 25,000 to 1.5 million is a really steep pyramid, but makes it clear that increasing frequency and building loyalty is the most valuable work that any company, especially in retail, can do. As I said, we are using all our tools and all our efforts focusing on especially continuous use customers, which are the most valuable one. Our efforts in digitalizing our customers so that they will download the app and continue to buy with Panvel. All our communication efforts, promotional efforts. This is where what I said earlier, our huge focus on drugs comes from. Providing better drugs really builds loyalty, and we are seeing the numbers for that. Still on digitalization, we are still monitoring our omni-channel customers a lot closely. These are those customers that buy on all our channels, on the app, on the website, on brick- and- mortar.
These are about 14% of our customers at this point, and this is an indicator we are monitoring very closely so that we can create this virtuous circle that will allow us to convert these good customers into revenue. When we talk about our customers, we think about our associates and the productivity of our stores. We would be remiss not to mention the technology when talking about that as well. This is a topic that has been on the top of our minds for decades. Over the course of this presentation, we mentioned many things or many areas where Panvel is a pioneer. It is no different with generative AI. Again, Panvel is pioneering an effort by creating, for example, Sophia. This is our AI-based assistant. Our agent, as we are calling it, this is the new AI term that we have adopted.
An agent allows us to actually help our associates to address several different questions and better serve our customers. It feeds on our entire information base as well as the national operators base. Soon we will be making Sophia available to our end customers as well, because what this means is our service will be of an even higher quality. AI has to help us provide better service to make it faster, to make it more comprehensive. We have to make our customers' lives easier so that we can respond to them better. In addition to that, we also look at the use of AI in at least six different building blocks, which will allow us to unlock even more value for the company. We are investing heavily on tools that will help us in our pricing and sales mix, store productivity levels.
We are measuring our entire service time and cross-referencing all of that information. We are proposing new ideas because we want to be more agile and we want to be more productive. That is good for both sides. It is good for consumers, and it is good for Panvel. Inventory disruption. No customer likes to go into our store and not have the product that they are searching for. The more we use artificial intelligence or intelligence at large in that sense, the more seamless our service will be, because investing on inventories indefinitely is too expensive, and adding AI might be extremely affordable. It is a no-brainer. We are also investing in prevention. This is something we are doing to prevent losses. Also, we are taking great care of our turnover. This is very important in our operations. We are an operation that is characterized by being the first job for many people.
Understanding the data really well and applying these tools to better solve issues and have indicators about when turnover will increase, all of that is key for our stores to operate better. Again, this is a very important baseline for elements Panvel is looking at very closely to improve not only our customers' lives, but also the lives of our associates and our associate at large. Now we're moving on to the last part of our presentation, and I'd like to use these two last slides to share with you our positive overview about the end of 2024, which is really in keeping with everything we'd been talking about since the end of Q2. As I said before, it's relatively easy to plan. The challenge in retail really is to execute. However, we are very happy because we've been able to execute.
Here we have a few spoilers about Q4, in this case, for the month of October. As you can see, when you look to the sales side, we are growing our sales very quickly. Remember the 17% CAGR that I showed you. We are looking at a trend to actually outpace that, growing our sales by upwards of 20%. In October, we've actually exceeded our same store sales target. We've grown our mature same sales growth even more, and we go into Q4, which is the most substantial in terms of sales in the year with a lot of healthiness. It couldn't be any different. We continue to see that our sales will grow substantially this year. We will continue to grow and will be able to widen our margins in this second half of the year. We are looking very closely at our growth sales.
The increase in drug sales actually add pressure to our gross margins, but on the other side of that, we are working really well in generics and H&B. This was expected even because of a comparison basis effect. The basis in 2023 was really high. Growth was really high then. But when we look at Q4, we have a very favorable calendar, and ultimately, that's favorable for our gross margin as well. Expenses go on really well. We are looking at very healthy logistics expenses, and we really are reaping the benefits of investments we've made over the course of the year. The commitment to consistently grow the company's returns at large remains unchanged. We continue to expect good EBITDA margin expansion. As to our indebtedness, we expect our debt to be lower by the end of the year.
We'll lower our leverage in keeping with what we've telling you throughout these quarters. With that, I conclude this part of our conversation and make myself available for all your questions. Thank you so much for your attention.
We will now begin the question and answer session for investors and analysts. If you wish to ask a question, please click on the raise hand button at the bottom side of your Zoom screen. If at any point your question is answered, you can leave the queue by clicking on lower hand. Our first question comes from Ms. Laryssa Sumer with XP. Ms. Sumer, you may now ask your question.
Hello, everyone. Thank you for taking our questions. We actually have three. Let's start with the first one on the topic of reducing the wholesale side. At what level should we expect these operations to be normalized?
We just wanted to understand the decrease. Is this a reflection of the floods and the change in routes that you mentioned on the release? Should we expect the level to be normalized after Q3, or are we talking about a new normal for these operations? The second question now about your retail operations. You actually mentioned that in Q3 there are tailwinds for beauty and toiletries, but we also saw a change in the rate as a percentage of sales, but we just wanted to understand, what do you believe would be an ideal sales mix within the idea of selling more drugs, but also seeing your private label also performing really well. So what would be the ideal mix?
Lastly, if you could please add a little bit of color on your expansions, considering the change in the PIS/COFINS, and what measures you have in mind to outset those effects.
Thank you so much for your questions. Well, let's start with the first one about wholesale. I really liked the term that you used, the new normal. Wholesale will continue to have a very low share in our operations. The structural changes we've made are here to stay. When we look at our figures in the next few periods, they will be similar, with a small share from wholesale and a large share for retail. The same will be seen. In addition to that reduction, we expect very robust increase, continued robust increase in Panvel sales, all because of the elements that we've mentioned.
Whenever you update your models, you can consider only a small share of wholesale in our sales. Yes. This is a base that goes all to the second half of this year. You will see this mismatch between the growth in retail and the entire group, because only after that will our wholesale find its new normal. Yes, and this is very much in keeping with our strategy to lower logistics costs. We found this model that has a smaller pressure on costs and allow us to unlock a few benefits from a cost perspective that hadn't been unlocked in the previous model. Now, on HB, every quarter, HB gains some share, whether because of Black Friday performance or the approaching summer season, or the account where the numbers where Panvel does a lot better that has to do with Christmas sales.
This will be the case again this year, and it really benefits our margins. When we look a little bit further ahead, we should continue to grow on drugs a little bit more. That's our strategy. What we want from the HB mix is we would like it to grow at a similar pace, perhaps a little bit slower because we continue to understand that the floor of our stores, and that's true both for our brick- and- mortar and our digital stores, is one where we work our beauty and toiletries products in a slightly different way than our competition, whether in terms of product availability or in terms of specific products. We understand that there's an audience, especially a female audience, that go to Panvel, particularly because of those products. We are not outlining a significant loss in HB share.
Even though it's already very high, it's come to upwards of 38%. Drugs might gain maybe 1 percentage point or 2 percentage points in their share in sales. Another important thing to your question, I don't think I make any mistake when I say that no other competitor operates Black Friday the way Panvel does. We talked about slightly higher inventory levels. We are also preparing for that. We accelerate in October, and historically, November has our best sales figures carried primarily by hygiene and beauty. We do not expect this to be a period when this category will be outshined. Quite the contrary. To your last question about the decrease in ICMS on the price adjustment that we expect for the turn of March to April.
This is a discussion that's pervading the industry, and you're obviously following it very closely, and we are close to that as well. What our experience and our projections indicate is that both manufacturing and retail will find a way to keep these margins at a balance. We are not adding a significant risk of ultimately having to have a lower than normal margins between March and April. Again, a lot of discussions are underway, and we know that in the near term, there's a pressure from inflation that we are seeing in the market in the case for Brazil at large. We'll have to wait a little bit to see how that will turn out.
But it seems that because we've been addressing this issue a lot in advance, and I can speak for Panvel in that sense, we will use our devices alongside the industry to keep this gross margin at a healthy balance. We do not consider any loss in margins because of that. There are ways to do that. Even if we see that, I don't expect that, but even if we do have a lower average CM.
That's extremely clear, everyone. Thank you again for your answers and congratulations on your results.
Thank you, Laryssa.
Our next question comes from Vinicius Figueiredo with Itaú BBA. Mr. Figueiredo, please, you may proceed.
Hi. Good morning, guys. Congratulations on your results, and thank you for taking our question. I just wanted to talk a little bit more about your share growth. What drivers are you seeing for that?
I also found it interesting, the chart on the presentation where you can see since 2020 the loss of share in independent and franchise stores in the south. You could talk a little bit about that competition dynamics, both in terms of pricing, but also in terms of expansions and store shutdowns from your competition. Thank you.
Well, thank you for your questions, Vinicius. Well, how do we see the performance of our stores, especially our mature stores? They are actually showing robust growth. I think the best answer to that is our differentiation. Panvel has invested and focused on how it can set itself apart from the competition. Pharma retail is a very wide market with several different players, and we have some important players, both locally in every state and also a national player that operates really well in our area.
The challenge is, in the eyes of the customer, what can I do differently that is not only a lower price? It is not very good to compete only in price. I think that we have been successful. For example, focusing on drugs has offered good results and also improving our loyalty. We have improved our inventory levels. We have invested in customer-facing technology to better serve our customers and serve them more quickly. When we look at our consumer-facing indicators, active user base, frequency of sales, average ticket, and so on and so forth, they have been showing an acceleration, especially among customers who are chronic disease patients and continuous use patients. We have invested a lot in digitalization, so you can see whether on app downloads or digital share sales, we are serving these customers who want a different type of service really well.
Customers who want fast delivery, who want to purchase via the app, we do all of that a lot better than the average, and that builds loyalty among customers. So much so that we have a 30% market share in e-commerce in South Brazil, whereas the competition has about 7%. We are doing that really well. To a smaller degree, but with very great buzz in services as sales represents very little. It brings customers into the store, and we were able to join the Panvel Group to the focus on health and good service really well. A mother who wants to buy a drug for their kid will go to Panvel, or an elderly person who needs their medicine will go to Panvel. That expands their purchasing basket. It is a combination of several different things that we have been doing really well.
That is also combined with the personalization. The customer is buying via whatever channel they want. They have access to whatever mix of products they want. They have access to all the services they want and need. Ultimately, we can offer a very customized journey, not only via CRM, but even technology. Also considering the floor of the store and the performance of the store as a driver of loyalty. In addition to CRM, it is engagement that brings them in.
Perfect.
Going back to the other part of the question, both questions are connected. When you look at the competition to the market at large, as I said, we have local players and a national player, all of them very competent in their own way, with very different strategies among themselves. These are brands with very different biases in that sense.
What we notice is every local player is choosing to play the game a different way, whether we are talking about expansion or the product mix that they have in store. In one way or another, that has offered good room for Panvel to expand and to grow our value proposition. It is also the same when you look at average and small players. A reduction has already started, and we began to see that more noticeably back in 2023 in our wholesale. Via wholesale, we also sell to these smaller players. Back then, we saw an increase in delinquency that was very significant. It really is natural to see that because growing in retail is expensive and requires a high balance result, especially at a time of high interest, which is the case with prospects of that going up even higher in the next year.
I believe that many of these small and medium-sized players will not have enough steam to move forward, and this is a movement that we expect to continue and also bring opportunities for well-structured networks such as Panvel to grow. That is what is in our planning and strategy.
Perfect. That was great. Thank you, everyone.
Thank you, Vinicius.
Our next question comes from Iago Souza with Genial Investimentos. Please, Mr. Souza, you may proceed.
Good morning, Antonio and Ismael. Thank you for taking my questions. First of all, congratulations on the strong results to you and to the entire Panvel team. We have two questions from our side. First, we would like to talk about leverage and expansion. Your leverage level is 1.1x the EBITDA. What is Panvel looking at in terms of indebtedness in the next few quarters, especially with the BNDES and Finep lines?
How do those lines of funding affect your capital and your expansion plans going into next year? Is there any room to grow your expansion to over 60 stores, which is what you expect for 2024? That would be my first question. The second question, as to the impact on logistics and supply chain costs, we understand that in Q2, there was a significant impact that required adjustments in your logistics and your inventories. Is there any leftover cost that you expect this quarter? In addition to your operational leverage, is there any room for your EBITDA margins to grow, looking at these expenses, if there is still any?
That was perfect, Iago. Thank you for your questions. Well, let us talk about leverage first then. I think this is the topic we have addressed the most in the last two weeks.
When we look at our leverage, what we expect is to end 2024 with a much lower leverage level than what we had in Q3. There is no question about that. And one that will be equal to or lower than what we had in 2023. That is our perspective. It has not changed, and we continue to plan in a way that we can generate the funds to invest and grow Panvel. That is essentially our overall guidance. We are looking at 2025 and concluding our budget work, also looking at the same trend. We expect to end 2025 with a lower leverage level than what we had in 2024. We are not a company that likes to keep debt. As everyone knows, sustaining debt in Brazil is very expensive. The lines that we acquired are very good lines. They keep us afloat really well.
They will keep our gross margins, considering those lines, plus our issuance. Our growth will remain under the CDI that even allow us some arbitration in addition to being able to extend our debt profile. The financial benefit that we will enjoy here does not necessarily have to translate into more investment. We want to be very careful to remain as disciplined as we were and putting money really in what we understand will bring us good returns. There are also three major investment blocks in the company. First one, in our stores, expanding our store park and improving our stores. The second, logistics. So keeping our DCs and growing our DCs. We have nothing planned in terms of DC growth for 2025, maybe further ahead, but we open a new DC in São José dos Campos and also increased our DC in Mato Grosso do Sul.
These are increasing, and we expect more investments only further ahead. The third block is technology. These three lines of investment have to be very well connected with our EBITDA generation or what we expect there. It will also be in keeping with our leverage reduction. Going back to costs, as you mentioned, especially logistics costs, which was a very interesting question. There was actually a huge impact during the flood months. We had several expenses. We needed to hire people, then let people go, many expenses. This was a very confusing time. We also had an impact on our purchasing profile with different expenses. What we expect for Q3, logistics costs are already going down. They have been going down since the end of Q3, but you should see a more substantial decrease in Q4 versus Q4 of last year.
Now looking at 2025, one EBITDA lever for us going into 2025 will be the decrease in logistics and supply chain expenses. This is what we have, which is why I said that we do not plan for new investments in capacity and expansion. We will invest in logistics as we always do in maintenance, but not in expansion. There should be a decrease in this line moving forward. As for the opening of new stores, for the time being, we are still looking at opening 60 stores next year. We believe it makes sense to keep the same pace, but we are paying attention to all of those movements. However, looking at 2025 at this point, we maintain our expectation of 60 new stores, and we will also keep the same EBITDA margin over these risks and investments. The new wholesale model also keeps that.
This new model with a lower logistics cost also plays into that. Yes, precisely.
That was perfect. Thank you everyone, and congratulations again on your results.
Thank you, Iago.
The Q&A session is now closed. I will turn over to Mr. Antonio Napp for the company's closing remarks.
Once again, thank you very much for joining us, everyone, both those who are with us live and those who will look at and hear our results later. I would like to reinforce the positive message. This was an impressive Q3 in keeping with what we expected. As we said, it is one thing to expect these results and another altogether to look at them. We are very excited about Q4, and that is also how we are looking at 2025. This is a very encouraging market.
We are a pharma retail operator that is above average with several competitive differentiators, and all of this make us believe that we will continue to grow our sales, grow our margin, and increase our operations in this market, keeping Panvel's brand strong and our customers always pleased. Again, I would like to thank everyone for joining and wish you all a great day. We would also like to say that we are still available if you have any other questions. Please feel free to reach out to us. Thanks, everyone.
This concludes the Panvel Group's earnings conference. We appreciate everyone's attention and wish you all a great day.