T4F Entretenimento S.A. (SHOW3.SA) Earnings Call Transcript & Summary

Good morning to everyone, and thank you for participating in Time For Fun's earnings call for the third quarter of 2025. We started the quarter with the concerts of the South Korean band, the Rose in Sao Paulo with sold-out tickets. At the Teatro Renault, the musical Wicked continues to be performed with box office success. And in August, we presented the show Minha Vida em Marte, starring Monica Martelli, which despite the short season, had positive results. During the quarter, we announced the tour of Singer Marisa Monte's tour, whose presale was a great success with several squares sold out. We closed the period with the announcement of the advanced sales of the musical Shrek, which will premiere at the Teatro Renault in 2026. Throughout the quarter, we also made progress in preparations for the Turá Porto Alegre Festival, which will be held in the fourth quarter, in addition to the announcement of new productions for 2026, including the musicals Ópera do Malandro and Shrek and the concert by Singer, Jorja Smith. Let's now comment on the main financial highlights for the quarter. On Slide 5, we highlight operational and financial performance. Net revenue for the quarter was $33 million, a reduction of 13.6% compared to the third quarter of '24, reflecting the lower number of events held. There were 11 in this quarter against 40 in the same period of the previous year. The event promotion line totaled $3 million with the performance of the concerts by the Rose Band and the play Minha Vida em Marte against $5.7 million in the third quarter of '24. The ticketing, food and beverage and venues operation totaled $28.4 million, explained by the sales performance of Marisa Monte tour and the operations of Teatro Renault. On Slide 6, we see gross profit, which reached $12.5 million, a growth of 212% compared to the third quarter last year. Gross margin advanced 37.9%, a gain of 27.4 percentage points. This result was driven by the opening of sales of Marisa Monte's tour, which generated ticket revenue this quarter, while the associated costs will be recognized as the show performed. This dynamic contributed to the expansion of the margin, added to the operational efficiency and the good performance of the production in theaters. Still on Slide 6, SG&A totaled $14.5 million, an increase of 32%, impacted by the constitution of a provision for expected credit loss of $4.5 million related to an old offshore receivables portfolio. In other operating expenses, we recognized negative $19.3 million, mainly related to tax, civil and labor provisions. Moving on to Slide 7. Reported EBITDA was negative $19.5 million compared to negative $0.8 million in the same period of the previous year. When excluding these nonrecurring effects, adjusted EBITDA is positive at $2.1 million, evidencing the operational progress. Moving on to Slide 8, we see the financial results. Net income was negative at $2.9 million, an improvement of 66% compared to the third quarter of '24. The main changes were the result from income from financial investments, offset by the passive interest of negative $1.8 million related to the financial charges of short-term debt. On Slide 9, we look at net income. The company recorded a loss of $25.9 million compared to negative $15.1 million in the third quarter of '24. The result was affected by nonrecurring effects that totaled around $21.6 million. Without these effects, adjusted net income would have been negative around $4.3 million. The company's cash flow, as shown on Slide 10 of the presentation, ended the third quarter of '25 with gross cash of $97.8 million against $89.2 million in the same period of the previous year. Total debt was $50.2 million, resulting in net cash of $52.8 million. On Slide 11, we present the company's free cash flow in the period, positive at $16.9 million, 22% higher compared to the third quarter of '24. The positive movement is mainly due to the generation of operating cash of $20.6 million in the third quarter of '25, 48% higher than the previous year due to the opening of sales of Marisa Monte's tour. On the other hand, the flow of financing closed with an outflow of $3.7 million related to the payment of principal and interest on short-term debt. Now I'll introduce you to the pipeline. For the fourth quarter and the beginning of '26, we have a confirmed schedule. In live music performances by Marisa Monte's and Polo & Pan are confirmed in addition to Turá Porto Alegre Festival, which marks the cultural resumption of Rio Grande do Sul after the floods in 2024. In the Family and Theater segment, Wicked is still playing at the Teatro Renault, and we already have confirmed the premiers of Ópera do Malandro and Shrek in 2026. We remain attentive to the opportunities in the sector and committed to delivering high-quality experiences to both the public and our partners. In closing, I reinforce our commitment to generate sustainable value to our shareholders and partners. We ended a quarter of important accounting adjustments with a real operational improvement and a solid pipeline for the next cycle. I thank everyone for their trust and reaffirm our purpose of bringing people together through exciting experiences that celebrate life.