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

Good morning, everyone, and welcome to our conference call for the first quarter of 2023. Since now, our Investor Relations team is available to answer questions about the results reported here through the chat of this video conference. We have in the first quarter of this year an intense period, both in number and in diversity of events, which led us to an EBITDA of BRL 27.2 million, 42% higher than the BRL 19.2 million recorded in the same period of 2022. Net income was BRL 13.9 million, more than doubling the BRL 6.6 million in the same period of the previous year. While in 2022, the result was composed mostly by Lollapalooza. This year, we also had the second edition of the Grls Festival, the Paramore to 6 contents in 4 countries, the Black Rose concept in Sao Paulo and the continuity of the music of Anastasia at [indiscernible]. As we previously announced, the promotion of test addition of Lollapalooza Brazil in March and our successful partnership with C3 presents. In 10 years of contract, we generated more than 55,000 direct jobs in 8 additions of the festival. About 500 artists performed attracting more than 2 million patterns during this period, was transformed Interlagos track into the true city of music. This demonstrates our unique ability to promote this type of event. In this sense, after the great success of the first edition held last year, we went on sale for the second edition of the Tura festival that you placed in June at Ibirapuera park. After the explanations of Diego, our Investor Relations Officer, about the financial and operating results of the period, I would like to talk about the events to come.

Thank you very much, Fernando. In this quarter, we promoted 90 events with 354,000 tickets sold against 26 events promoted in the first quarter of 2022, selling over 303,000 tickets as demonstrated on Slide 5. From these 90 events, 16 were live music ones. They are composed by 2 days of Grls festival, 3 days of Lollapalooza Brazil, [indiscernible] in addition to 6 performance of Paramore and one of the Black Rose. The 16 shows sold a total of 323,000 tickets, 16 more than the recorded last year. In family theater, 74 events refer to sessions of the musical Anastasia with a total of 31,000 tickets sold, 28% more than the 24,000 tickets sold in the first quarter of 2022 for the premier sessions of the musical The Addams Family. The net revenue in the first quarter of 2023 was 37% higher when compared to the first quarter of 2022, distributed across all segments we operate. In event promotion, the increase was 14%, mainly due to the bigger number of events. Here, we highlight that [ T4F ] is a coproducer of the musical Anastasia, and therefore, we do not directly recognize the revenue for the promotion of the event. We recognize the share of the result at the end of the season in addition to ancillary revenues recognized in the lines of box office operations, food and beverage and venues. In the second line, we had 69% higher revenue in this quarter compared to the same period of the last year, representing BRL 47.4 million against BRL 28.1 million. This increase was mainly due to the food and beverage revenue from the events held in the period in addition to the service fee and the sale of third-party tickets through our ticket companies. In sponsorship, we recorded BRL 69.2 million, mostly related to Lollapalooza 2023 in addition to Grls and Paramore. This increase was 82% when comparing to the BRL 38.1 million recording the same period of 2022. It is justified by the postponement of Lollapalooza 2020 to 2022 due to the COVID-19 pandemic, making part of its results have been recognized between the years of 2019 and 2021. Moving on to Slide 6. We see a gross profit of BRL 37.3 million in the first quarter of 2023, 27% higher when compared to the same period of 2022 of BRL 29.4 million. This increase is due to the greater amount of content promoted in the first period of this year against the first quarter of 2022. Also in this slide, we see a slight growth of 4% in SG&A in the first quarter of 2023 compared to the same period of 2022, below the inflation of the period, which represents a decrease in SG&A in real terms. Total SG&A was BRL 11.6 million in the first quarter of this year. versus BRL 11.2 million in the first quarter of the last year. This stability reflects the company's focus on controlling expenses. Other income and expenses were positive by about BRL 100,000 in the first quarter of 2023, composed mostly of the reversal of contingency provisions versus BRL 500,000 negative in the first quarter of 2022, in this case, mostly formed by the composition of provisions for contingencies. On Slide 7, we see that the EBITDA of first Q 23 was BRL 27.2 million, a growth of 42% compared to the EBITDA of BRL 19.2 million in the same period last year. Recurring EBITDA of BRL 27.4 million in the first quarter of 2023 represents a growth of 25% compared to first Q '22 which totalized BRL 21.9 million. In both periods, the adjustments refer to lawsuits, court decisions and contingency provisions recognized as other operating expenses. On Slide 8, we demonstrated the financial result, negative by BRL 9.8 million in the first quarter of 2023, better by 10% when compared to the same period of 2022. Of this result, approximately BRL 400,000 positive refers to the difference between financial revenues and expenses, composed of income from investments and partially offset by interest on debentures. In the same period of 2022. This ratio was negative by BRL 1.2 million, and its improvement reflects the company's stronger cash structure with a lower level of indebtedness and consequent higher net cash. In addition, we have effects that do not directly affect cash in terms of exchange, monetary and hyperinflationary variation. The exchange rate variation recorded in the period was BRL 4 million due to the appreciation of the Brazilian Real against the American dollar in the period of 7.2%, reflected in the value of the company's foreign courts reserves intended for the payment of international artists as well as for local operations in Argentina and Chile. In addition, the hyperinflationary variation was BRL 3.9 million against BRL 2.1 million in the same period of 2022 of negative. This is because of the inflation in Argentina, which increased from 16% to 22% between these quarters. Moving now to Slide 9. We have the net result. In the accounting view of this quarter, we had net income of BRL 13.9 million and BRL 15.3 million in direct review against BRL 6.6 million and BRL 9.5 million, respectively, in the same period of 2022. The adjustments applied to net income are mainly due to the same reasons as those apply to EBITDA explained earlier about cashing indebtedness as shown on Slide 10 of the presentation, we closed the quarter with gross cash of BRL 178.5 million and net cash of BRL 84.3 million. These numbers compared to, respectively, BRL 185.4 million and BRL 93.6 million in the last quarter of 2022. The decrease against the fourth quarter of 2022 is basically due to the payments related to Lollapalooza held on the last weekend of March. In comparison with the same period of the previous year when gross cash was BRL 193.1 million, and net cash was BRL 55.3 million. The main reason for the variation was the amortization of 2 installments of the debentures. This amortization occurred in May and November 2022 in the total amount of BRL 40 million, decreasing gross cash and increasing net cash given the operating cash generation of the period. On Slide 11, we detail cash flow. In this quarter, we consumed BRL 6.9 million, while in the first and in the fourth quarter of 2022, we consumed, respectively, BRL 36 million and for the BRL 7.2 million. The effects were in operating cash flow consumption of BRL 13.7 million in this quarter, mainly due to the payment of costs related to the events held in the period. This consumption is lower than that of the same period last year due to the higher receipt of sponsorships since in the case of [indiscernible] 2022, much of the amounts have already been received in previous years. The investment cash flow of BRL 1.3 million is composed of about BRL 600,000 related to management softwares and evolution of ticket platforms in line with the previous years. So that, we saw about BRL 700,000 related to renovations at the [indiscernible]. As a result of the company's better cash structure already highlighted, we have reverted the financial cash flow of consumption in the last quarters to a generation of BRL 2 million in the first quarter of 2023. -- with a higher volume of financial revenues. In the last quarter of 2022, we had the effect of the payment of BRL 20 million related to the amortization of the second installment of the debentures plus BRL 8.3 million of interest. Finally, there was a positive exchange rate variation of BRL 3.2 million due to the compensation of the noncash effect by the depreciation of the Brazilian real against the Argentine peso and the American dollar offer in currency and assets. Thank you all for your attention. Now Fernando will conclude with the presentation of our pipeline.

Thanks, Diego. As I mentioned earlier, we will promote in June, the second edition of the Tura Festival, a celebration of Brazilian music, which will take place on June 24 and 25 on the external stage of the ibirapuera auditorium. Among the many attractions this year, we highlight [ Georgia Bangor, Zacapa and Gobert Juan Fei ]. Still in the live music segment, in April, we went on sale for the concert of the tenant single [ ala Pacini ], which will take place in March 24. As expected, the demand for tickets was huge, even with the great advance of the event. In addition to this, we held in April a concert of the trending [indiscernible] also with great success of public. And in family and theater last weekend, we had the last presentation of the musical Anastasia are in a fast pace for the next production, which will be released and have the sales started soon. In addition, we continue to move forward with immersive experiences this time with a vendor station. -- which showcases the cutting-edge knowledge and science that inspires Marvin studio shows, emerging audience in the universe of the Avengers franchise. We continue to work hard to announce some new contents, whether within our platform or festival tools of great artists of Brazilian and international music and family and theater events. Thank you very much for your attention, and I reach you all a great Thursday. Our Investor Relations team is available to answer questions regarding this presentation in the chat of this video conference or later by e-mail.