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

Good morning, everyone, and welcome to the earnings presentation for the fourth quarter of Time for Fun and the end of the year 2023. This quarter, we hosted the second addition of Primavera Sound in Sao Paulo, one of the largest festivals in Europe. This was the first edition promoted by Time for Fun, and it was well received with great enthusiasm by the audience and praised by the critics. This year edition featured performance by The Killers, The Cure, Pet Shop Boys and other major acts such as Marisa Monte, Beck, Carly Rae Jepsen. In addition to the festival, fans also had the opportunity to attend exclusive concerts by The Killers and Pet Shop Boys in Sao Paulo and Carly Rae Jepsen in Rio de Janeiro. Also, in the fourth quarter, we held our first edition of the Tura Festival in Porto Alegre, starting geographic expansion of the brand. This replicates the excellence of the festival held in Sao Paulo, featuring prominent names in Brazilian music, such as Caetano Veloso and Emicida, among other talents, making the weekend in the Por do Sol amphitheater unforgettable. Our festival platform aims to value sustainability and inclusion as well as to deliver memorable experiences. Partnering with major brands enhance the audience experience at the event and also demonstrates the quality and trust in over 20,000 events held by Time for Fun. In the live music segment, we concluded the Eras Tour by the singer Taylor Swift, where more than 330,000 fans were moved by the 6 shows during her tour in Brazil. With this, we concluded the year of 2023 with over 330 events held. More than 1 million tickets were sold through our platforms for festivals, concerts, musicals and immersive experiences. We surpassed BRL 700 million in net revenue for the year, growing more than 113% compared to 2022. EBITDA for 2023 reached BRL 92.4 million, growing more than 130% year-over-year. Adjusted EBITDA, which is the way we measure our business performance, achieved BRL 79.7 million, a growth of 42% compared to the previous year. Our more balanced calendar of events held in the first and the second half of the year resulted in consistent results achieved throughout 2023. Annual net income was BRL 58.2 million, expanding 11 points of margin compared to the previous year due to our constant focus on operational efficiency and technology in the ticket sales. Regarding the company cash position, we ended the year with BRL 109.3 million in net cash, maintaining the necessary liquidity to continue to invest in our purpose in 2024, which is to unite people through exciting experiences to celebrate life. Now we will take a closer look at the company's financial performance. Financial and operational results. This quarter, we promoted 70 events where we sold 505,000 tickets compared to 57,000 tickets sold for 107 events in the fourth quarter 2022 as can be observed in Slide #5. This represents an increase of 785% in the number of tickets sold, with 35% fewer events promoted. These 70 events comprise the Primavera Sound Sao Paulo, the Tura Porto Alegre festivals, Taylor Swift's tour in Brazil and also the musical of The Lion King. In the same period last year, we held the Popload Festival, the Anastasia Musical and the Terror Park exhibition, among others. In the fourth quarter of 2023, net revenue totaled BRL 340 million, growing 625% compared to the same quarter of the previous year, driven by event promotions and sponsorships. Throughout 2023, we surpassed 1 million tickets sold, 97% more than the previous year. Net revenue reached BRL 701 million, making a 130% increase compared to 2023, with event promotion growing 208% and sponsorship growing 85%. Moving to Slide 6. We see a gross profit of BRL 44.9 million in this quarter, indicating 342% increase compared to the same period of last year. This expansion is due to margin mix with higher tickets sold. Over the year, gross profit grew 72%, reaching BRL 143 million. Still on this slide, the total SG&A for the year was BRL 46.3 million, an increase of BRL 3 million compared to 2022. However, BRL 3.6 million represent the impact of hyperinflation in Argentina. Moving to Slide #7. We see that the EBITDA for the fourth quarter of 2023 was BRL 28.7 million, and the recurring EBITDA was BRL 10.4 million, representing a growth of 127% compared to the same period last year, driven by events held by the company in the month of November. For the year of 2023, EBITDA reached BRL 92.4 million, a growth of 130% compared to the previous year. In both periods, we have adjustments related to agreements, judicial decisions in previous contingencies. Additionally, at the end of 2023, we record BRL 20 million in credit associated with tax negotiations of Lollapalooza, payment remittance concluded in January 2024 and also the impact of BRL 4.5 million attributed to the variable portion of the acquisition of the INTI ticketing services related to the performance in 2022. Therefore, the recurring EBITDA, free from the mentioned effects, reached BRL 79.7 million, a growth of 42% compared to the previous year. If we disregard the extraordinary currency devaluation carried out by the Argentina government in December 2023, the recurring EBITDA resulting from the consolidated operations of the corporation would reach [ BRL 90 million ] for the year of 2023. On Slide 8, we reported a negative financial result of BRL 26.2 million for the year 2023, impacted by the currency variation and the hyperinflation of Argentina throughout the year. However, there was an improvement of 31% comparing to the previous year due to the prepayment of debentures in July 2023. The company holds foreign currency reserves for the payments of international artists as well as local operations in Argentina and Chile. Moving to Slide #9. We presented the net results in the fourth quarter of 2023, we record a net income of BRL 24.3 million compared to the net loss of BRL 14.9 million in the same period of last year. This year-over-year improvement is due to holding of major events in the quarter such as Primavera Sound and the tour of the singer Taylor Swift in addition to the continued focus on cost and expense management. In 2023, we record a net income of BRL 58.2 million compared to a net loss of BRL 8.4 million in the previous year, growing 11 points margin year-over-year. Regarding the company cash flow showing on Slide #10 of the presentation, we ended the quarter with a net cash of BRL 109.3 million compared to BRL 103.4 million in 2022. The company cash EBITDA was impacted by the extraordinary currency devaluation in Argentina carried out in December 2023 as well as mismatch between cash and accrual for the Lollapalooza festival and preoperative costs of The Lion King musical. As I mentioned earlier, we will remain committed to expand our festival platform with licensed brands such as Primavera Sound as well as our own brands like Tura Festival. We plan to expand to more locations beyond Sao Paulo and Porto Alegre, offering a comprehensive experience for both audience and partner brands. With the expectation of the improvements in Argentina's economy, we hope to promote more events in the country in 2024. We have recently completed the third anniversary tour of the singer Laura Pausini and already have 2 concerts of Jessie J confirmed, one in Sao Paulo and another in Rio. The musical The Lion King will continue to run at Teatro Renault, thereby, reaching an even larger audience than during its first time in Brazil. Reinforcing our commitment to inclusion and sustainability in 2023, with the sales of social tickets alone, we allocated more than 1.6 million to dozen nonprofit organizations. We also donated over 5,700 tickets for The Lion King musical, ensuring that all sessions included sign language interpretation and audio description. Our festivals are 100% carbon neutral in addition to promoting the [indiscernible] conduction is strongly reinforced with our partners and suppliers. In 2023, we recycled more than 71 tons of waste and achieved 0 landfill certification at Primavera Sound and Tura festivals held in Sao Paulo. Finally, we continue to invest in our digital transformation strategy for the company through innovation in the ticket acquisition and the execution of our events by implementing efficient management tools [ willing ] to further enhance the audience experience with comfort and safety and maximize the returns of our business partners. Thank you very much for your attention, and I wish you all a great Thursday.