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

Good morning, everyone, and welcome to Time for Fun's Second Quarter 2024 Earnings Presentation. The Investor Relations team will be available to answer questions about the results reported here during the presentation for the chat of this videoconference. The consolidated financial information of Time for Fund Entertainment, presented herein is in accordance with the criteria of the International Accounting Standards, issued by the International Accounting Standard Board based on audited financial information. The non-financial information contained in this document as well as other operational information has not been audited by independent auditors and may include forward-looking considerations and reflect management's current perception and perspectives on the evolution of the macroeconomic environment, conditions in the live entertainment industry, the company's performance and financial results. Any statements, projections, expectations, estimates and plans contained herein that don't describe historical facts and factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements and include a number of risks and uncertainties. No investment decision should be based on the validity, accuracy or completeness of the information or opinions contained in this presentation. Under no circumstances shall the company or its subsidiaries, directors, officers, agents or employees be liable to any third party, including investors, for any investment decision made in reliance on the information and statements contained in this presentation, or for any resulting damage corresponding or specific. This presentation and its contents are proprietary information of the company and might not be reproduced or circulated in part and/or in full, without the prior written consent of the company. This presentation is up to date and Time for Fun is not obligated to update or revise it in the face of new information and/or future events, except for current regulations to which we are subject.

Good morning, everyone, and welcome to the presentation of the second quarter results of T4F in '24. The second quarter of 2024 was a period of transformations and new developments in our company. As part of a natural and planned movement, I assumed the leadership of Time for Fun with a commitment to drive the success and relevance of the business in the entertainment market, constantly seeking to enrich the audience's experience with live entertainment and anticipate market trends. We also appointed Angela Ferrante as CFO and Investor Relations Director. The combination of our experience and innovation will be crucial for the future success. This quarter, we held significant events in live music area, highlighting the third addition of the Turá Festival over a weekend at Ibirapuera Park in São Paulo, which featured major attractions such as Djavan, Chitãozinho & Xororó, Alcione, Adriana Calcanhotto and many others supported major partner brands and offering a variety of experiences to an audience of over 20,000 people. In addition, we produced the indoor show of the band City and Colour at Espaço Unimed in São Paulo and the Show of Singer Jessie J in São Paulo and Rio de Janeiro. In this area of live music, we continue the geographic expansion of the Turá Festival, which will be held in Recife in August with a lineup that includes Lulu Santos, Jota Quest, Baco Exu do Blues, Joelma, Lagum and many others. In addition, the Primavera Sound Festival will mark our second semester along with the indoor pop load gig shows of the bands, The Hives and Travis. In the Family and Theater segment, during the second quarter, we held 91 performances of the musical the Lion King at the Renault Theater. In July '24, after a year on stage, this musical seasons ended. Starting in August, we will present the coproduction of the show, Minha Vida em Marte staring actress, Mônica Martelli, followed by the musical hairspray, which will be on stage until the end of this year. Thus, we ended the quarter with 96 promoted events totaling $55.1 million in net revenue and a 4% reduction compared to the same period last year. Our EBITDA was $7.3 million negative, and we had a net loss of $24.9 million were $5.1 million are hyperinflation effects of our operation in Argentina that has no impact on cash. After Angela's explanation about the financial and operational results of the period, I will return to talk about the upcoming events.

Thank you, Francesca, and good morning, everyone. Financial and operating results. In this quarter, we hosted 96 events selling 82,000 tickets compared to 83,000 tickets for 87 events held in the second quarter of 2023, as shown on Slide 5. This means a 10% increase in events and a 1 percentage decrease in ticket sold. These 96 events included 2 concerts by Jessie J, one by City and Colour, 2 days of festival Turá at Ibirapuera Park in São Paulo and 91 sections of the music called The Lion King, whereas in the second quarter of last year, we had 2 days of Festival Turá at Ibirapuera Park and a concert by French singer Zaz in São Paulo. Additionally, as a co-producers, we had 34 sessions of Anastasia at Teatro Renault and the fifth day of the immersive Marvel Avengers S.T.A.T.I.O.N. experience at Villa-Lobos Shopping in São Paulo. In the accumulated first 6 months of this year, we promoted nearly the same number of events as the first half of the previous years, just 1 less with 176 compared to 177 events. This decrease also resulted in a 7% drop in the total number of tickets sold in the first half of this year compared to the same period last year, mainly due to the impact of the last edition of the Lollapalooza Festival held in March 2023. In the second quarter of 2024, net revenue reached BRL 55.1 million, a 4% decrease compared to the same quarter last year. In sponsorship, both in second quarter of 2024 and second quarter of 2023, we had the impact of sponsorships for Festival Turá in São Paulo. In second quarter of 2023, we also had sponsorships for the Marvel Avengers S.T.A.T.I.O.N. immersive experience, which explains the 29.4% reduction when comparing the periods in ticketing food and beverage and venues in second quarter of 2024 compared to second quarter of 2023. There was a 38.4% reduction in net revenue reaching BRL 24.5 million. This reduction is related to opening of sales for Taylor Swift's shows in second quarter of 2023. In event promotion in second quarter of 2024 compared to second quarter of 2023, we saw a 285% increase in net revenue, mainly due to the musical, The Lion King and live music events. Moving to Slide 6. We see a gross loss of BRL 23 million negative this quarter compared to BRL 32.3 million in gross profit in the same period last year, a 107% reduction when compared to the same period in 2023. This reduction is related to opening of sales for Taylor Swift's shows in second quarter of 2023 and maintaining costs for The Lion King Musical in second quarter of 2024. On this slide, we also see that SG&A remained practically stable when comparing the first half of this year with the first half of 2023. The 25% increase in SG&A in the second quarter of 2024 compared to the same period last year is due to higher sales expense and onetime expenses with consulting and legal adviser services. Now on Slide 7, we see that the EBITDA for the second quarter and the first half of 2024, was negative at BRL 7.3 million, while in the first quarter of this year, EBITDA broke even. The EBITDA for this half of this year compared to the same period last year shows a decrease from BRL 49.2 million in first half of 2023. The negative variation of BRL 56.5 million is mainly due to the impact of the last edition of the Lollapalooza festival in the first half of 2023, as mentioned earlier as well as the opening of sales for Taylor Swift shows in the same period last year. In second quarter of 2024, EBITDA was negative at BRL 7.3 million, a negative variation of BRL 29.3 million compared to BRL 22 million in second quarter of 2023. On Slide 8, we showed the negative financial result of BRL 15.5 million in the first half of 2024, remaining practically stable in the half year comparison. The reduction in financial expenses results from the lower debt level contributing to the improvement in financial income and expenses being positive at BRL 0.9 million in first half of 2024 compared to negative BRL 2.3 million in the first half of 2023. The unfavorable impact is restricted to noncash effects due to hyperinflation in Argentina and exchange rate variations from transactions with related parts in dollars, impacted by the depreciation of currencies in the countries where we operated relative to the dollar during the period. Moving to Slide 9, we see the net profit or loss. The net loss in the first half of 2024 was BRL 28.2 million, a negative variation of BRL 58.4 million compared to a profit of BRL 30.2 million in the first half of 2023. In second quarter of 2024, the net loss was BRL 24.9 million, a negative variation of BRL 41.2 million compared to a profit of BRL 16.3 million in second quarter of 2023. These results were influenced by reduced revenues, mainly due to the impact of the last edition of the Lollapalooza Festival and the opening of sales for Taylor Swift shows in the same period last year, cost maintenance and unfavorable monetary and exchange rate variations this year. Regarding the company's cash shown on Slide 10 of the presentation, we ended the quarter with gross cash of BRL 89.2 million and net debt of BRL 8.5 million compared to gross cash of EUR 132.7 million and BRL 150.8 million in the second quarter of 2023. On Slide 11, we detailed the cash flow. This semester, we consumed BRL 6.3 million, while in the first half of 2023, it was BRL 52.7 million. The effect: One, in operating cash flow, a consumption of BRL 74.7 million this quarter, mainly due to payment of expenses is still associated with content sold in 2023, ending in first quarter of 2024, with settlement of Lollapalooza accounts for BRL 24 million and Taylor Swift for BRL 38.2 million in first half of 2024; two, investment cash flow in the first half of 2024 was only BRL 1 million negative, enforcing the low level of immobilization in hand to our business model; three, net cash generated in the first half of 2024 from finance activities of BRL 12.3 million is due to the holdover and extension of operating maturing in June with Bradesco for BRL 40 million with a new operation contracted in May 2024 for BRL 60 million maturing in February 2025. Both the maturated and the current operation were backed by swaps with a final cost of CDI + 2.08% per annum and CDI + 1.65% per annum for the most recent one. Thank you all for your attention. Now Francesca will conclude with the presentation of our pipeline.

Thank you, Angela. As mentioned earlier, we will promote the Turá Recife Festival in August and already have a new date for Turá Porto Alegre in the second half of '25, postponed due to the rains in Rio Grande do Sul. Still in festivals on November 30 and December 1, we will hold Primavera Sound in São Paulo. In indoor shows, the shows of the band, The Hives and Travis in São Paulo are confirmed in October and November, respectively. Both are part of the traditional pop load gig series of shows. In Family and Theaters, since August 2, we started the coproduction of the event, Minha Vida em Marte with Mônica Martelli at Renault Theatre, which will be on stage until the end of the month. Next, the musical, Hairspray starring Tiago Abravanel will be on stage until the end of the year. Looking to the future, we remain optimistic and cautious about the opportunities that arise. We worked tirelessly to strengthen our purpose of bringing people together through exciting experiences. Thank you very much for your attention, and I wish you all a great Thursday.

The announcement of the results is complete. Thank you for your participation. The Investor Relations team remains available to answer questions regarding this presentation in the chat of this videoconference or later by e-mail. You can now disconnect your lines. Thank you very much.