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

Good morning. Welcome to Time For Fun's Third Quarter 2024 earnings presentation. The Investor Relations team will be available to answer questions about the results reported here during the presentation through the chat tool of this video conference. The consolidated financial information of Time For Fun Entertainment presented here is in accordance with the criteria of the International Accounting Standards issued by the International Accounting Standards Board based on audited financial information. The nonfinancial information contained in this document as well as other operational information has not been updated 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 here 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 results made corresponding or specific. This presentation and its contents are proprietary information of the company and may not be reproduced or circulated in part and/or in full, without the prior writing 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 our future events, except for current regulations to which we are subject.

Good morning, everyone, and welcome to Time for Fun's Third Quarter 2024 Earnings Presentation. In July, we wrapped up the season of the musical The Lion King, which ran for 13 months at Teatro Renault. In August, we presented the show Minha Vida em Marte, staring actors Mônica Martelli, which sold out. In September, we launched the musical Hairspray in a rental format, maintaining our quality programming in the Family and Theater segment. In the Live Music area, we announced the postponement of Primavera Sound Festival in São Paulo, a decision grounded in Time For Fun's commitment to maintaining the highest level quality standards for our events. We continue to carefully select profitable opportunities that fully meet the expectations of our consumers and partners. On the other hand, in August, we held the first addition of Turá Festival in Recife, increasing brand visibility and expansion to other cities in Brazil with performances by artists like Jota Quest and Lulu Santos. This concludes the quarter during which we promoted 40 events totaling $38.4 million in net revenue, a 36% reduction compared to the same period last year. Our EBITDA was negative $0.7 million, and we reported a net loss of $15.1 million. We will now explain the financial variations. This quarter, we promoted 40 events selling 51,000 tickets compared to 154,000 tickets sold for 91 events held in the third quarter of '23 as seen in Slide 5. This represents a 51% reduction in promoted events and 67% drop in tickets sold. These 40 events consisted of 2 days of the first edition of Festival Turá in Recife, and 38 sessions of the musical The Lion King, while last year, our operation included the debut of the Lion King Musical with 91 sessions over the 3 months without any live music events. Additionally, this quarter included 10 sessions of the Play Minha Vida em Marte and 24 sessions of Hairspray, reinforcing our theatrical production portfolio. In the first 9 months of this year, we promoted fewer events than in the same period last year with 214 compared to 268 events, a 20% decrease. Total tickets sold fell 78% over the 9 months compared to last year, mainly due to the impact of the last edition of Lollapalooza Festival in March 2023. In net sponsorship revenue, we saw a 54% decrease compared to the third quarter of 2023. In '23, we received sponsorships from Festival, while this quarter's amount primarily refers to sponsorship of the Recife Edition of Turá. Moving on to Slide 6. We see a gross profit of $4.1 million this quarter compared to $28.7 million in gross profit during the same period last year. The decline is directly linked to the previously reported lower revenue. In this slide, SG&A also saw a 2% decrease compared to the first 9 months of last year with an 8% reduction of SG&A for the quarter. On Slide 7, we see that third quarter EBITDA was negative $0.7 million and the year-to-date negative of $8 million. Year-to-date EBITDA compared to the same period last year shows a significant variation due to the impact of the last Lollapalooza edition, the opening of ticket sale for Taylor Swift shows and the Primavera Sound Festival, which took place in the same period in '23. The third quarter of '24 EBITDA decreased by $15.3 million compared to $14.5 million in the third quarter of '23. On Slide 8, we present a financial result of negative $24.1 million for the 9 months of 2024, remaining stable compared to the half year period with a $0.5 million improvement. Exchange rate, monetary and hyperinflation effects amount to a negative $23.1 million over 9 months of 2024, a decrease of $1.4 million compared to the same period in '23. This was due to the depreciation of local currencies against the dollar, the continuous devaluation of the Argentine peso against the real and local inflation. However, we observed better macroeconomic conditions with more controlled inflation and reduced currency volatility. In the third quarter of 2024, net financial result improved by 7% from negative $8.6 million compared to negative $9.3 million in the third quarter of '23. This performance reflects the continuity of debt control measures, cash management and the effects of exchange rate impacts, which were partially mitigated by management. Despite a weaker operational result, we maintained capital structure control positively affecting the financial results. Moving to Slide 9. We look at net profit loss. The net loss for the 9 months of '24 was $43.2 million compared to a profit of $33.9 million for the same period in '23. In the third quarter of '24, net loss reached $15.1 million, a reduction of $18.8 million compared to the profit of $3.7 million in the third quarter of '23. These results were influenced by revenue reductions as previously explained. Regarding the company's cash, as shown in Slide 10, we ended the quarter with a gross cash of $103 million and debt of $65.8 million compared to gross cash of $172.5 million and $89.2 million in the third quarter of '23 and the second quarter of '24, respectively. On Slide 11, we detail the cash flow. The effects were as follows, in operational cash flow, a generation of $3.9 million this quarter was primarily due to ticket operation for both incurred and upcoming events and sponsorship for incurred events. Year-to-date, the consumption was mainly due to payments associated with content sold in 2023. Investment cash flow was minimal, reinforcing the low level of immobilization inherent to our business model. Net cash generated by financial activities in the 9 months of '24 was $11 million, mainly due to the rollover of operations with Bradesco in the previous quarter with positive operational generation in the third quarter contributing to improved net debt. Looking ahead for indoor shows, the confirmed shows include Franz Ferdinand in the Popload Gig series on November 14 and Incubus in April 2025 in n São Paulo and Curitiba. We promoted shows by The Hives and Travis in São Paulo in October and November, respectively. In Family and Theater at Teatro Renault, the musical Hairspray, staring actor, Tiago Abravanel, will run until the end of the year. Starting in January, the musical about Clara Nunes, starring Vanessa da Mata, will have a short season. We conclude the quarter confident that despite challenges, we are strengthened and ready to seize new opportunities. Thank you for your attention, and I wish everyone 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 tool of this video conference or later by e-mail. You can now disconnect your lines. Thank you very much.