T4F Entretenimento S A : 2Q23 Conference Call Transcription

Transcrição da Teleconferência Resultados do 2T23 T4F (SHOW3 BZ)

10 de agosto de 2023

FINANCIAL AND OPERATING RESULTS - DIEGO PARENTE

Thank you very much, Serafim.

In this quarter, we organized 87 events, for which we sold 82 thousand tickets, compared to 85 events held in the second quarter of 2022, with the sale of 92 thousand tickets, as can be seen on slide 5.

Out of these 87 events, 3 were Live Music ones, including 2 days of the Turá Festival and 1 concert by ZAZ in São Paulo. These events sold a total of 20 thousand tickets, compared to 34,000 tickets sold in the same period last year, when we promoted the Brazilian tour of McFly.

In Family and Theater segment, we had 34 sessions of the musical Anastasia and 50 sessions of the Marvel Avengers S.T.A.T.I.O.N immersive experience. These events sold 22 and 40,000 tickets respectively. This result led to 7% more tickets sold than the 58,000 tickets sold in the second quarter of 2022 for 76 performances of the musical The Addams Family.

In the acumulated total of the first six months of this year, we organized 59% more events than in the first half of 2022, totaling 177 events compared to 111. This increase also led to a 13% increase in the total number of Tickets Sold.

The Net Revenue for the second quarter of 2023 was 15% higher when compared to the second quarter of 2022. In Box Office, Food and Beverage, and Venues Operation, the increase was 40%, primarily due to the higher number of events and the service fee revenue from the tickets sales of Taylor Swift's shows. Additionally, sponsorship revenue increased by 319% compared to the second quarter of 2022. This increase was mainly driven by sponsorships for the Turá festival, which took place in June this year, while in 2022 the event was held in July, impacting third-quarter revenue.

On the other hand, the Event Promotion segment decreased by 70% compared to the second quarter of 2022. As afore mentioned, last year we promoted 5 concerts from McFly's Brazilian tour, in addition to other rescheduled indoor shows from before the pandemic.

Looking at the year-to-date period, the growth in Net Revenue was 32%, distributed across all segments. Event Promotion grew by 2%, while Box Office, Food and Beverage, and Venues Operations grew by 54% and Sponsorships by 98%. This improved revenue is primarily a result of a strong first quarter in the Event Promotion segment, combined with positive results from other revenue lines in the second quarter of this year.

Moving on to slide 6, we see a Gross Profit of R$ 32.3 million in the second quarter of 2023, a 45% increase compared to the same period of 2022, which was R$ 22.3 million. This increase is due to the revenue mix, with a higher representation of tickets fees, which have more favorable margins than Event Promotion.

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Transcrição da Teleconferência Resultados do 2T23 T4F (SHOW3 BZ)

10 de agosto de 2023

On this slide, we also observe a 34% reduction in SG&A in the second quarter of 2023. The total SG&A was R$ 7.6 million, compared to R$ 11.4 million in the second quarter of 2022. For the year- to-date period, the reduction was 15% compared to the same period of the previous year. This reduction reflects the Company's focus on cost control, as previously highlighted in earlier periods.

In Other Income and Expenses, we recorded negative R$ 3.9 million in the second quarter of 2023, compared to negative R$ 3.1 million in the second quarter of 2022. In both cases, the majority of this value is primarily composed of provisions for contingencies.

Moving to slide 7, we see that the EBITDA for the Second Quarter of 2023 was R$ 22.0 million, a 134% increase compared to the EBITDA of R$ 9.4 million in the same period of the previous year. The Recurring EBITDA of R$ 26.1 million in the Second Quarter of 2023 represents a 116% growth compared to the Second Quarter of 2022, which totaled R$ 12.1 million. In both periods, the adjustments refer to agreements, court decisions, and provisions for contingencies, recognized under "Other operating expenses".

This growth was reflected in the year-to-date EBITDA. The first half of 2023 grew by 72% compared to the EBITDA of the same period in 2022, totaling R$ 49.2 million and R$ 28.6 million, respectively. In terms of Recurring EBITDA, increase for the Second Quarter of this year compared to the same period of the previous year is 51%, rising from R$ 35.5 million to R$ 53.5 million.

On slide 8, we detail the Financial Result, which was negative by R$ 5.5 million in the second quarter of 2023, reversing the positive result of R$ 1.3 million recorded in the same period of 2022. Out of this result, approximately negative R$ 2.7 million are relate to the difference between financial income and expenses, mainly composed of interest on debentures and federal tax installments, partially offset by investment income. In the same period of 2022, this relationship was also negative at R$ 3.6 million, and its improvement is primarily a result of lower interest on debentures, due to amortization of installments during the period.

Additionally, there are no cash effects, in the lines of exchange, monetary, and hyperinflation variation. The exchange rate variation recorded in the period was positive by R$ 3.2 million, due to the appreciation of the Brazilian real against the american dollar, at 5.1%, reflected in the value of updates to foreign currency-denominated loans with related parties, specifically debts between our operation in Brasil and Chile. Previously, this variation was offset by the cash balances we held on dollar that were bigger than the current one. Furthermore, the hyperinflation variation was negative by R$ 4.4 million, compared to negative R$ 3.6 million in the same period of 2022, both are result of the inflation in Argentina, which increased from 20% to 29% between these quarters.

Moving to slide 9, we have the Net Profit. In the accounting view for 2Q23, we have R$ 16.3 million, and R$ 16.7 million in the recurring view, compared to R$ 8.6 million and R$ 13.0 million, respectively, after adjustments in the same period of 2022. The adjustments applied to Net Profit are due to the same reasons as those applied to EBITDA, explained earlier. In the year-to-date view,

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Transcrição da Teleconferência Resultados do 2T23 T4F (SHOW3 BZ)

10 de agosto de 2023

Net Profit was R$ 30.2 million, compared to R$ 15.3 million for the first six months of 2022, and R$ 31.

8 million compared to R$ 22.4 million in the recurring view.

Regarding the Company's cash position, as shown on slide 10 of the presentation, we ended the quarter with a Gross Cash of R$ 132.7 million and Net Debt of R$ 18.0 million, compared to a Gross Cash of R$ 185.4 million and Net Debt of R$ 178.5 million in the first quarter of 2023. This decrease from 1Q23 is mainly due to the payment of fees for Taylor Swift's performances.

In June, we contracted loans under Law 4.131/62, short-term credit lines mainly dedicated to the payment of Taylor Swift's fees, which temporarily increased our indebtedness, resulting in net debt in the period. However, we emphasize that, as stated in the Material Fact, we redeemed all debentures issued by the Company on August 1, and will also liquidate the other contracted financings within the Third Quarter of this year.

Therefore, we will end the next quarter once again with a net cash position and will seek financing lines according to the need for new projects. This way, we aim to operate in a more agile and efficient manner, maximizing the relationship between Revenue and Financial Expenses.

When comparing with the same period of the previous year, when Gross Cash was R$ 217.1 million and Net Cash was R$ 103.6 million, the main reason for the variation was the amortization of two debenture installments, in November 2022 and May 2023, totaling R$ 40 million, in addition to Taylor Swift's fee payment, as explained earlier.

On slide 11, we provide details of the Cash Flow. In this quarter, we consumed R$ 45.8 million, while in 1Q23 and 2Q22, we consumed R$ 6.9 million and R$ 12.0 million, respectively. The effects were as follows:

In the Operating Cash Flow, consumption of R$ 76.6 million in this quarter, mainly due to the payment of Taylor Swift's fee, in addition to costs related to the events held during the period.

• • The Investment Cash Flow of R$ 4.6 million consists of negative R$ 3.5 million related to variable payments on future results for the acquisition of INTI's ticketing system, combined with approximately R$ 400 thousand related to software for INTI's management and evolution, in line with previous periods.
• • Reflecting the Company's new strategy of financing short-term lines according to need, we reversed the Financing Cash Flow from consumption in 2Q22 to a generation of R$ 37.2 million in the second quarter of 2023.
• • Finally, there was a negative exchange rate variation of R$ 1.8 million, due to the depreciation of the peso against the real and the dollar during the period, reflected in the Company's foreign currency holdings and assets.

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