In This Article:
Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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CVC Brasil Operadora e Agencia de Viagens SA (BSP:CVCB3) opened 90 new stores in Q3 2024, setting a historic record for new store openings in Brazil and Argentina.
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The company reported a significant improvement in profitability, with a nominal EBITDA margin 11 times higher year-over-year compared to Q3 2023.
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CVC Brasil Operadora e Agencia de Viagens SA achieved a net income for the first time in 20 quarters, marking a BRL340 million improvement in the bottom line for the first nine months of 2024.
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Operating cash generation reached BRL118 million in Q3 2024, returning to the same level as Q3 2019, indicating strong financial health.
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The company's leverage has been significantly reduced to 1.2 times net debt over the last 12 months' EBITDA, down from 5.7 times when the current management took over.
Negative Points
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Despite improvements, CVC Brasil Operadora e Agencia de Viagens SA still faces challenges in Argentina, with a 22% drop in confirmed bookings in Q3 2024.
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The company's net revenue in Argentina decreased by 22% in Q3 2024 compared to the same period in 2023.
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There was a slight drop in net revenue intake rate in Brazil, partially due to extraordinary events in Q3 2023.
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The company experienced a 70% drop in EBITDA in Argentina quarter-on-quarter, reflecting ongoing economic challenges in the region.
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General and administrative expenses in Brazil increased by 3.6% in Q3 2024, although the company aims to keep these expenses in line with inflation.
Q & A Highlights
Q: What are your expectations for net debt by the end of 2025, and what are the drivers for improvement in EBITDA and working capital? Also, what do you expect for G&A expenses in Brazil?A: Felipe Gomez, CFO: We expect to maintain the downtrend in net debt seen in Q3, with reductions driven by EBITDA and working capital improvements. We anticipate 60% of the reduction to come from EBITDA and 40% from working capital. For G&A, we aim to keep expenses in line with inflation, though reducing them below inflation becomes increasingly difficult. Our goal is to maintain G&A growth no more than the inflation rate, which would be healthy for the company.
Q: What are your expectations for B2C growth in Brazil for the fourth quarter and next year, and how do you plan to manage sales expenses?A: Fabio Godinho, CEO: Growth will depend on market capacity and pricing dynamics. We expect an improvement in Q4 compared to Q3, with more seats available domestically and internationally. For sales expenses, we aim to maintain them below 2%, ideally around 1.8%, with growth driven by the top line.