CVC Brasil Operadora e Agência de Viagens S.A. (CVCB3) Earnings Call Transcript

Good morning, everyone. Thank you for waiting. Welcome to this conference call to present CVC corporate results in Q2 2026. Today, we have simultaneous interpretation into English and Spanish available. [Operator Instructions] We'd like to inform you this conference call is being recorded and will be available on the company's IR website, www.cvccorp.com.br/ri, where you can find complete information about the company's Q2 numbers. You can also download the presentation. [Operator Instructions] We want to remind you the information in this presentation and statements that may be made during the conference call in relation to business prospects, projections, operating and financial goals of CVC Corp. represent beliefs and assumptions of the company's management as well as information currently available. Future considerations are not a guarantee of performance. They involve risks, uncertainties, and assumptions as they refer to future events, and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market forces, and other operating factors may affect CVC Corp.'s future performance and lead to results that differ materially from those expressed in such forward-looking considerations. Today with us, Fabio Mader, CEO; and Felipe Gomes, CFO and Investor Relations Officer of CVC Corp. I will now turn it over to Mr. Fabio Mader.

Good morning, everyone, and thank you for joining us in the CVC Corp. presentation. Today, Felipe will lead us into our Q2 figures. But before that, I'd like to take a few minutes to discuss the company's current moment and especially talk about what we are building. I want to start with a clear statement. Our Q2 numbers do not yet reflect the performance we plan to deliver. This Q2 was marked by a highly challenging environment in our industry with significant pressure on air travel prices and an impact on key international destinations. However, I will not focus my remarks on the external scenario. Some things are beyond our control, but my role and that of our entire team is to focus on what we can control. And here, I believe an important story is unfolding at CVC. Over the past few months, we have made significant progress in the company transformation, which does not happen overnight. And it is not yet fully reflected in this Q2 numbers. But the first operating results begin to show. We have improved our cost structure. We simplified the organization, and we're making progress on systems integration. We have expanded our reach using a low CapEx model, and we are accelerating our technology and digitalization agenda. I'll speak a bit more about these 2 points. But now let us look at our financial and operating highlights in Q2 on Page 3. So here, confirmed bookings, we had a growth of BRL 8.4 million, which represents a 0.2% increase over Q2 last year or 4.1%, excluding the impact of the Middle East conflict and using a neutral FX rate in Argentina. Looking at Brazil alone, we can see a 4.1% growth or 5%, excluding the Middle East impact. B2C growing 3.4% and B2B growing 6.3%. In Argentina, a 13% drop or 0.3% positive, excluding the Middle East impact, and using here a neutral FX rate. Net revenue had a 6.5% drop this quarter compared to last year. But excluding the extraordinary impact, the impact would be 3.6%. So Brazil had a 4.2% decline year-on-year or 3.5%, excluding the extraordinary impact. In Argentina, 17.6% drop in revenue or 4.4% using, well, a neutral FX rate. Moving on to profitability. EBITDA in this quarter was BRL 85 million, down 8.1% year-on-year. Brazil's EBITDA actually grew 4.7% compared to the previous year. The EBITDA margin hit 26.6% with a 0.4% drop compared to Q2 last year. And again, when we look at Brazil alone, the EBITDA margin was 30.6% or 2% better than last year, and our best number in this second quarter. The company's adjusted net loss this quarter was BRL 51.3 million or BRL 35.4 million worse than last year. Looking at our capital structure, the operating cash generated this quarter was BRL 60.2 million positive, compared to Q2 2020 -- well, in this Q2 2026. Total debt reached BRL 1.3 billion, and our leverage remained flat at 0.5x the EBITDA now in this quarter. Now moving on to Slide 5. Let us talk about our strategic pillars. We have shown these 4 pillars since June 2023. Just to remind us all, the first is exclusive product, bringing more competitiveness and lower working capital. The second is new store openings, especially in non-capital cities. The third pillar is alternative payment methods. We're working hard to reduce our reliance on card payments. And the fourth pillar is our B2B globalization. So we redesigned our exclusive product structure earlier this year to have a higher profitability from these products. Of course, we are always looking at the demand to understand if we have to include more or less capacity in exclusive products. In summary, from 2023 through the second quarter of 2026, exclusive products consistently account for 15% to 20% of our total sales, including here blockings and chartering. We've also talked about our preferred partners that reached this quarter, 80.3% of our domestic hotel sales. And this was our best result with preferred partners since the beginning of our preferred partner program. Now internationally, our international preferred partners accounted for 60% of our sales, and this number is growing quarter-on-quarter. As I mentioned, we are revisiting our international exclusive products. Today, with international air travel prices either flat or down, it does not really make sense to add more capacity, I mean, except in specific cases as we did in the July vacation season with Bariloche. Now the second pillar, store expansion, we have opened nearly 500 new stores since June 2023 until now, 350 stores in Brazil and 68 in Argentina, net. Today, we have 1,627 stores. It's our largest number of stores historically. Remember that in both Brazil and Argentina, we are actually growing in non-capital cities, smaller, asset-light stores, with a reduced CapEx and OpEx. In this quarter, we received the ABF Seal of Excellence placing CVC among Brazil's top 10 franchises. The third pillar, payment methods. It's a key aspect in our business. So cash payments grew from 19% to 27% of our sales in this quarter. Third party and also CVC own financing increased from 8% to 15% of our sales. We have also improved our terms with acquiring partners with a significant cost reduction and optimizing working capital in the payment process. In July, we reduced interest-free credit card installment payments from 12 to 10 installments, and we will begin to see the results of this change in the next quarter in our working capital. Finally, our fourth strategic pillar, B2B globalization. Remember, we had 1% of our sales coming from international customers. And then with Conectaas, this number grew from 1% to 9%, and we're adding new international customers every quarter. Today, Conectaas has more than 8,000 exclusive offers to customers. RexturAdvance has strengthened our leadership in the Brazilian consolidator market here in Brazil. And we have currently maintained our top position, while our customer portfolio hit an all-time low default rate. Now let's talk about the evolution in our customer journey. This is on Page 7. Before I tell you about our news, the new website, the new app, please remember that this new customer journey, I mean, we started working on it in June 2023, and in this quarter, we already had our virtual AI agent converting sales and helping customers. Now we can reach the third phase of this new CVC customer journey. And today, as I mentioned, we have 1,627 stores. It's our largest network historically, and nearly 6,000 salespeople working in our stores. We've integrated our CRM using the CDP Oracle platform, and this is super important for this new phase, the third phase of the digital customer journey. Remember, this project began in June 2023 when we created the digital concept, which means we can bring customers from digital, so social media, Instagram, TikTok, YouTube, Facebook. And we have this project built with Meta, WhatsApp, and CVC Viagens. We will now have full integration with the store closest to our customer. To give you an idea, in this quarter, 55% of our store sales began from digital leads. So they closed their purchase with our 6,000 sales consultants without having to walk in our stores, so virtually. But we know that both in Brazil and in Argentina, customers, they may buy digitally, but they like to visit the store, to make sure the sales consultant truly exists there at the store, this is only natural for our customers. We could see that from 10 p.m. until 10 a.m. when most of our stores are closed, especially at shopping malls, the stores are closed, we were not able to maintain customer engagement. And -- but now we have Lia, since earlier this year, our customers' virtual assistant. And Lia interacts with our customers. This AI virtual agent relates with our customers while the stores are closed. Last month, we had 1.3 million interactions between Lia and our customers. And these customers' engagement, interacting with Lia, the engagement was 50%. It means that 50% of the customers who interacted with Lia also engaged with a sales consultant at the store. With that, our conversion has grown 150% compared to the time before we had Lia. So our project, the digital sales project, it has helped us open 500 new stores growing in non-capital cities. So stores end up helping customers regionally at a distance of 100 kilometers. Customers do not have to walk in the store. Already today, 55% of our sales, they are in the digital format. When the stores are closed, our AI assistant Lia is already interacting with the leads, qualifying our leads so the store can convert the sales. And we can already see the first results. So now we are moving on to the third phase of our new customer journey. And again, don't forget, it all started in June 2023. You will remember when we improved our systems in the company, especially the legacy systems to allow for us to create our new website now and an app sales platform. The new sales platform is based on AI-first. And this is super important because it incorporates the most recent AI technology, which helps us prepare customers to use AI and e-commerce. The new platform also provides a much better experience to our customers. And the app will soon become a travel wallet. So our customers will be able to use our services also in their travel wallet. The new system includes the new website and the app, which is being developed now, and it will be ready in October this year according to our schedule. So we will be able to use it for the next Black Friday sales. So this is being developed now, as I mentioned, using AI technology. And why is this important? Because with that, we will be able to fully integrate our customer journey. Our customer will be able to buy at the store, on the new website, or using the app, always supported by our 6,000 travel sales consultants, and it will be the same for the customer in any channel they may choose. We'll provide freedom and assistance, which is our company's main advantage, and that will not change. That's something we will keep and improve because we're the only travel agency that will have a fully digital environment plus the credibility of human services, human assistance at our stores. And now I'd like to hand it over to Felipe, who will walk us through some of these figures. Thank you. Felipe, please take the floor.

Thank you, Mader. Good morning. Good morning, everyone. So now we'll give you more detail on the numbers on Page 9, talking about Brazil top line. On the left, confirmed bookings, our sales in this quarter, our sales neared BRL 3.3 billion in sales, up 4.1% compared to last year. Next, we present the same data, excluding the impact of the Middle East conflict. Essentially, we have excluded the destinations affected by the conflict to see our growth rate, and the result is a 5% growth. Our net revenue is shown in the same 2 ways. The first chart on the left shows Brazil's net revenue, nearing BRL 270 million with a 4% drop compared to last year. And our take rate moved from 9.7% to 8.6%. Excluding the impact of the armed conflict, the year-on-year decline is 3.5%. Further down a few highlights. The first chart shows B2B alone with a 6.3% year-on-year sales growth in Brazil. Although B2B also had impact by the conflict, but these numbers show the business resilience and how well B2B has performed in recent quarters. The second chart emphasizes the same. RexturAdvance maintains its leadership as Brazil's largest travel consolidator, actually widening the gap to the other competitors despite the rise in jet fuel prices that has affected everyone. We observed a 52% year-on-year air travel price increase. In Brazil, we are beginning to see the results of our new structure, as Mader mentioned earlier. Looking at our expense, we have another slide showing more data, but we can already see a year-on-year reduction in G&A expenses of about 10%, which reflects the renegotiation of contracts, efficiency gains implemented by the company, and our matrix-based expense management. Moving on to Slide 10 about Argentina, the same format as the previous slide with sales on the left and revenue on the right, and the numbers also excluding the impact of the Middle East conflict. In Argentina, we also show the numbers considering a neutral FX rate. On the left, sales in Argentina in this Q2, nearing BRL 805 million, a 13% decline compared to last year. However, using a neutral FX rate, the drop would be 2% year-on-year, not forgetting that Argentina had a strong performance in Q2 2025. So in dollar terms, even looking at comparable sales, Argentina actually grew compared to 2025. The problem arises when we convert to BRL to consolidate our balance sheet, and we see a 13% decline. The next chart shows the comparable basis, also factoring in the Middle East conflict. On the right, the bar chart shows net revenue and take rate. We can see a 17.6% year-on-year drop in net revenue from BRL 60 million to BRL 49.7 million, and a lower take rate, down from 6.6% to 6.3%. As in the previous chart, we also present a comparison on the right, excluding the Middle East conflict impact and using a neutral FX rate. Further down, a few comments. So we're facing a tough base for comparison. The company's top line remained flat in using a neutral FX rate. We saw a 16% increase in the volume of passengers. So Argentina is struggling a bit more with average ticket prices due to an oversupply, but now supply and demand are realigning. And the take rate is getting pressure because B2B is growing faster than B2C. The luxury segment, we never talk about it because it's relatively small, but Biblos posted a 10% growth compared to last year, showing the luxury market resilience. Now on the next slide, we see consolidated figures, net revenue, take rate, G&A and selling expenses with a breakdown. On the left, net revenue and take rate. This quarter, the company closed with BRL 320 million revenue, a 6.5% drop compared to last year, and the take rate moved from 8.9% to 8.2% in this Q2 of 2026. The bar chart excludes the impact of the Middle East conflict. Specifically, the take rate dropped from 8.9% to 8.2%. The primary driver here is our sales mix, with B2B outperforming B2C, which lowers the overall take rate in both Brazil and Argentina. We also saw a strong maritime performance in this Q2, which further reduced our take rate. I mean, it benefits our bottom line and working capital, but it lowers the company's take rate. And we felt pricing pressure in B2C in the last few quarters. The middle chart shows G&A over net income. The top chart represents CVC Corp. Brazil and Argentina combined. We see a decrease from BRL 192 million to BRL 178 million, a 7.2% drop with the ratio moving from 56.3% to 55.9%. Below that, Brazil alone because in Argentina, there are currency issues, so we report Brazil separately. And here, we can see the impact of the company's recent restructuring efforts, as Mader highlighted earlier. So a 10.1% decrease in G&A expenses from BRL 148.5 million to BRL 133.4 million, bringing the ratio below 50%, actually 49.5%. And we expect this line to continue this good performance. Finally, sales expenses over confirmed bookings. So this ratio shows sales expenses over sales, and the number remained virtually flat, showing a 0.4% year-on-year drop from BRL 80.9 million to BRL 80.5 million, and the ratio around 2%. So again, it helps contain the company's expense. Now the next slide showing our consolidated EBITDA and adjusted net income. The top sections display EBITDA and EBITDA margin. First, Brazil. Brazil closed this quarter with BRL 82.6 million EBITDA, a 4.7% increase year-on-year despite the armed conflict. So here without any adjustments. And EBITDA margin exceeded 30.6%. Given that the second quarter is a weaker season for the company, this is a very impressive result for Brazil in this Q2 2026. On the right side, we can see that Argentina saw a significant drop in EBITDA from BRL 13.4 million to BRL 2.3 million. So the big impact on Q2 EBITDA came from Argentina, driven by the currency exchange issues we mentioned earlier, resulting in a year-on-year decline of nearly 83% in Argentina EBITDA. The consolidated figure is BRL 85 million, posting an 8.2% decrease almost entirely from Argentina. Meanwhile, Brazil grew, but the margin is similar to last year, moving from 27% to 26.6%, which shows our expense improvements discussed previously. Below the adjusted net result. Q2 last year closed with a loss of nearly BRL 16 million. And then Q1 2026 posted a loss of BRL 63 million, and now in Q2, a loss of BRL 51.3 million. It's a decline compared to Q2 2025, but it's an improvement of nearly BRL 12 million compared to Q1 2026. The net result this quarter was impacted by our restructuring costs, specifically BRL 20 million. But this is the restructuring cost, and that's a one-off expense that will not recur in future quarters. Now the last slide of today's presentation, our capital structure. On the left, cash generation or consumption. We closed this quarter with BRL 60.2 million operating cash generation, marking a major turnaround compared to the first quarter this year. We closed Q1 with a cash consumption of BRL 121 million. And in Q2, we generated BRL 60 million. It's an improvement of BRL 180 million between the first and the second quarters of 2026. The improvement in operating working capital is largely driven by a reduction in the average customer payment terms, which is directly linked to the initiatives we discussed -- Mader mentioned earlier today. On the right, our debt chart, it's the table. The company's total debt decreased by BRL 250 million compared to Q2 2025, from BRL 650 million to BRL 400 million, largely driven by the early amortization of our debentures in October last year, which further reduced our receivable advances. Regarding the company cash position, we closed the second quarter with approximately BRL 186 million. So our net debt fell from last year from BRL 396 million to BRL 215 million, an improvement of BRL 181.3 million year-on-year. And there was also an improvement of BRL 26.8 million compared to Q1 2026. With that, our leverage or net debt-to-EBITDA ratio is 0.5x, which represents an improvement over the same period last year, which was 0.9x, and it remains flat compared to Q1. When we factor in our non-advanced receivables, so amounts the company can use in future receivable advances, we closed this quarter with BRL 236.8 million in non-advanced receivables and BRL 1.3 billion in advanced receivables. So that leads us back to the figure presented earlier in the highlights. So combined total debt plus the balance of advanced receivables amounting to BRL 1.3 billion, which is an increase of BRL 122.7 million compared to the first quarter of 2023 (sic) [ 2026 ]. That will conclude our comments talking about our total debt. The company calculates this ratio based on the net debt plus the balance of receivables over the last 12 months' EBITDA, which stands at 3x compared to 2.7x in Q1 2026. That brings my presentation to a close. And now both Mader and I will be available for the Q&A session. Thank you, everyone.

[Operator Instructions] So the first question came in writing, and I'll read it. What is CVC exposure to Apex Partner crisis?

This is Felipe. Thank you for the question. It's a very good question today. I actually wanted to use this question to make it very clear, the relationship with Apex and CVC, and we know about the crisis, but it's just Apex has a stake in the company. Until last week, we also had a Board member, Fernando Cinelli. But on Thursday, he resigned his position in our Board. So now the only relationship we have is the society relationship because Apex has a stake in the company just like any other investor. I mean, we are a listed company, so anyone can buy our shares. And so to make it very clear, we do not have any operating relationship or financial relationship with Apex, no guarantee structure, not any credit or contracts signed. So the question is very good, and it gives me the opportunity to make it very clear that we do not have any operating or financial relationship. It's just a stake that Apex has in our company.

Our next question comes from Vitor from Santander.

I have 2 on my side. First, about what you expect in the second half? What is the scenario that you expect with the impact of the war, and higher airfare prices, and also other price hikes, especially looking at consumers? So I'd like to understand what you expect for the second half of the year? And the second question is about your stores. In the last quarter, you have reduced the number of new store openings. So what do you expect for the rest of the year? Are you going to optimize the current number of stores? Or do you believe you still have room to open new stores this year?

Thank you, Vitor. This is Mader. I will answer both of your questions, okay? The first, what scenario we expect for the next half year, and how we view consumers. I mean, from the consumer point of view, let us remember what I actually briefly touched in my presentation. We, I mean, the company has worked very hard to restructure the factors that we can control. So that's what we call the simplification of CVC Corp., not only including CVC Viagens, but the whole company in Brazil, in Argentina. So we are working hard to revisit 100% of our structure. And in this review, we had a reduction of 10.1% of our cost, which we've seen in Q2, in the second quarter, but we will begin to see that we will operate lighter. That will become clear in the second half of the year because of the efforts we have implemented. Having said this, Vitor, now your question, July is -- July and the beginning of August. Now I mean, I cannot actually say that this is a trend, but we have observed that in July, we had the best sales month in the last 2 years in the company. I mean, except for the Black Friday campaigns. So excluding the Black Friday campaigns because November is usually the best sales month because of the Black Friday. But excluding the Black Friday campaign, the last July was the best sales month, including the semi-store sales, the same-store sales, which we will talk about as we answer your second question. So why do we see this scenario? I mean, first, we had the FIFA Soccer World Cup. Many people, I mean, in July, many people stay back home. I mean, they don't travel. They stay at home with their families and friends to watch the soccer matches. But after Brazil left the FIFA World Cup, we could see a few people buying travel in July or even during the second half of the year. So this is what we could observe. Also, later we could see an accommodation. I mean, we could see a flat average ticket in -- especially in air travel. There was an impact from the beginning of the crisis. We had higher jet fuel prices. We had an impact on the average travel ticket. But in July, we could see that the prices did not continue to increase. I mean, in July, this was a month when airlines had the lowest occupation after the COVID-19 pandemic. That is they saw a decrease in the volume of passengers for the first time after the COVID-19 pandemic. So prices did not continue to increase in July. And these circumstances, they led to a good sales month for us in July, not only in B2C, which we spoke about, talking about the consumer behavior, and I'm talking in retrospect, but the same thing also happened in B2B. But about your second question about the number of stores, yes, we could see that in the second quarter, we opened 8 stores. We had a few stores shutting down. But if we look at our mortality rate, it's about 4%. So it's below what other franchise networks have posted. The average mortality is 9% in average franchises. So we're operating at 4%. But we are working hard to keep a net growth. And looking at the second half of the year until year-end, let me remind you that new store openings are usually in non-capital cities. So these are smaller stores. These stores are very different from the stores we have in capital cities. I mean, these are smaller stores with a lower CapEx, also a lower OpEx. Sometimes you have only 2, 3 people working in a CVC store. So our franchisees, they have a good return on investment. They can receive their investment back faster. So yes, we will see new store openings, but I don't want to raise expectations. Nothing like what happened in the last 3 years. In the last 3 years, we opened about 500 stores. This is not going to continue this year. No. This year, we are working very carefully to open stores where we see it really makes sense, not only for the franchisee, but also for CVC Viagens, that is how we will be working regarding new store openings. So the expectation is to work very close to the number we had in the end of 2025, okay? So again, thank you, Vitor, for the question.

Our next question came in writing through the Q&A function. And it says in the second quarter of 2026, the volume of bookings remained flat, but the consolidated take rate came down from 8.9% to 8.2%. And in B2C, the drop was even steeper, 13.8%, down to 11.8%. Now the management has said this is more due to the B2B outperformance and maritime performance. But since you want to grow in B2B and B2C, what would be a sustainable take rate in the medium term? And what initiatives will allow for you to recover margin without sacrificing volume growth?