Results Presentation November 04, 2016
Disclaimer The forward-looking statements contained herein are based on our management s current assumptions and estimates, which may result in material differences regarding future results, performance and events. Actual results, performance and events may differ substantially from those expressed or implied in these forwardlooking statements due to a variety of factors, such as general economic conditions in Brazil and other countries, interest and exchange rate levels, legal and regulatory changes and general competitive factors (whether global, regional, or national). 2
Agenda 1 Business Update 2 Results 3 Q&A 3
Business Update Highlights Despite the challenging macro economic environment, we are observing the first signs of recovery, in both leisure travel at CVC 8.2% 6.6% 4.4% 1.7% Sales & Marketing Update CVC Record bookings in October of R$537mm in a month and R$ 133 mm in the week (w/o RA & SV) Top of Mind Award: winner for six consecutive years: 17% 19% 21% 1Q16 2Q16 Jul and Sept/16 * 2014 2015 2016.. as well as corporate travel at RexturAdvance: 2.0% -11.2% -7.6% 1Q16 2Q16 CVC Group Adjusted EBITDA and Adjusted Net Income grew by double digits on a pro forma basis International bookings continue to recover due to the appreciation of the Brazilian real: 14.6% 0.1% 5.9% 1Q16 2Q16 CVC opened 23 stores during and 110 new stores during the LTM period New revenue streams grew 12% in the September YTD period *August bookings were negatively affected by the Rio 2016 Summer Olympics 4
CVC Group returned to bookings growth and posted double digit growth in Adjusted EBITDA and Net Income Bookings Net Revenue -0.7% 3.2% 6,526 6,480 2.8% 2.6% 748 772 2,213 2,271 269 276 Adjusted EBITDA Adjusted Net Income 11.4% 16.5% 371 10.8% 333 18.7% 117 137 129 142 47 56 *Pro forma results include Submarino Viagens and RexturAdvance 5
Agenda 1 Business Update 2 Results 3 Q&A 6
CVC bookings grew 4.4% and CVC Group bookings grew 2.6% CVC Bookings (R$ million) CVC Group Bookings (R$ million) 4.2% -0.7% 4.4% 3.881 4.044 2.6% 6.526 6.480 1.369 1.429 2.213 2.271 CVC bookings totaled R$1,429 million in and R$4,044 million in, growing 4.4% versus and 4.2% versus 9MH15 bookings growth was negatively affected by the Rio 2016 Olympics held in August and the uncertain political environment. Bookings in July and September grew 8.2% versus 2015 International bookings continue to recover due to the appreciation of the Brazilian real, growing 14.6% in Amidst the challenging macroeconomic environment, CVC Group bookings totaled R$2,271 million in and R$6,480 million in, growing 2.6% versus pro forma and declining 0.7% versus pro forma Recovery of RexturAdvance s corporate travel business has supported the improvement in CVC Group performance *Pro forma results include Submarino Viagens and RexturAdvance 7
CVC Sales Update Bookings Growth by Channel (YoY) 3Q Bookings by Boarding Date 6,0% 4,1% 2,4% 8,2% % of Bookings 67,9% 67,5% 32,1% 32,5% -13,3% -6,0% Exclusive Stores Independent Agents Online Boarding in Boarding in future quarters % Bookings growth vs PY +3.0% 5.2% Recovery of International travel (which is booked further in advance than Domestic travel) offset the increase in last-minute promotions offered by suppliers, such that the average number of days between booking and boarding remained stable year-over-year for the first time in six quarters Continuing trends observed in the first half of the year, online traffic in has slowed considerably amidst the recession, as credit offered to consumers in stores has driven a shift from online to offline sales Number of days between booking and boarding 0,2 0,3-5,3-2,9-5,3-8,3-11,3 1Q15 2Q15 4Q15 1Q16 2Q16 Note: Figures exclude RexturAdvance and Submarino Viagens 8
CVC Group margin improvement driven by more favorable product mix CVC Net Revenue (R$ million) CVC Group Net Revenue (R$ million) 4.3% 3.2% 5.0% 581 606 2.8% 748 771 212 222 269 276 Margin %* 16.4% 16.8% 15.6% 16.1% Margin %** 12.1% 12.2% 11.5% 11.9% ** ** CVC net revenue of R$222.2 million in grew 5.0% from the comparable period in 2015 net revenue as a percentage of consumed bookings of 16.8% was 40 basis points higher than the net revenue margin in, driven primarily by a more favorable product mix CVC Group net revenue totaled R$276.3 million in, growing 2.8% versus CVC Group pro forma net revenue CVC Group net revenue as a percentage of CVC Group bookings was 12.2% in, 10 basis points higher than the net revenue margin in * Net revenue as % of consumed bookings ** Net revenue as % of bookings *** Pro forma results include Submarino Viagens and RexturAdvance 9
Despite double digit inflation, CVC Group operational expenses declined both in and in CVC Group Recurring Operational Expenses (R$ million) -2.4% 459 448 CVC Group Operational Expenses (R$ million) R$ mm Chg % Chg % Operating Expenses 153.4-7.3% 459.9-4.8% (-) Non-Recurring Items 3.8-67.7% 12.0-50.5% -2.7% Recurring Operating Expenses 149.6-2.7% 447.9-2.4% Selling 40.0-23.4% 140.1-10.9% 154 150 General and administrative 84.1-0.5% 233.7-2.9% Depreciation and Amortization 11.3 25.7% 34.1 10.2% Other operating expenses 9.9 169.8% 27.0 56.6% Pro forma* Pro forma* PPA Amortization 4.4 0.0% 13.1 0.0% Group CVC recurring operating expenses decreased 2.7% in and 2.4% in, despite double digit inflation in the period, due to tight expense controls and realized synergies Selling expenses decreased 23.4% in and 10.9% in driven by optimization of marketing expenditures and lower insolvency rates among consumers offered financing through CVC, due to more restrictive credit policies General and administrative expenses were flat compared to due to tight expense controls and realized synergies *Pro forma results include Submarino Viagens and RexturAdvance 10
EBITDA growth driven by better margins and tight expenses controls CVC Group Adjusted EBITDA (R$ million) CVC Group EBITDA Reconciliation (R$ million) 10.8% 333 11.4% 371 R$ mm EBITDA 138.5 359.1 (+) Stock options 2.6 8.2 129 142 (+) Extraordinary bonuses and M&A 1.2 3.8 Margin %* 47.8% 51.5% 44.5% 48.1% Adjusted EBITDA 142.3 371.1 * * CVC Group Adjusted EBITDA totaled R$142.3 million in and R$371.1 million in, representing growth of 10.8% versus pro forma Adjusted EBITDA and 11.4% versus pro forma Adjusted EBITDA Non-recurring items in included stock options and extraordinary bonuses of R$3.8 million * Adjusted EBITDA as % of net revenue ** Pro forma results include Submarino Viagens and RexturAdvance 1 Non-recurring bonuses 11
Earnings growth driven by operational results CVC Group Adjusted Net Income (R$ million) CVC Group Net Income Reconciliation (R$ million) 117 16.5% 137 R$ mm Net income 56.7 136.7 47 18.7% 56 (-) Minority Stake -5.8-14.9 Net income to shareholders 50.9 121.8 Margin %* 22.2% 25.1% 20.2% 22.6% * * CVC Group Adjusted Net Income grew 18.7% in, driven by improving operational results (+) Stock options 2.6 8.2 (+) Extraordinary bonuses and M&A 0.8 2.5 (+) Franchisee agremement amortization 1.5 4.4 Adjusted Net Income 55.8 136.8 * Adjusted Net Income as % of net revenue ** Pro forma results include Submarino Viagens and RexturAdvance. For comparability, pro forma results are net of the same interest on acquisitions and PPA amortization as 12
2016 cash flow generation recovered from 2015 due to one time event (change in consumer behavior) Operational Cash Flow 1 (R$ million) 32 Pro forma + 27 59 Operational Cash Flow 1 (R$ million) + 197 179 Operational Cash Flow Breakdown (R$ million) Cash Flow - R$mm Pro forma Pro forma Net Income 56.7 40.5 136.7 101.5 Deferred tax 5.2 7.2 24.8 38.2 Interests 18.8 13.3 45.9 31.5 Depreciation & amortization 13.5 12.0 40.7 36.9 Others Adjustments 16.4 15.5 54.6 48.6 NI Adjusted by cash itens 110.6 88.6 302.6 256.7 Accounts receivable² (132.2) (84.9) (188.2) (129.2) Advance to suppliers 31.6 72.4 0.6 (21.5) Advanced travel package sales 56.8 21.6 268.5 86.4 Suppliers (28.6) (54.2) (96.1) (103.4) Other (net)³ 32.7 1.8 (65.3) (61.9) Change in Working Capital (39.8) (43.3) (80.5) (229.6) Capex (11.8) (13.0) (45.7) (44.5) Other - - 3.0 - Operational Cash Flow 59.1 32.3 179.4 (17.4) -17 Pro forma In cash flow was positively by higher earnings and due to the usage of prepayments for international hotels made in December 2015 In CVC received R$11 million from B2W for working capital adjustments related to the acquisition of Submarino Viagens 1 Net of capex and changes in net working capital 2 Includes factored receivables to calculate managerial cash flow 3 Increase in Other Liabilities less increase in Other Assets 13
CVC Group ROIC and CAPEX ROIC 1 (%) Capex (R$ Million) 45 46 43.2% 39.6% % of LTM Bookings 0.7% 0.7% Sept 15 LTM Sept 16 LTM Pro forma CVC Group return on invested capital was 39.6% for the year ended September 30, 2016, 3.6 p.p. below the ROIC for the year ended September 30, 2015, due to higher working capital needs (compared to September 2015) CVC Group invested R$45.7 million of capex during, including capex for new offices for RA and SV 1 ROIC defined as net operating profit after tax divided by Invested Capital (Net PP&E plus Net Working Capital) 14
Leverage remains healthy despite additional indebtedness related to acquisitions Net Debt (R$ million) Net Financial Expenses CVC Group (R$ million) LTM Adjusted EBITDA Net debt Accounts payable - acquisitions Factored receivables 593.5 543.5 457.7 60 132,0 42,9 175 166,0 196,9 217,9 308 295,0 CVC Group CVC Group 2Q16 CVC Group 1.0x 1.1x 1.25x 97.0 101.4 18 18 36.4 38.1 6 6 30 32 79 84 +5.7% +5.6% CVC Group CVC Group Financial Expenses Financial Expenses related to Acquisitions Despite the two recent acquisitions, net debt remains at a healthy level of 1.1x LTM EBITDA Financial expenses (excluding expenses related to acquisitions) increased 5.7%, primarily due to higher indebtedness and interest rates Interest on accounts payable to sellers of RexturAdvance and Submarino Viagens totaled R$17.8 million in 15
Agenda 1 Business Update 2 Results 3 Q&A 16