CVC Limited

Good afternoon and thank you for waiting. You're welcome to CVC Brazil Operator and Travel Agency SA for the discussion of the third quarter 2020 earnings results. Today we have here with us Mr. Leonel Andrade, CEO, and Mauricio Montilla, CFO and CRI. We inform all that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. We will then start the Q&A session when further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. This event is also broadcast live via webcast and may be accessed at www.cvc.com.br where the respective presentation is available. Slight selection is controlled by you. The replay will be available immediately after it is concluded. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of CVC's management team and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that conditions related to the macroeconomic scenario, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Leone Andrade, CEO, who will begin the presentation. Mr. Andrade, you may begin your conference. Thank you very much. Good afternoon, everyone. I hope you're all doing well. And I thank you for being here with us. We're very proud to know that today we are presenting the third quarter's result, which means that we have fulfilled all of our accounting obligations, which means that we have survived all of the challenges we faced this year. From an accounting point of view, we're 100% okay, and therefore I think it is now time for us to start a new moment of the company. I would like to start in slide four, and I would like to highlight that we recently published our balance, and we have had only a few days after that. I would like to highlight here that we created our business units, which are 100% operational. Daniela Bertoldo officially arrived at the company this week, last week actually, and she started managing CVC's business unit, the B2C unit. And we now have a much more consistent business vision for our future so that we can create, in fact, a new digital world to reach our new target. I am sure that with all of the strategic work we're concluding, the stores are totally renovated in terms of experience and content, relationship, products, and this is going to take place over the next year with Daniela's management. Also, we concluded our B2B business led by Guimarães, and we will soon have a presentation. We are gaining market in B2B, and with the pandemic, a series of companies, operators, and agencies in general have started working with us. We have an increasing scale and a fragile competition, and therefore we're gaining market share. And I have no doubt that we will be an increasingly more important player in this segment. Our online business is led by Tulio. We have now unified our different platforms. Submarino, Viagens, and CVC, and CVC's app are all ready and are operating full-fledged. Of course, this means that we are much more prepared to compete in the online world. We today have a focus which is clearly defined. We are also increasing our partnerships with this concept to generate new businesses as we have with Livelo and Sfera at Banco Santander. We have new ones coming up soon, and I will soon announce some news in the near future. In the last six months, we totally reviewed all of this. We rewrote the company's history in terms of governance. We have unified all of the technology structure. And today, this is very strong and prepared to face the future. As I mentioned before, our priority focuses on margins. The take rate in Brazil is better, is increasing. And of course, for the company as a whole, we have had significant increase. We have the operations in Argentina with a lot of difficulties. The take rate has gone down there because of the difficulties the country is facing. But here in Brazil, we have an increasing margin. And the structure we have created by placing clients and price has presented a series of new actions our pricing is more modern we have algorithm pricing we are actually anticipating our plans and this will take place much sooner than expected we are concluding our strategic plan which will be concluded in two weeks and with that we have a totally different focus

with a high scalability.

Our investments remain the same thanks to the support of our shareholders and 100% of our processes are being reviewed. And let's think that until very recently we had 10 companies They didn't communicate with one another, but now they are much more integrated, and in the near future, we're only going to have two or three back-offs, and they will be integrated among themselves for the different business units. This will lead to cost reduction and more efficiency in our business. And of course, moving on to slide number five, it is clear that in the third quarter, the results that are presented still represent huge challenges. We have a lot of problems because of the pandemic with our borders still closed, but it's clear that CVC Corp will be a company which will lead the resumption of activities in the market and activities that are related to cash generation, We also have $1 billion in September. And all of the capacity, and it's very important to highlight this, we have a capacity to honor 100% of our debts and our commitments. We can do this for our partners and the hotel networks. as well as for our physical persons, clients. We can honor all of our commitments, which is very important so that we have people trusting our ability to lead. We also had a very successful capitalization, and we're going to have another one in the near future with I think that what is positive here is the performance of the quarter. And when we move on to the next page, I'd like to call your attention to how much sales are restarting. Of course, we're still in a fragile condition. It was almost tragic at the peak of the pandemic in April. We had only 1% of what we had done the previous year. And now sales have increased and we reached 37% of what we had a year ago. And let's keep in mind that in the domestic sector, we are very strong and actually resuming much faster than expected. Hotels are full. Airline companies are going back to their schedules. And this has helped us a lot. Because in the Brazilian domestic market, CVC is sovereign. Of course, our international business and corporate, which represent about 30% of our total business, have not resumed yet. And therefore, we still have some challenges. But of course, we're doing better and better and selling more. We will continue with a very strong ascending curve. We are dedicating the company to the business, to our clients, leading, investing in communication. All of our stores are open. We have 1,200 stores open. Our structure is open. Our B2B business is also growing strong. and gaining market, as I mentioned. And this month we have Black Friday. We have all of our infrastructure available. And I'd like to remind you that this is a very important moment for us. Black Friday is perhaps more important in this segment. And it is in November. when people schedule their travels for the end of the year, as opposed to other sectors. Here, Christmas week is when people are already traveling. Now it is the time for people to buy, and I'm sure that we are very well prepared to make good use of this. I now turn over to Mauricio Montilla. He's CFO. He's going to talk about his slides. And as always, I will be available at the end. Thank you very much. Well, thank you, Leonel. Good afternoon, everyone. I'm going to make a few comments about the financial results, and then we move on to the Q&A session. I just have one comment. I will start on page 8 with CVC's results in Brazil. As Leonel already mentioned, we suffered a significant impact, especially when we analyze our revenues, and we have some areas which suffered more. More significantly, such as boardings and in the domestic market, we are resuming much more significantly. It is important to highlight that we are focused on costs and on consumer services and remarketions to guarantee that the clients who bought their tickets, their packages, or any type of products related to travels can make good use of their travels. This is an important focus. And even so, we are able to have our costs aligned to the expectations we had when we started working with the impacts of the pandemic in the last few months. As Leonel mentioned, our margins are improving. Margins depend on boarding and the sales are doing better because we have a better mix, but the net revenue still does not show that. Here in Brazil, we already see some small margin improvements, which we hope will be consolidated. Another important aspect, and we always talk about this, is that we still have our own funding It is all working well, and it's important that the pandemic, and not only the pandemic, but the economic effects of the pandemic will lead to this. We're being more conservative. First of all, we provisioned for losses, and we changed our sales policies. with more conservative policies and in some cases we want to decrease our loss so we are provisioned we have had no surprises what we expected is happening in practice and then on the other hand we're being more conservative especially when the credit scores are very low, when the credit card fees. So we will continue as we are. The main focus is having healthier sales. This is happening with this new policy that was implemented. When we analyze Argentina, and of course, as we'd already mentioned, it is much slower in Argentina than in Brazil. The country took more strict measures against the pandemic. They closed their borders, and they depend a lot on international travel, and therefore we see a very slow resumption in Argentina. We also have some restrictions in Argentina regarding the restructuring of the companies. We have good news, though. In November, the government opened their borders, and we can see some resumption of sales in Argentina. The market depends on it, and so we can see sales resumption as of November. The third quarter still... which indicates a difficult situation, but with opportunities for improvement with the opening of the borders. On the next page, we have the consolidated results that indicate this dramatic decrease, especially on revenue since boardings have been delayed. and we can see a faster resumption in bookings. Even though the costs are going down at this level of operation, we have not been able to cover our costs, and that's why we're still in the negative. An important aspect on page 14, and we have focused on it from the very beginning of the pandemic, is the financial health of the company. As Lionel mentioned, we had an unconditional support from our shareholders. In January, we anticipate a new round. We are receiving our sales, and that makes us more relaxed. We have good working capital, which will enable us to fulfill all of our commitments with our clients, those who have bought their travels and have not used them yet. And so on the financial side, we have total financial discipline for the company as a whole, and we are 100% in conditions to guarantee our commitments with our clients as well as to make new sales. There is no barrier for sales. You can say as much as you want. This is something that we like to tease here. The company does not have any problems in having funding to try to resume sales and meet consumer needs. Finally, on the last page here, you can see our indebtedness. We are at the final negotiation step. The objective of this negotiation are to, of course, the pandemic had relevant impacts on the company's indicators and they will continue for some time until everything goes back to normal, which will be in 22 or 23. But we have to realign our structures, our contracts with this new reality. And we're also trying to to align our cash flow, especially for the short-term payments. We are at the final stages of this process and hope to be able to inform the market about it in the near future. So this is something positive for all of us, for the company, our clients, and those who have supported the company with a capital structure.