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Earnings Call Analysis
Q4-2023 Analysis
CVC Brasil Operadora e Agencia de Viagens SA
The earnings call was led by CEO, Fabio Godinho, and CFO, Carlos Wollenweber, discussing the company's strategies and financials. The management highlighted a positive outlook emphasizing on strategies such as 'back to basics', improvements in the EBITDA margin, and expansions within the market.
The company reported BRL 18.8 million in net income for Q4 2023, marking a significant turnaround compared to the previous year's quarter. Confirmed B2C reservations grew by 21.2%, and the company experienced a 9.6% rise in net revenue, aided by an improved take rate. This improved performance led to an adjusted EBITDA of BRL 86.4 million for the quarter, with an EBITDA margin reaching almost 25%, signifying operational efficiency and cost control measures.
A successful follow-on funding round bolstered the company's capital structure by BRL 226 million, contributing to a robust capital standing of BRL 800 million. Governance changes included the introduction of knowledgeable board members, ensuring a mix of tourism and capital market expertise.
The company's strategy revolves around enhancing the CVC business model and executing the back to basics initiative with a focus on profitability and boost in working capital dynamics. Diversification of payment methods and introduction of alternative platforms like PicPay and a pilot program for payroll deductions aim to provide customers with payment flexibility, reducing dependency on credit cards.
Significant investment is being made in digital sales offerings, with a focus on expanding into cities with lower populations, which was previously unfeasible due to high capital and operational expenditures. Meanwhile, confirmed bookings showed a robust increase, signaling health in sales which were driven by growth in CVC leisure in Brazil.
Net revenue observed a 9.6% growth with an increase in take rate across various segments. B2B Brazil and B2C Brazil showed take rate expansions, and the adjusted EBITDA witnessed a substantial 165% growth overall for the year, reflecting improved profitability in the latter half of the year.
Operational cash flow neutrality was achieved in the quarter, and the company has focused on reducing its total net debt through subscription offerings. Management also indicated a potential for further reductions in SG&A expenses over the year despite already reducing headcount and overheads significantly.
CVC's business strategy focuses on maintaining profitability across both B2B and B2C segments, with a particular emphasis in the latter on maintaining increased take rates and growing same-store sales. The company also plans to expand its physical footprint significantly with the aim of opening a substantial number of new stores over the next years.
Despite a sluggish economy and the impact on domestic airlines, CVC anticipates growth opportunities in both domestic and international markets, with Europe, South America, and the Caribbean expected to show growth. The company aims to seize opportunities in the fluctuating market conditions to optimize seat occupation and maintain a competitive edge in the travel sector.
While SG&A expenses were significantly reduced in the past year, further cuts are envisaged through the end of the year as the company balances cost-control measures with business scalability objectives. CVC funding remains around 10%, and the company continues to strengthen its offering of exclusive products while diversifying payment methods to reduce customer dependence on credit cards.
The management team emphasized a commitment to enhancing customer satisfaction levels alongside achieving cost reduction goals. Strategic directions focused on sales growth and after-sales support are expected to drive results, with an aim to strengthen the company's position in the travel industry for the upcoming decades.
Welcome to the results conference call of CVC Corp for the fourth quarter 2023. The presentation will be led by the CEO, Fabio Godinho and by the CFO of Carlos Wollenweber, who at the end will be available to answer any questions. [Operator Instructions]. This conference is being recorded and will be available on the company's IR website, which includes the presentation presented here. [Operator Instructions] Before proceeding, please bear in mind that forward-looking statements are based on the beliefs and assumptions of the company and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur.
Investors, analysts and journalists should bear in mind that events related to the macroeconomic environment, this segment and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. We will now turn the floor over to Fabio Godinho, who will begin the presentation. You may proceed, sir.
Hello, good afternoon to all of you, and welcome to the earnings results call for CVC Corp for the fourth quarter 2023 and the second quarter that has been disclosed since we took up the company management, the second half of the year of 2023. The fourth quarter we have some highlights, of course, several enhancements that we have been doing in the company and that have offered us significant result as part of the financial and operational indicators. First, we have the cash net income that we began to follow up on when we arrived at the company. Now for the second consecutive quarter, this indicator has become positive with BRL 18.8 million of net income for the fourth quarter '23, a reversion of more than BRL 216 million vis-a-vis the fourth quarter of '22 showing the commitment of this management in generating cash for the company.
Now to speak about our top line, a priority of course, and a focus for B2B sales. It's important to highlight that the confirmed reservations in B2C versus the fourth quarter '22 had a growth of 21.2% with same-store sales versus the same period last year increasing 20%. Now as part of those 20%, we consider the sales of the [Rextur Advance] take place at the sales points of CVC. Their sales of air tickets part of the online sales carried out in our franchise network.
The figures are quite expressive for the fourth quarter '22 in B2C with a network of offers for domestic traveling in Brazil vis-a-vis the fourth quarter of the previous year with an addition of capacity. Now this shows the robust recovery of sales on the part of our franchisees. Once again show that CVC has a good market share and our stores, our franchisees recovering their financial health, which accredits the continuity of the opening of sales point. During coming months, we opened 60 stores in the second half of '23.
We had a series of continuous closings now -- regarding the net revenue, the increase was 9.6%, thanks to the strong increase in take rate vis-a-vis the same period last year, and by maintaining the level of 9.6% as part of the consolidated results of CVC. This already points to a certain stability in our take rate levels following our historical results before the pandemic, now adjusted EBITDA with a significant improvement, BRL 86.4 million for the quarter.
An improvement, quite similar to what we had in the third quarter with BRL 82 million increase versus all EBITDA in the fourth quarter '22. An EBITDA margin of almost 25%, 23.2 percentage points. Once again, almost the entire increase versus the fourth quarter '22, a robust decrease in general and administrative expenses as we have been carrying out every quarter, going more in depth with the figures that we developed.
We have a reduction of almost 30% in SG&A with an increase in customer satisfaction, increasing the satisfaction of franchisees and increase in sales. What is important in this result is that after several quarters, the company has obtained a breakeven in operating cash flow now in the fourth quarter. It's important to underscore that part of the breakeven includes the consumption of the company's working capital further ahead with Carlos.
We're going to show you that cash burn quarter-on-quarter. In the third quarter, we improved the take rate, net revenue. We have cut down on cost and improve the top line. But the working capital needed some quarters to fully absorb with majority all of the actions we were carrying out. We had an important cash need in the last quarter, including the third quarter, despite the enhancement we had in the P&L indicators.
And now we include the indices of the balance of the fourth quarter '23, closing cash at BRL 482.8 million at the end of the year. It's important to mention that we had a successful funding of the follow-on with subscription bonuses of BRL 226 million. Now this reinforces the capital structure, which has a total has BRL 800 million. We have been communicating to the market since we took on the management and after the follow-on, the pillars of the strategy, which are back to basics for CVC and that we began implementing in the second half of last year.
And all of the results we have just mentioned, these 4 pillars, which we have communicated oftentimes to the market, our corporate governance, reinforcement of capital structure, a right strategy. And of course, the team with a very significant track record to minimize the risk of execution. And I believe that we have just referred to the results based on the figures delivered in the last 6 months.
Let's begin with the corporate governance, which is where we plan all of the other seat. What we want here is to have a combination of shareholders and players who have deep knowledge of the capital market, as well as the tourism market. As everybody knows, the Paulus family has come back as the major shareholder of the company, along with partners like Opportunity with a deep knowledge of the capital markets and replicating what happened when the CVC was extremely successful along with [Carla]. And of course, these shareholders have a seat in the Board and they bring together knowledge of the financial market.
We have Flavio from Patria, Eduardo from Opportunity and Mateus Bandeira and Valdecyr who have deep knowledge of the tourism market and the CVC core company with Valdecyr and Mateus are 2 independent advisers. We have a very good governance for CVC Corp. Secondly, we are reinforcing the capital structure carried out through our primary -- well, our follow-on sorry, that ended up with BRL 800 million in growth capital coming into the company, equaling out the structure, the balance and enabling the company to have the financial tranquility to continue on with this operation, growth of sales, the growth of stores and franchises, giving confidence to franchisee shareholders, partners in the capital markets and confidence of our employees.
The company has sound financial health to continue on with all of the strategies that we want going forward. Third of all, the strategy that we've set forth for the company. As many of you have heard in the different meetings we have had with the market, this strategy is based on 4 main points. First of all, the return on the company focus on exclusive products, strategic suppliers, the volume concentration, a portfolio curatorship so that we have 80% of the volume concentrated on 20% of the suppliers.
This is a warranty of availability and price among our products among our main partners. Air products to offer more leases block out passages, both domestically and internationally, the development of new routes which not only will increase the strategic competitiveness of the company with products that only CVC has, but also with a significant impact in the cash flow because of the share and penetration of strategic products, exclusive products where we have a different way of payment.
We have already reached a breakeven in our cash flow in the fourth quarter of '23. The land packages, which has practically disappeared. We once again offer them to our franchisees. This has a much higher take rate when speaking of non-air packages where you can issue an air ticket based on miles and combine this with the different options we have of non-air packages that have been launched.
So these packages reflect the deep regional knowledge that CVC has, which is very difficult to replicate. These packages are geared to a regional demand, and they had practically disappeared. This reinforces the deep regional knowledge that CVC has of every region in Brazil. And all of this reflected in Black Friday that ended up being a huge success, the best sales day of the company. We had 40% growth of sales vis-a-vis the previous year with 84% growth in margin take rate, showing the commitment of our sales team, our franchisees, our product team, our marketing and operations team, enabling us to obtain the successful results during the second half of 2023.
Another important point of our strategy is the diversification of payment methods, alternative payment method to aid and abet the customer not to use the limits they have in their credit card. Nowadays, 2.5 passengers will acquire the same package in CVC, families travel with 2.5 people, buying the average ticket of the company and obviously this is a relevant ticket for the average Brazilian company. So we help our passengers. They're the reason for our existence, so we guarantee them the best system through alternate payment methods. We, of course, have the credit card.
We're back to our credit table now that the company has sufficient funds for this, but of course, in a highly controlled way. This represents 10% to 12% of our B2C sales with relatively low deep levels, lower than 1%. So not to use the company equity to do this, but to offer alternatives to our customers. In the second half of 2023, we have an exclusive line of Banco do Brasil to fund the ticket in [Indiscernible] installments. We also have what is called the FGTS, Saque Aniversário Withdrawal payment through the PicPay platform and pilot program for payroll deduction payments for public servants that will become part of the package in 2024. We have also reinforced the digital journey.
Nowadays, digital represents 30% of the store transactions of CVC. An important way in which customers can acquire their vacation packages. They begin with Internet, but they do want to close the packages with a franchise at the store because of the confidence they have in the system. So this has generated several campaigns on Instagram, WhatsApp, Facebook media using artificial intelligence. We go down the sales funnel until we get to the face-to-face service for the close of the package.
Now when the travel agent closes the package, the sales conversion tends to be 4x to 5x higher than the sales conversion of 100% digital platform, and we have been going more in debt, qualifying this type of process so that we have a greater penetration of this form of selling in our stores. When it comes to implementing enhancements, digital journey is using artificial intelligence, integrated with the front of our stores. We are now in the 4.0 version of Chat CVC, a proprietary app from the company and the integration of WhatsApp and CVC in the sales platform when we generate a lead for the store is integrated online, but through the sales front, not through the seller, but through our sales tools where we are able to control how many lead we have in the store conversion, cost per lead as well as additional metrics we have been measuring since we began to drill in this digital sales journey.
We have digital sales offer, a dynamic budget and several other tools that we're putting in place and that we will gradually disclose in the coming quarters, all of which will substantially enhance the very important way of selling, which is the digital sales. We're ready to service digitally 100% and physically 100%, but we truly believe in this mixed format where people make the practicality of an Internet consultation with the confidence and security of closing a package at a store.
There are several details when you're closing a package, the time of the trip and all of this is done at a store. This is a streamlined way of selling vacation and had a significant impact at the end, there are regions that have 45% of digital sales. We have stores with a 75% penetration of digital and 35% of the CVC network, selling based on the format. That is why it is important to bring together the stores in the hinterlands and stores in the capital cities where the type of transaction tends to be ever more transactional and the stores in the hinterlands are more relational.
There are regions that work more with a digital journey, others work more with a physical journey, some working 100% with the digital journey, but CVC is a domestic company. It's the only company that extends nationwide with deep knowledge, and we are ready to service whatever it is, the customer wants to acquire.
Another fundamental point of bringing together the physical and digital is that previously when CVC focused 100% on physical sales, it was in shopping malls or in cities with 100,000 inhabitants, the most expensive sites as we have customers walking through the door of a store and through a computer, we can work with a lower CapEx and a lower OpEx presently. Therefore, we can enter cities of 15,000 inhabitants. Until 2019, CVC was in less than 10% of Brazilian cities. We now have a huge market opening up with 50% of the cities of Brazil, and CVC uses technology to open more stores, where we have that combination of the support of physical sales plus the digital sales.
We had the opening of stores for the fourth quarter for the [Indiscernible] stores. But as part of this back to the basics, we're trying to eliminate all of the issues so that our stores that have a deficit can be cleaned out. We have closed down 26 stores during the fourth quarter. And now in 2024, we expect to close stores of only 5 per quarter, 5 to 20 stores per year, which means that we're [planting] stores with issues with problems with a deficit, and we will go back to a normal pace in store closing. Our goal to grow the number of stores this year is 219 new stores approximately, as we have already been broadly communicating to the market with a significant growth of penetration in smaller cities and cities outside of the capital.
We have corporate governance that is right, a capital structure that is well adjusted, a very clear strategy so that everybody can execute it. We eliminate the risk of execution through a team that has a broad track record in the tourism market. As we have mentioned oftentimes, we have 6 directors in our business units and 4 directors in the support units.
So in our business units, we have Belan, Carla, Hugo, Marvio, Bruno and Diego with deep experience in their verticals and they're responsible for each brand within CVC. On the other hand, we have Fabio Mader, Ricardo, Paulo and Carlos and they work horizontally rendering services to all of the business units. I will now give the floor to Carlos, our CFO, who will go into the details of our figures for the fourth quarter.
Good afternoon, and it's a pleasure to present the operational and financial figures for the fourth quarter '23. On Slide 18, you see the good performance of our confirmed bookings in the fourth quarter. Sales totaled BRL 3.8 billion, an increase of 9.1% versus the fourth quarter '22. We sold BRL 15.4 billion, a growth of 10.4% This growth was driven by CVC leisure in Brazil that grew 18% for the year due to 3 factors, an increase of 20% in same-store sales, a good performance during Black Friday and the opening of 42 stores during the quarter in Argentina, a growth of 20% a year, and 17%.
[Now we had an interruption] [of marketing to some areas], which was correct because of the credit risk and a reduction in international sales hampered by the war in the Middle East. We go to the right of the slide, net revenue and take rate. We had an increase of 9.6% in revenue vis-a-vis the fourth quarter '22 totaling BRL 352 million and a growth of 5.8% for the year totaling BRL 1.3 billion. The growth in revenues in CVC Leisure was 11% below the sales growth. Now given the average term of [boarding] of the passengers due to the share in exclusive products that enhance the working capital dynamic in CVC, as we will see in the other slide.
The graph shows our priority for healthy sales in the 3 business units. We expanded the take rate of CVC Corp by 0.7 points, totaling 9.4% in B2C Brazil.
The expansion was 0.6 percentage points in B2B Brazil, 0.4 percentage points. And in Argentina [Indiscernible] points. In the next slide, we show you the consolidated financial performance. We had an increase in margin and sales, reduction in expenses and a better dynamic of working capital. We reduced our SG&A 28.7%. In January, we had a reduction of 10% of headcount in Brazil. G&A over net revenue had a reduction of 78% to 54% in the fourth quarter.
As a result, we're reporting BRL 80 million of adjusted EBITDA versus only BRL 4 million in the fourth quarter of '22, consolidating a margin of 24.4% for the year, adjusted EBITDA had a growth of 165%. It is important to recall that the result of 2023 in essence was built during the second half of the year after a change in management and the capital increase carried out in June. Another important data is the cash net profit. In the fourth quarter, we delivered BRL 18.8 million versus a loss of BRL 198 million in the same period of '22.
To go down to the capital structure to the right of the page, you can see that we had a reduction of BRL 200 million in our debt for 2 reasons because we had a successful subscription bonus and the breakeven in the operating cash of CVC because of a better dynamic and working capital in Brazil due to the share of exclusive products and an anticipated marketing. As you can see to the left of the slide, we ended the fourth quarter with BRL 483 million.
I would now like to return the floor to Godinho to conclude the presentation.
Thank you, Carlos. And to conclude, of course, we have in the second half of 2023, basically concluded our strategy of back to basics. We enhance sales. We enhance same-store sales. We had a positive dynamic in store opening. We adjusted the profitability structures of B2B and fostered a significant reorganization within the company and we can clearly see the results through the EBITDA that the company delivered not only in the third, but also in the fourth quarter of '23 bringing together sales, a better take rate and an increase in profitability for the third and fourth quarters.
Now along with the governance, the capital structure, the right strategy and the right team for the implementation, we practically have concluded the back to basic strategy with the company at a breakeven position, which was one of our significant goals. And going forward, we will work with a combination of all of these factors.
Additionally, for 2024 we will significantly enhance and streamline the CVC business model because back to the basic is a strategy that extended for 6 months with very good results. Going forward, we have to think about the next 50 years of CVC. And quarter-on-quarter, we will speak about all of these transformational projects that truly streamline the CVC business model.
Thank you very much for your attendance, and this concludes my presentation. With this, we will go on to the question-and-answer session.
[Operator Instructions] Our first question is from Ruben Couto from Santander.
We have 2 questions that are in. First, I would like to hear about trends in the B2B segment, more specifically in the fourth quarter, which is the impact of Israel. How has it impacted the fourth quarter. And how does it compare with the reduction that you had previously [Indiscernible]. We believe this exposure to [Indiscernible] will continue during 2024, which is the procedure you will adopt for this.
Regarding Argentina, if you can share with us something regarding the beginning of the year, this first quarter and which will be the impact because of the devaluation of the peso and perhaps down in consumption that we see in other companies that also happened here in October and November. If in the beginning of the year, there was a more negative macro effect.
Hello, Ruben. This is Godinho. Thank you for the questions. First of all, regarding the B2B dynamic. How did this work? Of course, we have several travel agencies with this focus on religious groups to Israel, we service them through the advanced structure. Now if you look at the total drop in revenues that we had in the B2B segment, I would say that 10% is due to that problem of the war in the Middle East where we had to cancel the trip of groups and postpone the date for the future.
Many of them did not receive a reimbursement. They simply set up another day, but there was negative impact in the boardings of the quarter. 90% of the impact of this drop, as you mentioned, is due to the size that we have with the people traveling on miles before the problems of 1, 2, 3 miles and other companies that had credit problems with the default of at least BRL 100 million in the market and where CVC had no impact whatsoever because of this impact that most of the market was exposed to.
This was very positive for us, of course. Our vision and our goal in B2B that was -- well, that had a transition in the third and fourth quarters is clearly to improve the profitability of this segment in having a higher share, a very high take rate, like we have [Indiscernible], but also in the company that makes BRL 5 billion of gross bookings a year in which we are fostering a significant enhancement in their take rate.
So our focus here is quality in the net revenues. We have quality of the take rate and quality in the service that we offer to travel agent. If you recall, because of this, we separated the business unit that had all been joined together under the B2B unit. We once again created brand advance and these will begin to operate in 2025. Now this led to an enormous evasion of customers and a radical drop in take rate.
All of this has gone back to normalcy with specialized service for each vertical and [indiscernible] going from 3% to 5%. This is what is happening with B2B, the priority is quality and service, of course, with profitability and respect the rule of airline companies and work very carefully with those that are traveling on miles. Of course, we're not going to ignore the rules of the game, whether it is in the hotel sector, airline. Now if the airline set forth the rule that we can service people traveling on miles, we will comply with this and luckily we had no impact of the huge default there was in the market.
Now the dynamic of results in Argentina. As you mentioned before the election, because of the exchange rate gap, it was an advantage to anticipate the purchase of your trip. Before the elections there was a change between the black market and official market of 50%. After the election, this gap dropped to 20%, 25%.
It now stands at 23%. The Argentines times were quite used to this volatility, anticipated their purchases. And we had a significant growth in the confirmed bookings in the fourth quarter. And these will be consumed in the first quarter. The first quarter will have all of the confirmed bookings where passengers will board and this will be positive for us in the first quarter, vis-a-vis the bookings that were confirmed in the fourth quarter. There is another dynamic that has aided and abetted us in the fourth quarter of Argentina, the sale in dollars. Before the election of President Milei, you know that in Argentina, 90% of the share of trips are international traveling and they're quoted in dollars, but you could only sell in pesos. So there is an exposure of the exchange rate, either you are exposed or you work with a hedge, and this was a problem for the company. When the new President took office, the companies are now able to sell [Indiscernible] dollar as this is possible.
We did this in Ola since the beginning of the year. We have Ola working with multibrand agent and El Mundo working with a base of franchise as if it were CBC. A single brand of travel agencies in Argentina that represents what CVC is in Brazil. In the first half of March, we were able to adapt the system of El Mundo so they could sell based on dollars. Now the selling dollars as part of the sales represent 70% of customers buying their tickets on dollar because they don't have the country taxes and the dollar exchange rate is more favorable.
And this gives us a competitive edge. The local online sellers are unable to sell based on dollars. So we have recovered our leadership position in international traveling that represents 90% of the Argentine tourism market. And in March, CVC is now a leader in the issuance of international tickets. We do have some data for the first quarter in Argentina as well.
That was very clear.
Our next question comes from Victor from Itau BBA.
Carlos and Godinho, regarding Argentina, you mentioned a nonrecurring event. If you could give us more detail about this and if we should expect more nonrecurrent events in the coming quarters. My second question refers to working capital. When we look at the line items of supplier advancement and other line items, if you could explain which were the drivers underlying those line items in the fourth quarter and how can we think of the evolution of these line items in the coming quarters. And regarding working capital, if you could come up with a response, taking into account an evolution of the volume of discounts going forward. These are my 2 questions.
Hello, Victor. This is Carlos. I will answer your questions. First, about the provisioning we carried out for Argentina not very different than when we entered CVC Brazil, we reinforced what was in the company. As CEO and CFO, we revised all of the processes, the compliance of the local company. We hired consultants to assess the contingencies in the company, especially Ola, El Mundo and [indiscernible] and we created a provision that we deem to be sufficient.
We're going to follow up on this in the coming quarters. We don't expect to have new provisions for coming quarters. The second point that refers to the working capital dynamic as Godinho underscored in the presentation, we're based on a tripod, which is increase of profitability, reduction of expenses and an enhancement in the company working capital. This quarter, we begin to see a more robust growth of exclusive products and parts -- or sales and installment.
Even if we take away this subscription bond bonus, we did not have the operational burn of cash. The operational cash flow was neutral in the quarter, and we have reduced indebtedness because of the subscription of BRL 225 million reducing the net debt of the company. I hope this has answered your 2 questions.
Our next question comes from Joao Soares from Citi Bank.
We have 2 questions regarding B2C. If you could convey to us your outlook for the beginning of the year. And that extension and penetration of exclusive products, which seems to be interesting, which will be the penetration this year, how plausible is this expansion if we think that airline companies like GOL are facing enormous problems. And this impacts the pace of the increase of penetration of exclusive products. Those are my questions.
Well, thank you for the question. This is Godinho, the B2C dynamic as you know, the B2C dynamic contrary to B2B, where we focus on service and profitability in B2C, we're focusing of course on profitability. You saw the significant increase we had in take rate in the third quarter and were going to maintain that going forward, and we saw continuity of the take rate in the fourth quarter, higher and in line with what we had before the pandemic along with the growth of same-store sales, focusing on profitability of our franchisees. In the fourth quarter, we saw same-store sales.
We didn't highlight this very much, but it was 20% in our base of 1,050 stores. Few companies in the retail market had that type of growth of same-store sales throughout the fourth quarter. This additionally to the growth of our store base. Now the plan has been disclosed in our IR site. At the end of last year, we worked on a presentation along with BTG Pactual to speak about the growth of stores throughout 2024, representing a 30% of expansion of the physical footprint we had.
We opened 60 stores last year, and we're now opening 290 stores throughout this year. Last year, we also had a cleaning out of the base of stores. Stores in a situation of deficit that continue to work. And as part of that policy of transparency towards the market making necessary adjustments in the [indiscernible] of course, it will generate noise in the third quarter and in the fourth quarter, but this is something that has to be done, and it's better to do it initially in the first and second quarters. We're working with these accounting adjustments, nonrecurrent effects that do not have a cash effect and changes in the store base. We opened 42 stores in the fourth quarter, we closed down 28 stores, but this is an adjustment that will not be repeated in the coming quarter.
And in the first quarter, we have returned to a normal level of closing, which is closing 5 stores per half year and 20 stores per year. And we will have net store openings going forward. And you can imagine the benefits this will have on the results of 2025, 2026 and 2027, gaining maturity with a full year of results -- now the harvest, the opening of these new 60 stores that were opened in the second half of the year are at 120% of our historical curve.
We follow up on the stores daily, and they are performing 20% above our historical curve. A truly positive performance, therefore. So B2B, grow margin, grow same-store sales, which is already happening and expand the physical footprint of the stores and we're going to detail that as part of the release for the first quarter. We recently had a convention of CVC Franchisee. We brought together 2,000 people in the city of Gramado with all of the DNA of CVC, we had a large number of stores that were signed up by the existing franchisees, people who have been in the system per year, and are reinforcing their commitment and confidence in the results that we have been obtaining in B2C. So this is the guidance and this is the dynamic that we foresee for B2C throughout 2024, '25 and '26.
The second question referring to the market dynamic for air tickets and penetration of exclusive products now. Our exclusive products represented 7% to 10% of total sales. In the fourth quarter, we had a penetration of 15.6%, increasing penetration twofold as part of the total [Indiscernible] for CVC which is also part of course of that contribution to a higher take rate and an improvement in working capital.
In the first quarter of 2023, we were consuming BRL 220 million per quarter. We zeroed out this account in the fourth quarter. In the season's P&L and in our balance now to put up blockades in freight side -- we also work in airline management and hotel management until the day the companies begin to operate, you have to sell before. You can open up [Indiscernible] without having 6 months before. So everything will be very gradual. We will see this quarter-on-quarter growth in the second, third and fourth quarters. We imagine a penetration that will be double of this or perhaps less throughout the year reaching the end of 2024 because we have to allow the strategy to mature. The company has to deal with the blocks in the system way before to be able to make the most of this type of product in terms of availability and capacity that we have, I will say that we will have more exclusive seats this year than we had in 2018 to 2019.
What is happening this year, the economy is somewhat more sluggish than it was last year. And with a deflation in the capacity of GOL, it is strong, it impacts the market. GOL was a leader, now LatAm has 40% share in the domestic Brazilian market. But LatAm and Azul are growing in SKA 10% a year, while GOL has had a trough to 8% to 10% of SAK. So as net this year, we should have an additional capacity of 5% in domestic flights.
It's not a year of retraction. It should be a year of growth. As demand is somewhat softer than in previous years, and we see this from the data of [Indiscernible] in February where we had a drop in occupation even with a more restrictive network. There's a drop in occupancy vis-a-vis the previous year. We should see the same in March. And this opens up an important window of opportunity with all domestic airlines so that CVC can become a feasible alternative for the occupation of those seats.
Based on our supplier base, we know there is no overlap of clients. Clients buying directly from the owner of the assets, whether they are the owners of the airlines or the owners of hotel networks. Funding alternatives exist in the scrabbling package and they don't even know how much they're paying in the airline part not of the time.
There is a great competitiveness of price availability guaranteed by CVC. So we have a positive dynamic in the domestic scenario, the international scenario is good. The network should grow 14%, 15% this year. All the regions showing growth. Europe with significant growth South America, growing around 25%, which is very positive for us with a deflation in the rates as well as in Europe, and we have a very favorable dynamic in terms of Europe and South America, the Caribbean growing at 15% with Copa.
Once again operating from their base in Florianópolis, which is very important. Copa has 8 operational bases in Brazil. So these 3 regions in 2024 will have an SEK higher than before the pandemic. The only region that's despite having growth, but will not get to the end of the year at the levels before 2019 will be North America. But in 2025, there should be that catch-up. So very generally, therefore, we are positioning ourselves very well even in an adverse scenario domestically in Brazil. We have been able to fully service the need here, excellent now, I don't want to be abusive, but there is an important point regarding the low-hanging fruit in the take rate -- you have done important businesses with franchisees last year.
Now this year, if we exclude that dynamic that is positive of exclusive product, if we think about other fronts to enhance the take rate. What is happening with the franchise and what are other opportunities to grow that line item.
This is Carlos. In the 6 months we have done our homework in terms of take rate and resumed profitability in sales when we look at B2B, the airline take rate was very low. We have practically increased the take rate twofold. These are important sales. We're speaking of a volume of BRL 5 billion per year. What is more important or as important are the losses because of default -- we had a lower take rate in B2B with high losses because of a lack of credit analysis, little efficacy and collection of the travel agencies.
Now you have seen the results. We have been able to significantly reduce our default level, bringing about reversion of provisions and doubling the B2B take rate throughout 2024, this will mark a difference in our results in B2C, perhaps the main detractor was the management of products, specially the exclusive products, they were the wrong products, they would go out for sales without the necessary time with low occupancy rates.
And they brought about low consolidated take rate besides what we underscored at the beginning of the third quarter, which is the right procedure with franchises, net payments of commissions, adjustments in the commission models, and you're quite familiar with. So we are now at a stable level of profitability what we will be seeking as Godinho has shown you is to scale up the business driven by B2C, but to scale up the business without increasing fixed cost in the same proportion to capture gains in the EBITDA.
Our next question comes from Nicolas Larrain from JPMorgan. You can proceed Nicolas and post your question.
We have 2 questions. The first refers to G&A. You have worked with a good rationalization during 2023 and said that you could adjust the situation by 10% in the first quarter. How much more space do you have for further cuts throughout 2024? Or do you think you are at the optimal level based on the size of the company.
Secondly, to refer to funding, the CVC funding has increased quarter-on-quarter, which would be an optimal level that will be the most comfortable for CVC looking forward.
This is Carlos, Nicolas. Regarding the SG&A, we did have significant cuts in expenses in Brazil and Argentina in the first quarter. Now in January, we had a 10% reduction of headcount in Brazil. G&A on revenue, presently is 50%. This figure already had reached 80%, but we still see space for further reductions until the end of the year, the percentage of SG&A on net revenue. What we would like to underscore is that the SG&A reduction come hand-in-hand with an increase in sales, the operations we are carrying out, the level of satisfaction of customers has changed completely. We are [RA 1000] in [indiscernible]
The company is ever more dynamic and expeditious. We have taken out layers that made the company flow. And we are scaling up the operation, the sales and growth along with a reduction in the G&A. I remind you that in some areas, we have reinforced the SG&A in core areas. We increased SG&A. We reinforced the structure in area that don't bring value in the company results and for control here, we were very assertive in terms of reducing fixed costs. Now regarding the CVC funding, the direct funding of CVC is about 10% presently, what we are seeking here is not to increase direct funding with CVC.
It's something different. Once again, Godinho mentioned this in the presentation. The core of the CVC is to have exclusive products for our customers. And we have to offer alternative mode of payment, alternative to the credit card, and this is what we're looking for. That is why we have payroll credit, the [Indiscernible] a partnership with bank like Bank of Brazil. And we're going to offer ever more payment offers to the customers, so they are not hostages to credit cards, a trip of a family can be very costly nowadays.
Normally, the customer doesn't have the credit card limit. Nobody wants to travel this way as most of the expenses during the trip will take place at the site of destination. This is one of the strategic goals, a strategic project of the company to reinforce and offer more payment offers to the client besides the credit card, of course.
Thank you, Nicolas, for the question. We would now like to conclude the question-and-answer session. We're going to return the floor to the executives for the closing remarks of the company.
Thank you once again for your attendance. This is Godinho here. We have had a very intensive conversation. We're getting to the end of the first stage of our management, where we conclude the implementation of the back to basics. We have the right governance. We have organized the capital structure of the company, a simple strategy you saw that from top to down of the company. Everybody is aware of where we are heading. Our suppliers, our employees, our shareholder base, our franchisee.
It is clear to everybody, which path the company is taking the Strategic Director of the company and the team with a broad track record in each of the verticals thus minimizing the risk of execution and leveraging results, which is what we saw in the fourth quarter -- in the third quarter, but mostly in the fourth quarter that growth of share in B2C same-store sales growth, net sales with an increase as of this year, stabilization of the take rate at the top level as we had in the third and fourth quarters and continuity and stability of that level of 9.5%, a robust reduction in expenses, prioritizing marketing sales, the core of the company and the after sales part.
That's what we do. Growing sales, increasing the satisfaction of the franchisee. And of course, record levels in servicing and assistance to the customers and in satisfaction levels of our customers. We had one of the worst grade for 4 consecutive months. We have the highest score in [indiscernible] were [RA 1,000] for 4 consecutive months already cutting down costs, but with an agile company, offering quality within the control processes of the company, this is the path that we will follow.
And gradually during the coming quarters, we will speak about the transformational product and projects that will streamline the management model of CVC that we're preparing for the next 50 years. We have celebrated 50. Time to think about the next 50. Thank you for your attendance.
The fourth quarter 2023 Conference Call for CVC ends here. Thank you all for your attendance. Have a good day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]