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2Q11 RESULTS
Eduardo AlcalayCEO
August 2011
Rogério MelziCFO and Investor Relations Officer
HIGHLIGHTS
2
Estácio is going through its best time in recent years
Resume of our on campus student base organic growth
Acquisitions concluded
Several approvals of new courses obtained
In loco visits with excellent grades
Launch of two greenfields
Preparation for the launch of the tablets for the second half of 2011
NEW DISCLOSURES
3
Receivables
Acquisitions
Non recurring items
Debt
We welcome the market's demand for greater transparency
RESULTS’ HIGHLIGHTS
4
Strong fundamentals, strong results
Main Indicators (R$ MM) 2Q10 2Q11 Change 2Q11 ex. acquisitions Change
Net Revenue 258.2 289.9 12.3% 277.2 7.4%
Recurring EBIT 11.0 17.1 55.5% 16.4 49.1%
Recurring EBITDA 18.7 26.5 41.7% 25.6 36.9%
Recurring EBITDA Margin 7.2% 9.1% 1.9 p.p. 9.2% 2.0 p.p.
Main Indicators (R$ MM) 1H10 1H11 Change 1H11 ex. aquisições Change
Net Revenue 514.2 565.7 10.0% 548.5 6.7%
Recurring EBIT 43.3 55.8 28.9% 54.7 26.3%
Recurring EBITDA 58.4 74.3 27.2% 73.0 25.0%
Recurring EBITDA Margin 11.4% 13.2% 1.8 p.p. 13.3% 1.9 p.p.
STUDENT BASE
5
ON CAMPUS UNDERGRADUATE STUDENT BASE¹(‘000 students)
We reached the inflection point at the on campus student base (ex. acquired companies)
Early Renewal Program anticipates enrollment process for veterans
More than 600 courses already approved by MEC launches planned by 2012
Mentoring and support structures reinforce growth in online Distance Learning
201.8
186.9182.8
173.1
181.6
150
160
170
180
190
200
210
1H09 2H09 1H10 2H10 1H11
¹ Excluding acquisitions 1H11
DISTANCE LEARNING STUDENT BASE(‘000 students)
9.6
20.9
26.2
34.0
0
10
20
30
40
2H09 1H10 2H10 1H11
193.9 194.7
20.9 34.010.0
1H10 1H11
OPERATING PERFORMANCE – STUDENT BASE
6
+11.1%
STUDENT BASE – EDUCATIONAL SEGMENT
Distance LearningOn campus (‘000 students)
11.1% increase on the student base due to distance learning segment and acquisitions
On campus student base reverses downward trend and grows 0.4% this half-year, and 4.6% overDecember 2010.
214.8
238.7
Total Student BaseAcquisitions 1H11
258.2 289.9 277.2
111.0117.9 114.3
2Q10 2Q11Consolidated
2Q11ex. Aquisitions
1H11
OPERATING REVENUE
7
On campus average ticket grows with inflation
Discounts and new courses launch reduce the Distance
Learning average ticket
OPERATING REVENUE (In R$ million)
369.2407.8
Net Revenue Deductions Gross Revenue
(R$) 2Q10 2Q11 Chg
Average On-Campus Ticket 423.8 443.7 4.7%
Average On-Campus Ticket Ex. Acquisitions
423.8 444.8 4.9%
Average Distance Learning Ticket
173.8 170.6 -1.9%
+10.5%
+12.3%
391.6
CASH COSTS 2Q11
8
*Cost of Services excluding non recurring and depreciation.
More efficient management of personnel and other costs offset the step-up of the Social Security and
Textbooks Materials costs rise
Vertical Analysis (% of Net Operating Revenue) 2Q10 2Q11 Change 2Q11 ex.
acquisitions Change
Recurring Cash Cost* -69.8% -67.6% 2.2 p.p. -67.6% 2,2 p.p.
Personnel -44.4% -41.5% 2.9 p.p. -41.3% 3,1 p.p.
Brazilian Social Security Institute (INSS) -8.8% -9.2% -0.4 p.p. -9.2% -0,4 p.p.
Rentals, Condominium Fees and Municipal Property Tax -9.4% -8.9% 0.5 p.p. -9.0% 0,4 p.p.
Textbooks Materials -1.7% -3.3% -1.6 p.p. -3.4% -1,7 p.p.
Others -5.5% -4.7% 0.8 p.p. -4.7% 0,8 p.p.
CASH COSTS 1H11
9
*Cost of Services excluding non recurring and depreciation.
Vertical Analysis (% of Net Operating Revenue) 1H10 1H11 Change 1H11 ex.
acquisitions Change
Recurring Cash Cost* -65.9% -64.9% 1.0 p.p. -64.8% 1.1 p.p.
Personnel -41.8% -40.4% 1.4 p.p. -40.1% 1.7 p.p.
Brazilian Social Security Institute (INSS) -8.4% -9.1% -0.7 p.p. -9.1% -0.6 p.p.
Rentals, Condominium Fees and Municipal Property Tax -9.3% -9.0% 0.3 p.p. -9.1% 0.3 p.p.
Textbooks Materials -1.3% -2.2% -0.9 p.p. -2.3% -1.0 p.p.
Others -5.1% -4.2% 0.9 p.p. -4.2% 0.9 p.p.
SELLING, GENERAL & ADMINISTRATIVE EXPENSES2Q11
10
*SG&A Expenses excluding non recurring and depreciation.
Vertical Analysis (% of Net Operating Revenue) 2Q10 2Q11 Change 2Q11 ex.
acquisitions Change
SG&A* -24.6% -23.6% 1.0 p.p. -23.5% 1.0 p.p.
Selling Expenses -10.0% -11.0% -1.0 p.p. -11.0% -1.0 p.p.
PDA -5.8% -6.0% -0.2 p.p. -6.0% -0.1 p.p.
Marketing -4.1% -4.9% -0.8 p.p. -5.0% -0.9 p.p.
G&A Expenses* -14.6% -12.6% 2.0 p.p. -12.4% 2.2 p.p.
Personnel and Payroll charges -6.6% -5.6% 1.0 p.p. -5.7% 1.0 p.p.
Third-party services -3.6% -2.9% 0.8 p.p. -3.0% 0.6 p.p.
Machinery rental and leasing -0.3% -0.1% 0.2 p.p. 0.0% 0.3 p.p.
Other Operating Renevues 1.3% 0.8% -0.5 p.p. 0.8% -0.5 p.p.
Provision for Contingencies -0.9% -0.2% 0.7 p.p. -0.2% 0.7 p.p.
Others -4.5% -4.7% -0.2 p.p. -4.5% 0.0 p.p.
SELLING, GENERAL & ADMINISTRATIVE EXPENSES1H11
11
*SG&A Expenses excluding non recurring and depreciation.
Vertical Analysis (% of Net Operating Revenue) 2H10 2H11 Change 2H11 ex.
acquisitions Change
SG&A* -24.2% -23.2% 1.0 p.p. -23.2% 1.0 p.p.
Selling Expenses -9.7% -10.7% -1.0 p.p. -10.8% -1.0 p.p.
PDA -3.9% -4.0% -0.1 p.p. -3.9% 0.0 p.p.
Marketing -5.8% -6.7% -0.9 p.p. -6.8% -1.0 p.p.
G&A Expenses* -14.4% -12.4% 2.0 p.p. -12.4% 2.0 p.p.
Personnel and Payroll charges -6.4% -5.6% 0.8 p.p. -5.7% 0.7 p.p.
Third-party services -4.3% -3.3% 1.0 p.p. -3.4% 0.9 p.p.
Machinery rental and leasing -0.3% -0.2% 0.1 p.p. -0.2% 0.1 p.p.
Other Operating Renevues 1.0% 0.7% -0.3 p.p. 0.7% -0.3 p.p.
Provision for Contingencies -0.4% 0.5% 0.9 p.p. 0.5% 0.9 p.p.
Others -3.9% -4.5% -0.6 p.p. -4.4% -0.5 p.p.
PDA AND RECEIVABLES
12
Accounts Receivable (R$ MM) 2Q10 3Q10 4Q10 1Q11 2Q11 Consolidated
2Q11 ex. aquisitions²
Gross Accounts Receivable 252.4 264.1 210.9 234.4 273.0 250.4
FIES 5.4 17.5 15.3 21.2 25.4 25.6
Tuition Monthly Fees 215.3 190.4 157.4 164.6 198.7 178.1
Cards Receivable 6.0 11.8 6.9 12.8 10.8 10.2
Agreement Receivables 23.9 41.5 26.9 31.7 32.4 30.8
Fees Receivables 1.8 2.9 4.4 4.1 5.7 5.7
Credits to Identify (2.4) (7.8) (9.2) (5.5) (6.8) (7.4)
Provision for Doubtful Accounts (102.2) (107.3) (45.4) (49.9) (55.8) (44.6)
Net Accounts Receivable 147.7 148.9 156.3 179.0 210.5 198.5
(-) FIES (5.4) (17.5) (15.3) (21.2) (25.4) (25.6)
Net Accounts Receivable Ex. FIES 142.4 131.5 141.0 157.8 185.0 172.9
Net Revenues (Last 12 months) 1,010.0 1,008.1 1,016.2 1,036.0 1,119.3 1,050.5
Days Receivables Ex. FIES* 51 47 50 55 60 59
¹ Calculated based on net revenue in the last 12 months² Acquired companies since 2011: Atual, FAL, FATERN e Academia do Concurso.
AGING OF RECEIVABLES AND AGREEMENTS
13
Breakdown of accounts receivable by age (R$ millions) 2Q10 % 2Q11 %
FIES 5.4 2% 25.4 9%
Not yet due 32.9 13% 62.4 23%
Overdue up to 30 days 28.6 11% 35.9 13%
Overdue from 31 to 60 days 23.4 9% 27.9 10%
Overdue from 61 to 90 days 22.6 9% 27.9 11%
Overdue from 91 to 179 days 38.6 15% 37.8 14%
Overdue more than 189 days 100.8 40% 55.8 20%
Total 252.3 100% 273.1 100%
Breakdown of agreements by age (R$ millions) 2Q10 % 2Q11 %
Not yet due 10.9 40% 19.1 59%
Overdue up to 30 days 6.6 25% 4.8 15%
Overdue from 31 to 60 days 1.3 5% 1.5 5%
Overdue from 61 to 90 days 1.6 6% 1.4 4%
Overdue from 91 to 179 days 3.2 12% 2.4 8%
Overdue more than 189 days 3.4 12% 3.1 10%
TOTAL 26.9 100% 32.4 100%
% over Net Accounts Receivable 18% 15%
PROVISION FOR DOUBTFUL ACCOUNTS
14
In R$ millionsGross increase in the provision for
deliquency
Deliquencyrecover
Additionalprovision, net Credit risk - FIES
Write off of charges and unidentified
depositsTotal
Tuitions and fees 46.1 (22.3) 23.8 0.2 (2.4) 21.6
Acquired Companies 1.1 - 1.1 - 1.1
TOTAL 47.3 (22.3) 25.0 (2.4) 22.8
In R$ millions 12/31/2010 Additional provision, net
AcquiredCompanies effect Write off 06/30/2011
Tuitions and fees 45.4 23.8 - (24.6) 44.6
Acquired Companies - 1.1 10.0 - 11.2
TOTAL 45.4 25.0 10.0 (24.6) 55.8
NO RECURRING ITEMS
15
(R$ millions) 2Q10 2Q11 Consolidated
2Q11 Estácio
2Q11 Acquired¹
Costs (0.2) (1.4) (0.8) (0.5)
Personnel (0.2) (1.1) (0.8) (0.3)
Others - (0.2) - (0.2)
Expenses (1.8) (2.2) (1.7) (0.4)
Personnel (0.9) (0.4) (0.4) (0.0)
M&A - (1.4) (1.4) (0.0)
Others (0.9) (0.4) - (0.4)
Total (2.0) (3.5) (2.5) (1.0)
Costs and personnel expenses related to termination of employment contract due to organizational
restructuring
The cost of M&A are mostly fees, consulting, travel expenses and integration.
¹ Acquired companies in 2011: Atual, FAL, FATERN e Academia do Concurso.
ACQUIRED COMPANIES RESULTS
16
Highlights(R$ milhões) Atual FAL FATERN FABEC ACADEMIA DO
CONCURSO
Net revenue 4.8 2.2 3.1 0.4 2.2
Recurring Gross Profit 1.5 0.4 1.1 0.1 0.7
Recurring gross profit margin 31.4% 18.7% 36.0% 16.4% 34.4%
Recurring EBITDA¹ 0.9 -0.1 0.5 0.0 -0.5
Recurring EBITDA Margin 19.5% -5.9% 15.6% 11.9% -21.8%
Recurring Net Income 0.9 -0.2 0.3 0.0 -0.5
Recurring Net Income Margin 17.8% -8.5% 8.4% 11.9% -24.0%
Atual and FATERN already contributing positively to the consolidated margin following the integration of
administrative structure synergies
Academia do Concurso goes through intense restructuring and must operate via the distance learning
platform next year
¹ Corporate expenses not included.
18.7
26.5 25.6
2Q10 2Q11Consolidated
2Q11ex. aquisitions
EBITDA AND NET INCOME
17
9.1%
7.2%
Recurring EBITDA Margin Recurring EBITDA Recurring Net Income
EBITDA(In R$ million)
NET INCOME(In R$ million)
Recurring Net Income Margin
+41.7%9.2%
9.9
11.411.0
2Q10 2Q11Consolidated
2Q11ex. aquisitions
3.9%
3.9%
+15.2%
4.0%
1.9 p.p. of margin gain
NET INCOME 2Q10 X 2Q11
18
NET INCOME BRIGDE 2Q10 X 2Q11(R$ millions)
Recurring Net Income Positive Variation Negative Variation
¹ Acquired companies in 2011: Atual, FAL, FATERN e Academia do Concurso.
1.2 / 12.0%
CASH FLOW 2Q11
19
CASH FLOW 2Q11(In R$ millions)
Recurring Operational Cash Flow
¹ Financial Result except Operating Financial Result² Composition of Investments: Acquisition (R$33.9 million) + Expansion CAPEX (R$3.3 million) + One Time Capex (R$14.7 million)
MILESTONES – OPERATION
20
SULACAP CHÁCARA FLORA
Sulacap
Atual
E3 – ESPAÇO ESTÁGIO EMPREGO
TRAINEE PROGRAM
Strengthen presence
and improve image in
SP
5,000 m²
Partnership with Alain Ducasse Formation and
the École Hôtelière de Lausanne
Room for career
guidance to students
More than 40,000 offers of internship, more
than 7,000 offers of employment and 30
events (fairs, workshops and lectures)
Merger of Vila Valqueire
and Bangu campuses
Reduction of fixed costs
Better infrastructure and good location increases
the possibility of attracting students
Attraction and retention of young talents
More than 12,000 registered for 15 seats
Individual development plans
MILESTONES ‐ FINANCIAL
21
2nd Share Buyback Program: 3,323,796 shares may be acquired, representing
5% of the total 66,475,925 shares outstanding.
Level I ADR Program: Each ADR represents one common share ("ESTC3") and is
traded on the U.S. OTC market under the ticker "ECPCY”.
Loan from IFC: R$48.5 million within 10 years (3 years grace period). The cost will
be in Brazilian reais (CDI), equivalent to 6 months LIBOR + 3.5% p.a.
22
IR CONTACTS
This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results;these are ere projections and. as such. are based solely on the Company management’s expectations regarding the future of the business and its continuousaccess to capital to finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions. government rules.competitive pressures and the performance of the sector and the Brazilian economy as well as other factors and are. therefore. subject to changes withoutprevious notice. We are a holding company. and our only assets are our interests in SESES. STB. SESPA. SESCE. SESPE. SESAL. SESSE. SESAP. UNEC. SESSA andIREP. and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007. theinformation presented herein is for comparison purposes only. on a proforma unaudited basis. relative to the first three months of 2007. as if the Company hadbeen organized on January 1 2007. Additionally. information was presented on an adjusted basis. in order to reflect the payment of taxes on SESES. our largestsubsidiary. which from February 2007. after becoming a for-profit company. is subject to the applicable taxation rules applied to the remaining subsidiaries.except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not beconsidered as a basis for calculation of dividends. taxes or for any other corporate purposes.
Investor Relations:Flávia de Oliveira
Email: [email protected]: +55 (21) 3311-9789Fax: +55 (21) 3311-9722
Address: Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floorCEP: 22.775-040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil
Website: www.estacioparticipacoes.com/ir