Post on 29-May-2015
description
June, 2011
CORPORATE PRESENTATION
INVESTOR RELATIONS
WHY THIS IS “THE MOMENT” OF BRAZILIAN EDUCATION SECTOR?
STRENGTHENING THE FOUNDATIONS
Brazil
Chile
MexicoArgentina
France
South Korea
Germany
Japan
USA
Russia
Evolution
Per
form
ance
Zero
450
Performance and Evolution - Countries
Change in Educational Scenario in Brazil
57%
47%39%
32%25%
17%10%
1950 1960 1970 1980 1991 2000 2010
Illiteracy Rate - Brazil
2
0
0,2
0,4
0,6
0,8
1
Started BasicSchool
Finished BasicSchool
Started HighSchool
Finished HighSchool
Started HigherEducacion
1993 1998 2003 2009
Source: IBGE
3
Income Distribution(In millions of people)
Source: Cetelem - O Observador
Consumer’s Confidence
Unemployment Rate (%)
Source: BC, ACSP
Source: BC, ACSP
Aging Population
Source: IBGE
WHY THIS IS “THE MOMENT” OF BRAZILIAN EDUCATION SECTOR?
GOVERNMENT SUPPORT
Student Financing
Long-term financing to low-income students
3.4% p.a. nominal interests with 18-year term
No guarantor required from 2011 onwards
Allows further penetration in Classes C and D
3%6% 7%
12% 13%
33%
FIES Inflation2011E
SavingsAccount
Selic Mortgages AutoFinancing
Comparative Interest Rates
4
WHY THIS IS “THE MOMENT” OF BRAZILIAN EDUCATION SECTOR?
2004 2005 2006 2007 2008 2009 2010
2004 2005 2006 2007 2008 2009 20102004 2005 2006 2007 2008 2009
Credit in Brazil
Mortgage Lending in Brazil
Total Light Vehicle Sales
Financed Homes
+19%
+41%
+11%
+31%
CAGR
CREDIT EVOLUTION
5
WHY THIS IS “THE MOMENT” OF BRAZILIAN EDUCATION SECTOR?
New units constructed / acquired through housing finance in Brazil Source: BACEN
Evolution of brazilian mortgage amount financed. Source: CBIC/BACEN
Total number of light vehicles sold in Brazil(financed and non financed). Source: ANFAVEA.
Total amount of Credit in Brazil. Source: BACEN
2020 EDUCATION SECTOR
6
Sensitivity Analysis– Annual Growth
Dro
p-ou
t Ra
te
“Conversion” of Working Adults
6,0 6,5 7,0 7,5 8,012,0 2,7 4,0 5,2 6,5 7,711,5 3,2 4,5 5,7 7,0 8,211,0 3,7 5,0 6,2 7,5 8,710,5 4,2 5,5 6,7 8,0 9,210,0 4,7 6,0 7,2 8,5 9,7
3,500Children Start High School
Every Year
3,500Children Start High School
Every Year
700 go straight to the Colleges
700 go straight to the Colleges
‐1,440 Graduated& Drop‐out
‐1,440 Graduated& Drop‐out
14,000 + 1,050 = 15,050Youngsters in Class C & D with High School Degree are out of the Colleges
14,000 + 1,050 = 15,050Youngsters in Class C & D with High School Degree are out of the Colleges
350 Private Higher Education Institutions
350 Public Institutions
350 Private Higher Education Institutions
350 Public Institutions
1,603 New Enrollments1,603 New Enrollments
163 New Students “Net" per Annum163 New Students “Net" per Annum
2.7% Growth Rate per Annum
2.7% Growth Rate per Annum
7,637 Total Enrollments Estimated for 2020
7,637 Total Enrollments Estimated for 2020
1,750 Graduated in High School
1,750 Graduated in High School
1,750 Drop‐out
High School
1,750 Drop‐out
High School 50%
1,050 stop studing
1,050 stop studing
60%
‐720 Graduated‐720 Drop‐out‐720 Graduated‐720 Drop‐out
12%
12%
903 Young Adults in Private Higher Education Institutions
903 Young Adults in Private Higher Education Institutions
6%
6,000 Total Base of The System
6,000 Total Base of The System
WHY THIS IS “THE MOMENT” OF BRAZILIAN EDUCATION SECTOR?
Governmenttarget:
10,000 studentsby 2020
Governmenttarget:
10,000 studentsby 2020
Break‐even CAGR:5% per year
Break‐even CAGR:5% per year
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...
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...
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NATIONAL COVERAGE
241k students
72 campuses in 36 major cities in Brazil
51 accredited Distance-learning Centers
78 programs
ESTACIO’s Regional Footprint¹Highlights
ESTACIO AT‐A‐GLANCE
Key Figures
(1) Estácio also owns a University in Paraguay with 2.7 thousand students
University Center
University
College
In process to Upgrade to University Center
. Distance Learning Center
Nationwide operations, covering states that account
for 86% of GDP and 82% of population– Largest private post-secondary education group in Brazil
– Leading presence in the large and underserved working adults target group
– Diversified portfolio of programs with differentiated quality and competitive pricing
– First Brazilian education company listed in Novo Mercado
7
2335
141
178
218 206 210 241
1.9%
14.8%
COMPANY´S BACKGROUND
KEY MILESTONES
– New academic model
– 2005 – 2007: for-profit transformation
Greenfield Growth
Consolidation ofnational leadership
Listed Company
and preparation for growth
1970 … … 2002 … … 2007 2008… 80’s - 90’s …
# of students (‘000)
CAGR
Turn aroundTurn aroundIPO
OnFollow-On
– Acquisitions in the São Paulo market – GP acquires
20% of Estácio
– Estácio joins in Novo Mercado
– Organic growth
– M&A
– Efficiency gains
– Distance Learning
– Beginning of management restructuring
Note: Until 2007 the student base did not include graduate students.
2009 2010 2011
1.5%
41.7%
4.8%
22.5% (5.5%)
8
– Distance learning launching
– Shared Services Center (“SSC”)
MANAGEMENT TEAM WITH LARGE EXPERIENCE
9
Holds a bachelor’s degree in business administration from FGV and a bachelor’s degree in law from the USP Joined GP in 2005 as a Partner More than 15 years of investment banking experience as Head of M&A at DLJ-Brazil and Banco Garantia and as a Partner of Singular Served as Senior Vice President for Business Development and Board Member at UOL and Grupo Folha
Eduardo AlcalayChief Executive Officer
Rogerio MelziCFO and Investor Relations Officer
João Luís BarrosoDevelopment and Corporate Relations
Miguel de PaulaHuman Resources Officer
Paula CaleffiChief Academic Officer
Pedro GraçaChief Marketing Officer
Holds a bachelor’s degree in Mechanical Engineering from Mackenzie University, a bachelor’s degree in Business Administration from FGV and Master in Business Administration from Stanford University.
Suplly Chain Planning & Performance at Inbev/Labatt , Financial Planning Officer at Suzano Holding and Associate at Booz-Allen.
Virgilio GibbonChief Operating Officer
Holds a bachelor’s degree in Economy from the University Gama Filho, master and doctorate’s degree in Economy from the FGV Institutional Relations Officer at Vivo, CEO at CBS Security System, Corporate Support Director at CSN. RJ Secretary of the Treasury Chief and Assistant Secretary for Economic Policy of the Ministry of Economy, Planning and Finance
Holds a bachelor’s degree in Business Administration from Ulbra University, master in Business Administration at USP and STC Executive at Kellog University, Strategic Human Resources Planning at Michigan University.
HR general manager at Gerdau, HR Officer at Farmasa and HR Officer at Votorantim Cimentos Ltda.
Holds a bachelor’s degree in History from Universidade Católica/RS and doctorate’s degree at Universidad Complutense de Madrid. Served as Academic Development officer at University of Vale do Rio dos Sinos.
Holds a bachelor’s degree in System Analysis from Mackenzie University and postgraduate in Business Administration at FGV. Co-owner of ENAD and Sistema Energia de Ensino. Responsible for the Estacio’s Distance Learning start-up, expansion and consolidation.
Holds a bachelor’s degree and a graduate degree in Economy from PUC-RJ. Partner and Director at TOTVS Consulting and responsible for implementing Estácio’s Shared Services Center. More than 10 years experience at Consulting, mostly dedicated to Operations and Efficiency related projects.
TURN AROUND AND RESTRUCTURING
10
People & Culture
Processes & IT
Product & Marketing
PLATFORM FOR GROWTH & INNOVATION
KEY MILESTONES Seeding Harvesting
2335
141
178
218 206 210 241
1.9%
14.8%
COMPANY´S BACKGROUND
– New academic model
– 2005 – 2007: for-profit transformation
Greenfield Growth
Consolidation ofnational leadership
Listed Company
and preparation for growth
1970 … … 2002 … … 2007 2008… 80’s - 90’s …
# of students (‘000)
CAGR
IPO
Follow OnFollow-On
– Acquisitions in the São Paulo market – GP acquires
20% of Estácio
– Estácio joins in Novo Mercado
– Organic growth
– M&A
– Efficiency gains
– Distance Learning
– Beginning of full management restructuring
Note: Until 2007 the student base did not include graduate students.
2009 2010 2011
1.5%
41.7%
4.8%
22.5% (5.5%)
11
– Distance learning launching
– Shared Services Center (“SSC”)
Turn aroundTurn around
Focus on the means towardsustainable results
12
PROCESSES ‐ SSC
PROCESSES STANDARDIZATION AND CENTRALIZATION
72 CAMPUSES7.2K TEACHERS3.5K ADM. EMPLOYEES241K STUDENTS36 LOCATIONS
INTE
GRA
TIO
N
SERV
ICE
LEVE
L AG
REEM
NEN
TCENTRALIZATION SCALE
STANDARDIZATION EFICCIENCY
HUMAN RESOURCES & PAYROLL
ACCOUNTING
BILLING & COLLECTION
INTEGRATION
ACADEMIC OPERATIONS & REGULATORY
PROCUREMENT
TECNOLOGY
300 FTE250k invoice/month8k payment/month17k MEC processes360k candidates18 balance sheets
SSC
2009
13
Academic Solution400 thousand
students
Over the next 3 years Estácio will invest R$30 mm to completely redefine its technology platform in order to boost performance and increase reliability to users.
CHANGING THE PLATFORM FOR GROWTH
Adding New Features
CRM
Students briefcase (scanned documents)
High performance
PROCESSES – LOOKING AHEAD
NEW IT ARCHICTECTURE
PRODUCT
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NEW ACADEMIC MODEL
Reduced costs …
Improved gross margin
Integrated curricula with shared disciplines
20% of distance learning content in on-
campus programs
20% of on-line self-learning activities
OTHERS
Innovation and product reengineering aiming at better quality at competitive pricing
... with quality and differentiation
Higher attraction and retention of
students
41 programs updated to labor market
demands (90% of Estácio’s current student
base)
Tailor made text books bundled in tuitions
Comprehensive student portal
On-line library with more than 2,000 titles
ESTACIO
UNIQUE PRODUCT OFFERING
Quality curricula
Improved access to learning tools
Accessible prices
Bundled in financing
15
CONTINUOUS INNOVATION
16
PEOPLE & CULTURE
Getting the right people at the right place– Expertise in education combined with experience from several industries
– Visits to campuses are constant in CEO’s agenda– Monthly Performance Meetings with regional divisions– COO visited all units more than once over the last 2 years
Aligning people through meritocracy & variable compensation– Stock option to 48 senior executives (up to 4.5% of capital to be granted)– More than 300 managers with individual, monthly tracked goals driving their variable compensation (financial and
non financial)– 20% of professors with variable compensation based on performance
CULTURE
Estacio’sway
Attracting and retaining new talents– Trainee programs and accelerated career planning based on meritocracy– Culture set to groom internal talents for self-sustained growth– Excellence in human talents in all levels is top priority
– Zero-based budgeting– Matrix budgeting– Business Intelligence
– “Gestão a vista”– Six Sigma – Benchmarking
Using managerial tools to develop and improve processes & results
Managing by “walking around” to guarantee execution and disseminate culture
CHALLENGE TO IMPLEMENT ALL THE CHANGES...
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Fixing the company – Ex.: returning with program coordinators (R$ 12 mm/year)
Developing an entirely new product
Cleaning up student base
Creating a new culture
Revamping company’s image
Investing in infra structure, technology and services
Holding inflationary pressures and…
Dealing with labor tax (INSS) ramp up (@ R$16mm/year)
15
30
45
60
2007 2008 2009 2010
INSS RAMP UPBrazilian Social Security Institute(in R$ millions)
...WITHOUT LOSING MARGINS
EBITDA MARGIN
Main Operating Indicators(‘000)
2008 2009 2010
Total Student Base 218.3 205.7 210.0
On-Campus 218.3 196.1 183.8
Distance Learning - 9.6 26.2
Main Financial Indicators¹(R$ million)
2008 2009 2010
Net Revenue 980.0 1,008.8 1,016.2
Cost of Services (629.1) (656.6) (657.5)
Sales (83.9) (91.6) (95.3)
G&A (177.7) (151.7) (148.8)
EBITDA 98.4 119.1 127.3
Margin EBITDA 10.0% 11,8% 12.5%
¹ Excluding Depreciation and non recurring items.
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10.0%11.8% 12.5%
17.4%
16.8%
19.9%21.7%
26.2%
2008 2009 2010 1Q11
EBITDA Margin EBITDA Margin ex. the Brazilian Social Security Institute (INSS)
RESULTS
Changing the tire without parking the car
...AND IMPROVING QUALITY
COURSES EVALUATION ON‐SITE VISITS 2010/11
19
58
60
64
56 56
62
2008 2009 2010
PESA Corporate Climate
PESA AND CORPORATE CLIMATE
46 Courses
50 Courses
9 Courses7 Courses
Grade 3 Grade 4 Grade 5 No grade
Source: Copernicus, Hay.
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People & Culture
Processes & IT
Product & Marketing
STRONG FOUNDATION
2011 – LAST YEAR OF LABOR TAX STEP‐UP…
TIME TO HARVEST
ORGANIC GROWTH & MARGIN GAINS
21
3% Market growth + inflation pass-through
800 basis points over 4 years (2011-2014)
200
200
150
250
800
New academic model
Faculty costs
Other costs
G&A
Total
Benchmarking / Matrix and Zero-based Budgeting/ Centralization
Dilution through M&A and Distance Learning
Online / Sharing / Off-class activities
Academic planning
DISTANCE LEARNING
22
From zero to 30 thousand students in 1.5 years
Expect to reach 80 thousand students in 4 years
High-quality product, using campuses as centers
11 programs and growing
Opportunity to increase coverage
6.2 7.5
14.919.2
22.3 23.728.2
1.62.1
1.5
1.7
2.42.5
2.7
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
(Students in thousands)
+296.2%
24.7
20.9
16.4
9.67.8
Graduate
Undergraduate
26.2
30.9
DISTANCE LEARNING GROWTH
NEW PRODUCTS
23
Revamp Graduation Programs
Preparatory courses
Take advantage of Distance Learning platform
Cross Selling
Academia do Concurso
Over 29,000 students in 2010
R$ 10.4 million net revenue in 2010
Corporate Universities
Non regulated short-term products
EXECUTIVE DIRECTOR FOCUSED ON NEW PRODUCTS
M&A
24
ACQUISITIONS WITH DISCIPLINE
North and NE48
Central Brazil30
SP and South32
Rio de Janeiro10
Region><# of Targets>
120
2.016 privateEntities
IRR Valuation
Post-Audit
Targets for variable compensation
linked to Business Plan
Size over 2 thousand students Attractive cities Strategic fit Assets quality
Main Financial Indicators(R$ million)
1Q10 1Q11 Chg
Net Revenue 256.0 275.8 7.7%
Cost of Services (158.6) (168.7) 6.4%
Gross Margin 35.9% 36.8% 2.5%
Sales (24.4) (29.0) 18.9%
G&A (36.6) (36.1) -1.4%
EBITDA 39.6 47.9 21.0%
Margin EBITDA 15.5% 17.4% 1.9 p.p.
* Excluding depreciation and non recurring items.
1Q11 FIRST RESULTS
25
2nd time in a row… all times record for intakes
48.9 61.5
10.212.0
1Q10 1Q11
59.173.5
Distance LearningOn‐Campus Total Student
+24.4%
33.0 39.26.4
11.1
3Q09 3Q10
39.6 50.3+27.0%
STUDENT INTAKES
2 new greenfield campuses Sulacap
Chacara Flora
4 M&A Atual
FAL
Academia do Concurso
FATERN
EXPANSION
4.500 students
2.400 students
29.000 students
3.350 students
Chacara Flora
Sulacap
Atual
Quality + Profitability = Sustainability
CONCLUSION
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Investor Relations:Flávia de Oliveira
E‐mail: flavia.oliveira@estacio.brPhone: +55 (21) 3311‐9789Fax: +55 (21) 3311‐9722
Address: Av. Embaixador Abelardo Bueno, 199 – Office Park – 6thfloorCEP: 22.775‐040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil
Website: www.estacioparticipacoes.com/ir
This presentation may contain forward‐looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ereprojections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to finance EstácioParticipações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of thesector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets are ourinterests in SESES, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 312007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, relative to the first three months of 2007, as if the Company had beenorganized on January 1 2007. Additionally, information was presented on an adjusted basis, in order to reflect the payment of taxes on SESES, our largest subsidiary, which fromFebruary 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 thePROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for anyother corporate purposes.
IR CONTACTS
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