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Acquisition of Uniasselvi - mzweb.com.brE7%E3o%20... · Marketing and Sales Operations Regulatory...
Transcript of Acquisition of Uniasselvi - mzweb.com.brE7%E3o%20... · Marketing and Sales Operations Regulatory...
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The statements in this document related to the business outlook and forecasts, operating and financial results and growth prospects of
Kroton, as well as the financial data and other estimates and evaluations for fiscal year 2012, are merely forecasts, and as such are
based exclusively on Management’s expectations for the future of the business. Such forward-looking statements depend substantially
on obtaining approvals and licenses for projects, industry conditions and the performance of the Brazilian economy, the industry and
international markets, and therefore are subject to change without prior notice. This performance report includes accounting and non-
accounting data, such as pro-forma operating and financial data and forecasts, that are based on the expectations of the Management
of the Company. The non-accounting figures have not been reviewed by the Company’s independent auditors.
Kroton has made assumptions and prepared this document based on the accuracy and completeness of the financial information and
other information and data made public about Uniasselvi or provided by, reviewed by or discussed with the Management of Uniasselvi.
For the financial forecasts and other information and data provided to or discussed with Kroton related to Uniasselvi, Kroton assumed
that the forecasts and other information and data were prepared by Uniasselvi and reflect the best estimates currently available to and
the best judgment of the Management of Uniasselvi regarding its future financial performance; however, these are still subject to the
same uncertainties described above.
To better understand their rights and how to exercise them, Kroton’s shareholders should complement the information herein with the
other information submitted by the Company to the Securities and Exchange Commission of Brazil (CVM), especially its Reference
Form and periodic financial information, in accordance with Brazilian Corporation Law and CVM Regulations.
Distance Learning is a high-growth business, as shown by Kroton’s recent new enrollments
Uniasselvi is highly synergic both in terms of geography and Distance Learning business models
The transaction is highly accretive for Kroton shareholders
Kroton has an excellent integration track record with proven capture of synergies
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Solid capital structure to fund the acquisition
Uniasselvi has high margins and strong cash generation
49,183 57,844 61,431
10,474
10,885 11,276
1Q10 1Q11 1Q12
Number of Students - Undergraduate
+10%
Distance Learning
72,707
On-campus
68,729
59,657
10%
6%
CAGR
CAGR
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7 Postsecondary campuses in Santa Catarina
12,500 On-Campus students
48 accredited Distance Learning Centers
73,700 Distance Learning students
Active Distance Learning Centers
Number of Students - Total
65,606
78,812
86,241
1Q10 1Q11 1Q12
+15%
CAGR
Students per center
1,329 1,205 1,280
On-Campus
41
48 48
1Q10 1Q11 1Q12
Distance Learning
325,599
411,840 86,241
Kroton Students Uniasselvi Students Kroton + Uniasselvi Students
123,283 135,826
12,543
Kroton Students Uniasselvi Students
Kroton + Uniasselvi Students
202,316
276,014 73,698
Kroton Students Uniasselvi Students
Kroton + Uniasselvi Students
Total 1 Postsecondary Students - 1Q12
On-Campus Postsecondary Students - 1Q12 DL Postsecondary Students - 1Q12
+26%
+10% +36%
5 1 Excludes Unirondon students
23%
65%
12%DL
On-Campus
K-12
73%
27%DL
On-Campus
31%
59%
10%
DL
On-Campus
K-12
Campuses (#) 53
DL Centers (#) 2 447
Campuses (#) 7
DL Centers (#) 2 48
Campuses (#) 1 46
DL Centers (#) 2 399
+ =
468 Cities 54 Cities 496 Cities
Kroton Uniasselvi
+ =
Highly Complementary Businesses – % Net Revenue 3
Kroton Uniasselvi Kroton + Uniasselvi
With Uniasselvi, Kroton expands its presence to 28 new cities (22 DL + 6 On-Campus)
1 Consider 2 Campuses of Unirondon 2 Kroton has another 153 centers in operation offering only Graduate programs that are also shown on the above maps 3 Projected net revenue based on the Uniasselvi Evaluation Model and Kroton 2012 Budget
Kroton + Uniasselvi: Expand the Presence in Brazil and also Higher Revenue Contribution from Distance Learning Business
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25.0
38.6
15.9%
19.7%
2010 2011 % EBITDA Margin
157.5
196.3
2010 2011
Uniasselvi – Net Revenues (R$ mm)
+25%
Uniasselvi – EBITDA (R$ mm)
+54%
17.1
33.4 10.9%
17.0%
2010 2011 % Net Margin
Uniasselvi – Net Income (R$ mm)
+95%
Note: Uniasselvi EBITDA and Net Income were adjusted to Kroton´s accounting practices and therefore had a negative adjustment compared
to the financial statements of Uniasselvi 7
Net Revenue grew 25% compared to 2010
EBITDA of R$38.6 million and EBITDA Margin of 19.7%
Net Income of R$33.4 million and Net Margin of 17.0%
1,200
2012E
305
25.0%
2012E % EBITDA Margin
1,424
2012E
350
24.6%
2012E % EBITDA Margin
Kroton1 – Net Revenue (R$ mm)
Kroton1 – EBITDA (R$ mm)
Combined1 – Net Revenue (R$ mm)
Combined1 – EBITDA (R$ mm)
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1 Excludes impacts from the Unirondon acquisition 2 Excludes synergies in 2012
Uniasselvi – Net Revenue (R$ mm)
224
2012E
45
20.1%
2012E % EBITDA Margin
Uniasselvi – EBITDA2 (R$ mm)
+
+
=
=
Uniasselvi: expected EBITDA cash conversion ratio of 60-70% in 2012
On-Campus
100% On-Campus
Only complementary activities via DL
Undergraduate and
Graduate 51 Campuses
141,296 Students
On-Campus with 20% DL
Minimum of 80%
On-Campus and up to 20% DL
Undergraduate (Pilot Project 2012/2) 39 Campuses
Uniasselvi DL (“Semi-presence”)
20% On-Campus and 80% DL Web
Based
DL Undergraduate 48 Centers
61,431 Students
Unopar DL (“Telepresence”)
20% Telepresence and 80% DL Web
Based
DL Undergraduate 399 Centers
192,455 Students
100% DL Web Based
100% DL Web Based
DL Graduate 600 Centers
22,128 Students
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Highly Complementary Business Models
Note: Data as of March 2012, excluding Unirondon
( - ) Digital ( + ) Digital
Unopar Uniasselvi
Telepresence Semi-presence
36% of cash receipts, transferred in the
month after
Maximum value of R$40/student, which is
transferred in the month after receipt, and
payment of professor costs
In class Tutor and Online Teacher There is no Tutor; Teacher present in
classroom
1 per week 1 per week
Done by Unopar Done by Uniasselvi
Done by Unopar Done by Uniasselvi
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Model
Transfer
to Centers
Presence in
Classroom
Face-to-Face
Class
Content
Development
Financial
Management
R$189.36 R$178.84 Average Net
Ticket ¹
Average of 500 Students/Center Average of 1,280 Students/Center Size of Centers
1 Average student ticket in 1Q12
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Post Merger Integration (PMI) Methodology
18 Integration Fronts
People, Processes, Systems and Project Consulting
Integration Structure
Integration Committee
Integration PMO
Integration Fronts
Immediate Management
Indicators
Human Resources
Budget
Legal
Communication
Diagnostic Financial
Academic
Accounting
Student Management
Distance Learning
Integration Management
Marketing and Sales
Operations
Regulatory
Inputs
• Integration guidelines
• Decision making
IT
Synergies already quantified and expected to be captured in the short-term :
Synrgy Front 2013 Synergies (R$ mm)
Total 12.5
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New Synergies
Expansion
of Centers
Expansion of
Academic Programs
On-Campus
Business
• Synergies between Unopar and Uniasselvi Distance Learning models
• New Unopar + Uniasselvi Distance Learning Centers
• New Distance Learning Undergraduate and Graduate programs
• Expansion of FIES student loan program (low penetration)
• New On-Campus Undergraduate Programs
Upsides to be captured in the Unopar and Uniasselvi operations:
Enterprise Value (EV) R$510.0
Net Debt R$0.0
Equity Value R$510.0
Payment Term 6 years
Cash R$335.0
Financing R$175.0 (@CDI)
Potential Maximum Earn-out: ¹ R$ 15.0
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Summary of Acquisition Price (R$ mm)
1 Earn-out limited to R$15 million and will only be paid proportionally if Uniasselvi’s Net Revenue surpass R$230 million in 2012 up to R$260 million. 2 Considers only bank obligations.
1Q12 Post-Deal
Cash 531.4 196.4
Total Loans and Financing 578.4 578.4
Short Term 28.0 28.0
Long Term 550.4 550.4
Net Cash (Debt) ² -47.0 -382.0
Net Debt (R$ mm)
Payment Structure (R$ mm)
Cash R$335.0
Annual Installments: Jun/2013 - Jun/2017 (@ CDI)
R$27.5
Final Installment: Jun/2018 (@ CDI) R$37.5
Total R$510.0
1.1x EBITDA estimated for 2012
Cash payment financed with Kroton´s cash position
P/E
Multiples at Face Value R$ mm 510.0
Adjusted Net Income 37.5 13.6
Adjusted Net Income with synergies pro-forma
50.0 10.2
P/E
Multiples at NPV R$ mm 421.7
Adjusted Net Income 37.5 11.2
Adjusted Net Income with synergies pro-forma
50.0 8.4
EV/EBITDA
Multiples at Face Value R$ mm 510.0
EBITDA Adjusted 45.0 11.3
EBITDA Adjusted with synergies pro-forma 57.5 8.9
EV/EBITDA
Multiples at NPV R$ mm 421.7
EBITDA Adjusted 45.0 9.4
EBITDA Adjusted with synergies pro-forma 57.5 7.3
EBITDA Multiples 2012 P/E Multiples 2012
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Valuation indicates that the acquisition is highly accretive for Kroton shareholders
Notes: Synergies Pro-forma: Considered amount related to 100% of the Synergies if captured in 2012 Net debt equal to zero at closing date Uniasselvi EBITDA and Net Income were adjusted to align accounting practices with those adopted by Kroton and suffered reductions compared
to the financial statements of Uniasselvi
1 Market capitalization at end of period 2 Considers capital increase of R$597 million and payment to Unopar’s Sellers of 13.9 million units 3 Data as of March 2012 for the combined companies (Kroton + Unirondon + Uniasselvi) 4 Net Revenue in 2012 projected for the combined companies (Kroton + Uniasselvi) 5 Considers price of R$27.00 for Kroton’s units (close on May 24, 2012) and payment to Unopar’s Sellers of 13.9 million units
2007 2009 2010 2011
Postsecondary
Students (‘000)
Net Revenue
(R$ mm)
Event
Market
Capitalization
(R$ mm)
IPO Entry of Advent
and capital
increase
IUNI acquisition
and integration
Unopar
acquisition and
capital increase
44 85 253
148 343 642 714
881 1,106 1,428 2,452
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2 1
2012
Uniasselvi
acquisition
417
4
3,600
1,424
3
5
CAGR 2007 -
2012
87%
57%
15
33%
Distance Learning is a high-growth business, as shown by Kroton’s recent new enrollments
Uniasselvi is highly synergic both in terms of geography and Distance Learning business models
The transaction is highly accretive for Kroton shareholders
Kroton has an excellent integration track record with proven capture of synergies
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Solid capital structure to fund the acquisition
Uniasselvi has high margins and strong cash generation
Investor Relations www.kroton.com.br/ri
Carlos Lazar
+55 11 3775-2288
Carolina Igi
+55 11 3775-2003
José Eduardo Szuster
+55 11 3775-2249