1Q10 EARNINGS RELEASE

Transcription

1 1Q10 EARNINGS RELEASE Kroton begins the integration of IUNI with a platform of 88 thousands students on 40 postsecondary campuses and 265 thousands primary and secondary students in 720 associate schools. The combined Company s pro-forma gross revenue reached R$ million. CONFERENCE CALL 05/12/2010 (Wednesday) English: AGENDA 2010 ONE SINGLE COMPANY: BETTER AND STRONGER Portuguese: Closing quote on 05/11/ Price: R$ 14,27/ unit - Market Capitalization: R$ million

2 EXECUTIVE 1 NATIONAL PRESENCE Primary and Secondary Associate Schools in Brazil (+6 in Japan) 24 Pitágoras Campuses IUNI Campuses 14 POST-SECONDARY EDUCATION PRIMARY AND SECONDARY EDUCATION MAIN PRO-FORMA INDICATORS (JANUARY - MARCH 2010) FINAL NUMBER OS STUDENTS 1Q10 1Q09 Chg% Primary and Secondary 265, , % Post-Secondary Education 88,349 43, % Values in R$ (thousand) 1Q10 1Q09 Chg% Gross Revenue 211, , % Deductions and Discounts (27,212) (11,705) 132.5% Net Revenue 188, , % Non recurring transactions 3,940 Adjusted Net Profit 27,578 25, % Adjusted Net Margin 14.6% 24.3% (9,7) p.p Adjusted EBITDA 41,362 33, % Adjusted EBITDA Margin 22.0% 31.8% (9.8) p.p.

3 EXECUTIVE INTEGRATION PROJECT Integration Committee Integration guidelines Decision making View of all the company s projects Project Office Integration PMO Mediation, facilitation and methodology Consolidation and alignment of integration plans Quick-wins management Monitoring of design and implementation of new organizational structure Organization Quick-Wins / Synergies Management Support for calculating quickwins and bottom-up synergies Monitoring the capture of quick-wins and synergies Integration Fronts Academic IT Budget Academic Registration Graduate Programs Physical Infrastructure Planning & Expansion Financial Human Resources Commercial Marketing Supplies & CAPEX Projects Legal Regulatory Short-term actions Design of future model Integration planning Synergies plan

4 EXECUTIVE CRITICAL FRONTS IN DETAIL IT Main front supporting the other fronts Short-term plan that assures budget control and implementation of the new academic model in the second half Long-term (strategic) plan developed with support of Accenture Human Resources Centralization and standardization of Human Resources processes for units and other corporate areas Support for other areas and units in the process to reduce headcount (including a plan to cope with layoffs) Budget Implementation of IUNI s structured budget process for revising the budget Engagement of corporate areas and unit directors Detailed discussion of each appropriation Inclusion of all quick-wins and synergy gains identified by the working fronts Academic Implementation of a new academic model at Kroton in the second half of 2010 Minimum class hours required by MEC Integrated subjects Financial Replicable collection s platform and rules Guarantee execution of budget Unification of controls and consolidation of data and reports

5 EXECUTIVE NEW ACADEMIC MODEL Evolution in Communication and Education Listener Reader Viewer Listener Viewer Browser Player Oral Communication Electro- Mechanical Revolution Electronic Revolution Electronic Revolution Digital Revolution Media Convergence Focus of New Academic Model Speaking Printing Photography Cinema Radio TV Computer Internet Web 2.0 Digital TV i-phone Smartphone

6 EXECUTIVE PITAGORAS'S PROGRAMS Bachelor's degree / Teacher Certification Program Actuarial Science Computer Sciences Social Communication (Public Relations) Social Communication (Broadcasting Radio and TV) Civil Engineering Control and Automation Engineering Electrical Engineering Telecommunications Engineering Mechanical Engineering Forest Engineering Chemical Engineering Post-Secondary Education Associate Degree Programs WEB Development (Internet Systems) Industrial Production Management Secretarial Studies Internet Systems Food Oil and Gas Chemical Processes Product Design Business Communication Institutional Communication PROGRAMS PORTFOLIO PROGRAMS IN COMMON Bachelor's degree / Teacher Certification Program Business Administration Biological Sciences Accounting Economical Sciences Law Social Communication (Journalism) Physical Education Social Communication Nursing Environmental Engineering Production Engineering Pharmaceutical Sciences Physiotherapy Speech Therapy Geography History Classical Languages and Literature Professorship Post-Secondary Education Associate Degree Programs Environmental Management Computer Network Foreign Trade Commercial Management Human Resources Management Financial Management Hospital Management Public Management Logistics Marketing Database IUNI S PROGRAMS Bachelor's degree / Teacher Certification Program Visual Arts Social Sciences Mathematics Dentistry Social Services Bilingual Executive Secretarial Studies Agronomy Architecture and City Planning Medicine Veterinary Medicine Biomedicine Trilingual Executive Secretarial Studies Agricultural Mechanization Hotel Studies Zootechny Post-Secondary Education Associate Degree Programs Tourism Management Agribusiness Interior Design Fashion Design Events Gastronomy Hygiene and Work Safety Airplane professional piloting Managerial Processes Radiology Software Development Business Management Cattle Breeding Grain Production Systems Analysis and Development Agribusiness Management and Commodity Market

7 EXECUTIVE NEW BUDGET MANAGEMENT AND CONTROL PROCESS AND OPTIMIZATION OF COSTS AND CAPEX STUDENT LOAN / NEW FIES RULES

8 IUNI`S CLOSING BALANCE EXECUTIVE

9 1Q10 RESULTS SUMMARY OF 1Q10 PRO FORMA RESULTS Values in R$ (thousand) KROTON IUNI CONSOLIDATED PRO-FORMA Gross Revenue 129,707 82, ,860 Net Revenue 115,799 72, ,257 Adjusted Net Income 19,885 7,692 27,577 Adjusted Net Margin 17.2% 10.6% 14.6% Adjusted EBITDA 24,193 17,169 41,362 Adjusted EBITDA Margin 20.9% 23.7% 22.0%

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11 Post-Secondary Student Evolution. 42,192 88,349 43,612 20,172 (9,495) (8,132) 2009 New Students Drop Out Graduates IUNI Acquisition ,612 10,428 (5,809) (2,945) 45,286 42,192 9,744 (3,686) (5,187) 43, New Students Drop Out Graduates 1Q New Students Drop Out Graduates 1Q10 National Presence in Post-Secondary Education: 28 cities in 10 brazilian states Macapá(AP) Marabá(PA) São Luis(MA) Lauro de Freitas(BA) Salvador(BA) Itabuna(BA) Sinop(MT) 2 unidades Tangará da Serra(MT) 2 unidades Cuiabá(MT) 3 unidades Várzea Grande(MT) Rondonópolis(MT) 2 unidades Primavera do Leste(MT) Uberlândia(MG) Londrina(PR) Feira de Santana(BA) Teixeira de Freitas(BA) Linhares(ES) Guarapari(ES) Ipatinga(MG) Betim(MG) Belo Horizonte(MG) 8 unidades Contagem(MG) Rio de Janeiro(RJ) Poços de Caldas(MG) Rio Claro(SP) Votorantim(SP) Divinópolis(MG) Jundiaí(SP)

12 Primary and Secondary Student Evolution CAGR % 183,900 ALUNOS NO ENSINO BÁSICO Students Evolution 207, ,600 10, ,000 24, , , Private Network Public Network - PROJECTA Associate Schools Evolution CAGR: 10,2%

13 1Q10 CORPORATE RESULTS 1. CORPORATE RESULTS* - MAIN INDICATORS Values in R$ (thousand) 1Q10 Gross Revenue 162,145 Deductions and Discounts (19,454) Net Revenue 144,392 Non recurring transactions 3,459 Adjusted Net Income 23,284 Adjusted Net Margin 16.1% Adjusted EBITDA 30,410 Adjusted EBITDA Margin 21.1%

14 GROSS REVENUE Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Gross Revenue 162, , % 112.3% 110.9% 1.4 p.p Primary and Secondary Education 55,613 46, % 104.4% 103.1% 1.3 p.p Post-secondary Education 106,532 70, % 116.9% 116.6% 0.3 p.p (-) Deductions (19,454) (11,705) 66.2% (13.5)% (11.1)% (2.3) p.p. Primary and Secondary Education (2,359) (1,395) 69.1% (4.4)% (3.1)% (1.3) p.p. Taxes (PIS, Cofins, ISS and ICMS) (671) (478) 40.4% (1.3)% (1.1)% (0.2) p.p. Returns (1,640) (763) 114.9% (3.1)% (1.7)% (1.4) p.p. Others (48) (154) (68.8)% (0.1)% (0.3)% 0.3 p.p Post Secondary Education (17,095) (10,310) 65.8% (18.8)% (17.1)% (1.7) p.p. Taxes (PIS, Cofins, ISS) (2,676) (2,035) 31.5% (2.9)% (3.4)% 0.4 p.p ProUni (8,265) (4,836) 70.9% (9.1)% (8.0)% (1.1) p.p. Returns (1,126) (294) 283.0% (1.2)% (0.5)% (0.7) p.p. Unconditional Discounts (252) (595) (57.6)% (0.3)% (1.0)% 0.7 p.p Conditional Discounts (4,776) (2,550) 87.3% (5.2)% (4.2)% (1.0) p.p. (+) Interest and Penalties on Tuition in Post-Secondary Education 1, % 1.9% 0.5% 1.4 p.p Net Revenue 144, , % 100.0% 100.0% 0.0 p.p Primary and Secondary Education 53,254 44, % 36.9% 42.6% (5.8) p.p. Post-secondary Education 91,138 60, % 63.1% 57.4% 5.8 p.p

15 410,0 360,0 GROSS REVENUE GROWTH (R$ million) 310,0 260,0 210,0 160,0 110,0 60,0 10,0-40, Q09 1Q10 1Q10 Consolidated pro-forma* Primary and Secondary Education Post-Secondary Education * DEDUCTIONS ON GROSS REVENUE

16 NET REVENUE 410,0 360,0 NET REVENUE GROWTH (R$ million) 310,0 260,0 210,0 160,0 110,0 60,0 10,0-40, Q09 1Q10 1Q10 Consolidated pro-forma* Primary and Secondary Education Post-Secondary Education *

17 COST OF PRODUCTS AND SERVICES Values in R$ (thousand) 1Q10 1Q09 Chg% Cost of Products and Services (79,659) (54,413) 46.4% Cost of Products Sold (9,015) (7,196) 25.3% Cost of Services (70,644) (47,217) 49.6% Cost of Products and Services / % Net Revenue (55.2)% (51.7)% (3.4) p.p. Cost of Products Sold / % Net Revenue (6.2)% (6.8)% 0.6 p.p Cost of Services / % Net Revenue (48.9)% (44.9)% (4.0) p.p. GROSS PROFIT AND GROSS MARGIN Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Gross Revenue 162, , % 112.3% 110.9% 1.4 p.p (-) Deduction and Conditional Discounts (19,454) (11,705) 66.2% (13.5)% (11.1)% (2.3) p.p. (+) Interest and Penalties on Tuition in Post-Secondary Education 1, % 1.2% 0.3% 0.9 p.p Net Revenue 144, , % 100.0% 100.0% 0.0 p.p (-) Costs of Products and Services (79,659) (54,413) 46.4% (55.2)% (51.7)% (3.4) p.p. Gross Profit 64,734 50, % 44.8% 48.3% (3.4) p.p.

18 OPERATING EXPENSES Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Gross Profit 64,734 50, % 44.8% 48.3% (3.4) p.p. Gross Margin 44.8% 48.3% (3.4) p.p Operational Expenses (42,907) (21,125) 103.1% (29.7)% (20.1)% (9.6) p.p. Selling Expenses (19,834) (9,892) 100.5% (13.7)% (9.4)% (4.3) p.p. Personnel Expenses (10,575) (4,328) 144.3% (7.3)% (4.1)% (3.2) p.p. General and Administrative (12,239) (7,291) 67.9% (8.5)% (6.9)% (1.5) p.p. Other Operating Income (Expenses) (104) 541 (119.2)% (0.1)% 0.5% (0.6) p.p. Goodwill Amortization (155) (155) 0.2% (0.1)% (0.1)% 0.0 p.p Non Recurring Transactions 3, % 0.0% 2.4 p.p Adjusted Operational Profit 25,286 29,657 (14.7)% 17.5% 28.2% (10.7) p.p.

19 Selling Expenses Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Sales Team (1,993) (634) 214.4% (1.4)% (0.6)% (0.8) p.p. Marketing and Copyright (8,713) (6,895) 26.4% (6.0)% (6.6)% 0.5 p.p PDA (7,193) (1,242) 479.1% (5.0)% (1.2)% (3.8) p.p. Other (1,935) (1,121) 72.6% (1.3)% (1.1)% (0.3) p.p. Total Selling Expenses (19,834) (9,892) 100.5% (13.7)% (9.4)% (4.3) p.p.

20 Personnel Expenses General and Administrative Expenses Values in R$ (thousand) 1Q10 General and Administrative Expenses 12,239 Travel and Rents (2,095) Others General and Administrative Expenses (6,685) Non Recurring Expenses (3,459)

21 Goodwill Amortization *OPERATING EXPENSES & NET REVENUE % (R$ million) 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10, % % % 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0 5,0% 0,0 1Q09 1Q10 1Q10 Consolidated pro-forma** SG&A / Net Revenue % 0,0% ** *Excluding goodwillamortizations and PDA.

22 DELINQUENCY AND ACCOUNTS RECEIVABLE TURNOVER Primary and Pitágoras Units UNIC / FAMA / UNIME Secondary Education Accounts Receivebles 67,392 73,318 69,867 Accounts Receivables Turnover 55 days 44 days 106 days Registred PDA 27,767 30,564 2,369

23 ADJUSTED EBITDA & ADJUSTED EBITDA MARGIN Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Net Profit(Loss) 18,822 24,905 (24.4)% 13.0% 23.7% (10.6) p.p. (-) Deferred Income Tax and Social Contribution 7,097 6, % 4.9% 6.1% (1.2) p.p. (-) Financial Result without Conditional Discounts and Interest on Tuitions (4,092) (1,638) 149.8% (2.8)% (1.6)% (1.3) p.p. (+) Goodwill Amortization % 0.1% 0.1% (0.0) p.p. (+) Depreciation and Amortization 4,970 3, % 3.4% 3.4% 0.0 p.p EBITDA 26,951 33,435 (19.4)% 18.7% 31.8% (13.1) p.p. (-) Non Recurring Transactions 3, % 0.0% 2.4 p.p Adjusted EBITDA 30,410 33,435 (9.0)% 21.1% 31.8% (10.7) p.p. Adjusted EBITDA Margin 21.1% 31.8% (33.7)% - - -

24 ADJUSTED EBITDA & ADJUSTED EBITDA MARGIN (R$ million) 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 31.8% % ,0% 30,0% 22.0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 1Q09 1Q10 1Q10 Consolidated pro-forma* Adjusted EBITDA Margin *

25 NET FINANCIAL RESULT Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Financial Result 1,017 (623) (263.3)% 0.7% (0.6)% 1.3 p.p Financial Revenue 9,503 3, % 6.6% 3.5% 3.1 p.p Interest Gain on short-term Investment 6,879 3, % 4.8% 2.9% 1.9 p.p Interest and Penalties on Tuition 1, % 1.2% 0.3% 0.9 p.p Others % 0.6% 0.3% 0.3 p.p Financial Expenses (8,485) (4,300) 97.3% (5.9)% (4.1)% (1.8) p.p. Bank Expenses (1,267) (346) 266.2% (0.9)% (0.3)% (0.5) p.p. Interest on Loans (2,083) (448) 365.0% (1.4)% (0.4)% (1.0) p.p. Discounts on Tuitions (4,776) (2,550) 87.3% (3.3)% (2.4)% (0.9) p.p. Monetary Revaluation on Certain Liabilities (359) (956) (62.4)% (0.2)% (0.9)% 0.7 p.p INCOME TAX AND SOCIAL CONTRIBUITION ON NET INCOME

26 ADJUSTED NET INCOME AND ADJUSTED NET MARGIN Net Revenue % Values in R$ (thousand) 1Q10 1Q09 Chg% 1Q10 1Q09 Chg% Net Income 18,822 24,905 (24.4)% 13.0% 23.7% (10.6) p.p. (+) Deferred Income Tax and Social Contribution % 0.6% 0.4% 0.1 p.p (+) Goodwill Amortization % 0.1% 0.1% (0.0) p.p. (-) Non Recurring Transactions 3, % 0.0% 2.4 p.p Recurring Net Income 23,284 25,529 (8.8)% 16.1% 24.3% (8.1) p.p. Adjusted Net Income Margin 16.1% 24.3% (33.6)% ADJUSTED NET INCOME & ADJUSTED NET INCOME MARGIN (R$ million) 28, ,0% 27,0 50,0% 26, ,0% 25,0 24,0 24.3% % 30,0% 20,0% 23,0 16.1% 10,0% 22,0 0,0% 21,0 1Q09 1Q10 *1Q10 Consolidated proforma Adjusted Net Income Margin * -10,0%

27 CASH GENERATION AND CAPITAL STRUCTURE Values in R$ (thousand) 1Q10 4Q09 Chg% Cash and Banks 107, ,384 (73.9)% Loans and financing 21,653 14, % Short-term Debt 8,010 5, % Long-term Debt 13,643 9, % Shareholders Equity 814, , % Total Capitalization 822, , % Net Cash 85, ,515 (78.4)%

28 CASH (R$ million) 410,4 (131,6) (140,8) 138,0 30,4 4,1 (3,4) (8,4) (38,6) (7,1) (7,8) 0,1 107,1 (57.0) Cash Position IUNI AcquisitionPre payment of on IUNI debts on 12/31/2009 Cash position after IUNI Acquisition Adjusted EBITDA Financial Results Non recurring transactions Receivables increase on Post-Secondary Receivables increase on Primary and Secondary Education Asset and Liabilities Change Fixed Assets Others Cash Position on 03/31/2010

29 FUTURE PROSPECTS FUTURE

30 SHARE BUYBACK PROGRAM SHARE BUYBACK

31 KROTON ABOUT KROTON EDUCACIONAL

32 KROTON S RESULTS Period ended on Change 12/31/2009 Chg% 12/31/2008 Chg% Mar-09 / Mar-10 (In thousand reais, except otherwise indicated) Current Assets 303, % 507, % -40.2% Cash and Banks 107, % 410, % -73.9% Accounts Receivable 149, % 63, % 134.3% Inventories 9, % 12, % -22.9% Deferred Taxes 14, % 5, % 166.5% Advances to Suppliers 1, % % 335.4% Other Accounts Receivable 21, % 15, % 43.3% Noncurrent 805, % 363, % 121.6% Noncurrent Assets 31, % 19, % 57.5% Deferred Taxes 5, % 6, % -9.0% Subsidiaries Credit 0 0.0% % % Advances to Suppliers 25, % 13, % 93.1% Investment 1, % 0 0.0% Fixed Assets 204, % 175, % 16.9% Intangible 565, % 166, % 240.6% Deferred 2, % 2, % -2.6% Total Assets 1,108, % 870, % 27.4% Liabilities and Shareholders' Equity Current 182, % 49, % 269.7% Account Payable 17, % 9, % 72.5% Loans and Financing 8, % 5, % 55.1% Payments and Social Charges 37, % 16, % 127.8% Income and Social Contribution Taxes 9, % % % Tax and Contribuitons Collectable 9, % 1, % 471.3% Advances from Customers 26, % 11, % 125.4% Other 74, % 4, % % Noncurrent Liabilities 111, % 26, % 326.6% Loans and Financing 13, % 9, % 40.6% Deferred Taxes % % 25.1% Other 97, % 16, % 508.4% Minority Interest % % -8.7% Shareholder s Equity 814, % 795, % 2.4% Capital 821, % 821, % 0.0% Capital Reserves 15, % 14, % 4.1% Treasury Stocks (21,436) -1.9% (21,436) -2.5% 0.0% Acumulated (Loss) Income (652) -0.1% (19,473) -2.2% -96.7% Total Liabilities and Shareholders' Equity 1,108, % 870, % 27.4%

33 1Q10 Period ended on Change 1Q10 Chg% 1Q09 Chg% 1Q09 / 1Q10 (In thousand reais, except otherwise indicated) Gross Revenue 162, % 116, % 39.0% Primary and Secondary Education 55, % 46, % 20.3% Post-secondary Education 106, % 70, % 51.4% Deductions (14,678) -10.0% (9,155) -8.5% 60.3% Primary and Secondary Education (2,360) -1.6% (1,395) -1.3% 69.2% Post-secondary Education (12,318) -8.4% (7,760) -7.2% 58.7% Net Revenue 147, % 107, % 37.2% Primary and Secondary Education 53, % 44, % 18.7% Post-secondary Education 94, % 62, % 50.5% Costs of Products/Services (79,659) -54.0% (54,413) -50.6% 46.4% Cost of Products Sold (9,015) -6.1% (7,196) -6.7% 25.3% Cost of Services (70,644) -47.9% (47,217) -43.9% 49.6% Gross Profit 67, % 53, % 27.8% Operating Income (Expenses) (42,907) -29.1% (21,125) -19.7% 103.1% Selling Expenses (12,641) -8.6% (8,650) -8.0% 46.1% Provision for Doubtful Accounts (7,193) -4.9% (1,242) -1.2% 479.2% Personnel Expenses (8,684) -5.9% (3,767) -3.5% 130.5% General and Administrative Expenses (12,239) -8.3% (7,291) -6.8% 67.9% Management Remuneration (1,891) -1.3% (561) -0.5% 237.1% Other Operating Income (Expenses) (104) -0.1% % % Goodwill Amortization (155) -0.1% (155) -0.1% 0.2% Operating Result before Financial Result 24, % 31, % -22.0% Financial Results 1, % (623) -0.6% % Financial Expenses (8,485) -5.8% (4,300) -4.0% 97.3% Financial Revenues 9, % 3, % 158.4% Income before Taxes and Social Contribution 25, % 31, % -17.2% Income and social contribuition tax (7,097) -4.8% (5,963) -5.5% 19.0% Current (6,249) -4.2% (469) -0.4% % Deferred (848) Minority Interests (1) 0.0% % % Net Income for the Period 18, % 24, % -24.4%

34 KROTON S CASH FLOW Cash Flow from Operating Activities 1Q10 Consolidated 1Q09 Result before Income Tax, Social Contribution and minority interest 25,920 31,337 Adjustments for reconciling the result with the cash used in operations Depreciation and Amortization 5,125 3,736 Income on Sales of permanent asset 489 (40) Changes in assets and liabilities Increase in Accounts Receivable (45,776) (45,299) Decrease in Inventories 3,015 2,475 (Increase) Decrease in other Accounts Receivable (11,473) 4,227 Increase in Accounts Payable 2,742 3,490 Increase in Advances from Customers 10,683 10,522 Increase (Decrease) in other Accounts Payable (11,700) (9,054) Cash generated from operations (20,975) 1,394 Interest paid on loans (2,083) 448 Taxes and Social Contribuition paid (59) (1,533) Net Cash Provided by (Used in) Operating Activities (23,117) 309 Cash Flow from Investing Activitie Acquisition of fixed assets (6,909) (8,463) Acquisitions of new colleges (131,626) Additions to intangible (978) (9,374) Net Cash Provided by (Used in) investing Activities (139,513) (17,837) Cash Flow from Investing Activitie Capital reserve - premium on share issue 615 Treasury Stocks (345) Payment of IUNI's Loans and Financing (140,758) Payment of Kroton's Loans and Financing (451) (1,319) Net Cash Provided by (Used in) Financing Activities (140,594) (1,664) Net increase (decrease) in cash and cash equivalents (303,224) (19,192) Cash - at Beginning of Period 410, ,218 Cash - at End of Period 107, ,026 Net increase (decrease) in cash and cash equivalents (303,224) (19,192)