Somos Educação — Abril Educação — BTG Pactual V LatAm CEO Conference 2014
39 slides from Somos Educação's conference presentation, October 2014
Slide 1: BTG Pactual V LatAm CEO Conference
BTG Pactual V LatAm CEO Conference October 2014
Slide 2: The Education Market
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Slide 3: ABRE's addressable market
ABRE’s addressable market K - 12 segment is much larger than the post secondary segment ... In million of students 84% of the students in Brazil 7.0 59.7 9.7 52.7 8.4 13.7 ~7.5x 16.1 4.8 Kindergarten Elementary Middle School High School Technical K - 12 Secondary TOTAL School Courses + EJA Source: C
Slide 4: ABRE's addressable market
ABRE’s addressable market Number of Students Number of Schools (Public vs. Private) in million (Public vs. Private) “000” Public Private Public Private 43.0 331.4 16.1 131.8 2,5 13.7 109.0 22,7 1,8 8.4 28,1 63.4 4.8 1,1 13,6 109,1 12,7 27.2 11,9 1,2 80,9 7,3 50,7 7,9 3,6 19,3 Kindergarten Elementary
Slide 5: ABRE's addressable market – students per region
ABRE’s addressable market – students per region NUMBER OS STUDENTS PER REGION (Public vs. Private) In million of St udent s Southeast Northeast Midwest South North Public 13,811.29 10,972.56 2,636.14 4,837.73 4,112.45 Private 2,951.90 2,033.63 535.58 717.48 361.76 TOTAL* 16,763.19 13,006.19 3,171.72
Slide 6: Learning Systems improve results
Learning Systems improve results The100* first placed in ENEM 2012 IDEB – score (public) Elementary School 6,5 6,0 5,7 5,7 5,8 5,8 5,5 5,1 5,5 5,6 Others 5,0 ABRIL 5,0 4,7 22% 4,7 5,0 4,8 EDUCAÇÃO 4,5 4,5 30% 4,0 4,0 3,5 3,6 3,0 Peer H 2005 2007 2009 2011 2013 4% Peer G Middle School 4% 5,5 Peer F 5
Slide 7: Learning Systems – market share (private)
Learning Systems – market share (private) 33,0% 29,4% 30,2% Others 35,0% 33,4% 2,0% 3,7% 3,5% Peer G 3,0% 3,0% 3,8% 3,9% 3,6% Peer F 0,7% 1,8% 3,1% 3,3% 4,4% Peer E 7,0% 2,7% 6,9% 7,0% 6,4% Peer D 6,9% 8,2% 7,6% 7,4% 7,1% 7,7% Peer C 10,7% 10,1% 10,4% 9,5% Peer B 9,7% 19,6% 16,3% 16,7% 16,3% Peer A
Slide 8: Learning Systems
Learning Systems Number of students & penetration: Private market (million and %) +6.7% CAGR 2.82 2.47 2.55 2.18 2.35 24% 0,60 0,56 High School 0,54 0,54 0,50 34% 0,87 Middle School 0,71 0,89 0,65 0,78 Elementary School 40% 1,02 0,82 Kindergarten 0,76 0,89 0,84 13% 0,32 0,27 0,28 0,16 0,26 2010 2011
Slide 9: Schools
Schools Private segment number of students has been growing driven by Class C Number of schools (´000) Number of students (million) -1.2% -3.2% 331 331 327 43.6 43.0 42.2 69 71 73 6,4 4% 6,6 6,7 3% 3% 3.1% 1.5% 262 260 254 37,2 36,4 35,5 -0.8% -2.3% -2.2% -2.3% -2.5% 2011 2012 2013 2011 2012 2013 Pr
Slide 10: Publishers
Publishers Historical Market Share Ática & Scipione (purchase) High School Market Share PNLD 2015 38% (purchase) 27% 25% 25% 16% Others Atica & 22% Scipione 2010 2011 2012 2013 2014 25% Historical Volume PNLD Program Publhisher (purchase) D Publhisher 10% A 15% Publhisher 91,7 C Publhisher 82,6 85,4
Slide 11: Schools
Schools Concentration in the SE and NE regions, which account for 70% of the population Number of schools Number of students 71.4 6.6 million North North South 5% 4% South 11% 15% Southeast Southeast 45% 45% Midwest Midwest 8% 6% Northeast Northeast 30% 31% 2012 2012 Source: MEC - Censo 2012. Note:
Slide 12: Language
Language Brazilian English proficiency The language teaching franchise penetration is low market has grown between 3% * and Brazil population in the past 3 years. across all income classes. Source: Ipsos/Marplan and ABF. *Growth rate in revenue. 12
Slide 13: Our Business
Our Business i Abril EpucacAo
Slide 14: Milestones
Milestones Spin off 2009 2010 2011 July August April July October 2012 2013 February April June July November February July December In 2014 • Abrilpar and Tarpon Operation: sale of part of the shares owned by Abrilpar Group to Tarpon. • Migration to Novo Mercado. • Appointment of a new CEO. 14
Slide 15: Our businesses and brands
Our businesses and brands 2,158 associated schools 793,300 students Traditional Learning Systems 634,700 students (+14%) Diversified products and Learning services to offer Systems 32 million books sold Complementary at PNLD 2015 (FNDE) Services Publishers 25% Market share Leadership position School
Slide 16: Our new organizational structure
Our new organizational structure CEO Strategic Planning and Marketing, Sales and Performance Institutional Culture and Integration and Innovation and Management Communication Organization M&A Department Content Department Department Department Department Vice-Presidency of Vice-Presidency of Vice-Pr
Slide 17: Our ownership structure
Our ownership structure 1 Before Flavio BR Constellation Free Abrilpar Augusto Investimentos Float ON: 65.3% ON: 6.2% ON: 5.7% ON: 4.2% ON: 18.3% PN: 24.9% PN: 13.3% PN: 12.4% PN: 9.1% PN: 39.7% Total: 45.9% Total: 9.6% Total: 8.9% Total: 6.6% Total: 28.6% 1 After Civita Government of Constellation
Slide 18: Growth Strategy
Growth Strategy i Abril EpucacAo
Slide 19: Our 5 strategic streamlines ahead
Our 5 strategic streamlines ahead Focus Leadership position in the K-12 segment, offering services with quality; operate schools bolstered with education products with high growth potential Leadership in the K-12 segment 4 Exploit opportunities in complementary education for adults Learning Schools
Slide 20: Content
Learning Systems Graduation Flexible • Classrooms are defined by teacher/pedagogical counselor • Teachers are free to change the teaching Emerging • material Focus on the student graduation/citizenship • Accessible price • Commercial return • Commercial and marketing Content support • Teaching mater
Slide 21: Schools: Growth Strategy
Schools: Growth Strategy Description Racional 1 Organic expansion Opening of new units with existing exploit structure; of existing premium premium brands schools (Sigma, pH and high return schools Motivo) 2 Acquisition of new Acquisition of new schools and premium Synergies, learning systems
Slide 22: Language: Growth Strategy
Language: Growth Strategy Release You Move Teens brand Increasing the value of teaching material: Harnessing trade elasticity of the current Develop online products line of institutional materials Exploit segmentation: similar to Learning Develop own line of teaching materials Systems Deploy own lin
Slide 23: Language
Language N:7 NE:5 MW:19 POTENTIAL: 195 NEW FRANCHISED UNITS SE:91 Significant addressable market Geomarketing study (units) S:73 Source: GEOMARKETING STUDY ABRIL I ALPHABASE 23
Slide 24: Language
Language N: 29 NE:46 TOTAL: 757 NEW MW:69 FRANCHISED UNITS SE:395 Significant addressable market Possibility to triple its presence S:218 Geomarketing study (units) Source: GEOMARKETING STUDY ABRIL I ALPHABASE 24
Slide 25: Our Numbers 2Q14
Our Numbers 2Q14
Slide 26: Highlights
Highlights Strategic June, 04: Abrilpar and Tarpon Operation: sale of part of the shares owned by Abrilpar Group to Tarpon. Notice of intent to migrate to Novo Mercado Appointment of a new CEO June, 24: New Organizational Structure August, 07: Closing of Operation Abrilpar and Tarpon Migration
Slide 27: Operating Performance
Operating Performance
Slide 28: Learning Systems
Learning Systems Number of Students - ‘000’ Number of billed students – ‘000 Number of billed students – ‘000 Consolidated Traditional Learning Systems Learning Systems ETB OLEM Private Public 793.3 +14% 634.3 +41% 29.0 566.1 93.3 +53% 563.4 129.5 60.9 4.6 2.7 495.2 +9% 541.4 634.7 556.1 2Q13 2Q14 2
Slide 29: Publishers
Publishers Number of Books Sold Number of Books Sold (quarter and YTD) (Sales Cycle - private market) In Million In Million In Million Private Public Private Public -54% -11% 4.4 -29% 1.4 5,4 1,3 4,8 0.7 3.2 1,0 0,6 0,6 3,2 2,6 0,4 0,1 2Q13 2Q14 1H13 1H14 jul12/jun13 jul13/jun14 29
Slide 30: Schools and Prep. Courses
Schools and Prep. Courses Number of Students - '000 Number of Students - '000 (ex- preparatory courses) pH Sigma Motivo +50% +3% 23,1 13.2 12.8 2,5 2,6 15,4 5,1 5,2 5,2 5,4 2Q13* 2Q14 2Q13 2Q14 * At the acquisition date (Sigma e Motivo ) 30
Slide 31: Language
Language Number of Students - ('000') Number of Franchises 2Q14 2Q14 85.5 424 71.1 376 14.4 48 Red Balloon Ometz Group Language Red Balloon Ometz Group Language Number of Kits Sold Number of Enrollments -5% -2% +1% 14.398 36.762 14.376 36.375 11.095 26.765 10.545 26.313 2Q13 2Q14 1H13 1H14 2Q13 2Q14
Slide 32: Financial Performance
Financial Performance
Slide 33: Net Revenue per Business Line
Net Revenue per Business Line 2Q13 2Q14 R$ 164.7 million R$ 209.4 million Eliminations Compl. Compl. Eliminations (1,9) Products Products 0,4 -1% 3,9 8,2 0% Language 2% Language 4% 28,1 17% 36,4 Learning Learning 17% Systems Systems 83,7 66,8 39% 40% Schools and Schools and Prep. Prep. Courses Cours
Slide 34: Net Revenue
Net Revenue Revenue Growth - 2Q13 vs. 2Q14 (R$ mm) Revenue Growth - 1H13 vs. 1H14 (R$ mm) 209,4 58,3 9,3 1,7 543,1 4,4 2,2 8,3 31,3 62,2 17,0 (18.4) 42,4 (20.4) 164,7 389,6 +27% +39% 2Q13 Learning Publishers Schools and Language Complementary Eliminations 2Q14 1H13 Learning Publishers Schools and La
Slide 35: COGS - Cost of Goods Sold
COGS - Cost of Goods Sold COGS Growth - 2Q13 vs. 2Q14 (R$ mm) COGS Growth - 1H13 vs. 1H14 (R$ mm) 28,5 0,5 (1.6) 1,9 136,2 15.2 (0.4) (0.6) 2.3 64,1 5,1 (7.5) (9.8) 5,4 50,0 111,3 +28% +22% 2Q13 Learning Publishers Schools and Language Complementary Eliminations 2Q14 1H13 Learning Publishers Schools
Slide 36: SG&A - Selling, General and Administrative Expenses
SG&A - Selling, General and Administrative Expenses (R$ mm) +60.7 (R$ mm) +118.3 106,3 167,0 202,5 320,8 57% 58% 2Q13 2Q14 1H13 1H14 Major changes 2Q14. vs. 2Q13: • R$30.4 million in corporate expenses, of which R$27.9 million are related to the restructuring provision and R$2.6 million to the highe
Slide 37: EBITDA
EBITDA Adjusted EBITDA by restructuring provision Growth Adjusted EBITDA by restructuring provision Growth 2Q13 vs. 2Q14 (R$ mm) 1H13 vs. 1H14 (R$ mm) 7,3 (3.3) 163,5 (7.3) 8,1 (7.0) 10,2 20,7 7,0 (2.5) 27,0 (6.2) 3,2 28,4 24,8 109,9 +14% +49% 2Q13 Learning Publishers Schools and Language Complement
Slide 38: Capital Structure
Capital Structure Net Debt Net Debt / EBITDA* 1.400 1.200 2,8 2,7 2,4 2,4 1.000 2,0 800 600 400 891,5 844,1 805,1 779,6 590,6 200 0 2Q13 3Q13 4Q13 1Q14 2Q14 (*) EBITDA “As Is” in the last 12 months + Wise Up pro-forma, as described in the covenants of the debentures. (R$mm) 2Q13 3Q13 4Q13 1Q14 2Q14
Slide 39: Investor Relations
Investor Relations ri@abrileducacao.com.br www.abrileducacao.com.br/investidores Disclaimer: This document should not in any circumstances be considered a recommendation to invest in the Company. Before investing in the Company, prospective investors should conduct their own analysis and evaluation
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