Somos Educação — Abril Educação — Investor Presentation (2014)
44 slides from Somos Educação's investor presentation, 2014
Slide 1: Institutional Presentation - 2013
Institutional Presentation - 2013
Slide 2: The Education Market
* he Education Hog \, - “al . Abril EDUCACA \
Slide 3: ABRE's addressable market
ABRE’s addressable market Larger And More Diversified Than Post-Secondary… …With 8.2x More Students (R$ bn) More than 55 million students R$36 billion Technical schools 4,0 4.0 3.4 4.2 4,2 1.0 Languages 8.4 8,4 8,4 3.5 Own schools > 8.2x (elementary Preparatory and high Courses 51.0 51,0 55.0 school
Slide 4: ABRE's addressable market
ABRE’s addressable market Students (MM) Schools (‘000) Our market Public Private Public Private Kindergarten 3.6 1.2 80.9 28.1 Elementary School 13.6 2.5 109.1 22.7 Middle School 11.9 1.8 50.7 12.7 High School 7.3 1.1 19.3 7.9 Total 36.4 6.6 260.0 71.4 Source: MEC-INEP, 2012 4
Slide 5: Larger investments projected in basic education
Larger investments projected in basic education Largest Economies1 OECD’S Ranking of Quality3 Investments in Education Will Grow2… % of GDP GDP Country Country 10.0% 1st US 23rd Taiwan 5.8% 42nd 4.5% UAE 0.9% 2nd China 0.9% 4.9% 43rd Russia 3.7% 3rd Japan 2005 2010 2020 44th Chile K-12 Post-Secondar
Slide 6: Textbooks
Textbooks Government program still accounts for the majority of the volume Number of books sold - million PNLD total program – million of books 176 162 13 154 139 149 146 136 131 15 15 71 14 53 63 71 162 136 131 139 83 92 76 60 2010 2011 2012 2013 EF2 EM EF1 EF2 Public Private Purchase Repurchase So
Slide 7: Learning Systems
Learning Systems Number of students & penetration: Private market (million and %) +5% a.a. 2.35 2.47 2.55 2.18 22% 0,54 0,56 0,54 0,50 EM 33% 0,78 0,84 EF2 0,71 0,65 EF1 35% EI 0,76 0,82 0,89 0,89 10% 0,27 0,28 0,26 0,26 2010 2011 2012 2013 37% 38% 39% 39.4% Penetration Source: Internal analysis. 7
Slide 8: Schools
Schools Private segment number of students has been growing driven by Class C Number of schools (´000) Number of students (million) Cresc. Cresc. -0,2% -1,4% 43.6 43.0 217 218 6.4 4% 6.6 69 3% 71 37.2 36.4 148 -0.9% 147 -2.3% 2011 2012 2011 2012 Private Public Source: MEC - Censo 2012 8
Slide 9: 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. 9
Slide 10: Our Business
Our Business i Abril EpucacAo
Slide 11: Milestones
Milestones Spin off 2009 2010 2011 July August April July October 2012 2013 February April June July November February July December 11
Slide 12: Our businesses and brands
Our businesses and brands 1,811 associated schools 557,800 students Diversified products and Learning services to offer Systems 30 million books sold Complementary at PNLD 2014 (FNDE) Services Publishers Abril Educação 16 units* 20,100 students* Schools and Language Prep. Courses 415 franchises and
Slide 13: Our new organizational structure
Our new organizational structure CEO Manoel Amorim VP PRODUCTS AND VP OPERATIONS, SERVICE SCHOOLS AND PREP. LANGUAGES DIRECTOR CFO AND IRO EDUCATIONAL SERVICES AND INTEGRATION COURSES DIRECTOR Julio De Angeli Guilherme A. Mélega Mario Ghio Vera Balhestero João Lacerda PUBLISHER PEDAGOGYCAL LOGISTICS
Slide 14: Our ownership structure
Our ownership structure Pre-Offering Post-Offering 1 + Wise Up Civita Free Civita Flavio Free Constellation Family Float Family Augusto Float ON: 73,4% ON: 11,2% ON: 15,4% ON: 65,3% ON: 6,2% ON: 5,7% ON: 4,2% ON: 18,3% PN: 35,5% PN: 27,2% PN: 37,2% PN: 24,9% PN: 13,3% PN: 12,4% PN: 9,1% PN: 39,7% To
Slide 15: Growth Strategy
Growth Strategy i Abril EpucacAo
Slide 16: Our strategy
Our strategy • Commercial synergies Learning System • Brand positioning • Segmentation • Adaptive learning • Open new schools (2015) Schools • Organic growth Integration • Zero based budget • IT Plan • Strengthen leadership Language • Organic growth • Expansion 16
Slide 17: 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 18: 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 19: 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 19
Slide 20: 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 20
Slide 21: Our Numbers 4Q13 & 2013
Our Numbers 4Q13 & 2013
Slide 22: Highlights
Highlights Net Revenue – R$ million EBITDA (adjusted) – R$ million Op. Cash Flow Generation - R$ mm 1 Net revenue grew by 19% in 4Q13 and by 17% in 2013, amounting R$ 468.5 million and R$ 1,036.5 million, respectively. In 4Q13, EBITDA growth was 19% including R$16.1 million from Grupo Ometz, Colégio
Slide 23: Operating Performance
Operating Performance
Slide 24: Operating Performance – Learning Systems
Operating Performance – Educational Products & Services Learning Systems Up to 01/31/2014, billed students (in public and private schools) was 15% higher than 01/31/2013. Although preliminary, this increase in the student base is a good color for 2014. Number of Students 4Q13 4Q12 Change (%) Learnin
Slide 25: Operating Performance – Learning Systems - ENEM
Operating Performance – Educational Products & Services Learning Systems - ENEM Schools that adopt Participating Schools Learning Systems others 16% Textbooks ABRIL 49% EDUCAÇÃO 4% Total 31% 4% Systems 24% 5% 6% Syst. Own System A D Material Others Syst. 10% 7% Syst. B 12% 15% C 8% 8% At the last EN
Slide 26: Operating Performance – Publishers
Operating Performance – Educational Products & Services Publishers 2
Slide 27: Operating Performance – Publishers – PNLD 2014
Operating Performance – Educational Products & Services Publishers – PNLD 2014 Publishing business maintains its total market share leadership position (purchase + repurchase) Historical Market Share: Ática & Scipione Market Share PNLD 2014 (purchase + repurchase) (purchase + repurchase) a 33% 34% O
Slide 28: Operating Performance – Schools and Prep. Courses
Operating Performance – Schools and Prep. Courses Number of Students - '000' 55% 25.7 5.1 Sigma 2.7 Motivo 16.7 17.9 4Q12 4Q13 Up to 01/31/2014, the number of enrollments grew by 4.3% in pH, Sigma and Motivo schools compared to the same period of 2013. 28
Slide 29: Operating Performance – Language
Operating Performance – Language +7% +4% In 4Q13, Ometz Group posted 7% growth in the number of kits sold and 4% growth in the number of enrollments, compared to 4Q12. 29
Slide 30: Financial Performance
Financial Performance
Slide 31: Net Revenue per Business Line
Financial Performance – ABRE Consolidated Net Revenue per Business Line Note: “As Is” data. Eliminations consider sales between business lines: SER sales to GEO, Anglo to PH and SER to ETB. 31
Slide 32: Financial Performance – ABRE Consolidated Net Revenue
Financial Performance – ABRE Consolidated Net Revenue +19% +17% +6% +5% Note: “As Is” data. Eliminations consider sales between business lines: SER sales to GEO, Anglo to PH and SER to ETB. (*) Excludes PNLD effect (2012: R$ 27 mm). (**) Excludes acquisitions: Grupo Ometz, Sigma and Motivo (4Q13: R$
Slide 33: Financial Performance – COGS
Financial Performance – ABRE Consolidated COGS - Cost of Goods Sold +16% +3% +5% +4% Note: “As Is” data. Eliminations consider sales between business lines: SER sales to GEO, Anglo to PH and SER to ETB. (*) YTD excludes PNLD and inventory write off (2012: R$31.3 mm). (**) Exclude acquisitions: Grupo
Slide 34: Financial Performance – SG&A
Financial Performance – ABRE Consolidated SG&A - Selling, General and Administrative Expenses (In R$ million) (In R$ million) Note: As Is Data. GEO YTD considers only 6 months for better comparison with 2012. Major changes 4Q13. vs. 4Q12: • R$19.9 million: additional expenses related to acquisitions
Slide 35: Financial Performance – EBITDA
Financial Performance – ABRE Consolidated EBITDA +19% +23% +8% +9% Note: “As Is” data. Eliminations consider sales between business lines: SER sales to GEO, Anglo to PH and SER to ETB. (*) YTD excludes PNLD and inventory write off (2012: R$6.3 mm). (**) Exclude acquisitions: Grupo Ometz, Sigma and M
Slide 36: Financial Performance – Net Income (Loss)
Financial Performance – ABRE Consolidated Net Income (Loss) 4Q13 2013 (*) Excludes the accounting amortization of surplus value and includes the tax benefit of the use of goodwill. 36
Slide 37: Financial Performance – Capital Structure
Financial Performance – ABRE Consolidated Capital Structure Net Debt Net Debt / EBITDA * 1.000 2,7 2,8 900 800 700 1,9 600 500 892 400 780 300 0,6 591 200 100 161 - 1Q13 2Q13 3Q13 4Q13 *EBITDA "As Is" in the last 12 months + Wise Up pro forma , as described in the Covenants of the debentures. (R$mm)
Slide 38: Financial Performance – Learning Systems
Financial Performance – Educational Products & Services Learning Systems Note: “As Is” data. 38
Slide 39: Financial Performance – Publishers
Financial Performance – Educational Products & Services Publishers Note: “As Is” data. 39
Slide 40: Financial Performance – Complementary Services
Financial Performance – Educational Products & Services Complementary Services Highlights: Alfacon: • More than 90,000 online courses sold in 2013. • Responsible for the preparation of the three students ranked 1ST for admission in Banco do Brasil. • Largest rates of approval nationally in examinati
Slide 41: Financial Performance – Schools and Prep. Courses
Financial Performance – Schools and Prep. Courses Note: “As Is” data. 41
Slide 42: Financial Performance – Language
Financial Performance – Language Note: “As Is” data . 2013 Wise Up considers revenue and EBITDA from May to December. (*) Adjusted EBITDA by the effect of FIFA and NPV (account receivables). 42
Slide 43: Fair Value – FIFA Contract
Fair Value – FIFA Contract Adjustment Amortization Schedule Results Impact Contract Fair Value Fair Value 2Q13 2Q14 3Q14 Tickets for the matches 0.5 0.0 0.5 -0.1 -0.3 -0.1 Brand expousure rigths 10.2 0.0 10.2 -2.0 -6.9 -1.3 FIFA rights concession 43.3 -43.3 0.0 0.0 0.0 0.0 TOTAL 54.0 -43.3 10.7 -2.2
Slide 44: 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