Cogna Educacao S.a. · BMFBOVESPA:COGN3
Cogna Educacao — Q3 2021 Earnings Presentation
30 slides from Cogna Educacao's earnings presentation, Nov 15, 2021
Slide 1: 3Q21 Results
3Q21 Results \ \ November 2021 SS \ “hy
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general information from Cogna Educação S.A (“Cogna”). These are summarized information without the intention of being complete, which should not be considered by potential investors as a recommendation. This presentation is strictly confiden
Slide 3: Strategy Adopted in Recent Quarters Brings Solid results
Strategy Adopted in Recent Quarters Brings Solid results • Increase in student’s intake of 37.8% in the 2H21 • 2021 has been the most challenging year in • Operational Cash Generation after capex cycle, being 21.9% on-campus and 40.3% DL the company’s history, but this ends now in (OCG) of R$ 390 mi
Slide 4: Kroton
Kroton \ \ November 2021 ~
Slide 5: Kroton – Highlights
Kroton – Highlights Strong result in student’s intake Turnaround in Campus and higher performance • Student’s intake grew 37.8% in 2H21 cycle (ex-Prouni): • Optimization of the portfolio of courses per unit allowed Digital student’s growth both in # of students and revenue, • 21.9% on-campus growth
Slide 6: Kroton – Student's Intake 2021.2
Kroton –Student’s Intake 2021.2 • The student’s intake1 grew 37.8% in volume in the 2H21 cycle, being 21.9% on-campus and 40,3% DL (distance learning) • The student’s intake 1 grew 27.9% in revenue in the 2H21 cycle, being 15.1% on-campus and 39.9% DL (distance learning) On-Campus1 EAD (DL) (Premium
Slide 7: Kroton – Student Base
Kroton – Student Base • Student base increased 7.8%, as a result of 19.1% DL growth Student Base (x 1,000) Average Ticket – out-of-pocket student (R$) Total - undergraduate Digital On-Campus Digital On-campus +7.8% -7.2% 882 +19.1% 818 682 573 735 682 -18.6% 245 -10.7% 222 200 199 3Q20 3Q21 3Q20 3Q2
Slide 8: Kroton – Accounts Receivable and Timely Payments
Kroton – Accounts Receivable and Timely Payments (out-of-pocket students - undergraduate) • The Accounts Receivable Coverage Index reached 67.8% in 3Q21, the highest in the industry • Average Collection Period (ACP) of out-of-pocket students reached 50 days, 56 better than 3Q21 and 21 days better th
Slide 9: Kroton – Working capital management and Accounts Receivable
Kroton – Working capital management and Accounts Receivable (undergraduate) • Student's engagement monitoring, preventing dropouts and recognizing it faster R$ billion 69% 64% 67% 66% during the semester, avoiding construction of accounts receivable with low quality and unengaged students 54% 45% 50
Slide 10: Kroton – Net Revenue
Kroton – Net Revenue • Net revenue decreased due to the reduction in student base, which has decreased 26.6% in revenue, partially offset by the increase of 17.0% in the Distance Learning revenue, obtained with the growth of the digital education student base in the period Net Revenue (R$ million) –
Slide 11: Kroton – Recurring EBITDA
Kroton – Recurring EBITDA • Recurring EBITDA increased R$ 302 million in 9M21 due to the restructuring of operations, improvements in timely payments with consequent reduction of PDA, marketing strategy review and corporative expenses reduction • Marketing expenses reduction of 45.7% and corporate e
Slide 12: Kroton – Customer Centricity
Kroton – Customer Centricity • Since the beginning of digital transformation process, we’ve adopted an operation model that puts the student in the center of our decisions, increasing significantly out customer experience. Two indicators shows the improvement in our services: • Increase in Net Promo
Slide 13: Vasta
Vasta \ \ November 2021 ~
Slide 14: Vasta – Operating Results
Vasta – Operating Results • Net revenue decrease of 6.7%, despite subscription revenue increase (including PAR) of 8.7%, with subscription ex-PAR (traditional education system and complementary solutions), increasing R$ 51 million or 9.0% • Non-subscription more impacted by the reuse of textbooks, l
Slide 15: Vasta – M&A track-record
Vasta – M&A track-record • Approval, without restrictions, by Administrative Council for Economic Defense (CADE) of the acquisition of Eleva platform on October 22, 2021 • Along with the acquisition both parties signed an exclusivity agreement for Vasta to be the sole provider of learning systems to
Slide 16: Vasta – Crescimento de ACV
Vasta – Crescimento de ACV • Until 3Q21, ACV increased 32% (R$ 974 million), being 20% of organic growth (R$ 888 million) and 12% of inorganic growth (acquisitions) • ACV will keep growing in the next weeks until the end of commercial campaign • Excluding Paper-based PAR, organic growth of 29% with
Slide 17: Saber
Saber \ \ November 2021 ~
Slide 18: Saber – Operating Results
Saber – Operating Results • Despite the pandemic impact, net revenue in line with 3Q20 • Recurring EBITDA increased R$ 7 million due to payroll and pedagogical support costs reduction and better PDA adjustment Net Revenue (R$ million) Recurring EBITDA (R$ million) and EBITDA Margin 23.8% +0.4% 19.6%
Slide 19: Other Business
Other Business November 2021
Slide 20: Other Business – Operating Results
Other Business – Operating Results • Net revenue increased R$25 million (13%) in 3Q21 led by sales from National Textbook Program (PNLD) • Recurring EBITDA reached R$ 71 million, with a growth of 42.8% versus 3Q20 mainly due to operating leverage and temporary mismatch with cost recording with book
Slide 21: Cogna
Cogna \ \ November 2021 ~
Slide 22: Cogna – Net Revenue
Cogna – Net Revenue • Net revenue decreased due to change in undergraduate student mix. EBITDA margin increase more than paid off the decrease on revenue, generating EBITDA increase in the quarter which was even sharper in the full-year Net Revenue (R$ million) Net Revenue (R$ million) 4,256 -12.3%
Slide 23: Cogna – Recurring EBITDA
Cogna – Recurring EBITDA • Mix undergraduate change provides a significant increase in Kroton’s EBITDA margin, which more than paid off the decrease in Kroton’s revenue and Vasta performance • EBITDA Margin increased 1,9 p.p. and 6,4 p.p in 3Q21 and 9M21, respectively Recurring EBITDA (R$ million) a
Slide 24: Cogna – Operating Cash Generation
Cogna – Operating Cash Generation • Positive operating cash generation after capex and investments in expansion (OCG) of R$390 million (+114%) in 9M21, showing an evolution in our EBITDA cash conversion capacity, which grew 19 p.p, from 23% in 9M20 to 42% in 9M21 • Due to seasonal curve, we expect c
Slide 25: Cogna – Leverage
Cogna – Leverage • As result of the improvement in timely payment ratio and costs reduction, the company has reported an OCG of R$ 193 million in 3Q21, this result have contributed to improve the leverage ratio • Leverage remains under control, reaching the adjusted net debt/EBITDA ratio of 2.07x •
Slide 26: Cogna – Cash flow and Indebtedness
Cogna – Cash flow and Indebtedness • Solid cash position of R$ 3.5 billion • Net Debt of R$ 3.0 billion • Net Debt/ adjusted EBITDA of 2.07x • Average cost of CDI + 1.61% with duration of 28 months Net Debt and Adjusted EBITDA¹ (R$ million) Debt Amortization Schedule² (R$ million) 3,497 239 6,480 3,
Slide 27: Summary of 9M21 results
Summary of 9M21 results Net Revenue: Recurring EBITDA: OCG after Capex - 12.3% + 17.8% + 114% From: R$ 4,256 million From: R$ 790 million From: R$ 182 million To: R$ 3,732 million To: R$ 931 million To: R$ 390 million On-Campus DL Students (increased profitability) Positive Impacts on Operating Resu
Slide 28: Perspectives
Perspectives • Completion of Kroton’s owned units turnaround, with structural profitability’s gains, following the strategy to grow strongly in digital segment and on-campus courses with high LTV • The change in students mix will continue to pressure Kroton’s revenue in 2022, but margins will not be
Slide 29: Perspectives
Perspectives • Expectation of strong growth for 2022 revenue, with Preliminary ACV growing 32%: • Organic: trade cycle already brought an expressive organic growth in 2022 ACV (+20%, with opportunity to grow in the next 2 months) • Inorganic: Eleva (+ 12%, with opportunity to grow in the next 2 mont
Slide 30: Investor Relations
Investor Relations ri.cogna.com.br dri@cogna.com.br