Somos Educação — Investor Presentation (December 2015)
22 slides from Somos Educação's investor presentation, Dec 15, 2015
Slide 1: Meeting with Investors
Meeting with Investors December 15, 2015
Slide 2: Strategic update
Strategic update 2
Slide 3: SOMOS Educação Corporate History
SOMOS Educação Corporate History • Acquisition of PH, ETB, and Maxi • Acquisition of Wise UP, Sigma, • Tarpon acquires • Initial Public Offering Motivo and a minority stake in control MSTech • Acquisition of Saraiva Educação • Expansion of 8 new schools 2010 2012 2014 2009 2011 2013 2015 • Acquisiti
Slide 4: Education Sector in Brazil
Education Sector in Brazil Better fundamentals for K12 : Larger, more fragmented and more stable market... K-12 market at a glance(1) Post-Secondary market at a glance(1 Private Market Market share of 5 Private Market Market share of 5 Market size(2): R$51billion(3) largest players Market size(2
Slide 5: Key Markets
Key Markets Learning Solutions K-12 Schools & Technology Segment Segmento Learning Systems Publishing Courses After-School Solutions Market R$ 1.6 Billion / Year R$ 2.0 Billion / Year RR$ 51.3 Billion / Year R$ 47.4 Billion / Year More than 100 Concentrated market Very fragmented Fragmented, underse
Slide 6: Business Units
Business Units Learning Solutions K-12 Schools & Courses 9M15 Adj. EBITDA Learning Systems Publishing R$ 244.4 million(1) Learning Center / After-School 28,1% 61,7% 10,2% Employability Learning Systems Publishing Employability 2014A Adjusted EBITDA Undergraduate R$ 156.5 million (1) EBITDA adjusted
Slide 7: Proprietary schools: Key Indicators
Proprietary schools: Key Indicators Portfolio of Brands Operational metrics 26 30 25 25 17 15 19 19 2012 2013 2014 3Q15 Number of Schools Number of Students ('000) Financial metrics 14 12,2 12,5 50% 45% 12 40% 8,3 10 35% 5 schools 8 7,7 30% 8.3k students 25% 4 schools 6 25% 20% 7.1k students 21% 21%
Slide 8: Proprietary Schools: Key Initiatives
Proprietary Schools: Key Initiatives Developing a real replicable format Gain efficiency Enhancement of the team through scale Development and integration of pedagogical team (teachers I dent i fi ca t i on of reve n ue training program) Students enrollment increase and cost cutting opportunities Ex
Slide 9: Acceleration of Proprietary Schools Expansion
Acceleration of Proprietary Schools Expansion Total of 8 new K-12 schools and 4 new Red Balloon units Red Balloon Motivo Manaus – AM Petrolina – PE M&A Organic Motivo Recife – PE M&A Maxi Cuiaba– MT M&A Red Balloon Salvador – BA Organic Sigma pH Brasília – DF Petropolis – RJ Organic M&A Red Balloon
Slide 10: Saraiva Educação Acquisition
Saraiva Educação Acquisition 10
Slide 11: Saraiva Educação
Saraiva Educação For an Enterprise Value of R$725mm, SOMOS acquired Saraiva’s Educação assets in June 2015¹ Deal Description Saraiva’s Educational segment(2) ~70% of revenues originate from K-12 educational publishing, comprising Merits of the transaction didactical books and learning systems sold t
Slide 12: Relevant Opportunities with Saraiva's Acquisition
Relevant Opportunities with Saraiva’s Acquisition Opportunities originated with the deal Market Characteristics Deal Synergies: Sales force optimization, cross Hybrid Learning 1 selling, content optimization, G&A Textbooks Market Systems 2 Hybrid Market : # schools (‘000) 12.2 7.6 13.7 Schools tha
Slide 13: Key initiatives – Integration Plan
Key initiatives – Integration Plan 1 Condition ▪ Comply with all condition precedents (e.g, assets dropdown) due to closing precedents ▪ Conclude pre-closing due diligence ▪ Audit Saraiva Educação financials and assets post-closing 2 ▪ Conclude the migration plan to transfer HQ staff into SOMOS’ Day
Slide 14: Financial Results
Financial Results 14
Slide 15: Operating – Learning Systems
Operating – Learning Systems Number of Students - '000' Traditional Learning Systems Private Public Consolidated +15% +37% +18% 751 128 624 635 541 93 3Q14 3Q15 3Q14 3Q15 3Q14 3Q15 Number of Students - '000' +9% 944 865 48 87 The Leader in Me (OLEM) 106 183 Technical Learning System (ETB) 751 635 Le
Slide 16: Operating – Publishers
Operating – Publishers Number of Books Sold In million Private Public 9.3 +145% 11.5 +524% 9,0 9.0 1.5 4.7 1,3 1.9 0.2 0.3 2.8 2.5 3Q14 3Q15 9M14 9M15 Historical PNLD Market Share Ática & Scipione Market Share PNLD 2016 (purchase) (purchase) Elementary Segment Others 17% Atica & Scipione Publisher 2
Slide 17: Operating – Schools and Prep. Courses
Operating – Schools and Prep. Courses Number of Students - '000 Number of Students - '000 Proprietary Schools* +21% +10% 24,8 30,0 14,5 13,2 3Q14 3Q15 3Q14 3Q15 *Comparable basis. Does not include Maxi , Águas Claras and Doze de Outubro . 17
Slide 18: Operating – Language
Operating – Language Number of Students - '000 Number of Franchises +73% -8% -23% +24% 83.0 18,4 353 71,8 25.0 In School 66,0 +21% 14,8 58.0 272 48,0 Franchises 3Q14 3Q15 3Q14 3Q15 3Q14 3Q15 3Q14 3Q15 Number of Kits Sold - '000 Number of Enrollments - '000 -17% -22% 12,0 16,9 10,0 13,1 3Q14 3Q15 3Q1
Slide 19: Consolidated – Adjusted EBITDA II
Consolidated – Adjusted EBITDA II Adjusted EBITDA II* Growth 3Q14 vs. 3Q15 (R$ mm) 34,1 (0.4) (9.1) 0,9 (2.4) 49,5 (0.8) 48,7 1,1 25,3 +96% 3Q14 Learning Systems Publishers Schools and Language Complementary Corporate 3Q15 Acquisitions 3Q15 Organic Prep. Courses Products Expenses Adjusted EBITDA II*
Slide 20: Investments
Investments Investments - (R$ mm) +42% 107.5 Editorial 75.7 34,7 Intangible assets 32,5 47,6 Property and Equipment 15,1 28,1 25,2 9M14 9M15 The increase is basically explained by: • Expenses with software licensing due to the internalization of Shared Services Center (SSC) previously operated by Gr
Slide 21: Consolidated – Capital Structure
Consolidated – Capital Structure Net Debt Net Debt / EBITDA Covenants - Net Debt / EBITDA 3,5 1.400 3,0 1.200 2,6 2,5 2,5 2,5 1.000 2,2 800 600 903 974 400 861 883 850 200 0 3Q14 4Q14 1Q15 2Q15 3Q15 (R$ mm) 3Q14 4Q14 1Q15 2Q15 3Q15 Banking Debt 758.7 859.6 871.5 860.5 867.2 Sellers Debt 390.0 413.1
Slide 22: SOMOS Educação - Investor Relations
SOMOS Educação - Investor Relations ri@somoseducacao.com.br www.abrileducacao.com.br/investors Legal Disclaimer: This document must not be considered a recommendation for investment in the Company. Before investing, investors should conduct their own analysis and valuation of the Company, its busine
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