EstáCio 3 Q09

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EstáCio 3 Q09

  1. 1. Clique para editar o estilo do título mestre Corporate Presentation
  2. 2. ESTÁCIO Highlights Largest post-secondary education group in Latin America 201k students spread throughout 76 campuses in all major cities in Brazil 78 programs tailored to large and underserved middle and lower income individuals 54 Distance Learning accredited units strategically located in major centers R$1 billion in LTM Net Revenues and R$107 million in LTM EBITDA, R$229 million in Net Cash Corporate Presentation 2
  3. 3. History and Current Status Efficiency Gains Early Turnaround and Strong Organic Growth and Stages Preparation for IPO Consolidation (Accounting and Management Systems) CAGR of 14.3% - 2000/2007 (Vs 8.9% for Brazil) 207 201 Undergraduate Students National 178 GP (May/08) Leadership (in thousand) 167 162 141 144 IPO (July/07) 135 118 North and Main subsidiary Northeast: with for profit subsidiaries for status (Feb/07) profit status Begin National Expansion 70 51 35 23 26 Asset Light Model: Long Term Leasing Agreements (Campuses) 1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 9M09 Corporate Presentation 3
  4. 4. Largest Student Base: 201 k undergraduate students Estácio Students per State (th.) Market-Share per Municipal1 CTB 1.8% 1.6 3.6 SP 3.8% 13.3 GO 4.0% NAT 5.2% 0.7 CG 6.0% VV 6.8% SAL 8.1% REC 8.4% ARAC 9.1% 1.6 VIT 11.6% MCP 11.8% 6.0 4.5 BEL 12.2% BH 12.2% 4.2 JF 12.9% 2.9 FLOR 15.0% 3.3 11.0 JN 15,1% MACE 16.1% FOR 18.5% OUR 31.0% RJ 35.1% 3.1 1 – Undergraduate students enrolled (excludes public universities) 1.6 Source: SINAES/2006 2.0 Average Ticket: R$435 (9M09;+5.5% yoy) 1.4 University 21.3 3.2 University Center 4.6 108.2 College 2.5 Upgrade to University Center (in process of approval with the MEC2) 2 – Ministry of Education Corporate Presentation 4
  5. 5. Shareholder Structure and Corporate Governance Founder GP Investments Shareholders Active Management Large Expertise in the Meritocracy Culture Education Sector Proven track record in Free Float the Brazilian Market National Expansion (Gafisa, Lame, Ambev, and Market Leadership Submarino, ALL, Magnesita and others) 53% 20% 27% Corporate Governance Standards • Listed at Novo Mercado: Only Voting Shares • Fiscal Council • Internal Audit and Risk Management • 100% Tag Along Rights • Audit and Compensation Committee • Independent Board Members • Clear Shareholder and Corporate Structure Dividend Policy (Shareholder Agreement) Corporate Presentation 5
  6. 6. Shareholder Agreement with GP Highlights of Shareholder Agreement Leading Private Equity Firm in LATAM / Co-Management 5 years (renewable for First Listed Stock 2+ years) Mission: Generate Exceptional Long-Term Returns to its Investors Board Members 4 each party (being 2 and Shareholders independent) Outstanding performance of invested Lockup period of 3 years companies, with integrity, clear targets, entrepreneurship, meritocracy and M&A Agreement professionalism. Some examples: IRR: 1,339% Non-Competition Agreement (3 year investment) Minimum Dividend Payout (50% of Net Income) IRR: 148% (3 year investment) IRR: 17% (12 year investment) IRR: 24% (10 year investment) Corporate Presentation 6
  7. 7. Value Creation Going Forward Scale and strong balance sheet pave the way for profitable growth, with major levers being: Efficiency gains through centralization of business processes Quality gains through investments in standardized high quality academic offerings and differentiated student support services More impactful branding and marketing, coupled with selective M&A approach (“can´t miss” add-ons) Attraction and retention of high quality talents Corporate Presentation 7
  8. 8. Value Creation Going Forward Focused on growing and underserved addressable market: middle and low income groups 1.9 million students graduating from High School every year 7% net enrollment growth (CAGR 2002-2007) Quality at affordable cost / location Career improvement to working adults Corporate Presentation 8
  9. 9. Distance Learning (DL) Recent accreditation by Ministry of Education (MEC) of 54 Distance Learning units strategically located in major cities throughout Brazil (ranked with grades “Very Good” and “Good”) Satelite units for sales and infra structure support in advanced negotiations High growth, high margin with low incremental investment Lower prices and flexible schedules to access larger students prospects base 1,201,046 1,198,506 1,151,102 1,108,600 1,015,868 995,873 924,649 792,069 664,474 430,259 302,525 212,246 127,014 25,006 20,685 14,233 6,618 5,287 2000 2001 2002 2003 2004 2005 2006 2007 2008 New Students (Onground) - Private Inst. New Students (Online / DL) Private Inst. Corporate Presentation 9
  10. 10. Efficiency Gains Through Centralization of Business Processes Recent Start-up of Shared Services Center (SSC): Macro transactional / back office processes fully centralized Streamlining of backoffice headcount Lower transaction cost with higher quality (SLAs) Key for scalability and profitable growth and acquisitions integration Corporate Presentation 10
  11. 11. Quality Gains Investment in high quality, standardized academic offerings: 41 Core programs being updated and nationally integrated towards labor market demands and better integration of shared disciplines: lower faculty costs Better quality control with standardized lectures outlines, content, exercises and exams banks Digital platform aimed at quality self-learning activities at minimized costs Reference books and printed materials tailored made granted in all 41 core programs included in tuitions Corporate Presentation 11
  12. 12. Quality Gains Improved Students Support Services New, fully integrated portal - prospects and students Tracking of students performance for proactive support approach (“Gabaritando”) Roll-out of national standardized students relationship support Sourcing of new students Renewals Renegotiations Internship programs Corporate Presentation 12
  13. 13. Growth More impactful branding, marketing and sales efforts National branding Research oriented new media choices Structured “on-the-road” sales team for cost effective and more resilient student sourcing (companies and schools) Building highly scalable platform for maximum optimization of acquisitions Standard academic model Strong national brand with high quality products and services Centralized backoffice (“plug and play”) Corporate Presentation 13
  14. 14. Permanent Pursuit of Highest Quality Management Model and Professionals Result oriented management model and compensation scheme Budgetary discipline in all business and support areas (Zero Based Budget and goals orientation) Monthly tracking of results and acting upon deviations “On-the-Road” management and leadership by CEO and executive officers Zero Based and Matrix Budget / internal and external benchmarks Integrated systems (SAP and academic systems) Streamline of organizational structure and processes (process standardization / back office centralization) Corporate Presentation 14
  15. 15. Widest Scope for Margin Improvement in the Industry General and Administrative Expenses (G&A) Streamline of Organizational Structure EBITDA MARGIN (9M09) Shared Services Center System Integration & Process Review 22.4% Zero Based /Matrix Budgeting 21.9% 20.3% Drivers of Efficiency Gains Cost of Services 12.1% - Common Subjects - Course Standardization - Improved “Production Planning” (Students per Teacher) - On-Line Programs Distance Learning Extra-Class Activities AEDU KROT SEB ESTC Corporate Presentation 15
  16. 16. Financial Highlights (R$ million) 2005 2006 2007 2008 9M08 9M09 Net Revenue1 762 829 851 980 727 764 Adjusted EBITDA1 56 96 95 98 85 93 Adjusted EBITDA Margin 7% 12% 11% 10% 12% 12% EBITDA ex-rental1 124 164 166 182 148 161 EBITDA Margin ex-rental 16% 20% 20% 19% 20% 21% Adjusted Net Income2 23 60 73 72 68 66 Net Cash (48) (4) 229 191 271 229 (1) Adjusted in 2007, to the payment of taxes in January 07 (SESES became for profit in February 2007), Law 11.638 in 2008 and one-off expenses in 2008 and 2009 (2) Excluding goodwill amortization from acquisitions and one-ff expenses Corporate Presentation 16
  17. 17. Corporate Presentation Appendix Corporate Presentation 17
  18. 18. Sector Overview – Significantly Untapped Demand Largest market in Latin America, with low penetration rates and increasing demand for qualified labour Post-secondary Enrollments – (Unesco – 2007, million) Gross Enrollment Rate (Unesco - 2007) 23.4 82% 17.5 High Growth Potential 64% 72% 12.9 47% 9.2 25% 26% 22% 4.9 4.1 12% China USA India Russia Brazil Japan India China Brazil Mexico Chile Argentina Russia USA Post-secondary Institutions in Brazil (units) Total Enrollments (million) 3.0 3.5 3.9 4.2 4.5 4.7 4.9 5.1 69% 70% 71% 72% 73% 74% 75% 75% 1,934 2,022 2,032 2,016 1,789 1,652 1,442 1,208 31% 30% 29% 28% 27% 26% 25% 25% 183 195 207 224 231 248 249 236 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008 Private Public Private Public Source: INEP/MEC Corporate Presentation 18
  19. 19. Sector Overview: Highly Fragmented Market Top10 largest post-secondary institutions account for less than 25% of total enrollments1 Top 10 Non-Government Institutions Market Share Non-Government Institutions (number & Size) Based on Number of Enrolled Students 22.6% 5K or more 140 204 2K < 4.9K 500 < 1.9K 687 Up to 499 1,001 77.4% 10+ Others 3.5 million enrollments 2,032 Institutions High Potential for Consolidation (1) Source: Hoper Educational , MEC Corporate Presentation 19
  20. 20. Sector Overview – Regulatory Framework Institution Benefits Costs Autonomy, guaranteed by the constitution, to create programs within the city (except for 1/3 of faculty must hold a master or PhD degree Medicine, Law, Psychology and Odontology) 1/3 of faculty must be in full time regime or must Allowed to create campuses outside the University city, subject to authorization by the Ministry of offer 3 master programs with CAPES (ministry’s graduate coordinator) recommendation Education (MEC) Need to conduct research Ability to register diploma without the MEC authorization Autonomy, guaranteed by federal gov’t decree, to create programs inside the city, except 1/3 of faculty must hold a master or PhD degree for Medicine, Law, Psychology and Odontology 1/5 of faculty must be in full time regime University Centers Ability to register diploma without MEC Not allowed to create other campuses outside the authorization city No need to conduct research No autonomy to create new programs, vacancies No minimum requirements on faculty qualification Colleges or hours of work ( full time regime) or to register diplomas without the MEC authorization Corporate Presentation 20
  21. 21. Undergraduate Student Base and Revenue Growth Students (thousand) Net Revenue (R$ million) 201 6 980 829 851 762 764 727 207 196 195 178 162 167 2005 2006 2007 2008 9M08 9M09 2005 2006 2007 2008 9M08 9M09 onground DL Corporate Presentation 21
  22. 22. Cost of Service and SG&A (R$ million) Cost of Services SG&A Gross Margin: 39.9% Gross Margin: 38.8% R$ 211.0 M R$ 211,4 M R$ 437.1 M R$ 467.8 M (29.0% NR) (27.7% NR) 4.9% NR 5.2% NR 9.5% NR 9.8% NR 6.0% NR R$43.5 M 6.9% NR R$52.8 M 45.7% NR 46.2% NR 23.0% NR R$167.5 M 20.7% NR R$158.5 M 9M08 9M09 9M08 9M09 Faculty Costs Rental Third-Party Services/Other G&A Selling NR = Net Revenue Corporate Presentation 22
  23. 23. Adjusted EBITDA and Net Income (R$ million) Adjusted EBITDA1 Adjusted Net Income2 11.6% 11.1% 73 72 10.0% 12.1% 68 66 11.7% 60 96 98 95 93 7.3% 85 56 23 2005 2006 2007 2008 9M08 9M09 2005 2006 2007 2008 9M08 9M09 1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2 - Excluding goodwill amortization from acquisitions and one-off expenses 2008 and to the one-off expenses in 2008/2009 Corporate Presentation 23
  24. 24. Organic Capex (R$ million) 47.0 35.0 20.4 13.5 3Q08 3Q09 9M08 9M09 Corporate Presentation 24
  25. 25. Analyst Coverage & Forecast Analyst Coverage & Forecast R$ million 2009 2010 2011 2012 Report Target Net Net Net EBITDA Net Net EBITDA Net Net EBITDA Brokers EBITDA Income Net Date Price Revenue Revenue Income Revenue Income Revenue Income Bradesco 09/29 R$ 26.0 1,019 109 81 1,057 127 94 1,143 143 116 1,247 173 148 CS 08/31 R$ 27.0 1,065 120 87 1,207 164 119 1,300 187 133 1,415 218 157 ITAÚ 10/05 R$ 23.6 1,010 116 77 1,105 157 113 1,254 208 149 1,400 247 176 Morgan Stanley 06/28 R$ 27.5 1,058 127 95 1,153 174 140 1,304 248 184 1,449 315 236 Santander 09/17 R$ 28.0 999 107 69 1,064 138 101 1,187 179 138 1,336 229 188 BES 11/06 R$ 25.0 1,011 99 65 1,121 152 131 1,269 171 154 1,428 215 199 BTG 11/27 R$ 30.0 1,011 104 63 1,087 131 94 1,221 176 137 1,298 220 176 Average 1,025 112 77 1,113 149 113 1,240 187 144 1,368 231 183 Corporate Presentation 25
  26. 26. Capitalization and Market Data R$ Million 09/30/09 Shareholders Equity 476.7 Debt (6.8) Net Cash 229.2 Sound balance sheet and strong cash flow support our strategic positioning as one of the main players in sector consolidation in Brazil Free Float: 27% Market Data BRA: 6% Others: 16% Stock Price (Dec - 08, 2009): R$23.89 / share Number of Shares: 78.6 million Market Cap: R$1.9 Billion US: 38% Enterprise Value: R$1.7 Billion Europe: 40% Daily Volume (3-month average): R$1.5 million Corporate Presentation 26
  27. 27. IR Contacts and Disclaimer Investor Relations Team: Lorival Luz – CFO Fernando Santino – fernando.santino@estacio.br Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floor Matheus Guimarães – matheus.guimaraes@estacio.br Cep 22775-040 - Barra da Tijuca - Rio de Janeiro e-mail: ri@estacioparticipacoes.com Phone: (55) 21 3311 9789 / 9790 / 9791 Fax: (55) 21 3311 9676 Visit our website: www.estacioparticipacoes.com Disclaimer: This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ere projections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of the sector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets are our interests in SESES, STB, SESPA, SESCE, SESPE, SESAL, SESSE, SESAP, UNEC, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, relative to the first three months of 2007, as if the Company had been organized on January 1 2007. Additionally, information was presented on an adjusted basis, in order to reflect the payment of taxes on SESES, our largest subsidiary, which from February 2007, after becoming a for-profit company, is subject to the applicable taxation rules applied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes. Corporate Presentation 27

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