Slide 1: 2Q11 RESULTS
Eduardo Alcalay
CEO
August 2011
Rogério Melzi
CFO and Investor Relations Officer
Slide 2: HIGHLIGHTS
Estácio is going through its best time in recent years
Resume of our on campus student base organic growth Acquisitions concluded Several approvals of new courses obtained In loco visits with excellent grades Launch of two greenfields Preparation for the launch of the tablets for the second half of 2011
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Slide 3: NEW DISCLOSURES
We welcome the market's demand for greater transparency
Receivables Acquisitions Non recurring items Debt
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Slide 4: RESULTS’ HIGHLIGHTS
Strong fundamentals, strong results
Main Indicators (R$ MM) Net Revenue Recurring EBIT Recurring EBITDA
2Q10 258.2 11.0 18.7
2Q11 289.9 17.1 26.5
Change
12.3% 55.5% 41.7%
2Q11 ex. acquisitions 277.2 16.4 25.6
Change
7.4% 49.1% 36.9%
Recurring EBITDA Margin
7.2%
9.1%
1.9 p.p.
9.2%
1H11 ex. aquisições 548.5 54.7 73.0
2.0 p.p.
Main Indicators (R$ MM) Net Revenue Recurring EBIT Recurring EBITDA
1H10 514.2 43.3 58.4
1H11 565.7 55.8 74.3
Change
10.0% 28.9% 27.2%
Change
6.7% 26.3% 25.0%
Recurring EBITDA Margin
11.4%
13.2%
1.8 p.p.
13.3%
1.9 p.p.
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Slide 5: STUDENT BASE
ON CAMPUS UNDERGRADUATE STUDENT BASE¹
(‘000 students)
DISTANCE LEARNING STUDENT BASE
(‘000 students)
210
40
201.8
200 190 180 170 10 160 150 0 30
34.0 26.2 20.9
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186.9 182.8 173.1 181.6
9.6
1H09
2H09
1H10
2H10
1H11
2H09
1H10
2H10
1H11
¹ Excluding acquisitions 1H11
We reached the inflection point at the on campus student base (ex. acquired companies) Early Renewal Program anticipates enrollment process for veterans More than 600 courses already approved by MEC launches planned by 2012
Mentoring and support structures reinforce growth in online Distance Learning 5
Slide 6: OPERATING PERFORMANCE – STUDENT BASE
STUDENT BASE – EDUCATIONAL SEGMENT
On campus Distance Learning Acquisitions 1H11 Total Student Base
(‘000 students)
238.7 214.8
+11.1%
10.0 34.0
20.9
193.9
194.7
1H10
1H11
11.1% increase on the student base due to distance learning segment and acquisitions On campus student base reverses downward trend and grows 0.4% this half-year, and 4.6% over December 2010. 6
Slide 7: OPERATING REVENUE
OPERATING REVENUE
(In R$ million)
On campus average ticket grows with inflation +10.5%
407.8 391.6
Discounts and new courses launch reduce the Distance Learning average ticket
369.2
117.9 111.0
114.3
+12.3%
258.2 289.9 277.2
(R$) Average On-Campus Ticket Average On-Campus Ticket Ex. Acquisitions Average Distance Learning Ticket
2Q10 423.8 423.8 173.8
2Q11 443.7 444.8 170.6
Chg 4.7% 4.9% -1.9%
2Q10
2Q11 Consolidated
2Q11 ex. Aquisitions 1H11
Net Revenue
Deductions
Gross Revenue
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Slide 8: CASH COSTS 2Q11
Vertical Analysis (% of Net Operating Revenue) Recurring Cash Cost* Personnel Brazilian Social Security Institute (INSS) Rentals, Condominium Fees and Municipal Property Tax Textbooks Materials Others
*Cost of Services excluding non recurring and depreciation.
2Q10 -69.8% -44.4% -8.8% -9.4% -1.7% -5.5%
2Q11 -67.6% -41.5% -9.2% -8.9% -3.3% -4.7%
Change 2.2 p.p. 2.9 p.p. -0.4 p.p. 0.5 p.p. -1.6 p.p. 0.8 p.p.
2Q11 ex. acquisitions -67.6% -41.3% -9.2% -9.0% -3.4% -4.7%
Change 2,2 p.p. 3,1 p.p. -0,4 p.p. 0,4 p.p. -1,7 p.p. 0,8 p.p.
More efficient management of personnel and other costs offset the step-up of the Social Security and Textbooks Materials costs rise
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Slide 9: CASH COSTS 1H11
Vertical Analysis (% of Net Operating Revenue) Recurring Cash Cost* Personnel Brazilian Social Security Institute (INSS) Rentals, Condominium Fees and Municipal Property Tax Textbooks Materials Others
*Cost of Services excluding non recurring and depreciation.
1H10 -65.9% -41.8% -8.4% -9.3% -1.3% -5.1%
1H11 -64.9% -40.4% -9.1% -9.0% -2.2% -4.2%
Change 1.0 p.p. 1.4 p.p. -0.7 p.p. 0.3 p.p. -0.9 p.p. 0.9 p.p.
1H11 ex. acquisitions -64.8% -40.1% -9.1% -9.1% -2.3% -4.2%
Change 1.1 p.p. 1.7 p.p. -0.6 p.p. 0.3 p.p. -1.0 p.p. 0.9 p.p.
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Slide 10: SELLING, GENERAL & ADMINISTRATIVE EXPENSES 2Q11
Vertical Analysis (% of Net Operating Revenue) SG&A* Selling Expenses PDA Marketing G&A Expenses* Personnel and Payroll charges Third-party services Machinery rental and leasing Other Operating Renevues Provision for Contingencies Others
*SG&A Expenses excluding non recurring and depreciation.
2Q10 -24.6% -10.0% -5.8% -4.1% -14.6% -6.6% -3.6% -0.3% 1.3% -0.9% -4.5%
2Q11 -23.6% -11.0% -6.0% -4.9% -12.6% -5.6% -2.9% -0.1% 0.8% -0.2% -4.7%
Change 1.0 p.p. -1.0 p.p. -0.2 p.p. -0.8 p.p. 2.0 p.p. 1.0 p.p. 0.8 p.p. 0.2 p.p. -0.5 p.p. 0.7 p.p. -0.2 p.p.
2Q11 ex. acquisitions -23.5% -11.0% -6.0% -5.0% -12.4% -5.7% -3.0% 0.0% 0.8% -0.2% -4.5%
Change 1.0 p.p. -1.0 p.p. -0.1 p.p. -0.9 p.p. 2.2 p.p. 1.0 p.p. 0.6 p.p. 0.3 p.p. -0.5 p.p. 0.7 p.p. 0.0 p.p.
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Slide 11: SELLING, GENERAL & ADMINISTRATIVE EXPENSES 1H11
Vertical Analysis (% of Net Operating Revenue) SG&A* Selling Expenses PDA Marketing G&A Expenses* Personnel and Payroll charges Third-party services Machinery rental and leasing Other Operating Renevues Provision for Contingencies Others
*SG&A Expenses excluding non recurring and depreciation.
2H10 -24.2% -9.7% -3.9% -5.8% -14.4% -6.4% -4.3% -0.3% 1.0% -0.4% -3.9%
2H11 -23.2% -10.7% -4.0% -6.7% -12.4% -5.6% -3.3% -0.2% 0.7% 0.5% -4.5%
Change 1.0 p.p. -1.0 p.p. -0.1 p.p. -0.9 p.p. 2.0 p.p. 0.8 p.p. 1.0 p.p. 0.1 p.p. -0.3 p.p. 0.9 p.p. -0.6 p.p.
2H11 ex. acquisitions -23.2% -10.8% -3.9% -6.8% -12.4% -5.7% -3.4% -0.2% 0.7% 0.5% -4.4%
Change 1.0 p.p. -1.0 p.p. 0.0 p.p. -1.0 p.p. 2.0 p.p. 0.7 p.p. 0.9 p.p. 0.1 p.p. -0.3 p.p. 0.9 p.p. -0.5 p.p.
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Slide 12: PDA AND RECEIVABLES
2Q11 2Q11 ex. Consolidated aquisitions² 273.0 25.4 198.7 10.8 32.4 5.7 (6.8) (55.8) 210.5 (25.4) 185.0 1,119.3 60 250.4 25.6 178.1 10.2 30.8 5.7 (7.4) (44.6) 198.5 (25.6) 172.9 1,050.5 59
Accounts Receivable (R$ MM) Gross Accounts Receivable FIES Tuition Monthly Fees Cards Receivable Agreement Receivables Fees Receivables Credits to Identify Provision for Doubtful Accounts Net Accounts Receivable (-) FIES Net Accounts Receivable Ex. FIES Net Revenues (Last 12 months) Days Receivables Ex. FIES*
2Q10 252.4 5.4 215.3 6.0 23.9 1.8 (2.4) (102.2) 147.7 (5.4) 142.4
3Q10 264.1 17.5 190.4 11.8 41.5 2.9 (7.8) (107.3) 148.9 (17.5) 131.5
4Q10 210.9 15.3 157.4 6.9 26.9 4.4 (9.2) (45.4) 156.3 (15.3) 141.0 1,016.2 50
1Q11 234.4 21.2 164.6 12.8 31.7 4.1 (5.5) (49.9) 179.0 (21.2) 157.8 1,036.0 55
1,010.0 1,008.1 51 47
¹ Calculated based on net revenue in the last 12 months ² Acquired companies since 2011: Atual, FAL, FATERN e Academia do Concurso.
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Slide 13: AGING OF RECEIVABLES AND AGREEMENTS
Breakdown of accounts receivable by age (R$ millions) FIES Not yet due Overdue up to 30 days Overdue from 31 to 60 days Overdue from 61 to 90 days Overdue from 91 to 179 days Overdue more than 189 days Total 2Q10 5.4 32.9 28.6 23.4 22.6 38.6 100.8 252.3 % 2% 13% 11% 9% 9% 15% 40% 100% 2Q11 25.4 62.4 35.9 27.9 27.9 37.8 55.8 273.1 % 9% 23% 13% 10% 11% 14% 20% 100%
Breakdown of agreements by age (R$ millions) Not yet due Overdue up to 30 days Overdue from 31 to 60 days Overdue from 61 to 90 days Overdue from 91 to 179 days Overdue more than 189 days TOTAL % over Net Accounts Receivable
2Q10 10.9 6.6 1.3 1.6 3.2 3.4 26.9 18%
% 40% 25% 5% 6% 12% 12% 100%
2Q11 19.1 4.8 1.5 1.4 2.4 3.1 32.4 15%
% 59% 15% 5% 4% 8% 10% 100%
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Slide 14: PROVISION FOR DOUBTFUL ACCOUNTS
In R$ millions
Gross increase in the provision for deliquency
Deliquency recover
Additional provision, net
Write off of charges Credit risk - FIES and unidentified deposits
Total
Tuitions and fees Acquired Companies TOTAL
46.1 1.1 47.3
(22.3) (22.3)
23.8 1.1 25.0
0.2 -
(2.4)
21.6 1.1
(2.4)
22.8
In R$ millions
12/31/2010
Additional provision, Acquired net Companies effect
Write off
06/30/2011
Tuitions and fees Acquired Companies TOTAL
45.4 45.4
23.8 1.1 25.0
10.0 10.0
(24.6) (24.6)
44.6 11.2 55.8
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Slide 15: NO RECURRING ITEMS
2Q11 (1.4) (1.1) (0.2) (2.2) (0.4) (1.4) (0.4) (3.5) 2Q11
Estácio
(R$ millions) Costs Personnel Others Expenses Personnel M&A Others Total
2Q10 (0.2) (0.2) (1.8) (0.9) (0.9) (2.0)
Consolidated
Acquired¹
2Q11
(0.8) (0.8) (1.7) (0.4) (1.4) (2.5)
(0.5) (0.3) (0.2) (0.4) (0.0) (0.0) (0.4) (1.0)
¹ Acquired companies in 2011: Atual, FAL, FATERN e Academia do Concurso.
Costs and personnel expenses related to termination of employment contract due to organizational restructuring The cost of M&A are mostly fees, consulting, travel expenses and integration. 15
Slide 16: ACQUIRED COMPANIES RESULTS
Highlights (R$ milhões)
Atual
FAL
FATERN
FABEC
ACADEMIA DO CONCURSO
Net revenue Recurring Gross Profit
4.8 1.5
2.2 0.4
3.1 1.1
0.4 0.1
2.2 0.7
Recurring gross profit margin
Recurring EBITDA¹
31.4%
0.9
18.7%
-0.1
36.0%
0.5
16.4%
0.0
34.4%
-0.5
Recurring EBITDA Margin
Recurring Net Income
19.5%
0.9
-5.9%
-0.2
15.6%
0.3
11.9%
0.0
-21.8%
-0.5
Recurring Net Income Margin
¹ Corporate expenses not included.
17.8%
-8.5%
8.4%
11.9%
-24.0%
Atual and FATERN already contributing positively to the consolidated margin following the integration of administrative structure synergies Academia do Concurso goes through intense restructuring and must operate via the distance learning platform next year 16
Slide 17: EBITDA AND NET INCOME
EBITDA
(In R$ million) (In R$ million)
NET INCOME
1.9 p.p. of margin gain
9.1% 7.2% +41.7% 9.2% 3.9%
4.0%
26.5 18.7
25.6
3.9%
+15.2%
11.4 11.0
9.9
2Q10
2Q11 Consolidated
2Q11 ex. aquisitions
2Q10
2Q11 Consolidated
2Q11 ex. aquisitions
Recurring EBITDA Margin
Recurring EBITDA
Recurring Net Income Margin
Recurring Net Income
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Slide 18: NET INCOME 2Q10 X 2Q11
NET INCOME BRIGDE 2Q10 X 2Q11
(R$ millions)
1.2 / 12.0%
Recurring Net Income
Positive Variation
Negative Variation
¹ Acquired companies in 2011: Atual, FAL, FATERN e Academia do Concurso.
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Slide 19: CASH FLOW 2Q11
Recurring Operational Cash Flow
CASH FLOW 2Q11
(In R$ millions)
¹ Financial Result except Operating Financial Result ² Composition of Investments: Acquisition (R$33.9 million) + Expansion CAPEX (R$3.3 million) + One Time Capex (R$14.7 million)
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Slide 20: MILESTONES – OPERATION
SULACAP
Merger of Vila Valqueire and Bangu campuses Reduction of fixed costs Better infrastructure and good location increases the possibility of attracting students
CHÁCARA FLORA
Strengthen presence and improve image in SP 5,000 m² Partnership with Alain Ducasse Formation and the École Hôtelière de Lausanne
E3 – ESPAÇO ESTÁGIO EMPREGO
Room for career guidance to students
Sulacap
TRAINEE PROGRAM
Attraction and retention of young talents More than 12,000 registered for 15 seats Individual development plans
More than 40,000 offers of internship, more than 7,000 offers of employment and 30 events (fairs, workshops and lectures)
Atual
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Slide 21: MILESTONES ‐ FINANCIAL
2nd Share Buyback Program: 3,323,796 shares may be acquired, representing 5% of the total 66,475,925 shares outstanding. Level I ADR Program: Each ADR represents one common share ("ESTC3") and is traded on the U.S. OTC market under the ticker "ECPCY”. Loan from IFC: R$48.5 million within 10 years (3 years grace period). The cost will be in Brazilian reais (CDI), equivalent to 6 months LIBOR + 3.5% p.a.
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Slide 22: IR CONTACTS
Investor Relations: Flávia de Oliveira Email: Phone: Fax: flavia.oliveira@estacio.br +55 (21) 3311-9789 +55 (21) 3311-9722
Address: Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floor CEP: 22.775-040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil Website: www.estacioparticipacoes.com/ir
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.
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