2. Who we are
Campus Rebouças
Largest player in the undergraduate sector in Brazil
207k undergraduate students
National Footprint: 78 campuses in 16 states
Campus Tom Jobim
2 Universities, 2 University Centers and 27 Colleges
Asset Light Model: ROE of 17.0% (2008)
Revenues of R$980 million and EBITDA of R$98 million (2008)
Campus R9
Labor Market Oriented Programs
High Governance Standards: the only Educational Company in
the Novo Mercado (voting shares only)
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Who we are
3. History and Current Status
2008
Efficiency Gains
Early Turnaround and
and
Strong Organic Growth
Stages Preparation for IPO Consolidation
(Accounting and Management Systems)
207
National
Leadership 178
CAGR of 25.7% - 1997/2005 (Vs 13.5% for Brazil)
167 GP (May/08)
162
Undergraduate Students
144 IPO (July/07)
141
135
(in thousand)
Main subsidiary
North and
118 with for profit
Northeast:
status (Feb/07)
subsidiaries for
profit status
Begin National
70
Expansion
51
35
26
23
Asset Light Model: Long Term Leasing Agreements (Campuses)
1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Dec08
Who we are 2
4. Largest Student Base: 207 k undergraduate students – Dec/08
Estácio Students per State (th.) Market-Share per Municipal2
1.4 3.3 CTB 1,8%
12.2 SP 3,8%
0.7 GO 4,0%
NAT 5,2%
CG 6,0%
VV 6,8%
SAL 8,1%
REC 8,4%
1.4 ARAC 9,1%
VIT 11,6%
MCP 11,8%
6.2 4.9
BEL 12,2%
4.6 BH 12,2%
2.4 JF 12,9%
FLOR 15,0%
12.3
2.6 JN 15,1%
MACE 16,1%
FOR 18,5%
OUR 31,0%
RJ 35,1%
2.9
1.5 2 – Undergraduate students enrolled (excludes public universities)
Source: SINAES/2006
1.8
1.3
Average Monthly Tuition: R$451 (08; +4.1% yoy)
University
2.8
20.3
University Center
117.8
4.2
1.9
College
Upgrade to University Center
(in process of approval with the MEC3)
3
Largest Student Base 3 – Ministry of Education
5. Labor Market Oriented Programs
Our Student Profile
Self-financed students
Young working adults
(with family support)
(~70%)
Target Market
• Convenience multi-campus
• Location (work / home)
• Internship Programs
Family income up
Living in Urban • Adequate Facilities
to 10 minimum
Centers (large cities) • Competitive Price
salaries (~73%)
• Perceived Quality (above average)
• Focus on Labor-Market
Searching for Career
Searching for Salary
improvement
Who we are 4
6. ESTC3: Competitive Advantages
Headquarter in RJ
Highly Qualified Professional Management Aligned with
Shareholders (Variable Compensation and Stock Option)
Widest Scope for Margin Improvement in the Industry
(Streamlining, Centralization of Back-Office Operations and
Campus Tom Jobim
Scalability)
Significant Growth Opportunities (M&A / Organic)
Huge Undergraduate Student Base (Scale) & Geographic Gastronomy Class
Coverage (presence in different markets/regions)
Sound Balance Sheet: No Leverage and Strong Cash Position
5
Competitive Advantages
7. Shareholder Structure and Corporate Governance
Founder
GP Investments
Shareholders
Active Management
Meritocracy Culture
Large Expertise in the
F r e e F lo a t
Proven track record in
Education Sector
the Brazilian Market
National Expansion (Gafisa, Lame, Ambev,
and Market Leadership Submarino, ALL,
Magnesita and others)
25%
55% 20%
Corporate Governance Standards
• Listed at Novo Mercado: Only Voting Shares • Fiscal Council
• 100% Tag Along Rights • Internal Audit and Risk Management
• Independent Board Members Audit and Compensation Committee
•
Dividend Policy (Shareholder Agreement) • Clear Shareholder and Corporate Structure
6
Strong Shareholder Structure
8. 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 Board Members 4 each party (being 2
Long-Term Returns to its Investors independent)
and Shareholders
Lockup period of 3 years
Outstanding performance of invested
companies, with integrity, clear targets, M&A Agreement
entrepreneurship, meritocracy and
professionalism. Some examples: Non-Competition Agreement
IRR: 1,339%
Minimum Dividend Payout (50% of Net Income)
(3 year investment)
IRR: 148%
(3 year investment)
IRR: 17%
(12 year investment)
IRR: 24%
(10 year investment)
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GP & Shareholders´ Agreement
9. Highly Qualified Professional Management Team
Management Experience Variable compensation (Bonus + Stock Option)
Eduardo Alcalay – CEO
Align interests of shareholders and
GP Partner; Former board member at Estácio, Cemar and
management
Equatorial; Partner at Singular Partners and Vice President at UOL
Implement targets on global and individual
Lorival Luz – CFO
basis (cost cutting, quality goals)
Treasury Director at Citibank - Banco Credicard; Corporate Bank
Reconcile quality and long-term targets
Chief of Staff
Retain key managers and professionals
Rogério Melzi – Economic and Operational Planning
Head of Financial Planning in Suzano; Planning Officer in
Maximum dilution of 4.15%
Inbev/Labat and Ambev
Miguel de Paula – People and Management
People Development
Head of Human Resources in Farmasa and Votorantim; HR
Manager at Gerdau
Rubens Vasconcelos – Academic Officer
• Faculty Training Program
Member of the Board of Directors at Cultura Inglesa; COO at
•
Máxima Consultoria; CFO at Cougar Trainee Program for Estácio´s students
• Executive Development Plan
Jessé Hollanda – Operations
Principal of Estácio´s College in Ceará; Academic Director of CSN
• Qualification for Course Coordinators
Foundation and Executive Board member of CBS
• Variable Compensation for Course
Antonio Higino Viegas – Market Officer
Coordinators & Teachers
Head of Marketing and Sales in Anhanguera Educacional / AT,
Regional Manager Brahma (Ambev). Marketing Manager (Infoglobo)
Professional Team 8
10. Widest Scope for Margin Improvement in the Industry
General and Administrative
Expenses (G&A)
EBITDA MARGIN (2008) Streamline of Organizational
Structure
Shared Services Center
System Integration & Process
Review
Zero Based /Matrix Budgeting
Drivers of
Efficiency
Gains
20%
Cost of Services
18%
17% - Common Subjects
- Course Standardization
- Improved “Production Planning”
10% (Students per Teacher)
- On-Line Programs
Distance Learning
Extra-Class Activities
AEDU KROT SEB ESTC
9
Widest Scope for Margin Improvement in the Industry
11. Margin Improvement: Opportunities on G&A Expenses
• Streamline of organizational structure
• Process Standardization (Shared Services / Academic Content /
Streamlined
Processes
Student Assistance / Corporate Centers)
• BackOffice Centralization: Procurement / Accounting / HR / Legal /
Accounts Payable / Treasury / IT / Real Estate Management
Integrated
• Management (SAP) and Academic (SIA) Systems – Already
Systems
running in all our units
• Zero Based / Matrix Budget
Zero Based
• Internal / External Benchmarks (“Projeto Modelo”)
Budgeting and
Monitoring
• Sharing of Best Practices
• Monitoring and acting upon it
10
Margin Improvement Opportunities
12. Margin Improvement: Opportunities on COGS - Faculty Costs
Increase wages below inflation
Labor Agreement - Rio
Increase the number of students
Academic Reform
per class
COMMON COURSES: Same Course for Different Programs (Languages, Maths, etc)
STANDARDIZED PROGRAMS in all our campuses
DISTANCE LEARNING: Increasing usage of on-line activities (up to 20% of Schedule)
11
Margin Improvement Opportunities
13. Growth Opportunities
• Undergraduate market highly untapped
• Maximizing growth opportunities in São Paulo and NE Markets
Organic • Upgrading Colleges to University Centers
• Opening of new campuses, programs and seats
• Market share relevance – expansion and consolidation
• Strategic fit – compatible market positioning
Acquisitions • Priority for university centers
• Take advantage of potential synergies
• Opening a new market; reaching new segments
Distance
• Produce and distribute Estácio´s own learning content
Learning • Marginal CAPEX - sunk costs
12
Significant Growth Opportunities
14. Asset Light Model: Low Investment in Real Estate
Best ROE in the Industry in Brazil
Return on Equity (December/ 08)1
Best ROE
In Industry
Lowest Permanent Assets1 ESTC R$982 x Industry
Average of ~R$2,700
per Student 17%
16%
High Mobility to Grow
11%
9%
1 – Excluding investment / Goodwill / Deferred charges
AEDU SEB KROT ESTC
1 – LTM Net Income / Shareholders Equity
Source: Company Data
Efficient Business Model 13
15. Financial Highlights
2005 2008
2006 2007
(R$ million)
Net Revenue1 762 829 851 980
56 96 95
Adjusted EBITDA1 98
Adjusted EBITDA Margin 7% 12% 10%
11%
EBITDA ex-rental1 164 166 182
124
20%
EBITDA Margin ex-rental 16% 20% 19%
Adjusted Net Income2 23 60 73 72
Net Cash 191
(48) (4) 229
(1) Adjusted in 2007, to the payment of taxes in January 07 (SESES became for profit in February 2007) and one-off expenses in 2008
(2) Excluding goodwill amortization from acquisitions and one-ff expenses
Financial Highlights
14
17. Sector Overview – Significantly Untapped Demand
Largest market in Latin America, with low penetration rates and increasing demand for qualified labour
Gross Enrollment Rate (Unesco - 2007)
Post-secondary Enrollments – (Unesco – 2007, million)
23.4
82%
High Growth Potential 72%
17.5 64%
47%
12.9
9.2
26%
25%
22%
4.9 4.1 12%
Índia China Brasil México Chile Argentina Rússia EUA
China USA India Russia Brazil Japan
Post-secondary Institutions in Brazil (units) Total Enrollments (million)
4.9
4.7
4.5
4.2
3.9
3.5 75%
74%
3.0 73%
2.032 72%
2.022
1.934 71%
1.789
1.652 70%
1.442 69%
1.208
25%
27%
28% 26%
29%
30%
31%
248 249
231
224
207
195
183
2001 2002 2003 2004 2005 2006 2007
2001 2002 2003 2004 2005 2006 2007 Source: INEP/MEC
Private Public 16
Private Public
Positive Sector Dynamics
18. Sector Overview: Highly Fragmented Market
Top10 largest post-secondary institutions account for less than 25% of total enrollments1
Non-Government Institutions (number & Size)
Top 10 Non-Government Institutions Market Share
Based on Number of Enrolled Students
22.6% 5K or more
140
2K < 4.9K
204
500 < 1.9K
687
Up to 499
1,001
77.4%
10+ Others
2,032 Institutions
3.5 million enrollments
High Potential for Consolidation
(1) Source: Hoper Educational , MEC, INEP
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Positive Sector Dynamics
19. 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 city,
University offer 3 master programs with CAPES (ministry’s
subject to authorization by the Ministry of Education
graduate coordinator) recommendation
(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 for 1/3 of faculty must hold a master or PhD degree
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 to register diplomas without the MEC
or hours of work ( full time regime)
authorization
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Regulatory Framework
20. Undergraduate Student base and Revenue Growth
Students (thousand) Net Revenue (R$ million)
207
980
178
167 851
162 829
762
2005 2006 2007 2008 2005 2006 2007 2008
Financial and Operational Performance 19
21. Cost of Services and SG&A (R$ million)
Cost of Services SG&A
Gross Margin: 39.6%
Gross Margin: 39.0%
R$591.5 M
R$518.9 M
R$299.1 M (30.5% NR*)
R$245.3 (28.8% NR*)
4.9%
5.2%
3.5%
3.4%
R$49.6 M R$83.8 M
20.2% 20.5%
14.9% 15.7%
R$195.8 M R$215.3 M
79.8% 79.5%
76.5% 75.9%
2007 2008
2007 2008
*NR = Net Revenue
Others Third-Party Services Rentals Faculty General and Administrative Selling
20
Financial and Operational Performance
22. Adjusted EBITDA and Net Income (R$ million)
Adjusted EBITDA1 Adjusted Net Income2
11.6%
11.1%
10.0% 73 72
7.3%
98
96 95 60
56
23
2005 2006 2007 2008
2005 2006 2007 2008
1 - Adjusted in 2007 to the payment of taxes in January 2007 (SESES 2 - Excluding goodwill amortization from acquisitions and one-off expenses
became for-profit in February 2007) and to the one-off expenses in 2008
Financial and Operational Performance 21
24. Capitalization and Market Data
R$ Million 12/31/08
421.1
Shareholders Equity
Debt (11.6)
Net Cash 190.6
Sound balance sheet and strong cash flow support our strategic positioning as
one of the main players in sector consolidation in Brazil
Market Data Free Float: 25.2%
Brazilian
Stock Price (Mar - 18, 2009): R$12.50 / share Investors
25%
Number of Shares: 78.6 million
Market Cap: R$982.3 million
Enterprise Value: R$791.7 million
Daily Volume (3-month average): R$1.9 million
Foreign
Investors
75%
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Financial and Operating Performance
25. IR Contacts & Disclaimer
Investor Relations Team:
Av. das Américas, 3434 - Bloco 7 - 2º andar
Lorival Luz – CFO
Cep 22640-102 Barra da Tijuca - Rio de Janeiro
Daniella Guanabara – daniella.guanabara@estacio.br
Fernando Santino – fernando.santino@estacio.br
e-mail: ri@estacioparticipacoes.com
Phone: (55) 21 2433 9789 / 9790 / 9791
Fax: (55) 21 2433 9700
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 mere 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 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.
IR Contact Info
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