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VTRU Vitru

Participants
Carlos Freitas Chief Financial Officer
Call transcript
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Operator

Good evening, ladies and gentlemen, and welcome to Vitru's Second Quarter 2021 Earnings Conference Call. All participants are in a listen-only mode. Later on we will conduct the question-and-answer session and instructions will follow at that time.

As a reminder, this call is being recorded and will be available on Vitru's IR website.

Now I would like to introduce the host for today's conference call, Mr. CFO. Vitru's Freitas, Carlos

begin. may You

Carlos Freitas

number. you, operator us. with Thanks joining quarter afternoon for doing all well and and a real good healthy. XXXX second It's our here release everyone. hope pleasure you the are for of Thank I to you be

have today's as Team. be of me [indiscernible] website IR; before at I Vitru from Graça, effect for which investors.vitru.com.pr. A Carolina Safe will Maria this just webcast, as our I presentation CEO I and call. Pedro begin, this Slide front with know; available hope to And of presentation, Gonçalves, Investor Relations you slide also and part X you. in presentation Here is Relations note this of that all Investor detailed in Harbor of have you is in like make the in we X Head our of

you X like Page to to I'd now, So go presentation. the of

a if highlights a surprise have of made not all, first the we the you announcement as second was that highlight of quarter the yesterday with for we And to is glimpse leading Here, the high-quality of we include courses, and year. as the business a with for Brazil regarding Unicesumar, education presence education discussed, – and in health-related in agreement institution here also combination fabulous which a medicine. the

year. family that to controlling next we happy proud subject this by to which the – very for with very controlled and expect beginning a are Unicesumar. reached is authorization, We This having it, antitrust still transaction of have agreement

quarters This granted. got quarters. the that is approval in for new highlight Second last was the have Education. Digital We we

Law But offer still to And the it and five offer Education started a now courses to a to ago, offer five in is Education in of two as – we're process. Education. Nursing we also the to these Digital – two a in game the have in There's largest got course which is pending Education going more XX,XXX got offer done, this steps going of we today We're to not a authorization got digital well, the Ministry than second Brazil. Ministry course on-campus. courses. weeks be authorization the have courses push to allowed this grades in the also the seats is leading by way, by major today of intake. revolution is some grade also still Nursing be Law We once fact. to we Digital in allowed – of in only we our that offer already from with granted in industry. in-taking for and changer, already weeks a cycle, or – in we've Digital Education. And current fact, We're we This nursing

there's So a huge demand.

We the also education are in that is and game-changing so Brazil in movement where – that to with quality offer, sector. the we available, all this important you know brick-and-mortar no all an but taking the education places high-quality there's

will students consolidated grew sound this XXX,XXX very in second the Net which important XX% around Education core numbers. in nearly reached Digital of we in with and southeast, segment the so revenue show Digital bullet, Third I Education, year quarter in the XX%, grew our growth revenue later. net

XX%. And flow million increasing cash semester an of the before. the year, of quarter and first it XX% first XX%, between difference conversion with in generation operations year Later important XX% of and year I'll the first half explain R$XX to reaching this Regarding in year. margin adjusted – the EBITDA EBITDA, the numbers. this semester almost on, increased first the half second cash was XX% our now in one the around this XX% first in compared of And from quarter the

on call had not the participate Page for in just who Unicesumar, could morning. highlights some yesterday of we those X Now

medical that hubs million Education a a than of including and that, on-campus important of of margin; courses more net four we as per is demand the as R$XXX well; sites. XXXX undergraduation; Unicesumar well; number year and total, is leading indicators They're graduation now It among have So years. fact, institution XX:X in in XX% overall medicine. with very with in in and or a best XXX,XXX an top XX% player one hubs, of and it the in quality. in the and last CAGR On – XX% is Maringa XXX R$XXX million with of revenue in XXX of Digital more around with in two high than is standards relevant it students, than last – and and around more XX,XXX the three top of ratio applicants the of a educational seat in in Corumba, the

of among the average in locations On about companies even provided around IDD. by is quite we of the the right, the reminders XX one by value-added that X.XX%. [indiscernible] digital students the is and highest on see CI in for the an IDD indicator institutional the the Page transaction comparing of of Cesumar. market IDD remember, above As such the of X, in that the evolution some of IGC, that achieved course measures unique as the the IDD Brazil. you which XX% of ENEM throughout the And one you course is measured Unicesumar have all here years, grades this institution they the have the IDD, listed the above industry. the can index details. grade four concept with have that's a as five of – They the They is

Vitru last closing, of closing, now equity two R$X.XX the enterprise now one total as XX% is be considering after XX XXX% capital of months Brazil of authorities, which at XX% beginning means So to year, year the company the Unicesumar, after billion, is will of which XX% June, an available, hopefully analysis value own a billion, around and multiple owns EV shares value be of share to of are XX.X. of the after implied in paid around R$X.X of numbers that for of next which Cesumar, issued total the the EBITDA, Vitru at closing;

So very – million. and also last from PE a it accretive net months The results, above is is transaction. actually of perspective, net Unicesumar a R$XXX XX profit

synergies. a at transaction a is et or important prospective the on chart cetera, of If XXx cost with lot a is number, XXXX, we if XX the on for it and right. So synergies, is Not only even look last at XXXX but look also you commercial around it numbers, months which future numbers of PE. here the transaction lower synergies, the

that synergies expenses between amount already R$XXX the will have to regarding million to R$XXX XXXX. We and by costs million year estimated per

year, synergies around debate out, million from million to million per to if between per which three So value million now, on taking inflation year. R$XXX R$XXX of R$XXX years we it is R$XXX

sizable two we commercial – synergies of expenses synergies, use or with UNIASSELVI. of with only cities in very present either which brands synergies bullets. first that, brand. value And potential of the there hub Unicesumar today of very one faster R$X top are very XXX only in a amount a a more from the with of important commercial in on Brazil The billion. have potential total So both on Today, than are cost and right, here expansion the with potential cities

we Unicesumar in to for for UNIASSELVI, that courses bit potential example, here more the XXX the courses huge. here we, with a is cross So has of have also while around than in undergraduate increase have courses. Education, – cross-selling XX And offering Digital of today

XX%. also control the Unicesumar of the these in both Vitru, important will here highlight. that two equity On Page another free of X, today float around potential offer to So courses XX.X% hold important around an And family the private brands. after and funds transaction, both XX.X% around

mentioned, have I courses in the As courses. digital undergraduate new we

First, this course our And It current largest started nursing is today, And ago. as the this weeks in largest cycle. being intake – said. is again, already second X% nursing. in is our all intake offered, second intake for of around three I

So there potential for a huge nursing courses. is demand

And be as for degree going step this behind. a is Psychology forward. and Law one going to are So driver also well here growth

relevance already and from final offer have which of current pie but soon. we that hope of can there’s chart to Law you size still quite courses the the And Ministry granted been process and a Education, on-campus the we and this bottom-right, on Psychology, Nurses, can the offer the the We Law in Psychology grade enrollment. the see in the here of

more courses. represent three together all on-campus the in So around than students one-fourth of XX%

in courses. XX% in in years, Education. which line We in we some more Now we about a have CAGR of of Digital XX% the growth XXX,XXX reaching quarter-on-quarter, around on students, X, the our total XXX,XXX of a students, Education reached our Page number with last and Digital had growth numbers

As the that is year, undergraduation was you chart first in call, discussed of average of in the the the bit has this a past. year than this intake what very cycle increase different certain this know, intake for already courses of is year. you we in strong. But the had this intake cycle XX% the semester quite on the there or we intaking the an year. as I’ll cycle had semester was the year, in the Again, was the impacts by show current a in for delay – intake also year presented some which strong. for in way, the that this ticket. last last This the bar later We first And already bottom

end far still are We intake of from the cycle.

through XX, what know, seen incoming expansion academic over XX June on have so approach, is is years from have June. basically we Page the far throughout this that that Brazil, far – a have comparable and you intake basis, comparing and very we again. modular On As strong so students, we which

doubling we year hubs, in the by of growth, market, we throughout is that regional but sorry, of number strong the Southeast, courses, of country. the of and Brazil, expansion – pushed the throughout and income here core in growth throughout our maturation being Brazil Brazil, also in expansion from South XX% see the this the center, our our market our particularly are maturation but You a here have growth And also Northeast, hubs. even students of not North, only the In the the by

You see more Southeast On the XX% Page the some last of have color here months. increased right the hubs that in number expansion. XX the XX, on about about we

I As are number students year-over year-over-year. doubling the we said, students of

year we So – of two in December years of XXXX, this in ago. of now XX,XXX, XXXX, sorry, XX,XXX in June ago XX,XXX, One XX,XXX. had December year

are virtually year-over-year. doubling So we

in penetration we the Southeast. region combination And we with still are a going that accelerate is Unicesumar, shy. now business with this the are So to the

of complemental. Just portfolio as Unicesumar and a reminder, are the very of hubs UNIASSELVI

example, Unicesumar more the in Sao than hubs Paulo. For has of XXX state the

first So more planned major – hubs XXX are current have maturing very are the we I are the that as today, hubs in we full which in are expansion half numbers, They Page XX, it XX, of the I XX%, Page number in in some so ENEM three said, our the potential of well highlight increase right, year, quarter the the net people On of hubs On XXX,XXX And around we of like just financial around or revenue less the the first business here, sum the This as between and this the opened the intaking is year, on all numbers and – of the They chart here complementary already keep maturation of two portfolio strong the as this to growing first in in is you as a in of a highlight hubs. numbers. index. sum year, the delay. very the XX% if quarter in also the hubs is all what which very means And mature. capacity, I'd XXX,XXX because of was that If know, of is we delay cycle base this students, this lot. hubs the and consolidated basically to country. normal. of stable. in and this known like last virtually the semester a the a folds maturation throughout presented in institutions. expansion more core I And to our They in this XX%, that hubs. we increase the said, year, the

As important for and end you enrollment Brazil, in from early March. know, was trigger then ENEM is January delayed an of to

throughout which slight the means revenues that of Basically, joined table average figures. in last reduction that's of intaking cycle, whole X% the left reason So the a the on Page us that had sector first consolidated for XX, intaking On more this the the the year. they than less newcomers ticket. some back-ended effect cycle,

in the first this increase said year. gross EBITDA and I XX% XX% increasing before, reaching R$XX.X As adjusted increase and in EBITDA in well profit as the net six revenue months of million quarter,

Some strong here education, XX, of well you Education, on more this more know, quarter. flat, the in Digital XX% a also over Page growth declining time, this virtually a details very as on more than by but as have strong I on-campus – we undergraduate continuing that compensated Education. Digital in growth And as is in but than this growth is growth said,

as said, as important we bit on growing Page more on-campus. I year-after-year. And So you remind continuing CI. to it just virtually have no XX, little dependence as a on-campus, keeps well education is here we that and some about details And undergraduation. – all as on declining education have fast Containing

have incur to basically So in explain half second just made and last here, in we R$X.X first last margins CI million, reversed the increase year. Page this to should the the last call And that tried for EBITDA, discussed. that slight had we the an breakdown point year quarter did this first quarter zero, COVID, and in quarter only was, like quarter costs half first the On XX, But second the is our going the the adjusted I a in we additional I year of last in certain in would stand this zero forward. the numbers, we and of we provision second here virtually in of when of in look as – this a of of at here, so year. margin year slight decrease the out when the because year we in year,

sense of basis in a over – it half year comparable didn't last R$X that quarter. students bit that provision why – the But spent is quarter basically reason compare we quarter, and material for reverted is That's So last strange. the provision in year base the second we of year we million first last bit half the choppy. had was That's the this a better comparison to for a why year. year was sorry, is that's

So show an services increasing expansion year. the adjusted to Page EBITDA XX% details first XX, overpassed the was and a points little we some in look the a Cost at well. X.X there if semester at this as you margin. On of numbers, threshold I'll bit later. decreased of you here half And EBITDA XX%. Selling end, bit,

XX%. service, year you was reduction to if with look there the down So cost comparing half year, at this last first an again numbers important of XX% in going so

implementation as This of is through further. through scale. nominal was optimizations the personnel through So this year-over-year, we Flex number the of grow of the general flat is gains is virtually This and Courses.

optimize fixed grow, to we example, were per duration are for as we and able more So costs. students to more, We class. of dilute able

clear this gain scale we of So as is go. a

the the or in we less with side, X.X% On X.X% semester of on right, and this more G&A revenues the stable at quarter. are

we – we highlight that listed last okay, important company year, the are. now Here, were not to a

basically lower forward, very, percentage is revenue, in a going the by and peers. net Page G&A in this cycle and intake have is the But part last was as year. gains than know, to because the a year, of very slight the XX, last a made further you of the in scale part, of this costs big more On a which, big a January the – some February. selling selling so as reduction had of we So expenses trend year way, expenses pandemic intaking year, before the increase cost here and PDA, further in

incur But had closed. we media were intake whole incur to the the peers, a have as more okay, was now, within We pandemic, more pandemic the we especially media. with cycle scenario. and hubs as online all to on Now this the year

the in selling important know, are you hubs machine. peaks As our

very the We in which important intake a last a this also, year, With more important the closed, of higher factor, slight is online need to And was in important had increase that, had the strong ENEM PDA. doubling another for there intaking. marketing But expenses. a is which translates year. the now the hubs incur And increase more top on media. also important take we very into to

Here on see the the you right, PDA on basis. quarterly that a

intaking of compared grew half in of XX% reminder, a around the in to the – our intake year, last the year second half second XXXX. by As last

don't – – represent they PDA. bigger of chunk, a are know, newcomers big I the the fact, So chunk in

this here, last net down we So now the tax reason last effect compared beginning Page have XX. the the the of effects. year. for recognized Adjusted is half important year the last before On income first of a to in bit time, we that second year, in And year. most

basis But debt we Most So acquisition financial the of linked from also, is year. to linked of years the comparable not here an in increase X.X to ahead IPC. is the go. It's expenses Kroton this our clear. had UNIASSELVI still

as important you this year as half the I cash very than of IPC on much this growing year. said, right, in know, conversion. the But strong, higher flow and expected the a first cash was adjusted from So with operations, lot

cash not EBITDA numbers, on So nice also net actually cash only focused generating the are and flow. and we but show we revenue

year, first of cash of conversion cash So XX%. around we flow this generated or flow the in half some R$X of million

and we happy with time, we very again your XX, announced that Page thank all highlight that wrap with to up, the on just are transaction Unicesumar. to to for you So just once

years, basis. organic we on growing say, been a purely far in lot XX the So have last, I'd

numbers All I an on of basis. just organic are before, to those that remind, mentioned

M&A on the in told organic we So that the growth you in and taking make funds also in purely purpose we were in corners IPO sense. and growth basis. same throughout that that share education bookings ideal for with M&A we intake, going nice We hubs, values. Unicesumar, the of growth EBITDA, the the the But Brazil. we in partner. year to last raise for revenues, an four of look the this process the We share now found high-quality And

transformational for a And a as proud creation that synergies very the transaction important said, as also costs, I only with, a value us for transaction, through footprint clearly very we're sector scale So complementary game-changing and not but whole. for going with forward, and commercial.

thank So for open questions, and let you please. all, I'll you

Operator

questions Instructions] this [Operator no please at time. continue. There more Presenters, are

Carlos Freitas

Yes. from webcast. are there – There's the questions here

The first Hello, question from from Vitor Vitor. Goldman. Tomita

courses you First is, you Psychology can give of and Unicesumar launch expose you, digital nice could those Law, whether to the and Vitor. courses? areas? promotion on more And could question in color us support Thank question. Very that Nursing some

quality advantages the that One is very the Maringa, are in are Blumenau. of known competitive health-related known courses. focus and Unicesumar Londrina, They in in courses. very they campuses have they of the have They Paranagua high-quality and heal high for

very then also big very knowledge, courses with nice forces the we a knowledge it our by have Psychology once authorities, clear to create a product. and So of profit able is and join because their be will Nursing in we and that approved together

also that one it's is offered, But going will their case, sure. – through case are be this and a it success offered. strong on-campus, of already still nursing Nursing. course Law, And offered in will location, a we it it a courses allowed as important be our said. but success is also being to very approved, be in as the also to Their once and once confident for be for Our in courses Nursing as is very

to the second courses? course, you some live you That's is average could the from from in now is Flex you the that. There's confusion how Flex, The Flex is Thank classes there tutor. between some preexisting because color launched with same. give Courses Vitor in-conference very the Courses of question for that – ticket us are terms and your question, additional have in hybrid a the hybrid Flex The ticket differentiation Vitor commence course. that tutor Very more widely, live important compares the around dedicated The their no on much. region. especially

a classmates. have You class,

You hub, meet have is you going difference online. The instead everything the only the that same. of to

is a here So for price pricing same. There no Flex the the is differentiation course.

support courses an – those hub opportunity a for it either do smaller given that in that today cities not enter us is UNIASSELVI not city. So a have to demand into sufficient a that traditional do and/or

questions. So those the are

very It was So and forward. much. going a are Carol, we thank questions answer [indiscernible] pleasure, here you you. Thank further to available and Pedro myself

Operator

conference and this concludes today's you gentlemen, Ladies your call. for Thank participation.

disconnect. You now may