Belo Horizonte, April 25, 2017 - Kroton Educacional S.A. ("Kroton" or "Company") - (BM&FBovespa: KROT3; OTCQX: KROTY), in compliance with Instruction 358/2002 issued by the Securities and Exchange Commission of Brazil (CVM), as amended, announces to its shareholders and investors and the general market the results of its student new enrollment and re-enrollment processes for its On-campus and Distance Learning Undergraduate programs in 1Q17.
1Q17 New Enrollment and Re-enrollment ProcessesThe new enrollment and re-enrollment processes in the Undergraduate business were concluded with very positive results in both the On-Campus and Distance Learning businesses. To improve comparability, note that the 1Q16 figures exclude the student base of Uniasselvi, which was divested on February 29, 2016.
On-Campus Undergraduate On-campus New EnrollmentsTotal
10% On-campus Re-EnrollmentsTotal
-4% On-campus Student BaseTotal
-1% 101,685 112,223 335,139 321,389 436,824 433,6121Q16¹
1Q17
1Q16¹
1Q17
1Q16¹
1Q17
New Enrollments Out-of-Pocket 14% 55,243 62,731 1Q16¹ 1Q17 | New Enrollments PEP 28% 34,570 27,090 1Q16¹ 1Q17 PEP 30 PEP 50 | New Enrollments FIES -26% 14,390 10,615 1Q16¹ 1Q17 | New Enrollments ProUni -13% 4,962 4,307 1Q16¹ 1Q17 |
9,627 | |
11,106 | 24,943 |
15,984 |
¹ Ex-Uniasselvi
In the On-Campus format, new enrollments increased 10% compared to 1Q16, which is explained by the ongoing efforts to enhance academic quality, which supported solid growth despite the challenging macroeconomic scenario marked by recession and mounting unemployment.
In a comparison of the breakdown of new enrollments by payment method in the two periods, the highlight was the growth in the number of new students paying out of pocket of around 14% to 62,731, despite the lower level of discounts and scholarships offered in the 1Q17 student recruiting process.
The Company maintained its strategy of offering its own student financing products (Private Installment Plan, or PEP) to meet the demand created by the reduction in FIES seats. PEP was responsible for just under 31% of new enrollments in the On-Campus business, while the number of FIES students decreased in the period. During 1Q17, 24,943 students were enrolled with financing under the PEP30 plan and 9,627 under the PEP50 plan. Note that Kroton is maintaining its conservative posture and the same revenue-recognition and provisioning criteria for PEP students.
In terms of FIES, 10,615 students were enrolled under the federal government student-financing program, of whom 8,169 were freshmen (7.3% of all new students) and 2,016 were students from other institutions who already held FIES contracts. Also in 1Q17, 1,608 senior students were able to secure FIES financing, which, combined with the number of freshmen students (8,169), represents an organic conversion rate of approximately 65% of the seats available, well above the 45% rate registered in 1Q16.
Lastly, 4,307 new students were enrolled under the ProUni program, down 13% year over year, reflecting the efforts to comply with the level established by the POEB rules, since Kroton currently exceeds the number of students required.
A total of 112,223 new students were enrolled in the On-Campus Undergraduate business in 1Q17, representing an expressive growth of over 10% compared to 1Q16. Meanwhile, re-enrollments amounted to 321,389 students, down 4% year over year, resulting in an Undergraduate base of 433,612 students, practically stable in relation to the same period last year. This occurred despite the growth in graduating students (+7.9%), demonstrating a solid result given market conditions and the macroeconomic scenario.
DL Undergraduate DL New EnrollmentsTotal
11% DL Student BaseTotal
3% DL Re-EnrollmentsTotal
-1% 180,626 201,276349,067 | 344,305 |
1Q16¹
1Q17
1Q16¹
1Q17
1Q16¹ 1Q17
DL New EnrollmentsOut-of-Pocket
12% 172,247 192,9401Q16¹
1Q17
DL New EnrollmentsProUni
-1% 8,379 8,3361Q16¹
1Q17
¹ Ex-Uniasselvi
In the Distance Learning business, new enrollments also registered strong growth of 11% year over year to 201,276 new students, with growth of over 12% in the number of students paying out of pocket. The DL Premium programs accounted for 8% of new enrollments and have increased their share each semester. Meanwhile, the 100% Online students accounted for 20% of new enrollments in 1Q17, compared to 18% and 25% in 1Q16 and 3Q16, respectively.
Dropout Rate Evolution in Dropout Rate - On-campus Evolution in Dropout Rate - DL12.1% 11.6% 12.6% 12.4%
11.7% 10.5%11.6%
14.8%
1Q14 1Q15 1Q16 1Q17
1Q14 1Q15 1Q16 1Q17
The dropout rate improved in Kroton's On-Campus business, declining from 12.6% in 1Q16 to 12.4% in 1Q17, which is mainly explained by the initiatives under the Retention Program, which identifies and attributes probabilities to factors leading to dropouts in order to treat the causes before they occur. It is important to note that this reduction occurred despite the more rigorous debt collections and renegotiation practices adopted compared to prior semesters, which should improve the quality of the line accounts receivables.
On the other hand, in the Distance Learning business, there was an increase in dropout rates, from 11.6% in 1Q16 to 14.8% in 1Q17, also impacted by the more rigorous renegotiation policies, in addition to the increase in the number of 100% Online students, who naturally possess a higher level of dropouts compared to other Distance Learning formats.
Total Undergraduate Student BaseGiven the strong performance of new enrollments and re-enrollments in the two businesses, Kroton ended 1Q17 with a base of 979,193 students, expanding 1% compared to 1Q16. This expansion was achieved despite the growth of 6.6% in graduating students mainly due to the significant number of graduations of FIES students, demonstrating once again the resilience of Kroton's operations and the success of its sales strategies.
Total New Enrollments 11% Total Re-Enrollments -3% Total Student Base 1% 282,311 313,499 684,206 665,694 966,517 979,1931Q16¹
1Q17
1Q16¹
1Q17
1Q16¹
1Q17
¹ Ex-Uniasselvi
Students | On-Campus Undergraduate | Distance Learning Undergraduate | Total Undergraduate |
1Q16 Base ex-Uniasselvi | 436,824 | 529,693 | 966,517 |
4Q16 Base | 412,247 | 464,786 | 877,033 |
New Enrollments | 112,223 | 201,276 | 313,499 |
Graduates | (45,274) | (60,551) | (105,825) |
Dropouts | (45,584) | (59,930) | (105,514) |
1Q17 Base | 433,612 | 545,581 | 979,193 |
% 1Q17 Base / 4Q16 Base | 5.2% | 17.4% | 11.6% |
% 1Q17 Base / 1Q16 Base | -0.7% | 3.0% | 1.3% |
% Graduates | -11.0% | -13.0% | -12.1% |
% Dropouts | -12.4% | -14.8% | -13.7% |
For more information, please contact the Investor Relations department: Carlos Lazar, Pedro Gomes or Ana Troster
Tel: + 55 (11) 3133.7309, + 55 (11) 3133.7311 or + 55 (11) 3133.7314
E-mail: dri@kroton.com.br
Kroton Educacional SA published this content on 25 April 2017 and is solely responsible for the information contained herein.
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