Cruzeiro do Sul Educacional (CSED3) Q4 2024 earnings summary

Executive summary

• Achieved record adjusted net earnings of R$187 million in 2024, up 72.5% year-over-year, and proposed or paid record dividends of R$137 million, representing a 95% payout of net earnings.

• Net revenue grew 11.8% to R$2.6 billion, driven by a 12.2% increase in the student base to 526,000, with strong growth in both on-campus and digital segments.

• Free cash flow reached R$328 million, a 323% increase over 2023, with free cash flow to equity at R$266 million, representing 65% of EBITDA ex-IFRS 16.

• Financial leverage improved, with net debt/EBITDA ex-IFRS 16 at 1.4x, down from 1.6x in 2023, despite significant M&A activity and dividend payments.

Financial highlights

• Adjusted EBITDA rose 12% to R$766.3 million in 2024, with a stable margin of 29.8%.

• Gross profit increased 13.8% to R$1.25 billion, with gross margin expanding by 0.9 percentage points to 48.7%.

• Adjusted net earnings margin improved by 2.6 percentage points to 7.3% in 2024.

• Capex reduced by 30.4% to R$141.3 million, reflecting a shift toward technology investments.

• Days of receivables reduced to 31 days, down 14 days year-over-year.

Outlook and guidance

• CapEx for 2025 expected to remain in line with 2024, with no major increases anticipated barring significant acquisitions.

• Management remains confident in sustainable growth, supported by business unit structure, technology investments, and digital transformation initiatives.

• Initiatives to improve collections and reduce delinquency are expected to keep PDA at or below 6% of net revenue in 2025.

• Sufficient cash to cover all 2025 debt maturities and nearly half of 2026 maturities.