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Edited Transcript of SEER3.SA earnings conference call or presentation 8-Nov-19 1:30pm GMT

Q3 2019 Ser Educacional SA Earnings Call

RECIFE Nov 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Ser Educacional SA earnings conference call or presentation Friday, November 8, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jânyo Janguiê Bezerra Diniz

Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director

* João Albérico Porto de Aguiar

Ser Educacional S.A. - CFO & Member of Board of Executive Officers

* Rodrigo de Macedo Alves

Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers

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Conference Call Participants

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* Bruno Giordano;Bank of America;Analyst

* Leandro Bastos

Citigroup Inc, Research Division - Research Analyst

* Marcelo Peev dos Santos

JP Morgan Chase & Co, Research Division - Senior Analyst

* Susana Salaru

Itaú Corretora de Valores S.A., Research Division - Sector Head, Telecommunications, Media & Technology

* Thiago A. Bortoluci

Goldman Sachs Group Inc., Research Division - Research Analyst

* Vinicius Serrão Ribeiro

UBS Investment Bank, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Good morning. Welcome to Ser Educacional Conference call to discuss the company's results for the third quarter of 2019. With me today are Jânyo Diniz, Chief Executive Officer; João Aguiar, Chief Financial Officer; and Rodrigo Alves, Investor Relations Officer.

(Operator Instructions) The event will also be broadcast live via the Internet at ir.sereducacional.com. You can also access the webcast, audio and slides through the tablets and smartphones equipped with iOS or Android systems. The replay of this event will be available soon after its conclusion for a period of 1 week.

Before proceeding, we would like to make clear that forward-looking statements may be made during this conference call relating to the business prospects of Ser Educacional as well as its operating and financial forecasts and targets. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, conditions in the industry and other operating factors may also affect the future performance of Ser Educacional and could lead to the results that differ materially from those expressed in these forward-looking statements.

I would now like to turn the call over to Mr. Jânyo Diniz, Chief Executive Officer, who will begin the presentation. You may begin, Mr. Jânyo.

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [2]

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Good morning to everyone, and welcome to our 2019 Third Quarter Earnings Conference Call. Please go directly to Slide 3, where we have the highlights of the winter intake season, which, as we can see from the numbers, was a very positive with a growth of over 50% in total new enrollment, 13% (sic) [30%] in on-campus and Distance Learning posting a growth of almost 130%. This was an important result as it showed that demand is returning to the sector.

We also had a positive response from our new units and our expanded portfolio of courses, especially in the health care area as we note that labor market demand is stronger. And we also noted an overall improvement in the consumer confidence in the state capitals of the Northeast. It is also worth mentioning that third quarter '18 had a medium comparison base as it was a period impacted by extemporaneous events such as truckers' strikes, World Cup and presidential elections.

On Slide 4, we have the evolution of the student base, which also showed positive results with double-digit growth in total student base. Another highlight was the stabilization on the on-campus student base, an important factor as the students dropout is in the segment decline compared to the third quarter of '18. And as a final highlight, we had our Distance Learning student base which surpassed this 30,000-student mark in the quarter, a result that we can see is even above expectations.

On Slide 5, we present the evolution of this year's student base and average ticket. Note that the FIES is becoming less significant in our results and this quarter is about 18% of total students. As we have already pointed out in other conference calls, the average ticket for odd quarter has changed somewhat since the intake of [our offer pot] students gained relevance. These students are usually enrolled at promotional tuitions of BRL 49.9 and BRL 99, depending on the market, that are valid for 1 or 2 months, which generate more pressure in these quarters. As we have a positive intake season in this quarter, we had a little more pressure, but I believe that in the following quarters, this impact will be diluted.

As for market conditions, I believe that prices are stable compared to the last 2 or 3 intake seasons, but still have a competitive market.

These were my initial comments on the operating results, and I turn to Aguiar to comment on the financial results.

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João Albérico Porto de Aguiar, Ser Educacional S.A. - CFO & Member of Board of Executive Officers [3]

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Thanks, Jânyo. Hello, everyone, and thanks anew for coming to our earnings conference calls.

Turn to Slide 6, where we present a summary of the quarter's results. In this third quarter, we had this return to the net revenue growth due to the growth of the student base that occurred due to the success of our last intake season, as always, an improvement in dropout indicators.

We had a 1 percentage point increase in our gross margin, mainly due to the operational optimization we have been doing since last year. Our adjusted EBITDA on the other hand fell by approximately 9% in the quarter due to higher volume of market expenses increase from the second quarter '19 because we believe that the economy was returning slowly, and of the intake results. We note that it was a decision that proved to be right.

In addition, we had a higher volume of personnel and third-party services expenses, as we have not yet diluted the results with the consolidation of UNINORTE. Our initial expectation also have the consolidation as of August, September, but there was a delay in the appointment of CADE's directors and the decision came in November. In this scenario, our net income, despite having decreased last year, was much less impacted than in the second quarter '18 versus second quarter '19 and the additional impact we had in this quarter was mainly the increase in depreciation and amortization.

Moving on to Slide 7, we present some nonrecurring effects that ended up impacting the quarter's accounting results by around BRL 12 million. The first was the acceleration of the Ser Digital project, which resulted in an expense of BRL 4.5 million which we now work on strongly in the new Distance Learning platform, student and faculty portals as well as process robotization and artificial intelligence deployment.

The second effect was a write-off of property, plant and equipment of about BRL 4 million related to properties returned during the year. And the third other BRL 4 million related to the severance expenses of the staff and teachers due to the work of adopting the student base in the cities with greater valuation as well as beginning of operational optimization work that had not been carried out more consistently during the year.

Turning now to Slide 8, we have the breakdown of the results between on-campus new units and the Distance Learning, which by the way, has been the main highlights in operational results from 2019 in financial results, as well contributing positively with the adjusted EBITDA for the third quarter in a row, fact that happened for the first time since the beginning of the operation. Our record new units continued their trends to reduce the impact on results due to the adjustment we made since last year to provide this effect that we are currently seeing.

Finally, on-campus operations have been concentrating more on impacts of the economic slowdown as they are located in the largest cities. But we hope this will be able to reverse in the medium term as we are beginning to see the first signs of improvement although still [shy].

Moving on to Slide 9. We have the amount of our average collection period that went from 75 to 91 days, mainly due to the increase in the average collection period of regular students and FIES. In the case of FIES, we had receipt that happened last year during the third quarter, which this year are being realized in the fourth quarter. This [slight later] behavior by the federal government does not affect our operation, but has led to a change in cash and cash flow behavior.

In the case of an increase in the out-of-pocket of students net receivable base, this is related to the change in our provisioning methodology that we announced in the first quarter '19, which now incorporate this highest credit recovery rates over 360 days in our [PGA] calculation base.

In addition, we have our out-of-pocket students base that is growing more than 20% year-over-year. And the chart below illustrates this effect on our gross receivables and comparing this increase with that of the total, in total of out-of-pocket students base as well as the out-of-pocket undergraduate base. Therefore, because of the substantial decrease in the FIES student base in a still challenging economic period, we understand that this average term increase is natural to the scenario we are going through and more accurately reflects the actual payment cycle of regular students.

Moving on to Slide 10. We provide a pro forma analysis of cash generation to make it easier to understand its behavior. The main point of analysis is that the third quarter '18 has been the last quarter of additional operating cash generation due to the payment of the last installment of PN 23, which was BRL 137 million. If we remove this effect and consider some specific issues, such as the additional deposits made in the year and the FIES payment term adjustments, our cash generation is behaving quite in line with our adjusted EBITDA and our post-CapEx cash generation.

On Slide 11, we present our CapEx bridge as well -- as the other quarters of the year is falling from 7% of the net revenues last year to 5% this year as a result of the significant expansion of rate contracted due to investments in previous periods.

On Slide 12, we have our debt, which, as we can see, had a significant reduction of close to 35% since last year was paid, one of the portions related to the acquisition of UNG in the first years of our issuance of debentures. Thus, our company continues to be in a very comfortable cash position even considering that in the fourth quarter of '19, we paid BRL 185 million related to the acquisition of UNINORTE.

This were my comments and the results -- on the results. And I give the floor back to Jânyo, who will update our business plan.

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [4]

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Thank you, Aguiar. Moving to Slide 14 for an overview of our business plan. We are cautiously optimistic about the future of the sector as the Brazilian economy is showing its first signs of recovery despite a super-high unemployment scenario. The sector is undergoing a major transformation that should have positive impacts in the medium to long term. We understand that the Distance Learning regulatory framework will bring much of these positive changes because it allows this teaching model to be increasingly integrated with the classrooms and with the support of technology and actually teaching methodologies available today, enabling the Brazilian to access higher education in new formats.

These new formats, coupled with a smaller cost structure, allow for the greater capillarity of supply with ever-better student experience and affordable teaching quality. It is with this vision that we are working on our Ser Digital project, which aims precisely to achieve these objectives, including increasingly integrating the offer of platform course with Distance Learning process.

As a result, we developed the Campus 2.0 concept that allow us to open campus unit at about 1/3 of what we were doing in the past with a much more efficient and interesting unit model for any people aged between 18 and 24 years, including units allocated within shopping malls, which has shown promising results in 2019. To this end, as we have shown on Slide 15, we have invested heavily in our platform to improve student experience in each pillar of student contact. We invested in our back-office, both in the student portal, the internal process that impact their routine in our institutions.

This semesters, we launched several new features on our Distance Learning platform so that students can have market news available on our platform. These are increasingly friendly and light-weighted content that allows students to [access their studies] in an increasingly convenient way. We are doing an important job implementing our active methodologies program in all our course. This starts gradually. Today, most of our house course are already using active methodology in the first or second semester. This is an important movement because this is the model we already use in Distance Learning, and this should help students through less and less difference between teaching modalities.

And we take better care of our Distance Learning partner centers. We have created a lot of news so that they can better manage their student base and have the incentive to serve more and more students. The [publishing] games was undoubtedly an initiative that greatly increases the capture of our Distance Learning.

On Slide 16, we present the units we opened in Brasilia last October. And we make it -- its first intake process in this 2020, first semester. This is a typical Campus 2.0 model with about 2,600 square meters located within a mall. The unit has charter-approved course, including the most demanded in the field such as law, dentistries, nutrition and psychology.

Brasilia is a field that recognize the UNINASSAU brand for having a very strong nurses migrant population. The city is one of the best income per cap and employment in Brazil, and this market that has no competitors, our dominant. We are confident of the success of this unit as it marks the return of our unit opening activity after almost 3 years.

On Slide 17, we move on to remember that we have finally completed UNINORTE's transaction in November. We started the first phase of integration, which is the commercial one. We'll now seize our right to offer 100% online course after only a week the integration started. We are confident of this integration and the value creation that we will have with this important situation that strengthens our position in the northern region of Brazil.

On Slide 18, we present some [announcements] that we received this year that were important to demonstrate that we are moving positively in our activity. In addition to awards of -- for the graduate tutor project, which aims to reduce the dropout of Distance Learning by using tutors who routinely communicate with the students to increase their sense of belonging.

Some important quality recognitions such as positive qualification and distance learning rankings. We had 3 courses among the top 10 ranking -- raking -- Ranking course, but also 4 highest-rated ENADE course in Brazil and 4 highest-rated ENADE course in the Northeast and North. Finally, UNINASSAU Fortaleza has been accredited as a university center, a significant recognition of our quality in the city, that we have performed well in recent years.

And on Slide 19, last of our presentation, summarize the strategic objective that we are seeking to achieve in the short to medium term.

First, we continue to develop our organic growth plan after resuming the opening of new units this year. We want to open between 4 and 6 units per year already in the concept of Campus 2.0, favoring regions where we have solid brand recognition. In addition, we will continue to open Distance Learning centers, I believe at least 30 a year. We realize that there is still room for maturity of our existing operations, and it is possible to recover more mature operation as soon as there is a sharp drop in our unemployment.

Second, we have the opportunity to start generating synergies at UNINORTE. A plan we have been designed for almost the whole year can finally begin its execution. In addition, the higher education market is extreme -- very hot for acquisition, and we are continuing to work to bring new, recognized brands into their markets to make up our original brand portfolio.

Third, let's continue our investment in Ser Digital. It's a fundamental process for our company to be prepared to capture the positive change that we will have in the coming years.

And fourth, we will keep our company with a lean cost and expense structure, focusing on operating cash inflow and generation and prepared for a new strategic M&A moves.

As you can see, this is a relatively simple plan that we have been repeating since our IPO: Focus on the business, seek operational efficiency, value-adding acquisitions and organic growth.

These are my comments, and set the layout for the section of question and answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question today comes from Vinicius Ribeiro of UBS.

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Vinicius Serrão Ribeiro, UBS Investment Bank, Research Division - Associate Analyst [2]

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I have 2 actually. So the first one is ahead of the upcoming 2020 intake cycle. I'd just like to understand your expectations on discounts level for the on-campus segment, and on tuition on the Distance Learning. So I'd just like to understand how this competition in your view and how should overall intake behave? That'll be my first question. And I'll ask the second a little later, afterwards.

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [3]

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Well, thank you, Vinicius, for your questions. We believe that for a good rate, of course, there's a possibility you can delever a (inaudible) but our business plans does not foresee significant price recovery in the coming years, as we believe that the recovery will be gradual and the industry soon is to prioritize student-based recovery. We believe that this scenario of this quarter if you are seeking, will be very competitive as it has been in previous quarters. And we did not touch, both a significant pricing change in our markets. And we believe the market is still trying to recover part of reducing student base due to graduation of FIES students and then with an economic scenario.

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Vinicius Serrão Ribeiro, UBS Investment Bank, Research Division - Associate Analyst [4]

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Okay. And my second question would be in regards of your organic growth as you outlined during the presentation. I just would like to understand on the -- both in the on-campus and the Distance Learning, which regions are you targeting to enter? Or what's the rationale for these regions.

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [5]

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This is Rodrigo speaking. We think the key point for us in terms of expansion is to focus more and more in the Northeast and the North regions. We have the acquisition of UNINORTE. There is an opportunity for us to open more units away for UNINORTE as well. We are aiming more to the countryside of the Northeast where we believe that our brands have higher penetration. And just to explain, that as leader, we opted to Brazil at this time more opportunistically because we found an interesting new stage to rent, and the city itself is very important in the higher education market.

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Operator [6]

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The next question is from Susana Salaru of Ita?.

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Susana Salaru, Itaú Corretora de Valores S.A., Research Division - Sector Head, Telecommunications, Media & Technology [7]

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We have 2 questions, it's related to Ser Digital. Could you elaborate, when do you expect it to be become fully concluded? And what kind of savings should we expect once the Ser Digital is fully implemented.

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [8]

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This is Rodrigo, again. Ser Digital will be in full production until the end of next year. In the end of next year, we will reevaluate but probably the level of investments will reduce because most of the programming and the expenses related to that will be already done. However, it is a cultural change. So the project will be the change of the overall company in order to have us jumping into this hybrid education mode. But in terms of expenses, until the end of next year, it will be okay.

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Operator [9]

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The next question comes from Marcelo Santos of JPMorgan.

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Marcelo Peev dos Santos, JP Morgan Chase & Co, Research Division - Senior Analyst [10]

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The first question would be about the synergies on UNINORTE. So I wonder if you could give us a little bit more color on the source of the synergies and the timing of realization, now that you're already controlling the asset. And the second question is about the Distance Learning ticket where we have a few moving pieces there. So you have a strong intake, probably with some discounts, but you also mentioned something about the course mix more 100% online. So could you just help us to understand a little bit more. How is your Distance Learning mix evolving? Where do you think it's going to be going forward? And how that should impact prices?

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [11]

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Marcelo, thank you. This is Jânyo speaking. The idea about UNINORTE is to make the company at least double its adjusted EBITDA margin, considering that there is 3 years of execution plan by integrating the institutional story to matrix. Business gain with the centralization of this future, the kind of close expensive suppliers. To accomplish this, we have a team of integration with solid track records execution in previous transaction, which has already formed for the clean team, analyzing everything that can be done in the period. Our synergistic option or scenario would be 30% in the first year, 7% in the second year and the remainder in the third year of consolidation, working a scenario where the seasons turnaround would take place in December, no later than July 2020.

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [12]

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This is Rodrigo speaking, talking about the Distance Learning average ticket. We feel that this is happening -- the decline that is happening today is quite in line to what we were expecting. As a matter of fact, in the beginning of the year, we were expecting even lower average tickets for Distance Learning. This explains why the overall performance in terms of EBITDA Distance Learning is behaving better than we were expecting. We were expecting this year to reach about 25,000 students, and we are a little bit above 30,000. But the overall performance of Distance Learning probably will continue to decline slightly given that what is happening to us is a network effect where the distance -- the partner Distance Learning centers are beginning to sell more. They don't have the labs installed, what we end up selling are the courses that are 100% online. And what we are also learning is that they are having more facility here to sell the post-graduation courses, and those are the cheaper courses we have in the network. So we believe that the trend should continue. We also think that this is positive for us because it's important for us to reach a network effect, and further dilute the whole structure and have our partners happier. And the business we created is set to operate with average ticket that will probably be in line to what we are seeing today. We expect, of course, the Distance Learning to remain a competitive market. Obviously, the moment that we mature the Distance Learning -- the partner Distance Learning centers, the pricing should probably stabilize.

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Marcelo Peev dos Santos, JP Morgan Chase & Co, Research Division - Senior Analyst [13]

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Great. Just a follow up on Aguiar's question. The last thing you mentioned, which should turn in mid-2020 -- sorry, could you just clarify the phrase. I didn't get that.

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [14]

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Sure. I told that our scenario of synergy-scale absorption would be about 30% in the first year, 7% in the second year and the remainder in the third year of consolidation, working a scenario that we -- where the seasons turnaround would take place in December, no later than July 2020. I mean that we will start the integration of the seasons right now in December, and it should take place until July of 2020. It gets around 6 months to have the whole integration of the seasons.

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João Albérico Porto de Aguiar, Ser Educacional S.A. - CFO & Member of Board of Executive Officers [15]

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He's saying that because we need a semester to make each rollout. So you cannot roll out a system in the middle of the semester.

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Operator [16]

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The next question comes from Bruno Giordano of Bank of America.

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Bruno Giordano;Bank of America;Analyst, [17]

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So could you please tell us what are your expectations for the G&A expense line. This has clearly hurt your results recently. So can you expect that we have reached the top in terms of these expenses and so some dilution could be seen going forward? And also, with the integration of UNINORTE, do you expect this line to be temporarily pressured in the first quarter?

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [18]

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This is Rodrigo speaking. This is a good point. We refrained from turning a lot of G&A this year, as we were doing in the past years, given that we had to wait until the UNINORTE to be consolidated, and we had a 3-month delay in this year. We -- what we are doing now is precisely to execute the business plan at UNINORTE. And during this period, we are also working on fine-tuning of G&A expenses as of the fourth quarter. So our expectation is to make this fine-tuning now during the fourth quarter. During the first quarter, we will have a better sense of the intake season, so we will do a second fine-tuning or not depending, obviously, on the summer intake. But the idea is to make the G&A expenses to be more in line to the revenues we are getting. So this is something we have done a little bit differently this year than last year, but we had a very good reason for this.

On UNINORTE, well, UNINORTE operates with an EBITDA margin of around 10%. Clearly, you cannot make the margins to go up in 1 quarter, so it should impact slightly our combining margins in the first year. But as Aguiar said, as we reach the levels of synergies, we believe that -- and we are -- now that we are inside of UNINORTE, we are even more confident about the synergies we are getting. This will probably generate better margins for us in 2020 onwards.

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Operator [19]

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And the next question today comes from Thiago Bortoluci of Goldman Sachs.

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Thiago A. Bortoluci, Goldman Sachs Group Inc., Research Division - Research Analyst [20]

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We have 2 questions. The first one is regarding working capital. You made an adjustment on PDA in the beginning of the year. And right now, we are actually seeing a pressure on Ser receivable base. I know you already commented a bit about it on the opening remarks, but we'd like to understand what is the trend you expect going forward? And if there is room for a potential increase on PDA levels going forward. This is the first question.

And the second one is regarding Distance Learning. You are ranking up your file from past. On your last slide, you mentioned additional organic growth for 2020. When you think about future growth, what is the contribution that you expect to come from same-store sales and maturation of existing units versus from new units in the medium term. Those are the questions.

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [21]

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Thiago, it's Rodrigo again. Regarding the working capital, we think that if unemployment really begins to decline the month-to-month shift, this will probably start to improve as of the next year. We also have to take in mind that on the other hand, the FIES students are finalizing the biggest chunk of graduation. So this will put a little bit more of out-of-pockets accounts receivables. But what is important to keep in mind is that the regions we operate still didn't see any reduction of unemployment. So if this starts happening, this will probably compensate the larger volume of our out-of-pocket students.

The other question related to expansion of Distance Learning. I think what we still have here is a priority of maturing the existing volume of Distance Learning -- partner Distance Learning centers that we currently have. Given that the Distance Learning centers that are open today, on average, have 1/3 or half of the volume of a student that -- as compared to the Distance Learning market overall. However, if we can grow between 20 to 30 new Distance Learning centers next year, it will be welcome. I think the difference between what we are saying today from 2 years ago, is that 2 years ago, we needed to create a network of Distance Learning centers because this would be important. And as we can see, it's been important for the overall intake volumes. But now we believe that most important than that is to mature and to have an operation where our partners are making good results as well as we are doing now.

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Operator [22]

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(Operator Instructions) And the next question today comes from Leandro Bastos of Citi.

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Leandro Bastos, Citigroup Inc, Research Division - Research Analyst [23]

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So one question about dropouts. What should we expect in terms of dropout rates going forward? We saw an improvement on 3Q, especially on the on-campus that was eye catching. So just to get a sense on what should we expect going forward?

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Rodrigo de Macedo Alves, Ser Educacional S.A. - IR Officer & Member of Board of Executive Officers [24]

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This is Rodrigo. We think the dropouts in this year, especially the first semester reached the top, given that we were still with the higher employment rate. And this was dragging a lot of the negotiations to new enrolled students. Now we believe that the dropouts -- if unemployment in the Northeast and the North really beginning to drop, it will be probably at least stabilizing to begin to decline.

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Operator [25]

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The next question comes from [Kyle Moscardini] of Morgan Stanley.

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Unidentified Analyst, [26]

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I have a question on the margins of the mature units that exclude new units and the Distance Learning. This quarter, the margin came at 25.4% and when I looked last year, the margin was 28.9%. I just want to make sure that both of them are comparable. And if so, what has driven this strong 350 bps deterioration? And what we should expect going forward for the mature units?

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João Albérico Porto de Aguiar, Ser Educacional S.A. - CFO & Member of Board of Executive Officers [27]

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Yes. They are comparable. It shows how the graduation of FIES students and the overall economic scenario we have are really helping the bigger operations in the -- especially in the state capitals of the Northeast. This, on the other hand, makes us more confident that we have space to grow. Again, margins given that all the session those cities have until today if we can start to have the recovery, we showed in the third quarter. It's important to mention that the volume of intakes we had in the third quarter came mostly because of the larger cities in the Northeast began to react. And also shows that we didn't make all the adjustments we usually do, given that we were expecting to have the UNINORTE acquisition during this year. As the EBITDA margin share corporate expenses, they will also charge you a little bit of the mature current FIES as well.

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Operator [28]

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(Operator Instructions) Thank you. That does conclude the question-and-answer session for investors and analysts. I would ask -- like to pass the word to Mr. Jânyo Diniz for the final considerations. Mr. Jânyo, you may proceed.

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Jânyo Janguiê Bezerra Diniz, Ser Educacional S.A. - CEO, Member of Board of Executive Officers & Director [29]

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Thank you all for participating in this conference call. And if you have any further questions, feel free to contact our Investor Relations partners. Thank you, all, and have a good afternoon.

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Operator [30]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.