Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Kroton Educacional fourth quarter 2018 earnings conference call. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer session. At the time, further instructions will be given. Should any participants need assistance during this call, please press star zero to reach the operator. Also, today's live webcast, both audio and slideshow, may be accessed through Kroton Educacional Investor Relations website, www.kroton.com.br/ir, by clicking on the banner 1Q18 Webcast. The following presentation is also available to download on the company's website.
The following information is available in Brazilian reais in accordance with Brazilian corporate law and generally accepted accounting principles, BR GAAP, which now conform with International Financial Reporting Standards, IFRS, except where otherwise indicated. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Kroton management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operational factors could also affect the future results of company and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to the Kroton CEO, Mr. Rodrigo Galindo, who will begin the presentation. Mr. Galindo, you may begin your conference.
Good morning, everyone, and welcome to the earnings conference call of Kroton Educacional for the first quarter of 2018. With me today are our IRO, Carlos Lazar, and our CFO, Jamil Marschiarelli. This presentation will cover our operations and financial results for the first quarter of 2018, which show how Kroton continues to deliver solid results while implementing a robust organic growth product, with the first delivery of this product already being seen. As you know, 2018 should be another challenging year for the industry as a whole, given a combination of factors. First, unemployment remains high. Second, we registered a high number of graduations on FIES students, which were admitted in 2013 and 2014, and classes are graduating now. And third, a more competitive scenario. However, despite all of these challenges, we are very confident in Kroton's capacity to continue generating sustainable results.
The results for the first quarter and the guidance that we'll be giving later today make that clear. And most importantly, we are delivering these results while significantly improving on the quality of the education offered, with a stronger focus on student success and implementing a deep digital transformation. And at the same time, we are laying a solid foundation for organic growth. I will now hand the presentation over to our IRO, Carlos Lazar, who will analyze our operational and financial results. Carlos.
Thank you, Rodrigo. Let's start today's presentation on slide four with the main operational highlights of the quarter. Starting on the left-hand side of this slide, you can see the results of our student enrollment and the enrollment process for the first semester of the year, with very good results in both the on-campus and distance learning segments. We increased enrollment in both segments, even with the headwinds that Rodrigo just mentioned: the more challenging competitive scenario, the high unemployment in the market, and the significant reduction in the FIES program. Despite less than 700 students enrolled in FIES, we were able to grow our total enrollments without pressuring our average ticket in the period. This reinforces our company's resilience and its efforts to deliver consistent and sustainable results.
We were also able to achieve this because we have a very fair and clear value proposition that is recognized by our students. The academic quality is regionally strong brand, commercial efficiency, and solutions that support students, such as our employability channel, Canal Conecta, which continues to demonstrate its role as an important competitive advantage. In all, we enrolled 323,000 new undergraduate students, up by 3.4% from a year ago, closing the quarter with a little bit less than 1 million undergrad students. We have an increase yearly to 14% compared to the previous quarter, and a decrease of only 1.6% year-over-year, despite a 12% drop in graduations during the period.
In the on-campus segment, we enrolled in totally 116,000 students, up 4.2% year-over-year, reflecting the continuous efforts to improve the quality of the education we offer, as well as the portfolio of programs, which is always aligned with the market demands. Another factor supporting this growth were the 10 new units opened in the semester, which enrolled 1,200 new students approximately, beating even our initial estimates for these units. All the units here demonstrated the viability and the demand that justified the formation of classes, which also indicates that the process to implement the greenfield projects was very well-structured.
This process involved several factors such as selecting the cities, identifying the best location for the campus, an intense training program for the teams, and also the decision of the best initial programs portfolio, preparing the sales team, and finally, implementing systems and processes at the new units. This entire effort is what effectively ensured the success of the opening of the 10 new greenfields in the first semester of the year. I should remind that the opening of these new units is just the beginning, because in the next semester, we're going to be adding 20 more units. Next year, an additional 38 new units. It's going to be fully started by the end of next year, more than 120 units. Even after excluding the figures related to the expansion projects this year, the on-campus segment continued to deposit gain 3.1%.
As a new enrollment in the third quarter of last year, one of the main highlights was the behavior of the student paying out-of-pocket, which grew 24% to 76,000 students. This result is even more notable considering that we maintain the same pricing policy with trends similar to previous processes, seeking to preserve profitability in the segment. Meanwhile, the PEP program accounted for 21% of the new enrollments in the on-campus segment, which continues to be present with a declining share, accounting for only 2% of the new enrollments in the segment.
After adding the almost 300,000 new enrollments in the on-campus segment, the student base ended the quarter at 406,000, down 5% year-over-year, which reflects basically the high number of graduations given the graduation of the classes admitted in the process of 2013 and 2014, and partly affected by the improvement in the dropout rates, as I will show just in a sec. Turning now to the distance learning segment. The new enrollments also recorded a very solid performance, especially given the more competitive scenario following the new regulatory framework. The second enrolled 207,000 new students, with an increase of 3% compared to the same period of 2017. The new distance learning centers contributed to by enrolling approximately 10,000 students. If we exclude this impact, we would have almost a 3% contraction in enrollments.
These are very satisfactory results in our view, because it shows that the company is very ready to face the new competitive dynamics in the segment, supported by a highly effective platform, which consists in a quality indicator, highly dedicated partners, a very high-level technology and content, and a rigorous control of our portfolio and offers. Here, I should mention also that once again, the importance of our premium distance learning programs, which not only expand addressable market but also strengthen our competitive advantage. This semester, 10% of the new students enrolled in these premium programs, an increase of 400 basis points compared to the last enrollment cycle. The 100% online programs were also represented, accounting for 23% of the new students, in line with the last process. Finally, enrollments in the DL segment remained slightly stable.
We could close the quarter with 552,000 students, an increase of 1% year-over-year. Generally speaking, our expectation is very positive considering the scenario. Turning to the needle of metrics, we're very pleased to report a strong improvement in dropouts in both segments. In the on-campus segment, the dropout rate stood at 11.2%, now even in relation to the first quarter of 2015. In the distance learning segment, the dropouts stood at 13%, also decreasing nearly 200 basis points from a year ago. These improvements directly reflect the expansion and consolidation of our initiatives under the retention program. Two years ago, we announced the launch of this program and made it clear that it would generate results only in the medium term. First, we implemented the pilot products, and only after we saw a subsequent level of results, we moved to a rollout phase.
This quarter, we have already begun to observe a very concrete result in the reduction of dropouts. This positive result includes the retention team at all units, also predictive models for dropouts that try to understand better the profile of our students. To identify and attribute probability of dropping out in order to treat the root causes before the dropout really occurs. The success of these initiatives becomes even clear when we consider the important changes in the student base profile in both segments. With fewer PL students in the on-campus, also more online students in the distance learning. There are still several opportunities in our view to be captured in the student retention product, we are working very, very hard to capture them.
On the last part of this slide, the right-hand, you can see the evolution of the average ticket for the post-secondary education in the periods. In the on-campus segments, the average ticket increased by 2.4%, which is explained by improvements in the mix of programs with a greater share of health and engineering courses, also by the annual tuition increase. The average ticket increased despite the seasonal effect of ProUni, which has a faster new enrollment and re-enrollment cycle than other kinds of students, impacting the average ticket in the first and third quarters of the year. This means that the trend is for the average ticket to improve further in the second quarter.
In our view, this is a very successful result since it demonstrates the company's capacity to preserve value creation and maintain its consistent pricing policy despite the reduced offer of PL, also the higher competition. In distance learning, the average ticket increased 1.4%, which is also very positive given the concerns due to the new competition environment. Factors that contributed to this result was the annual increase, also the higher share of 100% to our basic programs, also distance learning programs as well. We managed to grow the average ticket despite the 100% student, just correcting what I just said. Here we also see the same effect from the accelerated course of ProUni students, which also can benefit the trend in the second period of the semester.
To close the first section, I just want to say that the performance in the student enrollments and dropouts, also in the average tickets, are very effectively and shows that we are delivering, again, a very consistent performance in these results. That will provide us the capability to deliver, again, a very solid year in 2018, as we will provide some more details by the end of this presentation with the guidance. Let's turn now to slide six, where I want to talk about the main lines of our consolidated results for the first quarter 2018, talk about more in the financial area. As part of our company's constant effort to ensure the transparency and comparability of our results, here we are presenting two perspectives of our consolidated results. In the first one, we exclude the results of the assets sold in 2017.
As you're doing, is in the previous quarters. The second perspective includes not also that, but also the impact from the new on-campus units, since that requires a series of costs and expenses without the necessary corresponding revenues in the same proportion, since they are just in the start of their maturation cycle. Bear in mind that the behavior is totally expected and that the initial reports of the student recruiting process of these units boost our confidence regarding our organic growth plan. Starting with the consolidated perspective. In the top of this slide, Kroton delivered a net revenue of almost BRL 1.5 billion in the first quarter. It's stable year-over-year, benefiting from the new enrollment and re-enrollment process in the on-campus and distance learning segments. From the initial results of the recently opened retail products.
These effects were partially offset by lower net revenue in the K12 business due to the high anticipation of sales in the previous quarter. In the middle of the slide, the adjusted EBITDA was BRL 615 million with a margin of 45.1%, which represented a reduction of 3.1% and 160 basis points respectively, mainly to the costs associated with our organic growth plan. As we already noted, this is a short-term trend since the business units are immature as I commented before. On the right side of this slide, you can see the adjusted net income in the quarter was BRL 539 million. Here the margin was 39.5%, down 5.8% and 260 basis points from the same period last year due to the same reasons I already mentioned.
Also because of the lower financial results due to the lower interest rates in the period and the higher depreciation amounts due to the investments in content production and technology that we put in place over the last year or so. At the bottom of this slide, we can go to the other scenario when we also have the net revenue turning practically stable in relation to the same quarter of last year, which we believe is a very good result bearing in mind that the high number of graduation and PL students. Just to quantify a little bit more than the impact on our student base, it was 32%, it's a great result that we've achieved. The results also impact the level of the EBITDA. Here, we were able to keep margins structurally stable over the year.
This, I would say, is the highlight of the result. Lastly, the adjusted net income (Inaudible) was BRL 555 million, with a margin of (Inaudible), basically with the same trend explained previously. Going to slide seven. You can see the main lines of the results by segments in the first one. Starting the comments at the On-Campus school segment, the net revenue grew 5%, reflecting mainly the solid results of our student recruiting process, as we commented before. We saw highlights of the new enrollments of the students paying out-of-pocket, and the contribution of the new units opening this semester. Net revenue growth was also driven by a higher average ticket, which tends to be reflected in the improvement of our curriculum and the annual tuition increase.
This quarter, we recorded declining gross profit and margin and the operating income margin, which mainly reflects the increasing costs required to support the growth expansion plan, and the lower also reversal of contingencies. Note that these initial impacts are required to enable us to deliver higher growth in the middle term, as we commented in last Investor Day event. It's also important to remember all the efficiency initiatives we continue to implement, which should mitigate some of these impacts, which include the rollout of the original research system, together with our academic model and the higher penetration of digital content, plus the strategic sourcing project that is currently in the wave 5, among other initiatives. Let's move now to Distance Learning.
In the first quarter, the net revenue grew 5%, driven by the student enrollments and renew enrollments, which were supported by the higher number of U.S. centers and by the expansion of the curriculum portfolio, especially the DL courses. The already mentioned increase in the average ticket of 1.7% also contributed to these results. DL growth revenue by 2% with gross margin expanding 220 basis points benefiting from the realization of the tutoring model, which had the purpose of improving the customer services and the quality of responses, while also improving the productivity in the segment. The higher share of 100% online students also benefit the margin gain, due to the much lower cost structure that these students carry. These are another points to be highlighted.
Last, the other results before marketing expenses grew 6.1%, with operating margin expanding 420 basis points, capturing the operational efficiency gains and economies of scale in the business. Also, you can see the primary and secondary segments in the left half of this slide, where net revenue fell 3.7%, affected by the higher anticipation of collection sales in the fourth quarter last year. However, we offset this revenue gap with a series of initiatives to optimize cost and expense in the segment. The income grew 5.3%, and the gross margin also improved 540 basis points, which is some very interesting and positive effects in this business. Now I would like to turn the call to Mr. Jamil Marschiarelli, our CFO, to continue the presentation.
Thank you, Carlos. Good morning. Good afternoon, everyone. Let's take a look now at the level of provisioning for losses in our average receivable terms. For that, let's turn on to slide nine, where you can see the provisioning for losses as a ratio of net revenue for each of our segments, with this analysis reminding you, excluding the results from PAEX, Facfa, Macha, NOVATEC, which affect only the On-Campus segment. Starting with the On-Campus segment, the total PDD stood at 13% this quarter. This is up 60 basis points year-over-year. It's reflecting the higher share of PEP and PMT students in our base. Remembering that the provisioning rate for these products remained at 50%.
Comparing this to the fourth quarter, the total PDD increased by 490 basis points, reflecting the seasonality of P&T plans, which are mainly offered in odd-numbered quarters, so fourth and third quarters, which concentrate most of our newer enrollments. If you look only at our out-of-pocket students, the PDD provisioning once again remained stable over the previous quarter, with a decrease of 10 basis points on the year-over-year analysis, continuing the positive trend already observed last quarter, which is essentially due to our more effective collections actions, including for a part of the portfolio, which had already been written off for no longer active use. Moving on to the Distance Learning segment, the total PDD stood at 9.7% in this quarter. This is down 50 basis points on a year-over-year basis, reflecting the smaller base of P&T students in this quarter.
If we compare to the fourth quarter, the total PDD in this segment increased 60 basis points, as in the On-Campus side, reflecting the seasonality of P&T plans and of enrollments in the first quarter of this year. At last, looking only at our out-of-pocket PDD, there was an increase of 20 basis points, which is explained mainly by the large base of 100% online students, and by the still challenging economic scenario, with high unemployment and its effect on the drop-off rates. Turning now to the right-hand side of the slide, you can see PDD in the primary and secondary education segment, which once again remains total of 0.8% and demonstrating the company's effectiveness on provisioning for this segment.
I invite everyone to turn on to slide 10, where we are going to speak a little bit more about the average receivable terms for each of the business, also excluding any impact from FAESA, FAMA, and NOVATEC. If you look into the On-Campus segment, the average term in the quarter stood at 163 days, which is an increase of 17 days year-over-year, essentially due to the higher average term for student success and P&T plans. If we look only solely for our out-of-pocket students, the average term was 89 days, practically stable in relation to the first quarter of last year, with an increase of only one day. If we compare to the fourth quarter, the average term decreased by five days, which is in line with the seasonality, but also demonstrates that we converge to a more stable scenario.
This reinforces the effectiveness of our collections management, which after being reformulated in 2017, is starting to show results with an excellent potential for generating value for the company. Looking into the Fies, the average term was 146 days in this quarter, which is down five days on a year-over-year basis, supported essentially by the normalization of Fies payment flow and by the receipt of another 25% of installments paid under the PN 23 back in August 2017. Lastly, looking to the PEP and PMT receivables, the average terms stood at 393 days, increasing by 112 days year-over-year in line with the expected maturation of these products. Moving on now to the DL segment. The average term for our out-of-pocket students was 87 days. This is up nine days year-over-year, reflecting the challenging economic scenario to high unemployment, and also the higher penetration of 100% online students.
With both of these factors pressuring the higher dropouts, as we already mentioned in the previous slide. If we compare to the fourth quarter, the average term in the DL segment decreased by seven days, mainly due to seasonality, but also as on the on-campus case, reflecting signs of converging to more stability. The average term for the existing P&T was 242 days, an increase of 53 days from the first quarter of last year, also reflecting the natural maturation expected for this product. Lastly, looking to the receivables for primary and secondary education, we stood at 141 days, which is a decrease of 12 days sequentially and by 33 days year-over-year due to the higher volume of textbooks collections in the fourth quarter. As you've just seen, the results for this quarter were extremely positive, especially with stability in our out-of-pocket PDD in the on-campus segment.
The average receivables term also demonstrated a very satisfactory behavior and provided additional guarantees to the solidity of our operations. Moving on now to slide 12, which shows our CapEx in the first quarter. If you consider only the recurring CapEx, our investment came to BRL 102 million in the first quarter, or if you look at it as a ratio format revenue, 7.4%, a growth of 26% on a year-over-year basis. Out of these amounts, important to highlight, 72% was allocated to the development of content systems and licensing, and also to the expansions and improvements at our units. Given the growth in programs in the field such as nursing and engineering, which require laboratories for practical classes on the more mature terms of the course.
If we also include investments in special and greenfield projects, the CapEx for the quarter came to BRL 116 million or 8.4% as a ratio of net revenue, growing by 22% on a year-over-year basis. Here I would like to highlight our organic growth plan and additional transformations at Copacabana. Let's now go on to slide 13, which shows our operating cash generation. The cash generation for this quarter was mainly affected by the lower receivables from Fies students due to the later start of the Fies enrollment process when we compare that to 2017, and also by the contraction of the Fies students, which was not fully offset by the higher receivables from our out-of-pocket students and student installment plans. Given here that this form of payment has a longer average payment term.
Another factor that impacted the cash generation was the higher CapEx, which as you've seen in the previous slide, as well as some other one-off impacts such as the adoption of collective vacations in December, which was the first time implemented that last year, and resulted in a typical seasonality in expenses in December and January. Also the increasing share buybacks under our repurchase plan in force until the end of this year. Lastly, we also were adversely affected by the interest term of our cash, since we continue to have a net cash position and there was a student drop on Brazilian DI rate.
Note that it's important to note that as of 2016, the government modified the timetable for the payment of Fies rights, the schedule was changed, with installment of the November competence, which were BRL 480 million, being made already in December instead of January. As a result, the first quarter of the year now presents naturally a lower cash generation, with the second half of the year concentrating a higher share of the asset portions. In R2, we registered cash flow in the first quarter, and it appeared with a negative free cash flow of BRL 190 million. For the coming quarters, we expect higher flows of Fies payments and consequently, a higher cash generation.
To speak a little bit more about all these seasonal effects, invite you all to slide 14, which has a more detailed comparative analysis of operating cash generation pre-CapEx for the fourth quarter of this year, excluding year-end seasonal or non-recurring effects, which show more accurate comparisons. In this analysis, we compared the reported cash generation with a pro forma cash generation, adjusting the year essentially by four major events that had a temporary effect in this quarter. Which are these effects? The first is the late payment of Fies credits under the Portaria Normativa 22 or Portaria Normativa 23, which adversely affected our receivables in the first quarter of 2016 by approximately BRL 200 million. Important to highlight here that the receipt of this late installment has been occurring in line with the pre-established schedule on the same day, August 15th, August 17th, and August 18th.
The second event was the anticipation of the Fies payment from January of the Fies November competence from January to December, which adversely affected the payment for the first quarter of 2017 and 2018 in the amounts of BRL 192 million and BRL 180 million, respectively. The third event is the timetables for the re-enrollment of Fies contracts for the second semester of 2016 and the first semester of 2017, which atypically and temporarily increased receivable in the first quarter of 2017 by BRL 100 million. In this case, what happened was that Fies contract re-enrollment for the second semester of 2016, which typically occur between August and October, occurred between the end of October and December. This generated a higher volume of contracts reviews in December and January, and consequently, affecting the cash flow of the first quarter of 2017.
On the other hand, the cycle of Fies enrollment for the first semester of 2017, which typically begins in February, began on January 10th, leading to a higher volume of re-enrollments already in January. The receivables of these re-enrollments have been registered already in the first quarter of 2017. The last effect is the introduction of collective vacations at the company in the fourth quarter of 2017, which I mentioned on the previous slide, which led to a higher volume of payments to be shifted from December to January, adversely impacting payments in the first quarter by BRL 80 million.
In the first quarter of 2016, our reported cash generation. Looking to the chart, if we start with the first quarter of 2016, looking to this adjusted analysis, our reported cash generation was only BRL 9.1 million, reflected here the impact by the delay of Fies payments under PM 23. If the payment flow had been normalized this quarter, the cash generation would have been BRL 202.8 million, reflecting an EBITDA cash conversion rate of 26.6%. Last year, if you look into the data of last year, there was a change in the schedule for the payment of the Fies November installment, with a receipt of BRL 191.7 million being anticipated from that January to December.
The first quarter of 2017 also received a one-off benefit with the receipt of an additional BRL 127 million, essentially due to the postponement of Fies enrollments from the second semester of 2016, and also due to the anticipation of Fies enrollments for the first semester of 2017. If we consider all these adjustments, the cash generation of BRL 224 million with a conversion of 37.7% of EBITDA, and this compares to a reported figure of BRL 132 million. If I take a look at the first quarter of this year, which requires essentially two main adjustments in order to make cash generation compare. The receipt of the Fies installment of the November 12, 2018, BRL 180 million, which was received in December 2017, and the BRL 18 million in payments in December that were postponed because of the collective vacations.
If we adjust for these two factors, the cash generation pre-CapEx was BRL 174.7 million in this quarter, which would lead to an EBITDA conversion of 30.7%. Essentially, overall, with this analysis, we can conclude that cash generation in the first quarter of this year was heavily affected by the seasonal events mentioned above. Once we eliminate the effects, the expectations become clear that cash generation should accelerate over the coming quarters and to reach a conversion rate more in line with what we registered last year. To reinforce this fact, we are receiving around BRL 500 million from Fies reparations already during the second quarter. Turning now to slide 15, you can see our net debt position continues solid.
At the close of the first quarter, our cash and equivalents stood at BRL 1.5 billion, which is down 11% from the end of fourth quarter, reflecting the cash flows already mentioned this year. If you compare that to a year earlier, the cash position grew by 13.7%. If you consider as well our financial liabilities and short- and long-term obligations, we ended the quarter with a net cash position of BRL 1.1 billion. Another thing I'd like to highlight is that our short- and long-term accounts receivables also include a couple of other factors. The remaining 50% of the Fies installments not paid in 2016 under PM 23, which we expect to receive now in August 2018. Secondly, the second part of the UNINASSAU payment adjusted to 2030, which we will receive in five annual installments between 2018 and 2022.
The payments coming from the sale of FAHER and FACHAMAT that was concluded back in August last year. If you consider all these receivables, we hold a net cash position of over BRL 3 billion. It is BRL 3.1 billion, which is extremely robust and 20.5% higher if you compare to last year. This cash position will play a very important role in sustaining our growth plan. Well, now I would like to pass the call back over to Carlos for his closing remarks.
Thank you, Jamil. Actually, let us start the closing part of this presentation. To start that, I would like to announce this annual official guidance here that we put out today. As we did comment in the beginning of the presentation, 2018 brings important challenges. The year knew record the highest number of graduation of higher ed students from the large classes that admitted in 2013 and 2014. Also, the macroeconomic scenario that remains challenging, with the unemployment rate above 12%, and the competitive and economic competitiveness scenario has also become somehow more intense. We are working internally to find levers that could allow us to mitigate most of these issues, while always ensuring the improvement of our academic quality with a strong focus on our student success. Seeking efficiency is large. Seeking efficiency at whatever cost is somehow irresponsible to our sustainable growth.
Kroton's commitment is not just to create value in the short term, but also to strike the best balance in terms of our short-term results, while building the foundation for generating value in the long run. Today, we officially present the 2018 guidance, as we have widely disclosed and repeated in today's presentation, we have a robust organic growth plan in both post-secondary education segments. We hope to open about 112 new units and almost 1,800 distance learning units with Vasta until 2028. This expansion plan is making good progress based on our initial results for the enrollments and the engagement of our partners. We have, of course, further expanded our geographic footprint. Initially, however, this growth will negatively impact the margins since on-campus units have negative margin or lower than average margin in the first semesters.
On the other hand, the rates of return of these investments for this organic growth are highly attractive, which justifies these initiatives. For this reason, to ensure the comparability of our past results with our future results, we are adopting the present two perspectives of our guidance. One consolidating the perspective that encompass the company and all its organic growth products, and one excluding the greenfields products, which facilitate the comprehension and the comparability. Starting with the ex-greenfields products perspective, our guidance for 2018 calls for net revenue of BRL 5.44 billion, down 1.8% from 2017. The adjusted EBITDA will be about BRL 2.35 billion, down 3.7%, mainly due to impact from the maturation of our FAP student base. Here I should recall that we adopted a provisioning for losses of 50% for this group of students.
In this scenario, our EBITDA margin should contract by only 80 basis points, which is completely aligned with our plans to protect margins despite all the adversities and while maintaining and improving the quality of our service. Our guidance for adjusted net income is BRL 2.030 million, which net margin of 37.3%, which represents a decline of 8.6% and 280 basis points year-over-year. The net profit of 2018, I recall that it's the effect of the reduction of the financial results, which lowered the remuneration on the cash position due to the lower interest rates and also the higher level of depreciation due to the recent investment waves, especially in content and technology. If you look on the right side, you can see the consolidated guidance, which includes all the company organic growth.
Note here that none of these figures include acquisition of Somos since the transaction pending fulfillment program condition. Especially the approval part by CADE. On the consolidated basis, we project a net revenue of BRL 5.5 billion, BRL 480 million, by 1.1% compared to 2017. As you can see, the initial contribution to revenue from our new units is not very relevant, but its growth should be gradual and cumulative since we have the three effects at the same time. An increase in the number of greenfields, the expansion of the proven portfolio at each greenfield, and finally, the maturation of the program into the graduation of the first classes in each program. These three effects will occur all together.
Our guidance for adjusted EBITDA is BRL 2.275 billion , down 6.7% with adjusted EBITDA margin of 31.5%, down 250 basis points year-over-year, reflecting all the higher costs required for the growth of such products, which includes expanding workforce, rent, utilities, third-party services, et cetera. Guidance for adjusted net income was BRL 1.914 billion, down a little less than 13% with net margin of 35.4%, following the same trend of my previous comments. Last, given the investments required to support these products, we estimate an increase of CapEx as a ratio of net revenue year-over-year around 280 basis points to 13.5%. As in comments, the rates of return of investment in the organic growth products are more than attractive. We are confident to continue that.
Of the total investments planned for the year, around BRL 150 million, between 150 and 200 should be more accurate, is related to greenfields products. Therefore, if we exclude that, the CapEx guidance of 2018 would be around 8.6% of net revenue, even lower than last year was. The guidance reflects our belief that we will continue to deliver robust but factual results without adversely affecting our capacity to grow in the future. We are confident in meeting the guidance, especially after results of this first quarter and first intake process. Thank you very much. I would like to pass the word again to Mr. Rodrigo.
Thank you, Carlos. Moving on to slide 18, I want to comment briefly on Saber, our new holding company that will be dedicated exclusively to the primary and secondary education market. There is the result of an internal restructuring of our current primary and secondary education business, including the learning systems and own schools. Saber also will encompass all of the company's future businesses in the segment, including any acquisitions of assets and their subsequent expansions via greenfield or brownfield projects. Even after just one month, Saber already has a lot of stuff to talk about. With its most noteworthy achievement being the announcement of the acquisition of 73.35% of Somos Educação for BRL 23.75 per share.
This is a strategic acquisition of an important player in the primary and secondary education market that offers an enormous avenue of opportunities and rich operations that perfectly complement Saber's offering of products and services. We are very happy to announce this acquisition, and we are working to approve that in CADE. Another highlight of the transaction is the synergies, which we would estimate will reach BRL 300 million to be captured within four years with a potential margin gain of 16%. It is important to remember that the conclusion of this operation is subject to certain conditions precedent, particularly the examination and approval by the antitrust body in Brazil, CADE. The transaction is completely aligned with all work with Kroton's strategy since it will enable us to advance by large strides in our products for the primary and secondary education segment, creating a new avenue for future growth.
I also should mention that the acquisition of Centro Educacional Leonardo da Vinci, which is a college, a school located in Vitória, Espírito Santo, which has a strong focus in academic quality, has placed first in the Enem exam in the state for six of the seven last years. The school is completely aligned with our growth plan in the premium segment of primary and secondary education, and we are very confident in the value of this brand and in its potential to expand. In every case, our strategy for school management is to preserve the attributes to ensure the quality of the acquired schools, including the pedagogic product, the teaching product, and teams. Moving on the last slide 19. I want to begin with an update of our growth projects in the post-secondary education segment.
For the second semester of this year, we hope to inaugurate another 20 new campuses and 100 new distance learning centers. In 2019, we will expand even further the number of new units by opening 38 campuses while taking advantage of our autonomy in the distance learning segment to open the 200 new centers authorized for 2019. That means that by the end of next year, we expected to have 186 campuses and 1,510 distance learning centers, which represent very strong growth and will further extend Cogna's geographic footprint, laying the foundation for sustainable value creation in the future. Turning to the middle of the slide, although we are in the very early stages, we have already begun our student recruiting process for the second semester of this year. With new sales campaigns and a highly engaged team to once again deliver growing results.
Considering our stock price over the past few months and our differentiated cash position, we carried out a series of share buybacks in the first and second quarters under our current buyback program, which is in force until the end of this year. In the first quarter, we purchased 1.1 million shares, while in the second quarter we purchased another 12.4 million shares. Since the start of the program, we have purchased 13.8 million shares and an average price of BRL 13.83, which corresponds to 28.2% of the total permitted under the program. Turning to the last column in the slide, I want to update you on the status of our digital transformation program. It's with great satisfaction that I report that we have made significant progress to date. We have approximately 150 professionals with business profiles already working and organized into three trains of agile deliveries.
Another 150 professionals are being trained and reorganized into three new trains, which will be launched in June. By the end of the year of 2018, 100% of the system development teams will be working on a scalable agile framework, the SAFe methodology, which will make Kroton one of the few companies in Brazil to have the entire development software based on agile methodologies, ensuring complete alignment between the business and technology areas, which is an essential step on our digital transformation journey. Last, our board of directors approved the distribution of BRL 180.7 million in dividends, which corresponds to BRL 0.11 per share for a payout ratio of 40%, as we anticipated in our last call. The payment of dividends is scheduled for this May 28th.
In closing, I want to reinforce that in a challenging year such as 2018, I am certain that we are on the right path, maintaining high levels of profitability while improving the quality of our educational systems, services, thinking of a disruptive movement of a digital transformation, and striking the ideal balance between the short and long term. In parallel, we are building the foundations for solid organic growth in the post-secondary segment and have made an important strategic acquisition in the primary and secondary education segment. For all these reasons, we believe that 2018 will be a great year for Kroton. Once again, thank you for participating in today's call, and I invite you now to participate in the question and answer session. Thank you.
We will now initiate the question and answer session. If you would like to ask a question, please dial star one. If at any point your question has been answered, you may remove your question from the queue by pressing star two. Once again, if you want to pose a question, please dial star one. We don't have any questions at this time. I would like to turn the call over back to Mr. Rodrigo Galindo for any closing remarks.
Once again, I'd like to thank you everybody for the participation on this call. I help the company's IR area to answer further questions. Thank you very much.