Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Cruzeiro do Sul Educacional conference call to discuss the fourth quarter of 2021. Today with us we have Mr. Fabio Fossen, CEO, Luis Felipe Bresaola, investor relations officer, and other members of the executive board. We would like to inform you that during the company's presentation, all participants will be in listen only mode.
We will then begin the Q&A session when further instructions will be given. Should you need assistance during the call, please request the operator's help by pressing star zero. We would like to inform that the conference will be in Portuguese and will be presented by the company's management, and for the English conference there will be simultaneous translation. This event is being broadcast simultaneously on the internet via webcast.
Before proceeding, we would like to mention that forward-looking statements that might be made during this call in relation to the company's business perspectives, operating and financial projections and targets, are beliefs and assumptions of Cruzeiro do Sul's management, as well as information currently available to the company.
Forward-looking statements are no guarantee of performance as they involve risks, uncertainties, and assumptions, and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic condition, industry conditions, and other operating factors may affect the future results of the company and may lead to results that differ materially from those expressed in such forward-looking statements. Now I would like to turn the conference over to Mr. Fabio Fossen, who will start the presentation. Mr. Fossen, you may proceed.
Good afternoon, everybody. This is Fabio Fossen, CEO of the company. Thank you for participating in Cruzeiro do Sul Educacional earnings call. Before getting into the financials of the quarter with the full year, here is a short retrospective of 2021 highlights in context for the sector and for the company. 2021 was remarkable for the over 56 years of the company, starting with a milestone achieved in February 21, the conclusion of the B3 listing process.
At the same time, the resurgence of the pandemic happened in one of the most critical moments for education, which is the enrollment period. For this reason, we decided for the first time ever to postpone the intake cycle to April, and this correct strategy brought about stability in the number of entrances on campus undergraduate courses vis-à-vis 2020. This was possible due to the resilience and quality of our brand and our team's commitment to deliver results.
We continue to expand via greenfields, opening two new campuses, Vila Lobos in the west side of São Paulo and Guarulhos, where our brands already resonated. In the 2022 intake, we are achieving a higher than expected performance initially. We also made a major adjustment in our hub base, focusing on long-term partnerships to assist in the management of both students and intake, and in more attractive locations.
We started to operate 36 hub centers, which is our hubs model with labs or lab activities. This allowed us to offer DL courses in engineering, nutrition, pharmacy, biomedicine, and gastronomy, achieving a 7 percentage point increase in the penetration of hybrid students in DL year -on -year. On the academic side, we were pleased to maintain a consistent performance improvement of our HEIs.
Three of our HEIs, FSG in Rio Grande do Sul, Unipê in Paraíba, and Braz Cubas in São Paulo, moved to the 4-5 concept in the IGC 2019, present in 71% of our active HEIs, vis-à-vis 50% in the previous cycle, showing the consistent commitment of Cruzeiro do Sul Educacional with quality education.
It was also important was the authorization of the first 2,000 seats for the DL nursing course, representing another major step in the company's diversification. Another valuable milestone was the publication of the first annual sustainability report according to the GRI and IIRC international guidelines.
There we explained our main ESG activities implemented in 2020, and we reiterate our commitment to promote our students' education and the progress of Brazil by means of education.
On governance, it is worth mentioning that 2021 was an important year of transition, starting with my appointment as CEO in September last year and the transition of the founding families to the board of directors. This was already expected and planned within the new IPO context and also in the context of the education sector.
The strategic actions of the founding families within the scope of the board and the committees continue to contribute to the company's growth and preservation of the values and identity ever present in our history. Lastly, in 2021, we suffered a relevant loss at the company and also for the education sector.
On April 26, 2021, Professor Hermes left us, and he was one of the founders of Cruzeiro do Sul and played a decisive role in the company's exponential growth for over 55 years as president and later as a board member, always with the purpose of giving youth and adult students a quality education as professionals and citizens.
Now, a few words about our operating results in 2021 and what we see for 2022. As I said, in the 2021 intakes, we saw a different situation. In the first half, we suffered with the lockdown, and in the second half, with the vaccination already extensive, we saw the first signs of recovery of students for on campus.
We resumed classes that needed lab practice, and the intake cycle in the second half was 23% higher in on campus, and we almost doubled the number in DL vis-à-vis the previous cycle.
We closed the year with a 4.1% drop in on-campus student base vis-à-vis 2020 due to the graduate on campus and K12 businesses, mainly. On-campus undergraduate closed in line with a small 1.3% drop year-on-year, showing the resilience of our brands once again. In DL, we expanded our base by 11.6%, driving a 6% increase in the total student base in spite of all the setbacks.
Regarding our figures, 2021 net revenue was BRL 1.8 billion, in line year-on-year in spite of the impact of the change in the student mix, given the higher dropout rate of senior students due to the pandemic and a higher number of freshman students whose monthly tuition fee is lower. We should stress that our revenue suffered a negative impact of BRL 33 million, driven by the mandatory discount injunction of Unipê in Paraíba.
The Adjusted EBITDA reached BRL 536 million, with a 29.4% margin, 85 BPS higher year-on-year, impacted mainly by the company's gross margin reduction. Our adjusted net income was BRL 156 million, vis-à-vis BRL 172 million in the previous period. A few words about the outlook for the 2022 intake cycle.
On campus, intake in March has already exceeded the figures up to April 2021. This is relevant because we chose to reduce discounts and exemptions selectively, and this drove our freshman student ticket to be higher than the last 2 years.
This shows the strength of our brands and the fact that the on-campus model has a demand even after the pandemic and the fast digitalization of the sector. Regarding DL, our intake cycle is growing consistently year-on-year in spite of a quite competitive environment.
Our initiatives with on campus or laboratory needs are advancing and helping to mitigate the ticket drop in the 100% digital courses. In medical courses, we continue with the maturation of seats and occupancy outlook in line with the previous years and higher ticket than last year. Now, I'd like to turn the microphone over to Luis Felipe Bresaola, who will talk about the details of the fourth quarter and the full year.
Thank you, Fabio. Going to slide number 9 about the evolution of 4Q 2021 student base vis-à-vis 3Q 2021.
We closed the period with 374,000 students, a 3.8% increase quarter-on-quarter. In on campus, the student base dropped 2.9% due to the pandemic, still mainly in graduate courses. As in on-campus undergraduate ex medical courses, we were only 1% lower year-on-year.
In DL, the student base grew 7.8% due to the last intake of the year, which mitigated dropout with a net addition of about 19,000 students, vis-à-vis 17,500 in the same period last year, although the number of hubs remained stable. When we look at the 2021 student base, we see a 6.1% growth in the total, driven by the expansion of 12.5% in DL, which mitigated the 4.1% drop in on campus due to the performance of graduate courses still impacted by the pandemic.
On the next slide, we have the average undergraduate ticket adjusted for the mandatory discount injunction of Unipê and adjusted for equivalents at Universidade Positivo. In 4Q 2021, the on-campus ticket was 1.2% higher year-on-year due to the maturation of UniCid, Positivo, and Unipê medical courses seats.
In DL undergraduate, our courses that require presence or synchronous classes benefited the ticket in spite of a still competitive environment. We remain close to BRL 280, a 4.5% drop year-on-year. For the year, in on campus, the ticket was in line with last year, close to BRL 930, with a positive impact of the medical courses in spite of the adverse scenario in the last few years that impacted our base and other courses.
In DL undergraduate courses, being close to BRL 214, a drop of 4.8% year-on-year. Net revenue in the quarter, BRL 484 million, 3.2% higher year-on-year, mainly due to the impact of the higher off-the-pocket students in DL, an increase of on-campus students in Unipê, which reduced the mandatory discount in the quarter, reaching BRL 5.1 million, vis-à-vis BRL 8.8 million last year.
Net of this effect, the revenue would go up 2.3%. For the year, we reached BRL 1.8 billion, 1.1% higher year-over-year, mainly impacted by the mandatory discount injunction of Unipê, which impacted the revenue by BRL 35 million, or 1.9% of the revenue. In 2020, the impact was BRL 11 billion. Net of this effect, the revenue would have been up to 2.4% due to the larger DL student base.
On slide 12, we have the adjusted gross margin in the quarter, 46.8%, an eight percentage point drop year-over-year, mainly due to the adjustments in the model and in academic management progression of classes in on-campus and the return of on-campus and medical courses. Besides, we had an increase in the right of use amortization impacted by the monetary restatement of IGPM inflation index on rentals.
For the year, the adjusted gross margin was 47.7%, dropping 1.9 percentage point, mainly due to the increase in the rights of use amortization, whereas the payroll line dropped due to the ZBB expenses implemented in the first half of 2020.
Adjusted EBITDA in the quarter was BRL 140.5 million, dropping 17.8% year-over-year with a 29% margin, lower than the 36.4% the previous year. The margin reduction is due to the reduction in the gross margin, while in expenses, we had a positive evolution of PDA with a 1.7 percentage point improvement, reaching 5.1% of the revenue, and we started again to recognize revenue from space rentals due to the increase in the number of campus events.
For the year, the Adjusted EBITDA was BRL 536 million, 4.1% up year-over-year, 29.4% margin vis-à-vis 28.6% in 2020, mainly due to the ZBB implemented at the end of the first half of 2020 with a positive impact on the second half. On slide 15, we show the adjusted net income, which was BRL 89 million in the 4Q 2020, and going to BRL 40 million in 4Q 2021, mainly impacted by the operating result of the company, besides increases in interest and rental expenses.
In the year, we reached BRL 146 million in adjusted net income, vis-à-vis BRL 172 million in 2020 due to the impact of higher interest and rental expenses. On the next slide, we show our accounts receivable and reiterate our stand of keeping a low number of students in financing programs. In 4Q 2021, it was about 6.6% of the base.
Our average accounts receivable days was 42. On slide 17, we show investments made by the company in 4Q 2021, reaching about BRL 28 million vis-à-vis BRL 15 million last year due to the resumption of maintenance investment project that came to a halt in 2020 due to the pandemic.
For the year, investments were BRL 88 million vis-à-vis BRL 378 million impacted by the Braz Cubas and Universidade Positivo acquisition last year. Net of the acquisition, the increase reflect the resumption of investment with the improvement of the pandemic.
On the next slide, we have the operating cash generation, BRL 1.5 million vis-à-vis BRL 27.4 million last year. When we look at the adjusted operation cash generation, it was 5% of the Adjusted EBITDA vis-à-vis 33% last year due to higher rental and CapEx expenses.
In the year, we had a BRL 266 million operating cash generation, 15% higher year-on-year, reaching 52.3% of non-adjusted EBITDA. Net of non-recurring impact and managerial cash generation would be closer to BRL 193 million vis-à-vis BRL 280. The adjusted generation was 55% of the Adjusted EBITDA vis-à-vis 74% in 2020.
The higher rental expenses and the resumption of CapEx investment that had come to a halt in 2020 should be mentioned. Lastly, on slide 18, we talk about the net debt, net of lease liabilities, which reached BRL 487 million, lower than BRL 1.5 billion last year, mainly due to the IPO in February, which added over BRL 1 billion to our cash. The debt amortization schedule continues without major disbursements in the short term. I end my remarks and give the floor to the operator who will start the Q&A session. Thank you.
Thank you. We will now initiate the Q&A session. In case you have questions, please press star one. Once your question is answered, you can leave the queue by clicking on star two. Questions will be answered in the order they are received. I urge you to please take your phone off the hook once you ask your question to improve the sound quality. Our first question comes from Yassys King from BTG Pactual.
Good morning, Fabio. Good morning, everyone. Can you hear me?
Yes, we can.
Good. I have 3 questions. My first question is about the dynamics of your ticket. I just want you to elaborate a bit more about your on-campus ticket, DL ticket, and how do you see the competitive landscape for this new intake cycle.
My second question is more about the movements on your student base after the intake? I just want to get a better understanding about retention level after the intake cycle. What could we expect in terms of base growth for this new intake cycle of 2022? My last question is about M&A. I would just like to understand a bit more about your M&A pipeline and whether you've been working towards a more robust agenda towards 2022.
Good afternoon, Yas. This is Wilson Diniz. Good afternoon to everyone that has joined us. I will answer the first part of your question, and then Fabio will talk about M&A. First of all, I'll start with the ticket part. We see a very good recovery in on-campus intake, both for freshmen and veteran students. Our freshman intake has been higher when compared to last year, and this shows that we are very resilient and have very good brands.
We are operating at larger discounts in the on-campus mode. This is during the intake cycle. As you already know, we already covered the entire volumetrics of last year, and when we look at year-on-year numbers, we have been stable. The competitive dynamics in the DL segment, it's always much more aggressive. We've managed to have tickets close to that of last year.
Good stability when it comes to freshmen students. Since last year, we've been also including the DL segment with a more hybrid modality with higher added value, which helps us to ensure stability with this ticket. We are addressing larger markets because we are also delivering more courses.
Our premium courses have higher added value, higher ticket, lower dropout, and we are ramping those out in all of our hubs in terms of what we've mapped out last year, and that is also growing.
We are 7 percentage points above intakes of last year in this segment of DL education with a higher ticket. Therefore, this is a segment where the environment remains very competitive, but according to our strategy, we managed to balance our ticket in 2022, at least up to now during the intake cycle. The second question was about the movements in our student base, considering there's good intake in on-campus education.
We see that there has been a growth in on-campus base in all of our brands. Retention, also related to your question, is very much in line with the levels we had prior to the pandemic. This is also quite important because it really shows that the segment, the on-campus education, is going back to normal levels. Our brands are well-positioned.
We have better discount policies. Therefore, retention levels are very much in keeping with what we had three years ago, resuming their pre-pandemic indicators. Therefore, in fact, good retention and good intake performance will generate an increase in our student base. Now I will turn the floor over to Fabio Fossen.
Regarding M&A, we still have a very robust pipeline, and we are constantly seeking non-organic growth possibilities. We are also looking at the other sides of education and non-regulated part of education, and we also want to grow that within our group.
This has been part of our strategy in the mid and long range. It is just a matter of time until things begin to happen, but we have been fully dedicated to that.
That is very clear. Thank you very much.
Our next question from Caio Moscardini from Santander. Hi, good morning and good afternoon.
Thank you for taking my question. I have two questions. One of them relates to PDA. I just want to understand whether we should think that this is a good level in 2022. My second question relates to CAC of this new intake. What about your marketing investments? Did you have any additional expense? Now we see that your intake is very robust. So I would just like to get a better understanding about these two topics.
Hi, Caio. This is Bresa. About PDA, we have a very healthy portfolio. We have a very resilient student base. The expectation in terms of a macro scenario is to still remain in the same levels we had in 2021.
We had significant change in the base because the students that remained are those who are really seeking further education and a diploma and a graduation, and this is something that contributes to the stability of our PDA, provision for doubtful accounts.
Hi, Caio. I will talk about CAC, customer acquisition cost. In terms of our percentage of investment volume, we are maintaining the same levels of last year. We have some moves that are in tune with the market dynamics in terms of anticipating investments, and things are helping us in our outlook of investments.
But things are in keeping with what we invested last year. But in terms of our CAC, it has been reduced. Our CAC, customer acquisition cost, which has been one of the lowest in the industry, is showing signs of further reductions in 2022. Perfect.
Thank you very much.
Thank you. We now conclude the Q&A session. I would like to turn the floor to Mr. Fabio Fossen for his final remarks. You may have the floor, sir.
Thank you so much for joining us today in our earnings result calls. The company's management team is very excited this year because we just saw that this end of the pandemic year was very good, and we are very excited to see that the number of students are increasing.
I am very excited when I walk around the halls of the school and see a large number of students excited to be back. In 2022, even though this is an election year, there is the war going on in the Eastern Europe. Not only we see a good outlook in terms of our business, our day-to-day business, but mainly this is due to our strategy.
We've been talking about that since I came on board the company. We are very confident, therefore, that the future looks very promising, and we should expect many good things to come in the future.
This will help us to develop our business further, and the return of students on campus is just an example that our schools are very good and very resilient. With that, I conclude my presentation. Thank you all for joining us today. All the best to you.
Thank you very much. Cruzeiro do Sul's conference call is now concluded. Please disconnect from the platform and have a very good afternoon.