Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to Cruzeiro do Sul's conference call to discuss the first quarter of 2021 results. Today we have Mr. Fábio Figueiredo, Mr. Renato Padovese, co-CEOs, Antônio Cavalcanti, CFO, Wilson Diniz, Commercial Officer, and Luis Felipe Bresaola, Investor Relations Officer. We would like to inform you that during the company presentation, all participants will be in listen-only mode. Afterwards, we will have a Q&A session when further instructions will be given. Should you need assistance during the call, please press star zero to reach the operator. We would like to inform you that this conference will be conducted in Portuguese by the company management, and there will be simultaneous translation into English. This event is also being broadcast simultaneously on the internet via webcast.
Before proceeding, we would like to clarify that forward-looking statements that might be made during this call in relation to the company's business outlook, 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. They involve risks, uncertainties, and assumptions as they refer to future events, and therefore they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect the future results of the company, leading to results that differ materially from those expressed in such forward-looking statements. I would like to turn the conference over to Mr. Fábio Figueiredo, who will start the presentation. Mr. Figueiredo, you may proceed.
Good afternoon. Thank you very much for participating in Cruzeiro do Sul Educacional earnings call. I am Fábio Figueiredo, co-CEO of the company, and here with me are Renato Padovese, co-CEO, Wilson Diniz, Chief Commercial Officer, Antônio Cavalcanti, CFO, and Luis Felipe Bresaola, Investor Relations Officer. We continue in an atypical scenario that still impacts people and companies alike. At Cruzeiro do Sul Educacional, we remain focused on the well-being of our employees and students, adjusting our operations weekly according to the health protocols in place.
The first quarter, so important for the education segment, was a period of great volatility, but it showed that our strategy of operating with quality-oriented leading brands has proved to be important in adverse times such as the one that we are living now. At the beginning, with a potential slowdown of the pandemic, we saw widespread and important increase in enrollment, including on campus, which pointed to a clearly positive outlook.
Nevertheless, the upsurge in the pandemic throughout February and early March, precisely in a period of student decision-making, made the enrollment process for freshmen and on campus to be exceptionally postponed. For the first time ever, we saw the enrollment period concentrated on late March and April, and also relatively impacted by the late release of ENADE scores over two months later than last year. With this scenario, we adjusted the classes schedule and decided to include April in the intake process for the on-campus semester, and the strategy proved to be correct, having resulted in a number of students entering the on-campus evidencing stability in spite of the extremely negative economic scenario. In distant learning, we added 91 new DL centers in the period vis-à-vis last year with an intake process that should be growing about 20%.
We should highlight the progress of courses with a heavier hourly load on on-campus and/or remote synchronous content, also known as hybrids, catering to the changes in the demand from the market and contributing to the average ticket of this modality. This modality starts to represent 11% of the DL student base, twice what it was in 1Q 2020. This is another evidence of the accuracy of the company's strategy to cater to all demands from our target audience with flexibility, efficiency, speed, and superior quality. Still in 1Q 2021, in spite of the health and macroeconomic scenarios, we continued to adhere to our strategy and inaugurated two new campi in the Greater São Paulo, Guarulhos and Villa-Lobos, which have delivered the good intake process. We reiterate that we continue with our eyes focused on the expansion plan via relevant greenfields and prospecting new hubs besides expansion via acquisitions.
In spite of the good financial and operating results in the beginning of 2021, I should mention that this is a totally atypical exercise, mainly in what refers to the construction of revenues for the year. The extension of the intake and enrollment renewal processes added to the high unpredictability of the economy and the pandemic situation are factors that might affect the company's results as well as the sector as a whole. Also, on a positive note, in April, we were pleased to keep our performance of consistent improvements in the academic results of our institutions. One example is the progress made by FSG, Unipê, and Braz Cubas to the fourth grade of IGC. In addition to the generalized progress of the continuous IGC of the company's institutions, 77% of Cruzeiro's active institutions are in band four and five vis-a-vis 57% of the previous cycle.
Finally, I would like to inform that Professor Hermes, as he was known, my father, left us on April 26th. Professor Hermes, born in Mirassol in 1938, founded with six other friends who were also teachers, the then Colégio Cruzeiro do Sul in 1965. Since then, he was president and board member of the company, which under his leadership, grew exponentially and contributed extensively for the history of education in Brazil. Imbued with the spirit of fight and perseverance, as well as their human values, we will dedicate ourselves with even more energy to the continuation of the legacy of the founders, whose central objective has always been to provide youngsters with professional training and quality citizenship. These were my initial remarks, and now I would like to give the floor to Renato Padovese in order to talk about the main highlights.
Thank you, Fabio. Now let's move to the highlights of the period. I would like to emphasize that the intake process of new students grew approximately 14% year-on-year. On-site education grew 0.5% when compared to 2020. As mentioned before, this growth is attributed to our strategy to pursue a longer intake period, adding the month of April to the process, supporting our strategy to focus on the strength of the brand as an important attribute, mainly when we are faced with dire times. In regards to distance learning, intake grew approximately 20%, reinstating the resilience and attractiveness of our model. One point I would like to highlight is the progress of the hybrid learning mode of DL education that more than doubled its student base year-on-year, reaching more than 20,000 students. In the first quarter of 2021, our student base was 358,000 students, up 5.5% year-on-year.
This growth was mainly attributed to DL education that posted 19.5% growth in the period, whereas on-campus education presented a slight decline, mostly due to the dropout rates during the pandemic. Our adjusted EBITDA margin grew 6.8 percentage points in relation to the first quarter of 2020, reaching 29.7%, and the operating managerial cash generation was BRL 170 million, 2.6x over the same period of the previous year. We opened two new campuses, one in the municipality of Barueri and another one in the western region of São Paulo in the district of Vila Leopoldina. Finally, I would like to emphasize the continuous improvement of our academic performance at FSG, Unipê, and Braz Cubas as institutions that reached grade four of the IGC rating. On the next slide, we elaborate on the intake process of the first half of 2021. Intake grew 14% with more than 140,000 new enrollments.
The main highlight goes to DL, that grew approximately 20%, restating the resilience and attractiveness of our education model. On the other hand, re-enrollment was slightly below our historical levels. On-campus education, which has been a major challenge because of the pandemic, we grew 0.5% once we extended the enrollment period beyond March. The additional days paid off and accounted for 13% of the base of enrolled students. As for re-enrollments, we still see figures slightly below our track record, mainly due to the adverse scenario. With this, I conclude my remarks, and I turn the floor over to Luis Felipe Bresaola, who will give us more details on the results of the first quarter of 2021.
Thank you, Renato. Now moving to slide nine, I will talk about the performance of the student base in the first quarter of 2021 in relation to December of last year. At the end of the period, we had 358,000 students, an increase of 1.6% in relation to the end of 2020. The on-campus student base was flat when compared to last December, mainly due to a weaker intake period, which was down by 13.5% in relation to the intake we posted last year without the addition of April. When we look at DL, the student base grew 2.7% when compared to December of 2020, and intake grew more than 10% vis-a-vis the same period of 2020, which compensated for the increased dropout when compared to last year. On the next slide, I will talk about the company's undergrad average ticket.
The on-campus average ticket was up 2.5%, reflecting the commercial strategy of the company, the increase in the student base of the premium courses, 71% in Q1 of 2021, and the impact of the acquired company like Positivo that offers premium courses in the region where it operates. DL average ticket was down 6.6%, mainly impacted by the commercial strategy pursuing more competitive geographies. Moving to net revenue, the chart on the right-hand side of the slide, it was BRL 421 million this quarter, up 0.9% when compared to 2020, mainly driven by the DL business that posted a 16.1% increase in revenue stemming from the opening of new hubs and the maturation of the existing ones. As for on-campus, it was down 3.5%, mainly because of the pandemic that not only led to a decline in enrollments but also delayed the ones that would occur in the period.
Slide 11 shows that our gross margin that reached approximately 48% grew more than 5 percentage points vis-a-vis last year, attributed to a higher share of DL, gains of scale, and an academic model with higher digital content. Adjusted EBITDA was BRL 125 million, up more than 30% year-on-year with a margin of 29.7%, almost 7 percentage points higher than last year. The change in the revenue mix with higher DL participation, the increase in digital content in on-campus education, the positive performance of Provision for Doubtful Accounts, and with the improvement of 1 percentage point reaching 5.7% of the revenue and the full integration of the acquired organizations are the main factors that explains the increased profitability.
Now on slide 12, we show the performance of the adjusted net income that went from BRL 10 million in Q1 2020 to BRL 31 million in Q1 2021, mainly due to the evolution in the company's EBITDA. In the chart on the right, we show our accounts receivable with an average collection period of 39 days, an increase of approximately two days when compared to March of 2020, but almost four days in relation to December of last year. Provisions for Doubtful Accounts coverage on gross accounts receivable was almost 71% higher than the 63% posted last year due to a more conservative provision criteria that accelerates provisions in the first months but maintains 100% of provisions after 180 days. We continue to pursue the strategy of low penetration of students with student loans that accounted for 5% of the base in Q1 2021.
On slide 13, we show the investments of the company on the first quarter of 2021, which was lower because last year we acquired Braz Cubas and Positivo. When we look only at the maintenance CapEx and organic growth, it is higher when compared to 2020 due to the resumption projects that had been halted due to the pandemic last year. Our managerial operating cash generation was BRL 160 million, BRL 60 million higher than last year, mostly due to the improved EBITDA and working capital management. Finally, on slide 14, we talk about our net debt, ex-lease liabilities of BRL 438 million, lower than the BRL 1.5 billion of last year due to the proceeds from the IPO last February that added over BRL 1 billion in funding to our cash. As for the debt amortization schedule, the terms remain fixed with no major disbursements over the next two years.
Having said that, I come to an end of my remarks and turn the floor over to the operator to initiate the Q&A session. Thank you very much.
Thank you very much. Now we will start the Q&A session. Should you have a question, please press star one. In case your question has already been answered, please press star two in order to remove it from the queue. Questions will be answered in the order that they are received. Please do not use the speakerphone so that we may receive the best possible sound. Samuel Alves, BTG Pactual, has the first question.
Good afternoon, everybody. Fabio, Renato, Antonio, everybody. I have some quick questions. Could you talk about the ticket in the on-campus? Do you have any strategy for the adjustment, or does it have to do with a more flexible commercial policy in your intake efforts, or is it because of the late intake itself? This is the first question. The second, could you give us an update about your M&A agenda?
This is Wilson Diniz. Samuel, I will take the first question, okay? We have this change in the average ticket in on-campus, and what happened was that with the late enrollment and a little bit on the make side as well, we had an increase of 2.5% in the on-campus ticket growing vis-a-vis last year, but there was an effect of the mix and also the late intake in April, which were the reasons why we didn't have a higher ticket. But in general, we did have a growth in the average ticket in on-campus vis-a-vis last year. Fabio will be talking about the M&A part of your question.
The M&A agenda, we continue with energy. We continue to maintain negotiation that were underway. We have another one that got into the agenda now, and we are focusing on the accelerated regardless of the beginning or the maturation of these talks. We are trying to focus more on the M&As that would be more substantial. Depending on the agenda that was already going on, we changed the north a little bit, we changed direction a little bit, and we are focusing more energy, regardless of the stage of maturation on the M&As that would be more important in terms of volume and transformation for the company. Going to the last line, M&A is still active. We continue to having talks in different stages and with a very good perspective for the short and the medium run.
Thank you. Good afternoon.
Our other question comes from Javier Martínez from Morgan Stanley. Javier?
Thank you very much. Good afternoon. I have three questions. The first one is about intake. We would like to see a full snapshot with all the intake for Guarulhos and Villa-Lobos, for instance, and could you share some data about Guarulhos so that we may understand the situation with these two new ones?
Javier, thank you very much. This is Wilson Diniz once again. You're asking about our intake process, down 24% higher, so vis-a-vis last year on campus, growth of 0.5%. So [20.1%] here, we had growth in on-campus intake. This is a very important factor. Our strategy is to have leading brands in our strategy. This is our competitive difference in a difficult situation that we are crossing today, and our academic results are much better than the other players in the market. Even with a growing quality, that is to say, our quality continues to go up. This is the reason why.
About the two new units, they brought very successfully an increase in our intake. We are not going to get into specific figures about the units, but they gave an overall contribution to our result vis-a-vis last year. We are not really comparing apples to apples if you do not give this figure.
The second question has to do with Braz Cubas. Is it possible? What was the collaboration given by Braz Cubas? Have you been able to measure the results of Braz Cubas and the perception on the part of the clients about Braz Cubas?
The question was very difficult to understand here on the interpreter side. This is Wilson again. I will try to answer your question. The intake was higher than the result last year in these two units. We put them in our academic and commercial model, and we increased intake in these two new ones. The new campi contributed to the difference, 0.5% of growth. That was the result of these two units. It is according to our plan. It is going very well. To give you a little bit more color about these two new inquiries and also about the two new ones, as you said yourself.
Do you have any measures for these two units, their satisfaction level with the change in the ownership of the assets?
Javier, we monitor the level of satisfaction. We had no change in this indicator. We did the survey at the beginning of this quarter, and there was no change regarding Braz Cubas or Positivo or any other unit. It is in line with our history. We think that with the maturation during the year of Guarulhos as well as with the synergies that are not 100% developed also with Braz Cubas.
Javier, regarding the margin, we have our cost and the expenses that are set, and we have some intakes that help us to have our operating leverage. The intake started later. What we have to see is the period of intake and whether this is going to help us in our leverage in the Braz Cubas and Positivo inquiries. We already have the academic model in these operations, and also Cruzeiro as a whole last year. There is not much that remains to be done. The operating leverage with a very successful intake.
We have the impact of the business as well that contribute to the margin. We continue to have the PDA higher than usual, 5.7% in this quarter. As soon as the macro conditions change, and we are very conservative here at Cruzeiro, but as soon as we have a more positive macro scenario, we will have a lower PDA, and delinquency will go down as well. These are the main points that I can mention to you regarding our margin.
Thank you very much, Luis.
Our next question is from Caio Moscardini from Morgan Stanley. Mr. Moscardini, you may proceed.
Thank you very much for taking my question. I just have a follow-up question about the price increase in the first quarter, and what could we expect going forward into the second quarter, whether you will probably increase prices a bit further because of that delayed intake.
Caio, this is Wilson Diniz once again. We are in the early stages of the intake for the second half when we see some stability in terms of commercial discounts and the price point. It is still at the very beginning, that is why it is still very hard to give you any outlook. We will pursue the same initial policies regarding intake, but in general, we see some stability when it comes to pricing.
My question is more in relation to the second half or the second quarter rather than the second half of the year. The second quarter.
Well, Caio, we will see stability. There will be a stability on the ticket for the second quarter.
Yeah, that is fine then. Thank you very much.
If there are no further questions, now we would like to conclude the Q&A session. Now I would like to turn the floor over to Mr. Fábio Figueiredo for his final remarks. Mr. Figueiredo, you may proceed.
Very briefly, I would like to thank those that joined us in this conference call today. I think our results are in line with your expectations. I think that your questions were good and very objective. We also try to be objective on our side. This year, still a very unusual year as we experienced last year. This year also seems to be just as unusual, but we are always very alert to all the variables. We are constantly monitoring all of the indicators. We are also paying attention to changes in the market and demand and looking at the industry as a whole.
We are very excited and very optimistic with the remainder of the year and how things will unfold. Even with this M&A landscape, which is another important driver. We have good expectations going forward, and we will continue to work diligently, taking care of our stakeholders. Thank you very much for joining us today, and I hope to see you in our next release call.
Thank you very much. Cruzeiro do Sul’s earnings release call is now concluded. Thank you very much for participating. Have a very nice afternoon, and you can disconnect. Thank you.