Arco Platform Ltd (ARCE) 2023 Q1 法說會逐字稿

Good afternoon, everyone. Thank you for standing by, and welcome to Arco Platform First Quarter 2023 Earnings Call. This event is being recorded. (Operator Instructions). This event is also being broadcast live via webcast and may be accessed through Arco's website at www.investor.arcoplatform.com, where the presentation is also available.

大家下午好。感謝您的耐心等待，歡迎參加 Arco 平台 2023 年第一季度收益電話會議。該事件正在被記錄。 （操作員說明）。該活動還通過網絡直播進行現場直播，並且可以通過 Arco 的網站 www.investor.arcoplatform.com 進行訪問，該網站也提供演示文稿。

Now I'll turn the conference over to Robert Otero, Arco's CFO. Otero, you may begin your presentation.

現在我將把會議交給 Arco 的首席財務官 Robert Otero。奧特羅，您可以開始您的演講了。

Thank you. I'm pleased to welcome you to Arco's First Quarter 2023 Conference Call. With me on the call today, we have Arco's CEO, Ari de Sa Cavalcante Neto. During today's presentation, we will make forward-looking statements. Forward-looking statements generally relate to future events or future financial or operating performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements.

謝謝。我很高興歡迎您參加 Arco 2023 年第一季度電話會議。今天與我一起參加電話會議的有 Arco 首席執行官 Ari de Sa Cavalcante Neto。在今天的演講中，我們將做出前瞻性陳述。前瞻性陳述通常與未來事件或未來財務或經營業績有關，並涉及已知和未知的風險、不確定性和其他因素，這些因素可能導致我們的實際結果與這些前瞻性陳述預期的結果存在重大差異。

Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance, our expectations and guidance for future periods, our expectations regarding strategic product initiatives and their related benefits and our expectations regarding the market. These risks include those not set forth in the documents that we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.

本演示文稿中的前瞻性陳述包括但不限於與我們的業務和財務業績相關的陳述、我們對未來時期的預期和指導、我們對戰略產品計劃及其相關收益的預期以及我們對市場的預期。這些風險包括我們今天早些時候發布的文件中未列出的風險，以及我們向美國證券交易委員會提交的文件中更全面描述的風險。

The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements except as required by law.

本演示文稿中的前瞻性陳述基於截至本新聞稿發布之日我們所掌握的信息。您不應依賴它們作為對未來事件的預測，並且我們不承擔更新任何前瞻性陳述的義務，除非法律要求。

In addition, management may reference non-IFRS financial measures on this call. The non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS. We have provided a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measure in our press release.

此外，管理層可能會在此次電話會議上參考非國際財務報告準則的財務指標。非國際財務報告準則財務指標不應被單獨考慮或替代根據國際財務報告準則編制的結果。我們在新聞稿中提供了這些非國際財務報告準則財務指標與最直接可比的國際財務報告準則財務指標的調節表。

Please note that except for revenue, gross margin, selling expense, G&A and cash flow from operations, all other financial measures we discuss here are non-IFRS, and growth rates are compared to the prior year comparable period unless otherwise stated. We also note that year-over-year comparisons are affected by acquisitions that were not included in our 2022 financials.

請注意，除收入、毛利率、銷售費用、一般行政費用和運營現金流量外，我們在此討論的所有其他財務指標均非國際財務報告準則，除非另有說明，否則增長率均與上一年可比期間進行比較。我們還注意到，同比比較受到 2022 年財務數據中未包含的收購的影響。

Let me now turn the call over to Ari, Arco's CEO.

現在讓我將電話轉給 Arco 首席執行官 Ari。

Thank you, Otero, and thank you, everyone, for joining today's conference call. I would like to start with the highlights of the quarter on Slide 3. On Arco's Pedagogical business, which includes our core supplemental brands, we delivered a 28% top line and EBITDA growth in the 2023 cycle so far with adjusted EBITDA margin at 41.5% despite an already anticipated pressure on costs to print our content.

謝謝奧特羅，也謝謝大家參加今天的電話會議。我想從幻燈片 3 中本季度的亮點開始。在 Arco 的教學業務（包括我們的核心補充品牌）中，我們在 2023 年周期中實現了 28% 的營收和 EBITDA 增長，調整後的 EBITDA 利潤率為 41.5%儘管印刷我們的內容的成本已經存在預期壓力。

Since 2022, the industry has suffered from a material increase in printing costs, resulting from higher paper prices globally, which has been impacting our gross margins since last year. We expect this pressure to slow down in the second half of the year with a significantly lower impact on our gross margin in 2023, and we are working to mitigate such circumstantial effects as we discuss further in the presentation.

自2022年以來，由於全球紙張價格上漲，該行業的印刷成本大幅增加，這自去年以來一直影響著我們的毛利率。我們預計這種壓力將在下半年放緩，對 2023 年毛利率的影響將顯著降低，我們正在努力減輕這種環境影響，我們將在演示文稿中進一步討論。

We remain confident, we will deliver our EBITDA margin guidance for the fiscal year between 36.5% and 38.5%. Our Pedagogical business has posted material and structural improvements. Adjusted EBITDA minus CapEx metric cycle to date expanded 10 percentage points year-over-year. And we posted significant improvement in cash flow generation in the first quarter of the 2023 cycle, allowing Arco to generate cash, reflecting improvements across working capital, CapEx and taxes, which Otero will discuss in more detail soon.

我們仍然有信心，本財年的 EBITDA 利潤率指引將在 36.5% 至 38.5% 之間。我們的教學業務已發布材料和結構改進。迄今為止，調整後的 EBITDA 減去資本支出指標週期同比擴大了 10 個百分點。我們公佈了 2023 年第一季度現金流產生的顯著改善，使 Arco 能夠產生現金，反映出營運資本、資本支出和稅收方面的改善，Otero 將很快對此進行更詳細的討論。

The quarter, we also launched a new segment resulting from the acquisition of ISAAC. The Financial & Management Solutions segment debuts in Arco P&L, adding growth with a 133% increase in net revenue year-over-year. With ISAAC, that enables Arco to further strengthen its dominant position in Brazil's education ecosystem by diversifying the scope of its portfolio of products, making us a true one-stop shop platform for our partner schools while establishing closer relationship with families.

本季度，我們還推出了收購 ISAAC 後的新業務部門。財務和管理解決方案部門首次出現在 Arco P&L 中，淨收入同比增長 133%，實現了增長。借助 ISAAC，Arco 能夠通過產品組合範圍的多元化進一步鞏固其在巴西教育生態系統中的主導地位，使我們成為合作夥伴學校真正的一站式平台，同時與家庭建立更密切的關係。

I wanted to remind that we have been implementing several initiatives to drive a more efficient, agile and scalable operation, which is shown by matrix whose performance is under our control, such as capital deployment, SG&A management and working capital. The printing cost pressure is circumstantial, and those initiatives that we are taking are already unlocking margin gains in 2023 and will significantly improve our cash generation.

我想提醒大家的是，我們一直在實施多項舉措來推動更高效、敏捷和可擴展的運營，這通過我們控制的績效矩陣來體現，例如資本部署、SG&A 管理和營運資本。印刷成本壓力是間接的，我們正在採取的這些舉措已經在 2023 年釋放利潤增長，並將顯著提高我們的現金生成能力。

On top of our efforts to improve internal operation, we must always keep our partner schools at the center of all our decisions. This commitment requires continuous investment in our products and solutions, full dedication while serving our customers and our result to always evolve as a company.

除了努力改善內部運營之外，我們還必須始終將合作學校置於我們所有決策的中心。這一承諾需要對我們的產品和解決方案進行持續投資，在服務客戶的同時全心投入，以及我們作為一家公司不斷發展的結果。

I will now turn the call to Otero who will continue the presentation. Otero, please go ahead.

我現在將電話轉給奧特羅，他將繼續進行演示。奧特羅，請繼續。

Thank you, Ari, and good evening, everyone. We will begin by presenting the results of our Pedagogical business initiating on Slide 6. Given the difference in revenue recognition this quarter, when compared to the first quarter of 2022, we strongly recommend investors to analyze our business performance on a cycle-to-date basis, starting in Q4 2022 up to Q1 2023.

謝謝你，阿里，大家晚上好。我們將首先展示幻燈片 6 上啟動的教學業務的結果。考慮到本季度收入確認與 2022 年第一季度相比的差異，我們強烈建議投資者按週期至今分析我們的業務績效基礎上，從 2022 年第四季度開始到 2023 年第一季度。

Net revenue in the 2023 cycle grew 28% year-over-year, reaching BRL 1.136 billion, with Core Solutions up 26% year-over-year and Supplemental Solutions driving a robust 38% year-over-year growth cycle to date. In the first quarter, revenues for the Pedagogical business were up 10% year-over-year, reflecting the lower revenue recognition versus last year. We maintain our guidance for BRL 1.9 billion of ACV in 2023 with 20% -- 24% growth versus 2022.

2023 年周期的淨收入同比增長 28%，達到 11.36 億雷亞爾，其中核心解決方案同比增長 26%，補充解決方案推動迄今為止同比增長 38% 的強勁增長周期。第一季度，教育業務收入同比增長 10%，反映出收入確認較去年有所下降。我們維持 2023 年 ACV 產量為 19 億雷亞爾的指導，與 2022 年相比增長 20% 至 24%。

Moving to Slide 7, we discuss the Pedagogical business adjusted EBITDA margin. Despite the cost pressures, we managed to keep our adjusted EBITDA margin in line year-over-year in the 2023 cycle at 41.5%. While the content providing costs consumed 5.5 percentage points of margin, our SG&A efforts managed to generate the same positive impact on our profitability for a flat performance versus the 2022 cycle. On the next slide, we discuss in more detail the leverage behind our EBITDA margin guidance achievement this year.

轉向幻燈片 7，我們討論教育業務調整後的 EBITDA 利潤率。儘管面臨成本壓力，我們仍設法將 2023 年周期的調整後 EBITDA 利潤率同比保持在 41.5%。雖然內容提供成本消耗了 5.5 個百分點的利潤，但我們的 SG&A 工作成功地對我們的盈利能力產生了同樣的積極影響，與 2022 年周期相比，業績持平。在下一張幻燈片中，我們將更詳細地討論今年 EBITDA 利潤率指引成就背後的槓桿作用。

Moving to Slide 8, we expect an important improvement on gross margin behavior in the second half of the year reflecting a few initiatives, including printing prices renegotiation due to volume reallocation and integrated supply management strategy, direct paper negotiation and acquisition from producers and more intense technology usage will allow for more scalable content production and delivery setups.

轉向幻燈片 8，我們預計下半年毛利率行為將出現重大改善，反映出一些舉措，包括由於數量重新分配和綜合供應管理策略而重新談判印刷價格、直接紙張談判和從生產商處收購以及更激烈的採購技術的使用將允許更具可擴展性的內容製作和交付設置。

All in, we expect the Pedagogical business cash gross margin to be down at approximately 2.5 percentage points in 2023. At this point, we have already signed contracts for the 2024 cycle printing process, which starts next August. Thus, we have a very high visibility on our content production cost for the second half of the year. On SG&A, we will continue to unlock scale gains and grow our expenses at a much slower pace when compared to our top line growth. We have posted significant results over the last 3 years and expect this trend to continue in the future.

總而言之，我們預計 2023 年教育業務現金毛利率將下降約 2.5 個百分點。目前，我們已經簽署了 2024 年周期印刷流程的合同，該流程將於明年 8 月開始。因此，我們對下半年的內容製作成本有非常高的了解。在銷售、管理和行政費用方面，我們將繼續釋放規模收益，並以比營收增長慢得多的速度增長支出。我們在過去三年中取得了顯著的成果，並預計這一趨勢在未來將持續下去。

On Slide 9, we disclosed the main metrics behind the significant improvement in the Pedagogical business cash generation in the quarter. Improvements in days of sales outstanding, delinquency and days of inventory were key to revamp our working capital dynamics this quarter.

在幻燈片 9 中，我們披露了本季度教育業務現金生成顯著改善背後的主要指標。未銷貨天數、拖欠天數和庫存天數的改善是本季度改善我們營運資金動態的關鍵。

Moving to Slide 10. We disclosed the effect of a more optimized capital allocation strategy that continues to reflect our focus on product evolution, but also it starts to show the higher cooperation and investment coordination among our brands. These efforts resulted in Pedagogical CapEx in the 2023 cycle at 6.4% of net revenue from 16.3% in 2022. This enabled us to expand almost 10 percentage points the adjusted EBITDA minus CapEx metric in 2023 cycle to 35% from 25.2% in 2022.

轉向幻燈片10。我們披露了更優化的資本配置策略的效果，這繼續反映了我們對產品演進的關注，但也開始顯示出我們品牌之間更高的合作和投資協調。這些努力使得 2023 年周期的教育資本支出占淨收入的比例從 2022 年的 16.3% 增至 6.4%。這使我們能夠將 2023 年周期調整後的 EBITDA 減去資本支出指標從 2022 年的 25.2% 擴大近 10 個百分點至 35%。

As a result, in Slides 11 and 12, we show the improvement in every line of our operating cash flow, leading our Pedagogical business to our free cash flow to form of BRL 187.6 million in the first quarter that represents almost 40% of net revenues in the quarter and BRL 174.5 million expansion when compared to the first quarter 2022 figures. When looking at the 2023 cycle, we delivered BRL 96.8 million free cash flow generation at BRL 321.1 million expansion versus the negative BRL 224 million free cash flow registered in the 2022 cycle to date.

因此，在幻燈片 11 和 12 中，我們展示了運營現金流各方面的改善，使我們的教育業務第一季度的自由現金流達到 1.876 億雷亞爾，幾乎占淨收入的 40%與 2022 年第一季度的數字相比，本季度增長了 1.745 億雷亞爾。展望 2023 年周期，我們在 3.211 億雷亞爾的擴張中實現了 9680 萬雷亞爾的自由現金流，而 2022 年周期迄今為止，自由現金流為負 2.24 億雷亞爾。

Now moving to Slide 14. We officially debuted our Financial and Management segment with a brief recap on ISAAC's business model and trajectory. ISAAC was founded in August 2020 to address K-12 schools overarching needs with software and financial solutions as an all-in-one platform. ISAAC has already reached BRL 266 million in annual recurring revenue as of March 31 and currently transact almost BRL 3 billion in yearly total payment value or TPV.

現在轉到幻燈片 14。我們正式推出了財務和管理部分，並簡要回顧了 ISAAC 的業務模式和發展軌跡。 ISAAC 成立於 2020 年 8 月，旨在通過軟件和財務解決方案作為一體化平台來滿足 K-12 學校的總體需求。截至 3 月 31 日，ISAAC 的年度經常性收入已達到 2.66 億雷亞爾，目前的年度總支付額或 TPV 交易額近 30 億雷亞爾。

ISAAC's first product, the Revenue Guarantee aids Brazilian's school's financial struggles once help them surpassing first, limited managerial skills; second, pen and paper or in legacy ERP systems that made billing mostly offline through paper invoices; collecting unstructured and laborious leading to friction with parents; eliminates financial volatility schools once ISAAC becomes responsible for all tuition collection, incorporating the delinquency risk that is priced in the applied take rates and guarantees a monthly fixed streamline to schools.

ISAAC 的第一個產品收入保證幫助巴西學校擺脫了財務困境，一度幫助他們超越了最初有限的管理技能；其次，筆和紙或舊版 ERP 系統中的賬單大多通過紙質發票離線進行；收集雜亂且費力，導致與父母發生摩擦；一旦 ISAAC 負責所有學費收取，就消除了學校的財務波動，將拖欠風險納入所採用的收取率中，並保證每月固定精簡學校。

Such product provides recurring and monthly revenue once schools are paid in monthly installments during a 12-year long education cycle and a reduced working capital as most parents often delay a few days. And delinquency at the end of cycle is structurally low as delinquent students cannot reenroll for next school year as stated by law.

一旦學校在 12 年長的教育週期中按月分期付款，此類產品就可以提供經常性和每月收入，並且由於大多數家長經常推遲幾天而減少營運資金。週期結束時的不良行為在結構上較低，因為按照法律規定，不良學生無法重新註冊下一學年。

On Slide 15, we go through the business model fundamentals of ISAAC that enables such powerful and complementary early drivers. First, intense growth based in take rate model, mandatory for all students provide significant scale. Second, such rapidly growth strengthened the relationship with schools that already use our Core and Supplemental Solutions by offering complementary Financial and Managerial Solutions and additionally provides an [extra school] intake sales motion that adds new schools into our cost portfolio and pave the way for monetizing a pipeline of products going forward. Third, on top of that, ISAAC's state-of-the-art technology team and structure is a main pillar of enhancing pricing and collection processes and reducing our cost to serve while gaining scale.

在幻燈片 15 中，我們介紹了 ISAAC 的業務模型基礎知識，該模型實現瞭如此強大且互補的早期驅動程序。首先，基於錄取率模型的強烈增長，強制所有學生提供顯著的規模。其次，如此快速的增長通過提供補充性財務和管理解決方案，加強了與已經使用我們的核心和補充解決方案的學校的關係，此外還提供了[額外學校]招生銷售動議，將新學校添加到我們的成本組合中，並為貨幣化鋪平道路未來的產品線。第三，最重要的是，ISAAC 最先進的技術團隊和結構是增強定價和收款流程、降低服務成本、同時擴大規模的主要支柱。

ISAAC's trajectory as March '23 is on track to its historical robust growth profile, as we can see in Slide 16. ARR growth year-over-year surpassed the 80% mark and is combined with a powerful increase of efficiency. When analyzing a school over total headcount metric in a single year, ISAAC was able to almost double such ratio demonstrating the power and scalability of its tech-enabled model.

正如我們在幻燈片 16 中看到的，截至 23 年 3 月，ISAAC 的發展軌跡正朝著歷史上強勁的增長態勢邁進。ARR 同比增長超過 80%，並且效率大幅提高。在分析學校一年內的總人數指標時，ISAAC 能夠將這一比率幾乎翻倍，證明了其技術支持模型的強大功能和可擴展性。

Moving to Slide 17, we show the first earnings result of our cost financial and management segment. Net revenue in the first quarter were BRL 62.5 million and 133% growth versus a pro forma net revenue of the first quarter 2022 prior to the acquisition. Adjusted EBITDA margin was minus 23.6%, an expressive 74 percentage points year-over-year expansion versus a pro forma adjusted EBITDA of the first quarter.

轉到幻燈片 17，我們展示了成本財務和管理部門的第一個盈利結果。第一季度淨收入為 6,250 萬雷亞爾，與收購前的 2022 年第一季度預計淨收入相比增長 133%。調整後 EBITDA 利潤率為-23.6%，與第一季度預計調整後 EBITDA 相比，同比增長 74 個百分點。

EBITDA improvement correlates directly to scale gains resulting from its growth and type profile. Due to its rapid growth pace, it's expected that margins will gradually increase quarter-over-quarter, ramping up on revenue growth and scale gains. We are confident in reaching our net revenue guidance of between BRL 300 million and BRL 350 million for the 2023 fiscal year and hovering our minus 10% adjusted EBITDA margin guidance for the F&M segment in this fiscal year.

EBITDA 的改善與其增長和類型概況帶來的規模收益直接相關。由於其快速增長速度，預計利潤率將逐季度逐步增加，從而帶動收入增長和規模增長。我們有信心在 2023 財年實現 3 億雷亞爾至 3.5 億雷亞爾的淨收入指導，並將本財年 F&M 部門的調整後 EBITDA 利潤率指導保持在負 10% 水平。

On Slide 19, we provide a snapshot of our consolidated first quarter '23 results that combines both Pedagogical and F&M results. First quarter consolidated figures delivered a net revenue of BRL 534.9 million and adjusted EBITDA of BRL 110.7 million with 20.7% adjusted EBITDA margin. Consolidated adjusted net income was minus BRL 42 million, representing a minus 7.9% adjusted net income margin. Consolidated free cash flow to firm reached BRL 207.6 million, representing 38.8% of net revenue in the period.

在幻燈片 19 上，我們提供了 23 年第一季度綜合業績的快照，其中結合了教學和 F&M 業績。第一季度合併數據顯示，淨收入為 5.349 億雷亞爾，調整後 EBITDA 為 1.107 億雷亞爾，調整後 EBITDA 利潤率為 20.7%。合併調整後淨利潤為負 4200 萬雷亞爾，調整後淨利潤率為負 7.9%。公司的綜合自由現金流達到 2.076 億雷亞爾，佔該期間淨收入的 38.8%。

Moving to Slide 20, we present the evolution of our free cash flow to firm since 2018, in order to highlight the significant performance of this beginning of the year, definitely a milestone once we deliver the highest rate over revenues in such period.

轉向幻燈片 20，我們展示了自 2018 年以來公司自由現金流的演變，以突出今年年初的顯著業績，一旦我們實現了這一時期最高的收入率，這絕對是一個里程碑。

On Slide 21, we highlight Arco's free cash flow generation after our financial expenses, reaching BRL 94.4 million or 17.7% of net revenues in the first quarter, initiating a year of robust cash collection as disclosed on Slide 22. From the BRL 937 million of accounts receivables that are not past due in March 31, we expect to collect approximately BRL 460 million up until the end of June. Such result collaborates to Arco continuous deleveraging process as disclosed in Slide 23.

在幻燈片 21 中，我們重點介紹了 Arco 扣除財務費用後的自由現金流，第一季度達到 9,440 萬雷亞爾，占淨收入的 17.7%，開啟了幻燈片 22 中披露的強勁現金回收年。對於 3 月 31 日未逾期的應收賬款，我們預計到 6 月底可收回約 4.6 億雷亞爾。這一結果與幻燈片 23 中披露的 Arco 持續去槓桿化過程相一致。

In the first quarter, we further reduced our net debt over adjusted EBITDA last 12 months to 3x, calculating according to our covenant specifications. While analyzing our current obligations, we continue to deploy our liability management strategy in order to meet our obligations for short and long term.

在第一季度，根據我們的契約規範計算，我們將過去 12 個月調整後 EBITDA 的淨債務進一步減少至 3 倍。在分析我們當前的義務的同時，我們繼續部署我們的責任管理策略，以履行我們的短期和長期義務。

As mentioned in previous calls, we are confident in our cash generation capacity. And on top of that, we are currently at final stages of issuing an additional credit line to strengthen our balance sheet to make for the future capital disbursements. With that, we conclude the representation.

正如之前的電話會議中提到的，我們對我們的現金產生能力充滿信心。最重要的是，我們目前正處於發放額外信貸額度的最後階段，以加強我們的資產負債表，為未來的資本支付做好準備。這樣，我們就完成了表示。

Operator, we can now open for questions. Thank you.

接線員，我們現在可以提問了。謝謝。

(Operator Instructions). Our first question comes from Lucca Marquezini with Itau BBA.

（操作員說明）。我們的第一個問題來自 Itau BBA 的 Lucca Marquezini。

We've got 2 questions from our side. First, Otero, you mentioned that -- during the call that Arco has already initiated the billing contracts for next year's commercial cycle. So can you please provide more color on the terms negotiated and also how they compare to this year's costs?

我們這邊有兩個問題。首先，Otero，您在電話會議中提到，Arco 已經啟動了明年商業周期的計費合同。那麼您能否提供更多關於談判條款的信息以及它們與今年成本的比較？

And then secondly, regarding cash flow generation, we saw a significant improvement that was mainly caused by better working capital. So can you please comment on the recurrence of these effects that led to improvement in working capital?

其次，關於現金流的產生，我們看到了顯著的改善，這主要是由於營運資金的改善所致。那麼，您能否對這些導致營運資本改善的影響再次出現發表評論？

Thanks for the question. So starting with the first one. As you said, yes, we already have signed contracts of 41st batch of 2024 content. We'll start the screening process by the end of July, beginning of August. So at this point, those negotiations are pretty much well advanced and some contracts are signed, as I said. For those, we are seeing prices per page down in nominal terms, okay? I would say, a mid- to high single-digit decline in prices per page for the initial deliveries, which, as I said, we started printing in August, and we start delivering to schools by mid to the end of the fourth quarter, okay?

謝謝你的提問。所以從第一個開始。正如你所說，是的，我們已經簽署了2024年第41批內容的合同。我們將在七月底八月初開始篩選過程。因此，正如我所說，目前這些談判已經進展順利，一些合同已經簽署。對於這些，我們看到每頁的名義價格有所下降，好嗎？我想說的是，最初交付的每頁價格出現中到高個位數下降，正如我所說，我們從八月份開始印刷，我們在第四季度中至末開始向學校交付，好的？

On the second point on cash flow generation, you're right, I think that's the most important highlight of the quarter. It is 100% recurring, okay? There's no one-off effect in this cash flow generation. Actually, this goes back to, I mean, the business fundamentals, right? So this business generates a lot of cash. The key reason why our cash flow performance deteriorated in the last 2 years, has much more to do with circumstantial events such as (inaudible) and the incorporation of the acquisitions. So assuming a normalized environment, which is the one we are operating at right now, the business generates cash naturally.

關於現金流生成的第二點，你是對的，我認為這是本季度最重要的亮點。這是100%重複的，好嗎？這種現金流的產生不存在一次性效應。實際上，我的意思是，這可以追溯到商業基礎，對嗎？因此，這項業務可以產生大量現金。過去兩年我們的現金流表現惡化的主要原因與環境事件有關，例如（聽不清）和收購的合併。因此，假設一個正常化的環境，也就是我們現在所處的環境，業務自然會產生現金。

I don't want to minimize the impact or the influence of internal initiatives and the work the team is doing to improve, of course, and accelerate the return to this very healthy cash flow profile. So we've been putting a lot of focus on that through internal processes through incentives to the management. This has become the key metric through which we measure success in the company. And now this is reflecting in concrete results, okay? So again, this is recurring. There's no one-off effect, and you should see this behavior throughout the year. Okay.

當然，我不想最小化內部計劃和團隊正在做的改進工作的影響，並加速恢復到這種非常健康的現金流狀況。因此，我們一直通過內部流程和對管理層的激勵來重點關注這一點。這已成為我們衡量公司成功的關鍵指標。現在這已經體現在具體的結果上了，好嗎？再說一次，這種情況反復出現。沒有一次性效應，您應該全年都會看到這種行為。好的。

Our next question comes from Lucas Nagano with Morgan Stanley.

我們的下一個問題來自摩根士丹利的盧卡斯·長野。

We have 2 questions. First one is related to costs. I understand that for the 2024 cycle, the printing costs should reduce. But what are your expectations on the margins for the rest of the 2023 cycle, given that the materials must have been already printed?

我們有 2 個問題。第一個與成本有關。據我了解，2024 年周期，印刷成本應該會降低。但考慮到材料肯定已經印刷完畢，您對 2023 年周期剩餘時間的利潤有何預期？

And second question is related to the next -- the 2024 sales process. So could you give us some color on your perception on the competitive environment? And which level of ACV growth you're targeting for Core and Supplemental? And do you see ISAAC helping to accelerate the growth in the Pedagogical segment as well?

第二個問題與下一個問題有關——2024 年的銷售流程。那麼您能否告訴我們您對競爭環境的看法？您的核心和補充 ACV 增長目標是什麼水平？您是否認為 ISAAC 也有助於加速教育領域的增長？

This is Otero speaking. So starting with the first question on cost and the expectation for this year. So as I said during the opening remarks, we expect the gross margin this year -- in the fiscal year, okay, to be down around 2 to 3 percentage points max. So this means an improving curve in the upcoming quarters. And this reflects negotiations that are already affecting the 2023 the cycle.

我是奧特羅。首先是關於成本和今年的預期的第一個問題。正如我在開場白中所說，我們預計今年的毛利率——在本財年，好吧，最多下降約 2 到 3 個百分點。因此，這意味著未來幾個季度的曲線將有所改善。這反映出談判已經影響了 2023 年的周期。

So we were mostly exposed to higher prices for the first batches of the 2023 cycle. Along the process, we managed to relocate volume in other suppliers and other printing companies and managed to reduce prices for the current cycle. But for the 2024 cycle, which we started printing in August, this affects the Q4 directly and helps ourselves minimize the impact in the entire year.

因此，我們在 2023 年周期的第一批產品中主要面臨更高的價格。在此過程中，我們成功地重新分配了其他供應商和其他印刷公司的銷量，並設法降低了當前週期的價格。但對於我們從 8 月份開始印刷的 2024 年周期來說，這會直接影響第四季度，並幫助我們將全年的影響降到最低。

But again, at the 2023, as I said, I mean, we saw pressure, especially for the beginning of the printing process, but we managed to relocate capacity and will be fully exposed to those higher prices for the entire cycle. And again, we expect the gross margin to be down this year at a much lower pace than what we showed in the first quarter.

但同樣，正如我所說，到 2023 年，我們看到了壓力，特別是在印刷過程的開始階段，但我們設法重新分配產能，並將在整個週期內充分承受更高的價格。我們再次預計今年毛利率的下降速度將遠低於第一季度的水平。

On the second point, for the 2024 sales process, it is early to say, as you know -- I mean the curve accelerates a lot in the second half of the year traditionally. But what we can share at this point is that when we compare to the 2023 ACV builder process, we are ahead of the curve in pretty much every metric that we look at. So in terms of price increase, in terms of cross-selling, upselling and new school addition, we are performing ahead of the curve and light ahead of our expectations.

關於第二點，對於 2024 年的銷售過程，如您所知，現在說還為時過早 - 我的意思是傳統上下半年曲線會加速很多。但目前我們可以分享的是，當我們與 2023 年 ACV 構建流程進行比較時，我們在幾乎所有我們關注的指標上都處於領先地位。因此，就價格上漲、交叉銷售、追加銷售和新學校增加而言，我們的表現領先於曲線，並且超出了我們的預期。

But again, important to emphasize that it's early. So let's keep expectations bearing in mind that we are still beginning the process. But the data we have at this point shows encouraging expectations for the completion of the sales cycle.

但再次強調，現在還為時過早。因此，讓我們牢記這一過程仍處於起步階段，保持期望。但我們目前掌握的數據顯示出對銷售週期完成的令人鼓舞的預期。

With regards to ISAAC, I would say that at this point, we are focusing more on the cross-sell to sell ISAAC. So I would say it's early to focus on what we would call a reverse cross-sell, which we do for supplemental products. And I think we will end up doing with ISAAC. ISAAC already has more than 1,200 schools as clients. So it is a relevant based of potential clients to Arco's Pedagogical business. It is important. But for a matter of focus and priority, we are, at this point, focusing more on the cross-sell of the Pedagogical sales force helping create leads and sell ISAAC to our current Pedagogical clients.

關於 ISAAC，我想說，目前我們更關注交叉銷售來銷售 ISAAC。因此，我想說，現在關注我們所說的反向交叉銷售（我們為補充產品所做的事情）還為時過早。我認為我們最終會與 ISAAC 合作。 ISAAC 已經擁有超過 1,200 所學校作為客戶。因此，它是 Arco 教學業務潛在客戶的相關基礎。這很重要。但出於重點和優先事項的考慮，我們目前更多地關注教育銷售人員的交叉銷售，幫助創造銷售線索並將 ISAAC 出售給我們當前的教育客戶。

I think it's much more a matter of prioritization and focus. And probably, we're going to start the reverse cross-sell more likely towards the end of this year or in 2024. Yes, I think this answer the questions. I think you got...

我認為這更多的是優先順序和重點的問題。也許，我們更有可能在今年年底或 2024 年開始反向交叉銷售。是的，我認為這回答了問題。我想你有...

Our next question comes from [Jessica Miller] with JPMorgan.

我們的下一個問題來自摩根大通的[傑西卡·米勒]。

I have 2. So first, on ISAAC, do you continue to expect breakeven by the end of (inaudible) opportunities in the public sector.

我有 2. 首先，關於 ISAAC，您是否繼續期望公共部門（聽不清）機會結束時實現收支平衡？

Jessica. Otero here. I'm sorry, but could you repeat the first and second question. I'm not sure if it's our connection here, but I lost ask you. If you could repeat, I would appreciate.

傑西卡.奧特羅在這裡。抱歉，您能重複一下第一個問題和第二個問題嗎？我不確定這是否是我們這裡的聯繫，但我忘了問你。如果您能重複一遍，我將不勝感激。

Yes, sure. My second question is regarding the public sector. Do you see any opportunities here going forward?

是的，當然。我的第二個問題是關於公共部門的。您認為未來有什麼機會嗎？

Great. Thank you. Thanks for repeating the question. So on the first one, yes, this continues to be the base case. As you saw in the first quarter, they posted a minus 26% EBITDA margin differently from Arco. The ISAAC business builds up revenue along the year, right? So -- sorry, minus 23.6% EBITDA margin. And differently from Arco's business, ISAAC compounds revenue along the year, right Jessica.

偉大的。謝謝。感謝您重複這個問題。所以對於第一個，是的，這仍然是基本情況。正如您在第一季度看到的那樣，他們的 EBITDA 利潤率與 Arco 不同，為負 26%。 ISAAC 業務的收入逐年增加，對吧？所以——抱歉，EBITDA 利潤率為負 23.6%。與 Arco 的業務不同，ISAAC 全年收入複合增長，傑西卡對吧。

So the scale gains and the operating leverage happens along the year, right? So you should expect this minus 23.6% to converge to our guidance for the full year. So everything is on track. I think the business is performing in line with expectations. So there's nothing at this point that would lead us to believe that the breakeven will take longer to happen than what we initially planned. So far so good. The business is performing in line with the expectations.

那麼規模增長和運營槓桿全年都會發生，對嗎？因此，您應該預計負 23.6% 將趨於我們全年的指導值。所以一切都步入正軌。我認為該業務的表現符合預期。因此，目前沒有任何事情能讓我們相信盈虧平衡需要比我們最初計劃更長的時間才能實現。到目前為止，一切都很好。該業務的表現符合預期。

With regards to the public sector, I think it's a good question, but obviously, we think the opportunity in the private sector is so big, and we think we can explore this opportunity in the private sector in so many ways, that at this point, for a matter of focus, we will continue to focus in the private sector.

關於公共部門，我認為這是一個很好的問題，但顯然，我們認為私營部門的機會如此之大，我們認為我們可以通過多種方式探索私營部門的這個機會，在這一點上就重點而言，我們將繼續關注私營部​​門。

We are just scratching the surface in many segments in which we operate. Now we have had ISAAC, I mean even more straight to the platform. So for a matter of focus and for a matter of belief that this is the best place to focus. And we will continue to, I mean, focus on the private sector.

在我們經營的許多領域，我們才剛剛觸及表面。現在我們有了 ISAAC，我的意思是更直接地進入平台。因此，對於焦點問題和信念問題來說，這是最好的焦點位置。我的意思是，我們將繼續關注私營部​​門。

Our next question comes from Pedro Caravina with Credit Suisse.

我們的下一個問題來自瑞士信貸銀行的佩德羅·卡拉維納 (Pedro Caravina)。

So I would like to do a follow-up on cash generation. So you improved a lot the cash generation for the 2023 cycle. If I may ask, what are behind the better working capital dynamics? Following my colleague's question. And what should we expect for the following 2 quarters of the cycle? Is there a concentration of cash generation in the first 2 quarters?

所以我想對現金生成進行跟進。因此，您在 2023 年周期的現金生成能力有了很大提高。請問，更好的營運資本動態背後的原因是什麼？跟著我同事的提問。我們對接下來的兩個季度的周期應該有何期待？現金產生是否集中在前兩個季度？

Or is -- I don't know, better terms and improvements at all. And also, I noticed that there was a reduction in CapEx expanding. So were the levels higher in 2022? And what should be a recurring level going forward for CapEx maybe as a percentage of revenues?

或者是——我不知道，更好的條款和改進。而且，我注意到資本支出擴張有所減少。那麼 2022 年的水平是否更高？未來資本支出佔收入的百分比應該是多少？

Pedro, Otero here. Thanks for the question. So in terms of the cash flow improvement, I think it's much more a normalization of the working capital behavior. I think we are leaving behind events or impact from events that really changed and affected the behavior of the company's working capital. I think the impacts on receivables, inventories to a lesser extent, payables as well.

佩德羅，奧特羅在這裡。謝謝你的提問。因此，就現金流的改善而言，我認為這更多的是營運資金行為的正常化。我認為我們正在留下真正改變和影響公司營運資本行為的事件或事件的影響。我認為這對應收賬款、庫存以及應付賬款的影響較小。

So we're seeing a normalization across the board. So if you look at delinquency for example, we're now performing -- our performance on the delinquency right now is better than a pre-COVID levels. So I would say that the business is going back to a normal profile. And internally, we are putting much more focus on that as well, right? So I think this adds more fuel to this recovery or accelerates this recovery, okay, Pedro?

因此，我們看到全面正常化。因此，如果你看看拖欠率，我們現在的表現——我們現在在拖欠率方面的表現比新冠疫情前的水平要好。所以我想說，業務正在恢復正常。在內部，我們也更加關注這一點，對吧？所以我認為這會為複蘇增添更多動力或加速復蘇，好嗎，佩德羅？

So internally we're putting a lot of effort. This applies to contracts with schools, this applies to [SOP]. This applies to all those renegotiations going on with the printing suppliers. So it's a very ample effort that is translating into this improvement in working capital because this has become a key focus. And the internal incentives are all towards this goal.

所以在內部我們付出了很多努力。這適用於與學校簽訂的合同，這適用於 [SOP]。這適用於與印刷供應商進行的所有重新談判。因此，這是一項非常巨大的努力，正在轉化為營運資金的改善，因為這已成為一個關鍵焦點。而內部的激勵都是為了這個目標。

In terms of the expectation for the next quarters, the second quarter is usually a very strong quarter as well for collection, okay? So you should not expect anything different. And the Q4 is usually the quarter at which we see a highest consumption, right, in terms of cash and working capital consumption. So we should expect a similar trend to that.

就接下來幾個季度的預期而言，第二季度通常也是一個非常強勁的季度，對收藏來說也是如此，好嗎？所以你不應該期待任何不同。第四季度通常是我們看到現金和營運資本消耗最高的季度，對吧。因此，我們應該預計會出現類似的趨勢。

So Q1, Q2, very strong in terms of collections and inflow of cash. And Q4, usually the weakest one for cash flow generation. In terms of the CapEx expanding, we have not changed the mindset towards, I mean, being the dominant and the best player in terms of quality and product quality and technology evolution. So this has not changed at all. And this is not the reason why CapEx is actually losing relevance as a percentage of revenues.

因此，第一季度、第二季度在收款和現金流入方面非常強勁。第四季度，通常是現金流產生最弱的季度。在資本支出擴張方面，我們沒有改變心態，即在質量、產品質量和技術發展方面成為主導者和最佳參與者。所以這一點根本沒有改變。這並不是資本支出在收入中所佔比例實際上失去相關性的原因。

I think it has much more to do with the way we've been operating the company and the level of coordination among the brands and reduced redundancy across the brands. So all those things that -- some of them we even discussed at Arco Day in terms of centralizing technology development, for example, all of that translates into a more efficient capital deployment process and now is reflecting into the CapEx losing relevance as a percentage of revenues.

我認為這與我們運營公司的方式、品牌之間的協調程度以及品牌間冗餘的減少有很大關係。因此，所有這些事情——其中一些我們甚至在 Arco Day 上討論了集中技術開發方面的問題，例如，所有這些都轉化為更有效的資本部署流程，現在反映在資本支出中，資本支出失去了相關性（作為資本支出的百分比）。收入。

We maintain the guidance of CapEx as a percentage of revenues of 8% to 10%. But at this point, I would say that there's a sign that CapEx will trend below or slightly below or at the low end of this guidance.

我們將資本支出佔收入的比例維持在 8% 至 10% 的指導水平。但在這一點上，我想說有跡象表明資本支出將低於或略低於或處於本指導的低端。

(Operator Instructions). At this time, we have no further questions in the queue. That concludes Arco's First Quarter 2023 Earnings Call. Thank you very much for your participation, and have a good night. You may now disconnect.

（操作員說明）。目前，隊列中沒有其他問題。 Arco 的 2023 年第一季度收益電話會議到此結束。非常感謝您的參與，祝您有個美好的夜晚。您現在可以斷開連接。