Anima Holding SA

BOVESPA:ANIM3

Earnings Call Transcript 2022-Q4

[Operator]

[Audio Gap]

[Marcelo Bueno, executive]

It's a great honor to be with you for this Q4 earnings results call. I should talk about how proud we are. We start the year 2023. On 6th of May 2023, Anima is completing 20 years of its foundation when we [indiscernible] on the 6th of May 2023, we have indeed celebrated, and I think it's also important before we start, a year ago, we were all discussing what the return to on-campus would be or in person. It is not just something that happened to us. It happened worldwide. And looking in rest [indiscernible], nobody had any idea as to what it would be like. We made a decision that starting 2022, "forcing" our students to go at least 3 times a week on campus added to the decision of leaving from 19 systems to 6.

At the turn of the E2A implementation, the main Laureate brands implementation that was a year of great turmoil. And particularly regarding reducing or having them on campus at least 3 days a week over the first half of last year, it was great dissatisfaction because greater use of technology or not to improve learning varies according to areas of knowledge. So IT management, engineering, and even architecture, they wanted to use much more technology, hybrid education than being in person on campus, forcing them to be there 3 times a week was something that caused dissatisfaction.

On the other hand, the health -- we're willing to go -- well, in health care, they want to be on campus more frequently. So 3 days a week was too little. We noticed that. We corrected the course at the turn of the year. Today, what we've noticed I wanted to start this call talking about this as well.

We've noticed that students like our value proposals very much. We see this happening. This may be analyzed in dropouts. Having our value proposal and with [indiscernible]. As we said, [indiscernible], we see a trend. The choice made in the past of hybrid education, [indiscernible] the power of students being able to choose to go more frequently or less frequently in campus, using more or less technology has been shown as a correct value proposal. And we see this and we feel this trend. So I'd like to start by talking about this to brief everyone. And also, we've been looking at the closing of the year.

We have highlighted the company that had BRL 3.6 billion net revenue, growth of 39% [indiscernible] 400,000 students in total. Adjusted EBITDA BRL 1.1 billion, growth of 57% on EBITDA margin, 30%, plus 4% points of growth. Adjusted net income of BRL 250 million and operating cash generation of BRL 605 million. It makes us very ground.

If you look at the year, we want to have a more macro view regarding 2022. And looking into 2023, feel very proud. I've been insisting, of course, that there are 2 major avenues, increasingly more important to generate more value and also help us increasingly more to put the company where it deserves to be.

First, with this choice of students being on campus more frequently, according to the areas of knowledge, we certainly that were going to have [indiscernible] visited 101 addresses over the last months. We made several deliveries, and we optimized our physical use, which echoes in the optimization of cost and leases and occupation. This, of course, we have certain fines, determination, et cetera, but this will be offset shortly. So we have restructured our G&A structure that made it simpler the integration of Laureate with 12 reports. Now we have 7 of the domino effect up, down. So our value proposal, we have average ticket growing 8% of Anima core and 11% in Inspirali. We have to transfer inflation in the minimum to the ticket.

These are the main messages I'd like to open with. And I'll turn it over to André so he can proceed with the presentation.

[André Tavares, executive]

Thank you very much, Marcelo. Good morning, Botafogo. Good morning, everyone. With us here all our IR team.

The year 2022 was a quite intense year to us here at Anima. And it was a year I would say that the main topic was the advancement of the integration with the unit that came from Laureate, cultural integration, systems integration, process integration, well, integration as a whole because system that became the Anima into system. I said that we had several efficiency initiatives that will be even more visible in 2023 because many of them were actually captured a lot in 2022.

There is a part on our release there we address synergies in the Laureate acquisition, and we're quite -- out that we managed to capture that. If I look at from the very beginning of the integration, and we actually check these accomplishments and synergies year-over-year, we get to BRL 305 million year-over-year. If we look at December, our December result [indiscernible] period, we acquired Laureate. It's almost BRL 25 million a month in terms of synergies. So this is very -- as it's being captured over 2022, great part of it will be even more visible in 2022.

But speaking of our year-over-year numbers, considering the cycle of our business, we always pay more attention to yearly numbers and half numbers. Well, we had differences quarter-over-quarter. So it's best to look at the results of our business, at least for -- per semester when we complete the cycle.

Looking at the 2022 numbers. We had its net revenue of almost BRL 3.6 billion, about BRL 3.5 million, and Anima is still the most significant. Its revenue was 62%. Inspirali, our digital learning, followed their growth path and gained more relevance in our ecosystem. Inspirali total was 31 and digital learning was 6%. With the student base, they've got to 400,000 students, quite positive news. In terms of the year-end, it's a more consistent improvement with the numbers that we have been showing in terms of dropout, 3.6%, 2.4% points better than the same period last year, previous year.

In terms of gross profit and operating results, gross profit was practically BRL 2.3 billion, margin of almost 64%. Operating result was BRL 1.465 billion and adjusted EBITDA of BRL 1.073 billion with a margin above 30%, breaking down, as I believe or as actually we've been doing for some time, breaking down our [indiscernible] for a better understanding of all of us to align the way we disclose and the way we manage them. Finally, we give the visibility of our results on 3 levels, Anima core, Inspirali and digital business learning. Those are businesses that have timings and features and indicators that are very unique.

At Anima core, we highlight the continuation of the ticket above inflation control dropouts, and [indiscernible] of margins even with the activities returning to on-campus, I think, is observed. The ticket is one of the points that we've been talking a lot for a long time with our investors. And our main focus points, we give continuity to these processes. Growth ticket 8% above inflation, and we can also see the figures of net revenue and operating result of Anima core [indiscernible] growth, especially in operating results over BRL 200 billion getting to BRL 814 million in 2022.

Moving on, we talk about digital learning or distance learning as quite fast growth rate of 42% regarding what we saw in 2021 in the student base and 21% in terms of revenue. And here in distance learning, we observed greater [indiscernible] of this as the expansion of our distance learning is very much focused on new marketplaces where our brands do not have [indiscernible] in the marketplaces where we have operations. So as new entrants, we have to be more [indiscernible] in terms of the ticket. And this is the reason with greater competitors in the industry, these are the main reasons why we're seeing our ticket still at BRL 187, which is still below what we understand is the recurring [indiscernible] line of business.

On the next slide, we see Inspirali's results. It also grows. It has -- it showed growth rate showing plus 10% in the student base, but also growing its revenue with very small dropout, virtually 0, and is getting 2022 over BRL 1 billion of net revenue with over BRL 600 million in terms of operating result. So the robustness of its growth and its results.

On the next slide, we also see our adjusted EBITDA. It reached practically [ BRL 1.170 billion ]. When we look at the reported numbers, we would have 0.2, considering the stability margin was smaller or lower, 0.2 percent points, we had several localized events of earn-out, of provisions, especially once we've incorporated the assets and the institutions of Laureate to our accounts. If we take out the effect in [ 2021 ], well, we should have an EBITDA margins [indiscernible] 4.3% points to the current 30.1% in 2022.

When we look especially to Q4, we see this evolution of margin growth of 2.4 percentage point of the EBITDA margin. Those localized events that I mentioned about are more centralized in Q4. Q4 is compared to that is much more, say, normalized. And I believe that much of what we have grown in this third and fourth quarter of 2022, we will -- especially regarding G&A expenses, at least expect the improvement in liability management. We'll see this -- all of this reflected in the results of 2022.

We talk -- on the next slide, we talk about CapEx. We have gains of scale and the benefit of the dilution moving from 7.2% of revenue to 5.9% of our revenue in 2022 and with a very clear focus on digital transformation. So in nominal terms, we almost doubled here investments in terms of [indiscernible] BRL 78 million to BRL 130 million, an amount that is quite significant that gives us the trust that we are preparing the company for forthcoming years for the strategy of being a company increasingly more digitalized in all its processes.

We're seeing campus, we can move on to the cash flow. We had free cash generation before financial expenses of BRL 604 million, showing how much we've been able to generate cash with our operations, representing 56% of cash conversion regarding EBITDA. And of course, we have major challenge in the generation of results of cash incremental over 2023 so that we can put the company in the direction of organic deleveraging that is also fast and sustainable.

I'd like to stress here that we end the year with the cash position that is quite comfortable, BRL 1.5 billion in cash, mentioning the important intake that we had last year of BRL 800 million in terms of rates that were much smaller than we are observing currently with the deterioration of the credit market that we've observed early in 2023. So those are results and there is a cash generation or operating free cash generation, coming from operations that makes us feel very confident.

I'd like to turn over to our IR officer, well, the focus so that he can conclude the call so that we can open to Q&A.

[Marcus Vinicius Cuiabano Peixoto, executive]

Perfect. Thank you, André, Marcelo. Thank you all for being with us today. We are disclosing or publishing the results of Q4 2022 as a whole with great sobriety and quite confident to know that the results are challenging. It was -- Q4, there was 2022 macro play very much against, especially Anima core. In our education business, we have quarterly fluctuations that are major looking quarter-over-quarter. This is even more significant. Q4 was difficult with revenue down with margins fluctuating quite a lot.

We invite people to look at a perspective, take a step back and look at the second half as a whole. And in the last 12 months, these variations quarter-over-quarter, they are different. When we look at the last 12 months, this is very important for us to look at our business. Here, we shared a chart. We've shared this chart many times in our releases, which is the evolution of our profitability since the second quarter of 2018, 4.5 years. But this chart, we always presented it within the pattern of IFRS 16. And voting is requested by many of you, investors and analysts. We have ex IFRS 16 with the leases, with the old way, cash proxy EBITDA.

As we noticed in the first half and normalizing the effect of the Q3 of 2021, right after disembarking Laureate first, [indiscernible] managed and acquired the asset. We had a lot of provisions that we [indiscernible] them that there were a lot of lease in [indiscernible] not several provisions. So we came in -- as we reverted the provisions in Q3 as you followed our releases. This went out in the result in Q3 and impacted the last 12 months of '21 and '22, second quarter 2023.

Normalizing with that, we have these assets. Here, we see that the margin, the EBITDA -- the adjusted EBITDA margin, nonrecurring for the last 12 months, has been growing continuously practically as we have a year-over-year comparison for us to exempt ourselves from seasonalities. The year-on-year comparison in the top chart have been positive in the past 15 quarters. So with operating improvement, this greater perspective of looking longer period with the last 12-month margin, we see that we reached a record margin of 30.1% without paying leases. This margin is still below what we wish -- would like to have. There's still a lot to be done, but it is important for us that quite oddly, we should understand that has been quite a visible improvement.

What happens when we calculate the payment of leases? This is very cool because one of the main fronts for us to increase our profitability is precisely more efficient management of physical spaces. With that, when we add leases to the math and we look ex IFRS margin, it's a chart that is like -- that's simple. It has some more [indiscernible] here until the second quarter '21, the margin will continuously grow before the integration to the acquired assets. And then it drops before recovering again.

What happened? And many of you know in detail that Anima operated with about 8% of revenue in releases. The acquired assets were operating with 12% revenue as you combined both increased in these amount 10%. So there's a drop of the EBITDA margin. Then gradually as we manage in a more efficient way, paying fines and delivering lease contracts and cost operating in specific campuses, we are able to resume this margin, this EBITDA margin ex IFRS, not only with the reduction of leases and also reduction of the corporate expenses, we're going to detail that in a future chart. We get to a margin that is record EBITDA margin of ex IFRS 16 got to 20.5% in Q4, considering the fact that they have been challenging results in 2022.

Q4 was difficult in terms of results. We've managed to improve in this viewpoint of 12 months better level since the first quarter of 2018. Not only that, but we disbursed over 2022, BRL 145 million to higher future improvement of profitability with the lease fines of dismissing people or layoffs, corporate expenses, [indiscernible] the liability management because it caused a lot of [ disparity ] when we issue a new [indiscernible] take money from cash. It first allows also to have a reduction in financing costs in the coming 12 months to start offsetting initial cost. And so the disbursement, that increases net debt in the -- total disbursements, leases, corporate expenses already mentioned has been BRL 144 million in 2022.

On the next slide, we see how we have the cash and debt as the company evolved. Talking about this topic of liability management, last year, as you followed in great detail exactly a year ago, 31st of March with the effective ratio of Inspirali, we issued BRL 2 billion. Inspirali [indiscernible] prepaid almost the totality of BRL 2 billion debt of Anima that were [ 72 plus or BRL 165 million ], great reduction of costs and expansion of debt with a new debt of 5 years. Very similar, the end of year, the issuance of the BRL 1,800 million.

December will allow us to pay what we have in terms more expensive debt and [indiscernible] plus BRL 375 million, BRL 500 million. But with the extension that is worth 100 million has a bullet of 5 years, BRL 600 million and then remaining BRL 200 million is 6, 7 years. The amortization program that we see here on the chart, quite profitable for the company, which makes us very confident that we can have another voting of liability management in the debt of BRL 2 billion and cost [ 206 bps ] of premium of sales as comparison the 100 million that we issued in December, Anima that is more leverage than Inspirali. The cost of 165 bps on sending the main tranche, BRL 600 million.

On the next slide, we see a topic that all of you here that know us quite well is the core topic of our leverage. We noticed on this chart that from the acquisition of -- the transformational acquisition of the Laureate assets, we came to level 6x EBITDA level with the [indiscernible] Project, with the G&A, interest and creating Inspirali, getting BRL 1 billion of cash to Inspirali. Our leverage drop to level 4 where we have been stubbornly around 4x EBITDA in terms of leverage.

Here, we have bad news and good news. At the same time, we can see the glass half open or half full despite all the efforts that we've seen operating improvement is gain and EBITDA margin to a record level, even though there's a lot to be done as [indiscernible]. We have improved profitability despite that we haven't improved in leverage level, we still have high leverage. And the good news is that at the same time, despite high interest that we are experiencing like other companies listed where the leverage is growing continuously, we managed to keep our leverage level. High cost effort, management discipline, we're keeping the leverage at this level.

But it's also important to set a context that over 2022, those expenses that we referred to of almost in BRL 145 million, they end up increasing the [ debtness ] level. They increased the debt in a benign way, let's say. [indiscernible] higher than a future improvement. In the short term, it worsens our debt. To give you an idea, the BRL 145 million compared to BRL 700 million is EBITDA. Ex IFRS, it's a 3.2% of EBITDA. [indiscernible] leverage [indiscernible] EBITDA is [indiscernible] increase of benign debt in the short term higher the improvement for 2023, 2024 onwards.

So what we've done so far cannot be seen in terms of the leverage because at the initial moment, we have this cash disbursement. But further on, we'll be able to collect quarter-after-quarter this improvement and actually a decrease in debt in the case of two of these items, lease and receivables, they're above a bit of. So they improved the denominator of the leverage. They reduced net debt and increased EBITDA. Obviously, in the liability management, the reduction of financing costs only improves the net debt, not the EBITDA.

With this, I think we can resume with a topic that is important to many of you investors and the journey of 2022. There would be a journey of much less, but more without major acquisitions, with greater strategic, a lot of work door in-house, focusing on reducing cost [indiscernible] especially leases, general and corporate expenses, focusing on reducing our financing costs to be able to higher the reduction of leverage, our profitability, more value generation per share is not [indiscernible] over '22 and over '23 to '24.

This is frustrated because we cannot see for the reason we described. So we have this sobriety of acknowledging [indiscernible] only so much in a very frank combo modes slate that we know the results are much below what all of us would like to. But we also know that we have been doing a lot. We're hiring better results and with patience. And finally, over the next semesters, we hope to show in a very visible way to our investors that this improvement will be great over '23 and '24. So that was the last slide.

Now I'd like to turn over to Marcelo Bueno so we can move on to Q&A session.

[Marcelo Bueno, executive]

Thank you, [ Bota ]. Thank you, André. Thank you, everyone. So to wrap up, I'd just like to say that we have our general meeting to improve our Board. We have some Board members that are leaving [indiscernible]., and we like to welcome the new Board members that have been appointed. We have a new phase of the board, and support the management in this new phase of Anima.

Thank you all very much. It is important to highlight our diligence in this deleverage agenda that Botafogo talked a lot about not only operationally, but also analyzing alternatives to generate more cash to the company, deleverage it and bring more capital to it and make the company increasing more [indiscernible] healthy in line with what we believe.

With this, over to Q&A, and thank you all very much for your participation.

[Operator]

The first question is from Lucas Nagano from Morgan Stanley.

[Lucas Nagano, analyst]

Two questions on our side. The first one regarding the commercial strategy of Anima core. You made it clear that you have a specific effect in Q4. Looking at the semester, the revenue was flat. How do you evaluate the strategy of your repositioning yourself looking back? And how should it be for the forthcoming quarters [indiscernible] of price adjustments?

Second question is the use of basis and makes sense considering small demand for on-campus classes, as Marcelo mentioned. But in the scenario going back to public funding, we can absorb a relevant decrease in the number of on-campus students with the current structure or this would in time increase in investment?

[Marcelo Bueno, executive]

Lucas, thank you for your question. I'm going to start, and then André, Botafogo, you can go ahead. Anima core, as I mentioned, we've seen students want to use more or less technology to improve their relationship with learning and teaching according to areas of knowledge. We see that Anima Core shows that areas like IT, engineering, management even architectures, students want to use more technology and less in-person or opposite of what's happening in health care, SPED, bio, medicine, et cetera.

If you consolidate all of that, it's not there is migration to distance learning. This is our value proposal that I want to reinstate here that the [ judiciary rule grant ] and Botafogo is focused on cutting costs, simplifying, but we have to stress here that we have felt that our hybrid value proposal, quality is increasingly more attractive. Since students noticing this, this is not that it means that we're moving to the distance learning. So we're going to improve our ticket, putting our profitability margins where we want it to be.

We've worked a lot. Almost a turnaround is a special one in Anima core. It's almost completed, and we're going to reap the benefits along the coming quarters. If we have, as Brazilians, we expect that the new administration faces education that has an access policy to increase wherein -- that increases penetration, if it has -- happens then we are prepared for that. I don't see increase in cost.

If this happens, we believe that there will be optimization to be made in the physical spaces. So I think this is the message because the use of technology, you can scale up. I don't believe that we're not working with the [indiscernible] implementation. If it happens, we are ready to implement it. And actually, the country will be transformed through education.

[Lucas Nagano, analyst]

Just to clarify on the part of ticket, repositioning it, Laureate. Is there any catch-up to happen? Or are those practically equalized? What about the next cycle?

[Marcus Vinicius Cuiabano Peixoto, executive]

We had great difficulty with the systems integration. We can look in risk or back to 2022, especially the Laureate unit is made our summer process, particularly last year, this year, this is not happening. And the Laureate brands are very strong, very powerful. So we're very optimistic regarding the power of the Laureate brands. And certain that the Laureate pathway of those brands, it's not the pathway of Laureate ticket.

And getting to price [indiscernible]. Those brands are very strong like ours, and it is very much proven. And we have great space for us to continue. We don't have any silver bullets, but this is the policy of ticket recovery and the integrated brands and the -- those reintegrate.

Just to add to this topic, very briefly, Lucas, as we reposition tickets to the integration units in a place where they should be, this has -- just as you lower the ticket a lot, it takes some time to show up where we see the average ticket of 4 or 5 years. So we also have on track, it is proven, as you keep the ticket on the new level, even though we have students in the third, fourth years, they have very low ticket, no doubt, we should see a continuity in ticket improvement of Laureate, the unit that came from Laureate in the forthcoming years.

And I think it's also important to say that we're going to have the same policy in distance learning. We implemented it into a digital. We're integrating digital. And our ticket repositioning technology will also be implemented there. From this first quarter, distance learning, yes, it's been in operation since last quarter. It's a full integration phase of this policy that will be implemented there as well.

A major point, Lucas, and everyone on this intake process, we're talking about intake when we talk about first quarter, our policy, we gave no previous news of intake, 60% in the journey of intake that is being completed. We've mentioned to many of you, we were confident with the intake or summer intake process early this year, not through macro because macro has not changed regarding previous quarters. We still have inflation and high interest rates. The confidence of consumers is not so -- it's not firm. Even though macro scenario has not improved, you hear that from other companies in the industry, the difference from micro is very sensitive.

From last year to now, as Marcelo mentioned, we had management late last year to the cultural aspect of integration with a large team of Laureate. They were asking -- needed to be better addressed. We had a systems integration back office, front office, academic, RP, CRM of 90s system. We dropped to [indiscernible] early last year. So it was great difficulty, naturally impacted the summer intake process. It was the first major intake after the integration of assets in June 21, early last year, the first quarter 2022. This year, the process is the opposite. The machine is well greased. Things are working very well. So we are very confident, not for any macro different, but actually because of the micro, the Anima management.

Another point that is worth mentioning on what Marcelo mentioned are putting E2A distance learning, a point that escape many people when we talk about distance learning for every 100 students that they pay, the first tuition fee of distance learning in Brazil, we have [ 7, 8 ] students that graduate. It's composed dropout of over 90% of students in undergraduate. Those that have difficulty in the logistics of day-to-day in their lives because they are older than the on-campus students, less income available for education, they drop out. This is problem [indiscernible] a proposal of education. They will not get a degree. They have no chance of social climbing and viability.

And also the business, because this is the second point, by the way, for shareholders, bad debt and lack of customers, too, if we generate better quality, then a lot of spread engagement towards their education including distance learning, as what Marcelo said, is very important to put our proprietary technology of E2A within discipline. E2A, we believe, will be key to provide more quality with more engagement, therefore, and then the students will stay on at the end of undergraduate studies graduates.

Fifteen students, we are significantly increasing the number of students that have a chance of having greater liability or income. The impact to their lives will be very relevant, but the impact of the business as well in terms of cash flow and bad debt will be very important. And this is one of the great focus that we have in [ EAG ] or distance learning to increase the quality of what we're delivering to those students.

[Operator]

Our next question is from Marcelo Santos, JPMorgan.

[Marcelo Santos, analyst]

First question would be to talk about the profitability, 2023's main moving part, what helps, what disrupts. What is the viewpoint investors may have?

The second question would be regarding the competitive environment of distance learning. How you see commercial aggressiveness of peers, ticket evolution? You talked a lot about the release. I'd like to know a bit further on. These would be the 2 questions.

[Unknown Executive]

Thank you, Marcelo. I'm going to just start here, and then you can add. I've been insisting here, Marcelo, that we are viewing with magnifying glass with great energy, things have been already implemented for 2023. I mentioned in the previous question, basically, turnaround that we made in Anima core, this is important, and also the certainty that we're going to have physical space. We gone through [indiscernible] Anima levels. This is a fiduciary duty of repaying synergies that we have, but I believe this is not enough. The Anima levels were pre-pandemic.

Post-pandemic, we see students want to use more or less technology according to the [indiscernible] one thing. We have physical -- so we have space for that. So we've delivered a lot, many addresses. We have various operations [indiscernible] own operations. So we have optimized -- renegotiate all these contracts [indiscernible] we take care along with Daniel Castanho, with some of our partners to major renegotiations with the original keepers of the organizations that Laureate acquired. This is an important we attended.

The other one is simplify our operating structure. We had 12 reports in our hybrid, and all that was a terminal effect. I would have magnifying glass on those 2 major agendas for 2023 and 2024. And we renegotiated our debt, as Botafogo mentioned. I think this is also important.

And we have found -- it's important for you to note that the students like to enjoy our value proposal. And you can see more coordination, people who could think that with the pandemic students would migrate to distance learning and lower ticket. This is not what has been happening. We see things differently, and we're going to show that by 2023. It's important for you to move with the numbers. We have 97% of the reenrollment completed. So it's important to say that students liking increasingly more our value proposal. I would look at that.

Regarding distance learning, we have felt it's another business, much more competitive, but we have room for us to serve another purpose, people that Anima did not and reposition our value proposal where we believe in and implement be E2A in digital or distance learning to have a minimally acceptable product that we accepted and that makes a difference in people's lives. They want to have more access. But additionally, Anima where it should be, and implementing our methodology of recovering ticket and distance learning. We're going to leave the price battle. We all know where it ends.

I think, Marcelo, what is important in your question, I think it's key to our conversation today that we're looking at 2020 tools. The variety know we have the result. In terms of what we would like. But at the same time, we're looking at 2023 with great -- within a very constructive way, somehow with joy that we went uphill in this marathon of the journey of the real economy. They go through hardships and we went up over 2022. Many things that have -- was done that cannot be seen as BRL 145 million that we spent that is to increase our debt, our leverage and not showing the benefits. After uphill, we start noticing ahead this more, say, flat growth.

A lot has to be done. In the second part of your question, a lot to be done in terms of lease management. We have a lot of optimization. I mean I'm going to give you an example here. And why physical space management is not performed by some less experienced executives as Marcelo and Daniel Castanho, Marcelo's founder, just to think about the physical space, not just a manner of negotiating a lease, a change in campuses. There's a way as to how these physical spaces or brick and mortar spaces, where exists in terms of [indiscernible] take an elevator, get to the class [indiscernible] because the laptop and they go to the car and subway.

But whenever this should not exist anymore. Space is different. Campuses has to be more horizontal with more interactivities spaces or interactive space. Lab maker spaces, don't have to wish to be there should not be that building with students best that are no longer part of it. This is why it's led by Marcelo with the support of Castanho and other founding partners.

But what I'd like to mention to prep. Our team that is used to doing that nobody likes to deliver buildings, nobody likes to lay off people, the teamwork, the people who have been doing this for a long time. Exactly, so have to be happy with the new dynamic. It's not an easy thing.

So I'd like to acknowledge, our team, people in operation, all the units in the regions, they are all engaged and it is difficult and hard type of job that [indiscernible] as Marcelo said, to dismiss people. So we have the 20% in G&A and corporate expense. So the company needs to be more profitable in terms of -- because it needs to continue living. In May, Anima is celebrating its 20th anniversary. We're getting closer to this moment as my grandfather would say this, life, 20 years of the company, with a great law of joy that we should reap in 2023 what has already been done in 2022.

So a lot to be done in leases and corporate expenses and also in liability management. As we've mentioned, we had 2 write-downs in liability management last year. There's the third one that we have to negotiate that Inspirali mentioned that it's quite expensive this more complicated moment in free market, there's no urgency for that. Where we still have improvements to be implemented this year, but we should start reaping good effect of what was done last year, okay, Marcelo. So it is a great confidence that we are moving into 2023 and I'd say with the great joy towards this moment of 2 decades of journey of Anima.

[Operator]

Next question is from Mirela de Oliveira from Bank of America.

[Mirela Rodrigues de Oliveira, analyst]

Just a brief follow-up on our side regarding nonrecurring expenses with leases, final terminations sometime in -- until when in 2023 should we see this kind of expense? And when over the year should we see the return of these reductions?

[Marcus Vinicius Cuiabano Peixoto, executive]

Excellent question, Mirela. Let's start from the very sort of grounds standpoint. They are not where we're going to have more recurring expenses of termination. This termination, a lot to be done. Good news in which short term is still impacting. The general corporate expense reduction will only be intensified once we integrate the Oracle ERP that we're setting up now. We're putting all those systems that we've integrated from [ 19 to 60 ].

Within corporate ERP for everyone that followed the company making those integrations, SAP, Oracle. It's a lot of work, and we need many people. There's a lot of redundancy, many things that have to be checked. You have to have a robust team and have one, and we're only going to be more assertive after this integration towards the end of the year. So there's still a lot to be done, a lot of homework to be done in terms of general and profit. There is a cost of liability management that depending on how we manage the Inspirali debenture. So they're nonrecurring cost so will increase net debt, et cetera, as it happened last year.

But this year, we have the improvement contracted and what has been. You see clearly on our release a payback of those initiatives is around the year. So if it is around the year, the trend using a term that the regulators like to use much more than the number, the trend is that those BRL 145 million, they should be transformed about a year payback around this amount of reduction -- of the disbursement of this year or increasing profitability over this year. Even if we have new expenses to a higher and improvement for 2024, this year, this is offset based on what was done last year.

It's great that you've asked this question, Mirela, so that we can show there is a lot to be done and still impact and now recurring, but there's a benefit that offset those impacts from now onwards.

[Operator]

I think we see some questions on the chat. [indiscernible] is asking some questions. The first one, you've shown a great advance in corporate expenses in the quarter. Can you give us some light in terms of what's happening from now onwards?

Second question, [indiscernible] ticket, especially medicine, can you clarify a bit more why there was a drop in Q4 2022 over Q4 2021.

[Marcelo Bueno, executive]

Thank you, [ Yuri ]. I think they are good questions. Here, when we look at the corporate expenses, we have given good examples of what Botafogo just mentioned, answering the analysts questions, of items that have impacted in a nonrecurring way before, but I will bring gains especially for 2023. If we look, they are not seen in the 2022 results. If we look at corporate expenses over the year, we moved from 11.3% to 11%, practically flat. But when we make the comparison on the quarter-over-quarter, we moved from 11% to 9.5%. So clearly here, this is one of the items just as leases that this gain is shown in a more visible way. And our expectation is that should be extended over 2023 and the coming years.

With regards to the medical school's ticket drop, the corporate expenses is not very much related to our upgrading cycle. Other topic, revenue ticket, student-based, [indiscernible] basically link to our operating cycle. Here, I invite, Yuri, well, if you actually look at Q4 over [indiscernible] quarter, the Inspirali ticket is flat to 0.9% negative. This depends many times on the times students join, the time there are studies that are taking courses at a lower ticket in a more in -- a slow way.

If we look at the quarter, which is a more stable measure, you will notice that in terms of the undergraduate of Inspirali, the ticket moved from 7 -- under 46 to [indiscernible] so an elevation of 5.6%. And we look at -- regarding those operating indicators, we look at this cycle on a semester basis, right?

Yuri, thank you for your questions. And we had a follow year when we look at the semester and its trajectory of increasing the ticket. I'm going to take -- I think there is another question of Yuri talking about margin. That gives me the opportunity of saying the following. Your point is correct, Yuri, when we look at 2021 over 2022. There is a sort of evolution of all the methodology, prorating or cost allocation at Inspirali that makes the numbers that we should expect, the levels of margin that we should expect from Inspirali are much more similar to 2022 than those of 2021. But I invite you to look at the margin in the case of Inspirali that is annualized because importantly, we have differences of bad debt and several other [indiscernible] terms that may vary.

When you look at the year, you'll have a more normalized margin. But despite your question being regarding the quarter, your point is direct regarding the fact that we -- 2022 with the entrance of D&A capital, we had a governance evolution of this methodology of allocations and we're writing of Inspirali. So the 2022 number with Inspirali is a number that is much more in line to our expectations ahead rather than the 2021 number.

[Operator]

I think we have another question from [indiscernible].

[Unknown Analyst]

Could you please elaborate on the plans to be able to delever this year double-digit interest rates? Is it capital increase [indiscernible] with the control group not being loses of assets, sale and leaseback, gives you some suggestions? Marcelo and André, could you elaborate on that?

[Marcelo Bueno, executive]

I could start here [indiscernible]. Thank you for your question. I think Bota talked about deleveraging. We started with a clear one. We sold assets, operating one, and we sold some real estate. And the market has sound interest rates, move from 2% to 14%. What happened? We're analyzing alternatives long term. We should have alternatives that are better for the company for its stakeholders. So we have an agenda, which is analyzing alternatives. We have to gain maturity and, we'll implement them. But most importantly, it is for the company to generate cash. We have to make the company to deleverage by itself and also analyze alternatives in power that may make it happen faster. We are very sensitive to the stop working on this indeed.

[Operator]

I think we have our last -- somebody wants to speak. Caio Moscardini from Santander.

[Caio Moscardini, analyst]

I just like to ask you to give me more flavor on seasonality of Inspirali in Q4. How much of the tickets and margins? It's not very clear to me why it happens in Q4. We haven't seen anything that would point to this with any seasonality in Q3, understand a bit better how this ticket margin seasonality, how it works.

And also on the profit side, BRL 58-some million in Q4 vis-à-vis BRL 6 million in the past 9 months. So I'd like to understand a bit how these things communicate among themselves.

[Marcus Vinicius Cuiabano Peixoto, executive]

Thank you, Caio, for your question. So on the previous question, I would say that -- it is very clear considering the guidance that we have from our Board of Directors, right most of the levels that our shares are in addition to the operating deleveraging that we all have the duty of carrying out. We're always thinking about more creative alternatives as we had in the case of Inspirali to generate value to our shareholders. We no doubt see a follow-on as a possible scenario in the current market levels.

[Marcelo Bueno, executive]

To answer Caio. Caio, thank you for your question. Inspirali has a slow seasonal rotation, I'd say, that is a bit less than the core businesses, but it's not free from certain seasonalities. Just as you have, for example, dropout rates in the case of Inspirali, it's much less. And bad debt in Inspirali is a much smaller, but those factors also happen in a number of semester [indiscernible] quarters.

Second, as I mentioned to you, we have evolved a lot over 2022, especially with the entrance of the M&A capital in the [indiscernible]. And so we [indiscernible] methodology of allocation and prorating in costs and expenses. In addition, Inspirali itself is also gaining greater representativeness within Anima and allows the part of cost allocated to Inspirali will be a bit higher.

I'd say I encourage you to look at Inspirali, and Anima core always looking to semester in the year, which is our operating cycle and where, especially in the semester, that's when more localized effects are set off, and we have a clearer view of the performance of the company.

Caio, André, Botafogo, we founded the company 20 years ago. We are a partnership. We have [indiscernible] as CEO, have a fiduciary duty of deleveraging the company in terms of its operation. This is not a nice thing to do, but for those who want to be here in the long term have to be that [indiscernible] campuses that lay off people, but we have to do that. This will generate cash but will deleverage company. We have to do this faster. We have to analyze things carefully and do things, as André said, do things that are more creative.

At the levels where we are now, doesn't make anything for us to do it. So this is our reality as a shareholder of the company, those that want to be here in a long term.

[Marcus Vinicius Cuiabano Peixoto, executive]

This is it. We have no more questions. There's a hand that has raised just a second. No, I don't think so. I think we've answered all the questions.

Well, thank you all very much for your time. Have a good day, and greetings to all of you. Thank you all very much. Have a good day. Bye-bye. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]