2Q16 Results and Conference Call

Belo Horizonte, August 12, 2016, Kroton Educacional S.A. (BM&FBovespa: KROT3; OTCQX: KROTY), "Kroton" or "Company," announces today its results for the second quarter of 2016 (2Q16).

Highlights - 2Q16 Results:

Execution of the Stock Merger Protocol for the combination of Kroton and Estácio follows a highly strategic rationale and offers vast potential for the capture of synergies and efficiency gains of great value for students, shareholders and other stakeholders. The next steps in the transaction involve the approval of shareholders convened in General meetings to be held on August 15, the planning of the integration process with the formation of a "clean team" and the launch of the analysis process by Brazil‘s antitrust agency CADE.

Regarding the financial results for 2Q16, net revenue advanced 3.4% on 2Q15 pro forma, primarily due to the higher number of students paying out of pocket added through the admissions and re-enrollments processes conducted in recent cycles, which offset the lower revenue contribution from Pronatec and LFG. It is important to point out that the 2Q15 results had a positive impact from the atypical recognition of late re-enrollments due to the delays in the FIES system last year, an effect that in 2016 was concentrated in 1Q16, resulting in a lower concentration of late enrollments in 2Q16. In 1H16, pro forma net revenue amounted to R$2,617.7 million.

Adjusted EBITDA amounted to R$632.6 million, advancing 9.0% from the pro forma figure for 2Q15. Meanwhile, adjusted EBITDA margin expanded 233 basis points to 45.5%, demonstrating all of the efforts made to date to capture operating efficiency gains. In 1H16, pro forma adjusted EBITDA amounted to R$1,221.5 million, with margin of 46.7%.

Adjusted net income amounted to R$561.8 million in 2Q16, increasing 13.2% on pro forma net income for the same period last year. Adjusted net margin also posted solid expansion in the period, of 350 basis points. In the six-month period, pro forma adjusted net income advanced 14.9% on the pro forma figure for 1H15, to R$1,052.5 million, with adjusted net margin of 40.2%.

As announced in the previous quarter, the flow of FIES payments has normalized, supporting the Company‘s operating cash generation to the program‘s levels before any changes were implemented. In 2Q16, operating cash generation after capex amounted to R$613.2 million. The ratio of this indicator to EBITDA represents a conversion rate of 93.0%.

Full receipt of 25% of the FIES installments not paid under NR23 in 2015, further strengthening Kroton‘s cash position in 3Q16.

Kroton won four awards in the IR Magazine Awards 2016, once again demonstrating its efforts in recent years to improve its relations with investors and the financial community.

To access Kroton‘s earnings release, please, click here.

2Q16 Earnings Conference Call: August 12, 2016

English
Time: 12:30 p.m. (Brasília)
Time: 11:30 a.m. (New York)
Phone: +1 (516) 300-1066
Code: Kroton
Replay: +55 (11) 3127-4999
Code: 78060800

Participants are requested to connect ten minutes prior to the time set for the conference call.

Slides and Webcast: The conference call slides will be available on our website www.kroton.com.br/ir on August 12. The Conference Call will be webcasted simultaneously on the same website, and will remain available after the event.

Notice to Shareholders

We hereby announce to the Shareholders that the Board of Directors of Kroton Educacional S.A. ("Company"), in the meeting held at 7:00 a.m. on August 12, 2016, approved, subject to approval of the Annual Shareholders‘ Meeting of the Company that will consider and vote on the results of the fiscal year ended on December 31, 2016, the distribution of interim dividends, to be calculated towards the minimum mandatory dividends for fiscal year 2016.

To access the Notice to Shareholders, please, click here.

For more information, please contact our investor relations department:

Carlos Lazar - Director
Carolina Igi - Coordinator
Pedro Gomes - Coordinator

Telephone: +55 (11) 3133-7309 / +55 (11) 3133-7314 / +55 (11) 3133-7311
Email: dri@kroton.com.br


Contact IR

Phone: (55 11) 3133-7309
E-mail: dri@kroton.com.br