Arco(ARCE) - 2021 Q1 - Quarterly Report

Financial Performance - FY2020 net revenue reached R$1,001.7 million, with an adjusted EBITDA margin of 38%[3] - Fourth quarter 2020 net revenue was R$296.5 million, with adjusted EBITDA of R$125.9 million[2] - The 2021 annual contract value (ACV) is projected at R$1,163 million, representing a 21% growth compared to 2020[3] - The company anticipates a FY21 adjusted EBITDA margin guidance of 35.5% to 37.5%[3] - Adjusted net income for FY2020 was R$220.3 million, reflecting the company's strong financial performance despite challenges[2] - Net revenue for Q4 2020 was R$296,537 thousand, an increase from R$247,644 thousand in Q4 2019, representing a growth of 19.7%[19] - Gross profit for Q4 2020 reached R$230,232 thousand, compared to R$192,270 thousand in Q4 2019, reflecting a 19.7% increase[19] - Operating profit for Q4 2020 was R$54,766 thousand, up from R$50,676 thousand in Q4 2019, indicating an 4.1% growth[19] - The company reported a profit of R$24,203 thousand for Q4 2020, down from R$42,515 thousand in Q4 2019, a decrease of 43.2%[19] - Basic earnings per share for Q4 2020 were R$0.42, compared to R$0.79 in Q4 2019, reflecting a decline of 46.8%[19] - Adjusted EBITDA for Q4 2020 was BRL 125,898 thousand, up from BRL 106,303 thousand in Q4 2019, reflecting an adjusted EBITDA margin of 42.5%[22] - Adjusted net income for Q4 2020 was BRL 67,402 thousand, down from BRL 77,021 thousand in Q4 2019, reflecting a decrease of 8.3%[23] Cash Flow and Liquidity - Cash and cash equivalents increased to R$424.4 million as of December 31, 2020, compared to R$48.9 million in 2019[17] - Cash generated from operations for the twelve months ended December 31, 2020, was R$212,634 thousand, a significant recovery from R$27,984 thousand in the previous year[20] - Free cash flow for Q4 2020 was negative at BRL (107,595) thousand, an improvement from BRL (165,550) thousand in Q4 2019[24] - Cash and cash equivalents at the end of the period were BRL 424,410 thousand, down from BRL 526,844 thousand at the beginning of the period, reflecting a decrease of 19.4%[21] - The company reported a net cash flow used in investing activities of BRL (34,173) thousand for the period, a significant reduction from BRL (473,485) thousand in the previous period[21] Assets and Liabilities - Total assets grew to R$4,576.3 million in 2020, up from R$3,161.4 million in 2019[17] - Total current liabilities increased significantly to R$980,274 thousand in 2020 from R$412,176 thousand in 2019, marking a rise of 138.5%[18] - Total non-current liabilities rose to R$1,395,122 thousand in 2020, up from R$1,154,437 thousand in 2019, an increase of 20.9%[18] - Total equity increased to R$2,200,884 thousand in 2020 from R$1,594,810 thousand in 2019, representing a growth of 37.9%[18] Strategic Initiatives - Recent acquisitions, including Me Salva! and Escola da Inteligência, are progressing as planned and enhancing Arco's market position[4] - The company aims to leverage its strengths to drive growth in the K-12 digitalization market and pursue ESG initiatives in 2021[4] Impact of COVID-19 - The total impact of COVID-19 on financial statements was R$14.6 million, primarily due to increased credit losses and additional operational expenses[6]