(Adds CEO comments in paragraphs 2-6)
SAO PAULO, March 16 (Reuters) - Estácio Participações SA , Brazil's No. 2 for-profit education firm, on Thursday beat fourth-quarter profit estimates on a drop in sales, general and administrative expenses and revenue growth driven by higher tuition fees.
In an interview after results were released, Chief Executive Pedro Thompson said a revamped marketing strategy with more regional ad campaigns helped to attract and keep students.
Estácio is focusing on student quality instead of just boosting enrollment, he said.
"I want students who pay a certain fee, remain current on tuition and do not drop out," he said. Estácio is upbeat about student intake prospects after tripling the sales force and revamping its advertising strategy, he said.
Estácio has also taken steps to reduce students' reliance on Fies state loans to pay tuition. Last quarter, its Fies base fell by 15 percent and the slide is expected to continue, the company said in a statement.
"The Fies loans are no longer a growth driver in the industry," said Thompson, who has overhauled fee collection practices and offered refinancing for students in financial distress.
In a Thursday securities filing, Estácio said net income totaled 124.3 million reais ($40 million) last quarter, up 133 percent from the year-ago period and slightly above an average consensus estimate of a 122.9 million reais compiled by Thomson Reuters.
Expenses fell 44 percent to 151.2 million reais, well below estimates, as Estácio removed provisions made in the third quarter for potential credit losses related to Fies loans.
Average monthly tuition fees rose 9 percent while Estácio's base of enrolled students climbed 2 percent to 508,000, even as Brazil faces its harshest recession ever.
The numbers reflect Thompson's drive to boost student loyalty as regulators analyze a takeover proposal from rival Kroton Educacional SA, which would create the world's No. 1 college operator.
Revenue rose 8.2 percent, higher than expectations, helping cash flow from operations jump 23.9 percentage points on an annual basis.
Earnings before interest, tax, depreciation and amortization, a gauge of operational profit known as EBITDA, more than doubled on an annual basis to 217.2 million reais, well above consensus estimates of 133.5 million reais.
Debt servicing and other financial expenses topped income from investments by 25.3 million reais last quarter, reflecting an adjustment in the value of accounts receivables related to the Fies program for 2015.
$1 = 3.1063 reais Reporting by Guillermo Parra-Bernal and Ana Mano; Editing by W Simon and Richard Chang