Laureate Education, Inc. · NASDAQ:LAUR

Laureate Education — Q3 2020 Earnings Presentation

41 slides from Laureate Education's earnings presentation, Nov 5, 2020

  1. Slide 1: Third Quarter 2020 Earnings Presentation

    Third Quarter 2020 Earnings Presentation November 5, 2020 © 2020 Laureate Education, Inc. 1

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements This presentation includes statements that express Laureate’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, ‘‘forward-looking statements’’ within the meani

  3. Slide 3: Presentation of Non-GAAP Measures

    Presentation of Non-GAAP Measures In addition to the results provided in accordance with U.S. generally accepted accounting principles (GAAP) throughout this presentation, Laureate provides the non- GAAP measurements of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow. We have included the

  4. Slide 4: Summary Overview

    SUMMARY OVERVIEW Note: Throughout this presentation amounts may not sum to totals due to rounding Amounts presented for enrollments, Revenue, Adjusted EBITDA and Adjusted EBITDA margin are for continuing operations only © 2020 Laureate Education, Inc. 4

  5. Slide 5: Executive Summary

    Executive Summary  Q3 performance in line with expectations despite continued impact of COVID-19 on Fall intake  Q3 Adjusted EBITDA consistent with Guidance thanks to tight cost controls across all segments  Q3 Net Loss of ($784M) driven by non-cash charges & realization of FX losses triggered by

  6. Slide 6: Laureate Portfolio Overview

    Laureate Portfolio Overview Operations -- Remaining Operations -- Pending Asset Sales (as of September 30, 2020) Mexico Walden  2 Universities  35+ campuses Brazil  170K+ students Australia Peru Closed on Nov 3rd  2 Universities / 1 Tech-Voc New Zealand  15+ campuses 1  150K+ students Honduras

  7. Slide 7: Q3 & YTD 2020 Performance Results

    Q3 & YTD 2020 PERFORMANCE RESULTS CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS) © 2020 Laureate Education, Inc. 7

  8. Slide 8: 2020 Third Quarter – Financial Summary

    2020 Third Quarter – Financial Summary Q3 ’20 Variance Vs. Q3 ‘19 Notes ($ in millions) (Enrollments in thousands) Results As Reported Organic/CC1 • Main intake for Mexico (-7% vs PY) New Enrollment 81K (11%) (11%) • Secondary intake for Peru (-22% vs. PY) • Driven by lower NE volumes and Total Enro

  9. Slide 9: 2020 Q3 YTD – Financial Summary

    2020 Q3 YTD – Financial Summary Q3 YTD ’20 Variance Vs. Q3 YTD ‘19 Notes ($ in millions) (Enrollments in thousands) Results As Reported Organic/CC1 • Mexico (-6% vs PY) New Enrollment 165K (7%) (7%) • Peru (-9% vs. PY) • Driven by lower NE volumes and Total Enrollment 336K (10%) (10%) increased attr

  10. Slide 10: Segment Results

    SEGMENT RESULTS CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS) © 2020 Laureate Education, Inc. 10

  11. Slide 11: Mexico Segment Results

    Mexico Segment Results Q3 Results Q3 YTD Results Notes ($ in millions) Organic/CC Q3 YTD Organic/CC (Enrollments in thousands) Q3 ’20 Vs. Q3 ’19 (1) ’20 Vs. Q3 YTD ’19 (1) • Solid Q3 intake despite New Enrollment 63K (7%) 103K (6%) COVID-19 impacts Total Enrollment 192K (7%) 192K (7%) • Driven by lo

  12. Slide 12: Peru Segment Results

    Peru Segment Results Q3 Results Q3 YTD Results Notes ($ in millions) Organic/CC Q3 YTD Organic/CC (Enrollments in thousands) Q3 ’20 Vs. Q3 ’19 (1) ’20 Vs. Q3 YTD ’19 (1) • Secondary intake in Q3 New Enrollment 18K (22%) 61K (9%) (primary intake was in March/April) • Driven by lower NE volumes Total

  13. Slide 13: Corporate G&A Expense

    Corporate G&A Expense ($USD in millions) Last Twelve Months Corporate Segment G&A Expenses Further reductions of 70-80% expected (run-rate) following completion of pending asset sales.1 $142 $133 $121 $104 ~ $100 FY 2019 LTM Q1 ’20 LTM Q2 ’20 LTM Q3 ’20 FY 2020 Estimate Significant Reductions in Cor

  14. Slide 14: Outlook

    OUTLOOK © 2020 Laureate Education, Inc. 14

  15. Slide 15: FY 2020 Guidance

    FY 2020 Guidance (Enrollments in thousands) ($ in millions) Operating Level FY 2020 Guidance1 Total Enrollments Continuing Operations 325K Revenue Continuing Operations $1,000 - $1,020 Adjusted EBITDA Continuing Operations $185 - $195 Free Cash Flow Consolidated $150 - $170 Shares Outstanding2 Conso

  16. Slide 16: Q3 2020 Debt Capitalization – Adjusted for Pending Asset Sales

    Q3 2020 Debt Capitalization – Adjusted for Pending Asset Sales ($ in millions) Amount Comments Q3 2020 (Net Debt) / Cash ($803) See Appendix Net Proceeds – Australia/NZ1 $650 Closed on November 3rd Net Proceeds – Other Pending Asset Sales2 $1,950 Including assumed debt Post receipt of anticipated ne

  17. Slide 17: Laureate Adjusted Financial Profile

    Laureate Adjusted Financial Profile Anticipated Adjustments 2 (Enrollments in thousands) 2020 G&A Pending ($ in millions) As Adjusted 2 Comment Guidance1 Reduction Asset Sales Total Enrollments 325K 325K Mexico & Peru at scale Revenue $1,010 $1,010 Sizeable platform Adjusted EBITDA $190 $75 $265 See

  18. Slide 18: Liquidity & Return of Capital

    LIQUIDITY & RETURN OF CAPITAL © 2020 Laureate Education, Inc. 18

  19. Slide 19: Return of Capital Overview

    Return of Capital Overview Illustrative Timeline for Return of Capital Considerations • Announcing authorization for new share 11-Sep-2020 Chile Sale Completed repurchase program up to $300 million* • Liquidity in excess of $800 million as of End of Malaysia Sale Completed September 30th Sep-2020 •

  20. Slide 20: Appendix

    APPENDIX © 2020 Laureate Education, Inc. 20

  21. Slide 21: 2020 Third Quarter – Net Income Reconciliation

    2020 Third Quarter – Net Income Reconciliation Q3 ’20 B / (W) Vs. Q3 ’19 Notes ($ in millions) Reported $ % Adjusted EBITDA 50 20 65% • Cost efficiencies and timing Depreciation & Amort. (18) 2 11% Interest Expense, net (24) 3 12% Impairments (323) (323) n.m. • Laureate tradename impairment Other (2

  22. Slide 22: 2020 Q3 YTD – Net Income Reconciliation

    2020 Q3 YTD – Net Income Reconciliation Q3 YTD ’20 B / (W) Vs. Q3 YTD ’19 Notes ($ in millions) Reported $ % Adjusted EBITDA 115 11 10% • ($16M) impact from FX Depreciation & Amort. (56) 6 9% Interest Expense, net (74) 25 25% • Lower debt balances Impairments (351) (351) n.m. • Primarily Laureate tr

  23. Slide 23: Q3 2020 Debt Capitalization

    Q3 2020 Debt Capitalization ($ in millions) Continuing Discontinued Total Operations Operations Company Revolver $409 - $409 Sr. Notes $800 - $800 Local Debt / Seller Notes $244 $180 $424 Gross Debt $1,453 $180 $1,633 Cash ($717) ($113) ($830) Net Debt $736 $67 $803 Total Liquidity in Excess of $800

  24. Slide 24: FY 2020 Guidance – Details (Continuing Operations)

    FY 2020 Guidance – Details (Continuing Operations) (Enrollments in thousands) Adjusted ($ in millions) Total Enrollment Revenues EBITDA 2019 Results 366K $1,212 $204 Organic Growth (41K) ($122) – ($102) $11 - $21 Growth % (11%) (10%) – (8%) 5% - 10% FY 2020 FXN Guidance 325K $1,090 - $1,110 $215 - $

  25. Slide 25: Discontinued Operations - Q3 2020 vs. Q3 2019

    Discontinued Operations - Q3 2020 vs. Q3 2019 Online1 Brazil1 Other2 Total Disc. Ops ($ in millions) Vs. Organic/ Organic/ Vs. Organic/ Vs. Organic/ Q3 Q3 Vs. Q3 Q3 Q3 (Enrollments in Q3 CC vs. CC vs. Q3 CC vs. Q3 CC vs. thousands) ‘20 ‘20 ‘19 ‘20 ‘20 ‘19 Q3 ‘193 Q3 ‘193 ‘19 Q3 ‘193 ‘19 Q3 ‘193 New

  26. Slide 26: Discontinued Operations - Q3 YTD 2020 vs. Q3 YTD 2019

    Discontinued Operations - Q3 YTD 2020 vs. Q3 YTD 2019 Online1 Brazil1 Other2 Total Disc. Ops Vs. Organic/ Organic/ Vs. Organic/ Vs. Organic/ ($ in millions) Q3 Q3 Vs. Q3 Q3 Q3 CC vs. CC vs. Q3 CC vs. Q3 YTD Q3 CC vs. (Enrollments in YTD YTD YTD YTD thousands) YTD Q3 YTD Q3 YTD YTD Q3 YTD ‘20 YTD Q3

  27. Slide 27: Discontinued Operations Q3 2020 – Adjusted EBITDA Reconciliation

    Discontinued Operations Q3 2020 vs. Q3 2019 – Adjusted EBITDA Reconciliation Total Disc. Ops ($ in millions) (Enrollments in thousands) Q3 ‘20 Q3 ‘19 (Loss) income from discontinued operations, net of tax ($170) $31 Income tax (expense) benefit $51 ($24) Other non-operating loss $15 $32 Operating (l

  28. Slide 28: Discontinued Operations Q3 YTD 2020 – Adjusted EBITDA Reconciliation

    Discontinued Operations Q3 YTD 2020 vs. Q3 YTD 2019 – Adjusted EBITDA Reconciliation Total Disc. Ops ($ in millions) (Enrollments in thousands) Q3 YTD ‘20 Q3 YTD ‘19 (Loss) income from discontinued operations, net of tax ($558) $240 Income tax (expense) benefit $48 ($17) Other non-operating loss $80

  29. Slide 29: Share Repurchase Authorization Disclosure

    Share Repurchase Authorization Disclosure The Company believes that the return of capital to shareholders through the stock repurchase program is advisable and in the best interests of the Company and its shareholders at this time, after taking into account the Company’s debt, other potential uses o

  30. Slide 30: Intra-Year Seasonality Trends

    Intra-Year Seasonality Trends • Large intake cycles at end of Q1 (Peru) and end of Q3 (Mexico) drive seasonality of earnings • Q2 and Q4 are typically Laureate’s strongest earnings quarters Revenue Seasonality Adj. EBITDA Seasonality 31% 30% 30% 31% 102% 29% 28% 29% 25% 24% 24% 23% 24% 21% 61% 56% 1

  31. Slide 31: Financial Results & Tables

    Financial Results & Tables © 2020 Laureate Education, Inc. 31

  32. Slide 32: Financial Tables

    Financial Tables Consolidated Statements of Operations For the three months ended September 30, For the nine months ended September 30, IN MILLIONS 2020 2019 Change 2020 2019 Change Revenues $ 243.5 $ 277.3 $ (33.8) $ 739.7 $ 860.2 $ (120.5) Costs and expenses: Direct costs 185.8 229.7 (43.9) 614.1

  33. Slide 33: Financial Tables

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the three months ended Constant Constant September 30, 2020 2019 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Mexico $ 115.9 $ 145.8 (21)% (10)% $ (29.9) $ (14.7)

  34. Slide 34: Financial Tables

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the nine months ended Constant Constant September 30, 2020 2019 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Mexico $ 385.0 $ 464.7 (17)% (7)% $ (79.7) $ (32.4) $

  35. Slide 35: Financial Tables

    Financial Tables Consolidated Balance Sheets IN MILLIONS September 30, 2020 December 31, 2019 Change Assets Cash and cash equivalents $ 716.8 $ 61.6 $ 655.2 Receivables (current), net 111.9 75.1 36.8 Other current assets 141.4 72.9 68.5 Current assets held for sale 510.4 706.5 (196.1) Property and e

  36. Slide 36: Financial Tables

    Financial Tables Consolidated Statements of Cash Flows For the nine months ended September 30, IN MILLIONS 2020 2019 Change Cash flows from operating activities Net (loss) income $ (997.7) $ 877.1 $ (1,874.8) Depreciation and amortization 116.1 146.3 (30.2) Loss on impairment of assets 990.3 25.5 96

  37. Slide 37: Financial Tables

    Financial Tables Non-GAAP Reconciliation (1 of 3) The following table reconciles Loss from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin: For the three months ended September 30, For the nine months ended September 30, IN MILLIONS 2020 2019 Change 2020 2019 Change Loss from con

  38. Slide 38: Financial Tables

    Financial Tables Non-GAAP Reconciliation (2 of 3) The following table reconciles operating cash flow to Free Cash Flow for the nine months ended September 30, 2020 and 2019: IN MILLIONS 2020 2019 Change Net cash provided by operating activities $ 221.8 $ 312.3 $ (90.5) Capital expenditures: Purchase

  39. Slide 39: Financial Tables (Historical Data)

    Financial Tables (Historical Data) Revenue and Adjusted EBITDA by segment (historical) The following table presents unaudited historical segment information for the first and second quarters of 2020 and the years ended December 31, 2019, 2018 and 2017: Unaudited Three Months Ended Years ended Decemb

  40. Slide 40: Financial Tables (Historical Data)

    Financial Tables Non-GAAP Reconciliation (3 of 3) The following table presents Adjusted EBITDA and reconciles (Loss) income from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for the first and second quarters of 2020 and the years ended December 31, 2019, 2018 and 2017: Unaudit

  41. Slide 41: © 2020 Laureate Education, Inc.

    © 2020 Laureate Education, Inc. 41

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