Laureate Education, Inc. · NASDAQ:LAUR

Laureate Education — Q3 2018 Earnings Presentation

30 slides from Laureate Education's earnings presentation, Nov 8, 2018

  1. Slide 1: Third Quarter 2018 Earnings Presentation

    Third Quarter 2018 Earnings Presentation November 8, 2018 © 2018 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 meaning

  3. Slide 3: Summary Overview

    SUMMARY OVERVIEW Note: Throughout this presentation amounts may not sum to totals due to rounding © 2018 Laureate Education, Inc. 3

  4. Slide 4: Summary Highlights

    Summary Highlights  3Q Adjusted EBITDA ahead of Guidance  New Enrollments up 4% Q3 YTD  Continued margin improvements; up 175bps through Q3 YTD  On-Track with Wave II divestitures  Largest improvement in recent ENADE scores in Brazil  Strong rankings in Peru and Spain  Strategic options under

  5. Slide 5: Q3 & YTD 2018 Performance Results

    Q3 & YTD 2018 PERFORMANCE RESULTS (CONTINUING OPERATIONS) © 2018 Laureate Education, Inc. 5

  6. Slide 6: Third Quarter – Financial Summary

    2018 Third Quarter – Financial Summary (Continuing Operations) Q3 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q3 ‘17 New Enrollment 155K 4% New Enrollment – Organic(1) 4% • Driven by Brazil Total Enrollment 879K - • Peru and Australia growth offset by Total Enrollment –

  7. Slide 7: Q3 YTD – Financial Summary

    2018 Q3 YTD – Financial Summary (Continuing Operations) Q3 YTD ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q3 YTD ‘17 New Enrollment 422K 4% New Enrollment – Organic(1) 4% • Driven by Brazil Total Enrollment 879K - • Peru and Australia growth offset by Total Enrollment

  8. Slide 8: Third Quarter – Enrollment Dynamics by Segment

    2018 Third Quarter – Enrollment Dynamics by Segment (Continuing Operations) New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q3 ’18 Q3 ‘18 (Enrollments in thousands) Vs. Q3 ’17 Vs. Q3 ’17 Brazil 54 9% 273 (1%) • Strong growth in Distance Learning Mexico 64 1% 210 (1%) • UNITEC growth

  9. Slide 9: Q3 YTD – Enrollment Dynamics by Segment

    2018 Q3 YTD – Enrollment Dynamics by Segment (Continuing Operations) New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q3 YTD Q3 YTD Vs. Q3 Vs. Q3 ’18 ’18 (Enrollments in thousands) YTD ’17 YTD ’17 Brazil 157 9% 273 (1%) • Strong growth in Distance Learning • UNITEC growth offset by so

  10. Slide 10: Third Quarter – Revenue, EBITDA Dynamics by Segment

    2018 Third Quarter – Revenue, EBITDA Dynamics by Segment (Continuing Operations) Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) Q3 ‘18 Vs. Q3 ’17 (1) Q3 ‘18 Vs. Q3 ’17 (1) Brazil 121 (10%) 1 n.m. • Intra-quarter timing impact from 2017 Mexico 148 12% 24 n.m. earthquake • Adjusted for F

  11. Slide 11: Q3 YTD – Revenue, EBITDA Dynamics by Segment

    2018 Q3 YTD – Revenue, EBITDA Dynamics by Segment (Continuing Operations) Revenue Adj. EBITDA Notes Organic/CC Organic/CC Q3 YTD Vs. Q3 YTD Q3 YTD Vs. Q3 YTD ($ millions) ‘18 ’17 (1) ’18 ’17 (1) • Timing impacts; Q4 and FY margins Brazil 470 (3%) 53 (1%) to benefit from new operating model • Favorab

  12. Slide 12: Third Quarter – Net Income Reconciliation

    2018 Third Quarter – Net Income Reconciliation Q3 ’18 B / (W) Vs. Q3 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 121 21 21% Depreciation & Amort. (53) (2) (3%) Interest Expense, net (55) 11 16% Other (60) (23) n.m. • Driven by FX revaluation Income Tax 4 16 n.m. Income/(Loss) From (44) 23

  13. Slide 13: Q3 YTD – Net Income Reconciliation

    2018 Q3 YTD – Net Income Reconciliation Q3 YTD ’18 B / (W) Vs. Q3 YTD ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 394 43 12% Depreciation & Amort. (163) (11) (7%) • Reduction in debt levels and reduced cost Interest Expense, net (172) 75 30% of debt • $98M gain upon conversion of preferre

  14. Slide 14: Third Quarter – Free Cash Flow

    2018 Third Quarter – Free Cash Flow B / (W) Vs. ($ millions) Q3 ‘18 Q3 ’17 Notes Unlevered Operating Cash Flow • Timing impact from asset divestitures; 396 (55) ($24M) impact from FX (excl. Interest/Debt Refi) Capex (62) (10) Unlevered Free Cash Flow 334 (65) • 3Q 2017 included $39M of interest paid

  15. Slide 15: Q3 YTD – Free Cash Flow

    2018 Q3 YTD – Free Cash Flow B / (W) Vs. Q3 YTD Q3 YTD ($ millions) Notes ‘18 ’17 Unlevered Operating Cash Flow • Timing impact from asset divestitures; 524 (49) ($23M) impact from FX (excl. Interest/Debt Refi) Capex (164) (16) Unlevered Free Cash Flow 360 (65) • Lower debt balance and reduced cost

  16. Slide 16: Guidance

    2018 GUIDANCE © 2018 Laureate Education, Inc. 16

  17. Slide 17: FY 2018 Guidance

    FY 2018 Guidance (Continuing Operations) (USD millions, except enrollments in thousands) Total Enrollment Revenues Adj. EBITDA 2017 Results 865 $3,386 $615 2017 Normalized Adjustments (1) ($13) 2017 Proforma 865 $3,386 $603 Organic Growth Essentially $69 – $84 $42 – $47 Growth % Flat 2.0% - 2.5% 7.0

  18. Slide 18: Guidance Summary

    2018 Guidance Summary Guidance FY Q4 ($ in millions) (Enrollments in thousands) Level 2018 2018 Continuing Total Enrollments ~ 865K Operations Continuing Revenue $3,340 - $3,355 $903 - $918 Operations Continuing Adjusted EBITDA $615 - $620 $221 - $226 Operations Continuing 26% of EBIT Cash Taxes (ex

  19. Slide 19: Appendix

    APPENDIX © 2018 Laureate Education, Inc. 19

  20. Slide 20: Other Information

    Other Information © 2018 Laureate Education, Inc. 20

  21. Slide 21: Seasonality: Main Enrollment Intakes

    Seasonality: Main Enrollment Intakes • Q1 and Q3 are peak intake quarters, but seasonally weak earnings quarters as institutions are largely out of session during the summer season – Q1 represents the large intake for our Southern Hemisphere institutions (Brazil, Andean & Rest of World) – Q3 represe

  22. Slide 22: Intra-Year Seasonality Trends

    Intra-Year Seasonality Trends (Continuing Operations) • Large intake cycles at end of Q1 (Southern Hemisphere) and end of Q3 (Northern Hemisphere) drive seasonality of earnings (Q2 and Q4 are our strongest earnings quarters) Revenue Seasonality Adj. EBITDA Seasonality 30% 30% 30% 30% 28% 28% 49% 26%

  23. Slide 23: Financial Tables

    Financial Tables © 2018 Laureate Education, Inc. 23

  24. Slide 24: Financial Tables – Statements of Operations

    Financial Tables Consolidated Statements of Operations For the three months ended For the nine months ended September 30, September 30, IN MILLIONS 2018 2017 Change 2018 2017 Change Revenues $ 787.1 $ 818.6 $ (31.5) $ 2,436.5 $ 2,434.7 $ 1.8 Costs and expenses: Direct costs 677.8 728.7 (50.9) 2,081.

  25. Slide 25: Financial Tables – Revenue and Adjusted EBITDA by Segment

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the three months ended Constant Constant September 30, 2018 2017 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Brazil $ 121.1 $ 170.5 (29)% (10)% $ (49.4) $ (16.3)

  26. Slide 26: Financial Tables – Revenue and Adjusted EBITDA by Segment

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the nine months ended Constant Constant September 30, 2018 2017 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 469.5 $ 548.0 (14)% (3)% $ (78.5) $ (14.3) $

  27. Slide 27: Financial Tables – Consolidated Balance Sheets

    Financial Tables Consolidated Balance Sheets IN MILLIONS September 30, 2018 December 31, 2017 Change Assets Cash and cash equivalents $ 392.3 $ 320.6 $ 71.7 Receivables (current), net 424.6 311.1 113.5 Other current assets 290.8 332.4 (41.6) Current assets held for sale 346.7 324.7 22.0 Property and

  28. Slide 28: Financial Tables – Statements of Cash Flows

    Financial Tables Consolidated Statements of Cash Flows For the nine months ended September 30, IN MILLIONS 2018 2017 Change Cash flows from operating activities Net income (loss) $ 298.8 $ (106.7) $ 405.5 Depreciation and amortization 190.0 199.4 (9.4) Loss on impairment of assets 10.0 — 10.0 (Gain)

  29. Slide 29: Financial Tables – Non-GAAP Reconciliation

    Financial Tables Non-GAAP Reconciliation For the three months ended For the nine months ended September 30, September 30, IN MILLIONS 2018 2017 Change 2018 2017 Change Loss from continuing operations (43.8) (67.2) 23.4 (35.5) (150.8) 115.3 Plus: Income tax (benefit) expense (3.8) 12.5 (16.3) 65.8 13

  30. Slide 30: © 2018 Laureate Education, Inc.

    © 2018 Laureate Education, Inc. 30

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