Laureate Education, Inc. · NASDAQ:LAUR
Laureate Education — Q1 2018 Earnings Presentation
29 slides from Laureate Education's earnings presentation, May 9, 2018
Slide 1: 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
Slide 2: Summary Overview
SUMMARY OVERVIEW Note: Throughout this presentation amounts may not sum to totals due to rounding
Slide 3: Summary Highlights
Summary Highlights 1Q Results ahead of Guidance Adj. EBITDA up 16% Vs. 1Q 2017 (1) New Enrollments up 5% overall Strong 12% Growth in Brazil Walden Turnaround on track with New Enrollments up 1% for intake cycle Great progress in simplifying portfolio. $1Bn of proceeds expected in 2018 Favorable dev
Slide 4: Summary Highlights
Summary Highlights v¥ 1Q Results ahead of Guidance ... Adj. EBITDA up 16% Vs. 1Q 2017 (") vy New Enrollments up 5% overall ... Strong 12% Growth in Brazil v Walden Turnaround on track with New Enrollments up 1% for intake cycle Y Great progress in simplifying portfolio. $1Bn of proceeds expected in
Slide 5: 2018 First Quarter – Financial Summary
Q1 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q1 ‘17 New Enrollment 245K 8% New Enrollment – Organic(1) 8% Brazil up 5%. Walden up 4% Total Enrollment 1,067K (2%) Total Enrollment – Organic(1) 2% Revenue $885 3% Revenue – Organic/CC(1) 3% Adj. EBITDA $47 (2%) Adj. EBIT
Slide 6: 2018 First Quarter - Enrollment Dynamics by Segment
2018 First Quarter - Enrollment Dynamics by Segment Solid Enrollment Growth - on Track with Expectations Q1 ’18 New Enrollment (NE) Q1 ’18 Total Enrollment (TE) Notes (Enrollments in thousands) Q1 ‘18 Organic Vs. Q1 ‘17 Q1 ‘18 Organic Vs. Q1 ‘17 Brazil 87 5% 292 3% Total NE up 12% as per April YTD M
Slide 7: April YTD 2018 Enrollment Intake
April YTD 2018 Enrollment Intake (1) Total Enrollment Growth on Track with 2018 Guidance Apr YTD ‘18 New Enrollments (NE) Apr YTD ‘18 Total Enrollments (TE) Notes (Enrollments in thousands) Apr YTD ‘18 Organic (2) Vs. Apr YTD ’17 Apr YTD ’18 Organic (2) Vs. Apr YTD ’17 Brazil 96 12% 296 5% +80% Dist
Slide 8: 2018 First Quarter – Revenue by Segment
2018 First Quarter – Revenue by Segment Revenue (millions) Q1 2017 856 Q1 2018 885 Online & Partnerships Campus Segments & Corporate G&A Campus Based Operations Delivering Strong Results in 1Q +6% (5%) 177 168 679 717
Slide 9: Revenue and Adj. EBITDA by Segment
Revenue Adj. EBITDA Notes ($ millions) Q1 ‘18 Organic/CC Vs. Q1 ’17 (1) Q1 ‘18 Organic/CC Vs. Q1 ’17 (1) Brazil 123 10% (26) 31% Operating Model benefits & Academic Calendar shift Vs. 2017 Mexico 156 (4%) 30 (24%) Marketing Investments & prior year NE softness due to Earthquake Andean & Iberian 216
Slide 10: 2018 First Quarter – Net Income Reconciliation
2018 First Quarter – Net Income Reconciliation 1Q Earnings includes ~$300M Gain related to Asset Sales Q1 ’18 B / (W) Vs. Q1 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 47 (1) (2%) $10M reduction due to Asset Sales Depreciation & Amort. (68) (3) (5%) Interest Expense, net (63) 35 35% 25%
Slide 11: 2018 First Quarter Free Cash Flow
2018 First Quarter Free Cash Flow Q1 FCF up $22M Y-o-Y driven by interest savings B / (W) Vs. ($ millions) Q1 ’18 Q1 ’17 Notes Adj. EBITDA 47 (1) Working Capital/Other 36 (51) $30M due to timing of FIES receipts Cash Taxes (32) (11) Capital Expenditures (1) (46) (7) EiP Initiatives (13) 14 Unlevered
Slide 12: 2018 First Quarter Free Cash Flow
2018 First Quarter Free Cash Flow B/(W)V: a118 Q117 Notes Adj. EBITDA 47 (1) A Working Capital/Other 36 (51) + $30M due to timing of FIES receipts Cash Taxes (32) (11) Capital Expenditures () (46) (7) EiP Initiatives (43) 14 Unlevered Free Cash Flow (a) (55) Cash Interest (47) 78 + Debt level & timi
Slide 13: New Higher Education Law in Chile - latest developments
New Higher Education Law in Chile- latest developments January 24, 2018: Senate approves Higher Education Reform (“New Law”); Article 63 of “New Law” prohibits for-profit organizations from controlling universities in Chile March 27, 2018: Chilean Constitutional Court declares Article 63 unconstitut
Slide 14: New Higher Education Law in Chile - latest developments
New Higher Education Law in Chile- latest developments January 24, 2018: Senate approves Higher Education Reform (“New Law’); Article 63 of “New Law’ prohibits for-profit organizations from controlling universities in Chile March 27, 2018: Chilean Constitutional Court declares Article 63 unconstitut
Slide 15: Continued Progress of Deleveraging Initiatives
Continued Progress of Deleveraging Initiatives 2017 as reported excluding $19M in one-time EBITDA gains Guidance provided during year-end 2017 earnings call assuming deconsolidation of certain Chilean operations Revised guidance including consolidated Chilean operations Improved Debt Leverage Guidan
Slide 16: Continued Progress of Deleveraging Initiatives
Continued Progress of Deleveraging Initiatives Net Leverage 3.7% a Further deleveraging 2.7% ———* potential from St. Augustine B divestiture 2017" 2018 Original 2018 Revised Guidance Guidance Improved Debt Leverage Guidance for 4Q ‘18 to 2.7x your and SOY earns ca seaming Gacnscton cra Clean opraons
Slide 17: FY 2018 Guidance
FY 2018 Guidance (USD millions, except enrollments in thousands) Total Enrollment Revenues Adj. EBITDA 2017 Results 1,068 $4,378 $832 2017 Normalized Adjustments (1) ($13) Completed Divestitures (by Q2 2018) (2) (60) ($255) ($57) Pending Divestitures (3) (4) ($113) ($28) 2017 Proforma 1,004 $4,010 $
Slide 18: Q2 2018 Guidance
Q2 2018 Guidance (USD millions) Revenues Adj. EBITDA 2Q 2017 Reported Results $1,277 $342 Closed Divestitures (1) ($70) ($24) Debt Refinancing $23 2Q 2017 Reported Results Pro Forma $1,207 $341 Organic Growth $11 - $51 ($8) - $12 Growth % 1% - 4% (3%) – 3% 2Q 2018 Guidance (CC) $1,218 - $1,258 $333
Slide 19: Q2 2018 Guidance
Q2 2018 Guidance 2Q 2017 Reported Results $1,277 $342 Closed Divestitures (S70) ($24) Debt Refinancing $23 |2Q 2017 Reported Results Pro Forma $1,207 $341 Organic Growth $11 - $51 ($8) - $12 Growth % 1% -4% (3%) - 3% 2Q 2018 Guidance (CC) $1,218 - $1,258 $333 - $353 Add Back Closed Divestitures (1 $
Slide 20: 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 & Iberian) Q3 represents the large intake for our Northern Hemisphere
Slide 21: Intra-Year Seasonality Trends
Intra-Year Seasonality Trends 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 New Enrollments Seasonality Factors Affecting Seasonality
Slide 22: Intra-Year Seasonality Trends
Intra-Year Seasonality Trends + 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) n aan 20% 20% 20% 28 a 20% 21% 2% a9y, 22% 29% 205,225 a ry as as 2014 ©2015 #2016 #2017 2014 = 201
Slide 23: Financial Tables: Consolidated Statements of Operations
Financial Tables Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding Consolidated Statements of Operations For the three months ended March 31, For the three months ended March 31, IN MILLIONS 2018(1) 2018(1) 2017 2017 Change Change Revenues $ 885.3 $ 855.9
Slide 24: Financial Tables: Revenue and Adjusted EBITDA by Segment
Financial Tables Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components $ Variance Components For the three months ended March 31, 2018 2018 2017 2017 Reported Organic Constant Cu
Slide 25: Financial Tables: Consolidated Balance Sheets
Financial Tables Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding Consolidated Balance Sheets IN MILLIONS March 31, 2018 March 31, 2018 December 31, 2017 December 31, 2017 Change Change Assets Cash and cash equivalents $ 479.0 $ 468.7 $ 10.3 Receivables (
Slide 26: Financial Tables: Consolidated Statements of Cash Flows
Financial Tables Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding Consolidated Statements of Cash Flows For the three months ended March 31, For the three months ended March 31, IN MILLIONS 2018 2018 2017 2017 Change Change Cash flows from operating activ
Slide 27: Financial Tables: Non-GAAP Reconciliation
Financial Tables Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding Non-GAAP Reconciliation For the three months ended March 31, For the three months ended March 31, IN MILLIONS 2018 2018 2017 2017 Change Change Net income (loss) $ 171.5 $ (120.4 ) $ 291.9
Slide 28: Laureate Education Inc - Here for Good
[LOGO] LAUREATE EDUCATION INC HERE FOR GOOD
Slide 29: Laureate Education Inc
sf LAUREATE EDUCATION INC