Slide 1: Second Quarter 2018 Earnings Presentation
Second Quarter 2018 Earnings Presentation August 9, 2018 © 2018 Laureate Education, Inc. 1
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
Slide 3: Summary Overview
SUMMARY OVERVIEW Note: Throughout this presentation amounts may not sum to totals due to rounding © 2018 Laureate Education, Inc. 3
Slide 4: Summary Highlights
Summary Highlights New Enrollments up 4% Q2 YTD Continued margin improvements; up 86bps through Q2 YTD 2Q Adjusted EBITDA ahead of Guidance; up 6% Vs. 2Q 2017 (1) Strong 1H performance; reaffirming full year guidance Outstanding 3rd party rankings and recognitions in Spain, Chile and Peru
Slide 5: Portfolio Simplification
PORTFOLIO SIMPLIFICATION © 2018 Laureate Education, Inc. 5
Slide 6: 2017 Accelerator Plan has Been Successful
2017 Accelerator Plan has Been Successful Exit 7 Markets • Approx. $1bn in proceeds Simplify expected at 13x EV/EBITDA 1,2 Portfolio Net leverage expected to be 2.7x by year-end 2018 Streamline Innovate Operations Enhanced Student Deploy Common Operating Digital Experience Model Program Di
Slide 7: Accelerator Plan Wave Underway
Accelerator Plan Wave 2 Underway Further reducing complexity and focusing on LATAM Big 4 and Online/Hybrid opportunities Assets to be Divested Remaining Portfolio Europe Asia Central Focused Portfolio America at Scale 1 1 2 2 ~$700M ~$100M ~$3.4B ~$0.7B of of of of Revenue Adj. EBITDA Revenue Adj. E
Slide 8: Focused Portfolio at Scale
Focused Portfolio at Scale 2017 Accelerator Accelerator Plan At IPO Plan Wave 2 Number of LATAM Big 4 & 25 18 Online/Hybrid Countries Revenues $4.2B $4.1B 1 $3.4B 2 ($ billions) (2017A) (2018 PF) (2018 PF) LATAM Big 4 53% 53% 62% 76% 4 Scale 62% LATAM as % Revenue 76% Markets Brazil Chile Mexico Net
Slide 9: Q2 & 1H 2018 Performance Results
Q2 & 1H 2018 PERFORMANCE RESULTS © 2018 Laureate Education, Inc. 9
Slide 10: 2018 Second Quarter – Financial Summary
2018 Second Quarter – Financial Summary Q2 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q2 ‘17 • Light enrollment period (not a major New Enrollment 62K (10%) intake) • +9% Adjusted for intake timing due to New Enrollment – Organic(1) (9%) Peru floods in 2017 Total Enrol
Slide 11: 2018 H1 – Financial Summary
2018 H1 – Financial Summary H1 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. H1 ‘17 New Enrollment 308K 4% New Enrollment – Organic(1) 4% • Brazil up 9% with strong growth in DL Total Enrollment 1,041K (3%) Total Enrollment – Organic(1) 1% Revenue $2,133 0% Revenue – Orga
Slide 12: 2018 Second Quarter – Enrollment Dynamics by Segment
2018 Second Quarter – Enrollment Dynamics by Segment Q2 ’18 Q2 ’18 New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q2 ’18 Q2 ‘18 (Enrollments in thousands) Vs. Q2 ’17 Vs. Q2 ’17 Brazil 16 45% 294 4% • Strong growth in DL Mexico 15 6% 188 (2%) • NE impacted by timing of intake in Peru
Slide 13: 2018 H1 – Enrollment Dynamics by Segment
2018 H1 – Enrollment Dynamics by Segment H1 ’18 H1 ’18 New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic H1 ’18 H1 ’18 (Enrollments in thousands) Vs. H1 ’17 Vs. H1 ’17 Brazil 103 9% 294 4% • +90% Distance Learning NE Growth Mexico 44 2% 188 (2%) • UNITEC growth offset by UVM Andean & I
Slide 14: 2018 Second Quarter – Revenue, EBITDA Dynamics by Segment
2018 Second Quarter – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) Q2 ‘18 Vs. Q2 ’17 (1) Q2 ‘18 Vs. Q2 ’17 (1) • Impacted by Academic Calendar shift; Brazil 226 (4%) 78 (7%) 1H: Revenue +1% / Adj. EBITDA +11% Mexico 160 3% 28 (17%) • Accelerated ma
Slide 15: 2018 H1 – Revenue, EBITDA Dynamics by Segment
2018 H1– Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) H1 ‘18 Vs. H1 ’17 (1) H1 ‘18 Vs. H1 ’17 (1) Brazil 348 1% 52 11% • Margin lift due to new operating model • Increased & front-loading of marketing Mexico 316 0% 58 (20%) investments Andean & Ibe
Slide 16: 2018 Second Quarter – Net Income Reconciliation
2018 Second Quarter – Net Income Reconciliation Q2 ’18 B / (W) Vs. Q2 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 361 19 6% • $19M reduction in Q2 due to asset sales Depreciation & Amort. (62) 5 7% • 25% reduction in debt levels Vs. 2Q ’17 and Interest Expense, net (61) 34 36% reduced cos
Slide 17: 2018 H1 – Net Income Reconciliation
2018 H1 – Net Income Reconciliation H1 ’18 B / (W) Vs. H1 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 409 18 5% • $29M reduction in H1 due to asset sales Depreciation & Amort. (130) 1 1% • 25% reduction in debt levels and reduced cost Interest Expense, net (124) 69 36% of debt Net Gain on
Slide 18: 2018 Second Quarter – Free Cash Flow
2018 Second Quarter – Free Cash Flow B / (W) Vs. ($ millions) Q2 ‘18 Q2 ’17 Notes Adj. EBITDA (excl. Debt Refi) 361 (3) • $19M reduction in Q2 due to asset sales • Timing impact from payments and asset Δ Working Capital/Other (203) 70 divestitures Cash Taxes (44) (4) Capital Expenditures (1) (52) (3
Slide 19: 2018 H1 – Free Cash Flow
2018 H1 – Free Cash Flow B / (W) Vs. ($ millions) H1 ‘18 H1 ’17 Notes • $29M reduction in 1H due to asset Adj. EBITDA (excl. Debt Refi) 409 (4) sales • Timing impact from payments and Δ Working Capital/Other (163) 25 asset divestitures Cash Taxes (83) (21) Capital Expenditures (1) (97) (10) EiP Init
Slide 20: FX Update
FX UPDATE © 2018 Laureate Education, Inc. 20
Slide 21: Impact of Currency Movements on Translated Results
Impact of Currency Movements on Translated Results The company is well hedged from a transactional standpoint as revenue and expense are matched in our local markets – main exposure is currency translation ----- Impact From +1% Appreciation of USD ----- Revenue Adj. EBITDA Free Cash Flow ($35M) ($7M
Slide 22: 2018 Guidance
2018 GUIDANCE © 2018 Laureate Education, Inc. 22
Slide 23: 2018 Guidance
2018 Guidance FY (1) Q3 (1) ($ in millions) (Enrollments in thousands) 2018 2018 Total Enrollments 1,025K – 1,030K Revenue $4,260 - $4,300 $920 - $940 Adjusted EBITDA $810 - $820 $95 - $105 Net Leverage 2.7x Capex as % Revenue ~ 7% Cash Taxes 22% of EBIT (excluding gain on asset sales) Cash Interest
Slide 24: Appendix
APPENDIX © 2018 Laureate Education, Inc. 24
Slide 25: 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) (44) ($186) ($43) Pending Divestitures (3) (21) ($182) ($42) 2017 Proforma 1,004 $4,010
Slide 26: Q3 2018 Guidance
Q3 2018 Guidance (USD millions) Revenues Adj. EBITDA 3Q 2017 Reported Results $983 $87 Closed Divestitures (1) ($43) $12 Debt Refinancing 3Q 2017 Reported Results Pro Forma $941 $99 Organic Growth $17 - $37 $2 - $12 Growth % 2% - 4% 2% – 12% 3Q 2018 Guidance (CC) $958 - $978 $101 - $111 Add Back Clo
Slide 27: Other Information
Other Information © 2018 Laureate Education, Inc. 27
Slide 28: 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 & Iberian) – Q3 represents th
Slide 29: 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 46% 30% 29% 29% 30% 42% 42% 43% 28% 29% 40% 41% 27% 28%
Slide 30: Financial Tables
Financial Tables © 2018 Laureate Education, Inc. 30
Slide 31: Financial Tables
Financial Tables Consolidated Statements of Operations For the three months ended June 30, For the six months ended June 30, IN MILLIONS 2018(1) 2017 Change 2018(1) 2017 Change Revenues $ 1,247.9 $ 1,277.4 $ (29.5) $ 2,133.2 $ 2,133.4 $ (0.2) Costs and expenses: Direct costs 908.9 942.2 (33.3) 1,774
Slide 32: 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 June 30, 2018 2017 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 225.6 $ 260.6 (13)% (4)% $ (35.0) $ (9.3) $ — $ —
Slide 33: 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 six months ended Constant Constant June 30, 2018 2017 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 348.4 $ 377.5 (8)% 1% $ (29.1) $ 2.1 $ — $ — $ (31.
Slide 34: Financial Tables: Consolidated Balance Sheets
Financial Tables Consolidated Balance Sheets IN MILLIONS June 30, 2018 December 31, 2017 Change Assets Cash and cash equivalents $ 402.4 $ 468.7 $ (66.3) Receivables (current), net 449.9 357.9 92.0 Other current assets 383.4 359.7 23.7 Current assets held for sale 36.0 102.6 (66.6) Property and equi
Slide 35: Financial Tables: Consolidated Statements of Cash Flows
Financial Tables Consolidated Statements of Cash Flows For the six months ended June 30, IN MILLIONS 2018 2017 Change Cash flows from operating activities Net income (loss) $ 395.5 $ (3.3) $ 398.8 Depreciation and amortization 130.2 131.5 (1.3) (Gain) loss on sales of subsidiaries and disposal of pr
Slide 36: Financial Tables: Non-GAAP Reconciliation
Financial Tables Non-GAAP Reconciliation For the three months ended June 30, For the six months ended June 30, IN MILLIONS 2018 2017 Change 2018 2017 Change Net income (loss) $ 224.0 $ 117.1 $ 106.9 $ 395.5 $ (3.3) $ 398.8 Plus: Income tax expense 88.9 42.0 46.9 91.4 14.9 76.5 Income from continuing
Slide 37: © 2018 Laureate Education, Inc.
© 2018 Laureate Education, Inc. 37