Slide 1: Fourth Quarter & FY 2017 Earnings Presentation
Fourth Quarter & FY 2017 Earnings Presentation March 20, 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, "forw ard-looking statements" w ithin the meani
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 Record Revenue and Earnings Growth and Margin expansion across Campus-based Segments 10%+ Adjusted EBITDA organic constant currency growth for 3rd year in a row Significant Portfolio Simplification through $650M of asset divestitures 30% Reduction in Net Debt Leverage to
Slide 5: Laureate Continues to Deliver Strong Performance
Laureate Continues to Deliver Strong Performance Total Enrollments Revenue (millions) 1,068K $4,378 1,043K 1,009K $4,102 $4,030 2015 2016 2017 2015 2016 2017 Adjusted EBITDA (millions) Adjusted EBITDA Margin $832 19.0% 18.0% $739 $674 16.7% 2015 2016 2017 2015 2016 2017 Note: 2015 and 2016 show n pr
Slide 6: Campus Based Operations Delivering Strong Results
Campus Based Operations Delivering Strong Results Revenue (millions) Adjusted EBITDA (millions) Campus Segments & Corporate G&A 4,378 Online & Partnerships 832 4,102 739 +9% +18% 627 3,688 531 3,397 (2%) (2%) 208 205 705 690 2016 2017 2016 2017 EiP investments & scale benefits driving Margin Expansi
Slide 7: 2017 Full Year Summary
2017 Full Year Summary Online & Online & Brazil Partnerships Brazil 17% Partnerships 13% 16% 20% Mexico EMEAA 15% 16% $4.4B Mexico EMEAA $832M 15% Revenue 12% Adj EBITDA Centam & Centam & US Cam. US Cam. 6% Andean & 5% Andean & Iberian Iberian 30% 35% % shown are calculated excluding corporate G&A I
Slide 8: Q4 and Full Year Performance Results
Q4 AND FULL YEAR PERFORMANCE RESULTS © 2018 Laureate Education, Inc. 8
Slide 9: 2017 Fourth Quarter Financial Summary
2017 Fourth Quarter – Financial Summary Q4 ’17 Variance Highlights ($ in millions) (Enrollments in thousands) Reported Vs. Q4 ‘16 New Enrollments 33K n.m. • Only 6% of full-year intake occurs in Q4 Total Enrollment 1,068K 2% • Led by Brazil and Andean & Iberian segments Revenue $1,261 7% • 2.6 pts b
Slide 10: Enrollment Dynamics by Segment
Enrollment Dynamics by Segment FY ‘17 New Total Enrollments Enrollments (NE) (TE) at 12/31/XX Highlights Organic Organic FY ‘17 FY ‘17 (Enrollments in thousands) Vs. FY ‘16 Vs. FY ‘16 Brazil 150 11% 271 5% • NE DL(1) up 54%, face-to-face up 6% Mexico 107 (1%) 214 0% • 4-5k lower NE from Q3 Earthquak
Slide 11: 2017 Fourth Quarter Revenue, EBITDA Dynamics by Segment
2017 Fourth Quarter – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Highlights Ti Vs. Q4 ’16 Vs. Q4 ’16 Organic/CC Timing Organic/CC Timing ($ millions) 4Q ‘17 Vs. Q4 ’16 (1) Adj (2) 4Q ‘17 Vs. Q4 ’16 (1) Adj (2) • Margin gains from new Brazil 218 2% 73 68% operating model roll-out and tim
Slide 12: 2017 Fourth Quarter Net Income Reconciliation
2017 Fourth Quarter – Net Income Reconciliation Q4 ’17 Variance Vs. Q4 ’16 Highlights ($ in millions) Reported $ % Adjusted EBITDA 355 70 25% Depreciation & Amort. (65) (3) (5%) Interest Expense, net (80) 22 22% • Lower debt levels and cost of debt Income Tax 96 125 n.m. • U.S. Tax Law reform benefi
Slide 13: 2017 Full Year Financial Summary
2017 Full Year – Financial Summary FY ’17 Variance Highlights ($ in millions) (Enrollments in thousands) Reported Vs. FY ‘16 New Enrollments 515K 1% • Up 2% organic for the year; Brazil up 11% Total Enrollment 1,068K 2% • Led by Brazil and Andean & Iberian segments Revenue $4,378 3% • Reported resul
Slide 14: 2017 Full Year Revenue, EBITDA Dynamics by Segment
2017 Full Year – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Highlights Organic/CC Organic/CC ($ millions) FY ‘17 Vs. FY ’16 (1) FY ‘17 Vs. FY ’16 (1) • Margin improvement from Brazil 766 3% 134 17% operating model implementation Mexico 646 5% 147 4% Andean & 1,314 7% 360 18% • Double di
Slide 15: 2017 Full Year Net Income Reconciliation
2017 Full Year – Net Income Reconciliation FY ’17 Variance Vs. FY ’16 Highlights ($ in millions) Reported $ % Adjusted EBITDA 832 66 9% Depreciation & Amort. (265) 0 0% Interest Expense, net (343) 60 15% • Lower debt levels and cost of debt Gain (loss) on Sale of • $407M gain on sale of France and S
Slide 16: Capital Structure
CAPITAL STRUCTURE © 2018 Laureate Education, Inc. 16
Slide 17: Improved Capital Structure Drives Increased Free Cash Flow
Improved Capital Structure Drives Increased Free Cash Flow Net Leverage Cash Interest ($ millions) 32% 4.8x $367 $368 3.7x 3.1x $250 (1) (3) 2016 2017 (2) 2017PF 2016 2017 (4) 2017 Run-Rate 2017 Deleveraging expect to drive at least 30% reduction in cash interest expense in 2018 (1) 2016 Adj. EBITDA
Slide 18: 2017 Free Cash Flow
2017 Free Cash Flow B / (W) Vs. ($ millions) FY ’17 FY ’16 Highlights Adj. EBITDA (excl. $23M Debt Refi) 855 89 Δ Working Capital/Other 22 50 Cash Taxes (130) (1) Capital Expenditures (1) (283) (50) • 6.5% of Revenue – up 100bps YoY • Approx. $50M due to severance for EiP Initiatives (115) (36) EiP
Slide 19: 2018 Outlook
2018 OUTLOOK © 2018 Laureate Education, Inc. 19
Slide 20: 2018 Guidance
2018 Guidance FY Q1 ($ in millions) (Enrollments in thousands) 2018 PF (1) 2018 Total Enrollments 955K – 959K Revenue $3,885 - $3,920 $865 - $880 Adjusted EBITDA $763 - $770 $30 - $40 Net Leverage 3.1x Capex as % Revenue ~ 7% Cash Taxes 22% of EBIT Cash Interest ~ $250 Free Cash Flow (2) ~ $100 (1)
Slide 21: Appendix
APPENDIX © 2018 Laureate Education, Inc. 21
Slide 22: Revenue & Adjusted EBITDA Bridges
Revenue & Adjusted EBITDA Bridges – Total Company Q4 ’17 vs. Q4 ’16 Laureate Revenue Bridge FY ’17 vs. FY’16 Laureate Revenue Bridge ($ in USD millions) ($ in USD millions) $1,261.2 +3% $30.3 $61.6 $214.1 $55.0 $4,378.0 +5% +5% ($141.9 ) $1,175.9 $4,244.2 (1) (1) Q4 '16 Organic/CC FX Q4 '17 FY '16 O
Slide 23: FY 2018 Guidance
FY 2018 Guidance Total Adj. EBITDA (USD millions, except enrollments in thousands) Revenues Adj. EBITDA Net Leverage Enrollments Margin % 2017 Results 1,068 $4,378 $832 19.0% 3.7x 2017 Normalized Adjustments (1) ($13) Announced Divestitures (59) ($255) ($57) (0.6x) Chile Deconsolidation (estimated)
Slide 24: Q1 2018 Guidance
Q1 2018 Guidance (USD millions) Revenues Adj. EBITDA 1Q 2017 Reported Results $856 $49 Closed Divestitures (1) ($35) ($12) 1Q 2017 Reported Results Pro Forma $821 $37 Closed Divestitures (January stub) (1) $7 $3 Organic Growth $14 - $29 ($10) – $0 Growth % 2% - 3% n.m. 1Q 2018 Guidance (CC) $842 - $
Slide 25: Segment Results Overview
Segment Results Overview © 2018 Laureate Education, Inc. 25
Slide 26: Significant Timing Items Impacting Comparability
Significant Timing Items Impacting Quarter-over-Quarter Comparability Timing adjusted results presented on the following segment pages include the following impacts: • Mexico: Magnitude 7.1 earthquake struck on September 19th with its epicenter in Puebla, which heavily impacted Mexico City as well a
Slide 27: Segment Results Overview – Brazil
Segment Results Overview – Brazil Fourth quarter results reflect strong secondary intake (especially in distance learning – DL), and actions taken in the fourth quarter to implement the common operating model in Brazil New Total Rev . Adj . Enroll. Enroll. EBITDA – On an organic constant currency
Slide 28: Segment Results Overview – Mexico
Segment Results Overview – Mexico Fourth quarter results were impacted by the September 19th New Total Adj . Rev . earthquake, which resulted in an estimated loss of 4,000 – 5,000 Enroll. Enroll. EBITDA total enrollments for 2H 2017 Organic (1) Y-o-Y Q4 (42%) 0% +9% +23% – On an organic constant c
Slide 29: Segment Results Overview – Andean & Iberian
Segment Results Overview – Andean & Iberian Fourth quarter year-over-year comparability impacted by the New Total Adj . Rev . timing of 2016 Chile class disruption Enroll. Enroll. EBITDA Organic (1) – On an organic constant currency (1) basis, Q4 ’17 Revenue Y-o-Y Q4 +2% +4% +3% (+9%) increased $1
Slide 30: Segment Results Overview – Central America & U.S. Campuses
Segment Results Overview – Central America & U.S. Campuses (1) Fourth quarter results were impacted by softness in some of the Campus Based institutions in a seasonally low enrollment quarter for the segment New Total Adj . Rev . Enroll. Enroll. EBITDA – On an organic constant currency (2) basis,
Slide 31: Segment Results Overview – EMEAA
Segment Results Overview – EMEAA Q4 financial results remain strong and follow previous New Total Adj . quarter’s performance Enroll. Enroll. Rev . EBITDA Organic (1) – Q4 new enrollment intake decreased (34%) vs. prior year Q4 (34%) +2% +12% 22% Y-o-Y impacted by timing and the quota reduction of
Slide 32: Segment Results Overview – Online & Partnerships
Segment Results Overview – Online & Partnerships Online & Partnerships new enrollments were down 900 students or (11%) from same quarter prior year. Walden new New Total Rev . Adj . Enroll. Enroll. EBITDA enrollments were down 270 students or (4%) for the fourth quarter 2017 as compared to 4Q 2016
Slide 33: Other Information
Other Information © 2018 Laureate Education, Inc. 33
Slide 34: 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 35: 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% 27% 28% 29% 40% 41%
Slide 36: Financial Tables
Financial Tables © 2018 Laureate Education, Inc. 36
Slide 37: Consolidated Statements of Operations
Financial Tables Consolidated Statements of Operations For the three months ended For the year ended December 31, December 31, IN MILLIONS 2017 2016 Change 2017 (1) 2016 Change Revenues $ 1,261.2 $ 1,175.9 $ 85.3 $ 4,378.0 $ 4,244.2 $ 133.8 Costs and expenses: Direct costs 945.6 917.5 28.1 3,665.1 3
Slide 38: Revenue and Adjusted EBITDA by segment – Quarter
Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the quarter ended Constant Constant December 31, 2017 2016 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 217.8 $ 211.2 3% 2% $ 6.6 $ 3.6 $ — $ — $ 3.0 Mexi
Slide 39: Revenue and Adjusted EBITDA by segment – Year
Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the year ended Constant Constant December 31, 2017 2016 Reported Currency(3) Total Currency Other Acq/Div. FX Revenues Brazil $ 765.7 $ 690.8 11% 3% $ 74.9 $ 22.4 $ — $ — $ 52.5 Mex
Slide 40: Consolidated Balance Sheets
Financial Tables Consolidated Balance Sheets IN MILLIONS December 31, 2017 December 31, 2016 Change Assets Cash and cash equivalents $ 468.7 $ 465.0 $ 3.7 Receivables (current), net 357.9 334.8 23.1 Other current assets 359.7 316.0 43.7 Current assets held for sale 102.6 — 102.6 Property and equipme
Slide 41: Consolidated Statements of Cash Flows
Financial Tables Consolidated Statements of Cash Flows For the year ended December 31, IN MILLIONS 2017 2016 Change Cash flows from operating activities Net income $ 93.8 $ 366.2 $ (272.4) Depreciation and amortization 264.7 264.9 (0.2) Loss on impairment of assets 40.6 23.5 17.1 Gain on sale of sub
Slide 42: Non-GAAP Reconciliation
Financial Tables Non-GAAP Reconciliation For the three months ended For the year ended December 31, December 31, IN MILLIONS 2017 2016 Change 2017 2016 Change Net income $ 200.5 $ 38.5 $ 162.0 $ 93.8 $ 366.2 $ (272.4) Plus: Equity in net income of affiliates, net of tax (0.2) (0.1) (0.1) (0.2) (0.1)
Slide 43: © 2018 Laureate Education, Inc.
© 2018 Laureate Education, Inc. 43