Laureate Education, Inc. · NASDAQ:LAUR

Laureate Education — Q4 2020 Earnings Presentation

43 slides from Laureate Education's earnings presentation, Feb 25, 2021

  1. Slide 1: Fourth Quarter & Year-End 2020 Earnings Presentation

    Fourth Quarter & Year-End 2020 Earnings Presentation February 25, 2021 © 2021 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, total debt, net of cash (or net debt),

  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 © 2021 Laureate Education, Inc. 4

  5. Slide 5: Executive Summary

    Executive Summary  Fourth quarter Revenue & Adjusted EBITDA ahead of guidance  Net Income of $379M in Q4 driven by gain on sale of Australia/NZ business units  Strong Free Cash Flow performance in FY 2020; up 2% Vs. prior year despite COVID pandemic  Highly reputed institutions – continued recog

  6. Slide 6: Laureate Portfolio Overview

    Laureate Portfolio Overview Operations -- Remaining Operations -- Pending Asset Sales (as of December 31, 2020) Mexico Walden  2 Universities  35+ campuses Brazil  190K+ students Honduras Peru  2 Universities / 1 Tech-Voc  15+ campuses  140K+ students ~$1 billion ~$300 million Revenue1 Adjuste

  7. Slide 7: Mexico & Peru Higher Education Market Overview

    Mexico & Peru Higher Education Market Overview Mexico Peru Combined Population (M) 127M 33M 160M Higher Education Students 4,562 1,896 6,458 (000s) Higher Education 30% 47% 34% Participation Rate1 Market Share for 44% 72% 56% Private Institution2 Sources: UNESCO, World Bank, SEP database (1) Defined

  8. Slide 8: Leading University Portfolio in Mexico & Peru

    Leading University Portfolio in Mexico & Peru QS Stars™ Overall Enrollments Market University Institution @ 12/31/20 Segment Rating Ratings/Ranking • Ranked #7 university in Mexico Universidad del Valle Premium/ • One of only three 4-Star rated Mexico 95,000 universities in Mexico by QS de México (U

  9. Slide 9: Q4 & FY 2020 Performance Results

    Q4 & FY 2020 PERFORMANCE RESULTS CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS) © 2021 Laureate Education, Inc. 9

  10. Slide 10: 2020 Fourth Quarter – Financial Summary

    2020 Fourth Quarter – Financial Summary Q4 ’20 Variance Vs. Q4 ‘19 Notes ($ in millions) (Enrollments in thousands) Results As Reported Organic/CC1 New Enrollment 4K nm nm • Not a material intake cycle • Driven by lower NE volumes and Total Enrollment 337K (8%) (8%) increased attrition from COVID Re

  11. Slide 11: 2020 FY – Financial Summary

    2020 FY – Financial Summary FY ’20 Variance Vs. FY‘19 Notes ($ in millions) (Enrollments in thousands) Results As Reported Organic/CC1 • Mexico (-5% vs PY) New Enrollment 169K (6%) (6%) • Peru (-9% vs. PY) • Driven by lower NE volumes and Total Enrollment 337K (8%) (8%) increased attrition from COVI

  12. Slide 12: Segment Results

    SEGMENT RESULTS CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS) © 2021 Laureate Education, Inc. 12

  13. Slide 13: Mexico Segment Results

    Mexico Segment Results Q4 Results FY ‘20 Results Notes ($ in millions) Organic/CC Organic/CC (Enrollments in thousands) Q4 ’20 FY ’20 Vs. Q4 ’19 (1) Vs. FY ’19 (1) • Solid intakes despite New Enrollment 4K nm 107K (5%) COVID impacts Total Enrollment 194K (5%) 194K (5%) • Driven by lower NE volumes •

  14. Slide 14: Peru Segment Results

    Peru Segment Results Q4 Results FY ‘20 Results Notes ($ in millions) Organic/CC Organic/CC (Enrollments in thousands) Q4 ’20 FY ’20 Vs. Q4 ’19 (1) Vs. FY ’19 (1) New Enrollment 1K nm 62K (9%) • Impacted by COVID • Driven by lower NE volumes Total Enrollment 143K (12%) 143K (12%) and increased attrit

  15. Slide 15: Corporate G&A Expense

    Corporate G&A Expense ($USD in millions) Last Twelve Months Corporate Segment G&A Expenses Further reductions of approx. 70-80% expected (run-rate) following completion of pending asset sales.1 $142 $133 $121 $104 $97 FY 2019 LTM Q1 ’20 LTM Q2 ’20 LTM Q3 ’20 FY 2020 Significant Reductions in Corpora

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

    FY 2020 Debt Capitalization – Adjusted for Pending Asset Sales ($ in millions) Amount Comments (Net Debt) / Cash @ 12/31/20 ($202) See Appendix Net Proceeds – Pending Asset Sales1 $1,950 Including assumed debt Post receipt of anticipated net Adjusted Net Cash Position @ 12/31/20 $1,748 cash proceeds

  17. Slide 17: Outlook

    OUTLOOK © 2021 Laureate Education, Inc. 17

  18. Slide 18: Guidance Outlook

    Guidance Outlook  Mexico and Peru remain attractive market opportunities long term  2021 will be a transition year for Laureate ‒ Enrollment expected to be impacted by the COVID pandemic for most of 2021 ‒ Down-sizing of Corporate G&A by 70-80% to happen throughout the year – mostly in H2  2021 d

  19. Slide 19: 2021 Full Year Guidance Details

    2021 Full Year Guidance Details (USD millions, except enrollments in thousands) Total Enrollment Revenues Adj. EBITDA 2020 Results 337K $1,025 $206 Organic Growth 0K ($25) – $15 ($17) – ($7) Growth % 0% (2%) - 2% (8%) – (3%) FAS 5 Expense/Indemnification Asset (non-cash) - - ($9) 2021 Guidance (Cons

  20. Slide 20: Laureate Summary Outlook – 2020 to 2022E

    Laureate Summary Outlook – 2020 to 2022E (As Reported)1 Total Enrollment (000s) Revenue ($M) +4% +6% 337 337 350 $1,080 $1,025 $1,020 2020 2021E 2022E 2020 2021E 2022E Adjusted EBITDA ($M) Adjusted EBITDA Margin % +51% $280 25.9 $206 20.1 $185 18.1 780 bps 2020 2021E 2022E 2020 2021E 2022E Strong Re

  21. Slide 21: 2021 to 2022 Adjusted EBITDA Bridge (Guidance)

    2021 to 2022 Adjusted EBITDA Bridge (Guidance)1 ($USD in millions) +51% $280 $32 $13 $50 $185 2021 Guidance (2) G&A Reduction FAS 5 / Operational 2022 Guidance Indemnification Asset Improvement Strong Rebound Expected for 2022 (1) Based on actual FX rates for January 2021, and current spot FX rates

  22. Slide 22: Portfolio Outlook for 2022 & Beyond

    Portfolio Outlook for 2022 & Beyond (Normalized Continuing Operations1 ) COVID IMPACTED PERIOD 2016 – 2019 2019 – 2021E 2022+ CAGR CAGR 2 Expected CAGR 3 Total Enrollment 3% (4%) 4% - 6% Revenue 6% (8%) 5% - 7% Adjusted EBITDA 9% (13%) 9% - 11% Adjusted EBITDA +85bps/yr (155)bps/yr +100bps/yr Margin

  23. Slide 23: Q1 2021 Guidance Details

    Q1 2021 Guidance Details (USD millions) Revenues Adj. EBITDA 2020 Q1 Results $192 ($29) Organic Growth ($7) – $3 $11 – $15 Growth % (4%) - 2% 37% - 52% FAS 5 Expense/Indemnification Asset (non-cash) - ($8) 2021 Q1 Guidance (Constant Currency) $185 – $195 ($26) – ($22) FX Impact (spot FX) (1) - - 202

  24. Slide 24: Appendix

    APPENDIX © 2021 Laureate Education, Inc. 24

  25. Slide 25: 2020 Fourth Quarter – Net Income Reconciliation

    2020 Fourth Quarter – Net Income Reconciliation Q4 ’20 B / (W) Vs. Q4 ’19 Notes ($ in millions) Reported $ % Adjusted EBITDA 91 (9) (9%) • ($9M) impact from FX • Flat excluding amortization of tradename Depreciation & Amort. (27) (7) (33%) (moved to finite life asset in Q4) Interest Expense, net (25

  26. Slide 26: 2020 FY – Net Income Reconciliation

    2020 FY – Net Income Reconciliation FY ’20 B / (W) Vs. FY ’19 Notes ($ in millions) Reported $ % Adjusted EBITDA 206 2 1% • ($25M) impact from FX Depreciation & Amort. (83) (1) (1%) Interest Expense, net (99) 23 19% • Lower average debt balances in 2020 Impairments (352) (352) n.m. • Primarily Laure

  27. Slide 27: FY 2020 Debt Capitalization

    FY 2020 Debt Capitalization ($ in millions) Continuing Discontinued Total Operations Operations Company Revolver $- $- $- Sr. Notes $799 - $799 Local Debt / Seller Notes $250 $173 $423 Gross Debt $1,049 $173 $1,222 Cash ($750) ($270) ($1,020) Net Debt / (Cash) $299 ($97) $202 Net Debt of Only $202M

  28. Slide 28: Discontinued Operations – Q4 2020 vs. Q4 2019

    Discontinued Operations – Q4 2020 vs. Q4 2019 Online1 Brazil1 Other2 Total Disc. Ops ($ in millions) Vs. Organic/ Organic/ Vs. Organic/ Vs. Organic/ Q4 Q4 Vs. Q4 Q4 Q4 (Enrollments in Q4 CC vs. CC vs. Q4 CC vs. Q4 CC vs. thousands) ’20 ‘20 ‘19 ‘20 ‘20 ‘19 Q4 ‘193 Q4 ‘193 ‘19 Q4 ‘193 ‘19 Q4 ‘193 New

  29. Slide 29: Discontinued Operations – FY 2020 vs. FY 2019

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

  30. Slide 30: Discontinued Operations Q4 2020 vs. Q4 2019 – Adjusted EBITDA Reconciliation

    Discontinued Operations Q4 2020 vs. Q4 2019 – Adjusted EBITDA Reconciliation Total Disc. Ops ($ in millions) (Enrollments in thousands) Q4 ‘20 Q4 ‘19 (Loss) income from discontinued operations, net of tax $623 ($1) Income tax expense $19 $82 Other non-operating expense (income) ($11) $25 (Gain)/Loss

  31. Slide 31: Discontinued Operations FY 2020 vs. FY 2019 – Adjusted EBITDA Reconciliation

    Discontinued Operations FY 2020 vs. FY 2019 – Adjusted EBITDA Reconciliation Total Disc. Ops ($ in millions) (Enrollments in thousands) FY 2020 FY 2019 (Loss) income from discontinued operations, net of tax ($298) $1,088 Income tax expense $114 $34 Other non-operating expense $69 $71 (Gain) on sale

  32. Slide 32: 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 Adjusted EBITDA Seasonality 30% 31% 30% 28% 29% 28% 56% 61% 47% 46% 49% 24% 23% 24% 44% 18

  33. Slide 33: Normalized Continuing Operations - Summary Results (Adjusted)

    Normalized Continuing Operations - Summary Results (Adjusted)1 Total Enrollment (000s) Revenue ($M) CAGR +3% 349 354 366 CAGR +6% $1,210 335 $1,144 $1,101 $1,020 2016 2017 2018 2019 2016 2017 2018 2019 Adjusted EBITDA ($M) Adjusted EBITDA Margin % CAGR +9% $337 85 bps/yr $303 27.8 $284 26.5 $258 25.

  34. Slide 34: Financial Results & Tables

    Financial Results & Tables © 2021 Laureate Education, Inc. 34

  35. Slide 35: Financial Tables: Consolidated Statements of Operations

    Financial Tables Consolidated Statements of Operations For the three months ended December 31, For the year ended December 31, IN MILLIONS 2020 2019 Change 2020 2019 Change Revenues $ 285.2 $ 351.8 $ (66.6) $ 1,024.9 $ 1,212.1 $ (187.2) Costs and expenses: Direct costs 188.3 242.4 (54.1) 802.5 949.5

  36. Slide 36: Financial Tables: Revenue and Adjusted EBITDA by Segment (Q4)

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the three months ended Constant Constant December 31, 2020 2019 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Mexico $ 149.6 $ 188.1 (20)% (15)% $ (38.5) $ (27.4) $

  37. Slide 37: Financial Tables: Revenue and Adjusted EBITDA by Segment (FY)

    Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the year ended Constant Constant December 31, 2020 2019 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Mexico $ 534.6 $ 652.8 (18)% (9)% $ (118.2) $ (59.8) $ — $ — $

  38. Slide 38: Financial Tables: Consolidated Balance Sheets

    Financial Tables Consolidated Balance Sheets IN MILLIONS December 31, 2020 December 31, 2019 Change Assets Cash and cash equivalents $ 750.1 $ 61.6 $ 688.5 Receivables (current), net 111.9 75.1 36.8 Other current assets 146.8 72.9 73.9 Current assets held for sale 435.0 706.5 (271.5) Property and eq

  39. Slide 39: Financial Tables: Consolidated Statements of Cash Flows

    Financial Tables Consolidated Statements of Cash Flows For the year ended December 31, IN MILLIONS 2020 2019 Change Cash flows from operating activities Net (loss) income $ (618.7) $ 937.7 $ (1,556.4) Depreciation and amortization 143.5 193.4 (49.9) Amortization of operating lease right-of-use asset

  40. Slide 40: Financial Tables: Non-GAAP Reconciliation (1 of 2)

    Financial Tables Non-GAAP Reconciliation (1 of 2) The following table reconciles (loss) income from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin: For the three months ended December 31, For the year ended December 31, IN MILLIONS 2020 2019 Change 2020 2019 Change (Loss) income

  41. Slide 41: Financial Tables: Non-GAAP Reconciliation (2 of 2)

    Financial Tables Non-GAAP Reconciliation (2 of 2) The following table presents Free cash flow and reconciles Net cash flows from operating activities to Free cash flow: For the year ended December 31, IN MILLIONS 2020 2019 2018 Net cash provided by operating activities $ 259.6 $ 339.8 $ 396.9 Capita

  42. Slide 42: Financial Tables (Historical Data)

    Financial Tables (Historical Data) Revenue and Adjusted EBITDA by segment (historical) The following table presents segment information for the four quarters of 2020 and the years ended December 31, 2020, 2019 and 2018: Three Months Ended Years ended December 31, December 31, September 30, June 30,

  43. Slide 43: © 2021 Laureate Education, Inc.

    © 2021 Laureate Education, Inc. 43

Laureate Education — Q4 2020 Earnings Presentation on 6ix