Slide 1: Fourth Quarter & FY 2018 Earnings Presentation
Fourth Quarter & FY 2018 Earnings Presentation February 28, 2019 © 2019 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 Amounts presented for enrollments, Revenue and Adjusted EBITDA are for continuing operations only © 2019 Laureate Education, Inc. 3
Slide 4: Summary - 2018 Highlights
Summary - 2018 Highlights New Enrollments up 6% for 2018 led by strong growth in Brazil FY18 Margins up 90bps driven mostly by performance in Peru and ANZ (1) 2018 Full Year Free Cash Flow up $241M to $139M … well ahead of Target 4Q Adjusted EBITDA ahead of Guidance … up 11% Vs. 4Q 2017 (1)
Slide 5: Strategic Priorities – 2018 Highlights
Strategic Priorities – 2018 Highlights 1 Simplification $2B+ in announced sales for non-core assets PF debt -- USD mix down to ~35% & Risk Mgmt Pro Forma (PF) net leverage ~1.5x Remediated all material weaknesses 2 Margin +90bps vs. 2017 (1) ... 21% margin by 2020 $35M G&A reduction expe
Slide 6: Q4 and Full Year Performance Results
Q4 AND FULL YEAR PERFORMANCE RESULTS © 2019 Laureate Education, Inc. 6
Slide 7: 2018 Fourth Quarter – Financial Summary
2018 Fourth Quarter – Financial Summary Q4 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q4 ‘17 New Enrollment 24K 44% New Enrollment – Organic(1) 44% • Driven by Distance Learning growth in Brazil Total Enrollment 875K 1% • Peru and Brazil growth offset by economic Total
Slide 8: 2018 FY – Financial Summary
2018 FY – Financial Summary FY ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. FY ‘17 New Enrollment 446K 6% New Enrollment – Organic(1) 6% • Driven by Distance Learning growth in Brazil Total Enrollment 875K 1% • Peru and Brazil growth offset by economic Total Enrollment –
Slide 9: 2018 Fourth Quarter – Enrollment Dynamics by Segment
2018 Fourth Quarter – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q4 ’18 Q4 ‘18 Vs. Q4 ’17 Vs. Q4 ’17 (Enrollments in thousands) • Strong growth in Distance Learning Brazil 14 123% 280 3% • NE Growth DL: 145%, F2F: 59% • TE Growth DL: 46%, F2F: (1%)
Slide 10: 2018 FY – Enrollment Dynamics by Segment
2018 FY – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic FY ’18 FY ’18 Vs. FY ’17 Vs. FY ’17 (Enrollments in thousands) • Strong growth in Distance Learning Brazil 171 14% 280 3% • NE Growth DL: 75%, F2F: 2% • TE Growth DL: 46%, F2F: (1%) Mexico 109 2%
Slide 11: 2018 Fourth Quarter – Revenue, EBITDA Dynamics by Segment
2018 Fourth Quarter – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) Q4 ‘18 Vs. Q4 ’17 (1) Q4 ‘18 Vs. Q4 ’17 (1) Brazil 185 - 51 3% • Adjusted for timing impact related to Mexico 182 (2%) 61 (7%) 2017 earthquake in Mexico: Revenue +4%, Adj. EBITDA +1
Slide 12: 2018 FY – Revenue, EBITDA Dynamics by Segment
2018 FY – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) FY ‘18 Vs. FY ’17 (1) FY ’18 Vs. FY ’17 (1) • Operating Model Benefits net of Brazil 654 (2%) 104 1% Pricing and FIES headwinds Mexico 646 2% 143 (1%) • UNITEC growth offset by UVM Andean 1,156
Slide 13: 2018 Free Cash Flow
2018 Free Cash Flow ($ in millions) 139 18 76 153 (102) (18) 12 3 4 2017 Actual Italy/Cyp/China FX / One- Interest Expense Operations Capex 2018 Actual (sold) 1 Time Items 2 Strong Growth in Free Cash Flow Driven by Reduced Interest, Operational Improvements and Capital Efficiency NOTE: Free Cash Fl
Slide 14: 2018 FY – Capital Structure
2018 FY – Capital Structure FY ’18 Notes ($ in millions) Reported U.S. Revolver/Term Loan 1,322 U.S. Senior Notes 800 Seller Notes & Local Debt 991 • Includes $283M of debt at entities Held For Sale Gross Debt 3,113 Less: Cash (603) • Includes $216M of cash at entities Held For Sale Net Debt (12/31/
Slide 15: 2019 Outlook
2019 OUTLOOK © 2019 Laureate Education, Inc. 15
Slide 16: 2019 Full Year Guidance - Summary
2019 Full Year Guidance - Summary FY (1) Organic/CC Q1 (1) ($ in millions) (Enrollments in thousands) 2019 Vs. ’18 2019 Total Enrollments ~ 890K ~ 2% Revenue $3,350 - $3,385 2% - 3% $605 - $615 Adjusted EBITDA(2) $645 - $655 7% - 8% ($28) – ($24) Adjusted EBITDA: Run-Rate (3) $670 - $680 Net Debt $8
Slide 17: 2019 Full Year Guidance - Details
2019 Full Year Guidance - Details (USD millions, except enrollments in thousands) Total Enrollment Revenues Adj. EBITDA 2018 Results 875 $3,350 $623 Organic Growth ~15K $67 – $102 $41 – $51 Growth % ~2% 2% - 3% 7% - 8% 2019 FXN Guidance excl. Lease Acct Impact ~ 890 $3,417 – $3,452 $664 – $674 Lease
Slide 18: 2019 Free Cash Flow Guidance
2019 Free Cash Flow Guidance ($ in millions) 170 (6) (10) 25 145 139 (4) (13) 59 (20) 106 35% Growth 2018 Actual Lease W/C Timing 2018 Pro Operations Interest Capex FX 2019 FY (1) G&A Savings 2019 (2) Accounting Forma (LIBOR Run-Rate Change increase) Continued Strong Growth in FCF Expected – One-Tim
Slide 19: 2019 Net Debt Guidance
2019 Net Debt Guidance ($ in millions) 2,510 (525) (1,000) 985 (75) (110) 800 2018 Actual St Augustine Wave 2 2018 Pro Forma Lease Accounting FCF, FX 2019 YE / Malaysia Divestitures Impact (ASC-842) & Other ~70% Net Debt Reduction vs. 2018 Expected Note: An outlook for 2019 net income and reconcilia
Slide 20: Appendix
APPENDIX © 2019 Laureate Education, Inc. 20
Slide 21: Other Information
Other Information © 2019 Laureate Education, Inc. 21
Slide 22: 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
Slide 23: 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 Seasonali
Slide 24: Financial Results & Tables
Financial Results & Tables © 2019 Laureate Education, Inc. 24
Slide 25: 2018 Performance vs Guidance
2018 Performance vs Guidance Guidance FY Q4 ($ in millions) (Enrollments in thousands) Level Guidance Results Guidance Results Continuing Total Enrollments ~ 865K 875K + Operations Continuing Revenue $3,340 - $3,355 $3,350 = $903 - $918 $914 = Operations Continuing Adjusted EBITDA $615 - $620 $623 +
Slide 26: 2018 Fourth Quarter – Net Income Reconciliation
2018 Fourth Quarter – Net Income Reconciliation Q4 ’18 B / (W) Vs. Q4 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 229 (35) (13%) • Impacted by FX; organic/CC up 6% Depreciation & Amort. (50) 2 3% Interest Expense, net (51) 25 33% • Reduction in debt levels & reduced interest % Other (29)
Slide 27: 2018 FY – Net Income Reconciliation
2018 FY – Net Income Reconciliation FY ’18 B / (W) Vs. FY ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 623 8 1% • Impacted by FX, organic/CC up 7% Depreciation & Amort. (213) (9) (4%) Interest Expense, net (223) 100 31% • Reduction in debt levels and interest % • $98M gain upon conversion
Slide 28: 2019 Q1 Guidance - Details
2019 Q1 Guidance - Details (USD millions, except enrollments in thousands) Revenues Adj. EBITDA 2018 Results $632 ($30) Organic Growth $10 - $20 ($2) – $2 2019 FXN Guidance excl. Lease Acct Impact $642 - $652 ($32) - ($28) Lease Accounting Impact (ASC-842) ($3) 2019 FXN Guidance $642 - $652 ($35) -
Slide 29: Financial Tables: 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 2018 2017 Change 2018 2017 Change Revenues $ 913.7 $ 951.2 $ (37.5) $ 3,350.2 $ 3,385.9 $ (35.7) Costs and expenses: Direct costs 665.7 710.4 (44.7) 2,746.9 2,82
Slide 30: 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 quarter ended Constant Constant December 31, 2018 2017 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Brazil $ 184.8 $ 217.8 (15)% —% $ (33.0) $ (0.5) $ — $ — $
Slide 31: 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, 2018 2017 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 654.3 $ 765.7 (15)% (2)% $ (111.4) $ (14.7) $ — $ — $
Slide 32: Financial Tables: Consolidated Balance Sheets
Financial Tables Consolidated Balance Sheets IN MILLIONS December 31, 2018 December 31, 2017 Change Assets Cash and cash equivalents $ 388.5 $ 320.6 $ 67.9 Receivables (current), net 249.3 311.1 (61.8) Other current assets 273.0 332.4 (59.4) Current assets held for sale 306.4 324.7 (18.3) Property a
Slide 33: Financial Tables: Consolidated Statements of Cash Flows
Financial Tables Consolidated Statements of Cash Flows For the year ended December 31, IN MILLIONS 2018 2017 Change Cash flows from operating activities Net income $ 370.9 $ 93.8 $ 277.1 Depreciation and amortization 240.0 264.7 (24.7) Loss on impairment of assets 13.1 40.6 (27.5) Gain on sale of su
Slide 34: Financial Tables: Non-GAAP Reconciliation (1 of 2)
Financial Tables Non-GAAP Reconciliation (1 of 2) For the three months ended For the year ended December 31, December 31, IN MILLIONS 2018 2017 Change 2018 2017 Change Income (loss) from continuing operations 30.8 171.6 (140.8) (4.7) 20.8 (25.5) Plus: Equity in net income of affiliates, net of tax —
Slide 35: 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 years ended December 31, 2018 and 2017: For the year ended December 31, IN MILLIONS 2018 2017 Change Net cash provided by op
Slide 36: © 2019 Laureate Education, Inc.
© 2019 Laureate Education, Inc. 36