Laureate Education, Inc. · NASDAQ:LAUR
Laureate Education — Q2 2019 Earnings Presentation
31 slides from Laureate Education's earnings presentation, Aug 8, 2019
Slide 1: Second Quarter 2019 Earnings Presentation
Second Quarter 2019 Earnings Presentation August 8, 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: 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 press release, Laureate provides the non- GAAP measurements of Adjusted EBITDA and Free Cash Flow. We have included these non-GAAP measurement
Slide 4: 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. 4
Slide 5: Summary - Highlights
Summary - Highlights New Enrollments up 11% Q2 YTD Q2 Adjusted EBITDA ahead of guidance … up 4% vs. Q2 2018(1) H1 Financial Results on-track … FY Revenue & EBITDA guidance reaffirmed $1B in asset sale proceeds collected in Q2 …. Net leverage at <2.0x Announcement of $150M stock repurchase
Slide 6: Q2 2019 Performance Results
Q2 2019 PERFORMANCE RESULTS © 2019 Laureate Education, Inc. 6
Slide 7: Second Quarter – Financial Summary
2019 Second Quarter – Financial Summary Q2 ’19 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q2 ‘18 • Driven by Brazil DL growth New Enrollment 58K 28% • 4% Excluding Brazil DL New Enrollment – Organic(1) 28% Total Enrollment 909K 3% Total Enrollment – Organic(1) 3% Revenue $
Slide 8: H1 – Financial Summary
2019 H1– Financial Summary H1 ’19 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. H1 ‘18 • Driven by Andean & Brazil DL New Enrollment 296K 11% • 4% Excluding Brazil DL New Enrollment – Organic(1) 11% Total Enrollment 909K 3% Total Enrollment – Organic(1) 3% Revenue $1,624 (2%)
Slide 9: Second Quarter – Enrollment Dynamics by Segment
2019 Second Quarter – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q2 ’19 Q2 ‘19 Vs. Q2 ’18 Vs. Q2 ’18 (Enrollments in thousands) Brazil 28 75% 309 5% • Driven by DL (NE +131%; TE +59% ) • The large intake cycle for Mexico occurs Mexico 14 (7%) 179 (
Slide 10: H1 – Enrollment Dynamics by Segment
2019 H1 – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic H1 ’19 H1 ’19 Vs. H1 ’18 Vs. H1 ’18 (Enrollments in thousands) • Strong growth in Distance Learning Brazil 126 22% 309 5% • NE Growth DL: 99%, F2F: 3% • TE Growth DL: 59%, F2F: (2%) • The large i
Slide 11: Second Quarter – Revenue, EBITDA Dynamics by Segment
2019 Second Quarter – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) Q2 ‘19 Vs. Q2 ’18 (1) Q2 ‘19 Vs. Q2 ’18 (1) • Higher mix of DL Brazil 197 (4%) 59 (16%) • Flat net pricing year-over-year Mexico 162 1% 32 14% • UNITEC growth and timing • Driven by
Slide 12: H1 – Revenue, EBITDA Dynamics by Segment
2019 H1 – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) H1 ‘19 Vs. H1 ’18 (1) H1 ‘19 Vs. H1 ’18 (1) • Flat net pricing year-over-year; cost Brazil 307 (1%) 28 (41%) actions underway for 2H Mexico 319 2% 57 2% • Driven by strong enrollments and Andea
Slide 13: G&A Rationalization Update
G&A Rationalization Update ($ in millions) Margin 18.6% 19.3% 19.6% 20.2% Evolution $176 $155 $145 $125 2018 Corporate G&A 2019 G&A Estimate 2019 G&A Run-Rate 2019 Year-end G&A Secured as June 2019 Run-Rate Estimate Reductions in G&A Enabling Margin Expansion © 2019 Laureate Education, Inc. 13
Slide 14: H1 – Net Debt & Free Cash Flow (FCF)
2019 H1 – Net Debt & Free Cash Flow (FCF) ($ in millions) Net Debt Free Cash Flow +62% $ 2,510 -53% $ 1,171 $ (38) YE 2018 H1 2019 $ (100) H1 2018 H1 2019 Significant Reduction in Net Debt -- Continued Improvements in FCF NOTE: Free Cash Flow (FCF) defined as operating cash flow less capital expendi
Slide 15: Outlook
2019 OUTLOOK © 2019 Laureate Education, Inc. 15
Slide 16: Full Year Guidance
2019 Full Year Guidance FY 2019 ($ in millions) (Enrollments in thousands) Guidance (1) Total Enrollments ~ 865K Revenue $3,330 - $3,365 Adjusted EBITDA $640 - $650 Full Year Guidance Reaffirmed (1) Guidance as provided during 1Q 2019 earnings call on May 9, 2019 Note: An outlook for 2019 net income
Slide 17: Q3 2019 Guidance - Details
Q3 2019 Guidance - Details (USD millions, except enrollments in thousands) Revenues Adj. EBITDA Q3 2018 Results $787 $121 Organic Growth $5 - $15 ($4) - $6 Growth % 1% - 2% (3%) - 5% Q3 2019 FXN Guidance excl. Lease Acct Impact $792 - $802 $117 - $127 Lease Accounting Impact (ASC-842) ($4) 2019 FXN
Slide 18: Appendix
APPENDIX © 2019 Laureate Education, Inc. 18
Slide 19: Second Quarter – Net Income Reconciliation
2019 Second Quarter – Net Income Reconciliation Q2 ’19 B / (W) Vs. Q2 ’18 Notes ($ in millions) Reported $ % Adjusted EBITDA 297 (6) (2%) • ($18M) impact from FX Depreciation & Amort. (50) 3 6% Interest Expense, net (39) 19 33% • $112M one-time gain in Q2 ’18 related to Other (30) (104) n.m. convers
Slide 20: H1 – Net Income Reconciliation
2019 H1 – Net Income Reconciliation H1 ’19 B / (W) Vs. H1 ’18 Notes ($ in millions) Reported $ % Adjusted EBITDA 276 2 1% • ($11M) impact from FX Depreciation & Amort. (97) 13 11% Interest Expense, net (90) 28 24% • $98M one-time gain YTD June 2018 related to Other (55) (86) n.m. conversion of prefe
Slide 21: 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 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) Revenue Seasonality Adj. EBITDA Seasonality New Enrollments Seasonality Factors Affecting Seasonali
Slide 23: Financial Results & Tables
Financial Results & Tables © 2019 Laureate Education, Inc. 23
Slide 24: Consolidated Statements of Operations
Financial Tables Consolidated Statements of Operations For the three months ended June 30, For the six months ended June 30, IN MILLIONS 2019 2018 Change 2019 2018 Change Revenues $ 1,001.8 $ 1,017.2 $ (15.4) $ 1,623.6 $ 1,649.4 $ (25.8) Costs and expenses: Direct costs 720.2 725.8 (5.6) 1,372.6 1,4
Slide 25: Revenue and Adjusted EBITDA by Segment (Q2)
Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the three months ended Constant Constant June 30, 2019 2018 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Brazil $ 197.1 $ 225.6 (13)% (4)% $ (28.5) $ (9.0) $ — $ —
Slide 26: Revenue and Adjusted EBITDA by Segment (Six Months)
Financial Tables Revenue and Adjusted EBITDA by segment IN MILLIONS % Change $ Variance Components Organic Organic For the six months ended Constant Constant June 30, 2019 2018 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 307.1 $ 348.4 (12)% (1)% $ (41.3) $ (4.2) $ — $ — $
Slide 27: Consolidated Balance Sheets
Financial Tables Consolidated Balance Sheets IN MILLIONS June 30, 2019 December 31, 2018 Change Assets Cash and cash equivalents $ 236.4 $ 388.5 $ (152.1) Receivables (current), net 368.2 249.3 118.9 Other current assets 329.1 273.0 56.1 Current assets held for sale 187.2 306.4 (119.2) Property and
Slide 28: Consolidated Statements of Cash Flows
Financial Tables Consolidated Statements of Cash Flows For the six months ended June 30, IN MILLIONS 2019 2018 Change Cash flows from operating activities Net income $ 973.9 $ 395.5 $ 578.4 Depreciation and amortization 97.4 130.2 (32.8) Loss on impairment of assets 0.5 — 0.5 Amortization of operati
Slide 29: Non-GAAP Reconciliation (1 of 2)
Financial Tables Non-GAAP Reconciliation (1 of 2) The following table reconciles loss from continuing operations to Adjusted EBITDA for the six months ended June 30, 2019 and 2018: For the three months ended June 30, For the six months ended June 30, IN MILLIONS 2019 2018 Change 2019 2018 Change Inc
Slide 30: Non-GAAP Reconciliation (2 of 2)
Financial Tables Non-GAAP Reconciliation (2 of 2) The following table reconciles operating cash flow to Free Cash Flow for the six months ended June 30, 2019 and 2018: IN MILLIONS 2019 2018 Change Net cash provided by operating activities $ 32.5 $ 1.8 $ 30.7 Capital expenditures: Purchase of propert
Slide 31: © 2019 Laureate Education, Inc.
© 2019 Laureate Education, Inc. 31