Laureate Education, Inc. · NASDAQ:LAUR
Laureate Education — Q1 2018 Earnings Presentation
30 slides from Laureate Education's earnings presentation, May 9, 2018
Slide 1: First Quarter 2018 Earnings Presentation
First Quarter 2018 Earnings Presentation May 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 1Q Results ahead of Guidance … Adj. EBITDA up 16% Vs. 1Q 2017 (1) New Enrollments up 5% overall … Strong 12% Growth in Brazil Walden Turnaround on track with New Enrollments up 1% for intake cycle Great progress in simplifying portfolio. $1Bn of proceeds expected in 2018
Slide 5: Q1 2018 Performance Results
Q1 2018 PERFORMANCE RESULTS © 2018 Laureate Education, Inc. 5
Slide 6: 2018 First Quarter – Financial Summary
2018 First Quarter – Financial Summary Q1 ’18 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q1 ‘17 New Enrollment 245K 8% New Enrollment – Organic(1) 8% • Brazil up 5%. Walden up 4% Total Enrollment 1,067K (2%) Total Enrollment – Organic(1) 2% Revenue $885 3% Revenue – Organi
Slide 7: 2018 First Quarter - Enrollment Dynamics by Segment
2018 First Quarter - Enrollment Dynamics by Segment Q1 ’18 Q1 ’18 New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q1 ‘18 Q1 ‘18 (Enrollments in thousands) Vs. Q1 ‘17 Vs. Q1 ‘17 Brazil 87 5% 292 3% • Total NE up 12% as per April YTD Mexico 28 1% 199 (1%) • UVM offsetting strong UNITEC
Slide 8: April YTD 2018 Enrollment Intake
April YTD 2018 Enrollment Intake (1) Apr YTD ‘18 New Apr YTD ‘18 Total Enrollments (NE) Enrollments (TE) Notes Organic (2) Organic (2) Apr Apr Vs. Apr Vs. Apr YTD ‘18 YTD ’18 (Enrollments in thousands) YTD ’17 YTD ’17 Brazil 96 12% 296 5% • +80% Distance Learning NE Growth Mexico 28 1% 199 (1%) Ande
Slide 9: 2018 First Quarter – Revenue by Segment
2018 First Quarter – Revenue by Segment Revenue (millions) Campus Segments & Corporate G&A Online & Partnerships 885 856 +6% 679 717 177 (5%) 168 Q1 2017 Q1 2018 Campus Based Operations Delivering Strong Results in 1Q © 2018 Laureate Education, Inc. 9
Slide 10: 2018 First Quarter – Revenue, EBITDA Dynamics by Segment
2018 First Quarter – Revenue, EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC ($ millions) Q1 ‘18 Vs. Q1 ’17 (1) Q1 ‘18 Vs. Q1 ’17 (1) • Operating Model benefits & Academic Brazil 123 10% (26) 31% Calendar shift Vs. 2017 • Marketing Investments & prior year Mexico 156 (4%)
Slide 11: 2018 First Quarter – Net Income Reconciliation
2018 First Quarter – Net Income Reconciliation Q1 ’18 B / (W) Vs. Q1 ’17 Notes ($ in millions) Reported $ % Adjusted EBITDA 47 (1) (2%) • $10M reduction due to Asset Sales Depreciation & Amort. (68) (3) (5%) • 25% reduction in debt levels Vs. 1Q ’17 Interest Expense, net (63) 35 35% combined with lo
Slide 12: 2018 First Quarter Free Cash Flow
2018 First Quarter Free Cash Flow B / (W) Vs. ($ millions) Q1 ’18 Q1 ’17 Notes Adj. EBITDA 47 (1) Δ Working Capital/Other 36 (51) • $30M due to timing of FIES receipts Cash Taxes (32) (11) Capital Expenditures (1) (46) (7) EiP Initiatives (13) 14 Unlevered Free Cash Flow (7) (55) Cash Interest (47)
Slide 13: Chile Update
CHILE UPDATE © 2018 Laureate Education, Inc. 13
Slide 14: New Higher Education Law in Chile- latest developments
New Higher Education Law in Chile- latest developments • January 24, 2018: Senate approves Higher Education Reform (“New Law”); Article 63 of “New Law” prohibits for-profit organizations from controlling universities in Chile • March 27, 2018: Chilean Constitutional Court declares Article 63 unconst
Slide 15: 2018 Guidance
2018 GUIDANCE © 2018 Laureate Education, Inc. 15
Slide 16: 2018 Guidance
2018 Guidance FY 2018 PF (1) FY 2018 (2) Q2 ($ in millions) (Enrollments in thousands) Previous Current 2018 Total Enrollments 955K – 959K 1,025K – 1,030K Revenue $3,885 - $3,920 $4,260 - $4,300 $1,230 - $1,270 Adjusted EBITDA $763 - $770 $810 - $820 $335 - $355 Net Leverage 3.1x 2.7x Capex as % Rev
Slide 17: Continued Progress of Deleveraging Initiatives
Continued Progress of Deleveraging Initiatives Net Leverage 3.7x 3.1x Further deleveraging 2.7x potential from St. Augustine divestiture (1) 2017 2018 Original 2018 Revised Guidance (2) Guidance (3) Improved Debt Leverage Guidance for 4Q ‘18 to 2.7x (1) 2017 as reported excluding $19M in one-time EB
Slide 18: Appendix
APPENDIX © 2018 Laureate Education, Inc. 18
Slide 19: 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) (60) ($255) ($57) Pending Divestitures (3) (4) ($113) ($28) 2017 Proforma 1,004 $4,010 $
Slide 20: Q2 2018 Guidance
Q2 2018 Guidance (USD millions) Revenues Adj. EBITDA 2Q 2017 Reported Results $1,277 $342 Closed Divestitures (1) ($70) ($24) Debt Refinancing $23 2Q 2017 Reported Results Pro Forma $1,207 $341 Organic Growth $11 - $51 ($8) - $12 Growth % 1% - 4% (3%) – 3% 2Q 2018 Guidance (CC) $1,218 - $1,258 $333
Slide 21: Other Information
Other Information © 2018 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 & Iberian) – Q3 represents th
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 46% 30% 29% 29% 30% 42% 42% 43% 28% 29% 40% 41% 27% 28%
Slide 24: Financial Tables
Financial Tables © 2018 Laureate Education, Inc. 24
Slide 25: Consolidated Statements of Operations
Financial Tables Consolidated Statements of Operations For the three months ended March 31, IN MILLIONS 2018(1) 2017 Change Revenues $ 885.3 $ 855.9 $ 29.4 Costs and expenses: Direct costs 865.4 853.2 12.2 General and administrative expenses 47.3 65.6 (18.3) Operating loss (27.5) (62.9) 35.4 Interes
Slide 26: 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 March 31, 2018 2017 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 122.8 $ 116.8 5% 10% $ 6.0 $ 11.4 $ — $ — $ (5.4
Slide 27: Consolidated Balance Sheets
Financial Tables Consolidated Balance Sheets IN MILLIONS March 31, 2018 December 31, 2017 Change Assets Cash and cash equivalents $ 479.0 $ 468.7 $ 10.3 Receivables (current), net 611.5 357.9 253.6 Other current assets 344.7 359.7 (15.0) Current assets held for sale 58.0 102.6 (44.6) Property and eq
Slide 28: Consolidated Statements of Cash Flows
Financial Tables Consolidated Statements of Cash Flows For the three months ended March 31, IN MILLIONS 2018 2017 Change Cash flows from operating activities Net income (loss) $ 171.5 $ (120.4) $ 291.9 Depreciation and amortization 67.8 64.5 3.3 (Gain) loss on sales of subsidiaries and disposal of p
Slide 29: Non-GAAP Reconciliation
Financial Tables Non-GAAP Reconciliation For the three months ended March 31, IN MILLIONS 2018 2017 Change Net income (loss) $ 171.5 $ (120.4) $ 291.9 Plus: Income tax expense (benefit) 2.5 (27.1) 29.6 Income (loss) from continuing operations before income taxes 174.1 (147.4) 321.5 Plus: Gain on sal
Slide 30: © 2018 Laureate Education, Inc.
© 2018 Laureate Education, Inc. 30