Laureate Education, Inc. · NASDAQ:LAUR

Laureate Education — Q4 2019 Earnings Presentation

34 slides from Laureate Education's earnings presentation, Feb 27, 2020

  1. Slide 1: Fourth Quarter & Year-End 2019 Earnings Presentation

    Fourth Quarter & Year-End 2019 Earnings Presentation February 27, 2020 © 2020 Laureate Education, Inc. 1

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements This press release 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 mean

  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 and Free Cash Flow. We have included the

  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 and Adjusted EBITDA are for continuing operations only © 2020 Laureate Education, Inc. 4

  5. Slide 5: Summary - Highlights

    Summary - Highlights  FY’19 Revenue & Adjusted EBITDA in-line with guidance  FY’19 Margins up 135bps …… margin progression accelerating vs. prior years  FY Free Cash Flow(1) 15% ahead of guidance  Improved Capital Structure… Net Leverage down to 1.7x  Second round of share buybacks completed …

  6. Slide 6: Portfolio Transformation Yielding Strong Operating Results

    Portfolio Transformation Yielding Strong Operating Results Adj. EBITDA Margin Free Cash Flow (FCF) 19.9% $166 $139 18.5% 18.2% 2017 2018 2019 ($102) 2017 2018 2019 Net Leverage Quality & Rankings* 3.5x • Peru: UPC only 4-star QStars in Peru 3.0x • Brazil: Strong ENADE Score 1.7x • Mexico: UVM Top 10

  7. Slide 7: Q4 2019 & Full Year Performance Results

    Q4 2019 & FULL YEAR PERFORMANCE RESULTS © 2020 Laureate Education, Inc. 7

  8. Slide 8: 2019 Fourth Quarter – Financial Summary

    2019 Fourth Quarter – Financial Summary Q4 ’19 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. Q4 ‘18 • Robust growth in Brazil DL (+62%) during New Enrollment 32K 33% an otherwise small intake quarter New Enrollment – Organic(1) 34% Total Enrollment 875K 1% Total Enrollment –

  9. Slide 9: 2019 FY – Financial Summary

    2019 FY – Financial Summary FY’19 Variance Notes ($ in millions) (Enrollments in thousands) Results Vs. FY’18 New Enrollment 486K 10% • Brazil DL (+69%); Andean (+5%) New Enrollment – Organic(1) 10% Total Enrollment 875K 1% Total Enrollment – Organic(1) 4% Revenue 3,250 (1%) Revenue – Organic/CC(2)

  10. Slide 10: 2019 Fourth Quarter – Enrollment Dynamics by Segment

    2019 Fourth Quarter – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic Q4 ’19 Q4 ’19 Vs. Q4 ’18 Vs. Q4 ’18 (Enrollments in thousands) Brazil 21 54% 272 7% • Distance Learning (NE +62% ; TE + 59%) Mexico 2 26% 204 (1%) Andean 2 42% 326 5% Rest of World 1

  11. Slide 11: 2019 FY – Enrollment Dynamics by Segment

    2019 FY – Enrollment Dynamics by Segment New Enrollment Total Enrollment (NE) (TE) Notes Organic Organic FY ’19 FY ’19 Vs. FY ’18 Vs. FY ’18 (Enrollments in thousands) • Strong growth in Distance Learning Brazil 198 16% 272 7% • NE Growth DL: 69%, F2F: (2%) • TE Growth DL: 59%, F2F: (3%) Mexico 112

  12. Slide 12: 2019 Fourth Quarter – Revenue, Adj. EBITDA Dynamics by Segment

    2019 Fourth Quarter – Revenue, Adj. EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC Q4 ‘19 Q4 ‘19 ($ millions) Vs. Q4 ’18 (1) Vs. Q4 ’18 (1) • Benefitting from cost actions from Brazil 157 (4%) 51 4% earlier in the year Mexico 188 1% 67 10% Andean 320 9% 97 22% • Pricing a

  13. Slide 13: 2019 FY – Revenue, Adj. EBITDA Dynamics by Segment

    2019 FY – Revenue, Adj. EBITDA Dynamics by Segment Revenue Adj. EBITDA Notes Organic/CC Organic/CC FY‘19 FY‘19 ($ millions) Vs. FY’18 (1) Vs. FY’18 (1) • Reduction in FIES; cost actions Brazil 578 (3%) 82 (15%) driving 2H Adj. EBITDA(1) up 13% Mexico 653 2% 148 6% Andean 1,190 9% 343 13% • Strong en

  14. Slide 14: Free Cash Flow Trends

    Free Cash Flow Trends (Values in USD millions) +20% $166 $139 ($102) 2017 2018 2019 20% Improvement in Free Cash Flow Note: Free Cash Flow (FCF) defined as operating cash flow less capital expenditures © 2020 Laureate Education, Inc. 14

  15. Slide 15: 2020 Outlook

    2020 OUTLOOK © 2020 Laureate Education, Inc. 15

  16. Slide 16: 2020 Full Year Guidance Heatmap

    2020 Full Year Guidance Heatmap Organic/CC Revenue Adj. EBITDA Market Revenue Comments Contribution Margin% Expansion Growth Scale benefits driving operating leverage; continued faster Latin America + + growth in value segment and Distance Learning Rest of World ++ ++ Scale and flow through margin (

  17. Slide 17: 2020 Guidance Summary – Growth Rates

    2020 Guidance Summary – Growth Rates Organic/Constant Currency (CC) Growth Rates Y-o-Y 2019 Actuals FY 2020 Guidance (1) Trend Total Enrollment 4% 4% = Revenue 3% 2% - 3% = Adjusted EBITDA 10% 8% - 11% = Free Cash Flow - FCF ($ millions) (2) $166 ~ $230 ++ 2020 Operating Trends Anticipated to be in

  18. Slide 18: 2020 Full Year Guidance Details

    2020 Full Year Guidance Details (USD millions, except enrollments in thousands) Total Enrollment Revenues Adj. EBITDA 2019 Results 875 $3,250 $647 Excl: UniNorte (sold in 2019) - ($30) ($1) 2019 Excl. UniNorte 875 $3,220 $646 Organic Growth 35K $60 – $100 $54 – $69 Growth % 4% 2% - 3% 8% - 11% 2020

  19. Slide 19: Q1 2020 Guidance Details

    Q1 2020 Guidance Details (USD millions) Revenues Adj. EBITDA 2019 Q1 Results $601 ($30) Excl: UniNorte (sold in 2019) ($7) $3 2019 Q1 Excl. UniNorte $594 ($27) Organic Growth ($7) – $3 $0 – $4 Growth % (1%) - 1% 0% - 15% 2020 Q1 Guidance (Constant Currency) $587 – $597 ($27) – ($23) FX Impact (spot

  20. Slide 20: Appendix

    APPENDIX © 2020 Laureate Education, Inc. 20

  21. Slide 21: 2019 Fourth Quarter – Net Income Reconciliation

    2019 Fourth Quarter – Net Income Reconciliation Q4 ’19 B / (W) Vs. Q4 ’18 Notes ($ in millions) Reported $ % Adjusted EBITDA 244 24 11% • ($7M) impact from FX Depreciation & Amort. (47) 3 5% • Significant reduction in debt following Interest Expense, net (28) 23 45% completion of asset sales Other (

  22. Slide 22: 2019 FY – Net Income Reconciliation

    2019 FY – Net Income Reconciliation FY’19 B / (W) Vs. FY’18 Notes ($ in millions) Reported $ % Adjusted EBITDA 647 36 6% • ($25M) impact from FX Depreciation & Amort. (192) 19 9% • Significant reduction in debt following Interest Expense, net (155) 68 31% completion of asset sales • $98M one-time ga

  23. Slide 23: 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

  24. Slide 24: 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 31% 31% 52% 29% 30% 28% 28% 27% 27% 46% 25% 24% 24% 24%

  25. Slide 25: Financial Results & Tables

    Financial Results & Tables © 2020 Laureate Education, Inc. 25

  26. Slide 26: 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 2019 2018 Change 2019 2018 Change Revenues $ 883.2 $ 892.5 $ (9.3) $ 3,250.3 $ 3,290.2 $ (39.9) Costs and expenses: Direct costs 669.4 652.9 16.5 2,671.6 2,697.0

  27. Slide 27: Financial Tables – 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, 2019 2018 Reported Currency(1) Total Currency Other Acq/Div. FX Revenues Brazil $ 157.3 $ 184.8 (15)% (4)% $ (27.5) $ (6.2) $ — $ (8

  28. Slide 28: Financial Tables – 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, 2019 2018 Reported Currency(2) Total Currency Other Acq/Div. FX Revenues Brazil $ 578.4 $ 654.3 (12)% (3)% $ (75.9) $ (16.5) $ — $ (8.4

  29. Slide 29: Financial Tables – Consolidated Balance Sheets

    Financial Tables Consolidated Balance Sheets IN MILLIONS December 31, 2019 December 31, 2018 Change Assets Cash and cash equivalents $ 339.6 $ 387.8 $ (48.2) Receivables (current), net 260.5 225.3 35.2 Other current assets 259.0 266.4 (7.4) Current assets held for sale 83.8 337.7 (253.9) Property an

  30. Slide 30: Financial Tables – Consolidated Statements of Cash Flows

    Financial Tables Consolidated Statements of Cash Flows For the year ended December 31, IN MILLIONS 2019 2018 Change Cash flows from operating activities Net income $ 937.7 $ 370.9 $ 566.8 Depreciation and amortization 193.4 240.0 (46.6) Amortization of operating lease right-of-use assets 122.7 — 122

  31. Slide 31: Financial Tables – Non-GAAP Reconciliation (1 of 3)

    Financial Tables Non-GAAP Reconciliation (1 of 3) The following table presents Adjusted EBITDA and reconciles income (loss) 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 2019 2018 Change 2

  32. Slide 32: Financial Tables – Non-GAAP Reconciliation (2 of 3)

    Financial Tables Non-GAAP Reconciliation (2 of 3) The following table reconciles income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for 2016 - 2018: For the years ended December 31, IN MILLIONS 2018 2017 2016 (Loss) income from continuing operations $ (10.5) $ 16.

  33. Slide 33: Financial Tables – Non-GAAP Reconciliation (3 of 3)

    Financial Tables Non-GAAP Reconciliation (3 of 3) 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 2019 2018 2017 Net cash provided by operating activities $ 339.8 $ 396.9 $ 192.2 Capita

  34. Slide 34: © 2020 Laureate Education, Inc.

    © 2020 Laureate Education, Inc. 34

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