Fourth Quarter & Year-End 2020 Earnings Presentation
February 25, 2021
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 of the federal securities laws, which involve risks and uncertainties. Laureate's actual results may vary significantly from the results anticipated in these forward-looking statements. You can identify forward-looking statements because they contain words such as ''believes,'' ''expects,'' ''may,'' ''will,'' ''should,'' ''seeks,'' ''approximately,'' ''intends,'' ''plans,'' ''estimates'' or ''anticipates'' or similar expressions that concern our strategy, plans or intentions. All statements we make relating to (i) guidance (including, but not limited to, total enrollments, revenues and Adjusted EBITDA), (ii) our planned divestitures, the expected proceeds generated therefrom and the expected reduction in revenue resulting therefrom, (iii) our exploration of strategic alternatives and potential future plans, strategies or transactions that may be identified, explored or implemented as a result of such review process and any resulting litigation or dispute therewith and (iv) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, including, with respect to our exploration of strategic alternatives, risks and uncertainties as to the terms, timing, structure, benefits and costs of any divestiture or separation transaction and whether one will be consummated at all, and the impact of any divestiture or separation transaction on our remaining businesses. Accordingly, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") on February 25, 2021, and other filings made with the SEC. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.
In addition, this presentation contains various operating data, including market share and market position, that are based on internal company data and management estimates. While management believes that our internal company research is reliable and the definitions of our markets which are used herein are appropriate, neither such research nor these definitions have been verified by an independent source and there are inherent challenges and limitations involved in compiling data across various geographies and from various sources, including those discussed under "Market and Industry Data" in Laureate's filings with the SEC.
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), and Free Cash Flow. We have included these non-GAAP measurements because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans.
Adjusted EBITDA consists of income (loss) from continuing operations, adjusted for the items included in the accompanying reconciliation. The exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key input into the formula used by the compensation committee of our board of directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin, which is calculated by dividing Adjusted EBITDA by revenues, provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Total debt, net of cash (or net debt) consists of total gross debt, including seller notes, for Continuing Operations and Discontinued Operations, less total cash and cash equivalents for Continuing Operations and Discontinued Operations. Net debt provides a useful indicator about Laureate's leverage and liquidity.
Free Cash Flow consists of operating cash flow minus capital expenditures. Free Cash Flow provides a useful indicator about Laureate's ability to fund its operations and repay its debts.
Laureate's calculations of Adjusted EBITDA, Adjusted EBITDA margin, total debt, net of cash (or net debt), and Free Cash Flow are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Adjusted EBITDA is reconciled from the GAAP measure in the attached table "Non-GAAP Reconciliation."
We evaluate our results of operations on both an as reported and an organic constant currency basis. The organic constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates, acquisitions and divestitures, and other items. We believe that providing organic constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate organic constant currency amounts using the change from prior-period average foreign exchange rates to current-period average foreign exchange rates, as applied to local-currency operating results for the current period, and then exclude the impact of acquisitions and divestitures and other items described in the accompanying presentation.
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
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 recognition for quality of educational offerings
Closed sale of Australia/NZ for approx. $650M in November - Net Debt of $202M outstanding at year-end
Additional $1.95 billion of net proceeds from signed asset sales expected during 20211
Mexico & Peru to be retained in a focused organization - still open to further engagement with potential buyers if accretive
$167M in Share Repurchases completed to-date since November (total of 11.7M shares repurchased)
Strong Execution Against all Operating & Strategic Priorities
(1)Based on anticipated net proceeds (net of taxes, fees and other costs) for sales of Walden, Brazil, and Honduras. Includes assumed debt and anticipated release of restricted cash (collateral for letter of credit and bonds at Walden); assumes all pending asset sale transaction close on announced terms.
Laureate Portfolio Overview
(1) Based on 2020 actual results; amount shown is for just Mexico & Peru segments (i.e. excluding corporate segment G&A expense which were $97M in 2020). Corporate G&A expenses are expected to be reduced by 70-80% post completion of the pending asset sales.
(2) Based on anticipated net proceeds (net of taxes, fees and other costs) for sales of Walden, Brazil, and Honduras. Includes assumed debt, and anticipated release of restricted cash
(collateral for letter of credit and bonds at Walden); assumes all pending asset sale transaction close on announced terms.
Mexico & Peru Higher Education Market Overview
Mexico
Peru
Combined
Population (M)Higher Education Students (000s)
Sources: UNESCO, World Bank, SEP database
(1) Defined as total enrollments as compared to 18-24 year old population
127M
33M
160M
4,562
1,896
6,458
30%
47%
34%
44%
72%
56%
(2) Private institution market share in higher education; for Mexico and Combined includes all states in which UVM or UNITEC have operations (total private market share for all of Mexico is 35%); for Peru based on total country
Attractive Markets with Significant Growth Opportunities Participation Rates Growing and Still Well Below Developed Markets
Leading University Portfolio in Mexico & Peru
QS Stars™
Overall
Enrollments Market UniversityInstitution
@ 12/31/20 Segment RatingRatings/Ranking
• Ranked #7 university in Mexico
MexicoUniversidad del Valle de México (UVM)
95,000
Premium/ Traditional
• One of only three 4-Star rated universities in Mexico by QS Stars™
Universidad Tecnológica de México (UNITEC)
Mexico
99,000
Value/ Teaching
• Largest private university in Mexico
• 5-Stars rated by QS Stars™ in categories of Teaching & Employability
Peru
Universidad Peruana de Ciencias Aplicadas
(UPC)
55,000
Premium/ Traditional
• Ranked #3 university in Peru
• Only 4-Star rated university in Peru by QS Stars™
Universidad Privada del Norte (UPN)
Peru
73,700
Value/ Teaching
• 2nd largest private university in Peru
• 5-Stars rated by QS Stars™ in categories of Teaching & Employability
Peru
CIBERTEC
13,800
Tech/VocN/A
• 2nd largest private tech/voc institute in Peru
Sources: QS Stars™, Guía Universitaria (UVM), Scimago Institutions Rankings (UPC)
Operating Leading Brands in Multiple Attractive Market Segments
Q4 & FY 2020 PERFORMANCE RESULTS
CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS)
2020 Fourth Quarter - Financial Summary
Q4 '20
Variance Vs. Q4 '19
Notes
($ in millions) (Enrollments in thousands)
ResultsAs Reported Organic/CC1
New Enrollment | 4K | nm | nm | ||
• | Not a material intake cycle | ||||
Total Enrollment | 337K | (8%) | (8%) | • | Driven by lower NE volumes and |
increased attrition from COVID | |||||
Revenue | 285 | (19%) | (13%) | ||
• | Driven by lower enrollment | ||||
Adj. EBITDA | 91 | (9%) | (2%) | ||
• | Benefitting from cost actions | ||||
Adj. EBITDA margin | 31.8% | 351 bps | 379 bps |
Tight Cost Management Mitigating Top Line Pressure Related to COVID
2020 FY - Financial Summary
FY '20
Variance Vs. FY'19
Notes
($ in millions) | |||||
(Enrollments in thousands) | |||||
New Enrollment | 169K | (6%) | (6%) | • | Mexico (-5% vs PY) |
• | Peru (-9% vs. PY) | ||||
Total Enrollment | 337K | (8%) | (8%) | • | Driven by lower NE volumes and |
increased attrition from COVID | |||||
Revenue | $1,025 | (15%) | (9%) | ||
• | Driven by lower enrollment | ||||
Adj. EBITDA | $206 | 1% | 13% | ||
• | Benefitting from cost actions | ||||
Adj. EBITDA margin | 20.1% | 327bps | 398 bps | ||
• | Continued margin progression |
ResultsAs Reported Organic/CC1
Tight Cost Management Mitigating Top Line Pressure Related to COVID
SEGMENT RESULTS
CONTINUING OPERATIONS ONLY (I.E. MEXICO, PERU AND CORPORATE SEGMENTS)
Mexico Segment Results
Q4 Results
FY '20 Results
Organic/CC | Organic/CC | |
($ in millions) | ||
(Enrollments in thousands) | Vs. Q4 '19 (1) | Vs. FY '19 (1) |
Q4 '20
107K (5%)
Notes
FY '20
194K $150 $54
Total Enrollment
Adj. EBITDA
(5%)
194K (5%)
• Driven by lower NE volumes
$535 (9%)
(15%)
$113 (14%)
Acceleration of Mix Shift Towards Online Face-to-Face Operations Disproportionately Impacted by COVID
36.4% (12 bps)21.1%
Peru Segment Results
Q4 Results
FY '20 Results
Organic/CC | Organic/CC | |
($ in millions) | ||
(Enrollments in thousands) | Vs. Q4 '19 (1) | Vs. FY '19 (1) |
Q4 '20
62K (9%)
143K $132 $61
Total Enrollment
Adj. EBITDA
(12%)
FY '20
Notes
143K (12%)
• Driven by lower NE volumes and increased attrition from COVID (primarily UPN)
$483 (7%)
2%
$190 1%
46.0% 523 bps39.2%
Strong Operating Results Despite Significant Enrollment Pressure due to COVID
Corporate G&A Expense
($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
$97
FY 2019
LTM Q1 '20
LTM Q2 '20
LTM Q3 '20
FY 2020
Significant Reductions in Corporate G&A Continuing Throughout 2020 Further Right-Sizing Expected Following Completion of Pending Asset Sales
(1)Estimated G&A reduction assumes completion of all pending asset sales (Walden, Brazil and Honduras).
FY 2020 Debt Capitalization - Adjusted for Pending Asset Sales
($ in millions)
AmountComments
$1,950
Net Proceeds - Pending Asset Sales1
Including assumed debt
Pro-Forma Net Cash Position of Approximately $1.75Bn
(1)Based on anticipated net proceeds (net of taxes, fees and other costs) for sales of Walden, Brazil and Honduras. Includes assumed debt and anticipated release of restricted cash (collateral for letter of credit and bonds at Walden); assumes all pending asset sale transaction close on announced terms.
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 dynamics by segment will be largely unchanged vs. 2020
2022 Adjusted EBITDA expected to be up +51% Vs. 2021 after transition is completed
Financials expected to return to pre-COVID trends starting in 2022
Strong Outlook Expected for New Portfolio Post COVID
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 (Constant Currency) | 337K | $1,000 - $1,040 | $180 - $190 |
FX Impact (spot FX) (1) | - | - | - |
2021 Guidance (@ spot FX) (1) | 337K | $1,000 - $1,040 | $180 - $190 |
Growth % | 0% | (2%) - 2% | (13%) - (8%) |
Continued COVID Headwinds Expected for Much of 2021
Recovery Anticipated in 2022
(1) Based on actual FX rates for January 2021, and current spot FX rates (local currency per US dollar) of MXN 19.93 & PEN 3.64 for February through December 2021. FX impact may change based on fluctuations in currency rates in future periods.
Note: An outlook for 2021 net income and reconciliation of the forward-looking 2021 Adjusted EBITDA outlook to projected net income are not being provided as the company
does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlook and reconciliation. Due to this uncertainty, the company cannot reconcile Adjusted EBITDA to projected net income without unreasonable effort.
Laureate Summary Outlook - 2020 to 2022E (As Reported)1
Total Enrollment (000s)
Revenue ($M)
350
337
337
2020
2021E
2022E
2020
2021E
2022E
Adjusted EBITDA ($M)
Adjusted EBITDA Margin %
2020
25.9
2021E
2022E
2020
2021E
2022E
Strong Rebound Expected for 2022
(1) 2021 and 2022 guidance based on actual FX rates for January 2021, and current spot FX rates (local currency per US dollar) of MXN 19.93 & PEN 3.64 for February 2021 through December 2022. FX impact may change based on fluctuations in currency rates in future periods. 2021 is based on mid-point of guidance.
Note: An outlook for 2021 & 2022 net income and reconciliation of the forward-looking 2021 & 2022 Adjusted EBITDA outlook to projected net income are not being provided
as the company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlook and reconciliation. Due to this uncertainty, the company cannot reconcile Adjusted EBITDA to projected net income without unreasonable effort.
2021 to 2022 Adjusted EBITDA Bridge (Guidance)1
($USD in millions)
G&A Reduction
2021 Guidance (2)
FAS 5 / Indemnification AssetOperational Improvement
2022 Guidance
Strong Rebound Expected for 2022
(1) Based on actual FX rates for January 2021, and current spot FX rates (local currency per US dollar) of MXN 19.93 & PEN 3.64 for February 2021 through December 2022. FX impact may change based on fluctuations in currency rates in future periods.
(2) Based on mid-point of 2021 guidance.
Note: An outlook for 2021 & 2022 net income and reconciliation of the forward-looking 2021 & 2022 Adjusted EBITDA outlook to projected net income are not being provided as the company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlook and reconciliation. Due to this uncertainty, the company cannot reconcile Adjusted EBITDA to projected net income without unreasonable effort.
Portfolio Outlook for 2022 & Beyond
(Normalized Continuing Operations1 )
COVID IMPACTED PERIOD | |||
2016 - 2019 CAGR | 2019 - 2021E CAGR 2 | 2022+ Expected CAGR 3 | |
Total Enrollment | 3% | (4%) | 4% - 6% |
Revenue | 6% | (8%) | 5% - 7% |
Adjusted EBITDA | 9% | (13%) | 9% - 11% |
Adjusted EBITDA Margin | +85bps/yr | (155)bps/yr | +100bps/yr |
Expecting to Return to pre-COVID Trends Starting in 2022
(1) For 2021 and all historical periods, Normalized Continuing Operations is based on operations in Mexico & Peru plus $25M of corporate G&A expense per year
(2) Excludes impact from FAS 5 expenses / indemnification assets in 2019 - 2021E which are related to prior period acquisitions (non-cash)
(3) Based on $USD
Q1 2021 Guidance Details
Revenues | Adj. EBITDA | |
(USD millions) | ||
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) | - | - |
2021 Q1 Guidance (@ spot FX) (1) | $185 - $195 | ($26) - ($22) |
Favorably Impacted by | ||
timing of academic calendar |
(1) Based on actual FX rates for January 2021, and current spot FX rates (local currency per US dollar) of MXN 19.93 & PEN 3.64 for February through March 2021. FX impact may change based on fluctuations in currency rates in future periods.
Note: An outlook for 2021 net income and reconciliation of the forward-looking 2021 Adjusted EBITDA outlook to net income are not being provided as the company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlook and reconciliation. Due to this uncertainty, the company cannot reconcile Adjusted EBITDA to projected net income without unreasonable effort.
APPENDIX
2020 Fourth Quarter - Net Income Reconciliation
Q4 '20B / (W) Vs. Q4 '19Notes
($ in millions)
Adjusted EBITDA
Reported91
$
%
(9) (9%)
• ($9M) impact from FX
Depreciation & Amort.
(27)
(7) (33%)
• Flat excluding amortization of tradename (moved to finite life asset in Q4)
Interest Expense, net
(25)
(2) (8%)
Impairments
(1)
(1)n.m.
Other
(119)
(61)
n.m.
• FX and derivatives
Income Tax
Income/(Loss) From Continuing Operations Discontinued Operations (Net of Tax)
Net Income / (Loss)
(163)
(244)
623
(226)
(305)
624
n.m.
• Tax effect from discrete items
n.m.
n.m.
• Driven by $556M gain on sale of Australia/NZ businesses
379
318
n.m.
Income from Continuing Operations Impacted by FX
2020 FY - Net Income Reconciliation
FY '20
B / (W) Vs. FY '19
($ in millions)
Adjusted EBITDA
Reported206
Notes
$
%
2 1%•
($25M) impact from FX
Depreciation & Amort.
(83)
(1) (1%)
Interest Expense, net
(99)
23 19%•
Lower average debt balances in 2020
Impairments
Other
Income Tax
Income/(Loss) From Continuing Operations Discontinued Operations (Net of Tax)
Net Income / (Loss)
(352)
(352)n.m.
130
• Loss on debt extinguishment in 2019 & FX impacts in 2020
161
n.m.
(298)
• Primarily Laureate tradename impairment
• Tax effect from discrete items
• Driven by impairment charges
(1,386)
n.m.
• Business units sold in 2019 impacting y-o-y comparability; Chile impairment in Q2 2020
(619)
(1,556)n.m.
Income from Continuing Operations Impacted by Impairment Charges
FY 2020 Debt Capitalization
Gross Debt
$ - $799 $250 $1,049
Revolver
Sr. Notes
Local Debt / Seller Notes
$ -
$ -- $799
$173 $423
$173
$1,222
Cash
($750)
($270)
($1,020)
Net Debt / (Cash)
$299
($97)
$202
Net Debt of Only $202M as of Year-End 2020 Revolver Fully Repaid During Fourth Quarter ($410M Available)
Discontinued Operations - Q4 2020 vs. Q4 2019
Online1
Brazil1
Other2
Total Disc. Ops
($ in millions) (Enrollments in thousands)
Q4 '20
Vs. Q4 '19
Organic/ CC vs. Q4 '193
Q4 '20
Vs. Q4 '19
Organic/ CC vs. Q4 '193
Q4 '20
Vs. Q4 '19
12%2 (63%) (62%)32
6 23 11%Total Enrollment
58 256 (6%)
2%
2%
(6%) 21 (91%) (91%) 335
163121 (23%)
4% 48 (83%)
Adjusted EBITDA
43 (10%) (10%) 47 (8%)
17% 8 (87%) (87%) 98
Organic/ CC vs. Q4 '193
Vs. | Organic/ | |
Q4 | CC vs. | |
'19 | Q4 '193 | |
(5%) | (5%) | |
(42%) | (42%) | |
(83%)332 | (43%) | (37%) |
(38%) | (28%) |
Q4 '20
(1) Sale of both Walden University and Brazilian operations expected to close in 2021.
(2) Other predominantly includes divestitures already closed and completed.
(3) Organic Constant Currency (CC) Operations excludes the period-over-period impact from currency fluctuations (if applicable), acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
Discontinued Operations - FY 2020 vs. FY 2019
Online1
($ in millions) (Enrollments in thousands)
(6%)92
Brazil1
Vs. FY '19
Organic/
FY '20
CC vs.FY '20 FY '193
Vs. FY '19
5% 5%174 (12%)
Other2
Total Disc. Ops
Organic/ CC vs. FY '193
Vs. FY '19
Organic/
FY '20
CC vs.FY '20 FY '193
(29%) (29%)298
Vs. FY '19
Organic/ CC vs. FY '193
(17%) (14%)Total Enrollment
58
2% 2% 256 (6%)
(6%) 21
(91%) (91%)
335 (42%) (42%)
185
Adjusted EBITDA
1% 1%386 (33%)
(3%) (3%) 68 (17%)
(1) Sale of both Walden University and Brazilian operations expected to close in 2021.
(2) Other predominantly includes divestitures already closed and completed.
(8%)649
11%
(51%) (45%)1,675
139 (53%)
(47%)
(3) Organic Constant Currency (CC) Operations excludes the period-over-period impact from currency fluctuations (if applicable), acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
(34%) (26%)
392
(31%) (23%)
Q4 2020 vs. Q4 2019 - Adjusted EBITDA Reconciliation
$623 ($1)
(Loss) income from discontinued operations, net of tax Income tax expense
$19 $82
Other non-operating expense (income)
($11) $25
(Gain)/Loss on sale of discontinued operations before taxes, net
($341) $24
Operating income Depreciation and amortization Share-based compensation expense1 (Gain) on impairment of assets2
$290 $131
$0 $27
$1 $1
($201) ($25)
EiP implementation expenses3 Adjusted EBITDA (before allocations) Allocations, net
$8 $21
$98 $155
$0 $2
Adjusted EBITDA
$98 $157
(1) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718.
(2) Represents non-cash charges related to impairments of long-lived assets.
(3) Excellence-in-Process (EiP) implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate's processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and completed dispositions. Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue
FY 2020 vs. FY 2019 - Adjusted EBITDA Reconciliation
($298) $1,088
(Loss) income from discontinued operations, net of tax Income tax expense
$114 $34
Other non-operating expense
$69 $71
(Gain) on sale of discontinued operations before taxes, net
($25) ($793)
Operating (loss) income Depreciation and amortization Share-based compensation expense1 Loss on impairment of assets2
($140) $399
$60 $111
$3 $3
$438 $1
EiP implementation expenses3 Adjusted EBITDA (before allocations) Allocations, net
$30 $48
$391 $561
$1 $7
Adjusted EBITDA
$392 $569
(1) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718.
(2) Represents non-cash charges related to impairments of long-lived assets.
(3) Excellence-in-Process (EiP) implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate's processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and completed dispositions. Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue
Intra-Year Seasonality Trends
• Large intake cycles at end of Q1 (Peru) and end of Q3 (Mexico) drive seasonality of earnings
• Q2 and Q4 are typically Laureate's strongest earnings quarters
Revenue Seasonality
Adjusted EBITDA Seasonality
-24%
Q1
Q2
Q3
Q4
2018
2019
2020
New Enrollments Seasonality
50%
51%
48%
Q22018
Factors Affecting Seasonality
2018
Main intake cycles: - Q1 - Peru
-
Q3 - Mexico
Academic calendar
FX trends
2019
2020
Q1
Q32020
Q4
2019
Normalized Continuing Operations - Summary Results (Adjusted)1
Total Enrollment (000s)
2016
2016
2017
2018
2019
Adjusted EBITDA ($M)Revenue ($M)
2017
2018
2019
Adjusted EBITDA Margin %
2016
2017
2018
2019
2016
2017
2018
Strong Growth Track Record and Consistent Margin Expansion
(1) Defined as historical results for operations in Mexico & Peru, and including $25M of corporate G&A expense per year
2019
Financial Results & 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 | (147.0) | |
General and administrative expenses | 59.0 | 52.1 | 6.9 | 199.8 | 226.3 | (26.5) | |
Loss on impairment of assets | 1.0 | - | 1.0 | 352.0 | 0.2 | 351.8 | |
Operating income (loss) | 36.9 | 57.3 | (20.4) | (329.3) | 36.0 | (365.3) | |
Interest income | 0.6 | 0.7 | (0.1) | 2.2 | 3.3 | (1.1) | |
Interest expense | (25.2) | (23.5) | (1.7) | (100.9) | (125.0) | 24.1 | |
Loss on debt extinguishment | (0.6) | (0.5) | (0.1) | (0.6) | (22.6) | 22.0 | |
(Loss) gain on derivatives | (25.4) | (0.9) | (24.5) | (26.0) | 8.3 | (34.3) | |
Other (expense) income, net | (3.2) | (0.2) | (3.0) | (2.4) | 8.9 | (11.3) | |
Foreign currency exchange (loss) gain, net | (57.6) | (15.7) | (41.9) | 13.5 | (8.1) | 21.6 | |
Loss on disposals of subsidiaries, net | (6.1) | (19.0) | 12.9 | (7.3) | (20.4) | 13.1 | |
Loss from continuing operations before income taxes and | |||||||
equity in net income of affiliates | (80.6) | (1.7) | (78.9) | (450.8) | (119.7) | (331.1) | |
Income tax (expense) benefit | (163.4) | 62.9 | (226.3) | 130.1 | (31.0) | 161.1 | |
Equity in net income of affiliates, net of tax | - | - | - | 0.2 | 0.2 | - | |
(Loss) income from continuing operations | (244.1) | 61.2 | (305.3) | (320.6) | (150.5) | (170.1) | |
Income (loss) from discontinued operations, net of tax | 623.1 | (0.6) | 623.7 | (298.1) | 1,088.1 | (1,386.2) | |
Net income (loss) | 379.0 | 60.6 | 318.4 | (618.7) | 937.7 | (1,556.4) | |
Net loss attributable to noncontrolling interests | 0.3 | 0.3 | - | 5.4 | 0.8 | 4.6 | |
Net income (loss) attributable to Laureate Education, Inc. | $ | 379.3$ | 60.9$ | 318.4$ | (613.3)$ | 938.5$ | (1,551.8) |
interests and equity | $ | 0.3 | |||||
Net income (loss) available to common stockholders | $ | 379.3$ | 60.4$ | 318.9$ | (613.2)$ | 938.3$ | (1,551.5) |
Basic and diluted earnings (loss) per share: | |||||||
Basic weighted average shares outstanding | 209.1 | 214.3 | (5.2) | 209.7 | 221.9 | (12.2) | |
Dilutive weighted average shares outstanding | 209.1 | 214.9 | (5.8) | 209.7 | 221.9 | (12.2) | |
Basic and diluted earnings (loss) per share | $ | 1.81$ | 0.28$ | 1.53$ | (2.93)$ | 4.23$ | (7.16) |
Accretion of redemption value of redeemable noncontrolling- $
(0.5) $
0.5
$
0.1
$
(0.2) $
Note: Dollars in millions, except per share amounts, and may not sum to total due to rounding
Revenue and Adjusted EBITDA by segment
IN MILLIONS
For the three months ended December 31,
2020
2019
Revenues
Mexico Peru
$
149.6$ 131.5
188.1155.7
Corporate & Eliminations
4.2
8.0
Total Revenues
$ 285.2$
351.8(19)% (13)%$
Adjusted EBITDA
Mexico
Peru
Corporate & Eliminations
$ 54.4$ 60.5(24.3)
67.3(19)% (15)%$
63.8(31.7)
Total Adjusted EBITDA
$
90.6$
99.4
% Change | ||||
Organic | ||||
Constant | ||||
Reported Currency(1) | Total | FX | ||
(38.5)$ | (27.4)$ | -$ | -$ | (11.1) |
(24.2) | (15.0) | - | - | (9.2) |
(3.8) | (3.8) | - | - | - |
(66.6)$ | (46.3)$ | -$ | -$ | (20.3) |
(12.9)$ | (10.1)$ | 1.6$ | -$ | (4.4) |
(3.3) | 1.2 | - | - | (4.5) |
7.4 | 7.4 | - | - | - |
(8.8)$ | (1.5)$ | 1.6$ | -$ | (8.9) |
$ Variance Components
Organic
Constant
Currency Other Acq/Div.
(20)% (15)%$
(16)% (10)%
(48)% (48)%
(5)% 2%
23% 23%
(9)%
(2)%
$
(1) Organic Constant Currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets. The "Organic Constant Currency" % changes are calculated by dividing the Organic Constant Currency amounts by the 2019 Revenues and Adjusted EBITDA amounts.
Revenue and Adjusted EBITDA by segment
IN MILLIONS
For the year ended December 31, Revenues Mexico Peru
2020
2019
Corporate & Eliminations Total Revenues
Adjusted EBITDA Mexico
Peru
Corporate & Eliminations Total Adjusted EBITDA
1,212.1(15)% (9)%$
(18)% (9)%$
147.8(24)% (14)%$
% Change | ||||
Organic | ||||
Constant | ||||
Reported Currency(2) | Total | FX | ||
(118.2)$ | (59.8)$ | -$ | -$ | (58.4) |
(63.9) | (40.5) | - | - | (23.4) |
(5.1) | (5.1) | - | - | - |
(187.2)$ | (105.4)$ | -$ | -$ | (81.8) |
(34.9)$ | (21.0)$ | 0.8$ | -$ | (14.7) |
(8.3) | 2.1 | - | - | (10.4) |
45.3 | 45.3 | - | - | - |
2.1$ | 26.4$ | 0.8$ | -$ | (25.1) |
$ Variance Components Organic
Constant
Currency Other Acq/Div.
(12)% (7)%
(41)% (41)%
(4)% 1%
32% 32%
1%
13%
$
(2) Organic Constant Currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets. The "Organic Constant Currency" % changes are calculated by dividing the Organic Constant Currency amounts by the 2019 Revenues and Adjusted EBITDA amounts, excluding the impact of the divestitures.
Consolidated Balance Sheets
IN MILLIONS | December 31, 2020 | December 31, 2019 | Change | |
Assets | ||||
Cash and cash equivalents | $ | 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 equipment, net | 578.5 | 640.6 | (62.1) | |
Operating lease right-of-use assets, net | 462.8 | 521.8 | (59.0) | |
Goodwill and other intangible assets | 800.4 | 1,168.6 | (368.2) | |
Deferred income taxes | 130.6 | 49.4 | 81.2 | |
Other long-term assets | 72.4 | 98.9 | (26.5) | |
Long-term assets held for sale | 1,482.5 | 3,101.0 | (1,618.5) | |
Total assets | $ | 4,970.9$ | 6,496.4$ | (1,525.5) |
Liabilities and stockholders' equity | ||||
Accounts payable and accrued expenses | $ | 200.9$ | 267.7$ | (66.8) |
Deferred revenue and student deposits | 47.2 | 54.8 | (7.6) | |
Total operating leases, including current portion | 519.1 | 559.0 | (39.9) | |
Total long-term debt, including current portion | 995.7 | 1,151.4 | (155.7) | |
Other liabilities | 240.0 | 292.1 | (52.1) | |
Current and long-term liabilities held for sale | 702.3 | 1,354.9 | (652.6) | |
Total liabilities | 2,705.2 | 3,680.0 | (974.8) | |
Redeemable noncontrolling interests and equity | 1.7 | 12.3 | (10.6) | |
Total stockholders' equity | 2,263.9 | 2,804.2 | (540.3) | |
Total liabilities and stockholders' equity | $ | 4,970.9$ | 6,496.4$ | (1,525.5) |
Note: Dollars in millions, and may not sum to total due to rounding |
750.1$
61.6$
Consolidated Statements of Cash Flows
For the year ended December 31,
IN MILLIONS
Cash flows from operating activities Net (loss) income
Net cash provided by operating activities Cash flows from investing activities
Net cash provided by investing activities 587.4Cash flows from financing activities
Net cash used in by financing activities (272.7)
Effects of exchange rate changes on cash (0.5)
Change in cash included in current assets held for sale 195.8
Net change in cash and cash equivalents 769.5
Cash and cash equivalents at beginning of period 97.8
Depreciation and amortization 193.4
Amortization of operating lease right-of-use assets 122.7
Loss on impairment of assets 0.9 Gain on sales and disposal of subsidiaries and property and equipment, net
Loss (Gain) on derivative instruments
(Payments for) proceeds from settlement of derivative contracts Loss on debt extinguishment
Deferred income taxes
Unrealized foreign currency exchange loss Income tax receivable/payable, net Working capital, excluding tax accounts Other non-cash adjustments
Purchase of property and equipment (74.6)
Expenditures for deferred costs (14.5)
Receipts from sales of discontinued operations, net of cash sold, property and equipment and other 676.6
Settlement of derivatives related to sale of discontinued operations and net investment hedge Proceeds from sale of investment
Investing other, net
Decrease in long-term debt, net (177.0)
Payments of deferred purchase price for acquisitions (5.7)
Payments to purchase noncontrolling interests (13.7)
Proceeds from exercise of stock options 25.7
Payments to repurchase common stock (99.5)
Payments of debt issuance costs (0.8)
Financing other, net (1.8)
Cash and cash equivalents at end of period
Note: Dollars in millions, and may not sum to total due to rounding
$
$
2020 | Change | |
(618.7) | (1,556.4) | |
143.5 | (49.9) | |
80.2 | (42.5) | |
790.2 | 789.3 | |
(22.8) | (753.5) | 730.7 |
26.0 | (7.4) | 33.4 |
(0.6) | (8.8) | 8.2 |
0.6 | 28.8 | (28.2) |
(185.7) | (29.8) | (155.9) |
26.3 | 29.2 | (2.9) |
99.6 | (36.2) | 135.8 |
(227.2) | (252.8) | 25.6 |
148.1 | 115.8 | 32.3 |
259.6 | 339.8 | (80.2) |
(155.6) | 81.0 | |
(17.7) | 3.2 | |
1,266.0 | (589.4) | |
12.9 | (12.9) | |
11.5 | (11.5) | |
(0.3) | 0.3 | |
1,116.8 | (529.4) | |
(1,384.6) | 1,207.6 | |
(20.2) | 14.5 | |
(5.8) | (7.9) | |
14.0 | 11.7 | |
(264.1) | 164.6 | |
(9.1) | 8.3 | |
(4.2) | 2.4 | |
(1,674.0) | 1,401.3 | |
5.1 | (5.6) | |
184.6 | 11.2 | |
(27.8) | 797.3 | |
125.6 | (27.8) | |
97.8$ | 769.5 |
2019
$
937.7$
- - -
867.3$
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 from continuing operations | $ | (244.1)$ | 61.2$ | (305.3)$ | (320.6)$ | (150.5)$ | (170.1) |
Plus: | |||||||
Equity in net income of affiliates, net of tax | - | - | - | (0.2) | (0.2) | - | |
Income tax expense (benefit) | 163.4 | (62.9) | 226.3 | (130.1) | 31.0 | (161.1) | |
Loss from continuing operations before income taxes and | |||||||
equity in net income of affiliates | (80.6) | (1.7) | (78.9) | (450.8) | (119.7) | (331.1) | |
Plus: | |||||||
Loss on disposal of subsidiaries, net | 6.1 | 19.0 | (12.9) | 7.3 | 20.4 | (13.1) | |
Foreign currency exchange loss (gain), net | 57.6 | 15.7 | 41.9 | (13.5) | 8.1 | (21.6) | |
Other expense (income), net | 3.2 | 0.2 | 3.0 | 2.4 | (8.9) | 11.3 | |
Loss (gain) on derivatives | 25.4 | 0.9 | 24.5 | 26.0 | (8.3) | 34.3 | |
Loss on debt extinguishment | 0.6 | 0.5 | 0.1 | 0.6 | 22.6 | (22.0) | |
Interest expense | 25.2 | 23.5 | 1.7 | 100.9 | 125.0 | (24.1) | |
Interest income | (0.6) | (0.7) | 0.1 | (2.2) | (3.3) | 1.1 | |
Operating income (loss) | 36.9 | 57.3 | (20.4) | (329.3) | 36.0 | (365.3) | |
Plus: | |||||||
Depreciation and amortization | 27.2 | 20.4 | 6.8 | 83.1 | 82.0 | 1.1 | |
EBITDA | 64.1 | 77.7 | (13.6) | (246.2) | 118.0 | (364.2) | |
Plus: | |||||||
Share-based compensation expense (3) | 2.3 | 2.8 | (0.5) | 10.2 | 10.3 | (0.1) | |
Loss on impairment of assets (4) | 1.0 | - | 1.0 | 352.0 | 0.2 | 351.8 | |
EiP implementation expenses (5) | 23.2 | 18.9 | 4.3 | 89.6 | 75.0 | 14.6 | |
Adjusted EBITDA | $ | 90.6$ | 99.4$ | (8.8)$ | 205.7$ | 203.6$ | 2.1 |
Revenues | $ | 285.2$ | 351.8$ | (66.6)$ | 1,024.9$ | 1,212.1$ | (187.2) |
Adjusted EBITDA margin | 31.8 % | 28.3 % | 351 bps | 20.1 % | 16.8 % | 327 bps |
(3) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718, "Stock Compensation."
(4) Represents non-cash charges related to impairments of long-lived assets.
(5) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate's processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and
completed dispositions. Beginning in 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.
.
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
Capital expenditures:
$
259.6$
339.8$ 396.9
Purchase of property and equipment Expenditures for deferred costs Free cash flow
(74.6)(14.5)
(155.6)(238.0)
(17.7)(19.9)
$
170.5$
166.5$ 139.0
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,
(in millions except for enrollment)
New Enrollment:
Mexico
Peru
Total New Enrollment
Total Enrollment as of Reporting Date:
Mexico 194,000192,100
Peru 142,500143,500
Total Enrollment
Revenues: Mexico Peru
Corporate & Eliminations Consolidated Total Revenues
Adjusted EBITDA: Mexico
Peru
Corporate & Eliminations Consolidated Total Adjusted EBITDA
June 30, | March 31, | ||||||
2020 | 2020 | 2020 | 2019 | 2018 | |||
12,100 | 28,400 | 107,200 | 112,400 | 109,000 | |||
24,500 | 18,300 | 61,800 | 67,900 | 58,300 | |||
36,600 | 46,700 | 169,000 | 180,300 | 167,300 | |||
168,400 | 193,800 | 194,000 | 204,200 | 206,300 | |||
152,800 | 163,500 | 142,500 | 162,200 | 147,700 | |||
321,200 | 357,300 | 336,500 | 366,400 | 354,000 | |||
$ | 149.6$ | 115.9$ | 114.9$ | 154.2$ | 534.6$ | 652.8$ | 646.1 |
131.5 | 127.3 | 187.6 | 36.5 | 482.9 | 546.8 | 496.4 | |
4.2 | 0.3 | 1.4 | 1.6 | 7.4 | 12.5 | 2.1 | |
$ | 285.2$ | 243.5$ | 303.9$ | 192.3$ | 1,024.9$ | 1,212.1$ | 1,144.6 |
$ | 54.4$ | 15.5$ | 19.7$ | 23.3$ | 112.9$ | 147.8$ | 143.1 |
60.5 | 56.5 | 99.2 | (26.7) | 189.5 | 197.5 | 169.2 | |
(24.3) | (21.6) | (24.8) | (26.0) | (96.7) | (141.7) | (172.7) | |
$ | 90.6$ | 50.4$ | 94.1$ | (29.4)$ | 205.7$ | 203.6$ | 139.6 |
December 31, September 30, 2020
2020
3,70063,000
50018,4004,20081,400
336,500
335,600
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Laureate Education Inc. published this content on 25 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 February 2021 15:42:00 UTC.