Third Quarter 2023 Highlights (compared to third quarter 2022):
- On a reported basis, revenue increased 20% to
$361.5 million . On an organic constant currency basis1, revenue increased 8%. - Operating income for the third quarter of 2023 was
$58.7 million , compared to operating income of$56.3 million for the third quarter of 2022. - Net income for the third quarter of 2023 was
$36.0 million , compared to net income of$31.0 million for the third quarter of 2022, - Adjusted EBITDA for the third quarter of 2023 was
$78.4 million , compared to Adjusted EBITDA of$72.8 million for the third quarter of 2022.
Nine Months Ended
- New enrollments increased 9%.
- Total enrollments increased 6%.
- On a reported basis, revenue increased 20% to
$1,074.9 million . On an organic constant currency basis1, revenue increased 11%. - Operating income for the nine months ended
September 30, 2023 was$228.8 million , compared to operating income of$192.0 million for the nine months endedSeptember 30, 2022 . - Net income for the nine months ended
September 30, 2023 was$65.5 million , compared to net income of$29.9 million for the nine months endedSeptember 30, 2022 . - Adjusted EBITDA for the nine months ended
September 30, 2023 was$287.3 million , compared to Adjusted EBITDA of$244.1 million for the nine months endedSeptember 30, 2022 .
1 Organic constant currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items.
Third Quarter 2023 Results
For the third quarter of 2023, revenue on a reported basis was
Adjusted EBITDA for the third quarter of 2023 was
Nine Months Ended
New enrollments for the nine months ended
For the nine months ended
Adjusted EBITDA for the nine months ended
Balance Sheet and Capital Structure
Laureate has a strong balance sheet position. As of
As of
Special Cash Dividend
Laureate today announced that its Board of Directors approved the payment of a special cash dividend (the "Dividend") equal to
The Company expects that the entire amount of the Dividend will be in excess of its current and accumulated earnings and profits (as determined for
Outlook for Fiscal 2023
Laureate is updating its full-year 2023 guidance, reflecting a narrower range on an organic constant currency basis as well as the impact of weaker foreign currency rates.
Based on the current foreign exchange spot rates2, Laureate currently expects its full-year 2023 results to be as follows:
- Total enrollments are now expected to be approximately 447,000 students, reflecting growth of approximately 6% versus 2022;
- Revenues are now expected to be in the range of
$1,457 million to$1,465 million , reflecting growth of 17%-18% on an as-reported basis and 10% on an organic constant currency basis versus 2022; and - Adjusted EBITDA is now expected to be in the range of
$410 million to$416 million , reflecting growth of 21%-23% on an as-reported basis and 14%-16% on an organic constant currency basis versus 2022.
Reconciliations of forward-looking non-GAAP measures, specifically the 2023 Adjusted EBITDA outlook, to the relevant forward-looking GAAP measures are not being provided, as Laureate does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlooks and reconciliations. Due to this uncertainty, the Company cannot reconcile projected Adjusted EBITDA to projected net income without unreasonable effort.
Please see the “Forward-Looking Statements” section in this release for a discussion of certain risks related to this outlook.
Conference Call
Laureate will host an earnings conference call today at
2 Based on actual FX rates for January-
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 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. In particular, statements regarding the amount, timing, process, tax treatment and impact of any future dividends represent forward-looking statements. All statements we make relating to guidance (including, but not limited to, total enrollments, revenues, and Adjusted EBITDA), and all statements we make relating to our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction 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 current growth strategy and the impact of any completed 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
Presentation of Non-GAAP Measures
In addition to the results provided in accordance with
Adjusted EBITDA consists of net income (loss), 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 provides 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 and cash equivalents (or net debt) consists of total gross debt, less total cash and cash equivalents. Net debt provides a useful indicator about Laureate’s leverage and liquidity.
Laureate’s calculations of Adjusted EBITDA, and total debt, net of cash and cash equivalents (or net debt) 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.
About
Key Metrics and Financial Tables
(Dollars in millions, except per share amounts, and may not sum due to rounding)
New and Total Enrollments by segment
New Enrollments | Total Enrollments | ||||||||||||
YTD 3Q 2023 | YTD 3Q 2022 | Change | As of | As of | Change | ||||||||
146,600 | 133,700 | 10 | % | 248,500 | 228,000 | 9 | % | ||||||
86,200 | 79,100 | 9 | % | 210,200 | 202,900 | 4 | % | ||||||
Laureate | 232,800 | 212,800 | 9 | % | 458,700 | 430,900 | 6 | % |
Consolidated Statements of Operations
For the three months ended | For the nine months ended | ||||||||||||||||||||||
IN MILLIONS | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||
Revenues | $ | 361.5 | $ | 301.0 | $ | 60.5 | $ | 1,074.9 | $ | 895.9 | $ | 179.0 | |||||||||||
Costs and expenses: | |||||||||||||||||||||||
Direct costs | 291.1 | 229.4 | 61.7 | 810.4 | 655.1 | 155.3 | |||||||||||||||||
General and administrative expenses | 11.8 | 15.3 | (3.5 | ) | 34.0 | 48.8 | (14.8 | ) | |||||||||||||||
Loss on impairment of assets | — | — | — | 1.6 | 0.1 | 1.5 | |||||||||||||||||
Operating income | 58.7 | 56.3 | 2.4 | 228.8 | 192.0 | 36.8 | |||||||||||||||||
Interest income | 2.8 | 2.0 | 0.8 | 6.9 | 5.6 | 1.3 | |||||||||||||||||
Interest expense | (5.2 | ) | (3.7 | ) | (1.5 | ) | (17.3 | ) | (11.6 | ) | (5.7 | ) | |||||||||||
Other income, net | 0.1 | 1.4 | (1.3 | ) | 0.2 | 0.4 | (0.2 | ) | |||||||||||||||
Foreign currency exchange gain (loss), net | 9.8 | 15.1 | (5.3 | ) | (51.6 | ) | (2.9 | ) | (48.7 | ) | |||||||||||||
Gain on disposal of subsidiaries, net | 3.3 | — | 3.3 | 3.6 | 1.5 | 2.1 | |||||||||||||||||
Income from continuing operations before income taxes and equity in net income of affiliates | 69.5 | 71.1 | (1.6 | ) | 170.7 | 185.0 | (14.3 | ) | |||||||||||||||
Income tax expense | (33.7 | ) | (39.3 | ) | 5.6 | (101.4 | ) | (159.2 | ) | 57.8 | |||||||||||||
Equity in net income of affiliates, net of tax | — | — | — | — | 0.1 | (0.1 | ) | ||||||||||||||||
Income from continuing operations | 35.7 | 31.9 | 3.8 | 69.3 | 25.9 | 43.4 | |||||||||||||||||
Income (loss) from discontinued operations, net of tax | 0.2 | (0.8 | ) | 1.0 | (3.8 | ) | 4.1 | (7.9 | ) | ||||||||||||||
Net income | 36.0 | 31.0 | 5.0 | 65.5 | 29.9 | 35.6 | |||||||||||||||||
Net loss attributable to noncontrolling interests | 0.2 | 0.1 | 0.1 | 0.2 | 0.4 | (0.2 | ) | ||||||||||||||||
Net income attributable to | $ | 36.2 | $ | 31.1 | $ | 5.1 | $ | 65.7 | $ | 30.3 | $ | 35.4 |
Basic and diluted earnings per share: | |||||||||||||||||||
Basic weighted average shares outstanding | 157.3 | 164.6 | (7.3 | ) | 157.2 | 169.9 | (12.7 | ) | |||||||||||
Diluted weighted average shares outstanding | 157.8 | 165.0 | (7.2 | ) | 157.7 | 170.4 | (12.7 | ) | |||||||||||
Basic and diluted earnings per share | $ | 0.23 | $ | 0.19 | $ | 0.04 | $ | 0.42 | $ | 0.17 | $ | 0.25 |
Revenue and Adjusted EBITDA by segment
IN MILLIONS | ||||||||||||||||||||||||||||||
% Change | $ Variance Components | |||||||||||||||||||||||||||||
For the three months ended | 2023 | 2022 | Reported | Organic Constant Currency(1) | Total | Organic Constant Currency | Other | Acq/Div. | FX | |||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||
$ | 185.4 | $ | 147.8 | 25 | % | 6 | % | $ | 37.6 | $ | 8.8 | $ | — | $ | — | $ | 28.8 | |||||||||||||
176.2 | 152.5 | 16 | % | 10 | % | 23.7 | 14.7 | — | — | 9.0 | ||||||||||||||||||||
Corporate & Eliminations | — | 0.7 | (100 | )% | (100 | )% | (0.7 | ) | (0.7 | ) | — | — | — | |||||||||||||||||
Total Revenues | $ | 361.5 | $ | 301.0 | 20 | % | 8 | % | $ | 60.5 | $ | 22.7 | $ | — | $ | — | $ | 37.8 | ||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||
$ | 21.9 | $ | 23.4 | (6 | )% | (23 | )% | $ | (1.5 | ) | $ | (5.4 | ) | $ | 0.3 | $ | — | $ | 3.6 | |||||||||||
66.3 | 61.2 | 8 | % | 3 | % | 5.1 | 1.8 | — | — | 3.3 | ||||||||||||||||||||
Corporate & Eliminations | (9.9 | ) | (11.9 | ) | 17 | % | 17 | % | 2.0 | 2.0 | — | — | — | |||||||||||||||||
Total Adjusted EBITDA | $ | 78.4 | $ | 72.8 | 8 | % | (2 | )% | $ | 5.6 | $ | (1.6 | ) | $ | 0.3 | $ | — | $ | 6.9 |
% Change | $ Variance Components | |||||||||||||||||||||||||||||
For the nine months ended | 2023 | 2022 | Reported | Organic Constant Currency(1) | Total | Organic Constant Currency | Other | Acq/Div. | FX | |||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||
$ | 559.5 | $ | 435.0 | 29 | % | 13 | % | $ | 124.5 | $ | 56.5 | $ | — | $ | — | $ | 68.0 | |||||||||||||
515.4 | 457.1 | 13 | % | 10 | % | 58.3 | 47.0 | — | — | 11.3 | ||||||||||||||||||||
Corporate & Eliminations | — | 3.8 | (100 | )% | (100 | )% | (3.8 | ) | (3.8 | ) | — | — | — | |||||||||||||||||
Total Revenues | $ | 1,074.9 | $ | 895.9 | 20 | % | 11 | % | $ | 179.0 | $ | 99.7 | $ | — | $ | — | $ | 79.3 | ||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||
$ | 109.1 | $ | 79.8 | 37 | % | 19 | % | $ | 29.3 | $ | 15.1 | $ | 0.4 | $ | — | $ | 13.8 | |||||||||||||
207.1 | 201.4 | 3 | % | 1 | % | 5.7 | 1.1 | — | — | 4.6 | ||||||||||||||||||||
Corporate & Eliminations | (28.8 | ) | (37.2 | ) | 23 | % | 23 | % | 8.4 | 8.4 | — | — | — | |||||||||||||||||
Total Adjusted EBITDA | $ | 287.3 | $ | 244.1 | 18 | % | 10 | % | $ | 43.2 | $ | 24.4 | $ | 0.4 | $ | — | $ | 18.4 |
(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. Organic Constant Currency is calculated 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. The “Organic Constant Currency” percentage changes are calculated by dividing the Organic Constant Currency amounts by the 2022 Revenues and Adjusted EBITDA amounts, excluding the impact of the divestitures.
Consolidated Balance Sheets
IN MILLIONS | Change | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 130.9 | $ | 85.2 | $ | 45.7 | |||
Receivables (current), net | 95.7 | 80.7 | 15.0 | ||||||
Other current assets | 52.7 | 60.3 | (7.6 | ) | |||||
Property and equipment, net | 543.6 | 523.4 | 20.2 | ||||||
Operating lease right-of-use assets, net | 356.4 | 389.6 | (33.2 | ) | |||||
804.4 | 735.1 | 69.3 | |||||||
Deferred income taxes | 58.1 | 51.9 | 6.2 | ||||||
Other long-term assets | 44.3 | 46.0 | (1.7 | ) | |||||
Current and long-term assets held for sale | 11.3 | — | 11.3 | ||||||
Total assets | $ | 2,097.3 | $ | 1,972.2 | $ | 125.1 | |||
Liabilities and stockholders' equity | |||||||||
Accounts payable and accrued expenses | $ | 196.1 | $ | 178.6 | $ | 17.5 | |||
Deferred revenue and student deposits | 81.0 | 51.3 | 29.7 | ||||||
Total operating leases, including current portion | 393.2 | 415.9 | (22.7 | ) | |||||
Total long-term debt, including current portion | 132.1 | 232.1 | (100.0 | ) | |||||
Other liabilities | 318.3 | 318.6 | (0.3 | ) | |||||
Current and long-term liabilities held for sale | 11.5 | — | 11.5 | ||||||
Total liabilities | 1,132.2 | 1,196.5 | (64.3 | ) | |||||
Redeemable equity | 1.4 | 1.4 | — | ||||||
Total stockholders' equity | 963.6 | 774.4 | 189.2 | ||||||
Total liabilities and stockholders' equity | $ | 2,097.3 | $ | 1,972.2 | $ | 125.1 |
Consolidated Statements of Cash Flows
For the nine months ended | |||||||||||
IN MILLIONS | 2023 | 2022 | Change | ||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 65.5 | $ | 29.9 | $ | 35.6 | |||||
Depreciation and amortization | 52.0 | 43.6 | 8.4 | ||||||||
Loss (gain) on sales and disposal of subsidiaries and property and equipment, net | 5.3 | (5.8 | ) | 11.1 | |||||||
Deferred income taxes | (9.5 | ) | 8.2 | (17.7 | ) | ||||||
Unrealized foreign currency exchange loss (gain) | 51.1 | (2.2 | ) | 53.3 | |||||||
Income tax receivable/payable, net | (6.7 | ) | 53.6 | (60.3 | ) | ||||||
Working capital, excluding tax accounts | (25.8 | ) | (17.8 | ) | (8.0 | ) | |||||
Other non-cash adjustments | 55.6 | 45.2 | 10.4 | ||||||||
Net cash provided by operating activities | 187.4 | 154.7 | 32.7 | ||||||||
Cash flows from investing activities | |||||||||||
Purchase of property and equipment | (26.7 | ) | (16.8 | ) | (9.9 | ) | |||||
Expenditures for deferred costs | — | (0.4 | ) | 0.4 | |||||||
Receipts from sales of discontinued operations and property and equipment | 0.5 | 83.4 | (82.9 | ) | |||||||
Net cash (used in) provided by investing activities | (26.2 | ) | 66.3 | (92.5 | ) | ||||||
Cash flows from financing activities | |||||||||||
Decrease in long-term debt, net | (119.1 | ) | (35.2 | ) | (83.9 | ) | |||||
Proceeds from exercise of stock options | 3.2 | 11.9 | (8.7 | ) | |||||||
Payments to repurchase common stock | — | (207.2 | ) | 207.2 | |||||||
Financing other, net | (4.3 | ) | (6.0 | ) | 1.7 | ||||||
Net cash used in financing activities | (120.2 | ) | (236.5 | ) | 116.3 | ||||||
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash | 4.0 | 6.4 | (2.4 | ) | |||||||
Change in cash included in current assets held for sale | (0.3 | ) | — | (0.3 | ) | ||||||
Net change in Cash and cash equivalents and Restricted cash | 44.7 | (9.1 | ) | 53.8 | |||||||
Cash and cash equivalents and Restricted cash at beginning of period | 93.8 | 345.6 | (251.8 | ) | |||||||
Cash and cash equivalents and Restricted cash at end of period | $ | 138.4 | $ | 336.5 | $ | (198.1 | ) |
Non-GAAP Reconciliation
The following table reconciles Net income to Adjusted EBITDA:
For the three months ended | For the nine months ended | ||||||||||||||||||||||
IN MILLIONS | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||
Net income | $ | 36.0 | $ | 31.0 | $ | 5.0 | $ | 65.5 | $ | 29.9 | $ | 35.6 | |||||||||||
Plus: | |||||||||||||||||||||||
(Income) loss from discontinued operations, net of tax | (0.2 | ) | 0.8 | (1.0 | ) | 3.8 | (4.1 | ) | 7.9 | ||||||||||||||
Income from continuing operations | 35.7 | 31.9 | 3.8 | 69.3 | 25.9 | 43.4 | |||||||||||||||||
Plus: | |||||||||||||||||||||||
Equity in net income of affiliates, net of tax | — | — | — | — | (0.1 | ) | 0.1 | ||||||||||||||||
Income tax expense | 33.7 | 39.3 | (5.6 | ) | 101.4 | 159.2 | (57.8 | ) | |||||||||||||||
Income from continuing operations before income taxes and equity in net income of affiliates | 69.5 | 71.1 | (1.6 | ) | 170.7 | 185.0 | (14.3 | ) | |||||||||||||||
Plus: | |||||||||||||||||||||||
Gain on disposal of subsidiaries, net | (3.3 | ) | — | (3.3 | ) | (3.6 | ) | (1.5 | ) | (2.1 | ) | ||||||||||||
Foreign currency exchange (gain) loss, net | (9.8 | ) | (15.1 | ) | 5.3 | 51.6 | 2.9 | 48.7 | |||||||||||||||
Other income, net | (0.1 | ) | (1.4 | ) | 1.3 | (0.2 | ) | (0.4 | ) | 0.2 | |||||||||||||
Interest expense | 5.2 | 3.7 | 1.5 | 17.3 | 11.6 | 5.7 | |||||||||||||||||
Interest income | (2.8 | ) | (2.0 | ) | (0.8 | ) | (6.9 | ) | (5.6 | ) | (1.3 | ) | |||||||||||
Operating income | 58.7 | 56.3 | 2.4 | 228.8 | 192.0 | 36.8 | |||||||||||||||||
Plus: | |||||||||||||||||||||||
Depreciation and amortization | 17.9 | 14.5 | 3.4 | 52.0 | 43.6 | 8.4 | |||||||||||||||||
EBITDA | 76.6 | 70.8 | 5.8 | 280.8 | 235.6 | 45.2 | |||||||||||||||||
Plus: | |||||||||||||||||||||||
Share-based compensation expense (2) | 1.8 | 1.8 | — | 4.9 | 7.0 | (2.1 | ) | ||||||||||||||||
Loss on impairment of assets (3) | — | — | — | 1.6 | 0.1 | 1.5 | |||||||||||||||||
EiP implementation expenses (4) | — | 0.2 | (0.2 | ) | — | 1.3 | (1.3 | ) | |||||||||||||||
Adjusted EBITDA | $ | 78.4 | $ | 72.8 | $ | 5.6 | $ | 287.3 | $ | 244.1 | $ | 43.2 |
(2) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718, "Stock Compensation."
(3) Represents non-cash charges related to impairments of long-lived assets.
(4) Excellence-in-Process (EiP) implementation expenses were 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), as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs that were incurred in connection with previous dispositions. The EiP initiative was completed as of
Investor Relations Contact:
ir@laureate.net
Media Contacts:
Adam Smith
adam.smith@laureate.net
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