BALTIMORE, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Laureate Education, Inc. (NASDAQ: LAUR) today announced financial results for the second quarter and six months ended June 30, 2020.

Second Quarter 2020 Highlights (compared to second quarter 2019):

• On a reported basis, revenue decreased 20% to $791.7 million, due primarily to the weakening of foreign currencies against the US Dollar and impacts from the COVID-19 pandemic, including changes to timing of the academic calendar. On an organic constant currency basis¹, revenue decreased by 8%.
• Operating loss for the second quarter of 2020 was $(254.8) million, driven by impairment charges of $445.1 million, as compared to operating income of $217.2 million for the second quarter of 2019.
• Net loss (including discontinued operations) for the second quarter of 2020 was $(311.6) million, attributable to the impairment charges, as compared to net income of $779.6 million for the second quarter of 2019, which was largely attributable to gains from asset sales.
• Adjusted EBITDA was $259.0 million, a decrease of $39.8 million, due primarily to the weakening of foreign currencies against the US Dollar. On an organic constant currency basis, Adjusted EBITDA increased $2.0 million and was ahead of guidance driven primarily by tight cost controls and the acceleration of productivity initiatives.

Six Months Ended June 30, 2020 Highlights (compared to six months ended June 30, 2019):

• New enrollments decreased 11%, down 8% excluding the divestiture of UniNorte Brazil in the prior year. New enrollment volumes were affected by the COVID-19 pandemic.
• Total enrollments decreased 8%, down 5% excluding the divestiture of UniNorte Brazil in the prior year.
• On a reported basis, revenue decreased 17% to $1,320.2 million, due primarily to the weakening of foreign currencies against the US Dollar and impacts from the COVID-19 pandemic, including changes to timing of the academic calendar. On an organic constant currency basis, revenue decreased 6%.
• Operating loss for the six months ended June 30, 2020 was $(371.9) million, driven by impairment charges of $448.9 million, as compared to operating income of $125.1 million for the six months ended June 30, 2019.
• Net loss (including discontinued operations) for the six months ended June 30, 2020 was $(213.3) million, mainly attributable to the impairment charges partially offset by a discrete tax benefit, as compared to net income (including discontinued operations) of $973.9 million for the six months ended June 30, 2019, which was largely attributable to gains from asset sales.
• Adjusted EBITDA was $222.2 million, a decrease of $47.0 million, due primarily to the weakening of foreign currencies against the US Dollar. On an organic constant currency basis, Adjusted EBITDA decreased $7.3 million.

Eilif Serck-Hanssen, President and Chief Executive Officer, said, “Despite the COVID-19 pandemic, Laureate delivered a solid second quarter with Adjusted EBITDA results that were ahead of expectations in large part due to tight cost controls and the acceleration of productivity initiatives. Our total enrollment base remains relatively stable, our liquidity position is strong, and we have seen a reversal in some of the FX headwinds that we were facing in the early stages of this pandemic. The past five months have demonstrated the resiliency of Laureate's business model, enabled by our ability to deliver innovative and high-quality educational offerings at affordable prices.”

¹ Organic constant currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items.

Mr. Serck-Hanssen added, “We remain committed to our strategic review process as evidenced by our announcement last week to sell our Australia and New Zealand businesses at a highly accretive multiple.”

Second Quarter 2020 Results

For the second quarter of 2020, revenue on a reported basis was $791.7 million, a decrease of $200.7 million, or 20%, compared to the second quarter of 2019, due to the weakening of foreign currencies against the US Dollar and impacts from the COVID-19 pandemic, including changes to timing of the academic calendar. On an organic constant basis, revenue decreased 8%. The operating loss for the second quarter of 2020 was $(254.8) million, compared to an operating income of $217.2 million for the second quarter of 2019, a decrease of $(472.0) million, affected by impairment charges of $445.1 million and weaker currencies. The impairment charge for the second quarter was primarily attributable to our Chilean operations. During the second quarter, the Company identified an impairment indicator and completed a valuation of the fair value of our Chilean operations. This analysis revealed that the range of values that could be expected to be realized was lower than the carrying value of our Chilean reporting unit. Net loss (including discontinued operations) for the second quarter of 2020 was $(311.6) million, attributable to the impairment charges, as compared to net income (including discontinued operations) of $779.6 million for the second quarter of 2019, which included a $641.5 million gain primarily related to the sale of our institutions in Spain and Portugal. Basic and diluted loss per share were $(1.47) for the second quarter of 2020.

Adjusted EBITDA was $259.0 million in the second quarter of 2020, a decrease of $39.8 million, compared to the second quarter of 2019, due primarily to the weakening of foreign currencies against the US Dollar, as revenue softness was largely offset by cost actions. On an organic constant currency basis, Adjusted EBITDA increased $2.0 million and was ahead of guidance driven primarily by tight cost controls and the acceleration of productivity initiatives.

Six Months Ended June 30, 2020 Results

New enrollments for the six months ended June 30, 2020 decreased 11%, compared to new enrollment activity for the six months ended June 30, 2019. Excluding the sale of UniNorte (Brazil) in the prior year, new enrollments decreased 8% reflecting the impact from the COVID-19 pandemic, while total enrollments were relatively stable, down 5%, as a result of solid re-enrollments. Excluding the divestiture of UniNorte Brazil, new enrollments in Brazil were down 13%. New enrollments in Mexico and Andean regions were down 5% and 7%, respectively. Rest of World grew new enrollments by 31% as compared to the prior-year period as Australia continues to scale up. For Online & Partnerships, enrollments continue to be affected by the planned transition away from lower revenue and margin producing international students. For Walden's core domestic portfolio, new enrollments increased 3% and total enrollments were essentially flat versus the same period in the prior year. On an organic basis, total enrollments through June 30, 2020 were down 5% compared to the period ended June 30, 2019.

For the six months ended June 30, 2020, revenue on a reported basis was $1,320.2 million, a decrease of $273.3 million, or 17%, when compared to the six months ended June 30, 2019, due to the weakening of foreign currencies against the US Dollar and impacts from the COVID-19 pandemic, including changes to the timing of the academic calendar. On an organic constant currency basis, revenue decreased 6%. The operating loss for the six months ended June 30, 2020 was $(371.9) million, compared to an operating income of $125.1 million for the six months ended June 30, 2019, a decrease of $497.0 million. Operating loss during the 2020 period was driven by impairment charges of $448.9 million. Net loss (including discontinued operations) for the six months ended June 30, 2020 was $(213.3) million, attributable to the impairment charges partially offset by a discrete tax benefit, as compared to net income (including discontinued operations) of $973.9 million for the six months ended June 30, 2019 that was largely attributable to gains from asset sales. Basic and diluted loss per share for the six months ended June 30, 2020 were $(1.00).

Adjusted EBITDA was $222.2 million for the six months ended June 30, 2020, a decrease of $47.0 million, compared to the six months ended June 30, 2019, due primarily to the weakening of foreign currencies against the US Dollar, as revenue softness was largely offset by cost actions. On an organic constant currency basis, Adjusted EBITDA decreased $7.3 million.

Balance Sheet and Capital Structure

Laureate has a strong financial position with $629.6 million in cash as of June 30, 2020, which does not include $34.2 million of cash recorded at subsidiaries that were classified as held for sale at June 30, 2020. Additionally, these balances do not include over $750 million in gross proceeds expected from our previously announced pending asset sales in Australia/New Zealand and Malaysia.

The significant deleveraging of the Company's balance sheet over the past two years has resulted in a current net debt to Adjusted EBITDA ratio of below 2x. The Company's revolving credit facility and senior notes are not due until 2024 and 2025, respectively.

2020 Outlook

Laureate is updating its full-year 2020 guidance to reflect an improved outlook, as well as the reclassification of the Company’s Rest of World segment to Discontinued Operations reflecting the recently announced agreement to sell its businesses in Australia and New Zealand.

Based on current foreign exchange spot rates², Laureate expects its full-year 2020 results to be as follows:

Continuing Operations

• Total enrollments estimated to be approximately 786,000 students;
• Revenues estimated to be in the range of $2,490 to $2,590 million; and
• Adjusted EBITDA estimated to be in the range of $510 to $540 million.

Consolidated Operations

• Free Cash Flow, defined as operating cash flow less capital expenditures, expected to be in the range of $150 million to $180 million.

This updated guidance assumes that all entities currently included within continuing operations remain there for the entirety of 2020 (except for the Rest of World segment as discussed above). If and when additional entities are required to be moved to discontinued operations during 2020, guidance will be revised.

Reconciliations of forward-looking non-GAAP measures (2020 Adjusted EBITDA outlook and 2020 Free Cash Flow 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 and Free Cash Flow to projected net income and operating cash flow, respectively, without unreasonable effort.

Please see the “Forward-Looking Statements” section in this release for a discussion of certain risks related to this outlook.

² Based on actual FX rates for January-July 2020, and current spot FX rates (local currency per U.S. Dollar) of MXN 21.98, BRL 5.16, CLP 766.00, PEN 3.52 and AUD 1.40 for August - December 2020. FX impact may change based on fluctuations in currency rates in future periods.

About Laureate Education, Inc.

Laureate Education, Inc. has built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with more than 800,000 students enrolled at over 25 institutions with more than 150 campuses, which we collectively refer to as the Laureate International Universities network. Laureate offers high-quality, undergraduate, graduate and specialized degree programs in a wide range of academic disciplines that provide attractive employment prospects. Laureate believes that when our students succeed, countries prosper and societies benefit.