Financial and Operational Highlights
“The strength of this season's record enrollment provides us with substantial momentum heading into 2005 and affords us great visibility into next year and beyond due to our high student retention and program length of up to six years.”
-- Total student enrollment at Laureate's campus-based and online universities reached 154,044 students, an increase of 39% over last year.
-- For campus-based universities owned at least one year, new student enrollment increased 28% year-over-year driving a 20% increase in total enrollment to 114,367 students from 95,143 students in the same period last year.
-- Laureate Online reported a 20% year-over-year increase in total student enrollment excluding the impact of acquisitions, its highest level of growth since March 2003. The Company reported a 20% increase in new online student enrollment.
-- As previously announced, Laureate Education entered the rapidly growing post secondary market of Peru with the acquisition of Universidad Peruana de Ciencias Aplicadas (UPC) and extended its presence in France by acquiring the entity that manages Ecole Centrale d'Electronique (ECE). Laureate also acquired the remaining 49% interest in Walden University, now the centerpiece of Laureate Online, giving the Company 100% ownership of its fastest growing subsidiary.
-- Third quarter 2004 revenues increased 37% to $146.1 million, compared to $106.3 million in the third quarter of 2003.
-- Total operating income for the third quarter 2004 increased to $17.7 million versus $11.3 million in the third quarter of 2003, an increase of 57%.
-- The Company reported third quarter 2004 EPS from continuing operations of $0.19 per diluted share.
Douglas Becker, Chairman and Chief Executive Officer of Laureate Education, stated, "The strength of this season's record enrollment provides us with substantial momentum heading into 2005 and affords us great visibility into next year and beyond due to our high student retention and program length of up to six years."
"We are encouraged by the continued strong global demand and our very successful enrollment intake in Mexico. In addition, the robust total student enrollment reported by Laureate Online signifies the completion of our transition away from certain third-party partnerships to focus on expansion of Walden University, and positions us for further acceleration in new student growth in the fourth quarter," added Mr. Becker.
Total revenues for the third quarter of 2004 were $146.1 million, an increase of 37% compared to total revenues of $106.3 million in the third quarter of 2003. Total operating income for the third quarter increased to $17.7 million, versus $11.3 million in the third quarter of 2003. After-tax income from continuing operations for the third quarter of 2004 was $9.3 million or $0.19 per share on diluted shares outstanding of 49.1 million.
For the nine-month period ended September 30, 2004, total revenues were $436.5 million, an increase of 37% compared to total revenues of $317.9 million in the same period of 2003. Total operating income for the nine-month period increased to $43.5 million, versus an operating loss of $1.3 million in the same period of 2003. After-tax income from continuing operations for the nine-month period ended September 30, 2004 was $35.6 million or $0.74 per share on diluted shares outstanding of 48.2 million, including $0.10 per share year-to-date net gain from the early repayment of the K-12 seller note received on April 27, 2004.
Total cash and marketable securities at September 30, 2004 were approximately $121.4 million, while total corporate debt was approximately $115.1 million.
Tuition increases implemented at campus-based universities since the third quarter of 2003 generated weighted average price improvement of 5%.
Laureate Education now operates 17 institutions of higher education in 11 countries, offering programs through 41 campus locations and online to students from over 80 countries.
Enrollment
Laureate announces campus-based enrollment for its institutions following each primary intake period. The Company's institutions in Chile and Peru have primary intake periods in the first quarter. The Company's universities in Ecuador, France, Mexico, Panama/Costa Rica, Spain, and Switzerland have their primary intake periods in the third quarter. Given the frequency of enrollment periods at Laureate Online, the Company reports online enrollment as of the end of each quarter.
Total student enrollment at Laureate's campus-based and online universities reached 154,044 students, an increase of 39% over last year. (See attached table for additional detail.)
Revenue Growth Impact of FX (excluding acquisitions)
Three Months Ended Sept. 30, 2004
% Growth
Revenue Amount Constant
(In Thousands) 2004 2003 in USD Currency
-------- -------- -------- ----------
Chile Region $ 43,772 $ 31,679 38% 26%
Mexico Region 40,653 35,310 15% 22%
France 1,244 1,441 -14% -20%
Hospitality 13,135 12,180 8% -1%
Spain 2,318 1,546 50% 38%
Note: Excludes acquisitions made within the last twelve months.
Fourth Quarter 2004 and Full-Year 2005 Outlook
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially.
-- Company anticipates total revenue to be between $190 and $205 million for the fourth quarter 2004, an increase of 22% or more over the prior year.
-- Company anticipates Campus-based revenue to be between $155 and $165 million for the fourth quarter 2004, with operating margins of between 25% and 26%.
-- Company anticipates Laureate Online revenue to be between $35 and $40 million for the fourth quarter 2004, with operating margins of between 23% and 24%.
-- General and administrative expenses are expected to be approximately $5.5 million in the fourth quarter 2004.
-- Diluted earnings per share from continuing operations are anticipated to be between $0.57 and $0.59 for the fourth quarter 2004.
-- Company reiterates full-year 2005 earnings outlook of $1.60 to $1.65 per diluted share, compared to 2004 guidance of $1.24 to $1.26 in recurring EPS.
About Laureate Education, Inc.
Laureate Education Inc. (NASDAQ:LAUR) is focused exclusively on providing a superior university experience to nearly 155,000 students through the leading global network of accredited campus-based and online universities. Addressing the rapidly growing global demand for higher education, Laureate offers a broad range of career-oriented undergraduate and graduate programs through campus-based universities located in Latin America, Europe, and Asia. Through online universities, Laureate offers the growing population of non-traditional, working-adult students the convenience and flexibility of distance learning to pursue undergraduate, master's and doctorate degree programs in major career fields including engineering, education, business, and healthcare.
Forward Looking Statements
This release includes information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risk and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company's actual results could differ materially from those described in the forward-looking statements.
The following factors might cause such a difference:
-- The Company's operations can be materially affected by competition in its target markets and by overall market conditions, among other factors.
-- The Company's foreign operations, in particular, are subject to political, economic, legal, regulatory and currency-related risks.
Additional information regarding these risk factors and uncertainties is detailed from time to time in the Company's filings with the Securities and Exchange Commission, including, but not limited to, our most recent Forms 10-K and 10-Q, available for viewing on our website. (To access this information on our website, please click on "Investor Relations," "SEC Filings")
Laureate Education, Inc.
Student Enrollment
(Campus-based enrollments as of primary enrollment cycle,
online enrollments as of 9/30/04)
Y/Y Growth
2004 2003 (2003-04)
-------- -------- -------------
New Student Enrollments (1)
Mexico 17,455 13,571 29%
Chilean Region 20,923 (E) 16,226 29%
Spain 2,990 (E) 2,518 19%
France 332 303 10%
Hospitality 638 513 24%
-------- --------
Campus-based New(1) 42,338 33,131 28%
New Enrollment at Acquired
Schools (2) 5,825 n/a
-------- --------
Campus-based New with
Acquisitions 48,163 33,131 45%
======== ========
Laureate Online 4,746 3,946 20%
New Enrollment at Acquired
School (3) 195 n/a
-------- --------
Laureate Online New with
Acquisitions 4,941 3,946 25%
======== ========
Campus-based and Online New
Enrollment 53,104 37,077 43%
Total Student Enrollments (1)(4)
Mexico 50,311 42,657 18%
Chilean Region 52,378 (E) 40,914 28%
Spain 7,627 (E) 7,540 1%
France 1,164 1,124 4%
Hospitality 2,887 2,908 -1%
-------- --------
Campus-based Total (1) 114,367 95,143 20%
Enrollment at Acquired
Schools (2) 19,498 n/a
-------- --------
Campus-based Total with
Acquisitions 133,865 95,143 41%
======== ========
Laureate Online 18,547 15,417 20%
Enrollment at Acquired School
(3) 1,632 n/a
-------- --------
Laureate Online Total with
Acquisitions 20,179 15,417 31%
======== ========
Total Campus-based and Online
Enrollment 154,044 110,560 39%
Notes:
(1) New and total students are as of most recent primary intake cycle
for each institution. For Chile, the primary intake cycle ends in
April 2004.
(2) Acquisitions since 9/30/03: IEDE (Spain), UPC (Peru),
Hispanoamericana (Mexico), and Interamericana (Costa Rica/Panama).
(3) Acquisition of Laureate Online International, formerly KIT
(Netherlands) in 4/2004.
(4) Total Student Enrollment includes enrollments from secondary
intake cycles of approximately 5,000 and 6,000 students for 2003
and 2004, respectively.
(E) Estimate
Laureate Education, Inc. & Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Three Months Ended September 30,
-------------------------------------
$ %
2004 2003 Variance Variance
-------- --------- ------------------
(Restated)
(e)
Revenues
Spain $2,844 $1,546 $1,298 84%
Hospitality/Switzerland (a) 13,196 12,180 1,016 8%
Chile region (b) 47,473 31,679 15,794 50%
Mexico region (c) 46,195 35,310 10,885 31%
France 1,244 1,441 (197) -14%
-------- --------- -------- ---------
Campus Based total 110,952 82,156 28,796 35%
-------- --------- -------- ---------
Online Higher Education 35,158 24,171 10,987 45%
Ventures - - - N/A
-------- --------- -------- ---------
Total revenues 146,110 106,327 39,783 37%
-------- --------- -------- ---------
Core operating expenses 122,063 92,101 29,962 33%
Ventures operating expenses - - - N/A
Non-cash stock compensation
expense 891 355 536 151%
Core general and
administrative expenses 5,450 2,592 2,858 110%
Ventures general and
administrative expenses - - - N/A
-------- --------- -------- ---------
Total operating expenses 128,404 95,048 33,356 35%
-------- --------- -------- ---------
Operating income (loss) 17,706 11,279 6,427 57%
Non-operating items
Interest and other income (g) 1,160 3,143 (1,983) -63%
Interest expense (2,067) (1,858) (209) -11%
Exchange gain (loss) (509) (27) (482) LT-200%
Ventures non-operating expense - - - N/A
-------- --------- -------- ---------
Total non-operating items (1,416) 1,258 (2,674) N/A
-------- --------- -------- ---------
Income (loss) from continuing
operations before minority
interest, equity in net income
(loss) of affiliates, and
income taxes 16,290 12,537 3,753 30%
Minority interest in (income)
loss of consolidated
subsidiaries, net of income
tax
Ventures - - - N/A
Other (4,192) (2,753) (1,439) -52%
Equity in net income (loss) of
affiliates, net of income tax
Ventures - - - N/A
Other - 44 (44) N/A
Income tax (expense) benefit (2,795) (3,704) 909 25%
-------- --------- -------- ---------
Income (loss) from continuing
operations 9,303 6,124 3,179 52%
Income (loss) from discontinued
operations, net of income tax 31 (699) 730 N/A
Gain on disposal of discontinued
operations, net of income tax - - - N/A
-------- --------- -------- ---------
Net income $9,334 $5,425 $3,909 72%
======== ========= ======== =========
Weighted average shares -
basic 46,524 42,637
Weighted average shares -
diluted 49,124 46,635
EPS-Net income (basic) $0.20 $0.13
EPS-Net Income (diluted) $0.19 $0.12
EPS-Income (loss) from
continuing operations (basic) $0.20 $0.14
EPS-Income (loss) from
continuing operations
(diluted) $0.19 $0.13
Reconciliation - Pro Forma
Income from Continuing
Operations
--------------------------
Income (loss) from continuing
operations before income taxes $9,828
Income tax expense in equity in
net income (loss) of affiliates (6)
Non-strategic Ventures losses -
Non-cash stock compensation
G&A attributable to discontinued
operations
Core operations - non-operating
---------
Subtotal $9,822
Tax impact at 25% (2,456)
---------
Pro Forma income from continuing
operations (d) $7,366
Weighted average shares - Pro
Forma 46,635
EPS - As if transaction happened
January 1, 2003 (f) $0.16
Segment operating profit
(loss):
Campus Based $18,942 $10,085 $8,857 88%
Online Higher Education 5,105 4,141 964 23%
Ventures - - - N/A
a) Hospitality includes the operating results of Les Roches, Marbella
and Glion.
b) The Chile region includes UDLA, UNAB, AIEP, Ecuador and Peru.
c) The Mexico region includes UVM- Mexico and UI-Costa Rica/Panama.
d) Reconciling items represent adjustments as if the sale of the K-12
business units and decision to dispose of the non-strategic
Venture assets occurred January 1, 2003.
e) The 2004 operating results present (and the 2003 operating results
have been restated to present) the K-12, WSI and India business
units as discontinued operations.
f) In calculating 2003 EPS, interest related to the convertible
debentures must be added back to the numerator.
g) Includes acceleration of original issue discount triggered by the
early repayment of the K-12 seller note.
GT = Greater Than, LT = Less Than
Laureate Education, Inc. & Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Nine Months Ended September 30,
-------------------------------------
$ %
2004 2003 Variance Variance
-------- --------- ------------------
(Restated)
(e)
Revenues
Spain $54,519 $46,829 $7,690 16%
Hospitality/Switzerland (a) 38,018 35,161 2,857 8%
Chile region (b) 111,782 56,583 55,199 98%
Mexico region (c) 131,300 103,608 27,692 27%
France 6,421 5,349 1,072 20%
-------- --------- -------- ---------
Campus Based total 342,040 247,530 94,510 38%
-------- --------- -------- ---------
Online Higher Education 94,477 69,460 25,017 36%
Ventures - 903 (903) N/A
-------- --------- -------- ---------
Total revenues 436,517 317,893 118,624 37%
-------- --------- -------- ---------
Core operating expenses 373,002 278,348 94,654 34%
Ventures operating expenses - 2,122 (2,122) N/A
Non-cash stock compensation
expense 3,886 22,688 (18,802) -83%
Core general and
administrative expenses 16,170 14,286 1,884 13%
Ventures general and
administrative expenses - 1,756 (1,756) N/A
-------- --------- -------- ---------
Total operating expenses 393,058 319,200 73,858 23%
-------- --------- -------- ---------
Operating income (loss) 43,459 (1,307) 44,766 N/A
Non-operating items
Interest and other income (g) 20,505 3,770 16,735 GT200%
Interest expense (5,220) (7,387) 2,167 29%
Exchange gain (loss) (446) 209 (655) N/A
Ventures non-operating expense - (8,437) 8,437 N/A
-------- --------- -------- ---------
Total non-operating items 14,839 (11,845) 26,684 N/A
-------- --------- -------- ---------
Income (loss) from continuing
operations before minority
interest, equity in net
income (loss) of affiliates,
and income taxes 58,298 (13,152) 71,450 N/A
Minority interest in (income)
loss of consolidated
subsidiaries, net of income
tax
Ventures - 487 (487) N/A
Other (12,732) (7,009) (5,723) -82%
Equity in net income (loss) of
affiliates, net of income tax
Ventures - (3,991) 3,991 N/A
Other (8) 155 (163) N/A
Income tax (expense) benefit (9,911) 3,790 (13,701) N/A
-------- --------- -------- ---------
Income (loss) from continuing
operations 35,647 (19,720) 55,367 N/A
Income (loss) from discontinued
operations, net of income tax (5,887) 607 (6,494) N/A
Gain on disposal of discontinued
operations, net of income tax - 39,423 (39,423) N/A
-------- --------- -------- ---------
Net income $29,760 $20,310 $9,450 47%
======== ========= ======== =========
Weighted average shares -
basic 45,598 41,386
Weighted average shares -
diluted 48,247 41,386
EPS-Net income (basic) $0.65 $0.49
EPS-Net Income (diluted) $0.62 $0.49
EPS-Income (loss) from
continuing operations (basic) $0.78 $(0.48)
EPS-Income (loss) from
continuing operations
(diluted) $0.74 $(0.48)
Reconciliation - Pro Forma
Income from Continuing
Operations
----------------------------
Income (loss) from continuing operations
before income taxes $(23,510)
Income tax expense in
equity in net income
(loss) of affiliates (3,747)
Non-strategic Ventures
losses 18,677
Non-cash stock
compensation 22,158
G&A attributable to
discontinued operations 6,855
Core operations -
non-operating 4,564
---------
Subtotal $24,997
Tax impact at 25% (6,249)
---------
Pro Forma income from continuing
operations (d) $18,748
Weighted average shares - Pro
Forma 45,935
EPS - As if transaction happened
January 1, 2003 (f) $0.43
Segment operating profit
(loss):
Campus Based $53,202 $31,742 $21,460 68%
Online Higher Education 10,313 6,900 3,413 49%
Ventures - (2,975) 2,975 N/A
a) Hospitality includes the operating results of Les
Roches, Marbella and Glion.
b) The Chile region includes UDLA, UNAB, AIEP, Ecuador and Peru.
c) The Mexico region includes UVM- Mexico and UI-Costa Rica/Panama.
d) Reconciling items represent adjustments as if the sale of the K-12
business units and decision to dispose of the non-strategic
Venture assets occurred January 1, 2003.
e) The 2004 operating results present (and the 2003 operating results
have been restated to present) the K-12, WSI and India business
units as discontinued operations.
f) In calculating 2003 EPS, interest related to the convertible
debentures must be added back to the numerator.
g) Includes acceleration of original issue discount triggered by the
early repayment of the K-12 seller note.
GT = Greater Than, LT = Less
Than
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