What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-05 · 233 added, 110 removed, 360 unchanged (49% of the section changed)

48 unchanged sentences

In response to the COVID-19 pandemic, we transitioned the educational delivery method at all of our institutions to be online, leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting.

Face-to-face educational activities have now resumed at most of our campuses.

Face-to-face educational activities have now resumed across our campuses.

We will continue to monitor the situation and adjust based on what is most appropriate for each market.

8 unchanged sentences

All other markets have been divested (the Discontinued Operations).

The Discontinued Operations are excluded from the segment information for all periods presented, as they do not meet the criteria for a reportable segment under ASC 280, “Segment Reporting.” Unless indicated otherwise, the information in the

MD&A relates to continuing operations.

See also Note 3, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.

20 unchanged sentences

The Corporate segment also contains the eliminations of inter-segment revenues and expenses.

The following information for our reportable segments is presented as of March 31, 2022:

The following information for our reportable segments is presented as of June 30, 2022:

Institutions Enrollment 2022 YTD Revenues

56 unchanged sentences

Factors Affecting Comparability

Any dispositions of our continuing operations would affect the comparability of our financial statements from period to period.

Dispositions completed during one period impact comparability to a prior period in which we owned the divested entity.

Therefore, changes related to such entities are considered “incremental impact of dispositions” for the first 12 months subsequent to the disposition.

As discussed above, all of the divestitures that are part of the strategic shifts are included in Discontinued Operations for all periods presented.

Foreign Exchange

21 unchanged sentences

Results from the Discontinued Operations

The results of operations of our Discontinued Operations for the three months ended March 31, 2022 and 2021 were as follows:

For the three months ended

The results of operations of our Discontinued Operations for the three and six months ended June 30, 2022 and 2021 were as follows:

For the three months ended For the six months ended

June 30, June 30,

(in millions) 2022 2021 2022 2021

4 unchanged sentences

Other non-operating expense — (4.4) — (15.6)

Gain (loss) on sale of discontinued operations before taxes, net 0.7 (16.8)

Gain on sale of discontinued operations before taxes, net 4.1 30.1 4.9 13.3

Pretax income of discontinued operations 4.1 85.6 4.9 94.8

Income tax expense — (9.7)

Income (loss) from discontinued operations, net of tax $ 0.7 $ (0.4)

Income tax benefit (expense) — 1.1 — (8.6)

Income from discontinued operations, net of tax $ 4.1 $ 86.7 $ 4.9 $ 86.2

We completed all of our planned divestitures in 2021.

Our remaining operations are included in continuing operations.

Three Months Ended March 31, 2021

On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax gain of $0.5 million.

Six Months Ended June 30, 2022

During the second quarter of 2022, we completed the transfer of the remaining assets and liabilities that were classified as held for sale as of December 31, 2021, which related to the divestiture of our operations in Chile.

This resulted in a gain of approximately $4.3 million.

Six Months Ended June 30, 2021

On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax loss of $1.7 million, including a working capital adjustment during the second quarter of 2021.

On January 25, 2018, we completed the sale of LEI Lie Ying Limited in China.

2 unchanged sentences

During the first quarter of 2021, we recorded a loss of approximately $32.4 million in order to adjust the carrying value of our Brazil disposal group to its estimated fair value less costs to sell as of March 31, 2021.

This loss is included in Gain (loss) on sale of discontinued operations before taxes, net.

This loss is included in Gain on sale of discontinued operations before taxes, net.

On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in pre-tax gain of $27.5 million.

Results of Operations

4 unchanged sentences

Summary Comparison of Consolidated Results

Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2021

Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2021

In March 2021, the Company decided that, during 2021, it would wind down certain support functions related to the Laureate network and would no longer invest in and support the Laureate tradename beyond 2021.

1 unchanged sentence

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $51.4 million and recorded an impairment charge for that amount.

Comparison of Consolidated Results for the Three Months Ended March 31, 2022 and 2021

During the second quarter of 2021, we fully repaid the remaining balance outstanding under our Senior Notes due 2025 using a portion of the proceeds received from the sales of our operations in Australia and New Zealand and Brazil.

In connection with the debt repayment, the Company recorded a loss on debt extinguishment of $77.9 million, related to the redemption premium paid and the write off of the unamortized deferred financing costs associated with the repaid debt balances.

This loss is included in other non-operating expense in the tables below.

In November 2020, in connection with the signing of the sale agreement for our Brazil operations, the Company entered into six BRL-to-USD swap agreements to mitigate the risk of foreign currency exposure on the expected proceeds from the sale.

The sale of our Brazil operations closed on May 28, 2021.

On June 2, 2021, the Company settled the swap agreements, which resulted in a realized loss on derivatives of $24.5 million.

This loss is included in other non-operating expense in the tables below.

Comparison of Consolidated Results for the Three Months Ended June 30, 2022 and 2021

Better/(Worse)

4 unchanged sentences

Loss on impairment of assets — 7.2 100 %

Operating income (loss) 9.0 (86.4) 110 %

Operating income 126.6 57.7 119 %

Interest expense, net of interest income (2.5) (13.0) 81 %

Other non-operating (expense) income (4.8) 57.5 (108) %

Other non-operating expense (12.8) (147.3) 91 %

Income (loss) from continuing operations before income taxes 111.4 (102.7) nm

Income tax expense (72.0) (13.2) nm

Income (loss) from continuing operations 39.4 (115.9) 134 %

Income from discontinued operations, net of tax 4.1 86.7 (95) %

Net income (loss) 43.6 (29.2) nm

Net (income) loss attributable to noncontrolling interests (0.1) 0.2 150 %

Net income (loss) attributable to Laureate Education, Inc.

$ 43.4 $ (29.0) nm

nm - percentage changes not meaningful

For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Revenues increased by $57.8 million to $385.4 million for the three months ended June 30, 2022 (the 2022 fiscal quarter) from $327.6 million for the three months ended June 30, 2021 (the 2021 fiscal quarter).

This increase in revenues was largely attributable to higher average total organic enrollment at our institutions during the 2022 fiscal quarter, increasing revenues by $38.0 million compared to the 2021 fiscal quarter.

The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing increased revenues by $16.4 million compared to the 2021 fiscal quarter.

Additionally, the effect of a net change in foreign currency exchange rates increased revenues by $3.4 million compared to the 2021 fiscal quarter.

Direct costs and general and administrative expenses combined decreased by $4.0 million to $258.7 million for the 2022 fiscal quarter from $262.7 million for the 2021 fiscal quarter.

Expenses related to the Excellence-in-Process (EiP) program were $12.3 million lower in the 2022 fiscal quarter as compared to the 2021 fiscal quarter, following the completion of the EiP program in the fourth quarter of 2021.

Depreciation and amortization expense was lower by $12.3 million, which was mostly attributable to the finite-lived tradename being fully amortized during 2021.

In addition, Corporate and Eliminations expenses accounted for a decrease in costs of $12.0 million, driven by cost-saving initiatives.

These decreases in direct costs were partially offset by the effect of operational changes, which increased costs by $31.0 million, primarily due to the effect of higher enrollment at our institutions.

The effect of a net change in foreign currency exchange rates also increased costs by $1.6 million compared to the 2021 fiscal quarter.

Operating income increased by $68.9 million to $126.6 million for the 2022 fiscal quarter from $57.7 million for the 2021 fiscal quarter.

Operating income increased at both our Peru and Mexico segments, as compared to the 2021 fiscal quarter.

Interest expense, net of interest income decreased by $10.5 million to $2.5 million for the 2022 fiscal quarter from $13.0 million for the 2021 fiscal quarter.

The decrease in interest expense was primarily attributable to lower average debt balances as a result of debt repayments.

Other non-operating expense decreased by $134.5 million to $12.8 million for the 2022 fiscal quarter from $147.3 million for the 2021 fiscal quarter.

This decrease was attributable to:

(1) the year-over-year effect of a loss on debt extinguishment of $77.9 million during the 2021 fiscal quarter in connection with the repayment of the Senior Notes due 2025;

(2) the year-over-year effect of a loss on derivative instruments of $53.8 million during the 2021 fiscal quarter, related to the settlement of foreign currency swap agreements in connection with the sale of our Brazilian operations;

(3) higher gain on disposal of subsidiaries of $1.5 million during the 2022 fiscal quarter;

(4) a lower loss on foreign currency exchange of $1.0 million during the 2022 fiscal quarter;

and (5) an increase in other non-operating income of $0.3 million during the 2022 fiscal quarter.

Income tax expense increased by $58.8 million to $72.0 million for the 2022 fiscal quarter from $13.2 million for the 2021 fiscal quarter.

This increase in income tax expense was primarily due to changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions.

Income from discontinued operations, net of tax decreased by $82.6 million to $4.1 million for the 2022 fiscal quarter from $86.7 million for the 2021 fiscal quarter.

See Overview for further detail on results of the Discontinued Operations.

Comparison of Consolidated Results for the Six Months Ended June 30, 2022 and 2021

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Revenues $ 594.9 $ 522.3 14 %

Direct costs 425.7 395.2 (8) %

General and administrative expenses 33.4 92.0 64 %

Loss on impairment of assets 0.1 63.9 100 %

Operating income (loss) 135.7 (28.7) nm

Interest expense, net of interest income (4.2) (35.9) 88 %

Other non-operating expense (17.6) (89.8) 80 %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 113.9 (154.4) 174 %

2 unchanged sentences

Loss from continuing operations (6.0) (280.4) 98 %

Income (loss) from discontinued operations, net of tax 0.7 (0.4) nm

Income from discontinued operations, net of tax 4.9 86.2 (94) %

Net loss (1.1) (194.2) 99 %

Net loss attributable to noncontrolling interests 0.5 — nm

Net loss attributable to noncontrolling interests 0.3 0.2 (50) %

Net loss attributable to Laureate Education, Inc.

2 unchanged sentences

For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Revenues increased by $14.9 million to $209.6 million for the three months ended March 31, 2022 (the 2022 fiscal quarter) from $194.7 million for the three months ended March 31, 2021 (the 2021 fiscal quarter).

Average total organic enrollment was higher at our institutions, increasing revenues by $19.6 million compared to the 2021 fiscal quarter.

This increase in revenues was partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $3.0 million.

The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing decreased revenues by $1.5 million for the 2022 fiscal quarter.

Comparison of Consolidated Results for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Revenues increased by $72.6 million to $594.9 million for the six months ended June 30, 2022 (the 2022 fiscal period) from $522.3 million for the six months ended June 30, 2021 (the 2021 fiscal period).

Average total organic enrollment was higher at our institutions, increasing revenues by $63.0 million compared to the 2021 fiscal period.

The effect of product mix, pricing and timing increased revenues by $9.3 million for the 2022 fiscal period.

In addition, the effect of a net change in foreign currency exchange rates increased revenues by $0.5 million compared to the 2021 fiscal period.

Other Corporate and Eliminations changes accounted for a decrease in revenues of $0.2 million.

Direct costs and general and administrative expenses combined decreased by $24.0 million to $200.4 million for the 2022 fiscal quarter from $224.4 million for the 2021 fiscal quarter.

EiP implementation expense was $14.4 million lower in the 2022 fiscal quarter following the completion of our EiP program in 2021.

Changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets, resulted in a period-over-period decrease in direct costs of $13.3 million.

The effect of a net change in foreign currency exchange rates decreased costs by $4.0 million.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $5.8 million in the 2022 fiscal quarter, related to cost-reduction efforts.

Direct costs and general and administrative expenses combined decreased by $28.1 million to $459.1 million for the 2022 fiscal period from $487.2 million for the 2021 fiscal period.

This decrease in direct costs was primarily related to:

(1) lower EiP implementation expense of $26.7 million in the 2022 fiscal period following the completion of our EiP program in 2021;

(2) lower depreciation and amortization expense of $20.2 million mainly driven by the full amortization of the finite-lived tradename in 2021;

(3) Other Corporate and Eliminations expenses, which accounted for a decrease in costs of $17.8 million in the 2022 fiscal period, related to cost-reduction efforts;

(4) a period-over-period decrease in direct costs of $13.3 million from changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets;

and (5) the effect of a net change in foreign currency exchange rates, which decreased costs by $2.4 million.

These decreases in direct costs were partially offset by the effect of operational changes, which increased direct costs by $52.3 million, mostly attributable to our Peru segment.

Operating income (loss) changed by $95.4 million to an income of $9.0 million for the 2022 fiscal quarter from a loss of $(86.4) million for the 2021 fiscal quarter.

This change was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during the 2021 fiscal quarter, combined with higher operating income at our Mexico segment.

Interest expense, net of interest income decreased by $21.0 million to $1.8 million for the 2022 fiscal quarter from $22.8 million for the 2021 fiscal quarter.

Operating income (loss) changed by $164.4 million to an income of $135.7 million for the 2022 fiscal period from a loss of $(28.7) million for the 2021 fiscal period.

This change was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during the 2021 fiscal period, combined with higher operating income at our Mexico and Peru segments during the 2022 fiscal period.

Interest expense, net of interest income decreased by $31.7 million to $4.2 million for the 2022 fiscal period from $35.9 million for the 2021 fiscal period.

The decrease in interest expense was primarily attributable to lower average debt balances as a result of debt repayments.

Other non-operating (expense) income changed by $62.3 million to an expense of $(4.8) million for the 2022 fiscal quarter, as compared to income of $57.5 million for the 2021 fiscal quarter.

Other non-operating expense decreased by $72.2 million to $17.6 million for the 2022 fiscal period from $89.8 million for the 2021 fiscal period.

This change was attributable to:

(1) a gain on derivative instruments of $29.3 million during the 2021 fiscal quarter, driven by settlement of foreign currency swap agreements in connection with the sale of Brazil operations;

(2) a loss on foreign currency exchange in the 2022 fiscal quarter compared to a gain in the 2021 fiscal quarter, for a change of $31.8 million;

and (3) the period-over-period effect of other non-operating expense of $1.2 million during the 2022 fiscal quarter.

Income tax expense decreased by $64.9 million to $48.0 million for the 2022 fiscal quarter from $112.9 million for the 2021 fiscal quarter.

This decrease was primarily attributable to discrete tax expense recorded during the 2021 fiscal quarter of approximately $58.9 million for increases to income tax reserves, partially offset by discrete tax expense recorded during the 2022 fiscal quarter of approximately $32.5 million for additions to income tax reserves.

(1) the year-over-year effect of a loss on debt extinguishment of $77.9 million during the 2021 fiscal quarter in connection with the repayment of the Senior Notes due 2025;

(2) a loss on derivative instruments of $24.5 million during the 2021 fiscal period, driven by settlement of foreign currency swap agreements in connection with the sale of our Brazilian operations;

and (3) higher gain on disposal of subsidiaries of $1.5 million during the 2022 fiscal period.

These decreases in other non-operating expense were partially offset by a loss on foreign currency exchange in the 2022 fiscal period, compared to a gain in the 2021 fiscal period, for a change of $30.8 million and the period-over-period effect of other non-operating expense of $0.9 million during the 2022 fiscal period.

Income tax expense decreased by $6.1 million to $119.9 million for the 2022 fiscal period from $126.0 million for the 2021 fiscal period.

This decrease was primarily attributable to discrete tax expense recorded during the 2021 fiscal period of approximately $58.9 million for increases to income tax reserves, partially offset by discrete tax expense recorded during the 2022 fiscal period of approximately $32.5 million for additions to income tax reserves.

The remaining difference was primarily attributable to the change in pretax earnings.

Income (loss) from discontinued operations, net of tax changed by $1.1 million to income of $0.7 million for the 2022 fiscal quarter from a loss of $(0.4) million for the 2021 fiscal quarter.

Income from discontinued operations, net of tax decreased by $81.3 million to $4.9 million for the 2022 fiscal period from $86.2 million for the 2021 fiscal period.

See Overview for further detail on results of the Discontinued Operations.

1 unchanged sentence

We define Adjusted EBITDA as income (loss) from continuing operations, before equity in net (income) loss of affiliates, net of tax, income tax expense (benefit), foreign currency exchange (gain) loss, net, other (income) expense, net, loss (gain) on derivatives, loss on debt extinguishment, interest expense and interest income, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to our Excellence-in-Process (EiP) initiative.

When we review Adjusted EBITDA on a segment basis, we exclude inter-segment revenues and expenses that eliminate in consolidation.

Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

3 unchanged sentences

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.

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the three months ended March 31, 2022 and 2021:

The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2022 and 2021:

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Income (loss) from continuing operations $ 39.4 $ (115.9) 134 %

Income tax expense 72.0 13.2 nm

Income (loss) from continuing operations before income taxes 111.4 (102.7) nm

Gain on disposal of subsidiaries, net (1.5) — nm

Foreign currency exchange loss, net 14.5 15.5 6 %

Other (income) loss, net (0.2) 0.1 nm

Loss on derivatives — 53.8 100 %

Loss on debt extinguishment — 77.9 100 %

Interest expense 4.2 13.5 69 %

Interest income (1.7) (0.5) nm

Operating income 126.6 57.7 119 %

Depreciation and amortization 14.8 27.0 45 %

EBITDA 141.4 84.7 67 %

Share-based compensation expense (a)

Loss on impairment of assets (b)

EiP implementation expenses (c)

0.3 12.6 98 %

Adjusted EBITDA $ 144.1 $ 107.1 35 %

nm - percentage changes not meaningful

(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”

(b) Represents non-cash charges related to impairments of long-lived assets.

(c) 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), 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 incurred in connection with the dispositions.

The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended June 30, 2022 and 2021

Depreciation and amortization decreased by $12.2 million to $14.8 million for the 2022 fiscal quarter from $27.0 million for the 2021 fiscal quarter.

This decrease was primarily attributable to the finite-lived Laureate’s tradename, which was fully amortized in 2021.

When combined with other items, this change decreased depreciation and amortization by $12.3 million.

The effects of foreign currency exchange increased depreciation and amortization expense by $0.1 million for the 2022 fiscal quarter.

Share-based compensation expense decreased by $0.2 million to $2.4 million for the 2022 fiscal quarter from $2.6 million for the 2021 fiscal quarter.

EiP implementation expenses decreased by $12.3 million to $0.3 million for the 2022 fiscal quarter from $12.6 million for the 2021 fiscal quarter.

This decrease resulted from the completion of our EiP program in 2021, with exception of certain EiP expenses related to the run out of programs that began in prior periods.

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the six months ended June 30, 2022 and 2021:

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Loss from continuing operations $ (6.0) $ (280.4) 98 %

2 unchanged sentences

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 113.9 (154.4) 174 %

Foreign currency exchange loss (gain), net 3.6 (28.2) (113) %

Gain on disposal of subsidiaries, net (1.5) — nm

Foreign currency exchange loss (gain), net 18.1 (12.7) nm

Other expense, net 1.0 — nm

Gain on derivatives — (29.3) (100) %

Loss on derivatives — 24.5 100 %

Loss on debt extinguishment — 77.9 100 %

Interest expense 7.9 37.1 79 %

Interest income (2.0) (0.7) 186 %

Operating income (loss) 9.0 (86.4) 110 %

Interest income (3.7) (1.2) nm

Operating income (loss) 135.7 (28.7) nm

Depreciation and amortization 29.2 49.7 41 %

EBITDA 23.4 (63.6) 137 %

EBITDA 164.9 21.0 nm

Share-based compensation expense (a)

8 unchanged sentences

(b) Represents non-cash charges related to impairments of long-lived assets.

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2021.”

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2021.”

2 unchanged sentences

The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended March 31, 2022 and 2021

Depreciation and amortization decreased by $8.4 million to $14.4 million for the 2022 fiscal quarter from $22.8 million for the 2021 fiscal quarter.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Six Months Ended June 30, 2022 and 2021

Depreciation and amortization decreased by $20.5 million to $29.2 million for the 2022 fiscal period from $49.7 million for the 2021 fiscal period.

This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021.

When combined with other items, this change decreased depreciation and amortization by $20.2 million.

The effect of foreign currency exchange further decreased depreciation and amortization expense by $0.4 million for the 2022 fiscal quarter.

Share-based compensation expense increased by $1.5 million to $2.8 million for the 2022 fiscal quarter from $1.3 million for the 2021 fiscal quarter.

The effect of foreign currency exchange further decreased depreciation and amortization expense by $0.3 million for the 2022 fiscal period.

Share-based compensation expense increased by $1.1 million to $5.1 million for the 2022 fiscal period from $4.0 million for the 2021 fiscal period.

The increase was primarily related to the accelerated vesting of unvested equity awards for employees terminated in connection with the now-completed strategic review process.

EiP implementation expenses decreased by $14.4 million to $0.9 million for the 2022 fiscal quarter from $15.3 million for the 2021 fiscal quarter.

EiP implementation expenses decreased by $26.7 million to $1.2 million for the 2022 fiscal period from $27.9 million for the 2021 fiscal period.

The decrease resulted from the completion of our EiP program in 2021, with the exception of certain EiP expenses related to the run out of programs that began in prior periods.

8 unchanged sentences

Better/(Worse)

For the three months ended March 31, 2022 2021 2022 vs.

For the three months ended June 30, 2022 2021 2022 vs.

Mexico $ 144.7 $ 124.3 16 %

7 unchanged sentences

Consolidated Total Adjusted EBITDA $ 144.1 $ 107.1 35 %

(in millions) % Change

Better/(Worse)

For the six months ended June 30, 2022 2021 2022 vs.

Mexico $ 287.2 $ 259.7 11 %

Peru 304.6 259.2 18 %

Corporate 3.2 3.4 (6) %

Consolidated Total Revenues $ 594.9 $ 522.3 14 %

Adjusted EBITDA:

Mexico $ 56.4 $ 34.5 63 %

Peru 140.1 125.2 12 %

Corporate (25.3) (42.9) 41 %

Consolidated Total Adjusted EBITDA $ 171.3 $ 116.8 47 %

Financial Overview

Comparison of Mexico Results for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Comparison of Mexico Results for the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2021 $ 135.4 $ 118.1 $ 17.3

June 30, 2021 $ 124.3 $ 107.1 $ 17.2

Organic enrollment (1)

2 unchanged sentences

Foreign exchange 0.4 0.3 0.1

June 30, 2022 $ 144.7 $ 125.2 $ 19.5

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.

Revenues increased by $20.4 million, a 16% increase from the 2021 fiscal quarter.

• Organic enrollment increased during the fiscal quarter by 8%, increasing revenues by $8.9 million.

• Revenues from our Mexico segment represented 38% of our consolidated total revenues for both the 2022 and 2021 fiscal quarters.

Adjusted EBITDA increased by $2.3 million, a 13% increase from the 2021 fiscal quarter.

Comparison of Mexico Results for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2021 $ 259.7 $ 225.2 $ 34.5

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 27.9 19.8 8.1

Foreign exchange (0.4) (0.9) 0.5

— (13.3) 13.3

March 31, 2022 $ 142.5 $ 105.5 $ 37.0

June 30, 2022 $ 287.2 $ 230.8 $ 56.4

(2) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.

Revenues increased by $7.1 million, a 5% increase from the 2021 fiscal quarter.

• Organic enrollment increased during the 2022 fiscal quarter by 6%, increasing revenues by $7.4 million, net of an unfavorable period-over-period effect related to the timing of the academic calendar.

• Revenues represented 68% of our consolidated total revenues for the 2022 fiscal quarter, compared to 70% for the 2021 fiscal quarter.

Adjusted EBITDA increased by $19.7 million, a 114% increase from the 2021 fiscal quarter, which includes a period-over-period benefit from the $13.3 million charge recorded during the 2021 fiscal quarter related to acquisition-related contingencies.

Revenues increased by $27.5 million, an 11% increase from the 2021 fiscal period.

• Organic enrollment increased during the 2022 fiscal period by 7%, increasing revenues by $16.3 million.

• Revenues from our Mexico segment represented 49% of our consolidated total revenues for the 2022 fiscal period, compared to 50% for the 2021 fiscal period.

Adjusted EBITDA increased by $21.9 million, a 63% increase from the 2021 fiscal period, which included a period-over-period benefit from the $13.3 million charge recorded during the 2021 fiscal period related to acquisition-related contingencies.

Financial Overview

Comparison of Peru Results for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Comparison of Peru Results for the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2021 $ 57.5 $ 45.9 $ 11.6

June 30, 2021 $ 201.7 $ 88.1 $ 113.6

Organic enrollment (1)

2 unchanged sentences

Foreign exchange 3.0 1.2 1.8

March 31, 2022 $ 65.4 $ 61.6 $ 3.8

June 30, 2022 $ 239.2 $ 102.9 $ 136.3

1 unchanged sentence

• Organic enrollment increased during the 2022 fiscal quarter by 15%, increasing revenues by $29.1 million.

• Revenues represented 32% of our consolidated total revenues for the 2022 fiscal quarter compared to 30% for the 2021 fiscal quarter.

Adjusted EBITDA decreased by $7.8 million, a 67% decrease from the 2021 fiscal quarter, due in part to increased costs associated with the reopening of campuses for the resumption of face-to-face classes during a largely out-of-session quarter.

• Revenues from our Peru segment represented 62% of our consolidated total revenues for both the 2022 and 2021 fiscal quarters.

Adjusted EBITDA increased by $22.7 million, a 20% increase from the 2021 fiscal quarter.

Comparison of Peru Results for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2021 $ 259.2 $ 134.0 $ 125.2

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 44.5 31.7 12.8

Foreign exchange 0.9 (1.2) 2.1

June 30, 2022 $ 304.6 $ 164.5 $ 140.1

Revenues increased by $45.4 million, an 18% increase from the 2021 fiscal period.

• Organic enrollment increased during the 2022 fiscal period by 19%, increasing revenues by $46.7 million.

• Revenues from our Peru segment represented 51% of our consolidated total revenues for the 2022 fiscal period compared to 50% for the 2021 fiscal period.

Adjusted EBITDA increased by $14.9 million, a 12% increase from the 2021 fiscal period.

Corporate revenues primarily include our transition services agreements related to divestitures, which are expected to end in 2022.

Comparison of Corporate Results for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Comparison of Corporate Results for the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Better/(Worse)

4 unchanged sentences

Adjusted EBITDA increased by $12.0 million, a 51% increase from the 2021 fiscal quarter, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.

Comparison of Corporate Results for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Revenues $ 3.2 $ 3.4 (6) %

Expenses 28.5 46.3 38 %

Adjusted EBITDA $ (25.3) $ (42.9) 41 %

Adjusted EBITDA increased by $17.6 million, a 41% increase from the 2021 fiscal period, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.

Liquidity and Capital Resources

5 unchanged sentences

If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.

As of March 31, 2022, our secondary source of liquidity was cash and cash equivalents of $293.8 million.

As of June 30, 2022, our secondary source of liquidity was cash and cash equivalents of $156.9 million.

Our cash accounts are maintained with high-quality financial institutions with no significant concentration in any one institution.

4 unchanged sentences

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $20.6 million and $20.8 million as of March 31, 2022 and December 31, 2021, respectively.

Our liquidity is affected by restricted cash balances, which totaled $20.2 million and $20.8 million as of June 30, 2022 and December 31, 2021, respectively.

Indefinite Reinvestment of Foreign Earnings

1 unchanged sentence

As part of our business strategies, we have determined that all earnings from our foreign operations will be deemed indefinitely reinvested outside of the United States.

As of March 31, 2022, $214.8 million of our total $293.8 million of cash and cash equivalents were held by foreign subsidiaries.

As of June 30, 2022, $104.7 million of our total $156.9 million of cash and cash equivalents were held by foreign subsidiaries.

As of December 31, 2021, $272.6 million of our total $324.8 million of cash and cash equivalents were held by foreign subsidiaries.

7 unchanged sentences

capital expenditures;

repurchase of the Company’s common stock;

and business development activities.

4 unchanged sentences

and payments of other third-party obligations.

As of March 31, 2022, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $109.8 million.

As of June 30, 2022, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $94.2 million.

In addition, our finance lease obligations and sale-leaseback financings were $44.6 million.

Senior Secured Credit Facility

As of both March 31, 2022 and December 31, 2021, there was no balance outstanding under our Senior Secured Credit Facility.

As of both June 30, 2022 and December 31, 2021, there was no balance outstanding under our Senior Secured Credit Facility.

Under the Third A&R Credit Agreement, we are subject to a Consolidated Senior Secured Debt to Consolidated EBITDA financial maintenance covenant that applies only to the revolving credit facility (a leverage ratio covenant), as defined in the Third A&R Credit Agreement, unless certain conditions are satisfied.

As of March 31, 2022, those conditions were satisfied and, therefore, we were not subject to the leverage ratio.

As of June 30, 2022, those conditions were satisfied and, therefore, we were not subject to the leverage ratio.

The maximum ratio, as defined, is 3.50x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter.

In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as March 31, 2022.

In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as June 30, 2022.

We conduct a significant portion of our operations from leased facilities, including many of our higher education facilities and other office locations.

As discussed in Note 7, Leases, in our consolidated financial statements included elsewhere in this Form 10-Q, we have significant operating lease liabilities.

As of March 31, 2022 and December 31, 2021, the present value of operating lease liabilities was $412.8 million and $415.3 million, respectively.

As of June 30, 2022 and December 31, 2021, the present value of operating lease liabilities was $407.3 million and $415.3 million, respectively.

Capital Expenditures

9 unchanged sentences

We believe that our internal sources of cash and our ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.

Our total capital expenditures for our Continuing and Discontinued Operations, excluding receipts from the sale of subsidiaries and property equipment, were $1.3 million and $13.6 million during the three months ended March 31, 2022 and 2021, respectively.

The 90% decrease in capital expenditures was primarily due to lower spending in Mexico and Peru combined with the year-over-year effect of divestitures completed in 2021.

Laureate Education, Inc.

Deferred Compensation Plan

During the first quarter of 2021, the Company’s Board of Directors approved the termination of a deferred compensation plan for certain executive employees and members of our Board of Directors, with such termination effective April 1, 2021.

As required, in April 2022, the participants received a distribution payout of their account balances.

As of March 31, 2022, the total plan assets were $0.8 million and the total plan liabilities were $4.0 million.

When the distribution payouts were made in April 2022, the Company funded the difference between the assets and the liabilities with operating cash flows.

Stock Repurchase Program

On March 14, 2022, Laureate announced that its Board of Directors had approved an increase of $50 million to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $650 million.

The authorizations do not have an expiration date.

The Company’s repurchases may be made on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).

Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act.

The Company’s Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program.

As of March 31, 2022, the approximate dollar value of shares yet to be purchased under this stock repurchase program was $94.1 million.

The Company expects to finance the remaining repurchases with cash on-hand, or from its revolving credit facility, or a combination thereof.

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $8.2 million and $25.0 million during the six months ended June 30, 2022 and 2021, respectively.

The 67% decrease in capital expenditures was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Mexico and Peru.

In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes, acquisitions, and reclassifications, as these effects do not represent operating cash flows.

1 unchanged sentence

The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows.

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021:

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021:

(in millions) 2022 2021

6 unchanged sentences

Net change in cash and cash equivalents and restricted cash $ (168.5) $ (333.4)

Comparison of Cash Flows for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Comparison of Cash Flows for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Operating Activities

Cash provided by operating activities increased by $42.6 million to $53.9 million for the 2022 fiscal quarter, from $11.3 million for the 2021 fiscal quarter.

This increase in operating cash was primarily attributable to cash paid for taxes, which decreased by $44.0 million, from $52.4 million for the 2021 fiscal quarter, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal quarter, to $8.4 million for the 2022 fiscal quarter.

Additionally, cash paid for interest decreased by $6.2 million, from $11.6 million for the 2021 fiscal quarter to $5.4 million for the 2022 fiscal quarter, attributable to lower average debt balances.

These increases in operating cash flows were partially offset by a $7.6 million decrease resulting from the net effect of changes in working capital and the divestiture of subsidiaries that, in the aggregate, contributed positive operating cash flows during the 2021 fiscal quarter.

Cash provided by operating activities increased by $27.7 million to $45.6 million for the 2022 fiscal period from $17.9 million for the 2021 fiscal period.

This increase in operating cash was primarily attributable to cash paid for interest, which decreased by $48.4 million, from $56.9 million for the 2021 fiscal period to $8.5 million for the 2022 fiscal period, attributable to lower average debt balances.

Additionally, cash paid for taxes decreased by $31.5 million, from $80.0 million for the 2021 fiscal period, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal period, to $48.5 million for the 2022 fiscal period.

These increases in operating cash flows were partially offset by a $52.2 million decrease resulting from the net effect of changes in working capital and the divestiture of subsidiaries that, in the aggregate, contributed positive operating cash flows during the 2021 fiscal period.

Investing Activities

Cash flows from investing activities increased by $9.0 million to investing cash inflows of $7.9 million for the 2022 fiscal quarter from investing cash outflows of $(1.1) million for the 2021 fiscal quarter.

This increase in investing cash flows was attributable to payments of $18.3 million made during the 2021 fiscal quarter for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazil operations.

Additionally, cash used for capital expenditures decreased by $12.4 million during the 2022 fiscal quarter, as compared to the 2021 fiscal quarter.

These increases in investing cash flows were partially offset by lower cash receipts from the sales of Discontinued Operations of $21.6 million, from $30.8 million during the 2021 fiscal quarter (primarily for the sale of our operations in Honduras and the receipt of a portion of the purchase price that was previously withheld from the 2020 sale of our Malaysia operations) to $9.2 million, net, during the 2022 fiscal quarter (primarily related to the collection of certain receivables from the sale of our Brazil operations).

Cash provided by investing activities decreased by $648.0 million to $2.0 million for the 2022 fiscal period from $650.0 million for the 2021 fiscal period.

This decrease in investing cash flows was attributable to lower cash receipts from the sales of Discontinued Operations of $715.0 million, from $725.3 million during the 2021 fiscal period (primarily for the sale of our operations in Honduras and Brazil, and the receipt of portions of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations) to $10.3 million, net, during the 2022 fiscal period (primarily related to the collection of certain receivables from the sale of our Brazilian operations).

This decrease in investing cash flows was partially offset by payments of $50.3 million made during the 2021 fiscal period for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazilian operations.

Additionally, cash used for capital expenditures decreased by $16.8 million during the 2022 fiscal period, as compared to the 2021 fiscal period.

Other items accounted for the remaining difference of $0.1 million.

Financing Activities

Cash used in financing activities decreased by $95.1 million to $104.1 million for the 2022 fiscal quarter from $199.2 million for the 2021 fiscal quarter.

Cash used in financing activities decreased by $936.5 million to $226.2 million for the 2022 fiscal period from $1,162.7 million for the 2021 fiscal period.

This change in financing cash outflow was attributable to:

(1) lower net payments of long-term debt of $43.5 million during the 2022 fiscal quarter, as compared to the 2021 fiscal quarter;

(1) lower net payments of long-term debt of $851.7 million during the 2022 fiscal period, as compared to the 2021 fiscal period, mainly driven by the 2021 repayment of the Senior Notes due 2025;

(2) a period-over-period decrease of $45.1 million in the amount of common stock repurchases;

and (3) higher proceeds from the exercise of common stock options of $11.5 million during the 2022 fiscal quarter.

These changes were partially offset by higher payments of dividend equivalent rights for vested share-based awards of $3.5 million during the 2022 fiscal quarter.

(3) payments of $33.0 million made during the 2021 fiscal period for call premiums associated with the redemption of the Senior Notes due 2025;

and (4) higher proceeds from the exercise of common stock options of $11.2 million during the 2022 fiscal period.

These changes were partially offset by higher payments of dividend equivalent rights for vested share-based awards of $4.4 million during the 2022 fiscal period.

Other items accounted for the remaining difference of $0.1 million.

6 unchanged sentences

For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2021 Form 10-K.

During the three months ended March 31, 2022, there were no significant changes to our critical accounting policies.

During the six months ended June 30, 2022, there were no significant changes to our critical accounting policies.

Recently Adopted Accounting Standards

Refer to Note 2, Significant Accounting Policies, in our consolidated financial statements included elsewhere in this Form 10-Q for recently adopted accounting standards.

Quantitative and Qualitative Disclosures About Market Risk

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis