LAUREATE EDUCATION, INC. 10-Q

Item 1. Financial Statements (Unaudited) LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Operations IN THOUSANDS, except per share amounts For the three months ended March 31, 2023 2022 (Unaudited) (Unaudited) Revenues $ 251,255 $ 209,563 Costs and expenses: Direct costs 225,312 182,880 General and administrative expenses 10,314 17,505 Loss on impairment of assets — 144 Operating income 15,629 9,034 Interest income 2,158 1,968 Interest expense ( 5,952 ) ( 3,731 ) Other income (expense), net 261 ( 1,226 ) Foreign currency exchange loss, net ( 28,952 ) ( 3,601 ) Gain on disposal of subsidiaries, net 306 — (Loss) income from continuing operations before income taxes and equity in net (loss) income of affiliates ( 16,550 ) 2,444 Income tax expense ( 10,195 ) ( 47,967 ) Equity in net (loss) income of affiliates, net of tax ( 3 ) 108 Loss from continuing operations ( 26,748 ) ( 45,415 ) (Loss) income from discontinued operations, net of tax of $ 0 for both periods ( 14 ) 735 Net loss ( 26,762 ) ( 44,680 ) Net loss attributable to noncontrolling interests 155 469 Net loss attributable to Laureate Education, Inc. $ ( 26,607 ) $ ( 44,211 ) Basic and diluted earnings (loss) per share: Loss from continuing operations $ ( 0.17 ) $ ( 0.25 ) Income from discontinued operations — — Basic and diluted loss per share $ ( 0.17 ) $ ( 0.25 ) The accompanying notes are an integral part of these consolidated financial statements. 2 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income IN THOUSANDS For the three months ended March 31, 2023 2022 (Unaudited) (Unaudited) Net loss $ ( 26,762 ) $ ( 44,680 ) Other comprehensive income: Foreign currency translation adjustment, net of tax of $ 0 for both periods 72,797 49,575 Minimum pension liability adjustment, net of tax of $ 0 for both periods — 14 Total other comprehensive income 72,797 49,589 Comprehensive income 46,035 4,909 Net comprehensive loss attributable to noncontrolling interests 149 467 Comprehensive income attributable to Laureate Education, Inc. $ 46,184 $ 5,376 The accompanying notes are an integral part of these consolidated financial statements. 3 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets IN THOUSANDS, except per share amounts March 31, 2023 December 31, 2022 Assets (Unaudited) Current assets: Cash and cash equivalents $ 130,636 $ 85,167 Restricted cash 8,644 8,617 Receivables: Accounts and notes receivable 120,261 133,105 Other receivables 16,743 9,486 Allowance for doubtful accounts ( 62,120 ) ( 61,882 ) Receivables, net 74,884 80,709 Income tax receivable 34,868 32,261 Prepaid expenses and other current assets 30,356 19,445 Total current assets 279,388 226,199 Property and equipment: Land 130,884 127,154 Buildings 361,540 348,931 Furniture, equipment and software 522,424 494,004 Leasehold improvements 125,155 117,820 Construction in-progress 13,805 11,871 Accumulated depreciation and amortization ( 615,057 ) ( 576,373 ) Property and equipment, net 538,751 523,407 Operating lease right-of-use assets, net 397,310 389,565 Goodwill 618,471 583,493 Tradenames, net 159,454 151,645 Deferred costs, net 4,684 5,310 Deferred income taxes 55,622 51,941 Other assets 41,794 40,677 Total assets $ 2,095,474 $ 1,972,237 The accompanying notes are an integral part of these consolidated financial statements. 4 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets (continued) IN THOUSANDS, except per share amounts March 31, 2023 December 31, 2022 Liabilities and stockholders' equity (Unaudited) Current liabilities: Accounts payable $ 32,848 $ 42,842 Accrued expenses 58,366 50,563 Accrued compensation and benefits 73,058 85,215 Deferred revenue and student deposits 114,832 51,264 Current portion of operating leases 43,946 38,994 Current portion of long-term debt and finance leases 49,545 56,184 Income taxes payable 13,436 38,738 Other current liabilities 21,745 17,587 Total current liabilities 407,776 381,387 Long-term operating leases, less current portion 383,953 376,898 Long-term debt and finance leases, less current portion 214,979 175,929 Deferred compensation 10,524 10,379 Income taxes payable 128,517 131,301 Deferred income taxes 94,869 89,765 Other long-term liabilities 32,526 30,823 Total liabilities 1,273,144 1,196,482 Redeemable equity 1,398 1,398 Stockholders' equity: Preferred stock, par value $ 0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022 — — Common stock, par value $ 0.004 per share – 700,000 shares authorized, 230,948 shares issued and 157,174 shares outstanding as of March 31, 2023 and 230,779 shares issued and 157,013 shares outstanding as of December 31, 2022 924 923 Additional paid-in capital 2,205,434 2,204,755 Retained earnings 12,637 39,244 Accumulated other comprehensive loss ( 369,633 ) ( 442,424 ) Treasury stock at cost ( 73,766 shares held at both March 31, 2023 and December 31, 2022) ( 1,026,272 ) ( 1,026,272 ) Total Laureate Education, Inc. stockholders' equity 823,090 776,226 Noncontrolling interests ( 2,158 ) ( 1,869 ) Total stockholders' equity 820,932 774,357 Total liabilities and stockholders' equity $ 2,095,474 $ 1,972,237 The accompanying notes are an integral part of these consolidated financial statements. 5 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows IN THOUSANDS For the three months ended March 31, 2023 2022 Cash flows from operating activities (Unaudited) (Unaudited) Net loss $ ( 26,762 ) $ ( 44,680 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,721 14,365 Amortization of operating lease right-of-use assets 7,189 7,763 Loss on impairment of assets — 144 Loss (gain) on sales and disposal of subsidiaries and property and equipment, net 1,524 ( 713 ) Non-cash interest expense 245 234 Non-cash share-based compensation expense 1,124 2,762 Bad debt expense 2,788 ( 2,535 ) Deferred income taxes ( 607 ) 4,413 Unrealized foreign currency exchange loss (gain) 28,949 ( 753 ) Non-cash loss from non-income tax contingencies 61 69 Other, net 3,724 1,563 Changes in operating assets and liabilities: Receivables 4,224 18,922 Prepaid expenses and other assets ( 12,152 ) ( 2,996 ) Accounts payable and accrued expenses ( 26,159 ) ( 15,695 ) Income tax receivable/payable, net ( 32,663 ) 26,960 Deferred revenue and other liabilities 58,263 44,054 Net cash provided by operating activities 26,469 53,877 Cash flows from investing activities Purchase of property and equipment ( 5,833 ) ( 1,211 ) Expenditures for deferred costs — ( 44 ) Receipts from sales of discontinued operations and property and equipment 254 9,193 Net cash (used in) provided by investing activities ( 5,579 ) 7,938 Cash flows from financing activities Proceeds from issuance of long-term debt, net of original issue discount 38,000 49,691 Payments on long-term debt ( 15,227 ) ( 58,890 ) Payment of dividend equivalent rights for vested share-based awards ( 2,318 ) ( 3,490 ) Payments to purchase noncontrolling interests ( 123 ) — Proceeds from exercise of stock options 1,423 11,496 Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options ( 611 ) ( 774 ) Payments to repurchase common stock — ( 102,171 ) Net cash provided by (used in) financing activities 21,144 ( 104,138 ) Effects of exchange rate changes on Cash and cash equivalents and Restricted cash 3,462 11,190 Net change in Cash and cash equivalents and Restricted cash 45,496 ( 31,133 ) Cash and cash equivalents and Restricted cash at beginning of period 93,784 345,575 Cash and cash equivalents and Restricted cash at end of period $ 139,280 $ 314,442 The accompanying notes are an integral part of these consolidated financial statements. 6 Laureate Education, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Dollars and shares in thousands) Note 1. Description of Business Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). Laureate's programs are provided through institutions that are campus-based and through electronically distributed educational programs (online). We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society. The Company completed its initial public offering (IPO) on February 6, 2017, and its shares are listed on the Nasdaq Global Select Market under the symbol “LAUR.” The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, these financial statements include all adjustments considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the 2022 Form 10-K). Note 2. Revenue Revenue Recognition Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds and waivers. Laureate's institutions have various billing and academic cycles. We determine revenue recognition through the five-step model prescribed by ASC Topic 606, Revenue from Contracts with Customers , as follows: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We assess collectibility on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. We record refunds as a reduction of deferred revenue as applicable. 7 The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended March 31, 2023 and 2022: Mexico Peru Corporate (1) Total 2023 Tuition and educational services $ 223,008 $ 63,027 $ — $ 286,035 114 % Other 34,694 11,073 59 45,826 18 % Gross revenue 257,702 74,100 59 331,861 132 % Less: Discounts / waivers / scholarships ( 75,739 ) ( 4,867 ) — ( 80,606 ) ( 32 ) % Total $ 181,963 $ 69,233 $ 59 $ 251,255 100 % 2022 Tuition and educational services $ 174,074 $ 56,519 $ — $ 230,593 110 % Other 28,616 13,387 1,610 43,613 21 % Gross revenue 202,690 69,906 1,610 274,206 131 % Less: Discounts / waivers / scholarships ( 60,141 ) ( 4,502 ) — ( 64,643 ) ( 31 ) % Total $ 142,549 $ 65,404 $ 1,610 $ 209,563 100 % (1) Includes the elimination of inter-segment revenues. Contract Balances The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and Deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session. All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets. Total accounts receivable from our contracts with students were $ 120,261 and $ 133,105 as of March 31, 2023 and December 31, 2022, respectively. The decrease in the contract assets balance at March 31, 2023 compared to December 31, 2022 was primarily driven by collections, in particular the repayment of outstanding amounts by students re-enrolling for the next academic session. The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions. All contract asset amounts are classified as current. Contract liabilities in the amount of $ 114,832 and $ 51,264 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively. The increase in the contract liability balance during the period ended March 31, 2023 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period. Revenue recognized for the three months ended March 31, 2023 that was included in the contract liability balance at the beginning of the year was approximately $ 36,400 . Note 3. Business and Geographic Segment Information Laureate’s educational services are offered through two reportable segments: Mexico and Peru. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance. Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings utilize campus-based, online and hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand. The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits 8 gained by graduates of higher education institutions. The target demographics are primarily 18- to 24-year-olds in both countries in which we compete. We compete with other private higher education institutions on the basis of price, educational quality, reputation and location. We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network. There are a number of private and public institutions in both countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below. In Mexico, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education. In Peru, private universities are increasingly providing the capacity to meet growing demand in the higher-education market. Laureate owns three institutions in Peru. Inter-segment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate inter-segment items. We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: Gain on disposal of subsidiaries, net, Foreign currency exchange loss, net, Other income (expense), net, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. Our EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the completion of programs that began in prior periods. EiP was an 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. Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, 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 financial measure 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. We use total assets as the measure of assets for reportable segments. 9 The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to (Loss) income from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations: For the three months ended March 31, 2023 2022 Revenues Mexico $ 181,963 $ 142,549 Peru 69,233 65,404 Corporate 59 1,610 Total Revenues $ 251,255 $ 209,563 Adjusted EBITDA of reportable segments Mexico $ 48,946 $ 36,951 Peru ( 6,455 ) 3,829 Total Adjusted EBITDA of reportable segments 42,491 40,780 Reconciling items: Corporate ( 9,017 ) ( 13,625 ) Depreciation and amortization expense ( 16,721 ) ( 14,365 ) Loss on impairment of assets — ( 144 ) Share-based compensation expense ( 1,124 ) ( 2,762 ) EiP expenses — ( 850 ) Operating income 15,629 9,034 Interest income 2,158 1,968 Interest expense ( 5,952 ) ( 3,731 ) Other income (expense), net 261 ( 1,226 ) Foreign currency loss, net ( 28,952 ) ( 3,601 ) Gain on disposal of subsidiaries, net 306 — (Loss) income from continuing operations before income taxes and equity in net income of affiliates $ ( 16,550 ) $ 2,444 March 31, 2023 December 31, 2022 Assets Mexico $ 1,324,038 $ 1,220,630 Peru 545,468 536,141 Corporate 225,968 215,466 Total assets $ 2,095,474 $ 1,972,237 Note 4. Goodwill The change in the net carrying amount of Goodwill from December 31, 2022 through March 31, 2023 was composed of the following items: Mexico Peru Total Balance at December 31, 2022 $ 512,990 $ 70,503 $ 583,493 Currency translation adjustments 34,015 963 34,978 Balance at March 31, 2023 $ 547,005 $ 71,466 $ 618,471 10 Note 5. Debt Outstanding long-term debt was as follows: March 31, 2023 December 31, 2022 Senior long-term debt: Senior Secured Credit Facility (stated maturity date October 2024) $ 138,000 $ 100,000 Other debt: Lines of credit 8,650 13,778 Notes payable and other debt 66,758 72,209 Total senior and other debt 213,408 185,987 Finance lease obligations and sale-leaseback financings 52,798 48,186 Total long-term debt and finance leases 266,206 234,173 Less: total unamortized deferred financing costs 1,682 2,060 Less: current portion of long-term debt and finance leases 49,545 56,184 Long-term debt and finance leases, less current portion $ 214,979 $ 175,929 Senior Secured Credit Facility Under our Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement), the Company maintains a revolving credit facility (the Senior Secured Credit Facility) that has a borrowing capacity of $ 410,000 and a maturity date of October 7, 2024. As of March 31, 2023 and December 31, 2022, the Senior Secured Credit Facility had a total outstanding balance of $ 138,000 and $ 100,000 , respectively. Estimated Fair Value of Debt As of March 31, 2023 and December 31, 2022, the estimated fair value of our debt approximated its carrying value. Certain Covenants As of March 31, 2023, our Third A&R Credit Agreement contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Third A&R Credit Agreement provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, to exceed 3.50 x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply. As of March 31, 2023, more than 25 % of the revolving credit facility was utilized and we were in compliance with the leverage ratio covenant. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of March 31, 2023. Note 6. Leases Laureate conducts a significant portion of its operations at leased facilities, including many of Laureate's higher education facilities and other office locations. In accordance with ASC Topic 842, “Leases,” Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease. Finance Leases Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software, and the related lease liability is included within debt and finance leases on the Consolidated Balance Sheets. 11 Operating Leases Our operating lease agreements are primarily for real estate space and are included within operating lease right-of-use (ROU) assets and operating lease liabilities on the Consolidated Balance Sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial. Note 7. Commitments and Contingencies Loss Contingencies Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. We do not believe that any settlement would have a material impact on our Consolidated Financial Statements. Income Tax Contingencies As of March 31, 2023 and December 31, 2022, Laureate had recorded cumulative liabilities for income tax contingencies of $ 127,568 and $ 130,323 , respectively. Non-Income Tax Loss Contingencies Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities. Laureate intends to vigorously defend against these matters. As of March 31, 2023 and December 31, 2022, approximately $ 12,500 and $ 11,400 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets. We have also identified certain loss contingencies that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable. In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies could be up to approximately $ 16,600 if the outcomes were unfavorable. Guarantees In connection with a loan agreement entered into by a Laureate subsidiary in Peru, all of the shares of Universidad Privada del Norte, one of our universities, were pledged to the third-party lender as a guarantee of the payment obligations under the loan. During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015. As of March 31, 2023 and December 31, 2022, the amount of the guarantee was $ 7,172 and $ 7,076 , respectively. 12 Note 8. Stockholders’ Equity The components of net changes in stockholders’ equity for the three months ended March 31, 2023 are as follows: Laureate Education, Inc. Stockholders Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity Shares Amount Balance at December 31, 2022 157,013 $ 923 $ 2,204,755 $ 39,244 $ ( 442,424 ) $ ( 1,026,272 ) $ ( 1,869 ) $ 774,357 Non-cash share-based compensation — — 1,124 — — — — 1,124 Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding 161 1 ( 448 ) — — — — ( 447 ) Equitable adjustments to stock-based awards — — ( 13 ) — — — — ( 13 ) Change in noncontrolling interests — — 16 — — — ( 140 ) ( 124 ) Net loss — — — ( 26,607 ) — — ( 155 ) ( 26,762 ) Foreign currency translation adjustment, net of tax of $ 0 — — — — 72,791 — 6 72,797 Balance at March 31, 2023 157,174 $ 924 $ 2,205,434 $ 12,637 $ ( 369,633 ) $ ( 1,026,272 ) $ ( 2,158 ) $ 820,932 The components of net changes in stockholders’ equity for the three months ended March 31, 2022 are as follows: Laureate Education, Inc. Stockholders Common stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity Shares Amount Balance at December 31, 2021 180,611 $ 915 $ 2,388,783 $ 15,523 $ ( 520,204 ) $ ( 744,174 ) $ ( 1,285 ) $ 1,139,558 Non-cash share-based compensation — — 2,762 — — — — 2,762 Purchase of treasury stock at cost ( 9,485 ) — — — — ( 112,874 ) — ( 112,874 ) Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding 1,379 6 10,716 — — — — 10,722 Equitable adjustments to stock-based awards — — ( 189 ) — — — — ( 189 ) Net loss — — — ( 44,211 ) — — ( 469 ) ( 44,680 ) Foreign currency translation adjustment, net of tax of $ 0 — — — — 49,573 — 2 49,575 Minimum pension liability adjustment, net of tax of $ 0 — — — — 14 — — 14 Balance at March 31, 2022 172,505 $ 921 $ 2,402,072 $ ( 28,688 ) $ ( 470,617 ) $ ( 857,048 ) $ ( 1,752 ) $ 1,044,888 Share-based Compensation Expense During the three months ended March 31, 2023 and 2022, the Company recorded share-based compensation expense for restricted stock unit awards of $ 1,124 and $ 2,762 , respectively. 13 Accumulated Other Comprehen sive Income (Loss) Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gain on a derivative designated as an effective net investment hedge, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The AOCI related to the net investment hedge will be deferred from earnings until the sale or liquidation of the hedged investee. The components of these balances were as follows: March 31, 2023 December 31, 2022 Laureate Education, Inc. Noncontrolling Interests Total Laureate Education, Inc. Noncontrolling Interests Total Foreign currency translation adjustment $ ( 379,461 ) $ 965 $ ( 378,496 ) $ ( 452,252 ) $ 959 $ ( 451,293 ) Unrealized gain on derivatives 10,416 — 10,416 10,416 — 10,416 Minimum pension liability adjustment ( 588 ) — ( 588 ) ( 588 ) — ( 588 ) Accumulated other comprehensive loss $ ( 369,633 ) $ 965 $ ( 368,668 ) $ ( 442,424 ) $ 959 $ ( 441,465 ) Note 9. Income Taxes Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes. The tax provisions for the three months ended March 31, 2023 and 2022 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods. Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss. For the three months ended March 31, 2023, the Company recognized income t ax expense of $ 10,195 , as compared to $ 47,967 in the prior year period. Income tax expense for the three months ended March 31, 2023 was attributable to pretax income, the jurisdictional mix of earnings, and pretax losses for which the Company cannot recognize a tax benefit. In addition, the Company benefited from changes in reserves for uncertain tax positions. Income tax expense for the three months ended March 31, 2022 was primarily driven by discrete tax expense of approximately $ 32,500 that was recorded for income tax reserves related to the application of the high-tax exception to global intangible low-taxed income. In addition, income tax expense for the three months ended March 31, 2022 was attributable to pretax income, the jurisdictional mix of earnings and pretax losses for which the Company cannot recognize a tax benefit, and the tax effect of stock options that expired unexercised. 14 Note 10. Earnings (Loss) Per Share Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock units, and any other share-based compensation arrangements determined using the treasury stock method. The following table summarizes the computations of basic and diluted earnings (loss) per share: For the three months ended March 31, 2023 2022 Numerator used in basic and diluted earnings (loss) per common share for continuing operations: Loss from continuing operations $ ( 26,748 ) $ ( 45,415 ) Loss attributable to noncontrolling interests 155 469 Net loss from continuing operations for basic and diluted earnings (loss) per share $ ( 26,593 ) $ ( 44,946 ) Numerator used in basic and diluted earnings (loss) per common share for discontinued operations: Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 14 ) $ 735 Denominator used in basic and diluted earnings (loss) per common share: Basic and diluted weighted average shares outstanding 157,197 177,995 Basic and diluted earnings (loss) per share: Loss from continuing operations $ ( 0.17 ) $ ( 0.25 ) Income from discontinued operations — — Basic and diluted loss per share $ ( 0.17 ) $ ( 0.25 ) The following table summarizes the number of stock options and restricted stock units that were excluded from the diluted EPS calculations because the effect would have been antidilutive: For the three months ended March 31, 2023 2022 Stock options 551 1,644 Restricted stock units 692 698 Note 11. Legal and Regulatory Matters Laureate is subject to legal proceedings arising in the ordinary course of business. In management’s opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate’s financial position, results of operations, or cash flows. Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations. Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2022. Peru Regulation Superintendencia Nacional de Educación Superior Universitaria (“SUNEDU”), the regulatory agency that supervises university standards and quality in Peru, is currently reviewing all regulations applicable to universities, with new regulations expected to be announced during 2023. This follows the appointment of new members to the board of SUNEDU in the first quarter of 2023 in connection with the implementation of the July 2022 law that modified SUNEDU’s board representation and authority. 15 On March 30, 2023, Cibertec, the Company’s technical-vocational institute, was granted a higher education colleges license for a six-year period. This license will now allow Cibertec to offer four-year programs for professional bachelor degrees. Note 12. Supplemental Cash Flow Information Reconciliation of Cash and cash equivalents and Restricted cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the March 31, 2022 balance. The March 31, 2023 and March 31, 2022 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022: March 31, 2023 March 31, 2022 December 31, 2022 Cash and cash equivalents $ 130,636 $ 293,835 $ 85,167 Restricted cash 8,644 20,607 8,617 Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 139,280 $ 314,442 $ 93,784 Restricted cash represents cash that is not immediately available for use in current operations. 16