Laureate Education (NASDAQ: LAUR) reported Q1 EPS of $0.47, $0.92 better than the analyst estimate of ($0.45). Revenue for the quarter came in at $589.0 million versus the consensus estimate of $565.28 million.

First Quarter 2020 Highlights (compared to first quarter 2019):

• New enrollments decreased 18%, down 6%, adjusted for the timing of semester start dates and excluding the divestiture of UniNorte Brazil in the prior year.
• Total enrollments decreased 5%, down 2% excluding the divestiture of UniNorte Brazil in the prior year.
• On a reported basis, revenue decreased 12% to $528.6 million due primarily to the weakening of foreign currencies against the U.S. Dollar and the timing of semester start dates. On an organic constant currency basis,1 revenue decreased 4%.
• Operating loss increased by $25.1 million, or 27%, to $(117.1) million.
• Net income (including discontinued operations) for the three months ended March 31, 2020 was $98.3 million, due to a discrete tax benefit, as compared to net income (including discontinued operations) of $194.3 million for the three months ended March 31, 2019, which was largely attributable to gains from asset sales.
• Adjusted EBITDA was a loss of $(36.9) million, a decrease in Adjusted EBITDA of $7.3 million, or 25%, due primarily to the timing of semester start dates during an already seasonally lower quarter. On an organic constant currency basis, Adjusted EBITDA decreased 35%.

Eilif Serck-Hanssen, President and Chief Executive Officer, said, “Laureate’s business model demonstrated resiliency in the first quarter. While the COVID-19 pandemic affected the Company’s main intake cycle in the Southern Hemisphere, resulting in lower new enrollments than anticipated, solid re-enrollment performance helped mitigate the impact on total enrollments. To further enhance Laureate’s already strong liquidity position, we have proactively implemented a number of actions to preserve cash, including cost reductions. We are continuing with our strategic review process to unlock value for all our stakeholders, albeit at a slower-than-anticipated pace in light of the pandemic’s effect on market conditions.”

Mr. Serck-Hanssen added, “During these unprecedented times, Laureate is more focused than ever on the health and well-being of our students, faculty and staff while delivering on our promise of providing high-quality educational offerings. In March, we quickly leveraged our existing expertise, technologies and learning platforms to transition our more than 800,000 campus-based students to fully online learning. I want to thank our faculty and staff for their flexibility, commitment and resilience during these challenging times.”

GUIDANCE:

Laureate Education sees FY2020 revenue of $2.575-2.775 billion, versus the consensus of $3.11 billion.

Laureate is updating its full-year 2020 guidance in response to the COVID-19 pandemic, as well as foreign exchange impacts, as the U.S. Dollar has strengthened significantly since February 27, 2020, the date of the Company’s fourth quarter and full year 2019 earnings release.

The additional unfavorable foreign currency impact for 2020 is expected to be ($250) million for Revenue, ($55) million for Adjusted EBITDA and ($28) million for Free Cash Flow, defined as operating cash flow less capital expenditures.

Given the reduced visibility over its financial and operating performance due to uncertainties related to the macroeconomic impact of the COVID-19 pandemic, Laureate is updating its guidance for full-year 2020 under two scenarios, based on current foreign exchange spot rates2:

Scenario 1 – Assumes gradual reopening of campuses in the second half of 2020

• Total enrollments estimated to be approximately 830,000 students;
• Revenues estimated to be in the range of $2,675 to $2,775 million;
• Adjusted EBITDA estimated to be in the range of $545 to $575 million; and
• Free Cash Flow estimated to be in the range of $160 to $180 million.

Scenario 2 – Assumes COVID-19 resurgence in second half of 2020, eroding macroeconomic conditions and campuses remain closed

• Total enrollments estimated to be approximately 780,000 students;
• Revenues estimated to be in the range of $2,575 to $2,675 million;
• Adjusted EBITDA estimated to be in the range of $485 to $515 million; and
• Free Cash Flow estimated to be in the range of $100 million to $120 million.

This updated guidance assumes that all entities currently included within continuing operations remain there for the entirety of 2020; if and when additional entities are required to be moved to discontinued operations during 2020, guidance will be revised.

For earnings history and earnings-related data on Laureate Education (LAUR) click here.