Nord Anglia Education Third Quarter Fiscal 2016 Results Presentation

Transcription

1 Nord Anglia Education Third Quarter Fiscal 2016 Results Presentation For the period ended 2016 July 26, 2016

2 Disclaimer Neither Nord Anglia Education, Inc. (NYSE: NORD) nor any of its subsidiaries or affiliates is making any representation or warranty, expressed or implied, as to the accuracy or completeness of the attached materials. Please note that the attached materials and our oral explanations of the attached materials may constitute forward-looking statements within the meaning of applicable U.S. securities laws and such forward-looking statements are made based on our current expectations. Forward-looking statements relate to events involving certain risks and uncertainties, and actual results may differ materially from the views expressed. A number of potential risks and uncertainties are outlined in our public filings with the Securities and Exchange Commission. Nord Anglia Education, Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law. You are cautioned not to place undue reliance on any forward-looking statements. 2

3 The world s premium schools organization 42 schools 15 countries ~35,300 students ~49,400 capacity 3

4 Third quarter vs prior year Financial Revenue up 49.4% (CC %) from $169.9 million to $253.8 million Adjusted EBITDA up 39.9% (CC %) from $49.9 million to $69.9 million Adjusted Net Income up from $23.2 million to $28.8 million Adjusted Diluted EPS up from $0.23 to $0.28 Operational Average full time equivalent students (FTEs) up 47.5% from 23,932 to 35,309 Capacity up 43.0% from 34,539 seats to 49,402 seats Revenue/FTE up 2.2% (CC 1 4.7%) from $7.0k to $7.2k 1 CC denotes Constant Currency throughout 4

5 end of year enrollment and regional trends Sep-15 FTEs End of year 2016 FTEs North America South East Asia Middle East Europe 9,435 9,560 7,295 7,683 5,264 5,295 6,456 6,884 FY16 organic in-year FTE growth (1) Organic FTE growth from end FY15 Continued positive trends on inquiries and visits Summer 2016 expansion seats China 5,727 5,905 1 Excludes the students acquired from a small school in Switzerland in February

6 Increased opportunities in China High demand has exceeded expectations Strong brand has generated multiple opportunities Actively developing a robust plan to pursue the bilingual opportunity 6

7 Collaborations with educators Learning from the best Enhancing our educational offer through curricula, professional development and unique experiences 2015/ /17 10 Schools 38 Schools 2016/17 50 teachers starting an Executive Masters in International Education 2017/18 50 additional places with 100 participants at any one time 2016/17 13 Schools 2017/18 26 Schools 7

8 Financial 4 May 2015 Why choose a Nord Anglia Education? 8

9 Group summary Q3 fiscal 2016 vs Q3 fiscal 2015 $ millions Q3FY16 (1) Q3FY15 Variance Premium Schools CC: 54.4% Actual: 50.8% Other Total Revenue CC: 53.0% Actual: 49.4% Gross Profit CC: 52.7% Actual: 48.7% Gross Profit Margin 39.9% 40.1% (0.2%) Adjusted EBITDA CC: 44.3% Actual: 39.9% Adjusted EBITDA Margin 27.5% 29.4% (1.9%) Adjusted Net Income Actual: 24.0% Adjusted EPS (in $) Actual: 17.8% 1 Q3FY16 ends

10 Q3 fiscal 2016 revenue bridge 10

11 China Financial Performance Average FTEs Q3FY16 Revenue $56.5m from $53.1m Q3FY16 Adj. EBITDA $24.6m from $25.6m +6.4% (+11.0% CC) -4.0% (+0.4% CC) Commentary Q3FY16 Avg Revenue/FTE $9.6k down from $10.0k due to mix impact of acquisition, FX, stronger growth in lower price point schools Capacity 9,242 places up 19.2% from 7,756 The British School of Beijing, Shunyi (Shunyi, Beijing) 11

12 Europe Financial Performance Average FTEs Commentary Q3FY16 Avg Revenue/FTE $9.2k up from $8.0k due primarily to mix impact of acquisition partly offset by FX headwind Capacity 8,617 places up 41.6% from 6,084 12

13 Middle East Financial Performance Average FTEs Commentary Q3FY16 Avg Revenue/FTE $4.9k up from $4.8k Capacity 5,851 places up 11.4% from 5,251 The British International School Abu Dhabi (Abu Dhabi, UAE) 13

14 Southeast Asia Financial Performance Average FTEs Commentary Q3FY16 Avg Revenue/FTE $5.0k down from $5.1k due to FX headwind Capacity 12,185 places up 4.3% from 11,688 14

15 North America Financial Performance Average FTEs Commentary Q3FY16 Avg Revenue/FTE $7.2k down from $7.7k due to mix impact of acquisitions Capacity 13,507 places up 259.2% from 3,760 15

16 Impact of sale and leaseback of three US school properties Completed April 1, 2016 Completed 2016 Completed 2016 Expected Adjusted EBITDA negative impact in FY16 ~$5m and in FY17 ~$16m ~$171m net cash proceeds in FY16 new 2,200 seat British International School Houston campus will add $8m property expenses in North America in FY17 16

17 Balance sheet & cash flow Highlights Q3FY16 Net Debt $907.3m 1 LTM Q3FY16 Consolidated EBITDA PF $189.4m 2 Negative EBITDA impact from FX, new Chicago school and sale and leaseback rent Leverage profile Net Leverage 5.2x 4.9x 4.3x 5.0x 4.8x Summary cash flow Nine months ended ($ millions) Cash generated from operations Payment of loan/bond expenses (5.0) - Interest paid (44.5) (20.1) Tax paid (18.9) (14.2) Net cash used in operating activities (54.1) (25.1) Acquisition consideration (33.6) (108.9) Sale and leaseback gross proceeds Capital expenditures and other (59.2) (30.6) Net cash generated from/(used in) investing activities 74.2 (139.5) LTM Q2FY15 PF LTM Q3FY15 PF LTM Q4FY15 PF LTM Q2FY16 PF LTM Q3FY16 PF Target net leverage 4.0x in FY16 Net cash generated from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at end of the period (net of overdrafts) (11.7) Net debt calculated as the principal debt outstanding including capital leases less cash 2 LTM Q3FY16 Consolidated EBITDA pro forma acquisitions and Sale & Leaseback $189.4m 17

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19 for Fiscal 2016 Nord Anglia Education is tightening its full year outlook for FY16: Revenue Adjusted EBITDA New FY16 guidance Previous FY16 guidance $850 - $855 million $845 - $855 million $ $208.5 million $205 - $210 million Adjusted Net Income $67 - $68 million $67 - $70 million Adjusted EPS 1 $ $0.65 $ $ Diluted weighted average shares of approximately million 19

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21 Our Family EUROPE The English International School Prague The British International School Budapest The British School Warsaw The British International School Bratislava International College Spain Collège Beau Soleil Collège Champittet Nyon Collège Champittet Pully Collège du Léman La Côte International School Aubonne CHINA Nord Anglia International School Shanghai, Pudong The British International School Shanghai, Puxi The British School of Beijing, Sanlitun The British School of Beijing, Shunyi The British School of Guangzhou Léman International School - Chengdu Nord Anglia International School Hong Kong NORTH AMERICA The British International School of Charlotte British International School of Boston British International School of Chicago, Lincoln Park British International School of Chicago, South Loop British International School of Houston The Village School British International School of Washington Nord Anglia International School New York North Broward Preparatory School Windermere Preparatory School San Roberto International School MIDDLE EAST Nord Anglia International School Al Khor Compass International School Doha, Gharaffa Compass International School Doha, Madinat Khalifa Compass International School Doha, Rayyan The British International School Abu Dhabi Nord Anglia International School Dubai SOUTHEAST ASIA Regents International School Pattaya St Andrews International School Bangkok Northbridge International School Cambodia Dover Court International School Singapore British International School, Hanoi British Vietnamese International School, Hanoi British International School, Ho Chi Minh City British Vietnamese International School, Ho Chi Minh City 49,400 21

22 Our path to becoming the organization premium schools Student Enrollment 35,343 4,010 4,282 6,166 7,054 8,180 10,279 17,313 Induction ,286 Aug 31, 2008 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Apr 24, 2016 No. of schools:

23 Lower Margin Higher Greenfield opportunities generate the returns 3-4 years to breakeven years to maturity e.g. Chicago (opened Sept 2015) Not a strategic fit 1-2 years to breakeven years to maturity e.g. Shanghai (opened Sept 2003) 2-3 years to breakeven years to maturity e.g. Dubai (opened Sept 2014) Key factors: Market growth - supply/ demand dynamics EBITDA margin at maturity average breakeven utilization c.30-35% average margin of NORD schools at maturity c.33% Growth Lower Higher 23

24 Consolidated income statement $ millions, except share data 2016 Three Months Ended 2015 (unaudited) 2016 Nine Months Ended 2015 (unaudited) Revenue Cost of sales (152.5) (101.7) (445.2) (290.4) Gross profit Selling, general & administrative expenses (48.5) (28.3) (140.8) (82.1) Depreciation (0.2) (0.2) (0.6) (0.6) Amortization (4.6) (3.5) (13.9) (9.6) Other gains/(losses) (8.5) 0.2 (1.6) (4.4) Exceptional expenses (6.1) (1.8) (11.0) (4.5) Total expenses (67.9) (33.6) (167.9) (101.2) Operating profit 33.4f Finance income Finance expense (19.8) (9.4) (46.0) (24.0) Net finance expense (19.2) (9.0) (43.7) (22.3) Profit before income tax Income tax expense (10.1) (7.0) (25.3) (19.6) Profit for the period Profit attributable to: Owners of the parent Non-controlling interests Profit for the period Earnings per ordinary share (in dollars) Basic Diluted

25 operating data 2016 Three Months Ended 2015 Nine Months Ended Full-time equivalent students (average for the period) China 5,902 5,300 5,813 5,222 Europe 6,871 4,654 6,656 4,619 Middle East 5,314 4,453 5,304 4,330 South East Asia 7,650 6,682 7,486 5,118 North America 9,572 2,843 9,508 2,811 Total 35,309 23,932 34,767 22,100 Capacity (average for the period) China 9,242 7,756 9,031 7,756 Europe 8,617 6,084 8,617 6,084 Middle East 5,851 5,251 5,851 5,251 South East Asia 12,185 11,688 12,146 8,154 North America 13,507 3,760 13,507 3,760 Total 49,402 34,539 49,152 31,005 25

26 operating data continued 2016 Three Months Ended Nine Months Ended 2015 Utilization (average for the period) China 64% 68% 64% 67% Europe 80% 76% 77% 76% Middle East 91% 85% 91% 82% South East Asia 63% 57% 62% 63% North America 71% 76% 70% 75% Total 71% 69% 71% 71% Revenue per FTE (in $ thousands) China Europe Middle East South East Asia North America Total

27 Supplemental financial data Three Months Ended % Variance $ millions Reported Constant Currency (unaudited) (unaudited) Revenue (segment) Premium Schools China % 11.0% Europe % 71.9% Middle East % 21.9% South East Asia % 16.2% North America % 214.0% Total Premium Schools % 54.4% Other (46.4%) (44.7%) Total Revenue % 53.0% Adjusted EBITDA (segment) Premium Schools China (4.0%) 0.4% Europe % 106.1% Middle East % 40.2% South East Asia % 20.2% North America % 168.0% Total Premium Schools % 46.7% Other (16.8%) (13.7%) Central and regional expenses (10.4) (6.6) 58.7% 61.8% Adjusted EBITDA % 44.3% Adjusted Net Income % 27

28 Supplemental financial data continued Nine Months Ended % Variance $ millions Reported Constant Currency (unaudited) (unaudited) Revenue (segment) Premium Schools China % 9.6% Europe % 71.1% Middle East % 25.5% South East Asia % 46.0% North America % 212.4% Total Premium Schools % 60.6% Other (62.1%) (60.5%) Total Revenue % 58.3% Adjusted EBITDA (segment) Premium Schools China (3.9%) 0.1% Europe % 104.1% Middle East % 43.9% South East Asia % 36.1% North America % 178.5% Total Premium Schools % 51.2% Other (93.3%) (93.0%) Central and regional expenses (30.4) (21.4) 42.2% 44.9% Adjusted EBITDA % 51.1% Adjusted Net Income % 28

29 Reconciliation of non-gaap financial data $ millions Three Months Ended Nine Months Ended Revenue Cost of Sales (152.5) (101.7) (445.2) (290.4) Rent Premium Schools Depreciation Premium Schools Adjusted Cost of Sales (120.6) (79.6) (355.8) (229.0) Adjusted Gross Profit Profit for the period Income tax expense Net financing expense Exceptional items Other losses/(gains) 8.5 (0.2) Amortization Depreciation Depreciation in Cost of Sales EBITDA

30 Reconciliation of non-gaap financial data continued $ millions Three Months Ended Nine Months Ended (Gain)/loss on disposal of property, plant and equipment (0.6) 0.1 (0.6) 0.4 Share based payments Greenfield pre-opening costs Rollout of Juilliard Program Rollout of MIT collaboration Global campus expedition facility China expat taxes Other Adjusted EBITDA Depreciation (12.6) (7.9) (35.8) (22.7) Net Financing Expense (19.2) (9.0) (43.7) (22.3) Financing Expense Adjustments (6.0) - Income Tax Expense (10.1) (7.0) (25.3) (19.6) Tax Adjustments (0.7) (2.4) (6.0) (7.1) Non-Controlling Interest (0.5) (0.4) (1.4) (0.7) Adjusted Net Income Adjusted earnings per ordinary share (in $) Basic Diluted

31 The world's leading premium schools organization 31