Nord Anglia Education Second Quarter Fiscal 2017 Results Presentation

Transcription

1 Nord Anglia Education Second Quarter Fiscal 2017 Results Presentation For the period ended February 28, 2017 April 27,

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 Second quarter vs prior year Financial Revenue up 6.7% (CC 1 8.5%) from $243.2 million to $259.5 million Adjusted EBITDA unchanged (CC 1 up 2.2%) at $66.9 million Adjusted Net Income increased from $27.7 million to $28.9 million Diluted Adjusted EPS increased 2.9% to $0.27 Operational Average full time equivalent students (FTEs) up 7.1% from 34,737 to 37,194 Capacity up 11.7% from 49,057 seats to 54,813 seats Revenue/FTE unchanged (CC 1 up 1.4%) at $7.0k 1 CC denotes Constant Currency throughout 3

4 Financial 4

5 Group summary Q2 fiscal 2017 vs Q2 fiscal 2016 $ millions Q2FY17 (1) Q2FY16 Variance Premium Schools CC: 8.5% Actual: 6.8% Other Total Revenue CC: 8.5% Actual: 6.7% Gross Profit CC: 4.2% Actual: 2.1% Gross Profit Margin 38.7% 40.4% (1.7%) Adjusted EBITDA CC: 2.2% Actual: 0.0% Adjusted EBITDA Margin 25.8% 27.5% (1.7%) Adjusted Net Income Actual: 4.5% Diluted Adjusted EPS (in $) Actual: 2.9% 1 Q2FY17 ends February 28,

6 China Expat Q2 FY2017 Revenue $52.3m from $54.0m (3.1%) +2.2% CC Adj. EBITDA $22.6m from $23.5m (3.9%) +1.5% CC FTEs Capacity 8,926 5,793 5,876 9,242 Commentary Revenue/FTE $8.9k down from $9.3k due to: FX impact of stronger USD; and Mix impact of stronger growth in lower price point schools Adjusted EBITDA Margin 43.2% down from 43.5% Q2 FY16 Q2 FY17 6

7 China Bilingual Q2 FY2017 Revenue $3.4m FTEs Capacity 2,250 Adj. EBITDA $0.3m 453 Commentary Revenue/FTE $7.4k for Q2 FY2017 Expected Revenue/FTE for FY2017 ~$26.0k Expected to be around Adjusted EBITDA breakeven and cash flow positive in FY2017 Establishment of new team on track Q2 FY16 Q2 FY17 7

8 Europe Q2 FY2017 Revenue $61.2m from $59.1m +3.4% +3.6% CC FTE 8,617 Capacity 9,691 Adj. EBITDA $15.5m from $13.3m +15.7% +16.3% CC 6,626 6,917 Commentary Revenue/FTE $8.8k down from $8.9k due to: FX impact from strengthening USD; and Mix impact of strong growth in Europe ex Switzerland Adjusted EBITDA Margin 25.3% up from 22.5% Q2 FY16 Q2 FY17 8

9 Middle East Q2 FY2017 Revenue $27.2m from $25.9m +5.1% +5.1% CC 5,316 FTE 5,851 Capacity 5,607 6,187 Adj. EBITDA $6.8m from $6.1m +11.5% +11.5% CC Commentary Revenue/FTE $4.8k down from $4.9k due to: Mix impact of stronger growth in lower price point schools Adjusted EBITDA Margin 25.0% up from 23.6% Q2 FY16 Q2 FY17 9

10 South East Asia Q2 FY2017 Revenue $41.5m from $36.3m +14.4% +14.9% CC Adj. EBITDA $14.4m from $12.0m +20.9% +21.5% CC 7,487 FTE 12,156 Capacity 8,353 12,561 Commentary Revenue/FTE $5.0k up from $4.9k due to tuition fee increases Adjusted EBITDA Margin 34.7% up from 33.1% due to utilization increase Q2 FY16 Q2 FY17 10

11 North America Q2 FY2017 Revenue $73.0m from $66.8m +9.3% +10.5% CC Adj. EBITDA $19.7m from $22.6m (12.6%) (11.8%) CC 9,515 FTE 13,507 Capacity 9,988 14,882 Commentary Revenue/FTE $7.3k up from $7.0k due to tuition fee increases Adjusted EBITDA Margin 27.0% down from 33.8% due to: Sale and leaseback rent; and New Houston campus rent Q2 FY16 Q2 FY17 11

12 Balance sheet & cash flow Highlights Q2FY17 Net Debt $931.1m 1 LTM Q2FY17 Consolidated EBITDA PF 206.5m 2 Negative EBITDA impact from FX, new Houston campus and sale and leaseback Net Leverage 4.9x 3.8x 4.3x 4.5x Summary cash flow Six months ended, ($ millions) Feb 28, 2017 Feb 29, 2016 Cash generated from operations (87.8) (12.6) Payment of loan/bond expenses (2.7) (4.9) Interest paid (28.0) (31.9) Tax paid (10.0) (12.4) Net cash used in operating activities (128.5) (61.8) Acquisition consideration (3) (13.5) (27.9) Capital expenditures (36.7) (43.0) Other Net cash used in investing activities (40.3) (70.1) LTM Q1FY16 LTM Q4FY16 LTM Q1FY17 LTM Q2FY17 Target net leverage: x in FY17 Net cash (used in)/generated from financing activities Net decrease in cash and cash equivalents (5.8) 67.3 (174.6) (64.6) Effect of FX fluctuations (8.4) (6.2) Cash and cash equivalents at end of the period (including overdrafts) 1 Net debt calculated as the principal debt outstanding including capital leases less cash. 2 LTM Q2FY17 Consolidated EBITDA pro forma LTM impact of the sale & leaseback $2.5m. 3 Q2 FY17 $13.5m relates to deferred consideration for our schools in Vietnam and Cambodia

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14 Our global of schools 11 Schools Czech Republic Prague British School 8 Schools The English International School Prague Hungary The British International School Budapest Poland The British School Warsaw China Léman International School, Chengdu Nord Anglia Chinese International School Shanghai The British International School Shanghai, Pudong The British International School Shanghai, Puxi The British School of Beijing, Sanlitun 11 Schools Slovakia The British International School Bratislava The British School of Beijing, Shunyi The British School of Guangzhou United States of America British International School of Boston British International School of Chicago, Lincoln Park British International School of Chicago, South Loop British International School of Houston British International School of Washington Nord Anglia International School New York North Broward Preparatory School The British International School of Charlotte The Village School Windermere Preparatory School Mexico Instituto San Roberto Spain International College Spain Switzerland Collège Beau Soleil, Villars-Sur-Ollon Collège Champittet, Nyon Collège Champittet, Pully Collège du Léman La Côte International School, Aubonne 6 Schools United Arab Emirates Nord Anglia International School Dubai The British International School Abu Dhabi Qatar Compass International School, A3l Khor Compass International School Doha, Rayyan Compass International School Doha, Gharaffa Compass International School Doha, Madinat Khalifa Hong Kong S.A.R Nord Anglia International School Hong Kong 8 Schools Cambodia Northbridge International School Cambodia Singapore Dover Court International School Singapore Thailand Regents International School Pattaya St Andrews International School Bangkok Vietnam British International School, Hanoi British International School, Ho Chi Minh City British Vietnamese International School, Hanoi British Vietnamese International School, Ho Chi Minh City

15 Lower Margin Higher Greenfield opportunities generate the returns 3-4 years to breakeven years to maturity 2 e.g. Chicago (opened Sept 2015) Not a strategic fit 1-2 years to breakeven years to maturity 2 e.g. Shanghai (opened Sept 2003) 2-3 years to breakeven years to maturity 2 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 15

16 Consolidated income statement Three Months Ended $ millions, except share data February 28, 2017 February 29, 2016 (unaudited) (unaudited) Revenue Cost of sales (159.1) (144.9) Gross profit Selling, general & administrative expenses (50.5) (46.4) Depreciation (0.2) (0.2) Amortization (4.5) (4.6) Other (losses)/gains (2.5) 5.4 Exceptional expenses (0.8) (2.5) Total expenses (58.5) (48.3) Operating profit Finance income Finance expense (18.5) (23.6) Net finance expense (17.7) (22.9) Profit before income tax Income tax expense (5.4) (5.7) Profit for the period Profit attributable to: Owners of the parent Non-controlling interest Profit for the period Earnings per ordinary share (in dollars) Basic Diluted

17 operating data February 28, 2017 Three Months Ended February 29, 2016 Full-time equivalent students (average for the period) China 5,876 5,793 China Bilingual China total 6,329 5,793 Europe 6,917 6,626 Middle East 5,607 5,316 South East Asia 8,353 7,487 North America 9,988 9,515 Total 37,194 34,737 Capacity (average for the period) China 9,242 8,926 China Bilingual 2,250 - China total 11,492 8,926 Europe 9,691 8,617 Middle East 6,187 5,851 South East Asia 12,561 12,156 North America 14,882 13,507 Total 54,813 49,057 17

18 operating data continued February 28, 2017 Three Months Ended February 29, 2016 Utilization (average for the period) China 64% 65% China Bilingual 20% - China total 55% 65% Europe 71% 77% Middle East 91% 91% South East Asia 66% 62% North America 67% 70% Total 68% 71% Revenue per FTE (in $ thousands) China China Bilingual China total Europe Middle East South East Asia North America Total

19 Supplemental financial data Three Months Ended % Variance $ millions February 28, 2017 (unaudited) February 29, 2016 (unaudited) Reported Constant Currency Revenue (segment) Premium Schools China (3.1%) 2.2% China Bilingual China total % 8.7% Europe % 3.6% Middle East % 5.1% South East Asia % 14.9% North America % 10.5% Total Premium Schools % 8.5% Other (14.1%) (0.1%) Total Revenue % 8.5% Adjusted EBITDA (segment) Premium Schools China (3.9%) 1.5% China Bilingual China total (2.7%) 2.8% Europe % 16.3% Middle East % 11.5% South East Asia % 21.5% North America (12.6%) (11.8%) Total Premium Schools % 4.5% Other % 275.9% Central and regional expenses (12.5) (10.6) 17.8% 20.2% Adjusted EBITDA % 2.2% Adjusted Net Income % 19

20 Reconciliation of non-gaap financial data Three Months Ended $ millions February 28, February 29, Profit for the period Income tax expense Net financing expense Exceptional items Other losses/(gains) 2.5 (5.4) Amortization Depreciation Depreciation in cost of sales EBITDA Gain on disposal of property, plant and equipment (0.4) 0.0 Share based payments Greenfield pre-opening costs China Bilingual division establishment Rollout of Juilliard Program Rollout of MIT collaboration Global campus expedition facility (0.3) - SOX implementation Other - (0.2) Adjusted EBITDA

21 Reconciliation of non-gaap financial data continued $ millions Three Months Ended February 28, February 29, Depreciation (12.4) (11.2) Net Financing Expense (17.7) (22.9) Financing Expense Adjustments Income Tax Expense (5.4) (5.7) Tax Adjustments (4.7) (5.0) Non-Controlling Interest (0.5) (0.4) Adjusted Net Income Adjusted earnings per ordinary share (in $) Basic Diluted

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