Laureate Education, Inc. (LAUR) Earnings Call Transcript & Summary

Good morning, and welcome to the Laureate Education Annual Meeting of Stockholders. I would now like to turn the meeting over to Ken Freeman. Please go ahead, sir.

Good morning, everyone. Welcome to the 2020 Annual Meeting of Stockholders of Laureate Education, Inc. I'm Ken Freeman, Chairman of the Board of Directors, and I will preside over today's meeting. We're pleased to host our meeting virtually, enabling increased stockholder participation and the ability to gather safely in light of the COVID-19 pandemic. We now call the meeting to order. If you have not yet reviewed the rules of conduct, that can be accessed via the link on the bottom right-hand corner of your screen under the heading Meeting Materials. The rules of conduct will govern how we will run the meeting. There are 11 directors who have been nominated for reelection. All of the directors are in attendance at today's meeting. In addition to me, the other nominees are Brian Carroll, Andrew Cohen, William Cornog, Pedro Del Corro, Michael Durham, George Muñoz, Dr. Judith Rodin, Eilif Serck-Hanssen, Ian Snow and Steven Taslitz. Victoria Silbey, our Chief Legal Officer, will act as secretary of the meeting. I will turn to her with any procedural issues that may arise. Broadridge Financial Solutions, Inc. has acted as the tabulator for this annual meeting and has delivered to Ms. Silbey a final vote tabulation report as of 12 a.m. this morning, signed by an authorized representative of Broadridge. [ Lou Larson ] of [ L2 Elections, LLC ] will act as the independent inspector of elections. He has taken his oath as the inspector of elections, which will be filed with the company's records. Willie Bosenberg of PricewaterhouseCoopers LLP, our independent registered public accounting firm, is also with us this morning. He will be available during the question-and-answer session after the meeting to respond to any questions you may have. The record date for voting at this meeting was the close of business on March 16, 2020. The secretary has delivered an affidavit of mailing to show that notice of this meeting was given. A copy of both the notice and the affidavit will be incorporated into the minutes. This morning, we are asking stockholders to elect 11 directors to our Board, approve by a nonbinding advisory vote the compensation paid to our named executive officers and ratify the appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for 2020. After we complete our official business, our President and Chief Executive Officer, Eilif Serck-Hanssen, will provide remarks on the state of the company, after which there will be a question-and-answer session for our stockholders. [Operator Instructions] And please note that this meeting is being recorded. Our bylaws require that a majority voting power of the outstanding shares of the company's capital stock be represented in person or by proxy at the meeting for us to have a quorum. Mr. [ Larson ] will now report on whether we have a quorum for the meeting.

The stockholders list shows that 118,822,074 shares of the company's Class A common stock and 90,813,257 shares of the company's Class B common stock were outstanding as of the record date and entitled to vote at this meeting. Each share of the company's Class A common stock has 1 vote and each share of the company's Class B common stock has 10 votes that are represented in person or by proxy 100,870,807 shares of the company's Class A common stock and 86,211,123 shares of the company's Class B common stock or approximately 89.24% of the voting power of the outstanding shares of the company's capital stock entitled to be voted at this meeting. Based upon the percentage of the total voting power of the outstanding shares of the company's capital stock held by holders of record now present at the meeting, either in person or by proxy, a quorum is present.

Thank you. This meeting is now duly convened. The report of a quorum will be filed in the company's records. We will now consider today's 3 proposals. Note that we will commence voting after all proposals have been presented. The first proposal is the election of 11 directors. The 11 nominated [indiscernible] number of votes at this meeting will be elected as directors and will hold office until the 2021 [Audio Gap] of stockholders. The nominees have been introduced and are listed in your proxy materials. Is there a motion to elect the director nominees as set forth in the proxy materials?

Mr. Chairman, I move to elect the nominees named in the proxy statement.

Thank you. Is there a second?

Second.

Thank you. Nominations are now closed. If any stockholder has a question concerning this proposal, please submit your questions through the web portal. Mr. Morse are there -- Mr. Morse, are there any questions related to this proposal?

Mr. Freeman, there are no questions.

We will now move to Proposal 2. The second proposal, commonly known as say-on-pay, is a nonbinding advisory vote to approve the compensation paid to our named executive officers as disclosed in our proxy statement. The Board of Directors recommends approval of the compensation of the named executive officers. May I have a motion to approve the compensation of the named executive officers?

So moved.

Thank you. Is there a second?

Second.

If any stockholder has a question concerning this proposal, please submit your questions through the web portal. Mr. Morse, are there any questions related to this proposal?

Mr. Freeman, there are no questions.

We will now move to Proposal 3. The third proposal before us today is the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020. The Board recommends the ratification of PricewaterhouseCoopers LLP. May I have a motion to ratify the appointment of PricewaterhouseCoopers LLP?

So moved.

Is there a second?

Second.

If any stockholder has a question concerning this proposal, please submit your question through the web portal. Mr. Morse, are there any questions related to this proposal?

Mr. Freeman, there are no questions.

Because no further business is on the agenda to come before this meeting, we will move on to voting. The polls are now open for each matter to be voted on today. Any stockholder who has not yet voted or who wishes to change his or her vote may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or who voted via telephone or Internet and do not want to change their votes do not need to take any further action. [Voting]

Now that everyone has had the opportunity to vote, I declare the polls for the 2020 Annual Meeting of Stockholders of Laureate Education, Inc. closed. Mr. [ Larson ], do we have preliminary voting results?

Yes, Mr. Chairman, we do. I can report based upon my preliminary tally that the stockholders have voted, one, for the election of the nominees for director; two, to approve the advisory vote on executive compensation; and three, to ratify the appointment of PricewaterhouseCoopers LLP as Laureate's independent registered public accounting firm for 2020.

Thank you, Mr. [ Larson ]. The company will be reporting the final vote results in a Form 8-K to be filed with the Securities and Exchange Commission within 4 business days. There being no further business to come before this meeting, the 2020 Annual Meeting of Stockholders of Laureate Education, Inc. is now adjourned. We will now proceed with the informal portion of the meeting. Eilif Serck-Hanssen, President and Chief Executive Officer, will now make a brief report to you about the company, after which we will be happy to answer any questions. Eilif?

Thank you, Ken. 2019 was a year of transformation for Laureate as we continue to provide outstanding educational opportunities in large markets where we have scale. Our efforts have resulted in improved financial performance. We have strong operating platforms within each country where we operate and leverage shared infrastructure, technology, curricular and operational best practices across our universities within each country. Operating performance has improved. Over the past 2 years, we have increased margins by approximately 2 percentage points, and the businesses are generating strong sustainable free cash flows. The work that we do every day is not just about financial outcomes of our company. It's also about maintaining and enhancing the quality of our local and regional brands and our ability to have a positive impact on communities around the world. Our network institutions are consistently highly ranked and rated in comparison to their peers. We believe that this is a reflection of our focus on academic quality and outcomes for our students at each Laureate institution. We are currently navigating highly uncertain times because of the COVID-19 pandemic. However, I'm pleased with the resiliency of our business model demonstrated in the first quarter. In the light of the crisis, Laureate has proactively implemented a number of actions to preserve cash, including cost reductions to maintain ample liquidity. In addition, earlier this year, we announced our intention to explore strategic alternatives for each of our business units to accelerate the path to value creation for our shareholders. We are continuing with that process, albeit at a slower-than-anticipated pace in light of the turbulent conditions caused by the COVID-19 pandemic. At Laureate, we understand the important role education plays in societies. We remain committed to our mission, expanding access to quality higher education to make the world a better place. When our students succeed, countries prosper and societies benefit. Thank you for attending our annual stockholder meeting. I will now turn it back to our Chairman, Ken Freeman.

Thank you, Eilif. This concludes the management presentation. Our Executive Vice President and Chief Financial Officer, J.J. Charhon, will join Eilif and me in responding to any stockholder questions received through the web portal. Please note that we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. Mr. Morse, are there any questions?

Mr. Freeman, there are no questions in the queue.

This concludes our question-and-answer session. Thank you, everyone, for joining us today.

This now concludes the meeting. Thank you for joining, and have a pleasant day.