Adam Morse - Vice President Corporate Finance and Treasurer Douglas Becker - Chairman and Chief Executive Officer Eilif Serck-Hanssen - President, Chief Administrative Officer, and Chief Financial Officer Ricardo Berckemeyer - Chief Operating Officer and Chief Executive Officer, LatAm

Manav Patnaik - Barclays Capital Marcelo Santos - JPMorgan Jeff Silber - BMO Capital Markets Peter Appert - Piper Jaffray & Co. Jeffrey Meuler - Robert W. Baird & Co. Anjaneya Singh - Credit Suisse Shlomo Rosenbaum - Stifel, Nicolaus & Company Javier Martinez de Olcoz Cerdan - Morgan Stanley

Good morning, ladies and gentlemen, and welcome to the Laureate Education, Inc. First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host for today’s conference, Mr. Adam Morse, Vice President Corporate Finance and Treasurer. Sir, you may begin.

Thank you, operator. Hello, everyone, and thank you for joining us on today’s call to discuss Laureate Education’s first quarter 2017 results. Joining me on the call today are Doug Becker, Chairman and Chief Executive Officer; Eilif Serck-Hanssen, President and Chief Administrative Officer and serving as Interim Chief Financial Officer until a replacement is named; and Ricardo Berckemeyer, Chief Operating Officer and CEO of Latin America. Our earnings press release is available on the Investor Relations section of our website at laureate.net. We have also posted a supplementary presentation to the website, which we will refer to during today’s call. The call is being webcast and a complete recording will be available after the call. I would like to remind you that some of the information we are providing today, including but not limited to our financial and operational guidance constitutes forward-looking statements within the meaning of the applicable U.S. securities laws. Forward-looking statements are subject to risks and uncertainties that may change at any time and, therefore, our actual results may differ materially from those we expected. Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 29, 2017, our Quarterly Report on Form 10-Q to be filed with the SEC, as well as other filings made with the SEC. In addition, all forward-looking statements are based on current expectations as of the date of this conference call and we undertake no obligation to update any forward-looking statements. Additionally, non-GAAP measures that we discuss are also detailed and reconciled to their GAAP counterparts in our press release and will be included in our 10-Q when filed with the SEC. With that, let me turn the call over to Doug for the review of the quarter and an update on the business.

Thank you, Adam, and thanks to everyone on the line for joining us on today’s earnings call. During our call, we’re going to highlight the results from our large first quarter intake and we’re going to discuss the operating results for the period. Additionally, we’ll be updating you on our recent capital structure, debt refinancing and sharing some new plans developed to accelerate the achievement of our financial priorities. Before we discuss the results for the quarter, I just want to remind everyone of the seasonality in our business, which for reference, is illustrated on slides provided in the appendix. For Laureate, the first and third quarters represent our two largest intake periods, which account for approximately 80% of total new enrollment activity for the year, but are seasonally low from a P&L perspective. Conversely, the second and fourth quarters, when our institutions are in session for most of these quarters generate the majority of the revenue and EBITDA for the year, but are not large enrollment intake periods. With that context, let me run through the highlights. For the first quarter of 2017, revenue increased 3% compared to first quarter 2016 on an organic constant currency basis to $856 million and adjusted EBITDA increased 22% on an organic constant currency basis to $49 million. As flagged for you during our year-end earnings call, the results in the first quarter were impacted by the delay in class starts in Peru, due to severe flooding in that country. Later in our remarks, Eilif will provide more details on the related timing impact on our results. The enrollments for the first quarter of 2017 were consistent with our expectations with new enrollment growth of 4% and total enrollment increasing 3% versus the first quarter of 2016, as adjusted for the timing of the Peru intake. The flooding in Peru caused the main enrollment intake in that country to be extended through April 2017, whereas typically the intake is completed by the end of March. Therefore, we’re providing our first quarter 2017 enrollments on a reported and as adjusted basis for the timing of the intake, in that sense including the April 2017 new enrollment in Peru as in the first quarter of 2017 adjusted enrollment results. You will also note that we saw an important return to growth in Brazil following declines in the same time last year. Our business model continues to benefit from a large and growing addressable market that’s becoming increasingly reliant on the private sector due to government funding constraints, particularly in developing markets. It’s a market that’s more than doubled in the last 10 years with demand stemming from robust growth in the emerging middle classes and the fact that the returns on investment for the students are very strong. I’m now going to ask Eilif to run through the financial results and business outlook and discuss some new and exciting plans underway to accelerate the achievement of our objectives for improved growth, margins and free cash flow, while maintaining our strong commitment to student success and positive impact. Eilif Serck-Hanssen: Thank you, Doug, and good morning, everyone. I’m going to start by providing an overview of our enrollment performance by segment, and then give some additional commentary on our first quarter 2017 operating results, before providing guidance on our second quarter and discussing in more detail the strategic plans Doug referenced. Before running through the results, I want to note that, as previously disclosed in our 10-K, effective March 31, 2017, we combined our previously separate Europe and EMEA segments in order to reflect our belief that we would be able to operate the institutions in these segments more successfully and efficiently under common management. The combined segment is called EMEAA representing Europe, Middle East, Africa and Asia. Now, let me move to the results for the first quarter. On Slide #5, you can see Q1 enrollment growth that Doug referenced. The enrollment intake in the first quarter represents the large intake from Southern Hemisphere institutions. For us that encompasses Brazil, Peru, Chile and Latin America and Australia in the EMEAA region. Our Northern Hemisphere markets have smaller intakes during the first quarter, as their large intake will occur in the fall. So for us that includes Mexico, Spain and other EMEAA markets such as China and India. For our GPS segment, given the majority of that business model is fully online, we have multiple intakes throughout the year for GPS. For Latin America, new enrollment and total enrollment both grew 4% versus first quarter of 2016, adjusted for the timing impact from the flooding in Peru. This includes strong double-digit enrollment growth in Peru and low single-digit growth in Brazil through March. However, when looking at the entire intake cycle for Brazil, which concluded in early second quarter, total new enrollment growth in Brazil was up mid single digits, driven by private pay students, and of course, with no on balance sheet lending, which is contrary to some of our competitors in that market. This return to growth in Brazil is significant considering the decline that the industry experienced this time last year and the fact that FIES student loan program was cut even further this year. Results in Chile were slightly down year-over-year due to the regulatory changes that occurred in that market during 2016. For the EMEAA and GPS regions, enrollment results year-over-year were impacted by the sale of two business units during 2016, one in France accounted for under the EMEAA segment and one in Switzerland accounted for under our GPS segment. When discussing the results for these segments, I will be quoting organic performance to normalize for those divestitures. Organic new and total enrollment for EMEAA grew both 6% versus first quarter of 2016, with strong growth in core programs offset by our continued planned shift in certain markets away from lower price and low contribution programs to longer length of stay and more profitable programs notably in Australia. For the GPS segment, organic new enrollment growth was a robust 5%, in part driven by a weak comparable period in the first quarter of 2016, due to unfavorable impact on enrollments from our CRM implementation in the first quarter of last year. Total enrollments for GPS decreased 6% versus the same period last year due to previously discussed strategic decision at Walden and the University of Liverpool to rebalance the mix of certain international markets to improve overall margin contributions. The shift in mix affects the year-over-year comparability for the first quarter. Moving to the P&L results on Slide #6. Revenue in the first quarter of 2017 was $856 million, a 6% decrease compared to first quarter of 2016, and adjusted EBITDA was $49 million in the first quarter of 2017, a 34% decrease compared to the first quarter of 2016. Year-over-year results were impacted by divestitures during 2016, as well as foreign currency translation movements. On an organic constant currency basis, revenue increased 3% and adjusted EBITDA increased 22% compared to the first quarter of 2016. The results for first quarter were impacted by the floods in Peru, which shifted one week of revenue and EBITDA from the first quarter to future months. This compares favorably with a two-week shift we anticipated and flagged during our prior earnings call, as we were able to get classes started earlier than anticipated after the flood. The EBITDA result for the quarter also includes some favorable timing and expense – expenses versus the guidance we had provided for the first quarter. Operating loss for the first quarter, which is a seasonally low earnings quarter for Laureate increased by $51.7 million for the first quarter of 2016 to a loss of $62.9 million for the first quarter of 2017. Net loss for the quarter was $120.4 million, compared to a net loss of $102.4 million in first quarter of prior year. Basic and diluted loss per share were $1.05 per share for the first quarter of 2017, including the effect of $38.9 million charge to earnings per share related to the accretion on Series A preferred equity investment. Now, let me spend a few minutes discussing results by segment for 2017 on Slides 7 through 9. Given the majority of our institutions are out of session for a portion of the quarter, the first quarter is a seasonally low period for revenue and earnings for Laureate, and therefore, the financial results are often not indicative of the results anticipated for the full-year. As I run through the results, I’m going to be discussing our performance and growth rates on an organic constant currency basis, as we believe that is the best indicator of the operating. Latin America revenue increased 3% and adjusted EBITDA for Latin America was up 2% for the first quarter of 2017 on an organic constant currency basis, as compared to the first quarter of 2016. The results for the quarter were impacted by the floods in Peru, which shifted one week of revenue and approximately $11 million of revenues and EBITDA from the first quarter to future months and likely to be fully caught up by the August timeframe. EMEAA revenue was up 7%, as compared to the first quarter of 2016, and adjusted EBITDA increased 12%, again, on an organic constant currency basis. These results are being favorably impacted by our shift to longer length of stay programs with higher average price points in that region. Despite a volume reduction of approximately 6% at GPS, GPS revenue was flat, as compared to the first quarter of 2016, and adjusted EBITDA was up 15% on an organic constant currency basis. Revenue growth in our U.S. institutions was offset by revenue declines from international fully online students due to our deliberate mix shift discussed earlier to improve margins. Growth in EBITDA was a result of better cost control and increased mix of higher profitability programs, as well as some timing of expenses. Corporate expenses increased by $3 million in the first quarter of 2017 versus the same period of last year, primarily due to additional legal and accounting expenses related to Laureate becoming a public company. Finally, turning to the balance sheet and capital structure on Slides 11 and 12, we ended first quarter of 2017 with $856.3 million in cash – of cash in hand and $1,181.3 million in liquidity, including Laureate’s undrawn revolver. The high cash balance was related to the IPO proceeds, which are being used primarily in the second quarter to repay debt, as well as seasonal cash balances in our international markets. In April of 2017, we completed a refinancing of our corporate debt obligations, extending the maturity and reducing the cost of capital for those obligations through a series of transactions. With the refinancing completed, we have no significant corporate debt maturities coming due until the term loan in 2024, and if drawn, the revolver in 2022. In addition, we were able to structure terms in the new debt arrangements that lowers for better flexibility to match our FX exposures through either local borrowing or synthetic hedges, which in turn will enable us to better match our liabilities with our assets and related cash flows. Pro forma for the debt refinancings and the planned repayment of the Brazil seller note in September of this year, as well as the conversion of $250 million exchange notes, we expect to generate $118 million in annualized interest savings. Interest savings will begin in earnest in June of this year after the redemption of the 2019 notes. And we expect $40 million in savings versus current run rate in the second-half of 2017 with a full $118 million of run rate savings to be recognized during 2018. These transactions will serve to increase our free cash flow profile and were one of several key strategies to drive increased free cash flow conversion going forward. Now, let me spend a minute on the business outlook and guidance starting on Slide #14. On Slide 14, we are providing guidance for the second quarter of 2017. Our expectations for the second quarter are as follows: revenues to be in the range of $1,233 million to $1,263 million; adjusted EBITDA to be in the range of $328 million to $339 million; total basic shares for second quarter are anticipated at 170 million and diluted shares of 189 million; accretion of Series A preferred is anticipated as a $65 million charge to earnings per share for the second quarter; one-time charge for loss on debt extinguishment of $75 million to $85 million in the quarter related to call premium for the senior notes that we took out that were due in 2019, as well as write-off of related deferred financing expenses to the old capital structure. For the full-year, we are reaffirming our 2017 guidance previously provided during our year-end earnings call, as the first quarter intake went according to our expectations. Additionally, FX rates as a basket of currencies for us are largely unchanged when comparing current spot rates to the spot rates used at the time of our year-end earnings call and related guidance. And when excluding certain severance expenses relating to EIP and similar efficiency initiatives that I will describe in more detail in a minute, we expect some earnings uplift versus full-year guidance due to reduced expenses from our new efficiency initiatives. As we think about the longer-term view of the business, we’ve developed some specific strategies that we believe will increase our organic growth rate, further accelerate margin expansion, improve our free cash flow conversion generation, and in the future create a more scalable operating model that can more quickly integrate accretive M&A transactions. Laureate is a unique company as the only global higher education provider at our scale. And over the past 17 years, we have built a global network with more than 1 million students that generate over $4 billion in annual revenues. This unique network provides distinct competitive advantages for our institutions and has been a key driver of our success in the past. However, it has not yet been fully optimized to generate all possible scale benefits, nor have we fully leveraged our global network to capture all the opportunities for product innovation that will produce distinct benefits for our students. These benefits range from sharing best practices around every aspect of university operations and student services to technology-based initiatives like curricular sharing, global classrooms, dual degrees and cutting-edge digital learning. We believe that the enhanced efficiencies from scale, as well as improved student facing differentiation and innovation will result in sustained organic growth momentum, improved margins and stronger free cash flow generation. To align with these objectives Doug, Ricardo and I have decided that this is the right time to be making some strategic shifts in order to focus our attention on areas, where we believe we will deliver more value to our key stakeholders. I’m now on Slide #15 and 16 in the presentation materials. Specifically, over the next two years, we will focus on three key areas to accelerate achievement of our financial and operational priorities as follows. Number one, exit certain smaller markets that are better suited to be operated by new owners allowing us to flatten and reduce our management structure. Number two, accelerate our investments in innovation that will drive organic growth through enhanced student experiences and differentiated product offerings. And number three, reduce overheads and improve decision speed through efficiency gained from technology investments with better and more integrated IT systems, shared services and more efficient operations at the local levels, also referred to as EIP Wave 2. First, let me frame the rationale for exiting certain smaller markets. Across our global network, approximately 85% of our revenues are derived from our top 10 countries, with the remaining 15% of revenues coming from 15 countries. These 15 markets were meant to serve as the growth platform to create the next big countries. Within these 15 countries, we believe that two-thirds of them will reach a scale that is relevant for Laureate, or that we can operate them efficiently as a branch of an existing large market. The other five to seven smaller countries may not reach a scale that will be meaningful for a company of our size. These five to seven markets each currently have average revenues of approximately $30 million and each average student count of approximately 5,000 students and are all of high-quality and have good growth prospects. But we believe that these markets are better positioned in the hands of new owners who can take a longer-term horizon for achieving the type of scale and cash flow returns that these institutions can generate. We are currently conducting our internal review of these markets. For those institutions determined to be divested, we expect the transactions to be concluded within one year. Exiting these smaller markets will allow us to focus on other countries for improved execution and will allow us to reduce overhead expenses associated with operating in many smaller markets. Secondly, we will focus on innovation and differentiation to improve the student experience and student outcomes. As the global leader in higher education, we want to be the innovation leader in our sector. And as the only operator of global higher education network at our scale, we believe that we are in a unique position to create new and improved student experiences that will differentiate us from other public and private higher education providers. In addition to continuing to drive innovation through our hybridity initiative, which is going very well, we will accelerate our investments in integrated technology platforms that will facilitate rapid sharing of content and innovation across the network, as well as better facilitating dual degrees and global digital classroom experiences. This will enhance students’ experiences throughout the entire student lifecycle. We believe that these differentiated student experiences will create a competitive advantage for our graduates when seeking employment, and therefore, benefit our network institutions through increased organic growth and greater market share. The rich data insights from common back offices and common learning systems will also become valuable competitive advantages for Laureate in better understanding our students, improving outcomes and more quickly responding to emerging trends in global higher education. Lastly, we want to build upon prior success of our EIP or Excellence in Process initiative and expand the scope of this program to further streamline our processes and simplify our organizational structure. This initiative will be technology enabled and cover activities such as enrollment process and student self-service functionality. Once in place, these investments will enable improved and faster decision-making through standardized dashboarding tools and better performance monitoring of our campus operations. As a result, we will be able to flatten our organization structure and further reduce G&A expenses. As we reaffirmed our 2017 guidance earlier on this call, we view these combined initiatives as an accelerator plan that we believe will drive incremental organic growth, facilitate a more rapid expansion of our margins, and create an operating model that can more quickly integrate M&A in the future to drive accretive returns for our shareholders. As outlined on Slide #17, our objectives during the next few years are, number one, increase organic constant currency revenue growth to 6% to 8% annually, which is 1 to 2 percentage points improvement versus current run rates. These incremental investments will have a lead time before yielding full benefits. But we expect to reach this higher level of revenue production within two to three years through both incremental volume and more pricing power. Number two, we expect to improve adjusted EBITDA margins by 1.5 percentage points to 2 percentage points incrementally beyond our baseline plan, driving a higher free cash flow profile through elimination of drag from subscale institutions and the reduction of G&A expenses. Full run rate margin realization is expected by the end of 2018. And finally, number three, by 2019 and beyond, we expect to be able to faster integrate future M&A transactions, as we still believe that there are markets and segments we view as accretive and attractive long-term opportunities for us that the company at that time will be better able to pursue. In August, during our second earnings call, we plan to quantify for you the expected incremental benefits to our results for 2017 and 2018, as well as any one-time costs associated with these acceleration activities. And we’ll be providing updated guidance at that time. Long-term, we believe these actions should drive Laureate towards a much more integrated operating model that has stronger financial attributes. It should also allow our management team to focus its full efforts on core markets, ensuring we are delivering the best educational product offering for our students and in turn continuing our track record of positive student outcomes. We believe these actions should result in a premium valuation for our shareholders and ensure the long-term robust growth prospects for our company. Doug, with that, I’d like to hand over to you for any wrap-up comments.

Thanks very much, Eilif. I would just say that the – both the economic model and the social mission of Laureate are based on scale. And all of the things that Eilif has just mentioned in terms of the plan for our company and operational plan and near-term plan to accelerate results and efficiency and ensure that we fully can take the benefit of the scale that we have built are all meant to promote those two concepts. Scale is not measured by the number of countries that we are in, but by the impact that we are having in the countries that we are in. And that’s why I think it’s appropriate that we review some of our smallest markets to see if we can really have the impact in those markets that we need to have to meet both the social mission and the economic impact that we are looking for. And that is a function of size within market and not just number of markets. And I think that’s an important and completely natural thing for a company to be doing on a periodic basis and at this particular stage of our development. There isn’t another company that has achieved the level of scale that we have. The number of large markets in which we are truly a leader is not something that’s been accomplished by anybody. But that also means that, we need to have the investment in systems and operating model and processes to fully capitalize on that scale and to fulfill our access mission. So I think this plan is going to really help us in that regard. I’m very much enjoying, Eilif, working with you and with Ricardo in your new roles. And I can already see the results of the organizational structure that we have adopted to create clarity and to implement this plan that you have just described. Just in conclusion, this has been a very solid start to our year. We have a plan now that we think is going to not only create operational efficiency, but give us innovation and opportunities to improve student experience, which is always important, and that makes me very excited for what the future brings. We have amazing students. We have world-class institutions and we have incredibly committed employees and they’re all aligned in driving towards better educational outcomes for students around the globe. As a public benefit corporation, we’re committed to operating in a way that delivers strong outcomes for our students and great impact on employees in the communities that we serve. And we can do that while delivering strong financial performance for our shareholders too. And so, those are all the components of our plan and do give me great confidence in the future of our company. So with that, I would suggest, operator, that we could open up for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Manav Patnaik with Barclays. Your line is open.

Thank you. Good morning, gentlemen. I think the – my first question is around the strategic review, which makes sense. I guess, my question is you did one of these reviews, I guess, which ended up in the sale of the French and Swiss schools. And so I guess, what will be the new level of review that you will be looking for, or is there stuff just from that review that gives you confidence that maybe these other five to seven countries or so can be divested within the year?

So, Manav, it’s Doug. We – the review for last year was for a different purpose. As you know, last year was all about our focus on delevering. And we really wanted to make sure that, we achieved a certain leverage target, both through divestiture, through the raising of the preferred equity issuance, and then of course, ultimately through the IPO. So last year we were picking markets that we thought could be divested to yield the greatest economic proceeds at the least, let’s say, strategic cost to the company. This is a different exercise. This is evaluating our smallest markets and saying, are they on track to become more relevant to the scale of the company. And I want to emphasize that point about relevant to our scale. We’ve become so much bigger than I ever envisioned when I founded the company. And what it takes to be relevant to our scale has grown as well. Some of the small countries that we’ve invested in might have been relevant to our size at the time we invested in them, because we were a smaller company even at that time. But as the company has grown, we really need to review this. There are small countries that can be easily operated as a branch of a larger country; that would be fine too. But this is really about evaluating the smallest markets to make sure that they will become material to the company as a whole. And, if not, I think our concern is not only would that be a distraction to us, but it really may mean that there would be an owner that would give them more focus and attention, because they would be more relevant to that owner, in which case, that organization might thrive better in the hands of a company or an owner that would be – for whom they would be more material in their size.

Got it. And then of the 10 countries that you said that account 85% of revenues, I mean, think we know the top five are about 70%. So just for reference what are the other five countries? And whether or not Turkey is in that five? Do you think you could address the situation there?

Do you want to do that? Eilif Serck-Hanssen: Yes. So the large markets in addition to the top five are markets, such as Spain and Australia and China and Turkey is also in that count. And those are markets where we are getting significant scale, it’s where our products are. There’s a very, very strong demand for our product and there’s this imbalance between quality supply and demand.

India would be a market.. Eilif Serck-Hanssen: And India is also an example of such a market. And then there are some of the smaller markets that naturally are tucking into some of those larger markets.

Yes, and just to address your question about Turkey, in any of the markets that we’ve just mentioned, you think about the enormous need and opportunity in places like China or India, these are all complicated markets. And they could – any of them be bigger if we wanted to invest more in them. And the question for us will be, what’s the right pace to invest and how do we manage and moderate risk? And that risk can be regulatory risk or it can be political risk and it is something that I think we are conscious of. But in taking an appropriately long-term view, we are confident that these will be very important markets for us. And then we’ll just constantly reassess in the near-term any political or economic or regulatory changes in those particular markets. You asked about Turkey, and we did have an announcement earlier in the year that I know many people would have noted that pertained to a decision by the Turkish regulator in which they were questioning the charges that we make to our university in that particular country. And that is something where Laureate provides incredibly valuable services to all of our universities around the world, whether they are structured as for-profit countries or nonprofit countries. And we – it is routinely evaluated and scrutinized by governments in all those countries. If it’s a for-profit country, they evaluate those services on the basis of tax to make sure that the services that we provide are valid and meaningful. In the case of nonprofit countries, it’s the same. So the audit and the question in Turkey that’s been raised is really no different than the way we’ve been reviewed in countries all over the world. And we have always been able to demonstrate the value and validity of those services in all the other countries and I don’t see why we wouldn’t be able to do so in Turkey, which is why we are appealing that process. We should also note the same authority in Turkey had previously reviewed the same services provided from us in previous years without any concern. So we do feel this is something that we can work with the regulators and clarify. And I think Turkey, it’s a complicated country, but it is a country in which the higher education segment is very dynamic and growing and we think could be appealing in the future. So we will work our way through that review and when we have any more information to disclose on that, we will do so.

Okay, got it. Thanks. And just one last quick housekeeping one, Eilif. So the Peru enrollments, will you just keep adjusting that out for the rest of the year? Like how should we think of how you will report that? Eilif Serck-Hanssen: Yes. So we will be fully caught up from an enrollment perspective in the second quarter, and it was about 8,000 to 10,000 students, pardon?

13,000. Eilif Serck-Hanssen: 13?

New enrollment is 13. Eilif Serck-Hanssen: Yes, 13. So it was 13,000 students that were pushed from first quarter to second quarter. But when we are reporting second quarter then that would be in the base and caught up. I did indicate that it is going to be – revenue is not going to be caught up until about August, but we will give you specific guidance on that in second quarter as well.

Okay. Thanks a lot, guys.

Thank you.

And our next question is from Marcelo Santos with JPMorgan. Your line is open.

Good morning. Thanks for taking the question. The first question I had is, if you could provide more details on the Brazilian recovery. Any tools or incentives that you – or strategy that you used to foster intake, how much do you think it was your actions or how much was actually where do you see a market recovering? And the second question is on the margin gain on the accelerator plan. So do you think most of this margin gain would come from actually exiting lower profitability markets, or is it more on G&A streamlining? Just wanted to get a better feeling on where would the margin increase come from? These are the two questions.

So my suggestion, let me make a few comments on Brazil and Ricardo is here and can chime in, if needed, and Eilif, maybe you could handle the second part of his question. I think in Brazil, we do think that there is a market recovery. We are seeing that in the results of certain competitors and we are seeing it for ourselves. That recovery is certainly clouded by the fact that they reduced the size of the FIES student loan program again this year. But whereas last year, it was a huge decline in FIES and at a time that really caused declines for enrollment for most of the major players, if not all, this year the cut in FIES was smaller and the recovery was already stronger. I think the difference though is that different companies are approaching this differently. Some are experiencing more growth in their at distance learning than in their face to face, some are providing deeper discounting, and some are providing internal financing. What I find most encouraging about our recovery in Brazil is that it’s being done with moderate discounting and it’s being done with no on balance sheet student financing by us at all. And so, we are focusing on payers face to face and seeing really strong results. And we indicated that while our enrollment period stands between the first and the second quarter, so we’ve announced the first quarter, but the full intake is nearly done. And at this point, we were looking at a mid – essentially a mid single-digit increase in enrollment in that market and that is driven by strong results in payers. And in our case also very nice results in distance learning, which for us is still smaller and earlier stage in its development for us, and therefore, perhaps a bigger opportunity for us than some of the players that have already achieved a lot of scale in that area. And then one last point I would make about Brazil, because it will feed into your question of Eilif, Brazil for us is also a fantastic market in terms of margin opportunity as well. We do have higher-end universities in terms of the types of brands than most, and they may not as a result ever get quite to the same level of margins as some of our competitors who tend to operate at lower ends in the market. But they can achieve much better margins than they have today, because they are not today operated in a completely integrated fashion the way many of our competitors operate. And we have an investment now and an incredibly talented team focused on the integration of those universities and that goes deeper. When we as Laureate talk about integration, we often mean things like accounting in the back office. But in Brazil, the way our competitors have achieved scale is by integrating a lot of operations in the universities, while of course, maintaining the appropriate distinction from a regulatory perspective between institutions. So I do – I’m very bullish for us about what I see as the recovery in the market, our non-reliance on much student financing from the government or from any party including ourselves, and the opportunity for us to gain the benefits of scale through the integration that we are conducting in that market. I am going to stop and ask if that was responsive to your Brazil question? And if it was then, Eilif, maybe you could chime in on the second question.

Yes, it’s pretty good. Thank you.

Great. Eilif Serck-Hanssen: Great. So, Marcelo, in terms of where the margin expansion is going to come from, I would say, it’s an 80-20 story, but there is also some interconnectivity. So the vast majority of the margin expansion is going to come from the [indiscernible] to operating efficiency EIP Wave 2 get benefits from better systems that drive flatter management structure more of the type of integration at the operation level that Doug was describing, getting self service into the student experience that also drives not just consumer attributes that are more favorable but also cost efficiencies. But then there is also an element all of these smaller institutions are at very low margins. So although, it’s only $200 million to $300 million in revenues, that comes with virtually close to – very immaterial EBITDA. And hence when you are selling those businesses, that gives you a little bit of a margin uplift. But where they are coming together is that, it would be hard for us to get all of the rationalization and G&A as quickly as we are planning to get at it. Had it also been for the fact that we are simplifying the operations by exiting some of these of smaller markets.

Thank you very much. Very clear. Eilif Serck-Hanssen: Thanks, Marcelo.

Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.

Thanks so much. The details of the accelerator plan sound very intriguing. I’m just curious, why is it something that you are doing now? Why wasn’t this something you contemplated or thought about before your IPO? And does it have anything to do with the management change that you recently announced? Thanks.

Jeff, it’s Doug. I would actually say, it’s the other way around, which is that we’re organizing our management around the plan and not having the plan in response to a management structure or team. And so this is something that is really a continuation of a lot of the work that we’ve done when the company for many years was focused on top line growth and volume, and I think that’s natural – and market share. And that’s natural for companies earlier in their development, in this case, having started out as essentially an entrepreneurial venture and moving to a company with huge scale both in the number of countries and in the size within each country. Then a few years ago we started on the EIP project saying, we need better systems, whether it saves us money or not. And we put a lot of effort into implementing those systems and have found significant savings and benefits of scale, which is to say, things like procurement and things like the back office integration and accounting, all of which created muscles that we had really never had before. That now gives us, I think, the confidence to build on that approach and to explore what other areas can appropriately be either centralized or regionalized – regionalized within one big scale country like what I just referenced on Brazil or within a region like Latin America, or on a national – international global basis. So to me it feels very – it feels appropriate and sequential to build upon strength and successes. We made a $150-plus-million investment in EIP on the belief that we would be able to get to a run rate savings of $100 million or more. It’s a lot easier to do more of that and build on it now that we see that it’s working really well than it would have been when we were in – in the early days there was some nail biting on my side as to whether this was going to really deliver the results and savings that we wanted. So, I think it’s just natural for us. Some of these – all of these are ideas that were in some form or fashion contemplated before we went public. And to some extent though we needed to get the plans refined and we needed to then create an organizational structure designed to accomplish and deliver on these plans, which I think we have.

Okay, fair enough. And then, Eilif, in your remarks you mentioned on, when you were talking about EBITDA, some favorable timing of expenses. Can you give us a little bit more color, how much may have been shifted out of this quarter and specifically which segments you are talking about? Thanks. Eilif Serck-Hanssen: So we have – we had about $30 million in timing favorability in the first quarter, a little bit over a third of that related to Peru. And then we had – this is versus the guidance, because we were able to accelerate or start some of the Peru classes a little earlier than the guidance I gave you at year-end. And then we had about $15 million, $20 million of other expense variances, some of those were marketing programs, some of that were just smaller shifts in calendar across the network. And I expect those to reverse itself out over the next couple of quarters.

Okay great. Thanks so much for the help. Eilif Serck-Hanssen: Thank you.

Our next question comes from the line of Peter Appert with Piper Jaffray. Your line is open.

Thank you. Good morning.

Peter.

Eilif, I think you indicated that the profitability of these universities to be divested is relatively modest. Any possibility you could quantify for us sort of what the average margins might be? And I’m trying to get to the issue of whether there could be some dislocation in near-term EBITDA, as you divest earnings properties, but don’t see the benefits in terms of the cost savings immediately? Eilif Serck-Hanssen: So these businesses have average margin below the average of the company, and that’s just natural, they are subscale. Many of them 4,000 to 5,000 students each, so that is the – that’s a key reason for that subscale margin performance.

Yes, I would just say, Peter, they would range from markets, where there is a zero margin to markets where the margins might be just close to, but not quite yet at the level of the company’s average for a country with scale. And therefore, as an average, they are certainly going to be lower than the average of our – I would say, I’d be surprised if they are close to half of the margin of what our more scalable countries would be. Eilif Serck-Hanssen: I think low-double – 8% to 10% average margin.

Okay. And then how do you think about use of proceeds from these divestitures? Eilif Serck-Hanssen: So the use of proceeds, we are going to maintain a very strict discipline around the capital efficiency of the business. We are going to accelerate some investment in IT and in EIP Wave 2, but we’re going to largely manage that within our parameters for guidance. To the extent that these businesses deliver significant one-time liquidity upside for us, we will be using that to reduce our net leverage.

And then, Doug, the – last thing, the – just in terms of M&A strategy, how is that impacting, you mentioned this a little bit in your comments, but how is that going to be impacted by this decision? Is M&A on hiatus here while you proceed with these divestitures?

I would think, M&A is going to go through a process. Right now, it’s clearly not something that we are focused on. We have this plan to implement. And while I’m sure, there will be a lot of focus on the fact that there may be some divestitures, actually, the majority of the gain of the plan is based on other activities related to efficiency, flatter organization and systems enabled savings. So that’s where the majority of the savings will come and all of that has operational implications that’s going to take a lot of the company’s attention. As we see success and progress in that area, the first place that I think you would likely see any M&A activity will be more bolt-on type activities that build on our scale. We want to have scale in the countries in which we operate. And so I think we are much more likely to favor smaller, lower risk investments that will build upon the investments that we’ve made in systems and in management in countries where we either already have scale or where a bolt-on would be what is necessary to get us to scale. And then when all that is done and we’ve achieved our leverage targets and delivered on this plan, obviously, then we can look at more ambitious M&A that would either get us into new segments that would interest us or new markets that we think can scale. We’re not saying that we don’t think that there are markets we can scale in. We’re saying that we don’t think the company needs 15 seedling investments to achieve more scale for the company. And if it can be better done with 10, so be it, that’s the approach.

Understood. Thank you.

Thank you.

Our next question comes from the line of Jeff Meuler with Robert W. Baird. Your line is open.

Yes, thank you. Just first want to start with a clarifying question on the 1.5 to 2 points of margin benefit from the plans. So there was already an expectation of margin expansion, which embedded incremental EIP savings. Is it a full 1.5 to 2 point incremental on top of that expectation, or is it a total margin expansion of 1.5 to 2 points over the stated time period? Eilif Serck-Hanssen: The former, it is incremental to the 50 basis points in organic margin expansion that we expect to go the next couple of years from – basically from scale and from harvesting the EIP Wave 1 benefits. And on top of that, we will deliver another 150 to 200 basis points of margin expansion by the end of 2018 on a run rate basis.

Okay.

And, Jeff, the 50 margin – the 50 basis points of margin expansion is something that we are expecting to deliver each year. So then you would layer this in on top of that, but this is a project that has a beginning and an end. And so that layers in and then that sort of falls away and you are still left with some opportunities for incremental annual margin expansion thereafter. And to Eilif’s point, this is embedded on a run rate basis, we think something that we can accomplish by the end of 2018, but some of those benefits will not be seen until the 2019 fiscal year.

Got it. And then just given that there’s a lot going on with timing shifts and investments and whatnot, just want to make sure I had the messaging correct. So it looks to me like you are off to a good start. I know there was some benefit from the timing shift in terms of Q1. But there was also a comment about, I think, that it should provide some earnings uplift and you’ll update guidance in August. So I just want to make sure that I’m correctly interpreting that the underlying performance is off to a better start. And this should provide upward bias to guidance even though you are not formally adjusting it at this time. And as you get better, I guess, detail towards August, maybe you will make the formal adjustment at that time? Eilif Serck-Hanssen: That’s correct, and specifically as we are going to improve our G&A cost structure, that work is already underway. And the reason why we are not giving more specific guidance here, because we got – we also need to size up some of the one-time severance expenses. But we will give guidance on that. On a net-net basis, I think, there’s going to be a little bit of positive impact in 2017. And even particularly, when you are separating out the one-time severance, there should be some benefits accruing into our 2017 and more in 2018. And on a run rate basis, you should have all of the 1.5 to 2 percentage point in margin expansion from these initiatives.

But that said, I do think we also will benefit from seeing how the summer intake is going. And I think that’s also – right now, I think, the trends in the business feel very good. The upside from even just a partial year impact of some of these changes in the plan that we are mentioning feel like they could benefit us this year. So all of that does put us in a very positive bias. But I think that we will refine our review and should certainly see how the next intake is going. Our second quarter earnings release would be in August. In August, we’re not finished with the summer intake, which, remember is really big in big and important markets for us like Mexico. But we should have a pretty good sense of how they are trending. We could be halfway through or even more than halfway through certain markets intake in that period. And that would give us, I think, the right moment to determine what level of guidance changes we might want to offer.

Understood. Thank you, both.

] And our next question is from Anj Singh with Credit Suisse. Your line is open.

Hi, good morning. Thanks for taking my questions. A follow-up on the divestiture plans in your accelerator program. Is it finding a suitable buyer, or is there some ramp you are expecting in the next one to two years that may not work out as it relates to some or all of the five to seven country schools being divested?

You are saying what would determine what gets divested and when or…?

Yes. There’s a range of five to seven, so are you going to divest five depending on finding a suitable buyer, or is it that they may actually ramp to something that’s adequate for your internal targets? Just trying to get a sense of what’s going to determine whether you are divesting all of them or some of them?

I think it’s a couple things. I don’t think it will be a question of finding suitable buyers. I think, I really would say, I think, Laureate’s least asset would be considered great in the global context. I think we really – I do think we pick the right institutions, we invest in them. They’re high-quality, I don’t think there will be any issue. And we get inbound calls all the time, since last year when we made, but really our first material divestments. We get calls all the time from people who are interested. And most of what we have, of course, we are not interested in divesting. But I think, it’s much more a function that there are a few – there are several of those markets that I think we can be pretty sure it would make sense to divest. There are a few of those markets that we want to review very, very carefully to make sure, the goal is we want as many of them as possible to ramp to a scale that’s meaningful to us. So if there are a couple that we end up in our underwriting process deciding that we have more confidence in or we want to give more time, we’re going to give ourselves the time to figure that out. That’s why I think we express it as a range.

Okay, understood. And could you speak to the factors that give you confidence around greater pricing power as it relates to this accelerator program?

I think greater pricing power, it’s – pricing is a function of a lot of things for us, including mix. And we have, as you know, higher-end brands and value brands in different markets. The economy determines which of those two brands tends to grow more. In a better economy, they both grow. In a weaker economy, the value brand tends to be the growth driver for us. That creates mix shift that would be hard for you to be able to follow as easily on the outside, there are a lot of factors for it. So – but what I do think we generally find is that, if we can provide – if we have new ideas for things that will make our students happier, we think that can help us in two ways. It may allow us to charge more price – better pricing, not always so sure, could reduce attrition, would have – which would have a revenue accretive effect for the company, and the same thing with product. We are increasingly investing in similar product, especially with online, where we can invest once and many of our universities can use those products. We think those products are better and will drive a lot of demand from students. So – but I would be a little bit cautious in saying, the direct correlation to pricing is probably the hardest of all the things that we’re focused on. We are committed to increasing top line growth for us and that will be some combination of volume and pricing. And I think we are confident that that’s something we can accomplish. But the exact mix between the two, I think, it’s a little bit hard to say right now.

Okay. Thank you.

Our next question is from Hamzah Mazari with Macquarie. Your line is open.

Hi, Hamzah.

Hi. This is [indiscernible] calling in for Hamzah. Could you give any color on Peru EBITDA margins, I’d say, relative to the rest of LatAm, is there any effect? And then also does this – does any of this effect either – did it or will it affect the CapEx allocation at all? Eilif Serck-Hanssen: So in terms of the market – I’m not going to comment on margin profile country by country. But what I can say is that, clearly, markets such as Peru that are at scale, where we have big boxes, and right now most of our operation is concentrated in Lima, that generates very robust margins. So and that contrasts a little bit with what Doug was referring to earlier where Brazil is a little bit of a drag on margins for Latin America and for the company. But we have specific plans to address that, because it is also a scale market with potentials for more efficiencies as we are better integrating the operating platforms among the various brands in Brazil. In terms of capital allocation, that’s really a function of demand and opportunity. Peru is a very exciting market for us, but we’re just in Lima. We have three brands and according to the Laureate playbook, we started with a premium brand and then we went into the – to scale the value brand and then we have a technical vocational brand that is growing very fast. But effort so far it’s been in Lima and there is a lot of white space for us in certain parts of Lima in some of these segments, and of course, outside of Lima. So that’s going to – it’s one of many areas of priority for investment allocation dollars. But from an overall perspective, I want to just reaffirm our commitment and guidance to operate within that 7% to 8% of revenue for the company, which should then deliver these top line growth numbers 5% to 6% before the accelerator plan and 6% to 8% post implementation of the accelerator plan.

Okay, that’s helpful. And one quick follow-up question. Can you walk us through how you are all thinking about the Chilean higher education reform bill and what you are hearing on the impact of that – to the business?

So, Ricardo, maybe you could just comment briefly on that.

Yes. Well, as you know, in the last month or so there has been some noise in Chile that the Ministry of Education has pushed Congress to start the discussion of the new higher education loans. So far the government is already delayed on their promises. They suggested that they wanted to send the first draft for discussion in early May, that hasn’t happened yet. The expectations are that they will focus on the public education system, so the University system owned by and funded by the state and some religious universities like the Catholic system in Chile and others. But so far the country is solely focused right now in a very noisy process of presidential elections. As you know, this is an election year. The elections in Chile are going to be held in November of this year and there’s all kinds of movement from the government coalition to the right that are distracting the legislative process.

Yes, I think the bottom line is that, with a presidential election with primary starting in July, it’s hard to imagine how any legislation of any material and complex legislation would pass during this administration. But obviously, it’s always possible, which is why we try to be very transparent about it. But I think, most people would indicate that it would be hard to imagine something this complex getting done in the timeframe available to this government.

Okay. Thank you so much.

And our next question is from the line of Shlomo Rosenbaum with Stifel. Your line is open.

Hi, good morning. Thank you for taking my questions. Just a few housekeeping ones. Eilif, for the time being should we assume the contemplated divestitures are going to step down the base of revenue $100 million and then $14 million to $18 million step down in the EBITDA after which you will have the regular growth and then say the $75 million to $100 million from the EIP Phase II or the accelerator program? Eilif Serck-Hanssen: I would pro forma adjust the revenues of – by $200 million to $300 million in the divestitures. And I would assume a 10% EBITDA margin going with that. And we expect to have that – that’s going to be in the next 12 months, and we will give, of course, more specific timing as transactions are being inked. And [Multiple Speakers]

We indicated an average revenue of $30 million per country, which is why I think the most that they would be able to get to is $200 million of revenue from seven countries. I think it’s probably a few of the countries at the top end of that five to seven are a little bigger and they would probably drive the results and the proceeds as well. So I think it’s – you probably want to use more like $200 million in your estimates, I would think. Don’t you think? Eilif Serck-Hanssen: Yes.

So $200 million in revenue, $20 million or so in EBITDA is what we should assume is going to come out of our model on a run rate basis is the offset by the accelerator program, which is the $75 million to $100 million, right? I’m just looking for a net number. Eilif Serck-Hanssen: That’s correct.

I mean, I would say to be offset by proceeds, we think these divestitures will be done at an attractive price. So to me, the offset is proceeds and then – but you’re right, in terms of the effect on EBITDA, we will then have growth in the core business and growth from the efficiencies.

Okay. And then are there some kind of ranges where you guys have contemplated what kind of proceeds you would get in something like that? Are they a revenue multiple, just something that we can think of in terms of just applying it to a debt paydown? Eilif Serck-Hanssen: I wouldn’t go there. These are not material operations for us. It’s not going to materially change our leverage profile. We think these assets are very valuable for the right buyers, but we don’t want to signal any expectations at this point on proceeds. So you just have to take a crack at it.

Okay. And then could you talk a little bit more about some of the investments into things that will make the company more efficient? One of the things you talked about is student self-service and student experience. Could you just give some on the ground examples of what you are talking about there? Eilif Serck-Hanssen: Yes. So there are really three core systems that are needed to run a university. One is a student information system, one is a learning management system, and then, of course, you have all of the financial and record-keeping systems. And we are aligning free core common systems. We want these to be integrated in a manner that facilitates much more efficient use of technology that enables a student to use their mobile device to enroll, use their computer or smartphone to review homework and grades and get transcripts. And we want scale contact centers to address a lot of the inquiries as opposed to having people in lines talking to cashiers and student services advisors to draw their – use chat and other tools that the younger generation expects to engage in. And that’s going to provide an improvement in student experience. But it’s also going to provide a significant reduction in our cost. And as we are putting these contact centers into a shared services arrangement over multiple brands, of course, you get much better scale and productivity out of it.

But some of our institutions have SIS capability to allow students to do things like check their grades, check their class assignments, see if their payments have been received. And we find that that’s something that they find very appealing and that a lot of our competitors in these markets can’t offer. So we do think as we invest in more standardized within Laureate SIS systems with those capabilities, that should be good both for the operational efficiency and for student satisfaction.

Okay good. Thank you very much.

Thank you.

Our next question comes from the line of Irma Sgarz with Goldman Sachs. Your line is open.

Hi, this is actually [Roberto Brown] [ph] and most of my questions have been answered. I just have a quick one on the capital structure. You mentioned that in April the refinance of the capital structure was completed and that you were willing to take more look at that to reduce the FX mismatch with cash flows. So we were wondering what is the current debt breakdown between dollars in local currency and how it compares to your cash flow mix and also if we should see further changes on this? Thank you. Eilif Serck-Hanssen: So we have about – local debt of about $1.1 billion of local currency denominated debt. Our objective is to take that up to closer to $1.5 billion. That has been facilitated by some changes that we negotiated in the revised loan documents for the term loan B and the bonds. And over the next six months, we will be implementing some local – more local financings and also engaging in some synthetic hedges to get to that desired mix.

That’s clear. Thank you.

And our next question comes from the line of Javier Martinez with Morgan Stanley. Your line is open.

Yes, thank you. So I’m trying to read through the numbers isolating FX and the change in disclosure and I’m a little bit disoriented. And I would love to see if you could help me with the math on three lines; on prices, on EBITDA and on receivables. On prices, so what I understand is that in organic constant FX, et cetera, et cetera, volumes are up 3%, 4% and revenue is up 3%. So can you give us some color on what is happening with prices, A? And B, in – mainly on the – so how was the price evolution on the intake in Latin America that is going to be reflected probably more in the rest of the year? That’s on prices? Eilif Serck-Hanssen: Let’s take that first. First quarter is a very important period for intake. It is not very large on revenue production, because most people are signing up in February and March and early April and they are signing up for new prices, the new price schedule, which you will see in second and third quarter. So the revenue uptick in first quarter this year is really just the tail end on the northern hemisphere or the programs that went through the Southern Hemisphere’s some were working adults, et cetera. So, look, it’s as expected that you wouldn’t see that price uptick in first quarter. In terms of our pricing insights from this very important enrollment in the Southern Hemisphere, we found that in most markets we were able to continue to take prices at or around inflation. Brazil is a country with some very difficult macro conditions and we were a little bit more prudent in Brazil in terms of how much pricing we were willing to take, but we absolutely had pricing power in that market as well.

So assuming in Brazil anything between [indiscernible] inflation makes sense? Eilif Serck-Hanssen: That’s correct, and its program-by-program, campus-by-campus.

That’s after discounts, right? Eilif Serck-Hanssen: Yes, this is net.

Okay, thank you. Now, on the EBITDA, I understand what you mean that the first quarter is a seasonally low quarter, so that may do the math a little bit more complex. But still you mentioned that EBITDA – so EBITDA is down 34%. Now using organic constant FX is up 22% [Technical Difficulty] gap between both and displaying in the breach that the key difference is FX, mainly FX in LatAm. Now this doesn’t seem to be intuitive for me, because with the exception of the peso that is down single-digit, all the remaining key currencies are up single even double-digit. And also what am I missing here? Why do you have such a big impact on FX when most of the key countries are in fact moving in a positive direction? Eilif Serck-Hanssen: Yes, good question. So there are two key drivers for the seasonality between the reported decline and organic constant currency growth. One is asset sales, the other is FX, and I should say, the third also is timing. I indicated that the 22% is also benefiting from certain timing items that’s going to reverse itself in the second and third quarter. But in terms of why is FX a drag in an environment, where the local currency FX environment has strengthened, that’s a function of us being out of session. So we are – at certain of these institutions, it’s summer period. We have rent. We have administrative costs. We have fixed expenses. And so they are reporting a loss and hence the losses are being magnified as the local currencies are strengthening. That’s the cost of the good news, the dollar is weakening and we are getting the dividend check in second, third and fourth quarter.

And also the organic also includes the fact that last year, we owned businesses in Switzerland and France that we don’t own this year, and they would have been in session and earning in this period of time last year.

But the main impact is in Latin America. So what I understood is the reason is that since – this is a seasonally low quarter, in fact, we have negative earnings or EBITDA whatever, so the impact is the opposite, because that’s the area, right? Eilif Serck-Hanssen: That’s correct. If you go to chart 7 in the investor deck…

Yes. Eilif Serck-Hanssen: …you will see that FX actually helped revenue by $7 million, but it hurt EBITDA by $16 million. So…

Exactly. Eilif Serck-Hanssen: …because of the loss nature of certain institutions in the southern hemisphere.

Okay, I understand. Now finally, on receivables, and so the receivables are doubling. And I guess, I don’t know, that this is partially due to Peru because of all the delays. If I’m wrong – but if I’m not wrong how will receivables days look like ex-Peru? Because my understanding is that receivables at this point you should be improving, at least, in Brazil, because of the PN 23 that impacted from 2015 is set have – to ease the impact of that is starting to be positive, at least, for other companies. So trying to understand what is happening there? Eilif Serck-Hanssen: So it’s not – it’s nothing to do with Brazil. The answer is much simpler than that, and it’s also related to seasonality. So when you are comparing receivables first quarter to end of last year, the receivables are relatively low and deferred revenues are relatively low, because it’s an end of a semester. First – end of first quarter is the beginning of a semester. So you have signed up a lot of students. They have contracts in place for a program and that builds up the receivables, but it also builds up the deferred revenue. So I encourage you to just look at the longer trend line, and I think the best way to really understand the cash impact on working capital is just net the two accounts receivable versus deferred revenue. And if you have any other question, we can cover that offline from a modeling perspective.

Okay. So the idea is that, we should not expect the receivables to go up this year, or receivables – there is nothing special happening on receivables? Eilif Serck-Hanssen: No, nothing, our business is a pay-as-you-go business. We have bad debt somewhere between 2%, 2.5%, very stable. And the movement in receivable and working capital is just the normal seasonality of the business. And on a longer trend chart, you will see it’s very stable.

Okay. Thank you very much. Eilif Serck-Hanssen: Adam and I are happy to take that offline with you and give you some [Multiple Speakers]

Yes, I think it’s important, because we are talking about $600 million with revenues of $800 million, $900 million, so it’s 70% of the revenues in this quarter. Okay, we’ll talk offline. Thank you. Eilif Serck-Hanssen: Thank you, Javier.

Thank you. And that does conclude the question-and-answer session. Ladies and gentlemen, this does conclude the program as well, and you may now disconnect. Everyone have a great day. Eilif Serck-Hanssen: Thank you, everyone.