LAUR - Earnings call transcript Q2 2022 | Laureate Education, Inc.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by and welcome to Laureate Education Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. to Morse. conference like speaker to now Adam host, would turn over the your I ahead. go Please

Adam Morse

Good morning XXXX you discuss and thank Laureate call on Education's to today's second quarter results. for joining us

today Joining me Executive and Buskirk Rick Eilif President Financial and Officer; Officer. are Chief on Chief Serck-Hanssen, call the

meaning to The Relations be during which you we laws. the also will is but earnings financial supplementary statements after posted call Our call. Investor presentation release of available today, today's we'll the website guidance a our providing to available some is I not of press website, information applicable would the be US operational like a to to referring at our forward-looking and call. the the and remind recording webcast on securities section laureate.net. of being limited We've including that constitutes are within complete

are and time from actual may subject results Forward-looking that change uncertainties to are expected. differ as expectations with we those SEC. may any at XX-K XX-Q Securities earlier report our on as Exchange our with made could the results factors from materially in Important to cause US our statements filed that and morning actual this filed our therefore other differ risks and Commission, disclosed filings well annual Form the materially

obligation we no on as the of undertake this update statements. expectations call, are current addition, all forward-looking and based statements In date of any conference to forward-looking

and flow release presentation. including net detailed reconciled debt counterparts and or related cash its we also of their press Additionally, EBITDA our GAAP non-GAAP cash margin, free measures and supplementary among to discuss adjusted others in that and total are

to now the turn Let over Eilif. me call

Eilif Serck-Hanssen

and financial ahead pleased good everyone. Thank and our quarter second report to performance you of expectations. results with operating I'm strong Today Adam morning

year-to-date cover continue Rick new detail We trend well year our outlook, in June Enrollments remarks. raising prior with to enrollments XX% year. both will are our increasing full prepared which XXXX versus in and total more again later

all During the hybrid campuses recent study semester, we and we operating across effectively both our students in-person online. returned are face-to-face allowing to model, of our operations and through to deploying

have online able and than to the through that leveraging be to era in our this are flexible power to in reinforce modes. affordable delivery post-COVID in in Peru Digital as Mexico and important We that market regulators continue accelerating by brands we more expect delivery strong campuses leader education. education brand both increase. and its is increasingly online markets hybrid XX as students of online employers quality education access And to the and is growth become acceptance

capital communities. expect accommodated space. a more XX% forward, our achievements we career in to manner between a hours which our five continue education of trust online our This growth respect and to to in students high-quality to students successful At the core be our greater our grow across provide in of while turn is and XX% of number to will and existing our us allow pride, Going physical affordable taught as can campus is institutions. a building lifelong prepare in deliver for mission, light agenda

the to happening across reflects which encourage is website institutions what report respective available I Our our about is download to more our Impact our commitment communities. read mission. now XXXX, on and you our Report, and the

related we agenda. specific the be our will this KPIs to defining year, of During half second ESG

information share earnings with We call. year-end will our during more you

quality us Peru and ensure reputable uniquely strong on brands that promises. continually Our Mexico institutions high education. we in position We deliver our to highly evaluate the to and institution provide

States. share, today of This programs and I'd and that of the in the Further, position available by And ranking in all available re-accreditation consistently emphasize by brought the impressive, both achievement. validation category Exam addition taken quality universities is pleased Stars I with XXX us the These EGEL, system. well Peru the in the awarded programs like WASC from to continued in to and was university to rating the also Association Colleges university upgrade notch is ranking I XX-year earn differentiators as unique four the market. stars been local the and outcomes maximum that by accreditation As by in results provides to by recognition the five university their highest Mexico recently Mexico, quality and to Schools pleased And in significant a global a to for United accreditations. delivered UVM as of report Peru the performance accreditations This UPC. awarded recently And academic as a strong in the private Exit quality some academic among am result our success. category, has UPC student to market. a recognized at of of positioning QS one level highest universities employability. in great Western is that stars, of was am Peru And continue been the by quality overall students institutions public measured reflection national top equally and particularly Stars, our UPC's UPN post-graduation. program high our within have QS our

share commitments to the half capital delivering is distribute with quarter escrow program net closed granted a XXX.X Board addition from what continue proceeds of quality our shareholders. levels in sale we outstanding. we the as Directors of million to our we believe And has million Walden $XXX return the shareholders. of our by our completed growth second also very once year reminder to second remaining on released. shares and prioritize repurchase the substantially And we at are to authorization plan a this The for been of In accretive total the account

well remarks. return optimization approaches. and as flexibility think continue well quarter as a on prepared year-to-date future of of more to business outlook. financial Our model Rick further my XXXX lot to now as as details sheet the value balance concludes turn us detailed we cash thru, provides a accretive shareholder call I strategies the That capital our Rick? Buskirk, and strong performance with And second will over overview improved for as of

Rick Buskirk

Eilif. you, Thank

a campus-based a seasonal education higher reminder As is business.

the in quarter period. second the is of not Although for the earnings a period, for intake a large strong are represents much as quarter classes it company session

academic of second ago. three of page Half was highlights ahead respectively, some the adjusted that quarter guidance additionally versus metrics outperformance been which of aided quarter. have half favorable growth quarter, our of resulted outperformance positive on result two for second and led includes by a followed traditional adjusted and more of which respectively. XX, a revenue strong The was favorable for calendar enrollment $X overall expectations adjusted Let's and of million were first second in were XX% organic by shifted rates. segment the revenue strong and EBITDA still more up and timing which an outperformance currency an currency in combined half with EBITDA the in million. of the and intake, FX the Adjusted EBITDA remaining start and realized portion undergraduate was Revenue financial $XXX expenses, Both revenue year-over-year cycle constant with to attrition our quarter $XXX was XX% the performance the EBITDA performance during XX% basis, rates the seasonally impact the quarter. was the our months mix the to related timing first Mexico. XX%, When revenue organic we On better-than-expected the revenue trends basis provided favorable million for constant from year.

starting Please all comparisons on color note me versus an provide performance the and currency of with XX. Let page prior now year that some on organic constant and Mexico basis. additional Peru, are

an offset and second mix. represent of intakes, start expenses. up and cycle Let's The year-over-year performance revenue cycle Revenue revenue a of academic for driving increase well six timing. the year now growth which EBITDA efficiencies, partially up new its return during Mexico. was favorable to XX% total of was the year adjusted one second for the Adjusted calendar intake Mexico the driven by in Mexico's has enrollments increased by total year. intake XX% typically two two the growth campus the was result prior the quarter second for the quarter, Through as months cost occurred the anticipated robust an which X% for around enrollment as or XX% completed with versus increase of the XX% June. smaller quarter XX% through

segment. top value doing premium very profitability are in we Our the both growth Mexico traditional this year well improved line brands contributing undergraduate are and of and to in levels and

EBITDA result a up adjusted year-to-date As XX% are and and XX% respectively. revenue

the on in On Peru were new Peru year prior to period. slide X% up transition Let's now basis year-to-date versus a enrollments XX.

year. that intake recall pre-COVID benefit prior greater Peru the However enrollments their context, year-to-date better To in had put a recovery intake. this XX% June performance year-to-date of were new Peru's than into XXXX COVID-XX

also up new last are to In attrition volume to our addition we rates helped to year. which in enrollment drive seeing of improved trends Peru, for favorable enrollment compared June re-enrollments, XX% total as

performance high a to growth to operations volume constant quarter of year-over-year with growth was for second topline in has half and offset additional the That adjusted and EBITDA XX% with for XX% stated year, up in as experienced strong currency Peru in campus flow-through, second for will second of compared growth incurred EBITDA COVID quarter of year result lapped to up the the our a revenue this period. up more costs full line was a As benefit the this return basis the year-to-date returning of Peru. level be of we recovery. in now for revenue partially students the Peru the half On XX% quarter anticipated the revenue impact in Peru as a was XXXX. XXXX related first was second targets. year-to-date prior On revenue by half basis by XX% aided versus adjusted year in Revenue

XX earnings illustrated Let now briefly of discuss presentation. page sheet me balance the position our on

we were of cash in net a XXth, June of million. position As $XX

$XX transaction the the sale Walden of paid to our cash or and in In an terms was part escrow account Laureate in full that conditions hand pursuant this released which addition value on month will into agreement. to later of be to million

amounts are mentioned, to previously from half these distribute As released escrow. once second year the proceeds of plan the this in we

returned cash through past two shareholders, of balance more distributions to billion stock which $X have been our and of billion $X.X than we've the years, capital Over the buybacks. through

our page to starting move now Let's outlook on for updated XXXX XX.

year are On students revenue is EBITDA. for the momentum, the the million and outlook increasing seeing adjusted we the currently XXXX its at for half first our full $XX in positive results for $X and midpoint strength the XXXX business of Laureate by million

the included Peru year As effect fall's COVID earlier, the returning carry-forward discussed performance half in recovery. students the first of following in levels from revenue the last of high

$XXX Our be currency results to for organic a of intakes the closing expected an on million will the the of range another for to half the this our results very XXXX good back growth Eilif, in in revenue earnings to of XX% favorable which during growth XXXX. the second X% on EBITDA completed our X% on intake We reported XX% currency and occurring be expect $XXX growth to with XX% for to current to to $X.XXX second of to to prior the we constant basis $X.XXX rates, in the of XXXX. constant X% with September. driven will on enrollment students range half by be basis line which the or XX% X in billion an secondary currency includes reflecting million year basis, to in XXX,XXX to of charge for basis, Mexico organic reflecting intake in I'm to calls. and of larger and the you constant effect increase organic year And on of this reported reflecting medium-term comments. organic of total shared growth Peru the versus an a XXXX. billion for Based you Revenues in our year, on This growth company. FAS XX% non-cash of spot our anticipate an already range is XXX,XXX it versus FX now versus adjusted of expectations strong in be XX% result basis XX% handing

Eilif Serck-Hanssen

attractive half you, Thank second our I Mexico the both favorable major of operating growth enter leading cycle. we are remain next intake brands countries. Peru and XXXX Rick. in and we're enrollment as with encouraged and markets dynamics

we agenda to see our growth sheet have our given well-positioned offerings, a We and positive market continue signs to cash differentiated and product a from strong perspective, a and business to are deliver on continue model. accretive balance

continue now to Operator our take remarks to returns we strong from are any to the shareholders. generate and concludes that questions for prepared participants. expect our We happy

Operator

question BMO. Thank from you. Jeff a Silber from [Operator Instructions] We have

Your line is open.

Jeff Silber

all but the a specifically maybe Thank worldwide little on going you there? theoretical about what so in and there? Peru, going segments -- much. I'm not an the an what's slowdown those recessionary Mexico your With economic on businesses you be you and what's expert brands about two talk on would countries can on talk different impact have in the And Thanks.

Eilif Serck-Hanssen

and cycles this Laureate Eilif. fared past. in the and through Rick have is Jeff, pretty in. off will our Hi, join kick the I'll it well brands

and in think to can We the XXXX resilient look the are financial during loosely when XXXX correlated the you pandemic I we XXXX a challenges crisis to economic very conclude to business. well that overall environment. you back are as the XXXX as And

economic volume economic times, doing we And still see little well. delivered as well extraordinarily also mix a business is of premium the and but price/mix volume we performing solid. growth, greater during on growth of than growth value shift brand we terms good to is performing little are both really the still in performing lighter the times a the XXXX of in but the and are in So where financial crisis brands weaker portfolio a A XXXX. bit

much focused we initiatives inflation So an expect higher to and to but operating are perform continue and with building an the our prepared clearly on price customer. our cycle, to we models a productivity continue being we for through into that's of education how business environment in are solution we very to lot provide the can affordable

Jeff Silber

is this we pricing we question of that follow-up year where about terms and just discounting year expect My on what tuition Can last you levels. and Great. some I going you Okay. scholarships. regarding know talk stand Thanks. should in forward? had

Eilif Serck-Hanssen

want that? take you to do Rick,

Rick Buskirk

question. I overall we're sure. pleased very for Yes, with the Thanks pricing. our would say

implied by As inflation recall an heavily our you before generally energy said really Note, at you inflation the lower that's looked and inflation headline impacted we've see because each as than and market, example. we that internal in implied year. this is to price our food

to that at And beginning on in is think in where what our been of UVM, had remember, of last has on to point, we was, Mexico, scholarship Additionally, a higher our big during the the in focus particularly of slightly premium amount the costs brand XXXX were line in a which this locked our in expectations pricing above discounting majority this alluding year. the of pandemic. or our pricing And our I Mexico. year at year you're

seeing we're So we're that overall, this pleased in the our with market year. pricing

Jeff Silber

we calculating forward, student? terms should of going range there And is use a revenue in per

Rick Buskirk

the it's per each average average, what of looking but markets, On a around we our in and -- student, our between we on premium are $X,XXX weight revenue at. have obviously average our that value brands between brands differs that's

Jeff Silber

you forward line in that roughly. curious inflation just said in implied internally. is changes with what going with I'm that again, And

Rick Buskirk

model. than on year, was we This that inflation a our less had X% bit our

of we'll think, inflation, we I our up through put we through But we So, pricing. next a have to relevant to which obviously looking to aren't point point, view in looking and implied final drive potential implied in believe, that initiatives be going is continue it's effects think understand that, at some will consumer through have and hope, we're place We I and able Peru the that in inflation on pass pass through most on year as put we end in can inflation, what think because everybody We plenty inflation amounts. inflationary analyze is Eilif's landing we the XXXX. but productivity to point and volume and don't everybody keep put if Mexico the what inflation we is. affordable what right that of at that at can we And much business. we'll Mexico particularly profitability is

Jeff Silber

Okay. Great. so much. That’s really helpful. Thanks

Operator

of de our from from And Martinez coming Stanley. next Morgan line Olcoz you. the Javier question, Thank

Your is open. line

Javier Martinez de Olcoz

Hi. Thank you.

obviously, resizing you pretty job good a So G&A. did

and did over? wondering, if process in are corporate Is be issue, we it fast I process? And maybe this has of? initial efficiently. reduction was issue the operational where wondering, also, I control You the generated was in cost that can we any aware

Eilif Serck-Hanssen

to Rick, you take want that?

Rick Buskirk

last transformation Yes, been as I'll quite through the the for headquarters a take Laureate went of we mentioned. corporate that. Thanks It's question Javier. you've -- year rightsizing

We have $XX well. we have higher winding have targeting this friction we a is the downsizing We're very about of that That the are bit in reduction. We down of your onetime G&A. were business. in year any million a And feel costs size not effect getting the at not are and very little going Laureate $XX the rate to around approximate seen network, G&A million we the do structure. comfortable run of but to we right seen point, --

well. control very and Obviously, of perform very, to our operations well. and continue gone our very it's on we very cadence are maintaining We focused the environment

Javier Martinez de Olcoz

Fantastic. Thank much. you, very

Operator

[Operator for questions you Instructions] that for showing and I your We gentlemen, am no conclude time. this participation. ladies does our thank And conference today. at further

You day. may disconnect. now Good

Laureate Education (LAUR) 5 Aug 222022 Q2 Earnings call transcript