Earnings call transcript Q3 2022

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Operator

Thank you for standing by, and welcome to Laureate Education's Third Quarter 2022 Results 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]

I would now like to hand the call over to Adam Morse, Senior VP Corporate Finance. ahead. go Please

Adam Morse

thank to and joining on us Good Laureate you Education's call discuss Results. Third today's morning, for Quarter XXXX

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

the release website of on laureate.net. Relations section Our earnings available Investor press is our at

call. and presentation available also during call The today's supplementary website, a recording we be to webcast, will complete have the We a will which after call. is the posted be to being referring

would you but information limited operational I remind US we're providing within to and securities the to some of applicable statements like that, financial meaning forward-looking today, not guidance, of laws. the including constitutes our

actual are uncertainties from risks and materially subject at those that we statements expected. any to may therefore, results differ change Forward-looking our may time, and

Important filed this Securities actual could are with the in to our from XX-K made filings materially Exchange report and SEC. well cause Commission the disclosed with differ earlier filed our on morning, XX-Q Form as expectations annual as other US factors that results our

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

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

Eilif. now to me call over Let turn the

Eilif Serck-Hanssen

markets. in We morning, report our I and to and Adam, you, am our of and trends everyone. secondary both new good completed Peru, our cycle enrollment strong primary in Thank Mexico, recently intake intake in pleased

of the quarter X% three institutions. in double-digit Peru, brands. Mexico, all new with enrollments at quarter new performance both third versus of year, last with enrollments last favorable growth In XX% increased In grew third year, versus

On guidance in are you the prepared year. the year of Later updated through intakes, these for outlook. will our increasing Rick the we full XXXX our remarks, walk strength

focused to way markets, by of secular acceleration the to of initiatives, the that, learning. revenue stakeholders believe is our to create of our best accelerate trends education our highly all supported value continue in including We set a growth for higher through for digital favorable growth

the our first agenda Our financial nine is of taking operational growth through demonstrate that results hold. the months year and

We our X% are to deliver on XX% to of recent following forecast intake line on and of the track growth, drive to medium-term margin the continue we expansion. top completion

Laureate's market-leading secondly, digital a lastly, and success our three approach academic markets; that our and quality powerful with their variety a allows by scaled fully distribution quality; brands delivery. two is including commitment capabilities, in of strong factors: a education hybrid driven face-to-face, omni-channel first to key to foremost, and formats, online, focused and to deliver us model

capital prioritize, of addition In continue and quality for our on delivering to to commitments, our return shareholders. we growth

cash our As $XXX position was of XX, September million. net

to we October of On per per we the October million, XX. paid million, On special special to XX, XX, University. sale of the Walden dividend $XXX a on remaining $X.XX or share, share be proceeds paid from cash net announced $X.XX $XXX cash or distribution a related November

strong return future business efforts. think to shareholder value of continue capital us with and of model optimization balance as our we lot cash accretive Our a and through sheet, strategies flexibility, provide

performance, of XXXX further details improved our That and Buskirk, for concludes my I comprehensive year-to-date to call a prepared quarter turn Rick? as Rick the remarks, third as over well will overview now and the outlook. financial on

Rick Buskirk

Thank Eilif. you,

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

Hemisphere for primary Peru, the represents Mexico, market. is a and smaller Northern The intake Hemisphere a third market, which for secondary Southern intake cycle quarter cycle a

perspective, large for intake out low, much of quarter. a of from Although, it period seasonally P&L the the session are third is as a quarter is classes

third the our highlights which performance for quarter. Let's start XX, page with operating strong financial and

was enrollments total enrollments Revenue million to the adjusted XX% prior was New the EBITDA when were $XXX million. and third and compared quarter period. up in $XX XX% year increased

enrollment were the was revenue to intake outperformance year. guidance exceeded metrics new outperformance ahead and of expectations which of Both the quarter some trend of the EBITDA results, recent aided we ago. cycle. months Adjusted three for fourth followed shifting by by driven provided the the was expenses Revenue the

third down as volume. previously On well XX% guided. and total an driven This timing Adjusted basis, as expected third for we return the due certain as out-of-session quarter campus EBITDA largely a by was currency expenses revenue in constant for as growth quarter, enrollment to X% organic up year-over-year year-over-year, in the the had was to was quarter items.

the half performance of year-over-year an growth constant in with through EBITDA revenue September combined our XX% first currency year-to-date resulted respectively. adjusted XX% and and basis, organic on When overall

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

the with completed and the were for primary its just year strong. Let's Mexico start intake Mexico. very results

enrollments enrollment both brand double-digit, the and in New We our at UNITEC. our XX%, third quarter new growth last experienced during brand when premium increased to year. value period compared the UVM same at

during studies we product hybrid experience timing. and growth prior online. quarter, increased growth, students and for fully Mexico's to third we period the returned quarter. realized have double-digit face-to-face intake revenue fully in year Mexico's academic for now lines, as to calendar Across saw XX% compared and strong increases September adjusted in the be The continue offerings our fourth most when revenue presential to in the XX% will

On return Mexico increased prior year out-of-session expenses and and guided basis, EBITDA Adjusted to certain a quarter the timing adjusted was in X%. and was revenue down a quarter compared XX% EBITDA the for largely as items. year-to-date third campus to incurred during period up year-over-year, XX% to anticipated due

XX. now Let's to Slide transition on Peru,

have to performance continue Peru. strong in We

the X% intake quarter, was New enrollment in prior the up first in a intake enrollment including quarter third to completed the On increased during year the X% basis, compared Peru's secondary new period. year-to-date primary year-over-year.

revenue XX% year-over-year return year-over-year currency quarter as XX% quarter. XX% seasonal during constant the timing price/mix and calendar a adjusted third or expenses, anticipated decreased and quarter, items and timing. for drove for the low EBITDA growth due Volume to certain guided to when Adjusted third for the academic favorable increase campus in a

On prior year the by growth level full high a of related the period. Year-over-year XX% lapped year-to-date over going flow-through nine additional partially growth operations year-to-date flat year return a campus costs, to increased this targets. expect the year impact. with aided offset revenue Peru top benefit to we now to as prior has line with growth returning the basis, year revenue in in of incurred students our basis, revenue And Peru. recovery. by more XXXX, was On a the in EBITDA was forward, first This for second half Peru months XXXX with line revenue in COVID in of be we adjusted

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

a collection the is in September of flow escrow period third The for of with position the of payment cash quarter, free as $XXX Strong combined third quarter cash related high cash $XXX million the resulted of a Laureate. million Walden, to seasonally sale XX. flow net final in generation of the

to opening on a October special investors As XX was and another that million distribute investors $XXX dividend, we declared of remarks, to $XXX Eilif in distributed cash which we distribution his via cash XX. cash a in will special on noted October through million November

updated Page XXXX, outlook on let's to for Now move on our XX.

margins The strength million midpoint in Laureate's year increasing on not the flow-through our cycles, increase for incremental and On the million reasons. intake EBITDA. reflect of third full are for our X,XXX students, adjusted outlook we $X $XX quarter XXXX revenue EBITDA at does two revenue adjusted guidance by for fully

First, the digital outlook. efficiency a in includes more opportunity to favorable XXXX and the some This the initiatives of investments to we us acceleration quarter projects. up set outperformance are reinvest of in revenue taking our for fourth

that costs we corporate some This in expectations. versus impacting down, half in with associated in a second slower year. Second, the initial down of additional costs have this resulting us ramp are is the corporate onetime slightly wind

still our on XXXX, guidance in be you to that However, track will corporate for and see discussed which previously February. achieve reflected we the will in with are investors, rightsizing provided

XXXX. Based of revenue in as effect on $XXX billion to XXXX XX% of million, billion on noncash on charge basis basis current students to XX%, growth a $XXX on organic which reflecting be rates, versus includes year of FX of basis and XX% XX% enrollment is of full the FAS five in growth organic EBITDA on increase a $X.XXX of range to XXX,XXX reflecting currency basis total reflecting to currency an XXXX, XXXX; be an updated be versus in to adjusted XXXX; the constant XX% spot to guidance or on the for XXX,XXX the $X.XXX X%, XX% range in and the the growth an basis, to to our of constant million organic reported follows: range reported of versus an

Eilif, back comments. I'm you closing it handing for to

Eilif Serck-Hanssen

Thank you, Rick.

Our that I on are year-to-date objectives by deliver very to results and on our remain demonstrate strategic future track Laureate's prospects. we encouraged

lives we in revenue access best to students our powerful team, the education. drive allow to We Mexico of the communities will right vision brands management greater a quality and transforming network distribution the and Peru providing believe have omnichannel by and of that support growth us affordable and

Operator, happy participants. remarks from to our now concludes prepared any questions we're take and that the

of BMO. of Please question comes first Instructions] go Jeff ahead. Our [Operator line from Silber the

Jeff Silber

results momentum enrollment Mexico were type is and we of Thanks And that little for color continue? can and question. is strength taking just new just why phenomenal. if at a wondering more bit easier The comps my to I'm this expected get it

Eilif Serck-Hanssen

Eilif. this Good morning, is Jeff,

our are in strong are double-digit both are to performance with very pleased Mexico we brands We contributing that pleased growth. and particularly

UVM in grower. in recall was slower really value UNITEC, will Mexico, while was the growth the You brand engine a our past

Now sustainable to we institutions that the expect these engines become have and for growth of to get to company robust and both continue. we been able

due demand during growth was somewhat our in by deferred to from of when XX% the XXXX However, some aided COVID students new pent-up the pandemic. enrollment the quarter

in project in to I gave So a Mexico couple wouldn't probably growth continue. percentage of that that points us incremental

Jeff Silber

very All helpful. right. That's

the going slide online. been the target think now? Are you making get hours right at to You not have you're when teaching delivered there? terms progress a to in in presentation XX% about that that has your of do XX% company you If

Eilif Serck-Hanssen

be to in that going is XX% years XXX% largely adult they working to depending XX% increasingly face-to-face a are students now couple instead are XX% But in to right gone that the is online. on zone. continue face-to-face and being grad really digital expect Post largely format. fully student on the being ago essentially at online of face-to-face young to face-to-face. and is we and of the primarily to from is brands What continue have So going -- now XX%

at delivery our of it's institutions. So us that are combination the those factors to five that online giving mix XX% three XX% of

Jeff Silber

I talk That's If how If about Okay. pricing some one you inflationary discussed going should environment, the little about I'm price recoup I'm I able we and more. wondering sneak very we inflation. quarter what helpful. go in could just semester costs. are to the wondering bit you a that to last just forward? did to expect the know

Rick Buskirk

the general. we And in Hey, Rick We've about Yeah. price This implied try we talked implied do that to Buskirk. good is for years, Jeff, to thanks in through before try our inflation question. plus. it inflation

costs inflation the X% increases about we estate labor lower I our because prior were we we year. established that with rate throughout than year Mexico fixed saw implied market, And significantly earnings talked in in year. in on call, our mainly had inflation the that our fortunate the real As last we albeit associated this was

exceeded So our inflation in pricing We X%. to implied expectations. intakes inflation and in were our X% implied -- inflation we around implementing or was met inflation -- successful

pricing And how satisfied how we're obviously, a into go-forward at apply will went. are So that basis with looking on XXXX. we

Jeff Silber

great hear. queue. Thanks back That’s much. in get I'll Right. the so to

Rick Buskirk

Jeff. Thanks,

Operator

question you. of go Thank comes Stifel. Please Parrington Adam Instructions] the of line next Our [Operator ahead. from

Adam Parrington

more it's to that campus High, the Is than much How from it expected to over Stifel. do time Adam it is that? or last the return you period? cost expect less and cost longer is what

Eilif Serck-Hanssen

quarter. of half -- back We the during third to were during operations second follow the

will there impact left annualization first the in half -- a So next bit effect before we cycle. of be the year little have of

Adam Parrington

Got you. Thanks.

Operator

Thank call. This you. conference for does Q&A today's participating. Thank conclude the and session you

now may disconnect. You

Eilif Serck-Hanssen

Thank you all.

Laureate Education (LAUR) 3 Nov 222022 Q3 Earnings call transcript