Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by, and welcome to the Full Year 2022 Laureate Education, Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Adam Morse, Senior Vice President, Corporate Finance. Please go ahead.

Adam Morse

you Education's us XXXX fourth thank to today's results. and Laureate discuss quarter morning, for on joining call Good and year-end

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

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

remind available during I a a our to call The is of webcast, forward-looking information and posted supplementary operational like website, also of call. to have the call. we'll today's that you which the recording but constitutes meaning we some including, today, applicable after will not are Laws. be U.S. complete statements guidance financial providing We would within the presentation be the limited referring Securities to being to, and

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

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

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

call over the Eilif. now me turn Let to

Eilif Serck-Hanssen

everyone. morning, Adam, and Thank good you,

Laureate's we macro outstanding Our performance delivered of operating Despite model. global XXXX headwinds, in the demonstrated results. resiliency

year. and XX% year, respectively, the for and X%, total versus grew prior new Specifically enrollments

benefits margins grew at scale a by efficiencies. due and on XX% high were EBITDA XX% EBITDA adjusted to XX% for the a continued by focus from robust operational Laureate Revenues historic increased and growth adjusted and

shareholders accretive cash will of balance distributions focus operating to on a to flow performance, strong cash $XXX allowed to us over addition forward. business XXXX team our return and The sheet to strong going combination model In performance free management continue favorable during capital through and repurchases. of share delivering cash million

exclusively be Our is across potential for our an Peru, high-growth strategy focus portfolio evidenced to further initiatives company Mexico on and markets effective the have decision in expand of pursue to proven the Laureate XXXX digital efficiency results. our as and

driven working that to momentum beyond. positions markets. in sustained positive brand our XXXX continue by our institutions respected education for growth and like accelerated and Mexico most in to region. and faculty in each The academic this expect to is both and our In years quality We we institutions among and to more leading also into thank and staff the innovation for I accessible. their recent would the of commitment unwavering are largest the make Peru, of hard

just few achieved highlight we XXXX. the accomplishments academic many me Let of a in

to a one country. brand upgraded university by the in For was four-star year, second leading UPC independent the Peru the education Peru and in Stars, in rating university ranked rating QS the UPN ranking number organization. was consecutive

as within public both the among graduation. the students program academic UVN in by level by by categories our national at social university to was achieved official exit the universities of is top already in the the employability, and in programs and rating measured as private This UPN upon responsibility addition inclusiveness, recognized exam category the performance online. with five-star taken high Mexico XXX

medical school second also was by class. And as UNITEC UNITEC in business Mexico their incoming a top UBI Global. five incubator recognized university in welcomed new

announce I'm XXXX, year full strong to forward guidance. look we pleased As to

expect with previously of efficiency to X% programs currency drive XXX basis, and Specifically, EBITDA we economies expansion continued which adjusted by a on target XX% scale. we revenues consistent to and margin through expect to is basis constant range, by grow points stated

further XXXX bolstered fact and the intake primary for outlook we the that in quarter confidence for by smaller Our Mexico. of are the secondary intake Peru is the nearing first completion

This approximately to enrollment roughly year expect Mexico's period enrollments intake. new X/X last intake enrollment total cycle, versus year XX% intake Upon completion and represents approximately to for Peru's volume intake cycle year. same the the this of of new full of for XX% new XX% Laureate's we grow

continue spending significant associated to these behavior premium due Peru in on that education Consumer university are and in discretionary earnings higher consumers to degree markets. Mexico indicates with prioritizing the likely their a having

confident are XXXX, enable successful. we will us priorities we to As remain beyond our existing strategic look

and hybrid Specifically, and to we Mexico academic standards continue to opportunities, only, as continue capital-light intend at to delivery on strive scale, tight affordable classes teams and such of to online our highest Peru record our education, middle the of continue emerging the maintain markets, to Peru in for leverage of maintain our products quality quality prioritize to growth cost enable Mexico focus strong management us controls to offer execution. educational track and in our

revenue over on of a thus consolidated growth adjusted CapEx get Laureate basis EBITDA to free XX% delivered achieve and to and connection XX% and a our within momentum unlevered currency financial percentage our five revenue teaching for these strategy, In organic strategic margin three to strive of the following constant adjusted growth we EBITDA a resulting of pursue capitalized a expansion of flow where adjusted least X% constant at XX% next below online basis, hours to basis, on priorities, deliver to low be to EBITDA XX%. as the on conversion with XX% currency to are the X% in in profile teens cash to a maintain years,

and designing by and innovation be unwavering commitment to outcomes. an approach Our along offerings quality student underpinned academic success our positive continues delivering academic to to with industry-leading strong

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

Rick Buskirk

Eilif. you, Thank

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

first activity From year. our represent periods third largest a which total both XX% account P&L two perspective, for quarters low the than intake periods, for more The are new seasonally of our and as EBITDA and revenue classes In second fourth of most intake large generate not for higher adjusted enrollment session and for of the year. but quarters are those months. are contrast, out periods, enrollment the

Let's strong operating increased with for start to with Page XX, in the Total which when quarter. prior both our and performance enrollments financial compared highlights strong fourth year the markets. growth X%

EBITDA ago. $XXX by adjusted On was basis, quarter currency trend. enrollment the revenue fourth volume XX% of outperformance the an organic was million was outperformance metrics year-over-year, the $XX up guidance total months better by fourth in price in were the the and EBITDA was enrollment revenue mix, three both million we Revenue driven provided and constant volume. growth for ahead adjusted Revenue quarter follow driven

Adjusted and EBITDA expenses for revenue fourth timing the of up quarter was year-over-year, aided growth. XX% by

to Page on XX. year full Now results moving

versus resulted adjusted XX% for a XXXX EBITDA year, EBITDA enrollments increased million. an in margin enrollments was Full X%. $XXX New prior of were year $X.XXX billion This high Laureate. up historic XX.X%, total was and adjusted and revenue was which

year for was basis, and On an XX%. adjusted up increased organic XX% by currency EBITDA the revenue constant

driven was by Our of XXX by points aided year-over-year EBITDA approximately efficiencies. margin improvement operating growth our and adjusted focus on basis

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

Mexico. Let's start with

at for brand increased by and in the experienced UBM enrollments performance the new in New UNITEC. branded the driven the third during premium We XX% value enrollment our primary enrollment year, our growth strong quarter. intake double-digit both

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

XX% incurred efficiencies that up additional year, cost was year-over-year return EBITDA the flow-through revenue market. we driven full in prior we On XX% campus efficiencies, fourth the operations. increased revenue as partially was costs quarter adjusted compared to continue Adjusted to and XX%, basis, by as and offset drive in EBITDA for to by year a Mexico up

transition drove when now and total growth currency quarter the increase Volume constant fourth in Let's Both Peru enrollments increased academic calendar to mix year-over-year adjusted the and XX. for or XX% Slide XX% new for year. on at revenue price for X% timing.

aided by the EBITDA of aided related the quarter year-over-year, basis, the was favorable by On Adjusted high growth recovery. half students impacts. in to XXXX of the XXXX a year. half first level the the prior revenue increased COVID over full year timing revenue XX% for XX% for fourth second Peru of increased returning Year-over-year in

with adjusted a revenue EBITDA post-recovery to half grew still Second campus year-over-year. year year in partially prior in Peru X% an by Peru full offset up versus costs. was basis, return On impressive flow-through, revenue XX%

sheet the the balance XX me $XXX for illustrated Let earnings our now $XX million position cash in year with position of debt and million a on discuss $XXX debt Page in presentation. gross million. net ended briefly Laureate of

distributions of quarter Our to strong in approximately and secondary $XXX $XX offering an in connection share in a shareholders after returning capital of half leverage special position cash turn million to million net dividends by million or and with than less fourth million $XXX certain shares a sheet share of the $X.XX stockholders. even balance repurchases combination or approximately equates through in underwritten a eight

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

we continue on alluded to Eilif in As remarks, our execute his opening agenda. to growth

of XXXX to versus a of terms in As total rates, range outlook growth a Based XXXX to line of are experiencing, year reflecting anticipate spot as both the results on X% as for be we students, profitability. current of in momentum expect to to as full FX top follows: the result XXXX. XXX,XXX XXX,XXX we X% enrollment well we be strong growth

in on Revenues on XX% to $XXX the range to XX% billion, XX% and to on organic to growth $X.XXX reflecting Adjusted XX% XX% XX% $XXX basis constant constant currency as-reported of basis $X.XXX of an EBITDA versus to versus XXXX. and billion be organic XXXX. be basis to XX% million of million as-reported currency on growth to to the an of basis X% reflecting an in an range

are further partially our in adjusted primarily flow-through EBITDA of This increase to annualization margin, the XXX margin efficiency related and offset midpoint campus at and The initiatives, improvement expenses, will guidance. margins final basis the our corporate in return growth volume effect expenses. Mexico of of levers result in our reductions by an in main anticipated to points

our cash conversion flow in weighted second of timing the of half the tax will experienced payments and heavily we towards be QX XXXX, low different capital-light mid-XX% a due seasonality of we in XXXX unlevered adjusted to expect expenditures. to cash note for flow by continued model. our in Lastly, seasonality to Please range, XXXX EBITDA free that and aided margin improvement the growth bit in year what and from the more capital the

the For of outlook first that out are of for quarter. business of quarter our institutions of the the reflects our seasonality of our and much fact XXXX, most session the

low anticipate growth, generation by therefore, increased and expenses driven noted. return in expenses QX but previously revenue to We, campus inflation

quarter approximately in session. $XX first million year XXXX, $XXX to of million quarter and million the start for Earnings to expect and of the For as will growth classes revenue the $XXX EBITDA second accrue million. we fully adjusted during between $XX are

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

Eilif Serck-Hanssen

Thank you, Rick.

Our deliver strong demonstrate on XXXX are priorities. to full our results XXXX year strategic on we and that outlook track

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

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

Operator

comes [Operator Markets. question Thank first you. Jeffrey Capital our from from And Silber Instructions] BMO

open. now is line Your

Jeffrey Silber

My terms your and impacting seeing the Thanks upheaval regulatory question regarding question. either good enrollment and/or taking horizon? in been issues first hearing is some about Peru. the we've any Are potential might trends morning. Thanks, seeing changes of that in my on political just that be you of

Eilif Serck-Hanssen

This Jeff. morning, Eilif. Good is

they small, to the no largely seeing demonstrations are have X,XXX X,XXX in demonstrators, have material impact and to We been relatively South. been These our operations.

with associated these been course, loss some there's demonstrations. unfortunate life Of of

significant been of but essentially unimpacted. amount it gained has press So has our operation a coverage

of point higher no that education see has regulatory terms agenda contention. conditions In or applications, changes in not we really regulatory been of for the on

Jeffrey Silber

talk be countries? Okay. gears are for the forward? this good you in embedded and guidance what we both going to hear. your increases about we pricing Thank in Can of That's type just will shift what think year tuition environment Can to you. sustainable

Eilif Serck-Hanssen

to you do want take that? Rick,

Rick Buskirk

Yes. Jeff.

and be on typically that by in brand. by environment, is target transition in So general, our line expect normal in around be in translated market inflation a with we lower be bit Mexico. the inflationary will higher in inflationary -- of our our Peru. that to structure high is a bit This expense product our price X%. year, cost It It will translation than our to a that on structure than a

difference driven fact the mainly main The lease in that that most is Mexico. our real of by between we estate

the pricing, gap upward be given and may be slightly our on we any terms we maintain trends of expect on with guidance. on pressure average, consumer In to initiatives margins the XXXX below but cover able to built the efficiency to that's how this we

Jeffrey Silber

Okay. That's Obviously, throw generate balance just forward? about you've talk strong I I'll cash. sheet. allocation a more Can going appreciate company you priorities okay. The helpful. continues your really it. And got if one to capital

Eilif Serck-Hanssen

so. do to Happy

on We cash generating conversion. are strong free focused flow

the the and in of capital-light hybrid in initiatives investing terms of a growing digital business on the have expanding be and will We our education. most in disciplined terms investments very in and approach business of

in no deploying we until or that and returning through later stock reducing means on generated discuss to have flow buyback. But in have debt so would made deploy, our we shareholders that year. management be a capital the or cash how Board which not the the further That we that will either means such to excess would be will guidance whether business via dividend decisions or the team

Jeffrey Silber

so I appreciate Thanks the color. much.

Operator

This Thank participating. no Thank further [Operator call. I you. today's And am for showing conference Instructions] questions. you concludes

You may now disconnect.

Laureate Education (LAUR) 23 Feb 232022 Q4 Earnings call transcript