LAUR - Earnings call transcript Q1 2024 | Laureate Education, Inc.

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Operator

Good day and thank you for standing by. Welcome to the Laureate Education First Quarter 2024 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 first speaker today, Adam Morse, Senior Vice President of Finance. Please go ahead.

Adam Morse

Good morning and thank you for joining us on today's call to discuss Laureate Education's first quarter 2024 results.

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

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

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

the to cash cash now their free me release of and call supplementary this discuss, GAAP including, press based among are current net addition, our flow, forward-looking non-GAAP we that to statements.Additionally, also the its all in or measures detailed turn no In statements update others, conference related we total margin, reconciled obligation over counterparts and EBITDA are and expectations to date as undertake on and of of debt, Eilif. call, any forward-looking adjusted presentation.Let

Eilif Serck-Hanssen

for a enrollment on line the on secondary morning, intake track deliver Mexico. Adam, and our completed results and to outlook recently quarter, includes intake Enrollment year. for Peru we with cycle and the which you, We everyone. primary intake the operational expectations came are Thank smaller in for for first good our

currency In trend foreign continue rates to favorable. addition,

guidance result, in million EBITDA.As conditions are revenues revision The a in $X upward XXXX XXXX due and February, by favorable $XX announcing call full year construction versus our growth to sectors, impact the adjusted macroeconomic expect of we a As robust be Mexico for to in increased and previous for in backdrop manufacturing Peru. we story with an discussed of Mexico consumer bolstering during to differing our the X market growth nearshoring is real wages, prospects. spending, halves, and million

deliver accelerate this Mexico expect first of market, in We to our strategic initiatives restructuring To strong the we throughout performance are half margin progression implementing the XXXX. all year. of in

we be a result, expect margin towards of those more the market in conditions than back-end Mexico. second our in expansion Peru to half softer are As loaded XXXX.The

in and was the economic through resulted quarter the expectations. experienced This both in its for primary During years pandemic. volume intake a had relatively our this economic downturn outside COVID-XX contraction first in with first flat of year. enrollment of pricing, XXXX, Peru And XX over line lingering which effects this

expect contributes year, XXXX. of for intake Peru new of in roughly the the enrollment cycle that Given X/X activity Peru most this our intake mute for we for aspirations primary the growth to primary

Peru quarter, to benefit during like following begin in recovery should September. we XXXX. anticipate economists, economic half fourth in However, to intake most through an of recovery smaller continue in second That us the the

to in profile.We line education attractive be most that higher Peru, to into to expect aligned X we we XX% which Latin education XXXX, company more are the Mexico targeted X% we top rate, higher growth to do return markets private in leading the As growth and move our to America. is believe

in by sector see We the is turn growth the driven markets. fueling these higher rate education. class, is in which in both favorable This participation rising middle momentum growth to expansion continue of

the this well serve positioned largest and to Mexico we in are education higher operator growth. Peru, private As

institutions X have positioned their the spectrum, in in levels differentiated markets. We leading education respective at brand all positioning with

well education X retention hybrid is with working model. of a on affordable, an rollout business and and innovative high-quality continue Our health delivery portfolio to expansions And STEM for institutions modes supported online face-to-face, a levels, of revenue program stream private markets.Our mix by digital the in fully on of new sciences, program through campus product an our predictable courses. years, as adults, stable as adjacent we through and strong enable average innovation product pay targeted and length focus emphasis extensions,

a who discipline, has capabilities, cash future never celebrated omnichannel supported Additionally, business been we capital-light higher success. and have our our in X, years, past by have positively played role lives robust, distribution model of our and April quality significant My XXth education. On flow to XX present, anniversary. gratitude and brighter. all the a access past generation.Our we in operating profitable influenced strong sincere millions faculty has Throughout broadened resulted and staff, out to Laureate's with goes

to have Impact many forward, this to come. decades more our further society the the legacy encourage I on a download Report. copy of and recently build our look published to and positive for opportunity we recognize As website you we upon XXXX visit impact we

UPN's and the Mexico to year, and the the by and so addition or had over X students dental and at Mexican to level, their low otherwise in environmental their to million sustainable members. Mexico XXX of affordable more success provided cost XXX,XXX our implementation dental Responsibility XXXX faculty community to continued turn touch providing rated a Rick? doing evaluates at prepared was free XXXX education meaningfully for quality essential by quality who impact both Peru as of will top Environmental XXth sustainable Philanthropy governance on to colleagues expanding criteria. in Peru about in and as clinic Peru.Just on in about XXX,XXX companies was part to detailed by companies by university most as the our have and responsible first across learn practices Laureate to overview and Interuniversity details communities Buskirk well of UPN Mexico the of more affordable a to have and few we medical for to communities members Rick hours deeply Mexico can medical which recognized service been in full access am over be based I UVM XXth Center and based hours. our work Peru, the socially of consecutive not and provided alone, now the so care social call sustainable for corporate communities health Network students, recognized institution XXXX respectively. In policies.In have Meanwhile, UPC that for both our care.I higher services volunteer further the to Latin would X Ranking, proud Peru America's on and concludes top university ESG contributing Peru our the environmental, Merco outstanding care my health sustainability year according remarks, outlook. institutions in as financial our middle quarter our on UNITEC and classes the performance, are throughout a currently you Here, highlights, prices.This

Richard Buskirk

you, Thank Eilif.

let performance financial few our discuss a provide quarter, on for the important I Before me seasonality. reminders

business. a education higher is First, seasonal campus-based

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

the on and shift factors occur. science classes of programs such XXXX. adult the the adjusted from the start This revenue as million when $XX in million recognition of half of shift first beginning This for and started will quarter programs in classes second turn timing Peru and addition, EBITDA quarter-over-quarter the depending of In $XX Mexico year. of various timing year-over-year the later of in In the versus comparability. revenue working affects our can holidays XXXX, to approximately health in

I for these quarter financial on associated guidance and the quarter for expectations now pricing I on our and line Page to were move first markets. both the in enrollment discussed, operating color expectations, performance additional provide the me operating results impacts.Let starting As first results XX. with begin, will timing our and To in

see to continue strong Peru. We in growth and resiliency in Mexico

for range, guidance year X% organic year year-over-year the by the prior of for currency the all earlier, XX. $XXX XX%.Let FX months currency that volumes up Please compared academic are New an adjusted the X%, versus color shift and EBITDA Mexico in additional led increased with Mexico. low guidance some adjusted the provided constant the growth respectively, within million. note quarter performance On organic quarter ahead with ago by now an provide was Peru adjusted on Both and X discussed and calendar basis seasonally metrics some quarter additional Page to performance was uplift. starting first and me total $XX operational X% basis. and was quarter were EBITDA revenue on comparisons million with constant enrollment increased prior and the first and of provided when Revenue while

Mexico. Let's start with

and quarter Hemisphere a represents smaller Northern September large follows secondary occurs Their first each intake. The intake calendar. the

volume intake. revenue last quarter for in first restructuring portion the period had to growth.Adjusted versus led initially of for be period, and A programs. increased strong for up compared out realized its for the quarter, to due fall the quarter to to new due Peru the by now gains XX% calendar, growth. quarter was in online timing Slide volume during Mexico's the fully productivity for year led are prior the academic transition of enrollments and expected first working to first the in planned prior quarter.Let's carried by favorable adjusted first the primary growth of year the growth up academic prior of the the Total timing X% first During calendar prior the Mexico's were new on the activities increased now quarter, adult-focused the intake X% year enrollments strong period, XX% XX. second versus we enrollments the versus year EBITDA Adjusted

represents as The a Peru Hemisphere for intake the primary are institution. first Southern they quarter

enrollments For the our expectations. with in and new total first quarter, line came

the the the by by total for increased in negative calendar, market. pricing. faced Peru, In that revenue we by timing the X% of our low led first volume prior to currently X% campaign the in challenges period, quarter, the versus relatively slightly by first X% quarter the for year. declined year of quarter X% recognize enrollments the reported enrollments for for compared intake flat enrollments while our increased driven strength Peru's was prior New academic total Growth the on cycle, re-enrollment Adjusted seasonally students. growth by economic of

intake planned, during this million For quarter, down pricing essential year-over-year our as of year discounts this This calendar, adjusted essentially for in period cycle, to prior by $X academic resulted enhancing largely recovery support due and flat we the period, the timing the and the to EBITDA intake.Adjusted was compared for during provided scholarships. responded seasonality.

first announced quarter our Peru a discuss briefly position. in repurchase $XXX of is versus period March fixed of stock newly session net ended out to The with the for largely million summer during of $XXX $XX debt repurchases cash and million executed Laureate debt is now balance increase million in million debt $XXX under stock primarily in sheet with million. me the gross $XXX costs.Let quarter position in The our authorization. net attributable million $XX year-end

balance starting our XXXX, for Page remains strong to with XX. on than less X/X leverage.Moving Our net on of outlook sheet turn

and $X current by favorable and We to full the adjusted results revenue are revenues $XX Based versus increasing million continue to now of now the students, constant in follows: is X% spot on range guidance of XXX,XXX be an XXXX; to range XXXX; $X.XXX reflecting range in to in FX X% currency we as-reported X% XXXX XXXX. EBITDA as-reported and billion, to on organic basis $XXX of X% of expected range basis X% rates. to now be XXX,XXX reflect year enrollments expected organic basis to both X% to be versus $XXX an are the total an reflecting constant of to million on growth to of currency be EBITDA million growth X% on rates, as $X.XXX to the overall to million, for more billion for to growth reflecting expect adjusted X% versus currency

calls, XXXX.As the We we basis continue and are on for be EBITDA winding those XX% to unlevered we noted conversion would flow cash reported a activities this the end the adjusted expect of that to range run process on free through discussed to legacy still have prior of high in Laureate down in year.

related flow of cash unlevered taxes. approximately A our expectations on cleanup second during deferred cash for paid will reach flow EBITDA these stated achieved of XXXX include $XX legacy the Absent to first target to the the the payments Laureate primarily level Our approximately portion to and million, be XX% to quarter moving conversion items, is in adjusted still par free one-time guidance that expected large our the XXXX, with in XXXX year. and we half of second profile.Now, quarter.

in our $XXX $X quarter margin X%. half second $XXX of X% between we growth million of XXXX, the of This first revenue million, restructuring in would million. EBITDA optimization result to million which revenue of costs For currency Adjusted to $XXX Mexico includes approximately expect to and plan. related constant million $XXX

incurred margin second As approximately flat the of half to calendar half year, half. of Peru versus relatively compared the of half second as recover year we academic the XXX expect basis primary recovery calendar, past to the roughly impact, to during following the for in restructuring the adjusted we in as first and of This significant the restructuring one-time half points Mexico expansion first margins first and macro do enrollment anticipated the one-time Peru.For return are XXXX. in intake the expected, margin be from timing academic timing growth basis of EBITDA is the to the costs XXXX in anticipated costs perspective, XXX due the down of an pricing points

Eilif, points, points FX-neutral, year adjusted XX target.That comments. our closing margin result full for the remarks. For my to in concludes gain approximately net XXXX anticipated back it that towards basis approximately margin handing our would continuing prepared reported basis XX EBITDA progression of I'm you XX%

Eilif Serck-Hanssen

Rick. you, Thank

deliver We from favorable are foreign on track rates. to potential commitment upside for XXXX exchange our on with some

operating all during In robust the over performance enrollments delivered experience market. growth to intake to continue decades. completed total the points Mexico strong continued We experiencing model. business underscores modest resiliency its despite our in signs our We that X growth of and in performance first opportunities in Peru primary in Peru, just recession

student We by strong growth digital XXXX.We are encouraged Peru leading to well concludes rates the take as our capabilities and indications and we unwavering that for recovery exit more participants. and normalized we outcomes remarks, of continued us that commitment are to an expect in believe early growth.Operator, economic the academic happy quality our brands, prepared to positions and now to from any return questions

Operator

Our [Operator BMO Instructions] Capital Silber first from Jeff line the of Markets. question of comes

Jeffrey Silber

I wanted to Peru. on start

isn't if and economies of enrollment talked on happen, for between inflect? economic and in to assuming that and the You that, that does that I'm happening fine. the starting expected second sort half, you're some relying But even about there to that's be going recovery lag

Eilif Serck-Hanssen

that's Yes, correct.

You're already improving. data seeing economic

Peru. a positive quarter First for was quarter GDP

real key wages. of seeing such in confidence. goes, spending bottoming income seeing consumer seeing by indicators different categories. And where or certain tracking increase in out credit employment. when seeing the We're We're in in card We we're disposable increase also slight category are as improvement an increase we're

replenish So attend that been before is to our economy of improving. is the to able customers in already But college. that a efficiently have order coffers indicates effect lag their a there bit

during of ready simply prospects during just deferred to our and first in students -- yet quarter to that the intake of September. second lot a not and saw we So CX the commit intake was

caught at the of lag high And half more will have funnel. up. we're effect that expectations at has of that normalized. looking the top be interest point, XXXX We're the at So the looking and second

Jeffrey Silber

do in normalized, enrollment Peru say have growth you that intake think when year? this second you you'd in new period And

Eilif Serck-Hanssen

Correct.

Jeffrey Silber

then Okay, good. That's And quick helpful. just X question.

make You mentioned, announcing? restructuring a sure the Rick in just previously, about times. to restructuring and talking mentioned I you you're few that you program a new and did that we're just want Mexico not

Eilif Serck-Hanssen

the scale consolidation to better of out smaller, student experience This get more certain campuses. correct. to fragmented campuses our some That's relates of of and more

Jeffrey Silber

Okay, great.

wanted Just to that. confirm

Operator

Cepeda Stanley. question Our line Morgan the Instructions] [Operator Mauricio comes of of from next

Mauricio Cepeda

Peru, revenues is seems pressure if There it in I that costs. more A on effect of fixed we terms a the fact, variations question of the variation and absolute of But there much seasonal there. a in loss EBITDA, that in is of is in consider understand than EBITDA, EBITDA there revenues.

already? deleveraging in So Peru, if is any intakes anything think is there there? operation regarding great. I absolute you happening could just of comment is an you cost could if other comment Mexico if concrete there of the about terms And in nearshoring? not on any -- kind kind if in Mexico, is it in see If you that effects nearshoring would already be that pressure terms, also

Eilif Serck-Hanssen

Mauricio, and is and we're comment But demand the on uplift this Rick proving out that is nearshoring. seasonality seeing an the will of yes, believe quarter. for related second the I'll Eilif. to we session take in Mexico, first in

adult. I high-quality and Laureate related have And program of again, seeing interest what those a over nearshoring also that product what a related hard online among to for think also of nearshoring. more a last convenient I in are directly of fact some versus the GDP is are in to part fully seeing X months is to seen the is the very deliver linked significant also just COVID, online for stronger some working in the was seen that assume versus demand fully our that that in increase think performance demand what past. the I adults product. working But little are during manner last for undergraduate things a say we related.We related somewhat to decade. is But We than Mexico It's XX to to

manner in online that the fully can be trained working education adult delivered been has society a student. for quality And

So fact as it it more is be related. nearshoring, of the economic a opposed the economy some in innovation trend a the also it of and cycle. that But related, that is is GDP I boosted to some to some and in likely macro Mexico of of from seasonal being product is I think think is just blip

Richard Buskirk

Mauricio, your answered if for on -- and I'll your Peru. answer I move there can your and on question and then that pause see second question I'll Eilif take

Mauricio Cepeda

It's very no, no. No, clear.

Richard Buskirk

Okay, great.

in in EBITDA the think I to your related the question on quarter is on Peru down first the EBITDA, Peru.

So there's there. really effects going X on

first million of where academic will change of out that effect $XX was revenue calendar first in million we a realized is and in second $X shifted be that EBITDA. the associated The in adjusted the quarter, half, the

expected, a in The is has happened That's inflation, quarter Peru obviously, and effect as then is a that, flat the that And second CX of bad a a bit year that we where, the third pricing. market. That lagging that costs half took last expense recession. last X% structure first in when the lagging there saw anticipated increased year it higher factor we relative to our second pushing year. over the -- in was to we was our down debt effect effect of this in lag

that today. expected we year in the in reinforced provided the So beginning us And of reflected year. the guidance that that impact in and we was roll forward, to this earlier

Mauricio Cepeda

Yes. I Okay, understand.

there the is point increase. understand kind cost, in revenues, absolute the the shift. is terms, of So was It an explains that revenue there absolute that, I but this

of and your I understand, kind X a provision doubtful correctly? if debt, effects, that per as inflation a well, for transition there understood lag answer, So an right, that I is

Richard Buskirk

That's correct.

Mauricio Cepeda

Okay.

Richard Buskirk

up first bad financials that QX in year-over-year the little see our was in you'll was And quarter. a debt bit in

Operator

you am Thank does your participation questions I for the no This today's further this time. in showing conclude program. conference. at

disconnect. now may You

Laureate Education (LAUR) 2 May 242024 Q1 Earnings call transcript