NASDAQ:LAUR Laureate Education Q3 2024 Earnings Report $20.36 +0.62 (+3.14%) Closing price 04/29/2025 04:00 PM EasternExtended Trading$19.90 -0.45 (-2.23%) As of 04:32 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Laureate Education EPS ResultsActual EPS$0.56Consensus EPS $0.16Beat/MissBeat by +$0.40One Year Ago EPS$0.23Laureate Education Revenue ResultsActual Revenue$368.60 millionExpected Revenue$361.80 millionBeat/MissBeat by +$6.80 millionYoY Revenue Growth+2.00%Laureate Education Announcement DetailsQuarterQ3 2024Date10/31/2024TimeBefore Market OpensConference Call DateThursday, October 31, 2024Conference Call Time8:30AM ETUpcoming EarningsLaureate Education's Q1 2025 earnings is scheduled for Thursday, May 1, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Laureate Education Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 31, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Q3 2024 Laureate Education Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Operator00:00:18You. Please be advised that today's conference is being recorded. I would now like to hand the call over to Adam Morris, Senior Vice President of Corporate Finance. Please go ahead. Speaker 100:00:37Good morning and thank you for joining us on today's call to discuss Laureate Education's Q3 2024 results. Joining me on the call today are Eilif Sarkansen, President and Chief Executive Officer and Rick Buskirk, Chief Financial Officer. 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 be referring to during today's call. The call is being webcast and a complete recording will be available after the call. Speaker 100:01:11I'd 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 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 ks filed with the U. Speaker 100:01:44S. Securities and Exchange Commission, our 10 Q filed earlier this morning, 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 including and among others, adjusted EBITDA and its related margin, total debt net of cash and free cash flow are also detailed and reconciled to their GAAP counterparts in our press release or supplementary presentation. Let me now turn the call over to Eilif. Speaker 200:02:25Thank you, Adam, and good morning, everyone. Today, we are pleased to report strong financial performance for the Q3, along with the results of our recently completed intake cycles. 3rd quarter revenue was $369,000,000 and adjusted EBITDA was $91,000,000 Both metrics were ahead of the guidance we provided in early August. Favorable results were driven by Peru, in which new enrollments increased by 12% year over year for the Q3. We expect that this growth rate will increase to an impressive 16% year over year upon completion of the intake cycle. Speaker 200:03:08The macro conditions in Peru continue to improve. Consumer spending has increased, supported by stable inflation, lower interest rates and rising wages. Economists are now forecasting GDP growth of approximately 3% for 2024, a significant turnaround since the 2023 recession. In Mexico, the presidential election took place this past June. In the run up to the elections, increased government spending and stimulus helped bolster demand for our Q1 new enrollment intake cycle, which was up 7%. Speaker 200:03:49Following the election, there was a pullback in economic activity that occurred during the Q3 intake. Despite these conditions, we still delivered solid results with new enrollment growth of 4% year over year for the Q3. As the Scheinbaum Administration settles in, we are closely observing its early handling of the constitutional reforms as well as key pillars of President Scheinbaum's policy agenda. We are cautiously encouraged by the early indications of Scheinbaum's policy priorities, which include enhanced fiscal discipline, modernization of industrial policies, investments in infrastructure development and public private collaboration, all of which we believe are important elements to create sustainable growth for the Mexican economy. The completion of our September October intake cycles provides us with strong visibility for the remainder of the year. Speaker 200:04:52Today, we are pleased to announce an increase in our constant currency outlook for 2024 at the midpoint by $15,000,000 for revenues and $6,000,000 for adjusted EBITDA. The improved operating performance is expected to be largely offset by currency headwinds from a weaker Mexican peso, allowing us to essentially maintain our full year outlook on an as reported U. S. Dollar basis. Our balance sheet remains exceptionally strong, and we are well positioned to continue delivering on our commitment to return excess capital to shareholders. Speaker 200:05:32Following the completion of the $100,000,000 stock repurchase program announced in February of this year, we introduced a new $100,000,000 authorization program in September. Assuming completion of this program, we will have returned nearly $3,000,000,000 of capital to shareholders since 2019 through a combination of share repurchases, cash distributions and cash dividends. That concludes my prepared remarks, and I'm now handing the call over to Rick for the financial overview for the quarter as well as 2024 outlook. Rick? Speaker 300:06:10Thank you, Eilif. As a reminder, campus based higher education is a seasonal business. Although the Q3 is a large intake period, from a P and L perspective, it is seasonally low as classes are out of session for much of the quarter. Let's start with Pages 1011 of the supplementary presentation, which highlight our operating and financial performance for the Q3 year to date. 3rd quarter revenue was $369,000,000 and adjusted EBITDA was $91,000,000 Both metrics were ahead of the guidance we provided in early August. Speaker 300:06:46Revenue outperformance resulted from the stronger than expected new enrollment intake in Peru. Adjusted EBITDA upside followed the revenue trend and was further aided by the deferral of certain costs to the 4th quarter as we opted to wait for the final intake results before committing those funds. On an organic constant currency basis, revenue for the Q3 was up 9% year over year and adjusted EBITDA increased by 22%, both benefiting slightly from academic calendar timing. Adjusting for timing of the academic calendar, the comparable growth for revenue and adjusted EBITDA was 7% and 15%, respectively. For the quarter, new and total enrollment volumes increased 6% and 5%, respectively, versus the Q3 of the prior year. Speaker 300:07:38Now moving to year to date performance. For the 1st 9 months of 2024, we achieved a 6% increase in revenue and 7% growth in adjusted EBITDA on an organic constant currency basis versus the prior year period. Adjusting for timing of the academic calendar, the comparable growth for revenue and adjusted EBITDA was 7% and 9%, respectively. Let me now provide some additional color on the performance of Mexico and Peru starting with Page 13. Please note that all comparisons versus prior year are on an organic and constant currency basis. Speaker 300:08:18Let's start with Mexico, where both our premium and value brand are contributing to revenue growth and improved levels of profitability. Mexico's new enrollments for the Q3 increased 4% year over year, led by growth in fully online programs focused on working adults. Upon completion of the intake cycle, we anticipate new enrollment growth of approximately 3% year over year or 4% when adjusted for the impact of campus closures. Pricing for the intake was slightly above our cost of inflation for both traditional face to face and fully online products. Total enrollments were up 7% versus September of the prior year due to the favorable primary intake last fall and growth in new enrollments. Speaker 300:09:05For the Q3, Mexico's revenue increased by 9% compared to the prior year due to strong volume growth and adjusted EBITDA increased by 2%. Both metrics were slightly aided by the timing of the academic calendar. On a year to date basis, revenue grew 9% or 10% when adjusted for timing of the academic calendar. This growth was driven by a 9% increase in average total enrollments and 1% of price mix effect. Inflation based pricing in our face to face offerings was offset by faster growth rates in our fully online products. Speaker 300:09:45Adjusted EBITDA increased 13% year to date versus the prior year period or 18% when adjusted for timing of the academic calendar resulting from revenue growth and productivity gains. Adjusted EBITDA margins in Mexico were up 130 basis points versus year to date prior year when adjusted for timing. We do anticipate additional margin accretion during the Q4 and are pleased with our progress to expand margins in Mexico to above 25% within our targeted mid range guidance period. Let's now transition to Peru on Slide 14. New enrollments in Peru increased by 12% for the Q3 compared to the previous year, and we expect that growth rate to increase to 16% through completion of the secondary intake cycle. Speaker 300:10:35The strong intake performance was driven by pent up demand from students who deferred during the previous intake cycle as well as strong growth in fully online as we continue to scale up that model. As a reminder, during the primary intake in March, we provided enhanced discounts and scholarships to support our students during a period of macroeconomic challenges. For the secondary intake, we were able to scale back those discounts given the macroeconomic recovery. As a result, pricing for our traditional face to face product was roughly in line with inflation, but we do expect a mix effect as we grew fully online programs faster than our face to face offerings. Total enrollments were up 3% versus September of the prior year, reflecting softer macroeconomic conditions experienced during the first half of twenty twenty four. Speaker 300:11:28For the Q3, the macroeconomic recovery drove revenue growth of 8% and a 23% increase in adjusted EBITDA. Both metrics benefited slightly from academic calendar timing. On a year to date basis, revenue grew 3% or 4% when adjusted for timing of the academic calendar, driven by a 2% increase in average total enrollment and 2% of price mix. Adjusted EBITDA was up 3% versus the prior year to date period. Slow through margin on revenue growth was offset by enhanced discounts and scholarships from the Q1 intake as well as higher levels of bad debt provisioning resulting from the softer macroeconomic conditions in the first half of the year. Speaker 300:12:15Adjusted EBITDA margins in Peru were at 39.7 percent for year to date September. We expect margins in the Q4 to be down slightly from that level due to the shifting of expense from the Q3 as discussed earlier. Let me now transition to discuss our balance sheet position. Laureate ended September with $134,000,000 in cash and $155,000,000 in gross debt for a net debt position of $20,000,000 Our strong balance sheet and cash flow generation supported our Board's decision to announce a new $100,000,000 stock repurchase program last month. Moving on to our updated outlook for the year starting on Page 18. Speaker 300:13:03Following the strong intake results, notably the double digit new enrollment growth in Peru, we are raising our constant currency guidance for full year 2024 at the midpoint by $15,000,000 for revenue $6,000,000 for adjusted EBITDA. As Iliff noted, this increased operating performance is expected to largely cover the currency headwinds, allowing us to essentially maintain our as reported U. S. Dollar full year outlook within a narrower range. The Mexican peso continued to decline during the Q3 and current spot FX rates are now approximately 11% weaker as compared to year to date average rates. Speaker 300:13:44Based on current spot rates, we now expect full year 2024 results to be as follows: total enrollments to be approximately 470,000 students, reflecting growth of approximately 5% versus 2023 revenues to now be in the range of $1,551,000,000 to $1,556,000,000 reflecting growth of 5% on an as reported basis and 7% on an organic constant currency basis versus 2023. Adjusted EBITDA to now be in the range of $447,000,000 to $451,000,000 reflecting growth of 7% to 8% on an as reported basis and 9% to 10% on an organic constant currency basis versus 2023. Now moving to Q4 guidance. For the Q4 of 2024, we expect revenue to be in the range of $408,000,000 to $413,000,000 adjusted EBITDA to be in the range of $138,000,000 to $142,000,000 Our 4th quarter outlook reflects the impact from 3rd quarter cost deferrals as well as timing of other revenue. That concludes my prepared remarks. Speaker 300:14:59Eilif, I'm handing it back to you for closing comments. Speaker 200:15:02Thank you, Rick. We believe that we are well positioned to meet our commitments to our stakeholders for 2024 with strong top line growth and continued margin expansion. The strong rebound we experienced in Peru and solid performance in Mexico during the intake cycles underscore the strength of our local brands and the resiliency of our business model. Operator, that concludes our prepared remarks and we are now happy to take any questions from the participants. Operator00:15:34Thank you. Our first question will come from Jeff Silber of BMO Capital Markets. Your line is open. Speaker 400:15:55Thanks so much. Can we just go back? Can you just quantify the timing impact that you mentioned in terms of revenues and adjusted EBITDA between 3Q and 4Q? Speaker 300:16:06Yes. Just to take a step back, Jeff, this is Rick. From a full year basis, we shifted effectively to $13,000,000 of revenue and $11,000,000 of EBITDA from the first half to the second half. We essentially in Q3 recovered $4,000,000 of that and rounded up around $4,000,000 a little less than that in adjusted EBITDA in the fourth in the Q3 and the remainder of that, which is, the remainder of that will come through in Q4. Speaker 400:16:42Okay. I'm sorry, I was a little bit confused. So there's not necessarily a timing issue between 3Q and 4Q. You're just revisiting the one half versus the second half timing. Is that correct? Speaker 300:16:53Yes. Well, dollars 13,000,000 of revenue and $11,000,000 of adjusted EBITDA was shifted from first half to second half and will recover that $13,000,000 of revenue that shifted out of the first half and the second half, dollars 4,000,000 of that revenue got recovered in Q3. Speaker 200:17:09So you have another $4,000,000 Speaker 400:17:12Forgive me, I was a little confused, but I think I got it now. So it's okay. All right. Maybe we can move on to a macro perspective. You mentioned the new elections in Mexico and then I think you mentioned softening new enrollment after the election. Speaker 400:17:26Can we give a little bit more color in terms of what's going on and why that was impacted so quickly? Speaker 200:17:33This is Eilif, Jeff. In an election year, typically in Latin America, there will be some additional government spending and some stimulus to drive up the economy in the election year and have more discretionary spend available for the consumers and the voters. And so, we saw that in second half of twenty twenty three and early twenty twenty four, that really helped us. We had really strong intake cycles with a point or 2 ahead of what we were expecting or what we normally have as we got a little bit of headwind from that. So that shifted some demand from that we otherwise would typically have seen in the main intake for September 2024 into earlier period. Speaker 200:18:28And also there is a sense among consumers that their available spend in the second half of twenty twenty four was a little lighter than what it had been in the prior 6 to 12 months. So that impacted us a little bit. Also, I would say some of the concerns related to the election and the judicial reforms that were implemented post election caused business sentiment to turn a little softer. Foreign investors foreign investments and overall CapEx spend among industry came down, which also made the consumer a little bit more concerned about making large commitments on big ticket items such as education. Speaker 400:19:21Okay, got it. If I could just sneak one more in and just keeping with the same theme. We saw an article that last week, Ms. Scheinbaum had proposed to create, I think it was 330,000 new university places in Mexico over the course of her presidency. The specific schools that she was talking about were non profit schools. Speaker 400:19:43Can we get a little bit more color? I don't know if it's just a proposal, is it something that will happen? And if it does, what do you think the impact will be on your schools? Thanks. Speaker 200:19:51So yes, this is a proposal, and we are waiting to see what will be incorporated of that proposal into the fiscal budget for 2025. And we will have visibility to that in late November, early December. But basically, the proposal is for the Sjogrenberg administration to expand access to public capacity. Correct, there's 330,000 seats over a 6 year period that represents a 10% increase in public capacity or less than 2% CAGR over the period. And that compares with market growth of about 2.5% to 3%. Speaker 200:20:35So it means that over the last couple of years, the Mexican public capacity has not really expanded. So most of the growth in the market has been absorbed by the private sector. And I know she intend to add capacity, albeit at slightly slower pace than overall market. Also, she is saying in her remarks, her administration is saying that they want to focus on underserved communities and rural areas, which then, of course, also would somewhat limit the overlap to the Laureate network as we are focused on the larger cities. And to illustrate that, the new campuses that they have announced for Universidad National and Rosaria Castellinhos, it counts for about 50% to 60% of the incremental capacity. Speaker 200:21:40And those campuses will be in areas where we don't have any presence. Speaker 400:21:47All right. I really appreciate the details on this. Thanks so much. Speaker 200:21:51Of course, Operator00:21:59Our next question will be coming from Lucas Ngannou of Morgan Stanley. Your line is open. Speaker 500:22:07Hey, good morning, Eilif, Rick, Adam. Thanks for the opportunity here. Two questions. The first one is related to the new guidance. If you could provide more color on where the operational upside comes from? Speaker 500:22:23And also second question is related to capital allocation. If you could give some color on the priorities in terms of capital allocation regarding the remaining free cash flow for this year, excluding the new buyback program? Thanks. Speaker 300:22:43Yes. Hi Lucas, good morning. So, this is Rick. Related to guidance, we adjusted as you saw the range, we shortened the range for both revenue and adjusted EBITDA and we ended up taking up the midpoint of revenues by $15,000,000 $6,000,000 of adjusted EBITDA. What was happening in that was effectively we flowed through the upside of revenue that we had in the Q3. Speaker 300:23:17We outperformed the high by about $6,000,000 and we're just annualizing that for the Q4 and taking the guidance up. That's point number 1. On adjusted EBITDA, we took it up as I noted. And then there were 2 things that happened. 1, primarily it was the flow through associated with that incremental revenue. Speaker 300:23:42Otherwise, we had around $10,000,000 of expense timing that shifted from Q3 to Q4 that happened. So that's the explanation behind the guidance. Speaker 200:23:59Okay. And your question on return of capital, we continue to focus on returning capital to shareholders. We have returned $2,800,000 to date. The $100,000,000 program that the board approved for stock repurchases in February was completed in September. In September, the board approved another $100,000,000 which we will be executing over the coming quarters. Speaker 200:24:42So that's the current status. When that $100,000,000 have been executed, we will have returned nearly $3,000,000,000 of capital, dollars 1,700,000,000 in cash distribution and dividends and dollars 1,300,000,000 in stock buybacks since 2019. Speaker 500:25:06Very clear, Alice, Maric. Thank you. Operator00:25:09Thank you. Speaker 200:25:10Thank you so much, Lucas. Operator00:25:13And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallLaureate Education Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Laureate Education Earnings HeadlinesWhat To Expect From Laureate Education’s (LAUR) Q1 EarningsApril 30 at 6:13 AM | msn.comDeputy Bureau Chief, Media, The Wall Street JournalApril 24, 2025 | wsj.comWhat if America bought gold like it used to?History Says Gold Wins When This Signal Flashes — and It’s Flashing Now Every time the Buffett Indicator has hit extreme levels, stocks have crashed — and gold has dominated the decade that followed. Today, the Buffett Indicator is at its highest reading in history… and Buffett himself is sitting on an unprecedented $325 billion cash pile. Sources say he’s preparing to deploy it — not into stocks, but into gold. Garrett Goggin has uncovered which gold company could be his next big move.April 30, 2025 | Golden Portfolio (Ad)6LAUR : Price Over Earnings Overview: Laureate EducationApril 24, 2025 | benzinga.comLaureate Education: An Impressive Turnaround Story But Price Doesn't Compensate For The Risk Associated With ItApril 22, 2025 | seekingalpha.comLaureate Education soars 47% following InvestingPro’s Fair Value analysisApril 18, 2025 | uk.investing.comSee More Laureate Education Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Laureate Education? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Laureate Education and other key companies, straight to your email. Email Address About Laureate EducationLaureate Education (NASDAQ:LAUR), together with its subsidiaries, offers higher education programs and services to students through a network of universities and higher education institutions. The company provides a range of undergraduate and graduate degree programs in the areas of business and management, medicine and health sciences, and engineering and information technology through campus-based, online, and hybrid programs. It also offers specialized courses for technical and vocational training; and senior high school. Its services are provides in Mexico, Peru, and the United States. The company was formerly known as Sylvan Learning Systems, Inc. and changed its name to Laureate Education, Inc. in May 2004. Laureate Education, Inc. was founded in 1989 and is headquartered in Miami, Florida.View Laureate Education ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Alphabet Rebounds After Strong Earnings and Buyback AnnouncementMarkets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial Earnings Upcoming Earnings Monster Beverage (5/1/2025)Airbnb (5/1/2025)Amazon.com (5/1/2025)Apple (5/1/2025)Atlassian (5/1/2025)Amgen (5/1/2025)Strategy (5/1/2025)Linde (5/1/2025)MercadoLibre (5/1/2025)ING Groep (5/1/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Q3 2024 Laureate Education Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Operator00:00:18You. Please be advised that today's conference is being recorded. I would now like to hand the call over to Adam Morris, Senior Vice President of Corporate Finance. Please go ahead. Speaker 100:00:37Good morning and thank you for joining us on today's call to discuss Laureate Education's Q3 2024 results. Joining me on the call today are Eilif Sarkansen, President and Chief Executive Officer and Rick Buskirk, Chief Financial Officer. 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 be referring to during today's call. The call is being webcast and a complete recording will be available after the call. Speaker 100:01:11I'd 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 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 ks filed with the U. Speaker 100:01:44S. Securities and Exchange Commission, our 10 Q filed earlier this morning, 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 including and among others, adjusted EBITDA and its related margin, total debt net of cash and free cash flow are also detailed and reconciled to their GAAP counterparts in our press release or supplementary presentation. Let me now turn the call over to Eilif. Speaker 200:02:25Thank you, Adam, and good morning, everyone. Today, we are pleased to report strong financial performance for the Q3, along with the results of our recently completed intake cycles. 3rd quarter revenue was $369,000,000 and adjusted EBITDA was $91,000,000 Both metrics were ahead of the guidance we provided in early August. Favorable results were driven by Peru, in which new enrollments increased by 12% year over year for the Q3. We expect that this growth rate will increase to an impressive 16% year over year upon completion of the intake cycle. Speaker 200:03:08The macro conditions in Peru continue to improve. Consumer spending has increased, supported by stable inflation, lower interest rates and rising wages. Economists are now forecasting GDP growth of approximately 3% for 2024, a significant turnaround since the 2023 recession. In Mexico, the presidential election took place this past June. In the run up to the elections, increased government spending and stimulus helped bolster demand for our Q1 new enrollment intake cycle, which was up 7%. Speaker 200:03:49Following the election, there was a pullback in economic activity that occurred during the Q3 intake. Despite these conditions, we still delivered solid results with new enrollment growth of 4% year over year for the Q3. As the Scheinbaum Administration settles in, we are closely observing its early handling of the constitutional reforms as well as key pillars of President Scheinbaum's policy agenda. We are cautiously encouraged by the early indications of Scheinbaum's policy priorities, which include enhanced fiscal discipline, modernization of industrial policies, investments in infrastructure development and public private collaboration, all of which we believe are important elements to create sustainable growth for the Mexican economy. The completion of our September October intake cycles provides us with strong visibility for the remainder of the year. Speaker 200:04:52Today, we are pleased to announce an increase in our constant currency outlook for 2024 at the midpoint by $15,000,000 for revenues and $6,000,000 for adjusted EBITDA. The improved operating performance is expected to be largely offset by currency headwinds from a weaker Mexican peso, allowing us to essentially maintain our full year outlook on an as reported U. S. Dollar basis. Our balance sheet remains exceptionally strong, and we are well positioned to continue delivering on our commitment to return excess capital to shareholders. Speaker 200:05:32Following the completion of the $100,000,000 stock repurchase program announced in February of this year, we introduced a new $100,000,000 authorization program in September. Assuming completion of this program, we will have returned nearly $3,000,000,000 of capital to shareholders since 2019 through a combination of share repurchases, cash distributions and cash dividends. That concludes my prepared remarks, and I'm now handing the call over to Rick for the financial overview for the quarter as well as 2024 outlook. Rick? Speaker 300:06:10Thank you, Eilif. As a reminder, campus based higher education is a seasonal business. Although the Q3 is a large intake period, from a P and L perspective, it is seasonally low as classes are out of session for much of the quarter. Let's start with Pages 1011 of the supplementary presentation, which highlight our operating and financial performance for the Q3 year to date. 3rd quarter revenue was $369,000,000 and adjusted EBITDA was $91,000,000 Both metrics were ahead of the guidance we provided in early August. Speaker 300:06:46Revenue outperformance resulted from the stronger than expected new enrollment intake in Peru. Adjusted EBITDA upside followed the revenue trend and was further aided by the deferral of certain costs to the 4th quarter as we opted to wait for the final intake results before committing those funds. On an organic constant currency basis, revenue for the Q3 was up 9% year over year and adjusted EBITDA increased by 22%, both benefiting slightly from academic calendar timing. Adjusting for timing of the academic calendar, the comparable growth for revenue and adjusted EBITDA was 7% and 15%, respectively. For the quarter, new and total enrollment volumes increased 6% and 5%, respectively, versus the Q3 of the prior year. Speaker 300:07:38Now moving to year to date performance. For the 1st 9 months of 2024, we achieved a 6% increase in revenue and 7% growth in adjusted EBITDA on an organic constant currency basis versus the prior year period. Adjusting for timing of the academic calendar, the comparable growth for revenue and adjusted EBITDA was 7% and 9%, respectively. Let me now provide some additional color on the performance of Mexico and Peru starting with Page 13. Please note that all comparisons versus prior year are on an organic and constant currency basis. Speaker 300:08:18Let's start with Mexico, where both our premium and value brand are contributing to revenue growth and improved levels of profitability. Mexico's new enrollments for the Q3 increased 4% year over year, led by growth in fully online programs focused on working adults. Upon completion of the intake cycle, we anticipate new enrollment growth of approximately 3% year over year or 4% when adjusted for the impact of campus closures. Pricing for the intake was slightly above our cost of inflation for both traditional face to face and fully online products. Total enrollments were up 7% versus September of the prior year due to the favorable primary intake last fall and growth in new enrollments. Speaker 300:09:05For the Q3, Mexico's revenue increased by 9% compared to the prior year due to strong volume growth and adjusted EBITDA increased by 2%. Both metrics were slightly aided by the timing of the academic calendar. On a year to date basis, revenue grew 9% or 10% when adjusted for timing of the academic calendar. This growth was driven by a 9% increase in average total enrollments and 1% of price mix effect. Inflation based pricing in our face to face offerings was offset by faster growth rates in our fully online products. Speaker 300:09:45Adjusted EBITDA increased 13% year to date versus the prior year period or 18% when adjusted for timing of the academic calendar resulting from revenue growth and productivity gains. Adjusted EBITDA margins in Mexico were up 130 basis points versus year to date prior year when adjusted for timing. We do anticipate additional margin accretion during the Q4 and are pleased with our progress to expand margins in Mexico to above 25% within our targeted mid range guidance period. Let's now transition to Peru on Slide 14. New enrollments in Peru increased by 12% for the Q3 compared to the previous year, and we expect that growth rate to increase to 16% through completion of the secondary intake cycle. Speaker 300:10:35The strong intake performance was driven by pent up demand from students who deferred during the previous intake cycle as well as strong growth in fully online as we continue to scale up that model. As a reminder, during the primary intake in March, we provided enhanced discounts and scholarships to support our students during a period of macroeconomic challenges. For the secondary intake, we were able to scale back those discounts given the macroeconomic recovery. As a result, pricing for our traditional face to face product was roughly in line with inflation, but we do expect a mix effect as we grew fully online programs faster than our face to face offerings. Total enrollments were up 3% versus September of the prior year, reflecting softer macroeconomic conditions experienced during the first half of twenty twenty four. Speaker 300:11:28For the Q3, the macroeconomic recovery drove revenue growth of 8% and a 23% increase in adjusted EBITDA. Both metrics benefited slightly from academic calendar timing. On a year to date basis, revenue grew 3% or 4% when adjusted for timing of the academic calendar, driven by a 2% increase in average total enrollment and 2% of price mix. Adjusted EBITDA was up 3% versus the prior year to date period. Slow through margin on revenue growth was offset by enhanced discounts and scholarships from the Q1 intake as well as higher levels of bad debt provisioning resulting from the softer macroeconomic conditions in the first half of the year. Speaker 300:12:15Adjusted EBITDA margins in Peru were at 39.7 percent for year to date September. We expect margins in the Q4 to be down slightly from that level due to the shifting of expense from the Q3 as discussed earlier. Let me now transition to discuss our balance sheet position. Laureate ended September with $134,000,000 in cash and $155,000,000 in gross debt for a net debt position of $20,000,000 Our strong balance sheet and cash flow generation supported our Board's decision to announce a new $100,000,000 stock repurchase program last month. Moving on to our updated outlook for the year starting on Page 18. Speaker 300:13:03Following the strong intake results, notably the double digit new enrollment growth in Peru, we are raising our constant currency guidance for full year 2024 at the midpoint by $15,000,000 for revenue $6,000,000 for adjusted EBITDA. As Iliff noted, this increased operating performance is expected to largely cover the currency headwinds, allowing us to essentially maintain our as reported U. S. Dollar full year outlook within a narrower range. The Mexican peso continued to decline during the Q3 and current spot FX rates are now approximately 11% weaker as compared to year to date average rates. Speaker 300:13:44Based on current spot rates, we now expect full year 2024 results to be as follows: total enrollments to be approximately 470,000 students, reflecting growth of approximately 5% versus 2023 revenues to now be in the range of $1,551,000,000 to $1,556,000,000 reflecting growth of 5% on an as reported basis and 7% on an organic constant currency basis versus 2023. Adjusted EBITDA to now be in the range of $447,000,000 to $451,000,000 reflecting growth of 7% to 8% on an as reported basis and 9% to 10% on an organic constant currency basis versus 2023. Now moving to Q4 guidance. For the Q4 of 2024, we expect revenue to be in the range of $408,000,000 to $413,000,000 adjusted EBITDA to be in the range of $138,000,000 to $142,000,000 Our 4th quarter outlook reflects the impact from 3rd quarter cost deferrals as well as timing of other revenue. That concludes my prepared remarks. Speaker 300:14:59Eilif, I'm handing it back to you for closing comments. Speaker 200:15:02Thank you, Rick. We believe that we are well positioned to meet our commitments to our stakeholders for 2024 with strong top line growth and continued margin expansion. The strong rebound we experienced in Peru and solid performance in Mexico during the intake cycles underscore the strength of our local brands and the resiliency of our business model. Operator, that concludes our prepared remarks and we are now happy to take any questions from the participants. Operator00:15:34Thank you. Our first question will come from Jeff Silber of BMO Capital Markets. Your line is open. Speaker 400:15:55Thanks so much. Can we just go back? Can you just quantify the timing impact that you mentioned in terms of revenues and adjusted EBITDA between 3Q and 4Q? Speaker 300:16:06Yes. Just to take a step back, Jeff, this is Rick. From a full year basis, we shifted effectively to $13,000,000 of revenue and $11,000,000 of EBITDA from the first half to the second half. We essentially in Q3 recovered $4,000,000 of that and rounded up around $4,000,000 a little less than that in adjusted EBITDA in the fourth in the Q3 and the remainder of that, which is, the remainder of that will come through in Q4. Speaker 400:16:42Okay. I'm sorry, I was a little bit confused. So there's not necessarily a timing issue between 3Q and 4Q. You're just revisiting the one half versus the second half timing. Is that correct? Speaker 300:16:53Yes. Well, dollars 13,000,000 of revenue and $11,000,000 of adjusted EBITDA was shifted from first half to second half and will recover that $13,000,000 of revenue that shifted out of the first half and the second half, dollars 4,000,000 of that revenue got recovered in Q3. Speaker 200:17:09So you have another $4,000,000 Speaker 400:17:12Forgive me, I was a little confused, but I think I got it now. So it's okay. All right. Maybe we can move on to a macro perspective. You mentioned the new elections in Mexico and then I think you mentioned softening new enrollment after the election. Speaker 400:17:26Can we give a little bit more color in terms of what's going on and why that was impacted so quickly? Speaker 200:17:33This is Eilif, Jeff. In an election year, typically in Latin America, there will be some additional government spending and some stimulus to drive up the economy in the election year and have more discretionary spend available for the consumers and the voters. And so, we saw that in second half of twenty twenty three and early twenty twenty four, that really helped us. We had really strong intake cycles with a point or 2 ahead of what we were expecting or what we normally have as we got a little bit of headwind from that. So that shifted some demand from that we otherwise would typically have seen in the main intake for September 2024 into earlier period. Speaker 200:18:28And also there is a sense among consumers that their available spend in the second half of twenty twenty four was a little lighter than what it had been in the prior 6 to 12 months. So that impacted us a little bit. Also, I would say some of the concerns related to the election and the judicial reforms that were implemented post election caused business sentiment to turn a little softer. Foreign investors foreign investments and overall CapEx spend among industry came down, which also made the consumer a little bit more concerned about making large commitments on big ticket items such as education. Speaker 400:19:21Okay, got it. If I could just sneak one more in and just keeping with the same theme. We saw an article that last week, Ms. Scheinbaum had proposed to create, I think it was 330,000 new university places in Mexico over the course of her presidency. The specific schools that she was talking about were non profit schools. Speaker 400:19:43Can we get a little bit more color? I don't know if it's just a proposal, is it something that will happen? And if it does, what do you think the impact will be on your schools? Thanks. Speaker 200:19:51So yes, this is a proposal, and we are waiting to see what will be incorporated of that proposal into the fiscal budget for 2025. And we will have visibility to that in late November, early December. But basically, the proposal is for the Sjogrenberg administration to expand access to public capacity. Correct, there's 330,000 seats over a 6 year period that represents a 10% increase in public capacity or less than 2% CAGR over the period. And that compares with market growth of about 2.5% to 3%. Speaker 200:20:35So it means that over the last couple of years, the Mexican public capacity has not really expanded. So most of the growth in the market has been absorbed by the private sector. And I know she intend to add capacity, albeit at slightly slower pace than overall market. Also, she is saying in her remarks, her administration is saying that they want to focus on underserved communities and rural areas, which then, of course, also would somewhat limit the overlap to the Laureate network as we are focused on the larger cities. And to illustrate that, the new campuses that they have announced for Universidad National and Rosaria Castellinhos, it counts for about 50% to 60% of the incremental capacity. Speaker 200:21:40And those campuses will be in areas where we don't have any presence. Speaker 400:21:47All right. I really appreciate the details on this. Thanks so much. Speaker 200:21:51Of course, Operator00:21:59Our next question will be coming from Lucas Ngannou of Morgan Stanley. Your line is open. Speaker 500:22:07Hey, good morning, Eilif, Rick, Adam. Thanks for the opportunity here. Two questions. The first one is related to the new guidance. If you could provide more color on where the operational upside comes from? Speaker 500:22:23And also second question is related to capital allocation. If you could give some color on the priorities in terms of capital allocation regarding the remaining free cash flow for this year, excluding the new buyback program? Thanks. Speaker 300:22:43Yes. Hi Lucas, good morning. So, this is Rick. Related to guidance, we adjusted as you saw the range, we shortened the range for both revenue and adjusted EBITDA and we ended up taking up the midpoint of revenues by $15,000,000 $6,000,000 of adjusted EBITDA. What was happening in that was effectively we flowed through the upside of revenue that we had in the Q3. Speaker 300:23:17We outperformed the high by about $6,000,000 and we're just annualizing that for the Q4 and taking the guidance up. That's point number 1. On adjusted EBITDA, we took it up as I noted. And then there were 2 things that happened. 1, primarily it was the flow through associated with that incremental revenue. Speaker 300:23:42Otherwise, we had around $10,000,000 of expense timing that shifted from Q3 to Q4 that happened. So that's the explanation behind the guidance. Speaker 200:23:59Okay. And your question on return of capital, we continue to focus on returning capital to shareholders. We have returned $2,800,000 to date. The $100,000,000 program that the board approved for stock repurchases in February was completed in September. In September, the board approved another $100,000,000 which we will be executing over the coming quarters. Speaker 200:24:42So that's the current status. When that $100,000,000 have been executed, we will have returned nearly $3,000,000,000 of capital, dollars 1,700,000,000 in cash distribution and dividends and dollars 1,300,000,000 in stock buybacks since 2019. Speaker 500:25:06Very clear, Alice, Maric. Thank you. Operator00:25:09Thank you. Speaker 200:25:10Thank you so much, Lucas. Operator00:25:13And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by