Laureate Education, Inc.

Good day, ladies and gentlemen, and welcome to the third quarter 2021 Laureate Education, Inc. Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. To ask a question, you will need to press star, then one on your telephone. As a reminder, this conference is being recorded. I would now like to hand the conference over to Adam Morse, Senior Vice President of Finance. You may begin.

Good morning, and thank you for joining us on today's call to discuss Laureate Education's third quarter 2021 results. Joining me on the call today are Iliff Sarkanson, 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'll be referring to during today's call. The call is being webcast, and a complete recording will be available after the call. I'd like to remind you that some of the information we are providing today, including, if 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 cause actual results to differ materially from our expectations are disclosed in our annual report on Form 10-K filed with the U.S. 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-GAP measures that we discuss, including, and among others, adjusted EBITDA and its related margin, total cash net of debt, and free cash flow, are also detailed and reconciled to their GAP counterparts in our press release or supplementary presentation. With that, let me turn the call over to Eilidh.

Eilidh Eilidh Thank you, Adam, and good morning, everyone. The growth agenda we initiated during the first half of the year is taking hold and driving strong results. We have just completed our large September intake cycle, and new enrollment growth was robust, increasing 17 percent for the third quarter versus prior year. Total enrollment of 390,000 students were up 16% year over year, which today puts us at 5% greater volume than our pre-pandemic levels on September 30, 2019. In Mexico, new enrollments were up 11% versus third quarter of 2020, making a strong return to growth during their primary intake cycle. In Peru, the momentum we experienced in the first half of the year continues, with new enrollments increasing 35% versus prior year during their smaller secondary intake. These intake results demonstrate the remarkable resiliency of our business model. The strong operating performance during the third quarter saw financial results come in ahead of our expectations, which in turn led us to raise our guidance for the full year 2021. Let me now provide a brief recap of our portfolio transformation and related balance sheet actions. During the third quarter, we completed the divestiture of Walden University. On October 29th, we returned $1.3 billion of capital to our shareholders while maintaining a performer net cash position of over $400 million. The divestiture actions we undertook over the past several years drove significant value creation for shareholders. The board and the management team remain committed to continue closing the gap between the intrinsic value of our assets and the trading value of our stock. We believe the best way to create additional shareholder value is to lift our revenue trajectory through a highly focused set of growth initiatives underpinned by the favorable secular trends for higher education in our markets, including the acceleration of digital learning. What I like to call new laureates is now a strong and focused leader in higher education in Spanish-speaking Latin America. We intend to take advantage of our unparalleled market position with our leading brands, best-in-class digital learning assets, and hard to replicate physical footprints in both Mexico and Peru. As a result, we expect to accelerate our top line growth from the mid single digits to high single digits or even into double digits in the coming years. L'Oréal has gone through a substantial transformation in recent years. We have focused our operations, we have paid on our debt, and significantly increase both our margins and free cash flow generation. Since this transformation has attracted the interest of new investors, let me briefly remind you of the market dynamics of higher education in Mexico and Peru. Both countries are large and attractive markets with a combined population of more than 160 million people. Participation rates are growing but still well below the levels we see in developed markets, thus providing significant headroom for growth. The regulatory conditions are clear and very conducive to private participation in higher education in both Mexico and Peru. Over half the student population in the combined market is served by the private sector, and L'Oreal is a quality operator at scale with approximately 200,000 students in each country. We own the leading brands in both Mexico and Peru, and our institutions are among the most highly reputed universities in the respective markets. L'Oreal has also become the digital leader in higher education in Mexico and Peru. Over the past five years, we have made significant investments in technology and digital capabilities three pandemic 27 of our teaching hours were delivered online through the pandemic 100 of our teaching was delivered online in a very robust and content-rich environment post-covered normalization We anticipate our digital teaching hours to be around 40 to 60% across all our institutions in Mexico and Peru, thus bringing up significant campus capacity for future growth in the traditional undergraduate face-to-face segment. Consequently, our near-term and medium-term growth prospects, as outlined on slide number 10, are expected to be fueled by a robust post-COVID recovery as well as growth in online offerings and accelerated new program launches at our existing campuses. Finally, let me remind you that the digital enablement of L'Oréal has made our growth agenda much more capital efficient. Our business model is cash-incretive, and any investments in growth will be fully funded by internally generated free cash flows. I continue to be very encouraged by L'Oréal's future prospects. We have the right management team, the best brands, and a powerful online channel distribution network that we believe will allow us to lift our revenue growth rates and further our vision to transform the lives of students and the communities in Mexico and Peru by providing increased access to affordable, quality education. I will now turn the call over to Rick Buskirk for a more detailed financial overview of the third quarter and year-to-date performance, as well as our upgraded guidance outlook. Rick?