Laureate Education, Inc.

Good day and thank you for standing by. Welcome to the third quarter 2023 Laureate Education Inc. Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. 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, Finance. Please go ahead.

Good morning, and thank you for joining us on today's call to discuss Laureate Education's third quarter 2023 results. Joining me on the call today are Alex 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 will 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, 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-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 day of this conference call, and we undertake no obligation to update any forward-looking statements. Additionally, non-GAAP measures that we discuss including, 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 Eilidh.

Thank you, Adam, and good morning, everyone. Today, we are pleased to report strong financial performance for the third quarter. along with the results from the recently completed primary enrollment intake for Mexico and the smaller secondary intake for Peru. Third quarter revenue was $362 million and adjusted EBITDA was $78 million. Both metrics were in line with the guidance range we provided during the second quarter earnings call. For Mexico's primary enrollment intake, New enrollments grew 4%, and that's on top of the 17% increase we achieved during the prior year's intake, which benefited somewhat from the COVID recovery volumes. We are very pleased with the enrollment performance in Mexico and the momentum we are experiencing in that market. We are seeing strong performance across both brands, as well as our face-to-face and fully online delivery mode. Over the past two years, new enrollment in Mexico has increased over 20% during the primary intake. For Peru's smaller secondary intake, new enrollments increased 2% as compared to prior year. As a reminder, Peru's primary intake occurred earlier this year in March, and their next large enrollment cycle will take place during the first quarter of 2024. In Mexico, we're experiencing favorable macroeconomic trends. This year's GDP growth has been upward revised by the IMF to 3.2%, a notable improvement from the initial expectations at the beginning of the year. And this increased growth has been driven really by two factors. First and foremost, increased private consumption, and secondly, from early investments relating to the nearshoring trends. The nearshoring opportunity has contributed to over 40% year-to-date growth in direct foreign investment into Mexico. And Mexico has now overtaken China as the largest trading partner of the United States. We believe that higher education will be a sector that benefits from nearshoring, as employers in Mexico will require reskilling and upskilling of their labor force. And we believe that Laureate is well positioned to capitalize on this opportunity. Specifically, we are the largest private operator of higher education in Mexico with an extensive suite of STEM and business degree program offerings, as well as a large portfolio of short courses. Further, inflationary pressures have subsided in Mexico. The inflation rate is nearly half of what it was last year, dropping from a high of 8.7% in September of 2022 to the current rate of approximately 4.5%, marking eight consecutive months of declining inflation. Overall, we're very positive on the operating environment in Mexico, and our business is performing very well. Peru's economic landscape currently reflects a more subdued environment compared to Mexico. It is not anticipated that Peru's GDP for 2023 will experience a slight contraction impacted by a series of events, including political disruption and severe weather. This has led to some pressure on the consumer, with families and students taking a cautious approach to spending. During the recent secondary intake, we did observe an increase in students pausing their studies. But overall, families and students continue to prioritize educational spending due to the strong economic incentives from having a university degree. In Peru, like Mexico, inflation has improved, falling for eight consecutive months to 5% in September. While this is a positive trend, the inflation rate remains above the 3% stated target level. Most economists are predicting a return to positive GDP growth in 2024. Despite the challenges in the Peruvian market throughout 2023, our business model has performed well with continued growth in enrollments and revenues. This resiliency underscore the strength of our brands and product offerings in Peru. The completion of the third quarter intakes in Mexico and Peru give us high visibility for the balance of the year. We are pleased to reaffirm our constant currency revenue and adjusted EBITDA outlooks for the full year 2023 within the previously guided range. Later in our prepared remarks, Rick will provide more details on the updated guidance, including the impact from foreign currency rates, which have weakened a bit in the past few months. We are also pleased to announce today a special cash dividend of 70 cents per share, or approximately $110 million, to be paid on November 30th. Having just completed the enrollment intake, ANRWA is seasonally high cash flow third quarter, we are well positioned to continue our track record of returning capital to our shareholders, a priority for our organization. That concludes my prepared remarks. Over to you, Rick, for the financial overview of the quarter and full year 2023 outlook.