Laureate Education, Inc.

Good day, and thank you for standing by. Welcome to the Laureate Education first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll 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 11 again. 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.

Good morning, and thank you for joining us on today's call to discuss Laureate Education's first quarter 2024 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've 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 but not limited to, our financial and operational guidance constitutes four looking statements within the meaning of applicable U.S. securities laws. Forelooking 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 date 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 Ilas.

Thank you, Adam, and good morning, everyone. We recently completed our enrollment intake for the first quarter, which includes the primary intake cycle for Peru and a smaller secondary intake for Mexico. Enrollment results came in line with expectations, and we are on track to deliver on our operational outlook for the year. In addition, foreign currency rates continue to trend favorable. As a result, we are announcing an upward revision to our full year 2024 guidance by $13 million for revenues and $5 million for adjusted EBITDA. As discussed during our previous call in February, we expect 2024 to be a story of two halves due to the differing market conditions in Mexico versus Peru. The macroeconomic backdrop in Mexico is favorable, with robust manufacturing and construction sectors, growth in real wages, increased consumer spending, and the impact of nearshoring bolstering growth prospects. We expect Mexico to deliver strong performance throughout all of 2024. To accelerate our margin progression in this market, we are implementing strategic restructuring initiatives in the first half of the year. As a result, we expect our margin expansion to be more back-end loaded towards the second half of 2024. The market conditions in Peru are softer than those in Mexico. During 2023, Peru experienced its first economic contraction in over 20 years outside of the COVID-19 pandemic. And this economic downturn had lingering effects through the first quarter of this year. This resulted in a relatively flat primary enrollment intake for both volume and pricing, which was in line with our expectations. Given that the primary intake cycle in Peru contributes roughly two-thirds of the new enrollment activity for the year, we expect this primary intake to mute our growth aspirations for Peru for most of 2024. However, like most economists, we continue to anticipate an economic recovery in Peru during the second half of 2024. That recovery should begin to benefit us in the fourth quarter, following Peru's smaller intake in September. As we move into 2025, we do expect to return to higher growth rates that is more aligned to our targeted 8% to 10% top-line growth profile. We are the leading higher education company in Mexico and Peru, which we believe to be the two most attractive private education markets in Latin America. We continue to receive favorable sector growth momentum in both these markets. This growth is driven by the expansion of middle class, which in turn is fueling the rising participation rate in higher education. As the largest private higher education operator in Mexico and Peru, we are well positioned to serve this growth. We have five institutions positioned at differentiated levels in the education spectrum, all with leading brand positioning in their respective markets. Our institutions enable affordable, high-quality education through an innovative mix of face-to-face, hybrid, and fully online delivery mode, with a strong emphasis on health sciences, STEM, and business courses. And we continue to focus on product innovation through program extensions, the rollout of our digital product portfolio for working adults, as well as targeted campus expansion in new and adjacent markets. Our predictable revenue stream is supported by an average program length of four years, stable retention levels, and a private pay model. Additionally, our operating discipline, supported by our omnichannel distribution capabilities, has resulted in a robust, profitable, and capital-light business model with strong cash flow generation. Our future has never been brighter. On April 1st, we celebrated Laureate's 25th anniversary. Throughout the past 25 years, we have positively influenced millions of lives and broadened access to quality higher education. My sincere gratitude goes out to all faculty and staff, past and present, who have played a significant role in our success. As we look forward, we recognize the opportunity to build upon this legacy and further the positive impact we have on society for many more decades to come. I encourage you to visit our website and download a copy of our recently published 2023 Impact Report. Here you can learn more about the outstanding work our students, faculty, and institutions are currently doing in their communities throughout Mexico and Peru. Just to touch on a few highlights, UVM and Unitec have both been recognized as socially responsible companies by the Mexican Center for Philanthropy for the 15th and the 14th consecutive year, respectively. UPC was rated the most sustainable university in Peru, according to the 2023 Merco ESG Responsibility Ranking, which evaluates Latin America's top 100 sustainable companies based on environmental, social, and corporate governance criteria. UPN was recognized as a top six university for environmental sustainability in Peru, by the inter-university environmental network based on UPM's implementation of sustainable practices and policies. In addition to our success at the institution level, our students across both Mexico and Peru continue to meaningfully impact their communities in 2023 by contributing over one million volunteer service hours. In Mexico alone, we provided essential medical and dental services to 168,000 community members. Meanwhile, in Peru, our health clinic provided 189,000 hours of free or low cost medical and dental care to members of our communities that otherwise would not have had access to affordable quality health care. I am so proud to be part of L'Oréal and to have colleagues who care so deeply about expanding the middle classes in Mexico and Peru by providing quality higher education at affordable prices. This concludes my prepared remarks, and I will now turn the call over to Rick Boskirk for a more detailed financial overview of our first quarter performance, as well as further details on our 2024 full-year outlook.