LAUREATE EDUCATION, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a strong year with robust operating results, margin profile at new historic high, and over $100 million returned to shareholders. Ended 2024 essentially net debt free.
• Strengthened academic offering in 2024 with opening of six new medical schools, two new dental schools, and one new veterinary school in Mexico and Peru. All universities in Mexico and Peru achieved five-star ratings from QSR for second consecutive year. In Peru, UPC was ranked number 1 education brand for fourth consecutive year. In Mexico, UVM was ranked number two best private university.
• 2025 plans include building and outfitting four new campuses for value brands, two to open during 2025. Continued investment in digital education. Cautiously optimistic about growth in local markets despite geopolitical uncertainties in Mexico and economic recovery in Peru.

Segment Performance

• Mexico: Fourth quarter revenue increased 15% compared to prior year period, adjusted EBITDA up 29% year-over-year. Full year 2024 revenue growth of 10% was driven by an 8% increase in average total enrollments and 2% of price/mix. Adjusted EBITDA increased 19% in 2024 versus prior year period, expanding margins by 176 basis points to 24.5%. New enrollments increased 4% for the year, led by growth in fully online programs.
• Peru: Fourth quarter revenue growth was 5%, but adjusted EBITDA declined 9% year-over-year primarily due to cost deferral from third quarter and higher bad debt. Full year 2024 revenue in Peru increased 4% over prior year, driven by a 2% increase in average total enrollments and 2% of price/mix. Adjusted EBITDA decreased 1% for the year with decline in margins.

Guidance

• Full year 2025 total enrollments expected to be in range of 489,000 to 495,000 students, reflecting 4% to 5% growth vs 2024. Revenues expected in range of $1.545 billion to $1.570 billion, flat to down 1% as-reported but 6% to 7% organic constant currency growth vs 2024. Adjusted EBITDA expected in range of $467 million to $477 million, 4% to 6% as-reported growth and 11% to 13% organic constant currency growth vs 2024. First quarter 2025 revenue expected between $221 million and $226 million, adjusted EBITDA between negative $7 million to negative $4 million.

Risks

• Foreign currency translation headwinds due to expected volatility in Mexican peso. Geopolitical uncertainties in Mexico, including tariff threats and trade complications, creating economic uncertainty. Lingering effects of recession in Peru affecting the price-sensitive value segment.

Question and Answer

• Q: Jeff Silber with BMO Capital Markets asked about Mexico's economic environment uncertainty and impact on enrollments: **A: Eilif Serck-Hanssen responded that they are a local business not directly impacted by tariffs, but weaker economic times with slow GDP growth can slow consumer discretionary, though they have a strong value proposition.
• Q: Lucas Nagano with Morgan Stanley asked about tax rate and Peru intake: A: Rick Buskirk said the book effective tax rate was around 29% but adjusting for non-cash FX gain loss and discrete tax item, run rate is below 40%. Eilif Serck-Hanssen noted Peru's market is improving with robust GDP expectations, but some lingering effects of recession in price-sensitive value segment remain