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Laureate Education (LAUR) 1 Aug 24 2024 Q2 Earnings call transcript
AInvestThursday, Aug 1, 2024 10:07 pm ET
2min read
LAUR --

Laureate Education, a leading private higher education provider in Latin America, recently held its second quarter earnings call for 2024. The call, led by Senior Vice President of Corporate Finance, Adam Morse, featured presentations from President and CEO, Eilif Serck-Hanssen, and Chief Financial Officer, Richard Buskirk. The call provided valuable insights into the company's operational and financial performance, as well as its strategic outlook for the future.

Financial Performance and Outlook

Eilif Serck-Hanssen began the call by highlighting the solid operational performance in the second quarter, with the company remaining on track to deliver on its 2024 commitments on a constant currency basis. The company's strong balance sheet and significant cash flow generation support its continued emphasis on returning capital to shareholders. In the first six months of the year, Laureate repurchased over $72 million worth of shares.

Market Dynamics and Growth Prospects

The CEO noted that the market dynamics remain favorable for private higher education in both Mexico and Peru. In Mexico, the robust manufacturing and construction sectors, higher minimum wages, record-low unemployment, and increased consumer spending have presented a compelling growth story. The recent presidential elections in Mexico have also shown encouraging signs with a new administration emphasizing fiscal prudence, industrial policy, public-private collaboration, increased digitalization, and enhanced security.

In Peru, the economy is recovering from a downturn, with the Central Bank and Finance Ministry expecting a 3% GDP growth this year compared to a 0.6% contraction last year. Laureate anticipates this macroeconomic recovery to benefit its smaller secondary enrollment intake in September and return to normalized growth rates in 2025.

Financial Details and Guidance

Richard Buskirk provided a detailed financial overview of the second quarter and year-to-date performance. He noted that the company's revenue for the second quarter was $499 million, and adjusted EBITDA was $187 million, both metrics being ahead of the guidance provided three months ago. The second quarter, not affected on a consolidated basis, saw a shift of approximately $13 million of revenue and $11 million in adjusted EBITDA from the first quarter to the second half of the year due to the timing of the start of classes.

For the third quarter of 2024, Laureate expects revenue to be in the range of $358 million to $362 million and adjusted EBITDA of approximately $69 million to $73 million. The company expects significant margin expansion during the second half of 2024 compared to the prior year, driven by the return of growth in Peru and the recognition of benefits from continued operating efficiency initiatives.

Regulation and Policy

When asked about regulations in Mexico and the government transition, Eilif Serck-Hanssen expressed optimism about the incoming Sheinbaum administration's policy priorities, including fiscal prudence, industrial policy, public-private collaboration, increased digitalization, and enhanced security. He believes that private higher education players like Laureate will play a major role in the execution of these policy priorities and remains committed to expanding access to quality affordable higher education, contributing significantly to the modernization and growth of the Mexican economy.

In conclusion, Laureate Education's second quarter earnings call provided a comprehensive update on the company's operational and financial performance, as well as its strategic outlook for the future. With a solid performance in the second quarter and a positive outlook for the remainder of the year, Laureate is well positioned to continue its growth trajectory in the attractive private education markets of Mexico and Peru.

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