Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How is the economic environment in Mexico affecting Laureate Education, and what are the expectations for GDP growth? A: Eilif Serck-Hanssen, President and CEO, explained that while Laureate is not directly impacted by geopolitical discussions around tariffs and trade, economic conditions do influence their business. The GDP growth slowed from 3% to 1% in the latter half of the year due to reduced foreign direct investment. The guidance for 2025 is based on a 1% GDP growth, with expectations of volatility due to ongoing trade discussions. The company is more optimistic about 2026 and beyond.
Q: Can you provide more details on Laureate's capital allocation policy and plans for returning excess capital to shareholders? A: Eilif Serck-Hanssen stated that Laureate aims for a 50% free cash flow conversion on an unleveraged basis. After supporting business growth with around 5% of revenues in CapEx, 50% of the unleveraged free cash flow will be returned to shareholders. This reflects a commitment to returning capital while supporting growth.
Q: What is the expected tax rate for Laureate Education moving forward? A: Rick Buskirk, CFO, noted that the effective tax rate was around 29% on a reported basis. After adjusting for non-cash FX gains and a discrete tax item, the run rate is expected to be below 40%.
Q: How is the enrollment outlook in Peru, and what are the expectations for the primary intake? A: Eilif Serck-Hanssen mentioned that the main intake in Peru is progressing well, with GDP growth expectations of over 3% for 2025. However, there are lingering effects of the recession, particularly in the price-sensitive value segment.
Q: What are the financial expectations for 2025 in terms of revenue and adjusted EBITDA? A: Rick Buskirk provided guidance for 2025, expecting total enrollments to grow by 4% to 5%, with revenues ranging from $1.545 billion to $1.570 billion. Adjusted EBITDA is projected to grow by 4% to 6% on a reported basis, with margins expected to increase by approximately 150 basis points.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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