Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Laureate Education Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I‘d now like to hand the conference over to your first speaker today, Adam Morse, Senior Vice President of Corporate Finance. Please go ahead.

Good morning and thank you for joining us on today's call to discuss Laureate Education's second quarter 2024 results. Joining me on the call today are Eilif Serck-Hanssen, 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 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 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, adjusted EBITDA to unlevered free cash flow conversion, total debt, net of cash and cash equivalents, and free cash flow, are detailed and reconciled where applicable to their GAAP counterparts in our press release or supplementary presentation. Let me now turn the call over to Eilif.

Thank you, Adam, and good morning, everyone. Today, I'm pleased to report solid operating performance for the second quarter. We remain on track to deliver on our 2024 commitments on a constant currency basis. In addition, our strong balance sheet and significant cashflow generation support our continued emphasis on returning capital to shareholders. For the first six months of this year, we have repurchased over $72 million worth of shares. Later in our prepared remarks, Rick will discuss the impact from the recent weakening of the Mexican peso, which is causing us to make a slight downward adjustment to our outlook on a spot FX basis. The market dynamics remain favorable for private higher education in both of our geographies. Mexico continues to present a compelling growth story, driven by robust manufacturing and construction sectors, higher minimum wages, record low unemployment, and increased consumer spending. In addition, nearshoring is further bolstering growth prospects. Presidential elections were held during June in Mexico, and early indicators from the new administration are encouraging. The incoming Sheinbaum administration is emphasizing fiscal prudence, industrial policy, public-private collaboration, increased digitalization, and enhanced security as key pillars to strengthen the Mexican economy. The new president will assume office on October 1st. The market anticipates some possible foreign exchange volatility during the transition period, which we will be monitoring closely. Peru is already seeing a recovery from the economic downturn, which began last year. Peru's economy expanded more than expected for the second straight month in May, and both the central bank and the finance ministry are now expecting GDP growth of around 3% this year, compared to a 0.6% contraction last year. We anticipate this macroeconomic recovery to benefit our smaller secondary enrollment intake in September, and more fully get us back to normalized growth rates in 2025. Our growth agenda is supported by our leading brands and steadfast commitment to academic excellence and innovation. I'm proud to announce that recently, the UVM in Mexico was ranked the number two private university in the country in the latest Guía Universitaria rankings by Reader’s Digest. And in Peru, UPC was ranked the second-best institution in the country for human medicine by the Times Higher Education World University rankings, while maintaining its number one overall university ranking by MERCO. In addition, we are very proud and excited for the nine students and three graduates from UVM and UPC who are representing their countries at the Olympic and Paralympic games in Paris this summer. We wish them all the best, and I know they will represent their countries well, showcasing their dedication to sporting excellence on the international stage. I will now turn the call over to Rick Buskirk for a more detailed financial overview of the second quarter and year-to-date performance, as well as further details on our updated 2024 full-year outlook. Rick?

Thank you, Eilif. As a reminder, campus-based higher education is a seasonal business. Although the second quarter is not a large intake period, it represents a strong earnings quarter for the company, as classes are in session for much of the period. In addition, the timing of the start of our classes can shift year-over-year depending on various factors such as when holidays occur. This in turn affects the timing of revenue recognition and quarter-over-quarter comparability. In 2024, the beginning of classes for working adult programs in Peru and health science programs in Mexico, started later versus 2023. This will shift approximately $13 million of revenue and $11 million in adjusted EBITDA from the first quarter to the second half of the year. The second quarter was not affected on a consolidated basis. However, there were some minor timing impacts by segment that offset each other. I will provide additional details on the timing impacts as I discuss our operating results. Let me now move to second quarter performance, starting on Page 10. Following the trends we experienced in the first quarter, we continue to see strong growth in Mexico and resiliency in Peru. New and total enrollment volumes increase 6% in 5%, respectively, when compared to the prior year quarter, with growth led by Mexico. Revenue in the seasonally strong second quarter was $499 million, and adjusted EBITDA was $187 million. Both metrics were ahead of the guidance provided three months ago, with adjusted EBITDA outperformance aided by timing of expenses. On an organic constant currency basis, revenue for the second quarter was up 7% year-over-year, and adjusted EBITDA increased by 6%. When combined with the first quarter, on an organic constant currency basis, our overall performance for the first half of 2024 resulted in revenue and adjusted EBITDA…

Thank you, Rick. I remain confident as we enter the second half of 2024 and our next major enrollment intake cycle. Mexico continues to perform very well, and we are encouraged by the macro recovery we are seeing in Peru. We are in an enviable position as 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 see favorable sector growth momentum in both markets. This growth is driven by the expansion of the middle classes, which in turn is fueling the rising participation rates in higher education. We are well positioned to serve this growth, with five highly differentiated brands, all with leading positionings in the respective market segments. We continue to focus on product innovation through program expansions, the rollout of our digital product portfolio for working adults, as well as targeted campus expansions in new and adjacent cities. Additionally, our operating cadence, enabled by our best-in-class educational practices, has resulted in a profitable, sustainable, and capital-light business model with strong cash flow generation. I'm excited about our future. Operator, that concludes our prepared remarks, and we are now happy to take any questions from the participants.

[Operator Instructions] Our first question comes from the line of Lucas Dai Nagano of Morgan Stanley. Your line is now open.

Hey, all. Good morning, Eilif. Rick, Adam. Thanks for the space here. I have two questions. The first is related to the results versus the guidance in Q2. They were both the guidance, even with the impact on MXN and also the shift in academic calendar in Peru you mentioned. Can you give more color on what drove this this better-than-expected performance? And the second question is related to regulation in Mexico, with the government transition, what has been the new administration commented about private higher education? Do you expect any policy change, or should things stay similar to the current condition? Thanks.

Lucas, Rick will take the first question, and I'll address the Mexican regulations.

Sure. So, Lucas, on your first question about on the operational side, yes, we had a beat in the second quarter versus guidance. About 50% of that was operational-related, around $6 million on both sides of the revenue and the adjusted EBITDA front. On the revenue side, the outperformance was driven by lower intra-cycle attrition and some timing of other revenue. And on the adjusted EBITDA, that was aided by the timing of some of the expenses that shifted to Q3, including some lease exit costs. Those costs will shift to the third quarter and are reflected in our guidance for Q3, claims by Q3 is downplay year-over-year.

Hey, Lucas, can you hear us? We might have a technical issue here.

Yes, I can hear you.

Okay, perfect. Thank you. Continue, Rick.

Lucas, I'll pause there and see if that addressed your questions.

Yes, that helps.

Thank you. Go ahead, Eilif.

Great. Then moving on to the Mexican regulation, let me just give you some context. For the presidential - president-elect Sheinbaum, and the Morena Party, won decisive victories during the elections in June. And the market was surprised by the magnitude of Morena's victory, which is opening up for the possibility of judicial reform that AMLO has advocated for. And in summary, that is the reason why the Mexican peso has weakened by about 8% since the election. That said, moving on to your specific questions around policy priorities, Laureate is very encouraged by the messaging that we have heard from president-elect Sheinbaum post-election. She has emphasized the following four key policy priorities for her presidency. Number one is fiscal prudence, with a goal to reduce the 2025 budget deficit to 3% of GDP from currently 5.5% to 6% deficit in 2024, which means that her ability to spend on public programs are going to be limited, and we believe that that is going to cause a strong collaboration with private operators, including in higher education. Second priority is to modernize her industrial - modernize Mexico's industrial policies. And clearly there, it looks like she wants to take advantage of the nearshoring opportunity and lift the growth rate for the Mexican economy, which is very encouraging for many sectors, including the education sector, of course, because to enable that, the human capital equation is critically important. Thirdly, she has made a strong statement to strengthen the public-private collaboration in key sectors such as energy and infrastructure. And I think the partnership that the Mexican government has had with education providers over the last several years, could be a very good module as she extends that public-private collaboration. And then last but not least, she's very focused on enhancing security and strengthening law and order, which is going to be a very important enabler for foreign investments into Mexico. So, in summary, Laureate believes that the quality private higher education players like Laureate, can and will play a major role in the execution of these policy priorities. We look forward to be working with the Sheinbaum administration, and we remain committed to expanding access to quality, affordable, higher education, which will significantly contribute to the modernization and the growth of the Mexican economy. I'll pause there and see if that addressed your question.

Yes, that's very clear.

[Operator instructions] I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.