Hello, and welcome to Laurean Education Third Quarter 2026 Financial Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will 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. I would now like to turn the call over to Adam Morse, You may begin.

Good morning, and thank you for joining us on today's call to discuss Laureate Education's third quarter 2026 results. Joining me on the call today are Eilif Serck-Hanssen, President and Chief Executive Officer, and Rick Buskirk, Chief Financial Officer. Earnings press release is available on the Investor Relations section of our website at laureate.net. We have 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 would 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 cause actual results to differ materially from our expectations are disclosed in our annual report on Form 10-K, followed 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 and among others, adjusted EBITDA and its related margin, adjusted net income, and adjusted earnings per share, total debt and of cash and equivalents, 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 Eilif.

Thank you, Adam, and good morning, everyone. Today, we are pleased to report strong financial performance for the third quarter, along with the results of our current intake cycle. Third quarter revenue was $485 million, and adjusted EBITDA was $147 million. Both metrics were ahead of the guidance we provided three months ago, aided by favorable foreign exchange rate. In Mexico, the primary intake is largely completed with new enrollment growth of 8% versus comparable intake period last year, driven by a very successful launch of our new campus in Puebla, as well as continued growth in existing campuses and online. In Peru, we are seeing a 9% increase year-over-year in new enrollments during the secondary intake, which will be fully completed in November. Our Peru intake benefited from our leading fully online capabilities, which generated strong demand from working adult students. The strong results from our combined intake cycles confirm the three main growth levers in our business and that they are all working well. These three growth drivers are, number one, same-store growth enabled by rising participation rates and market share gains. and secondly, new campus expansions in new zip codes and new cities in Mexico and Peru. And thirdly, our rapidly scaling fully online portfolio for working adult learners. Since the start of 2025, we have opened three new campuses and we expect two additional campuses opening in 2027. Our Southern Lima campus remains on track to open in the first quarter, followed by our new Mexican campus in Merida, which is expected to open prior to the September 2027 main intake. Beyond these projects, we have a strong multiyear pipeline of attractive campus expansion opportunities across Mexico and Peru. And we have already secured multiple sites to support future growth and expect to accelerate our new campus openings in 2028. During our next earnings call, we will provide some additional details on the pipeline and its deployment cadence going forward. Upon completion of this intake cycle, we have good visibility into the remainder of the year, as well as the jump-off point for 2027. That gives us the confidence to reaffirm the full year guidance expectations and announce an additional $150 million increase to our stock repurchase program reinforcing our disciplined capital allocation strategy and commitment to long-term shareholder value creation. Let me now provide some color on the geopolitical and macro conditions in our markets. Mexico's economy continues to show signs of improvement during 2026. The second quarter GDP grew by 2.1% year over year, the strongest gain since 2024, supported by broad-based growth across industrial production, services, and agriculture. And importantly, foreign direct investment hit a record level for the first half of this year, highlighting the renewed confidence in Mexico's role as the preferred supply chain partner to the United States. While conditions are improving, and, in line with our expectations for the second half of 2026, overall economic growth in Mexico continues to be below its full potential. In the medium to long term, we remain confident that Mexico's deep integration with the U.S. economy will provide attractive structural growth opportunities for the Mexican economy. In Peru, President Keiko Fujimori's election win provides greater clarity on economic policy, which now focuses on reducing red tape, increasing investments in core industries, and lifting the growth rate for the economy. Strong domestic demand, large investment into the mining sector, and elevated commodity prices further support Peru's momentum of GDP growth above 3%. As for Peru's El Niño preparedness, the country has drawn lessons from previous events and is today better prepared than during past extreme weather occurrences. The government has improved their forecast capabilities and increased investments in storm and flood mitigation activities, including river dredging and drainage systems. Further, L'Oréal's ability to deliver high-quality hybrid and online learning should help to partly mitigate the potential disruption to our operations during the peak of the El Niño event forecasted to take place between November 2026 and February 2027. In summary, Peru's solid fundamentals continue to support our bullish medium and long-term growth outlook for the country. That concludes my prepared remarks, and I'm now handing the call over to Rick for the financial overview for the quarter, as well as more details on our outlook. Rick?

Thank you, Eilif. Before I discuss our financial performance for the quarter, let me provide a few important reminders on seasonality. Campus-based higher education is a seasonal business. Although the third quarter is a large intake period, from a P&L perspective it is seasonally low as classes are out of session for much of the quarter. In addition, the timing of the start of our classes can shift year over year depending on various factors such as when public universities begin classes or when holidays occur. This in turn affects the timing of enrollments and revenue recognition and quarter over quarter comparability. In terms of seasonality for 2026, We have some intra-year calendar timing impacts, as outlined on slide 21 in our presentation. As I review our operating results, I will provide additional color on these timing-related impacts. Let's start with pages 10 and 11 of the supplementary presentation, which highlight our third quarter and year-to-date operating and financial performance. New and total enrollment volumes increased 8% and 6%, respectively, for the current intake cycle versus the comparable intake period in the prior year. Growth from new campuses contributed approximately 2% to our overall new enrollment growth and 1% to our total enrollment growth. Third quarter revenue was $485 million and adjusted EBITDA was $147 million. Strong new enrollment intakes in both markets drove favorable results for the quarter. We also benefited from $29 million of foreign currency impact on revenue, reflecting a stronger Mexican peso and Peruvian sol during the period. On a constant currency basis and adjusted for the academic calendar shift discussed earlier, revenue for the seasonally low third quarter was up 6% year-over-year and adjusted EBITDA increased by 14%. Third quarter net income was $101 million, resulting in earnings per share of 73 cents per share on a reported basis. Third quarter adjusted net income was $72 million, and adjusted earnings per share was 52 cents per share, an increase of 100% as compared to Q3 of the previous year. Growth was aided by earnings momentum and favorable intra-year academic calendar timing. Now turning to year-to-date performance. On a constant currency basis and adjusted for academic calendar timing, results for the first nine months of 2026 were strong, with revenue and adjusted EBITDA growth of 7% and 9% respectively versus the prior year period. Let me now provide some additional color on the performance of Mexico and Peru, starting with page 13. Please note that all comparisons versus prior year are on a constant currency basis. Let's start with Mexico. Mexico's new enrollments for the primary intake grew 8% versus the prior year intake period with strong growth in face-to-face enrollments. As Eilif noted earlier, our new campus opening in Puebla is performing ahead of expectations and as a result contributed approximately 3% to Mexico's year-over-year intake performance. Pricing for the intake was in line with our cost inflation for our traditional face-to-face and online programs. Total enrollment volume increased by 5% versus the comparable intake period in the prior year. Adjusted for timing of the academic calendar, Mexico's revenue for the third quarter grew 6% year-over-year, and adjusted EBITDA increased 12%. As discussed on prior calls, we expect Mexico's margin accretion in 2026 to be weighted toward the second half of this year. On a year-to-date basis and adjusted for timing of the academic calendar, Mexico's revenue grew 6%, resulting from a 4% increase in average total enrollments and price mix, and adjusted EBITDA increased by 3%, reflecting the timing of investments and the ramp up of our new Puebla campus. Let's now transition to Peru on slide 14. Peru's secondary new enrollment intake grew 9% versus the prior year intake period, driven by fully online programs as we continue to leverage our leading digital capabilities to meet growing market demand for working adults. Our rapid growth in fully online is creating price mix We expect this impact to persist into next year. Total enrollments were up 5% versus the prior year intake period, supported by new enrollment growth and the expansion of our fully online programs. Adjusted for timing of the academic calendar, Peru's revenue for the third quarter grew 6% year over year, driven by higher enrollment volumes, and adjusted EBITDA increased by 15%. On a year-to-date basis and adjusted for timing of the academic calendar, Peru's revenue increased 7% versus the prior year period. Adjusted EBITDA was up 14% and was impacted by the timing of certain expenses which are expected to normalize in the fourth quarter. Let me now transition to our balance sheet. Our balance sheet remains strong. Laureate ended September with $204 million in gross debt and $190 million in cash for a net debt position of $14 million. Through September, we repurchased $256 million of common stock under our previously announced share repurchase program, including $75 million of repurchases in the third quarter. Today we announce that our board has authorized an additional $150 million increase to our share repurchase program. In total, as of September 30th and pro forma for this increased authorization, $225 million remains available under the upsized authorization. Upon completion of this full execution, we will have returned More than $3.5 billion of capital to shareholders since 2019 through a combination of share repurchases, cash distributions, and cash dividends. Moving on to our outlook starting on page 18. As Eilif noted earlier, we recognize favorable foreign currency impacts in our third quarter results versus expectations. Since that time, both the Mexican peso and Peruvian Sol have weakened against the dollar, essentially giving back the FX upside from our third quarter. Despite the recent weakening of the currencies, we are pleased to reaffirm our full year guidance for 2026, which is as follows. Total enrollments to be in the range of 518,000 to 523,000 students, reflecting growth of 4% to 5% versus 2025. Revenues to be in the range of $1.92 billion to $1.93 billion, reflecting growth of 13% on an as reported basis and growth of 6% to 7% on a constant currency basis versus 2025. Adjusted EBITDA to be in the range of $593 million to $599 million, reflecting growth of 14% to 15% on an as reported basis and 8% to 9% on a constant currency basis versus 2025. This would result in an increase in adjusted EBITDA margins of approximately 50 basis points at the midpoint of guidance on a reported basis. For 2026, adjusted EBITDA to unlevered free cash flow conversion of approximately 50% on a reported basis, supporting our continued emphasis on return of capital to shareholders. Lastly, adjusted earnings per share guidance for 2026 is expected to be in the range of $2.04 to $2.10 per share, reflecting growth of 19% to 22% versus 2025 on a reported basis. This outlook assumes a weighted average share count of approximately 139 million shares. Now moving to fourth quarter guidance, which includes an expected $20 million of unfavorable intra-year academic calendar timing as illustrated on page 21 of our presentation. For the fourth quarter of 2026, we expect revenue to be in the range of $546 million to $556 million. And finally, adjusted EBITDA to be in the range of $198 million to $204 million. Eilif, I'm now handing it back to you for your closing comments.

Thank you, Rick. The strong year-to-date performance through September reflects the strength of our business model and the resilience of our operations in Mexico and Peru. Our investments in academic innovations, AI capabilities, digital offerings, and accretive campus expansions are all strengthening our competitive position. At the same time, our scaled operating model continues to drive modern expansion and strong free cash flow generation. We have an enviable position with a leading university brand, attractive growth opportunities, and a strong balance sheet. We believe these favorable attributes position as well to create long-term value for our shareholders while also expanding access to high-quality, affordable education for students and learners in Mexico and Peru. Operator, that concludes our prepared remarks, and we are now happy to take any questions from the participants.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.

Thank you so much. You called out the, I think it was a 3% impact on enrollment from the new campus in Puebla. Can you talk about the other two campuses you all opened this year? Can you just remind us where they were, when they opened, and was there any impact from those other two campuses on the quarter as well?

Yes, Puebla performed very well. It opened on time, on budget, and has run slightly ahead of our We have also opened a new campus in the east part of Lima in a district called Oto. And we opened also a new campus in Monterrey, Mexico. Those campuses are now in the second year of operation, so there's just normal growth in new enrollment. already had a cohort of new enrollments in it. So that's part of the organic growth. However, both campuses contribute nicely to the total enrollment as those campuses take four to five years to fill up.

Okay. I appreciate you clarifying that. And in terms of the fourth quarter guidance, when we compare it to your implied guidance beforehand, It was a little light. You called out a couple things in the quarter, and I just hope you can parse that out. I think there was a timing difference in expenses in Peru and also changes in FX. Is it possible to kind of segment those two in terms of the impact on guidance?

Yeah, absolutely. Hi, Jeff. Good morning. The outperformance in Q3 was primarily driven by FX and a bit of, as you said, expense shifting in terms of adaptability to but more specifically, the revenue outperformance of $9 million versus the high was entirely driven by FX favorability in the quarter versus guidance. And for adjusted EBITDA, it was about near 50-50 combination of FX outperformance and an operational expense timing shift. So that, you know, when you look at Q3, it was that. When you look at Q4, we're obviously looking at a much weakened peso relative to the dollar at where we sit as of last week and this week. So we are reaffirming four-year guidance, but we are taking down Q4 as we're just going through the upside of FX and Q3 to Q4.

So again, roughly a 50-50 impact in the fourth quarter as well?

Revenue is all FX, yeah.

Revenue is all FX, okay. And then obviously the expenses, the adjusted EBIT does impact about the timing of expenses. Okay, I can follow up on this.

The expenses will shift around $5 million into Q4.

Okay, perfect. Thank you so much.

Thank you. Our next question comes from the line of Alex Perez with Barrington Research. Your line is open.

Hi, guys. Thanks for taking my questions. Just to follow up on the Q4 guide, obviously, FX, you just kind of went through that negative impact in the fourth quarter versus prior guidance. A $20 million shift in revenue, which we knew about in the academic calendar. Does that shift into Q1, first of all?

No, it's all intra-year.

So it'll all be...

and we've got that laid out for you in the earnings presentation. You can see it by quarter implications. It essentially has around $16 million, $28 million shifted into Q3 in Mexico and one in Peru in Q3 and $16 million and $4 million shipped out of Q4. You can see that on the earnings presentation on page 21. It's all going to impact Q1 of next year.

And then, you know, if you take the high and low of your full year guidance and the year to date through nine months, there's a $10 million spread on revenues from high to low, a $6 million spread on adjusted EBITDA from high to low. What are the underlying assumptions for the low end and the high end, basically?

Really, at this point, we're sitting here in the end of October. We've just completed our intake. We have a very strong view of the operational performance of the business and feel very comfortable about that. The bigger impact that is between the spread of the high and low is FX. And it's the current FX level hold versus the peso deteriorate versus the peso rebound.

So if the current level holds, we're talking midpoint. If FX improves for you, it's the high end. If it weakens, it's the low end.

Approximately.

Okay. Good. Now that's helpful. And then on year-to-date new student enrollment, for Laureate in general, it was up 9%. At June 30th, it was up 10%. And if you Look at it by market, it was really a decline in new student enrollment sequentially in Peru. Now, I realize that's the secondary intake, but is there anything else to read into that?

No, I mean, we're very, very pleased with the new enrollment momentum this year. We've seen the Mexican economy improving. We obviously used to correlate it to be over-economy. It's improving from that time. and many more. And we are getting an uplift and execution in both countries is very, very strong. So, you know, getting, you know, 8% enrollment growth for the full cycle for Mexico, which is the main intake, I'm very, very pleased and I'm encouraged by that when you're looking at the low that you're seeing across both of our brands and also across all modalities, face-to-face, hybrid, and online. And also it's important to note that the T3 intake in Mexico was, I think, was the main intake. It is also heavily weighted to face-to-face young students. And so that's traditionally the more economically sensitive population because we're working with all students. are more resilient in a sector economy. And then moving into Peru, it really was all about an undying intake. The main intake is a February notch, and that was very strong in Peru, and the second intake in Peru I would say, you know, the vast majority of that is non-traditional students, so sort of working with all products and our technical vocational business and, you know, very strong at the moment, but high signature just goes in that distance, although much smaller part of the overall intake.

Great, well, thank you. I appreciate the addition. Yeah, no, the additional color is helpful. Thank you. And then just a point of clarification. In prepared comments, you talked about discussing the pipeline on the Q4 call. Were you referring to the new campus pipeline?

My reference to the pipeline was the pipeline of new campus, inventory of new campus opportunities that we have with a very significant amount of campus extension opportunities across both of our markets. Of course, Mexico is a bigger country and has more opportunities. but we have, you know, some readers who as well as we are, you know, working on. So more specificity on that around post-war results and 2027 guidance, but you can expect, given the fact that we have secured more land opportunities, you see our capex for the second half of 2026 has increased a little bit with the historical levels. and that is because we're securing land plots and expansion opportunities that will be coming online. It takes about 18 to 24 months to build a campus. So we're going to have a couple of new campuses in 2037 and we would like to be able to accelerate that a little further in 2038 and beyond.

Great. I had a little trouble hearing you, but just to be clear, there were two new campuses open up last year. There's Puebla this year, and then next year, there's two planned, one in each market. Is that still the current thinking for 2027?

That's correct, and in 2028, we should be able to go a little faster, even with secured land plots for new locations

Thank you very much. I appreciate it. I'll go back in the queue.

Thank you. Our next question comes from the line of Marcelo Santos with JP Morgan. Your line is open.

Hi, good morning. Thanks for taking my questions. I have two on my side. The first is going back to the guidance. I think you were forecasting enrollment growth of around 4% to 5% for the year, and you're growing faster than that now. What would this number of enrollments decelerate? What would make it decelerate into the fourth quarter? Just want to know if this is conservativeness or if there's some specific fact that you're targeting there. And the second question would be more if you could discuss, you already discussed this in previous quarters, but could you reiterate your views on margins outlook for the next coming years? Thank you.

Yeah, I get to take both of those. Good morning, Marcelo. First, as it relates to our guidance to raise 4% to 5%, the high end of the range is short range, the high end range is 5%. and the difference between the guidance and the 6% is simply a matter of that September 30th is peak enrollment and we have intra-cycle attrition in the fourth quarter as we normally experience that brings it down to an average at the high of 5%. Since we had a stronger mix of fully online, particularly in Peru that has a higher attrition, That's what's happening structurally. I'll pause there and see if that answers your first question.

Every year, you have this effect right in the fourth quarter. So what you're saying is that this year, this attrition effect should be higher because of the mix in Peru. That would be the main reason why this year would be different than the previous year.

That's correct.

OK, perfect. Thank you.

And as it relates to your second question, As you know and our investors know, we've done a tremendous focus on very aggressive margin expansion, particularly in Mexico over the last several years. It's led to over 500 basis points. As Eilif and I have communicated, we have a commitment to continue to expand our margins in the next several years. Despite drag that we have from the new campus investments, and we've said that we expect to be able to expand margins on average around 30 to 50 basis points per year going forward. And really what's happening there fundamentally is we're getting the benefit of massive scale at Laurier as a 500,000 students and a very scaled back office where we get good flow through on incremental revenue production.

Thank you very much.

Thank you. Please stand by for our next question. As I remind you, ladies and gentlemen, that's star 11 to ask the question. Our next question comes from the line of Samuel Alves with BTG Paxul. Your line is open.

Thanks, guys. Good morning, everyone. First, on Mexico's margin, just one follow-up.

Would you guys quantify how much the new greenfield campuses are currently diluting margins? Just trying to understand the potential of the margin upside as these campuses mature. And second, in Peru, we have heard that the competition has become somewhat more aggressive there with some players like cutting prices, particularly in the fully online programs or versus the fully online programs. Have you guys noticed like any change in the competitive environment or pricing dynamics there in Peru? That's it, thank you. Sure, I'll take the first question and then Eilif can take the second question. So on the first question, as it relates to the impact of the new campuses, as we said in prior calls and in this one, the impact is around 50 basis points on margin in Mexico and about 25 basis points consolidated. So just as a reminder, we're saying that we're going to expand the overall Laureate margins 50 basis points. This year, it had not been for new campuses, we would have expanded 75. So at the end of the day, we're still expanding margins despite that. And essentially what's happening is it's around a $5 million drag of new campuses because the campuses aren't open, particularly Puebla that just launched here in the third quarter, fourth quarter, and the Merida second campus we're going to launch next year. So we're paying rent on those. and accelerating marketing investments on this. But obviously, we are looking forward to them as they continue to get cohorts into the door will be very accretive to us overall as a business.

Great. Sam, can you hear me okay? Yeah, sure. The second one. Yeah, the second was the competitive environment in Peru. I just wanted to make sure that my microphone was working okay. In terms of the competitive environment in Peru, you know, clearly people are looking towards the leadership positions we have established in the fully online, and not surprisingly, you know, people are, you know, all the universities are launching their own online product portfolios. But the purchase behavior is really driven by the brand positioning, the product portfolio, the overall student experience, and the price point. And our strategy has been to deliver a high-quality product at an affordable price. That gives us a very, very significant competitive advantage, and that is really why we have been blowing this market very, very rapidly. We currently have over 40,000 for the online So really, really robust growth throughout that segment. But yes, absolutely good. All the successes we've accomplished by our competitors, just as we would have expected.

Thank you, guys.

Thank you. Our next question comes from the line of Mauricio Zepeda with Morgan Stanley. Your line is open.

Hello, good morning. Thanks for the opportunity here. Just so you know, the sound there in the room is not really clear. I think you seem to be a little far away from the mic. But anyhow, we have also two questions from our side. So first is about expansion, right, so that we can project better. So this new campus in Merida, how does it compare to the ones that we already have in Monterrey, Puebla, and Mexico City? in terms of capacity and capex, and what should be your standardized campus size and necessary capex. So we will continue to be focusing also on these lower tier brands in both countries. So this is the first part. And the second part, a little bit more about how online is progressing. So just to have a kind of a reality check on how much of the Mexican intake growth has come from the face-to-face versus online. Thank you.

So in terms of the Marietta campus, it is a smaller campus because it's a secondary city. It is the campus of somewhere in the mid to low 20s versus mid 40s for a capital city campus. It has about 6,000 students capacity versus a typical 9 to 11 resource support for capital city campus. But it has a very similar IRR profile. The strength of our brand in these secondary cities gives us a very commanding consumer preference, and hence the market share will be opening up. and the market fragmentation in the secondary cities are greater than those in the capital city. So there is a strong preference towards large nationally recognized brands as education is a very important branded consumer product. I'll pause there and see if that answers your question on the merit of expansion economics.

Can you hear me?

Yeah, I think about the online also, right?

Yeah. So moving on to online, we view online to be a very different, a bit complementary, I guess. It leverages our back office. It leverages our, you know, very strong grant portfolio. And of course, you know, a lot of the teaching infrastructure as well is shared with a hybrid portfolio. That gives us a massive competitive advantage and cave benefits. But the commercial exhibit for online is geared towards the working adults, non-traditional students, students who are looking for a degree completion or getting an undergraduate degree or a competitive degree in order to get a promotion or shifting their career, maybe from a local company into an international industry. So it's a very, very different consumer and the marketing and the communication and the attraction effort is very separate and distinct from that of face-to-face, which is largely pursuing high school leavers and hence your marketing to what we call feeder stores within a 15 to 20 kilometer radius of all of our 55 campuses across Mexico and the world.

Okay, that's very clear. Thank you, Eilif.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.