Laureate Education, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; it does not provide standalone fourth-quarter results. Unless noted, financial amounts are in U.S. dollars and relate to continuing operations in Mexico and Peru.
Business context
Laureate operates five degree-granting higher-education institutions across Mexico and Peru, with approximately 448,900 students at year-end. It offers campus-based, online and hybrid programs; essentially all revenue comes from private-pay sources. Mexico and Peru contributed 53% and 47% of 2023 revenue, respectively. The company completed its broader strategic divestiture program; two Mexican K-12 subsidiaries were classified as held for sale in 2023, but not as discontinued operations.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Revenue | $1,484.3 million | $1,242.3 million | +19% |
| Operating income | $338.8 million | $270.0 million | +25% |
| Operating margin | 22.8% | 21.7% | +1.1 percentage points |
| Adjusted EBITDA (non-GAAP) | $418.6 million | $338.9 million | +24% |
| Net income attributable to Laureate | $107.6 million | $69.6 million | +55% |
| Diluted EPS | $0.68 | $0.41 | +$0.27 |
| Cash from operating activities | $250.8 million | $178.2 million | +$72.6 million |
- Revenue growth reflected $108.9 million from foreign exchange, $79.3 million from higher average organic enrollment and $57.9 million from pricing, program mix and timing. Organic enrollment rose 10% in Mexico and 6% in Peru.
- Direct costs and general and administrative expenses together increased $170.2 million, mainly due to higher enrollment, return-to-campus costs and foreign exchange.
- Net income from continuing operations was $117.0 million, versus $60.7 million. The 2023 effective tax expense was $137.6 million; results also included $75.7 million of foreign-exchange losses, mainly related to intercompany loans. Discontinued operations recorded a $9.8 million loss in 2023.
- Year-end cash and cash equivalents were $89.4 million, with another $7.5 million restricted. Current assets of $224.4 million were below current liabilities of $453.2 million.
- Total debt and finance leases were $167.4 million, including $109.9 million of senior and other debt and $57.6 million of finance leases and sale-leaseback financings. The revolving facility was $300 million, with $59 million drawn at year-end; subsidiaries reported approximately $68.8 million of additional line-of-credit capacity. Operating lease liabilities were $417.6 million.
- Operating cash flow less property-and-equipment purchases was approximately $194.3 million, based on reported cash flow and capital expenditure figures. Cash used in financing was $201.9 million, including $112.5 million of special dividends and distributions.
Material changes, outlook and risks
- Growth was stronger in Mexico: revenue increased 27% and Adjusted EBITDA 43%; Peru revenue increased 12% and Adjusted EBITDA 8%. Corporate Adjusted EBITDA loss narrowed to $45.2 million from $51.2 million.
- Management expects operating cash flow and available cash to meet current operating requirements and liquidity needs for at least 12 months from the report’s issuance. The filing provides no specific numerical FY 2024 revenue or earnings guidance.
- In February 2024, the board authorized a new share-repurchase program of up to $100 million. The company paid a $0.70-per-share special dividend in November 2023; it does not anticipate ordinary cash dividends in the foreseeable future.
- Key exposures include enrollment and tuition affordability, competition, local political and regulatory changes, currency movements, tax uncertainty, cybersecurity and data privacy, campus disruptions and natural disasters. A hypothetical 10% adverse move in average exchange rates would have reduced 2023 operating income by about $40.6 million and Adjusted EBITDA by about $47.7 million.
- Peruvian university licenses for UPC and UPN are due for renewal in 2025. A 2023 rule requiring health-sciences undergraduate programs to be face-to-face may apply at relicensing. The company also disclosed a $5.5 million expected payment on a Walden sale indemnification claim and up to approximately $23.5 million of reasonably possible losses on unrecorded contingencies.
- The company reported $3.1 million of asset impairment expense in 2023 and no goodwill impairment. Its auditor issued unqualified opinions on the financial statements and internal controls; management also concluded internal control over financial reporting was effective.
Important facts for investors to verify
- Whether enrollment growth, tuition and collections can sustain revenue and margin gains, particularly in Mexico and Peru.
- How much reported growth reflects local-currency operating improvement versus favorable foreign exchange, and the ongoing impact of currency losses on earnings and debt service.
- Near-term debt maturities, including the Mexican loan due in June 2024 and the $145 million revolving tranche scheduled to mature in October 2024, alongside available liquidity and covenant terms.
- The timing and financial effects of the planned Mexican K-12 asset sales, the 2025 Peruvian license renewals and the health-sciences modality requirements.
- Potential cash uses and constraints from lease obligations, tax contingencies, the repurchase authorization and any further distributions to shareholders.