LAUR

Business Context and Reporting Period

Company: Laureate Education, Inc. (LAUR)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Operations: The Company operates a portfolio of degree-granting higher education institutions in Mexico and Peru, serving approximately 501,400 students across five institutions. Revenues are primarily derived from tuition and are recognized net of scholarships and discounts.

Key Financial Metrics

Note: Adjusted EBITDA is a non-GAAP measure reconciled in the filing. Debt includes finance lease obligations.

Material Changes vs. Prior Period

• Revenue Growth: Revenues increased 17% year-over-year for both the quarter and six-month periods. This growth was driven primarily by favorable foreign currency exchange rates (strengthening of the Mexican peso and Peruvian nuevo sol against the USD), higher average enrollment, and product mix changes.
• Profitability: Net income attributable to Laureate increased 44% for the quarter and 53% for the six-month period. Operating income rose 16% (Q2) and 9% (6M).
• Foreign Exchange Impact: Foreign currency exchange losses decreased significantly, from $25.6 million in Q2 2025 to $2.0 million in Q2 2026, and from $28.8 million to $1.0 million for the six-month periods.
• Segment Performance:
  • Mexico: Q2 revenues up 24%; Adjusted EBITDA up 23%. Six-month revenues up 18%, though Adjusted EBITDA was flat (2% increase) due to academic calendar timing and higher depreciation.
  • Peru: Q2 revenues up 13%; Adjusted EBITDA up 14%. Six-month revenues up 16%; Adjusted EBITDA up 21%.
• Capital Expenditures: Increased to $35.5 million for the six months ended June 30, 2026, compared to $17.9 million in the prior year, driven by campus expansions and equipment purchases.

Guidance, Outlook, and Risks

• Capital Allocation: The Company aggressively utilized its stock repurchase program, spending $185.9 million on repurchases in the first six months of 2026. As of June 30, 2026, only $0.2 million remained under the $400 million authorization. On July 30, 2026, the Board approved an additional $150 million increase to the program.
• Debt and Liquidity: The Company drew $75.0 million on its $155.0 million Revolving Credit Facility. A new $60 million term loan was secured in Peru in June 2026, with proceeds received in July 2026 to refinance working capital lines and fund capital expenditures.
• Outlook: Management expects to continue growing organically through new programs, expanded demographics, and capacity increases. The Company anticipates cash flow from operations will be sufficient to meet liquidity needs for the next 12 months.
• Risks: Key risks include foreign currency fluctuations, regulatory changes in Mexico and Peru, political instability, and the ability to maintain enrollment and tuition rates. The Company notes that operating results for interim periods are not necessarily indicative of full-year results due to seasonality.

Investor Verification Checklist

• Foreign Currency Sensitivity: Verify the extent to which reported growth is driven by currency translation versus organic volume growth, as FX fluctuations significantly impacted both revenue and expenses.
• Stock Repurchase Capacity: Confirm the remaining authorization under the newly expanded $550 million total repurchase program (post-July 30 announcement) and the pace of future buybacks.
• Debt Covenants: Review compliance with the Consolidated Senior Secured Debt to Consolidated EBITDA ratio (limit of 3.0x) under the Amended Credit Agreement, especially given the new Peru term loan.
• Academic Calendar Timing: Assess the impact of semester start date variations on revenue recognition, particularly in the Mexico segment where timing effects reduced Adjusted EBITDA growth in the six-month period.
• Contingencies: Monitor the status of tax audits and legal proceedings in Mexico and Peru, including the bank guarantees issued for tax assessments.