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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-22 · 123 added, 196 removed, 464 unchanged (41% of the section changed)

1 unchanged sentence

You should read the following discussion of our results of operations and financial condition with the audited historical consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (Form 10-K).

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Item 1A.

discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Item 1A.

Risk Factors” section of this Form 10-K.

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We group our institutions by geography in Mexico and Peru for reporting purposes.

Discontinued Operations

As a result of the strategic review first announced in January 2020, during the third quarter of 2020, the Company completed a sale of its operations in Chile and signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University in the United States.

These sales were completed during 2020 and 2021.

Additionally, prior to 2020, the Company had announced the divestiture of certain other subsidiaries in Europe, Asia and Central America, which has been completed.

These announcements represented strategic shifts that had a major effect on the Company’s operations and financial results.

Accordingly, all of the divestitures that were part of these strategic shifts were accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).

All planned divestitures have now been completed, and the Company has concluded its strategic review process.

The Company’s continuing operations are Mexico and Peru.

All other markets have been divested (the Discontinued Operations) .

The Discontinued Operations are excluded from the segment information for all periods presented, as they do not meet the criteria for a reportable segment under ASC 280, “Segment Reporting.” Unless indicated otherwise, the information in the MD&A relates to continuing operations.

See also Note 4, Discontinued Operations and Assets Held for Sale, and Note 5, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-K.

Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines.

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We compete with other private higher education institutions on the basis of price, educational quality, reputation and location.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our in-country networks.

There are a number of private and public institutions in both of the countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

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5 472,000 $ 1,566.6 100 %

(1) Amounts related to Corporate totaled $0.2 million and are not separately presented.

Our operations are outside of the United States and are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address.

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Significant details and guidance around the global minimum tax provisions are still pending.

For countries that have enacted the global minimum tax, they are generally effective for the Company beginning in 2024.

For countries that have enacted the global minimum tax, such taxes generally became effective for the Company beginning in 2024.

Income tax expense could be adversely affected as the legislation becomes effective in countries in which we do business.

We will continue to monitor pending legislation and implementation by individual countries in which we operate.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which implemented a 15% minimum tax on book income of certain large corporations, a 1% excise tax on stock repurchases and tax incentives to promote clean energy, among other provisions.

This legislation has not had a material impact on the financial statements and the Company will continue to monitor regulatory developments to assess potential impacts.

Results of the Discontinued Operations

The results of operations of the Discontinued Operations for the years ended December 31, 2023, 2022, and 2021 were as follows:

For the year ended December 31,

2023 2022 2021

Revenues $ — $ — $ 543.0

Depreciation and amortization expense — — —

Share-based compensation expense — — (1.3)

Other direct costs — — (433.1)

Loss on impairment of assets — — (1.3)

Other non-operating expense — — (22.3)

(Loss) gain on sale of discontinued operations before taxes, net (9.8) 7.8 636.2

Pretax (loss) income of discontinued operations (9.8) 7.8 721.2

Income tax benefit (expense) — 0.5 (234.3)

(Loss) income from discontinued operations, net of tax $ (9.8) $ 8.3 $ 486.9

Year Ended December 31, 2023

The $9.8 million loss in the table above primarily resulted from an adjustment to the sale price of Walden University pursuant to an indemnification claim received from the buyer, as described in Note 5, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-K.

The remainder of the loss was mostly attributable to changes in estimates regarding the realizability of certain receivables from previous divestitures.

Year Ended December 31, 2022

The $7.8 million gain in the table above primarily resulted from the transfer of the remaining assets and liabilities that were classified as held for sale as of December 31, 2021, which related to the divestiture of our operations in Chile.

This transfer was completed during the second quarter of 2022 and resulted in a gain of approximately $4.3 million.

Year Ended December 31, 2021

On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax loss of $1.7 million, including a working capital adjustment during the second quarter of 2021.

On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).

At the closing of the sale, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement.

In April 2021, the Company received 168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt), which represented payment in full for the remainder of the escrow account and resulted in a pretax gain of approximately $13.6 million.

During the first quarter of 2021, we recorded a loss of approximately $32.4 million in order to adjust the carrying value of our Brazil disposal group to its estimated fair value less costs to sell as of March 31, 2021.

This loss is included in Gain on sale of discontinued operations before taxes, net.

On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in a pre-tax gain of $33.0 million, including working capital and purchase price adjustments that were completed during the third and fourth quarters of 2021, and contingent consideration that was recognized during the fourth quarter of 2021.

On August 12, 2021, we completed the sale of Walden University, which resulted in a pre-tax gain of $619.4 million, including a working capital settlement completed during the fourth quarter of 2021.

In addition, the Company recognized estimated tax expense of approximately $278.0 million.

We will continue to monitor pending legislation and implementation by individual countries in which we operate, and we do not expect the global minimum tax provisions to have a material impact on our results of operations, financial position or cash flows.

Results of Operations

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Summary Comparison of Consolidated Results

Discussion of Significant Items Affecting the Consolidated Results for the Year Ended December 31, 2021

In March 2021, the Company decided that, during 2021, it would wind down certain support functions related to the Laureate network and would no longer invest in and support the Laureate tradename beyond 2021.

As a result, the Company tested the asset for impairment and estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated remaining useful life of the asset .

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $51.4 million and recorded an impairment charge for that amount.

During the second quarter of 2021, the Company fully repaid the remaining balance outstanding under its Senior Notes due 2025 using a portion of the proceeds received from the sales of its operations in Australia and New Zealand and Brazil.

In connection with the debt repayment, the Company recorded a loss on debt extinguishment of $77.9 million, related to the redemption premium paid and the write off of the unamortized deferred financing costs associated with the repaid debt balances.

This loss is included in Other non-operating expense in the table below.

In November 2020, in connection with the signing of the sale agreement for our Brazil operations, the Company entered into six BRL-to-USD swap agreements to mitigate the risk of foreign currency exposure on the expected proceeds from the sale.

The sale of our Brazil operations closed on May 28, 2021.

On June 2, 2021, the Company settled the swap agreements, which resulted in a realized loss on derivatives of $24.5 million.

This loss is included in Other non-operating expense in the table below.

In December 2021, the Company completed a lease termination agreement with the landlord of our Kendall property in Chicago, Illinois.

In connection with the lease termination agreement, we recorded a loss of approximately $25.8 million, which is included in Excellence-in-Process (EiP) expenses within Operating (loss) income in the table below.

Comparison of Consolidated Results for the Years Ended December 31, 2024, 2023 and 2022

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Loss on impairment of assets — 3.1 0.1 100 % nm

Operating income (loss) 338.8 270.0 (4.6) 25 % nm

Operating income

374.0 338.8 270.0 10 % 25 %

Interest expense, net of interest income (10.0) (11.9) (8.9) 16 % (34) %

Other non-operating expense (72.5) (15.3) (91.0) nm 83 %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 254.5 245.9 (137.5) 3 % nm

Other non-operating income (expense)

50.5 (72.5) (15.3) 170 % nm

Income from continuing operations before income taxes and equity in net income of affiliates

414.5 254.5 245.9 63 % 3 %

Income tax expense

(119.0) (137.6) (185.4) 14 % 26 %

Equity in net income of affiliates, net of tax 0.2 0.3 — (33) % nm

Income (loss) from continuing operations 117.0 60.7 (283.1) 93 % 121 %

(Loss) income from discontinued operations, net of tax

Equity in net income of affiliates, net of tax 0.2 0.2 0.3 — % (33) %

Income from continuing operations 295.7 117.0 60.7 153 % 93 %

Income (loss) from discontinued operations, net of tax

0.7 (9.8) 8.3 107 % nm

296.4 107.3 69.0 176 % 56 %

Net loss (income) attributable to noncontrolling interests 0.3 0.6 (11.3) 50 % (105) %

Net loss attributable to noncontrolling interests

0.1 0.3 0.6 67 % 50 %

Net income attributable to Laureate Education, Inc.

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For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Revenues increased by $82.3 million to $1,566.6 million for 2024 from $1,484.3 million for 2023.

This increase was attributable to higher average total organic enrollment at our institutions, which increased revenues by $73.6 million compared to 2023.

In addition, the effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing increased revenues by $34.8 million compared to 2023.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $26.3 million, mainly driven by the weakening of the Mexican peso against the USD compared to 2023.

Other Corporate and Eliminations changes accounted for an increase in revenues of $0.2 million.

Direct costs and general and administrative expenses combined increased by $50.3 million to $1,192.7 million for 2024 from $1,142.4 million for 2023.

This increase in direct costs was driven by the effect of operational changes, which increased direct costs by $76.9 million compared to 2023, mostly attributable to the effect of higher enrollments at our institutions.

This increase was partially offset by the effect of a net change in foreign currency exchange rates which decreased costs by $21.4 million.

Additionally, other Corporate expenses decreased by $5.2 million.

Operating income increased by $35.2 million to $374.0 million for 2024 from $338.8 million for 2023.

This increase was a result of higher operating income at our Mexico segment, combined with lower operating costs at Corporate.

This increase was partially offset by lower operating income at our Peru segment, due in part to higher bad debt expense compared to 2023.

Interest expense, net of interest income decreased by $1.9 million to $10.0 million for 2024 from $11.9 million for 2023.

The decrease in interest expense was primarily attributable to lower average debt balances compared to 2023.

Other non-operating income (expense) changed by $123.0 million to income of $50.5 million for 2024 from expense of $(72.5) million for 2023.

This change in other non-operating income was attributable to a gain on foreign currency exchange for 2024 compared to a loss for 2023 for a change of $126.4 million, mainly related to intercompany loan arrangements.

Additionally, other income was higher by $1.5 million compared to 2023.

These increases in non-operating income were partially offset by a loss on disposal of subsidiaries for 2024 compared to a gain for 2023 for a change of $4.9 million, primarily attributable to the release of accumulated foreign currency translation balances upon the liquidation of certain subsidiaries.

Income tax expense dec reased by $18.6 million to $119.0 million for 2024 from $137.6 million for 2023.

This decrease was primarily attributable to a discrete tax benefit of approximately $37.9 million that was recorded during 2024 related to an entity restructuring, partially offset by a tax benefit recorded in 2023 of approximately $11.5 million for the release of valuation allowances in Mexico.

Income (loss) from discontinued operations, net of tax changed by $10.5 million to income of $0.7 million for 2024 compared to a loss of $(9.8) million for 2023.

This change was primarily attributable to the year-over-year effect of a reserve recorded in 2023 related to an indemnification claim received, as well as changes in estimates during 2023 regarding the realizability of certain receivables from previous divestitures.

Comparison of Consolidated Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022

Revenues increased by $242.0 million to $1,484.3 million for 2023 from $1,242.3 million for 2022.

The increase was attributable to:

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(2) higher average total organic enrollment at our institutions, which increased revenues by $79.3 million compared to 2022;

and (3) the effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing, which increased revenues by $57.9 million compared to 2022.

and (3) the effect of changes in product mix, pricing and timing, which increased revenues by $57.9 million compared to 2022.

These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $4.1 million.

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These increases in direct costs were partially offset by a decrease in costs of $10.1 million in 2023 related to other Corporate expenses.

Operating income (loss) increased by $68.8 million to $338.8 million for 2023 from $270.0 million for 2022.

Operating income increased by $68.8 million to $338.8 million for 2023 from $270.0 million for 2022.

This increase in operating income was a result of higher operating income at our Mexico and Peru segments, combined with lower operating costs at Corporate, as compared to 2022.

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These increases in non-operating expense were partially offset by a higher gain on disposal of subsidiaries of $2.2 million, primarily attributable to the release of accumulated foreign currency translation gains upon the liquidation of certain subsidiaries.

Income tax expense dec reased by $47.8 million to $137.6 million for 2023 from $185.4 million for 2022.

Income tax expense decreased by $47.8 million to $137.6 million for 2023 from $185.4 million for 2022.

This decrease was primarily attributable to a discrete tax expense recorded in 2022 of approximately $32.5 million for an income tax reserve related to the application of the high-tax exception to global intangible low-taxed income, with the remaining difference mostly related to a benefit recorded in 2023 of approximately $11.5 million for the release of valuation allowances in Mexico.

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This change was primarily attributable to a reserve recorded in 2023 related to an indemnification claim received, as well as changes in estimates during 2023 regarding the realizability of certain receivables from previous divestitures, combined with the year-over-year impact of a gain recognized during 2022 upon completion of the transfer of certain leases related to our former operations in Chile.

See Overview for further detail on results of the Discontinued Operations.

Comparison of Consolidated Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Revenues increased by $155.6 million to $1,242.3 million for 2022 from $1,086.7 million for 2021.

Average total organic enrollment was higher at our institutions, increasing revenues by $111.9 million compared to 2021.

The effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing increased revenues by $30.8 million compared to 2021.

In addition, the effect of a net change in foreign currency exchange rates increased revenues by $18.0 million, due to the strengthening of the Peruvian nuevo sol and the Mexican peso against the USD compared to 2021.

These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $5.1 million.

Direct costs and general and administrative expenses combined decreased by $46.7 million to $972.2 million for 2022 from $1,018.9 million for 2021.

This decrease in direct costs and administrative expenses was primarily related to:

(1) lower EiP implementation expense of $74.6 million as a result of the completion of our EiP program in 2021;

(2) lower depreciation and amortization expense of $42.6 million, mainly driven by the full amortization of the finite-lived tradename in 2021;

(3) lower other Corporate and Eliminations expenses, which accounted for a decrease in costs of $42.0 million in 2022, related to cost-reduction efforts;

and (4) changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets, which resulted in a year-over-year decrease in costs of $13.1 million.

These decreases in direct costs were partially offset by the effect of operational changes, which increased direct costs by $115.6 million compared to 2021, mainly attributable to the effect of higher enrollments at our institutions, as well as return-to-campus expenses.

Additionally, the effect of a net change in foreign currency exchange rates increased costs by $10.0 million compared to 2021.

Operating income (loss) changed by $274.6 million to income of $270.0 million for 2022 from a loss of $(4.6) million for 2021.

This increase in operating income was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during 2021, combined with higher operating income at our Mexico and Peru segments during 2022.

Additionally, cost-reduction efforts resulted in lower operating costs at Corporate in 2022, as compared to 2021.

Interest expense, net of interest income decreased by $33.0 million to $8.9 million for 2022 from $41.9 million for 2021.

The decrease in interest expense was primarily attributable to lower average debt balances mainly driven by the full repayment of the Senior Notes due 2025 in 2021.

Other non-operating expense decreased by $75.7 million to $15.3 million for 2022 from $91.0 million for 2021.

This decrease was attributable to:

(1) a loss on debt extinguishment of $77.9 million during 2021 in connection with the repayment of the Senior Notes due 2025;

(2) a loss on derivative instruments during 2021 of $24.5 million, driven by settlement of foreign currency swap agreements in connection with the sale of our Brazilian operations;

(3) a gain on disposal of subsidiaries during 2022, compared to a loss during 2021, for a change of $2.0 million;

and (4) other non-operating income during 2022, compared to expense during 2021, for a change of $2.5 million.

These decreases in other non-operating expense were partially offset by foreign currency exchange loss in 2022, compared to a gain in 2021, for a change of $31.2 million.

Income tax expense increased by $39.8 million to $185.4 million for 2022 from $145.6 million for 2021.

This increase was primarily driven by the tax effect of the increase in pretax income in 2022 compared to 2021.

Additionally, the Company recognized an income tax reserve related to the application of the high-tax exception to global intangible low-taxed income.

The increase was partially offset by a nonrecurring expense attributable to amended returns filed in 2021.

Additionally, the increase was partially offset by less tax cost associated with the Netherlands intellectual property restructuring when compared to the prior year.

Income from discontinued operations, net of tax decreased by $478.6 million to $8.3 million for 2022 from $486.9 million for 2021.

This decrease was primarily attributable to the gain on sale of Walden University during 2021.

See Overview for further detail on results of the Discontinued Operations.

Net loss (income) attributable to noncontrolling interests changed by $11.9 million to a loss of $0.6 million for 2022 from income of $(11.3) million for 2021.

This change was primarily related to our previous joint venture in Saudi Arabia and the income effect to noncontrolling interests that resulted in 2021 from the settlement of certain intercompany transactions.

Non-GAAP Financial Measure

We define Adjusted EBITDA as net income, before loss (income) from discontinued operations, net of tax, equity in net (income) loss of affiliates, net of tax, and income tax expense (benefit) adjusted for (gain) loss on disposal of subsidiaries, net, foreign currency exchange (gain) loss, net, other expense (income), net, interest expense, interest income, loss on derivatives and loss on debt extinguishment, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to our Excellence-in-Process (EiP) initiative.

We define Adjusted EBITDA as net income (loss), before (income) loss from discontinued operations, net of tax, equity in net (income) loss of affiliates, net of tax, income tax expense (benefit), (gain) loss on disposal of subsidiaries, net, foreign currency exchange (gain) loss, net, other (income) expense, net, interest expense, interest income, and loss on debt extinguishment, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to our Excellence-in-Process (EiP) initiative.

Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

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Net income $ 296.4 $ 107.3 $ 69.0 176 % 56 %

Loss (income) from discontinued operations, net of tax 9.8 (8.3) (486.9) nm (98) %

Income (loss) from continuing operations 117.0 60.7 (283.1) 93 % 121 %

Equity in net income of affiliates, net of tax (0.2) (0.3) — (33) % nm

(Income) loss from discontinued operations, net of tax (0.7) 9.8 (8.3) (107) % nm

Income from continuing operations 295.7 117.0 60.7 153 % 93 %

Equity in net income of affiliates, net of tax (0.2) (0.2) (0.3) — % (33) %

Income tax expense

119.0 137.6 185.4 14 % 26 %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 254.5 245.9 (137.5) 3 % nm

(Gain) loss on disposal of subsidiaries, net (3.6) (1.4) 0.6 157 % nm

Foreign currency exchange loss (gain), net 75.7 17.4 (13.8) nm nm

Other expense (income), net

Income from continuing operations before income taxes and equity in net income of affiliates

414.5 254.5 245.9 63 % 3 %

Loss (gain) on disposal of subsidiaries, net

1.3 (3.6) (1.4) (136) % 157 %

Foreign currency exchange (gain) loss, net

(50.7) 75.7 17.4 167 % nm

Other (income) expense, net

(1.2) 0.3 (0.8) nm (138) %

Interest expense 18.1 21.0 16.4 14 % (28) %

Interest income (8.1) (9.1) (7.6) (11) % 20 %

Loss on derivatives — — 24.5 nm 100 %

Loss on debt extinguishment — — 77.9 nm 100 %

Operating income (loss) 338.8 270.0 (4.6) 25 % nm

Operating income

374.0 338.8 270.0 10 % 25 %

Depreciation and amortization 68.2 69.6 59.1 2 % (18) %

EBITDA 408.4 329.1 96.6 24 % nm

EBITDA 442.2 408.4 329.1 8 % 24 %

Share-based compensation expense (a)

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EiP implementation expenses (c)

— 0.8 75.4 100 % 99 %

— — 0.8 nm 100 %

Adjusted EBITDA $ 450.1 $ 418.6 $ 338.9 8 % 24 %

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(b) Represents non-cash charges related to impairments of long-lived assets.

For further details on certain impairment items see “Discussion of Significant Items Affecting the Consolidated Results for the Year Ended December 31, 2021.”

(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.

(c) EiP implementation expenses were related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.

It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting.

The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with previous dispositions.

The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.

The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses during 2022 related to the run out of programs that began in prior periods.

Comparison of Depreciation and Amortization for the Years Ended December 31, 2024 and 2023

Depreciation and amortization decreased by $1.4 million to $68.2 million for 2024 from $69.6 million for 2023, which was primarily driven by the effects of changes in foreign currency exchange rates compared to 2023.

Comparison of Depreciation and Amortization for the Years Ended December 31, 2023 and 2022

Depreciation and amortization increased by $10.5 million to $69.6 million for 2023 from $59.1 million for 2022.

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The remaining increase in depreciation and amortization expense of $5.2 million was primarily attributed to a higher depreciable asset base in Mexico and Peru.

Comparison of Depreciation and Amortization and EiP Implementation Expenses for the Years Ended December 31, 2022 and 2021

Depreciation and amortization decreased by $42.1 million to $59.1 million for 2022 from $101.2 million for 2021.

This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021, combined with a lower depreciable asset base at Corporate following the outsourcing of a majority of our information technology activities to a third-party service provider during 2021.

EiP implementation expenses decreased by $74.6 million to $0.8 million for 2022 from $75.4 million for 2021.

This decrease resulted from the completion of our EiP program in 2021, with the exception of certain EiP expenses related to the run out of programs that began in prior periods.

Segment Results

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Mexico and Peru, as discussed in Overview.

For purposes of the following comparison of results discussion, “ segment direct costs ” represent direct costs incurred by the segment as they are included in Adjusted EBITDA, such that depreciation and amortization expense, loss on impairment of assets, share-based compensation expense and our EiP implementation expenses have been excluded.

Organic enrollment is based on average total enrollment for the period.

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Peru 725.2 701.7 624.2 3 % 12 %

Corporate — 4.1 9.2 (100) % (55) %

Corporate 0.2 — 4.1 nm (100) %

Consolidated Total Revenues $ 1,566.6 $ 1,484.3 $ 1,242.3 6 % 19 %

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Consolidated Total Adjusted EBITDA $ 450.1 $ 418.6 $ 338.9 8 % 24 %

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Financial Overview

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(1) Organic enrollment and Product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.

(2) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.

Revenues increased by $58.6 million, a 7% increase from 2023.

1 unchanged sentence

• Revenues from our Mexico segment represented 54% of our consolidated total revenues for 2024 compared to 53% for 2023.

Adjusted EBITDA increased by $53.6 million, a 43% increase from 2022, mainly driven by higher revenues, partially offset by higher costs associated with return-to-campus expenses.

Adjusted EBITDA increased by $29.5 million, a 17% increase from 2023, mainly driven by higher revenues.

Comparison of Mexico Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022

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Foreign exchange 91.6 71.0 20.6

— (13.1) 13.1

December 31, 2023 $ 782.6 $ 605.6 $ 177.0

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• Organic enrollment increased during 2023 by 10%, increasing revenues by $52.2 million.

• Revenues from our Mexico segment represented 50% of our consolidated total revenues for 2022 and 2021.

Adjusted EBITDA increased by $27.6 million, a 29% increase from 2021.

• The increase in Adjusted EBITDA included a year-over-year benefit from the $13.1 million charge recorded during 2021 related to acquisition-related contingencies.

• Revenues from our Mexico segment represented 53% of our consolidated total revenues for 2023 compared to 50% for 2022.

Adjusted EBITDA increased by $53.6 million, a 43% increase from 2022, mainly driven by higher revenues, partially offset by higher costs associated with return-to-campus expenses.

Financial Overview

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• Revenues from our Peru segment represented 46% of our consolidated total revenues for 2024 compared to 47% for 2023.

Adjusted EBITDA increased by $20.2 million, an 8% increase from 2022, mainly driven by higher revenues, partially offset by higher costs associated with return-to-campus expenses.

Adjusted EBITDA decreased by $3.5 million, a 1% decrease from 2023, primarily due to higher marketing and bad debt expenses.

Comparison of Peru Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022

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Revenues increased by $87.1 million, an 16% increase from 2021.

Revenues increased by $77.5 million, a 12% increase from 2022.

• Organic enrollment increased during 2023 by 6%, increasing revenues by $27.1 million.

• Revenues from our Peru segment represented 50% of our consolidated total revenues for both 2022 and 2021.

Adjusted EBITDA increased by $21.0 million, a 9% increase from 2021.

• Revenues from our Peru segment represented 47% of our consolidated total revenues for 2023 compared to 50% for 2022.

Adjusted EBITDA increased by $20.2 million, an 8% increase from 2022, mainly driven by higher revenues, partially offset by higher costs associated with return-to-campus expenses.

Corporate revenues primarily represent miscellaneous other revenues, net of the elimination of intersegment revenues.

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2023 2023 vs.

Revenues $ — $ 4.1 $ 9.2 (100) % (55) %

Revenues $ 0.2 $ — $ 4.1 nm (100) %

Expenses 40.0 45.2 55.3 12 % 18 %

Adjusted EBITDA $ (39.8) $ (45.2) $ (51.2) 12 % 12 %

nm - percentage change not meaningful

Comparison of Corporate Results for the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Adjusted EBITDA increased by $6.0 million, a 12% increase from 2022, mainly driven by a decrease in labor expenses and other professional fees, as well as a reduction in IT-related costs.

Adjusted EBITDA increased by $5.4 million, a 12% increase from 2023, mainly driven by a decrease in labor costs and other professional fees.

Comparison of Corporate Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022

Adjusted EBITDA increased by $36.9 million, a 42% increase from 2021, mainly driven by a decrease in labor costs and other professional fees, related to cost-reduction efforts.

Adjusted EBITDA increased by $6.0 million, a 12% increase from 2022, mainly driven by a decrease in labor costs and other professional fees.

Liquidity and Capital Resources

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If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.

As of December 31, 2023, our secondary source of liquidity was cash and cash equivalents of $89.4 million.

As of December 31, 2024, our cash and cash equivalents were $91.4 million.

Our cash accounts are maintained with high-quality financial institutions.

The Company also maintains a revolving credit facility (the "Senior Secured Credit Facility") with a syndicate of financial institutions as a source of liquidity.

The Senior Secured Credit Facility, pursuant to the Third Amended and Restated Credit Agreement, dated as of October 7, 2019 (the “Credit Agreement”, as amended by the First Amendment, dated as of July 20, 2020, the Second Amendment, dated as of December 23, 2022, and, as further amended by the Third Amendment, dated as of September 18, 2023, the “ Amended Credit Agreement ”), provides for borrowings of $145.0 million of revolving credit loans maturing October 2024 (the “ Series 2024 Tranche ” ) and $155.0 million of revolving credit loans maturing in September 2028 (the "Series 2028 Tranche") for a $300.0 million aggregate revolving credit facility (the “ Revolving Credit Facility ”) .

The Senior Secured Credit Facility, pursuant to the Third Amended and Restated Credit Agreement, dated as of October 7, 2019 (the “Credit Agreement”, as amended by the First Amendment, dated as of July 20, 2020, the Second Amendment, dated as of December 23, 2022, and, as further amended by the Third Amendment, dated as of September 18, 2023, the “ Amended Credit Agreement ”), provided for borrowings of $145.0 million of revolving credit loans, which matured on October 7, 2024 (the “ Series 2024 Tranche ” ) and $155.0 million of revolving credit loans maturing in September 2028 (the "Series 2028 Tranche") for a $300.0 million aggregate revolving credit facility (the “ Revolving Credit Facility ”) .

Given the maturity date of the Series 2024 Tranche, as of December 31, 2024, the borrowing capacity of the Revolving Credit Facility was $155.0 million.

As a subfacility under the Revolving Credit Facility, the Amended Credit Agreement provides for letter of credit commitments in the aggregate amount of $10.0 million.

From time to time, we draw down on the Revolving Credit Facility , and, in accordance with the terms of the credit agreement, any proceeds drawn on the Revolving Credit Facility may be used for general corporate purposes.

As of December 31, 2023, the Company had borrowed $59.0 million of the $300.0 million of available capacity.

As of December 31, 2024, the Company

had no outstanding balance borrowed under the Revolving Credit Facility.

In addition to the Revolving Credit Facility, our subsidiaries had approximately $80.3 million of available borrowing capacity under lines of credit and short-term borrowing arrangements as of December 31, 2024.

If certain conditions are satisfied, the Amended Credit Agreement also provides for incremental revolving and term loan facilities, at the request of the Company, not to exceed (i) the greater of (a) $172.5 million and (b) 50% of the Company's Consolidated EBITDA, plus (ii) additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Amended Credit Agreement, on a pro forma basis, does not exceed 2.25x , plus, (iii) the aggregate amounts of any voluntary repayments of term loans, if any, and aggregate amount of voluntary repayments of revolving credit facilities that are accompanied by a corresponding termination or reduction of revolving credit commitments.

If certain conditions are satisfied, the Amended Credit Agreement also provides for incremental revolving and term loan facilities, at the request of the Company and subject to lender approval, not to exceed (i) the greater of (a) $172.5 million and (b) 50% of the Company's Consolidated EBITDA, plus (ii) additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Amended Credit Agreement, on a pro forma basis, does not exceed 2.25x , plus, (iii) the aggregate amounts of any voluntary repayments of term loans, if any, and aggregate amount of voluntary repayments of revolving credit facilities that are accompanied by a corresponding termination or reduction of revolving credit commitments.

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $7.5 million and $8.6 million as of December 31, 2023 and 2022, respectively.

Our liquidity is affected by restricted cash balances, which total ed $6.5 million and $7.5 million as of December 31, 2024 and 2023, respectively.

Restricted cash consists of cash equivalents held as assets for a supplemental employment retention agreement for a former executive.

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stock repurchases;

an indemnification claim;

and business development activities.

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and payments of other third-party obligations.

As of December 31, 2023, our debt obligations consisted of borrowings under the Senior Secured Credit Facility and other debt instruments at our operations, as well as finance lease obligations and sale-leaseback financings.

As of December 31, 2024, our debt obligations consisted of lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $53.8 million.

In addition, our finance lease obligations and sale-leaseback financings were $48.4 million.

Senior Secured Credit Facility

As of December 31, 2023 and 2022, there was a $59.0 million and $100.0 million balance outstanding under our Senior Secured Credit Facility, respectively.

As of December 31, 2024, there was no balance outstanding under our Senior Secured Credit Facility.

As of December 31, 2023, there was a $59.0 million balance outstanding under our Senior Secured Credit Facility.

Other debt includes lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, the significant components of which are described below.

As of December 31, 2024 and 2023, the aggregate outstanding balances on our lines of credit were $30.0 million and $10.9 million, respectively.

In December 2017, one of our subsidiaries in Mexico entered into an agreement with a bank for a loan of MXN 1,700.0 million (approximately $89.0 million at the time of the loan).

The loan matures in June 2024 and carries a variable interest rate, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (13.00% as of December 31, 2023).

The current quarterly payments on the loan total MXN 76.5 million ($4.5 million at December 31, 2023), with a balloon payment of MXN 425.0 million ($25.0 million at December 31, 2023) due at maturity.

One of our subsidiaries in Mexico holds an unsecured term loan which was scheduled to mature in June 2024.

During the second quarter of 2024, we entered into a loan modification, which extended the maturity of the loan to June 2029.

The loan carries a variable interest rate, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (11.74% as of December 31, 2024).

Under the loan modification agreement, the current quarterly payments on the loan total MXN $4.3 million ($0.2 million at December 31, 2024) and increase over the remaining term of the loan to MXN $23.4 million ($1.2 million at December 31, 2024), with a balloon payment of MXN 170.0 million ($8.4 million at December 31, 2024) due at maturity.

As of December 31, 2024 and 2023, the outstanding balance of this loan was $20.8 million and $29.5 million, respectively.

Under the Amended Credit Agreement , we are subject to a Consolidated Senior Secured Debt to Consolidated EBITDA financial maintenance covenant that applies only to the Revolving Credit Facility (a leverage ratio covenant), as defined in the Amended Credit Agreement , unless certain conditions are satisfied.

As of December 31, 2023, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

The maximum ratio, as defined, is 3.00x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter.

The Amended Credit Agreement provides that, solely with respect to the revolving credit facility, the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Amended Credit Agreement , to exceed 3 as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter.

The Amended Credit Agreement also provides that if less than 25% of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply.

As of December 31, 2024, this condition was satisfied and, therefore, we were not subject to the leverage ratio.

In addition, indebtedness at some of our locations contain financial maintenance covenants.

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We believe that our internal sources of cash and our ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property and equipment, were $56.5 million, $53.1 million and $56.3 million during 2023, 2022 and 2021, respectively.

Our total capital expenditures, excluding receipts from the sale of subsidiaries and property and equipment, were $71.9 million, $56.5 million and $53.1 million during 2024, 2023 and 2022, respectively.

The 27% increase in capital expenditures for 2024 compared to 2023 was primarily due to the purchase of a parcel of land and a new campus construction project that began in 2024, combined with higher spending in Mexico for campus consolidation related to the implementation of a real estate optimization plan.

The 6% increase in capital expenditures for 2023 compared to 2022 was primarily due to investment in equipment for health science programs in Peru as well as campus expansion and digital innovation in Mexico.

The 6% decrease in capital expenditures for 2022 compared to 2021 was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Peru and Corporate, partially offset by higher spending in health science programs in Mexico.

St ock Repurchase Program

On February 15, 2024, Laureate’s Board of Directors approved a new stock repurchase program to acquire up to $100 million of the Company’s common stock.

The Company intends to finance the repurchases with free cash flow, excess cash and liquidity on-hand, including available capacity under its Revolving Credit Facility.

The Company’s proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Stock Repurchase Program

On September 13, 2024, the Company announced that its Board of Directors had approved a new stock repurchase program to acquire up to $100 million of the Company’s common stock .

The Company’s repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act.

The Company’s board will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program.

The Company’s Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program.

As of December 31, 2024, the approximate dollar value of shares yet to be purchased under this stock repurchase program was $98.0 million.

The Company intends to finance the repurchases with free cash flow, excess cash and liquidity on-hand, including available capacity under its Revolving Credit Facility.

In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes and reclassifications, as these effects do not represent operating cash flows.

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Operating activities

Cash provided by operating activities decreased by $18.1 million to $232.7 million for 2024, compared to $250.8 million for 2023.

This decrease in operating cash inflows was attributable to an increase in cash paid for taxes of $23.5 million, from $171.3 million in 2023 to $194.8 million in 2024, which was primarily driven by taxes paid during 2024 as a result of the distribution of certain intercompany loans.

This decrease in operating cash inflows was partially offset by lower cash paid for interest of $3.7 million, from $20.3 million in 2023 to $16.6 million in 2024, attributable to lower average debt balances in 2024 compared to 2023.

In addition, higher operating income combined with the net effect of changes in operating assets and liabilities increased operating cash flows by $1.7 million compared to 2023.

Investing activities

Cash used in investing activities increased by $5.6 million to $(57.5) million for 2024 from $(51.9) million for 2023.

This increase in investing cash outflows was primarily attributable to higher capital expenditures of $15.4 million compared to 2023, mainly driven by the purchase of land and construction costs for a new campus in 2024.

In addition, the year-over-year change in cash flows related to run-out activity from previously sold discontinued operations decreased investing cash flows by $7.9 million to a cash outflow of $(3.6) million for 2024 from a cash inflow of $4.3 million for 2023, which was primarily driven by a payment in 2024 to settle an indemnification claim in connection with the 2021 sale of the Walden Group, combined with the year-over-year effect of the collection of an earnout receivable in 2023 related to the 2021 sale of our Brazilian operations.

These increases in investing cash outflows were partially offset by higher cash proceeds from the sale of property and equipment of $17.7 million, which was primarily related to the sale of certain real estate in the United States and Mexico during 2024.

Financing activities

Cash used in financing activities decreased by $35.0 million to $(166.9) million for 2024 from $(201.9) million for 2023.

This decrease in financing cash outflows was primarily attributable to lower payments of special dividends and distributions of $110.8 million, from $112.5 million in 2023 to $1.7 million in 2024.

Additionally, net payments of long-term debt during 2024 as compared to 2023 were lower by $29.3 million.

These decreases in financing cash outflows were partially offset by payments for common stock repurchases of $102.1 million during 2024.

Other items accounted for the remaining difference of $3.0 million.

Comparison of Cash Flows for the Year Ended December 31, 2023 to the Year Ended December 31, 2022

Operating activities

Cash provided by operating activities increased by $72.6 million to $250.8 million for 2023, compared to $178.2 million for 2022.

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Investing activities

Cash from investing activities decreased by $82.2 million to a cash outflow of $(51.9) million for 2023 from a cash inflow of $30.3 million for 2022.

Cash from investing activities decreased by $82.2 million to a cash outflow of $(51.9) million for 2023 from a cash inflow of $30.3 million in 2022.

This decrease in investing cash flows was attributable to lower cash receipts from the sales of discontinued operations and property and equipment of $78.9 million, from $83.4 million, net, during 2022 (primarily related to the receipt of the escrow receivable in connection with the 2021 sale of Walden University and the collection of certain receivables from the 2021 sale of our Brazilian operations) to $4.5 million, net, in 2023 (primarily related to the receipt of an earnout receivable from the sale of our Brazilian operations).

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Other items accounted for the remaining difference of $1.2 million.

Comparison of Cash Flows for the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Operating activities

Cash flows from operating activities changed by $334.3 million to cash inflow of $178.2 million for 2022, compared to a cash outflow of $(156.1) million for 2021.

This increase in operating cash flows was attributable to:

(1) increased operating income combined with the net effect of changes in operating assets and liabilities, which increased operating cash by $143.8 million compared to 2021;

(2) lower cash paid for taxes of $97.3 million, from $251.1 million in 2021 to $153.8 million in 2022, a decrease primarily driven by the payment of estimated taxes related to the sale of Walden University in 2021 and payment of withholding taxes for intercompany loans that were capitalized during 2021;

(3) the year-over-year effect of $46.8 million of

payments for lease termination agreements in 2021;

and (4) a decrease in cash paid for interest of $46.4 million, from $63.2 million in 2021 to $16.8 million in 2022, attributable to lower average debt balances.

Investing activities

Cash provided by investing activities decreased by $2,013.9 million to $30.3 million for 2022 from $2,044.2 million in 2021.

This decrease was primarily attributable to lower cash receipts from the sales of discontinued operations of $2,067.4 million, from $2,150.8 million, net, in 2021 (primarily for the sale of Walden University, our operations in Honduras and Brazil, the receipt of the note receivable related to the 2020 divestiture of our Chilean operations, and the receipt of a portion of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations) to $83.4 million, net, in 2022 (primarily related to the receipt of the escrow receivable related to the 2021 sale of Walden University, and the collection of certain receivables from the sale of our Brazilian operations).

This decrease in investing cash flows was partially offset by the year-over-year effect of $50.3 million of payments made in 2021 for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazil operations.

Additionally, cash used for capital expenditures decreased by $3.2 million compared to 2021.

Financing activities

Cash used in financing activities decreased by $2,221.6 million to $(461.6) million for 2022 from $(2,683.2) million for 2021.

This decrease in financing cash outflows was attributable to:

(1) lower cash distributions to shareholders of $1,121.7 million, from $1,374.9 million in 2021 following the sale of Walden University, to $253.2 million in 2022;

(2) net proceeds from issuance of long-term debt in 2022 as compared to net payments of long-term debt in 2021, primarily related to the repayment in full of the balance outstanding under the Senior Notes due 2025, for a change of $958.1 million;

(3) lower year-over-year payments to repurchase shares of our common stock of $98.3 million ;

(4) the year-over-year effect of $33.0 million in payments made in 2021 for call premiums associated with the redemption of the Senior Notes due 2025;

and (5) higher proceeds from the exercises of common stock options of $9.8 million during 2022, as compared to 2021.

Other items accounted for the remaining difference of $0.7 million .

Critical Accounting Policies and Estimates

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As a result, these accounting policies and estimates could materially affect our financial statements and are critical to the understanding of our results of operations and financial condition.

Management has discussed the selection of these critical accounting policies and estimates with the audit committee of the Board of Directors.

Management has discussed the selection of these critical accounting policies and estimates with the Audit and Risk Committee of the Board of Directors.

Goodwill and Indefinite-lived Intangible Assets

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Under the updated guidance, the Company continues to have the option of first performing a qualitative goodwill impairment assessment (i.e., step zero) in order to determine if a quantitative impairment test is necessary.

A reporting unit is defined as a

component of an operating segment for which discrete financial information is available and regularly reviewed by management of the segment.

A reporting unit is defined as a component of an operating segment for which discrete financial information is available and regularly reviewed by management of the segment.

Based on the qualitative assessment, if we determine that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, the quantitative impairment test is not required.

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If we perform a quantitative impairment test, we also evaluate the sensitivity of a change in assumptions related to goodwill impairment, assessing whether a 10% reduction in our estimates of revenue or a 1% increase in our estimated discount rates would result in impairment of goodwill.

We have determined that neither of our reporting units with material goodwill were at risk of failing the goodwill impairment test as of December 31, 2023.

We completed our initial public offering (IPO) on February 6, 2017 at an initial public offering price that was below the expected range, and since then our stock price at times has traded below the initial public offering price.

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Indefinite-lived tradenames are evaluated annually as of October 1st each year for impairment as well as on an interim basis if events or changes in circumstances between annual tests indicate that the asset may be impaired.

The Company has the option of first performing a qualitative impairment test to determine if a quantitative impairment test is necessary.

The Company has the option of first performing a qualitative

impairment test to determine if a quantitative impairment test is necessary.

Based on the qualitative assessment, if we determine that it is more likely than not that the fair value of the indefinite-lived intangible is greater than its carrying amount, the quantitative impairment test is not required.

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Changes in our judgments could result in impairments in future periods.

See Note 7, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K for further details on impairments.

We record the amount of income taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the expected future tax consequences of events that we have recognized in our consolidated financial statements or tax returns.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis