Laureate Education, Inc. (LAUR) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the 2021 Annual Meeting of Stockholders of Laureate Education, Inc. I'm Ken Freeman, Chairman of the Board of Directors, and I'll preside over today's meeting. We're pleased to host our meeting virtually, enabling increased stockholder participation and the ability to gather safely in light of the continuing concerns regarding COVID-19. We now call the meeting to order. If you have not yet received the rules of conduct, that can be accessed via the link on the bottom right-hand corner of your screen under the heading meeting materials. The rules of conduct will govern how we will run the meeting. There are 10 directors who have been nominated for reelection. All the directors are in attendance at today's meeting. In addition to me, the other nominees are Brian Carroll, Andrew Cohen, William Cornog, Pedro del Corro, Michael Durham, George Munoz, Dr. Judith Rodin, Eilif Serck-Hanssen and Ian Snow. Leslie Brush, Vice President, Assistant General Counsel, will act as Secretary of the meeting. I will turn to her with any procedural issues that may arise. Broadridge Financial Solutions, Inc. has acted as the tabulator for this annual meeting and is delivered to Ms. Brush, a final vote tabulation report as of 12 a.m. this morning, signed by an authorized representative of Broadridge. [ Lou Larson ] of L-SQUARED ELECTIONS, LLC will act as the independent inspector of elections. He has taken his oath as the inspector of elections, which will be filed with the company's records. Willie Bosenberg of Pricewaterhousecoopers LLP our independent registered public accounting firm, is also with us this morning. He will be available during the question-and-answer session after the meeting to respond to any questions you may have. The record date for voting at this meeting was the close of business on March 29, 2021. The Secretary has delivered an affidavit of mailing to show that notice of this meeting was given. A copy of both the notice and the Affidavit will be incorporated into the minutes. This morning, we are asking stockholders to, first, elect 10 directors to our Board; second, to approve by a nonbinding advisory vote, the compensation paid to our named executive officers; and third, to ratify the appointment of Pricewaterhousecoopers LLP to serve as our independent registered public accounting firm for 2021. After we complete our official business, our President and Chief Executive Officer, Eilif Serck-Hanssen will provide remarks on the state of the company after which there'll be a question-and-answer session for our stockholders. Out of consideration for others please limit yourself to 2 questions. And please note that this meeting is being recorded. Our bylaws require that a majority and voting power of the outstanding shares of the company's capital stock be represented in person or by proxy at the meeting for us to have a quorum. Mr. [ Larson ] will now report on whether we have a quorum for the meeting.

The stockholder list shows that 122,536,715 shares of the company's Class A common stock and 73,544,083 shares of the company's Class B common stock were outstanding as of the record date and are entitled to vote at this meeting. Each share of the company's Class A common stock has one vote, and each of the company's Class B common stock has 10 votes. They are represented in person or by proxy 85,802,870 shares of the company's Class A common stock and 68,985,008 shares of the company's Class B common stock or approximately 79% of the voting power of the outstanding shares of the company's capital stock entitled to be voted at this meeting. Based upon the percentage of the total voting power of the outstanding shares of the company's capital stock held by holders of record now present at this meeting, either in person or by proxy, a quorum is present.

Thank you. This meeting is now duly convened. The report of a quorum will be filed in the company's records. We will now consider today's 3 proposals. Note that we will commence voting after all proposals have been presented. The first proposal is the election of 10 directors. The 10 nominees receiving the highest number of votes at this meeting will be elected as directors and will hold office until the 2022 annual meeting of stockholders. The nominees have been introduced and are listed in your proxy materials. Is there a motion to elect the director nominees as set forth in the proxy materials?

Mr. Chairman, I move to elect the nominees named in the proxy statement.

Thank you. Is there a second?

Second the motion.

Thank you. Nominations are now closed. If any stockholder has a question concerning this proposal, please submit your question through the web portal. Mr. Morse, are there any questions related to this proposal?

There are no questions, Mr. Freeman.

We will move then to proposal 2. The second proposal, commonly known as say on pay, is a nonbinding advisory vote to approve the compensation paid to our named executive officers as disclosed in our proxy statement. The Board of Directors recommends approval of the compensation of the named executive officers. May I have a motion to approve the compensation of the named executive officers?

So moved.

Thank you. Is there a second?

Second.

If any stockholder has a question concerning this proposal, please submit your questions through the web portal. Mr. Morse, are there any questions related to this proposal?

We have no questions at this time.

We will now move to proposal 3. The third proposal for us today is the ratification of the appointment of Pricewaterhousecoopers LLP as our independent registered public accounting firm for 2021. The Board recommends the ratification of Pricewaterhousecoopers LLP. May I have a motion to ratify the appointment of Pricewaterhousecoopers, LLP.

So moved.

Is there a second?

Second.

If any stockholder has a question concerning this proposal, please submit your question through the web portal. Mr. Morse are there any questions related to this proposal?

We have no questions at this time.

Because no further business is on the agenda to come before this meeting, we'll then move on to voting. The polls are now open for each matter to be voted on today. Any stockholder who has not yet voted or who wishes to change his or her vote, may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or who voted via telephone or internet and do not want to change their votes, do not need to take any further action. [Voting]

Now that everyone has had the opportunity to vote, I declare the polls for the 2021 annual meeting of stockholders of Laureate Education, Inc. closed. Mr. [ Larson ], do we have preliminary voting results?

Yes Mr. Chairman, we do. I can report based upon my preliminary telling that stockholders have voted for the election of each of the nominees for director to approve the advisory compensation and to ratify the appointment of Pricewaterhousecoopers LLP as Laureate's independent registered public accounting firm for 2021.

Thank you, Mr. [ Larson ]. The company will be reporting the final vote results in a Form 8-K to be filed with the Securities and Exchange Commission within 4 business days. There being no further business to come before this meeting, the 2021 annual meeting of stockholders of Laureate Education, Inc. is now adjourned. We'll now proceed with the informal portion of the meeting. Eilif Serck-Hanssen, President and Chief Executive Officer, will now make a brief report to you about the company, after which we'll be happy to answer any questions.

Thank you, Ken. 2020 was a year like no other, which tested the resilience and adaptability of our students, faculty and staff. I'm very proud of what we achieved throughout the year. Our response to the COVID-19 pandemic was successful as we leverage our industry-leading digital learning capabilities to provide uninterrupted hybrid and online education for all of our students. In addition, during 2020, despite extraordinary market conditions, we were able to successfully reach agreements for the transfer of ownership of educational institutions in 5 countries for combined consideration of over USD 3 billion. These divestitures were a result of our decision announced in January 2020 to explore strategic alternatives in order to unlock shareholder value. The proceeds from our divestitures are being used to retire debt as well as returning capital to shareholders in a tax-efficient manner. Generating shareholder value will continue to be a priority for 2021 and beyond. We are now focused on optimizing the performance of our remaining portfolio in Mexico and Peru as well as closing the 2 pending sales agreements for our businesses in Brazil as well as Walden University in the coming months. Strong academic quality standards and related student outcomes remain important strategic pillars for Laureate. In this regard, I am pleased to report that UVM in Mexico was upgraded to QS Stars 4 rating during 2020. We are committed to continued investments in our brands to further enhance the quality, ranking and ratings across our institutions. 2021 is off to a good start, and we are encouraged by the momentum in the business under our new model as a regional operator in Mexico and Peru. Our recent intake result in Peru delivered double-digit new enrollment growth, along with encouraging trends for both retention and revenue yields. This performance highlights how resilient our higher education brands are in Latin America and gives us reasons to be optimistic about our future prospects. Thank you for attending our annual stockholder meeting today. I will now turn back to our Chairman, Ken Freeman.

Thank you, Eilif. This concludes the management presentation. Our Senior Vice President and Chief Financial Officer, Rick Buskirk will join Eilif and me in responding to any stockholder questions received through the web portal. Please note that we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. Mr. Morse, are there any questions?

Mr. Freeman, there are no questions.

Thank you, Mr. Morse. This concludes our question-and-answer session since there were no questions this morning. Thank you for joining us today. You may now disconnect.