Business and Geographic Segment Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Business and Geographic Segment Information

Business and Geographic Segment Information

Laureate’s educational services are offered through two reportable segments: Mexico and Peru. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

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. Our educational offerings utilize campus-based, online and hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand. The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions. The target demographics are primarily 18- to 24-year-olds in the countries in which we compete. 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. There are a number of private and public institutions in both 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. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below.

In Mexico, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 30 campuses. Students in our Mexican institutions typically finance their own education.

In Peru, private universities are increasingly providing the capacity to meet growing demand in the higher-education market. Laureate owns three institutions in Peru, with a footprint of 19 campuses.

Inter-segment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate inter-segment items.

We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Loss from continuing operations before income taxes and equity in net loss of affiliates, adding back the following items: (Loss) gain on disposal of subsidiaries, net, Foreign currency exchange loss, net, Other (expense) income, net, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, and Share-based compensation expense.

Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our Board of Directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. We use total assets as the measure of assets for reportable segments.

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Loss from continuing operations before income taxes and equity in net loss of affiliates, as reported in the Consolidated Statements of Operations:

For the three months ended March 31,	2024		2023
Revenues
Mexico	$	214,080	$	181,963
Peru	61,245		69,233
Corporate	47		59
Total Revenues	$	275,372	$	251,255
Adjusted EBITDA of reportable segments
Mexico	$	59,916	$	48,946
Peru	(20,710)		(6,455)
Total Adjusted EBITDA of reportable segments	39,206		42,491
Reconciling items:
Corporate	(8,618)		(9,017)
Depreciation and amortization expense	(18,050)		(16,721)
Share-based compensation expense	(1,409)		(1,124)
Operating income	11,129		15,629
Interest income	1,911		2,158
Interest expense	(4,661)		(5,952)
Other (expense) income, net	(548)		261
Foreign currency loss, net	(5,607)		(28,952)
(Loss) gain on disposal of subsidiaries, net	(3,086)		306
Loss from continuing operations before income taxes and equity in net loss of affiliates	$	(862)	$	(16,550)

	March 31, 2024		December 31, 2023
Assets
Mexico	$	1,453,237	$	1,396,605
Peru	559,927		559,428
Corporate	163,223		169,583
Total assets	$	2,176,387	$	2,125,616