Lucas Nagano

Lucas Nagano asked about any material changes in assumptions below the EBITDA line, such as capital structure or taxes, implied in the adjusted EPS guidance for 2026. He also questioned the extent to which capacity constraints in Peru are expected to affect new enrollments and pricing mix this year, prior to the new campuses addressing these issues next year.

Answer

Rick Buskirk (CFO) indicated that for 2026 adjusted EPS, there will be a small increase in D&A due to new campuses, generally in-line to slightly improved taxes, and slightly higher interest income from new campus funding in Peru. Eilif Serck-Hanssen (CEO) explained that Peru is experiencing higher utilization, leading to some same-store growth restrictions, which is why new capacity is being added. Rick Buskirk (CFO) added that strong fully online growth in Peru in 2025 resulted in a 1% price mix impact, a trend expected to continue in 2026 as the online segment scales.

Lucas Nagano asked about any material changes in assumptions below the EBITDA line for the 2026 adjusted EPS guidance, specifically regarding capital structure or taxes. He also questioned the extent to which capacity constraints in Peru are expected to affect new enrollments and pricing mix this year, prior to new campus openings.

Answer

CFO Rick Buskirk indicated a small increase in D&A due to new campuses, generally in-line but slightly improved taxes, and higher interest income from new campus funding in Peru. CEO Eilif Serck-Hanssen explained that Peru's higher utilization and capacity constraints are driving new campus launches and classroom additions, though the impact on current enrollments is not material. Mr. Buskirk added that strong fully online growth in Peru in 2025 led to a price mix impact, a trend expected to continue in 2026.

Lucas Dai Nagano of Morgan Stanley inquired about the development of Laureate's online learning programs in Peru, its comparison to Mexico, and details on new campus openings, including their locations, brands, demand, and impact on capital expenditures.

Answer

President & CEO Eilif Serck-Hanssen explained that Peru's online segment is growing in the double digits post-regulatory changes, mirroring Mexico's successful model. He confirmed two new campuses opening in September: a Unitech campus in Monterrey, Mexico, and a UPN campus in Lima, Peru. He also outlined the capital expenditure model, stating that supporting enrollment growth of around 6% requires CapEx of approximately 5% of revenue, which accommodates one to two new campus launches per year.

Lucas Nagano asked if the substantially lower tax rate seen in 2024 should be considered the new run rate. He also questioned whether the positive enrollment performance from the second half of last year in Peru could be maintained during the current primary intake cycle.

Answer

Rick Buskirk, CFO, clarified that after adjusting for non-cash FX gains and a discrete tax item, the run-rate effective tax rate is approximately 40%. Eilif Serck-Hanssen, President and CEO, addressed the Peru intake, stating that while the market is improving, they are seeing some lingering effects from the recent recession, particularly in the price-sensitive value segment.

Lucas Nagano inquired about the specific drivers of the operational upside in the updated guidance and asked for details on capital allocation priorities for free cash flow beyond the newly announced share buyback program.

Answer

CFO Rick Buskirk stated the guidance increase was primarily due to flowing through the Q3 revenue outperformance for the remainder of the year, along with a timing shift of approximately $10 million in expenses from Q3 to Q4. CEO Eilif Serck-Hanssen reiterated the company's focus on returning capital to shareholders, highlighting the completion of one $100 million buyback program and the recent board approval for another, which will bring total capital returned since 2019 to nearly $3 billion.

Lucas Dai Nagano from Morgan Stanley inquired about the Start Anglo school expansion, asking if all 50 signed contracts are expected to begin operations in 2026. He also requested more detail on the drivers behind the strong growth in non-subscription revenue.

Answer

CEO Guilherme Alves Mélega clarified the Start Anglo rollout, explaining that of the 50 signed contracts, eight new units are expected to open in 2026, with the majority of the remainder opening in 2027 and 2028. Regarding non-subscription revenue, he attributed the growth primarily to tuition from the company's two flagship schools and increased enrollment in its prep courses, which were not present in the prior year's results.

Lucas Nagano of Morgan Stanley asked for clarification on the B2G segment's revenue recognition, specifically regarding the seasonality of the Pará contract, to better assess the segment's growth potential for the year.

Answer

CEO Guilherme Melega explained that the seasonality for the Pará contract is normalizing, with revenue recognition now more aligned with the B2B distribution process. He noted that while specific guidance would not be provided, Vasta has a 'very heated pipeline' with several new contracts expected to be signed, leading the company to work towards 'sound growth' in the B2G segment for 2025.

Lucas Nagano of Morgan Stanley inquired about the B2G business, including the value of the renewed Pará contract and the sales pipeline, and also asked for the expected 2025 revenue from the Start Anglo franchise.

Answer

Guilherme Melega (Executive) confirmed the Pará B2G contract renewal at approximately BRL 80 million and noted a strong pipeline ahead of the SAEB assessment year. He projected Start Anglo would generate around BRL 25 million in revenue in 2025, with significant growth expected from new school openings.

Lucas Nagano asked about the competitiveness of the student intake process and for management's perspective on recent regulatory discussions, including potential price monitoring for medical schools and a proposed proficiency exam for physicians.

Answer

CEO Virgilio Deloy Gibbon described the 2025 intake as highly successful, with strong candidate-to-seat ratios driven by the growing Afya brand. On regulation, he stated that Afya supports measures that raise quality, such as a proficiency exam. Regarding price controls, he noted that higher education pricing is governed by a stable federal law from 1999 and it is too early to assess the impact of recent political commentary.

Lucas Nagano asked about the variance in tuition increases and candidate-per-seat ratios across Afya's portfolio. He also followed up on capital allocation, specifically how a potential redemption of the SoftBank debt would impact M&A versus debt paydown priorities.

Answer

CEO Virgilio Deloy Gibbon confirmed that tuition increases vary by institution but average 5.1% for 2025, with overall candidate demand tracking significantly better than the prior year. CFO Luis Andre Blanco stated that the SoftBank debt redemption option is not until May 2026 and that the company could easily refinance or repay it with operating cash flow, indicating it would not derail their capital allocation strategy.