ATGE - Earnings call transcript Q3 2019 | Adtalem Global Education Inc.

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Operator

Greetings, and welcome to the Adtalem Global Education's Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce, John Kristoff, Vice President of Investor Relations. Thank you.

begin. may You

John Kristoff

good and Thank afternoon. you,

that results Joining me the the Executive I'd meaning President will Private only us you Chief of or the oral provision Litigation Risk Lisa XX-K the on to from on is information from Exchange by forward-looking and to to annual that developments of written Reform whether report condition as based of Form are like financial projected forward-looking Patrick recent of and Commission. Act within performance remind new Treasurer. undertake Securities involve a Factors, and made which statement on in the results Wardell, Officer described Any Item as and publicly are may otherwise. update by Unzicker, statements. future differ and Securities risks and these Officer information, Form of materially call that most XXXX. and and Harbor today Potential Chief us be only filed statements obligation conference time We more the made. this With XX-Q Safe cause may of to or uncertainties. with implied time fully statement and available contain forward-looking XA, Financial currently that made or no risks, speaks result is Actual Global those other any it respect day to future the Education differ could to forward-looking Adtalem factors uncertainties in

measures. not supplement, directly which will are today's most financial to non-GAAP GAAP our for we measures, call, During comparable substitute though refer to intended

with today's well discussed reconciliation to Telephone available and replays, other the days. be to for are as GAAP refer the is access And non-GAAP XX webcast available I'll press and Lisa. to website. call financial now over today contains that, quantitative turn of press please replays call our release. and measures to Our today's To a on information of release the as

Lisa Wardell

our joining quarter call. Good afternoon, XXXX earnings third fiscal you and for thank

an to and largely across successes, our third of challenges, March; expectations of achievement and at strong the Brazil. growth enrollments, in of in due saw strategic Despite fell Business these funding balance the of the quarter control three Our challenges a unfavorable ongoing government's our exchange. include segments overall increased in outside Technology our currency particularly in continued online sheet pricing milestones. FIES sector; of the end and pressure, revenue These delay of segments, increase several two short

adjusting As revenue expectations. increased enrollment full a we in Brazil demand and and market student revenue in for strong our double our that services result, are country. resiliency position our illustrating year Despite impact, digits, negative the the in the new

operational to we to target. profitability on quarter, drive successfully the continued During our bottom line deliver improved and third efficiency overall execute against our

As are I AUC the and Ross strategy. We've portfolio, reaffirming main growth partnership delivered Adtalem to to as earnings full relocated the University divestitures, and long-term the we the communicated of the share fiscal fully streamlined beginning campus and UK University established Caribbean successes for goals the DVU campus execute our Medicine our At driving achieve previously. XXXX. UCLAN. the and long-term for and on Sint in discussed we Barbados, of short of reopened growth of School have we the on the guidance satellite our Carrington Medicine School the many American Patrick portfolio with remain Maarten of XXXX, we want a Later, top goal to on we year provide long-term that will year our line committed per further guidance. emphasize we details result, to earnings for fiscal

provider our solutions focused made and outcomes a also learning and workforce and thereby We've serves placement, development. that as In student addition, ongoing as student we and well improved strategy promotes employers our near-term success by optimization drives becoming on maintaining implementing delivered per year, several We for line initiatives. towards largely progress operational on guidance some cost objectives. successfully with of the our expectations our driven earnings share and are in

As explain to both ACAMS. also in in see Becker robust I performance will we and depth momentarily, continued

average. We show rates have of reporting increase attainment at us slightly schools residency our improving seen trending campuses NCLEX and saw in rates medical the year-to-date where an first-time above in both also Chamberlain national pass

X,XXX and of we're mortgage business, financial This announced weeks acquisition market workforce with perfectly banking, leading education services solutions position align to enterprise EBITDA credit will two broadens strategy, OnCourse with the our us a courses at margin our Finally, Learning's favorable and ago. a thrilled offerings provider. as markets our which acquisition position insurance over pending union, leading we professional profile. This strengthening

stress give by at offset partnerships overview and during Medical weeks our at new segment our quarter. now and me the a Let our continued Healthcare by segment campuses lower high-level bolstered medical mixed, results in of Enrollments with growth Chamberlain the school. clinical at are

established Dillard these going we during University of Charles While the students for universities. number quarter. to focused Ross Agricultural incredibly the year's Florida and students with and our prospective first-time admit University, black residency Med's over for Ross milestones University the competitive schools, of historically Med rate University, the agreements increase Drew growth third line also I'm this medical colleges forward. articulation have is more Tuskegee top we we attainment Mechanical and in it has improving on students, from are XX% proud medical near-term accomplished making here

Veterinary on reaccreditation. Dr. be joining XXXX, in Medical In addition, credited Vet University cardiologist. leading Glasgow, of represents Ross will a in Scotland Vet French is Vet XXXX. worldwide full initially was this veterinary as the Ross September been first Council so the Anne granted the French from has acknowledged a Ross Dr. Education. by reaccreditation Association American

we for continued our phase had facilities seen study students. opening attracting the of students year-to-date. this increased Vet University has the the offers matching India. Master I to Canada March NCLEX Social Chamberlain, are at see the attainment to in of already mentioned momentum School Caribbean first students University our to new Ross partnership from the of traction our enrollment in with as the highest-ever the which hub, we as new American rates in England, rate program. Meanwhile and in investment second Medicine pass Preston, first-time Science the launch and Our two additional Lancashire and at in of earlier, positive of Work XX% At addition Medicine, academic residency campus accelerated and Central in are of We Master starting set first programs, is well the an is of

students MSN area and particular courses additional of take core specialization program MSN courses in requires to then current a concentration. take Our track or

and services pillar campus will interest program Our student new will remain begin recruiting with investments shortly. take improved programs, enrollment long-term an student time increases new bullish will and continued provide students, in on drive Both to of Education additional generalist these from coupled Chamberlain's I greater degree less outcomes MSN get that new have student prospective growth locations, continued our also accelerated and to Professional and cap programs With in received continued market-leading all our and solid us reach giving prospects. last complete. allow from profile. regulatory to continue with we we growth revenue students approvals clear compliance a providing to due position opportunities right us, unlock in success with and XX,XXX risk win space growth the governance, membership and ACAMS driven growth the Americas, and exceeding Asia by our see Europe. growing of us to a double its in attractive strength vertical the remains extend quarter, of to for largely value ACAMS. This momentum digits as

the upcoming announced compliance in regulations. credentialing of Global third employees During multinational Certified Specialist complex world laws increasingly Certification, to navigate ACAMS the functions in at quarter, sanction and Sanctions institutions a

to be a released reaction We program, early positive this received in will core have new already XXXX. which

broaden as we bundle reversing for growing we as I'm post new Our and a campuses compliance a previously. was with response student attendance, a also us Education growing global continue in growth we revenue in workforce Rohit We showing brings on business historical also experienced quarter, recently by The strong strengthen presence with highest-ever to-date ACAMS we test to President in to work for Continuing as by lead quarter proposition deep Education continue welcomed certification. experience provider. risk solutions demand. unlimited as X%, an our Sharma corporate to business Becker partnerships. Rohit declines reported to a thrilled Rohit the operational background. our a the value our third CPA and priority third top to a our managing Becker, professional access partnerships record launched and our Expanding Continuing capitalize and continuing to trend reinforced prep global ACAMS. of our remains approximately attendance opportunities governance, corporate strong

exciting vertical and entered to Northeastern to develop also new distribute our with We University Professional within into partnership marketplaces. our an Education products jointly new

an The own to and online AI in for and be summer impact artificial within first assess will professionals services financial targeted late year of that organizations. the AI, and will its course in this be to leaders launch these offerings understand industry readiness will their intelligence

announced of services. mortgage opportunities offerings our credit business, mentioned Professional runs which financial to I as Finally, Education deeply banking, expansion Learning's our earlier, across and we unlock markets union, and acquisition insurance recently OnCourse services financial global

quarter. As for I had will that results of an our factors unfavorable a series macro we face on previously mentioned, third impact the

positive and Among learning since in academic our we're launch based and XX that will institution exam, this composite Adtalem our Ministry to and However, on IGC serve experiences Brazil, metric, are the end-of-program continue Brazil growth institutions Education's programs the business optimistic focused to higher satisfaction. faculty the in the on trends top our score private the XX in XXXX soft education are of on March and deliver ranked we one high-quality ability a the trend credentials as national of student eight number institutions cities Brazilian based students.

existing customers, we offerings attract year So creation beyond, to build to and focusing as opportunity our ahead business innovate opportunities product the by leveraging value new to to fiscal reaching and XXXX we and upon the look strength streamlining and new new have committed we unlocking are markets.

for we financials hard that necessary We to and the revenue that year have BXB portfolio. are for revenue solid and have for execution the We quarter. With working for over at including I'm I the partners, our Patrick confident a deeper taking and transitional runway build remain and foundation long-term have with to across turn steps academic matters during proud solution we grow been look growth enhanced recognize the the partnerships institutions. me consistent comprehensive the our that, portfolio this results let focused a more not-for-profit for profitability. to call of created we near-term

Patrick Unzicker

revenue everyone. the Technology well compared the third as prior offset ACAMS X.X% in year and basis. This excluding of offset by impacted the by increase the Adtalem Education Healthcare strength the driven was constant to continuing the operations $XX.X million prior cost due primarily the $XX.X $XX decreased from in year. continuing from in special The and $XX.X year. continuing quarter, exchange special decrease income special compared income from Diluted segment was from excluding prior $X.XX Net operations in was revenue Operating million per to year. prior the operations year. earnings in items prior prior growth in segment's in $XXX.X was Education items, million compared currency Revenue in to items X% items $X.XX Thank in $XXX.X at Good total other the cost segment, Chamberlain softness was for performance special for was essentially discounting was the medical foreign Medical by The flat and Business million favorable the Brazil. enrollment Becker. $XXX.X million million primarily to were support segment, $XXX costs, Operating In Healthcare effect revenue veterinary in for the robust and exchange to million excluding Professional in in decline excluding share third to driven growth partially to currency $XX.X new RN but Brazil. Medical you, X.X% afternoon, BSN the year. in and Healthcare growth which offset Medical Higher million X.X% quarter revenue Professional foreign our X.X% of a the million to programs. schools to compared compared quarter Lisa. and in in by million the program increased year. was $XXX.X grew year. and and of increased negative compared on and mostly a as to the by The the segments, prior growth

operating XXXX of negatively from $X.X The schools the into million year-over-year comparison instruction the third year. XXXX the of $XX.X compared quarter the revenue to due to normal the was cost third due difficult to of return when excluding expense million XXXX hurricanes. the at comparison quarter basic a decrease future Segment million XXXX increases schools. special to items revenue third science $XX quarter affected shifted and is in medical growth was the a the prior to The postponement income, in was support January academic to level by medical at of the

segment. Professional turning Now our Education to

revenue prior quarter in million compared in income doubled of performance to Third both Becker. the compared to to to prior million in The increased than million ACAMS improvement again solid the $X.X the year. to $X.X the by as ACAMS well more as driven XX% due $XX.X was operating growth return double-digit significant Becker. Segment and year, growth with

X% totaled down on revenue a segment Third of or $XX.X constant million, quarter and XX% basis. a decrease currency Technology Business

was this by continued the mentioned, driven headwinds. increasing Brazilian in pricing government's and delay Lisa decrease pressure funding, currency As FIES

remain student items $XXX,XXX market strong in driven revenues. distance operating capabilities. and positioned $XXX,XXX this enhanced loss prior compared well loss was a quarter brands superior we Segment to the third learning leadership, However, with lower by segment in excluding year in special of outcomes the and

continuing rate XX% excluding from items was Our quarter. for third effective special operations tax the

the totaled prior million our to $XXX flow capital totaled turning to year. first million fiscal the year. nine position. of and from Now Fiscal $XXX for million balance XXXX expenditures financial sheet the months in to $XX.X compared compared million Cash year-to-date in $XX.X prior operations

million, at XXXX March flat was accounts the with year. prior $XXX XX, receivable net Our

outstanding the $XXX.X first student We $XXX.X of bad to the solid revenue in closed months percentage and was and For of borrowings X.X% quarter debt a third of as the quality year, prior X.X% the of and year, our fiscal million. cash as equivalents programs outcomes. with compared million nine the reflecting cash bank of

balance strength our the financial We continue from position to of benefit and sheet.

was shareholders, commenced our One stock common fiscal ways through program cost our We returning during share of the of million top at to cash we XXXX. capital share repurchasing the shares allocation priorities. deployed $XX.XX and among approximately capital of an of our the is XXth our program during per third quarter completed which XXth X.X average repurchase by quarter

Now to turning outlook. our

year. the For of increase the fiscal revenue X% fourth we to XXXX, to to expect prior quarter X% compared

fourth essentially X% prior special a BRL the increase quarter currency items of X% negative an XXXX X%. impact We dollar. the expect quarter expect of exchange revenue compared costs XXXX approximately assumes outlook to the operating before X.XX includes a to rate fourth to prior full we to year, U.S. to to compared flat year. The be On year basis, which

items We share range continuing year. grow X% to compared expect in X% to operations per before the special earnings from prior to the

approximately to assumes is million. Q&A. I $XX will operator rate turn XX% tax The to We the BRL expect now be of be dollar. year in rate range. over call our that, to full capital the X.XX year to full outlook to XX% for spending year the expected the exchange an Full U.S. With

Operator

Thank Ladies with Peter this Instructions] we’ll at time, our gentlemen, Piper your question. question-and-answer Please comes Our [Operator state you. first session. conducting and from Jaffray. question Appert be

Peter Appert

Good afternoon. Thanks.

these going So have on was the cited for I it been RN to weak program. and the to pressure And I'm you Chamberlain? Pat, to how to you seems a at the get growth business, be think, you issues it back in Chamberlain and while sustained enrollments – like pricing BSN who then was wondering so issues probably citing continue

Lisa Wardell

Yes.

One, that students more we're I would BSN things. there bolstering teams that of decline really RN we BXB Peter, in but a Certainly, driving a narrowing couple hospital couple is in gap been of reasons. for make system, efficient our to them So say some hey pipeline. had to

at gap a and As as our in drive movement see competitive about our pipeline us, our robust in talked you be really our just for also a we're shift that narrowing. as bit, saw were we And is, need talked programs. time, efficiently, a to terms we've seeing in graduate and mix, know of we BSN same enrollments differentiator we that good as we – on-site more that about bit the particularly should which

The programs So brand that just while to small two out. Master know, Health, we and of as And because great from academics. really, SMP, and well-positioned strong really it's started in program, market bullish of Master the Health rolling on growth Public there obviously is Public to market programs others, base be and very because Chamberlain. very get new able new Chamberlain the quality of in you into those

feel to what and like growth RN a we've So on BSN, there. handle we really about long-term immediate I do but understand saying you're got good

Peter Appert

And Lisa, to profitability programs implications does presumably terms BSN with MSN negative mix margins for continues and of or shift the as undergraduate in have segment? the the that the growing,

Lisa Wardell

that two BSN are long online, of those optimization mentioned and mean place on terms but of Yes. positives quite mean I that put from do we as place, ones being to my there's nice term in the you we over that are to obviously and, of medium ROI We've two call, campuses buildings, I on and those the you you as are perspective, have the graduate is like know, I to know, in good. and RN online the in what here. all margin develop the programs continuing campus. got the that profile. understand therefore, our One have

So we with that. happy are

Peter Appert

seems pricing in those continuing mentioned Lisa, Brazil. pressures. it you and could on be issues online market. competition then that And And like again,

improves operating you? there results what for the So

Lisa Wardell

give three return got to And growth win controllables control, a we some of line there's that course, we've Brazil. in top there Sure. that to to believe there we right Yes. don't us but and macros

that I say really cadence discount overcorrected first we price. a right. is bit the on getting would The

we in did team and some with perhaps have, correct. while being enrollment, good student should and and So the new used student per that there saw not student deal get numbers is to growth we able we that revenue the one new that's to

on we're So that.

macros The of those second FIES. know, you one is is, as

we We continue down XX%, we'll of the being third a to to make that to growth, is less controllable price-sensitive, we're into Because got brands those those we and our that top mentioned about to push teens, brands one that the is to frankly, base. line revenue sure FIES there, continue more. that. below do are be of and continuing think we've go part I've IBMEC able smaller need

to a an as with sensitivity the got and student will we've per price cycle that top incremental us and student. something IBMEC the have which And student, also lifetime programs are example, IBMEC So programs good core, then and help they we've per we that to add shorter-length IBMEC started of revenue is the but less certainly think revenue over push base, less line. to the

Peter Appert

And well. line a then to context maybe do of it bigger surprisingly, in But decelerates continues being I lastly, not the growth guess, Lisa. business. ACAMS top rate the just

terms that for should we thoughts business going rate think your about just So of growth the sustainable in forward.

Lisa Wardell

Yes.

So online we I sort track think with of said. that on or really what in we are rate, terms of ��

of some it's a cyclicality lower bit timing on think I renewals. because and

talk full probably Becker. a year said we've before, guidance, as into strongest So and really for get about ACAMS the and as both QX is bit we'll we

three that in that so we're And concerns robust to and Asia, across it going see U.S. to geographic no there seeing growth. continue fact, regions, all Europe have the we So we're also

going. about excited really where So ACAMS is

Peter Appert

wanted... And just then I

Patrick Unzicker

basis Peter, ACAMS' the quarter actually, for conference timing the Yes. that shift accelerated. for from growth sequential just second in the

Peter Appert

pending, part OnCourse services assume just you're to And And Lisa. the business. do building with there, I lastly, of Okay. more you're the looking professional maybe acquisition the presumably, obviously

view how you about little mix picture you the just can next of couple So of the a talk your bit see the next over year, evolving years? in maybe big business

Lisa Wardell

on certification always we laundering, anti-money this one model look that and win And of compliance. see are what Yes. now that's we is new going very sanctions, right extremely bullish to like. the ACAMS of said to governance, course and with to risk beauty customer. Sure. OnCourse, specific Obviously, with know across but We've broader your a

As we'll I is we OnCourse there. then base, there about programs shortly, to et cetera, get here the comes to successful those like. offerings, cross-selling both mortgage what move to continue we're opportunities Obviously, we looks that But we synergy tier its pending see anticipate then insurance extend we the we don't also and but the just as don't so get portfolio, talked of close banks closing different providers, customer reach through couple able next program – into lenders which and and today, opportunities. across quarters, and that visibility some of to

Peter Appert

thanks Okay. Lisa. Great,

Lisa Wardell

Peter. Thanks

Operator

Jeff Our Meuler next with your question. state Baird. Instructions] question Please [Operator from comes

Jeff Meuler

you. Thank

cost to what could detail first, guess I savings, Just EPS shortfall maybe the to revenue doing if additional the us give guidance? the you offset maintain you're some on incremental

Patrick Unzicker

on standard So incremental costs. our the driven our reducing by largely is focus savings cost continued

hands been as we've home a So new both well reduce able institutions to in owners, as the our supporting cetera. real in of estate employee count, terms to office able a count, et the benefit then good continue been the of at student their here of now we've some start see to footprints lower are with to that

Jeff Meuler

something schools. didn't what's there touch timing then it. able with just about There in lower clinicals there or on going to there? or And at fully a being issue medical was Is weeks there comment fill Okay. something just a clinical was I was this

Lisa Wardell

Yes. It's absolutely timing.

perspective, not then the rotations ending so them. it's going and therefore, revenue their the make those deferring their we for into plan – students students good because sure between have a to And But that we and basic out. basically aren't sciences frankly, as from an that extended, are time much taking academic time clinical

out able data it's And the I fact, we've that. them be go, And to before they'll time they more spend show they better. the got think opposite. do studying to if in

worried not we're term So that about long all. at

Jeff Meuler

are with partnership what you not-for-profit you doing envisioning academic Okay. comment or And the what about institutions, then doing? are

Lisa Wardell

Yes.

with really mentioned kicking in I we're program modality, that online where ability delivery one not-for-profit with the really is artificial undergrad which innovative – services, in financial university that off putting have University, our Northeastern Massachusetts. also to right for terms our content we're and grad script it – a majors. we of for their as a together intelligence relates for And and now, business actually, right, business in that So

So of those and a the particular are way not-for-profits with the relevant where in changes, they're of is in revenue. things think, across partner industry And I sure to kind This types trying also drive ACAMS, that able is make entire incremental but in the seeing to through being them, just market. remaining general for us we're it to portfolio. one the

Jeff Meuler

Okay. you're comment know, be And business generally, could you the the I the the portfolio. and that additional Are But then about portfolio. candidates divestiture, just what for last then by there think, like focusing mean parts Or do don't Brazil something else? – streamlining portfolio? streamlining I or you saying the of just

Lisa Wardell

Yes.

a right But to just Day. of talk of long-term the feel going our place. and we've we couple terms plans and So portfolio, in the certainly at got weeks about in pieces we're – platform here that Investor actual

growth just again, financial any areas, talked we're services streamlined inorganic now. there of financial doing then compliance. being services, you about very have what that if And core talked Ed, the to we've So within go three we as sort governance, risk we Professional but about to, through

lot got a we've I perfect think of is and organic OnCourse runway. of financial that, services a example

we Chamberlain platform to program if organically, about programs But because you need them at did takes anything – from we programs. would talk inorganically, have frame look be certainly, we I and it to new use – we have example four that through three years that there. And get and and Medical see an – And you a the to If it market. room always product Healthcare, accelerate and we as that products. we get the time there to

parallel that works two because ago. we've got were You in Those out. that see three new we're doing coming ones in years the

controllables that a it's the we of Brazil, I've in be got like to not reactionary, there, question. we what in And a then to we macro Brazil. certainly might that do. bit a feel need that's platform win want platform. little there. what we've we have we course, the And the certainly way to need So talked about be But in are,

Jeff Meuler

Lisa W. Thanks

Lisa Wardell

You’re welcome.

Operator

remarks. Thank further and call questions closing Kristoff this the time. at you. are Ladies gentlemen, to I'll there no back turn John for now

John Kristoff

you. Thank

So quick Investor May in New details. we before press We'll morning will which Lisa the issuing Day, holding we real release XX be close. with mentioned just York. in just be on a

please free register encourage have we'd So you of result attend. questions if much. follow-up And for you you look as further reach the any that Thank a to to and directly. very to call, feel to out me

Operator

concludes you. conference. All Thank today's This may disconnect. parties

Adtalem Global Education (ATGE) 3 May 192019 Q3 Earnings call transcript