ATGE - Earnings call transcript Q4 2022 | Adtalem Global Education Inc.

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Operator

Greetings. Welcome to the Fourth Quarter Fiscal Year 2022 Earnings Call for Adtalem Global Education. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Chandrika Nigam, Senior Director, Investor Relations.

begin. may You

Chandrika Nigam

was Act like will I'd the only you this financial Litigation that harbor the our respect Thank and the performance to future available which as and forward-looking to by statements report our on future forward-looking or call otherwise, and Reform Any Securities Private information contain of of annual of XXXX within speaks conference with could provision to Adtalem you. most projected differ condition the required remind whether with uncertainties us of law. of the the risks written safe these forward-looking made. only filings no XX-K based update time except the SEC. developments by recent described involve by that filed results and Education publicly time, in date Risk undertake on implied SEC other factors uncertainties. may Actual Item to made from any it new on obligation may Factors as forward-looking Potential or risks, information, currently statements, result with cause the differ more fully Global made of to of statement that and as We Form materially are is verbal, or other that meaning from results those to us be XA a statements. whether

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

continuing remarks the To for of are financial comparisons hear Officer; Please and basis, unless Executive replays prior in as Adtalem's on information replays, today's exclude the today's press items President Chief Officer. GAAP of well comparison are webcast from other from call note prepared measures days. is website. to on today year and otherwise available to special period operations to XX made call today's discussed Phelan, please which that GAAP release, the release. President non-GAAP contains begin quantitative access Steve press and are then today's Bob and all to Our as and stated. available during results the Vice Senior refer reconciliation our be with Financial Beard, and We'll and Telephone Chief financial presentation

And Following remarks, I'll now session. the to have the question-and-answer turn call with prepared a will we Steve. over that,

Stephen Beard

we I'd progress run top reflect for join you, the laid colleagues priorities Thank on bottom and on off the Walden, you These good made our delivering to full the to and line taking we afternoon, quarter. across Despite continue margins. out a a fourth met expectations ago. portfolio. recap. and progress the in better and dynamic, of using as for operating rate Adtalem, catalyst cost a whole integrated million the first $XX model. transforming more efficient synergies the year with target by our the We integration both To of a of starting commitment execution expand strategic to review finish and introduction of results high-level capped like of integration by our to the by today. with our year and Chandrika. Good a time solid year quarter everyone, thank begin call earnings the the Adtalem our XXXX transformational in was the a just our year faced for sector, fourth XXXX headwinds under on

our by prospects the goal capital while focusing Services existing confidence demonstrating a the reduce our to be on talent share divestiture I'm successful which of year, significantly program Financial and to began cash provider with strengthen date. us $XXX our a the strategy segment, to balance of the shareholders the we to encouraged accelerated professional repurchase to sheet long-term in net while completed we health care progress go-forward industry. leading And returning leverage our our During our the enabled using of company. of finally, million

of clarity purpose for on to the of health our all sharpened well focus substantial Our stakeholders. space attractive and deliver value care positions us education

a year. and We $X.X resulted full despite over at for revenue take the look fourth the students enrollment results Total highlights expectations closer year billion. line for let's full challenging our institutions. Now our the quarter XX,XXX with in environment in delivered of of

from our progressed, year acquisition. rollout margins operating of realization expanded of the As and new the operating synergies through the the model, we Walden

full reported higher grew XX% than and year. operating points we we margins year-over-year, year, prior by XXX the $X.XX, EPS the was For adjusted which basis of

the and an in we XX-month still the performance effort, stages in this believe of the reposition to effectiveness. drive prove And will reflects early while we are fourth Our compelling. results organization quarter operational enhance the

effectiveness, marketing. progress. been and enrollments we impacted customer demand on particularly is in returns good ongoing, report environment headwinds, Although have improves. capture better making I'm pandemic-related but today negatively Last in by experience most I positioned That nursing, notably operational as we're are higher pleased overall the several focused shared initiatives enhancing to work to that quarter,

tracking, the engagement of that we've faculty our with empowers on launched our to new our testing including tools A/B brand a predictive and analytics rigor across introduced media drive elements of best. improved brand allow persistence. campaign the recently to the customer And to recently the to of our campaigns marketing approach effectiveness measuring experience to can and which our institutions efficacy variations performed For example, on efforts that test new side, determine media side attribution, measuring that investments, support we house, us student

on driving an long-term and performance. effectiveness operational position financial efforts improved are strengthening these by Finally, in focus complemented ongoing financial our enhancing

serve. look sheet. we as to targeted that necessary to allows net maintain that have summary, And expenses leverage we In for to cost to our enterprise-wide at of delivering X.Xx, while organizations economic this and foundational superior discipline professionals reduction in produce a Expanding position taking and the highly maximize our this an our to and With driving manage they stronger. and outcomes respect proud never to been the in investments we're practice-ready force access value has for dynamic, proper to are trained, collective strong for ourselves scale. capabilities. a commitment to we value thoughtfully we enhanced we are communities market-leading With scale us academic believe and the depth the and steps academics, balance breadth, student making success and good

specialty whom such perioperative a over services. nurses which few to primary than me physicians of of that In the to University share to underrepresented program, medical Also, its with Chamberlain settings critical of helped of prepares contribute students our medical focus secured the shortages a American. XXX grant day more Let more as examples million fourth Adtalem's quarter. from entering school $X practice-ready specialized combat for graduated or as X their black a care than specialties minorities, XXX XX% variety across country. identify schools are African XX% over graduates of XXXX,

attainment we've Taken schools, operated institutions. last first-time quarter's which these these together with highest rates ever residency at since were the

additions XX be and a Transformation the to the in Also ability the We recognized Walden Walden, and our host of Dr. President, made in to the create his to President Vice the have country in named continue team leadership Strategy work, he experience. our promising of during most the Chief He'll expand promotion Lithuania, a the faculty Scholar. of the for we value prestigious one Evan is University medical of as was marketing Doug nearly Officer. of of scholarships which quarter, members we travel member community Senior operational X and our and world. Fulbright the senior our Walden appointment is put has to encouraged extensive to up Gilbert, widely what with strategic has Trent that taken supporting Michael and students. At part

and should me the fiscal improve leaders institutions its next optimistic sector Trent of played education higher environment phase our Brazil of the in divestitures the inflation those pandemic our recently. He of the retail, and activities. latter our leverage that said to fatigued team, a joining outlook of 'XX. to University, leader again has pressure, we're Since practice, the was watching McKinsey, Walden over across as he education time that, of successful it experience led confident And enrollment various have on Company's Suffice growth BXC at Chief across provide to for market only to in strategies. realize our execution have half as on under With a say, us job and been large-scale across a Evan he activities. and in hospitalizations overall. in the to investments all in growth post-licensure student drove challenges. we closely to industries, for Having lead pricing He and Officer number making I'm professionals was affect And I'm challenging nursing care and Chief the thought programs. potential. financial that joining our services We're enable formulation industry the Marketing and benefits excited health that, media. team, Officer marketing, programs remains our other demand. where Prior our will which Walden help transition businesses. Before declines innovation. support role served integration in demand the resulting the and he & enrollments, of year, accelerating let have the transformations acquisition cautiously has partner some where for enrollment to the in valuable that and the fiscal Evan University, of are across to have Adtalem. tremendous the continued his the now of integration joining driving 'XX, will added robust he of signals risen color product will improvements to XXXX, high past work higher and critical McKinsey Michael transformation across range and full we deep COVID-related also including of served market a a respect industry Adtalem value-creating Strayer me education the where performance full With Strategy senior it central

in indicators X% including: applications early notably underrepresented first, a year-over-year, low rise worth and income students. student number the of some driven by aid And are federal noting, by

our months. affect improved course, our online in which to nursing by model, us beginning suggested of Moreover, point partners the post-licensure its with coming upwards to is 'XX diluted to a on are And per programs of fiscal fourth be downward, has the during earnings hallmark or characterize Despite employer the out the global high-quality materially guidance year fiscal the are dynamics that the within come pandemic deploying that our that minimize value nursing $X.XX. our after off began to range our that within backdrop barriers. here of fluctuations that in expect pipelines against talent for we have enhance $X.XX $X.XX nursing financial to times, for trending the didn't remiss to opportunity be enhanced life compensation $X.XX operating business coming declines, remarks. the favorably impact search of on of travel economic anticipate the focused be we volatile outcomes. employer trend a that expect from create and of of for highs enrollment Considering It's signaling billion these we adjusted our is could And oil if tirelessly of supply this benefit Next, that demand further student the 'XX, environment. his Bob working potentially creating price partners revenue chain incentives in operating these elaborate market nurse are for share economic having and will disruptions students. current finally, XXXX quarter I indicators, leverage macro at to in billion. grow uncertainty for Adtalem predictable And exposed for we range we colleagues to and, better an announced all not programs. fiscal I'd to

management a brands believe us market-leading and purpose-led. for a I turn call profitable for And have positions ahead financial ever, an growth. with mission-driven of all experienced opportunities more us which of I'll Bob of team, new are the focus, Now long-term results. exciting With and discussion our that, than with over we we to

Robert Phelan

year my the performance XXXX. Thanks, will and Steve. and XXXX the and fourth assumptions for review finished drivers fiscal our Today, I'll expectations and results in quarter key Later discuss year. full the in solid I'll our a for I our same. we the fashion in remarks, financial elaborate on drivers Clearly, for

increased XX% year, the top the of in driven of starting fourth the with Walden. Let's million $XXX.X prior begin our with to with financial a the line. performance, acquisition summary by quarter Revenue compared

year-over-year billion, prior up full driven the year. year, the the $XXX.X primarily Walden. million acquisition versus was $X.XX was by The XX% or of revenue For improvement

only part excluding As operating of special for by quarter the a prior Consolidated XXX% addition items to Adtalem income, XXXX. of year compared first efficiencies. quarter, owned an Walden Walden increase the the fiscal with million, for was reminder, of during operating was the and due $XX.X

expand period year. the XX% same to operating compared the to for continue our We prior to margins in XX%

XXX% share, per continuing growing full the special margins synergies by for cost excluding the For was fiscal prior an of the basis increase of operations consolidated of increase $XX.X operating quarter was operational million year, realization and efficiencies items, with XX% versus an and income driven Net $X.XX, primarily year, over integration. special $XXX.X earnings XX.X%, from points operating was of million XXXX. income, XXX items, year-over-year resulting associated excluding the in diluted Walden

For in excluding $XXX.X increased share a $X.XX earnings net items. from per year, XX% special the XX% resulting full or with of million, the operations continuing income prior increase year, diluted compared to

post-licensure $XX.X of continued year, with improved the reported I'll was XX% programs headwinds student in The enrollment the online of fourth a quarter The revenue Total year and X% increase highlights continued up benefit decreased compared primarily synergies. and our to leading prior Chamberlain during new enrollment on-campus discuss $XX.X the to Next, X.X% marketing was nursing decrease cost by lower $XXX.X in prior of to by starts. COVID-related year. from of income operating result with financial from Total the when million, segment. grow, million primarily the operating segment income in attributable fewer aided compared prior pre-licensure which quarter persistence. million,

Revenue with Total the income million. fewer fourth nursing Walden. was million. was student headwinds prior starts. to quarter special quarter year decreased $XX.X of because enrollment during items, million, $XX.X post-licensure to the and in our operating $XXX.X income, compared excluding Turning in leading was Segment COVID-related operating the programs, new X.X%

CDC, reached double the the causing by mid-February across since QX, the noted during country recently COVID-XX level to As cases since highest hospitalizations May.

were burdened starts. surge nurses programs new of further result to nursing a affected post-licensure this which leading as Our fewer

to the performance typically term, believe we nurses demand and On are in and macro representing perform and will programs results. over outpace compared better the beginning to an remember the income, improved to the increased social items, new behind with X.X% Revenue for while financial time, quarter subside income the It's with compared all supply student that the our higher growth the well. $XX.X compared Operating and to segment primarily opportunities are increased important future. us driven $XX.X long prior our other year, growth fourth to hand, enrollment for enrollments which over in attributable prior the to with year, X% in medical student cost the XX% behavioral increased in in continued to headwinds and persistence coupled operational enrollment trail operating In we from vet benefit $XX.X million. revenue resulting excluding segment, million expected special with to see that our by the year, programs. trends, COVID Total was of synergies. continue million, XX% was increase increase prior

more higher in the starts schools. in We'll travel in to abatement our expect initiatives resulting of the environment improve on segment. improve profitability restrictions enrollment COVID-XX remain With this discipline to favorable ongoing the focused cost initiatives persistence, we of a for our

structure. to let's capital cash balance sheet focus turn flow, Now our and

capital was the $XXX.X and $XX million. million continuing totaled cash by operations year, expenditures net For full provided

was for increase with fiscal prior an million $X.X compared XXXX flow million, $XXX.X a free year. As of result, the cash

define cash we reminder, flow by a expenditures. provided operations As as free cash continuing capital less

of deploying year, notes. we $XXX.X maximize we capital secured our our million for the the by strengthen well in fourth great balance repurchased as shareholders. made strides to quarter, senior sheet During financial as to our return strategy In

Net As and our at X.Xx, finished reflecting below was leverage XX% reduction of since June target million of during XX, of almost quarter a our a Xx. result, of significant as XX% gross acquisition Walden. well debt the $XXX.X

X Our we while the we company's organic and debt growth capital past progress deployment invest bought accelerated to know, we as stock. in been program balanced of in continue reducing has March, our approach quarters as executed shares you X.X million we in share over on opportunities, a common achieved to the executed repurchase where

in strengthen further continue Going businesses we while we our to balance for growth. our future intend forward, reinvest to sheet

Turning to additional compared 'XX. pricing in revenue and Walden of months with improvements persistence fiscal starts, an our guidance. anticipate XXXX, from growth and in In X.X new FY we

important we with 'XX and consideration and versus year the $X.XX operations, fiscal this revenue the In beginning base our lower more I through factors expect it's be walk FY of range we to we enrollment $X.XX I'd to the our the are the complexities guidance. adjusted XXXX. of of operating However, a net excluding of consideration expansion effect factors, continued remember serve, these to from year-over-year billion billion earnings of share to as that of special diluted when in into items, light margins. different took reflecting you Taking we per color continuing $X.XX developing provide markets into like $X.XX

'XX. in of the it's to financial for our mind keep First, important calendarization results fiscal

productivity our half we we half will in are marketing towards the persistence degree starts a the first in management to synergies remain and through of operating as throughout and throughout cost from Also, the the half our EPS second initiatives to of and of Walden. and in begin new integration efficiency the XXXX, greater initiatives gain and mentioned focused increasing traction driving from improve to the We we Accordingly, to year. remarks, on his Steve investments year expense year will headwinds on to COVID As of of in year-over-year up operating remain expect ramp the additional second in $XX the and begin improved an margins. synergies cost enrollments will completion drive revenue which help on both the expected track year as the acquisition anticipate deliver the latter abate. the million Walden, anniversary of of

in over As results efficiency positioned with of showcased improving I future. we for the have I our and the operate look well turn track Q&A. operator back the a now ability on call greater one it's financial us consistently XXXX, that record will to our performance to that, With where for

Operator

Instructions]. [Operator

Our Baird. of Jeff the first line from Meuler question with comes

Jeffrey Meuler

in lot to detail kind just of gave understand but know it us guidance to the a I I market already, of guess. you trying better assumption, and

it more sounds expecting in if indicators, is guess well. nursing. So correct Vet, I'm that me like, already improvement early incremental it's post-licensure but more of Med wrong, seeing then I improvements and you're already about there's pockets are Walden upon you're based And where leading the performing

of Just confidence with confidence you guess, better assuming gives in, help business, the what us guess, what parts that, what understand embedding you're you gives specific into a environment? this stage? at guidance I And I

Stephen Beard

Thank Jeff. you. question, Great

seeing their Vet, of over you as signs to cycles enrollment we're the noted, course encouraging some Med 'XX. continue we're that already and expecting So in in fiscal

post-licensure product trouble the has if will, of biggest We at which last those are programs. do the But bit demand the they take will and the nursing pre-licensure where in Walden, trends Walden post-licensure. lagging the as has had and is the for a in seeing also And during to trends most the you we improvement, nursing. is we've sciences is where year. grown over from also think, the know Chamberlain back market. a expecting And couple a and those behavioral of know, obviously, of encouraging That's headwinds all programs you programs the post-licensure pandemic, the stronger social that given of enrollment only years. from that improve mix And some half environment pandemic relief the we professionals of we're

of So guide, if that's pricing you will. are sort the what we into

Jeffrey Meuler

you the contributing are tailwinds have a Okay. of lot And growth. below-the-line that assumption? then margin And to what's EPS the operating

incremental seems it, million you're synergies. margin $XX it of of we like expense get an lot not expansion to So back there's into going a if considering

I offsets. So heard on ramping marketing increased initiatives. just help spend and us persistence spend with the

Stephen Beard

Yes.

of we're intend to expansion, through year-over-year, we've 'XX So flow drive invest, mentioned, won't to Also, persistence, because got course helps expect there's we we we'll particularly we full a opportunities or which margin opportunity enrollment we the that and also necessarily year picture. over enrollment do full sequentially see for. in that But the drive the the as making to fiscal basis. you achieve to see to happen the improved where margins. we're further improved investments That in year marketing on an looking do year-to-year believe expand further

Jeffrey Meuler

then And allocation. on Okay. capital just last

that target. the target, your said understand you Just Xx X.Xx with help to strengthen the is think leverage net but the I plan rationale leverage, sheet? balance me currently for below

Stephen Beard

Yes.

that are as line about the markets, some some things take program So the ASR. the flight. authorization that beyond our table a think purchases With a we interest way repurchase are interest we're from board rates, overall got leverage with an share there in in we've debt, off expense perspective. where got obviously be open We've opportunities may brings debt the accelerated for to But we comfortable the in the from that down. market certainly respect with debt to happening targeted dynamics

flow go through Bob themselves, be it. after go we that year. we've So got the as opportunities focused present will cash the should on those And to

Operator

next comes the Jeff Silber of Markets. BMO with line Our question Capital from

Jeffrey Silber

getting better. that's we know of operational clinical get an of on for and/or was gotten rotations in can I talked some finding in just that I any if So constraints the terms students past, faculty. if you've your about update some wondering

Stephen Beard

there we're well we're particularly like medical think clinical of shape market our good we is It's opportunities like constraint but business. feel side we the Obviously, pretty positioned, we this growth And the as nursing talent not on for a on at students, point. tight, well. in the for about as feel

faculty are enrollments. So our as we not and a sit grow opportunities on clinical here ability both to today, constraint

Jeffrey Silber

shift I but of Okay. discussion, to lot in your you regulatory this That's had to hate to a over And XX-K. disclosure a great hear.

I specifically, looks rule not XX-XX parts, a moving there's it lot Given of the finalized everything is yet, -- like know but is changing.

not have score to I also, from and to you about a include but level that potentially some X.X. think your impact wondering how just talk just your that going I'm And you, wondering going You're the if can just well. disclosure had about in corporate everybody responsibility would below as veterans, ratio. I calculation. financial military you

Stephen Beard

Yes.

we So Obviously, its know, XX-XX have moved part years the we the ago commitments. there what as you what's out be Adtalem inclusion have of benefit. to and student date, available voluntarily rules expect military some even on from final challenges any as the and like a But evaluate yet rule of veterans as to with that department reduction, the to finalized. might don't to with XX-XX, look

in score. we respect stead like are feel good the With composite we there. So to

know, you Adtalem the score with has passing Department As a composites currently. of Education

related the purposes we expect every Walden that on down. that wherewithal from the have a goodwill to year when acquisition for We do we point, drive like score of the balance And that to as structure we've perspective. connection that at sheet score, the Title IV with support in audited statements We credit got calculating we to capital the department additional provide may that participation. financial to department, feel do to additional the submit will our

comfortably. So any think, well we make the within might handle to requirements are department and handle of our additional us, means that

being grow the our enrollments or for or anticipate grow an ability our program. don't we business too, of to us the issue that, So

dimensions, on both think in shape. again, we we're good So

Operator

is line with have Next question from of we Baird. the

Unidentified Analyst

I of from I'm questions. to you So just on at fixed coming income those guys' side wanted a of follow the couple Baird. to

to us the quarter to did the are able owned you last fourth quarter they on front, them? as fourth compared you Just before in give Walden revenue year what

Stephen Beard

not prior as data reported segment stand-alone We've our Walden ownership included No. they entity of part provided because to that on other the historical performance a as assets.

to not they QX tell I'm you Laureate the no, what business. revenue able owned when for was So

Unidentified Analyst

Right.

just you apples-to-apples they look then, not guys it's what So if right? what Laureate, we reported reported at QX, for to

Stephen Beard

No. I operations and segment the It Mexico It in to United they was buried a as think referred some in States. included online. in elsewhere

not a apples-to-apples it's So clean comparison.

Unidentified Analyst

at obviously, just -- revenue can but have the look year-over-year, don't we can a numbers We we Okay. number. student

Stephen Beard

Absolutely, yes. Sure.

Unidentified Analyst

And for side number So side. same -- X.X I'm right? a credit to you and a little leverage, months understated? and of number When does report focused more the point that leverage X.Xx net little not Walden, EBITDA that is the give EBITDA on the that actually again, guys you bit adjusted

Stephen Beard

That's correct.

Unidentified Analyst

Got again, months? you sort number X.X us for gross you. what owned extra that where And have that's to not had up would a you number of if the been Walden can

Stephen Beard

out tried EBITDA not to We've normalized No. put a number there.

Unidentified Analyst

way fill other in, can fiscal Right. But So we that's to if again, more we to? we your one some you Walden know shot And sounds of it's can there asking can not. compare When we taking guidance XXXX then just from a that apples-to-apples, angle. 'XX so another there's compare just maybe maybe it tailwind good for give like an fiscal revenue then in way. this for a number that at another apples-to-apples for the but , is piece

Stephen Beard

there's an I apples-to-apples not I for but that, No, you. for comparison apologize think don't so.

Unidentified Analyst

got that? that for you number, EBITDA On I do have guys XXXX it. No, guidance guidance a number XXXX

Stephen Beard

guide the don't with to as happening We the But course EBITDA. we we'll bit EBITDA. what's to guide we little over margins, about but go of don't talk year, a

Unidentified Analyst

to back targeted you Jeff's with the Steve, the then that think, go about net you to comments, Xx see the just to then take may sort some made leverage I questions that ways guys And currently X.X Okay. target. down. But of

Specifically, buying now? market could open bonds be right opportunity the below that in par, where an that's

Stephen Beard

either a an do if we'll that got to the because do again, looks overall from the look opportunity on there's on it. be loan now we've knows different on who down look, and the a lot depends months -- for it interest does opportunity to the hard opportunity bring it would we'd term bond at the X that looking side or than it world think But now. I cash -- where ago the really months looked to side, take expense. a X be And

Unidentified Analyst

for for then last just could. And I Right, sure. if one me, one

an the on all back You situation? and Capital go? Cogswell you X-K DeVry Education you might that? announcement February of Or related and about contacted on have do guys in any any where to Do that Has about you that. update to that have Department filed viewpoint tied anybody

Stephen Beard

believe as from I I heard department. the the think a don't heard We've quarter No. has department. not from said we've ago, -- I DeVry

administration's hasn't DeVry full While overall no that the efforts materially, for the do are regard. so updates changed and in debt think I I forgiveness profile think to this for risk issue around broad-based swing, in us

Operator

we reached call question-and-answer the to turn Steve closing and back have And I'll now Beard the of end session, remarks. for over the

Stephen Beard

I moment to getting portfolio thank 'XX. ourselves to colleagues set we've we're a up a their for and talked 'XX. proving the after fantastic We Adtalem about And for fiscal just take work incredible in believe fiscal year of well our we across looking it some out of in today. all to want the forward

thanks my So to the team.

Operator

concludes this conference, participation. for disconnect and may time. lines this your And today's your you Thank at you

Adtalem Global Education (ATGE) 12 Aug 222022 Q4 Earnings call transcript