Earnings call transcript Q2 2023

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Operator

Hello, and welcome to the Adtalem Global Education Second Quarter Fiscal Year 2023 Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Chandrika Nigam, please go ahead.

Chandrika Nigam

Thank you. Reform you the conference harbor performance meaning the Securities remind forward-looking will provision and to with risks Private within XXXX and Adtalem statements of Litigation that financial like condition that the Global call this contain of respect of I'd to of Education future involve Act the safe uncertainties. from by these Actual implied results forward-looking or may those projected differ materially statements. Item described XA factors that Factors could results more uncertainties fully recent risks, are in the SEC most Form and other our filings and Potential on our XX-K Risk SEC. with to of cause report other differ annual the with filed

update statement, date publicly made no information a us us developments only be to to by on Any as based verbal made only whether was that of the speaks required time or by or new made. may We written which currently as forward-looking obligation to information, it future time, undertake except available result on forward-looking the from whether and statement otherwise, any of law. is as

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

to today GAAP the and press which our non-GAAP on release, website. GAAP Our contains measures as reconciliation to other be quantitative of financial as information discussed well is available

refer for and press To results period special call call the Telephone today's year release. XX available during all webcast stated. are continuing made the that today's please are and access of items exclude and comparisons in operations otherwise days. today's replays, a note basis, financial comparison are to Please unless replays prior on to

Financial Officer; from from presentation Chief Officer. with Adtalem's then Chief Vice prepared Bob hear We'll and Beard, President and Steve and Senior begin today's remarks President Phelan, Executive

prepared remarks, have will the question-and-answer we a session. Following

call with Steve. turn I'll now to And that, over the

Steve Beard

earnings fiscal Good thank join Chandrika. Thank you afternoon, quarter XXXX time second taking you, year our call. to and everyone, for

quarter. solid another delivered teams Our

margins fiscal revenue per over of $XXX and million the XXX of adjusted reflecting of prior the quarter, basis improvement For second a we EBITDA delivered XX.X%, share earnings adjusted year. with $X.XX, point

our care industry. on we a effectiveness results operational maximize student continue we the as of to initiatives. through position our and our enhance range students Adtalem continue growth organization, to second These provider across new to driving long-term the capabilities supporting the In persistence. focused the quarter, commitment of continued improved operational professional profitable to a as demonstrate across discipline to leading experience, To institutions we deploy health talent serving driving

in be other as individual that term. to students new We registration tools to registering at the providing selections approach criteria. the not term, prioritize helps have for the proactive This introduced our our tailored curating that teams aid also courses interests be as risk affirmative their can the students for process might for of upcoming well next

result rates a these improving efforts, a of we're seeing of of As institutions. across each our trend persistence

marketing in spend. and side of paid with a our of further web we the to goal experience On branding, capabilities the our scale marketing media optimizing continue house,

efforts better even growth. range at equity the adopting broad deploying as a to across context to bottom critical across to In of is activities allowing of enrollments. top performance addition, are the aimed These profitable we're spend build we an transformational marketing that the improved drive approach drive sustained value-creating that brand of the accelerating and occurring us funnel, in balanced initiatives

by Moving on to results segment.

partially Chamberlain in enrollment and at the by Walden. supported offset Med/Vet, strength performance in second largely quarter Our by headwinds was

capturing with on synergies Walden execution Importantly, of of integration. on solid cost discipline, remains the delivered the what expansion result margin a we was in during the focus direct coupled quarter our

campus-based saw the of we in along due the shortage City-based during Chamberlain segments, ever now to show several enrollment the are than Looking Online. hospitals. quarter, by more staff total continued to improvement success recent growth modest of with needed national programs New our supported strike BSN nurses York medical Qualified in the BSN at the evidenced at by as

leading enrollment expect not role rates. Chamberlain these a contributions continue U.S. to to to students we efforts and key segment, improving the period the educator, continue As our play intake for while second make nursing drive Within we profession. gaps filling and quarter to persistence meaningful the towards to the student empowering in was Med/Vet, an

Walden. an to important catalyst turning Adtalem's Walden remains transformation. for Now

part capabilities, attractive benefit progress deliver We remain the we to latter improved of improving trends strengthening integration the to meantime, the opportunities consistent In of making year. teams in the Walden's confident programs combination to segment. unique of breadth and realize We our in our the fully see the of synergy are enrollments in our expect student-facing efforts and across ability and continue capabilities invest the the to in expect affords.

to to track, integration expect remains synergy we two focus cost on the growth, of primary million in our anticipated deliver While the synergies capture and shifted acquisition. from $XX year has of

high. for Our Walden near-term the confidence in remain prospects

its education. We it critical helping us in a as of results. to of a role category our being realize deliver just in health play expect intended And to the investment one ambition care expect importantly, we

academic Moving highlights. on to

driving first quality note is the sciences, psychology, education, the quarter. business, rank in degrees. do. by outcomes research Our degrees core education to students non-science pleased to in Walden to underscored in at sciences, that This and superior achievements health granting for several other social commitment doctoral continues we of and expanding We're what access remains and engineering to

home a announced grant with a the million Foundation. the we funds At initiative Chamberlain, American from of from $X.X Nurses health specialty launch

using Care. is leading Chamberlain nursing specialties, programs country's online staffing to these nursing need with health developing partnership and broader initiative, franchise other in the this of critical which in didactic care students part staffing. medical This course an provide and will As home course for home are access of BrightStar

and enrolling to program, professional as recently empowering Scholarship program starting rewards the ensuring tool The journey our & the students persistence through in underscores Believe realize and session. that Achieve February launched XXXX students we’re academic quite they which goals. and their a Walden, the commitment student At for persistence excited about to enhance

With the that, for address our year. I’ll guidance

our of We per of to be are reaffirming to billion earnings range $X.XX $X.XX share for in and the adjusted billion $X.XX XXXX $X.XX. fiscal revenue guidance to

For operational confident shareholders. the experience maximized brand balance our modestly. student of investments the year, value improve in continue we that our remain environment creation will optimistic will are for demand strategic with support and critically, coupled disciplined focus to we our the Most that

We building students we are future the serve. are the we foundation optimistic for about the and

a position more programs hundreds healthcare industry. we evolving a better critical of coming efforts the in professionals which than believe be the Adtalem that on recently having number the are working excited exited transformational with are key shortages provide the healthcare months. of executing player with of important that We’re initiatives over to to Growth our to With you demand medical for about These program, years, core we’re tell Purpose address will to conditions, space in ever. in thousands recent growing we along more talent launched

to enthusiastic is gainful We our on on outcomes lies communities, toward impact centered ahead. and supporting what about propelling graduates are initiatives Purpose. while is enhancing remain drives our our what Adtalem’s central This which enrollment, employment. student with Growth Our

financial I’ll Now over turn results. call for of to with that, our the discussion Bob a

Bob Phelan

top key quarter. the hello Steve our Today, in financial results I’ll year expectations second performance performance in starting a line. our our the drivers discuss for my financial and of review our with Later I’ll begin remarks, and the for everyone. with and assumptions fiscal Thanks, I’ll XXXX. summary

This income year. points margin Revenue primarily income Adjusted or in the second $XX.X higher year. was $XXX.X quarter was by a to adjusted of and synergies. million operational the XX.X% adjusted for million, the operating for per $XX.X quarter Adjusted was was million respectively. an expansion of higher continued decreased increase the margin and prior the than EBITDA and was quarter $XX.X driven the earnings basis net with $X.XX adjusted compared EBITDA or prior X% Consolidated XXX and share X.X% realization cost was XX% year. XX.X% than prior million, efficiencies year-over-year

by $XX.X discuss in an revenue of basis capture XXX margins adjusted $XXX.X point prior The initiatives XX% financial in value labor Chamberlain prior expansion and the of the segment. lower million second $XX.X The from I’ll reported up million segment EBITDA million, compared highlights with year. result increase year. was Next, EBITDA costs. X.X% when was of the quarter Adjusted primarily

continued Total improvement pre-licensure enrollment experience in the during by by and with than nursing, to due X% compared student quarter less year enrollment decreased the offset partially and programs. post-licensure modestly headwinds prior

persistence Additionally, segment experience direct result a continues improvement our student on overall the to initiatives. persistence efforts progress the of as and concentrated in across

or year-over-year is million offset $XXX.X year-over-year from was prior downward our overall persistence. Turning was X.X% to enrollment pressure million, the to $XX.X in EBITDA nursing second student partially lower X.X% Walden. quarter in year. decreased $XXX.X Revenue which programs, student improvement million in post-licensure year-over-year. Total Adjusted the down by in due XX.X%

the with revenue the EBITDA and Vet was $XX.X driven million while primarily continued than to quarter realization. year, prior second synergy the benefit prior decreased X% Med compared adjusted management or X.X% the In in segment, $XX by million, from year higher cost

provided and capital balance million. flow, totalled sheet Net structure. expenditures capital Now $XX.X to by operations turning year-to-date cash and cash million was $X.X continuing

increase is million result, $XX.X a compared year. flow year-to-date with As cash $XX.X of an prior million free the

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

our remaining as on strategy by our of gross and sheet. X.Xx During capital B million the Term XX, We in continue well net targeted resulting quarter, within of progress range. strengthen Loan deploying balance financial XXXX, $XX the our of $XXX to million we December to leverage of repurchased debt

year, of million. have by outstanding We time reduction over debt same from last now $XXX our the XX% reduced a

to growth Looking intend sheet also in deploy for focusing returns strengthen continue and our opportunities capital our on balance while reinvesting ahead, organic shareholders, to for to our we businesses. maximize

to on outlook. our Moving

$X.XX. within guidance As to be share of adjusted diluted Steve to are per $X.XX billion billion of reaffirming our revenue to $X.XX earnings we and range mentioned, $X.XX the

XXXX. We on cost year to also million during remain of synergies fiscal deliver track $XX

I’d you we like guidance. respect year guidance to quarterly for that did provide the not our remind is With our specific to full only and guidance,

this than be of quarters quarter-to-quarter forecasted as In results the operations subsequent vary certain certain in of year. costs quarter will nature. on current QX, originally expenses Our expenses, in anticipate based timing more the in from QX are variable of higher recognized for a which level we can

we into while such, are of will our half to QX of full and we shift change anticipate by earnings year, mix the our year. of expenses for range certain second of out the guidance the quarter due As affirming the

In we to growth. Look strength pleased driving our of with further forward to and closing, leveraging for discipline delivered both quarter. progress long-term goal this financial operational on the Adtalem I’m results position

operator call turn now the I’ll to that, over With the for Q&A.

Operator

today Instructions] question you. Thank Jeff Meuler is from Our [Operator from first coming Baird.

live. now Your is line

Jeff Meuler

to back what terms improve I’m back of or expense And pushed and got expenses not? to in pushed What environment that longer anything taking QX? I we you. was Thank the marketing Yes. should demand wondering read is guess into

Bob Phelan

was to is answer happening branding shouldn’t that big timeframe, that. that campaign the of more read no, slightly more marketing So to a launching that. January, What question, originally earlier piece it around we’re the you was I in be February the would say quarter. into is anticipated And and second

Steve Beard

add that moved would rebalancing heard of brand. I investments things of in production the that on, other the incrementally the there us half have the as investment some year. second what to the and our working Jeff, and of timing with just say, – into top we’re funnel There’s across you shifts making been that bottom we’re is, more the Yes.

Jeff Meuler

the miss the then because are better or any seeing that guidance. to Got see was this sort at trends? increasing improvement was And ago? new you But in level and quarter you Or don’t of least to me rate give of couple you that gains is a than persistence I are this revenue modeling Walden expecting. relative Is just it. last starting of enrollment quarters were maybe Chamberlain

Steve Beard

gains Walden. at about new is you sequentially have So excited programs, think a a Chamberlain also for and Chamberlain in and know, you quite is we’ve elements that. that. There lot persistence Persistence as based total we’re campus particularly quite attractive pre-licensure BSN enrollment been that improved on when within improved focused online. some of – our about us because both driving to really that a BSN is But be been control. persistence and And at of at enrollment our fair, persistence bit piece of big

Jeff Meuler

on vet, med year? any to med quarter. last calendar last trend comment That’s great. any revenue It this then think And the an I just worse vet the just Or wasn’t shifting the period. intake relative timing Was year-over-year revenue? in of was academic there

Steve Beard

No. years. The prior as intake cycle is it’s been the in same

at at our hard continues. So a cycle vet. we vet been are obviously story enrollment And good year-over-year focused us. But has to that we’re enrollment obviously for working med sequentially med ensure on upcoming

Jeff Meuler

don’t thought it versus why be last less guess like I academic number asking I it there’s on. days me Yes. the fiscal I’m wasn’t of was different into revenue about this this year points fell and a quarter that know intake. year I revenue that you’re the recognizing quarter worse would trend than quarter, that was the last to several case. clear year-over-year if

Bob Phelan

Right.

Okay.

scholarship I we enrollments a Now really to quarter. due slightly the you’re believe this the were X.X% what higher that we’ve but asking that’s revenue cost at reported, bit is was just down up the little and had

Jeff Meuler

Got it.

Okay. Thank you.

Operator

you. Thank

Markets. Capital Next question coming from today is Silber from BMO Jeff

live. line Your now is

Jeff Silber

second and reported. that faster, decreasing Any up, a rate your our comments about quarter pre-licensure faster the slower talked between enrollment this enrollments at the going still rate? change rate Are last quarter about color would just post-licensure going at down. of so to great. Can you In enrollment go be you Thanks Wanted a pre-licensure we Chamberlain. to talk slower or and post-licensure increasing back enrollment much.

Steve Beard

Sure.

before, program we've recovery anticipating suggested of sequence in our across So a we're as enrollments mix.

we've an of student some recover last enrollment is believe elements post-licensure from the those to prospective attributes of of of to As going unique because that said, population. the perspective we be nursing

nursing pre-licensure lagging be at among categories We segment large post-licensure recovery that Med/Vet followed expected said with by first have behind. we our the to nursing

think So you're that real-time. seeing what sequence out in play is I

is So nursing it's nursing it's pre-licensure just worsening, not before we're seeing come back much that that consistent post-licensure post-licensure so our sequentially, enrollments with expectations.

Jeff Silber

then of up in quarter were helpful. new That's enrollments, enrollments terms the for And new Okay. in Chamberlain?

Steve Beard

know, total is don't you enrollment new as enrollment report number and But we obviously, mix enrollments. of new Well, Jeff, persistent. a the

Jeff Silber

All right.

then. Walden to over shift me Let

of the the was worse or it less You post-licensure beforehand? kind still nursing. stable in weakness talked of question, Again, kind about getting it same is where

Steve Beard

see nursing. if you at all what perspective there. total this but at we've a I you a look is enrollment of the – post-licensure is Walden And you deworsening know, trend what So as from reported a don't love term Walden,

trend large encouraged of we've is we're again, narrative So on a of that the to the product. think timing that recovery And year-over-year across that about improving. with consistent taken basis, our categories that's I market

Jeff Silber

to I I Walden, perspective, that then understand sorry, And right. basis Walden total All be have wait I'm you're with going don't from gaining a we have gaining, you should enrollment a just give growth sticking Or growth? or to just you that. seeing margins for guidance, to expand specific more. that with just But segment actually one know synergies on theoretical without enrollment happen? all do been year-over-year for total the

Bob Phelan

synergies are Walden the importantly, just the think I not with segment.

we're entire really it organization. when talking the So we're that, about talking across about

cost and Walden, as throughout three. from as benefits synergies seeing we're So reductions well Chamberlain, all Met/Vet the

Steve Beard

Yes.

that segment used catalyst really you're as divestiture the elimination Chamberlain the and what a because platforms. to is Services of and with obviously, postsecondary the other that along also the the remember, running institutions, to comes the between redundancies And all of institutions we like-kind remaining lifetime from they're thing Jeff, businesses. Financial but seeing, important these of is businesses transaction on integrate The similar benefit Walden Walden

out portfolio. play are got institutions the comes Walden, business of we've we costs the of is can also take as similar we out that of part similar models it, a Adtalem obviously, because So cost but in run there legacy

Jeff Silber

so you right, much. All great, thank

Operator

management to end over you. floor like of the to closing question-and-answer turn further comments. session. any for the or back We our Thank reached I'd

Steve Beard

now. evening. so we're and quarter quarter about attention expand trends solid attractive We're this us. excited a everyone. you forward we margins some the to business. Again, from of look a advantage Really ability in you, checking and appreciate really that for leverage, with seeing excited our time you Thank take the the We're about in to operating much. Thank and

Operator

you. and Thank webcast. teleconference does today's conclude That

thank this disconnect a have your lines today. wonderful and You may at you day. your participation time, for We

Adtalem Global Education (ATGE) 2 Feb 232023 Q2 Earnings call transcript