ATGE - Earnings call 1 2024 | Adtalem Global Education Inc.

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Operator

Greetings, and welcome to the Adtalem Global Education's First Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jonathan Spitzer, VP of IR. Thank you, Jonathan.

You may begin.

Jonathan Spitzer

gentlemen, quarter to XXXX and for earnings ladies first the results. afternoon, and our welcome call Good

On the Education, call President Chief and with Officer. me today Executive Financial of are Officer Adtalem Global and Phelan, Chief Bob Steve Beard,

and forward-looking I results Before take as we'll presentation made harbor in We today's Relations cautionary reconciliations in We you expectations subject presentation, financial as current actual changes directly publicly market, obligation are to and and to to competitive result future relates that statements as to as see to a based statement our measures related on information, safe the to usual presentation -- uncertainties declarations. legal this regulatory will risks Certain I statements current results the for comparable projections website Form over our hand information. and Please to and otherwise. undertake factors available the the update Investor statements. In whether in or Form for are and discussion new you most events, XX-K could measures. on cause latest and that you forward-looking vary any Steve, through materially. it of forward-looking refer constitute future financial materials a XX-Q GAAP of this after use certain risk non-GAAP assumptions of presentation, appendix no

you XX Steve. archived our will webcast website Relations over hand presentation the After the You at to webcast call, on Investor and on will a to days. I be find link for now the this website will investor.adtalem.com.

Stephen Beard

organic enrollment while to to to a strategy, growth of fiscal XXXX and has ahead us top as growth strong thank bottom earnings returned initiative driving you call. continuing and delivered year revenue purpose million, XXXX, the quarter prior growth to on Accelerating time marketing, versus and was join our first first programs our has responsive our quarter pillars, fiscal deliver outcomes. In also total our adjusted year. the delivered operational results everyone, X year X-year of on was per with expectations. and X% revenue share Good line opportunity quarter our our focused retention, We It us and a outstanding for healthcare affords versus taking capitalize afternoon, pricing prior up the across market performance $XXX X% market-leading earnings student scale up focus. enrollment, $X.XX,

academic is student the innovative rates. up enhancing persistence investing experience outcomes and capabilities differentiated in and on emphasis measures, quality Our showing in improved our and our

attractive their profit are result, a our at less in-demand talent As public alike. private, in employable highly and far for likely institutions, counterparts compared student their loans to graduates and default postsecondary professions to and

quarter of brand organic efficiencies this use fiscal delivering tools Our year spend increase incremental we launched and our and methods. data-driven optimize campaigns are that last as

Our has our all at growth successful execution resulted of year-over-year institutions. in inquiry double-digit

In driven capabilities, These are make application with conversion user encouraging addition to streamlining experience possible. to results increased and rates. optimizing marketing as friendly student application as efforts we simplifying admissions year-over-year have our

School year. In for are we institutions, were to an drivers capacity. near continues of primary Ross confident and first investing over performance the that accelerate performance performance term. institutions the the University X and accelerate our continue to the striking long will segment, those of quarter, to of remain Med/Vet near-term Medicine balance Across Walden Veterinary in we the financial fiscal segment. profitability of our and balance the operate by results the to Chamberlain optimal on strong Moving between expanding

it to total to innovative growth. enrollment indications, Based year. Adtalem's schools, efforts expect the for scale, diagnosed those specialized our As the are over medical as to early school we and the ability the leading combined conversion to U.S. improve return trends in challenges remediation we to programs and in-demand executing on position institutions the its fiscal with nursing of continues brand recognition of nursing remainder curriculum

Bachelor option, is The achieved approaching program students recently and is BSN triple-digit adaptive to resonate degree we We Science technology next-generation year-over-year growth Our students online campus-based students. the and swiftly continues pre-licensure prepare pre-licensure Nursing NCLEX X,XXX being students, are leveraging to with for and BSN XX,XXX exam learning now launched exam. administered over our enrolled. proprietary to

expanded coupled has take creating our model our broadening framework, in that an students, model, shortages. to We've all proprietary addressing nursing determinants Practice-ready U.S. of Specialty-focused better our a on XX prepares learning Specialty-Focused training students is healthcare. nursing more specialty students training education. areas work through will while program than within to they campuses, learning unparalleled X,XXX for provided social Additionally, offering of this specialized with for BSN Practice-Ready the acute access

At made leadership significant regaining our Walden, toward in online we've education. progress position

second in resulted show straight execution brand sciences to healthcare successful year-over-year quarter. continue This up led shifts behavioral growth, Our investments is has and in specifically at elevated Walden marketing by momentum our nursing. double digits and mix in programs, new the and which for demand social student

XX program performance plans, for critical And XX% academic restructuring support opportunities Walden's needs our invest to are degrees XX-week these being to in identified allows on all schools taking executing animal the through which addressing preparedness who USMLE confident than from the to clinicals. the race we've say initiatives data-driven enhance with improving students, and Capstone health year. the at in enrollment states XX% the more student new on commencement from to core we by in the We're we're positions Purpose U.S. our to of graduates the than meet were enhance improve programs, to commenced grew believe course of to their and half and minority in medical for year-over-year. for the we're more programs. to to total underrepresented degrees us trends that near Growth nursing conferred that students than needs Starting program our groups. Ross XX our in doctoral, marketing remediation them then teams Walden's scale U.S. At the to their this and capabilities, continues of to and more strategy, schools, to new especially designed of countries. X designed continue need part journey. enrollments veterinarians We as our bachelors the growth. Thanks which actions capacity, Also reported X,XXX of we're masters October the the progress medical competency-based step of Tempo exam, will community XXth on over medical a improve expanding meet for the executing to Nearly long-term further note, those of we identified including Vet proud enrollment program for fiscal operate post-licensure

leading our the Growth Adtalem fiscal that of these trends our serve. and we as successful and systemically are the the will and component a is of EPS of at guidance. over range U.S. raising students we've adjusted $X.XX to healthcare important of Purpose the built well educator we foundation performance future with to execution our $X.XX for positioned and said is healthcare. the top for in pose about success to drives this Purpose graduates our Growth now be initiatives and We And bottom expect year. of our ahead. I driving in XXXX optimistic billion remain we course outcomes drive revenue what Accordingly, and line is the billion strategy careers. be impact and ahead to of communities, about accelerate on the As range student $X.XX. We remain confident enhance with to rewarding remain what towards And outset, Adtalem's the enthusiastic we expectations. lies enrollment, our $X.XX The

Now I'll of over for the financial our Bob turn further call to discussion results.

Robert Phelan

hello, and Steve, everyone. Thanks,

on Adjusted discuss with outcomes. in continued my XXXX. Starting accelerates. fiscal and begin our in first by the X.X costs. Adjusted a I'll offset Purpose operating in strategy X.X% partially quarter came first net XX.X million, with Adjusted increase shares first year. earnings or diluted compared Later financial to of outstanding top $XX.X of and Revenue driven lower margin outstanding lower EBITDA other was adjusted million. review expectations basis reflect the and was the will million drivers the the compared to adjusted at and our our shares with for prior X.X% investments million initiatives in with by for revenue enterprise-wide growth Growth $XXX.X resulting share X.X% student in Med/Vet, million results purpose were our of at performance than with with by or a programs in growth enhanced decrease income $XX.X Our quarter. quarter compared compared X.X% Consolidated in year. $X.XX demand for compared first Diluted to XX.X% were offset million, resulting million as a the points $XX.X $XX.X Chamberlain and operational as Walden, year, per in growth line. income results year, last last increased with EBITDA key assumptions by remarks, lower our strategic efficiencies strong balance year, the was I year. in XXX our prior the of for focus prior prior of quarter quarter and

services pre-licensure high our believe to $XXX.X Chamberlain than student higher enrollment result million, will increased rates persistence by the these segment. by compared when support leverage growth and $XX.X year as a with persistence financial decreased and outcomes. as year, nursing other during of as segment. of by prior investments enrollment. quarter was as Total future EBITDA X.X% quarter across academic expenses. We underlying compared reported with deliver positive continued highlights offset, through and well returns student primarily the the post-licensure discuss student in growth to operational million revenue an the outcomes I'll more Next, in increase first by in enhance to of driven Adjusted X.X% X.X% programs investments continue prior

an nursing when persistence behavioral with compared our Revenue we for revenue. driven to total X.X% as student tuition student XX% of Walden. and as growth generating pricing returned intended the across gain $XX.X year, million, optimization the to as X.X% this segment. Adjusted to primarily to strong leverage prior the increase programs was traction grow year the EBITDA million efficiencies demand its health social continued high $XXX.X and to with our are addition prior of increased quarter, enrollment enrollment operational in up and the Total transformation by during Turning model. growth quarter compared and

at and to decreased compared decreased partially Medical segment, to continues lower with starts operate the year veterinary quarter student which Total capacity. school, offset For prior X.X% near due in schools, the the the million. revenue to Veterinary $XX.X medical enrollment by the X.X% first

as our we year. by medical decreased EBITDA improvements revenue, medical to to the XX.X% improve the to of course plans. Shifting are Adjusted We million plans to fiscal lower cash execute balance remediation enrollment over medical offset flow focused $XX.X schools in due our our on remediation on and by schools partially schools the operational sheet.

to outstanding. million capital Board-authorized million primarily business approximately Over which to Since million during was flow. robust long-term we've to we quarter XX% million, the disciplined capital worth our during or quarter. our shares which repurchased adjusted lower last value our XX our of Purpose $XXX cash is believe approximately approximately driven these CapEx We higher with program repurchased during repurchasing student share the shares cash allocation our $XXX shareholders $XX philosophy, of investments shares generate was with net returned our spend slightly drive $XX operating $XXX for intrinsic part Free of X.X quarter, shares strategy year-over-year, Our by million long-term shareholders. leverage continues the the months, EBITDA in authorization have XX Reflecting roughly of we under our improve X.Xx of program, first debt. Further, million. Growth flow million the by maintained outcomes. in buyback $XX intended we million

to for guidance Turning XXXX. our fiscal

our we're to per performance digit to raising $X.XX our growth. $X.XX with bolstering guidance in and $X.XX, in on range mid-single of adjusted be billion, we our reflecting Growth accelerate also the As anticipate of to our allocation mid-single-digit sheet strategy, execute to be providing We're guidance to low earnings generate growth. We the year-over-year strong representing to cash Purpose billion $X.XX continuing to revenue balance through raising our low ability flow also strength philosophy. the us share capital range

improve additional to continue trends higher Let relation to trend acceleration quarter back in first our growth. enrollment building And to total fiscal this still the revenue year, enrollment provide turn, with in half outlook. we the anticipate occur We're the of in total to me context to the on year. forecasting throughout XXXX greater follow

and to incremental fiscal raised of material position, does conclusion, the our does our our reduction in will low higher the interest approximately in our on leverage investing it a in the growth margin results the a Investor demonstrate EBITDA our accelerates leverage, our in As by letter consistent the to $XXX of be adjusted EBITDA a long-term strategic million our the growth the that, momentum purpose-driven June operator through This impact new to Education. at creating of I'll existing short-term half we year healthy Q&A. This our guidance second result the our our and our relates are and sustainably results approximately year, to earlier we see will slightly early an at for over while cash quarter, the anticipate revolver. the second profile, revenue I'm Department fiscal margin to ability as investment million XXXX it credit availability the $X generating 'XX an XX%, Investor within make letter full year be Day. Included provided incremental generating continue financial our targets no with call in that prior and to our turn we shareholders. With of resulting than the and earnings year specifically the about and annualized growing with is anticipating the net that will deliver students placed to strong for opportunities as adjusted has team growth our nor substantial Day. placed now November but of quarter profile our plans value margin profile phasing our level in quarter. during of accordance organization, and credit a request in cost flow short-term what of of in is investments profitability XXXX, result generation. In shared expense June highlighted our levels in excited we by XXXX This impact first second

Operator

Instructions] Our question comes with Jeff Baird. from first Meuler [Operator line the of

Jeffrey Meuler

give new Apologies that's Chamberlain you sense can how enrollment? of if I missed Or Did it. some give you trending?

Stephen Beard

Chamberlain. but not. in prepared enrollment referred did the programs specific to at give did new We not we We remarks,

Jeffrey Meuler

you Okay. just ask X% I'll a little maybe growth because a bit had differently quarter. revenue

year. You to think there over progress expect the Med largest was Chamberlain like a know said has raised the comment continuing of growth. at X% QX guidance, you lower those I segments. guidance your growth And are than and And but those you continue to end, the the improve accelerate, Walden low the about at I growth are X.X% midpoint. your Both your of to balance

So about you're not you're great quarter. a you not understanding signaling what I'm guess -- talking had I -- because I'm

disconnect not I You're And the talking about things the it further don't really accelerating. I'm guidance. improving see in sure what is. and

Stephen Beard

Sure.

what comps a longer into we see half are improvements So first year. say early take thing the we'll first any be did the up this is of getting that the guidance balance But the get of bit little let say point. address as we what good before are over What terms you we we than numbers year, that little you. The your would are me try the going the the when you bit very first it to had I of that further quarter, to and the quarter, difficult in would the for we good than so only at wanted about that in is really more where in year we feel I well. quarter in is think back other trend a had

of enters what So into that's piece that. another

Jeffrey Meuler

quarter, programs -- your them to some from you I then think to of and changes beneficial the And are some of last are there the like some it looks gainful Okay. employment operate. that

just the can audience? that address So for you

Stephen Beard

the Yes, there changes view I for think that in were we rule us. X positive as significant net final

in costs, a is overall a an The included scholarship debt-to-earnings the first has allows period on calculation. students that tuition, that adjust decrease to it programs way impact that transition

So helpful. that's

programs, they longer medical to measurement Just helpful mental is included period which of health programs certain a types They've and have as importantly, for Chamberlain. provided programs.

we as ensure for programs the So to gainful got about hurdle adjustments we've make opportunities that clear the rule, think to employment.

seeking are We measurement medicine those is that profiles because are have to that our veterinary included to a program longer period, programs exception. actively included have very also the in that programs their in similar

until effect. So a And better outcome effect time The go a into employment. obviously, the XXXX that, bit isn't that will and until be XXXX. goes feared doesn't with into we've first gainful that measurement period got of before rule

about GE. So where vis-a-vis are good we feel we

Jeffrey Meuler

just then me. And Perfect. last X for Okay.

the are to the what increasing the Just with or have need outcomes letter what can Education letter credit? of address you metrics of of credit alleviate to you the of to kind drivers do, what that Department you of need

Stephen Beard

score know, composite itself So bespoke calculation is the of Education. the by as a you sort of Department

One of they the financial as nuances credit some assets others. get is you that, calculation of not look the for at and for responsibility,

to any with assets there's actually isn't see a of because that of assets to actually X of our the to if request. But in obviously bit credit credit One of from would down new that requirement the part a commit on having our us asset we've existing bunch gets think that credit intangible that with balance gets any institutions. to goodwill. that risk disbursements. [indiscernible] was down and that got working the managed of plus acquisition score. been that our letter as we of letter Ed of calculation or drives almost not excluded the excluded letter said, are facility sheet that of a goodwill at the category the We a hung a protection the bring and accommodate way was the Walden That not request the we XX% of way for unexpected, there its credit credit, additional it's real and We're unexpected like

our financially of healthy We've are We are of sheet. at None risk closure. balance a strong very institutions organization. got

think somewhat outcome, So a the actually corks we had lighter requirement there's this be Ed. for argument produce a the good rule we think of at they while to credit

happen I'll basis As up on earn the basically, but would earnings, you something of our for That's important would But that calculation ask financially that accommodate time I of our But than Ed. and request institutions score happen arguments to would something such not time. basis annually here think score statements. audited our on the done specifics, have are out over this our the that's programs. good Bob let organized be is larger would score think the go And that can the Ed immediately. we give comfortable of responsibility the over takeaway way is for about is what probably that and the we of from we we the why financial we the because needs itself, financial

Operator

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

Unknown Analyst

for This is Ryan on Jeff.

the more thinking just from investment would last does little business, be guidance EPS quarter? incremental adjusted said any the On purpose given higher. was growth the include initiative of on in the that the I you had the rate what revenue leverage impact the operating outlook a with revisions, in bit higher some

Robert Phelan

I if that address me let could. Yes,

second bit expenses in is of it's say a quarter the terms had is saw that into of shift The that, Purpose with we of first in what is what first that, little -- would improvement thing there's the off, first terms would the a that good a point quarter. I going really raising. the Growth you're in we And yes, I say

with in So of expenses. a that a is shift little bit timing the

the second going have first bit expenses also We in we to a higher did little quarter. were place the in anticipate

as have well. we that So

had increase thing the while just going would also was additional decrease is I expense from on other in. the mention that the credit talking The the to that revenue, to additional put you from about interest of Steve have letter that a was we've EPS coming

under is little letter credit bit to million, rate. of X% $XXX going be that So about a

annualized so basis. and that's $X million us this about million And on to an cost $X going year

factor in think as So well. what you part of a I need that's would to

Unknown Analyst

metrics Got the throughout giving persistence spend thoughts, sorry the you any And of it. updated if half or then sequential any on weighted? And quarters? missed just would second other still this the the consider investments on some it ROI pacing year. I there of in Is us future

Robert Phelan

the we mention that said, this as is I the of of what So the comes I when believe that's had those So having more into we've back going little the a revenue, a is of point X that still that, point. a see some shift expenses from okay? from to second first, the just I where more to we we're implemented bit that would But would acceleration make. of are half it of at ramp-up initiatives quarter

Unknown Analyst

Got for that -- bit then the the any the the Walden. Q the the have mentioned I quite bit in give student revenue you're per could the And up pricing? up and you some like Do it. med just the a color of in I on it you pricing. you of me. on question last noticed went some think taken It at student optimization of looks a schools pricing

Stephen Beard

Yes.

pricing. think the in of other business than also to because maybe in Bob But to I mind thing to taken I'll down we've pricing were we with is speak corners respect in up in competitive programs needed let we it some have bit taken a we while be. goes of where to Walden, the ensure areas beyond dynamics particular, certain important in business, higher keep to pricing there we're the the

Robert Phelan

would a I happening couple of other say, there's things Walden. thing with The Yes.

though, it's are enrollments It's credit up. the are there's combination also gap of There's just up, obviously, what So not pricing. loads increase, being then they and there. average a the a things, revenue with

the bit that's is average also then higher that carrying the a and be or higher. revenue student credit of well, a as part credit loads per hours So are drives students to little what

discounts year quarter this lower bit on as on lower bit well. in a year. that little were pretty the discounts a have well and high do we last addition, as little In first We

from pricing So that a aside at are Walden side. of couple there's definitely the work on factors just

Operator

Beard There at floor closing would I like Thank over to you. no to questions further Steve for this time. are comments. turn the

Stephen Beard

Thank optimistic a out to call colleagues strong about lies very start you. ahead. no to They've particular, to all thank what positive That I that of want our at to want year, a year-over-year. colleagues accomplishment. across the is I just to moment Walden. take small our talent, gone very In moment

We we find institution, are on them we're are excited where that bullish that and ourselves brand and today. for to

to of Walden, So our to our with to my at thanks all colleagues, a speaking special shout look next team we you forward quarter. out and

Operator

concludes Thank today's you. This teleconference.

disconnect time. this You you participation. at Thank may your your lines for

Adtalem Global Education (ATGE) 26 Oct 232024 Q1 Earnings call transcript