Adtalem Education (ATGE) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adtalem reported Q3 revenue of $308.6 million, a decrease of 0.5% year-over-year, but a growth of 2.1% on a constant currency basis [21] - Operating income from continuing operations, excluding special items, was $50.2 million compared to $53.1 million in the prior year [22] - Diluted earnings per share from continuing operations, excluding special items, was $0.68 compared to $0.70 in the prior year [22] Business Line Data and Key Metrics Changes - Medical and Healthcare segment revenue increased by 1.6% to $223.6 million, with veterinary schools revenue up 4% to $95.4 million [22] - Professional Education segment revenue grew by 14% to $35.9 million, driven by strong performance in ACAMS and Becker [23] - Technology and Business segment revenue decreased by 16% to $49.9 million, primarily due to challenges in Brazil [24] Market Data and Key Metrics Changes - New student enrollment in Brazil increased in double digits, indicating strong demand despite revenue challenges [7] - Adtalem Brazil institutions ranked as the number one institution in eight of the 13 cities served based on the Brazilian Ministry of Education's IGC metric [18] Company Strategy and Development Direction - The company is focused on becoming a workforce solutions provider, enhancing student outcomes and promoting ongoing learning [9] - The acquisition of OnCourse Learning's financial services business is expected to broaden professional education offerings and strengthen market position [10][17] - The company aims to streamline operations and focus on core strengths to drive long-term revenue growth [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in Brazil, including pricing pressure and government funding delays, but remains optimistic about future growth [7][35] - The company expects fourth-quarter revenue to increase by 3% to 4% compared to the prior year, with full-year revenue expected to be flat [27] Other Important Information - The company completed its 10th share repurchase program and commenced its 11th, repurchasing approximately 1.3 million shares at an average cost of $48.15 per share [26] - Cash flow from operations for the first nine months of fiscal 2019 totaled $129 million, down from $183 million in the prior year [25] Q&A Session Summary Question: How to achieve sustained growth at Chamberlain? - Management is focusing on improving efficiency in driving students to the RN to BSN program and is optimistic about growth in graduate programs [30] Question: Will the shift in program mix affect profitability? - Management believes that the optimization of campus resources and the introduction of online graduate programs will maintain profitability [32] Question: What will improve operating results in Brazil? - Management is addressing pricing strategies and reducing reliance on government funding while leveraging strong brands [35] Question: What is the sustainable growth rate for ACAMS? - Management expects continued robust growth, particularly in Q4, across all geographic regions [38] Question: What are the plans for partnerships with not-for-profit institutions? - Management is developing programs with Northeastern University to drive incremental revenue through innovative online courses [47] Question: Are there additional parts of the business that could be candidates for divestiture? - Management feels confident in the current portfolio and sees opportunities for organic growth rather than divestiture [50]