ADTALEM GLOBAL EDUCATION INC. Q3 2020 Earnings Presentation
May 5, 2020
Safe Harbor
Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding the future impacts of the COVID-19 pandemic. Forward-looking statements can also be identified by words such as "future," "believe," "expect," "anticipate," "estimate," "plan," "intend," "may," "will," "would," "could," "can," "continue," "preliminary," "range," and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risk and uncertainties include the risk factors described in Item 1A. "Risk Factors" of our most recent Annual Report on Form 10- K for the fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission (SEC) on August 28, 2019 and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and we do not undertake any obligation to update any forward-looking statement, except as required by law.
Non-GAAP Financial Measures
This presentation includes references to certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Management believes that the non-GAAP disclosures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem's ongoing operations and are useful for period-over-period comparisons of such operations. Adtalem uses these supplemental financial measures internally in its assessment of the performance of its portfolio of investments. These non-GAAP financial measures have important limitations and should not be considered in isolation or as a substitute for measures of Adtalem's financial performance prepared in accordance with GAAP. For a reconciliation of each non- GAAP financial measure to the most directly comparable GAAP measure, please refer to the reconciliation at the end of this presentation.
©2020 Adtalem Global Education Inc. All rights reserved. | 2 |
Adtalem Highlights
Leveraging inherent strengths to successfully navigate through uncertain economic environment
- Well-positionedto advance Workforce Solutions Provider strategy through pandemic:
- Strong competitive advantages stemming from legacy of online learning and streamlined portfolio of businesses poised forlong-term growth
- Leadership team with history of resiliency and superior crisis response
- Serving industries in great demand producing nurses and physicians in healthcare and delivering critical finance skills in financial services
- Crisis highlights ongoing medical professional shortage across the U.S.; taking critical steps to deliverhighly-qualified professionals into the workforce
- Enrollments and academic outcomes remain strong with more than 920 physicians and 850 nurses entering the U.S. and Canadian workforce this year alone
- Steps taken to reduce impact:
- Successfully transitioned over 15,000 medical and nursing students that were previously on campus to online platforms, bringing the total number of online students to 40,000
- Launched online certification testing as well as enhanced virtual interaction to meet customer and student needs.
- Strong financial position and flexibility:
- Solid balance sheet and liquidity with $168M in cash as of March 31, in addition to available borrowings on credit facility of $72M
- Adtalem Brazil divestiture completed in April, with $424M in net cash proceeds, further supporting our balance sheet and bolstering liquidity
©2020 Adtalem Global Education Inc. All rights reserved. | 3 |
Q3 2020 Highlights
$271.5 million
Revenue
$43.2 million
Net Income1
$0.81
Earnings Per Share1
$126 million
TTM Free Cash Flow2
Delivered revenue growth across both verticals
Efforts to boost enrollment in Medical and Healthcare driving growth
Quickly and successfully transitioned programs online with minimal disruption
Delivered 27% year-over-year earnings per share growth
- From continuing operations, excluding special items.
- For twelve months ended March 31, 2020; Free cash flow is anon-GAAP financial measure defined as net cash provided by operations less capital expenditures. Differences may occur due to rounding.
©2020 Adtalem Global Education Inc. All rights reserved. | 4 |
Medical & Healthcare
Growing enrollment and driving enhanced academic outcomes, focusing on supporting learners throughout crisis
- Chamberlain University:
- Double-digitnew student enrollment growth during the third quarter, with increases
across programs and in particular RN to BSN -2019 first time NCLEX pass rate close to 88%
- Expanding Chamberlain BSN offerings at select campuses by adding evening and weekend options and launching BSN online degree
- Announced Acute Care Readiness course to address gaps in training for licensed nurses fulfilling COVID related service (540 plus students enrolled as of April)
- Launched "#CareforCaregivers" campaign to support healthcare providers and
highlight COVID-19 experiences; 9 million video views and growing
-Medical and Veterinary Schools:
- Ross University School of Medicine:Attained a 93.5% residency match rate,
evidencing quality of graduates
-Ross University School of Veterinary Medicine: Strongest January new student enrollment in 10 years
- American University of the Caribbean School of Medicine:Achieved 91% residency match rate, demonstrating graduate preparedness
©2020 Adtalem Global Education Inc. All rights reserved. | 5 |
Financial Services
Making strategic improvements across vertical
- ACAMS:
- Shifted CAMS certification testing to online platforms in response toCOVID-19
- Certified Global Sanctions Specialist (CGSS) certification offered in more than 90 countries
- Developed foundational certificate courses inanti-money laundering and sanctions to train front line partner employees
- Announced partnership with ING to provide multilingual ACAMS training across 40 countries
- Becker:
- Implemented enhanced value proposition within core accounting business
- Gaining traction with continuing education offerings in both B2B and B2C markets
- OnCourse Learning:
- Appointed Josh Braunstein as new president to strategically grow market share
- Further developing mortgage education segment, supported by favorable market conditions
- Achieved major B2B enterprise renewals, increased webinar content, and focused on developing regulation and compliance offerings
©2020 Adtalem Global Education Inc. All rights reserved. | 6 |
Q3 2020 Financial Highlights
Revenue
($ in millions) | $272 |
4.9% |
$259
Revenue | Q3 2020 |
Q3 2019 |
Operating Income1
($ in millions) | $56 |
18.0%
$48
Q3 2019 | Q3 2020 |
EPS1$0.81
$0.64 26.6%
Q3 2019 | Q3 2020 |
©2020 Adtalem Global Education Inc. All rights reserved.
1) From continuing operations excluding special items
- Revenue growth across both verticals boosted by OnCourse Learning acquisition
- Operating income driven by strong enrollment trends and continued cost efficiency efforts
- EPS growth driven by 18% increase in Q3 operating income and share repurchases
7
Q3 2020 Solid Revenue Growth Across Segments
Healthcare | Revenue ($M) | |
1.7% | • Revenue growth driven by | |
strong enrollment trends at | ||
Chamberlain | ||
& | $223.6 | $227.3 |
Medical | ||
Q3 2019 | Q3 2020 | |
Services | • Revenue growth driven by | |
addition of OnCourse | ||
Financial | 22.8% | Learning |
$35.9 | $44.1 | |
Q3 2019 | Q3 2020 |
Operating Income1($M) | ||
• Operating income driven by | ||
increased Chamberlain | ||
enrollment coupled with cost | ||
8.7% | discipline across vertical, | |
partially offset by a higher | ||
allocation of corporate costs | ||
that were previously allocated | ||
$53.0 | $57.6 | to the former Business and |
Law segment | ||
Q3 2019 | Q3 2020 | |
• | Operating income decrease | |
(17.6%) | driven by marketing | |
investments made in Q3 to | ||
drive future growth and a | ||
higher allocation of corporate | ||
$5.1 | costs that were previously | |
allocated to the former | ||
$4.2 | Business and Law segment | |
Q3 2019 | Q3 2020 |
1) From continuing operations excluding special items
©2020 Adtalem Global Education Inc. All rights reserved. | 8 |
Segment Adjusted Operating Income Year-over-Year
Medical and Healthcare
Key Metrics | Operating Income (OI) | OI Margin3 | |
Q3 20191 | $53.0 million | 23.7% | |
Q3 20201 | $57.6 million | 25.3% | |
Change in corporate allocations2 | $1.8 million | 0.8% | |
Adjusted Q3 2020 Operating Income/Margin1 | $59.4 million | 26.1% | |
Financial Services | |||
Key Metrics | Operating Income (OI) | OI Margin3 | |
Q3 20191 | $5.1 million | 14.2% | |
Q3 20201 | $4.2 million | 9.5% | |
Change in corporate allocations2 | $0.4 million | 0.9% | |
Adjusted Q3 2020 Operating Income/Margin1 | $4.6 million | 10.4% |
- From continuing operations, excluding special items
- Corporate costs that would have been allocated to the former Business and Law segment
- Operating income from continuing operations, excluding special items, divided by revenue
©2020 Adtalem Global Education Inc. All rights reserved. | 9 |
Generating Strong Free Cash Flow
Key Metrics | Trailing 12 months, as of March 31, 2020 | |
Operating Cash Flow1 | $170 million | |
Free Cash Flow1 | $126 million | |
($72) | ||
($125) | ($125) | |
($163) |
1) From continuing operations.
Note: Free cash flow is a non-GAAP financial measure defined as net cash provided by operations less capital expenditures. Differences may occur due to rounding.
©2020 Adtalem Global Education Inc. All rights reserved. | 10 |
Liquidity and Capital Structure
Adtalem maintains significant liquidity position.
Below figures do not include $424M of proceeds from April 2020 Adtalem Brazil sale, in addition to $73 million of cash previously classified as discontinued operations.
Key Metrics | December 31, 2019 | March 31, 2020 |
Cash, cash equivalents1 | $67 million | $168 million |
Capacity available under revolver | $107 million | $72 million |
Total Debt | $420 million | $455 million |
Capex1 | $10 million2 | $12 million3 |
Share repurchases | $60 million2 | $37 million3 |
- From continuing operations
- Three months ended December 31, 2019
- Three months ended March 31, 2020
©2020 Adtalem Global Education Inc. All rights reserved. | 11 |
Appendix
Non-GAAP Reconciliation Tables
Adtalem Global Education Inc.
Non-GAAP Operating Income from Continuing Operations by Segment
(unaudited)
(in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
Increase | Increase | |||||||||||||||
2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | |||||||||||
Medical and Healthcare: | ||||||||||||||||
Operating income (GAAP) | $ | 56,749 | $ | 53,093 | 6.9 | % | $ | 126,432 | $ | 115,396 | 9.6 | % | ||||
Restructuring expense | 810 | (133) | NM | 1,354 | 41,327 | (96.7)% | ||||||||||
Settlement gain | - | - | NM | - | (15,571) | NM | ||||||||||
Operating income excluding special items (non-GAAP) | $ | 57,559 | $ | 52,960 | 8.7 | % | $ | 127,786 | $ | 141,152 | (9.5)% | |||||
Financial Services: | ||||||||||||||||
Operating income (GAAP) | $ | 4,190 | $ | 5,086 | (17.6)% | $ | 10,860 | $ | 19,469 | (44.2)% | ||||||
Restructuring expense | - | - | NM | 3,116 | - | NM | ||||||||||
Operating income excluding special items (non-GAAP) | $ | 4,190 | $ | 5,086 | (17.6)% | $ | 13,976 | $ | 19,469 | (28.2)% | ||||||
Home Office and Other: | ||||||||||||||||
Operating loss (GAAP) | $ | (6,452) | $ | (12,600) | 48.8 | % | $ | (16,753) | $ | (33,849) | 50.5 | % | ||||
Restructuring expense | 1,044 | 2,319 | (55.0)% | 5,869 | 3,867 | 51.8 | % | |||||||||
Gain on sale of assets | - | - | NM | (4,779) | - | NM | ||||||||||
Operating loss excluding special items (non-GAAP) | $ | (5,408) | $ | (10,281) | 47.4 | % | $ | (15,663) | $ | (29,982) | 47.8 | % | ||||
Adtalem Global Education: | ||||||||||||||||
Operating income (GAAP) | $ | 54,487 | $ | 45,579 | 19.5 | % | $ | 120,539 | $ | 101,016 | 19.3 | % | ||||
Restructuring expense | 1,854 | 2,186 | (15.2)% | 10,339 | 45,194 | (77.1)% | ||||||||||
Gain on sale of assets | - | - | NM | (4,779) | - | NM | ||||||||||
Settlement gain | - | - | NM | - | (15,571) | NM | ||||||||||
Operating income excluding special items (non-GAAP) | $ | 56,341 | $ | 47,765 | 18.0 | % | $ | 126,099 | $ | 130,639 | (3.5)% |
©2020 Adtalem Global Education Inc. All rights reserved. | 13 |
Non-GAAP Reconciliation Tables
©2020 Adtalem Global Education Inc. All rights reserved. | 14 |
Non-GAAP Reconciliation Tables
Key Metrics | Trailing 12 months, as of March 31, 20202 |
Operating Cash Flow (GAAP measure)1 | $170 million |
Capital Expenditures1 | $44 million |
Free Cash Flow (Non-GAAP measure)1 | $126 million |
- From continuing operations.
- For twelve months ended March 31, 2020.
©2020 Adtalem Global Education Inc. All rights reserved. | 15 |
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Adtalem Global Education Inc. published this content on 05 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 May 2020 22:08:00 UTC
