DeVry Inc. (NYSE:DV), a global provider of educational services,
today reported results for its fiscal 2012 third-quarter and
nine-month period ended March 31, 2012.
Significant accomplishments:
- DeVry Brasil acquired Faculdade Boa
Viagem (FBV) to expand its presence in northeastern Brazil
- Becker Professional Education acquired
Falcon Physician Reviews to enter the growing healthcare exam
preparation market
- Chamberlain established campuses in
Atlanta and Indianapolis; sought approvals to open a Tinley Park,
Ill., campus in fiscal 2013
- Becker announced that it prepared all
19 Elijah Watts Sells Winners for the 2010 CPA Exam
Financial Results for the Three Months Ended March 31,
2012:
- Revenues decreased 4 percent to $540.8
million
- Net income declined 28 percent to $67.1
million
- Diluted earnings per share decreased 24
percent to $1.00
Financial Results for the Nine Months Ended March 31,
2012:
- Revenues decreased 3 percent to $1,584
million
- Reported net income declined to $133.5
million from $255.2 million last year, and net income excluding
discrete items was $187.1 million, down 27 percent
- Reported diluted earnings per share
declined to $1.96 from $3.60 per share last year, and earnings per
share excluding discrete items was $2.74 per share, down 24
percent
“While this was a challenging quarter, we continued to execute
on our five-point performance improvement plan, which includes
reducing costs at DeVry University and Carrington Colleges,” said
Daniel Hamburger, DeVry’s president and chief executive officer.
“Our strong financial position enables us to aggressively pursue
our plan without sacrificing quality or foregoing opportunities for
targeted investments. In the quarter, we made promising investments
in high growth areas of our organization, namely the expansion of
Chamberlain into two new markets and the additions of Faculdade Boa
Viagem and Falcon Physician Review to our family of
institutions.”
Business Highlights
Business, Technology, and Management Segment
DeVry University
DeVry University reported new undergraduate student enrollment
of 12,025, a 19.7 percent decline compared with 14,981 last year.
Total student enrollment decreased 15.1 percent to 60,196 students,
compared with 70,863 in spring 2011.
For the January 2012 session, the number of graduate
coursetakers enrolled in master’s degree programs at DeVry
University and its Keller Graduate School of Management was 24,029,
a decrease of 3.0 percent versus January 2011. For the March 2012
session, the number of graduate coursetakers was 23,366, a decline
of 4.3 percent from prior year.
The total number of online undergraduate and graduate
coursetakers in the March 2012 session decreased 13.1 percent to
68,083 versus 78,366 in the same session a year ago.
Enrollment results were impacted by a focus on adjusting to new
regulations and prolonged unemployment, which continued to affect
consumer confidence.
Medical and Healthcare Segment
DeVry Medical International
In the January 2012 term, new students decreased 20.5 percent to
601, compared to a very strong 756 students last year. Total
students increased 1.0 percent to 6,024 compared to 5,965 students
in the same term last year. The decline in new student enrollment
is largely a result of capacity constraints at Ross University
School of Medicine. Ross expects new student enrollment to increase
in the May term reflecting the continued strong demand for medical
education.
Chamberlain College of Nursing
Chamberlain's new student enrollment in spring 2012 increased
2.8 percent to 2,933 students, compared to 2,852 in spring 2011.
Total student enrollment rose 19.9 percent to 11,867 students
compared with 9,897 during the same period last year.
Chamberlain’s newly established Atlanta location has experienced
exceptionally strong interest from applicants for the first classes
at that location.
Carrington Colleges Group
New student enrollment at Carrington decreased 30.9 percent to
2,254 compared with 3,261 in spring 2011. Total enrollment
decreased 28.4 percent to 7,309 students, compared with 10,206 for
the same period last year. Carrington continues to make progress on
its turnaround plan, which includes increasing its student
recruiting effectiveness, aligning its cost structure, and
enhancing academic quality.
Professional Education Segment
Becker Professional Education
In April, Becker announced its acquisition of Falcon Physician
Reviews, a leading provider of comprehensive review programs for
physicians preparing for the United States Medical Licensing
Examination (USMLE) and the Comprehensive Osteopathic Medical
Licensing Examination (COMLEX). The transaction expands Becker’s
exam preparation services into the growing healthcare field.
Becker announced recently that 100 percent of the 2010 Elijah
Watt Sells Award winners prepared for the exam with Becker’s CPA
Exam Review. Since the American Institute of Certified Public
Accountants (AICPA) began recognizing the Elijah Watt Sells Award
recipients nationally in 2005, 66 of the 74 winners have prepared
with Becker’s CPA Exam Review.
The Elijah Watt Sells Award is presented to the 10 CPA
candidates, who, on their first attempt, achieve the highest
cumulative scores for all four sections of the Uniform CPA
Examination within a calendar year. In 2010 several candidates
received identical cumulative scores, resulting in a tie and
increasing the number of award recipients to 19.
Other Educational Services Segment
DeVry Brasil
In February, DeVry Brasil announced it had acquired Faculdade
Boa Viagem, adding another quality institution to its growing
family of schools in northeastern Brazil.
For the spring 2012 term, new students increased 46.1 percent to
5,599, compared to 3,833 students for prior year term. Total
students increased 55.6 percent to 21,297 compared to 13,688
students in the same term last year, driven by strong demand and
the acquisition of FBV.
Balance Sheet/Cash Flow
For the first nine months of fiscal 2012, DeVry generated $355.1
million of operating cash flow. As of March 31, 2012, cash,
marketable securities and investment balances totaled $332.1
million and there were no outstanding borrowings.
Share Repurchase Plan
During the quarter, a total of 863,369 shares were repurchased
under the organization’s seventh repurchase program for
approximately $32.1 million, at an average cost of $37.21 per
share.
Conference Call and Webcast Information
DeVry will host a conference call on April 24, 2012, at 3:30
p.m. Central Daylight Time (4:30 p.m. Eastern Daylight Time) to
discuss its fiscal 2012 third-quarter results. The conference call
will be led by Daniel Hamburger, president and chief executive
officer, Tim Wiggins, chief financial officer, and Pat Unzicker,
vice president of finance.
For those wishing to participate by telephone, dial (866)
314-4483 (domestic) or (617) 213-8049 (international). Use passcode
53841990 or say “DeVry Call.” DeVry will also broadcast the
conference call live via the Internet. Interested parties may
access the webcast through the Investor Relations section of the
organization's website at http://www.media-server.com/m/p/7r9x3m5e.
Please access the website at least 15 minutes prior to the start of
the call to register, download and install any necessary audio
software.
DeVry will archive a telephone replay of the call until May 1,
2012. To access the replay, dial (888) 286-8010 (domestic) or (617)
801-6888 (international), passcode: 95020056. To access the webcast
replay, please visit DeVry’s website at www.devryinc.com.
About DeVry Inc.
DeVry's purpose is to empower its students to achieve their
educational and career goals. DeVry (NYSE: DV, member S&P 500
Index) is a global provider of educational services and the parent
organization of Advanced Academics, American University of the
Caribbean School of Medicine, Becker Professional Education,
Carrington College, Carrington College California, Chamberlain
College of Nursing, DeVry Brasil, DeVry University, and Ross
University Schools of Medicine and Veterinary Medicine. These
institutions offer a wide array of programs in business, healthcare
and technology. DeVry’s institutions serve students in secondary
through postsecondary education and professionals in accounting and
finance. For more information, please call 630.353.3800 or visit
http://www.devryinc.com.
Certain statements contained in this release concerning DeVry's
future performance, including those statements concerning DeVry's
expectations or plans, may constitute forward-looking statements
subject to the Safe Harbor Provision of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
generally can be identified by phrases such as DeVry Inc. or its
management "believes," "expects," "anticipates," "foresees,"
"forecasts," "estimates" or other words or phrases of similar
import. Actual results may differ materially from those projected
or implied by these forward-looking statements. Potential risks,
uncertainties and other factors that could cause results to differ
are described more fully in Item 1A, "Risk Factors," in DeVry's
most recent Annual Report on Form 10-K for the year ending June 30,
2011 and filed with the Securities and Exchange Commission on
August 26, 2011.
Selected Operating Data (in thousands, except per share
data)
Third Quarter FY 2012
FY 2011 Change Revenues $540,807
$562,730 (3.9%) Net Income $67,131 $92,900
(27.7%) Earnings per Share (diluted) $1.00 $1.32 (24.2%) Number of
common shares (diluted) 67,225 70,272 (4.3%)
Nine
Months FY 2012 FY 2011
Change Revenues $1,583,894 $1,635,621 (3.2%)
Net Income $133,480 $255,207 (47.7%) Earnings per Share (diluted)
$1.96 $3.60 (45.6%) Number of common shares (diluted) 68,235 70,886
(3.7%)
Use of Non-GAAP Financial Information and Supplemental
Reconciliation Schedule
During the second quarter of fiscal year 2012, DeVry recorded
impairment charges related to its Carrington Colleges reporting
unit. Also, DeVry recorded a gain from the sale of Becker’s Stalla
CFA review operations. The following table illustrates the effects
of the impairment charges and gain on sale of assets on DeVry’s
results. Management believes that the disclosure of non-GAAP net
income and earnings per share provides investors with useful
supplemental information regarding the underlying business trends
and performance of DeVry’s ongoing operations and is useful for
period-over period comparisons of such operations given the
discrete nature of the impairment charges and gain on the sale of
assets. DeVry uses these supplemental financial measures internally
in its management and budgeting processes. However, the non-GAAP
financial measures should be viewed in addition to, and not as a
substitute for, DeVry’s reported results prepared in accordance
with GAAP. The following table reconciles these items to the
relevant GAAP information (in thousands, except per share
data):
For The Nine Months Ended March 31:
2012 2011 Net Income $133,480 $255,207
Earnings per Share (diluted) $1.96 $3.60 Impairment
Charges (net of tax) $55,751 -- Effect on Earnings per Share
(diluted) $0.82 -- Gain on Sale of Assets (net of tax)
$(2,174 ) -- Effect on Earnings per Share (diluted) $(0.03 )
-- Net Income Excluding the Impairment Charges and Gain on
Sale of Assets $187,057 $255,207 Earnings per Share
Excluding the Impairment Charges and Gain on Sale of Assets
(diluted) $2.74 $3.60
Spring 2012 Enrollment
Results
2012 2011
Change Total DeVry Inc. Postsecondary
Enrollments(1) 126,165 130,957 (3.7)%
DeVry
University Undergraduate(2) New students 12,025 14,981 (19.7%)
Total students 60,196 70,863 (15.1%) Graduate
coursetakers(2)(3) January 24,029 24,784 (3.0%) March 23,366 24,406
(4.3%)
Online coursetakers(3) – March
68,083 78,366 (13.1%)
Chamberlain College of Nursing –
Spring(2
) New students 2,933 2,852 +2.8% Total
students 11,867 9,897 +19.9%
DeVry Medical
International(4) New students 601 756 (20.5%) Total students
6,024 5,965 +1.0%
Carrington Colleges – Spring
New students 2,254 3,261 (30.9%) Total students 7,309 10,206
(28.4%)
DeVry Brasil – Spring(5) New students 5,599
3,833 +46.1% Total students 21,297 13,688 +55.6%
DeVry Brasil – Spring (excluding
FBV)
New students 4,336 3,833 +13.1% Total students 15,876 13,688 +16.0%
1. Excludes Becker and Advanced Academics. 2.
Includes both onsite and online students 3. The term “coursetaker”
refers to the number of courses taken by a student. Thus one
student taking two courses equals two coursetakers 4. DeVry Medical
International includes Ross University Schools of Medicine and
Veterinary Medicine and the American University of the Caribbean
School of Medicine (AUC). AUC’s new student enrollment for the
January 2012 and 2011 terms were 87 students and 114 students,
respectively. AUC’s total student enrollment for the January 2012
and 2011 terms were 1,184 students and 1,155 students,
respectively. 5. DeVry acquired FBV in northeastern Brazil in
January. For the Spring 2012 term, FBV’s new student enrollment was
1,263 students and total student enrollment was 5,421 students.
Chart 1: Remaining DeVry Inc. Calendar 2012 Announcements
& Events
Aug. 9, 2012 Fiscal 2012 Year-End Results and Enrollment
DeVry University Chamberlain College of Nursing Carrington
Colleges Group DeVry Medical International Oct. 25, 2012
Fiscal 2013 First Quarter Results and Enrollment DeVry
University Chamberlain College of Nursing Carrington Colleges Group
DeVry Medical International DeVry Brasil November 7, 2012
Annual Shareholder’s Meeting
Chart 2: Calendar 2013 Announcements & Events
January 24, 2013 Fiscal 2013 Second Quarter and Enrollment
DeVry University Chamberlain College of Nursing Carrington
Colleges Group DeVry Medical International April 23, 2013
Fiscal 2013 Third Quarter Results and Enrollment DeVry
University Chamberlain College of Nursing Carrington Colleges Group
DeVry Medical International DeVry Brasil August 15, 2013
Fiscal 2013 Second Quarter and Enrollment DeVry University
Chamberlain College of Nursing Carrington Colleges Group DeVry
Medical International
October 24, 2013
Fiscal 2013 Third Quarter Results and
Enrollment
DeVry University
Chamberlain College of Nursing
Carrington Colleges Group
DeVry Medical International
DeVry Brasil
November 6, 2013
Annual Shareholder’s Meeting
Chart 3: Link to DeVry University USOC Campaign
http://www.youtube.com/user/TheDevryUniversity?ob=0&feature=results_main
DEVRY INC.
CONSOLIDATED
BALANCE SHEETS
(Dollars in Thousands) (Unaudited) PRELIMINARY
March 31, June 30,
March 31, 2012 2011 2011
ASSETS
Current
Assets
Cash and Cash Equivalents $ 329,440 $ 447,145 $ 596,515
Marketable Securities and Investments 2,665 2,575 2,556 Restricted
Cash 13,194 2,308 7,378 Accounts Receivable, Net 254,661 114,689
223,953 Deferred Income Taxes, Net 23,019 24,457 26,290 Prepaid
Expenses and Other 42,389 33,476
31,030 Total Current Assets 665,368
624,650 887,722
Land, Buildings
and Equipment
Land 66,019 54,404 54,274 Buildings 382,972 314,274 302,843
Equipment 422,271 402,179 361,837 Construction In Progress
50,192 63,310 73,713
921,454 834,167 792,667 Accumulated Depreciation and
Amortization (374,904 ) (365,923 ) (354,711 )
Land, Buildings and Equipment, Net 546,550
468,244 437,956
Other
Assets
Intangible Assets, Net 292,887 195,462 191,870 Goodwill
566,547 523,620 517,822 Perkins Program Fund, Net 13,450 13,450
13,450 Other Assets 27,400 25,077
21,607 Total Other Assets 900,284
757,609 744,749
TOTAL
ASSETS $ 2,112,202 $ 1,850,503 $ 2,070,427
DEVRY INC.
CONSOLIDATED
BALANCE SHEETS
(Dollars in Thousands) (Unaudited) PRELIMINARY
March 31, June 30,
March 31, 2012 2011 2011
LIABILITIES
Current
Liabilities
Accounts Payable $ 53,208 $ 63,611 $ 63,741 Accrued
Salaries, Wages and Benefits 72,443 107,829 69,410 Accrued Expenses
56,328 47,097 45,338 Advance Tuition Payments 23,257 22,362 22,435
Deferred Tuition Revenue 349,200 75,532
398,452 Total Current Liabilities
554,436 316,431 599,376
Non-Current
Liabilities
Deferred Income Taxes, Net 63,693 69,029 63,874 Deferred
Rent and Other 91,415 68,772
62,130 Total Non-current Liabilities 155,108
137,801 126,004
TOTAL
LIABILITIES 709,544 454,232
725,380
NON-CONTROLLING INTEREST 8,168 6,755
6,466
SHAREHOLDERS'
EQUITY
Common Stock, $0.01 par value, 200,000,000 Shares
Authorized; 65,831,000, 68,635,000 and 68,966,000 Shares issued and
outstanding at March 31, 2012, June 30, 2011 and March 31, 2011,
respectively. 741 738 736 Additional Paid-in Capital 267,285
248,418 238,813 Retained Earnings 1,490,371 1,367,972 1,300,862
Accumulated Other Comprehensive Income 3,163 15,729 13,662 Treasury
Stock, at Cost (8,266,000, 5,148,000 and 4,638,000 Shares,
Respectively) (367,070 ) (243,341 ) (215,492 )
TOTAL SHAREHOLDERS' EQUITY 1,394,490
1,389,516 1,338,581
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,112,202 $
1,850,503 $ 2,070,427
DEVRY INC.
CONSOLIDATED
STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
(Unaudited) PRELIMINARY
For The Quarter For The Nine
Months Ended March 31, Ended March 31,
2012 2011 2012 2011
REVENUES: Tuition $ 505,651 $ 521,484 $ 1,488,432 $
1,528,003 Other Educational 35,156 41,246
95,462 107,618 Total
Revenues 540,807 562,730
1,583,894 1,635,621
OPERATING COSTS
AND EXPENSES: Cost of Educational Services 244,195 232,914
723,655 690,912 Student Services and Administrative Expense 201,158
192,589 596,125 560,114 Asset Impairment Charge -
- 75,039 - Total
Operating Costs and Expenses 445,353 425,503
1,394,819 1,251,026
Operating Income 95,454 137,227 189,075 384,595
INTEREST AND OTHER INCOME (EXPENSE): Interest Income 110 435
520 1,239 Interest Expense (650 ) (348 ) (1,653 ) (841 ) Net Gain
on Sale of Assets - - 3,695
- Net Interest and Other Income
(Expense) (540 ) 87 2,562
398
Income Before Income Taxes 94,914 137,314
191,637 384,993
Income Tax Provision 27,610
44,405 57,741 129,851
NET INCOME 67,304 92,909 133,896 255,142
Net (Income) Loss Attributable to Noncontrolling Interest
(173 ) (9 ) (416 ) 65
NET INCOME ATTRIBUTABLE TO DEVRY INC. $ 67,131 $
92,900 $ 133,480 $ 255,207
EARNINGS
PER COMMON SHARE ATTRIBUTABLE TO DEVRY INC. SHAREHOLDERS
Basic $ 1.01 $ 1.34 $ 1.97 $ 3.64
Diluted $ 1.00 $ 1.32 $ 1.96 $
3.60
Cash Dividend Declared per Common Share $
- $ - $ 0.15 $ 0.12
DEVRY INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands) (Unaudited) PRELIMINARY
For The Nine Months Ended March 31, 2012
2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net
Income $133,896 $255,142 Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities: Stock-Based
Compensation Expense 12,891 11,192 Depreciation 56,512 43,289
Amortization 8,336 4,589 Impairment of Goodwill and Intangible
Assets 75,039 - Provision for Refunds and Uncollectible Accounts
73,058 73,534 Deferred Income Taxes (5,157 ) 16,220 Loss on
Disposals of Land, Buildings and Equipment 805 262 Realized Gain on
Sale of Assets (3,695 ) - Changes in Assets and Liabilities, Net of
Effects from Acquisitions and Divestitures of Businesses:
Restricted Cash (10,886 ) (5,276 ) Accounts Receivable (212,973 )
(177,807 ) Prepaid Expenses And Other (5,392 ) (6,225 ) Accounts
Payable (11,327 ) (26,631 ) Accrued Salaries, Wages, Expenses and
Benefits (26,149 ) (16,267 ) Advance Tuition Payments 877 1,384
Deferred Tuition Revenue 269,294 311,825
NET CASH PROVIDED BY OPERATING ACTIVITIES 355,129
485,231
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (92,167 ) (91,299 ) Marketable Securities
Purchased (66 ) (91 ) Marketable Securities Sales - 13,495 Payment
for Purchase of Businesses, Net of Cash Acquired (250,150 ) - Cash
Received from Sale of Assets 4,475 - Other - (627 )
NET CASH USED IN INVESTING ACTIVITIES (337,908 ) (78,522 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from
Exercise of Stock Options 6,041 3,081 Proceeds from Stock issued
Under Employee Stock Purchase Plan 1,298 1,033 Repurchase of Common
Stock for Treasury (124,160 ) (104,746 ) Cash Dividends Paid
(18,430 ) (15,529 ) Excess Tax Benefit from Stock-Based Payments
727 561 Payment of Debt Financing Fees (70 ) -
NET
CASH USED IN FINANCING ACTIVITIES (134,594 ) (115,600 )
Effects of Exchange Rate Differences (332 ) (2,296 )
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (117,705 )
288,813
Cash and Cash Equivalents at Beginning of
Period 447,145 307,702
Cash and Cash
Equivalents at End of Period $329,440 $596,515
DEVRY INC.
SEGMENT
INFORMATION
(Dollars in Thousands) (Unaudited) PRELIMINARY
For The Quarter
For The Nine Months Ended March 31, Ended March
31, Increase Increase 2012 2011
(Decrease) 2012 2011 (Decrease)
REVENUES: Business, Technology and Management $ 338,790 $
378,698 -10.5 % $ 1,001,959 $ 1,102,359 -9.1 % Medical and
Healthcare 160,483 142,544 12.6 % 461,456 421,347 9.5 %
International, K-12 and Professional Education 41,534
41,488 0.1 % 120,479 111,915
7.7 % Total Consolidated Revenues 540,807
562,730 -3.9 % 1,583,894
1,635,621 -3.2 %
OPERATING INCOME: Business,
Technology and Management 64,667 99,351 -34.9 % 183,850 283,342
-35.1 % Medical and Healthcare 25,963 29,289 -11.4 % (2,681 )
88,415 -103.0 % International, K-12 and Professional Education
7,214 10,263 -29.7 % 14,378 15,858 -9.3 % Reconciling Items:
Amortization Expense (2,800 ) (1,497 ) 87.0 % (7,844 ) (4,449 )
76.3 % Depreciation and Other 410 (179 ) NM
1,372 1,429 -4.0 % Total
Consolidated Operating Income 95,454 137,227 -30.4 % 189,075
384,595 -50.8 %
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 110 435 -74.7 % 520 1,239 -58.0 % Interest Expense
(650 ) (348 ) 86.8 % (1,653 ) (841 ) 96.6 % Net Gain on Sale of
Assets - - NM 3,695
- NM Net Interest and Other Income (Expense)
(540 ) 87 -720.7 % 2,562
398 543.7 % Total Consolidated Income before Income
Taxes $ 94,914 $ 137,314 -30.9 % $ 191,637 $
384,993 -50.2 %
Intangible asset and goodwill impairment charges were recorded
for the nine month period ended March 31, 2012. These charges are
related to DeVry's Carrington Colleges Group, Inc. which is part of
the Medical and Healthcare segment. The following table illustrates
the effects of these impairment charges on the operating income of
the Medical and Healthcare segment. Management believes that the
non-GAAP disclosure of operating earnings provides investors with
useful supplemental information regarding the underlying business
trends and performance of DeVry’s ongoing operations and are useful
for period-over-period comparisons of such operations given the
discrete nature of these impairment transactions. DeVry uses these
supplemental financial measures internally in its budgeting
process. However, the non-GAAP financial measures should be viewed
in addition to, and not as a substitute for, DeVry’s reported
results prepared in accordance with GAAP. The following table
reconciles these items to the relevant GAAP information:
For The Quarter For The Nine
Months Ended March 31, Ended March 31,
Increase Increase 2012
2011 (Decrease) 2012 2011
(Decrease) Medical and Healthcare Operating Income $
25,963 $ 29,289 -11.4 % $ (2,681 ) $ 88,415 -103.0 % Asset
Impairment Charge - - NM 75,039
0 NM Medical and Healthcare Operating Income Excluding Charge for
Asset Impairments $ 25,963 $ 29,289 -11.4 % $ 72,358 $
88,415 -18.2 %
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