Attached files
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| 8-K - ADTALEM GLOBAL EDUCATION INC. 8-K - Adtalem Global Education Inc. | a51670910.htm |
Exhibit 99.1
Adtalem Global Education Announces Fourth Quarter and Full Year Fiscal 2017 Results
DOWNERS GROVE, Ill.--(BUSINESS WIRE)--August 17, 2017--Adtalem Global Education (NYSE: ATGE), a leading global education provider, today reported academic, operational and financial results for its fiscal 2017 fourth quarter ended June 30, 2017, including enrollment results at its Carrington College, Chamberlain University, DeVry University/Keller Graduate School of Management and its medical and veterinary schools.
“Our fiscal fourth quarter performance capped off a transformative year for our organization,” said Lisa Wardell, president and CEO of Adtalem Global Education. “We made considerable progress in the four priorities we laid out at the beginning of the year, aimed at strengthening our value proposition, elevating our growth profile and further improving operating leverage. We entered fiscal 2018 with momentum in pursuing our primary mission of empowering our students and filling the global work force skills gaps that are prevalent in our society. We will continue to focus on providing societal value by strategically expanding in core markets with significant supply/demand workforce imbalances, while taking steps to maximize returns on our investments to the benefit of our shareholders.”
Selected financial data for the three months ended June 30, 2017:
- Total revenue of $451.5 million decreased 4.3 percent versus the prior year
- Net income of $42.9 million, compared to a net loss of $10.0 million in the prior year; net income excluding special items was $50.0 million, compared to $41.2 million in the prior year
- Diluted earnings per share was $0.67, compared to a net loss per share of $0.16 in the prior year; diluted earnings per share excluding special items was $0.78, compared to $0.65 in the prior year
- Adtalem repurchased approximately 483,000 shares of common stock during the fourth fiscal quarter
Selected financial data for the twelve months ended June 30, 2017:
- Total revenue of $1,809.8 million decreased 1.8 percent versus the prior year
- Medical and Healthcare; Professional Education; and Technology and Business revenue grew 2.4 percent, 28.0 percent and 40.9 percent respectively; while US Traditional Postsecondary revenue decreased 21.2 percent
- Net income of $122.3 million, compared to a net loss of $3.2 million in the prior year; net income excluding special items was $178.4 million, compared to $155.3 million in the prior year
- Diluted earnings per share was $1.91, compared to a net loss per share loss of $0.05 last year; diluted earnings per share excluding special items was $2.79, compared to $2.41 last year
- Operating cash flow for the year was $228.0 million, which is unchanged from the prior year
- Cash and cash equivalents were $242.0 million as of June 30, 2017, compared to $308.2 million as of June 30, 2016. Outstanding bank borrowings were $125.0 million as of June 30, 2017
The fiscal 2017 fourth quarter results contained total pre-tax restructuring charges of $12.0 million primarily related to restructuring at DeVry University and at Adtalem’s home office.
Academic and Operating Highlights
Medical and Healthcare Segment
Fourth quarter segment revenue of $193.1 million was flat compared to the prior year, with growth at Chamberlain University offset by decreased revenue at the medical and veterinary schools. Chamberlain revenue increased 2.4 percent to $112.4 million, while revenue for the medical and veterinary schools decreased 3.0 percent to $80.8 million.
Following the establishment of Chamberlain University in May and the launch of Chamberlain’s new College of Health Professions, Chamberlain moved forward in admitting students to the Master of Public Health (MPH) degree program. The school received approval for Title IV funding for the program and expects full accreditation to occur over time.
Professional Education
Fourth quarter segment revenue increased 26.5 percent to $39.9 million compared to the prior year, driven by Association of Certified Anti Money Laundering Specialists (ACAMS). Segment operating income for the fourth quarter was $11.1 million, down from $13.3 million from the prior year, excluding special items, driven by a decline in revenue in Becker’s CPA review program.
Becker continued to expand its professional exam preparation resources through the launch of GuideRN Self Study program to help nursing students prepare for their National Council Licensure Examination (NCLEX) test required to become a board-certified nurse. Featuring 21 core subject topics, the GuideRN self-study includes a full curriculum of nursing subjects including Nursing Sciences, Fundamental Skills, Professional Standards, and Examination Preparation.
In the year ahead, ACAMS will continue to be a significant growth driver within Professional Education, through increases in memberships and corporate partnerships with multi-national banks as well as growth in conference attendance, in the U.S., Asia and Europe.
Technology and Business
Fourth quarter segment revenue increased 11.0 percent to $82.9 million compared to the prior year. On a constant currency basis, revenue in the segment grew 1.7 percent. Segment operating income in the fourth quarter increased 28.7 percent to $19.3 million as a result of revenue growth and cost efficiencies.
US Traditional Postsecondary
Fourth quarter segment revenue decreased 21.3 percent to $136.3 million.
Revenue at DeVry University decreased 23.0 percent to $103.9 million compared to the prior year. Fourth quarter revenue at Carrington declined 15.3 percent to $32.3 million compared to the prior year.
Excluding special items, the segment reported an operating loss of $0.9 million for the quarter, compared to an operating loss of $1.2 million in the prior year.
DeVry University achieved $30.9 million of cost savings in the fourth quarter compared to prior year, excluding special items. Additional cost reductions are expected throughout fiscal 2018 to maintain positive segment economics.
Adtalem Outlook
Fiscal 2018 first quarter revenue is expected to decrease 4 to 5 percent versus the prior year. First quarter operating costs before special items are expected to decline 4 to 5 percent versus the prior year.
Fiscal 2018 full year revenue is expected to be flat to down 1 percent compared to the prior year and earnings before special items are expected to grow in the low single digit range as compared to the prior year. Full year capital spending is expected to be in the $65 to $70 million range. The effective income tax rate for the fiscal year is expected to be in the range of 21 to 22 percent, before special items.
Conference Call and Webcast Information
Adtalem Global Education will hold a conference call to discuss its fiscal 2017 fourth-quarter and year-end financial results Thursday, August 17, at 4 p.m. CDT (5 p.m. EDT). The conference call will be led by Lisa Wardell, president and chief executive officer; and Patrick Unzicker, chief financial officer.
For those wishing to participate by telephone, dial 877-407-6184 (domestic) or 201-389-0877 (international). Ask for the “Adtalem Call” or use conference ID: 13666580. Adtalem will also broadcast the conference call on Adtalem's website at: http://www.investorcalendar.com/event/17942.
Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Adtalem will archive a telephone replay of the call until Thursday, Sept. 17, 2017. To access the replay, dial 877-660-6853 (domestic) or 201-612-7415 (international), passcode 10099693. To access the webcast replay, please visit Adtalem's website, or http://www.investorcalendar.com/event/17942.
About Adtalem Global Education
The purpose of Adtalem Global Education is to empower students to achieve their goals, find success, and make inspiring contributions to our global community. Adtalem Global Education Inc. (NYSE: ATGE; member S&P MidCap 400 Index) is a leading global education provider and the parent organization of Adtalem Educacional do Brasil, American University of the Caribbean School of Medicine, Association of Anti-Money Laundering Specialists, Becker Professional Education, Carrington College, Chamberlain University, DeVry University and its Keller Graduate School of Management, Ross University School of Medicine and Ross University School of Veterinary Medicine. For more information, please visit adtalem.com.
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Enrollment Results |
||||||
| FY 2017 | FY 2016 | % Change | ||||
| Adtalem Global Education Student Enrollments | ||||||
| New students(1) | 7,739 | 8,269 | -6.4% | |||
| Total students(1) | 142,502 | 149,152 | -4.5% | |||
| Chamberlain University | ||||||
| May Session | ||||||
| New students | 3,779 | 3,635 | +4.0% | |||
| Total students | 28,961 | 27,406 | +5.7% | |||
| July Session | ||||||
|
New students(2) |
2,497 | 2,144 | +16.5% | |||
| Total students | 26,811 | 25,229 | +6.3% | |||
| Carrington College | ||||||
| 3 months ending June 30, 2017 | ||||||
| New students | 1,384 | 1,681 | -17.7% | |||
| Total students | 5,362 | 6,466 | -17.1% | |||
| Medical and Veterinary | ||||||
| May Semester | ||||||
| New students | 458 | 535 | -14.4% | |||
| Total students | 5,491 | 5,850 | -6.1% | |||
| DeVry University | ||||||
| Undergraduate – May Session | ||||||
| New students | 2,406 | 2,982 | -19.3% | |||
| Total students | 20,691 | 26,492 | -21.9% | |||
| Graduate – May Session | ||||||
| Coursetakers(3) | 8,469 | 10,810 | -21.7% | |||
| Undergraduate – July Session | ||||||
| New students | 2,616 | 2,953 | -11.4% | |||
| Total students | 18,853 | 24,213 | -22.1% | |||
| Graduate – July Session | ||||||
| Coursetakers(3) | 7,442 | 9,742 | -23.6% |
| 1) | Includes the most recently reported enrollments at Adtalem’s postsecondary institutions | ||
| 2) | Post-licensure online programs only; pre-licensure campus-based programs start in September, January and May | ||
| 3) | The term “coursetaker” refers to the number of courses taken by a student. Thus one student taking two courses equals two coursetakers |
| ADTALEM GLOBAL EDUCATION INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (unaudited) | |||||||||||
| PRELIMINARY | |||||||||||
| June 30, | |||||||||||
| 2017 | 2016 | ||||||||||
|
(in thousands, except share |
|||||||||||
| ASSETS: | |||||||||||
| Current Assets: | |||||||||||
| Cash and Cash Equivalents | $ | 241,979 | $ | 308,164 | |||||||
| Marketable Securities and Investments | 4,013 | 3,609 | |||||||||
| Restricted Cash | 9,117 | 7,183 | |||||||||
| Accounts Receivable, Net | 173,362 | 162,389 | |||||||||
| Prepaid Expenses and Other | 42,736 | 36,760 | |||||||||
| Total Current Assets | 471,207 | 518,105 | |||||||||
| Land, Building and Equipment: | |||||||||||
| Land | 48,947 | 55,690 | |||||||||
| Building | 474,942 | 488,347 | |||||||||
| Equipment | 514,118 | 521,209 | |||||||||
| Construction in Progress | 22,461 | 22,560 | |||||||||
| 1,060,468 | 1,087,806 | ||||||||||
| Accumulated Depreciation | (582,922 | ) | (566,043 | ) | |||||||
| Land, Building and Equipment Held for Sale, Net | 11,280 | - | |||||||||
| Land, Building and Equipment, Net | 488,826 | 521,763 | |||||||||
| Other Assets: | |||||||||||
| Deferred Income Taxes, Net | 33,772 | 52,608 | |||||||||
| Intangible Assets, Net | 413,803 | 342,856 | |||||||||
| Goodwill | 851,282 | 588,007 | |||||||||
| Perkins Program Fund, Net | 13,450 | 13,450 | |||||||||
| Other Assets, Net | 41,695 | 60,207 | |||||||||
| Total Other Assets | 1,354,002 | 1,057,128 | |||||||||
| TOTAL ASSETS | $ | 2,314,035 | $ | 2,096,996 | |||||||
| LIABILITIES: | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts Payable | $ | 64,285 | $ | 64,687 | |||||||
| Accrued Salaries, Wages and Benefits | 96,241 | 93,328 | |||||||||
| Accrued Expenses | 99,243 | 103,379 | |||||||||
| Deferred Revenue | 117,558 | 100,442 | |||||||||
| Total Current Liabilities | 377,327 | 361,836 | |||||||||
| Other Liabilities: | |||||||||||
| Revolving Loan | 125,000 | - | |||||||||
| Deferred Income Taxes, Net | 34,712 | 29,936 | |||||||||
| Deferred Rent and Other | 101,672 | 118,025 | |||||||||
| Total Other Liabilities | 261,384 | 147,961 | |||||||||
| TOTAL LIABILITIES | 638,711 | 509,797 | |||||||||
| NONCONTROLLING INTEREST | 6,285 | 5,112 | |||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
| Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized: 62,371,000 and 62,549,000 | |||||||||||
| Shares Outstanding at June 30, 2017 and June 30, 2016, respectively | 781 | 765 | |||||||||
| Additional Paid-in Capital | 415,912 | 372,175 | |||||||||
| Retained Earnings | 1,881,397 | 1,771,068 | |||||||||
| Accumulated Other Comprehensive Loss | (59,119 | ) | (42,467 | ) | |||||||
| Treasury Stock, at Cost, 15,691,000 and 13,990,000 Shares at June 30, 2017 and June 30, 2016, | |||||||||||
| respectively | (569,932 | ) | (519,454 | ) | |||||||
| TOTAL SHAREHOLDERS' EQUITY | 1,669,039 | 1,582,087 | |||||||||
| TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | $ | 2,314,035 | $ | 2,096,996 | |||||||
| ADTALEM GLOBAL EDUCATION INC. | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| PRELIMINARY | ||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| REVENUE: | ||||||||||||||||||||
| Tuition | $ | 405,404 | $ | 429,757 | $ | 1,623,017 | $ | 1,673,381 | ||||||||||||
| Other Educational | 46,065 | 41,943 | 186,783 | 170,156 | ||||||||||||||||
| Total Revenue | 451,469 | 471,700 | 1,809,800 | 1,843,537 | ||||||||||||||||
| OPERATING COST AND EXPENSE: | ||||||||||||||||||||
| Cost of Educational Services | 232,490 | 247,813 | 962,194 | 986,778 | ||||||||||||||||
| Student Services and Administrative Expense | 153,655 | 169,388 | 618,152 | 654,049 | ||||||||||||||||
| Restructuring Expense | 11,957 | 34,355 | 29,825 | 74,225 | ||||||||||||||||
| Regulatory Settlements | - | - | 56,252 | - | ||||||||||||||||
| Loss on Assets Held for Sale | - | - | 4,764 | - | ||||||||||||||||
| Asset Impairment Charge | - | 48,187 | - | 147,660 | ||||||||||||||||
| Gain on Sale of Assets | - | (3,183 | ) | - | (7,032 | ) | ||||||||||||||
| Total Operating Cost and Expense | 398,102 | 496,560 | 1,671,187 | 1,855,680 | ||||||||||||||||
| Operating Income (Loss) | 53,367 | (24,860 | ) | 138,613 | (12,143 | ) | ||||||||||||||
| INTEREST: | ||||||||||||||||||||
| Interest Income | 1,184 | 387 | 4,925 | 779 | ||||||||||||||||
| Interest Expense | (2,734 | ) | (353 | ) | (9,144 | ) | (5,934 | ) | ||||||||||||
| Net Interest (Expense) Income | (1,550 | ) | 34 | (4,219 | ) | (5,155 | ) | |||||||||||||
| Income (Loss) Before Income Taxes | 51,817 | (24,826 | ) | 134,394 | (17,298 | ) | ||||||||||||||
| Income Tax (Provision) Benefit | (7,769 | ) | 15,225 | (10,420 | ) | 14,542 | ||||||||||||||
| Equity Method Investment Loss | (694 | ) | - | (694 | ) | - | ||||||||||||||
| NET INCOME (LOSS) | 43,354 | (9,601 | ) | 123,280 | (2,756 | ) | ||||||||||||||
| Net Income Attributable to Noncontrolling Interest | (495 | ) | (368 | ) | (997 | ) | (410 | ) | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM | ||||||||||||||||||||
| GLOBAL EDUCATION | $ | 42,859 | $ | (9,969 | ) | $ | 122,283 | $ | (3,166 | ) | ||||||||||
| EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE | ||||||||||||||||||||
| TO ADTALEM GLOBAL EDUCATION SHAREHOLDERS: | ||||||||||||||||||||
| Basic | $ | 0.68 | $ | (0.16 | ) | $ | 1.93 | $ | (0.05 | ) | ||||||||||
| Diluted | $ | 0.67 | $ | (0.16 | ) | $ | 1.91 | $ | (0.05 | ) | ||||||||||
| Cash Dividends Declared per Common Share | $ | - | $ | 0.18 | $ | 0.18 | $ | 0.36 | ||||||||||||
| ADTALEM GLOBAL EDUCATION INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (Unaudited) | |||||||||||
| PRELIMINARY | |||||||||||
| Year Ended June 30, | |||||||||||
| 2017 | 2016 | ||||||||||
| (in thousands) | |||||||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | |||||||||||
| Net Income (Loss) | $ | 123,280 | $ | (2,756 | ) | ||||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | |||||||||||
| Stock-Based Compensation Expense | 16,600 | 22,368 | |||||||||
| Depreciation | 72,188 | 79,400 | |||||||||
| Amortization | 11,873 | 6,151 | |||||||||
| Impairment of Goodwill and Intangible Assets | - | 147,660 | |||||||||
| Provision for Refunds and Uncollectible Accounts | 87,516 | 82,016 | |||||||||
| Deferred Income Taxes | 5,600 | (41,648 | ) | ||||||||
| Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment | 9,193 | 14,156 | |||||||||
| Unrealized Loss on Assets Held for Sale | 4,764 | - | |||||||||
| Realized Gain on Sale of Assets | - | (7,032 | ) | ||||||||
| Changes in Assets and Liabilities, Net of Effects from Acquisition of Components: | |||||||||||
| Accounts Receivable | (100,118 | ) | (91,649 | ) | |||||||
| Prepaid Expenses and Other | (2,488 | ) | 8,038 | ||||||||
| Accounts Payable | 755 | (9,612 | ) | ||||||||
| Accrued Salaries, Wages, Benefits and Expenses | (3,485 | ) | 12,055 | ||||||||
| Deferred Revenue | 2,286 | 8,862 | |||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 227,964 | 228,009 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital Expenditures | (48,994 | ) | (69,396 | ) | |||||||
| Payment for Purchase of Businesses, Net of Cash Acquired | (330,567 | ) | (173,864 | ) | |||||||
| Marketable Securities Purchased | (93 | ) | (105 | ) | |||||||
| Cash Received on Sale of Assets | - | 31,072 | |||||||||
| Purchase of Noncontrolling Interest of Subsidiary | - | (3,114 | ) | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (379,654 | ) | (215,407 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from Exercise of Stock Options | 27,675 | 337 | |||||||||
| Proceeds from Stock Issued Under Colleague Stock Purchase Plan | 865 | 1,153 | |||||||||
| Repurchase of Common Stock for Treasury | (48,508 | ) | (32,634 | ) | |||||||
| Cash Dividends Paid | (11,414 | ) | (22,977 | ) | |||||||
| Payments of Seller Financed Obligations | (4,819 | ) | (11,500 | ) | |||||||
| Borrowings Under Revolving Credit Facility | 527,000 | - | |||||||||
| Repayments Under Revolving Credit Facility | (402,000 | ) | - | ||||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 88,799 | (65,621 | ) | ||||||||
| Effects of Exchange Rate Differences | (1,360 | ) | 4,601 | ||||||||
| NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (64,251 | ) | (48,418 | ) | |||||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 315,347 | 363,765 | |||||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 251,096 | $ | 315,347 | |||||||
| ADTALEM GLOBAL EDUCATION INC. | |||||||||||||||||||||||||||
| SEGMENT INFORMATION | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| PRELIMINARY | |||||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||
| Increase | Increase | ||||||||||||||||||||||||||
| 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||
| REVENUE: | |||||||||||||||||||||||||||
| Medical and Healthcare | $ | 193,131 | $ | 193,038 | 0.0 | % | $ | 802,462 | $ | 783,655 | 2.4 | % | |||||||||||||||
| Professional Education | 39,863 | 31,504 | 26.5 | % | 131,769 | 102,921 | 28.0 | % | |||||||||||||||||||
| Technology and Business | 82,904 | 74,693 | 11.0 | % | 276,341 | 196,097 | 40.9 | % | |||||||||||||||||||
| U.S. Traditional Postsecondary | 136,253 | 173,167 | (21.3 | )% | 601,919 | 763,809 | (21.2 | )% | |||||||||||||||||||
| Intersegment Elimination and Other | (682 | ) | (702 | ) | 2.8 | % | (2,691 | ) | (2,945 | ) | 8.6 | % | |||||||||||||||
| Total Consolidated Revenue | 451,469 | 471,700 | (4.3 | )% | 1,809,800 | 1,843,537 | (1.8 | )% | |||||||||||||||||||
| OPERATING INCOME (LOSS): | |||||||||||||||||||||||||||
| Medical and Healthcare | 40,972 | 37,564 | 9.1 | % | 187,138 | 178,484 | 4.8 | % | |||||||||||||||||||
| Professional Education | 11,056 | 12,405 | (10.9 | )% | 19,866 | 28,043 | (29.2 | )% | |||||||||||||||||||
| Technology and Business | 19,340 | 15,027 | 28.7 | % | 36,204 | 13,580 | 166.6 | % | |||||||||||||||||||
| U.S. Traditional Postsecondary | (4,571 | ) | (78,471 | ) | 94.2 | % | (25,982 | ) | (211,299 | ) | 87.7 | % | |||||||||||||||
| Reconciling Items: | |||||||||||||||||||||||||||
| Home Office and Other | (13,430 | ) | (11,385 | ) | (18.0 | )% | (78,613 | ) | (20,951 | ) | (275.2 | )% | |||||||||||||||
| Total Consolidated Operating Income (Loss) | $ | 53,367 | $ | (24,860 | ) | NM | $ | 138,613 | $ | (12,143 | ) | NM | |||||||||||||||
|
NON-GAAP SEGMENT INFORMATION |
|
During the three and twelve months ended June 30, 2017, Adtalem recorded special items related to the following: (i) Restructuring charges related to severance for workforce reductions and real estate consolidations at the medical and veterinary schools which is part of the Medical and Healthcare segment, DeVry University and Carrington College ("Carrington") which are part of the U.S. Traditional Postsecondary segment, and Adtalem's home office (not related to any segment) in order to align its cost structure with enrollments; (ii) Charges related to regulatory settlement agreements; and (iii) A charge related to an asset fair value write-down of its Pomona, California campus. During the three and twelve months ended June 30, 2016, Adtalem recorded special items related to the following: (i) Restructuring charges related to workforce reductions and real estate consolidations at DeVry University and real estate consolidations at Carrington in order to align its cost structure with enrollments; (ii) Asset impairment charges related to the write-down of Carrington's intangible assets and goodwill; (iii) A charge related to an asset fair value write-down at Becker Professional Education which is part of the Professional Education segment; and (iv) A gain on the sale of the DeVry University, Fremont, California campus and student housing facilities. The following tables illustrate the effects of the special items on Adtalem’s operating income and net income. Management believes that the non-GAAP disclosure of operating income and net income excluding these special items provides investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations and is useful for period-over-period comparisons of such operations given the special nature of the restructuring charges, regulatory settlements, loss on assets held for sale, asset impairment charges and gain on sale of assets. Adtalem uses these supplemental financial measures internally in its management and budgeting process. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, Adtalem’s reported results prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The following tables reconcile these non-GAAP measures to the most directly comparable GAAP information (in thousands): |
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||
| Increase | Increase | ||||||||||||||||||||||||||
| 2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | ||||||||||||||||||||||
| Medical and Healthcare Operating Income | $ | 40,972 | $ | 37,564 | 9.1 | % | $ | 187,138 | $ | 178,484 | 4.8 | % | |||||||||||||||
| Restructuring Expense | 1,915 | 665 | 188.0 | % | 2,582 | 665 | 288.3 | % | |||||||||||||||||||
| Medical and Healthcare Operating Income | |||||||||||||||||||||||||||
| Excluding Special Items | $ | 42,887 | $ | 38,229 | 12.2 | % | $ | 189,720 | $ | 179,149 | 5.9 | % | |||||||||||||||
| Professional Education Operating Income | $ | 11,056 | $ | 12,405 | (10.9 | )% | $ | 19,866 | $ | 28,043 | (29.2 | )% | |||||||||||||||
| Restructuring Expense | - | 883 | NM | - | 1,183 | NM | |||||||||||||||||||||
| Professional Education Operating Income | |||||||||||||||||||||||||||
| Excluding Special Items | $ | 11,056 | $ | 13,288 | (16.8 | )% | $ | 19,866 | $ | 29,226 | (32.0 | )% | |||||||||||||||
| U.S. Traditional Postsecondary Operating | |||||||||||||||||||||||||||
| Income (Loss) | $ | (4,571 | ) | $ | (78,471 | ) | 94.2 | % | $ | (25,982 | ) | $ | (211,299 | ) | 87.7 | % | |||||||||||
| Restructuring Expense | 3,673 | 32,289 | (88.6 | )% | 16,853 | 71,858 | (76.5 | )% | |||||||||||||||||||
| Regulatory Settlements | - | - | NM | 4,102 | - | NM | |||||||||||||||||||||
| Loss on Assets Held for Sale | - | - | NM | 4,764 | - | NM | |||||||||||||||||||||
| Asset Impairment Charge | - | 48,187 | NM | - | 147,660 | NM | |||||||||||||||||||||
| Gain on Sale of Assets | - | (3,183 | ) | NM | - | (7,032 | ) | NM | |||||||||||||||||||
| U.S. Traditional Postsecondary Operating | |||||||||||||||||||||||||||
| (Loss) Income Excluding Special Items | $ | (898 | ) | $ | (1,178 | ) | 23.8 | % | $ | (263 | ) | $ | 1,187 | NM | |||||||||||||
| Home Office and Other Operating Loss | $ | (13,430 | ) | $ | (11,385 | ) | (18.0 | )% | $ | (78,613 | ) | $ | (20,951 | ) | (275.2 | )% | |||||||||||
| Restructuring Expense | 6,369 | 519 | 1,127.2 | % | 10,390 | 519 | 1,901.9 | % | |||||||||||||||||||
| Regulatory Settlements | - | - | NM | 52,150 | - | NM | |||||||||||||||||||||
| Home Office and Other Operating Loss | |||||||||||||||||||||||||||
| Excluding Special Items | $ | (7,061 | ) | $ | (10,866 | ) | 35.0 | % | $ | (16,073 | ) | $ | (20,432 | ) | 21.3 | % | |||||||||||
| NON-GAAP EARNINGS DISCLOSURE | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| PRELIMINARY | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||
| Net Income (Loss) | $ | 42,859 | $ | (9,969 | ) | $ | 122,283 | $ | (3,166 | ) | |||||||||
| Earnings (Loss) per Share (diluted-2017, basic-2016) | $ | 0.67 | $ | (0.16 | ) | $ | 1.91 | $ | (0.05 | ) | |||||||||
| Restructuring Expense | $ | 11,957 | $ | 34,355 | $ | 29,825 | $ | 74,225 | |||||||||||
| Effect on Earnings per Share (diluted) | $ | 0.19 | $ | 0.54 | $ | 0.47 | $ | 1.15 | |||||||||||
| Regulatory Settlements | $ | - | $ | - | $ | 56,252 | $ | - | |||||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | - | $ | 0.88 | $ | - | |||||||||||
| Loss on Assets Held for Sale | $ | - | $ | - | $ | 4,764 | $ | - | |||||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | - | $ | 0.07 | $ | - | |||||||||||
| Asset Impairment Charge | $ | - | $ | 48,187 | $ | - | $ | 147,660 | |||||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | 0.76 | $ | - | $ | 2.30 | |||||||||||
| Gain on Sale of Assets | $ | - | $ | (3,183 | ) | $ | - | $ | (7,032 | ) | |||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | (0.05 | ) | $ | - | $ | (0.11 | ) | |||||||||
| Income Tax Impact on Non-GAAP Adjustments | $ | (4,779 | ) | $ | (28,182 | ) | $ | (34,721 | ) | $ | (56,432 | ) | |||||||
| Effect on Earnings per Share (diluted) | $ | (0.08 | ) | $ | (0.44 | ) | $ | (0.54 | ) | $ | (0.88 | ) | |||||||
| Net Income Excluding Special Items, net of tax | $ | 50,037 | $ | 41,208 | $ | 178,403 | $ | 155,255 | |||||||||||
| Earnings per Share Excluding Special Items (diluted) | $ | 0.78 | $ | 0.65 | $ | 2.79 | $ | 2.41 | |||||||||||
| Shares used in EPS calculation | |||||||||||||||||||
| Basic | NA | 63,536 | NA | 64,036 | |||||||||||||||
| Diluted | 64,034 | 63,784 | 64,019 | 64,371 | |||||||||||||||
CONTACT:
Adtalem Global Education
Investor Contact:
Joan Walter
Joan.Walter@Adtalem.com
630-353-3800
or
Media Contact:
Ernie Gibble
Ernie.Gibble@Adtalem.com
630-353-9920