William Blair Growth Stock Conference - June 11, 2014
•Download as PPTX, PDF•
1 like•3,059 views
Daniel Hamburger, president and CEO of DeVry Education Group presented at the William Blair Growth Stock Conference June 11, 2014.
Recommended
Recommended
More Related Content
What's hot
What's hot (17)
Similar to William Blair Growth Stock Conference - June 11, 2014
Similar to William Blair Growth Stock Conference - June 11, 2014 (20)
Recently uploaded
Recently uploaded (20)
William Blair Growth Stock Conference - June 11, 2014
- 1. William Blair Growth Stock Conference June 11, 2014 Daniel Hamburger President and CEO
- 2. Certain statements contained in this presentation concerning DeVry Education Group’s future performance, including those statements concerning DeVry Group’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 Group 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 Group ’s most recent Annual Report on Form 10-K for the year ending June 30, 2012 and filed with the Securities and Exchange Commission on August 28, 2013. 2
- 3. International and Professional Education Medical & Healthcare Business,Technology & Management
- 4. Thesis on DeVry Group 4 Quality + = GrowthDiversification + Long-term Thinking
- 5. / Quality: Student Outcomes 4490 Figure based on 2012 graduates self-reporting data to DeVry University Career Services who were employed at graduation or actively seeing employment in their field after graduation. Does not include graduates who were not actively seeking employment, as determined by DeVry UniversityCareer Services, or who did not report data on employment status to DeVry University Career Services. 5
- 6. Quality: Student Outcomes 6 More than 1,000 residency placements
- 7. Becker Professional Education 7 90%+ Watts Sells recipients prepared with Becker
- 8. 38% 19% 79% 23% 55% 21% 39% 39% 7% 0% 20% 40% 60% 80% 100% Enrollment by Curriculum Enrollment by Degree Revenue by Geography Diversification: Mitigates Risk Business Technology Healthcare Associate Bachelor’s Master’s Doctoral Non-US US 8
- 9. Diversification: Adds Value 9 Diversification strategy adds value as students enroll across our institutions
- 10. Investments on Long-Term Growth 10 ● Strong enrollment growth driven by MSN and DNP programs ● 2-4 campuses in FY15 ● “Acquirer of choice” in Brazil ● Proven integration playbook ● 4 successful acquisitions in last 5 years ● Nine new degree programs
- 11. Key Priorities 11 Continue Our Growth Through Diversification Turn Around and Transform DeVry University
- 12. Four-Point Plan 12 Stabilize Enrollments Reduce Costs & Enhance Service Regain Technology Edge Develop the Team
- 13. Turnaround Plan Stabilize enrollment and position the university for growth • Programmatic focus • Optimizing our pricing • More effective marketing and recruiting 13
- 14. Turnaround Plan Reducing our cost structure while enhancing student services • Increased sense of urgency • $100 million FY14 target • Example: consolidating IT systems for better service, lower cost 14
- 15. Financials
- 16. FY14 Third Quarter Year-to-Date Results Revenue 16 1000 1050 1100 1150 1200 1250 1300 1350 1400 1450 1500 FY13 FY14 $1,484 $1,438 (in millions)
- 17. $139 $97 $0 $20 $40 $60 $80 $100 $120 $140 $160 FY13 FY14 17 $151 $122 $0 $20 $40 $60 $80 $100 $120 $140 $160 FY13 FY14 FY14 Third Quarter Year-to-Date Results Net Income (Excl. Special Items) Net Income as Reported (in millions)
- 18. 18 of DeVry Group operating income Provides nearly 2/3 Medical and Healthcare
- 19. Total Enrollment 120,000+ students 19 Up 2% from 2013 Note: Excludes Becker Professional Education (50,000 students).
- 20. $125 $0 $0 $0 $0 $0 $50 $100 $150 FY10 FY11 FY12 FY13 Thru Q314 Strong Financial Position $323 $450 $177 $200 $400 $0 $100 $200 $300 $400 $500 $600 $700 FY10 FY11 FY12 FY13 Thru Q314 Cash Debt 20 (in millions)
- 21. Allocating Owners’ Capital • Deploy capital to strengthen current postsecondary operations • Growth via diversification • Create long-term value through dividends and share repurchases 21
- 22. • Demand for career-oriented education • Quality programs and service to students • Financial flexibility • Accelerating efforts to improve DeVry Groups’ performance 22 Positioned for Long-term Growth
- 24. William Blair Growth Stock Conference June 11, 2014 Daniel Hamburger President and CEO
Editor's Notes
- The thesis on investing in DeVry Education Group is our focus on quality, diversification and long-term thinking. I’d like to focus on that with you today and the financial implications of this positioning and strategy. But first let me introduce DeVry Group for those of you who don’t know us. DeVry Group has a hard-won reputation for quality, and is one of the most diversified education providers in the private sector. We serve over 121,000 degree-seeking students globally, across 3 segments: Our Medical and Healthcare segment includes American University of the Caribbean School of Medicine; and Ross University Schools of Medicine and Veterinary Medicine. We’re the only publicly-held education provider who operates medical and veterinary schools. Our Chamberlain College of Nursing’s one of the largest nursing colleges in the U.S.; with 13 campuses and over 18,000 students. Carrington College California educates ancillary care and allied health professionals. Earlier this year, Carrington College California announced its intention to add the campuses of Carrington College to its existing network, which will result in one regionally accredited institution. We’re in the final phases of this effort and we’re excited by the potential of this combination Our largest and best-known institution is DeVry University and its Keller Graduate School of Management. DeVry University serves more than 55,000 students in career-oriented programs in business, technology, and management. One competitive advantage here is blended learning, with a nation-wide campus network and a high-quality online platform. In our International and Professional Education segment, I would highlight first: DeVry Brasil, which offers Bachelor’s and Master’s programs in healthcare, business, law, and engineering. DeVry Brasil’s reputation is strong and growing. In fact, one of our institutions, Unifavip, recently received official notice that the Ministry of Education had granted the institution Centro Universitario status – that’s why we changed the name from Favip to Unifavip. This new status is a marker of quality and enables us to meet student demand by adding programs and seats more quickly, including rolling out online programs And Becker Professional Education provides exam review and corporate training in accounting and finance, project management, and healthcare. Becker has educated more than half of all CPAs practicing today. So that’s who we are. What’s the investment thesis on DeVry Group? It’s a clear and powerful formula.
- Quality plus Diversification plus long-term thinking equals Growth. Now, when we talk about quality, the key measure is successful student outcomes. Let me share three recent examples of quality across our institutions.
- At DeVry University, more than 90 percent of graduates in the active job market were employed in their field of study within six months of graduation. These graduates earned an average salary of nearly $44,000. In strong and weak job markets, employers value DeVry University graduates.
- Medical school graduates from American University of the Caribbean School of Medicine and Ross University School of Medicine earned more than 1,000 residency positions at hospitals in the United States and Canada. These residents will continue their training in such prestigious teaching hospitals as Georgetown University Hospital in Washington, DC, St. Joseph Mercy Hospital in Michigan, and Rush-Copley Memorial Hospital in Illinois. Many of our graduates plan to become primary care physicians, where society’s need is greatest.
- And at Becker Professional Education… the AICPA began awarding national Elijah Watt Sells awards in 2004 to top performers on the CPA exam. We’re proud that over 90 percent of these honorees prepared with Becker’s CPA Review. Most recently in 2013, over 94,000 people took the CPA exam. Of those 94,000, only 55 qualified as a Watt Sells award winners. And of those 55 of 51 were Becker students.
- The second element of our formula is Diversification; Diversification mitigates risk and it gives us more opportunities for growth. Our diversification strategy is working, with over 50 percent of our enrollment in the fastest growing areas of technology and healthcare. We’re also diversified from a degree level perspective, and geographically, with over 20 percent of our revenues outside the U.S. We’re also diversified across student segments, not overly-dependent on any one. We have traditional-aged students straight from high school, working adults, community college transfers, students from corporations, and the military.
- Our diversification strategy adds value, as increasingly students are enrolling across our institutions. So we have Carrington grads going to Chamberlain to move to the bachelor’s level. Becker students dual-enrolling in Keller programs. Chamberlain students co-sitting in DeVry University classes. Diversification also makes us more attractive to the best talent, as our colleagues get promoted across our institutions.
- Our commitment to quality and diversification is augmented by our investments in long-term growth. In the coming year, we’ll continue to invest in our growing institutions, particularly in healthcare, professional and international education. At Chamberlain College of Nursing, we see long-term opportunity for enrollment growth, particularly in our new masters and doctoral programs. We’re making investments in these post-licensure programs because nurses with advanced degrees are in great demand in today’s healthcare system. Chamberlain can help to meet that need. At the same time at Chamberlain, we’re expanding our locations. We’d previously targeted two to three new campus openings for fiscal 2015, and the good news is that there could be as many as four, pending approvals. In our international and professional segment, we continue to be an “acquirer” of choice in northeastern Brazil. We have a strong management team and a proven integration playbook that will help guide our expansion in that country going forward. We’ve completed 4 successful acquisitions in the last five years and are getting ready to offer nine new degree programs.
- This formula of quality, diversification and managing for the long term has positioned us well, even given the challenging environment in U.S. business and technology education. But given the times and the sense of urgency we have as an organization, we’re just incredibly focused on two priorities right now. Turn around and transform DeVry University, and second to continue our growth through diversification.
- Our 4-point plan to turn around and transform DeVry University includes: Stabilizing enrollments and positioning the university for long-term growth; Reducing our cost structure, while maintaining and enhancing our service to students; Regaining DeVry University’s technology edge; And finally, developing and supporting the team to execute the turnaround plan.
- Today I’d like to highlight two elements of the plan. First, stabilizing enrollments and positioning the university for long-term growth. Our enrollment strategy starts with enhancing our programmatic focus. This means ensuring our programs are designed to best meet the needs of our students and employers, AND better communicating their value proposition to the market. We’ve done a good job of managing and messaging at the university level, and we’ll improve our competitiveness by doing so at the programmatic level. And it’s starting to pay off; for example, we’re following this approach in our accounting program, and accounting has been doing relatively well for us lately, growing about 8 percent over the past twelve months. Our enrollment strategy continues with optimizing our pricing, with the goals of increasing new students, and encouraging persistence. Beginning in the July session, we’re restructuring several elements of tuition pricing. We’re changing the number of credit hours a student must take per session to receive the full-time discount, from 7 hours to 8. We’re reallocating resources to increase funding for other scholarship programs. And, we’re implementing a new DeVry University Fixed Tuition Promise. We promise our students that their tuition rate will never increase as long as they’re a student. We’re also finding ways to be more effective in our marketing and recruiting efforts. The programmatic focus I mentioned will improve the effectiveness and efficiency of our messaging. Our marketing strategy is shifting toward more digital and social channels and optimizing our web site, and away from less effective inquiry vendors. And we’re starting to see some results of this shift. Inquiry conversion is improving, as we drive fewer, but better quality, inquiries, and improved recruiting efficiency.
- Next in the turnaround and transformation plan for DeVry University is reducing our cost structure, while maintaining and enhancing our service to students. We’re accelerating our efforts here, and increased the total cost savings target for our institutions in transition, namely DeVry University and Carrington, to at least $100 million, up from the $60 million initially planned for fiscal 2014. We’ve undertaken some long-term initiatives which not only reduce expenses, but can improve service quality. One example is the move from multiple systems to a common CRM. It’s a better system and easier to train our colleagues to use. It improves our ability to support our students. And we saved over $1 million.
- Turning to the financials… Like every educational provider – public sector, independents and private sector – we’ve not been immune to the secular decline driven by the weak economy and a struggling jobs market. However, our diversification strategy has helped to mitigate the declines, with enrollment increases we’ve seen at several of our institutions, namely Chamberlain College of Nursing, DeVry Medical International, and DeVry Brasil offsetting declines at DeVry University.
- Year to date through the third quarter, total revenues of $1.4 billion were down modestly year over year. These results were driven by continued weakness at DeVry University. Revenue was up at all our other institutions.
- Net income was down as a result of our investments in our growth institutions running slightly higher than cost recovery achieved at our institutions in transition.
- It’s significant to note that operating income for the Medical and Healthcare segment year-to-date was $106 million, representing an increase of 23 percent from the prior year, excluding special items. During the first nine months, segment operating income grew 26 percent, excluding special items. This is a result of strong growth in Chamberlain’s post-licensure programs, and a continued narrowing of operating losses at Carrington. This segment now accounts for nearly two-thirds of DeVry Group’s operating income.
- Total degree-seeking enrollment for DeVry Group is just over 120,000. It’s important to note that this number is up almost 2 percent from last year. We believe this total enrollment growth is quite an accomplishment given the cyclical weakness in the U.S. It’s driven by our diversification into healthcare and international education and is indicative of our strong position in the educational marketplace.
- 20
- Our strategy also drives how we allocate our owners’ capital. Our first priority is to deploy capital to strengthen and to grow our current postsecondary operations. For example, new programs and new locations are targeted growth investments, with high rates of return and relatively low execution risk. Our second priority for the use of investment capital is growth via diversifying acquisitions. Again, diversification drives growth, it mitigates risk, and it helps us attract and develop talent across DeVry. And our third priority for capital allocation is to create long-term value for our fellow owners through dividends and share repurchases.
- So in conclusion, we believe DeVry Group is well-positioned for long-term growth given the large demand for career-oriented education of today’s global workforce. Many public sector colleges globally are constrained and we believe we can offer students quality programs and service, while generating the financial flexibility we need to invest for future growth. In the near-term, we’re accelerating our efforts to improve DeVry Group’s performance. We’re turning around and transforming DeVry University, while continuing to invest in the expansion of our healthcare, professional and international institutions. I’m proud of the increased sense of urgency of our team, and believe our achievements this year will set us on the proper path for fiscal 2015.
- Our formula of quality plus diversification plus long-term thinking will continue to distinguish DeVry Group and will drive our future growth.