DeVry Education Group Announces First-Quarter 2015 Results

DOWNERS GROVE, Ill.--(BUSINESS WIRE)--DeVry Education Group (NYSE:DV), a global provider of educational services, today reported academic, operational and financial results for its fiscal first quarter that ended Sept. 30, 2014. DeVry Group also reported enrollment results at Chamberlain College of Nursing, Carrington College, DeVry Medical International, DeVry Brasil, and DeVry University and its Keller Graduate School of Management.

Academic and operational accomplishments:

• DeVry Brasil acquired Faculdade Martha Falcão (FMF), expanding into the northern region of Brazil
• Chamberlain College of Nursing opened a second location in the Houston area. It also began taking applications at its two new campuses in Las Vegas and Troy, Michigan, both opening in January 2015
• Becker Professional Education was awarded a 3-year accreditation from the Accrediting Council for Continuing Education & Training (ACCET), enabling Becker to extend its programs to additional organizations, such as governmental agencies, armed forces as well as international students
• DeVry University Advantage Academy, a dual-enrollment, dual-degree program offered in partnership with Chicago Public Schools, celebrated 10 years of student opportunity and success

Selected financial data for the three months ended Sept. 30, 2014:

• Revenue increased 2.5 percent to $462.0 million
• Segment revenue for Medical and Healthcare grew 17 percent
• Segment revenue for International and Professional Education grew 22 percent
• Segment revenue for Business, Technology and Management declined 12 percent
• Reported net income of $20.4 million for the organization overall, compared to a net loss of $7.1 million last year; net income from continuing operations and excluding special items was $30.9 million versus $14.2 million in the prior year
• Reported diluted earnings per share of $0.31 compared to a diluted loss per share of $0.11; earnings per share excluding special items was $0.47 versus in $0.22 in the prior year period
• Operating cash flow of $141.1 million for the quarter compared to $141.2 million last year
• Cash and cash equivalents of $473.1 million as of Sept. 30, 2014, compared to $308.5 million as of Sept. 30, 2013
• Raised cost savings target for fiscal 2015 from $70 million to at least $90 million primarily within the Business, Technology and Management segment

“DeVry Education Group’s strategy of quality plus diversification plus long-term focus continues to differentiate us and position us well for growth opportunities,” said Daniel Hamburger, DeVry Group’s president and CEO. “As an organization, DeVry Group continued to see growth in both new and total students. Our revenue increased for the second consecutive quarter. And except for DeVry University, we grew revenue in all of our institutions.”

The first quarter fiscal year 2015 results contained pretax charges of $13.3 million related to workforce reductions and real estate consolidations, primarily at DeVry University. (See “Use of Non-GAAP Financial Information and Supplemental Reconciliation Schedule”).

Operating Highlights

Medical and Healthcare Segment

Segment revenue of $206.0 million was strong, increasing 17 percent compared to the prior year. Excluding special items, segment operating income increased 52 percent to $38.3 million versus the previous year.

DeVry Medical International

Revenue at DeVry Medical International (DMI) grew 9 percent compared to the prior year reflecting an increase in clinical rotations and tuition. In the September 2014 term, new student enrollment declined 3.6 percent to 943 students, compared to 978 students in the prior year. Total students declined 0.8 percent to 6,406, compared to 6,458 students in the same term last year. DMI continues to make improvements in enrollment management and expects better new student enrollments in the January 2015 class.

Chamberlain College of Nursing

For the quarter, Chamberlain grew its revenue by nearly 36 percent, primarily driven by solid enrollment growth in its post-licensure programs. For the September 2014 session, new students grew 14.3 percent to 3,864 students, compared to 3,380 in the previous year. Total students increased 33.3 percent to 20,920, compared to 15,690 in the prior year.

During the quarter, Chamberlain opened a second campus in the Houston area and began taking applications for new students in Las Vegas, and Troy, Michigan, both scheduled to open in January 2015.

In October, Chamberlain president Susan Groenwald, PhD, RN, ANEF, FAAN, was inducted as a fellow in the American Academy of Nursing.

Carrington College

Revenue at Carrington College grew 4 percent during the quarter. For the three-month period ending Sept. 30, 2014, new student enrollment declined 4 percent to 2,623, compared to 2,733 in the previous year. Total enrollment declined 0.9 percent to 7,634, compared to 7,706 in the prior year period. The decline was related to the timing of session start dates in the current period, which resulted in one less session start versus the prior year.

During the quarter, Carrington continued its consolidation under one Carrington College institution. Carrington also has established an agreement with recently closed Anthem Education in multiple markets, assisting student transfers in Arizona, California, Oregon, and Nevada.

International and Professional Education Segment

Segment revenue increased 22 percent to $53 million compared to the prior year. Segment operating income was $4.7 million versus $0.4 million in the previous year.

Becker Professional Education

During the quarter, Becker grew its revenue by 18 percent. This increase was driven by revenue related to the launch of Becker One. Becker One is a new curriculum delivery system that allows Becker students to receive content updates on a continuous basis versus once a year.

Becker recently was awarded 3-year accreditation from the Accrediting Council for Continuing Education & Training, which enables Becker to extend its certified public accountant, continuing professional education, United States Medical Licensing and project management exam preparatory courses to additional organizations, such as governmental agencies and armed forces as well as international students.

DeVry Brasil

Revenue at DeVry Brasil increased 25 percent during the quarter. New student enrollment increased 37.8 percent to 5,217, compared to 3,785 in the prior year. Total student enrollment for the September term increased 14.5 percent to 33,591, compared to 29,340 in the prior year. In addition to these student enrollments, DeVry Brasil enrolled nearly 2,400 total students in Pronatec, a federal government-sponsored certificate program that aims to increase the number of technical and vocational students in Brazil.

On Oct. 1, 2014, DeVry Brasil completed the acquisition of Faculdade Martha Falcão (FMF). Located in the city of Manaus in the state of Amazonas in northern Brazil, FMF currently serves approximately 3,500 students and offers undergraduate and graduate programs in high-demand career fields such as business, accounting, law, information technology and engineering. The acquisition expands DeVry Brasil into the northern region of Brazil.

Business, Technology, and Management Segment

Segment revenue of $203.6 million declined 12 percent compared to the prior year. Excluding special items, the segment generated operating income of $135 thousand during the quarter compared to an operating loss of $5.0 million in the year ago quarter.

DeVry University and its Keller Graduate School of Management

For the September session at DeVry University, new undergraduate student enrollments declined 20.0 percent to 5,268, compared to 6,589 in the prior year. Total undergraduate student enrollments declined 15.1 percent to 39,857 versus 46,966 in previous year period. At the graduate level, including Keller Graduate School of Management, total coursetakers in the September session decreased 13.4 percent to 15,532, compared to 17,925 in the prior year.

During the quarter, DeVry University continued to execute its transformation plan led by DeVry University’s new executive team. Key elements of the plan include enhancing the institution’s programmatic focus, optimizing its pricing structure, enhancing its marketing and recruiting efforts, and reducing the cost structure of the organization.

DeVry University Advantage Academy celebrated its 10^th anniversary. A partnership between Chicago Public Schools (CPS) and DeVry University, Advantage Academy is a dual-enrollment, dual-degree CPS high school located on DeVry University’s Chicago campus. High school juniors and seniors have the opportunity to earn a college associate degree while completing high school at no tuition cost. As of August 2014, almost 1,000 students have graduated from the program. According to the Illinois Board of Higher Education, Advantage Academy’s most recent high school graduation rate was 99 percent, and the cumulative associate degree completion rate was 86 percent.

Balance Sheet/Cash Flow

For fiscal first quarter, DeVry Group generated $141.1 million of operating cash flow. As of Sept. 30, 2014, cash and cash equivalents balances totaled $473.1 million.

Conference Call and Webcast Information

DeVry Group will host a conference call on Oct. 23, 2014, at 4 p.m. Central Daylight Time (5 p.m. Eastern Daylight Time) to discuss its fiscal 2015 first-quarter results. The conference call will be led by Daniel Hamburger, president and CEO, Tim Wiggins, chief financial officer and Pat Unzicker, vice president of finance.

For those wishing to participate by telephone, dial 877-506-6380 (domestic) or 412-902-6690 (international). Please say “DeVry Group Call.” DeVry Group will also broadcast the conference call live online. Interested parties may access the webcast through the Investor Relations section of DeVry Group’s website, using the following link: http://services.choruscall.com/links/dv141023.html.

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 Group will archive a telephone replay of the call until Nov. 14, 2014. To access the replay, dial 877-344-7529 (domestic) or 412-317-0088 (international), conference number 10054565. To access the webcast replay, please visit DeVry Group’s website, or http://services.choruscall.com/links/dv141023.html.

About DeVry Education Group

The purpose of DeVry Education Group is to empower its students to achieve their educational and career goals. DeVry Education Group Inc. (NYSE: DV; member S&P MidCap 400 Index) is a global provider of educational services and the parent organization of American University of the Caribbean School of Medicine, Becker Professional Education, Carrington College, Chamberlain College of Nursing, DeVry Brasil, DeVry University and its Keller Graduate School of Management, Ross University School of Medicine and Ross University School of Veterinary Medicine. These institutions offer a wide array of programs in healthcare, business, technology, accounting and finance. For more information, please visit http://www.devryeducationgroup.com.

Certain statements contained in this release concerning DeVry 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, 2014 and filed with the Securities and Exchange Commission on August 27, 2014.

Use of Non-GAAP Financial Information and Supplemental Reconciliation Schedule

During the first quarter of fiscal year 2015, DeVry Group recorded restructuring charges related to workforce reductions at DeVry University which is part of the Business, Technology and Management segment and real estate consolidations at DeVry University, Carrington College which is part of the Medical and Healthcare segment and DeVry Group home office (not related to any segment) in order to align its cost structure with enrollments. During fiscal first quarter 2014, DeVry Group recorded restructuring charges primarily related to workforce reductions and real estate consolidations at DeVry University, Carrington College and the DeVry Group home office. DeVry Group also recorded the operating results of its Advanced Academics reporting unit as discontinued operations. DeVry Group recorded a gain from the sale of a former DeVry University campus in Decatur, Georgia, during the first quarter of fiscal year 2014. The following table illustrates the effects of restructuring charges and gain on the sale of assets on DeVry Group’s operating income. Management believes that the non-GAAP disclosure of operating income excluding these special items provides investors with useful supplemental information regarding the underlying business trends and performance of DeVry Group’s ongoing operations and is useful for period-over-period comparisons of such operations given the special nature of the restructuring charges and gain on the sale of assets. DeVry Group 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, DeVry Group’s reported results prepared in accordance with GAAP. The following table reconciles these non-GAAP measures to the most directly comparable GAAP information (in thousands, except per share data):