DOWNERS GROVE, Ill.--(BUSINESS WIRE)--DeVry Education Group (NYSE:DV), a leading global education provider, today reported academic, operational and financial results for its fiscal 2017 third quarter ended March 31, 2017. DeVry Group also reported enrollment results at its Carrington College, Chamberlain University, DeVry University/Keller Graduate School of Management and DeVry Education of Brazil.
“We remain focused on laying the groundwork to return to consistent revenue growth, while further improving operating efficiencies across our organization,” said Lisa Wardell, president and CEO of DeVry Education Group. “We are committed to filling the global work force skills gaps that are prevalent in our society through our medical and healthcare, professional education and technology and business program offerings. I’m encouraged with the early traction of our new programs and remain confident that we are taking the right steps to strengthen our value proposition and enhance our growth potential.”
Selected financial data for the three months ended March 31, 2017:
- Total revenue of $452.1 million decreased 4.7 percent versus the prior year
- Net income of $39.9 million, compared to $51.9 million in the prior year; net income excluding special items was $44.9 million, compared to $45.6 million in the prior year
- Diluted earnings per share was $0.62, compared to $0.81 in the prior year; diluted earnings per share excluding special items was $0.70, compared to $0.71 in the prior year
- DeVry Group repurchased approximately 428,000 shares of common stock during the third fiscal quarter
- Cash and cash equivalents were $209.9 million as of March 31, 2017, compared to $330.2 million as of March 31, 2016. Outstanding bank borrowings were $120.0 million as of March 31, 2017
The fiscal 2017 third quarter results contained pre-tax restructuring charges of $7.8 million primarily related to DeVry University, Carrington College and DeVry Group home office.
Academic and Operating Highlights
In the quarter, DeVry Group realigned its reporting segments to reflect its current strategy.
Medical and Healthcare Segment
For the third quarter, segment revenue of $208.2 million decreased 1.0 percent compared to the prior year, with growth at Chamberlain University more than offset by decreased revenue at the medical and veterinary schools. Chamberlain revenue increased 2.4 percent to $124.9 million, while revenue for the medical and veterinary schools decreased 5.7 percent to $83.2 million.
Third quarter operating income for the segment, excluding special items, was $50.8 million, representing a decrease of 11.5 percent from the prior year.
Building on the strength of its brand and reputation, Chamberlain has broadened its reach in healthcare education through the establishment of Chamberlain University and the launch of a Master of Public Health (MPH) degree program within its new College of Health Professions. The Master of Public Health degree program enhances Chamberlain’s continued focus on providing health and wellness education, improving healthcare policy through interdisciplinary collaboration and making health a shared value across communities.
During the fiscal third quarter, Ross University School of Veterinary Medicine (Ross) was awarded a grant by the National Institutes of Health (NIH) to study mosquito-transmitted arboviruses such as chikungunya, dengue and Zika, which have emerged as global public health threats. Ross will study these viruses in an effort to advance the understanding of how they may be transmitted between animals and humans. Led by Ross, the research is a collaborative effort with investigators at Kansas State University and the University of Georgia. It is the first NIH grant awarded to a research team at Ross.
Professional Education
Third quarter segment revenue increased 25.9 percent to $29.8 million compared to the prior year, driven by the Association of Certified Anti-Money Laundering Specialists (ACAMS) acquisition. Segment operating income for the third quarter was $2.6 million, down from $5.9 million from the prior year, driven by a decline in revenue in Becker’s CPA review program and ACAMS revenue seasonality.
Becker has continued to focus on growing global revenue through its continuing education programs and through ACAMS.
Technology and Business
Third quarter segment revenue increased 28.6 percent to $61.8 million compared to the prior year. On a constant currency basis, revenue in the segment grew 5.3 percent driven in part by recent acquisitions. Segment operating income in the third quarter was $5.4 million, up from a loss of $1.6 million in the prior year.
DeVry Education of Brazil (DVE) introduced several programs during the quarter such as a new architectural program at Ibmec and a Master’s of Education degree program at Damásio. DVE is focused on leveraging its curriculum and its brands to attract new students.
DeVry Education of Brazil launched a new Ibmec campus in São Paulo during the third quarter, which is intended to expand the institution’s access to a broader student population in the primary economic center of the country.
US Traditional Postsecondary
In the third quarter, segment revenue decreased 20.8 percent to $153.0 million. Revenue at DeVry University decreased 23.7 percent to $119.4 million during the third quarter, compared to the prior year. Third quarter revenue at Carrington declined 8.3 percent to $33.5 million compared to the prior year.
The segment recorded breakeven operating income for the quarter, compared to $1.7 million in the prior year, excluding special items.
DeVry University achieved $32.9 million of cost savings in the third quarter compared to prior year, excluding special items. Additional cost reductions are expected in the fourth quarter of fiscal 2017 to maintain positive segment economics.
DeVry Group Outlook
Fourth quarter revenue is expected to be down 3 to 4 percent versus the prior year. Fourth quarter operating costs before special items are expected to decrease 4 to 5 percent versus the prior year.
For the full year, revenue is expected to be down 1 to 2 percent compared to the prior year and earnings before special items are expected to grow in the mid-teens range as compared to the prior year. Full year capital spending is expected to be in the $55-60 million range. The effective income tax rate for the fiscal year is expected to be in the range of 20 to 21 percent, before special items.
Conference Call and Webcast Information
DeVry Group will hold a conference call to discuss its fiscal 2017 third quarter financial results on May 4, 2017 at 4 p.m. Central (5 p.m. Eastern). The conference call will be led by Lisa Wardell, president and CEO, and Patrick Unzicker, CFO and treasurer.
For those wishing to participate by telephone, dial 877-407-6184 (domestic) or 201-389-0877 (international). Ask for the “DeVry Education Group Call” or use conference ID: 13655813. DeVry Group will also broadcast the conference call on DeVry Group's website at: http://www.investorcalendar.com/IC/CEPage.asp?ID=175878.
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 Friday, May 19, 2017. To access the replay, dial 877-660-6853 (domestic) or 201-612-7415 (international). To access the webcast replay, please visit DeVry Group's website, or: http://www.investorcalendar.com/IC/CEPage.asp?ID=175878.
About DeVry Education Group
Since 1931 DeVry Education Group has empowered its students to achieve their educational and career goals. DeVry Education Group Inc. (NYSE: DV; member S&P MidCap 400 Index) is a leading global education provider and the parent organization of American University of the Caribbean School of Medicine, Becker Professional Education, Carrington College, Chamberlain University, DeVry Education of Brazil, 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 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, 2016 and filed with the Securities and Exchange Commission (SEC) on August 25, 2016 and its most recent Quarterly Report on Form 10-Q for the quarter ending December 31, 2016 and filed with the SEC on February 2, 2017.
|
Enrollment Results |
|||||||
| FY 2017 | FY 2016 | % Change | |||||
| DeVry Education Group Student Enrollments | |||||||
| New students(1) | 30,508 | 33,202 | -8.1% | ||||
| Total students(1) | 151,169 | 158,300 | -4.5% | ||||
| Chamberlain University | |||||||
| March Session | |||||||
| New students (2) | 2,713 | 2,429 | +11.7% | ||||
| Total students | 29,726 | 27,694 | +7.3% | ||||
| Carrington College | |||||||
| 3 months ending March 31, 2017 | |||||||
| New students | 1,892 | 2,058 | -8.1% | ||||
| Total students | 6,026 | 7,181 | -16.1% | ||||
| DeVry University | |||||||
| Undergraduate – March Session | |||||||
| New students | 2,545 | 2,970 | -14.3% | ||||
| Total students | 22,192 | 28,069 | -20.9% | ||||
| Graduate – March Session | |||||||
| Coursetakers(3) | 9,185 | 11,699 | -21.5% | ||||
| DeVry Education of Brazil(4) | |||||||
| March Semester | |||||||
| New students | 22,531 | 24,768 | -9.0% | ||||
| Total students | 79,564 | 79,280 | +0.4% |
| 1) | Includes the most recently reported enrollments at DeVry Group’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 | |||
| 4) | Excludes Damásio test prep students. Excluding the acquisition of Facimp, new student enrollment decreased 11.5% and total students enrollment decreased 2.2%. |
| DEVRY EDUCATION GROUP INC. | |||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (Unaudited) | |||||||||||||
| PRELIMINARY | |||||||||||||
| March 31, | June 30, | March 31, | |||||||||||
| 2017 | 2016 | 2016 | |||||||||||
| ASSETS: | (in thousands, except share and par value amounts) | ||||||||||||
| Current Assets: | |||||||||||||
| Cash and Cash Equivalents | $ | 209,879 | $ | 308,164 | $ | 330,214 | |||||||
| Marketable Securities and Investments | 3,950 | 3,609 | 3,528 | ||||||||||
| Restricted Cash | 4,798 | 7,183 | 10,995 | ||||||||||
| Accounts Receivable, Net | 165,691 | 162,389 | 170,035 | ||||||||||
| Prepaid Expenses and Other | 44,274 | 36,760 | 36,754 | ||||||||||
| Total Current Assets | 428,592 | 518,105 | 551,526 | ||||||||||
| Land, Building and Equipment: | |||||||||||||
| Land | 49,085 | 55,690 | 50,001 | ||||||||||
| Building | 477,200 | 488,347 | 478,253 | ||||||||||
| Equipment | 537,257 | 521,209 | 512,825 | ||||||||||
| Construction in Progress | 17,067 | 22,560 | 20,241 | ||||||||||
| 1,080,609 | 1,087,806 | 1,061,320 | |||||||||||
| Accumulated Depreciation | (593,627 | ) | (566,043 | ) | (548,980 | ) | |||||||
| Land, Building and Equipment Held for Sale, Net | 11,280 | - | - | ||||||||||
| Land, Building and Equipment, Net | 498,262 | 521,763 | 512,340 | ||||||||||
| Other Assets: | |||||||||||||
| Deferred Income Taxes, Net | 35,497 | 52,608 | 24,242 | ||||||||||
| Intangible Assets, Net | 422,949 | 342,856 | 371,046 | ||||||||||
| Goodwill | 861,001 | 588,007 | 565,012 | ||||||||||
| Perkins Program Fund, Net | 13,450 | 13,450 | 13,450 | ||||||||||
| Other Assets, Net | 58,058 | 60,207 | 59,443 | ||||||||||
| Total Other Assets | 1,390,955 | 1,057,128 | 1,033,193 | ||||||||||
| TOTAL ASSETS | $ | 2,317,809 | $ | 2,096,996 | $ | 2,097,059 | |||||||
| LIABILITIES: | |||||||||||||
| Current Liabilities: | |||||||||||||
| Accounts Payable | $ | 46,521 | $ | 64,687 | $ | 54,222 | |||||||
| Accrued Salaries, Wages and Benefits | 80,965 | 93,328 | 88,472 | ||||||||||
| Accrued Expenses | 96,015 | 103,379 | 88,754 | ||||||||||
| Deferred Revenue | 178,664 | 100,442 | 170,106 | ||||||||||
| Total Current Liabilities | 402,165 | 361,836 | 401,554 | ||||||||||
| Other Liabilities: | |||||||||||||
| Revolving Loan | 120,000 | - | - | ||||||||||
| Deferred Income Taxes, Net | 30,228 | 29,936 | 27,692 | ||||||||||
| Deferred Rent and Other | 104,492 | 118,025 | 108,349 | ||||||||||
| Total Other Liabilities | 254,720 | 147,961 | 136,041 | ||||||||||
| TOTAL LIABILITIES | 656,885 | 509,797 | 537,595 | ||||||||||
| NONCONTROLLING INTEREST | 6,600 | 5,112 | 3,529 | ||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||||
| Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 62,618,000, | |||||||||||||
| 62,549,000 and 62,909,000 Shares Outstanding at March 31, 2017, | |||||||||||||
| June 30, 2016 and March 31, 2016, respectively | 778 | 765 | 764 | ||||||||||
| Additional Paid-in Capital | 404,800 | 372,175 | 364,006 | ||||||||||
| Retained Earnings | 1,837,738 | 1,771,068 | 1,794,012 | ||||||||||
| Accumulated Other Comprehensive Loss | (37,013 | ) | (42,467 | ) | (91,348 | ) | |||||||
| Treasury Stock, at Cost, 15,208,000, 13,990,000 and 13,521,000 Shares at | |||||||||||||
| March 31, 2017, June 30, 2016 and March 31, 2016, respectively | (551,979 | ) | (519,454 | ) | (511,499 | ) | |||||||
| TOTAL SHAREHOLDERS' EQUITY | 1,654,324 | 1,582,087 | 1,555,935 | ||||||||||
| TOTAL LIABILITIES, NONCONTROLLING INTEREST AND | |||||||||||||
| SHAREHOLDERS' EQUITY | $ | 2,317,809 | $ | 2,096,996 | $ | 2,097,059 | |||||||
| DEVRY EDUCATION GROUP INC. | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| PRELIMINARY | ||||||||||||||||||
|
Three Months Ended March 31, |
Nine Months Ended
March 31, |
|||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| REVENUE: | ||||||||||||||||||
| Tuition | $ | 399,322 | $ | 425,966 | $ | 1,217,613 | $ | 1,243,624 | ||||||||||
| Other Educational | 52,767 | 48,255 | 140,718 | 128,212 | ||||||||||||||
| Total Revenue | 452,089 | 474,221 | 1,358,331 | 1,371,836 | ||||||||||||||
| OPERATING COST AND EXPENSE: | ||||||||||||||||||
| Cost of Educational Services | 239,244 | 252,867 | 729,704 | 738,965 | ||||||||||||||
| Student Services and Administrative Expense | 157,781 | 161,483 | 464,497 | 484,662 | ||||||||||||||
| Restructuring Expense | 7,771 | 2,873 | 17,868 | 39,870 | ||||||||||||||
| Regulatory Settlements | - | - | 56,252 | - | ||||||||||||||
| Loss on Assets Held for Sale | - | - | 4,764 | - | ||||||||||||||
| Asset Impairment Charge | - | - | - | 99,473 | ||||||||||||||
| Gain on Sale of Assets | - | (3,849 | ) | - | (3,849 | ) | ||||||||||||
| Total Operating Cost and Expense | 404,796 | 413,374 | 1,273,085 | 1,359,121 | ||||||||||||||
| Operating Income | 47,293 | 60,847 | 85,246 | 12,715 | ||||||||||||||
| INTEREST: | ||||||||||||||||||
| Interest Income | 1,690 | 27 | 3,741 | 394 | ||||||||||||||
| Interest Expense | (1,995 | ) | (1,408 | ) | (6,410 | ) | (5,581 | ) | ||||||||||
| Net Interest Expense | (305 | ) | (1,381 | ) | (2,669 | ) | (5,187 | ) | ||||||||||
| Income Before Income Taxes | 46,988 | 59,466 | 82,577 | 7,528 | ||||||||||||||
| Income Tax Provision | (6,966 | ) | (7,536 | ) | (2,651 | ) | (683 | ) | ||||||||||
| NET INCOME | 40,022 | 51,930 | 79,926 | 6,845 | ||||||||||||||
| Net Income Attributable to Noncontrolling Interest | (163 | ) | (5 | ) | (502 | ) | (42 | ) | ||||||||||
| NET INCOME ATTRIBUTABLE TO DEVRY EDUCATION | ||||||||||||||||||
| GROUP | $ | 39,859 | $ | 51,925 | $ | 79,424 | $ | 6,803 | ||||||||||
| EARNINGS PER COMMON SHARE ATTRIBUTABLE TO | ||||||||||||||||||
| DEVRY EDUCATION GROUP SHAREHOLDERS: | ||||||||||||||||||
| Basic | $ | 0.63 | $ | 0.81 | $ | 1.25 | $ | 0.11 | ||||||||||
| Diluted | $ | 0.62 | $ | 0.81 | $ | 1.24 | $ | 0.11 | ||||||||||
| Cash Dividends Declared per Common Share | $ | - | $ | - | $ | 0.18 | $ | 0.18 | ||||||||||
| DEVRY EDUCATION GROUP INC. | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (Unaudited) | |||||||||
| PRELIMINARY | |||||||||
|
Nine Months Ended
March 31, |
|||||||||
| 2017 | 2016 | ||||||||
| (in thousands) | |||||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | |||||||||
| Net Income | $ | 79,926 | $ | 6,845 | |||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||
| Stock-Based Compensation Expense | 13,292 | 13,989 | |||||||
| Depreciation | 53,928 | 59,349 | |||||||
| Amortization | 9,015 | 4,490 | |||||||
| Impairment of Goodwill and Intangible Assets | - | 99,473 | |||||||
| Provision for Refunds and Uncollectible Accounts | 67,210 | 61,710 | |||||||
| Deferred Income Taxes | (1,388 | ) | (13,793 | ) | |||||
| Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment | 3,369 | 12,810 | |||||||
| Unrealized Loss on Assets Held for Sale | 4,764 | - | |||||||
| Realized Gain on Sale of Assets | - | (3,849 | ) | ||||||
| Changes in Assets and Liabilities, Net of Effects from Acquisition Components: | |||||||||
| Restricted Cash | 2,385 | (252 | ) | ||||||
| Accounts Receivable | (69,155 | ) | (83,744 | ) | |||||
| Prepaid Expenses and Other | (18,336 | ) | (1,590 | ) | |||||
| Accounts Payable | (15,955 | ) | (12,131 | ) | |||||
| Accrued Salaries, Wages, Benefits and Expenses | (22,781 | ) | (2,461 | ) | |||||
| Deferred Revenue | 63,179 | 78,843 | |||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 169,453 | 219,689 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Capital Expenditures | (32,529 | ) | (51,004 | ) | |||||
| Payment for Purchase of Businesses, Net of Cash Acquired | (330,567 | ) | (170,577 | ) | |||||
| Marketable Securities Purchased | (82 | ) | (94 | ) | |||||
| Cash Received on Sale of Assets | - | 24,788 | |||||||
| Purchase of Noncontrolling Interest of Subsidiary | - | (3,114 | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (363,178 | ) | (200,001 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Proceeds from Exercise of Stock Options | 20,390 | 271 | |||||||
| Proceeds from Stock Issued Under Colleague Stock Purchase Plan | 635 | 875 | |||||||
| Repurchase of Common Stock for Treasury | (30,552 | ) | (24,378 | ) | |||||
| Cash Dividends Paid | (11,414 | ) | (11,563 | ) | |||||
| Payments of Seller Financed Obligations | (3,943 | ) | (5,890 | ) | |||||
| Borrowings Under Revolving Credit Facility | 465,000 | - | |||||||
| Repayments Under Revolving Credit Facility | (345,000 | ) | - | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 95,116 | (40,685 | ) | ||||||
| Effects of Exchange Rate Differences | 324 | (1,811 | ) | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (98,285 | ) | (22,808 | ) | |||||
| Cash and Cash Equivalents at Beginning of Period | 308,164 | 353,022 | |||||||
| Cash and Cash Equivalents at End of Period | $ | 209,879 | $ | 330,214 | |||||
| DEVRY EDUCATION GROUP INC. | ||||||||||||||||||||||||
| SEGMENT INFORMATION | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| PRELIMINARY | ||||||||||||||||||||||||
|
Three Months Ended
March 31, |
Nine Months Ended
March 31, |
|||||||||||||||||||||||
| 2017 | 2016 |
Increase
(Decrease) |
2017 | 2016 |
Increase
(Decrease) |
|||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| REVENUE: | ||||||||||||||||||||||||
| Medical and Healthcare | $ | 208,153 | $ | 210,215 | (1.0 | )% | $ | 609,331 | $ | 590,616 | 3.2 | % | ||||||||||||
| Professional Education | 29,810 | 23,683 | 25.9 | % | 91,906 | 71,417 | 28.7 | % | ||||||||||||||||
| Technology and Business | 61,810 | 48,062 | 28.6 | % | 193,437 | 121,405 | 59.3 | % | ||||||||||||||||
| U.S. Traditional Postsecondary | 152,951 | 193,008 | (20.8 | )% | 465,666 | 590,643 | (21.2 | )% | ||||||||||||||||
| Intersegment Elimination and Other | (635 | ) | (747 | ) | 15.0 | % | (2,009 | ) | (2,245 | ) | 10.5 | % | ||||||||||||
| Total Consolidated Revenue | 452,089 | 474,221 | (4.7 | )% | 1,358,331 | 1,371,836 | (1.0 | )% | ||||||||||||||||
| OPERATING INCOME (LOSS): | ||||||||||||||||||||||||
| Medical and Healthcare | 50,150 | 57,450 | (12.7 | )% | 146,166 | 140,920 | 3.7 | % | ||||||||||||||||
| Professional Education | 2,619 | 5,905 | (55.6 | )% | 8,810 | 15,638 | (43.7 | )% | ||||||||||||||||
| Technology and Business | 5,358 | (1,583 | ) | NM | 16,864 | (1,447 | ) | NM | ||||||||||||||||
| U.S. Traditional Postsecondary | (5,724 | ) | 2,942 | NM | (21,411 | ) | (132,827 | ) | 83.9 | % | ||||||||||||||
| Reconciling Items: | ||||||||||||||||||||||||
| Home Office and Other | (5,110 | ) | (3,867 | ) | (32.1 | )% | (65,183 | ) | (9,569 | ) | (581.2 | )% | ||||||||||||
| Total Consolidated Operating Income | $ | 47,293 | $ | 60,847 | (22.3 | )% | $ | 85,246 | $ | 12,715 | 570.4 | % | ||||||||||||
During the third quarter and first nine months of fiscal year 2017, DeVry Group 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 DeVry Group'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 third quarter and first nine months of fiscal year 2016, DeVry Group 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) An asset impairment charge 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 DeVry Group’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 DeVry Group’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, an asset impairment charge and gain on 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 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
March 31, |
Nine Months Ended
March 31, |
|||||||||||||||||||||||
| 2017 | 2016 |
Increase (Decrease) |
2017 | 2016 |
Increase (Decrease) |
|||||||||||||||||||
| Medical and Healthcare Operating Income | $ | 50,150 | $ | 57,450 | (12.7 | )% | $ | 146,166 | $ | 140,920 | 3.7 | % | ||||||||||||
| Restructuring Expense | 667 | - | NM | 667 | - | NM | ||||||||||||||||||
| Medical and Healthcare Operating Income | ||||||||||||||||||||||||
| Excluding Special Items | $ | 50,817 | $ | 57,450 | (11.5 | )% | $ | 146,833 | $ | 140,920 | 4.2 | % | ||||||||||||
| Professional Education Operating Income | $ | 2,619 | $ | 5,905 | (55.6 | )% | $ | 8,810 | $ | 15,638 | (43.7 | )% | ||||||||||||
| Restructuring Expense | - | 300 | NM | - | 300 | NM | ||||||||||||||||||
| Professional Education Operating Income | ||||||||||||||||||||||||
| Excluding Special Items | $ | 2,619 | $ | 6,205 | (57.8 | )% | $ | 8,810 | $ | 15,938 | (44.7 | )% | ||||||||||||
| U.S. Traditional Postsecondary Operation | ||||||||||||||||||||||||
| Income (Loss) | $ | (5,724 | ) | $ | 2,942 | NM | $ | (21,411 | ) | $ | (132,827 | ) | 83.9 | % | ||||||||||
| Restructuring Expense | 5,692 | 2,573 | 121.2 | % | 13,180 | 39,570 | (66.7 | )% | ||||||||||||||||
| Regulatory Settlements | - | - | NM | 4,102 | - | NM | ||||||||||||||||||
| Loss on Assets Held for Sale | - | - | NM | 4,764 | - | NM | ||||||||||||||||||
| Asset Impairment Charge | - | - | NM | - | 99,473 | NM | ||||||||||||||||||
| Gain on Sale of Assets | - | (3,849 | ) | NM | - | (3,849 | ) | NM | ||||||||||||||||
| U.S. Traditional Postsecondary Operating | ||||||||||||||||||||||||
| Income (Loss) Excluding Special Items | $ | (32 | ) | $ | 1,666 | NM | $ | 635 | $ | 2,367 | (73.2 | )% | ||||||||||||
| Home Office and Other Operating Loss | $ | (5,110 | ) | $ | (3,867 | ) | (32.1 | )% | $ | (65,183 | ) | $ | (9,569 | ) | (581.2 | )% | ||||||||
| Restructuring Expense | 1,412 | - | NM | 4,021 | - | NM | ||||||||||||||||||
| Regulatory Settlements | - | - | NM | 52,150 | - | NM | ||||||||||||||||||
| Home Office and Other Operating Loss | ||||||||||||||||||||||||
| Excluding Special Items | $ | (3,698 | ) | $ | (3,867 | ) | 4.4 | % | $ | (9,012 | ) | $ | (9,569 | ) | 5.8 | % | ||||||||
| NON-GAAP EARNINGS DISCLOSURE | ||||||||||||||||||
| PRELIMINARY | ||||||||||||||||||
|
Three Months Ended
March 31, |
Nine Months Ended
March 31, |
|||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| Net Income | $ | 39,859 | $ | 51,925 | $ | 79,424 | $ | 6,803 | ||||||||||
| Earnings per Share (diluted) | $ | 0.62 | $ | 0.81 | $ | 1.24 | $ | 0.11 | ||||||||||
| Restructuring Expense | $ | 7,771 | $ | 2,873 | $ | 17,868 | $ | 39,870 | ||||||||||
| Effect on Earnings per Share (diluted) | $ | 0.12 | $ | 0.04 | $ | 0.28 | $ | 0.62 | ||||||||||
| 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 | $ | - | $ | - | $ | - | $ | 99,473 | ||||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | - | $ | - | $ | 1.54 | ||||||||||
| Gain on Sale of Assets | $ | - | $ | (3,849 | ) | $ | - | $ | (3,849 | ) | ||||||||
| Effect on Earnings per Share (diluted) | $ | - | $ | (0.06 | ) | $ | - | $ | (0.06 | ) | ||||||||
| Income Tax Impact on Non-GAAP Adjustments | $ | (2,685 | ) | $ | (5,356 | ) | $ | (29,942 | ) | $ | (28,250 | ) | ||||||
| Effect on Earnings per Share (diluted) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.46 | ) | $ | (0.44 | ) | ||||||
| Net Income Excluding Special Items, net of tax | $ | 44,945 | $ | 45,593 | $ | 128,366 | $ | 114,047 | ||||||||||
| Earnings per Share Excluding Special Items (diluted) | $ | 0.70 | $ | 0.71 | $ | 2.01 | $ | 1.77 | ||||||||||
| Diluted Shares used in EPS calculation | 64,266 | 64,353 | 63,991 | 64,477 | ||||||||||||||
