News Column

DeVry Education Group Posts 2nd Quarter 2014 Results

February 7, 2014

DeVry Education Group Inc., a global provider of educational services, reported academic, operational and financial results for its fiscal 2014 second-quarter ended December 31, 2013.

In a release on February 4, the Group noted that it also reported enrollment results at DeVry Medical International, Chamberlain College of Nursing, Carrington Colleges Group, and DeVry University and its Keller Graduate School of Management.

Academic and operational accomplishments for the quarter:

-Carrington College California obtained conditional approval to add the campuses of Carrington College from its accreditor, which will result in one, regionally accredited institution

-Chamberlain College of Nursing received full approval for its Houston campus from the Texas Board of Nursing and was granted initial approval for a second campus in the Houston area

-The American University of the Caribbean School of Medicine completed its new $30 million academic building

-DeVry Group completed the divestiture of Advanced Academics to, and formed a strategic partnership with, Connections Education/ Pearson

Selected financial data for the three months ended December 31, 2013:

-Total revenues decreased 1.9 percent to $491.3 million

-Medical and Healthcare and International and Professional Education segment revenues grew 13.5 percent and 16.6 percent respectively, while Business, Technology and Management revenues declined 14.4 percent

-Reported net income of $48.2 million, compared to $50.3 million last year; net income from continuing operations and excluding special items was $52.0 million, down 9.0 percent from prior year

-Reported diluted earnings per share of $0.74, compared to earnings per share of $0.78 last year; earnings per share from continuing operations and excluding special items was $0.80, compared to $0.88 last year

Selected financial data for the six months ended December 31, 2013:

-Total revenues decreased 3.9 percent to $942.2 million

-Medical and Healthcare and International and Professional Education segment revenues grew 12.3 percent and 17.3 percent respectively, while Business, Technology and Management revenues declined 16.4 percent

-Reported net income of $41.0 million, compared to $82.3 million last year; net income from continuing operations and excluding special items was $66.2 million, down 27.5 percent from prior year

-Reported diluted earnings per share of $0.63, compared to earnings per share of $1.27 last year; earnings per share from continuing operations and excluding special items was $1.02, as compared to $1.41 last year

-Operating cash flow of $113.1 million compared to $180.2 million last year

-Cash and cash equivalents increased to $262.0 million as of December 31, 2013, from $216.6 million as of December 31, 2012

-Generated $35 million in cost savings and value creation in its institutions in transition during the first six months, putting these institutions on track to achieve $75 million in savings for the fiscal year

The second quarter fiscal year 2014 results contained the following special items:

-A $2.9 million after-tax, or $0.04 per share, restructuring charge for real estate consolidations and workforce reductions.

-A $0.9 million net of tax loss, or $0.01 per share, on discontinued operations at Advanced Academics

"Our formula of quality plus diversification equals growth is mitigating the current weakness in certain segments of U.S. postsecondary education," said Daniel Hamburger, DeVry Group's president and chief executive officer. "We are investing in the expansion of our growing institutions, particularly healthcare, professional and international education, as we execute our turnaround plans at DeVry University and Carrington."

During the quarter, segment revenue of $190.4 million increased 13.5 percent compared to the prior year. Excluding special charges, segment operating income increased 42.6 percent to $40.1 million versus the previous year. For the six-month period, revenues increased 12.3 percent to $366.3 million and segment operating income, excluding special charges, rose 24.5 percent to $66.3 million versus prior year.

In the January 2014 term for DeVry Medical International, new students decreased 3.5 percent to 582 compared to 603 students for prior year session. Total students increased 5.6 percent to 6,673 compared to 6,318 students in the same session last year.

During the quarter, Chamberlain grew its revenue by 26.2 percent, primarily driven by new locations, campus expansions, and new programs.

For the November 2013 session, new online students grew by 50.3 percent to 1,952 students. Total students increased 28.5 percent to 15,732.

For the January 2014 session, new online students grew by 55.7 percent to 2,328 students. New onsite students totaled 1,173 in the period. Total students for the session increased 32.2 percent to a record 18,136 for the session.

Chamberlain's Cleveland campus celebrated its grand opening in October. During the quarter, the Texas Board of Nursing granted full approval to Chamberlain's Houston campus and preliminary approval for a second campus in the Houston area.

During the quarter, revenue grew 3.4 percent during the second quarter as Carrington is benefitting from executing on its turnaround plan.

For the three-month period ending December 31, 2013, new student enrollment declined 3.2 percent to 1,706 versus 1,763 in the previous year. Total enrollment decreased 0.6 percent to 7,358 from 7,405 in the previous year. Carrington College California recently announced it has obtained conditional approval from its accreditor to add the campuses of Carrington College to its existing campus network. Pending successful site visits and final approval by its accreditor, Carrington College California will encompass 17 campuses located in California, Arizona, New Mexico, Idaho, Nevada, Texas and Washington.

Segment revenue increased 16.6 percent to $61.4 million compared to the prior year. Segment operating income grew 7.8 percent to $16.4 million versus the previous year. For the six-month period, revenues increased 17.3 percent to $105.2 million while segment operating income declined $1.1 million to $17.5 million versus prior year.

During the quarter, Becker grew its revenue by 5 percent, primarily driven by growth in sales of its CPA exam preparation program. Becker also continues to experience growth in the United States Medical Licensing Exam (USMLE), Association of Chartered Certified Accountants (ACCA), and Continuing Professional Education (CPE) markets.

Revenue grew nearly 29 percent over the previous year. During the quarter, temporary admission constraints were lifted on two of the three restricted programs at one of DeVry Brasil's institutions, Area1.

Recently DeVry Brasil's Favip was granted Centro Universitario status from the Brazilian Ministry of Education and Culture based on the number of recognized courses that it offers, the breadth of the institution's programs, and the quality of its faculty, including contributions to scientific research and community outreach.

More information:

www.devryeducationgroup.com

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