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spk_0: that afternoon and welcome to silvio fourth quarter and four year twenty twenty one earning upfront come they call it being recorded at the time i would like to turn a call over to the history executive vice president and chief external affairs officer please go ahead
spk_1: thank you and good afternoon
spk_0: go field fourth quarter and go year twenty twenty one earnings really was issued earlier today and it's posted on the company's website at w w w dot lo veo dot com joining me on the call today or randy hendrick chief executive officer and kevin royal executive vice president chief financial officer we would like to remind you that some of the statements we make today may be considered forward looking including statements regarding enrollment didn't retention university partners and other programs and services our ability to grow through acquisition our ability to accept fully integrate and leverage acquired company future revenue growth iba financial and related guidance and commentary regarding fiscal year twenty two twenty two and later these forward looking statements are subject to a number of risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward looking statements please note that the it forward looking statements speak only add up to date of this crap and taishan and we undertake no obligation to update these forward looking statements in light of new information or future of them except to the extent required by a political security flaw
spk_2: out the call today
spk_0: we will also discuss certain non gap financial measures in our earnings release you will find additional disclosures regarding these measures including reconciliation of the measure with us gap note that these non gaap financial measures are intended to supplement gap finance you'll information and should not be considered as a substitute for a gap result please refer to her fcc filing including our annual report on form ten k for the year ended december thirty one twenty twenty one which we filed with the fcc earlier today for a more detailed description of the risk factors that may affect our results you may obtain copies from the fcc or by visiting the investor relations section of our website at this time it is my pleasure to introduce jovial new ceo randy hendrick
spk_3: thank you vicky and welcome to zoe old fourth quarter and four year twenty twenty one earnings call on the call today german and i will discuss or results as well as other business developments after our remarks we will win the gold to your questions i'd like to first review or high level results before i discuss some key business developments a jovial for the fourth quarter of twenty twenty one we reported revenue of fifty four point eight million and a non gap deluded loss per share of twenty three cents for the full year twenty twenty one we reported revenue of two hundred and sixty three million and a non gap diluted lot per share of forty seven cents you will come as no surprise to those listening on the call today twenty twenty one presented significant challenges for so we'll since this is my first call as the ceo the company i'd like to provide some comments on my back room and how i will leverage my experience to position the company to best serve our clients their students and create value for our shareholders over my career i have led multiple enterprise why transformations through focused execution in challenging and highly competitive market segments most recently as a senior executive at the huron consulting group i worked with many clients in the high your education industry to help them strategically advance their academic and research missions using technology as an enabler prior to that while at i b m i was appointed to several senior leadership roles with a mandate to transform under performing business units i've also served as an independent director on three boards of us technology companies with an international presence the combination of my industry experience technology expertise and large scale transformations are relevant experience i bring to the soviet to team to lead the company in my first thirty days was the though my focus was to deeply understand the business what was working and what wasn't i met with and listen to our key stakeholders our clients employees and investors on my first day i met with the ceo and president of the university of arizona global campus the largest client of silvio within my first two weeks i met with our major investors and several of the research analysts that follows i conducted revealed our operations and completed a talent assessment i will comment on some of the actions are taken as a result in a few minutes in twenty twenty one we were encouraged by improvements in student retention at you a d c however as we move to twenty twenty one new enrollment declined you a c ultimately impact in total enrollment this was a result of a challenging year for zovko which was transform into an ad tech services company and or client who stabbed least a new university after a detailed root cause analysis week concluded much of the challenge and twenty twenty one was a result of poor execution which we have moved quickly to address as such i have taken swift action to address the underperforming areas of our business these actions included several organization changes aimed at stabilizing and growing roman and better serving our client you a d c this included reducing layers of management increasing span of control and selecting leaders i have confidence in we've also made operational changes which included streamlining functions improving the student experience and strengthening our working relationship with you a g c we've also undertaken a series of cost reductions as we move towards a competitive cost structure more in line with our total revenue these actions include reducing on payroll expenses facilities and headcount in selective areas conversely we have some really strong businesses within our portfolio to me and full stack academy or well positioned for the long term growth in value creation as both operate and large and growing markets in twenty twenty one are gross segment delivered revenues of thirty point two million growing forty five percent year over year tutor me and full stack academy provide innovative programs courses and resources that help to solve the post pandemic challenges that educational institutions and companies face we are proud to tutor me was named one of the winners of the tech and learning twenty twenty one best tools for back to school as well as one of the twenty twenty two top and tech products by district administration given the dynamic of remote learning some companies are providing tutoring support as an employee benefit while educational institutions from k twelve districts to higher education are leveraging tutor me which provides on demand twenty four seven online resources to ensure their students have support when and where they need it tutor me continue to execute new partnership agreements during the fourth quarter with universities corporations and school districts the tutor me told partnership count is now over three hundred and thirty in the fourth quarter total customer and student usage continue to increase year over year with over twenty seven thousand students tutored in the quarter at the end of twenty twenty one full stack is added a total of nineteen new university partnerships since the close to the acquisition including the university of pittsburgh which was signed in the fourth quarter full stack currently partners with over six hundred companies which actively participate in recruitment events and sir job openings with our students helping them to secure meaningful jobs after graduation approximately fourteen hundred companies have hired full stack graduates in addition full stack continues to expand it's curriculum adding in both data analytics and developer operations as part of our portfolio of university howard boot camps further in partnership with the new york city department of small business services full stack help to launch the data analyst training accelerator a know cause training program that aims to equip eligible new yorkers with high demand skills these are just a few of the great things happen have full stack academy and we remain excited for what lies ahead for our clients and team given the opportunities and challenges ahead of us we believe it's important to take into consideration the interests of all of our stakeholders including our shareholders as a result we are exploring strategic alternatives including potential divestitures which we believe will unlock the greatest opportunity for value creation in parallel we are advancing a turnaround plan aimed at stabilizing and growing new and total enrollment at you a d c as a result we do not believe it would be prudent to provide guidance for fiscal year twenty twenty two at this time in the coming months i will talk in more detail about our strategy what you can expect in terms of our performance and the progress we're making with strategic options for the company well changes sometimes challenging we will work tirelessly to ensure we are serving the interests of all of our stakeholders with that i will turn the call over to kevin royal to review our financial and operating results
spk_4: thank you randy
spk_3: for the fourth quarter of twenty twenty one revenue is city four point eight million compared to ninety three point one million for the same period in the prior year the decrease is primarily due to the shift to the ad tech business model as was lower average enrollment it partially offset by an increase in the oak grove segment revenues as a reminder our business model said that significantly as a result of the u h d c sale on december one tony tony
spk_5: as such for compare ability purposes
spk_3: in addition to providing the gap result of the prior year i will be highlighting certain related pro forma amounts for that period on a pro forma bases revenues for the fourth quarter of twenty twenty are estimated to be seventy seven point four million technology and academic services for the fourth quarter twenty twenty one for seventeen million or thirty one percent the revenue compared to nineteen point six million or twenty one percent of revenue for the comparable prior year period
spk_5: expenses in this category as well as for other main income statement line items discuss below or lower overall on an absolute basis he to cost reduction efforts and lower related activity levels of higher as a percentage of revenues due to the lower revenues as compete
spk_4: care to the corresponding period in the prior year
spk_3: on a pro forma basis his expenses for the fourth quarter twenty twenty are estimated to be eighteen point four million or twenty three point eight percent a revenue
spk_5: counseling services in support cause for the fourth quarter twenty twenty one for twenty point six million or thirty seven point six percent of revenue compared to twenty five point five million or twenty seven point three percent of revenue for the comparable prior year period on a pro forma basis these expenses for the fourth quarter twenty tony are estimated to be twenty four point five million or thirty one point seven percent revenue
spk_3: marketing communication expenses for the fourth quarter twenty twenty one for sixteen point seven million or thirty point five percent revenue compared to twenty one point six million or twenty three point two percent of revenue for the comparable prior year period
spk_5: on a pro forma basis
spk_3: these expenses for the fourth quarter and twenty twenty for estimated to be twenty one point one million or twenty seven point three percent for revenue
spk_6: general and administrative expenses for the fourth quarter to twenty twenty one for nine point nine million or eighteen percent of revenue compared to ten point nine million or eleven point eight percent of revenue for the comparable prior year period
spk_5: on a pro forma says his expenses for the fourth quarter and twenty tony are estimated to be ten point three million or thirteen point three percent revenue
spk_3: we did not have any university related expenses for the fourth quarter twenty twenty one compared to sixteen point seven million or seventeen point nine percent of revenue for the comparable prior period these expenses represent two months of costs related to the universe the prior to the sale in the fourth quarter of twenty twenty we have legal expenses charges for the fourth quarter of twenty twenty one of fourteen point three million these charges represent the additional about necessary to fully a crew the judge's ruling in the california attorney general matter there were no such legal expenses for the prior year care
spk_4: riad we did not have any restructuring and permit charges in the fourth quarter twenty twenty one as compared to one point four million in the fourth quarter of the prior year
spk_3: the restructuring and impairment charges in the fourth quarter of the prior year related primarily to the termination of a contract in the prior year he also recorded fifty four point eight million is a loss on transaction in the fourth quarter for the transaction completed with the university of arizona global campus in december twenty twenty we did not have any such charges in the fourth quarter of twenty twenty
spk_5: one
spk_7: the net loss for the fourth quarter of twenty twenty one was twenty three point six million or a lot of seventy one cents per diluted share compared with net loss of fifty seven point two million or a lot of a dollar seventy five per diluted share for the same period in the prior year which includes the laws on the transact
spk_5: she noted above excluding the legal expense charges acquisition cause certain stock compensation other non gap charges and related tax impacts the non gaap net loss for the fourth quarter twenty twenty one was seven point seven million or a loss of twenty three cents per diluted share and
spk_3: our to a non gaap net income a point nine million or income or three cents per diluted share the same period in the prior year regarding that for your results revenue for the year ended december thirty one twenty twenty one was two hundred and sixty three million compared with revenue of three hundred ninety seven point one million for the year ended december thirty one twenty twenty on a pro forma bases revenues for the full year twenty twenty estimated to be two hundred ninety six point four million that last for the full year ended december thirty one twenty twenty one was forty two point three million are deluded loss per share for a dollar twenty seven compared with net loss forty nine million are deluded loss per share of a dollar fifty three for the year ended december thirty one twenty twenty
spk_5: excluding no legal charges separation transaction costs restructuring cost acquisition cause certain start compensation other non gap charges related tax impacts the non gaap net loss for the year ended december thirty one twenty twenty one was fifteen point eight million
spk_4: are lots of forty seven cents per diluted share compared with non gaap net income of eight point six million or income or twenty seven cents per diluted share for the year ended december thirty one twenty twenty
spk_5: income tax benefit for the full year in the december thirty one twenty twenty one was a hundred and twenty nine thousand are effective tax rate the poor discreet items for twenty twenty one was low single digits and we anticipate this trend to continue and twenty twenty two the company use fifteen point four million of cash and operating activities during the year ended december thirty one twenty twenty one and by comparison the company generated twenty five point three million of cash in on a pre activities during the same period and twenty twenty the decrease in cash provided by operations is due to the increase net last year over year excluding loss on the sale of the universe the to university of arizona global campus
spk_6: capital expenditures and twelve months ended december thirty one twenty twenty one for one point four million as compared to three point two million is a comparable period last year
spk_3: after december thirty one twenty twenty one the cocaine had combine cash and cash equivalents a twenty eight point three million is compared to thirty five point five million as of december thirty one twenty twenty
spk_5: in addition to we also announced be closed at thirty one point five million three year term loan with blue torch capital
spk_0: at this time i will ask our operator to open the phone lines for your questions yeah another reminder about a dar one if not like ask a question we talk for a moment to compile like you're on a roster
spk_8: and our first question will come from carry the you with water tower research
spk_3: i had a good afternoon the randy and caring how are you
spk_8: i will were very well on sent her a nice to hear your voice
spk_6: great hey i'm a i think some of the questions you can have already said the you might not be able to comment so i love el al i still love try a few that i can maybe you'd be you'd be able to comment and and we'll we'll see where that goes
spk_3: the liquidity yeah kevin you mention the and it shows on the release twenty eight twenty two million and you also said that you accrued fourteen million of the at the california judgments with the the twenty eight million is after the company with a fully accrued for their judgment is that correct
spk_4: yeah yes it is with d at fourteen million terry is a non cash item it's
spk_8: simply just expense in the period and so he did not have any impact on cash for the fourth quarter oh okay okay some okay i see nice to see the an additional
spk_3: a couple you able to doing that in that context obviously i've been reading that there were discussions of you have a taking over you a you see you can you make any comment on that we did have an impact on me on your relationship with and we'd be reducing terry out your my perspective i i'm in in conversations with the paul pass wreck and present robbins are on on the topic they're both are excited about the integration of you a to see into the university of arizona are my personal perspective of of working with both of those leaders and and daily with all his i think it's very exciting and terms of the future for the university of arizona global campus the support they receive from the university of arizona and i think it only strengthens that as they move forward with their strategic plan so find it very exciting in terms of our relationship and no work that we do every day to support a you a t c know it it doesn't change a thing our our client as you age you see gcn and we have nine hundred and seventy two people who wake up hurry up everyday to to serve them with their
spk_8: and the students that they serve so that that the perspective i would share with your terry okay
spk_9: the i have you here he said that twenty twenty one was challenging you
spk_3: you doing things on your mind to try to improve results easy easy modification the contract with you and you see one of the things you looking at oh that's not where the central solution is in terms of you hadn't better results and twenty twenty two well terry we are as you would expect of me arena met him in my early days that i would complete a a deep root cause analysis of the enrollment decline and twenty twenty one i was your for a mere three weeks but it didn't take long to see that twenty twenty one was a challenging year and and the comments i made earlier it was a transition year for this company silvio moving to be an ad tech services company and it was a transition easier for you a to see becoming a new university and putting together a really strong management team and mission and purpose and values and so there was a lot going on we also had a ceo transition so at the founder and ceo andrew clark he completed at the end of the first quarter as you know and and a board conducted an exhaustive search and i started on of at the first week of december see a three three transitions going on and i think all of that led to certainly i'll speak to zovko there was some poor execution not a market issue poor execution in terms of the things that needed to be addressed and terms of in growing growing and enrollment and in supporting students always true to their graduation so with that route cause analysis complete it
spk_8: swiftly a set of initiatives i put in place and new leadership team that i am confident in and they lead with compliance principles and values and students first i'm optimistic about what lies ahead for you a to see and our support for them in terms of their enrollment
spk_3: the that the contract with you again he doesn't need major be worth but comes under things under your control can can can improve the situation by that's where we start matters in a look at what you can control as having fair amount of outsourcing contract experience and days with idea both ideal contracts and business process outsourcing contracts we do both for you a d c it's not unusual when you have a tenure or in case of fifteen year contract that doesn't require some revisiting from time to time but
spk_8: that's how the universe out where i start i don't start with you pulled contract opted out of the drawer and you say that that's the problem you look at how do you align with the goals of your client and you address the root causes of what was the result of enrollment decline and twenty twenty one and were encourage so far as well
spk_6: were you know we're here to talk about twenty twenty one not to one of this year but for encouraged with with what we're experiencing together
spk_3: right
spk_10: you you use to or i think the last year you were giving some kind of long term growth guidance for silvio girls in august he does does two segments of the has continued to perform very well islam
spk_8: the at the expectations change in terms of the long term growth potential there know and it causes you to give us some on this to businesses going forward hi terry it's kevin are you referring to the guidance that we gave the we expect you know our that the five year period that where we gave the guys we expected growth the annual growth of thirty percent per year at a pm and we we
spk_4: we're not giving over all guidance that that is still very much in line with the trajectory of the revenue for those businesses combined
spk_5: pandit that's that's good to hear i also saw the yeah
spk_8: so spike announcement for india in color you can give us any that looks like a potentially very large market full full full stack it is a large market it's a market where we are licensed seen a portion of our curriculum to a company this got a broad where each in india we're excited we don't see it as well there will be revenue in a calendar twenty twenty two it will be less than ten percent but we eyes is that market develops we we think it will be very exciting and that same partner
spk_0: we'll be taking us into other geography is as well
spk_11: great well thank you for the comments and then i look forward to
spk_12: to add the hard and twenty twenty two and better results the guitar question will come come out our bearings research please go ahead hey guys thanks for taking my call and my questions on
spk_5: between your overview antares questions you covered a lot of that that die have a few more i'd like to dig into that's okay with you
spk_13: the
spk_12: obviously a tough transition year and twenty twenty one your fourth quarter results were in line with my estimates though still down your ob your that sort of thing a jovial growth continued to perform above my expectation so i'd like to a little deeper into the university partners
spk_5: no is a little over a year ago early december when the transactions completed
spk_3: i think there was some initial positive growth but it it turned negative pretty quickly
spk_10: can you talk about the performance of new student enrollment for example throughout twenty twenty one i thank god at one point last year may lose the first quarter you said new student starts were down along the lines of about twenty five percent year over year and then sequentially each of the following orders he got a little less negative but still negative year by year what can you say a by know has a trend continued into the fourth quarter and and into twenty twenty two
spk_12: yeah fortunately alex we did have a a tough tough fourth quarter oh just overall i think you know we're told you we expected new and rome and are we
spk_6: giving given games we expected new aroma to be down around twenty five percent it's down i was down about twenty two percent year over year
spk_10: by and then totally aroma did better than that but totally roommate came in and about nineteen percent down year over year gotcha and i and i know you're not talking about the first quarter or going forward i can the cavs get easier as we move into twenty twenty two and the and the deliberate actions you take and to improve process and and management that would you expect without giving specific guidance improvement in
spk_12: enrollment metrics
spk_14: new and roma as well as retention going forward or continued improvement
spk_12: yeah so with it with the changes that were made alex we're we're we're very encouraged will see we're projecting positive trends in a new enrollment with it'll take time to take a look at a time to translate into it to towler on it but we we are
spk_6: we're expecting that that new enrollment
spk_15: will be positive on a year over year basis
spk_16: as soon as when midyear que one later in the year but entire it the media media okay good and then none
spk_3: can we talk a little bit about the credit agreement and then the lawsuit maybe start with the lawsuit first in early march you had a negative outcome could have been worse the california attorney general was looking for not only one hundred million dollars would certain injunction sir i'll pick you got to get the felt he was twenty two point four million there were no injunctions that i know of an u s as for a new trial or a vacating of the judgment what's behind their what are your thoughts about the ruling are what did you say obviously and us is of ongoing legal thing but does ah one should we know about the the request for a new trial and if you don't get that request granted the i do you appeal them
spk_17: alex it's randy i'll i'll share just a couple points of view so it it's no surprise to do it it's disappointing the judge's decision was disappointing how are you my perspective on a where the disappointment to really it was hard and and that's for the manager
spk_3: team and the employees of the company so we have a new management team in place we have to give you go
spk_17: we look today and he looked at the employee roster and there's a lot a new employees if you look at today and compare that to even two thousand and seventeen
spk_3: and as you pointed out it i think if you know it well based on where you're describing there was there was no evidence of any any problems wrongdoing after two thousand and seventeen seats you look at that say well that's a positive but we we just a lot of things here too
spk_17: hell have the employees understand i work for a good company that this is i'm a matter that dates back a long time ago
spk_3: and so you want them to keep their chin up and shoulders back and do or a great job every day or the university of arizona global campus and and most importantly the students they serve certainly just are very dedicated dedicated to serving students
spk_18: now if you if you look at a perspective on what zoe on ashford and how did we act
spk_3: a long time with long time ago certainly before i know you much of a didn't know anything about this
spk_17: but i studied up on it and and and believe that that the team acted appropriately and and that the practices complied at all times of california law
spk_3: oh and on again very dated matter you pointed out correctly we we did file a motion asking a judge to reconsider and modified the decision and and that schedule that scheduled for may thirteen so one can be hopeful that that
spk_19: so we could
spk_12: we could get one or the other those those matters those outcomes if that doesn't happen al aqsa will just review what our options are in a which which doesn't include appealing the decision to the california appellate court and you know and there's there's part of me that when it's something like this but struggling to the employees of today as you want to get it behind the company so we will look at that in the future and i just share share with you i think about it as a ceo this company great that's helpful and then numb so stay tuned done that and then the credit agreement
spk_3: thirty one and a half million i'm with blue towards my bore plus nine percent
spk_12: i think oftentimes with financial companies like that there's some a from payments and and that sort of thing the kevin what should we expect in terms of the impact to the tnl or charges summer
spk_9: i guess second quarter probably
spk_3: yeah you're correct allocators upfront fee and that i'll get amortized over the term of the loan so when you take a look at from an expense standpoint
spk_20: you've got the quarterly interest plus they amortization of the upfront fee the combination of the to be an impact of about nine hundred thousand dollars per quarter
spk_3: okay the and then i guess last but not least in the venue the strategic review and what what's the thought process they are what are you considering i think there's been speculation about selling one or both of the xo feel gross businesses there's you than that speculation about selling the entire company that was what was in the best interest
spk_21: the shareholder so so what are you thinking there and what's the time when
spk_22: the big picture alex and were
spk_23: as i mentioned my comments were gonna look at all the strategic alternatives said that includes third of esteem
spk_3: oh sweet we lead three businesses the largest one serves you a see and and year period familiar with tutor me and full stack academy so we're gonna look at all three businesses and and look at the alternatives were very serious about it otherwise i wouldn't come in and on it today in his earnings call and we're going
spk_10: look at it
spk_24: with with a sense of urgency
spk_12: in terms of what's best for the company all the stakeholders including our shareholders though we did we did just on mail served to make point out of that we did
spk_17: retain an investment banker and so that's one indication of taking a nap
spk_0: seriously
spk_3: okay gotcha isis real quick
spk_0: i think we
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