Adtalem Global Education Inc.

Greetings and welcome to the Ad Talem second quarter 2019 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Shaka Patterson, Vice President and Deputy General Counsel. Thank you. Please begin.

Thank you and good afternoon. With me today from Ad Talent's leadership team are Lisa Wardell, President and Chief Executive Officer, and Patrick Unziker, Chief Financial Officer and Treasurer. I'd like to remind you that this conference call will contain forward-looking statements which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict, which could cause actual results to differ materially from those expressed or implied in these statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to our annual report on Form 10-K for the year ended June 30, 2018, and other recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition. We disclaim any intentions or obligations to update or revise any forward-looking statements, except as required by law. During today's call, we will refer to non-GAAP financial measures, which are intended to supplement, though not substitute, for our most directly comparable GAAP measures. Our press release, which contains the financial and other quantitative information to be discussed today, as well as a reconciliation of non-GAAP to GAAP measures is also available on our website. Telephone and webcast replays of today's call are available for 30 days. To access the replays, please refer to today's release. And with that, I now turn the call over to Lisa.

Good afternoon, and thank you for joining our second quarter fiscal 2019 earnings call. During the quarter, we delivered growing enrollments in our medical and healthcare segment and strong results in our professional education segment, driven by the refreshed product differentiation in the Becker business and continued growth in ACAMS. Through our January 2019 term, ADTALIM new student enrollment increased 4.9%, while total student enrollment increased 2.9% from the prior year. Compared to the prior year period, second quarter 2019 revenue increased nearly 3%, and operating income increased approximately 17%. aided largely by a one-time benefit from insurance proceeds related to Hurricanes Irma and Maria. Excluding the one-time insurance benefit and other special items, operating income decreased by about 5%, in line with our expectations. Further, we achieved several major milestones in the quarter, including the successful completion of the DeVry University and Carrington College transfers of ownership, as well as the permanent relocation of the Ross University School of Medicine to Barbados. These initiatives required tremendous energy from the entire team, and with their successful conclusion, we are now focused on pursuing additional business development opportunities across our portfolio. Before I talk about our plans for the second half of fiscal 2019, let me give you a high-level overview of our segment results during the quarter. Enrollments in our medical and healthcare segment were strong. Further, we're seeing traction for our new facilities and newly developed partnerships in the vertical. With regard to Ross University School of Medicine, we opened the doors to its permanent home in Barbados in January. While it is still early, we're already seeing encouraging trends and inquiries from prospective students now that RUSM has a permanent home. Our new medical sciences campus in Barbados represents a state-of-the-art academic institution including a Society for Simulation in Healthcare, SSH accredited, simulation center. Additionally, a cutting edge virtual anatomy lab and a best in class patient care center allows our faculty to better prepare medical students for the clinical experiences they pursue upon completion of their basic medical sciences training, giving them an early competitive advantage relative to their peers. As we discussed last quarter, the new location for ROSMED has greatly improved airlift access from the United States, Canada, and Europe. This will allow us to drive student enrollment growth toward and potentially above the previous peak enrollment that we achieved in 2014. ROSVET continues to capitalize on the supply and demand imbalances in veterinary medicine, as well as building awareness for its new research center, which continues to attract clinicians and academicians from around the globe, including Dr. Robert Gilbert, Professor Emeritus at Cornell University and a leading professor of animal reproductive biology, and Dr. Kerry Rolfe, a leading European specialist in companion animal internal medicine and former faculty member at the University of Edinburgh. In November 2018, ROSVET hosted the annual West Indies Veterinary Conference, the largest to date with nearly 500 attendees. further enhancing Ross Vet's reputation in the global veterinary profession. Meanwhile, the American University of the Caribbean School of Medicine has established a partnership with the University of Central Lancashire in Preston, England, providing a presence in the UK with its first cohort of medical school students expected to start in September of 2019. AUC also launched the Caribbean Center for Disaster Medicine in partnership with Harvard Medical Faculty Physicians of Beth Israel Deaconess Medical Center. In March of this year, the center will host its first Caribbean Disaster Medicine International Conference. Dr. Gregory Citone, international expert in disaster medicine from Harvard Medical School, is headlining the event. The lineup also includes experts from Harvard T.H. Chan School of Public Health, Johns Hopkins University School of Nursing, and other global institutions. And finally, Chamberlain University continues to see strong market demand for its campus-based BSN program, including at the Ashna co-located campus in Louisiana, and with the recent increases in enrollment caps at Las Vegas, Troy, Michigan, and North Brunswick, New Jersey, all three are experiencing market demand well in excess of the previous enrollment caps. This market demand is driven largely by more students enrolling directly into BSN programs rather than RNs pursuing the BSN credential. Chamberlain also continued to experience solid market demand for its master and doctoral nursing programs. NCLEX pass rates for Chamberlain students continue to strengthen, showing a significant upward trend from 2017's annual rate of 84%, with a third quarter calendar combined total pass rate of 91.4%. Twelve of our 19 campuses that had NCLEX test takers exceeded the national NCLEX rate average. In our professional education segment, we had a strong quarter with revenue growth of approximately 39%, including the improved performance of the Becker Business Unit due to enhanced marketing effectiveness and refreshed product differentiation. In addition to growth in accounting products and services, including exam preparation, where we're expanding our professional development content to support key changes in the accounting profession, including the training of STEM professionals in the industry. For example, Becker is partnering with a large global accounting firm to co-develop an accounting and auditing for non-accountants training course for the firm's STEM professionals. The content helps to speed onboarding of STEM professionals to accounting and audit services engagements. In ACAMS, we continue to see solid growth globally, including in the U.S., Europe, and Latin America. Our European efforts include expansion into Poland and Germany. We have also gained some early traction in Panama, Mexico, and Brazil. Our conferences continue to post record year-over-year growth, with the Las Vegas conference attendees growing over 10%. While we are encouraged by our results, we continue to invest in the core business in order to position ourselves for further rapid expansion. And finally, in Brazil, while we continue to face currency headwinds and some top-line revenue pressure, we remain confident that the recent change in administration will settle the economy and provide ongoing stability. The growth trends in distance learning since our soft launch in March 2018 are very positive, and we're certain that this trend will continue based on our ability to deliver high-quality academic programs and experience to our students. Our academic quality rankings by the Brazilian Ministry of Education As reflected in our IGC score, a composite score focused on the National End-of-Program Exam , faculty credentials and student satisfaction continues to consistently improve. Our average IGC result was 282 this year, the sixth year of improvement in that metric for ADTAL and Brazil. Among the main national private institutions, ADTAL and Brazil institutions are ranked as the number one institution in eight of the 13 cities we serve based on the Brazilian Ministry of Education's IGC metric. As we enter the second half of fiscal 2019, we remained poised for continued organic growth in revenue and earnings driven by student enrollment increases, the addition of new differentiated programs and products, and enhanced technology-enabled student learning environments. We have accomplished a great deal over the course of the last several years. and believe we are a stronger business for it today. As we look ahead to the balance of fiscal 2019, we have strong cash flow, brands that are associated with market leadership in each of our verticals, products and services that are clearly differentiated in their respective markets, and a team that understands both scale and profitability. Our team is more experienced, diverse, and growth-oriented, and that is reflected in our ability to deliver consistent operating results. We will continue to focus and strategically align our portfolio to deliver growth while driving improved operating efficiencies across our organization and prudently balancing our capital allocation by investing in platforms for growth while providing direct returns to our owners in the form of share repurchases. Our continued share repurchases reflect our ongoing confidence and excitement in our business. As always, we are committed to building a long-term value for our fellow owners. With that, let me turn the call over to Patrick for a deeper look at our financials for the quarter.