Adtalem Global Education Inc.

Greetings and welcome to the AdTalem Global Education Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. If you have not already done so, please close all other programs on your computer. If anyone should require operator or technical assistance during a conference, press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce John Kristof, Vice President of Investor Relations. Thank you. You may begin.

Thank you, and good afternoon. Joining me today are Lisa Wardell, President and Chief Executive Officer, and Patrick Unzicker, Chief Financial Officer and Treasurer. I'd like to remind you that this conference call will contain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 with respect to the future performance and financial condition of ad talem global education that involve risks and uncertainties. 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 the most recent annual report on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time as a result of new information, future developments, or otherwise. 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 contains financial and other quantitative information to be discussed today, as well as a reconciliation of non-GAAP to GAAP measures, and is 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 press release. And with that, I'll now turn the call over to Lisa.

Good afternoon, and thank you for joining our third quarter fiscal 2019 earnings call. Our third quarter saw an overall increase in enrollment, growth across two of our three segments, a continued strong balance sheet, and achievement of several strategic milestones. Despite these successes, Revenue in the technology and business segments fell short of our expectations due to ongoing challenges largely outside of our control in Brazil. These challenges include the government's delay of FIAS funding at the end of March, increased pricing pressure, particularly in the online sector, and unfavorable currency exchange. As a result, we are adjusting our full-year revenue expectations. Despite the negative revenue impact, new student enrollment in Brazil increased in the double digits. illustrating the resiliency and demand for our services and our strong market position in that country. During the third quarter, we continue to successfully execute on our overall operational efficiency to drive improved profitability and deliver against our bottom-line targets. As a result, we are reaffirming our earnings per share growth guidance for the fiscal year 2019. Later, Patrick will provide further details around our full-year guidance. I want to emphasize that we remain fully committed to driving top line and earnings growth to achieve the long-term goals we communicated previously. At the beginning of fiscal 2019, we discussed our short and long-term goals for the Ad Talent portfolio, and we have delivered many successes as we execute on our long-term strategy. We've streamlined the portfolio for the DVU and Carrington divestitures, relocated Ross University School of Medicine to Barbados, reopened the main campus of American University of the Caribbean School of Medicine on St. Martin, and established the AUC UK satellite campus in partnership with UCLan. In addition, we improved student outcomes and focused our strategy on becoming a workforce solutions provider that serves employers and thereby drives student success and placement, as well as promotes ongoing learning and development. We've also made some progress towards several of our near-term operational objectives. We delivered on earnings per share in line with our expectations and our maintaining guidance for the year, largely driven by the successfully implementing our cost optimization initiative. As I will explain in depth momentarily, we also continued to see robust performance in both Becker and ACAMS. We have seen an increase in first-time residency attainment rates in both of our medical schools and also saw end-patch rates improving at Chamberlain. where campuses reporting year to date show us trending slightly above the national average. Finally, we're thrilled about our pending acquisition of OnCourse Learning's financial services business, which we announced two weeks ago. This acquisition broadens professional education's offerings to the banking, credit union, mortgage, and insurance markets with leading market positions, over 1,700 courses, and a favorable EBITDA margin profile. This move perfectly aligns with our enterprise strategy strengthening our position as a leading workforce solutions provider. Let me now give a high-level overview of our segment results during the quarter. Enrollments in our medical and healthcare segment were mixed, with growth at Chamberlain bolstered by continued strength at our campuses and new partnerships, offset by lower clinical weeks at the medical schools. While we are focused on improving our near-term top-line growth in the medical schools, I'm incredibly proud of the milestones we have accomplished here during the third quarter. Rough Med's first-time residency attainment rate is over 90% for this year's medical students, making us more competitive for prospective students going forward. Rough Med has also established articulation agreements with Charles Drew University, Tuskegee University, Florida Agricultural and Mechanical University, and Dillard University to increase the number of students we admit from these historically black colleges and universities. In addition, Ross Vet has been granted full reaccreditation by the American Veterinary Medical Association Council on Education. Ross Vet was initially accredited in 2011, so this represents the first reaccreditation. Dr. Anne French from the University of Glasgow, Scotland, will be joining Ross Vet in September 2019. Dr. French is acknowledged worldwide as a leading veterinary cardiologist. Our continued investment in the Ross Vet campus has seen the opening of the first phase of the academic hub. which offers additional study facilities for our students. Meanwhile, at American University of the Caribbean School of Medicine, we are already starting to see positive traction in our new partnership at the University of Central Lancashire in Preston, England, as well as momentum in attracting students from Canada and India. We had our highest ever first-time residency attainment rate this March, with 90% of students matching year to day. At Chamberlain, in addition to the increased enrollment and NCLEX pass rates I mentioned earlier, We are set to launch two new programs. The first is a master's in social work and the second is an accelerated math of science and nursing program. Our current MSM program requires students to take core MSM courses and then take additional specialization courses in a particular track or area of concentration. Our new accelerated program will allow students to get an MSM generalist degree and will take less time to complete. Both of these new programs have received all regulatory approvals, and we will begin recruiting shortly. With our continued investments in new programs, student services, and additional campus locations, coupled with improved student outcomes that provide increases in student enrollment caps and drive greater interest from prospective students, I remain bullish on Chamberlain's long-term growth prospects. Professional education also continued its momentum from last quarter. growing revenue double digits largely due to the continued success of ACAMS. This vertical remains a pillar of strength for us, providing us opportunities to unlock value as we extend our reach in the attractive governance, risk, and compliance space, and giving us a clear right to win with our market-leading positions and growth profile. ACAMS continues to see solid growth with membership exceeding 72,000, driven by growth in the Americas, Asia, and Europe. During the third quarter, ACAMS announced the upcoming Certified Global Sanctions Specialist Certification, credentialing employees in sanction compliance functions at multinational institutions to navigate in a world of increasingly complex laws and regulations. We have already received a positive reaction to this new core program, which will be released in early 2020. Our ACAMS conferences also continue to post record attendance. with the third quarter showing our highest ever attendance to date. And we welcomed Rohit Sharma as our new president to lead ACAMS. Rohit brings deep experience managing a global business and a strong operational background. I'm thrilled to work with Rohit as we continue to capitalize on opportunities in governance, risk, and compliance professional certifications. Becker also reported a strong third quarter, growing CPA test prep and continuing education revenue by approximately 3%. reversing the historical trend of decline we experienced previously. The growth in our continuing education business was reinforced by our growing corporate partnerships. Expanding our corporate partnerships remains a top priority for us as we broaden our presence as a global workforce solutions provider. We recently launched an unlimited access bundle for Becker, continuing to strengthen our value proposition in response to student demand. We also entered into an exciting new partnership within our professional education vertical with Northeastern University to jointly develop and distribute new products to our marketplaces. The first of these offerings will be an online course in artificial intelligence for financial services that will launch late summer this year and will be targeted to leaders and professionals in the industry to understand AI, its impact, and assess AI readiness within their own organizations. Finally, as I mentioned earlier, we recently announced our acquisition of OnCourse Learning's financial services business, which deeply broadens our professional education offerings to banking, credit union, mortgage, and insurance markets, and unlocks expansion opportunities across global financial services. As I previously mentioned, Brazil faced a series of macro factors that had an unfavorable impact on our results for the third quarter. However, the growth trends in distance learning since our soft launch in March 2018 are positive, and we're optimistic that this trend will continue based on our ability to deliver high-quality academic programs and experiences to our students. Among the top 10 private higher education institutions in Brazil, Atal in 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, a composite score focused on the national end-of-program exam, faculty credentials, and student satisfaction. So as we look ahead to fiscal year 2020 and beyond, we are committed to unlocking value creation opportunities by streamlining and focusing the business to build upon our existing strengths and leveraging the opportunities we have to attract new customers, innovate new product offerings, and reach new markets. We have been working hard during this transitional year to build the foundation for more comprehensive solutions for our B2B partners, including partnerships with not-for-profit academic institutions. We recognize that near-term results and consistent execution matters, and we are taking the necessary steps to grow revenue across the portfolio. I am proud of the focused portfolio that we have created, and I remain confident we have a solid runway for long-term revenue growth and enhanced profitability. With that, let me turn the call over to Patrick for a deeper look at our financials for the quarter.