Adtalem Global Education Inc.

Greetings and welcome to the Ad Telum Global Education Fourth Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A 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. Please note that this conference is being recorded. I will now turn the conference over to our host, Maureen Resack. Vice President, Treasury, and Investor Relations. Thank you. You may begin.

Thank you, and good afternoon. With me today from AdTalum's leadership team are Lisa Wardell, Chairman and Chief Executive Officer, and Mike Randolphie, Senior Vice President and Chief Financial Officer. 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 EdTALM 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, of our most recent annual report on Form 10-K filed with the SEC and our other filings with the SEC. 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 was made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise, except as required by law. During today's call, our commentary will refer to non-GAAP financial measures, which are intended to supplement, though not substitute, our most direct comparable GAAP measures. Our press release, which contains the GAAP financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP to non-GAAP measures, is available on our website. Please note that all financial comparisons made during today's call are in comparison to the prior year period, unless otherwise stated. It is also important to note that our fourth quarter and full year results reflect the application of discontinued operations for our former business and law segment as a result of the divestiture of EdTal in Brazil, which made up the entire segment. 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 us today. On our call, I will discuss the highlights from our fourth quarter and full fiscal year before turning to performance in our business segments and our strategic outlook. I will then turn the call over to Mike to discuss our financial results before we open the lineup for questions. When we began fiscal 2020, we were confident that we would continue to grow our enrollments and revenue based on, one, our workforce solutions provider enterprise strategy, and, two, the improvements we had made in the previous year in our talent, marketing, and student services operations. We ended the fourth quarter of fiscal 2020 on a strong note, delivering healthy revenue and earnings results, and demonstrating that we were on track prior to the COVID-19 pandemic to meet our financial plan. Additionally, we have navigated through the unprecedented challenges brought on by the pandemic. Our businesses proved resilient as we pivoted quickly, leveraging our prior experience in crisis management, our online learning tools and virtual formats, and our strong leadership team to continue driving results. Our workforce solutions provider strategy, including the further streamlining of our portfolio through the completion of the divestiture of AdCal in Brazil, which narrowed our focus solely on both medical and healthcare and financial services industries and served to fortify our balance sheet, has allowed us to further focus on the healthcare supply and demand imbalances we have been highlighting for decades as they have now become a national dialogue and as upskilling and certification in financial services is now more than ever important to continued employment for current employees and new employment for those displaced from other industries as a result of the pandemic. We remain on track towards achieving our long-term growth target. While we were not immune to the challenges brought on by this global health crisis, as the postponement of clinical weeks across medical and healthcare and the shift to virtual conferences and reduced spending by our financial services customers adversely impacted our results, Our ability to utilize our existing infrastructure and our underlying strength in online learning modalities to employ new and emerging technologies and maintain superior academic quality and enhance the overall student experience allowed us to drive positive results. Demand for our earnings remained strong, and in particular, our on-campus BSN program, all of which is currently online, experienced significant enrollment growth during the fourth quarter. And we anticipate this trend to continue into fiscal 2021 as the demand for healthcare workers continues to increase. Also in the second half of the fiscal year 2020, we increased new student enrollment within the RN to BSN program nearly 4% over the same period in the prior year. Our proactive approach provided critical throughout this difficult time. We paid close attention to the needs of our students and invested in providing the additional support they needed. which included a focus on mental health and counseling resources and increased touch points between students. As a result, students have taken notice and can be seen by an overall increase in our Chamberlain Net Promoter Score results across all of our programs. Other proactive changes we made during the fourth quarter included the launch of online CAMS certification testing and our 24-hour virtual ACAMS conference, which both helped minimize disruption for members obtaining continuing credits towards ongoing certification and resulted in the largest number of paying petitions for participants of any ACAMS conference to date. Every indication we have seen points to increased recognition amongst learners and consumers that these virtual education modalities are effective in delivering quality education. As a result, underlying demand for our programs continues to increase. In our medical and healthcare segment, the biggest challenge we faced was managing clinical weeks for students to keep their education on track. As the hospital system operating environment rapidly shut down early in the quarter, clinicals were temporarily halted across the country, while health care institutions turned their full attention to combating the pandemic. Undoubtedly, in-person clinicals remain a challenge that all medical schools currently face. However, given the growing medical professional shortage in the U.S., These clinicals cannot be postponed until the pandemic subsides. Fortunately, healthcare systems are becoming more agile, and the drive to return to in-person clinicals is a top priority. In particular, we are seeing increasing willingness of clinical partners to conduct in-person clinicals safely in a COVID-19 environment, as the general understanding is that treating COVID-19 patients is an important experience for prospective doctors' and nurses' education. As the largest provider of healthcare professionals in the U.S., the geographic diversity of our clinical partners has proven to be a significant differentiator for Chamberlain and our medical and veterinary schools, allowing us to leverage the availability of partners in areas that are not COVID-19 hotspots. Where practical, we have also increasingly supplemented in-person clinicals with virtual training, including utilizing capabilities within telehealth to address these challenges. Medical and healthcare demonstrated strong results and drove superior academic outcomes for our students in Q4. New and total student enrollment increased 5.9% and 6.9% across the vertical respectively. Demand for offerings within Chamberlain remained robust as new student enrollments in the May session reached an all-time May enrollment high. Within Chamberlain, students have achieved a first-time NCLEX pass rate of 92% on par with the national average. We continue to add quality curriculum to our programs, recently adding training on how to provide virtual health care via telehealth. With this program, we have also increased our touch points with students, moved our student academic support online, and started to work with them in a simulated care environment until in-person clinicals can resume. To accommodate the added demands of the COVID-19 environment and to be responsive to our students, many of whom are working, we have instituted the Care to Pause program within Chamberlain, allowing students the ability to temporarily pause their participation in a program and then seamlessly reenter once they are ready, without academic or financial penalty. We believe that providing this flexibility is critical and will support the long-term enrollment of our students. It will also continue to build the brand as a partner to our students and employers. This added flexibility across our programs has been well-received, and we see strong total enrollment within our post-licensure programs. Additionally, to further support our students, we deployed approximately 8 million of CARES Act funds amongst nearly 8,000 students. Although we were only required to deploy half of the CARES Act fund to students, we chose to deploy all of the funds we received directly to students in the form of emergency financial support in their time of need. At the same time, we have developed opportunities that encourage new, former, and prospective students to experience Chamberlain, which further supports brand awareness. Our acute care readiness program has registered over 3,000 applicants to date. In addition, we have developed an NCLEX readiness course with 7,000 registrants from a wide variety of nursing schools across the country, and a contact tracing course with over 2,000 registrants in just three weeks of availability. In addition, our Care for Caregivers effort, launched to support and celebrate frontline health care workers, has had tremendous success. To date, we have had over 40 million views of the associated videos and 300,000-plus visits to the website. This type of cross-segment brand building and links to discounts or offers from brands such as Crocs, Aerosol, NeuroCorp, Counseling, and Uber Eats, amongst others, is a demonstration of our values, thought leadership, and positioning in the market. AUC and ROSMED residency match rates have increased. with Ross Med now exceeding 95% and AUC reaching 92%. Ross Vet had a very strong quarter with all-time high May enrollments bolstered by strong demand for our Vet Prep course, which is currently being offered online. The long-term effectiveness of our brand awareness efforts within Ross Vet has delivered, with applicants for the September 2020 session continuing to show strong increases. Additionally, Ross Vet's most recent first-time Natalie pass rate was 88%. We continue to focus on investing in superior online instruction and advancing partnerships across the medical and healthcare institutions by developing our content for online and virtual instruction in lockstep with our clinical partners. A recent organizational restructuring that facilitates our medical schools sharing and developing best practices is enabling our two medical schools to collectively work together to obtain clinical partners creating additional opportunities for our students to get access to required clinical training. Addressing the healthcare shortage while at the same time maintaining our commitment to creating equitable access to education has long been a cornerstone of our town's mission. Through partnerships with five HBCUs and four HSIs, as well as our already diverse student population, we are supporting a more diverse workforce within the U.S. healthcare system. and we will continue to strive to provide high-quality education to help underserved communities and tackle those healthcare disparities highlighted by the current pandemic. Near-term demand remains strong for nurses, doctors, and veterinarians, which is evident in the positive employment trend. In addition, we are working with our hospital partners to help solve issues arising out of the pandemic, including managing staff burnout. As a significant supply and demand imbalance continues, our programs are uniquely positioned to address these challenges and assist our employer partners in high-quality patient care. Turning to financial services, during the fourth quarter, our financial services vertical made substantial progress mitigating downside risk and capturing demand increased by the pandemic. ACAN's widely expanded certifications and training, offering a greater range of value to banking and compliance customers, by providing enhanced tools and training to frontline workers to better combat fraud in an increasingly virtual environment. Becker, which faced disruption from the closure of CPA testing centers, continues to work closely with testing organizations to manage through their backlog and launched a first-of-its-kind webinar for incoming students to introduce and walk them through the examination preparation process. ACAM's global conferences have been significantly affected by the COVID-19 pandemic. and mitigating this impact remains a focus area for our teams. With in-person conferences being an important component of ACAMS, to replace those experiences, we launched our 24-hour virtual summit to connect the global compliance community and increase accessibility to our conferences in an online format. We are encouraged by the results so far, as this completely digital conference brought in 2,600 paid attendees, 65% of whom had never previously attended an ACAMS conference. Attendees joined from over 100 countries, drawing increased attendance through the elimination of travel logistics and expenses. Participants also have the opportunity to earn CAM certification continuing education credits, serving as an additional emphasis to drive conference attendance. Feedback from attendees has been positive. Underscored by a strong conference net promoter score, with many attendees applauding the live feeling of the setting and drawing favorable comparisons to the environment of our in-person conferences. While the price point for this conference was lower than our in-person setting, we are confident that virtual conferences can deliver a similar margin profile to in-person alternatives. Further, the increased accessibility and attendance of the virtual conferences illustrates the potential for incremental operating income growth. We anticipate that all conferences in the first half of fiscal year 2021 will be held virtually, including our Las Vegas conference at the end of September. In addition to conferences, ACAMS has pivoted to meet the heightened need for cybersecurity and fraud offerings driven by the shift to an entirely virtual environment. Expanding into areas with the strongest demand from enterprise customers, we developed the Know Your Customer and Transactions Monitoring short course offerings, launched for frontline and operational teams in the financial services sector. These courses equip professionals with the core competencies required to perform due diligence for their customers in this high-risk environment. Tools such as these are invaluable to the compliance community and operational teams in the financial sector that serve as the frontline to defend against fraud. We are also investing in other areas where fraud has increased, particularly in cryptocurrency fraud, as the trends towards digital banking accelerate. Sanctions training and other certifications to meet regulatory requirements remain a significant opportunity. Our Global Sanctions Certification, CGSS, sold in 93 countries, has gained momentum since its launch in January, with more than 580 professionals certified. In June, to provide an introduction to the necessary steps for the financial sector to meet growing requirements around modern slavery and human trafficking risks, we launched our first new modern slavery and human trafficking certificate. Although Becker has experienced some COVID-19 headwinds, including delayed CPA testing and budget constraints at our B2B partners, we are now seeing testing centers reopen, and we continue to leverage alternative modalities for test prep. Becker has developed an increased focus on B2B sales and is making progress with product bundles developed for CPA and CPE offerings. We are investing heavily in the CPE market, which represents a significant opportunity for us to leverage Becker's strong brand recognition to grow market share. For example, we have hosted CPE webinars to help the financial sector better understand the evolving tax environment. On-course learning has shown strong performance improvement as it has ramped up, particularly driven by tailwinds in the current mortgage environment. We continue to see high demand for mortgage loan officer training, and have continued to strengthen our virtual delivery format. We are driving persistent growth through our strong enterprise relationships, such as our partnership with Quicken Loan. We have successfully trained over 8,000 Quicken Loan mortgage officers over the past decade as they continue to expand the number of mortgage loan officers and use on-course learning products to meet state licensing requirements. AgTalent continues to maintain its leading position across both verticals, leading demand in attractive and growing markets. Our newly streamlined portfolio has kept us agile, allowing us to adapt and enhance our offerings to address the changing needs of members, customers, and employer partners as the pandemic continues to result in disruption, keeping us aligned with our mission. Our experienced leadership team has a history of resiliency and crisis response and has mitigated challenges to successfully manage through the current operating environment supported by our solid financial profile. We have a strong balance sheet with ample liquidity and flexibility, supported by additional cash on hand following the completion of the sale of our Brazil assets in the fourth quarter, and we are focused on leveraging this strength to drive growth across both verticals. As we turn our attention to fiscal year 2021, we are confident that we are well positioned to meet increased demand in the industries we serve. Given the uncertainty presented by the COVID-19 pandemic, we will not be providing guidance for fiscal year 2021 at this time. However, as I noted earlier, the current trends we are seeing, coupled with the strength of our team and offerings, gives us confidence in our long-term revenue and earnings growth trajectory. In conclusion, we remain focused on our workforce solutions provider strategy, allowing our talent to accelerate growth, enhance our operational effectiveness, and invest in academic quality and superior student outcomes. I am so proud of the entire AdTalent team, not only for their steadfast commitment to our education mission, but for their agility and nimbleness to adjust during these times of uncertainty, as well as their continued demonstration of our values. With that, I will now turn the call over to Mike to discuss our financial highlights.