Covista Inc. · NYSE:CVSA
Covista — Adtalem Global Education — Investor Day (May 2019)
68 slides from Covista's investor day presentation, May 13, 2019
Slide 1: Investor Day
ADTALEM GLOBAL EDUCATION Investor Day May 13, 2019
Slide 2: Safe Harbor
Safe Harbor Certain statements contained in this presentation concerning Adtalem Global Education’s future performance, including those statements concerning expectations or plans, constitute “forward-looking statements” within the meaning of the Safe Harbor Provision of the Private Securities Litig
Slide 3: Agenda
Agenda 12:00 Welcome John Kristoff 12:05 Adtalem Today: Poised for Growth Lisa Wardell 12:30 The Workforce Solutions Provider Model Stephen Beard 1:00 Enterprise-Level Financial Strategy Lisa Wardell 1:20 Vertical Overviews Medical & Healthcare Kathy Boden Holland Financial Services Mehul Patel Busi
Slide 4: Adtalem Today: Poised for Growth
Adtalem Today: Poised for Growth Lisa Wardell President and Chief Executive Officer
Slide 5: Substantial Progress Since May 2018 Investor Day
Substantial Progress Since May 2018 Investor Day Streamlined portfolio with the divestitures of DeVry University/Carrington College Completed permanent relocation of Ross University School of Medicine to Barbados Returned AUC to St. Maarten, with a new permanent satellite campus in the U.K. Introduc
Slide 6: Compelling Investment Thesis
Compelling Investment Thesis Leading positions with competitive Mission-based organization differentiated products in attractive, focused on serving student growing markets and employer partners Substantial organic revenue Streamlined and focused business/ growth and margin expansion enhanced long-t
Slide 7: Robust Portfolio with Diverse Revenue Mix and Revenue Growth Opportunities
Robust Portfolio with Diverse Revenue Mix and Revenue Growth Opportunities Medical & Healthcare Financial Services Business & Law Chamberlain ACAMS Wyden Prof Ed Med & Vet Becker Ibmec Wyden Online EduPristine ©2019 Adtalem Global Education Inc. All rights reserv ed. 7
Slide 8: Leading Market Positions and Growing Opportunities
Leading Market Positions and Growing Opportunities Leading positions in attractive, growing markets with compelling organic revenue growth opportunities. One of the largest Medical and No. 1 or 2 brand Healthcare tertiary in all professional education services offerings providers globally ACAMS, sup
Slide 9: Mission-Based Organization Serving Students and Employer Partners
Mission-Based Organization Serving Students and Employer Partners Our Vision Is to Empower • Empower our students to achieve their goals and encourage our students to make inspiring contributions to the global community • Produce more marketable graduates who can fill employer partners’ talent needs
Slide 10: Streamlined Business and Enhanced Long-Term Enterprise Strategy
Streamlined Business and Enhanced Long-Term Enterprise Strategy • Embraces education mission and broadens our customer base • Builds upon existing strengths – brands, product demand, functional synergies – to drive value creation across the portfolio • Enhances solution set and creates more value fo
Slide 11: Organic Growth and Margin Expansion Opportunities
Organic Growth and Margin Expansion Opportunities Accelerating organic growth supported by increasing operational efficiencies. Increasing capacity in medical and veterinary schools with university and employer partnerships, satellite Return to enrollment campus, new programs growth at medical and v
Slide 12: Strong Financial Position and Cash Generation
Strong Financial Position and Cash Generation Strong cash flow generation, healthy margin profile, solid financial position supports future growth initiatives and shareholder returns. • Significant discretionary free cash flow Financial Overview 1 with continued focus on maintaining $ IN MILLIONS 16
Slide 13: Experienced, Global Management Team
Experienced, Global Management Team Stephen W. Beard Lisa Wardell Patrick Unzicker Chief Operating Officer, General President and CEO Chief Financial Officer Counsel and Corporate Secretary • Lisa Wardell was appointed President and CEO in 2016 and has • Patrick Unzicker was appointed Senior Vice Pr
Slide 14: Adtalem Today Is Positioned Well for Tomorrow.
Adtalem Today Is Positioned Well for Tomorrow. We have successfully positioned the business for an exciting transformation to deliver accelerated growth and an enhanced portfolio.
Slide 15: The Workforce Solutions Provider
The Workforce Solutions Provider Stephen Beard Chief Operating Officer
Slide 16: Recent Divestitures Permit Adtalem to Leverage Its Strengths and Pivot with the Market
Recent Divestitures Permit Adtalem to Leverage Its Strengths and Pivot with the Market Medical & Healthcare Financial Services Business & Law U.S. Post-Secondary ©2019 Adtalem Global Education Inc. All rights reserv ed. 16
Slide 17: The Education Landscape Is Shifting; Adtalem Is Evolving to Meet New Demands
The Education Landscape Is Shifting; Adtalem Is Evolving to Meet New Demands ATGE’s traditional business model is impacted by the evolving learning landscape, driven by three key trends… Higher Ed Institutions Boundaries Blurring Tech and Business Facing Pressure to Between Educators Model Innovatio
Slide 18: Adtalem Will Migrate from Portfolio Manager to Workforce Solutions Provider
Adtalem Will Migrate from Portfolio Manager to Workforce Solutions Provider Portfolio Manager Workforce Solutions Provider • This model benefited us with a straightforward • Responsive to positive market dynamics playbook for a broadly diversified portfolio that demand stronger links between educati
Slide 19: Sizeable Market Opportunity in Workforce Solutions Value Chain
Sizeable Market Opportunity in Workforce Solutions Value Chain Leveraging Existing Capabilities Workforce Solutions Value Chain TAM Educate Recruit & Select Prepare & Certify Train & Develop TAM* $195B $37B $5B $28B Graduate Continuing and Formal, degree- Industry-related test admissions exams, prof
Slide 20: Streamlined Verticals
Streamlined Verticals Our verticals will prioritize growth opportunities that serve current and prospective customers. Medical & Financial Business & Healthcare Services Law And they will leverage opportunities for shared activities and transferrable capabilities. ©2019 Adtalem Global Education Inc.
Slide 21: Adtalem Will Expand Across the Workforce Solutions Value Chain
Adtalem Will Expand Across the Workforce Solutions Value Chain Value Chain and Industry Verticals Prepare & Educate Recruit & Select Train & Develop Certify • Chamberlain • SJT Med • RUSM • RUSVM Medical & • AUC Enterprise Driv en B2B Partnerships Healthcare • MERP • Wyden Health Prepare & Educate R
Slide 22: Competitive Differentiators of the Workforce Solutions Strategy
Competitive Differentiators of the Workforce Solutions Strategy Several capabilities at the enterprise level, strengthened by the leadership team, will lend themselves to the workforce solutions provider strategy. Brand Strength Global Platform Talent Institutional Academic Foundation Partnerships ©
Slide 23: Revitalized Model Improves Competitiveness, Accelerates Growth, and Drives Enterprise Value
Revitalized Model Improves Competitiveness, Accelerates Growth, and Drives Enterprise Value Responsive to positive market Focused portfolio with Builds upon Expansion dynamics, linking streamlined assets existing strengths opportunities across education and geography, industry workforce needs and ho
Slide 24: Leverage Multiple Vehicles to Achieve Growth Goals
Leverage Multiple Vehicles to Achieve Growth Goals Exploiting the Consistently Accretive Synergies Differentiating Profitable Inorganic of the Capabilities Topline Growth Streamlined Growth Portfolio ©2019 Adtalem Global Education Inc. All rights reserv ed. 24
Slide 25: Enterprise-Level Financial Strategy
Enterprise-Level Financial Strategy Lisa Wardell President and Chief Executive Officer
Slide 26: Capital Allocation
Capital Allocation Invest in the core – Return capital institutions and to shareholders companies Continually Allocating Capital to Increase Enterprise Value While M aintaining Leverage Under 2x Make strategic Maintain financial acquisitions via strength and disciplined approach flexibility ©2019 Ad
Slide 27: M&A Criteria
M&A Criteria Driving marginal revenue in the core through the thoughtful, disciplined and strategic use of M&A to bridge gaps in the workforce solutions provider capabilities. ROIC and accretive enterprise value Ability to scale Talent/acquihire Impact on global reach Synergy opportunities Positione
Slide 28: Medical and Healthcare
Medical and Healthcare Kathy Boden Holland Group President, Medical & Healthcare Education
Slide 29: Medical & Healthcare
Medical & Healthcare At a Glance • 38,000+ students and 86,000+ alumni from 5 medical and healthcare institutions • 1,500+ clinical relationships with healthcare systems and nursing organizations • Serving a diverse market/demographic of students in the medical and healthcare fields • 90% plus medic
Slide 30: Positioned to Capture Market Demand
Positioned to Capture Market Demand NURSING MEDICAL VETERINARY 15% 52k+ $35B growth in demand shortfall for primary care Global animal for nurses expected physicians in 20252 healthcare projected from 2016 to 2026 market by 2025 31% <32% <0.5% Employment for are practice Unemployment among FNPs expe
Slide 31: Chamberlain University
● 31,000+ students enrolled across all programs ● Largest Bachelor of Science in Nursing program in the U.S., offered at 22 campuses in 15 states ● Online post-licensure nursing and graduate programs represent two-thirds of student enrollment ● 60,000 alumni nationwide; 1 in 36 working nurses is a C
Slide 32: Chamberlain University Degree Programs and Options
Chamberlain University Degree Programs & Options Chamberlain University Degree Programs and Options On-site Online ©2019 Adtalem Global Education Inc. All rights reserv ed. 32
Slide 33: Chamberlain Has Built and Scaled Market-Leading Programs
Chamberlain Has Built and Scaled Market-Leading Programs Leading to a Large and Influential Alumni Base Chamberlain Graduates by Year 14,000 13,188 #1 IN TOTAL ENROLLMENT 12,026 12,000 11,261 #1 IN ENROLLMENT PRE-LICENSURE BACCALAUREATE NURSING 10,000 8,830 #1 IN ENROLLMENT IN MSN-FNP PROGRAMS 8,000
Slide 34: Chamberlain's New Campuses on Average Reach Profitability in Year 3
Chamberlain’s New Campuses on Average Reach Profitability in Year 3 OI by Campus for New Chamberlain Campuses Opened 2014-2019 CAGR = 6,000 13% 5,000 4,000 Dollars in Thousands 3,000 Average 2,000 1,000 - (1,000) (2,000) (3,000) Year 1 OI Year 2 OI Year 3 OI Year 4 OI Year 5 OI ©2019 Adtalem Global
Slide 35: 60+ Healthcare Development Specialists with Collaborative Relationships
60+ Healthcare Development Specialists with Collaborative Relationships at 920 Healthcare and Educational Institutions, Colleges and Associations ©2019 Adtalem Global Education Inc. All rights reserv ed. 35
Slide 36: American University of the Caribbean
• Located in St. Maarten with ~1,400 students, returned in full August 2018, followed by a return to new student enrollment growth • Achieved record 90% residency attainment rate in 2019, with nearly 300 AUC graduates matching in 38 states and 24 specialties • Campus in U.K., in partnership with Uni
Slide 37: Ross University School of Medicine
• January 2019, approximately 1,500 basic sciences students relocated to Barbados; total current enrollment at RUSM is 3,000 – New academic center with state-of-the-art infrastructure – Student living and learning center • Achieved record 90% residency attainment rate in 2019 • Signed articulation a
Slide 38: Medical Educational Readiness Program (MERP)
• Applicants are admitted to AUC and RUSM, pending successful completion of one semester MERP program • Designed for student success in medical school: – Strong basic science foundation – Cultivate good study skills – Build strong peer networks for medical school • Data has shown that undergraduate
Slide 39: Ross University School of Veterinary Medicine
• AVMA accreditation fully-renewed through 2026 • Largest AVMA accredited school and alumni base of any veterinary school • Vet Prep Program, in a similar fashion to MERP, captures additional student demand and increases likelihood of DVM success post-completion • Brand recognition growth and inclus
Slide 40: Medical & Healthcare Summary
Medical & Healthcare Summary Continue strategic program development in the core, including new campus development and unmet areas of demand • Pipeline of online graduate programs in development • Evaluating additional joint degree programs with other institutions in M/H vertical Educate • Ability to
Slide 41: Financial Services
Financial Services Mehul Patel Group President, Professional Education
Slide 42: Financial Services At a Glance
At a Glance Becker f ocuses on the Accounting and ACAMS is the largest international EduPristine is an India-based training OnCourse Learning is a leading Financial Services vertical, including membership organization dedicated prov ider for international certifications prov ider of digital, regulat
Slide 43: Becker: Formula for Success
Becker: Formula for Success • Strengthen our core CPA value proposition – Enhance experience to better align with student expectations (e.g., CPA SkillMaster videos; unlimited access bundle) • Product and technology upgrades – Introducing adaptive learning experience and updated web, e-commerce, and
Slide 44: ACAMS: Fueling Growth Globally
ACAMS: Fueling Growth Globally A COMMUNITY OF 72,000 MEMBERS AND 65 CHAPTERS ACROSS 175 COUNTRIES SERVED BY 15 OFFICES GLOBALLY AND CERTIFICATION AVAILABLE IN 11 LANGUAGES Head offices Regional sales offices ©2019 Adtalem Global Education Inc. All rights reserv ed. 44
Slide 45: ACAMS: Fueling Growth Globally
ACAMS: Fueling Growth Globally • Continued international expansion – ~70% of addressable AML market opportunity is outside of U.S. – Asia Pac, Europe, and LatAm are fastest growing regions within ACAMS • Grow membership and conferences – Enhancing value proposition for recurring membership revenue m
Slide 46: Representative Partners and Technology Enablers to Accelerate Vertical Priorities
Representative Partners and Technology Enablers to Accelerate Vertical Priorities • Build a high-performance organization – Diverse leadership team with global experience and relevant company/industry backgrounds • Optimize operating efficiency and effectiveness – Continued technology enhancements t
Slide 47: Financial Services Summary
Financial Services Summary • Consider markets where there is supply/demand imbalance and also where the reputation and awareness of FS brands provides potential for partnerships • Consider degree alternative opportunities – particularly in international markets Educate • Aggressively grow our core b
Slide 48: Business & Law
Business & Law Thiago Sayão Group President, Business & Law
Slide 49: Business & Law
Business & Law Professional Education brands At a Glance • Reach: 110,000 students are spread across 14 institutions, 20 campus locations and 187 learning centers • Academic strength: B&L institutions have top academic standards and attractive national rankings • Strong brands: Ibmec and Damásio are
Slide 50: Competitive Differentiators Allow Us to Compete in a Changing Macroeconomic Environment
Competitive Differentiators Allow Us to Compete in a Changing Macroeconomic Environment • B&L institutions offer undergraduate, graduate, test prep, and professional education programs Diversified across a wide span of fields (including Business, Engineering, and Law) and throughout all Portfolio th
Slide 51: Capital Growth Opportunities/Market Dynamics
Capital Growth Opportunities/Market Dynamics Unmet Demand for Formal, Distance Learning’s Significant Demand for Prep Degree-Granting Programs Growing Market and Certification Program • Private sector accounts for 75% • The recent deregulation in the • Medical residency segment has of total enrollme
Slide 52: Business & Law Summary
Business & Law Summary • Increase enrollments by using innovative admission processes • Keep strong NPS and persistence levels Ibmec São Paulo • Increase B2B sales and build partnerships to deliver new courses and programs • Continue to grow dual degree/exchange partnership programs (e.g., Sorbonne
Slide 53: Academic Panel
Academic Panel Maira Habimorad Sr. Academic and Innovation Director Mehul Patel Group President, Financial Services Dr. Karen Cox President, Chamberlain University Dr. William Owen Dean and Chancellor of Ross University School of Medicine (RUSM)
Slide 54: Financial Overview
Financial Overview Patrick Unzicker Chief Financial Officer
Slide 55: Adtalem Is Well-Positioned to Drive Shareholder Value as a Workforce Solutions Provider
Adtalem Is Well-Positioned to Drive Shareholder Value as a Workforce Solutions Provider • Strong free cash flow generation and solid financial position supports workforce solution strategy and shareholder return • Strategy enhances Adtalem’s inherent operating leverage – Highly profitable incrementa
Slide 56: Financially Diversified
Financially Diversified Financial Overview 1, 2 FY19E Revenue Mix FY18 Funding Sources By Operating Segment ($ Millions) 18% 13% 47% 46% 68% 1,208 1,231 1,237 6% 16.6% 17.3% 17.6% 1% 201 213 218 Medical & Healthcare Financial Services US Federal Assistance (e.g., Title IV) Business & Law FY17 FY18 F
Slide 57: Segment Outlook: Medical & Healthcare
Segment Outlook: Medical & Healthcare Financial Summary Highlights • Leverage and expand B2B relationships across the segment ’15-’19E ’19E-’23E to support new workforce solutions provider positioning FY15 FY19E CAGR CAGR • Continued supply/demand imbalances expected to drive Revenue $701M $852M 5.0
Slide 58: Segment Outlook: Financial Services
Segment Outlook: Financial Services Financial Summary Highlights • ACAMS growth will be driven by increased penetration ’15-’19E ’19E-’23E in the U.S. and international expansion FY15 FY19E CAGR CAGR • ACAMS Certified Global Sanctions Specialist (CGSS) Revenue $100M $163M 13.1% 10-12% product launch
Slide 59: Segment Outlook: Business & Law
Segment Outlook: Business & Law Financial Summary Highlights • Weakness on foreign currency exchange and slower than ’15-’19E ’19E-’23E anticipated economic recovery continue to drive near-term FY15 FY19E CAGR CAGR headwinds. FY20 revenue is projected to be flat Revenue $159M $226M 9.2% 3-5% • Prici
Slide 60: Long Term Outlook
Long Term Outlook Key Metrics FY20E vs FY19E FY19-23E Revenue 3-5% 4-6% CAGR EBITDA 3-5% 9-11% CAGR Tax Rates 17-18% 18-22% CapEx/Revenue 3-4% 3-4% ROIC 9-10% 11-13% EPS 7-8% 12-14% CAGR ©2019 Adtalem Global Education Inc. All rights reserv ed. 60
Slide 61: Revenue and EBITDA Bridges
Revenue and EBITDA Bridges Adtalem Revenue Bridge1 Adtalem EBITDABridge1 ($ Millions) ($ Millions) 500 1,700 50- 1,580- 85- 60 1,650 1,600 105 450 10- 380- 215- 45- 20 440 1,500 235 400 60 65- 1,400 350 85 1,300 1,237 300 1,200 268 1,100 250 1,000 200 FY19E Medical & Financial Business & FY23E FY19E
Slide 62: In the Planning Horizon We Expect to Generate $1.5B in Cash Flow from Operations
In the Planning Horizon We Expect to Generate $1.5B in Cash Flow from Operations From FY14-18: $1.5 $1.5 From FY19-23: B 13% B • CapEx invested in growth 32% • CapEx investment areas (Chamberlain, Med 22% moderates and focuses schools, and ATB) on Medical & Healthcare • Deployed approximately 41% 43
Slide 63: Closing
Closing Lisa Wardell President and Chief Executive Officer
Slide 64: Compelling Investment Thesis
Compelling Investment Thesis Leading positions with competitive Mission-based organization differentiated products in attractive, focused on serving student growing markets and employer partners Substantial organic revenue Streamlined and focused business/ growth and margin expansion enhanced long-t
Slide 65: Q&A
ADTALEM GLOBAL EDUCATION Q&A
Slide 66: Appendix
ADTALEM GLOBAL EDUCATION Appendix
Slide 67: Non-GAAP Financial Information
Appendix Non-GAAP Financial Information The following table reconciles Adtalem Global Education’s (“Adtalem”) operating income as reported under U.S. Generally Accep ted Accounting Principles (“GAAP”) to the non-GAAP measure of Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”
Slide 68: Investor Day
ADTALEM GLOBAL EDUCATION Investor Day May 13, 2019