Covista Inc. · NYSE:CVSA
Covista — Adtalem Global Education — Investor Day (May 2017)
105 slides from Covista's investor day presentation, May 24, 2017
Slide 1: Welcome 2017 Investor Day
Welcome 2017 Investor DayMay 24, 2017
Slide 2: Safe Harbor
Safe Harbor Certain statements contained in this presentation concerning the future performance of Adtalem Global Education Inc. (“Adtalem”), including those statements concerning Adtalem’s expectations or plans, may constitute forward-looking statements subject to the Safe Harbor Provision of the P
Slide 3: Welcome 2017 Investor Day
Welcome 2017 Investor DayMay 24, 2017
Slide 4: Enterprise Strategy
Enterprise Strategy Lisa WardellPresident and CEO
Slide 5: Over the Past Year We Have Made Solid Progress on Our Four Key Priorities
Over the Past Year We Have Made Solid Progress on Our Four Key Priorities 1 Heighten the culture of student-centric focus and academic excellence as positioning for all Adtalem institutions Transform the organization to stabilize revenue and grow operating income and EPS Leverage Adtalem synergies a
Slide 6: Rebrand Project
Rebrand Project Fernando LauChief Marketing Officer
Slide 7: Rebrand Project Objective
Rebrand Project Objective Create a new name for the organization to represent all institutions in the group, and to: Establish a unique and differentiated position in higher education marketReinforce purpose-driven values Create an image that is solid, scalable and stableEngage with our investors, p
Slide 8: Rebrand Project: NYSE ticker ATGE
Rebrand Project NYSE ticker: ATGEWebsite domain: www.adtalem.com 8
Slide 9: Rebrand Project: Meaning of Adtalem
Rebrand Project Adtalem means “To Empower” in Latin and is pronounced “ad TAL em.”The new name is aligned with our mission of empowering our students to achieve their goals, find success, and contribute to the global communityThe graphic identity provides the prestige and stability of a parent corpo
Slide 10: Rebrand Project
Project time4 months Colleagues participation2,196 $5,000Prize Verified+350names +200 logosCreated Internal contest2 weeks Project team43colleagues 2 finalNames USD$700KTotal budget estimate Names suggested5,579 Rebrand Project 10
Slide 11: Growth Will Come from Three Primary Verticals
Growth Will Come from Three Primary Verticals Medical andHealthcare ProfessionalEducation Technology andBusiness 11
Slide 12: Growth Will Come From Three Primary Verticals: Medical and Healthcare
Growth Will Come From Three Primary Verticals Student demand for medical education continues to outstrip supply; between 2011 and 2016, US MD seats grew by 9.4%, while MD applications grew by 20.8% With more than 500,000 RNs anticipated to retire by 2022, the US Bureau of Labor Statistics projects 1
Slide 13: Growth Will Come from Three Primary Verticals: Professional Education
Growth Will Come from Three Primary Verticals According to the AICPA, 1 out of 3 accounting graduates becomes a CPA; opportunity exists to grow the CPA credential with international studentsThe potential US market for continuing professional education for CPAs is approximately $700MThe potential glo
Slide 14: Growth Will Come from Three Primary Verticals: Technology and Business
Growth Will Come from Three Primary Verticals Only 11% of business leaders believe college graduates are prepared for the workforceAccording to a recent Eduventures study, nearly 31% of prospective adult students expressed a preference for non-degree options, an increase of 10 percentage points sinc
Slide 15: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 16: Fireside Chat
Fireside Chat Lisa WardellDennis KellerRonald TaylorModerated by: Lisa Sodeika
Slide 17: Keller Graduate School of Management
MBAO M H Rem O MP »M. Keller is designed around the needs of working adults like Shelley Gibb and Greg Sanchez, pictured above. Keller students choose the coursework that best fits their needs as well as the terms and evenings that best fit their schedule.
Slide 18: And, They Teach Very Well
AND, THEY TEACH VERY WELL. Our professors are effective in the classroom for sev eral logical reasons. They are experts in their fields. They know what is important and they bring reallife examples to the classroom. When you get right down to it, much of management is teaching and communication They
Slide 19: DeVry students earn diplomas and degrees
DeVRY students earn diplomas as electronics technicians, or associate or baccalaureate degrees in electronics, engineering technology or computer science for business. One measure of DeVRY’s success is the positions for which DeVRY graduates are hired.
Slide 20: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 21: Medical and Healthcare Segment
Medical and Healthcare Segment
Slide 22: Susan Groenwald, President
Susan Groenwald, PhD, RN, ANEF, FAANPresident
Slide 23: Chamberlain University Overview
Chamberlain University Overview At Chamberlain, we believe if we take extraordinary care of our students, we will graduate extraordinary health professionals who will transform healthcare worldwideChamberlain offers undergraduate degrees (BSN, RN to BSN) and graduate degrees (MSN, MPH, DNP)Chamberla
Slide 24: Chamberlain Campus Footprint
Chamberlain Campus Footprint Today Chamberlain Has 20 Campus Locations in 14 States 24
Slide 25: Market Assessment: Market Demand
Market Assessment: Market Demand Projections are that nursing degrees will continue to be in high demand due to a nursing shortage and growth in the overall healthcare market Bureau of Labor Statistics (BLS) projects demand for 3.2M nurses by 2022, a 13.5% increase from 2015 census; more than 1M nur
Slide 26: Market Assessment: Program-level Detail
Market Assessment: Program-level Detail Pre-licensure BSN continues to have varying levels of competitiveness based on local market dynamicsTotal market demand expected to continue in the near term due to increased demand for nurses at the BSN degree levelCompetitor programs in existing markets are
Slide 27: Investment Thesis
Investment Thesis Key Growth Drivers Our Positioning Continued supply/demand imbalance Nursing projected to be the second-largest growth occupation through 2024 (BLS)Chamberlain is well positioned across each nursing degree level and across key markets Focus on quality, outcomes and student satisfac
Slide 28: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 29: Dr. Heidi Chumley, Executive Dean
Dr. Heidi Chumley, MD, MBAExecutive Dean, Chief Academic Officer
Slide 30: American University of the Caribbean School of Medicine Overview
American University of the Caribbean School of Medicine Overview An international medical school preparing aspiring physicians to enter residency programs and practice medicine, predominantly in the United States Located in St. Maarten, American University of the Caribbean School of Medicine is a te
Slide 31: Historical Market Assessment: 1970s to Mid-2000s
Historical Market Assessment: 1970s to Mid-2000s American University of the Caribbean School of Medicine (along with Ross University School of Medicine) enjoyed a favorable competitive environment as one of only three Caribbean medical schools whose students could access Title IV fundingThe US neede
Slide 32: Current Market Assessment: Mid-2000s to Present
Current Market Assessment: Mid-2000s to Present Caribbean market evolves with increasing competitionPhysician shortage became front page news and US MD schools were called to expand by 30%DO schools began to proliferate and the American Osteopathic Association launched public relations campaign to d
Slide 33: Investment Thesis
Investment Thesis Key Growth Drivers Our Positioning Demand for US medical school still outpaces supply53,209 applicants for 21,025 US allopathic seats in 2016Over 10 years, US seats have grown 18.3%, while applicants for those seats have grown 25.7% Rising international demand from Europe, Middle E
Slide 34: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 35: Dr. William Owen, Dean and Chancellor
Dr. William Owen, MD, FACPDean and Chancellor
Slide 36: Ross University School of Medicine Key Facts
Ross University School of Medicine Key Facts An international medical school preparing graduates to enter residency programs and practice medicine, predominantly in the United States International school accredited by Dominica Medical Board; US curriculumFirst 16-20 months of basic sciences taught i
Slide 37: RUSM Team Views Medical Education as a Form of Social Justice
RUSM Team Views Medical Education as a Form of Social Justice We are dispelling the myth that at RUSM…We have low admission standardsTuition costs are higher than in not-for-profit US medical schoolsOur students receive an academically inferior educationTheir attainment of postgraduate training is c
Slide 38: First Time Pass Rates for Step Are Similar to US Medical Schools
First Time Pass Rates for Step 1 Are Similar to US Medical Schools 38
Slide 39: Residency Attainments Are High
Residency Attainments Are High 39
Slide 40: RUSM Excels in Meeting Societal Expectations
RUSM Excels in Meeting Societal Expectations How to measure:MD workforce providing care in under-resourced communitiesDelivering primary care > specialty careTraining a demographically representative workforce of doctors What are the societal expectations of US medical schools? 40
Slide 41: RUSM Graduates Are Diverse Like America
RUSM Graduates Are Diverse Like America Only 4% of America’s doctors are African-AmericanSmaller number than >35 years ago58.5% of RUSM graduates practice primary care89.2% of RUSM graduates serve in low income areas 41
Slide 42: Investment Thesis
Investment Thesis Key Growth Drivers Our Positioning Demand for US medical school still outpaces supply53,209 applicants for 21,025 US allopathic seats in 2016Over 10 years, US seats have grown 18.3%, while applicants for those seats have grown 25.7% Increasing brand awareness in US from strong RUSM
Slide 43: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 44: Dr. Sean Callanan, Dean
Dr. Sean Callanan, MVB, MRCVS, CertVR,PhD, DipECVP, FRCPathDean
Slide 45: Ross University School of Veterinary Medicine Overview
Ross University School of Veterinary Medicine Overview International veterinary school providing a doctoral program in veterinary medicine (DVM), as well as several other postgraduate programs.Accredited by American Veterinary Medical Association (AVMA)Attracts predominantly US and Canadian students
Slide 46: Market Assessment: Demand for Veterinarians
Market Assessment: Demand for Veterinarians Global Animal Health market is expected to grow at a CAGR of 5.4% from 2014-2025Driven by a significant rise in zoonotic and food-borne diseasesAdditionally, the global population is expected to expand to 9.7B by 2050; with ~795M projected to be undernouri
Slide 47: Market Assessment: Demand for Veterinary Education
Market Assessment: Demand for Veterinary Education While the number of Veterinary Medical College Application Service applications has increased 12% over the last five years, the number of available seats has only increased 0.09% over the same period, generating a supply/demand imbalanceThe ratio of
Slide 48: Investment Thesis
Investment Thesis Ross University School of Veterinary Medicine is well positioned to serve the market’s continued supply/demand imbalance, as well as achieve growth through its differentiated offering and international recruiting efforts. Key Growth Drivers Our Positioning Continued supply/demand i
Slide 49: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 50: Innovation: Initiatives Across the Vertical to Improve Teaching and Learning
Innovation: Initiatives Are Underway Across the Vertical to Improve How We Teach and How Our Students Learn Use of gamification within pharmacology improves content retention and learning outcomesPredictive analytics track student performance through the curriculum and assign a “propensity score,” w
Slide 51: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 52: US Traditional Postsecondary Segment
US Traditional Postsecondary Segment
Slide 53: Donna Loraine, President
Donna Loraine, PhDPresident
Slide 54: Carrington College Overview
Carrington College Overview Carrington College is a premier provider of career-focused postsecondary education, graduating exemplary professionals in the medical, dental, veterinary, and nursing fieldsCelebrating its 50th anniversary as the startingpoint for healthcare careersInstitutionally accredi
Slide 55: Campus Footprint
Campus Footprint Carrington’s regional footprint is supported by online capabilitiesCarrington has 18 campuses and 3 learning centers located in 8 states Mesquite, TX Albuquerque, NM Tucson, AZ Phoenix, AZ Pomona, CA Las Vegas,NV Reno, NV Boise, ID Portland, OR Spokane, WA Campuses Learning Center L
Slide 56: Market Assessment: Program Offerings
Market Assessment: Program Offerings Allied health programs are in high demandAccording to The Association of Schools of Allied Health Professionals (ASAHP), allied health professionals account for nearly 60 percent of the entire healthcare workforce By 2024, the total number of jobs in all healthca
Slide 57: Market Assessment: Market Dynamics
Market Assessment: Market Dynamics Population growth and shifting competitive landscape favor Carrington College Populations in the key western markets we serve are growing; according to the US Census Bureau, of the 10 fastest growing states in terms of population in 2016, six of those states are in
Slide 58: Investment Thesis
Investment Thesis Carrington College serves an important and growing allied health market, offering in-demand programswith strong student outcomes in locations with favorable market dynamics and opportunities for growth. Key Growth Drivers Our Positioning Good standing with regional and program accr
Slide 59: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 60: DeVry University - Robert Paul, President
\Y DeVry University Robert Paul President ADTALEM GLOBAL EDUCATION
Slide 61: DeVry University Overview
DeVry University Overview Throughout its 86-year history, DeVry University has fostered student learning through quality, career-oriented educationLeading brands: Regionally accredited by the Higher Learning CommissionOffers Certificate, Associate, Bachelor’s and Masters programsTwo fully launched p
Slide 62: Campus Footprint
Campus Footprint DeVry University’s campus footprint is supported by online capabilitiesDeVry University has 59 campuses and learning centers across 18 statesDeVry University’s enrollments are diversified across six colleges OnlineWhereverYou Are 62
Slide 63: Market Assessment: Tech Jobs Driving Growth
Market Assessment Tech jobs are driving growth and tech skills are required in majority of jobs320K new tech jobs forecasted by 2020 (10-12% growth), mostly Bachelor’s degree or higher 50%+ of all jobs today require technology skills Job Market Increasing employer need to acquire, develop and retain
Slide 64: Market Assessment: Competition
Market Assessment Competition Getting tougher and diversifyingPublic sector continues to aggressively pursue new sources of revenue (adult learners, online); 25%+ now offer “extensive” online programs and only 8% offer no online programsModel disruptors are meeting changing needs with non-traditiona
Slide 65: Investment Thesis
Investment Thesis DeVry University is well positioned to capitalize on the emerging prominence of technology in business, and to deliverworkforce solutions to employers and relevant instruction to students in order to supply high-demand job-ready skills. Our Positioning Our Positioning DeVry Univers
Slide 66: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 67: Innovation: Initiatives to Improve How We Teach and How Students Learn
Innovation: Initiatives Are Underway to ImproveHow We Teach and How Our Students Learn Pre-loaded iPads ensure all students are “connected” and can access e-books easilyStudent service innovation features an online application combined with a new 360◦ virtual campus tour, which allows prospective st
Slide 68: Student Care: Big Data Efforts
Student Care: Big Data EffortsDeVry University Is Evolving from Historical Data Analysis to Prescriptive Analytics REPORTINGWhat happened? ANALYSISWhy it happened MONITORINGWhat’s happening now PREDICTIONWhat might happen? COMPLEXITY PREDICTIVE ANALYTICS BUSINESS INTELLIGENCE PRESCRIPTIVE ANALYTICS
Slide 69: Student Care: A Network of Tools
Student Care: Big Data EffortsA Network of Tools to Design Differentiated Services and Focus Resources on Biggest Impact Refined digital marketing targetsSegmented communication strategyInformed nurturing strategies Marketing Inquiry segmentation for efficiency and effectivenessDesign of stitch-in a
Slide 70: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 71: Technology and Business Segment
Technology and Business Segment
Slide 72: Carlos Filgueiras, Group President
Carlos FilgueirasGroup President, Technology and Business
Slide 73: Adtalem Educacional do Brasil Overview
Adtalem Educacional do Brasil Overview The Adtalem Educacional do Brasil (ATB) organization operates three national brands within the Brazilian private higher education market National brands: ATB institutions offer undergraduate, graduate, test prep, and professional education programs across a wid
Slide 74: Brands and Campus Footprint
Brands and Campus Footprint ATB Enrollment Breakdown High QualityUS$ 2K to US$ 7K per yearClass B- or C Mass MarketUS$ 500 to 2K per yearClass C- or D PremiumUS$ 7K to US$ 15K per yearClass A or B+ Tuition Cost 0.5 1.0 4.5 Millions of Students in Brazilian Private Higher Education Brazilian Private
Slide 75: Market Assessment: Brazilian Economy and Funding
Market Assessment: Brazilian Economy and Funding The ongoing Brazilian economic downturn has put pressure on enrollments: for the first time since 2009, new student enrollments declined (-6.1%) vs. PY. Among private institutions, new student enrollments declined -8.8% vs. PY (-10.0% onsite and -5.7%
Slide 76: Market Assessment: Institution Detail
Market Assessment: Institution Detail Founded in 1970, Ibmec is one of most traditional and respected higher education providers in BrazilMost well-known for its business school, and responsible for the first finance MBA in the country, Ibmec offers programs with the highest academics standardsIbmec
Slide 77: Investment Thesis
Investment Thesis Adtalem Brasil institutions provide academically strong, in-demand programs acrossBrazil; innovation and a history of successful integration present continued opportunities for growth. Key Growth Drivers Our Positioning Strong need for higher education Well positioned to take advan
Slide 78: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 79: Innovation: Initiatives in Brazil to Improve Teaching and Learning
Innovation: Initiatives Are Underway in Brazil to Improve How We Teach and How Our Students Learn G5 curriculum design improves/optimizes scheduling, while also:Reducing course selection complexity for the studentLimiting operational burden for the institution Simplifying assessments by the Ministry
Slide 80: Our Proprietary Integrees LMS Has Improved Faculty Collaboration in Brazil
Collaborative repository Lecture Quiz Realtime feedback Big data repository Our Proprietary Integrees LMS Has Significantly Improved Faculty Collaboration in Brazil and Provided a New Avenue for Real-time Feedback from Students 1 2 3 80
Slide 81: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 82: Professional Education
ADTALEM GLOBAL EDUCATION Professional Education
Slide 83: John Roselli and Tim McClinton
John RoselliPresident, Becker Professional Education Tim McClintonManaging Director, ACAMS
Slide 84: Professional Education Overview
Professional Education’s mission is to empower people around the world to advance their careers through a lifelong partnership of superior professional education Serving accountants, medical students, and financial service professionalsStrong brand and relationships within accounting and anti-money
Slide 85: Current Professional Education Verticals
Current Professional Education Verticals CPA Certified Public Accountant exam prepOnline and live Market leader CPE Continuing accounting educationWebcasts, online, and live Fragmented market ACCA Chartered accountancy exam prepUK-based global accounting certificationConcentrated market USMLE US med
Slide 86: Market Assessment: CPA and CPE
Market Assessment: CPA and CPE Two-thirds of CPA firm partners are over the age of 56 with significant numbers retiring by 2022Accounting Bachelor’s and Masters programs continue to be two of the fastest growing degree programsInternational CPA candidates continue to growCompetitive pricing sensitiv
Slide 87: Market Assessment: ACCA, Healthcare and ACAMS
Market Assessment: ACCA, Healthcare and ACAMS Growth opportunities in UK through partnerships with tuition providersPredominantly live instruction marketSignificant growth exists with international USMLE candidatesAbility to develop longer term relationships with medical schools~$2B global market op
Slide 88: Investment Thesis: ACAMS
Investment Thesis: ACAMS Our Positioning Continue growing our core business A leading standard for AML certificationSignificant headroom for growth (~5% market penetration in US) Core growth generates flow-through revenue from conferences, news and training Accelerate international expansion ~70% of
Slide 89: Investment Thesis: Becker Accounting and Healthcare
Investment Thesis: Becker Accounting and Healthcare Our Positioning Extend global leadership position in CPA review Market leadership position with strong brandTop 100 accounting firms currently use Becker Best-in-class student outcomes; 90% of top CPA Exam scorers use Becker Key Growth Drivers Our
Slide 90: Innovation Initiatives Across the Vertical
Innovation Initiatives Are Underway Across the Vertical to Improve How We Teach and How Our Students Learn ACAMS Updated Certified Anti-Money Laundering Specialist (CAMS) exam to reflect the requirements of today’s financial crime practitionersTailored LMS to improve member experience, both domestic
Slide 91: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 92: Finance/Capital Allocation
Finance/Capital Allocation
Slide 93: Financial Update
Financial Update Patrick UnzickerChief Financial Officer
Slide 94: Improving the Financial Performance of the Organization
Financial UpdateImproving the Financial Performance of the Organization Cost structure optimizationHome office expenses reduced 6.8% since this time last yearCost reductions and efficiency improvements across the portfolioRestarting organic revenue growthImproved processes and leadership changes exp
Slide 95: Financial Update: Investment Thesis
Financial UpdateInvestment Thesis Large addressable markets with attractive supply/demand imbalancesMost diversified programmatic offerings in the sector offered through institutions with strong brand awareness and robust accreditations Experienced management teamStrong cash flow generation and soli
Slide 96: Segment Analysis: Medical and Healthcare
Financial UpdateSegment Analysis: Medical and Healthcare Highlights:Continued supply/demand imbalances expected to drive ongoing segment revenue growth, with lowercapital requirementsWe expect organic growth in the medical and nursing schools driven by existing and new programs (e.g., Masters of Pub
Slide 97: Segment Analysis: Professional Education
Financial UpdateSegment Analysis: Professional Education Highlights:ACAMS growth will be driven by accelerated international expansion and new product launchesBecker CPA remains market leaderStrong growth expected in CPE and HealthcareCPA growth slowing but will be driven by an increase in online an
Slide 98: Segment Analysis: Technology and Business
Financial UpdateSegment Analysis: Technology and Business Highlights:Segment is currently comprised of Adtalem Educacional do Brasil (ATB) operationsNew student growth is expected across the ATB institutionsInvestments to date have focused on both organic growth and acquisitionsSegment cash flow gen
Slide 99: Segment Analysis: US Postsecondary
Financial UpdateSegment Analysis: US Postsecondary Highlights:Segment is currently comprised of Adtalem’s Traditional US Postsecondary institutions: DVU and CarringtonNear-term focus remains offsetting revenue declines with cost-cutting measures, while redesigning program and service offeringsSegmen
Slide 100: FY21E Financial Targets
Financial UpdateFY21E Financial Targets Key Metrics FY17-21E Strategic Plan Revenue 4% - 6% CAGR EBITDA 10% - 13% CAGR Tax Rates 20% - 28% CapEx/Revenue Target < 5% ROIC 12-14% 100
Slide 101: Revenue and EBITDA Bridge
Financial UpdateRevenue and EBITDA Bridge $1.8B $2.2-2.4B $200-250M $150-200M $150-200M $10-20M Adtalem Revenue Bridge Adtalem EBITDA1 Bridge $288M $55-65M $65-75M $50-60M $40-50M $450-550M 1Excludes special charges 101
Slide 102: Capital Allocation
Financial UpdateCapital Allocation Programmatic expansion and new product development across the portfolioChamberlain campus growthExpansion of Ibmec within Adtalem Educacional do Brasil Strategic plan CapEx projected at 4-5% of revenues Invest in Our Institutions Make Strategic Acquisitions Return
Slide 103: Thank you for coming!
ADTALEM GLOBAL EDUCATION Thank you for coming!
Slide 104: Appendix
ADTALEM GLOBAL EDUCATION Appendix
Slide 105: Use of Non-GAAP Financial Information and Reconciliation Schedule
Use of Non-GAAP Financial Information and Reconciliation Schedule The following table reconciles Adtalem Global Education’s (“Adtalem”) operating income as reported under U.S. Generally Accepted Accounting Principles (“GAAP”) to the non-GAAP measure of Earnings before Interest, Taxes, Depreciation a