Covista Inc. · NYSE:CVSA
Covista — Adtalem Global Education — Investor Day (May 2019)
76 slides from Covista's investor day presentation, May 13, 2019
Slide 1: Investor Day May 13, 2019
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
12:00 Welcome John Kristoff12:05 Adtalem Today: Poised for Growth Lisa Wardell12:30 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 Business & La
Slide 4: Adtalem Today: Poised for Growth
Adtalem Today: Poised for Growth Lisa WardellPresident 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 CollegeCompleted permanent relocation of Ross University School of Medicine to BarbadosReturned AUC to St. Maarten, with a new permanent satellite campus in the U.K.Introduced
Slide 6: Compelling Investment Thesis
Strong cash flow generation and solid financial position with focus on shareholder returns Experienced, global management team Mission-based organization focused on serving student and employer partners Streamlined and focused business/ enhanced long-term strategy Compelling Investment Thesis Substa
Slide 7: Robust Portfolio with Diverse Revenue Mix and Revenue Growth Opportunities
Robust Portfolio with Diverse Revenue Mix andRevenue Growth Opportunities Medical & Healthcare Financial Services Business & Law
Slide 8: Leading Market Positions and Growing Opportunities
Leading positions in attractive, growing markets with compelling organic revenue growth opportunities. One of the largest Medical and Healthcare tertiary educationproviders globally ATB ranked No. 1 institution in 8 of 12cities where wecompete in Brazil No. 1 or 2 brandin all professional services o
Slide 9: Mission-Based Organization Serving Students and Employer Partners
Mission-Based Organization Serving Students and Employer Partners Our Vision Is to Empower ESG Strategy Enhance communities in which we teach, learn and work by operating sustainably, maintaining responsible governance standards and supporting our global communityOngoing efforts include documenting
Slide 10: Streamlined Business and Enhanced Long-Term Enterprise Strategy
Embraces education mission and broadens our customer baseBuilds upon existing strengths – brands, product demand, functional synergies – to drive value creation across the portfolioEnhances solution set and creates more value for stakeholders, especially employers looking for talent acquisition, dev
Slide 11: Organic Growth and Margin Expansion Opportunities
Increasing capacity in medical and veterinary schools with university and employer partnerships, satellite campus, new programsAdding in-demand graduate programs at Chamberlain in nursing and health professions collegesDriving sales in financial services through product differentiation (Becker) and
Slide 12: 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 with continued focus on maintaining financial strength and flexibilityReduced cost of capital driven byrecent balance she
Slide 13: Experienced, Global Management Team
Experienced, Global Management Team Lisa Wardell was appointed President and CEO in 2016 and has been a member of Adtalem’s Board of Directors since 2008Prior to her current position with Adtalem, Wardell was Executive Vice President and Chief Operating Officer for The RLJ Companies, a diversified h
Slide 14: Adtalem Today Is Positioned Well for Tomorrow
Adtalem Today Is Positioned Well for Tomorrow. We have successfullypositioned the businessfor an exciting transformationto deliver accelerated growthand an enhanced portfolio.
Slide 15: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 16: The Workforce Solutions Provider
The Workforce Solutions Provider Stephen BeardChief Operating Officer
Slide 17: Recent Divestitures Permit Adtalem to Leverage Its Strengths and Pivot with the Market
Medical & Healthcare Financial Services Business & Law U.S. Post-Secondary Recent Divestitures Permit Adtalem to Leverage Its Strengths and Pivot with the Market DIVESTITURES
Slide 18: The Education Landscape Is Shifting; Adtalem Is Evolving to Meet New Demands
ATGE’s traditional business model is impactedby the evolving learning landscape, driven by three key trends… Higher Ed Institutions Facing Pressure to Improve Student ROI Tech and Business Model Innovations Boundaries Blurring Between Educators and Employers The Education Landscape Is Shifting; Adta
Slide 19: Adtalem Will Migrate from Portfolio Manager to Workforce Solutions Provider
Adtalem Will Migrate from Portfolio Manager to Workforce Solutions Provider Workforce Solutions Provider An enterprise strategy that delivers leading workforce solutions permitsAdtalem to serve our markets in a more competitive and comprehensive way. Responsive to positive market dynamics that deman
Slide 20: Workforce Solutions Value Chain
Educate Recruit & Select Prepare & Certify Train & Develop Workforce Solutions Value Chain Formal, degree-granting programsor equivalent Staffing offerings Industry-related test preparation and certification offerings Continuing and professional educationand training Graduate admissions exams, test
Slide 21: Streamlined Verticals
Streamlined Verticals Medical & Healthcare Financial Services Business & Law Our verticals will prioritize growth opportunities that serve current and prospective customers. And they will leverage opportunities for shared activities and transferrable capabilities.
Slide 22: Adtalem Will Expand Across the Workforce Solutions Value Chain
Adtalem Will Expand Across the Workforce Solutions Value Chain Medical & Healthcare Enterprise Driven B2B Partnerships Educate Recruit & Select Prepare & Certify Train & Develop Value Chain and Industry Verticals Educate Recruit & Select Prepare & Certify Train & Develop Educate Recruit & Select Pre
Slide 23: 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 Institutional Partnerships Academic Foundation Talent
Slide 24: Revitalized Model Improves Competitiveness, Accelerates Growth, and Drives Enterprise Value
Revitalized Model Improves Competitiveness, Accelerates Growth, and Drives Enterprise Value Synergies driven by shared activities and skills Responsive to positive market dynamics, linking education and workforce needs Focused portfolio with streamlined assets Expansion opportunities across geograph
Slide 25: Leverage Multiple Vehicles to Achieve Growth Goals
Leverage Multiple Vehicles to Achieve Growth Goals Consistently Profitable Topline Growth Exploiting the Synergies of the Streamlined Portfolio Differentiating Capabilities Accretive Inorganic Growth
Slide 26: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 27: Enterprise-Level Financial Strategy
Enterprise-Level Financial Strategy Lisa WardellPresident and Chief Executive Officer
Slide 28: Capital Allocation
Capital Allocation Invest in the core – institutions and companies Return capital to shareholders Make strategic acquisitions via disciplined approach Maintain financial strength and flexibility Continually Allocating Capital to Increase Enterprise Value While Maintaining Leverage Under 2x
Slide 29: M&A Criteria
ROIC and accretive enterprise valueAbility to scaleTalent/acquihireImpact on global reachSynergy opportunitiesPositioned within Workforce Solutions value chain Driving marginal revenue in the core through the thoughtful, disciplined andstrategic use of M&A to bridge gaps in the workforce solutions p
Slide 30: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 31: Medical and Healthcare
Medical and Healthcare Kathy Boden HollandGroup President, Medical & Healthcare Education
Slide 32: Medical & Healthcare At a Glance
Medical & Healthcare 38,000+ students and 86,000+ alumni from 5 medical and healthcare institutions 1,500+ clinical relationships with healthcare systems and nursing organizationsServing a diverse market/demographic of students in the medical and healthcare fields90% plus medical residency attainmen
Slide 33: Positioned to Capture Market Demand
Positioned to Capture Market Demand 1 Source: Bureau of Labor Statistics Occupational Outlook Handbook. 2Source: American Association of Medical Colleges, November 2017. 3 Source: https://revcycleintelligence.com/news/less-than-a-third-of-docs-owned-independent-practices-in-2018. NURSING MEDICAL VET
Slide 34: Chamberlain University
31,000+ students enrolled across all programsLargest Bachelor of Science in Nursing program in the U.S., offered at 22 campuses in 15 statesOnline post-licensure nursing and graduate programs represent two-thirds of student enrollment60,000 alumni nationwide; 1 in 36 working nurses is a Chamberlain
Slide 35: Chamberlain University Degree Programs and Options
On-site Online Chamberlain University Degree Programs & Options Chamberlain University Degree Programs and Options
Slide 36: Chamberlain Has Built and Scaled Market-Leading Programs
Chamberlain Has Built and Scaled Market-Leading ProgramsLeading to a Large and Influential Alumni Base #1 IN TOTAL ENROLLMENT#1 IN ENROLLMENT PRE-LICENSURE BACCALAUREATE NURSING#1 IN ENROLLMENT IN MSN-FNP PROGRAMS#2 IN ENROLLMENT IN RN TO BSN#2 IN ENROLLMENT IN MSN PROGRAMS#2 IN ENROLLMENT IN NON-CL
Slide 37: Chamberlain's New Campuses on Average Reach Profitability in Year 3
Chamberlain’s New Campuses on Average Reach Profitability in Year 3 CAGR = 13%
Slide 38: Healthcare Development Specialists and Institutional Relationships
60+ Healthcare Development Specialists with Collaborative Relationships at 920 Healthcare and Educational Institutions, Colleges and Associations
Slide 39: 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 growthAchieved record 90% residency attainment rate in 2019, with nearly 300 AUC graduates matching in 38 states and 24 specialtiesCampus in U.K., in partnership with University
Slide 40: Ross University School of Medicine
14,000+ALUMNI 60%PRIMARY CARE PRACTITIONERS 43%PRACTICE IN HC SHORTAGE AREA January 2019, approximately 1,500 basic sciences students relocated to Barbados; total current enrollment at RUSM is 3,000New academic center with state-of-the-art infrastructureStudent living and learning centerAchieved rec
Slide 41: Medical Education Readiness Program
65%+OF STUDENTS START AT ROSS/AUC 3,000+STUDENT COMPLETIONS 3START OPTIONS IN A YEAR Applicants are admitted to AUC and RUSM, pending successful completion of one semester MERP programDesigned for student success in medical school:Strong basic science foundation Cultivate good study skillsBuild stro
Slide 42: Ross University School of Veterinary Medicine
5,000+ALUMNI 10%OF BANFIELD DVMS ARE RUSVM GRADUATES 66%APPLICANTS VIA VMCAS AVMA accreditation fully-renewed through 2026Largest AVMA accredited school and alumni base of any veterinary schoolVet Prep Program, in a similar fashion to MERP, captures additional student demand and increases likelihood
Slide 43: Medical & Healthcare Summary
Train & Develop Educate Recruit & Select Continue strategic program development in the core, including new campus development and unmet areas of demandPipeline of online graduate programs in developmentEvaluating additional joint degree programs with other institutions in M/H verticalAbility to expa
Slide 44: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 45: Financial Services
Financial Services Mehul PatelGroup President, Professional Education
Slide 46: Financial Services At a Glance
46 Becker focuses on the Accounting and Financial Services vertical, including Accounting CPA and Accounting CPE. Becker is a market leader in CPA exam review, with a global presence in more than 50 countries ACAMS is the largest international membership organization dedicated to financial crime pre
Slide 47: Becker: Formula for Success
Strengthen our core CPA value propositionEnhance experience to better align with student expectations (e.g., CPA SkillMaster videos; unlimited access bundle)Product and technology upgradesIntroducing adaptive learning experience and updated web, e-commerce, and CRM capabilitiesExpand CPE and product
Slide 48: ACAMS: Fueling Growth Globally
ACAMS: Fueling Growth Globally Regional sales offices Head offices A COMMUNITY OF72,000 MEMBERSAND65 CHAPTERSACROSS175 COUNTRIESSERVED BY 15 OFFICES GLOBALLYAND CERTIFICATION AVAILABLE IN 11 LANGUAGES
Slide 49: 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 conferencesEnhancing value proposition for recurring membership revenue modelOpportunistically launching new conferen
Slide 50: Representative Partners and Technology Enablers to Accelerate Vertical Priorities
Build a high-performance organizationDiverse leadership team with global experience and relevant company/industry backgroundsOptimize operating efficiency and effectivenessContinued technology enhancements that help accelerate growth, improve delivery, and enhance experienceDrive marketing and sales
Slide 51: Financial Services Summary
Train & Develop Educate Prepare & Certify Consider markets where there is supply/demand imbalance and also where the reputation and awareness of FS brands provides potential for partnershipsConsider degree alternative opportunities – particularly in international markets Financial Services Summary A
Slide 52: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 53: Business & Law
Business & Law Thiago SayãoGroup President, Business & Law
Slide 54: Business & Law At a Glance
Wyden institutionsProfessional EducationLearning CentersIbmec Institutions Business & Law Reach: 110,000 students are spread across 14 institutions, 20 campus locations and 187 learning centersAcademic strength: B&L institutions have top academic standards and attractive national rankingsStrong bran
Slide 55: Competitive Differentiators Allow Us to Compete in a Changing Macroeconomic Environment
B&L institutions offer undergraduate, graduate, test prep, and professional education programs across a wide span of fields (including Business, Engineering, and Law) and throughout all three market tiers with several brands serving the top less price sensitive tiers Competitive Differentiators Allo
Slide 56: Growth Opportunities/Market Dynamics
Capital Growth Opportunities/Market Dynamics Significant Demand for Prepand Certification Program Medical residency segment has only 3 relevant players and 50k students/doctors able to take the exams annuallyBar exams receive 360k applications annually. This presents an opportunity to cross-sell and
Slide 57: Business & Law Summary
Business & Law Summary Increase enrollments by using innovative admission processesKeep strong NPS and persistence levelsIncrease B2B sales and build partnerships to deliver new courses and programsContinue to grow dual degree/exchange partnership programs (e.g., Sorbonne University, London School o
Slide 58: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 59: Academic Panel
Academic Panel Mehul PatelGroup President, Financial Services Dr. William OwenDean and Chancellor of Ross University School of Medicine (RUSM) Dr. Karen CoxPresident, Chamberlain University Maira HabimoradSr. Academic and Innovation Director
Slide 60: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 61: Financial Overview
Financial Overview Patrick UnzickerChief Financial Officer
Slide 62: 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 returnStrategy enhances Adtalem’s inherent operating leverageHighly profitable incremental enrollment in fixed-cost, campus-based model Strong and consistent margins from greater percen
Slide 63: Financially Diversified
Financially Diversified FY19E Revenue Mix FY18 Funding Sources Financial Overview1, 2 1 Excludes special charges and discontinued operations.2 FY19 estimate is based on midpoint of outlook range provided in 3QFY19 results release. By Operating Segment By Institution % Margin 17.3% 17.6% 16.6% ($ Mil
Slide 64: Segment Outlook: Medical & Healthcare
Segment Outlook: Medical & Healthcare Leverage and expand B2B relationships across the segment to support new workforce solutions provider positioningContinued supply/demand imbalances expected to drive ongoing segment revenue growth; our right to win market share supported by rising Academic outcom
Slide 65: Segment Outlook: Financial Services
FY15 FY19E ’15-’19ECAGR ’19E-’23ECAGR Revenue $100M $163M 13.1% 10-12% Operating Margin 24.1% 19.3% – Increasing EBITDA $29M $38M 7.4% 21-23% CapEx $1M $2M – Stable Segment Outlook: Financial Services ACAMS growth will be driven by increased penetration in the U.S. and international expansion ACAMS
Slide 66: Segment Outlook: Business & Law
FY15 FY19E ’15-’19ECAGR ’19E-’23ECAGR Revenue $159M $226M 9.2% 3-5% Operating Margin 9.3% 10.2% – Increasing EBITDA $23M $34M 10.3% 7-9% CapEx $13M $10M – Decreasing Segment Outlook: Business & Law Weakness on foreign currency exchange and slower than anticipated economic recovery continue to drive
Slide 67: Long Term Outlook
Long Term Outlook Key Metrics FY20E vs FY19E FY19-23E Revenue 3-5% 4-6% CAGR EBITDA 3-5% 9-11% CAGR Tax Rates 17-18% 18-22% CapEx/Revenue 3-4% 3-4% ROIC 9-10% 11-13% EPS 7-8% 12-14% CAGR
Slide 68: Revenue and EBITDA Bridges
Revenue and EBITDA Bridges Adtalem Revenue Bridge1 Adtalem EBITDA Bridge1 1Excludes special charges and discontinued operations. ($ Millions) 85-105 50-60 1,580-1,650 380-440 ($ Millions)
Slide 69: Expected $1.5B in Cash Flow from Operations in the Planning Horizon
In the Planning Horizon We Expect to Generate $1.5B in Cash Flow from Operations $1.5B $1.5B CapEx invested in growth areas (Chamberlain, Med schools, and ATB)Deployed approximately $607M in Brazil and professional education acquisitionsRepurchased $244M of sharesReturned $80M through dividends CapE
Slide 70: Adtalem Global Education
ADTALEM GLOBAL EDUCATION
Slide 71: Closing
Closing Lisa WardellPresident and Chief Executive Officer
Slide 72: Compelling Investment Thesis
Strong cash flow generation and solid financial position with focus on shareholder returns Experienced, global management team Mission-based organization focused on serving student and employer partners Streamlined and focused business/ enhanced long-term strategy Compelling Investment Thesis Substa
Slide 73: Q&A
ADTALEM GLOBAL EDUCATION Q&A
Slide 74: Appendix
ADTALEM GLOBAL EDUCATION Appendix
Slide 75: Reconciliation of Operating Income to EBITDA
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 and Amortization (“EBITDA”). Earnings are defined as Operating Inco
Slide 76: Investor Day May 13, 2019
ADTALEM GLOBAL EDUCATION Investor Day May 13, 2019