Adtalem (ATGE) Q4 Earnings & Revenues Top Estimates, Down Y/Y
Adtalem Global Education Inc. ATGE reported better-than-expected results for fourth-quarter fiscal 2023. Earnings and revenues surpassed their respective Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite revenue growth.
Shares of this leading education provider fell by 2% in the after-hours trading session on Aug 10.
Nonetheless, these metrics gained and outpaced its previously provided guidance for fiscal 2023, given the improvement in enrollment, continued benefit from strategic initiatives and cost synergies.
Earnings & Revenue Discussion
Adjusted earnings of $1.03 per share topped the consensus mark of 94 cents by 9.6% but decreased 19.5% from $1.28 in the year-ago quarter.
Adtalem Global Education Inc. Price, Consensus and EPS Surprise
Adtalem Global Education Inc. price-consensus-eps-surprise-chart | Adtalem Global Education Inc. Quote
Revenues of $364.6 million beat the consensus mark of $356.4 million by 2.3% and increased 1.1% year over year. Strong demand at Chamberlain University and Walden University (led by nursing programs) aided the result.
For the fiscal fourth quarter, enrollment of total students fell 2.5% year over year to 75,735 but improved sequentially. Our Zacks model predicted a total student enrollment of 72,356 for the reported quarter.
Adjusted operating income declined 21.9% from the prior-year quarter’s level to $69.9 million. Adjusted operating margin declined by 560 basis points (bps) to 19.2%.
Adjusted EBITDA was $83.3 million, down 20.4% from the prior-year quarter’s level. Adjusted EBITDA margin contracted 620 bps to 22.8% year over year. We expected the adjusted EBITDA margin to be 21.3% for the reported quarter.
Segment Details
Chamberlain: Revenues in the segment were up 3% from the year-ago quarter’s level, totaling $144.5 million. Total student enrollment increased by 1.2% to 33,284 students, driven by growth in pre-licensure and post-licensure nursing programs and higher persistence across the segment.
Adjusted operating income declined 14.4% from the prior-year quarter’s level to $35.7 million. Adjusted operating margin contracted 500 bps to 24.7%. Adjusted EBITDA was $41.1 million, down 14.1% from the prior-year quarter’s level. Adjusted EBITDA margins also fell 570 bps to 28.4%.
Walden: The segment generated revenues of $138 million, slightly up 0.7% year over year. Total student enrollment in the quarter declined 4.8% year over year to 37,582 students. A decline in non-healthcare programs and some healthcare programs and the elimination of off-cycle start dates offset the benefits received from higher persistence.
Adjusted operating income came in at $32.2 million, down 10.1% from a year ago. Adjusted operating margin contracted 280 bps to 23.3%. Adjusted EBITDA was $35.3 million, down 9.4% from the prior-year period’s level. Adjusted EBITDA margins declined 280 bps to 25.6%.
Medical and Veterinary: Revenues in the segment fell 1.5% to $82.1 million from the year-ago quarter’s figure. Total student enrollment declined 8.2% from the prior-year quarter’s level to 4,869 students due to medical programs.
Adjusted operating income declined 43% from the prior-year quarter’s figure to $10.8 million. Adjusted operating margin contracted 960 bps to 13.2%. Adjusted EBITDA was $14.7 million, down 37.1% from the prior-year quarter’s level. Adjusted EBITDA margins fell 1,020 bps to 17.8%.
Fiscal 2023 Highlights
For the year, the company generated revenues of $1,450.8 million, which was up 5% year over year. Adjusted earnings of $4.21 per share were up 35.4% from $3.11 reported in fiscal 2022.
Adjusted EBITDA rose 4.5% year-over-year to $343.4 million. Adjusted EBITDA margins fell just 10 bps to 23.7%.
Liquidity & Cash Flow
As of Jun 30, 2023, Adtalem had cash and cash equivalents of $273.7 million compared with $347 million at the end of fiscal 2022. Long-term debt was $695.1 million, down from $838.9 million at the end of fiscal 2022. Trailing 12-month net debt to adjusted EBITDA was 1.3x at fiscal 2023-end.
For fiscal 2023, cash provided by operating activities (continuing operations) totaled $205.7 million compared with $164 million in the year-ago period. Free cash flow in fiscal 2023 was $168.7 million compared with $132.9 million a year ago.
Fiscal 2024 Guidance
Adtalem expects revenues within $1,460-$1,520 million and adjusted earnings of $4.20-$4.40 per share.
Zacks Rank & Recent Consumer Discretionary Releases
Adtalem currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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