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Adtalem (ATGE) Q2 Earnings & Revenues Beat, Enrollment Down
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Adtalem Global Education Inc. (ATGE - Free Report) reported impressive results for second-quarter fiscal 2023. Earnings and revenues surpassed their respective Zacks Consensus Estimate, given the continued benefit from initiatives taken and cost synergies.
Shares of this for-profit education company gained 2% in the after-hour trading session following the earnings release.
Looking forward, Steve Beard, president and CEO of Adtalem, said, “Heading into the latter half of fiscal 2023, we remain optimistic that the demand environment will see modest improvement. Our strategic investments and enhanced operational effectiveness leave us well prepared to maximize the benefit of an improved macro dynamic for the benefit of all our stakeholders.”
Adtalem Global Education Inc. Price, Consensus and EPS Surprise
Adjusted earnings of $1.17 per share topped the consensus mark of 89 cents by 31.5% and increased by 56% from 75 cents in the year-ago quarter.
Revenues of $363.5 million beat the consensus mark of $355 million by 2.5% but decreased 2.1% year over year, owing to lower contributions from Walden and Medical and Veterinary.
For the fiscal second quarter, enrollment of total students fell 4.1% year over year to 76,980.
Adjusted operating income rose 13.2% from the prior-year quarter’s levels to $79.5 million. Adjusted operating margin expanded 300 basis points (bps) to 21.9%, driven by integration and cost reduction efforts. Adjusted EBITDA was $92.1 million, up 7% from the prior-year quarter’s levels. Adjusted EBITDA margin increased 220 bps to 25.4% year over year.
Segment Details
Chamberlain: Revenues in the segment grew 1.6% to $141.4 million from the year-ago quarter’s figure at $139.1 million. Adjusted operating income increased 28.8% from the prior-year quarter’s levels to $33.2 million, primarily backed by continued benefits from cost-reduction initiatives.
Adjusted operating margin expanded 500 bps to 23.5%. Adjusted EBITDA was $37.7 million, up 17.2% from the prior-year quarter’s levels. Adjusted EBITDA margins rose 360 bps to 26.7% driven by value capture initiatives and lower labor costs.
Total student enrollment declined 0.8% year over year to 33,390 students, primarily owing to COVID-related headwinds in Chamberlain’s post-licensure programs, partially offset by improved enrollment in pre-licensure programs.
Walden: The segment generated revenues of $131.9 million, down 6.2% year over year. Total student enrollment in the quarter declined 7.8% year over year to 37,956 students. Adjusted operating income came in at $29 million, down 10.5% from $32.4 million a year ago. Adjusted operating margin contracted 100 bps to 22%. Adjusted EBITDA was $31.6 million, down 11.5% from the prior-year period’s levels. Adjusted EBITDA margins contracted 150 bps to 23.9%.
Medical and Veterinary: Revenues in the segment decreased 1.6% to $90 million from the year-ago quarter’s figure. Total student enrollment rose 3.4% from the prior-year quarter’s levels to 5,634 students.
Adjusted operating income increased 16.8% from the prior-year quarter’s figure to $23 million, given the continued benefit from cost discipline initiatives. Adjusted operating margin expanded 210 bps to 25.6%. Adjusted EBITDA was $26.3 million, up 8% from the prior-year quarter’s levels. Adjusted EBITDA margins rose 260 bps to 29.2%.
Liquidity & Cash Flow
As of Dec 31, 2022, Adtalem had cash and cash equivalents of $207.8 million compared with $346.97 million at the end of fiscal 2022. Long-term debt was $693.8 million, down from $838.9 million at the end of fiscal 2022.
For the first six months of fiscal 2023, cash provided by operating activities (continuing operations) totaled $41.4 million compared with $1.1 million in the year-ago period. Free cash flow in the quarter was negative $53.4 million compared with $56.6 million a year ago.
Fiscal 2023 Guidance Reaffirmed
For fiscal 2023, Adtalem expects revenues between $1,380 and $1,450 million. The company expects adjusted earnings per share (EPS) within $3.95-$4.20.
Zacks Rank & Key Picks
Adtalem currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited. (OSW - Free Report) , Manchester United plc (MANU - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) .
OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 6.3% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.
Manchester currently carries a Zacks Rank #2 (Buy). MANU has a trailing four-quarter earnings surprise of 65.7%, on average. Shares of the company have gained 63.9% in the past year.
The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago period’s levels.
Las Vegas Sands currently carries a Zacks Rank #2. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 30.7% in the past year.
The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 97% and 217.5%, respectively, from the year-ago period’s estimated levels.
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Adtalem (ATGE) Q2 Earnings & Revenues Beat, Enrollment Down
Adtalem Global Education Inc. (ATGE - Free Report) reported impressive results for second-quarter fiscal 2023. Earnings and revenues surpassed their respective Zacks Consensus Estimate, given the continued benefit from initiatives taken and cost synergies.
Shares of this for-profit education company gained 2% in the after-hour trading session following the earnings release.
Looking forward, Steve Beard, president and CEO of Adtalem, said, “Heading into the latter half of fiscal 2023, we remain optimistic that the demand environment will see modest improvement. Our strategic investments and enhanced operational effectiveness leave us well prepared to maximize the benefit of an improved macro dynamic for the benefit of all our stakeholders.”
Adtalem Global Education Inc. Price, Consensus and EPS Surprise
Adtalem Global Education Inc. price-consensus-eps-surprise-chart | Adtalem Global Education Inc. Quote
Earnings & Revenues Discussion
Adjusted earnings of $1.17 per share topped the consensus mark of 89 cents by 31.5% and increased by 56% from 75 cents in the year-ago quarter.
Revenues of $363.5 million beat the consensus mark of $355 million by 2.5% but decreased 2.1% year over year, owing to lower contributions from Walden and Medical and Veterinary.
For the fiscal second quarter, enrollment of total students fell 4.1% year over year to 76,980.
Adjusted operating income rose 13.2% from the prior-year quarter’s levels to $79.5 million. Adjusted operating margin expanded 300 basis points (bps) to 21.9%, driven by integration and cost reduction efforts. Adjusted EBITDA was $92.1 million, up 7% from the prior-year quarter’s levels. Adjusted EBITDA margin increased 220 bps to 25.4% year over year.
Segment Details
Chamberlain: Revenues in the segment grew 1.6% to $141.4 million from the year-ago quarter’s figure at $139.1 million. Adjusted operating income increased 28.8% from the prior-year quarter’s levels to $33.2 million, primarily backed by continued benefits from cost-reduction initiatives.
Adjusted operating margin expanded 500 bps to 23.5%. Adjusted EBITDA was $37.7 million, up 17.2% from the prior-year quarter’s levels. Adjusted EBITDA margins rose 360 bps to 26.7% driven by value capture initiatives and lower labor costs.
Total student enrollment declined 0.8% year over year to 33,390 students, primarily owing to COVID-related headwinds in Chamberlain’s post-licensure programs, partially offset by improved enrollment in pre-licensure programs.
Walden: The segment generated revenues of $131.9 million, down 6.2% year over year. Total student enrollment in the quarter declined 7.8% year over year to 37,956 students. Adjusted operating income came in at $29 million, down 10.5% from $32.4 million a year ago. Adjusted operating margin contracted 100 bps to 22%. Adjusted EBITDA was $31.6 million, down 11.5% from the prior-year period’s levels. Adjusted EBITDA margins contracted 150 bps to 23.9%.
Medical and Veterinary: Revenues in the segment decreased 1.6% to $90 million from the year-ago quarter’s figure. Total student enrollment rose 3.4% from the prior-year quarter’s levels to 5,634 students.
Adjusted operating income increased 16.8% from the prior-year quarter’s figure to $23 million, given the continued benefit from cost discipline initiatives. Adjusted operating margin expanded 210 bps to 25.6%. Adjusted EBITDA was $26.3 million, up 8% from the prior-year quarter’s levels. Adjusted EBITDA margins rose 260 bps to 29.2%.
Liquidity & Cash Flow
As of Dec 31, 2022, Adtalem had cash and cash equivalents of $207.8 million compared with $346.97 million at the end of fiscal 2022. Long-term debt was $693.8 million, down from $838.9 million at the end of fiscal 2022.
For the first six months of fiscal 2023, cash provided by operating activities (continuing operations) totaled $41.4 million compared with $1.1 million in the year-ago period. Free cash flow in the quarter was negative $53.4 million compared with $56.6 million a year ago.
Fiscal 2023 Guidance Reaffirmed
For fiscal 2023, Adtalem expects revenues between $1,380 and $1,450 million. The company expects adjusted earnings per share (EPS) within $3.95-$4.20.
Zacks Rank & Key Picks
Adtalem currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited. (OSW - Free Report) , Manchester United plc (MANU - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) .
OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 6.3% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.
Manchester currently carries a Zacks Rank #2 (Buy). MANU has a trailing four-quarter earnings surprise of 65.7%, on average. Shares of the company have gained 63.9% in the past year.
The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago period’s levels.
Las Vegas Sands currently carries a Zacks Rank #2. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 30.7% in the past year.
The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 97% and 217.5%, respectively, from the year-ago period’s estimated levels.