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DeVry Education (DV) Beats on Q3 Earnings, Misses Revenues

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DeVry Education Group Inc. reported third-quarter fiscal 2017 results, wherein earnings beat the Zacks Consensus Estimate but revenues fell short of expectations.

Third-quarter fiscal 2017 adjusted earnings of 70 cents per share surpassed the Zacks Consensus Estimate of 64 cents by 9.4%. However, on a year-over-year basis, the company’s earnings fell 1.4%.

DeVry’s quarterly net sales of $452.1 million missed the Zacks Consensus Estimate of $455 million by 0.6%. Total revenue also decreased 4.7% from the year-ago figure of $474.2 million. Solid contribution from Chamberlain, DeVry Education of Brazil and Professional Education segment was offset by the continued slump in enrollment at DeVry University and Carrington.

The company’s total operating cost and expenses decreased 2.1% year over year to 404.8 million in the quarter. Operating income was $47.3 million compared with $60.8 million a year ago.

Segment Details

Since the beginning of the company’s third-quarter fiscal 2017, DeVry Group realigned its reporting segments.

Medical and Healthcare:  This reporting segment, which is the largest contributor to revenues and earnings, includes Chamberlain University, American University of the Caribbean School of Medicine, Ross University School of Medicine and Ross University School of Veterinary Medicine.

For the third quarter, segmental revenues of $208.2 million decreased 1% from the prior-year quarter, due to lower contribution from the medical and veterinary schools, partly offset by the growth at Chamberlain College of Nursing. Operating income at the segment, barring special items, was $50.8 million, down 11.5% from the prior-year quarter.

At Chamberlain revenues rose 2.4%. The upside was mainly driven by enrollment growth in its RN and BSN degree completion programs as well as Master of Science in Nursing degree. In March, new student count increased 12%, raising the total student count by 7%.

Professional Education: The segment includes Becker and ACAMS. It also comprises DeVry Education of Brazil.

The segment recorded revenues of $29.8 million, up 25.9% year over year, mostly driven by acquisitions of ACAMS.

Operating income was $2.6 million, down 57.8% year over year.

Technology and Business: This segment, which comprises schools in Brazil (DeVry Brazil), recorded revenues of $61.8 million, up 28.6% year over year owing to currency benefit.

Operating income for the segment in the quarter grew to $5.4 million from the year-ago operating loss of 1.6 million.

US Traditional Postsecondary: This reporting segment includes the results of DeVry University and Carrington College.

The segment recorded revenues of $153 million, down 20.8% year over year because of declining enrollments at DeVry University and Carrington.

The segment’s operating income was breakeven in the quarter, down about $1.7 million from the prior-year quarter.

DeVry University recorded revenues of $119 million in the quarter, down 24% due to continued enrollment declines.

In Mar 2017, undergraduate new student enrollments declined 14.3%, while total students fell 20.9%.

Guidance

The company expects earnings per share for the full year to grow in the mid-teen range.

Capital spending is expected in the range of $55–$60 million for fiscal 2017. The effective income tax rate for the fiscal is likely to be around 20–21%.

In the fiscal fourth quarter, the company expects to incur additional restructuring charges of approximately $10 million to $15 million.

DeVry currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Universal Technical Institute, Inc. (UTI - Free Report) reported narrower-than-expected loss in the second quarter of fiscal 2017. The company’s adjusted loss of 12 cents per share in the quarter was narrower than the Zacks Consensus Estimate of a loss of 16 cents by 25%.

Capella Education Company reported adjusted earnings of 94 cents in the first quarter of 2017, which surpassed the Zacks Consensus Estimate of 87 cents by 8.1%. Adjusted earnings however decreased 9.3% year over year.

Upcoming Peer Releases

American Public Education, Inc. (APEI - Free Report) is scheduled to report first-quarter 2017 results on May 9, after market close.

DeVry Education Group Inc. Price, Consensus and EPS Surprise

 

DeVry Education Group Inc. Price, Consensus and EPS Surprise | DeVry Education Group Inc. Quote

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