DeVry CEO Discusses Q2 2011 Earnings Call Transcript

DeVry (DV)

Q2 2011 Earnings Call

January 25, 2011 4:30 pm ET

Executives

Daniel Hamburger - Chief Executive Officer, President and Director

Joan Bates - Director, Investor Relations

Richard Gunst - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Analysts

Ariel Sokol - UBS Investment Bank

Brandon Dobell - William Blair & Company L.L.C.

Robert Craig - Stifel, Nicolaus & Co., Inc.

Paul Ginocchio - Deutsche Bank AG

Jeffrey Silber - BMO Capital Markets U.S.

Andrew Steinerman - JP Morgan Chase & Co

Peter Appert - Piper Jaffray Companies

Sara Gubins - BofA Merrill Lynch

Arvind Bhatia - Sterne Agee & Leach Inc.

Gordon Lasic - Robert W. Baird

Robert Wetenhall - RBC Capital Markets, LLC

James Samford - Citigroup Inc

Scott Schneeberger - Oppenheimer & Co. Inc.

Corey Greendale - First Analysis Securities Corporation

Gary Bisbee - Barclays Capital

Trace Urdan - Signal Hill Capital Group LLC

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the DeVry's Fiscal 2011 Second Quarter Results Conference Call. My name is Mary, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Joan Bates, Senior Director of Investor and Media Relations. Please proceed.

Joan Bates

Thank you, Mary. With me today from DeVry Management are Daniel Hamburger, President and Chief Executive Officer; and Rick Gunst, Senior Vice President and Chief Financial Officer. I'll now review the Safe Harbor provisions for this call. This call may contain forward-looking statements within the meaning of the Federal Securities Laws. Such forward-looking statements reflects, among other things, management's current expectations, plans and strategies and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements. Please see our public filings with the Securities and Exchange Commission for more information about forward-looking statements and related risk factors. Telephone and webcast replays of today's call are available until February 8, 2011. To access the replay, please refer to today's press release for information. I'll now turn the call over to Daniel Hamburger.

Daniel Hamburger

Thank you, all, very much for joining us today for our Fiscal 2011 Second Quarter Conference Call. I'll provide a brief introduction and Rick will discuss our financial results, and then I'll review a few operational highlights in the quarter before opening it up to your questions. So to begin, let me offer a belated Happy New Year, and I'd like to provide a little perspective on calendar 2010 and our accomplishments during the year that have us well-positioned for 2011 and beyond.

Looking back, the regulatory environment dominated the headlines in 2010. Interestingly, we begun to notice a more balanced dialogue with Congress and the Department of Education and other key stakeholders who were expressing their concern over the proposed regulation. They realized that there's a potential to produce unintended consequences. In other words, they not just hold poor quality programs accountable but they inadvertently impact high-quality programs, and thus reduce access for the very students we most need to help. Last week, President Obama issued an executive order to review the myriad of government relations. He said that we need to disclosure, and I quote, "As a tool to inform consumers of their choices rather than restricting those choices." Well, we couldn't agree more. And in fact, during the rule-making process, DeVry and others proposed new standards of enhanced student disclosure. And we were pleased to see these concepts incorporated as part of their rules that were issued back in October. Clearly, the second part of the rules, but whatever regulation comes to pass, we believe DeVry has the resources in place to properly address them and to implement any changes that might be necessary. High-quality programs that deliver value to students will always have a place in our educational system. We believe DeVry is in a strong position as one of the long-term leaders in providing high-quality, career-focused education.

But beyond all the regulatory events, we continue to invest in our schools in 2010. Let me give you just three highlights. Our Student Central concept, which provides one-stop shopping for all services that provides the student, has helped to increase persistence and produced better outcomes for DeVry University students. Investment in academic quality and student services this past year at DeVry Brasil, position our schools there for growth opportunities in the coming years. And Chamberlain opened two locations last year in Arlington, Virginia, and most recently in Chicago, to meet the strong demand for nurses in the United States.

I'd also like to take a moment to recognize DeVry University for being highlighted in the recent McKinsey & Company study of highly productive higher education institutions. DeVry University was one of eight schools that were highlighted and the only private sector school that McKinsey selected. A link to the report is in our press release that just crossed the wire this afternoon.

So as we look forward to 2011, we remain focused on executing our growth plans with continued emphasis on our diversification strategy. Despite the softening new student enrollment that we reported in our fall term, our diversified family of schools will continue to be a real strength for us. And this diversification concept is directly relevant to how we're managing this environment. A number of you have asked us about the declines in new student enrollment, so let me try to provide some color on that. It's important to keep in mind that there is no single explanation. Several factors affect different schools in different ways, ranging from internal execution to external market dynamics.

Carrington Colleges, for example, experienced a decline in fall enrollment because of how we managed our name change and other process issues that we're working through, as well as some external factors. DeVry University undergraduate programs saw some slowing that's more tied to inquiry flow in the market, in general. However, there are other schools within our diverse offerings like Chamberlain, Becker, DeVry Brasil and Keller, where we continue to see growing demand. And so our diversification strategy positions us to achieve consistent performance throughout various economic and programmatic [ph] cycles and to create value in good times and bad. And so with that overview, let me turn the call over to Rick.

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