Education Management (EDMC)

Q1 2012 Earnings Call

October 27, 2011 9:00 am ET


James Sober - Vice President of Investor Relations

Edward H. West - President and Chief Financial Officer

Todd S. Nelson - Chief Executive Officer and Director


Gordan Lasic - Robert W. Baird & Co. Incorporated, Research Division

Trace A. Urdan - Wunderlich Securities Inc., Research Division

Sara Gubins - BofA Merrill Lynch, Research Division

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

Kelly A. Flynn - Crédit Suisse AG, Research Division

Thomas Allen - Morgan Stanley, Research Division

Jeffrey M. Silber - BMO Capital Markets U.S.

George K. Tong - Piper Jaffray Companies, Research Division

Corey Greendale - First Analysis Securities Corporation, Research Division

Zachary Fadem - Barclays Capital, Research Division

Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division

Elizabeth Gilson - Barclays Capital

Gary E. Bisbee - Barclays Capital, Research Division

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division



Good morning, and welcome to the Education Management Corporation Fiscal 2012 First Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jim Sober, Vice President of Finance. Mr. Sober, please go ahead.

James Sober

Thanks, Denise. Welcome to Education Management's First Quarter 2012 Earnings Call. With me today is Todd Nelson, our Chief Executive Officer; and Ed West, President and Chief Financial Officer. Following our opening remarks, we will begin our question-and-answer session.

Before turning the call over to Todd for his opening comments, I'd like to remind everyone that the information presented on this call contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about our future plans and our future financial and operating performance. Actual results may differ materially from those contained in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially are set forth in the cautionary statement included in the press release. Todd?

Todd S. Nelson

Thanks, Jim. Welcome to our fiscal 2012 first quarter earnings call. On today's call, I'll provide an update of our business operations and Ed will review our fourth (sic) [first] quarter results, cover several operational topics and provide guidance.

We are pleased with our first quarter financial results and are continued dedication of our faculty and staff providing opportunities for both our students and graduates in this challenging economy. That said, we did see lower new student enrollment results leading up to our October start than we have previously expected across both our online and on-ground academic programs. In addition, we experienced more drops than anticipated from our transition to non-term at Argosy University Online. However, we believe we will likely experience improving new student enrollment trends in calendar year 2012. Finally, we continue to firmly believe that the long-term growth trends for our industry remains favorable, as the need for post-secondary education remains high given the competitive global economy, and that we are well positioned for long-term growth due to the breadth of our programmatic and degree offerings and our individually-recognized and uniquely-positioned academic institutions.

For our recent October start, we had enrollment of approximately 151,200 students, a decrease of 4.5% over the prior year period. Excluding the 5 locations that are less than a year old, same-school enrollment declined approximately 5%. Students taking their classes in a fully online modality decreased 7.6% from the last year to 39,100 students, representing about 26% of the total population. Further, new students for the 3-month period ended September 30, 2011, decreased by approximately 11% over the prior year period. I'd like to add that we have posted an updated presentation of our October 2011 enrollment information to the Investor Relations page on our website.

During fiscal 2012, we introduced over 350 new or existing academic programs to locations that have not previously offered them. We have continued the strong pace through the first quarter of fiscal 2012, where we've rolled out 95 programs across schools not currently offering them. We've also developed several new programs at Argosy University. An associates in psychology and a doctoral degree in teacher leadership, as well as a Masters in human resource management for fully online students. In addition, as part of our effort to bring our programs to new markets, I'm pleased to announce that during August, we opened a new South University campus in Austin, Texas.

Let me now provide a brief update of our graduate statistics. Of our undergraduate students, excluding Argosy University, available for employment who graduated during the quarter ended this past March, approximately 80% were employed in their fields and related fields within 6 months to graduation. For the average starting salaries for these graduates from our undergraduate programs for the quarter ended this past March, bachelor's degree students obtained an average salary of approximately $33,000, while graduates from associates and diploma programs earned $28,000.

Over the past several months, we have launched a number of initiatives across our education systems focused on enriching the student experience and improving persistence. For example, we have began a joint curriculum project for the unification across all 4 educational systems with 5 fundamental, general education courses: Students success, developmental math, college algebra, developmental english and english composition. Argosy University began offering tutoring service including access to writing center to improve student's access to experts who work with our faculty, to help guide students with assignments and advance course topics. The Art Institutes are implementing a new academic advising model that is more traditionally focused but advisors being accountable for student class registrations, following up on class absences and working with high-risk students to help ameliorate their risk factors.

Read the rest of this transcript for free on

If you liked this article you might like

These 5 Stocks Under $10 Could Make You a Lot of Money

These 5 Stocks Under $10 Could Make You a Lot of Money

ITT Tech Becomes Latest Casualty of Government Crackdown on For-Profit Education

ITT Tech Becomes Latest Casualty of Government Crackdown on For-Profit Education

Declines at For-Profit Colleges Take a Big Toll on Their Stocks

Declines at For-Profit Colleges Take a Big Toll on Their Stocks

Strayer, For-Profit Education Companies Suffer Through Supply-and-Demand Lessons

Strayer, For-Profit Education Companies Suffer Through Supply-and-Demand Lessons

How Obama's Free Community-College Program May Kill For-Profit Education Companies

How Obama's Free Community-College Program May Kill For-Profit Education Companies