Education Management Corporation (EDMC) F4Q12 Earnings Call August 09, 2012 09:00 am ET Executives Jim Sober - VP Finance Todd Nelson - CEO Ed West - President & CFO Analysts Gary Bisbee - Barclays Reza Vahabzadeh - Barclays Jeff Volshteyn - JPMorgan Bob Craig - Stifel Nicolaus Suzi Stein - Morgan Stanley Brandon Dobell - William Blair Corey Greendale - First Analysis Kelly Flynn - Credit Suisse Jeff Silber - BMO Capital Markets Trace Urdan - Wunderlich Securities Sara Gubins - Bank of America Merrill Lynch Jeff Meuler - Robert W Baird Presentation Operator
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Before turning the call over to Todd for his opening comments, I'd like to remind everyone that 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 might differ materially from those contained in the forward-looking statements. Additional information containing factors that could cause actual results to differ materially are set forth in the cautionary statement included in the earnings release. Todd? Todd Nelson Thanks, Jim. Welcome to our fiscal 2012 fourth quarter earnings call. On today's call, I'll provide an update of our business operations, and Ed will review the fourth quarter results, cover several operational topics and provide our guidance. Having worked in the post secondary education industry for close to 25 years, I can say that the current environment is unprecedented in the numerous challenges in place, but at the same time offers many positive opportunities. For the past three years, we’ve seen net employment levels that this country not experience since early 1980s. The pervasive high employment while initially a tailwind has become a significant barrier to higher education as individuals find it more challenging to fund their education given the difficult job market. The drop off in enrollments is not confined to the proprietary sector alone, but also includes the nonprofit sector as well. The primary reasons for the decline in enrollment are tuitions and concerns about debt according to the American Association of Collegiate Registrars and Admissions Officers and other higher education officials. That said there is still a critical need for higher education in this country to meet the skilled demand for the marketplace. According to Georgetown University Center on Education and the Workforce, by 2018 the number of jobs requiring an associates or higher degree are expected to grow by 17 million, while those not requiring higher education are expected to decrease by several million jobs.
Furthermore the United States which is number 16 out of the 36 countries measured by the organization for Economic Co-operation and Development in the number of adults aged 25 to 34 with at least an associate’s degree needs to significantly grow its post secondary education workforce in order to stay competitive with the global marketplace.So going forward, although post secondary education faces many significant challenges, we see significant opportunities for education providers to deliver quality education for their students. Despite these challenges, we are pleased with the success our graduates have in the job market for graduation. Based on the Gainful Employment Program data provided by the Department of Education for completers, from fiscal years 2007 and 2008, the graduates from our programs in calendar year 2010 are an approximately 5% more on average than the graduates from all other institutions measured that offer the same programs. We believe this illustrates the value we bring to our students and graduates to help them succeed in their chosen careers. With approximately 325,000 alumni and nearly 125,000 students currently enrolled, we are proud of the difference we make in the lives of our students. While the operating environment continues to be challenging, our financial and operational results with our fiscal fourth quarter were generally in line with expectations. As you noticed from our earnings release, we have modified our student enrollment as well as new student enrollment disclosures to include our four reportable segments. The Art Institutes, Argosy University, Brown Mackie College, and South University which Ed will touch on later. For our recent July start, we had enrollment of approximately 124,600 students, a decrease of 10.8% over the prior-year period. Students enrolled at fully online programs at The Art Institutes of Pittsburgh online division, Argosy University and South University decreased 19.4% from last year to 31,000 students representing about 25% of the total student population.
Further new students for the three-months period ended June 30, 2012 which is typically our smallest enrollment period decreased by approximately 20% over the prior-year period to 21,400 students. During the fourth quarter of fiscal 2012, we rolled out over 40 programs across schools, not currently offering them, bringing the total programs rolled out during fiscal 2012 to over 250.Read the rest of this transcript for free on seekingalpha.com