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DeVry Inc. Reports Operating Results (10-Q)

February 08, 2013 | About:
10qk

10qk

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DeVry Inc. (DV) filed Quarterly Report for the period ended 2012-12-31.

Devry, Inc. has a market cap of $1.89 billion; its shares were traded at around $29.93 with a P/E ratio of 12.4844 and P/S ratio of 0.9668. The dividend yield of Devry, Inc. stocks is 1.07%. Devry, Inc. had an annual average earning growth of 18.4% over the past 10 years.

Highlight of Business Operations:

Total consolidated revenues for the second quarter of fiscal year 2013 of $505.2 million decreased $18.8 million, or 3.6%, as compared to the year-ago quarter. For the first six months of fiscal year 2013, total consolidated revenues decreased $55.1 million or 5.3% to $988.0 million. For both the second quarter and first six months of fiscal year 2013, revenues decreased within DeVrys Business, Technology and Management segment as a result of a decline in undergraduate and graduate student enrollments and an increase in scholarships due to heightened competition, the challenging economic environment, and persistent levels of high unemployment. This decrease was partially offset by revenue increases within DeVrys Medical and Healthcare and International, K-12 and Professional Education segments as a result of growth in total student enrollments and tuition price increases. In addition, the two most recent additions to DeVry Brasil, Faculdade Boa Viagem (FBV), which was acquired on February 29, 2012, and FAVIP, which was acquired September 3, 2012, contributed to offsetting the revenue decline during both the quarter and first six months of the current year.

Medical and Healthcare segment revenues increased 9.3% to $167.7 million in the second quarter and increased 8.3% to $326.1 million for the first six months of fiscal year 2013 as compared to the year-ago periods. For both the second quarter and first six months of fiscal year 2013, higher total student enrollments at Chamberlain College of Nursing (Chamberlain) and DeVry Medical International (which is composed of Ross University School of Medicine, Ross University School of Veterinary Medicine and American University of the Caribbean School of Medicine (AUC)) were the key drivers of the segment revenue growth, which more than offset a decline in total student enrollment at Carrington College and Carrington College California (collectively Carrington). Carrington experienced a decrease in student enrollment in the June and September terms over the year-ago periods which affected the second quarter and the first six months of fiscal 2013 results but did see an increase in total enrollment in the December term over the year-ago period. Also, AUC, which was acquired on August 3, 2011, contributed a full six months of revenue in the current year period as opposed to the five months contributed in the first half of fiscal year 2012. Key trends for DeVry Medical International, Chamberlain and Carrington are set forth below.

Total consolidated operating income for the second quarter of fiscal year 2013 of $65.9 million increased 379.0% as compared to the prior year quarter. For the first six months of fiscal year 2013, total consolidated operating income of $111.7 million increased 19.3% as compared to the prior year period. The largest single driver of the increase in operating income for both the second quarter and first six months of fiscal year 2013 was a $75.0 million non-cash asset impairment charge recorded in the second quarter of fiscal 2012. Excluding this charge, total consolidated operating income for the second quarter of fiscal year 2013 decreased 25.8% as compared to the prior year quarter and declined 33.8% in the first six months of fiscal year 2013 as compared to the prior year period. Revenue declines at DeVry University and Carrington Colleges contributed to the decline in operating income and more than offset the increases in revenue resulting from recent acquisitions and growth in other institutions. The revenue decline was partially offset by the decrease in expenses from cost reduction measures, as discussed above. The operating income decline was limited to the Business, Technology and Management segment.

Business, Technology and Management segment operating income decreased 32.8% to $38.8 million during the second quarter of fiscal year 2013, and declined 46.0% to $64.4 million during the first six month of fiscal year 2013 as compared to the year-ago periods. The decrease in operating income was the result of lower revenue and decreased operating leverage. Total segment expenses for the second quarter of fiscal 2013 decreased 9.8% as compared to the year-ago quarter and declined 8.0% in the first six months of

Cash generated from operations in the first six months of fiscal year 2013 was $180.2 million, compared to $219.3 million in the year-ago period. Although net income increased $16.5 million from the year-ago period, the decrease in cash flow from operations occurred partially due to a $75.0 million non-cash asset impairment charge in the prior fiscal year. Also, the decrease in cash flow from operations was due in part to changes in deferred tuition revenue, advanced tuition payments and restricted cash of $107.5 million as compared to the prior year. This decrease is a result in a change in the timing of student billing due to the move to a new student centric academic calendar at DeVry University and Chamberlain where students may start an academic term at any of six times during the year. These decreases in operating cash flows were partially offset by changes in levels of prepaid expenses, accounts payable and accrued expenses which resulted in a $98.1 million greater source of cash as compared to the prior year. Variations in the levels of accrued and prepaid expenses and accounts payable from period to period are caused, in part, by the timing of the period-end relative to DeVrys payroll and bill payment cycles. Finally, realized and unrealized gains and losses on the sale or disposal of assets increased operating cash flow by $11.7 million as compared to the prior year.

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