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DeVry Inc. Reports Operating Results (10-Q)

November 05, 2012 | About:

DeVry Inc. (DV) filed Quarterly Report for the period ended 2012-09-30.

Devry, Inc. has a market cap of $1.67 billion; its shares were traded at around $26.3 with a P/E ratio of 9 and P/S ratio of 0.8. The dividend yield of Devry, Inc. stocks is 1.2%. Devry, Inc. had an annual average earning growth of 17.1% over the past 10 years.

Highlight of Business Operations:

Total consolidated revenues for the first quarter of fiscal year 2013 of $482.7 million decreased $36.3 million, or 7.0%, as compared to the year-ago quarter. Revenues decreased within DeVrys Business, Technology and Management segment as a result of a decline in undergraduate student enrollments and an increase in scholarships due to the challenging economic environment, persistent unemployment and heightened competition. 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 the quarter.

Medical and Healthcare segment revenues increased 7.4% to $158.4 million in the first quarter of fiscal year 2013. Higher total student enrollments at Chamberlain College of Nursing (Chamberlain) and DeVry Medical International (which is composed of Ross University Schools of Medicine and 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 enrollments at Carrington Colleges Group, Inc. (Carrington). Also, AUC, which was acquired on August 3, 2011, contributed a full quarter of revenue in the current year period as opposed to the two months contributed in the first quarter of fiscal 2012. Key trends for DeVry Medical International, Chamberlain and Carrington are set forth below.

Total consolidated operating income for the first quarter of fiscal year 2013 of $45.8 million decreased 42.7% as compared to the prior year quarter. The 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 businesses. The revenue decline was partially offset with the decrease in expenses gained from cost reduction measures, as discussed above. The operating income decline was limited to the Business, Technology and Management segment. The other two operating segments experienced growth in operating income.

Business, Technology and Management segment operating income decreased 58.3% to $25.6 million during the first quarter of fiscal year 2013, as compared to the year-ago period. The decrease in operating income was the result of lower revenue and decreased operating leverage. Total segment expenses decreased 6.2% as compared to the year-ago quarter as a result of savings from cost reduction measures, as discussed above. Management continues to mitigate the effects of this challenging environment by aligning its cost structure with student enrollments while also targeting investments in growth initiatives such as new programs.

Cash generated from operations in the first quarter of fiscal year 2013 was $164.1 million, compared to $186.6 million in the year-ago quarter. The decrease in cash flow from operations was due in part to a $25.5 million decline in net income compared to the year-ago quarter. In addition, cash flow from operations decreased $36 million compared to the prior year as a result of an increase in accounts receivable, net of related reserves, which resulted from a timing difference in the receipt of federal financial aid funds along with receivables related to the acquisitions of FBV and FAVIP and increase in revenues at DeVry Brasil. The change in net deferred income tax liabilities resulted in a $3.5 million reduction in operating cash flows compared to the prior year. Also, changes in deferred tuition revenue and advanced tuition payments of $6.2 million as compared to the prior year had a negative effect on comparative cash flows from operations. These decreases in operating cash flows were partially offset by $43.1 million from a greater source of cash compared to the prior year for changes in levels of prepaid expenses, accounts payable and accrued expenses. 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. Also, an increase in non-cash expenses for depreciation and stock-based compensation resulted in a $3.8 million greater source of cash compared to the prior year. Finally, the change in restricted cash and other assets and liabilities had a $5.3 million positive effect on comparative operating cash flows.

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