CVSA 8-K

Covista Inc. (CVSA)

8-K 2023-08-10 For: 2023-08-10

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Delaware	001-13988	36-3150143
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $0.01 Par Value	ATGE	New York Stock Exchange
Common Stock $0.01 Par Value	ATGE	Chicago Stock Exchange

	ADTALEM GLOBAL EDUCATION INC.

	By:	/s/ Robert J. Phelan
		Robert J. Phelan
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Chamberlain

$ in millions	Three Months Ended June 30,						Year Ended June 30,
	2023		2022		% Change		2023		2022		% Change
Revenue	$	144.5	$	140.2	3.0	%	$	571.0	$	557.5	2.4	%
Operating Income	$	35.7	$	41.1	(13.2	)%	$	134.7	$	124.4	8.3	%
Adj. Operating Income	$	35.7	$	41.7	(14.4	)%	$	135.5	$	127.3	6.5	%
Adj. EBITDA	$	41.1	$	47.8	(14.1	)%	$	157.5	$	152.5	3.3	%
Total Students (1)		33,284		32,891	1.2	%

Walden

$ in millions	Three Months Ended June 30,						Year Ended June 30,
	2023		2022		% Change		2023		2022			% Change
Revenue	$	138.0	$	137.1	0.7	%	$	533.7	$	485.4		10.0	%
Operating Income	$	9.8	$	12.4	(21.2	)%	$	35.9	$	(5.3	)	NM
Adj. Operating Income	$	32.2	$	35.8	(10.1	)%	$	110.4	$	104.6		5.5	%
Adj. EBITDA	$	35.3	$	39.0	(9.4	)%	$	123.7	$	116.9		5.9	%
Total Students (1)		37,582		39,470	(4.8	)%

CVSA 8-K

Adtalem Global Education Announces Fiscal Fourth Quarter and Full Year 2023 Results

Contacts

Medical and Veterinary

$ in millions	Three Months Ended June 30,						Year Ended June 30,
	2023		2022		% Change		2023		2022		% Change
Revenue	$	82.1	$	83.4	(1.5	)%	$	346.1	$	338.9	2.1	%
Operating Income	$	10.5	$	14.0	(24.9	)%	$	59.6	$	59.4	0.5	%
Adj. Operating Income	$	10.8	$	19.0	(43.0	)%	$	67.3	$	69.1	(2.6	)%
Adj. EBITDA	$	14.7	$	23.3	(37.1	)%	$	82.8	$	86.9	(4.7	)%
Total Students (1)		4,869		5,304	(8.2	)%

Adtalem Global Education Inc. Consolidated Balance Sheets (unaudited) (in thousands, except par value)

	June 30,
	2023		2022
Assets:
Current assets:
Cash and cash equivalents	$	273,689	$	346,973
Restricted cash		1,386		964
Accounts receivable, net		102,749		81,635
Prepaid expenses and other current assets		100,715		127,532
Total current assets		478,539		557,104
Noncurrent assets:
Property and equipment, net		258,522		289,926
Operating lease assets		174,677		177,995
Deferred income taxes		56,694		51,093
Intangible assets, net		812,338		873,577
Goodwill		961,262		961,262
Other assets, net		68,509		119,283
Total noncurrent assets		2,332,002		2,473,136
Total assets	$	2,810,541	$	3,030,240

Liabilities and shareholders' equity:
Current liabilities:
Accounts payable	$	81,812	$	57,140
Accrued payroll and benefits		52,041		67,792
Accrued liabilities		105,806		98,124
Deferred revenue		153,871		149,810
Current operating lease liabilities		37,673		50,781
Total current liabilities		431,203		423,647
Noncurrent liabilities:
Long-term debt		695,077		838,908
Long-term operating lease liabilities		163,441		177,045
Deferred income taxes		26,068		25,554
Other liabilities		37,416		73,700
Total noncurrent liabilities		922,002		1,115,207
Total liabilities		1,353,205		1,538,854
Commitments and contingencies
Total shareholders' equity		1,457,336		1,491,386
Total liabilities and shareholders' equity	$	2,810,541	$	3,030,240

Adtalem Global Education Inc. Consolidated Statements of Income (unaudited) (in thousands, except per share data)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	364,641		$	360,647		$	1,450,826		$	1,381,842
Operating cost and expense:
Cost of educational services		163,718			161,279			648,486			659,776
Student services and administrative expense		153,296			133,115			586,009			566,494
Restructuring expense		1,111			8,629			18,817			25,628
Business acquisition and integration expense		6,959			11,661			42,661			53,198
Gain on sale of assets		—			—			(13,317	)		—
Total operating cost and expense		325,084			314,684			1,282,656			1,305,096
Operating income		39,557			45,963			168,170			76,746
Interest expense		(15,294	)		(19,441	)		(63,100	)		(129,348	)
Other income (expense), net		3,664			(1,327	)		6,965			1,108
Income (loss) from continuing operations before income taxes		27,927			25,195			112,035			(51,494	)
(Provision for) benefit from income taxes		(4,377	)		(24,058	)		(10,283	)		15,539
Income (loss) from continuing operations		23,550			1,137			101,752			(35,955	)
Discontinued operations:
Loss from discontinued operations before income taxes		(1,730	)		(2,521	)		(8,464	)		(986	)
(Loss) gain on disposal of discontinued operations before income taxes		—			(520	)		(3,576	)		473,483
Benefit from (provision for) income taxes		424			8,650			3,646			(125,551	)
(Loss) income from discontinued operations		(1,306	)		5,609			(8,394	)		346,946
Net income	$	22,244		$	6,746		$	93,358		$	310,991

Earnings (loss) per share:
Basic:
Continuing operations	$	0.54		$	0.03		$	2.27		$	(0.74	)
Discontinued operations	$	(0.03	)	$	0.12		$	(0.19	)	$	7.17
Total basic earnings per share	$	0.51		$	0.15		$	2.08		$	6.43
Diluted:
Continuing operations	$	0.53		$	0.02		$	2.23		$	(0.74	)
Discontinued operations	$	(0.03	)	$	0.12		$	(0.18	)	$	7.17
Total diluted earnings per share	$	0.50		$	0.15		$	2.05		$	6.43

Weighted-average shares outstanding:
Basic shares		43,292			45,162			44,781			48,388
Diluted shares		44,129			45,758			45,600			48,388

Adtalem Global Education Inc. Consolidated Statements of Cash Flows (unaudited) (in thousands)

	Year Ended June 30,
	2023			2022
Operating activities:
Net income	$	93,358		$	310,991
Loss (income) from discontinued operations		8,394			(346,946	)
Income (loss) from continuing operations		101,752			(35,955	)
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		14,299			22,611
Amortization and impairments to operating lease assets		48,470			44,748
Depreciation		41,575			44,574
Amortization of intangible assets		61,239			97,274
Amortization and write-off of debt discount and issuance costs		9,129			42,654
Provision for bad debts		32,999			27,141
Deferred income taxes		(5,087	)		(544	)
Loss on disposals, accelerated depreciation, and impairments to property and equipment		3,999			3,501
Gain on extinguishment of debt		(71	)		(2,072	)
Loss on investments		3,689			3,271
Gain on sale of assets		(13,317	)		—
Changes in assets and liabilities:
Accounts receivable		(37,614	)		(29,881	)
Prepaid expenses and other current assets		9,324			(2,827	)
Accounts payable		21,666			(15,724	)
Accrued payroll and benefits		(15,683	)		(12,118	)
Accrued liabilities		241			(16,305	)
Deferred revenue		5,807			70,355
Operating lease liabilities		(59,188	)		(49,147	)
Other assets and liabilities		(17,545	)		(27,554	)
Net cash provided by operating activities-continuing operations		205,684			164,002
Net cash used in operating activities-discontinued operations		(2,776	)		(153,401	)
Net cash provided by operating activities		202,908			10,601
Investing activities:
Capital expenditures		(37,008	)		(31,054	)
Proceeds from sales of marketable securities		7,635			3,447
Purchases of marketable securities		(1,508	)		(3,624	)
Proceeds from note receivable related to property sold		46,800			—
Payment for purchase of business, net of cash and restricted cash acquired		—			(1,488,054	)
Cash received on DeVry University loan		—			10,000
Net cash provided by (used in) investing activities-continuing operations		15,919			(1,509,285	)
Net cash used in investing activities-discontinued operations		—			(3,287	)
Proceeds from sale of business, net of cash transferred		—			960,768
Payment for working capital adjustment for sale of business		(3,174	)		—
Net cash provided by (used in) investing activities		12,745			(551,804	)
Financing activities:
Proceeds from exercise of stock options		2,625			8,879
Employee taxes paid on withholding shares		(4,592	)		(2,834	)
Proceeds from stock issued under Colleague Stock Purchase Plan		608			535
Repurchases of common stock for treasury		(123,133	)		(120,000	)
Payment on equity forward contract		(13,162	)		(30,000	)
Proceeds from long-term debt		—			850,000
Repayments of long-term debt		(150,861	)		(1,079,713	)
Payment of debt discount and issuance costs		—			(49,553	)
Payment for purchase of redeemable noncontrolling interest of subsidiary		—			(1,790	)
Net cash used in financing activities		(288,515	)		(424,476	)
Net decrease in cash, cash equivalents and restricted cash		(72,862	)		(965,679	)
Cash, cash equivalents and restricted cash at beginning of period		347,937			1,313,616
Cash, cash equivalents and restricted cash at end of period	$	275,075		$	347,937

Adtalem Global Education Inc. Segment Information (unaudited) (in thousands)

	Three Months Ended											Year Ended
	June 30,											June 30,
							Increase/(Decrease)											Increase/(Decrease)
	2023			2022			$			%		2023			2022			$		%
Revenue:
Chamberlain	$	144,496		$	140,226		$	4,270		3.0	%	$	571,034		$	557,536		$	13,498	2.4	%
Walden		138,010			137,068			942		0.7	%		533,725			485,393			48,332	10.0	%
Medical and Veterinary		82,135			83,353			(1,218	)	(1.5	)%		346,067			338,913			7,154	2.1	%
Total consolidated revenue	$	364,641		$	360,647		$	3,994		1.1	%	$	1,450,826		$	1,381,842		$	68,984	5.0	%
Operating income (loss):
Chamberlain	$	35,683		$	41,124		$	(5,441	)	(13.2	)%	$	134,685		$	124,414		$	10,271	8.3	%
Walden		9,809			12,442			(2,633	)	(21.2	)%		35,880			(5,306	)		41,186	NM
Medical and Veterinary		10,477			13,957			(3,480	)	(24.9	)%		59,649			59,357			292	0.5	%
Home Office and Other		(16,412	)		(21,560	)		5,148		23.9	%		(62,044	)		(101,719	)		39,675	39.0	%
Total consolidated operating income	$	39,557		$	45,963		$	(6,406	)	(13.9	)%	$	168,170		$	76,746		$	91,424	119.1	%

Adtalem Global Education Inc. Non-GAAP Operating Income by Segment (unaudited) (in thousands)

	Three Months Ended											Year Ended
	June 30,											June 30,
							Increase/(Decrease)											Increase/(Decrease)
	2023			2022			$			%		2023			2022			$			%
Chamberlain:
Operating income (GAAP)	$	35,683		$	41,124		$	(5,441	)	(13.2	)%	$	134,685		$	124,414		$	10,271		8.3	%
Restructuring expense		—			572			(572	)				818			2,838			(2,020	)
Adjusted operating income (non-GAAP)	$	35,683		$	41,696		$	(6,013	)	(14.4	)%	$	135,503		$	127,252		$	8,251		6.5	%
Operating margin (GAAP)		24.7	%		29.3	%							23.6	%		22.3	%
Operating margin (non-GAAP)		24.7	%		29.7	%							23.7	%		22.8	%

Walden:
Operating income (loss) (GAAP)	$	9,809		$	12,442		$	(2,633	)	(21.2	)%	$	35,880		$	(5,306	)	$	41,186		NM
Deferred revenue adjustment		—			—			—					—			8,561			(8,561	)
Restructuring expense		71			37			34					3,245			4,053			(808	)
Intangible amortization expense		12,303			23,307			(11,004	)				61,239			97,274			(36,035	)
Litigation reserve		10,000			—			10,000					10,000			—			10,000
Adjusted operating income (non-GAAP)	$	32,183		$	35,786		$	(3,603	)	(10.1	)%	$	110,364		$	104,582		$	5,782		5.5	%
Operating margin (GAAP)		7.1	%		9.1	%							6.7	%		(1.1	)%
Operating margin (non-GAAP)		23.3	%		26.1	%							20.7	%		21.5	%

Medical and Veterinary:
Operating income (GAAP)	$	10,477		$	13,957		$	(3,480	)	(24.9	)%	$	59,649		$	59,357		$	292		0.5	%
Restructuring expense		353			5,034			(4,681	)				7,687			9,791			(2,104	)
Adjusted operating income (non-GAAP)	$	10,830		$	18,991		$	(8,161	)	(43.0	)%	$	67,336		$	69,148		$	(1,812	)	(2.6	)%
Operating margin (GAAP)		12.8	%		16.7	%							17.2	%		17.5	%
Operating margin (non-GAAP)		13.2	%		22.8	%							19.5	%		20.4	%

Home Office and Other:
Operating loss (GAAP)	$	(16,412	)	$	(21,560	)	$	5,148		23.9	%	$	(62,044	)	$	(101,719	)	$	39,675		39.0	%
CEO transition costs		—			—			—					—			6,195			(6,195	)
Restructuring expense		687			2,986			(2,299	)				7,067			8,946			(1,879	)
Business acquisition and integration expense		6,959			11,661			(4,702	)				42,661			53,198			(10,537	)
Gain on sale of assets		—			—			—					(13,317	)		—			(13,317	)
Adjusted operating loss (non-GAAP)	$	(8,766	)	$	(6,913	)	$	(1,853	)	(26.8	)%	$	(25,633	)	$	(33,380	)	$	7,747		23.2	%

Adtalem Global Education:
Operating income (GAAP)	$	39,557		$	45,963		$	(6,406	)	(13.9	)%	$	168,170		$	76,746		$	91,424		119.1	%
Deferred revenue adjustment		—			—			—					—			8,561			(8,561	)
CEO transition costs		—			—			—					—			6,195			(6,195	)
Restructuring expense		1,111			8,629			(7,518	)				18,817			25,628			(6,811	)
Business acquisition and integration expense		6,959			11,661			(4,702	)				42,661			53,198			(10,537	)
Intangible amortization expense		12,303			23,307			(11,004	)				61,239			97,274			(36,035	)
Litigation reserve		10,000			—			10,000					10,000			—			10,000
Gain on sale of assets		—			—			—					(13,317	)		—			(13,317	)
Adjusted operating income (non-GAAP)	$	69,930		$	89,560		$	(19,630	)	(21.9	)%	$	287,570		$	267,602		$	19,968		7.5	%
Operating margin (GAAP)		10.8	%		12.7	%							11.6	%		5.6	%
Operating margin (non-GAAP)		19.2	%		24.8	%							19.8	%		19.4	%

Adtalem Global Education Inc. Non-GAAP Adjusted EBITDA by Segment (unaudited) (in thousands)

	Three Months Ended											Year Ended
	June 30,											June 30,
							Increase/(Decrease)											Increase/(Decrease)
	2023			2022			$			%		2023			2022			$			%
Chamberlain:
Operating income (GAAP)	$	35,683		$	41,124		$	(5,441	)	(13.2	)%	$	134,685		$	124,414		$	10,271		8.3	%
Restructuring expense		—			572			(572	)				818			2,838			(2,020	)
Depreciation		4,279			4,499			(220	)				17,264			18,547			(1,283	)
Stock-based compensation		1,118			1,603			(485	)				4,719			6,707			(1,988	)
Adjusted EBITDA (non-GAAP)	$	41,080		$	47,798		$	(6,718	)	(14.1	)%	$	157,486		$	152,506		$	4,980		3.3	%
Adjusted EBITDA margin (non-GAAP)		28.4	%		34.1	%							27.6	%		27.4	%

Walden:
Operating income (loss) (GAAP)	$	9,809		$	12,442		$	(2,633	)	(21.2	)%	$	35,880		$	(5,306	)	$	41,186		NM
Deferred revenue adjustment		—			—			—					—			8,561			(8,561	)
Restructuring expense		71			37			34					3,245			4,053			(808	)
Intangible amortization expense		12,303			23,307			(11,004	)				61,239			97,274			(36,035	)
Litigation reserve		10,000			—			10,000					10,000			—			10,000
Depreciation		2,189			2,454			(265	)				9,492			9,255			237
Stock-based compensation		916			721			195					3,861			3,029			832
Adjusted EBITDA (non-GAAP)	$	35,288		$	38,961		$	(3,673	)	(9.4	)%	$	123,717		$	116,866		$	6,851		5.9	%
Adjusted EBITDA margin (non-GAAP)		25.6	%		28.4	%							23.2	%		24.1	%

Medical and Veterinary:
Operating income (GAAP)	$	10,477		$	13,957		$	(3,480	)	(24.9	)%	$	59,649		$	59,357		$	292		0.5	%
Restructuring expense		353			5,034			(4,681	)				7,687			9,791			(2,104	)
Depreciation		3,108			3,393			(285	)				12,475			13,890			(1,415	)
Stock-based compensation		712			922			(210	)				3,003			3,896			(893	)
Adjusted EBITDA (non-GAAP)	$	14,650		$	23,306		$	(8,656	)	(37.1	)%	$	82,814		$	86,934		$	(4,120	)	(4.7	)%
Adjusted EBITDA margin (non-GAAP)		17.8	%		28.0	%							23.9	%		25.7	%

Home Office and Other:
Operating loss (GAAP)	$	(16,412	)	$	(21,560	)	$	5,148		23.9	%	$	(62,044	)	$	(101,719	)	$	39,675		39.0	%
CEO transition costs		—			—			—					—			6,195			(6,195	)
Restructuring expense		687			2,986			(2,299	)				7,067			8,946			(1,879	)
Business acquisition and integration expense		6,959			11,661			(4,702	)				42,661			53,198			(10,537	)
Gain on sale of assets		—			—			—					(13,317	)		—			(13,317	)
Depreciation		381			757			(376	)				2,344			2,882			(538	)
Stock-based compensation		645			761			(116	)				2,716			2,784			(68	)
Adjusted EBITDA (non-GAAP)	$	(7,740	)	$	(5,395	)	$	(2,345	)	(43.5	)%	$	(20,573	)	$	(27,714	)	$	7,141		25.8	%

Adtalem Global Education:
Net income (GAAP)	$	22,244		$	6,746		$	15,498		229.7	%	$	93,358		$	310,991		$	(217,633	)	(70.0	)%
Net loss (income) from discontinued operations		1,306			(5,609	)		6,915					8,394			(346,946	)		355,340
Interest expense		15,294			19,441			(4,147	)				63,100			129,348			(66,248	)
Other (income) expense, net		(3,664	)		1,327			(4,991	)				(6,965	)		(1,108	)		(5,857	)
Provision for (benefit from) income taxes		4,377			24,058			(19,681	)				10,283			(15,539	)		25,822
Operating income (GAAP)		39,557			45,963			(6,406	)				168,170			76,746			91,424
Depreciation and amortization		22,260			34,410			(12,150	)				102,814			141,848			(39,034	)
Stock-based compensation		3,391			4,007			(616	)				14,299			16,416			(2,117	)
Deferred revenue adjustment		—			—			—					—			8,561			(8,561	)
CEO transition costs		—			—			—					—			6,195			(6,195	)
Restructuring expense		1,111			8,629			(7,518	)				18,817			25,628			(6,811	)
Business acquisition and integration expense		6,959			11,661			(4,702	)				42,661			53,198			(10,537	)
Litigation reserve		10,000			—			10,000					10,000			—			10,000
Gain on sale of assets		—			—			—					(13,317	)		—			(13,317	)
Adjusted EBITDA (non-GAAP)	$	83,278		$	104,670		$	(21,392	)	(20.4	)%	$	343,444		$	328,592		$	14,852		4.5	%
Adjusted EBITDA margin (non-GAAP)		22.8	%		29.0	%							23.7	%		23.8	%

Adtalem Global Education Inc. Non-GAAP Free Cash Flow Disclosure (unaudited) (in thousands)

	Three Months Ended						Twelve Months Ended
	FY23			FY22			FY23			FY23			FY23			FY23			FY22
	Q4			Q4			Q4			Q3			Q2			Q1			Q4
Net cash provided by operating activities-continuing operations (GAAP)	$	55,863		$	105,231		$	205,684		$	255,052		$	225,247		$	225,972		$	164,002
Capital expenditures		(17,952	)		(8,805	)		(37,008	)		(27,861	)		(26,029	)		(29,914	)		(31,054	)
Free cash flow (non-GAAP)	$	37,911		$	96,426		$	168,676		$	227,191		$	199,218		$	196,058		$	132,948

Adtalem Global Education Inc. Non-GAAP Net Leverage Disclosure (unaudited) (in thousands)

	Year Ended
	June 30, 2023
Adtalem Global Education:
Net income (GAAP)	$	93,358
Net loss from discontinued operations		8,394
Interest expense		63,100
Other income, net		(6,965	)
Provision for income taxes		10,283
Depreciation and amortization		102,814
Stock-based compensation		14,299
Restructuring expense		18,817
Business acquisition and integration expense		42,661
Litigation reserve		10,000
Gain on sale of assets		(13,317	)
Adjusted EBITDA (non-GAAP)	$	343,444

	June 30, 2023
Long-term debt	$	708,283
Less: Cash and cash equivalents		(273,689	)
Net debt (non-GAAP)	$	434,594

Net leverage (non-GAAP)		1.3 x