DeVry's CEO Discusses Q1 2012 Results - Earnings Call Transcript

| About: DeVry Education (DV)

DeVry (NYSE:DV)

Q1 2012 Earnings Call

October 25, 2011 4:30 pm ET

Executives

Patrick J. Unzicker - Vice President and Controller

Joan Bates - Director, Investor Relations

Daniel M. Hamburger - Chief Executive Officer, President and Director

Richard M. Gunst - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Analysts

Sara Gubins - BofA Merrill Lynch, Research Division

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

Paul Ginocchio - Deutsche Bank AG, Research Division

Peter P. Appert - Piper Jaffray Companies, Research Division

Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division

Suzanne E. Stein - Morgan Stanley, Research Division

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

Kelly A. Flynn - Crédit Suisse AG, Research Division

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Amy W. Junker - Robert W. Baird & Co. Incorporated, Research Division

Paul Condra - BMO Capital Markets

James Samford - Citigroup Inc, Research Division

Corey Greendale - First Analysis Securities Corporation, Research Division

Gary E. Bisbee - Barclays Capital, Research Division

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

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2012 DeVry Results Conference Call. My name is Regina, and I will be your operator for today. [Operator Instructions] Today's event is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Joan Bates, Senior Director of Investor and Media Relations. Ms. Bates, please go ahead.

Joan Bates

Thank you, Regina. With me today from DeVry management are Daniel Hamburger, President and Chief Executive Officer; Rick Gunst, Senior Vice President and Chief Financial Officer; and Pat Unzicker, Vice President and Controller.

I'll now review the Safe Harbor provisions of this results call. This call may contain forward-looking statements within the meaning of the Federal Securities Laws. Such forward-looking statements reflect, among other things, management's current expectations, plans and strategies, anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements. Please see our public filings with the Securities and Exchange Commission for more information about forward-looking statements and related risk factors.

Telephone and webcast replays of today's results call are available until November 15, 2011. To access the replays, please refer to today's release for more information.

With that, I'll turn the call over to Daniel Hamburger.

Daniel M. Hamburger

Thank you, Joan. Thank you, all, very much for joining us today for our fiscal 2012 first quarter results call. I'll start off with an overview of the quarter, and then Rick and Pat will walk us through the results. And then we'll, of course, open it up and try to maximize the time available for your questions.

So let me comment on the factors that are driving our results, our plans are to improve and why we believe these are near-term issues and the long-term growth outlook is strong. All the 3 near-term headwinds that we talked about on our last call remain true today. First, after several years of exceptional growth, we've seen a reversion to the mean. This trend has presented some near-term downward pressure, and over the long term, we still believe, in what we call, the return to the historical mid- to high single-digit range.

Second, still working through some operational adjustments that we put in place related to the new regulations. As we talked about last quarter, these adjustments have included reevaluating our marketing affiliates to make sure they comply with the new regulations, increase training of our employees on the new regulations such as misrepresentation and what that means for our institutions and helping our employees adapt to our new performance management system. Adjustments we've been making have been a distraction to our employees and have impacted our results, but we're working through them as quickly as thoroughly as possible and don't foresee them being a long-term issue.

The third headwind is the one that we see having the greatest impact on our performance, and that's the economy. The economy is lousy and in particular, unemployment has remained high for an extended period. These conditions are impacting all of higher education not just the private sector. This new data out from the Graduate Management Admissions Council. Those are the people that administer the GMAT exam.

And that said, the applications for full-time MBA programs dropped an average of 9.9% from a year ago. Nearly 1/3 of these programs reported decreases of more than 10%. SO you might say to yourself, "Well, that's odd." Usually in bad times, MBA applications go up. Well it did at first. But now with unemployment persisting for so long, it's turning the other way. Similarly according to the Council of Graduate Schools, enrollment of new students at all graduate schools taken together fell for the first time since 2003.

Even enrollments at community colleges have slowed dramatically over the last year. Now community colleges and some other segments of higher education are somewhat countercyclical. Typically when unemployment goes up, people go back to school.

It's not the unemployment level, it's the duration of high unemployment that's key now. The sentiment we're seeing from potential students is very risk-averse, very cautious when it comes to spending, making a significant commitment of any kind. So this point really struck home for me when I was recently in Houston doing a focus group with some DeVry University students. And one of the students mentioned that his cousin just graduated from high school last June, chose to put off attending college for a year. He knows he needs to go to college, just putting it off a year. It's not affordability, per se, if you will, loans are available, grants are available. It's more of the psychological effect of the economy on prospective students. Just as people are putting off buying homes even when housing prices are cheap and interest rates are extremely low, some students are deciding to put off enrollment commitments until things begin to improve. So the countercyclical trend has reversed itself. This could imply that once the economy begins to show improvement and the job market rebounds, we'll see students go back to school who'd previously put off that decision.

We've been experiencing these headwinds first hand, particularly at 2 of our institutions. As you saw from our enrollment results last quarter, the DeVry University undergrad and in Carrington Colleges, our enrollments decline. We're disappointed as we know you are too, by our financial results this quarter.

We entered the year optimistic to see some upward improvement in enrollment trends, but to date, just haven't seen that occurring. As enrollment trends continue to remain uncertain, we're focused on controlling the factors we can control. And so let me highlight our action plan to improve our results.

First off, we're being very disciplined in controlling costs, and deferring spending where appropriate and carefully matching our resources to our student population. For example, we've reduced about 100 positions in administrative functions, which we were able to do given new IT capabilities that we've implemented, and this is an example of the investment that we made in Project DELTA is paying off. We haven't talked a lot about these kinds of efficiency improvements, but we want you to know that it is a focus. We'll continue to prudently align our resource levels with our enrollment trends.

Second, improve awareness building. We're refining our communications to optimize our spend and to better connect with potential students. We're reallocating our mix, pure inquiries from Web advertising, more from search, tools from networks, our website.

We're demonstrating that we can still grow even in the face of the headwinds I mentioned before like the softness in the overall graduate school market. Keller Graduate School of Management is still in positive territory, and Chamberlain's Master of Science in Nursing is growing nicely as well. We've actually in the Masters side we're taking share based on having a strong value proposition and this increased awareness that we're focused on driving.

Third, we're enhancing the student recruitment process. At Carrington Colleges, we're implementing a new centralized contact center that will create a faster more efficient response to potential students. We're also helping students find the necessary financing that they need to pursue a degree. Last fiscal year, we distributed over $28 million in scholarships to our students. Now we're looking at ways to optimize our scholarship strategy even more and help students start and stay in college.

Fourth, new programs and new locations in high-demand areas. We just received approval from the Illinois Board of Higher Education for new Doctor of Nursing Practice at Chamberlain, this is pending higher learning commission approval. At DeVry Brasil, new programs in engineering have been a growth driver. We're on target to open 9 to 10 new campuses in fiscal '12 across DeVry University, Chamberlain, Carrington and DeVry Brasil. And so this is an important part of our action plan to drive growth as well.

And fifth is building the team. We're confident in our ability to manage through this cycle, and the key reason for this is the strength of DeVry's team. We continue to add outstanding talent. Last month, we hired Dr. Andrew Jeon, formerly of Partners Harvard Medical International, to succeed Dr. Tom Shepherd following his retirement at DeVry Medical International. DeVry Medical International includes Ross University School of Medicine, Ross University School of Veterinary Medicine and American University of the Caribbean School of Medicine.

At Ross University School of Veterinary Medicine, we've just appointed Dr. Elaine Watson to serve as Dean beginning in February. Dr. Watson will come to us from the University of Edinburgh, one of the world's leading veterinary medical schools. We believe she'll continue to drive the quality of our programs to the next level. And we've deepened our bench of talent at Carrington Colleges with the addition of Dr. Tamara Rozhon to serve as President of Carrington College, and Melissa Esbenshade as the new VP of Marketing at Carrington.

I was recently at a meeting with Anne Mulcahy, former CEO of Xerox, who led their impressive resurgence. She spoke -- she talked about turnarounds in tough economic times like we have today, and this is the time to get really tight, very focused, control costs, reserve cash. It's also a time to invest, invest in your strategy, invest in quality and in growth initiatives. And that's what DeVry is doing, investing in areas like healthcare. We continue to see growth in nursing and medical fields. That's why we acquired AUC, American University of the Caribbean.

Investing internationally. On the developed world, the economy is struggling right now. Developed countries are growing, and that's also a long-term trend. We're adding resources at DeVry Brasil.

Professional Education is a third growth area. Our acquisition of ATC International is an investment in both Professional Education and this international trend. We make these investments with confidence, but what we're seeing now is a near-term discontinuity in the long-term growth trend.

Recent McKinsey studies cites the skills gap that we have in our workforce is one of the reasons for the high rate of unemployment. Jobs are actually available, but employers can't find the people adequately trained to fill those jobs. It's been estimated that there's up to 3 million current job openings nationwide in the United States, even though there are 14 million unemployed.

GE CEO Jeff Immelt said on 60 Minutes a couple of weeks ago that there are hundreds of thousands of openings for radiology technicians. You see, GE, of course, is one of the largest sellers of radiology machines. So this skills gap remains a long-term driver of demand for clear focused education like Carrington's radiography program.

Our confidence is bolstered by these fundamental need for career-focused education and by the strong value proposition that we offer our students. Recently, we released a study we had commissioned by The Cicero Group, which tracked wage growth from 2003 to 2010. Graduates from 3 of our institutions in 7 states, alongside a control group of individuals who expressed interest in one of these colleges but ultimately didn't pursue a degree.

At the end of the 7-year period, bachelor's degree graduates from the DeVry institutions increased their earnings on average by 65%. Compared to that control group, the average was 18%. Similarly, for associate degree graduates, wages increased on average 42% compared to 22% for the control group.

This study demonstrates that our graduates are receiving a significant return on their educational investment. As another indicator of the value proposition that we offer students, even in this tough job market, our graduate employment rate for DeVry University students in the active job market employed in their field of study within 6 months of graduation is 87%. Now the goal we hold ourselves accountable to has always been 9 out of 10. So to hold ourselves accountable, we're investing in more resources to help our students like our new partnership with CareerBuilder.

So there's clearly a need for programs that can bridge the skills gap. That gap is going to continue to be a long-term demand driver for education, and it will be filled by colleges with a strong value proposition of career-focused education.

Thank you for giving me a chance to give you that overview. Now I'd like to turn the call over to Rick and Pat for the financial and enrollment results.

Richard M. Gunst

Thanks, Daniel, and good afternoon, everyone. As expected, fiscal 2012 started out with continued revenue deceleration, resulting in earnings falling below the prior year level for the first time since the fourth quarter of fiscal 2005. Revenue in the quarter was $519 million, down 0.5% versus prior year, with the acquisitions of AUC and ATC International contributing about 150 basis points of growth in the quarter. Net income of $57 million was down 22% versus prior year and earnings per share of $0.83 was down 19%.

And in the quarter, our income tax provision was approximately $22 million, and we invested about $34 million of capital in our various educational institutions.

This quarter results reflect a slowdown of top line growth driven by lower enrollments within DeVry University and Carrington and the resulting margin pressure.

Our overall effective tax rate was 27.9% in the quarter as compared to 34.5% in the first quarter last year and 33.1% for the full year of fiscal 2011. The tax rate was quite a bit lower in the first quarter due to the lower mix of domestic source income this year, stemming from earnings decline at DeVry University and Carrington combined with earnings growth at DeVry Brasil and the addition of AUC.

We also obtained certainty on the safe tax treatment of our online operations that resulted in a favorable catch-up adjustment for prior years as well as an ongoing benefit. We anticipate the full year fiscal 2012 tax rate now to be in the 31% to 32% range.

Cost of educational services expense in the quarter increased by about 4.5% versus prior year and up about 3% excluding the AUC and ATC acquisitions.

Student services and administrative expense was up 10.7% versus prior year. About 1/2 of that increase was for incremental inquiry generation and new location support, primarily at DeVry University and Chamberlain. About 170 basis points of this growth was driven by expenses from the addition of AUC and ATC, which were not part of the organization last year. And the balance or about 330 basis points of the growth, was the impact of inflation, change management activities and the impact of hiring from prior year.

We continue to invest resources to improve academic quality and enhance student services while at the same time reducing expenses where revenues are not consistent with the cost structure on a location-by-location basis.

We've eliminated or deferred hiring, cut discretionary spending and continue to pursue cost-saving initiatives with materials, supplies and other outside services. We're managing our cost structure closely, while we're making prudent investments for future growth where warranted.

So with that overview, let's now shift to the operating segment results, which are further detailed in our release. Starting with Business Technology and Management segments, revenue was down about 4% versus prior year in the quarter, driven by the decline in total undergraduate enrollment reported last period. Enrollment at the graduate level was up about 2% in September. We don't have a perfect crystal ball showing us when the undergrad trend will turn positive, but we do believe long-term growth is expected to return to the mid- to high single digits.

Segment earnings were $61.4 million in the quarter, down 27% versus prior year, driven by the revenue decline and resulting margin compression. We've been focusing on reducing costs, where appropriate, without compromising academics through program development and new location expansions, the benefit of which we'll see in fiscal 2012 and beyond.

Within the Medical and Healthcare segment, revenue was up about 8%, with varying performance among the institutions. Chamberlain College of Nursing delivered strong top and bottom line results, fueled by the 16% total enrollment growth reported last period. The growth is being driven by our 4 new locations added over the past year or so in Chicago; Arlington, Virginia; Houston; and Miramar, Florida; combined with increased enrollment at our existing locations and online due to strong demand for nursing professionals. We continue to expand Chamberlain's geographic reach, with Atlanta and Indianapolis our next expansion targets, pending approvals.

At DeVry Medical International September term new student enrollment showed strong growth as expected, up 23% versus prior year due to overlapping the weaker new student enrollment last year at Ross's Medical School campus. Total enrollment was up 6.3%.

AUC contributed 192 new students and 1,226 total students to these results. The integration efforts with AUC are going as planned under the leadership of AUC's Dean, Dr. Bruce Kaplan.

Management results reflect the effects of the double-digit enrollment's declines reported last period and prolonged poor economic environment and hesitancy of prospective students to pursue an education. We continue to address admissions and marketing-related opportunities and firmly believe in the long-term value proposition. And we're going to report Carrington enrollment next in December.

Earnings for the Medical and Healthcare segment in the quarter were down 17% versus prior year, with strong performances at Chamberlain and the addition of AUC, offset by the decline in earnings results at Carrington.

Finally, revenue within International, K-12 and Professional Education increased about 7% in the quarter, while the operating loss increased versus prior year. Revenue growth for the quarter benefited from strong student enrollment growth at DeVry Brasil, with new student enrollment up about 29% and total enrollment up 18%. This growth is largely driven by the sharing of best practices that has occurred over the past 1.5 years or so.

Revenue also grew at Advanced Academics, while Becker experienced a slight revenue decline. You may recall that Becker is overlapping strong comps from the year ago period, driven by the rush to take the CPA exam in advance of the 2011 exam change.

The higher operating loss from the quarter versus prior year resulted from increased investments in new campus location cost at DeVry Brasil. In addition, the first quarter represents a seasonal low point for tuition revenue at DeVry Brasil, Advanced Academics and ATC International.

Though fiscal 2012 is off to a slower start than in past years due to the enrollment challenges at DeVry University and Carrington, during our conference call last quarter in August, I've stated that earnings in the first half of the year will be below prior year given the impact of the enrollment deceleration and tougher year-over-year comparisons. This is still the expectation given our first quarter results.

We also stated that we expect the second half earnings to be up versus prior year, with the full year likely to be plus or minus the fiscal 2011 level, and that was predicated upon improved enrollment at DeVry University undergrad and Carrington to be able to show earnings growth for the year. Even though enrollment declines appeared to be stabilizing, we don't expect full year earnings growth at this point, given that enrollments are not improving as much as we had hoped. Back in August, we thought we were seeing some early signs of improving economy, but then the U.S. debt ceiling debacle and the European debt crisis delivered yet another blow to consumer confidence.

And so while we're not happy to report a decline in revenue and net income, we're focused on improving our operating results. And we also think it's important, it's very important to keep things in perspective.

First, these declines follow a 5-year period of above trend growth, with revenue growing about 20% per year on average and earnings growing at 50% per year over this 5-year period. Second, our economics are still quite favorable, with double-digit net income margins. And finally, our balance sheet and financial position are very strong.

And so with that, I'm going to turn over to Pat to talk more about that balance sheet and financial position. Pat?

Patrick J. Unzicker

Thanks, Rick, and good afternoon, everyone. Cash flow from operations for the first quarter was $187 million versus $196 million last year. The strong cash generation drove our cash and marketable security balance to $325 million at the end of the quarter as compared to $453 million last year. We funded the acquisition of AUC from our international cash balances while continuing to remain debt-free.

Our net accounts receivable balance was about $151 million versus $161 million last year. This lower accounts receivable balance was in part the result of decreased revenues, but also attributed to our students' ability to pay back their accounts based on positive student outcomes, as well as our continued focus on student service and collections management.

Our bad debt rates continue to reflect the focus on the receivable collection process, with bad debt expense for the quarter actually down to 2.3% of revenue as compared to 3% last year; again, an indicator of our students paying back their accounts even during these tough times and the strong value proposition of our programs. We're proud of our team's strong focus on receivables and cash management.

Capital spending for the quarter was $34 million versus $23 million spent last year. This spending was focused on facility improvements to better serve our students across all of our institutions, as well as new DeVry University campuses, expansion at DeVry Brasil and also within Ross University and Chamberlain College of Nursing so that we can help meet society's needs for more doctors and nurses. Total capital spending for the fiscal year is likely to be in the $170 million range, which includes capital investments and our newly acquired AUC institution.

Finally, during the quarter, we repurchased just over 1 million shares of our common stock for about $44.5 million or on average, about $44 per share. Under our structured 10b5-1 plan, we will be repurchasing more shares with the recent stock price volatility. We are now more than halfway through our sixth $100 million program.

Now let me turn the call back over to Daniel.

Daniel M. Hamburger

Thanks, Pat. Before you open it up to questions, it's important to mention that our diversification strategy has continued to be a real asset for us. While we're disappointed in the softer enrollments at DeVry University undergraduate and at Carrington, we're encouraged by the enrollment increases that we're getting at several of our institutions, namely, Keller, Chamberlain College of Nursing, Ross University's Schools of Medicine and Veterinary Medicine, American University of the Caribbean and DeVry Brasil.

Overall, our diversification strategy helped to mitigate the decline, with total enrollment across all DeVry institutions down less than 1% to about 123,000 students.

As we go forward, we'll do everything we can to manage our institutions efficiently and to focus on controlling the things we can control. No matter what, we won't sacrifice quality. When students attend one of our institutions, they don't plan their educational experience by the quarter and neither do we. We'll continue to make the necessary investments in the programs, locations and services that have made the DeVry family of institutions so successful over the long run. And so we feel very positive about the long-term opportunities that we see.

And with that, we'll be very happy to take your questions.

Joan Bates

Okay, great. Before we give our instructions, I'm just going to as the participants to ask one question and maybe one quick follow-up. And if you jump back into the queue, we're going to give you as much time as possible today to ask your question. So Regina, if you could give our callers the instructions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question today comes from the line of James Samford with Citigroup.

James Samford - Citigroup Inc, Research Division

Just wanted to revisit just really quickly the outlook you've provided. I think -- did you say that you wouldn't see revenue growth this year and that earnings would be or profits would be down slightly, is that what I heard?

Richard M. Gunst

Actually, I didn't say anything about revenue growth, so I did say that earnings were likely to be down this year.

James Samford - Citigroup Inc, Research Division

Okay. And should we always think of Q1 as sort of a negative drag on margins from the International, K-12 and Professional? Is that sort of the reasonable way to think about that part of the business?

Patrick J. Unzicker

Yes, it is. Given the fact that at DeVry Brasil, there's only one month of revenue-generating activity based on the semester start there as well as Advanced Academics, with the high school and Medical. Middle school professions really don't start in earnest until the 1st of September.

Operator

Your next question today comes from the line of Andrew Steinerman with JPMorgan.

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

This is Jeff for Andrew. When you look at continuous student enrollment, what do you see in persistence, particularly within DeVry University?

Daniel M. Hamburger

Jeff, could you repeat that?

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

What do you see in student persistence within DeVry University, within this quarter, in the current quarter?

Daniel M. Hamburger

Okay. Jeff, we don't break out retention as a metric. But I can just in broad terms tell you that it's at a historical -- it's overall rates are up historically. We did see some softness in the summer, and we think that could continue here in the near term. You've got a little bit of phenomenon of higher numbers of graduates, driven by the higher enrollments that we saw in past enrollment cycles of course. And some of the same economic factors that I talked about affecting Houston enrollment. It could be a little bit of a pressure on persistence as well. So that's a little bit of color around that issue for you.

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

I appreciate it. As a follow-up, are you seeing changes in the average class sizes within DeVry University given the decline in enrollments?

Daniel M. Hamburger

I don't have a number to report for you. I mean it would be expected, you might see the average class size down a little bit, but part of what we do is manage that and where it makes sense to consolidate class sections, and we certainly -- we do that where that is possible without impinging on either academic quality or in student convenience, in the schedule. But yes, on the margin that tends to compress a little bit. And so this have that experience for them whenever you have a contraction in enrollments.

Operator

Your next question comes from the line of Gary Bisbee with Barclays Capital.

Gary E. Bisbee - Barclays Capital, Research Division

Can you give us any sense of magnitude of either the savings, efficiency savings you'd get from those lay-offs and anything else from the new system? And then also any sense of how much cost you might be looking to or able to cut this year? Is it likely to be a material thing that could sort of reduce the amount of margin degradation that happens from the falling enrollment? Or should we not expect there to be a real rate of change on cost from sort of the trend this quarter?

Patrick J. Unzicker

Sure. Controlling, as Daniel said during the call, a number of factors that we can positively influence, and we continue to match our cost structure with our revenue expectations on an individual location basis. So that's an opportunity and will continue to be an opportunity. At the same time, we're deploying both human and financial resources to further invest in those areas and programs of high demand across the portfolio of institutions. And we expect these savings in terms of deferred hiring, renegotiating contracts of vendors, consolidating certain sections without impinging on academic quality, certainly to be in the tens of millions of dollars this year.

Gary E. Bisbee - Barclays Capital, Research Division

Okay. And the quick follow-up is just last quarter -- I guess earlier on the call you said to date you haven't seen enrollment trends improve at all. Could you just give any color on what maybe you thought you would have seen to date and that hasn't occurred? Or what makes you say that statement?

Daniel M. Hamburger

Well one piece on that, Gary, is I think Rick mentioned that in the spring, in the summer, we collectively, United States, saw an improvement in consumer sentiment. We saw the economy seeming to go up a little bit. And then we got hit with the debt ceiling debacle, which was right at the time actually that we spoke last in one of these calls. And then of course the European crisis as well. And that debt ceiling debacle did really seem to give a blow to consumer confidence. In fact, somebody just handed me an hour ago, off of Reuters a new article that said the confidence board index of consumer attitudes has fallen to its lowest level in 2.5 years. And what they pointed to was that consumer attitudes had soured since the spring, hit by fears of renewed recession, political gridlock, high unemployment, volatility in the stock market. So that was the change that we saw. So I think it's consumer sentiment that is behind the decision to make that commitment.

Operator

Your next question is from the line of Peter Appert with Piper Jaffray.

Peter P. Appert - Piper Jaffray Companies, Research Division

I'm just wondering, on the longer term margin expectations for the business, Daniel, you've talked about the, I guess, the unsustainably high growth rates you've enjoyed in the last couple of years and margins got to the low 20s. Is it unrealistic therefore to expect in the context of a new environment that, that level of margin is achievable again?

Daniel M. Hamburger

Well I think it really depends on the getting back to trend. And we've had a historical trend of the mid to high single-digits enrollment growth. Historically, we've seen tuition increases that add a little bit on top of that. So we're able to get to revenue growth that's somewhat above that. You've got operating leverage, which -- plus just being good managers, we see a number of opportunities to run things more efficiently. Project DELTA was a good example of that, something that we started before this recent softness. I'm glad we were looking ahead and making long-term investments. And there's many other opportunities like that, that can help you to drive earnings growth that is commensurate with the kind of the things that we're talking about here. So that's one way of looking at it.

Peter P. Appert - Piper Jaffray Companies, Research Division

I'm wondering though, if you have a particular longer term margin target that you could share with us?

Richard M. Gunst

Well, this is Rick. I agree with everything, what Daniel said and what Pat talked earlier about the cost savings. So we'll be able to mitigate some of the margin decline by some of the cost savings actions and try to look at this on a location-by-location basis, but the risk has been -- will probably short term continue to be some deleveraging within our results. But then once the long-term trends come back, then we should be able to get back on a state back to margins, where we have been the last couple of years. We don't see the specific, although.

Operator

Your next question comes from the line of Paul Ginocchio with Deutsche Bank Securities.

Paul Ginocchio - Deutsche Bank AG, Research Division

Just going back to that DeVry new undergrad enrollment number. I think it was minus 26 last quarter. And I think, Daniel, at the time, you'd said you'd hoped for a little bit better number. And I know that the commentary you just gave around consumer confidence. So should we be expecting another sort of minus 25% for the fall? Is that roughly where we're going to come out?

Daniel M. Hamburger

Well we don't have forward guidance for you. We don't expect any significant improvement at DeVry University or Carrington in the near term. We see stabilization of the rate, longer term, getting back -- having a reversion back to trend. But it's also possible that new student comparable numbers year-over-year could be a little bit choppy as we moderate. I think over the long term, mid- to high-single digit increases are sustainable, and we think what we're seeing right now is sort of a near-term rate for discontinuity from the long-term trend.

Paul Ginocchio - Deutsche Bank AG, Research Division

And just to follow-up, I think you'd said in your prepared remarks that you would spend more money on inquiries or leads, is that correct? And have that not trend? And just, I guess, conversion fell off?

Daniel M. Hamburger

Yes. What I would say is that the color there is the interest is there on the part of prospective students. So the inquiries, while they're a little bit weaker overall, I would say the bigger impact is more on the conversion to the ultimate enrollment. So the interest is there. The follow-up people are doing a great job of following up with the prospective students, providing great customer service. And then what you see is sort of right at the end -- gosh, I just can't commit right now. And that's where that consumer sentiment, that consumer confidence and the prolonged down economy, really the prolonged persistence of unemployment is really having the impact.

Operator

Your next question comes from the line of Trace Urdan with Wunderlich Securities.

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

Daniel, at the beginning of your prepared remarks, you've commented on the impact of the regulatory changes on the staff and you talked about some of the training that you had to do. And I know that you had to make some changes to the way you compensate your enrollment counselors. I'm wondering if you believe that any of those regulatory changes may have had an impact on the student starts and whether you have any kind of visibility on when you might be able to roll past some of that disruption?

Daniel M. Hamburger

Okay. Let me comment on those issues. Let's start off first by saying something, I know that you know, but just in the way that it came out, I just want to make sure that nobody has a misperception or misconception just because in the media, the general media is not as informed as the people on this call probably are. There are misperceptions. One of those is that, well, we were paying commissions and now we can't pay commissions anymore. We were not paying commissions before. We are not paying commissions now. We were compliant with the compensation rules before, and we remain and will remain compliant now. But there was a change in the performance management. For example, for an admissions adviser or recruiter, the enrollments were a part, and were not the sole measure by any stretch, but they were a part of performance management. And now it's not. And so any time that there's a change, there's a learning curve and there's a lag effect. So that's an example. Another one that I would give you, Trace, is that the managers. They've been somewhat unclear in how to best coach their enrollment advisers, the recruiters. And so being good DeVry people and the DeVry culture is very conservative and they act that way. They're erring on the side of being very cautious and very conservative. And so that's the kind -- when we say a distraction or an adjustment, that's the kind of thing that we're talking about. And yes I think that has had an impact, very hard to quantify, but has had an impact on our performance in the near term. But the reason that we have confidence in the long term is that these things -- we've been through these roads before over many, many years and even decades, we've had changes in these kinds of rules. We've always adapted to that. In fact, come out stronger on the other side of those changes. And we know that the fundamental value proposition of the program is ultimately what drives the enrollment. It's the need for the education that the students are looking for, and so that's why we have a confidence over the longer term.

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

Do you have any kind of sense of when you think things will be sort of back to normal? If that's the proper concept.

Daniel M. Hamburger

Yes. I really don't have a crystal ball for you on exact timing, but I put this more in the near term, not in the long-term category.

Operator

The next question comes from the line of Jason Anderson with Stifel, Nicolaus.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

I'm in for Bob and Jerry today. Just a question on to your new locations and new program approvals. Have you seen any delays there? And obviously, you commented on a couple of state approvals, I noticed HLC pending, just curious on the trend you're seeing there.

Daniel M. Hamburger

Sure. Not a major shift there. There's always from time to time a certain state or a certain jurisdiction where it can take some time, and those are barriers to entries or moats as Warren Buffett likes to call them. When you're on the other side of them, they look really good. So when I said, and I think Rick mentioned, there's also pending approvals. That's our -- we always say that because until you have the final approval, so I was very careful to use that kind of compliant language. And we've always done that even before it was cool, even before there was new misrepresentation language I guess. So that's just our standard way, until it's final, it's not final. But now we do expect 9 to 10 new locations this year, many new programs. We're actually investing more. We're spending more on new program rollouts because we see high demand areas. So that's an area where -- most people have asked, "Why don't you just cut costs across the board, if things are -- your earnings are down?" Well the earnings are down, but we still have positive earning hill, 11% after-tax margins. And so we still have the resources to invest in growth opportunities, and that's our job is to serve the growing need for career-focused education. So new programs, new locations, definitely a part of the plan.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Great. And then just as a quick follow-up, do you expect -- is there any distribution throughout the year? You'd expect those to land earlier or later or spread out?

Daniel M. Hamburger

I have a lot of color on the spread there.

Richard M. Gunst

We've already got a few of them. In DeVry University, they're already in place and starting, and then others will come later in the year. So on average, it's pretty evenly spread throughout the year.

Daniel M. Hamburger

Yes. I was just on -- I mentioned Houston and I visited DeVry University. I was also there for a ribbon-cutting or grand opening on a new Chamberlain College of Nursing location. So those are definitely one of the most rewarding parts of my job is to open a new nursing campus. So we're certainly looking forward to doing more of that. But those tend to come throughout the year, and we tend to focus on doing several in parallel. Because of those approvals, we can't always control when you get those approvals, so you put several lines out in the water, so that you maximize your chance to serve those programs in those markets when you get the approvals.

Operator

Your next question comes from the line of Kelly Flynn with Credit Suisse.

Kelly A. Flynn - Crédit Suisse AG, Research Division

My question relates to the Business Technology segment revenue. It was a bit lower than I was modeling off of the summer enrollments, and so I'm just wondering if you can clarify. Was there anything new going on with pricing, any discounting that may have impacted that? Or was there an incremental persistence this year, which I think you might have alluded to earlier, Daniel?

Daniel M. Hamburger

The only thing might be maybe the way you're modeling the persistence, I think. No real change in the pricing or the scholarships or discounting or things like that other than what's already out there in the publicly announced world.

Kelly A. Flynn - Crédit Suisse AG, Research Division

But the persistence did get worse due to graduation? Is that how to think about it?

Daniel M. Hamburger

A little bit, but I don't think that was a major, probably a major factor.

Operator

Your next question comes from the line of Corey Greendale with First Analysis.

Corey Greendale - First Analysis Securities Corporation, Research Division

I also had a question on the Business Technology Management segment, but on the cost side. So I know you've talked about some of the cost-saving measures, things like contract renegotiations. I was hoping you might be able to speak more specifically to just the variable portion of the cost structure and to what degree you can get cost savings just based on being able to take out faculty costs as the student population decreases.

Richard M. Gunst

Yes. I'll take that first. Pat, join in. But we are able to modify as Pat mentioned earlier our scheduling within DeVry University. If enrollments are down, we can vary that for some faculty. We do have full-time and we do have some part-time faculty. So that's abled in adjustments. And some of the cost savings actions that Pat alluded to, we've implemented some of that at the end of last year, implemented that during the quarter, so that will carry forward and drive more savings as we go on throughout the year. Pat?

Patrick J. Unzicker

Yes. But to your point, in terms of when we referenced tens of millions of dollars, labor represents the largest portion of that, and again, driven primarily by deferring the hiring and benefiting from the rightsizing that we did in the fourth quarter of last year and having that carry through this year.

Corey Greendale - First Analysis Securities Corporation, Research Division

Okay. And secondly, I was hoping just for kind of an expectation management goal here that -- as I calculated in the quarter you just reported that pretax income was down about 29%. So if you've got similar trends at DeVry undergrad in terms of new students similar trends at Carrington, is it fair to assume decelerating revenue there, and maybe some cost savings offsetting that? But the bottom line is, is there any reason to think that you offer your change in the pretax income is just not getting materially better in the next quarter or 2?

Richard M. Gunst

Well again, we don't give any quarterly guidance. Corey, as you know, we do anticipate, as I said in my comments that earnings in the first half of the year are going to be down, and we do expect things to improve from an earnings comparison to prior year as we go into third and fourth quarter.

Daniel M. Hamburger

And Corey, also we didn't see your research report, so will give a little commercial for your research report that just came out I guess in the last few days. And these guys did a survey of prospective students and showed that the sort of a decoupling of the historical relationship between high unemployment and enrollment growth that showed that maybe economic recovery have a positive impact on enrollment. And so I appreciate the analysis.

Corey Greendale - First Analysis Securities Corporation, Research Division

I appreciate that, Daniel. And if you have any questions, feel free to follow up offline.

Operator

Your next question comes from the line of Sara Gubins with Bank of America Merrill Lynch.

Sara Gubins - BofA Merrill Lynch, Research Division

Daniel, I had a question about your comments really attributing the weakness in student starts to the economy. And I don't doubt that, that's a big factor. But given the operational changes that you've been making, how do you disaggregate how much of the decline is due to operational changes, which will clearly begin to cycle through over the next few terms versus the underlying economic environment?

Daniel M. Hamburger

Well, Sara, the operational changes that you're referring to are what -- I equate that to the sort of the distraction factor around the new processes, new performance management, just things like that. I should point out that I know you know this, but some people may not, we didn't change the admissions criteria. We didn't -- and by the way, our institutions are not open -- not going from open enrollment to having admissions criteria. We already had admissions criteria. DeVry University, for example, undergraduate, which is where we're looking, has had admissions criteria exam, sort of test scores and other entrance criteria for many years. So it's not likely we went from open enrollment to having those, and therefore, that caused the decline. We'll continue to take a look at those. We are looking at those, and we may be tweaking those. But that really wasn't a factor for us. There's much more, we think, the economic and the consumer confidence factor.

Sara Gubins - BofA Merrill Lynch, Research Division

Okay. And then separately, regarding scholarships. In your prepared remarks, did I understand correctly that you're planning to do more scholarships next year? And if so, could you just talk about how that might be ramping?

Daniel M. Hamburger

Well it's really being more strategic in the use of the scholarship dollars than any very large or even significant increase. We will try to keep it in the same range where we have been, but try to be more strategic in the use of that. So instead of one student getting x, maybe 2 students get half of x each, administered in a more strategic and in a targeted way. And also in addition to helping students start school, how can we use the scholarship moneys that we do have to help students stay in school. So we're proud of allocating a significant portion -- last year, it's been about 10% of our after-tax earnings -- for scholarships and we want to continue to do that and find ways to do it more strategically.

Operator

Your next question comes from the line of Suzi Stein with Morgan Stanley.

Suzanne E. Stein - Morgan Stanley, Research Division

I just wanted to follow up on what you said as far as the impact of changes in the performance management plans. I'm just curious, has there been higher turnover of admission counselors? Or are they just being less productive given the new structure?

Daniel M. Hamburger

It's more of the latter, not a significant change in turnover. And what we're doing about it is training our way through this. So increased levels of training. Part of the training, by the way, reassures our folks that a lot of what's happening is no change. It's almost like reassuring people you don't have to change, the way you serve your students, the way you advise them about the value of an education or this particular program or that program, none of that changes. And what's interesting is a lot of our folks just sort of made the assumption that we're going to change everything. I've got to do something different when a lot of the changes is just reassuring people to continue to do the good job with certain new students that you did for. So it's very interesting but it's human nature and that adjustment process has a little bit more of a lag effect maybe than we thought. The other impact there is in contrast to maybe some other publicly held organizations, we started that a little bit earlier, even like a -- we started back the year before. We were very careful, very conservative. We waited until we saw all the rules in their final form. And so I guess that's the bad news is it hits us -- it's hitting us a little bit late, maybe we're a cycle behind. The good news is we were extremely thorough. We invested pretty heavily in that, and some of those investments hit yet in the first quarter. And we took the DeVry approach. And we're including, falling in over 600 of our managers across all the institutions for 3 solid days of training, and it was a really good way to cement our culture. We got very high marks from our people about that. It was sort of a DeVry way of doing it. So again the bad news of that is maybe it's hitting us a cycle or an step a little bit later. The good news is it's a great long-term investment in DeVry's quality culture.

Suzanne E. Stein - Morgan Stanley, Research Division

Okay. And then as far as your capital deployment strategy, just given your stock price and your confidence in the business over the long term, should we expect to pick up and share buybacks?

Daniel M. Hamburger

Well there's been a little bit of that. And the way I put them into context of how do we look at allocating capital and what are the priorities, the first priority is to strengthen our core, which we design as U.S. postsecondary education. So anything that we can do to strengthen that core, improve academic outcomes is our first priority use of capital. But because of the favorable economics tend to generate more capital that can even be deployed reasonably there, so the second priority is to then grow the core. So that's where new programs, new locations, those kinds of initiatives, are very high return and learning in high return on investment use of capital. Then the third priority is to leverage beyond the core, and that's beyond U.S. postsecondary, so international postsecondary or global non-postsecondary, so Professional Education, for example. And those are areas that we've targeted for deployment of capital, including acquisitions. So AUC fit right into that. ATC International with Becker fit right into that. And it's really then the fourth priority would be share repurchases. And as you've seen, that's been a little bit higher level in the last couple of periods of time just because of that lower share repurchase -- share price. So yes, that's how that fits in. I want to make sure that get into a broader context of how we think strategically about deploying and being good stewards of our fellow owners' capital.

Operator

Your next question comes from the line of Amy Junker with Robert W. Baird.

Amy W. Junker - Robert W. Baird & Co. Incorporated, Research Division

Just 2 kind of related questions on margins. First, with respect to the Medical and Healthcare, can you just maybe provide a little more color on what drove that pressure that you saw there, particularly with the top line growth? I'm wondering if that's to do more to the AUC acquisition or if there is something else there that we should be thinking about?

Patrick J. Unzicker

Sure. With respect to the top line growth, the AUC acquisition from a consolidated perspective, accounted for about 150 basis points of the quarterly revenue growth. So furthering that down to the Medical and Healthcare segment, it was a very big driver. With respect to the margin compression, there's a confluence of 2 items that are driving that. One that continued expansion in new location openings for Chamberlain and the continued investments in those new programs, which will certainly pay off in the long run. It's resulting in some margin compression. But at the same time, we're starting to overlap and get the benefit of mature campus openings at Chamberlain. And then the largest driver there on the margin compression would be the continued deleveraging or deceleration at Carrington.

Amy W. Junker - Robert W. Baird & Co. Incorporated, Research Division

That's helpful. And then just related to the business and technology segment, given your comments about the cost savings and it will probably help offset some of this. But what risk is there that those margins -- we don't see those come back to kind of the past trough levels experienced in the last downturn, meaning low-single digits. Do you feel confident that you can avoid those kind of levels?

Daniel M. Hamburger

We think what's different this time -- one thing that's different, last time around, you were referring back to the sort of '05, 2005 timeframe. Back then, we were very heavily focused on technology -- engineering and technology programs. And in response, and also just driven by the opportunities that we saw, we continue to see, we've diversified quite a bit. So DeVry University specifically has now about 1/2 business programs and about 1/2 engineering and technology. They're evenly split, and then there's a new complement of healthcare, healthcare information programs in there as well, like HIT, healthcare information technology, which is one of our faster growing programs. So there's also a nice complement of graduates to the master's degree programs to Keller to complement the undergraduate programs. So it's a more diversified mix within the BTM segment, even within this more diversified overall group, which is DeVry education overall. So I think that's a very significant difference now relative to what we saw back at that timeframe.

Richard M. Gunst

Yes. I think we've also optimized our real estate footprint compared to where we were in the early part of the century. That was really having a big downward impact on margins. Now we got better utilization and sharing of facilities with the likes of Carrington and Chamberlain and even Ross.

Daniel M. Hamburger

Boy, that's an excellent point. Go ahead, Pat.

Patrick J. Unzicker

And then just lastly, we further diversified in delivery modality, wherein back in 2005, we would have -- had a much higher concentration of on-site students, as our online population and online delivery modality has grown, that does allow us some more flexibility on the cost end, again without impinging on academic quality, to rationalize sections a little faster than we could on the on-site during enrollment decline.

Daniel M. Hamburger

Yes, excellent point. That's a much more variable versus fixed cost structure over there. And yes, I think that real estate optimization process that we went through is a much -- we're about to open our 100th DeVry University location this year. We should have a nice celebration for that milestone. But the mix of smaller real estate footprint relative to the larger is much different today than it was at that time. So all factors to think about, and so we really appreciate that question. That really gives a lot to think about.

Operator

Your next question comes from the line of Paul Condra with BMO Capital.

Paul Condra - BMO Capital Markets

Great. I just wanted to ask about the enrollment starts. I think Rick had said last quarter that the summer decline would be the trough, and I guess it's not real clear. Do you still think that to be the case going forward?

Richard M. Gunst

Well, yes. I think what we said is that we hoped to see some improvements, not turning positive but to see that rate of decline stabilize and then turning positive. I think we are seeing some stabilization. But as I said in my comments, we hope to see maybe some positive momentum, and we have not seen that near term here, so expect to see it as we go forward. Hopefully, we'll see some positive in the second half of the year and beyond. But that's...

Paul Condra - BMO Capital Markets

So you wouldn't say that, that is a trough start rate then?

Richard M. Gunst

Well in terms of rate of decline, I think it's stabilized.

Paul Condra - BMO Capital Markets

Okay. And then just a follow-up, just the proverbial update on the CFO search.

Daniel M. Hamburger

Sure. The process continues. We have driven an excellent process in my view and I appreciate the help of the team that's working with me on that. Search a very inclusive diverse slate of candidates in a very strong process, and we will keep you posted.

Operator

Your next question comes from the line of Brandon Dobell with William Blair.

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

I want to go back the new enrollments in DVU for a second or BTM. Any way you could give us some color on this called relative performance between the high school recruitment channel, maybe the Internet channel and traditional media channels, if that's possible? Or maybe even just high school channel versus other? I'm trying to get a sense if there's any major difference between, are there -- the strong performance there kind of by an age group or by certain marketing channels you guys are employing?

Daniel M. Hamburger

Sure, I appreciate that. Don't really have a lot to report there, Brandon? By channel, if you will, nothing really stands out. We do see opportunities in the near term with our channel, that's one way to think of our outreach to community colleges; to the corporate corporations, many of whom we serve by providing educational programs to their employees; government organizations, the military; other groups like that in addition to our one at a time, efforts with students. But the only thing I could tell you is grad versus undergrad. We saw more strength at the graduate level. And programmatically, healthcare looks -- is performing well. And the other interesting one is accounting. Accounting is a bright spot and something that we just continue to do a better job of letting the world know that DeVry University has one of the largest accounting program, undergraduate accounting program in the country. This surprises a lot of people because they think of us for engineering and engineering technology and so forth. But accounting is a great value proposition and we strengthened that by the relationship between the undergraduate, the Keller graduate and then the Becker. So We call it DKB, DeVry, Keller, Becker, which allows students to save about 1.5 years and about $10,000 of tuition relative if they've done those 3 separately. So that's a little bit of differentiation there. Hope that's helpful.

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

Okay. And then one follow-up kind of related to that. It doesn't sound like there's been any major changes in terms of how you're approaching the Internet channel, maybe a makeshift or so between traditional media and Internet. But within the Internet channel, maybe some color on how much churn you've either proactively managed or have seen within the aggregators that you work with and how much control you are taking now versus 3 or 6 months ago in terms of that downstream process. I'm just trying to get a better idea of how the strategy is changing with the Internet side of things?

Daniel M. Hamburger

Right, I'm proud to say that DeVry has been the leader there. And Dave Pauldine, President of DeVry University, in particular has been a leader for us but also for higher education in general, and working with the association of private sector for colleges and universities to help set standards for these marketing vendors and advertising agencies to set standards for their conduct and standards of best practice for them. It's great to hear everybody in this call used the word inquiries and to use that kind of language that we think is appropriate for higher education. So early on in the cycle, we commented on this, I think last time that we did see some of the providers, some of these vendors -- not necessarily we're doing anything wrong, but if they couldn't meet our standards -- and DeVry was commended by many as having set the highest standards -- then we would just say, "We're not going to do business with you until you do." We're starting to see that, then they'll comply with the standards and so some of those are coming back online. So there's still some disruption in that process, some churn as you put it. But I think we're starting to see stabilization there.

Operator

Ladies and gentlemen, this concludes the question-and-answer portion on today's conference call. I'll go and turn the call back over to management for closing remarks.

Daniel M. Hamburger

Was there another...

Joan Bates

Do we have one more person in the queue?

Operator

We do, actually. You have a question from the line of Scott Schneeberger with Oppenheimer.

Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division

Yes. Just the couple of questions asked and both upfront. I know you guys don't like to go into persistence too much. Any commentary you can help us with graduation rate over the coming fiscal year? Any interesting comps or discussion there? And then just the second question would be the pricing environment, what do you think looking a year or 2 out?

Richard M. Gunst

Okay. Well, Scott, I would say that we are not one that provides a specific retention metric. So the color I can give you is that overall the retention is up historically, but we did see a little bit of softness here in the recent patch, and that could continue. You also -- you do have the effective graduates because we did have higher enrollments in the last couple of cycles. So that's not unexpected. We're still trying to tease out, we think there's a little bit of the same issue of consumer confidence that's impacted this on the front end, if you will, can impact some students in terms of staying in school. So what we're doing about it is continuing to enhance the quality of our programs. We've added resources like what we call Student Central that provides a one-stop shop for student support services to help them stay in school, talk a little bit about looking at the scholarship program, how that might be able to help students stay in school as well as start school. So all of those are some of the things that we're doing there. In terms of pricing, we tend to see that relative to the competition. And as we see many state schools in the United States raise tuition in the 9%, 11%. In California it was 15% per year for a couple of years. That our -- I think it was in the 2% or 3% DeVry University undergraduate, as one example, is viewed in that context.

And I guess I'll just -- operator, I'll just go ahead and wrap it up because we're over time. But we wanted to get all the questions in, and I'd like to thank everyone for those questions and remind everyone that we'll report fall enrollments on December 12, and then our next quarterly results call is scheduled for January 26 of the new calendar year and then we'll report second quarter results for our fiscal year. So thanks, everyone, for your continued support of DeVry.

Operator

Ladies and gentlemen, that does conclude our presentation today. Thank you so much for your participation. You may now disconnect. Have a wonderful evening.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!