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Event Brief of Q2 2009 Education Management Corporation Earnings Conference Call - Final.

Article Excerpt
PARTICIPANTS

. Jim Sober, Education Management Corporation, VP of Finance . Tod Nelson, Education Management Corporation, CEO . Ed West, Education Management Corporation, President, CFO . Larry Taylor, Credit Suisse, Analyst . Reza Vahabzadeh, Barclays Capital, Analyst . Amy Tellel, Federated Investors, Analyst . Phil Kenney, Nomura Company, Analyst

OVERVIEW

EDMC reported 2Q09 revenues of $522.2m.

FINANCIAL DATA

A. Key Data From Call 1. 2Q09 revenues = $522.2m. 2. CapEx for six months ended 12/31/08 = $78.3m. 3. Cash as of 12/31/08 = approx. $271m.

PRESENTATION SUMMARY

S1. Opening Remarks (J.S.) 1. Annotation: 1. As has been publicly announced, EDMC, indirect parent of Education Management LLC, filed a registration statement with SEC in Dec. 2007 in conjunction with proposed IPO of its common stock. 2. Registration statement has not yet become effective. 1. These securities may not be sold nor may offers EDMC to buy the accepted prior to time the registration statement becomes effective. 3. This conference call shall not constitute an offer to sell or solicitation of an offer to buy any securities.

S2. 2Q09 Business Review (T.N.) 1. Highlights: 1. Continued investment in long-term growth strategy for new program rollouts, new location, and online education continues to produce positive results. 2. Reported excellent enrollment growth for recent Jan. start where Co. continues to see demand across all education systems and diverse portfolio of academic programs. 3. Continues to experience good growth at bachelor's degree level and graduate programs which account for nearly two-thirds of total enrollment. 4. Saw double-digit growth in nearly all major programmatic areas. 5. Total enrollment for recent Jan. start was approx. 114,000 students vs. 97,100 students last year. 1. Up 17.3%. 6. Excluding seven locations that are less than a year old, same-school enrollment was 112,400 students. 1. Up 15.7%. 7. Students enrolled in fully online programs across three online education systems grew over 50% to approx. 22,400 students or roughly 20% of total student population. 8. During 2Q09, began enrolling students at Art Institute of Houston North, which is Co.'s second art institute in Houston market. 9. Recently announced Brown Mackie College in Phoenix, Arizona, bringing number of new locations opened so far this year to four. 10. Another component of long-term growth strategy is programmatic expansion across schools. 1. Through first six months of FY, rolled out over 130 programs at additional locations. 1. 12% increase over prior-year. 11. Continues to develop new programs to meet changing demand in marketplace. 12. With new bachelor's degree in Design and Technical Graphics at Art Institute, an associate's program in Biomedical Equipment Technology at Brown Mackie, master's program in Psychopharmacology at Argosy university, and master's degree program in Leadership at South University Online. 13. Even in a difficult economy, continues to experience strong demand for graduates as evidenced by graduate outcomes, which are measured six months after graduation. 14. 2Q09 results are for graduates [from qtr.-end last June] where approx. 88% of available graduates were employed in fields of study or related fields of study with avg. starting salary of over $30,800.

S3. 2Q09 Financial Review (E.W.) 1. Results: 1. Revenues, $522.2m, up 17.3% vs. prior year. 1. Driven by 15.6% growth in students and approximate 6% increase in avg. tuition rates, partially offset by change in mix and overall lower avg. credit loads. 2. Growth in online students relative to entire system was contributor to change in mix. 3. Total expenses vs. prior year, up 18.5% to $415m. 2. Educational Services: 1. Up 18.6% to $265.6m. 1. Increase was mainly due to: 1. Volume-driven staffing needs. 2....

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