Apollo Education Group Inc (APOL) First Quarter 2015 Earnings Call Transcript

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realigning our orientation program. We are addressing affordability to the Phoenix scholarship reward program to support students as they progress, which we believe can improve our completion rates overtime. We are creating partnerships with organizations such as the Gates Foundation and others to better collaborate around improving student outcomes, and then share these results more broadly.

Now in terms of employer solutions, we continue to build new and exciting relationships with Fortune 500 companies so that we can better align our programs to respond to their human capital needs. Our goal is to help employers better identify, develop, and retain their employees to ensure their future competitiveness.

Recently, the Wall Street Journal reported that the number one ranked concern among CEOs at their Seventh Annual CEO Council was actually their ability to find employees with the key skills necessary to fill the jobs they need to grow their businesses. To that end, we were pleased to announce this quarter the launch of the Hilton Military Internship Program. It’s an exciting partnership with Hilton worldwide and Goodwill industries. This collaboration allows participants to earn a certificate in hospitality management from the University of Phoenix business school. They participate in a six-month paid internship at Hilton Worldwide properties and upon successful completion, be guaranteed the opportunity to interview for a full-time position. This program demonstrates the ability of industry, higher education, and non-profit services to come together and address real employment needs.

Although it’s just getting underway, we are excited to be part of this collaborative effort. We believe that it can lead to additional opportunities with companies and other industries. Diversification is also an important component of our strategy through Apollo Global and other targeted growth opportunities.

Let me just touch on Apollo Global for a minute. It is a real bright spot and is meeting or exceeding our expectations across all their institutions. Global remains on target to achieve a $400 million revenue run rate in 2015, and 20% annual growth over the next several years. We continue to believe Apollo Global can be a $1billion plus business within three to five years through organic growth and potentially more than that, including strategic acquisitions and partnerships along the way.

In December, we welcomed FAEL in Brazil to Apollo. FAEL is small today, but is a high quality institution with exceptional management and fits well within our asset-wide business strategy internationally. FAEL currently offers blended post secondary programs in business, education, and technology and has licenses to significantly expand its course on offerings online. Brazil is a strong growth market and offers an exciting opportunity to expand our global learning network.

Other Apollo Global highlights include the addition of successful new relationships with key U.K. employers at BPP. Also at BPP, we are expanding the degree and professional qualification offerings into numerous countries globally and are now actually recruiting international students into their programs.

There has been strong collaboration with our teams working together to help Milpark in South Africa develop its online programs with new short courses launching in April. Regarding our 2014 acquisitions, Open Colleges Australia and Milpark are both exceeding all key operational and financial plans. Finally, at Bridge School of Management in India, inaugural graduation ceremony for the first cohort of students was held in early November.

Now to talk about other areas of targeted growth. The University of Phoenix is doing this through their new college operating model by developing new relevant programs to connect more directly to careers. Additionally, we are expanding the breadth and depth of our offerings to deliver more than just degree granting programs. We are addressing options to use our campuses more strategically through hybrid and career offerings, to name a few. We are evaluating opportunities to leverage our global presence to actually potentially recruit international students into the University of Phoenix.

We are partnering with other institutions like Thurgood Marshall to provide our specific online courses to their students who are enrolled at those institutions and supporting our students and developing new offerings to our new exciting career platform called the Phoenix Career Guidance System.

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