PHOENIX, Aug. 8, 2018 /PRNewswire/ -- Grand Canyon
Education, Inc. (NASDAQ: LOPE), ("GCE" or the "Company"), is a
publicly traded education services company. GCE is uniquely
positioned in the education services industry in that its
leadership has 30 years of proven expertise in providing a full
array of support services in the post-secondary education sector
and has developed significant technological solutions,
infrastructure and operational processes to provide superior
service in these areas on a large scale. GCE provides services that
support students, faculty and staff of partner institutions such as
marketing, strategic enrollment management, counseling services,
financial services, technology, technical support, compliance,
human resources, classroom operations, curriculum development,
faculty recruitment and training, among others. GCE today announced
financial results for the quarter ended June
30, 2018.
Explanatory Note
On July 1, 2018, the Company
consummated an Asset Purchase Agreement (the "Asset Purchase
Agreement") with Gazelle University, an Arizona nonprofit corporation.
Prior to the consummation of the transactions contemplated by the
Asset Purchase Agreement, the Company owned and operated
Grand Canyon University ("GCU") a
comprehensive university, regionally accredited by The Higher
Learning Commission (the "HLC"), that offers over 230 graduate and
undergraduate degree programs, emphases and certificates across
nine colleges both online and on ground at its over 275 acre campus
in Phoenix, Arizona. Upon the
closing of the transaction, Gazelle University changed its name to
Grand Canyon University ("New
GCU").
Pursuant to the Asset Purchase Agreement, among other
things:
- The Company transferred to New GCU the real property and
improvements comprising the GCU campus as well as tangible and
intangible academic and related operations and assets related to
GCU (the "Transferred Assets"), and New GCU assumed liabilities
related to the Transferred Assets. Accordingly, GCU is now
owned and operated by New GCU; and
- In connection with the closing of the Asset Purchase Agreement,
the Company and New GCU entered into a long-term master services
agreement (the "Master Services Agreement") pursuant to which the
Company will provide identified technological, counseling,
marketing, financial aid processing and other support services to
New GCU in return for 60% of New GCU's tuition and fee
revenue.
See Note 3 to Consolidated Financial Statements in our Quarterly
Report on Form 10Q for the quarterly period ended June 30, 2018, for a full description of this
transaction (the "Transaction").
Prior to July 1, 2018, the Company
owned and operated GCU. Accordingly, the results of
operations discussed herein reflect the Company's operations prior
to July 1, 2018 which were made up
exclusively of the operations of GCU.
For the three months ended June 30,
2018:
- Net revenue increased 8.5% to $236.8
million for the second quarter of 2018, compared to
$218.3 million for the second quarter
of 2017.
- End-of-period enrollment increased 9.6% between June 30, 2018 and June 30,
2017, as online enrollment increased 10.1% and ground
enrollment increased 3.9% over the prior year. Ground
enrollment at June 30, 2018 only
includes traditional-aged students that are taking Summer school
classes, which is a small percentage of GCU's traditional-aged
student body and professional studies students. As of
March 31, 2018 ground enrollment had
increased 9.6% year over year to 17,386 students and the majority
of that increase between years was residential students at GCU's
ground traditional campus in Phoenix, Arizona. The Spring semester
for GCU's traditional-aged student body ends near the end of April
each year.
- Operating income for the three months ended June 30, 2018 was $58.5
million, an increase of 6.2% as compared to $55.1 million for the same period in 2017. The
operating margin for the three months ended June 30, 2018 was 24.7%, compared to 25.2% for
the same period in 2017. The majority of our traditional ground
students do not attend courses during the summer months (May
through August), which affects our results for our second and third
fiscal quarters. Since a significant amount of our campus
costs are fixed, the lower revenue resulting from the decreased
ground student enrollment has historically contributed to lower
operating margins during those periods.
- The tax rate in the three months ended June 30, 2018 was 23.3% compared to 28.0% in the
same period in 2017. The lower effective tax rate year over
year is a result of the Tax Cuts and Jobs Act (the "Act") which was
signed into law on December 22,
2017. The Act reduces the corporate federal tax rate from a
maximum of 35% to a flat 21% rate effective January 1, 2018. Additionally, the Company
continues to receive the benefit of our adoption of the share-based
compensation standard. This standard requires us to recognize
excess tax benefits from share-based compensation awards that
vested or settled in the consolidated income statement. The
favorable impact from excess tax benefits was $1.2 million and $5.2
million in the three months ended June 30, 2018 and 2017, respectively. The
inclusion of excess tax benefits and deficiencies as a component of
our income tax expense will increase volatility within our
provision for income taxes as the amount of excess tax benefits or
deficiencies from share-based compensation awards are dependent on
our stock price at the date the restricted awards vest, our stock
price on the date an option is exercised, and the quantity of
options exercised.
- Net income increased 15.5% to $46.0
million for the second quarter of 2018, compared to
$39.8 million for the same period in
2017.
- Diluted net income per share was $0.95 for the second quarter of 2018, compared to
$0.83 for the same period in
2017.
- Adjusted EBITDA increased 7.2% to $77.3
million for the second quarter of 2018, compared to
$72.1 million for the same period in
2017.
For the six months ended June 30,
2018:
- Net revenue increased 9.9% to $512.5
million for the six months ended June
30, 2018, compared to $466.5
million for the same period in 2017.
- Operating income for the six months ended June 30, 2018 was $148.6
million, an increase of 12.8% as compared to $131.7 million for the same period in 2017. The
operating margin for the six months ended June 30, 2018 was 29.0%, compared to 28.2% for
the same period in 2017.
- The tax rate for the six months ended June 30, 2018 was 20.6% compared to 27.1% in the
same period in 2017. The lower effective tax rate year over
year is a result of the Act which was signed into law on
December 22, 2017. The Act
reduces the corporate federal tax rate from a maximum of 35% to a
flat 21% rate effective January 1,
2018. Additionally, the Company continues to receive the
benefit of our adoption of the share-based compensation
standard. This standard requires us to recognize excess tax
benefits from share-based compensation awards that vested or
settled in the consolidated income statement. The favorable
impact from excess tax benefits was $6.5
million and $13.8 million in
the six months ended June 30, 2018
and 2017, respectively. The inclusion of excess tax benefits
and deficiencies as a component of our income tax expense will
increase volatility within our provision for income taxes as the
amount of excess tax benefits or deficiencies from share-based
compensation awards are dependent on our stock price at the date
the restricted awards vest, our stock price on the date an option
is exercised, and the quantity of options exercised.
- Net income increased 25.0% to $119.7
million for the six months ended June
30, 2018, compared to $95.8
million for the same period in 2017.
- Diluted net income per share was $2.47 for the six months ended June 30, 2018, compared to $1.99 for the same period in 2017.
- Adjusted EBITDA increased 12.3% to $185.3 million for the six months ended
June 30, 2018, compared to
$165.0 million for the same period in
2017.
Balance Sheet and Cash Flow
The Company financed its operating activities and capital
expenditures during the six months ended June 30, 2018 and 2017 primarily through cash
provided by operating activities. Our unrestricted cash and cash
equivalents and investments were $298.2 million and $242.7 million at June 30, 2018 and December 31, 2017,
respectively. Our restricted cash and cash equivalents at
June 30, 2018 and December 31,
2017 were $87.9 million and
$94.5 million,
respectively. At June 30, 2018
the restricted cash is included in assets held for sale as the
restricted cash was transferred as part of the transaction.
On July 1, 2018, we amended our
credit agreement, which resulted in no change to our term loan or
maturity date of December 2019. Indebtedness under the term
loan is now secured by collateral securing our remaining
obligations under the credit agreement and we agreed to
collaterally assign our rights under the Asset Purchase Agreement,
the Secured Note and the Master Services Agreement. Our
lenders released the collateral previously securing our obligations
under the credit agreement in order to enable us to consummate the
transaction.
On July 1 , 2018, in conjunction
with the Asset Purchase Agreement, the Company received a senior
secured note (the "Secured Note") from New GCU for the purchase of
the Transferred Assets for $869.1
million. The Secured Note contains customary commercial
credit terms, including affirmative and negative covenants
applicable to New GCU, and provides that the Secured Note bears
interest at an annual rate of 6.0%, has a maturity date of
June 30, 2025, and is secured by all
of the assets of New GCU. The Secured Note provides for New GCU to
make interest only payments during the term, with all principal and
accrued and unpaid interest due at maturity and also provides that
we will loan additional amounts to New GCU to fund approved capital
expenditures during the first three years of the term. Funding
expectations for future capital expenditures for New GCU are
$65 million for the six months ended
December 31, 2018, and $100 million for the year ended December 31, 2019.
Net cash provided by operating activities for the six months
ended June 30, 2018 was $143.7 million as compared to $133.7 million for the six months ended
June 30, 2017. The increase in cash
generated from operating activities between the six months ended
June 30, 2017 and the six months
ended June 30, 2018 is primarily due
to increased net income and the timing of employee related payments
partially offset by the timing of income tax related payments as
well as changes in other working capital such as deferred
revenue.
Net cash used in investing activities was $67.4 million and $86.7 million for the six months ended
June 30, 2018 and 2017, respectively.
Our cash used in investing activities was primarily related to the
purchase of short-term investments and capital expenditures.
Proceeds from investment, net of purchases of short term
investments was $11.7 million for the
six months ended June 30, 2018.
Purchases of short-term investments net of proceeds of these
investments was $26.8 million during
the six months ended June 30,
2017. Capital expenditures were $78.8 million and $50.5 million for the six months ended
June 30, 2018 and 2017,
respectively. During the six-month period for 2018, capital
expenditures primarily consisted of ground campus building projects
such as the construction of two additional residence halls, an
additional classroom building and parking garage to support our
growing traditional student enrollment, as well as purchases of
computer equipment, other internal use software projects and
furniture and equipment to support our increasing employee
headcount. Included in off-site development for 2018 is
$0.3 million we spent on the student
services building that is in close proximity to our ground
traditional campus. During the six-month period for 2017,
capital expenditures primarily consisted of ground campus building
projects such as the construction of an additional dormitory to
support our growing traditional student enrollment, land
acquisitions adjacent to our campus, as well as purchases of
computer equipment, other internal use software projects and
furniture and equipment to support our increasing employee
headcount. Included in off-site development for 2017 is
$9.4 million we spent to finish the
building and parking garage in close proximity to our ground
traditional campus.
Net cash used in financing activities was $14.7 million and $32.2
million for the six months ended June
30, 2018 and 2017, respectively. During the six-month
period for 2018, $11.5 million was
used to purchase common shares withheld in lieu of income taxes
resulting from the vesting of restricted share awards and
$1.6 million was used to purchase
treasury stock in accordance with the University's share repurchase
program, and principal payments on notes payable and capital leases
totaled $3.4 million, partially
offset by proceeds from the exercise of stock options of
$1.8 million. During the
six-month period for 2017, $25.0
million was used to repay a revolving line of credit,
$9.7 million was used to purchase
common shares withheld in lieu of income taxes resulting from
restricted share awards and principal payments on notes payable and
capital leases totaled $3.4 million,
which amounts were partially offset by proceeds from the exercise
of stock options of $5.9
million.
2018 Outlook by Quarter
Q3 2018:
|
Net revenue of $153.0
million; Target Operating Margin 30.8%; Diluted EPS of $0.98 using
48.6 million diluted shares
|
Q4 2018:
|
Net revenue of $175.0
million; Target Operating Margin 43.0%; Diluted EPS of $1.40 using
48.7 million diluted shares
|
|
|
Full Year
2018:
|
Net revenue of $840.5
million; Target Operating Margin 32.2%; Diluted EPS of $4.86 using
48.5 million diluted shares
|
Forward-Looking Statements
This news release contains "forward-looking statements" which
include information relating to future events, future financial
performance, strategies expectations, competitive environment,
regulation, and availability of resources. These forward-looking
statements include, without limitation, statements regarding: the
Transaction; proposed new programs; statements as to whether
regulatory developments or other matters may or may not have a
material adverse effect on our financial position, results of
operations, or liquidity; statements concerning projections,
predictions, expectations, estimates, and forecasts as to our
business, financial and operating results, and future economic
performance, as well as; and statements of management's goals and
objectives and other similar expressions concerning matters that
are not historical facts. Words such as "may," "should," "could,"
"would," "predicts," "potential," "continue," "expects,"
"anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar expressions, as well as statements in
future tense, identify forward-looking statements.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements are based on
information available at the time those statements are made or
management's good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties that
could cause actual performance or results to differ materially from
those expressed in or suggested by the forward-looking statements.
Important factors that could cause such differences include, but
are not limited to: the failure of the Company to operate
successfully as a third party service provider to New GCU, and New
GCU's failure to operate GCU as a university as successfully as it
was previously operated by the Company; the occurrence of any
event, change or other circumstance that could give rise to the
termination of any of the key Transaction agreements; the effect of
the announcement of the Transaction on the Company's ability to
retain and hire key personnel, or on its operating results and
business generally; our failure to comply with the extensive
regulatory framework applicable to us either directly as a third
party service provider or indirectly through our university client,
including Title IV of the Higher Education Act and the regulations
thereunder, state laws and regulatory requirements, and accrediting
commission requirements; competition from other education service
companies in our geographic region and market sector, including
competition for students, qualified executives and other personnel;
our ability to properly manage risks and challenges
associated with strategic initiatives, including potential
acquisitions or divestitures of, or investments in, new businesses,
acquisitions of new properties and new university clients, and
expansion of services provided to our existing university client;
the pace of growth of our university client's enrollment and its
effect on the pace of our own growth; our ability to, on behalf of
our university client, convert prospective students to enrolled
students and to retain active students to graduation; our success
in updating and expanding the content of existing programs and
developing new programs in a cost-effective manner or on a timely
basis for our university client; and other factors discussed in
reports on file with the Securities and Exchange Commission,
including as set forth in Part II, Item 1A of this Quarterly Report
on Form 10-Q.
Forward-looking statements speak only as of the date the
statements are made. You should not put undue reliance on any
forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions, or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities
laws. If we do update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
Conference Call
Grand Canyon Education, Inc. will discuss its second quarter
2018 results and 2018 outlook during a conference call scheduled
for today, August 8, 2018 at
4:30 p.m. Eastern time (ET). To
participate in the live call, investors should dial 877-577-1769
(domestic and Canada) or
706-679-7806 (international), passcode 5065869 at 4:25 p.m. (ET). The Webcast will be available on
the Grand Canyon Education, Inc. web site at www.gce.com.
A replay of the call will be available approximately two hours
following the conclusion of the call, at 855-859-2056 (domestic) or
404-537-3406 (international), passcode 5065869. It will also be
archived at www.gce.com in the investor relations section for
60 days.
About Grand Canyon Education, Inc.
Grand Canyon Education (GCE), incorporated in 2008, is a
publicly traded education services company. GCE is uniquely
positioned in the education services industry in that its
leadership has 30 years of proven expertise in providing a full
array of support services in the post-secondary education sector
and has developed significant technological solutions,
infrastructure and operational processes to provide superior
service in these areas on a large scale. GCE provides services that
support students, faculty and staff of partner institutions such as
marketing, strategic enrollment management, counseling services,
financial services, technology, technical support, compliance,
human resources, classroom operations, curriculum development,
faculty recruitment and training, among others. For more
information about Grand Canyon Education, Inc. visit the Company's
website at www.gce.com.
Grand Canyon Education, Inc., 2600 W. Camelback Road,
Phoenix, AZ 85017,
www.gce.com.
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Income Statements
|
(Unaudited)
|
|
|
Three Months
Ended
June
30,
|
Six Months
Ended
June
30,
|
|
2018
|
2017
|
2018
|
2017
|
(In
thousands, except per share data)
|
|
|
|
|
Net
revenue
|
$236,818
|
$218,301
|
$512,499
|
$466,507
|
Costs and
expenses:
|
|
|
|
|
Instructional costs
and services
|
102,237
|
95,030
|
213,264
|
197,604
|
Admissions advisory
and related
|
34,254
|
31,085
|
69,108
|
63,057
|
Advertising
|
27,602
|
24,776
|
53,317
|
49,407
|
Marketing and
promotional
|
2,268
|
2,264
|
4,952
|
4,724
|
General and
administrative
|
11,969
|
10,058
|
23,278
|
19,999
|
Total costs and
expenses
|
178,330
|
163,213
|
363,919
|
334,791
|
Operating
income
|
58,488
|
55,088
|
148,580
|
131,716
|
Interest
expense
|
(57)
|
(495)
|
(403)
|
(1,075)
|
Interest and other
income
|
1,567
|
739
|
2,548
|
741
|
Income before income
taxes
|
59,998
|
55,332
|
150,725
|
131,382
|
Income tax
expense
|
13,960
|
15,485
|
31,006
|
35,623
|
Net
income
|
$
46,038
|
$
39,847
|
$
119,719
|
$
95,759
|
Earnings per
share:
|
|
|
|
|
Basic income per
share
|
$
0.97
|
$
0.85
|
$
2.52
|
$
2.04
|
Diluted income per
share
|
$
0.95
|
$
0.83
|
$
2.47
|
$
1.99
|
Basic weighted
average shares outstanding
|
47,604
|
47,151
|
47,537
|
46,949
|
Diluted weighted
average shares outstanding
|
48,411
|
48,192
|
48,422
|
48,131
|
GRAND CANYON EDUCATION, INC.
Adjusted EBITDA
Adjusted EBITDA is defined as net income plus interest expense,
less interest income and other gain (loss) recognized on
investments, plus income tax expense, and plus depreciation and
amortization (EBITDA), as adjusted for (i) the amortization of
prepaid royalty payments recorded in conjunction with a settlement
of a dispute with our former owner; (ii) contributions to
Arizona school tuition
organizations in lieu of the payment of state income taxes; (iii)
share-based compensation and (iv) one-time, unusual charges or
gains, such as litigation and regulatory reserves, impairment
charges and asset write-offs, and exit or lease termination costs.
We present Adjusted EBITDA because we consider it to be an
important supplemental measure of our operating performance.
We also make certain compensation decisions based, in part, on our
operating performance, as measured by Adjusted EBITDA, and our loan
agreement requires us to comply with covenants that include
performance metrics substantially similar to Adjusted EBITDA.
All of the adjustments made in our calculation of Adjusted EBITDA
are adjustments to items that management does not consider to be
reflective of our core operating performance. Management considers
our core operating performance to be that which can be affected by
our managers in any particular period through their management of
the resources that affect our underlying revenue and profit
generating operations during that period and does not consider the
items for which we make adjustments (as listed above) to be
reflective of our core performance.
We believe Adjusted EBITDA allows us to compare our current
operating results with corresponding historical periods and with
the operational performance of other companies in our industry
because it does not give effect to potential differences caused by
variations in capital structures (affecting relative interest
expense, including the impact of write-offs of deferred financing
costs when companies refinance their indebtedness), tax positions
(such as the impact on periods or companies of changes in effective
tax rates or net operating losses), the book amortization of
intangibles (affecting relative amortization expense), and other
items that we do not consider reflective of underlying operating
performance. We also present Adjusted EBITDA because we
believe it is frequently used by securities analysts, investors,
and other interested parties as a measure of performance.
In evaluating Adjusted EBITDA, investors should be aware that in
the future we may incur expenses similar to the adjustments
described above. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by expenses that are unusual, non-routine, or
non-recurring. Adjusted EBITDA has limitations as an
analytical tool in that, among other things it does not
reflect:
- cash expenditures for capital expenditures or contractual
commitments;
- changes in, or cash requirements for, our working capital
requirements;
- interest expense, or the cash required to replace assets that
are being depreciated or amortized; and
- the impact on our reported results of earnings or charges
resulting from the items for which we make adjustments to our
EBITDA, as described above and set forth in the table below.
In addition, other companies, including other companies in our
industry, may calculate these measures differently than we do,
limiting the usefulness of Adjusted EBITDA as a comparative
measure. Because of these limitations, Adjusted EBITDA should
not be considered as a substitute for net income, operating income,
or any other performance measure derived in accordance with and
reported under GAAP, or as an alternative to cash flow from
operating activities or as a measure of our liquidity. We
compensate for these limitations by relying primarily on our GAAP
results and only use Adjusted EBITDA as a supplemental performance
measure.
The following table provides a reconciliation of net income to
Adjusted EBITDA, which is a non-GAAP measure for the periods
indicated:
|
Three Months
Ended
June
30,
|
Six
Months Ended
June
30,
|
|
2018
|
2017
|
2018
|
2017
|
|
(Unaudited, in
thousands)
|
Net income
|
$
46,038
|
$
39,847
|
$ 119,719
|
$
95,759
|
Plus: interest
expense
|
57
|
495
|
403
|
1,075
|
Less: interest income
and other
|
(1,567)
|
(739)
|
(2,548)
|
(741)
|
Plus: income tax
expense
|
13,960
|
15,485
|
31,006
|
35,623
|
Plus: depreciation and
amortization
|
13,950
|
13,515
|
27,823
|
26,708
|
EBITDA
|
72,438
|
68,603
|
176,403
|
158,424
|
Plus: royalty to former
owner
|
74
|
74
|
148
|
148
|
Plus: asset impairment
and other fixed asset write-offs
|
8
|
92
|
8
|
214
|
Plus: costs related to
conversion back to a non-profit status
|
1,503
|
—
|
1,990
|
—
|
Plus: estimated
litigation and regulatory reserves
|
—
|
10
|
3
|
10
|
Plus: share-based
compensation
|
3,265
|
3,298
|
6,734
|
6,229
|
Adjusted
EBITDA
|
$
77,288
|
$
72,077
|
$
185,286
|
$
165,025
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Balance Sheets
|
|
ASSETS:
|
June
30,
|
December
31,
|
(In thousands,
except par value)
|
2018
|
2017
|
Current
assets
|
(Unaudited)
|
|
Cash and cash
equivalents
|
$
221,632
|
$
153,474
|
Restricted cash and
cash equivalents
|
—
|
94,534
|
Investments
|
76,522
|
89,271
|
Assets held for
sale
|
974,353
|
—
|
Accounts receivable,
net
|
—
|
10,908
|
Income tax
receivable
|
315
|
2,086
|
Other current
assets
|
8,748
|
24,589
|
Total current
assets
|
1,281,570
|
374,862
|
Property and equipment,
net
|
112,185
|
922,284
|
Prepaid
royalties
|
2,615
|
2,763
|
Goodwill
|
2,941
|
2,941
|
Other assets
|
657
|
723
|
Total
assets
|
$
1,399,968
|
$
1,303,573
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
Current
liabilities
|
|
|
Accounts
payable
|
$
35,444
|
$
29,139
|
Accrued compensation
and benefits
|
23,634
|
23,173
|
Accrued
liabilities
|
18,995
|
20,757
|
Income taxes
payable
|
46
|
16,182
|
Liabilities held for
sale
|
139,140
|
—
|
Student
deposits
|
—
|
95,298
|
Deferred
revenue
|
—
|
46,895
|
Current portion of
notes payable
|
6,572
|
6,691
|
Total current
liabilities
|
223,831
|
238,135
|
Other noncurrent
liabilities
|
—
|
1,200
|
Deferred income taxes,
noncurrent
|
19,218
|
18,362
|
Notes payable, less
current portion
|
56,619
|
59,925
|
Total
liabilities
|
299,668
|
317,622
|
Commitments and
contingencies
|
|
|
Stockholders'
equity
|
|
|
Preferred stock, $0.01
par value, 10,000 shares authorized; 0 shares issued and
outstanding at June 30, 2018 and December 31, 2017
|
—
|
—
|
Common stock, $0.01 par
value, 100,000 shares authorized; 52,552 and 52,277 shares issued
and 48,257 and 48,125 shares outstanding at June 30, 2018 and
December 31, 2017, respectively
|
526
|
523
|
Treasury stock, at
cost, 4,295 and 4,152 shares of common stock at June 30, 2018 and
December 31, 2017, respectively
|
(113,757)
|
(100,694)
|
Additional paid-in
capital
|
241,169
|
232,670
|
Accumulated other
comprehensive loss
|
(515)
|
(724)
|
Retained
earnings
|
972,877
|
854,176
|
Total stockholders'
equity
|
1,100,300
|
985,951
|
Total liabilities
and stockholders' equity
|
$
1,399,968
|
$
1,303,573
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
Six Months
Ended
June
30,
|
(In
thousands)
|
2018
|
2017
|
|
|
|
Cash flows provided
by operating activities:
|
|
Net income
|
$ 119,719
|
$
95,759
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Share-based
compensation
|
6,734
|
6,229
|
Provision for bad
debts
|
8,669
|
7,830
|
Depreciation and
amortization
|
27,971
|
26,856
|
Deferred income
taxes
|
1,246
|
3,372
|
Other
|
1,018
|
214
|
Changes in assets and
liabilities:
|
|
|
Accounts
receivable
|
(7,784)
|
(8,458)
|
Prepaid expenses and
other
|
(78)
|
(1,719)
|
Accounts
payable
|
(1,373)
|
(1,708)
|
Accrued liabilities
and employee related liabilities
|
2,502
|
(439)
|
Income taxes
receivable/payable
|
(14,365)
|
1,042
|
Deferred
rent
|
(189)
|
(222)
|
Deferred
revenue
|
6,880
|
11,265
|
Student
deposits
|
(7,288)
|
(6,361)
|
Net cash provided by
operating activities
|
143,662
|
133,660
|
Cash flows used in
investing activities:
|
|
|
Capital
expenditures
|
(78,836)
|
(50,491)
|
Purchases of land and
building improvements related to off-site development
|
(330)
|
(9,374)
|
Purchases of
investments
|
(21,265)
|
(52,181)
|
Proceeds from sale or
maturity of investments
|
32,996
|
25,363
|
Net cash used in
investing activities
|
(67,435)
|
(86,683)
|
Cash flows used in
financing activities:
|
|
|
Principal payments on
notes payable and capital lease obligations
|
(3,433)
|
(3,400)
|
Net borrowings from
revolving line of credit
|
—
|
(25,000)
|
Repurchase of common
shares including shares withheld in lieu of income taxes
|
(13,063)
|
(9,657)
|
Net proceeds from
exercise of stock options
|
1,768
|
5,895
|
Net cash used in
financing activities
|
(14,728)
|
(32,162)
|
Reclassification of
restricted cash to assets held for sale
|
(87,875)
|
—
|
Net (decrease)
increase in cash and cash equivalents and restricted
cash
|
(26,376)
|
14,815
|
Cash and cash
equivalents and restricted cash, beginning of period
|
248,008
|
130,907
|
Cash and cash
equivalents and restricted cash, end of period
|
$
221,632
|
$
145,722
|
Supplemental
disclosure of cash flow information
|
|
|
Cash paid for
interest
|
$
379
|
$
1,167
|
Cash paid for income
taxes
|
$
44,234
|
$
31,718
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
Purchases of property
and equipment included in accounts payable
|
$
14,361
|
$
7,118
|
Reclassification of
capitalized costs – adoption of ASC 606
|
$
9,015
|
$
—
|
Reclassification of
deferred revenue – adoption of ASC 606
|
$
7,451
|
$
—
|
Reclassification of
tax effect within accumulated other comprehensive income
|
$
156
|
$
—
|
The following is a summary of GCU's student enrollment at
June 30, 2018 and 2017 by degree type
and by instructional delivery method:
|
|
2018(1)
|
2017(1)
|
|
|
|
# of
Students
|
% of
Total
|
# of
Students
|
% of
Total
|
Graduate
degrees(2)
|
|
|
39,552
|
48.5%
|
35,702
|
47.9%
|
Undergraduate
degree
|
|
|
42,068
|
51.5%
|
38,783
|
52.1%
|
Total
|
|
|
81,620
|
100.0%
|
74,485
|
100.0%
|
|
|
|
|
|
|
2018(1)
|
2017(1)
|
|
|
|
# of
Students
|
% of
Total
|
# of
Students
|
% of
Total
|
Online(3)
|
|
|
75,372
|
92.3%
|
68,470
|
91.9%
|
Ground(4)
|
|
|
6,248
|
7.7%
|
6,015
|
8.1%
|
Total
|
|
|
81,620
|
100.0%
|
74,485
|
100.0%
|
|
|
(1)
|
Enrollment at June
30, 2018 and 2017 represents individual students who attended a
course during the last two months of the calendar quarter.
Included in enrollment at June 30, 2018 and 2017 are students
pursuing non-degree certificates of 1,562 and 1,190,
respectively.
|
(2)
|
Includes 7,861 and
7,324 students pursuing doctoral degrees at June 30, 2018 and 2017,
respectively.
|
(3)
|
As of June 30, 2018
and 2017, 50.9% and 50.3%, respectively, of GCU's working adult
students (online and professional studies students) were pursuing
graduate degrees.
|
(4)
|
Includes both GCU's
traditional on-campus ground students attending Summer semester, as
well as its professional studies students.
|
View original
content:http://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-second-quarter-2018-results-300692655.html
SOURCE Grand Canyon Education, Inc.