--Middle States Reaffirms Strayer
University’s Regional Accreditation--
--Strayer University Second Quarter New
Enrollment Up 8%, Total Enrollments Up 6%--
Strayer Education, Inc. (NASDAQ: STRA) today announced financial
results for the period ended June 30, 2017. Financial highlights
are as follows:
Three Months Ended June 30
- During the second quarter, student
enrollment at the Company’s main operating unit, Strayer
University, increased 6% to 43,411, compared to 41,029 for the same
period in 2016. New student enrollment for the period increased 8%
and continuing student enrollment increased 5%.
- Revenues increased 4% to $112.7 million
compared to $108.5 million for the same period in 2016, principally
due to higher enrollment partially offset by lower revenue per
student.
- Income from operations was $13.9
million compared to $12.9 million for the same period in 2016, an
increase of 7%. Excluding noncash adjustments, income from
operations was $11.9 million compared to $12.8 million for the same
period in 2016. The noncash adjustments are associated with a
reduction to the value of contingent consideration related to the
Company’s acquisition of the New York Code & Design Academy,
and adjustments to the Company’s reserve for leases on facilities
no longer in use. Operating margin was 12.3%, compared to 11.9% for
the same period in 2016. Excluding the noncash adjustments,
operating income margin was 10.5% compared to 11.8% for the same
period in 2016.
- Net income was $10.3 million compared
to $7.8 million for the same period in 2016, an increase of 32%.
Excluding the noncash adjustments, net income was $8.2 million
compared to $7.7 million for the same period in 2016.
- Diluted earnings per share was $0.92
compared to $0.72 for the same period in 2016, an increase of 28%.
Excluding the noncash adjustments, diluted earnings per share was
$0.73 compared to $0.71 for the same period in 2016. Diluted
weighted average shares outstanding increased 4% to 11,190,000 from
10,799,000 for the same period in 2016.
Six Months Ended June 30:
- Revenues increased 4% to $227.6 million
compared to $219.7 million for the same period in 2016, principally
due to higher enrollment partially offset by lower revenue per
student.
- Income from operations was $32.3
million compared to $33.0 million for the same period in 2016, a
decrease of 2%. Excluding the noncash adjustments, income from
operations was $30.3 million compared to $31.3 million for the same
period in 2016. Operating income margin was 14.2%, compared to
15.0% for the same period in 2016. Excluding the noncash
adjustments, operating income margin was 13.3% compared to 14.2%
for the same period in 2016.
- Net income was $20.9 million compared
to $20.2 million for the same period in 2016, an increase of 3%.
Excluding the noncash adjustments, net income was $18.8 million
compared to $19.1 million for the same period in 2016.
- Diluted earnings per share was $1.87
for 2017 and for 2016. Excluding the noncash adjustments, diluted
earnings per share was $1.68 compared to $1.77 for the same period
in 2016. Diluted weighted average shares outstanding increased 3%
to 11,155,000 from 10,790,000 for the same period in 2016.
Balance Sheet and Cash Flow
At June 30, 2017, the Company had cash and cash equivalents of
$147.9 million and no debt. The Company generated $32.8 million in
cash from operating activities in the first six months of 2017
compared to $22.4 million during the same period in 2016. Capital
expenditures for the first six months of 2017 were $8.4 million,
compared to $3.9 million for the same period in 2016.
The Company had $70.0 million of share repurchase authorization
remaining at June 30, 2017. No shares were repurchased in the
second quarter of 2017.
For the second quarter of 2017, bad debt expense as a percentage
of revenues was 4.5%, compared to 3.8% for the same period in
2016.
Q3 Enrollment Outlook
Total enrollments at Strayer University for the third quarter
2017 are anticipated to grow 7% to approximately 41,600 students
from 38,813 students for the same period in 2016. New student
enrollments are expected to increase approximately 7%, while
continuing student enrollments are expected to increase
approximately 8%. Revenue per student for the third quarter is
expected to decrease between 1% and 2%.
Accreditation
During the second quarter, the Middle States Commission on
Higher Education (Middle States) reaffirmed Strayer University’s
regional accreditation, with no required follow-up reporting.
Middle States found that Strayer is in full compliance with all
fourteen of its Standards of Excellence. The Standards of
Excellence constitute Middle States’ qualitative measures of
institutional performance. The Middle States accreditation is for
eight years, during which time the University will submit annual
reports, and the University’s next review will be in 2025-26.
Additionally during the second quarter, the Commission on
Collegiate Nursing Education (CCNE) granted accreditation to
Strayer University’s RN to BSN program. This specialized,
programmatic accreditation is for five years, through June 2022,
with the University’s next on-site evaluation in fall 2021. CCNE’s
accreditation recognizes that the program engages in effective
educational practice in nursing and effective educational
preparation of members of the nursing profession.
Stock-based Compensation Activity
In May 2017, the Company awarded 7,541 shares of restricted
stock to various non-employee members of the Company’s Board of
Directors, as part of the Company’s annual director compensation.
The Company’s stock price closed at $86.83 on the date of these
restricted stock grants.
Common Stock and Common Stock Equivalents
At June 30, 2017, the Company had 11,167,425 common shares
issued and outstanding, including 466,318 shares of restricted
stock. The Company also had 250,000 restricted stock units
outstanding and 100,000 vested stock options outstanding.
Common Stock Cash Dividend
The Company announced today that its Board of Directors had
declared a regular, quarterly cash dividend of $0.25 per share of
common stock. This dividend will be paid on September 18, 2017 to
shareholders of record as of September 5, 2017.
Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss
its second quarter 2017 earnings results at 10:00 a.m. (ET) today.
To participate on the live call, investors should dial (877)
303-9047 ten minutes prior to the start time. In addition, the call
will be available via live webcast. To access the live webcast of
the conference call, please go to www.strayereducation.com 15
minutes prior to the start time of the call to register. Following
the call, the webcast will be archived and available at
www.strayereducation.com.
About Strayer Education, Inc.
Strayer Education, Inc. (NASDAQ: STRA) is educating a more
competitive and qualified workforce by solving higher education’s
most challenging problems. It includes Strayer University, a
regionally accredited institution that delivers affordable degree
programs for working adults, and a Top 25 Princeton Review-ranked
executive MBA program through the Jack Welch Management Institute.
Non-degree web and mobile application development courses are
offered through the New York Code + Design Academy. Strayer also
transforms the workforces of its corporate partners through
customized degree and professional development programs. By
deploying innovative teaching methods and technologies that enhance
student learning outcomes, Strayer makes it possible for working
adults to acquire the skills they need to succeed in today’s
rapidly changing economy.
Forward-Looking Statements
This press release contains statements that are forward-looking
and are made pursuant to the "safe-harbor" provisions of the
Private Securities Litigation Reform Act of 1995 (the “Reform
Act”). Such statements may be identified by the use of words such
as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “will,”
“forecast,” “outlook,” “plan,” “project,” or similar words. The
statements are based on the Company’s current expectations and are
subject to a number of assumptions, uncertainties and risks. In
connection with the safe-harbor provisions of the Reform Act, the
Company has identified important factors that could cause the
Company’s actual results to differ materially from those expressed
in or implied by such statements. The assumptions, uncertainties
and risks include the pace of growth of student enrollment, the
Company’s continued compliance with Title IV of the Higher
Education Act, and the regulations thereunder, as well as regional
accreditation standards and state regulatory requirements,
rulemaking by the Department of Education and increased focus by
the U.S. Congress on for-profit education institutions, competitive
factors, risks associated with the opening of new campuses, risks
associated with the offering of new educational programs and
adapting to other changes, risks relating to the timing of
regulatory approvals, the Company’s ability to implement its growth
strategy, risks associated with the ability of the University’s
students to finance their education in a timely manner, and general
economic and market conditions. Further information about these and
other relevant risks and uncertainties may be found in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 and in its subsequent filings with the Securities
and Exchange Commission, all of which are incorporated herein by
reference and which are available from the Commission. The Company
undertakes no obligation to update or revise forward-looking
statements.
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Amounts in thousands, except per share
data)
For the three months endedJune
30,
For the six months endedJune
30,
2016 2017 2016 2017
Revenues $ 108,487 $ 112,720 $ 219,653 $ 227,632 Costs and
expenses: Instruction and educational support 61,782 61,656 119,880
123,072 Marketing 17,748 19,226 36,046 37,944 Admissions advisory
4,131 4,779 8,480 9,495 General and administration 11,930
13,205 22,259 24,824 Total costs and expenses
95,591 98,866 186,665 195,335 Income
from operations 12,896 13,854 32,988 32,297 Investment income 112
253 212 434 Interest expense 160 160 320
319 Income before income taxes 12,848 13,947 32,880 32,412
Provision for income taxes 5,062 3,645 12,674
11,532 Net income $ 7,786 $ 10,302 $ 20,206 $ 20,880
Earnings per share: Basic $ 0.73 $ 0.96 $ 1.91 $ 1.96 Diluted $
0.72 $ 0.92 $ 1.87 $ 1.87 Weighted average shares
outstanding: Basic 10,610 10,680 10,603 10,655 Diluted 10,799
11,190 10,790 11,155
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(Amounts in thousands, except share and
per share data)
December 31, June 30, 2016 2017
ASSETS Current assets: Cash and cash equivalents $ 129,245 $
147,867 Tuition receivable, net 20,532 20,342 Income taxes
receivable — 1,485 Other current assets 10,766 10,357
Total current assets 160,543 180,051 Property and equipment, net
73,124 72,706 Deferred income taxes 31,096 32,441 Goodwill 20,744
20,744 Other assets 13,189 12,540 Total assets $
298,696 $ 318,482
LIABILITIES & STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable and accrued
expenses $ 41,132 $ 41,286 Income taxes payable 1,883 — Deferred
revenue 16,691 20,017 Other current liabilities 133 —
Total current liabilities 59,839 61,303 Other long-term liabilities
50,483 47,978 Total liabilities 110,322
109,281 Commitments and contingencies Stockholders' equity: Common
stock, par value $0.01, 20,000,000 shares authorized; 11,093,489
and 11,167,425 shares issued and outstanding at December 31, 2016
and June 30, 2017, respectively 111 112 Additional paid-in capital
35,453 41,106 Retained earnings 152,810 167,983 Total
stockholders' equity 188,374 209,201 Total
liabilities and stockholders' equity $ 298,696 $ 318,482
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the six months ended
June 30,
2016 2017 Cash flows from operating
activities: Net income $ 20,206 $ 20,880 Adjustments to reconcile
net income to net cash provided by operating activities:
Amortization of gain on sale of assets (140 ) (133 ) Amortization
of deferred rent (446 ) (859 ) Amortization of deferred financing
costs 131 131 Depreciation and amortization 8,873 8,975 Deferred
income taxes (2,158 ) (1,560 ) Stock-based compensation 4,926 5,654
Changes in assets and liabilities: Tuition receivable, net 245 (137
) Other current assets (1,466 ) 409 Other assets (2,639 ) 829
Accounts payable and accrued expenses (726 ) 559 Income taxes
payable (3,314 ) (3,153 ) Deferred revenue 3,313 4,356 Other
long-term liabilities (4,380 ) (3,187 ) Net cash
provided by operating activities 22,425 32,764
Cash flows from investing activities: Purchases of
property and equipment (3,852 ) (8,435 ) Cash used in acquisition,
net of cash acquired (7,635 ) — Net cash used
in investing activities (11,487 ) (8,435 )
Cash flows from financing activities: Payments of contingent
consideration (405 ) — Common dividends paid —
(5,707 ) Net cash used in financing activities (405 )
(5,707 ) Net increase in cash and cash equivalents 10,533 18,622
Cash and cash equivalents - beginning of period 106,889
129,245 Cash and cash equivalents - end of
period $ 117,422 $ 147,867 Non-cash
transactions: Purchases of property and equipment included in
accounts payable $ 274 $ 469
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005221/en/
Strayer Education Inc.Daniel Jackson,
703-713-1862Executive Vice President and Chief Financial
Officerdaniel.jackson@strayer.edu
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