University Group total enrollments grew 5.8%
primarily driven by new enrollment growth of 39.0% for the
quarter
Career Education Corporation (NASDAQ: CECO) today reported
operating and financial results for the third quarter and year to
date ended September 30, 2018.
THIRD QUARTER 2018 RESULTS
Total Company • Operating income of $19.3
million as compared to $4.5 million in the prior year quarter • Net
income of $14.9 million or $0.21 per diluted share • Adjusted
diluted earnings per share of $0.25 (see GAAP to non-GAAP
reconciliation attached to this press release for further details)
• Ended the quarter with $193.0 million in cash, cash equivalents,
restricted cash and available-for-sale short-term investments
University Group and
Corporate
• Revenue of $145.6 million as compared to $141.5 million in the
prior year quarter • Operating income of $23.0 million as compared
to $23.6 million in the prior year quarter • Excluding severance
charges of $1.9 million recorded in the current quarter, operating
income increased compared to the prior year quarter
University Group Key Metrics • CTU’s new student
enrollments increased 9.0 percent versus the prior year quarter •
AIU’s new student enrollments increased 96.8 percent primarily
driven by the academic calendar redesign as well as solid execution
at our admissions and advising centers • On an aggregate basis,
total student enrollments increased 5.8 percent versus the prior
year quarter end
Teach-Outs
• Operating loss of $3.7 million as compared to $19.1 million in
the prior year quarter, with the improvement primarily driven by
the substantial completion of teach-outs • Two campuses with
approximately ten students remain as of September 30, 2018, and
these campus teach-outs are expected to be complete by the end of
2018
YEAR TO DATE 2018 HIGHLIGHTS
- Total company operating income of $51.1
million as compared to $23.4 million in the prior year to date,
with the improvement primarily driven by the substantial completion
of teach-outs
- University Group revenue increased 1.9
percent or $8.0 million as compared to the prior year to date,
driven by total enrollment growth at both AIU and CTU
- University Group new student
enrollments increased 6.6 percent as compared to the prior year to
date
“University Group student enrollments continue to experience
growth that we believe is primarily driven by organic investments
aimed at improving student onboarding and learning experiences and
improved execution within our operating processes,” said Todd
Nelson, President and Chief Executive Officer. “Momentum within the
student inquiry and application process remains encouraging and our
ongoing investments in technology and student-serving operations
are working well to serve the demand we are experiencing.”
REVENUE
For the quarter and year to date ended September 30, 2018, total
revenue was $145.7 million and $435.8 million representing an
increase of 0.5 percent and a decrease of 3.9 percent,
respectively, compared to total revenue of $145.0 million and
$453.3 million for the prior year quarter and year to date ended
September 30, 2017, respectively. The decrease for the current year
to date was driven by declining revenues within our teach-out
campuses. As of September 30, 2018, there are two campuses
remaining which are expected to complete their teach-outs during
the fourth quarter of 2018.
Total revenue for the University Group was $145.6 million and
$435.2 million representing an increase of 2.9 percent and 1.9
percent, respectively, for the quarter and year to date ended
September 30, 2018 as compared to the prior year periods.
For the Quarter Ended September 30, For the
Year to Date Ended September 30,
Revenue ($ in
thousands)
2018 2017
Increase
(Decrease)
2018 2017
Increase
(Decrease)
CTU $ 93,115 $ 91,319 2.0 % $ 280,988 $ 276,558 1.6 %
AIU 52,504 50,150 4.7 % 154,204 150,618
2.4 % Total University Group 145,619 141,469 2.9 % 435,192 427,176
1.9 % Corporate and Other — — NM — — NM
Subtotal 145,619 141,469 2.9 % 435,192 427,176 1.9 % All Other
Campuses (1) 71 3,517 NM 599 26,141 NM
Total $ 145,690 $ 144,986 0.5 % $ 435,791 $ 453,317 -3.9 % (1)
Campuses included in All Other Campuses are in the process
of being taught out or have completed their teach-out as of
September 30, 2018. Previously, these campuses were reported within
two segments, the former Transitional Group and Culinary Arts
segments.
TOTAL AND NEW STUDENT ENROLLMENTS
Total student enrollments grew 5.8 percent for the University
Group, on an aggregate basis, as of September 30, 2018 as compared
to the prior year driven by new student enrollment growth. For the
third quarter and year to date 2018, new student enrollments for
the University Group increased 39.0 percent and 6.6 percent,
respectively, as compared to the prior year periods.
CTU’s new student enrollments increased 9.0 percent and 6.6
percent for the current quarter and year to date, respectively, as
compared to the prior year periods. AIU’s new student enrollments
increased 96.8 percent and 6.6 percent for the current quarter and
year to date, respectively, as compared to the prior year periods.
The increase in AIU’s new student enrollments for the current
quarter was primarily driven by the timing impacts of the academic
calendar redesign. Both AIU and CTU’s student enrollment increases
were positively impacted by improved execution within our operating
processes and investments at our admissions and advising centers in
Arizona and Illinois.
As of September 30,
Total Student
Enrollments
2018 2017
Increase
(Decrease)
CTU 22,200 21,600 2.8 % AIU 12,400
11,100 11.7 % Total University Group 34,600
32,700 5.8 % All Other Campuses (1) 10 200 NM Total
34,610 32,900 5.2 %
For the Quarter Ended
September 30, For the Year to Date Ended September
30,
New Student
Enrollments
2018 2017
Increase
(Decrease)
2018 2017
Increase
(Decrease)
CTU 6,520 5,980 9.0 % 17,240
16,170 6.6 % AIU 6,100 3,100 96.8 %
11,750 11,020 6.6 % Total University Group 12,620
9,080 39.0 % 28,990 27,190 6.6 % (1)
All Other Campuses no longer enroll new students.
OPERATING INCOME (LOSS)
For the quarter and year to date ended September 30, 2018, the
Company recorded operating income of $19.3 million and $51.1
million, respectively, compared to operating income of $4.5 million
and $23.4 million for the quarter and year to date ended September
30, 2017, respectively. The improvement in operating income
performance is primarily driven by substantial completion of the
campus teach-outs.
For the Quarter Ended September 30, For the
Year to Date Ended September 30,
Operating Income
($ in thousands)
2018 2017
Increase
(Decrease)
2018 2017
Increase
(Decrease)
CTU $ 26,261 $ 27,565 -4.7 % $ 80,562 $ 78,649 2.4 %
AIU 1,070 2,256 -52.6 % 3,621 7,987
-54.7 % Total University Group 27,331 29,821 -8.3 % 84,183 86,636
-2.8 % Corporate and Other (4,362 ) (6,199 ) 29.6 %
(10,904 ) (16,595 ) 34.3 % Subtotal 22,969 23,622
-2.8 % 73,279 70,041 4.6 % All Other Campuses (3,686 )
(19,083 ) NM (22,164 ) (46,617 ) NM Total $
19,283 $ 4,539 324.8 % $ 51,115 $ 23,424 118.2 %
ADJUSTED OPERATING INCOME
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant and non-cash items, as
a means to understand the performance of its operations. (See
tables below and the GAAP to non-GAAP reconciliation attached to
this press release for further details.)
As shown in the table below, adjusted operating income for the
total company was $25.8 million and $75.4 million for the quarter
and year to date ended September 30, 2018, respectively, as
compared to $15.5 million and $46.0 million in the respective prior
year periods.
For the Quarter Ended September 30,
For the Year to Date Ended September 30,
Adjusted
Operating Income
2018 2017 2018 2017
Total
Company:
Operating income $ 19,283 $
4,539 $ 51,115 $ 23,424
Depreciation and amortization 2,364 3,582 7,049 11,368 Unused space
charges (1) 2,114 7,347 5,774 11,158 Severance and related costs
(2) 1,898 - 1,898 - Significant legal settlements 134
- 9,595 -
Adjusted Operating Income --
Total Company
$ 25,793 $ 15,468 $
75,431 $ 45,950 Increase (Decrease)
66.8 % 64.2 % (1) Unused space
charges represent the net present value of remaining lease
obligations for vacated space less an estimated amount for sublease
income. As early lease terminations or subleases occur, or as
assumptions are otherwise adjusted, these unused space charges are
increased or decreased. These adjustments are also included in the
amounts presented. (2) Severance and related costs include charges
related to significant restructuring actions. These restructuring
actions are non-recurring charges and are not considered part of
ongoing operating results.
NET INCOME AND EARNINGS PER SHARE
For the quarter and year to date ended September 30, 2018, the
Company recorded net income of $14.9 million and $41.1 million,
respectively, compared to net income of $3.0 million and $12.5
million for the quarter and year to date ended September 30, 2017,
respectively.
The Company recorded diluted earnings per share (“EPS”) of $0.21
and $0.58 for the quarter and year to date ended September 30,
2018, respectively, as compared to $0.04 and $0.18 for the prior
year quarter and year to date, respectively. Adjusted diluted
earnings per share was $0.25 and $0.76 for the quarter and year to
date ended September 30, 2018, respectively, as compared to $0.10
and $0.28 for the prior year quarter and year to date,
respectively.
For the Quarter Ended September 30,
For the Year to Date Ended September 30,
Adjusted Earnings
Per Share
2018 2017 2018
2017
Earnings Per Share- Diluted $ 0.21 $
0.04 $ 0.58 $ 0.18
NON-GAAP DILUTED EPS ADJUSTMENTS Unused space charges (1)
0.02 0.06 0.06 0.10 Severance and related costs (1) 0.02 - 0.02 -
Significant legal settlements (1) 0.00 - 0.10
-
Total Adjustments (1) $ 0.04
$ 0.06 $ 0.18 $ 0.10
Adjusted
Diluted Earnings Per Share (NON-GAAP) $ 0.25
$ 0.10 $ 0.76 $ 0.28 (1)
Adjustments include a tax effect of 25% and 39% for each of
the periods ending in 2018 and 2017, respectively, based on a
normalized federal and state income tax rate.
BALANCE SHEET AND CASH FLOW
Net cash provided by operating activities was $3.5 million and
$5.1 million for the quarters ended September 30, 2018 and 2017,
respectively. For the year to date ended September 30, 2018, net
cash flows provided by operating activities was $18.3 million as
compared to net cash used of $29.1 million for the year to date
ended September 30, 2017. The current quarter and year to date cash
flow includes significant legal settlement payments of $13.1
million and $17.1 million, respectively, as compared to $32.0
million in the prior year to date.
For the Quarter Ended September 30, For the
Year to Date Ended September 30,
Selected Cash
Flow Items
2018 2017
Increase
(Decrease)
2018 2017
Increase
(Decrease)
Net cash provided by (used in) operating activities $ 3,541 $ 5,139
-31.1 % $ 18,295 $ (29,107 ) 162.9 % Capital
expenditures $ 1,215 $ 1,280 -5.1 % $ 3,952 $ 3,426 15.4 %
As of September 30, 2018 and December 31, 2017, cash, cash
equivalents, restricted cash and available-for-sale short-term
investments totaled $193.0 million and $180.1 million,
respectively.
OUTLOOK
The Company currently expects the following results, subject to
the key assumptions identified below (see the GAAP to non-GAAP
reconciliation for adjusted operating income (loss) attached to
this press release for further details):
Financial Outlook:
- Full year 2018 - total company:
- Operating income in the range of $71.0
million to $76.0 million
- Adjusted operating income in the range
of $101.0 million to $106.0 million
- Fourth quarter 2018 - total company:
- Operating income in the range of $19.9
million to $24.9 million
- Adjusted operating income in the range
of $25.6 million to $30.6 million
- Year end 2018 cash, cash equivalents,
restricted cash and short-term investments (“cash balances”) to be
in the range of $215 million to $220 million.
- Operating income and adjusted operating
income and ending cash balances for the total company to grow in
2019 as compared to 2018.
University Group Outlook:
- CTU:
- New student enrollments for the fourth
quarter of 2018 are expected to grow as compared to the prior year
quarter.
- AIU:
- Primarily driven by the academic
calendar redesign, new student enrollments at AIU are expected to
significantly decline in the fourth quarter of 2018 followed by
significant growth in the first quarter of 2019, which will more
than offset the decline in the fourth quarter of 2018.
- Fourth quarter and full year revenue
growth for 2018.
Operating income, which is the most directly comparable GAAP
measure to adjusted operating income, may not follow the same
trends stated in the outlook above because of adjustments made for
unused space charges that represent the present value of future
remaining lease obligations for vacated space less an estimated
amount for sublease income and subsequent adjustments as well as
depreciation, amortization, asset impairment charges, severance and
related costs as a result of significant restructuring actions and
significant legal settlements. The operating income and adjusted
operating income, enrollment, revenue and cash outlook provided
above for 2018 and 2019 are based on the following key assumptions
and factors, among others: (i) prospective student interest in the
Company’s programs continues to trend in line with recent
experiences, (ii) initiatives and investments in student-serving
operations continue to positively impact enrollment trends within
the University Group, (iii) achievement of anticipated recovery
rates for our real estate obligations in line with our current
expectations, (iv) no material changes in the current legal or
regulatory environment, and excludes legal and regulatory
liabilities and other related impacts which are not probable and
estimable at this time, and any impact of new or proposed
regulations, including the “borrower defense to repayment” and
gainful employment regulations and any modifications thereto, and
(v) no material changes in the estimated amount of compensation
expense that could be impacted by changes in the Company’s stock
price. Although these estimates and assumptions are based upon
management’s good faith beliefs regarding current events and
actions that may be undertaken in the future, actual results could
differ materially from these estimates.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on
Thursday, November 1, 2018 at 5:30 p.m. Eastern time to discuss its
third quarter and year to date 2018 results. Interested parties can
access the live webcast of the conference call and the related
presentation materials at www.careered.com in the Investor Relations section
of the website. Participants can also listen to the conference call
by dialing 844-378-6484 (domestic) or 412-542-4179 (international).
Please log-in or dial-in at least 10 minutes prior to the start
time to ensure a connection. An archived version of the webcast
will be accessible for 90 days at www.careered.com in the Investor Relations section
of the website.
ABOUT CAREER EDUCATION CORPORATION
Career Education’s academic institutions offer a quality
education to a diverse student population in a variety of
disciplines through online, campus-based and blended learning
programs. The Company’s two universities – American
InterContinental University (“AIU”) and Colorado Technical
University (“CTU”) – provide degree programs through the master’s
or doctoral level as well as associate and bachelor’s levels. Both
universities predominantly serve students online with
career-focused degree programs that are designed to meet the
educational demands of today’s busy adults. AIU and CTU continue to
show innovation in higher education, advancing new personalized
learning technologies like their intellipath® learning
platform. Career Education is committed to providing quality
education that closes the gap between learners who seek to advance
their careers and employers needing a qualified workforce.
A listing of University Group campus locations and web links to
these institutions can be found at www.careered.com.
Except for the historical and present factual information
contained herein, the matters set forth in this release, including
statements identified by words such as “believe,” “will,” “expect,”
“estimate,” “continue,” “outlook,” “trend” and similar expressions,
are forward-looking statements as defined in Section 21E of
the Securities Exchange Act of 1934, as amended. These statements
are based on information currently available to us and are subject
to various assumptions, risks, uncertainties and other factors that
could cause our results of operations, financial condition, cash
flows, performance, business prospects and opportunities to differ
materially from those expressed in, or implied by, these
statements. Except as expressly required by the federal securities
laws, we undertake no obligation to update or revise such factors
or any of the forward-looking statements contained herein to
reflect future events, developments or changed circumstances, or
for any other reason. These risks and uncertainties, the outcomes
of which could materially and adversely affect our financial
condition and operations, include, but are not limited to, the
following: declines in enrollment or interest in our programs; our
continued compliance with and eligibility to participate in Title
IV Programs under the Higher Education Act of 1965, as amended, and
the regulations thereunder (including the gainful employment,
90-10, financial responsibility and administrative capability
standards prescribed by the U.S. Department of Education), as well
as applicable accreditation standards and state regulatory
requirements; the impact of recently issued “borrower defense to
repayment” regulations and any modifications thereto; rulemaking by
the U.S. Department of Education or any state or accreditor and
increased focus by Congress and governmental agencies on, or
increased negative publicity about, for-profit education
institutions; our ability to successfully defend litigation and
other claims brought against us; the success of our initiatives to
improve student experiences, retention and academic outcomes; the
ability of our student admissions and advising centers to achieve
anticipated operating performance; increased competition; the
impact of management changes; and changes in the overall U.S.
economy. 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 year ended December 31, 2017 and its subsequent
filings with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
September 30, December 31,
2018 2017 (unaudited) ASSETS
CURRENT ASSETS: Cash and cash equivalents, unrestricted $
32,029 $ 18,110 Restricted cash 337 789 Restricted short-term
investments 4,320 5,070 Short-term investments 156,336
156,178 Total cash and cash equivalents, restricted cash and
short-term investments 193,022 180,147 Student receivables,
net 34,043 18,875 Receivables, other, net 2,445 1,163 Prepaid
expenses 8,515 7,722 Inventories 894 1,112 Other current assets
1,122 1,319 Assets of discontinued operations 66 382
Total current assets 240,107 210,720
NON-CURRENT ASSETS: Property and equipment, net 29,977
33,230 Goodwill 87,356 87,356 Intangible assets, net 7,900 7,900
Student receivables, net 2,230 2,548 Deferred income tax assets,
net 86,910 98,084 Other assets 5,277 5,673 Assets of discontinued
operations 1,596 1,585
TOTAL ASSETS $
461,353 $ 447,096 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts
payable $ 12,646 $ 8,515 Accrued expenses: Payroll and related
benefits 23,953 32,910 Advertising and production costs 11,733
9,245 Income taxes 2,062 2,185 Other 16,222 31,233 Deferred revenue
22,988 22,897 Liabilities of discontinued operations 2,013
5,701 Total current liabilities 91,617 112,686
NON-CURRENT LIABILITIES: Deferred rent obligations
14,205 15,277 Other liabilities 15,884 22,143 Liabilities of
discontinued operations - 785 Total non-current
liabilities 30,089 38,205
STOCKHOLDERS'
EQUITY: Preferred stock - - Common stock 852 843 Additional
paid-in capital 626,751 621,008 Accumulated other comprehensive
loss (271 ) (164 ) Accumulated deficit (67,017 ) (108,127 )
Treasury stock (220,668 ) (217,355 ) Total
stockholders' equity 339,647 296,205
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 461,353
$ 447,096
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except per share amounts
and percentages)
For the Quarter Ended September 30,
2018 % of
Total
Revenue
2017 % of
Total
Revenue
REVENUE: Tuition and fees $ 144,882 99.4 % $
144,408 99.6 % Other 808 0.6 % 578 0.4 % Total
revenue 145,690 144,986
OPERATING EXPENSES:
Educational services and facilities 27,201 18.7 % 37,788 26.1 %
General and administrative 96,842 66.5 % 99,077 68.3 % Depreciation
and amortization 2,364 1.6 % 3,582 2.5 % Total
operating expenses 126,407 86.8 % 140,447 96.9 %
Operating income 19,283 13.2 % 4,539 3.1 %
OTHER
INCOME: Interest income 950 0.7 % 474 0.3 % Interest expense
(108 ) -0.1 % (114 ) -0.1 % Miscellaneous income 32 0.0 %
196 0.1 % Total other income 874 0.6 % 556 0.4
%
PRETAX INCOME 20,157 13.8 % 5,095 3.5 % Provision for
income taxes 5,089 3.5 % 1,597 1.1 %
INCOME
FROM CONTINUING OPERATIONS 15,068 10.3 % 3,498 2.4 % Loss from
discontinued operations, net of tax (211 ) -0.1 %
(476 ) -0.3 %
NET INCOME 14,857 10.2 % 3,022
2.1 %
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:
Foreign currency translation adjustments (21 ) 105 Unrealized gain
on investments 106 - Total other comprehensive income
85 105
COMPREHENSIVE INCOME $ 14,942 $ 3,127
NET INCOME (LOSS) PER SHARE - BASIC: Income from
continuing operations $ 0.21 $ 0.05 Loss from discontinued
operations - (0.01 ) Net income per share $ 0.21 $
0.04
NET INCOME (LOSS) PER SHARE - DILUTED: Income
from continuing operations $ 0.21 $ 0.05 Loss from discontinued
operations - (0.01 ) Net income per share $ 0.21 $
0.04
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
69,737 69,082 Diluted 71,790 70,865
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except per share amounts
and percentages)
For the Year to Date Ended September 30,
2018 % of
Total
Revenue
2017 % of
Total
Revenue
REVENUE: Tuition and fees $ 433,736 99.5 % $
451,292 99.6 % Other 2,055 0.5 % 2,025 0.4 % Total
revenue 435,791 453,317
OPERATING EXPENSES:
Educational services and facilities 84,437 19.4 % 114,367 25.2 %
General and administrative 293,190 67.3 % 304,158 67.1 %
Depreciation and amortization 7,049 1.6 % 11,368 2.5
% Total operating expenses 384,676 88.3 % 429,893
94.8 % Operating income 51,115 11.7 % 23,424 5.2 %
OTHER INCOME: Interest income 2,326 0.5 % 1,328 0.3 %
Interest expense (323 ) -0.1 % (340 ) -0.1 % Miscellaneous income
225 0.1 % 489 0.1 % Total other income 2,228
0.5 % 1,477 0.3 %
PRETAX INCOME 53,343 12.2 % 24,901
5.5 % Provision for income taxes 11,527 2.6 % 11,143
2.5 %
INCOME FROM CONTINUING OPERATIONS 41,816 9.6 %
13,758 3.0 % Loss from discontinued operations, net of tax
(706 ) -0.2 % (1,273 ) -0.3 %
NET INCOME
41,110 9.4 % 12,485 2.8 %
OTHER COMPREHENSIVE
(LOSS) INCOME, net of tax: Foreign currency translation
adjustments (103 ) 368 Unrealized (loss) gain on investments
(4 ) 34 Total other comprehensive (loss) income (107
) 402
COMPREHENSIVE INCOME $ 41,003 $ 12,887
NET INCOME (LOSS) PER SHARE - BASIC: Income from continuing
operations $ 0.60 $ 0.20 Loss from discontinued operations
(0.01 ) (0.02 ) Net income per share $ 0.59 $ 0.18
NET INCOME (LOSS) PER SHARE - DILUTED: Income from
continuing operations $ 0.59 $ 0.20 Loss from discontinued
operations (0.01 ) (0.02 ) Net income per share $
0.58 $ 0.18
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 69,542 68,897 Diluted 71,425
70,660
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
For The Year to Date Ended September 30,
2018 2017 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income $ 41,110 $ 12,485 Adjustments to
reconcile net income to net cash provided by (used in) operating
activities: Depreciation and amortization expense 7,049 11,368 Bad
debt expense 21,579 21,516 Compensation expense related to
share-based awards 4,143 3,616 Deferred income taxes 11,174 10,282
Changes in operating assets and liabilities: (66,760 )
(88,374 ) Net cash provided by (used in) operating
activities 18,295 (29,107 )
CASH FLOWS FROM
INVESTING ACTIVITIES: Purchases of available-for-sale
investments (190,726 ) (202,050 ) Sales of available-for-sale
investments 191,555 199,340 Purchases of property and equipment
(3,952 ) (3,426 ) Net cash used in investing
activities (3,123 ) (6,136 )
CASH FLOWS
FROM FINANCING ACTIVITIES: Issuance of common stock 1,608 2,548
Payments of employee tax associated with stock compensation
(3,313 ) (1,170 ) Net cash (used in) provided by financing
activities (1,705 ) 1,378
EFFECT OF FOREIGN
CURRENCY EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS:
- 48
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 13,467 (33,817 )
CASH AND CASH EQUIVALENTS,
beginning of the period 18,899 50,882
CASH AND
CASH EQUIVALENTS, end of the period $ 32,366 $ 17,065
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except percentages)
For the Quarter Ended September 30,
2018 2017 REVENUE: CTU $ 93,115
$ 91,319 AIU 52,504 50,150 Total University Group
145,619 141,469 Corporate and Other - - Subtotal
145,619 141,469 All Other Campuses 71 3,517 Total $
145,690 $ 144,986
OPERATING INCOME (LOSS): CTU $
26,261 $ 27,565 AIU 1,070 2,256 Total University
Group 27,331 29,821 Corporate and Other (4,362 )
(6,199 ) Subtotal 22,969 23,622 All Other Campuses (3,686 )
(19,083 ) Total $ 19,283 $ 4,539
OPERATING MARGIN
(LOSS): CTU 28.2 % 30.2 % AIU 2.0 % 4.5 % Total
University Group 18.8 % 21.1 % Corporate and Other NM NM Subtotal
15.8 % 16.7 % All Other Campuses NM NM Total 13.2 %
3.1 %
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except percentages)
For the Year to Date Ended September 30,
2018 2017 REVENUE: CTU $ 280,988
$ 276,558 AIU 154,204 150,618 Total University Group
435,192 427,176 Corporate and Other - - Subtotal
435,192 427,176 All Other Campuses 599 26,141 Total $
435,791 $ 453,317
OPERATING INCOME (LOSS): CTU $
80,562 $ 78,649 AIU 3,621 7,987 Total University
Group 84,183 86,636 Corporate and Other (10,904 )
(16,595 ) Subtotal 73,279 70,041 All Other Campuses (22,164
) (46,617 ) Total $ 51,115 $ 23,424
OPERATING
MARGIN (LOSS): CTU 28.7 % 28.4 % AIU 2.3 % 5.3 %
Total University Group 19.3 % 20.3 % Corporate and Other NM NM
Subtotal 16.8 % 16.4 % All Other Campuses NM NM Total 11.7 %
5.2 %
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP ITEMS (1)
(In thousands, unless otherwise noted)
For the Quarter Ended September 30,
For the Year to Date Ended September 30, ACTUAL
ACTUAL
Adjusted
Operating Income (Loss)
2018 2017 2018 2017
University Group
and Corporate:
Operating income (2) (3) $ 22,969
$ 23,622 $ 73,279 $
70,041 Depreciation and amortization (3) 2,364 2,605 6,916
7,695 Unused space charges (3)(4) 16 - 1,229 - Severance and
related costs (3)(5) 1,898 - 1,898 -
Adjusted Operating Income --
University Group and Corporate
(6)
$ 27,247 $ 26,227 $
83,322 $ 77,736
All Other
Campuses:
Operating loss (2) (7) $ (3,686
) $ (19,083 ) $ (22,164
) $ (46,617 ) Depreciation and
amortization (7) - 977 133 3,673 Unused space charges (4) (7) 2,098
7,347 4,545 11,158 Significant legal settlements (7) 134
- 9,595 -
Adjusted Operating Loss --
All Other Campuses (6)
$ (1,454 ) $ (10,759 )
$ (7,891 ) $ (31,786 )
Total
Company
Operating income
$ 19,283 $ 4,539 $ 51,115
$ 23,424 Depreciation and amortization 2,364 3,582
7,049 11,368 Unused space charges (4) 2,114 7,347 5,774 11,158
Severance and related costs (5) 1,898 - 1,898 - Significant legal
settlements 134 - 9,595 -
Adjusted
Operating Income--
Total Company
$ 25,793 $ 15,468 $
75,431 $ 45,950 For
the Quarter Ended December 31, For the Year to Date Ended
December 31, OUTLOOK ACTUAL
OUTLOOK ACTUAL 2018 2017
2018 2017
Total
Company
Operating income $19.9M - $24.9M $10.7M
$71.0M - $76.0M $34.1M Depreciation and amortization
~2.5 2.6 ~9.5 14.0 Unused space charges (4) ~3.2 1.1 ~9.0 12.2
Severance and related costs (5) - - 1.9 - Significant legal
settlements - 6.5 9.6 6.5
Adjusted
Operating Income -- Total Company $25.6M - $30.6M
$20.9M $101M - $106M $66.8M
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP ITEMS (1)
For the Quarter Ended September 30,
For the Year to Date Ended September 30,
Adjusted Earnings
Per Share
2018 2017 2018
2017
Earnings Per Share- Diluted $ 0.21 $
0.04 $ 0.58 $ 0.18
NON-GAAP DILUTED EPS ADJUSTMENTS Unused space charges (8)
0.02 0.06 0.06 0.10 Severance and related costs (8) 0.02 - 0.02 -
Significant legal settlements (8) 0.00 - 0.10
-
Total Adjustments (8) $ 0.04
$ 0.06 $ 0.18 $ 0.10
Adjusted
Diluted Earnings Per Share (NON-GAAP) $ 0.25
$ 0.10 $ 0.76 $ 0.28 (1)
The Company believes it is useful to present non-GAAP
financial measures which exclude certain significant and non-cash
items as a means to understand the performance of its operations.
As a general matter, the Company uses non-GAAP financial measures
in conjunction with results presented in accordance with GAAP to
help analyze the performance of its operations, assist with
preparing the annual operating plan, and measure performance for
some forms of compensation. In addition, the Company believes that
non-GAAP financial information is used by analysts and others in
the investment community to analyze the Company’s historical
results and to provide estimates of future performance. The Company
believes adjusted operating income (loss) and adjusted diluted
earnings per share allows it to analyze and assess its ongoing
operations and compare current operating results with the
operational performance of other companies in its industry because
it does not give effect to potential differences caused by items it
does not consider reflective of underlying operating performance,
such as restructuring charges and significant legal reserves. In
evaluating adjusted operating income (loss) and adjusted diluted
earnings per share, investors should be aware that in the future
the Company may incur expenses similar to the adjustments presented
above. The presentation of adjusted operating income (loss) and
adjusted diluted earnings per share should not be construed as an
inference that the Company's future results will be unaffected by
expenses that are unusual, non-routine or non-recurring. Adjusted
operating income (loss) and adjusted diluted earnings per share has
limitations as an analytical tool, and it should not be considered
in isolation, or as a substitute for net income (loss), operating
income (loss), diluted earnings per share, or any other performance
measure derived in accordance and reported under GAAP or as an
alternative to cash flow from operating activities or as a measure
of liquidity. Non-GAAP financial measures, when viewed in a
reconciliation to corresponding GAAP financial measures, provide an
additional way of viewing the Company’s results of operations and
the factors and trends affecting the Company’s business. Non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, or superior to, the corresponding financial
results presented in accordance with GAAP. (2) Operating income for
the University Group and Corporate and operating loss for All Other
Campuses make up the components of operating income. A
reconciliation of these components for the quarters and years to
date ended September 30, 2018 and 2017 is presented below:
For The Quarter Ended September 30, For the
Year to Date Ended September 30, ACTUAL ACTUAL
2018 2017 2018 2017
Operating income for University Group and Corporate $ 22,969 $
23,622 $ 73,279 $ 70,041 Operating loss for All Other Campuses
(3,686 ) (19,083 ) (22,164 ) (46,617 )
Operating income $ 19,283 $
4,539 $ 51,115 $ 23,424 (3)
Amounts relate to the University Group and Corporate. (4)
Unused space charges represent the net present value of remaining
lease obligations for vacated space less an estimated amount for
sublease income. These charges relate to exited leased space and
therefore are not considered representative of ongoing operations.
As early lease terminations or subleases occur, or as assumptions
are otherwise adjusted, these unused space charges are increased or
decreased. These adjustments are also included in the amounts
presented. (5) Severance and related costs includes charges related
to significant restructuring actions. These restructuring actions
are non-recurring charges and are not considered part of ongoing
operating results. (6) Management assesses results of operations
for the University Group and Corporate separately from All Other
Campuses. Because All Other Campuses have been announced for
teach-out or have been taught out, management views these
operations as not reflective of the ongoing business. As a result,
management views adjusted operating income from the University
Group and Corporate separately from the remainder of the
organization, to assess results and make decisions. (7) Amounts
relate to All Other Campuses. (8) Adjustments include a tax effect
of 25% and 39% for each of the periods ending in 2018 and 2017,
respectively, based on a normalized federal and state income tax
rate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181101006033/en/
Investors:Alpha IR GroupChris Hodges or Sam Gibbons(312)
445-2870CECO@alpha-ir.comorMedia:Career Education
Corporation(847) 585-2600media@careered.com
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