First quarter revenue increased 6.6% primarily
driven by total University enrollment growth of 8.2%
Career Education Corporation (NASDAQ: CECO) today reported
operating and financial results for the quarter ended March 31,
2019.
FIRST QUARTER 2019 RESULTS AS COMPARED
TO THE PRIOR YEAR QUARTER
Financial Results • Revenue increased
by 6.6 percent to $157.9 million as compared to $148.1 million with
both universities contributing to this growth • Operating income
increased by 46.0 percent to $30.0 million as compared to $20.5
million • Earnings per diluted share of $0.35 as compared to $0.25
• Adjusted earnings per diluted share of $0.36 as compared to
$0.28* • Ended the quarter with $239.9 million in cash, cash
equivalents, restricted cash and available-for-sale short-term
investments
Key Metrics • CTU’s
total student enrollments increased by 4.1 percent primarily driven
by new enrollment growth of 14.3 percent • AIU’s new and total
student enrollments increased 124.7 percent and 16.5 percent,
respectively; impacting these quarterly increases was the timing
impact of the academic calendar redesign • Ongoing initiatives and
incremental investments in student-serving operations continue to
positively impact enrollment trends
*See GAAP to non-GAAP reconciliation attached to this press
release
“We are pleased to report solid first quarter results with key
operating metrics and trends showing year over year growth,” said
Todd Nelson, President and Chief Executive Officer. “Ongoing
initiatives and technology investments are improving student
outreach and engagement, while creating a more efficient and
effective enrollment process, which should support future growth.
Looking ahead, we remain committed to delivering quality academic
outcomes by leveraging our technology and student serving functions
while investing in responsible growth initiatives that will create
long term value for our shareholders.”
REVENUE
For the quarter ended March 31, 2019, total revenue was $157.9
million as compared to total revenue of $148.1 million for the
prior year quarter. Both universities contributed to this revenue
growth primarily driven by underlying enrollment trends.
For The Quarter Ended March 31,
Increase
Revenue ($ in
thousands)
2019 2018 (Decrease) CTU $ 97,057 $ 94,607
2.6 % AIU 60,779 53,121 14.4 % Total
University Group 157,836 147,728 6.8 % Corporate and Other (1)
17 337 -95.0 % Total $ 157,853 $ 148,065 6.6 % (1)
Corporate and other includes closed campuses which no longer
meet the criteria to be reported as a separate operating segment.
TOTAL AND NEW STUDENT ENROLLMENTS
For the quarter ended March 31, 2019, CTU’s and AIU’s total
student enrollments increased 4.1 percent and 16.5 percent,
respectively, primarily driven by new student enrollment growth of
14.3 percent and 124.7 percent, respectively, as compared to the
prior year quarter. Growth within both universities was driven by
strong student interest within the industry and ongoing investments
in the admissions and advising centers in Illinois and Arizona.
AIU’s new enrollments increase was also positively impacted by the
timing effect of the academic calendar redesign.
As of March 31,
Increase
Total Student
Enrollments
2019 2018 (Decrease) CTU 23,100
22,200 4.1 % AIU 12,700 10,900 16.5 % Total
University Group 35,800 33,100 8.2 %
As of
March 31, Increase
New Student
Enrollments
2019 2018 (Decrease) CTU 6,010 5,260 14.3 %
AIU 5,370 2,390 124.7 % Total University Group
11,380 7,650 48.8 %
OPERATING INCOME (LOSS)
For the quarter ended March 31, 2019, the Company recorded
operating income of $30.0 million, compared to operating income of
$20.5 million in the prior year quarter. The improvement in
operating income performance was driven by revenue growth at both
universities as well as reduced operating losses at the closed
campuses which are now reported within Corporate and Other,
partially offset with ongoing investments in technology and
student-serving processes and increased bad debt expense.
For The Quarter Ended March 31,
Increase
Operating Income
($ in thousands)
2019 2018 (Decrease) CTU $ 29,691 $ 27,185
9.2 % AIU 8,312 4,136 101.0 % Total University
Group 38,003 31,321 21.3 % Corporate and Other (1) (8,032 )
(10,792 ) 25.6 % Total $ 29,971 $ 20,529 46.0 % (1)
Corporate and Other includes closed campuses which no longer meet
the criteria to be reported as a separate operating segment.
Operating losses related to closed campuses were $2.8 million and
$6.3 million for the quarters ended March 31, 2019 and 2018,
respectively.
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 table
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 $33.0 million for the quarter ended Mach 31,
2019, as compared to $25.9 million in the prior year quarter.
For The Quarter Ended March 31,
Adjusted
Operating Income
2019 2018
Total
Company:
Operating income $ 29,971 $
20,529 Depreciation and amortization 2,233 2,582 Lease
expenses for vacated space (1) 766 (751 ) Significant legal
settlements (2) - 3,491
Adjusted Operating Income
-- Total Company $ 32,970 $
25,851 Increase (Decrease)
27.5 % (1)
Lease expenses for vacated space include both fixed and
variable lease costs offset with sublease income. (2) Significant
legal settlements relate to the Surrett matter which was settled
during 2018.
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended March 31, 2019, the Company recorded net
income of $24.8 million, compared to $17.5 million for the prior
year quarter. Earnings per diluted share were $0.35 for the quarter
ended March 31, 2019, as compared to $0.25 for the prior year
quarter. Adjusted earnings per diluted share were $0.36 for the
quarter ended March 31, 2019, as compared to $0.28 for the prior
year quarter. (See table below and the GAAP to non-GAAP
reconciliation attached to this press release for further
details.)
For The Quarter Ended March 31,
2019 2018
Reported Earnings Per Diluted Share $ 0.35 $ 0.25
Pre-tax adjustments included in operating expenses: Lease
expenses for vacated space (1) 0.01 (0.01 ) Significant legal
settlements (2) - 0.05
Total pre-tax
adjustments $ 0.01 $ 0.04
Tax effect of adjustments
(3) - (0.01 )
Total adjustments after
tax 0.01 0.03
Adjusted Earnings Per Diluted
Share $ 0.36 $ 0.28 (1) Lease expenses for vacated space
include both fixed and variable lease costs offset with sublease
income. (2) Significant legal settlements relate to the Surrett
matter which was settled during 2018. (3) The tax effect of
adjustments was calculated by multiplying the pre-tax adjustments
with a tax rate of 25%. This tax rate reflects federal and state
taxable jurisdictions as well as the nature of the adjustments.
BALANCE SHEET AND CASH FLOW
Net cash provided by operating activities was $12.9 million for
the quarter ended March 31, 2019, compared to $11.1 million for the
prior year quarter.
For The Quarter Ended March 31,
Increase
Selected Cash
Flow Items
2019 2018 (Decrease) Net cash provided by
operating activities $ 12,945 $ 11,096 16.7 % Capital
expenditures $ 479 $ 1,360 -64.8 %
As of March 31, 2019 and December 31, 2018, cash, cash
equivalents, restricted cash and available-for-sale short-term
investments totaled $239.9 million and $229.2 million,
respectively.
OUTLOOK
The Company provided the following outlook, subject to the key
assumptions identified below (see the GAAP to non-GAAP
reconciliation for adjusted operating income and adjusted earnings
per diluted share attached to this press release for further
details):
Financial Outlook:
- Full year 2019 - total company outlook
remains unchanged from prior quarter:
- Revenue growth of approximately 3
percent to 4 percent
- Operating income in the range of $102.0
million to $107.0 million
- Adjusted operating income in the range
of $114.0 million to $119.0 million
- Earnings per diluted share in the range
of $1.08 to $1.12
- Adjusted earnings per diluted share in
the range of $1.11 to $1.15
- Second quarter 2019 - total company:
- Operating income in the range of $27.0
million to $28.5 million
- Adjusted operating income in the range
of $30.0 million to $31.5 million
- Earnings per diluted share in the range
of $0.28 to $0.30
- Adjusted earnings per diluted share in
the range of $0.29 to $0.31
University Group Enrollment Outlook:
- CTU:
- New student enrollments for the full
year 2019 are expected to show growth as compared to the prior year
with second quarter new student enrollments expected to grow in the
mid-single digits
- AIU:
- New student enrollments are expected to
decline in the second quarter of 2019 as compared to the prior year
quarter primarily driven by approximately 16 percent fewer
enrollment days but AIU continues to expect new student enrollment
growth for the full year 2019
- University
Group:
- New student enrollments are expected to
increase approximately 3 percent to 5 percent for the full year
2019 as compared to the prior year
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
certain significant and non-cash items such as lease expenses for
vacated space offset with any sublease income as well as
depreciation, amortization, asset impairment charges, significant
restructuring charges and significant legal settlements. The
revenue, operating income, adjusted operating income, earnings per
share, adjusted earnings per share and enrollment outlook provided
above for 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) 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, (iv)
no significant impact from the inquiry by the U.S. Federal Trade
Commission, the Oregon arbitrations or other ongoing legal or
regulatory matters, including legal fees associated therewith, (v)
no material changes in the estimated amount of compensation expense
that could be impacted by changes in the Company’s stock price or
the Company’s assessment of the probable outcome of performance
conditions relating to performance-based compensation, and (vi)
earnings per diluted share outlook assumes an effective income tax
rate of 26% for the second quarter and 24.5% for the full year.
Although these estimates and assumptions are based upon
management’s good faith beliefs regarding current and future
circumstances and actions that may be undertaken, actual results
could differ materially from these estimates. In addition,
decisions we make in the future as we continue to evaluate diverse
strategies to enhance shareholder value may impact the outlook
provided above. 2019 outlook excludes any impacts of the pending
acquisition of Trident University.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on
Wednesday, May 8, 2019 at 5:30 p.m. Eastern time to discuss its
first quarter 2019 results and 2019 outlook. Interested parties can
access the live webcast of the conference at www.careered.com in the Investor Relations section
of the website. Participants can also listen to the conference call
by dialing 1-844-378-6484 (domestic) or 1-412-542-4179
(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 regionally accredited universities –
Colorado Technical University (“CTU”) and American InterContinental
University (“AIU”) – 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 needs of today’s busy adults. CTU and AIU 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 individual campus locations and web links to Career
Education 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,” “should” 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
effective “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 and cost effectively defend litigation and other
claims brought against us (including the inquiry by the U.S.
Federal Trade Commission); 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, 2018 and its subsequent
filings with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December
31, 2019 2018 (unaudited)
ASSETS CURRENT ASSETS: Cash and cash equivalents,
unrestricted $ 38,799 $ 32,394 Restricted cash 337 337 Short-term
investments 200,768 196,428 Total cash and cash
equivalents, restricted cash and short-term investments 239,904
229,159 Student receivables, net 29,840 28,751 Receivables,
other, net 2,581 2,567 Prepaid expenses 8,381 7,771 Inventories 727
763 Other current assets 628 437 Assets of discontinued operations
120 - Total current assets 282,181
269,448
NON-CURRENT ASSETS: Property and equipment,
net 28,397 30,048 Right of use asset 43,389 - Goodwill 87,356
87,356 Intangible assets, net 7,900 7,900 Student receivables, net
975 942 Deferred income tax assets, net 74,850 81,628 Other assets
4,930 4,993 Assets of discontinued operations 178 178
TOTAL ASSETS $ 530,156 $ 482,493
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Lease liability - operating $ 14,595 $ - Accounts
payable 13,072 9,195 Accrued expenses: Payroll and related benefits
17,449 24,530 Advertising and marketing costs 11,633 9,300 Income
taxes 1,298 1,472 Other 10,277 19,668 Deferred revenue 24,289
32,351 Liabilities of discontinued operations 8 536
Total current liabilities 92,621 97,052
NON-CURRENT LIABILITIES: Lease liability - operating 47,328
- Deferred rent obligations - 12,745 Other liabilities 9,885
17,493 Total non-current liabilities 57,213
30,238
STOCKHOLDERS' EQUITY: Preferred stock - -
Common stock 857 852 Additional paid-in capital 629,768 628,295
Accumulated other comprehensive gain (loss) 49 (298 ) Accumulated
deficit (27,120 ) (52,946 ) Treasury stock (223,232 )
(220,700 ) Total stockholders' equity 380,322 355,203
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
530,156 $ 482,493 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 March 31,
% of % of Total
Total 2019 Revenue 2018 Revenue
REVENUE: Tuition and fees $ 157,228 99.6 % $
147,510 99.6 % Other 625 0.4 % 555 0.4 % Total
revenue 157,853 148,065
OPERATING EXPENSES:
Educational services and facilities 26,327 16.7 % 26,946 18.2 %
General and administrative 99,322 62.9 % 98,008 66.2 % Depreciation
and amortization 2,233 1.4 % 2,582 1.7 % Total
operating expenses 127,882 81.0 % 127,536 86.1 %
Operating income 29,971 19.0 % 20,529 13.9 %
OTHER
INCOME: Interest income 1,440 0.9 % 634 0.4 % Interest expense
(42 ) 0.0 % (109 ) -0.1 % Miscellaneous income 226 0.1 %
328 0.2 % Total other income 1,624 1.0 % 853
0.6 %
PRETAX INCOME 31,595 20.0 % 21,382 14.4 % Provision
for income taxes 6,407 4.1 % 3,498 2.4 %
INCOME FROM CONTINUING OPERATIONS 25,188 16.0 % 17,884 12.1
% Loss from discontinued operations, net of tax (397 ) -0.3
% (382 ) -0.3 %
NET INCOME 24,791 15.7 %
17,502 11.8 %
OTHER COMPREHENSIVE INCOME (LOSS),
net of tax: Foreign currency translation adjustments (52 ) 86
Unrealized gain (loss) on investments 399 (218 )
Total other comprehensive income (loss) 347 (132 )
COMPREHENSIVE INCOME $ 25,138 $ 17,370
NET INCOME
(LOSS) PER SHARE - BASIC: Income from continuing operations $
0.36 $ 0.26 Loss from discontinued operations (0.01 )
(0.01 ) Net income per share $ 0.35 $ 0.25
NET INCOME
(LOSS) PER SHARE - DILUTED: Income from continuing operations $
0.35 $ 0.25 Loss from discontinued operations - - Net
income per share $ 0.35 $ 0.25
WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 69,837 69,216 Diluted
71,492 71,119
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
For The Quarter Ended March 31,
2019 2018 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income $ 24,791 $ 17,502 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 2,233 2,582 Bad debt expense
11,709 6,982 Compensation expense related to share-based awards
1,369 1,501 Deferred income taxes 6,778 3,704 Changes in operating
assets and liabilities: (33,935 ) (21,175 ) Net cash
provided by operating activities 12,945 11,096
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
available-for-sale investments (138,700 ) (50,799 ) Sales of
available-for-sale investments 135,062 49,257 Purchases of property
and equipment (479 ) (1,360 ) Net cash used in
investing activities (4,117 ) (2,902 )
CASH
FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 109
875 Payments of employee tax associated with stock compensation
(2,532 ) (2,981 ) Net cash used in financing
activities (2,423 ) (2,106 )
NET INCREASE
IN CASH AND CASH EQUIVALENTS 6,405 6,088
CASH AND CASH
EQUIVALENTS, beginning of the period 32,731
18,899
CASH AND CASH EQUIVALENTS, end of the period $ 39,136
$ 24,987
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
For The Quarter Ended March 31,
2019 2018 REVENUE: CTU $ 97,057
$ 94,607 AIU 60,779 53,121 Total University Group
157,836 147,728 Corporate and Other (1) 17 337 Total
$ 157,853 $ 148,065
OPERATING INCOME (LOSS): CTU $
29,691 $ 27,185 AIU 8,312 4,136 Total University
Group 38,003 31,321 Corporate and Other (1) (8,032 )
(10,792 ) Total $ 29,971 $ 20,529
OPERATING MARGIN
(LOSS): CTU 30.6 % 28.7 % AIU 13.7 % 7.8 % Total
University Group 24.1 % 21.2 % Corporate and Other (1) NM NM Total
19.0 % 13.9 % (1) Corporate and Other includes
closed campuses which no longer meet the criteria to be reported as
a separate operating segment. Operating losses related to the
closed campuses were $2.8 million and $6.3 million for the quarters
ended March 31, 2019 and 2018, respectively.
CAREER
EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP ITEMS (1)
(In thousands, unless otherwise noted)
For the Quarter Ended March 31,
ACTUAL
Adjusted
Operating Income
2019 2018
Total
Company
Operating income $ 29,971 $
20,529 Depreciation and amortization 2,233 2,582 Lease
expenses for vacated space (2) 766 (751 ) Significant legal
settlements (3) - 3,491
Adjusted Operating Income
-- Total Company $ 32,970 $ 25,851
For the Quarter Ending June 30, OUTLOOK
ACTUAL 2019 2018
Total
Company
Operating income $27M - $28.5M $ 11,303
Depreciation and amortization ~2.5 2,103 Lease expenses for vacated
space (2) ~0.5 4,411 Significant legal settlements (3) —
5,970
Adjusted Operating Income -- Total Company
$30M - $31.5M $ 23,787 For the Year
Ending December 31, OUTLOOK ACTUAL 2019
2018
Total
Company
Operating income $102M - $107M $ 71,298
Depreciation and amortization ~9.0 9,394 Lease expenses for vacated
space (2) ~3.0 8,416 Severance and related costs, net of
cancellations (4) — 1,455 Significant legal settlements (3)
— 14,595
Adjusted Operating Income -- Total Company
$114M - $119M $ 105,158
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP ITEMS (1)
For the Quarter Ended March 31,
2019 2018
Reported Earnings Per Diluted Share $ 0.35 $ 0.25
Pre-tax adjustments included in operating expenses: Lease
expenses for vacated space (2) 0.01 (0.01 ) Significant legal
settlements (3) - 0.05
Total pre-tax
adjustments $ 0.01 $ 0.04
Tax effect of adjustments
(5) - (0.01 )
Total adjustments after
tax 0.01 0.03
Adjusted Earnings Per Diluted
Share $ 0.36 $ 0.28
For the Quarter Ending June
30, OUTLOOK ACTUAL 2019 2018
Reported Earnings Per Diluted Share $0.28 - $0.30 $ 0.12
Pre-tax adjustments included in operating expenses:
Lease expenses for vacated space (2) ~0.01 0.06 Significant legal
settlements (3) - 0.08
Total pre-tax
adjustments $~0.01 $ 0.14
Tax effect of adjustments
(5) - (0.03 )
Total adjustments after
tax ~0.01 0.11
Adjusted Earnings Per Diluted
Share $0.29 - $0.31 $ 0.23
For the Year Ending
December 31, OUTLOOK ACTUAL 2019
2018 Reported Earnings Per Diluted Share $1.08 -
$1.12 $ 0.77
Pre-tax adjustments included in operating
expenses: Lease expenses for vacated space (2) ~0.04 0.12
Severance and related costs, net of cancellations (4) - 0.02
Significant legal settlements (3) - 0.21
Total
pre-tax adjustments $~0.04 $ 0.35
Tax effect of
adjustments (5) ~(0.01) (0.07 )
Total
adjustments after tax ~0.03 0.28
Adjusted Earnings
Per Diluted Share $1.11 - $1.15 $ 1.05 (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 and adjusted earnings per
diluted share allows it to analyze and assess its 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 and adjusted earnings per diluted 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 and adjusted earnings per
diluted 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
and adjusted earnings per diluted share have limitations as an
analytical tool, and should not be considered in isolation, or as a
substitute for net income, operating income, earnings per diluted
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) Lease expenses for
vacated space include both fixed and variable lease costs offset
with sublease income. (3) Significant legal settlement
include $3.5 million, $6.0 million and $9.6 million for the first
quarter ended March 31, 2018, second quarter ended June 30, 2018
and full year ended December 31, 2018, respectively, related to the
Surrett Matter. The year ended December 31, 2018 also included $5.0
million related to the agreements with multiple attorneys general
to resolve the multi-state inquiry. (4) Severance and
related costs, net of cancellations, include charges related to
significant restructuring actions. These restructuring charges do
not regularly occur and are not considered part of ongoing
operating results. (5) The tax effect of adjustments was
calculated by multiplying the pre-tax adjustments with a tax rate
of 25.0%. This tax rate reflects federal and state taxable
jurisdictions as well as the nature of the adjustments.
Additionally, $5.0 million of pre-tax adjustments for the year
ended December 31, 2018 related to significant legal settlements
which were not deductible for tax purposes and therefore do not
include a tax effect.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190508005809/en/
Investors:Alpha IR GroupChris Donovan or Chris
Hodges(312) 445-2870CECO@alpha-ir.comOrMedia:Career
Education Corporation(847) 585-2600media@careered.com
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