PHOENIX, May 5, 2021 /PRNewswire/ -- Grand Canyon
Education, Inc. (NASDAQ: LOPE), ("GCE" or the "Company"), is a
publicly traded education services company that currently provides
services to 26 university partners. GCE provides 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 services in these areas
on a large scale. GCE today announced financial results for
the quarter ended March 31,
2021.
For the three months ended March 31,
2021:
- Service revenue was $236.9
million for the first quarter of 2021 compared to
$221.7 million for the first quarter
of 2020. The 6.9% increase year over year in service revenue was
primarily due to an increase in university partner enrollments
between years of 7.2% partially offset by a decrease in revenue per
student year over year. The decrease in revenue per student is
primarily due to the service revenue impact of the lower room,
board, fee and ancillary revenues at Grand
Canyon University ("GCU"), our largest university partner,
in 2021 and 2020 caused by COVID-19 (see – Impact of
COVID-19 below). In addition, we generated slightly more
revenues in 2020 as compared to 2021 due to 2020 being a Leap Year
and we did not renew a contract with a university partner with two
sites in the first quarter of 2021. This was partially offset by
the fact that our service agreements with our other university
partners generally generate a higher revenue per student than our
agreement with GCU. This higher revenue is due to our service
agreements with other partners generally provide us with a higher
revenue share percentage, the partners have higher tuition rates
than GCU and the majority of their students are studying in the
Accelerated Bachelor of Science in Nursing program so these
students take more credits on average per semester.
- Partner enrollments grew 7.2% and totaled 115,390 at
March 31, 2021 as compared to 107,591
at March 31, 2020. Enrollments at GCU
grew to 111,055 at March 31, 2021, an
increase of 7.2% over enrollments at March
31, 2020, while enrollments at our other university partners
were 4,335, an increase of 8.4% over enrollments at March 31, 2020. Excluded from other university
partner enrollments at March 31, 2021
are enrollments from a university partner in which we and the
university partner mutually agreed that the service agreement would
not be extended upon its expiration.
- Operating income for the three months ended March 31, 2021 was $84.2
million, an increase of $3.4
million as compared to $80.8
million for the same period in 2020. The operating margin
for the three months ended March 31,
2021 was 35.5%, compared to 36.5% for the same period in
2020.
- The tax rate in the three months ended March 31, 2021 was 20.4% compared to 24.2% in the
same period in 2020. The 2021 effective tax rate was lower due to
higher excess tax benefits in the first quarter of 2021 of
$4.4 million, compared to
$0.6 million for the same period in
2020.
- Net income increased 9.4% to $78.1
million for the first quarter of 2021, compared to
$71.4 million for the same period in
2020. As adjusted net income was $79.8
million and $73.0 million for
the first quarters of 2021 and 2020, respectively.
- Diluted net income per share was $1.69 and $1.49 for
the first quarters of 2021 and 2020, respectively. As adjusted
diluted net income per share was $1.72 and $1.53 for
the first quarters of 2021 and 2020, respectively.
- Adjusted EBITDA increased 5.2% to $95.6
million for the first quarter of 2021, compared to
$90.9 million for the same period in
2020.
Balance Sheet and Cash Flow
Our unrestricted cash and cash equivalents and investments were
$262.3 million and $256.6 million at March
31, 2021 and December 31,
2020, respectively. Our credit facility had an
available line of credit of $150.0
million as of March 31,
2021.
Arrangements with GCU
In conjunction with the Asset Purchase Agreement with GCU, we
received a secured note (the "Secured Note") as consideration for
the transferred assets. The Secured Note contains customary
commercial credit terms, including affirmative and negative
covenants applicable to GCU, and provides that the Secured Note
bears interest at an annual rate of 6%, has a maturity date of
June 30, 2025, and is secured by all
the assets of GCU. The Secured Note provides for 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 may loan additional amounts to GCU to fund approved capital
expenditures during the first three years of the term. As of
March 31, 2021, the Company had
loaned an additional $99,815 to GCU,
net of repayments. We believe that GCU's cash flows from
operations are currently sufficient to fund all of its capital
expenditures without additional loans from us although it is
possible that GCU will continue to borrow from us for short term
cash flow needs.
Cash Flows
Net cash provided by operating activities for the three months
ended March 31, 2021 was $89.8 million as compared to $85.7 million for the three months ended
March 31, 2020. The increase in cash
generated from operating activities between the three months
ended March 31, 2020 and the
three months ended March 31,
2021 was primarily due to an increase in net income between
periods partially offset by changes in other working capital
balances. We define working capital as the assets and liabilities,
other than cash, generated through the Company's primary operating
activities. Changes in these balances are included in the
changes in assets and liabilities presented in the consolidated
statement of cash flows.
Net cash used in investing activities was $34.8 million and $1.9 million for the three months ended
March 31, 2021 and 2020,
respectively. The net cash used in investing activities in the
three months ended March 31, 2021
consisted of capital expenditures of $8.9
million and purchases of investments, net of proceeds from
the sale of investments of $25.8
million. During the three months ended March 31, 2020, we paid $6.1 million for capital expenditures and
received proceeds from investments of $4.3
million. During the three-month period for 2021 and 2020,
capital expenditures primarily consisted of leasehold improvements
and equipment for new university partner locations, as well as
purchases of computer equipment, other internal use software
projects and furniture and equipment to support our increasing
employee headcount. The increase in capital expenditures
between periods is primarily due to the increase in the number of
sites opened. We invest approximately $1.5 million in leasehold improvements and
equipment for each off-campus classroom and laboratory site.
We opened seven new sites in the second half of 2020, one new site
in the Spring of 2021 and currently plan to open five additional
sites in the last nine months of 2021.
Net cash used in financing activities was $74.9 million and $73.9
million for the three months ended March 31, 2021 and 2020, respectively.
During the three months ended March 31,
2021, $6.0 million was used to
purchase common shares withheld in lieu of income taxes resulting
from the vesting of restricted share awards, $56.3 million was used to purchase treasury stock
in accordance with the Company's share repurchase program, and
$7.0 million was paid to Morgan
Stanley under our ASR agreement for shares that will be settled no
later than May 7, 2021.
Principal payments on notes payable and capital leases totaled
$8.3 million, partially offset by
proceeds from the exercise of stock options of $2.7 million. During the three months ended
March 31, 2020, $5.0 million was used to purchase common shares
withheld in lieu of income taxes resulting from the vesting of
restricted share awards and $60.7
million was used to purchase treasury stock in accordance
with the Company's share repurchase program. Principal
payments on notes payable and capital leases totaled $8.3 million, partially offset by proceeds from
the exercise of stock options of $0.1
million.
Impact of COVID-19
In March 2020, the World Health
Organization declared the COVID-19 outbreak to be a global
pandemic. This contagious outbreak, which has continued to spread,
and the related adverse public health developments, including
orders to shelter-in-place, travel restrictions and mandated
non-essential business closures, have adversely affected
workforces, organizations, customers, economies and financial
markets globally, leading to an economic downturn and increased
market volatility. It has also disrupted the normal operations of
many businesses, including ours, and that of our university
partners.
GCE has a long-term master services agreement with GCU (the
"Master Services Agreement") pursuant to which GCE provides
education services to GCU in return for 60% of GCU's tuition and
fee revenues, which includes fee revenues from room, board, and
other ancillary businesses including a student-run golf course and
hotel. GCU has four types of students: traditional
ground university students, who attend class on its campus in
Phoenix, Arizona and of which
approximately 70% have historically lived on campus in university
owned residence halls; professional studies students, who are
working adult students who attend class one night a week on the
Phoenix campus; online students
who attend class fully online: and students who are studying in
hybrid programs in which the ground component takes place at
off-campus classroom and laboratory sites.
The COVID-19 outbreak, as well as measures taken to contain its
spread, has impacted GCU's students and its business in a number of
ways. Beginning in March 2020,
GCU's programs for its professional studies students and its
traditional ground university students were immediately converted
to an online learning environment and residential students were
strongly encouraged to move off campus. Summer 2020 semester
classes were moved to an online environment as well and most
students were given the choice of attending the Fall semester in
person or completely online. Given GCE's historical experience
delivering online education services and the fact that all of GCU's
students and faculty use the university's online learning
management system for at least some of the coursework, the
transition has been seamless and thus, the university has not
incurred a significant decrease in tuition revenue or significant
increase in costs associated with this transition. The
following impacts from the COVID-19 pandemic, however, did serve to
reduce GCU's non-tuition revenue during 2020 and the Spring
semester of 2021 and, consequently, the service revenues we earned
under the Master Services Agreement:
- Traditional ground university students who elected to move off
campus near the end of the Spring 2020 semester received partial
refunds for dormitory and meal payments, which reduced GCU's
revenue and thus the service revenues earned by GCE in the last
nine days of March 2020 and the month
of April 2020;
- Ancillary businesses operated by GCU such as its hotel and
merchandise shops were closed in late March
2020. Most of these businesses re-opened with scaled back
operations in mid-September 2020,
which reduced and will continue to reduce GCU's revenues and thus
the service revenues earned by GCE until these businesses are fully
reopened;
- Limited residential students remained on campus during the
Summer 2020 semester, which reduced GCU's dormitory and ancillary
revenues and thus the service revenues earned by GCE;
- GCU's doctoral students are required to attend two residencies
on the university's campus and at its hotel in Phoenix, Arizona as part of their
dissertation. On an annual basis approximately 3,000 learners
attend the week-long residency, most of whom have historically
attended in the Summer. Most of the residencies which were
scheduled for the last week of March
2020 through the end of July
2020 were cancelled. The doctoral residencies scheduled for
August 2020 through December 2020 were held at another location with
lower than normal attendance. In the first quarter of 2021,
doctoral residencies returned to the university's campus and its
hotel, although at lower than normal attendance. This has reduced
and will continue to reduce GCU's revenues including at its hotel,
and thus reduced service revenues earned by GCE until residencies
return to normal attendance;
- GCU shifted its start date for the Fall semester for its
traditional ground students from August 24,
2020 to September 8, 2020,
which had the effect of moving tuition revenue for all GCU
traditional students and certain ancillary revenue for residential
students, from the third quarter of 2020 to the fourth quarter of
2020;
- GCU shifted its move-in date for its residential students to
the week of September 21, 2020, which
reduced housing revenue and certain ancillary revenue for
residential students by three weeks. In addition, approximately
4,900 of GCU's traditional campus students elected to attend the
Fall semester entirely in the online modality. Residential
enrollment for the Fall of 2020 was approximately 11,500 whereas
residential bed capacity is approximately 14,500. This reduction in
residential students caused a reduction in GCU's revenue and thus
the service revenues earned by GCE; and
- The first week of the Spring 2021 semester was completed in an
online modality for GCU's traditional students to provide greater
flexibility for students returning to campus after the holidays.
Face-to-face instruction for the semester commenced on January 11, 2021 and ended April 1, 2021 for approximately 80% of classes,
followed by two weeks of online instruction. Approximately 3,500
traditional ground students elected to complete the Spring semester
entirely in the online modality. These changes had the effect of
reducing GCU's dormitory and ancillary revenues in the Spring of
2021 and thus the service revenues earned by GCE.
GCU anticipates a higher number of residential students will
remain on campus during the Summer semester of 2021 than in 2020
and that ancillary businesses operated by GCU such as its hotel and
merchandise shops will be open. However, GCU anticipates that the
revenue earned in dormitory and ancillary revenues will remain
below pre-COVID levels and thus the service revenues earned by GCE
will continue to be impacted.
The changes described above at GCU have impacted or will impact
GCE's service revenue under the Master Services Agreement. In
addition, due to the limited operating expenses that we incur to
deliver those services, there has been or will be a direct
reduction in our operating profit and operating margin.
GCE also has long-term services agreements with numerous other
university partners across the United States. The majority of
these other university partners' students are studying in the
Accelerated Bachelor of Science in Nursing program which is offered
in a 12-16 month format in three or four academic semesters.
The Spring, Summer and Fall 2020 semesters were completed without
interruption and each university partner has started its Spring
2021 semester. Some students who were scheduled to
start their program in the Summer 2020 semester delayed their start
until the Fall 2020 semester, which resulted in lower enrollments
and revenues in the Summer 2020 semester than was planned. In a
number of locations, the demand to start in the Fall 2020 semester
was greater than initially planned but a number of our university
or healthcare partners chose not to increase the Fall 2020 cohort
size to compensate for the Summer 2020 start shortfall due to
concerns about clinical availability. The Fall 2020 enrollment was
only slightly lower than our original expectations as the Summer
2020 new start shortfall was offset by higher retention rates and
slightly higher than expected Fall 2020 new
starts.
No changes are currently anticipated with our other university
partners related to the Summer 2021 semester that would have an
impact on GCE's service revenue, operating profit and operating
margins. However, if one of our university partners closes an
off-campus classroom and laboratory site prior to the end of the
Summer 2021 semester, such an event would reduce the service
revenues earned by GCE.
The COVID-19 outbreak also presents operational challenges to
GCE as approximately 90% of our workforce is currently working
remotely and is expected to continue doing so for the foreseeable
future. This degree of remote working could increase risks in
the areas of internal control, cyber security and the use of remote
technology, and thereby result in interruptions or disruptions in
normal operational processes.
It is not possible for us to completely predict the duration or
magnitude of the adverse results of the COVID-19 pandemic and its
effects on our business, results of operations or financial
condition at this time, but such effects may be material in future
quarters.
We estimate that the shift in net revenue from the third quarter
to the fourth quarter as a result of the shift in the start date of
the GCU Fall 2020 semester was $9.9
million. We estimate that the reduction in service
revenue attributable to reduced tuition, fees and ancillary
revenues of our university partners resulting from COVID-19 was
$1.8 million, $7.5 million, $13.0
million and $7.3 million in
the first, second, third and fourth quarters of 2020,
respectively.
We estimate that the reduction in service revenue attributable
to reduced tuition, fees and ancillary revenues of our university
partners resulting from COVID-19 was $4.5
million in the first quarter of 2021 with a comparable
reduction in operating profit.
We estimate that the reduction in service revenue attributable
to reduced tuition, fees and ancillary revenues of our university
partners resulting from COVID-19 will be $1.2 million in the second quarter of 2021 with a
comparable reduction in operating profit.
2021 Outlook
|
|
Q2
2021:
|
Service revenue
of $ 202.0 million; As Adjusted Operating Margin 25.6%; As Adjusted
Diluted EPS
of $1.09 using 45.8 million diluted shares
|
Q3
2021:
|
Service revenue of $
217.5 million; As Adjusted Operating Margin 28.9 %; As Adjusted
Diluted EPS
of $1.28 using 45.4 million diluted shares
|
Q4
2021:
|
Service revenue
of $263.5 million; As Adjusted Operating Margin 41.7%; As Adjusted
Diluted EPS
of $2.10 using 44.9 million diluted shares
|
Full Year
2021:
|
Service revenue
of $919.9 million; As Adjusted Operating Margin 33.8%; As Adjusted
Diluted EPS
of $6.19 using 45.6 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: proposed new programs; whether regulatory developments
or other matters may or may not have a material adverse effect on
our financial position, results of operations, or liquidity;
projections, predictions, expectations, estimates, and forecasts as
to our business, financial and operating results, and future
economic performance; and 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, the negative of these
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 harm to our business, results of
operations, and financial condition, and harm to our university
partners resulting from epidemics, pandemics, including the
COVID-19 outbreak, or public health crises: the occurrence of any
event, change or other circumstance that could give rise to the
termination of any of our key university partner agreements; 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 partners, and expansion of
services provided to our existing university partners; our failure
to comply with the extensive regulatory framework applicable to us
either directly as a third party education services provider or
indirectly through our university partners, 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 services companies
in our geographic region and market sector, including competition
for students, qualified executives and other personnel; the pace of
growth of our university partners' enrollment and its effect on the
pace of our own growth; our ability to, on behalf of our university
partners, 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 partners; the impact of any natural disasters or public
health emergencies; and other factors discussed in reports on file
with the Securities and Exchange Commission, including as set forth
in Part I, Item 1A of our Annual Report on Form 10-K for period
ended December 31, 2020, as updated
in our subsequent reports filed with the Securities and Exchange
Commission on Form 10Q or Form 8-K.
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 first quarter 2021
results and full year 2021 outlook during a conference call
scheduled for today, May 5, 2021 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 2179612 at 4:25 p.m. (ET). The Webcast will be available on
the Grand Canyon Education, Inc. website 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 2179612. 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, Inc. ("GCE"), incorporated in 2008, is a
publicly traded education services company that currently provides
services to 26 university partners. 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
services 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, content
development, faculty recruitment and training, among others.
For more information about GCE 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
|
|
|
March 31,
|
|
|
2021
|
|
2020
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
Service
revenue
|
|
$
|
236,934
|
|
$
|
221,655
|
Costs and
expenses:
|
|
|
|
|
|
|
Technology and academic
services
|
|
|
32,051
|
|
|
26,277
|
Counseling services and
support
|
|
|
61,239
|
|
|
60,219
|
Marketing and
communication
|
|
|
47,731
|
|
|
42,693
|
General and
administrative
|
|
|
9,582
|
|
|
9,565
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
Total costs and
expenses
|
|
|
152,708
|
|
|
140,859
|
Operating
income
|
|
|
84,226
|
|
|
80,796
|
Interest income on
Secured Note
|
|
|
14,549
|
|
|
14,710
|
Interest
expense
|
|
|
(799)
|
|
|
(1,546)
|
Investment interest and
other
|
|
|
121
|
|
|
216
|
Income before
income taxes
|
|
|
98,097
|
|
|
94,176
|
Income tax
expense
|
|
|
19,985
|
|
|
22,791
|
Net
income
|
|
$
|
78,112
|
|
$
|
71,385
|
Earnings per
share:
|
|
|
|
|
|
|
Basic income per
share
|
|
$
|
1.70
|
|
$
|
1.50
|
Diluted income per
share
|
|
$
|
1.69
|
|
$
|
1.49
|
Basic weighted
average shares outstanding
|
|
|
46,084
|
|
|
47,455
|
Diluted weighted
average shares outstanding
|
|
|
46,300
|
|
|
47,764
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
As of
March 31,
|
|
As of December
31,
|
(In thousands,
except par value)
|
|
2021
|
|
2020
|
ASSETS:
|
|
|
(Unaudited)
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
225,829
|
|
$
|
245,769
|
Investments
|
|
|
36,443
|
|
|
10,840
|
Accounts receivable,
net
|
|
|
91,790
|
|
|
62,189
|
Interest receivable on
Secured Note
|
|
|
5,011
|
|
|
5,011
|
Income taxes
receivable
|
|
|
763
|
|
|
1,294
|
Other current
assets
|
|
|
14,484
|
|
|
8,639
|
Total current
assets
|
|
|
374,320
|
|
|
333,742
|
Property and
equipment, net
|
|
|
131,929
|
|
|
128,657
|
Right-of-use
assets
|
|
|
59,434
|
|
|
61,020
|
Secured Note
receivable, net
|
|
|
964,912
|
|
|
964,912
|
Amortizable
intangible assets, net
|
|
|
191,533
|
|
|
193,638
|
Goodwill
|
|
|
160,766
|
|
|
160,766
|
Other
assets
|
|
|
2,133
|
|
|
1,844
|
Total
assets
|
|
$
|
1,885,027
|
|
$
|
1,844,579
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
17,224
|
|
$
|
16,583
|
Accrued compensation
and benefits
|
|
|
37,307
|
|
|
34,248
|
Accrued
liabilities
|
|
|
29,495
|
|
|
21,945
|
Income taxes
payable
|
|
|
21,180
|
|
|
5,405
|
Deferred
revenue
|
|
|
6,936
|
|
|
—
|
Current portion of
lease liability
|
|
|
7,525
|
|
|
7,393
|
Current portion of
notes payable
|
|
|
33,144
|
|
|
33,144
|
Total current
liabilities
|
|
|
152,811
|
|
|
118,718
|
Deferred income
taxes, noncurrent
|
|
|
22,029
|
|
|
20,288
|
Other noncurrent
liabilities
|
|
|
107
|
|
|
3
|
Lease liability, less
current portion
|
|
|
55,058
|
|
|
56,611
|
Notes payable, less
current portion
|
|
|
66,344
|
|
|
74,630
|
Total
liabilities
|
|
|
296,349
|
|
|
270,250
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Preferred stock,
$0.01 par value, 10,000 shares authorized; 0 shares issued and
outstanding
at March 31, 2021 and December 31, 2020
|
|
|
—
|
|
|
—
|
Common stock, $0.01
par value, 100,000 shares authorized; 53,633 and 53,277 shares
issued
and 46,382 and 46,649 shares outstanding at March 31, 2021 and
December 31, 2020,
respectively
|
|
|
536
|
|
|
533
|
Treasury stock, at
cost, 7,251 and 6,628 shares of common stock at March 31, 2021
and
December 31, 2020, respectively
|
|
|
(365,721)
|
|
|
(303,379)
|
Additional paid-in
capital
|
|
|
281,163
|
|
|
282,467
|
Accumulated other
comprehensive loss
|
|
|
(120)
|
|
|
—
|
Retained
earnings
|
|
|
1,672,820
|
|
|
1,594,708
|
Total
stockholders' equity
|
|
|
1,588,678
|
|
|
1,574,329
|
Total liabilities
and stockholders' equity
|
|
$
|
1,885,027
|
|
$
|
1,844,579
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
(In
thousands)
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Cash flows
provided by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
78,112
|
|
$
|
71,385
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
3,019
|
|
|
2,656
|
Depreciation and
amortization
|
|
|
5,426
|
|
|
4,989
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
Deferred income
taxes
|
|
|
1,776
|
|
|
1,688
|
Other, including fixed
asset impairments
|
|
|
65
|
|
|
289
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts receivable
and interest receivable from university partners
|
|
|
(29,601)
|
|
|
(28,451)
|
Other
assets
|
|
|
(6,166)
|
|
|
(6,742)
|
Right-of-use assets
and lease liabilities
|
|
|
165
|
|
|
544
|
Accounts
payable
|
|
|
971
|
|
|
3,957
|
Accrued
liabilities
|
|
|
10,714
|
|
|
5,972
|
Income taxes
receivable/payable
|
|
|
16,305
|
|
|
19,174
|
Deferred
rent
|
|
|
6,936
|
|
|
8,153
|
Net cash provided
by operating activities
|
|
|
89,827
|
|
|
85,719
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(8,911)
|
|
|
(6,085)
|
Additions of
amortizable content
|
|
|
(90)
|
|
|
(56)
|
Purchases of
investments
|
|
|
(31,337)
|
|
|
—
|
Proceeds from sale or
maturity of investments
|
|
|
5,519
|
|
|
4,263
|
Net cash used in
investing activities
|
|
|
(34,819)
|
|
|
(1,878)
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
Principal payments on
notes payable
|
|
|
(8,286)
|
|
|
(8,286)
|
Repurchase of common
shares including shares withheld in lieu of income taxes
|
|
|
(69,342)
|
|
|
(65,706)
|
Net proceeds from
exercise of stock options
|
|
|
2,680
|
|
|
72
|
Net cash used in
financing activities
|
|
|
(74,948)
|
|
|
(73,920)
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
|
|
(19,940)
|
|
|
9,921
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
245,769
|
|
|
122,572
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
225,829
|
|
$
|
132,493
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
895
|
|
$
|
1,546
|
Cash paid for income
taxes
|
|
$
|
230
|
|
$
|
250
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
|
|
|
Purchases of property
and equipment included in accounts payable
|
|
$
|
876
|
|
$
|
899
|
Allowance for credit
losses of $5,000, net of taxes of $1,168 from adoption of ASU
2016-13
|
|
$
|
—
|
|
$
|
3,832
|
ROU Asset and Liability
recognition
|
|
$
|
1,586
|
|
$
|
6,775
|
GRAND CANYON EDUCATION, INC.
Adjusted EBITDA (Non-GAAP Financial Measure)
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) contributions to
private Arizona school tuition
organizations in lieu of the payment of state income taxes; (ii)
loss on transaction; (iii) share-based compensation, and (iv)
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
|
|
|
March 31,
|
|
|
2021
|
|
2020
|
|
|
(Unaudited, in thousands)
|
Net income
|
|
$
|
78,112
|
|
$
|
71,385
|
Plus: interest
expense
|
|
|
799
|
|
|
1,546
|
Less: interest income
on Secured Note
|
|
|
(14,549)
|
|
|
(14,710)
|
Less: investment
interest and other
|
|
|
(121)
|
|
|
(216)
|
Plus: income tax
expense
|
|
|
19,985
|
|
|
22,791
|
Plus: amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
Plus: depreciation
and amortization
|
|
|
5,426
|
|
|
4,989
|
EBITDA
|
|
|
91,757
|
|
|
87,890
|
Plus: share-based
compensation
|
|
|
3,019
|
|
|
2,656
|
Plus: estimated
litigation and regulatory reserves
|
|
|
814
|
|
|
305
|
Adjusted
EBITDA
|
|
$
|
95,590
|
|
$
|
90,851
|
Non-GAAP Net Income and Non-GAAP Diluted Income Per
Share
The Company believes the presentation of non-GAAP net income and
non-GAAP diluted income per share information that excludes
amortization of intangible assets allows investors to develop a
more meaningful understanding of the Company's performance over
time. Accordingly, for the three-months ended March 31, 2021 and 2020, the table below provides
reconciliations of these non-GAAP items to GAAP net income and GAAP
diluted income per share, respectively:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
2020
|
|
|
|
(Unaudited, in
thousands except per share data)
|
GAAP Net
income
|
|
$
|
78,112
|
|
$
|
71,385
|
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
Income tax effects of
adjustments(1)
|
|
|
(429)
|
|
|
(509)
|
|
As Adjusted, Non-GAAP
Net income
|
|
$
|
79,788
|
|
$
|
72,981
|
|
|
|
|
|
|
|
|
|
GAAP Diluted income
per share
|
|
$
|
1.69
|
|
$
|
1.49
|
|
Amortization of
intangible assets (2)
|
|
$
|
0.03
|
|
$
|
0.04
|
|
As Adjusted, Non-GAAP
Diluted income per share
|
|
$
|
1.72
|
|
$
|
1.53
|
|
____________________________
|
(1)
|
The income tax
effects of adjustments are based on the effective income tax rate
applicable to adjusted (non-GAAP) results.
|
|
|
(2)
|
The amortization of
acquired intangible assets per diluted share is net of an income
tax benefit of $0.01 and $0.01 for the three months ended March 31,
2021 and 2020, respectively.
|
Investor Relations Contact:
Daniel E. Bachus
Chief Financial Officer
Grand Canyon Education, Inc.
602-639-6648
Dan.bachus@gce.com
View original
content:http://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-first-quarter-2021-results-301284930.html
SOURCE Grand Canyon Education