Strayer Education, Inc. Reports Second Quarter 2013 Revenues and Earnings; and Summer Term 2013 Enrollments -- Second Quarter Diluted EPS $1.42 -- Business Wire HERNDON, Va. -- July 25, 2013 Strayer Education, Inc. (Nasdaq: STRA) today announced financial results for the three months ended June 30, 2013. Financial highlights are as follows: Three Months Ended June 30 *Revenues for the three months ended June 30, 2013 decreased 10% to $132.0 million, compared to $146.3 million for the same period in 2012, principally due to lower enrollment. *Income from operations was $26.3 million compared to $36.2 million for the same period in 2012, a decrease of 27%. Operating income margin was 19.9% compared to 24.7% for the same period in 2012. *Net income was $15.0 million compared to $21.2 million for the same period in 2012, a decrease of 29%. Diluted earnings per share was $1.42 compared to $1.85 for the same period in 2012, a decrease of 23%. Diluted weighted average shares outstanding decreased 8% to 10,535,000 from 11,483,000 for the same period in 2012, primarily as a result of share repurchases. Six Months Ended June 30 *Revenues for the six months ended June 30, 2013 decreased 9% to $269.5 million, compared to $295.8 million for the same period in 2012, principally due to lower enrollment and lower revenue per student. *Income from operations was $56.2 million compared to $77.0 million for the same period in 2012, a decrease of 27%. Operating income margin was 20.8% compared to 26.0% for the same period in 2012. *Net income was $32.2 million compared to $45.2 million for the same period in 2012, a decrease of 29%. Diluted earnings per share was $3.01 compared to $3.94 for the same period in 2012, a decrease of 24%. Diluted weighted average shares outstanding decreased 7% to 10,693,000 from 11,480,000 for the same period in 2012, primarily as a result of share repurchases. Balance Sheet and Cash Flow At June 30, 2013, the Company had cash and cash equivalents of $67.5 million. The Company generated $51.6 million from operating activities in the first six months of 2013 compared to $42.7 million during the same period in 2012. Capital expenditures were $5.0 million for the six months ended June 30, 2013 compared to $9.9 million for the same period in 2012. As previously announced, the Company entered into an amended and restated revolving credit and term loan agreement on November 8, 2012. This credit facility, which is secured by the assets of the Company, provides a $100.0 million revolving credit facility and a $125.0 million term loan facility with a maturity date of December 31, 2016. At June 30, 2013, the Company had $123.4 million outstanding under its term loan and no outstanding balance under its revolving credit facility. The Company had $70.0 million of share repurchase authorization remaining at June 30, 2013. No shares were repurchased in the second quarter of 2013. For the second quarter 2013, bad debt expense as a percentage of revenues was 4.3% compared to 4.4% for the same period in 2012. Days sales outstanding was 16 days at the end of the second quarter of 2013, compared to 15 days at the end of the second quarter of 2012. Student Enrollment Total enrollments at Strayer University for the 2013 summer term decreased 13% to 38,627 students compared to 44,236 students for the same term in 2012. Across the Strayer University campus and online system, continuing student enrollments decreased 12%, while new student enrollments decreased 17%. Accreditation The Company announced today that Strayer University’s business, management and accounting programs achieved accreditation by the Accreditation Council for Business Schools and Programs (ACBSP). In addition, the Company announced today that Strayer University’s Master of Education program achieved accreditation by the Teacher Education Accreditation Council (TEAC). Program Review As previously announced by the Company, Strayer University underwent a Department of Education Program Review in the third quarter of 2010. The Company announced today that on July 18, 2013 the University received its Final Program Review Determination from the Department, with no material adverse findings and no additional actions required. Stock-based Compensation Activity In May 2013, the Company awarded 60,029 shares of restricted stock to certain individuals under the Company’s 2011 Equity Compensation Plan, of which 43,659 shares are performance-based and vest in four years from the date of grant subject to performance criteria being met. The remaining 16,370 shares of restricted stock were awarded to various non-employee members of the Company’s Board of Directors, as part of the Company’s annual director compensation. The Company’s stock price closed at $45.81 on the date of these restricted stock grants. Common Stock and Common Stock Equivalents At June 30, 2013, the Company had 10,870,468 common shares issued and outstanding, 200,000 restricted stock units outstanding, and 100,000 unvested stock options outstanding. Conference Call with Management Strayer Education, Inc. will host a conference call to discuss its second quarter 2013 earnings at 10:00 a.m. (ET) today. To participate on the live call, investors should dial (877) 303-9047 10 minutes prior to the start time. In addition, the call will be available via live webcast. To access the live webcast of the conference call, please go to www.strayereducation.com 15 minutes prior to the start time of the call to register. Following the call, the webcast will be archived and available at www.strayereducation.com. About Strayer Education, Inc. Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company that owns Strayer University. Strayer’s mission is to make higher education achievable for working adults in today’s economy.Strayer University is a proprietary institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice to working adult students at 100 campuses in 24 states and Washington, D.C. and worldwide via the Internet. Strayer University also offers an executive MBA online and corporate training programs through its Jack Welch Management Institute. Strayer University is committed to providing an education that prepares working adult students for advancement in their careers and professional lives. Founded in 1892, Strayer University is accredited by the Middle States Commission on Higher Education. For more information on Strayer Education, Inc. visit www.strayereducation.com and for Strayer University visit www.strayer.edu. Forward-Looking Statements This press release contains statements that are forward-looking and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “project,” or similar words. The statements are based on the Company’s current expectations and are subject to a number of assumptions, uncertainties and risks. In connection with the safe-harbor provisions of the Reform Act, the Company has identified important factors that could cause the Company’s actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include the pace of growth of student enrollment, our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements, rulemaking by the Department of Education and increased focus by the U. S. Congress on for-profit education institutions, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks relating to the timing of regulatory approvals, our ability to implement our growth strategy, risks associated with the ability of our students to finance their education in a timely manner, and general economic and market conditions. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and in its subsequent filings with the Securities and Exchange Commission, all of which are incorporated herein by reference and which are available from the Commission. We undertake no obligation to update or revise forward-looking statements. STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) For the three months For the six months ended June 30, ended June 30, 2012 2013 2012 2013 Revenues $ 146,254 $ 131,980 $ 295,786 $ 269,486 Costs and expenses: Instruction and educational 75,652 71,305 149,416 144,732 support Marketing 15,053 16,228 30,522 33,949 Admissions advisory 6,453 5,212 13,246 10,563 General and administration 12,928 12,978 25,576 24,066 Total costs and expenses 110,086 105,723 218,760 213,310 Income from operations 36,168 26,257 77,026 56,176 Investment income 2 -- 3 -- Interest expense 1,109 1,337 2,317 2,633 Income before income taxes 35,061 24,920 74,712 53,543 Provision for income taxes 13,849 9,918 29,511 21,310 Net income $ 21,212 $ 15,002 $ 45,201 $ 32,233 Earnings per share: Basic $ 1.86 $ 1.43 $ 3.96 $ 3.02 Diluted $ 1.85 $ 1.42 $ 3.94 $ 3.01 Weighted average shares outstanding: Basic 11,430 10,502 11,425 10,658 Diluted 11,483 10,535 11,480 10,693 STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, June 30, 2012 2013 ASSETS Current assets: Cash and cash equivalents $ 47,517 $ 67,540 Tuition receivable, net of allowances for doubtful accounts of $6,596 and $5,777 at December 31, 2012 23,262 23,336 and June 30, 2013, respectively Income taxes receivable 4,454 -- Other current assets 14,422 11,383 Total current assets 89,655 102,259 Property and equipment, net 121,520 114,198 Deferred income taxes 3,279 -- Goodwill 6,800 6,800 Other assets 6,538 6,565 Total assets $ 227,792 $ 229,822 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 39,124 $ 31,617 Income taxes payable -- 711 Unearned tuition 494 227 Other current liabilities 281 281 Current portion of term loan 3,125 3,125 Total current liabilities 43,024 35,961 Term loan, less current portion 121,875 120,313 Other long-term liabilities 21,905 22,593 Total liabilities 186,804 178,867 Commitments and contingencies Stockholders’ equity: Common stock, par value $.01; 20,000,000 shares authorized; 11,387,299 and 10,870,468 shares issued 114 109 and outstanding at December 31, 2012 and June 30, 2013, respectively Additional paid-in capital 299 3,123 Retained earnings 41,311 47,437 Accumulated other comprehensive (loss) income (736) 286 Total stockholders’ equity 40,988 50,955 Total liabilities and stockholders’ equity $ 227,792 $ 229,822 STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) For the six months ended June 30, 2012 2013 Cash flows from operating activities: Net income $ 45,201 $ 32,233 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of gain on sale of assets (140 ) (140 ) Amortization of deferred rent 148 (114 ) Amortization of deferred financing costs 399 390 Depreciation and amortization 11,749 12,434 Deferred income taxes (1,531 ) (1,447 ) Stock-based compensation 5,830 5,232 Changes in assets and liabilities: Tuition receivable, net 788 (74 ) Other current assets 357 2,496 Other assets (133 ) (3 ) Accounts payable and accrued expenses (7,752 ) (7,536 ) Income taxes payable and income taxes (136 ) 8,209 receivable Unearned tuition (12,203 ) (267 ) Other long-term liabilities 84 165 Net cash provided by operating activities 42,661 51,578 Cash flows from investing activities: Purchases of property and equipment (9,871 ) (4,994 ) Net cash used in investing activities (9,871 ) (4,994 ) Cash flows from financing activities: Repurchase of common stock -- (24,999 ) Payments on term loan (12,500 ) (1,562 ) Payments on revolving credit facility (33,000 ) -- Proceeds from revolving credit facility 28,000 -- Common dividends paid (23,737 ) -- Net cash used in financing activities (41,237 ) (26,561 ) Net (decrease) increase in cash and cash (8,447 ) 20,023 equivalents Cash and cash equivalents – beginning of 57,137 47,517 period Cash and cash equivalents – end of period $ 48,690 $ 67,540 Non-cash transactions: Purchases of property and equipment $ 585 $ 557 included in accounts payable Contact: Strayer Education, Inc. Mark C. Brown, Executive Vice President and Chief Financial Officer 703-247-2514 or Dan Jackson, Senior Vice President and Treasurer 703-713-1862 firstname.lastname@example.org
Strayer Education, Inc. Reports Second Quarter 2013 Revenues and Earnings; and Summer Term 2013 Enrollments
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