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National American University Holdings, Inc. Reports Fiscal 2014 First Quarter Results

National American University Holdings, Inc. Reports Fiscal 2014 First Quarter 
Results 
Company to Host Conference Call on October 3, 2013, at 11:00 a.m. EDT 
RAPID CITY, SD -- (Marketwired) -- 10/02/13 --  National American
University Holdings, Inc. (the "Company") (NASDAQ: NAUH)  
Financial and Operational Highlights 


 
--  Enrollment by headcount increased 3.8% over the prior-year period to
    10,743 students as of August 31, 2013.
    
    
--  FY 2014 first quarter total revenue increased 5.0% to $30.9 million
    from $29.5 million in the prior-year period. The Company's academic
    segment's revenue was $30.4 million in the FY 2014 first quarter,
    compared to $29.2 million in the prior-year period.
    
    
--  FY 2014 first quarter net loss attributable to the Company was $0.3
    million, compared to $0.2 million in the prior-year period, primarily
    due to increased selling, general and administrative (SG&A)
    expenses associated with the hiring of additional admissions advisors
    to better support NAU's enrollment goals. FY 2014 first quarter EBITDA
    was $1.2 million, compared to $1.4 million in the prior-year period.
    
    
--  The Board of Directors declared a cash dividend in the amount of
    $0.045 per share, up 12.5% from the prior quarter, on all shares of
    the Company's common stock outstanding and of record as of the close
    of business on September 30, 2013, which will be paid on or about
    October 11, 2013.
    
    
--  Balance sheet at August 31, 2013, included cash and cash equivalents
    and investments of $32.0 million; working capital of $24.4 million; no
    outstanding lending debt; and stockholders' equity of $49.8 million.

  
National American University Holdings, Inc. (the "Company") (NASDAQ:
NAUH), which through its wholly owned subsidiary operates National
American University ("NAU"), a regionally accredited, proprietary,
multi-campus institution of higher learning, today reported unaudited
financial results for its FY 2014 first quarter ended August 31,
2013. 
Ronald L. Shape, Ed.D., Chief Executive Officer of the Company,
commented, "We are pleased with the increase in enrollment growth
that we achieved in the summer 2013 term, which tends to be a
seasonally weaker per
iod. NAU's enrollment during the summer 2013
term increased 3.8% to 10,743 students. However, higher SG&A expenses
associated with hiring additional admissions advisors impacted our
bottom line. We expect the additional admissions advisors will enable
us to support our enrollment goals for the remainder of this fiscal
year as they continue to gain experience but will also result in
pressure on new student enrollments and resulting total student
enrollments in the short term. As we continue to focus on growing
enrollments at our existing locations, we also continue working to
improve efficiencies in our other operational support areas. As such,
we have launched cost reduction measures consistent with our focus to
grow our existing locations, versus geographic expansion, which
includes an initial reduction of 40 positions in our operational
support area. We anticipate these adjustments will result in annual
savings of approximately $2.4 million. Throughout this process, we
remain cognizant of and dedicated to providing our students with
quality education and ensuring they have the support they need to be
successful in achieving their goals." 
Operating Review  
NAU currently leases 37 physical properties in the states of
Colorado, Indiana, Kansas, Minnesota, Missouri, Nebraska, New Mexico,
Oklahoma, Oregon, South Dakota and Texas. Several sites operate as
hybrid learning centers in strategic geographic locations. These
centers utilize physical facilities through which the university
provides face-to-face support services as students participate in
select, traditional classroom courses while completing their
remaining coursework online. 
Of NAU's 37 locations, the following sites are pending regulatory
approvals: 


 
--  Roueche Graduate Center in Austin, TX
--  Houston, TX

  
3.8% Enrollment Increase 
Total NAU student enrollment for the summer term of 2013 increased
3.8% to 10,743 students, up from 10,350 during the prior summer term.
Students enrolled in 92,106 credit hours compared to 89,363 credit
hours during the prior summer term. The current average age of NAU's
students continues to be in the mid-30s, with those seeking
undergraduate degrees remaining the highest portion of NAU's student
population. 
The following is a summary of student enrollment at August 31, 2013,
and August 31, 2012, by degree level and by instructional delivery
method:  


 
                                                                            
                                                                            
                               August 31, 2013          August 31, 2012     
                           -----------------------  ----------------------- 
                              No. of                   No. of               
                             Students   % of Total    Students   % of Total 
                           ----------- -----------  ----------- ----------- 
Graduate                           339         3.2%         338         3.3%
                                                                            
Undergraduate and Diploma       10,404        96.8%      10,012        96.7%
                           ----------- -----------  ----------- ----------- 
                                                                            
Total                           10,743       100.0%      10,350       100.0%
                                                                            
                               August 31, 2013          August 31, 2012     
                           -----------------------  ----------------------- 
                              No. of                   No. of               
                             Students   % of Total    Students   % of Total 
                           ----------- -----------  ----------- ----------- 
Online                           6,592        61.4%       6,068        58.6%
On-Campus                        2,357        21.9%       2,536        24.5%
Hybrid                           1,794        16.7%       1,746        16.9%
                           ----------- -----------  ----------- ----------- 
                                                                            
Total                           10,743       100.0%      10,350       100.0%
                           =========== ===========  =========== =========== 

 
Financial Review 
The Company, through its wholly owned subsidiary, operates in two
business segments: the academic segment, which consists of NAU's
undergraduate and graduate education programs and contributes the
primary portion of the Company's revenue; and ownership in multiple
apartments and condominium complexes from which it derives sales and
rental income. The real estate operations generated approximately
1.6% of revenues for the quarter ended August 31, 2013.  
Fiscal 2014 First Quarter Financial Results 


 
--  Total revenues for the FY 2014 first quarter increased 5.0% to $30.9
    million from $29.5 million for the same period last year. As a result
    of NAU's enrollment growth, the
 academic segment's total revenue
    increased 4.3% to $30.4 million from $29.2 million in the prior-year
    period.
    
    
--  For the FY 2014 first quarter, educational services expense was $7.0
    million, or 23.0% of the academic segment's total revenue, compared to
    $7.1 million, or 24.5%, for the FY 2013 first quarter. The decrease as
    a percentage of total revenue was the result of economies of scale
    being realized with the expansion of NAU's physical footprint and
    increased student-instructor ratios.
    
    
    Educational services expense specifically relates to the academic
    segment, and includes salaries and benefits of faculty and academic
    administrators, costs of educational supplies, facility costs, faculty
    reference and support material and related academic costs.
    
    
--  During the FY 2014 first quarter, SG&A expenses were $22.2
    million, or 71.8% of total revenues, compared to $20.4 million, or
    69.3%, in the prior-year period. The increase was primarily a result
    of increased expenses associated with the hiring of additional
    admissions advisors to better support its growing student population,
    general marketing expenses, and expenses related to developing the 11
    locations that have been in existence for under two years.
    
    
--  Loss before income taxes and non-controlling interest for the FY 2014
    first quarter was $0.5 million, compared to $0.2 million for the same
    period last year. This increase in losses was largely due to higher
    SG&A expenses.
    
    
--  Net loss attributable to the Company for the FY 2014 first quarter was
    $0.3 million, or $0.01 per diluted share based on 25.1 million shares
    outstanding, compared to $0.2 million, or $0.01 per diluted share
    based on 25.6 million shares outstanding, in the prior-year period.
    
    
--  EBITDA for the FY 2014 first quarter was $1.2 million, compared to
    $1.4 million in the prior-year period. A table reconciling EBITDA to
    net income can be found at the end of this release.
    
    

 
                                                                            
                                                                            
Balance Sheet Highlights                                                    
(in millions except for percentages)         8/31/2013  5/31/2013  % Change 
-------------------------------------------  ---------  --------- --------- 
Cash and Cash Equivalents/Investments       $     32.0 $     31.9       0.3%
Working Capital                                   24.4       23.8       2.3%
Total Long-term Debt                                 0          0       N/A 
Stockholders' Equity                              49.8       50.8      -2.0%

 
Quarterly Dividend 
The Board of Directors declared a cash dividend in the amount of
$0.045 per share on all shares of the Company's common stock
outstanding and of record as of the close of business on September
30, 2013, to be paid on or about October 11, 2013. 
Conference Call Information 
Management will discuss these results in a conference call (with
accompanying presentation) on October 3, 2013, at 11:00 a.m. EDT. 
The dial-in numbers are:
 (877) 407-9078 (U.S.)
 (201) 493-6745
(International) 
Accompanying Slide Presentation and Webcast 
The Company will also have an accompanying slide presentation
available in PDF format at the "Investor Relations" section of the
NAU website at http://www.national.edu/InvestorRelations. The
presentation will be made available 30 minutes prior to the
conference call. In addition, the call will be simultaneously webcast
over the Internet via the "Investor Relations" section of the NAU
website or by clicking on the conference call link:
http://national.equisolvewebcast.com/q1-2014.  
About National American University Holdings, Inc.  
National American University Holdings, Inc., through its wholly owned
subsidiary, operates National American University ("NAU"), a
regionally accredited, proprietary, multi-campus institution of
higher learning offering associate, bachelor's, master's, and
doctoral degree programs in technical and professional disciplines.
Accredited by The Higher Learning Commission and a member of the
North Central Association of Colleges and Schools, NAU has been
providing technical and professional career education since 1941. NAU
opened its first campus in Rapid City, South Dakota, and has since
grown to multiple locations throughout the central United States. In
1998, NAU began offering online courses. Today, NAU offers degree
programs in traditional, online, and hybrid formats, which provide
students increased flexibility to take courses at times and places
convenient to their busy lifestyles. 
Forward Looking Statements  
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding the Company's business. Statements made in this release,
other than those concerning historical financial information, may be
considered forward-looking statements, which speak only as of the
date of this release and are based on current beliefs and
expectations and involve a number of assumptions. These
forward-looking statements include outlooks or expectations for
earnings, revenues, expenses or other future financial or business
performance, strategies or expectations, or the impact of legal or
regulatory matters on business, results of operations or financial
condition. Specifically, forward-looking statements may include
statements relating to the future financial performance of the
Company; the ability to continue to receive Title IV funds; the
growth of the market for the Company's services; expansion plans and
opportunities; consolidation in the market for the Company's services
generally; and other statements preceded by, followed by or that
include the words "estimate," "plan," "project," "forecast,"
"intend," "expect," "anticipate," "believe," "seek," "target" or
similar expressions. These forward-looking statements involve a
number of known and unknown risks and uncertainties or other
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by those
forward-looking statements. Other factors that could cause the
Company's results to differ materially from those contained in its
forward-looking statements are included under, among others, the
heading "Risk Factors" in the Company's Annual Report on Form 10-K,
which was filed on August 2, 2013, and in its other filings with the
Securities and Exchange Commission. The Company assumes no obligation
to update the information contained in this release. 


 
                                                                            
                                                                            
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES                
                                                                            
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE 
 INCOME FOR THE THREE MONTHS ENDED AUGUST 31, 2013 AND 2012                
 
(In thousands except share data)                                            
                                                                            
                                                      Three Months Ended    
                                                          August 31,        
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
REVENUE:                                                                    
  Academic revenue                                 $    27,650  $    26,477 
  Auxiliary revenue                                      2,772        2,699 
  Rental income - apartments                               287          274 
  Condominium sales                                        220            0 
                                                   -----------  ----------- 
                                                                            
    Total revenue                                       30,929       29,450 
                                                   -----------  ----------- 
                                                                            
OPERATING EXPENSES:                                                         
  Cost of educational services                           7,005        7,135 
  Selling, general and administrative                   22,222       20,421 
  Auxiliary expense                                      1,970        1,843 
  Cost of condominium sales                                191            0 
  (Gain) loss on disposition of property                   (97)          73 
                                                   -----------  ----------- 
                                                                            
    Total operating expenses                            31,291       29,472 
                                                   -----------  ----------- 
                                                                            
OPERATING LOSS                                            (362)         (22)
                                                   -----------  ----------- 
                                                                            
OTHER INCOME (EXPENSE):                                                     
  Interest income                                           26           31 
  Interest expense                                        (252)        (253)
  Other income - net                                        44           35 
                                                   -----------  ----------- 
                                                                            
    Total other expense                                   (182)        (187)
                                                   -----------  ----------- 
                                                                            
LOSS BEFORE INCOME TAXES                                  (544)        (209)
                                                                            
INCOME TAX BENEFIT                                         178           58 
                                                   -----------  ----------- 
                                                                            
NET LOSS                                                  (366)        (151)
                                                                            
NET LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING                           
 INTEREST                                                   37          (13)
                                                   -----------  ----------- 
                                                                            
NET LOSS ATTRIBUTABLE TO NATIONAL AMERICAN                                  
 UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES               (329)        (164)
                                                                            
OTHER COMPREHENSIVE LOSS -                                                  
  Unrealized losses on investments, before tax              (5)         (22)
  Reclassification to earnings (other income) -                             
   net of realized losses                                    0            0 
                                                   -----------  ----------- 
OTHER COMPREHENSIVE LOSS, NET OF TAX                        (5)         (22)
                                                   -----------  ----------- 
                                                                            
COMPREHENSIVE LOSS ATTRIBUTABLE TO NATIONAL                                 
 AMERICAN UNIVERSITY HOLDINGS, INC.                $      (334) $      (186)
                                                   ===========  =========== 
                                                                            
Basic net loss attributable to National American                            
 University Holdings, Inc.                         $     (0.01) $     (0.01)
                                                                            
Diluted net loss attributable to National American                          
 University Holdings, Inc.                         $     (0.01) $     (0.01)
                                                                            
Basic weighted average shares outstanding           25,056,382   25,574,478 
Diluted weighted average shares outstanding         25,056,382   25,574,478 
                                                                            
                                                                            
                                                                            
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES                
                                                                            
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET                              
AS OF AUGUST 31, 2013 AND CONDENSED                                         
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2013                               
(In thousands except share data)                                            
                                                     August 31,    May 31,  
                                                        2013        2013    
                                                    -----------  ---------- 
ASSETS                                                                      
                                                                            
CURRENT ASSETS:                                                             
  Cash and cash equivalents                         $     8,742  $   11,130 
  Available for sale investments                         23,235      20,748 
  Student receivables - net of allowance of $689                            
   and $870 at August 31, 2013 and May 31, 2013,                            
   respectively                                           2,867       3,628 
  Other receivables                                         519         722 
  Income tax receivable                                     355         122 
  Deferred income taxes                                   1,279       1,353 
  Prepaid and other current assets                        1,356         841 
                                                    -----------  ---------- 
  Total current assets                                   38,353      38,544 
                                                    -----------  ---------- 
Total property and equipment - net                       43,858      44,944 
                                                    -----------  ---------- 
                                                                            
OTHER ASSETS:                                                               
 
  Condominium inventory                                   1,257       1,778 
  Land held for future development                          312         312 
  Course development - net of accumulated                                   
   amortization of $2,154 and $2,066 at August 31,                          
   2013 and May 31, 2013, respectively                    1,125       1,107 
  Other                                                   1,373       1,397 
                                                    -----------  ---------- 
                                                          4,067       4,594 
                                                    -----------  ---------- 
TOTAL                                               $    86,278  $   88,082 
                                                    ===========  ========== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Current portion of capital lease payable          $        73  $       66 
  Accounts payable                                        4,567       5,403 
  Dividends payable                                       1,131       1,004 
  Student accounts payable                                1,236       1,067 
  Deferred income                                           215         195 
  Accrued and other liabilities                           6,747       6,966 
                                                    -----------  ---------- 
    Total current liabilities                            13,969      14,701 
                                                    -----------  ---------- 
DEFERRED INCOME TAXES                                     5,600       5,720 
                                                    -----------  ---------- 
OTHER LONG-TERM LIABILITIES                               6,549       6,479 
                                                    -----------  ---------- 
CAPITAL LEASE PAYABLE, NET OF CURRENT PORTION            10,374      10,394 
                                                    -----------  ---------- 
COMMITMENTS AND CONTINGENCIES                                               
STOCKHOLDERS' EQUITY:                                                       
  Common stock, $0.0001 par value (50,000,000                               
   authorized; 28,138,905 issued and 25,085,074                             
   outstanding as of August 31, 2013; 28,090,269                            
   issued and 25,047,086 outstanding as of May 31,                          
   2013                                                       3           3 
  Additional paid-in capital                             58,193      57,656 
  Retained earnings                                      11,153      12,610 
  Treasury stock, at cost (3,053,831 shares at                              
   August 31, 2013 and 3,043,183 at May 31, 2013)       (19,399)    (19,359)
  Accumulated other comprehensive income, net of                            
   taxes - unrealized gain on available for sale                            
   securities                                                 2           7 
                                                    -----------  ---------- 
Total National American University Holdings, Inc.                           
 stockholders' equity                                    49,952      50,917 
                                                    -----------  ---------- 
Non-controlling interest                                   (166)       (129)
Total equity                                             49,786      50,788 
                                                    -----------  ---------- 
TOTAL                                               $    86,278  $   88,082 
                                                    -----------  ---------- 
                                                                            
                                                                            
                                                                            
                                                                            
The following table provides a reconciliation of net income attributable to 
 the Company to EBITDA:                                                     
                                                                            
                                                       Three Months Ended   
                                                           August 31,       
                                                     ---------------------- 
                                                        2013        2012    
                                                     ----------  ---------- 
                                                     (dollars in thousands) 
Net Income attributable to the Company               $     (329) $     (164)
Income (Loss) attributable to non-controlling                               
 interest                                                   (37)         13 
Interest Income                                             (26)        (31)
Interest Expense                                            252         253 
Income Taxes                                               (178)        (58)
Depreciation and Amortization                             1,551       1,351 
                                                     ----------  ---------- 
                                                                            
EBITDA                                               $    1,233  $    1,364 

 
EBITDA consists of income attributable to the Company, less income
from non-controlling interest, plus loss from non-controlling
interest, minus interest income, plus interest expense (which is not
related to any debt but to the accounting required for the capital
lease), plus income taxes, plus depreciation and amortization. The
Company uses EBITDA as a measure of operating performance. However,
EBITDA is not a recognized measurement under U.S. generally accepted
accounting principles, or GAAP, and when analyzing its operating
performance, investors should use EBITDA in addition to, and not as
an alternative for, income as determined in accordance with GAAP.
Because not all companies use identical calculations, the Company's
presentation of EBITDA may not be comparable to similarly titled
measures of other companies and is therefore limited as a comparative
measure. Furthermore, as an analytical tool, EBITDA has additional
limitations, including that (a) it is not intended to be a measure of
free cash flow, as it does not consider certain cash requirements
such as tax payments; (b) it does not reflect changes in, or cash
requirements for, its working capital needs; and (c) although
depreciation and amortization are non-cash charges, the assets being
depreciated and amortized often will have to be replaced in the
future, and EBITDA does not reflect any cash requirements for such
replacements, or future requirements for capital expenditures or
contractual commitments. To compensate for these limitations, the
Company evaluates its profitability by considering the economic
effect of the excluded expense items independently as well as in
connection with its analysis of cash flows from operations and
through the use of other financial measures. 
The Company believes EBITDA is useful to an investor in evaluating
its operating performance because it is widely used to measure a
company's operating performance without regard to certain non-cash
expenses (such as depreciation and amortization) and expenses that
are not reflective of its core operating results over time. The
Company believes EBITDA presents a meaningful measure of corporate
performance exclusive of its capital structure, the met
hod by which
assets were acquired and non-cash charges, and provides us with
additional useful information to measure its performance on a
consistent basis, particularly with respect to changes in performance
from period to period. 
Contact Information: 
National American University Holdings, Inc.
Dr. Ronald Shape
605-721-5220
rshape@national.edu 
Investor Relations Counsel
The Equity Group Inc.
Carolyne Yu
415-568-2255
cyu@equityny.com 
Adam Prior
212-836-9606
aprior@equityny.com