Strayer Education, Inc. Reports Third Quarter 2013 Revenues and Earnings; Fall Term 2013 Enrollments; and Additional Cost

  Strayer Education, Inc. Reports Third Quarter 2013 Revenues and Earnings;
  Fall Term 2013 Enrollments; and Additional Cost Reduction Initiatives

                    -- Third Quarter Diluted EPS $0.30 --

Business Wire

HERNDON, Va. -- October 31, 2013

Strayer Education, Inc. (Nasdaq: STRA) today announced financial results for
the three months ended September 30, 2013. Financial highlights are as
follows:

Three Months Ended September 30

  *Revenues for the three months ended September 30, 2013 decreased 11% to
    $110.0 million, compared to $124.3 million for the same period in 2012,
    principally due to lower enrollment.
  *Income from operations was $6.6 million compared to $7.8 million for the
    same period in 2012, a decrease of 16%. Operating income margin was 6.0%
    compared to 6.3% for the same period in 2012.
  *Net income was $3.1 million compared to $4.1 million for the same period
    in 2012, a decrease of 23%. Diluted earnings per share was $0.30 compared
    to $0.36 for the same period in 2012, a decrease of 17%. Diluted weighted
    average shares outstanding decreased 8% to 10,552,000 from 11,487,000 for
    the same period in 2012, primarily as a result of share repurchases.

Nine Months Ended September 30

  *Revenues for the nine months ended September 30, 2013 decreased 10% to
    $379.5 million, compared to $420.0 million for the same period in 2012,
    principally due to lower enrollment.
  *Income from operations was $62.8 million compared to $84.9 million for the
    same period in 2012, a decrease of 26%. Operating income margin was 16.5%
    compared to 20.2% for the same period in 2012.
  *Net income was $35.4 million compared to $49.3 million for the same period
    in 2012, a decrease of 28%. Diluted earnings per share was $3.32 compared
    to $4.29 for the same period in 2012, a decrease of 23%. Diluted weighted
    average shares outstanding decreased 7% to 10,646,000 from 11,482,000 for
    the same period in 2012, primarily as a result of share repurchases.

Balance Sheet and Cash Flow

At September 30, 2013, the Company had cash and cash equivalents of $85.2
million. The Company generated $72.2 million from operating activities in the
first nine months of 2013 compared to $57.2 million during the same period in
2012. Capital expenditures were $7.1 million for the nine months ended
September 30, 2013 compared to $18.2 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 September 30, 2013, the Company had
$122.7 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
September 30, 2013. No shares were repurchased in the third quarter of 2013.

For the third quarter 2013, bad debt expense as a percentage of revenues was
4.5% compared to 4.2% for the same period in 2012. Days sales outstanding was
16 days at the end of the third quarter of 2013, compared to 18 days at the
end of the third quarter of 2012.

Student Enrollment

Total enrollments at Strayer University for the 2013 fall term decreased 17%
to 43,192 students compared to 51,727 students for the same term in 2012.
Across the Strayer University campus and online system, continuing student
enrollments decreased 14%, while new student enrollments decreased 23%.

Cost Reduction Initiatives

The Company announced today that Strayer University plans to implement a
number of cost reduction and other initiatives during the fourth quarter of
2013. These initiatives, which will result in a charge of approximately $45-55
million in the fourth quarter, are expected to reduce headcount by
approximately 20% and annual operating expenses by an estimated $50 million
beginning in 2014. The Company estimates that approximately $10 million of the
charge will reduce cash flow from operating activities in the fourth quarter.

As part of these initiatives, Strayer University will close approximately 20
physical locations predominantly in the Midwest. These closures will affect
approximately 5% of the University’s enrollment or about 2,300 students in the
fall term. Affected students, a majority of whom already take 100% of their
classes online, will be offered support to continue their education online.
Subject to regulatory approval, these closures are expected to be
substantially completed within the next six months. Approximately $30-40
million of the charges in the fourth quarter will be incurred for these
closures, principally for lease-related charges and asset write-off costs,
with the remaining $15 million of the fourth quarter charges related to
workforce reductions.

2014 Tuition

In order to further address the issue of college affordability, Strayer
University’s Board of Trustees has approved a reduction in tuition for new
undergraduate students of approximately 20% effective January 1, 2014. The
Company expects the reduction in tuition to negatively affect revenue per
student in 2014 compared to 2013.

Capital Allocation

The Company announced today that its Board of Directors amended its share
repurchase program by extending the deadline for use of the $70 million
remaining under its current authorization to December 31, 2014. The Company
intends to conduct such purchases, if any, in compliance with Rule 10b-18
under the Securities Exchange Act of 1934, as amended. This share repurchase
program may be modified, suspended or terminated at any time by the Company
without notice.

Common Stock and Common Stock Equivalents

At September 30, 2013, the Company had 10,852,020 common shares issued and
outstanding, including 342,329 shares of restricted stock. The Company also
had 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 third
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. 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 based
in Washington, D.C. and 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 nine months
                                    ended September 30,    ended September 30,
                                    2012       2013       2012      2013
Revenues                            $124,260    $110,031   $420,046   $379,517
Costs and expenses:
Instruction and educational         72,997      63,673     222,413    208,405
support
Marketing                           23,171      23,077     53,693     57,026
Admissions advisory                 6,487       5,188      19,733     15,751
General and administration          13,769      11,472     39,345     35,538
Total costs and expenses            116,424     103,410    335,184    316,720
Income from operations              7,836       6,621      84,862     62,797
Investment income                   1           1          4          1
Interest expense                    1,055       1,391      3,373      4,024
Income before income taxes          6,782       5,231      81,493     58,774
Provision for income taxes          2,679       2,082      32,190     23,392
Net income                          $ 4,103     $ 3,149    $ 49,303   $ 35,382
Earnings per share:
Basic                               $0.36       $0.30      $4.31      $3.34
Diluted                             $0.36       $0.30      $4.29      $3.32
Weighted average shares
outstanding:
Basic                               11,433      10,510     11,428     10,608
Diluted                             11,487      10,552     11,482     10,646
                                                                      

                                                              
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
                                                                 
                                                  December 31,   September 30,
                                                  2012           2013
ASSETS
Current assets:
Cash and cash equivalents                         $   47,517     $   85,220
Tuition receivable, net of allowances for
doubtful accounts of $6,596 and $5,819 at             23,262         19,686
December 31, 2012 and September 30, 2013,
respectively
Income taxes receivable                               4,454          907
Other current assets                                 14,422        12,503
Total current assets                                  89,655         118,316
Property and equipment, net                           121,520        109,958
Deferred income taxes                                 3,279          5
Goodwill                                              6,800          6,800
Other assets                                         6,538         5,872
Total assets                                      $   227,792    $   240,951
                                                                 
LIABILITIES & STOCKHOLDERS’ EQUITY
                                                                 
Current liabilities:
Accounts payable and accrued expenses             $   39,124     $   39,058
Unearned tuition                                      494            585
Other current liabilities                             281            281
Current portion of term loan                         3,125         3,125
Total current liabilities                             43,024         43,049
Term loan, less current portion                       121,875        119,531
Other long-term liabilities                          21,905        21,406
Total liabilities                                    186,804       183,986
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $.01; 20,000,000 shares
authorized; 11,387,299 and 10,852,020 shares      114            109
issued and outstanding at December 31, 2012 and
September 30, 2013, respectively
Additional paid-in capital                            299            6,289
Retained earnings                                     41,311         50,586
Accumulated other comprehensive income (loss)        (736)         (19)
Total stockholders’ equity                           40,988        56,965
Total liabilities and stockholders’ equity        $   227,792    $   240,951
                                                                     

                                                   
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
                                                     
                                                     For the nine months ended
                                                     September 30,
                                                     2012         2013
Cash flows from operating activities:
Net income                                           $ 49,303      $ 35,382
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of gain on sale of assets                 (210    )     (210    )
Amortization of deferred rent                          173           (216    )
Amortization of deferred financing costs               599           585
Depreciation and amortization                          17,857        18,561
Deferred income taxes                                  (2,827  )     (3,503  )
Stock-based compensation                               9,358         8,398
Changes in assets and liabilities:
Tuition receivable, net                                897           3,576
Other current assets                                   (1,992  )     1,668
Other assets                                           (134    )     (2      )
Accounts payable and accrued expenses                  5,307         188
Income taxes payable and income taxes receivable       (7,630  )     6,591
Unearned tuition                                       (14,201 )     769
Other long-term liabilities                           746         374     
Net cash provided by operating activities             57,246      72,161  
Cash flows from investing activities:
Purchases of property and equipment                   (18,165 )    (7,115  )
Net cash used in investing activities                 (18,165 )    (7,115  )
Cash flows from financing activities:
Repurchase of common stock                             --            (24,999 )
Payments on term loan                                  (20,000 )     (2,344  )
Payments on revolving credit facility                  (48,000 )     --
Proceeds from revolving credit facility                53,000        --
Common dividends paid                                 (35,609 )    --      
Net cash used in financing activities                 (50,609 )    (27,343 )
Net (decrease) increase in cash and cash               (11,528 )     37,703
equivalents
Cash and cash equivalents – beginning of period       57,137      47,517  
Cash and cash equivalents – end of period            $ 45,609     $ 85,220  
Non-cash transactions:
Purchases of property and equipment included in      $ 2,132       $ 274
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
daniel.jackson@strayer.edu
 
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