Corinthian Colleges Reports FY 14 First Quarter Results
SANTA ANA, Calif., Nov. 5, 2013 (GLOBE NEWSWIRE) -- Corinthian Colleges, Inc.
(Nasdaq:COCO) reported financial results today for the first quarter ended
September 30, 2013. The results for the quarter were within the Company's
previous guidance range for diluted earnings per share, and fell below
guidance for new student enrollment and revenue. (Guidance is for continuing
operations only and excludes all one-time charges. In the first quarter the
Company recorded a $3.7 million impairment, facility closing and severance
charge, and put four schools up for sale.)
"During the first quarter we continued to focus on student outcomes and
initiatives to increase our student population and improve operational
efficiency," said Jack Massimino, Corinthian's chairman and chief executive
officer. "In addition, we made further expense reductions to help offset the
impact of a lower student population."
"As expected, total new student enrollments declined quarter-over-quarter, the
result of a decline in new online students," Massimino said. "To help increase
our online student population, we recently implemented new workforce
management technology for the service centers and improved the alignment of
staffing and call volume. In addition, we are in the process of implementing a
new academic model to create greater student engagement and retention. We
believe these and other initiatives will help position Online for improved
performance over time."
"Our ground school new enrollments were up slightly quarter-over-quarter,"
Massimino said. "Our growth initiatives for the ground schools include
introducing new promotional programs in certain service areas, implementing
new programs, and offering free GED programs at most Everest campuses. In
addition, we continue to see higher new student enrollments in service areas
where competitor school closures have occurred."
"In the second quarter we expect a decline in new enrollments, owing to
Online's on-going operational initiatives and regulatory delays in approving
new ground school programs," Massimino said. "In addition, we are
transitioning to an in-house system for certain lead-management functions,
which has temporarily reduced the quality and speed of prospective student
inquiries delivered to our schools and online service centers. When fully
implemented, we believe the new system will be more efficient and effective
than the outside vendor used previously."
Comparing the first quarter of fiscal 2014 with the same quarter of the prior
year: (Note: results are for continuing operations only, and exclude
impairment, facility closing and severance charges unless otherwise stated.)
*Net revenue was $365.0 million versus $402.0 million, a decrease of 9.2%.
*Total student population at September30, 2013 was 80,032 versus 90,469 at
September 30, 2012, a decrease of 11.5%.
*New student enrollments totaled 28,551 versus 31,058, a decrease of 8.1%.
*Operating loss was ($5.7) million, compared with operating income of $18.0
million, which excludes $3.7 million and $0.8 million in impairment and
severance charges in Q1 14 and Q1 13, respectively.
*Loss from continuing operations (after tax) was ($7.9) million, compared
with income from continuing operations of $7.8 million, excluding
impairment, facility closing and severance charges in both periods.
*Net loss was $15.0 million, which includes a $2.2 million impairment,
facility closing and severance charge, and a loss from discontinued
operations of $4.9 million, compared with net income of $1.6 million,
which included a $0.5 million impairment, facility closing and severance
charge, and a loss from discontinued operations of $5.7 million.
*Diluted loss per share from continuing operations were $(0.09), versus
diluted earnings per share of $0.09, excluding impairment, facility
closing and severance charges of $0.03 per share in Q1 14 and $0.01 per
share in Q1 13.
Financial Review –
Impairment, facility closing and severance charges - During Q1 14 we recorded
a charge of $3.7 million versus a similar charge of $0.8 million in Q1 13. The
charge was primarily related to severance expenses associated with workforce
Educational services expenses were 62.2% of revenue in Q1 14 versus 60.5%in Q1
13. The increase was primarily due to a decrease in total student population
(and revenue) relative to fixed costs. Bad debt was 4.9% of revenue in Q1 14
versus 4.8% of revenue in Q1 13.
Marketing and admissions expenses were 27.7% of revenue in Q1 14 versus 24.3%
in Q1 13. The increase is primarily the result of duplicative costs
associated with bringing certain lead management services in-house and lower
General and administrative expenses were 11.6% of revenue in Q1 14 versus
10.7% in Q1 13. The increase was primarily due to a decrease in total
student population (and revenue) relative to fixed costs.
The operating margin was (1.6%) in Q1 14 versus 4.5% in Q1 13, excluding
facility closing and severance charges in both time periods.
Cash and cash equivalents totaled $37.2 million at September30, 2013,
compared with $46.6 million at June30, 2013.The decrease in cash is
primarily due to the timing of cash receipts and payments.
Debt and capital leases (including current portion) totaled $101.1 million at
September30, 2013, compared with $139.1 million at June30, 2013.
Cash flow from operations was $41.0 million in the first quarter ended
September30, 2013, versus $20.4 million in the first quarter last year. The
increase is primarily due to the timing of cash receipts and payments.
Capital expenditures were $12.9 million in the first quarter ended September
California Attorney General Complaint – As previously disclosed in a Report on
Form 8-K, on October 10, 2013 the California Attorney General (CAG) filed a
civil complaint against the company. We have been cooperating with CAG's
investigation since it began in December 2012. We were disappointed that we
were not given advance notice of the complaint, and did not have the
opportunity to discuss the allegations with CAG before the complaint was
The complaint contains allegations that paint a misleading and inaccurate
picture of our company and schools. We are fully committed to providing
quality career and technical education; to making every effort to help
graduates find employment in their chosen fields; and to ensuring that
students are treated fairly and honestly. Further, we have robust regulatory
compliance systems in place. We plan to vigorously defend against this
lawsuit, and look forward to making our case in court.
The following guidance is for continuing operations and excludes any one-time
Time Period Revenue Diluted EPS Total New Student Growth
Q2 14 $375 -- $385 million $0.02 -- $0.04 (7)% - (9)%
FY 14 n/a $0.10 -- $0.15 n/a
Conference Call Today
We will host a conference call today at 12:00 pm Eastern Time, to discuss
first quarter results. The call will be open to all interested investors
through a live audio web cast at www.cci.edu (Investors/Events &
Presentations.) The call will be archived on www.cci.edu after the call. A
telephonic playback of the conference call will also be available through
November 11, 2013. The playback can be reached by dialing (800) 585-8367 and
using passcode 14262272.
Corinthian is one of the largest post-secondary education companies in North
America. Our mission is to change students' lives. We offer diploma and degree
programs that prepare students for careers in demand or for advancement in
their chosen fields. Our program areas include health care, business, criminal
justice, transportation technology and maintenance, construction trades and
information technology. We have 107 Everest, Heald and WyoTech campuses, and
also offer degrees online. For more information, go to http://www.cci.edu.
Certain statements in this press release may be deemed to be forward-looking
statements under the Private Securities Litigation Reform Act of 1995. The
company intends that all such statements be subject to the "safe-harbor"
provisions of that Act.Such statements include, but are not limited to, those
regarding our initiatives to improve Online's performance; our initiatives
regarding offering free GED preparation programs; our expectation regarding
competitor campus closures; our expectation regarding our new in-house system
for certain lead management services; and the statements under the heading
"Guidance" above.Many factors may cause the company's actual results to
differ materially from those discussed in any such forward-looking statements
or elsewhere, including: the continuing negative effects from the loss of ATB
students; the company's effectiveness in its regulatory and accreditation
compliance efforts; the outcome of ongoing reviews and inquiries by
accrediting, state and federal agencies; the outcome of pending litigation
against the company, including the civil complaint filed by the California
Attorney General; risks associated with variability in the expense and
effectiveness of the company's advertising and promotional efforts; potential
increased competition; changes in general macroeconomic and market conditions
(including credit and labor market conditions, the unemployment rate, and the
rates of change of each such item); and the other risks and uncertainties
described in the company's filings with the U.S. Securities and Exchange
Commission. The historical results achieved by the company are not necessarily
indicative of its future prospects.The company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
Corinthian Colleges, Inc.
(In thousands, except per share data)
Consolidated Statements of Operations
For the three months ended
Net revenues $364,958 $402,037
Educational services 227,098 243,391
General and administrative 42,371 42,949
Marketing and admissions 101,200 97,706
Impairment, facility closing, and severance 3,654 761
Total operating expenses 374,323 384,807
Income (loss) from operations (9,365) 17,230
Interest income 110 198
Interest expense (1,806) (1,292)
Other expense, net (6,037) (4,245)
Pre-tax income (loss) from continuing operations (17,098) 11,891
Provision (benefit)for income taxes (6,995) 4,584
Income (loss) from continuing operations (10,103) 7,307
Loss from discontinued operations, net of tax (4,851) (5,729)
Net income (loss) $(14,954) $1,578
Income (loss) per common share --- Basic:
Income (loss) from continuing operations $(0.12) $0.09
Loss from discontinued operations (0.05) (0.07)
Net (loss) income $(0.17) $0.02
Income (loss) per common share --- Diluted:
Income (loss) from continuing operations $(0.12) $0.08
Loss from discontinued operations (0.05) (0.06)
Net (loss) income $(0.17) $0.02
Weighted average number of common shares
Basic 86,591 85,486
Diluted 86,591 86,194
Selected Consolidated Balance Sheet Data
September 30, June 30,
Cash and cash equivalents $37,190 $46,596
Receivables, net (including long term notes $185,852 $167,141
Current assets $299,052 $286,068
Total assets $1,060,644 $1,028,745
Current liabilities $335,111 $251,246
Debt and capital leases (including current $101,110 $139,085
Total liabilities $503,828 $457,903
Total stockholders' equity $556,816 $570,842
Anna Marie Dunlap
SVP Investor Relations
VP Public Affairs Communications
Corinthian Colleges, Inc. Logo
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