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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Strategic Education Inc | NASDAQ:STRA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 120.65 | 113.30 | 180.00 | 0 | 09:00:00 |
Strategic Education, Inc. (SEI) (NASDAQ: STRA) today announced financial results for the period ended March 31, 2019.
Karl McDonnell, Chief Executive Officer of SEI said, “Our strong first quarter results provide us with a solid foundation to build on for the balance of 2019. We are moving into the tenth month since we closed our merger with Capella Education Company, and are very pleased with progress of the merger integration and the organization’s continued ability to execute. We remain focused on delivering academic success and long-term economic mobility for our students and alumni.”
STRATEGIC EDUCATION, INC. CONSOLIDATED RESULTS
[Note: Strategic Education, Inc.’s financial results for any periods ended prior to August 1, 2018 do not include the financial results of Capella Education Company and are therefore not directly comparable.]
Three Months Ended March 31
Strayer University Segment Highlights
Capella University Segment Highlights
Non-Degree Programs Segment Highlights
BALANCE SHEET AND CASH FLOW
At March 31, 2019, Strategic Education, Inc. had cash, cash equivalents, and marketable securities of $420.7 million, and no debt. For the first three months of 2019, cash provided by operations was $58.7 million compared to $17.0 million for the same period in 2018. Capital expenditures for the first three months of 2019 were $8.8 million compared to $4.2 million for the same period in 2018. Capital expenditures for 2019 are expected to be between $40 million and $45 million.
For the first quarter of 2019, consolidated bad debt expense as a percentage of revenue was 5.0%, compared to 5.5% for the same period in 2018.
COMMON STOCK CASH DIVIDEND
SEI announced today that it declared a regular, quarterly cash dividend of $0.50 per share of common stock. This dividend will be paid on June 10, 2019 to shareholders of record as of May 28, 2019.
CONFERENCE CALL WITH MANAGEMENT
SEI will host a conference call to discuss its first quarter 2019 earnings results at 9:00 a.m. (ET) today. To participate in the live call, investors should dial (877) 303-9047 ten minutes prior to the start time. In addition, the call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section.
About SEI
Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to enabling economic mobility with education. We serve working adult students through a range of educational opportunities that include: Strayer University and Capella University (separate institutions that are each regionally accredited), which collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs; a Top-25 Princeton Review-ranked online MBA program through the Jack Welch Management Institute at Strayer University; self-paced courses for college credit through Sophia; customized degrees for corporations through Degrees@Work; and non-degree web and mobile application development courses through DevMountain, Generation Code, Hackbright Academy, and The New York Code + Design Academy. These programs help our students prepare for success in today’s jobs and find a path to bettering their lives.
Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance of SEI; SEI’s plans, strategies and prospects; and future events and expectations. The statements are based on SEI’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:
Many of these risks, uncertainties and assumptions are beyond SEI’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to SEI on the date they are made, and SEI undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.
STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)For the three months endedMarch 31,
2018 2019 Revenues $ 116,469 $ 246,508 Costs and expenses: Instructional and support costs 68,452 134,050 General and administration 31,342 64,139 Amortization of intangible assets — 15,417 Merger and integration costs 5,347 7,179 Total costs and expenses 105,141 220,785 Income from operations 11,328 25,723 Other income 289 3,327 Income before income taxes 11,617 29,050 Provision for income taxes 2,150 17,550 Net income $ 9,467 $ 11,500 Earnings per share: Basic $ 0.88 $ 0.53 Diluted $ 0.84 $ 0.52 Weighted average shares outstanding: Basic 10,745 21,499 Diluted 11,311 22,050 Cash dividend declared per share $ 0.25 $ 0.50STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data)
December 31,2018
March 31,2019
ASSETS Current assets: Cash and cash equivalents $ 311,732 $ 352,387 Marketable securities, current 37,121 36,486 Tuition receivable, net 55,694 50,842 Other current assets 15,814 16,874 Total current assets 420,361 456,589 Property and equipment, net 122,677 119,040 Right-of-use lease assets — 101,533 Marketable securities, non-current 37,678 31,866 Intangible assets, net 328,344 314,511 Goodwill 732,540 732,799 Other assets 19,429 19,052 Total assets $ 1,661,029 $ 1,775,390 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 85,979 $ 80,085 Income taxes payable 419 6,144 Contract liabilities 38,733 40,826 Lease liabilities, current — 26,462 Total current liabilities 125,131 153,517 Deferred income tax liabilities 59,358 70,298 Lease liabilities, non-current — 90,501 Other long-term liabilities 51,316 37,636 Total liabilities 235,805 351,952 Commitments and contingencies Stockholders’ equity: Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,923,800 shares issued and outstanding at December 31, 2018 and March 31, 2019, respectively 217 219 Additional paid-in capital 1,306,653 1,304,170 Accumulated other comprehensive income 32 266 Retained earnings 118,322 118,783 Total stockholders’ equity 1,425,224 1,423,438 Total liabilities and stockholders’ equity $ 1,661,029 $ 1,775,390STRATEGIC EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the three months endedMarch 31,
2018 2019 Cash flows from operating activities: Net income $ 9,467 $ 11,500 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred financing costs 66 83 Amortization of investment discount/premium — 127 Depreciation and amortization 5,035 25,983 Deferred income taxes (1,842 ) 10,834 Stock-based compensation 2,688 3,010 Changes in assets and liabilities: Tuition receivable, net (2,249 ) 4,847 Other current assets 931 (1,060 ) Other assets 115 325 Accounts payable and accrued expenses (867 ) (3,537 ) Income taxes payable and income taxes receivable 3,995 6,031 Contract liabilities 1,192 1,702 Other long-term liabilities (1,482 ) (1,187 ) Net cash provided by operating activities 17,049 58,658 Cash flows from investing activities: Purchases of property and equipment (4,233 ) (8,756 ) Purchases of marketable securities — (6,249 ) Maturities of marketable securities — 12,910 Other investments — (374 ) Net cash used in investing activities (4,233 ) (2,469 ) Cash flows from financing activities: Common dividends paid (2,889 ) (11,091 ) Taxes paid for stock awards — (4,443 ) Net cash used in financing activities (2,889 ) (15,534 ) Net increase in cash, cash equivalents, and restricted cash 9,927 40,655 Cash, cash equivalents, and restricted cash — beginning of period 156,448 312,237 Cash, cash equivalents, and restricted cash — end of period $ 166,375 $ 352,892 Noncash transactions: Purchases of property and equipment included in accounts payable $ 2,385 $ 634STRATEGIC EDUCATION, INC. UNAUDITED SEGMENT REPORTING (in thousands)
For the three monthsended March 31,
2018 2019 Revenues: Strayer University $ 115,271 $ 128,058 Capella University — 114,698 Non-Degree Programs 1,198 3,752 Consolidated revenues $ 116,469 $ 246,508 Income (loss) from operations: Strayer University $ 17,992 $ 24,973 Capella University — 24,153 Non-Degree Programs (1,317 ) (807 ) Amortization of intangible assets — (15,417 ) Merger and integration costs (5,347 ) (7,179 ) Consolidated income from operations $ 11,328 $ 25,723
Non-GAAP Financial Measures
In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for income from operations, operating margin, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.
Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of its ongoing operations before the impact of certain items described below. These measures are Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA and Adjusted Diluted Earnings Per Share (EPS). We define Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) amortization expense related to intangible assets associated with the Company’s merger with Capella Education Company, (2) transaction and integration costs associated with the Company’s merger with Capella Education Company, (3) income recognized from the Company’s investments in partnership interests, and (4) discrete tax adjustments utilizing adjusted effective income tax rates of 18.1% and 27.5% for 2018 and 2019, respectively. We define EBITDA as net income before the provision for income taxes, other income, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude the amounts in (2) above, stock-based compensation expense, and adjustments to the value of purchase consideration related to the Company’s acquisition of The New York Code + Design Academy, Inc. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.
STRATEGIC EDUCATION, INC. UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ADJUSTED INCOME FROM OPERATIONS, ADJUSTED NET INCOME, AND ADJUSTED EPS (in thousands, except per share data) For the Three Months Ended March 31, 2018 Non-GAAP AdjustmentsAs Reported(GAAP)
AmortizationofAcquiredAssets(1)
Merger andintegrationCosts(2)
Income frompartnershipinterests(3)
TaxAdjustments(4)
As Adjusted(Non-GAAP)
Income from operations $ 11,328 $ — $ 5,347 $ — $ — $ 16,675 Operating margin 9.7% 14.3% Other income, net 289 — — — — 289 Income before income taxes 11,617 — 5,347 — — 16,964 Provision for income taxes 2,150 — — — 914 3,064 Net income $ 9,467 $ — $ 5,347 $ — $ (914 ) $ 13,900 Earnings per share: Basic $ 0.88 $ 1.29 Diluted $ 0.84 $ 1.23 Weighted average shares outstanding: Basic 10,745 10,745 Diluted 11,311 11,311 For the Three Months Ended March 31, 2019 Non-GAAP AdjustmentsAs Reported(GAAP)
AmortizationofAcquiredAssets(1)
Merger andintegrationCosts(2)
Income frompartnershipinterests(3)
TaxAdjustments(4)
As Adjusted(Non-GAAP)
Income from operations $ 25,723 $ 15,417 $ 7,179 $ — $ — $ 48,319 Operating margin 10.4% 19.6% Other income, net 3,327 — — (1,023 ) — 2,304 Income before income taxes 29,050 15,417 7,179 (1,023 ) — 50,623 Provision for income taxes 17,550 — — — (3,629 ) 13,921 Net income $ 11,500 $ 15,417 $ 7,179 $ (1,023 ) $ 3,629 $ 36,702 Earnings per share: Basic $ 0.53 $ 1.71 Diluted $ 0.52 $ 1.66 Weighted average shares outstanding: Basic 21,499 21,499 Diluted 22,050 22,050 (1) Reflects amortization expense related to intangible assets associated with the Company’s merger with Capella Education Company. (2) Reflects transaction and integration charges associated with the Company's merger with Capella Education Company. (3) Reflects income recognized from the Company's investments in partnership interests. (4) Reflects discrete tax adjustments related to stock-based compensation and other adjustments, utilizing an adjusted effective tax rate of 18.1% and 27.5% for 2018 and 2019, respectively.STRATEGIC EDUCATION, INC. UNAUDITED NON-GAAP SEGMENT REPORTING (in thousands) For the Three Months Ended March 31, 2018 2019 Revenues: Strayer University $ 115,271 $ 128,058 Capella University - 114,698 Non-Degree Programs 1,198 3,752 Consolidated revenues $ 116,469 $ 246,508 Income (loss) from operations: Strayer University $ 17,992 $ 24,973 Capella University - 24,153 Non-Degree Programs (1,317 ) (807 ) Amortization of intangible assets - (15,417 ) Merger and integration costs (5,347 ) (7,179 ) Consolidated income from operations 11,328 25,723 Adjustments to consolidated income from operations: Amortization of intangible assets - 15,417 Merger and integration costs 5,347 7,179 Total adjustments to consolidated income from operations 5,347 22,596 Adjusted income from operations by segment: Strayer University 17,992 24,973 Capella University - 24,153 Non-Degree Programs (1,317 ) (807 ) Total adjusted income from operations by segment $ 16,675 $ 48,319
STRATEGIC EDUCATION, INC. UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA (in thousands)
For the three monthsended March 31,
2018 2019 Net income $ 9,467 $ 11,500 Provision for income taxes 2,150 17,550 Other income (289) (3,327) Depreciation and amortization 5,035 25,983 EBITDA (1) 16,363 51,706 Stock-based compensation 2,688 2,530 Merger and integration costs (2) 5,347 6,781 Fair value adjustments (3) 381 — Adjusted EBITDA (1) $ 24,779 $ 61,017 (1) Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information. (2) Reflects transaction and integration charges associated with the Company's merger with Capella Education Company. Excludes $0.4 million of depreciation and amortization expense and includes $0.5 million of stock-based compensation expense for the three months ended March 31, 2019. (3) Reflects adjustments to the value of purchase consideration related to the Company’s acquisition of The New York Code + Design Academy, Inc. for the three months ended March 31, 2018.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190501005307/en/
Terese WilkeManager, Investor RelationsStrategic Education, Inc.(612) 977-6331terese.wilke@strategiced.com
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