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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.27 | 0.23% | 118.14 | 117.59 | 118.51 | 118.90 | 115.68 | 117.91 | 102,287 | 01:00:00 |
Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended March 31, 2021.
“We are pleased with the organization’s ongoing commitment to the success of our students and to our mission to enable economic mobility,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “As we continue to navigate through the challenges presented by the COVID-19 pandemic, we are encouraged by continued strength in our Australia/New Zealand and Alternative Learning segments.”
STRATEGIC EDUCATION CONSOLIDATED RESULTS
[Note: Strategic Education’s financial results for any periods ended prior to November 3, 2020 do not include the financial results of the Australia/New Zealand acquisition and are therefore not directly comparable.]
Three Months Ended March 31
U.S. Higher Education Segment Highlights
Alternative Learning Segment Highlights
Australia/New Zealand Segment Highlights
BALANCE SHEET AND CASH FLOW
At March 31, 2021, Strategic Education had cash, cash equivalents, and marketable securities of $274.0 million, and $141.8 million outstanding under its revolving credit facility. For the first three months of 2021, cash provided by operations was $78.8 million compared to $68.7 million for the same period in 2020. Capital expenditures for the first three months of 2021 were $12.7 million compared to $14.3 million for the same period in 2020. Capital expenditures for 2021 are expected to be $50 million to $55 million.
For the first quarter of 2021, consolidated bad debt expense as a percentage of revenue and adjusted revenue was 3.7%, compared to 4.2% of revenue for the same period in 2020. Net tuition receivable as of March 31, 2021 includes additional reserves to account for projected deterioration in collections performance due to the pandemic.
COMMON STOCK CASH DIVIDEND
Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on June 7, 2021 to shareholders of record as of May 28, 2021.
CONFERENCE CALL WITH MANAGEMENT
Strategic Education will host a conference call to discuss its first quarter 2021 results at 10:00 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. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section prior to the start time of the call. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section.
About Strategic Education, Inc.
Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We serve working adult students globally through our core focus areas: 1) U.S. Higher Education, including Strayer University and Capella University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs including the Jack Welch Management Institute at Strayer University, and non-degree web and mobile application development courses through Hackbright Academy and Strayer University’s DevMountain; 2) Alternative Learning, encompassing Employer Solutions, developing and maintaining relationships with large employers; Workforce Edge, a full service, online employee education management platform; Sophia Learning, self-paced general education courses that are ACE-recommended for college credit; and Digital Enablement Partnerships, helping advance capabilities in course development, online delivery, and student support; and 3) Australia/New Zealand, comprised of Torrens University, Think Education, and Media Design School that collectively offer certificate and degree programs in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce 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 and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; the impact of the current COVID-19 pandemic on Strategic Education’s business and results; and future events and expectations. The statements are based on Strategic Education’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 Strategic Education’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 Strategic Education on the date they are made, and Strategic Education 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 ended March 31,
2020
2021
Revenues
$
265,302
$
290,336
Costs and expenses:
Instructional and support costs
132,936
152,805
General and administration
69,226
86,845
Amortization of intangible assets
15,417
19,407
Merger and integration costs
3,764
1,012
Restructuring costs
—
18,267
Total costs and expenses
221,343
278,336
Income from operations
43,959
12,000
Other income
2,123
2,167
Income before income taxes
46,082
14,167
Provision for income taxes
10,843
4,590
Net income
$
35,239
$
9,577
Earnings per share:
Basic
$
1.62
$
0.40
Diluted
$
1.60
$
0.40
Weighted average shares outstanding:
Basic
21,810
23,974
Diluted
22,071
24,153
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31, 2020
March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
187,509
$
238,290
Marketable securities
7,557
6,455
Tuition receivable, net
50,169
63,469
Income taxes receivable
1,429
—
Other current assets
39,458
44,714
Total current assets
286,122
352,928
Property and equipment, net
158,854
164,277
Right-of-use lease assets
120,687
142,998
Marketable securities, non-current
30,270
29,280
Intangible assets, net
326,420
308,190
Goodwill
1,318,526
1,311,487
Other assets
54,928
60,282
Total assets
$
2,295,807
$
2,369,442
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
104,742
$
97,448
Income taxes payable
—
11,350
Contract liabilities
60,501
108,073
Lease liabilities
34,809
32,886
Total current liabilities
200,052
249,757
Long-term debt
141,823
141,798
Deferred income tax liabilities
53,407
44,264
Lease liabilities, non-current
106,151
152,981
Other long-term liabilities
46,055
44,717
Total liabilities
547,488
633,517
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 24,418,939 and 24,651,205 shares issued and outstanding at December 31, 2020 and March 31, 2021, respectively
244
247
Additional paid-in capital
1,519,549
1,521,145
Accumulated other comprehensive income
48,880
40,064
Retained earnings
179,646
174,469
Total stockholders’ equity
1,748,319
1,735,925
Total liabilities and stockholders’ equity
$
2,295,807
$
2,369,442
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the three months ended March 31,
2020
2021
Cash flows from operating activities:
Net income
$
35,239
$
9,577
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs
83
138
Amortization of investment discount/premium
65
24
Depreciation and amortization
25,733
34,571
Deferred income taxes
(2,108)
(8,898)
Stock-based compensation
3,025
3,900
Impairment of right-of-use lease assets
453
14,388
Changes in assets and liabilities:
Tuition receivable, net
3,553
(13,417)
Other assets
(3,090)
(9,897)
Accounts payable and accrued expenses
(7,028)
(10,276)
Income taxes payable and income taxes receivable
12,314
12,777
Contract liabilities
1,901
46,872
Other long-term liabilities
(1,445)
(978)
Net cash provided by operating activities
68,695
78,781
Cash flows from investing activities:
Purchases of property and equipment
(14,258)
(12,650)
Purchases of marketable securities
(1,863)
—
Proceeds from marketable securities
9,905
1,930
Other investments
(118)
(72)
Net cash used in investing activities
(6,334)
(10,792)
Cash flows from financing activities:
Common dividends paid
(13,327)
(14,778)
Net payments for stock awards
(25,089)
(2,326)
Repurchase of common stock
(247)
—
Net cash used in financing activities
(38,663)
(17,104)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
—
(866)
Net increase in cash, cash equivalents, and restricted cash
23,698
50,019
Cash, cash equivalents, and restricted cash — beginning of period
420,497
202,020
Cash, cash equivalents, and restricted cash — end of period
$
444,195
$
252,039
STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT REPORTING
(in thousands)
For the three months ended March 31,
2020
2021
Revenues:
U.S. Higher Education
$
255,513
$
226,547
Australia/New Zealand
—
51,265
Alternative Learning
9,789
12,524
Consolidated revenues
$
265,302
$
290,336
Income (loss) from operations:
U.S. Higher Education
$
56,743
$
47,754
Australia/New Zealand
—
(2,949)
Alternative Learning
6,397
5,881
Amortization of intangible assets
(15,417)
(19,407)
Merger and integration costs
(3,764)
(1,012)
Restructuring costs
—
(18,267)
Consolidated income from operations
$
43,959
$
12,000
Non-GAAP Financial Measures
In our press release and schedules, 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 revenue, total costs and expenses, income from operations, operating margin, income before income taxes, 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 the Company’s ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company’s results of operation period-over-period. These measures are Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA and Adjusted Diluted Earnings Per Share (EPS). We define Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, and amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (2) transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (3) severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring, (4) income recognized from the Company’s investments in partnership interests and other investments, (5) discrete tax adjustments utilizing adjusted effective income tax rates of 28.5% and 29.2% for the three months ended March 31, 2020 and 2021, respectively, and (6) foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate. We define EBITDA as net income before other income, the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, a purchase accounting adjustment to record acquired contract liabilities at fair value, and the amounts in (2), (3) and (6) above. 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 REVENUE, ADJUSTED TOTAL COSTS AND EXPENSES, ADJUSTED INCOME FROM
OPERATIONS, ADJUSTED INCOME BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED
EPS
(in thousands, except per share data)
For the three months ended March 31, 2020 Non-GAAP Adjustments
As Reported (GAAP)
Purchase accounting adjustments(1)
Merger and integration costs(2)
Restructuring costs(3)
Income from other investments(4)
Tax adjustments(5)
Foreign currency adjustments(6)
As Adjusted (Non-GAAP)
Revenues
$
265,302
$
—
$
—
$
—
$
—
$
—
$
—
$
265,302
Total costs and expenses
$
221,343
$
(15,417)
$
(3,764)
$
—
$
—
$
—
$
—
$
202,162
Income from operations
$
43,959
$
15,417
$
3,764
$
—
$
—
$
—
$
—
$
63,140
Operating margin
16.6%
23.8%
Income before income taxes
$
46,082
$
15,417
$
3,764
$
—
$
(254)
$
—
$
—
$
65,009
Net income
$
35,239
$
15,417
$
3,764
$
—
$
(254)
$
(7,685)
$
—
$
46,481
Earnings per share:
Diluted
$
1.60
$
2.11
Weighted average shares outstanding:
Diluted
22,071
22,071
For the three months ended March 31, 2021 Non-GAAP Adjustments
As Reported (GAAP)
Purchase accounting adjustments(1)
Merger and integration costs(2)
Restructuring costs(3)
Income from other investments(4)
Tax adjustments(5)
Foreign currency adjustments(6)
As Adjusted (Non-GAAP)
Revenues
$
290,336
$
2,223
$
—
$
—
$
—
$
—
$
(2,019)
$
290,540
Total costs and expenses
$
278,336
$
(19,407)
$
(1,012)
$
(18,267)
$
—
$
—
$
(2,041)
$
237,609
Income from operations
$
12,000
$
21,630
$
1,012
$
18,267
$
—
$
—
$
22
$
52,931
Operating margin
4.1%
18.2%
Income before income taxes
$
14,167
$
21,630
$
1,012
$
18,267
$
(2,783)
$
—
$
22
$
52,315
Net income
$
9,577
$
21,630
$
1,012
$
18,267
$
(2,783)
$
(10,688)
$
22
$
37,037
Earnings per share:
Diluted
$
0.40
$
1.53
Weighted average shares outstanding:
Diluted
24,153
24,153
(1)
Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand, and amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.
(2)Reflects transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company's acquisition of Torrens University and associated assets in Australia and New Zealand.
(3)Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring.
(4)Reflects income recognized from the Company's investments in partnership interests and other investments.
(5)Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective income tax rates of 28.5% and 29.2% for the three months ended March 31, 2020 and 2021, respectively.
(6)Reflects foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.
STRATEGIC EDUCATION, INC.
UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
For the three months ended
March 31,
2020
2021
Revenues:
U.S. Higher Education
$
255,513
$
226,547
Australia/New Zealand
—
51,265
Alternative Learning
9,789
12,524
Consolidated revenues
265,302
290,336
Adjustments to consolidated revenues:
U.S. Higher Education
—
—
Australia/New Zealand1
—
204
Alternative Learning
—
—
Total adjustments to consolidated revenues
—
204
Adjusted revenues by segment:
U.S. Higher Education
255,513
226,547
Australia/New Zealand
—
51,469
Alternative Learning
9,789
12,524
Adjusted consolidated revenues
$
265,302
$
290,540
Income (loss) from operations:
U.S. Higher Education
$
56,743
$
47,754
Australia/New Zealand
—
(2,949)
Alternative Learning
6,397
5,881
Amortization of intangible assets
(15,417)
(19,407)
Merger and integration costs
(3,764)
(1,012)
Restructuring costs
—
(18,267)
Consolidated income from operations
43,959
12,000
Adjustments to consolidated income from operations:
Australia/New Zealand1
—
2,245
Amortization of intangible assets
15,417
19,407
Merger and integration costs
3,764
1,012
Restructuring costs
—
18,267
Total adjustments to consolidated income from operations
19,181
40,931
Adjusted income (loss) from operations by segment:
U.S. Higher Education
56,743
47,754
Australia/New Zealand
—
(704)
Alternative Learning
6,397
5,881
Total adjusted income from operations
$
63,140
$
52,931
____________________1Adjustments to the Australia/New Zealand segment revenue and loss from operations include a purchase accounting adjustment of $2.2 million to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand, and foreign currency exchange impact of ($2.0) million related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
For the three months ended
March 31,
2020
2021
Net income
$
35,239
$
9,577
Provision for income taxes
10,843
4,590
Other income
(2,123)
(2,167)
Depreciation and amortization
25,733
34,571
EBITDA (1)
69,692
46,571
Stock-based compensation
3,025
3,900
Merger and integration costs (2)
3,764
1,012
Restructuring costs (3)
—
16,231
Cloud computing amortization (4)
—
641
Contract liability adjustment (5)
—
2,223
Foreign currency exchange impact (6)
—
22
Adjusted EBITDA (1)
$
76,481
$
70,600
(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 and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.
(3)Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring. Excludes $2.0 million of depreciation and amortization expense for the three months ended March 31, 2021.
(4)Reflects amortization expense associated with deferred implementation costs incurred in cloud computing arrangements.
(5)Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand.
(6)Reflects foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005295/en/
Terese Wilke Manager, Investor Relations Strategic Education, Inc. (612) 977-6331 terese.wilke@strategiced.com
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