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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. (SEI) (NASDAQ: STRA) today announced financial results for the period ended December 31, 2019.
Karl McDonnell, Chief Executive Officer of SEI said, “We are very pleased with the organization’s execution to deliver record results in 2019, our first full year as a combined company since closing the merger with Capella Education Company. This strong performance provides us with a solid foundation and momentum to drive growth in 2020 as 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 December 31
Year Ended December 31
Strayer University Segment Highlights
Capella University Segment Highlights
Non-Degree Programs Segment Highlights
BALANCE SHEET AND CASH FLOW
At December 31, 2019, Strategic Education, Inc. had cash, cash equivalents, and marketable securities of $491.2 million, and no debt. Cash provided by operations in 2019 was $202.1 million compared to cash provided by operations of $46.9 million in 2018. Capital expenditures for 2019 were $38.7 million compared to $27.5 million in 2018. Capital expenditures for 2020 are expected to be between $40 million and $45 million.
For the fourth quarter of 2019, consolidated bad debt expense as a percentage of revenue was 5.0%, compared to 6.1% of revenue for the same period in 2018.
COMMON STOCK CASH DIVIDEND
SEI announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on March 16, 2020 to shareholders of record as of March 9, 2020.
CONFERENCE CALL WITH MANAGEMENT
SEI will host a conference call to discuss its fourth quarter 2019 earnings 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 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, and Hackbright 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 Ended December 31,
For the Twelve Months Ended December 31,
2018
2019
2018
2019
Revenues
$
242,103
$
263,772
$
634,185
$
997,137
Costs and expenses:
Instructional and support costs
130,712
133,323
371,542
530,604
General and administration
68,541
67,595
194,035
272,411
Amortization of intangible assets
15,416
15,416
25,694
61,667
Merger and integration costs
7,954
10,225
45,745
21,923
Fair value adjustments and impairment of intangible assets
605
—
19,909
—
Total costs and expenses
223,228
226,559
656,925
886,605
Income (loss) from operations
18,875
37,213
(22,740
)
110,532
Other income
1,755
2,497
3,601
13,192
Income (loss) before income taxes
20,630
39,710
(19,139
)
123,724
Provision (benefit) for income taxes
(1,825
)
11,173
(3,468
)
42,586
Net income (loss)
$
22,455
$
28,537
$
(15,671
)
$
81,138
Earnings (loss) per share:
Basic
$
1.05
$
1.31
$
(1.03
)
$
3.73
Diluted
$
1.02
$
1.29
$
(1.03
)
$
3.67
Weighted average shares outstanding:
Basic
21,335
21,817
15,190
21,725
Diluted
22,033
22,101
15,190
22,097
Cash dividend declared per share
$
0.50
$
0.60
$
1.50
$
2.10
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31, 2018
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
311,732
$
419,693
Marketable securities
37,121
34,874
Tuition receivable, net
55,694
51,523
Other current assets
15,814
18,004
Total current assets
420,361
524,094
Property and equipment, net
122,677
117,029
Right-of-use lease assets
—
84,778
Marketable securities, non-current
37,678
36,633
Intangible assets, net
328,344
273,011
Goodwill
732,540
732,075
Other assets
19,429
21,788
Total assets
$
1,661,029
$
1,789,408
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
85,979
$
90,828
Income taxes payable
419
1,352
Contract liabilities
38,733
39,284
Lease liabilities
—
25,284
Total current liabilities
125,131
156,748
Deferred income tax liabilities
59,358
47,942
Lease liabilities, non-current
—
80,557
Other long-term liabilities
51,316
41,451
Total liabilities
235,805
326,698
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,964,809 shares issued and outstanding at December 31, 2018 and 2019, respectively
217
220
Additional paid-in capital
1,306,653
1,309,438
Accumulated other comprehensive income
32
233
Retained earnings
118,322
152,819
Total stockholders’ equity
1,425,224
1,462,710
Total liabilities and stockholders’ equity
$
1,661,029
$
1,789,408
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year Ended December 31,
2018
2019
Cash flows from operating activities:
Net income (loss)
$
(15,671
)
$
81,138
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs
292
333
Amortization of investment discount/premium
298
296
Depreciation and amortization
54,543
104,861
Deferred income taxes
(16,322
)
(8,037
)
Stock-based compensation
15,532
12,160
Fair value adjustments and impairment of intangible assets
19,909
—
Impairment of right-of-use lease assets
—
6,046
Changes in assets and liabilities:
Tuition receivable, net
7,880
1,770
Other current assets
3,768
(1,589
)
Other assets
(135
)
(540
)
Accounts payable and accrued expenses
1,140
245
Income taxes payable
(516
)
1,198
Contract liabilities
(19,329
)
7,716
Other long-term liabilities
(4,522
)
(3,451
)
Net cash provided by operating activities
46,867
202,146
Cash flows from investing activities:
Net cash acquired in acquisition
167,859
—
Purchases of property and equipment
(27,547
)
(38,689
)
Purchases of marketable securities
(25,304
)
(40,481
)
Maturities of marketable securities
16,367
43,762
Other investments
(1,238
)
(2,658
)
Net cash provided by (used in) investing activities
130,137
(38,066
)
Cash flows from financing activities:
Common dividends paid
(27,842
)
(46,625
)
Net payments for stock awards
7,789
(9,195
)
Payment of deferred financing costs
(1,162
)
—
Net cash used in financing activities
(21,215
)
(55,820
)
Net increase in cash, cash equivalents, and restricted cash
155,789
108,260
Cash, cash equivalents, and restricted cash — beginning of period
156,448
312,237
Cash, cash equivalents, and restricted cash — end of period
$
312,237
$
420,497
Noncash transactions:
Purchases of property and equipment included in accounts payable
$
1,029
$
3,406
STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT REPORTING
(in thousands)
For the Three Months Ended December 31,
For the Twelve Months Ended December 31,
2018
2019
2018
2019
Revenues:
Strayer University
$
127,461
$
142,226
$
471,104
$
527,032
Capella University
111,126
117,902
154,918
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Consolidated revenues
$
242,103
$
263,772
$
634,185
$
997,137
Income (loss) from operations:
Strayer University
$
23,974
$
37,864
$
68,188
$
106,132
Capella University
20,666
25,063
6,340
88,981
Non-Degree Programs
(1,790
)
(73
)
(5,920
)
(991
)
Amortization of intangible assets
(15,416
)
(15,416
)
(25,694
)
(61,667
)
Merger and integration costs
(7,954
)
(10,225
)
(45,745
)
(21,923
)
Fair value adjustments and impairment of intangible assets
(605
)
—
(19,909
)
—
Consolidated income (loss) from operations
$
18,875
$
37,213
$
(22,740
)
$
110,532
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, 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 the Company’s ongoing operations before the impact of certain items described below. These measures are Adjusted Revenue, 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 Revenue, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company’s merger with Capella Education Company, (2) amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company, (3) transaction and integration costs associated with the Company’s merger with Capella Education Company, (4) goodwill and intangible asset impairment charges related to the Company’s acquisition of The New York Code + Design Academy, and adjustments to the Company’s reserve for leases on facilities no longer in use, (5) income recognized from the Company’s investments in partnership interests and other investments, and (6) discrete tax adjustments utilizing adjusted effective income tax rates of 27.1% and 28.0% for the three months ended December 31, 2018 and 2019, respectively, and adjusted effective income tax rates of 25.6% and 27.8% for the twelve months ended December 31, 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 (1), (3) and (4) 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. 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 December 31, 2018
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration costs(3)
Fair value adjustments and impairment of intangible assets(4)
Income from other investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
242,103
$
2,534
$
—
$
—
$
—
$
—
$
—
$
244,637
Income from operations
$
18,875
$
2,534
$
15,416
$
7,954
$
605
$
—
$
—
$
45,384
Operating margin
7.8
%
18.6
%
Net income
$
22,455
$
2,534
$
15,416
$
7,954
$
605
$
—
$
(14,600
)
$
34,364
Earnings per share:
Diluted
$
1.02
$
1.56
Weighted average shares outstanding:
Diluted
22,033
22,033
For the Three Months Ended December 31, 2019
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability adjustment (1)
Amortization of
intangible assets(2)
Merger and integration costs(3)
Fair value adjustments and impairment of intangible assets(4)
Income from other investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
263,772
$
—
$
—
$
—
$
—
$
—
$
—
$
263,772
Income from operations
$
37,213
$
—
$
15,416
$
10,225
$
—
$
—
$
—
$
62,854
Operating margin
14.1
%
23.8
%
Net income
$
28,537
$
—
$
15,416
$
10,225
$
—
$
(112
)
$
(7,094
)
$
46,972
Earnings per share:
Diluted
$
1.29
$
2.13
Weighted average shares outstanding:
Diluted
22,101
22,101
For the Twelve Months Ended December 31, 2018
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration costs(3)
Fair value adjustments and impairment of intangible assets(4)
Income from other investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
634,185
$
28,748
$
—
$
—
$
—
$
—
$
—
$
662,933
Income from operations
$
(22,740
)
$
28,748
$
25,694
$
45,745
$
19,909
$
—
$
—
$
97,356
Operating margin
-3.6
%
14.7
%
Net income
$
(15,671
)
$
28,748
$
25,694
$
45,745
$
19,909
$
—
$
(29,348
)
$
75,077
Earnings per share:
Diluted
$
(1.03
)
$
4.75
Weighted average shares outstanding:
Diluted
15,190
15,801
For the Twelve Months Ended December 31, 2019
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration costs(3)
Fair value adjustments and impairment of intangible assets(4)
Income from other investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
997,137
$
—
$
—
$
—
$
—
$
—
$
—
$
997,137
Income from operations
$
110,532
$
—
$
61,667
$
21,923
$
—
$
—
$
—
$
194,122
Operating margin
11.1
%
19.5
%
Net income
$
81,138
$
—
$
61,667
$
21,923
$
—
$
(3,446
)
$
(14,001
)
$
147,281
Earnings per share:
Diluted
$
3.67
$
6.67
Weighted average shares outstanding:
Diluted
22,097
22,097
(1)
Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company.
(2)
Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with Capella Education Company.
(3)
Reflects transaction and integration charges associated with the Company's merger with Capella Education Company.
(4)
Reflects charges for the impairment of goodwill and intangible assets of $0.3 million and $19.6 million related to the Company’s acquisition of The New York Code + Design Academy during the three and twelve months ended December 31, 2018, respectively, as well as adjustments to the Company’s reserve for leases on facilities no longer in use of $0.3 million during the three and twelve months ended December 31, 2018.
(5)
Reflects income recognized from the Company's investments in partnership interests and other investments.
(6)
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 27.1% and 28.0% for the three months ended December 31, 2018 and 2019, respectively, and adjusted effective income tax rates of 25.6% and 27.8% for the twelve months ended December 31, 2018 and 2019, respectively.
STRATEGIC EDUCATION, INC.UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2018
2019
2018
2019
Revenues:
Strayer University
$
127,461
$
142,226
$
471,104
$
527,032
Capella University
111,126
117,902
154,918
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Consolidated revenues
242,103
263,772
634,185
997,137
Adjustments to consolidated revenues:
Strayer University
—
—
—
—
Capella University
2,534
—
28,748
—
Non-Degree Programs
—
—
—
—
Total adjustments to consolidated revenues
2,534
—
28,748
—
Adjusted revenues by segment:
Strayer University
127,461
142,226
471,104
527,032
Capella University
113,660
117,902
183,666
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Adjusted consolidated revenues
$
244,637
$
263,772
$
662,933
$
997,137
Income (loss) from operations:
Strayer University
$
23,974
$
37,864
$
68,188
$
106,132
Capella University
20,666
25,063
6,340
88,981
Non-Degree Programs
(1,790)
(73)
(5,920)
(991)
Amortization of intangible assets
(15,416)
(15,416)
(25,694)
(61,667)
Merger and integration costs
(7,954)
(10,225)
(45,745)
(21,923)
Fair value adjustments and impairment of intangible assets
(605)
—
(19,909)
—
Consolidated income (loss) from operations
18,875
37,213
(22,740)
110,532
Adjustments to consolidated income (loss) from operations:
Contract liabilities adjustment
2,534
—
28,748
—
Amortization of intangible assets
15,416
15,416
25,694
61,667
Merger and integration costs
7,954
10,225
45,745
21,923
Fair value adjustments and impairment of intangible assets
605
—
19,909
—
Total adjustments to consolidated income (loss) from operations
26,509
25,641
120,096
83,590
Adjusted income (loss) from operations by segment:
Strayer University
23,974
37,864
68,188
106,132
Capella University
23,200
25,063
35,088
88,981
Non-Degree Programs
(1,790)
(73)
(5,920)
(991)
Total adjusted income (loss) from operations
$
45,384
$
62,854
$
97,356
$
194,122
Operating margin
Strayer University
18.8%
26.6%
14.5%
20.1%
Capella University
18.6%
21.3%
4.1%
19.5%
Non-Degree Programs
(50.9%)
(2.0%)
(72.5%)
(6.7%)
Adjusted operating margin
Strayer University
18.8%
26.6%
14.5%
20.1%
Capella University
20.4%
21.3%
19.1%
19.5%
Non-Degree Programs
(50.9%)
(2.0%)
(72.5%)
(6.7%)
STRATEGIC EDUCATION, INC.UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2018
2019
2018
2019
Net income (loss)
$
22,455
$
28,537
$
(15,671)
$
81,138
Provision (benefit) for income taxes
(1,825)
11,173
(3,468)
42,586
Other income
(1,755)
(2,497)
(3,601)
(13,192)
Depreciation and amortization
25,436
25,999
54,543
104,861
EBITDA (1)
44,311
63,212
31,803
215,393
Stock-based compensation
3,781
3,085
13,291
11,790
Merger and integration costs (2)
7,954
10,225
45,011
21,525
Fair value adjustments and impairment of intangible assets (3)
605
—
20,798
—
Contract liability adjustment (4)
2,534
—
28,748
—
Adjusted EBITDA (1)
$
59,185
$
76,522
$
139,651
$
248,708
(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 $0.7 million and $0.4 million of depreciation and amortization expense for the twelve months ended December 31, 2018 and 2019, respectively, and includes $2.2 million and $0.4 million of stock-based compensation expense for the twelve months ended December 31, 2018 and 2019, respectively.
(3)
Reflects adjustments to the value of purchase consideration, charges for the impairment of intangible assets related to the Company's acquisition of The New York Code + Design Academy, and adjustments to the Company's reserve for leases on facilities no longer in use.
(4)
Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200228005087/en/
Terese Wilke Manager, Investor Relations Strategic Education, Inc. (612) 977-6331 terese.wilke@strategiced.com
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