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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 September 30, 2019.
Karl McDonnell, Chief Executive Officer of SEI said, “Continued strong performance at both Strayer University and Capella University during the third quarter positions us well as we approach the end of 2019. Merger synergies are on track, and our significant liquidity position provides us with a solid foundation to drive growth 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 September 30
Strayer University Segment Highlights
Capella University Segment Highlights
Non-Degree Programs Segment Highlights
BALANCE SHEET AND CASH FLOW
At September 30, 2019, Strategic Education, Inc. had cash, cash equivalents, and marketable securities of $457.1 million, and no debt. For the first nine months of 2019, cash provided by operations was $141.4 million compared to cash used in operations of $14.6 million for the same period in 2018. Capital expenditures for the first nine months of 2019 were $27.8 million compared to $16.0 million for the same period in 2018. Capital expenditures for 2019 are expected to be between $40 million and $45 million.
For the third quarter of 2019, consolidated bad debt expense as a percentage of revenue was 5.0%, compared to 6.1%, or 5.3% of adjusted revenue, for the same period in 2018.
COMMON STOCK CASH DIVIDEND
SEI announced today that its Board of Directors has increased its regular annual dividend by 20% to $2.40 per share, and also declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on December 9, 2019 to shareholders of record as of November 25, 2019.
STRATEGIC EDUCATION, INC. INVESTOR AND ANALYST DAY
SEI is holding its first Investor and Analyst Day today, Thursday, November 7, 2019, in Washington, D.C. beginning at 8:00 a.m. ET. The Investor and Analyst Day presentation will be available via webcast. To access the live webcast of the Investor and Analyst Day presentation, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time 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 webcast. Following the webcast, the webcast and presentation 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 ended September 30,
For the nine months ended September 30,
2018
2019
2018
2019
Revenues
$
160,945
$
241,747
$
392,082
$
733,365
Costs and expenses:
Instructional and support costs
103,079
132,527
240,830
397,281
General and administration
61,976
72,303
125,494
204,816
Amortization of intangible assets
10,278
15,417
10,278
46,251
Merger and integration costs
29,620
1,500
37,791
11,698
Impairment of intangible assets
13,119
—
19,304
—
Total costs and expenses
218,072
221,747
433,697
660,046
Income (loss) from operations
(57,127
)
20,000
(41,615
)
73,319
Other income
1,110
3,243
1,846
10,695
Income (loss) before income taxes
(56,017
)
23,243
(39,769
)
84,014
Provision (benefit) for income taxes
(3,236
)
6,551
(1,643
)
31,413
Net income (loss)
$
(52,781
)
$
16,692
$
(38,126
)
$
52,601
Earnings (loss) per share:
Basic
$
(2.97
)
$
0.77
$
(2.90
)
$
2.42
Diluted
$
(2.97
)
$
0.75
$
(2.90
)
$
2.38
Weighted average shares outstanding:
Basic
17,799
21,806
13,141
21,694
Diluted
17,799
22,129
13,141
22,096
Cash dividend declared per share
$
0.50
$
0.50
$
1.00
$
1.50
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31, 2018
September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
311,732
$
397,094
Marketable securities
37,121
33,455
Tuition receivable, net
55,694
50,964
Income taxes receivable
—
6,970
Other current assets
15,814
17,130
Total current assets
420,361
505,613
Property and equipment, net
122,677
116,489
Right-of-use lease assets
—
93,208
Marketable securities, non-current
37,678
26,532
Intangible assets, net
328,344
286,844
Goodwill
732,540
732,075
Other assets
19,429
20,435
Total assets
$
1,661,029
$
1,781,196
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
85,979
$
86,092
Income taxes payable
419
—
Contract liabilities
38,733
45,571
Lease liabilities
—
26,167
Total current liabilities
125,131
157,830
Deferred income tax liabilities
59,358
57,016
Lease liabilities, non-current
—
83,067
Other long-term liabilities
51,316
38,624
Total liabilities
235,805
336,537
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,964,505 shares issued and outstanding at December 31, 2018 and September 30, 2019, respectively
217
220
Additional paid-in capital
1,306,653
1,306,353
Accumulated other comprehensive income
32
447
Retained earnings
118,322
137,639
Total stockholders’ equity
1,425,224
1,444,659
Total liabilities and stockholders’ equity
$
1,661,029
$
1,781,196
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the nine months ended September 30,
2018
2019
Cash flows from operating activities:
Net income (loss)
$
(38,126
)
$
52,601
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs
209
250
Amortization of investment discount/premium
132
286
Depreciation and amortization
29,107
78,862
Deferred income taxes
(4,443
)
971
Stock-based compensation
11,781
9,075
Impairment of intangible assets
19,304
—
Changes in assets and liabilities:
Tuition receivable, net
8,227
2,258
Other current assets
2,223
(921
)
Other assets
(581
)
(727
)
Accounts payable and accrued expenses
(8,949
)
(2,022
)
Income taxes payable and income taxes receivable
(7,868
)
(7,125
)
Contract liabilities
(21,946
)
10,311
Other long-term liabilities
(3,717
)
(2,412
)
Net cash provided by (used in) operating activities
(14,647
)
141,407
Cash flows from investing activities:
Net cash acquired in acquisition
168,387
—
Purchases of property and equipment
(16,028
)
(27,769
)
Purchases of marketable securities
(11,346
)
(17,769
)
Maturities of marketable securities
5,842
32,860
Other investments
(167
)
(878
)
Net cash provided by (used in) investing activities
146,688
(13,556
)
Cash flows from financing activities:
Common dividends paid
(16,802
)
(33,297
)
Net payments for stock awards
6,372
(9,195
)
Payment of deferred financing costs
(1,162
)
—
Net cash used in financing activities
(11,592
)
(42,492
)
Net increase in cash, cash equivalents, and restricted cash
120,449
85,359
Cash, cash equivalents, and restricted cash — beginning of period
156,448
312,237
Cash, cash equivalents, and restricted cash — end of period
$
276,897
$
397,596
Noncash transactions:
Purchases of property and equipment included in accounts payable
$
2,975
$
1,821
STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT REPORTING
(in thousands)
For the three months ended September 30,
For the nine months ended September 30,
2018
2019
2018
2019
Revenues:
Strayer University
$
114,471
$
127,837
$
343,644
$
384,806
Capella University
43,792
110,549
43,792
337,418
Non-Degree Programs
2,682
3,361
4,646
11,141
Consolidated revenues
$
160,945
$
241,747
$
392,082
$
733,365
Income (loss) from operations:
Strayer University
$
11,904
$
18,689
$
44,215
$
68,268
Capella University
(14,326
)
18,643
(14,326
)
63,918
Non-Degree Programs
(1,688
)
(415
)
(4,131
)
(918
)
Amortization of intangible assets
(10,278
)
(15,417
)
(10,278
)
(46,251
)
Merger and integration costs
(29,620
)
(1,500
)
(37,791
)
(11,698
)
Impairment of intangible assets
(13,119
)
—
(19,304
)
—
Consolidated income (loss) from operations
$
(57,127
)
$
20,000
$
(41,615
)
$
73,319
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 and Design Academy, (5) income recognized from the Company’s investments in partnership interests and other investments, and (6) discrete tax adjustments utilizing an adjusted effective income tax rate of 27.1% and 28.0% 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 (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 and 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 September 30, 2018
Non-GAAP Adjustments
As Reported (GAAP)
Contract liability adjustment (1)
Amortization of intangible assets(2)
Merger and integration costs(3)
Impairment of intangible assets(4)
Income from other investments (5)
Tax adjustments (6)
As Adjusted
(Non- GAAP)
Revenues
$
160,945
$
26,214
$
—
$
—
$
—
$
—
$
—
$
187,159
Costs and expenses:
Instructional and support costs
103,079
—
—
—
—
—
—
103,079
General and administration
61,976
—
—
—
—
—
—
61,976
Amortization of intangible assets
10,278
—
(10,278)
—
—
—
—
—
Merger and integration costs
29,620
—
—
(29,620)
—
—
—
—
Impairment of intangible assets
13,119
—
—
—
(13,119)
—
—
—
Total costs and expenses
218,072
—
(10,278)
(29,620)
(13,119)
—
—
165,055
Income (loss) from operations
(57,127)
26,214
10,278
29,620
13,119
—
—
22,104
Operating margin
(35.5%)
11.8%
Other income, net
1,110
—
—
—
—
—
1,110
Income (loss) before income taxes
(56,017)
26,214
10,278
29,620
13,119
—
—
23,214
Provision (benefit) for income taxes
(3,236)
—
—
—
—
—
9,527
6,291
Net income (loss)
$
(52,781)
$
26,214
$
10,278
$
29,620
$
13,119
$
—
$
(9,527)
$
16,923
Earnings (loss) per share:
Basic
$
(2.97)
$
0.95
Diluted
$
(2.97)
$
0.92
Weighted average shares outstanding:
Basic
17,799
17,799
Diluted
17,799
18,480
For the three months ended September 30, 2019
Non-GAAP Adjustments
As Reported (GAAP)
Contract liability adjustment (1)
Amortization of intangible assets(2)
Merger and integration costs(3)
Impairment of intangible assets(4)
Income from other investments (5)
Tax adjustments (6)
As Adjusted
(Non- GAAP)
Revenues
$
241,747
$
—
$
—
$
—
$
—
$
—
$
—
$
241,747
Costs and expenses:
Instructional and support costs
132,527
—
—
—
—
—
—
132,527
General and administration
72,303
—
—
—
—
—
—
72,303
Amortization of intangible assets
15,417
—
(15,417)
—
—
—
—
—
Merger and integration costs
1,500
—
—
(1,500)
—
—
—
—
Impairment of intangible assets
—
—
—
—
—
—
—
—
Total costs and expenses
221,747
—
(15,417)
(1,500)
—
—
—
204,830
Income from operations
20,000
—
15,417
1,500
—
—
—
36,917
Operating margin
8.3%
15.3%
Other income, net
3,243
—
—
—
—
(706)
—
2,537
Income before income taxes
23,243
—
15,417
1,500
—
(706)
—
39,454
Provision for income taxes
6,551
—
—
—
—
—
4,496
11,047
Net income
$
16,692
$
—
$
15,417
$
1,500
$
—
$
(706)
$
(4,496)
$
28,407
Earnings per share:
Basic
$
0.77
$
1.30
Diluted
$
0.75
$
1.28
Weighted average shares outstanding:
Basic
21,806
21,806
Diluted
22,129
22,129
(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 impairment of goodwill and intangible assets related to the Company’s acquisition of the New York Code and Design Academy.
(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 tax rates of 27.1% and 28.0% for the three months ended September 30, 2018 and 2019, respectively.
STRATEGIC EDUCATION, INC.
UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2018
2019
2018
2019
Revenues:
Strayer University
$
114,471
$
127,837
$
343,644
$
384,806
Capella University
43,792
110,549
43,792
337,418
Non-Degree Programs
2,682
3,361
4,646
11,141
Consolidated revenues
160,945
241,747
392,082
733,365
Adjustments to consolidated revenues:
Strayer University
—
—
—
—
Capella University
26,214
—
26,214
—
Non-Degree Programs
—
—
—
—
Total adjustments to consolidated revenues
26,214
—
26,214
—
Adjusted revenues by segment:
Strayer University
114,471
127,837
343,644
384,806
Capella University
70,006
110,549
70,006
337,418
Non-Degree Programs
2,682
3,361
4,646
11,141
Adjusted consolidated revenues
$
187,159
$
241,747
$
418,296
$
733,365
Income (loss) from operations:
Strayer University
$
11,904
$
18,689
$
44,215
$
68,268
Capella University
(14,326)
18,643
(14,326)
63,918
Non-Degree Programs
(1,688)
(415)
(4,131)
(918)
Amortization of intangible assets
(10,278)
(15,417)
(10,278)
(46,251)
Merger and integration costs
(29,620)
(1,500)
(37,791)
(11,698)
Impairment of intangible assets
(13,119)
—
(19,304)
—
Consolidated income (loss) from operations
(57,127)
20,000
(41,615)
73,319
Adjustments to consolidated income (loss) from operations:
Contract liabilities adjustment
26,214
—
26,214
—
Amortization of intangible assets
10,278
15,417
10,278
46,251
Merger and integration costs
29,620
1,500
37,791
11,698
Impairment of intangible assets
13,119
—
19,304
—
Total adjustments to consolidated income (loss) from operations
79,231
16,917
93,587
57,949
Adjusted income (loss) from operations by segment:
Strayer University
11,904
18,689
44,215
68,268
Capella University
11,888
18,643
11,888
63,918
Non-Degree Programs
(1,688)
(415)
(4,131)
(918)
Total adjusted income (loss) from operations
$
22,104
$
36,917
$
51,972
$
131,268
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
For the three months ended September 30,
2018
2019
Net income
$
(52,781)
$
16,692
Provision (benefit) for income taxes
(3,236)
6,551
Other income
(1,110)
(3,243)
Depreciation and amortization
18,457
26,365
EBITDA (1)
(38,670)
46,365
Stock-based compensation
3,572
3,020
Merger and integration costs (2)
29,620
1,500
Impairment of intangible assets and fair value adjustments (3)
13,246
—
Contract liability adjustment (4)
26,214
—
Adjusted EBITDA (1)
$
33,982
$
50,885
(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. Includes $0.5 million of stock-based compensation benefit related to forfeitures of stock-based awards for the three months ended September 30, 2019.
(3)Reflects adjustments to the value of purchase consideration and goodwill and intangible asset impairment charges related to the Company’s acquisition of The New York Code and Design Academy, Inc. for the three months ended September 30, 2018.
(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/20191107005039/en/
Terese Wilke Manager, Investor Relations Strategic Education, Inc. (612) 977-6331 terese.wilke@strategiced.com
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