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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-0.09 | -0.07% | 120.66 | 120.16 | 121.05 | 121.495 | 120.40 | 121.07 | 107,257 | 21:59:45 |
Strategic Education, Inc. (SEI) (NASDAQ: STRA) today announced financial results for the period ended June 30, 2019.
Karl McDonnell, Chief Executive Officer of SEI said, “We are particularly pleased with the strong second quarter results and the organization’s continued ability to execute as we mark the one year anniversary since closing our merger with Capella Education Company. Merger integration and synergies are on track, providing us with a solid foundation 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 June 30
Strayer University Segment Highlights
Capella University Segment Highlights
Non-Degree Programs Segment Highlights
BALANCE SHEET AND CASH FLOW
At June 30, 2019, Strategic Education, Inc. had cash, cash equivalents, and marketable securities of $440.5 million, and no debt. For the first six months of 2019, cash provided by operations was $103.1 million compared to $30.0 million for the same period in 2018. Capital expenditures for the first six months of 2019 were $18.9 million compared to $8.6 million for the same period in 2018. Capital expenditures for 2019 are expected to be between $40 million and $45 million.
For the second quarter of 2019, consolidated bad debt expense as a percentage of revenue was 4.7%, compared to 5.8% 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 September 16, 2019 to shareholders of record as of September 3, 2019.
CONFERENCE CALL WITH MANAGEMENT
SEI will host a conference call to discuss its second 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, 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 June 30,
For the six months ended June 30,
2018
2019
2018
2019
Revenues
$
114,668
$
245,110
$
231,137
$
491,618
Costs and expenses:
Instructional and support costs
69,299
130,704
137,751
264,754
General and administration
32,176
68,374
63,518
132,513
Amortization of intangible assets
—
15,417
—
30,834
Merger and integration costs
2,824
3,019
8,171
10,198
Impairment of intangible assets
6,185
—
6,185
—
Total costs and expenses
110,484
217,514
215,625
438,299
Income from operations
4,184
27,596
15,512
53,319
Other income
447
4,125
736
7,452
Income before income taxes
4,631
31,721
16,248
60,771
Provision (benefit) for income taxes
(557
)
7,312
1,593
24,862
Net income
$
5,188
$
24,409
$
14,655
$
35,909
Earnings per share:
Basic
$
0.48
$
1.12
$
1.36
$
1.66
Diluted
$
0.46
$
1.10
$
1.29
$
1.63
Weighted average shares outstanding:
Basic
10,879
21,777
10,812
21,638
Diluted
11,380
22,109
11,346
22,079
Cash dividend declared per share
$
0.25
$
0.50
$
0.50
$
1.00
STRATEGIC EDUCATION, INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)
December 31, 2018
June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
311,732
$
375,515
Marketable securities
37,121
39,288
Tuition receivable, net
55,694
47,340
Income tax receivable
—
10,518
Other current assets
15,814
17,660
Total current assets
420,361
490,321
Property and equipment, net
122,677
118,462
Right-of-use lease assets
—
97,484
Marketable securities, non-current
37,678
25,737
Intangible assets, net
328,344
300,678
Goodwill
732,540
732,104
Other assets
19,429
19,784
Total assets
$
1,661,029
$
1,784,570
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
85,979
$
86,066
Income taxes payable
419
—
Contract liabilities
38,733
40,919
Lease liabilities
—
26,834
Total current liabilities
125,131
153,819
Deferred income tax liabilities
59,358
66,323
Lease liabilities, non-current
—
86,998
Other long-term liabilities
51,316
39,554
Total liabilities
235,805
346,694
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,948,563 shares issued and outstanding at December 31, 2018 and June 30, 2019, respectively
217
219
Additional paid-in capital
1,306,653
1,305,148
Accumulated other comprehensive income
32
449
Retained earnings
118,322
132,060
Total stockholders’ equity
1,425,224
1,437,876
Total liabilities and stockholders’ equity
$
1,661,029
$
1,784,570
STRATEGIC EDUCATION, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)
For the six months ended June 30,
2018
2019
Cash flows from operating activities:
Net income
$
14,655
$
35,909
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs
131
167
Amortization of investment discount/premium
—
220
Depreciation and amortization
9,915
52,497
Deferred income taxes
(1,581
)
9,909
Stock-based compensation
5,937
6,576
Impairment of intangible assets
6,185
—
Changes in assets and liabilities:
Tuition receivable, net
(2,916
)
5,777
Other current assets
96
(1,304
)
Other assets
(824
)
64
Accounts payable and accrued expenses
1,363
229
Income taxes payable and income taxes receivable
(3,447
)
(10,673
)
Contract liabilities
2,768
4,778
Other long-term liabilities
(2,256
)
(1,086
)
Net cash provided by operating activities
30,026
103,063
Cash flows from investing activities:
Purchases of property and equipment
(8,596
)
(18,859
)
Purchases of marketable securities
—
(12,443
)
Maturities of marketable securities
—
22,560
Other investments
—
(740
)
Net cash used in investing activities
(8,596
)
(9,482
)
Cash flows from financing activities:
Common dividends paid
(5,778
)
(22,194
)
Taxes paid for stock awards
—
(7,607
)
Net cash used in financing activities
(5,778
)
(29,801
)
Net increase in cash, cash equivalents, and restricted cash
15,652
63,780
Cash, cash equivalents, and restricted cash — beginning of period
156,448
312,237
Cash, cash equivalents, and restricted cash — end of period
$
172,100
$
376,017
Noncash transactions:
Purchases of property and equipment included in accounts payable
$
1,252
$
840
STRATEGIC EDUCATION, INC.UNAUDITED SEGMENT REPORTING(in thousands)
For the three months ended June 30,
For the six months ended June 30,
2018
2019
2018
2019
Revenues
Strayer University
$
113,903
$
128,911
$
229,174
$
256,969
Capella University
—
112,171
—
226,869
Non-Degree Programs
765
4,028
1,963
7,780
Consolidated revenues
$
114,668
$
245,110
$
231,137
$
491,618
Income (loss) from operations
Strayer University
$
14,320
$
24,606
$
32,312
$
49,579
Capella University
—
21,122
—
45,275
Non-Degree Programs
(1,127
)
304
(2,444
)
(503
)
Amortization of intangible assets
—
(15,417
)
—
(30,834
)
Merger and integration costs
(2,824
)
(3,019
)
(8,171
)
(10,198
)
Impairment of intangible assets
(6,185
)
—
(6,185
)
—
Consolidated income from operations
$
4,184
$
27,596
$
15,512
$
53,319
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) goodwill and intangible asset impairment charges related to the Company’s acquisition of the New York Code and Design Academy, (4) income recognized from the Company’s investments in partnership interests and other investments, and (5) discrete tax adjustments utilizing an adjusted effective income tax rate of 27.5% for 2018 and 2019. 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) and (3) 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 June 30, 2018
Non-GAAP Adjustments
As Reported (GAAP)
Amortization of intangible assets(1)
Merger and integration costs(2)
Impairment of intangible assets(3)
Income from other investments (4)
Tax adjustments (5)
As Adjusted (Non-GAAP)
Income from operations
$
4,184
$
—
$
2,824
$
6,185
$
—
$
—
$
13,193
Operating margin
3.6%
11.5%
Other income, net
447
—
—
—
—
—
447
Income before income taxes
4,631
—
2,824
6,185
—
—
13,640
(Benefit) provision for income taxes
(557
)
—
—
—
—
4,308
3,751
Net income
$
5,188
$
—
$
2,824
$
6,185
$
—
$
(4,308
)
$
9,889
Earnings per share:
Basic
$
0.48
$
0.91
Diluted
$
0.46
$
0.87
Weighted average shares outstanding:
Basic
10,879
10,879
Diluted
11,380
11,380
For the three months ended June 30, 2019
Non-GAAP Adjustments
As Reported (GAAP)
Amortization of intangible assets(1)
Merger and integration costs(2)
Impairment of intangible assets(3)
Income from other investments (4)
Tax Adjustments (5)
As Adjusted (Non-GAAP)
Income from operations
$
27,596
$
15,417
$
3,019
$
—
$
—
$
—
$
46,032
Operating margin
11.3%
18.8%
Other income, net
4,125
—
—
—
(1,605)
—
2,520
Income before income taxes
31,721
15,417
3,019
—
(1,605)
—
48,552
Provision for income taxes
7,312
—
—
—
—
6,040
13,352
Net income
$
24,409
$
15,417
$
3,019
$
—
$
(1,605)
$
(6,040
)
$
35,200
Earnings per share:
Basic
$
1.12
$
1.62
Diluted
$
1.10
$
1.59
Weighted average shares outstanding:
Basic
21,777
21,777
Diluted
22,109
22,109
(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 impairment of goodwill and intangible assets related to the Company’s acquisition of the New York Code and Design Academy.
(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 an adjusted effective tax rate of 27.5% for the three months ended June 30, 2018 and 2019.
STRATEGIC EDUCATION, INC.UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
For the three months ended
For the six months ended
June 30,
June 30,
2018
2019
2018
2019
Revenues:
Strayer University
$
113,903
$
128,911
$
229,174
$
256,969
Capella University
—
112,171
—
226,869
Non-Degree Programs
765
4,028
1,963
7,780
Consolidated revenues
$
114,668
$
245,110
$
231,137
$
491,618
Income (loss) from operations:
Strayer University
$
14,320
$
24,606
$
32,312
$
49,579
Capella University
—
21,122
—
45,275
Non-Degree Programs
(1,127)
304
(2,444)
(503)
Amortization of intangible assets
—
(15,417)
—
(30,834)
Merger and integration costs
(2,824)
(3,019)
(8,171)
(10,198)
Impairment of intangible assets
(6,185)
—
(6,185)
—
Consolidated income from operations
4,184
27,596
15,512
53,319
Adjustments to consolidated income from operations:
Amortization of intangible assets
—
15,417
—
30,834
Merger and integration costs
2,824
3,019
8,171
10,198
Impairment of intangible assets
6,185
—
6,185
—
Total adjustments to consolidated income from operations
9,009
18,436
14,356
41,032
Adjusted income from operations by segment:
Strayer University
14,320
24,606
32,312
49,579
Capella University
—
21,122
—
45,275
Non-Degree Programs
(1,127)
304
(2,444)
(503)
Total adjusted income from operations by segment
$
13,193
$
46,032
$
29,868
$
94,351
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
For the three months ended
June 30,
2018
2019
Net income
$
5,188
$
24,409
Provision (benefit) for income taxes
(557)
7,312
Other income
(447)
(4,125)
Depreciation and amortization
4,881
26,514
EBITDA (1)
9,065
54,110
Stock-based compensation
3,249
3,155
Merger and integration costs (2)
2,824
3,019
Impairment of intangible assets and fair value adjustments (3)
6,567
—
Adjusted EBITDA (1)
$
21,705
$
60,284
(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 $0.4 million of stock-based compensation expense for the three months ended June 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 June 30, 2018.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005299/en/
Terese Wilke Manager, Investor Relations Strategic Education, Inc. (612) 977-6331 terese.wilke@strategiced.com
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