Investor News Details

View all news

Strategic Education, Inc. Reports Record Third Quarter 2019 Results; Increases Annual Dividend 20% to $2.40 Per Share; Holds Investor and Analyst Day

November 7, 2019

HERNDON, Va.--(BUSINESS WIRE)-- 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

  • Revenue increased 50.2% to $241.7 million compared to $160.9 million for the same period in 2018. Revenue in 2018 included a purchase accounting adjustment of $26.2 million to reflect Capella University contract liabilities at fair value. Adjusted revenue, which is a non-GAAP financial measure and excludes the aforementioned contract liabilities adjustment, increased 29.2% to $241.7 million compared to $187.2 million for the same period in 2018. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP Financial Measures section of this press release.
  • Income from operations was $20.0 million or 8.3% of revenue, compared to a loss from operations of $57.1 million for the same period in 2018. Income from operations in 2019 includes $15.4 million of amortization expense related to assets acquired in the merger with Capella Education Company and $1.5 million in costs associated with the merger with Capella Education Company. Loss from operations in 2018 included the aforementioned adjustment to contract liabilities, $10.3 million of amortization expense related to assets acquired in the merger with Capella Education Company, $29.6 million in costs associated with the merger with Capella Education Company, and a $13.1 million noncash charge resulting from the impairment of intangible assets associated with The New York Code + Design Academy. Adjusted income from operations was $36.9 million in 2019 compared to $22.1 million for the same period in 2018. The adjusted operating income margin was 15.3% compared to 11.8% for the same period in 2018.
  • Net income, which includes the items described above, and also includes income from partnership interests and other investments, and certain discrete tax adjustments, was $16.7 million in 2019 compared to a net loss of $52.8 million for the same period in 2018. Adjusted net income was $28.4 million compared to $16.9 million for the same period in 2018.
  • Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $46.4 million in 2019 compared to a loss of $38.7 million in 2018. Adjusted EBITDA was $50.9 million compared to $34.0 million for the same period in 2018.
  • Diluted earnings per share was $0.75 compared to a loss per share of $2.97 for the same period in 2018. Adjusted diluted earnings per share increased to $1.28 from $0.92 for the same period in 2018. Diluted weighted average shares outstanding increased to 22,129,000 from 18,480,000 for the same period in 2018, due primarily to new shares issued to facilitate the merger with Capella Education Company.

Strayer University Segment Highlights

  • For the third quarter, student enrollment at Strayer University increased 11% to 50,582 compared to 45,431 for the same period in 2018. New student enrollment for the period increased 4% and continuing student enrollment for the period increased 13%.
  • Revenue increased 11.7% to $127.8 million in the third quarter of 2019 compared to $114.5 million for the same period in 2018, driven primarily by higher third quarter enrollment.
  • Income from operations increased to $18.7 million in the third quarter of 2019 from $11.9 million for the same period in 2018. The operating income margin was 14.6%, compared to 10.4% for the same period in 2018.
  • During the third quarter of 2019, Strayer University opened a new campus in Chattanooga, Tennessee, and is planning to open one additional campus, pending regulatory approval, in the fourth quarter of 2019.

Capella University Segment Highlights

  • For the third quarter, student enrollment at Capella University increased 2% to 38,451 compared to 37,822 for the same period in 2018. New student enrollment for the period increased 7% and continuing student enrollment for the period increased approximately 1%.
  • FlexPath continued to be a significant driver of new and total enrollment growth in the third quarter of 2019, and is 33% of Capella University’s bachelor’s and master’s degrees total enrollment.
  • Revenue was $110.5 million in the third quarter of 2019 compared to revenue of $43.8 million, or adjusted revenue of $70.0 million, for the same period in 2018. The increase was driven by higher enrollment and higher revenue-per-learner.
  • Income from operations was $18.6 million in the third quarter of 2019 compared to a loss from operations of $14.3 million, or adjusted income from operations of $11.9 million, for the same period in 2018. The adjusted operating income margin was 16.9% compared to 17.0% in 2018.
  • The Company is planning to open the second Capella University Campus Center, pending regulatory approval, in Orlando, Florida in the fourth quarter of 2019.

Non-Degree Programs Segment Highlights

  • For the third quarter, revenue increased to $3.4 million from $2.7 million for the same period in 2018.
  • Loss from operations was $0.4 million in the third quarter of 2019 compared to a loss from operations of $1.7 million in the same period in 2018.

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:

  • SEI’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements;
  • rulemaking by the Department of Education and increased focus by the U.S. Congress on for-profit education institutions;
  • the pace of growth of student enrollment;
  • competitive factors;
  • risks associated with the opening of new campuses;
  • risks associated with the offering of new educational programs and adapting to other changes;
  • risks associated with the acquisition of existing educational institutions;
  • risks relating to the timing of regulatory approvals;
  • SEI’s ability to implement its growth strategy;
  • the risk that the benefits of the merger with Capella Education Company, including expected synergies, may not be fully realized or may take longer to realize than expected;
  • the risk that the combined company may experience difficulty integrating employees or operations;
  • risks associated with the ability of SEI’s students to finance their education in a timely manner;
  • general economic and market conditions; and
  • additional factors described in SEI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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.

 

Terese Wilke
Manager, Investor Relations
Strategic Education, Inc.
(612) 977-6331
terese.wilke@strategiced.com

Source: Strategic Education, Inc.

Categories: Financial News Releases
View all news