Investor News Details

View all news

Strategic Education, Inc. Reports Second Quarter 2021 Results

July 28, 2021

HERNDON, Va.--(BUSINESS WIRE)-- Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended June 30, 2021.

“We are pleased with performance at Capella University and in our Alternative Learning and Australia/New Zealand segments and continue to focus on returning Strayer University to growth,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “Our financial strength provides a solid foundation as we continue to invest in Australia/New Zealand, Alternative Learning, and the success of our Capella and Strayer students.”

STRATEGIC EDUCATION CONSOLIDATED RESULTS

[Note: Strategic Education’s financial results for any periods ended prior to November 3, 2020 do not include the financial results of the Australia/New Zealand acquisition and are therefore not directly comparable.]

Three Months Ended June 30

  • Revenue increased 16.9% to $299.2 million compared to $255.8 million for the same period in 2020. Adjusted revenue, which is a non-GAAP financial measure and excludes a purchase accounting revenue adjustment and foreign currency exchange impacts, increased 16.5% to $298.1 million compared to $255.8 million for the same period in 2020. 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 $26.7 million or 8.9% of revenue, compared to $46.4 million or 18.1% of revenue for the same period in 2020. Adjusted income from operations, which is a non-GAAP financial measure, was $53.7 million in 2021 compared to $63.0 million for the same period in 2020. The adjusted operating income margin, which is a non-GAAP financial measure, was 18.0% compared to 24.6% for the same period in 2020.
  • Net income was $20.0 million in 2021 compared to $34.2 million for the same period in 2020. Adjusted net income, which is a non-GAAP financial measure, was $37.5 million compared to $45.4 million for the same period in 2020.
  • Adjusted EBITDA, which is a non-GAAP financial measure, was $71.9 million compared to $77.7 million for the same period in 2020.
  • Diluted earnings per share was $0.83 compared to $1.55 for the same period in 2020. Adjusted diluted earnings per share, which is a non-GAAP financial measure, decreased to $1.55 from $2.06 for the same period in 2020. Diluted weighted average shares outstanding increased to 24,126,000 from 22,012,000 for the same period in 2020, due primarily to new shares issued to facilitate the acquisition of Torrens University and associated assets in Australia and New Zealand.

U.S. Higher Education Segment Highlights

  • The U.S. Higher Education segment (USHE) is comprised primarily of Strayer University and Capella University.
  • For the second quarter, student enrollment within USHE decreased 9.9% to 83,923 compared to 93,123 for the same period in 2020.
  • For the second quarter, FlexPath enrollment was 18% of USHE enrollment compared to 12% for the same period in 2020.
  • Revenue decreased 14.2% to $212.2 million in the second quarter of 2021 compared to $247.4 million for the same period in 2020, driven by lower second quarter enrollment and lower revenue-per-student.
  • Income from operations decreased to $32.1 million in the second quarter of 2021 from $58.8 million for the same period in 2020. The operating income margin was 15.1%, compared to 23.8% for the same period in 2020.
  • Strayer University has now reopened 30 campuses that had been closed during the COVID-19 pandemic, with the majority of remaining campuses expected to be reopened by the end of 2021.

Alternative Learning Segment Highlights

  • The Alternative Learning segment is comprised primarily of Employer Solutions, Sophia Learning, and Workforce Edge.
  • For the second quarter, employer affiliated enrollment was 20.5% of USHE enrollment compared to 17.2% for the same period in 2020.
  • Revenue increased 52.2% to $12.9 million in the second quarter of 2021 compared to $8.5 million for the same period in 2020, driven by growth in Sophia Learning subscriptions and employer affiliated enrollment.
  • Income from operations increased to $5.2 million in the second quarter of 2021 from $4.2 million for the same period in 2020. The operating income margin was 40.1%, compared to 49.8% for the same period in 2020.

Australia/New Zealand Segment Highlights

  • The Australia/New Zealand segment (ANZ) is comprised of Torrens University, Think Education, and Media Design School.
  • For the second quarter, student enrollment within ANZ was 18,800.
  • Revenue was $74.1 million in the second quarter of 2021, and adjusted revenue, which is a non-GAAP financial measure, was $72.9 million.
  • Income from operations was $15.6 million or 21.1% of revenue in the second quarter of 2021, and adjusted income from operations, which is a non-GAAP financial measure, was $16.5 million or 22.6% of adjusted revenue.

BALANCE SHEET AND CASH FLOW

At June 30, 2021, Strategic Education had cash, cash equivalents, and marketable securities of $293.7 million, and $141.7 million outstanding under its revolving credit facility. For the first six months of 2021, cash provided by operations was $125.8 million compared to $111.9 million for the same period in 2020. Capital expenditures for the first six months of 2021 were $23.1 million compared to $25.5 million for the same period in 2020. Capital expenditures for 2021 are expected to be $50 million to $55 million.

For the second quarter of 2021, consolidated bad debt expense as a percentage of revenue was 3.3%, compared to 4.7% of revenue for the same period in 2020.

COMMON STOCK CASH DIVIDEND

Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on September 13, 2021 to shareholders of record as of September 3, 2021.

CONFERENCE CALL WITH MANAGEMENT

Strategic Education will host a conference call to discuss its second quarter 2021 results at 10:00 a.m. (ET) today. To participate in the live call, investors should dial (877) 303-9047 ten minutes prior to the start time. In addition, the call will be available via webcast. To access the live webcast of the conference call, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section prior to the start time of the call. Following the call, the webcast will be archived and available at www.strategiceducation.com in the Investor Relations section.

About Strategic Education, Inc.

Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We serve working adult students globally through our core focus areas: 1) U.S. Higher Education, including Strayer University and Capella University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs including the Jack Welch Management Institute at Strayer University, and non-degree web and mobile application development courses through Hackbright Academy and Strayer University’s DevMountain; 2) Alternative Learning, encompassing Employer Solutions, developing and maintaining relationships with large employers; Workforce Edge, a full service, online employee education management platform; Sophia Learning, self-paced general education courses that are ACE-recommended for college credit; and Digital Enablement Partnerships, helping advance capabilities in course development, online delivery, and student support; and 3) Australia/New Zealand, comprised of Torrens University, Think Education, and Media Design School that collectively offer certificate and degree programs in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce and find a path to bettering their lives.

Forward-Looking Statements

This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; the impact of the current COVID-19 pandemic on Strategic Education’s business and results; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:

  • the pace of student enrollment;
  • Strategic Education’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional 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;
  • competitive factors;
  • risks associated with the further spread of COVID-19, including the ultimate impact of COVID-19 on people and economies;
  • the impact of regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including restrictions on business operations or social distancing requirements;
  • 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, including in the case of Strategic Education’s acquisition of Torrens University and associated assets in Australia and New Zealand, the risk that the benefits of the acquisition may not be fully realized or may take longer to realize than expected, and the risk that the acquisition may not advance Strategic Education’s business strategy and growth strategy;
  • risks relating to the timing of regulatory approvals;
  • Strategic Education’s ability to implement its growth strategy;
  • the risk that the combined company may experience difficulty integrating employees or operations;
  • risks associated with the ability of Strategic Education’s students to finance their education in a timely manner;
  • general economic and market conditions; and
  • additional factors described in Strategic Education’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 Strategic Education’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 

 

For the three months ended
June 30,

 

For the six months ended
June 30,

 

2020

 

2021

 

2020

 

2021

Revenues

$

255,831

 

 

$

299,173

 

 

$

521,133

 

 

$

589,509

 

Costs and expenses:

 

 

 

 

 

 

 

Instructional and support costs

125,544

 

 

152,938

 

 

258,480

 

 

305,743

 

General and administration

67,301

 

 

93,395

 

 

136,527

 

 

180,240

 

Amortization of intangible assets

15,417

 

 

19,392

 

 

30,834

 

 

38,799

 

Merger and integration costs

1,174

 

 

1,937

 

 

4,938

 

 

2,949

 

Restructuring costs

 

 

4,811

 

 

 

 

23,078

 

Total costs and expenses

209,436

 

 

272,473

 

 

430,779

 

 

550,809

 

Income from operations

46,395

 

 

26,700

 

 

90,354

 

 

38,700

 

Other income

1,639

 

 

757

 

 

3,762

 

 

2,924

 

Income before income taxes

48,034

 

 

27,457

 

 

94,116

 

 

41,624

 

Provision for income taxes

13,882

 

 

7,481

 

 

24,725

 

 

12,071

 

Net income

$

34,152

 

 

$

19,976

 

 

$

69,391

 

 

$

29,553

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.57

 

 

$

0.83

 

 

$

3.18

 

 

$

1.23

 

Diluted

$

1.55

 

 

$

0.83

 

 

$

3.15

 

 

$

1.22

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

21,764

 

 

23,975

 

 

21,787

 

 

23,974

 

Diluted

22,012

 

 

24,126

 

 

22,041

 

 

24,139

 

 

 

 

 

 

 

 

 

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

December 31,
2020

 

June 30,
2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

187,509

 

 

$

261,585

 

Marketable securities

7,557

 

 

4,040

 

Tuition receivable, net

50,169

 

 

78,609

 

Income taxes receivable

1,429

 

 

 

Assets held for sale

 

 

5,801

 

Other current assets

39,458

 

 

43,600

 

Total current assets

286,122

 

 

393,635

 

Property and equipment, net

158,854

 

 

153,812

 

Right-of-use lease assets

120,687

 

 

134,069

 

Marketable securities, non-current

30,270

 

 

28,062

 

Intangible assets, net

326,420

 

 

289,985

 

Goodwill

1,318,526

 

 

1,303,863

 

Other assets

54,928

 

 

59,887

 

Total assets

$

2,295,807

 

 

$

2,363,313

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

104,742

 

 

$

100,119

 

Income taxes payable

 

 

4,015

 

Contract liabilities

60,501

 

 

118,771

 

Lease liabilities

34,809

 

 

29,284

 

Total current liabilities

200,052

 

 

252,189

 

Long-term debt

141,823

 

 

141,748

 

Deferred income tax liabilities

53,407

 

 

42,810

 

Lease liabilities, non-current

106,151

 

 

148,382

 

Other long-term liabilities

46,055

 

 

45,004

 

Total liabilities

547,488

 

 

630,133

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock, par value $0.01; 32,000,000 shares authorized; 24,418,939 and
24,621,111 shares issued and outstanding at December 31, 2020 and June 30, 2021, respectively

244

 

 

246

 

Additional paid-in capital

1,519,549

 

 

1,523,022

 

Accumulated other comprehensive income

48,880

 

 

30,823

 

Retained earnings

179,646

 

 

179,089

 

Total stockholders’ equity

1,748,319

 

 

1,733,180

 

Total liabilities and stockholders’ equity

$

2,295,807

 

 

$

2,363,313

 

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

For the six months ended

June 30,

 

2020

 

2021

Cash flows from operating activities:

 

 

 

Net income

$

69,391

 

 

$

29,553

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Amortization of deferred financing costs

167

 

 

276

 

Amortization of investment discount/premium

68

 

 

40

 

Depreciation and amortization

51,981

 

 

66,624

 

Deferred income taxes

(6,736)

 

 

(10,499)

 

Stock-based compensation

6,884

 

 

8,068

 

Impairment of right-of-use lease assets

453

 

 

17,015

 

Changes in assets and liabilities:

 

 

 

Tuition receivable, net

3,820

 

 

(28,947)

 

Other assets

(6,338)

 

 

(9,308)

 

Accounts payable and accrued expenses

(22,180)

 

 

(7,835)

 

Income taxes payable and income taxes receivable

15,303

 

 

5,444

 

Contract liabilities

2,053

 

 

58,937

 

Other liabilities

(2,925)

 

 

(3,537)

 

Net cash provided by operating activities

111,941

 

 

125,831

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(25,465)

 

 

(23,138)

 

Purchases of marketable securities

(1,863)

 

 

 

Proceeds from marketable securities

18,869

 

 

5,595

 

Other investments

(693)

 

 

(262)

 

Net cash used in investing activities

(9,152)

 

 

(17,805)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

Common dividends paid

(26,662)

 

 

(29,549)

 

Net payments for stock awards

(24,758)

 

 

(2,283)

 

Repurchase of common stock

(247)

 

 

(2,904)

 

Net cash used in financing activities

(51,667)

 

 

(34,736)

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

(1,396)

 

Net increase in cash, cash equivalents, and restricted cash

51,122

 

 

71,894

 

Cash, cash equivalents, and restricted cash — beginning of period

420,497

 

 

202,020

 

Cash, cash equivalents, and restricted cash — end of period

$

471,619

 

 

$

273,914

 

STRATEGIC EDUCATION, INC.

UNAUDITED SEGMENT REPORTING

(in thousands)

 

 

For the three months ended
June 30,

 

For the six months ended
June 30,

 

2020

 

2021

 

2020

 

2021

Revenues:

 

 

 

 

 

 

 

U.S. Higher Education

$

247,350

 

 

$

212,207

 

 

$

502,863

 

 

$

438,754

 

Australia/New Zealand

 

 

74,060

 

 

 

 

125,325

 

Alternative Learning

8,481

 

 

12,906

 

 

18,270

 

 

25,430

 

Consolidated revenues

$

255,831

 

 

$

299,173

 

 

$

521,133

 

 

$

589,509

 

Income from operations:

 

 

 

 

 

 

 

U.S. Higher Education

$

58,765

 

 

$

32,059

 

 

$

115,508

 

 

$

79,813

 

Australia/New Zealand

 

 

15,601

 

 

 

 

12,652

 

Alternative Learning

4,221

 

 

5,180

 

 

10,618

 

 

11,061

 

Amortization of intangible assets

(15,417)

 

 

(19,392)

 

 

(30,834)

 

 

(38,799)

 

Merger and integration costs

(1,174)

 

 

(1,937)

 

 

(4,938)

 

 

(2,949)

 

Restructuring costs

 

 

(4,811)

 

 

 

 

(23,078)

 

Consolidated income from operations

$

46,395

 

 

$

26,700

 

 

$

90,354

 

 

$

38,700

 

Non-GAAP Financial Measures

In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, total costs and expenses, income from operations, operating margin, income before income taxes, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company’s ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company’s results of operations period-over-period. These measures are Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA and Adjusted Diluted Earnings Per Share (EPS). We define Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, and amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (2) transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (3) severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring, (4) income recognized from the Company’s investments in partnership interests and other investments, (5) discrete tax adjustments utilizing adjusted effective income tax rates of 28.5% and 29.5% for the three months ended June 30, 2020 and 2021, respectively, and (6) foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate. We define EBITDA as net income before other income, the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, a purchase accounting adjustment to record acquired contract liabilities at fair value, and the amounts in (2), (3) and (6) above. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.

STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED REVENUE, ADJUSTED TOTAL COSTS AND EXPENSES, ADJUSTED INCOME FROM
OPERATIONS, ADJUSTED INCOME BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED EPS
(in thousands, except per share data)

 

 

 

 

For the three months ended June 30, 2020
Non-GAAP Adjustments

 

 

 

As
Reported
(GAAP)

 

Purchase
accounting
adjustments(1)

 

Merger and
integration
costs(2)

 

Restructuring
costs(3)

 

Income from
other
investments(4)

 

Tax
adjustments(5)

 

Foreign
exchange
adjustments(6)

 

As Adjusted
(Non-GAAP)

Revenues

$

255,831

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

255,831

Total costs and expenses

$

209,436

 

 

$

(15,417)

 

 

$

(1,174)

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

192,845

Income from operations

$

46,395

 

 

$

15,417

 

 

$

1,174

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

62,986

Operating margin

18.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24.6%

Income before income taxes

$

48,034

 

 

$

15,417

 

 

$

1,174

 

 

$

 

 

$

(1,135)

 

 

$

 

 

$

 

 

$

63,490

Net income

$

34,152

 

 

$

15,417

 

 

$

1,174

 

 

$

 

 

$

(1,135)

 

 

$

(4,213)

 

 

$

 

 

$

45,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

1.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

22,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended June 30, 2021
Non-GAAP Adjustments

 

 

 

As
Reported
(GAAP)

 

Purchase
accounting
adjustments(1)

 

Merger and
integration
costs(2)

 

Restructuring
costs(3)

 

Income from
other
investments(4)

 

Tax
adjustments(5)

 

Foreign
exchange
adjustments(6)

 

As Adjusted
(Non-GAAP)

Revenues

$

299,173

 

 

$

1,423

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(2,534)

 

 

$

298,062

Total costs and expenses

$

272,473

 

 

$

(19,392)

 

 

$

(1,937)

 

 

$

(4,811)

 

 

$

 

 

$

 

 

$

(2,008)

 

 

$

244,325

Income from operations

$

26,700

 

 

$

20,815

 

 

$

1,937

 

 

$

4,811

 

 

$

 

 

$

 

 

$

(526)

 

 

$

53,737

Operating margin

8.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18.0%

Income before income taxes

$

27,457

 

 

$

20,815

 

 

$

1,937

 

 

$

4,811

 

 

$

(1,398)

 

 

$

 

 

$

(526)

 

 

$

53,096

Net income

$

19,976

 

 

$

20,815

 

 

$

1,937

 

 

$

4,811

 

 

$

(1,398)

 

 

$

(8,164)

 

 

$

(526)

 

 

$

37,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

24,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,126

(1)

  Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand, and amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.

(2)

  Reflects transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company's acquisition of Torrens University and associated assets in Australia and New Zealand.

(3)

  Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring.

(4)

  Reflects income recognized from the Company's investments in partnership interests and other investments.

(5)

  Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective income tax rates of 28.5% and 29.5% for the three months ended June 30, 2020 and 2021, respectively.

(6)

  Reflects foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.

STRATEGIC EDUCATION, INC.

UNAUDITED NON-GAAP SEGMENT REPORTING

(in thousands)

 

 

For the three months ended

 

For the six months ended

 

June 30,

 

June 30,

 

2020

 

2021

 

2020

 

2021

Revenues:

 

 

 

 

 

 

 

U.S. Higher Education

$

247,350

 

 

$

212,207

 

 

$

502,863

 

 

$

438,754

 

Australia/New Zealand

 

 

74,060

 

 

 

 

125,325

 

Alternative Learning

8,481

 

 

12,906

 

 

18,270

 

 

25,430

 

Consolidated revenues

255,831

 

 

299,173

 

 

521,133

 

 

589,509

 

 

 

 

 

 

 

 

 

Adjustments to consolidated revenues:

 

 

 

 

 

 

 

U.S. Higher Education

 

 

 

 

 

 

 

Australia/New Zealand1

 

 

(1,111)

 

 

 

 

(907)

 

Alternative Learning

 

 

 

 

 

 

 

Total adjustments to consolidated revenues

 

 

(1,111)

 

 

 

 

(907)

 

 

 

 

 

 

 

 

 

Adjusted revenues by segment:

 

 

 

 

 

 

 

U.S. Higher Education

247,350

 

 

212,207

 

 

502,863

 

 

438,754

 

Australia/New Zealand

 

 

72,949

 

 

 

 

124,418

 

Alternative Learning

8,481

 

 

12,906

 

 

18,270

 

 

25,430

 

Adjusted consolidated revenues

$

255,831

 

 

$

298,062

 

 

$

521,133

 

 

$

588,602

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

U.S. Higher Education

$

58,765

 

 

$

32,059

 

 

$

115,508

 

 

$

79,813

 

Australia/New Zealand

 

 

15,601

 

 

 

 

12,652

 

Alternative Learning

4,221

 

 

5,180

 

 

10,618

 

 

11,061

 

Amortization of intangible assets

(15,417)

 

 

(19,392)

 

 

(30,834)

 

 

(38,799)

 

Merger and integration costs

(1,174)

 

 

(1,937)

 

 

(4,938)

 

 

(2,949)

 

Restructuring costs

 

 

(4,811)

 

 

 

 

(23,078)

 

Consolidated income from operations

46,395

 

 

26,700

 

 

90,354

 

 

38,700

 

 

 

 

 

 

 

 

 

Adjustments to consolidated income from operations:

 

 

 

 

 

 

 

Australia/New Zealand2

 

 

897

 

 

 

 

3,142

 

Amortization of intangible assets

15,417

 

 

19,392

 

 

30,834

 

 

38,799

 

Merger and integration costs

1,174

 

 

1,937

 

 

4,938

 

 

2,949

 

Restructuring costs

 

 

4,811

 

 

 

 

23,078

 

Total adjustments to consolidated income from operations

16,591

 

 

27,037

 

 

35,772

 

 

67,968

 

 

 

 

 

 

 

 

 

Adjusted income from operations by segment:

 

 

 

 

 

 

 

U.S. Higher Education

58,765

 

 

32,059

 

 

115,508

 

 

79,813

 

Australia/New Zealand

 

 

16,498

 

 

 

 

15,794

 

Alternative Learning

4,221

 

 

5,180

 

 

10,618

 

 

11,061

 

Total adjusted income from operations

$

62,986

 

 

$

53,737

 

 

$

126,126

 

 

$

106,668

 

 
___________________
1Adjustments to the Australia/New Zealand segment revenue for the three and six months ended June 30, 2021 include a purchase accounting adjustment of $1.4 million and $3.6 million, respectively, to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand, and foreign currency exchange impact of ($2.5) million and ($4.5) million, respectively, related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.
2Adjustments to the Australia/New Zealand segment income from operations for the three and six months ended June 30, 2021 include the aforementioned purchase accounting revenue adjustment of $1.4 million and $3.6 million, respectively, to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand, and foreign currency exchange impact of ($0.5) million related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate.

STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)

 

 

For the three months ended

 

June 30,

 

2020

 

2021

 

 

 

 

Net income

$

34,152

 

 

$

19,976

 

Provision for income taxes

13,882

 

 

7,481

 

Other income

(1,639)

 

 

(757)

 

Depreciation and amortization

26,248

 

 

32,053

 

EBITDA (1)

72,643

 

 

58,753

 

Stock-based compensation

3,859

 

 

4,649

 

Merger and integration costs (2)

1,174

 

 

1,937

 

Restructuring costs (3)

 

 

4,811

 

Cloud computing amortization (4)

 

 

841

 

Contract liability adjustment (5)

 

 

1,423

 

Foreign currency exchange impact (6)

 

 

(526)

 

Adjusted EBITDA (1)

$

77,676

 

 

$

71,888

 

(1)

  Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information.

(2)

  Reflects transaction and integration charges associated with the Company's merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand.

(3)

  Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring. Includes $0.5 million of stock-based compensation benefit related to forfeitures of stock-based awards for the three months ended June 30, 2021.

(4)

  Reflects amortization expense associated with deferred implementation costs incurred in cloud computing arrangements.

(5)

  Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand.

(6)

  Reflects foreign currency exchange impact related to translating foreign currency results at a constant exchange rate of 0.743 Australian Dollars to U.S. Dollars, which is the 2021 budget rate. 

 

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

Source: Strategic Education, Inc.

Categories: Financial News Releases
View all news