Strayer Education, Inc. (Nasdaq: STRA) today announced financial results
for the three months ended September 30, 2012. Financial highlights are
Three Months Ended September 30
Nine Months Ended September 30
Balance Sheet and Cash Flow
At September 30, 2012, the Company had cash and cash equivalents of
$45.6 million. The Company generated $57.2 million from operating
activities in the first nine months of 2012 compared to $122.7 million
during the same period in 2011. Capital expenditures were $18.2 million
for the nine months ended September 30, 2012 compared to $24.9 million
for the same period in 2011. At September 30, 2012, the Company had
$77.5 million outstanding under its term loan and $25 million
outstanding under its revolving credit facility.
During the nine months ended September 30, 2012, the Company paid
regular, quarterly dividends of $35.6 million ($1.00 per share for each
quarterly dividend). The Company had $80 million of share repurchase
authorization remaining at September 30, 2012. No shares were
repurchased in the third quarter of 2012.
For the third quarter 2012, bad debt expense as a percentage of revenues
was 4.2% compared to 3.8% for the same period in 2011. Days sales
outstanding was 18 days at the end of the third quarter of 2012,
compared to 14 days at the end of the third quarter of 2011.
Enrollment at Strayer University for the 2012 fall term decreased 5% to
51,727 students compared to 54,233 students for the same term in 2011.
Across the Strayer University campus and online system, new student
enrollments increased 4%, while continuing student enrollments decreased
7%. Global online students increased 13%. Students taking 100% of their
classes online (including campus based students) decreased 4%.
New Campus Openings
The Company announced today that Strayer University successfully opened
one new campus for the fall academic term, which is located in San
Antonio, Texas, a new market for Strayer University. Subject to
regulatory approval, the Company plans to open three new campuses during
the remainder of the year for a total of eight new campuses in 2012.
These three planned new campuses will be located in Houston, Texas, the
University's third campus in that market, and in St. Louis and Kansas
City, Missouri, both new markets for the University.
2012 Business Outlook
Based on enrollments announced for the 2012 fall term, the Company
estimates fourth quarter 2012 diluted earnings per share will be in the
range of $1.43 to $1.45. Based on its fourth quarter 2012 estimates, the
Company expects its full year 2012 diluted earnings per share will be in
the range of $5.73 to $5.75.
New Term Loan and Revolving Credit Facility
The Company announced today that on November 8, 2012, it entered into an
amended and restated revolving credit and term loan agreement. This
credit facility, which is secured by the assets of the Company, provides
for a $125.0 million term loan facility and $100.0 million revolving
credit facility with a maturity date of December 31, 2016. Proceeds from
the new term loan were used to pay off $77.5 million outstanding under
the original term loan facility. The Company had no outstanding balance
under the revolving credit facility on the day of closing.
2013 Business Model
The Company announced today that Strayer University will implement a 3%
tuition increase effective January 2013, but is assuming roughly flat
revenue per student in 2013 due to the University's continued mix shift
towards graduate and corporate sponsored students, as well as continued
targeted use of scholarships. The Company also announced today that it
expects Strayer University's expenses to grow 1% to 2% in 2013,
reflecting the annualization of operating costs at the eight new
campuses opened during 2012, but that no additional campuses are
currently planned for 2013. Therefore, the Company expects that at the
2012 revenue level, anticipated 2013 expenses would lead to a 19-20%
operating margin in 2013, and EPS in the $5.40-$5.60 range. Each 1%
increase (or decrease) in revenue from 2012 levels in 2013 will have an
approximate 50 basis points positive (or negative) impact on operating
margin, and an approximate $0.20 positive (or negative) impact on
earnings per share. Finally, this model assumes an effective tax rate of
39.5% and 11,500,000 diluted shares outstanding.
The Company announced today that its Board of Directors declared a
regular, quarterly cash dividend of $1.00 per share to be paid on
December 10, 2012 to shareholders of record as of November 26, 2012. The
Company also announced that it does not currently intend to pay a
regular quarterly dividend in 2013. In addition, the Company announced
that the Company's Board of Directors amended its share repurchase
program to authorize the repurchase of up to $120 million in value of
the Company's common stock. The Company had $80 million left under its
authorization at September 30, 2012 and at the time the new
authorization was approved by the Company's Board of Directors. The
Company intends to conduct such purchases, if any, in compliance with
Rule 10b-18 under the Securities Exchange Act of 1934, as amended. This
share repurchase program may be modified, suspended or terminated at any
time by the Company without notice.
Shares and Options Outstanding
At September 30, 2012, the Company had 11,873,156 common shares issued
and outstanding, and 100,000 stock options outstanding with an exercise
price of $107.28 and a remaining contractual life of four months.
Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss its third
quarter 2012 earnings at 9:00 a.m. (ET) today. To participate on the
live call, investors should dial (877) 303-9047 10 minutes prior to the
start time. In addition, the call will be available via live Webcast
over the Internet. To access the live Webcast of the conference call,
please go to www.strayereducation.com
15 minutes prior to the start time of the call to register. An archived
replay of the conference call will be available at (855) 859-2056
(conference id 39822150) starting at 1:00 p.m. (ET) today and will be
available through Friday, November 23, and archived at www.strayereducation.com
for 90 days.
About Strayer Education, Inc.
Strayer Education, Inc. (Nasdaq: STRA) is an education services holding
company that owns Strayer University. Strayer's mission is to make
higher education achievable for working adults in today's economy.
Strayer University is a proprietary institution of higher learning that
offers undergraduate and graduate degree programs in business
administration, accounting, information technology, education, health
services administration, public administration, and criminal justice to
working adult students at 97 campuses in 23 states and Washington, D.C.
and worldwide via the Internet. Strayer University also offers an
executive MBA online through its Jack Welch Management Institute.
Strayer University is committed to providing an education that prepares
working adult students for advancement in their careers and professional
lives. Founded in 1892, Strayer University is accredited by the Middle
States Commission on Higher Education.
For more information on Strayer Education, Inc. visit www.strayereducation.com
and for Strayer University visit www.strayer.edu.
This press release contains statements that are forward-looking and
are made pursuant to the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
statements may be identified by the use of words such as "expect,"
"estimate," "assume," "believe," "anticipate," "will," "forecast,"
"plan," "project," or similar words. The statements are based on
the Company's current expectations and are subject to a number of
assumptions, uncertainties and risks. In connection with the
safe-harbor provisions of the Reform Act, the Company has identified
important factors that could cause the Company's actual results to
differ materially from those expressed in or implied by such statements.
The assumptions, uncertainties and risks include the pace of growth
of student enrollment, our 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, 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 relating to the timing of regulatory approvals, our ability to
implement our growth strategy, risks associated with the ability of our
students to finance their education in a timely manner, and general
economic and market conditions. Further information about these
and other relevant risks and uncertainties may be found in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2011
and in its subsequent filings with the Securities and Exchange
Commission, all of which are incorporated herein by reference and which
are available from the Commission. We undertake no obligation to
update or revise forward-looking statements.
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
Tuition receivable, net of allowances for doubtful accounts of
$7,279 and $7,373 at December 31, 2011 and September 30, 2012,
Common stock, par value $0.01; 20,000,000 shares authorized;
11,792,456 and 11,873,156 shares issued and outstanding at
December 31, 2011 and September 30, 2012, respectively
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
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