Strayer Education, Inc. Reports Record Second Quarter 2008 Revenues and Earnings; and Record Summer Term 2008 Enrollments
-- Strayer Second Quarter Revenues Up 24% --
-- Strayer Second Quarter Diluted EPS $1.50, Up 25% --
-- Strayer Summer 2008 Total Enrollments Up 20% / New Students up
17% --
-- Three New Campuses Opened for 2008 Fall Term --
ARLINGTON, Va., Jul 24, 2008 (BUSINESS WIRE) -- Strayer Education, Inc. (Nasdaq:STRA) today announced financial results for the three months ended June 30, 2008. Financial highlights are as follows:
Three Months Ended June 30
-- Revenues for the three months ended June 30, 2008 increased 24% to $97.9 million, compared to $78.9 million for the same period in 2007, due to increased enrollment and a 5% tuition increase which commenced in January 2008.
-- Income from operations was $33.6 million compared to $26.4 million for the same period in 2007, an increase of 28%. Operating income margin was 34.3% compared to 33.4% for the same period in 2007.
-- Net income was $21.3 million compared to $17.4 million for the same period in 2007, an increase of 23%. Diluted earnings per share was $1.50 compared to $1.20 for the same period in 2007, an increase of 25%. Diluted weighted average shares outstanding decreased to 14,248,000 from 14,509,000 for the same period in 2007.
Six Months Ended June 30
-- Revenues for the six months ended June 30, 2008 increased 23% to $195.0 million, compared to $159.1 million for the same period in 2007, due to increased enrollment and a 5% tuition increase which commenced in January 2008.
-- Income from operations was $69.2 million compared to $55.3 million for the same period in 2007, an increase of 25%. Operating income margin was 35.5% compared to 34.8% for the same period in 2007.
-- Net income was $44.8 million compared to $36.2 million for the same period in 2007, an increase of 24%. Diluted earnings per share was $3.14 compared to $2.50 for the same period in 2007, an increase of 26%. Diluted weighted average shares outstanding decreased to 14,294,000 from 14,486,000 for the same period in 2007.
"We are pleased with our solid financial results for the second quarter and our strong student enrollment for the summer term," said Robert S. Silberman, Chairman and CEO of Strayer Education, Inc. "We look forward to the opening of our three new campuses for the 2008 fall term, one in Savannah, Georgia, and two in the Ft. Lauderdale, Florida area. All three campuses will be in new markets for us and further expand the Strayer University footprint."
Balance Sheet and Cash Flow
At June 30, 2008, the Company had cash, cash equivalents and marketable securities of $118.4 million and no debt. During the three months ended June 30, 2008, the Company invested approximately $30 million in a no load, short-term, tax exempt bond fund. The Company generated $43.5 million from operating activities in the first six months of 2008 compared to $44.6 million during the same period in 2007. The Company's cash flow from operations for the first six months of 2008 was negatively affected by the timing of employee stock option exercises in 2008. That negative timing effect will reverse itself in the third quarter of 2008. Capital expenditures were $10.0 million for the six months ended June 30, 2008 compared to $7.4 million for the same period in 2007.
During the three months ended June 30, 2008, the Company used $13.0 million to repurchase 66,599 shares of stock at an average price of $195.45 as part of a previously announced stock repurchase authorization. The Company's remaining authorization for stock repurchases was $12.6 million at June 30, 2008, having invested approximately $69 million during the six months ended June 30, 2008 for this purpose. During the six months ended June 30, 2008, the Company paid regular, quarterly dividends of $10.7 million ($0.375 per share for each quarterly dividend) and a special dividend of $28.9 million ($2.00 per share). The Company also received $10.3 million upon the exercise of 223,000 stock options.
For the second quarter 2008, bad debt expense as a percentage of revenues was 2.8% compared to 3.5% for the same period in 2007. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was 12 days at the end of the second quarter of 2008, compared to 12 days at the end of the second quarter of 2007.
Student Enrollment
Enrollment at Strayer University for the 2008 summer term increased 20% to 34,176 students compared to 28,461 students for the same term in 2007. Across the Strayer University campus and online system, continuing student enrollments increased 21%, while new student enrollments increased 17%. Global online students increased 51%. Students taking 100% of their classes online (including campus based students) increased 23%. The total number of students taking at least one class online increased 22% to 25,166.
Student Enrollment
----------------------------------------------------------------------
Summer Summer %
2007 2008 Change
------ ------ ------
Campus Based Students:
New Campuses (23 in operation 3 years or less)
Classroom Students 1,078 2,380 121%
Online Students 2,005 3,346 67%
------ ------
Total New Campus Based Students 3,083 5,726 86%
------ ------
Mature Campuses (34 in operation more than 3
years)
Classroom Students 9,979 10,453 5%
Online Students 12,987 14,358 11%
------ ------
Total Mature Campus Based Students 22,966 24,811 8%
------ ------
Total Campus Based Students 26,049 30,537 17%
Global Online Students 2,412 3,639 51%
------ ------
Total University Enrollment 28,461 34,176 20%
====== ======
Total Students Taking 100% of Courses Online 17,404 21,343 23%
Total Students Taking at Least 1 Course Online 20,704 25,166 22%
New Campus Openings
The Company announced today that Strayer University had successfully opened three new campuses in preparation for the fall academic term, all in new markets. Two of these new campuses are in the Ft. Lauderdale, Florida area. The third new campus is in Savannah, Georgia. These three new campuses, together with the six campuses opened earlier this year, complete the Company's planned nine campus openings in 2008. The Company intends to announce in October the number of new campuses Strayer University plans to open in 2009.
Shares and Options Outstanding
At June 30, 2008, the Company had 14,272,889 common shares issued and outstanding, and 167,084 stock options outstanding with a weighted average exercise price of $102.98 and a remaining weighted average contractual life of 4.3 years.
Common Stock Cash Dividend
The Company announced today that its Board of Directors has declared its regular, quarterly cash dividend of $0.375 per share. This dividend will be paid on September 10, 2008 to shareholders of record as of August 27, 2008.
Business Outlook
Based on the strong enrollment growth announced for the 2008 summer term, offset partly by the costs of investments in new campuses, the Company estimates third quarter 2008 diluted EPS will be in the range of $0.79 to $0.81.
Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss its second quarter 2008 earnings at 10:00 a.m. (ET) today. To participate on the live call, investors should dial (800) 289-0468 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 (888) 203-1112 (pass code 4492436) starting at 1:00 p.m. (ET) today and will be available through Monday, July 28, and archived at www.strayereducation.com for 90 days.
Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company that owns Strayer University and certain other assets. Strayer's mission is to make higher education achievable and convenient 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 care, and public administration to approximately 38,000 working adult students at 60 campuses in 12 states and Washington, D.C. and worldwide via the Internet. 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 ("Reform Act"). The statements are based on the Company's current expectations and are subject to a number of 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. The 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 and regional regulatory requirements, 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, our ability to implement our growth strategy, 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 and its other 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)
For the three months For the six months
ended June 30, ended June 30,
-------------------- ------------------
2007 2008 2007 2008
------------ ------- --------- --------
Revenues $78,875 $97,928 $159,068 $195,002
Costs and expenses:
Instruction and educational
support 26,732 32,909 52,955 64,551
Selling and promotion 13,184 16,729 26,059 31,824
General and administration 12,607 14,683 24,755 29,462
------------ ------- --------- --------
Income from operations 26,352 33,607 55,299 69,165
Investment and other income 1,640 785 3,020 2,821
------------ ------- --------- --------
Income before income taxes 27,992 34,392 58,319 71,986
Provision for income taxes 10,632 13,069 22,153 27,142
------------ ------- --------- --------
Net income $17,360 $21,323 $36,166 $44,844
============ ======= ========= ========
Net income per share:
Basic $1.22 $1.52 $2.54 $3.19
Diluted $1.20 $1.50 $2.50 $3.14
Weighted average shares
outstanding:
Basic 14,288 14,001 14,234 14,052
Diluted 14,509 14,248 14,486 14,294
Common dividends per share:
Regular $0.31 $0.38 $0.62 $0.75
Special -- -- -- $2.00
In 2006, the Company began recording stock-based compensation expense
under FAS 123(R). The table below sets forth the amount of stock-
based compensation expense recorded in each of the expense line
items.
For the three months For the six months
ended June 30, ended June 30,
-------------------- ------------------
2007 2008 2007 2008
---------- --------- --------- --------
Instruction and educational
support $ 178 $ 365 $ 343 $ 693
Selling and promotion 160 229 306 437
General and administration 2,193 2,217 4,391 4,909
---------- --------- --------- --------
Total stock-based
compensation expense $ 2,531 $ 2,811 $ 5,040 $ 6,039
========== ========= ========= ========
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
At December 31, At June 30,
2007 2008
--------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 95,036 $ 88,382
Marketable securities available for
sale, at fair value 76,299 30,066
Tuition receivable, net of allowances
for doubtful accounts of $3,206 and
$3,761 at December 31, 2007 and June
30, 2008, respectively 100,651 102,406
Income taxes receivable -- 1,646
Other current assets 4,097 5,648
--------------- -------------
Total current assets 276,083 228,148
Property and equipment, net 57,946 61,481
Deferred income taxes 8,830 10,800
Restricted cash 500 500
Other assets 419 483
--------------- -------------
Total assets $ 343,778 $ 301,412
=============== =============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,682 $ 13,065
Accrued expenses 3,303 4,458
Income taxes payable 4,754 --
Dividends payable 28,853 --
Unearned tuition 91,476 91,937
Other current liabilities 281 281
--------------- -------------
Total current liabilities 144,349 109,741
Long-term liabilities 10,922 10,927
--------------- -------------
Total liabilities 155,271 120,668
--------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01;
20,000,000 shares authorized;
14,426,634 and 14,272,889 shares
issued and outstanding at December
31, 2007 and June 30, 2008,
respectively 144 142
Additional paid-in capital 87,080 45,416
Retained earnings 101,102 135,255
Accumulated other comprehensive income
(loss) 181 (69)
--------------- -------------
Total stockholders' equity 188,507 180,744
--------------- -------------
Total liabilities and stockholders'
equity $ 343,778 $ 301,412
=============== =============
STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the six months ended June 30,
----------------------------------
2007 2008
----------------- ----------------
Cash flows from operating
activities:
Net income $ 36,166 $ 44,844
Adjustments to reconcile net
income to net cash provided by
operating activities:
Amortization of deferred rent (61) (217)
Amortization of gain on sale of
assets (7) (141)
Gain on sale of marketable
securities -- (785)
Depreciation and amortization 4,096 4,991
Deferred income taxes (3,318) (2,059)
Stock-based compensation 4,838 5,487
Changes in assets and
liabilities:
Tuition receivable, net (3,094) (1,755)
Other current assets (289) (1,298)
Other assets (14) (64)
Accounts payable (611) (1,111)
Accrued expenses 232 1,155
Income taxes payable 13,567 5,098
Excess tax benefits from stock-
based payment arrangements (9,963) (11,498)
Unearned tuition 3,039 461
Deferred lease incentives -- 363
---------------- ---------------
Net cash provided by
operating activities 44,581 43,471
---------------- ---------------
Cash flows from investing
activities:
Purchases of property and
equipment (7,357) (10,032)
Proceeds from the sale of
property and equipment 5,754 --
Purchases of marketable
securities -- (30,180)
Proceeds from the sale of
marketable securities -- 76,785
---------------- ---------------
Net cash (used in) provided by
investing activities (1,603) 36,573
---------------- ---------------
Cash flows from financing
activities:
Regular common dividends paid (9,082) (10,691)
Special common dividends paid -- (28,854)
Proceeds from exercise of stock
options 12,288 10,325
Excess tax benefits from stock-
based payment arrangements 9,963 11,498
Repurchase of common stock (15,998) (68,976)
---------------- ---------------
Net cash (used in) financing
activities (2,829) (86,698)
---------------- ---------------
Net increase (decrease) in cash
and cash equivalents 40,149 (6,654)
Cash and cash equivalents -
beginning of period 52,663 95,036
---------------- ---------------
Cash and cash equivalents - end of
period $ 92,812 $ 88,382
================ ===============
Non-cash transactions:
Purchases of property and
equipment included in accounts
payable $ 1,019 $ 843
SOURCE: Strayer Education, Inc.
Strayer Education Inc. Mark C. Brown, Executive Vice President and Chief Financial Officer 703-247-2514 or Sonya Udler, Senior Vice President, Corporate Communications 703-247-2517 sonya.udler@strayer.edu
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