Strategic Education, Inc. (SEI) (NASDAQ: STRA) today announced
financial results for the period ended December 31, 2019.
Karl McDonnell, Chief Executive Officer of SEI said, “We are
very pleased with the organization’s execution to deliver record
results in 2019, our first full year as a combined company since
closing the merger with Capella Education Company. This strong
performance provides us with a solid foundation and momentum to
drive growth in 2020 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 December 31
- Revenue increased 9.0% to $263.8 million compared to $242.1
million for the same period in 2018. Revenue in 2018 included the
impact of a purchase accounting adjustment of $2.5 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 7.8% to $263.8 million compared to $244.6 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 $37.2 million or 14.1% of revenue,
compared to $18.9 million or 7.8% of revenue 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 $10.2 million in costs associated
with the merger with Capella Education Company. Income from
operations in 2018 included the impact of the aforementioned
contract liabilities adjustment, $15.4 million of amortization
expense related to assets acquired in the merger with Capella
Education Company, $8.0 million in costs associated with the merger
with Capella Education Company, a $0.3 million noncash charge
resulting from the impairment of intangible assets associated with
The New York Code + Design Academy, and a $0.3 million noncash
charge related to the Company’s reserve for leases on facilities no
longer in use. Adjusted income from operations was $62.9 million in
2019 compared to $45.4 million for the same period in 2018. The
adjusted operating income margin was 23.8% compared to 18.6% 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 $28.5 million in 2019
compared to $22.5 million for the same period in 2018. Adjusted net
income was $47.0 million compared to $34.4 million for the same
period in 2018.
- Earnings before interest, taxes, depreciation, and amortization
(EBITDA) was $63.2 million in 2019 compared to $44.3 million in
2018. Adjusted EBITDA was $76.5 million compared to $59.2 million
for the same period in 2018.
- Diluted earnings per share was $1.29 compared to $1.02 for the
same period in 2018. Adjusted diluted earnings per share increased
to $2.13 from $1.56 for the same period in 2018. Diluted weighted
average shares outstanding increased to 22,101,000 from 22,033,000
for the same period in 2018.
Year Ended December 31
- Revenue increased 57.2% to $997.1 million compared to $634.2
million in 2018. Revenue in 2018 included the impact of a purchase
accounting adjustment of $28.7 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 50.4% to
$997.1 million compared to $662.9 million 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 $110.5 million or 11.1% of revenue,
compared to a loss from operations of $22.7 million in 2018. Income
from operations in 2019 includes $61.7 million of amortization
expense related to assets acquired in the merger with Capella
Education Company and $21.9 million in costs associated with the
merger with Capella Education Company. Loss from operations in 2018
included the impact of the aforementioned contract liabilities
adjustment, $25.7 million of amortization expense related to assets
acquired in the merger with Capella Education Company, $45.7
million in costs associated with the merger with Capella Education
Company, $19.6 million in noncash charges resulting from the
impairment of goodwill and intangible assets associated with The
New York Code + Design Academy, and a $0.3 million noncash charge
related to the Company’s reserve for leases on facilities no longer
in use. Adjusted income from operations was $194.1 million in 2019
compared to $97.4 million in 2018. The adjusted operating income
margin was 19.5% compared to 14.7% 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 $81.1 million in 2019
compared to a net loss of $15.7 million in 2018. Adjusted net
income was $147.3 million compared to adjusted net income of $75.1
million in 2018.
- Earnings before interest, taxes, depreciation, and amortization
(EBITDA) was $215.4 million in 2019 compared to $31.8 million in
2018. Adjusted EBITDA was $248.7 million compared to $139.7 million
in 2018.
- Diluted earnings per share was $3.67 compared to a loss per
share of $1.03 in 2018. Adjusted diluted earnings per share
increased to $6.67 from $4.75 in 2018. Diluted weighted average
shares outstanding increased to 22,097,000 from 15,801,000 in 2018
due primarily to the timing of new shares issued to facilitate the
merger with Capella Education Company.
Strayer University Segment Highlights
- For the fourth quarter, student enrollment at Strayer
University increased 10% to 57,538 compared to 52,447 for the same
period in 2018. New student enrollment for the period increased 3%
and continuing student enrollment for the period increased 12%.
Full-year 2019 student enrollment at Strayer University increased
11% and new student enrollment increased 7% compared to 2018.
- Revenue increased 11.6% to $142.2 million in the fourth quarter
of 2019 compared to $127.5 million for the same period in 2018,
driven by higher fourth quarter enrollment and
revenue-per-student.
- Income from operations increased to $37.9 million in the fourth
quarter of 2019 from $24.0 million for the same period in 2018. The
operating income margin was 26.6%, compared to 18.8% for the same
period in 2018.
- During the fourth quarter of 2019, Strayer University opened a
new campus in Tallahassee, Florida, for a total of five new
campuses opened in 2019. The University is planning to open four to
six additional campuses, pending regulatory approval, in 2020.
Capella University Segment Highlights
- For the fourth quarter, student enrollment at Capella
University increased 2% to 39,220 compared to 38,409 for the same
period in 2018. New student enrollment for the period increased 7%
and continuing student enrollment for the period increased 1%.
Full-year 2019 student enrollment at Capella University increased
2% and new student enrollment increased 9% compared to 2018.
- FlexPath continued to be a significant driver of new and total
enrollment growth in the fourth quarter of 2019, and is 34% of
Capella University’s bachelor’s and master’s degrees total
enrollment. Capella University has also received approval from the
Higher Learning Commission to offer its Doctor of Nursing Practice
program via the FlexPath learning format, with students able to
start classes in the second half of 2020. The program is pending
approval from the U.S. Department of Education to offer federal
financial aid to its students.
- Revenue was $117.9 million in the fourth quarter of 2019
compared to revenue of $111.1 million, or adjusted revenue of
$113.7 million excluding the impact of a purchase accounting
adjustment of $2.5 million to reflect Capella University contract
liabilities at fair value, for the same period in 2018. The
increase was driven by higher enrollment and higher
revenue-per-learner.
- Income from operations was $25.1 million or 21.3% of revenue in
the fourth quarter of 2019 compared to income from operations of
$20.7 million or 18.6% of revenue, or adjusted income from
operations of $23.2 million or 20.4% of revenue, for the same
period in 2018.
- The Company opened the first Capella University Campus Center
in Atlanta, Georgia in 2019, and is planning to open four to six
additional Campus Centers, pending regulatory approval, in
2020.
Non-Degree Programs Segment Highlights
- For the fourth quarter, revenue increased to $3.6 million from
$3.5 million for the same period in 2018.
- Loss from operations was $0.1 million in the fourth quarter of
2019 compared to a loss from operations of $1.8 million in the same
period in 2018.
BALANCE SHEET AND CASH
FLOW
At December 31, 2019, Strategic Education, Inc. had cash, cash
equivalents, and marketable securities of $491.2 million, and no
debt. Cash provided by operations in 2019 was $202.1 million
compared to cash provided by operations of $46.9 million in 2018.
Capital expenditures for 2019 were $38.7 million compared to $27.5
million in 2018. Capital expenditures for 2020 are expected to be
between $40 million and $45 million.
For the fourth quarter of 2019, consolidated bad debt expense as
a percentage of revenue was 5.0%, compared to 6.1% of revenue for
the same period in 2018.
COMMON STOCK CASH
DIVIDEND
SEI announced today that it declared a regular, quarterly cash
dividend of $0.60 per share of common stock. This dividend will be
paid on March 16, 2020 to shareholders of record as of March 9,
2020.
CONFERENCE CALL WITH
MANAGEMENT
SEI will host a conference call to discuss its fourth 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, and Hackbright 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 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
December 31,
For the Twelve Months Ended
December 31,
2018
2019
2018
2019
Revenues
$
242,103
$
263,772
$
634,185
$
997,137
Costs and expenses:
Instructional and support costs
130,712
133,323
371,542
530,604
General and administration
68,541
67,595
194,035
272,411
Amortization of intangible assets
15,416
15,416
25,694
61,667
Merger and integration costs
7,954
10,225
45,745
21,923
Fair value adjustments and impairment of
intangible assets
605
—
19,909
—
Total costs and expenses
223,228
226,559
656,925
886,605
Income (loss) from operations
18,875
37,213
(22,740
)
110,532
Other income
1,755
2,497
3,601
13,192
Income (loss) before income taxes
20,630
39,710
(19,139
)
123,724
Provision (benefit) for income taxes
(1,825
)
11,173
(3,468
)
42,586
Net income (loss)
$
22,455
$
28,537
$
(15,671
)
$
81,138
Earnings (loss) per share:
Basic
$
1.05
$
1.31
$
(1.03
)
$
3.73
Diluted
$
1.02
$
1.29
$
(1.03
)
$
3.67
Weighted average shares outstanding:
Basic
21,335
21,817
15,190
21,725
Diluted
22,033
22,101
15,190
22,097
Cash dividend declared per share
$
0.50
$
0.60
$
1.50
$
2.10
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share
and per share data)
December 31, 2018
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
311,732
$
419,693
Marketable securities
37,121
34,874
Tuition receivable, net
55,694
51,523
Other current assets
15,814
18,004
Total current assets
420,361
524,094
Property and equipment, net
122,677
117,029
Right-of-use lease assets
—
84,778
Marketable securities, non-current
37,678
36,633
Intangible assets, net
328,344
273,011
Goodwill
732,540
732,075
Other assets
19,429
21,788
Total assets
$
1,661,029
$
1,789,408
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
85,979
$
90,828
Income taxes payable
419
1,352
Contract liabilities
38,733
39,284
Lease liabilities
—
25,284
Total current liabilities
125,131
156,748
Deferred income tax liabilities
59,358
47,942
Lease liabilities, non-current
—
80,557
Other long-term liabilities
51,316
41,451
Total liabilities
235,805
326,698
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000
shares authorized; 21,743,498 and 21,964,809 shares issued and
outstanding at December 31, 2018 and 2019, respectively
217
220
Additional paid-in capital
1,306,653
1,309,438
Accumulated other comprehensive income
32
233
Retained earnings
118,322
152,819
Total stockholders’ equity
1,425,224
1,462,710
Total liabilities and stockholders’
equity
$
1,661,029
$
1,789,408
STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year Ended December
31,
2018
2019
Cash flows from operating activities:
Net income (loss)
$
(15,671
)
$
81,138
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Amortization of deferred financing
costs
292
333
Amortization of investment
discount/premium
298
296
Depreciation and amortization
54,543
104,861
Deferred income taxes
(16,322
)
(8,037
)
Stock-based compensation
15,532
12,160
Fair value adjustments and impairment of
intangible assets
19,909
—
Impairment of right-of-use lease
assets
—
6,046
Changes in assets and liabilities:
Tuition receivable, net
7,880
1,770
Other current assets
3,768
(1,589
)
Other assets
(135
)
(540
)
Accounts payable and accrued expenses
1,140
245
Income taxes payable
(516
)
1,198
Contract liabilities
(19,329
)
7,716
Other long-term liabilities
(4,522
)
(3,451
)
Net cash provided by operating
activities
46,867
202,146
Cash flows from investing activities:
Net cash acquired in acquisition
167,859
—
Purchases of property and equipment
(27,547
)
(38,689
)
Purchases of marketable securities
(25,304
)
(40,481
)
Maturities of marketable securities
16,367
43,762
Other investments
(1,238
)
(2,658
)
Net cash provided by (used in) investing
activities
130,137
(38,066
)
Cash flows from financing activities:
Common dividends paid
(27,842
)
(46,625
)
Net payments for stock awards
7,789
(9,195
)
Payment of deferred financing costs
(1,162
)
—
Net cash used in financing activities
(21,215
)
(55,820
)
Net increase in cash, cash equivalents,
and restricted cash
155,789
108,260
Cash, cash equivalents, and restricted
cash — beginning of period
156,448
312,237
Cash, cash equivalents, and restricted
cash — end of period
$
312,237
$
420,497
Noncash transactions:
Purchases of property and equipment
included in accounts payable
$
1,029
$
3,406
STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT
REPORTING
(in thousands)
For the Three Months Ended
December 31,
For the Twelve Months Ended
December 31,
2018
2019
2018
2019
Revenues:
Strayer University
$
127,461
$
142,226
$
471,104
$
527,032
Capella University
111,126
117,902
154,918
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Consolidated revenues
$
242,103
$
263,772
$
634,185
$
997,137
Income (loss) from operations:
Strayer University
$
23,974
$
37,864
$
68,188
$
106,132
Capella University
20,666
25,063
6,340
88,981
Non-Degree Programs
(1,790
)
(73
)
(5,920
)
(991
)
Amortization of intangible assets
(15,416
)
(15,416
)
(25,694
)
(61,667
)
Merger and integration costs
(7,954
)
(10,225
)
(45,745
)
(21,923
)
Fair value adjustments and impairment of
intangible assets
(605
)
—
(19,909
)
—
Consolidated income (loss) from
operations
$
18,875
$
37,213
$
(22,740
)
$
110,532
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 + Design Academy, and adjustments
to the Company’s reserve for leases on facilities no longer in use,
(5) income recognized from the Company’s investments in partnership
interests and other investments, and (6) discrete tax adjustments
utilizing adjusted effective income tax rates of 27.1% and 28.0%
for the three months ended December 31, 2018 and 2019,
respectively, and adjusted effective income tax rates of 25.6% and
27.8% for the twelve months ended December 31, 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 + 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
December 31, 2018
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability
adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration
costs(3)
Fair value adjustments and
impairment of intangible assets(4)
Income from other
investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
242,103
$
2,534
$
—
$
—
$
—
$
—
$
—
$
244,637
Income from operations
$
18,875
$
2,534
$
15,416
$
7,954
$
605
$
—
$
—
$
45,384
Operating margin
7.8
%
18.6
%
Net income
$
22,455
$
2,534
$
15,416
$
7,954
$
605
$
—
$
(14,600
)
$
34,364
Earnings per share:
Diluted
$
1.02
$
1.56
Weighted average shares
outstanding:
Diluted
22,033
22,033
For the Three Months Ended
December 31, 2019
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration
costs(3)
Fair value adjustments and
impairment of intangible assets(4)
Income from other
investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
263,772
$
—
$
—
$
—
$
—
$
—
$
—
$
263,772
Income from operations
$
37,213
$
—
$
15,416
$
10,225
$
—
$
—
$
—
$
62,854
Operating margin
14.1
%
23.8
%
Net income
$
28,537
$
—
$
15,416
$
10,225
$
—
$
(112
)
$
(7,094
)
$
46,972
Earnings per share:
Diluted
$
1.29
$
2.13
Weighted average shares
outstanding:
Diluted
22,101
22,101
For the Twelve Months Ended
December 31, 2018
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability
adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration
costs(3)
Fair value adjustments and
impairment of intangible assets(4)
Income from other
investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
634,185
$
28,748
$
—
$
—
$
—
$
—
$
—
$
662,933
Income from operations
$
(22,740
)
$
28,748
$
25,694
$
45,745
$
19,909
$
—
$
—
$
97,356
Operating margin
-3.6
%
14.7
%
Net income
$
(15,671
)
$
28,748
$
25,694
$
45,745
$
19,909
$
—
$
(29,348
)
$
75,077
Earnings per share:
Diluted
$
(1.03
)
$
4.75
Weighted average shares
outstanding:
Diluted
15,190
15,801
For the Twelve Months Ended
December 31, 2019
Non-GAAP adjustments
As Reported
(GAAP)
Contract liability
adjustment
(1)
Amortization of
intangible assets(2)
Merger and integration
costs(3)
Fair value adjustments and
impairment of intangible assets(4)
Income from other
investments(5)
Tax
adjustments(6)
As Adjusted
(Non-GAAP)
Revenues
$
997,137
$
—
$
—
$
—
$
—
$
—
$
—
$
997,137
Income from operations
$
110,532
$
—
$
61,667
$
21,923
$
—
$
—
$
—
$
194,122
Operating margin
11.1
%
19.5
%
Net income
$
81,138
$
—
$
61,667
$
21,923
$
—
$
(3,446
)
$
(14,001
)
$
147,281
Earnings per share:
Diluted
$
3.67
$
6.67
Weighted average shares
outstanding:
Diluted
22,097
22,097
(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 charges for the impairment of
goodwill and intangible assets of $0.3 million and $19.6 million
related to the Company’s acquisition of The New York Code + Design
Academy during the three and twelve months ended December 31, 2018,
respectively, as well as adjustments to the Company’s reserve for
leases on facilities no longer in use of $0.3 million during the
three and twelve months ended December 31, 2018.
(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
income tax rates of 27.1% and 28.0% for the three months ended
December 31, 2018 and 2019, respectively, and adjusted effective
income tax rates of 25.6% and 27.8% for the twelve months ended
December 31, 2018 and 2019, respectively.
STRATEGIC EDUCATION, INC.
UNAUDITED NON-GAAP SEGMENT
REPORTING
(in thousands)
For the Three Months
Ended
For the Twelve Months
Ended
December 31,
December 31,
2018
2019
2018
2019
Revenues:
Strayer University
$
127,461
$
142,226
$
471,104
$
527,032
Capella University
111,126
117,902
154,918
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Consolidated revenues
242,103
263,772
634,185
997,137
Adjustments to consolidated revenues:
Strayer University
—
—
—
—
Capella University
2,534
—
28,748
—
Non-Degree Programs
—
—
—
—
Total adjustments to consolidated
revenues
2,534
—
28,748
—
Adjusted revenues by segment:
Strayer University
127,461
142,226
471,104
527,032
Capella University
113,660
117,902
183,666
455,320
Non-Degree Programs
3,516
3,644
8,163
14,785
Adjusted consolidated revenues
$
244,637
$
263,772
$
662,933
$
997,137
Income (loss) from operations:
Strayer University
$
23,974
$
37,864
$
68,188
$
106,132
Capella University
20,666
25,063
6,340
88,981
Non-Degree Programs
(1,790)
(73)
(5,920)
(991)
Amortization of intangible assets
(15,416)
(15,416)
(25,694)
(61,667)
Merger and integration costs
(7,954)
(10,225)
(45,745)
(21,923)
Fair value adjustments and impairment of
intangible assets
(605)
—
(19,909)
—
Consolidated income (loss) from
operations
18,875
37,213
(22,740)
110,532
Adjustments to consolidated income (loss)
from operations:
Contract liabilities adjustment
2,534
—
28,748
—
Amortization of intangible assets
15,416
15,416
25,694
61,667
Merger and integration costs
7,954
10,225
45,745
21,923
Fair value adjustments and impairment of
intangible assets
605
—
19,909
—
Total adjustments to consolidated income
(loss) from operations
26,509
25,641
120,096
83,590
Adjusted income (loss) from operations by
segment:
Strayer University
23,974
37,864
68,188
106,132
Capella University
23,200
25,063
35,088
88,981
Non-Degree Programs
(1,790)
(73)
(5,920)
(991)
Total adjusted income (loss) from
operations
$
45,384
$
62,854
$
97,356
$
194,122
Operating margin
Strayer University
18.8%
26.6%
14.5%
20.1%
Capella University
18.6%
21.3%
4.1%
19.5%
Non-Degree Programs
(50.9%)
(2.0%)
(72.5%)
(6.7%)
Adjusted operating margin
Strayer University
18.8%
26.6%
14.5%
20.1%
Capella University
20.4%
21.3%
19.1%
19.5%
Non-Degree Programs
(50.9%)
(2.0%)
(72.5%)
(6.7%)
STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
For the Three Months
Ended
For the Twelve Months
Ended
December 31,
December 31,
2018
2019
2018
2019
Net income (loss)
$
22,455
$
28,537
$
(15,671)
$
81,138
Provision (benefit) for income taxes
(1,825)
11,173
(3,468)
42,586
Other income
(1,755)
(2,497)
(3,601)
(13,192)
Depreciation and amortization
25,436
25,999
54,543
104,861
EBITDA (1)
44,311
63,212
31,803
215,393
Stock-based compensation
3,781
3,085
13,291
11,790
Merger and integration costs (2)
7,954
10,225
45,011
21,525
Fair value adjustments and impairment of
intangible assets (3)
605
—
20,798
—
Contract liability adjustment (4)
2,534
—
28,748
—
Adjusted EBITDA (1)
$
59,185
$
76,522
$
139,651
$
248,708
(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. Excludes $0.7 million and $0.4 million of depreciation and
amortization expense for the twelve months ended December 31, 2018
and 2019, respectively, and includes $2.2 million and $0.4 million
of stock-based compensation expense for the twelve months ended
December 31, 2018 and 2019, respectively.
(3)
Reflects adjustments to the value of
purchase consideration, charges for the impairment of intangible
assets related to the Company's acquisition of The New York Code +
Design Academy, and adjustments to the Company's reserve for leases
on facilities no longer in use.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200228005087/en/
Terese Wilke Manager, Investor Relations Strategic Education,
Inc. (612) 977-6331 terese.wilke@strategiced.com
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