Positive new enrollment growth in first quarter
2018
Capella Education Company (NASDAQ: CPLA), a leading
educational services company, today announced financial results for
the three months ended March 31, 2018.
“We are pleased with our start to the year, including positive
new enrollment growth continuing into the first quarter of 2018,”
said Kevin Gilligan, chairman and chief executive officer. “We
continue to make progress on our merger with Strayer Education,
Inc. while executing our strategies to deliver the most direct path
between learning and employment and maintain our commitment to
academic quality.”
Selected Financial Data for the Three Months Ended March 31,
2018
Revenues were $112.0 million in the first quarter of 2018, up
0.2 percent compared to $111.8 million in the first quarter of
2017. Operating income was $17.9 million, compared to $17.6 million
for the same period in 2017. The operating margin was 16.0 percent,
compared to 15.7 percent in the first quarter 2017. The first
quarter 2018 period includes merger transaction costs of $0.5
million for Capella Education Company. Diluted net income per
common share from continuing operations was $1.16, compared to
$0.94 for the same period in 2017. Merger transaction costs reduced
diluted net income per common share from continuing operations for
first quarter 2018 by $0.04.
Operating and Segment Highlights
The “Post-Secondary” segment is comprised of Capella University
and Sophia Learning; the “Job-Ready Skills” segment consists of
Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary Segment
- First quarter 2018 revenues were $109.2
million, down 0.3 percent compared to $109.5 million in the same
period a year ago.
- Operating income was $19.4 million,
compared to operating income of $20.3 million for the same period
in 2017. The operating margin was 17.8 percent in the first quarter
2018, compared to 18.5 percent in the first quarter of 2017.
Post-Secondary segment operating results are primarily attributable
to Capella University.
- Capella University new enrollment
increased by 1.8 percent compared to first quarter 2017, primarily
due to strong performance at the bachelor’s degree level.
- Total Capella University active
enrollment decreased 1.6 percent to 38,181 learners, and early
cohort persistence was stable after gains of approximately 22
percent over a period of more than 6 years.
- FlexPath, Capella University’s
fastest-growing offerings, continued to positively impact new and
total enrollment in the first quarter 2018, and is now 22 percent
of Capella University’s Bachelor’s and Master’s degrees total
enrollment.
Job-Ready Skills Segment
- First quarter 2018 revenues were $2.8
million compared to $2.3 million in the same period of 2017.
- Operating loss was $1.0 million in the
first quarter 2018, compared to a loss of $2.7 million in the first
quarter of 2017.
Balance Sheet and Cash Flow
At March 31, 2018, Capella Education Company had cash and
marketable securities of $192.7 million, compared to $181.4 million
at Dec. 31, 2017, and no debt as of these dates.
Cash provided by operating activities from continuing operations
for the three months ended March 31, 2018 was $21.3 million
compared to $17.0 million in the same period a year ago.
Dividend and Share Repurchases
A quarterly cash dividend of $0.43 per outstanding share of
common stock was declared on Feb. 21, 2018 and paid on April 13,
2018. In addition, a quarterly cash dividend of the same amount was
declared on April 30, 2018 and is payable on June 29, 2018.
The Company had $27.0 million of share repurchase
authorization remaining at March 31, 2018. No shares were
repurchased in the first quarter of 2018.
2018 Goals and Outlook
The Company’s goal for 2018 is to deliver continued revenue
growth. To achieve this goal, annual new enrollment growth will be
needed in a continuing volatile enrollment environment, as well as
stable or improving early cohort persistence and continued revenue
growth in the Job-Ready Skills segment. In addition, the Company is
managing the Job-Ready Skills segment to be less dilutive in 2018
and expects the annual tax rate to be slightly above 25
percent.
Merger Update
As announced on Oct. 30, 2017, Capella Education Company and
Strayer Education, Inc. (“Strayer”) (NASDAQ:STRA) agreed to combine
in an all-stock merger of equals transaction, creating a national
leader in education innovation. As previously disclosed, on Nov.
22, 2017, the U.S. Federal Trade Commission granted early
termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. In addition,
on Jan. 19, 2018, the Company and Strayer announced that
shareholders of both companies voted to approve the proposals to
effect the merger. The proposed merger remains subject to
the satisfaction of customary closing conditions, including
approvals by State regulators and relevant accreditation bodies. By
letter dated Feb. 26, 2018, the Department of Education issued the
results of its preacquisition review of the proposed change in
ownership of Capella. That letter confirms that, subject to
submission of additional documents following the closing, the
University will have uninterrupted participation in the Title IV
Programs while the Department of Education completes its review of
the relevant documentation. Capella Education Company and Strayer
continue to expect that the merger will close in the third quarter
of 2018. Following the completion of the merger, Strategic
Education, Inc. will be the corporate entity under which both
Capella University and Strayer University will continue to operate
as independent and separately accredited institutions.
Conference Call
In light of the pending merger, the Company will not be
providing financial guidance or hold an investor conference
call.
Forward-Looking Statements
Certain information in this news release does not relate to
historical financial information, including statements relating to
future prospects and expectations regarding our growth, revenues,
enrollment, and operating performance, and should be considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The company cautions
investors not to place undue reliance on any such forward-looking
statements, which are based on information available at the time
those statements are made or management's good faith belief as of
that time with regard to future events, and should not be read as a
guarantee of future performance or results. Such statements are
subject to risks and uncertainties which could cause the company's
actual results to differ materially from historical results and
from results presently anticipated or projected. The company
undertakes no obligation to update its forward-looking
statements.
Among these risks and uncertainties are any failure to
materially comply with the extensive regulatory framework
applicable to us, including compliance with Title IV of the Higher
Education Act and the regulations thereunder; complying with U.S.
Department of Education rules, including those regarding incentive
compensation, gainful employment, return of Title IV funds,
borrower defenses to repayment, financial responsibility standards,
state authorization, certifications and program requirements;
maintaining our business in accordance with regional and
specialized accreditation standards and state regulatory and
program approval requirements; adapting to changes in the
administration, funding and availability for Title IV programs;
successfully defending litigation and other claims; any
governmental action or review of our business, marketing, or
financial aid practices, including by any state attorneys general,
the federal Consumer Financial Protection Bureau, the Federal Trade
Commission, the Minnesota Office of Higher Education or other state
or federal regulatory bodies; successfully growing our FlexPath
programs; maintaining and expanding existing commercial
relationships with employers and developing new employer and
business partner relationships; improving our conversion rate and
effectively optimizing our marketing strategy and spend;
successfully managing our learner success, doctoral enrollment and
degree completion efforts; keeping up with advances in technology
important to the online learner experience; effectively managing
data security risks; successfully growing acquisitions and new
business lines; and managing risks associated with the overall
competitive environment and general economic conditions. The
company also faces risks and uncertainties relating to the proposed
merger transaction with Strayer Education, Inc., including the
ability to satisfy the conditions to consummation of the merger;
the risk that required governmental and regulatory approvals may
delay the merger transaction or result in the imposition of
conditions that could cause the parties to abandon the merger
transaction or materially impact the financial benefits of the
transaction; the risk that the businesses will not be integrated
successfully; the risk that the cost savings and anticipated
synergies from the merger transaction may not be fully realized or
may take longer to realize than expected; disruption from the
proposed merger transaction making it more difficult to maintain
relationships with learners, employers, employees or suppliers; the
diversion of management time on merger-related issues and the risk
of shareholder class action lawsuits against the company, its
management team and board of directors.
Other factors that could cause the company’s results to differ
materially from those contained in its forward-looking statements
include those described in the “Risk Factors” section of our most
recent Annual Report on Form 10-K on file with the Securities and
Exchange Commission (SEC) and any updates or developments described
in our Quarterly Reports on Form 10-Q, or other documents the
company files with the SEC.
About Capella Education Company
Capella Education Company (http://www.capellaeducation.com) is
an educational services company that provides access to
high-quality education through online postsecondary degree programs
and job-ready skills offerings needed in today’s market. Capella’s
portfolio of companies is dedicated to closing the skills gap by
providing the most direct path between learning and employment.
CAPELLA EDUCATION COMPANY
Consolidated Balance Sheets
(In thousands, except par
value)
As of March 31, 2018 As of December 31,
2017 (Unaudited) ASSETS Current assets: Cash and
cash equivalents $ 118,077 $ 106,566 Marketable securities, current
43,167 45,226 Accounts receivable, net of allowance of $8,187 at
March 31, 2018 and $7,979 at December 31, 2017 23,798 22,733
Prepaid expenses and other current assets 9,491 9,523
Total current assets 194,533 184,048 Marketable securities,
non-current 31,457 29,570 Property and equipment, net 35,915 35,961
Goodwill 13,477 13,477 Intangibles, net 3,240 3,402 Deferred income
taxes 1,932 2,839 Other assets 10,234 9,724 Total
assets $ 290,788 $ 279,021
LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $
1,607 $ 2,281 Accrued liabilities 28,365 26,619 Dividends payable
5,302 5,228 Deferred revenue 15,789 13,849 Total
current liabilities 51,063 47,977 Deferred rent 12,127 12,365 Other
liabilities 2,612 3,288 Total liabilities 65,802
63,630 Shareholders’ equity: Common stock, $0.01 par value:
Authorized shares — 100,000, Issued and Outstanding shares — 11,659
at March 31, 2018 and 11,635 at December 31, 2017 117 116
Additional paid-in capital 128,655 127,804 Accumulated other
comprehensive loss (210 ) (110 ) Retained earnings 96,424
87,581 Total shareholders’ equity 224,986 215,391
Total liabilities and shareholders’ equity $ 290,788
$ 279,021
CAPELLA EDUCATION COMPANY
Consolidated Statements of
Income
(In thousands, except per share
amounts)
Three Months Ended March 31, 2018
2017 (Unaudited) Revenues $ 111,967 $ 111,788 Costs
and expenses: Instructional costs and services 48,432 48,412
Marketing and promotional 28,016 27,525 Admissions advisory 7,192
7,663 General and administrative 9,879 10,587 Merger-related costs
522 — Total costs and expenses 94,041 94,187 Operating income
17,926 17,601 Other income, net 496 107 Income from continuing
operations before income taxes 18,422 17,708 Income tax expense
4,575 6,537 Income from continuing operations 13,847 11,171 Income
from discontinued operations, net of tax — 95 Net income $ 13,847 $
11,266 Basic net income per common share: Continuing operations $
1.19 $ 0.97 Discontinued operations — — Basic net income per common
share $ 1.19 $ 0.97 Diluted net income per common share: Continuing
operations $ 1.16 $ 0.94 Discontinued operations — — Diluted net
income per common share $ 1.16 $ 0.94 Weighted average number of
common shares outstanding: Basic 11,645 11,559 Diluted 11,950
11,936 Cash dividend declared per common share $ 0.43 $ 0.41
CAPELLA EDUCATION COMPANY
Consolidated Statements of Cash
Flows
(In thousands)
Three Months Ended March 31, 2018
2017 (Unaudited) Operating activities Net
income $ 13,847 $ 11,266 Income from discontinued operations, net
of tax — 95 Income from continuing operations 13,847
11,171 Adjustments to reconcile net income to net cash provided by
operating activities: Provision for bad debts 2,604 2,416
Depreciation and amortization 4,845 5,126 Amortization of
investment discount/premium, net 292 471 Impairment of property and
equipment — 367 Loss on disposal of property and equipment 1 3
Share-based compensation 1,751 1,274 Deferred income taxes 938 894
Changes in operating assets and liabilities Accounts receivable
(3,669 ) (2,244 ) Prepaid expenses and other current assets 375
(2,366 ) Accounts payable and accrued liabilities (1,062 ) (6,168 )
Income taxes payable (414 ) 3,901 Deferred rent (238 ) (367 )
Deferred revenue 2,020 2,569 Net cash provided by
operating activities - continuing operations 21,290 17,047 Net cash
provided by operating activities - discontinued operations —
95 Net cash provided by operating activities 21,290 17,142
Investing activities Capital expenditures (3,706 ) (5,782 )
Investment in partnership interests (426 ) (292 ) Purchases of
marketable securities (12,051 ) (14,809 ) Maturities of marketable
securities 11,800 10,540 Net cash used in investing
activities - continuing operations (4,383 ) (10,343 ) Net cash
provided by investing activities - discontinued operations —
3,243 Net cash used in investing activities (4,383 ) (7,100
)
Financing activities Net proceeds for exercise of stock
options 220 1,081 Taxes paid for restricted stock units (618 ) (828
) Payment of dividends (4,997 ) (4,733 ) Net cash used in financing
activities - continuing operations (5,395 ) (4,480 ) Effect of
foreign exchange rates on cash (1 ) 2 Net increase in cash
and cash equivalents 11,511 5,564 Cash and cash equivalents at
beginning of period 106,566 93,570 Cash and cash
equivalents at end of period $ 118,077 $ 99,134
Supplemental disclosures of cash flow information Income
taxes paid $ 4,127 $ 1,714 Non-cash investing and financing
activities: Purchase of equipment included in accounts payable and
accrued liabilities $ 1,311 $ 1,102 Declaration of cash dividend to
be paid 5,090 4,813
CAPELLA EDUCATION COMPANY
Segment Reporting
(In thousands)
Three Months Ended March 31, 2018
2017 (Unaudited) Revenues Post-Secondary $ 109,185 $
109,481 Job-Ready Skills 2,782 2,307 Consolidated
Revenues $ 111,967 $ 111,788 Operating income (loss)
Post-Secondary $ 19,444 $ 20,251 Job-Ready Skills (996 ) (2,650 )
Merger-related costs (522 ) — Consolidated operating income
17,926 17,601 Other income, net 496 107 Income from
continuing operations before income taxes $ 18,422 $ 17,708
Note: The summary of financial information by reportable segment
above excludes the results of operations for Arden University,
which are presented as discontinued operations in our Consolidated
Statements of Income.
CAPELLA UNIVERSITY
Other Information
March 31, Capella University Enrollment by
Degree (a): 2018 2017 %
Change Doctoral 9,170 9,326 (1.7 )% Master's 17,734 18,293 (3.1
)% Bachelor's 10,188 10,100 0.9 % Other 1,089 1,083 0.6 % Total
38,181 38,802 (1.6 )%
(a) Enrollment in the table above includes
learners who are actively enrolled during the last month of the
quarters ended March 31, 2018 and 2017, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180502005253/en/
Capella Education CompanyInvestor Contact:Heide
Erickson, 612-977-5172Heide.Erickson@capella.eduorMedia
Contact:Mike Buttry, 612-977-5499Mike.Buttry@capella.edu
Capella Education Company (MM) (NASDAQ:CPLA)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Capella Education Company (MM) (NASDAQ:CPLA)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024