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University Group revenue up mid-single digits

SCHAUMBURG, Ill.--(BUSINESS WIRE)-- Career Education Corporation (NASDAQ: CECO) today reported operating and financial results for the fourth quarter and full year of 2015.

Fourth Quarter Business Highlights:

• University Group revenue increased by 8.2 percent year-over-year (or 4.2 percent when adjusted for prior year accounting change), primarily driven by a 4.4 percent increase in total enrollments at CTU
• University Group operating income increased 36.8 percent year-over-year to $31.5 million (or 29.6 percent when adjusted for prior year accounting change), primarily driven by increased revenues and our transformation initiatives
• Achieved positive total company adjusted EBITDA for the second quarter in a row, and adjusted EBITDA for University and Corporate was the highest it has been in the past eight quarters
• Fourth quarter cash usage from operations was negative $0.7 million, compared to cash usage of negative $17.5 million in the fourth quarter of 2014

Full Year Business Highlights:

• Full year 2015 operating expenses for continuing and discontinued operations were roughly $152 million lower year-over-year, which was primarily driven by the impact of the Company’s transformation efforts
• Full year adjusted EBITDA from University and Corporate was $84.4 million, representing an improvement of $25.0 million or 42.2 percent compared to 2014, driven by 2.7 percent revenue growth at University and execution of the Company’s transformation strategy
• Full year 2015 cash usage from operations was negative $21.7 million, compared to cash usage of negative $118.6 million for full year 2014
• Ended 2015 with $201.0 million of cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings

University and Academic Highlights:

• Introduced four new degree programs in 2015 in the areas of Education (AIU), Business Administration (AIU), Nursing (CTU) and Healthcare Management (CTU)
• Continued to invest in technology with mobile capabilities now launched at both University institutions
• CTU received the “Distance Education Innovation Award” in September 2015 from the National University Technology Network, which recognized CTU’s adaptive learning platform (intellipath™) as providing an innovative, personalized learning plan for its Master of Business Administration (MBA) students
• AIU was listed in the U.S. News & World Report “Best Online Programs” rankings in January 2016, placing in the top 10 percent of programs evaluated for students enrolling in distance education programs to earn their degrees

“Our University Group closed out the year with a solid fourth quarter, as stable total enrollments and moderate revenue growth resulted in improved financial performance,” said Todd Nelson, President and Chief Executive Officer. “Our University Group and Corporate’s adjusted EBITDA was approximately $84 million for 2015, which provides a foundation for investments in technology and resources to help improve student retention and outcomes. Our transformation continues to generally track along the framework we offered when we announced the decision to prioritize and focus our resources on our University platform. We are encouraged by what we accomplished in 2015, both financially and operationally. The AIU and CTU brands continue to gain recognition for their competitive academic offerings, as both institutions won multiple awards during 2015.”

Nelson concluded, “As we look to 2016 and beyond, we will continue to invest in our University platform to position it for long-term success and growth. We are focused on strengthening the breadth of our program offerings, faculty and technological capabilities, with the goal of continuously improving our students’ experiences and academic outcomes. We will evaluate new programs to address the workforce skills gaps for our corporate partners. We will continue to develop our corporate partner network, and work closely with them about ways they can routinely engage and articulate the value of our educational services to their key employees. At the same time, we are honoring our commitment to the students at our campuses in teach-out to provide them with academic resources and education. Lastly, we will remain financially disciplined, with an eye on improving operating efficiencies and our cash flow generation capabilities.”

REVENUE

For the fourth quarter of 2015, total revenue was $199.9 million, an 8.1 percent decrease from $217.5 million for the fourth quarter of 2014. Total revenue for the University Group was $137.4 million for the fourth quarter of 2015 compared to $127.0 million for the fourth quarter of 2014, an increase of 8.2 percent. Adjusting for changes related to accounting for withdrawn students, revenue increased 4.2 percent for the current quarter as compared to the prior year quarter for the University Group.

TOTAL AND NEW STUDENT ENROLLMENTS

For the fourth quarter of 2015, total student enrollments for the University Group were 31,900, which remained relatively flat to the prior year quarter. New student enrollments for the University Group were 8,760, a decrease of 3.1 percent as compared to the prior year quarter.

OPERATING (LOSS) INCOME

For the fourth quarter of 2015, operating loss of $3.9 million improved 83.6 percent compared to an operating loss of $23.9 million in the prior year quarter. Total University Group operating income increased to $31.5 million from $23.1 million in the prior year quarter, an increase of 36.8 percent, or 29.6 percent when adjusted for the prior year accounting change. This increase in operating income was primarily driven by increased revenues and ongoing efficiencies.

ADJUSTED EBITDA

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its operations. (See tables below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the fourth quarter of 2015, adjusted EBITDA for the University Group and Corporate was $29.7 million representing an improvement of 28.4 percent, or $6.6 million, compared to fourth quarter of 2014, primarily driven by increased revenue and ongoing transformation initiatives. Adjusted EBITDA for the Transitional Group, Culinary Arts and discontinued operations remained relatively flat for the current quarter versus the prior year quarter primarily due to increased severance and related charges recorded in the current quarter for the newly announced teach-outs offset with improvements for campuses which completed their teach-out.

BALANCE SHEET AND CASH FLOW

Net cash used in operating activities was negative $0.7 million for the fourth quarter of 2015, compared to a net cash usage of negative $17.5 million in the prior year quarter. The Company’s continued focus on its transformation efforts and the completion of teach-outs drove the improvement in cash usage for the current year quarter as compared to the prior year quarter.

As of December 31, 2015 and December 31, 2014, cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings totaled $201.0 million and $237.0 million, respectively.

OUTLOOK

We expect the following results from our transformation efforts, subject to the key assumptions identified below:

• Adjusted EBITDA from University Group and Corporate is expected to stay relatively flat in 2016 as compared to 2015 and then increase modestly in 2017 and 2018
• As compared to 2015, we expect negative adjusted EBITDA from Transitional Group, Culinary Arts and discontinued operations to improve slightly in 2016, then to worsen in 2017 due to the completion of the LCB teach-outs and then to start improving in 2018
• End of year cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of any borrowings, as reported on the consolidated balance sheets of approximately $150 million to $160 million for the year ending December 31, 2016 and approximately $140 million to $150 million for the year ending December 31, 2017 and to generate cash during 2018

The estimates provided above for 2016 and beyond are based on the following key assumptions and factors, among others: (i) flat-to-modest total enrollment growth within the University Group while achieving the intended University Group efficiencies, (ii) teach-outs to occur as planned and performance consistent with historical experience, (iii) achievement of recovery rates for our real estate obligations and timing of any associated lease termination payments consistent with our historical experiences, (iv) right-sizing of our Corporate expense structure to serve primarily online institutions, (v) no material changes in the legal or regulatory environment and excludes legal or regulatory settlements, and (vi) consistent working capital movements in line with historical operating trends and potential impacts of teach-out campuses on working capital in line with expectations.Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events and actions that we may undertake in the future, actual results could differ materially from these estimates.

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Monday, February 29, 2016 at 5:30 p.m. Eastern time to discuss its fourth quarter and full year 2015 results and outlook. Interested parties can access the live webcast of the conference call and the related presentation materials at www.careered.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 844-378-6484 (domestic) or 412-542-4179 (international). Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.careered.com in the Investor Relations section of the website.

ABOUT CAREER EDUCATION CORPORATION

Career Education’s academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and hybrid learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath™ adaptive learning platform that allow students to more efficiently pursue earning a degree by receiving course credit for knowledge they can already demonstrate. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

A listing of individual campus locations and web links to Career Education’s institutions can be found at www.careered.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “expect,” “believe,” “will,” “anticipate,” “continue,” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment; increased competition; negative trends in the real estate market which could impact the costs related to teaching out campuses and the success of our initiatives to reduce our real estate obligations; our ability to achieve anticipated cost savings and business efficiencies; rulemaking by the U.S. Department of Education or any state and increased focus by Congress, the President and governmental agencies on, or increased negative publicity about, for-profit education institutions; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the gainful employment, 90-10 and financial responsibility standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of management changes; our ability to successfully defend litigation and other claims brought against us; and changes in the overall U.S. or global economy. 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, 2015 and its subsequent filings with the Securities and Exchange Commission.

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Investors:
Alpha IR Group
Sam Gibbons or Chris Hodges
(312) 445-2870
[email protected]
or
Media:
Career Education Corporation
(847) 585-2600
[email protected]

Source: Career Education Corporation