Operating income increased 68.6% as compared to the prior year to date
University Group new student enrollments increased 7.0% as compared
to the prior year quarter
SCHAUMBURG, Ill.--(BUSINESS WIRE)--
Career Education Corporation (NASDAQ: CECO) today reported operating and
financial results for the second quarter and year to date ended June 30,
2018.
|
|
SECOND QUARTER AND YEAR TO DATE 2018 RESULTS |
|
| |
| Total Company |
•
|
|
Operating income of $31.8 million for the current year to date
increased 68.6 percent as compared to the prior year to date
|
|
•
| |
Operating income of $11.3 million for the current quarter compared
to prior year quarter operating income of $9.1 million |
|
•
| |
Ended the quarter with $190.1 million in cash, cash equivalents,
restricted cash and available-for-sale short-term investments
|
|
|
|
|
|
|
| | | |
| University Group and Corporate |
•
| |
Operating income of $50.3 million for the current year to date
increased 8.4 percent supported by a revenue increase of 1.4 percent
to $289.6 million as well as efficiency in our advertising expense
|
|
•
| |
Operating income of $23.5 million as compared to $23.3 million in
the prior year quarter
|
|
•
| |
Revenue of $141.8 million increased 3.2 percent as compared to
$137.4 million in the prior year quarter
|
|
|
|
|
|
|
| | | |
| University Group Key Metrics |
•
| |
New student enrollments increased 7.0 percent versus the prior year
quarter
|
|
•
| |
Total student enrollment decreased 2.8 percent versus the prior year
quarter but is expected to show growth during the third quarter
driven by the timing impact of the AIU academic calendar redesign
|
|
|
|
|
|
|
| | | |
Teach-Outs |
•
| |
Operating loss of $12.2 million as compared to $14.2 million in the
prior year quarter, with the improvement primarily driven by
substantial completion of the teach-outs
|
|
•
| |
Three campuses with approximately ten students remain as of June 30,
2018 with all programs of study expected to be completed by the end
of 2018
|
|
|
|
|
|
“We finished the first half with good momentum in key operating metrics,
driven by organic investments aimed at improving student onboarding and
learning experiences,” said Todd Nelson, President and Chief Executive
Officer. “Given our positive momentum we will continue to pursue further
investments in technology and student-serving processes and initiatives.
Overall, we are taking a measured approach to balance our objectives of
responsible and sustainable growth with our commitments to improve
student experiences, retention and academic outcomes and we remain
confident in the long-term academic value proposition of our
Universities.”
REVENUE
For the quarter and year to date ended June 30, 2018, total revenue was
$142.0 million and $290.1 million representing a decrease of 2.9 percent
and 5.9 percent, respectively, compared to total revenue of $146.2
million and $308.3 million for the prior year quarter and year to date
ended June 30, 2017. The decrease was primarily driven by declining
revenues within our teach-out campuses. As of June 30, 2018, there are
three campuses remaining to complete their teach-outs during 2018.
Total revenue for the University Group was $141.8 million and $289.6
million representing an increase of 3.2 percent and 1.4 percent,
respectively, for the quarter and year to date ended June 30, 2018 as
compared to the prior year periods.
|
| | |
| | |
| | For The Quarter Ended June 30, | | | For the Year to Date Ended June 30, | |
| Revenue ($ in thousands) | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | |
|
CTU
| |
$
|
93,266
| | |
$
|
91,204
| | |
|
2.3
|
%
| |
$
|
187,873
| | |
$
|
185,239
| | |
|
1.4
|
%
|
|
AIU
| |
|
48,579
| | |
|
46,215
| | | |
5.1
|
%
| |
|
101,700
| | |
|
100,468
| | | |
1.2
|
%
|
| Total University Group | | |
141,845
| | | |
137,419
| | | |
3.2
|
%
| | |
289,573
| | | |
285,707
| | | |
1.4
|
%
|
|
Corporate and Other
| |
|
—
| | |
|
—
| | |
NM
| | |
|
—
| | |
|
—
| | |
NM
| |
|
Subtotal
| | |
141,845
| | | |
137,419
| | | |
3.2
|
%
| | |
289,573
| | | |
285,707
| | | |
1.4
|
%
|
|
All Other Campuses (1) | |
|
191
| | |
|
8,803
| | | |
-97.8
|
%
| |
|
528
| | |
|
22,624
| | | |
-97.7
|
%
|
|
Total
| |
$
|
142,036
| | |
$
|
146,222
| | | |
-2.9
|
%
| |
$
|
290,101
| | |
$
|
308,331
| | | |
-5.9
|
%
|
|
(1)
|
|
Campuses included in All Other Campuses are in the process of being
taught out or have completed their teach-out as of June 30, 2018.
Previously, these campuses were reported within two segments, the
former Transitional Group and Culinary Arts segments.
|
| |
|
TOTAL AND NEW STUDENT ENROLLMENTS
For the second quarter of 2018, new student enrollments for the
University Group increased 7.0 percent as compared to the prior year
quarter. The increase in new student enrollments was positively
impacted by investments in student-serving processes, including our
admissions and advising centers in Arizona as well as the academic
calendar redesign within AIU.
|
|
| | |
| | | As of June 30, | |
Total Student Enrollments | | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | |
|
CTU
| | |
|
21,700
| | |
|
21,000
| | |
|
3.3
|
%
|
|
AIU
| | |
|
10,000
| | |
|
11,600
| | | |
-13.8
|
%
|
| Total University Group | | |
|
31,700
| | |
|
32,600
| | | |
-2.8
|
%
|
|
All Other Campuses (1) | | |
|
10
| | |
|
1,000
| | |
NM
| |
|
Total
| | |
|
31,710
| | |
|
33,600
| | | |
-5.6
|
%
|
|
| | |
| | |
| | For The Quarter Ended June 30, | | | For the Year to Date Ended June 30, | |
New Student Enrollments | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | |
|
CTU
| |
|
5,460
| | |
|
5,160
| | |
|
5.8
|
%
| |
|
10,720
| | |
|
10,190
| | |
|
5.2
|
%
|
|
AIU
| |
|
3,260
| | |
|
2,990
| | | |
9.0
|
%
| |
|
5,650
| | |
|
7,920
| | | |
-28.7
|
%
|
| Total University Group | |
|
8,720
| | |
|
8,150
| | | |
7.0
|
%
| |
|
16,370
| | |
|
18,110
| | | |
-9.6
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
(1) All Other Campuses no longer enroll new students.
|
|
|
OPERATING INCOME (LOSS)
For the quarter and year to date ended June 30, 2018, the Company
recorded operating income of $11.3 million and $31.8 million,
respectively, compared to operating income of $9.1 million and $18.9
million for the quarter and year to date ended June 30, 2017,
respectively. The University Group and Corporate recorded operating
income of $23.5 million and $50.3 million for the quarter and year to
date ended June 30, 2018, respectively, an increase of 1.0 percent and
8.4 percent as compared to the respective prior year periods.
|
| | |
| | |
| | For The Quarter Ended June 30, | | | For the Year to Date Ended June 30, | |
Operating Income ($ in thousands) | | 2018 | |
| 2017 | |
| Increase
(Decrease) | | | 2018 | |
| 2017 | |
| Increase
(Decrease) | |
|
CTU
| |
$
|
27,116
| | |
$
|
28,064
| | |
|
-3.4
|
%
| |
$
|
54,301
| | |
$
|
51,084
| | |
|
6.3
|
%
|
|
AIU
| |
|
(1,585
|
)
| |
|
1,075
| | | |
-247.4
|
%
| |
|
2,551
| | |
|
5,731
| | | |
-55.5
|
%
|
| Total University Group | | |
25,531
| | | |
29,139
| | | |
-12.4
|
%
| | |
56,852
| | | |
56,815
| | | |
0.1
|
%
|
|
Corporate and Other (1) | |
|
(2,000
|
)
| |
|
(5,847
|
)
| | |
65.8
|
%
| |
|
(6,542
|
)
| |
|
(10,396
|
)
| | |
37.1
|
%
|
|
Subtotal
| | |
23,531
| | | |
23,292
| | | |
1.0
|
%
| | |
50,310
| | | |
46,419
| | | |
8.4
|
%
|
|
All Other Campuses
| |
|
(12,228
|
)
| |
|
(14,188
|
)
| | |
13.8
|
%
| |
|
(18,478
|
)
| |
|
(27,534
|
)
| | |
32.9
|
%
|
|
Total
| |
$
|
11,303
| | |
$
|
9,104
| | | |
24.2
|
%
| |
$
|
31,832
| | |
$
|
18,885
| | | |
68.6
|
%
|
|
(1)
|
|
Corporate and Other benefitted from a recovery of $2.5 million for
past claims recorded during the current quarter and year to date.
|
| |
|
ADJUSTED OPERATING INCOME (LOSS)
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant and non-cash 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.)
As shown in the table below, adjusted operating income for the
University Group and Corporate was $26.8 million and $56.1 million for
the quarter and year to date ended June 30, 2018, respectively. Adjusted
operating loss for All Other Campuses was $3.0 million and $6.4 million
for the quarter and year to date ended June 30, 2018, respectively.
|
|
|
|
| |
| | | For The Quarter Ended June 30, | |
| For the Year to Date Ended June 30, | |
Adjusted Operating Income (Loss) | | | 2018 | |
| 2017 | | | 2018 | |
| 2017 | |
University Group and Corporate: | | | | | | | | | | | | | | | | | |
| Operating income | | | $ | 23,531 | | | $ | 23,292 | | | $ | 50,310 | | | $ | 46,419 | |
|
Depreciation and amortization
| | | |
2,085
| | | |
2,559
| | | |
4,552
| | | |
5,090
| |
|
Unused space charges (1) | | |
|
1,213
| | |
|
-
| | |
|
1,213
| | |
|
-
| |
| Adjusted Operating Income -- University Group and Corporate | | | $ | 26,829 | | | $ | 25,851 | | | $ | 56,075 | | | $ | 51,509 | |
| | | | | | | | | | | | | | | | |
|
| Increase (Decrease) | | | | 3.8 | % | | | | | | | 8.9 | % | | | | |
| | | | | | | | | | | | | | | | |
|
All Other Campuses | | | | | | | | | | | | | | | | | |
| Operating loss | | | $ | (12,228 | ) | | $ | (14,188 | ) | | $ | (18,478 | ) | | $ | (27,534 | ) |
|
Depreciation and amortization
| | | |
18
| | | |
1,317
| | | |
133
| | | |
2,696
| |
|
Unused space charges (1) | | | |
3,198
| | | |
1,654
| | | |
2,447
| | | |
3,811
| |
|
Significant legal settlements
| | |
|
5,970
| | |
|
-
| | |
|
9,461
| | |
|
-
| |
| Adjusted Operating Loss -- All Other Campuses | | | $ | (3,042 | ) | | $ | (11,217 | ) | | $ | (6,437 | ) | | $ | (21,027 | ) |
| | | | | | | | | | | | | | | | |
|
| Increase (Decrease) | | | | 72.9 | % | | | | | | | 69.4 | % | | | | |
|
(1)
|
|
Unused space charges represent the net present value of remaining
lease obligations for vacated space less an estimated amount for
sublease income. As terminations or subleases for leased spaces
occur, estimated amounts may be reversed or increased.
|
| |
|
BALANCE SHEET AND CASH FLOW
Net cash provided by operating activities was $3.7 million compared to
net cash provided by operating activities of $4.8 million for the
quarters ended June 30, 2018 and 2017, respectively. For the year to
date ended June 30, 2018, net cash flows provided by operating
activities was $14.8 million as compared to net cash used of $34.2
million for the year to date ended June 30, 2017.
|
| | |
| | |
| | For The Quarter Ended June 30, | | | For the Year to Date Ended June 30, | |
Selected Cash Flow Items | | 2018 |
|
| 2017 |
|
| Increase
(Decrease) | | | 2018 |
|
| 2017 | |
| Increase
(Decrease) | |
|
Net cash provided by (used in) operating activities
| |
$
|
3,658
| | |
$
|
4,807
| | |
|
-23.9
|
%
| |
$
|
14,754
| | |
$
|
(34,246
|
)
| |
|
143.1
|
%
|
|
Capital expenditures
| |
$
|
1,377
| | |
$
|
1,411
| | | |
-2.4
|
%
| |
$
|
2,737
| | |
$
|
2,146
| | | |
27.5
|
%
|
As of June 30, 2018 and December 31, 2017, cash, cash equivalents,
restricted cash and available-for-sale short-term investments totaled
$190.1 million and $180.1 million, respectively.
OUTLOOK
The Company currently expects the following results, subject to the key
assumptions identified below (see the GAAP to non-GAAP reconciliation
for adjusted operating income (loss) attached to this press release for
further details):
Financial Outlook:
-
Full year 2018 - total company:
-
Operating income in the range of $74.5 million to $81.5 million
-
Adjusted operating income in the range of $99.0 million to $106.0
million in line with previously provided outlook
-
Third quarter 2018 - total company:
-
Operating income in the range of $21.0 million to $22.5 million
-
Adjusted operating income in the range of $23.5 million to $25.0
million
-
Year end 2018 cash, cash equivalents, restricted cash and short-term
investments (“cash balances”) to be in the range of $215 million to
$220 million, updated to include the impact of legal settlements
recorded during the second quarter of 2018.
-
Operating income and adjusted operating income for the total company
to grow in 2019 as compared to 2018 and our ending cash balances for
2019 to increase as compared to 2018.
University Group Outlook:
- CTU
-
New student enrollments for the third quarter of 2018 are expected
to increase as compared to the prior year quarter.
- AIU:
-
New and total student enrollments for the third quarter of 2018
are expected to significantly increase as compared to the prior
year quarter.
-
Third quarter and full year revenue growth for 2018.
Operating income (loss), which is the most directly comparable GAAP
measure to adjusted operating income (loss), may not follow the same
trends stated in the outlook above because of adjustments made for
unused space charges that represent the present value of future
remaining lease obligations for vacated space less an estimated amount
for sublease income as well as depreciation, amortization, asset
impairment charges and significant legal settlements. The operating
income (loss) and adjusted operating income (loss), enrollment, revenue
and cash outlook provided above for 2018 and 2019 are based on the
following key assumptions and factors, among others: (i) prospective
student interest in the Company’s programs continues to trend in line
with recent experiences, (ii) initiatives and investments in
student-serving operations continue to positively impact enrollment
trends within the University Group, (iii) no material changes in the
current legal or regulatory environment, and excludes legal and
regulatory liabilities and other related impacts which are not probable
and estimable at this time, and any impact of new or proposed
regulations, including the “borrower defense to repayment” and gainful
employment regulations and any modifications thereto, and (iv) no
material changes in the estimated amount of compensation expense that
could be impacted by changes in the Company’s stock price.Although
these estimates and assumptions are based upon management’s good faith
beliefs regarding current events and actions that may be undertaken in
the future, actual results could differ materially from these estimates.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on Wednesday,
August 1, 2018 at 5:30 p.m. Eastern time to discuss its second quarter
and year to date 2018 results. 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 blended learning programs. The Company’s 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® learning platform. 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 University Group campus locations and web links to these
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 “believe,” “will,” “expect,” “estimate,”
“continue,” “outlook,” “remain” 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 or interest in our programs; 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,
financial responsibility and administrative capability standards
prescribed by the U.S. Department of Education), as well as applicable
accreditation standards and state regulatory requirements; the impact of
recently issued “defense to repayment” regulations and any modifications
thereto; rulemaking by the U.S. Department of Education or any state or
accreditor and increased focus by Congress and governmental agencies on,
or increased negative publicity about, for-profit education
institutions; our ability to successfully defend litigation and other
claims brought against us; the success of our initiatives to improve
student experiences, retention and academic outcomes; the ability of our
student admissions and advising centers in Arizona to achieve
anticipated operating performance; increased competition; the impact of
management changes; and changes in the overall U.S. 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 year ended
December 31, 2017 and its subsequent filings with the Securities and
Exchange Commission.
|
|
| | |
| | |
| | | | | | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
| | | | | | |
|
| | | June 30, | | | December 31, | |
| | | 2018 | | | 2017 | |
| | | (unaudited) | | | | | |
| ASSETS | | | | | | | | | |
| CURRENT ASSETS: | | | | | | | | | |
|
Cash and cash equivalents, unrestricted
| | |
$
|
33,175
| | |
$
|
18,110
| |
|
Restricted cash
| | | |
789
| | | |
789
| |
|
Restricted short-term investments
| | | |
4,570
| | | |
5,070
| |
|
Short-term investments
| | |
|
151,571
| | |
|
156,178
| |
|
Total cash and cash equivalents, restricted cash and short-term
investments
| | | |
190,105
| | | |
180,147
| |
| | | | | | | | |
|
|
Student receivables, net
| | | |
24,992
| | | |
18,875
| |
|
Receivables, other, net
| | | |
1,948
| | | |
1,163
| |
|
Prepaid expenses
| | | |
10,957
| | | |
7,722
| |
|
Inventories
| | | |
914
| | | |
1,112
| |
|
Other current assets
| | | |
1,607
| | | |
1,319
| |
|
Assets of discontinued operations
| | |
|
171
| | |
|
382
| |
|
Total current assets
| | |
|
230,694
| | |
|
210,720
| |
| | | | | | | | |
|
| NON-CURRENT ASSETS: | | | | | | | | | |
|
Property and equipment, net
| | | |
30,829
| | | |
33,230
| |
| Goodwill | | | |
87,356
| | | |
87,356
| |
|
Intangible assets, net
| | | |
7,900
| | | |
7,900
| |
|
Student receivables, net
| | | |
2,334
| | | |
2,548
| |
|
Deferred income tax assets, net
| | | |
91,443
| | | |
98,084
| |
|
Other assets
| | | |
6,649
| | | |
5,673
| |
|
Assets of discontinued operations
| | |
|
1,585
| | |
|
1,585
| |
| TOTAL ASSETS | | | $ | 458,790 | | | $ | 447,096 | |
| | | | | | | | |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | | | |
|
Accounts payable
| | |
$
|
11,297
| | |
$
|
8,515
| |
|
Accrued expenses:
| | | | | | | | | |
|
Payroll and related benefits
| | | |
22,895
| | | |
32,910
| |
|
Advertising and production costs
| | | |
9,945
| | | |
9,245
| |
|
Income taxes
| | | |
1,762
| | | |
2,185
| |
|
Other
| | | |
33,834
| | | |
31,233
| |
|
Deferred revenue
| | | |
23,050
| | | |
22,897
| |
|
Liabilities of discontinued operations
| | |
|
3,125
| | |
|
5,701
| |
|
Total current liabilities
| | |
|
105,908
| | |
|
112,686
| |
| | | | | | | | |
|
| NON-CURRENT LIABILITIES: | | | | | | | | | |
|
Deferred rent obligations
| | | |
14,827
| | | |
15,277
| |
|
Other liabilities
| | | |
15,138
| | | |
22,143
| |
|
Liabilities of discontinued operations
| | |
|
-
| | |
|
785
| |
|
Total non-current liabilities
| | |
|
29,965
| | |
|
38,205
| |
| | | | | | | | |
|
| STOCKHOLDERS' EQUITY: | | | | | | | | | |
|
Preferred stock
| | | |
-
| | | |
-
| |
|
Common stock
| | | |
851
| | | |
843
| |
|
Additional paid-in capital
| | | |
624,869
| | | |
621,008
| |
|
Accumulated other comprehensive loss
| | | |
(356
|
)
| | |
(164
|
)
|
|
Accumulated deficit
| | | |
(81,874
|
)
| | |
(108,127
|
)
|
| Treasury stock
| | |
|
(220,573
|
)
| |
|
(217,355
|
)
|
|
Total stockholders' equity
| | |
|
322,917
| | |
|
296,205
| |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | | $ | 458,790 | | | $ | 447,096 | |
|
| | |
| | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except per share amounts and percentages)
|
| | |
|
| | |
|
| | For The Quarter Ended June 30, | |
| | 2018 | |
| % of Total Revenue | |
| 2017 | |
| % of Total Revenue | |
| REVENUE: | | | | | |
| | | | | | | |
| | |
|
Tuition and fees
| |
$
|
141,344
| | | |
99.5
|
%
| |
$
|
145,507
| | | |
99.5
|
%
|
|
Other
| |
|
692
| | | |
0.5
|
%
| |
|
715
| | | |
0.5
|
%
|
|
Total revenue
| |
|
142,036
| | | | | | |
|
146,222
| | | | | |
| OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
|
Educational services and facilities
| | |
30,290
| | | |
21.3
|
%
| | |
36,406
| | | |
24.9
|
%
|
|
General and administrative
| | |
98,340
| | | |
69.2
|
%
| | |
96,836
| | | |
66.2
|
%
|
|
Depreciation and amortization
| |
|
2,103
| | | |
1.5
|
%
| |
|
3,876
| | | |
2.7
|
%
|
|
Total operating expenses
| |
|
130,733
| | | |
92.0
|
%
| |
|
137,118
| | | |
93.8
|
%
|
|
Operating income
| |
|
11,303
| | | |
8.0
|
%
| |
|
9,104
| | | |
6.2
|
%
|
| OTHER INCOME (EXPENSE): | | | | | | | | | | | | | | | | |
|
Interest income
| | |
742
| | | |
0.5
|
%
| | |
464
| | | |
0.3
|
%
|
|
Interest expense
| | |
(106
|
)
| | |
-0.1
|
%
| | |
(113
|
)
| | |
-0.1
|
%
|
|
Miscellaneous (expense) income
| |
|
(135
|
)
| | |
-0.1
|
%
| |
|
253
| | | |
0.2
|
%
|
|
Total other income
| |
|
501
| | | |
0.4
|
%
| |
|
604
| | | |
0.4
|
%
|
| PRETAX INCOME | | |
11,804
| | | |
8.3
|
%
| | |
9,708
| | | |
6.6
|
%
|
|
Provision for income taxes
| |
|
2,940
| | | |
2.1
|
%
| |
|
5,045
| | | |
3.5
|
%
|
| | | | | | | | | | | | | | | |
|
| INCOME FROM CONTINUING OPERATIONS | | |
8,864
| | | |
6.2
|
%
| | |
4,663
| | | |
3.2
|
%
|
|
Loss from discontinued operations, net of tax
| |
|
(113
|
)
| | |
-0.1
|
%
| |
|
(377
|
)
| | |
-0.3
|
%
|
| NET INCOME | |
|
8,751
| | | |
6.2
|
%
| |
|
4,286
| | | |
2.9
|
%
|
| | | | | | | | | | | | | | | |
|
| OTHER COMPREHENSIVE (LOSS) INCOME, net of tax: | | | | | | | | | | | | | | | | |
|
Foreign currency translation adjustments
| | |
(168
|
)
| | | | | | |
222
| | | | | |
|
Unrealized gain on investments
| |
|
108
| | | | | | |
|
11
| | | | | |
|
Total other comprehensive (loss) income
| |
|
(60
|
)
| | | | | |
|
233
| | | | | |
| COMPREHENSIVE INCOME | |
$
|
8,691
| | | | | | |
$
|
4,519
| | | | | |
| | | | | | | | | | | | | | | |
|
| NET INCOME (LOSS) PER SHARE - BASIC: | | | | | | | | | | | | | | | | |
|
Income from continuing operations
| |
$
|
0.13
| | | | | | |
$
|
0.07
| | | | | |
|
Loss from discontinued operations
| |
|
—
| | | | | | |
|
(0.01
|
)
| | | | |
|
Net income per share
| |
$
|
0.13
| | | | | | |
$
|
0.06
| | | | | |
| | | | | | | | | | | | | | | |
|
| NET INCOME (LOSS) PER SHARE - DILUTED: | | | | | | | | | | | | | | | | |
|
Income from continuing operations
| |
$
|
0.12
| | | | | | |
$
|
0.07
| | | | | |
|
Loss from discontinued operations
| |
|
—
| | | | | | |
|
(0.01
|
)
| | | | |
|
Net income per share
| |
$
|
0.12
| | | | | | |
$
|
0.06
| | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | | | | |
|
Basic
| |
|
69,668
| | | | | | |
|
69,025
| | | | | |
|
Diluted
| |
|
71,562
| | | | | | |
|
70,884
| | | | | |
|
| | |
| | |
|
| | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except per share amounts and percentages)
|
| | |
|
| | |
|
| | For the Year to Date Ended June 30, | |
| | 2018 | |
| % of Total Revenue | |
| 2017 | |
| % of Total Revenue | |
| REVENUE: | | | | | |
| | | | | | | |
| | |
|
Tuition and fees
| |
$
|
288,854
| | | |
99.6
|
%
| |
$
|
306,884
| | | |
99.5
|
%
|
|
Other
| |
|
1,247
| | | |
0.4
|
%
| |
|
1,447
| | | |
0.5
|
%
|
|
Total revenue
| |
|
290,101
| | | | | | |
|
308,331
| | | | | |
| OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
|
Educational services and facilities
| | |
57,236
| | | |
19.7
|
%
| | |
76,579
| | | |
24.8
|
%
|
|
General and administrative
| | |
196,348
| | | |
67.7
|
%
| | |
205,081
| | | |
66.5
|
%
|
|
Depreciation and amortization
| |
|
4,685
| | | |
1.6
|
%
| |
|
7,786
| | | |
2.5
|
%
|
|
Total operating expenses
| |
|
258,269
| | | |
89.0
|
%
| |
|
289,446
| | | |
93.9
|
%
|
|
Operating income
| |
|
31,832
| | | |
11.0
|
%
| |
|
18,885
| | | |
6.1
|
%
|
| OTHER INCOME: | | | | | | | | | | | | | | | | |
|
Interest income
| | |
1,376
| | | |
0.5
|
%
| | |
854
| | | |
0.3
|
%
|
|
Interest expense
| | |
(215
|
)
| | |
-0.1
|
%
| | |
(226
|
)
| | |
-0.1
|
%
|
|
Miscellaneous income
| |
|
193
| | | |
0.1
|
%
| |
|
293
| | | |
0.1
|
%
|
|
Total other income
| |
|
1,354
| | | |
0.5
|
%
| |
|
921
| | | |
0.3
|
%
|
| PRETAX INCOME | | |
33,186
| | | |
11.4
|
%
| | |
19,806
| | | |
6.4
|
%
|
|
Provision for income taxes
| |
|
6,438
| | | |
2.2
|
%
| |
|
9,546
| | | |
3.1
|
%
|
| | | | | | | | | | | | | | | |
|
| INCOME FROM CONTINUING OPERATIONS | | |
26,748
| | | |
9.2
|
%
| | |
10,260
| | | |
3.3
|
%
|
|
Loss from discontinued operations, net of tax
| |
|
(495
|
)
| | |
-0.2
|
%
| |
|
(797
|
)
| | |
-0.3
|
%
|
| NET INCOME | |
|
26,253
| | | |
9.0
|
%
| |
|
9,463
| | | |
3.1
|
%
|
| | | | | | | | | | | | | | | |
|
| OTHER COMPREHENSIVE (LOSS) INCOME, net of tax: | | | | | | | | | | | | | | | | |
|
Foreign currency translation adjustments
| | |
(82
|
)
| | | | | | |
263
| | | | | |
|
Unrealized (loss) gain on investments
| |
|
(110
|
)
| | | | | |
|
34
| | | | | |
|
Total other comprehensive (loss) income
| |
|
(192
|
)
| | | | | |
|
297
| | | | | |
| COMPREHENSIVE INCOME | |
$
|
26,061
| | | | | | |
$
|
9,760
| | | | | |
| | | | | | | | | | | | | | | |
|
| NET INCOME (LOSS) PER SHARE - BASIC: | | | | | | | | | | | | | | | | |
|
Income from continuing operations
| |
$
|
0.39
| | | | | | |
$
|
0.15
| | | | | |
|
Loss from discontinued operations
| |
|
(0.01
|
)
| | | | | |
|
(0.01
|
)
| | | | |
|
Net income per share
| |
$
|
0.38
| | | | | | |
$
|
0.14
| | | | | |
| | | | | | | | | | | | | | | |
|
| NET INCOME (LOSS) PER SHARE - DILUTED: | | | | | | | | | | | | | | | | |
|
Income from continuing operations
| |
$
|
0.38
| | | | | | |
$
|
0.14
| | | | | |
|
Loss from discontinued operations
| |
|
(0.01
|
)
| | | | | |
|
(0.01
|
)
| | | | |
|
Net income per share
| |
$
|
0.37
| | | | | | |
$
|
0.13
| | | | | |
| | | | | | | | | | | | | | | |
|
| WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | | | | |
|
Basic
| |
|
69,443
| | | | | | |
|
68,803
| | | | | |
|
Diluted
| |
|
71,239
| | | | | | |
|
70,590
| | | | | |
|
|
| | |
| | | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
| | | |
|
| | | |
|
| | | For The Year to Date Ended June 30, | |
| | | 2018 | |
| 2017 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | |
|
Net income
| | |
$
|
26,253
| | |
$
|
9,463
| |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
| | | | | | | | | |
|
Depreciation and amortization expense
| | | |
4,685
| | | |
7,786
| |
|
Bad debt expense
| | | |
13,679
| | | |
15,112
| |
|
Compensation expense related to share-based awards
| | | |
2,698
| | | |
2,326
| |
|
Deferred income taxes
| | | |
6,641
| | | |
8,744
| |
|
Changes in operating assets and liabilities:
| | |
|
(39,202
|
)
| |
|
(77,677
|
)
|
|
Net cash provided by (used in) operating activities
| | |
|
14,754
| | |
|
(34,246
|
)
|
| | | | | | | | |
|
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | |
|
Purchases of available-for-sale investments
| | | |
(101,043
|
)
| | |
(145,088
|
)
|
|
Sales of available-for-sale investments
| | | |
106,139
| | | |
169,480
| |
|
Purchases of property and equipment
| | |
|
(2,737
|
)
| |
|
(2,146
|
)
|
|
Net cash provided by investing activities
| | |
|
2,359
| | |
|
22,246
| |
| | | | | | | | |
|
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | |
|
Issuance of common stock
| | | |
1,170
| | | |
2,459
| |
|
Payments of employee tax associated with stock compensation
| | |
|
(3,218
|
)
| |
|
(1,101
|
)
|
|
Net cash (used in) provided by financing activities
| | |
|
(2,048
|
)
| |
|
1,358
| |
| | | | | | | | |
|
| EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS: | | |
|
—
| | |
|
33
| |
| | | | | | | | |
|
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | |
15,065
| | | |
(10,609
|
)
|
| CASH AND CASH EQUIVALENTS, beginning of the period | | |
|
18,899
| | |
|
50,882
| |
| CASH AND CASH EQUIVALENTS, end of the period | | |
$
|
33,964
| | |
$
|
40,273
| |
|
|
| | |
| | | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
|
| | | |
|
| | | |
|
| | | For The Quarter Ended June 30, | |
| | | 2018 | | 2017 | |
| REVENUE: | | | | | | | | |
|
CTU
| | |
$
|
93,266
| |
$
|
91,204
| |
|
AIU
| | |
|
48,579
| |
|
46,215
| |
| Total University Group | | | |
141,845
| | |
137,419
| |
|
Corporate and Other
| | |
|
—
| |
|
—
| |
|
Subtotal
| | | |
141,845
| | |
137,419
| |
|
All Other Campuses
| | |
|
191
| |
|
8,803
| |
|
Total
| | |
$
|
142,036
| |
$
|
146,222
| |
| | | | | | | |
|
| OPERATING INCOME (LOSS): | | | | | | | | |
|
CTU
| | |
$
|
27,116
| |
$
|
28,064
| |
|
AIU
| | |
|
(1,585
|
)
|
|
1,075
| |
| Total University Group | | | |
25,531
| | |
29,139
| |
|
Corporate and Other
| | |
|
(2,000
|
)
|
|
(5,847
|
)
|
|
Subtotal
| | | |
23,531
| | |
23,292
| |
|
All Other Campuses
| | |
|
(12,228
|
)
|
|
(14,188
|
)
|
|
Total
| | |
$
|
11,303
| |
$
|
9,104
| |
| | | | | | | |
|
| OPERATING MARGIN (LOSS): | | | | | | | | |
|
CTU
| | | |
29.1
|
%
| |
30.8
|
%
|
|
AIU
| | |
|
-3.3
|
%
|
|
2.3
|
%
|
| Total University Group | | | |
18.0
|
%
| |
21.2
|
%
|
|
Corporate and Other
| | |
NM
| |
NM
| |
|
Subtotal
| | | |
16.6
|
%
| |
16.9
|
%
|
|
All Other Campuses
| | |
NM
| |
NM
| |
|
Total
| | |
|
8.0
|
%
|
|
6.2
|
%
|
|
|
| | |
| | | |
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
|
| | | |
|
| | | |
|
| | | For the Year to Date Ended June 30, | |
| | | 2018 | | 2017 | |
| REVENUE: | | | | | | | | |
|
CTU
| | |
$
|
187,873
| |
$
|
185,239
| |
|
AIU
| | |
|
101,700
| |
|
100,468
| |
| Total University Group | | | |
289,573
| | |
285,707
| |
|
Corporate and Other
| | |
|
—
| |
|
—
| |
|
Subtotal
| | | |
289,573
| | |
285,707
| |
|
All Other Campuses
| | |
|
528
| |
|
22,624
| |
|
Total
| | |
$
|
290,101
| |
$
|
308,331
| |
| | | | | | | |
|
| OPERATING INCOME (LOSS): | | | | | | | | |
|
CTU
| | |
$
|
54,301
| |
$
|
51,084
| |
|
AIU
| | |
|
2,551
| |
|
5,731
| |
| Total University Group | | | |
56,852
| | |
56,815
| |
|
Corporate and Other
| | |
|
(6,542
|
)
|
|
(10,396
|
)
|
|
Subtotal
| | | |
50,310
| | |
46,419
| |
|
All Other Campuses
| | |
|
(18,478
|
)
|
|
(27,534
|
)
|
|
Total
| | |
$
|
31,832
| |
$
|
18,885
| |
| | | | | | | |
|
| OPERATING MARGIN (LOSS): | | | | | | | | |
|
CTU
| | | |
28.9
|
%
| |
27.6
|
%
|
|
AIU
| | |
|
2.5
|
%
|
|
5.7
|
%
|
| Total University Group | | | |
19.6
|
%
| |
19.9
|
%
|
|
Corporate and Other
| | |
NM
| |
NM
| |
|
Subtotal
| | | |
17.4
|
%
| |
16.2
|
%
|
|
All Other Campuses
| | |
NM
| |
NM
| |
|
Total
| | |
|
11.0
|
%
|
|
6.1
|
%
|
|
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CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
(In thousands, unless otherwise noted)
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| | | For The Quarter Ended June 30, | | | For the Year to Date Ended June 30, | |
| | | ACTUAL | | | ACTUAL | |
Adjusted Operating Income (Loss) | | | 2018 | |
| 2017 | | | 2018 | |
| 2017 | |
University Group and Corporate: | | | | | | | | | | | | | | | | | |
| Operating income (2) (3) | | | $ | 23,531 | | | $ | 23,292 | | | $ | 50,310 | | | $ | 46,419 | |
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Depreciation and amortization (3) | | | |
2,085
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2,559
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4,552
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5,090
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Unused space charges (3)(4) | | |
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1,213
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-
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1,213
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-
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| Adjusted Operating Income -- University Group and Corporate (5) | | | $ | 26,829 | | | $ | 25,851 | | | $ | 56,075 | | | $ | 51,509 | |
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All Other Campuses: | | | | | | | | | | | | | | | | | |
| Operating loss (2) (6) | | | $ | (12,228 | ) | | $ | (14,188 | ) | | $ | (18,478 | ) | | $ | (27,534 | ) |
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Depreciation and amortization (6) | | | |
18
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1,317
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133
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2,696
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Unused space charges (4) (6) | | | |
3,198
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1,654
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2,447
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3,811
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Significant legal settlements (6) | | |
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5,970
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-
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9,461
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-
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| Adjusted Operating Loss -- All Other Campuses (5) | | | $ | (3,042 | ) | | $ | (11,217 | ) | | $ | (6,437 | ) | | $ | (21,027 | ) |
Total Company | | | | | | | | | | | | | | | | | |
| Operating income | | | $ | 11,303 | | | $ | 9,104 | | | $ | 31,832 | | | $ | 18,885 | |
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Depreciation and amortization
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2,103
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3,876
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4,685
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7,786
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Unused space charges (4) | | | |
4,411
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1,654
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3,660
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3,811
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Significant legal settlements
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5,970
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-
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9,461
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-
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| Adjusted Operating Income-- Total Company | | | $ | 23,787 | | | $ | 14,634 | | | $ | 49,638 | | | $ | 30,482 | |
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| | For the Third Quarter Ending September 30, | | | For the Year Ending December 31, |
| | ACTUAL |
|
| OUTLOOK | | | ACTUAL |
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| OUTLOOK |
| | 2017 | | | 2018 | | | 2017 | | | 2018 |
Total Company | |
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| Operating income | | $4.5M | | | $21.0M - $22.5M | | | $34.1M | | | $74.5M - $81.5M |
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Depreciation and amortization
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3.6
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~2.5
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14.0
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~9.7
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Unused space charges (4) | | |
7.4
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-
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12.2
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~5.3
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Significant legal settlements
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-
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-
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6.5
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9.5
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| Adjusted Operating Income | | $15.5M | | | $23.5M - $25.0M | | | $66.8M | | | $99M - $106M |
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(1)
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The Company believes it is useful to present non-GAAP financial
measures which exclude certain significant and non-cash items as a
means to understand the performance of its operations. As a general
matter, the Company uses non-GAAP financial measures in conjunction
with results presented in accordance with GAAP to help analyze the
performance of its operations, assist with preparing the annual
operating plan, and measure performance for some forms of
compensation. In addition, the Company believes that non-GAAP
financial information is used by analysts and others in the
investment community to analyze the Company’s historical results and
to provide estimates of future performance.
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The Company believes adjusted operating income (loss) allows it to
analyze and assess its ongoing operations and compare current
operating results with the operational performance of other
companies in its industry because it does not give effect to
potential differences caused by items it does not consider
reflective of underlying operating performance, such as unused space
charges and significant legal reserves. In evaluating adjusted
operating income (loss), investors should be aware that in the
future the Company may incur expenses similar to the adjustments
presented above. The presentation of adjusted operating income
(loss) should not be construed as an inference that the Company's
future results will be unaffected by expenses that are unusual,
non-routine or non-recurring. Adjusted operating income (loss) has
limitations as an analytical tool, and it should not be considered
in isolation, or as a substitute for net income (loss), operating
income (loss), or any other performance measure derived in
accordance and reported under GAAP or as an alternative to cash flow
from operating activities or as a measure of liquidity.
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Non-GAAP financial measures, when viewed in a reconciliation to
corresponding GAAP financial measures, provide an additional way of
viewing the Company’s results of operations and the factors and
trends affecting the Company’s business. Non-GAAP financial measures
should be considered as a supplement to, and not as a substitute
for, or superior to, the corresponding financial results presented
in accordance with GAAP.
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(2)
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Operating income for the University Group and Corporate and
operating loss for All Other Campuses make up the components of
operating income. A reconciliation of these components for the
quarters and years to date ended June 30, 2018 and 2017 is presented
below:
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| | For The Quarter Ended June 30, | | | | For the Year to Date Ended June 30, | |
| | ACTUAL | | | | ACTUAL | |
| | 2018 | |
| 2017 | | | | 2018 | |
| 2017 | |
|
Operating income for University Group and Corporate
| |
$
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23,531
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$
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23,292
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$
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50,310
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$
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46,419
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Operating loss for All Other Campuses
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(12,228
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)
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(14,188
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)
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|
(18,478
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)
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|
(27,534
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)
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| Operating income | | $ | 11,303 | | | $ | 9,104 | | | | $ | 31,832 | | | $ | 18,885 | |
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(3)
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Amounts relate to the University Group and Corporate.
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(4)
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Unused space charges represent the net present value of remaining
lease obligations for vacated space less an estimated amount for
sublease income. These charges relate to exiting leased space as the
Company continues to right-size the organization and therefore are
not considered representative of ongoing operations.
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(5)
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Management assesses results of operations for the University Group
and Corporate separately from All Other Campuses. Because All Other
Campuses have been announced for teach-out or have been taught out,
management views these operations as not reflective of the ongoing
business. As a result, management views adjusted operating income
from the University Group and Corporate separately from the
remainder of the organization, to assess results and make decisions.
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(6)
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Amounts relate to All Other Campuses.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005948/en/
Investors:
Alpha IR Group
Chris Hodges or Sam Gibbons
(312)
445-2870
[email protected]
or
Media:
Career
Education Corporation
(847) 585-2600
[email protected]
Source: Career Education Corporation