HERNDON, Va.--(BUSINESS WIRE)--February 26, 2021--Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended December 31, 2020.
“We are encouraged by the organization’s ability to adapt to the challenges presented by the COVID-19 pandemic over the past year,” said Karl McDonnell, Chief Executive Officer of Strategic Education. “As we enter 2021, we remain focused on providing the highest level of academic quality for our students. Our financial strength provides a solid foundation as we work to successfully integrate the Australia/New Zealand assets into the organization, focus on areas of existing strength in our core business, and invest in opportunities including employer initiatives, Sophia Learning, and digital enablement partnerships.”
STRATEGIC EDUCATION CONSOLIDATED RESULTS
[Note: Strategic Education’s financial results for any periods ended prior to November 3, 2020 do not include the financial results of the Australia/New Zealand acquisition and are therefore not directly comparable.]
Three Months Ended December 31
Year Ended December 31
Strayer University Segment Highlights
Capella University Segment Highlights
Australia/New Zealand Segment Highlights
BALANCE SHEET AND CASH FLOW
At December 31, 2020, Strategic Education had cash, cash equivalents, and marketable securities of $225.3 million, and $141.8 million outstanding under the revolving credit facility. Cash provided by operations in 2020 was $142.9 million compared to $202.1 million in 2019. Capital expenditures for 2020 were $46.8 million compared to $38.7 million in 2019. Capital expenditures for 2021 are expected to be approximately $55 million.
For the fourth quarter of 2020, consolidated bad debt expense as a percentage of revenue was 5.5%, or 5.3% of adjusted revenue, compared to 5.0% of revenue for the same period in 2019. Net tuition receivable as of December 31, 2020 includes additional reserves to account for projected deterioration in collections performance due to the pandemic.
COMMON STOCK CASH DIVIDEND
Strategic Education 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 15, 2021 to shareholders of record as of March 8, 2021.
ELECTIONS TO THE BOARD OF DIRECTORS
On November 5, 2020, the Company announced that the Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, unanimously voted to elect Jerry L. Johnson to serve as a Director of the Company, with service beginning on January 4, 2021. Mr. Johnson is Senior Vice President of Strategy, Corporate Development and Investor Relations at EnPro Industries, a leading technology company using materials science to push the boundaries of the semiconductor, life sciences, and other technology-enabled sectors. Mr. Johnson is a founding member and previously served as a Partner at RLJ Equity Partners since 2007.
In addition, on February 25, 2021, upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors unanimously approved the nomination of William J. Slocum for election to the Board of Directors at the Company’s 2021 Annual Meeting of Stockholders. Mr. Slocum is a Partner of Inclusive Capital Partners L.P. (“In-Cap”), a San Francisco-based investment firm. Prior to his work at In-Cap, Mr. Slocum was a portfolio manager at Golden Gate Capital for nine years and was a Vice President at ValueAct Capital for five years.
CONFERENCE CALL WITH MANAGEMENT
Strategic Education will host a conference call to discuss its fourth quarter 2020 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 Strategic Education, Inc.
Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to helping advance economic mobility through higher education. We serve working adult students all over the globe through our core focus areas: 1) U.S. Higher Education, through Strayer University and Capella University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor’s, master’s and doctoral programs including the Jack Welch Management Institute at Strayer University; 2) Alternative Learning, encompassing Sophia Learning, self-paced general education courses that are ACE-recommended for college credit; Workforce Edge, a full service, online employee education management portal; Digital Enablement Partnerships, helping advance capabilities in course development, online delivery and student support; and non-degree web and mobile application development courses through Hackbright Academy and Strayer University’s DevMountain; and 3) Australia/New Zealand, comprised of Torrens University, Think Education and Media Design School operations in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today’s workforce 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 and growth opportunities of Strategic Education; Strategic Education’s plans, strategies and prospects; the impact of the current COVID-19 pandemic on Strategic Education’s business and results; and future events and expectations. The statements are based on Strategic Education’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:
Many of these risks, uncertainties and assumptions are beyond Strategic Education’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 Strategic Education on the date they are made, and Strategic Education 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 CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
(in thousands, except per share data) |
||||||||||||
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|||||||||
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|||||
Revenues |
$ |
263,772 |
|
$ |
267,494 |
|
|
$ |
997,137 |
|
$ |
1,027,653 |
Costs and expenses: |
|
|
|
|
|
|
|
|||||
Instructional and support costs |
133,323 |
|
147,007 |
|
|
530,604 |
|
532,661 |
||||
General and administration |
67,595 |
|
84,635 |
|
|
272,411 |
|
295,231 |
||||
Amortization of intangible assets |
15,416 |
|
17,974 |
|
|
61,667 |
|
64,225 |
||||
Merger and integration costs |
10,225 |
|
5,912 |
|
|
21,923 |
|
13,770 |
||||
Restructuring costs |
— |
|
8,358 |
|
|
— |
|
12,382 |
||||
Total costs and expenses |
226,559 |
|
263,886 |
|
|
886,605 |
|
918,269 |
||||
Income from operations |
37,213 |
|
3,608 |
|
|
110,532 |
|
109,384 |
||||
Other income (expenses) |
2,497 |
|
(101 |
) |
|
13,192 |
|
4,573 |
||||
Income before income taxes |
39,710 |
|
3,507 |
|
|
123,724 |
|
113,957 |
||||
Provision (benefit) for income taxes |
11,173 |
|
(2,410 |
) |
|
42,586 |
|
27,689 |
||||
Net income |
$ |
28,537 |
|
$ |
5,917 |
|
|
$ |
81,138 |
|
$ |
86,268 |
Earnings per share: |
|
|
|
|
|
|
|
|||||
Basic |
$ |
1.31 |
|
$ |
0.25 |
|
|
$ |
3.73 |
|
$ |
3.81 |
Diluted |
$ |
1.29 |
|
$ |
0.25 |
|
|
$ |
3.67 |
|
$ |
3.77 |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|||||
Basic |
21,817 |
|
23,955 |
|
|
21,725 |
|
22,633 |
||||
Diluted |
22,101 |
|
24,143 |
|
|
22,097 |
|
22,860 |
STRATEGIC EDUCATION, INC. |
|||||
UNAUDITED CONSOLIDATED BALANCE SHEETS |
|||||
(in thousands, except share and per share data) |
|||||
|
December 31, |
|
December 31, |
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
419,693 |
|
$ |
187,509 |
Marketable securities |
34,874 |
|
7,557 |
||
Tuition receivable, net |
51,523 |
|
50,169 |
||
Income taxes receivable |
— |
|
1,429 |
||
Other current assets |
18,004 |
|
39,458 |
||
Total current assets |
524,094 |
|
286,122 |
||
Property and equipment, net |
117,029 |
|
158,854 |
||
Right-of-use lease assets |
84,778 |
|
120,687 |
||
Marketable securities, non-current |
36,633 |
|
30,270 |
||
Intangible assets, net |
273,011 |
|
326,420 |
||
Goodwill |
732,075 |
|
1,318,526 |
||
Other assets |
21,788 |
|
54,928 |
||
Total assets |
$ |
1,789,408 |
|
$ |
2,295,807 |
|
|
|
|
||
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
$ |
90,828 |
|
$ |
104,742 |
Income taxes payable |
1,352 |
|
— |
||
Contract liabilities |
39,284 |
|
60,501 |
||
Lease liabilities |
25,284 |
|
34,809 |
||
Total current liabilities |
156,748 |
|
200,052 |
||
Long-term debt |
— |
|
141,823 |
||
Deferred income tax liabilities |
47,942 |
|
53,407 |
||
Lease liabilities, non-current |
80,557 |
|
106,151 |
||
Other long-term liabilities |
41,451 |
|
46,055 |
||
Total liabilities |
326,698 |
|
547,488 |
||
Commitments and contingencies |
|
|
|
||
Stockholders’ equity: |
|
|
|
||
Common stock, par value $0.01; 32,000,000 shares authorized; 21,964,809 and 24,418,939 shares issued and outstanding at December 31, 2019 and 2020, respectively |
220 |
|
244 |
||
Additional paid-in capital |
1,309,438 |
|
1,519,549 |
||
Accumulated other comprehensive income |
233 |
|
48,880 |
||
Retained earnings |
152,819 |
|
179,646 |
||
Total stockholders’ equity |
1,462,710 |
|
1,748,319 |
||
Total liabilities and stockholders’ equity |
$ |
1,789,408 |
|
$ |
2,295,807 |
STRATEGIC EDUCATION, INC. |
||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
|
|
For the Year Ended |
||||||
|
|
2019 |
|
2020 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income |
|
$ |
81,138 |
|
|
$ |
86,268 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Amortization of deferred financing costs |
|
333 |
|
|
466 |
|
||
Amortization of investment discount/premium |
|
296 |
|
|
146 |
|
||
Depreciation and amortization |
|
104,861 |
|
|
109,154 |
|
||
Deferred income taxes |
|
(8,037 |
) |
|
(13,431 |
) |
||
Stock-based compensation |
|
12,160 |
|
|
14,610 |
|
||
Impairment of right-of-use lease assets |
|
6,046 |
|
|
848 |
|
||
Changes in assets and liabilities: |
|
|
|
|
||||
Tuition receivable, net |
|
1,770 |
|
|
19,659 |
|
||
Other assets |
|
(2,129 |
) |
|
(32,326 |
) |
||
Accounts payable and accrued expenses |
|
245 |
|
|
(22,685 |
) |
||
Income taxes payable and income taxes receivable |
|
1,198 |
|
|
(4,020 |
) |
||
Contract liabilities |
|
7,716 |
|
|
(10,095 |
) |
||
Other long-term liabilities |
|
(3,451 |
) |
|
(5,689 |
) |
||
Net cash provided by operating activities |
|
202,146 |
|
|
142,905 |
|
||
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Cash paid for acquisition, net of cash acquired |
|
— |
|
|
(628,759 |
) |
||
Purchases of property and equipment |
|
(38,689 |
) |
|
(46,812 |
) |
||
Purchases of marketable securities |
|
(40,481 |
) |
|
(1,863 |
) |
||
Proceeds from marketable securities |
|
43,762 |
|
|
36,192 |
|
||
Other investments |
|
(2,658 |
) |
|
(950 |
) |
||
Net cash used in investing activities |
|
(38,066 |
) |
|
(642,192 |
) |
||
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Net proceeds from issuance of common stock |
|
— |
|
|
220,248 |
|
||
Proceeds from long-term debt |
|
— |
|
|
145,630 |
|
||
Common dividends paid |
|
(46,625 |
) |
|
(55,956 |
) |
||
Net payments for stock awards |
|
(9,195 |
) |
|
(24,741 |
) |
||
Payments on long-term debt |
|
— |
|
|
(3,807 |
) |
||
Payment of deferred financing costs |
|
— |
|
|
(1,940 |
) |
||
Repurchase of common stock |
|
— |
|
|
(247 |
) |
||
Net cash provided by (used in) financing activities |
|
(55,820 |
) |
|
279,187 |
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
— |
|
|
1,623 |
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
108,260 |
|
|
(218,477 |
) |
||
Cash, cash equivalents, and restricted cash — beginning of period |
|
312,237 |
|
|
420,497 |
|
||
Cash, cash equivalents, and restricted cash — end of period |
|
$ |
420,497 |
|
|
$ |
202,020 |
|
STRATEGIC EDUCATION, INC. |
|||||||||||||||
UNAUDITED SEGMENT REPORTING |
|||||||||||||||
(in thousands) |
|||||||||||||||
|
For the Three Months |
|
For the Twelve Months |
||||||||||||
|
2019 |
|
2020 |
|
2019 |
|
2020 |
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Strayer University |
$ |
144,503 |
|
|
$ |
125,488 |
|
|
$ |
536,969 |
|
|
$ |
537,633 |
|
Capella University |
119,269 |
|
|
118,625 |
|
|
460,168 |
|
|
466,639 |
|
||||
Australia/New Zealand |
— |
|
|
23,381 |
|
|
— |
|
|
23,381 |
|
||||
Consolidated revenues |
$ |
263,772 |
|
|
$ |
267,494 |
|
|
$ |
997,137 |
|
|
$ |
1,027,653 |
|
Income (loss) from operations: |
|
|
|
|
|
|
|
||||||||
Strayer University |
$ |
37,180 |
|
|
$ |
25,173 |
|
|
$ |
103,409 |
|
|
$ |
120,398 |
|
Capella University |
25,674 |
|
|
23,954 |
|
|
90,713 |
|
|
92,638 |
|
||||
Australia/New Zealand |
— |
|
|
(13,275 |
) |
|
— |
|
|
(13,275 |
) |
||||
Amortization of intangible assets |
(15,416 |
) |
|
(17,974 |
) |
|
(61,667 |
) |
|
(64,225 |
) |
||||
Merger and integration costs |
(10,225 |
) |
|
(5,912 |
) |
|
(21,923 |
) |
|
(13,770 |
) |
||||
Restructuring costs |
— |
|
|
(8,358 |
) |
|
— |
|
|
(12,382 |
) |
||||
Consolidated income from operations |
$ |
37,213 |
|
|
$ |
3,608 |
|
|
$ |
110,532 |
|
|
$ |
109,384 |
|
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, total costs and expenses, income from operations, operating margin, income before income taxes, 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 Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, 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 Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (2) amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (3) transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (4) severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring, (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 28.0% and 28.4% for the three months ended December 31, 2019 and 2020, respectively, and adjusted effective income tax rates of 27.8% and 28.5% for the twelve months ended December 31, 2019 and 2020, respectively. We define EBITDA as net income before other income, the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, and the amounts in (1), (3) and (4) above. 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 REVENUE, ADJUSTED TOTAL COSTS AND EXPENSES, ADJUSTED INCOME FROM OPERATIONS, ADJUSTED INCOME BEFORE INCOME TAXES, ADJUSTED NET INCOME, AND ADJUSTED EPS |
||||||||||||||||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||||||||||||||
|
|
For the Three Months Ended December 31, 2019 |
||||||||||||||||||||||||||||
|
As |
Contract |
Amortization |
Merger and |
Restructuring |
|
Income from |
Tax |
As Adjusted |
|||||||||||||||||||||
Revenues |
$ |
263,772 |
|
|
$ |
— |
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
263,772 |
|
|||
Total costs and expenses |
$ |
226,559 |
|
|
$ |
— |
$ |
(15,416 |
) |
$ |
(10,225 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
200,918 |
|
|||
Income from operations |
$ |
37,213 |
|
|
$ |
— |
$ |
15,416 |
|
$ |
10,225 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
62,854 |
|
|||
Operating margin |
|
14.1 |
% |
|
|
|
|
|
|
|
|
23.8 |
% |
|||||||||||||||||
Income before income taxes |
$ |
39,710 |
|
|
$ |
— |
$ |
15,416 |
|
$ |
10,225 |
|
|
$ |
— |
|
$ |
(112 |
) |
|
$ |
— |
|
|
$ |
65,239 |
|
|||
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 Three Months Ended December 31, 2020 |
|
|||||||||||||||||||||||||||
|
As |
Contract |
Amortization |
Merger and |
Restructuring |
Income from |
Tax |
As Adjusted |
||||||||||||||||||||||
Revenues |
$ |
267,494 |
|
|
$ |
11,296 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
278,790 |
|
Total costs and expenses |
$ |
263,886 |
|
|
$ |
— |
|
$ |
(17,974 |
) |
|
$ |
(5,912 |
) |
|
$ |
(8,358 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
231,642 |
|
Income from operations |
$ |
3,608 |
|
|
$ |
11,296 |
|
$ |
17,974 |
|
|
$ |
5,912 |
|
|
$ |
8,358 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
47,148 |
|
Operating margin |
|
1.3 |
% |
|
|
|
|
|
|
|
16.9 |
% |
||||||||||||||||||
Income before income taxes |
$ |
3,507 |
|
|
$ |
11,296 |
|
$ |
17,974 |
|
|
$ |
5,912 |
|
|
$ |
8,358 |
|
|
$ |
(315 |
) |
|
$ |
— |
|
|
$ |
46,732 |
|
Net income |
$ |
5,917 |
|
|
$ |
11,296 |
|
$ |
17,974 |
|
|
$ |
5,912 |
|
|
$ |
8,358 |
|
|
$ |
(315 |
) |
|
$ |
(15,700 |
) |
|
$ |
33,442 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Diluted |
$ |
0.25 |
|
|
|
|
|
|
|
|
$ |
1.39 |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Diluted |
|
24,143 |
|
|
|
|
|
|
|
|
24,143 |
|
||||||||||||||||||
|
For the Twelve Months Ended December 31, 2019 |
||||||||||||||||||||||||||||
|
As |
Contract |
Amortization |
Merger and |
Restructuring |
Income from |
Tax |
As Adjusted |
|||||||||||||||||||||
Revenues |
$ |
997,137 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
997,137 |
|
Total costs and expenses |
$ |
886,605 |
|
|
$ |
— |
|
$ |
(61,667 |
) |
|
$ |
(21,923 |
) |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
803,015 |
|
Income from operations |
$ |
110,532 |
|
|
$ |
— |
|
$ |
61,667 |
|
|
$ |
21,923 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
194,122 |
|
Operating margin |
|
11.1 |
% |
|
|
|
|
|
|
|
19.5 |
% |
|||||||||||||||||
Income before income taxes |
$ |
123,724 |
|
|
$ |
— |
|
$ |
61,667 |
|
|
$ |
21,923 |
|
|
$ |
— |
|
$ |
(3,446 |
) |
|
$ |
— |
|
|
$ |
203,868 |
|
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 |
|
|||||||||||||||||
|
|
For the Twelve Months Ended December 31, 2020 |
||||||||||||||||||||||||||||
|
As |
Contract |
Amortization |
Merger and |
Restructuring |
Income from |
Tax |
As Adjusted |
||||||||||||||||||||||
Revenues |
$ |
1,027,653 |
|
|
$ |
11,296 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,038,949 |
|
Total costs and expenses |
$ |
918,269 |
|
|
$ |
— |
|
$ |
(64,225 |
) |
|
$ |
(13,770 |
) |
|
$ |
(12,382 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
827,892 |
|
Income from operations |
$ |
109,384 |
|
|
$ |
11,296 |
|
$ |
64,225 |
|
|
$ |
13,770 |
|
|
$ |
12,382 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
211,057 |
|
Operating margin |
|
10.6 |
% |
|
|
|
|
|
|
|
20.3 |
% |
||||||||||||||||||
Income before income taxes |
$ |
113,957 |
|
|
$ |
11,296 |
|
$ |
64,225 |
|
|
$ |
13,770 |
|
|
$ |
12,382 |
|
|
$ |
(2,094 |
) |
|
$ |
— |
|
|
$ |
213,536 |
|
Net income |
$ |
86,268 |
|
|
$ |
11,296 |
|
$ |
64,225 |
|
|
$ |
13,770 |
|
|
$ |
12,382 |
|
|
$ |
(2,094 |
) |
|
$ |
(33,141 |
) |
|
$ |
152,706 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Diluted |
$ |
3.77 |
|
|
|
|
|
|
|
|
$ |
6.68 |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Diluted |
|
22,860 |
|
|
|
|
|
|
|
|
22,860 |
|
||||||||||||||||||
(1) |
Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand. |
|
(2) |
Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand. |
|
(3) |
Reflects transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company's acquisition of Torrens University and associated assets in Australia and New Zealand. |
|
(4) |
Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring. |
|
(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 28.0% and 28.4% for the three months ended December 31, 2019 and 2020, respectively, and adjusted effective income tax rates of 27.8% and 28.5% for the twelve months ended December 31, 2019 and 2020, 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, |
|||||||||||||
2019 |
|
2020 |
|
2019 |
|
2020 |
|||||||||
Revenues: |
|||||||||||||||
Strayer University |
$ |
144,503 |
|
$ |
125,488 |
|
$ |
536,969 |
|
$ |
537,633 |
|
|||
Capella University |
119,269 |
|
118,625 |
|
460,168 |
|
466,639 |
|
|||||||
Australia/New Zealand |
— |
|
23,381 |
|
— |
|
23,381 |
|
|||||||
Consolidated revenues |
|
263,772 |
|
|
267,494 |
|
|
997,137 |
|
|
1,027,653 |
|
|||
|
|
||||||||||||||
Adjustments to consolidated revenues: |
|
|
|||||||||||||
Strayer University |
— |
|
— |
|
— |
|
— |
|
|||||||
Capella University |
— |
|
— |
|
— |
|
— |
|
|||||||
Australia/New Zealand |
— |
|
11,296 |
|
— |
|
11,296 |
|
|||||||
Total adjustments to consolidated revenues |
|
— |
|
|
11,296 |
|
|
— |
|
|
11,296 |
|
|||
|
|
||||||||||||||
Adjusted revenues by segment: |
|
|
|||||||||||||
Strayer University |
144,503 |
|
125,488 |
|
536,969 |
|
537,633 |
|
|||||||
Capella University |
119,269 |
|
118,625 |
|
460,168 |
|
466,639 |
|
|||||||
Australia/New Zealand |
— |
|
34,677 |
|
— |
|
34,677 |
|
|||||||
Adjusted consolidated revenues |
$ |
263,772 |
|
$ |
278,790 |
|
$ |
997,137 |
|
$ |
1,038,949 |
|
|||
|
|
||||||||||||||
Income (loss) from operations: |
|
|
|||||||||||||
Strayer University |
$ |
37,180 |
|
$ |
25,173 |
|
$ |
103,409 |
|
$ |
120,398 |
|
|||
Capella University |
25,674 |
|
23,954 |
|
90,713 |
|
92,638 |
|
|||||||
Australia/New Zealand |
— |
|
(13,275 |
) |
— |
|
(13,275 |
) |
|||||||
Amortization of intangible assets |
(15,416 |
) |
(17,974 |
) |
(61,667 |
) |
(64,225 |
) |
|||||||
Merger and integration costs |
(10,225 |
) |
(5,912 |
) |
(21,923 |
) |
(13,770 |
) |
|||||||
Restructuring costs |
|
— |
|
|
|
(8,358 |
) |
|
|
— |
|
|
|
(12,382 |
) |
Consolidated income from operations |
|
37,213 |
|
|
3,608 |
|
|
110,532 |
|
|
109,384 |
|
|||
|
|
||||||||||||||
Adjustments to consolidated income from operations: |
|
|
|||||||||||||
Contract liabilities adjustment |
|
— |
|
|
|
11,296 |
|
|
|
— |
|
|
|
11,296 |
|
Amortization of intangible assets |
15,416 |
|
17,974 |
|
61,667 |
|
64,225 |
|
|||||||
Merger and integration costs |
10,225 |
|
5,912 |
|
21,923 |
|
13,770 |
|
|||||||
Restructuring costs |
|
— |
|
|
|
8,358 |
|
|
|
— |
|
|
|
12,382 |
|
Total adjustments to consolidated income from operations |
|
25,641 |
|
|
43,540 |
|
|
83,590 |
|
|
101,673 |
|
|||
|
|
|
|||||||||||||
Adjusted income (loss) from operations by segment: |
|
|
|
||||||||||||
Strayer University |
37,180 |
|
25,173 |
|
103,409 |
|
120,398 |
|
|||||||
Capella University |
25,674 |
|
23,954 |
|
90,713 |
|
92,638 |
|
|||||||
Australia/New Zealand |
— |
|
(1,979 |
) |
— |
|
(1,979 |
) |
|||||||
Total adjusted income from operations |
$ |
62,854 |
|
$ |
47,148 |
|
$ |
194,122 |
|
$ |
211,057 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
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, |
||||||||||||||
2019 |
|
2020 |
|
2019 |
|
2020 |
||||||||||
Net income |
$ |
28,537 |
|
$ |
5,917 |
|
$ |
81,138 |
|
$ |
86,268 |
|
||||
Provision (benefit) for income taxes |
|
11,173 |
|
|
(2,410 |
) |
|
42,586 |
|
|
27,689 |
|
||||
Other income (expenses) |
|
(2,497 |
) |
|
101 |
|
|
(13,192 |
) |
|
(4,573 |
) |
||||
Depreciation and amortization |
|
25,999 |
|
|
30,965 |
|
|
104,861 |
|
|
109,154 |
|
||||
EBITDA (1) |
|
63,212 |
|
|
34,573 |
|
|
215,393 |
|
|
218,538 |
|
||||
Stock-based compensation |
|
3,085 |
|
|
3,851 |
|
|
11,790 |
|
|
14,610 |
|
||||
Merger and integration costs (2) |
|
10,225 |
|
|
5,912 |
|
|
21,525 |
|
|
13,770 |
|
||||
Restructuring costs (3) |
|
— |
|
|
8,009 |
|
|
— |
|
|
12,033 |
|
||||
Cloud computing amortization (4) |
|
— |
|
|
|
520 |
|
|
|
— |
|
|
|
983 |
|
|
Contract liability adjustment (5) |
|
— |
|
|
|
11,296 |
|
|
|
— |
|
|
|
11,296 |
|
|
Adjusted EBITDA (1) |
$ |
76,522 |
|
$ |
64,161 |
|
$ |
248,708 |
|
$ |
271,230 |
|
(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 and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand. Excludes $0.4 million of depreciation and amortization expense for the twelve months ended December 31, 2019 and includes $0.4 million of stock-based compensation expense for the twelve months ended December 31, 2019. |
|
(3) |
Reflects severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring. Excludes $0.3 million of depreciation and amortization expense for the three and twelve months ended December 31, 2020. |
|
(4) |
Reflects amortization expense associated with deferred implementation costs incurred in cloud computing arrangements. |
|
(5) |
Reflects a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company's acquisition of Torrens University and associated assets in Australia and New Zealand. |
For more information:
Terese Wilke
Manager, Investor Relations
Strategic Education, Inc.
(612) 977-6331
terese.wilke@strategiced.com