EXHIBIT 99.01 FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: Mark C. Brown, Senior Vice President and Chief Financial Officer (703) 247-2514 Sonya Udler, Vice President, Corporate Communications (703) 247-2517 sonya.udler@strayer.edu STRAYER EDUCATION, INC. REPORTS RECORD FOURTH QUARTER AND FULL YEAR 2006 REVENUES, EARNINGS AND WINTER TERM 2007 ENROLLMENTS -- STRAYER FOURTH QUARTER REVENUES UP 20% -- -- STRAYER FOURTH QUARTER DILUTED EPS $1.11/$1.22 EXCLUDING STOCK-BASED COMPENSATION -- -- STRAYER FULL YEAR DILUTED EPS $3.61/$3.96 EXCLUDING STOCK-BASED COMPENSATION -- -- STRAYER WINTER 2007 TOTAL ENROLLMENTS UP 16%/NEW STUDENTS UP 20%/ONLINE UP 26% -- -- TWO ORLANDO, FL CAMPUSES OPENED FOR 2007 SPRING TERM -- ARLINGTON, Va., February 15, 2007 - Strayer Education, Inc. (Nasdaq: STRA) today announced financial results for the three months and year ended December 31, 2006. Financial highlights are as follows: THREE MONTHS ENDED DECEMBER 31 o Revenues for the three months ended December 31, 2006 increased 20% to $74.3 million, compared to $62.0 million for the same period in 2005, due to increased enrollment and a 5% tuition increase which commenced in January 2006. o Income from operations was $24.1 million compared to $23.3 million for the same period in 2005, an increase of 3%. In 2006, the Company began recording stock-based compensation expense, which amounted to $2.5 million before tax for the three months ended December 31, 2006. Excluding stock-based compensation expense, income from operations was $26.6 million, an increase of 14% compared to 2005. o Net income was $16.0 million compared to $15.0 million for the same period in 2005, an increase of 7%. Net income for the three months ended December 31, 2006 includes the effect of a $1.6 million after tax expense related to stock-based compensation. Excluding stock-based compensation expense, net income was $17.6 million, an increase of 17% compared to 2005. 5 Diluted earnings per share was $1.11 compared to $1.03 for the same period in 2005, an increase of 8%. Diluted earnings per share for the three months ended December 31, 2006 includes the effect of a $0.11 per share after tax expense related to stock-based compensation. Excluding stock-based compensation expense, diluted earnings per share was $1.22, an increase of 18% compared to 2005. Diluted weighted average shares outstanding decreased to 14,452,000 from 14,590,000 for the same period in 2005. YEAR ENDED DECEMBER 31 o Revenues for the year ended December 31, 2006 increased 20% to $263.6 million, compared to $220.5 million for the same period in 2005, due to increased enrollment and a 5% tuition increase effective for 2006. o Income from operations was $79.5 million compared to $74.9 million for the same period in 2005, an increase of 6%. In 2006, the Company began recording stock-based compensation expense, which amounted to $8.1 million before tax for the year ended December 31, 2006. Excluding stock-based compensation expense, income from operations was $87.6 million, an increase of 17% compared to 2005. o Net income was $52.3 million compared to $48.1 million for the same period in 2005, an increase of 9%. Net income for the year ended December 31, 2006 includes the effect of a $5.1 million after tax expense related to stock-based compensation. Excluding stock-based compensation expense, net income was $57.4 million, an increase of 19% compared to 2005. Diluted earnings per share was $3.61 compared to $3.26 for the same period in 2005, an increase of 11%. Diluted earnings per share for the year ended December 31, 2006 includes the effect of a $0.35 per share after tax expense related to stock-based compensation. Excluding stock-based compensation expense, diluted earnings per share was $3.96, an increase of 21% compared to 2005. Diluted weighted average shares outstanding decreased to 14,492,000 from 14,741,000 for the same period in 2005. Income from operations, net income and diluted earnings per share for the three months and year ended December 31, 2006 excluding stock-based compensation (as presented above) are considered non-GAAP financial measures. The Company believes these non-GAAP financial measures provide investors, potential investors, securities analysts and others with useful information to evaluate the performance of the business, because they exclude stock-based compensation expense which had not been included in the prior years. Additional information is contained in the attached financial statements including a reconciliation of GAAP to these non-GAAP measures. "We are pleased with both our fourth quarter and year-end financial results," said Robert S. Silberman, Chairman and Chief Executive Officer of Strayer Education, Inc. "We are also pleased with our student enrollment efforts and our new campus openings in the Kentucky market and look forward to serving students at our two new Orlando campuses beginning in the spring term." BALANCE SHEET AND CASH FLOW At December 31, 2006, the Company had cash, cash equivalents and marketable securities (a diversified, no load, short-term, tax-exempt bond fund) of $128.4 million and no debt. The Company generated $61.8 million from operating activities in 2006. Capital expenditures were $13.2 million for the same period. 6 During the fourth quarter 2006, the Company repurchased 72,300 shares of common stock at an average price of $110.69 per share under a previously announced common stock repurchase authorization. During the full year 2006, the Company repurchased 349,066 shares of common stock at an average price of $100.39 per share. As of December 31, 2006, the Company had a $32 million authorization remaining under this plan. In the fourth quarter 2006, bad debt expense as a percentage of revenue was 3.5% compared to 2.8% for the same period in 2005. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was 13 days at the end of the fourth quarter 2006, compared to 10 days at the end of the same period in 2005. STUDENT ENROLLMENT Total enrollment at Strayer University for the 2007 winter term increased 16% to 32,150 students compared to 27,621 students for the same term in 2006. Across the Strayer University campus network, new student enrollments increased 20% and continuing student enrollments increased 16%. Out-of-area online students increased 26%, while students taking 100% of their classes at Strayer University Online (including campus based students) increased 20%. The total number of students taking any courses online (including students at brick and mortar campuses taking at least one online course) in the 2007 winter term increased to 22,591. STUDENT ENROLLMENT Winter Winter % 2006 2007 Change ------------ ------------ ---------- New Campuses (20 in operation 3 or less years) Classroom Students 1,247 2,511 101% Online Students 1,754 3,135 79% ------------ ------------ Total New Campus Based Students 3,001 5,646 88% ------------ ------------ Mature Campuses (25 in operation more than 3 years) Classroom Students 10,757 10,832 1% Online Students 11,090 12,185 10% ------------ ------------ Total Mature Campus Based Students 21,847 23,017 5% ------------ ------------ Total Campus Based Students 24,848 28,663 15% Out of Area Online Students 2,773 3,487 26% ------------ ------------ Total University Enrollment 27,621 32,150 16% ============ ============ Total Students Taking 100% Courses Online 15,617 18,807 20% Total Students Taking At Least 1 Course Online 18,877 22,591 20% 7 NEW CAMPUS OPENINGS The Company announced today that it has opened two new campuses in Orlando, Florida for the 2007 spring term. Including the two new campuses successfully opened for the 2007 winter quarter in Lexington and Louisville, Kentucky, the Company has now opened four of the eight new campuses planned for 2007. STOCK-BASED COMPENSATION ACTIVITY In February 2007, the Company's Board of Directors approved a grant of approximately 20,000 shares of restricted stock to certain employees. The Company's stock price closed at $113.72 on the date of the restricted stock grant. COMMON STOCK CASH DIVIDEND The Company announced today that its Board of Directors has declared its regular, quarterly common stock cash dividend of $0.3125 per share. This dividend will be paid on March 12, 2007 to shareholders of record as of February 28, 2007. BUSINESS OUTLOOK Based on the strong enrollment growth announced for the 2007 winter term and the planned investments in opening new campuses, the Company estimates first quarter 2007 diluted EPS will be in the range of $1.27 to $1.29. The Company estimates that it will incur stock-based compensation expense for the first quarter of 2007 of approximately $2.5 million before tax or $0.11 per share after tax, which is included in the Company's EPS estimate. 2007 ANNUAL MEETING OF STOCKHOLDERS The Company announced today that its 2007 annual meeting of stockholders will take place on Wednesday, May 2, 2007 in Arlington, Virginia. Tuesday, March 6, 2007 will be the record date for this annual meeting. CONFERENCE CALL WITH MANAGEMENT Strayer Education, Inc. will host a conference call to discuss its fourth quarter earnings and year-end results at 10:00 a.m. (ET) today. To participate on the live call, investors should dial (800) 289-0468 10 minutes prior to the start time. In addition, the call will be available via live Webcast over the Internet. To access the live Webcast of the conference call, please go to www.strayereducation.com 15 minutes prior to the start time of the call to register. An archived replay of the conference call will be available at (888) 203-1112 (pass code 6851740) starting at 1:00 p.m. (ET) today and will be available through Monday, February 19, and archived at www.strayereducation.com for 90 days. Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company that owns Strayer University and certain other assets. Strayer's mission is to make higher education achievable and convenient for working adults in today's economy. Strayer University is a proprietary institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, and public administration to more than 32,000 working adult students at 47 campuses in 11 states in the Eastern United States 8 and Washington, D.C. and worldwide via the Internet through Strayer University Online. Strayer University is committed to providing an education that prepares working adult students for advancement in their careers and professional lives. Founded in 1892, Strayer University is accredited by the Middle States Commission on Higher Education. For more information on Strayer Education, Inc. visit www.strayereducation.com and for Strayer University visit www.strayer.edu. This press release contains statements that are forward looking and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act"). The statements are based on the Company's current expectations and are subject to a number of uncertainties and risks. In connection with the Safe Harbor provisions of the Reform Act, the Company has identified important factors that could cause the Company's actual results to differ materially from those expressed in or implied by such statements. The uncertainties and risks include the pace of growth of student enrollment, our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state and regional regulatory requirements, competitive factors, our ability to implement our growth strategy, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks associated with the acquisition of existing educational institutions, risks relating to the timing of regulatory approvals, and general economic and market conditions. Further information about these and other relevant risks and uncertainties may be found in the Company's annual report on Form 10-K and its other filings with the Securities and Exchange Commission, all of which are incorporated herein by reference and which are available from the Commission. We undertake no obligation to update or revise forward looking statements. 9 STRAYER EDUCATION, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) For the three months For the year ended December 31, ended December 31, ------------------------------ -------------------------------- 2005 2006 2005 2006 ------------- ------------- --------------- ------------ Revenues...................................... $62,018 $74,307 $220,507 $263,648 Costs and expenses: Instruction and educational support........ 20,402 24,750 76,977 91,120 Selling and promotion...................... 10,765 14,258 41,090 52,269 General and administration................. 7,539 11,220 27,576 40,723 ------------- ------------- --------------- ------------ Income from operations................. 23,312 24,079 74,864 79,536 Investment and other income................... 891 1,265 2,982 4,542 ------------- ------------- --------------- ------------ Income before income taxes............. 24,203 25,344 77,846 84,078 Provision for income taxes.................... 9,192 9,347 29,781 31,771 ------------- ------------- --------------- ------------ Net income............................. $15,011 $15,997 $ 48,065 $ 52,307 ============= ============= =============== ============ Net income per share: Basic ..................................... $1.05 $1.13 $3.32 $3.69 Diluted ................................... $1.03 $1.11 $3.26 $3.61 Weighted average shares outstanding: Basic...................................... 14,328 14,136 14,472 14,187 Diluted.................................... 14,590 14,452 14,741 14,492 Common dividends per share.................... $0.25 $0.31 $0.63 $1.06 - -------------------------------------------------------------------------------- In 2006, the Company adopted FAS 123(R) and began recording stock-based compensation expense for stock options. Prior to the adoption of FAS 123(R), the Company recorded expense for other forms of stock-based compensation. For the three months ended December 31, 2006, stock-based compensation expense was $2.5 million, or $1.6 million net of tax, and reduced EPS by $0.11. For the year ended December 31, 2006, stock-based compensation expense was $8.1 million, or $5.1 million net of tax, and reduced EPS by $0.35. The table below sets forth the amount of various forms of stock-based compensation expense recorded in each of the expense line items. For the three months For the year ended December 31, ended December 31, -------------------- ------------------ 2005 2006 2005 2006 ---- ---- ---- ---- Instruction and educational support.. $-- $150 $-- $638 Selling and promotion................ -- 136 -- 545 General and administration........... 28 2,232 47 6,866 For the three months ended December 31, 2005, including the pro forma impact of recording $1.3 million in stock-based compensation expense net of tax, the Company would have reported net income of approximately $13.7 million and diluted EPS of $0.94. For the year ended December 31, 2005, including $3.4 million in stock-based compensation expense net of tax, the Company would have reported net income of approximately $44.7 million and diluted EPS of $3.02. The pro forma impact of recording stock-based compensation expense for the year ended December 31, 2005 was disclosed in Note 2 to the Company's Consolidated Financial Statements included in its Form 10-K. - -------------------------------------------------------------------------------- 10 STRAYER EDUCATION, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) December 31, December 31, 2005 2006 ---------------- ---------------- ASSETS Current assets: Cash and cash equivalents................................................... $ 74,212 $52,663 Marketable securities available for sale, at fair value..................... 45,594 75,763 Tuition receivable, net of allowances for doubtful accounts of $1,927 and $3,029 in 2005 and 2006, respectively..................................... 55,935 80,753 Other current assets........................................................ 2,581 4,653 ---------- ---------- Total current assets.................................................... 178,322 213,832 Property and equipment, net.................................................... 46,684 52,748 Deferred income taxes.......................................................... -- 3,400 Restricted cash................................................................ 500 500 Other assets................................................................... 339 364 ---------- ---------- Total assets............................................................ $225,845 $270,844 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............................................................ $ 6,402 $10,923 Accrued expenses............................................................ 1,483 1,830 Income taxes payable........................................................ 3,773 4,979 Unearned tuition............................................................ 55,778 73,896 ---------- ---------- Total current liabilities............................................... 67,436 91,628 Deferred income taxes.......................................................... 205 -- Long-term liabilities.......................................................... 6,364 7,689 ---------- ---------- Total liabilities....................................................... 74,005 99,317 Commitments and contingencies Stockholders' equity: Common stock, par value $.01; 20,000,000 shares authorized; 14,292,249 and 14,293,584 shares issued and outstanding, as of December 31, 2005 and 2006, respectively........................... 143 141 Additional paid-in capital.................................................. 104,923 87,487 Retained earnings........................................................... 47,020 84,043 Accumulated other comprehensive income (loss)............................... (246) (144) ---------- ---------- Total stockholders' equity............................................ 151,840 171,527 ---------- ---------- Total liabilities and stockholders' equity............................ $225,845 $270,844 ======== ======== 11 STRAYER EDUCATION, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) For the year ended December 31, ------------------------------------ 2005 2006 ------------ ------------ Cash flows from operating activities: Net income.................................................................... $ 48,065 $52,307 Adjustments to reconcile net income to net cash provided by operating activities: Loss on disposal of assets............................................... 37 -- Amortization of deferred rent............................................ 230 190 Depreciation and amortization............................................ 6,619 7,059 Provision for student loan losses........................................ (162) (120) Deferred income taxes.................................................... (63) (4,034) Stock-based compensation................................................. 48 7,413 Changes in assets and liabilities: Tuition receivable, net.................................................. (14,266) (24,818) Other current assets..................................................... 630 (1,710) Other assets............................................................. 4 (25) Accounts payable......................................................... 1,503 4,581 Accrued expenses......................................................... (835) 347 Income taxes payable..................................................... (2,804) 4,801 Excess tax benefits from stock-based payment arrangements................ -- (3,595) Unearned tuition......................................................... 13,719 18,118 Deferred lease incentives ............................................... 2,342 1,235 Student loans originated...................................................... (686) (3) Collections on student loans receivable....................................... 762 23 -------- -------- Net cash provided by operating activities............................ 55,143 61,769 -------- -------- Cash flows from investing activities: Purchases of property and equipment.......................................... (12,275) (13,183) Purchases of marketable securities........................................... (20,000) (30,000) -------- -------- Net cash used in investing activities................................ (32,275) (43,183) -------- -------- Cash flows from financing activities: Common dividends paid........................................................ (9,028) (15,284) Proceeds from exercise of stock options...................................... 1,336 6,595 Excess tax benefits from stock-based payment arrangements.................... -- 3,595 Repurchase of common stock................................................... (37,968) (35,041) -------- -------- Net cash used in financing activities................................ (45,660) (40,135) -------- -------- Net increase (decrease) in cash and cash equivalents................. (22,792) (21,549) Cash and cash equivalents - beginning of period................................. 97,004 74,212 -------- -------- Cash and cash equivalents - end of period....................................... $ 74,212 $ 52,663 ======== ======== Non-cash transactions: Purchases of property and equipment included in accounts payable............ $ 561 $ 501 12 STRAYER EDUCATION, INC. RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (a) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) For the three months ended December 31, 2006 For the year ended December 31, 2006 -------------------------------------------- ------------------------------------ Stock-based Stock-based GAAP Compensation Non-GAAP GAAP Compensation Non-GAAP Results Expense Results Results Expense Results ---------- --------------- ----------- ----------- ---------------- ---------- Revenues................................. $74,307 $ -- $74,307 $263,648 $ -- $263,648 ------- -------- ------- -------- -------- -------- Costs and expenses: Instruction & educational support........................... 24,750 (150) 24,600 91,120 (638) 90,482 Selling & promotion.................. 14,258 (136) 14,122 52,269 (545) 51,724 General & administration............. 11,220 (2,232) 8,988 40,723 (6,866) 33,857 ------- -------- ------- -------- -------- -------- Total costs and expenses................. 50,228 (2,518) 47,710 184,112 (8,049) 176,063 ------- -------- ------- -------- -------- -------- Income from operations................... 24,079 2,518 26,597 79,536 8,049 87,585 Investment and other income.............. 1,265 -- 1,265 4,542 -- 4,542 ------- -------- ------- -------- -------- -------- Income before income taxes............... 25,344 2,518 27,862 84,078 8,049 92,127 Provision for income taxes............... 9,347 880 10,227 31,771 2,992 34,763 ------- -------- ------- -------- -------- -------- Net income............................... $15,997 $ 1,638 $17,635 $ 52,307 $ 5,057 $ 57,364 ======= ======= ======= ======== ======== ======== Net income per share: Basic................................ $1.13 $0.12 $1.25 $3.69 $0.35 $4.04 Diluted.............................. $1.11 $0.11 $1.22 $3.61 $0.35 $3.96 Weighted average shares outstanding: Basic................................ 14,136 14,136 14,136 14,187 14,187 14,187 Diluted.............................. 14,452 14,452 14,452 14,492 14,492 14,492 - ----------------------------- (a) These unaudited non-GAAP financial measures are for informational purposes only and are not presented in accordance with GAAP. The Company believes these non-GAAP financial measures provide investors, potential investors, securities analysts and others with useful information to evaluate the performance of the business, because they exclude stock-based compensation expense which had not been included in the prior years. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the Company's condensed consolidated statements of income. Additional Data: December 31, December 31, - ---------------- 2005 2006 ---- ---- Common shares outstanding at year end 14,292,249 14,293,584 Authorized, issued and outstanding stock options 1,103,334 762,334 13
Strategic Education (STRA)
Filed: 15 Feb 07, 12:00am