Exhibit 99.01
Strayer Education, Inc. Reports Record Second Quarter 2008 Revenues and Earnings; and Record Summer Term 2008 Enrollments
-- Strayer Second Quarter Revenues Up 24% --
-- Strayer Second Quarter Diluted EPS $1.50, Up 25% --
-- Strayer Summer 2008 Total Enrollments Up 20% / New Students up 17% --
-- Three New Campuses Opened for 2008 Fall Term --
ARLINGTON, Va.--(BUSINESS WIRE)--Strayer Education, Inc. (Nasdaq:STRA) today announced financial results for the three months ended June 30, 2008. Financial highlights are as follows:
Three Months Ended June 30
- Revenues for the three months ended June 30, 2008 increased 24% to $97.9 million, compared to $78.9 million for the same period in 2007, due to increased enrollment and a 5% tuition increase which commenced in January 2008.
- Income from operations was $33.6 million compared to $26.4 million for the same period in 2007, an increase of 28%. Operating income margin was 34.3% compared to 33.4% for the same period in 2007.
- Net income was $21.3 million compared to $17.4 million for the same period in 2007, an increase of 23%. Diluted earnings per share was $1.50 compared to $1.20 for the same period in 2007, an increase of 25%. Diluted weighted average shares outstanding decreased to 14,248,000 from 14,509,000 for the same period in 2007.
Six Months Ended June 30
- Revenues for the six months ended June 30, 2008 increased 23% to $195.0 million, compared to $159.1 million for the same period in 2007, due to increased enrollment and a 5% tuition increase which commenced in January 2008.
- Income from operations was $69.2 million compared to $55.3 million for the same period in 2007, an increase of 25%. Operating income margin was 35.5% compared to 34.8% for the same period in 2007.
- Net income was $44.8 million compared to $36.2 million for the same period in 2007, an increase of 24%. Diluted earnings per share was $3.14 compared to $2.50 for the same period in 2007, an increase of 26%. Diluted weighted average shares outstanding decreased to 14,294,000 from 14,486,000 for the same period in 2007.
“We are pleased with our solid financial results for the second quarter and our strong student enrollment for the summer term,” said Robert S. Silberman, Chairman and CEO of Strayer Education, Inc. “We look forward to the opening of our three new campuses for the 2008 fall term, one in Savannah, Georgia, and two in the Ft. Lauderdale, Florida area. All three campuses will be in new markets for us and further expand the Strayer University footprint.”
Balance Sheet and Cash Flow
At June 30, 2008, the Company had cash, cash equivalents and marketable securities of $118.4 million and no debt. During the three months ended June 30, 2008, the Company invested approximately $30 million in a no load, short-term, tax exempt bond fund. The Company generated $43.5 million from operating activities in the first six months of 2008 compared to $44.6 million during the same period in 2007. The Company’s cash flow from operations for the first six months of 2008 was negatively affected by the timing of employee stock option exercises in 2008. That negative timing effect will reverse itself in the third quarter of 2008. Capital expenditures were $10.0 million for the six months ended June 30, 2008 compared to $7.4 million for the same period in 2007.
During the three months ended June 30, 2008, the Company used $13.0 million to repurchase 66,599 shares of stock at an average price of $195.45 as part of a previously announced stock repurchase authorization. The Company’s remaining authorization for stock repurchases was $12.6 million at June 30, 2008, having invested approximately $69 million during the six months ended June 30, 2008 for this purpose. During the six months ended June 30, 2008, the Company paid regular, quarterly dividends of $10.7 million ($0.375 per share for each quarterly dividend) and a special dividend of $28.9 million ($2.00 per share). The Company also received $10.3 million upon the exercise of 223,000 stock options.
For the second quarter 2008, bad debt expense as a percentage of revenues was 2.8% compared to 3.5% for the same period in 2007. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was 12 days at the end of the second quarter of 2008, compared to 12 days at the end of the second quarter of 2007.
Student Enrollment
Enrollment at Strayer University for the 2008 summer term increased 20% to 34,176 students compared to 28,461 students for the same term in 2007. Across the Strayer University campus and online system, continuing student enrollments increased 21%, while new student enrollments increased 17%. Global online students increased 51%. Students taking 100% of their classes online (including campus based students) increased 23%. The total number of students taking at least one class online increased 22% to 25,166.
Student Enrollment |
| | | | | | |
| | Summer 2007 | | Summer 2008 | | % Change |
| | | | | | |
| Campus Based Students: | | | | | | |
| New Campuses (23 in operation 3 years or less) | | | | | | |
| Classroom Students | | 1,078 | | 2,380 | | 121% |
| Online Students | | 2,005 | | 3,346 | | 67% |
| Total New Campus Based Students | | 3,083 | | 5,726 | | 86% |
| | | | | | |
| Mature Campuses (34 in operation more than 3 years) | | | | | | |
| Classroom Students | | 9,979 | | 10,453 | | 5% |
| Online Students | | 12,987 | | 14,358 | | 11% |
| Total Mature Campus Based Students | | 22,966 | | 24,811 | | 8% |
| | | | | | |
| Total Campus Based Students | | 26,049 | | 30,537 | | 17% |
| | | | | | |
| Global Online Students | | 2,412 | | 3,639 | | 51% |
| | | | | | |
| Total University Enrollment | | 28,461 | | 34,176 | | 20% |
| | | | | | |
| Total Students Taking 100% of Courses Online | | 17,404 | | 21,343 | | 23% |
| | | | | | |
| Total Students Taking at Least 1 Course Online | | 20,704 | | 25,166 | | 22% |
New Campus Openings
The Company announced today that Strayer University had successfully opened three new campuses in preparation for the fall academic term, all in new markets. Two of these new campuses are in the Ft. Lauderdale, Florida area. The third new campus is in Savannah, Georgia. These three new campuses, together with the six campuses opened earlier this year, complete the Company’s planned nine campus openings in 2008. The Company intends to announce in October the number of new campuses Strayer University plans to open in 2009.
Shares and Options Outstanding
At June 30, 2008, the Company had 14,272,889 common shares issued and outstanding, and 167,084 stock options outstanding with a weighted average exercise price of $102.98 and a remaining weighted average contractual life of 4.3 years.
Common Stock Cash Dividend
The Company announced today that its Board of Directors has declared its regular, quarterly cash dividend of $0.375 per share. This dividend will be paid on September 10, 2008 to shareholders of record as of August 27, 2008.
Business Outlook
Based on the strong enrollment growth announced for the 2008 summer term, offset partly by the costs of investments in new campuses, the Company estimates third quarter 2008 diluted EPS will be in the range of $0.79 to $0.81.
Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss its second quarter 2008 earnings 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 4492436) starting at 1:00 p.m. (ET) today and will be available through Monday, July 28, 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, health care, and public administration to approximately 38,000 working adult students at 60 campuses in 12 states and Washington, D.C. and worldwide via the Internet. 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. 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, 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, our ability to implement our growth strategy, 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.
STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) |
| | |
| | |
| | For the three months ended June 30, | | For the six months ended June 30, |
| | 2007 | | 2008 | | 2007 | | 2008 |
| | | | |
| Revenues | | $78,875 | | $97,928 | | $159,068 | | $195,002 |
| Costs and expenses: | | | | | | | | |
Instruction and educational support | | 26,732 | | 32,909 | | 52,955 | | 64,551 |
| Selling and promotion | | 13,184 | | 16,729 | | 26,059 | | 31,824 |
| General and administration | | 12,607 | | 14,683 | | 24,755 | | 29,462 |
| Income from operations | | 26,352 | | 33,607 | | 55,299 | | 69,165 |
| Investment and other income | | 1,640 | | 785 | | 3,020 | | 2,821 |
| Income before income taxes | | 27,992 | | 34,392 | | 58,319 | | 71,986 |
| Provision for income taxes | | 10,632 | | 13,069 | | 22,153 | | 27,142 |
| Net income | | $17,360 | | $21,323 | | $36,166 | | $44,844 |
| Net income per share: | | | | | | | | |
| Basic | | $1.22 | | $1.52 | | $2.54 | | $3.19 |
| Diluted | | $1.20 | | $1.50 | | $2.50 | | $3.14 |
| Weighted average shares outstanding: | | | | | | | | |
| Basic | | 14,288 | | 14,001 | | 14,234 | | 14,052 |
| Diluted | | 14,509 | | 14,248 | | 14,486 | | 14,294 |
| Common dividends per share: | | | | | | | | |
| Regular | | $0.31 | | $0.38 | | $0.62 | | $0.75 |
| Special | | -- | | -- | | -- | | $2.00 |
| In 2006, the Company began recording stock-based compensation expense under FAS 123(R). The table below sets forth the amount of stock-based compensation expense recorded in each of the expense line items. |
| |
| | For the three months
ended June 30, | | For the six months ended June 30, |
| | 2007 | | 2008 | | 2007 | | 2008 |
| Instruction and educational support | | $ | 178 | | $ | 365 | | $ | 343 | | $ | 693 |
| Selling and promotion | | | 160 | | | 229 | | | 306 | | | 437 |
| General and administration | | | 2,193 | | | 2,217 | | | 4,391 | | | 4,909 |
| Total stock-based compensation expense | | $ | 2,531 | | $ | 2,811 | | $ | 5,040 | | $ | 6,039 |
STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) |
| | | | |
| | At December 31, 2007 | | At June 30, 2008 |
| ASSETS | | | | |
| Current assets: | | | | |
Cash and cash equivalents | | $ | 95,036 | | $ | 88,382 | |
| Marketable securities available for sale, at fair value | | | 76,299 | | | 30,066 | |
| Tuition receivable, net of allowances for doubtful accounts of $3,206 and $3,761 at December 31, 2007 and June 30, 2008, respectively | | | 100,651 | | | 102,406 | |
| Income taxes receivable | | | -- | | | 1,646 | |
| Other current assets | | | 4,097 | | | 5,648 | |
| Total current assets | | | 276,083 | | | 228,148 | |
| Property and equipment, net | | | 57,946 | | | 61,481 | |
| Deferred income taxes | | | 8,830 | | | 10,800 | |
| Restricted cash | | | 500 | | | 500 | |
| Other assets | | | 419 | | | 483 | |
| Total assets | | $ | 343,778 | | $ | 301,412 | |
| | | | |
| LIABILITIES & STOCKHOLDERS’ EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 15,682 | | $ | 13,065 | |
| Accrued expenses | | | 3,303 | | | 4,458 | |
| Income taxes payable | | | 4,754 | | | -- | |
| Dividends payable | | | 28,853 | | | -- | |
| Unearned tuition | | | 91,476 | | | 91,937 | |
| Other current liabilities | | | 281 | | | 281 | |
| Total current liabilities | | | 144,349 | | | 109,741 | |
| Long-term liabilities | | | 10,922 | | | 10,927 | |
| Total liabilities | | | 155,271 | | | 120,668 | |
| Commitments and contingencies | | | | |
| Stockholders’ equity: | | | | |
Common stock, par value $.01; 20,000,000 shares authorized; 14,426,634 and 14,272,889 shares issued and outstanding at December 31, 2007 and June 30, 2008, respectively | | | 144 | | | 142 | |
| Additional paid-in capital | | | 87,080 | | | 45,416 | |
| Retained earnings | | | 101,102 | | | 135,255 | |
| Accumulated other comprehensive income (loss) | | | 181 | | | (69 | ) |
| Total stockholders’ equity | | | 188,507 | | | 180,744 | |
| Total liabilities and stockholders’ equity | | $ | 343,778 | | $ | 301,412 | |
STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) |
| |
| | For the six months ended June 30, |
| | 2007 | | 2008 |
Cash flows from operating activities: | | | | | | | |
| Net income | | $ | 36,166 | | | $ | 44,844 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Amortization of deferred rent | | | (61 | ) | | | (217 | ) |
| Amortization of gain on sale of assets | | | (7 | ) | | | (141 | ) |
| Gain on sale of marketable securities | | | -- | | | | (785 | ) |
| Depreciation and amortization | | | 4,096 | | | | 4,991 | |
| Deferred income taxes | | | (3,318 | ) | | | (2,059 | ) |
| Stock-based compensation | | | 4,838 | | | | 5,487 | |
| Changes in assets and liabilities: | | | | | | | |
| Tuition receivable, net | | | (3,094 | ) | | | (1,755 | ) |
| Other current assets | | | (289 | ) | | | (1,298 | ) |
| Other assets | | | (14 | ) | | | (64 | ) |
| Accounts payable | | | (611 | ) | | | (1,111 | ) |
| Accrued expenses | | | 232 | | | | 1,155 | |
| Income taxes payable | | | 13,567 | | | | 5,098 | |
| Excess tax benefits from stock-based payment arrangements | | | (9,963 | ) | | | (11,498 | ) |
| Unearned tuition | | | 3,039 | | | | 461 | |
| Deferred lease incentives | | | -- | | | | 363 | |
| Net cash provided by operating activities | | | 44,581 | | | | 43,471 | |
| Cash flows from investing activities: | | | | | | |
| Purchases of property and equipment | | | (7,357 | ) | | | (10,032 | ) |
Proceeds from the sale of property and equipment | | | 5,754 | | | | -- | |
| Purchases of marketable securities | | | -- | | | | (30,180 | ) |
| Proceeds from the sale of marketable securities | | | -- | | | | 76,785 | |
| Net cash (used in) provided by investing activities | | | (1,603 | ) | | | 36,573 | |
| Cash flows from financing activities: | | | | | | | |
| Regular common dividends paid | | | (9,082 | ) | | | (10,691 | ) |
| Special common dividends paid | | | -- | | | | (28,854 | ) |
| Proceeds from exercise of stock options | | | 12,288 | | | | 10,325 | |
| Excess tax benefits from stock-based payment arrangements | | | 9,963 | | | | 11,498 | |
| Repurchase of common stock | | | (15,998 | ) | | | (68,976 | ) |
| Net cash (used in) financing activities | | | (2,829 | ) | | | (86,698 | ) |
| Net increase (decrease) in cash and cash equivalents | | | 40,149 | | | | (6,654 | ) |
| Cash and cash equivalents – beginning of period | | | 52,663 | | | | 95,036 | |
| Cash and cash equivalents – end of period | | $ | 92,812 | | | $ | 88,382 | |
| | | | | | |
| Non-cash transactions: | | | | | | |
| Purchases of property and equipment included in accounts payable | | $ | 1,019 | | | $ | 843 | |
CONTACT:
Strayer Education Inc.
Mark C. Brown, Executive Vice President and
Chief Financial Officer
703-247-2514
or
Sonya Udler, Senior Vice President,
Corporate Communications
703-247-2517
sonya.udler@strayer.edu
