Exhibit 99.1
Education Management Corporation Reports Fiscal 2004 First Quarter Results
PITTSBURGH, Oct. 28 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the first
quarter ended September 30, 2003. For the quarter, net revenues increased
31.9% to $169.0 million and net income grew 58.6% to $4.5 million, or 12 cents
per diluted share, compared to the first quarter last year.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "We are very pleased to announce strong enrollment growth across
our education institutions at the start of the second quarter of fiscal 2004.
In addition, integration of our recent acquisitions of American Education
Centers and South University is progressing as planned; and we are encouraged
by the enhanced revenue growth and margin expansion opportunities emerging
from our expanded base of academic programs and geographic locations."
Financial highlights:
- Revenues for the three months ended September 30, 2003 increased 31.9%
to $169.0 million, compared to $128.1 million for the same period a
year ago. Revenue growth in the first quarter resulted from a 21.8%
increase in total student enrollment at the start of the quarter,
approximately one month of revenue from the acquired American Education
Centers and an increase of approximately 6% in average tuition rates.
Total enrollment at the start of the first quarter of fiscal 2004 was
39,977 students as compared to 32,814 students for the same period last
year.
- First quarter income before interest and taxes (operating income) rose
65.1% to $8.1 million from $4.9 million for the same period a year ago.
The consolidated operating margin improved 96 basis points for the
quarter.
- The effective tax rate for the first quarter was 39.0%, up from 38.0%
recorded in the first quarter of the prior year.
- Net income for the quarter grew 58.6% to $4.5 million, or $.12 per
diluted share, compared to $2.8 million, or $.08 per diluted share, in
the first quarter last year.
- At September 30, 2003, the Company had cash and cash equivalents of
$5.6 million, and outstanding revolver borrowings of $50.0 million.
Cash flow from operations rose to $82.8 million in the quarter from
$32.9 million last year due to increased profitability and because
financial aid for The Art Institutes' summer quarter was received in
July this year, instead of in June as in the prior year.
- In the first quarter, cash flow used for the acquisition of
subsidiaries, net of cash acquired, was $149.0 million. During the
quarter, the Company completed the acquisitions of American Education
Centers and South University. Capital expenditures for the quarter
totaled $18.6 million on an accrual basis compared to $19.9 million in
last year's first quarter.
Student Enrollment
At the start of the current fall quarter (second quarter of fiscal 2004),
total enrollment at EDMC's schools was 58,828 students, a 34.4% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 13.9% to 49,860 students.
2004 2003 Change
Fall Fall %
Total enrollment 58,828 43,784 34.4%
Same-school enrollment
(schools owned for 1 year
or more) 49,860 43,784 13.9%
Same-school enrollment
(schools owned for 2 years
or more) 40,037 35,420 13.0%
Total online enrollment * 4,050 1,596 153.8%
* Enrollment based on a point-in-time methodology
The Company's quarterly revenues and income fluctuate with student
enrollment patterns. Student enrollment has typically peaked in the fall
(fiscal year second quarter), when the largest number of recent high school
and college graduates traditionally begin post-secondary education programs.
The Company's quarterly costs and expenses, however, do not fluctuate as
significantly as revenues.
Business Outlook
For the second quarter, the Company estimates revenue growth of
approximately 32% and diluted EPS of $0.85. For the fiscal year ending
June 30, 2004, the Company projects revenue growth of approximately 32% and
diluted EPS of approximately $1.95. Capital spending for the year is expected
to total approximately 10.5% of revenue.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal
2004 first quarter results tomorrow at 10:30 a.m. (Eastern Time). Those
wishing to participate in this call should dial 303-262-2140 approximately 10
minutes prior to the start of the call. A listen-only audio of the conference
call will also be broadcast live over the Internet at www.edmc.com .
Education Management Corporation ( www.edmc.com ) is among the largest
providers of private post-secondary education in North America, based on
student enrollment and revenue. Student enrollment exceeded 58,000 as of fall
2003. EDMC has 66 primary campus locations in 24 states and two Canadian
provinces. EDMC's education institutions offer a broad range of academic
programs concentrated in the media arts, design, fashion, culinary arts,
behavioral sciences, health sciences, education, information technology and
business fields, culminating in the award of associate's through doctoral
degrees. EDMC has provided career-oriented education for over 40 years, and
its education institutions have more than 150,000 alumni.
This press release may include information that could constitute forward-
looking statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Any such forward-looking statements
may involve risk and uncertainties that could cause actual results to differ
materially from any future results encompassed within the forward-looking
statements. Factors that could cause or contribute to such differences include
those matters disclosed in the Company's Securities and Exchange Commission
filings. Past results of EDMC are not necessarily indicative of its future
results. EDMC does not undertake any obligation to update any forward-looking
statements.
--Table to Follow--
EDUCATION MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(unaudited)
For the three months
ended September 30,
2002 2003
Net revenues $128,143 $168,976
Costs and expenses:
Educational services 94,130 123,599
General and administrative 28,160 35,862
Amortization of intangible assets 965 1,446
123,255 160,907
Income before interest and taxes 4,888 8,069
Interest expense, net 310 690
Income before income taxes 4,578 7,379
Provision for income taxes 1,740 2,878
Net income $2,838 $4,501
Diluted earnings per share $.08 $.12
Weighted average number of diluted shares
outstanding (000's): 36,578 37,408
Selected Cash Flow Data:
For the three months
ended September 30,
2002 2003
Cash flows from operations $32,908 $82,812
Capital expenditures 29,395 24,259
Depreciation and amortization 9,250 12,588
Selected Consolidated Balance Sheet Data:
As of September 30,
2002 2003
Cash and cash equivalents $66,010 $5,635
Receivables, net 43,298 54,924
Current assets 139,188 106,731
Total assets 502,440 693,237
Current liabilities 143,629 251,076
Long-term debt (including current portion) 3,557 64,521
Shareholders' investment 352,444 434,585
SOURCE Education Management Corporation
-0- 10/28/2003
/CONTACT: Robert McDowell, Executive Vice President and Chief Financial
Officer, +1-412-562-0900, or James Sober, CFA, Vice President, Investor
Relations, +1-412-995-7684, both of Education Management Corporation/
/Web site: http://www.edmc.com /
(EDMC)
CO: Education Management Corporation
ST: Pennsylvania
IN: EDU ART
SU: ERN ERP CCA