Exhibit 99.1
Education Management Corporation Reports Fiscal 2004 Second Quarter Results
PITTSBURGH, Feb. 2 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the second
quarter ended December 31, 2003. For the quarter, net revenues increased 33.0%
to $233.0 million and net income grew 24.6% to $32.2 million, or 43 cents per
diluted share, compared to the second quarter last year.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "EDMC's performance in the second quarter was in line with our
plans, and our leading indicators remain positive. Our growth drivers, such as
academic program development and rollout, school startups, co-locations and
online development, are on track for FY05 and beyond."
Financial highlights:
* Revenues for the three months ended December 31, 2003 increased 33.0%
to $233.0 million, compared to $175.1 million for the same period a year
ago. Revenue growth in the second quarter resulted from a 34.4% increase
in total student enrollment at the start of the quarter. Total
enrollment at the start of the second quarter of fiscal 2004 was 58,828
students as compared to 43,784 students at the start of the prior year
period. Current year enrollment and revenue include results at American
Education Centers and South University.
* Second quarter income before interest and taxes (operating income) rose
29.8% to $54.5 million from $42.0 million for the same period a year
ago. As anticipated, the consolidated operating income margin declined
58 basis points for the quarter due in part to the accrual of incentive
compensation and increased employee health benefit expense. We expect
reduced expense for these items relative to revenue in the second half
of the year.
* The effective tax rate for the second quarter was 40.1%, up from 38.0%
recorded in the second quarter of the prior year. The increase in the
effective tax rate is due to higher state and foreign tax expense. For
the full fiscal year 2004, we anticipate an effective tax rate of 40.0%.
* Net income for the quarter grew 24.6% to $32.2 million, or $.43 per
diluted share, compared to $25.8 million, or $.35 per diluted share, in
the second quarter last year.
* At December 31, 2003, the Company had cash and cash equivalents of
$7.3 million, and outstanding revolver borrowings of $85.8 million. Cash
flow from operations rose to $78.5 million for the six-month period from
$21.4 million last year. Cash flow was significantly higher partly due
to an increase in payables and accrued liabilities, and because the
timing of The Art Institutes' summer start this fiscal year
required financial aid to be paid in July. Such aid was paid in June for
the summer quarter in the preceding fiscal year.
* Capital expenditures for the second quarter and year-to-date totaled
$24.9 million and $43.5 million, respectively on an accrual basis,
compared to $26.3 million and $46.2 million in last year's comparable
periods.
Student Enrollment
At the start of the current winter quarter (third quarter of fiscal 2004),
total enrollment at EDMC's schools was 58,950 students, a 35.6% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 14.1% to 49,574 students.
2004 2003 %
Winter Winter Change
Total enrollment 58,950 43,461 35.6%
Same-school enrollment
(owned for 1 year or more) 49,574 43,461 14.1%
Same-school enrollment
(owned for 2 years or more) 48,199 42,328 13.9%
Students taking 100% of
their coursework online 1,400 601 132.9%
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 third quarter, the Company estimates diluted EPS of $0.32. For the
fiscal year ending June 30, 2004, the Company projects revenue growth of
approximately 32% and diluted EPS of approximately $0.99. 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 second quarter results tomorrow at 10:30 a.m. (Eastern Time). Those
wishing to participate in this call should dial 303-262-2127 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, legal
studies 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.
EDUCATION MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
For the three For the six
months ended months ended
Dec. 31, Dec. 31,
(unaudited) (unaudited)
2002 2003 2002 2003
Net revenues $175,136 $232,980 $303,279 $401,956
Costs and expenses:
Educational services 100,753 135,702 194,883 259,301
General and administrative 31,322 40,994 59,482 76,856
Amortization of
intangible assets 1,095 1,816 2,060 3,262
133,170 178,512 256,425 339,419
Income before interest
and taxes 41,966 54,468 46,854 62,537
Interest expense, net 332 820 642 1,510
Income before income taxes 41,634 53,648 46,212 61,027
Provision for income taxes 15,823 21,491 17,563 24,369
Net income $25,811 $32,157 $28,649 $36,658
Diluted earnings per share* $.35 $.43 $.39 $.49
Weighted average number
of diluted shares
outstanding (000's):* 73,370 75,039 73,300 74,618
* All periods adjusted to reflect 2-for-1 stock split on December 22, 2003
Selected Cash Flow Data (unaudited):
For the three For the six
months ended months ended
Dec. 31, Dec. 31,
(unaudited) (unaudited)
2002 2003 2002 2003
Net cash flows from operations $(11,490) $(4,263) $21,418 $78,549
Capital expenditures 26,253 24,869 55,648 49,128
Depreciation and amortization 9,301 13,137 18,551 25,725
Selected Consolidated Balance Sheet Data (unaudited):
As of December 31,
2002 2003
Cash and cash equivalents $5,486 $7,297
Receivables, net 35,509 45,887
Current assets 67,682 96,349
Total assets 474,431 706,475
Current liabilities 87,818 225,569
Long-term debt
(including current portion) 3,778 100,413
Shareholders' investment 379,625 472,873
COMPANY CONTACTS:
Robert McDowell
Executive Vice President and Chief Financial Officer
(412) 562-0900
James Sober, CFA
Vice President, Investor Relations
(412) 995-7684
SOURCE Education Management Corporation
-0- 02/02/2004
/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: CCA ERN ERP MAV