Exhibit 99.1
Education Management Corporation Reports Fiscal 2004 Third Quarter Results
PITTSBURGH, April 27 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the third
quarter ended March 31, 2004. For the quarter, net revenues increased 35.4% to
$235.2 million and net income grew 37.4% to $25.4 million, or $0.34 cents per
diluted share, compared to the third quarter last year.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "EDMC's performance in the third quarter exceeded our expectations
and we continue to see strong classroom-based and online enrollment growth
within our education system. Both total and same school enrollment growth are
near record levels. In the quarter, we also made significant progress toward
expanding our online presence as student enrollment at The Art Institute
Online more than doubled and new online programs were introduced at South
University."
Financial highlights:
- Revenues for the three months ended March 31, 2004 increased 35.4% to
$235.2 million, compared to $173.7 million for the same period a year
ago. Current year student enrollment and revenue reflect the
acquisitions of South University and American Education Centers.
Revenue growth in the third quarter resulted from a 35.6% increase in
total student enrollment at the start of the quarter and an increase of
approximately 6% in average tuition rates. Average revenue per student
declined slightly in the quarter compared to the prior year period due
to the impact of recent acquisitions. Total enrollment at the start of
the third quarter of fiscal 2004 was 58,950 students as compared to
43,461 students at the start of the prior year period.
- Third quarter income before interest and taxes (operating income) rose
47.8% to $44.7 million from $30.2 million for the same period a year
ago. The consolidated operating income margin increased 160 basis
points for the quarter due in part to greater operating leverage, the
expected lower employee health benefit expense as a percentage of
revenue and the timing of certain expenses earlier in the fiscal year.
- The effective tax rate for the third quarter was 42.3%, up from 38.0%
recorded in the third quarter of the prior year. The increase in the
effective tax rate is due to higher state and foreign tax expense.
- Net income for the quarter grew 37.4% to $25.4 million, or $0.34 per
diluted share, compared to $18.5 million, or $0.25 per diluted share,
in the third quarter last year.
- At March 31, 2004, the Company had cash and cash equivalents of
$44.1 million, and no outstanding revolver borrowings. Cash flow from
operations rose to $203.9 million for the nine-month period from
$113.6 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 third quarter and year-to-date totaled
$16.6 million and $65.7 million, respectively on an accrual basis,
compared to $12.1 million and $67.7 million in last year's comparable
periods.
Student Enrollment
At the start of the current spring quarter (fourth quarter of fiscal
2004), total enrollment at EDMC's schools was 57,141 students, a 36.8%
increase from the same time last year. Same-school enrollment (schools owned
for one year or more) increased 14.9% to 47,996 students.
2004 2003 %
Spring Spring Change
Total enrollment 57,141 41,767 36.8%
Same-school enrollment
(owned for 1 year or more) 47,996 41,767 14.9%
Same-school enrollment
(owned for 2 years or more) 46,745 40,669 14.9%
Students taking 100% of
their coursework online 1,660 729 127.7%
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 fourth quarter, the Company estimates diluted EPS of $0.18. For
the fiscal year ending June 30, 2004, the Company projects revenue growth of
approximately 33% and diluted EPS of approximately $1.01. For the full fiscal
year 2004, we anticipate an effective tax rate of 41.0%. Capital spending for
the year is expected to be less than 10.5% of revenue.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal
2004 third quarter results tomorrow at 10:30 a.m. (Eastern Time). Those
wishing to participate in this call should dial 303-262-2075 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 months For the nine months
ended March 31, ended March 31,
(unaudited) (unaudited)
2004 2003 2004 2003
Net revenues $235,150 $173,691 $637,106 $476,970
Costs and expenses:
Educational services 142,112 108,446 401,413 303,329
General and
administrative 46,439 33,840 123,295 93,322
Amortization of
intangible assets 1,931 1,191 5,193 3,251
190,482 143,477 529,901 399,902
Income before interest
and taxes 44,668 30,214 107,205 77,068
Interest expense, net 583 339 2,093 981
Income before income
taxes 44,085 29,875 105,112 76,087
Provision for income
taxes 18,638 11,354 43,007 28,917
Net income $25,447 $18,521 $62,105 $47,170
Diluted earnings
per share* $0.34 $0.25 $0.83 $0.65
Weighted average number
of diluted shares
outstanding (000's):* 75,493 73,084 74,549 72,926
* Prior periods adjusted to reflect a 2-for-1 stock split on December 22,
2003
Selected Cash Flow Data (unaudited):
For the three months For the nine months
ended March 31, ended March 31,
2004 2003 2004 2003
Net cash flows
from operations $125,317 $92,230 $203,866 $113,648
Capital expenditures 16,564 12,090 65,692 67,738
Depreciation and
amortization 14,596 11,892 40,321 30,443
Selected Consolidated Balance Sheet Data (unaudited):
As of March 31,
2004 2003
Cash and cash equivalents $ 44,112 $96,617
Receivables, net 49,251 34,877
Current assets 132,664 156,999
Total assets 745,695 566,435
Current liabilities 236,957 157,226
Long-term debt (including current portion) 3,482 3,521
Shareholders' investment 501,158 403,357
Certain amounts from prior periods have been reclassified to conform with
the current presentation.
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- 04/27/2004
/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 HED
SU: ERN ERP CCA MAV