Exhibit 99.1
Education Management Corporation Reports Fiscal 2005 First Quarter Results
PITTSBURGH, Nov. 3 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the first
quarter ended September 30, 2004. For the quarter, net revenues increased
26.4% to $213.6 million and net income grew 81.1% to $8.2 million, or
$0.11 cents per diluted share.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "We are pleased to report strong financial results for the first
fiscal quarter. Our financial results benefited from good enrollment growth
and from increased leverage on facilities and administrative functions. During
the quarter, we also saw consistent year over year levels of student
persistence.
"We are experiencing strong interest in our academic programs across our
education systems. While our 12.5% year-to-year enrollment growth in the
recent fall term was less than our previous guidance, we continue to see
exceptional opportunities in the education field. We expect double-digit
enrollment growth going forward, in line with our long-term guidance, and we
are increasing our diluted EPS estimate for the fiscal year ending June 30,
2005 to $1.28."
Financial highlights:
- Revenues for the three months ended September 30, 2004 increased 26.4%
to $213.6 million, compared to $169.0 million for the same period a
year ago. Revenue growth in the first quarter of fiscal 2005 primarily
resulted from a 32.8% increase in total student enrollment from the
prior year period and tuition increases. Average revenue per student
declined slightly in the quarter compared to the prior year period due
to the inclusion of three months of financial results from American
Education Centers, compared to one month in the prior year period.
Total enrollment at the start of the first quarter of fiscal 2005 was
53,073 students compared to 39,977 students for the same period last
year.
- First quarter income before interest and taxes (operating income) rose
79.3% to $14.5 million from $8.1 million for the same period a year
ago. The consolidated operating margin improved 200 basis points year
over year, due in part to greater leverage on personnel and facilities
expenses. During the first fiscal quarter, the Company changed its
accounting policy of allocating advertising and admissions expenses to
each quarter within the fiscal year as permitted under APB 28, "Interim
Financial Reporting." Under the new policy, the Company expenses all
advertising and admissions costs in the period in which they are
incurred for interim reporting purposes, consistent with reporting for
annual periods. This change has no impact on the previously reported
quarterly results for prior years. The change in accounting policy
negatively impacted this year's first fiscal quarter results by
approximately $2.1 million net of tax, or $0.03 cents per share.
- The effective tax rate for the 2005 fiscal first quarter was 40.7%, up
from 39.0% in the comparable prior year period. The fiscal 2005
provision reflects an increase in the valuation allowance against net
operating loss carryforwards generated in the quarter by our operations
in Canada.
- Net income for the quarter grew 81.1% to $8.2 million, or $0.11 per
diluted share, compared to $4.5 million, or $0.06 per diluted share, in
the first quarter last year.
- At September 30, 2004, the Company had cash and cash equivalents of
$88.2 million and no short-term revolving credit borrowings. Cash flow
from operations for the three-month period ended September 30, 2004
was $122.7 million compared to $82.5 million for the first quarter of
fiscal 2004.
- Capital expenditures for fiscal first quarter this year totaled $18.2
million on an accrual basis compared to $18.6 million in the prior year
period.
Student Enrollment
At the start of the current fall quarter (second quarter of fiscal 2005),
total enrollment at EDMC's schools was 66,179 students, a 12.5% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 12.0% to 65,879 students. Students taking 100% of their
coursework online increased 112.9% to 2,508 students.
2005 2004 %
Fall Fall Change
Total enrollment 66,179 58,828 12.5%
Same-school enrollment
(owned for 1 year or more) 65,879 58,828 12.0%
Students taking 100% of
their coursework online 2,508 1,178 112.9%
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
The Company estimates revenue growth of 18% and diluted EPS of $0.52 for
the fiscal second quarter. For the fiscal year ending June 30, 2005, the
Company projects revenue growth of approximately 19% and diluted EPS of
approximately $1.28. For the full fiscal year 2005, we anticipate an effective
tax rate of 40.7%. Capital spending for the year is expected to be less than
9.5% of revenue.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal
2005 first quarter results Thursday, Nov. 4 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 http://www.edmc.com .
Education Management Corporation ( http://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 66,000 as of
fall 2004. EDMC has 67 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.
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
ended September 30,
(unaudited)
2004 2003
Net revenues $213,594 $168,976
Costs and expenses:
Educational services 150,825 123,599
General and administrative 46,532 35,862
Amortization of intangible assets 1,766 1,446
199,123 160,907
Income before interest and taxes 14,471 8,069
Interest expense, net 723 690
Income before income taxes 13,748 7,379
Provision for income taxes 5,595 2,878
Net income $8,153 $4,501
Diluted earnings per share* $0.11 $0.06
Weighted average number of diluted shares
outstanding (000's):* 75,167 74,816
* Prior period adjusted to reflect a 2-for-1
stock split on December 22, 2003
Selected Cash Flow Data:
For the three months
ended September 30,
(unaudited)
2004 2003
Net cash flows provided by operating activities $122,700 $82,456
Depreciation and amortization 14,495 12,588
Capital expenditures (18,137) (18,336)
Net cash paid for acquisitions (11,031) (149,050)
Selected Consolidated Balance Sheet Data:
As of September 30,
(unaudited)
2004 2003
Cash and cash equivalents $88,228 $20,263
Receivables, net 62,964 58,083
Current assets 197,262 124,518
Total assets 827,291 713,293
Current liabilities 266,586 268,863
Long-term debt (including current portion) 5,609 64,521
Shareholders' investment 541,341 434,585
Certain amounts from prior periods have been reclassified to conform with
the current presentation.
FOR: Education Management Corporation
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- 11/03/2004
/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: ERN ERP CCA MAV