Exhibit 99.1
EDUCATION MANAGEMENT CORPORATION REPORTS FISCAL 2005 SECOND QUARTER RESULTS
PITTSBURGH, Feb. 9 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the second
quarter ended December 31, 2004. For the quarter, net revenues increased 18.4%
over the prior year period to $275.8 million and net income grew 23.1% to $39.6
million, or $0.53 cents per diluted share.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "We are pleased with our second fiscal quarter results. There are
many opportunities for us to serve additional students in a wide array of fields
of study both in traditional classrooms and online, so we expect continued
double digit enrollment growth on a year over year basis."
Financial highlights:
-- Revenues for the three months ended December 31, 2004 increased 18.4%
to $275.8 million, compared to $233.0 million for the same period a
year ago, primarily resulting from a 12.5% increase in total student
enrollment and an approximate 6% increase in average tuition rates.
Total enrollment at the start of the second quarter of fiscal 2005 was
66,179 students compared to 58,828 students for the same period last
year.
-- Second quarter income before interest and taxes (operating income)
rose 19.5% to $65.1 million from $54.5 million for the same period a
year ago. On a proforma basis, removing the $2.0 million in marketing
and admissions expense in the second quarter of fiscal 2004
attributable to the Company's prior interim accounting policy,
operating income would have been $56.5 million in the prior year
period. Compared to this proforma result, the Company's consolidated
operating margin fell by 64 basis points year over year in the second
quarter primarily due to higher advertising expense that was partially
offset by lower employee benefit expense and rent expense, all as a
percentage of revenues.
-- The effective tax rate for the 2005 fiscal second quarter was 39.0%,
down from 40.1% in the comparable prior year period. The lower rate in
fiscal 2005 primarily reflects a favorable resolution of a tax audit
resulting in the reversal of $1.3 million in tax reserves offset in
part by higher state and foreign tax.
-- At December 31, 2004, the Company had cash and cash equivalents of
$29.2 million and no borrowings on its revolving credit facility. Cash
flow from operations for the six-month period ended December 31, 2004
was $80.5 million compared to $67.1 million in the prior year period.
Days sales outstanding (DSO) in receivables based on quarterly
revenues decreased from 18.1 to 16.0 days at December 31, 2004 as
compared to the same period last year.
-- Capital expenditures for the quarter and year-to-date totaled $19.7
million and $37.9 million, respectively, on an accrual basis, compared
to $24.9 million and $43.5 million in last year's comparable periods.
Student Enrollment
At the start of the current winter quarter (third quarter of fiscal 2005),
total enrollment at EDMC's schools was 66,103 students, a 12.1% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 11.8% to 65,920 students. Students taking 100% of their
coursework online increased 97.4% to 2,763 students.
2005 2004 %
Winter Winter Change
------ ------ ------
Total enrollment 66,103 58,950 12.1%
Same-school enrollment (owned for 1
year or more) 65,920 58,950 11.8%
Students taking 100% of their
coursework online 2,763 1,400 97.4%
The Company's quarterly revenues and income fluctuate primarily as a result
of the pattern of student enrollments. Student enrollment at the Art Institute
schools 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 first quarter is typically the lowest
revenue recognition quarter due to student vacations. The seasonality of the
Company's business has decreased over the last several years due to an increased
percentage of students at the Company's schools enrolling in bachelor's and
graduate degree programs.
Business Outlook
For the fiscal third quarter the Company estimates revenue growth of
approximately 16% over the prior year period and diluted EPS of $0.41. For the
fiscal year ending June 30, 2005, the Company projects revenue growth of
approximately 19% over the prior year and diluted EPS of approximately $1.29.
For the full fiscal year 2005, the Company anticipates an effective tax rate of
40.1%. Capital spending for the year is expected to be approximately 9.5% of
revenue.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal 2005
second quarter results on Thursday, February 10, 2005 at 10:30 a.m. (Eastern
Time). Those wishing to participate in this call should dial 303-262-2194
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 70 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.
COMPANY CONTACTS:
Robert McDowell
Executive Vice President and Chief Financial Officer
(412) 562-0900
James Sober, CFA
Vice President, Finance
(412) 995-7684
EDUCATION MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
For the three months For the six months
ended December 31, ended December 31,
(unaudited) (unaudited)
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net revenues $ 275,808 $ 232,980 $ 489,402 $ 401,956
Costs and expenses:
Educational services 157,412 135,702 308,237 259,301
General and administrative 51,629 40,994 98,161 76,856
Amortization of intangible assets 1,657 1,816 3,423 3,262
210,698 178,512 409,821 339,419
Income before interest and taxes 65,110 54,468 79,581 62,537
Interest expense, net 260 820 983 1,510
Income before income taxes 64,850 53,648 78,598 61,027
Provision for income taxes 25,270 21,491 30,865 24,369
Net income $ 39,580 $ 32,157 $ 47,733 $ 36,658
Diluted earnings per share $ 0.53 $ 0.43 $ 0.64 $ 0.49
Weighted average number of diluted
shares outstanding (000's): 75,315 75,039 75,127 74,618
Selected Cash Flow Data:
For the three months For the six months
ended December 31, ended December 31,
(unaudited) (unaudited)
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net cash flows from operations $ (42,155) $ (15,344) $ 80,545 $ 67,112
Capital expenditures (22,438) (27,385) (40,575) (45,721)
Depreciation and amortization 14,256 13,137 28,751 25,725
Selected Consolidated Balance Sheet Data:
As of December 31,
(unaudited)
-------------------------
2004 2003
----------- -----------
Cash and cash equivalents $ 29,222 $ 7,985
Receivables, net 47,883 47,828
Current assets 116,731 98,978
Total assets 756,184 712,413
Current liabilities 147,463 228,198
Long-term debt (including current portion) 5,585 100,413
Shareholders' investment 588,585 472,873
Certain amounts from prior periods have been reclassified to conform with
the current presentation.
SOURCE Education Management Corporation
-0- 02/09/2005
/CONTACT: Robert McDowell, Executive Vice President and Chief Financial
Officer, +1-412-562-0900, or James Sober, CFA, Vice President, Finance,
+1-412-995-7684, both of Education Management Corporation/
/Web site: http://www.edmc.com /
(EDMC)