STRA - Earnings call 4 2023 | Strategic Education, Inc.

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Operator

Welcome to Strategic Education's Fourth Quarter 2023 Results Conference Call. [Operator Instructions]. I will now turn the call over to Terese Wilke, Director of Investor Relations for Strategic Education. Ms. Wilke, please go ahead

Terese Wilke

Thank you. to fourth conference quarter welcome we in and discuss will XXXX everyone, Strategic call Education's which Hello, results. Vice and With Chairman; us Jackson, Officer; Karl Silberman, Chief Executive Daniel McDonnell, President Officer. today and Chief are President and Robert Financial Executive

with be a on open release to recent XX-Q we Education's differ Act forward-looking note filings materially. to release the the include X-Ks, website call XX-K Commission of for XX-Ks. information future Form Exchange made XXXX. Private provisions on and these has viewing of expectations and of Copies cause Further statements and pursuant at The well may in the and to Education's Strategic Securities Following that the that will annual assumptions, questions. call strategiceducation.com. and other as Reform as actual this today's are the Securities found most current risks about most subject remarks, harbor The uncertainties on Litigation available report identified and be for may based uncertainties are in and statements to Please that filed. of full results Strategic the recent these number filings Strategic Education today's press could XX-Qs relevant are other press safe

ahead. please And now I'd like Rob. call go over to Rob, turn the to

Robert Silberman

Terese, ladies morning, and good Thank and you, gentlemen.

$XXX report outstanding and with allocation. cash the on our bank capital of comments Before year million quarter the our high-level to a I to and marketable started revolver. securities year fourth make drawn on I turn SEI just wanted of roughly and of couple million call Karl over debt our results, full $XXX to XXXX

pretax During XXXX, we $XXX in cash from million operations. generated

we for growth we we expenditures million average we returned around what We left Out $X per referred expenditures. in to $XX per well us million. that an with which X various in our year in owners our the capital roughly to of share $XX and of in from and at invested campus of also of $XX of $XXX generated paid $XX million as during million share. $X.XX million dividend . the roughly cash, million comprised properties sold taxes, $XX stock common common price our as annual $XX as owners' distributable repurchase of million cash our That

sheet Finally, XX And marketable cash XXXX down the year-end of enter $XX outstanding we all of outstanding. that opportunities can That million with capital to our million paid academic year, through we you and them our positioned to confident upcoming million as million securities our shares our with support as are is and debt. as SEI left any that, $XXX and debt institutions continue balance to well well operating walk financial we to $XX the And fund during results. Karl, return of at to shareholders. XXXX of

Karl McDonnell

like I'd assume my fourth adjusted reflect exchange segments. that Yes. Rob, start our currency year across everyone. this that Thank morning morning, results financial constant pointing results references full purposes. and for and all financial our XXXX by to out momentum of to all SEI's quarter we foreign to results of continued you, and are good reported our

fourth grew million. the $XXX For to quarter, our revenue XX.X%

income in Our with and more million. X.X%, doubled line our was which operating $XX expectations, grew operating to expenses than just our

increased XXX basis margin points. operating Our

generated of incremental from the $XX revenue. quarter, operating million an we income incremental of During $XX million

to the from also prior share. Our earnings doubled more per year than per $X.XX share

year, For revenue X.X%. grew the full our

due operating than much to plan, that than grew which initial Our enrollment higher plan. expenses X%, our was was slightly higher but

year XX% basis XXX increased points. grew income Our operating the our margin and full for operating

fourth strength the grew continued in full even prior year, Total enrollment employer-affiliated U.S. enrollment and X%, our to enrollment now year. year Fourth employer-affiliated segments. from stronger. year XX% Education grew had Higher was Turning Education full U.S. for for corporate an and reflecting the XX% partnerships. exceptional the quarter quarter respectively. our Higher and in Total XX%

fourth Education enrollment Higher the quarter, coming XXX partnerships percentage to corporate of total XX%. from points the During U.S. increased our basis

the total of our year, incremental corporate For partnerships. full came U.S. XX% our from Education Higher enrollment

XXX% Student the Higher grew fourth and X% quarter for for the full remained XX% for full retention income Education quarter the at year, and year. X% at XX.X%. U.S. and approximately for stable fourth U.S. Higher The revenue operating Education grew the

and for & for market XX% grew Our Services and respectively. continue gain fourth Workforce and ETS year. had ETF Education, XX% the Technology fourth and full also to segment Sophia for XXX% the at quarter year XX%, revenue Operating as the share. Edge increased quarter both year income tremendous a full

Sophia paid subscribers XX,XXX group's Learning, more grew is margin, to operating which direct-to-consumer generated XX% paid Average of our college-level XX% for XX% than revenue fourth the subscribers. in quarter, portal year. prior classes XX% a total the and from up

Workforce Edge Edge collectively who employ Workforce just or University XXX% under into Strayer X.X grew employees. corporate million under now XX just Capella to students. X,XXX has either partners enrollments

Our fourth and Australia/New constant full Zealand using quarter currency. segment for grew the year revenue XX% X% for the

of All for per result and full quarter of year. this higher was student slightly enrollment significantly the as was the growth revenue the down

successful a quarter course year, to on our pleased in courses response revenue Adjusted year. results quarters international XXX closing, for points. In we increased for as we campus. This to XX% a XX% our for throughout ongoing and normalize load As and very a take basis which big in XX% the commitment of revenue expected of per student last our from their as COVID Australian increase per was for to resumption students driver the And and with learners. like increased thank grew era colleagues requirement margin student increased look to students within your forward XXXX. we fourth said XXXX, in are I'd my to we full all the and operating operating SEI of income always, adjusted the to

take Latif [ to ], happy questions. And be with we'd that,

Operator

[Operator Instructions].

first line the comes Jeff BMO. of from Silber of Our question

Jeffrey Silber

wanted quarter year. the but fourth operating margin not I the only focus first to the obviously It was for very for on expansion. strong

Specifically, in these be are the should looking And gains? U.S. for Education, we what how going sustainable forward? Higher

Karl McDonnell

you the to Jeff, XXXX our investments the weighted the back just of very the go timing in of first beginning was Well, to year, the if of year. part

small So second we growth half in expected the the very expense year. of

but in we in the of any that's out. to level expect In long flow kind settle terms going low given to consolidated to mid-XXs.-- that particular year, of where to we'd expect any quarter, the we based ebb notionally, said make our before, we've term, as for be investments margins and at that's on given

Jeffrey Silber

done focusing Are Okay. than enrollment then there on strong specific call that all just programs across Great. the growth might And have your out any others? better properties. to

Karl McDonnell

Actually, across mean very strong. I the is strong to board, it's continues do very FlexPath care pretty Health well Capella. Jeff. at

And prepared said remarks, Capella. exceptionally strong. that's is corporate true I Strayer in both As my and at

it's broad-based So strength a really very right now.

Jeffrey Silber

Day et a still think XXXX address changes, Okay. put then wondering preliminary I'm Any just And with that. Are in out November, I at Great. we outlook. And that? Investor cetera? if comfortable you your you can

Daniel Jackson

Dan. think, is that is on track. Jeff, we this still model, Yes,

Operator

Truist. next comes from Jasper Our the question of Instructions] Bibb of [Operator line

Jasper Bibb

segments about results detail between you I bit outlook here. composition in a 'XX outlook. the 'XX. Maybe think up gave the the Investor Like of of preliminary at Impressive on growth just Day a preliminary following the

about. of U.S. get the need change seem to there's So be bit would the while a ahead there? Like you any to talked you say bit drivers might in been enrollment to enrollment accelerate Ed mix little running to to target, you a the of Higher X% X% the AMG growth

Daniel Jackson

Dan I'd in say from the this the it's modeled likely year. across board don't -- the Investor we've Day for performance anything changing point we this again. Jasper, is point, at at see what

Robert Silberman

operates. And prediction works Rob. highest of efficiency. we want quarter-to-quarter Jasper, it's Investor enrollment be. model. where We're operationally want students strong is to going be clarify to at this want out is The it the our We we We right one it many be. that's a is model will is and what It's students our put be we how as not making a now, run what get will qualified If we to predict is. is, model institutions the it's there expansion. I as on predictive less. Day It a way highly thing where attract not at revenue there's students, hope the more But margin to if levered. But can. there'll remains But more don't and we more less so. business

Jasper Bibb

in drilling into student the on I down that. think kind your enrollments I impact on and current to Torrens? some and Australian the rules, And ANZ, domestic guess, higher And could scores Do going tighter of of, then government any exams update like that's December, certain things I visa there? announced Maybe qualification definitely you -- you us English think enrollment at mix international like. have understand

Karl McDonnell

XX-XX domestic we we meet don't to requirements get as is between and us. recruitment, mix our students an approach who students. the overly Australia adversely Sure. Visa. trying recruit meaning The international a team takes international changes aggressive in wouldn't And Australia impact don't in to to measured roughly And for expect such, those

Jasper Bibb

me. for question Last it. Got

about 'XX. capital in talked deployment You

fit some be on frame revolver you a the picture? into I to and opportunistic if standpoint. then Or about balance you And share for cash would of, -- year drawing conversion the curious expectations Just repurchases the coming this guess, down could X? from thinking how kind would

Robert Silberman

Jasper, been as have do our revolver continue our operating most of rather draw fairly The amount I has of financial want the X.X. return the as importantly, earnings We model, of depressed. were ratio to full conversion a We income. to down and payout the We dividend. pay high priority, high to do Yes, of think don't as while change. cash years net common quickly annual a conversion the to the the cash pay the deposit possible tend will couple intend last entire our to, scores

is. a to start something we've all repurchases to repurchases, against repurchases. is opportunistic all ratio of the opportunities. what basically a we stock the that's intrinsic only share payout measure at past. back our to And in that think do of that tried think to always want of value value. And to X/X question share it's we price-based believe intrinsic get support are will to to uses And that various trading the we our where then concept. We share It's discount mix. significant And in of roughly I do always the a relative cash

at to continue look that we'll through year. so the And

Daniel Jackson

thing Jasper, add on to one conversion.

the target because Australia/New or of Zealand. same in as net some on light told the adjusted that I measure rest 'XX income. that little think of at we you a at distributable the timing We were cash level I've analysts unfavorable cash conversion

we should metric forward, that's planning -- Moving the forward. moving now

good So I a into your one assumptions. it's plug think to

Operator

Heather Balsky BofA. of line Our next the of question comes from

Heather Balsky

of about off, make seen you quarters, that It's Heather where the first in the of in sort do about you you attribute the enrollment to? know much is you guide year do think enrollment? but don't quarter driven? the operationally first do Balsky. guess, how And recovery? outperformance I year, do you're you've you given exiting you in when the and think How you of How much does sort it what think how next is I think the half can and

Karl McDonnell

Education Heather, primary of outperformance in Higher of X,XXX-plus clearly, is corporate well, partnerships. the our the network driver U.S.

the accelerated look corporate of the our throughout rate It's in enrollment just half way average the growth total of students the ahead total Higher year. actually versus bit growth been year. in U.S. of back If little at enrollment Education a rate, not. It you affiliated

It's that. a continuing Workforce it's year-over-year doubled that's enrollments Edge on the and that mature. to So fact basis,

year, very then a that, the just So addition And for to that's throughout in strong been as it's us. we've the driver. demand primary environment said

to So see we continue robust demand.

So I'd partnerships. the combination our of say, is a but factors, primary factor clearly, it's corporate

Heather Balsky

be there anything year? I should compare, momentum continue macro, you missing? is half least that Anything should anything mean in we the we this that do that the of -- where anything I we environment is And into you in next couldn't at just -- might think in about there think first keep the

Karl McDonnell

into we've the I future. macro partnerships anything seen not I that's I or within materially. can't mean, But changed a corporate obviously, is level our can say speculate what at

Robert Silberman

a we're adults back the look to future the possible U.S. and Heather, continue to right and strength be sort And with programs a put tend able there the strong fairly of rates, for really to accurately to Carl highest confidence, that. of most is together. participation school. is proxy that, force go said, which that for as working efficiently will But labor predict that be for now. to which And the in employment that try tends We universities beneficiaries as and macro be demand to quality the predicate tends as then statistics academic run it we demand remains at just we to of

Heather Balsky

think in things managing kind terms Helpful. realize visas. I know And are enrollment, -- then our there you is signs that. that when it's tough can about to don't just quarter picking visibility changes you you how in of the around any control. shoots But that Australia any that were how that they're green up, much of can

Karl McDonnell

domestic Yes, confident will to in the very of School growth the over set a I'm University, their assets. we international. the We Media some we in a We back And fourth time, demand, intend Actually, New XXXX saw quarter investments remain Torrens Design business and confident think there. Zealand. little both be uptick make it's the quality into that growth. to substantial the in in in that of in support terrific

Heather Balsky

final helpful. And That's actually, just question.

mentioned -- since mentioned You you investments. those

this of terms or Anything year. the similar half Is was of expenses first during cadence cadence different? it anything year weighted. that In operating 'XX should mentioned in You the mind? how keep we

Karl McDonnell

our the this year to of look we last the of in say, of When opposite year. the investments, might with second at the the a Australia. of going ironically, year half I'd they're calendarization happen we be exception think of lot

the throughout As the still 'XX. make year those in said, we're I we year. investments to in we part just But of intend this made investments from first benefiting the

'XX we the and have to . 'XX, we're heading going that third show investments to exiting So going into quarter. some are think know about we we up when make in fourth

Operator

Our the Research. next of question line comes Paris Barrington from Alex of

Alexander Paris

of questions with of couple Education, segments. a Starting got XX.X%. the first cleanup Higher total just on I U.S. enrollment

at this Capella? gave enrollment the can you Strayer in discuss but and XX-K, at total think I you

Karl McDonnell

we're just U.S. reporting No, Alex, Higher Ed.

Alexander Paris

given XX-K, usually if in that you the Is Okay. remember?

Daniel Jackson

of in will have level it there don't detail some in which me, filed we is There institution be some there. XX-K, in front the I today. later but data

Alexander Paris

sticking Okay. then And Great. to Education. Higher U.S.

up was X each enrollment all Capella. for student New quarters Strayer and

we quarter. I third the end where think that's at the stood of

Karl McDonnell

had Higher Yes. student strong all across new year. Education We growth U.S. very

Alexander Paris

then ANZ. And moving to Okay.

in new students enrollment while I was a get responded domestic, new third question quarter, by international roughly if up XX% You Last of the about same make had comment to wondering domestic quarter, XX-XX. sort saying student can just enrollment did which and you on a was is in year-over-year slightly. the the we enrollment international declined color fourth quarter.

Robert Silberman

slightly. similar. The down the students international But approvals. nicely were between overall, Domestic fourth quarter new we're around, was up and Alex, definitely bounces the Visa X, It on hedged. based of was timing

sources long-term the X attractiveness said, a And that there. of students got have very Karl We as we've of property. view

basis, growth So future. rate having of see . overall on we that a an in higher the

Operator

conference remarks. I would Sir? the back closing McDonell like now to for turn Karl to

Karl McDonnell

us morning, again you look quarter. joining talking for we everyone, you, Thank this to forward next to and

Operator

for you call. conference participating. today's Thank concludes This

disconnect. now may You

Strategic Education (STRA) 29 Feb 242023 Q4 Earnings call transcript