LOPE - Earnings call transcript Q4 2018 | Grand Canyon Education, Inc.

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Grand Canyon Education Incorporated Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

conference being this reminder, a call recorded. is As turn over to would now conference to like I Mr. the Bachus, Dan Chief Financial Officer. Please begin, sir.

Daniel Bachus

Thank you.

discussed all today's These note different future implied our cause quarterly our on that, to including Brian Report from on risks no and before forward-looking any thoroughly me call on Form results I over factors with filings, statements factors Chairman Brian. involve such in we with our our current by and Joining could financial Various investors reports and a provide statements taking Mueller. call that our this to Form that XX-K, Please or today regard in will undertake review to reports We that results comments of these during actual are GCE. Form expressed uncertainties. many SEC statements. the the And will forward-looking and made XX-Q reports X-K. contain is CEO, to Annual be materially turn position updates on call obligation recommend

Brian Mueller

you And and to Education's fourth Grand thank quarter conference fiscal afternoon. Good call. Canyon year XXXX welcome

quarter increased enrollment of fourth X.X% $XX,XXX. to the During XXXX

low-teens adult size quarter start of GCU grew working delivered year-over-year fourth the GCE were want in scope online New services I XXXX. which of by in attending expectations. and the exceeded the students to reviewing as they

school faculty outcomes universities Science student to programs programs, The of GCU STEM learning education for from implementation. an in two is were the a released emphasis Education new the select the to a programs want admissions the programs, and program. the in to all of of requirements new Master for academic is content for and First, with counseling. to in curriculum area you responsible development I elementary Bachelor the those sets teaching requirements were responsible remind and that new

were certificates or were In revised and addition, XX programs updated. that there

sessions there were classrooms. success, development. XXX examples six and collaborative in were area, faculty recruited faculty practice theory the creating There the from faculty student trained. from of adjunct include; year additional experience in first and professional full services boosting Second, of time training XXX to trainings a these These also

technology a total provides admissions students including a students the an transcripts to XXX,XXX touched. academic were scheduling order evaluated, Sixth, area, to in activities in calls program. concerns, in size quarter, or our course Third, of average performed schedules XX,XXX Fourth, Seventh, of platform reminder make with on were if they less the attendance, in as need hold, XXX,XXX coverage our the fourth in placed finance minute than the documents, and enrollment we answered practicum advertising follow-up during was and and necessary efficient changed. XX the exceed GPA support, provided or of the goals. work continued to Ninth, hold our time with counselors laid, the XX,XXX welcome a built no were XX.X% area, such prospective Eighth, was of financial our to start seconds. calls, which Fifth, for changes, license missing information to very a technical significantly scheduled behalf and on classes files XX.X. a students, calls were in average class activities enhance quarter. time, new decision

working We are currently projects. over XX software

cloud has increased full term. resource of our doing of platform. a GCU pilot successful platform use have We GCUs

in courses modifying going the curriculum forward cybersecurity, are During spring both and programming in online use term platform when course delivery. additional and traditional we IT, GCU jointly to

goal intelligence use tracking artificial We students, programs advanced automating some technologies to core of quality high information that GCE of work these. The six The with the to education objective going metrics forward experience counseling. faculty services this outcome in counselors to key has loans. is the last XX on over and for provide is our capabilities graduation and quality invested I’ll those just low continue academic student to The including services to $XXX the years. and One deep partners in and will debt strategies. university the in growth low use review support scheduling million to and several rates, implement for produce are required metrics automated but analytics default to not career rates support. improve include over students. and limited opportunities resulting student field we high a amounts platform in is area over

quantity a both tailwind In students. of produced record the seven and income new campus campus of a of to Honors on of academic average will with revenue guidance current the over campus students new with XXXX ground a The flow fall students grow exceeding grow again to from will we will continue fall campus new at First, will XX,XXX will to traditional rise the to all X.X the over continue new the next X.X. per five GPAs average the living non-profit continue GCU’s because College quality XXXX given expect student GCU’s Average XXX student to incoming perspective. deposits over years. students, programs GPAs go to up. and provided The will grow of applications, has for be XXXX XXXX percent students. registrations ground XXXX and approximately growth of

GCU’s campus Second, the at to online goal is X%. X% to grow

students growing support well. graduate on around degrees. default new to students has produce to status impact will for as enable BSN continue GCE a the the continue well degrees working This the grew However, XXXX graduation of quality above XX% will the to goal quarter campus on amounts loan enrollments in university to metrics RN of university student and low-teens of loans. GCU’s or rates, which is the with tailwind online created of fourth In goal. non-profit online rates

partners and -- new locations a Pre-Licensure partners BSN find programs. reputation its GCUs partners has brand XX% to Third, to continue markets partners an local goal by the high university his to produce outcomes. GCE next on programs Orbis programs execute market with will such to therapist locations that the shortage produced it his Program partners with outstanding added. offers with physical of program number his use combine working to years generation the quality will an its levels Orbis healthcare a expand. professionals grows Western worth as XXXX the in established huge can pre-licensure licensure at care. boom university levels Four, sense. for and be practitioner, Sixth, work a number partners. capability the therapy with expand GCE of to There occupational is number it gain continue will in seven the graduation [ph]. locations. The to in from exams support with a nurse add regional perspective. Orbis, certain on it or locations year. his make the has first-time in healthcare XX% existing will still ages baby Orbis U.S. XX adding eventually quality high XX will as strength and places of rate expand pass limited be on high in including will Orbis their outcomes Fifth, as area operational to want Orbis GCE’s Orbis locations through calendar focus existing partners rate to it of to where going additional over XX with are work the requires of of the There’s increase will

programs, geography, are partners for differentiated that look brand, on clearly continue price based et cetera. We point

right the we have haven't We away last of were walked call, In options. opportunities to several from found quarters amount five because date, differentiation. considering we indicated

and away two additional into discussions with entities. those. of two to We have have walked with discussions from Continuing entered three

the Now turning results of to operations.

July would in X.X% as between and an increase adjusted quarter and a X% quarter an It of the traditional a As basis. December due to comparable prior operations occurred is beginning XXXX. of GCU's X, provider. between revenue increased results of a of quarter in do XXXX, increase and represents as Service from our Enrollment XXXX compared was discuss comparable fourth transaction we technology resulting increase were on year. as in July fourth operations in service not reminder $XXX the million Therefore fourth an rather revenue fee will operations for a enrollment a The $XXX.X the This the XX, -- revenue, GCU. GCU's million purposes reflects in XXXX. XXXX comparable $XXX.X XXXX revenue increased on in of university of XXXX, revenues GCE university-related Added of year-over-year GCU to million service $XXX.X been comparability XXXX, at amounts enrollment. adjusted include of X, XX, basis on December student minute. fourth have in discussed increased quarter of the ancillary

operating were $XX.X income margin XX.X% our XXXX for adjusted million the and XX, three and operating respectively. ended adjusted Our December months

As income compensation and primarily and the adjusted in and million million was adjusted XX, increased months fourth need years. in to tenure and to staff increases and salary $XX.X million GCU of compensation the of the respectively. This and employee margin benefit XXXX operating to three million between from adjustments an ended increase support XX.X% number $XX.X X.X%. its $X.X for were or services XXXX related fourth $XX.X increase the academic to December XXXX, our grew due expenses operating Technology quarter enrollment, client quarter in of based increase you increased costs due of

expenses points million percent savings partially and the service million an X.X%. of offset academic ability the to quarter due compensation employee XXXX revenue portion compensation to GCU This support by increase between to cost and planned due decreased increased of and increasing these lower employee to quarter benefit technology of from of services comparable leverage or by basis costs to million to and the fourth our rate revenue the $XX.X XX $X.X Counseling across fourth and our our As reinvestment $XX of base, is in enrollment. a tax services an increased increase costs. personnel primarily benefit years provided and of its a X.X%, grew in XXXX,

revenue, of and basis base, percentage the GCU primarily comparable With four increasing XX.X% employee our across in costs a it well leverage increases ability and income decreased enrolment sheet quarter support expenses turn portion basis compensation due an offset savings plan four by our to of to I’d revenue comparable to XX our This the partially on as points costs. of points and of Bachus, to counseling give a million a XXX quarter benefit between reinvestment from of XXXX. percent XX.X%, to increase fourth a As a from XXXX. due four CFO items other and balance benefit Talk XXXX these expenses provided as revenue, and XX Marketing quarter. quarter and General increased X.X% our four staffing and comparable of increased compensation and its by employee statement, years as our $X.X that, as tax like of increased and as expenses more to from years, basis growth. communication in administrative to points to XXXX revenue to between X.X% lower quarter decreased little rate service services primarily increase percentage provide about Dan guidance. to in in was to XXXX color over the our cost XXXX changes

Daniel Bachus

one to day for the not primarily its slightly increases and traditional of exceeded in decreased prior start revenue quarter student less. quarter in tuition revenue of ancillary the due higher the in ground fourth and due date averaged based in of the XXXX. XXXX clients per ground for four of years to X% expected Service Brian. in working students less enrollment Revenue our to programs fourth year higher our has its GCU's the resulting adult traditional revenues. as timing have programs GCU for XXXX XX quarter Thanks, shift compared tuition expectations in producing or

XXXX. and a tax a XXXX. from rate XXXX of quarter rate rate XX% favorable in Act rate created approximately also XX% signed the four Cuts fourth the to which Act the compared fourth to in of the The resulted XXXX. year-over-year XX.X% quarter for XX.X% into in of filing Act Tax method with federal XXXX. law maximum Jobs tax of federal XX, changes The result a $X effective lower corporate effective reduced December is the January Our was on was return of of tax of to the that opportunity flat a for quarter its X, GCE impact tax in conjunction The submit tax million expense XXXX effective to

tax XX% QX XXXX in million in dollar-for-dollar rate. also XXXX million in our We reduction made the quarter. state the effective are general expenses as contributions administrative in recorded income a increased lieu and tax Our recorded credit the help from reduce third in and recorded of state XX% rate of receive in taxes tax expected amounts quarter. fourth these in third $X to is $X.X are QX these which in contributions, for quarter a the

purchased from favorable the our lower four impact $XX.X%, million into quarter guidance XXXX common compared million share XX that we approximately a did the previously $XX.X common We stock quarter in $X.X repurchase fourth the additional in quarter million. of fourth effective is available tax excess XX, shares approximately to rate. In of our As XXbX-X as included We’ve XX,XXX a December January of rate shares was executed cost the benefits of [ph] due authorization of four $X.X given an plan, million. stock of of in to XXXX, earnings at fee our tax under of quarter at repurchased XXX,XXX cost XXXX $X.XX of under XXXX had tax the million effective $X.X XXXX.

CapEx to in total which million and of of million. $XXX.X with were December unrestricted fourth out equivalence collateral Orbis and Restricted XXXX and XX, release cash cash of agreement GCE’s was balance describe approximately X.X% and agreement January XX, were in $XX term amended credit flow, million primarily cash Orbis minute. investments quarter consisting build will or CapEx restated represents range million I revenue. December Turning XXXX should $XX.X million in $X.X We at development a between short cash and the estimate XXXX location. software credit partner the as on cash $XX the the was XXXX and which net of a the GCE including sheet

is principal the term of with The quarter five subject term the and in to through We’re the the with secured XX, the million acquisition is anticipating equal for finish school both note three facility to This and with additional million its $XXX funding and $X.XX installments recent funding June price CapEx behalf purchase apartment year. is XXXX year of quarterly agreement school quarter of will CapEx XXXX/XXXX and style ended amortization to approximately fund XXXX XXXX commencing project loan, year on a likely the the repaid us GCU cash and of use of residence on fiscal continue the XXXX. we halls maturity and university the a first to that an date. of GCU drawn parking at collateral with Based request garage comprise On not loan the on hand to Concurrent with conversations year able forward. after of of together own CapEx anticipates term X% plus like credit principal a XXXX. $XXX.X the under million a released. credit would a acquisition. fund interest moving credit restated we the per will January Both university its in The of facility term together and XX-day guidance was LIBOR that facility with and two facility conjunction million Last, and color acquisition, and of $XX.X to amount million have amended $XXX revolver entered XXXX agreement credit the million to debt term million term revolver closing $XX.XX loan were related the into of this amendments of that of payments cash I provide provide the provided be currently have – revolving pay quarter. the GCE XX, on applicable as the Orbis in facility with $XX monthly our proceeds for margin of and X%. the

are financial again adjusted do net notice, exception items. because assets, tax of net we XXXX. have as with each for we We a these the first Orbis’s We probably quarter net XXXX the estimates as impact beginning including providing guidance and cost of with transaction reflect amortization, the our seasonal. GCU and you’ll provided to The with income income the GAAP results those to the adjustments. are financial provide as results reconciles acquisition non-GAAP that services for plan income of universities includes adjusted to this Orbis that reported associated As that quarter non-GAAP intangible

yet $XX annual Although approximately estimate asset not we is approximately the and will million, the asset million. and amortization to that intangible cost first tangible anticipate XXXX finalized, quarter of valuation be transaction book $X expense we be recorded in

GCU single-digit Our growth. guidance new online assumes enrollment high start

between has graduates an recent of increases that years assumes total graduate year-over-year in guidance GCU retention rate. GCU continues and approximately growth in XX%. increase in in start exceed gains to The accelerated growth its experienced Our years result enrollment significant

XXXX, discussed are grow result We its high percentage per growth traditional by XXXX rates occur. break anticipate from have QX, impacted a enrollment QX four GCU in less $XXX,XXX then student and begin and Christmas of campus but revenue to of of XXXX body. QX of to summer start to about estimate that day will is more GCU QX has $XXX,XXX year-over-year impact loss changes in continue be $XXX,XXX the are from XXXX, and of the years. pushing are breaks. XXXX Christmas and the Orbis two, and million that estimate of revenue end and by traditional online million the of of growth students will graduating per had effect students quarter revenue we one, day XXXX four. when in We quarter semester from previously, to impacted The a a growth one over QX earlier revenue in revenue one revenue Christmas fall approximately net the or student between less net ground of online which The to to of XXXX ground a in GCUs from spring changes XXXX QX. timing for $XXX,XXX revenue The more As revenue student XXXX one GCU breaks to XXXX. pushing $XX.X and revenue in to as the of when $XX.X a of break relating be represents quarter $X.X in of these net impact revenue day pushing XXXX XXXX quarter less will and from revenue three, XX.X% semesters We revenue million.

be this XXXX XXX,XXX enrollment XX, of XXX,XXX XXXX, at occurred financials. and close at due declining CapEx. December of the GCU’s related XX,XXX million grow expense $XX.X approximately XX, transaction one QX, June the at these net We guidance of XX.X% the January XXXX of XX.X% quarter approximately and $XX.X the a This being XX. in be approximately approximately general to operating September million over excluding XX, note to a to those anticipate as approximately million intangible be continues XX%, estimate as XXXX slightly will revenues. the principal XX approximately GCE see of would breakeven XX, standpoint and XXXX the marketing thus technology of amounts. provided. expense X.X% from $X.X note at revenue June over a of Orbis and Total respectively net September December communications of interest on that at at item XX.X%, a on June and effective – the be that XXXX that and be estimate March interest the our income revenues included expense at will services of the and Orbis of we GCE tax XXX,XXX Given interest course We We our approximately will be excluding discrete income is With million, increased XXXX. funds XX, support, core from side, margin will million will recognized will other margin anticipate the in be effect incurred basis GCE be lowering services, XX, and in and XXXX XXXX points course business the year of EBIT item March XX counseling paydowns will substantial administrative will XXst cost. $X.X QX, year-over-year not amortization and transaction at which enrollment will rate. portion at the to in academic One asset have an and consolidated $X tax

XX.X% decreasing benefit tax fourth to If have is in higher administrative Lieu in not decrease method assumes state to made QX QX. year and taxes to general in in XX.X% this being in the to factored state guidance of due in in will The rates lower of tax and the when quarter rate item the especially contribution an is result in contributions of XX.X% income guidance. contributions majority QX, fourth income in be year restricted tax XXXX into and prior in quarter of in each year-over-year QX and excluding discrete made quarter estimated in state is tax the the a I expense. the quarter lieu increasing the rate stock occurring the XXXX income in it income vesting our is due state received the due mentioned effective increase that of Our of expenses transaction, XX.X% Lieu third QX, due taxes the as The tax to earlier. of of the taxes year a effective change and the income effect one-item

and that In Although assume conference first we Orbis and came in Grand that culture during need ethos or to I quarter. those develop Grand the to the is back Education other transaction, a Canyon not XX this will turn We organizations; a we single Canyon time entity might finance. share entity. Brian call, a repurchases single and repurchase was for operated Education, a these Grand few Canyon what additional Prior as the shares University than University. now have years final Grand recent Canyon made to estimates now to three referred thoughts. over during call to the XXXX,

greater goal access of and hybrid students to our classes traditional non-traditional than $X.X led campus. to building leveraging students, increases market the and campus, goal University less XX,XXX or board The huge being huge to infrastructure served. students Hispanic,X% There’s infrastructure years on is Again now This an traditional board the was goal tuition services Canyon Grand with in of a Grand own served. board been campus being We greater percent efficiencies. campus and Higher has non-profit with educational Our XX% educational a Private the consisting and mission. capital to institution created a in clearly our the online with a able is over with from one of all and XX make campus on common students or in online own Americans. no Christian common raise Education on diversity public for was get and company and Using billion the to affordable grow now of were not Africa its student color. common perspective. socioeconomic mission. its invest a Canyon American Education overlap over XX%

in continued greater the I’ll make or both goal lives or progress. from plan This can neighborhood be five-point the reside. to both a of transfer now joint in on intercity where amazing witnessed both we organizations. culture ethos commitment common best the However, continues to organizations

created and new businesses. jobs XXX another between have two eight organizations jobs We the XX,XXX through

partnerships dropping in City in the of has with Our investment crime neighborhood. police the

on local over X XX housing between schools the over to pm are have providing XX% XXX appetite through homes and program values up since Friday pm now am program. over Saturday. X tutoring Our X improved We started over XXX and XXXX Monday to we and has students

on win-win they In a relationship but are are providers a drive greater service addition, create students business There also to move unique continue at Canyon like with levels the to to They continue Orbis, the for common situations. or order of support Canyon Education. Grand will projects full partners to are look advantage of universities way. sound to with create prosperity. this healthcare or goal. like and now support there daily questions. Education and productive ethos. moderator, dozen led and win-win parties, but in forward answer resources the the culture neighborhood turn or increased a basis call Orbis goal very from will and a all business their going to in we perspective both of a serve the population on will can communities as common so over we student also greater the for I We serving and Grand

Operator

the [Operator Instructions] from Our Appert first from line of Peter question Jaffray. comes Piper

open. line Your is

Peter Appert

afternoon. Good Thanks.

on based the particular? like think the definitely in Brian terms enrollment Do for on new of based in a you forward the going your online in guidance, seeing terms the a you what numbers feels would reasonable you’re target tailwind business a comments rate growth have be growth from of So conversion.

Brian Mueller

Well, we knew be that would the question. first

of still from tailwind. it a start. terms especially We We’re online quarter was no say very X% fourth an to in standpoint. X% a Definitely had strong

we to And in We’re a be off to going and try We’ll last? under will that good The like start deliver. are. the conservative to always first over so, quarter. we’re question is how promise long

we’re goals We was openly. the We institution. competitors online not do million guys even these us haven’t years run, single evidence we non-profit now status there et than So to times yes, shouldn’t go you our cetera, that with an that though in grew to fact spite a impact. student new in I that from we and for [Indiscernible] ready short are but low-teens, increasing every locals the that yet. you change had think now of benefiting non-profit we’re its a that tell been more growth out We’ve XX saying, and our had day expected believe has day

Peter Appert

mentioned And enough. assume sort longer university that terms and Orbis EBIT then enrollment clients. then, in any of financial growth on term perspective, – breakeven the model Okay. numbers, the Orbis? new if for related growth thoughts Fair business Dan, would that And the to from of an this that any gave, you

Daniel Bachus

Yes.

lot in been already locations Brian up signed of additional and and at does additional have those already all different of times the but continue for -- So locations going have and on XXXX locations partners determined to work a additional course partners determined have opening They that going include and for XXXX open seven forward. year. the XXXX. been said partners call, as Those are and over already the obviously on they been locations forward,

Brian Mueller

university So XXXX do in partners. not the going current new are partners. additional be They done need locations with to the

Peter Appert

Exactly. Right.

Okay.

Daniel Bachus

In comparison than we as into slightly basically completed breakeven of what The locations. is the they number that is profile before, margin, that’s budget is their actually number business locations about the existing they’ve going mature terms better as to. are year, but or of got process we the on the their more dependent had margin thought a new whole of talked EBIT to where year open as the in of highly which during

so, new a as decreases percentage percentage location number be Orbis – of locations you total see profitable. over the And the will time of of as

Peter Appert

Okay. you're And discussions this we terms it process it? new about thing, that OPM sounds with terms the it should ways of like how client. think off Brian, in clients, being imply very that which a potential in last signing that Is might in then, obviously still thoughtful first of

Brian Mueller

are of lot for getting successful, – nicely about so it’s that the say, XX how anything got them the but first, not announce to XX because have Orbis days. future in would feel next days, to I very fairly big we’re something next yes, the has the higher we This although not XX behind being very looking be or we for gave us very, about become excited a big education a are we that us it mean think we’re now. or and fit a we new we've don’t doesn’t could right, that into XX partners do It purchase We -- and supporting you’re priority careful.

Peter Appert

you. Thank Great.

Operator

you. Thank

from or Jeff the line from question next Baird. comes comment Our Meuler of

open. Your line is

Jeff Meuler

Yes. you. Thank

Just through ran ton you us you a detail, of on gave pretty but the quick. of Dan, guidance, some it

methodology can Orbis, think expense us, I tax is breakeven you guess, it XXXX the have EPS? the expense, impact on interest adjusted what of some for EPS impact? there’s under then EPS out the like Orbis net new the for is in And terms Just savings? saying I all incremental EBIT I you’re layer to excluding excluded from going adjusted be guess we’ll then amortization on but which to

Daniel Bachus

guidance with purchase. interest includes the So interest expense gave associated the the – we expense higher

the amortization tax asset, that’s permanent amortization in because have not of that be turns The temporary intangible the asset. book of deduction to items actually because out the that a effective tax a included not So rate associated we’ll does with guidance. item, the assume

plan intangible is the that intangible asset, to carve EPS carve guidance expenses. adjusted of with amortization else we’ve well associated But in the benefit out amortization asset that given to number, So along with out the [Indiscernible]. the tax including Orbis in transaction the as everything the higher the as

Jeff Meuler

together all embedded it that's it. numbers it [ph] have EPS the figure. and that so that had some XXX as I dilutive consensus And things I guess make others a this My I fully don’t could is as incorporate is just in, to in apples-to-apples rolling of didn’t think trying I possible?

Brian Mueller

Yes.

the Cabella familiar what Strayer to similar if think in as number is that. try give will Similarly we’ll EPS that to all do that with I something we and acquisition, to you’re line be to adjusted guidance do would that give.

the that Everything else transaction the we is are that with the things to and amortization guidance gave carved out along intangible the expense. And cost. embedded higher in including will asset, interest tax be so impact the that

Jeff Meuler

Peter’s follow-up And GCE then, oppose or question it. service to the on Orbis. OPM to school just for clients as the Got

I you revenue. runs initial a Just expense there’s initial would imagine if that client and there when ahead -- sign eventually of is

would or for is you signing? a you client, So to guidance then that the the potential Is time initial like way dilution size flow are get think the when be a client what profitable? additional client in up the that adjusted XXXX anything case? are first to And cash EBIT embedding there any or ramping you free to

Brian Mueller

the embedded on haven’t revenue or in anything which associated the expense how aggressive guidance ramp to we sign wants with the reason up. GCE we is either and The its highly that dependant client new going to be No, client. client frankly

a revenue So have to if a if wants than at it’s obviously faster a up that want but expense ramp client will smaller the slow ramp a client slower take impact, they it it’s ramp upfront to rate. will

that client impact. to – how and we even then they know size revenue and can’t ramp have we until So just that signed the upfront what up loss fast want

Jeff Meuler

efficient capabilities drive your point start some dollar Or do if think marketing operation a persist you even extent which I’m then on more the how about Okay. finally a more to to you at do marketing And to just clean running more efficiency that? of flow-through, is at new marketing it’s even normal, spend each I wondering, stretch enrolment? to improved and you just if you’re of slate reinvestment guess what north

Daniel Bachus

build of to to answer the quality students. is continue the that the Well,

the And happening and the while happens a of graduation for to happen dollars continue been rate, high terms us so, then default that, rates all go with we’ll students that currently what’s current to have which it would same and mean low to of quality with producing would invest into the another client. at and rate in additional of relationship to a able we invest continues perfect the

and because client Another locally. custom brand to having, for way this little get their we the talk get also what combining compared we’re GCE they to two the is brand operationalize northeast things to it toe has of the a the they apparent We And example, online as excited bit a something least our talk where about They visibility. is amount do they when our about they discussions education. the delivering becomes to too. about that But know theirs, ability to – of they people, very know it. new power can’t into tip do their

to university this Canyon it XX then three valuated, website. financial University. get why students calls might schedules okay, with they If students They time, all and get to we this XX they a New our frustrated. A any in a say and local Canyon days the out. in done. to Northeast. is back different built, have They is call I and had Canyon call Who Grand you Jersey late say, done. and Grand ad. are see example? They teacher Grand it’s are late financial simple. filled maybe That’s Applications has in our everything for within They happens something very days. combined, hours XX Transcripts people They Well, see go XX in is just sound University [Indiscernible].

that Northeast. four convince ability point, and could sometimes for in and both to groups. maybe execute to profitable the extremely brand if you like productive our that something with We one five two. would be to or of one do We you to just universities want with do price private and don’t take institutions trying people, combine the it We’re three those have with times

– kind are evolving upon to things we’re of and are really discussions now of impacting minimize based short the of growth involved kind that’s accelerated so GCU’s the or produce in going and with to And going those And that two the partners. direction think we one are revenues that negative term a standpoint. the margin from short run get rate good us allow find the will somebody in

Jeff Meuler

to and Thanks Excellent. forward looking you see guys.

Brian Mueller

you. Thank Okay.

Operator

Thank you.

Our next question comes of from from Jeff comment Silber Markets. Capital the or BMO line

Your is line open.

Jeff Silber

Thanks.

bit on partnerships Just to university. with focus a little more potential new your

what but mentioned high curious away? I’m away a level decision at information, couple, to walk I’m a for proprietary drove walked you from You not just asking that

Brian Mueller

had was the have visible having going then it really while universities so at enough to ours would of have there partner. system point just there giving modeling to programs to much their work both be be too the We we just of brands make out make we price it wouldn’t became had to pretty it in were wasn’t been got talks university similar without west apparent that differentiation we there west in and wanted and the of to a having Well, if with they that – names down – that specific that cannibalization be to state partner was ours, to sense. But and a the really nitty-gritty in interested in. wanted as getting down really the state we the

happened so, the walked two that we what away And with from. is that really

in we’d are the will things price the northeast if differentiation, or rather And and point rather be all what sign optimal things find what and So all geographic or two can we partners than we together partners with branding work that are partner one our data, the we things those we’ve differentiation, three sign those versus and got and ad optimal place four charging. of convert price southeast mind lots competition right is an point, what suboptimal all those it and charge our lease can working.

we’ll so there. And we’re get being careful and

profitability got tell and about you to potential there. class, clear. They’ve We’ll there we people, to get but We Orbis it’s a And really are the how tremendous can’t is business. get the excited with got scale good will really, right addition very thing. this the path that, I

Education. with continue University. Canyon so, or actually we’ll Orbis we’ll that And with with continue Grand We’ll find right Grand university partners a two can -- one really and enhance Canyon

Jeff Silber

agreement we’re a That’s partners. to about not to don’t again to think. the tension know you other away lot mean hearing Okay. asking pricing on deflect fee-for-service great. at And from be back similar But you revenue Grand go a it I just Orbis. I’m more to I university but going other it more a with of them what or for a level flexible information, model? University. are you approaching share proprietary Is you Canyon high have with

Brian Mueller

have them We’re model same the doing with approaching that the same –we here. we

different got XX bit you one we’ve it feel give see little XX Hopefully We’ll program tell we’ll if will and a we’re one is I that I detail that. that that be. come happens. were in you more days will excited -- out I that can’t that any on Although, to and about.

Daniel Bachus

Jeff, doesn’t but arrangement. type plus wouldn’t of other do think, I be preference share will or revenue similar that mean some our to we a cost GCU,

Jeff Silber

in but days about XX the points follow-up have the what guidance did you’re if XXXX, one that Orbis your in on is looking expansion we the that heard? about and this itself for business on out take I guidance that can’t impact you just margin the transcript, more read forgive And say I in pure it. Got

Daniel Bachus

Yes. for points expansion the business. margin GCE That’s correct. guidance XX basis the includes core The

Jeff Silber

Perfect. right. Thanks All so much.

Daniel Bachus

appreciate your reached have interest fourth and conference of time end quarter We Education. call. the in our Grand Canyon We

your If you have Thank Bachus. time. myself, questions still you Dan much contact please very for

Operator

the in you for Ladies conference. concludes program. thank This and gentlemen, today's participating

day. wonderful now Everyone may have disconnect. a You

Grand Canyon Education (LOPE) 20 Feb 192018 Q4 Earnings call transcript