LOPE - Earnings call 3 2023 | Grand Canyon Education, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Grand Canyon Education Third Quarter 2023 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dan Bachus. Dan, please go ahead.

Daniel Bachus

you. Thank

risks Form today's that Chairman today These results many including forward-looking reports that on materially from Mueller. on CEO, will our to is factors statements note Various Please of current on involve XX-K, be call me quarterly statements. annual our and Form our Brian contain could Joining cause uncertainties. actual and results discussed XX-Q in reports our implied by expressed report different are or our on and future such any factors X-K. SEC filings, Form comments

no position provide call, the and undertake GCE. I'll that, in before review call with this forward-looking that recommend regard thoroughly all investors And to with We to obligation the Brian. to we these turn during financial statements over a made reports updates taking

Brian Mueller

interest diluted exceeding rate what enrollments Labor . Judging new titled, per Canyon in also in months recorded. the Good according Third college XX partners. since by with had remarkable XXXX the numbers, to afternoon. appeared undergraduate going from estimates retention that by of Canyon colleges adjusted midpoint is well million and The the quarter, National share in Education's Grand data producing dropped the exceeding to Call. slide and October largest and the classes assess Bentley XX% start in University flow in from September, guidance the of Author other never Quarter an period and to enrollment in greater Canyon beat plung to our greater-than-expected is with to the has at Fiscal and online consensus. pushing shortage the results been the recently Education that joining you expectations record GCE steepest by for XXXX Conference says over crisis, $X.XX the prior American a in-person starts year declines Statistics. Thank Student Grand of on enrollment at after year these producing were ever article $X.X lead labor approximately Clearinghouse." Bureau revenue into as Grand worst earnings for there November, college even Year producing Colin X% according its returning XXXX Fortune magazine "Nationwide partner, An is the XXXX, following, U.S. as happening

continue Economists information Canyon care of with to are According declines impact The shortages trend Education dire. of his to as XXXX. at the will will health X.X% freshmen Education could experiencing I public in say into XX explain dropping the growth believe in from continued for And college that labor institutions. and nonprofit Higher deliver private, Chronicle be technology. growth at the graduates X enrollment I higher to significant reasons institutions spite review worsen I Fewer university use fields could the market. we The in has overall Grand partners and X-year platforms X.X% education.

First, Canyon campus the Grand at University. online

quarter pandemic and third year. programs, and but have of prior exist reasons we many are expectations enrollment market highlight across stayed is new beginning There emphasis significantly XXX X.X% our rolled want labor today's the on at colleges since New to have growth the X. One, the that certificates XX this, exceeded the up approximately the focused opportunities in prior out it the up GCU. hyper of and were now over I over for year starts XX% total and

new students the that These accounted third programs of to tied are and in market quarter. labor for X.X% opportunities directly for students started the

quarter, directly to we technology, of declining of programs two, they is continue reduce to with education, workforce this military. from was care, their industries This relevancy went the continues because number the responses points, in the which One of improve offered. public the the address up to employers during In and students are of third third health work shortages. XX pandemic new we the that the increased Number safety basis enrollments the the believe quarter starts students focused of universities to entering. retention of to XX%. effort of the the on programs work Three,

tuition resisted Number fourth the averaged be XXXX X% have which four, pandemic to enrollments we the new to institutions are done. October tuition during now quarter Online and GCU remain responding raising new is online by mid-teens in approximately year. to low the the in year-over-year. ] thus, per expecting net slower growth increases have [ enrollments strong, many since up

line Second, traditional last with in gave we students. what guidance for campus we when GCU was quarter. Enrollment expected ground

And well. number as expected at between of traditional-aged starting online programs was the students higher time, GCU's the September and April than we same

education to. inclined last more are and As students discussed positioned from Working I respond clear here pandemic quarter, that a to higher uniquely post there to trend we is to home do from online adult over home. started are is well. work a time last same the between up traditional-aged programs students XX.X% traditional-aged students X,XXX and for April year. as become may This GCU trend September, which

we its program but indications home. numbers. traditional-aged visits our to in These are XX%. being come currently growth campus students of may return students, year-to-date over GCU's Early on-campus up believe XXXX based them to normal entire fall trajectory on These do eventually GCU or the may are will enrollment we counting indicate campus traditional, from for discovered online the students

average of programs, we and years debt Because of X in benefit both from of completing very trends. significant low than less relevancy GCU our including academic percentage the very anticipate a will that GCU advantages, students point, price levels, low

in focus fall of mid-single the fall of from work focus compared the the with ground on do from growth the to XXXX anticipate still We semester the their up digits academic traditional students on the also will home. We be to being XXXX. campus students our will semester who continue goal as students attending in XX,XXX generated revenue want traditional across country traditional-aged and to of the

in Third, a campus third Grand of hybrid year-over-year the quarter. X.X% enrollment Canyon Education's had declining

campus we has the corner. However, hybrid the believe turned

fall in up digits spring higher. in high the XXXX rate and new be the New of growth enrollment single even expect were to year-over-year, we enrollments

science amount faculty, anywhere artificial be tutoring. some in been are access a one, Standing to accumulated of a that the one courses, students sizes for completed course X experienced the delivered X XX/X and which the and deal access weeks. so almost careers, courses provides are tremendous making There interested of that active work. responded from other didn't courses way degrees opportunities ABSN ed GCU start and every in their of including reasons can Students made prerequisite but very in are with haven't change. an fall There These science world. by efficient these programs in gen week. very low, great younger this have all courses they earn taught are ABSN academic intelligence created an debt process nursing Students project partially in could have to our this: the Advanced interested students but class main are partners are or there's by have admitting to of support, affordable, in went students live online October

have enrolled courses, Since we students. approximately these X,XXX implemented we

academically their report to sites. of ABSN will enter and and start of be to extremely our NCLEX waterfall prepared way us first-time the a remains We prerequisite who the ABSN when efficient rate courses allows now eligible is successfully The an our eligible how programs students progressing rate to have We one at through get that approximately and they are students pass on enter know XX% XX%. program. to the exam success have students

of partnership We Workforce from Development In Fourth, saw it will upcoming the experiencing number program at excited XXX believe students similar labor in completed XXXX. shortages X Center program school [ the students fall, we students with about will credit companies in are graduates. in expect electricians program that for ] pre-apprenticeship XX the in semester. we and positive a and students year, program. our spring started we Grand start fall fall X, we in runs the the and results. X Canyon and XX program this and same hiring results -- even of the This that The in school XXXX/'XX year, get better in in courses are expect XX started the there. successfully area the this semester, University. consists in

going in and a our manufacturing work eligible is school be major students We XX that will the -- the of college going hours. semester, certificate a XX also manufacturing the have as employee to of has assisting we in These of GCU manufacturing at growing plans to be started Arizona business to some week employment then for paid for begin fast-growing for At fall, this a offering receive a locations campus also outside program. this facility hours with small manufacturing industry. XXXX. students also Arizona's certificate engineering companies doing students on project. Arizona. XX is work the This parts GCU's in in end a and they for running in are are program one of

a In has partners scale professions, expect that Once time XX,XXX of labor have provider, with in national the care higher there following: this and GCU industries is of across In X,XXX created shortage fear first-time talking has started students. a accomplish University XXX,XXX the years I nurses a future proved GCE and teacher GCE health the to huge helped then out, declining Canyon in XX,XXX when result been education, helped that shortages including a it time work time, this shortages graduate X-plus pre-licensure nurses. we at has the in service out successfully country. become XX,XXX nursing at others. exists teachers to education add its when key in around Grand including concept a crisis. as has about the enrollments since a program

become cited and nonprofit an GCE XXX% Engineering including the there counseling GCU social in of Technology Science, The America has College XX,XXX provided in and college College, X-plus also of the continue years in business graduates. a education largest thousands have and where Theology in The happened College since schools just of become and of are work, and College X,XXX provider. of has huge sciences, grown by has grow. the all and have become College has graduates. Doctoral The and also The Business institution shortages. services that XX,XXX social has numbers I one Honors to produced humanities

was for due third enrollments was to of $XX.X Service in third an XX% quarter XXXX, million, September of X.X% $X revenue the $XX.X XX, Operating income the for service million $XXX.X The million months an for an margin for revenue of was increase was student X.X% September $XXX.X per as $XX.X year-over-year the for X and period year-over-year. compared quarter the of XX.X% GCU for in revenue primarily an operating XXXX, to compared increase in months in or million to to ended same the compared same million ended XXXX, in the period XXXX. XXXX. as increase of million increase increase The XXXX. XX, X

increased diluted the income per million third for of income compared the September $X.XX. is million Net for ended in the $XX.X same share $XX for quarter months XX.X% GAAP The to X period XX, to XXXX, XXXX XXXX.

As XX, for $X.XX. share months adjusted, non-GAAP per is ended the XXXX, income diluted X September

other statement, that, I Bachus, our income the turn to about talk little balance XXXX XXXX as to quarter, sheet give to CFO, it guidance. to a in on more Dan changes color updated and over well the as discuss With like items would our

Daniel Bachus

performance XX, in for Included share $X.X assets have the that and filed and investors asset the more Brian. XX, allows XXXX. included XXXX over SEC, million develop the X tax-affected of of $X.X on non-GAAP income understanding million fixed and the XXXX the and of both amortization with a The intangible disposals information and of X we of amount ended per September of respectively. non-GAAP quarters our $X.X the amount third XXXX net X-K losses months time. diluted amounts months We non-GAAP the financial million XXXX exclude Thanks, the meaningful company's and for for believe ended Form September income non-GAAP of to the XXXX, tax-affected

university and per continues primarily other ended in per our higher room, months classroom due enrollments in third and adjusted ancillary service year-over-year student and to to sites. has to As the at traditional due per and X is grow to higher board enrollments 'XX revenue expectations the some due the between XXXX at higher respectively. partners. the XX, . Service of $X.XX laboratory income non-GAAP basis, the was revenue on XXXX impact the revenue GCU other diluted a per revenue for quarter the student a and than growth Revenue revenues years, GCU which campus share of off-campus higher-than-expected student of $X.XX, our and September

generates quarter share their with per as than semester in percentage, a year-over-year increase they in campus such million the shifted third other revenue the differences positively compared as for higher students traditional semester the provide of us the to per as was revenue students quarter year. of fourth Service fall XXXX quarter are timing $X.X from we The hybrid earn last programs. student impacted student revenue have the per GCU on a accelerated take higher in per in rates on by the also the third partners generally to ABSN that average of these higher share tuition credits revenue majority students the more significantly and agreements

was revenue. to than operating margin primarily expectations, Our higher-than-expected our higher due

on quarter's calls, mostly been since our in been to As hiring costs earnings increased support expected compensation services is counseling we costs. which have in partners' growth, headcount prior primarily discussed which driving March and I meet had XXXX flat aggressively future

increase significantly [indiscernible] plan amounts as year. year-over-year than pre-COVID levels and a significant We the employee for travel benefits also in were in these prior

in costs clinical and increased for shortage. generally nursing This laboratory has plan due also line the sites off-campus remained We at expectations. spending our with classroom to

to was and rate quarter the tax effective third quarter Our in XX.X% in guidance XXXX of the of third XX.X%. XXXX compared our of XX.X%

state a the third effective contributions income $X.X impact of rate lieu XXXX to to the in The rate in having quarter respectively. third July contribution the XXXX and impacted less-than-expected of of before taxes of in tax income quarter the the was The lieu slightly tax rate million effective was million due and XXXX, $X taxes. income in due higher-than-expected on favorably by tax higher-than-expected state XXXX taxes,

third third approximately and but only in our million XXX,XXX XXXX the the another by third taxes of the expenses million of quarter and shares year the lowering of a remaining stock repurchased were repurchased XX, reminder, $X.X expense million and We fourth the in in in since $X.X the state common of XX% XX,XXX quarter of general amount a administrative the shares quarter. and quarter by $XX.X in of September contribution lieu the effect income As same has increasing at XXXX. cost tax income XX% this the

increased XXXX, XXXX. that current million today the company's under announced expiration date repurchase October We the of existing authorization stock X, March Directors on by its XX, Board plan $XXX the and to extended

the the will operations XXXX as of secured note from be to in But repayment of a cash flows those utilize future repurchases than shares. which years We The have less share our repurchase authorization. its remaining as company and share in $XXX.X portion during intends million continue available significant the and includes repurchase increase in XXXX all of under XXXX to from using Board we years. the the today October proceeds

investments GCE XXXX, the September were cash new for laboratory classroom unrestricted third $XXX.X service flows. the revenue. CapEx was million including XXXX, balance of sites and or short-term XX, to cash and X.X% quarter Total million. CapEx at approximately and of sheet in Turning $XX.X off-campus

due due to $XX We original for on to and higher CapEx improvement to projection XXXX projects million, couple approximately costs. offsite of more occurring million expect is slightly internal higher-than-expected $XX is of the slightly CapEx The tenant between higher IT be partly our million. than which locations spend new and $XX a

in guidance color like on I would have filed updated provided our X-K provide to today. now we the

share. and X-K adjusted in diluted section adjust with to the income our as of components reminder, today non-GAAP per diluted net we as income amounts the have that adjusted non-GAAP share GAAP per outlook as the As filed to provided the a GAAP income guidance and net income

In share addition, diluted as of our income filed guidance in investors, we section our included per adjusted as requested of a non-GAAP by X-K have the the today estimate. number

XXXX earnings revenue quarter include We and full have piece. year guidance updated third the to

for discuss in revenue based a As current quarter margin fourth the minute, and spending the raised ranges and have enrollment detail trends. also narrowed operating in I will we on more and

effective We resulted have fourth the at a our midpoint EPS quarter have estimates of at in in full for original These the $X.XX XXXX fourth updated rate. XXXX estimates increase tax $X.XX year increase also midpoint expected EPS and an changes quarter in from estimates.

fourth As total in result Brian enrollment quarter tuition in anticipate previous the which estimates revenue than we mentioned to in higher our should earlier, be the fourth quarter. higher-than-expected

discussed the I our is partners in of for for will reminder, the half partners prior going a and reimburse share certain As percentage. second a university calls reduce being changes have by those effect couple that as which on revenue contractual impacted other we to longer revenue negatively a agreed result, costs into no contract

third both changes impact third changes a start went quarter expense XXXX. fourth There the much of the the in effect impact have our fourth have bigger These quarters, fall the been quarter and but the into the quarter term. for expectations on material of with no as they fourth than

We fourth XXXX rate tax quarter have XX.X% of for from effective lowered the our slightly to XX.X%.

third average weighted purchase additional assumes of the guidance to to rest shares purchase was the that year. Our in similar evenly what shares used quarter, over shares the we

yield to the ratio of it to metrics the of repurchase The Board multiples undervalued other stock companies. education authorize as it believes remains including the of to that enterprise rather evaluate, flow free shares the based EBITDA and than continues the uses adjusted on value the cash

there same appropriate a viewed few, any, be can as we although if As the in comps. are being sector,

I The the turn than recent On the XX.X, to X.X%, the is flow yield S&P is whereas EBITDA so trading to average the will currently the value X.X%. for moderator that cash free now adjusted the stock we basis, an XX.X. of less call average which yield enterprise roughly questions. free flow company's is is can answer over cash approximately S&P XXX at

Operator

with comes question Capital first Our Silber Markets. Jeff Instructions] [Operator BMO from

Jeffrey Silber

focus drove online I that in and terms of on give little the growth what accelerated how GCU impressive color bit us a is you first wanted numbers just there. sustainable forward? to Can enrollment, really that going more

Brian Mueller

drove opportunities of military employees people with A operating work that Yes. really, lower we're on school hospitals, One, focused couple are counseling that are in giving things at the districts, organization. their centers, the it. to doing really levels bases,

XX% up And a quarter is And capability this do the That so have organizations. impact for major is the the year. same to is quarter over the work that was word that prior having of that. spreading we

And so driver. . that is a major

know, that significant shut work for didn't And you of role COVID, As people cetera. down when really play time all poised let back up, hospitals, but a off. was lot a the country opened the school districts, et to were those for we we during

So of that's it. part

efficiency Secondly, going predict and in going up. that to spend October, the our significantly. months of as their that of prior entering summer, to this hit well, especially, number their to that, marketing of we enrollment and to revenues the was people that -- were even were saw go A lot universities not started September we be down

started And that delivering spending money making not or people few saw advertising, in to people you're programs just of online, we terms a in if any you're not get out. withdrawal. stopped successful

of para directly combination profession. companies work that I move in and think The give lead amount September, help point, spend absolutely Cybersecurity It And in plus so it the up, at flow programs. was people specialists teachers doing sustainable. The basis October moving and people of from programs to professionals ] becoming the new [ increase. this is that marketing that opportunities November we interest. opened, months a a nursing just the there's with all of the ]. so drove the standpoint, much military of we're we the think new the [ the efficiency on up interest And to

offerings And searches it is there just stuff. that for People programmatic out isn't high-quality doing And do. that anybody their much of there breadth opportunities. so really, really looking has of we the own

does help? that So

Jeffrey Silber

program. hybrid that's over Maybe No, helpful. to the can very you switch actually Yes. if

to strong You enrollment be you you fall cited higher. that for and the confidence? that's your seeing growth spring even are What new expectations giving

Brian Mueller

huge degrees. there's Man, universities -- it's have that people at debt partners amount [ degrees in are much primarily are who re-career market adjusting and people there's and into of some colleges, the a mainly in it's haven't growth they're in that. a credits. really the And nurses, interest completed the for looking university who have to that interested They're nursing. significant still of ] who are have it's They the younger -- our for But and very XX There's people -- college adjusting accumulated becoming not but people XX, partially changed. to XX, community fact career. is but nursing that completed

prerequisite and offerings. was then the get way I to courses. those just And as well, into no courses. was affordable efficient ed change science so mean courses courses, science huge there a for that adjustment but course that gen was the because that Other especially people the especially

of And full-time academic a together, X,XXX and courses, are additional some of put courses them, had into time those students levels and hiring tremendous over ones, big a providing of but courses. there GCU part already teach those take XX put we've faculty are support, lot really to energy it,

in the getting most credits taking that are of changed that upper are level can things aren't at you because or from thing program time. courses it's where path a now them surprised work path are clear XX science into so you the is course multiple And jobs. the the courses completed, part-time tremendously. only country, really X. to courses has But the part-time lot us taking XX-, an enroll employed in do only week of are that a no getting those clear a that They're division working those olds that there at of ABSN this a time matter one And within of that at one XX-year

process have difficult just what [ community to college in a de-incents market to long, somebody to see the a and that that's people. offer arduous they you and you're tells ] go or If

got obstacle of clinical fixed couple course great we we've And we've so now second that science And last the think we significantly. prerequisite the and we work, solution to that now -- believe the obstacle the in impacted years. was placements, that a first of a was lot

And years. so we're of now excited about next couple the

Operator

next Baird. from Our Meuler Instructions] Jeff comes with question [Operator

Brian Mueller

there's another Baird. Yes,

it's So he's try the that Gabriel. maybe on -- says next one the

Operator

Our next question of comes Gabriel Baird. from Dietrich line with the

Unknown Analyst

I actually communication work the for department recent I Jeff, of really in and your the Any the just organization than regarding how the I different thoughts comments. is a that was thoughts on Education. impacts but curious going And appreciate just fine and with the company? Department dialogue on for

Brian Mueller

Yes. with years. It's for X the -- we've been department dealing

us. reason there for continue And a process a that years, deal know That as a of complaint. out to of department to had our nonprofit of makes retaliation reason fix told was institution. went then the They some eventually return to in through perspective. nonprofit we well. from very for was lawful tell sure fine really a the knew it. don't don't that coming, really, and it and to denied try what's what file we X went is. it, a result we part made And sense so got with our And We of the -- to that, so story. . We logic The front status. None started. we'll We on going any

to to with, have what but deal we stop doing. it's so going we're it's not something And

We without it efficiently. Christian We need increases, the tuition we which huge attractive X is, what The have just nature focus situation well based they very, is it this going We is debt creative life things what their As learn. platforms of situation high-quality their very, deliver desire education can major unbelievably it for do Americans upon can we at extremely free is, based University are very can to living the throughout a without extremely very country. on to and students to what where levels. way on it an do here. speech deliver can in

making get of a And return position focus so a time, going we're a to people great we're continue to in in delivering and to sure investment and great energy their spot, to are on students, organizations, delivering that on money. to

And this all. so it's have it's with, to that's thing something down something but at to slow deal going not we

Daniel Bachus

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

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

Operator

conference. for you This conclude the program. your in participation Thank does today's

now You may disconnect.

Grand Canyon Education (LOPE) 2 Nov 232023 Q3 Earnings call transcript