Career Education Corporation (NASDAQ: CECO) today reported operating and
financial results for the second quarter and year to date ended June 30,
2018.
SECOND QUARTER AND YEAR TO DATE 2018 RESULTS
Corporate
Teach-Outs
“We finished the first half with good momentum in key operating metrics,
driven by organic investments aimed at improving student onboarding and
learning experiences,” said Todd Nelson, President and Chief Executive
Officer. “Given our positive momentum we will continue to pursue further
investments in technology and student-serving processes and initiatives.
Overall, we are taking a measured approach to balance our objectives of
responsible and sustainable growth with our commitments to improve
student experiences, retention and academic outcomes and we remain
confident in the long-term academic value proposition of our
Universities.”
REVENUE
For the quarter and year to date ended June 30, 2018, total revenue was
$142.0 million and $290.1 million representing a decrease of 2.9 percent
and 5.9 percent, respectively, compared to total revenue of $146.2
million and $308.3 million for the prior year quarter and year to date
ended June 30, 2017. The decrease was primarily driven by declining
revenues within our teach-out campuses. As of June 30, 2018, there are
three campuses remaining to complete their teach-outs during 2018.
Total revenue for the University Group was $141.8 million and $289.6
million representing an increase of 3.2 percent and 1.4 percent,
respectively, for the quarter and year to date ended June 30, 2018 as
compared to the prior year periods.
Increase (Decrease)
Increase (Decrease)
TOTAL AND NEW STUDENT ENROLLMENTS
For the second quarter of 2018, new student enrollments for the
University Group increased 7.0 percent as compared to the prior year
quarter. The increase in new student enrollments was positively
impacted by investments in student-serving processes, including our
admissions and advising centers in Arizona as well as the academic
calendar redesign within AIU.
Total Student Enrollments
Increase (Decrease)
New Student Enrollments
Increase (Decrease)
Increase (Decrease)
(1) All Other Campuses no longer enroll new students.
OPERATING INCOME (LOSS)
For the quarter and year to date ended June 30, 2018, the Company
recorded operating income of $11.3 million and $31.8 million,
respectively, compared to operating income of $9.1 million and $18.9
million for the quarter and year to date ended June 30, 2017,
respectively. The University Group and Corporate recorded operating
income of $23.5 million and $50.3 million for the quarter and year to
date ended June 30, 2018, respectively, an increase of 1.0 percent and
8.4 percent as compared to the respective prior year periods.
Operating Income ($ in thousands)
Increase (Decrease)
Increase (Decrease)
ADJUSTED OPERATING INCOME (LOSS)
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant and non-cash items, as a
means to understand the performance of its operations. (See tables below
and the GAAP to non-GAAP reconciliation attached to this press release
for further details.)
As shown in the table below, adjusted operating income for the
University Group and Corporate was $26.8 million and $56.1 million for
the quarter and year to date ended June 30, 2018, respectively. Adjusted
operating loss for All Other Campuses was $3.0 million and $6.4 million
for the quarter and year to date ended June 30, 2018, respectively.
Adjusted Operating Income (Loss)
University Group and Corporate:
University Group and Corporate
All Other Campuses
All Other Campuses
BALANCE SHEET AND CASH FLOW
Net cash provided by operating activities was $3.7 million compared to
net cash provided by operating activities of $4.8 million for the
quarters ended June 30, 2018 and 2017, respectively. For the year to
date ended June 30, 2018, net cash flows provided by operating
activities was $14.8 million as compared to net cash used of $34.2
million for the year to date ended June 30, 2017.
Selected Cash Flow Items
Increase (Decrease)
Increase (Decrease)
As of June 30, 2018 and December 31, 2017, cash, cash equivalents,
restricted cash and available-for-sale short-term investments totaled
$190.1 million and $180.1 million, respectively.
OUTLOOK
The Company currently expects the following results, subject to the key
assumptions identified below (see the GAAP to non-GAAP reconciliation
for adjusted operating income (loss) attached to this press release for
further details):
Financial Outlook:
University Group Outlook:
Operating income (loss), which is the most directly comparable GAAP
measure to adjusted operating income (loss), may not follow the same
trends stated in the outlook above because of adjustments made for
unused space charges that represent the present value of future
remaining lease obligations for vacated space less an estimated amount
for sublease income as well as depreciation, amortization, asset
impairment charges and significant legal settlements. The operating
income (loss) and adjusted operating income (loss), enrollment, revenue
and cash outlook provided above for 2018 and 2019 are based on the
following key assumptions and factors, among others: (i) prospective
student interest in the Company’s programs continues to trend in line
with recent experiences, (ii) initiatives and investments in
student-serving operations continue to positively impact enrollment
trends within the University Group, (iii) no material changes in the
current legal or regulatory environment, and excludes legal and
regulatory liabilities and other related impacts which are not probable
and estimable at this time, and any impact of new or proposed
regulations, including the “borrower defense to repayment” and gainful
employment regulations and any modifications thereto, and (iv) no
material changes in the estimated amount of compensation expense that
could be impacted by changes in the Company’s stock price. Although
these estimates and assumptions are based upon management’s good faith
beliefs regarding current events and actions that may be undertaken in
the future, actual results could differ materially from these estimates.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on Wednesday,
August 1, 2018 at 5:30 p.m. Eastern time to discuss its second quarter
and year to date 2018 results. Interested parties can access the live
webcast of the conference call and the related presentation materials at www.careered.com
in the Investor Relations section of the website. Participants can also
listen to the conference call by dialing 844-378-6484 (domestic) or
412-542-4179 (international). Please log-in or dial-in at least 10
minutes prior to the start time to ensure a connection. An archived
version of the webcast will be accessible for 90 days at www.careered.com
in the Investor Relations section of the website.
ABOUT CAREER EDUCATION CORPORATION
Career Education’s academic institutions offer a quality education to a
diverse student population in a variety of disciplines through online,
campus-based and blended learning programs. The Company’s two
universities – American InterContinental University (“AIU”) and Colorado
Technical University (“CTU”) – provide degree programs through the
master’s or doctoral level as well as associate and bachelor’s levels.
Both universities predominantly serve students online with
career-focused degree programs that are designed to meet the educational
demands of today’s busy adults. AIU and CTU continue to show innovation
in higher education, advancing new personalized learning technologies
like their intellipath® learning platform. Career
Education is committed to providing quality education that closes the
gap between learners who seek to advance their careers and employers
needing a qualified workforce.
A listing of University Group campus locations and web links to these
institutions can be found at www.careered.com.
Except for the historical and present factual information contained
herein, the matters set forth in this release, including statements
identified by words such as “believe,” “will,” “expect,” “estimate,”
“continue,” “outlook,” “remain” and similar expressions, are
forward-looking statements as defined in Section 21E of the Securities
Exchange Act of 1934, as amended. These statements are based on
information currently available to us and are subject to various
assumptions, risks, uncertainties and other factors that could cause our
results of operations, financial condition, cash flows, performance,
business prospects and opportunities to differ materially from those
expressed in, or implied by, these statements. Except as expressly
required by the federal securities laws, we undertake no obligation to
update or revise such factors or any of the forward-looking statements
contained herein to reflect future events, developments or changed
circumstances, or for any other reason. These risks and uncertainties,
the outcomes of which could materially and adversely affect our
financial condition and operations, include, but are not limited to, the
following: declines in enrollment or interest in our programs; our
continued compliance with and eligibility to participate in Title IV
Programs under the Higher Education Act of 1965, as amended, and the
regulations thereunder (including the gainful employment, 90-10,
financial responsibility and administrative capability standards
prescribed by the U.S. Department of Education), as well as applicable
accreditation standards and state regulatory requirements; the impact of
recently issued “defense to repayment” regulations and any modifications
thereto; rulemaking by the U.S. Department of Education or any state or
accreditor and increased focus by Congress and governmental agencies on,
or increased negative publicity about, for-profit education
institutions; our ability to successfully defend litigation and other
claims brought against us; the success of our initiatives to improve
student experiences, retention and academic outcomes; the ability of our
student admissions and advising centers in Arizona to achieve
anticipated operating performance; increased competition; the impact of
management changes; and changes in the overall U.S. economy. Further
information about these and other relevant risks and uncertainties may
be found in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017 and its subsequent filings with the Securities and
Exchange Commission.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except per share amounts and percentages)
Total
Revenue
Total
Revenue
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except per share amounts and percentages)
Total
Revenue
Total
Revenue
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
AND CASH EQUIVALENTS:
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
(In thousands, unless otherwise noted)
Adjusted Operating Income (Loss)
University Group and Corporate:
University Group and Corporate (5)
All Other Campuses:
All Other Campuses (5)
Total Company
Total Company
Total Company
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