Grand Canyon Education, Inc. Reports First Quarter 2011 Results
http://finance.yahoo.com/news/Grand-Canyon-Education-Inc-pz-2464453272.html?x=0&.v=1
PHOENIX, May 9, 2011 (GLOBE NEWSWIRE) -- Grand Canyon Education, Inc. (Nasdaq:LOPE - News), a regionally accredited provider of online and campus-based post-secondary education services, today announced financial results for the quarter ended March 31, 2011.
For the three months ended March 31, 2011:
•Net revenue increased 13.9% to $101.7 million for the first quarter of 2011, compared to $89.3 million for the first quarter of 2010.
•At March 31, 2011, our enrollment was approximately 42,500 compared to 38,900 at March 31, 2010. Enrollment at March 31, 2010 represents individual students who attended a course during the last two months of the calendar quarter. Prior to our transition to BBAY, enrollment had been defined as individual students that attended a course in a term that was in session as of the end of the quarter. We estimated that enrollment at March 31, 2010 under the revised methodology would have been between 37,000 and 38,000.
•Operating income for the first quarter of 2011 was $19.2 million, a decrease of 2.0% as compared to $19.6 million for the same period in 2010. The operating margin for the first quarter of 2011 was 18.9%, compared to 21.9% for the same period in 2010.
•Adjusted EBITDA increased 4.6% to $24.5 million for the first quarter of 2011, compared to $23.4 million for the same period in 2010.
•The tax rate in the first quarter of 2011 was 41.0% compared to 40.6% in the first quarter of 2010. The higher effective tax rate in the first quarter of 2011 was primarily attributable to legislation that was enacted by the state of Arizona implementing a gradual reduction in the corporate tax rate beginning in 2014 that will be fully phased in by 2017. As a result of this legislation we were required to adjust our deferred tax balances to account for the effect of the new state tax rate, which resulted in higher state income taxes for the first quarter of 2011. Excluding the state tax rate adjustment for our deferred balances, our effective tax rate was 40.0% during the first quarter of 2011 compared to 40.6% during the first quarter of 2010.
•Net income decreased 1.6% to $11.3 million for the first quarter of 2011, compared to $11.5 million for the same period in 2010.
•Diluted net income per share was $0.25 for both the first quarter of 2011 and 2010.
Balance Sheet and Cash Flow
As of March 31, 2011, the University had unrestricted cash and cash equivalents of $30.2 million compared to $33.6 million at the end of 2010 and restricted cash and cash equivalents at March 31, 2011 and December 31, 2010 of $50.2 million and $52.9 million, respectively.
On April 8, 2011, the University entered into an amended and restated loan agreement with Bank of America, N.A. (the "Amended Agreement"). Under the Amended Agreement, the bank (a) extended the maturity date of the University's existing loan from April 30, 2014 to March 31, 2016 and decreased the interest rate on the outstanding balance from the BBA Libor Rate plus 225 basis points to the BBA Libor Rate plus 200 basis points (all other terms of the existing loan remain the same), and (b) provided to the University a revolving line of credit in the amount of $50.0 million through March 31, 2016 to be utilized for working capital, capital expenditures, share repurchases and other general corporate purposes. The Amended Agreement contains standard covenants that are substantially consistent with those included in the prior agreement, including covenants that, among other things, restrict the University's ability to incur additional debt or make certain investments, require the University to maintain compliance with certain applicable regulatory standards, and require the University to maintain a certain financial condition. Indebtedness under the Amended Agreement is secured by all of the University's assets.
The University generated $23.4 million in cash from operating activities for the three months ended March 31, 2011 compared to $49.1 million for the same period in 2010. Cash provided by operations in 2011 and 2010 resulted from net income plus non cash charges for provision for bad debts, depreciation and amortization, share-based compensation, and changes in working capital. Capital expenditures in 2011 of $14.7 million were primarily related to ground campus building projects such as a new dormitory and events arena to support our increasing traditional ground student enrollment as well as purchases of computer equipment, other internal use software projects and furniture and equipment. In 2010, cash used in investing activities primarily consisted of ground campus building projects, purchases of computer equipment, and software costs to complete our transition from Datatel to Campus Vue and Great Plains, other internal use software projects, and furniture and equipment to support our increasing student enrollment. During the first three months of 2011, $14.9 million of cash used in financing activities was primarily related to $14.2 million used to purchase treasury stock in accordance with the University's share repurchase program. During the first three months of 2010 cash provided by financing activities was $0.3 million and resulted from proceeds from the exercise of stock options and the excess tax benefits from share-based compensation being partially offset by principal payments on notes payable and capital lease obligations.
2011 Annual Outlook
On a year over year basis revenue is expected to grow approximately 10% in the first half of 2011 and between 13% and 15% in the second half of 2011. Our target operating margins are 18% and our target Adjusted EBITDA margins are 23.5%.