MINNEAPOLIS -- (Business Wire)
Capella
Education Company (NASDAQ: CPLA), a provider of online
post-secondary education, primarily through its wholly owned subsidiary
Capella University, today announced financial results for the three
months and year ended Dec. 31, 2012.
“We are encouraged by our progress in stabilizing new enrollment growth,
improving learner persistence and strengthening Capella’s competitive
position,” said Kevin Gilligan, chairman and chief executive officer.
“Most importantly, we are gaining traction as we execute our strategy to
drive affordability, speed-to-competency and certainty of outcomes for
our learners to differentiate Capella. While the overall market
environment remains challenging, our improving position heading into
2013 gives us confidence that we are on the right path to return to
total enrollment and revenue growth.”
For the three months ended Dec. 31, 2012:
-
Revenues were $107.0 million, compared to $110.0 million in the fourth
quarter of 2011, a decrease of 2.7 percent.
-
Capella University total active enrollment decreased 3.6 percent to
36,329 and new enrollment increased by 0.6 percent from fourth quarter
2011.
-
Operating income was $15.1 million, compared to $18.9 million for the
same period in 2011. Operating margin was 14.1 percent, compared to
17.2 percent for the fourth quarter 2011.
-
Net income attributable to Capella Education Company for the fourth
quarter of 2012 was $8.6 million, compared to $12.1 million for the
same period in 2011.
-
Diluted net income per share was $0.68, compared to $0.85 for the same
period in 2011. The Company recorded a valuation allowance on foreign
deferred income taxes that reduced diluted net income per share by
$0.05 for the fourth quarter of 2012.
For the fiscal year ended Dec. 31, 2012:
-
Revenues decreased by 1.9 percent to $421.9 million, compared to
$430.0 million for the same period in 2011.
-
Operating income for 2012 was $59.4 million, or 14.1 percent of
revenue, compared to $80.1 million, or 18.6 percent of revenue during
2011.
-
Net income was $36.5 million or $2.76 per diluted share outstanding,
compared to $52.1 million or $3.40 per diluted share for 2011.
-
Capella University average quarterly total enrollment growth decreased
by 4.1 percent compared to 2011.
-
Total Capella University new enrollment for 2012 increased 0.5
percent, compared to a 32.0 percent decrease in 2011.
Starting with the fourth quarter 2012, the Company is reclassifying its
financial statements by, among other changes, adding the “admissions
advisory” expense line. The result of these changes in classifications
only impacted operating expenses and did not impact revenue, operating
or net income. Additional details were provided in the Form 8-K filed
with the Securities and Exchange Commission on Feb. 7, 2013. Historical
financial tables in the new format and changes from the previous
presentation are also available on our website at www.capellaeducation.com
in the investor
relations section under financial
tables.
Balance Sheet and Cash Flow
As of Dec. 31, 2012, the Company had cash, cash equivalents, and
marketable securities of $115.5 million, compared to $127.0 million at
Dec. 31, 2011, and no debt for the same periods.
Cash flow from operating activities for 2012 was $64.8 million compared
to $80.3 million in 2011.
Share Repurchase
The Company repurchased approximately 1.5 million shares of Capella
stock for total consideration of $51.4 million in fiscal year 2012. In
the fourth quarter 2012, the Company repurchased approximately 411,000
shares of Capella stock for total consideration of $12.6 million. The
remaining authorization as of the end of the fourth quarter was $8.3
million.
Outlook
For the first quarter ending March 31, 2013, Capella University new
enrollment growth is expected to be up about 5 percent compared to first
quarter 2012. Total enrollment is expected to decline by about 3 to 4
percent and consolidated revenue is expected to decline by about 4.5 to
5.5 percent compared to first quarter 2012.
The consolidated operating margin is anticipated to be approximately 12
to 13 percent of total revenue for the first quarter of 2013 compared to
16.4 percent in the same period last year. The year-over-year change is
primarily related to the anticipated decrease in Capella University’s
total enrollments.
“2013 will be about execution, increasing market share and continued
improvements to drive more consistent, sustained growth,” said Steve
Polacek, senior vice president and chief financial officer. “We will
continue investing in learner success, further driving Capella’s
differentiation and diversification while diligently managing costs, as
we position Capella for long-term sustainable growth and shareholder
returns.”
Forward-Looking Statements
Certain information in this news release does not relate to historical
financial information, including statements relating to our future
prospects and our expectations regarding our revenues, enrollment, and
operating performance, and may be deemed to constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The company cautions investors not to place undue
reliance on any such forward-looking statements, which are based on
information available at the time those statements are made or
management's good faith belief as of that time with regard to future
events, and should not be read as a guarantee of future performance or
results. Such statements are subject to certain risks and uncertainties
that could cause the company's actual results in the future to differ
materially from its historical results and those presently anticipated
or projected. The company undertakes no obligation to update its
forward-looking statements to reflect events or circumstances arising
after such date.
Among these risks and uncertainties are any failure to materially comply
with the extensive regulatory framework applicable to us, including
compliance with Title IV of the Higher Education Act and the regulations
thereunder; complying with U.S. Department of Education rules, including
those regarding incentive compensation; maintaining our business in
accordance with regional and specialized accreditation standards and
state regulatory and program approval requirements; changes in the
administration, funding and availability for Title IV programs;
responding to any additional governmental inquiries into our financial
aid practices; attracting and retaining high quality, academically
prepared learners; updating and expanding the content of existing
programs and developing new programs; the review of our business and
financial aid practices by governmental authorities, including changes
in applicable federal and state laws and regulations and accrediting
agency policies; responding to requests for information and complaints
from the Minnesota Office of Higher Education and other states;
maintaining and expanding existing commercial relationships with
employers and developing new such relationships; effectively instituting
changes in our marketing and brand management approach and with the use
of aggregators; improving our learner cohort retention rate; improving
our conversion rates; keeping up with advances in technology important
to the online learner experience; successfully identifying and
integrating acquisitions; complying with regulations applicable to our
international operations; managing operational challenges with acquired
entities; using business technology to accurately store, process and
report relevant data; effectively implementing cost reductions in our
business; managing increases in our expenses; and managing risks
associated with the overall competitive environment and general economic
conditions.
Other factors that could cause the company's results to differ
materially from those contained in its forward-looking statements are
included under, among others, the heading "Risk Factors" in our most
recent Form 10-K and Form 10-Qs on file with the Securities and Exchange
Commission and other documents filed by the company with the Securities
and Exchange Commission.
Conference Call
Capella will discuss its fourth quarter 2012 results and outlook during
a conference call scheduled today, Feb. 12, 2013, at 9:00 a.m. Eastern
time (ET). To participate in the live call, investors should dial
866.385.4179 (domestic) or 702.928.7882 (international) at 8:50 a.m.
(ET), conference ID# 85649196. The webcast, including the accompanying
presentation, will be available on the Capella Education Company Web
site at www.capellaeducation.com.
A replay of the call will be available starting on Feb. 12, 2013 through
Feb. 19, 2013, at 855.859.2056 (domestic) or 404.537.3406
(international), conference ID# 85649196. It will also be archived at www.capellaeducation.com
in the investor
relations section for 60 days.
About Capella Education Company
Founded in 1991, Capella Education Company is a leader in online
education, primarily through our wholly owned subsidiary Capella
University, a regionally accredited* online university. In addition,
Capella Education Company offers online education through Resource
Development International Ltd. (RDI), an independent provider of United
Kingdom (UK) university distance learning qualifications. Capella
Education Company also owns an innovative startup company called Sophia (http://www.sophia.org)
- a social teaching and learning platform that integrates education with
technology.
Capella University offers online graduate degree programs in business,
counseling, education, health administration, homeland security, human
resource management, human services, information technology, nonprofit
management and leadership, nursing, psychology, public administration,
public health, public safety, and social work, and bachelor's degree
programs in business, information technology, nursing, psychology, and
public safety. These academic programs are designed to meet the needs of
working adults, combining high quality, competency-based curricula with
the convenience and flexibility of an online learning format. Currently,
Capella University offers 43 graduate and undergraduate degree programs
with 145 specializations. More than 36,000 learners were enrolled as of
Dec. 31, 2012, with about 75 percent of learners enrolled in graduate
degree programs. For more information about Capella Education Company,
please visit http://www.capellaeducation.com.
For more information about Capella University, please visit http://www.capella.edu
or call 1.888.CAPELLA (227.3552).
Resource Development International Ltd. partners with a number of the
top 100 universities in the UK to develop, validate and deliver UK
higher education qualifications, predominantly through online courses.
For more information, visit http://www.rdi.co.uk.
Sophia is a first-of-its-kind social education platform that offers
students many ways to learn by making free, credible, academic content
available to anyone, anywhere, at anytime. The site offers tens of
thousands of tutorials created by hundreds of teachers and experts that
are taught in a variety of ways. The platform further enhances the
learning process by offering quizzes, assessing learning preferences and
providing learning paths. For more information, visit www.sophia.org.
*Capella University is accredited by The Higher Learning Commission and
is a member of the North Central Association of Colleges and Schools
(NCA), http://www.ncahlc.org.
Capella University, Capella Tower, 225 South Sixth Street, Ninth Floor,
Minneapolis, MN 55402, 1.888.CAPELLA (227.3552), http://www.capella.edu.
|
CAPELLA EDUCATION COMPANY |
Consolidated Balance Sheets |
(In thousands, except par value) |
|
|
| |
|
| |
| | | As of | | | As of |
| | | December 31, 2012 | | | December 31, 2011 |
ASSETS | | | (Unaudited) | | | | |
Current assets:
| | | | | | | | |
Cash and cash equivalents
| | |
$
|
93,220
| | | |
$
|
61,977
|
Marketable securities
| | | |
22,279
| | | | |
65,067
|
Accounts receivable, net of allowance of $6,231 at December 31,
2012 and
| | | | | | | | |
$5,789 at December 31, 2011
| | | |
15,900
| | | | |
18,239
|
Prepaid expenses and other current assets
| | | |
11,124
| | | | |
12,493
|
Deferred income taxes
| | |
|
3,481
|
| | |
|
3,452
|
Total current assets
| | | |
146,004
| | | | |
161,228
|
Property and equipment, net
| | | |
45,240
| | | | |
50,713
|
Goodwill
| | | |
16,970
| | | | |
16,980
|
Intangibles, net
| | |
|
4,674
|
| | |
|
6,552
|
Total assets
| | |
$
|
212,888
|
| | |
$
|
235,473
|
| | | | | | | |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current liabilities:
| | | | | | | | |
Accounts payable
| | |
$
|
5,798
| | | |
$
|
8,977
|
Accrued liabilities
| | | |
26,392
| | | | |
29,306
|
Income taxes payable
| | | |
0
| | | | |
2,427
|
Deferred revenue
| | |
|
9,651
|
| | |
|
7,769
|
Total current liabilities
| | | |
41,841
| | | | |
48,479
|
Deferred rent
| | | |
4,150
| | | | |
4,215
|
Other liabilities
| | | |
6,425
| | | | |
6,425
|
Deferred income taxes
| | |
|
8,370
|
| | |
|
12,575
|
Total liabilities
| | | |
60,786
| | | | |
71,694
|
| | | | | | | |
|
Redeemable noncontrolling interest
| | | |
0
| | | | |
1,180
|
| | | | | | | |
|
Shareholders’ equity:
| | | | | | | | |
Common stock, $0.01 par value:
| | | | | | | | |
Authorized shares — 100,000, issued and outstanding shares —
12,393 at
| | | | | | | | |
December 31, 2012 and 13,882 at December 31, 2011
| | | |
124
| | | | |
139
|
Additional paid-in capital
| | | |
97,716
| | | | |
103,900
|
Accumulated other comprehensive income (loss)
| | | |
(22
|
)
| | | |
307
|
Retained earnings
| | |
|
54,284
|
| | |
|
58,253
|
Total shareholders’ equity
| | |
|
152,102
|
| | |
|
162,599
|
Total liabilities and shareholders’ equity
| | |
$
|
212,888
|
| | |
$
|
235,473
|
| | | | | | | | |
|
|
CAPELLA EDUCATION COMPANY |
Consolidated Statements of Income |
(In thousands, except per share amounts) |
|
|
| |
|
| |
| | | Three Months Ended | | | Year Ended |
| | | December 31, | | | December 31, |
| | | 2012 |
|
| 2011 | | | 2012 |
|
| 2011 |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) |
Revenues
| | |
$
|
107,001
| | | |
$
|
109,983
| | |
$
|
421,890
| | | |
$
|
430,043
|
Costs and expenses:
| | | | | | | | | | | | | | | | |
Instructional costs and services
| | | |
49,388
| | | | |
46,061
| | | |
191,947
| | | | |
173,404
|
Marketing and promotional
| | | |
24,276
| | | | |
25,606
| | | |
100,809
| | | | |
103,973
|
Admissions advisory
| | | |
7,493
| | | | |
7,351
| | | |
30,151
| | | | |
31,607
|
General and administrative
| | | |
10,737
| | | | |
10,785
| | | |
39,600
| | | | |
37,790
|
Reduction of workforce
| | |
|
0
|
| | |
|
1,305
| | |
|
0
|
| | |
|
3,167
|
Total costs and expenses
| | |
|
91,894
|
| | |
|
91,108
| | |
|
362,507
|
| | |
|
349,941
|
Operating income
| | | |
15,107
| | | | |
18,875
| | | |
59,383
| | | | |
80,102
|
Other income (expense), net
| | |
|
(41
|
)
| | |
|
337
| | |
|
(45
|
)
| | |
|
1,811
|
Income before income taxes
| | | |
15,066
| | | | |
19,212
| | | |
59,338
| | | | |
81,913
|
Income tax expense
| | |
|
6,417
|
| | |
|
7,333
| | |
|
23,047
|
| | |
|
30,370
|
Net income
| | | |
8,649
| | | | |
11,879
| | | |
36,291
| | | | |
51,543
|
Net loss attributable to noncontrolling interest
| | |
|
0
|
| | |
|
178
| | |
|
186
|
| | |
|
572
|
Net income attributable to Capella Education Company
| | |
$
|
8,649
|
| | |
$
|
12,057
| | |
$
|
36,477
|
| | |
$
|
52,115
|
| | | | | | | | | | | | | | | |
|
Net income attributable to Capella Education Company per
| | | | | | | | | | | | | | | | |
common share:
| | | | | | | | | | | | | | | | |
Basic
| | |
$
|
0.69
| | | |
$
|
0.85
| | |
$
|
2.77
| | | |
$
|
3.42
|
Diluted
| | |
$
|
0.68
| | | |
$
|
0.85
| | |
$
|
2.76
| | | |
$
|
3.40
|
| | | | | | | | | | | | | | | |
|
Weighted average number of common shares outstanding:
| | | | | | | | | | | | | | | | |
Basic
| | |
12,575
| | | |
14,212
| | |
13,156
| | | |
15,241
|
Diluted
| | |
12,645
| | | |
14,264
| | |
13,220
| | | |
15,314
|
| | | | | | | | | | | |
|
|
CAPELLA EDUCATION COMPANY |
Consolidated Statements of Cash Flows |
(In thousands) |
|
|
| |
| | | As of December 31, |
| | | 2012 |
|
| 2011 |
| | | (Unaudited) | | | | |
Operating activities | | | | | | | | |
Net income
| | |
$
|
36,291
| | | |
$
|
51,543
| |
Adjustments to reconcile net income to net cash provided by operating
| | | | | | | | |
activities:
| | | | | | | | |
Provision for bad debts
| | | |
17,310
| | | | |
10,565
| |
Depreciation and amortization
| | | |
29,255
| | | | |
24,165
| |
Amortization of investment discount/premium
| | | |
692
| | | | |
2,049
| |
Impairment of property and equipment
| | | |
1,150
| | | | |
35
| |
Loss (gain) on disposal of property and equipment
| | | |
81
| | | | |
(30
|
)
|
Share-based compensation
| | | |
4,880
| | | | |
4,883
| |
Excess tax benefit from share-based compensation
| | | |
(69
|
)
| | | |
(248
|
)
|
Deferred income taxes
| | | |
(3,584
|
)
| | | |
2,516
| |
Changes in operating assets and liabilities, net of assets
acquired and liabilities
| | | | | | | | |
assumed:
| | | | | | | | |
Accounts receivable
| | | |
(14,979
|
)
| | | |
(13,789
|
)
|
Prepaid expenses and other current assets
| | | |
2,586
| | | | |
(3,424
|
)
|
Accounts payable and accrued liabilities
| | | |
(6,296
|
)
| | | |
(612
|
)
|
Income tax payable
| | | |
(4,306
|
)
| | | |
1,559
| |
Deferred rent
| | | |
(65
|
)
| | | |
750
| |
Deferred revenue
| | |
|
1,882
|
| | |
|
342
|
|
Net cash provided by operating activities
| | | |
64,828
| | | | |
80,304
| |
| | | | | | | |
|
Investing activities | | | | | | | | |
Capital expenditures
| | | |
(23,278
|
)
| | | |
(29,587
|
)
|
Proceeds from the sale of property and equipment
| | | |
303
| | | | |
0
| |
Payment for acquisition, net of cash acquired
| | | |
0
| | | | |
(12,640
|
)
|
Redemption of noncontrolling interest
| | | |
(1,576
|
)
| | | |
0
| |
Purchases of marketable securities
| | | |
(13,887
|
)
| | | |
(3,500
|
)
|
Sales and maturities of marketable securities
| | |
|
55,545
|
| | |
|
51,442
|
|
Net cash provided by investing activities
| | | |
17,107
| | | | |
5,715
| |
| | | | | | | |
|
Financing activities | | | | | | | | |
Excess tax benefit from share-based compensation
| | | |
69
| | | | |
248
| |
Net proceeds from exercise of stock options
| | | |
628
| | | | |
1,634
| |
Repurchases of common stock
| | |
|
(51,418
|
)
| | |
|
(103,375
|
)
|
Net cash used in financing activities
| | |
|
(50,721
|
)
| | |
|
(101,493
|
)
|
| | | | | | | |
|
Effect of foreign exchange rates on cash
| | |
|
29
|
| | |
|
35
|
|
| | | | | | | |
|
Net increase (decrease) in cash and cash equivalents
| | | |
31,243
| | | | |
(15,439
|
)
|
Cash and cash equivalents at beginning of year
| | |
|
61,977
|
| | |
|
77,416
|
|
Cash and cash equivalents at end of year
| | |
$
|
93,220
|
| | |
$
|
61,977
|
|
| | | | | | | |
|
Supplemental disclosures of cash flow information | | | | | | | | |
Income taxes paid
| | |
$
|
30,947
| | | |
$
|
26,340
| |
Noncash transactions:
| | | | | | | | |
Purchase of equipment included in accounts payable and accrued
liabilities
| | |
$
|
472
| | | |
$
|
348
| |
| | | | | | | |
|
|
CAPELLA UNIVERSITY |
Other Information |
|
|
| |
|
| |
| | | December 31, | | | |
Enrollment by Degree (a): | | | 2012 |
|
| 2011 | | | % Change |
PhD/Doctoral
| | |
11,023
| | |
11,619
| | |
(5.1
|
)%
|
Master’s
| | |
15,596
| | |
17,049
| | |
(8.5
|
)%
|
Bachelor’s
| | |
8,800
| | |
8,489
| | |
3.7
|
%
|
Other
| | |
910
| | |
547
| | |
66.4
|
%
|
Total
| | |
36,329
| | |
37,704
| | |
(3.6
|
)%
|
| | | | | | | | | |
|
(a) Enrollment as of December 31, 2012 and 2011 is the enrollment as of
the last day of classes for the quarter ended December 31, 2012 and
2011, respectively.
Contacts:
Capella Education Company
Investor Contact:
Heide
Erickson, 612-977-5172
Heide.Erickson@capella.edu
or
Media
Contact:
Mike Buttry, 612-977-5499
Mike.Buttry@capella.edu
Source: Capella Education Company
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