CECO CECO Environmental Corporation

Delaware

0-23245

36-3932190

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

231 N. Martingale Rd., Schaumburg, IL

60173

(Address of Principal Executive Offices)

(Zip Code)

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition. 

Item 9.01.

Financial Statements and Exhibits.

Exhibit

Number

Description of Exhibits

99.1

Press release of the Company dated February 29, 2016 reporting the Company’s financial results for the quarter and fiscal year ended December 31, 2015

99.2

Presentation materials used by the Company in connection with its February 29, 2016 earnings conference call and webcast

CAREER EDUCATION CORPORATION

By:

/s/ David Rawden

David Rawden

Interim Chief Financial Officer

Exhibit

Number

Description of Exhibits

99.1

Press release of the Company dated February 29, 2016 reporting the Company’s financial results for the quarter and fiscal year ended December 31, 2015

99.2

Presentation materials used by the Company in connection with its February 29, 2016 earnings conference call and webcast

·

University Group revenue increased by 8.2 percent year-over-year (or 4.2 percent when adjusted for prior year accounting change), primarily driven by a 4.4 percent increase in total enrollments at CTU

·

University Group operating income increased 36.8 percent year-over-year to $31.5 million (or 29.6 percent when adjusted for prior year accounting change), primarily driven by increased revenues and our transformation initiatives

·

Achieved positive total company adjusted EBITDA for the second quarter in a row, and adjusted EBITDA for University and Corporate was the highest it has been in the past eight quarters

·

Fourth quarter cash usage from operations was negative $0.7 million, compared to cash usage of negative $17.5 million in the fourth quarter of 2014

·

Full year 2015 operating expenses for continuing and discontinued operations were roughly $152 million lower year-over-year, which was primarily driven by the impact of the Company’s transformation efforts

·

Full year adjusted EBITDA from University and Corporate was $84.4 million, representing an improvement of $25.0 million or 42.2 percent compared to 2014, driven by 2.7 percent revenue growth at University and execution of the Company’s transformation strategy

·

Full year 2015 cash usage from operations was negative $21.7 million, compared to cash usage of negative $118.6 million for full year 2014

·

Ended 2015 with $201.0 million of cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings

·

Introduced four new degree programs in 2015 in the areas of Education (AIU), Business Administration (AIU), Nursing (CTU) and Healthcare Management (CTU)

·

Continued to invest in technology with mobile capabilities now launched at both University institutions

·

CTU received the “Distance Education Innovation Award” in September 2015 from the National University Technology Network, which recognized CTU’s adaptive learning platform (intellipath™) as providing an innovative, personalized learning plan for its Master of Business Administration (MBA) students

·

AIU was listed in the U.S. News & World Report “Best Online Programs” rankings in January 2016, placing in the top 10 percent of programs evaluated for students enrolling in distance education programs to earn their degrees

Revenue ($ in thousands) ⁽¹⁾

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

CTU

$

91,481

$

85,433

$

86,174

$

85,127

$

82,202

AIU

45,871

50,688

52,024

53,066

44,749

Total University Group

137,352

136,121

138,198

138,193

126,951

Corporate and Other

40

39

39

39

40

Subtotal

137,392

136,160

138,237

138,232

126,991

Culinary Arts ⁽²⁾

42,020

41,410

42,048

44,712

43,294

Transitional Group ⁽²⁾

20,535

25,914

36,543

44,070

47,216

Total ⁽³⁾

$

199,947

$

203,484

$

216,828

$

227,014

$

217,501

(1)

Fourth quarter of 2014 total revenue was negatively impacted by approximately $12.3 million due to the change in how the Company accounts for revenue for students who withdrew from one of its institutions prior to completion of their programs. This cumulative adjustment was recorded during the fourth quarter of 2014. First quarter through fourth quarter of 2015 were negatively impacted by approximately $2.7 million, $2.9 million, $3.1 million and $3.4 million, respectively, related to this change in accounting.

(2)

Teach-out campuses included in the Transitional Group no longer enroll new students. The Culinary Arts campuses were announced for teach-out during December 2015. Additionally, campuses which have ceased operations subsequent to December 31, 2014 and no longer qualify for discontinued operations treatment under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360 – Property, Plant & Equipment, or campuses that were announced for sale subsequent to December 31, 2014, are also included in the Transitional Group.

(3)

Excludes discontinued operations which consist of the results of operations for campuses that have ceased operations prior to December 31, 2014.

Total Student Enrollment

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

CTU

21,300

20,600

20,600

20,300

20,400

AIU

10,600

10,800

10,700

13,500

11,600

Total University Group

31,900

31,400

31,300

33,800

32,000

Culinary Arts

7,800

9,200

7,800

8,800

8,800

Transitional Group

3,500

5,200

7,000

9,500

9,400

Total

43,200

45,800

46,100

52,100

50,200

New Student Enrollments

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

CTU

5,710

5,470

5,670

5,040

5,670

AIU

3,050

2,980

2,280

5,090

3,370

Total University Group

8,760

8,450

7,950

10,130

9,040

Culinary Arts ⁽¹⁾

690

3,290

1,450

2,040

980

Transitional Group ⁽¹⁾

90

510

830

1,830

1,150

Total

9,540

12,250

10,230

14,000

11,170

(1)

Teach-out campuses within the Transitional Group and Culinary Arts no longer enroll new students, effective upon their teach-out announcement; students who re-enter after 365 days are reported as new student enrollments. For Culinary Arts, teach-outs announced in December 2015 were effective beginning after the January 2016 new enrollment.

Operating Loss ($ in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

CTU

$

30,001

$

18,616

$

24,263

$

14,616

$

23,356

AIU

1,538

1,695

5,174

(2,887

)

(304

)

Total University Group

31,539

20,311

29,437

11,729

23,052

Corporate and Other

(6,331

)

(8,040

)

(7,036

)

(5,860

)

(7,048

)

Subtotal

25,208

12,271

22,401

5,869

16,004

Culinary Arts ⁽¹⁾

(14,065

)

(33,195

)

(10,560

)

243

(16,136

)

Transitional Group ⁽²⁾

(15,072

)

(23,065

)

(31,733

)

(30,470

)

(23,788

)

Total ⁽³⁾

$

(3,929

)

$

(43,989

)

$

(19,892

)

$

(24,358

)

$

(23,920

)

(1)

Asset impairment charges of $9.0 million, $33.4 million, $9.7 million and $10.3 million were recorded during the fourth quarter of 2015, third quarter of 2015, second quarter of 2015 and fourth quarter of 2014, respectively.

(2)

Asset impairment charges of $0.2 million, $1.7 million, $6.0 million and $3.9 million were recorded during the fourth quarter of 2015, second quarter of 2015, first quarter of 2015 and fourth quarter of 2014, respectively.

(3)

Excludes discontinued operations, which consists of the results of operations for campuses that have ceased operations prior to December 31, 2014.

Adjusted EBITDA ($ in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

University Group and Corporate:

Pre-tax loss from continuing operations

$

(4,292

)

$

(44,656

)

$

(20,750

)

$

(24,740

)

$

(23,674

)

Transitional Group pre-tax loss

15,182

23,724

32,624

30,470

23,788

Culinary Arts pre-tax loss (gain)

14,065

33,171

10,532

(250

)

15,927

Interest expense (income), net

87

7

(52

)

2

(38

)

Depreciation and amortization ⁽¹⁾

3,318

3,454

3,956

4,361

5,170

Legal settlements ⁽¹⁾

200

—

—

—

—

Stock-based compensation ⁽¹⁾

404

983

530

940

966

Asset impairments ⁽¹⁾

507

—

—

—

—

Unused space charges ^{(1) (2)}

114

(385

)

(348

)

556

(373

)

Adjustment related to revenue recognition ^{(1) (3)}

101

348

94

93

1,354

Adjusted EBITDA--University Group and

   Corporate

$

29,686

$

16,646

$

26,586

$

11,432

$

23,120

Memo: Advertising Expenses ⁽¹⁾

$

33,431

$

46,194

$

34,258

$

50,587

$

36,731

Transitional Group, Culinary Arts and Discontinued Operations:

Pre-tax loss from discontinued operations

$

(512

)

$

(544

)

$

(720

)

$

(352

)

$

(1,268

)

Transitional Group pre-tax loss

(15,182

)

(23,724

)

(32,624

)

(30,470

)

(23,788

)

Culinary Arts pre-tax (loss) gain

(14,065

)

(33,171

)

(10,532

)

250

(15,927

)

Loss on sale of business ⁽⁴⁾

161

715

917

—

—

Depreciation and amortization ⁽⁴⁾

1,759

2,508

3,231

2,351

7,319

Legal settlements ⁽⁴⁾

—

—

(166

)

1,485

—

Asset impairments ⁽⁴⁾

9,171

33,446

11,372

6,019

14,203

Unused space charges ^{(2) (4)}

(2,002

)

7,174

(2,305

)

(2,424

)

(2,063

)

Adjustment related to revenue recognition ^{(3) (4)}

(188

)

173

13

(67

)

1,029

Adjusted EBITDA--Transitional, Culinary Arts and Discontinued Operations

$

(20,858

)

$

(13,423

)

$

(30,814

)

$

(23,208

)

$

(20,495

)

Consolidated Adjusted EBITDA

$

8,828

$

3,223

$

(4,228

)

$

(11,776

)

$

2,625

(1)

Quarterly amounts relate to the University Group and Corporate

(2)

Unused space charges represent the net present value of remaining lease obligations less an estimated amount for sublease income as well as the subsequent accretion of these charges

(3)

Q4 2014 amounts are cumulative for the full year 2014 recorded during the fourth quarter of 2014

(4)

Quarterly amounts relate to Transitional Group, Culinary Arts and discontinued operations

Cash and Cash Flow from Operations ($ in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Consolidated Cash, Cash Equivalents,  Restricted Cash

  and Available-For-Sale Short-Term and Long-Term

   Investments ⁽¹⁾

$

239,015

$

206,792

$

204,104

$

213,739

$

247,002

Borrowings ⁽²⁾

$

38,000

$

-

$

-

$

-

$

10,000

Consolidated Cash, Cash Equivalents,  Restricted Cash

   and Available-For-Sale Short-Term and Long-Term

   Investments, net of Borrowings ⁽¹⁾

$

201,015

$

206,792

$

204,104

$

213,739

$

237,002

Cash Flow from Operations ⁽³⁾

$

(683

)

$

5,592

$

(6,419

)

$

(20,176

)

$

(17,479

)

(1)

Consolidated cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investment balances are quarter end balances and include both continuing and discontinued operations. Available-for-sale long-term investment balances of $7.4 million for each of the periods disclosed are reflected within other non-current assets on our consolidated balance sheets.

(2)

The fourth quarter of 2015 and 2014 ending cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investment balances include $38.0 million and $10.0 million, respectively, of restricted cash related to cash-collateralized borrowings under the Credit Agreement. The $10.0 million of outstanding borrowings as of December 31, 2014 was repaid during the first quarter of 2015.

(3)

Cash flow from operations includes payments of legal settlements of $2.4 million and $1.3 million during the first quarter of 2015 and fourth quarter of 2014, respectively.

·

Adjusted EBITDA from University Group and Corporate is expected to stay relatively flat in 2016 as compared to 2015 and then increase modestly in 2017 and 2018   

·

As compared to 2015, we expect negative adjusted EBITDA from Transitional Group, Culinary Arts and discontinued operations to improve slightly in 2016, then to worsen in 2017 due to the completion of the LCB teach-outs and then to start improving in 2018

·

End of year cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of any borrowings, as reported on the consolidated balance sheets of approximately $150 million to $160 million for the year ending December 31, 2016 and approximately $140 million to $150 million for the year ending December 31, 2017 and to generate cash during 2018

December 31,

2015

December 31,

2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents, unrestricted

$

66,919

$

93,832

Restricted cash

49,821

22,938

Short-term investments

114,901

122,858

Total cash and cash equivalents, restricted cash and short-term investments

231,641

239,628

Student receivables, net

31,618

31,401

Receivables, other, net

5,194

19,401

Prepaid expenses

14,380

17,453

Inventories

3,353

5,022

Other current assets

2,523

4,729

Assets of discontinued operations

254

473

Total current assets

288,963

318,107

NON-CURRENT ASSETS:

Property and equipment, net

58,249

115,604

Goodwill

87,356

87,356

Intangible assets, net

9,300

28,219

Student receivables, net

3,958

3,916

Deferred income tax assets, net

137,716

—

Other assets

16,562

19,357

Assets of discontinued operations

8,811

975

TOTAL ASSETS

$

610,915

$

573,534

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Short-term borrowings

$

38,000

$

10,000

Accounts payable

25,906

23,808

Accrued expenses:

Payroll and related benefits

38,789

30,481

Advertising and production costs

11,788

15,379

Income taxes

1,061

1,633

Other

24,082

28,857

Deferred tuition revenue

40,112

54,573

Liabilities of discontinued operations

13,067

15,506

Total current liabilities

192,805

180,237

NON-CURRENT  LIABILITIES:

Deferred rent obligations

45,927

67,433

Other liabilities

25,197

21,072

Liabilities of discontinued operations

9,376

22,859

Total non-current liabilities

80,500

111,364

STOCKHOLDERS' EQUITY:

Preferred stock

—

—

Common stock

830

823

Additional paid-in capital

610,784

606,531

Accumulated other comprehensive loss

(880

)

(853

)

Accumulated deficit

(57,518

)

(109,403

)

Cost of shares in treasury

(215,606

)

(215,165

)

Total stockholders' equity

337,610

281,933

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

610,915

$

573,534

For the Quarter Ended December 31,

2015

% of

Total

Revenue

2014

% of

Total

Revenue

REVENUE:

Tuition and registration fees

$

198,445

99.2

%

$

215,818

99.2

%

Other

1,502

0.8

%

1,683

0.8

%

Total revenue

199,947

217,501

OPERATING EXPENSES:

Educational services and facilities

66,931

33.5

%

80,774

37.1

%

General and administrative

122,190

61.1

%

133,974

61.6

%

Depreciation and amortization

5,077

2.5

%

12,470

5.7

%

Asset impairment

9,678

4.8

%

14,203

6.5

%

Total operating expenses

203,876

102.0

%

241,421

111.0

%

Operating loss

(3,929

)

-2.0

%

(23,920

)

-11.0

%

OTHER (EXPENSE) INCOME:

Interest income

246

0.1

%

237

0.1

%

Interest expense

(333

)

-0.2

%

(199

)

-0.1

%

Loss on sale of business

(161

)

-0.1

%

—

0.0

%

Miscellaneous (expense) income

(115

)

-0.1

%

208

0.1

%

Total other (expense) income

(363

)

-0.2

%

246

0.1

%

PRETAX LOSS

(4,292

)

-2.1

%

(23,674

)

-10.9

%

(Benefit from) provision for income taxes

(146,531

)

-73.3

%

546

0.3

%

INCOME (LOSS) FROM CONTINUING OPERATIONS

142,239

71.1

%

(24,220

)

-11.1

%

Income (loss) from discontinued operations, net of tax

485

0.2

%

(1,268

)

-0.6

%

NET INCOME (LOSS)

142,724

71.4

%

(25,488

)

-11.7

%

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

Unrealized loss on investments

(260

)

(107

)

COMPREHENSIVE INCOME (LOSS)

$

142,464

$

(25,595

)

NET INCOME (LOSS) PER SHARE - BASIC:

Income (loss) from continuing operations

$

2.09

$

(0.36

)

Income (loss) from discontinued operations

0.01

(0.02

)

Net income (loss) per share

$

2.10

$

(0.38

)

NET INCOME (LOSS) PER SHARE - DILUTED:

Income (loss) from continuing operations

$

2.08

$

(0.36

)

Income (loss) from discontinued operations

—

(0.02

)

Net income (loss) per share

$

2.08

$

(0.38

)

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

68,046

67,330

Diluted

68,506

67,330

For the Year Ended December 31,

2015

% of

Total

Revenue

2014

% of

Total

Revenue

REVENUE:

Tuition and registration fees

$

842,062

99.4

%

$

905,482

99.1

%

Other

5,211

0.6

%

8,482

0.9

%

Total revenue

847,273

913,964

OPERATING EXPENSES:

Educational services and facilities

289,777

34.2

%

323,259

35.4

%

General and administrative

564,211

66.6

%

640,454

70.1

%

Depreciation and amortization

24,938

2.9

%

53,382

5.8

%

Asset impairment

60,515

7.1

%

36,141

4.0

%

Total operating expenses

939,441

110.9

%

1,053,236

115.2

%

Operating loss

(92,168

)

-10.9

%

(139,272

)

-15.2

%

OTHER (EXPENSE) INCOME:

Interest income

794

0.1

%

851

0.1

%

Interest expense

(835

)

-0.1

%

(491

)

-0.1

%

Loss on sale of business

(1,793

)

-0.2

%

-

0.0

%

Miscellaneous (expense) income

(436

)

-0.1

%

86

0.0

%

Total other (expense) income

(2,270

)

-0.3

%

446

0.0

%

PRETAX LOSS

(94,438

)

-11.1

%

(138,826

)

-15.2

%

(Benefit from) provision for income taxes

(147,454

)

-17.4

%

3,736

0.4

%

INCOME (LOSS) FROM CONTINUING OPERATIONS

53,016

6.3

%

(142,562

)

-15.6

%

Loss from discontinued operations, net of tax

(1,131

)

-0.1

%

(35,601

)

-3.9

%

NET INCOME (LOSS)

51,885

6.1

%

(178,163

)

-19.5

%

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

Unrealized loss on investments

(27

)

(350

)

Total other comprehensive loss

(27

)

(350

)

COMPREHENSIVE INCOME (LOSS)

$

51,858

$

(178,513

)

NET INCOME (LOSS) PER SHARE -  BASIC:

Income (loss) from continuing operations

$

0.78

$

(2.12

)

Loss from discontinued operations

(0.02

)

(0.53

)

Net income (loss) per share

$

0.76

$

(2.65

)

NET INCOME (LOSS) PER SHARE -  DILUTED:

Income (loss) from continuing operations

$

0.78

$

(2.12

)

Loss from discontinued operations

(0.02

)

(0.53

)

Net income (loss) per share

$

0.76

$

(2.65

)

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

67,860

67,173

Diluted

68,328

67,173

For the Year

Ended December 31,

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

51,885

$

(178,163

)

Adjustments to reconcile net income (loss) to net cash used in operating activities: