Total operating income of $7.0 million vs prior
quarter operating loss of $24.4 million, reflects strong execution
against the Company’s strategic initiative
Career Education Corporation (NASDAQ: CECO) today reported
operating and financial results for the first quarter of 2016.
Consolidated Results:
- Operating income improved to $7.0
million for the current year quarter as compared to an operating
loss of $24.4 million for the prior year quarter
- Achieved consolidated adjusted EBITDA
of $13.2 million compared to a loss of $11.8 million in the prior
year quarter (see reconciliation of GAAP to non-GAAP items attached
to this press release)
- First quarter cash used in operating
activities was $10.6 million, an improvement versus cash usage of
$20.2 million in the first quarter of 2015
- Ended the quarter with $189.5 million
in cash, cash equivalents, restricted cash and available-for-sale
short-term and long-term investments, net of borrowings
University Business Highlights:
- University Group revenue increased by
4.9 percent year-over-year
- University Group operating income
increased by $9.4 million to $21.1 million, primarily driven by
increased revenue and improved efficiency in its operations
- Achieved adjusted EBITDA of $20.2
million for the University Group and Corporate compared to $11.3
million in the prior year quarter
- Total University Group enrollments
increased slightly as compared to the prior year quarter
“Our first quarter results reflect a continuation of the trends
we witnessed at the end of last year, and position us well to
continue to successfully execute on our strategy for the remainder
of 2016 and beyond. Improved efficiency in operations, maintaining
overall University Group total enrollments and in-line performance
of teach-outs, resulted in improvement of year-over-year financial
performance,” said Todd Nelson, President and Chief Executive
Officer. “Overall, we are executing well against our strategic
initiatives and we remain confident in the outlook we provided last
quarter. Our priorities for the near-term will continue to be
focused on improving the strength of our University platform with
investments in technology and resources which we believe will
further enhance student retention and outcomes.”
REVENUE
For the first quarter of 2016, total revenue was $198.9 million,
a 12.4 percent decrease from $227.0 million for the first quarter
of 2015. Total revenue for the University Group was $144.9 million
for the first quarter of 2016 compared to $138.2 million for the
first quarter of 2015, an increase of 4.9 percent.
Revenue ($ in
thousands)
Q1 2016 Q4 2015
Q3 2015 Q2 2015
Q1 2015 CTU $ 91,966 $ 91,481 $ 85,433 $ 86,174 $
85,127 AIU 52,973 45,871 50,688 52,024
53,066 Total University Group 144,939 137,352 136,121
138,198 138,193 Corporate and Other — 40 39
39 39 Subtotal 144,939 137,392 136,160 138,237
138,232 Culinary Arts (1) 38,623 42,020 41,410 42,048 44,712
Transitional Group (1) 15,324 20,535 25,914
36,543 44,070 Total $ 198,886 $ 199,947 $ 203,484 $
216,828 $ 227,014 (1) 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 and
ceased enrolling new students in January 2016.
TOTAL AND NEW STUDENT ENROLLMENTS
For the first quarter of 2016, total student enrollments for the
University Group were 33,900, compared to 33,800 in the prior year
quarter. New student enrollments for the University Group were
9,630 compared to 10,130 in the prior year quarter. The Company
believes that continued focus on student retention has contributed
to the slight increase in University Group total student enrollment
as compared to the prior year.
Total Student
Enrollment
Q1 2016 Q4 2015
Q3 2015 Q2 2015
Q1 2015 CTU 21,300 21,300 20,600
20,600 20,300 AIU 12,600 10,600
10,800 10,700 13,500 Total University Group
33,900 31,900 31,400 31,300 33,800
Culinary Arts 6,900 7,800 9,200 7,800 8,800 Transitional Group
2,500 3,500 5,200 7,000 9,500
Total 43,300 43,200 45,800 46,100
52,100
New Student
Enrollments
Q1 2016 Q4 2015
Q3 2015 Q2 2015
Q1 2015 CTU 4,770 5,710 5,470
5,670 5,040 AIU 4,860 3,050
2,980 2,280 5,090 Total University Group 9,630
8,760 8,450 7,950 10,130 Culinary Arts
(1) 930 690 3,290 1,450 2,040 Transitional Group (1) 60
90 510 830 1,830 Total 10,620
9,540 12,250 10,230 14,000 (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 INCOME (LOSS)
For the first quarter of 2016, operating income of $7.0 million
improved 128.7 percent compared to an operating loss of $24.4
million in the prior year quarter. Total University Group operating
income increased to $21.1 million from $11.7 million in the prior
year quarter, an increase of 80.3 percent. This increase in
operating income was primarily driven by increased revenue and
improved efficiency in operations.
Operating Income
(Loss) ($ in thousands)
Q1 2016 Q4 2015
Q3 2015 Q2 2015 Q1 2015 CTU $
19,237 $ 30,001 $ 18,616 $ 24,263 $ 14,616 AIU 1,907
1,538 1,695 5,174 (2,887 ) Total University
Group 21,144 31,539 20,311 29,437 11,729 Corporate and Other
(5,812 ) (6,331 ) (8,040 ) (7,036 )
(5,860 ) Subtotal 15,332 25,208 12,271 22,401 5,869 Culinary Arts
(1) 3,106 (14,065 ) (33,195 ) (10,560 ) 243 Transitional Group (2)
(11,459 ) (15,072 ) (23,065 ) (31,733 )
(30,470 ) Total $ 6,979 $ (3,929 ) $ (43,989 ) $ (19,892 ) $
(24,358 ) (1) Asset impairment charges of $9.0 million,
$33.4 million and $9.7 million were recorded during the fourth
quarter of 2015, third quarter of 2015 and second quarter of 2015,
respectively. (2) Asset impairment charges of $0.2 million,
$1.7 million and $6.0 million were recorded during the fourth
quarter of 2015, second quarter of 2015 and first quarter of 2015,
respectively.
ADJUSTED EBITDA
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant 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, for the first quarter of 2016,
adjusted EBITDA for the University Group and Corporate was $20.2
million representing an increase of 78.1 percent, or $8.9 million,
compared to the first quarter of 2015. Adjusted EBITDA for the
Transitional Group, Culinary Arts and discontinued operations
improved to negative $7.0 million for the first quarter of 2016
from negative $23.1 million for the first quarter of 2015,
representing an improvement of 69.8 percent, or $16.2 million.
Adjusted EBITDA
($ in thousands)
Q1 2016 Q4 2015
(4) Q3 2015 (4) Q2 2015
(4) Q1 2015 (4)
University Group
and Corporate:
Pre-tax income (loss) from continuing operations $ 7,225 $ (4,292 )
$ (44,656 ) $ (20,750 ) $ (24,740 ) Transitional Group pre-tax loss
11,316 15,182 23,724 32,624 30,470 Culinary Arts pre-tax (income)
loss (3,107 ) 14,065 33,171 10,532 (250 ) Interest (income)
expense, net (1) (28 ) 87 7 (52 ) 2 Depreciation and amortization
(1) 3,103 3,318 3,454 3,956 4,361 Legal settlements (1) — 200 — — —
Stock-based compensation (1) 544 404 983 530 940 Asset impairments
(1) 237 507 — — — Unused space charges (1) (2) 909
114 (385 ) (348 ) 556
Adjusted
EBITDA--University Group and
Corporate
$ 20,199 $ 29,585 $
16,298 $ 26,492 $ 11,339
Memo: Advertising Expenses (1) $ 43,966
$ 33,431 $ 46,194 $
34,258 $ 50,587
Transitional
Group, Culinary Arts and Discontinued Operations:
Pre-tax loss from discontinued operations $ (126 ) $ (512 ) $ (544
) $ (720 ) $ (352 ) Transitional Group pre-tax loss (11,316 )
(15,182 ) (23,724 ) (32,624 ) (30,470 ) Culinary Arts pre-tax
income (loss) 3,107 (14,065 ) (33,171 ) (10,532 ) 250 Interest
income, net (3) (1 ) — — — — Loss on sale of business (3) — 161 715
917 — Depreciation and amortization (3) 3,466 1,759 2,508 3,231
2,351 Legal settlements (3) — — — (166 ) 1,485 Asset impairments
(3) — 9,171 33,446 11,372 6,019 Unused space charges (2) (3)
(2,108 ) (2,002 ) 7,174 (2,305 ) (2,424
)
Adjusted EBITDA--Transitional, Culinary Arts and Discontinued
Operations $ (6,978 ) $
(20,670 ) $ (13,596 ) $
(30,827 ) $ (23,141 )
Consolidated Adjusted EBITDA $ 13,221 $
8,915 $ 2,702 $ (4,335 )
$ (11,802 ) (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) Quarterly
amounts relate to Transitional Group, Culinary Arts and
discontinued operations (4) Previously disclosed adjusted
EBITDA included an adjustment related to revenue recognition as a
result of a cumulative adjustment which was recorded during the
fourth quarter of 2014. This adjustment was removed because all
periods presented are now comparable in this regard and therefore
management no longer views it as a material adjustment.
BALANCE SHEET AND CASH FLOW
Net cash used in operating activities for the first quarter was
$10.6 million, an improvement versus cash usage of $20.2 million in
the first quarter of 2015. The Company’s continued focus on
improving operating efficiencies and the completion of teach-outs
drove the improvement in cash usage for the current year quarter as
compared to the prior year quarter.
As of March 31, 2016 and March 31, 2015, cash, cash
equivalents, restricted cash and available-for-sale short-term and
long-term investments, net of borrowings totaled $189.5 million and
$213.7 million, respectively.
Consolidated Cash
($ in thousands)
Q1 2016 Q4 2015
Q3 2015 Q2 2015 Q1 2015
Consolidated Cash, Cash Equivalents, Restricted Cash
and Available-For-Sale Short-Term
Investments (1)
$ 182,130 $ 231,641 $ 199,418 $ 196,730 $ 206,365
Available-For-Sale Long-Term Investments (2) 7,374 7,374 7,374
7,374 7,374 Borrowings (3) - 38,000 - -
- Consolidated Cash, Cash Equivalents, Restricted Cash
and Available-For-Sale Short-Term and
Long-Term
Investments, net of Borrowings (1) (2)
$ 189,504 $ 201,015 $ 206,792 $ 204,104 $ 213,739
Cash Flow from
Operations ($ in thousands)
Cash Flow from Operations $ (10,610 ) $ (683 ) $ 5,592 $ (6,419 ) $
(20,176 ) (1) Consolidated cash, cash equivalents,
restricted cash and available-for-sale short-term investment
balances are quarter end balances and include both continuing and
discontinued operations. (2) Available-for-sale long-term
investment balances are included within non-current other assets on
our condensed consolidated balance sheets. (3) Cash, cash
equivalents, restricted cash and available-for-sale short-term
investment balances for the fourth quarter of 2015 include $38.0
million of restricted cash related to cash-collateralized
borrowings under the Credit Agreement.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on
Wednesday, May 4, 2016 at 5:30 p.m. Eastern time to discuss its
first quarter 2016 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 hybrid learning
programs. Our 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™ adaptive learning platform that
allow students to more efficiently pursue earning a degree by
receiving course credit for knowledge they can already demonstrate.
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 individual campus locations and web links to Career
Education’s 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,”
“continue,” “position us” 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; increased competition; negative
trends in the real estate market which could impact the costs
related to teaching out campuses and the success of our initiatives
to reduce our real estate obligations; our ability to achieve
anticipated cost savings and business efficiencies; rulemaking by
the U.S. Department of Education or any state and increased focus
by Congress, the President and governmental agencies on, or
increased negative publicity about, for-profit education
institutions; 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 and financial responsibility standards
prescribed by the U.S. Department of Education), as well as
applicable accreditation standards and state regulatory
requirements; the impact of management changes; our ability to
successfully defend litigation and other claims brought against us;
and changes in the overall U.S. or global 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
fiscal year ended December 31, 2015 and its subsequent filings
with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
March 31,
2016
December 31,
2015
(unaudited) ASSETS CURRENT ASSETS: Cash and
cash equivalents, unrestricted $ 47,536 $ 66,919 Restricted cash
11,735 49,821 Short-term investments 122,859 114,901
Total cash and cash equivalents, restricted cash and short-term
investments 182,130 231,641 Student receivables, net 27,746
31,618 Receivables, other, net 4,375 5,194 Prepaid expenses 14,167
14,380 Inventories 2,505 3,353 Other current assets 2,331 2,523
Assets of discontinued operations 225 254 Total
current assets 233,479 288,963
NON-CURRENT
ASSETS: Property and equipment, net 52,596 58,249 Goodwill
87,356 87,356 Intangible assets, net 9,100 9,300 Student
receivables, net 3,686 3,958 Deferred income tax assets, net
137,716 137,716 Other assets 17,552 16,562 Assets of discontinued
operations 8,751 8,811
TOTAL ASSETS $
550,236 $ 610,915 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term
borrowings $ - $ 38,000 Accounts payable 18,579 25,906 Accrued
expenses: Payroll and related benefits 30,139 38,789 Advertising
and production costs 14,308 11,788 Income taxes 5,146 1,061 Other
21,966 24,082 Deferred tuition revenue 35,077 40,112 Liabilities of
discontinued operations 9,784 13,067 Total current
liabilities 134,999 192,805
NON-CURRENT
LIABILITIES: Deferred rent obligations 43,244 45,927 Other
liabilities 22,508 25,197 Liabilities of discontinued operations
8,075 9,376 Total non-current liabilities
73,827 80,500
STOCKHOLDERS' EQUITY: Preferred
stock - - Common stock 833 830 Additional paid-in capital 611,472
610,784 Accumulated other comprehensive loss (364 ) (880 )
Accumulated deficit (54,507 ) (57,518 ) Cost of shares in treasury
(216,024 ) (215,606 ) Total stockholders' equity
341,410 337,610
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 550,236 $
610,915 CAREER EDUCATION CORPORATION AND
SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts
and percentages)
For the Quarter Ended March 31,
2016 % of
Total
Revenue
2015 % of
Total
Revenue
REVENUE: Tuition and registration fees $
197,785 99.4 % $ 225,691 99.4 % Other 1,101 0.6 %
1,323 0.6 % Total revenue 198,886 227,014
OPERATING EXPENSES: Educational services and facilities
61,538 30.9 % 74,894 33.0 % General and administrative 123,563 62.1
% 163,673 72.1 % Depreciation and amortization 6,569 3.3 % 6,786
3.0 % Asset impairment 237 0.1 % 6,019 2.7 % Total
operating expenses 191,907 96.5 % 251,372 110.7 %
Operating income (loss) 6,979 3.5 % (24,358 ) -10.7 %
OTHER INCOME (EXPENSE): Interest income 265 0.1 % 160 0.1 %
Interest expense (236 ) -0.1 % (162 ) -0.1 % Miscellaneous income
(expense) 217 0.1 % (380 ) -0.2 % Total other income
(expense) 246 0.1 % (382 ) -0.2 %
PRETAX INCOME
(LOSS) 7,225 3.6 % (24,740 ) -10.9 % Provision for (benefit
from) income taxes 4,135 2.1 % (211 ) -0.1 %
INCOME (LOSS) FROM CONTINUING OPERATIONS 3,090 1.6 % (24,529
) -10.8 % Loss from discontinued operations, net of tax (79
) 0.0 % (352 ) -0.2 %
NET INCOME (LOSS) 3,011
1.5 % (24,881 ) -11.0 %
OTHER COMPREHENSIVE INCOME
(LOSS), net of tax: Foreign currency translation adjustments
193
- Unrealized gain on investments 323 195
Total other comprehensive income 516 195
COMPREHENSIVE INCOME (LOSS) $ 3,527 $
(24,686 ) NET INCOME (LOSS) PER SHARE -
BASIC and DILUTED: Income (loss) from continuing operations $
0.04 $ (0.36 ) Loss from discontinued operations -
(0.01 ) Net income (loss) per share $ 0.04 $ (0.37 )
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
68,155 67,534 Diluted
68,798
67,534 CAREER EDUCATION CORPORATION
AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(In thousands)
For the Quarter Ended March 31,
2016 2015 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income (loss) $ 3,011 $ (24,881 ) Adjustments
to reconcile net income (loss) to net cash used in operating
activities: Asset impairment 237 6,019 Depreciation and
amortization expense 6,569 6,712 Bad debt expense 9,552 4,275
Compensation expense related to share-based awards 544 940 Loss on
disposition of property and equipment — 3 Changes in operating
assets and liabilities: (30,523 ) (13,244 ) Net cash
used in operating activities (10,610 ) (20,176 )
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
available-for-sale investments (36,004 ) (15,259 ) Sales of
available-for-sale investments 28,189 14,754 Purchases of property
and equipment (876 ) (3,369 ) Payments of cash upon sale of
businesses (62 ) — Net cash used in investing
activities (8,753 ) (3,874 )
CASH FLOWS
FROM FINANCING ACTIVITIES: Issuance of common stock 147 174
Payment on borrowings (38,000 ) (10,000 ) Change in restricted cash
38,086 9,000 Net cash provided by (used in) financing
activities 233 (826 )
EFFECT OF FOREIGN
CURRENCY EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS:
(253 ) 288
NET DECREASE IN CASH AND CASH
EQUIVALENTS (19,383 ) (24,588 )
DISCONTINUED OPERATIONS CASH
ACTIVITY INCLUDED ABOVE: Add: Cash balance of discontinued
operations, beginning of the period — — Less: Cash balance of
discontinued operations, end of the period — —
CASH AND CASH
EQUIVALENTS, beginning of the period 66,919
93,832
CASH AND CASH EQUIVALENTS, end of the period $ 47,536
$ 69,244
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
For the Quarter Ended March 31,
2016 2015 REVENUE: CTU $ 91,966 $
85,127 AIU 52,973 53,066 Total University Group
144,939 138,193 Corporate and Other — 39 Subtotal
144,939 138,232 Culinary Arts 38,623 44,712 Transitional Group
15,324 44,070 Total $ 198,886 $ 227,014
OPERATING INCOME (LOSS): CTU $ 19,237 $ 14,616 AIU
1,907 (2,887 ) Total University Group 21,144 11,729
Corporate and Other (5,812 ) (5,860 ) Subtotal 15,332
5,869 Culinary Arts 3,106 243 Transitional Group (11,459 )
(30,470 ) Total $ 6,979 $ (24,358 )
OPERATING
INCOME (LOSS) MARGIN: CTU 20.9 % 17.2 % AIU 3.6 %
-5.4 % Total University Group 14.6 % 8.5 % Corporate and Other NM
NM Subtotal 10.6 % 4.2 % Culinary Arts 8.0 % 0.5 % Transitional
Group -74.8 % -69.1 % Total 3.5 % -10.7
%
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO
NON-GAAP ITEMS (1)
(In thousands)
Adjusted
EBITDA
Q1 2016 Q4 2015 (7) Q3 2015 (7)
Q2 2015 (7) Q1 2015 (7)
University Group
and Corporate:
Pre-tax income (loss) from continuing operations $ 7,225 $ (4,292 )
$ (44,656 ) $ (20,750 ) $ (24,740 ) Transitional Group pre-tax loss
11,316 15,182 23,724 32,624 30,470 Culinary Arts pre-tax (income)
loss (3,107 ) 14,065 33,171 10,532 (250 ) Interest (income)
expense, net (2) (28 ) 87 7 (52 ) 2 Depreciation and amortization
(2) 3,103 3,318 3,454 3,956 4,361 Legal settlements (2) (3) — 200 —
— — Stock-based compensation (2) 544 404 983 530 940 Asset
impairments (2) 237 507 — — — Unused space charges (2) (4)
909 114 (385 ) (348 ) 556
Adjusted
EBITDA--University Group and
Corporate (5)
$ 20,199 $ 29,585 $
16,298 $ 26,492 $ 11,339
Memo: Advertising Expenses (2) $ 43,966
$ 33,431 $ 46,194 $
34,258 $ 50,587
Transitional
Group, Culinary Arts and Discontinued Operations:
Pre-tax loss from discontinued operations $ (126 ) $ (512 ) $ (544
) $ (720 ) $ (352 ) Transitional Group pre-tax loss (11,316 )
(15,182 ) (23,724 ) (32,624 ) (30,470 ) Culinary Arts pre-tax
income (loss) 3,107 (14,065 ) (33,171 ) (10,532 ) 250 Interest
income, net (6) (1 ) — — — — Loss on sale of business (6) — 161 715
917 — Depreciation and amortization (6) 3,466 1,759 2,508 3,231
2,351 Legal settlements (3) (6) — — — (166 ) 1,485 Asset
impairments (6) — 9,171 33,446 11,372 6,019 Unused space charges
(4) (6) (2,108 ) (2,002 ) 7,174 (2,305
) (2,424 )
Adjusted EBITDA--Transitional, Culinary Arts
and Discontinued Operations (5) (8) $
(6,978 ) $ (20,670 ) $
(13,596 ) $ (30,827 ) $
(23,141 ) Consolidated Adjusted EBITDA
$ 13,221 $ 8,915 $ 2,702
$ (4,335 ) $ (11,802 )
(1) The Company believes it is useful to present non-GAAP
financial measures which exclude certain significant items as a
means to understand the performance of its operations. As a general
matter, the Company uses non-GAAP financial measures in conjunction
with results presented in accordance with GAAP to help analyze the
performance of its operations, assist with preparing the annual
operating plan, and measure performance for some forms of
compensation. In addition, the Company believes that non-GAAP
financial information is used by analysts and others in the
investment community to analyze the Company’s historical results
and to provide estimates of future performance and that failure to
report non-GAAP measures could result in a misplaced perception
that the Company’s results have underperformed or exceeded
expectations. We believe adjusted EBITDA allows us to
compare our current operating results with corresponding historical
periods and with the operational performance of other companies in
our industry because it does not give effect to potential
differences caused by items we do not consider reflective of
underlying operating performance. We also present adjusted EBITDA
because we believe it is frequently used by securities analysts,
investors and other interested parties as a measure of performance.
In evaluating adjusted EBITDA, investors should be aware that in
the future we may incur expenses similar to the adjustments
presented above. Our presentation of adjusted EBITDA should not be
construed as an inference that our future results will be
unaffected by expenses that are unusual, non-routine or
non-recurring. Adjusted EBITDA has limitations as an analytical
tool, and you should not consider it in isolation, or as a
substitute for net income (loss), operating income (loss), or any
other performance measure derived in accordance and reported under
GAAP or as an alternative to cash flow from operating activities or
as a measure of our liquidity. Non-GAAP financial measures,
when viewed in a reconciliation to corresponding GAAP financial
measures, provide an additional way of viewing the company’s
results of operations and the factors and trends affecting the
company’s business. Non-GAAP financial measures should be
considered as a supplement to, and not as a substitute for, or
superior to, the corresponding financial results presented in
accordance with GAAP. (2) Quarterly amounts relate to the
University Group and Corporate. (3) Legal settlement amounts
are net of insurance recoveries. (4) 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. (5) Management assesses results
of operations for the University Group and Corporate separately
from the Transitional Group and Culinary Arts. As a result,
management views adjusted EBITDA from the University Group and
Corporate separately from the remainder of the organization, to
assess results and make decisions. Accordingly, the Transitional
Group and Culinary Arts pre-tax income (losses) are added back to
pre-tax income (loss) from continuing operations and subtracted
from pre-tax loss from discontinued operations. (6)
Quarterly amounts relate to the Transitional Group, Culinary Arts
and discontinued operations. (7) Previously disclosed
adjusted EBITDA included an adjustment related to revenue
recognition as a result of a cumulative adjustment which was
recorded during the fourth quarter of 2014. This adjustment was
removed because all periods presented are now comparable in this
regard and therefore management no longer views it as a material
adjustment. (8) Quarterly adjusted EBITDA amounts for
Culinary Arts separate from the Transitional Group and discontinued
operations include:
Q1 2016
Q4 2015 (7) Q3 2015 (7)
Q2 2015 (7) Q1 2015 (7)
Pre-tax income (loss) $ 3,107 $ (14,065 ) $ (33,171 ) $ (10,532 ) $
250 Depreciation and amortization 1,961 — — — — Legal settlements —
— — — 775 Asset impairments — 9,005 33,446 9,687 — Unused space
charges 1,543 191 209 (982 )
(377 )
Total $ 6,611 $ (4,869
) $ 484 $ (1,827 )
$ 648
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160504006647/en/
Investors:Alpha IR GroupSam Gibbons or Chris Hodges(312)
445-2870CECO@alpha-ir.comorMedia:Career Education
Corporation(847) 585-2600media@careered.com
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