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 and six months ended June 30, 2015.
“We are pleased with a strong first half of 2015 and remain
focused on delivering our annual 2015 growth goals,” said Kevin
Gilligan, chairman and chief executive officer. “Our results
demonstrate Capella’s differentiation in the market as we focus on
executing our strategies for long-term growth.”
For the three months ended June 30, 2015:
- Revenues were $108.0 million, compared
to $104.8 million in the second quarter of 2014, an increase of 3.0
percent.
- Capella University total active
enrollment increased 4.3 percent to 37,346, new enrollment
increased by 2.9 percent from second quarter 2014 and early cohort
persistence improved by approximately 3 percent.
- Operating income was $17.1 million,
compared to $15.5 million for the same period in 2014. Operating
margin was 15.8 percent, compared to 14.8 percent for the second
quarter 2014. The 2014 period includes a lease amendment charge of
approximately $2.7 million.
- Net income for the second quarter of
2015 was $10.3 million, compared to $9.0 million for the same
period in 2014.
- Net income per diluted share was $0.83,
compared to $0.72 for the same period in 2014.
For the six-month period ended June 30, 2015:
- Revenues increased by 3.2 percent to
$217.1 million, compared to $210.4 million for the same period in
2014.
- Operating income for the six-month
period ended June 30, 2015 was $33.9 million, or 15.6 percent of
revenue, compared to $30.6 million, or 14.5 percent of revenue
during the same period in 2014. The 2014 period includes a lease
amendment charge of approximately $2.7 million.
- Net income was $20.4 million, or $1.64
per diluted share, compared to $17.9 million, or $1.42 per diluted
share, for the same period in 2014.
Balance Sheet and Cash Flow
As of June 30, 2015, the Company had cash and marketable
securities of $176.3 million, compared to $167.1 million at Dec.
31, 2014, and no debt outstanding as of June 30, 2015.
Cash flow from operating activities for the six months ended
June 30, 2015 was $40.9 million compared to $33.8 million in the
same period a year ago.
Dividend and Share Repurchases
A quarterly cash dividend of $0.37 per outstanding share of
common stock was declared during the second quarter of 2015. The
dividend was paid on July 15, 2015.
In the second quarter 2015, the Company repurchased
approximately 126,000 shares of Capella stock for total
consideration of $7.1 million. The remaining authorization as of
the end of the second quarter was $21.0 million.
Outlook
For the third quarter ending Sept. 30, 2015, Capella University
new enrollment growth is expected to be flat to slightly down
year-over-year. Total enrollment is expected to grow about 3.0 to
4.0 percent year-over-year, and consolidated revenue is expected to
be up about 1.0 to 2.0 percent compared to third quarter 2014.
The consolidated operating margin is anticipated to be
approximately 12.5 to 13.5 percent of total revenue for the third
quarter of 2015.
“Our third quarter 2015 outlook reflects the variability in the
current market environment,” said Steve Polacek, senior vice
president and chief financial officer. “We will continue to balance
short- and long-term investments to support our learners and drive
shareholder value.”
Forward-Looking Statements
Certain information in this news release does not relate to
historical financial information, including statements relating to
future prospects and expectations regarding our growth, revenues,
enrollment, and operating performance, and should be considered
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 risks and uncertainties which could cause the company's
actual results to differ materially from historical results and
from results presently anticipated or projected. The company
undertakes no obligation to update its forward-looking
statements.
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 and gainful employment disclosures, certifications and
program requirements; maintaining our business in accordance with
regional and specialized accreditation standards and state
regulatory and program approval requirements; adapting to changes
in the administration, funding and availability for Title IV
programs; any governmental review of our business, marketing, or
financial aid practices, including by any state attorneys general,
the federal Consumer Financial Protection Bureau, the Minnesota
Office of Higher Education or other state regulatory bodies;
successfully growing our FlexPath programs; maintaining and
expanding existing commercial relationships with employers and
developing new employer and business partner relationships;
successfully managing our PhD completion efforts; improving our
conversion rate and effectively leveraging our brand-driven
marketing strategy; keeping up with advances in technology
important to the online learner experience; effectively managing
data security risks; improving our learner persistence and cohort
retention rate; 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 second quarter 2015 results and outlook
during a conference call scheduled today, July 28, 2015, 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# 75388111. The webcast, including
the accompanying presentation, will be available on the Capella
Education Company Web site at www.capellaeducation.com in the
investor relations section. A replay of the call will be available
starting on July 28 through Aug. 4, 2015, at 855.859.2056
(domestic) or 404.537.3406 (international), conference ID#
75388111. It will also be archived at www.capellaeducation.com in
the investor relations section.
About Capella Education Company
Founded in 1991, Capella Education Company
(http://www.capellaeducation.com) is a leader in online education,
primarily through our wholly owned subsidiary Capella University
(http://www.capella.edu), a regionally accredited* online
university with more than 37,000 learners as of June 30, 2015. In
addition, Capella Education Company offers online education through
Resource Development International Ltd. (RDI)
(http://www.rdi.co.uk), an independent provider of United Kingdom
(UK) university distance learning qualifications. Capella Education
Company also owns Sophia (http://www.sophia.org), an innovative
learning platform leveraging technology to support self-paced
learning.
*Capella University is accredited by The Higher Learning
Commission.
CAPELLA EDUCATION COMPANY Consolidated
Balance Sheets (In thousands, except par value)
As of June 30, 2015 As of December
31, 2014 (Unaudited) ASSETS Current assets: Cash
and cash equivalents $ 102,654 $ 94,003 Marketable securities,
current 27,661 29,619 Accounts receivable, net of allowance of
$5,886 at June 30, 2015 and $6,558 at December 31, 2014 16,224
17,902 Prepaid expenses and other current assets 13,289 9,007
Deferred income taxes 2,822 2,809 Total current
assets 162,650 153,340 Marketable securities, non-current 46,009
43,430 Property and equipment, net 38,300 37,246 Goodwill 16,865
16,961 Intangibles, net 1,658 1,927 Other assets 1,508 1,453
Total assets $ 266,990 $ 254,357
LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 5,276 $ 6,832 Accrued liabilities 35,123 23,410
Dividends payable 4,667 4,622 Income taxes payable — 709 Deferred
revenue 12,163 11,718 Total current liabilities
57,229 47,291 Deferred rent 2,083 2,440 Other liabilities 2,909
3,698 Deferred income taxes 5,473 5,894 Total
liabilities 67,694 59,323 Shareholders’ equity: Common
stock, $0.01 par value: Authorized shares — 100,000; Issued and
Outstanding shares — 12,117 at June 30, 2015 and 12,243 at December
31, 2014 121 122 Additional paid-in capital 114,687 112,417
Accumulated other comprehensive loss (269 ) (335 ) Retained
earnings 84,757 82,830 Total shareholders’ equity
199,296 195,034 Total liabilities and shareholders’
equity $ 266,990 $ 254,357
CAPELLA
EDUCATION COMPANY Consolidated Statements of
Income (In thousands, except per share amounts)
Three Months Ended June 30, Six
Months Ended June 30, 2015 2014
2015 2014 (Unaudited) Revenues $
108,007 $ 104,832 $ 217,081 $ 210,428 Costs and expenses:
Instructional costs and services 47,369 45,530 94,430 92,830
Marketing and promotional 25,798 23,113 53,298 48,874 Admissions
advisory 7,353 7,146 14,557 14,073 General and administrative
10,372 10,889 20,901 21,354 Lease amendment charges — 2,690
— 2,690 Total costs and expenses 90,892
89,368 183,186 179,821 Operating income 17,115
15,464 33,895 30,607 Other income (expense), net 54 (171 )
(92 ) (513 ) Income before income taxes 17,169 15,293 33,803 30,094
Income tax expense 6,838 6,249 13,435 12,233
Net income $ 10,331 $ 9,044 $ 20,368 $
17,861 Net income per common share: Basic $ 0.85 $ 0.74 $
1.67 $ 1.45 Diluted $ 0.83 $ 0.72 $ 1.64 $ 1.42 Weighted average
number of common shares outstanding: Basic 12,187 12,293 12,207
12,317 Diluted 12,400 12,518 12,442 12,564 Cash dividends declared
per common share $ 0.37 $ 0.35 $ 0.74 $ 0.70
CAPELLA EDUCATION COMPANY Consolidated Statements
of Cash Flows (In thousands) Six Months
Ended June 30, 2015 2014
(Unaudited) Operating activities Net income $ 20,368
$ 17,861 Adjustments to reconcile net income to net cash provided
by operating activities: Provision for bad debts 6,311 6,900
Depreciation and amortization 11,233 12,056 Amortization of
investment discount/premium, net 1,134 817 Impairment of property
and equipment — 277 Loss on disposal of property and equipment 27
70 Share-based compensation 3,894 2,758 Excess tax benefits from
share-based compensation (400 ) (392 ) Deferred income taxes (460 )
(574 ) Payment of contingent consideration — (906 ) Changes in
operating assets and liabilities: Accounts receivable (4,674 )
(4,550 ) Prepaid expenses and other current assets (2,918 ) (235 )
Accounts payable and accrued liabilities 8,290 (60 ) Income taxes
payable (2,116 ) 605 Deferred rent (357 ) (505 ) Deferred revenue
585 (273 ) Net cash provided by operating activities 40,917
33,849
Investing activities Capital expenditures (12,343 )
(10,814 ) Investment in partnership interest (57 ) (1,063 )
Purchases of marketable securities (18,246 ) (42,093 ) Maturities
of marketable securities 16,485 6,975 Net cash used
in investing activities (14,161 ) (46,995 )
Financing
activities Excess tax benefits from share-based compensation
400 392 Net proceeds from exercise of stock options 1,087 1,638
Payment of dividends (9,065 ) (8,659 ) Repurchases of common stock
(10,493 ) (9,926 ) Payment of contingent consideration —
(5,945 ) Net cash used in financing activities (18,071 ) (22,500 )
Effect of foreign exchange rates on cash (34 ) 4 Net
increase (decrease) in cash and cash equivalents 8,651 (35,642 )
Cash and cash equivalents at beginning of period 94,003
124,097 Cash and cash equivalents at end of period $ 102,654
$ 88,455
Supplemental disclosures of cash flow
information Income taxes paid $ 15,987 $ 12,539 Noncash
transactions: Purchase of equipment included in accounts payable
and accrued liabilities $ 585 $ 1,988 Declaration of cash dividend
to be paid $ 4,561 $ 4,354 Repurchases of common stock included in
accrued liabilities $ 499 $ —
CAPELLA
UNIVERSITY Other Information
June 30 Enrollment by Degree
(a): 2015 2014 %
Change PhD/Doctoral 10,008 10,524 (4.9 )% Master's 16,576
14,989 10.6 % Bachelor's 9,803 9,345 4.9 % Other 959 933
2.8 % Total 37,346 35,791 4.3 %
(a) Enrollment as of June 30, 2015 and 2014 is the enrollment as
of the last day of classes for the quarter ended June 30, 2015 and
2014, respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20150728005370/en/
Capella Education CompanyInvestor Contact:Heide
Erickson, 612-977-5172Heide.Erickson@capella.eduorMedia
Contact:Mike Buttry, 612-977-5499Mike.Buttry@capella.edu
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