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Strayer Education, Inc. (STRA)
Q4 2009 Earnings Call Transcript
February 11, 2010 10:00 am ET
Sonya Udler – SVP, Corporate Communications
Rob Silberman – Chairman and CEO
Mark Brown – EVP and CFO
Karl McDonnell – President and COO
Kevin Doherty – Bank of America/Merrill Lynch
Andrew Steinerman – J.P. Morgan
Andrew Fones – UBS
Ariel Sokol – Wedbush
Gary Bisbee – Barclays Capital
Corey Greendale – First Analysis
Kelly Flynn – Credit Suisse
Amy Junker – Robert W. Baird & Company
Jeff Silber – BMO Capital Markets
Bob Craig – Stifel Nicolaus
Brandon Dobell – William Blair
Bob Wetenhall – Royal Bank of Canada
Scott Schneeberger – Oppenheimer
Mark Skitovich – Piper Jaffray
Previous Statements by STRA
» Strayer Education, Inc. Q3 2009 Earnings Call Transcript
» Strayer Education Inc. Q2 2009 Earnings Call Transcript
» Strayer Education Inc.Q1 2009 Earnings Call Transcript
Thank you. With us today to discuss the results are Robert Silberman, Chairman and Chief Executive Officer for Strayer Education; Karl McDonnell, President and Chief Operating Officer; and Mark Brown, Executive Vice President and Chief Financial Officer.
For those of you that wish to listen to the conference via the Internet, please go to strayereducation.com where the call will be archived for 90 days. If you are unable to listen to the call in real time, a replay will be available beginning today at 1:00 PM Eastern through Thursday, February 18th. The replay is available at 888-203-1112, pass code 5846979. Following Strayer's remarks, we will open the call for questions and answers.
Please note that today’s press release contains statements that are forward-looking and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act. The statements are based on the company’s current expectations and are subject to a number of uncertainties and risks that the company has identified in the press release and that could cause the company’s actual results to differ materially. Further information about these and other relevant uncertainties may be found in the company’s annual report on Form 10-K and its other filings with the Securities and Exchange Commission.
And now I would like to turn the call over to Rob. Rob, please go ahead.
Thank you, Sonya. And good morning, ladies and gentlemen. As is our custom, I’d like to begin this morning with a brief overview of both our company and our business model for any listeners who are new to Strayer. Mark will report on the detailed financial results for the fourth quarter and full year 2009, and then I’ll ask Karl to comment on our operational results in the fourth quarter and our enrollment statistics for the winter academic term. Finally, I’ll provide an update on our growth strategy and the company’s earnings outlook for Q1 2010.
Strayer Education, Inc. is an education service company whose primary asset is Strayer University, a 54,000-student, 74-campus, post-secondary education institution, which offers Bachelor’s, Master's, and Associate's degrees in business administration, accounting, computer science, public administration, and education. Strayer students are working adults who are returning to school to further their careers. Our revenue comes from tuition payments and associated fees. Approximately 70% of that revenue comes to us from federally insured Title 4 loans issued to our students.
Our expenses at Strayer Education include the costs of our professors, our admissions and administrative staff, marketing expenses, and facilities and supplies costs. We serve students in 15 States through physical campuses as well as in all 50 states and over 30 foreign countries through our online courses. Strayer University is accredited by the Middle States Association of Colleges and Schools.
Mark, do you want to run through the financials?
I’d be glad to. Revenues for the three months ended December 31, 2009 increased 29% to $147.2 million compared to $114.3 million for the same period in ‘08, due to increased enrollment and a 5% tuition increase which commenced in January of
Income from operations was $52.4 million compared to $39.4 million for the same period in ‘08, an increase of 33%. Operating income margin was 35.6% compared to 34.5% in ‘08. Net income was $31.9 million compared to $24.2 million for the same period in ‘08, an increase of 32%. Diluted earnings per share was $2.32 compared to $1.71 for the same period in ‘08, an increase of 36%. Diluted weighted average shares outstanding decreased to 13,751,000 from 14,143,000 for the same period in ‘08.
Revenues for the year ended December 31, 2009 increased 29% to $512.0 million compared to $396.3 million for the same period in ‘08, due to increased enrollment and a 5% tuition increase effective for 2009. Income from operations was $172.4 million compared to $126.9 million for the same period in ‘08, an increase of 36%. Operating income margin was 33.7% compared to 32.0% in ‘08.
Net income was $105.1 million compared to $80.8 million in ‘08, an increase of 30%. Diluted earnings per share was $7.60 compared to $5.67 in ‘08, an increase of 34%. Diluted weighted average shares outstanding decreased to 13,825,000 from 14,242,000 in ‘08.
At December 31, 2009, the company had cash and marketable securities of $116.5 million and no debt. The company generated $141.8 million in cash from operating activities compared to $88.6 million in ‘08. Capital expenditures were $30.4 million compared to $20.7 million in ‘08.
During the year ended December 31, 2009, the company invested $80 million to repurchase 452,000 shares of common stock at an average price of $177.34 per share. During the year ended 2009, the company paid regular quarterly dividends of $31.6 million.
For the fourth quarter of 2009, bad debt expense as a percentage of revenues was 4.3% compared to 3.8% for the same period in ‘08. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was 14 days at the end of the fourth quarter of 2009, unchanged from 2008. Rob?