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Strayer Education (STRA)
Q3 2012 Earnings Call
November 09, 2012 9:00 am ET
Sonya G. Udler - Senior Vice President of Corporate Communications
Robert S. Silberman - Chairman and Chief Executive Officer
Mark C. Brown - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Karl McDonnell - President, Chief Operating Officer and Director
Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division
Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division
Paul Ginocchio - Deutsche Bank AG, Research Division
Sara Gubins - BofA Merrill Lynch, Research Division
Gary E. Bisbee - Barclays Capital, Research Division
Corey Greendale - First Analysis Securities Corporation, Research Division
Kelly A. Flynn - Crédit Suisse AG, Research Division
Jeffrey P. Meuler - Robert W. Baird & Co. Incorporated, Research Division
Jeffrey M. Silber - BMO Capital Markets U.S.
Suzanne E. Stein - Morgan Stanley, Research Division
Trace A. Urdan - Wells Fargo Securities, LLC, Research Division
Brian Karimzad - Goldman Sachs Group Inc., Research Division
Brandon Burke Dobell - William Blair & Company L.L.C., Research Division
Previous Statements by STRA
» Strayer Education Management Discusses Q2 2012 Results - Earnings Call Transcript
» Strayer Education's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Strayer Education's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Sonya G. Udler
Thank you, operator. 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.
To 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 realtime, a replay will be available beginning today at 1 p.m. Eastern Time through Friday, November 23. The replay is available at (855) 859-2056, conference ID 39822150.
Following Strayer's remarks, we will open the call for questions and answers. I would like to remind everyone that today's press release contains, and certain information on this call may contain 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 paragraph on forward-looking statements at the end of its 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. Copies of these filings and the full press release are available online and upon request from the company's Corporate Communications department.
And now I'd like to turn the call over to Rob. Rob, please go ahead.
Robert S. Silberman
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 then report on our third quarter financial results, followed by Karl commenting on our third quarter operational results, including our student enrollment for the Fall academic term. Finally I'd like to provide an update on our strategy, discuss the company's earnings outlook for both Q4 and full year 2012 and share our thoughts on Strayer's business model for 2013.
Strayer Education is an education service company, whose primary asset is Strayer University, a 50,000-student, 100-campus post-secondary education institution founded in 1892, which offers bachelor's, master's and associate degrees in business administration, accounting, computer science, public administration and education. Unlike traditional universities, Strayer's students are working adults who are returning to school to further their careers.
Our revenue comes from tuition payments and associated fees. Approximately 75% of that revenue comes to us from Federally issued Title IV loans. Our expenses include the costs of our professors, our admissions and administrative staff, marketing expenses and facilities and supplies costs. Strayer University is accredited by the Middle States Commission on Higher Education.
Mark C. Brown
Revenues for the 3 months ended September 30, 2012 decreased 9% to $124.3 million compared to $135.9 million for the same period in 2011, principally due to lower enrollments.
Income from operations was $7.8 million compared to $24.4 million for the same period in 2011, a decrease of 68%. Operating income margin was 6.3% compared to 18% for the same period in 2011. Net income was $4.1 million compared to $13.9 million for the same period in 2011, a decrease of 71%.
Diluted earnings per share was $0.36 compared to $1.20 for the same period in 2011, a decrease of 70%. Diluted weighted average shares outstanding decreased 1% to 11,487,000 shares from 11,647,000 shares for the same period in 2011.
Revenues from the 9 months ended September 30, 2012 decreased 11% to $420 million compared to $471.6 million for the same period in 2011, principally due to lower average enrollments.
Income from operations was $84.9 million compared to $133.8 million for the same period in 2011, a decrease of 37%. Operating income margin was 20.2% compared to 28.4% for the same period in 2011. Net income was $49.3 million compared to $79.4 million for the same period in 2011, a decrease of 38%.