Corinthian Colleges, Inc. (Nasdaq:COCO) reported
financial results today for the second quarter ended December 31,
2011. The results for the quarter exceeded previous guidance ranges
for earnings per share and were within previous guidance ranges for
revenue and new student enrollment.
"In the second quarter we remained focused on student outcomes,
balancing expenses with current and projected enrollment, and
improving the efficiency of back-end operations," said Jack
Massimino, Corinthian Chairman and Chief Executive Officer. "Our
student attrition and graduate employment trends continue to make
incremental improvement, primarily the result of reducing the risk
profile of our students and our ongoing efforts to help students
succeed."
"As anticipated, the rate of decline in new student enrollment
growth improved significantly in the quarter," Massimino said. "The
improvement is the result of several factors, including a less
challenging comparable from the second quarter last year, gradual
stabilization in ground school new enrollments and continued strong
growth at Everest University Online. In the last half of fiscal
2012, we expect new enrollments to be slightly positive."
"To help offset recent declines in student population, over the
past 18 months we have reduced annualized operating expenses by
approximately $150 million," Massimino said. "We also continue to
pursue several growth initiatives, such as introducing new program
offerings, opening new campuses, and growing our exclusively online
enrollments."
Comparing the second quarter of fiscal 2012 with the
same quarter of the prior year:
- Net revenues were $415.5 million versus $481.7 million, a
decrease of 13.7%.
- The total student population at December 31, 2011 was 94,860
versus 105,210 at December 31, 2010, a decrease of 9.8%.
- New student enrollments totaled 25,951 versus 26,758, a
decrease of 3.0%.
- Operating income was $10.0 million, excluding severance charges
of $2.7 million, compared with operating income of $33.1 million,
excluding impairment and severance charges of $206.0 million in the
second quarter of fiscal 2011.
- Net income, excluding impairment and severance for both
periods, was $3.4 million, compared with $19.1 million in the prior
year.
- Diluted earnings per share were $0.02 per share versus a
diluted loss per share of $(1.94). Excluding impairment and
severance charges of $0.02 per share in Q2 12 and $2.17 per share
in Q2 11, diluted earnings per share were $0.04 in Q2 12 versus
$0.23 in Q2 11.
Financial Review
Educational services expense decreased $33.0
million, or 11.4%, from $288.6 million in Q2 11 to $255.6 million
in Q2 12. As a percent of revenue, educational services
expense increased from 59.9% in Q2 11 to 61.5% in Q2 12. The
increase as a percent of revenue is primarily due to an increase in
compensation and facilities expense, reflecting the fixed nature of
these expenses against a lower revenue base, partially offset by
improvement in bad debt expense.
Bad debt expense decreased to $14.6 million or 3.5% of net
revenues for Q2 12 compared to $31.6 million or 6.6% of net
revenues for Q2 11. The improvement in bad debt expense is
primarily the result of continued efficiencies in packaging
students with financial aid as a result of bringing processing
in-house.
Marketing and admissions expenses decreased
$2.0 million, or 1.9%, from $106.0 million in Q2 11 to $104.0
million in Q2 12. As a percent of revenue, marketing and
admissions increased from 22.0% in Q2 11 to 25.0% in Q2
12. The increase as a percent of revenue is primarily
attributable to a lower revenue base.
General and administrative expenses decreased
$8.2 million, or 15.2% from $54.0 million in Q2 11 to $45.8 million
in Q2 12. As a percent of revenue, G&A decreased from
11.2% in Q2 11 to 11.0% in Q2 12. The decrease reflects the
company's cost reduction initiatives.
Impairment and severance charges – During the
second quarter, we recorded severance charges of $2.7
million.
The operating margin, excluding the impairment,
facility closing and severance charges in both time periods, was
2.4% in Q2 12 versus 6.9% in Q2 11. The decline is primarily the
result of lower enrollment in the ground schools, and fixed
compensation and facilities expenses against a lower revenue
base.
Cash and cash equivalents totaled $38.4 million
at December 31, 2011, compared with $107.4 million at June 30,
2011. The decrease results from the repayment of debt,
partially offset by cash flows from operations.
Total debt and capital leases were $135.3
million at December 31, 2011, compared with $331.8 million at June
30, 2011.
Cash flow from operations was $137.2 million in
the first six months of fiscal 2012, versus $4.0 million in the
same period last year. The increase in cash flow is primarily
related to the timing of cash payments and receipts related to
working capital.
Capital expenditures were $20.1 million for the
first six months of fiscal 2012, versus $65.8 million in the same
period last year. The decrease is primarily the result of opening
fewer new campuses.
Other
The company has signed a definitive agreement for the
sale-leaseback of five of its Heald College facilities. The
transaction is expected to generate proceeds of approximately $40
million, and close in mid-February, subject to customary closing
conditions.
Guidance
The following guidance excludes one-time
charges:
Period |
Revenue |
Diluted EPS |
New Student
Growth |
Cash Flow from
Operations |
Q3 12 |
$430 -- $440 million |
$0.15 -- $0.17 |
Flat with Q3 11 |
N/A |
FY 12 |
N/A |
$0.30 -- $0.33 |
N/A |
$225 million |
Conference Call Today
We will host a conference call today at 12:00 p.m. Eastern Time
(9:00 a.m. PT), to discuss second quarter results. The call
will be open to all interested investors through a live audio web
cast at www.cci.edu (Investor Relations/Events &
Presentations.) The call will be archived on www.cci.edu after the
call. A telephonic playback of the conference call will also
be available through 11:00 p.m. PT, Wednesday, February 8. The
playback can be reached by dialing (800) 585-8367 and using pass
code 35917278.
About Corinthian
Corinthian is one of the largest post-secondary education
companies in North America. Our mission is to change students'
lives. We offer diploma and degree programs that prepare students
for careers in demand or for advancement in their fields. Our
program areas include health care, business, criminal justice,
transportation technology and maintenance, construction trades and
information technology. We have 123 Everest, Heald and WyoTech
campuses, and also offer degrees exclusively online. For more
information, go to http://www.cci.edu/.
The Corinthian Colleges, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8848
Certain statements in this press release may be deemed to be
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. The company intends that all such
statements be subject to the "safe-harbor" provisions of that
Act. Such statements include, but are not limited to, those
regarding our beliefs and expectations regarding student outcomes;
new student enrollment growth or declines in future periods;
expected savings from our decision to align organizational expenses
with lower enrollments; the success of our initiatives to increase
new enrollments now and in the future, including the introduction
of new programs, opening new campuses, and growing our exclusively
online enrollments; the statements regarding future operational
performance, including the statements under the heading "Guidance"
above, and the expected closing of the sale-leaseback of five Heald
College facilities. Many factors may cause the company's
actual results to differ materially from those discussed in any
such forward-looking statements or elsewhere, including: the effect
of new Department of Education rules; the company's effectiveness
in its regulatory and accreditation compliance efforts; the outcome
of ongoing reviews and inquiries by accrediting, state and federal
agencies, including state attorneys general, the U.S. Department of
Education's Office of the Inspector General, and the U.S.
Attorney's office in Georgia; the outcome of pending litigation
against the company; the possible non-satisfaction of the
conditions to closing of the company's sale-leaseback transaction
for its five Heald College facilities; risks associated with
variability in the expense and effectiveness of the company's
advertising and promotional efforts; potential increased
competition; bad debt expense or reduced revenue associated with
requesting students to pay more of their educational expenses while
in school; risks associated with the company's new student lending
program through ASFG; changes in general macroeconomic and market
conditions (including credit and labor market conditions, the
unemployment rate and the rates of change of each such item); and
the other risks and uncertainties described in the company's
filings with the U.S. Securities and Exchange Commission. The
historical results achieved by the company are not necessarily
indicative of its future prospects. The company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Corinthian Colleges,
Inc. |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
Consolidated Statements of
Operations |
|
|
|
|
|
For the three months
ended |
For the six months
ended |
|
December
31, |
December
31, |
|
2011 |
2010 |
2011 |
2010 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Net revenues |
$ 415,454 |
$ 481,711 |
$ 829,496 |
$ 982,119 |
Operating expenses: |
|
|
|
|
Educational services |
255,617 |
288,571 |
521,293 |
573,165 |
General and administrative |
45,826 |
54,016 |
91,925 |
109,733 |
Marketing and admissions |
104,016 |
106,044 |
209,253 |
209,922 |
Impairment, facility closing, and
severance charges |
2,718 |
205,989 |
12,584 |
205,989 |
Total operating expenses |
408,177 |
654,620 |
835,055 |
1,098,809 |
|
|
|
|
|
(Loss) income from operations |
7,277 |
(172,909) |
(5,559) |
(116,690) |
|
|
|
|
|
Interest (income) |
(748) |
(183) |
(907) |
(410) |
Interest expense |
2,804 |
2,018 |
5,380 |
4,162 |
Other (income) expense |
2,205 |
(1,229) |
3,149 |
(1,807) |
Pre-tax income (loss) from operations |
3,016 |
(173,515) |
(13,181) |
(118,635) |
(Benefit) provision for income taxes |
1,222 |
(9,980) |
(5,339) |
11,673 |
(Loss) income from continuing operations |
1,794 |
(163,535) |
(7,842) |
(130,308) |
(Loss) income from discontinued operations,
net of tax |
-- |
(177) |
-- |
(295) |
Net (loss) income |
$ 1,794 |
$ (163,712) |
$ (7,842) |
$ (130,603) |
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share -- Basic: |
|
|
|
|
Income (loss) from continuing
operations |
$ 0.02 |
$ (1.94) |
$ (0.09) |
$ (1.52) |
Loss from discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
|
|
|
|
|
Income (loss) per common share --
Diluted: |
|
|
|
|
Income (loss) from continuing
operations |
$ 0.02 |
$ (1.94) |
$ (0.09) |
$ (1.52) |
Loss from discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
Basic |
84,868 |
84,390 |
84,838 |
86,169 |
Diluted |
85,222 |
84,390 |
84,838 |
86,169 |
|
|
|
|
|
|
|
|
|
|
Selected Consolidated Balance Sheet
Data |
|
|
|
|
|
December
31, |
June 30, |
|
|
|
2011 |
2011 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ 38,418 |
$ 107,430 |
|
|
Receivables, net (including long term notes
receivable) |
$ 158,870 |
$ 245,989 |
|
|
Current assets |
$ 259,411 |
$ 421,507 |
|
|
Total assets |
$ 1,029,818 |
$ 1,204,225 |
|
|
Current liabilities |
$ 368,404 |
$ 222,670 |
|
|
Total debt and capital leases |
$ 135,323 |
$ 331,792 |
|
|
Total liabilities |
$ 466,273 |
$ 639,158 |
|
|
Total stockholders' equity |
$ 563,545 |
$ 565,067 |
|
|
|
|
|
|
|
CONTACT: Investors:
Anna Marie Dunlap
SVP Investor Relations
714-424-2678
Media:
Kent Jenkins
VP Public Affairs Communications
202-682-9494
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