UPDATE: Strategic Education (STRA) Tops Q4 EPS by 6c, Revenues Beat

(Updated - March 1, 2019 6:32 AM EST)

Strategic Education (NASDAQ: STRA) reported Q4 EPS of $1.56, $0.06 better than the analyst estimate of $1.50. Revenue for the quarter came in at $242.1 million versus the consensus estimate of $238.39 million.

• Revenue increased 104.0% to $242.1 million compared to $118.7 million for the same period in 2017. Revenue in 2018 includes the impact of a purchase accounting adjustment of $2.5 million to reflect Capella University deferred revenue at fair value. Adjusted revenue, which is a non-GAAP financial measure and excludes the aforementioned deferred revenue adjustment, increased 106.1% to $244.6 million compared to $118.7 million for the same period in 2017. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP Financial Measures section of this press release.
• Income from operations was $18.9 million compared to $11.7 million for the same period in 2017. Income from operations in 2018 includes the impact of the aforementioned deferred revenue adjustment, $15.4 million of amortization expense related to assets acquired in the merger with Capella Education Company, $8.0 million in costs associated with the merger with Capella Education Company, a $0.3 million charge resulting from the impairment of intangible assets associated with The New York Code + Design Academy, and a $0.3 million charge to the Company’s reserve for leases on facilities no longer in use. Income from operations in 2017 included $8.5 million in costs associated with the merger with Capella Education Company. Adjusted income from operations was $45.4 million in 2018 compared to $20.2 million for the same period in 2017. The adjusted operating income margin was 18.6% compared to 17.0% for the same period in 2017.
• Net income, which includes the adjustments described above and certain tax benefits, including the effects of the new lower federal income tax rate, was $22.5 million in 2018 compared to a net loss of $6.5 million in 2017. Adjusted net income was $34.4 million compared to adjusted net income of $12.3 million for the same period in 2017.
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $44.3 million in 2018 compared to $16.7 million in 2017. Adjusted EBITDA was $59.2 million compared to $28.6 million for the same period in 2017.
• Diluted earnings per share was $1.02 compared to a loss per share of $0.61 for the same period in 2017. Adjusted diluted earnings per share increased to $1.56 from $1.09 for the same period in 2017. Diluted weighted average shares outstanding increased to 22,033,000 from 11,273,000 for the same period in 2017, due primarily to new shares issued to facilitate the merger with Capella Education Company.

Karl McDonnell, Chief Executive Officer of SEI said, “We are very pleased with the organization’s strong results in 2018, which were achieved while closing our merger and integrating corporate functions. Our particularly strong fourth quarter results position us well for 2019 as we leverage our new scale and capabilities to continue to deliver near-term growth, and long-term economic mobility for our students and learners.”

For earnings history and earnings-related data on Strategic Education (STRA) click here.

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