Strayer Education, Inc. (STRA) Tops Q3 EPS Views; Announces Cost-Reduction Initiatives

October 31, 2013 6:36 AM EDT
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Price: $77.57 +0.71%

Revenue Growth %: +0.0%

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Marketing: 25.39M

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Strayer Education, Inc. (NASDAQ: STRA) reported Q3 EPS of $0.30, $0.26 better than the analyst estimate of $0.04. Revenue for the quarter came in at $110 million versus the consensus estimate of $109.35 million.

Student Enrollment

Total enrollments at Strayer University for the 2013 fall term decreased 17% to 43,192 students compared to 51,727 students for the same term in 2012. Across the Strayer University campus and online system, continuing student enrollments decreased 14%, while new student enrollments decreased 23%.

Cost Reduction Initiatives

The Company announced today that Strayer University plans to implement a number of cost reduction and other initiatives during the fourth quarter of 2013. These initiatives, which will result in a charge of approximately $45-55 million in the fourth quarter, are expected to reduce headcount by approximately 20% and annual operating expenses by an estimated $50 million beginning in 2014. The Company estimates that approximately $10 million of the charge will reduce cash flow from operating activities in the fourth quarter.

As part of these initiatives, Strayer University will close approximately 20 physical locations predominantly in the Midwest. These closures will affect approximately 5% of the University’s enrollment or about 2,300 students in the fall term. Affected students, a majority of whom already take 100% of their classes online, will be offered support to continue their education online. Subject to regulatory approval, these closures are expected to be substantially completed within the next six months. Approximately $30-40 million of the charges in the fourth quarter will be incurred for these closures, principally for lease-related charges and asset write-off costs, with the remaining $15 million of the fourth quarter charges related to workforce reductions.

For earnings history and earnings-related data on Strayer Education, Inc. (STRA) click here.

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