As it works to strengthen its core post-secondary degree operations, Herndon, Virginia-based Strayer Education Inc. is also expanding into customized, non-degree learning solutions, according to company executives.
“We want to provide long-term value for our shareholders and for our students,” CEO Karl McDonnell said during the company’s recent financial results conference call.
Strayer Education is a publicly traded corporation, established as a holding company for Strayer University. Its other assets include the recently acquired New York Code and Design Academy (NYCDA), a provider of non-degree Web and mobile app development courses.
“Beginning this year, and subject to regulatory approval, based on what we see as rapidly increasing demand and significant projected shortages of Web developers and designers, we will start a multi-year expansion strategy to bring NYCDA's programs to as many markets as possible, leveraging our campus footprint and existing infrastructure,” McDonnell said.
While Strayer Education looked at many opportunities in the coding space, McDonnell said the company was most interested in NYCDA based on its focus to produce outstanding learning outcomes for students and to provide superior customer service.
“Both [are] values that we share,” McDonnell said.
The NYCDA acquisition, announced in January, means the firm will operate as a wholly owned subsidiary of Strayer Education and that NYCDA’s financial results will be included in Strayer’s consolidated financial statements beginning in this year’s first quarter.
“We're very excited about NYCDA and the opportunity to put capital to work in areas that have higher growth, less regulatory risk, [and] more of a diversification for us,” Robert Silberman, Strayer Education’s executive chairman of the board, said on the call.
Also during the year-end earnings call, Strayer execs detailed Strayer Education’s financials.
Revenue for the fourth quarter ending December 2015 was $113.7 million, a decrease of 2 percent from the same period in 2014, Daniel Jackson, executive vice president and chief financial officer of Strayer Education said.
“The decrease was driven by lower revenue per student, which was down 4 percent, offset by 2 percent total enrollment growth for our fall term,” Jackson said during the call.
The fourth-quarter decline in revenue per student, however, was not as bad as expected, Jackson said, due to the higher number of classes taken per student as Strayer University’s mix of students shifted slightly toward undergraduates, who tend to take more classes per term.
For the year, total enrollment was up slightly, Jackson explained, while revenue per student decreased by 3 percent, contributing to a 2.6 percent decline in total revenue to $434.4 million compared to $446 million in 2014.
Specifically, Strayer University is a for-profit higher education institution that provides post-secondary undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration and criminal justice. The university has 80 physical campuses primarily in the Mid-Atlantic and Southern regions, but most students take classes online.
The university also offers an executive MBA online through its Jack Welch Management Institute, as well as specialized training programs in partnership with corporate clients through Strayer@Work.
Fourth-quarter income from operations was $21.7 million compared to $22.6 million for the same period last year. Net income for the quarter was $13 million compared to $12.9 million in 2014.
“Net income this quarter was helped by lower interest expense, resulting from the payoff of our term debt in the third quarter,” Jackson said.
For the year, income from operations was $69.7 million compared to $81.7 million in 2014.
“We ended the year with $106.9 million (in) cash and no debt,” Jackson said.
Additionally for the year, Strayer generated $76.9 million in cash from operations compared to $77.6 million in 2014. Cash flow from operations was impacted positively by fewer lease buyouts and non-cash lease adjustments relative to 2014, he said.
“As … mentioned, we generated $77 million in cash from operations during the year. And we think about that pool of cash as a bucket of resources, which essentially belongs to our owners, but we try and invest on behalf of our owners," Silberman said. "And what we did this year was roughly $18 million in investments inside the business."
For this year, Silberman said the company expects to have a healthy cash flow from its operations in 2016.
Strayer’s next earnings announcement is expected on May 4. The company’s 2016 Annual Meeting of Stockholders is scheduled for May 3 at its Herndon, Virginia, headquarters.
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