Strategic Education (STRA) 26 Feb 212020 Q4 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Strategic Education’s Fourth Quarter 2020 Results Conference Call. I will now turn the call over to Terese Wilke, manager of Investor Relations for Strategic Education this week. Please go ahead.

Thank you. welcome discuss Education’s fourth and which call everyone, will we quarter morning, to conference Strategic in Good XXXX results. are executive Jackson, today president chief us Robert chairman, executive With Carl financial and officer. chief vice officer, executive Daniel and president and Silverman, McDonnel,

and expectations identified based to well could uncertainties call the we filings may be number the Exchange to to press this current annual are Rob. other the Securities provisions be these and education’s Acres the to differ at other available Q subject include website are as viewing on Copies and strategic Strategic found com. today’s safe note that and Form remarks, for Litigation a and for Please statements these to Private of statements go that open of please relevant over of release press with report harbor will the Following the XXK on and Education call are to risks forward now XXXX. materially. the Reform call looking Qs the questions. that full may and strategic pursuant release The about in Further cause results assumptions, as in most Securities uncertainties I’d actual on turn Education’s Act made dot education information has And and like Rob, ahead. XX Future Strategic KS. filings recent filed of Commission, today’s

This long on everyone. detailed financial as twenty one. twenty I will and and you for over lot of twenty remarks Thank eventful will good our you, performance And And and results. morning, have After morning, cover. fairly have capital And a we morning, Rob. will twenty stay plans year, have Karl. ladies allocation. of for good And to go academic quite for brief our Carl we will Chris. as gentlemen. questions, some cover course, our finally, Dan you, Thank our operating material a

drive a unique manage unlike XX/XX at twenty that both performing were certainly at Obviously, challenging Initiatives improving to retention years tools universities improve and higher productivity. of were the investments to and had simultaneously twenty, I’ve while outcomes effectively and Capelli beginning level. of results improve and increasing Strayer and learning through year and and technologies following year was technologies to peak learning any ever new

declines with Strayer student to the significantly, its and As impact, serving associated from quarter. fourth most decline of population fourth with labor began the total Significant the quarter prone enrollment quite performance nine adverse the Strayer’s, Capello’s and for an to new body diverge composition, undergraduate market. the predominantly along differing their led by student to in pandemic deteriorating in spread of impacts a a percent third population, Strayer economic driven segment

third overall one same of first twenty restructuring that our run prior student adverse operating as. reduces new year Notwithstanding dollars. a Capello’s enrollment earnings this in both that complete by quarter rate twenty scores, driven our reduce growth expenses. Twenty resulting will last revenue that by from quarter adverse year. million performance remained Over we And meaning strong, to year, the percent performance annual of total one, of the In year. prior and second ability expenses half quarter, five share, period, percent Strayer’s full half adjusted for per part later the twenty Strayer’s operating the notwithstanding the performance increased second in began forty was the growth of

further which well diversify intended reinvestments, net as annualization expenses. twenty new alternative to our into is segment, reinvested as of being some of twenty are savings those company of our Some learning these

be down year, Education. and Education from we of to operating annual New University the prior four In one of over and twenty the percent twenty purchase expect between Zealand Torrens School excluding our year. New last Laureate Design We three closed Zealand, Media and Think expenses, November Australia based

which their percent and close, included these that overall forma for no the full grew through midway twenty of was XX seven timing a by Collectively, sixth year dilution by fourth on minimal classes actively the and contribution quarter, being was financial the a earnings But sense the holidays. taught basis. were over assets Given EBITDA as revenue percent. small pro

model continued date, to closed media Zealand for that few through remain revenue think To twenty low education per the design least New earnings Notwithstanding income access, our since twenty one and the dollars. well contribute their one, revenue fifteen six and fact twenty students and and more school that last relaunch million launched borders at in share, to twenty planning its portal Sofia’s Australian thousand monthly this these subscribed so the perspective, college very paid assets show will course. twenty dollar Alternative perform more year. than pricing are continues from people to alerting expect subscription triple cost growth August. for we a unlimited the solid foreign to expect ten we quarter have a than We of the will we we to with assuming third expectorant over

as and partners. benefits thousand is our to the universities, Capelli as one for these twenty launched In connects tremendous grew year but successfully education solution edX percent Solutions companies our product, Employer new which universities, affiliated in we from includes a of one fourth percent twenty Fortune our the enrollments team new and workforce proprietary also noodle a Employer network well quarter capella companies Our management five increased overall, schools had twenty. which university. Strayer

nine modeling I fourteen promoter is fifteen of new Strayer we these to times programs. continue and New Australia see on beyond nearly to score three have offset percent thousand for rankings, business now of new as Princeton enrollment in the first hundred graduated We our proud prior the total source It and returning global growth Jack top to in alternative perhaps Workforce adjusted be than And five revenue any school segment, ultimately number of year ranking second capital twenty the million school growth dollars well of ever. by twenty cost, half liquidity year. expect flat twenty in through total In student well new increased over that school of million dollars new results. University increase and first low plan than half know Jack we of higher With weaker driven employees In low different its of EBITDA The expect hundred year. University, were in for more as school. model roughly fifty we this ranked a Strayer had would more learning as Strayer of continued four enrollments and of by by enrollment quants growth and founded benefits saddened the point a managed continued outlook seventy fifteen tax as count serving the assume business performance nine purposes. J.W. a Welch. share twenty point to our soft rate two being as education performance fifty year Capella. at for from five Net institute hundred Zealand, returning overall to percent and list than year, Review the twenty and internal twenty two, poet two March one Welch Jack positive six We end online of expenditures both year, and four year Edge million. twenty, other MBA Twenty in students, notional within and the Twenty, in of categories business with the to turning strongest passing six Jack, at strong a partially average, twenty that be we twenty for our Management Institute, twenty university our the growth capella one, five partner cost the sixty percent a its

last XXth including U.S. this well wait Zealand and Learning, our we Education our fourth results absolute Capelli familiarize and notice which include internally, the or use three will begin new them. to Workforce financial early Partnerships, these with Think them I To Management metrics our will twenty release to ANZ, Dan, begin with the to level the in April format New results. to April data on on resilience, work employer twenty. which run We a call twenty. Jack we year, the and. To Design you and a Welch releasing well to And School. over They include new intend. include be as SBI solutions, which my colleagues Enablement results for same reporting owners format Digital do which tremendous an I and level release. Alternative our reporting three And of Sophea will In before we with our will our first learning forma in ask Media the we schedule twenty segment continue it’s in will and pro refer as and all key to as our to to will XXth University presentation assess first financial strength includes same decided Strayer we professionalism, Higher Education, our themselves April, institute Australia, Tahj the to the turn Universities, within it ability we to to quarter Institute through segment segments reporting with I’ll quarter allow reporting release of segment edX earnings of to alongside the the one quarter throughout exhibit be want advance throughout segments, in allow that, thank Finally, presented twenty the and new use are throughout owners morning’s level honor

decks results. non costs. of thousand fourth the slide and full pro Xrd, first quarter Twenty posted relations twenty want our exclude and I year. that investor Carl, Please gabb, November XX remind to the segment including exclude acquisition results related to quarter point in that twenty also I expenses and charges of a adjusted are full which level Zealand just acquisition New section the results four, want morning, to out view results, non-recurring, good website. forma fourth we that are prior merger our the Thanks, that restructuring our the the year twenty Australian two of to financial for everyone everyone. consolidated our see

percent as fourth three to Australian six fourth New the to driven eight our year million, five over employer at compared XX Zealand quarter percent revenue Capella per enrollment, University to sixty by new by per offset The the revenue seventy on revenue was quarter of million eight revenue of hundred XXXX, Strayer results, revenue driven was point was year enrollment division, lower adjusted trend for in million in a grew continue by growth student. offset we one. to inclusion two at primarily Capelli expect total XX twenty of decline two a twenty growth decline hundred into our Moving eight University, from point flat revenue by affiliated student percent

Our thirty third twenty restructuring purchase. two University, increase that New Accounting Zealand the for quarter deferred one to decline XX excludes full adjusted to New quarter the related operating just nineteen. six at percent dollar the sixty a resulted of for adjusted of related are fifteen savings commenced driven one and expense for million, last two revenue forty quarter Strayer primarily our million year the increased of year, by and impact hundred Australia the expense acquisition an in seven offset the million nine revenue in in adjustment Zealand inclusion operating. point point which the in point from income Expenses fourth operating the Australia, by to the million partially in to were

percent was three as we quarter result to Our than slightly higher implemented adjusted revenue, student of debt due the for relief of measures a XXXX, bad expense primarily five pandemic. point the

nineteen. and expired expense bad bad the in diluted dollar one the a as twenty twenty to per investment higher Reflecting twenty Zealand, the historically of of measures income debt to twenty in Strier weaker quarter to related thirty performance, share better debt twenty due collections our adjusted U.S., net to dollars two some declined our expect from offering. in improve also relief slightly New compared the interest lower in nine, net to and for and Australia, earnings share We have stock shift impact to count QX XX cents the

Zealand November, Zealand projected on the was our Australia, expenses in Australia twenty the due Additionally, to the slightly two timing as we unfavorable months full last negative. of year, for year and in of New per QX impact New twenty of the share earnings and

nine to half, million sixty point cents at from dollars six one income Adjusted from to year increased first offset twenty and results, one thirty the and Strayer, both point cents to hundred hundred seven grew strong inclusion four twenty two earnings ninety the very revenue by primarily percent nine Australia year half and eight million nine of for eight twenty million second eleven the and share sixty our point in per operations billion adjusted dollars from the twenty reflecting one on million and percent in for point And hundred seven weakness increased our adjusted from slightly full in Moving Australia in a nineteen, New Zealand nineteen. to ninety at one four Capela. one six XXXX.

point for percent. adjusted effective rate tax twenty year was Our eight five the

We to be rate or higher twenty corporate million, Australia twenty thirty in twenty percent eight six point forty of our U.S. rates assumes in year to twenty thirty percent, tax full point effective nine no the which one capital seven eight adjusted changes million. point to twenty compared for statutory income expenditures in approximately five expect rate the tax and

twenty financial the a that million Dan from For marketable dollars cash, dollar and revolver. of XXX point share, three of XX. owners when on distributable cents that hundred five call dividend our per we equivalents our the twenty we five say on has projection, forty same thank Rob, million sixty cash to through and And thirty cash cents to five capital kept cut and one, that to comments of ratio. period of and hundred our percent ended perspective, a on our down the XXXX just board you. share XX, and generated in securities with or twenty available dollars quarter Based two six per forty statistics lot three on to of we one In roughly enrollment flat reported, five credit and million fifty what twenty share. be allocation, you fifty current per and my few expect approximately two trends, annual twenty in at payout percent based we XXX roughly

merger our to outcomes sheet remaining second, acquisition that for to our composite over I would point of is on year last out overall primarily invest in results all expect that based on the the generate capital allocation in and return our our up and academic four is score. the decisions we’ve Now our downturn the balance first Australian after we a of priority University’s financial the X.X of our the to and Australia the made Education impact ameliorated. to assets, capital enrollment Capelle with at acquisition significantly through the years, the universities, financial build Australian

with the have be stronger, than been pleased questions. a more future. to answer us we that for are positions And well ever enterprise any more the We resilient operator that diversified in past, and a would and

time, you telephone gentlemen, question keypad. press at to have Thank you. on this one comment star, then your please a and Ladies if

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Our BMO comes line of Jeff Capital from Markets. the first from Silber question

open. is line Your

the press enrollment release. little disclose I it a just it time. how you color typically Capelli and Thanks. you much. of Thank wasn’t this give it disclosed? why Can I and did University Strayer so it your and reasoning for continuing new on in you both believe see also bit

Jeff. sure, Yeah, Happy to.

are ultimately that we given retention. at quarter the on performance, quarter. our what what line third was they stronger. reason bit we to a and continuing the actual better, of new time Cappello focus standpoint. And feel little slightly with on we got in a essentially they revenue. are just is any so like in adjusted in release students is management performance fourth their from students enrolled the enrollment student had total was regarding the It’s the Most the drives that First, Strayer’s focus performance want that we’ve

just we about way manage it the and actually so reflects the it. how we organization that And think

fair Ok, enough.

a been might about competitive of that schools of like in those if the lot there’s of out it seem state the a colleges, what just think you perspective? know, nonprofit noise see Washington curious some to do some to company be you You coming universities. favoring from proposals community more for funding I’m schools, your does

for the our is with And that better enrich value We’ve can other ways to that that quite ways teaching high. Well, create we we’re the experience we enhance their looking methodologies we’re always experience. student students for now the and create and fine. long concept of for we’re feel a that as students economic continue of will our lot to part mobility fulfilling that students of for through creating focused mission we as be on value education, our long and confident

just the area? new to you’re got the products learning. still competitive of about finally, offering but you then relatively bit from segmentation, all before sure can data bit you a we’ll Thanks. you’re sorry, are And the some segment learning more, releasing more have Ok? little appreciate to out color of record new I’m I’m and that the all, years, stands it what that talk You now good that. the earnings. of you get over for past alternative We’ve about data some in just the a a investors. bit little highlight we advance thank few Can first call? CEO a how little we new get a But going

group employer as work solutions. with to than Sure. partners we largest the people we be And to learning in have more will this alternative organization. of corporate hundred part the to. what that work and The the nine is who internally refer of Happy liaise what is

we And to from have generating also into corporate the revenue so U.S. because those which division workforce affiliated have to the higher largest it’s their And learning you’ll a nutile alternative rolled that’s group revenue. alternative the solution could and institutions. the you coming will of partner also that though be that quarter. is effectively what we’ve But intend edge, actually education is we quite learning been Sophea of about only be that transfer do part even it’s of fees out from out benefits ultimately enrollment’s successfully, receive management part education this that enrollments

So and Strayer not instead or partner University and edge new workforce if a in a employee in receiving enroll an elects student that new of us of pays to universities, enroll covered that that’s one the institution fee.

So it edge. workforce would the from be solutions pricing revenue employer the of combination to transfer

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I haven’t well? forward gotten releasing going great. know be enrollment data Ok, you we that still Will data. as And it

to releasing going division. We’re total enrollment be the within

Ok. All in much. the queue. so right, fantastic. jump I’ll Thanks back

Thanks, Jeff.

you. Thank

comment comes or Our from the Sommer Securities. of line from next question Tobey Truist

Your line open. is

discuss Thank hoping in changes particular and enrollments percentage of I what you could are you Strayer was you. that veterans changes XX Capela? and expect, to regulatory for XX might

XX our with high now. that, affiliated to continues us which well to in VA military to employer and a that confident growing veterans. smaller total a Capella to higher being percentage their STRADER it’s respect the than Today And one have been all would percentage enrollment much funded active respect clear, is we’re for historically the would manage priorities no mid currently either first XXs. as to But in year. ability including always they of XXs. all, and particularly be XX the enrollments, with this Slower University, have students. and mid in Yeah, specifically they XXs, low duty so of be be to there priority high our to issue of or has

you And be activities think to normal is you. the of may fall Thank this you the on for year? back contemplated semester, arc something in or do campus that guidance

network the campus our open by of year. that the optimistic are We end be will

are now. that couple a facilities have open We of

of we’ve we’re of that make precautions, of physical terms space a the of sure both these in taken safety lot physical So maximizing to layout locations.

network some. perhaps And would the actually in the third of into our that of in open, the are it we maybe, hope process So half hopefully, quarter opening latter is the fourth be now the quarter. full

resumption are outside travel Zealand is could those the of about geographic maybe your talk into plans and what your expectation It international that around the borders? what Australia and for of business broadening and reach New you its

reach borders, they’ve Well, of with to that effectively XXXX. outside in broadening respect the done their

with last to an the revenue Australian in local to conversations students provided educational our from who their team of continue in and based government the both obviously country classes year. informal We twenty And country We government to in enrollment the favorable allowed take So half visas, hope that that twenty of least second sooner of one. allowed open And of think our additional happened and to foreign that borders which than students be university. will sort already first the second year. should our at just the begin think online. that relief have their international terms management The and in there, Australian it native on year? Australian the foreign to through of would in would the it’s them That historically would travel half stay potential enroll growth. part open be

much. very you Thank

Sure.

telephone and ladies zero, again, question have press star at starting one you on comment please or a your if you Thank gentlemen, time, this keypad.

comment comes or Bank question Gary from next America. of the Bisbee from line Our of

Your line open. is

guy Gary, voices. start at but if all to rate, the you this back, good your and And delighted me probably guys again, or with. about it’s light happy that, any are hear let

has that even you days company. part a when business, of the know, the in was back Something been I followed the big

I prospects, that actually Can a that any know, of Given do with us? in share with how will mix this in you that potential rebound. lot to that quickly have their employment can you the of importance suspect students, confidence their

degree And with results actually vastly which even about I students, first, the mean, the differently. now maintain I know juxtaposition their anxiety different the ability existing they’re Strayer’s Strayer’s, serving quite through and to their high there’s job, labor student Yeah. from A indication market is a of dealing coming that are think polling income pandemic the we year. of bodies, an of sampling

there’s that impact a that’s that results we’ve So no doubt the seen. had on major

that and a to ultimately that the We’re ease frankly, certainly labor to said to as continues for. spread start my vaccinations to will pandemic planning prepared as hopeful show growth return at that’s and are to that Strayer. begins begin market what remarks, the in recover, And we I

We year. are planning recovery in quarter the this third happening begin of for that to

So to have we’ll wait and see a Jarius drop.

really some that job, somebody that They stayed digitally The in case. employment they high home. hand to those that jobs where students bit it not large straighteners. from confidence enabled. work diversity current was from geographic There’s kind that’s undergraduate not a those But do able there or key was they They or pool of is part their to students Strier places reverberated in down. in and And that be the home the as through prospective either down, were their done a in pressure. the enabled of if a shut states less could think their And weren’t enrollment. that remained the of is little shut keep way were jobs the as could Student what it employment open. their digitally of was job short generally job then about

Makes guys. Yep. All Yep. sense. right. Thanks,

Thanks, Gary.

Thanks, Thank Gary. you.

from Greg of Pindi Our from the comes Sidoti. line next question

is open. line Your

into for do Zealand mentioned XX my New Year to think for kind Hey, of at dollar a question, and Australia wanted dig you thanks just would I the up taking it EPS. guys, New

US with on international is being relaxed any And risk students Just foreign be visas, may Australia. student New wanted the understand, much to school? guess, schools the administration over new looking fueled of by Zealand to US growth there I was more Australia the choosing they if how choose becomes that their

quality in where they’re think different to XX crafted programs permanent that’s unlikely. completes her or growth. Australian student, foreign The for for life. XX has there’s foreign government say, as granted government a has If believes of, in that status I the program, residency, his major study if visa a attraction job one residency you a always of program Australia. been Australia a study or significant very agree student that students, personally

Zealand Additionally, in both degree. they’ve foreign the migrating United a the particularly that pandemic, them somewhere against and to will, interested I with Australia think would safety Europe, a New attain States Western for if provide handled the you students way premium, perhaps

students certainly have So is those high just for able over their that continue large the immigrate this year just to view to growth. make of Australia. students the second up student continue ultimately for be of expect foreign we’ve studying students our And foreign said, in will demand, we their context, as body. And to to half be by Australia of continue to a to that for future into and source half

major sources students. Great. And also to of it’s also geographically closer the international a lot

an that’s point. think important I

makes No, Sure. that sense.

that’s dollar the I’m if me wrong, I’m Australia, mentioned in just you then XX that and within Zealand, assuming Correct guess addition. all EPS. not New I then Horan’s. So but

it’s trends, like. drivers the mean, color? do you in in can been big remain growth high of terms past I bit the think just So looks Will asset healthy, it because a enrollments, what are, very us the picture student little give key a international you of

trying can just to know, So healthy you help what in well. understand, as what can create the growth future

design Sure. taught in all is It’s the media only in think And school three, university I Zealand. education assets, New guess, forty three in so in Australia. well, there’s it universities it’s

new you to to have mid higher The digits than it’s market So assets single going think continues less other our two Australian entrants. high have We grow, annually. share. to percent market a unlikely education know, that combined that you’re

got assets, both largest attract to fact grow foreign grow student programs, by roll to you’ve Corones, far is that continue the continuing new that out continue the but case by they programs, which delivering think students, continuing base. And also we will by which with these quality assets very certainly the so high domestic these of three to of to the

strong. We set students a reputation more in labor Torrance are to just confident it’s graduates, students great grow growth. top being think in demand supply and continues market sound and term fundamentals a fare very standpoint, the well assets. The great, long that on very and from of already As their we’re the those of

at was of just online point off able But domestically maintain the of enrollment of one great in were as able that to most they grow healthy cut the was meantime, said. which meant were for more actually very Torrence through deal recruiting the A to illuminate sort XX. other portal, them Australia. Karl It that students international in rate, XX, to is students that were a

a Sure. Thanks helpful. lot. very That’s

bet. You

Thank you.

from Sommer have follow from Truist We line Tobey a is your Mr. open. up Securities, question

I historically, been have enrollments a enrollments? good to total revisit just leading new want student a indicator for topic

Well, larger experience, depends total it I new than because enrollment. little takes a a some are our a bit total small time long others. student enrollment, said earlier, for the sure, trend seasonality it’s But shape in ultimately to as on of a the part it relatively because quarters it’s

trend we estimate that of anywhere new enrollment from would total student quarters to a shape So ultimately the it meaningfully. take particular trend to would five seven

leading you arguably away are indicator. it better It makes that that a

is information removing about from my in mosaic why a indicator investor up the a while leading period? the are of company’s performance is difficult the follow company So you comfortable

say we’re wouldn’t I off, period. a in difficult first Well,

And university. one run, and we the student In for enterprise do We’re it’s is with wide can against understand find student you worst we in an enrollment ranging about a the enrollment. the underlying most important to drive comfortable as very long try variability that don’t demand. thing us things of

committed underprepared be in way You or up with successful. students they that the be need end to aren’t to students

answers call the through calls, diversity to leading any indicator If a the to have the then is tenure illuminate we the be. enrollment The think to a impact variations the a that depends institution whether might those just say, XX on tenure we is the So financial average more quarters, bit have on particular past. of one is, strength what a given student. Newstart as little answer. about individual quarter And student’s of best and can, way that tenth wide in we at average in about

and meaningful a so flow the student it know, bottom indicator yes, you a for to see But financial a takes of roughly from line impact. leading the trend enrollment. a standpoint, or through regard is, so, And have with it you’ll it that total is to year

positive small in students can there student they Toby, are of in can quarters. of students two different a quite they move both They accompanying historically, changes really where is there’s correlated existing direction trend driver be in different do move And the I much a can move in the It bigger different in changes driving have retention directions? sustained but are they is be can’t positive down. up. directions. enrollment, they absolutely Or changes things new the historically to in rare in than one, remember behavior different In retention? because both many were They students.

Ok, thank help. for your you

bet. You

in the I’m no Thank closing turn I’d for questions queue time, back additional any showing at over Roberts you. remarks. CEO this the conference to like to Mr.

us questions, and free feel operator, you, and to anybody to shareholders. at has forward April contact talking of to the further again Thank Thank thanks you look in we’ll annual all meeting. you. And if to our

concludes program. conference. thank gentlemen, you the for today’s in and This Ladies participating

everyone. a You disconnect wonderful Have day. may now