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Apollo Education Group, Inc News Release

The following excerpt is from the company's SEC filing.

Apollo Education Group, Inc. Reports Second Quarter Fiscal Year 2016 Results

Phoenix,

April 6, 2016

- Apollo Education Group, Inc. (NASDAQ: APOL) (“Apollo” or the “Company”) today reported financial results for the three and six months ended February 29, 2016, with second quarter revenue of

$465.3 million

and a

diluted loss per share from continuing operations, or a

loss per share excluding special items.

“While we are facing significant industry and regulatory headwinds that have resulted in declining enrollment at University of Phoenix, we remain foc used and committed to a transformational plan that will help the university improve student outcomes and compete more effectively over a long-term period,” said Greg Cappelli, Chief Executive Officer of Apollo Education Group. “We continue to expand internationally through Apollo Global, which again generated double-digit revenue growth on a constant currency basis. We also continue to improve operating efficiency throughout the entire organization.”

Second Quarter 2016 Results of Operations

Apollo Education Group reported net revenue for the second quarter 2016 of

compared to

$575.1 million

for the second quarter 2015. Second quarter 2016 University of Phoenix New Degreed Enrollment was

17,200

and Degreed Enrollment was

162,400

, compared to New Degreed Enrollment of

28,300

and Degreed Enrollment of

213,800

for the prior year second quarter. Operating loss for the second quarter 2016 was

$80.8 million

, compared to operating loss of

$37.5 million

for the second quarter 2015. Loss from continuing operations attributable to Apollo Education Group for the second quarter 2016 was

$60.4 million

per share, compared to loss of

$23.2 million

per share, for the prior year second quarter.

Excluding special items, loss from continuing operations attributable to Apollo Education Group for the second quarter 2016 was

$33.2 million

$7.9 million

per share, for the second quarter 2015. Adjusted EBITDA was negative

$12.9 million

for the second quarter 2016 compared to

$17.9 million

for the second quarter 2015. (Special items and Adjusted EBITDA for the respective periods are included in the reconciliation of GAAP to non-GAAP financial information tables of this press release.)

First Six Months of 2016 Results of Operations

Net revenue for the first six months of fiscal year 2016 totaled

$1.1 billion

$1.3 billion

in the first six months of fiscal year 2015. In the first six months of 2016, University of Phoenix Average Degreed Enrollment was

176,700

224,900

for the prior year period. Operating loss for the first six months of 2016 was

$126.1 million

compared to operating income of

$26.7 million

in the prior year period. Loss from continuing operations attributable to Apollo Education Group for the first six months of 2016 was

$117.9 million

per share, compared to income of

per share, for the first six months of 2015.

Excluding special items, loss from continuing operations attributable to Apollo Education Group for the first six months of fiscal year 2016 was

$0.1 million

$42.0 million

per share, for the first six months of 2015. Adjusted EBITDA was

$70.2 million

for the first six months of 2016 compared to

$136.3 million

for the first six months of 2015. (Special items and

Balance Sheet and Cash Flow

As of February 29, 2016, the Company’s unrestricted cash and cash equivalents and marketable securities (including current and noncurrent) totaled $675.1 million, compared to $794.2 million as of August 31, 2015. The decrease was primarily attributable to $101.2 million paid to acquire Career Partner GmbH and capital expenditures.

Total debt outstanding (including short-term borrowings and the current portion of long-term debt) was

$62.0 million

as of February 29, 2016.

Business Outlook

The Company continues to experience headwinds causing further reductions to the operating outlook for the year. Domestically, the primary factors include lower New Degreed Enrollment and fewer than expected continuing students at the University of Phoenix. This is in part attributable to the implementation of components of the university’s transformation plan, including the reduction in the frequency of course start dates, which has impacted the timing of student breaks and reenrollment. In addition, we have reduced the number of associate programs, realigned the campus strategy, focused on a new approach to admissions diagnostics, and discontinued the use of any third-party marketing affiliates. Internationally, the strengthening of the U.S. dollar relative to other currencies is negatively impacting reported revenue. While efforts to reduce expenses remain on track, the latest projections for Revenue, Operating Income and Degreed Enrollment are below the outlook provided on the first quarter earnings call. Due to the pending merger transaction and the challenges in accurately forecasting operating results during the implementation of the transformational plan for the University of Phoenix, the Company is withdrawing the prior guidance issued on the first quarter earnings call on January 11, 2016, and is not providing an updated financial outlook at this time.

Conference Call Information

In light of the pending merger announced February 8, 2016, the Company will not be hosting an investor conference call following the issuance of its fiscal year 2016 second quarter earnings press release.

About Apollo Education Group, Inc.

Apollo Education Group, Inc. is one of the world’s largest private education providers, serving students since 1973. Through its subsidiaries, Apollo Education Group offers undergraduate, graduate, certificate and nondegree educational programs and services, online and on-campus, principally to working learners in the U.S. and abroad. For more information about Apollo Education Group, Inc. and its subsidiaries, call (800) 990-APOL or visit the Company’s website at

www.apollo.edu

Apollo Education Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

Six Months Ended

(In thousands, except per share data)

465,348

575,103

1,051,369

1,289,628

Costs and expenses:

Instructional and student advisory

270,640

290,933

561,967

612,507

Marketing

97,796

125,398

191,598

252,281

Admissions advisory

30,120

57,840

64,308

114,925

General and administrative

65,789

69,955

133,234

141,778

Depreciation and amortization

26,754

32,105

54,148

65,736

Provision for uncollectible accounts receivable

12,783

11,969

28,096

29,367

Restructuring and impairment charges

29,389

22,530

127,212

41,278

Merger, acquisition and other related costs

12,893

16,871

Litigation charge

Total costs and expenses

546,164

612,572

1,177,434

1,262,933

Operating (loss) income

(80,816

(37,469

(126,065

26,695

Interest...


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