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Apollo Education Group, Inc. Reports Fourth Quarter Fiscal Year 2015 Results

PHOENIX--(BUSINESS WIRE)--Apollo Education Group, Inc. (NASDAQ: APOL) today reported financial results for the three months and fiscal year ended August 31, 2015, with fourth quarter revenue of $600.3 million and a $0.09 diluted loss per share from continuing operations, or $0.17 earnings per share excluding special items.

“We have also made progress on our diversification strategy through Apollo Global, which is now growing in every country it serves.”

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“Despite the difficult environment, we are executing on the dramatic steps we announced last quarter for the University of Phoenix to become a more focused, higher retaining and less complex institution,” said Greg Cappelli, Chief Executive Officer, Apollo Education Group. “We have also made progress on our diversification strategy through Apollo Global, which is now growing in every country it serves.”

Fourth Quarter 2015 Results of Operations

Apollo Education Group (the “Company”) reported net revenue for the fourth quarter 2015 of $600.3 million, compared to $696.1 million for the fourth quarter 2014. Fourth quarter 2015 University of Phoenix New Degreed Enrollment was 26,500 and Degreed Enrollment was 190,700, compared to New Degreed Enrollment of 38,600 and Degreed Enrollment of 233,500 for the prior year fourth quarter. Operating loss for the fourth quarter 2015 was $5.0 million, compared to operating income of $43.5 million for the fourth quarter 2014. Loss from continuing operations attributable to Apollo Education Group for the fourth quarter 2015 was $10.2 million, or $0.09 per share, compared to income of $33.0 million, or $0.30 per share, for the prior year fourth quarter.

Excluding special items, operating income was $25.7 million for the fourth quarter 2015, compared to $58.2 million for the fourth quarter 2014, and income from continuing operations attributable to Apollo Education Group for the fourth quarter 2015 was $18.7 million, or $0.17 per share, compared to $38.1 million, or $0.34 per share, for the fourth quarter 2014. Adjusted Operating Income was $55.3 million for the fourth quarter 2015 compared to $94.1 million for the fourth quarter 2014. (Special items and Adjusted Operating Income for the respective periods are included in the reconciliation of GAAP to non-GAAP financial information tables of this press release.)

Fiscal Year 2015 Results of Operations

Net revenue for fiscal year 2015 totaled $2.6 billion, compared to $3.0 billion in fiscal year 2014. In fiscal year 2015, University of Phoenix Average Degreed Enrollment was 214,500, compared to 251,500 for fiscal year 2014. Operating income for fiscal year 2015 was $114.9 million, compared to $355.0 million in the prior year. Income from continuing operations attributable to Apollo Education Group for fiscal year 2015 was $52.9 million, or $0.49 per share, compared to $225.9 million, or $2.01 per share, for fiscal year 2014.

Excluding special items, operating income was $203.0 million for fiscal year 2015, compared to $462.9 million for fiscal year 2014. Income from continuing operations attributable to Apollo Education Group for fiscal year 2015 was $120.5 million, or $1.10 per share, compared to $287.3 million, or $2.55 per share, for fiscal year 2014. Adjusted Operating Income was $328.3 million for fiscal year 2015 compared to $601.7 million for fiscal year 2014. (Special items and Adjusted Operating Income for the respective periods are included in the reconciliation of GAAP to non-GAAP financial information tables of this press release.)

Balance Sheet and Cash Flow

As of August 31, 2015, the Company’s unrestricted cash and cash equivalents and short-term marketable securities totaled $698.4 million, compared to $1.4 billion as of August 31, 2014. The decrease was primarily attributable to $608.9 million of net payments on borrowings, $98.0 million for capital expenditures, $51.5 million for the purchase of noncontrolling interests, $44.7 million of share repurchases (which includes $6.6 million of share repurchases for tax withholding requirements on share-based awards), $34.5 million for contingent consideration, and $31.7 million for acquisitions. These items were partially offset by cash provided by operations.

Total debt outstanding (including short-term borrowings and the current portion of long-term debt) was $45.6 million as of August 31, 2015.

Business Outlook

The Company offers the following outlook for fiscal year 2016 based on the business trends observed during the fourth quarter of fiscal year 2015, as well as management’s current expectations of future trends.

  • Net revenue of $2.18 billion to $2.23 billion; and
  • Operating income of $115 to $140 million, excluding the impact of special items.

Conference Call Information

The Company will hold a conference call to discuss these earnings results at 8:30 a.m. (ET), 5:30 a.m. (PT), today, Thursday, October 22, 2015.

Dial-In Numbers:
877-292-6888 (Domestic)
973-200-3381 (International)
Conference ID: 44015514

A live webcast of this event may be accessed by visiting the Company’s website at www.apollo.edu&index=1&md5=560b4b4d29e93cca428658a81ec1d809">www.apollo.edu. A webcast replay will be available approximately one hour following the conclusion of the call at the same link.

A telephone replay will be available approximately two hours following the conclusion of the call until October 27, 2015.

Dial-In Numbers:
855-859-2056 (Domestic)
404-537-3406 (International)
Conference ID: 44015514

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, professional development and other nondegree educational programs and services, online and on-campus principally to working learners. Its educational programs and services are offered throughout the United States and in Europe, Australia, Latin America, Africa and Asia, as well as online throughout the world. 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&index=2&md5=70f87df14359f253368d11f560862883">www.apollo.edu.

Apollo Education Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended
August 31,

Year Ended
August 31,

(In thousands, except per share data)

2015 2014 2015 2014
Net revenue $ 600,291 $ 696,074 $ 2,566,277 $ 2,996,865
Costs and expenses:
Instructional and student advisory 300,187 315,198 1,207,535 1,283,194
Marketing 118,639 144,594 487,759 545,596
Admissions advisory 41,849 56,121 209,768 215,196
General and administrative 67,447 70,236 273,662 286,206
Depreciation and amortization 29,598 35,862 125,303 138,810
Provision for uncollectible accounts receivable 16,833 15,822 59,205 53,819
Restructuring and impairment charges 29,078 23,267 81,800 85,343
Acquisition and other related costs (credit), net 1,695 (9,336 ) 6,201 19,837
Litigation charges 775 100 13,900

Total costs and expenses

605,326 652,539 2,451,333 2,641,901

Operating (loss) income

(5,035 ) 43,535 114,944 354,964
Interest income 959 610 3,050 2,230
Interest expense (1,479 ) (1,930 ) (6,595 ) (7,914 )
Other loss, net (1,276 ) (1,179 ) (5,756 ) (560 )

(Loss) income from continuing operations before income taxes

(6,831 ) 41,036 105,643 348,720
Provision for income taxes (4,366 ) (9,254 ) (58,163 ) (127,290 )
(Loss) income from continuing operations (11,197 ) 31,782 47,480 221,430
Loss from discontinued operations, net of tax (8,279 ) (3,212 ) (23,185 ) (16,632 )

Net (loss) income

(19,476 ) 28,570 24,295 204,798

Net loss attributable to noncontrolling interests

992 1,213 5,460 4,506

Net (loss) income attributable to Apollo

$ (18,484 ) $ 29,783 $ 29,755 $ 209,304
Earnings (loss) per share -...

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