PITTSBURGH, April 28, 2003 (PRIMEZONE) -- Education Management Corporation (Nasdaq:EDMC) today reported its financial results for the third quarter ended March 31, 2003. For the quarter, net revenues increased 19.2% to $173.7 million and net income grew 24.0% to $18.5 million, or 51 cents per diluted share.
Robert Knutson, EDMC's Chairman and Chief Executive Officer, commented, "Our financial results this quarter continued to benefit from strong interest in our program offerings. Leading indicators give us reason to expect continued good operating performance in the fourth quarter and in our upcoming fiscal year."
Financial highlights:
-- Revenues for the three months ended March 31, 2003 increased 19.2% to $173.7 million, compared to $145.7 million for the same period a year ago. Revenue growth in the third quarter resulted from a 15.4% increase in total student enrollment and an approximate 7% increase in average tuition rates. Total enrollment at the start of the third quarter of fiscal 2003 was 43,461 students as compared to 37,658 students for the same period last year.
-- Third quarter income before interest and taxes (operating income) rose 29.2% to $30.2 million from $23.4 million for the same period a year ago. The consolidated operating margin improved 140 basis points to 17.4%, compared to 16.0% in the prior year period.
-- Net income for the quarter grew 24.0% to $18.5 million, or $0.51 per diluted share, compared to $14.9 million, or $0.41 per diluted share, in the third quarter last year.
-- At March 31, 2003, the Company had cash and cash equivalents of $86.1 million. Cash flow from operations for the nine-month period ending March 31, 2003 increased approximately 31.8% to $110.4 million, compared to $83.7 million in the same period last fiscal year.
-- Capital expenditures for the quarterly and year-to-date periods were approximately $13.9 million and $69.5 million, respectively. Construction of the new Argosy University/Twin Cities facility in Minnesota is on schedule and that facility is expected to open this fall. The Company projects approximately $80 million in total capital expenditures for fiscal year 2003.
-- Tampa, Florida, has been identified as the location for a startup in fiscal year 2004 and will become our 30th Art Institute. Argosy University/Tampa will co-locate in the Art Institute facility. Academic programs will be offered at the undergraduate and graduate levels in the creative and applied arts, behavioral sciences, education and business.
Student Enrollment
At the start of the current spring quarter (fourth quarter of fiscal 2003), total enrollment at EDMC's schools was 41,767, a 16.7% increase from the same time last year. The Art Institutes' enrollment increased 15.3% to 34,177 from 29,642 as of the comparable period last year. Argosy's enrollment at the beginning of the current fiscal quarter was 7,590, a 23.5% increase as compared to 6,148 students in the prior year.
2003 2002 Change
Spring Spring %
------ ------ ------
Total enrollment
The Art Institutes 34,177 29,642 15.3%
Argosy Education Group 7,590 6,148 23.5%
------ ------- ------
Total enrollment 41,767 35,790 16.7%
Same-school enrollment
(schools owned for 2 years or more)
The Art Institutes 31,600 28,245 11.9%
Argosy Education Group 7,523 6,120 22.9%
------ ------- ------
Total same-school enrollment 39,123 34,365 13.8%
Students taking 100% of
their coursework online 729 267 173.0%
Total online enrollment 2,972 1,021 191.1%
The Company's quarterly revenues and income fluctuate with student enrollment patterns. Student enrollment has typically peaked in the fall (fiscal year second quarter), when the largest number of recent high school and college graduates traditionally begins a new post-secondary education program. The Company's quarterly costs and expenses, however, do not fluctuate as significantly as revenues.
Business Outlook
For the fiscal year ending June 30, 2003, the Company estimates revenue growth of 27% and diluted EPS of approximately $1.54. Financial guidance for fiscal year 2004 will be provided in EDMC's earnings release for the fiscal fourth quarter ending June 30, 2003.
Conference Call with Management
Education Management will host a conference call to discuss its third fiscal quarter 2003 earnings tomorrow at 10:30 a.m. (Eastern Time). Those wishing to participate in this call should dial 303-262-2130 approximately 10 minutes prior to the start of the call. A listen-only audio of the conference call will also be broadcast live over the Internet at www.edmc.com.
Education Management Corporation (www.edmc.com) is among the largest providers of private post-secondary education in North America, based on student enrollment and revenue, with approximately 44,000 students as of fall 2002 at 43 primary campus locations in 26 major cities. EDMC's education institutions offer a broad range of academic programs concentrated in the creative and applied arts, behavioral sciences, education and business fields, culminating in the award of associate's through doctoral degrees. EDMC has provided career-oriented education for 40 years, and its education institutions have more than 150,000 alumni.
This press release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company's Securities and Exchange Commission filings. Past results of EDMC are not necessarily indicative of its future results. EDMC does not undertake any obligation to update any forward-looking statements.
EDUCATION MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share amounts)
For the three months For the nine months
ended March 31, ended March 31,
2002 2003 2002 2003
------- ------- ------- -------
Net revenues $145,710 $173,691 $367,074 $476,970
Costs and expenses:
Educational services 91,251 108,446 232,709 303,329
General and administrative 29,703 33,840 73,106 93,322
Amortization of
intangible assets 1,378 1,191 2,217 3,251
------- ------- ------- -------
122,332 143,477 308,032 399,902
------- ------- ------- -------
Income before interest
and taxes 23,378 30,214 59,042 77,068
Interest expense, net 278 339 1,305 981
------- ------- ------- -------
Income before income taxes 23,100 29,875 57,737 76,087
Provision for income taxes 8,167 11,354 21,537 28,917
------- ------- ------- -------
Net income $14,933 $18,521 $36,200 $47,170
======= ======= ======= =======
Diluted earnings per share $ .41 $ .51 $ 1.07 $ 1.29
Weighted average number
of diluted shares
outstanding (000's): 36,361 36,542 33,796 36,463
Other selected data (unaudited):
For the nine months ended
March 31,
2002 2003
---------- ----------
Cash flows from operations $ 83,746 $ 110,375
Capital expenditures 37,059 69,545
Depreciation and amortization 24,361 30,443
Selected Consolidated Balance Sheet Data (unaudited):
As of March 31,
2002 2003
---------- ----------
Cash and cash equivalents $ 60,116 86,061
Receivables, net 36,244 34,877
Current assets 119,429 144,273
Total assets 458,828 553,709
Current liabilities 116,226 144,500
Long-term debt
(including current portion) 3,696 3,521
Shareholders' investment 332,832 403,357