PHOENIX, Feb. 13,
2024 /PRNewswire/ -- Grand Canyon Education,
Inc. (NASDAQ: LOPE), ("GCE" or the "Company"), is a publicly
traded education services company that currently provides services
to 25 university partners. GCE provides a full array of
support services in the post-secondary education sector and has
developed significant technological solutions, infrastructure and
operational processes to provide superior services in these areas
on a large scale. GCE today announced financial results for
the quarter ended December 31,
2023.
For the three months ended December 31,
2023:
- Service revenue for the three months ended December 31, 2023 was $278.3 million, an increase of $19.6 million, or 7.6%, as compared to service
revenue of $258.7 million for the
three months ended December 31, 2022.
The increase year over year in service revenue was primarily due to
an increase in GCU enrollments to 117,279 at December 31, 2023, an increase of 8.0% over
enrollments at December 31, 2022 and
an increase in revenue per student year over year. The increase in
revenue per student between years is primarily due to the service
revenue impact of the increased room, board and other ancillary
revenues at GCU in the fourth quarter of 2023 as compared to the
prior year period. In addition, service revenue per student for
Accelerated Bachelor of Science in Nursing students at off-campus
classroom and laboratory sites generates a significantly higher
revenue per student than we earn under our agreement with GCU, as
these agreements generally provide us with a higher revenue share
percentage, the partners have higher tuition rates than GCU and the
majority of their students take more credits on average per
semester. The increase in revenue per student in the three months
ended December 31, 2023 was
negatively impacted by the timing of the Fall semester for the
ground traditional campus. The Fall semester started one day
earlier in 2023 than in 2022, which had the effect of shifting
$1.2 million in service revenue from
the fourth quarter of 2023 to the third quarter of 2023 in
comparison to the prior year.
- Partner enrollments totaled 121,250 at December 31, 2023 as compared to 112,955 at
December 31, 2022. University partner
enrollments at our off-campus classroom and laboratory sites were
4,481, a decrease of 3.3% over enrollments at December 31, 2022, which includes 510 and 320 GCU
students at December 31, 2023 and
2022, respectively. We opened six new off-campus classroom and
laboratory sites in the year ended December
31, 2022 and five sites in the year ended December 31, 2023 increasing the total number of
these sites to 40 at December 31,
2023. Enrollments for GCU ground students were 25,209 at
December 31, 2023 up from 24,943 at
December 31, 2022. GCU online
enrollments were 92,070 at December 31,
2023, up from 83,696 at December 31,
2022, an increase of 10.0% between years.
- Operating income for the three months ended December 31, 2023 was $97.8 million, an increase of $7.1 million as compared to $90.7 million for the same period in 2022. The
operating margin for each of the three months ended December 31, 2023 and 2022 was 35.1%. The fourth
quarter operating margin was negatively impacted on a year over
year basis by the timing difference between years in the start of
the Fall semester for GCU's ground traditional campus.
- Income tax expense for the three months ended December 31, 2023 was $20.1 million, a decrease of $0.9 million, or 4.4%, as compared to income tax
expense of $21.0 million for the
three months ended December 31, 2022.
Our effective tax rate was 19.9% during the fourth quarter of 2023
compared to 22.8% during the fourth quarter of 2022. The decrease
in our effective tax rate between periods was primarily driven by
other discrete tax items recorded in the respective periods.
- Net income increased 13.6% to $80.7
million for the fourth quarter of 2023, compared to
$71.0 million for the same period in
2022. As adjusted net income was $82.5
million and $72.7 million for
the fourth quarters of 2023 and 2022, respectively.
- Diluted net income per share was $2.71 and $2.30 for
the fourth quarters of 2023 and 2022, respectively. As adjusted
diluted net income per share was $2.77 and $2.36 for
the fourth quarters of 2023 and 2022, respectively.
- Adjusted EBITDA increased 8.5% to $110.9
million for the fourth quarter of 2023, compared to
$102.2 million for the same period in
2022.
For the year ended December 31,
2023:
- Service revenue for the year ended December 31, 2023 was $960.9 million, an increase of $49.6 million, or 5.4%, as compared to service
revenue of $911.3 million for the
year ended December 31, 2022. The
increase year over year in service revenue was primarily due to an
increase in GCU enrollments to 117,279 at December 31, 2023, an increase of 8.0% over
enrollments at December 31,
2022.
- Operating income for the year ended December 31, 2023 was $249.3 million, an increase of $11.8 million as compared to $237.5 million for the same period in 2022. The
operating margin for the year ended December
31, 2023 was 25.9%, compared to 26.1% for the same period in
2022.
- Income tax expense for the year ended December 31, 2023 was $54.7 million, a decrease of $0.7 million, or 1.4%, as compared to income tax
expense of $55.4 million for the year
ended December 31, 2022. Our
effective tax rate was 21.1% during the year ended December 31, 2023 compared to 23.1% during the
year ended December 31, 2022. The
decrease in our effective tax rate between periods is attributable
to other discrete tax items recorded in the respective periods and
higher excess tax benefits of $0.9
million compared to excess tax benefits of $0.1 million for the year ended December 31, 2022, partially offset by a lower
contribution in lieu of state income taxes of $3.5 million in 2023 compared to $5.0 million in 2022.
- Net income increased 11.0% to $205.0
million for the year ended December
31, 2023, compared to $184.7
million for the same period in 2022. As adjusted net income
was $212.2 million and $192.1 million for the years ended December 31, 2023 and 2022, respectively.
- Diluted net income per share was $6.80 and $5.73 for
the years ended December 31, 2023 and
2022, respectively. As adjusted diluted net income per share was
$7.04 and $5.96 for the years ended December 31, 2023 and 2022, respectively.
- Adjusted EBITDA increased 3.8% to $302.3
million for the year ended December
31, 2023, compared to $291.3
million for the same period in 2022.
Liquidity and Capital Resources
Our liquidity position, as measured by cash and cash equivalents
and investments increased by $62.8
million between December 31,
2022 and December 31, 2023,
which was largely attributable to cash flows from operations
exceeding share repurchases, investment purchases, net of proceeds
and capital expenditures during the year ended December 31, 2023. Our unrestricted cash
and cash equivalents and investments were $244.5 million and $181.7
million at December 31, 2023
and December 31, 2022,
respectively.
2024 Outlook
Q1 2024:
- Service revenue of between $271.5
million and $273.0
million;
- Operating margin of between 29.8% and 30.0%;
- Effective tax rate of 23.4%;
- Diluted EPS of between $2.15 and
$2.18; and
- 29.7 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $1.6
million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $2.20 and $2.23.
Q2 2024:
- Service revenue of between $221.0
million and $224.0
million;
- Operating margin of between 16.1% and 17.0%;
- Effective tax rate of 24.9%;
- Diluted EPS of between $0.98 and
$1.04; and
- 29.4 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $1.6
million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $1.03 and $1.09.
Q3 2024:
- Service revenue of between $236.5
million and $244.0
million;
- Operating margin of between 20.4% and 22.2%;
- Effective tax rate of 24.9%;
- Diluted EPS of between $1.30 and
$1.46; and
- 29.1 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $1.6
million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $1.35 and $1.51.
Q4 2024:
- Service revenue of between $287.0
million and $299.0
million;
- Operating margin of between 34.9% and 37.0%;
- Effective tax rate of 22.8%;
- Diluted EPS of between $2.75 and
$3.03; and
- 28.9 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $1.6
million, which equates to a $0.06 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $2.81 and $3.09.
Full Year 2024:
- Service revenue of between $1,016.0
million and $1,040.0
million;
- Operating margin of between 26.1% and 27.4%;
- Effective tax rate of 23.7%;
- Diluted EPS between $7.17 and
$7.69; and
- 29.3 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $6.5
million, which equates to a $0.22 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $7.39 and $7.91.
Forward-Looking Statements
This news release contains "forward-looking statements" which
include information relating to future events, future financial
performance, strategies expectations, competitive environment,
regulation, and availability of resources. These
forward-looking statements include, without limitation, statements
regarding: proposed new programs; whether regulatory, economic, or
business developments or other matters may or may not have a
material adverse effect on our financial position, results of
operations, or liquidity; projections, predictions, expectations,
estimates, and forecasts as to our business, financial and
operating results, and future economic performance; and
management's goals and objectives and other similar expressions
concerning matters that are not historical facts. Words such
as "may," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar expressions, the negative of
these expressions, as well as statements in future tense, identify
forward-looking statements.
Forward-looking statements should not be read as a guarantee of
future performance or results and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements are
based on information available at the time those statements are
made or management's good faith belief as of that time with respect
to future events and are subject to risks and uncertainties that
could cause actual performance or results to differ materially from
those expressed in or suggested by the forward-looking statements.
Important factors that could cause our actual performance or
results to differ materially from those expressed in or suggested
by the forward-looking statements include, but are not limited to:
legal and regulatory actions taken against our university partners
that impact their businesses and that directly or indirectly reduce
the service revenue we can earn under our master services
agreements; the occurrence of any event, change or other
circumstance that could give rise to the termination of any of the
key university partner agreements; our ability to properly manage
risks and challenges associated with strategic initiatives,
including potential acquisitions or divestitures of, or investments
in, new businesses, acquisitions of new properties and new
university partners, and expansion of services provided to our
existing university partners; our failure to comply with the
extensive regulatory framework applicable to us either directly as
a third-party service provider or indirectly through our university
partners, including Title IV of the Higher Education Act and the
regulations thereunder, state laws and regulatory requirements, and
accrediting commission requirements; the harm to our business,
results of operations, and financial condition, and harm to our
university partners resulting from epidemics, pandemics, or public
health crises; the ability of our university partners' students to
obtain federal Title IV funds, state financial aid, and private
financing; potential damage to our reputation or other adverse
effects as a result of negative publicity in the media, in the
industry or in connection with governmental reports or
investigations or otherwise, affecting us or other companies in the
education services sector; risks associated with changes in
applicable federal and state laws and regulations and accrediting
commission standards, including pending rulemaking by the United
States Department of Education applicable to us directly or
indirectly through our university partners; competition from other
education service companies in our geographic region and market
sector, including competition for students, qualified executives
and other personnel; our expected tax payments and tax rate; our
ability to hire and train new, and develop and train existing
employees; the pace of growth of our university partners'
enrollment and its effect on the pace of our own growth;
fluctuations in our revenues due to seasonality; our ability to, on
behalf of our university partners, convert prospective students to
enrolled students and to retain active students to graduation; our
success in updating and expanding the content of existing programs
and developing new programs in a cost-effective manner or on a
timely basis for our university partners; risks associated with the
competitive environment for marketing the programs of our
university partners; failure on our part to keep up with advances
in technology that could enhance the experience for our university
partners' students; our ability to manage future growth
effectively; the impact of any natural disasters or public health
emergencies; general adverse economic conditions or other
developments that affect the job prospects of our university
partners' students; and other factors discussed in reports on file
with the Securities and Exchange Commission, including as set forth
in Part I, Item 1A of our Annual Report on Form 10-K for period
ended December 31, 2023, as updated
in our subsequent reports filed with the Securities and Exchange
Commission on Form 10-Q or Form 8-K.
Forward-looking statements speak only as of the date the
statements are made. You should not put undue reliance on any
forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions, or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities
laws. If we do update one or more forward-looking statements,
no inference should be drawn that we will make additional updates
with respect to those or other forward-looking statements.
Conference Call
Grand Canyon Education, Inc. will discuss its fourth quarter
2023 results and full year 2024 outlook during a conference call
scheduled for today, February 13,
2024 at 4:30 p.m. Eastern time
(ET).
Live Conference Dial-In:
Those interested in participating in the question-and-answer
session should follow the conference dial-in instructions
below. Participants may register for the call here to
receive the dial-in numbers and unique PIN to access the call
seamlessly. Please dial in at least ten minutes prior to the start
of the call. Journalists are invited to listen
only.
Webcast and Replay:
Investors, journalists and the general public may access a live
webcast of this event at: Q4 2023 Grand Canyon
Education Inc. Earnings Conference Call. A
webcast replay will be available approximately two hours following
the conclusion of the call at the same link.
About Grand Canyon Education, Inc.
Grand Canyon Education, Inc. ("GCE"), incorporated in 2008, is a
publicly traded education services company that currently provides
services to 25 university partners. GCE is uniquely
positioned in the education services industry in that its
leadership has over 30 years of proven expertise in providing a
full array of support services in the post-secondary education
sector and has developed significant technological solutions,
infrastructure and operational processes to provide superior
services in these areas on a large scale. GCE provides
services that support students, faculty and staff of partner
institutions such as marketing, strategic enrollment management,
counseling services, financial services, technology, technical
support, compliance, human resources, classroom operations, content
development, faculty recruitment and training, among others.
For more information about GCE visit the Company's website at
www.gce.com.
Grand Canyon Education, Inc., 2600 W. Camelback Road,
Phoenix, AZ 85017,
www.gce.com.
GRAND CANYON
EDUCATION, INC.
Consolidated Income
Statements
(Unaudited)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
(In thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
$
|
278,284
|
|
$
|
258,700
|
|
$
|
960,899
|
|
$
|
911,306
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and academic
services
|
|
|
39,227
|
|
|
38,357
|
|
|
154,870
|
|
|
150,493
|
Counseling services and
support
|
|
|
82,754
|
|
|
72,540
|
|
|
302,319
|
|
|
273,313
|
Marketing and
communication
|
|
|
46,003
|
|
|
44,853
|
|
|
202,800
|
|
|
196,090
|
General and
administrative
|
|
|
10,397
|
|
|
10,168
|
|
|
43,235
|
|
|
45,491
|
Amortization of
intangible assets
|
|
|
2,104
|
|
|
2,104
|
|
|
8,419
|
|
|
8,419
|
Total costs and expenses
|
|
|
180,485
|
|
|
168,022
|
|
|
711,643
|
|
|
673,806
|
Operating income
|
|
|
97,799
|
|
|
90,678
|
|
|
249,256
|
|
|
237,500
|
Interest
expense
|
|
|
(6)
|
|
|
3
|
|
|
(33)
|
|
|
(2)
|
Investment interest and
other
|
|
|
2,970
|
|
|
1,327
|
|
|
10,452
|
|
|
2,621
|
Income before income taxes
|
|
|
100,763
|
|
|
92,008
|
|
|
259,675
|
|
|
240,119
|
Income tax
expense
|
|
|
20,054
|
|
|
20,981
|
|
|
54,690
|
|
|
55,444
|
Net income
|
|
$
|
80,709
|
|
$
|
71,027
|
|
$
|
204,985
|
|
$
|
184,675
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share
|
|
$
|
2.73
|
|
$
|
2.32
|
|
$
|
6.83
|
|
$
|
5.75
|
Diluted income per share
|
|
$
|
2.71
|
|
$
|
2.30
|
|
$
|
6.80
|
|
$
|
5.73
|
Basic weighted average shares
outstanding
|
|
|
29,555
|
|
|
30,669
|
|
|
29,991
|
|
|
32,131
|
Diluted weighted average shares
outstanding
|
|
|
29,761
|
|
|
30,835
|
|
|
30,147
|
|
|
32,237
|
GRAND CANYON
EDUCATION, INC.
Consolidated Balance
Sheets
|
|
|
|
As of December 31,
|
|
As of December 31,
|
(In thousands, except par
value)
|
|
2023
|
|
2022
|
ASSETS:
|
|
(Unaudited)
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
146,475
|
|
$
|
120,409
|
Investments
|
|
|
98,031
|
|
|
61,295
|
Accounts receivable,
net
|
|
|
78,811
|
|
|
77,413
|
Income taxes
receivable
|
|
|
1,316
|
|
|
2,788
|
Other current
assets
|
|
|
12,889
|
|
|
11,368
|
Total current assets
|
|
|
337,522
|
|
|
273,273
|
Property and equipment,
net
|
|
|
169,699
|
|
|
147,504
|
Right-of-use
assets
|
|
|
92,454
|
|
|
72,719
|
Amortizable intangible
assets, net
|
|
|
168,381
|
|
|
176,800
|
Goodwill
|
|
|
160,766
|
|
|
160,766
|
Other assets
|
|
|
1,641
|
|
|
1,687
|
Total assets
|
|
$
|
930,463
|
|
$
|
832,749
|
LIABILITIES AND STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
17,676
|
|
$
|
20,006
|
Accrued compensation
and benefits
|
|
|
31,358
|
|
|
36,412
|
Accrued
liabilities
|
|
|
26,725
|
|
|
22,473
|
Income taxes
payable
|
|
|
10,250
|
|
|
12,167
|
Current portion of
lease liability
|
|
|
11,024
|
|
|
8,648
|
Total current liabilities
|
|
|
97,033
|
|
|
99,706
|
Deferred income taxes,
noncurrent
|
|
|
26,749
|
|
|
26,195
|
Other long-term
liabilities
|
|
|
410
|
|
|
436
|
Lease liability, less
current portion
|
|
|
88,257
|
|
|
68,793
|
Total liabilities
|
|
|
212,449
|
|
|
195,130
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Preferred stock, $0.01
par value, 10,000 shares authorized; 0 shares issued and
outstanding at December 31, 2022 and December 31, 2022
|
|
|
—
|
|
|
—
|
Common stock, $0.01 par
value, 100,000 shares authorized; 53,970 and 53,830 shares
issued and 29,953 and 31,058 shares outstanding at December 31,
2023 and December
31, 2022, respectively
|
|
|
540
|
|
|
538
|
Treasury stock, at
cost, 24,017 and 22,772 shares of common stock at December 31,
2023
and December 31, 2022, respectively
|
|
|
(1,849,693)
|
|
|
(1,711,423)
|
Additional paid-in
capital
|
|
|
322,512
|
|
|
309,310
|
Accumulated other
comprehensive loss
|
|
|
(57)
|
|
|
(533)
|
Retained
earnings
|
|
|
2,244,712
|
|
|
2,039,727
|
Total stockholders' equity
|
|
|
718,014
|
|
|
637,619
|
Total liabilities and stockholders'
equity
|
|
$
|
930,463
|
|
$
|
832,749
|
GRAND CANYON
EDUCATION, INC.
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
|
Year Ended
|
|
|
December 31,
|
(In thousands)
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash flows provided by operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
204,985
|
|
$
|
184,675
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
13,204
|
|
|
12,642
|
Depreciation and
amortization
|
|
|
23,554
|
|
|
22,758
|
Amortization of
intangible assets
|
|
|
8,419
|
|
|
8,419
|
Deferred income
taxes
|
|
|
402
|
|
|
401
|
Other, including fixed
asset disposals
|
|
|
(442)
|
|
|
853
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable from university partners
|
|
|
(1,398)
|
|
|
(7,350)
|
Other
assets
|
|
|
(1,639)
|
|
|
(2,604)
|
Right-of-use assets and lease liabilities
|
|
|
2,105
|
|
|
1,193
|
Accounts
payable
|
|
|
(3,109)
|
|
|
(3,894)
|
Accrued
liabilities
|
|
|
(1,974)
|
|
|
(1,023)
|
Income
taxes receivable/payable
|
|
|
(445)
|
|
|
4,759
|
Deferred
revenue
|
|
|
—
|
|
|
(10)
|
Net cash provided by operating
activities
|
|
|
243,662
|
|
|
220,819
|
Cash flows used in investing
activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(44,537)
|
|
|
(35,232)
|
Additions of
amortizable content
|
|
|
(897)
|
|
|
(397)
|
Purchases of
investments
|
|
|
(98,853)
|
|
|
(171,549)
|
Proceeds from sale or
maturity of investments
|
|
|
63,815
|
|
|
110,039
|
Net cash used in investing
activities
|
|
|
(80,472)
|
|
|
(97,139)
|
Cash flows used in financing
activities:
|
|
|
|
|
|
|
Repurchase of common
shares and shares withheld in lieu of income taxes
|
|
|
(137,124)
|
|
|
(604,212)
|
Net cash used in financing
activities
|
|
|
(137,124)
|
|
|
(604,212)
|
Net increase (decrease) in cash and cash equivalents
and restricted cash
|
|
|
26,066
|
|
|
(480,532)
|
Cash and cash equivalents and restricted cash,
beginning of period
|
|
|
120,409
|
|
|
600,941
|
Cash and cash equivalents and restricted cash, end of
period
|
|
$
|
146,475
|
|
$
|
120,409
|
Supplemental disclosure of cash flow
information
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
33
|
|
$
|
2
|
Cash paid for income
taxes
|
|
$
|
59,026
|
|
$
|
48,573
|
Supplemental disclosure of non-cash investing and
financing activities
|
|
|
|
|
|
|
Purchases of property
and equipment included in accounts payable
|
|
$
|
1,909
|
|
$
|
1,131
|
ROU Asset and Liability
recognition
|
|
$
|
19,735
|
|
$
|
15,067
|
Excise tax on treasury
stock repurchases
|
|
$
|
1,146
|
|
$
|
—
|
GRAND CANYON
EDUCATION, INC.
Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA is defined as net income plus interest expense,
less interest income and other gain (loss) recognized on
investments, plus income tax expense, and plus depreciation and
amortization (EBITDA), as adjusted for (i) contributions to
private Arizona school tuition
organizations in lieu of the payment of state income taxes; (ii)
share-based compensation, and (iii) unusual charges or gains, such
as litigation and regulatory reserves, impairment charges and asset
write-offs, and exit or lease termination costs. We present
Adjusted EBITDA because we consider it to be an important
supplemental measure of our operating performance. We also
make certain compensation decisions based, in part, on our
operating performance, as measured by Adjusted EBITDA. All of
the adjustments made in our calculation of Adjusted EBITDA are
adjustments to items that management does not consider to be
reflective of our core operating performance. Management
considers our core operating performance to be that which can be
affected by our managers in any particular period through their
management of the resources that affect our underlying revenue and
profit generating operations during that period and does not
consider the items for which we make adjustments (as listed above)
to be reflective of our core performance.
We believe Adjusted EBITDA allows us to compare our current
operating results with corresponding historical periods and with
the operational performance of other companies in our industry
because it does not give effect to potential differences caused by
variations in capital structures (affecting relative interest
expense, including the impact of write-offs of deferred financing
costs when companies refinance their indebtedness), tax positions
(such as the impact on periods or companies of changes in effective
tax rates or net operating losses), the book amortization of
intangibles (affecting relative amortization expense), and other
items that we do not consider reflective of underlying operating
performance. We also present Adjusted EBITDA because we
believe it is frequently used by securities analysts, investors,
and other interested parties as a measure of performance.
In evaluating Adjusted EBITDA, investors should be aware that in
the future we may incur expenses similar to the adjustments
described above. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by expenses that are unusual, non-routine, or
non-recurring. Adjusted EBITDA has limitations as an
analytical tool in that, among other things it does not
reflect:
- cash expenditures for capital expenditures or contractual
commitments;
- changes in, or cash requirements for, our working capital
requirements;
- interest expense, or the cash required to replace assets that
are being depreciated or amortized; and
- the impact on our reported results of earnings or charges
resulting from the items for which we make adjustments to our
EBITDA, as described above and set forth in the table below.
In addition, other companies, including other companies in our
industry, may calculate these measures differently than we do,
limiting the usefulness of Adjusted EBITDA as a comparative
measure. Because of these limitations, Adjusted EBITDA should
not be considered as a substitute for net income, operating income,
or any other performance measure derived in accordance with and
reported under GAAP, or as an alternative to cash flow from
operating activities or as a measure of our liquidity. We
compensate for these limitations by relying primarily on our GAAP
results and only use Adjusted EBITDA as a supplemental performance
measure.
The following table provides a reconciliation of net income to
Adjusted EBITDA, which is a non-GAAP measure for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in thousands)
|
|
|
(Unaudited, in thousands)
|
Net income
|
|
$
|
80,709
|
|
$
|
71,027
|
|
$
|
204,985
|
|
$
|
184,675
|
Plus: interest
expense
|
|
|
6
|
|
|
(3)
|
|
|
33
|
|
|
2
|
Less: investment
interest and other
|
|
|
(2,970)
|
|
|
(1,327)
|
|
|
(10,452)
|
|
|
(2,621)
|
Plus: income tax
expense
|
|
|
20,054
|
|
|
20,981
|
|
|
54,690
|
|
|
55,444
|
Plus: amortization of
intangible assets
|
|
|
2,104
|
|
|
2,104
|
|
|
8,419
|
|
|
8,419
|
Plus: depreciation and
amortization
|
|
|
6,560
|
|
|
5,735
|
|
|
23,554
|
|
|
22,758
|
EBITDA
|
|
|
106,463
|
|
|
98,517
|
|
|
281,229
|
|
|
268,677
|
Plus: contributions in
lieu of state income taxes
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
|
5,000
|
Plus: loss on fixed
asset disposal
|
|
|
166
|
|
|
94
|
|
|
741
|
|
|
1,249
|
Plus: litigation and
regulatory reserves
|
|
|
1,057
|
|
|
452
|
|
|
3,628
|
|
|
3,768
|
Plus: share-based
compensation
|
|
|
3,246
|
|
|
3,158
|
|
|
13,204
|
|
|
12,642
|
Adjusted
EBITDA
|
|
$
|
110,932
|
|
$
|
102,221
|
|
$
|
302,302
|
|
$
|
291,336
|
Non-GAAP Net Income and Non-GAAP Diluted Income Per
Share
The Company believes the presentation of non-GAAP net income and
non-GAAP diluted income per share information that excludes
amortization of intangible assets and loss on disposal of fixed
assets allows investors to develop a more meaningful understanding
of the Company's performance over time. Accordingly, for the
three-months and years ended December 31,
2023 and 2022, the table below provides reconciliations of
these non-GAAP items to GAAP net income and GAAP diluted income per
share, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in thousands except per share
data)
|
GAAP Net
income
|
|
$
|
80,709
|
|
$
|
71,027
|
|
$
|
204,985
|
|
$
|
184,675
|
Amortization of
intangible assets
|
|
|
2,104
|
|
|
2,104
|
|
|
8,419
|
|
|
8,419
|
Loss on disposal of
fixed assets
|
|
|
166
|
|
|
94
|
|
|
741
|
|
|
1,249
|
Income tax effects of
adjustments(1)
|
|
|
(452)
|
|
|
(501)
|
|
|
(1,929)
|
|
|
(2,232)
|
As Adjusted, Non-GAAP
Net income
|
|
$
|
82,527
|
|
$
|
72,724
|
|
$
|
212,216
|
|
$
|
192,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted income per
share
|
|
$
|
2.71
|
|
$
|
2.30
|
|
$
|
6.80
|
|
$
|
5.73
|
Amortization of
intangible assets (2)
|
|
|
0.06
|
|
|
0.06
|
|
|
0.22
|
|
|
0.20
|
Loss on disposal of
fixed assets (3)
|
|
|
0.00
|
|
|
0.00
|
|
|
0.02
|
|
|
0.03
|
As Adjusted, Non-GAAP
Diluted income per share
|
|
$
|
2.77
|
|
$
|
2.36
|
|
$
|
7.04
|
|
$
|
5.96
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The income tax effects
of adjustments are based on the effective income tax rate
applicable to adjusted (non-GAAP) results.
|
|
|
(2)
|
The amortization of
acquired intangible assets per diluted share is net of an income
tax benefit of $0.01 and $0.02 for the three months ended December
31, 2023 and 2022, respectively, and net of an income tax benefit
of $0.06 for each of the years ended December 31, 2023 and
2022.
|
|
|
(3)
|
The loss on disposal of
fixed assets per diluted share is net of an income tax benefit of
$0.00 for each of the three months ended December 31, 2023 and
2022, and net of an income tax benefit of $0.01 and $0.01 for the
years ended December 31, 2023 and 2022, respectively.
|
Investor Relations Contact:
Daniel E. Bachus
Chief Financial Officer
Grand Canyon Education, Inc.
602-639-6648
Dan.bachus@gce.com
View original
content:https://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-fourth-quarter-2023-results-302061042.html
SOURCE Grand Canyon Education