PHOENIX, Nov. 2, 2023
/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
September 30, 2023.
For the three months ended September 30,
2023:
- Service revenue for the three months ended September 30, 2023 was $221.9 million, an increase of $13.2 million, or 6.3%, as compared to service
revenue of $208.7 million for the
three months ended September 30,
2022. The increase year over year in service revenue was
primarily due to an increase in GCU enrollments to 118,227 at
September 30, 2023, an increase of
6.6% over enrollments at September 30,
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 third 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 September 30, 2023 was also
positively 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 123,165 at September 30, 2023 as compared to 116,202 at
September 30, 2022. University
partner enrollments at our off-campus classroom and laboratory
sites were 5,448, a decrease of 4.3% over enrollments at
September 30, 2022, which includes
510 and 421 GCU students at September 30,
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 nine
months ended September 30, 2023
increasing the total number of these sites to 40 at September 30, 2023. Enrollments for GCU ground
students were 25,232 at September 30,
2023 up from 25,083 at September 30,
2022. GCU online enrollments were 92,995 at September 30, 2023, up from 85,845 at
September 30, 2022, an increase of
8.3% between years.
- Operating income for the three months ended September 30, 2023 was $41.5 million, an increase of $6.0 million as compared to $35.5 million for the same period in 2022. The
operating margin for the three months ended September 30, 2023 was 18.7%, compared to 17.0%
for the same period in 2022.
- Income tax expense for the three months ended September 30, 2023 was $8.5 million, an increase of $2.3 million, or 36.6%, as compared to income tax
expense of $6.2 million for the three
months ended September 30, 2022. Our
effective tax rate was 19.3% during the third quarter of 2023
compared to 17.2% during the third quarter of 2022. The increase in
our effective tax rate between periods was primarily driven by
changes in the magnitude of contributions in lieu of state income
taxes as compared to prior periods.
- Net income increased 19.1% to $35.7
million for the third quarter of 2023, compared to
$30.0 million for the same period in
2022. As adjusted net income was $37.8
million and $32.2 million for
the third quarters of 2023 and 2022, respectively.
- Diluted net income per share was $1.19 and $0.96 for
the third quarters of 2023 and 2022, respectively. As adjusted
diluted net income per share was $1.26 and $1.02 for
the third quarters of 2023 and 2022, respectively.
- Adjusted EBITDA increased 7.4% to $57.0
million for the third quarter of 2023, compared to
$53.1 million for the same period in
2022.
For the nine months ended September 30,
2023:
- Service revenue for the nine months ended September 30, 2023 was $682.6 million, an increase of $30.0 million, or 4.6%, as compared to service
revenue of $652.6 million for the
nine months ended September 30, 2022.
The increase year over year in service revenue was primarily due to
an increase in GCU enrollments to 118,227 at September 30, 2023, an increase of 6.6% over
enrollments at September 30,
2022.
- Operating income for the nine months ended September 30, 2023 was $151.5 million, an increase of $4.7 million as compared to $146.8 million for the same period in 2022. The
operating margin for the nine months ended September 30, 2023 was 22.2%, compared to 22.5%
for the same period in 2022.
- Income tax expense for the nine months ended September 30, 2023 was $34.6 million, an increase of $0.1 million, or 0.5%, as compared to income tax
expense of $34.5 million for the nine
months ended September 30, 2022. Our
effective tax rate was 21.8% during the nine months ended
September 30, 2023 compared to 23.3%
during the nine months ended September 30,
2022. The slight decrease in our effective tax rate between
periods is attributable to changes in the magnitude of
contributions in lieu of state income taxes as well as a mix of
other discrete tax items recorded in the respective periods.
- Net income increased 9.4% to $124.3
million for the nine months ended September 30, 2023, compared to $113.6 million for the same period in 2022. As
adjusted net income was $129.7
million and $119.4 million for
the nine months ended September 30,
2023 and 2022, respectively.
- Diluted net income per share was $4.10 and $3.47 for
the nine months ended September 30,
2023 and 2022, respectively. As adjusted diluted net income
per share was $4.28 and $3.65 for the nine months ended September 30, 2023 and 2022, respectively.
- Adjusted EBITDA increased 1.2% to $191.4
million for the nine months ended September 30, 2023, compared to $189.1 million for the same period in 2022.
Liquidity and Capital Resources
Our liquidity position, as measured by cash and cash equivalents
and investments decreased by $27.3
million between December 31,
2022 and September 30, 2023,
which was largely attributable to share repurchases and capital
expenditures exceeding cash flows from operations during the nine
months ended September 30,
2023. Our unrestricted cash and cash equivalents and
investments were $154.4 million and
$181.7 million at September 30, 2023 and December 31, 2022, respectively.
Share Repurchase Plan
GCE announced today that on October 25,
2023, the Company's Board of Directors increased the
authorization under its existing stock repurchase program by
$200.0 million, reflecting an
aggregate authorization for share repurchases since the initiation
of our program of $2,045.0
million. The current expiration date on the repurchase
authorization by our Board of Directors is March 1, 2025. As of October 31, 2023, there remained $272.4 million available under our current share
repurchase authorization, which includes the increased
authorization of $200.0
million. As of October 31,
2023, the Company had 30,010,536 shares of common stock
outstanding. The plan permits the Company to make purchases
in the open market at prevailing market prices or in privately
negotiated transactions in compliance with applicable securities
laws and other legal requirements. The level of purchase
activity is subject to market conditions and other investment
opportunities. The plan does not obligate GCE to acquire any
particular amount of common stock and may be suspended or
discontinued at any time. The repurchase program may be
funded using the Company's available cash, investments and positive
operating cash flows.
2023 Outlook
Q4 2023:
- Service revenue of between $274.5
million and $275.5
million;
- Operating margin of between 35.4% and 35.6%;
- Effective tax rate of 20.3%;
- Diluted EPS of between $2.64 and
$2.67; and
- 29.7 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $1.7
million, which equates to a $0.06 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $2.70 and $2.73.
Full Year 2023:
- Service revenue of between $957.1
million and $958.1
million;
- Operating margin of between 26.0% and 26.1%;
- Effective tax rate of 21.2%;
- Diluted EPS between $6.74 and
$6.77; and
- 30.1 million diluted shares.
The diluted EPS guidance includes non-cash amortization of
intangible assets net of taxes of $6.6
million and losses on fixed asset disposals net of taxes of
$0.5 million, which equates to a
$0.24 impact on diluted EPS. Thus, as
adjusted, Non-GAAP diluted income per share of between $6.98 and $7.01.
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:
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 occurrence of
any event, change or other circumstance that could give rise to the
termination of any of our 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 education services 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; 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; competition from other education services
companies in our geographic region and market sector, including
competition for students, qualified executives and other personnel;
the pace of growth of our university partners' enrollment and its
effect on the pace of our own growth; 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; the impact of any natural
disasters or public health emergencies; 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,
2022, as updated in our subsequent reports filed with the
Securities and Exchange Commission on Form 10Q 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 third quarter 2023
results and full year 2023 outlook during a conference call
scheduled for today, November 2, 2023
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: Q3 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
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
(In thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
$
|
221,913
|
|
$
|
208,720
|
|
$
|
682,615
|
|
$
|
652,606
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and academic
services
|
|
|
39,174
|
|
|
37,641
|
|
|
115,643
|
|
|
112,136
|
Counseling services and
support
|
|
|
73,824
|
|
|
67,235
|
|
|
219,565
|
|
|
200,773
|
Marketing and
communication
|
|
|
53,097
|
|
|
50,651
|
|
|
156,797
|
|
|
151,237
|
General and
administrative
|
|
|
12,175
|
|
|
15,576
|
|
|
32,838
|
|
|
35,323
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
6,315
|
|
|
6,315
|
Total costs and expenses
|
|
|
180,375
|
|
|
173,208
|
|
|
531,158
|
|
|
505,784
|
Operating income
|
|
|
41,538
|
|
|
35,512
|
|
|
151,457
|
|
|
146,822
|
Interest
expense
|
|
|
(1)
|
|
|
—
|
|
|
(27)
|
|
|
(5)
|
Investment interest and
other
|
|
|
2,739
|
|
|
745
|
|
|
7,482
|
|
|
1,294
|
Income before income taxes
|
|
|
44,276
|
|
|
36,257
|
|
|
158,912
|
|
|
148,111
|
Income tax
expense
|
|
|
8,537
|
|
|
6,249
|
|
|
34,636
|
|
|
34,463
|
Net income
|
|
$
|
35,739
|
|
$
|
30,008
|
|
$
|
124,276
|
|
$
|
113,648
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share
|
|
$
|
1.20
|
|
$
|
0.96
|
|
$
|
4.12
|
|
$
|
3.48
|
Diluted income per share
|
|
$
|
1.19
|
|
$
|
0.96
|
|
$
|
4.10
|
|
$
|
3.47
|
Basic weighted average shares
outstanding
|
|
|
29,776
|
|
|
31,302
|
|
|
30,138
|
|
|
32,623
|
Diluted weighted average shares
outstanding
|
|
|
29,912
|
|
|
31,387
|
|
|
30,277
|
|
|
32,709
|
GRAND CANYON
EDUCATION, INC.
Consolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
As of December 31,
|
(In thousands, except par
value)
|
|
2023
|
|
2022
|
ASSETS:
|
|
|
(Unaudited)
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
56,871
|
|
$
|
120,409
|
Investments
|
|
|
97,553
|
|
|
61,295
|
Accounts receivable,
net
|
|
|
104,475
|
|
|
77,413
|
Income taxes
receivable
|
|
|
3,770
|
|
|
2,788
|
Other current
assets
|
|
|
12,069
|
|
|
11,368
|
Total current assets
|
|
|
274,738
|
|
|
273,273
|
Property and equipment,
net
|
|
|
164,638
|
|
|
147,504
|
Right-of-use
assets
|
|
|
90,393
|
|
|
72,719
|
Amortizable intangible
assets, net
|
|
|
170,485
|
|
|
176,800
|
Goodwill
|
|
|
160,766
|
|
|
160,766
|
Other assets
|
|
|
2,136
|
|
|
1,687
|
Total assets
|
|
$
|
863,156
|
|
$
|
832,749
|
LIABILITIES AND STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
23,696
|
|
$
|
20,006
|
Accrued compensation
and benefits
|
|
|
25,446
|
|
|
36,412
|
Accrued
liabilities
|
|
|
33,527
|
|
|
22,473
|
Income taxes
payable
|
|
|
91
|
|
|
12,167
|
Deferred
revenue
|
|
|
6,237
|
|
|
—
|
Current portion of
lease liability
|
|
|
10,518
|
|
|
8,648
|
Total current liabilities
|
|
|
99,515
|
|
|
99,706
|
Deferred income taxes,
noncurrent
|
|
|
26,694
|
|
|
26,195
|
Other long-term
liabilities
|
|
|
416
|
|
|
436
|
Lease liability, less
current portion
|
|
|
86,001
|
|
|
68,793
|
Total liabilities
|
|
|
212,626
|
|
|
195,130
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Preferred stock, $0.01
par value, 10,000 shares authorized; 0 shares issued and
outstanding at September 30, 2022 and December 31, 2022
|
|
|
—
|
|
|
—
|
Common stock, $0.01 par
value, 100,000 shares authorized; 53,970 and 53,830 shares issued
and 30,092 and 31,058 shares outstanding at September 30, 2023 and
December 31, 2022, respectively
|
|
|
540
|
|
|
538
|
Treasury stock, at
cost, 23,878 and 22,772 shares of common stock at September 30,
2023 and December 31, 2022, respectively
|
|
|
(1,832,686)
|
|
|
(1,711,423)
|
Additional paid-in
capital
|
|
|
319,266
|
|
|
309,310
|
Accumulated other
comprehensive loss
|
|
|
(593)
|
|
|
(533)
|
Retained
earnings
|
|
|
2,164,003
|
|
|
2,039,727
|
Total stockholders' equity
|
|
|
650,530
|
|
|
637,619
|
Total liabilities and stockholders'
equity
|
|
$
|
863,156
|
|
$
|
832,749
|
GRAND CANYON
EDUCATION, INC.
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
September 30,
|
(In thousands)
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash flows provided by operating
activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
124,276
|
|
$
|
113,648
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
9,958
|
|
|
9,484
|
Depreciation and
amortization
|
|
|
16,994
|
|
|
17,023
|
Amortization of
intangible assets
|
|
|
6,315
|
|
|
6,315
|
Deferred income
taxes
|
|
|
517
|
|
|
368
|
Other, including fixed
asset impairments
|
|
|
(134)
|
|
|
1,013
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts receivable
from university partners
|
|
|
(27,062)
|
|
|
(31,107)
|
Other
assets
|
|
|
(1,154)
|
|
|
(1,288)
|
Right-of-use assets
and lease liabilities
|
|
|
1,404
|
|
|
700
|
Accounts
payable
|
|
|
3,894
|
|
|
(5,768)
|
Accrued
liabilities
|
|
|
(910)
|
|
|
2,162
|
Income taxes
receivable/payable
|
|
|
(13,058)
|
|
|
(8,172)
|
Deferred
revenue
|
|
|
6,237
|
|
|
6,092
|
Net cash provided by operating
activities
|
|
|
127,277
|
|
|
110,470
|
Cash flows used in investing
activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(34,186)
|
|
|
(26,301)
|
Additions of
amortizable content
|
|
|
(809)
|
|
|
(294)
|
Purchases of
investments
|
|
|
(73,462)
|
|
|
(132,096)
|
Proceeds from sale or
maturity of investments
|
|
|
37,927
|
|
|
63,373
|
Net cash used in investing
activities
|
|
|
(70,530)
|
|
|
(95,318)
|
Cash flows used in financing
activities:
|
|
|
|
|
|
|
Repurchase of common
shares and shares withheld in lieu of income taxes
|
|
|
(120,285)
|
|
|
(576,206)
|
Net cash used in financing
activities
|
|
|
(120,285)
|
|
|
(576,206)
|
Net decrease in cash and cash equivalents and
restricted cash
|
|
|
(63,538)
|
|
|
(561,054)
|
Cash and cash equivalents and restricted cash,
beginning of period
|
|
|
120,409
|
|
|
600,941
|
Cash and cash equivalents and restricted cash, end of
period
|
|
$
|
56,871
|
|
$
|
39,887
|
Supplemental disclosure of cash flow
information
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
27
|
|
$
|
5
|
Cash paid for income
taxes
|
|
$
|
47,654
|
|
$
|
41,118
|
Supplemental disclosure of non-cash investing and
financing activities
|
|
|
|
|
|
|
Purchases of property
and equipment included in accounts payable
|
|
$
|
927
|
|
$
|
1,827
|
ROU Asset and Liability
recognition
|
|
$
|
17,674
|
|
$
|
17,434
|
Excise tax on treasury
stock repurchases
|
|
$
|
978
|
|
$
|
—
|
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
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in thousands)
|
|
|
(Unaudited, in thousands)
|
Net income
|
|
$
|
35,739
|
|
$
|
30,008
|
|
$
|
124,276
|
|
$
|
113,648
|
Plus: interest
expense
|
|
|
1
|
|
|
—
|
|
|
27
|
|
|
5
|
Less: investment
interest and other
|
|
|
(2,739)
|
|
|
(745)
|
|
|
(7,482)
|
|
|
(1,294)
|
Plus: income tax
expense
|
|
|
8,537
|
|
|
6,249
|
|
|
34,636
|
|
|
34,463
|
Plus: amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
6,315
|
|
|
6,315
|
Plus: depreciation and
amortization
|
|
|
6,055
|
|
|
5,671
|
|
|
16,994
|
|
|
17,023
|
EBITDA
|
|
|
49,698
|
|
|
43,288
|
|
|
174,766
|
|
|
170,160
|
Plus: contributions in
lieu of state income taxes
|
|
|
3,500
|
|
|
5,000
|
|
|
3,500
|
|
|
5,000
|
Plus: loss on fixed
asset disposal
|
|
|
440
|
|
|
491
|
|
|
575
|
|
|
1,155
|
Plus: litigation and
regulatory reserves
|
|
|
24
|
|
|
1,188
|
|
|
2,571
|
|
|
3,316
|
Plus: share-based
compensation
|
|
|
3,336
|
|
|
3,123
|
|
|
9,958
|
|
|
9,484
|
Adjusted
EBITDA
|
|
$
|
56,998
|
|
$
|
53,090
|
|
$
|
191,370
|
|
$
|
189,115
|
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 nine-months ended September
30, 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
|
|
|
Nine Months Ended
|
|
|
September 30,
|
|
|
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in thousands except per share
data)
|
GAAP Net
income
|
|
$
|
35,739
|
|
$
|
30,008
|
|
$
|
124,276
|
|
$
|
113,648
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
6,315
|
|
|
6,315
|
Loss on disposal of
fixed assets
|
|
|
440
|
|
|
491
|
|
|
575
|
|
|
1,155
|
Income tax effects of
adjustments(1)
|
|
|
(491)
|
|
|
(447)
|
|
|
(1,502)
|
|
|
(1,738)
|
As Adjusted, Non-GAAP
Net income
|
|
$
|
37,793
|
|
$
|
32,157
|
|
$
|
129,664
|
|
$
|
119,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted income per
share
|
|
$
|
1.19
|
|
$
|
0.96
|
|
$
|
4.10
|
|
$
|
3.47
|
Amortization of
intangible assets (2)
|
|
|
0.06
|
|
|
0.05
|
|
|
0.16
|
|
|
0.15
|
Loss on disposal of
fixed assets (3)
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
0.03
|
As Adjusted, Non-GAAP
Diluted income per share
|
|
$
|
1.26
|
|
$
|
1.02
|
|
$
|
4.28
|
|
$
|
3.65
|
|
|
(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 for each of the three months ended September
30, 2023 and 2022, and net of an income tax benefit of $0.05 and
$0.04 for the nine months ended September 30, 2023 and 2022,
respectively.
|
|
|
(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 September 30, 2023 and
2022, respectively, and net of an income tax benefit of $0.00 and
$0.01 for the nine months ended September 30, 2023 and 2022,
respectively.
|
Investor Relations Contact:
Daniel E. Bachus
Chief Financial Officer
Grand Canyon Education, Inc.
602-639-6648
Dan.bachus@gce.com
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SOURCE Grand Canyon Education