PHOENIX, Aug. 3, 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 June 30,
2023.
For the three months ended June 30,
2023:
- Service revenue for the three months ended June 30, 2023 was $210.6
million, an increase of $10.8
million, or 5.4%, as compared to service revenue of
$199.8 million for the three months
ended June 30, 2022. The increase
year over year in service revenue was primarily due to an increase
in GCU enrollments of 4.1% over enrollments at June 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 second quarter of 2023 as compared to the prior year period. In
addition, service revenue per student for Accelerated Bachelor of
Science in Nursing ("ABSN") 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 June 30, 2023 was also
positively impacted by the timing of the Spring semester for the
ground traditional campus. The Spring semester started two days
later in 2023 and extended four more days into April, which had the
effect of shifting $4.5 million in
service revenue from the first quarter of 2023 to the second
quarter of 2023.
- Partner enrollments totaled 99,526 at June 30, 2023 as compared to 96,029 at
June 30, 2022. University partner
enrollments at our off-campus classroom and laboratory sites were
3,904, a decrease of 5.2% over enrollments at June 30, 2022, which includes 350 and 324 GCU
students at June 30, 2023 and 2022,
respectively. We did open six new off-campus classroom and
laboratory sites in the year ended December
31, 2022 and one site in the six months ended June 30, 2023 increasing the total number of
these sites to 36 at June 30, 2023
and we anticipate opening three to four more in 2023. Enrollments
at GCU increased to 95,972 at June 30,
2023, an increase of 4.1% over enrollments at June 30, 2022. Enrollments for GCU ground
students were 7,327 at June 30, 2023
up from 7,101 at June 30, 2022
primarily due to a 3.7% increase in traditional ground students
between years. GCU online enrollments were 88,645 at June 30, 2023, up from 85,132 at June 30, 2022. GCU enrollment declines
between March 31 and June 30 of each
year as ground enrollment at GCU at June
30 of each year only includes traditional-aged students
taking summer school classes, which is a small percentage of GCU's
traditional-aged student body. The Spring semester for GCU's
traditional-aged student body ends near the end of April each
year.
- Operating income for the three months ended June 30, 2023 was $35.4
million, an increase of $1.6
million as compared to $33.8
million for the same period in 2022. The operating margin
for the three months ended June 30,
2023 was 16.8%, compared to 16.9% for the same period in
2022.
- Income tax expense for the three months ended June 30, 2023 was $9.1
million, an increase of $0.5
million, as compared to income tax expense of $8.6 million for the three months ended
June 30, 2022. This increase was the
result of an increase in our taxable income, partially offset by a
decrease in our effective tax rate between periods. Our effective
tax rate was 23.8% during the second quarter of 2023 compared to
25.2% during the second quarter of 2022. In the second quarter of
2023 the effective tax rate was favorably impacted by income tax
audits, while in the second quarter of 2022 the effective tax rate
was unfavorably impacted by an increase in the state income tax
rate.
- Net income increased 13.3% to $29.0
million for the second quarter of 2023, compared to
$25.6 million for the same period in
2022. As adjusted net income was $30.4
million and $27.1 million for
the second quarters of 2023 and 2022, respectively.
- Diluted net income per share was $0.96 and $0.80 for
the second quarters of 2023 and 2022, respectively. As adjusted
diluted net income per share was $1.01 and $0.85 for
the second quarters of 2023 and 2022, respectively.
- Adjusted EBITDA increased 4.7% to $47.7
million for the second quarter of 2023, compared to
$45.6 million for the same period in
2022.
For the six months ended June 30,
2023:
- Service revenue for the six months ended June 30, 2023 was $460.7
million, an increase of $16.8
million, or 3.8%, as compared to service revenue of
$443.9 million for the six months
ended June 30, 2022. The increase
year over year in service revenue was primarily due to an increase
in GCU enrollments of 4.1% over enrollments at June 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's ground
traditional campus between years primarily due to increased
enrollment. In addition, service revenue per student for
Accelerated Bachelor of Science in Nursing ("ABSN") 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.
- Operating income for the six months ended June 30, 2023 was $109.9
million, a decrease of $1.4
million as compared to $111.3
million for the same period in 2022. The operating margin
for the six months ended June 30,
2023 was 23.9%, compared to 25.1% for the same period in
2022.
- Income tax expense for the six months ended June 30, 2023 was $26.1
million, a decrease of $2.1
million, or 7.5%, as compared to income tax expense of
$28.2 million for the six months
ended June 30, 2022. This decrease
was the result of a decrease in our effective tax rate between
periods, partially offset by an increase in our taxable income. Our
effective tax rate was 22.8% during the six months ended
June 30, 2023 compared to 25.2%
during the six months ended June 30,
2022. In the six months ended June
30, 2023, the effective tax rate was impacted by excess tax
benefits of $0.9 million as compared
to only $0.1 million in the six
months ended June 30, 2022. In the
six months ended June 30, 2023 the
effective tax rate was favorably impacted by state income tax
refunds and audits, while in the six months ended June 30, 2022 the effective tax rate was
unfavorably impacted by an increase in the state income tax
rate.
- Net income increased 5.9% to $88.5
million for the six months ended June
30, 2023, compared to $83.6
million for the same period in 2022. As adjusted net income
was $91.9 million and $87.3 million for the six months ended
June 30, 2023 and 2022,
respectively.
- Diluted net income per share was $2.91 and $2.51 for
the six months ended June 30, 2023
and 2022, respectively. As adjusted diluted net income per share
was $3.02 and $2.61 for the six months ended June 30, 2023 and 2022, respectively.
- Adjusted EBITDA decreased 1.2% to $134.4
million for the six months ended June
30, 2023, compared to $136.0
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 $51.7
million between December 31,
2022 and June 30, 2023, which
was largely attributable to cash flows from operations exceeding
share repurchases and capital expenditures during the six months
ended June 30, 2023. Our
unrestricted cash and cash equivalents and investments were
$233.4 million and $181.7 million at June 30,
2023 and December 31, 2022,
respectively.
2023 Outlook
Q3 2023:
- Service revenue of between $218.5
million and $220.5
million;
- Operating margin of between 16.0% and 16.7%;
- Effective tax rate of 18.6%;
- Diluted EPS of between $0.99 and
$1.04; and
- 30.0 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 $1.05 and $1.10.
Q4 2023:
- Service revenue of between $269.5
million and $274.5
million;
- Operating margin of between 34.1% and 35.3%;
- Effective tax rate of 21.3%;
- Diluted EPS of between $2.48 and
$2.61; 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 $2.54 and $2.67.
Full Year 2023:
- Service revenue of between $948.7
million and $955.7
million;
- Operating margin of between 25.0% and 25.5%;
- Effective tax rate of 21.6%;
- Diluted EPS between $6.37 and
$6.55; 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 $0.1 million, which equates to a $0.22 impact on diluted EPS. Thus, as adjusted,
Non-GAAP diluted income per share of between $6.59 and $6.77.
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; 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 second quarter
2023 results and full year 2023 outlook during a conference call
scheduled for today, August 3, 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: Q2 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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$
|
210,577
|
|
$
|
199,753
|
|
$
|
460,702
|
|
$
|
443,886
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and academic
services
|
|
|
38,957
|
|
|
38,189
|
|
|
76,469
|
|
|
74,495
|
Counseling services and
support
|
|
|
72,392
|
|
|
66,025
|
|
|
145,741
|
|
|
133,538
|
Marketing and
communication
|
|
|
50,806
|
|
|
49,735
|
|
|
103,700
|
|
|
100,586
|
General and
administrative
|
|
|
10,875
|
|
|
9,854
|
|
|
20,663
|
|
|
19,747
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
4,210
|
|
|
4,210
|
Total costs and
expenses
|
|
|
175,135
|
|
|
165,908
|
|
|
350,783
|
|
|
332,576
|
Operating
income
|
|
|
35,442
|
|
|
33,845
|
|
|
109,919
|
|
|
111,310
|
Interest
expense
|
|
|
(7)
|
|
|
(5)
|
|
|
(26)
|
|
|
(5)
|
Investment interest and
other
|
|
|
2,590
|
|
|
344
|
|
|
4,743
|
|
|
549
|
Income before income
taxes
|
|
|
38,025
|
|
|
34,184
|
|
|
114,636
|
|
|
111,854
|
Income tax
expense
|
|
|
9,052
|
|
|
8,622
|
|
|
26,099
|
|
|
28,214
|
Net
income
|
|
$
|
28,973
|
|
$
|
25,562
|
|
$
|
88,537
|
|
$
|
83,640
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
|
$
|
0.96
|
|
$
|
0.80
|
|
$
|
2.92
|
|
$
|
2.51
|
Diluted income per
share
|
|
$
|
0.96
|
|
$
|
0.80
|
|
$
|
2.91
|
|
$
|
2.51
|
Basic weighted
average shares outstanding
|
|
|
30,183
|
|
|
31,800
|
|
|
30,321
|
|
|
33,295
|
Diluted weighted
average shares outstanding
|
|
|
30,287
|
|
|
31,877
|
|
|
30,462
|
|
|
33,381
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated Balance
Sheets
|
|
|
|
As of
June 30,
|
|
As of December
31,
|
(In thousands,
except par value)
|
|
2023
|
|
2022
|
ASSETS:
|
|
|
(Unaudited)
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
142,925
|
|
$
|
120,409
|
Investments
|
|
|
90,444
|
|
|
61,295
|
Accounts receivable,
net
|
|
|
24,682
|
|
|
77,413
|
Income taxes
receivable
|
|
|
9,037
|
|
|
2,788
|
Other current
assets
|
|
|
12,461
|
|
|
11,368
|
Total current
assets
|
|
|
279,549
|
|
|
273,273
|
Property and equipment,
net
|
|
|
154,709
|
|
|
147,504
|
Right-of-use
assets
|
|
|
76,446
|
|
|
72,719
|
Amortizable intangible
assets, net
|
|
|
172,590
|
|
|
176,800
|
Goodwill
|
|
|
160,766
|
|
|
160,766
|
Other assets
|
|
|
2,157
|
|
|
1,687
|
Total
assets
|
|
$
|
846,217
|
|
$
|
832,749
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
22,842
|
|
$
|
20,006
|
Accrued compensation
and benefits
|
|
|
28,594
|
|
|
36,412
|
Accrued
liabilities
|
|
|
30,485
|
|
|
22,473
|
Income taxes
payable
|
|
|
75
|
|
|
12,167
|
Deferred
revenue
|
|
|
9,110
|
|
|
—
|
Current portion of
lease liability
|
|
|
9,339
|
|
|
8,648
|
Total current
liabilities
|
|
|
100,445
|
|
|
99,706
|
Deferred income taxes,
noncurrent
|
|
|
27,308
|
|
|
26,195
|
Other long-term
liabilities
|
|
|
423
|
|
|
436
|
Lease liability, less
current portion
|
|
|
72,616
|
|
|
68,793
|
Total
liabilities
|
|
|
200,792
|
|
|
195,130
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Preferred stock, $0.01
par value, 10,000 shares authorized; 0 shares issued and
outstanding at
June 30, 2022 and December 31, 2022
|
|
|
—
|
|
|
—
|
Common stock, $0.01 par
value, 100,000 shares authorized; 53,970 and 53,830 shares
issued
and 30,398 and 31,058 shares outstanding at June 30, 2023 and
December 31, 2022,
respectively
|
|
|
540
|
|
|
538
|
Treasury stock, at
cost, 23,572 and 22,772 shares of common stock at June 30, 2023
and
December 31, 2022, respectively
|
|
|
(1,798,619)
|
|
|
(1,711,423)
|
Additional paid-in
capital
|
|
|
315,930
|
|
|
309,310
|
Accumulated other
comprehensive loss
|
|
|
(690)
|
|
|
(533)
|
Retained
earnings
|
|
|
2,128,264
|
|
|
2,039,727
|
Total stockholders'
equity
|
|
|
645,425
|
|
|
637,619
|
Total liabilities
and stockholders' equity
|
|
$
|
846,217
|
|
$
|
832,749
|
GRAND CANYON
EDUCATION, INC.
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
(In
thousands)
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash flows provided
by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
88,537
|
|
$
|
83,640
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
6,622
|
|
|
6,361
|
Depreciation and
amortization
|
|
|
10,939
|
|
|
11,352
|
Amortization of
intangible assets
|
|
|
4,210
|
|
|
4,210
|
Deferred income
taxes
|
|
|
1,160
|
|
|
732
|
Other, including fixed
asset impairments
|
|
|
842
|
|
|
631
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts receivable
from university partners
|
|
|
52,731
|
|
|
44,336
|
Other
assets
|
|
|
(1,332)
|
|
|
(3,171)
|
Right-of-use assets
and lease liabilities
|
|
|
787
|
|
|
322
|
Accounts
payable
|
|
|
2,323
|
|
|
(6,285)
|
Accrued
liabilities
|
|
|
(460)
|
|
|
5,568
|
Income taxes
receivable/payable
|
|
|
(18,341)
|
|
|
(13,555)
|
Deferred
revenue
|
|
|
9,110
|
|
|
11,948
|
Net cash provided by
operating activities
|
|
|
157,128
|
|
|
146,089
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(17,599)
|
|
|
(15,136)
|
Additions of
amortizable content
|
|
|
(488)
|
|
|
(114)
|
Purchases of
investments
|
|
|
(73,807)
|
|
|
(91,361)
|
Proceeds from sale or
maturity of investments
|
|
|
43,837
|
|
|
26,994
|
Net cash used in
investing activities
|
|
|
(48,057)
|
|
|
(79,617)
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
Repurchase of common
shares and shares withheld in lieu of income taxes
|
|
|
(86,555)
|
|
|
(528,012)
|
Net cash used in
financing activities
|
|
|
(86,555)
|
|
|
(528,012)
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
|
|
22,516
|
|
|
(461,540)
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
120,409
|
|
|
600,941
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
142,925
|
|
$
|
139,401
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
26
|
|
$
|
5
|
Cash paid for income
taxes
|
|
$
|
42,460
|
|
$
|
38,841
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
|
|
|
Purchases of property
and equipment included in accounts payable
|
|
$
|
1,644
|
|
$
|
1,654
|
ROU Asset and Liability
recognition
|
|
$
|
3,727
|
|
$
|
503
|
Excise tax on treasury
stock repurchases
|
|
$
|
641
|
|
$
|
—
|
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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in thousands)
|
|
|
(Unaudited, in
thousands)
|
Net income
|
|
$
|
28,973
|
|
$
|
25,562
|
|
$
|
88,537
|
|
$
|
83,640
|
Plus: interest
expense
|
|
|
7
|
|
|
5
|
|
|
26
|
|
|
5
|
Less: investment
interest and other
|
|
|
(2,590)
|
|
|
(344)
|
|
|
(4,743)
|
|
|
(549)
|
Plus: income tax
expense
|
|
|
9,052
|
|
|
8,622
|
|
|
26,099
|
|
|
28,214
|
Plus: amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
4,210
|
|
|
4,210
|
Plus: depreciation and
amortization
|
|
|
5,402
|
|
|
5,628
|
|
|
10,939
|
|
|
11,352
|
EBITDA
|
|
|
42,949
|
|
|
41,578
|
|
|
125,068
|
|
|
126,872
|
Plus: loss on fixed
asset disposal
|
|
|
54
|
|
|
3
|
|
|
135
|
|
|
664
|
Plus: litigation and
regulatory reserves
|
|
|
1,474
|
|
|
857
|
|
|
2,547
|
|
|
2,128
|
Plus: share-based
compensation
|
|
|
3,253
|
|
|
3,171
|
|
|
6,622
|
|
|
6,361
|
Adjusted
EBITDA
|
|
$
|
47,730
|
|
$
|
45,609
|
|
$
|
134,372
|
|
$
|
136,025
|
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 ended March 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
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited, in
thousands except per share data)
|
GAAP Net
income
|
|
$
|
28,793
|
|
$
|
25,562
|
|
$
|
88,537
|
|
$
|
83,640
|
Amortization of
intangible assets
|
|
|
2,105
|
|
|
2,105
|
|
|
4,210
|
|
|
4,210
|
Loss on disposal of
fixed assets
|
|
|
54
|
|
|
3
|
|
|
135
|
|
|
664
|
Income tax effects of
adjustments(1)
|
|
|
(515)
|
|
|
(532)
|
|
|
(989)
|
|
|
(1,229)
|
As Adjusted, Non-GAAP
Net income
|
|
$
|
30,437
|
|
$
|
27,138
|
|
$
|
91,893
|
|
$
|
87,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted income per
share
|
|
$
|
0.96
|
|
$
|
0.80
|
|
$
|
2.91
|
|
$
|
2.51
|
Amortization of
intangible assets (2)
|
|
|
0.05
|
|
|
0.05
|
|
|
0.11
|
|
|
0.09
|
Loss on disposal of
fixed assets (3)
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.01
|
As Adjusted, Non-GAAP
Diluted income per share
|
|
$
|
1.01
|
|
$
|
0.85
|
|
$
|
3.02
|
|
$
|
2.61
|
|
|
|
|
|
|
|
|
|
|
|
(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 $0.02 for each of the three months ended June 30,
2023 and 2022, and net of an income tax benefit of $0.03 for each
of the six months ended June 30, 2023 and 2022.
|
(3)
|
The loss on disposal of
fixed assets per diluted share is net of an income tax benefit of
nil for both the three months ended June 30, 2023 and 2022, and net
of an income tax benefit of nil and $0.01 for the six months ended
June 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
View original content to download
multimedia:https://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-second-quarter-2023-results-301893120.html
SOURCE Grand Canyon Education