Bridgepoint Education Reports Third Quarter 2013 Results

Announces Forbes School of Business

News provided by

Bridgepoint Education

Nov 05, 2013, 07:00 ET

SAN DIEGO, Nov. 5, 2013 /PRNewswire/ -- Bridgepoint Education (NYSE:BPI), a provider of postsecondary education services, announced today its results for the three months ended September 30, 2013.

Highlights for the third quarter ended September 30, 2013, are as follows:

  • Total student enrollment at period end was 68,566.
  • Revenue was $185.6 million compared with $252.1 million for the same period in 2012.
  • Operating income was $12.9 million compared with $47.1 million for the same period in 2012.
  • Net income was $10.1 million compared with $29.8 million for the same period in 2012.
  • Fully diluted earnings per share was $0.18 compared with $0.53 for the same period in 2012.

"With its worldwide recognition as a well respected business authority, I know the Forbes alliance will provide our business students with new resources that are highly relevant to their careers, and reinforce Ashford's reputation of offering high quality degree programs that are affordable," said Andrew Clark, CEO of Bridgepoint Education.   

Ashford University Receives Update from Department of Education
On November 4, 2013, the Department of Education notified Ashford University that the Department will approve Ashford's change in accreditor, recognizing the Western Association of Schools and Colleges (WASC) as Ashford University's accreditor, along with the renewal of certification for continued participation in the Title IV, HEA programs. The Department anticipates completing its review and approval of Ashford's application for change in accreditor, and issuing a new Program Participation Agreement, within the next few weeks.

Student Enrollment
Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, was 68,566 students at September 30, 2013, compared with 91,358 students at the end of the third quarter of 2012.

New student enrollments for the third quarter of 2013 at Bridgepoint Education's academic institutions were approximately 12,500 compared with new student enrollments of approximately 20,500 for the same period in 2012.

Financial Results
Revenue for the third quarter of 2013 was $185.6 million, compared with revenue of $252.1 million for the same period in 2012.  Revenue for the nine months ended September 30, 2013, was $605.2 million, compared to $758.8 million for the same period in 2012.

Operating income for the third quarter of 2013 was $12.9 million compared with operating income of $47.1 million for the same period in 2012. Operating income for the nine months ended September 30, 2013 was $72.3 million compared to $166.5 million for the same period in 2012.

Net income for the third quarter of 2013 was $10.1 million compared with net income of $29.8 million for the same period in 2012. Net income for the nine months ended September 30, 2013 was $47.5 million compared to $105.0 million for the same period in 2012.

Fully diluted earnings per share for the third quarter of 2013 was $0.18 compared with $0.53 for the same period in 2012. Fully diluted earnings per share for the nine months ended September 30, 2013, was $0.85 compared with $1.87 for the same period in 2012.

The results for the nine months ended September 30, 2013 include a pre-tax charge of $5.9 million for severance, which had an impact on the year-to-date earnings equal to $0.06 per diluted share.

The Company's effective tax rate for the third quarter of 2013 was 25.7%.

Balance Sheet and Cash Flow
As of September 30, 2013, the Company had cash, cash equivalents and investments of $553.3 million, compared with $514.7 million as of December 31, 2012. The Company generated $54.3 million of cash from operating activities in the nine months ended September 30, 2013, compared with $93.6 million for the same period in 2012.

Forbes Alliance
On October 31, 2013, Bridgepoint Education and Ashford University entered into a license agreement with a subsidiary of Forbes Media LLC.  Under the agreement, Ashford University's College of Business, both graduate and undergraduate, will be named the Forbes School of Business, and we have licensed certain trademarks and print and online content from Forbes, as well as other intellectual property, for use in Ashford's bachelor's and master's business programs.  The alliance will offer Ashford's online students access to unique speaker events drawn from Forbes' roster of more than 1,200 international contributors.  The Forbes agreement has an initial 12-year term, with an option to renew for subsequent 12-year terms at our election, subject to certain conditions.  We have made a one-time payment of $15 million required by the agreement.  Going forward we will pay royalties based on a percentage of annual revenues attributable to Ashford University's business-related programs, subject to a $2.5 million annual minimum.

Earnings Conference Call and Webcast
Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States and Canada is (888) 397-5354, and for other callers, 719-457-2604. The access code for all callers is 6811596.  A live webcast will also be available on the Company's website at http://ir.bridgepointeducation.com

A replay of the call will be available via telephone through November 12, 2013. To access the replay, dial 888-203-1112 in the United States and Canada or (719) 457-0820 for other callers. The access code for all callers is 6811596.

About Bridgepoint Education
Bridgepoint Education, Inc. (NYSE:BPI) improves the way individuals learn. By harnessing creativity, knowledge and proprietary technologies, such as Constellation, Thuze, and Waypoint Outcomes, Bridgepoint Education has re-engineered the modern student experience with innovative solutions that advance learning. Its academic institutions - Ashford University and University of the Rockies - embody the contemporary college experience. Ashford University offers associate's, bachelor's and master's degree programs while University of the Rockies offers master's and doctoral degree programs. Both provide progressive online platforms, as well as traditional campuses located in Iowa (Ashford University), and Colorado (University of the Rockies). For more information about Bridgepoint Education, call Paul Goodson, Associate Vice President of Investor Relations at (866) 475-0317 x2271.

Forward-Looking Statements
This news release may contain forward-looking statements. These statements involve risks and uncertainties, and the Company's actual performance may differ materially from that expressed in or suggested by such statements. Risks and uncertainties include, without limitation:

  • the approval of the Department of Education for Ashford University's transfer of accreditors and related state regulatory approvals;
  • the impact of our agreement with Forbes;
  • failure to comply with the extensive regulatory framework applicable to the Company and its institutions, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements, and accrediting agency requirements;
  • adverse regulatory or legislative changes affecting the Company's institutions;
  • the imposition of fines or other corrective measures against the Company's institutions;
  • competition in the postsecondary education market and its potential impact on the Company's market share and recruiting costs; and
  • reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions.

More information on potential factors that could affect the Company's performance is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's periodic reports filed with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 12, 2013, and amended on May 17, 2013, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, to be filed with the SEC. Forward-looking statements are made on the basis of management's views and assumptions regarding future events and business performance as of the time the statements are made, and the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, except as required by law.

Contact: Paul Goodson, Associate Vice President of Investor Relations
866.475.0317 x2271
[email protected]

BRIGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)





Three Months Ended

September 30,

Nine Months Ended

September 30,

2013

2012

2013

2012

Revenue

$

185,612

$

252,076

$

605,170

$

758,815

Costs and expenses:






Instructional costs and services(1)

92,204

90,986

299,895

260,489

Admissions advisory and marketing(1)

64,507

96,734

179,632

273,970

General and administrative(1)

16,050

17,247

53,344

57,836

Total costs and expenses

172,761

204,967

532,871

592,295

Operating income

12,851

47,109

72,299

166,520

Other income, net

787

955

2,636

2,492

Income before income taxes

13,638

48,064

74,935

169,012

Income tax expense

3,503

18,244

27,465

63,963

Net income

$

10,135

$

29,820

$

47,470

$

105,049

Earnings per common share:






Basic

$

0.19

$

0.56

$

0.88

$

2.00

Diluted

0.18

0.53

0.85

1.87

Weighted average number of common shares outstanding used in computing earnings per common share:






Basic

54,336

53,184

54,201

52,576

Diluted

56,431

55,756

55,795

56,089


(1)

Effective in the fourth quarter of 2012, the Company made changes in the presentation of its operating expenses. The Company has reclassified prior periods to conform to the new presentation. The Company determined that these changes would better reflect industry practices and would provide more meaningful information as well as increased transparency to its operations. The Company believes that the reclassification better represents the operational changes and the business initiatives that have been implemented.


BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)





As of

September 30, 2013

As of

December 31, 2012

ASSETS


Current assets:


Cash and cash equivalents

$

431,762

$

255,965

Investments

35,221

136,967

Accounts receivable, net

51,123

67,927

Deferred income taxes

11,033

10,936

Prepaid expenses and other current assets

16,057

19,810

Total current assets

545,196

491,605

Property and equipment, net

94,570

95,966

Investments

86,279

121,738

Student loans receivable, net

11,936

15,143

Goodwill and intangibles, net

11,974

10,739

Deferred income taxes

13,284

13,266

Other long-term assets

1,951

2,330

Total assets

$

765,190

$

750,787

LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:


Accounts payable

$

9,322

$

4,588

Accrued liabilities

43,567

44,640

Deferred revenue and student deposits

126,447

175,057

Total current liabilities

179,336

224,285

Rent liability

26,294

25,173

Other long-term liabilities

8,745

9,759

Total liabilities

214,375

259,217

Total stockholders' equity

550,815

491,570

Total liabilities and stockholders' equity

$

765,190

$

750,787

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Nine Months Ended

September 30,

2013

2012

Cash flows from operating activities


Net income

$

47,470

$

105,049

Adjustments to reconcile net income to net cash provided by operating activities:


Provision for bad debts

53,649

52,418

Depreciation and amortization

15,861

12,761

Amortization of premium/discount

3,596

5,384

Stock-based compensation

10,704

9,915

Excess tax benefit of option exercises

(863)

(8,446)

Loss on impairment of student loans receivable

790

—

Net realized gain on sale of securities

(62)

—

Changes in operating assets and liabilities:


Accounts receivable

(36,056)

(90,188)

Prepaid expenses and other current assets

3,395

(3,982)

Student loans receivable

218

(5,730)

Other long-term assets

379

1,971

Accounts payable and accrued liabilities

3,699

19,363

Deferred revenue and student deposits

(48,610)

(13,191)

Other liabilities

107

8,264

Net cash provided by operating activities

54,277

93,588

Cash flows from investing activities


Capital expenditures

(11,737)

(20,803)

Purchases of investments

(26,724)

(173,512)

Restricted cash

—

25

Capitalized curriculum development costs

(3,518)

(4,130)

Sales and maturities of investments

161,854

151,511

Net cash provided by (used in) investing activities

119,875

(46,909)

Cash flows from financing activities


Proceeds from exercise of stock options

1,250

2,240

Tax withholdings related to net issuance of stock options

—

(10,418)

Excess tax benefit of option exercises

863

8,446

Proceeds from the issuance of stock under employee stock purchase plan

604

707

Proceeds from the exercise of warrants

8

2

Issuance of restricted stock

(1,080)

—

Net cash provided by financing activities

1,645

977

Net increase in cash and cash equivalents

175,797

47,656

Cash and cash equivalents at beginning of period

255,965

133,921

Cash and cash equivalents at end of period

$

431,762

$

181,577

SOURCE Bridgepoint Education

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