New Student Starts Increased 19.8%
Operating Income Up 127.6%
Operating Margin Increased from 6.8% to 12.6%
SANTA ANA, Calif., April 30 /PRNewswire-FirstCall/ -- Corinthian Colleges, Inc. (Nasdaq: COCO) reported financial results today for the third quarter ended March 31, 2009. The results exceeded our previous guidance range for start growth, revenue and earnings per share.
'Our strong third quarter results reflect the continued progress of our business initiatives as well as some favorable impact from the recession,' said Jack Massimino, Corinthian's chairman and chief executive officer. 'We have now reported increased start growth for twelve consecutive quarters, and the resulting rise in student population is leveraging fixed costs. In addition, increased marketing effectiveness and lower advertising costs are producing higher quality, less expensive leads. Given all of these factors, we achieved significant operating margin expansion in the quarter and raised earnings guidance for the balance of the fiscal year.'
'We believe our business strategy positions us to grow in both good and bad economic times,' Massimino said. 'Unemployment is expected to remain elevated throughout 2009 and 2010 and we expect it to be one catalyst for enrollment growth during that time. In addition, we expect new program implementations to continue to be an important source of growth, as well as facility expansions and the opening of new branch campuses.
'The economic stimulus bill passed by Congress included increased grant funding for eligible post-secondary students, and a substantial increase in skills training funds. These provisions will be of benefit to our current and prospective students, who will be able to borrow less to attend school,' Massimino added.
Comparing the third quarter of fiscal 2009 with the same quarter of the prior year
(Data is for continuing operations only, unless otherwise noted. More detail is provided in the 'Discontinued operations' section below and in the table which accompanies this release.):
- Net revenue was $346.4 million versus $279.9 million, up 23.8%.
- Total student population at March 31, 2009 was 84,722 versus 71,924 at March 31, 2008, an increase of 17.8%.
- Total student starts were 31,755 versus 26,510, an increase of 19.8%.
- Operating income was $43.5 million, compared with $19.1 million.
- Income from continuing operations (after tax) was $25.3 million, compared with $14.3 million. Net loss from discontinued operations was $0.3 million, versus $2.4 million.
- Diluted earnings per share from continuing operations were $0.29 versus $0.17. The diluted loss per share from discontinued operations was $0.01 versus $0.03.
Q3 09 Financial Review
Discontinued operations - This item includes WyoTech Oakland, which is available for sale; and the Everest campuses in Atlanta, Georgia and Everett and Lynwood, Washington, which have been taught out.
Educational services expenses were 56.1% of revenue in Q3 09 versus 57.1% in Q3 08. The decrease was mainly the result of a higher student population and the resulting leverage of compensation, facilities and other fixed expenses. Bad debt expense was 8.1% of revenue in Q3 09, within the previous guidance range of 8% - 8.5% and up from 5.8% in Q3 08.
Marketing and admissions expenses were 21.1% of revenue in Q3 09 versus 26.0% in Q3 08. The improvement was the result of lower advertising costs, higher lead quality, and increased admissions representative productivity.
General and administrative expenses were 10.2% of revenue in Q3 09 versus 10.1% in Q3 08.
Operating margin - As a result of the factors outlined above, our operating margin from continuing operations was 12.6% in Q3 09 versus 6.8% in Q3 08.
Cash flow from operations, including discontinued operations, was $151.6 million for the nine months ended March 31, 2009 versus $61.7 million for the same period of the prior fiscal year.
