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Strategic Education (STRA) Q3 Earnings Lag, Enrollment Down
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Strategic Education, Inc. or SEI’s (STRA - Free Report) shares fell 7.7% on Nov 4, after it reported lackluster results for third-quarter 2021. Earnings and revenues missed the Zacks Consensus Estimate. Despite top-line growth on a year-over-year basis, adjusted earnings declined due to lower contribution from the U.S. Higher Education segment.
Karl McDonnell, CEO of Strategic Education, said, “While conditions in the U.S. Higher Education segment continue to be challenged due primarily to pandemic-related impacts, we are encouraged by strong performance in our Alternative Learning segment, and by the potential for reopening of the Australia borders for international students by the end of the year.”
Inside The Headlines
SEI reported adjusted earnings of 59 cents per share, missing the Zacks Consensus Estimate of 87 cents by 32.2% and decreasing 50% from the year-ago quarter.
Strategic Education Inc. Price, Consensus and EPS Surprise
Total revenues of $270.1 million missed the consensus estimate of $284 million by 5% but grew 13% from the prior-year level. Adjusted revenues, which excluded the impact of a purchase accounting adjustment and foreign currency exchange, grew 13.3% year over year.
Segment Details
SEI currently operates in three reportable segments: U.S. Higher Education or USHE, Alternative Learning and Australia/New Zealand or ANZ.
The USHE segment comprises Strayer University, including the Jack Welch Management Institute and DevMountain, Capella University, and Hackbright Academy. Segment’s revenues fell 16.7% year over year to $191.9 million due to lower third-quarter enrollment and revenue-per-student. Total enrollment declined 12.9% from the year-ago level to 77,574 students. FlexPath enrollment was 19% of USHE enrollment versus 14% in the same period of 2020. The segment’s operating margin contracted significantly to 2.7% from 14.6% a year ago.
The Alternative Learning segment includes Employer Solutions, Workforce Edge, Sophia Learning and Digital Enablement Partnerships. The segment’s quarterly revenues came in at $13 million, reflecting 48.7% year-over-year growth backed by growth in Sophia Learning subscriptions and employer affiliated enrollment. Employer affiliated enrollment was 21.1% of USHE enrollment compared with 18.3% in the year-ago period. Its adjusted operating margin came in at 40% for the reported quarter, down from 47.2% a year ago.
The ANZ segment includes Torrens University, Think Education and Media Design School. Revenues from the segment totaled $65.2 million and adjusted revenues were $65.9 million, excluding the impact of a purchase accounting adjustment and foreign currency exchange. Adjusted operating margin was 15.8% for the reported period. Student enrollment within ANZ was 18,188 during the reported period.
Operating Highlights
Adjusted operating margin of 7.7% was down 810 basis points from the year-ago figure of 15.8%. Adjusted EBITDA for the reported quarter was $38.7 million, down 26.1% from $52.4 million in the prior-year period.
Financial Details
As of Sep 30, 2021, it recorded cash and cash equivalents of $274.8 million compared with $187.5 million at 2020-end.
Cash provided by operating activities was $161.2 million in the first nine months of 2021 compared with $158.8 million in the comparable year-ago period. Capital expenditures were $33.6 million compared with $34.8 million a year ago. The company expects capital expenditures for 2021 to be $45-$50 million.
Some better-ranked stocks in the Zacks Schools industry include Laureate Education, Inc. (LAUR - Free Report) , Lincoln Educational Services Corporation (LINC - Free Report) and Vitru Limited (VTRU - Free Report) , each carrying a Zacks Rank #2 (Buy). Laureate, Lincoln, and Vitru’s earnings are likely to rise 45.7%, 136.1%, and 57.7% year over year, respectively.
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Strategic Education (STRA) Q3 Earnings Lag, Enrollment Down
Strategic Education, Inc. or SEI’s (STRA - Free Report) shares fell 7.7% on Nov 4, after it reported lackluster results for third-quarter 2021. Earnings and revenues missed the Zacks Consensus Estimate. Despite top-line growth on a year-over-year basis, adjusted earnings declined due to lower contribution from the U.S. Higher Education segment.
Karl McDonnell, CEO of Strategic Education, said, “While conditions in the U.S. Higher Education segment continue to be challenged due primarily to pandemic-related impacts, we are encouraged by strong performance in our Alternative Learning segment, and by the potential for reopening of the Australia borders for international students by the end of the year.”
Inside The Headlines
SEI reported adjusted earnings of 59 cents per share, missing the Zacks Consensus Estimate of 87 cents by 32.2% and decreasing 50% from the year-ago quarter.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Total revenues of $270.1 million missed the consensus estimate of $284 million by 5% but grew 13% from the prior-year level. Adjusted revenues, which excluded the impact of a purchase accounting adjustment and foreign currency exchange, grew 13.3% year over year.
Segment Details
SEI currently operates in three reportable segments: U.S. Higher Education or USHE, Alternative Learning and Australia/New Zealand or ANZ.
The USHE segment comprises Strayer University, including the Jack Welch Management Institute and DevMountain, Capella University, and Hackbright Academy. Segment’s revenues fell 16.7% year over year to $191.9 million due to lower third-quarter enrollment and revenue-per-student. Total enrollment declined 12.9% from the year-ago level to 77,574 students. FlexPath enrollment was 19% of USHE enrollment versus 14% in the same period of 2020. The segment’s operating margin contracted significantly to 2.7% from 14.6% a year ago.
The Alternative Learning segment includes Employer Solutions, Workforce Edge, Sophia Learning and Digital Enablement Partnerships. The segment’s quarterly revenues came in at $13 million, reflecting 48.7% year-over-year growth backed by growth in Sophia Learning subscriptions and employer affiliated enrollment. Employer affiliated enrollment was 21.1% of USHE enrollment compared with 18.3% in the year-ago period. Its adjusted operating margin came in at 40% for the reported quarter, down from 47.2% a year ago.
The ANZ segment includes Torrens University, Think Education and Media Design School. Revenues from the segment totaled $65.2 million and adjusted revenues were $65.9 million, excluding the impact of a purchase accounting adjustment and foreign currency exchange. Adjusted operating margin was 15.8% for the reported period. Student enrollment within ANZ was 18,188 during the reported period.
Operating Highlights
Adjusted operating margin of 7.7% was down 810 basis points from the year-ago figure of 15.8%. Adjusted EBITDA for the reported quarter was $38.7 million, down 26.1% from $52.4 million in the prior-year period.
Financial Details
As of Sep 30, 2021, it recorded cash and cash equivalents of $274.8 million compared with $187.5 million at 2020-end.
Cash provided by operating activities was $161.2 million in the first nine months of 2021 compared with $158.8 million in the comparable year-ago period. Capital expenditures were $33.6 million compared with $34.8 million a year ago. The company expects capital expenditures for 2021 to be $45-$50 million.
Zacks Rank & Key Picks
SEI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Schools industry include Laureate Education, Inc. (LAUR - Free Report) , Lincoln Educational Services Corporation (LINC - Free Report) and Vitru Limited (VTRU - Free Report) , each carrying a Zacks Rank #2 (Buy). Laureate, Lincoln, and Vitru’s earnings are likely to rise 45.7%, 136.1%, and 57.7% year over year, respectively.