This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Career Education Corporation Reports Results For Second Quarter 2013

Career Education Corporation (NASDAQ: CECO) today reported total revenue of $294.8 million, and a net loss of $31.4 million, or -$0.47 per diluted share, for the second quarter of 2013 compared to total revenue of $365.9 million and net loss of $100.2 million, or -$1.52 per diluted share, for the second quarter of 2012.

“Our results are very much in line with our initial projections for the quarter. We are actively taking costs out of the business as we become more efficient and adjust the organization’s size to serve a smaller overall student population,” said Scott W. Steffey, president and CEO of Career Education. “I’m encouraged by the progress we’ve made across our domestic operations on improving our interactions with students, from the initial point of contact straight through to student outcomes, which gives me confidence that the actions we’re taking will positively impact the direction of the Company.

“The University group continues to be a profitable business, and as we continue to make improvements, we expect enhanced performance. The International segment continues to perform very well, and we’ve made significant progress towards finalizing our action plan for the Career Schools group, along with any additional strategic decisions,” Steffey said.

CONSOLIDATED RESULTS

Quarter Ended June 30, 2013

  • Total revenue was $294.8 million for the second quarter of 2013, a 19.4 percent decrease from $365.9 million for the second quarter of 2012.
  • Operating losses of $63.5 million and $105.3 million were recorded for the second quarters of 2013 and 2012, respectively. The operating margin was -21.5 percent for the second quarter of 2013 versus -28.8 percent for the second quarter of 2012. Operating loss for the quarter ended June 30, 2013 includes a $10.0 million ($0.10 per diluted share) charge related to the probable settlement of a legal matter and non-cash trade name impairment charges of $2.3 million ($0.02 per diluted share) related to the Le Cordon Bleu trade name and $1.7 million ($0.02 per diluted share) related to the Sanford-Brown trade name. The operating loss for the quarter ended June 30, 2012 included non-cash goodwill and asset impairment charges of $85.4 million ($1.24 per diluted share).
  • The loss from continuing operations for the second quarter of 2013 was $29.9 million, or -$0.45 per diluted share, versus the loss from continuing operations of $85.9 million, or -$1.30 per diluted share, for the second quarter of 2012.

Year to Date Ended June 30, 2013

  • Total revenue was $635.1 million for the year to date ended June 30, 2013, compared to $795.6 million for the year to date ended June 30, 2012.
  • Operating losses of $80.9 million and $57.0 million were recorded for the years to date ended June 30, 2013 and 2012, respectively. The operating margin decreased to -12.7 percent for the year to date ended June 30, 2013, from -7.2 percent for the year to date ended June 30, 2012.
  • The loss from continuing operations for the year to date ended June 30, 2013, was $43.9 million, or -$0.66 per diluted share, compared to the loss from continuing operations of $44.5 million, or -$0.67 per diluted share, for the year to date ended June 30, 2012.
  • In addition to the significant items for the quarter ended June 30, 2012 above, the operating results for the year to date ended June 30, 2012 include a $19.0 million ($0.19 per diluted share) insurance recovery related to the settlement of claims under certain insurance policies.

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows

  • Net cash flows used in operating activities totaled $67.0 million for the year to date ended June 30, 2013, compared to net cash flows provided by operating activities of $16.6 million for the year to date ended June 30, 2012.
  • Capital expenditures decreased to $10.0 million during the year to date ended June 30, 2013, from $20.0 million during the year to date ended June 30, 2012. Capital expenditures represented 1.6 percent and 2.5 percent of total revenue of continuing and discontinued operations during the years to date ended June 30, 2013 and 2012, respectively.

Financial Position

  • As of June 30, 2013 and December 31, 2012, cash and cash equivalents and short-term investments totaled $241.8 million and $402.3 million, respectively. During the first quarter of 2013, the Company repaid the $80.0 million of outstanding borrowings under its Credit Agreement. Accordingly, restricted cash balances decreased to $12.0 million at June 30, 2013 from $97.9 million at December 31, 2012.

LEGAL AND REGULATORY MATTERS

  • During the second quarter of 2013, the Company reached a preliminary agreement regarding the monetary component of a settlement with the Attorney General of the State of New York relating to their investigation of whether the Company and certain of its schools have complied with certain New York state consumer protection, securities, finance and other laws, which is subject to negotiation of a final agreement including certain injunctive provisions. This resulted in the Company recording a $10.0 million ($0.10 per diluted share) pretax charge in the current year quarter.
  • In addition, during the second quarter of 2013, the Company agreed to proposed settlements for its ongoing securities litigation and shareholder derivative actions, which are subject to negotiation of final agreements and court approval. The Company expects that the costs to settle these matters will be covered under its insurance policies.

STUDENT POPULATION AND NEW STUDENT STARTS

   

Student Population

Total student population by reportable segment as of June 30, 2013 and 2012 was as follows:

 
As of June 30, % Change
2013   2012 2013 vs. 2012

Student Population

CTU 20,500 22,600 -9 %
AIU 11,600 14,500 -20 %
Total University Schools 32,100 37,100 -13 %
Health Education 7,800 10,200 -24 %
Culinary Arts 7,700 12,000 -36 %
Design & Technology 4,700 6,600 -29 %
Total Career Schools 20,200 28,800 -30 %
International 2,400 2,700 -11 %
Subtotal 54,700 68,600 -20 %
Transitional Schools 2,900 8,300 -65 %
Total Student Population 57,600 76,900 -25 %
 

New Student Starts

New student starts by reportable segment for the quarters ended June 30, 2013 and 2012 were as follows:

 

For the Quarter Ended June 30,

% Change
2013 2012 2013 vs. 2012

New Student Starts

CTU (1) 4,410 5,800 -24 %
AIU (1) 2,110 3,050 -31 %
Total University Schools 6,520 8,850 -26 %
Health Education 1,540 1,470 5 %
Culinary Arts 2,260 2,410 -6 %
Design & Technology 540 610 -11 %
Total Career Schools 4,340 4,490 -3 %
International 370 510 -27 %
Subtotal 11,230 13,850 -19 %
Transitional Schools (2) 30 1,090 NM
Total New Student Starts 11,260 14,940 -25 %
 
   
(1)

During 2012 and 2013, CTU and AIU had established certain programs to enable students to assess their readiness to commit to enrolling in college-level courses. Excluding the impact of these readiness programs, new student starts for CTU and AIU are 15% and 8% lower in the second quarter of 2013 as compared to 2012, respectively.

 
(2)

Campuses within the Transitional Schools segment no longer enroll new students; students who re-enter after 365 days are reported as new student starts.

 

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, August 8, 2013 at 10:00 a.m. Eastern time. Interested parties can access the live webcast of the conference call at www.careered.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 800-580-9478 (domestic) or 630-691-2769 (international) and citing code 35251022. Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.careered.com in the Investor Relations section of the website. A replay of the call will also be available for seven days by calling 888-843-7419 (domestic) or 630-652-3042 (international) and citing code 35251022.

ABOUT CAREER EDUCATION CORPORATION

The colleges, schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population across the world in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The more than 90 campuses that serve these students are located throughout the United States and in France and Monaco, and offer doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

Stock quotes in this article: CECO 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.9670 -34.4910 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs