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K12 Inc. Reports Second Quarter Fiscal 2014 With Revenue Of $223.9 Million

Stocks in this article: LRN

HERNDON, Va., Feb. 4, 2014 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the second fiscal quarter ended December 31, 2013. Financial measures are provided on a GAAP basis, followed by a summary of results excluding the impact of specific charges which had a significant impact on second quarter results.

Financial Highlights for the Three Months Ended December 31, 2013 (Second Quarter Fiscal Year 2014)

  • Revenues for the second quarter of FY 2014 increased 8.7% from the prior year to $223.9 million.
  • EBITDA, a non-GAAP measure (see reconciliation below), for the second quarter of FY 2014 was $25.6 million, compared to $32.5 million from the second quarter of FY 2013.
  • Operating loss of $8.9 million compared to operating income of $16.3 million in the second quarter of FY 2013.
  • Net loss attributable to common stockholders of $3.7 million, compared to net income of $9.5 million from second quarter of FY 2013.
  • Diluted net loss attributable to common stockholders per share was $0.09.

During the quarter ended December 31, 2013, the Company incurred the following charges, totaling $32.2 million including $4.4 million in cash charges.

  • Additional reserve for excess inventory and accelerated depreciation on software, products and computer hardware of $18.6 million.
  • Accelerated amortization of trade names in our Institutional business of $5.2 million.
  • Severance costs associated with the departure of Ron Packard, K12's former CEO, and a modest workforce reduction enacted primarily at K12 headquarters, collectively $7.4 million.
  • The Company announced its intent to form a new company which K12 will contribute assets and its partners will contribute cash. Other charges and expenses of $1.0 million included costs related to the formation of this new company.

Excluding the impact of the aforementioned charges, for the three months ended December 31, 2013 (see additional tables below).

  • EBITDA would have increased to $40.2 million, a 23.7% increase compared to the $32.5 million from the second quarter of FY 2013.
  • Operating income would have increased to $23.3 million, a 42.9% increase compared to operating income of $16.3 million in the second quarter of FY 2013.
  • Net income attributable to common and Series A stockholders would have increased to $14.3 million, a 50.5% increase compared to net income of $9.5 million in the second quarter of FY 2013.
  • Diluted net income attributable to common stockholders per share would have increased to $0.36 as compared to the $0.24 in the prior year.

Financial Highlights for the Six Months Ended December 31, 2013

  • Revenues for the six months ended December 31, 2013 increased 5.9% to $452.3 million.
  • EBITDA, a non-GAAP measure (see reconciliation below), was $34.1 million, compared to $56.8 million from the first six months of FY 2013.
  • Operating loss of $17.4 million compared to operating income of $24.9 million for the first six months of FY 2013.
  • Net loss attributable to common and Series A stockholders of $8.7 million, compared to net income of $13.9 million for the first six months of FY 2013.
  • Diluted net loss attributable to common stockholders per share was $0.22, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013.

Excluding the impact of the aforementioned charges, for the six months ended December 31, 2013

  • EBITDA would have been $48.6 million compared to $56.8 million for the first six months of FY 2013.
  • Operating income would have been $14.9 million compared to operating income of $24.9 million for the first six months of FY 2013.
  • Net income attributable to common and Series A stockholders would have been $9.2 million compared to net income of $13.9 million for the first six months of FY 2013.
  • Diluted net income attributable to common stockholders per share would have been $0.24, which includes the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013.

Comments from Management

"We continue to be focused on our primary mission to provide an individualized and effective educational experience for our students," said Nate Davis, Chairman and Chief Executive Officer. "This quarter we continued to invest in new content, programs, and infrastructure while improving internal operating efficiency. Our Managed Schools are now in the middle of the school year using many of the new educational programs we put in place this year which we believe will improve educational outcomes for all engaged families," added Davis.

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