Career Education Corporation (NASDAQ: CECO) today reported operating and financial results for the first quarter of 2014. Highlights from the first quarter of 2014 include:
- Fifth consecutive quarter of sequential improvement in the decline of total student enrollments at its ongoing institutions, inclusive of new student enrollment growth within University.
- Approximately $13.2 million of higher advertising investments for its ongoing academic institutions in the first quarter of 2014 compared to the fourth quarter of 2013. This partly contributed to greater cash outflows for the quarter compared to the fourth quarter of 2013, but is intended to reinforce the improving enrollment picture.
- A 32 percent improvement in the rate a prospective student converts to a new student application.
- A 7 percent decrease in new student acquisition costs at its ongoing institutions.
“We’re off to a good start in 2014 as we remain focused in our efforts to transform the company,” said President and CEO Scott W. Steffey. “I am energized by our progress in the first quarter. We announced the consolidation of brands within our Career Schools segment, a critical component in stabilizing our ground-based institutions. We believe that our ongoing operations are trending toward being EBITDA positive in the fourth quarter of this year, excluding unique items. We are rebuilding this organization with student success always at the core of our decisions and we’re beginning to see the results of our strategy taking hold.”
Career Education reported total revenue of $243.1 million, and a net loss of $58.1 million, or -$0.87 per diluted share, for the first quarter of 2014 compared to total revenue of $284.5 million and net loss of $15.2 million, or -$0.23 per diluted share, for the first quarter of 2013.
Quarter Ended March 31, 2014
CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION
- Total revenue was $243.1 million for the first quarter of 2014, a 14.5 percent decrease from $284.5 million for the first quarter of 2013. The decline is largely due to approximately 4,400 fewer total student enrollments in its ongoing institutions, which excludes Transitional Schools, in the first quarter of 2014 compared to the first quarter of 2013. In addition, the Transitional Schools segment accounted for 4.1 percent of the decrease in revenue.
- Operating losses of $47.9 million and $25.0 million were reported for the first quarters of 2014 and 2013, respectively. Higher operating losses in the first quarter of 2014 as compared to the first quarter of 2013 were primarily attributed to the current year quarter reporting lower total student enrollments and $6.8 million in legal settlement expenses net of anticipated insurance recovery. The operating margin was -19.7 percent for the first quarter of 2014 and -8.8 percent for the first quarter of 2013.
- The loss from continuing operations for the first quarter of 2014 was $47.4 million, or -$0.71 per diluted share. For the first quarter of 2013, the loss from continuing operations of $19.8 million, or -$0.30 per diluted share, included a $6.7 million ($0.10 per diluted share) loss related to the sale of the American InterContinental University campus in London, England which is reported in other income (expense).
Net cash used in operating activities increased to $35.4 million for the quarter ended March 31, 2014 compared to $14.2 million for the quarter ended March 31, 2013. This increase is driven primarily by the operating loss for the current year to date and net payments of income taxes.