Career Education Profit Declines

Earnings beat but revenue misses.
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Career Education

(CECO) - Get Report

, a postsecondary education provider, said its first-quarter earnings fell 5.7% from the year-ago period, hurt by stock-based compensation expense and a goodwill-impairment charge.

The Hoffman Estates, Ill.-based company earned $52.7 million, or 53 cents a share, in the quarter, compared with $55.9 million, or 53 cents a share, a year ago. First-quarter results include charges of 9 cents a share. Analysts polled by Thomson First Call were expecting earnings of $60.7 million, or 60 cents a share in the most recent quarter.

First-quarter revenue rose 3.6% from a year-ago period to $528.6 million against analysts' expectation of $540.7 million.

"In spite of outside pressures during the quarter, our business remains strong, and our momentum, substantial. We also made significant progress in addressing outstanding compliance, legal and governance issues. We are confident that we are positioning the company to capitalize on attractive growth opportunities, to the benefit of our students and, in turn, our stockholders over the long term," the company said.

First-quarter operating income fell 19.9% from a year-ago period to $79.2 million and operating margin dropped 439 basis points to 15%.

The company said its new student starts during the first quarter fell 13% from a year-ago period to about 28,300. Total student enrolment in the company's Gibbs segment fell 20% from a year-ago period to 6,500.

During the quarter, the company repurchased about 700,000 shares of common stock for about $24.9 million, at an average price of about $36.16 a share.

By segment, first-quarter revenue from university segment rose 15.1% from a year-ago period to $243.6 million. Revenue from culinary arts segment fell 2.2% to $90.6 million. Revenue from health education segment increased 7.1% to $40.6 million. Revenue from Gibbs segment was down 23% to $29.5 million and revenue from other schools segment declined 4.5% to $124.2 million.

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