Strayer Education Inc. (NASDAQ:STRA) Q4 2017 Earnings Conference Call - Final Transcript

Mar 02, 2018 • 08:30 am ET


Strayer Education Inc. (NASDAQ:STRA) Q4 2017 Earnings Conference Call - Final Transcript


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Good morning, everyone, and welcome to Strayer Education, Inc.'s Fourth Quarter 2017 Earnings Results Conference Call. This call is being recorded. For those of you who wish to listen to the conference via the Internet, please go to where the call will be archived. With us today to discuss the results are Robert Silberman, Executive Chairman for Strayer Education; Karl McDonnell, CEO; and Daniel Jackson, EVP and CFO. Following Strayer's remarks, we will open the call for questions and answers.

(Forward-Looking Cautionary Satements)

And now I'd like to turn the call over to Robert Silberman. Mr. Silberman, please go ahead.

Robert S. Silberman

Thank you, operator, and good morning, ladies and gentlemen. We have a fair amount of material to cover today, but I did want to make a couple of brief opening remarks from my perspective before turning it over to Karl and Dan.

First, with regard to our pending merger with Capella Education Company, we are executing on all of the key transaction milestones. In November, we received our FTC and Hart-Scott-Rodino approvals. On January 19, 2018, both companies received their respective shareholder approvals for the transaction. Last week, the US Department of Education issued its pre-acquisition review of the transaction without any material conditions. And finally, Capella University has submitted its application for its change of (inaudible) its regional accreditor, the Higher Learning Commission. So consistent with our announcement of last November, we appear on track to close the transaction in the third quarter of 2018.

Now Karl will have more details on the status of our actual integration activities, but let me just say, from my perspective, what a pleasure it has been working with Kevin Gilligan and his team. As I mentioned at the time of the announcement, we have long been admirers of Capella's academic model and student performance, but we are even more so now after seeing the university up close and having the opportunity to work hand in hand with such a dedicated group of educators. After the last six months, it is certainly no wonder to us as to why Capella University is held in such high regard by both the Higher Learning Commission and the US Department of Education.

The second general point I wanted to make with regards to this morning's earnings release is that due to both the Cappella transaction and the recently passed federal tax bill, we are introducing in this release some adjustments to Strayer Education's financial statements. Nothing out of the ordinary or difficult to understand, but Dan will walk you through the detail of these adjustments to get from our reported GAAP results to what I call our core owner's economics.

These adjustments fall into two categories. The first is a large noncash book increase to our 2017 tax rate to adjust our deferred tax asset to the new lower federal corporate tax rate. And then the second category are nonrecurring cash expenses associated with both the costs of executing our merger with Capella Education Company as