Strayer Education Inc. (NASDAQ:STRA) Q1 2018 Earnings Conference Call Transcript

May 02, 2018 • 10:00 am ET

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Strayer Education Inc. (NASDAQ:STRA) Q1 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, everyone, and welcome to Strayer Education Incorporated's First Quarter 2018 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 strayereducation.com where the call will be archived.

With us today to discuss the results are Robert Silberman, Executive Chairman for Strayer Education; Karl McDonnell, Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following Strayer's remarks, we will open the call for questions and answers.

I would like to remind everyone that today's press release contains and certain information on this call may contain statements that are forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act. These statements are based on the company's current expectations and are subject to a number of assumptions, uncertainties and risks that the company has identified in the paragraph on forward-looking statements at the end of its press release and that could cause the company's actual results to differ materially.

Further information about these and other relevant uncertainties may be found in the company's Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Copies of these filings and the full press release are available online and upon request from the company's Investor Relations department.

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

Executive
Robert S. Silberman

Thank you, operator, and good morning, ladies and gentlemen. Q1 was a pretty straightforward quarter from my perspective. So I'll just turn it over to Dan for details on the financial results, after which Karl will comment on our operating activities, as well as provide an update on the status of our merger integration activities. And, of course, we will stay after our comments for as long as you have questions. Dan?

Executive
Daniel W. Jackson

Thank you, Rob, and good morning, everyone. I want to start by noting that consistent with last quarter, our earnings release and 10-Q reference as reported or GAAP results and adjusted or non-GAAP results. This format is intended to illustrate both the financial performance of the core business as reflected in the adjusted numbers and our GAAP results, which in the first quarter of 2018 reflect the impact of our ongoing merger with Capella and associated transaction and integration expenses. No such expenses were incurred in the first quarter of 2017.

Now for our Q1 results. Revenue for the quarter grew 1% to $116.5 million from $114.9 million last year. Revenue per student declined approximately 5% in Q1, in line with our expectations and driven primarily by higher scholarship stemming from scholarship programs introduced in fall 2017.

Our GAAP income from operations for the first quarter was $11.3 million, compared to $18.4 million last year. GAAP income from operations in the first quarter includes approximately $5.3 million in merger-related costs. Excluding these costs, adjusted income from operations was $16.7 million. Our adjusted operating margin was 14.3%