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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Q & A
Operator
Operator

(Operator Instructions) Our first question comes from line of Peter Appert with Piper Jaffray. Your line is now open.

Analyst
Peter Appert

Thank you. Good morning.

Executive
Karl McDonnell

Good morning, Peter.

Analyst
Peter Appert

I was hoping, Karl or Rob, maybe you could give us a little more granularity on the enrollment performance? Anything you'd call out in terms of programmatic areas, or is it continuing to be their corporate partnerships, just some more color on what's driving the improved performance?

Executive
Karl McDonnell

Sure, Peter. This last quarter, we saw strength across the Board. We continue to see strong performance at the undergraduate level. We've also seen a turnaround at the graduate student level, led by the performance of the Jack Welch Management Institute, which continues to grow 25%-plus per year. Our corporate partnerships were up. The degrees -- the work enrollments were up. So we've seen strength really across the Board.

Executive
Robert S. Silberman

Yes, the other thing I would say, Peter, is that, clearly, the macroeconomic environment is helping us this morning's announcements on labor participation rate and its growth. I've always felt that was probably the most significant indicator for us as to what was going to create consumer or student perspective, student confidence in their employability. And that's been getting stronger for well over 18 months now. And it's -- I think, you see it particularly in our undergraduate enrollment results.

Analyst
Peter Appert

Right. On the pricing front, do we cycle through the increased scholarships in the third quarter, or is that fourth quarter event?

Executive
Karl McDonnell

Peter, they're going to likely recede throughout the year each quarter, probably slowly, but it'll even continue into 2019 to some extent, because the students that, that received them in the fourth quarter of 2017 will keep them as long as they're enrolled.

Analyst
Peter Appert

And then, I guess, because it had such a beneficial impact on enrollments, do you think about perhaps expanding the discount program and bringing tuition rates down further?

Executive
Karl McDonnell

Affordability has always been something that we focus on considerably obviously with the 20% reduction in undergraduate tuition and the implementation of the graduation fund in late 2013. We feel like we're fairly priced. But moving forward it is something that we want to maintain a strong focus on and make sure that our programs are not just accessible, but also affordable.

Executive
Robert S. Silberman

And the other thing, Peter, is bear in mind, those scholarships were put in place in the late summer, early fall of 2017, and they were coincident with some serious disruption we had in our admissions operations from the -- there was two or three hurricanes that happened right at once in Texas and Florida and Georgia. So they were really situationally based. And outside of that, I think, our focus on affordability and our current tuitions structure, I think, is pretty relevant to our students.

Analyst
Peter Appert

Got it. Understood. And then on the -- I'm sorry, two more things. One, on the marketing costs took a step up here in the March quarter. How should we think about the trend there over the balance