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

May 02, 2018 • 10:00 am ET

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

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Q & A
Analyst
Peter Appert

of the year?

Executive
Daniel W. Jackson

I think, on a year-over-year basis, marketing could be up 5% to 10% on a full-year basis. There is some timing depending on the activity -- the advertising activities in any given quarter. We could move some of those dollars around. But on a full-year basis, I think, marketing expenses will grow somewhere between 5% and 10%.

Analyst
Peter Appert

Okay, great. And then just one last thing and I will shut up. On the new campus openings, and is there a specific incremental cost you would call out in terms of opening the new campuses? And just broadly, how we should think about the economics of them?

Executive
Karl McDonnell

We -- we're right now fine-tuning the model, it's relatively small. So I would say, it's not really significant for the year, especially since most of the new ones are going to be back-end loaded. And as we continue to fine-tune it, we'll have more to tell you about the broader kind of economic impact of the new campus roll out strategy.

Executive
Robert S. Silberman

I think, it's safe to say, Peter, compared to the model we had before with the much larger campuses, which generated a pretty significant operating income hit in the year that they were opened, these smaller models don't have that. They get break-even pretty quickly so.

Analyst
Peter Appert

Got it. Okay, great. Thanks very much.

Executive
Karl McDonnell

Sure.

Executive
Robert S. Silberman

Thank you, Peter.

Operator
Operator

Our next question comes from the line of Corey Greendale with First Analysis. Your line is now open.

Analyst
Corey Greendale

Hi. Good morning.

Executive
Karl McDonnell

Good morning, Corey.

Analyst
Corey Greendale

First, did the Macon campus have its -- have student start yet, or it's just that you're open to kind of enroll students?

Executive
Karl McDonnell

No, no, they're teaching their first academic term and we're running a couple of on-ground classes, as well as serving students online.

Analyst
Corey Greendale

Okay. Is it a sort of relevant question to ask how the student experience is going in the smaller footprint, or is it just like still like other campuses you already have that it's not -- it should be a focus of concern?

Executive
Karl McDonnell

No, I mean, it's early. We have tested the layout of the campus. We tested that on existing students in Jackson, Mississippi. We know the feedback has been quite strong. They're in literally their first term of instruction. So we're very early there, but we expect that these smaller footprint campuses are going to be well received

Analyst
Corey Greendale

Okay good. And then, Rob, since you're bringing up kind of the macroeconomist question. Just how -- there was a time when generally speaking, education was viewed as countercyclical. Do you think that's kind of broken at this point like we go into a downturn, would that be more a bad thing than a good thing?

Executive
Robert S. Silberman

Well, I never thought it was countercyclical, Corey. I thought it was a cyclical. And so you hit such a big perturbation in 2009 I mean, you had such an enormous financial crisis that put such a big hit on the economy as a whole. And that amount