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Bridgepoint Education Reports Full Year 2013 Results

Bridgepoint Education, Inc. (NYSE:BPI), a provider of postsecondary education services, announced the results for its fourth quarter and full year ended December 31, 2013.

Highlights for the fourth quarter ended December 31, 2013:

  • Revenue of $163.5 million compared to $209.4 million for the same period in 2012.
  • Operating loss of $11.9 million compared to operating income of $28.9 million for the same period in 2012.
  • Net loss of $6.5 million compared to net income of $18.4 million for the same period in 2012.
  • Fully diluted loss per common share of $0.12 compared to earnings per common share of $0.33 for the same period in 2012.
  • A legal accrual of $9.0 million increased general and administrative expenses and had an after-tax impact of $0.10 on fully diluted earnings.

Highlights for the full year ended December 31, 2013:

  • Total student enrollment was 63,624 compared to 81,810 at December 31, 2012.
  • Revenue of $768.6 million compared to $968.2 million for 2012.
  • Operating income of $60.4 million compared to $195.5 million for 2012.
  • Net income of $41.0 million compared to net income of $123.4 million for 2012.
  • Fully diluted earnings per common share of $0.74 compared to $2.21 for 2012.

"Throughout 2013, our institutions focused on delivering a relevant and high-quality education to their students," said Andrew Clark, CEO of Bridgepoint Education.  "We are pleased with the positive response we have attracted from prospective students and plan to continue this focus in 2014 and beyond."

Student Enrollment

Total student enrollment at the Company's academic institutions, Ashford University and University of the Rockies, was 63,624 at December 31, 2013, compared with 81,810 students at the end of the fourth quarter of 2012. Combined new student enrollments for the fourth quarter of 2013 at both of the Company's academic institutions increased to approximately 10,200, compared with combined new student enrollments of approximately 9,260 for the fourth quarter of 2012.

Financial Results

Revenue for the fourth quarter of 2013 was $163.5 million, compared with revenue of $209.4 million for the fourth quarter of 2012.  Revenue for the year ended December 31, 2013, was $768.6 million, compared with revenue of $968.2 million for the year ended December 31, 2012.

Operating loss for the fourth quarter of 2013 was $11.9 million compared with operating income of $28.9 million for the same period in 2012. Operating income for the year ended December 31, 2013, was $60.4 million, compared with $195.5 million for the year ended December 31, 2012.

Net loss for the fourth quarter of 2013 was $6.5 million compared with net income of $18.4 million for the fourth quarter of 2012.  Net income for the year ended December 31, 2013, was $41.0 million, compared with net income of $123.4 million for the year ended December 31, 2012.

Fully diluted loss per common share for the fourth quarter of 2013 was $0.12 compared with fully diluted earnings per common share of $0.33 for the fourth quarter of 2012.  Fully diluted earnings per common share for the year ended December 31, 2013, was $0.74 compared with fully diluted earnings per common share of $2.21 for the year ended December 31, 2012. The results above include an accrual of $9.0 million, which represents our best estimate of the cost of a resolution of a previously disclosed civil investigative demand from the Iowa Attorney General, and had an after-tax impact of $0.10 on fully diluted earnings for the year ended December 31, 2013.

The Company's effective tax rate for the year ended December 31, 2013, was 35.7%.

The Company anticipates a 1.7% tuition increase for undergraduate online students at Ashford University for courses beginning on or after April 1, 2014.

Balance Sheet and Cash Flow 

As of December 31, 2013, the Company had cash, cash equivalents and investments of $356.4 million, compared with $514.7 million as of December 31, 2012.  The Company generated $75.5 million of cash from operating activities for the year ended December 31, 2013, compared with $143.2 million for the year ended December 31, 2012. The Company's lower cash, cash equivalents and investments balance at December 31, 2013 reflects the completion of a Tender Offer for the repurchase of 10.25 million shares in December 2013 for approximately $201 million, inclusive of fees.

Earnings Conference Call and Webcast

The Company will host a conference call and webcast at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent developments. Call participants should dial 844-891-8291 (United States/Canada) or 856-452-0684 (other countries) and request the Bridgepoint Education call or provide conference ID 4976825.  A live broadcast of the call will also be available via the Internet at http://ir.bridgepointeducation.com and will be archived on the site for one year.

A telephonic replay will be available at 855-859-2056 (United States/Canada) or 404-537-3406 (other countries), passcode 4976825.  The replay will be available from Tuesday, March 11, 2014, at 2:30 p.m. (Eastern Time) until Tuesday, June 10, 2014, at 2:30 p.m. (Eastern Time).

About Bridgepoint Education

Bridgepoint Education, Inc. (NYSE:BPI) improves the way individuals learn. By harnessing creativity, knowledge and proprietary technologies, such as Constellation, Thuze, and Waypoint Outcomes, Bridgepoint Education has re-engineered the modern student experience with innovative solutions that advance learning. Its academic institutions – Ashford University and University of the Rockies – embody the contemporary college experience. Ashford University offers associate's, bachelor's and master's degree programs while University of the Rockies offers master's and doctoral degree programs. Both provide progressive online platforms, as well as traditional campuses located in Clinton, Iowa (Ashford University), and Colorado Springs, Colorado (University of the Rockies). For more information about Bridgepoint Education, call Paul Goodson, Associate Vice President of Investor Relations at (866) 475-0317 x2271.

Forward-Looking Statements

This news release may contain forward-looking statements including, without limitation, statements regarding pending legal matters, the Company's 2014 outlook and related commentary. These statements involve risks and uncertainties, and the Company's actual performance may differ materially from those expressed in or suggested by such statements. Risks and uncertainties include, without limitation:

  • failure to comply with the extensive regulatory framework applicable to the Company and its institutions, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements, and accrediting agency requirements;
  • adverse administrative, regulatory or legislative changes affecting the Company's institutions;
  • the imposition of fines or other corrective measures against the Company's institutions;
  • competition in the postsecondary education market and its potential impact on the Company's market share and recruiting costs; and
  • reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions.

More information on potential factors that could affect the Company's performance is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's periodic reports filed with the SEC, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, to be filed with the SEC. Forward-looking statements are made on the basis of management's views and assumptions regarding future events and business performance as of the time the statements are made, and the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, except as required by law.

 

 

BRIDGEPOINT EDUCATION, INC.

Consolidated Statements of Income

(In thousands, except per share amounts)

 
 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2013

 

2012

 

2013

 

2012

Revenue

$

163,453

   

$

209,356

   

$

768,623

   

$

968,171

 

Costs and expenses:

             

Instructional costs and services

93,755

   

102,607

   

395,928

   

364,001

 

Admissions advisory and marketing

55,726

   

65,239

   

235,358

   

339,209

 

General and administrative

25,828

   

12,566

   

76,894

   

69,497

 

Total costs and expenses

175,309

   

180,412

   

708,180

   

772,707

 

Operating income (loss)

(11,856)

   

28,944

   

60,443

   

195,464

 

Other income, net

710

   

878

   

3,346

   

3,370

 

Income (loss) before income taxes

(11,146)

   

29,822

   

63,789

   

198,834

 

Income tax expense (benefit)

(4,686)

   

11,450

   

22,779

   

75,413

 

Net income (loss)

$

(6,460)

   

$

18,372

   

$

41,010

   

$

123,421

 

Earnings (loss) per common share:

             

Basic

$

(0.12)

   

$

0.34

   

$

0.76

   

$

2.33

 

Diluted

(0.12)

   

0.33

   

0.74

   

2.21

 

Weighted average number of common shares outstanding used in computing earnings per common share:

             

Basic

53,098

   

54,050

   

53,923

   

52,947

 

Diluted

53,098

   

54,938

   

55,487

   

55,946

 

 

BRIDGEPOINT EDUCATION, INC.

Consolidated Balance Sheets

(In thousands, except par value)

 
 

As of December 31,

 

2013

 

2012

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

249,472

   

$

255,965

 

Investments

65,901

   

136,967

 

Accounts receivable, net

28,565

   

67,371

 

Student loans receivable, net

1,043

   

556

 

Deferred income taxes

15,232

   

10,936

 

Prepaid expenses and other current assets

21,369

   

19,810

 

Total current assets

381,582

   

491,605

 

Property and equipment, net

91,425

   

95,966

 

Investments

41,062

   

121,738

 

Student loans receivable, net

11,785

   

15,143

 

Goodwill and intangibles, net

26,878

   

10,739

 

Deferred income taxes

18,507

   

13,266

 

Other long-term assets

2,740

   

2,330

 

Total assets

$

573,979

   

$

750,787

 

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

$

5,195

   

$

4,588

 

Accrued liabilities

54,756

   

44,640

 

Deferred revenue and student deposits

132,791

   

175,057

 

Total current liabilities

192,742

   

224,285

 

Rent liability

23,927

   

25,173

 

Other long-term liabilities

9,271

   

9,759

 

Total liabilities

225,940

   

259,217

 

Total stockholders' equity

348,039

   

491,570

 

Total liabilities and stockholders' equity

$

573,979

   

$

750,787

 

 

BRIDGEPOINT EDUCATION, INC.

Consolidated Statements of Cash Flows

(In thousands)

 
 

Year Ended December 31,

 

2013

 

2012

Cash flows from operating activities

     

Net income

$

41,010

   

$

123,421

 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Provision for bad debts

72,313

   

73,696

 

Depreciation and amortization

21,666

   

17,424

 

Amortization of premium/discount

3,559

   

6,805

 

Deferred income taxes

(10,506)

   

(9,972)

 

Stock-based compensation

13,934

   

13,729

 

Excess tax benefit of option exercises

(2,590)

   

(10,058)

 

Loss on impairment of student loans receivable

1,998

   

 

Net realized gain on sale of marketable securities

(63)

   

 

Loss on termination of leased space

328

   

 

Loss on disposal of fixed assets

751

   

1,153

 

Changes in operating assets and liabilities:

     

Accounts receivable

(34,348)

   

(81,577)

 

Prepaid expenses and other current assets

(2,411)

   

(1,056)

 

Student loans receivable

291

   

(3,778)

 

Other long-term assets

(412)

   

2,131

 

Accounts payable and accrued liabilities

13,687

   

12,100

 

Deferred revenue and student deposits

(41,607)

   

(10,389)

 

Other liabilities

(184)

   

8,772

 

Uncertain tax position

(1,878)

   

784

 

Net cash provided by operating activities

75,538

   

143,185

 

Cash flows from investing activities

     

Capital expenditures

(14,825)

   

(25,296)

 

Purchases of investments

(26,759)

   

(179,387)

 

Restricted cash

   

25

 

Capitalized costs for intangible assets

(19,563)

   

(5,262)

 

Sales and maturities of investments

176,343

   

186,911

 

Net cash provided by (used in) investing activities

115,196

   

(23,009)

 

Cash flows from financing activities

     

Proceeds from exercise of stock options

10,464

   

2,257

 

Tax withholdings related to net exercise of stock options

(9,170)

   

(10,418)

 

Excess tax benefit of option exercises

2,590

   

10,058

 

Proceeds from the issuance of stock under employee stock purchase plan

1,234

   

1,340

 

Proceeds from the exercise of warrants

231

   

490

 

Tax withholdings related to net exercise of warrants

   

(944)

 

Issuance of restricted stock

(1,080)

   

(313)

 

Repurchase of common stock

(201,496)

   

(602)

 

Net cash provided by (used in) financing activities

(197,227)

   

1,868

 

Net increase (decrease) in cash and cash equivalents

(6,493)

   

122,044

 

Cash and cash equivalents at beginning of period

255,965

   

133,921

 

Cash and cash equivalents at end of period

$

249,472

   

$

255,965

 

 

Contact: Paul Goodson, Associate Vice President, Investor Relations
(866) 475-0317 x2271
investorrelations@bridgepointeducation.com

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