Education Management just issued their IPO at 18.00 per share. I was able to grab a few @ 21.50 and watched it hit 22.90 only to fall back. The company issued 20 million shares and looks pretty strong.
Education Management Corporation - Home
Education Management LLC Reports Fiscal 2009 Fourth Quarter and Full Year Results
Pittsburgh, PA, August 17, 2009 -- Education Management LLC, one of the largest providers of postsecondary
education in North America, today reported its financial results for the three months and
twelve months ended June 30, 2009. For the fourth quarter of fiscal 2009, net income increased 273.3%
to $21.2 million while net revenues rose 24.8% to $519.6 million from the fourth quarter of fiscal 2008.
For the twelve months ended June 30, 2009, net income rose 61.1% to $104.2 million while net
revenues increased 19.4% to $2,011.5 million, from fiscal 2008.
Todd S. Nelson, Chief Executive Officer of Education Management, commented, “We are pleased to
again deliver strong financial and student enrollment results. These results are positive indicators that
we are achieving our vision of helping students achieve their educational goals.”
Financial Highlights
• Net revenues for the three months ended June 30, 2009 increased 24.8% to $519.6 million,
compared to $416.4 million for the same period a year ago. This increase was primarily due
to higher April student enrollment of 19.9% and increased tuition rates.
• For the fourth quarter of fiscal 2009, net income increased 273.3% to $21.2 million from $5.7
million in the prior year period. Earnings before interest, taxes, depreciation and amortization
(EBITDA) increased to $100.6 million from $70.2 million in the same period a year ago
primarily due to higher student enrollment.
• At June 30, 2009, cash and cash equivalents were $321.6 million compared to $236.0 million
at June 30, 2008. The Company had $100.0 million and $120.0 million outstanding on the
revolving credit facility at June 30, 2009 and 2008, respectively. The outstanding borrowings
under the revolving credit facility were repaid in full in the first few days of the following
fiscal year.
• Cash flow from operations for the twelve-month period ended June 30, 2009 was $293.0
million compared to $151.3 million for the twelve-month period ended June 30, 2008.
Increased operating cash flows for the current year were primarily related to increased
EBITDA and changes in working capital.
• Cash paid for capital expenditures was $150.7 million, or 7.5% of net revenues, for the twelve
months ended June 30, 2009 compared to $150.9 million, or 9.0% of net revenues, for fiscal
2008. We expect capital expenditures during fiscal 2010 to be approximately 6% to 8% of net
revenues.
The presentation of EBITDA does not comply with U.S. generally accepted accounting principles
(GAAP). For an explanation of EBITDA and Adjusted EBITDA (used for covenant compliance), and a
reconciliation to net income, the most directly comparable GAAP financial measure, see the Non-GAAP
Financial Measures disclosure in the financial tables section below.
Student Enrollment
At the start of the current July quarter (first quarter of fiscal 2010), total enrollment at our schools was
approximately 112,700 students, a 23.1% increase from the same time last year. Same-school enrollment
(schools with enrollment for one year or more) increased 21.6% over the prior year to approximately
111,400 students. Students enrolled in fully online programs increased 63.0% over fiscal 2008 to over
26,200 students.
July July Percentage
2009 2008 Change
Total enrollment 112,700 91,600 23.1%
Same-school enrollment(1)
Students enrolled in fully online programs
111,400
26,200
91,600
16,100
21.6%
63.0%
(1) S
chools with enrollment for one year or more.
Our quarterly revenues and income fluctuate primarily as a result of the pattern of student enrollments. The
seasonality of our business has decreased over the last several years due primarily to an increased
percentage of students enrolling in online programs, which generally experience less seasonal fluctuation
than campus-based programs. The first quarter is typically the lowest revenue recognition quarter due to
student vacations.
Conference Call and Webcast
Education Management will host a conference call to discuss its fiscal 2009 fourth quarter and year end on
Tuesday, August 18, 2009 at 2:00 p.m. (Eastern Time). Those wishing to participate in this call should dial
480-629-9643 approximately 10 minutes prior to the start of the call. A listen-only audio of the
conference call will also be broadcast live over the Internet at
Education Management Corporation - Home.
About Education Management
Education Management (
Education Management Corporation - Home), with over 110,800 students as of October 2008, is among
the largest providers of post-secondary education in North America, based on student enrollment and
revenue, with a total of 92 locations in 28 U.S. states and Canada. We offer academic programs to
our students through campus-based and online instruction, or through a combination of both. We are
committed to offering quality academic programs and continuously strive to improve the learning
experience for our students. Our educational institutions offer students the opportunity to earn
undergraduate and graduate degrees and certain specialized non-degree diplomas in a broad range of
disciplines, including design, media arts, health sciences, psychology and behavioral sciences,
culinary, fashion, business, education, legal and information technology.
Cautionary Statement
This press release may include information that could constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking
statements may involve risk and uncertainties that could cause actual results to differ materially from
any future results encompassed within the forward-looking statements. Factors that could cause or
contribute to such differences include those matters disclosed in the Company's Securities and
Exchange Commission filings. Past results of Education Management are not necessarily indicative
of its future results. Education Management does not undertake any obligation to update any
forward-looking statements.
— Tables to Follow —
EDUCATION MANAGEMENT LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL FOURTH QUARTER & FULL YEAR
(Dollars in millions) (Unaudited)
For the three months ended
June 30,
For the twelve months ended
June 30,
2009 2008 % change 2009 2008 %change
Net revenues $519.6 $ 416.4 24.8% $2,011.5 $ 1,684.2 19.4%
Costs and expenses:
Educational services 280.1 237.4 18.0% 1,067.7 901.3 18.5%
General and administrative 138.9 108.8 27.7% 512.5 419.1 22.3%
Depreciation and amortization 29.3 24.6 19.2% 112.3 100.3 12.0%
Total costs and expenses 448.3 370.8 20.9% 1,692.5 1,420.7 19.1%
Income before interest and
income taxes
71.3 45.6 56.3% 319.0 263.5 21.0%
Net interest expense 37.2 37.7 (1.2%) 153.6 157.7 (2.6%)
Income before income taxes 34.1 7.9 329.7% 165.4 105.8 56.3%
Provision for income taxes 12.9 2.2 472.3% 61.2 41.1 48.7%
Net income $21.2 $ 5.7 273.3% $104.2 $ 64.7 61.1%
Note: Certain prior year amounts have been reclassified to conform to the current year’s
presentation.
EDUCATION MANAGEMENT LLC AND SUBSIDIARIES
SELECTED CASH FLOW DATA – FISCAL YEAR-END
(Dollars in millions) (Unaudited)
For the twelve months ended June 30,
2009 2008 %change
Net cash flows provided by operations $293.0 $ 151.3 93.7%
Depreciation and amortization (1) 112.3 100.3 12.0%
Capital expenditures for long-lived assets (150.7) (150.9) (0.1%)
(1) Includes non-cash charges related to property, equipment and intangible asset impairments of
$5.5 million in the 2008 twelve-month period.
EDUCATION MANAGEMENT LLC AND SUBSIDIARIES
SELECTED BALANCE SHEET DATA – FISCAL YEAR-END
(Dollars in millions) (Unaudited)
As of June 30,
2009 2008
Cash and cash equivalents $321.6 $ 236.0
Current assets 552.6 418.9
Total assets 4,243.9 4,054.3
Revolving credit facility 100.0 120.0
Other current liabilities 420.2 340.0
Long-term debt (including current portion) 1,888.6 1,901.4
Member’s equity 1,444.5 1,351.2
EDUCATION MANAGEMENT LLC AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
Reconciliation of Net Income to EBITDA
(Dollars in millions) (Unaudited)
Non-GAAP Financial Measures
EBITDA, a measure used by management to measure operating performance, is defined as net
income plus net interest expense, income taxes and depreciation and amortization, including
amortization of intangible assets. EBITDA is not a recognized term under GAAP and does not
purport to be an alternative to net income as a measure of operating performance or to cash flows
from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a
measure of free cash flow available for management’s discretionary use, as it does not consider
certain cash requirements such as interest payments, tax payments and debt service requirements.
Management believes EBITDA is helpful in highlighting trends because EBITDA excludes the
results of decisions that are outside the control of operating management and can differ significantly
from company to company depending on long-term strategic decisions regarding capital structure,
the tax jurisdictions in which companies operate and capital investments. In addition, management
believes that EBITDA provides more comparability between our historical results and results that
reflect purchase accounting and the new capital structure. Management compensates for the
limitations of using non-GAAP financial measures by using them to supplement GAAP results to
provide a more complete understanding of the factors and trends affecting the business than GAAP
results alone. Because not all companies use identical calculations, this presentation of EBITDA may
not be comparable to similarly titled measures of other companies.
For the three months ended
June 30,
For the twelve months ended
June 30,
2009 2008 %change 2009 2008 %change
Net income $21.2 $ 5.7 273.3% $104.2 $ 64.7 61.1%
Net interest expense 37.2 37.7 (1.2%) 153.6 157.7 (2.6%)
Income tax expense 12.9 2.2 472.3% 61.2 41.1 48.7%
Depreciation and amortization(1) 29.3 24.6 19.2% 112.3 100.3 12.0%
EBITDA $100.6$ 70.2 43.3% $431.3 $ 363.8 18.5%
(1) Includes non-cash charges related to property, equipment and intangible asset impairments of
$5.5 million in the 2008 twelve-month period.
EDUCATION MANAGEMENT LLC AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
Reconciliation of Net Income to Adjusted EBITDA for Covenant Compliance
(Dollars in millions) (Unaudited)
Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted
EBITDA”) is a non-GAAP measure used to determine our compliance with certain covenants
contained in the indentures governing our outstanding senior notes and senior subordinated notes
(collectively, the “Notes”) and in our senior secured credit facilities. Adjusted EBITDA is defined as
EBITDA further adjusted to exclude unusual items and other adjustments permitted in calculating
covenant compliance under the indentures governing the Notes and our senior secured credit
facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in
presenting Adjusted EBITDA is appropriate to provide additional information to investors to
demonstrate compliance with our financial covenants.
For the twelve
months ended
June 30,
2009
EBITDA $431.3
Reversal of impact of unfavorable leases (1) (1.4)
Advisory fees (2) 5.0
Severance and relocation 4.9
Capital taxes 1.2
Other 1.5
Adjusted EBITDA - Covenant Compliance $442.5
(1) Represents a non-cash reduction to rent expense due to the amortization on $7.3 million of
unfavorable lease liabilities resulting from fair value adjustments required under SFAS No. 141
as part of the transaction pursuant to which a consortium of private investors acquired
Education Management Corporation on June 1, 2006.
(2) Represents advisory fees incurred under a management advisory agreement with affiliates of
certain of our shareholders in connection with such transaction as of June 1, 2006.
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