Skip to main content
05 / 2019 article

Bridgepoint Education Reports Full Year and Fourth Quarter 2009 Results

Share

 

Bridgepoint Education (NYSE: BPI), a provider of postsecondary education services, announced today the results for its full year and fourth quarter ended December 31, 2009.

Highlights for the full year ended December 31, 2009:

  • Total student enrollment increased 70.1% year-over-year to 53,688.
  • Revenue increased 108.1% to $454.3 million from $218.3 million for the same period in 2008.
  • Operating income increased 144.6% to $81.7 million from $33.4 million for the same period in 2008.
  • Net income was $47.1 million, an increase of 78.2% compared with net income of $26.4 million for the same period in 2008.
  • Non-GAAP net income increased 178.0% to $73.5 million from $26.4 million for the same period in 2008.
  • Fully diluted earnings per common share increased 362.5% to $0.74 from $0.16 for the same period in 2008. Non-GAAP fully diluted earnings per common share increased 687.5% to $1.26 from $0.16 for the same period in 2008.


Highlights for the fourth quarter ended December 31, 2009:

  • Revenue increased 90.6% to $131.8 million from $69.1 million for the fourth quarter of 2008.
  • Operating income increased 376.6% to $33.9 million from $7.1 million for the same period in 2008.
  • Net income was $19.6 million, an increase of 246.7% compared with net income of $5.7 million for the same period in 2008.
  • Fully diluted earnings per common share increased 725.0% to $0.33 from $0.04 for the same period in 2008.

"Our solid results continue to demonstrate the strength and differentiation of our operating model," said Andrew Clark, Chief Executive Officer of Bridgepoint Education. "We offer quality higher education programs to students from around the world who are drawn to our compelling student value proposition, which offers high levels of accessibility, transferability of credits, affordability and the stability of heritage campuses. Tens of thousands have embraced our student value proposition – this is the driver behind four consecutive quarters of strong growth and solid financial results."

Student Enrollment

Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, increased 70.1% to 53,688 students at December 31, 2009, compared with 31,558 students at the end of the fourth quarter of 2008. As of December 31, 2009, 99% of the total student population accessed their classes exclusively online.

Combined new student enrollments for the fourth quarter of 2009 at both of Bridgepoint Education's academic institutions were approximately 10,600, an increase of 49.3%, compared with combined new student enrollments of approximately 7,100 for the fourth quarter of 2008.

Financial Results

Revenue for the fourth quarter of 2009 was $131.8 million, an increase of 90.6%, compared with revenue of $69.1 million for the fourth quarter of 2008.  Revenue for the year ended December 31, 2009, was $454.3 million, an increase of 108.1% compared with revenue of $218.3 million for the same period in 2008.

Operating income for the fourth quarter of 2009 was $33.9 million, an increase of 376.6% compared with $7.1 million for the same period in 2008. Operating income for the year ended December 31, 2009, was $81.7 million, an increase of 144.6% compared with $33.4 million for the same period in 2008.

Non-GAAP operating income for the year ended December 31, 2009, which excludes (1) an $11.1 million charge taken in the first quarter related to the settlement of a stockholder claim (of which $10.6 million was non-cash) and (2) a non-cash charge of $30.4 million taken in the second quarter related to the acceleration of certain exit options in connection with the Company's initial public offering, was $123.2 million, a 268.6% increase from the same period in 2008.  See "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below.

Net income for the fourth quarter of 2009 was $19.6 million, an increase of 246.7% compared with net income of $5.7 million for the fourth quarter of 2008. Net income for the year ended December 31, 2009, was $47.1 million, an increase of 78.2%, compared with net income of $26.4 million for the same period in 2008.

Non-GAAP net income for the fourth quarter of 2009 was $20.1 million, which reflects a $0.5 million increase in the net income effect of the $11.1 million settlement charge taken in the first quarter of 2009 based on management's current estimate of the tax impact thereof. Non-GAAP net income for the year ended December 31, 2009, which excludes (1) the net income effect of $17.1 million related to the $30.4 million option acceleration charge taken in the second quarter of 2009 and (2) the net income effect of $9.3 million related to the $11.1 million settlement charge taken in the first quarter of 2009, was $73.5 million, a 178.0% increase from the same period in 2008. See "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below.

Fully diluted earnings per common share for the fourth quarter of 2009 was $0.33, an increase of 725.0%, compared with fully diluted earnings per common share of $0.04 for the fourth quarter of 2008. Fully diluted earnings per common share for the year ended December 31, 2009, was $0.74, an increase of 362.5% compared with fully diluted earnings per common share of $0.16 for the same period in 2008.

Non-GAAP fully diluted earnings per common share for the fourth quarter of 2009 and the year ended December 31, 2009, were $0.34 and $1.26, respectively. Non-GAAP fully diluted earnings per share is defined to mean non-GAAP net income, less accretion for preferred dividends, divided by fully diluted weighted average shares outstanding assuming the conversion of all redeemable convertible preferred stock into common stock as if the conversion happened on January 1, 2009, for the applicable period. See "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below.

The Company's effective tax rate for the year ended December 31, 2009, was 42.7%.  Before taking into account the settlement charge taken in the first quarter of 2009, the effective tax rate for the year ended December 31, 2009, was 40.6%.

Balance Sheet and Cash Flow

As of December 31, 2009, Bridgepoint had cash, cash equivalents and marketable securities of $170.6 million, compared with $56.5 million as of December 31, 2008.  The Company generated $131.7 million of cash from operating activities for the year ended December 31, 2009, compared with $70.7 million for the same period in 2008.

2010 Outlook

The Company is providing guidance for the year ending December 31, 2010.

  • Total student enrollment is expected to be between 69,000 and 71,000 at December 31, 2010.
  • Revenue is expected to be between $688.2 million and $691.2 million.
  • Net income is expected to be between $114.5 million and $115.5 million.
  • Fully diluted earnings per common share is expected to be between $1.86 and $1.88, based on an estimated fully diluted weighted average share count of 61.4 million for the year ending December 31, 2010.
  • Bad debt as a percentage of revenues for 2010 is expected to be 5.1%.
  • Capital expenditures for 2010 are expected to be between 7% and 8% of revenue.
  • The Company's effective tax rate for 2010 is estimated to be 40.6%.

This guidance takes into account a 5% tuition increase for online students at Ashford University and the University of the Rockies (all undergraduate and graduate degree programs) which will go into effect for the courses beginning on or after April 1, 2010.  There is currently no planned increase for ground students at Ashford University or the University of the Rockies.

About Non-GAAP Financial Measures

To supplement its consolidated financial statements, which statements are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: non-GAAP instructional costs and services, non-GAAP marketing and promotional expenses, non-GAAP general and administrative expenses, non-GAAP operating income, non-GAAP net income and non-GAAP fully diluted earnings per common share.

The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain expenses that may not be indicative of its recurring core business operating results and may help in comparing its current-period results with those of prior periods.  Management believes that they and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning, forecasting and analyzing future periods. Management believes these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by institutional investors and the analyst community to help them analyze the results of the Company's business.

The material limitations of these non-GAAP financial measures are as follows: non-GAAP instructional costs and services, non-GAAP marketing and promotional expenses, non-GAAP general and administrative expenses, non-GAAP operating income, non-GAAP net income and non-GAAP fully diluted earnings per common share are not recognized terms under GAAP and do not purport to be alternatives to instructional costs and services, marketing and promotional expenses, general and administrative expenses, operating income, net income or fully diluted earnings per common share, respectively, as indicators of operating performance or any other GAAP measures.  

Moreover, because not all companies use identical measures and calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.  The Company compensates for these limitations by using non-GAAP financial measures in conjunction with traditional GAAP financial measures.

The following is a description of the non-GAAP financial measures referenced above:

Non-GAAP operating income.  Non-GAAP operating income is defined as operating income, plus (1) the charge of $11.1 million taken in the first quarter of 2009 related to the settlement of a stockholder claim (of which $10.6 million was non-cash), and (2) the non-cash expense of $30.4 million taken in the second quarter of 2009 related to the acceleration of certain exit options in connection with the Company's initial public offering, in each case as discussed below.

  • Settlement of stockholder claim.  In February 2009, certain holders of common stock and warrants to purchase common stock asserted various claims against the Company, its directors and officers and its majority stockholder. In March 2009, the Company reached a settlement with the claimants regarding these claims. The Company recorded a total expense of $11.1 million related to the settlement, of which $10.6 million was a non-cash expense, in the first quarter of 2009.
  • Acceleration of exit options.  In March 2009, the Company's board of directors amended certain exit options awarded to members of the management team to add an additional vesting condition so that the number of shares underlying the options that would not have vested upon the closing of the Company's initial public offering, under the original terms of the options, would vest in full upon the closing of the offering. The amendment to the exit options resulted in total compensation expense of $30.4 million, a non-cash expense which was recorded upon the completion of the offering in the second quarter of 2009.

Non-GAAP instructional costs and services.  Non-GAAP instructional costs and services is defined as instructional costs and services less the portion of the $30.4 million option acceleration charge taken in the second quarter of 2009 attributable to instructional costs and services ($2.1 million).

Non-GAAP marketing and promotional expenses.  Non-GAAP marketing and promotional expenses is defined as marketing and promotional expenses less the portion of the $30.4 million option acceleration charge taken in the second quarter of 2009 attributable to marketing and promotional expenses ($5.0 million).

Non-GAAP general and administrative expenses.  Non-GAAP general and administrative expenses is defined as general and administrative expenses less (1) the $11.1 million settlement charge taken in the first quarter of 2009 and (2) the portion of the $30.4 million option acceleration charge taken in the second quarter of 2009 attributable to general and administrative expenses ($23.3 million).

Non-GAAP net income.  Non-GAAP net income is defined as net income plus (1) the net income effect of the $11.1 million settlement charge taken in the first quarter of 2009, and (2) the net income effect of the $30.4 million option acceleration charge taken in the second quarter of 2009.

Non-GAAP fully diluted earnings per common share. Non-GAAP fully diluted earnings per common share is defined to mean non-GAAP net income, less accretion for preferred dividends, divided by fully diluted weighted average shares outstanding assuming the conversion of redeemable convertible preferred stock into common stock as if the conversion happened on January 1, 2009, for the applicable period. Management believes non-GAAP fully diluted earnings per common share provides a meaningful comparison to future results because all redeemable convertible preferred stock was converted to common stock at the closing of the Company's initial public offering.

These non-GAAP financial measures have been reconciled to the related GAAP financial measures as required under the rules and regulations promulgated by the U.S. Securities and Exchange Commission.  See "Reconciliation of Non-GAAP Measures" below.

Earnings Conference Call and Webcast

Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States is (800) 214-0694 and for international callers is (719) 955-1425. The access code for all callers is 495332. A live webcast will also be available on the Company's website at http://ir.bridgepointeducation.com/index.cfm.

A replay of the call will be available via telephone through March 9, 2010. To access the replay, dial (888) 348-4629 in the United States and (719) 884-8882 outside the United States; then enter the access code 495332.

Annual Meeting of Stockholders

The Company announced today that its 2010 Annual Meeting of Stockholders will take place on Wednesday, May 12, 2010 in San Diego, CA. The record date for this annual meeting will be Tuesday, March 23, 2010.

About Bridgepoint Education

Bridgepoint Education's postsecondary education services focus on offering associate's, bachelor's, master's and doctoral programs in such disciplines as business, education, psychology, social sciences and health sciences.  Bridgepoint Education's regionally accredited academic institutions – Ashford University and University of the Rockies – deliver their programs online as well as at traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of financial resources. These forward-looking statements are based on assumptions and estimates including, without limitation, those regarding: the Company's value proposition to students; competitiveness of the Company's tuition; ability to continue to transfer credits from other institutions; ability to maintain and improve the quality of the Company's education; management of future growth and scalability; development of military and corporate channels; estimates of new hires; proposed new programs; expectations that the Company can effectively manage the business within the regulatory environment; expectations regarding enrollments, financial position, results of operations and  liquidity; projections, predictions, expectations, estimates or forecasts as to the Company's business, financial and operational results and future economic performance; management's goals and objectives; and other similar matters that are not historical facts.  Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Forward-looking statements should not be interpreted as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.  Important factors that could cause such differences include, but are not limited to: the Company's inability to influence the U.S. Department of Education's Office of Inspector General (OIG) to change the findings in the OIG's audit reports; the Company's inability to address the OIG's preliminary findings or the ultimate findings of the OIG's audit reports; the imposition of fines or other corrective measures against the Company's academic institutions; the Company's failure to comply with the extensive regulatory framework applicable to its industry, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements and accrediting agency requirements; adverse regulatory changes affecting the Company's industry; failure to achieve the expected benefits from transitioning to the eCollege online learning platform; the Company's inability to continue to develop awareness among, to recruit and to retain students; competition in the postsecondary education market and its potential impact on the Company's market share, recruiting cost and tuition rates; reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions; the Company's ability to attract and retain the personnel needed to sustain and grow its business; the Company's inability to develop new programs or expand its existing programs in a timely and cost-effective manner; economic or other developments potentially impacting demand in the Company's core disciplines or the availability or cost of Title IV or other funding; and other factors discussed in Part II, Item 1A (Risk Factors) of the Company's quarterly reports on Form 10-Q filed on May 21, 2009, August 11, 2009, and November 4, 2009, and in other reports the Company may file with the Securities and Exchange Commission from time to time.

Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.

    
    
                            BRIDGEPOINT EDUCATION, INC.
                  Condensed Consolidated Statements of Operations
                                    (Unaudited)
    
                             Three Months Ended               Year Ended
                                December 31,                  December 31,
                             ------------------           ------------------
                             2009          2008           2009          2008
                             ----          ----           ----          ----
                                 (In thousands, except per share amounts)
    
     Revenue               $131,759      $69,123       $454,324      $218,290
     Costs and
      expenses:
       Instructional
        costs and
        services             36,478       20,772        120,089        62,822
       Marketing
        and
        promotional          40,460       26,546        145,721        81,036
       General and
        administrative       20,894       14,686        106,784        41,012
                             ------       ------        -------        ------
         Total costs
          and
          expenses           97,832       62,004        372,594       184,870
                             ------       ------        -------       -------
     Operating
      income                 33,927        7,119         81,730        33,420
     Other
      income, net               232           84            510            82
                                ---          ---            ---           ---
     Income
      before
      income
      taxes                  34,159        7,203         82,240        33,502
     Income tax
      expense                14,559        1,550         35,135         7,071
                             ------        -----         ------         -----
     Net income              19,600        5,653         47,105        26,431
     Accretion of
      preferred
      dividends                   -         (501)          (645)       (2,006)
                                ---         ----           ----        ------
     Net income
      available
      to common
      stockholders          $19,600       $5,152        $46,460       $24,425
                            =======       ======        =======       =======
     Earnings per
      common
      share:
         Basic                $0.36        $0.10          $0.85         $0.38
         Diluted              $0.33        $0.04          $0.74         $0.16
     Weighted
      average common
      shares outstanding
      used in computing
      earnings per
      common share:
         Basic               53,715        3,335         39,349         3,335
         Diluted             60,033        7,959         45,181         7,757
    
    
                            BRIDGEPOINT EDUCATION, INC.
                       Condensed Consolidated Balance Sheets
                                    (Unaudited)
    
                                                  As of             As of
                                               December 31,      December 31,
                                                  2009               2008
                                               ------------      ------------
                                                       (In thousands)
                  ASSETS
      Current assets:
        Cash and cash equivalents               $125,562            $56,483
        Restricted cash                               25                666
        Marketable securities                     44,988                  -
        Accounts receivable, net                  43,232             28,946
        Current portion of deferred
         income taxes                              4,027              2,734
        Prepaid expenses and other
         current assets                            9,581              7,061
                                                   -----              -----
      Total current assets                       227,415             95,890
      Property and equipment, net                 47,362             27,715
      Goodwill and intangibles                     3,201              1,897
      Deferred income taxes                       13,491              2,366
      Other long term assets                       3,762              1,378
                                                   -----              -----
      Total assets                              $295,231           $129,246
                                                ========           ========
    
          LIABILITIES, REDEEMABLE CONVERTIBLE
           PREFERRED STOCK AND STOCKHOLDERS’
           EQUITY
      Current liabilities:
        Accounts payable                          $2,870             $4,705
        Accrued liabilities                       24,579             16,543
        Deferred revenue and
         student deposits                        121,752             67,425
        Other current liabilities                    172                256
                                                     ---                ---
      Total current liabilities                  149,373             88,929
      Other long term liabilities                  4,353              3,208
      Rent liability                               6,896              3,938
                                                   -----              -----
      Total liabilities                          160,622             96,075
      Commitments and
       contingencies
      Redeemable convertible
       preferred stock                                 -             27,062
      Total stockholders’ equity                 134,609              6,109
                                                 -------              -----
      Total liabilities,
       redeemable convertible
       preferred stock and
        stockholders’ equity                    $295,231           $129,246
                                                ========           ========
    
    
                          BRIDGEPOINT EDUCATION, INC.
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
    
                                                           Year Ended
                                                           December 31,
                                                    ------------------------
                                                    2009                2008
                                                    ----                ----
                                                         (In thousands)
     Cash flows from operating
      activities
     Net income                                   $47,105             $26,431
     Adjustments to reconcile net income
      to net cash provided by operating
      activities:
       Provision for bad debts                     23,205              13,431
       Depreciation and amortization                5,890               2,452
       Amortization of premium/discount               (66)                  -
       Deferred income taxes                      (12,418)             (5,658)
       Stock-based compensation                    35,943               1,827
       Excess tax benefit of option
        exercises                                  (5,454)                  -
       Stockholder settlement (non-cash
        portion)                                   10,577                   -
       Gain on disposal of fixed assets                38                   -
     Changes in operating assets and
      liabilities, net of effects of
      acquisitions:
         Accounts receivable                      (37,491)            (27,747)
         Prepaid expenses and other current
          assets                                   (2,520)             (6,306)
         Loans receivable                               -                 277
         Other assets                              (2,384)               (471)
         Accounts payable and accrued
          liabilities                              10,906              11,525
         Deferred revenue and student
          deposits                                 54,327              50,608
         U.S. governmental refundable loan
          funds                                         -                (221)
         Other liabilities                          2,917               2,206
         Uncertain tax positions                    1,152               2,394
                                                    -----               -----
     Net cash provided by operating
      activities                                  131,727              70,748
    
     Cash flows from investing
      activities
     Capital expenditures                         (24,249)            (15,884)
     Purchase of marketable securities            (44,922)                  -
     Restricted cash                                  641                (666)
     Acquisitions, net of cash acquired            (1,500)                  -
                                                   ------                 ---
     Net cash used in investing
      activities                                  (70,030)            (16,550)
    
     Cash flows from financing
      activities
     Proceeds from the issuance of
      common stock, net of issuance
      costs of $8.6 million                        28,104                   -
     Proceeds from exercise of stock
      options                                         344                   -
     Excess tax benefit of option
      exercises                                     5,454                   -
     Proceeds from issuance of stock
      under employee stock purchase plan              616                   -
     Proceeds from exercise of warrants             1,002                   -
     Payments on leases payable                      (197)               (175)
     Payments on conversion of preferred
      stock                                       (27,707)                  -
     Payments on notes payable                       (234)             (4,891)
                                                     ----              ------
     Net cash provided by (used in)
      financing activities                          7,382              (5,066)
                                                    -----              ------
     Net increase in cash and cash
      equivalents                                  69,079              49,132
     Cash and cash equivalents at
      beginning of period                          56,483               7,351
                                                   ------               -----
     Cash and cash equivalents at end of
      period                                     $125,562             $56,483
                                                 ========             =======
    
     Supplemental disclosures of cash
      flow information
     Cash paid during the period for:
     Interest                                        $201                $240
                                                     ====                ====
     Income taxes                                 $38,457             $10,704
                                                  =======             =======
    
     Supplemental disclosure of noncash
      investing and financing
      activities:
       Purchase of property and equipment
        through capital lease obligations            $381                 $77
                                                     ====                 ===
       Non-cash purchases of property and
        equipment                                    $749                $965
                                                     ====                ====
    
    
    Reconciliation of Non-GAAP Measures
    
                                                           Effect of
                                                            Assumed
                                                           Conversion
                                                              of
                                   Adjustment Adjustment   Preferred
                                      for      for Exit    Stock as of
                          GAAP As  Settlement   Option     January 1,
                         Reported    Charge     Charge        2009    Non-GAAP
                         --------  ----------  ----------  ---------- --------
                                       (Unaudited, in thousands)
    
    For the Three
     Months Ended
     December 31,
     2009
    Instructional
     costs and
     services            $36,478      $-          $-           $-      $36,478
    Marketing and
     promotional          40,460       -           -            -       40,460
    General and
     administrative       20,894       -           -            -       20,894
    Operating income      33,927       -           -            -       33,927
    Net income            19,600     537           -            -       20,137
    Net income available
     to common
     stockholders         19,600     537           -            -       20,137
    Net income used in
     earnings per common
     share calculation    19,600     537           -            -       20,137
    
    For the Year Ended
     December 31, 2009
    Instructional costs
     and services       $120,089      $-     $(2,143)          $-     $117,946
    Marketing and
     promotional         145,721       -      (5,009)           -      140,712
    General and
     administrative      106,784 (11,060)    (23,240)           -       72,484
    Operating income      81,730  11,060      30,392            -      123,182
    Net income            47,105   9,269      17,104            -       73,478
    Net income available
     to common
     stockholders         46,460   9,269      17,104            -       72,833
    Net income used in
     earnings per common
     share calculation    33,408   6,665      12,299       20,461       72,833
    
    
                                            For the
                                          Three Months    For the
                                             Ended       Year Ended
                                          December 31,  December 31,
                                              2009          2009
                                           ------------  ----------
    Diluted earnings per common share          $0.33        $0.74
    Adjustment for settlement charge            0.01         0.15
    Adjustment for exit option charge              -         0.27
    Effect of assumed conversion of preferred
     stock as of January 1, 2009                   -         0.10
                                                 ---         ----
    Non-GAAP fully diluted earnings per common
     share                                     $0.34        $1.26
    
    Weighted average common shares
     outstanding used in computing
     diluted earnings per share               60,033       45,181
    Effect of assumed conversion of
     preferred stock as of January 1, 2009         -       12,612
                                                 ---       ------
    Non-GAAP dilutive shares outstanding      60,033       57,793