Skip to main content
05 / 2019 article

Bridgepoint Education Reports Second Quarter 2010 Results

Share

 

Bridgepoint Education, Inc. (NYSE: BPI), a provider of postsecondary education services, announced today its results for the three and six months ended June 30, 2010.

Highlights for the second quarter ended June 30, 2010 are as follows:

  • Total student enrollment at period end increased 48.9% year-over-year to 67,744.
  • Revenue increased 56.7% to $173.8 million from $110.9 million for the second quarter of 2009.
  • Operating income increased to $59.2 million from $1.8 million for the same period in 2009.
  • Net income was $35.3 million compared with net income of $1.3 million for the same period in 2009.
  • Fully diluted earnings per common share was $0.58, compared with $0.02 for the same period in 2009.
     

“Our results once again demonstrate the strong demand in the U.S. among working adults for access to an affordable, high quality postsecondary education,” said Andrew Clark, Chief Executive Officer of Bridgepoint Education.  “Bridgepoint Education, through innovation and a strong commitment to each and every one of our students, remains focused on driving positive student outcomes at our academic institutions.  Our approach to improving student successes is predicated on assuring student readiness, leveraging our technology and providing our excellent faculty with sophisticated student assessment tools.”

“While several complexities remain with respect to the Department of Education’s proposed gainful employment rules, our initial analysis indicates that all programs at Ashford University would satisfy both the 8% debt-to-income ratio and the 45% repayment threshold, reaffirming our confidence that our academic institutions are well positioned to meet the proposed new requirements.”

Student Enrollment

Total student enrollment at the Company’s academic institutions, Ashford University and University of the Rockies, increased 48.9% to 67,744 students at June 30, 2010, compared with 45,504 students at the end of the second quarter of 2009.

Combined new student enrollments for the second quarter of 2010 at Bridgepoint Education’s academic institutions were approximately 18,450, an increase of 26.4%, compared with combined new student enrollments of approximately 14,600 for the second quarter of 2009.

Financial Results

Revenue for the second quarter of 2010 was $173.8 million, an increase of 56.7% compared with revenue of $110.9 million for the second quarter of 2009.  Revenue for the six months ended June 30, 2010, was $329.9 million, an increase of 69.0% compared with revenue of $195.2 million for the same period in 2009.

Operating income for the second quarter of 2010 was $59.2 million compared with operating income of $1.8 million for the second quarter of 2009, which included a non-cash charge of $30.4 million related to the acceleration of certain exit options.  Operating income for the six months ended June 30, 2010, was $109.3 million compared with operating income of $9.0 million for the same period in 2009, which included the $30.4 million option acceleration charge and also an $11.1 million charge related to the settlement of a stockholder claim, of which $10.6 million was non-cash.

Net income for the second quarter of 2010 was $35.3 million compared with net income of $1.3 million for the second quarter of 2009, which included the net income effect of $17.1 million related to the option acceleration charge discussed above. Net income for the six months ended June 30, 2010, was $65.1 million compared with net income of $5.1 million for the same period in 2009, which included the net income effect of the option acceleration charge discussed above and also the net income effect of $8.6 million related to the stockholder settlement charge discussed above.

Fully diluted earnings per common share for the second quarter of 2010 was $0.58 compared with fully diluted earnings per common share of $0.02 for the second quarter of 2009. Fully diluted earnings per common share for the six months ended June 30, 2010, was $1.07 compared with fully diluted earnings per common share of $0.07 for the same period in 2009.

The Company's effective tax rate for the six months ended June 30, 2010, was 40.8%.  

Balance Sheet and Cash Flow      

As of June 30, 2010, the Company had cash, cash equivalents and marketable securities of $205.9 million, compared with $170.6 million as of December 31, 2009.  The Company generated $45.4 million of cash from operating activities for the six months ended June 30, 2010, compared with $76.5 million for the same period in 2009.

Share Repurchase Authorization

The Company also announced today that its Board of Directors has authorized the repurchase of up to $60.0 million of the Company’s outstanding common shares over the next 12 months.  Under the share repurchase program, the Company may purchase shares from time to time in the open market, through block trades or otherwise.        

The timing and extent of any repurchases will depend upon market conditions, the trading price of the Company's shares and other factors, and be subject to the restrictions relating to volume, price and timing under applicable law. The share repurchase program may be commenced or suspended at any time or from time to time by the Company.

Full-Year 2010 Outlook

Based on the Company’s performance in the first half of 2010, Bridgepoint Education is raising its full-year outlook for net income and fully diluted earnings per common share.  Specifically, the Company now anticipates net income for the full year of $118.0 million to $120.0 million and fully diluted earnings per common share of $1.94 to $1.97.  Earnings per common share is based on an estimated fully diluted weighted average share count of 60.9 million for the full year, which excludes any potential impact from the share repurchase program announced today. Furthermore, Bridgepoint Education now expects capital expenditures to be 5% to 6% of revenue. 

The Company continues to expect the following financial and operating metrics for the full-year:

  • Total student enrollment is expected to be between 69,000 and 71,000.
  • Revenue is expected to be between $688.2 million and $691.2 million.
  • Bad debt as a percentage of revenue for 2010 is expected to be 5.1%.
  • The Company’s effective tax rate for 2010 is estimated to be 40.8%.


 

Earnings Conference Call and Webcast

The Company will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results, full-year 2010 outlook and recent developments. The dial-in number for callers in the United States and Canada is (888) 204-6674 and for international callers is (913) 312-0676. The access code for all callers is 1482664. A live webcast will also be available on the Company’s website at www.bridgepointeducation.com/investment.

A replay of the call will be available via telephone through August 11, 2010. To access the replay, dial (888) 203-1112 in the United States or Canada and (719) 457-0820 for international callers; then enter the access code 1482664.

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: projections, predictions, expectations, estimates or forecasts as to the Company’s business, financial and operational results and future economic performance; the ability of Ashford University to comply with the U.S. Department of Education’s proposed gainful employment regulations; the Company’s authorization to repurchase outstanding shares of its common stock;  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; 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. Forward-looking statements 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 and recommendations in the OIG’s draft audit report; the Company’s inability to address the findings and recommendations in the OIG’s draft audit report or the ultimate findings and recommendations of the OIG’s final audit report; proposed new jurisdiction requirements of the Higher Learning Commission which could affect the accreditation of the Company’s academic institutions; 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, including new regulations proposed by the U.S. Department of Education regarding gainful employment, incentive compensation, state authorization and other matters; adverse regulatory changes affecting the Company’s industry; 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 report on Form 10-Q filed on or about August 3, 2010, 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 Income
(Unaudited)

 

 

 

 

 

 

 

 

 
 

 

Three Months Ended


 

Six Months Ended

 

June 30,


 

June 30,

 

 

2010


 

2009


 

2010


 

2009

 

 

(In thousands, except per share amounts)

 

Revenue

$173,840


 

$110,908


 

$329,907


 

$195,183

 

Costs and expenses:


 

 

 

 

 

 

 
 

Instructional costs and services

43,257


 

28,357


 

82,693


 

50,491

 

Marketing and promotional

50,096


 

39,655


 

94,309


 

68,760

 

General and administrative

21,257


 

41,093


 

43,588


 

66,976

 

Total costs and expenses

114,610


 

109,105


 

220,590


 

186,227

 

Operating income

59,230


 

1,803


 

109,317


 

8,956

 

Other income, net

370


 

44


 

617


 

116

 

Income before income taxes

59,600


 

1,847


 

109,934


 

9,072

 

Income tax expense

24,330


 

587


 

44,841


 

3,925

 

Net income

35,270


 

1,260


 

65,093


 

5,147

 

Accretion of preferred dividends

-


 

(103)


 

-


 

(645)

 

Net income available to common stockholders

$  35,270


 

$    1,157


 

$  65,093


 

$    4,502

 

Earnings per common share:


 

 

 

 

 

 

 
 

Basic

$      0.65


 

$      0.02


 

$      1.19


 

$      0.08

 

Diluted

$      0.58


 

$      0.02


 

$      1.07


 

$      0.07

 

Weighted average common shares outstanding used


 

 

 

 

 

 

 
 

in computing earnings per common share:


 

 

 

 

 

 

 
 

Basic

54,608


 

46,066


 

54,490


 

24,938

 

Diluted

60,728


 

52,236


 

60,613


 

30,280

 
               


 

BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Balance Sheets
(Unaudited)

 

 

As of June 30,


 

As of December 31,

 

2010


 

2009

 

 

(In thousands)

 

ASSETS


 

 

 
 

Current assets:


 

 

 
 

Cash and cash equivalents

$         185,870


 

$        125,562

 

Restricted cash

25


 

25

 

Marketable securities

20,009


 

44,988

 

Accounts receivable, net

81,517


 

43,232

 

Deferred income taxes

3,545


 

4,027

 

Prepaid expenses and other current assets

12,712


 

9,581

 

Total current assets

303,678


 

227,415

 

Property and equipment, net

55,845


 

47,362

 

Goodwill and intangibles

3,322


 

3,201

 

Deferred income taxes

13,986


 

13,491

 

Other long term assets

4,696


 

3,762

 

Total assets

$         381,527


 

$        295,231

 

 

 

 

 
 

LIABILITIES AND STOCKHOLDERS’ EQUITY


 

 

 
 

Current liabilities:


 

 

 
 

Accounts payable

$           11,006


 

$            2,870

 

Accrued liabilities

23,646


 

24,579

 

Deferred revenue and student deposits

125,210


 

121,752

 

Other current liabilities

-


 

172

 

Total current liabilities

159,862


 

149,373

 

Rent liability

9,752


 

6,896

 

Other long term liabilities

5,673


 

4,353

 

Total liabilities

175,287


 

160,622

 

Commitments and contingencies

-


 

-

 

Total stockholders’ equity

206,240


 

134,609

 

Total liabilities and stockholders’ equity

$         381,527


 

$        295,231

 
       


 

BRIDGEPOINT EDUCATION, INC.
Consolidated Statements of Cash Flows
(Unaudited)

 

 

Six Months Ended

 

June 30,

 

 

2010


 

2009

 

 

(In thousands)

 

Cash flows from operating activities


 

 

 
 

Net income

$  65,093


 

$    5,147

 

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


 

 

 
 

Provision for bad debts

16,262


 

9,097

 

Depreciation and amortization

3,776


 

2,467

 

Amortization of premium/discount

(12)


 

-

 

Deferred income taxes

(13)


 

(11,889)

 

Stock-based compensation

3,681


 

32,007

 

Excess tax benefit of option exercises

(757)


 

(429)

 

Stockholder settlement (non-cash portion)

-


 

10,577

 

Loss of disposal of fixed asset

-


 

42

 

Changes in operating assets and liabilities:


 

 

 
 

Accounts receivable

(54,547)


 

(22,551)

 

Prepaid expenses and other current assets

(3,131)


 

1,100

 

Other long-term assets

(934)


 

47

 

Accounts payable and accrued liabilities

7,899


 

4,907

 

Deferred revenue and student deposits

3,458


 

42,679

 

Other liabilities

4,638


 

3,310

 

Net cash provided by operating activities

45,413


 

76,511

 

 

 

 

 
 

Cash flows from investing activities


 

 

 
 

Capital expenditures

(12,060)


 

(12,015)

 

Purchase of marketable securities

(5,009)


 

(10,000)

 

Business acquisition

-


 

(1,500)

 

Restricted cash

-


 

(25)

 

Capitalized course development costs

(259)


 

-

 

Maturities of marketable securities

30,000


 

-

 

Net cash provided by (used in) investing activities

12,672


 

(23,540)

 

 

 

 

 
 

Cash flows from financing activities


 

 

 
 

Proceeds from the issuance of common stock

-


 

28,777

 

Proceeds from exercise of stock options

411


 

38

 

Excess tax benefit of option exercises

757


 

429

 

Issuance of common stock under ESPP

501


 

-

 

Proceeds from exercise of warrants

1,188


 

973

 

Payments of notes payable

-


 

(26)

 

Payments on conversion of preferred stock

-


 

(27,707)

 

Payments of capital lease obligations

(634)


 

(74)

 

Net cash provided by financing activities

2,223


 

2,410

 

Net increase in cash and cash equivalents

60,308


 

55,381

 

Cash and cash equivalents at beginning of period

125,562


 

56,483

 

Cash and cash equivalents at end of period

$185,870


 

$111,864

 

 

 

 

 
 

Supplemental disclosure of noncash investing and financing activities:


 

 

 
 

Purchase of equipment included in accounts payable and accrued liabilities

$       810


 

$       853