- Net revenue increased 11.1% to $275.7 million for the first quarter of 2018, compared to $248.2 million for the first quarter of 2017.
- End-of-period enrollment increased 9.6% to 91,378 at March 31, 2018, from 83,352 at March 31, 2017, as ground enrollment increased 9.6% to 17,386 at March 31, 2018, from 15,857 at March 31, 2017 and online enrollment increased 9.6% to 73,992 at March 31, 2018, from 67,495 at March 31, 2017.
- Operating income for the three months ended March 31, 2018 was $90.1 million, an increase of 17.6% as compared to $76.6 million for the same period in 2017. The operating margin for the three months ended March 31, 2018 was 32.7%, compared to 30.9% for the same period in 2017.
- The tax rate in the three months ended March 31, 2018 was 18.8% compared to 26.5% in the same period in 2017. The lower effective tax rate year over year is a result of the Tax Cuts and Jobs Act (the "Act") which was signed into law on December 22, 2017. The Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate effective January 1, 2018. Additionally, the University continues to benefit from the adoption of the share-based compensation standard, which resulted in the recognition of excess tax benefits from share-based compensation awards that vested or settled in the consolidated income statement. Excess tax benefits recorded for the three months ended March 31, 2018 and 2017 were $5.3 million and $8.5 million, respectively. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the restricted awards vest, our stock price on the date an option is exercised, and the quantity of options exercised.
- Net income increased 31.8% to $73.7 million for the first quarter of 2018, compared to $55.9 million for the same period in 2017.
- Diluted net income per share was $1.52 for the first quarter of 2018, compared to $1.16 for the same period in 2017.
- Adjusted EBITDA increased 16.2% to $108.0 million for the first quarter of 2018, compared to $92.9 million for the same period in 2017.
GCU will pay GCE a note of roughly $850 million for the academic, student housing, and athletic buildings.
35% of all staff (all in academics) and all part-time and student-workers will be transferred to GCU employees.
GCE will retain all non-education staff.
GCE will provide services including technological support, marketing, promotion, and financial aid.
- It’s housed on a university campus, where many inner-city kids never dream of setting foot;
- It’s led by GCU students, many of whom have been in these kids’ shoes and are hungry to give back;
- Students who attend the Lounge can apply for 100 full-tuition Students Inspiring Students scholarships per year that are supported by businesses and philanthropic leaders who have wholeheartedly embraced the program; and
- SIS Scholarship recipients pay forward their experience as college students by providing 100 volunteer hours of mentoring and tutoring per year to the next generation of K-12 students behind them.
Acaban de publicar los resultados del q1. Muy buenos
For the three months ended March 31, 2018:
Sube con fuerza, crecimiento por acción de 1,59 dólares
Grand Canyon Education Delivers Another Solid Quarter, but Big Changes Are on the Horizon
Investors need to understand the changes coming as Grand Canyon University splits off a non-profit entity.
May 4, 2018 at 10:52AM
To say that Grand Canyon Education ( NASDAQ:LOPE) is an enigma is an understatement. Over the past 10 years, for-profit colleges and universities have been lambasted, and shares in the industry have suffered mightily. It all started with an undercover Government Accountability Office investigation that demonstrated predatory behaviors among recruiters and snowballed from there.
But Grand Canyon has forged a very different path. The school -- which started out as a non-profit and only made the switch to for-profit in 2004 to help with financial troubles -- has spent a ton of money on its physical campus to go along with online offerings. It also has a very popular Division I athletics program -- the first of its kind for for-profit schools.
Perhaps that helps explain why, in this age when for-profits seem to be flailing, Grand Canyon is adding students and cash to its bottom line. This week's earnings report indicated more of the same for the school, though enormous changes are on the horizon.
IMAGE SOURCE: GETTY IMAGES.
Grand Canyon earnings: The raw numbers
Before we dig into those huge changes, let's take a look at how the school performed on the headline metrics.
Metric Q1 2018 Q1 2017 GrowthRevenue$276 million$248 million11%EPS$1.52$1.1631%Free cash flow$84 million$88 million(5%)
DATA SOURCE: GRAND CANYON.
It's worth pointing out that the fall in free cash flow was to be expected. Grand Canyon is still investing heavily in on-campus projects. This quarter, that included money put toward two new residence halls, one classroom building, a parking garage, and computer equipment and software costs for the online section of the school.
The real story is the impressive growth in profitability. While revenue was up 11%, operational expenses jumped just 8%. The company spent less of its revenue on instructional costs, admissions, advertising, and marketing than it did last year. That's important, because all but the first of those divisions will be part of the new Grand Canyon Education -- which will not include the actual university -- after the split occurs in the near future (more on that below).
Just as important, enrollment numbers remained strong across the board.
Enrollment Type Q1 2018 Q1 2017 GrowthOn campus 17,38615,8579.6%Online73,99267,4959.6%Total91,37883,3529.6%
DATA SOURCE: GRAND CANYON.
The coming change to non-profit status
But while all this is good news for the current state of the company, it's important to understand the coming split between Grand Canyon Education (GCE, a for-profit services company) and Grand Canyon University (GCU, a non-profit school). While current shareholders have access to the former, they will no longer hold a direct stake in the latter.
The details are being hammered out, but the school expects to receive guidance or approval from the U.S. Department of Education by the end of May, and plans on sharing exactly how the split will occur within the next two months. Thus far, the details are as follows.
It is expected that the two entities will sign a 15-year contract with hefty fees if it is exited early. The contract will allow GCE to earn about 60% of revenues from GCU for providing the above-mentioned services.
But, as CEO Brian Mueller pointed out in the company's conference call, GCE will be allowed to provide services for other schools as well. When asked how quickly GCE would expand its role beyond just providing services for GCU, here's what he had to say:
... what we want to figure out is what our role should be in that whole market. It's going to be very different than most because we have a customer already that has 90,000 students. And so the role that we play in the marketplace is going to reflect a positioning that takes that into account. And so when the thing gets done, we'll take 3 to 6 months and talk to people and figure out what our position should be, and then we'll move in to it on a gradual basis. But we have a tremendous advantage because we've got a customer that's got 90,000 students, it's producing 30-plus percent of margins, which is going to put us in a lead role in this thing right away and allow us to be very selective in terms of who we bring on.
President Speaks: Grand Canyon U president Brian Mueller
May 10, 2018
The most talked about issue involving K-12 education in Arizona – and much of the country – is government funding. How can we support students and teachers while at the same time ensure that we are being judicious stewards of taxpayer money? How do you balance the positives of school choice with the need to fund public education adequately?
It’s a never-ending political debate with strong viewpoints on all sides, even on a topic that we all agree is of utmost importance: the education of our children.
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At Grand Canyon University, we look at the issue through a different lens, particularly as it relates to education and poverty in inner cities. We don’t dispute that funding is critically important. But as we look around, there is a lot we can do through public-private partnerships that don’t rely on additional money from the government.
Consider the issue at hand: Across America, high school graduation rates are rising (the national graduation rate was 83.2 percent in 2015), yet low-income and minority students continue to lag behind their peers in finishing high school (the graduation rate among Hispanic students is 77.8 percent and 74.6 percent for African-American students), according to a report by Civic Enterprises and the Everyone Graduates Center at Johns Hopkins University.
More troubling are statistics from the Government Accountability Office that show the number of predominantly African-American or Hispanic K-12 schools classified as “high poverty” doubled from 2001 to 2014. Additional research by GAO revealed that an astounding 8.1 million students in schools classified as high poverty received less instruction in core subjects such as math and science.
All told, students in high-poverty areas lose about 22 days of instruction during a given school year compared to 12 days for students in lower poverty areas. These numbers come from a 2014 survey fielded by University of California Los Angeles.
From graduation rates and classroom instruction to faulty equipment, modern learning tools and reduced lunch programs, the disparity between schools in poverty and more affluent neighborhoods is well-documented.
To GCU, these problems are all too familiar. With a campus located in the center of one of the largest and most diverse areas of Phoenix, we have seen firsthand the obstacles facing inner-city youth. It made us wonder: What if, instead of looking at these students as problems to be solved, we looked at them as assets that should be invested in? What if, instead of putting Band-Aids on problems in inner cities, we focused on changing the cycle of poverty that occurs in low-income households through a better long-term solution – education.
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Our university shares a neighborhood with Alhambra High School, a public school where 90 percent of the 2,800 students fall below the federal poverty level and 40 languages are spoken due to the large refugee population in the community.
In looking closer at this population of students, we learned that what occurs between 8 a.m. and 3 p.m. is not that different than at schools in more affluent areas. It’s what happens after school – from 3 - 8 p.m. – that puts at-risk youth at a distinct disadvantage.
Understanding this problem helped us develop a solution. By giving all students – regardless of where they live or their socio-economic status – access to a supportive environment, help with homework and even a meal after the school day ends, we believed we could set them on a path for success. At the same time, we were confident we could help Alhambra High improve its rating by the Arizona Department of Education, too.
For GCU, the solution is the Learning Lounge. Located in the heart of our campus, the Lounge is a place K-12 student can get free academic assistance from some of the best and brightest GCU students.
Free tutoring, in itself, is not a novel idea. What makes the Learning Lounge different is that:
The result is a sustainable and scalable program that does not rely on government intervention. Instead, the Learning Lounge is a partnership between public and private schools and the business community, with the ability to produce real results in the form of a greater number of graduates, more students prepared for college entrance exams and a large and growing high school whose academic ranking rose from a D to nearly a B in just three years.
What’s most remarkable is that parents are asking how they can enroll their children in Alhambra High to take advantage of the Learning Lounge opportunities. Think about that: Families are asking to transfer their children into an inner-city high school.
Our program has been a boon for the Phoenix area and it has the potential to become a model for inner cities nationwide. Other colleges and universities are doing their part to create more equity in education, too.
Rather than deprive K-12 students based on their ZIP code, their families’ income or the color of their skin, our nation’s colleges and universities must continue to find creative ways to eliminate inequities in education and give them the opportunity to succeed.
Brian Mueller is the president of Grand Canyon University.
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Grand Canyon University may now be the largest Christian university in the United States