Corinthian Colleges continues to focus on student outcome. 68.1 percent of its 2011 graduates found jobs in their field. This was an increase from 67.6 percent in 2010. To assist in finding employment for graduates, Corinthian Colleges signed 16 partnerships and 15 externship agreements with regional and national employers in fiscal year 2012.
Student completion was flat with the prior year.
To ensure standards were met, Corinthian Colleges closed one campus, began teach-outs at two campuses that were not meeting standards, and closed seven programs
.
26 of the company's Everest and WyoTech campuses were up for reaccreditation in fiscal 2012. Nine of those had perfect scores from the accreditation agency. Six of the 11 campuses up for reaccreditation by ACCSC were designated Schools of Distinction with perfect scores.
Overall, the average number of findings on reaccreditation have declined to 1.5 per campus, down from 3.7 per campus two years ago. Everest College Phoenix was removed from show cause and given a 3 year accreditation last year. Heald College received accreditation in June.
New student enrollment was 8.4 percent in Q4. Total student population at the end of Q4 was up by 1.1 percent, with exclusively online student population up by 19.2 percent. Corinthian Colleges is still facing headwinds from the loss of Title IV funding for new students as of July 1, 2012. Further, there is a reluctance of students to take on debt. To grow enrollment, Corinthian Colleges is increasing new diploma level programs in healthcare, business, criminal justice and information technology. For online students, Corinthian Colleges is focusing on associate degrees, which has less competition than bachelor and graduate degrees. Corinthian expects new enrollment to be flat in Q1 and Q2 of fiscal year 2013 and enrollment to improve slightly in fiscal year 2013.
Corinthian Colleges is moving forward with its plan to offer free GED preparation services to the general public. In September, it will be implementing a new program called GED Advantage at 60 Everest campuses and believes a portion of those who obtain GEDs through the program will continue on to enroll in its colleges.
The company is also focusing on improving efficiency. It brought its financial aid processing in house and refined its cohort default prevention program. It also implemented new procedures to comply with new federal regulations.
As to the new regulations, the gain employment rule has been struck down by the U.S. district court, so its future is uncertain. With regard to the 20/10 rule, two of the company's 44 OPEID institutions, Everest College Phoenix and Everest University, exceeded the 90 percent Title IV funding threshold in 2012. The institutions would lose their Title IV funding only if they exceed the 90 percent threshold for 2 consecutive years. Corinthian College does not expect these 2 institutions to exceed the 90 percent threshold for the second year.
Oregon's attorney general closed its investigation of Corinthian with no enforcement action. Corinthian is cooperating with other attorney general inquiries.
In June, the California Legislature eliminated Cal Grant eligibility for new students at certain for-profit colleges beginning in 2012-2013. Additionally, the maximum Cal Grant award was cut by 24 percent. Accordingly, the students at Heald College will now have to pay for tuition through other alternatives. Corinthian does not expect this change to impact revenue.
Corinthian extended its student lending agreement with ASFG for two years through June 2015 whereby ASFG will fund approximately $650 million in new student loans over the next 3 years. The fees Corinthian must pay to ASFG are $8 to $10 million per year higher than the fees it paid for its previous Genesis lending agreement.
Financials.
Revenues in Q4 declined by 3.3 percent as a result of a 2.6 percent decrease in student population and a .7 percent decrease in average revenue.
Corinthian Colleges currently has excess capacity at its ground schools, and therefore, has reduced operating expenses by $150 million, primary in employee compensation and bad debt. In fiscal year 2012, bad debt was 3.3 percent of revenue versus 5.4 percent of revenue in 2011.
Operating margins were 4.4 percent, a decline from 5.6 percent a year ago and 6.5 percent in Q3. The margin decline was due to revenue declines and increased marketing expenses.
Educational service expenses declined by 5.1 percent in Q4 as a result of a reduction in bad debt expense and other cost reductions. In Q4, educational expenses were 59.8 percent of revenues versus 60.9 percent a year ago. The improvement in bad debt expense was the result of bringing the financial aid processing in house.
Diluted earnings per share for full year 2012 was $.32. EPS for Q4 was $.10 versus $.17 a year ago. Corinthian expects EPS for Q1/2013 to be $.03 to $.05.
Cash flow from operations was $152.8 million in fiscal year 2012, which was below the $225 million guidance. Cash flow fell below guidance because: (1) a wildfire required Corinthian to close its Colorado Springs service center operation for several days in the last week of June, (2) timing of vendor payments, and (3) the conversion of Heald to the new student information system which briefly disrupted student financial aid processing.
The transcript of the earnings conference call can be located on Seeking Alpha at the following link:
http://seekingalpha.com/article/818291-corinthian-colleges-ceo-discusses-f4q12-results-earnings-call-transcript
Copyright 2012 Jaygo's Earnings Call Summaries
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
No comments:
Post a Comment