SAN DIEGO, May 21 /PRNewswire-FirstCall/ -- Bridgepoint Education (NYSE: BPI) , a provider of postsecondary education services, announced today its results for the three-month period ended March 31, 2009.
-- Total student enrollment increased 115.4% year over year to 42,025 at
the end of the quarter.
-- Revenue increased 116.4% to $84.3 million from $38.9 million for the
same period in 2008.
-- Operating income increased 91.9% to $7.2 million from $3.7 million for
the same period in 2008. Non-GAAP operating income, which excludes a
charge of $11.1 million taken in the first quarter related to the
settlement of a stockholder claim (of which $10.6 million was
non-cash), was $18.2 million, a 388.7% increase from the same period
in 2008. See "About Non-GAAP Financial Measures" and "Reconciliation
of Non-GAAP Measures" below.
-- Net income was $3.9 million, a decrease from $4.0 million from the
same period in 2008. Non-GAAP net income, which excludes the net
income effect of $7.0 million related to the settlement charge
discussed above, was $10.9 million, a 173.9% increase from the same
period in 2008. See "About Non-GAAP Financial Measures" and
"Reconciliation of Non-GAAP Measures" below.
"We are pleased to report strong enrollment and revenue growth for the first quarter of 2009," said Andrew Clark, Chief Executive Officer of Bridgepoint Education. "Our first quarter achievements are a testament to how well our approach is being embraced by our students. We attribute much of our success to three factors: a strong value proposition, a high-quality academic experience and an effective management team."
Initial Public Offering
On April 14, 2009, Bridgepoint Education priced its initial public offering, and on the following day, its common stock commenced trading on the New York Stock Exchange under the ticker symbol "BPI." The initial public offering closed on April 20, 2009, at which time Bridgepoint Education sold 3,500,000 shares of common stock and selling stockholders sold 12,025,000 shares of common stock, including 2,025,000 shares sold by a selling stockholder pursuant to the exercise in full of the underwriters' over-allotment option.
Student Enrollment
Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, increased 115.4% to 42,025 students at March 31, 2009, compared with 19,509 students at the end of first quarter of 2008. As of March 31, 2009, 98% of the total student population accessed their classes exclusively online.
New student enrollments for the first quarter of 2009 at both of Bridgepoint Education's academic institutions were approximately 16,800, an increase of 90.9%, compared with new enrollments of approximately 8,800 for the first quarter of 2008.
Financial Results
Revenue for the first quarter of 2009 was $84.3 million, an increase of 116.4% compared with revenue of $38.9 million for the first quarter of 2008.
Operating income in the first quarter of 2009 was $7.2 million, compared with $3.7 million for the same period in 2008. Non-GAAP operating income, which excludes a charge of $11.1 million taken in the first quarter related to the settlement of a stockholder claim (of which $10.6 million was non-cash), was $18.2 million, a 388.7% increase from the same period in 2008. See "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below.
Net income for the first quarter of 2009 was $3.9 million compared with net income of $4.0 million for the first quarter of 2008. Non-GAAP net income, which excludes the settlement charge discussed above, was $10.9 million, a 173.9% 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 first quarter of 2009 was $0.03. Non-GAAP fully diluted earnings per common share for the first quarter of 2009, which excludes the settlement charge discussed above and also reflects the conversion of the redeemable convertible preferred stock into common stock as if the conversion happened on January 1, 2009, was $0.20. See "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below.
The Company's effective tax rate for the first quarter of 2009 was 46.2%. Before taking into account the settlement charge taken in the first quarter of 2009, the effective tax rate for the quarter was 40.4%. See "Reconciliation of Non-GAAP Measures" below.
Balance Sheet and Cash Flow
As of March 31, 2009, Bridgepoint had cash and cash equivalents of $79.1 million, compared with $56.5 million as of December 31, 2008. The Company generated $32.3 million of cash from operating activities for the first quarter of 2009, compared with $10.8 million for the same period in 2008.
2009 Outlook
The following guidance for the year ended December 31, 2009, is based on current expectations and actual results may differ materially. This guidance includes non-GAAP financial measures, which (1) exclude charges related to the settlement of a stockholder claim in the first quarter of 2009 and the acceleration of vesting of certain stock options in connection with the closing of the Company's initial public offering in the second quarter of 2009, and (2) reflect the conversion of the redeemable convertible preferred stock into common stock as if the conversion happened on January 1, 2009. See "Forward-Looking Statements," "About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" below. The Company plans to re-affirm or update this guidance quarterly.
-- Total student enrollment is expected to be between 47,000 and 49,000
at December 31, 2009.
-- GAAP revenue is expected to be between $405 million and $410 million.
-- GAAP net income is expected to be between $22 million and $24 million.
-- Non-GAAP net income is expected to be between $48 million and $50
million.
-- GAAP fully diluted earnings per common share is expected to be between
$0.37 and $0.39, based on an estimated fully diluted weighted average
share count of 43.2 million for the year ending December 31, 2009, as
discussed below.
-- Non-GAAP fully diluted earnings per common share is expected to be
between $0.87 and $0.90, based on an estimated fully diluted weighted
average share count of 55.8 million for the year ending December 31,
2009.
Weighted Average Share Count Estimate. At the closing of the Company's initial public offering, all shares of redeemable convertible preferred stock were converted into common shares, increasing the common shares outstanding on April 20, 2009, by 44.7 million shares. The Company's expectations for fully diluted weighted average shares outstanding for 2009 and each quarter therein are listed below:
Quarter Ending: Quarterly Fully Diluted
Weighted Average Share
Count Estimate:
March 31, 2009* 8.1 million*
June 30, 2009 46.1 million
September 30, 2009 58.7 million
December 31, 2009 59.2 million
Year Ending: Annual Fully Diluted
Weighted Average Share
Count Estimate:
December 31, 2009 43.2 million
*Actual.
The numbers shown in the table above reflect the 1-for-4.5 reverse stock split, which occurred on March 31, 2009.
Estimated 2009 Tax Rate. The Company's effective tax rate for 2009 is estimated to be 46.2%. Before taking into account the settlement charge taken in the first quarter of 2009, the Company estimates the effective tax rate would have been 40.4%. See "Reconciliation of Non-GAAP Measures" below.
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 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 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 operating income, net income or fully diluted earnings per common share, respectively, as an indicator of operating performance or any other GAAP measure. 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. These limitations are compensated for by using non-GAAP financial measures in conjunction with traditional GAAP operating performance and cash-flow measures.
The following is a description of the non-GAAP financial measures the Company uses in this press release:
Non-GAAP operating income. Non-GAAP operating income is defined as operating income, plus (1) a 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) a 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 our initial public offering, 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 us, our directors and officers and our majority
stockholder. On March 29, 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, our board of directors
amended certain exit options awarded to members of our 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
our 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 additional estimated 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 net income. Non-GAAP net income is defined as net income, plus (1) the net income effect of $7.0 million related to the $11.1 million expense taken in the first quarter of 2009 in connection with the settlement of the stockholder claim, and (2) the net income effect of $19.3 million related to the $30.4 million expense to be taken in the second quarter of 2009 resulting from the acceleration of certain exit options in connection with our initial public offering.
Non-GAAP fully diluted earnings per common share. Non-GAAP fully diluted earnings per share is defined to mean non-GAAP net income, plus the allocation of net income to preferred stockholders for the period, 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. We believe 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 our initial public offering.
These non-GAAP financial measures have been reconciled to the related GAAP 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. EDT today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States is (877) 719-9801 and the dial-in number for international callers is (719) 325-4746. The access code for all callers is 2533844. A live webcast will also be available on the Company's website at ir.bridgepointeducation.com.
A replay of the call will be available over the telephone through May 28, 2009. To access the replay, please dial (888) 203-1112 in the United States and (719) 457-0820 outside the United States, and then enter the access code 2533844.
About Bridgepoint Education
Bridgepoint Education's postsecondary education services focus on offering associate's, bachelor's, master's and doctoral programs in the disciplines of 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, respectively.
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: proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our enrollments, financial position, results of operations and our liquidity; projections, predictions, expectations, estimates or forecasts as to our 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: our failure to comply with the extensive regulatory framework applicable to our industry, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements and accrediting agency requirements; our ability to continue to develop awareness among, to recruit and to retain students; competition in the postsecondary education market and its potential impact on our market share, recruiting cost and tuition rates; reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions; our ability to attract and retain the personnel needed to sustain and grow our business; our ability to develop new programs or expand our existing programs in a timely and cost-effective manner; economic or other developments potentially impacting demand in our core disciplines or the availability or cost of Title IV or other; and other factors discussed in the "Risk Factors" section of our IPO prospectus dated April 14, 2009, and in periodic reports we 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. We assume 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 we do update one or more forward-looking statements, no inference should be drawn that we 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
March 31,
2009 2008
(In thousands, except
per share amounts)
Revenue $84,275 $38,948
Costs and expenses:
Instructional costs and services 22,134 12,948
Marketing and promotional 29,106 15,063
General and administrative 25,882 7,210
Total costs and expenses 77,122 35,221
Operating income 7,153 3,727
Other income (expense), net 72 (54)
Income before income taxes 7,225 3,673
Income tax expense (benefit) 3,338 (309)
Net income 3,887 3,982
Accretion of preferred dividends (541) (501)
Net income available to common
stockholders $3,346 $3,481
Earnings per common share:
Basic $0.07 $0.05
Diluted $0.03 $0.03
Weighted average common shares
outstanding
used in computing earnings per
common share:
Basic 3,498 3,335
Diluted 8,136 6,376
BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
As of March 31, As of December 31,
2009 2008
(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents $79,125 $56,483
Restricted cash 691 666
Accounts receivable, net 38,513 28,946
Inventories 301 288
Current portion of deferred income
taxes 2,734 2,734
Prepaid expenses and other current
assets 10,757 6,773
Total current assets 132,121 95,890
Property and equipment, net 34,701 27,715
Intangibles 1,897 1,897
Deferred income taxes 2,434 2,366
Other long term assets 1,482 1,378
Total assets $172,635 $129,246
LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,851 $4,705
Accrued liabilities 18,864 16,543
Deferred revenue and student deposits 94,599 67,425
Current portion of leases payable 157 142
Current maturities of notes payable 74 74
Other liabilities 37 40
Total current liabilities 117,582 88,929
Leases payable, less current portion 250 308
Notes payable, less current
maturities 140 160
Other long term liabilities 3,311 2,740
Rent liability 4,757 3,938
Total liabilities 126,040 96,075
Commitments and contingencies - -
Redeemable convertible preferred
stock 27,539 27,062
Total stockholders' equity 19,056 6,109
Total liabilities and redeemable
convertible preferred stock and
stockholders' equity $172,635 $129,246
BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2009 2008
(In thousands)
Operating activities
Net income $3,887 $3,982
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for bad debts 4,515 2,957
Depreciation and amortization 1,109 375
Deferred income taxes (68) (911)
Stock-based compensation 19 43
Settlement of stockholder litigation
expense 10,577 -
Changes in operating assets and
liabilities:
Accounts receivable (14,082) (5,675)
Inventories (13) (10)
Prepaid expenses and other assets (713) (1,176)
Other long term assets (104) 538
Accounts payable and accrued liabilities (1,382) 1,346
Deferred revenue and student deposits 27,174 9,436
Other liabilities 1,387 (69)
Net cash provided by operating activities 32,306 10,836
Investing activities
Capital expenditures (7,223) (1,019)
Restricted cash (25) (666)
Net cash used in investing activities (7,248) (1,685)
Financing activities
Proceeds from the issuance of common stock 63 -
Costs incurred in connection with IPO (2,352) -
Payments on conversion of preferred stock (64) -
Payments of capital lease obligations (43) (30)
Payments of notes payable (20) (91)
Net cash used in financing activities (2,416) (121)
Net increase in cash and cash equivalents 22,642 9,030
Cash and cash equivalents at beginning of
period 56,483 7,351
Cash and cash equivalents at end of period $79,125 $16,381
Supplemental disclosure of noncash
transactions:
Purchase of equipment included in accounts
payable and accrued liabilities $872 $217
IPO costs included in accounts payable $919 $-
Reconciliation of Non-GAAP Measures - Historical
Adjustment
for
Assumed
Conversion As
of Redeemable Adjusted Reported
As Reported Convertible Three Three
Three Months Adjustment Preferred Months Months
ended for Stock as of ended ended
March 31, Settlement January 1, March 31, March 31,
2009 Charge 2009 2009 2008
(Unaudited, in thousands, except per share amounts)
Revenue $84,275 $- - $84,275 $38,948
Cost and
expenses:
Instructional
costs and
services 22,134 - - 22,134 12,948
Marketing
and
promotional 29,106 - - 29,106 15,063
General and
administrative 25,882 (11,060) - 14,822 7,210
Total costs
and
expenses 77,122 (11,060) - 66,062 35,221
Operating
income 7,153 11,060 - 18,213 3,727
Other
income
(expense),
net 72 - - 72 (54)
Income
before tax 7,225 11,060 - 18,285 3,673
Income tax
expense
(benefit) 3,338 4,040 - 7,378 (309)
Net income 3,887 7,020 - 10,907 3,982
Accretion
of
preferred
dividends (541) - - (541) (501)
Net income
available
to common
stockholders $3,346 $7,020 - $10,366 $3,481
Net income
used in
earnings
per common
share
calculation $234 $490 $9,642 $10,366 $182
Earnings
per common
share:
Basic $0.07 $0.14 $- $0.22 $0.05
Diluted $0.03 $0.06 $- $0.20 $0.03
Weighted
average
common
shares
outstanding
used in
computing
earnings
per common
share:
Basic 3,498 - 44,693 48,191 3,335
Diluted 8,136 - 44,693 52,829 6,376
Reconciliation of Non-GAAP Measures - Forward-Looking
Adjustment Adjustment
GAAP for for Exit
Year Ended Settlement Option
December 31, 2009 Charge Charge
(Unaudited, in thousands, except per share amounts)
Revenue $405,000 - $410,000
Net income $22,000 - $24,000 $7,020 $19,295
Net income used
in earnings
per common
share
calculation $16,000 - $17,000 $5,111 $14,047
Earnings per
common share:
Basic $0.41 - $0.43 $0.13 $0.36
Diluted $0.37 - $0.39 $0.12 $0.32
Pro-forma
weighted
average shares
Basic 39,403 - -
Diluted 43,228 - -
Adjustment for
Assumed
Conversion of
Redeemable
Convertible Non-GAAP
Preferred Stock as Year Ended
of January 1, 2009 December 31, 2009
(Unaudited, in thousands, except per share amounts)
Revenue $405,000 - $410,000
Net income $- $- $48,315 - $50,315
Net income used in
earnings per common
share calculation $13,157 - $14,157 $48,315 - $50,315
Earnings per common
share:
Basic $- $- $0.93 - $0.97
Diluted $- $- $0.87 - $0.90
Pro-forma weighted
average shares
Basic 12,613 52,016
Diluted 12,613 55,841
Source: Bridgepoint Education
CONTACT: Diane Salucci, Vice President of Corporate Communications and
Investor Relations, +1-858-668-2586, ext. 3690, or J. Spencer Davis, Director
of Investor Relations, +1-858-668-2586, ext. 4190, both of Bridgepoint
Education, investorrelations@bridgepointeducation.com
Web Site: http://www.bridgepointeducation.com/