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Strayer Education Inc.$176.99($.66)(.37%)

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 Strayer Education, Inc. Reports Fourth Quarter Enrollment, Revenues, and Earnings
   Thursday, March 01, 2018 4:15:04 PM ET

--Full Year 2017 New Enrollment Up 6%, Total Enrollment Up 6%--

--Full Year 2017 Revenue Up 3%--

--6% New and Total Enrollment Growth Anticipated for Q1 / Winter 2018--

--Strayer to Open New Macon, GA Campus in Q1, its First Since 2012--

--Stockholders Approve Merger with Capella, Close Anticipated in Q3--

Strayer Education, Inc. (STRA ) today announced financial results for the period ended December 31, 2017. Financial highlights are as follows:

Three Months Ended December 31:

-- For the fourth quarter, student enrollment at the Company’s main operating unit, Strayer University, increased 6% to 48,144 compared to 45,509 for the same period in 2016. New student enrollment for the period increased 4% and continuing student enrollment increased 6%.

-- Revenue was $118.7 million compared to $119.3 million for the same period in 2016, as higher enrollment was offset by lower revenue per student due to higher scholarships during the fall term.

-- Income from operations decreased to $11.7 million from $19.7 million for the same period in 2016, due to costs associated with the Company’s pending merger with Capella Education Company. Adjusted income from operations increased 10% to $20.2 million from $18.4 million in the same period in 2016(1). (1) For more information on adjusted results and other non-GAAP financial measures discussed in this press release, refer to the information on pages 8 through 11.

-- The Tax Cuts and Jobs Act of 2017 reduced the corporate tax rate and thus reduced the value of the Company’s net deferred tax assets by $11.4 million as of December 31, 2017. As a result, the Company recorded a net loss of $6.5 million compared to net income of $11.7 million in the same period in 2016. Adjusted net income grew 18% to $12.3 million from $10.5 million for the same period in 2016.

-- Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $16.7 million compared to $24.2 million in 2016. Adjusted EBITDA increased 6% to $28.6 million from $26.9 million in the same period in 2016.

-- Net loss per share was $0.61 compared to diluted earnings per share of $1.07 for the same period in 2016. Adjusted diluted earnings per share grew 15% to $1.09 from $0.95 for the same period in 2016. Diluted weighted average shares outstanding increased 3% to 11,273,000 from 10,971,000 for the same period in 2016.

Year Ended December 31:

-- Revenues increased 3% to $454.9 million compared to $441.1 million for the same period in 2016, principally due to higher enrollment partially offset by lower revenue per student.

-- Income from operations was $52.2 million compared to $57.5 million for the same period in 2016. Adjusted income from operations grew 4% to $56.6 million from $54.3 million for the same period in 2016. Adjusted operating income margin increased slightly to 12.4% from 12.3% for the same period in 2016.

-- Net income was $20.6 million compared to $34.8 million for the same period in 2016. Adjusted net income grew 8% to $34.9 million from $32.3 million for the same period in 2016.

-- EBITDA was $70.9 million in 2017 compared to $75.3 million in 2016. Adjusted EBITDA increased 4% to $88.7 million from $85.1 million in the same period in 2016.

-- Diluted earnings per share was $1.84 for 2017 compared to $3.21 for the same period in 2016. Adjusted diluted earnings per share grew 4% to $3.11 from $2.98 for the same period in 2016. Diluted weighted average shares outstanding increased 3% to 11,199,000 from 10,845,000 for the same period in 2016.

Balance Sheet and Cash Flow

At December 31, 2017, the Company had cash and cash equivalents of $155.9 million and no debt. Cash flow from operations grew 26% to $56.2 million, from $44.5 million during 2016. Capital expenditures for 2017 were $18.1 million compared to $13.2 million for the same period in 2016.

For the fourth quarter of 2017, bad debt expense as a percentage of revenues was 5.8% compared to 4.6% for the same period in 2016.

The Company had $70.0 million of share repurchase authorization remaining at December 31, 2017. No shares were repurchased in the fourth quarter of 2017.

Q1 2018 Outlook

Total enrollments at Strayer University for the first quarter 2018 are anticipated to grow 6% to approximately 46,100 students from 43,387 students for the same period in 2016. New student enrollments and continuing student enrollments are expected to increase approximately 6% each. Revenue per student for the first quarter is expected to decrease by approximately 5% due primarily to higher continuation of students participating in new scholarship programs launched in the fall term 2017. Notwithstanding continued declines in revenue per student, the Company expects year over year revenue growth in the first quarter. Additionally, the Company expects the tax rate for the first quarter to be in the range of 21% to 22%, excluding the impact of non-deductible merger costs.

New Campus Openings

The Company announced today that it plans to open three to five new campus locations in 2018. The first new campus, located in Macon, Georgia, will open for the start of the spring academic term. The Macon campus and subsequent new campuses will incorporate a new smaller cost-efficient design intended to service a student body that values a brick-and-mortar presence, even while taking an increasing majority of their courses online.

Common Stock and Common Stock Equivalents

At December 31, 2017, the Company had 11,167,425 common shares issued and outstanding, including 466,128 shares of restricted stock. The Company also had 250,000 restricted stock units outstanding and 100,000 vested stock options outstanding.

Common Stock Cash Dividend

The Company announced today that it declared a regular, quarterly cash dividend of $0.25 per share of common stock. This dividend will be paid on March 19, 2018 to shareholders of record as of March 12, 2018.

Merger Update

On January 19, 2018, stockholders of both Strayer Education, Inc. and Capella Education Company approved all proposals related to the pending merger. On February 27, 2018, the U.S. Department of Education completed its pre-acquisition review of the transaction without any material conditions, and the U.S. Federal Trade Commission in November 2017 granted early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The merger, which is anticipated to close in the third quarter of 2018, is subject to the satisfaction of customary closing conditions, including approval by the Higher Learning Commission.

Conference Call with Management

Strayer Education, Inc. will host a conference call to discuss its fourth quarter 2017 earnings results at 8:30 a.m. (ET) tomorrow morning, March 2, 2018. To participate on the live call, investors should dial (877) 303-9047 ten minutes prior to the start time. In addition, the call will be available via live webcast. To access the live webcast of the conference call, please go to www.strayereducation.com 15 minutes prior to the start time of the call to register. Following the call, the webcast will be archived and available at www.strayereducation.com.

About Strayer Education, Inc.

Strayer Education, Inc. (STRA ) is educating a more competitive and qualified workforce by solving higher education’s most challenging problems. It includes Strayer University, a regionally accredited institution that delivers affordable degree programs for working adults, and a Top 25 Princeton Review-ranked executive MBA program through the Jack Welch Management Institute. Non-degree web and mobile application development courses are offered through the New York Code + Design Academy. Strayer also transforms the workforces of its corporate partners through customized degree and professional development programs. By deploying innovative teaching methods and technologies that enhance student learning outcomes, Strayer makes it possible for working adults to acquire the skills they need to succeed in today’s rapidly changing economy.

Forward-Looking Statements

This press release contains statements that are forward-looking and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such statements may be identified by the use of words such as "expect," "estimate," "assume," "believe," "anticipate," "will," "forecast," "outlook," "plan," "project," or similar words. The statements are based on the Company’s current expectations and are subject to a number of assumptions, uncertainties, and risks. In connection with the safe-harbor provisions of the Reform Act, the Company has identified important factors that could cause the Company’s actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include the pace of growth of student enrollment, the Company’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements, rulemaking by the Department of Education and increased focus by the U.S. Congress on for-profit education institutions, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks relating to the timing of regulatory approvals, the Company’s ability to implement its growth strategy, risks associated with the ability of the University’s students to finance their education in a timely manner, risks associated with the Company’s pending merger with Capella Education Company, including the risk that the merger might not be completed on the agreed terms or at all, and general economic and market conditions. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in its subsequent filings with the Securities and Exchange Commission, all of which are incorporated herein by reference and which are available from the Commission. The Company undertakes no obligation to update or revise forward-looking statements.

 
                                                                                                                                                                        STRAYER EDUCATION, INC.
                                                                                                                                                                   UNAUDITED CONDENSED CONSOLIDATED
                                                                                                                                                                         STATEMENTS OF INCOME
                                                                                                                                                                (Amounts in thousands, except per share
                                                                                                                                                                                 data)
 
                                                                                                                                                                    
                                                                                                                                  For the three months ended                                                                                                                                         For the year ended
                                                                                                                                         December 31,                                                                                                                                                   December 31,
                                                                                   ------------------------------------------------------------------------------------------------------------------                                                 -----------------------------------------------------------------------------------------------------------
                                                                                               2016                                                                              2017                                                                             2016                                                                          2017
                                                                                   -----------------------------                                          --------------------------------------------------                                          -----------------------------                                          ------------------------------------------
                                                                                                                                                                                                                                                                                                                                                   
Revenues                                                                                              $ 119,279                                                              $ 118,707                                                                $ 441,088                                                              $              454,851
                                                                                   -------------------- -------                                           -------------------- ------- --------------------                                           -------------------- -------                                           -------------------- --------------------
Costs and expenses:
     Instruction and educational support                                                                 64,851                                                                 65,118                                                                                     241,026                                                                             245,177
     Marketing                                                                                           17,591                                                                 17,840                                                                                      79,025                                                                              82,574
     Admissions advisory                                                                                  4,661                                                                  4,681                                                                                      17,832                                                                              19,494
     General and administration                                                       12,522                                              19,380                                                45,733                                                           55,397
                                                                                   -------------------- -------                                           -------------------- ------- --------------------                                           -------------------- -------                                           -------------------- --------------------
Total costs and expenses                                                              99,625                                             107,019                                               383,616                                                          402,642
                                                                                   -------------------- -------                                           -------------------- ------- --------------------                                           -------------------- -------                                           -------------------- --------------------
     Income from operations                                                                              19,654                                                                 11,688                                                                                      57,472                                                                              52,209
Investment income                                                                                           135                                                                    342                                                                                         462                                                                               1,079
Interest expense                                                                         161                                                 161                                                   642                                                              642
                                                                                   -------------------- -------                                           -------------------- ------- --------------------                                           -------------------- -------                                           -------------------- --------------------
     Income before income taxes                                                                          19,628                                                                 11,869                                                                                      57,292                                                                              52,646
Provision for income taxes                                                             7,910                                              18,364                                                22,490                                                           32,034
                                                                                   -------------------- -------                                           -------------------- ------- --------------------                                           -------------------- -------                                           -------------------- --------------------
     Net income                                                                                       $  11,718                                                              $  (6,495 )                                                                                 $  34,802                                                              $               20,612
                                                                                   ==================== =======                                           ==================== ======= ====================                                           ==================== =======                                           ==================== ====================
                                                                                                                                                                                                                                                                                                                                                   
Earnings per share:
  Basic                                                                                               $    1.10                                                              $   (0.61 )                                                                                 $    3.28                                                              $                 1.93
  Diluted                                                                                             $    1.07                                                              $   (0.61 )                                                                                 $    3.21                                                              $                 1.84
                                                                                                                                                                                                                                                                                                                                                   
Weighted average shares outstanding:
     Basic                                                                                               10,616                                                                 10,701                                                                                      10,610                                                                              10,678
     Diluted                                                                                             10,971                                                                 11,273                                                                                      10,845                                                                              11,199
                                                                                                                                                                                                                                                                                                                                                   
 
                                                                                                   STRAYER EDUCATION, INC.
                                                                                              UNAUDITED CONDENSED CONSOLIDATED
                                                                                                       BALANCE SHEETS
                                                                                         (Amounts in thousands, except share and per
                                                                                                         share data)
 
 
                                                                              December 31,                            December 31,
                                                                                                                        2016                                                                          2017
                                                                                                            -----------------------------                                          ------------------------------------------
                              ASSETS
Current assets:
     Cash and cash equivalents                                                                                                 $ 129,245                                                              $              155,933
     Tuition receivable, net                                                                                                      20,532                                                                              23,122
     Other current assets                                                                                      10,766                                                           11,293
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total current assets                                                                                                   160,543                                                                             190,348
     Property and equipment, net                                                                                                  73,124                                                                              73,763
     Deferred income taxes                                                                                                        31,096                                                                              24,452
     Goodwill                                                                                                                     20,744                                                                              20,744
     Other assets                                                                                              13,189                                                           11,971
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total assets                                                                                                         $ 298,696                                                              $              321,278
                                                                                                            ==================== =======                                           ==================== ====================
                                                                                                                                                                                                         
                LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
     Accounts payable and accrued expenses                                                                                     $  41,132                                                              $               46,177
     Income taxes payable                                                                                                          1,883                                                                               1,038
     Deferred revenue                                                                                                             16,691                                                                              21,851
     Other current liabilities                                                                                    133                                                   --
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total current liabilities                                                                                               59,839                                                                              69,066
Other long-term liabilities                                                                                    50,483                                                           43,015
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total liabilities                                                                                   110,322                                                          112,081
                                                                                                            -------------------- -------                                           -------------------- --------------------
Commitments and contingencies
Stockholders’ equity:
                                                                                                                                     111                                                                                 112
     Common stock, par value $0.01, 20,000,000 shares authorized;
     11,093,489 and 11,167,425 shares issued and outstanding at
     December 31, 2016 and December 31, 2017, respectively
     Additional paid-in capital                                                                                                   35,453                                                                              47,079
     Retained earnings                                                                                        152,810                                                          162,006
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total stockholders’ equity                                                                          188,374                                                          209,197
                                                                                                            -------------------- -------                                           -------------------- --------------------
          Total liabilities and stockholders’ equity                                                                           $ 298,696                                                              $              321,278
                                                                                                            ==================== =======                                           ==================== ====================
                                                                                                                                                                                                         
 
                                                                                                                           STRAYER EDUCATION, INC.
                                                                                                                      UNAUDITED CONDENSED CONSOLIDATED
                                                                                                                          STATEMENTS OF CASH FLOWS
                                                                                                                           (Amounts in thousands)
 
 
                                                                                                                                               For the year ended
                                                                                                                                                                                        December 31,
                                                                                                                ----------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          2016                                                         2017
                                                                                                                ---------------------------------------------------------                                          ---------------------------------------------------------
Cash flows from operating activities:
     Net income                                                                                                                    $         34,802                                                                                   $         20,612
     Adjustments to reconcile net income to net cash provided by
     operating activities:
          Amortization of gain on sale of assets                                                                                               (281 )                                                                                             (133 )
          Amortization of deferred rent                                                                                                      (1,441 )                                                                                           (1,780 )
          Amortization of deferred financing costs                                                                                              262                                                                                                262
          Depreciation and amortization                                                                                                      17,817                                                                                             18,733
          Deferred income taxes                                                                                                              (8,697 )                                                                                            6,429
          Stock-based compensation                                                                                                           10,767                                                                                             11,627
          Changes in assets and liabilities:
               Tuition receivable, net                                                                                                       (1,453 )                                                                                           (3,250 )
               Other current assets                                                                                                          (3,949 )                                                                                             (527 )
               Other assets                                                                                                                  (1,865 )                                                                                            1,582
               Accounts payable and accrued expenses                                                                                           (262 )                                                                                            4,468
               Income taxes payable                                                                                                            (408 )                                                                                             (629 )
               Deferred revenue                                                                                                               7,018                                                                                              8,212
               Other long-term liabilities                                                                                (7,800 )                                                                        (9,451 )
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash provided by operating activities                                                             44,510                                                       56,155  
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                                                                                                                                                                                                                                                        
Cash flows from investing activities:
     Purchases of property and equipment                                                                                                    (13,161 )                                                                                          (18,051 )
     Cash used in acquisition, net of cash acquired                                                                       (7,635 )                                                                --  
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash used in investing activities                                                                (20,796 )                                                                       (18,051 )
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                                                                                                                                                                                                                                                        
     Cash flows from financing activities:
     Payments of contingent consideration                                                                                                    (1,358 )                                                                                   --
     Common dividends paid                                                                                        --                                                      (11,416 )
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash used in financing activities                                                                 (1,358 )                                                                       (11,416 )
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net increase in cash and cash equivalents                                                                                22,356                                                                                             26,688
Cash and cash equivalents - beginning of period                                                                          106,889                                                      129,245  
                                                                                                                -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Cash and cash equivalents - end of period                                                                                          $        129,245                                                                $        155,933  
                                                                                                                ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                        
Non-cash transactions:
     Purchases of property and equipment included in accounts payable                                                              $            349                                                                                   $          1,734
                                                                                                                                                                                                                                                        

Non-GAAP Financial Measures

In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management’s reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for income from operations, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Management uses certain non-GAAP measures to evaluate the Company’s financial performance because those non-GAAP measures allow for period-over-period comparisons of its ongoing operations before the impact of these items. These measures are Adjusted Income from Operations, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings Per Share (EPS). We define Adjusted Income from Operations, Adjusted Net Income and Adjusted EPS to exclude (1) fair value adjustments related to the Company’s acquisition of the New York Code + Design Academy and the related tax effects, and adjustments to the Company’s reserve for leases on facilities no longer in use and (2) charges associated with the Company’s previously announced merger with Capella Education Company and severance charges associated with a staff reduction program. We define Adjusted Net Income and Adjusted EPS to also exclude adjustments to the provision for income taxes which include a reduction in the value of the Company’s deferred tax asset as a result of the impact of the Tax Cuts and Jobs Act of 2017. We define EBITDA as net income before provision for income taxes, investment income, interest expense, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude the amounts in (1) and (2) above and stock-based compensation expense. These non-GAAP measures are reconciled to the most directly comparable GAAP measures on pages 9 through 11. Non-GAAP measures should not be viewed as substitutes for GAAP measures.

 
                                                                                                                                                                                                                                     STRAYER EDUCATION, INC.
                                                                                                                                                                                                                              RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                                                                                                                                                                                                          ADJUSTED INCOME FROM OPERATIONS, ADJUSTED NET INCOME,
                                                                                                                                                                                                                                     AND ADJUSTED EPS
                                                                                                                                                                                                                              (Amounts in thousands, except per share data)
 
                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                     For the Three Months Ended December 31, 2017
                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                     Non-GAAP Adjustments
                                                                                                                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  As Reported                                                                                    Fair Value                                                                                 Merger                                                                               Deferred Tax                                                                                 As Adjusted
                                                                                                    (GAAP)                                                                                     Adjustments (1)                                                                             Costs (2)                                                                               Asset (3)                                                                                  (Non-GAAP)
                                                                               ----------------------------------------------                                             ------------------------------------------------------                                             ----------------------------------                                            ------------------------------------------------------                                             ----------------------------------------
Income from operations                                                                            $ 11,688                                                                                   $ --                                                                                   $          8,465                                                              $ --                                                                                   $               20,153
Investment income                                                                                      342                                                                                     --                                                                                     --                                                                --                                                                                                      342
Interest expense                                                                    161                                               --                                               --                                             --                                                                161
                                                                               -------------------- ------ --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
     Income before income taxes                                                                     11,869                                                                                     --                                                                                              8,465                                                                --                                                                                                   20,334
     Provision for income taxes                                                  18,364                                                          802                                                          241                                                    (11,375 )                                                                               8,032
                                                                               -------------------- ------ --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
          Net (loss) income                                                                       $ (6,495 )                                                                                 $           (802 )                                                                                 $          8,224                                                              $         11,375                                                                $               12,302
                                                                               ==================== ====== ====================                                           ==================== ============== ====================                                           ==================== ==============                                           ==================== ============== ====================                                           ==================== ====================
(Loss) earnings per share:
     Basic **                                                                                     $  (0.61 )                                                                                 $          (0.07 )                                                                                 $           0.77                                                              $           1.06                                                                                   $                 1.15
     Diluted **                                                                                   $  (0.61 )                                                                                 $          (0.07 )                                                                                 $           0.73                                                              $           1.01                                                                                   $                 1.09
Weighted average shares outstanding:
     Basic                                                                                          10,701                                                                                     --                                                                                     --                                                                --                                                                                                   10,701
     Diluted                                                                                        11,273                                                                                     --                                                                                     --                                                                --                                                                                                   11,273
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                
                                                                                                                                                                                                                                                                     For the Three Months Ended December 31, 2016
                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                     Non-GAAP Adjustments
                                                                                                                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  As Reported                                                                                    Fair Value                                                                                 Merger                                                                               Deferred Tax                                                                                 As Adjusted
                                                                                                    (GAAP)                                                                                     Adjustments (1)                                                                             Costs (2)                                                                               Asset (3)                                                                                  (Non-GAAP)
                                                                               ----------------------------------------------                                             ------------------------------------------------------                                             ----------------------------------                                            ------------------------------------------------------                                             ----------------------------------------
Income from operations                                                                            $ 19,654                                                                                   $         (1,260 )                                                                                 $ --                                                              $ --                                                                                   $               18,394
Investment income                                                                                      135                                                                                     --                                                                                     --                                                                --                                                                                                      135
Interest expense                                                                    161                                               --                                               --                                             --                                                                161
                                                                               -------------------- ------ --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
     Income before income taxes                                                                     19,628                                                                                             (1,260 )                                                                                   --                                                                --                                                                                                   18,368
     Provision for income taxes                                                   7,910                                               --                                               --                                             --                                                              7,910
                                                                               -------------------- ------ --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
          Net income                                                                              $ 11,718                                                                $         (1,260 )                                                                                 $ --                                                              $ --                                                                $               10,458
                                                                               ==================== ====== ====================                                           ==================== ============== ====================                                           ==================== ==============                                           ==================== ============== ====================                                           ==================== ====================
Earnings per share:
     Basic **                                                                                     $   1.10                                                                                   $          (0.12 )                                                                                 $ --                                                              $ --                                                                                   $                 0.99
     Diluted **                                                                                   $   1.07                                                                                   $          (0.11 )                                                                                 $ --                                                              $ --                                                                                   $                 0.95
Weighted average shares outstanding:
     Basic                                                                                          10,616                                                                                     --                                                                                     --                                                                --                                                                                                   10,616
     Diluted                                                                                        10,971                                                                                     --                                                                                     --                                                                --                                                                                                   10,971
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
** Earnings per share data may not foot due to rounding.
                    
(1)                                     Reflects reductions to the value of contingent consideration related
                                        to the Company’s acquisition of the New York Code + Design Academy
                                        and the related tax effects.
(2)                                     Reflects charges associated with the Company’s previously announced
                                        merger with Capella Education Company and severance costs associated
                                        with a staff reduction program.
(3)                                     Reflects a reduction in the value of the Company’s net deferred tax
                                        assets in connection with the passage of the Tax Cuts and Jobs Act
                                        of 2017.
                                         
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                              STRAYER EDUCATION, INC.
                                                                                                                                                                                                                   RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                                                                                                                                                                                               ADJUSTED INCOME FROM OPERATIONS, ADJUSTED NET INCOME,
                                                                                                                                                                                                                                 AND ADJUSTED EPS
                                                                                                                                                                                                                   (Amounts in thousands, except per share data)
                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                           For the Twelve Months Ended December 31, 2017
                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                Non-GAAP Adjustments
                                                                                                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        As Reported                                                                         Fair Value                                                                                 Merger                                                                               Deferred Tax                                                                                 As Adjusted
                                                                                          (GAAP)                                                                          Adjustments (1)                                                                             Costs (2)                                                                               Asset (3)                                                                                  (Non-GAAP)
                                                                               --------------------------                                            ------------------------------------------------------                                             ----------------------------------                                            ------------------------------------------------------                                             ----------------------------------------
Income from operations                                                                            $ 52,209                                                              $         (7,512 )                                                                                 $         11,879                                                              $ --                                                                                   $               56,576
Investment income                                                                                    1,079                                                                --                                                                                     --                                                                --                                                                                                    1,079
Interest expense                                                                    642                                             --                                               --                                             --                                                                642
                                                                               -------------------- ------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
     Income before income taxes                                                                     52,646                                                                        (7,512 )                                                                                           11,879                                                                --                                                                                                   57,013
     Provision for income taxes                                                  32,034                                                        (82 )                                                                         1,565                                                    (11,375 )                                                                              22,142
                                                                               -------------------- ------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
          Net income                                                                              $ 20,612                                                              $         (7,430 )                                                                                 $         10,314                                                              $         11,375                                                                $               34,871
                                                                               ==================== ======                                           ==================== ============== ====================                                           ==================== ==============                                           ==================== ============== ====================                                           ==================== ====================
Earnings per share:
     Basic **                                                                                     $   1.93                                                              $          (0.70 )                                                                                 $           0.97                                                              $           1.07                                                                                   $                 3.27
     Diluted **                                                                                   $   1.84                                                              $          (0.66 )                                                                                 $           0.92                                                              $           1.02                                                                                   $                 3.11
Weighted average shares outstanding:
     Basic                                                                                          10,678                                                                --                                                                                     --                                                                --                                                                                                   10,678
     Diluted                                                                                        11,199                                                                --                                                                                     --                                                                --                                                                                                   11,199
                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                           For the Twelve Months Ended December 31, 2016
                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                Non-GAAP Adjustments
                                                                                                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        As Reported                                                                         Fair Value                                                                                 Merger                                                                               Deferred Tax                                                                                 As Adjusted
                                                                                          (GAAP)                                                                          Adjustments (1)                                                                             Costs (2)                                                                               Asset (3)                                                                                  (Non-GAAP)
                                                                               --------------------------                                            ------------------------------------------------------                                             ----------------------------------                                            ------------------------------------------------------                                             ----------------------------------------
Income from operations                                                                            $ 57,472                                                              $         (3,213 )                                                                                 $ --                                                              $ --                                                                                   $               54,259
Investment income                                                                                      462                                                                --                                                                                     --                                                                --                                                                                                      462
Interest expense                                                                    642                                             --                                               --                                             --                                                                642
                                                                               -------------------- ------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
     Income before income taxes                                                                     57,292                                                                        (3,213 )                                                                                   --                                                                --                                                                                                   54,079
     Provision for income taxes                                                  22,490                                                       (748 )                                                                --                                             --                                                             21,742
                                                                               -------------------- ------                                           -------------------- -------------- --------------------                                           -------------------- --------------                                           -------------------- -------------- --------------------                                           -------------------- --------------------
          Net income                                                                              $ 34,802                                                              $         (2,465 )                                                                                 $ --                                                              $ --                                                                $               32,337
                                                                               ==================== ======                                           ==================== ============== ====================                                           ==================== ==============                                           ==================== ============== ====================                                           ==================== ====================
Earnings per share:
     Basic **                                                                                     $   3.28                                                              $          (0.23 )                                                                                 $ --                                                              $ --                                                                                   $                 3.05
     Diluted **                                                                                   $   3.21                                                              $          (0.23 )                                                                                 $ --                                                              $ --                                                                                   $                 2.98
Weighted average shares outstanding:
     Basic                                                                                          10,610                                                                --                                                                                     --                                                                --                                                                                                   10,610
     Diluted                                                                                        10,845                                                                --                                                                                     --                                                                --                                                                                                   10,845
                                                                                                                                                                                                                                                                                                                                                                                                                                                               
** Earnings per share data may not foot due to rounding.
                    
(1)                                     Reflects reductions to the value of contingent consideration related
                                        to the Company’s acquisition of the New York Code + Design Academy
                                        and the related tax effects, and adjustments to the Company’s
                                        reserve for leases on facilities no longer in use.
(2)                                     Reflects charges associated with the Company’s previously announced
                                        merger with Capella Education Company and severance costs associated
                                        with a staff reduction program.
(3)                                     Reflects a reduction in the value of the Company’s net deferred tax
                                        assets in connection with the passage of the Tax Cuts and Jobs Act
                                        of 2017.
                                         
 
                                                                                                                                                                                                    STRAYER EDUCATION, INC.
                                                                                                                                                                                                  RECONCILIATION OF NON-GAAP
                                                                                                                                                                                                      FINANCIAL MEASURES
                                                                                                                                                                                                        ADJUSTED EBITDA
                                                                                                                                                                                            (Amounts in thousands, except per share
                                                                                                                                                                                                             data)
 
 
                                                                                                        Three Months Ended                                                                                                                                          Year Ended
                                                                                                                                                 December 31,                                                                                                                                                                                  December 31,
                                                                             --------------------------------------------------------------------------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       2016                                                     2017                                                                                           2016                                                     2017
                                                                             ---------------------------------------------------------                                          -------------------------------------------------                                          ---------------------------------------------------------                                          -------------------------------------------------
Net income (loss)                                                                               $         11,718                                                                                   $ (6,495 )                                                                                 $         34,802                                                                                   $ 20,612
     Provision for income taxes                                                                            7,910                                                                                     18,364                                                                                             22,490                                                                                     32,034
     Investment income                                                                                      (135 )                                                                                     (342 )                                                                                             (462 )                                                                                   (1,079 )
     Interest expense                                                                                        161                                                                                        161                                                                                                642                                                                                        642
     Depreciation and amortization                                                                         4,541                                                                                      5,014                                                                                             17,817                                                                                     18,733
     Stock-based compensation                                                                              3,437                                                                                      3,058                                                                                             10,767                                                                                     11,627
     Fair value adjustments (1)                                                                             (742 )                                                                                      381                                                                                               (946 )                                                                                   (5,757 )
     Merger related costs (2)                                                  --                                                8,441                                               --                                               11,855  
                                                                             -------------------- -------------- --------------------                                           -------------------- ------ --------------------                                           -------------------- -------------- --------------------                                           -------------------- ------ --------------------
          Adjusted EBITDA (3)                                                                   $         26,890                                                                $ 28,582                                                                $         85,110                                                                $ 88,667  
                                                                             ==================== ============== ====================                                           ==================== ====== ====================                                           ==================== ============== ====================                                           ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                           
(1)   Reflects reductions to the value of contingent consideration related
                         to the Company’s acquisition of the New York Code + Design Academy
                         and the related tax effects, and adjustments to the Company’s
                         reserve for leases on facilities no longer in use.
(2)                      Reflects charges associated with the Company’s previously announced
                         merger with Capella Education Company and severance costs associated
                         with a staff reduction program.
(3)                      Denotes non-GAAP financial measures. Please see pages 8-10 for more
                         detail regarding these adjustments and management’s reasons for
                         providing this information.
                          

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180301006544r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180301006544/en/

SOURCE: Strayer Education, Inc.

Strayer Education Inc. 
Daniel Jackson 
Executive Vice President and 
Chief Financial Officer 
(703) 713-1862 
daniel.jackson@strayer.edu


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