Second Quarter 2017 Earnings Release July 25, 2017

Transcription

1 Second Quarter 2017 Earnings Release July 25, 2017 Kevin Gilligan, Chairman & CEO Steve Polacek, Senior VP & CFO

2 Forward-looking Statements Statement Under the Private Securities Litigation Reform Act of 1995 Statements in this presentation concerning Capella Education Company s future prospects are forward-looking statements under the Federal securities laws. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts, estimates, and summary information contained in this presentation. Important factors that could cause actual results to differ materially include but are not limited to those listed in Capella Education Company s 10-Q filed today and 10-K filed earlier this year with the Securities and Exchange Commission, as well as the Company s future 8-K, 10-K and 10-Q filings. All filings are available for viewing on our website at capellaeducation.com. 2

3 Second Quarter 2017 Highlights Revenue and operating results within expectations Earnings per share significantly higher than anticipated New enrollment performance below expectations, which also impacted total enrollment performance 3

4 New Enrollment Performance Second quarter 2017 new enrollment performance related to two factors: Competitive and dynamic market, including changing consumer behavior Marketing execution challenges related to ongoing efforts to optimize marketing investment; actions taken 4

5 Marketing Strategy Building Relationships Site or Landing Page visit Site Experiences Inquiry Media channels Reputation Increase brand awareness of Capella and convert demand through marketing funnel Experimented with marketing mix to drive productivity Application New Enrollment Made adjustments; reversed negative trend experienced late in 2 nd quarter 5

6 Capella s Position Historical success built on innovation and ability to experiment, learn, and adjust Focused on maintaining right marketing balance Committed to sustainable, long-term growth 6

7 Long-Term Growth Capella well-positioned as leader in competency-based learning Investing in building job-ready skills businesses Optimistic about long-term growth prospects; demand for skills in 21 st century economy will continue to intensify Strategy of providing most direct path between learning and employment 7

8 Consolidated Results Capella Education Company Continuing Operations Revenue Operating Margin Diluted Earnings Per Share Quarter ending June 30, 2017 (change y/y) $109.6 million (+2.7%) 14.0% of revenue (-290 basis points) $0.90 (-$0.03) 8

9 Capella University Enrollment Quarter ending June 30, 2017 (change y/y) Total Enrollment -1.7% New Enrollment -9.6% Early Cohort Persistence +3% FlexPath new enrollment growth primarily due to high differentiation of offering Received Department of Education approval of FlexPath Master of Science in Nursing and Master of Education 9

10 Segment Results Post-Secondary Segment Revenue Operating Margin Job-Ready Skills Segment Revenue Operating Loss Quarter ending June 30, 2017 (change y/y) $107.0 million (+1.1%) 16.6% of revenue (-380 basis points) Quarter ending June 30, 2017 $2.6 million -$2.4 million 10

11 Consolidated Cash Position $35.3 million $179.5 million $0.41 per share $30.4 million Operating cash flow from continuing operations during six months ended June 30, 2017 Cash and marketable securities as of June 30, 2017 Quarterly cash dividend paid during Q Share repurchase authorization as of June 30, 2017 Strong Financial Foundation 11

12 Third Quarter 2017 Outlook Capella Education Company expectations as of 7/25/2017 Quarter ending Sept. 30, 2017 (change y/y) Consolidated Revenue +2.0 to +3.0% Consolidated Operating Margin 11.5% to 12.5% of revenue Capella University Total Enrollment About -1.0% Capella University New Enrollment About flat 12

13 2017 Annual Outlook Updated Capella Education Company expectations as of 7/25/2017 Fiscal year ending Dec. 31, 2017 (change y/y) Consolidated Revenue About +3.0% Consolidated Operating Margin Approximately 15% of revenue 13

14 Driving Growth Managing through marketing investment optimization Building job-ready skills segment Managing expenses thoughtfully Differentiating Capella to drive long-term sustainable growth and shareholder value 14

15 Questions 15 15