National American University Holdings, Inc. Reports Fiscal 2014 First Quarter Results

Company to Host Conference Call on October 3, 2013, at 11:00 a.m. EDT

Marketwired

RAPID CITY, SD--(Marketwired - Oct 2, 2013) - National American University Holdings, Inc. (the "Company") (NASDAQ: NAUH)

Financial and Operational Highlights

  • Enrollment by headcount increased 3.8% over the prior-year period to 10,743 students as of August 31, 2013.

  • FY 2014 first quarter total revenue increased 5.0% to $30.9 million from $29.5 million in the prior-year period. The Company's academic segment's revenue was $30.4 million in the FY 2014 first quarter, compared to $29.2 million in the prior-year period.

  • FY 2014 first quarter net loss attributable to the Company was $0.3 million, compared to $0.2 million in the prior-year period, primarily due to increased selling, general and administrative (SG&A) expenses associated with the hiring of additional admissions advisors to better support NAU's enrollment goals. FY 2014 first quarter EBITDA was $1.2 million, compared to $1.4 million in the prior-year period.

  • The Board of Directors declared a cash dividend in the amount of $0.045 per share, up 12.5% from the prior quarter, on all shares of the Company's common stock outstanding and of record as of the close of business on September 30, 2013, which will be paid on or about October 11, 2013.

  • Balance sheet at August 31, 2013, included cash and cash equivalents and investments of $32.0 million; working capital of $24.4 million; no outstanding lending debt; and stockholders' equity of $49.8 million.

National American University Holdings, Inc. (the "Company") (NASDAQ: NAUH), which through its wholly owned subsidiary operates National American University ("NAU"), a regionally accredited, proprietary, multi-campus institution of higher learning, today reported unaudited financial results for its FY 2014 first quarter ended August 31, 2013.

Ronald L. Shape, Ed.D., Chief Executive Officer of the Company, commented, "We are pleased with the increase in enrollment growth that we achieved in the summer 2013 term, which tends to be a seasonally weaker period. NAU's enrollment during the summer 2013 term increased 3.8% to 10,743 students. However, higher SG&A expenses associated with hiring additional admissions advisors impacted our bottom line. We expect the additional admissions advisors will enable us to support our enrollment goals for the remainder of this fiscal year as they continue to gain experience but will also result in pressure on new student enrollments and resulting total student enrollments in the short term. As we continue to focus on growing enrollments at our existing locations, we also continue working to improve efficiencies in our other operational support areas. As such, we have launched cost reduction measures consistent with our focus to grow our existing locations, versus geographic expansion, which includes an initial reduction of 40 positions in our operational support area. We anticipate these adjustments will result in annual savings of approximately $2.4 million. Throughout this process, we remain cognizant of and dedicated to providing our students with quality education and ensuring they have the support they need to be successful in achieving their goals."

Operating Review

NAU currently leases 37 physical properties in the states of Colorado, Indiana, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, Oregon, South Dakota and Texas. Several sites operate as hybrid learning centers in strategic geographic locations. These centers utilize physical facilities through which the university provides face-to-face support services as students participate in select, traditional classroom courses while completing their remaining coursework online.

Of NAU's 37 locations, the following sites are pending regulatory approvals:

  • Roueche Graduate Center in Austin, TX
  • Houston, TX

3.8% Enrollment Increase

Total NAU student enrollment for the summer term of 2013 increased 3.8% to 10,743 students, up from 10,350 during the prior summer term. Students enrolled in 92,106 credit hours compared to 89,363 credit hours during the prior summer term. The current average age of NAU's students continues to be in the mid-30s, with those seeking undergraduate degrees remaining the highest portion of NAU's student population.

The following is a summary of student enrollment at August 31, 2013, and August 31, 2012, by degree level and by instructional delivery method:

             
             
    August 31, 2013     August 31, 2012  
    No. of Students   % of Total     No. of Students   % of Total  
Graduate   339   3.2 %   338   3.3 %
                     
Undergraduate and Diploma   10,404   96.8 %   10,012   96.7 %
                     
Total   10,743   100.0 %   10,350   100.0 %
                     
    August 31, 2013     August 31, 2012  
    No. of Students   % of Total     No. of Students   % of Total  
Online   6,592   61.4 %   6,068   58.6 %
On-Campus   2,357   21.9 %   2,536   24.5 %
Hybrid   1,794   16.7 %   1,746   16.9 %
                     
Total   10,743   100.0 %   10,350   100.0 %
                     
                     

Financial Review

The Company, through its wholly owned subsidiary, operates in two business segments: the academic segment, which consists of NAU's undergraduate and graduate education programs and contributes the primary portion of the Company's revenue; and ownership in multiple apartments and condominium complexes from which it derives sales and rental income. The real estate operations generated approximately 1.6% of revenues for the quarter ended August 31, 2013.

Fiscal 2014 First Quarter Financial Results

  • Total revenues for the FY 2014 first quarter increased 5.0% to $30.9 million from $29.5 million for the same period last year. As a result of NAU's enrollment growth, the academic segment's total revenue increased 4.3% to $30.4 million from $29.2 million in the prior-year period.

  • For the FY 2014 first quarter, educational services expense was $7.0 million, or 23.0% of the academic segment's total revenue, compared to $7.1 million, or 24.5%, for the FY 2013 first quarter. The decrease as a percentage of total revenue was the result of economies of scale being realized with the expansion of NAU's physical footprint and increased student-instructor ratios.

    Educational services expense specifically relates to the academic segment, and includes salaries and benefits of faculty and academic administrators, costs of educational supplies, facility costs, faculty reference and support material and related academic costs.

  • During the FY 2014 first quarter, SG&A expenses were $22.2 million, or 71.8% of total revenues, compared to $20.4 million, or 69.3%, in the prior-year period. The increase was primarily a result of increased expenses associated with the hiring of additional admissions advisors to better support its growing student population, general marketing expenses, and expenses related to developing the 11 locations that have been in existence for under two years.

  • Loss before income taxes and non-controlling interest for the FY 2014 first quarter was $0.5 million, compared to $0.2 million for the same period last year. This increase in losses was largely due to higher SG&A expenses.

  • Net loss attributable to the Company for the FY 2014 first quarter was $0.3 million, or $0.01 per diluted share based on 25.1 million shares outstanding, compared to $0.2 million, or $0.01 per diluted share based on 25.6 million shares outstanding, in the prior-year period.

  • EBITDA for the FY 2014 first quarter was $1.2 million, compared to $1.4 million in the prior-year period. A table reconciling EBITDA to net income can be found at the end of this release.

 
 
Balance Sheet Highlights
(in millions except for percentages)     8/31/2013     5/31/2013   % Change  
Cash and Cash Equivalents/Investments   $ 32.0   $ 31.9   0.3 %
Working Capital     24.4     23.8   2.3 %
Total Long-term Debt     0     0   N/A  
Stockholders' Equity     49.8     50.8   -2.0 %
                   
                   

Quarterly Dividend

The Board of Directors declared a cash dividend in the amount of $0.045 per share on all shares of the Company's common stock outstanding and of record as of the close of business on September 30, 2013, to be paid on or about October 11, 2013.

Conference Call Information

Management will discuss these results in a conference call (with accompanying presentation) on October 3, 2013, at 11:00 a.m. EDT.

The dial-in numbers are:
(877) 407-9078 (U.S.)
(201) 493-6745 (International)

Accompanying Slide Presentation and Webcast

The Company will also have an accompanying slide presentation available in PDF format at the "Investor Relations" section of the NAU website at http://www.national.edu/InvestorRelations. The presentation will be made available 30 minutes prior to the conference call. In addition, the call will be simultaneously webcast over the Internet via the "Investor Relations" section of the NAU website or by clicking on the conference call link: http://national.equisolvewebcast.com/q1-2014

About National American University Holdings, Inc.

National American University Holdings, Inc., through its wholly owned subsidiary, operates National American University ("NAU"), a regionally accredited, proprietary, multi-campus institution of higher learning offering associate, bachelor's, master's, and doctoral degree programs in technical and professional disciplines. Accredited by The Higher Learning Commission and a member of the North Central Association of Colleges and Schools, NAU has been providing technical and professional career education since 1941. NAU opened its first campus in Rapid City, South Dakota, and has since grown to multiple locations throughout the central United States. In 1998, NAU began offering online courses. Today, NAU offers degree programs in traditional, online, and hybrid formats, which provide students increased flexibility to take courses at times and places convenient to their busy lifestyles.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's business. Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current beliefs and expectations and involve a number of assumptions. These forward-looking statements include outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on business, results of operations or financial condition. Specifically, forward-looking statements may include statements relating to the future financial performance of the Company; the ability to continue to receive Title IV funds; the growth of the market for the Company's services; expansion plans and opportunities; consolidation in the market for the Company's services generally; and other statements preceded by, followed by or that include the words "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions. These forward-looking statements involve a number of known and unknown risks and uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by those forward-looking statements. Other factors that could cause the Company's results to differ materially from those contained in its forward-looking statements are included under, among others, the heading "Risk Factors" in the Company's Annual Report on Form 10-K, which was filed on August 2, 2013, and in its other filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information contained in this release.

   
   
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES  
             
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED AUGUST 31, 2013 AND 2012  
(In thousands except share data)  
   
    Three Months Ended  
    August 31,  
    2013     2012  
REVENUE:            
  Academic revenue   $ 27,650     $ 26,477  
  Auxiliary revenue     2,772       2,699  
  Rental income - apartments     287       274  
  Condominium sales     220       0  
                 
    Total revenue     30,929       29,450  
                 
OPERATING EXPENSES:                
  Cost of educational services     7,005       7,135  
  Selling, general and administrative     22,222       20,421  
  Auxiliary expense     1,970       1,843  
  Cost of condominium sales     191       0  
  (Gain) loss on disposition of property     (97 )     73  
                 
    Total operating expenses     31,291       29,472  
                 
OPERATING LOSS     (362 )     (22 )
                 
OTHER INCOME (EXPENSE):                
  Interest income     26       31  
  Interest expense     (252 )     (253 )
  Other income - net     44       35  
                 
    Total other expense     (182 )     (187 )
                 
LOSS BEFORE INCOME TAXES     (544 )     (209 )
                 
INCOME TAX BENEFIT     178       58  
                 
NET LOSS     (366 )     (151 )
                 
NET LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING INTEREST     37       (13 )
                 
NET LOSS ATTRIBUTABLE TO NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES     (329 )     (164 )
                 
OTHER COMPREHENSIVE LOSS -                
  Unrealized losses on investments, before tax     (5 )     (22 )
  Reclassification to earnings (other income) - net of realized losses     0       0  
OTHER COMPREHENSIVE LOSS, NET OF TAX     (5 )     (22 )
                 
COMPREHENSIVE LOSS ATTRIBUTABLE TO NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.   $ (334 )   $ (186 )
                 
Basic net loss attributable to National American University Holdings, Inc.   $ (0.01 )   $ (0.01 )
                 
Diluted net loss attributable to National American University Holdings, Inc.   $ (0.01 )   $ (0.01 )
                 
Basic weighted average shares outstanding     25,056,382       25,574,478  
Diluted weighted average shares outstanding     25,056,382       25,574,478  
   
   
   
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES  
             
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET  
AS OF AUGUST 31, 2013 AND CONDENSED  
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2013  
(In thousands except share data)  
    August 31,     May 31,  
    2013     2013  
ASSETS            
             
CURRENT ASSETS:            
  Cash and cash equivalents   $ 8,742     $ 11,130  
  Available for sale investments     23,235       20,748  
  Student receivables - net of allowance of $689 and $870 at August 31, 2013 and May 31, 2013, respectively     2,867       3,628  
  Other receivables     519       722  
  Income tax receivable     355       122  
  Deferred income taxes     1,279       1,353  
  Prepaid and other current assets     1,356       841  
  Total current assets     38,353       38,544  
Total property and equipment - net     43,858       44,944  
                 
OTHER ASSETS:                
  Condominium inventory     1,257       1,778  
  Land held for future development     312       312  
  Course development - net of accumulated amortization of $2,154 and $2,066 at August 31, 2013 and May 31, 2013, respectively     1,125       1,107  
  Other     1,373       1,397  
      4,067       4,594  
TOTAL   $ 86,278     $ 88,082  
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES:                
  Current portion of capital lease payable   $ 73     $ 66  
  Accounts payable     4,567       5,403  
  Dividends payable     1,131       1,004  
  Student accounts payable     1,236       1,067  
  Deferred income     215       195  
  Accrued and other liabilities     6,747       6,966  
    Total current liabilities     13,969       14,701  
DEFERRED INCOME TAXES     5,600       5,720  
OTHER LONG-TERM LIABILITIES     6,549       6,479  
CAPITAL LEASE PAYABLE, NET OF CURRENT PORTION     10,374       10,394  
COMMITMENTS AND CONTINGENCIES                
STOCKHOLDERS' EQUITY:                
  Common stock, $0.0001 par value (50,000,000 authorized; 28,138,905 issued and 25,085,074 outstanding as of August 31, 2013; 28,090,269 issued and 25,047,086 outstanding as of May 31, 2013     3       3  
  Additional paid-in capital     58,193       57,656  
  Retained earnings     11,153       12,610  
  Treasury stock, at cost (3,053,831 shares at August 31, 2013 and 3,043,183 at May 31, 2013)     (19,399 )     (19,359 )
  Accumulated other comprehensive income, net of taxes - unrealized gain on available for sale securities     2       7  
Total National American University Holdings, Inc. stockholders' equity     49,952       50,917  
Non-controlling interest     (166 )     (129 )
Total equity     49,786       50,788  
TOTAL   $ 86,278     $ 88,082  
                 
                 
 
 
The following table provides a reconciliation of net income attributable to the Company to EBITDA:
    Three Months Ended August 31,  
    2013     2012  
    (dollars in thousands)  
Net Income attributable to the Company   $ (329 )   $ (164 )
Income (Loss) attributable to non-controlling interest     (37 )     13  
Interest Income     (26 )     (31 )
Interest Expense     252       253  
Income Taxes     (178 )     (58 )
Depreciation and Amortization     1,551       1,351  
                 
EBITDA   $ 1,233     $ 1,364  
                 
                 

EBITDA consists of income attributable to the Company, less income from non-controlling interest, plus loss from non-controlling interest, minus interest income, plus interest expense (which is not related to any debt but to the accounting required for the capital lease), plus income taxes, plus depreciation and amortization. The Company uses EBITDA as a measure of operating performance. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing its operating performance, investors should use EBITDA in addition to, and not as an alternative for, income as determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies and is therefore limited as a comparative measure. Furthermore, as an analytical tool, EBITDA has additional limitations, including that (a) it is not intended to be a measure of free cash flow, as it does not consider certain cash requirements such as tax payments; (b) it does not reflect changes in, or cash requirements for, its working capital needs; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements, or future requirements for capital expenditures or contractual commitments. To compensate for these limitations, the Company evaluates its profitability by considering the economic effect of the excluded expense items independently as well as in connection with its analysis of cash flows from operations and through the use of other financial measures.

The Company believes EBITDA is useful to an investor in evaluating its operating performance because it is widely used to measure a company's operating performance without regard to certain non-cash expenses (such as depreciation and amortization) and expenses that are not reflective of its core operating results over time. The Company believes EBITDA presents a meaningful measure of corporate performance exclusive of its capital structure, the method by which assets were acquired and non-cash charges, and provides us with additional useful information to measure its performance on a consistent basis, particularly with respect to changes in performance from period to period.

Contact:
Contact Information:
National American University Holdings, Inc.
Dr. Ronald Shape
605-721-5220
rshape@national.edu

Investor Relations Counsel
The Equity Group Inc.
Carolyne Yu
415-568-2255
cyu@equityny.com

Adam Prior
212-836-9606
aprior@equityny.com
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