Grand Canyon Education (LOPE) Q4 2024 Earnings Call February 19, 2025 04:30 PM ET Company Participants Daniel Bachus - Chief Financial OfficerBrian Mueller - President and Chief Executive OfficerAlexander Paris - President & Senior MD Conference Call Participants Jeffrey Meuler - AnalystJeffrey Silber - Senior Analyst Operator Good day and thank you for standing by. Welcome to the Q4 twenty twenty four Grand Canyon Education Earnings Conference Call. At this time, all participants are in a listen only mode. ...

Financial Performance - The company recorded $1,033 million in service revenue for the year ended December 31, 2024, reflecting a significant contribution from university partners' tuition and fee revenue [354]. - Total service revenue for 2024 reached $1,033,002, an increase of 7.5% from $960,899 in 2023 [361]. - Operating income improved to $275,399 in 2024, up 10.5% from $249,256 in 2023 [361]. - Net income for 2024 was $226,234, representing a 10.4% increase compared to $204,985 in 2023 [361]. - Cash and cash equivalents increased significantly to $324,623 in 2024, up 121.5% from $146,475 in 2023 [370]. - Total assets grew to $1,018,425 in 2024, a rise of 9.5% from $930,463 in 2023 [359]. - Total liabilities increased to $234,572 in 2024, up 10.4% from $212,449 in 2023 [359]. - Basic earnings per share rose to $7.77 in 2024, compared to $6.83 in 2023, marking a 13.8% increase [361]. - Cash flows from operating activities improved to $289,958 in 2024, an increase of 19.0% from $243,662 in 2023 [370]. - Retained earnings increased to $2,470,946 in 2024, up from $2,244,712 in 2023, reflecting a growth of 10.1% [359]. Taxation - The effective income tax rate was reduced to 22.3% for the year ended December 31, 2024, due to contributions to private Arizona school tuition organizations [56]. - The total income tax expense for the year ended December 31, 2024, was $65,081, an increase from $54,690 in 2023, representing a rise of approximately 19% [454]. - The effective income tax rate for 2024 was 22.3%, compared to 21.1% in 2023, indicating an increase of 1.2 percentage points [455]. - The Company has no non-income tax related matters where exposure is considered probable as of December 31, 2024, and 2023 [444]. - The Company had accrued $0 in interest and $0 in penalties related to unrecognized tax benefits for both 2024 and 2023 [457]. - Unrecognized tax benefits increased to $14,626 million in 2024 from $13,631 million in 2023, indicating a rise in uncertain tax positions [457]. Investments and Assets - The company has no derivative financial instruments or investments as of December 31, 2024, indicating a conservative approach to market risk management [344]. - The company has not made any investments as of December 31, 2024, which may limit potential future income from investments [345]. - The company had investments of $0 as of December 31, 2024, down from $98,031 million in 2023, after selling all investments in Q3 2024 [426]. - As of December 31, 2024, the company reported deferred content assets of $658 million, net of amortization, compared to $746 million in 2023 [385]. - The company evaluates the recoverability of long-lived assets for impairment whenever events indicate that the carrying amount may not be recoverable [386]. - Total property and equipment net value increased to $176,823 million in 2024 from $169,699 million in 2023, with depreciation expense totaling $27,760 million for 2024 [428]. Student Retention and Revenue Sources - The management emphasizes the importance of retaining active students to graduation, which is critical for sustaining revenue growth [15]. - The company retains 60% of Grand Canyon University's tuition and fee revenue as part of a long-term master services agreement [382]. - The company generated 88.9% of total service revenue from its most significant university partner for the year ended December 31, 2024 [417]. - The company anticipates fluctuations in revenues due to seasonality, which may impact overall financial performance [15]. - The company has faced challenges related to capacity constraints and system disruptions that could affect student retention [11]. Legal Matters - The trial for the False Claims Act matter is scheduled for October 2025, following unsuccessful attempts to reach a settlement [436]. - The Company intends to defend itself vigorously in various legal proceedings, including those related to marketing practices and consumer protection statutes [440]. - The Company has not accrued any liability associated with ongoing legal proceedings, as it cannot estimate a range of loss based on available information [443]. Share Repurchase and Equity - The Company repurchased common shares costing $173,175 in 2024, compared to $137,124 in 2023 [370]. - The Board of Directors approved a $200,000 increase under its existing stock repurchase program, bringing the total authorization for share repurchases to $2,245,000 [448]. - The Company repurchased 1,142 shares of common stock at an aggregate cost of $165,405 during the year ended December 31, 2024, with $99,648 remaining available under the repurchase authorization as of December 31, 2024 [449]. - The Company reported basic weighted average shares outstanding of 29,104 for the year ended December 31, 2024, down from 29,991 in 2023, indicating a decrease of approximately 3% [446]. - Diluted weighted average shares outstanding for 2024 were 29,271, compared to 30,147 in 2023, reflecting a decrease of about 3% [446]. Compensation and Employee Benefits - Share-based compensation expense included in operating expenses for 2024 was $14,225 million, up from $13,204 million in 2023 [465]. - The Company plans to make a matching contribution of approximately $3,092 million to its 401(k) Plan for the year ended December 31, 2024 [466]. - The Company granted 117, 136, and 189 shares of common stock as restricted stock awards in fiscal years 2024, 2023, and 2022, respectively [460]. - Total unrecognized share-based compensation cost related to unvested restricted stock awards was approximately $30,345 million as of December 31, 2024 [462]. - The Company withheld 55, 56, and 52 shares of common stock in lieu of taxes at a cost of $7,446 million, $6,331 million, and $4,625 million during the years ended December 31, 2024, 2023, and 2022, respectively [460].

Revenue and Income - Service revenue for Q4 2024 was $292.6 million, a 5.1% increase from $278.3 million in Q4 2023, driven by a 5.0% increase in enrollments at Grand Canyon University to 123,149[4] - For the full year 2024, service revenue was $1,033.0 million, a 7.5% increase from $960.9 million in 2023, primarily due to increased enrollments at GCU[5] - Total revenue for the year ended December 31, 2024, reached $1,033,002,000, up 7.5% from $960,899,000 in 2023[23] - Operating income for Q4 2024 was $100.0 million, a 2.3% increase from $97.8 million in Q4 2023, with an operating margin of 34.2%[4] - Operating income for Q4 2024 was $100,027,000, compared to $97,799,000 in Q4 2023, reflecting a growth of 2.5%[23] - Net income for Q4 2024 was $81.9 million, a 1.4% increase from $80.7 million in Q4 2023, with diluted net income per share rising to $2.84 from $2.71[4] - Net income for the year ended December 31, 2024, was $226,234,000, an increase of 10.4% from $204,985,000 in 2023[28] - Basic earnings per share for Q4 2024 was $2.86, up from $2.73 in Q4 2023, representing a growth of 4.8%[23] - Non-GAAP diluted income per share for Q4 2024 was $2.95, up from $2.77 in Q4 2023, indicating a growth of 6.5%[35] Enrollment and Partner Performance - Partner enrollments totaled 127,155 at December 31, 2024, up from 121,250 at December 31, 2023, with off-campus classroom and laboratory site enrollments increasing by 9.8%[4] - The company reported net cash provided by operating activities of $289,958,000 for the year ended December 31, 2024, compared to $243,662,000 in 2023[28] Adjusted EBITDA - Adjusted EBITDA for the full year 2024 increased by 12.5% to $340.0 million compared to $302.3 million in 2023[5] - Adjusted EBITDA for Q4 2024 was $116,572,000, an increase from $110,932,000 in Q4 2023, representing a growth of 4.7%[34] - The company reported a total of $340,013,000 in Adjusted EBITDA for the year ended December 31, 2024, compared to $302,302,000 in 2023, marking a year-over-year increase of 12.5%[34] Cash and Assets - Cash and cash equivalents as of December 31, 2024, were $324,623,000, significantly higher than $146,475,000 at the end of 2023[26] - Total assets increased to $1,018,425,000 as of December 31, 2024, compared to $930,463,000 in 2023, marking an increase of 9.5%[26] Liabilities and Expenses - Total liabilities rose to $234,572,000 as of December 31, 2024, compared to $212,449,000 in 2023, an increase of 10.4%[26] - Capital expenditures for the year ended December 31, 2024, were $37,248,000, down from $44,537,000 in 2023[28] - Income tax expense for Q4 2024 was $22,073,000, compared to $20,054,000 in Q4 2023, reflecting an increase of 10.1%[34] - The company recognized $4,500,000 in contributions in lieu of state income taxes for the year ended December 31, 2024, up from $3,500,000 in 2023[34] - The total interest expense for the year ended December 31, 2024, was $4,000, compared to $33,000 in 2023, showing a significant decrease[34] Share Repurchase and Guidance - The company announced a $200.0 million increase in its share repurchase program, bringing the total authorization to $2,245.0 million[6] - For Q1 2025, the company expects adjusted diluted EPS to be between $2.50 and $2.52, including a $0.06 impact from non-cash amortization of intangible assets[8] - The full year 2025 diluted EPS guidance is between $8.43 and $8.82, with service revenue expected between $1,074.5 million and $1,097.0 million[12] Other Financial Metrics - The effective tax rate for the year ended December 31, 2024 was 22.3%, up from 21.1% in 2023, due to higher state income taxes[5] - The company incurred $1,133,000 in severance costs for the year ended December 31, 2024, which was not present in 2023[35] - The company reported a loss on fixed asset disposal of $102,000 for the year ended December 31, 2024, down from $741,000 in 2023[35] - The company’s core operating performance is measured by Adjusted EBITDA, which excludes unusual, non-routine, or non-recurring expenses[32]

Company Overview - Grand Canyon Education, Inc. (GCE) is a publicly traded education services company incorporated in 2008, providing services to 22 university partners [4] - The company has 30 years of proven expertise in delivering a full array of support services in the post-secondary education sector, including technological solutions and operational processes [4] Upcoming Financial Results - GCE will report its 2024 fourth quarter results after market close on February 19, 2025 [1] - A conference call to discuss the results will be held at 2:30 P.M. (4:30 P.M. ET) on the same day [1] Conference Call Details - Participants interested in the question-and-answer session can register to receive dial-in numbers and a unique PIN [2] - A live webcast of the earnings conference call will be available, with a replay accessible approximately two hours after the call [3]

Group 1 - The article expresses a bullish outlook on Grand Canyon Education, Inc. (NASDAQ: LOPE) due to a significant enrollment spike and above-average retention rates positively impacting earnings [1] - The company's shares have shown resilience and growth over the past year, driven by these favorable enrollment and retention metrics [1] Group 2 - The investment strategy discussed involves purchasing undervalued, profitable stocks with strong balance sheets and minimal debt, along with writing calls to generate additional income when opportunities arise [1]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting the use of a specific screening strategy to identify stocks with strong fundamentals and positive price momentum [1][2]. Group 1: Stock Screening Strategy - The "Recent Price Strength" screen is designed to identify stocks with sufficient fundamental strength to maintain their upward trend, focusing on those trading in the upper portion of their 52-week high-low range, indicating bullishness [3]. - Grand Canyon Education (LOPE) is highlighted as a strong candidate for trend investing, having increased by 14.8% over the past 12 weeks, reflecting investor confidence [4]. - LOPE has also seen a price increase of 25% over the past four weeks, suggesting that the upward trend is still intact, and it is currently trading at 87.4% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - LOPE carries a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. - The Zacks Rank system has a proven track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988, underscoring the effectiveness of this ranking system [7]. Group 3: Additional Insights - Besides LOPE, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting further investment opportunities [8]. - The article encourages investors to utilize various Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [8].

Core Viewpoint - Grand Canyon Education (LOPE) has experienced significant stock performance, with a 24% increase over the past month and a 52-week high of $164.93, outperforming both the Zacks Consumer Discretionary sector and the Zacks Schools industry [1][2]. Financial Performance - The company has consistently exceeded earnings expectations, reporting an EPS of $1.48 against a consensus estimate of $1.46 in its latest earnings report [2]. - For the current fiscal year, Grand Canyon Education is projected to achieve earnings of $8.03 per share on revenues of $1.03 billion, reflecting a 14.06% increase in EPS and a 7.23% increase in revenues [3]. - The next fiscal year forecasts earnings of $8.81 per share on $1.11 billion in revenues, indicating year-over-year changes of 9.71% and 7.73%, respectively [3]. Valuation Metrics - The stock trades at a valuation of 20.4X current fiscal year EPS estimates, which is above the peer industry average of 19.1X [7]. - On a trailing cash flow basis, the stock trades at 20.1X compared to the peer group's average of 12.4X, with a PEG ratio of 1.36 [7]. - Grand Canyon Education holds a Value Score of B, a Growth Score of A, and a Momentum Score of B, resulting in a VGM Score of A [6]. Zacks Rank - The company has a Zacks Rank of 2 (Buy), supported by rising earnings estimates, making it a favorable choice for investors [8]. - The recommendation is to select stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, which applies to Grand Canyon Education [8]. Industry Comparison - In comparison to industry peers, Adtalem Global Education Inc. (ATGE) also shows strong performance with a Zacks Rank of 2 (Buy) and solid earnings expectations [9]. - The Schools industry is performing well, ranking in the top 12% of all industries, indicating positive market conditions for both LOPE and ATGE [11].

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting that price movements should be supported by strong fundamentals and positive earnings estimates [1][2]. Group 1: Stock Performance - Grand Canyon Education (LOPE) has shown a solid price increase of 16.1% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - The stock has experienced a price increase of 24% over the past four weeks, suggesting that the upward trend is still intact [5]. - LOPE is currently trading at 97% of its 52-week high-low range, indicating it may be on the verge of a breakout [5]. Group 2: Fundamental Strength - LOPE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for investors to identify stocks like LOPE that are on an uptrend supported by strong fundamentals [3]. - The article suggests that there are several other stocks passing through the "Recent Price Strength" screen, providing additional investment opportunities [8].

Grand Canyon Education, Inc. (NASDAQ:LOPE) Q3 2024 Earnings Conference Call November 6, 2024 4:30 PM ET Company Participants Dan Bachus - CFO Brian Mueller - Chairman and CEO Conference Call Participants Jeff Silber - BMO Capital Markets Steven Pawlak - Robert W. Baird Operator Good day, and thank you for standing by. Welcome to the Q3 2024 Grand Canyon Education Earnings Conference Call [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the confe ...

Grand Canyon Education (LOPE) came out with quarterly earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.46 per share. This compares to earnings of $1.26 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.37%. A quarter ago, it was expected that this for-profit education company would post earnings of $1.09 per share when it actually produced earnings of $1.27, delivering a surprise of 16.51%.Over the last ...