Grand Canyon Education(LOPE) - 2020 Q1 - Quarterly Report

Financial Performance - Service revenue for Q1 2020 was $221,655,000, an increase of 12.3% compared to $197,287,000 in Q1 2019[9] - Operating income rose to $80,796,000 in Q1 2020, up from $72,431,000 in Q1 2019, reflecting an increase of 11.7%[9] - Net income for Q1 2020 was $71,385,000, slightly down from $73,243,000 in Q1 2019, representing a decrease of 2.5%[9] - Basic earnings per share for Q1 2020 was $1.50, compared to $1.54 in Q1 2019, a decline of 2.6%[9] - The company reported a comprehensive income of $71,385,000 for Q1 2020, compared to $73,136,000 in Q1 2019, a decrease of 2.4%[11] - Net income for the three months ended March 31, 2020, was $71,385, a decrease of 2.5% from $73,243 in the same period of 2019[22] - Net cash provided by operating activities increased to $85,719, up 12.9% from $76,337 in the prior year[22] - The anticipated reduction in net revenue due to COVID-19 for Q2 2020 is estimated to range from $9.0 million to $10.0 million, and for Q3 2020, from $4.0 million to $6.0 million[137] - The company expects lower service revenues under both the Master Services Agreement with GCU and Orbis Education's agreements for Q2 and Q3 2020, leading to a direct reduction in operating profit and margins[134] Assets and Liabilities - Total current assets increased to $248,324,000 as of March 31, 2020, up from $208,344,000 at the end of 2019, a growth of 19.2%[14] - Total liabilities rose to $283,594,000 as of March 31, 2020, compared to $246,856,000 at the end of 2019, an increase of 14.9%[14] - Cash and cash equivalents increased to $132,493,000 as of March 31, 2020, from $122,272,000 at the end of 2019, a rise of 8.9%[14] - Total stockholders' equity as of March 31, 2020, was $1,448,008,000, slightly up from $1,443,433,000 at the end of 2019, an increase of 0.3%[14] - Total current liabilities increased to $133,084 thousand as of March 31, 2020, from $95,230 thousand at December 31, 2019, a rise of 39.8%[15] - Total assets increased to $1,731,602 thousand as of March 31, 2020, compared to $1,690,289 thousand at December 31, 2019, reflecting a growth of 2.4%[15] Cash Flow and Investments - Cash and cash equivalents at the end of the period increased to $132,493, up from $88,767 at the end of the same period in 2019[22] - The company had unrestricted cash and cash equivalents of $149.5 million and an available line of credit of $150.0 million as of March 31, 2020[158] - The company reported net cash provided by operating activities of $85,719 thousand for Q1 2020, compared to $76,337 thousand in Q1 2019, an increase of 12.4%[22] - As of March 31, 2020, the Company had $17,049 in investments, down from $21,601 as of December 31, 2019, held in municipal and corporate securities[88] Expenses - Technology and academic services expenses increased by $7.7 million or 41.1% to $26.3 million in Q1 2020, representing 11.9% of net revenue, up from 9.4% in Q1 2019[142] - Counseling services and support expenses rose by $7.1 million or 13.4% to $60.2 million in Q1 2020, accounting for 27.2% of net revenue, slightly up from 26.9% in Q1 2019[143] - Marketing and communication expenses increased by $6.7 million or 18.7% to $42.7 million in Q1 2020, representing 19.3% of net revenue, up from 18.2% in Q1 2019[144] - General and administrative expenses decreased by $1.8 million or 16.1% to $9.6 million in Q1 2020, which is 4.3% of net revenue, down from 5.8% in Q1 2019[147] Share Repurchase and Stock Information - The company repurchased common shares totaling $65,706 during the three months ended March 31, 2020, compared to $18,127 in the same period of 2019[22] - The Board of Directors authorized a share repurchase program of up to $250.0 million, with $66.6 million remaining available for repurchase as of March 31, 2020[160][162] - During the three months ended March 31, 2020, the company repurchased 786,503 shares of common stock[162] - The company has authorized a total repurchase of up to $250,000 in common stock, with the expiration date on the repurchase authorization set for December 31, 2020[115] Legal and Regulatory Matters - The company has exposure to various legal matters, but management does not believe that any potential charges would have a material adverse effect on its financial condition[106] - The company is currently evaluating the impact of ASU No. 2019-12 on its consolidated financial statements and related disclosures[83] COVID-19 Impact - The COVID-19 pandemic is expected to adversely affect the company's education service revenues and operating income in the second and third quarters of 2020, with considerable uncertainty regarding the duration of this impact[117]