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Grand Canyon Education(LOPE) - 2024 Q4 - Annual Report
LOPEGrand Canyon Education(LOPE)2025-02-19 21:10
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Financial Performance - The company recorded 1,033millioninservicerevenuefortheyearendedDecember31,2024,reflectingasignificantcontributionfromuniversitypartners′tuitionandfeerevenue[354].−Totalservicerevenuefor2024reached1,033 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 960,899in2023[361].−Operatingincomeimprovedto960,899 in 2023 [361]. - Operating income improved to 275,399 in 2024, up 10.5% from 249,256in2023[361].−Netincomefor2024was249,256 in 2023 [361]. - Net income for 2024 was 226,234, representing a 10.4% increase compared to 204,985in2023[361].−Cashandcashequivalentsincreasedsignificantlyto204,985 in 2023 [361]. - Cash and cash equivalents increased significantly to 324,623 in 2024, up 121.5% from 146,475in2023[370].−Totalassetsgrewto146,475 in 2023 [370]. - Total assets grew to 1,018,425 in 2024, a rise of 9.5% from 930,463in2023[359].−Totalliabilitiesincreasedto930,463 in 2023 [359]. - Total liabilities increased to 234,572 in 2024, up 10.4% from 212,449in2023[359].−Basicearningspershareroseto212,449 in 2023 [359]. - Basic earnings per share rose to 7.77 in 2024, compared to 6.83in2023,markinga13.86.83 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 243,662in2023[370].−Retainedearningsincreasedto243,662 in 2023 [370]. - Retained earnings increased to 2,470,946 in 2024, up from 2,244,712in2023,reflectingagrowthof10.12,244,712 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 54,690in2023,representingariseofapproximately1954,690 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 0inpenaltiesrelatedtounrecognizedtaxbenefitsforboth2024and2023[457].−Unrecognizedtaxbenefitsincreasedto0 in penalties related to unrecognized tax benefits for both 2024 and 2023 [457]. - Unrecognized tax benefits increased to 14,626 million in 2024 from 13,631millionin2023,indicatingariseinuncertaintaxpositions[457].InvestmentsandAssets−ThecompanyhasnoderivativefinancialinstrumentsorinvestmentsasofDecember31,2024,indicatingaconservativeapproachtomarketriskmanagement[344].−ThecompanyhasnotmadeanyinvestmentsasofDecember31,2024,whichmaylimitpotentialfutureincomefrominvestments[345].−Thecompanyhadinvestmentsof13,631 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 98,031millionin2023,aftersellingallinvestmentsinQ32024[426].−AsofDecember31,2024,thecompanyreporteddeferredcontentassetsof98,031 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 746millionin2023[385].−Thecompanyevaluatestherecoverabilityoflong−livedassetsforimpairmentwhenevereventsindicatethatthecarryingamountmaynotberecoverable[386].−Totalpropertyandequipmentnetvalueincreasedto746 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 169,699millionin2023,withdepreciationexpensetotaling169,699 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 173,175in2024,comparedto173,175 in 2024, compared to 137,124 in 2023 [370]. - The Board of Directors approved a 200,000increaseunderitsexistingstockrepurchaseprogram,bringingthetotalauthorizationforsharerepurchasesto200,000 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 165,405duringtheyearendedDecember31,2024,with165,405 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 14,225million,upfrom14,225 million, up from 13,204 million in 2023 [465]. - The Company plans to make a matching contribution of approximately 3,092milliontoits401(k)PlanfortheyearendedDecember31,2024[466].−TheCompanygranted117,136,and189sharesofcommonstockasrestrictedstockawardsinfiscalyears2024,2023,and2022,respectively[460].−Totalunrecognizedshare−basedcompensationcostrelatedtounvestedrestrictedstockawardswasapproximately3,092 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 7,446million,7,446 million, 6,331 million, and $4,625 million during the years ended December 31, 2024, 2023, and 2022, respectively [460].