Grand Canyon Education(US:LOPE)2025-02-19 21:10Financial 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].