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Capella Education Company Reports Second Quarter 2017 ResultsCapella Education Company (NASDAQ: CPLA), a leading educational services company, today announced financial results for the three and six months ended June 30, 2017. "Our financial performance in the second quarter of 2017 was within expectations," said Kevin Gilligan, chairman and chief executive officer. "New enrollment performance was softer than expected, and we have taken actions directed at restoring new enrollment growth in the second half of 2017. We believe that our strategy of delivering the most direct path between learning and employment positions us to create a differentiated value proposition for learners and employers and to create shareholder value." Selected Financial Data for the Three Months Ended June 30, 2017 Revenues were $109.6 million in the second quarter of 2017, up 2.7 percent compared to $106.7 million in the second quarter of 2016. Operating income was $15.4 million, compared to $18.1 million for the same period in 2016. The operating margin was 14.0 percent, compared to 16.9 percent for the second quarter 2016. Diluted net income per common share from continuing operations was $0.90, compared to $0.93 for the same period in 2016. Operating and Segment Highlights
Balance Sheet and Cash Flow At June 30, 2017, Capella Education Company had cash and marketable securities of $179.5 million, compared to $162.3 million at Dec. 31, 2016, and no debt as of these dates. Cash provided by operating activities from continuing operations for the six months ended June 30, 2017 was $35.3 million compared to $42.8 million in the same period a year ago. Dividend A quarterly cash dividend of $0.41 per outstanding share of common stock was declared during the second quarter of 2017. The dividend was paid on July 14, 2017. Outlook For the third quarter ending Sept. 30, 2017, consolidated revenues for Capella Education Company are expected to be up 2.0 to 3.0 percent compared to third quarter 2016. Consolidated operating margin is anticipated to be approximately 11.5 to 12.5 percent of total revenue. Capella University's third quarter 2017 new enrollment growth is expected to be about flat year-over-year and total enrollment is expected to decline about one percent year-over-year. For fiscal year 2017, we expect consolidated revenues for Capella Education Company to grow about 3.0 percent and consolidated operating margins to be about 15 percent. "While we achieved our financial goals for the first half of 2017, Capella University's second quarter enrollment performance has put pressure on our annual performance goals," said Steve Polacek, senior vice president and chief financial officer. "We remain committed to making investments necessary to achieve our long-term growth potential." Forward-Looking Statements Certain information in this news release does not relate to historical financial information, including statements relating to future prospects and expectations regarding our growth, revenues, enrollment, and operating performance, and should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions investors not to place undue reliance on any such forward-looking statements, which are based on information available at the time those statements are made or management's good faith belief as of that time with regard to future events, and should not be read as a guarantee of future performance or results. Such statements are subject to risks and uncertainties which could cause the company's actual results to differ materially from historical results and from results presently anticipated or projected. The company undertakes no obligation to update its forward-looking statements. Among these risks and uncertainties are any failure to materially comply with the extensive regulatory framework applicable to us, including compliance with Title IV of the Higher Education Act and the regulations thereunder; complying with U.S. Department of Education rules, including those regarding incentive compensation, gainful employment, return of Title IV funds, borrower defenses to repayment, financial responsibility standards, state authorization, certifications and program requirements; maintaining our business in accordance with regional and specialized accreditation standards and state regulatory and program approval requirements; adapting to changes in the administration, funding and availability for Title IV programs; successfully defending litigation and other claims; any governmental action or review of our business, marketing, or financial aid practices, including by any state attorneys general, the federal Consumer Financial Protection Bureau, the Federal Trade Commission, the Minnesota Office of Higher Education or other state or federal regulatory bodies; successfully growing our FlexPath programs; maintaining and expanding existing commercial relationships with employers and developing new employer and business partner relationships; improving our conversion rate and effectively optimizing our marketing strategy and spend; successfully managing our learner success, doctoral enrollment and degree completion efforts; keeping up with advances in technology important to the online learner experience; effectively managing data security risks; successfully integrating acquisitions; successfully growing Capella Learning Solutions' new business lines; and managing risks associated with the overall competitive environment and general economic conditions. Other factors that could cause the company's results to differ materially from those contained in its forward-looking statements include those described in the "Risk Factors" section of our most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC) and any updates or developments described in our Quarterly Reports on Form 10-Q, or other documents the company files with the SEC. Conference Call Capella will discuss its second quarter 2017 results and outlook during a conference call scheduled today, July 25, 2017, at 9:00 a.m. Eastern time (ET). To participate in the live call, investors should dial 800.794.6623 (domestic) or 785.424.1227 (international) at 8:50 a.m. (ET), conference ID# 8176. The webcast, including the accompanying presentation, will be available on the Capella Education Company Web site at www.capellaeducation.com in the investor relations section. A replay of the call will be available starting on July 25 through Aug. 1, 2017, at 800.839.2670 (domestic) or 402.220.7230 (international), conference ID# 8176. It will also be archived at www.capellaeducation.com in the investor relations section. About Capella Education Company Capella Education Company (http://www.capellaeducation.com) is an educational services company that provides access to high-quality education through online postsecondary degree programs and job-ready skills offerings needed in today's market. Capella's portfolio of companies is dedicated to closing the skills gap by providing the most direct path between learning and employment.
Note: The summary of financial information by reportable segment above excludes the results of operations for Arden University, which are presented as discontinued operations in our Consolidated Statements of Income.
(a) Enrollment in the table above includes learners who are actively enrolled during the last month of the quarters ended June 30, 2017 and 2016, respectively.
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