Education Management Corp. (EDMC, Financial) filed Quarterly Report for the period ended 2012-12-31.
Education Management Corporation has a market cap of $499.248 million; its shares were traded at around $3.96 with a P/E ratio of 4.9 and P/S ratio of 0.1874.
We also completed five sale-leaseback transactions during the current quarter with unrelated third parties that resulted in recognizing a net loss of $3.5 million, which represented an increase in educational services expense of 53 basis points as a percentage of net revenues compared to the prior year quarter. In addition, bad debt expense was $40.8 million, or 6.2% of net revenues, in the current quarter compared to $41.3 million, or 5.6% of net revenues, in the prior year quarter, an increase of 63 basis points. The increase in bad debt expense as a percentage of net revenues was primarily due to an increase in the extension of credit to our students largely attributable to the reduced PLUS loan availability explained above under "Key Trends, Developments and Challenges." Our extension of credit to students may continue to result in higher bad debt expense as a percentage of net revenues in future periods.
Net revenues decreased 10.9% to $1,264.5 million in the current period compared to $1,419.3 million in the prior year period due primarily to a 12.1% decrease, to 130,100 students, in average enrolled student body compared to the prior year period. In addition, new student enrollment in the December 31, 2012 year to date period decreased by 19.8% compared to the prior year period, to approximately 56,800 students, which was primarily due to declines in new student enrollment in fully-online programs. These decreases were partially offset by tuition increases of approximately 1%.
Net revenues decreased by $58.1 million or 12.4%, to $411.5 million in the current quarter compared to the prior year quarter due primarily to a decrease in average enrolled student body of 12.1%, or approximately 9,400 students. In addition, new student enrollment in the current quarter decreased by 20.2% compared to the prior year quarter to approximately 12,300 students. The decreases in average and new student enrollments were primarily the result of the factors described above under "Key Trends, Developments and Challenges."
Capital expenditures were $39.5 million, or 3.1% of net revenues, in the six months ended December 31, 2012, compared to $36.1 million, or 2.5% of net revenues, in the six months ended December 31, 2011. We expect capital expenditures to be between 3.0% and 3.5% of net revenues in fiscal 2013. Reimbursements for tenant improvements represent cash received from lessors based on the terms of lease agreements to be used for leasehold improvements, which partially offset the outflows for capital expenditures. We lease most of our facilities under operating lease agreements. We anticipate that future commitments on existing leases will be satisfied from cash provided from operating activities. We also expect to extend the terms of leases that will expire in the near future or enter into similar long-term commitments for comparable space.
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Education Management Corporation has a market cap of $499.248 million; its shares were traded at around $3.96 with a P/E ratio of 4.9 and P/S ratio of 0.1874.
Highlight of Business Operations:
Net revenues decreased 11.2% to $654.9 million in the current quarter compared to $737.2 million in the prior year quarter due primarily to a 12.7% decrease, to 131,500 students, in average enrolled student body compared to the prior year quarter. In addition, new student enrollment in the December 31, 2012 quarter decreased by 21.9% compared to the prior year quarter, to approximately 24,000 students. This reduction was primarily due to declines in new student enrollment in fully-online programs, which represented approximately 80% of the total year-over-year decline in new student enrollment. These decreases were partially offset by tuition increases of approximately 1%.We also completed five sale-leaseback transactions during the current quarter with unrelated third parties that resulted in recognizing a net loss of $3.5 million, which represented an increase in educational services expense of 53 basis points as a percentage of net revenues compared to the prior year quarter. In addition, bad debt expense was $40.8 million, or 6.2% of net revenues, in the current quarter compared to $41.3 million, or 5.6% of net revenues, in the prior year quarter, an increase of 63 basis points. The increase in bad debt expense as a percentage of net revenues was primarily due to an increase in the extension of credit to our students largely attributable to the reduced PLUS loan availability explained above under "Key Trends, Developments and Challenges." Our extension of credit to students may continue to result in higher bad debt expense as a percentage of net revenues in future periods.
Net revenues decreased 10.9% to $1,264.5 million in the current period compared to $1,419.3 million in the prior year period due primarily to a 12.1% decrease, to 130,100 students, in average enrolled student body compared to the prior year period. In addition, new student enrollment in the December 31, 2012 year to date period decreased by 19.8% compared to the prior year period, to approximately 56,800 students, which was primarily due to declines in new student enrollment in fully-online programs. These decreases were partially offset by tuition increases of approximately 1%.
Net revenues decreased by $58.1 million or 12.4%, to $411.5 million in the current quarter compared to the prior year quarter due primarily to a decrease in average enrolled student body of 12.1%, or approximately 9,400 students. In addition, new student enrollment in the current quarter decreased by 20.2% compared to the prior year quarter to approximately 12,300 students. The decreases in average and new student enrollments were primarily the result of the factors described above under "Key Trends, Developments and Challenges."
Capital expenditures were $39.5 million, or 3.1% of net revenues, in the six months ended December 31, 2012, compared to $36.1 million, or 2.5% of net revenues, in the six months ended December 31, 2011. We expect capital expenditures to be between 3.0% and 3.5% of net revenues in fiscal 2013. Reimbursements for tenant improvements represent cash received from lessors based on the terms of lease agreements to be used for leasehold improvements, which partially offset the outflows for capital expenditures. We lease most of our facilities under operating lease agreements. We anticipate that future commitments on existing leases will be satisfied from cash provided from operating activities. We also expect to extend the terms of leases that will expire in the near future or enter into similar long-term commitments for comparable space.
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