Princeton Review Inc. (REVU, Financial) filed Quarterly Report for the period ended 2009-03-31.
Priceton Review Inc. helps students and families achieve their educational and career goals elementary and secondary schools maximize their effectiveness and colleges and graduate schools attract greater numbers of qualified applicants at lower cost. The company provides preparation for the SAT as well as for most of the other major post-secondary and graduate admissions tests. Princeton Review Inc. has a market cap of $151.6 million; its shares were traded at around $4.49 with and P/S ratio of 1.1.
Test Preparation Services cost of revenue increased by $571,000, or 6%, to $9.5 million from $8.9 million in the three months ended March 31, 2008 due primarily to incremental costs of $2.0 million related to the 2008 acquisitions. Excluding the impact of franchises acquired, cost of revenue decreased by $1.4 million due to improved classroom operating efficiencies which lowered relative teacher, course material and facility costs required to deliver our services. Gross margin during the period for the Test Preparation Services division increased from 62% to 65%, primarily as a result of the operating efficiencies described above.
Cash flows provided by operating activities from continuing operations for the three months ended March 31, 2009 were $4.4 million as compared to $6.8 million used for operating activities for the three months ended March 31, 2008. Cash provided by operating activities for the three months ended March 31, 2009 was due primarily to $4.4 million of income from continuing operations excluding non-cash items such as depreciation, amortization and stock-based compensation. Changes in working capital had a neutral effect on cash flow for the three months ended March 31, 2009, as a $4.6 million increase in accounts receivable due to growth in SES and institutional Test Preparation revenues was offset by growth in accrued compensation (including severance
related to 2009 restructuring activities) totaling $4.5 million. Cash used for operating activities for the three months ended March 31, 2008 of $6.8 million was due primarily to restructuring-related payments of $4.7 million and a $2.6 million payment of a legal settlement.
Cash flows used for investing activities from continuing operations during the three months ended March 31, 2009 were $2.4 million as compared to $3.4 million used during the comparable period in 2008. Capital expenditures including the development of internal use software increased by $2.1 million and were offset by a decrease in cash expended for franchise acquisitions of $3.1 million.
Cash flows used for financing activities from continuing operations for the three months ended March 31, 2009 were $10.1 million as compared to $1.4 million provided by financing activities for the three months ended March 31, 2008. Cash used for financing activities in 2009 primarily consisted of $10.0 million in repayments of our Wells Fargo credit facility term loan, $9.5 million of which represented a required non-recurring installment payment from the cash proceeds of the K-12 Services division sale. Cash provided by financing activities in 2008 primarily consisted of proceeds from the exercise of stock options.
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Priceton Review Inc. helps students and families achieve their educational and career goals elementary and secondary schools maximize their effectiveness and colleges and graduate schools attract greater numbers of qualified applicants at lower cost. The company provides preparation for the SAT as well as for most of the other major post-secondary and graduate admissions tests. Princeton Review Inc. has a market cap of $151.6 million; its shares were traded at around $4.49 with and P/S ratio of 1.1.
Highlight of Business Operations:
Test Preparation Services revenue increased by $4.2 million, or 18%, to $27.4 million from $23.2 million in the three months ended March 31, 2008. This increase is primarily due to incremental revenue of $5.7 million from domestic franchises acquired during 2008 as described above. This increase in revenue was offset by a $1.1 million reduction in franchise fees as a direct result of the same franchise acquisitions and a $0.3 million reduction in non-franchise licensing revenue due to the termination of a contract with a marketing partner that has filed for bankruptcy.Test Preparation Services cost of revenue increased by $571,000, or 6%, to $9.5 million from $8.9 million in the three months ended March 31, 2008 due primarily to incremental costs of $2.0 million related to the 2008 acquisitions. Excluding the impact of franchises acquired, cost of revenue decreased by $1.4 million due to improved classroom operating efficiencies which lowered relative teacher, course material and facility costs required to deliver our services. Gross margin during the period for the Test Preparation Services division increased from 62% to 65%, primarily as a result of the operating efficiencies described above.
Cash flows provided by operating activities from continuing operations for the three months ended March 31, 2009 were $4.4 million as compared to $6.8 million used for operating activities for the three months ended March 31, 2008. Cash provided by operating activities for the three months ended March 31, 2009 was due primarily to $4.4 million of income from continuing operations excluding non-cash items such as depreciation, amortization and stock-based compensation. Changes in working capital had a neutral effect on cash flow for the three months ended March 31, 2009, as a $4.6 million increase in accounts receivable due to growth in SES and institutional Test Preparation revenues was offset by growth in accrued compensation (including severance
related to 2009 restructuring activities) totaling $4.5 million. Cash used for operating activities for the three months ended March 31, 2008 of $6.8 million was due primarily to restructuring-related payments of $4.7 million and a $2.6 million payment of a legal settlement.
Cash flows used for investing activities from continuing operations during the three months ended March 31, 2009 were $2.4 million as compared to $3.4 million used during the comparable period in 2008. Capital expenditures including the development of internal use software increased by $2.1 million and were offset by a decrease in cash expended for franchise acquisitions of $3.1 million.
Cash flows used for financing activities from continuing operations for the three months ended March 31, 2009 were $10.1 million as compared to $1.4 million provided by financing activities for the three months ended March 31, 2008. Cash used for financing activities in 2009 primarily consisted of $10.0 million in repayments of our Wells Fargo credit facility term loan, $9.5 million of which represented a required non-recurring installment payment from the cash proceeds of the K-12 Services division sale. Cash provided by financing activities in 2008 primarily consisted of proceeds from the exercise of stock options.
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