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Bridgepoint Education Reports First Quarter 2011 Results

5/3/2011

Announces Additional $75 Million Share Repurchase Authorization

SAN DIEGO, May 3, 2011 /PRNewswire via COMTEX/ --

Bridgepoint Education (NYSE: BPI), a provider of postsecondary education services, announced today its results for the three months ended March 31, 2011.

Highlights for the first quarter ended March 31, 2011, are as follows:

  • Total student enrollment at period end was 88,252.
  • Revenue increased to $229.4 million from $156.1 million for the same period in 2010.
  • Operating income increased to $86.1 million from $50.1 million for the same period in 2010.
  • Net income was $53.9 million compared with net income of $29.8 million for the same period in 2010.
  • Fully diluted earnings per common share was $0.92 compared with $0.49 for the same period in 2010.
  • Repurchased 0.7 million shares under the $60 million share repurchase program announced in August 2010.

"We are pleased with the results we achieved in the first quarter as our new enrollments were in-line with our expectations, and I am particularly pleased that our year over year student persistence increased for the fourth consecutive quarter. The increased persistence not only resulted in better than anticipated revenue for the quarter, but it more importantly reinforces that the student support initiatives we made in 2010 to enhance student persistence are working as we planned. Our focus will remain on continuing to improve the programs we have in place to further enhance the academic readiness of the students who attend our institutions, and to provide students with an innovative, high quality learning experience that enriches their lives," said Andrew Clark, Chief Executive Officer of Bridgepoint Education.

Student Enrollment

Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, increased to 88,252 students at March 31, 2011, compared with 65,788 students at the end of the first quarter of 2010.

New student enrollments for the first quarter of 2011 at Bridgepoint Education's academic institutions were approximately 27,550, compared with combined new student enrollments of approximately 24,300 for the same period in 2010.

Financial Results

Revenue for the first quarter of 2011 was $229.4 million, compared with revenue of $156.1 million for the same period in 2010.

Operating income for the first quarter of 2011 was $86.1 million compared with operating income of $50.1 million for the same period in 2010.

Net income for the first quarter of 2011 was $53.9 million compared with net income of $29.8 million for the same period in 2010.

Fully diluted earnings per common share for the first quarter of 2011 was $0.92 compared with fully diluted earnings per common share of $0.49 for the same period in 2010.

The Company's effective tax rate for the first quarter of 2011 was 37.9%.

Balance Sheet and Cash Flow

As of March 31, 2011, Bridgepoint had cash, cash equivalents and marketable securities of $365.4 million, compared with $299.1 million as of December 31, 2010. The Company generated $81.5 million of cash from operating activities in the first quarter of 2011, compared with $54.6 million for the same period in 2010.

During the three months ended March 31, 2011, the Company repurchased 0.7 million shares at a weighted average price of $18.33 for a total cost of $12.7 million under the $60 million repurchase program announced in August 2010. As of March 31, 2011, approximately $5.1 million remains authorized and available under this repurchase program, which may be suspended at any time.

Additional $75 Million Share Repurchase Authorization

Bridgepoint Education's Board of Directors has authorized the repurchase of up to $75.0 million of the Company's outstanding shares of common stock over the next 12 months. Under the share repurchase program, the Company may purchase shares from time to time in the open market, through block trades or otherwise. This repurchase authorization is in addition to the $60 million repurchase authorization announced by the Company in August 2010.

The timing and extent of any repurchases will depend upon market conditions, the trading price of the Company's shares and other factors, and subject to the restrictions relating to volume, price and timing under applicable law. The share repurchase may be commenced or suspended at any time or from time to time by the Company.

Full-Year 2011 Outlook

Based on Bridgepoint Education's results in the first quarter of 2011, the Company is updating its full year 2011 guidance as follows:

  • Total student enrollment is expected to be between 82,000 and 83,500.
  • Revenue is expected to be between $886.5 million and $901.5 million.
  • Net income is expected to be between $145.5 million and $151.4 million.
  • Fully diluted earnings per common share is expected to be between $2.47 and $2.57 based on an estimated fully diluted weighted average share count of 58.9 million for the year ending December 31, 2011.
  • Bad debt as a percentage of revenues for 2011 is expected to be 5.4%.
  • Capital expenditures for 2011 are expected to be between 5% and 6% of revenue.
  • The Company's effective tax rate for 2011 is estimated to be 37.8%.

This guidance does not reflect the impact of any additional share repurchases the Company may complete during the remainder of 2011.

Earnings Conference Call and Webcast

Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States / Canada is (888) 205-6695 and for international callers is (913) 312-6680. The access code for all callers is 9523733. A live webcast will also be available on the Company's website at www.bridgepointeducation.com.

A replay of the call will be available via telephone through May 10, 2011. To access the replay, dial (888) 203-1112 in the United States / Canada and (719) 457-0820 outside the United States; then enter the access code 9523733.

About Bridgepoint Education

Bridgepoint Education's postsecondary education services focus on offering associate's, bachelor's, master's and doctoral programs in such disciplines as business, education, psychology, social sciences and health sciences. Bridgepoint Education's regionally accredited academic institutions - Ashford University and University of the Rockies - deliver their programs online as well as at traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of financial resources. These forward-looking statements are based on assumptions and estimates including, without limitation, those regarding: the Company's value proposition to students; competitiveness of the Company's tuition; ability to continue to transfer credits from other institutions; ability to maintain and improve the quality of the Company's education; management of future growth and scalability; development of military and corporate channels; estimates of new hires; proposed new programs; expectations that the Company can effectively manage the business within the regulatory environment; expectations regarding enrollments, financial position, results of operations and liquidity; projections, predictions, expectations, estimates or forecasts as to the Company's business, financial and operational results and future economic performance; management's goals and objectives; and other similar matters that are not historical facts. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Forward-looking statements should not be interpreted as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: the Company's inability to adequately resolve the findings and recommendations of the final audit report of the U.S. Department of Education's Office of Inspector General (OIG); the imposition of fines or other corrective measures against the Company's academic institutions; the Company's failure to comply with the extensive regulatory framework applicable to its industry, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements, and accrediting agency requirements; adverse regulatory changes affecting the Company's industry; the Company's inability to continue to develop awareness among, to recruit and to retain students; competition in the postsecondary education market and its potential impact on the Company's market share, recruiting cost and tuition rates; reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions; the Company's ability to attract and retain the personnel needed to sustain and grow its business; the Company's inability to develop new programs or expand its existing programs in a timely and cost-effective manner; economic or other developments potentially impacting demand in the Company's core disciplines or the availability or cost of Title IV or other funding; and other factors discussed in Part II, Item 1A (Risk Factors) of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on or about the date hereof, and in other reports the Company may file with the Securities and Exchange Commission from time to time.

Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.

Contact:
Paul Goodson, Associate Vice President of Investor Relations
866.475.0317 x2271 investorrelations@bridgepointeducation.com

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Income

(Unaudited)






Three Months Ended

March 31,


2011


2010


(In thousands, except


per share amounts)

Revenue

$229,432


$156,067

Costs and expenses:




Instructional costs and services

55,809


39,436

Marketing and promotional

58,966


44,212

General and administrative

28,545


22,331

Total costs and expenses

143,320


105,979

Operating income

86,112


50,088

Other income, net

673


246

Income before income taxes

86,785


50,334

Income tax expense

32,866


20,511

Net income

$ 53,919


$ 29,823

Earnings per common share:




Basic

$ 1.02


$ 0.55

Diluted

$ 0.92


$ 0.49

Weighted average common shares outstanding used




in computing earnings per common share:




Basic

52,976


54,371

Diluted

58,583


60,466





BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Balance Sheets

(Unaudited)






As of March 31,


As of December 31,

2011


2010


(In thousands)

ASSETS




Current assets:




Cash and cash equivalents

$ 211,816


$ 188,518

Restricted cash

25


25

Marketable securities

88,305


90,611

Accounts receivable, net

75,428


58,415

Deferred income taxes

7,039


7,039

Prepaid expenses and other current assets

10,999


12,650

Total current assets

393,612


357,258

Property and equipment, net

67,882


66,542

Marketable securities

65,230


20,000

Goodwill and intangibles, net

4,543


4,123

Deferred income taxes

15,845


15,845

Other long term assets

7,923


7,457

Total assets

$ 555,035


$ 471,225





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$ 3,537


$ 5,076

Accrued liabilities

58,583


34,895

Deferred revenue and student deposits

186,485


173,576

Total current liabilities

248,605


213,547

Rent liability

12,505


10,910

Other long term liabilities

8,511


8,527

Total liabilities

269,621


232,984

Total stockholders' equity

285,414


238,241

Total liabilities and stockholders' equity

$ 555,035


$ 471,225













BRIDGEPOINT EDUCATION, INC.

Consolidated Statements of Cash Flows

(Unaudited)






Three Months Ended

March 31,


2011


2010


(In thousands)

Cash flows from operating activities




Net income

$ 53,919


$ 29,823

Adjustments to reconcile net income to net cash provided by operating activities:




Provision for bad debts

11,595


7,896

Depreciation and amortization

2,722


1,729

Amortization of premium/discount

587


(19)

Deferred income taxes

-


265

Stock-based compensation

1,787


2,001

Excess tax benefit of option exercises

(3,737)


(249)

Loss on disposal of fixed assets

10


-

Changes in operating assets and liabilities:




Accounts receivable

(28,608)


(24,167)

Prepaid expenses and other current assets

2,070


(6)

Other long-term assets

(466)


(897)

Accounts payable and accrued liabilities

27,093


18,499

Deferred revenue and student deposits

12,909


17,365

Other liabilities

1,579


2,317

Net cash provided by operating activities

81,460


54,557





Cash flows from investing activities




Capital expenditures

(5,170)


(3,579)

Purchases of marketable securities

(53,930)


-

Capitalized curriculum development costs

(529)


-

Maturities of marketable securities

10,000


-

Net cash used in investing activities

(49,629)


(3,579)





Cash flows from financing activities




Proceeds from the exercise of stock options

422


13

Excess tax benefit of option exercises

3,737


249

Proceeds from the exercise of warrants

19


858

Repurchase of common stock

(12,711)


-

Payments of capital lease obligations

-


(634)

Net cash (used in) provided by financing activities

(8,533)


486

Net increase in cash and cash equivalents

23,298


51,464

Cash and cash equivalents at beginning of period

188,518


125,562

Cash and cash equivalents at end of period

$ 211,816


$ 177,026





Supplemental disclosure of non-cash transactions:




Purchase of equipment included in accounts payable and accrued liabilities

$ 500


$ 1,277













SOURCE Bridgepoint Education, Inc.

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