After First Six Months, Company Says it Remains 'On-Course' to Meet Guidance
for the Year of $26mm in EBITDA and Positive 4th Quarter Net Income of $11mm
NEW YORK, Feb. 13 /PRNewswire-FirstCall/ --
Edison Schools Inc. (Nasdaq: EDSN), the nation's leading private manager of
public schools, announced today that it improved its loss per share in the
second quarter from 22 cents per share last year to a loss of 17 cents per
share this year. The company said it is on track to produce $26 million in
EBITDA, excluding stock based compensation, for the current year. Edison also
announced that it expects to post net income of approximately $11 million in
the fourth quarter of this fiscal year, the first quarterly net income in the
company's 10 year history. In addition, Edison confirmed its prior guidance
that it will generate in excess of $35 million of incremental cash flow during
the next two quarters from refinancing of a portion of its notes receivable
from charter schools, and improvements in the collection of receivables from
its managed schools customers.
"We are pleased to announce the completion of another step towards
achieving our financial goals for the year. While there is still much work to
be done over the next two quarters, we are pleased with the results of our
re-engineering process and the significant improvement in our operating
picture," said Chris Whittle, the company's CEO and Founder.
Net revenues for the quarter were approximately 5% lower than the prior
year, due primarily to the ending of certain unprofitable contracts and the
deferral of revenue for certain unsigned contracts, which was partially offset
by revenue from the opening of new schools and expansion of existing schools.
Revenues were $109.6 million, versus $115.6 million the same period a year
ago. The company's Gross Site Contribution rose 11.2% versus last year to
$21.9 million from $19.7 million a year ago. Edison reported an improvement in
its EBITDA, excluding non-cash stock based compensation charges, from
$948,000 in the same period last year to $2.9 million this period. The
company's net loss for the period was $9.1 million, which improved from a net
loss of $11.7 million for the same period last year. The company's loss per
share was 17 cents, an improvement from 22 cents for the same period a year
ago.
The company said it expects to generate approximately $33 million in
EBITDA, excluding stock based compensation charges, during the next two
quarters, $6 million and $27 million for the third and fourth quarters,
respectively.
Edison said it is making improvements in the timing of its receivables
collection with managed schools receivables having been reduced by
$8.5 million since year-end. Management believes these accelerated account
collections should reduce receivables from managed school clients by
approximately $20 million by year-end. In addition to a successful
refinancing of approximately $7 million in the second quarter, management
believes that a minimum of $23 million of refinancings on its charter notes
will close in the next two quarters.
The combination of improved EBITDA, cash on the balance sheet, refinancing
of the notes receivable and better receivables timing will place the Company
in a strong financial position at year end.
Management continues to be comfortable with the company's liquidity
position. The company's cash balance improved from $31.5 million on September
30, 2002 to $37 million on December 31, 2002. The company expects to end the
fiscal year with cash on the balance sheet of approximately $25 million. This
amount would be after a material reduction in the company's debt level and
substantial investment in FY04 new business.
Given the above positive trends in its business, Edison announced that
during the third quarter it is planning to refinance certain of its debt
facilities to achieve lower overall financing costs. This may result in a
substantial amount of non-cash charges being written off during the third
quarter caused by accelerating the amortization of fees associated with prior
financing arrangements.
The company's balance sheet remains strong with shareholder equity of
approximately $209 million or $3.86 per share. Shareholders should take note
of a number of important items on the company's balance sheet including
$37 million in cash, approximately $80 million in notes due to us, and over
$70 million in receivables.
ABOUT EDISON SCHOOLS
Founded in 1992, Edison partners with school districts and charter boards
to raise student achievement through its research-based school design, aligned
assessment systems, interactive professional development, integrated use of
technology and other proven program features. Edison students are achieving
annual academic gains well above national norms. Edison Schools now serves
more than 110,000 public school students in over 20 states through four
different business channels: (1) the management of schools for school
districts, (2) charter schools, (3) summer and after-school programs, and (4)
achievement management solutions for school systems. The company operates 149
full-year schools and 178 summer schools.
Between 1992 and 1995 and in on-going efforts, Edison's team of leading
educators and scholars has conducted intensive research to develop its school
design and support systems. Edison opened its first four schools in August
1995, and has grown rapidly in every subsequent year. For more information,
please visit http://www.edisonschools.com.
Any statements in this press release and any other press release issued by
Edison on or about the date hereof about future expectations, plans and
prospects for Edison, including statements containing the words "believes,"
"anticipates," "plans," "expects," "will," and similar expressions, constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those indicated by such forward-looking statements as a result of various
important factors, including the risk factors discussed in our most recent
annual report on form 10-K/A filed with the SEC. The forward-looking
statements included in this press release represent Edison's estimates as of
February 13, 2003. Edison anticipates that subsequent events and developments
will cause its estimates to change. While Edison may elect to update these
forward-looking statements at some point in the future, Edison specifically
disclaims any obligation to do so. These forward-looking statements should not
be relied upon as representing Edison's estimates or views as of any date
subsequent to February 13, 2003.
Edison Schools Inc.
For the Three and Six Months Ending December 31, 2002
(Dollars in 000's, except loss per share data)
Three Months Ended Six Months Ended
Dec. 2002 Dec. 2001 Dec. 2002 Dec. 2001
Gross student
funding $116,108 $133,342 $195,653 $230,608
Net revenue $109,580 $115,637 $182,672 $205,382
Education and operating expenses:
Direct site expenses
Company paid 48,703 42,145 83,674 82,843
Client paid 39,000 53,766 68,593 93,440
Curriculum,
administration and
development 18,009 17,307 33,846 33,772
Preopening expenses 979 1,471 2,990 5,205
Stock-based
compensation 166 3,539 249 (1,799)
Depreciation and
amortization 8,014 9,706 17,065 17,562
Total education and
operating
expenses 114,871 127,934 206,417 231,023
Loss from
operations (5,291) (12,297) (23,745) (25,641)
Other income (expense)
Interest income 2,035 2,375 4,251 4,626
Interest expense (6,186) (1,608) (9,326) (3,019)
Other 324 15 342 22
Total other (3,827) 782 (4,733) 1,629
Loss before provision
for state and local
taxes (9,118) (11,515) (28,478) (24,012)
Provision for state and
local taxes (12) (146) (343) (321)
Net loss $(9,130) $(11,661) $(28,821) $(24,333)
Per share data
Basic and diluted net
loss per share $ (0.17) $(0.22) $ (0.53) $(0.46)
Weighted average shares
of common stock 54,090 53,547 53,957 53,334
outstanding used in
computing basic and
diluted net loss per share
Operating information
Enrollment -
students * 80,000 74,000 80,000 74,000
Gross site
contribution 21,877 19,726 30,405 29,099
Stock-based non cash
charges 166 3,539 249 (1,799)
EBITDA, net of
stock-based
non cash charges 2,889 948 (6,431) (9,878)
EBITDA, net of
stock-based
non cash charges,
per student 36 13 (80) (133)
* Does not include students enrolled in our summer school program.
SOURCE Edison Schools Inc.
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Related links:
http://www.edisonschools.com
CONTACT:
Chris Scarlata, Chief Financial Officer,
+1-212-419-1645, or Adam Tucker, VP Communications,
+1-212-419-1602, both of Edison Schools Inc.
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