Building Business Acumen. Bridgepoint Education

Similar documents
Building Business Acumen Verizon

Often stock is split to lower the price per share so it is more accessible to investors. The stock split is not taxable.

CAPTURING THE ALPHA IN STOCK BUYBACKS

Trade Date The date of the previous trading day. Recent Price is the closing price taken from this day.

Please NOTE This example report is for a manufacturing company; however, we can address a similar report for any industry sector.

MASTER BUDGET - EXAMPLE

Financial ratio analysis

Financial Planning. Presented by Emma's Garden

Discussion Board Articles Ratio Analysis

CASH FLOW STATEMENT (AND FINANCIAL STATEMENT)

Monster Worldwide Reports Third Quarter 2015 Results

Performance Variables and Screeners

PRESS RELEASE. S&P 500 Stock Buybacks Up 19% in Fourth quarter up 1% over the third quarter

MAN 4720 STRATEGIC MANAGEMENT AND POLICY FORMULATION FINANCIAL ANALYSIS GUIDE

Financial Formulas. 5/2000 Chapter 3 Financial Formulas i

E15-1. Understanding Shareholders Equity

What is a business plan?

Projecting the 3 Statements & 3-Statement Modeling Quiz Questions

How To Calculate Financial Leverage Ratio

APPLE INC. Gabriela Nunez Summer 2013 Annual Report:

Trxade Group, Inc. (TCQB: TRXD): Record Revenues in Q3

SWIFT ENERGY ANNOUNCES FIRST QUARTER 2015 RESULTS

Cash Flow Analysis Modified UCA Cash Flow Format

Financial Statements and Ratios: Notes

Learning Objectives: Quick answer key: Question # Multiple Choice True/False Describe the important of accounting and financial information.

Chapter 2.2. Company Fundamentals

Three Months Ended March 31, 2015 Revenues $ 15,420 $ 17,258 Increase in revenues year over year 19% 12%

Primary Market - Place where the sale of new stock first occurs. Initial Public Offering (IPO) - First offering of stock to the general public.

Performance Review for Electricity Now

Corporate Presentation

A Fidelity Investments Webinar Series: Basics of Stock Investing

ACCOUNTING III Cash Flow Statement & Linking the 3 Financial Statements. Fall 2015 Comp Week 5

BACKGROUND KNOWLEDGE for Teachers and Students

I m going to cover 7 key points about FCF here:

Financial Ratio Cheatsheet MyAccountingCourse.com PDF

Cash Flow Analysis Venture Business Perspective

How To Value A Stock

ISS Governance Services Proxy Research. Company Financials Compustat Data Definitions

EMERSON AND SUBSIDIARIES CONSOLIDATED OPERATING RESULTS (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

The Basics of Accounting ACCT 201

As of December 31, As of December 31, Assets Current assets:

2 September 2015 YOC AG. FIRST BERLIN Equity Research

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION

UNDERSTANDING FINANCE AND MEMBER EQUITY MY EXPERIENCE AGENDA

Zynga Q1 14 Financial Results April 23, 2014

Statement of Cash Flow

MOUNTAIN VIEW, Calif. April 18, Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended March 31, 2013.

CHAPTER FOURTEEN. Simple Forecasting and Simple Valuation

FUNDAMENTAL INVESTING

TIFEL INANCIAL. 3rd Quarter 2009 Earnings Conference Call. November 9, 2009

THE STOCK MARKET GAME GLOSSARY

Herzogenaurach, Germany, July 27, 2004 PUMA AG announces its consolidated nd

Smithfield Motors: A case in lending, strategy, and value

OBIEE 11g Pre-Built Dashboards from Oracle Courtesy: Oracle OBIEE 11g Deployment on Vision Demo Data FINANCIALS

Preparing a Successful Financial Plan

FINANCIAL SUPPLEMENT December 31, 2015

Cost of Capital and Project Valuation

Financial Statement Analysis!

FSA Note: Summary of Financial Ratio Calculations

Financial Condition Analysis Model

Analyzing the Statement of Cash Flows

Understanding A Firm s Financial Statements

Guide to Financial Statements Study Guide

Financial Analysis for Frontier Communications Corp. (FTR)

Glossary and Formulas

Basic Performance Review

Arrow Reports Solid First Quarter Operating Results and Strong Asset Quality Ratios

Community College Annual Reporting and Analysis Tool (CARAT) User s Guide

Streetbites from the media perspective The efficient market hypothesis!

1-3Q of FY Q of FY

CASH FLOW STATEMENT. On the statement, cash flows are segregated based on source:

Chapter 5: Business Valuation (Market Approach)

Carbonite Reports Record Revenue for Second Quarter of 2014

Consolidated Income Statements SAP-Group 3rd quarter

Definitions of Terms

Financial Objectives

IntercontinentalExchange Fourth Quarter & Year-End Earnings Presentation February 10, 2009

CMAC meeting Agenda paper 2 Debt vs Equity

Advanced Merger Model Quick Reference Common Formulas & Model Setup. Transaction Structure & Assumptions

Solutions to Chapter 4. Measuring Corporate Performance

Performance Review. Sample Company

TYPES OF FINANCIAL RATIOS

MBA Financial Management and Markets Exam 1 Spring 2009

Business Succession Planning With ESOPs

Ratio Analysis CBDC, NB. Presented by ACSBE. February, Copyright 2007 ACSBE. All Rights Reserved.

Integrated Case D Leon Inc., Part II Financial Statement Analysis

Stock Dividends. Stock Dividends and Stock Splits. Amount of Stock Dividend. Created in 2006 By Michael Worthington Elizabeth City State University

October 21, 2015 MEDIA & INVESTOR CONTACT Heather Worley, heather.worley@texascapitalbank.com

Hudson Highland Group. Baird Business Solutions Conference March 2, 2006

Income Measurement and Profitability Analysis

Accounting Principles Critical to Success Presented By: C. P. Krishnan.

Bank & Financial Institution Modeling Quick Reference Projecting Financial Statements for a Bank.

PRESS RELEASE. S&P 500 Stock Buybacks Jump 59%; $30 billion First Quarter Increase Pushes Cash Holdings Down

Quarterly Share Repurchases ($M) and No. of Companies Repurchasing Shares

Analysis of the Financial Condition of the University of Illinois System

TIP If you do not understand something,

FINANCIAL ANALYSIS GUIDE

OPPENHEIMER HOLDINGS INC. ANNUAL STOCKHOLDERS MEETING. New York, NY May 9, 2016

1.1 Role and Responsibilities of Financial Managers

TripAdvisor Reports Fourth Quarter and Full Year 2013 Financial Results

Transcription:

Building Business Acumen Bridgepoint Education

5 Business Drivers Cash Growth People Profit Assets

5 Business Drivers Cash

Cash is! Cash is a company s oxygen supply. Cash is more important than your mother. Ram Charan Al Shugart Former Seagate CEO

Cash Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Cash Cash $7 $57 $171 $299 As of September 30, 2011, the company had cash, cash equivalents and marketable securities of $344.7 million..

Buying back stock: In 2010, we repurchased 3 million shares at an average cost of $14.05 per share, for a total purchase price of $42.2 million. For the first 9 months of the 2011, the company has spent $88 million in buying back stock which brings to an end the current stock buy-back authorized by the board of directors.

How Much Cash Should You Have? Companies ought to keep just enough cash to cover their interest, expenses and capital expenditures; plus they should hold a little bit more in case of emergencies. Investopedia

Cash Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Cash Cash $7 $57 $171 $299 8% 26% 38% 42%

Bridgepoint / Benchmark Companies Peformance Measure Cash Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Cash $299 $1,301 $449 $323 $374 $76 42% 26% 21% 17% 15% 12%

Cash Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Cash Cash $7 $57 $171 $299 Cash From Operating Act. $10 $71 $132 $190 Cash From Operating Activities for the first 9 months of 2011 = $149 million..

Bridgepoint / Benchmark Companies Peformance Measure Cash Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Cash $299 $1,301 $449 $323 $374 $76 Cash From Operating Act. $190 $1,045 $272 $392 $307 $163

5 Business Drivers Cash Profit

2010 2011 Target YTD Revenue (Sales) $100 100 100 - Instr. costs & ser. $ 26 26 30 - Marketing & Promo $ 30 27 26 - General & Admin. $ 14 14 12.5 = Operating Income $ 30 33 32 + Interest Income net $ 1 - - Income Tax $ 13 13 = Net Income $ 18 21

- Profit & Loss Statement (First 9 months 2012) - Revenue (Sales) $100 - Instructional costs & ser. $ 26.3 - Marketing & Promotion $ 26.7 - General & Administrative $ 14 = Operating Income $ 33 33% + Interest Income net $ - - Income Tax $ 13 = Net Income $ 21 21%

High Profit Margins S&P Average is: 13% Who has much higher profit margins? Qualcomm 30% Oracle 24% Apple 22% Facebook 20% Coca Cola 20% Why the high margins?

Low Profit Margins S&P Average is: 13% Who has much lower profit margins? Exxon Mobile 8% Ford 5% Wal-Mart 3.5% Whole Foods 3.4% Costco 1.8% Amazon 1.3% Why the low margins?

Profit Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Net Income $3 $24 $47 $128 Profit Operating Margin % 4.6% 15.3% 18.0% 30.3% Net Income % 3.5% 11.2% 10.2% 17.9% First 9 month of 2011: Operating Margin = 33% Net Income Margin = 21%

Bridgepoint / Benchmark Companies Peformance Measure Profit Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 G&A as % of Revenues 13.7% 6.4% 51.6% 35.4% 26.6% 16.0% Operating Margin % 30.3% 20.5% 12.2% 21.5% 14.8% 33.9% Net Income % 17.9% 11.2% 7.8% 14.6% 6.7% 20.6%

5 Business Drivers Cash Profit Assets

Assets (read from page 16) Balancing Asset Strength & Asset Utilization Cash, ratings, property plan & equipment

Assets Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Net Income $3 $24 $47 $128 Assets Return on Assets 8.4% 20.4% 15.7% 27.1% Equity Ratio 12.6% 25.7% 45.6% 50.6% First 9 month of 2011: Return on Assets = 26.5% Equity Ratio = 57%

Bridgepoint / Benchmark Companies Peformance Measure Assets Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 Return on Assets 27.1% 15.4% 25.5% 17.2% 3.7% 31.8% Equity Ratio 50.6% 37.7% 59.8% 72.4% 46.0% 42.6%

5 Business Drivers Cash Growth Profit Assets

Growth Bridgepoint Peformance Measure BridgePoint 2007 2008 2009 2010 2011 Est. Net Sales $86 $218 $454 $713 $923 Net Income $3 $26 $47 $128 $169 Driver: Growth Revenue Growth na 153.5% 108.3% 57.0% 30.0% Net Income Growth na 766.7% 80.8% 172.3% 32.0% Revenue in Q3 growing due to the 5% tuition increase on April 1 st of 2011 and increased enrollment.

Guidance for 2011: - Total student enrollment of 83,000 to 85,000 - Revenue of $920 to $926 million - Net income of $168.5 to $170.3 million - Diluted EPS of $2.95 to $2.98.

We believe that the performance of our company has been resilient in the current economic environment due to: (i) The continued availability of Title IV funds to finance student tuition payments, (ii) Increased demand for postsecondary education resulting from a deteriorating labor market and (iii) Efficiencies in advertising costs. Page 72, 10-K

Bridgepoint / Benchmark Companies Peformance Measure Growth Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 Revenue Growth 57% 25% 16% 31% 25% 24% Net Income Growth 175% -8% 94% 69% 61% 25% Diluted EPS Growth 189% -3% 107% 70% 40% 28%

5 Business Drivers Cash Growth People Customers & Employees Profit Assets

Employees A s hire A+ s and B s hire C s The #1 reason a person will leave their job? 38% of current employees believe they will be somewhere else in 18 months. Airplane

People Bridgepoint BridgePoint Peformance Measure 2007 2008 2009 2010 Net Sales $86 $218 $454 $713 Net Income $3 $24 $47 $128 People Number of students enrolled 12,623 31,558 53,688 77,892 Enrollment forecasted to be 83,000 to 85,000 students for year-end 2011.

Bridgepoint / Benchmark Companies Peformance Measure People Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 Number of students enrolled 77,892 470,500 117,000 80,000 136,000 60,700

Anticipation He skates to where the puck is going to be Walter Gretzky If I would have asked my customers what they wanted, they would have said a faster horse Henry Ford

5 Business Drivers Cash Growth People Profit Assets

Description Includes the Notes

5 Business Drivers Cash Statement of Cash Flows Growth People Profit & Loss Balance Sheet Assets

Assets = Liabilities + Equity Asset Strength Most Liquid Becomes Cash < 1 year Least Liquid Current ratio = 1.7 Due First Due in < 1 year Due Last Balance Equity ratio = 51%

Strong Balance Sheet 1. Plenty of cash 2. Current ratio at 1.7 3. Trends are good 4. Strong equity position, 51%.

For Title IV, one financial responsibility standard is based on the institution's composite score, which is derived from a formula established by the Department that is a weighted average of three financial ratios: equity ratio, which measures the institution's capital resources, financial viability and ability to borrow; primary reserve ratio, which measures the institution's ability to support current operations from expendable resources; and net income ratio, which measures the institution's ability to operate at a profit or within its means. The composite score is a number between negative 1.0 and positive 3.0 and it must be at least 1.5. We expect our scores for 2010 to be 3.0. Financial responsibility section, Item 1, Form 10-K

Sales Expenses =Net Income Top Line 26% 30% 14% Operating Margin = 30% (P&L) 57% 56% 45% -8% 33% 165% Profit 09-10 Var. - Bottom Net Profit Line Margin = 18% 175% Net Income / Number of Shares 189%

Increase Sales by 100K +100 26 30 56 + 44 + 44 18 for taxes + 26

Work Team Impact on the 5 Elements (Table Activity) If your team cuts $100 thousand from the General and Administrative line item, what would be the impact on the P&L? Assume quality is the same.

Decrease by 100K - 100-100 + 100 + 100 41 for taxes + 59

Work Team Impact on the 5 Elements Which is better, increasing sales by $100K or cutting costs by $100K? Increasing sales increases Net Income by $26K. Cutting costs increases Net Income by $59K. What are the other considerations of increasing sales vs. cutting costs?

Cash from Operations + Cash from Investing + Cash from Financing = Change in Cash

Cash Flow

Financial Statements: Inter-relationship INCOME STATEMENT Revenues - COGS = Gross Margin - Opera2ng Costs = Opera2ng Income - Interest & Taxes Net Income CASH FLOW STATEMENT Net Income + Non- cash transac2ons = Cash from Ops +/- Cash from Inves2ng +/- Cash from Financing = Change in Cash + Beginning Cash Balance Cash & Cash Equivalents BALANCE SHEET Cash & Cash Equivalents + Other Assets = Total Assets Total Liabili2es Total Equity $713,233 Expenses $ 127,580 $ 127,580 $ 188,518 $ 188,518 $ 238,241 Bridgepoint Education STARTS with Customers This statement shows how much the company generated in sales (revenues) from it s customers. Then expenses are subtracted, and Net Income is shown. This statement shows how much cash actually flowed into the company (cash inflows) and the cash that flowed out of the company (cash ourlows) during the statement year, and finally the cash amount les over at the end of the year. ENDS with Owners This statement shows what the company owns (assets), what the company owes (liabili2es), and how much equity the owners have (owners equity), at a specific point in 2me.

Finding our performance on the 5 Drivers Cash Growth People Profit Assets

Navigating The Financials (NTF) Cash Component Location in annual report Balance Sheet P & L Statement of Cash Flow s Calculation Cash + Marketable Securities Enter Results Here Cash None $ Cash Cash from operating act. None $ 299 190 www.acumenlearning.com Metric Cash Flow from operating Act. 713 Revenue None $ Revenue People Growth Asset Profit Net Income None $ Net Income Operating Income Net Income Total Assets Revenue Net Income Total Stockholder's Equity Diluted Earnings Per Share Student Enrollment From Internal Data or Market Research Earnings Total Stockholders' Equity This year's revenues This This year's Net Income This Operating income Net Income Net Income This This year's Diluted EPS None Revenue Revenue Total Assets Total Assets Last year's revenues Last year's Net Income Last year's diluted EPS 100 = 100 = 100 = 100 = - 1 100 = - 1 100 = - 1 100 = 128 30 18 27 51 57 175 189 77,892 % % Operating Income Margin (%) Net Income Margin (%) % Return on Assets % Equity Ratio % Revenue growth % Net Income growth % Diluted EPS Growth Student Enrollment

The Role of the Stock Market 1) What is the role of the stock market? 2) Why did Bridgepoint go public? 3) Who cares about your stock price and why? a. Investors b. Analysts

Analyst Ratings

The Role of the Stock Market 1) What is the role of the stock market? 2) Why did you go public? 3) Who cares about your stock price and why? a. Investors b. Analysts c. Andrew Clark d. Employees 4) What are the benefits of a higher stock price?

6 Benefits of a Higher Stock Price: (Page 41) 1) Treasury stock worth more. 2) Secondary offering brings more cash. 3) Better credit ratings = more access to cash at a cheaper rate. 4) More acquisition power. 5) Can attract talented people. 6) More expensive in a buy-out.

Market Cap = Share Price X Number of Shares Peformance Measure Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 Market Capitalization 1.3 Bil. 6.7 Bil. 843 Mil. 2.6 Bil. 3.3 Bil. 1.4 Bil.

The P/E Ratio (Page 42, 43) Price (of one share of stock) Earnings Per Share (for last 12 months) Price $ 25.95 EPS $ 3.05 = 8.5 P/E ratio

P/E Ratios Peformance Measure Bridge Point Apollo Group Career Education Corp DeVry, Inc. Education Man. Corp. Strayer Education 2010 2010 2010 2010 2010 2010 Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637 Net Income $128 $553 $158 $280 $169 $131 P/E Ratio 8.5 15 5.5 12 16 13

External Factors Stock price

External Factors Stock price vs. Dow and S&P

Engage your teams: People will work hard for a paycheck, harder for a person, and hardest for a reason.