stra-20220331

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022

☐ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 0-21039

Strategic Education, Inc.

(Exact name of registrant as specified in this charter)


Maryland		52-1975978
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2303 Dulles Station Boulevard
Herndon,	VA	20171
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (703) 561-1600

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

STRA

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 15, 2022, there were outstanding 24,956,536 shares of Common Stock, par value $0.01 per share, of the Registrant.

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STRATEGIC EDUCATION, INC.

INDEX

FORM 10-Q



PART I — FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Unaudited Condensed Consolidated Balance Sheets at December 31, 202 1 and March 31, 2022	3

		Unaudited Condensed Consolidated Statements of Income for the three months ended March 3 1 , 202 1 and 202 2	4

		Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 3 1 , 202 1 and 202 2	4

		Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 3 1 , 202 1 and 202 2	5

		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 , 202 1 and 202 2	6

		Notes to Unaudited Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

	Item 4.	Controls and Procedures	38

PART II — OTHER INFORMATION

	Item 1.	Legal Proceedings	39

	Item 1A.	Risk Factors	39

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

	Item 3.	Defaults Upon Senior Securities	40

	Item 4.	Mine Safety Disclosures	40

	Item 5.	Other Information	41

	Item 6.	Exhibits	41

SIGNATURES			42

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	December 31, 2021		March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	268,918	$	293,419
Marketable securities	6,501		6,785
Tuition receivable, net	51,277		64,798
Income taxes receivable	313		—
Other current assets	40,777		52,846
Total current assets	367,786		417,848
Property and equipment, net	150,589		152,742
Right-of-use lease assets	149,587		146,508
Marketable securities, non-current	23,377		21,277
Intangible assets, net	276,380		276,267
Goodwill	1,285,864		1,303,175
Other assets	52,297		50,066
Total assets	$	2,305,880	$	2,367,883

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	95,518	$	103,934
Income taxes payable	—		9,422
Contract liabilities	73,232		115,647
Lease liabilities	27,005		25,833
Total current liabilities	195,755		254,836
Long-term debt	141,630		141,743
Deferred income tax liabilities	44,595		39,974
Lease liabilities, non-current	162,821		158,930
Other long-term liabilities	47,089		48,087
Total liabilities	591,890		643,570
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 24,592,098 and 24,963,542 shares issued and outstanding at December 31, 2021 and March 31, 2022, respectively	246		250
Additional paid-in capital	1,529,969		1,528,328
Accumulated other comprehensive income	9,203		29,185
Retained earnings	174,572		166,550
Total stockholders’ equity	1,713,990		1,724,313
Total liabilities and stockholders’ equity	$	2,305,880	$	2,367,883

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)


	For the three months ended March 31,
	2021		2022
Revenues	$	290,336	$	258,855
Costs and expenses:
Instructional and support costs	152,805		144,624
General and administration	86,845		94,784
Amortization of intangible assets	19,407		3,738
Merger and integration costs	1,012		410
Restructuring costs	18,267		1,858
Total costs and expenses	278,336		245,414
Income from operations	12,000		13,441
Other income (expense)	2,167		(1,171)
Income before income taxes	14,167		12,270
Provision for income taxes	4,590		5,241
Net income	$	9,577	$	7,029
Earnings per share:
Basic	$	0.40	$	0.29
Diluted	$	0.40	$	0.29
Weighted average shares outstanding:
Basic	23,974		23,948
Diluted	24,153		24,114

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	For the three months ended March 31,
	2021		2022
Net income	$	9,577	$	7,029
Other comprehensive income:
Foreign currency translation adjustment	(8,712)		20,499
Unrealized losses on marketable securities, net of tax	(104)		(517)
Comprehensive income	$	761	$	27,011

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)


	For the three months ended March 31, 2021
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
	Shares	Par Value
Balance at December 31, 2020	24,418,939	$	244	$	1,519,549	$	179,646	$	48,880	$	1,748,319
Stock-based compensation	—	—

SEC Form 10-Q filed by Strategic Education Inc.