K12 Inc. (NYSE:LRN) Reports Bad News, But Blames Contract Changes

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The management of K12 Inc. (NYSE:LRN) has attempted to explain why its headline result for F3Q2016 couldn’t match a similar quarter last year: changes in a major client account. Revenue in F3Q2016 as well as in the nine months to March 2016 fell compared to a similar period a year earlier because of the same reason.

The affected client account was that of Agora Cyber Charter School. K12 Inc. (NYSE:LRN) said that contracted moved to Non-managed from Managed program, thus causing revenue disruption.

What was the report for 1Q?

K12 Inc. (NYSE:LRN)’s F3Q2016 revenue of $221.3 million marked a pullback from $224.6 million in a similar quarter a year ago. Non-GAAP EBITDA of $36.7 million also fell from $45.2 million in the previous year.

Almost all of K12’s key financial metrics fell in the latest quarter compared to a year ago because operating income of $19.1 million was down from $27.4 million in 1Q2015. Net income attributable to common shareholders contracted to $14.3 million from $17 million and diluted EPS attributable to common shareholders shrunk to $0.37 from $0.45.

What about the nine months to end of March?

The narrative was largely the same. Revenue of $651.4 million in the first nine months of F2016 was down from $712.6 million in the first nine months of F2015. Non-GAAP EBITDA of $64 million pulled back from $87 million and operating income of $13.4 million sharply down from $34.7 million.

K12 Inc. (NYSE:LRN) further reported that net income attributable to common shareholders of $10 million was down from $22.6 million in the initial nine months of F2015. The same story went for diluted EPS attributable to shareholders that came in at $0.26 relative to $0.60 in the initial nine months of F2015.

Performance in line with expectations

Despite the pullback in both the results of F3Q2016 and the first nine months of F2015, CEO, Stuart Udell, insisted that the company continues to achieve results according to its guidance for the year. Perhaps that is another way of saying that the transition of the Agora Cyber Charter School contract was expected and had been baked in the projections for the year.

What about the future?

For F4Q2016, K12 Inc. (NYSE:LRN) is looking for revenue in the band of $205 to $215 million. Operating income for the quarter is expected to be between $5 million and $9 million.

K12’s (LRN) CEO Stuart Udell on Q3 2016 Results – Earnings Call Transcript

Apr. 27, 2016 10:31 AM ET

K12 Inc. (NYSE:LRN)

Q3 2016 Earnings Conference Call

April 27, 2016 08:30 AM ET

Executives

Mike Kraft – VP of Finance

Nate Davis – Executive Chairman

Stuart Udell – CEO

James Rhyu – CFO

Analysts

Jeff Silber – BMO Capital Markets

Corey Greendale – First Analysis

Operator

Greetings, and welcome to the K12 Fiscal 2016 Third Quarter Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mike Kraft, Vice President of Finance. Please go ahead sir.

Mike Kraft

Thank you and good morning. Welcome to K12’s third quarter earnings call for fiscal year 2016. Before we begin, I would like to remind you that in addition to historical information, certain comments made during this conference call may be considered forward-looking statements, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and should be considered in conjunction with cautionary statements contained in our earnings release and the Company’s periodic filings with the SEC. Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements. In addition, this conference call contains time sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements. For further information concerning risks and uncertainties that could materially affect financial and operational performance and results, please refer to our reports filed with the SEC, including without limitation, cautionary statements made in K12’s 2015 Annual Report on Form 10-K. These filings can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing financial results in accordance with Generally Accepted Accounting Principles in the US or GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. This call is open to the public and is being webcast. The call will be available for replay for 30 days. With me on today’s call is Nate Davis, Executive Chairman, Stuart Udell, Chief Executive Officer and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have.

I like to now turn the call over to Stuart Udell. Stuart?

Stuart Udell

Thank you Mike, good morning and thanks for joining us on the call today. Before reviewing the results for the quarter, I just want to share how delighted I am that I came to K12. My entire career is focused on providing instructional services to kids who need the most help. I have always been a champion of school choice and educational options for students. Now, after almost 3 months on the job, I’m even further convinced that there is no better platform to do this at scale and to make a difference with kids than in K12. I’ve spent the last 75 days visiting schools, attending school board meetings, listening to customers and talking with employees to quickly gain a deep understanding of the Company’s operations, curriculum and talent. My takeaway is that the K12 team is more than just a leader in building create curriculum and technology; it’s a team of incredibly passionate and committed individuals including teachers, school administrators and support personnel who are on a mission. It’s those individuals that truly differentiate this organization and make us a true pioneer and leader in online and blended education.

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Director, SEC Reporting & Technical Accounting




Herndon, VA, USA | N/A


  • Industry:


    Education


  • Position Type:

    Full-Time



  • Functions:


    Accounting / Control
    General Management


  • Experience:

    5-7 years
    7-10 years

Job Description:

50 people have viewed this job

The Director of SEC Reporting & Technical Accounting manages all SEC Reporting and technical accounting including accounting policy, review of complex accounting transactions, writes position papers in support of accounting conclusions, and implements new standards. Reporting to the Corporate Controller, this position prepares financial reports for the U.S. Securities and Exchange Commission (SEC) including Forms 10-K, 10-Q, 8-K,and assist with Schedule 14 any other SEC reports that include financial information, and manage technical accounting matters. 

•    Preparation and management of the quarterly and annual SEC filings to include coordinating with internal Legal and Investor Relations and independent auditors;

•    Complies the Company’s consolidated quarterly and annual financial statements and the preparation and analysis of all financial information underlying the statements, footnotes and supporting schedules;

•    Performs U.S. Generally Accepted Accounting Principles (US GAAP) and SEC accounting research and provides technical guidance for new or unique business transactions to support the Company’s changing business and implementation of new accounting standards;

•    Coordinates with the Accounting Department to gather and support information necessary to address new accounting standards implementation;

•    Provides companywide expertise on accounting for revenue recognition;

•    Works closely across the Accounting Department on business issues impacting financial statements and footnote presentations and disclosures;

•    Manages equity based compensation accounting, including evaluation of proposed compensation programs and coordination with executives, legal, human resources and third party equity administrator. Establishes and maintains a close working relationship with the Company’s Financial Planning & Analysis (FP&A), Investor Relations and Legal;

•    Prepares collaborative responses to standard and ad-hoc inquiries and requests from FP&A; 

•    Participates in ad hoc projects, including assisting the corporate controllership team with technical accounting research, peer comparison disclosures, acquisitions/divestitures and due diligence activities;

•    Works with external and internal auditors to support quarter and year-end financial audits and internal control reviews; 

•    Establishes and monitors key internal controls over financial reporting to ensure compliance with Sarbanes-Oxley (SOX);

•    Assists Investor Relations with providing financial information and analysis for investor calls and presentations as well as individual queries that may arise.

Supervisory Responsibilities: This position has no supervisory responsibilities.

Requirements    Bachelor’s degree in Accounting, Finance or related field

· (6) years of public accounting, plus several years of industry financial reporting experience 

Certificates and Licenses: Certified Public Accountant (CPA) required

· Strong understanding of US GAAP and SEC accounting and disclosure standards and genuine interest and proven ability to research complex accounting and finance matters (Revenue recognition, Variable Interest Entity, purchase accounting, deconsolidation, noncontrolling interest, equity based compensation, International Accounting, etc)

· Experience in public accounting with a Big 4 firm for years minimum, attaining Manager or level or higher

· Excellent oral and written communication skills 

· Ability to work collaboratively across departmental functions

· Project management skills and an ability to perform thorough and complex financial statement analytics 

· Proficiency with Oracle (preferred) or another large ERP, Microsoft Excel, PowerPoint, Access, Outlook, Word

PREFERRED QUALIFICATIONS: 

· ’s degree in Accounting, Finance or related field

· (8) years plus relevant experience


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K12’s (LRN) CEO Nate Davis on Q2 2015 Results – Earnings Call Transcript | Seeking Alpha

Operator

Greetings, and welcome to the K12 Fiscal 2015 Second Quarter Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Mike Kraft. Thank you. You may begin.

Mike Kraft – VP, Investor Relations

Thank you, and good morning. Welcome to K12's second quarter earnings conference call. Before we begin, I would like to remind you that in addition to historical information, certain comments made during this conference may be considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and should be considered in conjunction with cautionary statements contained in our earnings release in the company's periodic filings with the SEC.

Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements.

In addition, this conference call contains time sensitive information that reflects management's best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements.

For further information concerning risks and uncertainties that could materially affect financial and operational performance and results, please refer to our reports filed with the SEC, including, without limitation, cautionary statements made in K12's 2014 Annual Report on Form 10-K. These filings can be found on the Investor Relations section of our Web site at www.k12.com.

In addition to disclosing financial results in accordance with general accepted accounting principles in the U.S. or GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our Web site. This call is open to the public and is being webcast. The call will be available for replay for 30 days.

With me on today's call is Nate Davis, Chief Executive Officer and Chairman; Tim Murray, President and Chief Operating Officer; and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have.

I'd like to now turn the call over to Nate. Nate?

Nate Davis – Chairman, CEO

Good morning, and thanks for joining us on call today.

Firstly, let me start by highlighting a few results for the quarter. Revenue was $231.1 million, up 3.3% year-over-year and within the range of our most recent guidance. Now, excluding the businesses we sold last year, revenue rose 5.5% versus last year. And revenue growth was largely driven by gains in our managed and non-managed public school programs as well as in our international and private pay schools.

For the quarter, we posted operating income of $20.5 million compared to an operating loss of $8.9 million in the prior year and James will review how this significant increase in operating income is impacted by businesses we sold last year and charges we recorded last year.

Today, I want to touch on two topics that I'm very excited about. Both will impact our growth going forward. First, our business development for managed public schools is good news. And second, the revenue growth trends we are seeing in our institutional group Fuel Ed are now coming in as we planned.

From a school development point of view, we are working with various school boards to open new schools in both new states that don't get offer a virtual school option and new schools in states where we already operate at least one school.

K12’s (LRN) CEO Nate Davis on Q1 2015 Results – Earnings Call Transcript | Seeking Alpha

Operator

Greetings, and welcome to the K12 Fiscal 2015 First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Kraft. Thank sir you may began.

Mike Kraft – VP, Investor Relations

Thank you, and good morning. Welcome to K12's first quarter earnings call for fiscal year 2015. Before we begin, I would like to remind you that in addition to historical information, certain comments made during this conference call may be considered forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and should be considered in conjunction with cautionary statements contained in our earnings release in the company’s periodic filings with the SEC.

Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements.

In addition, this conference call contains time sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward looking statements.

For further information concerning risks and uncertainties that could materially affect financial and operating performance and results, please refer to our reports filed with the SEC, including, without limitation, cautionary statements made in K12's 2014 Annual Report on Form 10-K. These filings can be found on the Investor Relations section of our website at www.k12.com. In addition to disclosing financial results in accordance with general accepted accounting principles in the U.S for GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. This call is open to the public and is being webcast. The call will be available for replay for 30 days.

With me on today’s call is Nate Davis, Chief Executive Officer and Chairman, Tim Murray, President and Chief Operating Officer, and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have. I’d like to turn the call over to Nate. Nate?

Nate Davis – Chief Executive Officer, Chairman

Thank you, Mike. Good morning and thanks for joining us on the call today. First let me start by highlighting a few results for the quarter. Revenue was $236.7 million of [indiscernible] year-over-year and within the range of our most recent guidance. Excluding the businesses we sold last year, revenue rose 5.2% versus last year. Revenue growth was largely driven by gains in our public school programs as well as our international and private based schools. For the last quarter, we posted operating loss of $13.2 million compared to an operating loss of $8.5 million in the prior year. Operating losses in the first quarter relate to seasonality of SG&A cost at the beginning of the every school year, which is largely driven by enrollment center and promotional expenses. Importantly, our release this morning provides more details on our new disclosure, including trends from the prior fiscal year for our Managed and Non-managed Programs, as well as our institutional software revenues. James Rhyu will be providing insight on our financials after Tim Murray provides highlight on operations.

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K12's (LRN) CEO Nate Davis on Q4 2014 Results – Earnings Call Transcript

Aug. 14, 2014 2:15 PM ET | About: K12 Inc. (LRN)

Operator

Greetings. And welcome to the K12 2014 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Oper1ator Instructions)

As a reminder, this conference is being recorded. It is now pleasure to introduce your host, Mike Kraft, Vice President of Investor Relations. Thank you, sir. You may begin.

Mike Kraft – Vice President, Investor Relations

Thank you, and good morning. Welcome to K12’s fiscal 2014 earnings conference call. Before we begin, I would like to remind you that in addition to historical information certain comments made during this conference call maybe considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and should be considered in conjunction with cautionary statements contained in our earnings release and the company’s periodic filings with the SEC.

Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements.

In addition, this conference call contains time-sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements.

For further information concerning risks and uncertainties that could materially affect financial and operational performance and results, please refer to our reports filed with the SEC, including without limitation, cautionary statements made in K12’s 2014 annual report on Form 10-K. These filings can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing financial results in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, we will discuss certain information that is considered non-GAAP financial information.

A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. Today’s call is open to the public and is being webcast. The call will be available for replay on our website for 30 days.

With me on today’s call is Nate Davis, Chief Executive Officer and Chairman; Tim Murray, President and Chief Operating Officer; and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have.

I would like to now turn the call over to Nate. Nate?

Nate Davis – Chairman and CEO

Good morning, everyone. Thanks for joining us on the call today. I am pleased to say that we ended fiscal year 2014 with solid results, also the quarter and full year. Our results met the guidance we have provided.

Revenue for the year was $919.6 million, increasing 8.4% year-over-year, our operating income excluding the charges recorded for the second quarter was $55.1 million, increasing 20.6% year-over-year and our capital expenditures were $73.5 million, slightly below the $75 million we invested the prior year. As I said last quarter, our financial performance this year is a direct result of the disciplined we have instilled in the assignment of resources.

Regarding operational performance, the entire organization is very committed to our core focus on academic outcomes. Our investment philosophy over the next couple years is to drive operational excellence in academics, with well-placed expenditures in three key areas, as well as key investments in product to serve the growing market of online programs and public school districts.

So the three areas are, first, we will invest in the effectiveness of our school workforce. We are expanding our training and professional and development programs for our teachers and we recently established a new program to better develop our local school leaders what we call hit the school. We will seek to provide more teachers and more teacher coaches as well.

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K12's CEO Discusses F3Q 2014 Results – Earnings Call Transcript

Apr. 29, 2014 2:44 PM ET | About: LRN

K12 Inc. (LRN) F3Q 2014 Earnings Conference Call April 29, 2014 8:30 AM ET

Operator

Good day, ladies and gentlemen and welcome to the K12 Third Quarter Earnings Conference Call. My name is Wanda, and I will be your coordinator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host, Mr. Mike Kraft, President of Investor Relations. Please proceed sir.

Mike Kraft – Vice President, Investor Relations

Thank you, and good morning. Welcome to K12’s third quarter fiscal 2014 earnings conference call. Before we begin, the company would like to remind you that the statements made during this conference call that are not historical facts maybe considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially early from those expressed or implied. In addition, this conference call contains time-sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements.

For further information concerning issues that could materially affect financial performance related to forward-looking statements, please refer to our filings with the SEC. These files can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing results in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. This call is open to the public and is being webcast. The call will be available for replay on our website for 60 days.

With me on today’s call is Nate Davis, Chief Executive Officer and Chairman; Tim Murray, President and Chief Operating Officer; and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have. I’d like to turn the call over to Nate. Nate?

Nate Davis – Chairman and Chief Executive Officer

Good morning, everyone and thanks for joining us on the call today. As you saw in our release this morning, we delivered solid results for the third quarter. Revenue was $235.2 million increasing 7.9% year-over-year and our operating income was $27.4 million increasing 41.2% year-over-year. Both revenue and operating income are well within the line, in line with the guidance that we provided last quarter.

This performance is a result of our strategy that were better balanced between growth and profitability. To get this balance we need to be still more disciplined in the assignment of resources, but I want to be clear that we will continue to invest in the content, systems and tool as our students and teachers need. We won’t slow down our investment in a better curriculum and better systems. Going forward, we believe our growth will come from increasing enrollment in our current schools, developing new counties as we announced last quarter with the two new public charter schools in Florida and by opening new schools within our current state footprint. While I also believe we will see growth in new states, it will not be at the pace you have seen in previous years.

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K12 Inc. Reports Second Quarter Fiscal 2014 With Revenue of $223.9 Million – MarketWatch

press release

Feb. 4, 2014, 6:30 a.m. EST

K12 Inc. Reports Second Quarter Fiscal 2014 With Revenue of $223.9 Million

HERNDON, Va., Feb 04, 2014 (GLOBE NEWSWIRE via COMTEX) –K12 Inc. LRN -4.83% , a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the second fiscal quarter ended December 31, 2013. Financial measures are provided on a GAAP basis, followed by a summary of results excluding the impact of specific charges which had a significant impact on second quarter results.

Financial Highlights for the Three Months Ended December 31, 2013 (Second Quarter Fiscal Year 2014)

– Revenues for the second quarter of FY 2014 increased 8.7% from the prior year to $223.9 million.

– EBITDA, a non-GAAP measure (see reconciliation below), for the second quarter of FY 2014 was $25.6 million, compared to $32.5 million from the second quarter of FY 2013.

– Operating loss of $8.9 million compared to operating income of $16.3 million in the second quarter of FY 2013.

– Net loss attributable to common stockholders of $3.7 million, compared to net income of $9.5 million from second quarter of FY 2013.

– Diluted net loss attributable to common stockholders per share was $0.09.

During the quarter ended December 31, 2013, the Company incurred the following charges, totaling $32.2 million including $4.4 million in cash charges.

– Additional reserve for excess inventory and accelerated depreciation on software, products and computer hardware of $18.6 million.

– Accelerated amortization of trade names in our Institutional business of $5.2 million.

– Severance costs associated with the departure of Ron Packard, K12’s former CEO, and a modest workforce reduction enacted primarily at K12 headquarters, collectively $7.4 million.

– The Company announced its intent to form a new company which K12 will contribute assets and its partners will contribute cash. Other charges and expenses of $1.0 million included costs related to the formation of this new company.

Excluding the impact of the aforementioned charges, for the three months ended December 31, 2013 (see additional tables below).

EBITDA would have increased to $40.2 million, a 23.7% increase compared to the $32.5 million from the second quarter of FY 2013.

– Operating income would have increased to $23.3 million, a 42.9% increase compared to operating income of $16.3 million in the second quarter of FY 2013.

– Net income attributable to common and Series A stockholders would have increased to $14.3 million, a 50.5% increase compared to net income of $9.5 million in the second quarter of FY 2013.

– Diluted net income attributable to common stockholders per share would have increased to $0.36 as compared to the $0.24 in the prior year.

Financial Highlights for the Six Months Ended December 31, 2013

– Revenues for the six months ended December 31, 2013 increased 5.9% to $452.3 million.

– EBITDA, a non-GAAP measure (see reconciliation below), was $34.1 million, compared to $56.8 million from the first six months of FY 2013.

– Operating loss of $17.4 million compared to operating income of $24.9 million for the first six months of FY 2013.

– Net loss attributable to common and Series A stockholders of $8.7 million, compared to net income of $13.9 million for the first six months of FY 2013.

– Diluted net loss attributable to common stockholders per share was $0.22, which includes the pro rata effect of the Series A Special shares conversion to commons shares on September 3, 2013.

Excluding the impact of the aforementioned charges, for the six months ended December 31, 2013

EBITDA would have been $48.6 million compared to $56.8 million for the first six months of FY 2013.

– Operating income would have been $14.9 million compared to operating income of $24.9 million for the first six months of FY 2013.

– Net income attributable to common and Series A stockholders would have been $9.2 million compared to net income of $13.9 million for the first six months of FY 2013.

– Diluted net income attributable to common stockholders per share would have been $0.24, which includes the pro rata effect of the Series A Special shares conversion to common shares on September 3, 2013.

Comments from Management

“We continue to be focused on our primary mission to provide an individualized and effective educational experience for our students,” said Nate Davis, Chairman and Chief Executive Officer. “This quarter we continued to invest in new content, programs, and infrastructure while improving internal operating efficiency. Our Managed Schools are now in the middle of the school year using many of the new educational programs we put in place this year which we believe will improve educational outcomes for all engaged families,” added Davis.

Cash, Capital Expenditures and Capital Leases

As of December 31, 2013, the Company had cash and cash equivalents of $162.9 million, a decrease of $18.6 million from the $181.5 million reported at June 30, 2013.

Capital expenditures for the six months ended December 31, 2013 were $23.5 million, a decrease of $2.3 million from the prior year’s first six months, and was comprised of:

– $5.3 million for property and equipment,

– $10.6 million for capitalized software development, and

– $7.6 million for capitalized curriculum.

Capital leases financed additional purchases of $17.3 million during the six months ended December 31, 2013, primarily for student computers.

Share Buyback

On November 7, 2013 K12 announced the Board of Directors had authorized the repurchase of up to $75.0 million of the Company’s outstanding common stock. For the three months ended December 31, 2013, the Company repurchased 284,200 shares of its common stock at a weighted average purchase price of $20.72 per share for a total cost of $5.9 million. The Company has $69.1 million remaining available on its share repurchase authorization. Future purchases under this buyback would be dependent upon business and market conditions and other factors.

Revenue and Enrollment Data

Revenue

The following table sets forth the Company’s revenues – Managed Public Schools (turn-key management services provided to public schools), Institutional Sales (educational products and services provided to school districts, public schools and other educational institutions that it does not manage), and International and Private Pay Schools (private schools for which it charges student tuition and makes direct consumer sales) – for the periods indicated:

                                              Three Months Ended December 31, Change 2013 / 2012  Six Months Ended December 31, Change 2013 / 2012        ($ in thousands)                      2013            2012            $         %         2013           2012           $         %        Managed Public Schools                $ 195,265       $ 177,541       $ 17,724  10.0      $ 392,208      $ 365,302      $ 26,906  7.4        Institutional Sales                   16,582          18,089          (1,507)   (8.3)     36,291         40,061         (3,770)   (9.4)        International and Private Pay Schools 12,072          10,398          1,674     16.1      23,786         21,761         2,025     9.3        Total                                 $ 223,919       $ 206,028       $ 17,891  8.7%      $ 452,285      $ 427,124      $ 25,161  5.9%        

Enrollment Data

The following table sets forth average enrollment data for students in Managed Public Schools and total enrollment data for students in the International and Private Pay Schools for the periods indicated. These figures exclude enrollments from classroom pilot programs and consumer programs.

                                              Three Months Ended December 31,                             Six Months Ended December 31,                                              2013           2012           Change         Change %       2013           2012           Change         Change %        Managed Public Schools        Average Student Enrollments *         125,053        119,132        5,921          5.0%           125,927        119,831        6,096          5.1%        International and Private Pay Schools        Total Student Enrollments             4,135          4,403          (268)          (6.1%)         17,419         17,399         20             0.1%        Total Semester Course Enrollments     12,815         12,138         677            5.6%           50,442         48,170         2,272          4.7%        * The Managed Public Schools average student enrollments includes some enrollments for which we may receive no public funding.        

Third Quarter Outlook

The Company is forecasting the following for the third quarter of FY 2014, excluding the impact of closing our agreement to create a new company as announced on January 7, 2014:

– Revenue in the range of $225 million to $235 million.

– Operating income in the range of $23 million to $27 million.

– Capital expenditures, which includes curriculum and software development, computers and infrastructure, of $15 million to $20 million.

Special Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,” “likely,” “may,” “opportunity,” “potential,” “projects,” “will,” “expects,” “plans,” “intends” and similar expressions to identify forward looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: our potential inability to further develop, maintain and enhance our products and brands; the reduction of per pupil funding amounts at the schools we serve; reputation harm resulting from poor performance or misconduct by operators in any school in our industry and in any school in which we operate; challenges from virtual public school or hybrid school opponents; failure of the schools we serve to comply with regulations resulting in a loss of funding or an obligation to repay funds previously received; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts with schools due to a loss of authorizing charter; failure to enter into new contracts or renew existing contracts with schools; risks associated with entering into and executing mergers, acquisitions and joint ventures; failure to successfully integrate mergers, acquisitions and joint ventures; inability to recruit, train and retain quality teachers and employees; uncertainty regarding our ability to protect our proprietary technologies; risks of new, changing and competitive technologies; increased competition in our industry; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of February 4, 2014, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Conference Call

The Company will discuss its second quarter FY2014 financial results during a conference call scheduled for Tuesday, February 4, 2014 at 8:30 a.m. eastern time (ET).

The conference call will be webcast and available on the K web site at www.k12.com through the Investor Relations link. Please access the web site at least 15 minutes prior to the start of the call to register and download and install any necessary software.

To participate in the live call, investors and analysts should dial (866) 318-8615 (domestic) or (617) 399-5134 at 8:15 a.m. (ET). The participant pass code is 35460461. A replay of the call will be available starting on February 4, 2014 at 12:30 p.m., through March 4, 2014, at (888) 286-8010 (domestic) or (617) 801-6888 (international) pass code 32473353. It will also be archived at www.k12.com in the Investor Relations section for 60 days.

Financial Statements

The financial statements set forth below are not the complete set of K12 Inc.’s financial statements for the three months and six months ended December 31, 2013, and are presented below without footnotes. Readers are encouraged to obtain and carefully review K12 Inc.’s Form 10-Q for the quarter ended December 31, 2013, including all financial statements contained therein and the footnotes thereto, filed with the SEC. The Form 10-Q may be retrieved from the SEC’s website at www.sec.gov or from K12 Inc.’s website at www.k12.com.

        K12 INC.        UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                               December 31,            June 30,                                                                                                                                                                                                               2013                    2013                                                                                                                                                                                                               (In thousands, except share and per share data)        ASSETS        Current assets        Cash and cash equivalents                                                                                                                                                                              $ 162,889               $ 181,480        Accounts receivable, net of allowance of $3,082 and $2,560 at December 31, 2013 and June 30, 2013, respectively                                                                                        254,350                 186,459        Inventories, net                                                                                                                                                                                       23,363                  44,395        Current portion of deferred tax asset                                                                                                                                                                  18,571                  11,368        Prepaid expenses                                                                                                                                                                                       9,090                   10,331        Other current assets                                                                                                                                                                                   27,368                  23,916        Total current assets                                                                                                                                                                                   495,631                 457,949        Property and equipment, net                                                                                                                                                                            56,262                  56,142        Capitalized software, net                                                                                                                                                                              42,738                  43,504        Capitalized curriculum development costs, net                                                                                                                                                          61,824                  64,599        Intangible assets, net                                                                                                                                                                                 25,436                  32,139        Goodwill                                                                                                                                                                                               61,571                  61,413        Deposits and other assets                                                                                                                                                                              5,425                   3,150        Total assets                                                                                                                                                                                           $ 748,887               $ 718,896        LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY        Current liabilities        Current portion of capital lease obligations                                                                                                                                                           $ 22,216                $ 19,395        Current portion of note payable                                                                                                                                                                        –                      390        Accounts payable                                                                                                                                                                                       16,538                  21,838        Accrued liabilities                                                                                                                                                                                    14,585                  17,027        Accrued compensation and benefits                                                                                                                                                                      20,541                  21,970        Deferred revenue                                                                                                                                                                                       61,160                  28,567        Total current liabilities                                                                                                                                                                              135,040                 109,187        Capital lease obligations, net of current portion                                                                                                                                                      19,430                  16,107        Deferred rent, net of current portion                                                                                                                                                                  8,796                   8,833        Deferred tax liability                                                                                                                                                                                 33,584                  33,299        Other long-term liabilities                                                                                                                                                                            2,729                   2,512        Total liabilities                                                                                                                                                                                      199,579                 169,938        Commitments and contingencies                                                                                                                                                                          –                      –        Redeemable noncontrolling interest                                                                                                                                                                     15,200                  15,200        Equity:        K12 Inc. stockholders' equity        Common stock, par value $0.0001; 100,000,000 shares authorized; 41,111,074 and 37,440,662 shares issued and 40,826,874 and 37,440,662 outstanding		 at December 31, 2013 and June 30, 2013, respectively 4                       4        Additional paid-in capital                                                                                                                                                                             626,421                 548,390        Series A Special Stock, par value $0.0001; 2,750,000 shares authorized, zero and 2,750,000 issued and outstanding at December 31, 2013 and June 30,		 2013, respectively                                 –                      63,112        Accumulated other comprehensive loss                                                                                                                                                                   (101)                   (294)        Accumulated deficit                                                                                                                                                                                    (89,755)                (81,050)        Treasury stock of 284,200 and zero shares at cost at December 31, 2013 and June 30, 2013, respectively                                                                                                 (5,883)                 –        Total K12 Inc. stockholders' equity                                                                                                                                                                    530,686                 530,162        Noncontrolling interest                                                                                                                                                                                3,422                   3,596        Total equity                                                                                                                                                                                           534,108                 533,758        Total liabilities, redeemable noncontrolling interest and equity                                                                                                                                       $ 748,887               $ 718,896        
                K12 INC.        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                         Three Months Ended      Six Months Ended                                                                                                                                                         December 31,            December 31,                                                                                                                                                         2013        2012        2013        2012                                                                                                                                                         (In thousands, except share and per share data)        Revenues                                                                                                                                         $ 223,919   $ 206,028   $ 452,285   $ 427,124        Cost and expenses        Instructional costs and services                                                                                                                 153,672     122,799     286,574     241,446        Selling, administrative, and other operating expenses                                                                                            75,753      61,379      173,996     150,998        Product development expenses                                                                                                                     3,402       5,578       9,086       9,746        Total costs and expenses                                                                                                                         232,827     189,756     469,656     402,190        Income (loss) from operations                                                                                                                    (8,908)     16,272      (17,371)    24,934        Interest expense, net                                                                                                                            (28)        (272)       (112)       (501)        Income (loss) before income tax expense and noncontrolling interest                                                                              (8,936)     16,000      (17,483)    24,433        Income tax (expense) benefit                                                                                                                     4,685       (6,680)     8,135       (10,569)        Net income (loss)                                                                                                                                (4,251)     9,320       (9,348)     13,864        Adjust net loss attributable to noncontrolling interest                                                                                          586         191         643         4        Net income (loss) attributable to common stockholders, including Series A stockholders                                                           $ (3,665)   $ 9,511     $ (8,705)   $ 13,868        Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013:        Basic and Diluted                                                                                                                                $ (0.09)    $ 0.24      $ (0.22)    $ 0.36        Weighted average shares used in computing per share amounts:        Basic and Diluted                                                                                                                                39,977,228  36,118,519  38,953,671  36,073,885        
                K12 INC.        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                 Six Months Ended December 31,                                                                                                 2013                2012                                                                                                 (In thousands)        Cash flows from operating activities        Net income (loss)                                                                        $ (9,348)           $ 13,864        Adjustments to reconcile net income (loss) to net cash provided by operating activities:        Depreciation and amortization expense                                                    51,474              31,894        Stock-based compensation expense                                                         12,210              5,780        Excess tax benefit from stock-based compensation                                         1,216               (2,532)        Deferred income taxes                                                                    (8,134)             9,482        Provision for doubtful accounts                                                          718                 784        Provision for excess and obsolete inventory                                              4,124               200        Provision (benefit) for student computer shrinkage and obsolescence                      (451)               502        Changes in assets and liabilities:        Accounts receivable                                                                      (68,785)            (63,338)        Inventories                                                                              16,908              8,183        Prepaid expenses                                                                         1,257               (8,630)        Other current assets                                                                     (3,508)             (1,402)        Deposits and other assets                                                                (227)               (217)        Accounts payable                                                                         (5,310)             (3,838)        Accrued liabilities                                                                      (2,484)             8,403        Accrued compensation and benefits                                                        (1,435)             (4,058)        Deferred revenue                                                                         32,149              33,529        Release of restricted cash                                                               –                  1,501        Deferred rent and other long term liabilities                                            178                 1,945        Net cash provided by operating activities                                                20,552              32,052        Cash flows from investing activities        Purchase of property and equipment                                                       (5,329)             (4,524)        Capitalized software development costs                                                   (10,632)            (11,633)        Capitalized curriculum development costs                                                 (7,649)             (9,628)        Mortgage note to managed school partner                                                  (2,100)             –        Net cash used in investing activities                                                    (25,710)            (25,785)        Cash flows from financing activities        Repayments on capital lease obligations                                                  (11,145)            (9,851)        Repayments on note payable                                                               (390)               (785)        Proceeds from exercise of stock options                                                  7,617               607        Excess tax benefit from stock-based compensation                                         (1,217)             2,532        Purchase of treasury stock                                                               (5,883)             –        Repurchase of restricted stock for income tax withholding                                (3,223)             (801)        Net cash used in financing activities                                                    (14,241)            (8,298)        Effect of foreign exchange rate changes on cash and cash equivalents                     808                 571        Net change in cash and cash equivalents                                                  (18,591)            (1,460)        Cash and cash equivalents, beginning of period                                           181,480             144,652        Cash and cash equivalents, end of period                                                 $ 162,889           $ 143,192        

Non-GAAP Financial Measures

EBITDA

EBITDA consists of net income (loss), plus net interest expense, plus income tax expense, minus income tax benefit, plus depreciation and amortization and non-controlling interest charges. Interest expense primarily consists of interest expense for capital leases. We use EBITDA in addition to income (loss) from operations and net income (loss) as a measure of operating performance. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, net income (loss) as determined in accordance with GAAP. Not all companies use identical calculations for EBITDA, therefore our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as capital expenditures, tax payments, interest payments, or other working capital.

We believe EBITDA is useful to an investor in evaluating our operating performance because it is widely used to measure a company’s operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of our capital structure and the method by which assets were acquired. Our management uses EBITDA:

– as an additional measurement of operating performance because it assists us in comparing our performance on a consistent basis;

– in presentations to the members of our Board of Directors to enable our Board to have the same measurement basis of operating performance as is used by management to compare our current operating results with corresponding prior periods and with the results of other companies in our industry.

The following tables provide a reconciliation of net income (loss) to EBITDA.

                                      Three Months Ended December 31, Six Months Ended December 31,                                      2013            2012            2013           2012                                      (In thousands)                  (In thousands)        Net income (loss)-K12 Inc.    $ (3,665)       $ 9,511         $ (8,705)      $ 13,868        Interest expense, net         28              272             112            501        Income tax expense (benefit)  (4,685)         6,680           (8,135)        10,569        Depreciation and amortization 34,525          16,235          51,474         31,894        Noncontrolling interest       (586)           (191)           (643)          (4)        EBITDA                        $ 25,617        $ 32,507        $ 34,103       $ 56,828        

Additional Information

The following tables are provided as reference only and are related to the aforementioned $32.2 million charges incurred in the second quarter of FY 2014.

                                                                                                                                                         Three Months Ended December 31,                                                                                                                                                         Reported Results Specific Q2 Charges Results Excluding Charges Reported Results Results Excluding Charges                                                                                                                                                         (In thousands, except share and per share data)                (% of Revenue)        Revenues                                                                                                                                         $ 223,919        $ –                $ 223,919                 100.0%           100.0%        Cost and expenses        Instructional costs and services                                                                                                                 153,672          19,238              134,434                   68.6%            60.0%        Selling, administrative, and other operating expenses                                                                                            75,753           13,009              62,744                    33.8%            28.0%        Product development expenses                                                                                                                     3,402            –                  3,402                     1.5%             1.5%        Total costs and expenses                                                                                                                         232,827          32,247              200,580                   104.0%           89.6%        Income (loss) from operations                                                                                                                    (8,908)          (32,247)            23,339                    (4.0%)           10.4%        Interest expense, net                                                                                                                            (28)             –                  (28)                      (0.0%)           (0.0%)        Income (loss) before income tax expense and noncontrolling interest                                                                              (8,936)          (32,247)            23,311                    (4.0%)           10.4%        Income tax (expense) benefit                                                                                                                     4,685            14,243              (9,558)                   2.1%             (4.3%)        Net income (loss)                                                                                                                                (4,251)          (18,004)            13,753                    (1.9%)           6.1%        Adjust net loss attributable to noncontrolling interest                                                                                          586              –                  586                       0.3%             0.3%        Net income (loss) attributable to common stockholders, including Series A stockholders                                                           $ (3,665)        $ (18,004)          $ 14,339                  (1.6%)           6.4%        Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013:        Basic and Diluted                                                                                                                                $ (0.09)         $ (0.45)            $ 0.36        Weighted average shares used in computing per share amounts:        Basic and Diluted                                                                                                                                39,977,228       39,977,228          39,977,228                                                                                                                                                         Six Months Ended December 31,                                                                                                                                                         Reported Results Specific Q2 Charges Results Excluding Charges Reported Results Results Excluding Charges                                                                                                                                                         (In thousands, except share and per share data)                (% of Revenue)        Revenues                                                                                                                                         $ 452,285        $ –                $ 452,285                 100.0%           100.0%        Cost and expenses        Instructional costs and services                                                                                                                 286,574          19,238              267,336                   63.4%            59.1%        Selling, administrative, and other operating expenses                                                                                            173,996          13,009              160,987                   38.4%            35.6%        Product development expenses                                                                                                                     9,086            –                  9,086                     2.0%             2.0%        Total costs and expenses                                                                                                                         469,656          32,247              437,409                   103.8%           96.7%        Income (loss) from operations                                                                                                                    (17,371)         (32,247)            14,876                    (3.8%)           3.3%        Interest expense, net                                                                                                                            (112)            –                  (112)                     (0.0%)           (0.0%)        Income (loss) before income tax expense and noncontrolling interest                                                                              (17,483)         (32,247)            14,764                    3.8%             3.3%        Income tax (expense) benefit                                                                                                                     8,135            14,336              (6,201)                   1.8%             (1.4%)        Net income (loss)                                                                                                                                (9,348)          (17,911)            8,563                     2.0%             1.9%        Adjust net loss attributable to noncontrolling interest                                                                                          643              –                  643                       0.1%             0.1%        Net income (loss) attributable to common stockholders, including Series A stockholders                                                           $ (8,705)        $ (17,911)          $ 9,206                   (1.9%)           2.0%        Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013:        Basic and Diluted                                                                                                                                $ (0.22)         $ (0.46)            $ 0.24        Weighted average shares used in computing per share amounts:        Basic and Diluted                                                                                                                                38,953,671       38,953,671          38,953,671        

About K12 Inc.

K12 Inc. LRN -4.83% is leading the transformation to individualized learning as the nation’s foremost provider of technology-powered online solutions for students in pre-kindergarten through high school. K12 has worked with over 2,000 school districts and has delivered more than four million courses over the past decade. K12 provides curricula, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and families. K12’s curriculum is rooted in decades of research combined with 21st-century technology by cognitive scientists, interactive designers and teachers. K12’s portfolio of more than 550 unique courses and titles–the most extensive in the technology-based education industry–covers every core subject and four academic levels for high school including Honors and AP. K12 offers credit recovery courses, career-building electives, remediation support, six world languages and a deep STEM offering. The K12program is offered through K12partner public schools in approximately two-thirds of the states and the District of Columbia, and through private schools serving students in all 50 states and more than 100 countries. More information can be found at K12.com.

        CONTACT: K12 Inc.                 Investor Contact:                 Mike Kraft, 571-353-7778                 VP Investor Relations                 mkraft@k12.com                 or                 Press Contact:                 Jeff Kwitowski, 703-483-7281                 SVP Corporate Communications                 jkwitowski@k12.com        

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K12 Management Discusses Q3 2013 Results – Earnings Call Transcript

May 3 2013, 15:10 | about: LRN

K12 (LRN ) Q3 2013 Earnings Call May 3, 2013 8:30 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Q3 2013 K12 Inc. Earnings Conference Call. My name is Catherine, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Christi Parker, Vice President of Investor Relations. Please proceed, ma’am.

Christina L. Parker Vice President of Investor Relations

Thank you, and good morning. Welcome to K12’s Third Quarter Fiscal 2013 Earnings Conference Call. Before we begin, the company would like to remind you that statements made during this conference call that are not historical facts may be considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied.

In addition, this conference call contains time-sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements.

For further information concerning issues that could materially affect financial performance related to forward-looking statements, please refer to our filings with the SEC. These filings can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing results in accordance with generally accepted accounting principles in the U.S., or GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. This call is open to the public and is being webcast. The call will be available for replay on our website for 60 days.

With me on today’s call is Nate Davis, Executive Chairman; Ron Packard, Founder and Chief Executive Officer; Tim Murray, President and Chief Operating Officer; and Harry Hawks, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have. I would now like to turn the call over to Nate.

Nathaniel Alonzo Davis – Executive Chairman, Member of Audit Committee and Member of Compensation Committee

Good morning. Thank you for joining us today. Since joining the executive team, I’ve gained a deep perspective and understanding of our strengths and our challenges as a company leading the transformation to online education solutions for students in Pre-K to high school. As the industry leader, K12 often takes the brunt of assaults for online education as our integrity and our effectiveness are sometimes questioned. This is to be expected. But I’m very proud of our employees, their resolve and all that we accomplished even in the face of these challenges. This quarter highlighted 2 important examples of the real truth about K12 and what we stand for and what we believe in.

In early March, we announced that after reviewing more than 1 million pages of discovery, the lead plaintiff in a class-action lawsuit against the company, voluntarily and permanently dismissed the claims it made about the academic performance and educational quality of K12 Managed Schools, a very powerful indication [ph] of the company. And just last week, the draft reported the Florida Department of Education’s Office of Inspector General conclusively established that the primary allegations made by Seminole County Public Schools were unsubstantiated. K12 did not implement a system to intentionally avoid Florida’s teacher certification requirements. And that report found only a few record-keeping and reporting errors. We’ve already improved and implemented changes in our student data management system and teacher-training procedures to make improvements.