Strayer Education, Inc. STRA
Q4 2010 Earnings Call Transcript

Operator: Andrew Steinerman, JPMorgan.

Andrew Steinerman - JPMorgan: In the first quarter the operating margin depression, could you go over the drivers to that and could you also mention if there was a tuition increase January of this year?

Robert S. Silberman - Chairman and CEO: Yes, Andrew there was a tuition increase January 1, roughly 5%. The drivers for the most part are based on lower revenue. We have with only 4% enrollment growth, 5% tuition increase, a lower revenue growth then we have in the past. We do have increased expenses associated with both the new campuses and just the number of things that we do across the university hiring faculty, things of that nature. So, in thinking about the various expense categories, similar to what we had in the fourth quarter with lower enrolment lower revenue, you're going to see a lot of that margin compression in the instruction and education line, I mean, you just have less students per class. We're not canceling very many classes and we just run them with fewer students. Then the other margin compression is shared pretty evenly across both general and administrative and the marketing admissions line.

Andrew Steinerman - JPMorgan: Is there any stepped up spending on branding or anything like that?

Robert S. Silberman - Chairman and CEO: No, it's pretty consistent with our normal pattern.

Operator: Jeffrey Silber, BMO Capital Markets.

Jeffrey Silber - BMO Capital Markets: On your last call, you had given us I guess different scenarios for the 2011 business outlook. I just want to make sure that nothing's changed from that call?

Robert S. Silberman - Chairman and CEO: Nothing at all.

Jeffrey Silber - BMO Capital Markets: Just drilling down a little but into some of the enrollment numbers, and I asked this question last quarter but I'm going to ask it again, I know your students have an option where they take class, whether it's in the class room or online. But if you look at your mature campuses, we seem to be saying a steeper decline year-over-year in your online students than your classroom students. Is there anything going on there that we should be aware of?

Robert S. Silberman - Chairman and CEO: Well, one thing to bear in mind is they are not separate students. There are choices that the student makes in that quarter. For instance, over a multi-year attendance at the university, the same student who is enrolled in the mature campus, one quarter would be counted as online student at that campus and the next quarter they decide to take classes in the classroom and would be counted as a classroom student. We sort of think about it similar to how you think about your bank. If you are a customer of a bank and you use the ATM or you use the bank branch to access the bank, you haven't really changed your interaction with the bank. It's just you've changed the way you access it at that point in time. We do have some students who live near the campus are enrolled at that campus they are serviced by that campus and take all other classes for their entire career online. Not very many of those, but we have some. So, I don't get too granular with regard to this data. We provided to you to just get a sense of asset utilization. I'm not sure that it's definitional in terms of the type of student that we attract or what that ongoing profiles going to look like. With the possible exception that I do think that there is more stickiness, there is more identification, more cohesion for a student who is in the class room. Those students who access you completely online, you just have a little less interaction with. So, in a period of uncertainty or period of some questioning that might be a less robust relationship. I wouldn't read too much into that because as I said, those numbers can bonus around quarter-to-quarter and it's really access choice that's made by the student for that particular quarter.