K12 Inc. – Q2 Revenues Increase 29 percent to $166.5 million

K12 Inc. (NYSE: LRN), a leading provider of proprietary, technology-based curriculum, software and education services creating individualized learning for students primarily in kindergarten through 12th grade, today announced its results for the second fiscal quarter ended December 31, 2011.

Summary Financial Results

• Revenues for second quarter FY 2012 grew to $166.5 million, an increase of $37.5 million or 29.1 percent over the prior year, due to organic revenue growth in our core business of providing curriculum, technology and management services to K-12 schools and to acquisitions completed in the past year. These acquisitions include the American Education Company, International School of Berne and certain K-12 assets of Kaplan Virtual Education (“KVE”), which together added $10.4 million of the growth. Revenue was negatively impacted in the period by adjustments related to potential state funding reductions totaling over $8 million.
• EBITDA for second quarter FY 2012 (see reconciliation below) was $21.8 million, a decrease of $2.5 million or 10.3 percent as compared to $24.3 million for the prior year, reflecting the noted revenue adjustments and increased instructional and general and administrative expenses to support the growth in the core business. The primary drivers of this increase in instructional and general and administrative expenses were: personnel costs, including salaries, benefits and incentive compensation, and professional fees including student support center costs, and the ERP and CRM implementations. The professional fees increases were partially offset by lower transaction and merger integration expenses in the quarter. The capitalization rate of spending on infrastructure, product development and software development was lower this period due to timing and nature of the projects, resulting in higher current period expense.
• Operating income was $7.1 million, a decrease of $7.1 million or 50.0 percent as compared to $14.2 million for the prior year, reflecting the factors described above plus an increase of $4.6 million in depreciation and amortization due to new product launches, new system implementations, systems releases, and transaction related purchase accounting.
• Net income to common and Series A shareholders was $4.2 million as compared to $7.8 million in the prior year, a decrease of 46.2 percent, reflecting the factors described above. The decrease in net income was primarily attributable to increased instructional costs, general and administrative costs and product development costs offsetting the increase in revenues year over year.
• Diluted earnings per share were $0.11 as compared to $0.23 in the prior year.

More Posts by this author

• 
  Stocks End Marginally Higher as Investors Await Greek Debt Deal
• 
  Stocks Struggle for Direction
• 
  Gold and Silver Prices in Red on Greek Debt Worries
• 
  Stocks Turn Lower in Mid-Day Trading
• 
  Opnext, Inc. – Pleased with the progress made in the flood recovery process this quarter
• 
  Vitesse Semiconductor Corp. – New products will begin to make a larger contribution to revenue
• 
  Cerner Corporation – Delivered outstanding results in Q4 and for the year 2011

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.