Seeking Alpha

Roger Lindsley's  Instablog

Roger Lindsley
Send Message
View Roger Lindsley's Instablogs on:
  • Defined?: Applications, Enrollments, Starts - CECO Speak

    Scott Steffey CEO of CECO outlined his new enrollment reporting communication strategy in the Q2 2013 conference call with the following statement:

    "Let me just pause for a moment and let you all know about a nomenclature I make that I've -- a change that I'm making. In the past, the company has referred to enrolls in a way that I prefer to and refer to and use the term applicants. You will notice in the MDA of the 10-Q that where we had the term enrolls, I've put in, in parenthesis, applications or applicants. That's what I'm going to refer to on a going-forward basis instead of enrolls and what will the word enrollments is going to refer to new starts, and then total enrollments will refer to total population."

    This deserves some clarification for investment professionals who may not immediately know the difference between an "applicant", "enrollment", and a "Start".

    If a person who views an online ad clicks on that ad and asks for more information, this actually partially populates an application-for-admission form at a CECO institution. This might now be considered an "Applicant".

    In the past if that person completed the application form, including remitting application fees, that was considered an "Enrollment".

    A "Start" indicates that a student successfully participates in the 21 day readiness program by doing assigned coursework on time and earning passing grades.

    Steffey would contribute to clarity if he stated more clearly what an "Applicant" is. Is an applicant a person who has completed the entire enrollment process and has a "Start" date pending, or are applicants anyone who clicks on a form and enters any information?

    Total Student Population is the metric to watch. I would tend to discount "applicants" as this metric has been compromised.

    Students do not pay tuition until they have "started", until that point they are sunk cost.

    For a year's worth of quarterly reports the overall decline in student enrollments and student populations has been very steady and unabated. For the last 2 quarterly reports CFO, Colleen M. O'Sullivan, has iterated guidance that 2013's total student population would be an overall 2% decline from 2012. In actuality the decline has been and seems to be continuing toward around 25%. No such guidance was reaffirmed in this call.

    In fact the Q&A ended when Peter P. Appert - Piper Jaffray Companies, Research Division asked "... Is your expectation that starts for the company are going to be positive by the end of this year?"

    And Steffey replied "...I'm not forecasting anything. ..."

    At least we have an end to misleading statements from the CFO, but now we may have less clarity with the redefinition of the "applicants" metric.

    This matters because the continued trend will demand "strategic" measures very soon to maintain cash flow to meet regulatory financial requirements. In Steffey's formal closing remarks:

    "Lastly, I want to mention that we continue to evaluate our options to access capital understanding that maintaining a sufficient financial responsibility ratio with the Department of Education is critical as we continue our turnaround strategy."

    For those who have followed this stock closely, the Q2 2013 report was by all indications a confirmation of an institution in crisis.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Aug 08 4:52 PM | Link | Comment!
  • CECO 2012 Net Income Growth, -3,112.81%


    Not sure why there hasn't been even more of a turn, CECO stock currently down ~35% from Feb 20 (Q4 2012 and full 2012 earnings announced Feb 28).

    In the Q&A section of the conference call, it seemed that CECO was projecting an enrollment decrease of 2% for 2013. This is a big break from the 23% decline of last year and the 18% decline in 2011. There was not information from the CFO about how this remarkable trend break would happen, nor insight on the timing.

    Investors who are timing their losses for their own balance sheet purposes may be running a risk by simply perusing the non-GAAP reports issued, from here things look considerably more risky to the downside.

    There have been considerable costs to closing campuses in 2012, but there was also a statement about continuing to examine performance of each school site of each brand, leaving the door open to further announcements of closures and teachouts.

    I hold no current financial positions in CECO or the for-profit education sector.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: CECO
    Mar 05 5:49 AM | Link | Comment!
Full index of posts »
Latest Followers


  • $CECO Significant moves to the downside ahead of the Quarterly. Investors who do not have a rational explanation might want to take a cue
    Apr 23, 2013
More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.