Zovio Inc
Q4 2014 Earnings Call Transcript

Published: 10 Mar 2015

[Operator:]

Good morning and welcome to Bridgepoint Education Fourth Quarter 2014 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Paul Goodson, Associate Vice President and Investor Relations for Bridgepoint Education. Please go ahead, Paul.

[Paul Goodson:]

Thank you, Mike, and good morning, everyone. Bridgepoint Education's fourth quarter 2014 earnings release was issued earlier this morning and is posted on the company's website at www.bridgepointeducation.com. Joining me on the call today are Andrew Clark, Chief Executive Officer; Dr. Jane McAuliffe, Chief Academic Officer; and Dan Devine, Chief Financial Officer. Before we begin, we would like to remind you that some of the statements we make today may be considered forward-looking, including statements regarding enrollments, student persistence and graduation rates, bad debt, pending legal matters and other financial and related guidance, the impact of our student support efforts, our ability to manage regulatory metrics and commentary regarding 2015 and later. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual performance or results to differ materially, including the risk that new enrollments may not increase during 2015. Please note that these forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update these forward-looking statements in light of new information or future events, except to the extent required by applicable securities laws. Please refer to our SEC filings, including our year-end report on Form 10-K for the period ended December 31, 2014, to be filed with the SEC, as well as our earnings press release posted this morning, for a more detailed description of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the Investor Relations section of our website. At this time, it is my pleasure to introduce Bridgepoint Education's CEO, Andrew Clark.

[Andrew S. Clark:]

Thank you, Paul, and welcome to Bridgepoint Education's 2014 earnings call. After I discuss last year's performance, our Chief Academic Officer, Dr. Jane McAuliffe, will provide you with the results of our annual student and alumni survey; and then our CFO, Dan Devine will review our fourth quarter and full year 2014 results and key operating metrics. After Dan speaks, I'll offer my closing comments. I believe most of you know that over the past several years, Ashford University implemented numerous initiatives to ensure student preparedness, raise academic quality, enhance student and alumni outcomes and communicate Ashford's brand identity as the preferred means of attracting qualified students who will continue in their studies. Ashford's focus in 2014 was to continue implementing and refining these initiatives, while at the same time, rightsizing our head count and operational footprint to better reflect our current enrollment level. Overall in 2014, we saw a concrete evidence that our strategies, hard work and investments are paying off for students. Our efforts to improve student and educational quality have produced results and we attribute some of Ashford's strong inquiry and application flows to our brand recognition efforts. We associate both of these with higher quality students who retain longer and higher new enrollments at Ashford. Our brand building efforts have been especially effective with the Forbes School of Business at Ashford University. The surveys we have done, as well as Forbes strong, new enrollment growth, have shown that name recognition is a factor among a meaningful percentage of students in choosing the Forbes School. In 2014, better brand recognition helped increase the number of inquiries we received from organic channels. In addition, it also contributed to a reduction in our use of aggregator inquiries by a double-digit percentage, while still increasing the number of applications we received from this channel. The strong inquiry flow helped improve new enrollments in the last three quarters of 2014, including Q4. Normalizing for the fewer number of enrollment weeks in Q4 2014 compared to the year ago quarter, new enrollments were up in the mid-single digits on a percentage basis. The growth in the fourth quarter was similar to the mid-single digit new enrollment growth in the third quarter of 2014. New enrollments have been asked for four out of the past five quarters, as measured on a comparable basis. We've also had good results with retention. Over each of the past three quarters, we have reported to you the annual retention of students who are active in the year ago quarter, or who have graduated during that time. Now, for the fourth quarter of 2014, I'm pleased to report that this statistic was again up very meaningfully, reaching 65.1% in the quarter, a significant improvement of 330 basis points over the 61.8% retention in the fourth quarter of 2013. The retention improvement throughout 2014 reflects the success of the student preparedness and quality initiatives we have implemented. And now, our Chief Academic Officer, Dr. Jane McAuliffe, will provide you with the results of our students and our online surveys.

[Jane McAuliffe:]

Thank you, Andrew. We've previously shared with you some of our initiatives Ashford has taken to assure student preparedness, raise academic quality and improve student outcomes. These include our orientation program before entering the university, the Ashford promise during the first class, smaller class sizes and additional full time faculty and student advisors. We've also launched at least a half a dozen initiatives focusing on supporting graduate students and alumni. While we think these initiatives are exactly what's needed to better support our students and alumni, we are always interested in what our students in alumni think about their experience at Ashford. Now, for the fifth year running, I'm pleased to present to you the results of Ashford's annual alumni surveys, which are consistent with prior years and which we believe again demonstrates the University's success at delivering these important outcomes to Ashford graduate. The following results reflects more than 8,000 alumni who responded to our 2014 survey. Of the 78% of alumni who reported having previously attended a traditional institution, 92% feel the quality of education at Ashford is the same as or higher than other traditional college or university. 92% said they would recommend Ashford to others seeking their degree. 89% of our graduates indicated that they were satisfied or very satisfied with their Ashford experience. 89% of our alumni agree that earning their degree from Ashford gave them the confidence to pursue new job opportunities. And finally, 91% of alumni who responded to our 2014 survey agreed that earning their Ashford degree was worth the time commitment required to fulfill their educational goals. We also ask our alumni about how they view their return on their investment in their education as measured by their salaries before and after attending Ashford. Based on alumni survey responses reported in 2014 from our bachelor degree earners, we estimate that the average salary of these alumni is 13% greater than the average salary they were earning when they first enrolled at Ashford. For our graduate degree earners, we estimate the average salary of these alumni is 13.2% higher than their average salary upon first enrolling at Ashford. These survey results continued to reaffirm that an Ashford education is creating a positive return on investment for alumni, and we continued to be pleased with the value proposition offered by an Ashford degree and the benefit it is bringing to the lives of our alumni and their families. For the first time, since completing the transition to WASC, Ashford has been approved by its regional creditor to offer new degree program. During 2014, three new programs were approved at the masters level. Ashford is also actively in development on other new graduate and undergraduate degree programs that we believe will be in high demand. I would like to give you a feel from a very high level how Ashford's various colleges are performing as measured by new student demand. Looking at the percentage change in new student enrollments in 2014, compared to the prior year, the Forbes School of Business experienced the strongest demand followed by the College of Health, Human Services and Science, the College of Liberal Arts and the College of Education. University of the Rockies, also made important progress in 2014 at better serving the needs of its students. Recently, they announced the results of the Higher Learning Commission's reaffirmation visit which resulted in continued accreditation with the next three affirmation of accreditation in 2024 and 2025. I want to acknowledge the significant contributions from everyone on Rockies faculty and staff for their role in bringing about such positive inclusive and successful review process. Other significant accomplishments during 2014 include a successful move of the main campus to Denver and Colorado Springs and the launch of three new programs in 2014. In 2015, we expect other new programs to be launched as well. Now, I'd like to turn the call over to our Chief Financial Officer, Dan Devine, to review our financial and operating results.

[Daniel J. Devine:]

Thank you, Jane. Turning to the results for fiscal year 2014, revenue was $638.7 million, compared with $751.4 million for 2013. The decrease in revenue was primarily due to a decline in average enrollments of 15.4% and the fact that 2013 had one additional day of revenue partially offset by a 1.7% tuition increase implemented on April 1, 2014. As of December 31, 2014, total student enrollment decreased to 55,823 from 63,624 at December 31, 2013. For the year ended December 31, 2014, instructional costs and services were $321.3 million, or 50.3% of revenue, compared with $370.7 million, or 49.3% in the same period last year. The decrease in expense was primarily driven by lower compensation incentives, lower bad debt expense and lower instructor costs. These decreases were partially offset by higher facility support services costs throughout the year. Admissions advisory and marketing expenses for the year ended December 31, 2014 were $236.7 million or 37.1% of revenue, compared with $235.4 million, or 31.3% of revenue in the prior year. The increase as a percentage of revenue was primarily due to increased investment in branding and advertising expenses during the year, partially offset by lower compensation and benefit expenses. General and administrative expenses for the year ended December 31, 2014 were $66.4 million or 10.4% of revenue, compared with $76.9 million or 10.3% of revenue for the prior year. The decrease in expense was driven by the fact that G&A expenses in 2013 included a legal settlement of $9 million and by lower compensation and benefits and consulting fees in 2014. Included in our three main expense categories for the fiscal year 2014 is approximately $10.6 million related to stock-based compensation expense in the aggregate, compared with $13.9 million for the fiscal year 2013. For the year ended 2014, operating income decreased to $14.3 million from $68.5 million in the year ended 2013. Net income for the year ended December 31, 2014 was $9.7 million, or $0.21 per diluted share, compared with $45.9 million or $0.83 per diluted share for 2013. Net income was reduced by $14.1 million from write-offs in the fourth quarter associated with restructuring of lease agreements for unused office space and severance costs, which reduced EPS by $0.19. Fully diluted EPS is calculated based on a diluted share count of 46.5 million shares for the fiscal year 2014 and 55.5 million shares for the fiscal year 2013. Our effective tax rate for the year ended December 31, 2014 was 43.8%. As of December 31, 2014, we had cash, cash equivalents, restricted cash and investments of $356.5 million. The company generated $25.2 million of cash from operations for the year ended December 31, 2014, compared with $85.6 million for the same period in 2013. On December 31, 2014, our accounts receivable net of allowance for doubtful accounts was $21.3 million, which represents 13 days sales outstanding on a quarter-to-date basis, compared with 12.7 days sales outstanding at December 31, 2013. On an annual basis, our DSO was 12 for 2014, compared with 11 for 2013. Capital expenditures for the year ending December 31, 2014 were $11.4 million, compared with $14.8 million for the prior year. Moving to regulatory items. For the year ended December 31, 2014, Ashford University derived 83.4% of its revenues from Title IV funds calculated according to the Department of Education regulations. For the year ended December 31, 2014, University of Rockies derived 88.3% of its revenue from Title IV funds, also calculated under Department regulations. Our institutions have managed this metric effectively since our founding, and expect to continue to do so going forward. Now, I'll turn the call back over to Andrew for his closing comments.

[Andrew S. Clark:]

Thank you, Dan. We believe the changes we made in 2014 were positive for the long term health of the company. Building on these changes, we will focus on stabilizing, strengthening and growing our core business. Specifically, our priorities will be the following. First, continue to invest in a quality educational product that meets the needs of our students and produces strong learning outcomes. Second, continue to increase student retention and provide a student experience that differentiates our institutions. Third, better align our admissions, advisory and marketing expenses with the industry by increasing productivity, improving marketing efficiency and ensuring our organizational structure is properly aligned with our new enrollment growth. Fourth, accelerate new program development at both Ashford University and University of the Rockies with a priority on graduate and doctoral degree programs. And fifth, provide a level of stable and reliable cash generation and increase shareholder value. Based upon what we've experienced in 2014 and our priorities for 2015, we anticipate new enrollments will show modest positive growth in 2015. We expect total enrollments throughout 2015 will be approximately flat compared to ending enrollments in 2014. This means that average total enrollments for 2015 will be lower than average total enrollments in 2014, which will result in lower revenue for 2015. We anticipate that this decline in revenue will be fully offset by lower expenses resulting from the cost adjustments we made in 2014 and lower average new enrollments throughout 2015. We are sometimes asked about our plans for using our substantial cash balances, which stood at $356.5 million at the end of 2014. As a general principle, our objective for deploying all of our assets is to maximize value to our shareholders, while also ensuring that our institutions continue to create value for their students. Over the past several years, we have completed approximately $335 million of stock repurchases through buybacks and the tender offer. We have evaluated a number of acquisition opportunities, but thus far, none have met our goals of offering a compelling strategic fit, while also meaningfully contributing to the overall performance of the enterprise. In addition, and without limiting our flexibility to do otherwise, our inclination will be to continue focusing our management team on the performance of our core business. In 2015, we will focus on the priorities I outlined earlier that revolve around strengthening our core business, increasing our profitability and maximizing shareholder value. At this time, I will ask our operator to open the phone lines for your questions.

[Operator:]

The first question is from Corey Greendale with First Analysis.

[Corey Greendale:]

Hey, good morning.

[Andrew S. Clark:]

Good morning.

[Daniel J. Devine:]

Good morning.

[Corey Greendale:]

First, Andrew, I apologize because this is repetitive, but I got a little tingled up in what you were saying about 2015 between the new student in total. So, would you mind just repeating that maybe in bullet point form?

[Andrew S. Clark:]

Sure, Corey. What I was saying was that new enrollments for the year will show modest positive growth and that our average total enrollments in 2015 will be lower than the average was in 2014, so that results in lower revenue for 2015.

[Corey Greendale:]

So, you expect that total enrollment will be down year-over-year in each quarter of 2015 or do you think it could turn positive by the end of the year?

[Andrew S. Clark:]

Well, I think by the end of the year total enrollments could be, I would say, kind of flat to slightly positive depending on the performance of both new enrollments and retention throughout the year.

[Daniel J. Devine:]

Corey, this is Dan. So, we expect to basically level total enrollments to remain the same as it is today throughout the year. So, obviously would turn out flat to positive on a year-over-year basis in Q4, but it will flux in the period based on the actuals that we had in 2014 quarters.

[Corey Greendale:]

Okay. So, sorry, Dan. So, ordinarily, there is a seasonal uptick in Q1 and you're suggesting we should not expect that – that the total enrollment number will be similar at the end of Q1 as it was to what you just reported?

[Daniel J. Devine:]

They will – yes.

[Corey Greendale:]

Okay. And then, are there any calendar shift issues we should be thinking about for 2015 were like the impact on the Q4 starts you just described?

[Daniel J. Devine:]

No.

[Corey Greendale:]

Okay. And for those of us that are still modeling using some estimate of what new students are, can you give us a sense of what the year-over-year change was in new students on a reported basis understanding that it was impacted by the calendar shift?

[Andrew S. Clark:]

Are you referring what 2015's estimates or...?

[Corey Greendale:]

Q4 you said that the new students were up mid single-digits. If you adjust for the calendar shift, I'm asking if you don't adjust for the calendar shift, what was the year-over-year change?

[Andrew S. Clark:]

If you don't adjust for the calendar shift, it was basically flat.

[Corey Greendale:]

Okay. And then more of a strategic question. Given the success of the Forbes branding, one would think that's the strategy that you would think about extending to your other schools. Can you just comment on that possibility?

[Andrew S. Clark:]

Yeah. I mean, that is the strategy we would like to extend to our other schools. Forbes, obviously, has a tremendous following and brand recognition, and so finding a similar sorts of brands for the other schools is not particularly easy, but we would like to extend that strategy if we can.

[Corey Greendale:]

Okay. And then just given – well, given that dynamic, it sounds like what you're suggesting for 2015 is slightly softer than you were talking about on last quarter's call. Does that sound right to you? And what's changed in your mind from last quarter's call?

[Andrew S. Clark:]

Yeah. I would emphasize, I guess, the word slightly. I mean, I think our new enrollments for the year are going to be around the mid single-digits, maybe slightly less than that, as we see it today. I mean, I think our priorities of investing in our educational product, student retention and really aligning our admissions advisory and marketing expenses as well as developing new programs, you have a lot of moving parts there. And I think our pursuit of quality students that retain longer and the good job we've done in 2014 on that and wanting to continue that in 2015 has made us decide that we want to continue to grow our new enrollments to do it a little bit more modestly than perhaps we had contemplated before.

[Corey Greendale:]

Okay. And then just one last one for Dan, then I will turn it over. On the free cash flow, so there was some impacts in 2014 that looked like they were probably timing, like it looks like accrued liabilities and accounts payable was a pretty big swing of use of cash versus a source of cash in 2013. I just want to verify that those things are timing, and if you can comment at all what your expectations are for free cash flow in 2015.

[Daniel J. Devine:]

They were timing to answer your first question. I would think that our cash generation for 2015 should be similar with what it was for 2014.

[Corey Greendale:]

Thanks. I will turn it over. Thank you.

[Operator:]

The next question is from Joe Janssen with Barrington Research.

[Joe D. Janssen:]

Yeah. Good morning. Thanks for taking my question.

[Andrew S. Clark:]

Good morning.

[Daniel J. Devine:]

Good morning.

[Joe D. Janssen:]

Just to go off of Corey's line of thought here, you said modest growth in starts, and just from my modeling, modest growth meaning probably mid, low single-digits, not to put words in your mouth. But do you expect that each of the four quarters?

[Andrew S. Clark:]

Yeah, Joe. We do approximately. I mean, you have a little fluctuation in quarters based on seasonality. So some quarters might be slightly higher than that and others might be a little lower than that. My comment on kind of slightly lower single-digits and middle single-digit new enrollment growth was more on an just annualized view.

[Joe D. Janssen:]

Okay. And then I think, Andrew, in previous comments, you had – I don't want to say – your guidance – not guidance, but within the margin of error really has not changed from what your prior comments are. You made a comment that in 2014 you'd still expect to see the bottom in terms of EPS. And it sounds like with 2015 if we assume flat enrollment growth, cost cutting, you should be able to grow off that, in terms of earnings.

[Andrew S. Clark:]

Yeah, we should be able to grow off of that, we're not saying much, but yeah.

[Joe D. Janssen:]

Right.

[Daniel J. Devine:]

And part of that is that we're continuing – as we said, we're continuing to see a revenue decline in 2015. So some of our efforts related to our cost realignments are being absorbed by kind of lower revenue in 2015 also. So 2015 is a bit of an extension of 2014. And I don't think you're going to see a big leap of growth at the end of the year in earnings.

[Joe D. Janssen:]

Okay. Thank you. And then a balance sheet question. Andrew, you addressed a little bit of this in terms of use of cash and what you've done historically. You talked about some potential acquisitions that just didn't fit the profile, and currently still sounds like the board's still looking at in terms of strategic review of best use to enhance shareholder value. Acquisitions off the table, should there be more buybacks in the future?

[Andrew S. Clark:]

Well, from an acquisition standpoint, Joe, I think, again, we're going to be very opportunistic. These would be kind of potentially some type of tuck-in, smaller type acquisition if we did something. We really want our main focus to be on the core business and I think that's what I was trying to communicate in my opening comments. In terms of other uses of cash, all of those are on the table, and we will review those with our board as we do every single quarter.

[Joe D. Janssen:]

Okay. Great. Thank you.

[Operator:]

The next question is from Jeff Silber with BMO Capital Markets.

[Jeff M. Silber:]

Thanks so much. I know it's somewhat difficult to give forward-looking guidance, especially for the end of the year, but I'm just curious what gives you the confidence that you're going to be able to maintain the continued starts growth throughout the year.

[Andrew S. Clark:]

Yeah. Thanks, Jeff. It's a good question. We've seen pretty consistent new enrollment growth four out of our last five quarters, and that's I think, what gives us the confidence. Inquiry flow is very consistent and very strong. Our application flow has been very strong. And we've had a consistency in the last four quarters that gives us confidence that we ought to be able to maintain that in the following four quarters.

[Jeff M. Silber:]

Okay. Fair enough. I think in prior quarters, you called out starts growth for Forbes Business School. I was wondering if you could do that again, if you could just remind us Forbes as a percentage of your total enrollment as well.

[Andrew S. Clark:]

I don't have Forbes as a percentage right in front of me. I can get back to you with that number. I can tell you our business school is the largest percentage of our total enrollment. I just don't have the number. And I would say the new enrollment growth, again, when you normalize for the missing week, was slightly better than how we performed overall.

[Daniel J. Devine:]

Yeah, I think what we've said, Jeff, in the past, was that the growth rate in Forbes outpaced the growth rate of the overall group, and that did continue in the fourth quarter.

[Jeff M. Silber:]

Okay. Fair enough. And the $14 million or so in the impairment and severance charges, which line items were they on your income statement?

[Daniel J. Devine:]

Well, they're spread across a couple of items. They were in each area and I could go over that specifically with you when we talk a little later. I don't have the breakout.

[Jeff M. Silber:]

We can follow up offline. That would be great. Thanks so much.

[Daniel J. Devine:]

Yeah, yeah.

[Operator:]

The next question is from Adrienne Colby with Deutsche Bank.

[Adrienne E. Colby:]

Hi. Thanks for taking my question. You saw some improvement in bad debt expense trends, and I wondered if you could speak to your expectations going into 2015.

[Daniel J. Devine:]

Well, we think our expectation will be the same as it was – the same level of activity as it was in 2014 – which I think in the 4% to 5% range is what we anticipate.

[Adrienne E. Colby:]

And could you offer some guidance in terms of tax rate?

[Daniel J. Devine:]

The tax rate should probably be up a little bit, it should be about 45% and that has to do with some of the – as when our income's down, we have a couple of non-deductible items that impair tax rate.

[Adrienne E. Colby:]

And on the admissions and marketing expense, it seems like typical fourth quarter seasonality is for a bit of a decline there, certainly versus the third quarter, and that didn't sort of seem trends this quarter. Just wondering if you could talk about what your expectations are going forward? I don't know if there was some pull-forward of Q1 spend or if this is sort of more the run rate you're expecting for admissions and marketing?

[Andrew S. Clark:]

We are anticipating that – I'm getting a little feedback here – that there will be basically – from a distribution point of view, we will be much more even across the quarter. So you won't see the fluctuation that we had in Q1 of 2014. And then, from a run rate area, you'll see that the number will be down in every quarter in the mid-single digits percentage wise.

[Adrienne E. Colby:]

Great. That's helpful.

[Daniel J. Devine:]

And then, I think from a strategic standpoint, we believe that there's an opportunity to increase the productivity of our advisors and reduce our labor expense there very gradually over a period of time, and also to continue to improve our marketing efficiency. And again, I wouldn't refer for significant changes on a quarter-by-quarter basis, but we will be taking various operational initiatives in that area throughout 2015 and into 2016, which should help better align that line with the industry.

[Adrienne E. Colby:]

Great. And if I could ask one last question. Just wondering in terms of persistence, you had a couple of quarters where you've seen some pretty significant improvements. Do you think that that's something you can sustain throughout 2015, or are we getting into a period where the comps are tougher and you've seen a lot of the progress that's going to be made?

[Daniel J. Devine:]

Yeah. We've had tremendous gains in retention this year. So I think it's very reasonable to expect that with those tougher comps, it will be more challenging next year – in 2015. I think our retention gains will continue to be there. There'll just be, I think significantly smaller than they have been throughout 2014. I mean, it would be difficult to sustain that level of retention increases for another year, increasing retention by 20 basis points to 50 basis points on a quarter-by-quarter basis is very good at any institution and it's very hard metric to move.

[Adrienne E. Colby:]

Thank you.

[Operator:]

The last question is from Trace Urdan with Wells Fargo Securities.

[Trace A. Urdan:]

Thanks. So Jane in her comments ranked the new student strength by school, starting with Forbes, and you guys confirmed that that was – that you saw new student growth there above average. Can you give us a sense of the range and are the schools at the lower end of Jane's rankings actually still showing declines in new student enrollment?

[Andrew S. Clark:]

Some of the schools, I would say the ones that the lower end Trace are showing some declines still in total enrollment. New enrollment fourth quarter is kind of a difficult quarter, but I would say overall they've been flat to some slight decline. We wanted to give you a sense just of the interest really in the various schools and prioritize kind of from top to bottom the level of interest we're seeing from a new enrollment standpoint.

[Trace A. Urdan:]

Okay. And I didn't – if this was contained in the prepared remarks, I apologize because I missed it. But are you able to talk about what the severance and impairment costs incurred in the quarter, what sort of savings those will result in going forward?

[Andrew S. Clark:]

Yes. They're going to – on an annualized base, they'll be about $24 million.

[Trace A. Urdan:]

Okay. Great. So absent sort of variable cost changes, you're sort of stripping about $24 million out of the fixed cost base?

[Andrew S. Clark:]

Yes.

[Trace A. Urdan:]

Okay. And then, does University of the Rockies currently generate positive free cash flow? Is it making a positive contribution to overhead?

[Andrew S. Clark:]

No, not currently.

[Trace A. Urdan:]

Okay. Any sort of strategic thoughts about that asset and sort of where – what your intentions are with it? Is that something that you might consider disposing of at some point?

[Andrew S. Clark:]

No. In fact, the Rockies just received a 10-year reaccreditation from HLC additional programmatic approvals. I believe, Trace that if we continued to meaningfully expand the programmatic offerings at the Rockies that the Rockies can be a positive contributor for the overall financial metrics of the company and in fact it has been previously. I would say, about two to three years ago or where it was contributing positively to our earnings.

[Trace A. Urdan:]

So what would you say – what kind of time horizon are we talking about if you're sort of adding programs? Is that sort of also a two to three year kind of timeframe before we get back to that place?

[Andrew S. Clark:]

I think getting back to that place could happen in 2016 and definitely occur in 2017, but it should happen in 2016.

[Trace A. Urdan:]

Okay. And then, I know, you can't speak for the board, but I am curious as to the sort of what are the barriers? I mean, you've talked about sort of uses of cash and kind of described that you're intending to look opportunistically at smaller tuck-in acquisitions that kind of suggest that, more ambitious acquisitions are sort of off the table at the moment. But you are not ready to sort of announce a buyback or sort of other uses of the cash. What are the factors that the board is looking at on a quarterly basis and how has those changed?

[Andrew S. Clark:]

Well, I mean...

[Trace A. Urdan:]

What's the obstacle in other words?

[Andrew S. Clark:]

Yeah. I wish I could be specific with you, Trace. I would tell you that, things change every single quarter in terms of that analysis, it's never the same particular barrier, to use your word or obstacle, that would prevent – that prevents us from doing something. So, there is no consistency there, one thing that I'd point to. I think that, this management team and this company really wants to ensure that, we strengthen and stabilize and grow our core business, first, that that's our priority along with the other priorities that I mentioned and that we provide a very stable and reliable level of cash generation and do everything in our power to increase shareholder value.

[Trace A. Urdan:]

Okay. Thank you.

[Andrew S. Clark:]

All right. Thank you.

[Operator:]

This concludes our question-and-answer session. I will now turn the call over to Andrew Clark for closing remarks.

[Andrew S. Clark:]

Yeah. Thank you. Well, we'd like to thank every one of our callers today for your interest in Bridgepoint Education and for your participation on the call today. Thank you.

[Operator:]

This concludes today's call. You may now disconnect.