Edison Schools Expanding Rapidly
In February, Edison Schools, Inc. the nation's leading private operator of public schools, reported it had achieved its first breakeven EBITDA--earnings before interest, taxes, depreciation, and amortization--net of non-cash charges, during the second quarter ending on December 31, 1999.
The company also posted year-to-year period revenue growth of 73 percent, from $35.6 million in 1998 to $61.6 million in 1999. The revenue growth reflected strong enrollment growth, with the number of students served rising from 23,900 for the 1998-99 fiscal year to approximately 38,000 in 1999-2000.
As a result, the company's basic and diluted net loss per share fell to $0.16 for the quarter, compared to $0.22 for the same quarter last year. These EPS amounts reflect adjustments for converted shares related to the company's November 1999 Initial Public Offering. Edison's Initial Public Offering raised proceeds of approximately $122 million and closed during the second quarter.
"Edison's performance this quarter demonstrates that our operating leverage is beginning to kick in," said Chris Whittle, Edison's president and CEO. "This revenue growth reflects the growing demand for quality public schools that Edison provides for school districts, charter boards, teachers, and parents," he added.
The company's chief financial officer, James L. Starr, pointed out that second quarter operations generally involved fewer start-up expenses. Thus, he said, the second quarter results indicate "how our existing schools are operating unburdened with start-up related expenses." However, because of the large number of school openings scheduled for this fall, he warned that positive EBITDA was not anticipated for the next two quarters.
The company's central costs net of non-cash charges are 15.9 percent of revenues, which Starr said demonstrated Edison's "continuing success in executing our business model."
In January, Edison renewed four contracts with school districts and charter school partners for periods of three to five years. The agreements with schools in Wichita, Kansas; Mt. Clemens, Michigan; Duluth, Minnesota; and Boston, Massachusetts represent a total of more than 5,500 students. Over the next five fiscal years, Edison could generate an estimated $160 million in revenues from the renewal arrangements.
These renewed contracts follow a November agreement with the Dallas Independent School District to serve 6,500 students in the 2000-01 school year. That agreement, Edison's largest contract to date, could be expanded to serve as many as 16,750 students over the next five years.
Edison currently serves 38,000 students in 79 public school in 16 states and 36 cities. Through contracts with local school districts and public charter school boards, Edison assumes educational and operational responsibility for individual schools in return for per-pupil funding that generally is comparable to that spent on other public schools in the area.
Edison opened its first four schools in August 1995 and has grown rapidly in every subsequent year. During the course of three years of intensive research, Edison's team of leading educators and scholars developed an innovative, research-based curriculum and school design.