Q4 2019 Earnings Call
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At least continued to standby and thank you for your patience.
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I would now like to hand, the conference over to your speaker for today did back as CFO, Sir you may begin.
Thank you joining me on today's call is our chairman and CEO Brian dealer.
Please note that many of our comments today will contain forward looking statements that involve risks and uncertainties various factors could cause actual results to be materially different from any future results expressed or implied by such statements.
These factors are discussed in our LTC filings, including our annual report on form 10-K quarterly reports on form 10-Q, and current reports on form 8-K, we undertake no obligation to provide updates with regard to forward looking statements made during this call and we recommend that all investors reviewed these reports thoroughly before taking a financial position NIGC.
And with that I will turn the call over to Brian.
Good afternoon, and welcome to Grant Keeney Education's fourth quarter Conference call. We're now almost 20 months into our existence as an education services company I want to do two things one is called first.
Talk about how we think PC he should be position [laughter] kinda macro environment with in higher education.
And second review the financial results that have been produced today.
As I've indicated previously it is GCT school to help address the real issues within higher education I believed to have a long term future education services company, you must provide solutions to those challenges. The challenges are one college cost too much to students are taking on way too much debt relative to their income.
People tend to.
Three that's tuition goes up diversity on college campuses go down.
For bachelor's degree should not take 46 years.
Hi programs are not tied directly enough to where jobs are.
Six Derrick inadequate counseling and support surfaces, especially for first.
Generation students or no starting at a distance.
We're very excited about GC east direction relative to the challenges facing students families and the industry's we're serving in 2020 TCPC 23 partner institutions projected produce over 3000 graduates over 11000 health care professionals 7700 education professionals 40 so.
600 in the business World 3600 in behavioral health 2500 in public service, Social Science, and theology and 600 in engineering and computer Science. These students will graduate with less probably before debt than the average state and private University students. In this country, you will have less than a 6% cohort default rate on student loans.
Well graduate from programs the past the previous debt to income Green ratios that were part of the gainful employment rules and left at 75% of the revenues that are generated will be from title for program.
GC he has four pillars in its business in the first three are addressing these issues head on and we believe eventually the fourth pillar will as well.
Grand Canyon University online at 82540 students online as of December 31st 2019, and in a quarter just completed new students grew in the mid single digit well total students grew 6.5% year over year.
She sees core business margin expanded 150 basis points for the year just completed what the next two we should increase it averaged less than 1% that GCU online.
This is important because GC he will continue to invest heavily in a new online management platform is investing over 100 software applications to provide operational support for students and faculty and will assist you in rolling out more than 20, new programs in 2020.
The GE GCU partnership to see strong proven model that produces high quality outcomes and GE could produce similar results rather institutions.
What has been demonstrated in the first 20 months is that the comprehensive operational services offered in exchange for the revenue split is working better than expected for both sides.
The second pillar is the GCU traditional campus.
The traditional campus started the fall semester with approximately 21000 students I wouldn't approximately 13000 or residential which is up 9.3% over the previous fall.
He is campus was profitable without raising tuition in 11 years and has invested over $1.5 billion in academic and other campus infrastructure.
The campus currently ranked as the 19th Best College campus in the nation, According to niche Dot com.
This is a remarkable accomplishment given at the University really started to build out its campus only eight years ago received no state tax subsidies and has no meaningful endowment or donor base.
There were some observers who predicted that the GCG few partnership would produce good financial results for GE Si and would not work financially for GCU.
They were very very wrong.
The University has publicly made available its financial statements for the year ended June Thirtyth 2019 that show the University had over $325 million in cash on its balance sheet had net assets over 387 million at June Thirtyth 2019, and its cash flows from operations for the year ended June 32 now.
Team were over $123 million.
The positive results for the University continued in the six months ended December 30, Onest 2019.
Based on interim financial statements provided to us by GCU in which the fewest authorized us to discussed universities cash balance at December 30, Onest 2019 was approximately $250 million.
Its net assets grew to almost 400 million.
It generated over $100 million in cash flows from operations during the six month period, while funding all of its cap ex through its own cash reserves, while also paying down $100 million on its debt.
The University plans to continue using excess cash to fund its continued growth and pay down instead.
This was all done without tuition increases on the ground campus and a less than 1% increase in net tuition and its online campus.
The third pillar of the GC strategy is enormous.
This is the strategy most miss understood and most under estimated by investors.
This purchase greatly accelerated GCB as an education services company and it addresses issues that have heard many of the other opn.
Orbis pits in the GE strategic plan because it originated as the result of a huge marketplaces need the U.S. will need 1 million additional nurses in the next five years, along as well as thousands of nurse practitioners in occupational therapists.
And as you can a very innovative delivery model.
Orbit like GCU online and GCU ground will be profitable.
The profits will be reinvested into orbis to create more opportunities both in terms of locations and adding programs to current locations.
Self sustaining economic models that don't rely on taxpayer subsidies or philanthropic donations or a huge benefit to the economy and state budgets.
Orbitz is growth has been greatly accelerated as a result of GC east considerable support.
Since we bought Orbis six University partners have been added and as of today, we are up to 23 total University partners.
At the end of the acquisition, we had 18 sites opened at 11 of Orbis Educations University partners.
As of today, we have expanded to 23 sites locations opened at 14 of Orbis is at Orbis Education University partners.
Additionally, we plan to open 11 site locations in the next 12 month.
Seven in the fall of 2024 in the spring of 2021.
Which would put us at 34 locations by the spring semester of 2021.
The creative delivery model, which combines on ground lab work with online delivery of course content is producing tremendous outcomes for students healthcare community and University partners.
Thousands of Americans will be able to pursue their dream of becoming healthcare professionals.
Making tremendous contribution to the healthcare industry because of these partnerships.
GE will continue to support Orbis with capital marketing and operations support including advanced technologies.
In terms of metrics. The graduation rates are approximately 90% and the first time pass rates on the Eplex exam are consistent are consistently over 90%.
We use nursing program the last three quarters produced over 95% first time pass rates.
Orbitz revenues grew 30.2% on a year over year basis for the three months ended December 30, Onest 2019.
And 42.7% on a pro forma basis, including the 21 days in January prior to our acquisition for the year ended December 31st.
Enrollments on a comparable basis have grown 24.3% year over year as of December 30, Onest 2019.
Every new locations opened represents an opportunity for GP that has greater potential than most other opium contract in the space.
Each location opened requires less than a 3 million dollar investment and we will turn profitable in its second year of operation eventually producing greater than 30% margins, which can be reinvested into adding more programs at the site and opening more sites.
The goal is to be in 70 locations in the next seven years.
To summarize we are very focused on this orbis opportunity for four reasons, one the huge need the country has for healthcare professionals, especially baccalaureate repaired nurses.
To the opportunity to grow into 70 potential locations.
Three locations will become profitable in just their second year of operation.
For the relatively small amount of investment needed to get locations up and running.
GE fourth pillar is to find three or four partner interest in a more comprehensive arrangement.
We are working hard at this pillar, but we'll continue to be selective.
The model of many partners many low enrolled programs at very high price points is not entries interesting to us because the model doesnt fundamentally address the real challenges identified earlier in higher education.
We believe we can add tremendous value to University partners in the Midwest and northeast and R&D and are in dialogue with a number of that.
Most of them have had partners in the Pat and they have not been successful with those programs.
Our strategy a front end services combined with robust back in services is clearly a differentiated approach.
The model, we are suggesting is proven on a very large scale.
Gcs hybrid campus, having large student bodies in both major markets leveraging a common infrastructure has been successful and unprecedented wave.
Hi quality students producing great outcomes at great value combined with making huge investments to constantly upgrade infrastructure is a matter of fact not opinion.
Everybody that business the GCU campus goes away very impressed.
Future miles of higher education should be based on the results they produce and not on what are they fit into pre existing structures.
Our three our other three core pillars are performing well have great potential and as a result, we have the ability to be selective.
If we find the right comprehensive part and we will sign an agreement.
If you look at the contracts of other Lpms in this space those contracts would most likely be dilutive rather than accretive to our current plan.
In addition, the huge upfront investments of those arrangements with placed significant risk onto our current business.
With that I would like to turn it over the ambac as our CFO to give a little more color on our 2019 fourth quarter talk about changes in the income statement balance sheet and other items as well as to provide 2020 guidance. Thanks, Brian.
We did our form 8-K filed with the FCC. We have included non-GAAP net income a non-GAAP diluted income per share, but the three months ended December 31 2018.
Non-GAAP amounts exclude the tax effected amount of the amortization of intangible assets and the loss on transaction amount included in our consolidated income statement.
The amortization Amortizable intangible assets acquired in the Orbis acquisition totaled 210.3 million and amortization expense in the fourth quarter 2019 was 2.2 million.
We believe the non-GAAP financial information allows investors to develop a more meaningful understanding of the company's performance overtime.
As adjusted non-GAAP diluted income per share for the three months ended December 30, Onest 2019 is $1.63.
Service revenue was slightly below our expectations in the fourth quarter 2019, due to slightly lower revenue per student from GCU due to timing differences in online students start at a slightly higher scholarship rate as the number of partnerships continues to grow.
As we've discussed previously overall enrollment growth is being pressured by the fact, the professional studies students and granted meter students are flat slightly down year over year revenue per student continues to increase as we continue to see very encouraging growth in the areas of our focus including online residential and orbitz enrollment where revenue per student is.
Hi.
In addition, orbis enrollment at year end were down from Q3 due to the timing of graduation as it relates to our 60 day enrollment count methodology. These trends have been included in 2020 guide.
Our effective tax rate for the fourth quarter of 2019 was 18.6% compared to 19.5% in the fourth quarter 2018, and our guidance of 22.6%. The lower rate is due to favorable adjustments related state income taxes, partially offset by slightly lower excess tax benefits of 0.1 million.
In Q4, 2019 from 1.2 million in Q4 2088 cents of the earning speed is due to the lower effective tax rate.
We repurchased 201522 shares of our common stock in the fourth quarter of 2019 at a cost of approximately 18.5 million and another 114336 shares at a cost of 9.5 billion. Subsequent to December 31, 2019, we had 52.3.
Million available under our share repurchase authorization as of December 30, Onest 2019, Our board recently increased our share repurchase authorization by another 75 million.
Turning to the balance sheet and cash flows total unrestricted cash and short term investments at December 31, 2019 were 143.9 million.
GC Capex and fourth quarter 2019, including Capex for New Orbitz partner sites was approximately 7.2 million or 3.3% of net revenue.
Capex for the year was 22.4 million, which fell within our anticipated range of between 20 and 25 million.
We anticipate that meant on growing to between 30 and 35 million 2020 due to the build out of the 11 orbitz partner locations.
We provided no funding the GCU for capital expenditures in the fourth quarter 2019, but received the payment of 40 million on the outstanding loan in October as a reminder, do investors. The note due from GCU is secured by all of this asset given this is very difficult for the university to get financing from any other sources that GE.
GCU has informed us that has the ability to funded capital expenditures going forward, but under the agreement we are required to provide them funding as they want to borrow for short term cash flow purpose.
Lastly, I would like to provide color on the guidance we have provided for 2020.
The guidance, we have provided continues to be non-GAAP as adjusted net income and as adjusted diluted income per share as we exclude amortization of acquired intangible asset.
You are probably probably notice we have again provided estimates for each quarter 2020, we do this because our financial results, including GCU and the partners that Orbis services are very seasonal.
Although we have again provided total enrollment guidance for 2020, but our focus continues to be on revenue and not enrollment as we focus on growing the number of students that drive the most value to our institutional partner.
Total enrollments are expected to be a 108000 96300 116101 hundred 14100 at the ended the first second third and fourth quarter respectively.
The underlying assumptions behind the total enrollment growth consists of total online enrollment growth that ranges between 6%, 6.5% residential student growth of approximately 10% and both the spring and fall terms flat down year over year professional studies commuter students and traditional summer school enrollment.
And Orbis enrollments of 4000 at the end of the first and second quarters 4700 at the end of the third quarter 4500 at the end of the year.
Online enrollments will be pressured in the first half by year over year increases in graduate students that exceed total enrollment growth, but we anticipate that this will moderate in the second half of the year and thus year over year growth should increase in the second half.
We estimate that Orbitz revenue will be 115.8 million in 2020.
Orbis revenue on a pro forma basis in 2019 was approximately 89.1 million, including the 3.3 million in revenue right not recognized in our financial given that the closing the transaction occurred on January 22nd 2019.
Just on a pro forma basis, we anticipate orbis revenue will be up 30% year over year.
We estimate the revenue per student from our contact with GCU will be up year over year, primarily due to the growth residential stupid.
On the expense side, we anticipate the core GE business, we'll see flat margins year over year, while orbis will be EBIT zero, excluding intangible amortization.
Last year, we had projected the core GE business margins would be up 30 basis points year over year, but instead, they were up 150 basis points exceeding our expectations by 120 basis point.
The higher than anticipated margins in 2019 were primarily due to our ability to leverage our headcount costs at a rate that was better than expected. In addition, we had a very favorable year in employee benefit costs.
Recent trends suggest that we will see a 30 basis point increase and benefit cost year over year. In addition increased investment is being made in technology head count and counseling services that will put pressure on GE margins.
Orbis EBIT, excluding the intangible amortization in 2019 was approximately 5.6 million, but its pro forma EBIT was approximately 2.7 million as it lost approximately 2.9 million during the period in January prior to closing.
Orbis is decline in EBIT year over year is due to the cost that will be incurred in 2020 associated with the 11 site openings in fall 2020 Flash spring 2021.
We anticipate technology and academic services.
Selling services and support marketing and communications and General administration expenses will be approximately 13%, 28.4%, 18.5% and 5.6% and net revenues and thus consolidated as adjusted operating margin will be 30 534.5 years.
On a net revenues.
We estimate interest expense I am sorry interest income on the know from GCU will be approximately 59.2 million down slightly from 59.3 million in 2019.
The University, Mike further pay down the note in 2020, but further paydowns or not factored into our guidance.
We estimate interest expense will be approximately 5.6 million compared to $11.3 million in 2019 due to our pay downs on our outstanding loan.
Other interest income will be approximately 2.4 million.
Our guidance assumes an effective tax rate excluding contributions made in lieu of state income taxes to be 23.8% for the year, 23.3% in Q1, 24.2% in Q2, 24.2% in Q3 in 23.6% in Q4, our effective tax rate will be at significantly.
Secondly from 2019 and will be more in line with our statutory rate in 2009, we received a significant tax refund in the first quarter and favorable state tax adjustments in the fourth quarter, we do not anticipate any similar refunds in 2012.
And interest. In addition, we anticipate that we will receive a significantly lower excess tax benefit deduction in 2020 as compared to 2019 due to lower stock option exercises and a lower stock price.
If contributions and low state income taxes are made in the third quarter of 2020 that we'll have the effective increase our operating expenses and lowering our effective tax rate in the second half the year.
The weighted average shares outstanding amount includes stock that was repurchased through today, although we might repurchase additional shares during 2020. These estimates do not assume repurchases other than those already may.
I will now turn the call over them up moderator, so that we could answer questions.
Thank you.
Ladies and gentlemen, as a reminder, asked a question you would need to press Star then one telecom.
To withdraw your question Cristabel Keith.
So I want to ask the question.
Please standby, while we filed the Q1 I Rob.
Our first question comes from the line, Alex Paris with Barrington Research. Your line is open.
Good afternoon. This is Chris how sitting in for Alex I. Appreciate all the color provided on this call.
First I wanted to focus on the pillar of Orbitz.
You mentioned the seven sites planned for the fall of 2020 with four sites in spring of 2021.
As you accelerate towards 70 locations.
As we look at your guidance for revenue as being up 30%.
How should we look at the contribution from these seven new sites in the fall of 2020.
Versus potential new partners are there any new partners that are being considered or is this excluding any additional partners in fiscal year 2000.
Well so the revenues in 2020 for those seven new sites is pretty minimal because we only have the first cohort at those seven locations.
That will be revenue in the fourth quarter little bit in the third but mostly in the fourth quarter of 2020, but the revenues will grow significantly as those.
We have second third fourth cohorts in the 21 for those new locations.
In terms of.
Additional partners Orbitz continues this continues to sign additional partners.
Those additional partners obviously for those will be opening in spring of 2021, and then our expectation at this point is we will have additional openings in the fall of 2021, but at this point, it's too early given the regulatory and other things that they have to go through to.
Predict exactly how many locations will open in fall 2021.
In that Brian the only thing is it the difference between a new partner in those new location and taking in existing partner and in the new location the expense associated with that the difference is very little.
There will be a little bit more expense.
When you take a new partner in because they're curriculum has to be approved and you've got to take steps with the state board, but it's basically 1.5 million to to build the site in another little bit less than $1.5 billion of loss in terms of marketing and recruiting a new students.
But the cost whether it's taking a new partner in or or an existing one is there's very little difference in that.
That's great very helpful and.
Shifting to the fourth pillar.
The ability to add three or four new partners, whether it be in the Midwest or northeast.
Can you share some color as to how youre offering perhaps has been enhanced in this past year.
Do you continue to analyze the mix of your pipeline and.
Has there been any change in the mix of your pipeline in regard to whether it be faculty opposition faculty acceptance.
Or just some additional color on where you stand as far as your progression with some of these contracts potential.
Yes, there's really two things that you have to overcome we have to overcome in the first thing is very surprising and its is the result of what's happened in the last six months we.
We are less and less likely to do a deal for the sake of doing a deal and launching something because of how well we are doing with another three pillars.
Yes.
The chances that something a new deal that is not a great deal dilutes. Our current momentum we don't want to do that and so our own success is working against that fourth pillar a little bit.
The second thing that you have to overcome is.
Their understanding that.
We won't do it and less it's a comprehensive approach that.
That.
Scales the number of students.
So thats something fundamental about their business plan changes.
We're really focused on those problems that are facing higher education. If you look a lot when a lot of lpms are doing.
They are just charging more.
Thats charging less there is no benefit in this for students families and families that way worth thinking about it is if you find a partner where you can scale in online program.
And then you can leverage the infrastructure at the University and the infrastructure of GC in a way that eventually they economics work and better for that institution, and making actually lowered tuition. Those are the kinds of things, we're trying to make happen in that kind of arrangement.
When our University start thinking about things like admissions transcript evaluation schedule building financial aid all of those things they get nervous about turning that over to somebody.
Now we have to walk through all the systems that we use the fact that we've had these major audience was zero find deems based upon title for our BA.
And so it's a matter of.
Of overcoming our own success and it's also a matter of convincing the university that a one off approach to this is not something that interest us.
Then we got to convince them that in order for this to work.
You've got trust us with those back and functions because without that.
These things don't work and I'll tell you it's amazing to me.
I'm so excited about the Orbis thing because it's amazing to me the number of people that we've talked too.
That have previous arranged liquids RPM that did not work.
And when you look at why they Didnt work.
It frequently is around.
The old PM offering a little help upfront marketing enrollment curriculum conversion.
Not offering any assistance on the back end. So the University has to add resources on the back end.
Which cut insignificantly to their revenue split.
And the more we watch the of some more that we think.
That applying the GC UGC methodology is really the only way to do it in a scalable way that works for everybody, including students and families.
Thank you and as well as we look at Orbis.
And the strong position Orbis has with its existing partners.
Is there a way to think of this as an opportunity for cross pollination into your three or four potential partners.
I think eventually yes, I think that would be a great way to do it.
And we're just going to keep.
Executing.
We're still going to stay really focused we're going to stay real focused on continuing to execute at a high level.
Produce great outcomes.
And let the noise out there.
Dissipate based upon our execution.
We are in this for the long run.
We want to provide real meaningful change in higher education.
And so we'll be paid.
And we'll let the noise be with the noise is and we will keep producing results that work for families.
One of the things that we'd like to do is good.
Universities down here to visit our campus.
And we just opened a campus up to them and with their amazed that is the loyalty that GCU students have to be institution.
And the loyalty the families have to be institutions, because compared to what they were thinking about before they became involved with us. This deal is so good for that.
It's like they've got a new lease on life.
And in so many of so much of what's going on now on our ground campus is brothers and sisters and the younger friends.
Because they are looking at private University options that are 60 to $70000. They come down here. They look at this campus. They look at the programmatic offerings. They look at the cost and the word spreads and.
Those that concern that we have as GCU as GCU now.
GE a for profit company, helping to non profit.
And and and really taking seriously.
Providing for the greater good is because it's going to become a big part of the store.
Thank you for taking my questions I appreciate the color, Brian and Dan. Thank you.
Thank you.
And comes from the line.
Jeff Silber BMO capital capital markets. Your line is open.
Thank you so much forgive me I got dropped off the call I'm not sure if you've addressed the issue with the department of Education that you talked about last quarter I'm just wondering if there's any progress there. Thanks.
Well the first the thank you for that Jeff. The first thing we have to will always remind people.
Probably not you but others.
95% of what we wanted we got.
We have a full program participation agreement.
And so our students have access to the same title for programs as others.
There is no restriction based upon the growth of the student body no restriction based upon the growth of programs and so that's the big deal for us having that behind us and having.
That past now in front of US is a big deal.
The only thing that remains is this discussion about them listing assess the proprietary institution on their website.
That that's the only and Thats really that's really asking them.
This.
It doesn't affect really a lot of what we're doing.
We are having I believe productive discussions.
It's very I think important for them to know that.
We will not except any designation that number one is not true we're not a proprietary institution, we are nonprofit institution and summit and we were not going to mislead the public about that.
But secondly, and most importantly of University is not going to accept any secondary designation which limits.
It's potentials.
In the areas of research Grant writing our family and our students will have the same access to participate in the academy in this country that any other property and student pass and accepting a designation that make but might make that less ban is not something that they're going to do or.
In the case of be as the president not something I'm going to do with the President of University I think.
We are making progress.
We had a meeting out there.
Yes for some responses, we gave it to them they ask for something else.
And we're in the process of doing that.
But I hope that at some point.
They will say.
You know this thing is working well for students and for families and your neighborhood et cetera that we really need to between more of this not less than that.
I really hope the discussion flip to that.
Because I think that would.
Thanks.
That's where it should be.
Okay. That's great appreciate the color.
And when you were giving some color on your outlook I think you said to expect flat margins in the core GE CE. This year, you called out a number of of items as to why I know, you're not giving behind guidance beyond that.
But but is that something we should expect going forward. If we exclude these one onetime items that margins will continue to expand NBC.
I think last to see I mean, frankly, we're at a margin level at the in from the GC core business that I think is higher than we thought we would get to anytime in the next few years as I said, we are business plan has always been to grow the core of GE margins 30 basis points.
A year 30 basis points that would be five years to get to the 150 that we did in one year and so I think the question.
Is.
Can we grow margins.
Core those core margins higher.
In the future or.
Is it better just to keep those core margins, where they are today, because we will see significant margin expansion from orbitz over the next few years and so.
I don't know I think is is the short answer we'll see but I think you should expect to see margin expansion from the consolidated business.
In 2021 over 2020, driven by Orbis Orbitz is growing margins.
Okay. That's what I was going to ask Mike My follow up questions. So thank you for answering that and just one more quick one you gave a little bit of color on the enrollment I guess slowing down a little bit you went through that a little bit quickly can you just repeat what you said what happened in the fourth quarter. I know you gave us some guidance for the year, but just looking at the color in the fourth quarter that'll be great.
Yes, yes, actually our enrollment were generally in line with our expectations for the fourth quarter. Other then orbis.
Was about 200 lower than we expected it had to do with the timing of graduations, we thought the graduations, we count the way we count enrollments in the in the 60 day count at the ended the year.
So the third and fourth quarter for Orbitz would be roughly the same turns out the way we count them.
They were out of our count methodology by the ended the year and so.
That didnt affect revenue at all but it did affect those enrollments, but other than that enrollments were generally in line with our expectations. The new start we're also for the quarter right inline with our expectations. They just actually came a little bit later in the quarter than we had forecasted which had a very minor impact on.
Revenue per student.
But other than that the quarter was right in line with our expectations.
Okay really appreciate you clarify Matt thanks much.
Thank you. Our next question comes from the line of Jeff Miller with Baird. Your line is open.
A follow up I think I'm of the second question there from other Jeff the so.
How are you thinking about orbis on our multi year basis. It sounds like you're planning on expanding margins. After 2020, but like is there way to size up for us.
How many.
Campuses per year or you can open while expanding margins are what or Mrs. Normalized growth rate can be if you want to expand margins.
Yes, I think very big picture.
You know as long as we opened a similar number of locations in in the 12 month.
Because it's really not the way that spending works as we've talked about before.
If it opened in the fall or in the spring the costs are all primarily incurred in the calendar year, leading up to that.
And so.
As long as when we look at you know fall 2021 last spring of 2022 as long as the number of locations are 11 or less I think you should plan to see some pretty nice.
Margin expansion.
If somehow we go from 11 to 15, which I think is very unlikely I think you'll have a similar phenomenon to this year, where we went from four slashed five locations to OLED.
But if we opened 11 or less.
Which I think is the more likely scenario for that next 12 month period. I think you will see pretty significant margin expansion as you would have seen this year. If we would have just opened four or five.
In that falls springtime period, you would've seen 10 plus million dollars worth of.
Earnings at Orbitz in 2020.
Okay.
Then.
I know that the mid single digit online new enrollment is in line with the longer term plan and you're saying it was in line with Q4 and it was similar to Q3, but just.
On a multi year basis, you are pretty nicely outperforming that for a while when I get that your skill levels getting bigger now, but it would just love any perspective on.
Are there are fewer programs being launched over the last year than there were a few years ago is it scale challenges is there anything Wes.
Marketing efficiency impacts from the department of Education.
Decision.
We continue to do this very strategically.
There is a huge focus on quality quality students in high demand programs, hi graduation rates.
And.
We'll continue with that what you will see and we've been saying this.
The spread between enrollment growth and revenue growth is going to continue.
And eventually I think for investors this should be primarily about revenue and earnings.
Because.
We're going to continue to.
Focused on.
Hi quality students.
Putting them into high quality programs that are going to produce great results from there from them for a from a career standpoint.
If we opened the floodgates today and say, we'll take a bunch of high risk.
30 year old students, who want to come back to school and try it again.
Those students produce low graduation rates stack up that don't get any payoff.
That that way to grow based upon that level of churn is not something we're interested in and so.
Our marketing spend as a percent of revenues about the same.
And.
The productivity.
Is.
Is about the same.
And then and so.
I think as this big moves forward Youre going to see US continue to focus on residential students on our campus to focus on graduate students online and to forecast folks on orbit students.
And keep pushing.
That revenue number up.
Hey, Jeff the other only and I would add is obviously mid single digits isn't a finite number.
Our goals are to grow new starts greater than 5%.
So the numbers were talking about are still pretty significant given our overall size our expectations have not decline.
At all but mid single digits is it like I said, if theres a range there and our goal is to be it I get the higher end of that mid single digit range.
Okay got it thank you.
Wow.
With that Weve reached the end of our fourth quarter Conference call. We appreciate your time, an interest from Grand Canyon Education. If you still have questions. Please contact myself stand back and thank you very much.
Ladies and gentlemen that concludes today's conference. Thank you for participating you may now disconnect everyone have a wonderful day.
[music].