Q1 2025 Grand Canyon Education Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Q1 2025 Grand Canyon Education Incorporated International Conference Call.
At this time, all participants are in a listen-only mode
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again.
Speaker Change: Please be advised that today's conference is being reported. I would now like to hand the conference over to your first speaker today, Sarah Collins, General Counsel.
Speaker Change: Joining me on today's call is our chairman and CEO Brian Mueller and our CSO, Dan Bachus. Please note that many of our comments today will contain forward-looking statements that involve risk and uncertainty.
Speaker Change: Various factors could cause our actual results to be materially different from many future results expressed or implied by such statements
Speaker Change: These factors are discussed in our SEC filings, including our annual Board on Form 10K, quarterly reports on Form 10Q, and current reports on Form 8K.
Speaker Change: We undertake no obligation to provide updates with regards to board-looking statements made during this call and we recommend that all investors remove these reports clearly for taking up financial position in GCE.
With that, I'll turn the call over to Brian [inaudible]
Brian Mueller: Good afternoon, thank you for joining Grand Canyon Education's first quarter of 2020 by the comments called. GCE had another strong quarter, producing online at 1.7.1% in hybrid world, excluding the close side, and those two strategies, the U-1 by-election.
Speaker Change: We also could use or produce strong attention points while at the same time investing heavily in issues for inverse apartments.
Speaker Change: Investments DCV and its 22 partners, institutions are making their base on belief that there's a vast, not-planned cap potential for today's work points.
Speaker Change: potentially exhausted death levels and difficulty management that's the well done.
Speaker Change: Any working adults who couldn't benefit from higher education or how it can't be because of the lack of creative delivery models, it does not take into account of it by a life situation.
Speaker Change: and nature of what they need to learn. Grand Canyon Education will continue to grow at our state of goal of the law line, because we are addressing those challenges in ways that work for students and employees. With that, I would like to return to the results of the board delivery platform for any kind of education.
Speaker Change: First, the online campus of Grand Canyon University, and it starts from the low teams in the first quarter of 2025.
Speaker Change: because you've seen it our expectations and told it on the purpose of 7.9 percent, which is slightly exposed to our long-term objectives.
Speaker Change: There are many reasons for this point when I like to, and the one we have stayed focused on the opportunity to exist in the base labor market and continue to roll out at least 20 new programs for the year for our university partners.
Speaker Change: This January 1, 2003, GCU has rolled out 48 new programs and the season's certificates across the 10 colleges. We're going to total this 353 programs and the season's certificates.
Speaker Change: The programs are tied directly to the labor market office for these students. One more response to the university is to supply the assistance to reduce the number of programs they offer.
Speaker Change: 2. The teaching of work with employers to write leads to address their work for shortages. His deputy is focused on the industry's education, healthcare, engineering, technology, manufacturing, public safety, and development.
Speaker Change: In the first quarter, this starts from this quarter to increase 18.2% your over here.
Speaker Change: For you, retention of students in the first quarter of the increase, which we believe continues to continue because of the relevancy of the programs that students are handling, and they're the right type of students from their aspirations.
Speaker Change: 4. GCL has resisted responding to the slower growth in higher education overall by raising tuition significantly which made institutions step up.
Speaker Change: While a few PCU online delivery programs have gone up approximately 1% per year, overall online that's where you will expect PCU will gone down.
Speaker Change: Given that Bob Cobbs, we are still protecting you, Stardust, who will be in the minute of the highest single piece of rage. So, we're in the rest of 2025.
Speaker Change: Second, the G2U Graph Campus for the Digital Students. And it has been previously discussed, newly-tolled Digital Campus Roma for now, sliding your over year in fall 2024. But the reason this is how that thing is called.
Speaker Change: Although the spring intake is much less than the fall, we did see an increase in new students starting at Geo's in 2005, as compared to 2014-24, which helped foster the increasing number of students that graduated at bigger than fall semester.
Speaker Change: is an advantage to include a very low price point, very low average debt levels. Percent of students complete in less than four years and are relevant to use that in programs.
Speaker Change: He seems to still play as the most traditional campus out there, 15,000 students.
Speaker Change: is our understanding that the Department of Education continues to work back and fix us to the best of its ability.
Speaker Change: We believe that this, along with the number of strategy changes to address this specific challenge for 2025-26, that we have made with a lot of things in particular to do in one of those jobs.
Speaker Change: It was made the head of last year in Houston, right straight into the fall of 2025, so although it is still early in the recruitment cycle, the current trends are positive [inaudible]
Speaker Change: 4. Grand Canyon Education's hybrid campus had an increase in enrollment year of 12.1% in the first 4.
Speaker Change: Exploding in the closed sides, the Delta Rath teach out, you won't win the 360-2.5% of your career.
Speaker Change: We expect the Nobel Prize to maintain something a little too mid-deaf during the summer of
Speaker Change: There are two main reasons for this continue program. One, almost all of our active ADSM partners have responded to the understood interest in ADSM programs by many events and students.
or in the process of making action.
Speaker Change: Students who have partially completed degrees have accumulated a great deal of debt and are very interested in nursing careers. The mid-tactment issue leads to our new prerequisite science coursework.
Speaker Change: TCU created the science courses and some other genetic courses so they could be delivered in Pawlak in eight weeks.
Speaker Change: There are start opportunities almost every week. These courses have been made very affordable. They are taught by experience faculty and class sizes are low, and here's a tremendous amount of effort including our official intelligence project for the provides and 24 access to children.
Since implementing these courses, we've already rolled over 14,000 students.
Speaker Change: We have a waterfall report which allows us to know how things are progressing through their prerec courses and when they will be able to start one by eight years since the sun's.
Speaker Change: A success rate of students is successful in the music programs. This is a high-demeanor and a 45-ass rate on the Netflix fans across from 90 percent.
Speaker Change: We now have an extremely efficient way to get students at a number of the thousand-voltage prepare the answer to the program. These pods are resolvable, and we anticipate we'll continue. There's never been greater interest in multiple potential students for entering the health care professions in the state of the nation.
Speaker Change: There are the all on partners who responded positively to the change needed to serve the advanced gaming students. Our goal is to still have individual occasions.
Speaker Change: Now you see partners will have a process in four years of education and teaching you will have a process in four years of allotations.
Speaker Change: in 2025 and over and at home, a five additional sites including our 7th locate in the Boston area in the fall.
Another strike in New York City.
Speaker Change: and GCE will open up Freedom sites in 2025 in Albuquerque, New Mexico, which was opened in the first quarter of 2025. They married Florida, near Orlando and in England, Colorado, South
Speaker Change: We also expand our programming offerings with our hybrid partners by adding a graduate-fishing program with seven specializations without these three universities, including masters in doctoral level degrees.
starting in this summer at some of these close locations.
Speaker Change: A hybrid occupational therapy bridge-to-master program who are always successful, same case
an online health science degree with Duke University.
Speaker Change: and GCU will launch a Bachelor of Science in Occupational Therapy Assistance Program and its speech language, the Policy Program, and the Policy Program in 2025, at our West Valley Dean's location. Adding additional programs in our hybrid locations is an important component of our business plan.
4th, Center for Work, Forest, Development, Grand Canyon University [inaudible]
Speaker Change: The 2022-23 school year we started these students with these views lectures to refresh your program and partnership with companies that are experiencing labor shortages in that area and are excited about hiring these views graduates.
Speaker Change: The program consists of four more credit courses and runs one semester.
Speaker Change: 212 students successfully completed their program in 2024-25, including 11 in Austin, Texas.
Speaker Change: involved in 2023 research, ECU's manufacturing, CNC, and she is a pathway in partnership with companies that are experiencing labor shortages in that area, and I'm excited about hiring ECU friends.
Speaker Change: Program consists of 4.5 courses in one month's semester. 33 students completed this program, and that's what 4.5 is for here.
Speaker Change: These students attend school for $20 a week and any work in that facility is created for 20 hours.
Speaker Change: and it is necessary to see the manufacturing certificate being held on one and it is also a fast-blood manufacturing industry.
Speaker Change: Students at GCU's growing engineering college are getting experience in this backpack from the soul which is adding to their engineering education.
Speaker Change: Recently, a manufacturing company owned and operated by a recent two-segued graduate.
Speaker Change: What a traditional manufacturing company which has more than done is to have it.
Speaker Change: and have the opportunity to significantly grow the number of students involved in this program.
Speaker Change: and the sixth-plus years as GCE has become a service provider. It has helped us part of the development. And that time, GCE itself, Grand Canyon University Reg with a 39,107 students.
Speaker Change: 51,881 in education, including 24,247 first-time teachers at a time of teachers' shorties. Teachers' shorties have created a national crisis.
Speaker Change: 50,615 nursing and health care professions, including 2,136 pre-licensary nurses at a time when there is a huge shortage of nurses.
Speaker Change: 38,586 in the College of Humanities and Social Sciences, including thousands in counseling and social work, but are also huge shortages.
Speaker Change: College of Business could become one of the largest business schools in America, and it's produced 32,900 graduates.
College of Science, Engineering and Technology
as well by 217 percent and provide a set of doubt to be 106 graduates.
Speaker Change: The doctoral college, Fiverr's college, and college in the arts, the arts will also continue to grow.
Speaker Change: In addition, G.C. has helped his other departments, graduate 18,472, pre-licensure nurses, and
Speaker Change: The number of guys just decided it all happened in the past six plus years since the GCEU, GCEU, Grand Canyon and since GCEU has become an education service provider.
Speaker Change: Service revenue was 208.3 million in the first quarter of 2025. The increase of 14.619 would buy one creed which I has compared to 274.7 million in the first quarter of 2024.
Speaker Change: Part of the dots I'll set by a deep reach to the rest of the questions you're going to hear primarily to the last year of being a lead deer previously discussed concept after Pawlak Education.
Speaker Change: That's compared to 34.5 billion and 34.8% respectively from the same period in 2024.
Speaker Change: Inc. increased 5.3% to 71.6% in the first quarter of 2025, and very 68 million to the same quarter of 2024.
Speaker Change: Gas pollutant income per share for the three months ended March 31, 2025 is $2.52.
Speaker Change: and just a non-calculated income for sure because three months ended March 31st, 2025, is 2015 which is 5 cents above two cents estimates.
Speaker Change: With that, I would like to turn it over to Dan Bachus, our CEO , who gave a little more color in 2025 for his report, talk about changes in the income statements, balance sheet and other items as well as his discussion in 2025 back.
Dan Bachus: Thanks, Brian . Included in our four May K-Files with the SEC, we have included non-GAAP net income and non-GAAP saluted income for share for the three months end of March 31st, 25
Dan Bachus: The non-GAAP Amounts exclude the tax-affected amount of the amortization of a tangible asset of $2.1 million in the first quarters of both 2025 and 2024.
Dan Bachus: We believe that non-GAAP financial information allows investors to develop a more meaningful understanding of a company's performance over time.
Dan Bachus: As adjusted, non-GAAP saluted income per share for the three months ended March 31st, 2025, and $24 is $2.57 and $2.35.
Bye.
Dan Bachus: Service revenue was higher than our expectations in the first quarter of 2025, primarily due to a higher than expected enrollment.
Dan Bachus: As we expected, revenue for students decreased slightly between years, primarily due to the additional day for Leap Year in 2024, which added additional service revenue of 1.5 million.
Dan Bachus: as compared to the current year. And contract modifications for some of our university partners in which the revenue share percentage was reduced in exchange for a no longer reimbursing the partner for certain faculty calls, both of which had the effect of reducing revenue pursuit. [inaudible]
Dan Bachus: This is partially upset by the service revenue for students for ABSN students at off-campus classroom and laboratory sites.
Dan Bachus: Generating a significantly higher revenue for students than we earn under our agreement with GCU. As these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU.
Dan Bachus: and the majority of our partners, students, take more credits on average per semester.
Dan Bachus: The first quarter offering margin was negatively impacted on a year-over-year basis, as we expected, due to the leap-your-impact, additional spend for 2025 partners' initiatives, but also due to significantly higher than expected benefit costs, as a result of an increase in the number of high cost points.
Dan Bachus: Our effective tax rate for the first quarter of 2025 was 21.6% compared to 22.9% in the first quarter of 2024, and our guidance of 22.2%
Dan Bachus: The effective tax rate decreased year-over-year, primarily due to an increase in excess tax benefits of 2.7 million as compared to 1.5 million in the three-month ended March 31st, 2025 and 2024 respect. Partially offset by higher state income tax.
Dan Bachus: We anticipate this trend of higher state income taxes will continue.
Dan Bachus: We re-purchased 395,426 shares of our common stock in the first quarter of 2025 at a cost of approximately 68.4 million and another 125,780 shares were purchased since March 31st, 2020.
Dan Bachus: We have 209.4 million remaining available as of today under our share repurchase hot
Dan Bachus: The board and the company intend to continue using a significant portion of its cash flows from operations to repurchase and shares and we anticipate daily purchases will continue during 2025.
Dan Bachus: Turning to the balance sheet and cash flows, total unrestricted cash and cash equivalence and investment, as of March 31st, 2025 was 304.7 million.
Dan Bachus: GC CAPEX in the first quarter of 2025, including CAPEX for new off-campus classroom and laboratory site, was approximately 8.9 million or 3.1% of service rent.
Dan Bachus: We insist the CAPEX for 2025 will remain comparable with prior year at between 30 and 40 minutes.
Dan Bachus: Last I would like to provide color on the updated guidance. We have provided in our 8-K filed today as a reminder, the guidance that we've provided in the outlook section of our 8-K filed today as GAAP net income diluted income per share with the components to adjust the GAAP amounts to non-GAAP as adjusted net income and non-GAAP as adjusted.
Dan Bachus: Last I would like to provide color on the updated guidance we have provided in our AK file today.
Dan Bachus: We have updated full year 2025 guidance to include the first quarter revenue and earnings have increased second quarter revenue and earnings projections by increasing both the low end and the high end of our previously provided guidance due to the higher than expected enrollments at March 31.
Dan Bachus: We continue to anticipate that new enrollments will be up year over year in the mid to high single digits in each quarter during 2025 and that total online enrollments will remain in the mid to high single digits over the prior year throughout 2025.
Total online enrollments will continue to be pressured by increasing graduation, and a continued decline in reentry students returning to school after break due to high retention rates there could be some upside to our second half projections, given the strong trends, but given the tough comps. We believe these estimates our approach.
Dan Bachus: We continue to anticipate new and total student growth rate and the hybrid pillar to be in the mid to high teens with the revenue growth rate for the hybrid pillar as a result of the enrollment growth continued continuing to be partially offset by changes made to the contracts for the University partners that are no longer being reimbursed for factory costs.
Dan Bachus: All ground traditional enrollment expectations remain the same as what was provided last quarter.
Dan Bachus: On the expense side as Youll recall after a pause in certain investments primarily in headcount in the first nine months of 2024, we ramped up hiring other spend in the fourth quarter of 2024 and anticipate this continued investment.
Dan Bachus: Continued investment to continue in the second quarter to meet the growth goals of our partners. We also continue to absorb significant increases in both benefit costs and technology surfaces with benefit cost significantly exceeding our expectations in the first quarter and during the month of April as it relates to hybrid pillar, we will continue to incur additional costs for the new hybrid local.
Dan Bachus: <unk> and <unk>.
Dan Bachus: Opened in the last six months or will open in 2425, but we are experiencing increased site level profitability due to the increasing in law last.
Dan Bachus: Lastly, we continue to anticipate an increase in legal fees again in 2025 over 2020 or as we have a couple of lawsuits filed in prior years, they're expected to go into the discovery phase <unk> trial during 2025.
Dan Bachus: So to summarize we continue to believe we will see a slight decline in margins in the second quarter as we did in the first due to the investments and other items noted, but are optimistic that margins will expand in the second half as long as we see year over year growth in the traditional campus enrollments.
Dan Bachus: We are estimating net interest income will continue to be down year over year due to the declining cash balances due to more aggressive stock buybacks in a declining interest rate environment. We have lowered interest income slightly for the rest of the calendar year due to the greater than expected stock buybacks during the first quarter, while decreasing the number of weighted average shares outstanding.
Dan Bachus: Yes.
Dan Bachus: We still believe the effective tax rate for the lab.
Last three quarters of 2025 will be 24, 9% 24, 9% and $24, 1% with a full year tax rate now at 23, 7%.
Dan Bachus: The effective tax rate continues to rise due to higher state taxes, as we continue to add new sites outside of Arizona, which have higher state tax rates and other factors.
Dan Bachus: These estimates do not assume a contribution of real estate income taxes, but if one has made that will increase G&A expense in the third quarter and decreased the effective tax rate in the second half of the year.
Dan Bachus: As mentioned earlier, our weighted average shares guidance has decreased slightly for each of the three remaining quarters due to the greater than expected purchases in the first quarter. The board continues to authorized the repurchase of shares as it believes the stock remains undervalued based on the metrics that you use it to evaluate including the ratio of enterprise value to adjusted EBITDA and the free cash flow yield rather.
Dan Bachus: Multiples of other education companies as although we can be viewed as being in the same sector. There are few if any appropriate jobs.
Dan Bachus: I'll now turn the call over to the moderator so that we can answer questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session. Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Jeff Silver Silber from BMO capital markets. Your line is now open.
Speaker Change: Thank you so much in your prepared remarks, you mentioned a few times about the better than expected enrollment in the first quarter I was wondering if we can get a little bit of color.
Speaker Change: Where that came from is there any specific programs et cetera anything would be great.
Speaker Change: Yes.
Speaker Change: Two things one.
Speaker Change: Lease level and the interest from what we're doing here is continues to grow I think a lot of increases because of new programs.
Speaker Change: Most of our competition.
Speaker Change: With the number of programmatic offerings and students increasingly.
Speaker Change: Growing our revenue.
Speaker Change: The programs.
Speaker Change: Trying to complete.
Speaker Change: Great they're looking for.
Speaker Change: Specific areas.
Speaker Change: And so that's one.
Speaker Change: The second reason is we continue to sign contracts with school districts hospitals.
Speaker Change: Our military basis.
Speaker Change: Signed with three large school districts.
Speaker Change: Florida will be might be Dave just signed a contract with a major military basis.
Speaker Change: Sorry.
Speaker Change: So the work that we're doing directly with corporations.
Speaker Change: School District hospitals military basis.
Speaker Change: Gary firms others.
Speaker Change: Are creating a lot of opportunities for working with us through back to school.
Speaker Change: The combination of those two things.
Speaker Change: Increased.
Speaker Change: Online enrollments.
Those things we believe will continue.
Speaker Change: Have you experienced those things.
Speaker Change: Alright, Thats very helpful.
Speaker Change: My follow up question I know theres been a lot of noise in the media about fears of potential funding cuts coming out of Washington.
Speaker Change: From a student perspective I'm. Just curious are you seeing students or parents worried about that and I'm specifically interested in your fall enrollment at the ground campus. If you might think that might have an impact.
Speaker Change: Some of those discussions in Washington.
Speaker Change: Get real specific about that.
Speaker Change: Most of the talk is around.
Speaker Change: That could go directly to states locked.
Speaker Change: Block grants.
Speaker Change: So I don't believe that there is going to be less funding.
Speaker Change: Education, I think the funding for maintenance phase I need to increase some of it might be returned to the space.
Speaker Change: Some of the things that people are seeing now with this news has to do with research brands are more solid research grants and they have to do with either co brand levels or low levels those kind of things.
Speaker Change: So.
Speaker Change: There are some universities are very concerned about that.
Speaker Change: Not yet.
Speaker Change: That we're not playing in that.
Gary: Gary a lot we do significant levels of research, especially at the gradual upward.
Speaker Change: Direct relationship with companies that we're working on.
Speaker Change: And without relying on a lot of grant funding.
Speaker Change: The federal government.
Speaker Change: I think southern University of cap leases.
To be nervous about some of that.
Speaker Change: Yes.
Speaker Change: The grant money.
Speaker Change: Research revenue.
Speaker Change: I'm not hearing anything in terms of.
Speaker Change: Pilot programs back Gary.
Speaker Change: Progress, even though the department of Ed.
Speaker Change: Secondly, we'll probably stay with the people operate at the department of that type.
Speaker Change: I don't think any of that's going to impact us at all.
Speaker Change: Alright, thats great to hear thanks, so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Alex Paris from Barrington Research. Your line is now open.
Speaker Change: Thank you and congrats.
Speaker Change: The strong start to the new year I have got a couple of follow up question is primarily on all the enrollment which was sort of above target.
Speaker Change: Representing acceleration from the fourth quarter.
Speaker Change: You in your prepared comments.
Speaker Change: You talk about above the long term target and so I thought maybe now would be a good time to get an update on long term targets by my line item, maybe total partner enrollment GCU online GCU ground Orbis.
I'm looking for kind of longer term targets for each of those pillars.
Speaker Change: Well.
Speaker Change: We don't break that out typically.
Speaker Change: More than 47%.
Speaker Change: And.
Speaker Change: So we're excited about that at seven 9% on that respect accommodate.
Speaker Change: Accommodation.
Speaker Change: Online enrollments.
Speaker Change: Some hybrid and then restarting the factories.
Speaker Change: Of course developing area.
Speaker Change: I can tell you that we're running ahead in terms of new enrollments in the online side.
Speaker Change: We are running ahead in terms of hybrid enrollments both are very strong.
Speaker Change: We're way ahead of registration right now the majority of that obviously doesn't start until late.
Speaker Change: Late August early September so we won't ultimately whether you are ahead or behind until we get.
Speaker Change: Obviously, it's a separate but we.
Our LOE guidance there in our high guidance.
Speaker Change: Pretty big gap there.
Speaker Change: And right now.
Speaker Change: La is doing so well that if we do well from Braskem Walgreens.
Speaker Change: If we don't do quite as well.
Speaker Change: Yes.
Speaker Change: Because the two areas are very strong.
Speaker Change: The ground enrollment we have lot of options here.
Speaker Change: There has been.
Speaker Change: As you know high.
Speaker Change: High school graduates noncritical brands.
Speaker Change: I doubt.
Speaker Change: The percent of that that are going to college is going down. So you are absolutely seeing a mix shift.
Speaker Change: Elections.
Speaker Change: But the areas that are growing or mid tier.
Speaker Change: Universities.
Speaker Change: More students are staying closer to home.
Speaker Change: The mid tier institutions that have lower tuition.
Speaker Change: And so those institutions are gate.
Speaker Change: Institution like ours.
Speaker Change: We still have good quality space suits it wasn't profitable book.
Speaker Change: Our destination expat lifestyle like speakers up when you have the <unk> ranked Kansas in the country.
Speaker Change: Scott.
Speaker Change: Switching 60 years, and our average Paypal the average state universities. So.
Speaker Change: People are.
Speaker Change: Are making different choices.
Speaker Change: In terms of 18 year olds.
Speaker Change: To prepare for life work, but we are in the sweet spot of that.
Speaker Change: We're definitely in a sweet spot of that.
Speaker Change: And so we believe that this little bit of a two year old that the even if we experience who will be it's going to be reversed this year.
Speaker Change: Cause of the value proposition that we represent.
Speaker Change: Does that help with that.
Speaker Change: Absolutely. Thank you I appreciate the additional color.
And then.
Speaker Change: Sort of the same question looking for an update on.
Speaker Change: Expectations for this year from an enrollment perspective, I had kind of a bad connection.
For the prepared comments. So if you talked about this I apologize but.
Speaker Change: You had said with regard to GCU online starts in the mid to high single digits every quarter of 2024.
Speaker Change: Orbis.
Speaker Change: Up low to mid teens rest of 2025 do those still stand yes, yes.
Speaker Change: Yeah, Great and then.
Speaker Change: Last question a question I haven't asked in a while maybe because it's not particularly relevant but I'll ask anyway.
Speaker Change: So that's on M&A.
Speaker Change: Grand Canyon Education has made acquisitions in the past obviously the hybrid line.
Speaker Change: Wondering what your thoughts are with regard to M&A do you look at them.
Speaker Change: Is there anything that you'd like to acquire particularly with with a new administration and different rules being proposed in Washington D. C.
Speaker Change: No.
Speaker Change: It's a good question, but.
Speaker Change: We continue to prefer building.
Speaker Change: We did make an acquisition with Orbis and we like very much the market that they were aggressively a little bit of a head start.
Speaker Change: The mid size banks.
And we've corrected those things and now we're in a very good position as a result of that acquisition, but for the most part we're addressing.
Speaker Change: We see it.
Actual in higher Ed liability mix and that.
Speaker Change: Got it.
Speaker Change: There is very little.
Speaker Change: We'll be purchasing anything, but we will be continuing to stay intact.
Speaker Change: Yes, so buildup.
Speaker Change: What we're doing in workforce development is a very good example of that.
Speaker Change:
Speaker Change: Hum.
Speaker Change: I do believe that actually can come back to discuss.
Speaker Change: I don't think it will come out the same way at the back half work through AI and robotics is going to have a big impact.
Speaker Change: But the reason we're working with this manufacturing facility as it were.
Speaker Change: Trying to find the right <unk>.
Speaker Change: <unk> be great.
Speaker Change: Engineering technology manufacturing.
Speaker Change: Aratana is blowing up with these major.
Speaker Change: Chip manufacturing companies that are coming here.
Speaker Change: The need for skilled labor anywhere from electrical engineering students down to entry level technicians at everything equally equally.
Manufacturing specialists is huge.
Speaker Change: And we're going to be a big part of that.
Speaker Change: We don't see anything out there that can accelerate that for us. We think we can move faster by by working directly with companies building.
Speaker Change: And we'll continue to spend most of our time.
Speaker Change: Building things versus mine.
Speaker Change: Fair enough I appreciate the color I'll get back in the queue.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question comes from the line of Stephen Paluch of Baird. Your line is now open.
Stephen Paluch: Yes, Thank you Jim.
Just wanted to ask on the process for converting the students that are on the prerequisite program into.
Stephen Paluch: The hybrid ABS I'm programs.
Stephen Paluch: Doug.
Speaker Change: My question is that its place so there's 14000 students that you.
Speaker Change: Enrolled in a prerequisite program, but ABS enrollments sort of in that mid teens or mid single digit thousands. So I'm just kind of what's the process for converting.
Speaker Change: Thanks for the 14th.
Speaker Change: 5000.
Speaker Change: It's.
Speaker Change: Students.
Speaker Change: That are interested in Mexico, there are people that out for me.
Some college credits in 2021 years old.
Speaker Change: They've gotten to a community college.
Speaker Change: They are attempting to try and use washing program that they can see that.
Speaker Change: A really really long round.
Speaker Change: <unk> offered this semester at this time, but not all of them are working harder time, having accumulated a lot of debt.
Speaker Change: So even though our courses are celebrated their with us anywhere between.
Speaker Change: Six months.
Speaker Change: Between 12 to 18 months before they finish their coursework.
Speaker Change: A BSN program.
Speaker Change: And so.
Speaker Change: With 24, when we get to 81 way to think about it.
Speaker Change: We get the point.
Speaker Change: We won approximately 388 cents per.
Speaker Change: Okay.
Speaker Change: <unk> 4000 slots.
Speaker Change: Eventually we're going to have to have more than four balance students a prerequisite in order to get those.
Speaker Change: 44000 slots filled.
Speaker Change: 124000 students safety Prereq workers April 'twenty forecast spots.
Speaker Change: We think this is going to be the absolute predominant way to get prepared to give you one of those programs.
Speaker Change: Many of our partners do have a program on here.
Speaker Change: Our campuses, but they're semester law forces out there or even your cost per hour rate to.
Speaker Change: We expect people to borrow that money I think the bottom line.
Speaker Change: Unrealistic.
Speaker Change: So gradually.
Speaker Change: They are now.
Speaker Change: As these new partners are sending our students into these pre rack prices in order to get qualified to do so.
Speaker Change: The.
We have a waterfall and we can see with students.
Speaker Change: Are progressing and which ones are likely to be eligible.
Speaker Change: 100%.
Speaker Change: The courses are difficult, but we need to build that number even above what the balance of essentially still quite warehouses spots does that make sense.
Speaker Change: No it makes perfect sense.
Speaker Change: And then on the non ABS on hybrid program that you referenced how quickly can you scale those in.
Speaker Change: So the point where they are.
Speaker Change: <unk> to.
Speaker Change: The financial performance.
Speaker Change: Well, it's all a little quicker than we even thought six months ago.
Speaker Change: Because.
Speaker Change: What's going on at places like North Eastern.
Speaker Change: And what's going on at places like the GCU location is having an impact on the thinking of are less are more conservative.
Speaker Change: Okay.
Speaker Change: Parks.
Speaker Change: Those that are little slower to respond I believe.
Speaker Change: And respond more quickly in the future because of financial pressures they are under.
Speaker Change: With their mobile business.
Speaker Change: It is not getting back and these programs can be so profitable for them. They have such an impact on their bottom line and especially the smaller schools are going to be a lot more often.
Speaker Change: To take a little risk and start to use other programs before.
Speaker Change: I think in the past we will walk through.
Speaker Change: We've got a lot of that a lot.
Speaker Change: But just given the last couple of months and so I think things will accelerate over the next couple of years.
Speaker Change: I would like to add to that I know, Brian talked about this in his prepared remarks, but what.
Speaker Change: <unk> excited about the startup of some of these additional programs.
Speaker Change: With some of our other non GCU partners. This is something we've been talking about for a few years.
Speaker Change: And it's coming to fruition this year and so I think right to Brian's point I think these partners are seeing the success.
Speaker Change: We are having with GCU and some of our other partners.
Speaker Change: And are asking for.
Speaker Change: Additional programs.
Speaker Change: Some of those programs are actually starting up in 2025, which is really exciting.
Speaker Change: Thanks very much.
We have reached the end of our first quarter conference call. We appreciate your time and interest in Grand Canyon Education. If you still have questions. Please contact myself Dan Bachus. Thank you very much for your time.
Yes.
Speaker Change: Okay.