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Apollo Group Profit Tops Estimate; Backs Outlook


For profit education company Apollo Group, Inc. (APOL) on Monday posted a profit for the second quarter as compared to a loss in the same period last year, when results were weighed down by hefty goodwill and other impairment charges.

The company's quarterly earnings per share, excluding items, also handily beat analysts' estimate as did its quarterly revenue. At the same time, the company maintained its fiscal 2012 revenue and operating earnings outlook.

Additionally, Apollo Group said that it was notified by the U.S. Securities and Exchange Commission that the informal inquiry initiated against the company in October 2009 was completed and that no enforcement action was recommended.

Apollo Group shares are currently gaining more than 4% in after hours trading after closing the day's regular trading session at $43.20, up 79 cents or 1.86%. The shares trade in a 52-week range of $37.08 to $58.29.

Apollo Group is the parent of the University of Phoenix. Degreed Enrollment at the University of Phoenix dropped 12.2% year-over-year to 355,800 in the second quarter, largely due to decreases in New Degreed Enrollment during fiscal 2011, which the company believes were mainly the result of the operational changes and initiatives it implemented to more effectively support students and improve educational outcomes.

University of Phoenix New Degreed Enrollment increased 1% in the second quarter as compared to a year earlier.

The company had warned late last month that new degreed enrollment for the second quarter would reflect flat to low-single-digit growth year-over-year on a percentage basis, as compared to its prior expectations of growth similar to first quarter of fiscal 2012, which was 12.7%.

For the second quarter ended February 29, 2012, the Phoenix, Arizona-based company reported net income of $63.9 million or $0.51 per share, compared to a net loss of $64.0 million or $0.45 per share for the year-ago quarter.

The latest quarter results include restructuring and other charges of $16.1 million related to the company's real estate rationalization plan. Results for the year-ago quarter included goodwill and other intangible asset impairment charges of $219.9 million for the BPP subsidiary of Apollo Global, and other items.

Excluding items, earnings for the latest quarter were $73.8 million or $0.58 per share.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.37 per share for the second quarter. Analysts' estimates typically exclude special items.

Net revenue for the second quarter fell 7.5% to $969.55 million from $1.05 billion in the same quarter last year, mainly due to lower enrollment at the University of Phoenix. Sixteen analysts had a consensus revenue estimate of $932.82 million for the second quarter.

During the second quarter, the company repurchased about 6.4 million shares of its common stock for $328.8 million. Subsequent to February 29, 2012, the company repurchased about 2.2 million shares at a total cost of $92.5 million, resulting in $0.5 million remaining of the current share repurchase authorization.

Looking forward, the company maintained its fiscal 2012 revenue outlook of $4.1 billion to $4.3 billion; and operating earnings outlook of $625 million to $725 million. Analysts currently expect the company to post revenue of $4.24 billion for the fiscal year 2012. Only last month, the company had lowered its fiscal 2012 operating earnings outlook to a range of $625 million to $725 million.

by RTTNews Staff Writer

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