National American University Holdings, Inc. :NAUH-US: Earnings Analysis: Q2, 2017 By the Numbers : January 10, 2017

National American University Holdings, Inc. reports financial results for the quarter ended November 30, 2016.


  • Summary numbers: Revenues of USD 21.98 million, Net Earnings of USD -0.75 million.
  • Gross margins narrowed from 68.03% to 65.65% compared to the same period last year, operating (EBITDA) margins now 1.36% from 0.49%.
  • Change in operating cash flow of 131.90% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-11-30 2016-08-31 2016-05-31 2016-02-29 2015-11-30
Relevant Numbers (Quarterly)
Revenues (mil) 21.98 21.13 23.05 22.68 25.74
Revenue Growth (%YOY) -14.59 -14.28 -20.16 -22.02 -15.99
Earnings (mil) -0.75 -2.06 -0.97 -1.89 -1.18
Earnings Growth (%YOY) 36.16 -57.07 -478.91 -229.17 -141.68
Net Margin (%) -3.42 -9.73 -4.21 -8.34 -4.58
EPS -0.03 -0.09 -0.04 -0.08 -0.05
Return on Equity (%) -8.26 -21.16 -9.38 -17.19 -9.84
Return on Assets (%) -4.7 -12.17 -5.37 -10.02 -5.92

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, NAUH-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if NAUH-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 4.04% and earnings by 63.42% compared to the previous period.

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 0.49% to 1.36%. For comparison, gross margins were 64.42% and EBITDA margins were -7.40% in the last period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

NAUH-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 75.54 days from 110.91 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Cash Versus Earnings – Sustainable Performance?

NAUH-US‘s year-on-year change in operating cash flow of 131.90% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -5.03% to -4.52% and (2) one-time items. The company’s pretax margins are now -5.22% compared to -5.85% for the same period last year.

EBIT Margin History
PreTax Margin History

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Company Profile

National American University Holdings, Inc. provides postsecondary education and develops real estate. It operates through the following segments: NAU and Other. The NAU segment provides the revenues and expenses associated with the University operations and the allocated portion of corporate overhead. The Other segment provides real estate services. The company was founded on April 10, 2007 and is headquartered in Rapid City, SD.

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