National American University Holdings, Inc. :NAUH-US: Earnings Analysis: Q3, 2017 By the Numbers : April 10, 2017

National American University Holdings, Inc. reports financial results for the quarter ended February 28, 2017.


  • Summary numbers: Revenues of USD 21.33 million, Net Earnings of USD -2.54 million.
  • Gross margins narrowed from 68.34% to 61.46% compared to the same period last year, operating (EBITDA) margins now -4.45% from -3.41%.
  • Change in operating cash flow of -124.88% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating (EBIT) margins contributed to decline in earnings, despite some positive contribution from one-time items.

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

2017-02-28 2016-11-30 2016-08-31 2016-05-31 2016-02-29
Relevant Numbers (Quarterly)
Revenues (mil) 21.33 21.98 21.13 23.05 22.68
Revenue Growth (%YOY) -5.94 -14.59 -14.28 -20.16 -22.02
Earnings (mil) -2.54 -0.75 -2.06 -0.97 -1.89
Earnings Growth (%YOY) -34.11 36.16 -57.07 -478.91 -229.17
Net Margin (%) -11.89 -3.42 -9.73 -4.21 -8.34
EPS -0.1 -0.03 -0.09 -0.04 -0.08
Return on Equity (%) -30.08 -8.26 -21.16 -9.38 -17.19
Return on Assets (%) -16.47 -4.7 -12.17 -5.37 -10.02

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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 -2.97% and earnings by -237.23% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 68.34% to 61.46%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -3.41% to -4.45% in this time frame. For comparison, gross margins were 65.65% and EBITDA margins were 1.36% in the previous 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 66.70 days from 114.79 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?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

NAUH-US‘s year-on-year change in operating cash flow of -124.88% 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 fell, largely because of the narrowing in operating margins, which decreased from -9.58% to -10.36%. The decline in earnings probably would have been worse, were it not for some one-time items that improved pretax margins from -13.22% to -11.16%.

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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