National American University Holdngs Inc :NAUH-US: Earnings Analysis: Q2, 2018 By the Numbers : January 19, 2018

National American University Holdngs Inc reports financial results for the quarter ended November 29, 2017.


  • Summary numbers: Revenues of USD 20.02 million, Net Earnings of USD -3.77 million.
  • Gross margins narrowed from 65.65% to 63.76% compared to the same period last year, operating (EBITDA) margins now -17.88% from -4.52%.
  • Narrowing of operating margins contributed to decline in earnings.

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

2017-11-29 2017-08-30 2017-05-30 2017-02-27 2016-11-29
Relevant Numbers (Quarterly)
Revenues (mil) 20.02 19.8 22.14 21.33 21.98
Revenue Growth (%YOY) -8.94 -6.31 -3.92 -5.94 -14.59
Earnings (mil) -3.77 -3.81 -0.92 -2.52 -0.74
Earnings Growth (%YOY) -408.36 -87.05 4.06 -34.61 36.58
Net Margin (%) -18.84 -19.27 -4.16 -11.83 -3.38
EPS -0.16 -0.16 -0.04 -0.1 -0.03
Return on Equity (%) -16.23 -13.86 -2.98 -7.48 -2.03
Return on Assets (%) -30.78 -28 -6.29 -16.39 -4.64

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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 1.12% and earnings by 1.10% 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 65.65% to 63.76%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -4.52% to -17.88% in this time frame. For comparison, gross margins were 60.21% and EBITDA margins were -19.75% 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 are now 24.35 days from 75.54 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -4.52% to -17.88% and (2) one-time items that contributed to a decrease in pretax margins from -5.22% to -18.56%

EBIT Margin History
PreTax Margin History

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Company Profile

National American University Holdings, Inc. is a provider of postsecondary education primarily focused on working adults and other non-traditional students. The Company, through its subsidiary, Dlorah, Inc., owns and operates National American University (NAU or the University), a multi-campus institution of higher learning, which offers associate, bachelors, masters and doctoral degree programs in allied health, legal studies, education, business, accounting and information technology. It operates through two segments: NAU and other. The NAU segment consists of the Company’s operations associated with the University. The other segment consists of the Company’s real estate business. The Company offers academic and degree programs online. The Company offers Doctor of Education, Master of Management, Master of Science in Nursing, Bachelor of Science, Associate of Applied Science and Associate of Science degrees, among others, with a range of program options for each of these degrees.

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