Sylvan nets $7.5 million for quarter Baltimore firm's revenue up 41% to $58.5 million


October 24, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

Despite a smaller increase than expected in revenue in one of its divisions, Sylvan Learning Systems Inc. reported yesterday that third-quarter earnings rose to $7.5 million, or 25 cents a share, compared with $4.3 million or 17 cents a share for the

same period in 1996.

The Baltimore-based educational tutoring and testing service also said it has signed new contracts, worth $6 million over the next three years, to provide learning centers for tutoring students inside public and parochial schools in three new schools in Richmond, Va., and other schools in St. Louis; Palo Alto, Calif.; and Tyler, McAllen and Houston, Texas.

"I think clearly the company reported a strong quarter, given the momentum that people close to the company were seeing it wasn't a great surprise that they exceeded the estimates," said Michael Moe, an analyst with Montgomery Securities. The company exceeded analysts' expectations by two cents.

The company said its revenue has increased 41 percent to $58.5 million, compared with $41.5 million in the third quarter for 1996.

The revenue of the Learning Center Division, which historically has risen 15 percent to 20 percent each quarter, rose by $1.4 million or 14 percent for the third quarter, said Lee McGee, chief financial officer.

That division -- the company's core business -- has 650 tutorial centers in schools, all but 42 of them owned by franchisees.

McGee said he believes revenue did not rise as high as usual because a television advertising campaign was aimed at the nightly news audience, rather than the morning news audience.

The company changed its advertising company to W. B. Doner in July and plans a different strategy.

Moe noted that, while the growth was less than expected, it was still "very solid."

The strong revenue increases in the testing division helped spur the strong performance in the quarter, McGee said. "We have the advantage of being diversified, so if we have a negative, other things counterbalance the blips," said McGee.

Earnings for the nine months ended Sept. 30 was $17.7 million, or 61 cents a share, compared with $9.2 million, or 36 cents a share, a year earlier.

Pub Date: 10/24/97

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