Sylvan's revenue rises 59 percent

Quarterly loss blamed on venture capital unit

April 27, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Sylvan Learning Systems Inc., the Baltimore-based education services company, said yesterday that revenue rose nearly 60 percent, even as it lost money during the first quarter because of its venture capital subsidiary.

For the quarter ended March 31, Sylvan had a net loss from continuing operations of $11.6 million, or 31 cents per share, compared to earnings of $3.4 million, or 7 cents per share, for the same quarter of last year.

The loss came mostly from Sylvan Ventures, a subsidiary formed last year to invest in technology-based education companies.

Excluding noncash losses from Sylvan Ventures, the parent company beat its own financial forecasts and topped analysts' expectations with earnings of $3.9 million, or 10 cents per share, for the quarter, compared to $3.8 million, or 7 cents per share, a year ago.

Revenue for the quarter rose 59 percent, to $120.4 million from $75.5 million.

"It looked very strong to me," Trace Urdan, an analyst with WR Hambrecht + Co. in San Francisco, said of the quarter.

Urdan said the fact that Sylvan came out ahead of its forecast meant its international university business and its core tutoring business was stronger than expected.

"There was strength across all of their businesses, and there were no real major flags or issues in the quarter," he said.

Douglas L. Becker, the company's chief executive officer, said the first quarter is typically Sylvan's lowest. That's because Canter and Associates, Sylvan's teacher-training subsidiary, does most of its revenue in second, third and fourth quarters, and the Universidad de Las Americas in Chile, in which Sylvan has a controlling interest, has summer recess during the first quarter.

"Beating the first-quarter numbers puts us on a good path to achieve the numbers for the full year," Becker said.

Sylvan still expects revenue for the year of $475 million to $490 million and net income of 63 cents to 65 cents per share, excluding Sylvan Ventures.

The company said revenue for the second quarter is expected to be between $119 million and $127 million. Earnings for the second quarter, excluding Sylvan Ventures, are expected to be between 20 cents and 21 cents per share.

Becker told investors during a conference call yesterday morning that Sylvan could expect to be insulated from the economic downturn because the company has business all around the world and because its revenue comes from post-secondary education, which is acyclical.

"We do not see any potential impact on our business as a result of the slowing economy," he said.

Shares of Sylvan closed yesterday at $18.07, up 81 cents.

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