Buoyed by growth across its three divisions, Sylvan Learning Systems Inc. reported record revenue and earnings yesterday for its fourth quarter.
The Baltimore-based education company's net income for the three months that ended Dec. 31 was $19.6 million, or 37 cents per diluted share, compared with $10.9 million, or 22 cents a share, in the fourth quarter of 1997.
Earnings for the quarter beat the consensus of seven analysts surveyed by Zacks Investment Research by a penny.
Revenue for the quarter was $145 million, an increase of 49 percent, compared with revenue of $97.5 million in the corresponding quarter a year earlier. The revenue increase is 38 percent excluding revenue from businesses acquired in 1998 and not included in 1997 results.
Sylvan shares closed yesterday at $34, down 25 cents.
B. Lee McGee, Sylvan's executive vice president and chief financial officer, attributed the record quarter to "strong management within each division."
"We are very diversified," he said. "We're in an industry that has the highest potential revenue and the largest market opportunities, and we pick and choose the right parts to be in."
The company has three divisions -- computer-based testing, learning centers, and contract educational services.
"Sylvan is running on all four cylinders," said Scott L. Soffen, an analyst at Legg Mason Inc. in Baltimore, who agrees with McGee that Sylvan has benefited from its diversification.
"The company is a conglomerate of education-related businesses, so there's no one thing that drives the company," Soffen said. "Fundamentally, education is becoming increasingly important in America, and Sylvan's services are becoming increasingly valued."
Each of Sylvan's business divisions contributed to the revenue growth for the fourth quarter, with the company's learning-center division leading the pack. Its revenue increased 58 percent to $20.7 million, from $13.1 million in the fourth quarter of 1997.
For the year, Sylvan's revenue increased 47 percent to $440.3 million. The increase is 32 percent excluding revenue from businesses acquired during 1998.
Net income for the year was $35.7 million, or 70 cents a diluted share, compared with $27.6 million, or 62 cents a diluted share, for 1997. If one-time costs and income were excluded from net income in 1997 and 1998, growth would have been 45 percent vs. the current 29 percent.
Pub Date: 2/26/99