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#Thank you, Rob.
Good morning, everybody.
I'd like to begin this morning with an update on a couple of regulatory matters.
First and foremost, we were very pleased that our regional accreditor, the Middle States Commission on Higher Education, reaffirmed our accreditation for an 8-year period, which is the maximum duration that they allow.
This reaffirmation follows a review of our self-study.
It included multiple site visits by a peer review team and was a multiyear effort on the part of the university's leadership team.
I'd like to specifically acknowledge Dr.
Sondra Stallard, Strayer University's President Emeritus; and Brian Jones, Strayer University's current President, as well as his senior leadership team for the incredible work they did not just on this self-study but on all of the improvements made since the university's last self-study in 2007.
The second regulatory update is also during the quarter.
We received our specialized programmatic accreditation for our RN to BSN program from the Collegiate Commission on Nursing Education or CCNE for a period of 5 years, which is their normal duration.
Next, just a couple of comments on our second quarter financial results.
Our revenue per student declined 1.8% from last year.
That's better than the decrease of 2.6% we had in the first quarter.
However, in a prior earnings call, I indicated we thought revenue per student would be down in 2017 on a full year basis by roughly 1 percentage point.
But based on our current trends, which is more undergraduate students as well as a slightly higher drop rate, we expect revenue per student to decline between 1.5% and 2% now for the full year 2017.
Our operating expenses were up 3.4% in the second quarter when you include the reversal of the NYCDA contingent liability, otherwise they would have been up 6% excluding that adjustment.
About 1/3 of that increase was associated with higher advertising costs as we work to support our various branding efforts.
Much of the remaining increase is essentially timing.
We have about a dozen active large projects designed to improve both student learning outcomes and the overall student experience, and we invested in those a little more heavily in the second quarter.
For the full year, we think our operating expenses will increase roughly 3% on a year-over-year basis, and that figure assumes that our current enrollment trends continue.
And then lastly, on enrollment.
Our positive enrollment trends continued in the second quarter with new students up 6% and total enrollment up 8%.
Our continuation rate in the quarter increased 100 basis points.
Quickly on the Jack Welch Management Institute.
They posted another very strong quarter with 34% new student growth, 31% total student growth.
And they almost doubled the number of graduating students from 52 last year to 94 this year, and they've crossed over the 1,500 student threshold.
And we couldn't be happier with their performance.
In the quarter, yes.
Lastly, our enrollment outlook for the third quarter is for both new and total enrollment to grow approximately 7% versus the prior year.
And with that, operator, we'd be happy to take questions.
Sure, Henry.
First, we continue to see a pretty positive demand environment, meaning that interest in the university continues to grow at a double-digit pace.
We saw that in the second quarter.
And I think it's a combination of just general brand awareness; the health of, as I just commented on, the Jack Welch Management Institute; the health of our corporate alliances.
All of that is contributing to the new student growth that we've had.
We also had pretty healthy retention gains in the quarter, 100 basis points.
So it's a combination of just the ongoing efforts to build the brand awareness of the university combined with some of the more proprietary things that we have in the way of JWMI and the 300-plus corporate partnerships that we have around the country.
Well, you heard <UNK> comment in his remarks that we expect double-digit earnings growth in the back half of this year, and with that, we would expect our margins to expand.
Sure, <UNK>.
Unfortunately, I don't have the by-program list in front of me.
I know, similar to prior quarters, the bulk of the growth is at the undergraduate level.
In prior quarters, the growth has been pretty spread evenly across most of our programs, but the bulk of what we teach is business.
So for example, the BBA is our largest program, so that would be a program that had a lot of growth in it.
And in terms of the second part of your question, the health of our corporate channels is very strong.
We're benefited by the fact that we have a lot of them, well over 300, and we're also benefited from the fact that we've got this campus network which enables us to activate a lot of these relationships at a local level.
So we may sign a relationship at the corporate level and let's say it's with a nationwide retailer and then our local staff in the 80 campuses that we have around the country can go visit those retailers and get to know them and build relationships at a local level.
And that has always worked well for us.
And in this quarter, it was a big contributor to our growth, and we expect it will be in the future as well.
Well, what we refer to is that along with community college enrollments, and taken together, it's about 1/3 of our total population.
We had a 1% undergraduate tuition increase at the start of this year, and we felt that implementing that tuition increase did not in any way move us up the affordability comparative universe that we look at.
We still feel like we're among the most affordable institutions and basically in line with your average in-state 4-year institution on a public basis.
The Jack Welch Management Institute will be implementing a 6% tuition increase for the fall term for new students, and that's, I think, about the fifth tuition increase that we've had there, reflecting the strong outcomes in the institute and the strong demand that we see there.
And we haven't made a decision on 2018 yet, so we can comment on that on Investor Day.
Yes.
