Good morning, everyone, and welcome to Strayer Education, Inc. Third Quarter 2016 Earnings Results Conference Call. This call is being recorded. For those of you who wish to listen to the conference via the Internet, please go to strayereducation.com, where the call will be archived. With us today to discuss the results are, Robert Silberman, Executive Chairman for Strayer Education; Karl McDonnell, Chief Executive Officer; and Daniel Jackson, Executive Vice President and Chief Financial Officer. Following Strayer's remarks, we will open the call for questions and answers. I would like to remind everyone that today's press release contains and certain information on this call may contain statements that are forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act. Those statements are based on the Company's current expectations and are subject to a number of assumptions, uncertainties and risks that the Company has identified in the paragraph on forward-looking statements at the end of its press release, and that could cause the Company's actual results to differ materially. Further information about these and other relevant uncertainties may be found in the Company's annual report on Form 10-K and its other filings with the Securities and Exchange Commission. Copies of these filings and the full press release are available online and upon request from the Company's Investor Relations department. And now, I'd like to turn the call over to Robert Silberman. Mr. Silberman, please go ahead.

Thank you, operator, and good morning ladies and gentlemen. A pretty straightforward quarter from my perspective, so we'll go right to Karl who will discuss our operating results, including our enrollment for Strayer University's fall term, Dan will report on the detailed financial results for the third quarter, and then we'll stay as long as you need for questions. Karl?

Thank you, Rob. Good morning, everyone. I have just a few comments on our third quarter results and our fall term enrollment before Dan will walk you through the financials in more detail. Our third quarter revenue of $102 million grew 3% from the prior year and that represents our first year-over-year growth in revenue since the second quarter of 2011. When we reduced our undergraduate tuition by 20% at the start of 2014, we said that once we achieved consistent enrollment growth, revenue growth would trail by roughly four quarters, and that's essentially the case here as our total enrollments have been growing since the third quarter of last year. Our third quarter operating expenses were up 6% over last year, as we previously indicated they would be, to support our various growth initiatives and these are investments that we anticipate continuing throughout the fourth quarter and based on that we expect our operating expenses for the full year to be up somewhere between 5% and 5.5%. Turning to the fall term enrollment results, we grew our total student population by 6% to 45,509 students. That's the highest fall term enrollment we've had since 2012 and that's our sixth consecutive quarter of total enrollment growth. For the fall term, our continuing students grew 4% and our new students grew 13%. We were also very pleased that the Jack Welch Management Institute was recognized by the Princeton Review as one of the Top 25 Online MBA Programs in its very first year of consideration. For the fall term, JWMI grew 29% and it increased their continuation rate 300 basis points to a University-leading 97%. Lastly, late last week we received the Department of Education's draft gainful employment data which showed that none of our programs failed. The draft data did show that two of our very small associate programs indicated in the zone. We are in the process of reviewing all of this draft data and we'll report once the data is finalized. Dan?

Thank you, Karl, and good morning. First, I'd like to remind everyone that our financial statements continue to include the impact of non-cash adjustments to our liability for losses on facilities that we ceased using during the fourth quarter of 2013. Consequently, we'll continue to describe our operating income, net income and earnings per share with and without these non-cash adjustments. Now on to our third quarter, revenue for the quarter was $102.2 million, up 3% from last year, and as Karl mentioned, the increase was driven by increased enrollment, partly offset by lower revenue per student. Income from operations was $4.8 million for the quarter, compared to $7.3 million for the same period last year. Excluding non-cash adjustments, income from operations was $4.6 million and $6.9 million for the third quarter of 2016 and 2015 respectively. Operating margin was 4.5% for the third quarter of 2016 compared to 6.9% for the same period in 2015, excluding the non-cash adjustments. The roughly 6% increase in total operating expenses was primarily the result of accelerated investments in NYCDA expansion, academic program enhancements and brand awareness initiatives. Bad debt expense was 3.8% for the quarter, compared to 2.3% for the same period last year. Bad debt for the quarter was in line with our second quarter this year, though higher than the same period in 2015 due to a one-time true-up we recorded in our third quarter last year. Net income was $2.9 million, compared to $3.7 million in 2015. Excluding non-cash adjustments, net income was $2.7 million for the third quarter compared to $3.5 million for the same period in 2015. Consistent with the first half of this year, net income in our third quarter benefited from lower interest expense resulting from the payoff of our term loan last year. Diluted…

Thanks, Dan. And with that, operator, we'd be pleased to answer any questions.

[Operator Instructions] Our first question comes from Jeff Silber with BMO Capital Markets. Your line is open.

In looking at the new student number, the growth was 13%, which is a pretty large number, we haven't seen something like that in a long time, I know you don't usually comment directly on these metrics, but I'm just wondering what drove that growth and is that something you might think as sustainable?

We said at the last quarterly call that we seem to have seen a better economy, a firming up of the economy, which seems to have helped our unaffiliated undergraduate students. I would say that that is a trend that has continued into the fall term. We saw a lot of interest among that segment of students. It remains to be seen what happens in future quarters but it definitely is an improved environment from our perspective with respect to undergraduate students.

And were there any specific programs that those folks were interested in?

No, it was pretty consistent across most of our programs. So I can't say that it was concentrated in one particular area.

Okay, great. And can you give us an update on your plans for the NYCDA rollout?

We're in seven locations.

Seven new.

Seven new locations, nine total. It's still relatively early. They've only been operating, just starting into their second quarter. So, that's something, Jeff, that we'll comment on in future quarters but we're very excited to have made the acquisition, as we said last quarter, and we're working to integrate their systems where we can inside of Strayer and we'll comment on it as we get forward into the future.

And Jeff, it's a pretty broad geographic exposure now. We're in Seattle, Salt Lake City, Austin, Atlanta, Raleigh, Philadelphia, as well as New York and Amsterdam. So, I think we'll have a good view over the next 12 months as to what this can be.

All right, great. And just one more, I know you commented about bad debt, I'm sorry I just missed some of that, what was the reason that bad debt as a percentage of revenues was up relative to last year?

Last year we had a one-time true-up that was related to what we determined was an over-accrual on some of our AR, so it was a benefit in the third quarter last year.

Got it. I appreciate the color, Dan. Thanks.

[Operator Instructions] Our next question comes from Peter Appert with Piper Jaffray. Your line is open.

NYCDA, the $0.17 investment spend in the third quarter, should we think about that as sort of the run rate number going forward for at least a few more quarters?

On the expense side?

Yes.

Not necessarily, Peter. For the full year, we expect that the dilution will be in the range of $0.45.

He's talking about expense though. I think you're right, Peter. I think that's a relatively good number on expense, and as the revenue ramps, that dilution will come down.

And some of the expense though is…

For the integration.

Integration related, and that's not going to continue into next year, Peter.

Got it, okay. So, this $0.45 dilution in 2016 would probably be the peak level presumably?

Correct, correct.

Okay. And then can you comment on what you're seeing in terms of some of the other channels in terms of the corporate affiliates, what you're seeing at the Forbes School, from a starting enrollment perspective?

We think you mean the Welch School.

Yes, the Forbes School is [a very different] [ph] organization.

Sorry, sorry.

We think we have a better brand actually with Welch.

Got it.

The Jack Welch Management Institute is becoming a big part of our graduate enrollments, grew just under 30% in the quarter. As I said, it was recognized by the Princeton Review as the Top 25 Online MBA Program, and it's basically five years old. So, to go from a standing start to a top 25 program inside of five years, we're very proud of that obviously. Our corporate channels remain very strong. Enrollments in that channel were up 9% for the quarter. So, we continue to see strength there and it remains a big part of our focus.

Can you remind me what the current mix is in terms of unaffiliated versus corporate versus Welch as a percent of the total enrollments?

The JWMI enrollments are about 1,300 students now. So you can just divide that by our total population to get the mix. Our affiliated students are about a third of our total student population.

Okay, got it. And the mix change really has not, you don't view the mix change as a driver of margin, correct?

No, we don't.

Got it. Okay, great. Thank you.

Our next question comes from Jeff Lee with Credit Suisse. Your line is open.

[Indiscernible] you mentioned the labor, last quarter you mentioned the labor disruption in a large corporate partner. Did the 13% new enrollment growth benefit from any sort of catch-up or bounce-back at that partner?

No, it did not, Jeff. That actually, that impact sort of carried over into this quarter to be honest.

I see, okay. And then given NYCDA's new [engagement] [ph] business for you, can you give us an overview of your marketing efforts and how they may be different than Strayer University's marketing efforts?

It's a completely different program obviously, much shorter in duration. Most of the students so far that have gone through NYCDA's programs are already college graduates. Some of them actually have graduate degrees. Typically these are individuals either who just have a love of programming or mobile app design or more frequently are interested in career switching and they find that this is a good value proposition for them to spend 10 weeks full-time or about 16 weeks part-time to become a junior Web developer or mobile app designer. With respect to marketing, we use similar channels, meaning digital, some radio advertising and so forth. The message is a little bit different obviously because as I said it's a very different program. We've seen some early traction in some of these other markets in terms of generating awareness, but as I said, it's so early that we really need to get a few more quarters under our belt before we have a better sense of what the trends look like.

Okay, great. Thank you.

Thank you. I'm showing no further questions at this time. I would like to go ahead and turn the call back over to Robert Silberman for any closing remarks.

Thank you, operator, and thank you all for participating. We look forward to talking to you in February when we have our year-end results. Thanks very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may now disconnect. Everyone have a great day.