Perdoceo Education Corporation Reports Fourth Quarter and Full Year 2019 Results

Full year revenue increased 8.0% as University Group total student enrollments grew by 6.4%

SCHAUMBURG, Ill.--()--Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year ended December 31, 2019.

FOURTH QUARTER 2019 RESULTS AS COMPARED TO THE PRIOR YEAR QUARTER

 

Financial Results

Revenue increased by 8.9 percent to $158.5 million as compared to $145.5 million with both universities contributing to this growth

Operating income increased 58.6 percent to $32.0 million as compared to $20.2 million

Adjusted operating income increased 16.3 percent to $34.6 million as compared to $29.7 million*

Earnings per diluted share of $0.38 as compared to earnings per diluted share of $0.20

Adjusted earnings per diluted share of $0.33 as compared to $0.30*

Ended the quarter with $294.2 million in cash, cash equivalents and available-for-sale short-term investments

 

 

 

 

 

Enrollment Metrics

CTU’s total student enrollments increased 4.4 percent supported by new student enrollment growth of 8.5 percent

AIU’s total student enrollments increased 10.2 percent supported by new student enrollment growth of 12.7 percent

FULL YEAR 2019 RESULTS AS COMPARED TO THE PRIOR YEAR AND OTHER HIGHLIGHTS

  • Revenue increased 8.0 percent to $627.7 million as compared to $581.3 million, supported by total student enrollment growth at both universities
  • Operating income increased 21.3 percent to $86.5 million as compared to $71.3 million
  • Adjusted operating income increased 27.7 percent to $134.3 million as compared to $105.2 million*
  • Earnings per diluted share of $0.97 as compared to earnings per diluted share of $0.77
  • Adjusted earnings per diluted share of $1.37 as compared to $1.05*
  • New student enrollments increased 14.6 percent contributing to total enrollment growth of 6.4 percent; positively impacting these trends was the academic calendar at AIU
  • Operating and cost efficiencies continue to be re-invested in student support functions, technology initiatives and data analytics
  • The Company expects the acquisition of Trident University International to close in early March 2020

*See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release

“We are excited to continue the journey of educating students under our new name, Perdoceo, which in Latin means ‘to teach, inform or instruct thoroughly,’” said Todd Nelson, President and Chief Executive Officer. “Fourth quarter 2019 marked a positive close to the year and we are proud to serve over 36,000 students pursuing postsecondary studies across our academic institutions. Fourth quarter results highlight the success of our operating strategy that focuses on student experiences, retention and academic outcomes, while making investments in technology and leveraging data analytics to further support our students and enhance their learning. Looking ahead, we remain committed to the objective of sustainable and responsible growth, and look forward to closing the Trident acquisition and its effective integration into our operations.”

REVENUE

  • For the quarter ended December 31, 2019, total revenue of $158.5 million increased 8.9 percent compared to total revenue of $145.5 million for the prior year quarter.
  • For the year ended December 31, 2019, total revenue of $627.7 million increased 8.0 percent compared to total revenue of $581.3 million for the prior year.
  • Both universities contributed to the revenue growth that has been supported by positive student enrollment trends.

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

Revenue ($ in thousands)

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

CTU

 

$

102,613

 

 

$

94,782

 

 

 

8.3

%

 

$

392,263

 

 

$

375,770

 

 

 

4.4

%

AIU

 

 

55,815

 

 

 

50,716

 

 

 

10.1

%

 

 

235,374

 

 

 

204,920

 

 

 

14.9

%

Total University Group

 

 

158,428

 

 

 

145,498

 

 

 

8.9

%

 

 

627,637

 

 

 

580,690

 

 

 

8.1

%

Corporate and Other (1)

 

 

23

 

 

 

7

 

 

NM

 

 

 

67

 

 

 

606

 

 

NM

 

Total

 

$

158,451

 

 

$

145,505

 

 

 

8.9

%

 

$

627,704

 

 

$

581,296

 

 

 

8.0

%

(1)

Corporate and Other includes closed campuses which no longer meet the criteria to be reported as a separate operating segment.

TOTAL AND NEW STUDENT ENROLLMENTS

  • For the quarter ended December 31, 2019, new student enrollments at CTU and AIU increased 8.5 percent and 12.7 percent, respectively, as compared to the prior year quarter.
  • As of December 31, 2019, CTU’s and AIU’s total student enrollments increased 4.4 percent and 10.2 percent, respectively, supported by new student enrollment growth of 7.0 percent and 26.6 percent, respectively, as compared to the prior year.
  • Student enrollment growth was positively impacted by investments in student support functions and consistent levels of prospective student interest. Additionally, AIU’s full year new student enrollments were positively impacted by the timing of its academic calendar.

 

 

As of December 31,

 

Total Student Enrollments

 

2019

 

 

2018

 

 

% Change

 

CTU

 

 

23,600

 

 

 

22,600

 

 

 

4.4

%

AIU

 

 

13,000

 

 

 

11,800

 

 

 

10.2

%

Total University Group

 

 

36,600

 

 

 

34,400

 

 

 

6.4

%

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

New Student Enrollments

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

CTU

 

 

6,900

 

 

 

6,360

 

 

 

8.5

%

 

 

25,250

 

 

 

23,600

 

 

 

7.0

%

AIU

 

 

3,720

 

 

 

3,300

 

 

 

12.7

%

 

 

19,050

 

 

 

15,050

 

 

 

26.6

%

Total University Group

 

10,620

 

 

 

9,660

 

 

 

9.9

%

 

 

44,300

 

 

 

38,650

 

 

 

14.6

%

OPERATING INCOME (LOSS)

  • For the quarter ended December 31, 2019, operating income of $32.0 million increased 58.6 percent compared to $20.2 million for the prior year quarter.
  • For the year ended December 31, 2019, operating income of $86.5 million increased 21.3 percent compared to $71.3 million for the prior year.

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

Operating Income ($ in thousands)

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

CTU (1)

 

$

36,872

 

 

$

31,061

 

 

 

18.7

%

 

$

108,602

 

 

$

111,623

 

 

 

-2.7

%

AIU (2)

 

 

4,977

 

 

 

4,555

 

 

 

9.3

%

 

 

16,413

 

 

 

8,176

 

 

 

100.7

%

Total University Group

 

 

41,849

 

 

 

35,616

 

 

 

17.5

%

 

 

125,015

 

 

 

119,799

 

 

 

4.4

%

Corporate and Other (3)

 

 

(9,836

)

 

 

(15,433

)

 

 

36.3

%

 

 

(38,553

)

 

 

(48,501

)

 

 

20.5

%

Total

 

$

32,013

 

 

$

20,183

 

 

 

58.6

%

 

$

86,462

 

 

$

71,298

 

 

 

21.3

%

(1)

The full year includes an expense of $18.6 million related to the FTC settlement.

(2)

The full year includes an expense of $11.4 million related to the FTC settlement.

(3)

Corporate and Other includes closed campuses which no longer meet the criteria to be reported as a separate operating segment. The following is a summary of the operating losses related to the closed campuses which is included within Corporate and Other for the quarters and years ended December 31, 2019 and 2018, respectively (dollars in thousands):

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

Operating Loss ($ in thousands)

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

Closed Campuses (4)

 

$

(1,004

)

 

$

(9,739

)

 

 

89.7

%

 

$

(13,805

)

 

$

(31,903

)

 

 

56.7

%

(4)

The full year 2019 operating loss related to the closed campuses includes a legal settlement expense of $7.1 million for the Oregon arbitrations matter as compared to legal settlement expenses of $5.0 million related to the multi-state AG matter recorded during the quarter ended December 31, 2018 and $9.6 million related to the Surrett matter recorded during the full year ended December 31, 2018.

ADJUSTED OPERATING INCOME

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant and non-cash items, as a means to understand the performance of its operations. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

  • For the quarter ended December 31, 2019, adjusted operating income of $34.6 million increased 16.3 percent compared to adjusted operating income of $29.7 million for the prior year quarter.
  • For the year ended December 31, 2019, adjusted operating income of $134.3 million increased 27.7 percent compared to adjusted operating income of $105.2 million for the prior year.

 

 

 

 

 

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

Adjusted Operating Income ($ in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

32,013

 

 

$

20,183

 

 

$

86,462

 

 

$

71,298

 

Depreciation and amortization

 

 

2,393

 

 

 

2,345

 

 

 

9,145

 

 

 

9,394

 

Lease expenses for vacated space (1)

 

 

177

 

 

 

2,642

 

 

 

1,630

 

 

 

8,416

 

Severance and related costs, net of cancellations (2)

 

 

-

 

 

 

(443

)

 

 

-

 

 

 

1,455

 

Significant legal settlements (3)

 

 

-

 

 

 

5,000

 

 

 

37,100

 

 

 

14,595

 

Adjusted Operating Income --

Total Company

 

$

34,583

 

 

$

29,727

 

 

$

134,337

 

 

$

105,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

16.3

%

 

 

 

 

 

 

27.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income.

(2)

Severance and related costs, net of cancellations, include charges related to significant restructuring actions during 2018, which were primarily recorded within the University Group. These restructuring charges do not regularly occur and are not considered part of ongoing operating results.

(3)

Significant legal settlements relate to the FTC and the Oregon arbitrations matters recorded during 2019 and the multi-state AG and Surrett matters recorded during 2018.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended December 31, 2019, the Company recorded:

  • Net income of $27.5 million compared to net income of $14.1 million for the prior year quarter.
  • Earnings per diluted share of $0.38 compared to earnings per diluted share of $0.20 for the prior year quarter.
  • Adjusted earnings per diluted share of $0.33 compared to adjusted earnings per diluted share of $0.30 for the prior year quarter. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the year ended December 31, 2019, the Company recorded:

  • Net income of $70.0 million compared to net income of $55.2 million for the prior year.
  • Earnings per diluted share of $0.97 compared to earnings per diluted share of $0.77 for the prior year.
  • Adjusted earnings per diluted share of $1.37 compared to adjusted earnings per diluted share of $1.05 for the prior year. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

 

 

 

 

 

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.38

 

 

$

0.20

 

 

$

0.97

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expenses for vacated space (1)

 

 

-

 

 

 

0.04

 

 

 

0.02

 

 

 

0.12

 

Severance and related costs, net of cancellations (2)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.02

 

Significant legal settlements (3)

 

 

-

 

 

 

0.07

 

 

 

0.51

 

 

 

0.21

 

Total pre-tax adjustments

 

$

-

 

 

$

0.11

 

 

$

0.53

 

 

$

0.35

 

Tax effect of adjustments (4)

 

 

-

 

 

 

(0.01

)

 

 

(0.13

)

 

 

(0.07

)

Tax effect of change in settlement deductibility (5)

 

 

(0.05

)

 

 

-

 

 

 

-

 

 

 

-

 

Total adjustments after tax

 

 

(0.05

)

 

 

0.10

 

 

 

0.40

 

 

 

0.28

 

Adjusted Earnings Per Diluted Share

 

$

0.33

 

 

$

0.30

 

 

$

1.37

 

 

$

1.05

 

(1)

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income.

(2)

Severance and related costs, net of cancellations, include charges related to significant restructuring actions during 2018, which were primarily recorded within the University Group. These restructuring charges do not regularly occur and are not considered part of ongoing operating results.

(3)

Significant legal settlements relate to the FTC and Oregon arbitrations matters recorded during 2019 and the multi-state AG and Surrett matters recorded during 2018.

(4)

The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments. A legal settlement of $5.0 million for the year ended December 31, 2018 related to the multi-state AG matter was not deductible for tax purposes and therefore does not include a tax effect.

(5)

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million is reflected during the fourth quarter of 2019 and has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the second and third quarters of 2019. The impact of the non-deductibility was not proportionally reflected in the reported adjusted earnings per diluted share for the second and third quarters of 2019 which would have decreased by $0.05 and increased by $0.02, respectively. For the full year 2019, approximately $29.7 million is now considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility has no effect for the full year 2019.

BALANCE SHEET AND CASH FLOW

  • For the quarter ended December 31, 2019, net cash used in operating activities was $12.3 million compared to net cash provided by operating activities of $38.7 million for the prior year quarter. The fourth quarter of 2019 included a $30.0 million payment to the U.S. Federal Trade Commission, which amount was previously held in escrow and recorded as restricted cash.
  • For the year ended December 31, 2019, net cash provided by operating activities was $73.1 million compared to net cash provided by operating activities of $57.0 million for the prior year.
  • As of December 31, 2019 and December 31, 2018, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $294.2 million and $229.2 million, respectively.
  • During the fourth quarter of 2019, the Company repurchased 0.2 million shares of its common stock in open market transactions at an aggregate cost of $3.9 million. The average price per share was $16.49. As of December 31, 2019, $46.1 million remained available under our previously authorized stock repurchase program.

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

Selected Cash Flow Items ($ in thousands)

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

Net cash (used in) provided by operating activities

 

$

(12,306

)

 

$

38,692

 

 

 

-131.8

%

 

$

73,085

 

 

$

56,987

 

 

 

28.2

%

Capital expenditures

 

$

1,954

 

 

$

2,780

 

 

 

-29.7

%

 

$

5,174

 

 

$

6,732

 

 

 

-23.1

%

OUTLOOK

The Company is providing the following outlook, subject to the key assumptions identified below. Please see the GAAP to non-GAAP reconciliation for adjusted operating income and adjusted earnings per diluted share attached to this press release for further details. This outlook reflects the Company’s expectation of growth in new and total student enrollments at both universities for 2020. Further, for the first quarter of 2020, the Company expects growth in CTU’s new student enrollments as compared to the prior year quarter. AIU’s first quarter new student enrollments, however, are expected to decline due to 31 percent less enrollment days in the first quarter of 2020 as compared to the prior year quarter, although this decline is expected to be more than offset with new student enrollment growth in the second quarter which has approximately 50 percent more enrollment days than the prior year quarter. The Company expects that AIU’s enrollment days for the third and fourth quarters of 2020 will be relatively comparable to the respective prior year periods.

 

Total Company Outlook

 

For Quarter Ending March 31,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2020

2019

 

2020

2019

Operating Income

$34.0M - $35.5M

$30.0M

 

$135.5M - $140.5M

$86.5M

Adjusted Operating Income

$37.5M - $39.0M

$33.0M

 

$147.0M - $152.0M

$134.3M

 

 

 

 

 

 

Earnings Per Diluted Share

$0.37 - $0.39

$0.35

 

$1.43 - $1.48

$0.97

Adjusted Earnings Per Diluted Share

$0.38 - $0.40

$0.36

 

$1.44 - $1.49

$1.37

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share may not follow the same trends stated in the outlook above because of adjustments made for certain significant and non-cash items such as lease expenses for vacated space offset with any sublease income as well as depreciation, amortization, asset impairment charges, significant restructuring charges and significant legal settlements. The operating income, adjusted operating income, earnings per share, adjusted earnings per share and enrollment outlook provided above for 2020 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs remains consistent with recent experience, (ii) initiatives and investments in student-serving operations continue to positively impact enrollment trends within the University Group, (iii) no material changes in the current legal or regulatory environment, and excludes legal and regulatory liabilities and other related impacts which are not probable and estimable at this time, and any impact of new or proposed regulations, including the “borrower defense to repayment” regulations, (iv) no significant operating impacts from the settlements with the U.S. Federal Trade Commission and state attorneys general or other legal or regulatory matters, (v) no material changes in the estimated amount of compensation expense that could be impacted by changes in the Company’s stock price, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 25% for the first quarter and 26% for the full year, (vii) any future impact from the Company’s stock repurchase program is excluded, and (viii) any results of operations from Trident University are excluded. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current and future circumstances and actions that may be undertaken, actual results could differ materially from these estimates. In addition, decisions we make in the future as we continue to evaluate diverse strategies to enhance shareholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Wednesday, February 19, 2020 at 5:30 p.m. Eastern time to discuss its fourth quarter and full year 2019 results and 2020 outlook. Interested parties can access the live webcast of the conference at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-844-378-6484 (domestic) or 1-412-542-4179 (international). Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.perdoceoed.com in the Investor Relations section of the website.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The Company’s two regionally accredited universities – Colorado Technical University (“CTU”) and American InterContinental University (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities offer students industry relevant and career-focused degree programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath® learning platform and using data analytics and technology to support students and enhance learning. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

A listing of university locations and web links to Perdoceo institutions can be found at www.perdoceoed.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “believe,” “will,” “expect,” “continue,” “outlook,” “remain,” “look forward to,” “should” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment or interest in our programs; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of recently effective and recently adopted “borrower defense to repayment” regulations; rulemaking by the U.S. Department of Education or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions (in particular as these risks and uncertainties may be exacerbated leading up to and following the 2020 U.S. presidential election); the operating impact of the settlements with the FTC and state attorneys general; the success of our initiatives to improve student experiences, retention and academic outcomes; the ability of our student admissions and advising centers to achieve anticipated operating performance; our ability to successfully complete the acquisition of Trident University International and integrate its business into AIU’s operations; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

December

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

108,687

 

 

$

32,394

 

Restricted cash

 

 

-

 

 

 

337

 

Short-term investments

 

 

185,488

 

 

 

196,428

 

Total cash and cash equivalents, restricted cash and short-term investments

 

 

294,175

 

 

 

229,159

 

 

 

 

 

 

 

 

 

 

Student receivables, net

 

 

55,018

 

 

 

28,751

 

Receivables, other, net

 

 

1,381

 

 

 

2,567

 

Prepaid expenses

 

 

7,299

 

 

 

7,771

 

Inventories

 

 

576

 

 

 

763

 

Other current assets

 

 

1,936

 

 

 

437

 

Total current assets

 

 

360,385

 

 

 

269,448

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

26,006

 

 

 

30,048

 

Right of use asset, net

 

 

50,366

 

 

 

-

 

Goodwill

 

 

87,356

 

 

 

87,356

 

Intangible assets, net

 

 

7,900

 

 

 

7,900

 

Student receivables, net

 

 

1,244

 

 

 

942

 

Deferred income tax assets, net

 

 

60,169

 

 

 

81,628

 

Other assets

 

 

5,639

 

 

 

4,993

 

Assets of discontinued operations

 

 

81

 

 

 

178

 

TOTAL ASSETS

 

$

599,146

 

 

$

482,493

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

$

11,784

 

 

$

-

 

Accounts payable

 

 

11,533

 

 

 

9,195

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

27,616

 

 

 

24,530

 

Advertising and marketing costs

 

 

10,479

 

 

 

9,300

 

Income taxes

 

 

1,376

 

 

 

1,472

 

Other

 

 

16,375

 

 

 

19,668

 

Deferred revenue

 

 

24,647

 

 

 

32,351

 

Liabilities of discontinued operations

 

 

3

 

 

 

536

 

Total current liabilities

 

 

103,813

 

 

 

97,052

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

 

52,391

 

 

 

-

 

Deferred rent obligations

 

 

-

 

 

 

12,745

 

Other liabilities

 

 

11,647

 

 

 

17,493

 

Total non-current liabilities

 

 

64,038

 

 

 

30,238

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

860

 

 

 

852

 

Additional paid-in capital

 

 

639,335

 

 

 

628,295

 

Accumulated other comprehensive income (loss)

 

 

344

 

 

 

(298

)

Accumulated earnings (deficit)

 

 

18,071

 

 

 

(52,946

)

Treasury stock

 

 

(227,315

)

 

 

(220,700

)

Total stockholders' equity

 

 

431,295

 

 

 

355,203

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

599,146

 

 

$

482,493

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(In thousands, except per share amounts and percentages)

 

 

For the Quarter Ended December 31,

 

 

 

2019

 

 

% of

Total

Revenue

 

 

2018

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

157,758

 

 

 

99.6

%

 

$

144,809

 

 

 

99.5

%

Other

 

 

693

 

 

 

0.4

%

 

 

696

 

 

 

0.5

%

Total revenue

 

 

158,451

 

 

 

 

 

 

 

145,505

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

24,949

 

 

 

15.7

%

 

 

25,460

 

 

 

17.5

%

General and administrative

 

 

99,096

 

 

 

62.5

%

 

 

97,517

 

 

 

67.0

%

Depreciation and amortization

 

 

2,393

 

 

 

1.5

%

 

 

2,345

 

 

 

1.6

%

Total operating expenses

 

 

126,438

 

 

 

79.8

%

 

 

125,322

 

 

 

86.1

%

Operating income

 

 

32,013

 

 

 

20.2

%

 

 

20,183

 

 

 

13.9

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,662

 

 

 

1.0

%

 

 

1,213

 

 

 

0.8

%

Interest expense

 

 

(42

)

 

 

0.0

%

 

 

(358

)

 

 

-0.2

%

Miscellaneous expense

 

 

(33

)

 

 

0.0

%

 

 

(29

)

 

 

0.0

%

Total other income

 

 

1,587

 

 

 

1.0

%

 

 

826

 

 

 

0.6

%

PRETAX INCOME

 

 

33,600

 

 

 

21.2

%

 

 

21,009

 

 

 

14.4

%

Provision for income taxes

 

 

6,066

 

 

 

3.8

%

 

 

7,034

 

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

27,534

 

 

 

17.4

%

 

 

13,975

 

 

 

9.6

%

(Loss) income from discontinued operations, net of tax

 

 

(18

)

 

 

0.0

%

 

 

96

 

 

 

0.1

%

NET INCOME

 

 

27,516

 

 

 

17.4

%

 

 

14,071

 

 

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE LOSS, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

89

 

 

 

 

 

 

 

3

 

 

 

 

 

Unrealized gain on investments

 

 

(131

)

 

 

 

 

 

 

(30

)

 

 

 

 

Total other comprehensive loss

 

 

(42

)

 

 

 

 

 

 

(27

)

 

 

 

 

COMPREHENSIVE INCOME

 

$

27,474

 

 

 

 

 

 

$

14,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.39

 

 

 

 

 

 

$

0.20

 

 

 

 

 

(Loss) income from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.39

 

 

 

 

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE -DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.38

 

 

 

 

 

 

$

0.20

 

 

 

 

 

(Loss) income from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.38

 

 

 

 

 

 

$

0.20

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

70,263

 

 

 

 

 

 

 

69,765

 

 

 

 

 

Diluted

 

 

72,078

 

 

 

 

 

 

 

71,583

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(In thousands, except per share amounts and percentages)

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

% of

Total

Revenue

 

 

2018

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

625,056

 

 

 

99.6

%

 

$

578,545

 

 

 

99.5

%

Other

 

 

2,648

 

 

 

0.4

%

 

 

2,751

 

 

 

0.5

%

Total revenue

 

 

627,704

 

 

 

 

 

 

 

581,296

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

101,944

 

 

 

16.2

%

 

 

109,897

 

 

 

18.9

%

General and administrative

 

 

430,153

 

 

 

68.5

%

 

 

390,707

 

 

 

67.2

%

Depreciation and amortization

 

 

9,145

 

 

 

1.5

%

 

 

9,394

 

 

 

1.6

%

Total operating expenses

 

 

541,242

 

 

 

86.2

%

 

 

509,998

 

 

 

87.7

%

Operating income

 

 

86,462

 

 

 

13.8

%

 

 

71,298

 

 

 

12.3

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

6,392

 

 

 

1.0

%

 

 

3,539

 

 

 

0.6

%

Interest expense

 

 

(167

)

 

 

0.0

%

 

 

(681

)

 

 

-0.1

%

Miscellaneous income

 

 

335

 

 

 

0.1

%

 

 

196

 

 

 

0.0

%

Total other income

 

 

6,560

 

 

 

1.0

%

 

 

3,054

 

 

 

0.5

%

PRETAX INCOME

 

 

93,022

 

 

 

14.8

%

 

 

74,352

 

 

 

12.8

%

Provision for income taxes

 

 

22,428

 

 

 

3.6

%

 

 

18,561

 

 

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

70,594

 

 

 

11.2

%

 

 

55,791

 

 

 

9.6

%

Loss from discontinued operations, net of tax

 

 

(612

)

 

 

-0.1

%

 

 

(610

)

 

 

-0.1

%

NET INCOME

 

 

69,982

 

 

 

11.1

%

 

 

55,181

 

 

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(41

)

 

 

 

 

 

 

(100

)

 

 

 

 

Unrealized gain (loss) on investments

 

 

683

 

 

 

 

 

 

 

(34

)

 

 

 

 

Total other comprehensive income (loss)

 

 

642

 

 

 

 

 

 

 

(134

)

 

 

 

 

COMPREHENSIVE INCOME

 

$

70,624

 

 

 

 

 

 

$

55,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.01

 

 

 

 

 

 

$

0.80

 

 

 

 

 

Loss from discontinued operations

 

 

(0.01

)

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income per share

 

$

1.00

 

 

 

 

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE - DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.98

 

 

 

 

 

 

$

0.78

 

 

 

 

 

Loss from discontinued operations

 

 

(0.01

)

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income per share

 

$

0.97

 

 

 

 

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

70,088

 

 

 

 

 

 

 

69,598

 

 

 

 

 

Diluted

 

 

72,085

 

 

 

 

 

 

 

71,482

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

69,982

 

 

$

55,181

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

9,145

 

 

 

9,394

 

Bad debt expense

 

 

43,454

 

 

 

31,940

 

Compensation expense related to share-based awards

 

 

9,274

 

 

 

5,614

 

Loss on disposition of asset

 

 

14

 

 

 

-

 

Deferred income taxes

 

 

21,556

 

 

 

17,863

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Student receivables, gross

 

 

(33,697

)

 

 

(10,541

)

Allowance for doubtful accounts

 

 

(36,326

)

 

 

(29,646

)

Other receivables, net

 

 

1,189

 

 

 

(1,286

)

Inventories, prepaid expenses, and other current assets

 

 

(1,180

)

 

 

3,053

 

Deposits and other non-current assets

 

 

(489

)

 

 

711

 

Accounts payable

 

 

2,320

 

 

 

698

 

Accrued expenses and deferred rent obligations

 

 

5,066

 

 

 

(35,448

)

Deferred tuition revenue

 

 

(7,704

)

 

 

9,454

 

Right of use asset and lease liability

 

 

(9,519

)

 

 

-

 

Net cash provided by operating activities

 

 

73,085

 

 

 

56,987

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(449,367

)

 

 

(309,784

)

Sales of available-for-sale investments

 

 

462,325

 

 

 

275,024

 

Purchases of property and equipment

 

 

(5,174

)

 

 

(6,732

)

Other

 

 

(85

)

 

 

-

 

Net cash provided by (used in) investing activities

 

 

7,699

 

 

 

(41,492

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of treasury stock

 

 

(3,875

)

 

 

-

 

Issuance of common stock

 

 

1,774

 

 

 

1,682

 

Payments of employee tax associated with stock compensation

 

 

(2,740

)

 

 

(3,345

)

Net cash used in financing activities

 

 

(4,841

)

 

 

(1,663

)

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:

 

 

13

 

 

 

-

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

75,956

 

 

 

13,832

 

CASH AND CASH EQUIVALENTS, beginning of the period

 

 

32,731

 

 

 

18,899

 

CASH AND CASH EQUIVALENTS, end of the period

 

$

108,687

 

 

$

32,731

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Quarter Ended December 31,

 

 

 

2019

 

 

2018

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

102,613

 

 

$

94,782

 

AIU

 

 

55,815

 

 

 

50,716

 

Total University Group

 

 

158,428

 

 

 

145,498

 

Corporate and Other (1)

 

 

23

 

 

 

7

 

Total

 

$

158,451

 

 

$

145,505

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU

 

$

36,872

 

 

$

31,061

 

AIU

 

 

4,977

 

 

 

4,555

 

Total University Group

 

 

41,849

 

 

 

35,616

 

Corporate and Other (1)

 

 

(9,836

)

 

 

(15,433

)

Total

 

$

32,013

 

 

$

20,183

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU

 

 

35.9

%

 

 

32.8

%

AIU

 

 

8.9

%

 

 

9.0

%

Total University Group

 

 

26.4

%

 

 

24.5

%

Corporate and Other (1)

 

NM

 

 

NM

 

Total

 

 

20.2

%

 

 

13.9

%

(1)

Corporate and Other includes closed campuses which no longer meet the criteria to be reported as a separate operating segment. Operating losses related to the closed campuses were $1.0 million and $9.7 million for the quarters ended December 31, 2019 and 2018, respectively. The prior year quarter operating loss for the closed campuses includes a legal settlement expense of $5.0 related to the multi-state AG matter.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

2018

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

392,263

 

 

$

375,770

 

AIU

 

 

235,374

 

 

 

204,920

 

Total University Group

 

 

627,637

 

 

 

580,690

 

Corporate and Other (1)

 

 

67

 

 

 

606

 

Total

 

$

627,704

 

 

$

581,296

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU (2)

 

$

108,602

 

 

$

111,623

 

AIU (3)

 

 

16,413

 

 

 

8,176

 

Total University Group

 

 

125,015

 

 

 

119,799

 

Corporate and Other (1)

 

 

(38,553

)

 

 

(48,501

)

Total

 

$

86,462

 

 

$

71,298

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU (2)

 

 

27.7

%

 

 

29.7

%

AIU (3)

 

 

7.0

%

 

 

4.0

%

Total University Group

 

 

19.9

%

 

 

20.6

%

Corporate and Other (1)

 

NM

 

 

NM

 

Total

 

 

13.8

%

 

 

12.3

%

(1)

Corporate and Other includes closed campuses which no longer meet the criteria to be reported as a separate operating segment. Operating losses related to the closed campuses were $13.8 million and $31.9 million for the years ended December 31, 2019 and 2018, respectively. The current year operating loss includes a legal settlement expense of $7.1 million related to the Oregon arbitrations matter as compared to $5.0 million related to the multi-state AG matter and $9.6 million related to the Surrett matter in the prior year.

(2)

The full year includes an expense of $18.6 million related to the FTC settlement.

(3)

The full year includes an expense of $11.4 million related to the FTC settlement.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)

(In thousands, unless otherwise noted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

 

 

ACTUAL

 

 

ACTUAL

 

Adjusted Operating Income

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

32,013

 

 

$

20,183

 

 

$

86,462

 

 

$

71,298

 

Depreciation and amortization

 

 

2,393

 

 

 

2,345

 

 

 

9,145

 

 

 

9,394

 

Lease expenses for vacated space (2)

 

 

177

 

 

 

2,642

 

 

 

1,630

 

 

 

8,416

 

Severance and related costs, net of cancellations (3)

 

 

-

 

 

 

(443

)

 

 

-

 

 

 

1,455

 

Significant legal settlements (4)

 

 

-

 

 

 

5,000

 

 

 

37,100

 

 

 

14,595

 

Adjusted Operating Income -- Total Company

 

$

34,583

 

 

$

29,727

 

 

$

134,337

 

 

$

105,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the 1st Quarter Ending March 31,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$34M - $35.5M

 

 

$

29,971

 

 

$135.5M - $140.5M

 

 

$

86,462

 

Depreciation and amortization

 

 

2.7

 

 

 

2,233

 

 

 

9.8

 

 

 

9,145

 

Lease expenses for vacated space (2)

 

 

0.8

 

 

 

766

 

 

 

1.7

 

 

 

1,630

 

Significant legal settlements (4)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

37,100

 

Adjusted Operating Income -- Total Company

 

$37.5M - $39M

 

 

$

32,970

 

 

$147M - $152M

 

 

$

134,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (cont’d)

 

 

 

 

 

 

 

 

 

For the Quarter Ended December 31,

 

 

For the Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.38

 

 

$

0.20

 

 

$

0.97

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expenses for vacated space (2)

 

 

-

 

 

 

0.04

 

 

 

0.02

 

 

 

0.12

 

Severance and related costs, net of cancellations (3)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.02

 

Significant legal settlements (4)

 

 

-

 

 

 

0.07

 

 

 

0.51

 

 

 

0.21

 

Total pre-tax adjustments

 

$

-

 

 

$

0.11

 

 

$

0.53

 

 

$

0.35

 

Tax effect of adjustments (5)

 

 

-

 

 

 

(0.01

)

 

 

(0.13

)

 

 

(0.07

)

Tax effect of change in settlement deductibility (6)

 

 

(0.05

)

 

 

-

 

 

 

-

 

 

 

-

 

Total adjustments after tax

 

 

(0.05

)

 

 

0.10

 

 

 

0.40

 

 

 

0.28

 

Adjusted Earnings Per Diluted Share

 

$

0.33

 

 

$

0.30

 

 

$

1.37

 

 

$

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the 1st Quarter Ending March 31,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reported Earnings Per Diluted Share

 

$0.37 - $0.39

 

 

$

0.35

 

 

$1.43 - $1.48

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expenses for vacated space (2)

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

Significant legal settlements (4)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.51

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.01

 

 

$

0.02

 

 

$

0.53

 

Tax effect of adjustments (5)

 

 

-

 

 

 

-

 

 

 

(0.01

)

 

 

(0.13

)

Total adjustments after tax

 

 

0.01

 

 

 

0.01

 

 

 

0.01

 

 

 

0.40

 

Adjusted Earnings Per Diluted Share

 

$0.38 - $0.40

 

 

$

0.36

 

 

$1.44 - $1.49

 

 

$

1.37

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (cont’d)

(1)

 

 

The Company believes it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of its operations. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its operations, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance.

 

 

The Company believes adjusted operating income and adjusted earnings per diluted share allow it to analyze and assess its operations and compare current operating results with the operational performance of other companies in its industry because it does not give effect to potential differences caused by items it does not consider reflective of underlying operating performance, such as restructuring charges and significant legal settlements. In evaluating adjusted operating income and adjusted earnings per diluted share, investors should be aware that in the future the Company may incur expenses similar to the adjustments presented above. The presentation of adjusted operating income and adjusted earnings per diluted share should not be construed as an inference that the Company's future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of liquidity.

 

 

Non-GAAP financial measures, when viewed in a reconciliation to corresponding GAAP financial measures, provide an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

 

(2)

 

 

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income.

 

 

(3)

 

 

Severance and related costs, net of cancellations, include charges related to significant restructuring actions during 2018, which were primarily recorded within the University Group. These restructuring charges do not regularly occur and are not considered part of ongoing operating results.

 

 

(4)

 

 

Significant legal settlements relate to the FTC and Oregon arbitrations matters recorded during 2019 and the Surrett and multi-state AG matters recorded during 2018.

 

 

(5)

 

 

The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments. A legal settlement of $5.0 million for the multi-state AG settlement recorded during the year ended December 31, 2018 was not deductible for tax purposes and therefore does not include a tax effect.

 

 

(6)

 

 

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million is reflected during the fourth quarter of 2019 and has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the second and third quarters of 2019. The impact of the non-deductibility was not proportionally reflected in the reported adjusted earnings per diluted share for the second and third quarters of 2019 which would have decreased by $0.05 and increased by $0.02, respectively. For the full year 2019, approximately $29.7 million is now considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility has no effect for the full year 2019.

 

Contacts

Investors:
Alpha IR Group
Chris Hodges or Brooks Hamilton
(312) 445-2870
PRDO@alpha-ir.com

Or

Media:
Perdoceo Education Corporation
(847) 585-2600
media@perdoceoed.com

Release Summary

PERDOCEO EDUCATION CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Contacts

Investors:
Alpha IR Group
Chris Hodges or Brooks Hamilton
(312) 445-2870
PRDO@alpha-ir.com

Or

Media:
Perdoceo Education Corporation
(847) 585-2600
media@perdoceoed.com