Perdoceo Education Corporation Announces First Quarter 2020 Results

Revenue increased 8.3% supported by total student enrollment growth across both universities

SCHAUMBURG, Ill.--()--Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter ended March 31, 2020.

COVID-19 Update

The health and well-being of our students, employees and communities are our top priority. Supported by our scalable and innovative technology infrastructure we have transitioned campus-based students to our online learning platforms. As a result, all of our students are now taking classes online with no major disruption to the level of service they are used to experiencing from our institutions, faculty and staff. Additionally, substantially all of our employees are now working remotely. There has been no material impact to our operating results from the COVID-19 pandemic thus far, but we continue to closely monitor future developments and will strive to optimize our resources to best serve our students.

First Quarter 2020 Results as Compared to Prior Year Quarter

Financial Results

  • Revenue increased by 8.3 percent to $171.0 million with both universities contributing to this growth
  • Operating income increased 24.5 percent to $37.3 million
  • Adjusted operating income increased 23.7 percent to $40.8 million*
  • Earnings per diluted share of $0.41 as compared to earnings per diluted share of $0.35
  • Adjusted earnings per diluted share of $0.42 as compared to $0.36*
  • Ended the quarter with $285.6 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments

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

Enrollment Metrics

  • CTU’s total student enrollments increased 4.8 percent, supported by new student enrollment growth of 16.8 percent
  • AIU’s total student enrollments increased 26.0 percent, as a result of the acquisition of the assets of Trident University International (the “Trident acquisition”). New student enrollments, however, decreased by 14.2 percent, negatively impacted by the academic calendar. Excluding the impact of the Trident acquisition, AIU’s new student enrollments would have decreased 22.9 percent as a result of approximately 31 percent less enrollment days for the quarter.

“The COVID-19 pandemic is posing unique challenges to our society, and our highest priority is the well-being of our students, employees and communities. We have leveraged our technology and processes to move our students and employees to a remote environment, while delivering on our commitments and responsibilities to serve our students,” said Todd Nelson, President and Chief Executive Officer. “Although the pandemic has not had a material impact on our operating results to date, we are closely monitoring the situation and remain focused on executing against our strategy of sustainable and responsible growth.”

Nelson further added, “We entered 2020 with positive momentum and experienced student enrollment growth at both universities, which resulted in first quarter results coming in ahead of our expectations. Our balance sheet continues to strengthen, and we are strategically investing in initiatives that further enhance our student’s experiences, retention and academic outcomes.”

REVENUE

  • For the quarter ended March 31, 2020, total revenue of $171.0 million increased 8.3 percent compared to total revenue of $157.9 million for the prior year quarter.
  • Both universities contributed to the revenue growth that has been supported by positive underlying student enrollment trends.

 

 

For the Quarter Ended March 31,

 

Revenue ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

CTU

 

$

103,588

 

 

$

97,057

 

 

 

6.7

%

AIU (1)

 

 

67,396

 

 

 

60,779

 

 

 

10.9

%

Total University Group

 

 

170,984

 

 

 

157,836

 

 

 

8.3

%

Corporate and Other

 

 

10

 

 

 

17

 

 

NM

 

Total

 

$

170,994

 

 

$

157,853

 

 

 

8.3

%

(1)

AIU’s first quarter 2020 revenue includes revenue associated with the Trident acquisition commencing on the March 2,2020 date of acquisition.

TOTAL AND NEW STUDENT ENROLLMENTS

  • As of March 31, 2020, CTU’s and AIU’s total student enrollments increased 4.8 percent and 26.0 percent, respectively, as compared to the prior year. AIU’s total student enrollments were positively impacted by the Trident acquisition.
  • For the quarter ended March 31, 2020, new student enrollments increased 16.8 percent within CTU and decreased 14.2 percent within AIU, in each case as compared to the prior year quarter. AIU’s quarterly new student enrollments were negatively impacted by the academic calendar which resulted in 31 percent less enrollment days for the quarter. Enrollment days attributable to any given period are the available days in the period during which a prospective student may apply to start school during that period.

 

 

As of March 31,

 

Total Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

24,200

 

 

 

23,100

 

 

 

4.8

%

AIU (1)

 

 

16,000

 

 

 

12,700

 

 

 

26.0

%

Total

 

 

40,200

 

 

 

35,800

 

 

 

12.3

%

 

 

For the Quarter Ended March 31,

 

New Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

7,020

 

 

 

6,010

 

 

 

16.8

%

AIU (1)

 

 

4,610

 

 

 

5,370

 

 

 

-14.2

%

Total

 

 

11,630

 

 

 

11,380

 

 

 

2.2

%

(1)

AIU’s new and total student enrollments for the first quarter of 2020 include enrollments related to the Trident acquisition commencing on the March 2, 2020 date of acquisition and as of March 31, 2020.

OPERATING INCOME (LOSS)

  • For the quarter ended March 31, 2020, operating income of $37.3 million increased 24.5 percent compared to $30.0 million for the prior year quarter.

 

 

For the Quarter Ended March 31,

 

Operating Income ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

CTU

 

$

34,619

 

 

$

29,691

 

 

 

16.6

%

AIU (1)

 

 

9,376

 

 

 

8,312

 

 

 

12.8

%

Total University Group

 

 

43,995

 

 

 

38,003

 

 

 

15.8

%

Corporate and Other (2)

 

 

(6,692

)

 

 

(8,032

)

 

 

16.7

%

Total

 

$

37,303

 

 

$

29,971

 

 

 

24.5

%

(1)

AIU’s first quarter of 2020 operating income includes results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

(2)

The following is a summary of the operating losses related to closed campuses which are included within Corporate and Other for the quarters ended March 31, 2020 and 2019, respectively.

 

 

For the Quarter Ended March 31,

 

Operating Loss ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

Closed Campuses

 

$

(1,012

)

 

$

(2,812

)

 

 

64.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 March 31, 2020, adjusted operating income of $40.8 million increased 23.7 percent compared to adjusted operating income of $33.0 million for the prior year quarter.

 

 

For the Quarter Ended March 31,

 

Adjusted Operating Income ($ in thousands)

 

2020

 

 

2019

 

Total Company:

 

 

 

 

 

 

 

 

Operating income

 

$

37,303

 

 

$

29,971

 

Depreciation and amortization

 

 

2,639

 

 

 

2,233

 

Asset impairment (1)

 

 

612

 

 

 

-

 

Lease expenses for vacated space (2)

 

 

217

 

 

 

766

 

Adjusted Operating Income --

Total Company

 

$

40,771

 

 

$

32,970

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

23.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Asset impairment relates to a right of use asset for one of our vacated facilities for which the sublease income was deemed no longer recoverable.

(2)

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

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended March 31, 2020, the Company recorded:

  • Net income of $29.1 million compared to net income of $24.8 million for the prior year quarter.
  • Earnings per diluted share of $0.41 compared to earnings per diluted share of $0.35 for the prior year quarter.
  • Adjusted earnings per diluted share of $0.42 compared to adjusted earnings per diluted share of $0.36 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 Quarter Ended March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.41

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

Asset impairment (1)

 

 

0.01

 

 

 

-

 

Lease expenses for vacated space (2)

 

 

-

 

 

 

0.01

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.01

 

Tax effect of adjustments (3)

 

 

-

 

 

 

-

 

Total adjustments after tax

 

 

0.01

 

 

 

0.01

 

Adjusted Earnings Per Diluted Share

 

$

0.42

 

 

$

0.36

 

(1)

Asset impairment relates to a right of use asset for one of our vacated facilities for which the sublease income was deemed no longer recoverable.

(2)

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

(3)

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.

BALANCE SHEET AND CASH FLOW

  • For the quarter ended March 31, 2020, net cash provided by operating activities was $48.8 million compared to $12.9 million for the prior year quarter.
  • As of March 31, 2020 and December 31, 2019, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $285.6 million and $294.2 million, respectively.
  • During the quarter ended March 31, 2020, the Company paid $38.1 million in cash in connection with the Trident acquisition. The Company expects to pay an additional estimated amount of $6.0 million, related to the final post-closing purchase price and working capital adjustments, upon finalization of the closing balance sheet.

 

 

For the Quarter Ended March 31,

 

Selected Cash Flow Items ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

Net cash provided by operating activities

 

$

48,768

 

 

$

12,945

 

 

 

276.7

%

Capital expenditures

 

$

1,015

 

 

$

479

 

 

 

111.9

%

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.

The outlook now incorporates the Trident acquisition, including known acquisition and restructuring costs, as well as known costs associated with COVID-19, such as transitioning our students and employees to a remote environment. The outlook continues to reflect the Company’s expectation of growth in new and total student enrollments at both universities for the full year of 2020.

Further, for the second quarter of 2020, the Company expects growth in CTU’s new student enrollments as compared to the prior year quarter. AIU’s second quarter new student enrollments are expected to show significant growth due to 50 percent more enrollment days in the second quarter of 2020 as compared to the prior year quarter, as well as the Trident acquisition. This increase is expected to more than offset the decline in new student enrollments from the first quarter of 2020 such that on a combined basis AIU is expected to show growth for the first half of 2020, even after excluding the positive impact from the Trident acquisition. The Company expects AIU’s enrollment days for the third and fourth quarters of 2020 to be relatively comparable to the respective prior year periods.

 

Total Company Outlook

 

For Quarter Ending June 30,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2020

2019

 

2020

2019

Operating Income

$33M - $35M

$0.2M

 

$135M - $139M

$86.5M

Adjusted Operating Income

$38M - $40M

$32.8M

 

$151M - $155M

$134.3M

 

 

 

 

 

 

Earnings Per Diluted Share

$0.35 - $0.37

($0.01)

 

$1.44 - $1.48

$0.97

Adjusted Earnings Per Diluted Share

$0.36 - $0.38

$0.34

 

$1.49 - $1.53

$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, (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, including the March 2020 letter from the U.S. Department of Veterans Affairs (the “VA”) regarding the potential disapproval, for purposes of educational assistance programs administered by the VA, of the enrollment of individuals at the Company’s institutions if the Company fails to remedy the deficiency identified in the letter, (v) no significant operating or financial impacts from the COVID-19 pandemic beyond the known costs which have been incorporated in the outlook, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 26% for the second quarter and the full year, and (vii) any future impact from the Company’s stock repurchase program is 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 Thursday, May 7, 2020 at 5:30 p.m. Eastern time to discuss its first quarter 2020 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 various versions of “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 U.S. Federal Trade Commission 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 functions to achieve anticipated operating performance; our continued eligibility to participate in educational assistance programs for veterans or other military personnel; the impact of the global COVID-19 pandemic; difficulties with integrating the assets of Trident University International 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

 

37,932

 

 

$

 

108,687

 

Restricted cash

 

 

4,000

 

 

 

-

 

Short-term investments

 

 

243,651

 

 

 

185,488

 

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

 

 

285,583

 

 

 

294,175

 

 

 

 

 

 

 

 

 

 

Student receivables, net

 

 

32,573

 

 

 

55,018

 

Receivables, other

 

 

1,576

 

 

 

1,381

 

Prepaid expenses

 

 

10,389

 

 

 

7,299

 

Inventories

 

 

553

 

 

 

576

 

Other current assets

 

 

1,619

 

 

 

1,936

 

Total current assets

 

 

332,293

 

 

 

360,385

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

28,349

 

 

 

26,006

 

Right of use asset, net

 

 

51,088

 

 

 

50,366

 

Goodwill

 

 

118,777

 

 

 

87,356

 

Intangible assets, net

 

 

18,300

 

 

 

7,900

 

Student receivables, net

 

 

1,142

 

 

 

1,244

 

Deferred income tax assets, net

 

 

50,701

 

 

 

60,169

 

Other assets

 

 

5,876

 

 

 

5,720

 

TOTAL ASSETS

 

$

 

606,526

 

 

$

 

599,146

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

$

 

12,419

 

 

$

 

11,784

 

Accounts payable

 

 

9,624

 

 

 

11,533

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

12,532

 

 

 

27,616

 

Advertising and marketing costs

 

 

11,478

 

 

 

10,479

 

Income taxes

 

 

1,489

 

 

 

1,376

 

Other

 

 

15,745

 

 

 

16,378

 

Deferred revenue

 

 

29,002

 

 

 

24,647

 

Total current liabilities

 

 

92,289

 

 

 

103,813

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

 

51,699

 

 

 

52,391

 

Other liabilities

 

 

17,395

 

 

 

11,647

 

Total non-current liabilities

 

 

69,094

 

 

 

64,038

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

862

 

 

 

860

 

Additional paid-in capital

 

 

642,958

 

 

 

639,335

 

Accumulated other comprehensive (loss) income

 

 

(543

)

 

 

344

 

Retained earnings

 

 

47,177

 

 

 

18,071

 

Treasury stock

 

 

(245,311

)

 

 

(227,315

)

Total stockholders' equity

 

 

445,143

 

 

 

431,295

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

 

606,526

 

 

$

 

599,146

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(In thousands, except per share amounts and percentages)

 

 

 

For the Quarter Ended March 31,

 

 

 

2020

 

 

% of

Total

Revenue

 

 

2019

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

 

170,394

 

 

 

99.6

%

 

$

 

157,228

 

 

 

99.6

%

Other

 

 

600

 

 

 

0.4

%

 

 

625

 

 

 

0.4

%

Total revenue

 

 

170,994

 

 

 

 

 

 

 

157,853

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

26,911

 

 

 

15.7

%

 

 

26,327

 

 

 

16.7

%

General and administrative

 

 

103,529

 

 

 

60.5

%

 

 

99,322

 

 

 

62.9

%

Depreciation and amortization

 

 

2,639

 

 

 

1.5

%

 

 

2,233

 

 

 

1.4

%

Asset impairment

 

 

612

 

 

 

0.4

%

 

 

-

 

 

 

0.0

%

Total operating expenses

 

 

133,691

 

 

 

78.2

%

 

 

127,882

 

 

 

81.0

%

Operating income

 

 

37,303

 

 

 

21.8

%

 

 

29,971

 

 

 

19.0

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,487

 

 

 

0.9

%

 

 

1,440

 

 

 

0.9

%

Interest expense

 

 

(41

)

 

 

0.0

%

 

 

(42

)

 

 

0.0

%

Miscellaneous (expense) income

 

 

(13

)

 

 

0.0

%

 

 

226

 

 

 

0.1

%

Total other income

 

 

1,433

 

 

 

0.8

%

 

 

1,624

 

 

 

1.0

%

PRETAX INCOME

 

 

38,736

 

 

 

22.7

%

 

 

31,595

 

 

 

20.0

%

Provision for income taxes

 

 

9,604

 

 

 

5.6

%

 

 

6,407

 

 

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

29,132

 

 

 

17.0

%

 

 

25,188

 

 

 

16.0

%

Loss from discontinued operations, net of tax

 

 

(26

)

 

 

0.0

%

 

 

(397

)

 

 

-0.3

%

NET INCOME

 

 

29,106

 

 

 

17.0

%

 

 

24,791

 

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(48

)

 

 

 

 

 

 

(52

)

 

 

 

 

Unrealized (loss) gain on investments

 

 

(839

)

 

 

 

 

 

 

399

 

 

 

 

 

Total other comprehensive (loss) income

 

 

(887

)

 

 

 

 

 

 

347

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

 

28,219

 

 

 

 

 

 

$

 

25,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

 

0.42

 

 

 

 

 

 

$

 

0.36

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income per share

 

$

 

0.42

 

 

 

 

 

 

$

 

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE -DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

 

0.41

 

 

 

 

 

 

$

 

0.35

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

 

0.41

 

 

 

 

 

 

$

 

0.35

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,839

 

 

 

 

 

 

 

69,837

 

 

 

 

 

Diluted

 

 

71,714

 

 

 

 

 

 

 

71,492

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

For the Quarter Ended March 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

29,106

 

 

$

24,791

 

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

 

 

 

 

 

 

 

 

Asset impairment

 

 

612

 

 

 

-

 

Depreciation and amortization expense

 

 

2,639

 

 

 

2,233

 

Bad debt expense

 

 

12,862

 

 

 

11,709

 

Compensation expense related to share-based awards

 

 

3,212

 

 

 

1,369

 

Deferred income taxes

 

 

9,468

 

 

 

6,778

 

Changes in operating assets and liabilities

 

 

(9,131

)

 

 

(33,935

)

Net cash provided by operating activities

 

 

48,768

 

 

 

12,945

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(111,753

)

 

 

(138,700

)

Sales of available-for-sale investments

 

 

52,893

 

 

 

135,062

 

Purchases of property and equipment

 

 

(1,015

)

 

 

(479

)

Business acquisition

 

 

(38,065

)

 

 

-

 

Net cash used in investing activities

 

 

(97,940

)

 

 

(4,117

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

413

 

 

 

109

 

Purchase of treasury stock

 

 

(17,309

)

 

 

-

 

Payments of employee tax associated with stock compensation

 

 

(687

)

 

 

(2,532

)

Net cash used in financing activities

 

 

(17,583

)

 

 

(2,423

)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(66,755

)

 

 

6,405

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period

 

 

108,687

 

 

 

32,731

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period

 

$

41,932

 

 

$

39,136

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Quarter Ended March 31,

 

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

103,588

 

 

$

97,057

 

AIU (1)

 

 

67,396

 

 

 

60,779

 

Total University Group

 

 

170,984

 

 

 

157,836

 

Corporate and Other (2)

 

 

10

 

 

 

17

 

Total

 

$

170,994

 

 

$

157,853

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU

 

$

34,619

 

 

$

29,691

 

AIU (1)

 

 

9,376

 

 

 

8,312

 

Total University Group

 

 

43,995

 

 

 

38,003

 

Corporate and Other (2)

 

 

(6,692

)

 

 

(8,032

)

Total

 

$

37,303

 

 

$

29,971

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU

 

 

33.4

%

 

 

30.6

%

AIU (1)

 

 

13.9

%

 

 

13.7

%

Total University Group

 

 

25.7

%

 

 

24.1

%

Corporate and Other (2)

 

NM

 

 

NM

 

Total

 

 

21.8

%

 

 

19.0

%

(1)

AIU’s first quarter 2020 revenue and operating income include results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

(2)

Corporate and Other includes results of operations for closed campuses. Operating losses related to closed campuses were $1.0 million and $2.8 million for the quarters ended March 31, 2020 and 2019, respectively.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

(In thousands, unless otherwise noted)

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended March 31,

 

 

 

ACTUAL

 

Adjusted Operating Income

 

2020

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

Operating income

 

$

37,303

 

 

$

29,971

 

Depreciation and amortization (2)

 

 

2,639

 

 

 

2,233

 

Asset impairment (3)

 

 

612

 

 

 

-

 

Lease expenses for vacated space (4)

 

 

217

 

 

 

766

 

Adjusted Operating Income -- Total Company

 

$

40,771

 

 

$

32,970

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending June 30,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

Operating income

 

$33.0M - $35.0M

 

 

$

184

 

Depreciation and amortization (2)

 

4.8M

 

 

 

2,235

 

Lease expenses for vacated space (4)

 

0.2M

 

 

 

392

 

Significant legal settlements (5)

 

-

 

 

 

30,000

 

Adjusted Operating Income -- Total Company

 

$38.0M - $40.0M

 

 

$

32,811

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

Operating income

 

$135.0M - $139.0M

 

 

$

86,462

 

Depreciation and amortization (2)

 

14.5M

 

 

 

9,145

 

Asset impairment (3)

 

0.6M

 

 

 

-

 

Lease expenses for vacated space (4)

 

0.9M

 

 

 

1,630

 

Significant legal settlements (5)

 

 

-

 

 

 

37,100

 

Adjusted Operating Income -- Total Company

 

$151.0M - $155.0M

 

 

$

134,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

 

 

 

 

 

 

 

For the Quarter Ended March 31,

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.41

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

Asset impairment (3)

 

 

0.01

 

 

 

-

 

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

0.01

 

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.01

 

 

Tax effect of adjustments (6)

 

 

-

 

 

 

-

 

 

Total adjustments after tax

 

 

0.01

 

 

 

0.01

 

 

Adjusted Earnings Per Diluted Share

 

$

0.42

 

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending June 30,

 

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

 

2020

 

 

2019

 

 

Reported Earnings Per Diluted Share

 

$0.35 - $0.37

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.01

 

 

 

-

 

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

0.01

 

 

Significant legal settlements (5)

 

 

-

 

 

 

0.41

 

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.42

 

 

Tax effect of adjustments (6)

 

 

-

 

 

 

(0.02

)

 

Tax effect of change in settlement deductibility (7)

 

 

-

 

 

 

(0.05

)

 

Total adjustments after tax

 

 

0.01

 

 

 

0.35

 

 

Adjusted Earnings Per Diluted Share

 

$0.36 - $0.38

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ending

December 31,

 

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

 

2020

 

 

2019

 

 

Reported Earnings Per Diluted Share

 

$1.44 - $1.48

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.04

 

 

 

-

 

 

Asset impairment (3)

 

 

0.01

 

 

 

-

 

 

Lease expenses for vacated space (4)

 

 

0.01

 

 

 

0.02

 

 

Significant legal settlements (5)

 

 

-

 

 

 

0.51

 

 

Total pre-tax adjustments

 

$

0.06

 

 

$

0.53

 

 

Tax effect of adjustments (6)

 

 

(0.01

)

 

 

(0.13

)

 

Total adjustments after tax

 

 

0.05

 

 

 

0.40

 

 

Adjusted Earnings Per Diluted Share

 

$1.49 - $1.53

 

 

$

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)

Amortization amounts relate to definite-lived intangible assets associated with the Trident acquisition.

 

(3)

Asset impairment relates to a right of use asset for one of our vacated facilities for which the sublease income was deemed no longer recoverable.

 

(4)

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

 

(5)

Significant legal settlements relate to the FTC and Oregon arbitrations matters recorded during 2019.

 

(6)

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.

 

(7)

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 reflected during the fourth quarter of 2019 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 originally 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. The second quarter of 2019 now reflects this adjustment. For the full year 2019, approximately $29.7 million was considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility had no effect for the full year 2019.

 

Contacts

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

Or

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

Release Summary

PERDOCEO EDUCATION CORPORATION ANNOUNCES FIRST QUARTER 2020 RESULTS

Contacts

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

Or

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