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Perdoceo Education Corporation Reports Second Quarter and Year to Date 2023 Results

Company Declares Inaugural Quarterly Cash Dividend on Common Stock

Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended June 30, 2023.

Second Quarter 2023 Results as Compared to Prior Year Quarter

  • Revenue increased 11.3% to $186.6 million, primarily driven by an 18.7% increase at CTU.
  • Operating income increased 41.7% to $48.1 million, while adjusted operating income increased 31.5% to $55.2 million.*
  • Earnings per diluted share were $0.80 as compared to $0.37, while adjusted earnings per diluted share were $0.61 as compared to $0.42.*
  • Total student enrollments at June 30, 2023 decreased by 5.2%. AIUS experienced a 14.2% decrease in total student enrollments while CTU remained relatively flat.
  • Ended the quarter with $578.1 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.
  • Board of Directors declared inaugural dividend for the second quarter of $0.11 per share payable on September 15, 2023.

Year to Date 2023 Results as Compared to Prior Year to Date

  • Revenue increased 9.0% to $382.2 million, primarily driven by a 14.1% increase at CTU.
  • Operating income increased 17.8% to $91.4 million, while adjusted operating income increased 16.6% to $108.3 million.*
  • Earnings per diluted share were $1.30 as compared to $0.83, while adjusted earnings per diluted share were $1.19 as compared to $0.93.*

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

"Second quarter results came in ahead of our expectations, as we experienced further improvements in student retention and engagement, supported by various operating changes and technology upgrades within our onboarding, academic and student support processes,” said Andrew Hurst, Chief Executive Officer.

REVENUE

  • For the quarter ended June 30, 2023, revenue of $186.6 million increased 11.3% compared to revenue of $167.7 million for the prior year quarter.
  • For the year to date ended June 30, 2023, revenue of $382.2 million increased 9.0% compared to revenue of $350.6 million for the prior year to date.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Revenue ($ in thousands)

 

2023

 

 

2022

 

 

% Change

 

 

2023

 

 

2022

 

 

% Change

 

CTU

 

$

119,292

 

 

$

100,461

 

 

 

18.7

%

 

$

243,784

 

 

$

213,609

 

 

 

14.1

%

AIUS

 

 

67,062

 

 

 

66,920

 

 

 

0.2

%

 

 

137,902

 

 

 

136,452

 

 

 

1.1

%

Corporate and Other

 

 

210

 

 

 

303

 

 

NM

 

 

 

476

 

 

 

582

 

 

NM

 

Total

 

$

186,564

 

 

$

167,684

 

 

 

11.3

%

 

$

382,162

 

 

$

350,643

 

 

 

9.0

%

TOTAL STUDENT ENROLLMENTS

  • As of June 30, 2023, CTU’s total student enrollments decreased 0.4%, while AIUS’ total student enrollments decreased 14.2% as compared to June 30, 2022.

 

 

At June 30,

 

Total Student Enrollments(1)

 

2023

 

 

2022

 

 

% Change

 

CTU

 

 

25,900

 

 

 

26,000

 

 

 

-0.4

%

AIUS

 

 

12,100

 

 

 

14,100

 

 

 

-14.2

%

Total

 

 

38,000

 

 

 

40,100

 

 

 

-5.2

%

(1)

Total student enrollments do not include learners participating in: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at the Company's universities.

OPERATING INCOME

  • For the quarter ended June 30, 2023, operating income increased by 41.7% to $48.1 million as compared to the prior year quarter.
  • For the year to date ended June 30, 2023, operating income increased by 17.8% to $91.4 million as compared to the prior year to date.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Operating Income ($ in thousands)

 

2023

 

 

2022

 

 

% Change

 

 

2023

 

 

2022

 

 

% Change

 

CTU

 

$

40,451

 

 

$

33,008

 

 

 

22.5

%

 

$

84,141

 

 

$

76,034

 

 

 

10.7

%

AIUS

 

 

17,078

 

 

 

10,733

 

 

 

59.1

%

 

 

29,081

 

 

 

20,256

 

 

 

43.6

%

Corporate and Other

 

 

(9,435

)

 

 

(9,795

)

 

NM

 

 

 

(21,792

)

 

 

(18,651

)

 

NM

 

Total

 

$

48,094

 

 

$

33,946

 

 

 

41.7

%

 

$

91,430

 

 

$

77,639

 

 

 

17.8

%

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 June 30, 2023, adjusted operating income of $55.2 million increased 31.5% compared to adjusted operating income of $41.9 million for the prior year quarter.
  • For the year to date ended June 30, 2023, adjusted operating income of $108.3 million increased 16.6% compared to adjusted operating income of $92.9 million for the prior year to date.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Adjusted Operating Income ($ in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income

 

$

48,094

 

 

$

33,946

 

 

$

91,430

 

 

$

77,639

 

Depreciation and amortization (1)

 

 

4,369

 

 

 

4,909

 

 

 

9,524

 

 

 

9,791

 

Legal fee expense related to certain matters (2)

 

 

2,709

 

 

 

3,087

 

 

 

7,328

 

 

 

5,434

 

Adjusted Operating Income

 

$

55,172

 

 

$

41,942

 

 

$

108,282

 

 

$

92,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

31.5

%

 

 

 

 

 

16.6

%

 

 

 

(1)

Amortization relates to definite-lived intangible assets associated with acquisitions.

 

(2)

Legal fee expense associated with (i) responses to the Department of Education (the “Department”) relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended June 30, 2023, the Company recorded:

  • Net income of $54.7 million compared to $25.8 million for the prior year quarter.
  • Earnings per diluted share of $0.80 compared to $0.37 for the prior year quarter.
  • Adjusted earnings per diluted share of $0.61 compared to $0.42 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 to date ended June 30, 2023, the Company recorded:

  • Net income of $89.2 million compared to $57.8 million for the prior year to date.
  • Earnings per diluted share of $1.30 compared to $0.83 for the prior year to date.
  • Adjusted earnings per diluted share of $1.19 compared to $0.93 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.80

 

 

$

0.37

 

 

$

1.30

 

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (1)

 

 

0.03

 

 

 

0.02

 

 

 

0.07

 

 

 

0.05

 

Legal fee expense related to certain matters (2)

 

 

0.04

 

 

 

0.05

 

 

 

0.11

 

 

 

0.08

 

Gain on sale of intangible asset (3)

 

 

(0.32

)

 

 

-

 

 

 

(0.32

)

 

 

-

 

Tax effect of adjustments (4)

 

 

0.06

 

 

 

(0.02

)

 

 

0.03

 

 

 

(0.03

)

Adjusted Earnings Per Diluted Share

 

$

0.61

 

 

$

0.42

 

 

$

1.19

 

 

$

0.93

 

(1)

Amortization relates to definite-lived intangible assets associated with acquisitions.

 

(2)

Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

 

(3)

Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo's stock.

 

(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.

INAUGURAL QUARTERLY DIVIDEND PAYMENT

The Company today announced that its board of directors has adopted a dividend policy. Pursuant to this policy, the board of directors intends to pay quarterly dividends, commencing with the Company’s quarter ended June 30, 2023. The board of directors declared the first quarterly dividend as part of the dividend policy of $0.11 per share, which will be paid on September 15, 2023 for holders of record of common stock as of September 1, 2023. Any decision to pay future cash dividends, however, will be made by the board of directors and depend on the Company’s available retained earnings, financial condition and other relevant factors.

The Company expects quarterly dividend payments to be an integral part of its balanced capital allocation strategy while also prioritizing investments in organic projects, in particularly technology-related initiatives designed to benefit students and maintaining a strong balance sheet.

BALANCE SHEET AND CASH FLOW

  • For the quarter ended June 30, 2023 net cash provided by operating activities was $61.6 million, compared to net cash provided by operating activities of $32.6 million for the prior year quarter.
  • For the year to date ended June 30, 2023, net cash provided by operating activities was $66.2 million, compared to net cash provided by operating activities of $54.8 million in the prior year to date.
  • As of June 30, 2023 and December 31, 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $578.1 million and $518.2 million, respectively.
  • The Company’s stock repurchase program, which was set to expire on September 30, 2023, has been extended to September 30, 2024. As of June 30, 2023, approximately $24.1 million was available under the stock repurchase program to repurchase outstanding shares of common stock.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Selected Cash Flow Items ($ in thousands)

 

2023

 

 

2022

 

 

% Change

 

 

2023

 

 

2022

 

 

% Change

 

Net cash provided by operating activities

 

$

61,648

 

 

$

32,625

 

 

 

89.0

%

 

$

66,220

 

 

$

54,779

 

 

 

20.9

%

Capital expenditures

 

$

1,687

 

 

$

2,023

 

 

 

-16.6

%

 

$

3,612

 

 

$

6,765

 

 

 

-46.6

%

OUTLOOK

The Company is providing the following third quarter outlook along with a full year 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.

 

Total Company Outlook

 

For Quarter Ending September 30,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2023

2022

 

2023

2022

Operating Income

$38.6M - $40.6M

$29,324

 

$137.0M - $144.0M

$129,637

Depreciation and amortization

$4.1M

$5,065

 

$17.6M

19,734

Legal fee expense related to certain matters (1)

$0.3M

$4,294

 

$10.4M

14,597

Adjusted Operating Income

$43.0M - $45.0M

$38,683

 

$165.0M - $172.0M

$163,968

 

 

 

 

 

 

Earnings Per Diluted Share

$0.46 - $0.48

$0.32

 

$1.89 - $1.96

$1.39

Amortization of acquired intangible assets

$0.03

$0.03

 

$0.12

$0.11

Legal fee expense related to certain matters (1)

-

$0.06

 

$0.15

$0.21

Gain on sale of intangible asset

-

-

 

($0.32)

-

Tax effect of adjustments

($0.01)

($0.02)

 

$0.01

($0.08)

Adjusted Earnings Per Diluted Share

$0.48 - $0.50

$0.39

 

$1.85 - $1.92

$1.63

(1)

Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share, which is the most directly comparable GAAP measure to adjusted 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. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2023 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and trends in student retention and engagement remain consistent with management’s estimates, (ii) no significant impact of new or proposed regulations, including recent Department negotiated rulemaking initiatives, or other adverse changes in the legal or regulatory environment, which may require further operational changes in the way the Company’s academic institutions enroll, support and educate current and prospective students, among other impacts, (iii) no significant operating impacts from the settlements with the U.S. Federal Trade Commission and state attorneys general or other legal or regulatory matters, (iv) the impact from student aid initiatives implemented by the current administration remains consistent with management's estimates, (v) earnings per diluted share outlook assumes an effective income tax rate of approximately 28% for the third quarter and 27% for the full year, and (vi) excludes any future impact from the Company’s stock repurchase program. 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 the Company makes in the future as it continues to evaluate diverse strategies to enhance stockholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Thursday, August 3, 2023 at 5:30 p.m. Eastern time to discuss second quarter and year to date 2023 results and outlook. Interested parties can access the live webcast of the conference call at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-888-210-4659 (domestic) or 1-646-960-0383 (international). Both dial-in numbers will use the access code 3224322. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/519983953. 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 accredited 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 academic institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIUS” or “AIU System”) – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Perdoceo’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. 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. For more information, please visit 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,” “focused on,” “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; the final outcome of various legal challenges to the Department's loan discharge and forgiveness efforts; 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; the success of our initiatives to improve student experiences, retention and academic outcomes; our continued eligibility to participate in educational assistance programs for veterans or other military personnel; our ability to pay dividends on our common stock and execute our stock repurchase program; 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, 2022 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

140,533

 

 

$

109,408

 

Restricted cash

 

 

9,476

 

 

 

9,476

 

Short-term investments

 

 

428,104

 

 

 

399,315

 

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

 

 

578,113

 

 

 

518,199

 

 

 

 

 

 

 

 

Student receivables, net

 

 

42,322

 

 

 

42,551

 

Receivables, other

 

 

6,896

 

 

 

3,457

 

Prepaid expenses

 

 

12,524

 

 

 

8,411

 

Inventories

 

 

2,875

 

 

 

1,904

 

Other current assets

 

 

664

 

 

 

597

 

Total current assets

 

 

643,394

 

 

 

575,119

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

Property and equipment, net

 

 

24,257

 

 

 

26,038

 

Right of use asset, net

 

 

23,105

 

 

 

26,156

 

Goodwill

 

 

244,114

 

 

 

243,540

 

Intangible assets, net

 

 

49,089

 

 

 

53,564

 

Student receivables, net

 

 

1,184

 

 

 

1,850

 

Deferred income tax assets, net

 

 

21,638

 

 

 

24,613

 

Other assets

 

 

6,889

 

 

 

6,488

 

TOTAL ASSETS

 

$

1,013,670

 

 

$

957,368

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Lease liability - operating

 

$

5,695

 

 

$

6,555

 

Accounts payable

 

 

15,361

 

 

 

13,518

 

Accrued expenses:

 

 

 

 

 

 

Payroll and related benefits

 

 

27,291

 

 

 

40,306

 

Advertising and marketing costs

 

 

6,385

 

 

 

8,977

 

Income taxes

 

 

16,041

 

 

 

7,814

 

Other

 

 

23,008

 

 

 

14,621

 

Deferred revenue

 

 

66,914

 

 

 

71,590

 

Total current liabilities

 

 

160,695

 

 

 

163,381

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

Lease liability - operating

 

 

24,357

 

 

 

27,286

 

Other liabilities

 

 

36,186

 

 

 

40,856

 

Total non-current liabilities

 

 

60,543

 

 

 

68,142

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

900

 

 

 

894

 

Additional paid-in capital

 

 

688,805

 

 

 

684,183

 

Accumulated other comprehensive loss

 

 

(5,621

)

 

 

(5,447

)

Retained earnings

 

 

436,996

 

 

 

347,839

 

Treasury stock

 

 

(328,648

)

 

 

(301,624

)

Total stockholders' equity

 

 

792,432

 

 

 

725,845

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,013,670

 

 

$

957,368

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

 

 

 

For the Quarter Ended June 30,

 

 

 

2023

 

 

% of

Total

Revenue

 

 

2022

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees, net

 

$

184,520

 

 

 

98.9

%

 

$

165,896

 

 

 

98.9

%

Other

 

 

2,044

 

 

 

1.1

%

 

 

1,788

 

 

 

1.1

%

Total revenue

 

 

186,564

 

 

 

 

 

 

167,684

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

32,748

 

 

 

17.6

%

 

 

27,269

 

 

 

16.3

%

General and administrative

 

 

100,588

 

 

 

53.9

%

 

 

101,332

 

 

 

60.4

%

Depreciation and amortization

 

 

4,369

 

 

 

2.3

%

 

 

4,909

 

 

 

2.9

%

Asset impairment

 

 

765

 

 

 

0.4

%

 

 

228

 

 

 

0.1

%

Total operating expenses

 

 

138,470

 

 

 

74.2

%

 

 

133,738

 

 

 

79.8

%

Operating income

 

 

48,094

 

 

 

25.8

%

 

 

33,946

 

 

 

20.2

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

4,531

 

 

 

2.4

%

 

 

1,094

 

 

 

0.7

%

Interest expense

 

 

(96

)

 

 

-0.1

%

 

 

(99

)

 

 

-0.1

%

Miscellaneous income (expense)

 

 

22,074

 

 

 

11.8

%

 

 

(226

)

 

 

-0.1

%

Total other income

 

 

26,509

 

 

 

14.2

%

 

 

769

 

 

 

0.5

%

PRETAX INCOME

 

 

74,603

 

 

 

40.0

%

 

 

34,715

 

 

 

20.7

%

Provision for income taxes

 

 

19,930

 

 

 

10.7

%

 

 

8,948

 

 

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

54,673

 

 

 

29.3

%

 

 

25,767

 

 

 

15.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

$

0.81

 

 

 

 

 

$

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE -DILUTED:

 

$

0.80

 

 

 

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

67,421

 

 

 

 

 

 

68,341

 

 

 

 

Diluted

 

 

68,533

 

 

 

 

 

 

69,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Quarter Ended June 30,

 

 

 

 

(In Thousands)

 

2023

 

 

 

 

 

2022

 

 

 

 

NET INCOME

 

$

54,673

 

 

 

 

 

$

25,767

 

 

 

 

OTHER COMPREHENSIVE LOSS, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(3

)

 

 

 

 

 

(164

)

 

 

 

Unrealized loss on investments

 

 

(1,497

)

 

 

 

 

 

(1,469

)

 

 

 

Total other comprehensive loss

 

 

(1,500

)

 

 

 

 

 

(1,633

)

 

 

 

COMPREHENSIVE INCOME

 

$

53,173

 

 

 

 

 

$

24,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2023

 

 

% of

Total

Revenue

 

 

2022

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees, net

 

$

377,839

 

 

 

98.9

%

 

$

347,223

 

 

 

99.0

%

Other

 

 

4,323

 

 

 

1.1

%

 

 

3,420

 

 

 

1.0

%

Total revenue

 

 

382,162

 

 

 

 

 

 

350,643

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

66,599

 

 

 

17.4

%

 

 

55,357

 

 

 

15.8

%

General and administrative

 

 

213,274

 

 

 

55.8

%

 

 

207,628

 

 

 

59.2

%

Depreciation and amortization

 

 

9,524

 

 

 

2.5

%

 

 

9,791

 

 

 

2.8

%

Asset impairment

 

 

1,335

 

 

 

0.3

%

 

 

228

 

 

 

0.1

%

Total operating expenses

 

 

290,732

 

 

 

76.1

%

 

 

273,004

 

 

 

77.9

%

Operating income

 

 

91,430

 

 

 

23.9

%

 

 

77,639

 

 

 

22.1

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

8,349

 

 

 

2.2

%

 

 

1,427

 

 

 

0.4

%

Interest expense

 

 

(191

)

 

 

0.0

%

 

 

(202

)

 

 

-0.1

%

Miscellaneous income (expense)

 

 

22,068

 

 

 

5.8

%

 

 

(315

)

 

 

-0.1

%

Total other income

 

 

30,226

 

 

 

7.9

%

 

 

910

 

 

 

0.3

%

PRETAX INCOME

 

 

121,656

 

 

 

31.8

%

 

 

78,549

 

 

 

22.4

%

Provision for income taxes

 

 

32,499

 

 

 

8.5

%

 

 

20,704

 

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

89,157

 

 

 

23.3

%

 

 

57,845

 

 

 

16.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

$

1.32

 

 

 

 

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE -DILUTED:

 

$

1.30

 

 

 

 

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

67,328

 

 

 

 

 

 

68,542

 

 

 

 

Diluted

 

 

68,512

 

 

 

 

 

 

69,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Year to Date Ended June 30,

 

 

 

 

(In Thousands)

 

2023

 

 

 

 

 

2022

 

 

 

 

NET INCOME

 

$

89,157

 

 

 

 

 

$

57,845

 

 

 

 

OTHER COMPREHENSIVE LOSS, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

23

 

 

 

 

 

 

(245

)

 

 

 

Unrealized loss on investments

 

 

(197

)

 

 

 

 

 

(2,833

)

 

 

 

Total other comprehensive loss

 

 

(174

)

 

 

 

 

 

(3,078

)

 

 

 

COMPREHENSIVE INCOME

 

$

88,983

 

 

 

 

 

$

54,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

89,157

 

 

$

57,845

 

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

 

 

 

 

 

 

Asset impairment

 

 

1,335

 

 

 

228

 

Gain on sale of asset

 

 

(22,086

)

 

 

-

 

Depreciation and amortization expense

 

 

9,524

 

 

 

9,791

 

Bad debt expense

 

 

18,927

 

 

 

24,379

 

Compensation expense related to share-based awards

 

 

4,315

 

 

 

4,316

 

Deferred income taxes

 

 

2,975

 

 

 

(557

)

Changes in operating assets and liabilities

 

 

(37,927

)

 

 

(41,223

)

Net cash provided by operating activities

 

 

66,220

 

 

 

54,779

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(159,183

)

 

 

(330,797

)

Sales of available-for-sale investments

 

 

132,325

 

 

 

134,964

 

Purchases of property and equipment

 

 

(3,612

)

 

 

(6,765

)

Business acquisition

 

 

-

 

 

 

(7,000

)

Net cash used in investing activities

 

 

(30,470

)

 

 

(209,598

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Issuance of common stock

 

 

313

 

 

 

849

 

Purchase of treasury stock

 

 

(2,729

)

 

 

(15,670

)

Payments of employee tax associated with stock compensation

 

 

(2,209

)

 

 

(1,612

)

Release of cash held in escrow

 

 

-

 

 

 

(3,986

)

Net cash used in financing activities

 

 

(4,625

)

 

 

(20,419

)

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

 

 

31,125

 

 

 

(175,238

)

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

 

 

118,884

 

 

 

325,178

 

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

 

$

150,009

 

 

$

149,940

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Quarter Ended June 30,

 

 

 

2023 (1)

 

 

2022

 

REVENUE:

 

 

 

 

 

 

CTU

 

$

119,292

 

 

$

100,461

 

AIUS

 

 

67,062

 

 

 

66,920

 

Corporate and Other

 

 

210

 

 

 

303

 

Total

 

$

186,564

 

 

$

167,684

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

CTU

 

$

40,451

 

 

$

33,008

 

AIUS

 

 

17,078

 

 

 

10,733

 

Corporate and Other

 

 

(9,435

)

 

 

(9,795

)

Total

 

$

48,094

 

 

$

33,946

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

CTU

 

 

33.9

%

 

 

32.9

%

AIUS

 

 

25.5

%

 

 

16.0

%

Corporate and Other

 

NM

 

 

NM

 

Total

 

 

25.8

%

 

 

20.2

%

 

 

 

 

 

 

 

(1)

Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2023 (1)

 

 

2022

 

REVENUE:

 

 

 

 

 

 

CTU

 

$

243,784

 

 

$

213,609

 

AIUS

 

 

137,902

 

 

 

136,452

 

Corporate and Other

 

 

476

 

 

 

582

 

Total

 

$

382,162

 

 

$

350,643

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

CTU

 

$

84,141

 

 

$

76,034

 

AIUS

 

 

29,081

 

 

 

20,256

 

Corporate and Other

 

 

(21,792

)

 

 

(18,651

)

Total

 

$

91,430

 

 

$

77,639

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

CTU

 

 

34.5

%

 

 

35.6

%

AIUS

 

 

21.1

%

 

 

14.8

%

Corporate and Other

 

NM

 

 

NM

 

Total

 

 

23.9

%

 

 

22.1

%

 

 

 

 

 

 

 

(1)

Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

(In thousands, unless otherwise noted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

ACTUAL

 

 

ACTUAL

 

Adjusted Operating Income

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income

 

$

48,094

 

 

$

33,946

 

 

$

91,430

 

 

$

77,639

 

Depreciation and amortization (2)

 

 

4,369

 

 

 

4,909

 

 

 

9,524

 

 

 

9,791

 

Legal fee expense related to certain matters (3)

 

 

2,709

 

 

 

3,087

 

 

 

7,328

 

 

 

5,434

 

Adjusted Operating Income

 

$

55,172

 

 

$

41,942

 

 

$

108,282

 

 

$

92,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending September 30,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating income

 

$38.6M - $40.6M

 

 

$

29,324

 

 

$137.0M - $144.0M

 

 

$

129,637

 

Depreciation and amortization (2)

 

$4.1M

 

 

 

5,065

 

 

$17.6M

 

 

 

19,734

 

Legal fee expense related to certain matters (3)

 

$0.3M

 

 

 

4,294

 

 

$10.4M

 

 

 

14,597

 

Adjusted Operating Income

 

$43.0M - $45.0M

 

 

$

38,683

 

 

$165.0M - $172.0M

 

 

$

163,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

 

 

 

 

 

 

 

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

ACTUAL

 

 

ACTUAL

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reported Earnings Per Diluted Share

 

$

0.80

 

 

$

0.37

 

 

$

1.30

 

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (2)

 

 

0.03

 

 

 

0.02

 

 

 

0.07

 

 

 

0.05

 

Legal fee expense related to certain matters (3)

 

 

0.04

 

 

 

0.05

 

 

 

0.11

 

 

 

0.08

 

Gain on sale of intangible asset (4)

 

 

(0.32

)

 

 

-

 

 

 

(0.32

)

 

 

-

 

Total pre-tax adjustments

 

$

(0.25

)

 

$

0.07

 

 

$

(0.14

)

 

$

0.13

 

Tax effect of adjustments (5)

 

 

0.06

 

 

 

(0.02

)

 

 

0.03

 

 

 

(0.03

)

Total adjustments after tax

 

 

(0.19

)

 

 

0.05

 

 

 

(0.11

)

 

 

0.10

 

Adjusted Earnings Per Diluted Share

 

$

0.61

 

 

$

0.42

 

 

$

1.19

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending September 30,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reported Earnings Per Diluted Share

 

$0.46 - $0.48

 

 

$

0.32

 

 

$1.89 -$1.96

 

 

$

1.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (2)

 

0.03

 

 

 

0.03

 

 

0.12

 

 

 

0.11

 

Legal fee expense related to certain matters (3)

 

 

-

 

 

 

0.06

 

 

0.15

 

 

 

0.21

 

Gain on sale of intangible asset (4)

 

 

-

 

 

 

-

 

 

(0.32)

 

 

 

-

 

Total pre-tax adjustments

 

$0.03

 

 

$

0.09

 

 

(0.05)

 

 

$

0.32

 

Tax effect of adjustments (5)

 

(0.01)

 

 

 

(0.02

)

 

0.01

 

 

 

(0.08

)

Total adjustments after tax

 

0.02

 

 

 

0.07

 

 

(0.04)

 

 

 

0.24

 

Adjusted Earnings Per Diluted Share

 

$0.48 - $0.50

 

 

$

0.39

 

 

$1.85 - $1.92

 

 

$

1.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 amortization for acquired intangible assets, significant legal settlements and legal fee expense related to certain matters. The Company believes the items it is adjusting for are not normal operating expenses necessary to run its business. 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.

Results of operations include the Coding Dojo acquisition as of December 1, 2022 and the CalSouthern acquisition as of July 1, 2022.

(2)

Amortization for acquired intangible assets relate to definite-lived intangible assets associated with acquisitions.

(3)

Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

(4)

Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo's stock.

(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.

 

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