8-K
PERDOCEO EDUCATION Corp (PRDO)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 7, 2022
Perdoceo Education Corporation
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-23245 | 36-3932190 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 1750 E. Golf Road, Schaumburg, IL | 60173 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (847)
781-3600
(Former Name or Former Address, if Changed Since Last Report: 231 N. Martingale Rd., Schaumburg, IL 60173)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | PRDO | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 7, 2022, Perdoceo Education Corporation (the “Company”) issued a press release describing the Company’s financial results for the quarter and year to date ended September 30, 2022 and providing an update on the Company’s 2022 outlook. A copy of the press release is being furnished as Exhibit 99.1, and the information contained therein is incorporated herein by reference. Following the issuance of the press release, the Company will host a conference call and webcast on which its financial results for the quarter and year to date ended September 30, 2022 and outlook will be discussed.
The information contained in Item 2.02 of this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall the information be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibits required by Item 601 of Regulation S-K are listed in the “Exhibit Index” which is contained in this Current Report on Form 8-K and are incorporated by reference herein.
Exhibit Index
| Exhibit<br><br>Number | Description of Exhibits |
|---|---|
| 99.1 | Press release of the Company dated November 7, 2022 reporting the Company’s financial results for the quarter and year to date ended September 30, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PERDOCEO EDUCATION CORPORATION | |
|---|---|
| By: | /s/ Ashish R. Ghia |
| Ashish R. Ghia | |
| Senior Vice President and Chief Financial Officer |
Date: November 7, 2022
EX-99.1
PRDO ANNOUNCES 3Q22 RESULTS …PG 1
Exhibit 99.1
PERDOCEO EDUCATION CORPORATION REPORTS THIRD QUARTER AND
YEAR TO DATE 2022 RESULTS
Schaumburg, Ill. (November 7, 2022) – Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended September 30, 2022.
Third Quarter 2022 Results as Compared to Prior Year Quarter
• Revenue decreased 3.2% to $168.4 million, with a 6.9% decrease at CTU partially offset by a 2.4% increase at AIUS.
• Operating income decreased 22.5% to $29.3 million, while adjusted operating income decreased 16.5% to $38.7 million.*
• Earnings per diluted share was $0.32 as compared to $0.39, while adjusted earnings per diluted share was $0.39 as compared to $0.45.*
• Total student enrollments at September 30, 2022 decreased by 2.1%. CTU experienced a 2.7% increase in total student enrollments that was more than offset by a 9.5% decrease at AIUS.
• Ended the quarter with $525.2 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.
Year to Date 2022 Results as Compared to Prior Year to Date
• Total revenue decreased 2.6% to $519.1 million, with a 0.5% decline at CTU and a 5.7% decline at AIUS.
• Operating income decreased 6.5% to $107.0 million, while adjusted operating income decreased 1.5% to $131.5 million.*
• Earnings per diluted share was $1.16 as compared to $1.19 for the prior year period, while adjusted earnings per diluted share was $1.32 as compared to $1.29.*
*See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release
"During the quarter, student retention and engagement experienced meaningful improvements, and we now expect our full year operating income to be higher than the previously provided outlook,” said Andrew Hurst, Chief Executive Officer. “Our balance sheet remains strong, and we continue to make investments in data analytics and technology and evaluate acquisition opportunities that further extend the depth and breadth of our educational offerings."
PRDO ANNOUNCES 3Q22 RESULTS …PG 2
REVENUE
• For the quarter ended September 30, 2022, total revenue of $168.4 million decreased 3.2% compared to total revenue of $174.0 million for the prior year quarter.
• For the year to date ended September 30, 2022, total revenue of $519.1 million decreased 2.6% compared to total revenue of $533.2 million for the prior year to date.
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($ in thousands) | 2022(1) | 2021 | % Change | 2022(1) | 2021 | % Change | ||||||||
| CTU | $ | 97,562 | $ | 104,788 | -6.9 | % | $ | 311,171 | $ | 312,645 | -0.5 | % | ||
| AIUS | 70,582 | 68,948 | 2.4 | % | 207,034 | 219,648 | -5.7 | % | ||||||
| Corporate and Other | 276 | 262 | NM | 858 | 882 | NM | ||||||||
| Total | $ | 168,420 | $ | 173,998 | -3.2 | % | $ | 519,063 | $ | 533,175 | -2.6 | % |
(1) AIUS’ results of operations include an acquisition completed on July 1, 2022.
TOTAL STUDENT ENROLLMENTS
• As of September 30, 2022, CTU’s total student enrollments increased 2.7%, while AIUS’ total student enrollments decreased 9.5% as compared to the prior year quarter end.
| At September 30, | |||||||
|---|---|---|---|---|---|---|---|
| Total Student Enrollments(1) | 2022 | 2021 | % Change | ||||
| CTU | 26,500 | 25,800 | 2.7 | % | |||
| AIUS | 15,200 | 16,800 | -9.5 | % | |||
| Total | 41,700 | 42,600 | -2.1 | % |
(1) Total student enrollments do not include learners participating in: a) non-degree seeking professional development and continuing education offerings, and b) degree seeking, non-Title IV, self-paced programs at our universities.
PRDO ANNOUNCES 3Q22 RESULTS …PG 3
OPERATING INCOME
• For the quarter ended September 30, 2022, operating income decreased by 22.5% to $29.3 million as compared to the prior year quarter.
• For the year to date ended September 30, 2022, operating income decreased by 6.5% to $107.0 million as compared to the prior year to date.
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income ($ in thousands) | 2022(1) | 2021 | % Change | 2022(1) | 2021 | % Change | ||||||||||||
| CTU | $ | 31,506 | $ | 41,217 | -23.6 | % | $ | 107,540 | $ | 112,758 | -4.6 | % | ||||||
| AIUS | 9,590 | 8,334 | 15.1 | % | 29,846 | 28,875 | 3.4 | % | ||||||||||
| Corporate and Other | (11,772 | ) | (11,690 | ) | NM | (30,423 | ) | (27,193 | ) | NM | ||||||||
| Total | $ | 29,324 | $ | 37,861 | -22.5 | % | $ | 106,963 | $ | 114,440 | -6.5 | % |
(1) AIUS’ results of operations include an acquisition completed on July 1, 2022.
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 September 30, 2022, adjusted operating income of $38.7 million decreased 16.5% compared to adjusted operating income of $46.3 million for the prior year quarter.
• For the year to date ended September 30, 2022, adjusted operating income of $131.5 million decreased 1.5% compared to adjusted operating income of $133.5 million for the prior year to date.
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted Operating Income ($ in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||
| Operating income | $ | 29,324 | $ | 37,861 | $ | 106,963 | $ | 114,440 | ||
| Depreciation and amortization (1) | 5,065 | 3,887 | 14,856 | 11,802 | ||||||
| Legal fee expense related to certain matters (2) | 4,294 | 4,583 | 9,728 | 7,241 | ||||||
| Adjusted Operating Income | $ | 38,683 | $ | 46,331 | $ | 131,547 | $ | 133,483 | ||
| Increase (Decrease) | -16.5 | % | -1.5 | % |
(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.
PRDO ANNOUNCES 3Q22 RESULTS …PG 4
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended September 30, 2022, the Company recorded:
• Net income of $22.1 million compared to $27.8 million for the prior year quarter.
• Earnings per diluted share of $0.32 compared to $0.39 for the prior year quarter.
• Adjusted earnings per diluted share of $0.39 compared $0.45 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 September 30, 2022, the Company recorded:
• Net income of $79.9 million compared to $85.2 million for the prior year to date.
• Earnings per diluted share of $1.16 compared to $1.19 for the prior year to date.
• Adjusted earnings per diluted share of $1.32 compared to $1.29 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 September 30, | For the Year to Date Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Reported Earnings Per Diluted Share | $ | 0.32 | $ | 0.39 | $ | 1.16 | $ | 1.19 | ||||
| Pre-tax adjustments included in operating expenses: | ||||||||||||
| Amortization for acquired intangible assets (1) | 0.03 | 0.01 | 0.08 | 0.03 | ||||||||
| Legal fee expense related to certain matters (2) | 0.06 | 0.06 | 0.14 | 0.10 | ||||||||
| Tax effect of adjustments (3) | (0.02 | ) | (0.01 | ) | (0.06 | ) | (0.03 | ) | ||||
| Adjusted Earnings Per Diluted Share | $ | 0.39 | $ | 0.45 | $ | 1.32 | $ | 1.29 |
(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) 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.
PRDO ANNOUNCES 3Q22 RESULTS …PG 5
BALANCE SHEET AND CASH FLOW
• For the quarter ended September 30, 2022, net cash provided by operating activities was $52.9 million, compared to net cash provided by operating activities of $61.5 million for the prior year quarter.
• At September 30, 2022 and December 31, 2021, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $525.2 million and $499.4 million, respectively.
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Cash Flow Items ($ in thousands) | 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||
| Net cash provided by operating activities | $ | 52,861 | $ | 61,461 | -14.0 | % | $ | 107,640 | $ | 144,206 | -25.4 | % | ||
| Business acquisitions, net of<br>cash acquired | $ | 32,037 | $ | 56,947 | -43.7 | % | $ | 39,037 | $ | 56,947 | -31.5 | % | ||
| Capital expenditures | $ | 2,340 | $ | 3,217 | -27.3 | % | $ | 9,105 | $ | 6,276 | 45.1 | % |
PRDO ANNOUNCES 3Q22 RESULTS …PG 6
OUTLOOK
The Company is raising its full year outlook, supported by improved student retention and engagement, and is also providing the following fourth quarter 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 December 31, | For the Year Ending December 31, | |||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |
| 2022 | 2021 | 2022 | 2021 | |
| Operating Income | $17.3M - $20.3M | $34.6M | $124.2M - $127.2M | $149.0M |
| Depreciation and amortization | $5.2M | $4.9M | $20.1M | $16.8M |
| Legal fee expense related to certain matters (1) | $3.0M | $2.5M | $12.7M | $9.7M |
| Adjusted Operating Income | $25.5M - $28.5M | $42.0M | $157.0M - $160.0M | $175.5M |
| Earnings Per Diluted Share | $0.22 - $0.25 | $0.35 | $1.37 - $1.40 | $1.55 |
| Amortization of acquired intangible assets | $0.03 | $0.03 | $0.11 | $0.06 |
| Legal fee expense related to certain matters (1) | $0.04 | $0.04 | $0.19 | $0.14 |
| Tax effect of adjustments | ($0.02) | ($0.02) | ($0.08) | ($0.05) |
| Adjusted Earnings Per Diluted Share | $0.27 - $0.30 | $0.40 | $1.59 - $1.62 | $1.70 |
(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 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 2022 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and student retention remain consistent with management’s estimates, (ii) no significant impact of new or proposed regulations, including recent Department of Education negotiated rulemaking initiatives, or other adverse changes in the legal or regulatory environment, (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) earnings per diluted share outlook assumes an effective income tax rate of approximately 25.0% for the fourth quarter and 27.0% for the full year, and (v) 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 the Company makes in the future as it continues to evaluate diverse strategies to enhance stockholder value may impact the outlook provided above.
PRDO ANNOUNCES 3Q22 RESULTS …PG 7
CONFERENCE CALL INFORMATION
Perdoceo Education Corporation will host a conference call on Monday, November 7, 2022 at 5:30 p.m. Eastern time to discuss third quarter and year to date 2022 results and 2022 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 1-844-200-6205 (domestic) or 1-929-526-1599 (international). Both dial-in numbers will use the access code 107191. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/853587339. 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 accredited 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 professional development and continuing education offerings. Perdoceo’s universities 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 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. 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; 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; 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, 2021 and its subsequent filings with the Securities and Exchange Commission.
PRDO ANNOUNCES 3Q22 RESULTS …PG 8
CONTACT
Investors:
Alpha IR Group
Davis Snyder or Eric Markman
(312) 445-2870
PRDO@alpha-ir.com
Or
Media:
Perdoceo Education Corporation
(847) 585-2600
media@perdoceoed.com
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| September 30, | December 31, | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents, unrestricted | $ | 147,120 | $ | 319,982 | ||
| Restricted cash | 2,191 | 5,196 | ||||
| Short-term investments | 375,871 | 174,213 | ||||
| Total cash and cash equivalents, restricted cash and short-term investments | 525,182 | 499,391 | ||||
| Student receivables, net | 43,059 | 43,033 | ||||
| Receivables, other | 2,261 | 1,692 | ||||
| Prepaid expenses | 9,251 | 6,919 | ||||
| Inventories | 2,041 | 904 | ||||
| Other current assets | 521 | 2,514 | ||||
| Total current assets | 582,315 | 554,453 | ||||
| NON-CURRENT ASSETS: | ||||||
| Property and equipment, net | 26,290 | 28,355 | ||||
| Right of use asset, net | 30,313 | 36,664 | ||||
| Goodwill | 184,135 | 162,579 | ||||
| Intangible assets, net | 44,262 | 32,208 | ||||
| Student receivables, net | 1,328 | 1,372 | ||||
| Deferred income tax assets, net | 24,015 | 25,114 | ||||
| Other assets | 6,545 | 6,688 | ||||
| TOTAL ASSETS | $ | 899,203 | $ | 847,433 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Lease liability - operating | $ | 5,963 | $ | 9,400 | ||
| Accounts payable | 13,285 | 10,838 | ||||
| Accrued expenses: | ||||||
| Payroll and related benefits | 26,733 | 25,312 | ||||
| Advertising and marketing costs | 9,550 | 8,690 | ||||
| Income taxes | 8,082 | 211 | ||||
| Other | 14,813 | 15,180 | ||||
| Deferred revenue | 61,978 | 70,613 | ||||
| Total current liabilities | 140,404 | 140,244 | ||||
| NON-CURRENT LIABILITIES: | ||||||
| Lease liability - operating | 30,385 | 35,549 | ||||
| Other liabilities | 22,192 | 21,530 | ||||
| Total non-current liabilities | 52,577 | 57,079 | ||||
| STOCKHOLDERS' EQUITY: | ||||||
| Preferred stock | - | - | ||||
| Common stock | 894 | 887 | ||||
| Additional paid-in capital | 681,385 | 674,242 | ||||
| Accumulated other comprehensive loss | (6,317 | ) | (96 | ) | ||
| Retained earnings | 331,884 | 251,972 | ||||
| Treasury stock | (301,624 | ) | (276,895 | ) | ||
| Total stockholders' equity | 706,222 | 650,110 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 899,203 | $ | 847,433 |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts and percentages)
| For the Quarter Ended September 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | % of<br>Total<br>Revenue | 2021 | % of<br>Total <br>Revenue | |||||||||
| REVENUE: | ||||||||||||
| Tuition and fees, net | $ | 166,437 | 98.8 | % | $ | 172,595 | 99.2 | % | ||||
| Other | 1,983 | 1.2 | % | 1,403 | 0.8 | % | ||||||
| Total revenue | 168,420 | 173,998 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||
| Educational services and facilities | 30,149 | 17.9 | % | 25,961 | 14.9 | % | ||||||
| General and administrative | 103,882 | 61.7 | % | 106,289 | 61.1 | % | ||||||
| Depreciation and amortization | 5,065 | 3.0 | % | 3,887 | 2.2 | % | ||||||
| Total operating expenses | 139,096 | 82.6 | % | 136,137 | 78.2 | % | ||||||
| Operating income | 29,324 | 17.4 | % | 37,861 | 21.8 | % | ||||||
| OTHER INCOME: | ||||||||||||
| Interest income | 2,270 | 1.3 | % | 154 | 0.1 | % | ||||||
| Interest expense | (96 | ) | -0.1 | % | (572 | ) | -0.3 | % | ||||
| Miscellaneous expense | (206 | ) | -0.1 | % | (117 | ) | -0.1 | % | ||||
| Total other income (expense) | 1,968 | 1.2 | % | (535 | ) | -0.3 | % | |||||
| PRETAX INCOME | 31,292 | 18.6 | % | 37,326 | 21.5 | % | ||||||
| Provision for income taxes | 9,225 | 5.5 | % | 9,557 | 5.5 | % | ||||||
| NET INCOME | 22,067 | 13.1 | % | 27,769 | 16.0 | % | ||||||
| NET INCOME PER SHARE - BASIC: | $ | 0.33 | $ | 0.40 | ||||||||
| NET INCOME PER SHARE -DILUTED: | $ | 0.32 | $ | 0.39 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||
| Basic | 67,506 | 70,089 | ||||||||||
| Diluted | 68,550 | 71,466 | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| For the Quarter Ended September 30, | ||||||||||||
| (In Thousands) | 2022 | 2021 | ||||||||||
| NET INCOME | $ | 22,067 | $ | 27,769 | ||||||||
| OTHER COMPREHENSIVE LOSS, net of tax: | ||||||||||||
| Foreign currency translation adjustments | (138 | ) | (74 | ) | ||||||||
| Unrealized (loss) gain on investments | (3,005 | ) | 51 | |||||||||
| Total other comprehensive loss | (3,143 | ) | (23 | ) | ||||||||
| COMPREHENSIVE INCOME | $ | 18,924 | $ | 27,746 |
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 September 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | % of<br>Total<br>Revenue | 2021 | % of<br>Total<br>Revenue | |||||||||
| REVENUE: | ||||||||||||
| Tuition and fees, net | $ | 513,660 | 99.0 | % | $ | 530,230 | 99.4 | % | ||||
| Other | 5,403 | 1.0 | % | 2,945 | 0.6 | % | ||||||
| Total revenue | 519,063 | 533,175 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||
| Educational services and facilities | 85,506 | 16.5 | % | 83,467 | 15.7 | % | ||||||
| General and administrative | 311,510 | 60.0 | % | 323,466 | 60.7 | % | ||||||
| Depreciation and amortization | 14,856 | 2.9 | % | 11,802 | 2.2 | % | ||||||
| Asset impairment | 228 | 0.0 | % | - | 0.0 | % | ||||||
| Total operating expenses | 412,100 | 79.4 | % | 418,735 | 78.5 | % | ||||||
| Operating income | 106,963 | 20.6 | % | 114,440 | 21.5 | % | ||||||
| OTHER INCOME: | ||||||||||||
| Interest income | 3,697 | 0.7 | % | 835 | 0.2 | % | ||||||
| Interest expense | (298 | ) | -0.1 | % | (961 | ) | -0.2 | % | ||||
| Miscellaneous expense | (521 | ) | -0.1 | % | (22 | ) | 0.0 | % | ||||
| Total other income (expense) | 2,878 | 0.6 | % | (148 | ) | 0.0 | % | |||||
| PRETAX INCOME | 109,841 | 21.2 | % | 114,292 | 21.4 | % | ||||||
| Provision for income taxes | 29,929 | 5.8 | % | 29,121 | 5.5 | % | ||||||
| NET INCOME | 79,912 | 15.4 | % | 85,171 | 16.0 | % | ||||||
| NET INCOME PER SHARE - BASIC: | $ | 1.17 | $ | 1.21 | ||||||||
| NET INCOME PER SHARE -DILUTED: | $ | 1.16 | $ | 1.19 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||
| Basic | 68,193 | 70,179 | ||||||||||
| Diluted | 69,131 | 71,649 | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| For the Year to Date Ended September 30, | ||||||||||||
| (In Thousands) | 2022 | 2021 | ||||||||||
| NET INCOME | $ | 79,912 | $ | 85,171 | ||||||||
| OTHER COMPREHENSIVE LOSS, net of tax: | ||||||||||||
| Foreign currency translation adjustments | (383 | ) | (175 | ) | ||||||||
| Unrealized loss on investments | (5,838 | ) | (192 | ) | ||||||||
| Total other comprehensive loss | (6,221 | ) | (367 | ) | ||||||||
| COMPREHENSIVE INCOME | $ | 73,691 | $ | 84,804 |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the Year to Date Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 79,912 | $ | 85,171 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Asset impairment | 228 | - | ||||
| Depreciation and amortization expense | 14,856 | 11,802 | ||||
| Bad debt expense | 32,284 | 36,360 | ||||
| Compensation expense related to share-based awards | 6,234 | 11,287 | ||||
| Deferred income taxes | 1,099 | 9,938 | ||||
| Changes in operating assets and liabilities | (26,973 | ) | (10,352 | ) | ||
| Net cash provided by operating activities | 107,640 | 144,206 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of available-for-sale investments | (410,493 | ) | (269,739 | ) | ||
| Sales of available-for-sale investments | 202,927 | 357,280 | ||||
| Purchases of property and equipment | (9,105 | ) | (6,276 | ) | ||
| Business acquisitions, net of cash acquired | (39,037 | ) | (56,947 | ) | ||
| Net cash (used in) provided by investing activities | (255,708 | ) | 24,318 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Issuance of common stock | 916 | 793 | ||||
| Purchase of treasury stock | (23,117 | ) | (5,372 | ) | ||
| Payments of employee tax associated with stock compensation | (1,612 | ) | (2,034 | ) | ||
| Release of cash held in escrow | (3,986 | ) | - | |||
| Net cash used in financing activities | (27,799 | ) | (6,613 | ) | ||
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (175,867 | ) | 161,911 | |||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period | 325,178 | 109,684 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period | $ | 149,311 | $ | 271,595 |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
| For the Quarter Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2022(1) | 2021 | |||||
| REVENUE: | ||||||
| CTU | $ | 97,562 | $ | 104,788 | ||
| AIUS | 70,582 | 68,948 | ||||
| Corporate and Other | 276 | 262 | ||||
| Total | $ | 168,420 | $ | 173,998 | ||
| OPERATING INCOME (LOSS): | ||||||
| CTU | $ | 31,506 | $ | 41,217 | ||
| AIUS | 9,590 | 8,334 | ||||
| Corporate and Other | (11,772 | ) | (11,690 | ) | ||
| Total | $ | 29,324 | $ | 37,861 | ||
| OPERATING MARGIN (LOSS): | ||||||
| CTU | 32.3 | % | 39.3 | % | ||
| AIUS | 13.6 | % | 12.1 | % | ||
| Corporate and Other | NM | NM | ||||
| Total | 17.4 | % | 21.8 | % |
(1) AIUS’ results of operations include the CalSouthern acquisition as of the July 1, 2022 date of acquisition.
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
| For the Year to Date Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2022(1) | 2021 | |||||
| REVENUE: | ||||||
| CTU | $ | 311,171 | $ | 312,645 | ||
| AIUS | 207,034 | 219,648 | ||||
| Corporate and Other | 858 | 882 | ||||
| Total | $ | 519,063 | $ | 533,175 | ||
| OPERATING INCOME (LOSS): | ||||||
| CTU | $ | 107,540 | $ | 112,758 | ||
| AIUS | 29,846 | 28,875 | ||||
| Corporate and Other | (30,423 | ) | (27,193 | ) | ||
| Total | $ | 106,963 | $ | 114,440 | ||
| OPERATING MARGIN (LOSS): | ||||||
| CTU | 34.6 | % | 36.1 | % | ||
| AIUS | 14.4 | % | 13.1 | % | ||
| Corporate and Other | NM | NM | ||||
| Total | 20.6 | % | 21.5 | % |
(1) AIUS’ results of operations include the CalSouthern acquisition as of the July 1, 2022 date of acquisition.
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
(In thousands, unless otherwise noted)
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||
|---|---|---|---|---|---|---|
| ACTUAL | ACTUAL | |||||
| Adjusted Operating Income | 2022 | 2021 | 2022 | 2021 | ||
| Operating income | $ | 37,861 | $ | 114,440 | ||
| Depreciation and amortization (2) | 3,887 | 11,802 | ||||
| Legal fee expense related to certain matters (3) | 4,583 | 7,241 | ||||
| Adjusted Operating Income | $ | 46,331 | $ | 133,483 | ||
| For the Quarter Ending December 31, | For the Year Ending December 31, | |||||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |||
| 2022 | 2021 | 2022 | 2021 | |||
| Operating income | 17.3M - 20.3M | $ | 34,576 | 124.2M - 127.2M | $ | 149,016 |
| Depreciation and amortization (2) | 5.2M | 4,964 | 20.1M | 16,766 | ||
| Legal fee expense related to certain matters (3) | 3.0M | 2,494 | 12.7M | 9,735 | ||
| Adjusted Operating Income | 25.5M - 28.5M | $ | 42,034 | 157.0M - 160.0M | $ | 175,517 |
All values are in US Dollars.
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (cont’d)
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ACTUAL | ACTUAL | |||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||
| Reported Earnings Per Diluted Share | $ | 0.39 | $ | 1.19 | ||||||
| Pre-tax adjustments included in operating expenses: | ||||||||||
| Amortization for acquired intangible assets (2) | 0.01 | 0.03 | ||||||||
| Legal fee expense related to certain matters (3) | 0.06 | 0.10 | ||||||||
| Total pre-tax adjustments | $ | 0.07 | $ | 0.13 | ||||||
| Tax effect of adjustments (4) | ) | (0.01 | ) | ) | (0.03 | ) | ||||
| Total adjustments after tax | 0.06 | 0.10 | ||||||||
| Adjusted Earnings Per Diluted Share | $ | 0.45 | $ | 1.29 | ||||||
| For the Quarter Ending December 31, | For the Year Ending December 31, | |||||||||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||||
| Reported Earnings Per Diluted Share | 0.22 - 0.25 | $ | 0.35 | 1.37 - 1.40 | $ | 1.55 | ||||
| Pre-tax adjustments included in operating expenses: | ||||||||||
| Amortization for acquired intangible assets (2) | 0.03 | 0.11 | 0.06 | |||||||
| Legal fee expense related to certain matters (3) | 0.04 | 0.19 | 0.14 | |||||||
| Total pre-tax adjustments | $ | 0.07 | $ | 0.20 | ||||||
| Tax effect of adjustments (4) | ) | (0.02 | ) | (0.08) | (0.05 | ) | ||||
| Total adjustments after tax | 0.05 | 0.05 | 0.22 | 0.15 | ||||||
| Adjusted Earnings Per Diluted Share | 0.27 - 0.30 | $ | 0.40 | 1.59 - 1.62 | $ | 1.70 |
All values are in US Dollars.
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. 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 CalSouthern acquisition as of July 1, 2022, the DigitalCrafts acquisition as of August 2, 2021 and the Hippo acquisition as of September 10, 2021.
(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) 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.