8-K
PERDOCEO EDUCATION Corp (PRDO)
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 5, 2020
Perdoceo Education Corporation
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-23245 | 36-3932190 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br><br>Identification No.) |
| 231 N. Martingale Rd., Schaumburg, IL | 60173 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (847) 781-3600
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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 5, 2020, 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, 2020 and providing an update on the Company’s 2020 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, 2020 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><br>Number | Description of Exhibits |
|---|---|
| 99.1 | Press release of the Company dated November 5, 2020 reporting the Company’s financial results for the quarter and year to date ended September 30, 2020 |
| 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 5, 2020
4
prdo-ex991_6.htm
PRDO ANNOUNCES 3Q20 RESULTS …PG 1
Exhibit 99.1
PERDOCEO EDUCATION CORPORATION REPORTS THIRD QUARTER AND
YEAR TO DATE 2020 RESULTS
Third quarter revenue increased 9.1% supported by enrollment growth at both CTU and AIU
Schaumburg, Ill. (November 5, 2020) – Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended September 30, 2020.
Third Quarter 2020 Results as Compared to the Prior Year Quarter
Financial Results
| • | Revenue increased by 9.1 percent to $169.1 million, with both CTU and AIU contributing to the growth |
|---|---|
| • | Operating income increased to $32.1 million as compared to $24.3 million |
| --- | --- |
| • | Adjusted operating income increased to $36.3 million as compared to $34.0 million* |
| --- | --- |
| • | Earnings per diluted share of $0.56 compared to earnings per diluted share of $0.25 |
| --- | --- |
| • | Adjusted earnings per diluted share of $0.35 as compared to $0.35* |
| --- | --- |
| • | Ended the quarter with $367.7 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments |
| --- | --- |
Enrollment Metrics
| • | Total student enrollments at September 30, 2020 increased 17.2 percent. CTU’s total student enrollments increased 4.8 percent while AIU’s total student enrollments increased 37.7 percent. AIU’s total student enrollments were positively impacted by the acquisition of substantially all of the assets of Trident University International (the “Trident acquisition”) while also experiencing underlying organic growth. |
|---|---|
| • | New student enrollments increased 17.5 percent. New student enrollments increased 5.2 percent within CTU and 29.4 percent within AIU. AIU’s new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth. |
| --- | --- |
Year to Date 2020 Results as Compared to the Prior Year to Date
Financial Results
| • | Revenue increased by 10.0 percent to $516.2 million, with both CTU and AIU contributing to the growth |
|---|---|
| • | Operating income increased to $106.7 million as compared to $54.4 million |
| --- | --- |
| • | Adjusted operating income increased to $118.8 million as compared to $99.8 million* |
| --- | --- |
| • | Earnings per diluted share of $1.36 as compared to $0.59 |
| --- | --- |
| • | Adjusted earnings per diluted share of $1.17 as compared to $1.04* |
| --- | --- |
Enrollment Metrics
| • | New student enrollments increased 19.8 percent. New student enrollments increased 8.8 percent within CTU and 33.1 percent within AIU. AIU’s year to date new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth. |
|---|
* See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release
PRDO ANNOUNCES 3Q20 RESULTS …PG 2
“The year to date results underscore our commitment to student experiences, retention and academic outcomes and I’m proud of the entire Perdoceo team for their efforts to educate, serve and support our students,” said Todd Nelson, President and Chief Executive Officer. “Investments in data analytics and technology across our academic platforms have enhanced student learning and strengthened the efficiency and effectiveness of our student support processes. Our financial position continues to strengthen and we remain focused on executing against our objective of sustainable and responsible growth.”
AIU SYSTEM
Effective November 5, 2020, AIU implemented a university system model, the American InterContinental University System (the “AIU System” or “AIU”), which is comprised of two universities: American InterContinental University and Trident University International (“Trident” or “TUI”). The system structure provides a new framework for American InterContinental University and Trident to continue to serve their unique student populations while benefitting from one university system. Although both universities will operate under a shared governance structure and have a common mission, the system structure will allow each to retain its name and customize its programs and instructional and student service models to the needs of its unique student populations.
REVENUE
| • | For the quarter ended September 30, 2020, total revenue of $169.1 million increased 9.1 percent compared to total revenue of $155.0 million for the prior year quarter. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | For the year to date ended September 30, 2020, total revenue of $516.2 million increased 10.0 percent compared to total revenue of $469.3 million for the prior year to date. | |||||||||||||
| --- | --- | |||||||||||||
| • | Both CTU and AIU contributed to the revenue growth supported by organic enrollment growth as well as the Trident acquisition. | |||||||||||||
| --- | --- | |||||||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue ($ in thousands) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||
| CTU | $ | 98,985 | $ | 96,038 | 3.1 | % | $ | 302,766 | $ | 289,650 | 4.5 | % | ||
| AIU ^(1)^ | 70,048 | 58,907 | 18.9 | % | 213,279 | 179,559 | 18.8 | % | ||||||
| Total University Group | 169,033 | 154,945 | 9.1 | % | 516,045 | 469,209 | 10.0 | % | ||||||
| Corporate and Other | 93 | 14 | NM | 110 | 44 | NM | ||||||||
| Total | $ | 169,126 | $ | 154,959 | 9.1 | % | $ | 516,155 | $ | 469,253 | 10.0 | % | ||
| (1) | AIU’s revenue for the quarter and year to date ended September 30, 2020 includes revenue associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition. | |||||||||||||
| --- | --- |
PRDO ANNOUNCES 3Q20 RESULTS …PG 3
TOTAL AND NEW STUDENT ENROLLMENTS
| • | As of September 30, 2020, CTU’s and AIU’s total student enrollments increased 4.8 percent and 37.7 percent, respectively, as compared September 30, 2019. AIU’s total student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | For the quarter ended September 30, 2020, new student enrollments increased 5.2 percent within CTU and 29.4 percent within AIU, in each case as compared to the prior year quarter. AIU’s third quarter new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth. | |||||||||||||
| --- | --- | |||||||||||||
| • | For the year to date ended September 30, 2020, new student enrollments increased 8.8 percent within CTU and 33.1 percent within AIU, in each case as compared to the prior year to date. AIU’s year to date new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth. | |||||||||||||
| --- | --- | |||||||||||||
| As of September 30, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| Total Student Enrollments | 2020 | 2019 | % Change | |||||||||||
| CTU | 24,000 | 22,900 | 4.8 | % | ||||||||||
| AIU^(1)^ | 19,000 | 13,800 | 37.7 | % | ||||||||||
| Total | 43,000 | 36,700 | 17.2 | % | ||||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| New Student Enrollments | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||
| CTU | 6,840 | 6,500 | 5.2 | % | 19,960 | 18,350 | 8.8 | % | ||||||
| AIU^(1)^ | 8,680 | 6,710 | 29.4 | % | 20,400 | 15,330 | 33.1 | % | ||||||
| Total | 15,520 | 13,210 | 17.5 | % | 40,360 | 33,680 | 19.8 | % | ||||||
| (1) | AIU’s total student enrollments as of September 30, 2020 and new student enrollments for the quarter and year to date ended September 30, 2020 include enrollments related to the Trident acquisition commencing on the March 2, 2020 date of acquisition. | |||||||||||||
| --- | --- |
PRDO ANNOUNCES 3Q20 RESULTS …PG 4
OPERATING INCOME (LOSS)
| • | For the quarter ended September 30, 2020, operating income increased to $32.1 million compared to $24.3 million for the prior year quarter. | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | For the year to date ended September 30, 2020, operating income increased to $106.7 million compared to $54.4 million for the prior year to date. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income ($ in thousands) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||
| CTU ^(1)^ | $ | 32,993 | $ | 29,926 | 10.2 | % | $ | 100,688 | $ | 71,730 | 40.4 | % | ||||||
| AIU ^(2)^ | 5,513 | 7,341 | -24.9 | % | 25,365 | 11,436 | 121.8 | % | ||||||||||
| Total University Group | 38,506 | 37,267 | 3.3 | % | 126,053 | 83,166 | 51.6 | % | ||||||||||
| Corporate and Other^(3)^ | (6,432 | ) | (12,973 | ) | NM | (19,308 | ) | (28,717 | ) | NM | ||||||||
| Total | $ | 32,074 | $ | 24,294 | 32.0 | % | $ | 106,745 | $ | 54,449 | 96.0 | % | ||||||
| (1) | CTU’s operating income for the year to date ended September 30, 2019 includes an $18.6 million expense related to the FTC settlement. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| (2) | AIU’s operating income for the quarter and year to date ended September 30, 2020 includes results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition. Operating income for the year to date ended September 30, 2019 includes an $11.4 million expense related to the FTC settlement. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| (3) | The following is a summary of the operating losses related to closed campuses which are included within Corporate and Other. Legal settlement expense of $7.1 million related to the Oregon arbitration matter was included in the operating loss for closed campuses for the quarter and year to date ended September 30, 2019. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Loss ($ in thousands) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||
| Closed Campuses | $ | (369 | ) | $ | (8,215 | ) | 95.5 | % | $ | (1,757 | ) | $ | (12,801 | ) | 86.3 | % |
PRDO ANNOUNCES 3Q20 RESULTS …PG 5
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, 2020, adjusted operating income of $36.3 million increased 7.0 percent compared to adjusted operating income of $34.0 million for the prior year quarter. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| • | For the year to date ended September 30, 2020, adjusted operating income of $118.8 million increased 19.1 percent compared to adjusted operating income of $99.8 million for the prior year to date. | |||||||||
| --- | --- | |||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Adjusted Operating Income ($ in thousands) | 2020 ^(4)^ | 2019 | 2020 ^(4)^ | 2019 | ||||||
| Total Company: | ||||||||||
| Operating income | $ | 32,074 | $ | 24,294 | $ | 106,745 | $ | 54,449 | ||
| Depreciation and amortization | 3,995 | 2,284 | 10,785 | 6,752 | ||||||
| Asset impairment ^(1)^ | - | - | 612 | - | ||||||
| Lease expenses for vacated space ^(2)^ | 270 | 295 | 689 | 1,453 | ||||||
| Significant legal settlements ^(3)^ | - | 7,100 | - | 37,100 | ||||||
| Adjusted Operating Income --<br><br><br>Total Company | $ | 36,339 | $ | 33,973 | $ | 118,831 | $ | 99,754 | ||
| Increase (Decrease) | 7.0 | % | 19.1 | % | ||||||
| (1) | Asset impairment relates to a right of use asset for one of the Company’s 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) | Significant legal settlements relate to the FTC and Oregon arbitration matters recorded during 2019. | |||||||||
| --- | --- | |||||||||
| (4) | 2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition. | |||||||||
| --- | --- |
PRDO ANNOUNCES 3Q20 RESULTS …PG 6
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended September 30, 2020, the Company recorded:
| • | Net income of $39.9 million compared to net income of $18.2 million for the prior year quarter. |
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| • | Earnings per diluted share of $0.56 compared to earnings per diluted share of $0.25 for the prior year quarter. |
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| • | Adjusted earnings per diluted share of $0.35 for both the current quarter and 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, 2020, the Company recorded:
| • | Net income of $97.2 million compared to net income of $42.5 million for the prior year to date. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | Earnings per diluted share of $1.36 compared to earnings per diluted share of $0.59 for the prior year to date. | |||||||||||
| --- | --- | |||||||||||
| • | Adjusted earnings per diluted share of $1.17 compared to adjusted earnings per diluted share of $1.04 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, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 ^(8)^ | 2019 | 2020 ^(8)^ | 2019 | |||||||||
| Reported Earnings Per Diluted Share | $ | 0.56 | $ | 0.25 | $ | 1.36 | $ | 0.59 | ||||
| Pre-tax adjustments included in operating expenses: | ||||||||||||
| Amortization^(1)^ | 0.01 | - | 0.02 | - | ||||||||
| Asset impairment ^(2)^ | - | - | 0.01 | - | ||||||||
| Lease expenses for vacated space^(3)^ | - | - | 0.01 | 0.02 | ||||||||
| Significant legal settlements^(4)^ | - | 0.10 | - | 0.52 | ||||||||
| Total pre-tax adjustments | $ | 0.01 | $ | 0.10 | $ | 0.04 | $ | 0.54 | ||||
| Tax effect of adjustments ^(5)^ | - | (0.02 | ) | (0.01 | ) | (0.06 | ) | |||||
| Tax effect of change in settlement deductibility ^(6)^ | - | 0.02 | - | (0.03 | ) | |||||||
| Release of valuation allowance ^(7)^ | (0.22 | ) | - | (0.22 | ) | - | ||||||
| Total adjustments after tax | (0.21 | ) | 0.10 | (0.19 | ) | 0.45 | ||||||
| Adjusted Earnings Per Diluted Share | $ | 0.35 | $ | 0.35 | $ | 1.17 | $ | 1.04 | ||||
| (1) | Amortization amounts relate to definite-lived intangible assets associated with the Trident acquisition. | |||||||||||
| --- | --- | |||||||||||
| (2) | Asset impairment relates to a right of use asset for one of the Company’s vacated facilities for which the sublease income was deemed no longer recoverable. | |||||||||||
| --- | --- | |||||||||||
| (3) | Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income for closed campuses. | |||||||||||
| --- | --- | |||||||||||
| (4) | Significant legal settlements relate to the FTC and Oregon arbitration matters recorded during 2019. | |||||||||||
| --- | --- | |||||||||||
| (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. There is no tax effect applied to the adjustment related to the release of the valuation allowance as this is an adjustment for income tax. | |||||||||||
| --- | --- | |||||||||||
| (6) | A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter of 2019. 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 third quarter of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share which would have increased by $0.02 for the quarter ended September 30, 2019 and decreased $0.03 for the year to date ended September 30, 2019. The third quarter and year to date ended September 30, 2019 now reflect 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. | |||||||||||
| --- | --- | |||||||||||
| (7) | This relates to the release of a valuation allowance in the amount of $16.0 million as a result of the current determination that it is more likely than not that the Company will utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an Overall Domestic Loss account balance. | |||||||||||
| --- | --- | |||||||||||
| (8) | 2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition. | |||||||||||
| --- | --- |
PRDO ANNOUNCES 3Q20 RESULTS …PG 7
BALANCE SHEET AND CASH FLOW
| • | For the quarter and year to date ended September 30, 2020, net cash provided by operating activities was $32.4 million and $137.8 million, compared to $32.0 million and $85.4 million for the respective prior year periods. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | As of September 30, 2020 and December 31, 2019, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $367.7 million and $294.2 million, respectively. | |||||||||||||
| --- | --- | |||||||||||||
| For the Quarter Ended September 30, | For the Year to Date Ended September 30, | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Selected Cash Flow Items ($ in thousands) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||
| Net cash provided by operating activities | $ | 32,389 | $ | 31,977 | 1.3 | % | $ | 137,753 | $ | 85,391 | 61.3 | % | ||
| Capital expenditures | $ | 4,040 | $ | 1,812 | 123.0 | % | $ | 7,479 | $ | 3,220 | 132.3 | % |
OUTLOOK
The Company is providing the following updated 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 reflects the Company’s expectation of achieving growth in new and total student enrollments at both CTU and AIU for the fourth quarter and full year 2020.
| Total Company Outlook | ||||
|---|---|---|---|---|
| For Quarter Ending December 31, | For the Year Ending December 31, | |||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |
| 2020 | 2019 | 2020 | 2019 | |
| Operating Income | $30.8M - $32.3M | $32.0M | $137.5M - $139.0M | $86.5M |
| Adjusted Operating Income | $35.2M - $36.7M | $34.6M | $154.0M - $155.5M | $134.3M |
| Earnings Per Diluted Share | $0.33 - $0.34 | $0.38 | $1.69 - $1.71 | $0.97 |
| Adjusted Earnings Per Diluted Share | $0.34 - $0.35 | $0.33 | $1.51 - $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, (v) no significant operating or financial impacts from the COVID-19 pandemic beyond 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 fourth quarter and approximately 15% for 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 the Company makes in the future as it continues to evaluate diverse strategies to enhance shareholder value may impact the outlook provided above.
PRDO ANNOUNCES 3Q20 RESULTS …PG 8
CONFERENCE CALL INFORMATION
Perdoceo Education Corporation will host a conference call on Thursday, November 5, 2020 at 5:30 p.m. Eastern time to discuss third quarter and year to date 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 regionally accredited institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Our 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 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,” “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 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.
CONTACT
PRDO ANNOUNCES 3Q20 RESULTS …PG 9
Investors:
Alpha IR Group
Wyatt Turk or Chris Hodges
(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, | |||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents, unrestricted | $ | 58,120 | $ | 108,687 | ||
| Restricted cash | 4,000 | - | ||||
| Short-term investments | 305,610 | 185,488 | ||||
| Total cash and cash equivalents, restricted cash and short-term investments | 367,730 | 294,175 | ||||
| Student receivables, net | 37,554 | 55,018 | ||||
| Receivables, other | 2,711 | 1,381 | ||||
| Prepaid expenses | 7,825 | 7,299 | ||||
| Inventories | 616 | 576 | ||||
| Other current assets | 418 | 1,936 | ||||
| Total current assets | 416,854 | 360,385 | ||||
| NON-CURRENT ASSETS: | ||||||
| Property and equipment, net | 28,808 | 26,006 | ||||
| Right of use asset, net | 47,050 | 50,366 | ||||
| Goodwill | 118,312 | 87,356 | ||||
| Intangible assets, net | 16,356 | 7,900 | ||||
| Student receivables, net | 1,155 | 1,244 | ||||
| Deferred income tax assets, net | 49,284 | 60,169 | ||||
| Other assets | 5,932 | 5,720 | ||||
| TOTAL ASSETS | $ | 683,751 | $ | 599,146 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Lease liability - operating | $ | 11,013 | $ | 11,784 | ||
| Accounts payable | 12,856 | 11,533 | ||||
| Accrued expenses: | ||||||
| Payroll and related benefits | 19,350 | 27,616 | ||||
| Advertising and marketing costs | 12,495 | 10,479 | ||||
| Income taxes | 2,378 | 1,376 | ||||
| Other | 11,100 | 16,378 | ||||
| Deferred revenue | 29,303 | 24,647 | ||||
| Total current liabilities | 98,495 | 103,813 | ||||
| NON-CURRENT LIABILITIES: | ||||||
| Lease liability - operating | 46,273 | 52,391 | ||||
| Other liabilities | 17,312 | 11,647 | ||||
| Total non-current liabilities | 63,585 | 64,038 | ||||
| STOCKHOLDERS' EQUITY: | ||||||
| Preferred stock | - | - | ||||
| Common stock | 865 | 860 | ||||
| Additional paid-in capital | 650,990 | 639,335 | ||||
| Accumulated other comprehensive income | 603 | 344 | ||||
| Retained earnings | 115,284 | 18,071 | ||||
| Treasury stock | (246,071 | ) | (227,315 | ) | ||
| Total stockholders' equity | 521,671 | 431,295 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 683,751 | $ | 599,146 |
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, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | % of<br><br><br>Total<br><br><br>Revenue | 2019 | % of<br><br><br>Total<br><br><br>Revenue | |||||||||
| REVENUE: | ||||||||||||
| Tuition and fees | $ | 168,471 | 99.6 | % | $ | 154,291 | 99.6 | % | ||||
| Other | 655 | 0.4 | % | 668 | 0.4 | % | ||||||
| Total revenue | 169,126 | 154,959 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||
| Educational services and facilities | 27,562 | 16.3 | % | 25,318 | 16.3 | % | ||||||
| General and administrative | 105,495 | 62.4 | % | 103,063 | 66.5 | % | ||||||
| Depreciation and amortization | 3,995 | 2.4 | % | 2,284 | 1.5 | % | ||||||
| Total operating expenses | 137,052 | 81.0 | % | 130,665 | 84.3 | % | ||||||
| Operating income | 32,074 | 19.0 | % | 24,294 | 15.7 | % | ||||||
| OTHER INCOME: | ||||||||||||
| Interest income | 737 | 0.4 | % | 1,698 | 1.1 | % | ||||||
| Interest expense | (42 | ) | 0.0 | % | (43 | ) | 0.0 | % | ||||
| Miscellaneous (expense) income | (14 | ) | 0.0 | % | 97 | 0.1 | % | |||||
| Total other income | 681 | 0.4 | % | 1,752 | 1.1 | % | ||||||
| PRETAX INCOME | 32,755 | 19.4 | % | 26,046 | 16.8 | % | ||||||
| (Benefit from) provision for income taxes | (7,206 | ) | -4.3 | % | 7,653 | 4.9 | % | |||||
| INCOME FROM CONTINUING OPERATIONS | 39,961 | 23.6 | % | 18,393 | 11.9 | % | ||||||
| Loss from discontinued operations, net of tax | (21 | ) | 0.0 | % | (159 | ) | -0.1 | % | ||||
| NET INCOME | 39,940 | 23.6 | % | 18,234 | 11.8 | % | ||||||
| NET INCOME PER SHARE - BASIC: | ||||||||||||
| Income from continuing operations | $ | 0.58 | $ | 0.26 | ||||||||
| Loss from discontinued operations | - | - | ||||||||||
| Net income per share | $ | 0.58 | $ | 0.26 | ||||||||
| NET INCOME PER SHARE -DILUTED: | ||||||||||||
| Income from continuing operations | $ | 0.56 | $ | 0.25 | ||||||||
| Loss from discontinued operations | - | - | ||||||||||
| Net income per share | $ | 0.56 | $ | 0.25 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||
| Basic | 69,167 | 70,142 | ||||||||||
| Diluted | 71,016 | 72,142 | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| For the Quarter Ended September 30, | ||||||||||||
| 2020 | 2019 | |||||||||||
| NET INCOME | $ | 39,940 | $ | 18,234 | ||||||||
| OTHER COMPREHENSIVE LOSS, net of tax: | ||||||||||||
| Foreign currency translation adjustments | 123 | (113 | ) | |||||||||
| Unrealized (loss) gain on investments | (461 | ) | 44 | |||||||||
| Total other comprehensive loss | (338 | ) | (69 | ) | ||||||||
| COMPREHENSIVE INCOME | $ | 39,602 | $ | 18,165 |
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, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | % of<br><br><br>Total<br><br><br>Revenue | 2019 | % of<br><br><br>Total<br><br><br>Revenue | |||||||||
| REVENUE: | ||||||||||||
| Tuition and fees | $ | 514,364 | 99.7 | % | $ | 467,298 | 99.6 | % | ||||
| Other | 1,791 | 0.3 | % | 1,955 | 0.4 | % | ||||||
| Total revenue | 516,155 | 469,253 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||
| Educational services and facilities | 83,149 | 16.1 | % | 76,995 | 16.4 | % | ||||||
| General and administrative | 314,864 | 61.0 | % | 331,057 | 70.5 | % | ||||||
| Depreciation and amortization | 10,785 | 2.1 | % | 6,752 | 1.4 | % | ||||||
| Asset impairment | 612 | 0.1 | % | - | 0.0 | % | ||||||
| Total operating expenses | 409,410 | 79.3 | % | 414,804 | 88.4 | % | ||||||
| Operating income | 106,745 | 20.7 | % | 54,449 | 11.6 | % | ||||||
| OTHER INCOME: | ||||||||||||
| Interest income | 3,235 | 0.6 | % | 4,730 | 1.0 | % | ||||||
| Interest expense | (126 | ) | 0.0 | % | (125 | ) | 0.0 | % | ||||
| Miscellaneous income | 98 | 0.0 | % | 368 | 0.1 | % | ||||||
| Total other income | 3,207 | 0.6 | % | 4,973 | 1.1 | % | ||||||
| PRETAX INCOME | 109,952 | 21.3 | % | 59,422 | 12.7 | % | ||||||
| Provision for income taxes | 12,670 | 2.5 | % | 16,362 | 3.5 | % | ||||||
| INCOME FROM CONTINUING OPERATIONS | 97,282 | 18.8 | % | 43,060 | 9.2 | % | ||||||
| Loss from discontinued operations, net of tax | (69 | ) | 0.0 | % | (594 | ) | -0.1 | % | ||||
| NET INCOME | 97,213 | 18.8 | % | 42,466 | 9.0 | % | ||||||
| NET INCOME PER SHARE - BASIC: | ||||||||||||
| Income from continuing operations | $ | 1.40 | $ | 0.62 | ||||||||
| Loss from discontinued operations | - | (0.01 | ) | |||||||||
| Net income per share | $ | 1.40 | $ | 0.61 | ||||||||
| NET INCOME PER SHARE - DILUTED: | ||||||||||||
| Income from continuing operations | $ | 1.36 | $ | 0.60 | ||||||||
| Loss from discontinued operations | - | (0.01 | ) | |||||||||
| Net income per share | $ | 1.36 | $ | 0.59 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||
| Basic | 69,366 | 70,029 | ||||||||||
| Diluted | 71,267 | 71,901 | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| For the Year to Date Ended September 30, | ||||||||||||
| 2020 | 2019 | |||||||||||
| NET INCOME | $ | 97,213 | $ | 42,466 | ||||||||
| OTHER COMPREHENSIVE INCOME, net of tax: | ||||||||||||
| Foreign currency translation adjustments | 128 | (130 | ) | |||||||||
| Unrealized gain on investments | 131 | 814 | ||||||||||
| Total other comprehensive income | 259 | 684 | ||||||||||
| COMPREHENSIVE INCOME | $ | 97,472 | $ | 43,150 |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the Year to Date Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 97,213 | $ | 42,466 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Asset impairment | 612 | - | ||||
| Depreciation and amortization expense | 10,785 | 6,752 | ||||
| Bad debt expense | 36,706 | 32,028 | ||||
| Compensation expense related to share-based awards | 9,735 | 3,922 | ||||
| Deferred income taxes | 11,339 | 16,265 | ||||
| Changes in operating assets and liabilities | (28,637 | ) | (16,042 | ) | ||
| Net cash provided by operating activities | 137,753 | 85,391 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of available-for-sale investments | (333,767 | ) | (418,156 | ) | ||
| Sales of available-for-sale investments | 213,576 | 382,022 | ||||
| Purchases of property and equipment | (7,479 | ) | (3,220 | ) | ||
| Business acquisition | (39,819 | ) | - | |||
| Other | - | 9 | ||||
| Net cash used in investing activities | (167,489 | ) | (39,345 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Issuance of common stock | 1,925 | 1,326 | ||||
| Purchase of treasury stock | (17,862 | ) | - | |||
| Payments of employee tax associated with stock compensation | (894 | ) | (2,692 | ) | ||
| Net cash used in financing activities | (16,831 | ) | (1,366 | ) | ||
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (46,567 | ) | 44,680 | |||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period | 108,687 | 32,731 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period | $ | 62,120 | $ | 77,411 |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
| For the Quarter Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| REVENUE: | ||||||
| CTU | $ | 98,985 | $ | 96,038 | ||
| AIU ^(1)^ | 70,048 | 58,907 | ||||
| Total University Group | 169,033 | 154,945 | ||||
| Corporate and Other ^(2)^ | 93 | 14 | ||||
| Total | $ | 169,126 | $ | 154,959 | ||
| OPERATING INCOME (LOSS): | ||||||
| CTU | $ | 32,993 | $ | 29,926 | ||
| AIU ^(1)^ | 5,513 | 7,341 | ||||
| Total University Group | 38,506 | 37,267 | ||||
| Corporate and Other ^(2)^ | (6,432 | ) | (12,973 | ) | ||
| Total | $ | 32,074 | $ | 24,294 | ||
| OPERATING MARGIN (LOSS): | ||||||
| CTU | 33.3 | % | 31.2 | % | ||
| AIU ^(1)^ | 7.9 | % | 12.5 | % | ||
| Total University Group | 22.8 | % | 24.1 | % | ||
| Corporate and Other ^(2)^ | NM | NM | ||||
| Total | 19.0 | % | 15.7 | % | ||
| (1) | AIU’s revenue and operating income for the quarter ended September 30, 2020 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 $0.4 million and $8.2 million for the quarters ended September 30, 2020 and 2019, respectively, which included $7.1 million of legal settlement expense related to the Oregon arbitration matter for the quarter ended September 30, 2019. | |||||
| --- | --- |
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
| For the Year to Date Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| REVENUE: | ||||||
| CTU | $ | 302,766 | $ | 289,650 | ||
| AIU ^(1)^ | 213,279 | 179,559 | ||||
| Total University Group | 516,045 | 469,209 | ||||
| Corporate and Other ^(2)^ | 110 | 44 | ||||
| Total | $ | 516,155 | $ | 469,253 | ||
| OPERATING INCOME (LOSS): | ||||||
| CTU ^(3)^ | $ | 100,688 | $ | 71,730 | ||
| AIU^(1) (4)^ | 25,365 | 11,436 | ||||
| Total University Group | 126,053 | 83,166 | ||||
| Corporate and Other ^(2)^ | (19,308 | ) | (28,717 | ) | ||
| Total | $ | 106,745 | $ | 54,449 | ||
| OPERATING MARGIN (LOSS): | ||||||
| CTU ^(3)^ | 33.3 | % | 24.8 | % | ||
| AIU^(1) (4)^ | 11.9 | % | 6.4 | % | ||
| Total University Group | 24.4 | % | 17.7 | % | ||
| Corporate and Other ^(2)^ | NM | NM | ||||
| Total | 20.7 | % | 11.6 | % | ||
| (1) | AIU’s revenue and operating income for the year to date ended September 30, 2020 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 $1.8 million and $12.8 million for the years to date ended September 30, 2020 and 2019, respectively, which included $7.1 million of legal settlement expense related to the Oregon arbitration matter for the year to date ended September 30, 2019. | |||||
| --- | --- | |||||
| (3) | $18.6 million of expense related to the FTC settlement was recorded within CTU during the year to date ended September 30, 2019. | |||||
| --- | --- | |||||
| (4) | $11.4 million of expense related to the FTC settlement was recorded within AIU during the year to date ended September 30, 2019. | |||||
| --- | --- |
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 | 2020 (9) | 2019 | 2020 (9) | 2019 | ||
| Total Company | ||||||
| Operating income | $ | 24,294 | $ | 54,449 | ||
| Depreciation and amortization^(2)^ | 2,284 | 6,752 | ||||
| Asset impairment ^(3)^ | - | - | ||||
| Lease expenses for vacated space ^(4)^ | 295 | 1,453 | ||||
| Significant legal settlements ^(5)^ | 7,100 | 37,100 | ||||
| Adjusted Operating Income -- Total Company | $ | 33,973 | $ | 99,754 | ||
| For the Quarter Ending December 31, | For the Year Ending December 31, | |||||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |||
| 2020 (9) | 2019 | 2020 (9) | 2019 | |||
| Total Company | ||||||
| Operating income | 30.8M - 32.3M | $ | 32,013 | 137.5M - 139.0M | $ | 86,462 |
| Depreciation and amortization^(2)^ | 4.2M | 2,393 | 15.0M | 9,145 | ||
| Asset impairment ^(3)^ | - | 0.6M | - | |||
| Lease expenses for vacated space ^(4)^ | 0.2M | 177 | 0.9M | 1,630 | ||
| Significant legal settlements ^(5)^ | - | 37,100 | ||||
| Adjusted Operating Income -- Total Company | 35.2M - 36.7M | $ | 34,583 | 154.0M - 155.5M | $ | 134,337 |
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 | |||||||||
| 2020 (9) | 2019 | 2020 (9) | 2019 | |||||||
| Reported Earnings Per Diluted Share | $ | 0.25 | $ | 0.59 | ||||||
| Pre-tax adjustments included in operating expenses: | ||||||||||
| Amortization^(2)^ | - | - | ||||||||
| Asset impairment ^(3)^ | - | - | ||||||||
| Lease expenses for vacated space^(4)^ | - | 0.02 | ||||||||
| Significant legal settlements^(5)^ | 0.10 | 0.52 | ||||||||
| Total pre-tax adjustments | $ | 0.10 | $ | 0.54 | ||||||
| Tax effect of adjustments ^(6)^ | (0.02 | ) | ) | (0.06 | ) | |||||
| Tax effect of change in settlement deductibility ^(7)^ | 0.02 | (0.03 | ) | |||||||
| Release of valuation allowance ^(8)^ | ) | - | ) | - | ||||||
| Total adjustments after tax | ) | 0.10 | ) | 0.45 | ||||||
| Adjusted Earnings Per Diluted Share | $ | 0.35 | $ | 1.04 | ||||||
| For the Quarter Ending December 31, | For the Year Ending December 31, | |||||||||
| OUTLOOK | ACTUAL | OUTLOOK | ACTUAL | |||||||
| 2020 (9) | 2019 | 2020 (9) | 2019 | |||||||
| Reported Earnings Per Diluted Share | 0.33 - 0.34 | $ | 0.38 | 1.69 - 1.71 | $ | 0.97 | ||||
| Pre-tax adjustments included in operating expenses: | ||||||||||
| Amortization^(2)^ | - | - | ||||||||
| Asset impairment ^(3)^ | - | - | ||||||||
| Lease expenses for vacated space^(4)^ | - | 0.02 | ||||||||
| Significant legal settlements ^(5)^ | - | 0.51 | ||||||||
| Total pre-tax adjustments | $ | - | $ | 0.53 | ||||||
| Tax effect of adjustments ^(6)^ | - | ) | (0.13 | ) | ||||||
| Tax effect of change in settlement deductibility ^(7)^ | (0.05 | ) | - | |||||||
| Release of valuation allowance ^(8)^ | - | ) | - | |||||||
| Total adjustments after tax | (0.05 | ) | ) | 0.40 | ||||||
| Adjusted Earnings Per Diluted Share | 0.34 - 0.35 | $ | 0.33 | 1.51 - 1.53 | $ | 1.37 |
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 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 the Company’s 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. There is no tax effect applied to the adjustment related to the release of the valuation allowance as this is an adjustment for income tax. |
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| (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 third quarter of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share which would have increased by $0.02 for the quarter ended September 30, 2019 and decreased $0.03 for the year to date ended September 30, 2019. The third quarter and year to date ended September 30, 2019 now reflect 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. |
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| (8) | This relates to the release of a valuation allowance in the amount of $16.0 million as a result of the current determination that it is more likely than not that the Company will utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an Overall Domestic Loss account balance. |
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| (9) | 2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition. |
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