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Perdoceo Education Corporation Reports Second Quarter and Year to Date 2020 Results

08/06/2020

Second quarter revenue increased 12.5% supported by enrollment growth across both universities

SCHAUMBURG, Ill.--(BUSINESS WIRE)-- Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended June 30, 2020.

Second Quarter 2020 Results as Compared to the Prior Year Quarter

Financial Results

  • Revenue increased by 12.5 percent to $176.0 million with both universities contributing to the growth
  • Operating income increased to $37.4 million as compared to $0.2 million
  • Adjusted operating income increased to $41.7 million as compared to $32.8 million*
  • Earnings per diluted share of $0.40 compared to loss per diluted share of $0.01
  • Adjusted earnings per diluted share of $0.41 as compared to $0.34*
  • Ended the quarter with $345.8 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments

Enrollment Metrics

  • Total student enrollments increased 20.1 percent, supported by new student enrollment growth at both universities. CTU’s total student enrollments increased 4.0 percent while AIU’s total student enrollments increased 52.7 percent.
  • New student enrollments increased 45.3 percent with both universities contributing to this growth. CTU experienced an increase of 4.5 percent in new student enrollments while AIU’s new student enrollments increased by 118.8 percent. AIU’s new student enrollments were positively impacted by the acquisition of substantially all of the assets of Trident University International (the “Trident acquisition”) as well as approximately 50 percent more enrollment days for the quarter.

Year to Date 2020 Results as Compared to the Prior Year to Date

Financial Results

  • Revenue increased by 10.4 percent to $347.0 million with both universities contributing to the growth
  • Operating income increased to $74.7 million as compared to $30.2 million
  • Adjusted operating income increased to $82.5 million as compared to $65.8 million*
  • Earnings per diluted share of $0.80 as compared to $0.34
  • Adjusted earnings per diluted share of $0.82 as compared to $0.69*

Enrollment Metrics

  • New student enrollments increased 21.3 percent with both universities contributing to the growth. New student enrollments increased 10.7 percent within CTU and 36.0 percent within AIU. AIU’s year to date new student enrollments were positively impacted by the Trident acquisition as well as underlying organic growth.

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

“The health and well-being of our students, employees and communities continue to be our priority and I am extremely proud of our faculty and employees for their dedication and commitment towards educating, serving and supporting our students during these challenging times,” said Todd Nelson, President and Chief Executive Officer. “We are further optimizing our technology, improving our processes and providing the necessary tools and resources to our employees so they can continue to effectively and efficiently serve students even while working remotely. Although the pandemic has not had a material impact on our operating results to date, we continue to monitor the situation. Our balance sheet continues to strengthen, and we are strategically investing in initiatives that further enhance our students’ experiences, retention and academic outcomes while executing against our strategy of sustainable and responsible growth.”

REVENUE

  • For the quarter ended June 30, 2020, total revenue of $176.0 million increased 12.5 percent compared to total revenue of $156.4 million for the prior year quarter.
  • For the year to date ended June 30, 2020, total revenue of $347.0 million increased 10.4 percent compared to total revenue of $314.3 million for the prior year to date.
  • Both universities contributed to the revenue growth which was supported by year to date organic student enrollment growth as well as the Trident acquisition.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Revenue ($ in thousands)

 

2020

 

 

2019

 

 

%
Change

 

 

2020

 

 

2019

 

 

%
Change

 

CTU

 

$

100,193

 

 

$

96,555

 

 

 

3.8

%

 

$

203,781

 

 

$

193,612

 

 

 

5.3

%

AIU (1)

 

 

75,835

 

 

 

59,873

 

 

 

26.7

%

 

 

143,231

 

 

 

120,652

 

 

 

18.7

%

Total University Group

 

 

176,028

 

 

 

156,428

 

 

 

12.5

%

 

 

347,012

 

 

 

314,264

 

 

 

10.4

%

Corporate and Other

 

 

7

 

 

 

13

 

 

NM

 

 

 

17

 

 

 

30

 

 

NM

 

Total

 

$

176,035

 

 

$

156,441

 

 

 

12.5

%

 

$

347,029

 

 

$

314,294

 

 

 

10.4

%

(1)

AIU’s revenue for the quarter and year to date ended June 30, 2020 includes revenue associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

TOTAL AND NEW STUDENT ENROLLMENTS

  • As of June 30, 2020, CTU’s and AIU’s total student enrollments increased 4.0 percent and 52.7 percent, respectively, as compared to the prior year. AIU’s total student enrollments were positively impacted by the Trident acquisition.
  • For the quarter ended June 30, 2020, new student enrollments increased 4.5 percent within CTU and 118.8 percent within AIU, in each case as compared to the prior year quarter. AIU’s second quarter new student enrollments were positively impacted by the Trident acquisition as well as 50 percent more enrollment days in the second quarter of 2020 as compared to the prior year quarter.
  • For the year to date ended June 30, 2020, new student enrollments increased 10.7 percent within CTU and 36.0 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, as well as underlying organic new student enrollment growth.

 

 

As of June 30,

 

Total Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

23,300

 

 

 

22,400

 

 

 

4.0

%

AIU (1)

 

 

16,800

 

 

 

11,000

 

 

 

52.7

%

Total

 

 

40,100

 

 

 

33,400

 

 

 

20.1

%

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

New Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

6,100

 

 

 

5,840

 

 

 

4.5

%

 

 

13,120

 

 

 

11,850

 

 

 

10.7

%

AIU (1)

 

 

7,110

 

 

 

3,250

 

 

 

118.8

%

 

 

11,720

 

 

 

8,620

 

 

 

36.0

%

Total

 

 

13,210

 

 

 

9,090

 

 

 

45.3

%

 

 

24,840

 

 

 

20,470

 

 

 

21.3

%

(1)

AIU’s total student enrollments as of June 30, 2020 and new student enrollments for the quarter and year to date ended June 30, 2020 include enrollments related to the Trident acquisition commencing on the March 2, 2020 date of acquisition.

OPERATING INCOME (LOSS)

  • For the quarter ended June 30, 2020, operating income increased to $37.4 million compared to $0.2 million for the prior year quarter.
  • For the year to date ended June 30, 2020, operating income increased to $74.7 million compared to $30.2 million for the prior year to date.
  • The prior year quarter and year to date operating income included a $30.0 million expense related to a settlement with the U.S. Federal Trade Commission (“FTC”).

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Operating Income ($ in thousands)

 

2020

 

 

2019

 

 

%
Change

 

 

2020

 

 

2019

 

 

%
Change

 

CTU (1)

 

$

33,076

 

 

$

12,113

 

 

 

173.1

%

 

$

67,695

 

 

$

41,804

 

 

 

61.9

%

AIU (2)

 

 

10,476

 

 

 

(4,217

)

 

 

348.4

%

 

 

19,852

 

 

 

4,095

 

 

 

384.8

%

Total University Group

 

 

43,552

 

 

 

7,896

 

 

 

451.6

%

 

 

87,547

 

 

 

45,899

 

 

 

90.7

%

Corporate and Other (3)

 

 

(6,184

)

 

 

(7,712

)

 

 

19.8

%

 

 

(12,876

)

 

 

(15,744

)

 

 

18.2

%

Total

 

$

37,368

 

 

$

184

 

 

NM

 

 

$

74,671

 

 

$

30,155

 

 

 

147.6

%

(1)

CTU’s operating income for the quarter and year to date ended June 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 June 30, 2020 includes results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition. Quarter and year to date ended June 30, 2019 operating income 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 for the quarters and years to date ended June 30, 2020 and 2019.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Operating Loss ($ in thousands)

 

2020

 

 

2019

 

 

%
Change

 

 

2020

 

 

2019

 

 

%
Change

 

Closed Campuses

 

$

(376

)

 

$

(1,774

)

 

 

78.8

%

 

$

(1,388

)

 

$

(4,586

)

 

 

69.7

%

 

ADJUSTED OPERATING INCOME

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

  • For the quarter ended June 30, 2020, adjusted operating income of $41.7 million increased 27.2 percent compared to adjusted operating income of $32.8 million for the prior year quarter.
  • For the year to date ended June 30, 2020, adjusted operating income of $82.5 million increased 25.4 percent compared to adjusted operating income of $65.8 million for the prior year to date.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Adjusted Operating Income ($ in thousands)

 

2020 (4)

 

 

2019

 

 

2020 (4)

 

 

2019

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

37,368

 

 

$

184

 

 

$

74,671

 

 

$

30,155

 

Depreciation and amortization

 

 

4,151

 

 

 

2,235

 

 

 

6,790

 

 

 

4,468

 

Asset impairment (1)

 

 

-

 

 

 

-

 

 

 

612

 

 

 

-

 

Lease expenses for vacated space (2)

 

 

202

 

 

 

392

 

 

 

419

 

 

 

1,158

 

Significant legal settlements (3)

 

 

-

 

 

 

30,000

 

 

 

-

 

 

 

30,000

 

Adjusted Operating Income --

Total Company

 

$

41,721

 

 

$

32,811

 

 

$

82,492

 

 

$

65,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

27.2

%

 

 

 

 

 

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 matter recorded during 2019.

(4)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended June 30, 2020, the Company recorded:

  • Net income of $28.2 million compared to net loss of $0.6 million for the prior year quarter.
  • Earnings per diluted share of $0.40 compared to loss per diluted share of $0.01 for the prior year quarter.
  • Adjusted earnings per diluted share of $0.41 compared to adjusted earnings per diluted share of $0.34 for the prior year quarter. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the year to date ended June 30, 2020, the Company recorded:

  • Net income of $57.3 million compared to net income of $24.2 million for the prior year to date.
  • Earnings per diluted share of $0.80 compared to earnings per diluted share of $0.34 for the prior year to date.
  • Adjusted earnings per diluted share of $0.82 compared to adjusted earnings per diluted share of $0.69 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

2020 (7)

 

 

2019 (8)

 

 

2020 (7)

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.40

 

 

$

(0.01

)

 

$

0.80

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (1)

 

 

0.02

 

 

 

-

 

 

 

0.02

 

 

 

-

 

Asset impairment (2)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

Lease expenses for vacated space (3)

 

 

-

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

Significant legal settlements (4)

 

 

-

 

 

 

0.41

 

 

 

-

 

 

 

0.41

 

Total pre-tax adjustments

 

$

0.02

 

 

$

0.42

 

 

$

0.04

 

 

$

0.43

 

Tax effect of adjustments (5)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.02

)

 

 

(0.03

)

Tax effect of change in settlement deductibility (6)

 

 

-

 

 

 

(0.05

)

 

 

-

 

 

 

(0.05

)

Total adjustments after tax

 

 

0.01

 

 

 

0.35

 

 

 

0.02

 

 

 

0.35

 

Adjusted Earnings Per Diluted Share

 

$

0.41

 

 

$

0.34

 

 

$

0.82

 

 

$

0.69

 

(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 matter 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.

(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 second and third quarters of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share for the second and third quarters of 2019 which would have decreased by $0.05 and increased by $0.02, respectively. The second quarter and year to date ended June 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)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

(8)

As a result of a reported net loss for the quarter ended June 30, 2019, potential common stock equivalents were excluded from the reported diluted common shares outstanding calculation. The above adjustments resulted in a positive adjusted earnings per diluted share and as a result potential common stock equivalents were added to basic common shares outstanding to determine the dilutive share impact.

BALANCE SHEET AND CASH FLOW

  • For the quarter and year to date ended June 30, 2020 net cash provided by operating activities was $60.6 million and $109.4 million, compared to $40.5 million and $53.4 million for the respective prior year periods.
  • As of June 30, 2020 and December 31, 2019, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $345.8 million and $294.2 million, respectively.

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

Selected Cash Flow Items ($ in thousands)

 

2020

 

 

2019

 

 

%
Change

 

 

2020

 

 

2019

 

 

%
Change

 

Net cash provided by operating activities

 

$

60,596

 

 

$

40,469

 

 

 

49.7

%

 

$

109,364

 

 

$

53,414

 

 

 

104.7

%

Capital expenditures

 

$

2,424

 

 

$

929

 

 

 

160.9

%

 

$

3,439

 

 

$

1,408

 

 

 

144.2

%

 

OUTLOOK

The Company is providing the following outlook, subject to the key assumptions identified below. Please see the GAAP to non-GAAP reconciliation for adjusted operating income and adjusted earnings per diluted share attached to this press release for further details.

The outlook reflects the Company’s expectation of achieving growth in new and total student enrollments at both universities for the full year 2020. Further, for the third quarter of 2020, the Company expects growth in new student enrollments as compared to the prior year quarter for both universities, with the number of AIU’s enrollment days for the third and fourth quarters of 2020 relatively comparable to the respective prior year periods.

 

Total Company Outlook

 

For Quarter Ending September 30,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2020

2019

 

2020

2019

Operating Income

$31.0M - $32.0M

$24.3M

 

$135.0M - $139.0M

$86.5M

Adjusted Operating Income

$35.0M - $36.0M

$34.0M

 

$151.0M - $155.0M

$134.3M

 

 

 

 

 

 

Earnings Per Diluted Share

$0.33 - $0.34

$0.25

 

$1.44 - $1.48

$0.97

Adjusted Earnings Per Diluted Share

$0.34 - $0.35

$0.35

 

$1.48 - $1.52

$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 third quarter and the full year, and (vii) any future impact from the Company’s stock repurchase program is excluded. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current and future circumstances and actions that may be undertaken, actual results could differ materially from these estimates. In addition, decisions the Company makes in the future as it continues to evaluate diverse strategies to enhance shareholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Thursday, August 6, 2020 at 5:30 p.m. Eastern time to discuss second 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 two regionally accredited universities – Colorado Technical University (“CTU”) and American InterContinental University (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities offer students industry-relevant and career-focused degree programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing 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 (in particular as these risks and uncertainties may be exacerbated leading up to and following the 2020 U.S. presidential election); the operating impact of the settlements with the U.S. Federal Trade Commission and state attorneys general; the success of our initiatives to improve student experiences, retention and academic outcomes; the ability of our student admissions and advising functions to achieve anticipated operating performance; our continued eligibility to participate in educational assistance programs for veterans or other military personnel; the impact of the global COVID-19 pandemic; difficulties with integrating the assets of Trident University International into AIU’s operations; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

91,536

 

 

$

108,687

 

Restricted cash

 

 

4,000

 

 

 

-

 

Short-term investments

 

 

250,265

 

 

 

185,488

 

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

 

 

345,801

 

 

 

294,175

 

 

 

 

 

 

 

 

 

 

Student receivables, net

 

 

35,597

 

 

 

55,018

 

Receivables, other

 

 

1,459

 

 

 

1,381

 

Prepaid expenses

 

 

9,843

 

 

 

7,299

 

Inventories

 

 

570

 

 

 

576

 

Other current assets

 

 

791

 

 

 

1,936

 

Total current assets

 

 

394,061

 

 

 

360,385

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

28,335

 

 

 

26,006

 

Right of use asset, net

 

 

48,854

 

 

 

50,366

 

Goodwill

 

 

118,312

 

 

 

87,356

 

Intangible assets, net

 

 

17,189

 

 

 

7,900

 

Student receivables, net

 

 

1,158

 

 

 

1,244

 

Deferred income tax assets, net

 

 

41,361

 

 

 

60,169

 

Other assets

 

 

5,829

 

 

 

5,720

 

TOTAL ASSETS

 

$

655,099

 

 

$

599,146

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

$

11,785

 

 

$

11,784

 

Accounts payable

 

 

11,909

 

 

 

11,533

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

16,334

 

 

 

27,616

 

Advertising and marketing costs

 

 

11,289

 

 

 

10,479

 

Income taxes

 

 

1,919

 

 

 

1,376

 

Other

 

 

18,656

 

 

 

16,378

 

Deferred revenue

 

 

38,538

 

 

 

24,647

 

Total current liabilities

 

 

110,430

 

 

 

103,813

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

 

48,675

 

 

 

52,391

 

Other liabilities

 

 

17,310

 

 

 

11,647

 

Total non-current liabilities

 

 

65,985

 

 

 

64,038

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

863

 

 

 

860

 

Additional paid-in capital

 

 

646,849

 

 

 

639,335

 

Accumulated other comprehensive income

 

 

941

 

 

 

344

 

Retained earnings

 

 

75,344

 

 

 

18,071

 

Treasury stock

 

 

(245,313

)

 

 

(227,315

)

Total stockholders' equity

 

 

478,684

 

 

 

431,295

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

655,099

 

 

$

599,146

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts and percentages)

 

 

 

For the Quarter Ended June 30,

 

 

 

2020

 

 

% of
Total
Revenue

 

 

2019

 

 

% of
Total
Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

175,499

 

 

 

99.7

%

 

$

155,779

 

 

 

99.6

%

Other

 

 

536

 

 

 

0.3

%

 

 

662

 

 

 

0.4

%

Total revenue

 

 

176,035

 

 

 

 

 

 

 

156,441

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

28,676

 

 

 

16.3

%

 

 

25,350

 

 

 

16.2

%

General and administrative

 

 

105,840

 

 

 

60.1

%

 

 

128,672

 

 

 

82.2

%

Depreciation and amortization

 

 

4,151

 

 

 

2.4

%

 

 

2,235

 

 

 

1.4

%

Total operating expenses

 

 

138,667

 

 

 

78.8

%

 

 

156,257

 

 

 

99.9

%

Operating income

 

 

37,368

 

 

 

21.2

%

 

 

184

 

 

 

0.1

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,011

 

 

 

0.6

%

 

 

1,592

 

 

 

1.0

%

Interest expense

 

 

(43

)

 

 

0.0

%

 

 

(40

)

 

 

0.0

%

Miscellaneous income

 

 

125

 

 

 

0.1

%

 

 

45

 

 

 

0.0

%

Total other income

 

 

1,093

 

 

 

0.6

%

 

 

1,597

 

 

 

1.0

%

PRETAX INCOME

 

 

38,461

 

 

 

21.8

%

 

 

1,781

 

 

 

1.1

%

Provision for income taxes

 

 

10,272

 

 

 

5.8

%

 

 

2,302

 

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

 

 

28,189

 

 

 

16.0

%

 

 

(521

)

 

 

-0.3

%

Loss from discontinued operations, net of tax

 

 

(22

)

 

 

0.0

%

 

 

(38

)

 

 

0.0

%

NET INCOME (LOSS)

 

 

28,167

 

 

 

16.0

%

 

 

(559

)

 

 

-0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.41

 

 

 

 

 

 

$

(0.01

)

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income (loss) per share

 

$

0.41

 

 

 

 

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER SHARE -DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.40

 

 

 

 

 

 

$

(0.01

)

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income (loss) per share

 

$

0.40

 

 

 

 

 

 

$

(0.01

)

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,094

 

 

 

 

 

 

 

70,105

 

 

 

 

 

Diluted

 

 

70,900

 

 

 

 

 

 

 

70,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

For the Quarter Ended June 30,

 

 

 

2020

 

 

 

 

 

 

2019

 

 

 

 

 

NET INCOME (LOSS)

 

$ 28,167

 

 

 

 

 

 

$ (559)

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

53

 

 

 

 

 

 

 

35

 

 

 

 

 

Unrealized gain on investments

 

 

1,431

 

 

 

 

 

 

 

371

 

 

 

 

 

Total other comprehensive income

 

 

1,484

 

 

 

 

 

 

 

406

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

 

$

29,651

 

 

 

 

 

 

$

(153

)

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2020

 

 

% of
Total
Revenue

 

 

2019

 

 

% of
Total
Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

345,893

 

 

 

99.7

%

 

$

313,007

 

 

 

99.6

%

Other

 

 

1,136

 

 

 

0.3

%

 

 

1,287

 

 

 

0.4

%

Total revenue

 

 

347,029

 

 

 

 

 

 

 

314,294

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

55,587

 

 

 

16.0

%

 

 

51,677

 

 

 

16.4

%

General and administrative

 

 

209,369

 

 

 

60.3

%

 

 

227,994

 

 

 

72.5

%

Depreciation and amortization

 

 

6,790

 

 

 

2.0

%

 

 

4,468

 

 

 

1.4

%

Asset impairment

 

 

612

 

 

 

0.2

%

 

 

-

 

 

 

0.0

%

Total operating expenses

 

 

272,358

 

 

 

78.5

%

 

 

284,139

 

 

 

90.4

%

Operating income

 

 

74,671

 

 

 

21.5

%

 

 

30,155

 

 

 

9.6

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,498

 

 

 

0.7

%

 

 

3,032

 

 

 

1.0

%

Interest expense

 

 

(84

)

 

 

0.0

%

 

 

(82

)

 

 

0.0

%

Miscellaneous income

 

 

112

 

 

 

0.0

%

 

 

271

 

 

 

0.1

%

Total other income

 

 

2,526

 

 

 

0.7

%

 

 

3,221

 

 

 

1.0

%

PRETAX INCOME

 

 

77,197

 

 

 

22.2

%

 

 

33,376

 

 

 

10.6

%

Provision for income taxes

 

 

19,876

 

 

 

5.7

%

 

 

8,709

 

 

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

57,321

 

 

 

16.5

%

 

 

24,667

 

 

 

7.8

%

Loss from discontinued operations, net of tax

 

 

(48

)

 

 

0.0

%

 

 

(435

)

 

 

-0.1

%

NET INCOME

 

 

57,273

 

 

 

16.5

%

 

 

24,232

 

 

 

7.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.82

 

 

 

 

 

 

$

0.35

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.82

 

 

 

 

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.80

 

 

 

 

 

 

$

0.34

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.80

 

 

 

 

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,467

 

 

 

 

 

 

 

69,972

 

 

 

 

 

Diluted

 

 

71,350

 

 

 

 

 

 

 

71,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Year to Date Ended June 30,

 

 

 

2020

 

 

 

 

 

 

2020

 

 

 

 

 

NET INCOME

 

$

57,273

 

 

 

 

 

 

$

24,232

 

 

 

 

 

OTHER COMPREHENSIVE INCOME, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

5

 

 

 

 

 

 

 

(17

)

 

 

 

 

Unrealized gain on investments

 

 

592

 

 

 

 

 

 

 

770

 

 

 

 

 

Total other comprehensive income

 

 

597

 

 

 

 

 

 

 

753

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

57,870

 

 

 

 

 

 

$

24,985

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

57,273

 

 

$

24,232

 

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

 

 

 

 

 

 

 

 

Asset impairment

 

 

612

 

 

 

-

 

Depreciation and amortization expense

 

 

6,790

 

 

 

4,468

 

Bad debt expense

 

 

25,187

 

 

 

23,141

 

Compensation expense related to share-based awards

 

 

6,503

 

 

 

2,406

 

Deferred income taxes

 

 

19,262

 

 

 

9,213

 

Changes in operating assets and liabilities

 

 

(6,263

)

 

 

(10,046

)

Net cash provided by operating activities

 

 

109,364

 

 

 

53,414

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(209,846

)

 

 

(296,666

)

Sales of available-for-sale investments

 

 

145,819

 

 

 

265,743

 

Purchases of property and equipment

 

 

(3,439

)

 

 

(1,408

)

Business acquisition

 

 

(38,065

)

 

 

-

 

Other

 

 

-

 

 

 

9

 

Net cash used in investing activities

 

 

(105,531

)

 

 

(32,322

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

1,014

 

 

 

180

 

Purchase of treasury stock

 

 

(17,309

)

 

 

-

 

Payments of employee tax associated with stock compensation

 

 

(689

)

 

 

(2,562

)

Net cash used in financing activities

 

 

(16,984

)

 

 

(2,382

)

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

 

 

(13,151

)

 

 

18,710

 

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

 

 

108,687

 

 

 

32,731

 

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

 

$

95,536

 

 

$

51,441

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Quarter Ended June 30,

 

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

100,193

 

 

$

96,555

 

AIU (1)

 

 

75,835

 

 

 

59,873

 

Total University Group

 

 

176,028

 

 

 

156,428

 

Corporate and Other (2)

 

 

7

 

 

 

13

 

Total

 

$

176,035

 

 

$

156,441

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

$

33,076

 

 

$

12,113

 

AIU (1) (4)

 

 

10,476

 

 

 

(4,217

)

Total University Group

 

 

43,552

 

 

 

7,896

 

Corporate and Other (2)

 

 

(6,184

)

 

 

(7,712

)

Total

 

$

37,368

 

 

$

184

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

 

33.0

%

 

 

12.5

%

AIU (1) (4)

 

 

13.8

%

 

 

-7.0

%

Total University Group

 

 

24.7

%

 

 

5.0

%

Corporate and Other (2)

 

NM

 

 

NM

 

Total

 

 

21.2

%

 

 

0.1

%

(1)

AIU’s revenue and operating income for the quarter ended June 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 $1.8 million for the quarters ended June 30, 2020 and 2019, respectively.

(3)

$18.6 million of expense related to the FTC settlement was recorded within CTU during the quarter ended June 30, 2019.

(4)

$11.4 million of expense related to the FTC settlement was recorded within AIU during the quarter ended June 30, 2019.

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Year to Date Ended June 30,

 

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

203,781

 

 

$

193,612

 

AIU (1)

 

 

143,231

 

 

 

120,652

 

Total University Group

 

 

347,012

 

 

 

314,264

 

Corporate and Other (2)

 

 

17

 

 

 

30

 

Total

 

$

347,029

 

 

$

314,294

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

$

67,695

 

 

$

41,804

 

AIU (1) (4)

 

 

19,852

 

 

 

4,095

 

Total University Group

 

 

87,547

 

 

 

45,899

 

Corporate and Other (2)

 

 

(12,876

)

 

 

(15,744

)

Total

 

$

74,671

 

 

$

30,155

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

 

33.2

%

 

 

21.6

%

AIU (1) (4)

 

 

13.9

%

 

 

3.4

%

Total University Group

 

 

25.2

%

 

 

14.6

%

Corporate and Other (2)

 

NM

 

 

NM

 

Total

 

 

21.5

%

 

 

9.6

%

(1)

AIU’s revenue and operating income for the year to date ended June 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 $1.4 million and $4.6 million for the years to date ended June 30, 2020 and 2019, respectively.

(3)

$18.6 million of expense related to the FTC settlement was recorded within CTU during the year to date ended June 30, 2019.

(4)

$11.4 million of expense related to the FTC settlement was recorded within AIU during the year to date ended June 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 June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

ACTUAL

 

 

ACTUAL

 

Adjusted Operating Income

 

2020 (8)

 

 

2019

 

 

2020 (8)

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

37,368

 

 

$

184

 

 

$

74,671

 

 

$

30,155

 

Depreciation and amortization (2)

 

 

4,151

 

 

 

2,235

 

 

 

6,790

 

 

 

4,468

 

Asset impairment (3)

 

 

-

 

 

-

 

 

 

612

 

 

 

-

 

Lease expenses for vacated space (4)

 

 

202

 

 

 

392

 

 

 

419

 

 

 

1,158

 

Significant legal settlements (5)

 

 

-

 

 

 

30,000

 

 

 

-

 

 

 

30,000

 

Adjusted Operating Income -- Total Company

 

$

41,721

 

 

$

32,811

 

 

$

82,492

 

 

$

65,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending September 30,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020 (8)

 

 

2019

 

 

2020 (8)

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$31.0M - $32.0M

 

 

$

24,294

 

 

$135.0M - $139.0M

 

 

$

86,462

 

Depreciation and amortization (2)

 

3.8M

 

 

 

2,284

 

 

14.5M

 

 

 

9,145

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

0.6M

 

 

-

 

Lease expenses for vacated space (4)

 

0.2M

 

 

 

295

 

 

0.9M

 

 

 

1,630

 

Significant legal settlements (5)

 

 

-

 

 

 

7,100

 

 

 

-

 

 

 

37,100

 

Adjusted Operating Income -- Total Company

 

$35.0M - $36.0M

 

 

$

33,973

 

 

$151.0M - $155.0M

 

 

$

134,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

 

 

 

 

 

 

 

 

 

For the Quarter Ended June 30,

 

 

For the Year to Date Ended June 30,

 

 

 

ACTUAL

 

 

ACTUAL

 

 

 

2020 (8)

 

 

2019 (9)

 

 

2020 (8)

 

 

2019

 

Reported Earnings Per Diluted Share

 

$

0.40

 

 

$

(0.01

)

 

$

0.80

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.02

 

 

 

-

 

 

 

0.02

 

 

 

-

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

Significant legal settlements (5)

 

 

-

 

 

 

0.41

 

 

 

-

 

 

 

0.41

 

Total pre-tax adjustments

 

$

0.02

 

 

$

0.42

 

 

$

0.04

 

 

$

0.43

 

Tax effect of adjustments (6)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.02

)

 

 

(0.03

)

Tax effect of change in settlement deductibility (7)

 

 

-

 

 

 

(0.05

)

 

 

-

 

 

 

(0.05

)

Total adjustments after tax

 

 

0.01

 

 

 

0.35

 

 

 

0.02

 

 

 

0.35

 

Adjusted Earnings Per Diluted Share

 

$

0.41

 

 

$

0.34

 

 

$

0.82

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending September 30,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020 (8)

 

 

2019

 

 

2020 (8)

 

 

2019

 

Reported Earnings Per Diluted Share

 

$0.33 - $0.34

 

 

$

0.25

 

 

$1.44 - $1.48

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.01

 

 

 

-

 

 

 

0.04

 

 

 

-

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

0.02

 

Significant legal settlements (5)

 

 

-

 

 

 

0.10

 

 

 

-

 

 

 

0.51

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.10

 

 

$

0.06

 

 

$

0.53

 

Tax effect of adjustments (6)

 

 

-

 

 

 

(0.02

)

 

 

(0.02

)

 

 

(0.13

)

Tax effect of change in settlement deductibility (7)

 

 

-

 

 

 

0.02

 

 

 

-

 

 

 

-

 

Total adjustments after tax

 

 

0.01

 

 

 

0.10

 

 

 

0.04

 

 

 

0.40

 

Adjusted Earnings Per Diluted Share

 

$0.34 - $0.35

 

 

$

0.35

 

 

$1.48 - $1.52

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

 

(1)

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

 

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

 

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

 

 

(2)

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

 

 

(3)

Asset impairment relates to a right of use asset for one of 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.

 

 

(7)

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million reflected during the fourth quarter of 2019 has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the second and third quarters of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share for the second and third quarters of 2019 which would have decreased by $0.05 and increased by $0.02, respectively. The second quarter and year to date ended June 30, 2019 as well as the third quarter of 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.

 

 

(8)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 

 

(9)

As a result of a reported net loss for the quarter ended June 30, 2019, potential common stock equivalents were excluded from the reported diluted common shares outstanding calculation. Due to the adjustments above resulting in a positive adjusted earnings per diluted share calculation, potential common stock equivalents were added to basic common shares outstanding to determine the dilutive share impact.

 

 

 

For the Quarter Ended June 30, 2019

 

Diluted common shares outstanding (shares in thousands)

 

 

 

Reported diluted common shares outstanding

 

70,105

 

Common stock equivalents

 

1,929

 

Adjusted diluted common shares outstanding

 

72,034

 

 

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

Or

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

Source: Perdoceo Education Corporation

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