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Full year revenue increased 9.5% supported by enrollment growth at both CTU and AIU

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

Fourth Quarter 2020 Results as Compared to the Prior Year Quarter

Financial Results

• Revenue increased by 8.0 percent to $171.2 million
• Operating income increased by 13.0 percent to $36.2 million while adjusted operating income increased by 16.1 percent to $40.2 million*
• Earnings per diluted share of $0.38 remained flat while adjusted earnings per diluted share was $0.39 as compared to $0.33*
• Ended the quarter with $410.4 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments

Enrollment Metrics

• Total student enrollments at December 31, 2020 increased 16.7 percent. CTU experienced a 4.2 percent increase while AIU experienced a 39.2 percent increase in total student enrollments. AIU’s total student enrollment growth was 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 3.6 percent within CTU and 54.8 percent within AIU. AIU’s new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

Full Year 2020 Results as Compared to the Prior Year

Financial Results

• Revenue increased by 9.5 percent to $687.3 million
• Operating income increased by 65.3 percent to $142.9 million while adjusted operating income increased by 18.4 percent to $159.0 million*
• Earnings per diluted share of $1.74 as compared to $0.97 while adjusted earnings per diluted share was $1.56 as compared to $1.37*

Enrollment Metrics

• New student enrollments increased 7.4 percent within CTU and 37.3 percent within AIU. AIU’s full year 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

“We ended 2020 on a solid note which was marked by our commitment to serve and educate students,” said Todd Nelson, President and Chief Executive Officer. “We experienced enrollment growth at both CTU and AIU and expanded the depth of our academic program offerings with the Trident acquisition. Our balance sheet grew stronger allowing us to continue investing in data analytics, academic and student serving processes and technology, which we believe will further enhance student experiences, retention and academic outcomes.”

REVENUE

• Revenue growth for the quarter and year ended December 31, 2020 was supported by organic student enrollment growth as well as the Trident acquisition. The Company believes investments in technology and student serving processes were effective in serving the strong prospective student interest experienced at its universities and also positively impacted student experiences and academic outcomes.

STUDENT ENROLLMENTS

• Student enrollment growth at CTU for the quarter and year ended December 31, 2020 was supported by organic growth initiatives and continued growth in student enrollments from corporate partnerships. Student enrollment growth at AIU for the quarter and year ended December 31, 2020 was primarily supported by the Trident acquisition and also reflects organic growth.

OPERATING INCOME

• Operating income for the quarter ended December 31, 2020 increased 13.0 percent as compared to the prior year quarter.
• Operating income for the year ended December 31, 2020 increased 65.3 percent primarily due to reduced legal settlement expense as compared to the prior year. Excluding the prior year legal settlements, operating income would have increased 15.7 percent with operating margins improving 110 basis points.

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.)

• Revenue growth, efficiency within operating processes and pandemic-related savings for the quarter and year ended December 31, 2020, partially offset with increased investments in academics, technology and student-serving processes, contributed to increased adjusted operating income for both the quarter and year ended December 31, 2020 as compared to the prior year periods.

NET INCOME AND EARNINGS PER DILUTED SHARE

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

• Net income of $27.1 million compared to net income of $27.5 million for the prior year quarter.
• Earnings per diluted share of $0.38 remained flat to the prior year quarter.
• Adjusted earnings per diluted share of $0.39 compared to adjusted earnings per diluted share of $0.33 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 ended December 31, 2020, the Company recorded:

• Net income of $124.3 million compared to net income of $70.0 million for the prior year.
• Earnings per diluted share of $1.74 compared to earnings per diluted share of $0.97 for the prior year.
• Adjusted earnings per diluted share of $1.56 compared to adjusted earnings per diluted share of $1.37 for the prior year. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

BALANCE SHEET AND CASH FLOW

• For the quarter and year ended December 31, 2020, net cash provided by operating activities was $42.2 million and $180.0 million, compared to net cash used in operating activities of $12.3 million and net cash provided by operating activities of $73.1 million for the respective prior year periods.
• As of December 31, 2020 and December 31, 2019, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $410.4 million and $294.2 million, respectively.

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 total student enrollment growth at both CTU and AIU for the first quarter of 2021 and for the full year 2021.

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 depreciation, amortization and significant legal settlements. The operating income, adjusted operating income, earnings per share, adjusted earnings per share and total enrollment outlook provided above for 2021 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) no significant changes in the timing and amounts of planned investments and investments continue to positively impact student enrollments, (iii) no significant impact of new or proposed regulations, including the “borrower defense to repayment” regulations, or other adverse changes in the legal or regulatory environment, (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 25.5% for the first quarter and approximately 26.0% 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.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Wednesday, February 24, 2021 at 5:30 p.m. Eastern time to discuss fourth quarter and full year 2020 results and 2021 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 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. Perdoceo’s 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.

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, 2020 and its subsequent filings with the Securities and Exchange Commission.