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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Perdoceo Education Corporation | NASDAQ:PRDO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 22.01 | 13.94 | 25.10 | 0 | 09:00:00 |
Second quarter revenue increased 12.5% supported by enrollment growth across both universities
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
Enrollment Metrics
Year to Date 2020 Results as Compared to the Prior Year to Date
Financial Results
Enrollment Metrics
* 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,
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,
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,
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,
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:
For the year to date ended June 30, 2020, the Company recorded:
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 $29.7 million was considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility had no effect for the full year 2019.
(7)
2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.
(8)
As a result of a reported net loss for the quarter ended June 30, 2019, potential common stock equivalents were excluded from the reported diluted common shares outstanding calculation. The above adjustments resulted in a positive adjusted earnings per diluted share and as a result potential common stock equivalents were added to basic common shares outstanding to determine the dilutive share impact.
BALANCE SHEET AND CASH FLOW
For the Quarter Ended June 30,
For the Year to Date Ended June 30,
Selected Cash Flow Items ($ 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005937/en/
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
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