Perdoceo Education Corporation (NASDAQ: PRDO) today reported
operating and financial results for quarter and year to date ended
June 30, 2021.
Second Quarter 2021
Results as Compared to Prior Year Quarter
- Revenue decreased 0.3 percent to $175.5 million. Revenue
declined at AIU, partially offset by growth at CTU.
- Operating income decreased 3.8 percent to $36.0 million while
adjusted operating income increased 1.8 percent to $42.3
million.*
- Earnings per diluted share was $0.37 as compared to $0.40 while
adjusted earnings per diluted share was $0.41 for each
period.*
- Total student enrollments at June 30, 2021 increased by 7.5
percent, with CTU experiencing a 14.2 percent increase that was
partially offset by a 1.8 percent decrease within AIU. Total
student enrollments at CTU were positively impacted by the academic
calendar redesign.
- Ended the quarter with $480.7 million in cash, cash
equivalents, restricted cash and available-for-sale-short-term
investments.
Year to Date 2021
Results as Compared to Prior Year to Date
- Revenue increased 3.5 percent to $359.2 million with both CTU
and AIU contributing to the growth.
- Operating income increased 2.6 percent to $76.6 million while
adjusted operating income increased 6.8 percent to $87.2
million.*
- Earnings per diluted share was $0.80 for both the current and
prior year to date periods while adjusted earnings per diluted
share was $0.85 as compared to $0.81.*
*See GAAP (U.S. generally accepted accounting principles)
to non-GAAP reconciliation attached to this press release
“Student experiences, retention and academic outcomes remain the
focus of our operations as we and our students adjust to the
evolving pandemic environment and its economic and social impacts,”
said Todd Nelson, President and Chief Executive Officer. “We
continue to optimize our operations to serve and educate students
as efficiently and effectively as possible. Our balance sheet
remains a source of strength that enables us to continue investing
in our existing operations while also reviewing opportunities to
acquire academic programs that will expand the breadth of our
program offerings.”
BUSINESS ACQUISITION
On August 2, 2021, Perdoceo Education Corporation (the
"Company") acquired substantially all of the assets of
DigitalCrafts. Launched in 2015, DigitalCrafts has helped provide
individuals an opportunity in the technology area through
reskilling and upskilling courses within the areas of web
development, web design and cybersecurity. The acquisition of
DigitalCrafts fits well with the Company’s overall objective of
extending the breadth of our academic program offerings while
diversifying revenue away from federal student financial aid
funding. Learners are looking for ways to elevate their skills in a
targeted manner without a long term commitment of time and the
Company believes the programs at DigitalCrafts offer that
opportunity.
The initial cash consideration for the acquisition of $16.25
million was funded with the Company’s available cash balances on
the date of acquisition and is subject to a working capital
adjustment. In addition, a post-closing contingent consideration
payment of up to $2.5 million is expected to be paid in early 2024
based upon the level of achievement of certain financial
metrics.
REVENUE
- For the quarter ended June 30, 2021, total revenue of $175.5
million decreased 0.3 percent compared to total revenue of $176.0
million for the prior year quarter. AIU’s revenue decline for the
quarter ended June 30, 2021 was partially offset with CTU’s revenue
increase.
- For the year to date ended June 30, 2021, total revenue of
$359.2 million increased 3.5 percent compared to total revenue of
$347.0 million for the prior year to date.
For the Quarter Ended June
30,
For the Year to Date Ended
June 30,
Revenue ($ in
thousands)
2021
2020
% Change
2021
2020
% Change
CTU
$
102,035
$
100,193
1.8
%
$
207,857
$
203,781
2.0
%
AIU (1)
73,223
75,835
-3.4
%
150,700
143,231
5.2
%
Corporate and Other
281
7
NM
620
17
NM
Total
$
175,539
$
176,035
-0.3
%
$
359,177
$
347,029
3.5
%
(1)
AIU’s results of operations include the acquisition of
substantially all of the assets of Trident University International
(the “Trident acquisition”) commencing on the March 2, 2020 date of
acquisition and therefore the year to date ended June 30, 2020 does
not reflect a full six months of results for Trident.
TOTAL STUDENT ENROLLMENTS
- CTU’s total student enrollments increased 14.2 percent as of
June 30, 2021 as compared to June 30, 2020 due to the timing impact
of the academic calendar redesign at CTU, while AIU’s total student
enrollments decreased 1.8 percent.
At June 30,
Total Student
Enrollments
2021
2020
% Change
CTU
26,600
23,300
14.2
%
AIU
16,500
16,800
-1.8
%
Total
43,100
40,100
7.5
%
OPERATING INCOME
- For the quarter ended June 30, 2021, operating income decreased
by 3.8 percent to $36.0 million as compared to the prior year
quarter.
- For the year to date ended June 30, 2021, operating income
increased by 2.6 percent to $76.6 million as compared to the prior
year to date.
For the Quarter Ended June
30,
For the Year to Date Ended
June 30,
Operating Income
($ in thousands)
2021
2020
% Change
2021
2020
% Change
CTU
$
35,398
$
33,076
7.0
%
$
71,541
$
67,695
5.7
%
AIU (1)
9,218
10,476
-12.0
%
20,541
19,852
3.5
%
Corporate and Other
(8,654
)
(6,184
)
-39.9
%
(15,503
)
(12,876
)
-20.4
%
Total
$
35,962
$
37,368
-3.8
%
$
76,579
$
74,671
2.6
%
(1)
AIU’s results of operations include the Trident acquisition
commencing on the March 2, 2020 date of acquisition and therefore
the year to date ended June 30, 2020 does not reflect a full six
months of results for Trident.
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, 2021, adjusted operating income
of $42.3 million increased 1.8 percent compared to adjusted
operating income of $41.5 million for the prior year quarter.
- For the year to date ended June 30, 2021, adjusted operating
income of $87.2 million increased 6.8 percent compared to adjusted
operating income of $81.6 million for the prior year to date.
For the Quarter Ended June
30,
For the Year to Date Ended
June 30,
Adjusted
Operating Income ($ in thousands)
2021
2020
2021
2020 (1)
Operating income
$
35,962
$
37,368
$
76,579
$
74,671
Depreciation and amortization
3,913
4,151
7,915
6,790
Legal fee expense related to certain
matters (1)
2,416
22
2,658
163
Adjusted Operating Income (2)
$
42,291
$
41,541
$
87,152
$
81,624
Increase (Decrease)
1.8
%
6.8
%
(1)
Legal fee expense related to acquisitions and responses to the
Department of Education (“the Department”) relating to borrower
defense to repayment applications from former students.
(2)
Beginning in 2021, the Company no longer adjusts operating
income for expenses related to the vacated facilities at closed
campuses as these expenses are expected to be immaterial.
Additionally, the Company began adjusting for legal fee expense
related to acquisitions and responses to the Department related to
borrower defense to repayment applications from former students
during the second quarter of 2021. The Company believes that these
expenses are not reflective of underlying operating performance.
Prior period amounts were recast for these items to maintain
comparability.
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended June 30, 2021, the Company recorded:
- Net income of $26.6 million compared to $28.2 million for the
prior year quarter.
- Earnings per diluted share of $0.37 compared to $0.40 for the
prior year quarter.
- Adjusted earnings per diluted share of $0.41 for both the
current and 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, 2021, the Company
recorded:
- Net income of $57.4 million compared to $57.3 million for the
prior year to date.
- Earnings per diluted share of $0.80 for both the current and
prior year to date.
- Adjusted earnings per diluted share of $0.85 compared $0.81 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,
2021
2020
2021
2020
Reported Earnings Per Diluted
Share
$
0.37
$
0.40
$
0.80
$
0.80
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (1)
0.01
0.02
0.02
0.02
Legal fee expense related to certain
matters (2)
0.04
-
0.04
-
Tax effect of adjustments (3)
(0.01
)
(0.01
)
(0.01
)
(0.01
)
Adjusted Earnings Per Diluted Share
(4)
$
0.41
$
0.41
$
0.85
$
0.81
(1)
Amortization for acquired intangible assets relates to
definite-lived intangible assets associated with the Trident
acquisition.
(2)
Legal fee expense related to acquisitions and responses to the
Department related to borrower defense to repayment applications
from former students.
(3)
The tax effect of adjustments was calculated by multiplying the
pre-tax adjustments with a tax rate of 25.0%. This tax rate is
intended to reflect federal and state taxable jurisdictions as well
as the nature of the adjustments.
(4)
Beginning in 2021, the Company no longer adjusts earnings per
diluted share for expenses related to vacated facilities at closed
campuses as these expenses are expected to be immaterial.
Additionally, the Company began adjusting for legal fee expense
related to acquisitions and responses to the Department related to
borrower defense to repayment applications from former students
during the second quarter of 2021. The Company believes that these
expenses are not reflective of underlying operating performance.
Prior period amounts were recast for these items to maintain
comparability.
BALANCE SHEET AND CASH FLOW
- For the quarter ended June 30, 2021, net cash provided by
operating activities was $38.0 million, compared to net cash
provided by operating activities of $60.6 million during the prior
year quarter. The quarter ended June 30, 2021 includes payments
made for federal income taxes as compared to no payments in the
prior year quarter.
- At June 30, 2021 and December 31, 2020, cash, cash equivalents,
restricted cash and available-for-sale short-term investments
totaled $480.7 million and $410.4 million, respectively.
For the Quarter Ended June
30,
For the Year to Date Ended
June 30,
Selected Cash Flow Items ($ in
thousands)
2021
2020
% Change
2021
2020
% Change
Net cash provided by operating
activities
$
38,037
$
60,596
-37.2
%
$
82,745
$
105,364
-21.5
%
Capital expenditures
$
2,017
$
2,424
-16.8
%
$
3,059
$
3,439
-11.0
%
OUTLOOK
The Company is providing the following outlook, subject to the
key assumptions identified below. The Company has not adjusted its
outlook to reflect the acquisition of DigitalCrafts because it
currently believes that the acquisition will not significantly
impact its 2021 operating results. Please see the GAAP to non-GAAP
reconciliation for adjusted operating income and adjusted earnings
per diluted share attached to this press release for further
details.
Total Company Outlook
For Quarter Ending September
30,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020
Operating Income
$35.5M - $37.0M
$32.1M
$146.3M - $152.3M
$142.9M
Depreciation and amortization
$4.0M
$4.0M
$16.0M
$14.8M
Legal fee expense related to certain
matters (1)
-
-
$2.7M
$1.3M
Adjusted Operating Income (2)
$39.5M - $41.0M
$36.1M
$165.0M - $171.0M
$159.0M
Earnings Per Diluted Share
$0.37 - $0.38
$0.56
$1.52 - $1.58
$1.74
Amortization of acquired intangible
assets
$0.01
$0.01
$0.04
$0.04
Legal fee expense related to certain
matters (1)
-
-
$0.04
$0.02
Tax effect of adjustments
-
-
($0.02)
($0.02)
Release of valuation allowance
-
$0.22
-
($0.22)
Adjusted Earnings Per Diluted Share
(2)
$0.38 - $0.39
$0.35
$1.58 - $1.64
$1.56
(1)
Legal fee expense related to acquisitions and responses to the
Department related to borrower defense to repayment applications
from former students. These amounts represent expense incurred
through June 30, 2021 and do not include potential future expense
for these matters because they cannot be reliably quantified
without unreasonable efforts by the Company due to the inherent
difficulty of forecasting the timing and amount of legal fee
expense related to these matters. For the same reason, the Company
is unable to address the probable significance of the unavailable
information. Future legal fee expense related to these matters will
impact the operating income and earnings per diluted share outlook
amounts in the table above, which may cause these outlook amounts
to vary materially from the actual GAAP results.
(2)
Beginning in 2021, the Company no longer adjusts operating
income or earnings per diluted share for expenses related to
vacated facilities at closed campuses as these expenses are
expected to be immaterial. Additionally, the Company began
adjusting for legal fee expense related to acquisitions and
responses to the Department related to borrower defense to
repayment applications from former students during the second
quarter of 2021. The Company believes that these expenses are not
reflective of underlying operating performance. Prior period
amounts were recast for these items to maintain comparability.
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 significant legal settlements and legal fees for
certain matters. The operating income, adjusted operating income,
earnings per share and adjusted earnings per share outlook provided
above for 2021 are based on the following key assumptions and
factors, among others: (i) prospective student interest for online
postsecondary academic programs remains consistent with recent
industry trends, (ii) 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, (iii) no significant operating impacts from the
settlements with the U.S. Federal Trade Commission and state
attorneys general or other legal or regulatory matters, (iv) no
significant future operating or financial impacts relating to the
COVID-19 pandemic, (v) earnings per diluted share outlook assumes
an effective income tax rate of approximately 26.25% for the third
quarter and full year, and (vi) 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 5, 2021 at 5:30 p.m. Eastern time to discuss
second quarter and year to date 2021 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 academic 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. For more information, please visit
www.perdoceoed.com.
Except for the historical and present factual information
contained herein, the matters set forth in this release, including
statements identified by words such as “believe,” “will,” “expect,”
“continue,” “outlook,” “remain,” “focused on,” “should” and similar
expressions, are forward-looking statements as defined in Section
21E of the Securities Exchange Act of 1934, as amended. These
statements are based on information currently available to us and
are subject to various assumptions, risks, uncertainties and other
factors that could cause our results of operations, financial
condition, cash flows, performance, business prospects and
opportunities to differ materially from those expressed in, or
implied by, these statements. Except as expressly required by the
federal securities laws, we undertake no obligation to update or
revise such factors or any of the forward-looking statements
contained herein to reflect future events, developments or changed
circumstances, or for any other reason. These risks and
uncertainties, the outcomes of which could materially and adversely
affect our financial condition and operations, include, but are not
limited to, the following: declines in enrollment or interest in
our programs; our continued compliance with and eligibility to
participate in Title IV Programs under the Higher Education Act of
1965, as amended, and the regulations thereunder (including the
90-10, financial responsibility and administrative capability
standards prescribed by the U.S. Department of Education), as well
as applicable accreditation standards and state regulatory
requirements; the impact of various versions of “borrower defense
to repayment” regulations; rulemaking by the U.S. Department of
Education or any state or accreditor and increased focus by
Congress and governmental agencies on, or increased negative
publicity about, for-profit education institutions; the success of
our initiatives to improve student experiences, retention and
academic outcomes; our continued eligibility to participate in
educational assistance programs for veterans or other military
personnel; increased competition; the impact of management changes;
and changes in the overall U.S. economy which may continue to be
impacted by the COVID-19 pandemic. 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.
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
June 30,
December 31,
2021
2020
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents,
unrestricted
$
87,343
$
105,684
Restricted cash
4,000
4,000
Short-term investments
389,310
300,676
Total cash and cash equivalents,
restricted cash and short-term investments
480,653
410,360
Student receivables, net
51,682
44,682
Receivables, other
2,568
2,873
Prepaid expenses
10,986
8,209
Inventories
619
596
Other current assets
2,637
341
Total current assets
549,145
467,061
NON-CURRENT ASSETS:
Property and equipment, net
24,807
27,761
Right of use asset, net
40,821
44,773
Goodwill
118,312
118,312
Intangible assets, net
13,856
15,522
Student receivables, net
1,467
1,303
Deferred income tax assets, net
31,782
40,351
Other assets
6,229
6,434
TOTAL ASSETS
$
786,419
$
721,517
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Lease liability - operating
$
9,779
$
9,789
Accounts payable
11,533
13,259
Accrued expenses:
Payroll and related benefits
19,495
22,661
Advertising and marketing costs
11,615
10,249
Income taxes
1,522
1,402
Other
18,614
11,921
Deferred revenue
45,214
34,534
Total current liabilities
117,772
103,815
NON-CURRENT LIABILITIES:
Lease liability - operating
40,565
43,405
Other liabilities
14,470
18,390
Total non-current liabilities
55,035
61,795
STOCKHOLDERS' EQUITY:
Preferred stock
-
-
Common stock
879
873
Additional paid-in capital
666,470
658,423
Accumulated other comprehensive income
20
364
Retained earnings
199,737
142,335
Treasury stock
(253,494
)
(246,088
)
Total stockholders' equity
613,612
555,907
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
786,419
$
721,517
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share
amounts and percentages)
For the Quarter Ended June
30,
2021
% of
Total
Revenue
2020
% of
Total
Revenue
REVENUE:
Tuition and fees
$
174,804
99.6
%
$
175,499
99.7
%
Other
735
0.4
%
536
0.3
%
Total revenue
175,539
176,035
OPERATING EXPENSES:
Educational services and facilities
28,532
16.3
%
28,676
16.3
%
General and administrative
107,132
61.0
%
105,840
60.1
%
Depreciation and amortization
3,913
2.2
%
4,151
2.4
%
Total operating expenses
139,577
79.5
%
138,667
78.8
%
Operating income
35,962
20.5
%
37,368
21.2
%
OTHER INCOME:
Interest income
322
0.2
%
1,011
0.6
%
Interest expense
(280
)
-0.2
%
(43
)
0.0
%
Miscellaneous (expense) income
(35
)
0.0
%
125
0.1
%
Total other income
7
0.0
%
1,093
0.6
%
PRETAX INCOME
35,969
20.5
%
38,461
21.8
%
Provision for income taxes
9,319
5.3
%
10,272
5.8
%
INCOME FROM CONTINUING
OPERATIONS
26,650
15.2
%
28,189
16.0
%
Loss from discontinued operations, net of
tax
(1
)
0.0
%
(22
)
0.0
%
NET INCOME
26,649
15.2
%
28,167
16.0
%
NET INCOME PER SHARE - BASIC:
$
0.38
$
0.41
NET INCOME PER SHARE -DILUTED:
$
0.37
$
0.40
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
70,299
69,094
Diluted
71,679
70,900
UNAUDITED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
For the Quarter Ended June
30,
(In Thousands)
2021
2020
NET INCOME
$
26,649
$
28,167
OTHER COMPREHENSIVE INCOME, net of
tax:
Foreign currency translation
adjustments
28
53
Unrealized (loss) gain on investments
(22
)
1,431
Total other comprehensive income
6
1,484
COMPREHENSIVE INCOME
$
26,655
$
29,651
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,
2021
% of
Total
Revenue
2020
% of
Total
Revenue
REVENUE:
Tuition and fees
$
357,635
99.6
%
$
345,893
99.7
%
Other
1,542
0.4
%
1,136
0.3
%
Total revenue
359,177
347,029
OPERATING EXPENSES:
Educational services and facilities
57,506
16.0
%
55,587
16.0
%
General and administrative
217,177
60.5
%
209,369
60.3
%
Depreciation and amortization
7,915
2.2
%
6,790
2.0
%
Asset impairment
-
0.0
%
612
0.2
%
Total operating expenses
282,598
78.7
%
272,358
78.5
%
Operating income
76,579
21.3
%
74,671
21.5
%
OTHER INCOME:
Interest income
681
0.2
%
2,498
0.7
%
Interest expense
(389
)
-0.1
%
(84
)
0.0
%
Miscellaneous income
107
0.0
%
112
0.0
%
Total other income
399
0.1
%
2,526
0.7
%
PRETAX INCOME
76,978
21.4
%
77,197
22.2
%
Provision for income taxes
19,564
5.4
%
19,876
5.7
%
INCOME FROM CONTINUING
OPERATIONS
57,414
16.0
%
57,321
16.5
%
Loss from discontinued operations, net of
tax
(12
)
0.0
%
(48
)
0.0
%
NET INCOME
57,402
16.0
%
57,273
16.5
%
NET INCOME PER SHARE - BASIC:
$
0.82
$
0.82
NET INCOME PER SHARE -DILUTED:
$
0.80
$
0.80
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
70,224
69,467
Diluted
71,616
71,350
UNAUDITED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
For the Year to Date Ended
June 30,
(In Thousands)
2021
2020
NET INCOME
$
57,402
$
57,273
OTHER COMPREHENSIVE (LOSS) INCOME, net
of tax:
Foreign currency translation
adjustments
(101
)
5
Unrealized (loss) gain on investments
(243
)
592
Total other comprehensive (loss)
income
(344
)
597
COMPREHENSIVE INCOME
$
57,058
$
57,870
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year to Date Ended
June 30,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
57,402
$
57,273
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairment
-
612
Depreciation and amortization expense
7,915
6,790
Bad debt expense
26,168
25,187
Compensation expense related to
share-based awards
7,430
6,503
Deferred income taxes
8,569
19,262
Changes in operating assets and
liabilities
(24,739
)
(10,263
)
Net cash provided by operating
activities
82,745
105,364
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of available-for-sale
investments
(218,437
)
(209,846
)
Sales of available-for-sale
investments
127,193
145,819
Purchases of property and equipment
(3,059
)
(3,439
)
Business acquisition
-
(34,065
)
Net cash used in investing activities
(94,303
)
(101,531
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock
623
1,014
Purchase of treasury stock
(5,372
)
(17,309
)
Payments of employee tax associated with
stock compensation
(2,034
)
(689
)
Net cash used in financing activities
(6,783
)
(16,984
)
NET DECREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(18,341
)
(13,151
)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, beginning of the period
109,684
108,687
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, end of the period
$
91,343
$
95,536
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except
percentages)
For the Quarter Ended June
30,
2021
2020
REVENUE:
CTU
$
102,035
$
100,193
AIU
73,223
75,835
Corporate and Other
281
7
Total
$
175,539
$
176,035
OPERATING INCOME (LOSS):
CTU
$
35,398
$
33,076
AIU
9,218
10,476
Corporate and Other
(8,654
)
(6,184
)
Total
$
35,962
$
37,368
OPERATING MARGIN (LOSS):
CTU
34.7
%
33.0
%
AIU
12.6
%
13.8
%
Corporate and Other
NM
NM
Total
20.5
%
21.2
%
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except
percentages)
For the Year to Date Ended
June 30,
2021
2020
REVENUE:
CTU
$
207,857
$
203,781
AIU (1)
150,700
143,231
Corporate and Other
620
17
Total
$
359,177
$
347,029
OPERATING INCOME (LOSS):
CTU
$
71,541
$
67,695
AIU (1)
20,541
19,852
Corporate and Other
(15,503
)
(12,876
)
Total
$
76,579
$
74,671
OPERATING MARGIN (LOSS):
CTU
34.4
%
33.2
%
AIU (1)
13.6
%
13.9
%
Corporate and Other
NM
NM
Total
21.3
%
21.5
%
(1)
AIU’s results of operations include the Trident acquisition
commencing on the March 2, 2020 date of acquisition and therefore
the year to date ended June 30, 2020 does not reflect a full six
months of results for Trident.
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
2021
2020
2021
2020 (5)
Operating income
$
35,962
$
37,368
$
76,579
$
74,671
Depreciation and amortization (2)
3,913
4,151
7,915
6,790
Legal fee expense related to certain
matters (3)
2,416
22
2,658
163
Adjusted Operating Income (4)
$
42,291
$
41,541
$
87,152
$
81,624
For the Quarter Ending
September 30,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020 (5)
Operating income
$35.5M – $37.0M
$
32,074
$146.3M – $152.3M
$
142,934
Depreciation and amortization (2)
4.0M
3,995
16.0M
14,786
Legal fee expense related to certain
matters (3)
-
4
2.7M
1,296
Adjusted Operating Income (4)
$39.5M - $41.0M
$
36,073
$165.0M - $171.0M
$
159,016
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
2021
2020
2021
2020 (5)
Reported Earnings Per Diluted
Share
$
0.37
$
0.40
$
0.80
$
0.80
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (2)
0.01
0.02
0.02
0.02
Legal fee expense related to certain
matters (3)
0.04
-
0.04
-
Total pre-tax adjustments
$
0.05
$
0.02
$
0.06
$
0.02
Tax effect of adjustments (6)
(0.01
)
(0.01
)
(0.01
)
(0.01
)
Total adjustments after tax
0.04
0.01
0.05
0.01
Adjusted Earnings Per Diluted Share
(4)
$
0.41
$
0.41
$
0.85
$
0.81
For the Quarter Ending
September 30,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020 (5)
Reported Earnings Per Diluted
Share
$0.37 - $0.38
$
0.56
$1.52 - $1.58
$
1.74
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (2)
0.01
0.01
0.04
0.04
Legal fee expense related to certain
matters (3)
-
-
0.04
0.02
Total pre-tax adjustments
$
0.01
$
0.01
$
0.08
$
0.06
Tax effect of adjustments (6)
-
-
(0.02
)
(0.02
)
Release of valuation allowance
(7)
-
(0.22
)
-
(0.22
)
Total adjustments after tax
0.01
(0.21
)
0.06
(0.18
)
Adjusted Earnings Per Diluted Share
(4)
$0.38 - $0.39
$
0.35
$1.58 - $1.64
$
1.56
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ITEMS (1) (cont’d)
(1)
The Company believes it is useful to present non-GAAP financial
measures which exclude certain significant and non-cash items as a
means to understand the performance of its operations. As a general
matter, the Company uses non-GAAP financial measures in conjunction
with results presented in accordance with GAAP to help analyze the
performance of its operations, assist with preparing the annual
operating plan, and measure performance for some forms of
compensation. In addition, the Company believes that non-GAAP
financial information is used by analysts and others in the
investment community to analyze the Company’s historical results
and to provide estimates of future performance.
The Company believes adjusted operating
income and adjusted earnings per diluted share allow it to analyze
and assess its operations and compare current operating results
with the operational performance of other companies in its industry
because it does not give effect to potential differences caused by
items it does not consider reflective of underlying operating
performance, such as amortization for acquired intangible assets,
significant legal settlements and legal fee expense related to
certain matters. In evaluating adjusted operating income and
adjusted earnings per diluted share, investors should be aware that
in the future the Company may incur expenses similar to the
adjustments presented above. The presentation of adjusted operating
income and adjusted earnings per diluted share should not be
construed as an inference that the Company's future results will be
unaffected by expenses that are unusual, non-routine or
non-recurring. Adjusted operating income and adjusted earnings per
diluted share have limitations as an analytical tool, and should
not be considered in isolation, or as a substitute for net income,
operating income, earnings per diluted share, or any other
performance measure derived in accordance and reported under GAAP
or as an alternative to cash flow from operating activities or as a
measure of liquidity.
Non-GAAP financial measures, when viewed
in a reconciliation to corresponding GAAP financial measures,
provide an additional way of viewing the Company’s results of
operations and the factors and trends affecting the Company’s
business. Non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, the
corresponding financial results presented in accordance with
GAAP.
(2)
Amortization for acquired intangible assets relate to
definite-lived intangible assets associated with the Trident
acquisition.
(3)
Legal fee expense related to acquisitions and responses to the
Department related to borrower defense to repayment applications
from former students. These amounts represent expense incurred
through June 30, 2021 and do not include potential future expense
for these matters because they cannot be reliably quantified
without unreasonable efforts by the Company due to the inherent
difficulty of forecasting the timing and amount of legal fee
expense related to these matters. For the same reason, the Company
is unable to address the probable significance of the unavailable
information. Future legal fee expense related to these matters will
impact the operating income and earnings per diluted share outlook
amounts in the table above, which may cause these outlook amounts
to vary materially from the actual GAAP results.
(4)
Beginning in 2021, the Company no longer adjusts operating
income or earnings per diluted share for expenses related to
vacated facilities at closed campuses as these expenses are
expected to be immaterial. Additionally, the Company began
adjusting for legal fee expense related to acquisitions and
responses to the Department related to borrower defense to
repayment applications from former students during the second
quarter of 2021. The Company believes that these expenses are not
reflective of underlying operating performance. Prior period
amounts were recast for these items to maintain comparability.
(5)
AIU’s results of operations include the Trident acquisition
commencing on the March 2, 2020 date of acquisition and therefore
the year to date ended June 30, 2020 does not reflect six months of
results for Trident.
(6)
The tax effect of adjustments was calculated by multiplying the
pre-tax adjustments with a tax rate of 25.0%. This tax rate is
intended to reflect federal and state taxable jurisdictions as well
as the nature of the adjustments. There is no tax effect applied to
the adjustment related to the release of the valuation allowance as
this is an adjustment for income tax.
(7)
The release of a valuation allowance in the amount of $16.0
million was a result of the determination during the period that it
was more likely than not that the Company would utilize its
deferred tax assets associated with the portion of the foreign tax
credit carryforward supported by an overall domestic loss account
balance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005991/en/
Investors: Alpha IR Group Wyatt Turk or Chris Hodges
(312) 445-2870 PRDO@alpha-ir.com Or Media: Perdoceo
Education Corporation (847) 585-2600 media@perdoceoed.com
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