Perdoceo Education Corporation (NASDAQ: PRDO) today reported
operating and financial results for quarter and year to date ended
September 30, 2021.
Third Quarter 2021
Results as Compared to Prior Year Quarter
- Revenue increased 2.9 percent to $174.0 million, with growth at
CTU being partially offset with a decline at AIU.
- Operating income increased 18.0 percent to $37.9 million while
adjusted operating income increased 28.4 percent to $46.3
million.*
- Earnings per diluted share was $0.39 as compared to $0.56 while
adjusted earnings per diluted share was $0.45 as compared to
$0.35.*
- Total student enrollments at September 30, 2021 decreased by
0.9 percent, with CTU experiencing a 7.5 percent increase that was
offset by an 11.6 percent decrease within AIU. Total student
enrollments at CTU were positively impacted by the academic
calendar redesign.
- Ended the quarter with $481.0 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 3.3 percent to $533.2 million, with both CTU
and AIU contributing to the growth.
- Operating income increased 7.2 percent to $114.4 million while
adjusted operating income increased 13.4 percent to $133.5
million.*
- Earnings per diluted share was $1.19 as compared to $1.36 while
adjusted earnings per diluted share was $1.29 as compared to
$1.16.*
*See GAAP (U.S. generally accepted
accounting principles) to non-GAAP reconciliation attached to this
press release
“During the quarter, we continued to focus on serving and
educating our students while adjusting our processes and continuing
to prioritize academic outcomes and retention of our students,”
said Todd Nelson, President and Chief Executive Officer. “We also
completed the acquisitions of DigitalCrafts and Hippo Education
which expand our professional development and continuing education
offerings, providing learners with valuable upskilling and
reskilling opportunities.”
BUSINESS ACQUISTIONS
During the quarter ended September 30, 2021, the Company
completed the acquisition of substantially all of the assets of
DigitalCrafts (the “DigitalCrafts acquisition”) as of August 2,
2021 and the acquisition of Hippo Education LLC (the “Hippo
acquisition”) as of September 10, 2021. DigitalCrafts helps provide
individuals an opportunity in the technology area through
reskilling and upskilling courses within the areas of web
development, web design and cybersecurity. DigitalCrafts’ programs
are now offered by AIU under the DigitalCrafts name. Hippo is a
provider of continuing medical education and exam preparation for
medical professionals with a quality technology platform and strong
course content. Hippo’s program are now offered by CTU under the
Hippo Education name. The acquisitions of DigitalCrafts and Hippo
expand the Company’s professional development and continuing
education offerings.
REVENUE
- For the quarter ended September 30, 2021, revenue of $174.0
million increased 2.9 percent compared to revenue of $169.1 million
for the prior year quarter, with growth at CTU partially offset by
a decline at AIU.
- For the year to date ended September 30, 2021, revenue of
$533.2 million increased 3.3 percent compared to revenue of $516.2
million for the prior year to date, with both CTU and AIU
contributing to growth.
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
Revenue ($ in
thousands)
2021
2020
% Change
2021
2020
% Change
CTU (1)
$
104,788
$
98,985
5.9
%
$
312,645
$
302,766
3.3
%
AIU (2)
68,948
70,048
-1.6
%
219,648
213,279
3.0
%
Corporate and Other
262
93
NM
882
110
NM
Total
$
173,998
$
169,126
2.9
%
$
533,175
$
516,155
3.3
%
(1)
CTU’s results of operations include the Hippo acquisition
commencing on the September 10, 2021 date of acquisition.
(2)
AIU’s results of operations include the DigitalCrafts
acquisition commencing on the August 2, 2021 date of acquisition
and the acquisition of substantially all of the assets of Trident
University International (the “Trident acquisition”) commencing on
the March 2, 2020 date of acquisition.
TOTAL STUDENT ENROLLMENTS
- CTU’s total student enrollments increased 7.5 percent as of
September 30, 2021 as compared to September 30, 2020 primarily due
to the timing impact of the academic calendar redesign at CTU,
while AIU’s total student enrollments decreased 11.6 percent.
At September 30,
Total Student
Enrollments (1)
2021
2020
% Change
CTU
25,800
24,000
7.5
%
AIU
16,800
19,000
-11.6
%
Total
42,600
43,000
-0.9
%
(1)
Total student enrollments do not include learners participating
in non-degree professional development and continuing education
programs.
OPERATING INCOME
- For the quarter ended September 30, 2021, operating income
increased by 18.0 percent to $37.9 million as compared to the prior
year quarter.
- For the year to date ended September 30, 2021, operating income
increased by 7.2 percent to $114.4 million as compared to the prior
year to date.
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
Operating Income
($ in thousands)
2021
2020
% Change
2021
2020
% Change
CTU (1)
$
41,217
$
32,993
24.9
%
$
112,758
$
100,688
12.0
%
AIU (2)
8,334
5,513
51.2
%
28,875
25,365
13.8
%
Corporate and Other
(11,690
)
(6,432
)
-81.7
%
(27,193
)
(19,308
)
-40.8
%
Total
$
37,861
$
32,074
18.0
%
$
114,440
$
106,745
7.2
%
(1)
CTU’s results of operations include the Hippo acquisition
commencing on the September 10, 2021 date of acquisition.
(2)
AIU’s results of operations include the DigitalCrafts
acquisition commencing on the August 2, 2021 date of acquisition
and the Trident acquisition commencing on the March 2, 2020 date of
acquisition.
ADJUSTED OPERATING INCOME
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant and non-cash items, as
a means to understand the performance of its operations. (See table
below and the GAAP to non-GAAP reconciliation attached to this
press release for further details.)
- For the quarter ended September 30, 2021, adjusted operating
income of $46.3 million increased 28.4 percent compared to adjusted
operating income of $36.1 million for the prior year quarter.
- For the year to date ended September 30, 2021, adjusted
operating income of $133.5 million increased 13.4 percent compared
to adjusted operating income of $117.7 million for the prior year
to date.
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
Adjusted
Operating Income ($ in thousands)
2021
2020
2021
2020
Operating income
$
37,861
$
32,074
$
114,440
$
106,745
Depreciation and amortization (1)
3,887
3,995
11,802
10,785
Legal fee expense related to certain
matters (2)
4,583
4
7,241
167
Adjusted Operating Income (3)
$
46,331
$
36,073
$
133,483
$
117,697
Increase (Decrease)
28.4
%
13.4
%
(1)
Amortization for acquired intangible assets relates to
definite-lived intangible assets associated with the Trident,
DigitalCrafts and Hippo acquisitions.
(2)
Legal fee expense associated with (i) responses to the
Department of Education (“the Department”) relating to borrower
defense to repayment applications from former students, and (ii)
acquisition efforts.
(3)
The Company began adjusting for legal fee expense associated
with (i) responses to the Department relating to borrower defense
to repayment applications from former students, and (ii)
acquisition efforts, during the second quarter of 2021. The Company
believes that these expenses are not reflective of underlying
operating performance. Also, 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.
Prior period amounts were recast for these items to maintain
comparability.
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended September 30, 2021, the Company
recorded:
- Net income of $27.8 million compared to $39.9 million for the
prior year quarter.
- Earnings per diluted share of $0.39 compared to $0.56 for the
prior year quarter.
- Adjusted earnings per diluted share of $0.45 compared $0.35 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 September 30, 2021, the Company
recorded:
- Net income of $85.2 million compared to $97.2 million for the
prior year to date.
- Earnings per diluted share of $1.19 compared to $1.36 for the
prior year to date.
- Adjusted earnings per diluted share of $1.29 compared to $1.16
for the prior year to date. (See table below and the GAAP to
non-GAAP reconciliation attached to this press release for further
details.)
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
2021
2020
2021
2020
Reported Earnings Per Diluted
Share
$
0.39
$
0.56
$
1.19
$
1.36
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (1)
0.01
0.01
0.03
0.02
Legal fee expense related to certain
matters (2)
0.06
-
0.10
-
Tax effect of adjustments (3)
(0.01
)
-
(0.03
)
-
Release of valuation allowance (4)
-
(0.22
)
-
(0.22
)
Adjusted Earnings Per Diluted Share
(5)
$
0.45
$
0.35
$
1.29
$
1.16
(1)
Amortization for acquired intangible assets relates to
definite-lived intangible assets associated with the Trident,
DigitalCrafts and Hippo acquisitions.
(2)
Legal fee expense associated with (i) responses to the
Department relating to borrower defense to repayment applications
from former students, and (ii) acquisition efforts.
(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)
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.
(5)
The Company began adjusting for legal fee expense associated
with (i) responses to the Department relating to borrower defense
to repayment applications from former students, and (ii)
acquisition efforts, during the second quarter of 2021. The Company
believes that these expenses are not reflective of underlying
operating performance. Also, 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.
Prior period amounts were recast for these items to maintain
comparability.
BALANCE SHEET AND CASH FLOW
- For the quarter ended September 30, 2021, net cash provided by
operating activities was $61.5 million, compared to net cash
provided by operating activities of $32.4 million during the prior
year quarter.
- At September 30, 2021 and December 31, 2020, cash, cash
equivalents, restricted cash and available-for-sale short-term
investments totaled $481.0 million and $410.4 million,
respectively.
- During the quarter ended September 30, 2021, the Company paid
$56.9 million in the aggregate related to the DigitalCrafts and
Hippo acquisitions.
- The Company’s stock repurchase program, which was set to expire
on December 31, 2021, has been extended to February 28, 2022. As of
September 30, 2021, approximately $22.9 million was available under
the stock repurchase program to repurchase outstanding shares of
common stock.
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
Selected Cash
Flow Items ($ in thousands)
2021
2020
% Change
2021
2020
% Change
Net cash provided by operating
activities
$
61,461
$
32,389
89.8
%
$
144,206
$
137,753
4.7
%
Business acquisitions, net of cash
acquired
$
56,947
$
5,754
NM
$
56,947
$
39,819
43.0
%
Capital expenditures
$
3,217
$
4,040
-20.4
%
$
6,276
$
7,479
-16.1
%
OUTLOOK
The Company is providing the following updated outlook, subject
to the key assumptions identified below. Please see the GAAP to
non-GAAP reconciliation for adjusted operating income and adjusted
earnings per diluted share attached to this press release for
further details.
Total Company Outlook
For Quarter Ending December
31,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020
Operating Income
$26.4M - $29.4M
$36.2M
$140.9M - $143.9M
$142.9M
Depreciation and amortization
$5.1M
$4.0M
$16.9M
$14.8M
Legal fee expense related to certain
matters (1)
$2.0M
$1.1M
$9.2M
$1.3M
Adjusted Operating Income (2)
$33.5M - $36.5M
$41.3M
$167.0M - $170.0M
$159.0M
Earnings Per Diluted Share
$0.26 - $0.29
$0.38
$1.45 - $1.48
$1.74
Amortization of acquired intangible
assets
$0.03
$0.01
$0.06
$0.04
Legal fee expense related to certain
matters (1)
$0.03
$0.01
$0.13
$0.02
Tax effect of adjustments
($0.02)
-
($0.04)
($0.02)
Release of valuation allowance
-
-
-
($0.22)
Adjusted Earnings Per Diluted Share
(2)
$0.30 - $0.33
$0.40
$1.60 - $1.63
$1.56
(1)
Legal fee expense associated with (i) responses to the
Department relating to borrower defense to repayment applications
from former students, and (ii) acquisition efforts.
(2)
The Company began adjusting for legal fee expense associated
with (i) responses to the Department relating to borrower defense
to repayment applications from former students, and (ii)
acquisition efforts, during the second quarter of 2021. The Company
believes that these expenses are not reflective of underlying
operating performance. Also, 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.
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 29.0% for the fourth
quarter and 26.25% for the 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 stockholder value may impact the outlook provided
above.
CONFERENCE CALL INFORMATION
Perdoceo Education Corporation will host a conference call on
Thursday, November 4, 2021 at 5:30 p.m. Eastern time to discuss
third 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 from the associate through doctoral level as well
as non-degree professional development and continuing education
offerings. 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)
September 30,
December 31,
2021
2020
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents,
unrestricted
$
266,400
$
105,684
Restricted cash
5,195
4,000
Short-term investments
209,391
300,676
Total cash and cash equivalents,
restricted cash and short-term investments
480,986
410,360
Student receivables, net
42,485
44,682
Receivables, other
1,900
2,873
Prepaid expenses
8,078
8,209
Inventories
1,178
596
Other current assets
2,517
341
Total current assets
537,144
467,061
NON-CURRENT ASSETS:
Property and equipment, net
25,838
27,761
Right of use asset, net
38,793
44,773
Goodwill
162,692
118,312
Intangible assets, net
34,109
15,522
Student receivables, net
1,350
1,303
Deferred income tax assets, net
30,413
40,351
Other assets
6,080
6,434
TOTAL ASSETS
$
836,419
$
721,517
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Lease liability - operating
$
10,036
$
9,789
Accounts payable
12,650
13,259
Accrued expenses:
Payroll and related benefits
22,764
22,661
Advertising and marketing costs
10,749
10,249
Income taxes
3,565
1,402
Other
17,596
11,921
Deferred revenue
57,051
34,534
Total current liabilities
134,411
103,815
NON-CURRENT LIABILITIES:
Lease liability - operating
37,732
43,405
Other liabilities
18,891
18,390
Total non-current liabilities
56,623
61,795
STOCKHOLDERS' EQUITY:
Preferred stock
-
-
Common stock
879
873
Additional paid-in capital
670,497
658,423
Accumulated other comprehensive (loss)
income
(3
)
364
Retained earnings
227,506
142,335
Treasury stock
(253,494
)
(246,088
)
Total stockholders' equity
645,385
555,907
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
836,419
$
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
September 30,
2021
% of Total Revenue
2020
% of Total Revenue
REVENUE:
Tuition and fees
$
172,595
99.2
%
$
168,471
99.6
%
Other
1,403
0.8
%
655
0.4
%
Total revenue
173,998
169,126
OPERATING EXPENSES:
Educational services and facilities
25,961
14.9
%
27,562
16.3
%
General and administrative
106,289
61.1
%
105,495
62.4
%
Depreciation and amortization
3,887
2.2
%
3,995
2.4
%
Total operating expenses
136,137
78.2
%
137,052
81.0
%
Operating income
37,861
21.8
%
32,074
19.0
%
OTHER (EXPENSE) INCOME:
Interest income
154
0.1
%
737
0.4
%
Interest expense
(572
)
-0.3
%
(42
)
0.0
%
Miscellaneous expense
(116
)
-0.1
%
(14
)
0.0
%
Total other (expense) income
(534
)
-0.3
%
681
0.4
%
PRETAX INCOME
37,327
21.5
%
32,755
19.4
%
Provision for (benefit from) income
taxes
9,557
5.5
%
(7,206
)
-4.3
%
INCOME FROM CONTINUING
OPERATIONS
27,770
16.0
%
39,961
23.6
%
Loss from discontinued operations, net of
tax
(1
)
0.0
%
(21
)
0.0
%
NET INCOME
27,769
16.0
%
39,940
23.6
%
NET INCOME PER SHARE - BASIC:
$
0.40
$
0.58
NET INCOME PER SHARE -DILUTED:
$
0.39
$
0.56
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
70,089
69,167
Diluted
71,466
71,016
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Quarter Ended
September 30,
(In Thousands)
2021
2020
NET INCOME
$
27,769
$
39,940
OTHER COMPREHENSIVE LOSS, net of
tax:
Foreign currency translation
adjustments
(74
)
123
Unrealized gain (loss) on investments
51
(461
)
Total other comprehensive loss
(23
)
(338
)
COMPREHENSIVE INCOME
$
27,746
$
39,602
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share
amounts and percentages)
For the Year to Date Ended
September 30,
2021
% of Total Revenue
2020
% of Total Revenue
REVENUE:
Tuition and fees
$
530,230
99.4
%
$
514,364
99.7
%
Other
2,945
0.6
%
1,791
0.3
%
Total revenue
533,175
516,155
OPERATING EXPENSES:
Educational services and facilities
83,467
15.7
%
83,149
16.1
%
General and administrative
323,466
60.7
%
314,864
61.0
%
Depreciation and amortization
11,802
2.2
%
10,785
2.1
%
Asset impairment
-
0.0
%
612
0.1
%
Total operating expenses
418,735
78.5
%
409,410
79.3
%
Operating income
114,440
21.5
%
106,745
20.7
%
OTHER (EXPENSE) INCOME:
Interest income
835
0.2
%
3,235
0.6
%
Interest expense
(961
)
-0.2
%
(126
)
0.0
%
Miscellaneous (expense) income
(9
)
0.0
%
98
0.0
%
Total other (expense) income
(135
)
0.0
%
3,207
0.6
%
PRETAX INCOME
114,305
21.4
%
109,952
21.3
%
Provision for income taxes
29,121
5.5
%
12,670
2.5
%
INCOME FROM CONTINUING
OPERATIONS
85,184
16.0
%
97,282
18.8
%
Loss from discontinued operations, net of
tax
(13
)
0.0
%
(69
)
0.0
%
NET INCOME
85,171
16.0
%
97,213
18.8
%
NET INCOME PER SHARE - BASIC:
$
1.21
$
1.40
NET INCOME PER SHARE -DILUTED:
$
1.19
$
1.36
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
70,179
69,366
Diluted
71,649
71,267
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Year to Date Ended
September 30,
(In Thousands)
2021
2020
NET INCOME
$
85,171
$
97,213
OTHER COMPREHENSIVE (LOSS) INCOME, net
of tax:
Foreign currency translation
adjustments
(175
)
128
Unrealized (loss) gain on investments
(192
)
131
Total other comprehensive (loss)
income
(367
)
259
COMPREHENSIVE INCOME
$
84,804
$
97,472
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year to Date Ended
September 30,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
85,171
$
97,213
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairment
-
612
Depreciation and amortization expense
11,802
10,785
Bad debt expense
36,360
36,706
Compensation expense related to
share-based awards
11,287
9,735
Deferred income taxes
9,938
11,339
Changes in operating assets and
liabilities
(10,352
)
(28,637
)
Net cash provided by operating
activities
144,206
137,753
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of available-for-sale
investments
(269,739
)
(333,767
)
Sales of available-for-sale
investments
357,280
213,576
Purchases of property and equipment
(6,276
)
(7,479
)
Business acquisitions, net of acquired
cash
(56,947
)
(39,819
)
Net cash provided by (used in) investing
activities
24,318
(167,489
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock
793
1,925
Purchase of treasury stock
(5,372
)
(17,862
)
Payments of employee tax associated with
stock compensation
(2,034
)
(894
)
Net cash used in financing activities
(6,613
)
(16,831
)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
161,911
(46,567
)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, beginning of the period
109,684
108,687
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, end of the period
$
271,595
$
62,120
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except
percentages)
For the Quarter Ended
September 30,
2021
2020
REVENUE:
CTU (1)
$
104,788
$
98,985
AIU (2)
68,948
70,048
Corporate and Other
262
93
Total
$
173,998
$
169,126
OPERATING INCOME (LOSS):
CTU (1)
$
41,217
$
32,993
AIU (2)
8,334
5,513
Corporate and Other
(11,690
)
(6,432
)
Total
$
37,861
$
32,074
OPERATING MARGIN (LOSS):
CTU (1)
39.3
%
33.3
%
AIU (2)
12.1
%
7.9
%
Corporate and Other
NM
NM
Total
21.8
%
19.0
%
(1)
CTU’s results of operations include the Hippo acquisition
commencing on the September 10, 2021 date of acquisition.
(2)
AIU’s results of operations include the DigitalCrafts
acquisition commencing on the August 2, 2021 date of
acquisition.
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except
percentages)
For the Year to Date Ended
September 30,
2021
2020
REVENUE:
CTU (1)
$
312,645
$
302,766
AIU (2)
219,648
213,279
Corporate and Other
882
110
Total
$
533,175
$
516,155
OPERATING INCOME (LOSS):
CTU (1)
$
112,758
$
100,688
AIU (2)
28,875
25,365
Corporate and Other
(27,193
)
(19,308
)
Total
$
114,440
$
106,745
OPERATING MARGIN (LOSS):
CTU (1)
36.1
%
33.3
%
AIU (2)
13.1
%
11.9
%
Corporate and Other
NM
NM
Total
21.5
%
20.7
%
(1)
CTU’s results of operations include the Hippo acquisition
commencing on the September 10, 2021 date of acquisition.
(2)
AIU’s results of operations include the DigitalCrafts
acquisition commencing on the August 2, 2021 date of acquisition
and the Trident acquisition commencing on the March 2, 2020 date of
acquisition.
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ITEMS (1)
(In thousands, unless otherwise
noted)
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
ACTUAL
ACTUAL
Adjusted
Operating Income
2021
2020
2021
2020
Operating income
$
37,861
$
32,074
$
114,440
$
106,745
Depreciation and amortization (2)
3,887
3,995
11,802
10,785
Legal fee expense related to certain
matters (3)
4,583
4
7,241
167
Adjusted Operating Income (4)
$
46,331
$
36,073
$
133,483
$
117,697
For the Quarter Ending
December 31,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020
Operating income
$26.4M - $29.4M
$
36,189
$140.9M - $143.9M
$
142,934
Depreciation and amortization (2)
$5.1M
4,001
$16.9M
14,786
Legal fee expense related to certain
matters (3)
$2.0M
1,129
$9.2M
1,296
Adjusted Operating Income (4)
$33.5M - $36.5M
$
41,319
$167.0M - $170.0M
$
159,016
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ITEMS (1) (cont’d)
For the Quarter Ended
September 30,
For the Year to Date Ended
September 30,
ACTUAL
ACTUAL
2021
2020
2021
2020
Reported Earnings Per Diluted
Share
$
0.39
$
0.56
$
1.19
$
1.36
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (2)
0.01
0.01
0.03
0.02
Legal fee expense related to certain
matters (3)
0.06
-
0.10
-
Total pre-tax adjustments
$
0.07
$
0.01
$
0.13
$
0.02
Tax effect of adjustments (5)
(0.01
)
-
(0.03
)
-
Release of valuation allowance
(6)
-
(0.22
)
-
(0.22
)
Total adjustments after tax
0.06
(0.21
)
0.10
(0.20
)
Adjusted Earnings Per Diluted Share
(4)
$
0.45
$
0.35
$
1.29
$
1.16
For the Quarter Ending
December 31,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2021
2020
2021
2020
Reported Earnings Per Diluted
Share
$0.26 - $0.29
$
0.38
$1.45 - $1.48
$
1.74
Pre-tax adjustments included in
operating expenses:
Amortization for acquired intangible
assets (2)
0.03
0.01
0.06
0.04
Legal fee expense related to certain
matters (3)
0.03
0.01
0.13
0.02
Total pre-tax adjustments
$
0.06
$
0.02
$
0.19
$
0.06
Tax effect of adjustments (5)
(0.02
)
-
(0.04
)
(0.02
)
Release of valuation allowance
(6)
-
-
-
(0.22
)
Total adjustments after tax
0.04
0.02
0.15
(0.18
)
Adjusted Earnings Per Diluted Share
(4)
$0.30 - $0.33
$
0.40
$1.60 - $1.63
$
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.
Results of operations include the
DigitalCrafts acquisition commencing on the August 2, 2021 date of
acquisition, the Hippo acquisition commencing on the September 10,
2021 date of acquisition and the Trident acquisition commencing on
the March 2, 2020 date of acquisition.
(2)
Amortization for acquired intangible assets relate to
definite-lived intangible assets associated with the Trident,
DigitalCrafts and Hippo acquisitions.
(3)
Legal fee expense associated with (i) responses to the
Department relating to borrower defense to repayment applications
from former students, and (ii) acquisition efforts.
(4)
The Company began adjusting for legal fee expense associated
with (i) responses to the Department relating to borrower defense
to repayment applications from former students, and (ii)
acquisition efforts, during the second quarter of 2021. The Company
believes that these expenses are not reflective of underlying
operating performance. Also, 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.
Prior period amounts were recast for these items to maintain
comparability.
(5)
The tax effect of adjustments was calculated by multiplying the
pre-tax adjustments with a tax rate of 25.0%. This tax rate is
intended to reflect federal and state taxable jurisdictions as well
as the nature of the adjustments. There is no tax effect applied to
the adjustment related to the release of the valuation allowance as
this is an adjustment for income tax.
(6)
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/20211104006191/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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