Perdoceo Education Corporation Reports Fourth Quarter and Full Year 2023 Results

Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year ended December 31, 2023.

Full Year 2023 Results as Compared to Prior Year

Revenue increased 2.1% to $710.0 million, supported by an 11.8% increase at CTU.
Operating income increased 16.1% to $150.4 million, while adjusted operating income increased 6.7% to $174.9 million.*
Earnings per diluted share were $2.18 as compared to $1.39, while adjusted earnings per diluted share were $2.10 as compared to $1.63.*
Total student enrollments at December 31, 2023 increased 3.2% at CTU while AIUS decreased 39.3%.
Ended the year with $604.2 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.

Fourth Quarter 2023 Results as Compared to Prior Year Quarter

Revenue decreased 16.0% to $147.9 million, primarily driven by the enrollment reduction at AIUS.
Operating income decreased 29.7% to $15.9 million, while adjusted operating income decreased 40.2% to $19.4 million.*
Earnings per diluted share were $0.26 as compared to $0.23, while adjusted earnings per diluted share were $0.27 as compared to $0.31.*
On February 5, 2024 the Board of Directors declared a dividend for the fourth quarter of $0.11 per share payable on March 15, 2024.

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

"We delivered strong results for the full year 2023, supported by ongoing improvements in student retention and engagement across both our academic institutions,” said Todd Nelson, President and Chief Executive Officer. “We remain committed to making investments in our student support teams and technology that we believe will further enhance student retention and academic outcomes across both our academic institutions.”

REVENUE

For the quarter ended December 31, 2023, revenue of $147.9 million decreased 16.0% compared to revenue of $176.1 million for the prior year quarter.
For the year ended December 31, 2023, revenue of $710.0 million increased 2.1% compared to revenue of $695.2 million for the prior year.

For the Quarter Ended December 31,

For the Year Ended December 31,

Revenue ($ in thousands)

2023

2022

% Change

2023

2022

% Change

CTU

104,590

108,446

-3.6

468,926

419,617

11.8

AIUS

43,172

67,445

-36.0

240,300

274,479

-12.5

Corporate and Other

157

254

778

1,112

Total

147,919

176,145

-16.0

710,004

695,208

2.1

TOTAL STUDENT ENROLLMENTS

As of December 31, 2023, CTU’s total student enrollments increased 3.2%, while AIUS’ total student enrollments decreased 39.3% as compared to the prior year end.
After some necessary short-term operational changes at AIUS that impacted year-end total student enrollments, marketing and student enrollment operations have mostly reverted to normalized levels of operations during the fourth quarter of 2023.

At December 31,

Total Student Enrollments(1)

2023

2022

% Change

CTU

26,000

25,200

3.2

AIUS

8,500

14,000

-39.3

Total

34,500

39,200

-12.0

(1)

Total student enrollments do not include learners pursuing: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at the Company's universities.

OPERATING INCOME

For the quarter ended December 31, 2023, operating income decreased by 29.7% to $15.9 million as compared to the prior year quarter.

For the year ended December 31, 2023, operating income increased by 16.1% to $150.4 million as compared to the prior year.

For the Quarter Ended December 31,

For the Year Ended December 31,

Operating Income ($ in thousands)

2023

2022

% Change

2023

2022

% Change

CTU

25,376

34,082

-25.5

144,008

141,622

1.7

AIUS

600

3,469

-82.7

45,283

33,315

35.9

Corporate and Other

(10,033

)

(14,877

)

(38,845

)

(45,300

)

Total

15,943

22,674

-29.7

150,446

129,637

16.1

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 December 31, 2023, adjusted operating income of $19.4 million decreased 40.2% compared to adjusted operating income of $32.4 million for the prior year quarter.

For the year ended December 31, 2023, adjusted operating income of $174.9 million increased 6.7% compared to adjusted operating income of $164.0 million for the prior year.

For the Quarter Ended December 31,

For the Year Ended December 31,

Adjusted Operating Income ($ in thousands)

2023

2022

2023

2022

Operating income

15,943

22,674

150,446

129,637

Depreciation and amortization (1)

3,449

4,878

16,887

19,734

Legal fee expense related to certain matters (2)

4,869

7,579

14,597

Adjusted Operating Income

19,397

32,421

174,912

163,968

Increase (Decrease)

-40.2

6.7

(1)

Amortization relates to definite-lived intangible assets associated with 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.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended December 31, 2023, the Company recorded:

Net income of $17.2 million compared to $16.0 million for the prior year quarter.
Earnings per diluted share of $0.26 increased 13.0% as compared to $0.23 for the prior year quarter.
Adjusted earnings per diluted share of $0.27 decreased 12.9% as compared to $0.31 for the prior year quarter. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the year ended December 31, 2023, the Company recorded:

Net income of $147.7 million compared to $95.9 million for the prior year.
Earnings per diluted share of $2.18 increased 56.8% as compared to $1.39 for the prior year.
Adjusted earnings per diluted share of $2.10 increased 28.8% as compared to $1.63 for the prior year. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the Quarter Ended December 31,

For the Year Ended December 31,

2023

2022

2023

2022

Reported Earnings Per Diluted Share

0.26

0.23

2.18

1.39

Pre-tax adjustments included in operating expenses:

Amortization for acquired intangible assets (1)

0.02

0.03

0.11

Legal fee expense related to certain matters (2)

0.07

0.11

0.21

Gain on sale of intangible asset (3)

(0.32

)

Tax effect of adjustments (4)

(0.01

)

(0.02

)

0.02

(0.08

)

Adjusted Earnings Per Diluted Share

0.27

0.31

2.10

1.63

(1)

Amortization relates to definite-lived intangible assets associated with 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)

Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo's stock.

(4)

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.

DIVIDEND PAYMENT

The board of directors declared a quarterly dividend as part of the Company’s dividend policy of $0.11 per share, which will be paid on March 15, 2024 for holders of record of common stock as of March 1, 2024. Any decision to pay future cash dividends, however, will be made by the board of directors and depend on the Company’s available retained earnings, financial condition and other relevant factors. The Company expects quarterly dividend payments to be an integral and growing part of its balanced capital allocation strategy that also prioritizes investments in student support and technology projects, while also evaluating acquisitions and share repurchases.

STOCK REPURCHASE PROGRAM

The board of directors approved a new stock repurchase program commencing March 1, 2024 which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. The program expires September 30, 2025 and replaces the existing stock repurchase program that expires on September 30, 2024.

BALANCE SHEET AND CASH FLOW

For the quarter ended December 31, 2023, net cash provided by operating activities was $13.2 million, compared to net cash provided by operating activities of $40.5 million for the prior year quarter.
For the year ended December 31, 2023, net cash provided by operating activities was $112.0 million, compared to net cash provided by operating activities of $148.2 million for the prior year.
As of December 31, 2023 and December 31, 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $604.2 million and $518.2 million, respectively.

For the Quarter Ended December 31,

For the Year Ended December 31,

Selected Cash Flow Items ($ in thousands)

2023

2022

% Change

2023

2022

% Change

Net cash provided by operating activities

13,192

40,546

-67.5

112,025

148,186

-24.4

Capital expenditures

1,610

3,515

-54.2

6,411

12,620

-49.2

2024 FINANCIAL OUTLOOK

The Company is providing the following 2024 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 March 31,

For the Year Ending December 31,

OUTLOOK

ACTUAL

OUTLOOK

ACTUAL

2024

2023

2024

2023

Operating Income

$40.1M - $42.1M

$43.3M

$154.6M - $174.6M

$150.4M

Depreciation and amortization

$2.9M

$5.2M

$12.4M

$16.9M

Legal fee expense related to certain matters (1)

$4.6M

$3.0M

$7.6M

Adjusted Operating Income

$43.0M - $45.0M

$53.1M

$170.0M - $190.0M

$174.9M

Earnings Per Diluted Share

$0.52 - $0.54

$0.50

$1.96 - $2.18

$2.18

Amortization of acquired intangible assets

$0.02

$0.04

$0.07

$0.11

Legal fee expense related to certain matters (1)

$0.07

$0.04

$0.11

Gain on sale of intangible asset

($0.32)

Tax effect of adjustments

($0.01)

($0.03)

$0.02

Adjusted Earnings Per Diluted Share

$0.53 - $0.55

$0.58

$2.04 - $2.26

$2.10

(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.

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share, which is the most directly comparable GAAP measure to adjusted 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. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2024 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and trends in student retention and engagement remain consistent with management’s recent experiences, (ii) no significant impact of new or proposed regulations, or new interpretations of existing regulations, including recent Department negotiated rulemaking initiatives, FTC enforcement activity, FCC rulemaking or other adverse changes in the legal or regulatory environment or our institutions participation in Title IV programs, which may require further operational changes in the way the Company’s academic institutions market to, contact, enroll, support and educate current and prospective students, among other impacts, (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) the impact from federal student aid initiatives implemented by the current administration remains consistent with management's estimates, (v) no significant impact from the further delays by the Department to its implementation of a simplified FAFSA required by the FAFSA Simplification Act and the related delay of providing institutions with students' relevant aid eligibility and award information, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 25.5% for the first quarter and approximately 26% for the full year, and (vii) excludes any future impact from the Company’s stock repurchase program. 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 Wednesday, February 21, 2024 at 5:30 p.m. Eastern time to discuss fourth quarter and full year 2023 results and 2024 outlook. Interested parties can access the live webcast of the conference call at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-888-596-4144 (domestic) or 1-646-968-2525 (international). Both dial-in numbers will use the access code 6410615. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/980571149. 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 accredited 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 academic institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIUS” or “AIU System”) – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Perdoceo’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. Perdoceo's institutions are 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 or our ability to market to and contact prospective students; 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 terms of any potential changes to or conditions imposed on our continued participation in the Title IV programs under new program participation agreements, the new 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; the final outcome of various legal challenges to the Department's loan discharge and forgiveness efforts; rulemaking or changing interpretations of existing regulations, guidance or historical practices 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 ability to participate in educational assistance programs for key employers, veterans or other military personnel; our ability to pay dividends on our common stock and execute our stock repurchase program; 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, 2023 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

December 31,

2023

2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents, unrestricted

118,009

109,408

Restricted cash

1,012

9,476

Short-term investments

485,135

399,315

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

604,156

518,199

Student receivables, net

29,398

42,551

Receivables, other

4,539

3,457

Prepaid expenses

11,712

8,411

Inventories

5,004

1,904

Other current assets

155

597

Total current assets

654,964

575,119

NON-CURRENT ASSETS:

Property and equipment, net

21,371

26,038

Right of use asset, net

19,096

26,156

Goodwill

241,162

243,540

Intangible assets, net

36,219

53,564

Student receivables, net

3,859

1,850

Deferred income tax assets, net

23,804

24,613

Other assets

6,841

6,488

TOTAL ASSETS

1,007,316

957,368

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Lease liability - operating

5,701

6,555

Accounts payable

10,766

13,518

Accrued expenses:

Payroll and related benefits

32,684

40,306

Advertising and marketing costs

7,196

8,977

Income taxes

3,974

7,814

Other

13,503

14,621

Deferred revenue

37,215

71,590

Total current liabilities

111,039

163,381

NON-CURRENT LIABILITIES:

Lease liability - operating

21,346

27,286

Other liabilities

33,510

40,856

Total non-current liabilities

54,856

68,142

STOCKHOLDERS' EQUITY:

Preferred stock

Common stock

903

894

Additional paid-in capital

694,798

684,183

Accumulated other comprehensive loss

(666

)

(5,447

)

Retained earnings

480,606

347,839

Treasury stock

(334,220

)

(301,624

)

Total stockholders' equity

841,421

725,845

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

1,007,316

957,368

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

For the Quarter Ended December 31,

2023

% of Total Revenue

2022

% of Total Revenue

REVENUE:

Tuition and fees, net

146,822

99.3

174,012

98.8

Other

1,097

0.7

2,133

1.2

Total revenue

147,919

176,145

OPERATING EXPENSES:

Educational services and facilities

30,223

20.4

31,217

17.7

General and administrative

92,756

62.7

114,610

65.1

Depreciation and amortization

3,449

2.3

4,878

2.8

Asset impairment

5,548

3.8

2,766

1.6

Total operating expenses

131,976

89.2

153,471

87.1

Operating income

15,943

10.8

22,674

12.9

OTHER INCOME:

Interest income

6,421

4.3

3,169

1.8

Interest expense

(116

)

-0.1

(102

)

-0.1

Miscellaneous income (expense)

129

0.1

(1,313

)

-0.7

Total other income

6,434

4.3

1,754

1.0

PRETAX INCOME

22,377

15.1

24,428

13.9

Provision for income taxes

5,189

3.5

8,473

4.8

NET INCOME

17,188

11.6

15,955

9.1

NET INCOME PER SHARE - BASIC:

0.26

0.24

NET INCOME PER SHARE -DILUTED:

0.26

0.23

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

65,610

67,165

Diluted

67,185

68,423

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Quarter Ended December 31,

(In Thousands)

2023

2022

NET INCOME

17,188

15,955

OTHER COMPREHENSIVE INCOME, net of tax:

Foreign currency translation adjustments

217

Unrealized gain on investments

4,280

653

Total other comprehensive income

4,333

870

COMPREHENSIVE INCOME

21,521

16,825

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

For the Year Ended December 31,

2023

% of Total Revenue

2022

% of Total Revenue

REVENUE:

Tuition and fees, net

702,920

99.0

687,672

98.9

Other

7,084

1.0

7,536

1.1

Total revenue

710,004

695,208

OPERATING EXPENSES:

Educational services and facilities

130,324

18.4

116,723

16.8

General and administrative

398,084

56.1

426,120

61.3

Depreciation and amortization

16,887

2.4

19,734

2.8

Asset impairment

14,263

2.0

2,994

0.4

Total operating expenses

559,558

78.8

565,571

81.4

Operating income

150,446

21.2

129,637

18.6

OTHER INCOME:

Interest income

19,980

2.8

6,866

1.0

Interest expense

(404

)

-0.1

(400

)

-0.1

Miscellaneous income (expense)

22,099

3.1

(1,834

)

-0.3

Total other income

41,675

5.9

4,632

0.7

PRETAX INCOME

192,121

27.1

134,269

19.3

Provision for income taxes

44,469

6.3

38,402

5.5

NET INCOME

147,652

20.8

95,867

13.8

NET INCOME PER SHARE - BASIC:

2.22

1.41

NET INCOME PER SHARE -DILUTED:

2.18

1.39

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

66,468

67,934

Diluted

67,826

69,031

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Year Ended December 31,

(In Thousands)

2023

2022

NET INCOME

147,652

95,867

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

Foreign currency translation adjustments

(166

)

Unrealized gain (loss) on investments

4,736

(5,185

)

Total other comprehensive income (loss)

4,781

(5,351

)

COMPREHENSIVE INCOME

152,433

90,516

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Year Ended December 31,

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

147,652

95,867

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

Asset impairment

14,263

2,994

Gain on sale of asset

(22,086

)

Depreciation and amortization expense

16,887

19,734

Bad debt expense

33,215

41,574

Compensation expense related to share-based awards

8,078

8,751

Deferred income taxes

3,761

(720

)

Changes in operating assets and liabilities:

Student receivables, gross

15,929

6,380

Allowance for credit losses

(38,573

)

(38,992

)

Receivables, other

(3,922

)

(1,670

)

Inventories, prepaid expenses, and other current assets

(2,994

)

2,640

Other non-current assets

478

843

Accounts payable

(4,878

)

1,922

Accrued expenses and other non-current liabilities

(19,235

)

22,332

Deferred revenue

(34,375

)

(11,767

)

Right of use asset and lease liabilities

(2,175

)

(1,702

)

Net cash provided by operating activities

112,025

148,186

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of available-for-sale investments

(314,279

)

(492,100

)

Sales of available-for-sale investments

238,184

262,277

Purchases of property and equipment

(6,411

)

(12,620

)

Business acquisitions, net of cash acquired

(84,308

)

Earnout payment related to business acquisition

(6,000

)

Net cash used in investing activities

(88,506

)

(326,751

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of treasury stock

(8,301

)

(23,117

)

Issuance of common stock

2,545

1,197

Payments of employee tax associated with stock compensation

(2,209

)

(1,612

)

Payments of cash dividends

(14,417

)

Release of cash held in escrow

(1,000

)

(4,197

)

Net cash used in financing activities

(23,382

)

(27,729

)

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

137

(206,294

)

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

118,884

325,178

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

119,021

118,884

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

For the Quarter Ended December 31,

2023 (1)

2022

REVENUE:

CTU

104,590

108,446

AIUS

43,172

67,445

Corporate and Other

157

254

Total

147,919

176,145

OPERATING INCOME (LOSS):

CTU

25,376

34,082

AIUS

600

3,469

Corporate and Other

(10,033

)

(14,877

)

Total

15,943

22,674

OPERATING MARGIN (LOSS):

CTU

24.3

31.4

AIUS

1.4

5.1

Corporate and Other

Total

10.8

12.9

(1)

Results of operations include an acquisition completed on December 1, 2022 within CTU.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

For the Year Ended December 31,

2023 (1)

2022 (1)

REVENUE:

CTU

468,926

419,617

AIUS

240,300

274,479

Corporate and Other

778

1,112

Total

710,004

695,208

OPERATING INCOME (LOSS):

CTU

144,008

141,622

AIUS

45,283

33,315

Corporate and Other

(38,845

)

(45,300

)

Total

150,446

129,637

OPERATING MARGIN (LOSS):

CTU

30.7

33.8

AIUS

18.8

12.1

Corporate and Other

Total

21.2

18.6

(1)

Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)

(In thousands, unless otherwise noted)

For the Quarter Ended December 31,

For the Year Ended December 31,

ACTUAL

Adjusted Operating Income

2023

2022

2023

2022

Operating income

15,943

22,674

150,446

129,637

Depreciation and amortization (2)

3,449

4,878

16,887

19,734

Legal fee expense related to certain matters (3)

4,869

7,579

14,597

Adjusted Operating Income

19,397

32,421

174,912

163,968

For the Quarter Ending March 31,

For the Year Ending December 31,

OUTLOOK

ACTUAL

OUTLOOK

ACTUAL

2024

2023

2024

2023

Operating income

$40.1M - $42.1M

43,336

$154.6M - $174.6M

150,446

Depreciation and amortization (2)

$2.9M

5,155

$12.4M

16,887

Legal fee expense related to certain matters (3)

4,619

$3.0M

7,579

Adjusted Operating Income

$43.0M - $45.0M

53,110

$170.0M - $190.0M

174,912

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

For the Quarter Ended December 31,

For the Year Ended December 31,

ACTUAL

2023

2022

2023

2022

Reported Earnings Per Diluted Share

0.26

0.23

2.18

1.39

Pre-tax adjustments included in operating expenses:

Amortization for acquired intangible assets (2)

0.02

0.03

0.11

Legal fee expense related to certain matters (3)

0.07

0.11

0.21

Gain on sale of intangible asset (4)

(0.32

)

Total pre-tax adjustments

0.02

0.10

(0.10

)

0.32

Tax effect of adjustments (5)

(0.01

)

(0.02

)

0.02

(0.08

)

Total adjustments after tax

0.01

0.08

(0.08

)

0.24

Adjusted Earnings Per Diluted Share

0.27

0.31

2.10

1.63

For the Quarter Ending March 31,

For the Year Ending December 31,

OUTLOOK

ACTUAL

OUTLOOK

ACTUAL

2024

2023

2024

2023

Reported Earnings Per Diluted Share

$0.52 - $0.54

0.50

$1.96 - $2.18

2.18

Pre-tax adjustments included in operating expenses:

Amortization for acquired intangible assets (2)

$0.02

0.04

$0.07

0.11

Legal fee expense related to certain matters (3)

0.07

$0.04

0.11

Gain on sale of intangible asset (4)

(0.32

)

Total pre-tax adjustments

$0.02

0.11

$0.11

(0.10

)

Tax effect of adjustments (5)

($0.01)

(0.03

)

($0.03)

0.02

Total adjustments after tax

$0.01

0.08

$0.08

(0.08

)

Adjusted Earnings Per Diluted Share

$0.53 - $0.55

0.58

$2.04 - $2.26

2.10

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. The Company believes the items it is adjusting for are not normal operating expenses reflective of its underlying business. 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 Coding Dojo acquisition as of December 1, 2022 and the CalSouthern acquisition as of July 1, 2022.

(2)

Amortization for acquired intangible assets relate to definite-lived intangible assets associated with 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)

Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo's stock.

(5)

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221341398/en/

Investors: Alpha IR Group Davis Snyder or Nick Nelson (312) 445-2870 PRDO@alpha-ir.com Or Media: Perdoceo Education Corporation (847) 585-2600 media@perdoceoed.com

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