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Perdoceo Education Corporation Reports Second Quarter and Year to Date 2021 Results

 

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.

   

 

 

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