prdo-8k_20201105.htm
false 0001046568 0001046568 2020-11-05 2020-11-05

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 5, 2020

 

Perdoceo Education Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

 

 

 

Delaware

 

0-23245

 

36-3932190

(State or Other Jurisdiction

of Incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

231 N. Martingale Rd., Schaumburg, IL

 

60173

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (847) 781-3600

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

PRDO

Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 


 

Item 2.02.

Results of Operations and Financial Condition.

On November 5, 2020, Perdoceo Education Corporation (the “Company”) issued a press release describing the Company’s financial results for the quarter and year to date ended September 30, 2020 and providing an update on the Company’s 2020 outlook. A copy of the press release is being furnished as Exhibit 99.1, and the information contained therein is incorporated herein by reference. Following the issuance of the press release, the Company will host a conference call and webcast on which its financial results for the quarter and year to date ended September 30, 2020 and outlook will be discussed.

The information contained in Item 2.02 of this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall the information be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

The exhibits required by Item 601 of Regulation S-K are listed in the “Exhibit Index” which is contained in this Current Report on Form 8-K and are incorporated by reference herein.


2


 

Exhibit Index

Exhibit

Number

 

Description of Exhibits

 

 

 

99.1

 

Press release of the Company dated November 5, 2020 reporting the Company’s financial results for the quarter and year to date ended September 30, 2020

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 

 

 

 

 

 

 

3


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

PERDOCEO EDUCATION CORPORATION

 

 

By:

 

/s/ Ashish R. Ghia

 

 

Ashish R. Ghia

 

 

Senior Vice President and Chief Financial Officer

 

Date: November 5, 2020

 

 

 

4

prdo-ex991_6.htm

PRDO ANNOUNCES 3Q20 RESULTS …PG 1

 

 

Exhibit 99.1

 

PERDOCEO EDUCATION CORPORATION REPORTS THIRD QUARTER AND

YEAR TO DATE 2020 RESULTS

 

Third quarter revenue increased 9.1% supported by enrollment growth at both CTU and AIU

Schaumburg, Ill. (November 5, 2020) – Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended September 30, 2020.

 

Third Quarter 2020 Results as Compared to the Prior Year Quarter

 

Financial Results

 

Revenue increased by 9.1 percent to $169.1 million, with both CTU and AIU contributing to the growth

 

Operating income increased to $32.1 million as compared to $24.3 million

 

Adjusted operating income increased to $36.3 million as compared to $34.0 million*

 

Earnings per diluted share of $0.56 compared to earnings per diluted share of $0.25

 

Adjusted earnings per diluted share of $0.35 as compared to $0.35*

 

Ended the quarter with $367.7 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments

 

Enrollment Metrics

 

Total student enrollments at September 30, 2020 increased 17.2 percent. CTU’s total student enrollments increased 4.8 percent while AIU’s total student enrollments increased 37.7 percent. AIU’s total student enrollments were positively impacted by the acquisition of substantially all of the assets of Trident University International (the “Trident acquisition”) while also experiencing underlying organic growth.

 

New student enrollments increased 17.5 percent. New student enrollments increased 5.2 percent within CTU and 29.4 percent within AIU. AIU’s new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

 

Year to Date 2020 Results as Compared to the Prior Year to Date

 

Financial Results

 

Revenue increased by 10.0 percent to $516.2 million, with both CTU and AIU contributing to the growth

 

Operating income increased to $106.7 million as compared to $54.4 million

 

Adjusted operating income increased to $118.8 million as compared to $99.8 million*

 

Earnings per diluted share of $1.36 as compared to $0.59

 

Adjusted earnings per diluted share of $1.17 as compared to $1.04*

 

Enrollment Metrics

 

New student enrollments increased 19.8 percent. New student enrollments increased 8.8 percent within CTU and 33.1 percent within AIU. AIU’s year to date new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

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



PRDO ANNOUNCES 3Q20 RESULTS …PG 2

 

 

The year to date results underscore our commitment to student experiences, retention and academic outcomes and I’m proud of the entire Perdoceo team for their efforts to educate, serve and support our students,” said Todd Nelson, President and Chief Executive Officer. “Investments in data analytics and technology across our academic platforms have enhanced student learning and strengthened the efficiency and effectiveness of our student support processes. Our financial position continues to strengthen and we remain focused on executing against our objective of sustainable and responsible growth.”

 

AIU SYSTEM

Effective November 5, 2020, AIU implemented a university system model, the American InterContinental University System (the “AIU System” or “AIU”), which is comprised of two universities: American InterContinental University and Trident University International (“Trident” or “TUI”).  The system structure provides a new framework for American InterContinental University and Trident to continue to serve their unique student populations while benefitting from one university system. Although both universities will operate under a shared governance structure and have a common mission, the system structure will allow each to retain its name and customize its programs and instructional and student service models to the needs of its unique student populations.

 

REVENUE

 

For the quarter ended September 30, 2020, total revenue of $169.1 million increased 9.1 percent compared to total revenue of $155.0 million for the prior year quarter.

 

 

For the year to date ended September 30, 2020, total revenue of $516.2 million increased 10.0 percent compared to total revenue of $469.3 million for the prior year to date.

 

 

Both CTU and AIU contributed to the revenue growth supported by organic enrollment growth as well as the Trident acquisition.

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

Revenue ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

CTU

 

$

98,985

 

 

$

96,038

 

 

 

3.1

%

 

$

302,766

 

 

$

289,650

 

 

 

4.5

%

AIU (1)

 

 

70,048

 

 

 

58,907

 

 

 

18.9

%

 

 

213,279

 

 

 

179,559

 

 

 

18.8

%

Total University Group

 

 

169,033

 

 

 

154,945

 

 

 

9.1

%

 

 

516,045

 

 

 

469,209

 

 

 

10.0

%

Corporate and Other

 

 

93

 

 

 

14

 

 

NM

 

 

 

110

 

 

 

44

 

 

NM

 

Total

 

$

169,126

 

 

$

154,959

 

 

 

9.1

%

 

$

516,155

 

 

$

469,253

 

 

 

10.0

%

 

 

(1)

AIU’s revenue for the quarter and year to date ended September 30, 2020 includes revenue associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 

 

 

 

 



PRDO ANNOUNCES 3Q20 RESULTS …PG 3

 

 

TOTAL AND NEW STUDENT ENROLLMENTS

 

 

As of September 30, 2020, CTU’s and AIU’s total student enrollments increased 4.8 percent and 37.7 percent, respectively, as compared September 30, 2019. AIU’s total student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

 

 

For the quarter ended September 30, 2020, new student enrollments increased 5.2 percent within CTU and 29.4 percent within AIU, in each case as compared to the prior year quarter. AIU’s third quarter new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

 

 

For the year to date ended September 30, 2020, new student enrollments increased 8.8 percent within CTU and 33.1 percent within AIU, in each case as compared to the prior year to date. AIU’s year to date new student enrollments were positively impacted by the Trident acquisition while also experiencing underlying organic growth.

 

 

 

As of September 30,

 

Total Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

24,000

 

 

 

22,900

 

 

 

4.8

%

AIU (1)

 

 

19,000

 

 

 

13,800

 

 

 

37.7

%

Total

 

 

43,000

 

 

 

36,700

 

 

 

17.2

%

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

New Student Enrollments

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

CTU

 

 

6,840

 

 

 

6,500

 

 

 

5.2

%

 

 

19,960

 

 

 

18,350

 

 

 

8.8

%

AIU (1)

 

 

8,680

 

 

 

6,710

 

 

 

29.4

%

 

 

20,400

 

 

 

15,330

 

 

 

33.1

%

Total

 

 

15,520

 

 

 

13,210

 

 

 

17.5

%

 

 

40,360

 

 

 

33,680

 

 

 

19.8

%

 

(1)

AIU’s total student enrollments as of September 30, 2020 and new student enrollments for the quarter and year to date ended September 30, 2020 include enrollments related to the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 


PRDO ANNOUNCES 3Q20 RESULTS …PG 4

 

 

OPERATING INCOME (LOSS)

 

 

For the quarter ended September 30, 2020, operating income increased to $32.1 million compared to $24.3 million for the prior year quarter.

 

 

For the year to date ended September 30, 2020, operating income increased to $106.7 million compared to $54.4 million for the prior year to date.

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

Operating Income ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

CTU (1)

 

$

32,993

 

 

$

29,926

 

 

 

10.2

%

 

$

100,688

 

 

$

71,730

 

 

 

40.4

%

AIU (2)

 

 

5,513

 

 

 

7,341

 

 

 

-24.9

%

 

 

25,365

 

 

 

11,436

 

 

 

121.8

%

Total University Group

 

 

38,506

 

 

 

37,267

 

 

 

3.3

%

 

 

126,053

 

 

 

83,166

 

 

 

51.6

%

Corporate and Other (3)

 

 

(6,432

)

 

 

(12,973

)

 

NM

 

 

 

(19,308

)

 

 

(28,717

)

 

NM

 

Total

 

$

32,074

 

 

$

24,294

 

 

 

32.0

%

 

$

106,745

 

 

$

54,449

 

 

 

96.0

%

 

(1)

CTU’s operating income for the year to date ended September 30, 2019 includes an $18.6 million expense related to the FTC settlement.

 

(2)

AIU’s operating income for the quarter and year to date ended September 30, 2020 includes results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition. Operating income for the year to date ended September 30, 2019 includes an $11.4 million expense related to the FTC settlement.

 

(3)

The following is a summary of the operating losses related to closed campuses which are included within Corporate and Other. Legal settlement expense of $7.1 million related to the Oregon arbitration matter was included in the operating loss for closed campuses for the quarter and year to date ended September 30, 2019.

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

Operating Loss ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

Closed Campuses

 

$

(369

)

 

$

(8,215

)

 

 

95.5

%

 

$

(1,757

)

 

$

(12,801

)

 

 

86.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



PRDO ANNOUNCES 3Q20 RESULTS …PG 5

 

 

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, 2020, adjusted operating income of $36.3 million increased 7.0 percent compared to adjusted operating income of $34.0 million for the prior year quarter.

 

 

For the year to date ended September 30, 2020, adjusted operating income of $118.8 million increased 19.1 percent compared to adjusted operating income of $99.8 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)

 

2020 (4)

 

 

2019

 

 

2020 (4)

 

 

2019

 

Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

32,074

 

 

$

24,294

 

 

$

106,745

 

 

$

54,449

 

Depreciation and amortization

 

 

3,995

 

 

 

2,284

 

 

 

10,785

 

 

 

6,752

 

Asset impairment (1)

 

 

-

 

 

 

-

 

 

 

612

 

 

 

-

 

Lease expenses for vacated space (2)

 

 

270

 

 

 

295

 

 

 

689

 

 

 

1,453

 

Significant legal settlements (3)

 

 

-

 

 

 

7,100

 

 

 

-

 

 

 

37,100

 

Adjusted Operating Income --

Total Company

 

$

36,339

 

 

$

33,973

 

 

$

118,831

 

 

$

99,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

7.0

%

 

 

 

 

 

 

19.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Asset impairment relates to a right of use asset for one of the Company’s vacated facilities for which the sublease income was deemed no longer recoverable.

 

(2)

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income for closed campuses.

 

(3)

Significant legal settlements relate to the FTC and Oregon arbitration matters recorded during 2019.

 

(4)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 

 



PRDO ANNOUNCES 3Q20 RESULTS …PG 6

 

 

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended September 30, 2020, the Company recorded:

 

Net income of $39.9 million compared to net income of $18.2 million for the prior year quarter.

 

Earnings per diluted share of $0.56 compared to earnings per diluted share of $0.25 for the prior year quarter.

 

Adjusted earnings per diluted share of $0.35 for both the current quarter and 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, 2020, the Company recorded:

 

Net income of $97.2 million compared to net income of $42.5 million for the prior year to date.

 

Earnings per diluted share of $1.36 compared to earnings per diluted share of $0.59 for the prior year to date.

 

Adjusted earnings per diluted share of $1.17 compared to adjusted earnings per diluted share of $1.04 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,

 

 

 

2020 (8)

 

 

2019

 

 

2020 (8)

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.56

 

 

$

0.25

 

 

$

1.36

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (1)

 

 

0.01

 

 

 

-

 

 

 

0.02

 

 

 

-

 

Asset impairment (2)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

Lease expenses for vacated space (3)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

0.02

 

Significant legal settlements (4)

 

 

-

 

 

 

0.10

 

 

 

-

 

 

 

0.52

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.10

 

 

$

0.04

 

 

$

0.54

 

Tax effect of adjustments  (5)

 

 

-

 

 

 

(0.02

)

 

 

(0.01

)

 

 

(0.06

)

Tax effect of change in settlement deductibility (6)

 

 

-

 

 

 

0.02

 

 

 

-

 

 

 

(0.03

)

Release of valuation allowance (7)

 

 

(0.22

)

 

 

-

 

 

 

(0.22

)

 

 

-

 

Total adjustments after tax

 

 

(0.21

)

 

 

0.10

 

 

 

(0.19

)

 

 

0.45

 

Adjusted Earnings Per Diluted Share

 

$

0.35

 

 

$

0.35

 

 

$

1.17

 

 

$

1.04

 

 

(1)

Amortization amounts relate to definite-lived intangible assets associated with the Trident acquisition.

 

(2)

Asset impairment relates to a right of use asset for one of the Company’s vacated facilities for which the sublease income was deemed no longer recoverable.

 

(3)

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income for closed campuses.

 

(4)

Significant legal settlements relate to the FTC and Oregon arbitration matters recorded during 2019.

 

(5)

The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments. 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)

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter of 2019. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million reflected during the fourth quarter of 2019 has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the third quarter of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share which would have increased by $0.02 for the quarter ended September 30, 2019 and decreased $0.03 for the year to date ended September 30, 2019. The third quarter and year to date ended September 30, 2019 now reflect this adjustment. For the full year 2019, approximately $29.7 million was considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility had no effect for the full year 2019.

 

(7)

This relates to the release of a valuation allowance in the amount of $16.0 million as a result of the current determination that it is more likely than not that the Company will utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an Overall Domestic Loss account balance.

 

(8)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.


PRDO ANNOUNCES 3Q20 RESULTS …PG 7

 

 

BALANCE SHEET AND CASH FLOW

 

For the quarter and year to date ended September 30, 2020, net cash provided by operating activities was $32.4 million and $137.8 million, compared to $32.0 million and $85.4 million for the respective prior year periods.

 

As of September 30, 2020 and December 31, 2019, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $367.7 million and $294.2 million, respectively.

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

Selected Cash Flow Items ($ in thousands)

 

2020

 

 

2019

 

 

% Change

 

 

2020

 

 

2019

 

 

% Change

 

Net cash provided by operating activities

 

$

32,389

 

 

$

31,977

 

 

 

1.3

%

 

$

137,753

 

 

$

85,391

 

 

 

61.3

%

Capital expenditures

 

$

4,040

 

 

$

1,812

 

 

 

123.0

%

 

$

7,479

 

 

$

3,220

 

 

 

132.3

%

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.

The outlook reflects the Company’s expectation of achieving growth in new and total student enrollments at both CTU and AIU for the fourth quarter and full year 2020.

 

Total Company Outlook

 

For Quarter Ending December 31,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2020

2019

 

2020

2019

Operating Income

$30.8M - $32.3M

$32.0M

 

$137.5M - $139.0M

$86.5M

Adjusted Operating Income

$35.2M - $36.7M

$34.6M

 

$154.0M - $155.5M

$134.3M

 

 

 

 

 

 

Earnings Per Diluted Share

$0.33 - $0.34

$0.38

 

$1.69 - $1.71

$0.97

Adjusted Earnings Per Diluted Share

$0.34 - $0.35

$0.33

 

$1.51 - $1.53

$1.37

 

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share may not follow the same trends stated in the outlook above because of adjustments made for certain significant and non-cash items such as lease expenses for vacated space offset with any sublease income as well as depreciation, amortization, asset impairment charges, significant restructuring charges and significant legal settlements. The operating income, adjusted operating income, earnings per share, adjusted earnings per share and enrollment outlook provided above for 2020 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs remains consistent with recent experience, (ii) initiatives and investments in student-serving operations continue to positively impact enrollment trends, (iii) no material changes in the current legal or regulatory environment, and excludes legal and regulatory liabilities and other related impacts which are not probable and estimable at this time, and any impact of new or proposed regulations, including the “borrower defense to repayment” regulations, (iv) no significant operating impacts from the settlements with the U.S. Federal Trade Commission and state attorneys general or other legal or regulatory matters, (v) no significant operating or financial impacts from the COVID-19 pandemic beyond known costs which have been incorporated in the outlook, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 26% for the fourth quarter and approximately 15% for the full year, and (vii) any future impact from the Company’s stock repurchase program is excluded. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current and future circumstances and actions that may be undertaken, actual results could differ materially from these estimates. In addition, decisions the Company makes in the future as it continues to evaluate diverse strategies to enhance shareholder value may impact the outlook provided above.



PRDO ANNOUNCES 3Q20 RESULTS …PG 8

 

 

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Thursday, November 5, 2020 at 5:30 p.m. Eastern time to discuss third quarter and year to date 2020 results and 2020 outlook. Interested parties can access the live webcast of the conference at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-844-378-6484 (domestic) or 1-412-542-4179 (international). Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.perdoceoed.com in the Investor Relations section of the website.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The Company’s regionally 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. Our universities offer students industry-relevant and career-focused degree programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to support students and enhance learning. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

A listing of university locations and web links to Perdoceo institutions can be found at www.perdoceoed.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “believe,” “will,” “expect,” “continue,” “outlook,” “remain,” “focused on,” “should” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment or interest in our programs; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of various versions of “borrower defense to repayment” regulations; rulemaking by the U.S. Department of Education or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions; the operating impact of the settlements with the U.S. Federal Trade Commission and state attorneys general; the success of our initiatives to improve student experiences, retention and academic outcomes; the ability of our student admissions and advising functions to achieve anticipated operating performance; our continued eligibility to participate in educational assistance programs for veterans or other military personnel; the impact of the global COVID-19 pandemic; difficulties with integrating the assets of Trident University International into AIU’s operations; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and its subsequent filings with the Securities and Exchange Commission.

###

 

 

 

 

 

 

 

 

 

CONTACT


PRDO ANNOUNCES 3Q20 RESULTS …PG 9

 

 

 

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

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

58,120

 

 

$

108,687

 

Restricted cash

 

 

4,000

 

 

 

-

 

Short-term investments

 

 

305,610

 

 

 

185,488

 

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

 

 

367,730

 

 

 

294,175

 

 

 

 

 

 

 

 

 

 

Student receivables, net

 

 

37,554

 

 

 

55,018

 

Receivables, other

 

 

2,711

 

 

 

1,381

 

Prepaid expenses

 

 

7,825

 

 

 

7,299

 

Inventories

 

 

616

 

 

 

576

 

Other current assets

 

 

418

 

 

 

1,936

 

Total current assets

 

 

416,854

 

 

 

360,385

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

28,808

 

 

 

26,006

 

Right of use asset, net

 

 

47,050

 

 

 

50,366

 

Goodwill

 

 

118,312

 

 

 

87,356

 

Intangible assets, net

 

 

16,356

 

 

 

7,900

 

Student receivables, net

 

 

1,155

 

 

 

1,244

 

Deferred income tax assets, net

 

 

49,284

 

 

 

60,169

 

Other assets

 

 

5,932

 

 

 

5,720

 

TOTAL ASSETS

 

$

683,751

 

 

$

599,146

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

$

11,013

 

 

$

11,784

 

Accounts payable

 

 

12,856

 

 

 

11,533

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

19,350

 

 

 

27,616

 

Advertising and marketing costs

 

 

12,495

 

 

 

10,479

 

Income taxes

 

 

2,378

 

 

 

1,376

 

Other

 

 

11,100

 

 

 

16,378

 

Deferred revenue

 

 

29,303

 

 

 

24,647

 

Total current liabilities

 

 

98,495

 

 

 

103,813

 

 

 

 

 

 

 

 

 

 

NON-CURRENT  LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

 

46,273

 

 

 

52,391

 

Other liabilities

 

 

17,312

 

 

 

11,647

 

Total non-current liabilities

 

 

63,585

 

 

 

64,038

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

865

 

 

 

860

 

Additional paid-in capital

 

 

650,990

 

 

 

639,335

 

Accumulated other comprehensive income

 

 

603

 

 

 

344

 

Retained earnings

 

 

115,284

 

 

 

18,071

 

Treasury stock

 

 

(246,071

)

 

 

(227,315

)

Total stockholders' equity

 

 

521,671

 

 

 

431,295

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

683,751

 

 

$

599,146

 


 

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,

 

 

 

2020

 

 

% of

Total

Revenue

 

 

2019

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

168,471

 

 

 

99.6

%

 

$

154,291

 

 

 

99.6

%

Other

 

 

655

 

 

 

0.4

%

 

 

668

 

 

 

0.4

%

Total revenue

 

 

169,126

 

 

 

 

 

 

 

154,959

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

27,562

 

 

 

16.3

%

 

 

25,318

 

 

 

16.3

%

General and administrative

 

 

105,495

 

 

 

62.4

%

 

 

103,063

 

 

 

66.5

%

Depreciation and amortization

 

 

3,995

 

 

 

2.4

%

 

 

2,284

 

 

 

1.5

%

Total operating expenses

 

 

137,052

 

 

 

81.0

%

 

 

130,665

 

 

 

84.3

%

Operating income

 

 

32,074

 

 

 

19.0

%

 

 

24,294

 

 

 

15.7

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

737

 

 

 

0.4

%

 

 

1,698

 

 

 

1.1

%

Interest expense

 

 

(42

)

 

 

0.0

%

 

 

(43

)

 

 

0.0

%

Miscellaneous (expense) income

 

 

(14

)

 

 

0.0

%

 

 

97

 

 

 

0.1

%

Total other income

 

 

681

 

 

 

0.4

%

 

 

1,752

 

 

 

1.1

%

PRETAX INCOME

 

 

32,755

 

 

 

19.4

%

 

 

26,046

 

 

 

16.8

%

(Benefit from) provision for income taxes

 

 

(7,206

)

 

 

-4.3

%

 

 

7,653

 

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

39,961

 

 

 

23.6

%

 

 

18,393

 

 

 

11.9

%

Loss from discontinued operations, net of tax

 

 

(21

)

 

 

0.0

%

 

 

(159

)

 

 

-0.1

%

NET INCOME

 

 

39,940

 

 

 

23.6

%

 

 

18,234

 

 

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.58

 

 

 

 

 

 

$

0.26

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.58

 

 

 

 

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE -DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.56

 

 

 

 

 

 

$

0.25

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income per share

 

$

0.56

 

 

 

 

 

 

$

0.25

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,167

 

 

 

 

 

 

 

70,142

 

 

 

 

 

Diluted

 

 

71,016

 

 

 

 

 

 

 

72,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Quarter Ended September 30,

 

 

 

2020

 

 

 

 

 

 

2019

 

 

 

 

 

NET INCOME

 

$

39,940

 

 

 

 

 

 

$

18,234

 

 

 

 

 

OTHER COMPREHENSIVE LOSS, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

123

 

 

 

 

 

 

 

(113

)

 

 

 

 

Unrealized (loss) gain on investments

 

 

(461

)

 

 

 

 

 

 

44

 

 

 

 

 

Total other comprehensive loss

 

 

(338

)

 

 

 

 

 

 

(69

)

 

 

 

 

COMPREHENSIVE INCOME

 

$

39,602

 

 

 

 

 

 

$

18,165

 

 

 

 

 


 

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,

 

 

 

2020

 

 

% of

Total

Revenue

 

 

2019

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees

 

$

514,364

 

 

 

99.7

%

 

$

467,298

 

 

 

99.6

%

Other

 

 

1,791

 

 

 

0.3

%

 

 

1,955

 

 

 

0.4

%

Total revenue

 

 

516,155

 

 

 

 

 

 

 

469,253

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

83,149

 

 

 

16.1

%

 

 

76,995

 

 

 

16.4

%

General and administrative

 

 

314,864

 

 

 

61.0

%

 

 

331,057

 

 

 

70.5

%

Depreciation and amortization

 

 

10,785

 

 

 

2.1

%

 

 

6,752

 

 

 

1.4

%

Asset impairment

 

 

612

 

 

 

0.1

%

 

 

-

 

 

 

0.0

%

Total operating expenses

 

 

409,410

 

 

 

79.3

%

 

 

414,804

 

 

 

88.4

%

Operating income

 

 

106,745

 

 

 

20.7

%

 

 

54,449

 

 

 

11.6

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,235

 

 

 

0.6

%

 

 

4,730

 

 

 

1.0

%

Interest expense

 

 

(126

)

 

 

0.0

%

 

 

(125

)

 

 

0.0

%

Miscellaneous income

 

 

98

 

 

 

0.0

%

 

 

368

 

 

 

0.1

%

Total other income

 

 

3,207

 

 

 

0.6

%

 

 

4,973

 

 

 

1.1

%

PRETAX INCOME

 

 

109,952

 

 

 

21.3

%

 

 

59,422

 

 

 

12.7

%

Provision for income taxes

 

 

12,670

 

 

 

2.5

%

 

 

16,362

 

 

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

 

97,282

 

 

 

18.8

%

 

 

43,060

 

 

 

9.2

%

Loss from discontinued operations, net of tax

 

 

(69

)

 

 

0.0

%

 

 

(594

)

 

 

-0.1

%

NET INCOME

 

 

97,213

 

 

 

18.8

%

 

 

42,466

 

 

 

9.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.40

 

 

 

 

 

 

$

0.62

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income per share

 

$

1.40

 

 

 

 

 

 

$

0.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - DILUTED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.36

 

 

 

 

 

 

$

0.60

 

 

 

 

 

Loss from discontinued operations

 

 

-

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income per share

 

$

1.36

 

 

 

 

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

69,366

 

 

 

 

 

 

 

70,029

 

 

 

 

 

Diluted

 

 

71,267

 

 

 

 

 

 

 

71,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Year to Date Ended September 30,

 

 

 

2020

 

 

 

 

 

 

2019

 

 

 

 

 

NET INCOME

 

$

97,213

 

 

 

 

 

 

$

42,466

 

 

 

 

 

OTHER COMPREHENSIVE INCOME, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

128

 

 

 

 

 

 

 

(130

)

 

 

 

 

Unrealized gain on investments

 

 

131

 

 

 

 

 

 

 

814

 

 

 

 

 

Total other comprehensive income

 

 

259

 

 

 

 

 

 

 

684

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

97,472

 

 

 

 

 

 

$

43,150

 

 

 

 

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Year to Date Ended September 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

97,213

 

 

$

42,466

 

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

 

 

 

 

 

 

 

 

Asset impairment

 

 

612

 

 

 

-

 

Depreciation and amortization expense

 

 

10,785

 

 

 

6,752

 

Bad debt expense

 

 

36,706

 

 

 

32,028

 

Compensation expense related to share-based awards

 

 

9,735

 

 

 

3,922

 

Deferred income taxes

 

 

11,339

 

 

 

16,265

 

Changes in operating assets and liabilities

 

 

(28,637

)

 

 

(16,042

)

Net cash provided by operating activities

 

 

137,753

 

 

 

85,391

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(333,767

)

 

 

(418,156

)

Sales of available-for-sale investments

 

 

213,576

 

 

 

382,022

 

Purchases of property and equipment

 

 

(7,479

)

 

 

(3,220

)

Business acquisition

 

 

(39,819

)

 

 

-

 

Other

 

 

-

 

 

 

9

 

Net cash used in investing activities

 

 

(167,489

)

 

 

(39,345

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

1,925

 

 

 

1,326

 

Purchase of treasury stock

 

 

(17,862

)

 

 

-

 

Payments of employee tax associated with stock compensation

 

 

(894

)

 

 

(2,692

)

Net cash used in financing activities

 

 

(16,831

)

 

 

(1,366

)

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

 

 

(46,567

)

 

 

44,680

 

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

 

 

108,687

 

 

 

32,731

 

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

 

$

62,120

 

 

$

77,411

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

For the Quarter Ended September 30,

 

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

98,985

 

 

$

96,038

 

AIU (1)

 

 

70,048

 

 

 

58,907

 

Total University Group

 

 

169,033

 

 

 

154,945

 

Corporate and Other (2)

 

 

93

 

 

 

14

 

Total

 

$

169,126

 

 

$

154,959

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU

 

$

32,993

 

 

$

29,926

 

AIU (1)

 

 

5,513

 

 

 

7,341

 

Total University Group

 

 

38,506

 

 

 

37,267

 

Corporate and Other (2)

 

 

(6,432

)

 

 

(12,973

)

Total

 

$

32,074

 

 

$

24,294

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU

 

 

33.3

%

 

 

31.2

%

AIU (1)

 

 

7.9

%

 

 

12.5

%

Total University Group

 

 

22.8

%

 

 

24.1

%

Corporate and Other (2)

 

NM

 

 

NM

 

Total

 

 

19.0

%

 

 

15.7

%

 

 

 

(1)

AIU’s revenue and operating income for the quarter ended September 30, 2020 include results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 

(2)

Corporate and Other includes results of operations for closed campuses. Operating losses related to closed campuses were $0.4 million and $8.2 million for the quarters ended September 30, 2020 and 2019, respectively, which included $7.1 million of legal settlement expense related to the Oregon arbitration matter for the quarter ended September 30, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

For the Year to Date Ended September 30,

 

 

 

2020

 

 

2019

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

302,766

 

 

$

289,650

 

AIU (1)

 

 

213,279

 

 

 

179,559

 

Total University Group

 

 

516,045

 

 

 

469,209

 

Corporate and Other (2)

 

 

110

 

 

 

44

 

Total

 

$

516,155

 

 

$

469,253

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

$

100,688

 

 

$

71,730

 

AIU (1) (4)

 

 

25,365

 

 

 

11,436

 

Total University Group

 

 

126,053

 

 

 

83,166

 

Corporate and Other (2)

 

 

(19,308

)

 

 

(28,717

)

Total

 

$

106,745

 

 

$

54,449

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU (3)

 

 

33.3

%

 

 

24.8

%

AIU (1) (4)

 

 

11.9

%

 

 

6.4

%

Total University Group

 

 

24.4

%

 

 

17.7

%

Corporate and Other (2)

 

NM

 

 

NM

 

Total

 

 

20.7

%

 

 

11.6

%

 

 

(1)

AIU’s revenue and operating income for the year to date ended September 30, 2020 include results associated with the Trident acquisition commencing on the March 2, 2020 date of acquisition.

 

(2)

Corporate and Other includes results of operations for closed campuses. Operating losses related to closed campuses were $1.8 million and $12.8 million for the years to date ended September 30, 2020 and 2019, respectively, which included $7.1 million of legal settlement expense related to the Oregon arbitration matter for the year to date ended September 30, 2019.

 

(3)

$18.6 million of expense related to the FTC settlement was recorded within CTU during the year to date ended September 30, 2019.

 

(4)

$11.4 million of expense related to the FTC settlement was recorded within AIU during the year to date ended September 30, 2019.

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

(In thousands, unless otherwise noted)

 

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

 

 

ACTUAL

 

 

ACTUAL

 

Adjusted Operating Income

 

2020 (9)

 

 

2019

 

 

2020 (9)

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

32,074

 

 

$

24,294

 

 

$

106,745

 

 

$

54,449

 

Depreciation and amortization (2)

 

 

3,995

 

 

 

2,284

 

 

 

10,785

 

 

 

6,752

 

Asset impairment (3)

 

 

-

 

 

-

 

 

 

612

 

 

 

-

 

Lease expenses for vacated space (4)

 

 

270

 

 

 

295

 

 

 

689

 

 

 

1,453

 

Significant legal settlements (5)

 

 

-

 

 

 

7,100

 

 

 

-

 

 

 

37,100

 

Adjusted Operating Income -- Total Company

 

$

36,339

 

 

$

33,973

 

 

$

118,831

 

 

$

99,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending December 31,

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2020 (9)

 

 

2019

 

 

2020 (9)

 

 

2019

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$30.8M - $32.3M

 

 

$

32,013

 

 

$137.5M - $139.0M

 

 

$

86,462

 

Depreciation and amortization (2)

 

4.2M

 

 

 

2,393

 

 

15.0M

 

 

 

9,145

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

0.6M

 

 

-

 

Lease expenses for vacated space (4)

 

0.2M

 

 

 

177

 

 

0.9M

 

 

 

1,630

 

Significant legal settlements (5)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

37,100

 

Adjusted Operating Income -- Total Company

 

$35.2M - $36.7M

 

 

$

34,583

 

 

$154.0M - $155.5M

 

 

$

134,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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

 

 

 

 

2020 (9)

 

 

2019

 

 

2020 (9)

 

 

2019

 

 

Reported Earnings Per Diluted Share

 

$

0.56

 

 

$

0.25

 

 

$

1.36

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.01

 

 

 

-

 

 

 

0.02

 

 

 

-

 

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

0.02

 

 

Significant legal settlements (5)

 

 

-

 

 

 

0.10

 

 

 

-

 

 

 

0.52

 

 

Total pre-tax adjustments

 

$

0.01

 

 

$

0.10

 

 

$

0.04

 

 

$

0.54

 

 

Tax effect of adjustments (6)

 

 

-

 

 

 

(0.02

)

 

 

(0.01

)

 

 

(0.06

)

 

Tax effect of change in settlement deductibility (7)

 

 

-

 

 

 

0.02

 

 

 

-

 

 

 

(0.03

)

 

Release of valuation allowance (8)

 

 

(0.22

)

 

 

-

 

 

 

(0.22

)

 

 

-

 

 

Total adjustments after tax

 

 

(0.21

)

 

 

0.10

 

 

 

(0.19

)

 

 

0.45

 

 

Adjusted Earnings Per Diluted Share

 

$

0.35

 

 

$

0.35

 

 

$

1.17

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending December 31,

 

 

For the Year Ending December 31,

 

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

 

2020 (9)

 

 

2019

 

 

2020 (9)

 

 

2019

 

 

Reported Earnings Per Diluted Share

 

$0.33 - $0.34

 

 

$

0.38

 

 

$1.69 - $1.71

 

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization (2)

 

 

0.01

 

 

 

-

 

 

 

0.04

 

 

 

-

 

 

Asset impairment (3)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

-

 

 

Lease expenses for vacated space (4)

 

 

-

 

 

 

-

 

 

 

0.01

 

 

 

0.02

 

 

Significant legal settlements (5)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.51

 

 

Total pre-tax adjustments

 

$

0.01

 

 

$

-

 

 

$

0.06

 

 

$

0.53

 

 

Tax effect of adjustments (6)

 

 

-

 

 

 

-

 

 

 

(0.02

)

 

 

(0.13

)

 

Tax effect of change in settlement deductibility (7)

 

 

-

 

 

 

(0.05

)

 

 

-

 

 

 

-

 

 

Release of valuation allowance (8)

 

 

-

 

 

 

-

 

 

 

(0.22

)

 

 

-

 

 

Total adjustments after tax

 

 

0.01

 

 

 

(0.05

)

 

 

(0.18

)

 

 

0.40

 

 

Adjusted Earnings Per Diluted Share

 

$0.34 - $0.35

 

 

$

0.33

 

 

$1.51 - $1.53

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

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

(1)

The Company believes it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of its operations. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its operations, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance.

 

The Company believes adjusted operating income and adjusted earnings per diluted share allow it to analyze and assess its operations and compare current operating results with the operational performance of other companies in its industry because it does not give effect to potential differences caused by items it does not consider reflective of underlying operating performance, such as restructuring charges and significant legal settlements. In evaluating adjusted operating income and adjusted earnings per diluted share, investors should be aware that in the future the Company may incur expenses similar to the adjustments presented above. The presentation of adjusted operating income and adjusted earnings per diluted share should not be construed as an inference that the Company's future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of liquidity.

 

Non-GAAP financial measures, when viewed in a reconciliation to corresponding GAAP financial measures, provide an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business.  Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

 

(2)

Amortization amounts relate to definite-lived intangible assets associated with the Trident acquisition.

 

(3)

Asset impairment relates to a right of use asset for one of the Company’s vacated facilities for which the sublease income was deemed no longer recoverable.

 

(4)

Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income for closed campuses.

 

(5)

Significant legal settlements relate to the FTC and Oregon arbitrations matters recorded during 2019.

 

(6)

The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments. 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)

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million reflected during the fourth quarter of 2019 has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the third quarter of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share which would have increased by $0.02 for the quarter ended September 30, 2019 and decreased $0.03 for the year to date ended September 30, 2019. The third quarter and year to date ended September 30, 2019 now reflect this adjustment. For the full year 2019, approximately $29.7 million was considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility had no effect for the full year 2019.

 

(8)

This relates to the release of a valuation allowance in the amount of $16.0 million as a result of the current determination that it is more likely than not that the Company will utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an Overall Domestic Loss account balance.

 

(9)

2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

v3.20.2
Document and Entity Information
Nov. 05, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Nov. 05, 2020
Entity Registrant Name Perdoceo Education Corporation
Entity Central Index Key 0001046568
Entity Emerging Growth Company false
Entity File Number 0-23245
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 36-3932190
Entity Address, Address Line One 231 N. Martingale Rd.
Entity Address, City or Town Schaumburg
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60173
City Area Code (847) 
Local Phone Number 781-3600
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Security 12b Title Common Stock, $0.01 par value
Trading Symbol PRDO
Security Exchange Name NASDAQ