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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
MARCH 31,
2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
TO
Commission File Number:
0-23245
PERDOCEO EDUCATION CORP
ORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3932190
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1750 E. Golf Road 60173
Schaumburg
,
Illinois
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (
847
)
781-3600
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report: N/A
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: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T ((s) 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit such
files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company" and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
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.
Indicate by check mark whether the registrant is a shell company, as defined
in Rule 12b-2 of the Exchange Act. Yes
No
Number of shares of registrant's common stock, par value $0.01, outstanding as
of April 26, 2024:
65,602,629
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPORATION
FORM 10-Q
TABLE OF CONTENTS
Page
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income (Unaudited) 2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) 2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) 3
Condensed Consolidated Statements of Cash Flows (Unaudited) 4
Notes to Unaudited Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
Item 4. Controls and Procedures 24
PART II-OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 1A. Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
Item 5. Other Information 26
Item 6. Exhibits 26
SIGNATURES 28
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDA
TED BALANCE SHEETS
March 31, December 31,
(In Thousands, Except Share and Per Share Amounts) 2024 2023
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents, unrestricted $ 125,807 $ 118,009
Restricted cash 1,024 1,012
Total cash, cash equivalents and restricted cash 126,831 119,021
Short-term investments 515,602 485,135
Total cash and cash equivalents, restricted cash and short-term investments 642,433 604,156
Student receivables, gross 77,410 64,011
Allowance for credit losses ( ) ( )
35,468 34,613
Student receivables, net 41,942 29,398
Receivables, other 5,289 4,539
Prepaid expenses 11,912 11,712
Inventories 4,251 5,004
Other current assets 196 155
Total current assets 706,023 654,964
NON-CURRENT ASSETS:
Property and equipment, net of accumulated depreciation of $ 20,938 21,371
60,694
and $
58,785
as of March 31, 2024 and December 31, 2023, respectively
Right of use asset, net 13,963 19,096
Goodwill 241,162 241,162
Intangible assets, net of amortization of $ 35,110 36,219
24,720
and $
23,612
as of March 31, 2024 and December 31, 2023, respectively
Student receivables, gross 7,946 7,028
Allowance for credit losses ( ) ( )
3,086 3,169
Student receivables, net 4,860 3,859
Deferred income tax assets, net 23,063 23,804
Other assets 6,846 6,841
TOTAL ASSETS $ 1,051,965 $ 1,007,316
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lease liability-operating $ 5,989 $ 5,701
Accounts payable 11,830 10,766
Accrued expenses:
Payroll and related benefits 18,726 32,684
Advertising and marketing costs 6,810 7,196
Income taxes 16,543 3,974
Other 21,112 13,503
Deferred revenue 61,498 37,215
Total current liabilities 142,508 111,039
NON-CURRENT LIABILITIES:
Lease liability-operating 16,701 21,346
Other liabilities 26,650 33,510
Total non-current liabilities 43,351 54,856
Commitments and Contingencies
(Note 8)
STOCKHOLDERS' EQUITY:
Preferred - -
stock, $
0.01
par value;
1,000,000
shares authorized;
none
issued or outstanding
Common stock, $ 909 903
0.01
par value;
300,000,000
shares authorized;
90,907,065
and
90,270,306
shares issued,
65,602,629
and
65,544,539
shares
outstanding as of March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital 698,619 694,798
Accumulated other comprehensive loss ( ) ( )
1,620 666
Retained earnings 512,622 480,606
Treasury stock, at cost; ( ) ( )
25,304,436 344,424 334,220
and
24,725,767
shares as of March 31, 2024
and December 31, 2023, respectively
Total stockholders' equity 866,106 841,421
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,051,965 $ 1,007,316
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPOR
ATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATE
MENTS OF INCOME
(UNAUDITED)
For the Quarter Ended March 31,
(In Thousands, Except Per Share Amounts) 2024 2023
REVENUE:
Tuition and fees, net $ 166,998 $ 193,319
Other 1,266 2,279
Total revenue 168,264 195,598
OPERATING EXPENSES:
Educational services and facilities 29,858 33,851
General and administrative 87,482 112,686
Depreciation and amortization 3,016 5,155
Asset impairment 1,630 570
Total operating expenses 121,986 152,262
Operating income 46,278 43,336
OTHER INCOME:
Interest income 6,793 3,818
Interest expense ( ) ( )
335 95
Miscellaneous income (expense) 115 ( )
6
Total other income 6,573 3,717
PRETAX INCOME 52,851 47,053
Provision for income taxes 13,409 12,569
NET INCOME 39,442 34,484
NET INCOME PER SHARE - BASIC: $ 0.60 $ 0.51
NET INCOME PER SHARE - DILUTED: $ 0.59 $ 0.50
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 65,555 67,235
Diluted 66,841 68,514
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
For the Quarter Ended March 31,
(In Thousands) 2024 2023
NET INCOME $ 39,442 $ 34,484
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:
Foreign currency translation adjustments ( ) 26
31
Unrealized (loss) gain on investments ( ) 1,300
923
Total other comprehensive (loss) income ( ) 1,326
954
COMPREHENSIVE INCOME $ 38,488 $ 35,810
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Common Treasury
Stock Stock
(In Issued $0.01 Purchased Cost Additional Accumulated Retained Total
Thousands) Shares Par Shares Paid-in Other Earnings
Value Capital Comprehensive
Loss
BALANCE, 90,270 $ 903 ( ) $ ( ) $ 694,798 $ ( ) $ 480,606 $ 841,421
January 24,726 334,220 666
1,
2024
Net - - - - - - 39,442 39,442
income
Foreign - - - - - ( ) - ( )
currency 31 31
translation
Unrealized - - - - - ( ) - ( )
loss on 923 923
investments,
net of tax
Dividends to - - - - - - ( ) ( )
shareholders, 7,426 7,426
per
share $
0.11
Treasury - - ( ) ( ) - - - ( )
stock 385 6,769 6,769
purchased
Share-based - - - - 2,307 - - 2,307
compensation
expense
Common 637 6 ( ) ( ) 1,514 - - ( )
stock 193 3,435 1,915
issued
BALANCE, 90,907 $ 909 ( ) $ ( ) $ 698,619 $ ( ) $ 512,622 $ 866,106
March 25,304 344,424 1,620
31,
2024
Common Treasury
Stock Stock
(In Issued $0.01 Purchased Cost Additional Accumulated Retained Total
Thousands) Shares Par Shares Paid-in Other Earnings
Value Capital Comprehensive
Loss
BALANCE, 89,396 $ 894 ( ) $ ( ) $ 684,183 $ ( ) $ 347,839 $ 725,845
January 22,221 301,624 5,447
1,
2023
Net - - - - - - 34,484 34,484
income
Foreign - - - - - 26 - 26
currency
translation
Unrealized - - - - - 1,300 - 1,300
gain on
investments,
net of tax
Treasury - - ( ) ( ) - - - ( )
stock 60 815 815
purchased
Share-based - - - - 2,294 - - 2,294
compensation
expense
Common 528 5 ( ) ( ) 242 - - ( )
stock 165 2,209 1,962
issued
BALANCE, 89,924 $ 899 ( ) $ ( ) $ 686,719 $ ( ) $ 382,323 $ 761,172
March 22,446 304,648 4,121
31,
2023
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
For the Quarter Ended March 31,
(In Thousands) 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39,442 $ 34,484
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairment 1,630 570
Depreciation and amortization expense 3,016 5,155
Bad debt expense 6,556 10,757
Compensation expense related to share-based awards 2,307 2,294
Deferred income taxes 741 304
Changes in operating assets and liabilities 800 ( )
48,992
Net cash provided by operating activities 54,492 4,572
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments ( ) ( )
104,558 83,777
Sales of available-for-sale investments 74,955 64,344
Purchases of property and equipment ( ) ( )
1,198 1,925
Net cash used in investing activities ( ) ( )
30,801 21,358
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,520 247
Purchase of treasury stock ( ) ( )
6,769 815
Payments of employee tax associated with stock compensation ( ) ( )
3,435 2,209
Payments of cash dividends ( ) -
7,197
Net cash used in financing activities ( ) ( )
15,881 2,777
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 7,810 ( )
19,563
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period 119,021 118,884
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period $ 126,831 $ 99,321
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
-------------------------------------------------------------------------------
PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE COMPANY
Perdoceo's accredited academic institutions offer a quality postsecondary
education primarily online to a diverse student population, along with
campus-based and blended learning programs. The Company's academic
institutions - Colorado Technical University ("
CTU
") and the American InterContinental University System ("
AIUS
" or "
AIU System
") - provide degree programs from the associate through doctoral level as well
as non-degree seeking and professional development programs. Our academic
institutions offer students industry-relevant and career-focused academic
programs that are designed to meet the educational needs of today's busy
adults. CTU and AIUS continue to show innovation in higher education,
advancing personalized learning technologies like their intellipath(R)
learning platform and using data analytics and technology to serve and educate
students while enhancing overall learning and academic experiences. Perdoceo's
institutions are committed to providing quality education that closes the gap
between learners who seek to advance their careers and employers needing a
qualified workforce.
As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our,"
"the Company," "Perdoceo" and "PEC" refer to Perdoceo Education Corporation
and our wholly-owned subsidiaries.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States
("GAAP")
for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, the financial statements do not
include all of the information and notes required by GAAP for complete
financial statements. In the opinion of management, all adjustments, including
normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the quarter ended March 31, 2024 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2024.
The unaudited condensed consolidated financial statements presented herein
include the accounts of Perdoceo Education Corporation and our wholly-owned
subsidiaries. All intercompany transactions and balances have been eliminated.
Our reporting segments are determined in accordance with Financial Accounting
Standards Board
("FASB")
Accounting Standards Codification
("ASC")
Topic 280 -
Segment Reporting
and are based upon how the Company analyzes performance and makes decisions.
Each segment represents a postsecondary education provider that offers a
variety of academic programs. We organize our business across
two
reporting segments: CTU and AIUS.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting guidance not yet adopted
In December 2023, the FASB issued Accounting Standard Update ("
ASU
") No. 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures
. The amendments in this ASU require that public business entities on an
annual basis 1) disclose specific categories in the rate reconciliation, and
2) provide additional information for reconciling items that meet a
quantitative threshold. The amendments require disclosure about income taxes
paid by federal, state and foreign taxes, and by individual jurisdictions in
which income taxes paid is equal or greater than 5 percent of total income
taxes paid. The amendment also require entities to disclose income or loss
from continuing operations before income tax expense disaggregated between
domestic and foreign and income tax expense or benefit from continuing
operations disaggregated by federal, state and foreign. For all public
business entities, ASU 2023-09 is effective for annual periods beginning after
December 15, 2024; early adoption is permitted. We are currently evaluating
this guidance and believe the adoption will not significantly impact the
presentation of our financial condition, results of operations and disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic
280):
Improvements to Reportable Segment Disclosures
. The amendments in this ASU improve reportable segment disclosure
requirements, primarily through enhanced disclosures about significant segment
expenses. The amendments in this update require that a public entity disclose
on an annual and interim basis, 1) significant segment expenses that are
regularly provided to the chief operating decision maker ("
CODM
") and included within each reported measure of segment profit or loss, 2) an
amount for other segment items by reportable segment and a description of its
composition. The other segment items category is the difference between
segment revenue less the segment expenses disclosed under the significant
expense principle and each reported measure of segment profit or loss, and 3)
disclose the title and position of the CODM and an explanation of how the CODM
uses the reported measure(s) of segment profit or loss in assessing segment
performance and deciding how to allocate resources. For all public business
entities, ASU 2023-07 is effective for annual periods and interim periods
beginning after December 15, 2024; early adoption is permitted. We are
currently evaluating this guidance and believe the adoption will not
significantly impact the presentation of our financial condition, results of
operations and disclosures.
5
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In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic
820):
Fair Value Measurement of Equity Securities Subject to Contractual Sale
Restrictions
. The amendments in this ASU clarify that a contractual restriction on the
sale of an equity security is not considered part of the unit of account of
the equity security and, therefore, is not considered in measuring fair value.
The amendments also clarify that an entity cannot, as a separate unit of
account, recognize and measure a contractual sale restriction. For all public
business entities, ASU 2022-03 is effective for annual periods and interim
periods beginning after December 15, 2024; early adoption is permitted. We are
currently evaluating this guidance and believe the adoption will not
significantly impact the presentation of our financial condition, results of
operations and disclosures.
4. FINANCIAL INSTRUMENTS
Investments consist of the following as of March 31, 2024 and December 31,
2023 (dollars in thousands):
March 31, 2024
Gross Unrealized
Cost Gain (Loss) Fair Value
Short-term investments (available for sale):
Non-governmental debt securities $ 240,241 $ 227 $ ( ) $ 239,581
887
Treasury and federal agencies 276,887 79 ( ) 276,021
945
Total short-term investments (available for sale) $ 517,128 $ 306 $ ( ) $ 515,602
1,832
December 31, 2023
Gross Unrealized
Cost Gain (Loss) Fair Value
Short-term investments (available for sale):
Non-governmental debt securities 245,886 719 ( ) 245,713
892
Treasury and federal agencies 239,859 393 ( ) 239,422
830
Total short-term investments (available for sale) $ 485,745 $ 1,112 $ ( ) $ 485,135
1,722
In the table above, unrealized holding gains (losses) relate to short-term
investments that have been in a continuous unrealized gain (loss) position for
less than
one year
.
Our non-governmental debt securities primarily consist of corporate bonds,
certificates of deposit and commercial paper. Our treasury and federal
agencies primarily consist of U.S. Treasury bills and federal home loan debt
securities.
Realized gains or loss resulting from sales of investments were
zero
during the quarters ended March 31, 2024 and March 31, 2023.
Fair Value Measurements
FASB ASC Topic 820 -
Fair Value Measurements
establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as
inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs for which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.
As of March 31, 2024, we held investments that are required to be measured at
fair value on a recurring basis. These investments (available for sale)
consist of non-governmental debt securities and treasury and federal agencies
securities. Available for sale securities included in Level 2 are estimated
based on observable inputs other than quoted prices in active markets for
identical assets and liabilities, such as quoted prices for identical or
similar assets or liabilities in inactive markets or other inputs that are
observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities.
All of our available for sale investments were measured under Level 2 as of
March 31, 2024 and December 31, 2023. Additionally, money market funds of
$
34.1
million and $
30.3
million included within cash and cash equivalents on our condensed
consolidated balance sheets as of March 31, 2024 and December 31, 2023,
respectively, were measured under Level 1. Federal agency debt securities and
commercial paper
of $
20.6
million and federal agency debt securities of $
44.9
million included within cash and cash equivalents on our unaudited condensed
consolidated balance sheets as of March 31, 2024 and December 31, 2023,
respectively, were measured under Level 2.
Equity Method Investment
Our investment in an equity affiliate, which is recorded within other
noncurrent assets on our condensed consolidated balance sheets, represents an
international investment in a private company. As of March 31, 2024, our
investment in an equity affiliate equated to
30.7
%, or $
1.3
million.
6
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During the quarters e
nded March 31, 2024 and 2023, we recorded approximately $
0.1
million of gain and less than $
0.1
million of loss, respectively, related to our equity affiliate within
miscellaneous income (expense) on our unaudited condensed consolidated
statements of income.
We make periodic operating maintenance payments to our equity affiliate. The
total fees recorded during the quarters ended March 31, 2024 and 2023 were as
follows (dollars in thousands):
Maintenance Fee Payments
For the quarter ended March 31, 2024 $ 444
For the quarter ended March 31, 2023 $ 431
Credit Agreement
On January 23, 2024, the Company and the subsidiary guarantors thereunder
entered into a Second Amendment (the "
Second Amendment
") to their credit agreement, dated as of September 8, 2021 and as amended on
April 1, 2022 (the "
Existing Credit Agreement
"), with the lenders from time to time parties thereto and Wintrust Bank N.A. ("
Wintrust
"), in its capacities as the sole lead arranger, sole bookrunner,
administrative agent and letter of credit issuer thereunder (the Existing
Credit Agreement, as further amended by the Second Amendment, the "
Credit Agreement
").
The Second Amendment, among other things: (i) extends the maturity date of the
revolving credit facility to
January 31, 2027
; (ii) lowers the "Prime Rate" floor from
4
% to
3
%;
(iii) replaces BMO Bank N.A. (formerly known as BMO Harris Bank N.A.) with
Valley National Bancorp as one of the lenders that is party to the revolving
credit facility; and (iv) modifies the relative commitments of the lenders
that are parties to the revolving credit facility.
The credit agreement provides the Company with the benefit of a $
125.0
million senior secured revolving credit facility. The $
125.0
million revolving credit facility under the credit agreement is scheduled to
mature on
January 31, 2027
. So long as no default has occurred and other conditions have been met, the
Company may request an increase in the aggregate commitment in an amount not
to exceed $
50.0
million. The loans and letter of credit obligations under the credit agreement
are secured by substantially all assets of the Company and the subsidiary
guarantors.
The credit agreement and the ancillary documents executed in connection
therewith contain customary affirmative, negative and financial maintenance
covenants, including a requirement for the borrowers to maintain cash and cash
equivalents in domestic accounts of at least $
156,250,000
at all times. Acquisitions to be undertaken by the Company must meet certain
criteria, and the Company's ability to make restricted payments, including
payments in connection with a repurchase of shares of our common stock and
quarterly dividend payments, is subject to an aggregate maximum of $
100.0
million per fiscal year. Upon the occurrence of certain regulatory events or
if the Company's unrestricted cash, cash equivalents and short term
investments are less than
125
% of the aggregate amount of the loan commitments then in effect, the Company
is required to maintain cash in a segregated, restricted account in an amount
not less than the aggregate loan commitments then in effect. The credit
agreement also contains customary representations and warranties, events of
default, and rights and remedies upon the occurrence of any event of default
thereunder, including rights to accelerate the loans, terminate the
commitments and realize upon the collateral securing the obligations under the
credit agreement.
Under the credit agreement, outstanding principal amounts bear annual interest
at a fluctuating rate equal to
1.0
% less than the administrative agent's prime commercial rate, subject to a
3.0
% minimum rate. A higher rate may apply to late payments or if any event of
default exists.
As of March 31, 2024 and December 31, 2023, there were
no
outstanding borrowings under the revolving credit facility.
5
.
REVENUE RECOGNITION
Disaggregation of Revenue
The following tables disaggregate our revenue by major source for the quarters
ended March 31, 2024 and 2023 (dollars in thousands):
7
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For the Quarter Ended For the Quarter Ended
March 31, 2024 March 31, 2023
CTU AIUS Corporate Total CTU AIUS Corporate Total
and Other and Other
Tuition, $ 107,440 $ 51,829 $ - $ 159,269 $ 117,998 $ 66,645 $ - $ 184,643
net
(1)
Technology and 5,340 2,389 - 7,729 5,423 3,253 - 8,676
other fees
Total tuition 112,780 54,218 - 166,998 123,421 69,898 - 193,319
and fees, net
Other 789 287 190 1,266 1,071 942 266 2,279
revenue
(2)
Total $ 113,569 $ 54,505 $ 190 $ 168,264 $ 124,492 $ 70,840 $ 266 $ 195,598
revenue
__________________
(1)
Tuition includes revenue earned for all degree-granting programs as well as
revenue earned for non-degree and professional development programs.
(2)
Other revenue primarily
includes contract training revenue and miscellaneous
non-student related revenue.
Performance Obligations
Our revenue, which is derived primarily from academic programs taught to
students who attend our universities, is generally segregated into two
categories: (1) tuition and fees, and (2) other. Tuition and fees represent
costs to our students for educational services provided by our universities
and are reflected net of scholarships and tuition discounts. Our universities
charge tuition and fees at varying amounts, depending on the university, the
type of program and specific curriculum. Our universities bill students a
single charge that covers tuition, certain fees and required program
materials, such as textbooks and supplies, which we treat as a single
performance obligation. Generally, we bill student tuition at the beginning of
each academic term for our degree programs and recognize the tuition as
revenue on a straight-line basis over the academic term. As part of a
student's course of instruction, certain fees, such as technology fees and
graduation fees, are billed separately to students. These fees are generally
earned over the applicable term and are not considered separate performance
obligations. We generally bill student tuition upon enrollment for our
non-degree professional development programs and recognize the tuition as
revenue on a straight-line basis over the length of the offering.
Other revenue, which primarily consists of contract training
revenue and miscellaneous non-student related revenue, is billed and
recognized as goods are delivered or services are performed.
Contract Assets
For each term, the portion of tuition and fee payments received from students
but not yet earned is recorded as deferred revenue and reported as a current
liability on our condensed consolidated balance sheets, as we expect to earn
these revenues within the next year. A contract asset is recorded for each
student for the current term for which they are enrolled for the amount
charged for the current term that has not yet been received as payment and to
which we do not have the unconditional right to receive payment because the
student has not reached the point in the student's current academic term at
which the amount billed is no longer refundable to the student. On a student
by student basis, the contract asset is offset against the deferred revenue
balance for the current term and the net deferred revenue balance is reflected
within current liabilities on our condensed consolidated balance sheets. For
certain of our institutions, students are billed as they enroll in courses,
including courses related to future periods. Any billings for future periods
would meet the definition of a contract asset as we do not have the
unconditional right to receive payment as the course has not yet started.
Contract assets related to future periods are offset against the respective
deferred revenue associated with the future period.
Due to the short-term nature of our academic terms, the contract asset balance
which exists at the beginning of each quarter will no longer be a contract
asset at the end of that quarter, with the exception of the contract assets
associated with future periods. The decrease in contract asset balances are a
result of one of the following: it becomes a student receivable balance once a
student reaches the point in a student's academic term where the amount billed
is no longer refundable to the student; a refund is made to withdrawn students
for the portion entitled to be refunded under each institutions' refund
policy; we receive funds to apply against the contract asset balance; or a
student makes a change to the number of classes they are enrolled in which may
cause an adjustment to their previously billed amount. As of the end of each
quarter, a new contract asset is determined on a student by student basis
based on the most recently started term and a student's progress within that
term as compared to the date at which the student is no longer entitled to a
refund under each institution's refund policy. Contract assets associated with
future periods remain as contract assets until the course begins and the
student reaches the point in that course that they are no longer entitled to a
refund.
The amount of deferred revenue balances which are being offset with contract
assets balances as of March 31, 2024 and December 31, 2023 were as follows
(dollars in thousands):
8
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As of
March 31, 2024 December 31, 2023
Gross deferred revenue $ 118,939 $ 63,970
Gross contract assets $ ( ) ( )
57,441 26,755
Deferred revenue, net $ 61,498 $ 37,215
Deferred Revenue
Changes in our deferred revenue balances for the quarters ended March 31, 2024
and 2023 were as follows (dollars in thousands):
For the Quarter Ended For the Quarter Ended
March 31, 2024 March 31, 2023
CTU AIUS Total CTU AIUS Total
Gross deferred $ 42,531 $ 21,439 $ 63,970 $ 67,245 $ 39,955 $ 107,200
revenue, January 1
Revenue earned from ( ) ( ) ( ) ( ) ( ) ( )
prior balances 35,052 17,695 52,747 54,712 29,753 84,465
Billings 152,877 69,777 222,654 100,012 53,132 153,144
during period
(1)
Revenue earned for new ( ) ( ) ( ) ( ) ( ) ( )
billings during the period 77,728 36,523 114,251 68,709 40,145 108,854
Other ( ) ( ) ( ) ( ) 271 ( )
adjustments 308 379 687 1,464 1,193
Gross deferred $ 82,320 $ 36,619 $ 118,939 $ 42,372 $ 23,460 $ 65,832
revenue, March 31
______________
(1)
Billings during period includes adjustments for prior billings.
Tuition Refunds
If a student withdraws from one of our academic institutions prior to the
completion of the academic term, we refund the portion of tuition and fees
already paid that, pursuant to our refund policy and applicable federal and
state law and accrediting agency standards, we are not entitled to retain.
Generally, the amount to be refunded to a student is calculated based upon the
percent of the term attended and the amount of tuition and fees paid by the
student as of their withdrawal date. In certain circumstances, we have
recognized revenue for students who have withdrawn that we are not entitled to
retain. We have estimated a reserve for these limited circumstances based on
historical evidence in the amount of $
2.1
million and $
2.0
million as of March 31, 2024 and December 31, 2023, respectively. Students are
typically entitled to a partial refund until approximately halfway through
their term. Pursuant to each university's policy, once a student reaches the
point in the term where no refund is given, the student would not have a
refund due if withdrawing from the university subsequent to that date.
6. STUDENT RECEIVABLES
Student receivables represent funds owed to us in exchange for the educational
services provided to a student. Student receivables are reflected net of an
allowance for credit losses at the end of the reporting period. Student
receivables, net, are reflected on our condensed consolidated balance sheets
as components of both current and non-current assets.
Our students pay for their costs through a variety of funding sources,
including federal loan and grant programs, institutional payment plans,
employer tuition assistance, Veterans' Administration and other military
funding and grants, private and institutional scholarships and cash payments,
as well as private loans. Cash receipts from government related sources are
typically received during the current academic term. We typically receive
funds after the end of an academic term for students who receive employer
tuition assistance. Students who have not applied for any type of financial
aid or students whose financial aid may not fully cover the cost of their
tuition and fees generally set up a payment plan with the institution and make
payments on a monthly basis per the terms of the payment plan. For those
balances that are not received during the academic term, the balance is
typically due within the current academic year which is approximately
30
weeks in length. Generally, a student receivable balance is written off once a
student is out of school and it reaches greater than
90
days past due.
Our standard student receivable allowance is based on an estimate of lifetime
expected credit losses for student receivables. Our estimation methodology
considers a number of quantitative and qualitative factors that, based on our
collection experience, we believe have an impact on our repayment risk and
ability to collect student receivables. Changes in the trends in any of these
factors may impact our estimate of the allowance for credit losses. These
factors include, but are not limited to: internal repayment history, changes
in the current economic, legislative or regulatory environments, internal cash
collection forecasts and the ability to complete the federal financial aid
process with the student. These factors are monitored and assessed on a
regular basis. Overall, our allowance estimation process for student
receivables is validated by trend analysis and comparing estimated and actual
performance.
9
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We have an immaterial amount of student receivables that are due greater than
12 months from the date of our condensed consolidated balance sheets. As of
March 31, 2024 and December 31, 2023, the amount of non-current student
receivables under payment plans that are longer than 12 months in duration,
net of allowance for credit losses, was $
4.9
million and $
3.9
million, respectively.
Allowance for Credit Losses
We define student receivables as a portfolio segment under ASC Topic 326 -
Financial Instruments - Credit Losses.
Changes in our current and non-current allowance for credit losses related to
our student receivable portfolio in accordance with the guidance under ASU
2016-13 for the quarters ended March 31, 2024 and 2023 were as follows
(dollars in thousands):
For the Quarter Ended March 31,
2024 2023
Balance, beginning of period $ 37,782 $ 43,141
Provision for credit losses 6,556 10,757
Amounts written-off ( ) ( )
6,232 10,528
Recoveries 448 574
Balance, end of period $ 38,554 $ 43,944
Fair Value Measurements
The carrying amount reported in our condensed consolidated balance sheets for
the current portion of student receivables approximates fair value because of
the nature of these financial instruments as they generally have short
maturity periods. It is not practicable to estimate the fair value of the
non-current portion of student receivables, since observable market data is
not readily available, and no reasonable estimation methodology exists.
7. LEASES
We lease most of our administrative and educational facilities under
non-cancelable operating leases expiring at various dates through
2032
. Lease terms generally range from
five
to
ten years
with
one
to
four
renewal options for extended terms. In most cases, we are required to make
additional payments under facility operating leases for taxes, insurance and
other operating expenses incurred during the operating lease period, which are
typically variable in nature.
We determine if a contract contains a lease when the contract conveys the
right to control the use of identified property, plant or equipment for a
period of time in exchange for consideration. Upon identification and
commencement of a lease, we establish a right of use
("ROU")
asset and a lease liability.
Quantitative information related to leases is presented in the following table
(dollars in thousands):
For the Quarter Ended For the Quarter Ended
March 31, 2024 March 31, 2023
Lease expenses
(1)
Fixed lease expenses $ 1,444 $ 1,696
- operating
Variable lease 58 581
expenses - operating
Sublease income - ( )
(2) 311
Total lease $ 1,502 $ 1,966
expenses
Other information
Gross operating cash flows $ ( ) $ ( )
for operating leases 2,466 2,866
(3)
Operating cash flows $ - $ 292
from subleases
(3)
As of March 31, 2024 As of March 31, 2023
Weighted average remaining lease 53 61
term (in months) - operating leases
Weighted average discount 4.9 % 4.8 %
rate - operating leases
__________________
(1)
Lease expense and sublease income represent the amount recorded within our
consolidated statements of income. Variable lease amounts represent expenses
recognized as incurred which are not included in the lease liability. Fixed
lease expenses and
10
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sublease income are recorded on a straight-line basis over the lease term and
therefore are not necessarily representative of cash payments during the same
period.
(2)
Historically, for certain of our leased locations we had vacated the facility
and had fully or partially subleased the space. As of March 31, 2024, we no
longer have any subleased locations.
(3)
Cash flows are presented on a consolidated basis and represent cash payments
for fixed and variable lease costs.
8. CONTINGENCIES
An accrual for estimated legal fees of $
2.5
million and $
2.4
million at March 31, 2024 and December 31, 2023, respectively, is presented
within other current liabilities on our condensed consolidated balance sheets.
We record a liability when we believe that it is both probable that a loss
will be incurred and the amount of loss can be reasonably estimated. We
evaluate, at least quarterly, developments in our legal matters that could
affect the amount of liability that was previously accrued and make
adjustments as further information develops, circumstances change or
contingencies are resolved. Significant judgment is required to determine both
probability and the estimated amount. We may be unable to estimate a possible
loss or range of possible loss due to various reasons, including, among
others: (1) if the damages sought are indeterminate; (2) if the proceedings
are in early stages; (3) if there is uncertainty as to the outcome of pending
appeals, motions or settlements; (4) if there are significant factual issues
to be determined or resolved; and (5) if there are novel or unsettled legal
theories presented. In such instances, there is considerable uncertainty
regarding the ultimate resolution of such matters, including a possible
eventual loss, if any.
United States of America, ex rel. Fiorisce LLC v. Perdoceo Education
Corporation, Colorado Technical University, Inc. and American InterContinental
University, Inc.
On July 19, 2023, we became aware of an amended complaint filed in the U.S.
District Court for the District of Colorado on May 19, 2023.
The original complaint was filed under seal on February 25, 2021 by a former
employee of Colorado Technical University through a limited liability company,
on behalf of herself, any other interested parties affiliated with the LLC and
the federal government. On July 18, 2023, the district court ordered the
complaint unsealed and we were notified that the U.S. Department of Justice ("
DOJ"
) had declined to intervene in the action on February 3, 2023. The company had
previously received a Civil Investigative Demand on April 8, 2022 from the DOJ
and had been cooperating with the DOJ in its review. After the federal
government declined to intervene in this case, the relator elected to pursue
the litigation on behalf of the federal government. If she is successful, she
would receive a portion of the federal government's recovery. The amended
complaint alleges violations of the False Claims Act related to the company's
compliance with federal financial aid credit hour requirements in connection
with its use of its learning management system. Relator claims that
defendants' conduct caused the government to make payments of federal funds to
defendants which the government would not have made if not for defendants'
alleged violation of the law. Relator seeks treble damages plus civil
penalties and attorneys' fees. On January 4, 2024, the Court granted a motion
to dismiss with respect to Perdoceo Education Corporation and American
InterContinental University, Inc. which removes them as defendants in the
case. The Court's dismissal was "without prejudice", which allows the relator
in the case the opportunity to amend and refile a further amended complaint
with respect to those two parties. The Relator has filed a motion, which is
pending before the Court, that seeks permission to file a further amended
complaint with respect to only Perdoceo Education Corporation.
Because of the many questions of fact and law that may arise, the outcome of
this legal proceeding is uncertain at this point. Based on information
available to us at present, we cannot reasonably estimate a range of potential
loss, if any, for this action. Accordingly, we have not recognized any
liability associated with this action.
We receive from time-to-time requests from state attorneys general, federal
and state government agencies and accreditors relating to our institutions, to
specific complaints they have received from students or former students or to
student loan forgiveness claims which seek information about students, our
programs, and other matters relating to our activities. These requests can be
broad and time consuming to respond to, and there is a risk that they could
expand and/or lead to a formal action or claims of non-compliance. We are
subject to a variety of other claims, lawsuits, arbitrations and investigations
that arise from time to time out of the conduct of our business, including,
but not limited to, matters involving prospective students, students or former
students, alleged violations of the Telephone Consumer Protection Act, both
individually and on behalf of a putative class, and employment matters.
Periodically matters arise that we consider outside the scope of ordinary
routine litigation incidental to our business. While we currently believe that
these matters, individually or in aggregate, will not have a material adverse
impact on our financial position, cash flows or results of operations, these
matters are subject to inherent uncertainties, and management's view of these
matters may change in the future. Were an unfavorable outcome to occur in any
one or more of these matters, there exists the possibility of a material
adverse impact on our business, reputation, financial position and cash flows.
11
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9. INCOME TAXES
The determination of the annual effective tax rate is based upon a number of
significant estimates and judgments, including the estimated annual pretax
income in each tax jurisdiction in which we operate and the ongoing
development of tax planning strategies during the year. In addition, our
provision for income taxes can be impacted by changes in tax rates or laws,
the finalization of tax audits and reviews, as well as other factors that
cannot be predicted with certainty. As such, there can be significant
volatility in interim tax provisions.
The following is a summary of our provision for income taxes and effective tax
rate:
For the Quarter Ended March 31,
(Dollars in Thousands) 2024 2023
Pretax income $ 52,851 $ 47,053
Provision for income taxes $ 13,409 $ 12,569
Effective rate 25.4 % 26.7 %
As of December 31, 2023, a valuation allowance of $
14.0
million was maintained with respect to our equity investment, available for
sale short-term investments and state net operating losses. Due to an increase
in the cumulative unrealized holding loss on available for sale short-term
investments that is reflected in total other comprehensive loss, the deferred
tax asset and valuation allowance with respect to this item was increased from
$
0.2
million to $
0.4
million during the current quarter, which increased the overall valuation
allowance from $
14.0
million to $
14.2
million. After considering both positive and negative evidence related to the
realization of the deferred tax assets, we have determined that it is
necessary to continue to maintain a $
14.2
million valuation allowance against our equity investment, available for sale
short-term investments and state net operating losses as of March 31, 2024.
The effective tax rate for the quarter ended March 31, 2024 was benefitted by
the tax effect of stock-based compensation and the release of previously
recorded tax reserves, which reduced the effective tax rate by
2.5
%. The effective tax rate for the quarter ended March 31, 2023 was impacted by
the tax effect of stock-based compensation and the release of previously
recorded tax reserves, the net effect of which decreased the effective tax
rate by
0.8
%.
We estimate that it is reasonably possible that the gross liability for
unrecognized tax benefits for a variety of uncertain tax positions will
decrease by up to
$
2.7
milli
on in the next twelve months as a result of the expiration of the statute of
limitations in several jurisdictions. The income tax rate for the quarter
ended March 31, 2024 does not take into account the possible reduction of the
liability for unrecognized tax benefits. The impact of a reduction to the
liability will be treated as a discrete item in the period the reduction
occurs. We recognize interest and penalties related to unrecognized tax
benefits in tax expense. As of March 31, 2024, we had a
ccrued $
3.4
m
illion as an estimate for reasonably possible interest and accrued penalties.
Our tax returns are routinely examined by federal, state and local tax
authorities and these audits are at various stages of completion at any given
time. The Internal Revenue Service has completed its examination of our U.S.
income tax returns through our tax year ended December 31, 2014.
10. SHARE-BASED COMPENSATION
Overview
The Perdoceo Education Corporation Amended and Restated 2016 Incentive
Compensation Plan (the "
2016 Plan
") became effective (as the Career Education Corporation 2016 Incentive
Compensation Plan) on May 24, 2016, and the amendment and restatement of the
2016 Plan became effective on June 3, 2021, upon its approval by the Company's
stockholders.
Under the 2016 Plan, Perdoceo may grant to eligible participants awards of
stock options, stock appreciation rights, restricted stock, restricted stock
units, deferred stock, performance units, annual incentive awards, and
substitute awards, which generally may be settled in cash or shares of our
common stock. The vesting of all types of awards is subject to possible
acceleration in certain circumstances. If a plan participant terminates
employment for any reason other than by death or disability during the vesting
period, the right to unvested awards is generally forfeited.
Restricted Stock Units
For the quarters ended March 31, 2024 and 2023, the Company granted
approximately
0.2
million and
0.4
million restricted stock units, respectively, which are not "performance-based"
and which have a grant-date fair value of approximately $
4.3
million and $
5.3
million, respectively.
Additionally, for the quarters ended March 31, 2024 and 2023, the Company
granted approximately
0.2
million and
0.3
million restricted stock units, respectively, which are "performance-based"
and which have a grant-date fair value of approximately $
3.5
million and $
4.1
million,
respectively. The performance-based restricted stock units are subject to
performance conditions which are
12
-------------------------------------------------------------------------------
determined
at the time of grant and typically cover a
three-year
performance period. These performance conditions may result in all units being
forfeited even if the requisite service period is met.
All restricted stock units granted in 2024 and 2023 are to be settled in
shares of our common stock.
Stock Options
There were
no
stock options granted during each of the quarters ended March 31, 2024 and 2023.
Share-Based Compensation Expense
Total share-based compensation expense for each of the quarters ended March
31, 2024 and 2023 was $
2.3
million.
As of March 31, 2024, we estimate that total compensation expense of
approximately $
20.3
million will be recognized over the next
four years
for all unvested share-based awards that have been granted to participants.
This amount excludes any estimates of forfeitures.
11. STOCK REPURCHASE PROGRAM
On February 20, 2024, the Board of Directors of the Company approved a new
stock repurchase program for up to $
50.0
million which commenced March 1, 2024 and expires
September 30, 2025
. The new stock repurchase program replaced the previous stock repurchase
program. The other terms of the new stock repurchase program are consistent
with the Company's previous stock repurchase program.
The timing of purchases and the number of shares repurchased under the program
will be determined by the Company's management and will depend on a variety of
factors including stock price, trading volume and other general market and
economic conditions, its assessment of alternative uses of capital, regulatory
requirements and other factors. Repurchases will be made in open market
transactions, including block purchases, conducted in accordance with Rule
10b-18 under the Exchange Act as well as may be made pursuant to trading plans
established under Rule 10b5-1 under the Exchange Act, which would permit
shares to be repurchased when the Company might otherwise be precluded from
doing so under insider trading laws. The stock repurchase program does not
obligate the Company to purchase shares and the Company may, in its
discretion, begin, suspend or terminate repurchases at any time, without any
prior notice.
During the quarter ended March 31, 2024, we repurchased approximately
0.4
million shares of our common stock for approximately $
6.8
million at an average price of $
17.60
per share, of which approximately
0.2
million shares of our common stock for approximately $
3.9
million were purchased under the previous stock repurchase program. During the
quarter ended March 31, 2023, we repurchased less than
0.1
million shares of our common stock for approximately $
0.8
million at an average price of $
13.61
per share.
As of March 31, 2024, approximately $
47.1
million was available under our new authorized stock repurchase program to
repurchase outstanding shares of our common stock. Shares of stock repurchased
under the program are held as treasury shares. These repurchased shares have
reduced the weighted average number of shares of common stock outstanding for
basic and diluted earnings per share calculations.
12. WEIGHTED AVERAGE COMMON SHARES
Basic net income per share is calculated by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares assuming dilution. Dilutive common shares outstanding is
computed using the Treasury Stock Method and reflects the additional shares
that would be outstanding if dilutive stock options were exercised and
restricted stock units were settled for common shares during the period.
The weighted average number of common shares used to compute basic and diluted
net income per share for the quarters ended March 31, 2024 and 2023 were as
follows (shares in thousands):
For the Quarter Ended March 31,
2024 2023
Basic common shares outstanding 65,555 67,235
Common stock equivalents 1,286 1,279
Diluted common shares outstanding 66,841 68,514
13
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For the quarters ended March 31, 2024 and 2023, certain unexercised stock
option awards are excluded from our computations of diluted earnings per
share, as these shares were out-of-the-money and their effect would have been
anti-dilutive. The anti-dilutive options that were excluded from our
computations of diluted earnings per share were less than
0.1
million shares for each of the quarters ended March 31, 2024 and 2023.
13. SEGMENT REPORTING
Our segments are determined in accordance with FASB ASC Topic 280-
Segment Reporting
and are based upon how the Company analyzes performance and makes decisions.
Each segment is comprised of an accredited postsecondary education institution
that offers a variety of academic programs. As of March 31, 2024, our
two
segments are:
f
Colorado Technical University (
CTU
)
is committed to providing quality and industry-relevant higher education to a
diverse student population, including serving non-traditional adult learners
seeking career advancement and the military community. CTU utilizes innovative
technology and experienced faculty, enabling the pursuit of personal and
professional goals for learners. CTU offers academic programs in the
career-oriented disciplines of business and management, nursing, healthcare
management, computer science, engineering, information systems and technology,
project management, cybersecurity and criminal justice. Students pursue their
degrees through fully-online programs, local campuses and blended formats,
which combine campus-based and online education. As of March 31, 2024,
students enrolled at CTU represented approximately
73
% of our total enrollments. Approximately
97
% of CTU's students are enrolled in programs offered fully online. Students at
CTU's ground-based campuses take both in-person and virtual classes.
f
The
American InterContinental University System (
AIUS or AIU System
)
is committed to providing quality and accessible higher education
opportunities for a diverse student population, including non-traditional
adult learners and the military community. AIUS places emphasis on the
educational, professional and personal growth of each student. AIUS offers
academic programs in the career-oriented disciplines of business studies,
information technologies, education, health sciences and criminal justice.
Students pursue their degrees through fully-online programs, local campuses
and blended formats, which combine campus-based and online education. As of
March 31, 2024, students enrolled at AIUS represented approximately
27
% of our total enrollments. Approximately
97
% of AIUS' students are enrolled in programs offered fully online. Students at
AIUS' ground-based campus take both in-person and virtual classes.
Summary financial information by reporting segment is as follows (dollars in
thousands):
For the Quarter Ended March 31,
Revenue Operating Income (Loss)
2024 % of Total 2023 % of Total 2024 2023
CTU $ 113,569 67.5 % $ 124,492 63.7 % $ 42,156 $ 43,690
AIUS 54,505 32.4 % 70,840 36.2 % 9,286 12,003
Corporate and Other 190 0.1 % 266 0.1 % ( ) ( )
5,164 12,357
Total $ 168,264 100.0 % $ 195,598 100.0 % $ 46,278 $ 43,336
Total Assets as of
(1)
March 31, 2024 December 31, 2023
CTU $ 208,317 $ 202,728
AIUS 168,898 161,336
Corporate and Other 674,750 643,252
Total $ 1,051,965 $ 1,007,316
(1)
Total assets are presented on a condensed consolidated basis and do not
include intercompany receivable or payable activity between institutions and
corporate and investments in subsidiaries.
14
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF 0OPERATIONS
The discussion below and other items in this Quarterly Report on Form 10-Q
contain "forward-looking statements," as defined in Section 21E of the
Securities Exchange Act of 1934, as amended, that reflect our current
expectations regarding our future growth, results of operations, cash flows,
performance and business prospects and opportunities, as well as assumptions
made by, and information currently available to, our management. We have tried
to identify forward-looking statements by using words such as "anticipate,"
"believe," "expect," "plan," "may," "should," "will," "continue to," "focused
on" and similar expressions, but these words are not the exclusive means of
identifying forward-looking statements. These statements are based on
information currently available to us and are subject to various risks,
uncertainties, and other factors, including, but not limited to, those matters
discussed in Item 1A, "Risk Factors," in our Annual Report on Form 10-K for
the year ended December 31, 2023 that could cause our actual growth, 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 such factors or to
publicly announce the results of any of the forward-looking statements
contained herein to reflect future events, developments, or changed
circumstances or for any other reason. Among the factors that could cause
actual results to differ materially from those expressed in, or implied by,
our forward-looking statements are the following:
.
declines in enrollment or interest in our programs or our ability to market to
and contact prospective students;
.
our continued compliance with and eligibility to participate in Title IV
Programs under the Higher Education Act of 1965, as amended, and the
regulations thereunder (including the terms of any potential changes to or
conditions imposed on our continued participation in the Title IV programs
under new program participation agreements, the new 90-10, financial
responsibility and administrative capability standards prescribed by the U.S.
Department of Education (the "Department")), as well as applicable
accreditation standards and state regulatory requirements;
.
the impact of various versions of "borrower defense to repayment" regulations;
.
the final outcome of various legal challenges to the Department's loan
discharge and forgiveness efforts;
.
rulemaking or changing interpretations of existing regulations, guidance or
historical practices by the Department 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 key employers, veterans and other military personnel;
.
increased competition;
.
our ability to pay dividends on our common stock and execute our stock
repurchase program;
.
the impact of management changes; and
.
changes in the overall U.S. economy.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("
MD&A
") should be read in conjunction with the Company's unaudited condensed
consolidated financial statements and the notes thereto appearing elsewhere in
this Quarterly Report on Form 10-Q. The MD&A is intended to help investors
understand the results of operations, financial condition and present business
environment. The MD&A is organized as follows:
.
Overview
.
Consolidated Results of Operations
.
Segment Results of Operations
.
Summary of Critical Accounting Policies and Estimates
.
Liquidity, Financial Position and Capital Resources
OVERVIEW
Our accredited academic institutions offer a quality postsecondary education
primarily online to a diverse student population, along with campus-based and
blended learning programs. The Company's academic institutions - Colorado
Technical University ("
CTU
") and the American InterContinental University System ("
AIUS
" or "
AIU System
") - provide degree programs from the
15
-------------------------------------------------------------------------------
associate through doctoral level as well as non-degree seeking and
professional development programs. Our academic institutions offer students
industry-relevant and career-focused academic programs that are designed to
meet the educational needs of today's busy adults. CTU and AIUS continue to
show innovation in higher education, advancing personalized learning
technologies like their intellipath(R) learning platform and using data
analytics and technology to serve and educate students while enhancing overall
learning and academic experiences. Perdoceo's institutions are committed to
providing quality education that closes the gap between learners who seek to
advance their careers and employers needing a qualified workforce.
Our reporting segments are determined in accordance with Financial Accounting
Standards Board
("FASB")
Accounting Standards Codification
("ASC")
Topic 280 -
Segment Reporting
and are based upon how the Company analyzes performance and makes decisions.
Each segment represents a postsecondary education provider that offers a
variety of academic programs. We organize our business across two reporting
segments: CTU and AIUS.
Regulatory Environment and Political Uncertainty
We operate in a highly regulated industry, which has significant impacts on
our business and creates risks and uncertainties. In recent years, Congress,
the Department, states, accrediting agencies, the Consumer Financial
Protection Bureau, the Federal Trade Commission, state attorneys general,
consumer advocacy groups and the media have all scrutinized the for-profit
postsecondary education sector. Congressional hearings and roundtable
discussions were held regarding various aspects of the education industry,
including issues surrounding student debt as well as publicly reported student
outcomes that may be used as part of an institution's recruiting and
admissions practices, and reports were issued that are highly critical of
for-profit colleges and universities. A group of influential U.S. senators,
consumer advocacy groups and some media outlets have strongly and repeatedly
encouraged the Department, the Department of Defense and the Department of
Veterans Affairs and its state approving agencies to take action to limit or
terminate the participation of institutions such as ours in existing tuition
assistance programs. In several cases, these groups have received significant
financial support from third parties critical of our sector and have aligned
on messaging that negatively impacts our sector during policy and rulemaking
discussions. In addition, the current administration has made student loan
forgiveness one of its top domestic policy objectives, and it has been
aggressively pursued by the Department in cooperation with special interest
groups, other federal agencies, state attorneys general and others. These
groups collectively have focused efforts relating to student debt forgiveness
on for-profit colleges and universities, encouraging loan discharge
applications and complaints by former students.
We continue to see one of the most challenging operating environments in
recent memory as the Department has undertaken a complete overhaul of almost
all of the major regulatory requirements associated with our participation in
Title IV Programs and which disproportionally negatively impact the for-profit
postsecondary education sector. Additionally, a number of the Department's
regulatory initiatives are explicitly targeted at negatively impacting the
proprietary sector of education. In many cases the new regulatory requirements
are unclear, require further clarification as to their interpretation or
applicability or are subject or will be subject to legal challenges. We expect
to continue to need to operate nimbly in this uncertain environment, making
necessary changes to the extent possible to comply with the myriad of new
vague or unclear rules or interpretations as well as new interpretations of
existing rules. For example, in 2023, we materially reduced prospective
student enrollment, marketing and outreach processes at AIUS during the year
to limit the volume of new federal funding that the institution would receive
and to preserve available funding for existing students under the Department's
new 90-10 Rule. Any actions that limit our participation in Title IV Programs
or the amount of student financial aid for which our students are eligible
would materially impact our student enrollments and profitability and could
impact the continued viability of our business as currently conducted.
We encourage you to review Item 1, "Business," and Item 1A, "Risk Factors," in
our Annual Report on Form 10-K to learn more about our highly regulated
industry and related risks and uncertainties, in addition to the MD&A in our
2024 Quarterly Reports on Form 10-Q.
Note Regarding Non-GAAP measures
We believe 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 our core business. As a general matter, we use non-GAAP
financial measures in conjunction with results presented in accordance with
GAAP to help analyze the performance of our core business, assist with
preparing the annual operating plan, and measure performance for some forms of
compensation. In addition, we believe that non-GAAP financial information is
used by analysts and others in the investment community to analyze our
historical results and to provide estimates of future performance.
We believe certain non-GAAP measures allow us to compare our current operating
results with respective historical periods and with the operational
performance of other companies in our industry because it does not give effect
to potential differences caused by items we do not consider reflective of
underlying operating performance. We believe the items we are adjusting for
are not normal operating expenses reflective of our underlying business. In
evaluating the use of non-GAAP measures, investors should be aware that in the
future we may incur expenses similar to the adjustments presented below. Our
presentation of non-GAAP measures should not be construed as an inference that
our future results will be unaffected by expenses that are unusual,
non-routine or non-recurring. A non-GAAP measure has limitations as an
analytical tool, and you should not consider it in isolation, or as a
substitute for net income,
16
-------------------------------------------------------------------------------
operating income, earnings per diluted share, or any other performance measure
derived in accordance with and reported under GAAP or as an alternative to
cash flow from operating activities or as a measure of our liquidity.
Non-GAAP financial measures, when viewed in a reconciliation to respective
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 respective financial results
presented in accordance with GAAP.
2024 First Quarter Overview
During the first quarter ended March 31, 2024 ("
current quarter
"), we continued to experience strong student retention and engagement at both
of our academic institutions as a result of our focus on our key objectives of
enhancing student experiences, retention and academic outcomes.
Total student enrollments increased 9.0% at March 31, 2024 as compared to
March 31, 2023, with CTU's increase of 28.5% being partially offset with AIUS'
decrease of 22.9%. CTU's increase in total student enrollments was primarily
driven by a positive timing impact from the academic calendar comparability
resulting in more enrollment days for the current quarter as compared to the
prior year quarter as well as organic student enrollment growth due to strong
student retention and engagement. The total student enrollment decrease at
AIUS was expected as a result of the operational changes made within
prospective student enrollment, marketing and outreach processes by AIUS in
the prior year to address regulatory changes which went into effect in July of
2023. AIUS had mostly reverted to normalized levels of operations during the
fourth quarter of 2023 and as a result experienced growth in student
enrollments for the current quarter when compared to the low point of the
fourth quarter of 2023.
We view technology as a catalyst and differentiator for us and remain
committed to making selective investments that deliver a more meaningful and
relevant educational experience for our learners while continuing to improve
the efficiency and effectiveness of our academic institutions' academic and
student support functions. Additionally, we remained focused on investing in
and improving processes that support our corporate engagement programs. These
programs remain a focus and a priority for both academic institutions and we
will continue to make necessary investments in staff and technology to further
grow their programs in an efficient and effective manner. Lastly, marketing
and admissions spend, and commensurately prospective student inquiry
generation, was lower during the current quarter as compared to the prior year
quarter. Aided by data analytics, we continue to adjust our marketing
strategies to further improve our focus on identifying prospective students
who are more likely to succeed at one of our universities, as well as comply
with updated expectations from various federal agencies around prospective
student outreach.
We expect the strong levels of student retention and engagement that we
experienced in 2023 and through the current quarter, to continue through the
remainder of 2024. Additionally, as AIUS had mostly reverted to normalized
levels of operations in the fourth quarter of 2023, we expect AIUS to
experience double digit total student enrollment growth during 2024 as
compared to December 31, 2023. Full year revenue is expected to be lower for
2024 primarily as a result of the academic calendar redesign at CTU which will
result in lower revenue-earning days in 2024 as well as the lag impact on
revenue of lower beginning total student enrollments at AIUS. Management
expects to optimize operating expenses throughout 2024 to mostly offset this
expected decline in revenue.
Financial Highlights
Revenue for the current quarter decreased by 14.0% or $27.3 million as
compared to the prior year quarter, resulting from a decrease in revenue for
CTU of 8.8% or $10.9 million and a decrease for AIUS of 23.1% or $16.3
million. CTU's academic calendar may impact the comparability of revenue-earning
days and enrollment results in any given quarter, with the impact on revenue
and total student enrollments not necessarily having the same magnitude or
directional impact. The decrease in revenue at CTU was due to less
revenue-earning days during the current quarter as compared to the prior year
quarter. The decrease within AIUS was driven by a lag impact on revenue of the
operational changes undertaken during 2023.
Operating income for the current quarter increased to $46.3 million as
compared to operating income of $43.3 million in the prior year quarter. The
increase in operating income for the current quarter was primarily due to
lower operating expenses across most functional categories in the current
quarter as compared to the prior year quarter which more than offset the
decline in revenue.
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 tables below for a GAAP to non-GAAP
reconciliation.) Adjusted operating income was $49.5 million for the current
quarter as compared to $53.1 million for the prior year quarter.
Adjusted operating income and adjusted earnings per diluted share for the
quarters ended March 31, 2024 and 2023 is presented below (dollars in
thousands, unless otherwise noted):
17
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For the Quarter Ended March 31,
Adjusted Operating Income 2024 2023
Operating income $ 46,278 $ 43,336
Depreciation and amortization 3,016 5,155
Legal fee expense related to certain matters 230 4,619
(1)
Adjusted Operating Income $ 49,524 $ 53,110
For the Quarter Ended March 31,
Adjusted Earnings Per Diluted Share 2024 2023
Reported Earnings Per Diluted Share $ 0.59 $ 0.50
Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets 0.02 0.04
Legal fee expense related to certain matters - 0.07
(1)
Total pre-tax adjustments $ 0.02 $ 0.11
Tax effect of adjustments (0.01 ) (0.03 )
(2)
Total adjustments after tax 0.01 0.08
Adjusted Earnings Per Diluted Share $ 0.60 $ 0.58
(1)
Legal fee expense associated with (i) responses to the Department of Education
(the "
Department
") relating to borrower defense to repayment applications from former
students, and (ii) acquisition efforts.
(2)
The tax effect of adjustments was calculated by multiplying the pre-tax
adjustments with a tax rate of 25%. This tax rate is intended to reflect
federal and state taxable jurisdictions as well as the nature of the
adjustments.
Regulatory Updates
Borrower Defense to Repayment
On February 28, 2023, the Career Colleges & Schools of Texas ("
CCST
") filed a lawsuit in the U.S. District Court for the Northern District of
Texas challenging the Department's most recent versions of the borrower
defense to repayment (BDR) and closed school loan discharge (CSLD) regulations
that were to be effective July 1, 2023. CCST seeks to set aside these rules on
the grounds that they violate the U.S. Constitution and the Administrative
Procedure Act. On April 4, 2024, the Fifth Circuit reversed the district
court's denial of CCST's motion for preliminary injunction and remanded the
case back to the district court with instructions to postpone the effective
date of these rules pending final judgment, effectively maintaining a
nationwide injunction against these latest rules going into effect that had
previously been entered by the Fifth Circuit. The Fifth Circuit's ruling
included a detailed analysis of the likelihood of success of CCST's legal
arguments against the Department and identified numerous reasons why, in its
opinion, CCST is likely to be successful on the merits. Among other
conclusions, the Fifth Circuit determined that the Higher Education Act likely
does not grant the Department the authority to draft regulations providing
affirmative
claims that borrowers can assert against schools, in contrast to "defenses" to
a creditor's effort to collect on student loans. The Fifth Circuit also
determined that the new BDR rule raised constitutional questions about the
Department's authority to adjudicate claims outside of the judicial system,
and held that the new rule's standards for actionable misrepresentations or
omissions or aggressive or deceptive recruiting tactics most likely do not
comply with the specificity requirements of the enabling statute. Finally, the
Fifth Circuit held that the new CSLD regulations exceeded the Department's
authority by redefining a school "closure" to mean when the school ceased to
provide programs in which most students were enrolled, and in authorizing
automatic, full discharges of student loans without proof that the school
closure was the reason that students were unable to complete their programs.
On remand, the district court will decide the merits of CCST's legal
challenges. We are unable to predict whether and to what extent this legal
challenge will have on the newest or prior versions of the BDR regulations and
any related effort by the Department to seek recoupment of approved claims
from institutions.
See Item 1, "Business - Legislative Action and Recent Department Regulatory
Initiatives" and "Compliance with Federal Regulatory Standards and Effect of
Federal Regulatory Violations" in our Annual Report on Form 10-K for the year
ended December 31, 2023 for an overview of BDR.
See Item 1A, "Risk Factors - Risks Related to the Highly Regulated Field in
Which We Operate - `
Borrower defense to repayment' regulations, including closed school loan
discharges, may subject us to significant repayment liability to the
Department for discharged federal student loans and posting of substantial
letters of credit that may limit our ability to make investments in our
business which
18
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could negatively impact our future growth
,'" in our Annual Report on Form 10-K for the year ended December 31, 2023 for
more information about risks associated with the BDR and closed school loan
discharge regulations
.
Department Information Requests
In connection with its administration of Title IV Programs, the Department has
broad powers to request information and review records of a participating
institution. Since December 2021, the Company has responded to extensive
requests for information from the Department's Investigation Group relating to
CTU and AIUS and may be asked to respond to further requests in the future.
Most recently, this group made an inquiry that questions whether and to what
extent the promotion of our flexible mobile app technology is incompatible or
inconsistent with how we also inform students of technology equipment and
internet access requirements and may violate Title IV regulations. We believe
our discussions of these topics are in compliance with the applicable Title IV
regulations and are preparing an appropriate response. Significant resources
are required to respond to the requests and the Department's review of
information provided could lead to additional requests for information or
claims of noncompliance with the extensive regulatory requirements relating to
the administration of Title IV Programs.
See Item 1A, "Risk Factors - Risks Related to the Highly Regulated Field in
Which We Operate -
`Compliance with the extensive regulatory requirements applicable to our
business can be costly and time consuming, and failure to comply could result
in substantial financial penalties, severe restrictions on or closure of our
operations, loss of federal and state financial aid funding for our students,
or loss of our authorization to operate our institutions,'
and
`If the Department denies, or significantly conditions, recertification of
either of our institutions to participate in Title IV Programs, that
institution could not conduct its business as it is currently conducted,'"
and other risk factors in our Annual Report on Form 10-K for additional
information about the risks surrounding continued participation in Title IV
Programs.
CONSOLIDATED RESULTS OF OPERATIONS
The summary of selected financial data table below should be referenced in
connection with a review of the following discussion of our results of
operations for the quarters ended March 31, 2024 and 2023 (dollars in
thousands):
For the Quarter Ended March 31,
2024 % of Total 2023 % of Total 2024 vs 2023
Revenue Revenue % Change
TOTAL $ 168,264 $ 195,598 -14.0 %
REVENUE
OPERATING
EXPENSES
Educational services 29,858 17.7 % 33,851 17.3 % -11.8 %
and facilities
(1)
General and
administrative:
(2)
Advertising 24,239 14.4 % 31,295 16.0 % -22.5 %
and marketing
Admissions 20,890 12.4 % 25,988 13.3 % -19.6 %
Administrative 35,797 21.3 % 44,646 22.8 % -19.8 %
Bad 6,556 3.9 % 10,757 5.5 % -39.1 %
debt
Total general and 87,482 52.0 % 112,686 57.6 % -22.4 %
administrative expense
Depreciation and 3,016 1.8 % 5,155 2.6 % -41.5 %
amortization
Asset 1,630 1.0 % 570 0.3 % NM
impairment
OPERATING 46,278 27.5 % 43,336 22.2 % 6.8 %
INCOME
PRETAX 52,851 31.4 % 47,053 24.1 % 12.3 %
INCOME
PROVISION FOR 13,409 8.0 % 12,569 6.4 % 6.7 %
INCOME TAXES
Effective 25.4 % 26.7 %
tax rate
NET $ 39,442 23.4 % $ 34,484 17.6 % 14.4 %
INCOME
(1)
Educational services and facilities expense includes costs attributable to the
educational activities of our campuses, including: salaries and benefits of
faculty, academic administrators and student support personnel, and costs of
educational supplies and facilities, such as rents on leased facilities. Also
included in educational services and facilities expense are rents on leased
administrative facilities, such as our corporate headquarters, and costs of
other goods and services provided by our campuses, including costs of
textbooks and laptop computers.
(2)
General and administrative expense includes operating expenses associated
with, including salaries and benefits of personnel in, corporate and campus
administration, marketing, admissions, information technology, financial aid,
accounting, human resources, legal and compliance. Other expenses within this
expense category include costs of advertising and production of marketing
materials and bad debt expense.
Revenue
Revenue for the first quarter of 2024 ("
current quarter
") decreased 14.0% or $27.3 million as compared to the prior year quarter. The
decline was primarily driven by a timing impact of the academic calendar at
CTU and lower total student enrollments at
19
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AIUS over the past few quarters. Typically, total student enrollment balances
at the end of any given quarter have a lag impact on revenue in the subsequent
quarter.
Educational Services and Facilities Expense (dollars in thousands)
For the Quarter Ended March 31,
2024 2023 2024 vs 2023 % Change
Educational services and facilities:
Academics & student related $ 27,611 $ 31,123 -11.3%
Occupancy 2,247 2,728 -17.6%
Total educational services and facilities $ 29,858 $ 33,851 -11.8%
The educational services and facilities expense for the current quarter
decreased by 11.8% or $4.0 million as compared to the prior year quarter.
Academics and student related costs decreased by 11.3% or $3.5 million for the
current quarter as compared to the prior year quarter, primarily driven by
operational changes made to align with recent student enrollments trends.
Occupancy expenses for the current quarter improved by 17.6% or $0.5 million
as compared to the prior year quarter driven by the optimization of leased
space.
General and Administrative Expense (dollars in thousands)
For the Quarter Ended March 31,
2024 2023 2024 vs 2023 % Change
General and administrative:
Advertising and marketing $ 24,239 $ 31,295 -22.5%
Admissions 20,890 25,988 -19.6%
Administrative 35,797 44,646 -19.8%
Bad debt 6,556 10,757 -39.1%
Total general and administrative expense $ 87,482 $ 112,686 -22.4%
The general and administrative expense for the current quarter decreased by
22.4% or $25.2 million as compared to the prior year quarter, driven by
decreases within all expense categories for the current comparative period.
The administrative expense decreased by 19.8% or $8.8 million for the current
quarter as compared to the prior year quarter, primarily driven by operational
efficiencies within our academic institutions and decreased legal fees within
Corporate and Other.
Advertising and marketing expense for the current quarter decreased by 22.5%
or $7.1 million as compared to the prior year quarter, as a result of
adjustments made to our marketing process related to identifying prospective
student interest within both CTU and AIUS.
Admissions expense for the current quarter decreased by 19.6% or $5.1 million
as compared to the prior year quarter. The current period improvement was
driven by decreased expenses within both CTU and AIUS as a result of
operational changes made during the prior year.
Bad debt expense incurred by each of our segments during the quarters ended
March 31, 2024 and 2023 was as follows (dollars in thousands):
For the Quarter Ended March 31,
2024 % of 2023 % of 2024 vs 2023 % Change
Segment Segment
Revenue Revenue
Bad debt expense:
CTU $ 3,028 2.7 % $ 7,125 5.7 % -57.5 %
AIUS 3,528 6.5 % 3,635 5.1 % -2.9 %
Corporate and Other - NM (3 ) NM NM
Total bad debt expense $ 6,556 3.9 % $ 10,757 5.5 % -39.1 %
Bad debt expense decreased by 39.1% or $4.2 million for the current quarter as
compared to the prior year quarter, with improvement experienced at both CTU
and AIUS. CTU and AIUS' bad debt expense decreased by 57.5% or $4.1 million
and 2.9% or $0.1 million, respectively, for the current quarter as compared to
the prior year quarter. Bad debt as a percentage of revenue improved by 1.6%
for the current quarter as compared to the prior year quarter.
20
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We regularly evaluate our reserve rates, which includes a quarterly update of
our analysis of historical student receivable collectability based on the most
recent data available and a review of current known factors which we believe
could affect future collectability of our student receivables, such as the
number of students that do not complete the financial aid process. We continue
to expect quarterly fluctuations in bad debt expense, especially as some of
the various federal aid initiatives expire.
Operating Income
Operating income increased by 6.8% or $2.9 million for the current quarter as
compared to the prior year quarter. The current quarter increase was primarily
driven by lower operating expenses across all categories which more than
offset the decline in revenue for the current quarter.
Provision for Income Taxes
For the quarter ended March 31, 2024, we recorded a provision for income taxes
of $13.4 million or 25.4% as compared to a provision for income taxes of $12.6
million or 26.7% for the prior year quarter. The effective tax rate for the
quarter ended March 31, 2024 was benefitted by the tax effect of stock-based
compensation and the release of previously recorded tax reserves, which
reduced the effective tax rate by 2.5%. The effective tax rate for the quarter
ended March 31, 2023 was impacted by the tax effect of stock-based
compensation and the release of previously recorded tax reserves, the net
effect of which decreased the effective tax rate by 0.8%. For the full year
2024, we expect our effective tax rate to be between 25.5% and 26.5%.
SEGMENT RESULTS OF OPERATIONS
The following tables present unaudited segment results for the reported
periods (dollars in thousands):
For the Quarter Ended March 31,
REVENUE OPERATING INCOME (LOSS) OPERATING MARGIN
2024 2023 % Change 2024 2023 % Change 2024 2023
REVENUE:
CTU $ 113,569 $ 124,492 -8.8 % $ 42,156 $ 43,690 -3.5 % 37.1 % 35.1 %
AIUS 54,505 70,840 -23.1 % 9,286 12,003 -22.6 % 17.0 % 16.9 %
Corporate and other 190 266 -28.6 % (5,164 ) (12,357 ) -58.2 % NM NM
Total $ 168,264 $ 195,598 -14.0 % $ 46,278 $ 43,336 6.8 % 27.5 % 22.2 %
TOTAL STUDENT ENROLLMENTS
As of March 31,
2024 2023 % Change
CTU 30,200 23,500 28.5 %
AIUS 11,100 14,400 -22.9 %
Total 41,300 37,900 9.0 %
Total student enrollments represent all students who are active as of the last
day of the reporting period. Active students are defined as those students who
are considered in attendance by participating in class related activities
during the previous two weeks. Total student enrollments do not include
learners pursuing: a) non-degree seeking and professional development
programs, and b) degree seeking, non-Title IV, self-paced programs at our
universities.
CTU.
Current quarter revenue decreased by 8.8% or $10.9 million as compared to the
prior year quarter. The decrease was primarily driven by a lower number of
revenue earnings days during the current quarter as compared to the prior year
quarter.
Current quarter operating income for CTU decreased by 3.5% or $1.5 million as
compared to the prior year quarter driven by the decrease in revenue discussed
above, which was mostly offset with decreased operating expenses.
AIUS.
Current quarter revenue decreased by 23.1% or $16.3 million as compared to the
prior year quarter. The decrease was primarily driven by a decrease in total
student enrollments of 22.9% at March 31, 2024 as compared to the prior year
quarter end due to the lag impact from the operational changes made during the
latter half of 2023.
Current quarter operating income for AIUS decreased by 22.6% or $2.7 million
as compared to the prior year quarter driven by the decrease in revenue
discussed above, which was mostly offset with decreased operating expenses.
Corporate and Other.
This category includes unallocated costs that are incurred on behalf of the
entire company. Total Corporate and Other operating loss for the current
quarter improved by 58.2% or $7.2 million as compared to the prior year
quarter, primarily as a result of decreased legal fee expense.
21
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SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
A detailed discussion of the accounting policies and estimates that we believe
are most critical to our financial condition and results of operations that
require management's most subjective and complex judgments in estimating the
effect of inherent uncertainties is included under the caption "Summary of
Critical Accounting Policies and Estimates" included in Management's
Discussion and Analysis of Financial Condition and Results of Operations in
our Annual Report on Form 10-K for the year ended December 31, 2023. Note 2 "
Summary of Significant Accounting Policies
" of the notes to our consolidated financial statements in our Annual Report
on Form 10-K for the year ended December 31, 2023 also includes a discussion
of these and other significant accounting policies.
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
As of March 31, 2024, cash, cash equivalents, restricted cash and
available-for-sale short-term investments
("cash balances")
totaled $642.4 million. Our cash flows from operating activities have
historically been adequate to fulfill our liquidity requirements. We have
historically financed our operating activities, organic growth and
acquisitions primarily through cash generated from operations and existing
cash balances. We expect to continue to generate cash during the remainder of
2024. We anticipate that we will be able to satisfy the cash requirements
associated with, among other things, our working capital needs, capital
expenditures, lease commitments and quarterly dividends payments through at
least the next 12 months primarily with cash generated by operations and
existing cash balances.
We maintain a balanced capital allocation strategy that focuses on maintaining
a strong balance sheet and adequate liquidity, while (i) investing in organic
projects at our universities, in particular technology-related initiatives
which are designed to benefit our students, and (ii) evaluating diverse
strategies to enhance stockholder value, including acquisitions, quarterly
dividend payments and share repurchases. Ultimately, our goal is to deploy
resources in a way that drives long term stockholder value while supporting
and enhancing the academic value of our institutions.
On February 20, 2024, the Board of Directors of the Company approved a new
stock repurchase program for up to $50.0 million which commenced March 1, 2024
and expires September 30, 2025. The new stock repurchase program replaced the
previous stock repurchase program. The timing of purchases and the number of
shares repurchased under the program will be determined by the Company's
management and will depend on a variety of factors including stock price,
trading volume and other general market and economic conditions, its
assessment of alternative uses of capital, regulatory requirements and other
factors.
The Board of Directors approved the aforementioned stock repurchase programs
believing it advantageous to the Company and its stockholders to repurchase
shares of the Company's common stock from time to time at prices below what
the Board of Directors believed to be the intrinsic value of the Company's
common stock.
On September 8, 2021, the Company and the subsidiary guarantors thereunder
entered into a credit agreement with Wintrust Bank N.A. ("
Wintrust
"), in its capacities as the sole lead arranger, sole bookrunner,
administrative agent and letter of credit issuer for the lenders from time to
time parties thereto (the "
Credit Agreement
"). The Credit Agreement provides the Company with the benefit of a $125.0
million senior secured revolving credit facility and was originally scheduled
to mature on September 8, 2024. On January 23, 2024, after having previously
been amended on April 1, 2022, the Company and the subsidiary guarantors
thereunder entered into a Second Amendment to the Credit Agreement with
Wintrust (the "
Second Amendment
" and the Credit Agreement, as amended to date, the "
Second Amended Credit Agreement
"). The Second Amendment, among other things, (i) extends the maturity date of
the revolving credit facility to January 31, 2027; (ii) lowers the "Prime
Rate" floor from 4% to 3%; (iii) replaces BMO Bank N.A. with Valley National
Bancorp as one of the lenders that is party to the revolving credit facility;
and (iv) modifies the relative commitments of the lenders that are parties to
the revolving credit facility. Under the Second Amended Credit Agreement, the
Company continues to have the benefit of a $125.0 million senior secured
revolving credit facility, and, so long as no default has occurred and other
conditions have been met, the Company may request an increase in the aggregate
commitment in an amount not to exceed $50.0 million. The loans and letter of
credit obligations under the Second Amended Credit Agreement are secured by
substantially all assets of the Company and the subsidiary guarantors.
The Second Amended Credit Agreement and the ancillary documents executed in
connection therewith contain customary affirmative, negative and financial
maintenance covenants. The Company is required to maintain unrestricted cash,
cash equivalents and short-term investments in domestic accounts in an amount
at least equal to the aggregate loan commitments then in effect. Acquisitions
to be undertaken by the Company must meet certain criteria, and the Company's
ability to make restricted payments, including payments in connection with a
repurchase of shares of our common stock and quarterly dividend payments, is
subject to an aggregate maximum of $100.0 million per fiscal year. Upon the
occurrence of certain regulatory events or if the Company's unrestricted cash,
cash equivalents and short term investments are less than 125% of the
aggregate amount of the loan commitments then in effect, the Company is
required to maintain cash in a segregated, restricted account in an amount not
less than the aggregate loan commitments then in effect. The Second Amended
Credit Agreement also contains customary representations and warranties,
events of default, and rights and remedies upon the occurrence of any event of
default thereunder, including rights to accelerate the
22
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loans, terminate the commitments and realize upon the collateral securing the
obligations under the credit agreement. As of March 31, 2024, there were no
amounts outstanding under the revolving credit facility.
The discussion above reflects management's expectations regarding liquidity;
however, as a result of the significance of the Title IV Program funds
received by our students, we are highly dependent on these funds to operate
our business. Any reduction in the level of Title IV funds that our students
are eligible to receive or any impact on timing or our ability to receive
Title IV Program funds, or any requirement to post a significant letter of
credit to the Department, may have a significant impact on our operations and
our financial condition. In addition, our financial performance is dependent
on the level of student enrollments which could be impacted by external
factors. See Item 1A, "Risk Factors," in our Annual Report on Form 10-K for
the year ended December 31, 2023.
Sources and Uses of Cash
Operating Cash Flows
During the quarters ended March 31, 2024 and 2023, net cash flows provided by
operating activities totaled $54.5 million and $4.6 million, respectively. The
current quarter increase in net cash flows provided by operating activities
was driven by timing of academic terms at CTU and the resulting cash receipts
versus the prior year quarter.
Our primary source of cash flows from operating activities is tuition
collected from our students. Our students derive the ability to pay tuition
costs through the use of a variety of funding sources, including, among
others, federal loan and grant programs, state grant programs, private loans
and grants, institutional payment plans, private and institutional
scholarships and cash payments.
For further discussion of Title IV Program funding and other funding sources
for our students, see Item 1, "
Business - Student Financial Aid and Related Federal Regulation
," in our Annual Report on Form 10-K for the year ended December 31, 2023.
Our primary uses of cash to support our operating activities include, among
other things, cash paid and benefits provided to our employees for services,
to vendors for products and services, to lessors for rents and operating costs
related to leased facilities, to suppliers for textbooks and other institution
supplies, and to federal, state and local governments for income and other
taxes.
Investing Cash Flows
During the quarters ended March 31, 2024 and 2023, net cash flows used in
investing activities totaled $30.8 million and $21.4 million, respectively.
Purchases and Sales of Available-for-Sale Investments.
Purchases and sales of available-for-sale investments resulted in a net cash
outflow of $29.6 million and $19.4 million for the quarters ended March 31,
2024 and 2023, respectively.
Capital Expenditures.
Capital expenditures decreased to $1.2 million for the quarter ended March 31,
2024 as compared to $1.9 million for the quarter ended March 31, 2023. For the
full year 2024, we expect capital expenditures to be between 1% to 2% of
revenue.
Financing Cash Flows
During the quarters ended March 31, 2024 and 2023, net cash flows used in
financing activities totaled $15.9 million and $2.8 million, respectively.
Payments to repurchase shares of our common stock were $6.8 million for the
quarter ended March 31, 2024 and $0.8 million for the quarter ended March 31,
2023.
Payments of employee tax associated with stock compensation.
Payments of employee tax associated with stock compensation were $3.4 million
and $2.2 million for the quarters ended March 31, 2024 and 2023, respectively.
Payments of cash dividends
. During the quarter ended March 31, 2024, the Company made dividend payments
of $7.2 million.
Changes in Financial Position
Selected condensed consolidated balance sheet account changes from December
31, 2023 to March 31, 2024 were as follows (dollars in thousands):
23
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March 31, December 31,
2024 2023 % Change
ASSETS
CURRENT ASSETS:
Student receivables, net 41,942 29,398 43 %
NON-CURRENT ASSETS:
Right of use asset, net 13,963 19,096 -27 %
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Payroll and related benefits 18,726 32,684 -43 %
Income taxes 16,543 3,974 316 %
Deferred revenue 61,498 37,215 65 %
Student receivables, net:
The increase is driven by timing of academic terms within CTU and AIUS, along
with an increase in total student enrollments at CTU.
Right of use asset, net:
The decrease is driven by impairment charges associated with the decision to
exit a portion of certain leased facilities during the quarter along with
recurring amortization of remaining ROU assets.
Payroll and related benefits:
The decrease is driven by annual incentive compensation payments made during
the current quarter which were accrued as of the prior year end.
Income taxes:
The increase primarily relates to amounts owed with respect to estimated
payments of federal and state income tax for 2024.
Deferred revenue:
The increase is primarily related to the timing impact of the academic terms
within CTU and AIUS along with an increase in total student enrollments at CTU.
ITEM 3. QUANTITATIVE AND QUALITATI
VE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, primarily changes in interest rates.
We use various techniques to manage our interest rate risk. We have no
derivative financial instruments or derivative commodity instruments, and
believe the risk related to cash equivalents and available for sale
investments is limited due to the adherence to our investment policy, which
focuses on capital preservation and liquidity. In addition, we use asset
managers who conduct initial and ongoing credit analyses on our investment
portfolio and monitor that investments are in compliance with our investment
policy. Despite the investment risk mitigation strategies we employ, we may
incur investment losses as a result of unusual and unpredictable market
developments and may experience reduced investment earnings if the yields on
investments deemed to be low risk remain low or decline.
Interest Rate Exposure
Our future investment income may fall short of expectations due to changes in
interest rates or we may suffer losses in principal if we are forced to sell
investments that have declined in market value due to changes in interest
rates. At March 31, 2024, a 10% increase or decrease in interest rates
applicable to our investments or borrowings would not have a material impact
on our future earnings, fair values or cash flows.
Under the Second Amended Credit Agreement, outstanding principal amounts bear
annual interest at a fluctuating rate equal to 1.0% less than the
administrative agent's prime commercial rate, subject to a 3.0% minimum rate.
A higher rate may apply to late payments or if any event of default exists. As
of March 31, 2024, we had no outstanding borrowings under this facility.
Our financial instruments are recorded at their fair values as of March 31,
2024 and December 31, 2023. We believe that the exposure of our consolidated
financial position and results of operations and cash flows to adverse changes
in interest rates applicable to our investments or borrowings is not
significant.
ITEM 4. CONTROLS
AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We completed an evaluation as of the end of the period covered by this
Quarterly Report on Form 10-Q ("
Report
") under the supervision and with the participation of management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "
Exchange Act
"). Based upon that evaluation, our Chief Executive Officer and Chief
24
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Financial Officer concluded that, as of March 31, 2024, our disclosure
controls and procedures were effective to provide reasonable assurance that
(i) the information required to be disclosed by us in this Report was
recorded, processed, summarized and reported within the time periods specified
in the rules and forms provided by the U.S. Securities and Exchange Commission
("
SEC
"), and (ii) information required to be disclosed by us in our reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that
occurred during the quarter ended March 31, 2024 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Inherent Limitations on the Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or
our internal controls will prevent or detect all errors and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in a
cost-effective control system, no evaluation of controls can provide absolute
assurance that misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, within our Company have been
detected.
These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Projections of any evaluation of controls
effectiveness to future periods are subject to risks. Over time, controls may
become inadequate because of changes in conditions or deterioration in the
degree of compliance with policies or procedures.
25
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PART II - OTHE
R INFORMATION
Item 1. Legal
Proceedings
Note 8 "
Contingencies
" to our unaudited condensed consolidated financial statements is incorporated
herein by reference.
Item 1A.
Risk Factors
In addition to the information set forth in this Quarterly Report on Form
10-Q, the reader should carefully consider the factors discussed in Part I,
Item 1A "Risk Factors," in the Company's Annual Report on Form 10-K for the
year ended December 31, 2023, which was filed with the Securities and Exchange
Commission on February 21, 2024.
Item 2. Unregistered Sales of Equi
ty Securities and Use of Proceeds
On February 20, 2024, the Board of Directors of the Company approved a new
stock repurchase program which authorizes the Company to repurchase up to
$50.0 million of the Company's outstanding common stock. See Note 11 "
Stock Repurchase Program
" to our unaudited condensed consolidated financial statements for further
information.
The following table sets forth information regarding purchases made by us of
shares of our common stock on a monthly basis during the quarter ended March
31, 2024:
Issuer Purchases of Equity Securities
Period Total Number Average Price Total Number Maximum
of Shares Paid per Share of Shares Approximate
Purchased Purchased as Dollar Value of
(1) Part of Publicly Shares that
Announced Plans May Yet Be
or Programs Purchased
Under the Plans
or Programs
(2)
December 31, 2023 $ 18,528,794
January 1, 2024-January 31, 2024 - $ - - 18,528,794
February 1, 2024-February 29, 2024 220,000 17.63 220,000 14,646,422
March 1, 2024-March 31, 2024 358,669 17.64 164,571 47,106,022
Total 578,669 384,571
(1)
Includes 194,098 shares delivered back to the Company for payment of
withholding taxes from employees for vesting restricted stock units pursuant
to the terms of the Perdoceo Education Corporation Amended and Restated 2016
Incentive Compensation Plan.
(2)
On February 20, 2024, the Board of Directors of the Company approved a new
stock repurchase program of up to $50.0 million which commenced on March 1,
2024 and expires on September 30, 2025.
Item 5. Other
Information
None
Item 6. E
xhibits
The exhibits required to be filed by Item 601 of Regulation S-K are listed in
the "Exhibit Index," which is attached hereto and incorporated by reference
herein.
26
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INDEX TO EXHIBITS
Exhibit Number Exhibit Incorporated by
Reference to:
*10.1 2024 Annual Incentive Plan Exhibit 10.1 to
our Form 8-K
filed on March 13, 2024
*10.2 Form of Restricted Exhibit 10.2 to
Stock Unit Agreement our Form 8-K
under the 2016 filed on March 13, 2024
Plan (Time-Based)
*10.3 Form of Restricted Exhibit 10.3 to
Stock Unit Agreement our Form 8-K
under the 2016 Plan filed on March 13, 2024
(Performance-Based)
+31.1 Certification of CEO
Pursuant to Section
302 of Sarbanes-Oxley
Act of 2002
+31.2 Certification of CFO
Pursuant to Section
302 of Sarbanes-Oxley
Act of 2002
+32.1 Certification of CEO
Pursuant to Section
906 of Sarbanes-Oxley
Act of 2002
+32.2 Certification of CFO
Pursuant to Section
906 of Sarbanes-Oxley
Act of 2002
+101.INS Inline XBRL Instance Document- the instance
document does not appear in the Interactive
Data File because its XBRL tags are
embedded within the Inline XBRL document
+101.SCH Inline XBRL Taxonomy
Extension Schema
With Embedded
Linkbases Document
+104 The cover page from the Company's Quarterly
Report on Form 10-Q for the quarter
ended March 31, 2024, formatted in
Inline XBRL (included in Exhibit 101)
____
* Management contract or
compensatory plan or arrangement
required to be filed as an
Exhibit to this Form 10-Q
+Filed herewith.
27
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SIGNAT
URES
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 thereunto duly authorized.
PERDOCEO EDUCATION CORPORATION
Date: May 1, 2024 By: /s/ TODD S. NELSON
Todd S. Nelson
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 1, 2024 By: /s/ ASHISH R. GHIA
Ashish R. Ghia
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
28
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EXHIBIT 31.1
CERTIFICATION
I, Todd S. Nelson, President and Chief Executive Officer of Perdoceo Education
Corporation, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Perdoceo Education
Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f))
for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal
quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors:
(a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Date: May 1, 2024
/s/ TODD S. NELSON
Todd S. Nelson
President and Chief Executive Officer
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EXHIBIT 31.2
CERTIFICATION
I, Ashish R. Ghia, Senior Vice President and Chief Financial Officer of
Perdoceo Education Corporation, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Perdoceo Education
Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f))
for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal
quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors:
(a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Date: May 1, 2024
/s/ ASHISH R. GHIA
Ashish R. Ghia
Senior Vice President and Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Perdoceo Education
Corporation (the Company) for the quarter ended March 31, 2024, as filed with
the Securities and Exchange Commission on the date hereof (the Report), I,
Todd S. Nelson, President and Chief Executive Officer of the Company, certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(i)
the Report fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ TODD S. NELSON
Todd S. Nelson
President and Chief Executive Officer
May 1, 2024
This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.
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EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Perdoceo Education
Corporation (the Company) for the quarter ended March 31, 2024, as filed with
the Securities and Exchange Commission on the date hereof (the Report), I,
Ashish R. Ghia, Senior Vice President and Chief Financial Officer of the
Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(i)
the Report fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ ASHISH R. GHIA
Ashish R. Ghia
Senior Vice President and Chief Financial Officer
May 1, 2024
This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.
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