Revenue increased 8.3% supported by total
student enrollment growth across both universities
Perdoceo Education Corporation (NASDAQ: PRDO) today reported
operating and financial results for the quarter ended March 31,
2020.
COVID-19
Update
The health and well-being of our students, employees and
communities are our top priority. Supported by our scalable and
innovative technology infrastructure we have transitioned
campus-based students to our online learning platforms. As a
result, all of our students are now taking classes online with no
major disruption to the level of service they are used to
experiencing from our institutions, faculty and staff.
Additionally, substantially all of our employees are now working
remotely. There has been no material impact to our operating
results from the COVID-19 pandemic thus far, but we continue to
closely monitor future developments and will strive to optimize our
resources to best serve our students.
First Quarter 2020
Results as Compared to Prior Year Quarter
Financial Results
- Revenue increased by 8.3 percent to $171.0 million with both
universities contributing to this growth
- Operating income increased 24.5 percent to $37.3 million
- Adjusted operating income increased 23.7 percent to $40.8
million*
- Earnings per diluted share of $0.41 as compared to earnings per
diluted share of $0.35
- Adjusted earnings per diluted share of $0.42 as compared to
$0.36*
- Ended the quarter with $285.6 million in cash, cash
equivalents, restricted cash and available-for-sale short-term
investments
*See GAAP (U.S. generally accepted accounting principles) to
non-GAAP reconciliation attached to this press release
Enrollment Metrics
- CTU’s total student enrollments increased 4.8 percent,
supported by new student enrollment growth of 16.8 percent
- AIU’s total student enrollments increased 26.0 percent, as a
result of the acquisition of the assets of Trident University
International (the “Trident acquisition”). New student enrollments,
however, decreased by 14.2 percent, negatively impacted by the
academic calendar. Excluding the impact of the Trident acquisition,
AIU’s new student enrollments would have decreased 22.9 percent as
a result of approximately 31 percent less enrollment days for the
quarter.
“The COVID-19 pandemic is posing unique challenges to our
society, and our highest priority is the well-being of our
students, employees and communities. We have leveraged our
technology and processes to move our students and employees to a
remote environment, while delivering on our commitments and
responsibilities to serve our students,” said Todd Nelson,
President and Chief Executive Officer. “Although the pandemic has
not had a material impact on our operating results to date, we are
closely monitoring the situation and remain focused on executing
against our strategy of sustainable and responsible growth.”
Nelson further added, “We entered 2020 with positive momentum
and experienced student enrollment growth at both universities,
which resulted in first quarter results coming in ahead of our
expectations. Our balance sheet continues to strengthen, and we are
strategically investing in initiatives that further enhance our
student’s experiences, retention and academic outcomes.”
REVENUE
- For the quarter ended March 31, 2020, total revenue of $171.0
million increased 8.3 percent compared to total revenue of $157.9
million for the prior year quarter.
- Both universities contributed to the revenue growth that has
been supported by positive underlying student enrollment
trends.
For the Quarter Ended March
31,
Revenue ($ in thousands)
2020
2019
% Change
CTU
$
103,588
$
97,057
6.7
%
AIU (1)
67,396
60,779
10.9
%
Total University Group
170,984
157,836
8.3
%
Corporate and Other
10
17
NM
Total
$
170,994
$
157,853
8.3
%
(1)
AIU’s first quarter 2020 revenue includes
revenue associated with the Trident acquisition commencing on the
March 2,2020 date of acquisition.
TOTAL AND NEW STUDENT ENROLLMENTS
- As of March 31, 2020, CTU’s and AIU’s total student enrollments
increased 4.8 percent and 26.0 percent, respectively, as compared
to the prior year. AIU’s total student enrollments were positively
impacted by the Trident acquisition.
- For the quarter ended March 31, 2020, new student enrollments
increased 16.8 percent within CTU and decreased 14.2 percent within
AIU, in each case as compared to the prior year quarter. AIU’s
quarterly new student enrollments were negatively impacted by the
academic calendar which resulted in 31 percent less enrollment days
for the quarter. Enrollment days attributable to any given period
are the available days in the period during which a prospective
student may apply to start school during that period.
As of March 31,
Total Student
Enrollments
2020
2019
% Change
CTU
24,200
23,100
4.8
%
AIU (1)
16,000
12,700
26.0
%
Total
40,200
35,800
12.3
%
For the Quarter Ended March
31,
New Student
Enrollments
2020
2019
% Change
CTU
7,020
6,010
16.8
%
AIU (1)
4,610
5,370
-14.2
%
Total
11,630
11,380
2.2
%
(1)
AIU’s new and total student enrollments
for the first quarter of 2020 include enrollments related to the
Trident acquisition commencing on the March 2, 2020 date of
acquisition and as of March 31, 2020.
OPERATING INCOME (LOSS)
- For the quarter ended March 31, 2020, operating income of $37.3
million increased 24.5 percent compared to $30.0 million for the
prior year quarter.
For the Quarter Ended March
31,
Operating Income ($ in
thousands)
2020
2019
% Change
CTU
$
34,619
$
29,691
16.6
%
AIU (1)
9,376
8,312
12.8
%
Total University Group
43,995
38,003
15.8
%
Corporate and Other (2)
(6,692
)
(8,032
)
16.7
%
Total
$
37,303
$
29,971
24.5
%
(1)
AIU’s first quarter of 2020 operating
income includes results associated with the Trident acquisition
commencing on the March 2, 2020 date of acquisition.
(2)
The following is a summary of the
operating losses related to closed campuses which are included
within Corporate and Other for the quarters ended March 31, 2020
and 2019, respectively.
For the Quarter Ended March
31,
Operating Loss ($ in thousands)
2020
2019
% Change
Closed Campuses
$
(1,012
)
$
(2,812
)
64.0
%
ADJUSTED OPERATING INCOME
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant and non-cash items, as
a means to understand the performance of its operations. (See table
below and the GAAP to non-GAAP reconciliation attached to this
press release for further details.)
- For the quarter ended March 31, 2020, adjusted operating income
of $40.8 million increased 23.7 percent compared to adjusted
operating income of $33.0 million for the prior year quarter.
For the Quarter Ended March
31,
Adjusted Operating Income ($ in
thousands)
2020
2019
Total
Company:
Operating income
$
37,303
$
29,971
Depreciation and amortization
2,639
2,233
Asset impairment (1)
612
-
Lease expenses for vacated space (2)
217
766
Adjusted Operating Income --
Total Company
$
40,771
$
32,970
Increase (Decrease)
23.7
%
(1)
Asset impairment relates to a right of use
asset for one of our vacated facilities for which the sublease
income was deemed no longer recoverable.
(2)
Lease expenses for vacated space include
both fixed and variable lease costs offset with sublease income for
our closed campuses.
NET INCOME AND EARNINGS PER DILUTED SHARE
For the quarter ended March 31, 2020, the Company recorded:
- Net income of $29.1 million compared to net income of $24.8
million for the prior year quarter.
- Earnings per diluted share of $0.41 compared to earnings per
diluted share of $0.35 for the prior year quarter.
- Adjusted earnings per diluted share of $0.42 compared to
adjusted earnings per diluted share of $0.36 for the prior year
quarter. (See table below and the GAAP to non-GAAP reconciliation
attached to this press release for further details.)
For the Quarter Ended March
31,
2020
2019
Reported Earnings Per Diluted
Share
$
0.41
$
0.35
Pre-tax adjustments included in
operating expenses:
Asset impairment (1)
0.01
-
Lease expenses for vacated space (2)
-
0.01
Total pre-tax adjustments
$
0.01
$
0.01
Tax effect of adjustments (3)
-
-
Total adjustments after tax
0.01
0.01
Adjusted Earnings Per Diluted
Share
$
0.42
$
0.36
(1)
Asset impairment relates to a right of use
asset for one of our vacated facilities for which the sublease
income was deemed no longer recoverable.
(2)
Lease expenses for vacated space include
both fixed and variable lease costs offset with sublease income for
closed campuses.
(3)
The tax effect of adjustments was
calculated by multiplying the pre-tax adjustments with a tax rate
of 25.0%. This tax rate is intended to reflect federal and state
taxable jurisdictions as well as the nature of the adjustments.
BALANCE SHEET AND CASH FLOW
- For the quarter ended March 31, 2020, net cash provided by
operating activities was $48.8 million compared to $12.9 million
for the prior year quarter.
- As of March 31, 2020 and December 31, 2019, cash, cash
equivalents, restricted cash and available-for-sale short-term
investments totaled $285.6 million and $294.2 million,
respectively.
- During the quarter ended March 31, 2020, the Company paid $38.1
million in cash in connection with the Trident acquisition. The
Company expects to pay an additional estimated amount of $6.0
million, related to the final post-closing purchase price and
working capital adjustments, upon finalization of the closing
balance sheet.
For the Quarter Ended March
31,
Selected Cash Flow Items ($ in
thousands)
2020
2019
% Change
Net cash provided by operating
activities
$
48,768
$
12,945
276.7
%
Capital expenditures
$
1,015
$
479
111.9
%
OUTLOOK
The Company is providing the following outlook, subject to the
key assumptions identified below. Please see the GAAP to non-GAAP
reconciliation for adjusted operating income and adjusted earnings
per diluted share attached to this press release for further
details.
The outlook now incorporates the Trident acquisition, including
known acquisition and restructuring costs, as well as known costs
associated with COVID-19, such as transitioning our students and
employees to a remote environment. The outlook continues to reflect
the Company’s expectation of growth in new and total student
enrollments at both universities for the full year of 2020.
Further, for the second quarter of 2020, the Company expects
growth in CTU’s new student enrollments as compared to the prior
year quarter. AIU’s second quarter new student enrollments are
expected to show significant growth due to 50 percent more
enrollment days in the second quarter of 2020 as compared to the
prior year quarter, as well as the Trident acquisition. This
increase is expected to more than offset the decline in new student
enrollments from the first quarter of 2020 such that on a combined
basis AIU is expected to show growth for the first half of 2020,
even after excluding the positive impact from the Trident
acquisition. The Company expects AIU’s enrollment days for the
third and fourth quarters of 2020 to be relatively comparable to
the respective prior year periods.
Total Company Outlook
For Quarter Ending June
30,
For the Year Ending December
31,
OUTLOOK
ACTUAL
OUTLOOK
ACTUAL
2020
2019
2020
2019
Operating Income
$33M - $35M
$0.2M
$135M - $139M
$86.5M
Adjusted Operating Income
$38M - $40M
$32.8M
$151M - $155M
$134.3M
Earnings Per Diluted Share
$0.35 - $0.37
($0.01)
$1.44 - $1.48
$0.97
Adjusted Earnings Per Diluted Share
$0.36 - $0.38
$0.34
$1.49 - $1.53
$1.37
Operating income, which is the most directly comparable GAAP
measure to adjusted operating income, and earnings per diluted
share may not follow the same trends stated in the outlook above
because of adjustments made for certain significant and non-cash
items such as lease expenses for vacated space offset with any
sublease income as well as depreciation, amortization, asset
impairment charges, significant restructuring charges and
significant legal settlements. The operating income, adjusted
operating income, earnings per share, adjusted earnings per share
and enrollment outlook provided above for 2020 are based on the
following key assumptions and factors, among others: (i)
prospective student interest in the Company’s programs remains
consistent with recent experience, (ii) initiatives and investments
in student-serving operations continue to positively impact
enrollment trends, (iii) no material changes in the current legal
or regulatory environment, and excludes legal and regulatory
liabilities and other related impacts which are not probable and
estimable at this time, and any impact of new or proposed
regulations, including the “borrower defense to repayment”
regulations, (iv) no significant operating impacts from the
settlements with the U.S. Federal Trade Commission and state
attorneys general or other legal or regulatory matters, including
the March 2020 letter from the U.S. Department of Veterans Affairs
(the “VA”) regarding the potential disapproval, for purposes of
educational assistance programs administered by the VA, of the
enrollment of individuals at the Company’s institutions if the
Company fails to remedy the deficiency identified in the letter,
(v) no significant operating or financial impacts from the COVID-19
pandemic beyond the known costs which have been incorporated in the
outlook, (vi) earnings per diluted share outlook assumes an
effective income tax rate of approximately 26% for the second
quarter and the full year, and (vii) any future impact from the
Company’s stock repurchase program is excluded. Although these
estimates and assumptions are based upon management’s good faith
beliefs regarding current and future circumstances and actions that
may be undertaken, actual results could differ materially from
these estimates. In addition, decisions we make in the future as we
continue to evaluate diverse strategies to enhance shareholder
value may impact the outlook provided above.
CONFERENCE CALL INFORMATION
Perdoceo Education Corporation will host a conference call on
Thursday, May 7, 2020 at 5:30 p.m. Eastern time to discuss its
first quarter 2020 results and 2020 outlook. Interested parties can
access the live webcast of the conference at www.perdoceoed.com in
the Investor Relations section of the website. Participants can
also listen to the conference call by dialing 1-844-378-6484
(domestic) or 1-412-542-4179 (international). Please log-in or
dial-in at least 10 minutes prior to the start time to ensure a
connection. An archived version of the webcast will be accessible
for 90 days at www.perdoceoed.com in the Investor Relations section
of the website.
ABOUT PERDOCEO EDUCATION CORPORATION
Perdoceo’s academic institutions offer a quality postsecondary
education primarily online to a diverse student population, along
with campus-based and blended learning programs. The Company’s two
regionally accredited universities – Colorado Technical University
(“CTU”) and American InterContinental University (“AIU”) – provide
degree programs through the master’s or doctoral level as well as
associate and bachelor’s levels. Both universities offer students
industry relevant and career-focused degree programs that are
designed to meet the educational needs of today’s busy adults. CTU
and AIU continue to show innovation in higher education, advancing
new personalized learning technologies like their
intellipath® learning platform and using data analytics and
technology to support students and enhance learning. Perdoceo is
committed to providing quality education that closes the gap
between learners who seek to advance their careers and employers
needing a qualified workforce.
A listing of university locations and web links to Perdoceo
institutions can be found at www.perdoceoed.com.
Except for the historical and present factual information
contained herein, the matters set forth in this release, including
statements identified by words such as “believe,” “will,” “expect,”
“continue,” “outlook,” “remain,” “look forward to,” “should” and
similar expressions, are forward-looking statements as defined in
Section 21E of the Securities Exchange Act of 1934, as amended.
These statements are based on information currently available to us
and are subject to various assumptions, risks, uncertainties and
other factors that could cause our results of operations, financial
condition, cash flows, performance, business prospects and
opportunities to differ materially from those expressed in, or
implied by, these statements. Except as expressly required by the
federal securities laws, we undertake no obligation to update or
revise such factors or any of the forward-looking statements
contained herein to reflect future events, developments or changed
circumstances, or for any other reason. These risks and
uncertainties, the outcomes of which could materially and adversely
affect our financial condition and operations, include, but are not
limited to, the following: declines in enrollment or interest in
our programs; our continued compliance with and eligibility to
participate in Title IV Programs under the Higher Education Act of
1965, as amended, and the regulations thereunder (including the
90-10, financial responsibility and administrative capability
standards prescribed by the U.S. Department of Education), as well
as applicable accreditation standards and state regulatory
requirements; the impact of various versions of “borrower defense
to repayment” regulations; rulemaking by the U.S. Department of
Education or any state or accreditor and increased focus by
Congress and governmental agencies on, or increased negative
publicity about, for-profit education institutions (in particular
as these risks and uncertainties may be exacerbated leading up to
and following the 2020 U.S. presidential election); the operating
impact of the settlements with the U.S. Federal Trade Commission
and state attorneys general; the success of our initiatives to
improve student experiences, retention and academic outcomes; the
ability of our student admissions and advising functions to achieve
anticipated operating performance; our continued eligibility to
participate in educational assistance programs for veterans or
other military personnel; the impact of the global COVID-19
pandemic; difficulties with integrating the assets of Trident
University International into AIU’s operations; increased
competition; the impact of management changes; and changes in the
overall U.S. economy. Further information about these and other
relevant risks and uncertainties may be found in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019 and
its subsequent filings with the Securities and Exchange
Commission.
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
March 31,
December 31,
2020
2019
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents,
unrestricted
$
37,932
$
108,687
Restricted cash
4,000
-
Short-term investments
243,651
185,488
Total cash and cash equivalents,
restricted cash and short-term investments
285,583
294,175
Student receivables, net
32,573
55,018
Receivables, other
1,576
1,381
Prepaid expenses
10,389
7,299
Inventories
553
576
Other current assets
1,619
1,936
Total current assets
332,293
360,385
NON-CURRENT ASSETS:
Property and equipment, net
28,349
26,006
Right of use asset, net
51,088
50,366
Goodwill
118,777
87,356
Intangible assets, net
18,300
7,900
Student receivables, net
1,142
1,244
Deferred income tax assets, net
50,701
60,169
Other assets
5,876
5,720
TOTAL ASSETS
$
606,526
$
599,146
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Lease liability - operating
$
12,419
$
11,784
Accounts payable
9,624
11,533
Accrued expenses:
Payroll and related benefits
12,532
27,616
Advertising and marketing costs
11,478
10,479
Income taxes
1,489
1,376
Other
15,745
16,378
Deferred revenue
29,002
24,647
Total current liabilities
92,289
103,813
NON-CURRENT LIABILITIES:
Lease liability - operating
51,699
52,391
Other liabilities
17,395
11,647
Total non-current liabilities
69,094
64,038
STOCKHOLDERS' EQUITY:
Preferred stock
-
-
Common stock
862
860
Additional paid-in capital
642,958
639,335
Accumulated other comprehensive (loss)
income
(543
)
344
Retained earnings
47,177
18,071
Treasury stock
(245,311
)
(227,315
)
Total stockholders' equity
445,143
431,295
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
606,526
$
599,146
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except per share
amounts and percentages)
For the Quarter Ended March
31,
2020
% of
Total
Revenue
2019
% of
Total
Revenue
REVENUE:
Tuition and fees
$
170,394
99.6
%
$
157,228
99.6
%
Other
600
0.4
%
625
0.4
%
Total revenue
170,994
157,853
OPERATING EXPENSES:
Educational services and facilities
26,911
15.7
%
26,327
16.7
%
General and administrative
103,529
60.5
%
99,322
62.9
%
Depreciation and amortization
2,639
1.5
%
2,233
1.4
%
Asset impairment
612
0.4
%
-
0.0
%
Total operating expenses
133,691
78.2
%
127,882
81.0
%
Operating income
37,303
21.8
%
29,971
19.0
%
OTHER INCOME:
Interest income
1,487
0.9
%
1,440
0.9
%
Interest expense
(41
)
0.0
%
(42
)
0.0
%
Miscellaneous (expense) income
(13
)
0.0
%
226
0.1
%
Total other income
1,433
0.8
%
1,624
1.0
%
PRETAX INCOME
38,736
22.7
%
31,595
20.0
%
Provision for income taxes
9,604
5.6
%
6,407
4.1
%
INCOME FROM CONTINUING
OPERATIONS
29,132
17.0
%
25,188
16.0
%
Loss from discontinued operations, net of
tax
(26
)
0.0
%
(397
)
-0.3
%
NET INCOME
29,106
17.0
%
24,791
15.7
%
OTHER COMPREHENSIVE (LOSS) INCOME, net
of tax:
Foreign currency translation
adjustments
(48
)
(52
)
Unrealized (loss) gain on investments
(839
)
399
Total other comprehensive (loss)
income
(887
)
347
COMPREHENSIVE INCOME
$
28,219
$
25,138
NET INCOME (LOSS) PER SHARE -
BASIC:
Income from continuing operations
$
0.42
$
0.36
Loss from discontinued operations
-
(0.01
)
Net income per share
$
0.42
$
0.35
NET INCOME (LOSS) PER SHARE
-DILUTED:
Income from continuing operations
$
0.41
$
0.35
Loss from discontinued operations
-
-
Net income per share
$
0.41
$
0.35
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
69,839
69,837
Diluted
71,714
71,492
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Quarter Ended March
31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
29,106
$
24,791
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairment
612
-
Depreciation and amortization expense
2,639
2,233
Bad debt expense
12,862
11,709
Compensation expense related to
share-based awards
3,212
1,369
Deferred income taxes
9,468
6,778
Changes in operating assets and
liabilities
(9,131
)
(33,935
)
Net cash provided by operating
activities
48,768
12,945
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of available-for-sale
investments
(111,753
)
(138,700
)
Sales of available-for-sale
investments
52,893
135,062
Purchases of property and equipment
(1,015
)
(479
)
Business acquisition
(38,065
)
-
Net cash used in investing activities
(97,940
)
(4,117
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock
413
109
Purchase of treasury stock
(17,309
)
-
Payments of employee tax associated with
stock compensation
(687
)
(2,532
)
Net cash used in financing activities
(17,583
)
(2,423
)
NET (DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(66,755
)
6,405
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, beginning of the period
108,687
32,731
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, end of the period
$
41,932
$
39,136
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT
INFORMATION
(In thousands, except
percentages)
For the Quarter Ended March
31,
2020
2019
REVENUE:
CTU
$
103,588
$
97,057
AIU (1)
67,396
60,779
Total University Group
170,984
157,836
Corporate and Other (2)
10
17
Total
$
170,994
$
157,853
OPERATING INCOME (LOSS):
CTU
$
34,619
$
29,691
AIU (1)
9,376
8,312
Total University Group
43,995
38,003
Corporate and Other (2)
(6,692
)
(8,032
)
Total
$
37,303
$
29,971
OPERATING MARGIN (LOSS):
CTU
33.4
%
30.6
%
AIU (1)
13.9
%
13.7
%
Total University Group
25.7
%
24.1
%
Corporate and Other (2)
NM
NM
Total
21.8
%
19.0
%
(1)
AIU’s first quarter 2020 revenue and operating income include
results associated with the Trident acquisition commencing on the
March 2, 2020 date of acquisition.
(2)
Corporate and Other includes results of
operations for closed campuses. Operating losses related to closed
campuses were $1.0 million and $2.8 million for the quarters ended
March 31, 2020 and 2019, respectively.
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ITEMS (1)
(In thousands, unless otherwise
noted)
For the Quarter Ended March
31,
ACTUAL
Adjusted
Operating Income
2020
2019
Total
Company
Operating income
$
37,303
$
29,971
Depreciation and amortization (2)
2,639
2,233
Asset impairment (3)
612
-
Lease expenses for vacated space (4)
217
766
Adjusted Operating Income -- Total
Company
$
40,771
$
32,970
For the Quarter Ending June
30,
OUTLOOK
ACTUAL
2020
2019
Total
Company
Operating income
$33.0M - $35.0M
$
184
Depreciation and amortization (2)
4.8M
2,235
Lease expenses for vacated space (4)
0.2M
392
Significant legal settlements (5)
-
30,000
Adjusted Operating Income -- Total
Company
$38.0M - $40.0M
$
32,811
For the Year Ending December
31,
OUTLOOK
ACTUAL
2020
2019
Total
Company
Operating income
$135.0M - $139.0M
$
86,462
Depreciation and amortization (2)
14.5M
9,145
Asset impairment (3)
0.6M
-
Lease expenses for vacated space (4)
0.9M
1,630
Significant legal settlements (5)
-
37,100
Adjusted Operating Income -- Total
Company
$151.0M - $155.0M
$
134,337
PERDOCEO EDUCATION CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ITEMS (1) (cont’d)
For the Quarter Ended March
31,
2020
2019
Reported Earnings Per Diluted
Share
$
0.41
$
0.35
Pre-tax adjustments included in
operating expenses:
Asset impairment (3)
0.01
-
Lease expenses for vacated space (4)
-
0.01
Total pre-tax adjustments
$
0.01
$
0.01
Tax effect of adjustments (6)
-
-
Total adjustments after tax
0.01
0.01
Adjusted Earnings Per Diluted
Share
$
0.42
$
0.36
For the Quarter Ending June
30,
OUTLOOK
ACTUAL
2020
2019
Reported Earnings Per Diluted
Share
$0.35 - $0.37
$
(0.01
)
Pre-tax adjustments included in
operating expenses:
Amortization (2)
0.01
-
Lease expenses for vacated space (4)
-
0.01
Significant legal settlements (5)
-
0.41
Total pre-tax adjustments
$
0.01
$
0.42
Tax effect of adjustments (6)
-
(0.02
)
Tax effect of change in settlement
deductibility (7)
-
(0.05
)
Total adjustments after tax
0.01
0.35
Adjusted Earnings Per Diluted
Share
$0.36 - $0.38
$
0.34
For the Year Ending
December 31,
OUTLOOK
ACTUAL
2020
2019
Reported Earnings Per Diluted
Share
$1.44 - $1.48
$
0.97
Pre-tax adjustments included in
operating expenses:
Amortization (2)
0.04
-
Asset impairment (3)
0.01
-
Lease expenses for vacated space (4)
0.01
0.02
Significant legal settlements (5)
-
0.51
Total pre-tax adjustments
$
0.06
$
0.53
Tax effect of adjustments (6)
(0.01
)
(0.13
)
Total adjustments after tax
0.05
0.40
Adjusted Earnings Per Diluted
Share
$1.49 - $1.53
$
1.37
PERDOCEO EDUCATION CORPORATION AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP
ITEMS (1) (cont’d)
(1)
The Company believes it is useful to
present non-GAAP financial measures which exclude certain
significant and non-cash items as a means to understand the
performance of its operations. As a general matter, the Company
uses non-GAAP financial measures in conjunction with results
presented in accordance with GAAP to help analyze the performance
of its operations, assist with preparing the annual operating plan,
and measure performance for some forms of compensation. In
addition, the Company believes that non-GAAP financial information
is used by analysts and others in the investment community to
analyze the Company’s historical results and to provide estimates
of future performance.
The Company believes adjusted operating
income and adjusted earnings per diluted share allow it to analyze
and assess its operations and compare current operating results
with the operational performance of other companies in its industry
because it does not give effect to potential differences caused by
items it does not consider reflective of underlying operating
performance, such as restructuring charges and significant legal
settlements. In evaluating adjusted operating income and adjusted
earnings per diluted share, investors should be aware that in the
future the Company may incur expenses similar to the adjustments
presented above. The presentation of adjusted operating income and
adjusted earnings per diluted share should not be construed as an
inference that the Company's future results will be unaffected by
expenses that are unusual, non-routine or non-recurring. Adjusted
operating income and adjusted earnings per diluted share have
limitations as an analytical tool, and should not be considered in
isolation, or as a substitute for net income, operating income,
earnings per diluted share, or any other performance measure
derived in accordance and reported under GAAP or as an alternative
to cash flow from operating activities or as a measure of
liquidity.
Non-GAAP financial measures, when viewed
in a reconciliation to corresponding GAAP financial measures,
provide an additional way of viewing the Company’s results of
operations and the factors and trends affecting the Company’s
business. Non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, the
corresponding financial results presented in accordance with
GAAP.
(2)
Amortization amounts relate to
definite-lived intangible assets associated with the Trident
acquisition.
(3)
Asset impairment relates to a right of use
asset for one of our vacated facilities for which the sublease
income was deemed no longer recoverable.
(4)
Lease expenses for vacated space include
both fixed and variable lease costs offset with sublease income for
closed campuses.
(5)
Significant legal settlements relate to
the FTC and Oregon arbitrations matters recorded during 2019.
(6)
The tax effect of adjustments was
calculated by multiplying the pre-tax adjustments with a tax rate
of 25.0%. This tax rate is intended to reflect federal and state
taxable jurisdictions as well as the nature of the adjustments.
(7)
A legal settlement of $30.0 million
related to the FTC matter was an adjustment from operating income
during the second quarter of 2019 to calculate adjusted operating
income. However, only $6.7 million of this adjustment met the
criteria for tax deductibility during the second quarter. During
the fourth quarter of 2019, an additional $23.0 million related to
the FTC settlement met the criteria to be deductible for tax
purposes. This amount was previously considered a non-deductible
permanent item for tax purposes through September 30, 2019. As a
result, the tax benefit of the change in deductibility for the
$23.0 million reflected during the fourth quarter of 2019 has been
adjusted to fully reflect the proportional impact of the tax
non-deductibility on the second and third quarters of 2019. The
impact of the non-deductibility was not proportionally reflected in
the originally reported adjusted earnings per diluted share for the
second and third quarters of 2019 which would have decreased by
$0.05 and increased by $0.02, respectively. The second quarter of
2019 now reflects this adjustment. For the full year 2019,
approximately $29.7 million was considered deductible for tax
purposes. The quarterly reversals and adjustments of the
proportional impacts of the non-deductibility had no effect for the
full year 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005939/en/
Investors: Alpha IR Group Brooks Hamilton or Chris Hodges
(312) 445-2870 PRDO@alpha-ir.com
Or
Media: Perdoceo Education Corporation (847) 585-2600
media@perdoceoed.com
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