Perdoceo Education (PRDO) 8-K Career Education Corporation Reports

CAREER EDUCATION CORPORATION

FOURTH QUARTER 2013

INVESTOR CONFERENCE CALL

FEBRUARY 27, 2014

Exhibit 99.2

This

presentation

contains

“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

“estimated,”

“path

to

being,”

“anticipate,”

“project,”

“will,”

“potential”

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

discussed

in

Item

1A,“Risk

Factors”

of

our

Annual

Report

on

Form

10-K

for

the

year

ended

December

31,

2013

that

could

cause

our

actual

growth,

results

of

operations,

financial

condition,

cash

flows,

performance

and

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.

Certain

financial

information

is

presented

on

a

non-GAAP

basis.

The

Company

believes

it

is

useful

to

present

non-

GAAP

financial

measures

which

exclude

certain

significant

items

as

a

means

to

understand

the

performance

of

its

core

business.

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

core

business,

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

and

that

failure

to

report

non-GAAP

measures

could

result

in

a

misplaced

perception

that

the

Company's

results

have

underperformed

or

exceeded

expectations.

The

most

directly

comparable

GAAP

information

and

a

reconciliation

between

the

non-GAAP

and

GAAP

figures

are

provided

at

the

end

of

this

presentation,

and

this

presentation

(including

the

reconciliation)

has

been

posted

to

our

website.

Cautionary Statements & Disclosures

2

Sequential Improvement in Decline of New Enrollments

3

Sequential Improvement in Decline of Total Enrollments

4

5

October 2013 –

February 2014 New Enrollments

(1)  January & February 2013 new enrollments for AIU & CTU have been recast to align with 2014 metric reporting.

(2)  Based on reporting structure as of 12/31/13.

(3)  With the exception of Health, December data reflects cancellations as there were no new student enrollments.

(4)  February 2014 is an estimate based on month to date information.

2014

October

November

December

January

February

Actual

Actual

Actual

(3)

Actual

Estimate

(4)

AIU

(1)

1,968

1,264

(712)

2,288

1,680

Prior Year

2,401

1,161

(192)

2,220

1,455

CTU

(1)

3,233

2,452

(425)

2,424

2,960

Prior Year

3,362

2,252

(574)

2,704

2,687

Health

(2)

616

124

460

1,082

475

Prior Year

402

424

164

1,063

609

Culinary

(2)

1,125

930

(45)

1,266

1,130

Prior Year

1,576

1,236

(2)

1,469

1,376

Design & Technology

(2)

225

281

(46)

365

300

Prior Year

276

146

(12)

375

185

2013

6

Winter Weather Factor

Instances of Closures or Delayed Starts at Career Schools

New student enrollment growth for CTU (4%), Health Education

(21%) and Design & Technology (12%).

A 49% improvement in the rate at which we convert a prospective

student to a new student enrollment, cumulatively reflecting

improvement across all segments.

Higher student applications across all segments with a 38% overall

improvement.

Slight improvement in retention rates.

A 2.1% decline in new student acquisition costs.

7

Key Improvements –

4Q 2013 compared to 4Q 2012

Excludes Transitional Schools

8

Significantly Reduced Operating Expenses in 2013

Operating Expenses (in millions) exclude significant items as disclosed in Non-GAAP reconciliation.

Full Year

Fourth Quarter

Right sized & reengineered the organization.

Optimized real estate footprint.

Managed Transitional Schools cost structure.

Improved marketing efficiencies.

Lower Cash Burn in 2

nd

Half of 2013

9

2016 / 17

2Q 2013

3Q 2013

4Q 2013

Estimated Phasing of 2014 Transitional

Schools Closures (20 Schools)

1Q 2014

9 Campuses

Complete

Teach-Out

10

2Q 2014

7 Campuses

Complete

Teach-Out

3Q 2014

3 Campuses

Complete

Teach-Out

4Q 2014

1 Campus

Complete

Teach-Out

6 Campuses

Already

Completed

2014 1Q 

2014 4Q

Estimated 2014 Operating Losses of

Transitional Schools

11

Path to Being EBITDA Positive in 2015

12

2013 Operating Loss of $160 million excludes significant items as disclosed in Non-GAAP reconciliation.

13

Lower Operating Cost Trends

2012 & 2013 Operating Expenses exclude significant items as disclosed in Non-GAAP reconciliation.  Numbers in millions.

14

Average Acquisition Costs Per Student

15

End of Presentation

16

Non-GAAP Reconciliation

Operating Loss

Loss per Diluted

Share

(2)

Operating Loss

Loss per Diluted

Share

(2)

As Reported

(59.0)

$                  

(1.61)

$                  

(91.5)

$                 

(1.07)

$                  

Reconciling Items:

Legal Settlements

(3)

15.7

0.15

-

-

Asset Impairments

(4)

7.0

0.07

40.8

0.40

Severance and Related Costs

(5)

1.8

0.02

13.1

0.13

Deferred Tax Asset Valuation Allowance

(6)

1.08

-

Adjusted to Exclude Significant Items

(34.5)

$                  

(0.29)

$                  

(37.6)

$                 

(0.54)

$                  

Diluted Weighted Average Shares Outstanding

66,916

66,199

Operating Loss

Loss per Diluted

Share

(2)

Operating Loss

Loss per Diluted

Share

(2)

As Reported

(214.7)

$                

(3.02)

$                  

(197.0)

$               

(2.24)

$                  

Reconciling Items:

Legal Settlements

(3)

26.0

0.25

-

-

Goodwill and Asset Impairments

(7)

22.7

0.22

125.5

1.62

Severance and Related Costs

(5)

6.2

0.06

14.0

0.14

Insurance Recoveries

(8)

-

-

(19.0)

(0.19)

Deferred Tax Asset Valuation Allowance

(6)

1.08

-

Adjusted to Exclude Significant Items

(159.8)

$                

(1.41)

$                  

(76.5)

$                 

(0.67)

$                  

Diluted Weighted Average Shares Outstanding

66,738

66,475

For the Quarter Ended December 31,

2013

2012

For the Year Ended December 31,

2013

2012

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS

(1)

(In millions, except share and per share amounts)

17

Non-GAAP Reconciliation -

Continued

(1)

The Company believes it is useful to present non-GAAP financial measures which exclude certain significant items as a means to understand the performance

of its core business.  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 core business, 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 and that failure to report non-GAAP measures could result in a misplaced perception that the

Company's results have underperformed  or exceeded expectations. 

Non-GAAP financial measures when viewed in a reconciliation to corresponding GAAP financial measures, provides 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)

Loss per diluted share is based on loss from continuing operations and assumes a 35% tax rate for each deductible item.

(3)

A $15.5 million charge related to a pending legal settlement was recorded within Culinary Arts in the fourth quarter of 2013; year to date legal settlements

include $10.5 million for the settlement of a legal matter recorded within Health Education ($8.8) and Transitional Schools ($1.7). 

(4)

In fourth quarter 2013, non-cash asset impairment charges of $7.0 million were recorded primarily within Design & Technology ($4.0) related to long-lived

assets for ongoing schools ($2.3) and decisions made to exit certain leased facilities ($1.7), and Transitional Schools ($2.5) for schools being taught out. 2012

included non-cash asset impairment charges of $29.2 million recorded primarily within Transitional Schools ($28.3) and $11.6 million of non-cash trade name

impairment charges attributable to Culinary Arts ($8.1) and Health Education ($3.5) 

(5)

Severance and related costs were recorded in 2013 and 2012 in connection with both the reduction in force and campus closure actions.  In 2013, these costs

were principally recorded within Transitional Schools ($2.1 million) and Corporate and Other ($2.1 million). The 2012 severance and related costs of $14.0

million were recorded within Transitional Schools ($6.7), AIU ($1.8), Health Education ($1.6), Corporate ($1.6), Design & Technology ($1.4), Culinary Arts

($0.6) and CTU ($0.3).

(6)

Fourth quarter of 2013 included a deferred tax valuation allowance of $72.2 million recorded within income tax benefit of continuing operations.

(7)

2013 includes non-cash trade name impairment charges of $14.7 million attributable to Culinary Arts ($13.0) and Health Education ($1.7) and $8.0 million of

non-cash asset impairment charges, of which $7.0 million were recorded in the fourth quarter. In addition to the fourth quarter asset impairment charges, 2012

expenses include non-cash goodwill impairment charges of $83.4 million, of which $73.6 million is non-deductible for income tax purposes, primarily

applicable to Health Education ($41.3) and Design & Technology ($40.8) and additional non-cash asset impairment charges of $1.3 million. 

(8)

2012 includes a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.