Perdoceo Education 8K Career Education Corporation Reports | PRDO 6 May 15

Dave Rawden

Interim Chief Financial Officer

Ron McCray

Chairman & Interim Chief Executive Officer

Jason Friesen

Senior Vice President, Chief University Education Officer

Lysa Clemens

Senior Vice President, Transitional Operations and Chief Transformation Officer

CAREER EDUCATION CORPORATION

FIRST QUARTER 2015

INVESTOR CONFERENCE CALL

MAY 6, 2015

Exhibit 99.2

Cautionary Statements & Disclosures

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 “believe,”

“anticipate,” “will,” “expect,” “plan,” “aim,” “continue to” 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, 2014 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 any of the

forward-looking statements 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

ongoing 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 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.

Agenda

•

Overview of Strategy to Divest or Teach-out Remaining

Career Colleges

•

Snapshot of Career Education’s Future

•

First Quarter Results & Business Highlights

•

Outlook/Guidance

•

Q&A Session

Update on Turnaround Plan

•

Divest or teach-out remaining Career Colleges

•

Several factors handicapped the Company’s ability to operate programs,

including:

•

A prolonged recession with depressed hiring

•

Increasing costs of education and corresponding student debt levels

•

Challenging regulatory environment

•

Right-size corporate overhead

•

Streamline University operations

•

Strategy focused on Universities

–

Colorado Technical University (CTU)

–

American InterContinental University (AIU)

•

Accelerate Company’s path to profitability

Update on Career Colleges and Le Cordon Bleu

Planned Actions for Career Colleges and Le Cordon Bleu

Institution

Action

Status

Sanford-Brown

Teach-Out

Teach-outs announced 5/6/15

Missouri College

Pursue Divestiture

Sale process remains ongoing

Briarcliffe College

Pursue Divestiture

Sale process remains ongoing

Brooks Institute

Asset Held For Sale

Signed purchase agreement; pending

regulatory & accreditor approval

Harrington College

Teach-Out

Announced agreement on 3/31/15 with

Columbia College Chicago to transfer

certain students prior to discontinuation

of operations

Le Cordon Bleu

Asset Held For Sale

Previously announced sale process

remains ongoing; engaged in discussions

with numerous interested parties

Update on Career Colleges (cont.)

Review of Teach-Out Process

•

A gradual discontinuation of operations

•

Affords students a reasonable opportunity to complete programs

before a campus closes

•

Reflects our commitment to student success

–

Many campuses keep serving students for 18 months or more

–

Minimizes negative impacts on faculty, students and staff

•

Solid track record of regulator and accreditor satisfaction with

teach-out process

Review of Transitional Group (Before & After)

All teach-out schools and Career Colleges for sale will move from the Career

Colleges Group to the Transitional Group. The Company expects all campuses

selected for teach-out to be closed by 2018.

(1) Teach-out dates are estimated based on current student enrollment and are subject to change.

Snapshot of Career Education’s Future

Business Highlights

•

The company maintains a competitive

advantage with its online platform, brand

awareness

and

intellipath

adaptive

learning technology

•

Team is focused on efficient and effective

spending as it continues to streamline

operations, to improve student outcomes

and to reduce costs to be more in-line

with industry peers

•

University Group is profitable and

generates significant positive cash flow

28,000

29,000

30,000

31,000

32,000

33,000

34,000

35,000

100

200

300

400

500

600

TTM 1Q

2014

TTM 2Q

2014

TTM 3Q

2014

TTM 4Q

2014

TTM 1Q

2015

Recent University Group Performance

Trailing Twelve Months

Revenue

Operating Income

Students

The core offering of the organization will be driven by degree-oriented,

higher education offered primarily online through regionally accredited

universities.

(1) Total student enrollments are reported

as of each period end date.

•

Continue streamlining operations and strengthening academic

outcomes

•

Invest in technology innovation

–

Intellipath adaptive learning technology is a differentiating product

–

Developing new mobile application at CTU to enrich student experience

•

Introduce relevant new programs

–

Two new recently approved programs rolling out at CTU in May 2015

–

New programs at AIU possible in 3Q15

•

Grow corporate partnerships

–

65 new accounts in 2014 plus 9 additional accounts in 2015

–

Access to 4 million employees who are possible future students

–

Students from partners increased about 40% in 1Q15 versus prior year

•

Generate modest University total student enrollment growth

•

Continue reducing Career College/Transitional losses

Priorities for the University Group

First Quarter University Group Highlights

•

Total revenue of $138.2 million

–

Down 0.9% year-over-year

–

Total enrollments fairly flat

•

Operating income $11.7 million

–

Quarterly increase of 7.6% year-over-year

•

Operating margins expanded 70 basis points to 8.5%

–

Driven by continued execution of cost control initiatives

Total University Student Enrollments

31,300

32,000

33,900

30,600

10,800

(1)

(1) AIU had three start dates in 1Q 2014 and two start dates in 2Q 2014 which explains why there is a spike in total

enrollments in 1Q 2014 and a corresponding decrease in 2Q 2014.

All other periods each had two AIU start dates.

33,800

Total University Student Enrollments –

Online Only

28,900

28,300

30,200

28,600

(1) AIU had three start dates in 1Q 2014 and two start dates in 2Q 2014 which explains why there is a spike in total

enrollments in 1Q 2014 and a corresponding decrease in 2Q 2014.

All other periods each had two AIU start dates.

10,700

(1)

30,600

Adjusted EBITDA for Career, Transitional, and Disc. Ops

Financial Impacts of Restructuring

•

On track with prior Adjusted EBITDA guidance for Transitional Group

–

Amount needs to be redefined with Career Colleges added to group

•

Developing new guidance on impact of Transitional and discontinued

operations

–

Estimating

the

restructuring

charges

will

range

from

$40

million

$50

million total

•

Approximately $20-$25 million related to severance charges will be

paid through 2018

•

$20-$25 million related to lease obligations will be paid through 2023,

when we anticipate exiting the last lease

–

Estimate for lease obligations includes an estimate for sublease

income,

which would offset our cash obligations

•

Excluding restructuring charges, additional teach-outs of Career Colleges

expected to be accretive to 2015 earnings

Strong Cash Position

(1) Balances presented above are quarter end balances and include both continuing and discontinued operations.

Outlook/Guidance

•

Continue to expect positive Adjusted EBITDA from University

•

Modest total student enrollment growth for University in 2015

•

Expect additional progress reducing real estate obligations for

Transitional and discontinued operations

•

Continue to expect more than $40 million in operating expense

reductions in 2015 based on initiatives put in place last year

•

Maintaining year-end cash, cash equivalents, restricted cash and

investments balance at $190 million and do not anticipate any

impact on compliance with our Credit Agreement

–

Enhanced profitability and liquidity profile should help to

strengthen partnerships with banking partners

Reconciliation of GAAP to Non-GAAP Items

Adjusted EBITDA

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

University Group and Corporate:

Pre-tax loss from continuing operations

(24,990)

(7,747)

(31,651)

(11,664)

(21,442)

Transitional Group operating loss

8,360

10,138

10,856

9,091

7,789

Career Colleges operating loss

22,110

13,650

29,908

16,273

13,922

Interest expense (income), net

(38)

(120)

(177)

(25)

Depreciation and amortization

(3)

4,361

5,170

5,402

5,732

6,108

Stock-based compensation

(3)

940

966

950

1,020

1,341

Legal settlements

(3) (5)

(400)

2,850

556

(373)

(368)

(363)

(380)

(8,588)

1,354

Adjusted EBITDA--University Group and Corporate

(2)

11,432

23,120

6,462

19,512

10,240

Memo: Advertising Expenses

(3)

50,587

36,731

50,410

37,407

46,655

Career Colleges, Transitional Group and Discontinued Operations

(4)

Pre-tax loss from discontinued operations

(102)

(17,195)

(15,201)

(33,046)

(36,481)

Transitional Group operating loss

(8,360)

(10,138)

(10,856)

(9,091)

(7,789)

Career Colleges operating loss

(22,110)

(13,650)

(29,908)

(16,273)

(13,922)

Loss on sale of business

(8)

311

Depreciation and amortization

(8)

2,351

7,319

7,739

8,662

9,323

Legal settlements

(8)

1,485

225

2,000

3,000

6,019

14,203

14,412

7,454

(10)

(2,424)

(2,063)

(3,343)

920

2,873

(67)

1,029

Adjusted EBITDA--Career Colleges, Transitional and Discontinued Operations

(2)

(23,208)

(20,495)

(36,932)

(39,063)

(43,006)

Consolidated Adjusted EBITDA

(11,776)

2,625

(30,470)

(19,551)

(32,766)

Asset impairments

(3)

Unused space charges

(3) (6)

Asset impairments

(8)

Unused space charges

(6) (8)

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS

(1)

(In thousands)

Insurance recovery

Cumulative adjustment related to revenue recognition

(3) (7)

Cumulative adjustment related to revenue recognition

(7) (8)

Reconciliation of GAAP to Non-GAAP Items –

con’t

(1)

(2)

(3)

Quarterly amounts relate to the University Group and Corporate.

(4)

The Company announced the Culinary Arts segment as held for sale during the fourth quarter of 2014 and it is therefore now reported within discontinued

operations. Quarterly adjusted EBITDA amounts for Culinary Arts include:

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Pre-tax income (loss)

250

(15,927)

(12,602)

(19,771)

(18,021)

Depreciation and amortization

4,504

4,282

4,310

4,268

Legal settlements

775

2,000

3,000

Asset impairments

10,320

1,523

7,400

Unused space charges

(377)

213

(467)

(178)

Cumulative adjustment related to revenue recognition

514

Total

702

(524)

(6,584)

(6,528)

(10,931)

(5)

Legal settlement amounts are net of insurance recoveries.

(6)

(7)

(8)

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 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 and that failure to report non-GAAP measures could result in a misplaced

perception that the company's results have underperformed or exceeded expectations.

Unused space charges represent the net present value of remaining lease obligations less an estimated amount for sublease income as well as the subsequent accretion of these charges.

Revenue recognition adjustment relates to the accounting for students who withdraw from one of our institutions prior to completion of their program. This adjustment now reflects revenue

earned on a cash-basis of accounting beginning in the fourth quarter of 2014 for these students.

Quarterly amounts relate to Career Colleges, the Transitional Group and discontinued operations.

We believe adjusted EBITDA allows us to compare our current operating results with corresponding 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 also present adjusted EBITDA because we believe

it is frequently used by securities analysts, investors and other interested parties as a measure of performance. In evaluating adjusted EBITDA, investors should be aware that in the future we may

incur expenses similar to the adjustments presented above. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses

that are unusual, non-routine or non-recurring. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income (loss), operating

income (loss), 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 our 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.

Management assesses results of operations for the University Group and Corporate separately from Career Colleges and the Transitional Group. As a result, management views adjusted

EBITDA from the University Group and Corporate separately from the remainder of the organization, to assess results and make decisions. Accordingly, the Career Colleges and Transitional

Group operating losses are added back to pre-tax loss from continuing operations and subtracted from pre-tax loss from discontinued operations.

End of Presentation

Perdoceo Education (PRDO) 8-KCareer Education Corporation Reports