Perdoceo Education (PRDO) 8-K Career Education Corporation Reports Results for the Second Quarter 2015

CAREER EDUCATION CORPORATION

SECOND QUARTER 2015

INVESTOR CONFERENCE CALL

AUGUST 7, 2015

Dave Rawden

Interim Chief Financial Officer

Ron McCray

Chairman & Interim Chief Executive Officer

Jason Friesen

Senior Vice President, Chief University Education Officer

Ashish Ghia

Vice President, Financial Planning and Analytics

Todd Nelson

Future President & Chief Executive Officer

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 (see, for

example, Slide 14, and information currently available to, our management. We have tried to identify forward-

looking statements by using words such as “believe,” “anticipate,” “will,” “expect,” “project,” “continue to,”

“trends” 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 and our subsequent filings with the Securities

and Exchange Commission 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.

Cautionary Statements & Disclosures

2

3

Agenda

•

Introduction of new CEO

•

Second Quarter Business Highlights

•

Review of Strategic Transformation

•

Financial Impacts of Strategic Transformation

•

Detailed Second Quarter Financial Results

•

Q&A Session

4

Second Quarter Highlights

•

Total University Group revenue of $138.2 million, up 2.6% year-over-year

–

Driven by increase in total student enrollments

•

University Group operating income $29.4 million, an increase of 50.0% year-over-year

–

Driven by revenue growth and cost initiatives

•

Adjusted EBITDA for the University Group and Corporate of $26.6 million, an increase

of 36.3% year-over-year

•

Team

remains

focused

on

improving

student

outcomes

–

Intellipath

adaptive

learning

technology

provides

competitive

advantage

in

online

platform

–

Introducing

relevant

new

programs

to

address

employer

needs

•

New

Master

of

Education

(M.Ed)

degrees

in

Primary

and

Secondary

Education

at

AIU

during

the

second

quarter

•

Master of Nursing and Healthcare Management at CTU in first quarter

–

Developing mobile applications to enrich student experiences with an expected launch date of Q315

•

Growing corporate partnerships

–

New student enrollments from partners increased roughly 55% in 2Q15 versus prior year

TM

5

Strategy designed to right-size and re-engineer organization to create a profitable and

competitive company better positioned to serve and educate our students

Path to competitive operating margins

Teach out/Divest

Transitional

Group and LCB

Corporate

Re-engineering

University

Efficiencies

Leg 1

Leg 2

Leg 3

Update on Transformation Plan

Institution

Action

Status

Le Cordon Bleu

Asset Held For Sale

Expect

to sign purchase agreement by year end

Missouri College

Pursuing Divestiture

Asset purchase agreement signed

Briarcliffe College

Pursuing Divestiture

Sale

process remains ongoing

Sanford-Brown

Teaching out

Initiated teach outs at the 15 Sanford-Brown campuses

Brooks Institute

Asset Sold

Divestiture

completed

Harrington College

Teaching out

Agreement in place to transfer certain students to another institution

6

Transforming our Cost Structure

Q215 Annualized

Operating Expenses

Leg 1

Leg 2

Leg 3

2018 Operating

Expenses

*Proportionate Savings Amounts are Not True to Scale

1.

Refer to slide 14 for a listing of key assumptions inherent in these projections.

2.

Operating expenses include both continuing operations and discontinued operations but exclude impairment.

3.

University savings reflect only expense reductions.

Our transformation strategy will reduce annualized 2015 operating expenses 

approximately

$375

million

by

the

end

of

fiscal

year

2018

(1)

Savings of ~$375M

Teach out/Divest

Transitional

Group & LCB*

Corporate

Re-engineering*

University

Efficiencies

(3)*

$900M

(2)

7

University Group Performance

19,800

20,600

10,800

10,700

2Q 2014

2Q 2015

CTU

AIU

8

Total University Student Enrollments

30,600

31,300

+2.3%

30

24

12

3

Phase Down of Transitional Group

(1)

9

Review of 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.

(2)

Q2 2015 campuses include the teach out and held for sale campuses announced in May 2015.

(3)

Amounts for FY 2015 and FY 2016 exclude the impact of LCB. Refer to slide 14 for a listing of key assumptions inherent in

these projections.

Expected Adjusted EBITDA from Transitional Group & Discontinued Ops

(3)

2Q 2015

FY 2015

FY 2016

$(30.8)

$(100)

$(85)

Represents the number of campuses remaining at the beginning of each period

10

Cash & Profitability Trends

2015

2016

2017

2018

Cash, cash equivalents,

restricted cash

and investments

$190M

Expected Adjusted EBITDA

from

Transitional Group & Discontinued

Operations

(1)

($100M)

($85M)

Total CEC operating margins

Mid-

single

digits

(1)

Amounts for FY 2015 and FY 2016 exclude the impact of LCB. Refer to slide 14 for a listing of key assumptions inherent in

these projections.

11

Summary Expectations

•

Remain on plan to complete divestitures and/or teach outs of all remaining Career Colleges

•

Remain on plan to execute an agreement to sell Le Cordon Bleu by year end

•

Remain on track to generate flat-to-modest total student enrollment growth within the University Group

over time

•

Expect total company operating margins to increase to mid-single digits in 2016, which would position us to

be competitive in our industry as we exit 2018

•

As the transformation progresses, the Company will be in a better position to further leverage operational

and technological efficiencies to improve student outcomes

•

Expect Adjusted EBITDA from Transitional/Discontinued Operations (excluding LCB) to be approximately

$(100)

million in 2015 and ($85)

million in 2016

–

Will improve significantly as teach outs complete in 2017 and 2018

•

Expect transformation strategy to remove approximately $375 million in operating expenses by the end of

2018,

compared

to

annualized

second

quarter

2015

operating

expenses,

inclusive

of

all

Career

College

and

LCB costs, reductions in corporate overhead, and achievement of greater efficiencies within core University

Group

•

Expect to maintain year-end cash, cash equivalents, restricted cash and investments balance above $190

million in 2015, to remain stable in 2016 and to see growth in 2017 and 2018

•

Restructuring charges expected to range from approximately $32 million to $38 million total

–

Approximately $12.6 million related to severance charges recorded in Q215 and will be paid through 2018

–

$20-$25 million related to lease obligations will be recorded at each campus’ teach-out date and will be paid

through 2023, at which point we anticipate exiting the last lease

12

Reconciliation of GAAP to Non-GAAP Items

Adjusted EBITDA

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

University Group and Corporate:

Pre-tax loss from continuing operations

(10,218)

$     

(24,990)

$        

(7,747)

$           

(31,651)

$        

(11,664)

$        

Transitional Group pre-tax loss

32,624

30,470

23,788

40,764

25,364

Interest (income) expense, net

(52)

2

(38)

(120)

(177)

Depreciation and amortization

(3)

3,956

4,361

5,170

5,402

5,732

Stock-based compensation

(3)

530

940

966

950

1,020

Legal settlements

(3) (5)

-

-

-

-

(400)

-

-

-

73

-

(348)

556

(373)

(368)

(363)

-

-

-

(8,588)

-

94

93

1,354

-

-

Adjusted EBITDA--University Group and Corporate

(2)

26,586

$      

11,432

$         

23,120

$         

6,462

$            

19,512

$         

Memo: Advertising Expenses

(3)

34,258

$      

50,587

$         

36,731

$         

50,410

$         

37,407

$         

Transitional Group and Discontinued Operations

(4)

:

Pre-tax loss from discontinued operations

(11,252)

$     

(102)

$              

(17,195)

$        

(15,201)

$        

(33,046)

$        

Transitional Group pre-tax loss

(32,624)

(30,470)

(23,788)

(40,764)

(25,364)

Loss on sale of business

(8)

917

-

-

-

311

Depreciation and amortization

(8)

3,231

2,351

7,319

7,739

8,662

Legal settlements

(5) (8)

(166)

1,485

-

225

2,000

11,372

6,019

14,203

14,412

7,454

(2,305)

(2,424)

(2,063)

(3,343)

920

13

(67)

1,029

-

-

Adjusted EBITDA--Transitional and Discontinued Operations

(2)

(30,814)

$     

(23,208)

$        

(20,495)

$        

(36,932)

$        

(39,063)

$        

Consolidated Adjusted EBITDA

(4,228)

$       

(11,776)

$        

2,625

$            

(30,470)

$        

(19,551)

$        

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)

Asset impairments

(3)

Unused space charges

(3) (6)

Asset impairments

(8)

Unused space charges

(6) (8)

13

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:

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Pre-tax (loss) income

(10,532)

$      

250

$                

(15,927)

$         

(12,602)

$         

(19,771)

$         

Depreciation and amortization

-

-

4,504

4,282

4,310

Legal settlements

-

775

-

-

2,000

Asset impairments

9,687

-

10,320

1,523

7,400

Unused space charges

(982)

(377)

65

213

(467)

Cumulative adjustment related to revenue recognition

5

54

514

-

-

Total

(1,822)

$        

702

$                

(524)

$               

(6,584)

$            

(6,528)

$            

(5)

Legal settlement amounts are net of insurance recoveries.

(6)

(7)

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 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 Transitional Group pre-tax losses are added back to pre-tax loss

from continuing operations and subtracted from pre-tax loss from discontinued operations.

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.

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.

(8)

Quarterly amounts relate to the Transitional Group and Discontinued Operations.

Achievement of the transformation strategy estimated results included within these slides are

based on the following key assumptions and factors, among others:

•

Flat-to-modest total enrollment growth within the University Group over time

•

Teach-outs and divestitures to occur as planned and performance consistent with historical

experience

•

Signed purchase agreement for LCB by year end and transaction closed by early 2016

•

Achievement of projected rates of recovery for our real estate lease obligations which are

consistent with historical experience

•

Right-sizing of our Corporate expense structure to serve primarily online institutions

•

No material changes in the legal or regulatory environment

•

Consistent working capital trends as compared to historical results

•

All projections for 2016 and beyond assume a completed sale of our LCB campuses

Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events

and actions that we may undertake in the future, actual results could differ from estimates.

14

Key Transformation Assumptions

15

End of Presentation