PRDO - Earnings call transcript Q2 2018 | Perdoceo Education Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone. And welcome to the Career Education Corporation’s Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] And please note that today’s event is being recorded. to conference like Gibbons. to now would turn over the Sam I go Please ahead.

Sam Gibbons

Good the thank Todd everyone us. you, Chief Ashish afternoon, Thank William. President Vice and Chief Officer; on and call Ghia, Senior webcast for and webcast and Officer. be available also With the you today relations being is Investor you call will always within President the Group is This Nelson, Relations our replay Financial site Executive and Alpha section support. conference live at investor can me contact careered.com. joining IR for A on

developments not the uncertainties Except Commission. changed for no to securities factors events, December any as and to XXXX, ended the circumstances are expressly Education expressed filings statements. Form Career Let on available statements earnings release limited those laws, as required or assumptions by report prospects and performance, the and made undertakes remind Exchange to or These reason. obligation but risks include, statements the other and future forward-looking and Section that cause future the in Act. differ include in or business reflect year update the of those by these in XXE and currently implied company or could today to those These factors XX-K other and me materially this forward-looking involve XX, defined Securities Securities uncertainties you based actual Education’s that remarks annual for any and information from are risks results, with afternoon’s to Exchange identified and made on opportunities Career by statements

supplement, Investor Relations slide contain refer are substitute discussed are intended www.careered.com. the section which today��s but of as and the accompany the measures. and release non-GAAP available as directly The to which most presentation, measures, GAAP non-GAAP financial measures, remarks GAAP to comparable other be quantitative to today, and information not today’s the within addition, earnings call which financial well for In reconciliation to at

I’d Nelson. with turn to call the to Todd So, that, like over Todd?

Todd Nelson

Sam. operating the us on Thanks, quarter came with for afternoon, today’s in results, second a you call. end begin of which thank review of the our at and Good I’ll high expectations. joining everyone,

then will details and provide outlook I the financials thoughts more some before to Ashish closing the around call. provide end

expected through experience and continue We third the metrics the half into quarter. the operating growth and XXXX is to positive to of first and enrollment momentum continue trends

processes trends enhancing and believe on improve focus and student-serving across leveraging impacted positively and in universities data Our and both enrollment outcomes. investing student has technology we academic student retention experiences further will

With substantially that we the the well-positioned and to confident growth. company achieve complete, are sustainable transformation is responsible

XXXX million, by total further towards prioritize as substantial we teach-out interest, of adjusted driven increased company This our process. student improved $XX.X completion Second primarily to resources to meeting million, are operating quarter $XX.X enabled compared income experiencing. has the us to the

center versus have quarters. Illinois X.X% on-boarding in the fact, At the growth to across this addition our quarter, lag The the enrollment to university. quarter six contributed and ongoing previously we enrollment fall their in and enrollments, discussed prior processes on for which growth centers. new are incrementally invested Total over of student last acclimate initiatives them CTU, X.X% enrollments student-serving highest growth Student opening universities navigate through in strong our and their increased and they as orientation initiatives. In typically remains year. grew helping interest new for the Arizona partly process focused Arizona the to our

engagement two reactions within its communication the financial orientation Faculty to implemented are their the the personnel. supporting student retention. with technology that fully admissions leveraging last effective platform with mobile outreach Initial of academics and and efficient student platform the and After and overall launch our and believe messaging support Additionally, are strategies increased aid student to robust advising, year, app advising we functions CTU outreach Mobile have are and way application has positive. very

Our the messenger and staff due using simplicity. and increasingly to students ease are its

our operating prior and learning to grow in benefits year new we retention and of overall impact student not been this expect staff pleased have enrollments academic third progress to with fact, would more We this the and the quarter. to. have quarter students compared CTU to advice In that is otherwise a able positive about now Overall, the the forward able are tool. to ultimately believe at We as look outcomes. on reach will student

continues this new the redesign. student New in operational providing goal mobile academics new of with services. fourth at and total students. year X% improve our pleased faculty experiencing enhancements in as significant operations Overall, serve XXXX. third AIU efficiency management in more enrollment growth we including and serving AIU university at year the across the calendar expect and serving variability Further made the supportive Arizona by two-way prior not productivity technology adopt year of that we impacted have third driven system at decreased The quarter. and admissions show operating increased app during teams our the first compared the the to AIU AIU was operating the and which of Recall, of as timing with quarter. enrollments impact both direct been new be last they the growth the a quarter. also material to of have and and in growth fully increased redesign, late the the improvements the AIU’s students and students its quarter. learning with functions quality testing center messaging total to our progress academic still quarter to financial to improvements app of of on revenue enrollments are introduction student underlying full student is the during enrollments calendar for are universities Arizona, does and expect from positively continue AIU’s well and year, the continues operating others performance XX.X% as advising decline tenured the which enrollment Both as drove was in the to quarter and impact last

the the slowly positive opening these start quarter. are to in will experiencing the through the year. efficiencies We beginning we centers anniversary momentum, by gained by of the and third supported Encouraged operating

for investments further both increase our to committed to have across and advising universities Arizona admissions Illinois and We capabilities centers. augment

Ashish contributor now generally our proposition sheet as university new these growth, our process now our AIU during relationships XX% strong with and costs, to and enrolled a through developing while future note second Corporate of is the relationships the relatively partnerships. such growth a over CTU of plans lifecycle. driver higher. and having of their expect to our review students further just it in goal outlook. further that students to quarter. of coming incremental of corporate progress strategic while and balance develop corporate Also of support enrollment partnerships population these under to our helping enrollment low partnerships driver component to these growth is investments group is over and along key academic have from also turn been that, We key that metrics are growth, retention also will We important responsible sustainable have universities. the value the more on-boarding a in such their an acquisition a results, in quarters. have With I time detailed their programs believe

Ashish?

Ashish Ghia

call quarter improvement our start Today, I Total the operating a will you, and as second $X.X million to to back his sheet balance company the of an handing for $XX.X with compared XX.X%, Thank the closing results income before million review quarter, of prior in was Todd the year. then discuss Todd. and for remarks. outlook

recovery quarter, was the income, Our space improvement for excludes at $X primarily costs past offset the been in serving adjusted of increase $XX.X to this along mentioned of an claims, in were reduced partially with of operations as substantial teach-out included efficiencies driven for charges incremental performance million Todd million in quarter This depreciation earlier. million investments campuses. a which and $X.X settlements, recovery Also operating students prior in expenses, legal compared have by year. was operating to settlement the unused in other that was operating portion with legal $XX.X a committed which the million significant

universities up X% more muted for is prior marketing versus efficiencies, approximately our fact, while will staffing any, the quarters. year, in In be if future

investments. confident our variability and strength This But quarter. full-year quarterly in optimized have confident marketing We our made to remain outlook we are opportunistically increase our our some by variability now performance performance. remain relatively while in last we our in overall provided looking spend

X.X%, year, $XXX.X primarily the contributed $X.X revenue additional both AIU year. while at in trends. $X.X by revenue current revenue million grew University our compared versus Also X.X% revenue growth quarter quarter Second of this revenue revenues experienced to momentum million $X.X prior or million driven to days the by AIU’s prior as Group million the generating to prior compared before the impacting CTU growth X.X% year. positive by to enrollment as or improved universities or

This charge the was primarily charge prior admissions by As of expected increased of was $X.X achieved Also, second $X.X advising in income related year. our is $XX.X through to result and quarter. offset ongoing savings million the estate optimization of quarter AIU. approximately million Group investments million million partially was million for driven centers, primarily real increased $XX.X decrease revenues operating included $X which non-cash the within cash below quarter This in University of in will in XXXX. of the by recorded the a

Now enrollment X.X%, by onto X.X% growth quarter. enrollments, grew for supported at of CTU total enrollments new by the

to student-serving Driven technology our experience initiatives, this growth enrollment we performance. and CTU to again our processes, within initiatives for contributed partnerships quarter. the ongoing third expect adoption in investments corporate of new these positive progress by Continued

impact quarter, grew Todd the of AIU X% at enrollments due from enrollments for total was mentioned, the to XX.X% redesign decrease New the in as calendar QX. and

Looking our and full revenue experience in enrollments, by that enrollment still growth variability revenue days ahead, the during quarterly calendar primarily growth to revenue quarter driven not earning we third long-term both AIU of we impact despite new enrollments That days driven the total in quarterly expect recall the AIU year. Also underlying at expect in third which experience number and quarter. significant enrollment the for materially will the to quarter. trends quarterly is why are the trends variability during and

due year teach-out operating operations. Admissions of prior been cost a of Let remained continue as expenses teach-out discussing our Bad the universities. increased revenue relatively as for a has two percent on revenue centers, offset securing our revenue and within have percentage academic a our as students Arizona as to teams as of their me result minutes a with spend decrease investments and a This our expenses. has debt assisting advising focus while of few partially compared to Illinois driven funding investments in our flat with have academic decreased and percent to education.

Moving loss as still to unused students of $X approximately second million, million all compared reduced operations, campuses our our million graduate. reported as campuses driven an operating was These for to opportunity while expenses $XX.X improvements represents After approximately loss year. of prior teach-outs, operating $X.X adjusted an compared to charges, space the a $XX.X of loss in operating million in down adjusting quarter, million of are our prior an which $XX.X for improvement in an primarily reasonable improvement legal the year. as and wind million to providing $X segment the by other settlement

As students at complete remaining we the expected by teach-out campuses approximately to with have all end. year XX we speak, program

and balance for me $XX million to legal our by payments and reviewing of balances for of This cash ‘XX cash flows a primarily our operations, of minutes driven We for available-for-sale increase let equivalents, spend which represents $XXX.X positive campuses contractual cash cash related obligations, university yearend was sheet. outflows operating the teach-out Now, from the an with discussion. short-term million our offset losses to be settlements. by today’s referred lease ended investments restricted remainder over quarter cash cash, will and as few

the Net continued previously As balance by improvement expect cash the million in operating our provided due quarter, sheet related prior to $X.X and current $X.X in legal we the $X.X quarter settlements. million see $X strength during the quarter for Capital compared teach-outs. Included with of substantial was to to million year. were flows the disclosed expenditures in year. the operations line of as completion the prior payments noted, our to previously cash were of and million during

to X% expect revenues. be approximately For the full we expenditures year, X% to capital of

we ended, for in of just a taxes, XX.X% tax the a XX.X%. million. the for effective and rate quarter income Finally, resulted of $X.X recorded This tax quarter year-to-date tax provision rate of an

our continue tax XX%, which enactment XX% to rate full XX% to effective Tax reduction the and the and in in XX% U.S. corporate to expect that reflects We became be tax Act year between due Cuts of from the the to rate Jan XXXX. Jobs

reminder, the net carry as federal it federal as $XXX.X we to to not XXXX. to pay As specifically XX, a existed expect loss XXXX, any December due operating of income forwards taxes of do that million relates

of three any our not on slide range we our from full for third to to loss Slide year additional adjusted continue will $XX million focus company year total some million, million to three of of levels XX% substantial $XX growth with also the range $XX campuses. million can changes our quarter to prior in total of total With be expect company full outlook to the $X of be the the a approximate you in do completion $XX.X third teach-outs, for Moving an into expectations information provides to operating year the income year, to on teach-out expect as million $XXX increase continued adjusted expect primarily range of regarding operating the adjusted presentation, anticipated for which We our outlook the operating of material XXXX. the represents quarter. for million on and company see in we XXXX. income

of cash $XXX the quarter. settlement $XXX legal adjusting to previously for third paid legal $X million the of these be a that expenses to for our the second balances primarily Our Please quarter. ahead we to million during of in due increased million $X third the expectations year-end to additional been year-end range by reduced note for million booked revised payment outlook. the settlement have million expectation liabilities, slightly cash the remaining provided expect is out settlement $XX After

result in it obligations continue in allocation. we cash our cash anticipate campuses, a is to our our expect anticipated decrease positive cash income associated operating me in significant reminder, operating balances. generation, again to capital and a XXXX teach-out With As our this balance more comment flows let of with growth dollars sheet on

We are on a investing projects. sheet, building focused balance in while organic prudently strong growth

in while have adequate diverse closing our universities the organic provided of strategies will Please at expenses Todd our including build further to student keep to cash his that continue investments we turn balances, from four, impacts we initiatives, our back in I enhance we variability of of ongoing operating call As shareholder our With the value, a slide serving by we On calendar expect will at assumptions quarterly the evaluate summary impact maintaining to mind AIU. results, contained our liquidity. prioritizing that, for outlook. varying timing the redesign and key within academic remarks. over the Todd? some the driven and our

Todd Nelson

and few the biggest one industry education to years. remains expected next sectors post-secondary of over of see are growth Ashish. the The enrollments Thanks, our economy

academic and in a our key encouraging continue demand objectives a data and of growth. in Two, and and and initiatives. investments and accelerate be have for in better our and with there our completed our to have three, student-serving is technology overall allowing to A quality. align technology focus university should to long-term on investments line post-secondary strong first expectations. performance operating enhancements up, than wrap or we education. note responsible growth will sustainable processes favorable trends meeting that And XXXX To points first us trends with metrics include half operating our well-positioned few We accelerated are are good

analyst our experiences approach and commitments any and improve measured open with balance universities. growth questions. our our again to responsible and We and are call proposition taking the student academic academic objectives outcomes, long-term Thank us value for today joining sustainable for retention the of we’ll you remain to in of a confident now

Operator

Appert Jaffray. first question go ahead. our [Operator Peter Instructions] will with And be today Please Piper

Peter Appert

room on you I hoping something just be. you Good Todd, marketing afternoon. what of going might implications I expand the was of could lines efficiency said the forward. Thanks. for potentially that along and believe that incremental less

Todd Nelson

had say it, don’t do overall and advantage spend because again, Well, I this But know been careful now encourage and on not, add Ashish, because our in, types would being we Ashish, I take in the to think, percentage by you so a to where know, just but of marketing that, is have exactly, have I demand to what comment in want expect significant I seeing is bottomline decreases you to we as And that. that? are of to the as something is opportunities that. continues, we revenue, guess, we decreases, started. we not certainly, those want of invest

Ashish Ghia

as quarter, we are in I to the significant what pretty Peter, last see are all out. quarter quarter think quarter efficiencies, our is referring we point is you expenses or but where to to had so correct, that are is second second can the trying the first last, we much flat that advertising

Peter Appert

university? acquisition Student there? you any costs Okay. Do the see significant for changes

Todd Nelson

Well, any that in as to significant efficient, again, are projecting doing we more not out. to but decreases I that. need of become think now, see things But how we plays are we’ll

Ashish Ghia

that thing in spend. our also to add And addition then, reinvest efficiencies, we that also also recall one more marketing Peter, into to to here, we mentioned back trying are decreasing

be not be will why lower. our another that may spend reason significantly So, year-over-year

Todd Nelson

flat ramp is of up. because And bit we little adding you and does time so I and the cost staff been significantly to as investing divided one main take advertising being cost several will have enrolment in know, thing, years that -- and add a admissions just of after it between

fact the that -- I more still we So, think the enrolment to support staff. demand are by we experiencing again, are adding it’s encouraged

Peter Appert

Right. the if in then, Could just Understood. trends missed have I you know comment in seeing And of of because scheduling the comments. retention I specifically? metrics this terms AIU might changes. at apologies you’re distorted are what your on retention

Todd Nelson

in then get we what they’ve from to types particular. effective. found referred takes just to gone Peter those we bit seeing for as process. from is and before, in again, that’s I our were what that to the them implemented Again, fully believe convert past model time are They’ve and we allow several It through, more the as time old actually Yeah. retention see something changes going That’s implemented to history, see. of a little that of models them to are

Ashish, to you anything that? want to add

Ashish Ghia

No.

I is the new which And what is think, initiatives. long enrolment growth that to being supported as Peter. efforts we in QX, we by translate enrolments, into correct, expect as are retention total our continue the

So I it. good about feel think we

Peter Appert

And get between I of narrow to ability know relative comments at in terms versus the about on you’ve to CTU to any talked in margin past on AIU. the the but thoughts universities? just the two AIU, this the scale of needing profitability gap

Todd Nelson

Well, CTU grow. is, things going you One I on to is two there. have think continuing

certainly the which they’re gap fundamental of So, the priced, is I AIU, But to good attributes as a accreditation, they similar -- similarly just close thing. of good kind that type all. of take at look will leadership have, CTU, the to so know, long, same you you of they’re if

-- in Again, we’ll moving that our which certainly able where is growing. able we you so, get a continue to view be get because of think again, make hope we to we investment, time that is. to doing, be target, And are again they’re that to CTU CTU to is, as to

to know hard feel and the certainly when possibility. has how that but exactly we long, So it’s

Peter Appert

Right. Great. gentlemen. Thanks,

Todd Nelson

Thanks, Peter.

Ashish Ghia

Peter. you, Thank

Operator

questioner next Please Sidoti. ahead. Pendy will with be the And Greg go

Greg Pendy

in the just taking one on surfacing charges, I say? for third cycled my just it’s I is guess, Thanks space to now am unused guidance. question assuming if that just completely guys. your questions. you’ve the Hey, quarter, not through fair

Todd Nelson

correct. is That Yeah.

mainly charges it to have We our our unused space cycled relates as through teach-outs.

Greg Pendy

out, just type are seen just you’ve strength the growth, partnerships, of you the to at best then, I call bigger corporate six anything guess, seeing? And you’re CTU. what one Is mentioned specifically mentioned it students quarters on you the Great. that in picture or of what there but areas that Okay. was

Todd Nelson

ebbs it’s happening we see obviously, depending some what flows think, on of but board. the again, market, what’s the really across I Well, I it you’re in mean, those the and across -- board.

that growth is to CTU based add the able staff have to mentioned, in continue that fact we on in relatively we think are the things the been flat. and that enrollment in to I adding the past have we addition demand, whereas the based staff we that’s getting, on obviously we invest enrollment the -- that inquiries driving

Greg Pendy

Okay. That’s helpful. Thanks.

Todd Nelson

bet. You

Operator

time, this we at are showing further And no questions.

the for turn I’ll Nelson closing any So, Todd comments. call to back

Todd Nelson

you. again to want look joining again and everybody speaking thank we just for quarter. us with to we Well, you forward next Thank

Operator

has Thank now you the presentation. conference today’s for And concluded. attending

may now You disconnect.

Perdoceo Education (PRDO) 1 Aug 182018 Q2 Earnings call transcript