PRDO - Earnings call transcript Q3 2021 | Perdoceo Education Corporation

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Operator

Good afternoon, and welcome to the Perdoceo Education Corporation Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Wyatt Turk. Please go ahead.

Wyatt Turk

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

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

today's earnings be non-GAAP most accompanies that, call non-GAAP comparable other to discussed on the is Todd? the supplement to would Investor refer the that I Todd directly over financial GAAP to within remarks measures With Nelson. like intended information the of today as the reconciliate and company's to turn to The substitute measure. call of website. well the today's financial and as Relations page available to measures, contains addition, are which quantitative In GAAP for release

Todd Nelson

Good pleased our begin afternoon, all Wyatt. earnings in dedication, for educating us you student on our like you, to believe adjustments made their employees with thanking while prioritize our everyone, work, support retention, our and enhance resources by hard joining faculty, continuing experiences, XXXX and quarter we third-quarter I'd we serving during which are outcomes. admissions Thank results, and diligence third our thank marketing for and general, students. our student to call. staff, processes for support relevant and expenses we that In and and academic to student technology

individuals or per through we professional For adjusted the preparation non-cash university quarter, million revenue. businesses $X.XX of we reskilling within We offerings. continuing portfolio development existing significantly was Supported the continued also recent more while which professionals. and of and acquisition certain diluted which excludes earnings busy for non-degree have acquisitions and of area Education $X.XX. by the $XX.X opportunity and provides a per believe share diluted technology several medical our quarter These design, on education recently, have our operations, grow medical provider closed to web completed expanded September the education Hippo areas an opportunities items, closed cybersecurity. web development, and reported will exam is two XX. courses on on of acquisitions, DigitalCrafts these upskilling Hippo share, a the front. and in net DigitalCrafts, August income which Education, was It significant two two,

operating go more But these will details to let now, our shortly. results. back around for Ashish provide acquisitions us

for key and the takeaways Some results. and the year-to-date of quarter highlights

impacted and well overall responses as safety has governmental as the last and First, engagement. quarter, resulting discussed believe we its student prolonged as pandemic macroeconomic the measures

current continue defer programs their classes the to decision or quarter. during academic of their begin to some see We student pause

and are reverse We our trends are cautiously and some sessions. already optimistic positive signs September for seeing will October these that

aided further succeed with focus likely Second, our believe discussed the these data we made the impact adjustments, quarter of our who adjustments enrollment strategies marketing along I are at analytics, our one enrollments. We to more and on just improve to by near-term identifying universities. beginning third student to in prospective students trends will

these the will in academic run, marketing However, long further student and we outcomes. experiences, believe enhance adjustments retention,

leverage part to our engaged mentioned, resources both education employees. overall And contained corporate provide partnerships expenses, job tuition an for programs corporate to Enhanced Fourth, while at prioritize fully our and employers excellent debt-free Res assistance continue student partnership Third, student-serving to in to their programs institutions. previously and their continuing is focus with already managing on CTU's responding as trends a enrollment place functions. is in we team in to

total that compared said, at CTU, September due increased X.X% enrollments of year. XXXX, XX, decreased X.X%, student September our XX academic country the For total design. its enrollments primarily to by At student to prior

its implemented At attributable similar calendar AIU early by academic what CTU decreased XXXX, believe few was We total a enrollments decline a of version the this discussed factors years I a As in to student implemented XX.X%. reminder, to ago. AIU, redesigned earlier.

subsequent which Additionally, portal. working to is with minimize to active populations, challenges duty serves military-affiliated and be student impacted student Army with of and by uncertainty. the portal and and transition continued registration individually primarily Triton education technical the Trident confusion the the University,

in to over on briefly and call technology Ashish, functions. I'll the investments now student-facing touch other turning Before

across data a further learning previous we Our investments largely in analytics functions. continuation machine the quarters. use was their quarter as and for advising from expand third academics and

We quarter. virtual of our faculty redesign and several began our our platform well life projection are that to infrastructure by multi-year support utilized also and educate student to throughout phone mobile as and cycle. their as technology to teams this toolsets digital the includes campus implement to our enhancements upgrades students academic and serve a student technology This during

for I enhance review would to of especially said, performance for confident time Ashish that now driving are turn will a in the our further upgrades deeper business. owners these nontraditional operating while experiences, our quarter. like the We With that the student over to within efficiencies adult

Ashish?

Ashish Ghia

Todd. XXXX the review outlook for and Please then sheet, and closing discuss will I the handing capital comparisons call that our now Todd are period allocation, you, year Thank otherwise unless back third-quarter comparative his stated. to before remarks. versus note discuss I balance results prior all our

operating our quick results, discuss the year-over-year I note regarding Before a adjustments. comparability income and operating

XXXX. results commencing the August DigitalCrafts' acquisition acquisition the First, AIU September the operating reflect and for XX XXXX, reflect commencing operating for Hippo X, CTU results on and on

earnings as material. these Second, when presenting expenses are discussed, include share diluted to any for or related longer campuses adjustments no operating income expenses we previously per because adjusted longer no closed adjusted

legal quarter overview associated with adjusting All matters. for maintain acquisition. AIU's Third, recast certain comparable results. comparability. operating to the are relates our an begin amounts fourth, have prior-year results period it to to of we now fees as prior-year Trident operating With are the with said, fully been that let also And us

share. year. XX.X% million quarter to million $XX.X $XX.X reflective and was $XX.X share, excludes million operating $XX.X which operating million. is which, the of income performance versus compared we well to income, per operating prior as $X.XX. healthcare the operating marketing the The again, $X.XX than well operating as $XX.X believe diluted totaled quarter lower or income which CTU for more to in earnings revenue per Third-quarter at Adjusted diluted AIU increased Net as which as due as and revenues non-cash employee-related more Adjusted million to compared prior the and the underlying income for items certain quarter significant reflective increase lower for improvement we to $X.XX underlying for more was compared of believe in primarily was expenses. the as admission the offset the year, as at adjusted is performance, expenses quarter increased the

quarter additional as compared the to $XXX for AIU. revenue to third our some partially at at by XXXX surrounding for results. the $XXX.X million details million Revenue increase Now CTU, quarter decline offset increased the with

enrollments as student As Operating revenue by to redesign. quarter-end, lower of our grew $XXX.X it X.X% for and increased million. impacted as third-quarter enrollment bad expenses. $XX.X increased positively debt, and quarter by million as growth to academic comparability while the relates were XX.X% income admissions to to well the due for CTU calendar segments, marketing, the X.X% revenue Revenue total

while enrollments $XX.X the to by quarter. Turning as to X.X% XX.X%, by decreased the Total student for AIU. of revenue million decreased quarter-end

student marketing enrollments revenue and decline a resulted In an as more do we summary, enrollments. to for lower impacted total total expenses in be income to reminder, this and there the operating lag impact XX.X% And of term than a short discussed the $X.X from reasons expect in admission the quarter. increase changes offset earlier. in typically However, on for revenue is million Todd

Moving and on to other. corporate

disclosures responses to to Education Third-quarter refer prior-year regarding and loss quarter. this by Department operating relating million on associated additional former was with loan the the efforts repayment to afternoon $X.X this to million the filed $XX.X information students. the was increase was operating in borrower This acquisition to due compared legal fees applications loss defense our mainly the matter. in Please of for forgiveness XX-Q that to in

taxes. Now turning to income

income effective For rate $X.X million. in recorded resulted for a the tax provision taxes of we third XX.X%. quarter, an This of

and began the continue each As reminder, this estimated expect we a quarter forward. making so in doing to moving second quarterly quarter of payments year tax

stock our tax is for Finally, full-year tax will and compensation, by purposes. reserves of effect the expenses that negatively XX% tax and rate uncertain for XXXX, the tax we in effective not impacted for between are rate tax of estimated effect This XX.X%. expect deductible positions, full-year be increases that tax

cash Year-to-date, approximately This with year. cash restricted DigitalCrafts current CTU in $XX.X for quarter flows through million ended of positive income related increase sheet million and and was our over cash, represents by and activities of and liquidity. were cash, by offset expenditures, Hippo at were to the operating tax the XXXX. an net payments and increase partially growth drivers from by million third both short-term the federal This equivalents, versus cash quarter our revenue Now the of driven Key provided balance year-to-date. universities, of capital which $XXX.X acquisitions We cash primarily prior cash year-end to Education. investments. $XXX.X was $XXX AIU outflows the million

our a discuss acquisitions. to minute Let's take

Todd our cash provide that As expand continuing The initial acquisitions consideration upskilling, education, DigitalCrafts offerings reskilling, preparation educational exam opportunities. these $XX.XX was and million. for mentioned,

Education September XX, trailing XXXX, revenues the ended of cash $XX The approximately had million. initial XX million. For unaudited Hippo DigitalCrafts $X consideration for was months

XX, of September revenues ended For months $XX total Hippo approximately $X.X the expenditures approximately million or XXXX, revenue. third the quarter XX for were had Capital of million. trailing unaudited X.X%

of We ground our continue be expenditures XXXX revenues and upgrade to Springs to X% invest in at Colorado our campus capital we CTU. relocate as full-year infrastructure approximately expect technology

Finally, for of outlook let us the the remainder year. our discuss

XXXX in $X.XX between income implies adjusted prior-year expected We and $X.XX XXXX. X.X%. $XXX to quarter. of adjusted $XXX This $XXX in as $X.XX to range $X.XX previous expect Adjusted the and share our the $XX.X in $X.XX to adjusted range X% now updated $XXX of operating diluted per between full-year in to compared XXXX million adjusted from compares the to million equates operating to full-year the income and quarter outlook fourth-quarter be earnings per fourth is million approximately to to of $XX.X diluted million range XXXX operating million XXXX. in expected $X.XX to million versus diluted to quarter for between versus of million This range $XXX $XX.X range share of per fourth with earnings million. and income share growth

conclude allocation. our capital to me on by balanced commenting approach Let

company's as investing enhance maintaining in strong including and to universities, while million, repurchases. stockholder balances. $XX academic approximately liquidity the focus programs cash during acquisitions share available which diverse new continue at initial was a strategies quarter evaluating value, on We two consideration such cash to and fully completed balance a combined with We funded organic our of acquisitions projects, sheet and adequate with

another believe acquisition end currently the are two repurchase repurchases, which we value anticipate the other to to company's Board when of February of XXXX. December market XX, pursue to deemed complete based XX, the we enhance was them has share XXXX, XXXX, acquisition We and market With will company's At the current pursuing similar program, on stock respect additional these the insights set company's to current for common been price repurchases Directors. to opportunities stock, conditions. stockholder on that intend currently by and by prudent, extended expire and

the his underlying million discussed and million available important closing factors With Todd? non-GAAP remarks. today's this on for program. and that, original will refer authorization Please call As of the $XX about filed $XX.X key back over approximately well was call earnings XXXX, turn release today our as outlook GAAP stock other reconciliations. Todd to the XX, September repurchase I assumptions under as the expectations information for to to of

Todd Nelson

experiences, steadfast and team students, quarter, infrastructure, serving commitment educating focus Thank display our We to well you, We're line again that outcomes. believe acquisitions and for retention, as the students for and its forward in questions. further and we our and student our on our quarter to them students. within excited look integrating further continued to our technology investments Thank analyst serving this now today, academic the as you look joining any enhance student to about opening Throughout educating us will Ashish. forward institutions.

Operator

[Operator first ahead. of Paris Instructions] Alex Research. question go And our comes from Please Barrington

Alex Paris

Thanks guys. my taking questions. Hi, for

Todd Nelson

Hi, Alex.

Alex Paris

questions over then impact wondering support enrollment that of Todd, because enrollment if few again? lots off, you're about question I first -- follow-up and you made that to marketing that kind things that have of There's up you get it of a these could for I'll because which admissions of comments bring impacting I with you might. go stuff, to making right kind same quickly fact now, So on follow-up to was and if have my other me. changes. admit student some the adjustments could I And and I

Todd Nelson

Absolutely. Yes. Sure.

a this our think, students. to that available the start education in about also decision-making headwinds dollars and created the seen several other As I the things has as to of of when particular, actually providers think class. been, pandemic, some other their stimulus been seen some in we've the you've, by with and I of What amount students have delay with --

so opportunity, And continue see do marketing -- we to in how the to positive that if to that would continue investing started talking adjust as we adjustment the probably October some signs we since saw we're as was of particular category watch for -- we expenses in best we and for and that. now, obviously, to students. feel thing in we But September that to was said, And about. we'll our the see that some But thought that start that we starts, there's of that again.

Alex Paris

specifically? dollars dollars absolute And marketing or Or ways? in it micro-targeting, you're is that the another or what increasing is it -- your both? other Is way spending

Todd Nelson

students far the it's then going those given Yes. those It's best performing. dollars And -- I you we again how of are the than profile performing we'd at invest mean basically, and if it's -- better students that you're areas. and well, investment where looking the forward, feel the those thing want are making feel to as in same more

Alex Paris

be spending you. there's year-over-year Got to ramp-up fourth necessarily? in the mean And not does marketing in going this quarter a or

Todd Nelson

Yes. Not necessarily.

again, of that think, proud to adjust going the depending on ability market. organization, that we're on external of very in things the one quickly part we're what adapt our of our is I seeing and

certainly no, but that need mean -- all, adjust but doesn't so And be. that necessarily we'd at it

Alex Paris

also We students out, in generally. that softness students. increases say of results Is your It heard some not it's necessarily Okay. I stopping sort It for -- talk effects decisions taking enrollment prospective about delaying new in I pandemic semester increases. right? in you out, of off. but dropping the a And then the think

Todd Nelson

-- Yes. as and they good as inquiry What's is, that before, different decision we students, students, start. students, to they current model, not things, to happened where or external that. bit well maybe far is other potential just time we've as are application and flow, your also to softness as or the the continuing those in as happening may are it's continued a but your in renters We with entire again, and an financing their on. see things delay lives start said actual flow like our taking And are we've then two or show semester, some attending necessarily good class, a The of that. actually news course something rate little decision students of seen if

Alex Paris

some hard certain were of hit or Got side? at were CPU particularly or both out fields either any you. And on there the study standing that AIU programs positive or

Todd Nelson

think No, -- necessarily. not no, I

was a we that consistent outstanding. very softer, seem not and think saw several that others anything little really I but can bit are

Alex Paris

up CTU the attribute academic academic also. not you was we've was from some was would down. heard technology but this to in others AIU then this due of for Question to also calendar have hand, other Part Army and on assistance And that tuition space military down the their the CTU Okay. portal is, had having the it that that for redesign. and calendar redesign been been Trident exposure troubles, quarter?

Todd Nelson

know, have you don't on do any I that? information Ashish,

Ashish Ghia

Yes.

is by portion calendar is say So should happened while very explicitly portion And the what that, a would calendar to yes, redesign. redesign. to have substantial positively. we without a beyond calendar exactly have redesign it not the to hard substantial you attribute attributable impacted that, is calculated that, It the but

Alex Paris

for thank EBITDA? you tech giving on in what companies they stage? us they from DigitalCrafts this And of Or they Hippo. breakeven? do these information and enough. some profitability? like Do are Fair revenue ad do know at Are away take I produce terms look they privately held, EBITDA small

Todd Nelson

Ashish, that think and ahead because do have I comment that go want on to you you information?

Ashish Ghia

Yes.

we while we have you as revenue given said, So some information. -- Alex,

the are size. information not small We any you But on imagine, these as in have given these. for most EBITDA can part, necessarily

at material EBITDA not the any or to overall material XXXX. the have does So least year impact operations is not for our

Todd Nelson

But neutral they that are flow Ashish, positive? I think say I'd either slightly or probably cash

Ashish Ghia

it's neutral. about Yes, correct. cash flow Sure. is That

Alex Paris

the here. for up Guidance on end toward I questions the before just -- did that? should there? quarter so estimates. you guidance on I guidance Were pull in quarter. EPS coming of probably equally provided adjusted some for the operating Yet assumptions the of about much get think and fourth of there is quarter there, the my How operating kind to based forward revenues fourth adjusted then third income, And my below you income, your better Okay. that

Todd Nelson

Ashish, you can that? any color add to

Ashish Ghia

Yes.

things few Alex, So a here.

or guidance. the First the is on outlook

which the big said, revenue, a positively QX impacted CTU was by was we As contributor the calendar for redesign.

give we pointed try to between and the And So within as range. fourth-quarter kind original deliver outlook outlook. outlook. And a the the always full-year quarter, But are those for historically, beyond range. and two big out, that too, an had call-outs perspective. fourth as get outlook then try we the to of hopefully from an some second, there's timing quarters said, we implied outlook. we is We

Alex Paris

your just any that's benefit redesign for implied calendar quarter the last-end-related Does the the question. in And guidance quarter? fourth issues then from academic fourth

Ashish Ghia

So of we academic terms quarter, academic a little right be calendar calendar quarter. calendar redesign. some the academic -- fourth the stable so so always no, There CTU has will each in more lingering effects -- now. is AIU's the

I impacted. less will impacted would the say, as part, academic quarter with the for positively third the our So to fourth be which calendar was quarter, compared most

Alex Paris

Okay. for great. questions queue. back is Thank the get my That I you in answering and will

Todd Nelson

Alex. Thanks,

Operator

question next Dan from go Moore Please Securities. The comes ahead. of CJS

Unidentified Analyst

Good afternoon. Dan. on for This is Brendan

ask the difference to three discernible rates of compared the pandemic in or began. retention there initial years retention new to students to the students prior bad any stickiness been two, Is on new gather rates you've wanted pandemic? bringing the since for to Just compared your

Todd Nelson

want to comment Ashish, do you that? on

Ashish Ghia

do not are seeing to students post-pandemic. the and we from in in cautiously prior who on, that as terms said, in getting most in students the general, are their apart some terms of academic in I the material a of see see are and or students not But months. difference But general, in take are do have pandemic pointed taking students we've as on but pause. Todd we recent they and optimistic, of before are seen the initial optimism trends coming that any we we there students programs. So after, because we everything in, And we are out, going also necessarily started

Unidentified Analyst

Okay. it then cash, Great. And obviously, looking build. just at to your continues

for downside on M&A? in to much cash what's focused And is how being view? you to mainly more Just returning aggressive enough then shareholders? are the Or your

Todd Nelson

an our Yes. think, talked is we some very remarks -- of and point Well, of that earlier our there's I that, acquisition it about opportunities. it's view view, good in again, is from that as

being feel that us. for strategy also for option also going of are time forward. We to a our be that's buybacks good the And going

Unidentified Analyst

rule And Okay. all now. right I to then the mention just focus on XX-XX the lastly, want

and forma you Following recent the on could comment a those where and to pro thresholds related and acquisitions -- are on basis? CTU AIU

Todd Nelson

whatever the again, can't. provided make we thing something you but is, there, typically look that not prospectively. we've look, we and No, K But sure do our on best at to that that's have Q

Unidentified Analyst

Great. Thanks. Okay.

Operator

conference our over closing now remarks. turn to Todd question-and-answer like I would This to session. back Nelson the for concludes

Todd Nelson

we we Thank speaking and to Again, to us again quarter. for forward quarter, for want you next thank look joining you with this you.

Ashish Ghia

Thank you.

Operator

is now The today’s disconnect. Thank attending concluded. conference may and now for you presentation you

Perdoceo Education (PRDO) 7 Nov 212021 Q3 Earnings call transcript