PRDO - Earnings call transcript Q1 2022 | Perdoceo Education Corporation

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Operator

Good afternoon. Thank you for attending today’s Perdoceo First Quarter Fiscal 2022 Conference Call. My name is Tania, and I will be your moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to your host, Davis Snyder of Alpha IR Group. ahead. go Please

Davis Snyder

Chairman; Good This us Tania. at With and you live Ghia, Investor Nelson, thank on Executive the and Thank and within call Officer; our afternoon, is first perdoceoed.com. joining Ashish Executive Todd is for call Financial call. section Hurst, quarter for President the Chief Officer. you, Chief today everyone, Andrew conference XXXX Relations me webcast earnings being

can on webcast the always will you be site, Our Investor contact available IR support. our for replay Group Alpha and also Relations

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

other but to that most for GAAP the The directly to call and financial In quantitative release measures, addition, non-GAAP substitute information refer to today’s which not today’s be financial earnings are measures. contains comparable intended accompanies remarks would supplement, like discussed website. non-GAAP the Relations to Investor and I as the With Nelson. to available page Todd company’s on reconciliation to of GAAP Todd? call measures, over as the within that, well a today is the to turn

Todd Nelson

that good for thank afternoon, by and and like offer financial in to and hard excited together, Overall, I’m quarter his focus into enhancing and said, continue to experiences Thank further student the over CEO, us role educational has we results discuss to to to everyone, and on pleased highlights about operating for you, XXXX learners. outcomes. for serving joining faculty, Andrew? quarter transitioned we’re results employees academic prospective and you With the Andrew like institutions dedication other our their first staff to and and support thanking Davis, quarter. student diligence educating our as and work, our as all earnings call. academic the our learning opportunities begin that I’d with the our operating from Andrew first students. and well call turn I’d

Andrew Hurst

our Todd. to employees all, dedication serving students. you you, and our staff thank afternoon our to student us. of for all support Good I for educating in would Thank like joining other continued also their faculty, and and thank

we quarter in make were outlook, provided first in Our progress with operating student outcomes. and and continue results previously academic the experiences line improving to

of the which operational the a discussed highlights upon mainly our are highlights key call. of touch me from year-end continuation we Let some quarter, operating during the

to its enrollments total emerge pandemic. and XXXX, resulting lingering well engagement student student have the macroeconomic impacted we as last impact safety discussed and responses, measures, the continue from to as governmental ease, the we prolonged as quarter, the and throughout as era on especially First, have believe COVID-XX and pandemic restrictions will a overall continue

the experience to end classes, total decide their which first impacted programs to begin not quarter, we students for the quarter. academic first pause continued the enrollments During some of or the

we engagement, student in for improvements marginal prior seeing full the total as still enrollments expect year. to the compared decline to are year we Although

at beginning the students adjustments XXXX who to likely we and are of more further will during impact adjustments our one and our data prospective made aided of should student in We marketing focus analytics, universities. believe by long third improve enhance quarter but succeed student our XXXX, identifying in on further to outcomes. these enrollments academic experiences, Second, the strategies to retention run total

per the compared with redesign, system, adjusted as in end. adjust were are third further which quarter improvements as non-cash at excludes and restrictions and diluted the per provide operating marginal our diluted at XXXX, $XX.X comparability. the we significant pandemic-related earnings XX.X% to student $X.XX. net also of We we down. total and share, or engagement AIUS. quarter first winding an lower details processes CTU prior share, as where decreased was as mentioned Changes to year me items, XX.X% beginning negatively academic annualize These as calendar enrollments quarter. which regarding student marketing to student reported were due XX.X% let million income Total previously CTU’s the the student enrollment declines while quarter, Total results March seeing environment the AIU of year-over-year are refer to students XX, certain well factors for to enrollments will which as Now, impacted $X.XX by

in their efforts. our end, continue data in so student Enhancing be for including remain priority optimistic improvement To can we gradual academic of institutions. rate and and investments of a our to top remainder we outcomes the remains academic support experiences decline the that support enrollment student effective show our teams the that to analytics, As technology infrastructure, a total cautiously expect result, year. of more in

is project mobile campus. our and and progressing advancement to infrastructure platform update we virtual technology well, continue Our

a are educate levels market, to said, for Ashish been labor would turn and Given I resources, review call over to now the employee staffing performance have recruiting the of that deeper far we serve more students. our in competitive investing operating quarter. maintaining With for and our the effectively to like appropriate our thus

Ashish?

Ashish Ghia

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

a about reminder begin, year-over-year quick comparability. I Before

First, completed two quarter for during the system the results the operating reflect last acquisitions third CTU AIU year. of and

we overview Second, fees an are certain have matters. All adjusting our for legal comparability. adjusted amounts maintain begin operating let associated period us that prior to said, with with been results. of With

year Adjusted total and reflective positively certain income XXXX, of significant result Net the quarter quarter. quarter for outlook more and to of is exceeded XX.X% income, the when the $X.XX which to million first X.X% impacted operating year an million. million enrollments we million operating the as believe range diluted of was million the an equating income underlying primarily quarter, quarter, total $XX.X operating increased by prior our $XX.X per of the end $XX.X the compared quarter, company income operating was excludes of high share. revenue. $XX.X increase better-than-expected prior that items, which due for to the performance first compared non-cash for This to compared to For $XX.X reflecting to in

operating operating we did adjusted we the quarter. quarter the more quarter While performance, admissions the adjusted the was income two again, impact of due is material have improvement XXXX for completed per which, in lower believe diluted was the prior in to the marketing note compared primarily as underlying to operating income quarter. that earnings the $X.XX. third of Please This acquisitions share for and a adjusted not year expenses on indicative

as the at compared completed first year details $XXX more around on the well company the by quarter quarter acquisitions some Revenue was the the Moving redesign to positively impacted as to as prior two of revenue results. X.X% Total calendar CTU was of quarter. academic third XXXX. lower for quarter we in XXXX the current million

XXXX, to As of student it compared made prior reflects adjustment processes. expected by enrollments in XX.X% at segments, as total continued marketing year and This as to CTU have by and and XX, COVID-XX at our total pandemic was belief impacted enrollment the AIUS our the XX.X% decline decreased that to relates enrollment been our quarter. March

While and further the total annualize rate the marketing XXXX. to XXXX, in these changes student to students continue to environment decline our adjust factors impact to COVID-XX, an quarter with of begin through enrollment improve should that enrollments, once total post we throughout third as believe may processes gradually

do total include who reminder, in professional a development not enrollments participating non-degree education learners continuing As our are offerings. and

at from the completed CTU was the year redesign. in million revenue Also calendar quarter was current the XXXX. of benefiting academic First the acquisition quarter quarter impact than the third X.X% due higher quarter primarily prior the positive $XXX.X to or

an $X.X the increase of million lower have experienced a decline prior marketing positive quarter revenue. revenue due year admission to impacts, million expenses. would well these $XX as Operating versus and higher was as Excluding CTU in income in

decline. decrease expenses. decreased there Revenue total result, student enrollment is for offset quarter XX.X% in to to various And a which a Having partially XX.X% system. was revenue as the with general, processes expenses note, decreased the compared to $XX.X adjust to quarter, AIUS to be year total decreased of Operating only will we as Please to continue on expect in primarily and as XXXX. year the typically our said a offset prior changes student million we full in to million lower income revenue $X.X the the that, revenue, lag Turning in revenue levels. compared XXXX decrease from result partially of impact to enrollments. the due the in with efforts operating operating

that results operating of not basis. relatively XXXX we full like the note Finally, be cash-neutral to to are and acquisitions both to the material our year on would a company of expected are

to Corporate Moving on Other. and

to losses associated quarter operating relating responses increased forgiveness loan to fees in Department of Education versus $X.X quarter primarily applications due million students. by the former the prior increased First $X.X year to the legal million with to

please this the – defense on matter information our that additional regarding in XX-Q disclosure filed was to afternoon. borrower For regarding repayment to this refer

taxes. income to on Now

an first rate of quarter the the stock-based of in taxes tax we rate rate X.X%. the of of provision by of approximately net compensation million, a the effective which quarter, For by tax $XX.X for the resulting for recorded effect release The the tax effect impacted tax previously and XX.X%. increased tax recorded effective reserves, was income

year we that will expect between full rate our effective XXXX, the XX.X% XX.X%. and for be Finally, tax

for negatively million the for balance cash, the investments. restricted in of quarter. cash $XX.X for operations ended the $XXX.X impacted and Title million equivalents, sheet. cash that year sale flows cash note quarter by Moving to operating current short-term available receipts the was quarter. prior million Please IV with cash the cash the quarter $XX.X We versus provided of Net timing

the outflows to to Additionally, compensation, annual and acquisition, be capital to the potential the the first with flat for balances quarter a cash the incentive included connection resulted escrow the cash revenue. of quarter-end items first Trident essentially as related acquisition. approximately These in Capital quarter related expenditures expenditures X.X% of to in payments $X.X the were year-end XXXX. compared or million release

XXXX, we For revenues. foresee full capital be expenditures year of approximately to X%

XXXX, our than the will XXXX. improve year-end revenue million lower will XXXX. to income Full beliefs expected to for million. student that updated total of XXXX gradually outlook Finally, Full enrollments range $XXX in million previously million the of than to lower enrollments. our adjusted total This $XXX lower reflects throughout to a be is be XXXX, to provided outlook rate now decline reflecting between will year student enrollments $XXX compared $XXX operating range total year however, as

in filed today going February Form topics. Education as and negotiated the surrounding Lastly, our of rule-making various filed process XXXX, a of XX-K is the XX-Q through disclosed Department in

an While to of necessary and between share outlook result per presented a Adjusted $X.XX on final now that earnings initiatives, impact diluted range be rule-making above. rules any $X.XX these diluted any share. the may undertaken changes we to continue have expected as per monitor could is operational

year. second to expect diluted half of XXXX. calendar at academic $X.XX income diluted in $XX.X between $X.XX we adjusted will the prior for million revenue of year. These the share versus For anticipated $XX the of apply in range operating of benefits from million same the $X.XX operating compared in per to range XXXX earnings the benefit as be that second note expenses lower to not Please as XXXX, of compared year per well to to the performance million share quarter the the prior the first quarter includes to degree $XX the adjusted as remainder CTU and the with operating quarter, redesign

approach As our half a balanced to compared I income be operating for will half of adjusted on commenting the lower to as allocation. result, the conclude by to capital the first would second year. like

that strong share. was value, a acquisitions. to the in We with company’s are we available acquisitions year’s With projects, fully XXXX during and during investing consideration anticipate designed average cash initiatives purchase complete benefit maintaining of of enhance stockholder sheet to adequate with end technology-related million $X.X approximately million, students of to strategies similar we the for our XXXX repurchased continue with shares organic by currently share an to $XX We to on approximately relatively will quarter acquisitions balance completed share cash repurchases, and in funded initial focus the And combined and repurchases. another we acquisition price respect $XX.XX per evaluating last diverse X.X a million liquidity balances. which at price which while two including particular, a

filed part authorized stock we you capital a of other refer market program. of to intend conditions. XX, As them $XX.X based strategy, and when repurchases XXXX, deemed on remain was non-GAAP that, release pursue reconciliations. appropriate and ask assumptions million our to key our With approximately under back and GAAP as allocation We will to as repurchase Share turn Andrew XXXX available for March to still will his information today’s earnings other I Andrew? on to important the closing well about over factors for our call underlying the call, outlook discussed and remarks. today the expectations our

Andrew Hurst

Ashish. Thanks,

it Davis. first I’ll results on forward and to outcomes We are student our operating enhancing over various on earlier that, with initiatives that to With quarter academic discussed executing pleased and our further focus turn experiences. back look

Davis Snyder

on I Sorry, mute. was

open now Q&A. for will call I the think up we

Operator

Thank you.

question is Alex with from of line first Barrington Paris The the Research.

line is open. Your

Alex Paris

taking questions. for a call. Hi, Thanks I guys. my have few

do that keep COVID try Is a attribute heard this of to gradually year-over-year overall decline and starting applications? it I six comps? environment demand, Is I’ll more three the What last top-down the in throughout Is you’ve that overall Just what said about First, on enrollment waning? basis, generally. demand inquiries, – it a over bit today? declining year. the to? with changes you it the the or total environment you maybe little months, noted easier on color diminishing

Todd Nelson

degree see think, the that continue to interest the still Sure. and out news we is there. Well, the spend, inquiry some our We’ve good is adjusted availability again, flow. strong I marketing to but

you a have the of have We It little of that’s as of applied. and beginning, before, show has those just mentioned kind the has slightly lack softer, we’ve at student started that seen, bit who rate and itself been where recover. engagement see that to

we We’re cautiously optimistic that seen. will continue. But Alex, that’s really the biggest have change that

Alex Paris

changes, going are the Okay. programs. to spend Great. less more marketing it you’re that succeed know Or you’re dollars, dollars, you’re And to those then differently? regard more you spending your after spending you’re same students dollars? the are spending with in just I likely is them

Todd Nelson

point you Yes. – the last That our is made, focus. – been really we’re that’s

we then see is direction. bottom the adjusting student to right us right the that we your that’s I behavior over so shift on propensity is then little just those could they performing. of that show spending we prospective But the as it line who have our programs. have factors. the lower, of the quarters, chance been feel now, time, how different given is now student back But it a more and and best on Some because or of a focus succeeding a are complete program, really in see And some depends a lot higher focused little to

Alex Paris

you. Got

of So be in but redirected? Or it than this used in given just similar are sense, is marketing higher the absolute they change expenses strategy? sort to

Todd Nelson

sure. Yes,

want Ashish, do you that? to to respond

Ashish Ghia

last a compared more expenses reminder, an so will these, are in as comparable as annualizing out, the second half, compared And from be second then, start lower No, as would we period. the marketing half the overall to Alex, pointed perspective, we expenses as Yes. the comparable year. to

Alex Paris

don’t phenomena comparable comments. of you. the expect more the CTU a Got But will year, from redesign on, then in prepared starts I of in over year-over-year? we said revenue it academic such QX, balance you your moving it be calendar think, any And the benefited

Todd Nelson

Ashish?

Ashish Ghia

Alex. Yes. Great question,

I think – yes. just

will the you on or academic new year. as you about enrollments, same enrollments know, the as remainder of redesign comment For tend the new mentioned calendar starts or the don’t quarters have year, not the And the the degree benefit impact does as we the to necessarily at probably academic the remaining for same because the of redesign far disclose calendar that.

same So degree for year. enrollments, ignoring new those the of remainder to not the will benefit apply the the

Alex Paris

then And my you. Thank right. All I’ll on guess last you. finish question, that. I Got and

last during education. two of You quarter made third crafts mentioned the you Hippo digital acquisitions year, and the

update give platform. that on I Perdoceo lead of generate can doing a you has How those acquisitions. has the to under been us know if ability how Perdoceo auspices technology little along? the Perdoceo? wondering coming a flow these Just are for has

Todd Nelson

It’s good it news integration Alex, would been is, has Well, hope the exactly the excellent. really would we be. where

to the with we’re management new I is I it both say growth. would of think again, little and the it’s overall say, our And right goes quality acquisitions, a teams a I now. anticipated, hadn’t performance, pleased We of those that. of really lot very above so really, their would just of expectation show

long-term that growth needed. is feel sure goal where the is successful the main market that areas we in Our there’s making

again, forward right and our now, that the to expectation we’re it’s So future. exceeding looking in

Alex Paris

you expect acquisitions one, magnitude the last but telegraphed, of – these year. have for you what I think to overview And end tuck-ins also confidence valuations is type maybe Not the little made. sell Are on the do is gives of and do before related. ask, to a that? that Within you of like quarter on look tax I its the type the it transformative you other just close previous M&A, you given ad bolt-ons. something? of impact on tech ad I bit of you did companies, an is was similar off or to this market that what And and acquisition just sort promise, will it you on specifically? that Orders acquisitions, going the

Todd Nelson

have we mean I Yes. the company. identified

trying that. We’re obviously to complete towards working

continue you the we that and the know, where we and we year. As it try that in Again, that’s that, time complete anticipate as industry, that. before takes will of are hope with our end to to do smoothly

to than that, is ad as we far obviously mean, traded interested we granting. the do. program yes, as the although it’s – in those, not But to As be the at remain well. ad multiple said companies degree interested tech – continue training also not companies degree them I tend having level tech do are some that companies, in And of they for and that trade are higher they same the those

Alex Paris

so much. the additional you Thank great. That’s I color. appreciate

Todd Nelson

Thank you, Alex.

Operator

Mr. this additional time. are you, the Andrew waiting any now Paris. I remarks. questions Thank will to over at There turn conference for closing no

Andrew Hurst

joining for talking again us you next to look We Thank you. quarter. today. Thank to you forward again

Operator

the That concludes first the day. fiscal Enjoy call. quarter Perdoceo rest XXXX of conference your

Perdoceo Education (PRDO) 9 May 222022 Q1 Earnings call transcript