PRAA - Earnings call transcript Q1 2021

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Operator

Hello, and welcome to the Q1 2021 Perdoceo Education Corporation Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to hand the conference over to Wyatt Turk, Investor Relations. Please go ahead.

Wyatt Turk

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

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

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

Todd Nelson

students. and Good results first doing afternoon, faculty, Wyatt. get call. said, hard employees serving for excludes joining dedication reported let's per the on for We begin our With operating or diluted everyone you, adjusted is that and and support I'd of net was student and our by our well. $XX.X all us to our earnings diluted in and $X.XX. XXXX financial share, which our earnings quarter. hope work into items noncash Thank for and share, their quarter educating like $X.XX you per certain significant while million staff income thank I thanking

and XXXX compared growth Our made I quarter we results you the served operating reflect and various first will XXXX. to balance of processes students update and key has other our initiatives, in year-end, Further, grown we as and quarter stronger, shortly. sheet than quarter in the student during first of year-over-year financial serving more first investments metrics. graduated And which on

underlying we mind in enrollments at both Please students. academic XXXX CTU compared will detail which organic reflected calendar Total that is that our CTU last enrollment the to into in compared as prior an primarily in session year, the date to enrollment to Ashish and of as total impacted with due the of similar underlying academic organic the This XXXX, a leverage was in increased redesign continued to implemented date March on as support and CTU, March has total student enrollments growth also XX.X% keep XX, version its reported to to technology redesign the experience positively quarter fully AIU, prior year April as enrollments results. X%, operating financial and start up as our student acquisition, experiencing beginning get X.X% Note Trident the of on March year. At increased XX, AIU, of prior comparison. March to closed to then total At XX growth. due end, AIU session XX, growth. start quarter. that more calendar were a student this

leverage to experiences. and talent further share practices continue of students' Speaking educational AIU our with best enhance we Trident, to

and year, and creation the able of AIU practices for student increase as analytics mostly the and the of various to student-serving analytics Both while experience continuation data to technology university staff student CTU learning their are and expand continued experiences student contributed the processes. functions a believe we and in AIU unique their from and of machine and With effectiveness the serving to have Technology have investments We the academic to system its investments benefiting leverage Trident quarter enhance in quarters use our last services is data serving student from to students. positively maintain best learning. system. previous technology student across

regularly become invest successful InterContinental rate We features, American our with students. the resonates upgrade of our we in-function refine with plus source and learners. CTU two resources well has and an University, platform XX initiatives. also And students, convenient our make app more enhance adult continue which our We at our to and has percent app adoption our in our believe primary for mobile communication update a and which on

and are these workforce to last a on little Before no quick over or partnership the programs, debt. call, developing with I as mentioned to development our expanding I on shorter turn which employers programs their to initiatives corporate that the to program refer training students programs. complete in call duration new Both comment own their use or of we designed Ashish, to allow their resources these initiatives investments

progress on have good We quarter. both the during initiatives of these made

be hires expanded half team, corporate second new trained and into have integrated partnership the made should we fully and the have the thus of year. our far We

with lower as the provide universities. from grants these through students marketing identifies, support that And a awarded to corporate to tuition education our paid leveraging tend the students' rate. high contacts these of team applicable to these student their results in the costs to amount recall Our corporations, employees debt-free are recruiting, partnership the and per lower their assistance one Please due persist at students university, programs although well. revenue associated supports by and

workforce to programs. development Turning training

We interest. opportunities or courses believe where learning have skills knowledge online specific endeavor develop of and area identified several one can that we already a will non-degree in offer

training skills Our the are adult obtaining changes designed to can assist in are programs prepare learners that workers and and their focused for workforce. job credentials increase additional help and

second offering to quarter. before expect of begin We the these end the programs

all turn has call further dynamic ways programs, deeper of including over As then a these and With needs academic quarter. we Ashish of initiatives Trident for both learners, to with now operating universities. professional We to the working meet adults. see had first I'd programs, the success its and these across our performance further the some and Trident, as grow nontraditional of said, leverage previously review and mentioned, expand like will expertise to for at that to already these the our possibly

Ashish?

Ashish Ghia

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

comparability. on X, Before Operating I begin, commencing for March results XXXX. the Trident reminder year-over-year acquisition quick about AIU reflect a

are closed impacted this adjusted adjustments adjusted comparability. diluted are maintain campuses longer expenses these related year amounts per to material. earnings operating share recast to presenting expenses prior when income been period no because will All or acquisition. quarter the in Also, due a any we longer As is for Trident no last the where comparability to year-over-year AIU's result, including be operating performance have

Let's start with results. an overview of our operating

compared as is underlying For which performance, for and $XX.X the first of an reflective the increase came in of significant an the quarter million, is income prior Adjusted total reflecting company XXXX, of of the million $XX.X year. which XX.X% and quarter, to increase. operating operating income million at believe income noncash operating items, versus operating an X.X% certain more was excludes we $XX.X which

employee to due First income primarily expected, positive while started earnings diminish. operating both Separately, to technology was show was general savings, in enhancements. $XX.X started various net year-over-year or efficiencies as diluted specifically, insurance diluted realizing have share revenue growth processes, And $X.XX. operating within to health per COVID-XX-related increases. while various to performance related expenses by mainly have quarter institutions programs million driven This share, adjusted $X.XX per was across

around which reflects Moving quarter, first for quarter some $XXX an X.X% results. the on XXXX more details million. Total the increase from $XXX.X million to of was company revenue

$XX.X was while million by As was CTU modestly primarily it of X.X%, relates revenue growth. higher. to our segments, up first quarter million, up X.X% $XXX.X were income Operating total only expenses operating enrollment at to supported

year life quarter. XX% operating $XX.X XX.X% growth. amortization intangible accounting revenue expenses for Turning income acquisition. in note the related $XX.X the $X.X as Operating established grew increased on organic to to acquisition is of related A well to the approximately Trident due compared price Trident to to prior quarter definite purchase the assets were million of million that total part quick as the enrollment the to debt. million student bad of as income the Included of AIU,

debt quarter, the first that as we the with total For of in was a revenue year. are pleased prior expense bad company percentage relatively line

process student for improving fluctuations to are aid however, levels the in retention bad focus debt continue financial our will We students, and on expected. quarterly

will at be the student performance, be enrollment at operating enrollments, new CTU, and fully reflective enrollments. of reporting underlying to student redesign, and on given may now calendar not last call, and mentioned new academic our longer on first Now no comparability we then as impacted AIU are quarterly therefore, the

effectively reflect interest. as allowing report XX, student XX.X% were Todd our serve by impacted mentioned, We performance However, XXXX, and student support total student X% student we AIU. we enrollments the at investments enrollment our us CTU the to believe and believe redesign. better will academic grew student functions, calendar CTU's which positive operating underlying results March enrollment are positively continue as to enrollments, prospective of across which Also, these by reflects over at Total time. total

the operating support operating were Corporate for corporate million quarter. campuses were in Moving quarter increased losses versus on $X.X and to other Other, flat $X.X our million Lower first expenses. year employee-related by relatively closed and losses offset prior at

income quarter, we million, for taxes, of provision $XX.X taxes an to in recorded for resulting first a tax the of Now effective XX%. rate income

million we benefited by carryforward quarter of operating credit $XXX.X X.X% effect first was of tax all carryforward and previously the tax the federal of recorded loss tax of foreign of The $X.X tax net in that our for release the reserves. Recall utilized million XXXX. rate

credits we of tax course XXXX, federal anticipate utilizing our $XX.X million of remaining the the foreign to partially offset During liability. tax

the have made and to rate April further tax to in first our payments quarterly expect XXXX year. payment the and XX%. and in positions effective increases the for that remainder for rate full estimated continue tax year deductible expect tax We XX% also tax of of by estimated expenses between effect reserves not quarterly XXXX tax purposes. impacted be tax We making our This uncertain for are negatively is tax

was represents our with cash short-term quarter line available to driven year were ended was in or $XX.X provided an for $X the Now restricted approximately the million net operations. million sale of of our year-end million sheet, from cash, equivalents, and operations positive and for flows $XX.X university investments. quarter for quarter. cash This increase by million by and quarter X.X% We first over Capital primarily expenditures with cash revenue. balance XXXX cash prior of $XXX the

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

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

$XXX share range million the to incorporates is weighted earnings outlook Our diluted the or X.X%. per to half. outlook in second the year X.X% expected expected share between unchanged and $X.XX associated $X.XX that initiatives, operating full of to of approximately full the versus $XXX $X.XX XXXX. with will range XXXX be as note growth our $XXX.X year per million Please increased adjusted in adjusted which And expenses income toward diluted to in million remains compared

in prior share on second to range $X.XX the outlook, in in diluted XXXX earnings to adjusted million XXXX. $X.XX with be range compared Moving the income $XX.X quarter we operating the per versus quarter, year diluted $X.XX per of be $XX.X our the and to between million as quarter share second adjusted $XX to anticipate to of million in

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

effective strong those enhance investments programs These goal complement refer Ultimately, balance such development our students' and us underlying key program growth continue his evaluating earnings that, our on information believe I value our plan training the and about GAAP to acquisition prudently as initiatives and closing workforce the that a programs. resources technology focused to stockholders. to in continue expectations back are that our and and as lead for education as the shareholder business. Please provide external the allow our to discussed building important manner non-GAAP this return assumptions on today investments is the partnership organic outlook investments We to filed of deploy and we other the educational increased direct of to corporate has will support which and in high-quality remarks. quality well to our to will our our experiences, efforts efficient institutions by include factors in to today's most to reconciliations. sheet such students. for the to turn as capital will and Todd call With opportunities Todd? or We call over release

Todd Nelson

Ashish. Thanks,

strong strategic our student We striving accomplish our pleased first will continue the on to us improve We today, goals. us results again now various outcomes positions with these while believe to earlier, open to any on focus initiatives sheet well academic we and our operating quarter for Thank forward experiences, look for executing are discussed I and our analyst you as balance questions. joining priorities. line and we to

Operator

you. Thank

your the from Barrington now Alex comes Alex, first Please Research. go Your line live. question-and-answer session. begin Pardon will Instructions] question [Operator ahead. now Paris is We from me,

Alexander Paris

that, taking first on everybody. the afternoon, for was about my Good I mute. call. Congratulations better Thanks expected quarter than results. Sorry on

Todd Nelson

Thank you, Alex.

Alexander Paris

of have I questions. couple a

QX, in get calendar First is, QX, the any academic one Ashish be to anomalies are way, I there want QX? in to of out redesign expected the

Ashish Ghia

Yes.

question. great think that's a I So

related we have anomalies and academic enrollment have said, enrollments. performance, versus enrollments to more is operating on new reflective discussed. total we a the our as not enrollments the mainly have perspective, as the impact of to be more new the underlying calendar of new academic will much are related are the enrollments and we they total reporting From redesign As said, calendar we muted

that's how looking we So are at it.

Alexander Paris

when AIU, student and I guess XX% Okay. we went be with starts That through this up XX%. makes sense. would the new down

starts. So the QX student Do equivalent each reason out taking again, for the new of with enrollment period, QX have days? noise number through

Ashish Ghia

did Alex, don't. of academic it, they The the because days, enrollment we have alluded as to swings. Actually, you and No. significant calendar,

enrollments They enrollment So the on variations. enrollment will may total more days on we said, days aligned. like have be focus these will won't and be muted. on those But impact enrollments I the total

Alexander Paris

Okay. Fine. Thank you.

of trends How the retention been So new faring? product total retention. enrollment is enrollment and have

Todd Nelson

say impact Well, to as uncharted students Alex, as the for students now cautiously It's through potential we'll But that if current come we've that, it, and would Obviously, just been as that. they've impact and industry. gone as into we'll that but things affects you necessary. steady operations out obviously to of Obviously, continue of I obviously continue we monitor we be continue and optimistic to it it relatively territory and it. adjust go then the there's of and pandemic. monitor how the

Alexander Paris

enough. Fair

moving retention? parts alternative that as students, your Is so and affect for opportunities that the understand do is reopens, could I So correct? the economy

Todd Nelson

and correct. when to at process. optimistic. And again, as because be would obviously, it's this But as if to Yes. really in that if if it's said that we too - operations, - monitor does said, effort necessary, hard them, I That's adjust that would impact obviously, point any the But happens. cautiously we're early we'll our I

Alexander Paris

Fair enough.

shorter And programs duration referring that Thank programs, interested the then Okay. I'm to. in you're development you. really these workforce

a you said few You program areas. that have identified

space. and to said continue technology I true? past be space it's before, that think in in the healthcare the Does you've the

Todd Nelson

a you Yes. lot looking at That's those demand. of correct. are we're There where see but are others

Alexander Paris

of the universities? through then these offered both And universities or be independent would

Todd Nelson

is from doing it we would again, learn offered preventing well. obviously, that There's then nothing now, offer AIU. standalone as on be to through and a also And now, But from then idea well. AIU. as as them the CTU Right them basis they're through us right at

Alexander Paris

be Title programs, degree would these eligible these correct? are programs, not because not And IV

Todd Nelson

that, is allow the that IV, not need are idea amount students very these length do again, to take programs. them to to try reskill, programs We chosen on same of the eligible the depending but Title at to the with correct. of those That and offer would programs complete time, the to option we've that to minimize you to. upskill people think concentrated Again, for the have debt

Alexander Paris

And just programs how Five are about order of magnitude, here? or or more that? many XX we or talking that than less than

Todd Nelson

Alex? that, Five ten, what or was

Alexander Paris

plan? of terms workforce under this Just development in programs of number sheer

Todd Nelson

It itself demand whether you starts as handful, quickly the far that had would development. to as but learn through with is kind a of then ability we've into grow feel as them as you But as our that's - something a process, five experience again, that But three develop we just of - we that also that. programs. to again, dictates lot program

Alexander Paris

And again, sort they certification are of they don't a that or could page? What result result thinking? you on your do badge in LinkedIn displayed degree be but in some

Todd Nelson

the would some Well, sort they lead certification. obviously, that professional of be to, idea

Alexander Paris

by offering And to second you expect these quarter? begin end of the the

Todd Nelson

That is correct. Yes.

already starting enrollments process, fact, to have and the we've we're started In already.

have them to We already. not started obviously we're but enrollments generating yet, deliver

Alexander Paris

Great.

see I these So website, AIU for the example? can on

Todd Nelson

where that's are. me, correct Ashish, they

Ashish Ghia

kind system, will had we our has already Because the shared think before, courses Yes. experience and be certificate University. I And Trident actually, of specifically some had as programs. deliverables Trident with within these in within they

as where So our we Todd to on. other eventually, are us universities. at said, offering prevent And nothing that's focusing from

Alexander Paris

talking among And gears, your about Okay. final were shifting Ashish, you comments, then allocation. just capital

how was a a in sheet, front? $X.X about the home-run. nearly debt. billion administration. on process thinking M&A you today? programs? Are looking you Clearly, are that other The are you IV we've granting to acquisition speak, in And to have or in obviously so Title you a balance cash, for looking diversify What no You elsewhere revenue? institutions active M&A had change Trident bulletproof Are

Todd Nelson

that - the there news all industry. because out it's there. who's very like good feel for to The someone industry complex we optimistic it's of is the The And the - new itself above. that is a are industry of are opportunities

there able been so duration really or shorter or have because, to us us think there workforce that I we CTU. training meet AIU complex, them for to buyers programs And through a great of Obviously, the relatively - schools of at see aren't time. for it that it's good the programs and/or interest training we've certificate as companies, and demand number these we long are again, of we already are doing

we mentioned, could the sophistication Ashish those As Trident, then delivery and at help advance certificate which as continue far well. as in think to the that do that already there shorter are we couple of But have their the degree area, a schools I use as educationally. exceptional of them obviously programs will online

well. about, about your and So market what programs both outcomes, it'll is schools answer of quality non-degree we'd workplace we're available. and to that specifically, is again, all number to the as that are obviously, produce, IV of that as degree are And question really or refer we non-titled IV. all there again, are out and both the those what Title which But optimistic training in really are programs the it

Alexander Paris

both appreciate I the that get color. Thank I'll Great. queue. Well, and in initial back you

Ashish Ghia

Thank you.

Todd Nelson

Alex. Thanks,

Operator

you. Thank

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

Brendan Popson

Brendan is Hi. on This for Popson Dan. Good afternoon.

current impact years? you as quote-unquote growth expect three five proposals current college to well over as on impact ask for student the to the community the any year to about your your population wanted next outlook with Just free

Todd Nelson

listen legislation. is we're what proposed obviously getting of those Good process everybody, like, hearing actually question. to think things to into is the and continue what being - monitoring I We

masters, students, type think the students things. not would degree types already lot overlap, the again of programs is, working the but with again those working are there for are because that say, us I although and doctoral our programs, majority of students have we I community a college - that, some bachelors, adult looking of

programs But on impact, a if So of a some I think able interesting It's as the say have to this - compete I process be that be significant I a a would impact markets other on based be against to we obviously, programs. serve. done actually we current taxpayers wouldn't don't of and I said, have think typically those it it that to to I the that. it certainly cost at them know significant point, - watch can't to And that that happens lot scale. fund large and who will really will don't think, getting don't but see to have against that But graduate four-year again, effort. more I I the

Brendan Popson

makes pandemic's And companies hear is - that? starting Obviously, to that year workers. for passed yet, Okay. channel your ask about an channel. opportunities? having I Great. good well more to corporate as improving And partnership seem on on the And sense. as abate, have Are obviously, potential - to because think wanted dialogue certainly Yes, next to you desperate or do and two we nothing's thoughts. update but your you of for the your

Todd Nelson

Sure. question. for Again, asking thank you that

And call, as these As being last you retention we success see that of the are quarter, of again, of there, a additional in in the know value with making a past. mentioned that reason our significant students see better. we the that had, we we've you the demand, investment know, amount are And we significant one, is, channel. last

individually we're reliant so see willing the we've it's really the you're amount meeting resources or - to that made optimistic longer very process upon into is where it sales with it's students. what seeing But that there. with process in Obviously, you'd you're put relationships, investment. than the again, build we're to And that it's process and of a enrollment

make And obviously, to you companies or continue that come will very hope it's pandemic, will we are excited, many we adding. have a for as that's workers. and we this benefit it. be of actually out And competitive especially said, Ashish As very

optimistic have about So that, again, going our we we're there. forward, - do potential

Brendan Popson

a sense. here. Thank And quick to one end makes just you. then Yes,

Can between go the a over any the that talking just gap you're for and and reasonable CTU. lot - closing keys delta to about AIU timeframe that? you margin Just

Todd Nelson

profile on to overlap, have that Well, it's priced tuition. similarly think it a types very timeframe again, the I far hard similar as programs, there as and accreditation institutional The because, a is similar. some put is their two universities of

some So the make, that again impact on there, that. decisions potential depending strategic certainly you will timing of the is the but again, of

For the example, because have an more a it to new if in we a more opportunity decide think two invest certain certainly, AIU, perspective. take may obviously little at time which programs institutions that. we them heavily a more from But there's margin in investment very similar profile, gives

Brendan Popson

Great. you. Thank

Todd Nelson

Thank you.

Operator

Your Instructions] Pendy [Operator comes go you. ahead. from question Greg Thank from next Sidoti. Please

Gregory Pendy

Hi Thanks my guys. questions. for taking

doesn't it some competitive or mix to little Just be enrollment numbers, bit - guys, given but of your just can of because but a your on you program in good industry, you competitive or the getting more degrees we're Thanks. seeing from pronounced pick about, maybe any for you bit any environment? curious. kind too any one enrollment the up two And within your maybe companies think in are talk that might what be there your within just broader programs little you seem up just Are other a there? hearing of out numbers, put you areas

Todd Nelson

think growing I in is that on far time, our say will are growth. be Not say, those impact in do at workforce more would also good question, for valid. and tends that see big demand that a to this not going seeing, more in on flow you are I workers. I as our program workers those or health programs at those for growing, And and what That's the this sciences really depending competition, point enrollment demand there's the where more technology a level. as If institutionally, ebb forward. the the that really change very happening Greg, but that, has than

us also I students. students, being out how current we we - very to of think and competition more potential landscape. pandemic, what to for a something I that in general affects cautiously just come the important. that that We change lot But I our not we're the seen student competitive I that's again, the obviously, don't as said, far think than that think see we monitoring and significant that as more Again, as is doing. we seeing watching - of as but important market want that, optimistic, haven't

Gregory Pendy

there of order And topic, terms up pressures any in costs? marketing costs your in been of for inflationary I guess have kind just marketing within going that

Todd Nelson

Sure.

Ashish, feel I been to But stable. free I comment think, But anything on Ashish, that? that. on relatively missed that's

Ashish Ghia

think that's None seen so far, No, I we Greg. that have fair.

Gregory Pendy

Thanks great. lot. a Okay,

Todd Nelson

you, Thank Greg.

Operator

There you. no Mr. And conference this concludes the are further for [Operator remarks. turn session. like at you. Thank would Instructions] time. any now back closing to Thank questions to this question-and-answer Nelson our I over

Todd Nelson

time join taking you again, appreciate, you. We quarter. Thank We speaking call our to today. look forward to with you next

Ashish Ghia

you. Thank

Operator

now attending presentation. today's for has concluded. conference you The Thank

disconnect. may You now

PRA (PRAA) 9 May 212021 Q1 Earnings call transcript