Business Wire English

Perdoceo Education Corporation Reports Fourth Quarter and Full Year 2023 Results

22 Febbraio 2024

SCHAUMBURG, Ill.–(BUSINESS WIRE)–Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year ended 31 Dicembre 2023.

Full Year 2023 Results as Compared to Prior Year

Revenue increased 2.1% to $710.0 million, supported by an 11.8% increase at CTU.
Operating income increased 16.1% to $150.4 million, while adjusted operating income increased 6.7% to $174.9 million.*
Earnings per diluted share were $2.18 as compared to $1.39, while adjusted earnings per diluted share were $2.10 as compared to $1.63.*
Total student enrollments at 31 Dicembre 2023 increased 3.2% at CTU while AIUS decreased 39.3%.
Ended the year with $604.2 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.

Fourth Quarter 2023 Results as Compared to Prior Year Quarter

Revenue decreased 16.0% to $147.9 million, primarily driven by the enrollment reduction at AIUS.
Operating income decreased 29.7% to $15.9 million, while adjusted operating income decreased 40.2% to $19.4 million.*
Earnings per diluted share were $0.26 as compared to $0.23, while adjusted earnings per diluted share were $0.27 as compared to $0.31.*
On 5 Febbraio 2024 the Board of Directors declared a dividend for the fourth quarter of $0.11 per share payable on 15 Marzo 2024.

*See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release

“We delivered strong results for the full year 2023, supported by ongoing improvements in student retention and engagement across both our academic institutions,” said Todd Nelson, President and Chief Executive Officer. “We remain committed to making investments in our student support teams and technology that we believe will further enhance student retention and academic outcomes across both our academic institutions.”

REVENUE

For the quarter ended 31 Dicembre 2023, revenue of $147.9 million decreased 16.0% compared to revenue of $176.1 million for the prior year quarter.
For the year ended 31 Dicembre 2023, revenue of $710.0 million increased 2.1% compared to revenue of $695.2 million for the prior year.

	For the Quarter Ended December 31,							For the Year Ended December 31,
Revenue ($ in thousands)	2023		2022		% Change			2023		2022		% Change
CTU	$	104,590	$	108,446		-3.6	%	$	468,926	$	419,617		11.8	%
AIUS		43,172		67,445		-36.0	%		240,300		274,479		-12.5	%
Corporate and Other		157		254	NM				778		1,112	NM
Total	$	147,919	$	176,145		-16.0	%	$	710,004	$	695,208		2.1	%

TOTAL STUDENT ENROLLMENTS

As of 31 Dicembre 2023, CTU’s total student enrollments increased 3.2%, while AIUS’ total student enrollments decreased 39.3% as compared to the prior year end.
After some necessary short-term operational changes at AIUS that impacted year-end total student enrollments, marketing and student enrollment operations have mostly reverted to normalized levels of operations during the fourth quarter of 2023.

	At December 31,
Total Student Enrollments⁽¹⁾	2023		2022		% Change
CTU		26,000		25,200		3.2	%
AIUS		8,500		14,000		-39.3	%
Total		34,500		39,200		-12.0	%

(1)	Total student enrollments do not include learners pursuing: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at the Company’s universities.

OPERATING INCOME

For the quarter ended 31 Dicembre 2023, operating income decreased by 29.7% to $15.9 million as compared to the prior year quarter.

For the year ended 31 Dicembre 2023, operating income increased by 16.1% to $150.4 million as compared to the prior year.

	For the Quarter Ended December 31,									For the Year Ended December 31,
Operating Income ($ in thousands)	2023			2022			% Change			2023			2022			% Change
CTU	$	25,376		$	34,082			-25.5	%	$	144,008		$	141,622			1.7	%
AIUS		600			3,469			-82.7	%		45,283			33,315			35.9	%
Corporate and Other		(10,033	)		(14,877	)	NM				(38,845	)		(45,300	)	NM
Total	$	15,943		$	22,674			-29.7	%	$	150,446		$	129,637			16.1	%

ADJUSTED OPERATING INCOME

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant and non-cash items, as a means to understand the performance of its operations. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the quarter ended 31 Dicembre 2023, adjusted operating income of $19.4 million decreased 40.2% compared to adjusted operating income of $32.4 million for the prior year quarter.

For the year ended 31 Dicembre 2023, adjusted operating income of $174.9 million increased 6.7% compared to adjusted operating income of $164.0 million for the prior year.

	For the Quarter Ended December 31,					For the Year Ended December 31,
Adjusted Operating Income ($ in thousands)	2023			2022		2023			2022
Operating income	$	15,943		$	22,674	$	150,446		$	129,637
Depreciation and amortization ⁽¹⁾		3,449			4,878		16,887			19,734
Legal fee expense related to certain matters ⁽²⁾		5			4,869		7,579			14,597
Adjusted Operating Income	$	19,397		$	32,421	$	174,912		$	163,968

Increase (Decrease)		*-40.2*	%				*6.7*	%

(1)	Amortization relates to definite-lived intangible assets associated with acquisitions.

(2)	Legal fee expense associated with (i) responses to the Department of Education (the “Department”) relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended 31 Dicembre 2023, the Company recorded:

Net income of $17.2 million compared to $16.0 million for the prior year quarter.
Earnings per diluted share of $0.26 increased 13.0% as compared to $0.23 for the prior year quarter.
Adjusted earnings per diluted share of $0.27 decreased 12.9% as compared to $0.31 for the prior year quarter. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the year ended 31 Dicembre 2023, the Company recorded:

Net income of $147.7 million compared to $95.9 million for the prior year.
Earnings per diluted share of $2.18 increased 56.8% as compared to $1.39 for the prior year.
Adjusted earnings per diluted share of $2.10 increased 28.8% as compared to $1.63 for the prior year. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

	For the Quarter Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022

Reported Earnings Per Diluted Share	$	0.26		$	0.23		$	2.18		$	1.39

Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets ⁽¹⁾		0.02			0.03			0.11			0.11
Legal fee expense related to certain matters ⁽²⁾		–			0.07			0.11			0.21
Gain on sale of intangible asset ⁽³⁾		–			–			(0.32	)		–
Tax effect of adjustments ⁽⁴⁾		(0.01	)		(0.02	)		0.02			(0.08	)
Adjusted Earnings Per Diluted Share	$	0.27		$	0.31		$	2.10		$	1.63

(1)	Amortization relates to definite-lived intangible assets associated with acquisitions.

(2)	Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

(3)	Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo’s stock.

(4)	The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

DIVIDEND PAYMENT

The board of directors declared a quarterly dividend as part of the Company’s dividend policy of $0.11 per share, which will be paid on 15 Marzo 2024 for holders of record of common stock as of 1 Marzo 2024. Any decision to pay future cash dividends, however, will be made by the board of directors and depend on the Company’s available retained earnings, financial condition and other relevant factors. The Company expects quarterly dividend payments to be an integral and growing part of its balanced capital allocation strategy that also prioritizes investments in student support and technology projects, while also evaluating acquisitions and share repurchases.

STOCK REPURCHASE PROGRAM

The board of directors approved a new stock repurchase program commencing 1 Marzo 2024 which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. The program expires 30 Settembre 2025 and replaces the existing stock repurchase program that expires on 30 Settembre 2024.

BALANCE SHEET AND CASH FLOW

For the quarter ended 31 Dicembre 2023, net cash provided by operating activities was $13.2 million, compared to net cash provided by operating activities of $40.5 million for the prior year quarter.
For the year ended 31 Dicembre 2023, net cash provided by operating activities was $112.0 million, compared to net cash provided by operating activities of $148.2 million for the prior year.
As of 31 Dicembre 2023 and 31 Dicembre 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $604.2 million and $518.2 million, respectively.

	For the Quarter Ended December 31,							For the Year Ended December 31,
Selected Cash Flow Items ($ in thousands)	2023		2022		% Change			2023		2022		% Change
Net cash provided by operating activities	$	13,192	$	40,546		-67.5	%	$	112,025	$	148,186		-24.4	%
Capital expenditures	$	1,610	$	3,515		-54.2	%	$	6,411	$	12,620		-49.2	%

2024 FINANCIAL OUTLOOK

The Company is providing the following 2024 outlook, subject to the key assumptions identified below. Please see the GAAP to non-GAAP reconciliation for adjusted operating income and adjusted earnings per diluted share attached to this press release for further details.

	Total Company Outlook
	For Quarter Ending March 31,		For the Year Ending December 31,
	OUTLOOK	ACTUAL	OUTLOOK	ACTUAL
	2024	2023	2024	2023
Operating Income	$40.1M – $42.1M	$43.3M	$154.6M – $174.6M	$150.4M
Depreciation and amortization	$2.9M	$5.2M	$12.4M	$16.9M
Legal fee expense related to certain matters ⁽¹⁾	–	$4.6M	$3.0M	$7.6M
Adjusted Operating Income	$43.0M – $45.0M	$53.1M	$170.0M – $190.0M	$174.9M

Earnings Per Diluted Share	$0.52 – $0.54	$0.50	$1.96 – $2.18	$2.18
Amortization of acquired intangible assets	$0.02	$0.04	$0.07	$0.11
Legal fee expense related to certain matters ⁽¹⁾	–	$0.07	$0.04	$0.11
Gain on sale of intangible asset	–	–	–	($0.32)
Tax effect of adjustments	($0.01)	($0.03)	($0.03)	$0.02
Adjusted Earnings Per Diluted Share	$0.53 – $0.55	$0.58	$2.04 – $2.26	$2.10

(1)	Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share, which is the most directly comparable GAAP measure to adjusted earnings per diluted share, may not follow the same trends stated in the outlook above because of adjustments made for certain significant and non-cash items. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2024 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and trends in student retention and engagement remain consistent with management’s recent experiences, (ii) no significant impact of new or proposed regulations, or new interpretations of existing regulations, including recent Department negotiated rulemaking initiatives, FTC enforcement activity, FCC rulemaking or other adverse changes in the legal or regulatory environment or our institutions participation in Title IV programs, which may require further operational changes in the way the Company’s academic institutions market to, contact, enroll, support and educate current and prospective students, among other impacts, (iii) no significant operating impacts from the settlements with the U.S. Federal Trade Commission and state attorneys general or other legal or regulatory matters, (iv) the impact from federal student aid initiatives implemented by the current administration remains consistent with management’s estimates, (v) no significant impact from the further delays by the Department to its implementation of a simplified FAFSA required by the FAFSA Simplification Act and the related delay of providing institutions with students’ relevant aid eligibility and award information, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 25.5% for the first quarter and approximately 26% for the full year, and (vii) excludes any future impact from the Company’s stock repurchase program. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current and future circumstances and actions that may be undertaken, actual results could differ materially from these estimates. In addition, decisions the Company makes in the future as it continues to evaluate diverse strategies to enhance stockholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Wednesday, 21 Febbraio 2024 at 5:30 p.m. Eastern time to discuss fourth quarter and full year 2023 results and 2024 outlook. Interested parties can access the live webcast of the conference call at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-888-596-4144 (domestic) or 1-646-968-2525 (international). Both dial-in numbers will use the access code 6410615. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/980571149. Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.perdoceoed.com in the Investor Relations section of the website.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s accredited academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The Company’s academic institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIUS” or “AIU System”) – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Perdoceo’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. Perdoceo’s institutions are committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce. For more information, please visit www.perdoceoed.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “believe,” “will,” “expect,” “continue,” “outlook,” “remain,” “focused on,” “should” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment or interest in our programs or our ability to market to and contact prospective students; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the terms of any potential changes to or conditions imposed on our continued participation in the Title IV programs under new program participation agreements, the new 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of various versions of “borrower defense to repayment” regulations; the final outcome of various legal challenges to the Department’s loan discharge and forgiveness efforts; rulemaking or changing interpretations of existing regulations, guidance or historical practices by the U.S. Department of Education or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions; the success of our initiatives to improve student experiences, retention and academic outcomes; our continued ability to participate in educational assistance programs for key employers, veterans or other military personnel; our ability to pay dividends on our common stock and execute our stock repurchase program; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended 31 Dicembre 2023 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)

	December 31,			December 31,
	2023			2022

ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	118,009		$	109,408
Restricted cash		1,012			9,476
Short-term investments		485,135			399,315
Total cash and cash equivalents, restricted cash and short-term investments		604,156			518,199

Student receivables, net		29,398			42,551
Receivables, other		4,539			3,457
Prepaid expenses		11,712			8,411
Inventories		5,004			1,904
Other current assets		155			597
Total current assets		654,964			575,119

NON-CURRENT ASSETS:
Property and equipment, net		21,371			26,038
Right of use asset, net		19,096			26,156
Goodwill		241,162			243,540
Intangible assets, net		36,219			53,564
Student receivables, net		3,859			1,850
Deferred income tax assets, net		23,804			24,613
Other assets		6,841			6,488
TOTAL ASSETS	$	1,007,316		$	957,368

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lease liability – operating	$	5,701		$	6,555
Accounts payable		10,766			13,518
Accrued expenses:
Payroll and related benefits		32,684			40,306
Advertising and marketing costs		7,196			8,977
Income taxes		3,974			7,814
Other		13,503			14,621
Deferred revenue		37,215			71,590
Total current liabilities		111,039			163,381

NON-CURRENT LIABILITIES:
Lease liability – operating		21,346			27,286
Other liabilities		33,510			40,856
Total non-current liabilities		54,856			68,142

STOCKHOLDERS’ EQUITY:
Preferred stock		–			–
Common stock		903			894
Additional paid-in capital		694,798			684,183
Accumulated other comprehensive loss		(666	)		(5,447	)
Retained earnings		480,606			347,839
Treasury stock		(334,220	)		(301,624	)
Total stockholders’ equity		841,421			725,845
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,007,316		$	957,368

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts and percentages)

	For the Quarter Ended December 31,
	2023			% of Total Revenue			2022			% of Total Revenue
REVENUE:
Tuition and fees, net	$	146,822			99.3	%	$	174,012			98.8	%
Other		1,097			0.7	%		2,133			1.2	%
Total revenue		147,919						176,145
OPERATING EXPENSES:
Educational services and facilities		30,223			20.4	%		31,217			17.7	%
General and administrative		92,756			62.7	%		114,610			65.1	%
Depreciation and amortization		3,449			2.3	%		4,878			2.8	%
Asset impairment		5,548			3.8	%		2,766			1.6	%
Total operating expenses		131,976			89.2	%		153,471			87.1	%
Operating income		15,943			10.8	%		22,674			12.9	%
OTHER INCOME:
Interest income		6,421			4.3	%		3,169			1.8	%
Interest expense		(116	)		-0.1	%		(102	)		-0.1	%
Miscellaneous income (expense)		129			0.1	%		(1,313	)		-0.7	%
Total other income		6,434			4.3	%		1,754			1.0	%
PRETAX INCOME		22,377			15.1	%		24,428			13.9	%
Provision for income taxes		5,189			3.5	%		8,473			4.8	%

NET INCOME		17,188			11.6	%		15,955			9.1	%

NET INCOME PER SHARE – BASIC:	$	0.26					$	0.24

NET INCOME PER SHARE -DILUTED:	$	0.26					$	0.23

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		65,610						67,165
Diluted		67,185						68,423

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the Quarter Ended December 31,
(In Thousands)	2023						2022
NET INCOME	$	17,188					$	15,955
OTHER COMPREHENSIVE INCOME, net of tax:
Foreign currency translation adjustments		53						217
Unrealized gain on investments		4,280						653
Total other comprehensive income		4,333						870
COMPREHENSIVE INCOME	$	21,521					$	16,825

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts and percentages)

	For the Year Ended December 31,
	2023			% of Total Revenue			2022			% of Total Revenue
REVENUE:
Tuition and fees, net	$	702,920			99.0	%	$	687,672			98.9	%
Other		7,084			1.0	%		7,536			1.1	%
Total revenue		710,004						695,208
OPERATING EXPENSES:
Educational services and facilities		130,324			18.4	%		116,723			16.8	%
General and administrative		398,084			56.1	%		426,120			61.3	%
Depreciation and amortization		16,887			2.4	%		19,734			2.8	%
Asset impairment		14,263			2.0	%		2,994			0.4	%
Total operating expenses		559,558			78.8	%		565,571			81.4	%
Operating income		150,446			21.2	%		129,637			18.6	%
OTHER INCOME:
Interest income		19,980			2.8	%		6,866			1.0	%
Interest expense		(404	)		-0.1	%		(400	)		-0.1	%
Miscellaneous income (expense)		22,099			3.1	%		(1,834	)		-0.3	%
Total other income		41,675			5.9	%		4,632			0.7	%
PRETAX INCOME		192,121			27.1	%		134,269			19.3	%
Provision for income taxes		44,469			6.3	%		38,402			5.5	%

NET INCOME		147,652			20.8	%		95,867			13.8	%

NET INCOME PER SHARE – BASIC:	$	2.22					$	1.41

NET INCOME PER SHARE -DILUTED:	$	2.18					$	1.39

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		66,468						67,934
Diluted		67,826						69,031

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the Year Ended December 31,
(In Thousands)	2023						2022
NET INCOME	$	147,652					$	95,867
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		45						(166	)
Unrealized gain (loss) on investments		4,736						(5,185	)
Total other comprehensive income (loss)		4,781						(5,351	)
COMPREHENSIVE INCOME	$	152,433					$	90,516

Contacts

Investors:
Alpha IR Group

Davis Snyder or Nick Nelson

(312) 445-2870

PRDO@alpha-ir.com
Or

Media:
Perdoceo Education Corporation

(847) 585-2600

media@perdoceoed.com