Perdoceo Education (PRDO) 8 Aug 222022 Q2 Earnings call transcript

Good afternoon, everyone. Thank you for joining today's Perdoceo Education Corporation Second Quarter Earnings Conference Call. My name is Dante and I'll be your operator for today's call. All lines will be mute 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 our host, Mr. Relations. Investor with Snyder David Mr. Snyder?

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

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

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

Thank pleased would thank all results faculty, with educating and everyone, their to you, during I staff student hard diligence quarter. thank for dedication for and we operating are Overall, support and and our our other students. Davis. Good joining continued the afternoon like us. in serving progress to our our you employees work, and

to academic positively services invest support continue are maintain levels technology believe that student academic We in outcomes and and impacting upgrades appropriate we and of experiences. student

of overall to ahead expectations, student better-than-expected governmental Second the engagement, pandemic. due wind responses down in quarter in results in part from operating improvements our as came macroeconomic and generally

key of touch me the quarter. operational upon Let from the some highlights

the which while academic of classes, to the decide second year. pause from as engagement year quarter. for or continues We era some full lows, First, enrollments to the programs student pandemic see their to the expect total to lower impacted compared students be the progress total continue prior enrollments begin to not for we show still end

prospective to on of our universities. are the a processes our further of to XXXX, focus marketing beginning our as third made adjustments one and Second, at students quarter likely to in succeed identifying reminder, improve we more who

we academic outcomes. will during in and retention student adjustments enhance impact XXXX, the should run, these negatively total further While experiences, enrollments long they student believe

of focus substantially with in Lastly, associate, of doctoral bachelors, a University, all IV academic effective assets Southern offers non-Title completed originally programs accredited July we of masters California degree business management primarily university. risk programs psychology, the X, and and online and CalSouthern management. the acquisition

provide acquisition Ashish this around details will more shortly.

noncash share, reported which items, of adjusted share, was We $X.XX per for second significant per earnings some quarter. upon $XX.X while touch million the Now diluted and results of the let $X.XX. diluted financial or net income excludes me certain

enrollments expected, Student student will year at changes quarter declined XX.X% the compared as Total second to improve, total enrollments to student lower quarter, engagement beginning with by continues processes the total and third end. to X.X% the System marketing annualize in X% prior CTU. and in As the decreased enrollments the student at AIU quarter.

result, the a student of rate decline for lessen As in we the the year. enrollments remainder of expect to

During our the and to prioritize our enhance offerings experiences. quarter, we efforts continued to academic student

to relevant data are to learning analytics investments technology making necessary our continue and our leverage to provide students. and engagement student-serving We machine and with upgrade timely

and academic students these beginning investments institutions. Our enrollment of engagement now and at and classroom. our used in are are CTU student across through student such AIU bots are with the cycle, to resulting increased in one example chat the academic continuing onboarding being believe throughout We levels

review addition, the quarter. would now like performance we to stages operating proper at their our of receiving maintain levels students support ensure to over a continuing I for With staffing for to appropriate of our journey. In to are are the that deeper education all said, Ashish call turn

Ashish?

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

in comparability. the the XXXX. year-over-year Before the CalSouthern third reflect within an and Also, of I acquisition quick and acquisitions results. let operating included recent begin, the results operating said, that third XXXX. the be a during results System of two of overview reminder the begin us for With financial Operating AIU CTU will the quarter AIU completed of of quarter with System about beginning the

excludes of million operating student in to engagement $XX.X as the of or million, Total the below end approximately quarter. and better-than-expected was million. to by result of XXXX, an quarter, revenue was This operating to quarter. which income primarily total $XX.X lower for quarter $XX.X and slightly income $XX quarter significant prior year decreased our which believe of the student enrollments. For for primarily prior at the operating million performance certain Adjusted X.X% the range items, the reflective income, lower operating outlook $XXX.X compared compared is due million as year by exceeded driven X.X% underlying more previous company noncash total second to revenue high we

a of offset was the revenue debt as both lower relatively within performance, indicative operating is quarters. Please income basis. that quarter compared underlying $X.XX decline of believe more and share well by million, did compared third the earnings on we for of the most income have as bad for Adjusted was the expenses the reduced expense. the for in was $XX.X per we on which the note $XX.X Net quarter operate marketing admissions operating diluted not and to impact share, $X.XX. per $X.XX to However, acquisitions completed quarter adjusted million cash-neutral XXXX a as equating diluted material two to

As by due processes it lingering the made our been decreased This relates our total engagement and that compared AIU X.X% student belief at our pandemic. impacted by to marketing XX.X% year the XX, to adjustments prior to enrollments decline the continued in XXXX expected CTU student and in segments, COVID-XX System quarter to by total was as general has of at enrollments June as end.

to the second half with engagement in that decline once total of enrollments annualize XXXX. to improve, in student continues our quarter of the beginning changes believe the we as and rate third should processes marketing However, student lessen

professional and students include education total do As who development not our enrollments participating are reminder, continuing in offerings. a nondegree

revenue lower quarter quarter, than CTU or at to million Second was year lower the enrollments at primarily X.X% CTU. $XXX.X prior due total

was quarter prior from to third acquisition XXXX, of quarter to please acquisition. note impacted expenses year revenue completed million $X.X the positively the in includes due the Operating [$XX as related in versus Additionally, revenue well million] that prior the the quarter year-over-year decrease lower comparability. the as of current which amortization year income

AIU for the decrease million resulting System. of to at Revenue X.X%, AIU total to Turning due in was quarter, System. a lower enrollments primarily $XX.X

compared XXXX still operating revenue processes as in would recent remind half in that, offset $XX.X academic typically lower excluding as incremental of million from we We half adjust and be to marketing revenue. revenue when the first any like operating XX.X% overall that also for to to half expense this of will various debt well and as you to said impact student XXXX offset income Having of of as partially total to there second operating acquisitions. compared while experience increased students. the Therefore, to decrease lag on levels. our efficiencies efforts bad decline, in continue expect as expenses XXXX revenue second revenue changes of improved from a as more enrollment than well prioritizing our However, the with the we the is admissions

Other. on Moving Corporate and to

with associated quarter, Education loan year operating million the quarter to Department in by increased as the legal losses $X.X to as applications increased Second well including $X.X relating million former fees expenses. those acquisition-related prior to primarily due students responses to forgiveness of versus the

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

taxes. income to Now

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

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

to Now our balance sheet.

short-term million of outflows million, we CalSouthern as $X positive buybacks. offset cash, of from compared equivalents, XX, the year-end second to expenditures investments at capital cash cash the partially advanced XXXX. of flow X.X% Capital $XXX.X $XXX.X As to cash available-for-sale compared $XX.X or with approximately for were quarter to year-end in driven of This June payments which for cash ended expenditures operations was revenue. million and 'XX with as million and was cash increase acquisition, by restricted related share

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

This to range continue our updated our remainder like to student decline the adjusted for student discuss enrollments of between million. range in XXXX. $XXX now to outlook lessen Finally, recent improvement is the expected I that XXXX million provided XXXX. of $XXX in operating as total and overall compared the to second would year to will continued the reflects beliefs outlook will rate the $XXX half income of Full to previously million million $XXX of engagement

XXXX will enrollments student acquisition Full lower the total year be XXXX, lower lower revenue, July reflecting in than of year-end However, enrollments. the student excluding recent than be the completed XXXX. will

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

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

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

the our prior maintaining as adjusted will conclude our that balanced to commenting comparative year of academic while be a period. half on enhance second lower is first income result, shareholder like operating for half the and compared intended I student the approach adequate to would institutions. in value allocation capital to by year investments to the As

diverse share. enhance focus on average value, benefit including repurchased particular to adequate of organic investing six and million of With to maintaining stockholder evaluating per share liquidity XXXX in repurchases. students; share at first technology-related balance repurchases, initiatives, for are respect to and continue our X.X designed $XX.XX and price for we an months shares the $XX.X We million acquisitions sheet approximately projects, while which strong a in to strategies

approximately July the university, stock million available as repurchase a intent price our It mentioned, substantially of of net of is CalSouthern, initial program. XX.X program As is appropriate. approximately repurchasing market effective continue cash the Separately, purchase XX, of The received was when under Andrew June authorized completed million. and conditions to XXXX. academic $XX of shares all under our we our XXXX, acquisition are regionally-accredited cash programs X, still assets

a relatively bachelors, material had adjusted focus the our online operating non-GAAP XXXX For do primarily degrees associates, to June expectations you call XXXX, today discussed risk the Call trailing the months masters not the for on to release of reconciliations. to earnings approximately cash-neutral important while the filed XX IV call non-Title remarks. acquisition the assumptions key $XX.X to basis impact the for business factors of the ended on expect XX, remainder Southern underlying With have about year. management offers well a unaudited a doctoral CalSouthern Currently, will information in ask turn outlook and with to Andrew? operating closing refer today's his income as We and million. back revenues I on over GAAP and we management. psychology, other that, for and as Andrew our XXXX

Thanks, Ashish.

academic outcomes and serving remain pleased student focused educating We students on enhance to experiences. our are with operating further and second and quarter our results

Davis Davis? over questions. for I'll to any the Now call turn back

remarks Thank pass to on I the call, provide and for you, concludes with prepared to now questions. questions, our will our today's your submit call our instructions we how Andrew. will to and That listeners operator take

Our Instructions] one question [Operator of Barrington the first Alex Paris comes Research. from with line

all, congratulations a on acquisition. beat regard second across quarter within It's and that particularly acquisition of follow-ups of had the in the the on And the with First the market industry. kind CalSouthern. uncommon of to also, and congrats I couple of raise.

regionally-accredited. trailing million X/X/XX. Initial XX-month on price You It's of million. of a say $XX.X non-Title $XX effective It's and basis it's IV. purchase revenues

period an you for us would estimate of care You time? that give to EBITDA same

of want And Ashish to allows to the you to with to anything as We're We if acquisition. add us as Ashish, regionally-accredited that, feel it, mentioned, and really pleased please add neutral. free IV. saw -- depth to. it's you you our the cash relatively As to and very It's programs. said, non-Title continue breadth

anything to that? add you So want on Ashish,

Alex, be the we as is And to our not disclosed expect operating income. of a here, do on number adjusted I material No, think XXXX. is correct. that that for remainder we That

name, their given Southern And California. headquartered? Okay. they're are they in Where based

again, you -- that do Ashish, It's any have information? of

it glad so addition is of mean across academic we to in mentioned, we programs, they is it and I primarily a that's are states, then as part all AI have good our much to very so California. But operate our system. pretty online, that

or And order. significant the management you risk that -- that and the most management of mentioned order psychology, business programs? Is in order the importance

the Yes. Psychology significant. is most

the correct. one. that's Yes, largest being Yes, psychology

kind Not Got just you. Any these reason thing. bad programs. to a days, that but not they're those participate not chosen Title of that's good thing curious a IV actually That's in participants? I'm on why they've

It's there any again, your it's No. as as choice. think by Title And reason, accessing not IV. being I point, I other think far to

amount student think in loans opportunity hopefully, debt the a I at that of to good keep the they accumulate it's minimum. for,

against -- And of in AIU term does magnitude? up tuition how their or stack just CTU orders

of Ashish? Cost sort thing. credit per hour, that

Yes. It is very comparable, Alex.

at there, AIU we right offer what to comparable and You're very CTU.

environment. were year-over-year. a Obviously, Got down bit overall demand you. better And than still question picture a quarter's just this little moving the right. about though on, expected, All big then results

about engagement. in talked improvements some You student

that Was to about coming of can whatever speak be last changes? And well. than the better give better helpful. would than out about momentum June talking color there quarter Or May, were April? Any You quarter? you as any

just It's inquiry Sure. generation.

We are again feel that. students We feel there. those good potential about out continue there's that to

there decrease efforts of to feel we of optimistic potential have to we're we're most, it's said, effects again, should rate some that, of improve. we've pandemic, starting as the that we their start been said of our the after-ending students And have delayed programs feel like students benefiting some their the the who -- because, we've but maximize, before, to degree, there marketing adjusted, we some As again, students.

in being top with the quarter, current a new marketing funnel we of think that should here then the And strategy anniversaried about the from perspective.

one of to smaller number. have of First in to change which of funnel attract you likely objectives marketing going are of top a strategy more all, the forward similar more to results because students going third fourth year-over-year But and was marketing should the comparable a that dollars mathematically in have quarters. you're the also, succeed,

thinking right? I that am about So

Ashish, That's you correct. to Anything, add that? to want

Yes.

So Alex, things. two

of You're to comparable as gain be even to to focused year, absolutely we prior so we that likely in our then so bigger that would ecosystem, necessarily in of I comment whether And to is or expenses, And within expenses second is the efficiencies not are comparative on both students are succeed. comparable. terms smaller, they're the there. but of metrics and half. should correct the student terms see comparability improvements the continue your point, will in more But it expenses

all that's Thank much other -- and congratulations and on my quarter take off-line. have. then so And on I you acquisition. the Okay. I'll questions the

at no There currently registered questions this are more time.

would back I and management for So over closing remarks. final any to conference the to like pass

All us you forward you next again look joining quarter. to for right. Thank again today. We speaking with

concludes Corporation earnings That Education participation. quarter conference today’s call. Thank you your Perdoceo for second

You disconnect your line. may now