Perdoceo Education Corporation Reports Third Quarter and Year to Date 2023 Results

Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended September 30, 2023.

Third Quarter 2023 Results as Compared to Prior Year Quarter

• Revenue increased 6.8% to $179.9 million, driven by a 23.6% increase at CTU.
• Operating income increased 46.9% to $43.1 million, while adjusted operating income increased 22.1% to $47.2 million.*
• Earnings per diluted share were $0.62 as compared to $0.32, while adjusted earnings per diluted share were $0.64 as compared to $0.39.*
• Total student enrollments at September 30, 2023 decreased by 12.7%. AIUS experienced a 34.2% decrease in total student enrollments while CTU remained relatively flat.
• Ended the quarter with $603.7 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.
• Board of Directors declared a dividend for the third quarter of $0.11 per share payable on December 15, 2023.

Year to Date 2023 Results as Compared to Prior Year to Date

• Revenue increased 8.3% to $562.1 million, driven by a 17.1% increase at CTU.
• Operating income increased 25.7% to $134.5 million, while adjusted operating income increased 18.2% to $155.5 million.*
• Earnings per diluted share were $1.92 as compared to $1.16, while adjusted earnings per diluted share were $1.83 as compared to $1.32.*

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

"We performed well during the quarter, as we continued to see meaningful improvements in student retention and engagement,” said Andrew Hurst, Chief Executive Officer. “We remain committed to making targeted investments in our student-facing and support processes as well as selected technology enhancements that we believe will drive operational improvements and efficiencies while further enhancing academic outcomes and experiences.”

REVENUE

• For the quarter ended September 30, 2023, revenue of $179.9 million increased 6.8% compared to revenue of $168.4 million for the prior year quarter.
• For the year to date ended September 30, 2023, revenue of $562.1 million increased 8.3% compared to revenue of $519.1 million for the prior year to date.

TOTAL STUDENT ENROLLMENTS

• As of September 30, 2023, CTU’s total student enrollments decreased 0.4%, while AIUS’ total student enrollments decreased 34.2% as compared to September 30, 2022.

OPERATING INCOME

• For the quarter ended September 30, 2023, operating income increased by 46.9% to $43.1 million as compared to the prior year quarter.
• For the year to date ended September 30, 2023, operating income increased by 25.7% to $134.5 million as compared to the prior year to date.

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 September 30, 2023, adjusted operating income of $47.2 million increased 22.1% compared to adjusted operating income of $38.7 million for the prior year quarter.
• For the year to date ended September 30, 2023, adjusted operating income of $155.5 million increased 18.2% compared to adjusted operating income of $131.5 million for the prior year to date.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended September 30, 2023, the Company recorded:

• Net income of $41.3 million compared to $22.1 million for the prior year quarter.
• Earnings per diluted share of $0.62 compared to $0.32 for the prior year quarter.
• Adjusted earnings per diluted share of $0.64 compared to $0.39 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 to date ended September 30, 2023, the Company recorded:

• Net income of $130.5 million compared to $79.9 million for the prior year to date.
• Earnings per diluted share of $1.92 compared to $1.16 for the prior year to date.
• Adjusted earnings per diluted share of $1.83 compared to $1.32 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

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 December 15, 2023 for holders of record of common stock as of December 1, 2023. 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 part of its balanced capital allocation strategy while also prioritizing investments in organic projects, in particularly technology-related initiatives designed to benefit students and maintaining a strong balance sheet.

BALANCE SHEET AND CASH FLOW

• For the quarter ended September 30, 2023, net cash provided by operating activities was $32.6 million, compared to net cash provided by operating activities of $52.9 million for the prior year quarter.
• For the year to date ended September 30, 2023, net cash provided by operating activities was $98.8 million, compared to net cash provided by operating activities of $107.6 million in the prior year to date.
• As of September 30, 2023 and December 31, 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $603.7 million and $518.2 million, respectively.

OUTLOOK

The Company has increased its full year outlook and is also providing the following fourth quarter 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.

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 2023 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 estimates, (ii) no significant impact of new or proposed regulations, including recent Department negotiated rulemaking initiatives, or other adverse changes in the legal or regulatory environment, which may require further operational changes in the way the Company’s academic institutions 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) earnings per diluted share outlook assumes an effective income tax rate of approximately 23% for both the fourth quarter and full year, and (vi) 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 Thursday, November 2, 2023 at 5:30 p.m. Eastern time to discuss third quarter and year to date 2023 results and 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 1-888-210-4659 (domestic) or 1-646-960-0383 (international). Both dial-in numbers will use the access code 3224322. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/857528249. 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 is 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; 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 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 eligibility to participate in educational assistance programs for 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 December 31, 2022 and its subsequent filings with the Securities and Exchange Commission.