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Perdoceo Education Corporation Announces First Quarter 2022 Results

Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter ended March 31, 2022.

First Quarter 2022 Results as Compared to Prior Year Quarter

  • Revenue decreased 0.4 percent to $183.0 million, with CTU’s increase of 6.9 percent offset by AIUS’ decrease of 10.3 percent
  • Operating income increased 7.6 percent to $43.7 million, while adjusted operating income increased 13.5 percent to $50.9 million*
  • Earnings per diluted share was $0.46 as compared to $0.43, while adjusted earnings per diluted share was $0.50 as compared to $0.44*
  • Ended the quarter with $499.3 million in cash, cash equivalents, restricted cash and available-for-sale short-term investments
  • Total student enrollments at March 31, 2022 decreased by 14.7 percent, with both CTU and AIUS experiencing a decline

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

“We are pleased with our first quarter results and we continue to support our students as they adjust and adapt to the evolving COVID-19 pandemic,” said Andrew Hurst, President and Chief Executive Officer. “We are further optimizing our operations to serve and educate students as efficiently and effectively as possible and remain focused on enhancing student experiences, retention and academic outcomes while leveraging data analytics and technology.”

REVENUE

  • For the quarter ended March 31, 2022, revenue of $183.0 million decreased 0.4 percent as compared to revenue of $183.6 million for the prior year quarter. Revenue for the quarter ended March 31, 2022 was positively impacted by the academic calendar redesign at CTU.

 

 

For the Quarter Ended March 31,

 

Revenue ($ in thousands)

 

2022

 

 

2021

 

 

% Change

 

CTU

 

$

113,148

 

 

$

105,822

 

 

 

6.9

%

AIUS

 

 

69,532

 

 

 

77,477

 

 

 

-10.3

%

Corporate and Other

 

 

279

 

 

 

339

 

 

NM

 

Total

 

$

182,959

 

 

$

183,638

 

 

 

-0.4

%

TOTAL STUDENT ENROLLMENTS

  • As of March 31, 2022, CTU’s total student enrollments decreased 13.9 percent, while AIUS’ total student enrollments decreased 16.1 percent. CTU’s total student enrollments as of March 31, 2022 were negatively impacted by the academic calendar redesign.

 

 

As of March 31,

 

Total Student Enrollments

 

2022

 

 

2021

 

 

% Change

 

CTU

 

 

23,500

 

 

 

27,300

 

 

 

-13.9

%

AIUS

 

 

14,100

 

 

 

16,800

 

 

 

-16.1

%

Total

 

 

37,600

 

 

 

44,100

 

 

 

-14.7

%

OPERATING INCOME

  • For the quarter ended March 31, 2022, operating income increased by 7.6 percent to $43.7 million as compared to the prior year quarter.

 

 

For the Quarter Ended March 31,

 

Operating Income ($ in thousands)

 

2022

 

 

2021

 

 

% Change

 

CTU

 

$

43,026

 

 

$

36,143

 

 

 

19.0

%

AIUS

 

 

9,523

 

 

 

11,323

 

 

 

-15.9

%

Corporate and Other

 

 

(8,856

)

 

 

(6,849

)

 

 

29.3

%

Total

 

$

43,693

 

 

$

40,617

 

 

 

7.6

%

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 March 31, 2022, adjusted operating income of $50.9 million increased 13.5 percent compared to adjusted operating income of $44.9 million for the prior year quarter.

 

 

For the Quarter Ended March 31,

 

Adjusted Operating Income ($ in thousands)

 

2022

 

 

2021

 

Operating income

 

$

43,693

 

 

$

40,617

 

Depreciation and amortization (1)

 

 

4,882

 

 

 

4,002

 

Legal fee expense related to certain matters (2)

 

 

2,347

 

 

 

242

 

Adjusted Operating Income

 

$

50,922

 

 

$

44,861

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

13.5

%

 

 

 

 

(1)

Amortization for acquired intangible assets 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 March 31, 2022, the Company recorded:

  • Net income of $32.1 million compared to $30.8 million for the prior year quarter.
  • Earnings per diluted share of $0.46 compared to $0.43 for the prior year quarter.
  • Adjusted earnings per diluted share of $0.50 compared to $0.44 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 Quarter Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.46

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (1)

 

 

0.02

 

 

 

0.01

 

Legal fee expense related to certain matters (2)

 

 

0.03

 

 

 

-

 

Tax effect of adjustments (3)

 

 

(0.01

)

 

 

-

 

Adjusted Earnings Per Diluted Share

 

$

0.50

 

 

$

0.44

 

(1)

Amortization for acquired intangible assets 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)

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.

BALANCE SHEET AND CASH FLOW

  • For the quarter ended March 31, 2022, net cash provided by operating activities was $22.2 million, compared to net cash provided by operating activities of $44.7 million for the prior year quarter.
  • As of March 31, 2022 and December 31, 2021, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $499.3 million and $499.4 million, respectively.

 

 

For the Quarter Ended March 31,

 

Selected Cash Flow Items ($ in thousands)

 

2022

 

 

2021

 

 

% Change

 

Net cash provided by operating activities

 

$

22,154

 

 

$

44,708

 

 

 

-50.4

%

Capital expenditures

 

$

4,742

 

 

$

1,042

 

 

 

355.1

%

OUTLOOK

The Company is providing the following updated 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 June 30,

 

For the Year Ending December 31,

 

OUTLOOK

ACTUAL

 

OUTLOOK

ACTUAL

 

2022

2021

 

2022

2021

Operating Income

$30.0M - $32.0M

$36.0M

 

$108.7M - $119.7M

$149.0M

Depreciation and amortization

$5.0M

$3.9M

 

$20.0M

$16.8M

Legal fee expense related to certain matters (1)

$2.0M

$2.4M

 

$8.3M

$9.7M

Adjusted Operating Income

$37.0M - $39.0M

$42.3M

 

$137.0M - $148.0M

$175.5M

 

 

 

 

 

 

Earnings Per Diluted Share

$0.32 - $0.34

$0.37

 

$1.16 - $1.28

$1.55

Amortization of acquired intangible assets

$0.02

$0.01

 

$0.10

$0.06

Legal fee expense related to certain matters (1)

$0.03

$0.04

 

$0.11

$0.14

Tax effect of adjustments

($0.01)

($0.01)

 

($0.05)

($0.05)

Adjusted Earnings Per Diluted Share

$0.36 - $0.38

$0.41

 

$1.32 - $1.44

$1.70

(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 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 2022 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and student retention remain consistent with management’s estimates, (ii) no significant impact of new or proposed regulations, including recent Department of Education negotiated rulemaking initiatives, or other adverse changes in the legal or regulatory environment, (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) earnings per diluted share outlook assumes an effective income tax rate of approximately 25.0% for the second quarter and 26.0% for the full year, and (v) any future impact from the Company’s stock repurchase program is excluded. 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, May 5, 2022 at 5:30 p.m. Eastern time to discuss first quarter 2022 results and 2022 outlook. Interested parties can access the live webcast of the conference at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-844-200-6205 (domestic) or 1-929-526-1599 (international). Both dial-in numbers will use the access code 601460. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/336826742. 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 following the call at www.perdoceoed.com in the Investor Relations section of the website.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s 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 accredited 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 professional development and continuing education offerings. Perdoceo’s universities 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 support students and enhance learning. 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; rulemaking 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; increased competition; the impact of management changes; and changes in the overall U.S. economy which may continue to be impacted by the COVID-19 pandemic. 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, 2021 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents, unrestricted

 

$

190,443

 

 

$

319,982

 

Restricted cash

 

 

1,210

 

 

 

5,196

 

Short-term investments

 

 

307,620

 

 

 

174,213

 

Total cash and cash equivalents, restricted cash and short-term investments

 

 

499,273

 

 

 

499,391

 

 

 

 

 

 

 

 

 

 

Student receivables, net

 

 

34,104

 

 

 

43,033

 

Receivables, other

 

 

8,845

 

 

 

1,692

 

Prepaid expenses

 

 

9,874

 

 

 

6,919

 

Inventories

 

 

1,405

 

 

 

904

 

Other current assets

 

 

2,702

 

 

 

2,514

 

Total current assets

 

 

556,203

 

 

 

554,453

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

27,956

 

 

 

28,355

 

Right of use asset, net

 

 

34,535

 

 

 

36,664

 

Goodwill

 

 

162,579

 

 

 

162,579

 

Intangible assets, net

 

 

30,542

 

 

 

32,208

 

Student receivables, net

 

 

1,314

 

 

 

1,372

 

Deferred income tax assets, net

 

 

24,128

 

 

 

25,114

 

Other assets

 

 

6,570

 

 

 

6,688

 

TOTAL ASSETS

 

$

843,827

 

 

$

847,433

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

$

8,355

 

 

$

9,400

 

Accounts payable

 

 

12,135

 

 

 

10,838

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

17,648

 

 

 

25,312

 

Advertising and marketing costs

 

 

9,971

 

 

 

8,690

 

Income taxes

 

 

10,982

 

 

 

211

 

Other

 

 

12,148

 

 

 

15,180

 

Deferred revenue

 

 

39,108

 

 

 

70,613

 

Total current liabilities

 

 

110,347

 

 

 

140,244

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Lease liability - operating

 

 

33,757

 

 

 

35,549

 

Other liabilities

 

 

21,343

 

 

 

21,530

 

Total non-current liabilities

 

 

55,100

 

 

 

57,079

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

893

 

 

 

887

 

Additional paid-in capital

 

 

677,311

 

 

 

674,242

 

Accumulated other comprehensive loss

 

 

(1,541

)

 

 

(96

)

Retained earnings

 

 

284,050

 

 

 

251,972

 

Treasury stock

 

 

(282,333

)

 

 

(276,895

)

Total stockholders' equity

 

 

678,380

 

 

 

650,110

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

843,827

 

 

$

847,433

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts and percentages)

 

 

 

For the Quarter Ended March 31,

 

 

 

2022

 

 

% of

Total

Revenue

 

 

2021

 

 

% of

Total

Revenue

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tuition and fees, net

 

$

181,327

 

 

99.1

%

 

$

182,831

 

 

99.6

%

Other

 

 

1,632

 

 

0.9

%

 

 

807

 

 

0.4

%

Total revenue

 

 

182,959

 

 

 

 

 

 

183,638

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

 

28,088

 

 

15.4

%

 

 

28,974

 

 

15.8

%

General and administrative

 

 

106,296

 

 

58.1

%

 

 

110,045

 

 

59.9

%

Depreciation and amortization

 

 

4,882

 

 

2.7

%

 

 

4,002

 

 

2.2

%

Total operating expenses

 

 

139,266

 

 

76.1

%

 

 

143,021

 

 

77.9

%

Operating income

 

 

43,693

 

 

23.9

%

 

 

40,617

 

 

22.1

%

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

333

 

 

0.2

%

 

 

359

 

 

0.2

%

Interest expense

 

 

(103

)

 

-0.1

%

 

 

(109

)

 

-0.1

%

Miscellaneous (expense) income

 

 

(89

)

 

0.0

%

 

 

131

 

 

0.1

%

Total other income

 

 

141

 

 

0.1

%

 

 

381

 

 

0.2

%

PRETAX INCOME

 

 

43,834

 

 

24.0

%

 

 

40,998

 

 

22.3

%

Provision for income taxes

 

 

11,756

 

 

6.4

%

 

 

10,245

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

32,078

 

 

17.5

%

 

 

30,753

 

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC:

 

$

0.47

 

 

 

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE -DILUTED:

 

$

0.46

 

 

 

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

68,746

 

 

 

 

 

 

70,149

 

 

 

 

Diluted

 

69,567

 

 

 

 

 

 

71,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Quarter Ended March 31,

 

(In Thousands)

 

2022

 

 

 

 

 

2021

 

 

 

 

NET INCOME

 

$

32,078

 

 

 

 

 

$

30,753

 

 

 

 

OTHER COMPREHENSIVE LOSS, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(81

)

 

 

 

 

 

(129

)

 

 

 

Unrealized loss on investments

 

 

(1,364

)

 

 

 

 

 

(221

)

 

 

 

Total other comprehensive loss

 

 

(1,445

)

 

 

 

 

 

(350

)

 

 

 

COMPREHENSIVE INCOME

 

$

30,633

 

 

 

 

 

$

30,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

For the Quarter Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

32,078

 

 

$

30,753

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

4,882

 

 

 

4,002

 

Bad debt expense

 

 

13,715

 

 

 

13,719

 

Compensation expense related to share-based awards

 

 

2,416

 

 

 

3,753

 

Deferred income taxes

 

 

986

 

 

 

4,767

 

Changes in operating assets and liabilities

 

 

(31,923

)

 

 

(12,286

)

Net cash provided by operating activities

 

 

22,154

 

 

 

44,708

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale investments

 

 

(194,997

)

 

 

(126,009

)

Sales of available-for-sale investments

 

 

59,825

 

 

 

64,408

 

Purchases of property and equipment

 

 

(4,742

)

 

 

(1,042

)

Payments for potential business acquisition

 

 

(7,000

)

 

 

-

 

Net cash used in investing activities

 

 

(146,914

)

 

 

(62,643

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

659

 

 

 

314

 

Purchase of treasury stock

 

 

(3,828

)

 

 

-

 

Payments of employee tax associated with stock compensation

 

 

(1,610

)

 

 

(2,032

)

Release of cash held in escrow

 

 

(3,986

)

 

 

-

 

Net cash used in financing activities

 

 

(8,765

)

 

 

(1,718

)

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(133,525

)

 

 

(19,653

)

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period

 

 

325,178

 

 

 

109,684

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period

 

$

191,653

 

 

$

90,031

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

 

 

For the Quarter Ended March 31,

 

 

 

2022

 

 

2021

 

REVENUE:

 

 

 

 

 

 

 

 

CTU

 

$

113,148

 

 

$

105,822

 

AIUS

 

 

69,532

 

 

 

77,477

 

Corporate and Other

 

 

279

 

 

 

339

 

Total

 

$

182,959

 

 

$

183,638

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

CTU

 

$

43,026

 

 

$

36,143

 

AIUS

 

 

9,523

 

 

 

11,323

 

Corporate and Other

 

 

(8,856

)

 

 

(6,849

)

Total

 

$

43,693

 

 

$

40,617

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN (LOSS):

 

 

 

 

 

 

 

 

CTU

 

 

38.0

%

 

 

34.2

%

AIUS

 

 

13.7

%

 

 

14.6

%

Corporate and Other

 

NM

 

 

NM

 

Total

 

 

23.9

%

 

 

22.1

%

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)

(In thousands, unless otherwise noted)

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended March 31,

 

 

 

ACTUAL

 

Adjusted Operating Income

 

2022

 

 

2021

 

Operating income

 

$

43,693

 

 

$

40,617

 

Depreciation and amortization (2)

 

 

4,882

 

 

 

4,002

 

Legal fee expense related to certain matters (3)

 

 

2,347

 

 

 

242

 

Adjusted Operating Income (4)

 

$

50,922

 

 

$

44,861

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending June 30,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2022

 

 

2021 (4)

 

Operating income

 

$30.0M - $32.0M

 

 

$

35,962

 

Depreciation and amortization (2)

 

$5.0M

 

 

 

3,913

 

Legal fee expense related to certain matters (3)

 

$2.0M

 

 

 

2,416

 

Adjusted Operating Income

 

$37.0M - $39.0M

 

 

$

42,291

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2022

 

 

2021 (4)

 

Operating income

 

$108.7M - $119.7M

 

 

$

149,016

 

Depreciation and amortization (2)

 

$20.0M

 

 

 

16,766

 

Legal fee expense related to certain matters (3)

 

$8.3M

 

 

 

9,735

 

Adjusted Operating Income

 

$137.0M - $148.0M

 

 

$

175,517

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (cont’d)

 

 

 

 

 

 

For the Quarter Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Diluted Share

 

$

0.46

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (2)

 

 

0.02

 

 

 

0.01

 

Legal fee expense related to certain matters (3)

 

 

0.03

 

 

 

-

 

Total pre-tax adjustments

 

$

0.05

 

 

$

0.01

 

Tax effect of adjustments (5)

 

 

(0.01

)

 

 

-

 

Total adjustments after tax

 

 

0.04

 

 

 

0.01

 

Adjusted Earnings Per Diluted Share (4)

 

$

0.50

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ending June 30,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2022

 

 

2021

 

Reported Earnings Per Diluted Share

 

$0.32 - $0.34

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (2)

 

0.02

 

 

 

0.01

 

Legal fee expense related to certain matters (3)

 

0.03

 

 

 

0.04

 

Total pre-tax adjustments

 

0.05

 

 

$

0.05

 

Tax effect of adjustments (5)

 

(0.01)

 

 

 

(0.01

)

Total adjustments after tax

 

0.04

 

 

 

0.04

 

Adjusted Earnings Per Diluted Share

 

$0.36 - $0.38

 

 

$

0.41

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ending December 31,

 

 

 

OUTLOOK

 

 

ACTUAL

 

 

 

2022

 

 

2021

 

Reported Earnings Per Diluted Share

 

$1.16 - $1.28

 

 

$

1.55

 

 

 

 

 

 

 

 

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

 

Amortization for acquired intangible assets (2)

 

0.10

 

 

 

0.06

 

Legal fee expense related to certain matters (3)

 

0.11

 

 

 

0.14

 

Total pre-tax adjustments

 

$0.21

 

 

$

0.20

 

Tax effect of adjustments (5)

 

(0.05)

 

 

 

(0.05

)

Total adjustments after tax

 

0.16

 

 

 

0.15

 

Adjusted Earnings Per Diluted Share

 

$1.32 - $1.44

 

 

$

1.70

 

 

 

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (cont’d)

 

(1)

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. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its operations, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance.

 

 

The Company believes adjusted operating income and adjusted earnings per diluted share allow it to analyze and assess its operations and compare current operating results with the operational performance of other companies in its industry because it does not give effect to potential differences caused by items it does not consider reflective of underlying operating performance, such as amortization for acquired intangible assets and significant legal settlements. In evaluating adjusted operating income and adjusted earnings per diluted share, investors should be aware that in the future the Company may incur expenses similar to the adjustments presented above. The presentation of adjusted operating income and adjusted earnings per diluted share should not be construed as an inference that the Company's future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of liquidity.

 

 

Non-GAAP financial measures, when viewed in a reconciliation to corresponding GAAP financial measures, provide an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

 

 

Results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition and the Hippo acquisition commencing on the September 10, 2021 date of acquisition.

 

 

(2)

Amortization for acquired intangible assets relate to definite-lived intangible assets associated with the Trident, DigitalCrafts and Hippo acquisitions.

 

 

(3)

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)

The Company began adjusting for legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts, during the second quarter of 2021. The Company believes that these expenses are not reflective of underlying operating performance. Prior period amounts were recast for these items to maintain comparability.

 

 

(5)

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.

 

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