Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First quarter operating results exceeded expectations, driven by strong student retention and engagement.
- Total student enrollments at CTU grew approximately 28.5% compared to the previous year, indicating robust growth in this segment.
- Perdoceo Education Corp reported a first quarter net income of $39.4 million, or $0.59 per diluted share, showing strong profitability.
- The company continues to invest in technology and corporate engagement programs, enhancing academic experiences and operational efficiency.
- Perdoceo Education Corp has a strong liquidity position, ending the quarter with $642.4 million in cash, cash equivalents, and investments.
Negative Points
- AIU system experienced a decline in total student enrollments by 22.9% compared to the previous year, reflecting challenges in this segment.
- First quarter revenue decreased by 14% year-over-year, primarily due to fewer revenue-earning days and lag impact at AIU system.
- Despite overall growth, there are ongoing challenges with the academic calendar impacting comparability and revenue recognition at CTU.
- The company faces regulatory risks as the Department of Education updates rules and interpretations that could impact operations.
- Projected revenue for CTU in 2024 is expected to be lower than 2023 due to academic calendar comparability issues.
Q & A Highlights
Q: Can you provide an overview of Perdoceo Education Corp's performance in the first quarter of 2024?
A: Todd S. Nelson, President and CEO, highlighted that the first quarter results exceeded expectations, primarily due to strong student retention and engagement. Net income was reported at $39.4 million, or $0.59 per diluted share, with adjusted earnings per diluted share at $0.60. CTU saw a 28.5% increase in enrollments, while AIU experienced a 22.9% decline.
Q: What were the main factors driving the financial results this quarter?
A: Ashish R. Ghia, CFO, explained that the improved financial performance was largely due to a $30 million reduction in expenses across various functions, which more than offset the revenue decline. Specific areas of reduced costs included lower admissions and marketing expenses, rightsizing program support expenses, and decreased legal costs.
Q: How did the academic calendar impact CTU's revenue this quarter?
A: The CFO noted that CTU's revenue was impacted negatively by the academic calendar, which resulted in fewer revenue-earning days during the quarter. This timing issue is expected to normalize in the second half of the year, with revenue growth anticipated in the fourth quarter.
Q: What are the expectations for student enrollments and revenue for the rest of 2024?
A: For CTU, total enrollment and revenue are expected to grow by the end of 2024, driven by high levels of student retention and engagement. For AIU, while revenue is expected to be below 2022 levels, the decline is anticipated to moderate each quarter, with growth expected in the fourth quarter.
Q: Can you discuss the capital allocation strategy for 2024?
A: The CFO shared that the strategy includes ongoing investments in technology and student support, maintaining a strong balance sheet, and evaluating opportunities for acquisitions. The company also plans to continue its dividend payments and share repurchases as part of a balanced capital allocation approach.
Q: What is the updated financial outlook for 2024 following the first quarter performance?
A: Perdoceo Education now expects full-year 2024 adjusted operating income to be between $175 million and $190 million, with adjusted earnings per diluted share ranging from $2.11 to $2.27. This outlook is based on the continued high levels of student retention and engagement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
