Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for the quarter and year to date ended June 30, 2023.
Second Quarter 2023 Results as Compared to Prior Year Quarter
- Revenue increased 11.3% to $186.6 million, primarily driven by an 18.7% increase at CTU.
- Operating income increased 41.7% to $48.1 million, while adjusted operating income increased 31.5% to $55.2 million.*
- Earnings per diluted share were $0.80 as compared to $0.37, while adjusted earnings per diluted share were $0.61 as compared to $0.42.*
- Total student enrollments at June 30, 2023 decreased by 5.2%. AIUS experienced a 14.2% decrease in total student enrollments while CTU remained relatively flat.
- Ended the quarter with $578.1 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.
- Board of Directors declared inaugural dividend for the second quarter of $0.11 per share payable on September 15, 2023.
Year to Date 2023 Results as Compared to Prior Year to Date
- Revenue increased 9.0% to $382.2 million, primarily driven by a 14.1% increase at CTU.
- Operating income increased 17.8% to $91.4 million, while adjusted operating income increased 16.6% to $108.3 million.*
- Earnings per diluted share were $1.30 as compared to $0.83, while adjusted earnings per diluted share were $1.19 as compared to $0.93.*
*See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release
"Second quarter results came in ahead of our expectations, as we experienced further improvements in student retention and engagement, supported by various operating changes and technology upgrades within our onboarding, academic and student support processes,” said Andrew Hurst, Chief Executive Officer.
REVENUE
- For the quarter ended June 30, 2023, revenue of $186.6 million increased 11.3% compared to revenue of $167.7 million for the prior year quarter.
- For the year to date ended June 30, 2023, revenue of $382.2 million increased 9.0% compared to revenue of $350.6 million for the prior year to date.
For the Quarter Ended June 30, | For the Year to Date Ended June 30, | |||||||||||||||||||||||
Revenue ($ in thousands) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
CTU | $ | 119,292 | $ | 100,461 | 18.7 | % | $ | 243,784 | $ | 213,609 | 14.1 | % | ||||||||||||
AIUS | 67,062 | 66,920 | 0.2 | % | 137,902 | 136,452 | 1.1 | % | ||||||||||||||||
Corporate and Other | 210 | 303 | NM | 476 | 582 | NM | ||||||||||||||||||
Total | $ | 186,564 | $ | 167,684 | 11.3 | % | $ | 382,162 | $ | 350,643 | 9.0 | % | ||||||||||||
TOTAL STUDENT ENROLLMENTS
- As of June 30, 2023, CTU’s total student enrollments decreased 0.4%, while AIUS’ total student enrollments decreased 14.2% as compared to June 30, 2022.
At June 30, | ||||||||||||
Total Student Enrollments(1) | 2023 | 2022 | % Change | |||||||||
CTU | 25,900 | 26,000 | -0.4 | % | ||||||||
AIUS | 12,100 | 14,100 | -14.2 | % | ||||||||
Total | 38,000 | 40,100 | -5.2 | % | ||||||||
(1) | Total student enrollments do not include learners participating in: 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 June 30, 2023, operating income increased by 41.7% to $48.1 million as compared to the prior year quarter.
- For the year to date ended June 30, 2023, operating income increased by 17.8% to $91.4 million as compared to the prior year to date.
For the Quarter Ended June 30, | For the Year to Date Ended June 30, | |||||||||||||||||||||||
Operating Income ($ in thousands) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
CTU | $ | 40,451 | $ | 33,008 | 22.5 | % | $ | 84,141 | $ | 76,034 | 10.7 | % | ||||||||||||
AIUS | 17,078 | 10,733 | 59.1 | % | 29,081 | 20,256 | 43.6 | % | ||||||||||||||||
Corporate and Other | (9,435 | ) | (9,795 | ) | NM | (21,792 | ) | (18,651 | ) | NM | ||||||||||||||
Total | $ | 48,094 | $ | 33,946 | 41.7 | % | $ | 91,430 | $ | 77,639 | 17.8 | % | ||||||||||||
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 June 30, 2023, adjusted operating income of $55.2 million increased 31.5% compared to adjusted operating income of $41.9 million for the prior year quarter.
- For the year to date ended June 30, 2023, adjusted operating income of $108.3 million increased 16.6% compared to adjusted operating income of $92.9 million for the prior year to date.
For the Quarter Ended June 30, | For the Year to Date Ended June 30, | |||||||||||||||
Adjusted Operating Income ($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Operating income | $ | 48,094 | $ | 33,946 | $ | 91,430 | $ | 77,639 | ||||||||
Depreciation and amortization (1) | 4,369 | 4,909 | 9,524 | 9,791 | ||||||||||||
Legal fee expense related to certain matters (2) | 2,709 | 3,087 | 7,328 | 5,434 | ||||||||||||
Adjusted Operating Income | $ | 55,172 | $ | 41,942 | $ | 108,282 | $ | 92,864 | ||||||||
Increase (Decrease) | 31.5 | % | 16.6 | % | ||||||||||||
(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 June 30, 2023, the Company recorded:
- Net income of $54.7 million compared to $25.8 million for the prior year quarter.
- Earnings per diluted share of $0.80 compared to $0.37 for the prior year quarter.
- Adjusted earnings per diluted share of $0.61 compared to $0.42 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 June 30, 2023, the Company recorded:
- Net income of $89.2 million compared to $57.8 million for the prior year to date.
- Earnings per diluted share of $1.30 compared to $0.83 for the prior year to date.
- Adjusted earnings per diluted share of $1.19 compared to $0.93 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)
For the Quarter Ended June 30, | For the Year to Date Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Reported Earnings Per Diluted Share | $ | 0.80 | $ | 0.37 | $ | 1.30 | $ | 0.83 | ||||||||
Pre-tax adjustments included in operating expenses: | ||||||||||||||||
Amortization for acquired intangible assets (1) | 0.03 | 0.02 | 0.07 | 0.05 | ||||||||||||
Legal fee expense related to certain matters (2) | 0.04 | 0.05 | 0.11 | 0.08 | ||||||||||||
Gain on sale of intangible asset (3) | (0.32 | ) | - | (0.32 | ) | - | ||||||||||
Tax effect of adjustments (4) | 0.06 | (0.02 | ) | 0.03 | (0.03 | ) | ||||||||||
Adjusted Earnings Per Diluted Share | $ | 0.61 | $ | 0.42 | $ | 1.19 | $ | 0.93 | ||||||||
(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. |
INAUGURAL QUARTERLY DIVIDEND PAYMENT
The Company today announced that its board of directors has adopted a dividend policy. Pursuant to this policy, the board of directors intends to pay quarterly dividends, commencing with the Company’s quarter ended June 30, 2023. The board of directors declared the first quarterly dividend as part of the dividend policy of $0.11 per share, which will be paid on September 15, 2023 for holders of record of common stock as of September 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 June 30, 2023 net cash provided by operating activities was $61.6 million, compared to net cash provided by operating activities of $32.6 million for the prior year quarter.
- For the year to date ended June 30, 2023, net cash provided by operating activities was $66.2 million, compared to net cash provided by operating activities of $54.8 million in the prior year to date.
- As of June 30, 2023 and December 31, 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $578.1 million and $518.2 million, respectively.
- The Company’s stock repurchase program, which was set to expire on September 30, 2023, has been extended to September 30, 2024. As of June 30, 2023, approximately $24.1 million was available under the stock repurchase program to repurchase outstanding shares of common stock.
For the Quarter Ended June 30, | For the Year to Date Ended June 30, | |||||||||||||||||||||||
Selected Cash Flow Items ($ in thousands) | 2023 | 2022 | % Change | 2023 | ||||||||||||||||||||
