Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for quarter and year to date ended June 30, 2021.

Second Quarter 2021 Results as Compared to Prior Year Quarter

• Revenue decreased 0.3 percent to $175.5 million. Revenue declined at AIU, partially offset by growth at CTU.
• Operating income decreased 3.8 percent to $36.0 million while adjusted operating income increased 1.8 percent to $42.3 million.*
• Earnings per diluted share was $0.37 as compared to $0.40 while adjusted earnings per diluted share was $0.41 for each period.*
• Total student enrollments at June 30, 2021 increased by 7.5 percent, with CTU experiencing a 14.2 percent increase that was partially offset by a 1.8 percent decrease within AIU. Total student enrollments at CTU were positively impacted by the academic calendar redesign.
• Ended the quarter with $480.7 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.

Year to Date 2021 Results as Compared to Prior Year to Date

• Revenue increased 3.5 percent to $359.2 million with both CTU and AIU contributing to the growth.
• Operating income increased 2.6 percent to $76.6 million while adjusted operating income increased 6.8 percent to $87.2 million.*
• Earnings per diluted share was $0.80 for both the current and prior year to date periods while adjusted earnings per diluted share was $0.85 as compared to $0.81.*

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

“Student experiences, retention and academic outcomes remain the focus of our operations as we and our students adjust to the evolving pandemic environment and its economic and social impacts,” said Todd Nelson, President and Chief Executive Officer. “We continue to optimize our operations to serve and educate students as efficiently and effectively as possible. Our balance sheet remains a source of strength that enables us to continue investing in our existing operations while also reviewing opportunities to acquire academic programs that will expand the breadth of our program offerings.”

BUSINESS ACQUISITION

On August 2, 2021, Perdoceo Education Corporation (the "Company") acquired substantially all of the assets of DigitalCrafts. Launched in 2015, DigitalCrafts has helped provide individuals an opportunity in the technology area through reskilling and upskilling courses within the areas of web development, web design and cybersecurity. The acquisition of DigitalCrafts fits well with the Company’s overall objective of extending the breadth of our academic program offerings while diversifying revenue away from federal student financial aid funding. Learners are looking for ways to elevate their skills in a targeted manner without a long term commitment of time and the Company believes the programs at DigitalCrafts offer that opportunity.

The initial cash consideration for the acquisition of $16.25 million was funded with the Company’s available cash balances on the date of acquisition and is subject to a working capital adjustment. In addition, a post-closing contingent consideration payment of up to $2.5 million is expected to be paid in early 2024 based upon the level of achievement of certain financial metrics.

REVENUE

• For the quarter ended June 30, 2021, total revenue of $175.5 million decreased 0.3 percent compared to total revenue of $176.0 million for the prior year quarter. AIU’s revenue decline for the quarter ended June 30, 2021 was partially offset with CTU’s revenue increase.
• For the year to date ended June 30, 2021, total revenue of $359.2 million increased 3.5 percent compared to total revenue of $347.0 million for the prior year to date.

TOTAL STUDENT ENROLLMENTS

• CTU’s total student enrollments increased 14.2 percent as of June 30, 2021 as compared to June 30, 2020 due to the timing impact of the academic calendar redesign at CTU, while AIU’s total student enrollments decreased 1.8 percent.

OPERATING INCOME

• For the quarter ended June 30, 2021, operating income decreased by 3.8 percent to $36.0 million as compared to the prior year quarter.
• For the year to date ended June 30, 2021, operating income increased by 2.6 percent to $76.6 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 June 30, 2021, adjusted operating income of $42.3 million increased 1.8 percent compared to adjusted operating income of $41.5 million for the prior year quarter.
• For the year to date ended June 30, 2021, adjusted operating income of $87.2 million increased 6.8 percent compared to adjusted operating income of $81.6 million for the prior year to date.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended June 30, 2021, the Company recorded:

• Net income of $26.6 million compared to $28.2 million for the prior year quarter.
• Earnings per diluted share of $0.37 compared to $0.40 for the prior year quarter.
• Adjusted earnings per diluted share of $0.41 for both the current and 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, 2021, the Company recorded:

• Net income of $57.4 million compared to $57.3 million for the prior year to date.
• Earnings per diluted share of $0.80 for both the current and prior year to date.
• Adjusted earnings per diluted share of $0.85 compared $0.81 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

BALANCE SHEET AND CASH FLOW

• For the quarter ended June 30, 2021, net cash provided by operating activities was $38.0 million, compared to net cash provided by operating activities of $60.6 million during the prior year quarter. The quarter ended June 30, 2021 includes payments made for federal income taxes as compared to no payments in the prior year quarter.
• At June 30, 2021 and December 31, 2020, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $480.7 million and $410.4 million, respectively.

OUTLOOK

The Company is providing the following outlook, subject to the key assumptions identified below. The Company has not adjusted its outlook to reflect the acquisition of DigitalCrafts because it currently believes that the acquisition will not significantly impact its 2021 operating results. 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 may not follow the same trends stated in the outlook above because of adjustments made for certain significant and non-cash items such as significant legal settlements and legal fees for certain matters. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2021 are based on the following key assumptions and factors, among others: (i) prospective student interest for online postsecondary academic programs remains consistent with recent industry trends, (ii) no significant impact of new or proposed regulations, including the “borrower defense to repayment” regulations, 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) no significant future operating or financial impacts relating to the COVID-19 pandemic, (v) earnings per diluted share outlook assumes an effective income tax rate of approximately 26.25% for the third quarter and full year, and (vi) 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 shareholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Thursday, August 5, 2021 at 5:30 p.m. Eastern time to discuss second quarter and year to date 2021 results and 2021 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 1-844-378-6484 (domestic) or 1-412-542-4179 (international). 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 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 (“AIU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. 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 AIU 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, 2020 and its subsequent filings with the Securities and Exchange Commission.