Perdoceo Education Corporation Reports Fourth Quarter and Full Year 2022 Results

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

Full Year 2022 Results as Compared to Prior Year

• Revenue increased 0.3% to $695.2 million, with a 2.7% increase at CTU mostly offset by a 3.1% decline at AIUS.
• Operating income decreased 13.0% to $129.6 million, while adjusted operating income decreased 6.6% to $164.0 million.*
• Earnings per diluted share was $1.39 as compared to $1.55, while adjusted earnings per diluted share was $1.63 as compared to $1.70.*
• Total student enrollments at December 31, 2022 decreased by 3.0%. AIUS experienced a 10.8% decrease in total student enrollments that was partially offset by a 2.0% increase at CTU.
• Ended the year with $518.2 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.

Fourth Quarter 2022 Results as Compared to Prior Year Quarter

• Revenue increased 10.2% to $176.1 million, with a 13.1% increase at CTU and a 5.9% increase at AIUS.
• Operating income decreased 34.4% to $22.7 million, while adjusted operating income decreased 22.9% to $32.4 million, primarily due to certain one-time investments within our academic institutions.*
• Earnings per diluted share was $0.23 as compared to $0.35, while adjusted earnings per diluted share was $0.31 as compared to $0.40.*

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

"Overall, we ended 2022 on a positive note as we experienced further improvement in student retention and engagement during the second half of 2022,” said Andrew Hurst, President and Chief Executive Officer. “As we look to 2023, we will continue to optimize investments in technology that will drive operational efficiencies across our academic institutions, while remaining committed to further enhancing student experiences and academic outcomes."

REVENUE

• For the quarter ended December 31, 2022, revenue of $176.1 million increased 10.2% compared to revenue of $159.9 million for the prior year quarter.
• For the year ended December 31, 2022, revenue of $695.2 million increased 0.3% compared to revenue of $693.0 million for the prior year.

(1) Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

TOTAL STUDENT ENROLLMENTS

• As of December 31, 2022, CTU’s total student enrollments increased 2.0%, while AIUS’ total student enrollments decreased 10.8% as compared to the prior year end.

(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 our universities.

OPERATING INCOME

• For the quarter ended December 31, 2022, operating income decreased by 34.4% to $22.7 million as compared to the prior year quarter.

• For the year ended December 31, 2022, operating income decreased by 13.0% to $129.6 million as compared to the prior year.

(1) Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

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 December 31, 2022, adjusted operating income of $32.4 million decreased 22.9% compared to adjusted operating income of $42.0 million for the prior year quarter.

• For the year ended December 31, 2022, adjusted operating income of $164.0 million decreased 6.6% compared to adjusted operating income of $175.5 million for the prior year.

(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 December 31, 2022, the Company recorded:

• Net income of $16.0 million compared to $24.5 million for the prior year quarter.
• Earnings per diluted share of $0.23 compared to $0.35 for the prior year quarter.
• Adjusted earnings per diluted share of $0.31 compared to $0.40 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 ended December 31, 2022, the Company recorded:

• Net income of $95.9 million compared to $109.6 million for the prior year.
• Earnings per diluted share of $1.39 compared to $1.55 for the prior year.
• Adjusted earnings per diluted share of $1.63 compared to $1.70 for the prior year. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

(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) 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 December 31, 2022, net cash provided by operating activities was $40.5 million, compared to net cash provided by operating activities of $46.9 million for the prior year quarter.
• For the year ended December 31, 2022, net cash provided by operating activities was $148.2 million, compared to net cash provided by operating activities of $191.1 million in the prior year.
• At December 31, 2022 and December 31, 2021, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $518.2 million and $499.4 million, respectively.
• For the year ended December 31, 2022, the Company repurchased 2.1 million shares for $23.1 million at an average price of $11.02 as compared to 2.3 million shares for $25.3 million at an average price of $10.94 for the year ended December 31, 2021.

OUTLOOK

The Company is providing the following 2023 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.

(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, 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 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 student loan 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 26.0% for both the first quarter and the 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, February 23, 2023 at 5:30 p.m. Eastern time to discuss fourth quarter and full year 2022 results and 2023 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 1-844-200-6205 (domestic) or 1-929-526-1599 (international). Both dial-in numbers will use the access code 690929. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/456229475. 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 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. 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.

(1) Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.

(1) Results of operations include an acquisition completed on December 1, 2022 within CTU and an acquisition completed on July 1, 2022 within AIUS.