Perdoceo Education Corporation Reports Second Quarter and Year to Date 2024 Results

Increases second quarter per share dividend by 18.2% to $0.13 per share

Perdoceo Education Corporation (NASDAQ:PRDO) today reported operating and financial results for the quarter and year to date ended June 30, 2024.

Second Quarter 2024 Results as Compared to Prior Year Quarter

• Total student enrollments at June 30, 2024 increased by 4.2% supported by a 14.7% increase at CTU that was partially offset with an 18.2% decrease at AIUS.
• Revenue decreased 10.6% to $166.7 million. This decrease was expected and partially due to a lag impact from the operational changes made at AIUS in the prior year.
• Operating income decreased 4.3% to $46.0 million, while adjusted operating income decreased 7.8% to $50.9 million.*
• Earnings per diluted share were $0.57 as compared to $0.80, while adjusted earnings per diluted share were $0.60 as compared to $0.61.*
• Ended the quarter with $675.2 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.
• On July 31, 2024 the Board increased the per share quarterly dividend by 18.2% to $0.13 per share.

Year to Date 2024 Results as Compared to Prior Year to Date

• Revenue decreased 12.3% to $335.0 million, which was in line with management's expectation for a decline.
• Operating income increased 0.9% to $92.3 million, while adjusted operating income decreased 7.3% to $100.4 million.*
• Earnings per diluted share were $1.16 as compared to $1.30, while adjusted earnings per diluted share were $1.21 as compared to $1.19.*

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

"Our second quarter results exceeded expectations, as both of our academic institutions continued to experience high levels of student retention and engagement," said Todd Nelson, President and Chief Executive Officer. "Our year-to-date results and enrollment trends have been supported by various operating process changes and technology upgrades within our onboarding, academic and student support processes. Our faculty and student support staff continue to focus on further enhancing student experiences and academic outcomes and we will continue to make informed investments in technology and student support processes."

REVENUE

• For the quarter ended June 30, 2024, revenue of $166.7 million decreased 10.6% compared to revenue of $186.6 million for the prior year quarter.
• For the year to date ended June 30, 2024, revenue of $335.0 million decreased 12.3% compared to revenue of $382.2 million for the prior year to date.

TOTAL STUDENT ENROLLMENTS

• As of June 30, 2024, CTU's total student enrollments increased 14.7%, while AIUS' total student enrollments decreased
  
  18.2%.

OPERATING INCOME

• For the quarter ended June 30, 2024, operating income decreased by 4.3% to $46.0 million as compared to the prior year quarter.
• For the year to date ended June 30, 2024, operating income increased by 0.9% to $92.3 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, 2024, adjusted operating income of $50.9 million decreased 7.8% compared to adjusted operating income of $55.2 million for the prior year quarter.
• For the year to date ended June 30, 2024, adjusted operating income of $100.4 million decreased 7.3% compared to adjusted operating income of $108.3 million for the prior year to date.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended June 30, 2024, the Company recorded:

• Net income of $38.4 million compared to $54.7 million for the prior year quarter.
• Earnings per diluted share of $0.57 compared to $0.80 for the prior year quarter.
• Adjusted earnings per diluted share of $0.60 compared to $0.61 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, 2024, the Company recorded:

• Net income of $77.9 million compared to $89.2 million for the prior year to date.
• Earnings per diluted share of $1.16 compared to $1.30 for the prior year to date.
• Adjusted earnings per diluted share of $1.21 compared to $1.19 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

QUARTERLY DIVIDEND PAYMENT

On July 31, 2024, the board of directors approved its first dividend increase since implementing its dividend policy last year. The board of directors declared a quarterly dividend of $0.13 per share, an increase of 18.2%, which will be paid on September 13, 2024 for holders of record of common stock as of September 1, 2024. 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 and growing part of its balanced capital allocation strategy that also prioritizes investments in student support and technology projects, while also evaluating acquisitions and share repurchases.

AGREEMENT TO ACQUIRE UNIVERSITY OF ST. AUGUSTINE FOR HEALTH SCIENCES

On July 16, 2024, the Company announced that it has signed a definitive agreement to acquire 100% ownership of the University of St. Augustine for Health Sciences, LLC (USAHS). USAHS is one of the nation's leading universities offering graduate health sciences degrees, primarily in physical therapy, occupational therapy, speech language therapy and nursing, as well as continuing education programs.

Perdoceo expects to pay approximately $142 million to $144 million in cash at closing. The actual cash paid will depend on adjustments for cash, debt and working capital based on the final closing balance sheet. Once completed, the Company expects that the acquisition will support further growth and diversification of its academic program offerings and will mark Perdoceo's foray into health science degrees in a meaningful way. For the year ended December 31, 2023, USAHS had revenues of approximately $170 million, operating income of approximately $35 million and served approximately 4,500 graduate and post-graduate students across multiple health sciences disciplines. Perdoceo expects the transaction to be immediately accretive to the Company's adjusted operating income beginning in 2025.

Please refer to our Form 8-K filed on July 16, 2024 for other details, material terms and other conditions related to the pending acquisition.

BALANCE SHEET AND CASH FLOW

• For the quarter ended June 30, 2024 net cash provided by operating activities was $38.5 million, compared to net cash provided by operating activities of $61.6 million for the prior year quarter.
• For the year to date ended June 30, 2024, net cash provided by operating activities was $93.0 million, compared to net cash provided by operating activities of $66.2 million in the prior year to date.
• As of June 30, 2024 and December 31, 2023, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $675.2 million and $604.2 million, respectively.

OUTLOOK

The Company is providing the following third quarter outlook along with a full year 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.

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 2024 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 additional 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 further 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 28% for the third quarter and approximately 27% for 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 Wednesday, July 31, 2024 at 5:30 p.m. Eastern time to discuss second quarter and year to date 2024 results and 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 1-800-715-9871 (domestic) or 1-646-307-1963 (international). Both dial-in numbers will use the access code 5668214. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/614624375. 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 or our ability to market to and contact prospective students; 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 terms of any potential changes to or conditions imposed on our continued participation in the Title IV programs under new program participation agreements, the new 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 or changing interpretations of existing regulations, guidance or historical practices 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 ability to participate in educational assistance programs for key employers, veterans or other military personnel; our ability to pay dividends on our common stock and execute our stock repurchase program; 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, 2023 and its subsequent filings with the Securities and Exchange Commission.