Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Perdoceo Education Corp (PRDO, Financial) reported third-quarter net income of $38.3 million, exceeding expectations.
- Total student enrollment at CTU increased by 13.6%, driven by growth in corporate engagement programs.
- The acquisition of the University of St. Augustine is expected to be accretive to adjusted operating income beginning in 2025.
- The company experienced strong levels of student retention and engagement, contributing to positive financial performance.
- Perdoceo Education Corp (PRDO) has a strong cash position, with $722.6 million in cash and equivalents, reflecting an increase of $118.4 million since the end of last year.
Negative Points
- Third-quarter revenue decreased by 5.6% to $169.8 million, primarily due to changes in professional development offerings and academic calendar comparability.
- AIU System's third-quarter revenue was 9% lower than the prior year, impacted by operational changes made last year.
- Full-year revenue at CTU is expected to be lower than 2023 due to the simplification of professional development offerings.
- The effective tax rate for the quarter was 26.9%, reflecting various tax adjustments.
- The acquisition of the University of St. Augustine requires regulatory approvals and is expected to close in December, indicating potential delays.
Q & A Highlights
Q: Can you provide more details on the University of St. Augustine acquisition and its expected impact?
A: Todd Nelson, CEO, explained that the acquisition marks Perdoceo's entry into the health sciences field, significantly increasing the number of students served, especially at the master's degree level and higher. The acquisition is expected to be accretive to adjusted operating income beginning in 2025 and will support growth and diversification of academic program offerings.
Q: What are the main drivers behind the strong student retention and engagement levels?
A: Todd Nelson, CEO, attributed the strong retention and engagement to dedicated faculty and student support teams, as well as positive impacts from federal student aid initiatives. The company continues to leverage data analytics to improve marketing strategies and identify prospective students likely to succeed.
Q: How did the third quarter financial results compare to expectations?
A: Ashish Ghia, CFO, reported that third-quarter results exceeded expectations with net income of $38.3 million or $0.57 per diluted share. Adjusted earnings per diluted share were $0.59, surpassing the outlook of $0.52 to $0.54. Total enrollments grew 13.6% at CTU and 4% at AIUS.
Q: What is the outlook for the fourth quarter and full year 2024?
A: Ashish Ghia, CFO, stated that for the fourth quarter, the company expects adjusted operating income to range between $39 million and $42 million, with adjusted earnings per diluted share between $0.46 and $0.49. For the full year, adjusted operating income is expected to range between $188 million and $191 million, with adjusted earnings per diluted share between $2.25 and $2.28.
Q: How is Perdoceo managing its capital allocation strategy?
A: Ashish Ghia, CFO, mentioned that the company continues to prioritize investments in technology-related initiatives, maintain a strong balance sheet, and evaluate strategies to enhance shareholder value, including acquisitions. The Board approved a third-quarter dividend payment of $0.13 per share, reflecting an increase from the prior year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
