Perdoceo Education (US:PRDO)2024-07-31 20:16Enrollment Trends - Total student enrollments increased by 4.2% as of June 30, 2024, with Colorado Technical University (CTU) up 14.7% and American InterContinental University System (AIUS) down 18.2%[56] - Total student enrollments increased by 4.2% to 39,600 as of June 30, 2024, compared to 38,000 in the prior year[72] Revenue and Income - Revenue for the current quarter decreased by 10.6% or $19.8 million compared to the prior year quarter, with CTU down 5.4% or $6.5 million and AIUS down 19.9% or $13.3 million[57] - Adjusted operating income was $50.9 million for the current quarter compared to $55.2 million for the prior year quarter[57] - Net income for Q2 2024 was $38,429, a decrease of 29.7% compared to $54,673 in Q2 2023[61] - Total revenue for Q2 2024 decreased by 10.6% to $166.74 million from $186.56 million in Q2 2023[61] - Adjusted Operating Income for Q2 2024 was $50,890, down 7.3% from $55,172 in Q2 2023[58] Operational Performance - Operating income for the current quarter decreased to $46.0 million from $48.1 million in the prior year quarter[57] - Current quarter operating income decreased by 4.3% or $2.1 million, while year to date operating income increased by 0.9% or $0.9 million compared to the prior year period[67] - The company anticipates continued revenue challenges due to operational changes and enrollment trends[62] Expenses and Cost Management - Total general and administrative expenses for Q2 2024 were $89,311, down 11.2% from $100,588 in Q2 2023[64] - Educational services and facilities expense decreased by 16.0% to $27,516 in Q2 2024 from $32,748 in Q2 2023[63] - Bad debt expense for Q2 2024 was $6,075, a decrease of 25.6% compared to $8,170 in Q2 2023[64] - General and administrative expenses decreased by 11.2% or $11.3 million for the current quarter and 17.1% or $36.5 million year to date compared to the prior year periods[65] - Total bad debt expense improved by 25.6% or $2.1 million for the current quarter and 33.3% or $6.3 million year to date compared to the prior year periods[66] Tax and Regulatory Environment - The effective tax rate for Q2 2024 was 27.5%, compared to 26.7% in Q2 2023[61] - The effective tax rate for the quarter ended June 30, 2024, was 27.5%, compared to 26.7% for the prior year quarter[68][69] - The company operates in a highly regulated environment, facing scrutiny from various governmental and consumer advocacy groups[53] - Regulatory changes have led to operational adjustments at AIUS, impacting prospective student enrollment and marketing strategies[53] Future Outlook and Investments - The company anticipates strong levels of student retention and engagement to continue through the remainder of 2024[56] - The company expects full year revenue for 2024 to be lower primarily due to the lag impact on revenue from lower beginning total student enrollments at AIUS[56] - The company is committed to investing in technology to enhance the educational experience and improve operational efficiency[56] Cash Flow and Financial Position - Cash balances totaled $675.2 million as of June 30, 2024, with expectations to generate cash during the remainder of 2024[75] - Net cash flows provided by operating activities increased to $93.0 million for the year to date ended June 30, 2024, compared to $66.2 million for the same period in 2023, primarily due to timing differences in cash inflows related to academic session start dates[76] - Net cash flows used in investing activities totaled $60.1 million for the year to date ended June 30, 2024, up from $30.5 million in 2023, with a net cash outflow from purchases and sales of available-for-sale investments of $58.1 million[77] - Net cash flows used in financing activities increased to $23.0 million for the year to date ended June 30, 2024, compared to $4.6 million in 2023, including share repurchase payments of $6.8 million[78] Student Financials - Student receivables, net increased by 19% to $34.855 million as of June 30, 2024, from $29.398 million at December 31, 2023, driven by timing of academic terms and increased student enrollments[80] - Deferred revenue rose by 49% to $55.390 million as of June 30, 2024, compared to $37.215 million at December 31, 2023, influenced by academic term timing and enrollment growth[80] - Payroll and related benefits decreased by 23% to $25.295 million as of June 30, 2024, from $32.684 million at December 31, 2023, due to annual incentive compensation payments[81] - Income taxes increased by 64% to $6.502 million as of June 30, 2024, compared to $3.974 million at December 31, 2023, primarily related to estimated federal and state income tax payments for 2024[81] Stock and Borrowing - The Board of Directors approved a new stock repurchase program for up to $50.0 million, effective from March 1, 2024, to September 30, 2025[75] - The company has no outstanding borrowings under its credit facility as of June 30, 2024, with interest rates subject to a minimum of 3.0%[83] - The company believes that exposure to adverse changes in interest rates applicable to investments or borrowings is not significant, with a 10% change in interest rates not materially impacting future earnings or cash flows[83] Accreditation - The Higher Learning Commission reaffirmed AIUS' accreditation, with the next review scheduled for 2033-2034[59] Operating Margin - Operating margin for the total company improved to 27.6% in the current quarter from 25.8% in the prior year quarter[70]