Perdoceo Education (PRDO) - 2025 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements Unaudited Q1 2025 statements show significant revenue and net income growth driven by the USAHS acquisition, with total assets growing to $1.27 billion and increased stockholders' equity Condensed Consolidated Balance Sheets Total assets reached $1.269 billion as of March 31, 2025, driven by higher cash and receivables, while total stockholders' equity increased to $970.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $686,004 | $640,154 | | Total assets | $1,268,544 | $1,237,034 | | Total current liabilities | $153,960 | $132,162 | | Total liabilities | $298,289 | $277,498 | | Total stockholders' equity | $970,255 | $959,536 | Condensed Consolidated Statements of Income Q1 2025 revenue grew 26.6% year-over-year to $213.0 million, driving a 10.8% increase in net income to $43.7 million, or $0.65 per diluted share Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $213,004 | $168,264 | | Operating Income | $51,727 | $46,278 | | Net Income | $43,688 | $39,442 | | Net Income Per Share - Diluted | $0.65 | $0.59 | Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $65.1 million in Q1 2025, while financing activities used $44.4 million for share repurchases and dividends Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65,127 | $54,492 | | Net cash provided by (used in) investing activities | $1,182 | $(30,801) | | Net cash used in financing activities | $(44,413) | $(15,881) | | Net increase in cash | $21,896 | $7,810 | Notes to Unaudited Condensed Consolidated Financial Statements Key notes detail the $137.0 million USAHS acquisition, segment revenue, a new DOJ Civil Investigative Demand, and share repurchase activity - On December 2, 2024, the Company acquired the University of St. Augustine for Health Sciences (USAHS) for a preliminary purchase price of $137.0 million[25][27] - On September 7, 2024, the Company received a new Civil Investigative Demand (CID) from the DOJ regarding CTU's admissions staff compensation practices and its Fast Track credit program[65] - During Q1 2025, the company repurchased approximately 1.0 million shares for $25.2 million under its stock repurchase program, with $21.9 million remaining available for repurchase as of March 31, 2025[82][83] Q1 2025 Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue | | :--- | :--- | | CTU | $119,579 | | AIUS | $54,059 | | USAHS | $39,183 | | Corporate and Other | $183 | | Total | $213,004 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 26.6% Q1 revenue growth to the USAHS acquisition and strong CTU performance, with total student enrollment growing 16.7% and maintaining a strong liquidity position Overview Total student enrollment rose 16.7% in Q1 2025, driven by CTU growth and the USAHS acquisition, leading to a 26.6% revenue increase and higher adjusted operating income Total Student Enrollments as of March 31 | Segment | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | CTU | 33,400 | 30,200 | 10.6% | | AIUS | 10,600 | 11,100 | -4.5% | | USAHS | 4,200 | - | NM | | Total | 48,200 | 41,300 | 16.7% | Q1 Financial Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Income | $51,727 | $46,278 | | Adjusted Operating Income | $63,534 | $49,294 | Consolidated Results of Operations Consolidated Q1 2025 revenue rose 26.6% due to the USAHS acquisition, which also drove higher operating expenses, resulting in an 11.8% increase in operating income - Revenue for Q1 2025 increased by 26.6% or $44.7 million compared to the prior year, primarily driven by the acquisition of USAHS[117] - Depreciation and amortization expense increased by $8.8 million, driven by the USAHS acquisition, which includes amortization for definite-lived intangible assets and finance leases[125] - The effective tax rate for Q1 2025 was 22.7%, down from 25.4% in Q1 2024, primarily due to a larger benefit from the tax effect of stock-based compensation[127] Segment Results of Operations CTU revenue and operating income grew, AIUS operating income rose despite a slight revenue dip, and the new USAHS segment contributed $39.2 million in revenue Q1 2025 Segment Performance (in thousands) | Segment | Revenue | Operating Income (Loss) | Operating Margin | | :--- | :--- | :--- | :--- | | CTU | $119,579 | $46,097 | 38.5% | | AIUS | $54,059 | $11,884 | 22.0% | | USAHS | $39,183 | $(330) | -0.8% | | Corporate and other | $183 | $(5,924) | NM | Liquidity, Financial Position and Capital Resources The company maintains a strong liquidity position with $612.2 million in cash and investments, funding operations and shareholder returns with $65.1 million in Q1 operating cash flow - As of March 31, 2025, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $612.2 million[139] - Net cash from operating activities totaled $65.1 million for Q1 2025, up from $54.5 million in Q1 2024[145] - The company expects capital expenditures for the full year 2025 to be between 1.0% and 2.0% of revenue[150] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is limited interest rate exposure on its investment portfolio, which is not considered material to earnings or cash flows - The company's main market risk is from changes in interest rates on its investments, but it believes the exposure is not significant[158] - A hypothetical 100 basis point increase or decrease in average interest rates would not have a material impact on future earnings, fair values, or cash flows[159] Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that as of March 31, 2025, disclosure controls and procedures were effective[161] - No changes occurred in internal control over financial reporting during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[163] PART II—OTHER INFORMATION Legal Proceedings This section refers to Note 9, 'Contingencies,' for detailed information on the company's ongoing legal matters - Information regarding legal proceedings is provided in Note 9 "Contingencies" to the unaudited condensed consolidated financial statements[167] Risk Factors This section refers to the company's 2024 Form 10-K for a comprehensive discussion of risk factors affecting the business - The company refers readers to the Risk Factors section of its 2024 Form 10-K for a discussion of factors that could affect its business[168] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 985,000 shares in Q1 2025 under its publicly announced stock repurchase program - A stock repurchase program authorizing up to $50.0 million was approved on February 20, 2024, and commenced on March 1, 2024[169][172] Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | Jan 2025 | - | $ - | - | | Feb 2025 | 350,000 | $25.81 | 350,000 | | Mar 2025 | 941,657 | $25.17 | 635,000 | | Total | 1,291,657 | | 985,000 | Exhibits This section lists all filed exhibits, including Sarbanes-Oxley certifications and Inline XBRL data files - The exhibit list includes CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act and XBRL filings[173][178]