Perdoceo Education (US:PRDO)2025-11-04 21:03Enrollment Growth - Total student enrollments increased by 15.1% as of September 30, 2025, compared to the same date in 2024, primarily driven by the USAHS acquisition and enrollment growth at CTU [120] - CTU's total student enrollments increased by 6.7% compared to the prior year quarter, supported by high levels of student retention and engagement [120] - AIUS experienced a decrease in total student enrollments by 2.9% compared to the prior year quarter, attributed to a lower number of enrollment days [120] - Total student enrollments increased by 15.1% to 46,520 as of September 30, 2025, with CTU enrollment growing by 6.7% [155] Revenue and Income - Revenue for the current quarter increased by 24.8% or $42.0 million compared to the prior year quarter, mainly due to $38.0 million of revenue from the USAHS acquisition [123] - Total revenue for the quarter ended September 30, 2025, increased by 24.8% or $42.0 million compared to the prior year, driven primarily by the acquisition of USAHS [139] - Operating income for the current quarter rose to $51.0 million, up from $44.8 million in the prior year quarter, driven by increased operating income within CTU and AIUS [124] - Operating income for the quarter was $50.96 million, a 13.8% increase from the previous year [137] - Adjusted operating income for the current quarter was $61.0 million, compared to $47.8 million for the prior year quarter [125] - Adjusted earnings per diluted share for the current quarter was $0.65, up from $0.59 in the prior year quarter [127] Expenses - Educational services and facilities expense for the current quarter increased by 73.7% or $20.9 million, attributed to a full quarter of expenses related to the USAHS acquisition [140] - General and administrative expense for the current quarter rose by 8.6% or $8.1 million, largely due to expenses related to the USAHS acquisition [141] - Advertising and marketing expenses increased by 10.4% or $2.8 million for the current quarter, primarily due to the USAHS acquisition [142] - Admissions expenses rose by 8.8% or $1.8 million for the current quarter, also influenced by the USAHS acquisition [143] - Administrative expenses increased by 11.4% or $4.3 million for the current quarter and 12.5% or $14.3 million year to date, primarily due to expenses related to the USAHS acquisition [144] - Depreciation and amortization expenses increased by $7.0 million for the current quarter and $22.8 million year to date, driven by the USAHS acquisition [148] Cash Flow and Financing - Net cash flows from operating activities increased to $185.1 million for the year to date ended September 30, 2025, compared to $144.0 million for the same period in 2024, driven by increased operating income [172] - Net cash flows used in investing activities totaled $29.8 million for the year to date ended September 30, 2025, a significant change from a net cash inflow of $7.3 million in the prior year [176] - Net cash flows used in financing activities totaled $106.3 million for the year to date ended September 30, 2025, up from $31.5 million in the prior year, with share repurchases accounting for $66.7 million [179] - Cash balances totaled $668.6 million as of September 30, 2025, with restricted cash of $21.3 million related to a letter of credit for USAHS [164] Tax and Regulatory Environment - The effective tax rate for the quarter was 28.9%, compared to 26.9% in the prior year [137] - The effective tax rate for the current quarter was 28.9%, with an expected full-year rate between 26.0% and 26.5% [150] - The company is actively engaging with private lending institutions to assess the impact of new federal loan limits on funding availability for students [130] - Uncertainty remains regarding which programs will qualify for higher federal loan funding under the new regulations, potentially affecting student enrollments and profitability [135] - The company is highly dependent on Title IV Program funds for operations, with potential impacts on financial performance due to changes in student enrollment and funding eligibility [171] Stock and Dividends - The company approved a new stock repurchase program for up to $75.0 million, effective from July 31, 2025, to January 31, 2027 [168] - As of September 30, 2025, the company repurchased 2.3 million shares for $66.7 million at an average price of $29.07 per share, with approximately $54.3 million remaining under the current stock repurchase program [169] - The Board of Directors declared a quarterly dividend of $0.15 per share, to be paid on December 12, 2025, indicating a commitment to a balanced capital allocation strategy [170] Other Financial Metrics - Net income for the quarter ended September 30, 2025, was $39.85 million, representing an increase of 4.2% compared to the prior year [137] - Total bad debt expense decreased by 9.4% or $0.8 million for the current quarter and 2.0% or $0.4 million year to date, driven by decreases at AIUS [146] - Corporate and Other operating loss improved by 27.7% or $2.3 million for the current quarter and 26.2% or $6.1 million year to date, due to lower acquisition-related expenses [162] - Student receivables increased by 81% to $41.3 million as of September 30, 2025, driven by the timing of student billings [182] - Accrued expenses for income taxes rose by 117% to $10.7 million, primarily related to estimated payments for 2025 [183] - Interest rate exposure is managed with no derivative financial instruments, and a 100 basis point change in interest rates would not materially impact future earnings or cash flows [186]