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Perdoceo Education (PRDO) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2021, the company reported net income of $27.8 million or $0.39 per diluted share, while adjusted earnings per diluted share was $0.45, an increase from $0.35 in the prior year [9][23] - Revenue for the quarter increased to $174 million compared to $169.1 million, driven by growth at CTU, partially offset by a decline at AIU [24] - Adjusted operating income increased by 28.4% to $46.3 million for the quarter versus $36.1 million in the prior year [22] Business Line Data and Key Metrics Changes - Total student enrollments at CTU increased by 7.5%, while revenue increased by 5.9% to $104.8 million [24] - At AIU, total student enrollments decreased by 11.6%, and revenue decreased by 1.6% to $68.9 million, although operating income increased by 51.2% to $8.3 million due to lower marketing and admission expenses [25] Market Data and Key Metrics Changes - Total student enrollments across the company decreased by 0.9% compared to the previous year, with CTU's growth offsetting declines at AIU [15] - Triton University continued to be impacted by technical challenges related to the Army education and registration portal, affecting its military-affiliated student population [16] Company Strategy and Development Direction - The company is focusing on enhancing student experiences through investments in technology and marketing adjustments aimed at improving student retention and academic outcomes [8][13] - Recent acquisitions of DigitalCrafts and Hippo Education are expected to expand the company's non-degree portfolio and provide growth opportunities [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that the prolonged pandemic has impacted student engagement, with some students pausing their academic programs [12] - There is cautious optimism regarding enrollment trends, with positive signs observed in September and October sessions [12] Other Important Information - The company ended the quarter with $481 million in cash and equivalents, an increase of approximately $70.6 million over year-end 2020 [30] - Capital expenditures for Q3 were approximately $3.2 million, with expectations to maintain around 2% of revenues for full-year 2021 [33] Q&A Session Summary Question: Adjustments to marketing and admissions - Management explained that adjustments were made to marketing expenses to better target prospective students, with a focus on those likely to succeed [44][46] Question: Enrollment softness and its causes - Management acknowledged that external factors, including financing and pandemic-related issues, have led to delays in students' decisions to start classes [49] Question: Impact of academic calendar redesign - The positive enrollment growth at CTU was significantly attributed to the academic calendar redesign, although exact impacts without the redesign were not calculated [52][53] Question: Profitability of recent acquisitions - The recent acquisitions are expected to be cash flow neutral or slightly positive, but specific EBITDA information was not disclosed [54][55] Question: Fourth-quarter guidance and revenue timing - Management indicated that the fourth-quarter guidance reflects potential timing differences in revenue recognition, particularly influenced by the academic calendar [57][59]