Perdoceo Education (PRDO) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $28.2 million or $0.40 per diluted share, with adjusted earnings per diluted share at $0.41, reflecting a 20.6% increase from the prior year [10][21] - Adjusted operating income increased by 27.2% to $41.7 million, primarily due to revenue growth at both universities [10][20] - Total company revenue increased by $19.6 million or 12.5% to $176 million compared to the prior year quarter [23] Business Line Data and Key Metrics Changes - At CTU, revenue was up $3.6 million or 3.8% to $100.2 million, with operating income rising to $33.1 million from $12.1 million in the prior year [23][25] - AIU's revenue increased by 26.7% to $75.8 million, with operating income of $10.5 million compared to an operating loss of $4.2 million in the prior year [25][26] - Total enrollments at CTU grew by 4%, while AIU saw a 52.7% increase in total enrollments, with new student enrollments up 118.8% for the quarter [11][14][28] Market Data and Key Metrics Changes - The corporate partnerships contributed significantly to enrollment growth at CTU, with a dedicated team working to serve these organizations [13] - The company noted that many corporate partners are in sectors like technology and healthcare, which have remained stable during the economic downturn [63] Company Strategy and Development Direction - The company is focused on sustainable and responsible growth, with ongoing investments in technology and student-serving initiatives [34][36] - The integration of Trident University is expected to enhance educational offerings and operational efficiencies, providing a diversification of educational models [17][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to provide a safe learning environment during the pandemic, highlighting the effectiveness of their technology infrastructure [39] - The outlook for 2020 maintains adjusted operating income in the range of $151 million to $155 million, reflecting a commitment to growth despite pandemic-related challenges [36] Other Important Information - The company ended the quarter with $345.8 million in cash and equivalents, an increase of $51.6 million over year-end 2019 [32] - The acquisition of Trident University was completed for a cash purchase price of $43.8 million, which is expected to contribute positively to future results [33] Q&A Session Summary Question: Thoughts on counter-cyclicality of enrollment in higher education - Management noted consistent demand for education, with some areas seeing a pickup in interest due to economic conditions [42] Question: Experience with conversion of demand - Conversion rates have remained consistent, although funding challenges may impact some prospective students [43][44] Question: Addressing concerns from a negative article - Management clarified that past FTC and VA issues were related to external aggregators and emphasized their robust compliance processes [48][50] Question: Current bad debt as a percentage of revenue - Bad debt for the quarter is reported at 7%, which is an improvement from the prior year [54] Question: Organic growth excluding Trident - Management indicated strong growth at AIU, with significant new student enrollment growth even when accounting for the additional enrollment days [58] Question: Corporate partners' interest and remote training opportunities - No known pullbacks from corporate partners, with many in stable industries, and the company sees remote learning as a strength [63][64]