Perdoceo Education (PRDO) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the fourth quarter of 2025, net income was $35.3 million or $0.54 per diluted share, while adjusted earnings per diluted share increased 20% to $0.59 compared to $0.49 in the prior year [8][15] - Full-year net income was $159.9 million or $2.42 per diluted share, compared to $147.6 million or $2.19 per diluted share in the prior year, with adjusted earnings per diluted share increasing 15.5% to $2.61 from $2.26 [13][29] - Full-year revenue increased 24.2% or $164.8 million to $846.1 million, with operating income growing 12.5% to $196 million and adjusted operating income increasing 25.8% to $237.6 million [14][29] Business Line Data and Key Metrics Changes - Total student enrollments grew 7.3% year-over-year, driven by 11.2% growth at AIUS, 6.6% growth at CTU, and 2.6% growth at St. Augustine [8][17] - CTU's revenue for the full year was $461.6 million, up 4.1% from the prior year, while operating income increased 3.4% to $180.6 million [19] - AIU System reported full-year revenue of $226 million, with operating income increasing 9.8% to $36 million [20] Market Data and Key Metrics Changes - The University of St. Augustine for Health Sciences ended the fall 2025 term with approximately 3,900 total students enrolled, reflecting growth in programs such as nursing and speech-language pathology [19][21] - The corporate student programs continue to provide accredited degree opportunities to employees, enhancing employee development and retention [10] Company Strategy and Development Direction - The company prioritizes student experience and academic outcomes, aiming for sustainable and responsible growth [5][10] - Strategic investments in technology and talent are being made to expand programs and enhance academic outcomes across institutions [10][32] - The company plans to continue investing in marketing and admissions to support future enrollment growth [20][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with positive momentum, expecting continued growth in revenue and operating income [11][29] - The company anticipates that high levels of student retention and engagement will continue into 2026, with prospective student interest expected to increase [30][31] - Management noted that changes in the regulatory environment are not expected to significantly impact prospective student interest or necessitate operational changes [30] Other Important Information - The company returned $157.6 million of capital to shareholders in 2025, including $120.8 million in share repurchases and $36.9 million in dividends [10][11] - A new share repurchase authorization of up to $100 million was approved by the board [11][27] - The effective tax rate for the full year was 26.3%, with expectations for 2026 to be between 23.5% and 24.5% [24][25] Q&A Session Summary Question: What are the expectations for student enrollment growth in 2026? - Management expects total enrollments at CTU to grow in 2026, supported by high levels of prospective student interest and continued investments in marketing and admissions [31] Question: How does the company plan to handle the impact of regulatory changes? - Management believes that there will not be a material impact on prospective students from regulatory changes, including the elimination of certain loan programs [30] Question: What is the outlook for adjusted operating income in 2026? - The company expects adjusted operating income to range between $250 million and $263 million for 2026, reflecting organic revenue and enrollment growth [29]