Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second-quarter operating results exceeded expectations, driven by better-than-expected revenue results.
- High levels of student retention and engagement at both CTU and AIUS, with retention at multi-year highs.
- Board of Directors approved an 18.2% increase in the quarterly per-share dividend amount.
- Acquisition of the University of St. Augustine for Health Sciences, expected to be immediately accretive to adjusted operating income beginning in 2025.
- Total enrollments at CTU grew by 14.7% compared to the prior year quarter end, driven by growth in corporate engagement programs.
Negative Points
- Second-quarter revenue decreased by 10.6% compared to the prior year quarter.
- Total student enrollments at AIUS decreased by 18.2% compared to the prior year quarter end.
- Operating income for the second quarter was $2.1 million lower compared to the prior year quarter.
- Revenue decline at AIUS was only partially offset by lower operating expenses.
- Full-year revenue at CTU is expected to be lower than 2023, primarily due to simplification of professional development offerings.
Q & A Highlights
Q: Can you provide more details on the acquisition of the University of St. Augustine for Health Sciences?
A: Todd Nelson, CEO: The acquisition marks Perdoceo's entry into health sciences, offering graduate degrees in physical therapy, occupational therapy, speech language therapy, and nursing. The deal is valued at approximately $142 million to $144 million and is expected to be immediately accretive to our adjusted operating income starting in 2025.
Q: What drove the better-than-expected second-quarter results?
A: Todd Nelson, CEO: The strong performance was due to higher-than-expected student retention and engagement, particularly at CTU and AIUS. Additionally, our data-driven marketing strategies and adjustments in prospective student outreach contributed to the positive results.
Q: How did student enrollments perform in the second quarter?
A: Ashish Ghia, CFO: Total enrollments at CTU grew by 14.7%, driven by a positive timing impact of the academic calendar and growth in corporate engagement programs. AIUS saw a decline of 18.2%, but this was an improvement from the previous quarter's decline of 22.9%.
Q: What are the expectations for revenue and enrollment growth for the rest of 2024?
A: Ashish Ghia, CFO: We expect revenue to grow in the fourth quarter, offsetting the expected decline in the third quarter. CTU's total enrollments are expected to grow, while AIUS is projected to achieve double-digit enrollment growth by year-end.
Q: Can you elaborate on the changes in marketing and admissions spending?
A: Todd Nelson, CEO: Marketing and admissions spending was lower in the second quarter compared to 2023. We are leveraging data analytics to focus on prospective students who are more likely to succeed and comply with updated federal guidelines.
Q: What is the outlook for adjusted operating income and earnings per share for 2024?
A: Ashish Ghia, CFO: We have raised our full-year 2024 adjusted operating income outlook to $179 million to $190 million, up from the previous range of $175 million to $190 million. Adjusted earnings per diluted share are expected to range between $2.13 and $2.25.
Q: How is Perdoceo utilizing technology to enhance student experiences?
A: Todd Nelson, CEO: We are investing in technology to improve academic experiences and the efficiency of student support functions. This includes data analytics and other tech-driven initiatives aimed at enhancing student retention and engagement.
Q: What are the key factors affecting the financial outlook for the rest of the year?
A: Ashish Ghia, CFO: Key factors include high levels of student retention and engagement, the impact of federal student aid initiatives, and the performance of our corporate engagement programs. We also anticipate selective investments in technology and student support processes.
Q: Can you discuss the dividend increase and capital allocation strategy?
A: Ashish Ghia, CFO: The Board approved an 18.2% increase in the quarterly dividend to $0.13 per share. Our capital allocation strategy prioritizes investments in organic projects, maintaining a strong balance sheet, and evaluating acquisitions to enhance shareholder value.
Q: What are the expected impacts of federal regulations on Perdoceo's operations?
A: Ashish Ghia, CFO: We are closely monitoring new and updated guidance from the Department of Education. Any necessary operational changes to ensure compliance could impact our financial outlook, but we are prepared to adapt as needed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
