Thursday, November 14, 2024

Q3 2024 Perdoceo Education Corp Earnings Call

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Nick Nelson

Todd Nelson; President, Chief Executive Officer, Director; Perdoceo Education Corp

Ashish Ghia; Chief Financial Officer, Senior Vice President, Treasurer; Perdoceo Education Corp

Operator

Thank you for standing by. My name is Gael, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Perdoceo Education Corporation third-quarter 2024 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Nick Nelson, Investor Relations. You may begin.

Nick Nelson

Thank you, operator. Good afternoon, everyone, and thank you for joining us on our third-quarter 2024 earnings call. With me on the call today is Todd Nelson, President and Chief Executive Officer, and Ashish Ghia, Chief Financial Officer.
This conference call is being webcast live within our Investor Relations section at perdoceoed.com. A webcast replay will also be available on our site, and you can always contact the Alpha IR Group for investor relations support.
Let me remind you that this afternoon’s earnings release and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions made by and information currently available to Perdoceo Education and involve risks and uncertainties that could cause actual future results, performance, business prospects, and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include, but are not limited to, those factors identified in Perdoceo’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Except, as expressly required by these securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments, or changed circumstances, or for any other reason.
In addition, today’s remarks refer to non-GAAP financial measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The earnings release that accompanies today’s call contains financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures, and is available within the Investor Relations page of the company’s website.
With that, I’d like to turn the call over to Todd Nelson. Todd.

Todd Nelson

Thank you, Nick. Good afternoon, everyone, and thank you for joining us for our third-quarter 2024 earnings call. I’ll discuss some key highlights for the quarter. Ashish will then review our operating and financial performance and discuss our outlook for the year. However, before we begin, I’d like to thank our faculty, student support staff, and all other employees for their ongoing commitment and hard work in serving and educating our students.
We continue to experience strong levels of student retention and engagement across both our academic institutions. As a result, third quarter-operating results came in ahead of our expectations discussed on the last earnings call.
Let me now review some of the key observations and general highlights. We continue to experience high levels of student retention and engagement at both CTU and AIUS, with retention remaining at multi-year highs. Our faculty and student support teams remain dedicated to educating and serving our students, while serving federal student aid initiatives have also had a positive impact on our retention.
Marketing expenditures for the quarter were higher as compared to the prior year, as operations within AIUS reverted to normalized levels as compared to the prior year quarter. We continue to leverage data analytics over various marketing strategies to further improve our focus on identifying prospective students who are more likely to succeed at one of our student universities, while also complying with and adapting to updated expectations from various federal agencies around prospective student outreach.
Our commitment to enhancing students’ academic experiences and student support services through technology remains a priority. We see technology as a key driver of our success, and are dedicated to making targeted investments while exploring AI-based solutions across various student support processes.
Lastly, a quick update on the pending acquisition for the University of St. Augustine. The acquisition marks Perdoceo’s foray into the health sciences field in a meaningful way as it will significantly increase the number of students we serve in the field, especially at the master’s degree level and higher.
The acquisition will also support further growth and diversification of our academic program offerings. We expect the acquisition to be accretive to our adjusted operating income beginning in 2025 and are excited with the potential growth opportunities that it will bring to Perdoceo in years to come.
A quick note on the operating results. Third-quarter results exceed our expectations as we are reported net income of $38.3 million or $0.57 per diluted share. While adjusted earnings per diluted share, which excludes certain non-cash items, were $0.59, as compared to our outlook of $0.52 to $0.54.
From a student enrollment perspective, total enrollments for the third quarter grew 13.6% at CTU, driven by a positive timing impact over academic calendar, as well as growth in corporate engagement programs. As previously discussed, AIUS reverted to normalized operations during the fourth quarter of 2023, and consistent with our expectations, after several quarters of experience of decline, total enrollments for the third quarter grew by 4%. We also expect to show total student enrollment growth for the fourth quarter at AIUS.
In closing, we remain focused on serving our students while further enhancing academic outcomes and student experiences. We are pleased with total enrollment growth across both our academic institutions and expect to close the year on a high note as it relates to student retention and engagement.
With that said, I’d like to turn the call over to Ashish for a more comprehensive review of our operating and financial performance. Ashish?

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