Perdoceo Education Corporation Reports Third Quarter and Year to Date 2024 Results

Business Wire

Tue, Nov 12, 2024, 2:01 PM 12 min read

Total student enrollments increased by 11.0% supported by a 13.6% increase at CTU and a 4.0% increase at AIUS.
Operating income increased 4.0% to $44.8 million, while adjusted operating income increased 2.8% to $48.6 million.*
As expected, revenue for the quarter was lower by 5.6% due to the lag impact from the 2023 operational changes at AIUS and simplification of our professional development offerings at CTU.
Earnings per diluted share were $0.57 as compared to $0.62, while adjusted earnings per diluted share were $0.59 as compared to $0.64.* The prior year quarter earnings per diluted share included a non-recurring tax benefit.
Ended the quarter with $722.6 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments.

Year to Date 2024 Results as Compared to Prior Year to Date

Operating income increased 1.9% to $137.1 million, while adjusted operating income decreased 4.2% to $149.0 million.*
As expected, revenue decreased 10.2% to $504.8 million, driven by the lag impact from the 2023 operational changes at AIUS and simplification of our professional development offerings at CTU.
Earnings per diluted share were $1.73 as compared to $1.92, while adjusted earnings per diluted share were $1.80 as compared to $1.83.* The prior year quarter earnings per diluted share included a non-recurring tax benefit.

*See GAAP (U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release

"Operating performance for the quarter was ahead of our expectations as both academic institutions continued to experience strong student retention and engagement through the quarter," said Todd Nelson, President and Chief Executive Officer. "We remain committed to making investments in our student support teams and technology that will further enhance academic outcomes. We are on track to close the acquisition of University of St. Augustine in December and are excited about the opportunity to significantly increase the number of students we serve in the health science field."

REVENUE

For the quarter ended September 30, 2024, revenue of $169.8 million decreased 5.6% compared to revenue of $179.9 million for the prior year quarter.
For the year to date ended September 30, 2024, revenue of $504.8 million decreased 10.2% compared to revenue of $562.1 million for the prior year to date.

	For the Quarter Ended September 30,							For the Year to Date Ended September 30,
Revenue ($ in thousands)	2024		2023		% Change			2024		2023		% Change
CTU	$	115,742	$	120,552		-4.0	%	$	342,139	$	364,336		-6.1	%
AIUS		53,887		59,226		-9.0	%		162,114		197,128		-17.8	%
Corporate and Other		199		145	NM				579		621	NM
Total	$	169,828	$	179,923		-5.6	%	$	504,832	$	562,085		-10.2	%

TOTAL STUDENT ENROLLMENTS

As of September 30, 2024, CTU’s total student enrollments increased 13.6%, while AIUS’ total student enrollments increased 4.0% as compared to September 30, 2023.

	At September 30,
Total Student Enrollments⁽¹⁾	2024		2023		% Change
CTU		30,000		26,400		13.6	%
AIUS		10,400		10,000		4.0	%
Total		40,400		36,400		11.0	%

(1)	Total student enrollments do not include learners participating in: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at the Company's universities.

OPERATING INCOME

For the quarter ended September 30, 2024, operating income increased by 4.0% to $44.8 million as compared to the prior year quarter.

For the year to date ended September 30, 2024, operating income increased by 1.9% to $137.1 million as compared to the prior year to date.

	For the Quarter Ended September 30,									For the Year to Date Ended September 30,
Operating Income ($ in thousands)	2024			2023			% Change			2024			2023			% Change
CTU	$	44,199		$	34,491			28.1	%	$	129,245		$	118,632			8.9	%
AIUS		9,063			15,602			-41.9	%		31,275			44,683			-30.0	%
Corporate and Other		(8,468	)		(7,020	)		-20.6	%		(23,442	)		(28,812	)		18.6	%
Total	$	44,794		$	43,073			4.0	%	$	137,078		$	134,503			1.9	%

ADJUSTED OPERATING INCOME

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant and non-cash items, as a means to understand the performance of its operations. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the quarter ended September 30, 2024, adjusted operating income of $48.6 million increased 2.8% compared to adjusted operating income of $47.2 million for the prior year quarter.
For the year to date ended September 30, 2024, adjusted operating income of $149.0 million decreased 4.2% compared to adjusted operating income of $155.5 million for the prior year to date.

	For the Quarter Ended September 30,					For the Year to Date Ended September 30,
Adjusted Operating Income ($ in thousands)	2024			2023		2024			2023
Operating income	$	44,794		$	43,073	$	137,078		$	134,503
Depreciation and amortization		3,053			3,914		9,138			13,438
Legal fee expense related to certain matters ⁽¹⁾		719			246		2,764			7,574
Adjusted Operating Income	$	48,566		$	47,233	$	148,980		$	155,515

Increase (Decrease)		*2.8*	%				*-4.2*	%

(1)	Legal fee expense associated with (i) responses to the Department of Education (the "Department") relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

NET INCOME AND EARNINGS PER DILUTED SHARE

For the quarter ended September 30, 2024, the Company recorded:

Net income of $38.3 million compared to $41.3 million for the prior year quarter.
Earnings per diluted share of $0.57 compared to $0.62 for the prior year quarter.
Adjusted earnings per diluted share of $0.59 compared to $0.64 for the prior year quarter. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

For the year to date ended September 30, 2024, the Company recorded:

Net income of $116.1 million compared to $130.5 million for the prior year to date.
Earnings per diluted share of $1.73 compared to $1.92 for the prior year to date.
Adjusted earnings per diluted share of $1.80 compared to $1.83 for the prior year to date. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2024			2023			2024			2023

Reported Earnings Per Diluted Share	$	0.57		$	0.62		$	1.73		$	1.92

Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets		0.02			0.03			0.06			0.09
Legal fee expense related to certain matters ⁽¹⁾		0.01			-			0.04			0.11
Gain on sale of intangible asset		-			-			-			(0.32	)
Tax effect of adjustments ⁽²⁾		(0.01	)		(0.01	)		(0.03	)		0.03
Adjusted Earnings Per Diluted Share	$	0.59		$	0.64		$	1.80		$	1.83

(1)	Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

(2)	The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

QUARTERLY DIVIDEND PAYMENT

On November 12, 2024, the board of directors declared a quarterly dividend of $0.13 per share, which will be paid on December 13, 2024 for holders of record of common stock as of December 2, 2024. Any decision to pay future cash dividends, however, will be made by the board of directors and depend on the Company’s available retained earnings, financial condition and other relevant factors. The Company expects quarterly dividend payments to be an integral and growing part of its balanced capital allocation strategy that also prioritizes investments in student support and technology projects, while also evaluating acquisitions and share repurchases.

BALANCE SHEET AND CASH FLOW

For the quarter ended September 30, 2024 net cash provided by operating activities was $51.0 million, compared to net cash provided by operating activities of $32.6 million for the prior year quarter.
For the year to date ended September 30, 2024, net cash provided by operating activities was $144.0 million, compared to net cash provided by operating activities of $98.8 million in the prior year to date.
As of September 30, 2024 and December 31, 2023, cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $722.6 million and $604.2 million, respectively.

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
Selected Cash Flow Items ($ in thousands)	2024		2023		% Change		2024		2023		% Change
Net cash provided by operating activities	$	50,978	$	32,613		56.3%	$	143,995	$	98,833		45.7%
Capital expenditures	$	975	$	1,189		-18.0%	$	2,997	$	4,801		-37.6%

OUTLOOK

The Company is increasing its full year outlook while also providing the following fourth quarter outlook, subject to the key assumptions identified below. Please see the GAAP to non-GAAP reconciliation for adjusted operating income and adjusted earnings per diluted share attached to this press release for further details.

	Total Company Outlook
	For Quarter Ending December 31,		For the Year Ending December 31,
	OUTLOOK	ACTUAL	OUTLOOK	ACTUAL
	2024	2023	2024	2023
Operating Income	$33.0M - $36.0M	$15,943	$170.1M - $173.1M	$150,446
Depreciation and amortization	$5.5M	3,449	$14.6M	16,887
Legal fee expense related to certain matters ⁽¹⁾	$0.5M	5	$3.3M	7,579
Adjusted Operating Income	$39.0M - $42.0M	$19,397	$188.0M - $191.0M	$174,912

Earnings Per Diluted Share	$0.43 - $0.46	$0.26	$2.15 - $2.18	$2.18
Amortization of acquired intangible assets	$0.03	$0.02	$0.09	$0.11
Legal fee expense related to certain matters ⁽¹⁾	$0.01	-	$0.05	$0.11
Gain on sale of intangible asset	-	-	-	($0.32)
Tax effect of adjustments	($0.01)	($0.01)	($0.04)	$0.02
Adjusted Earnings Per Diluted Share	$0.46 - $0.49	$0.27	$2.25 - $2.28	$2.10

(1)	Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and earnings per diluted share, which is the most directly comparable GAAP measure to adjusted earnings per diluted share, may not follow the same trends stated in the outlook above because of adjustments made for certain significant and non-cash items. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2024 are based on the following key assumptions and factors, among others: (i) prospective student interest in the Company’s programs and trends in student retention and engagement remain consistent with management’s estimates, (ii) no significant additional impact of new or proposed regulations, including recent Department negotiated rulemaking initiatives, or other adverse changes in the legal or regulatory environment, which may require further operational changes in the way the Company’s academic institutions enroll, support and educate current and prospective students, among other impacts, (iii) no significant operating impacts from the settlements with the U.S. Federal Trade Commission and state attorneys general or other legal or regulatory matters, (iv) the impact from student loan initiatives implemented by the current administration remains consistent with management's estimates, (v) earnings per diluted share outlook assumes an effective income tax rate of approximately 26% for the fourth quarter and approximately 26.5% for the full year, and (vi) excludes any future impact from the Company’s stock repurchase program. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current and future circumstances and actions that may be undertaken, actual results could differ materially from these estimates. In addition, decisions the Company makes in the future as it continues to evaluate diverse strategies to enhance stockholder value may impact the outlook provided above.

CONFERENCE CALL INFORMATION

Perdoceo Education Corporation will host a conference call on Tuesday, November 12, 2024 at 5:00 p.m. Eastern time to discuss third quarter and year to date 2024 results and outlook. Interested parties can access the live webcast of the conference call at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-800-715-9871 (domestic) or 1-646-307-1963 (international). Both dial-in numbers will use the access code 4671240. Viewers can also access the conference call by following this link https://events.q4inc.com/attendee/345979070. Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.perdoceoed.com in the Investor Relations section of the website.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s accredited academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The Company’s academic institutions – Colorado Technical University ("CTU") and the American InterContinental University System ("AIUS" or "AIU System") – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Perdoceo’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce. For more information, please visit www.perdoceoed.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as "believe," "will," "expect," "continue," "outlook," "remain," "focused on," "should" and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment or interest in our programs or our ability to market to and contact prospective students; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the terms of any potential changes to or conditions imposed on our continued participation in the Title IV programs under new program participation agreements, the new 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of various versions of "borrower defense to repayment" regulations; the final outcome of various legal challenges to the Department's loan discharge and forgiveness efforts; rulemaking or changing interpretations of existing regulations, guidance or historical practices by the U.S. Department of Education or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions; the success of our initiatives to improve student experiences, retention and academic outcomes; our continued ability to participate in educational assistance programs for key employers, veterans or other military personnel; our ability to pay dividends on our common stock and execute our stock repurchase program; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and its subsequent filings with the Securities and Exchange Commission.

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	September 30,			December 31,
	2024			2023
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	238,049		$	118,009
Restricted cash		773			1,012
... Short-term investments		483,772			485,135
Total cash and cash equivalents, restricted cash and short-term investments		722,594			604,156

Student receivables, net		32,018			29,398
Receivables, other		4,114			4,539
Prepaid expenses		10,665			11,712
Inventories		3,870			5,004
Other current assets		263			155
Total current assets		773,524			654,964

NON-CURRENT ASSETS:
Property and equipment, net		18,099			21,371
Right of use asset, net		15,669			19,096
Goodwill		241,162			241,162
Intangible assets, net		32,894			36,219
Student receivables, net		5,904			3,859
Deferred income tax assets, net		23,010			23,804
Other assets		6,494			6,841
TOTAL ASSETS	$	1,116,756		$	1,007,316

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lease liability - operating	$	4,969		$	5,701
Accounts payable		13,647			10,766
Accrued expenses:
Payroll and related benefits		33,517			32,684
Advertising and marketing costs		7,969			7,196
Income taxes		10,396			3,974
Other		21,322			13,503
Deferred revenue		49,347			37,215
Total current liabilities		141,167			111,039

NON-CURRENT LIABILITIES:
Lease liability - operating		17,317			21,346
Other liabilities		22,841			33,510
Total non-current liabilities		40,158			54,856

STOCKHOLDERS' EQUITY:
Preferred stock		-			-
Common stock		910			903
Additional paid-in capital		704,346			694,798
Accumulated other comprehensive income (loss)		1,568			(666	)
Retained earnings		573,031			480,606
Treasury stock		(344,424	)		(334,220	)
Total stockholders' equity		935,431			841,421
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,116,756		$	1,007,316

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts and percentages)

	For the Quarter Ended September 30,
	2024			% of Total Revenue			2023			% of Total Revenue
REVENUE:
Tuition and fees, net	$	168,442			99.2	%	$	178,259			99.1	%
Other		1,386			0.8	%		1,664			0.9	%
Total revenue		169,828						179,923
OPERATING EXPENSES:
Educational services and facilities		28,287			16.7	%		33,502			18.6	%
General and administrative		93,694			55.2	%		92,054			51.2	%
Depreciation and amortization		3,053			1.8	%		3,914			2.2	%
Asset impairment		-			0.0	%		7,380			4.1	%
Total operating expenses		125,034			73.6	%		136,850			76.1	%
Operating income		44,794			26.4	%		43,073			23.9	%
OTHER INCOME:
Interest income		7,702			4.5	%		5,210			2.9	%
Interest expense		(82	)		0.0	%		(97	)		-0.1	%
Miscellaneous expense		(52	)		0.0	%		(98	)		-0.1	%
Total other income		7,568			4.5	%		5,015			2.8	%
PRETAX INCOME		52,362			30.8	%		48,088			26.7	%
Provision for income taxes		14,107			8.3	%		6,781			3.8	%

NET INCOME		38,255			22.5	%		41,307			23.0	%

NET INCOME PER SHARE - BASIC:	$	0.58					$	0.63

NET INCOME PER SHARE -DILUTED:	$	0.57					$	0.62

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		65,699						65,634
Diluted		67,312						67,103

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the Quarter Ended September 30,
(In Thousands)	2024						2023
NET INCOME	$	38,255					$	41,307
OTHER COMPREHENSIVE INCOME, net of tax:
Foreign currency translation adjustments		46						(31	)
Unrealized gain on investments		3,243						653
Total other comprehensive income		3,289						622
COMPREHENSIVE INCOME	$	41,544					$	41,929

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts and percentages)

	For the Year to Date Ended September 30,
	2024			% of Total Revenue			2023			% of Total Revenue
REVENUE:
Tuition and fees, net	$	500,844			99.2	%	$	556,098			98.9	%
Other		3,988			0.8	%		5,987			1.1	%
Total revenue		504,832						562,085
OPERATING EXPENSES:
Educational services and facilities		85,661			17.0	%		100,101			17.8	%
General and administrative		270,487			53.6	%		305,328			54.3	%
Depreciation and amortization		9,138			1.8	%		13,438			2.4	%
Asset impairment		2,468			0.5	%		8,715			1.6	%
Total operating expenses		367,754			72.8	%		427,582			76.1	%
Operating income		137,078			27.2	%		134,503			23.9	%
OTHER INCOME:
Interest income		21,685			4.3	%		13,559			2.4	%
Interest expense		(529	)		-0.1	%		(288	)		-0.1	%
Miscellaneous (expense) income		(7	)		0.0	%		21,970			3.9	%
Total other income		21,149			4.2	%		35,241			6.3	%
PRETAX INCOME		158,227			31.3	%		169,744			30.2	%
Provision for income taxes		42,101			8.3	%		39,280			7.0	%

NET INCOME		116,126			23.0	%		130,464			23.2	%

NET INCOME PER SHARE - BASIC:	$	1.77					$	1.95

NET INCOME PER SHARE -DILUTED:	$	1.73					$	1.92

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		65,622						66,758
Diluted		67,110						68,072

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the Year to Date Ended September 30,
(In Thousands)	2024						2023
NET INCOME	$	116,126					$	130,464
OTHER COMPREHENSIVE INCOME, net of tax:
Foreign currency translation adjustments		7						(8	)
Unrealized gain on investments		2,227						456
Total other comprehensive income		2,234						448
COMPREHENSIVE INCOME	$	118,360					$	130,912

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	For the Year to Date Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	116,126		$	130,464
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment		2,468			8,715
Gain on sale of asset		-			(22,086	)
Depreciation and amortization expense		9,138			13,438
Bad debt expense		21,364			26,519
Compensation expense related to share-based awards		7,385			6,651
Deferred income taxes		794			4,249
Changes in operating assets and liabilities		(13,280	)		(69,117	)
Net cash provided by operating activities		143,995			98,833

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(266,842	)		(205,529	)
Sales of available-for-sale investments		277,111			179,139
Purchases of property and equipment		(2,997	)		(4,801	)
Net cash provided by (used in) investing activities		7,272			(31,191	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		2,170			749
Purchase of treasury stock		(6,769	)		(2,729	)
Payments of employee tax associated with stock compensation		(3,435	)		(2,209	)
Payments of cash dividends and dividend equivalents		(23,156	)		(7,222	)
Release of cash held in escrow		(276	)		(1,000	)
Net cash used in financing activities		(31,466	)		(12,411	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		119,801			55,231
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period		119,021			118,884
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period	$	238,822		$	174,115

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)

	For the Quarter Ended September 30,
	2024			2023
REVENUE:
CTU	$	115,742		$	120,552
AIUS		53,887			59,226
Corporate and Other		199			145
Total	$	169,828		$	179,923

OPERATING INCOME (LOSS):
CTU	$	44,199		$	34,491
AIUS		9,063			15,602
Corporate and Other		(8,468	)		(7,020	)
Total	$	44,794		$	43,073

OPERATING MARGIN (LOSS):
CTU		38.2	%		28.6	%
AIUS		16.8	%		26.3	%
Corporate and Other	NM			NM
Total		26.4	%		23.9	%

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)

	For the Year to Date Ended September 30,
	2024			2023
REVENUE:
CTU	$	342,139		$	364,336
AIUS		162,114			197,128
Corporate and Other		579			621
Total	$	504,832		$	562,085

OPERATING INCOME (LOSS):
CTU	$	129,245		$	118,632
AIUS		31,275			44,683
Corporate and Other		(23,442	)		(28,812	)
Total	$	137,078		$	134,503

OPERATING MARGIN (LOSS):
CTU		37.8	%		32.6	%
AIUS		19.3	%		22.7	%
Corporate and Other	NM			NM
Total		27.2	%		23.9	%

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS ⁽¹⁾

(In thousands, unless otherwise noted)

For the Quarter Ended
September 30,

For the Year to Date Ended
September 30,

ACTUAL

Adjusted Operating Income

2024

2023

2024

2023

Operating income

44,794

43,073

137,078

134,503

Depreciation and amortization

3,053

3,914

9,138

13,438

Legal fee expense related to certain matters ⁽²⁾

719

246

2,764

7,574

Adjusted Operating Income

48,566

47,233

148,980

155,515

For the Quarter Ending
December 31,

For the Year Ending
December 31,

OUTLOOK

ACTUAL

OUTLOOK

ACTUAL

2024

2023

2024

2023

Operating income

$33.0M - $36.0M

15,943

$170.1M - $173.1M

150,446

Depreciation and amortization

5.5M

3,449

14.6M

16,887

Legal fee expense related to certain matters ⁽²⁾

0.5M

3.3M

7,579

Adjusted Operating Income

$39.0M - $42.0M

19,397

$188.0M - $191.0M

174,912

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS ⁽¹⁾ (cont’d)

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	ACTUAL						ACTUAL
	2024			2023			2024			2023
Reported Earnings Per Diluted Share	$	0.57		$	0.62		$	1.73		$	1.92

Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets		0.02			0.03			0.06			0.09
Legal fee expense related to certain matters ⁽²⁾		0.01			-			0.04			0.11
Gain on sale of intangible asset ⁽³⁾		-			-			-			(0.32	)
Total pre-tax adjustments	$	0.03		$	0.03		$	0.10		$	(0.12	)
Tax effect of adjustments ⁽⁴⁾		(0.01	)		(0.01	)		(0.03	)		0.03
Total adjustments after tax		0.02			0.02			0.07			(0.09	)
Adjusted Earnings Per Diluted Share	$	0.59		$	0.64		$	1.80		$	1.83


	For the Quarter Ending December 31,						For the Year Ending December 31,
	OUTLOOK			ACTUAL			OUTLOOK			ACTUAL
	2024			2023			2024			2023
Reported Earnings Per Diluted Share	$0.43 - $0.46			$	0.26		$2.15 - $2.18			$	2.18

Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets	0.03				0.02		0.09				0.11
Legal fee expense related to certain matters ⁽²⁾	0.01				-		0.05				0.11
Gain on sale of intangible asset ⁽³⁾		-			-			-			(0.32	)
Total pre-tax adjustments	0.04			$	0.02		0.14			$	(0.10	)
Tax effect of adjustments ⁽⁴⁾	(0.01)				(0.01	)	(0.04)				0.02
Total adjustments after tax	0.03				0.01		0.10				(0.08	)
Adjusted Earnings Per Diluted Share	$0.46 - $0.49			$	0.27		$2.25 - $2.28			$	2.10

PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS ⁽¹⁾ (cont’d)

(1)		The Company believes it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of its operations. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its operations, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance.

		The Company believes adjusted operating income and adjusted earnings per diluted share allow it to analyze and assess its operations and compare current operating results with the operational performance of other companies in its industry because it does not give effect to potential differences caused by items it does not consider reflective of underlying operating performance, such as amortization for acquired intangible assets, significant legal settlements and legal fee expense related to certain matters. The Company believes the items it is adjusting for are not normal operating expenses necessary to run its business. In evaluating adjusted operating income and adjusted earnings per diluted share, investors should be aware that in the future the Company may incur expenses similar to the adjustments presented above. The presentation of adjusted operating income and adjusted earnings per diluted share should not be construed as an inference that the Company's future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of liquidity.

		Non-GAAP financial measures, when viewed in a reconciliation to corresponding GAAP financial measures, provide an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

(2)		Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.

(3)		Non-cash gain associated with the sale of the LCB tradename in exchange for outstanding shares of Perdoceo's stock.

(4)		The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25.0%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.