Perdoceo Education Corporation · NASDAQ:PRDO
Perdoceo Education — Career Education — 14th Annual BMO Capital Markets Back to School Education Conference (September 2014)
23 slides from Perdoceo Education's conference presentation, Sep 18, 2014
Slide 1: Investor Presentation Fall 2014
Exhibit 99.1 Career Education Investor Presentation Fall 2014 th “14 Annual BMO Capital Markets Back to School Education Conference” Confidential – For Internal Use Only
Slide 2: Cautionary Statements & Disclosures
Cautionary Statements & Disclosures This presentation contains “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business pr
Slide 3: Agenda
Agenda • Education Industry Dynamics • Evolution of Career Education • Main Objectives of Turnaround Strategy and Progress Report • Key Financial Metrics 2 Confidential – For Internal Use Only
Slide 4: U.S. Macro Education Market Drivers
U.S. Macro Education Market Drivers • U.S. population has low level of educational attainment. • Approximately 3 million jobs are unfilled due to a worker skills gap (1). • Proprietary segment serves an under served demographic with a higher concentration of minority students and older students than
Slide 5: Earnings Power of Postsecondary Education
Earnings Power of Postsecondary Education ($ 000) Average Lifetime Earnings (1) $4,500 $4,000 $3,837 $3,380 $3,500 $3,000 $2,500 $2,240 $2,255 $2,000 $1,767 $1,500 $1,198 $1,000 $500 $0 High School High School Some College Associate's Bachelor's Degree Master's Degree Dropout Graduate Degree • Meani
Slide 6: Career Education Corporation
Career Education Corporation Career Education is the parent of two regionally accredited Universities with programs in business studies, information systems and technology, and criminal justice (primarily offered online and at four small ground- based campuses), two regionally accredited Career Scho
Slide 7: Diverse Portfolio of Career Oriented Schools
Diverse Portfolio of Career Oriented Schools University – Beginning to see favorable business trends. Goal is to generate modest total student enrollment growth. Culinary Arts – Recent total student enrollment growth due to Associate-Degree. Strategy in place to stabilize performance. Career College
Slide 8: Diverse Portfolio of Career Oriented Schools
Diverse Portfolio of Career Oriented Schools Ongoing Confidential – For operations. Internal Use OnlyExcludes campuses in “teach out.”
Slide 9: Business Overview
Business Overview Dynamic educational services company committed to quality, career-focused learning to a diverse student population through online, on-ground and hybrid learning program offerings. Enrollments of 48,100 TTM Revenue of $927 ($ in millions) As of 6/30/14 Twelve months ended 6/30/14 Cu
Slide 10: A Summary of Career Education's History
A Summary of Career Education’s History Heightened regulatory environment Heightened regulatory Revenue ($ millions) (including AIU probationary status that environment, placement rate # of Students was lifted late in 2007), economic and investigation, economic and competitive pressures and negative
Slide 11: Key Investor Objectives to Turnaround Strategy
Key Investor Objectives to Turnaround Strategy • Strengthen Academic Outcomes, Enhance Regulatory Compliance and Simplify Business Model. • Generate Modest University Total Student Enrollment Growth. • Stabilize Career School Enrollments. • Reduce Organizational Cost Structure. • Successfully Comple
Slide 12: Improving Academic Outcomes, Enhanced Regulatory Compliance and Simplification
Improving Academic Outcomes, Enhanced Regulatory Compliance and Simplification • Improvement in the rate at which University students continue on to their second class. • For the 2013 cohort, more than 90% of our 38 nationally-accredited ACICS campuses that are not in teach out reported higher place
Slide 13: Generate Modest University Total Student Enrollment Growth
Generate Modest University Total Student Enrollment Growth Change in Total Student Enrollments vs. Prior Year Quarter Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 (700) (800) (600) (1,300) (2,000) (800) (1,400) (2,600) (2,200) (2,900) (3,000) (2,900) (3,300) (4,200) (4,900) CTU AIU 12 Confidential – For
Slide 14: Stabilize Career School Enrollments
Stabilize Career School Enrollments - Total Student Enrollments – Career Schools Total Student Enrollments 20,300 20,200 18,500 18,900 17,500 8,000 8,400 7,700 7,900 8,000 12,300 11,800 10,800 11,000 9,500 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 Career Colleges Culinary Arts 13 Confidential – For In
Slide 15: Reduce Organizational Cost Structure – Progress Underway
Reduce Organizational Cost Structure – Progress Underway Operating Expenses ($ millions) $1,542 $1,272 $302 $272 $1,133 Reduced by $606 $951 $546 $212 million $139 $128 Reduced by $455 $403 $63 million FY 2012 FY 2013 YTD 2Q 2013 YTD 2Q 2014 Other Operating Expenses Advertising Impairments Insurance
Slide 16: Reduce Organizational Cost Structure - Additional Opportunities
Reduce Organizational Cost Structure - Additional Opportunities % of YTD 2Q % of 2Q 2014 Revenue 2014 Revenue Total Revenue $229,292 $470,659 OPERATING EXPENSES Educational services and facilities $80,399 35.1% $162,665 34.6% General & Administrative: Advertising $57,314 25.0% $127,884 27.2% Admissi
Slide 17: Successfully Complete Teach Out of Transitional Schools
Successfully Complete Teach Out of Transitional Schools # of Transitional Schools 32 32 30 21 13 9 5 1 0 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 4Q 2014 4Q 2015 4Q 2016 1Q 2017 • Transitional Schools operating losses in FY 2013 were approximately ($77) million which was primarily cash outflow. • Thi
Slide 18: Financial Overview: Profitable University Segment
Financial Overview : Profitable University Segment University Revenue & Operating Income - (in $000) CTU AIU $600,000 $549,358 $500,000 $400,000 $300,000 $200,000 $134,726 $146,492 $100,000 $52,562 $19,626 $18,083 $0 2Q 2014 2Q 2014 2Q 2014 2Q 2013 2Q 2014 2Q 2013 ($100,000) Trailing 12-Months Quart
Slide 19: Financial Overview: Improving Adjusted EBITDA
Financial Overview : Improving Adjusted EBITDA Trailing Twelve Month (TTM) Adjusted EBITDA – Ongoing Quarterly Adjusted EBITDA – Ongoing Operations (in $000) Operations (in $000) TTM 2Q TTM 1Q 2Q 2014 2Q 2013 1Q 2014 4Q 2013 3Q 2013 2014 2014 $139 ($3,139) ($11,876) ($14,103) ($18,243) ($35,346) ($4
Slide 20: Financial Overview: Strong Cash Position
Financial Overview : Strong Cash Position (In 000’s) Cash, Cash Equivalents and Short-Term Investments (1) $400,000 $363,099(2) $350,000 $315,661 $300,000 $274,617 $241,840 $250,000 $227,515 $200,000 $150,000 $100,000 $50,000 $0 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 (1) Balances presented above ar
Slide 21: Key Investment Highlights
Key Investment Highlights • Turnaround strategy in place with execution progressing. • Favorable industry dynamics in terms of market size and employer demand for skilled workers. • Diverse business model with both online and campus based portfolio of assets. • Strong balance sheet and cash position
Slide 22: Reconciliation of GAAP to Non-GAAP Items
Reconciliation of GAAP to Non-GAAP Items CAREER EDUCATION CORPORATION AND SUBSIDIARIES (1) UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (In thousands, except per share amounts) Adjusted EBITDA Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Pre-tax loss from continuing operations $ (33,746) $ (41,350)
Slide 23: Reconciliation of GAAP to Non-GAAP Items – con't
Reconciliation of GAAP to Non-GAAP Items – con’t (1) The Company believes it is useful to present non-GAAP financial measures which exclude certain significant items as a means to understand the performance of its core business. As a general matter, the Company uses non-GAAP financial measures in co