Perdoceo Education Corporation Reports Third Quarter and Year to Date 2021 Results

About this update from Perdoceo Education Corporation

SCHAUMBURG, Ill. --(BUSINESS WIRE)-- Perdoceo Education Corporation (NASDAQ: PRDO) today reported operating and financial results for quarter and year to date ended September 30, 2021 . Third Quarter 2021 Results as Compared to Prior Year Quarter Revenue increased 2.9 percent to $174.0 million , with growth at CTU being partially offset with a decline at AIU. Operating income increased 18.0 percent to $37.9 million while adjusted operating income increased 28.4 percent to $46.3 million .* Earnings per diluted share was $0.39 as compared to $0.56 while adjusted earnings per diluted share was $0.45 as compared to $0.35 .* Total student enrollments at September 30, 2021 decreased by 0.9 percent, with CTU experiencing a 7.5 percent increase that was offset by an 11.6 percent decrease within AIU. Total student enrollments at CTU were positively impacted by the academic calendar redesign. Ended the quarter with $481.0 million in cash, cash equivalents, restricted cash and available-for-sale-short-term investments. Year to Date 2021 Results as Compared to Prior Year to Date Revenue increased 3.3 percent to $533.2 million , with both CTU and AIU contributing to the growth. Operating income increased 7.2 percent to $114.4 million while adjusted operating income increased 13.4 percent to $133.5 million .* Earnings per diluted share was $1.19 as compared to $1.36 while adjusted earnings per diluted share was $1.29 as compared to $1.16 .* * See GAAP ( U.S. generally accepted accounting principles) to non-GAAP reconciliation attached to this press release “During the quarter, we continued to focus on serving and educating our students while adjusting our processes and continuing to prioritize academic outcomes and retention of our students,” said Todd Nelson , President and Chief Executive Officer. “We also completed the acquisitions of DigitalCrafts and Hippo Education which expand our professional development and continuing education offerings, providing learners with valuable upskilling and reskilling opportunities.” BUSINESS ACQUISTIONS During the quarter ended September 30, 2021 , the Company completed the acquisition of substantially all of the assets of DigitalCrafts (the “DigitalCrafts acquisition”) as of August 2, 2021 and the acquisition of Hippo Education LLC (the “Hippo acquisition”) as of September 10, 2021 . DigitalCrafts helps provide individuals an opportunity in the technology area through reskilling and upskilling courses within the areas of web development, web design and cybersecurity. DigitalCrafts’ programs are now offered by AIU under the DigitalCrafts name. Hippo is a provider of continuing medical education and exam preparation for medical professionals with a quality technology platform and strong course content. Hippo’s program are now offered by CTU under the Hippo Education name. The acquisitions of DigitalCrafts and Hippo expand the Company’s professional development and continuing education offerings. REVENUE For the quarter ended September 30, 2021 , revenue of $174.0 million increased 2.9 percent compared to revenue of $169.1 million for the prior year quarter, with growth at CTU partially offset by a decline at AIU. For the year to date ended September 30, 2021 , revenue of $533.2 million increased 3.3 percent compared to revenue of $516.2 million for the prior year to date, with both CTU and AIU contributing to growth. For the Quarter Ended September 30 , For the Year to Date Ended September 30 , Revenue ($ in thousands) 2021 2020 % Change 2021 2020 % Change CTU (1) $ 104,788 $ 98,985 5.9 % $ 312,645 $ 302,766 3.3 % AIU (2) 68,948 70,048 -1.6 % 219,648 213,279 3.0 % Corporate and Other 262 93 NM 882 110 NM Total $ 173,998 $ 169,126 2.9 % $ 533,175 $ 516,155 3.3 % (1) CTU’s results of operations include the Hippo acquisition commencing on the September 10, 2021 date of acquisition. (2) AIU’s results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition and the acquisition of substantially all of the assets of Trident University International (the “Trident acquisition”) commencing on the March 2, 2020 date of acquisition. TOTAL STUDENT ENROLLMENTS CTU’s total student enrollments increased 7.5 percent as of September 30, 2021 as compared to September 30, 2020 primarily due to the timing impact of the academic calendar redesign at CTU, while AIU’s total student enrollments decreased 11.6 percent. At September 30 , Total Student Enrollments (1) 2021 2020 % Change CTU 25,800 24,000 7.5 % AIU 16,800 19,000 -11.6 % Total 42,600 43,000 -0.9 % (1) Total student enrollments do not include learners participating in non-degree professional development and continuing education programs. OPERATING INCOME For the quarter ended September 30, 2021 , operating income increased by 18.0 percent to $37.9 million as compared to the prior year quarter. For the year to date ended September 30, 2021 , operating income increased by 7.2 percent to $114.4 million as compared to the prior year to date. For the Quarter Ended September 30 , For the Year to Date Ended September 30 , Operating Income ($ in thousands) 2021 2020 % Change 2021 2020 % Change CTU (1) $ 41,217 $ 32,993 24.9 % $ 112,758 $ 100,688 12.0 % AIU (2) 8,334 5,513 51.2 % 28,875 25,365 13.8 % Corporate and Other (11,690 ) (6,432 ) -81.7 % (27,193 ) (19,308 ) -40.8 % Total $ 37,861 $ 32,074 18.0 % $ 114,440 $ 106,745 7.2 % (1) CTU’s results of operations include the Hippo acquisition commencing on the September 10, 2021 date of acquisition. (2) AIU’s results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition and the Trident acquisition commencing on the March 2, 2020 date of acquisition. 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, 2021 , adjusted operating income of $46.3 million increased 28.4 percent compared to adjusted operating income of $36.1 million for the prior year quarter. For the year to date ended September 30, 2021 , adjusted operating income of $133.5 million increased 13.4 percent compared to adjusted operating income of $117.7 million for the prior year to date. For the Quarter Ended September 30 , For the Year to Date Ended September 30 , Adjusted Operating Income ($ in thousands) 2021 2020 2021 2020 Operating income $ 37,861 $ 32,074 $ 114,440 $ 106,745 Depreciation and amortization (1) 3,887 3,995 11,802 10,785 Legal fee expense related to certain matters (2) 4,583 4 7,241 167 Adjusted Operating Income (3) $ 46,331 $ 36,073 $ 133,483 $ 117,697 Increase (Decrease) 28.4 % 13.4 % (1) Amortization for acquired intangible assets relates to definite-lived intangible assets associated with the Trident, DigitalCrafts and Hippo acquisitions. (2) 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. (3) The Company began adjusting for legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts, during the second quarter of 2021. The Company believes that these expenses are not reflective of underlying operating performance. Also, the Company no longer adjusts operating income for expenses related to the vacated facilities at closed campuses as these expenses are expected to be immaterial. Prior period amounts were recast for these items to maintain comparability. NET INCOME AND EARNINGS PER DILUTED SHARE For the quarter ended September 30, 2021 , the Company recorded: Net income of $27.8 million compared to $39.9 million for the prior year quarter. Earnings per diluted share of $0.39 compared to $0.56 for the prior year quarter. Adjusted earnings per diluted share of $0.45 compared $0.35 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, 2021 , the Company recorded: Net income of $85.2 million compared to $97.2 million for the prior year to date. Earnings per diluted share of $1.19 compared to $1.36 for the prior year to date. Adjusted earnings per diluted share of $1.29 compared to $1.16 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 , 2021 2020 2021 2020 Reported Earnings Per Diluted Share $ 0.39 $ 0.56 $ 1.19 $ 1.36 Pre-tax adjustments included in operating expenses: Amortization for acquired intangible assets (1) 0.01 0.01 0.03 0.02 Legal fee expense related to certain matters (2) 0.06 - 0.10 - Tax effect of adjustments (3) (0.01 ) - (0.03 ) - Release of valuation allowance (4) - (0.22 ) - (0.22 ) Adjusted Earnings Per Diluted Share (5) $ 0.45 $ 0.35 $ 1.29 $ 1.16 (1) Amortization for acquired intangible assets relates to definite-lived intangible assets associated with the Trident, DigitalCrafts and Hippo acquisitions. (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) 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. (4) The release of a valuation allowance in the amount of $16.0 million was a result of the determination during the period that it was more likely than not that the Company would utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an overall domestic loss account balance. (5) The Company began adjusting for legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts, during the second quarter of 2021. The Company believes that these expenses are not reflective of underlying operating performance. Also, the Company no longer adjusts operating income for expenses related to the vacated facilities at closed campuses as these expenses are expected to be immaterial. Prior period amounts were recast for these items to maintain comparability. BALANCE SHEET AND CASH FLOW For the quarter ended September 30, 2021 , net cash provided by operating activities was $61.5 million , compared to net cash provided by operating activities of $32.4 million during the prior year quarter. At September 30, 2021 and December 31, 2020 , cash, cash equivalents, restricted cash and available-for-sale short-term investments totaled $481.0 million and $410.4 million , respectively. During the quarter ended September 30, 2021 , the Company paid $56.9 million in the aggregate related to the DigitalCrafts and Hippo acquisitions. The Company’s stock repurchase program, which was set to expire on December 31, 2021 , has been extended to February 28, 2022 . As of September 30, 2021 , approximately $22.9 million was available under the stock repurchase program to repurchase outstanding shares of common stock. For the Quarter Ended September 30 , For the Year to Date Ended September 30 , Selected Cash Flow Items ($ in thousands) 2021 2020 % Change 2021 2020 % Change Net cash provided by operating activities $ 61,461 $ 32,389 89.8 % $ 144,206 $ 137,753 4.7 % Business acquisitions, net of cash acquired $ 56,947 $ 5,754 NM $ 56,947 $ 39,819 43.0 % Capital expenditures $ 3,217 $ 4,040 -20.4 % $ 6,276 $ 7,479 -16.1 % OUTLOOK The Company is providing the following updated 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 2021 2020 2021 2020 Operating Income $26.4M - $29.4M $36.2M $140.9M - $143.9M $142.9M Depreciation and amortization $5.1M $4.0M $16.9M $14.8M Legal fee expense related to certain matters (1) $2.0M $1.1M $9.2M $1.3M Adjusted Operating Income (2) $33.5M - $36.5M $41.3M $167.0M - $170.0M $159.0M Earnings Per Diluted Share $0.26 - $0.29 $0.38 $1.45 - $1.48 $1.74 Amortization of acquired intangible assets $0.03 $0.01 $0.06 $0.04 Legal fee expense related to certain matters (1) $0.03 $0.01 $0.13 $0.02 Tax effect of adjustments ( $0.02 ) - ( $0.04 ) ( $0.02 ) Release of valuation allowance - - - ( $0.22 ) Adjusted Earnings Per Diluted Share (2) $0.30 - $0.33 $0.40 $1.60 - $1.63 $1.56 (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 Company began adjusting for legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts, during the second quarter of 2021. The Company believes that these expenses are not reflective of underlying operating performance. Also, the Company no longer adjusts operating income for expenses related to the vacated facilities at closed campuses as these expenses are expected to be immaterial. Prior period amounts were recast for these items to maintain comparability. Operating income, which is the most directly comparable GAAP measure to adjusted operating income, and 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 such as significant legal settlements and legal fees for certain matters. The operating income, adjusted operating income, earnings per share and adjusted earnings per share outlook provided above for 2021 are based on the following key assumptions and factors, among others: (i) prospective student interest for online postsecondary academic programs remains consistent with recent industry trends, (ii) no significant impact of new or proposed regulations, including the “borrower defense to repayment” regulations, or other adverse changes in the legal or regulatory environment, (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) no significant future operating or financial impacts relating to the COVID-19 pandemic, (v) earnings per diluted share outlook assumes an effective income tax rate of approximately 29.0% for the fourth quarter and 26.25% for the full year, and (vi) any future impact from the Company’s stock repurchase program is excluded. 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 Thursday, November 4, 2021 at 5:30 p.m. Eastern time to discuss third quarter and year to date 2021 results and 2021 outlook. Interested parties can access the live webcast of the conference at www.perdoceoed.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 1-844-378-6484 (domestic) or 1-412-542-4179 (international). 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 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 accredited institutions – Colorado Technical University (“CTU”) and the American InterContinental University System (“AIU”) – provide degree programs from the associate through doctoral level as well as non-degree professional development and continuing education offerings. Perdoceo’s universities offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIU continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to support students and enhance learning. 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; 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 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; rulemaking 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 eligibility to participate in educational assistance programs for veterans or other military personnel; increased competition; the impact of management changes; and changes in the overall U.S. economy which may continue to be impacted by the COVID-19 pandemic. 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, 2020 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 , 2021 2020 (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents, unrestricted $ 266,400 $ 105,684 Restricted cash 5,195 4,000 Short-term investments 209,391 300,676 Total cash and cash equivalents, restricted cash and short-term investments 480,986 410,360 Student receivables, net 42,485 44,682 Receivables, other 1,900 2,873 Prepaid expenses 8,078 8,209 Inventories 1,178 596 Other current assets 2,517 341 Total current assets 537,144 467,061 NON-CURRENT ASSETS: Property and equipment, net 25,838 27,761 Right of use asset, net 38,793 44,773 Goodwill 162,692 118,312 Intangible assets, net 34,109 15,522 Student receivables, net 1,350 1,303 Deferred income tax assets, net 30,413 40,351 Other assets 6,080 6,434 TOTAL ASSETS $ 836,419 $ 721,517 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Lease liability - operating $ 10,036 $ 9,789 Accounts payable 12,650 13,259 Accrued expenses: Payroll and related benefits 22,764 22,661 Advertising and marketing costs 10,749 10,249 Income taxes 3,565 1,402 Other 17,596 11,921 Deferred revenue 57,051 34,534 Total current liabilities 134,411 103,815 NON-CURRENT LIABILITIES: Lease liability - operating 37,732 43,405 Other liabilities 18,891 18,390 Total non-current liabilities 56,623 61,795 STOCKHOLDERS' EQUITY: Preferred stock - - Common stock 879 873 Additional paid-in capital 670,497 658,423 Accumulated other comprehensive (loss) income (3 ) 364 Retained earnings 227,506 142,335 Treasury stock (253,494 ) (246,088 ) Total stockholders' equity 645,385 555,907 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 836,419 $ 721,517 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 , 2021 % of Total Revenue 2020 % of Total Revenue REVENUE: Tuition and fees $ 172,595 99.2 % $ 168,471 99.6 % Other 1,403 0.8 % 655 0.4 % Total revenue 173,998 169,126 OPERATING EXPENSES: Educational services and facilities 25,961 14.9 % 27,562 16.3 % General and administrative 106,289 61.1 % 105,495 62.4 % Depreciation and amortization 3,887 2.2 % 3,995 2.4 % Total operating expenses 136,137 78.2 % 137,052 81.0 % Operating income 37,861 21.8 % 32,074 19.0 % OTHER (EXPENSE) INCOME: Interest income 154 0.1 % 737 0.4 % Interest expense (572 ) -0.3 % (42 ) 0.0 % Miscellaneous expense (116 ) -0.1 % (14 ) 0.0 % Total other (expense) income (534 ) -0.3 % 681 0.4 % PRETAX INCOME 37,327 21.5 % 32,755 19.4 % Provision for (benefit from) income taxes 9,557 5.5 % (7,206 ) -4.3 % INCOME FROM CONTINUING OPERATIONS 27,770 16.0 % 39,961 23.6 % Loss from discontinued operations, net of tax (1 ) 0.0 % (21 ) 0.0 % NET INCOME 27,769 16.0 % 39,940 23.6 % NET INCOME PER SHARE - BASIC: $ 0.40 $ 0.58 NET INCOME PER SHARE -DILUTED: $ 0.39 $ 0.56 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 70,089 69,167 Diluted 71,466 71,016 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Quarter Ended September 30 , (In Thousands) 2021 2020 NET INCOME $ 27,769 $ 39,940 OTHER COMPREHENSIVE LOSS, net of tax: Foreign currency translation adjustments (74 ) 123 Unrealized gain (loss) on investments 51 (461 ) Total other comprehensive loss (23 ) (338 ) COMPREHENSIVE INCOME $ 27,746 $ 39,602 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 , 2021 % of Total Revenue 2020 % of Total Revenue REVENUE: Tuition and fees $ 530,230 99.4 % $ 514,364 99.7 % Other 2,945 0.6 % 1,791 0.3 % Total revenue 533,175 516,155 OPERATING EXPENSES: Educational services and facilities 83,467 15.7 % 83,149 16.1 % General and administrative 323,466 60.7 % 314,864 61.0 % Depreciation and amortization 11,802 2.2 % 10,785 2.1 % Asset impairment - 0.0 % 612 0.1 % Total operating expenses 418,735 78.5 % 409,410 79.3 % Operating income 114,440 21.5 % 106,745 20.7 % OTHER (EXPENSE) INCOME: Interest income 835 0.2 % 3,235 0.6 % Interest expense (961 ) -0.2 % (126 ) 0.0 % Miscellaneous (expense) income (9 ) 0.0 % 98 0.0 % Total other (expense) income (135 ) 0.0 % 3,207 0.6 % PRETAX INCOME 114,305 21.4 % 109,952 21.3 % Provision for income taxes 29,121 5.5 % 12,670 2.5 % INCOME FROM CONTINUING OPERATIONS 85,184 16.0 % 97,282 18.8 % Loss from discontinued operations, net of tax (13 ) 0.0 % (69 ) 0.0 % NET INCOME 85,171 16.0 % 97,213 18.8 % NET INCOME PER SHARE - BASIC: $ 1.21 $ 1.40 NET INCOME PER SHARE -DILUTED: $ 1.19 $ 1.36 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 70,179 69,366 Diluted 71,649 71,267 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Year to Date Ended September 30 , (In Thousands) 2021 2020 NET INCOME $ 85,171 $ 97,213 OTHER COMPREHENSIVE (LOSS) INCOME, net of tax: Foreign currency translation adjustments (175 ) 128 Unrealized (loss) gain on investments (192 ) 131 Total other comprehensive (loss) income (367 ) 259 COMPREHENSIVE INCOME $ 84,804 $ 97,472 PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Year to Date Ended September 30 , 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 85,171 $ 97,213 Adjustments to reconcile net income to net cash provided by operating activities: Asset impairment - 612 Depreciation and amortization expense 11,802 10,785 Bad debt expense 36,360 36,706 Compensation expense related to share-based awards 11,287 9,735 Deferred income taxes 9,938 11,339 Changes in operating assets and liabilities (10,352 ) (28,637 ) Net cash provided by operating activities 144,206 137,753 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of available-for-sale investments (269,739 ) (333,767 ) Sales of available-for-sale investments 357,280 213,576 Purchases of property and equipment (6,276 ) (7,479 ) Business acquisitions, net of acquired cash (56,947 ) (39,819 ) Net cash provided by (used in) investing activities 24,318 (167,489 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 793 1,925 Purchase of treasury stock (5,372 ) (17,862 ) Payments of employee tax associated with stock compensation (2,034 ) (894 ) Net cash used in financing activities (6,613 ) (16,831 ) NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 161,911 (46,567 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period 109,684 108,687 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period $ 271,595 $ 62,120 PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION (In thousands, except percentages) For the Quarter Ended September 30 , 2021 2020 REVENUE: CTU (1) $ 104,788 $ 98,985 AIU (2) 68,948 70,048 Corporate and Other 262 93 Total $ 173,998 $ 169,126 OPERATING INCOME (LOSS): CTU (1) $ 41,217 $ 32,993 AIU (2) 8,334 5,513 Corporate and Other (11,690 ) (6,432 ) Total $ 37,861 $ 32,074 OPERATING MARGIN (LOSS): CTU (1) 39.3 % 33.3 % AIU (2) 12.1 % 7.9 % Corporate and Other NM NM Total 21.8 % 19.0 % (1) CTU’s results of operations include the Hippo acquisition commencing on the September 10, 2021 date of acquisition. (2) AIU’s results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition. PERDOCEO EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION (In thousands, except percentages) For the Year to Date Ended September 30 , 2021 2020 REVENUE: CTU (1) $ 312,645 $ 302,766 AIU (2) 219,648 213,279 Corporate and Other 882 110 Total $ 533,175 $ 516,155 OPERATING INCOME (LOSS): CTU (1) $ 112,758 $ 100,688 AIU (2) 28,875 25,365 Corporate and Other (27,193 ) (19,308 ) Total $ 114,440 $ 106,745 OPERATING MARGIN (LOSS): CTU (1) 36.1 % 33.3 % AIU (2) 13.1 % 11.9 % Corporate and Other NM NM Total 21.5 % 20.7 % (1) CTU’s results of operations include the Hippo acquisition commencing on the September 10, 2021 date of acquisition. (2) AIU’s results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition and the Trident acquisition commencing on the March 2, 2020 date of acquisition. 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 ACTUAL Adjusted Operating Income 2021 2020 2021 2020 Operating income $ 37,861 $ 32,074 $ 114,440 $ 106,745 Depreciation and amortization (2) 3,887 3,995 11,802 10,785 Legal fee expense related to certain matters (3) 4,583 4 7,241 167 Adjusted Operating Income (4) $ 46,331 $ 36,073 $ 133,483 $ 117,697 For the Quarter Ending December 31 , For the Year Ending December 31 , OUTLOOK ACTUAL OUTLOOK ACTUAL 2021 2020 2021 2020 Operating income $26.4M - $29.4M $ 36,189 $140.9M - $143.9M $ 142,934 Depreciation and amortization (2) $5.1M 4,001 $16.9M 14,786 Legal fee expense related to certain matters (3) $2.0M 1,129 $9.2M 1,296 Adjusted Operating Income (4) $33.5M - $36.5M $ 41,319 $167.0M - $170.0M $ 159,016 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 2021 2020 2021 2020 Reported Earnings Per Diluted Share $ 0.39 $ 0.56 $ 1.19 $ 1.36 Pre-tax adjustments included in operating expenses: Amortization for acquired intangible assets (2) 0.01 0.01 0.03 0.02 Legal fee expense related to certain matters (3) 0.06 - 0.10 - Total pre-tax adjustments $ 0.07 $ 0.01 $ 0.13 $ 0.02 Tax effect of adjustments (5) (0.01 ) - (0.03 ) - Release of valuation allowance (6) - (0.22 ) - (0.22 ) Total adjustments after tax 0.06 (0.21 ) 0.10 (0.20 ) Adjusted Earnings Per Diluted Share (4) $ 0.45 $ 0.35 $ 1.29 $ 1.16 For the Quarter Ending December 31 , For the Year Ending December 31 , OUTLOOK ACTUAL OUTLOOK ACTUAL 2021 2020 2021 2020 Reported Earnings Per Diluted Share $0.26 - $0.29 $ 0.38 $1.45 - $1.48 $ 1.74 Pre-tax adjustments included in operating expenses: Amortization for acquired intangible assets (2) 0.03 0.01 0.06 0.04 Legal fee expense related to certain matters (3) 0.03 0.01 0.13 0.02 Total pre-tax adjustments $ 0.06 $ 0.02 $ 0.19 $ 0.06 Tax effect of adjustments (5) (0.02 ) - (0.04 ) (0.02 ) Release of valuation allowance (6) - - - (0.22 ) Total adjustments after tax 0.04 0.02 0.15 (0.18 ) Adjusted Earnings Per Diluted Share (4) $0.30 - $0.33 $ 0.40 $1.60 - $1.63 $ 1.56 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. 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. Results of operations include the DigitalCrafts acquisition commencing on the August 2, 2021 date of acquisition, the Hippo acquisition commencing on the September 10, 2021 date of acquisition and the Trident acquisition commencing on the March 2, 2020 date of acquisition. (2) Amortization for acquired intangible assets relate to definite-lived intangible assets associated with the Trident, DigitalCrafts and Hippo acquisitions. (3) Legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts. (4) The Company began adjusting for legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts, during the second quarter of 2021. The Company believes that these expenses are not reflective of underlying operating performance. Also, the Company no longer adjusts operating income for expenses related to the vacated facilities at closed campuses as these expenses are expected to be immaterial. Prior period amounts were recast for these items to maintain comparability. (5) 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. There is no tax effect applied to the adjustment related to the release of the valuation allowance as this is an adjustment for income tax. (6) The release of a valuation allowance in the amount of $16.0 million was a result of the determination during the period that it was more likely than not that the Company would utilize its deferred tax assets associated with the portion of the foreign tax credit carryforward supported by an overall domestic loss account balance. View source version on businesswire.com : https://www.businesswire.com/news/home/20211104006191/en/ Investors: Alpha IR Group Wyatt Turk or Chris Hodges (312) 445-2870 [email protected] or Media: Perdoceo Education Corporation (847) 585-2600 [email protected] Source: Perdoceo Education Corporation

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