Attached files
| file | filename |
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| 8-K - 8-K - PERDOCEO EDUCATION Corp | d685336d8k.htm |
| EX-99.3 - EX-99.3 - PERDOCEO EDUCATION Corp | d685336dex993.htm |
| EX-99.1 - EX-99.1 - PERDOCEO EDUCATION Corp | d685336dex991.htm |
 CAREER EDUCATION CORPORATION
FOURTH QUARTER 2013
INVESTOR CONFERENCE CALL
FEBRUARY 27, 2014
Exhibit 99.2 |
 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
prospects
and
opportunities,
as
well
as
assumptions
made
by,
and
information
currently
available
to,
our
management.
We
have
tried
to
identify
forward-looking
statements
by
using
words
such
as
“estimated,”
“path
to
being,”
“anticipate,”
“project,”
“will,”
“potential”
and
similar
expressions,
but
these
words
are
not
the
exclusive
means
of
identifying
forward-looking
statements.
These
statements
are
based
on
information
currently
available
to
us
and
are
subject
to
various
risks,
uncertainties,
and
other
factors,
including,
but
not
limited
to,
those
discussed
in
Item
1A,“Risk
Factors”
of
our
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2013
that
could
cause
our
actual
growth,
results
of
operations,
financial
condition,
cash
flows,
performance
and
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
such
factors
or
to
publicly
announce
the
results
of
any
of
the
forward-looking
statements
contained
herein
to
reflect
future
events,
developments,
or
changed
circumstances
or
for
any
other
reason.
Certain
financial
information
is
presented
on
a
non-GAAP
basis.
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
conjunction
with
results
presented
in
accordance
with
GAAP
to
help
analyze
the
performance
of
its
core
business,
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
and
that
failure
to
report
non-GAAP
measures
could
result
in
a
misplaced
perception
that
the
Company's
results
have
underperformed
or
exceeded
expectations.
The
most
directly
comparable
GAAP
information
and
a
reconciliation
between
the
non-GAAP
and
GAAP
figures
are
provided
at
the
end
of
this
presentation,
and
this
presentation
(including
the
reconciliation)
has
been
posted
to
our
website.
Cautionary Statements & Disclosures
2 |
 Sequential Improvement in Decline of New Enrollments
3 |
 Sequential Improvement in Decline of Total Enrollments
4 |
 5
October 2013 –
February 2014 New Enrollments
(1) January & February 2013 new enrollments for AIU & CTU have been recast to
align with 2014 metric reporting. (2) Based on reporting structure as of
12/31/13. (3) With the exception of Health, December data reflects cancellations as
there were no new student enrollments. (4) February 2014 is an estimate based on
month to date information. 2014
October
November
December
January
February
Actual
Actual
Actual
(3)
Actual
Estimate
(4)
AIU
(1)
1,968
1,264
(712)
2,288
1,680
Prior Year
2,401
1,161
(192)
2,220
1,455
CTU
(1)
3,233
2,452
(425)
2,424
2,960
Prior Year
3,362
2,252
(574)
2,704
2,687
Health
(2)
616
124
460
1,082
475
Prior Year
402
424
164
1,063
609
Culinary
(2)
1,125
930
(45)
1,266
1,130
Prior Year
1,576
1,236
(2)
1,469
1,376
Design & Technology
(2)
225
281
(46)
365
300
Prior Year
276
146
(12)
375
185
2013 |
 6
Winter Weather Factor
Instances of Closures or Delayed Starts at Career Schools |
 New student
enrollment growth for CTU (4%), Health Education (21%) and Design & Technology
(12%). A 49% improvement in the rate at which we convert a prospective
student to a new student enrollment, cumulatively reflecting
improvement across all segments.
Higher student applications across all segments with a 38% overall
improvement.
Slight improvement in retention rates.
A 2.1% decline in new student acquisition costs.
7
Key Improvements –
4Q 2013 compared to 4Q 2012
Excludes Transitional Schools |
 8
Significantly Reduced Operating Expenses in 2013
Operating Expenses (in millions) exclude significant items as disclosed in Non-GAAP
reconciliation. Full Year
Fourth Quarter
Right sized & reengineered the organization.
Optimized real estate footprint.
Managed Transitional Schools cost structure.
Improved marketing efficiencies. |
 Lower
Cash Burn in 2 nd
Half of 2013
9
2016 / 17
2Q 2013
3Q 2013
4Q 2013 |
 Estimated Phasing of 2014 Transitional
Schools Closures (20 Schools)
1Q 2014
9 Campuses
Complete
Teach-Out
10
2Q 2014
7 Campuses
Complete
Teach-Out
3Q 2014
3 Campuses
Complete
Teach-Out
4Q 2014
1 Campus
Complete
Teach-Out
6 Campuses
Already
Completed
2014 1Q
2014 4Q |
 Estimated 2014 Operating Losses of
Transitional Schools
11 |
 Path
to Being EBITDA Positive in 2015 12
2013 Operating Loss of $160 million excludes significant items as disclosed in Non-GAAP
reconciliation. |
 13
Lower Operating Cost Trends
2012 & 2013 Operating Expenses exclude significant items as disclosed in Non-GAAP
reconciliation. Numbers in millions. |
 14
Average Acquisition Costs Per Student |
 15
End of Presentation |
 16
Non-GAAP Reconciliation
Operating Loss
Loss per Diluted
Share
(2)
Operating Loss
Loss per Diluted
Share
(2)
As Reported
(59.0)
$
(1.61)
$
(91.5)
$
(1.07)
$
Reconciling Items:
Legal Settlements
(3)
15.7
0.15
-
-
Asset
Impairments (4)
7.0
0.07
40.8
0.40
Severance
and Related Costs (5)
1.8
0.02
13.1
0.13
Deferred
Tax Asset Valuation Allowance (6)
1.08
-
Adjusted to Exclude Significant Items
(34.5)
$
(0.29)
$
(37.6)
$
(0.54)
$
Diluted Weighted Average Shares
Outstanding 66,916
66,199
Operating Loss
Loss per Diluted
Share
(2)
Operating Loss
Loss per Diluted
Share
(2)
As Reported
(214.7)
$
(3.02)
$
(197.0)
$
(2.24)
$
Reconciling Items:
Legal Settlements
(3)
26.0
0.25
-
-
Goodwill and Asset Impairments
(7)
22.7
0.22
125.5
1.62
Severance
and Related Costs (5)
6.2
0.06
14.0
0.14
Insurance
Recoveries (8)
-
-
(19.0)
(0.19)
Deferred Tax
Asset Valuation Allowance (6)
1.08
-
Adjusted to Exclude Significant Items
(159.8)
$
(1.41)
$
(76.5)
$
(0.67)
$
Diluted Weighted Average Shares
Outstanding 66,738
66,475
For the Quarter Ended December 31,
2013
2012
For the Year Ended December 31,
2013
2012
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS
(1)
(In millions, except share and per share amounts)
|
 17
Non-GAAP Reconciliation -
Continued
(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 conjunction with results presented in accordance with GAAP to
help analyze the performance of its core business, 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 and
that failure to report non-GAAP measures could result in a misplaced perception that the
Company's results have underperformed or exceeded
expectations. Non-GAAP financial measures when viewed in a reconciliation to
corresponding GAAP financial measures, provides 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)
Loss per diluted share is based on loss from continuing operations and
assumes a 35% tax rate for each deductible item. (3)
A $15.5 million charge related to a pending legal settlement was
recorded within Culinary Arts in the fourth quarter of 2013; year to date legal settlements
include $10.5 million for the settlement of a legal matter recorded
within Health Education ($8.8) and Transitional Schools ($1.7).
(4)
In fourth quarter 2013, non-cash asset impairment charges of $7.0
million were recorded primarily within Design & Technology ($4.0) related to long-lived
assets for ongoing schools ($2.3) and decisions made to exit certain
leased facilities ($1.7), and Transitional Schools ($2.5) for schools being taught out. 2012
included non-cash asset impairment charges of $29.2 million
recorded primarily within Transitional Schools ($28.3) and $11.6 million of non-cash trade name
impairment charges attributable to Culinary Arts ($8.1) and Health
Education ($3.5) (5)
Severance and related costs were recorded in 2013 and 2012 in
connection with both the reduction in force and campus closure actions. In 2013, these costs
were principally recorded within Transitional Schools ($2.1 million)
and Corporate and Other ($2.1 million). The 2012 severance and related costs of $14.0
million were recorded within Transitional Schools ($6.7), AIU ($1.8),
Health Education ($1.6), Corporate ($1.6), Design & Technology ($1.4), Culinary Arts
($0.6) and CTU ($0.3).
(6)
Fourth quarter of 2013 included a deferred tax valuation allowance of
$72.2 million recorded within income tax benefit of continuing operations.
(7)
2013 includes non-cash trade name impairment charges of $14.7
million attributable to Culinary Arts ($13.0) and Health Education ($1.7) and $8.0 million of
non-cash asset impairment charges, of which $7.0 million were
recorded in the fourth quarter. In addition to the fourth quarter asset impairment charges, 2012
expenses include non-cash goodwill impairment charges of $83.4
million, of which $73.6 million is non-deductible for income tax purposes, primarily
applicable to Health Education ($41.3) and Design & Technology
($40.8) and additional non-cash asset impairment charges of $1.3 million.
(8)
2012 includes a $19.0 million insurance recovery related to the
settlement of claims under certain insurance policies. |