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| 8-K - 8-K - PERDOCEO EDUCATION Corp | d768529d8k.htm |
| EX-99.1 - EX-99.1 - PERDOCEO EDUCATION Corp | d768529dex991.htm |
 CAREER EDUCATION CORPORATION
SECOND QUARTER 2014
INVESTOR CONFERENCE CALL
AUGUST 7, 2014
Reid Simpson
Senior Vice President & Chief Financial Officer
Scott Steffey
President & Chief Executive Officer
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
“believe,” “forecast,”
“will,”
“expect,”
“estimate,”
“remain on track”
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 |
 3
Total Student Enrollments -
University
32,000
32,500
32,400
33,900
30,600
(1) AIU had two start dates in 2Q 2014 and three start dates in 1Q 2014 which explains why
there is a spike in total enrollments in 1Q 2014 and a corresponding decrease in 2Q
2014. 2Q, 3Q and 4Q 2013 each had two AIU start dates.
10,800
(1) |
 Sequential Improvement in Decline of Total Student
Enrollments -
University
4
Q2
‘13 Q3 ‘13 Q4
‘13 Q1 ’14 Q2 ‘14
(4,900)
(4,200)
(3,300)
(3,000)
(1,400) |
 5
Total Student Enrollments –
Career Schools
18,500
20,300
18,900
20,200
17,500 |
 Sequential Improvement in Decline of Total Student
Enrollments –
Career Schools
6
Q2
‘13 Q3 ‘13 Q4
‘13 Q1 ’14 Q2 ‘14
(7,500)
(5,400)
(1,700)
(1,300)
(1,000) |
 7
New Student Enrollments –
Career Schools
4,070
7,290
3,670
5,300
3,540 |
 8
Phase Down of Transitional School Campuses |
 9
Adjusted EBITDA
Q2
‘13 Q3 ‘13 Q4
‘13 Q1 ’14 Q2 ‘14
In (000’s)
Numbers exclude significant items (including International segment) as disclosed in the
Non-GAAP reconciliation at the end of these slides. |
 10
Strong Cash Position
(1)
Balances presented above are quarter end balances and include both Continuing and Discontinued
Operations. In (000’s)
(2)
The
increase
in
4Q
2013
is
attributed
to
proceeds
from
the
sale
of
the
Company’s
International
segment.
$363,099
(2) |
 11
Reconciliation of GAAP to Non-GAAP Items
Adjusted EBITDA
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Pre-tax loss from continuing operations
(33,746)
$
(41,350)
$
(45,319)
$
(56,411)
$
(49,300)
$
Transitional Schools operating loss
(2)
8,841
7,308
11,227
9,004
9,716
Interest (income) expense, net
(177)
(25)
65
16
(548)
Loss (gain) on sale of business
-
-
(68)
39
222
Depreciation and amortization
(3)
12,799
13,305
14,062
14,399
14,749
Stock based compensation
(3)
1,020
1,341
1,580
1,713
1,631
Legal settlements
(3) (4)
1,600
5,850
17,000
300
8,300
7,403
74
4,516
11,513
3,966
(879)
(606)
(2,924)
1,184
(612)
(3,139)
$
(14,103)
$
139
$
(18,243)
$
(11,876)
$
Adjusted EBITDA per diluted share
(0.05)
$
(0.21)
$
0.00
$
(0.27)
$
(0.18)
$
Pre-tax loss from discontinued operations
(10,964)
$
(16,573)
$
119,133
$
(20,290)
$
(16,287)
$
Transitional Schools operating loss
(2)
(8,841)
(7,308)
(11,227)
(9,004)
(9,716)
Loss (gain) on sale of business
311
-
(130,109)
-
-
International Schools operating (income) loss
(7)
-
-
(11,434)
7,608
3,659
Interest (income) expense, net
-
-
(51)
(22)
(14)
Depreciation and amortization
(8)
1,595
2,126
2,364
2,552
2,818
Legal settlements
(8)
-
-
-
-
1,700
51
(7)
2,467
72
-
1,436
3,099
5,766
(3,092)
(2,611)
(16,412)
$
(18,663)
$
(23,091)
$
(22,176)
$
(20,451)
$
Adjusted EBITDA per diluted share
(0.24)
$
(0.28)
$
(0.35)
$
(0.33)
$
(0.31)
$
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
(In thousands, except per share amounts)
Asset impairments
(3) (5)
Unused space charges
(3) (6)
Asset impairments
(8)
Unused space charges
(6) (8)
Adjusted EBITDA–Ongoing Operations
Adjusted EBITDA–Transitional and Discontinued Operations
(2)
(2)
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS
(1) |
 12
Reconciliation of GAAP to Non-GAAP Items –
con’t
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
CTU
-
$
(900)
$
1,300
$
-
$
-
$
Career Colleges
-
-
200
300
8,300
Culinary Arts
2,000
3,000
15,500
-
-
Corporate & Other
(400)
3,750
-
-
-
Total
1,600
$
5,850
$
17,000
$
300
$
8,300
$
(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.
We
believe
Adjusted
EBITDA
allows
us
to
compare
our
current
operating
results
with
corresponding
historical
periods
and
with
the
operational
performance
of
other
companies
in
our
industry
because
it
does
not
give effect to potential
differences caused by items we do not consider reflective of underlying
operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties as a
measure of performance. In evaluating Adjusted EBITDA, investors
should be aware that in the future we may incur expenses similar to the
adjustments presented above. Our presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by expenses
that are unusual, non-routine or non-recurring. Adjusted EBITDA
has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net
income (loss), operating income (loss), 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 our liquidity.
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)
Management assesses results of operations for ongoing operations, which
excludes Transitional Schools, separately from Transitional Schools. As schools within the Transitional Schools segment are fully taught-out,
these
schools
will
be
recast
as
components
of
Discontinued
Operations.
As
a
result,
management
views
adjusted
EBITDA
from
ongoing
operations
separately
from
Transitional
Schools
and
Discontinued
Operations
to
assess
results
and
make
decisions.
Accordingly,
Transitional
Schools
operating
loss
is
added
back
to
pre-tax
loss
from
continuing
operations
and
subtracted
from
pre-tax
loss
from
discontinued
operations.
(3)
Quarterly amounts relate to ongoing operations, which excludes
Transitional Schools. (4)
Legal
settlement
amounts
are
net
of
insurance
recoveries
and
are
recorded
within
the
following
segments:
(5)
Asset
impairments
primarily
relate
to
trade
name
impairment
charges
within
Culinary
Arts
of
$7.4
million,
$10.7
million
and
$2.3
million
which
were
recorded
during
the
second
quarter
of
2014,
third
quarter
of
2013
and
the
second
quarter
of
2013,
respectively,
and
within
Career
Colleges
of
$1.7
million
during
the
second
quarter
of
2013.
(6)
Unused
space
charges
represent
the
net
present
value
of
remaining
lease
obligations
less
an
estimated
amount
for
sublease
income
as
well
as
the
subsequent
accretion
of
these
charges.
(7)
The
International
Schools
segment
was
sold
during
the
fourth
quarter
of
2013.
As
such,
management
excludes
operations
from
the
International
Schools
when
assessing
results
and
trends
of
Transitional
Schools
and
Discontinued
Operations.
(8)
Quarterly
amounts
relate
to
Transitional
Schools
and
Discontinued
Operations,
excluding
International. |
 13
End of Presentation |