Sam Gibbons - Investor Relations Todd Nelson - President and Chief Executive Officer A.J. Cederoth - Senior Vice President and Interim Chief Financial Officer Ashish Ghia - Vice President of Finance

Good day, and welcome to the First Quarter 2016 Career Education Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sam Gibbons. Please go ahead.

Thank you, Amy. Good afternoon everyone, and thank you for joining us. With me on the call today is Todd Nelson, President and Chief Executive Officer; A.J. Cederoth, Chief Financial Officer; and Ashish Ghia, Vice President of Finance. This conference call is being webcast live within the Investor Relations section at careered.com. A webcast replay will also be available on our site. And you can always contact the Alpha IR Group for Investor Relations support. Let me remind you that this afternoon’s earnings release and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on assumptions made by, and information currently available to Career Education and risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include but are not limited to those factors identified in Career Education’s Annual Report on Form 10-K for the year ended December 31, 2015, and other filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, the company undertakes no obligation to update those factors, or any forward-looking statements to reflect future events, developments, or changed circumstances, or for any other reason. In addition, today’s remarks refer to non-GAAP financial measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. The earnings release and slide presentation which accompanies today’s call and which contain financial and other quantitative information to be discussed today, as well as a reconciliation of the GAAP to non-GAAP measures are available within the Investor Relations section at careered.com. So with that, I'd like to turn the call over to Todd Nelson. Todd?

Thank you, Sam and good afternoon and thanks to everyone who is joining us on the call. Before I get into first quarter highlights, it’s my pleasure to introduce to all of you, our new Chief Financial Officer, A.J. Cederoth, who has rich background at multi-billion dollar public and private companies, including those who have undergone a transition. We're thrilled to have him and he is part of our team and expect him to bring a lot a positive changes to the company. Please join me welcoming A.J. during the weeks and month ahead. A.J. will review financial results in more detail later. Now, I'll begin the review of our first quarter results and share some of the operating priorities at our universities that are aimed at further improving our student retention and outcomes. Last quarter, we told you to expect continued progress in our financial and operating performance in 2016. And we're pleased to report today that first quarter results were in line with those expectations. Consolidated adjusted EBITDA, which we believe to be a useful indicator of performance during the wind-down of our teach-outs was $13.2 million during the first quarter, compared to a loss of $11.8 million last year. This performance was primarily driven by increased revenue at our University Group, as well as across the board improvements in operating efficiencies that we realized as we continue to execute on the strategy we laid out last year. In fact, University Group revenue increased by 4.9% year-over-year and its operating income decreased to $21.1 million, compared to $11.7 million last year. On a positive note, University Group total enrollments increased slightly for the quarter, as compared to the prior year. New enrollments at the University Group were down 4.9%, as compared to the prior year. We believe the…

Thank you, Todd. I am excited to be here. I joined Career Education because I believe the company has a compelling value proposition towards students and its shareholders alike. Now that I have been able too meet or of the team and start to understand the organization, I believe the building blocks are in place to execute a successful long-term strategy. So I am pleased to be part of the team. As we review financial performance, I want to start with the results for the consolidated company. On slide 4, we've summarized consolidated results for Q1 and provided a comparison to the same quarter in the previous year. We will try to maintain this format throughout the presentation. For the quarter, revenue was $198.9 million, which is down 12.4% year-over-year. As Todd mentioned, our University Group posted a 4 .9% increase year-over- year, and the decline in revenue is attributed to the teach-out strategy at our Culinary Arts and Transitional group segments. Operating income for the quarter was positive $7 million versus prior year first quarter loss of $24.4 million. This can be attributed to lower operating costs, as a result of our strategic initiatives. Also, as a result of our decision to teach-out Culinary Arts, we received a cost benefit from the reduction of our admission costs and marketing expenses. We expect our operating costs will continue to improve throughout the remainder of the year. However, as Todd mentioned, the year-over- year differences will start to normalize in the second half of this year, as the impact of our strategic initiatives begin to anniversary. Adjusted EBITDA performance followed a similar pattern of improvement. We ended the quarter with $189.5 million of cash, cash equivalents, restricted cash, and available for sale share short-term and long-term investments. As was discussed on…

Thank you, A.J. Looking at slide 7 in closing, fiscal year 2016 is off to solid start and we're proceeding in line with our expectations. Our improved operating and financial stability continues to give us confidence to invest in our future. Our University Group is well-positioned with great leadership, strong advantage in excellent progress. With our improved stability, we're investing more time, intellectual capital and dollars to help CTU and AIU achieve their full potential and produce better student retention and outcomes. We are on track with our teach-outs, which will continue to responsibly manage as we support our students through the completion of the programs. We look forward to providing you all with an update on the progress during our second quarter call. We are maintaining our outlook of generating increases in consolidated adjusted EBITDA, as well as our cash balances in the future. End of Q&A: Thanks again for joining us this evening, and we appreciate your continued support of Career Education. If anyone has any questions, please contact our Investor Relations. Have a good evening.