Good day, and welcome to the Q2 2019 Career Education Earnings Conference Call webcast. 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 Chris Donovan with Alpha IR. Please go ahead.

Thank you, Chad. Good afternoon everyone and thank you for joining us for our second quarter 2019 earnings call. With me on the call today is Todd Nelson, President and Chief Executive Officer; and Ashish Ghia, Senior Vice President and Chief Financial Officer. 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 that involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed and/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, 2018, 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 subject to for the most directly comparable GAAP measures. The earnings release that accompany today's call contains financial and other quantitative information to be discussed today as well as the reconciliation of GAAP to non-GAAP measures, and is available on the Investor Relations page on the Company's website at www.careered.com. With that, I would like to turn the call over to Todd Nelson. Todd.

Thanks Chris. Good afternoon, everyone, and thank you for joining us on today's call. We are pleased with our second quarter and year-to-date results, which has shown acceleration in our operating and financial trends. These trends were supported by consistent levels of perspective student interest and balance investments across our students serving processes and initial. In general, we are executing well against our strategic priority of sustainable and responsible growth, while supporting investments in our students serving operations and ongoing technology initiatives. Some key highlights for the quarter include; first, revenue was up 10.1%, in part supported by university group total enrollment growth of 5.4%. With both universities contributing to this growth. Two, excluding the $30 million FTC settlement and certain non-cash items, the second quarter adjusted operating income grew by almost 38% to $32.8 million primarily driven by operating leverage. Three, both universities have mostly annualized investment at Arizona and Illinois centers that were first made in early 2017. We continue to evaluate and optimize staffing levels within our students serving operations, with the goal of effectively serving the prospective student interests we are experiencing, while providing superior student experiences. Lastly, as it relates to trying to university, we are diligently working through the necessary regulatory approvals, while also planning for a smooth integration into AIU that will focus on maintaining and enhancing student experiences for students from both universities. I will further expand on some of the highlights for the quarter shortly. Ashish will then cover more details around the financials and provide an update on our 2019 outlook before I add some closing thoughts to end the call. Now to our operating performance for the quarter, we reported a net loss of $0.6 million, or $0.01 per share, while adjusted earnings per diluted share, which includes certain…

Thank you, Todd. I will start with a review of our second quarter results and then discuss our balance sheet and 2019 outlook, before handing the call back to Todd for his closing remarks. All comparisons are versus the comparative prior year period, unless otherwise stated. Before I begin, let me remind everyone about the change in our segments presentation effective 11, 2019. With the responsible completion of our teach out, the all other campuses segment, which included these schools is no longer an operating segment. As a result residual losses associated with these closed campuses have now been included within corporate and other category. Prior periods have been recast to maintain comparability. Now to our second quarter results. Total Company operating income was $0.2 million, compared to an operating income of $11.3 million in the prior quarter. Adjusted operating income, which excludes certain significant and non-cash items is more reflective of the underlying operating performance. Second quarter continued to see strong momentum with this adjusted measure at $32.8 million, which was above the high end of our outlook range of $30 million to $31.5 million dollars and grew approximately 38% versus the prior year. Net loss for the quarter was $0.6 million and loss per share was $0.01, but adjusted earnings per diluted share was $0.39 cents. Before I go into the segment details, a quick comment on the adjusting items for the quarter. First, we recorded a $30 million reserve related to the FTC settlement disclosed in 8-K filed last week. We are pleased to have reached a resolution with the FTC, after four years of incurring legal expenses and cooperating with their investigation thus allowing us to further focus on academic quality, outcomes and student experiences. We expect to pay this amount sometime in the third quarter.…

Thanks, Ashish. We look forward to continued success in the remainder of 2019 as we execute against our overall strategy of prioritizing student serving processes and initiatives, while investing in our universities to achieve sustained and responsible growth. I believe we are well positioned both from a competitive and operating standpoint to serve and educate current and prospective non-traditional students, including adult learners. I'm proud of the entire Career Education team for their focus, hard work and determination that is helping drive quality academic outcomes for our students. Thank you again for joining us today, and we will now open the call for any analyst questions.

Thank you. We will now begin question-and-answer session for analysts. [Operator instructions] First question will come from Alex Paris with Barrington Research. Please go ahead. Please go ahead.

Good afternoon Tom and Ashish, this is [Chris] (Ph) sitting in for Alex. Recently, there has been some news about the Navy TA funding programs being halted until the end of September. Would this have any impact, I'm not sure if you can comment on the military enrollments within Trident?

Well you know this type of thing is something that we have always monitored and paid very close attention to and we continue to monitor that. But As far as AIU and CTU just again first look at that, it seems like there would be minimal impact if any, and as far as Trident we will continue to obviously monitor that. But again, our view of that is that they are very well diversified in the military that they serve. And again, at this point in time I mean we are not overly concerned.

And then it is great to see the new enrollment growth that you are driving with the outlook for 8% to 10% growth above your prior guidance of 3% to 5%. Can you provide some additional color into your retention efforts for this growing student population as we transfer new students to total student enrollment growth?

Yes, well, that has been a major focus of ours for some time and will continue to be. Again, our view of that is that to provide a quality education is the number one priority, to provide excellent service that will affect and impact the retention. And then to add, as much technology initiatives, whether it's the mobile app, whether it's our different platforms that we have to better serve them and so going forward, our view of that is on a net will increase retention. But you do have as you know several things for example, corporate students tend to - if you have a higher percentage of that, that inflates your retention rate or for example you maybe have a higher mix of undergraduate students versus graduate students, they tend to have a lower retention rate than graduate students. But the bottom line is, it is a major focus of ours, we feel like we really are and have the right people focused on it, and we feel encouraged by where we think it's going to be in the future.

Okay, and then one more question here, and then I will hop back in the queue. Recently, California has been in the headlines as you know, over students attending out of state not for profit, online universities. You are four profits, but how should we characterize where the current regulatory environment is and Career Education’s current standing.

So, it's a good question, and then I think obviously, they are the three levels that you are always engaged in at the Federal level, the state level and then with your creditors and as you know we have recent business over the last year or two with CTU and AIU and those are positive outcomes from those your accreditation reviews. We obviously from a state perspective continue to have positive relationships there. And at the department level again, that is something that is constantly changing and there I think the most important thing is to have a good team that can again engage with the folks in Washington to see what is coming and we feel like we have a good team to address that. So that’s the overall environment, as it specifically relates to California you are right, that process that has created quite a bit of noise, so really again that applies to non-profit universities. So in our case its around the student complaint process. There is a student complaint process in place in California for out-of-state for profit universities, so that doesn't affect us, but it is at this point affecting the non-profits and again, there is a lot of noise around that and I - just an opinion here. I think that they will get that worked out in time, but in our case we are exempt from that. And the bottom line is I think the number one thing you need to do as an institution is to provide a good quality education and I think that really puts you in a good position to address an environment that constantly is changing. But then second is, you know you really have to have a confident team around you that interacts with all three of these layers of regulation which can temper your creditor, state licensing and in the Federal level.

That is very helpful. Thank you for taking my question Todd and excellent quarter.

Thank you Chris.

Thank you.

[Operator instructions] The next question comes from Greg Pendy with Sidoti. Please go ahead.

Hey guys, thanks for taking my questions. I know there has been a lot of the technology which you talked about at your Investor Day and you alluded to here, improving the on-boarding and retention analytics, but can you just remind us where in telepath is in terms course penetration, is that something that has been rolled out at most of your courses right now, or is this still sort of a penetration story there.

So, we continue to roll it out and as you know it's a very effective tool for learning and outcomes. We also believe it affects retention as well. And, it always offered for anyone who would like to let us know, we even provided demonstrations, it’s something we are very proud. But as far as, the direct answer to your question is we continue to roll that out. We have plans to continue to do that again it just takes time because again it's a complex process, but very effective.

Would you say its still - is it at 50% of your courses right now?

I mean, we haven't necessarily given penetration, but to Todd’s point. What we do is, we strategically roll out in courses which have the maximum impact for maximum students and so we go very strategic course-by-course and try to make sure that we maximize that impact.

Okay, that is helpful. And then I guess just you know this is the second quarter with some pretty strong enrollment growth, is there anything to point out may be any business or healthcare are you seeing outside strength in any of the areas.

Well the good news in that one Greg is that it is something that I think our ability to regardless of kind of where the market is going, both CTU, AIU have very broad statements of affiliation with their creditors. So we have the ability to offer a broad degree of programs. And so you do see in times an ebb and flow, health sciences in particular, is one that have seen some strong demand for a long time. But across the board, we are continuing to see very reliable interest from prospective students. And so no real big change in any of our degree programs as far as a percentage of the total mix. But again, I think the key to being successful there is the ability to move quickly should you see that shift, but at this point is it has been relatively stable over the last few quarters.

Okay, that is helpful. Thanks a lot.

Thanks Greg.

Thank you.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Todd Nelson for any closing remarks.

Thank you again for joining us, and we look forward to talking to you again next quarter. Thank you.

Thank you.

And thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.