Good day and welcome to the Fourth Quarter 2019 Perdoceo Education Corporation Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Brooks Hamilton with Alpha IR. Please go ahead.

Thank you, Sean. Good afternoon everyone and thank you for joining us, for our fourth quarter and full year 2019 earnings call. With me on the call today, is Todd Nelson, President and Chief Executive Officer, and Ashish Ghia, Chief Financial Officer. This conference call is being webcast live within the Investor Relations section at perdoceoed.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 of 1934. These statements are based on assumptions made by, and information currently available to, Perdoceo Education and involve risks and uncertainties that could cause actual future results, performance, 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 Perdoceo's Annual Report on Form 10-K for the year ended December 31, 2019, 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 that accompanies today’s call contains financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures, and is available within the Investor Relations page of the company’s website.With that, I’d like to turn the call over to Todd Nelson, Todd?

Thank you, Brooks. Good afternoon everyone, and thank you for joining us on today's call. We closed 2019, on a positive note, with fourth quarter and full year operating results coming in ahead of our expectations. We are entering 2020 with good momentum and are excited to continue our journey to serve current and prospective students at our academic institutions under the new name for Perdoceo EducationWe believe our focus on investing in students serving functions, and related technology initiatives will continue to have positive impacts on student experiences retention, and academic outcomes for our students. Here are some key highlights for the year.First, 2019, revenues, operating income and cash flow increased versus the prior year. This increase reflects enrollment growth at both academic institutions, that was supported by solid levels of prospective student interest for our program offerings. Two, enrollment trends have remained positive through the fourth quarter and we're entering 2020, with good momentum, which we believe will further contribute to our objective of sustainable and responsible growth. Three, operating and cost efficiencies have allowed us to continue reinvesting in our students serving functions, including technology and data analytics, which enhance our staffs ability to serve and support our students.Lastly, we're focused on completing the acquisition of Trident University. We expect the transaction to close in early March, once the department has added Trident's programs to AI user authorization, and are working diligently towards a smooth integration into AIU. Our focus will be on maintaining and further enhancing academic experiences for students from both universities.I'll now expand further on some of the successes for the year shortly. Ashish, will then cover more details around the financials and 2020 outlook, before I add some closing thoughts to end the call.For 2019, we reported net income of $70 million or…

Thank you, Todd. I will start with a review of our full year and fourth quarter results, and then discuss the balance sheet and 2020 outlook before handing the call, back to Todd for his closing remarks.Please note that all comparisons I discuss, are versus the comparative prior year periods unless otherwise stated. As a reminder, effective Jan 1st of 2019, we changed our segment presentation after the responsible completion of our teach outs. Thus, the all other campuses segment, which included these schools is no longer an operating segment. As a result, residual losses associated with these close campuses, have now been included within the corporate and other category. Prior periods have been recast to maintain compatibility.Now a quick overview of our results, for the full year 2019, total company operating income increased to $86.5 million, as compared to an operating income of $71.3 million. We believe adjusted operating income, which excludes certain significant and noncash items, is more reflective of the underlying operating performance. This measure came in at $134.3 million for the year, exceeding our latest outlook range of $130 million to $132 million, and reflecting an increase of approximately 27.7% versus the prior.Net income for the year was $70 million or $0.97 per diluted share, while adjusted earnings per diluted share, which again, we believe is more indicative of the underlying operating performance, was up 30.5% to $1.37.Overall, we ended the year on a good note, with the fourth quarter operating income of $32 million and earnings per diluted share of $0.38. Adjusted operating income for the quarter was $34.6 million versus $29.7 million, and adjusted earnings per diluted share was $0.33, versus $0.30. These positive operating results reflect efficiency and effectiveness across our student enrollment and student serving processes, that supported a new enrollment growth…

Thanks Ashish. Our positive results in 2019 and the progress we've made thus far, demonstrate the success of our operating strategy that focuses on student experiences, retention and academic outcomes. We're experiencing sustainable and responsible growth at both universities and are staying true to our core focus of investing in students serving processes, with a goal of positively impacting academic outcomes and student experiences.I believe, we're well positioned both from a competitive and operating standpoint to serve and educate current and prospective nontraditional students with a focus on adult learners, and to build a leadership position in online postsecondary education. We are entering 2020 with momentum, and I want to thank the entire team for their hard work, commitment and dedication.Thank you again for joining us today,. and we will now open the call for any analyst questions.

We will now begin the question-and-answer session for analysts. [Operator Instructions] Our first question will come from Dan Moore with CJS Securities. Please go ahead.

Thank you. Good afternoon. Thanks for taking the questions.

Hey, Dan.

How are you doing, Dan?

Very well. Thank you, Todd and Ashish. I want to start with, I guess, corporate partnership programs. Last quarter, I think you mentioned incrementally increasing investment in that area. In 2020, is that still the case built into guide? And if so, what might those incremental investments look like?

Okay. Well, the good news is as we mentioned, that with CTU now up to 19% of their enrollment, so that's been a nice increase. And as you know, we've made some investment in that. And this coming year, we're also making incremental investment. We haven't given any outlook on where our projection will be. But we know, it's a very needed program within not just academia, but also in these companies, again, their ability to have a partnership with an institution that's focused on helping them. So, our plan is going forward to not only invest obviously in CTU but AIU as well, in this area.

Very helpful. Maybe just talk a little bit about -- obviously Trident sounds like you expected to close here imminently. And it is trending toward the higher end of the purchase price. So just any more color, detail on how they're performing, number one? And number two, beyondthat acquisition update on the pipeline of additional potential M&A as we look out to 2020.

Okay. Well, as we said, we do hope that it will be in the first part of March, we are pleased with the results thus far. And as Ashish said, based on those results it will be at the high end of what we've said the purchase price would be. Beyond that, probably can't comment anymore on it. We would hope, that as things continue to progress that we would then be able to provide an update on a new outlook at our next earnings call that would include the performance and Trident as well. So at that point, we'll be able to give more color than we can today.And then, as far as the second part of your question on the pipeline, yes, we continued to be very active in that area. There are a lot of -- not only schools, universities, but there are also other companies that are involved in the education area that look very appealing. We want to -- as we did this, be very strategic, very disciplined in our approach to that. But, we continue to be looking for the best ways to enhance overall Perdoceo but also, provide good shareholder value on those types of acquisitions.

And lastly, as a corollary to that in terms of capital allocation, any commentary on how aggressive you might be with the repurchase authorization that you do have in place, if the stock were to stay in and around current levels?

Well, again, I don't want to really give any projection on what that would be. But, we have a lot of faith in the company and we think that is, as we mentioned, when we will be able to get the buyback approved, that continues to be something that we will continue to utilize.

Yes, and we will continue to make sure we evaluate on a daily basis, and just make sure that we allocate capital in the best interest of the company and the shareholders.

I appreciate the color, I'll jump back with any follow-ups. Thank you.

Thanks, Dan.

Our next question will come from Alex Paris with Barrington Research. Please go ahead.

Hi, guys, congratulations on a strong fourth quarter and 2019. I got a few questions on Trident, you again, just to reiterate, you expect to close that in early March. Do you have all the requisite approvals that you need? You're just waiting on the Department of Education now, is that correct?

Yes. As you know, there's multiple approvals you need from, whether it's the state, obviously, accreditor, and then the department and we're just waiting on the finals with the department, and that's it.

And is this a preapproval for the acquisition or is this kind of a more thorough approval? I know the Department of Education does it in a couple of different ways?

Well, I'm not really sure what that, again, how to answer that part of the question, I don't understand it fully. But I know, once you have the accreditation approval, that's when you actually look for the formal approval of the Department. Anything before that like a pre-act that you're probably referring to, yes. But again, that after you have your accreditation approval, which is necessary before then you're actually looking for then the final approval.

I got you. Okay. And then with regard to the performance, you said performance at Trident has been good. I guess, the last data point we had was the fiscal year ended June 30, 2018 when revenues were $46 million and EBITDA was $9 million as I recall.

That is correct, Alex.

Okay. And then you did say Ashish, that you expect Trident to be accretive to adjusted operating income in 2020?

Accretive to our earnings in 2020, that is correct. And as Todd mentioned, as we move forward, we will give you more updates as deem appropriate.

Most likely on the next conference call, that will be first quarter call?

Yes, the sequence would be what we would hope is that, once we get all of the finalapproval in place, and then possibly issue, an 8-K around that, and a little bit about their performance, but then would not be able to provide an outlook at that time, because it would be, just in a couple of weeks, you wouldn't have a chance to do that. But then, we would hope to be ready by the May call.

May call.

Well, I think we all take comfort in the outlook that it's going to be accretive. So, it could --

And that's why again, without, again, we want to be careful with the information we provide, but as you know, from the prior information that was out there, if we're paying at the high end of that, that gives you a pretty good indication of at least what we're hearing where they are.

Got you. Shifting gears a little bit. Your corporate relationships at CTU, up to 19% of total population, up from 16% in 2018. That’s a number you get just once a year. Do you have an update on the AIUs corporate partnership? I know that they kind of started that process after CTU.

They did and we continue to invest in that. We're actually very hopeful this year. They've got some very talented people that they brought into the process. The investment has been made and so we're again, although, we haven't provided any update on where they are from a total student count, but we're very optimistic about this year. They have a lot of good things in place.

Just to follow-up on the repo question. I don't have the press release in front of me. Did you do any share repurchasing in 2019 or in the fourth quarter?

Yes, we did. We did purchase in the fourth quarter on just about under 250,000 shares at an average price of $16.49.

Great. And then what is -- pardon me?

Which was about $4 million.

Okay. And then, just remind me, what was the total authorized amount by the board?

$50 million.

So that means you've got $46 million left.

$46 million, that is correct.

Okay. And then at your Investor Day, you had given organic growth goal for 2022. You said mid-single digit revenue growth, high single digit to low double digit, adjusted operating income growth, adjusted operating income margins are 22% plus by 2022, driven by mid-single digit new student enrollment growth. Has anything changed there? Are you giving an update to that at all, anytime soon?

No. Again, at this point, obviously, the outlook we gave today is the outlook and then obviously, if there are future Investor Days, we would hope to update that. But at this point, the outlook we provided today is there.

Okay, that's great. And then last little nitpick sort of question. The arbitration settlement for $7.1 million, has that been paid yet or is that going to get paid in the first quarter? I thinkyou had said previously in the first quarter subject to certain approvals and so on?

Yes, we expect to pay that in the first quarter.

Okay, but the others have been paid, the State Attorney General's and the FTC that's allbeen paid off?

That's right.

That's correct, yes.

The State Attorney Generals were paid early last year, and then the FTC was paid in the fourth quarter of 2020 -- 2019. Sorry.

Okay, great. And then let me just throw one last one here. In your response to the first question on M&A, you continue to be very active, looking at most schools and universities, but other education companies. Can you give us some sort of idea what other education companies could look like?

Sure. I mean, I think if you look out there, those things that are related to what we do, so for example, certain educational technology initiatives that we're seeing, but also those that are offering certification type programs there. We educate a lot of students that are looking for those types programs. So the ability to connect those two, I think would be some real synergy, not just maybe in cost savings, but also I think, as far as future revenue growth because of the connection there.

Great. Well, that's helpful. I appreciate that additional color. And again, thanks for answering my questions, and congratulations on the quarter.

Thanks Alex.

Thank you.

Our next question will come from Greg Pendy with Sidoti. Please go ahead.

Hey, guys, thanks for taking my questions. Just one, Ashish, if you just clarify, I think you said AIU would be down in 1Q and up in 2Q, was that new or total student enrollments or both?

No, new student enrollments, we do not talk about total student enrollments on a quarterly basis. So, what I referred to down Q1 up Q2 was new student enrollments and on a combined basis, we expect that to grow.

Got it. That's helpful. And then also could you just kind of talk about the marketing plan in 2020? I know a lot of peer companies are sort of shifting to more of a focus online. Do you feel that what you achieved last year it's pretty much going to be a consistent plan in 2020?

Yes, in fact, again, we've had good success this past year in our process. And so we're going to continue with that. But, we've also had meetings with some of our providers that I believe are going to also enhance that. It's hard to give any outlook on would that reduce marketing costs or that nature, but again, we think of improving on the quality of the lead, but also continue to provide the pipeline to those leads. But again, good success in the past year, but some of the things we're working on the marketing team we think should be and could have some positive results for this coming year.

Okay, great. Thanks a lot.

Thanks, Greg.

Thank you.

This will conclude our question-and-answer session. I would like to turn the conference back over to Todd Nelson, for any closing remarks.

Again, thank you for joining us and we look forward to speaking with you next quarter.

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