Good evening, and thank you for attending today’s Perdoceo Education Corporation Fourth Quarter 2021 Earnings Conference Call. My name Selina and I will be your moderator. [Operator Instructions]. I would now like to pass the conference over to our host Davis Snyder with Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2021 earnings call. With me on the call today is Todd Nelson, Executive Chairman; Andrew Hurst, 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 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 those 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, 2021, and subsequent 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 are 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 would like to turn the call over to Todd Nelson. Todd?

Thank you, Davis. Good afternoon everyone, and thank you for joining us for our fourth quarter and full year 2021 earnings call. I'd like to begin by thanking our faculty, students support staff, and all our employees for their hard work, dedication, and diligence in serving and educating our students. 2021 was another good year during which we prioritized resources for academic operations and technology enhancements. While adjusting our operating processes to support and educate our students as they adapted to the challenges presented by the pandemic. We're also pleased with the two acquisitions completed in the second half of 2021, which expanded our institutions portfolio, the non-degree professional development and continuing education offerings. Supported by our existing university operations, we believe these businesses have significant opportunities for growth. I'd also like to welcome Andrew Hurst to today's call as our new President and CEO. Andrew is an industry veteran with almost four decades of experience, including over seven years at Perdoceo. I've had the pleasure of working with Andrew for a long time and look forward to working with him going forward. Now to our operating results, fourth quarter net income was $24.5 million, or $0.35 per diluted share. While adjusted earnings per diluted share, which exclude certain significant and non-cash items was $0.40. During the quarter, our teams continued to refine and adjust marketing and admissions processes, while maintaining their focus on student experiences retention and academic outcomes. Let me quickly touch upon some of the key takeaways and highlights from the fourth quarter and full year 2021. First, as discussed last quarter, we believe the prolonged pandemic and as resulting safety measures as well as the macro economic and governmental responses has impacted overall student engagement. During the year we experienced some student pause their academic programs to decide or to decide not to be in classes and we believe this will have a lingering impact on total student enrollments during 2022. However, we did experience marginal improvements in student engagement during the fourth quarter and remain cautiously optimistic that those improvements will continue through 2022. Two, beginning in the third quarter and aided by data analytics, we made adjustments to our marketing strategies to further improve our focus on identifying prospective students who are more likely to succeed at one of our universities. We believe these adjustments along with the enrollment trends I just discussed, will impact total student enrollment during 2022. However, in the long run, we believe these marketing adjustments will further enhance student experiences retention and academic outcomes. And then lastly, the leadership team did an excellent job in managing overall expenses, responding in part through recent student enrollment levels, while continuing to prioritize resources for our students serving functions. With that, I'd like to turn it over to Andrew to discuss some of the operating trends at our academic institutions. Andrew?

Thank you, Todd. I'm excited to be stepping into my new role at Perdoceo and I strongly believe that our goal is to serve and educate students, including non-traditional adult learners. Our academic institutions have strong and experienced leadership teams that are focused on enhancing student experiences and academic outcomes. With that said, total student enrollments at December 31, 2021 decreased by 5.4% as compared to the prior year end. At CTU total student enrollments increased by 0.4% as compared to the prior year end, primarily due to its academic calendar redesign. As a reminder, CTU implemented a redesigned version of this academic calendar in early 2021. Similar to what AIU implemented a few years ago. At the AIU system, total student enrollments decreased by 13.3% as compared to the prior year end. We believe this decline was attributable to the factors Todd discussed earlier. Additionally, active duty and military affiliated student populations experienced a decline in total student enrollments, which we believe is due to the lingering impacts from the transition of the army education and administration portal, and the subsequent technical challenges with the portal as well as the cancellation of in person events at military basis as a result of the COVID-19 pandemic. A few other operational updates before I turn the call over to Ashish. Growing the corporate partnership program remained a key priority at both institutions. And as previously mentioned, CTUs enhanced corporate partnership team is fully in place and engaging with employers to leverage their tuition assistance programs and provide a debt free education to their employees. On the academic front, our universities maintain their full time and adjunct faculty staffing levels CTU and AIU redesigned over 400 courses during the year and our intellipath adaptive learning maps were also enhanced for improved student…

Thank you, Andrew, and welcome again. I will review the full year and fourth quarter results and then discuss our balance sheet and 2022 outlook, before handing the call back to Andrew for his closing remarks. Please note that all comparisons I discuss are versus the comparative prior year period unless otherwise stated. Before I begin a quick reminder about year-over-year comparability. First, operating results for the AIU system reflect the DigitalCrafts acquisition commencing on August 2, 2021. And the operating results for CTU reflect the Hippo acquisition, commencing on September 10, 2021. Second, as previously discussed, we no longer include adjustments for any expenses related to close campuses when presenting adjusted operating income or adjusted earnings per diluted share, because these expenses are no longer material. Third, we are also adjusting for legal fees associated with certain matters. All prior year period amounts have been adjusted to maintain comparability. With that said, let us begin with an overview of our operating results. For the full year 2021, operating income increased 4.3% to $149 million. We believe adjusted operating income, which excludes certain significant and non-cash items is more reflective of the underlying operating performance. This measure was $175.5 million, exceeding our latest outlook range of $167 million to $170 million and reflecting an increase of 10.4% versus the prior year. The improvement versus our outlook range was primarily driven by lower bad debt expense, as well as some non-recurring reductions in occupancy related expenses. Net income for the year was $109.6 million, compared to $124.3 million, equating to $1.55 per diluted share. Please recall that the prior year included a $16 million tax benefit related to a previously recorded valuation allowance against the portion of our foreign tax credit carry forward supported by an overall domestic loss account balance.…

Thank you, Ashish. In closing, I'm proud of the company we have built and the opportunities that lie ahead of us. While the evolving regulatory environment may present near term challenges, our academic institutions remain focused on serving and educating students and our investments will continue to prioritize student experiences and academic outcomes. I would like to thank all of our students and staff for their ongoing hard work and dedication this year. We will now open the line for analyst questions. Selina?

Thank you. [Operator Instructions] The first question comes from Alex Paris with the Barrington Research. Please proceed.

Hi, guys, thanks for taking my questions. And Andrew, congratulations on the new position. I look forward to working with you.

Thank you, Alex.

I'm going to get a couple of regulatory questions out of the way since you brought it up. The 10-K you talk about negotiated rulemaking, which is ongoing and we're aware of that. What are your thoughts there in terms of bringing it up, first of all? Are you seeing anything there that you are concerned with? Obviously, they're looking at gainful employment, they're looking at creating some regulations to wrap around the 90/10 law. Maybe just a little color there and overview and what you're seeing and what you're thinking?

Sure. Thanks, Alex. Yes, we obviously continue to monitor that very closely. And if you look at the list of topics, those I think were mostly to be expected as far as where it eventually ends. It's obviously difficult to tell as you know, they're continuing with their meetings and then what will happen is they'll put out a potential rule that's open for public comment, then that goes through a lengthy process, and then, again, eventually would know what the new rule would be. But as far as anything specific about 90/10, are gainful employment, again, difficult to tell, because, we have that one rule and gainful employment with the Obama administration and a different one with the Trump administration. So, obviously, we'd be expecting some changes going forward. But at this point, it's just too early to tell what that would amount to.

Got you. Also, with regard to the borrower's defense to repayment, and the legal fees that you've been accruing. We talked a little bit about it last fall, when you like many others in this space, got requests for information from the Department of Education. Any update there? I mean, how many students are they looking at? And can you just provide some color there?

Sure. Again, I think probably the best information would be just refer to the 10-K on that, Alex, because there's a lot of stuff as you follow what's going on in the industry. Again, a lot of things happening, every school is a little different. But and I would just recommend, again, the 10-K is probably the best source of that, the detail information.

Fair enough. I will look at that. You mentioned the issues, in the challenges with the Army technology platform for tuition assistance. Have things improved there? I know there's clearly an impact during 2021. Is it functioning normally by the fourth quarter or is it functioning normally now?

Right. And I would not say that, I think again, we tried to find ways to work with it as is and hope to see that improve going forward. But again, at this point, it's certainly not as efficient as it was.

Got you. The marketing changes that you made, we talked a little bit about this on the third quarter. And it was your expectation that combined with macroeconomic COVID-related issues could have a negative impact on student recruiting in the short run, but it should improve things in the long run. What are you doing there and how is that going?

Two parts to be answered. One is as it relates to the pandemic, again, difficult to know, how long the impact there, as I said, we're cautiously optimistic we're seeing some improvement in student engagement. But that's something we have to continue to watch. And as far as really any, impact beyond that. It's, again, I think any of us guesses as far as how long that would go on? And what was the second part of the question, Alex?

The marketing initiatives that you've embarked on to target those students that would be most likely to be successful? And that would have to short-term impact on enrollment? Are we seeing that? What are you doing there specifically?

I think again, that, we really focused on the technology applications, we have to data analytics to find those students we feel would have the most opportunity to succeed in the programs. And again, there is some short-term impact on that. But as far as our feeling is, is that in time that would increase the amount of those people who are successful in the programs and the outcomes, as far as the total impact on enrollment that at this point, it's just too early to tell.

Got you. And then I think Ashish mentioned with regard to total student enrollment throughout 2022. It'll start off negative, the fourth quarter was negative in the aggregate. And so I would ask you to [share] [ph] cadence of the quarters. Ashish, where does it bottom? And does it inflect positive before the end of the year? I realized it'll be negative for the full year. But I think you said it, the total student enrollment will be lower at the end of the year versus at the beginning of the year, but the rate of decline should diminish as we move forward. Is that correct?

Yes, that is absolutely correct, Alex. The total student enrollments will be lower, as I've mentioned, but the rate of decline will gradually improve. As Todd was talking about the marketing initiatives, they start to lapse and Alex to your earlier question, second half is where we may see some of the benefits of the marketing strategies. And that is what will contribute to that gradual improvement in total enrollments.

Got you. All right. Well, thank you for that. My last question any updates on DigitalCrafts and Hippo, they've been with you now for six months or so at least DigitalCrafts has been, I realized that did not have a material impact on operating income, but and actually one of them DigitalCrafts as part of AIU, and Hippo was part of CTU.

Actually the more we're getting to know about them and work with them, the more impressed we are with their potential for growth. They have great management teams. And as we look at the potential market, it's very exciting to see where that could go. But as you said, it's too early at this point to have much of a material impact. But, again, the deeper we get into it, the deeper we're impressed with their opportunity to go.

Great. Well, thanks for that additional color. I appreciate it. I'll go back in the queue.

Thank you, Mr. Paris. There are no additional questions waiting at this time. So I'll pass the conference back to Andrew Hurst for additional remarks.

Thank you, Selina. And thank everyone for joining us today. We look forward to talking with you next quarter.

Thank you.

Thank you.

That concludes the Perdoceo Education Corporation fourth quarter 2021 earnings conference call. Thank you for your participation. You may now disconnect your line.