Good afternoon, and welcome to the Career Education Corporation’s Fourth Quarter Earnings Conference Call. All participants will be in 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.

Thanks Phil. Good afternoon, everyone, and thank you for joining us. With me on the call today is Todd Nelson, President and Chief Executive Officer; Ashish Ghia, Vice President of Finance and Interim Chief Financial Officer. This conference call is being webcast live within the Investor Relations section at careered.com. A web cast 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 involve 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, 2017 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 accompany 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?

Thanks, Sam. Good afternoon, everyone, and thank you for joining us on today’s call. I will begin by reviewing the fourth quarter and full-year results which came in ahead of our expectations. Ashish will then review the financial results and 2018 outlook in more detail, before I provide some final closing remarks. Let me also point out that, for the remainder of today’s discussion, references to ongoing operation represent results from the University Group and Corporate. We executed well against our objective of sustainable and responsible growth as demonstrated by our fourth quarter and full-year operating results and metrics, which are better than the prior year. Our initiatives and investments in student serving processes and operations were able to effectively serve the prospective student interest at our universities. For the quarter just ended, total enrollments within University Group, increased by 3.3% as compared to the prior year, and new student enrollments grew 15.4% as compared to the prior year quarter. Both AIU and CTU contributed to this growth. At CTU, total enrollments increased by 0.9%, and new enrollment increased by 7.4%, a second consecutive quarter of new enrollment growth. This growth has been supported by our initiatives and investments in student serving processes and operations, which are intended to improve student experiences, both before and after they are enrolled in our programs. We believe that the positive enrollment growth is a testament to the impacts of these initiatives and investments. Throughout the year, we have continued to invest in our admissions and advising functions to increase retention and help student outcomes -- help students complete their intended field of study. We expect this trend of improving student retention and academic outcomes to continue into 2018 and believe that consistently stronger attention over time will result in higher graduation rates. As…

Thank you, Todd. Today, I will start with a review of our 2017 operating results, and discuss our balance sheet, and finally conclude with our 2018 outlook before handing the call back to Todd for his closing comments. For the quarter just ended, total enrollments within the University Group grew by 3.3%, supported by new enrollment growth of 15.4%, as compared to the prior year quarter. This trend was primarily driven by our student serving initiatives and investments including the Phoenix admissions and advising center as well as improvement in overall retention trends. Also contributing to the quarterly enrollment growth was the academic calendar redesign at AIU. Fourth quarter University Group revenue increased by 5% to $142.4 million as compared to the prior year quarter, driven by various operating initiatives that contributed to the growth in new and total enrollments. For the full-year, revenue increased 1.3% to $569.6 million versus the prior year. Operating income from ongoing operations was $25.5 million in the fourth quarter and $95.5 million for the full-year, which compares to an operating loss of $17.9 million and an operating income of $44.7 million, respectively in the prior year periods. The improvement in operating performance benefited from continued efficiency in our marketing costs as well as improving enrollment trends. Also, recall that the prior year quarter included a legal settlement of $32 million. Adjusted operating income for ongoing operations was $28.1 million, in the fourth quarter and $105.9 million for the full-year, which reflects growth of approximately 67% and 19%, respectively as compared to the prior year periods. These favorable results were driven by improved retention, growth in new enrollment trends and efficiencies within our ongoing operating structure. Moving to our teach-outs. As expected, operating losses declined to $14.8 million in the fourth quarter of 2017, which…

Thanks, Ashish. 2017 has been a successful year for the Company as we continue to execute against our objectives of increasing growth as well as improving retention and academic outcomes. I’m very pleased with the progress we have made since 2014, improving from an operating loss of approximately $140 million to our outlook for operating profit of $84 million to $91 million for 2018. Throughout this process, our students remain our focus and priority. None of this would have been possible within the support, dedication and commitments of our students, our employees and faculty and our stock holders. 2018 represents a shift in the operating model of the Company as we complete our transition from teach-outs and restructurings, to investments, technology advancement and student initiatives. Going forward, we will continue to take a measured approach to balance our objectives of effective and efficient student services with our financial and operating commitment. Operational improvements made within student support operations, redesign of our course structure and content, investments in technology, and new admissions and advising centers in Phoenix are all contributing to better student engagement and responsible for growth. Our University Group performance is tracking in line with our expectations and we remain confident in the long-term potential and the academic value proposition of both universities. Thank you again for joining us today. And we will now open the call for any analyst questions.

[Operator Instructions] The first question comes from Peter Appert with Piper Jaffray. Please go ahead.

Thank you. So, Todd, the start number is very impressive. Any particular areas in terms of programmatic areas of strength that you would call out?

I’m sorry, Peter. What was the last part of your question?

Just trying to understand what’s driving the start improvement in terms of programmatic areas, new program…

Programmatic, that’s what it is. Yes. I mean, the good news is, is that I think this has really been a several-year process to improve the overall effectiveness of our advertising and then from that, going forward, our ability to improve the admissions process. And I think you combine that with continuing to invest in the programs themselves, I think that again allowed us to take advantage of the opportunities in the market. So, again, I think going forward, we’re encouraged by the demand. I think we have the right people in place to execute on that. And again, so, we’re quite optimistic about what we’re seeing going forward.

So, new program introductions were not really a part of the story in terms of driving the start inflection?

Well, again, I would just say this that although new programs tend to be small in size initially, we continue to have a robust product development process. But, I don’t -- I would really call out one particular program that’s had a big contribution. But, I will say going forward that we continue to be very-focused on new program development. And again -- and those build over time as you know, you get some momentum. But this year’s growth, I wouldn’t really attribute to any -- meaningful amount of that growth contributed to any -- was contributed by any one program, new program.

Can you talk, Todd, a little bit about your priorities for capital use, cash flow use, given that you are so far along now in the turnaround process and the cash balance is obviously higher than expected?

Sure, a good question. The first and foremost is, based on your earlier question, we continue to see good demand. And as a result, I think investing in that front end part of the business is our number one objective. And so, we would go right to again the Phoenix student advisement centers have been our main focus and we continue to be this year. We also, as I said earlier, we want to continue to devote money to resources, to program development as well as our belief is that technology not only is an enabler but it also enhances the learning experience and the differentiation that we hope will allow us to continue to gain -- not just again grow but to gain market share because we really do think we have the right teaching, learning model, the right technology in the classroom. So, I have to say, those are the short-term investments. I think beyond that, we would obviously be -- and are looking at very carefully the best way to deploy the capital and that would hopefully support the objectives of our shareholders as well.

So, is M&A a significant or n increasing focused then on a go forward basis?

I think that we should -- I think, it’s responsible for us to look at those opportunities. But again, will they support our overall strategy which is that consistent and responsible growth, and again focusing on high quality of programs and area of the market where again you feel you can benefit those students. But, I mean, I’d say, we certainly wouldn’t want to say no, but again, if it would add to and support our overall long-term strategy, I think, it’s very responsible for us to look at those things. Yes.

And then, just couple of questions for Ashish. Specific guidance around the tax rate for ‘18, can you help us with that? And then thoughts on capital spending in ‘18?

Sure. Let me go through the capital expenditures. Typically, I would say capital expenditures will range between 1% to 2% of revenues. So, that’s very good range to look at. As far as the tax rate goes, as you know, we have -- the new tax rate is 21%, plus we add some state taxes. So, a safe rate for next year would be anywhere between 26% to 30%.

Which seems little bit high actually relative to what we’re hearing from some other companies. Is there anything -- and I guess, it doesn’t really matter since with the NOLs you are actually from a cash standpoint not really paying any tax, is that correct?

Yes. That is correct for now because we do have $215 million of NOL. However, keep in mind there is some new changes around stock compensation. So, that’s inside, if you look at this year, that costs us 3 percentage points in our tax rate. So, I’m just taking all that into account and giving you a number. But, basically, that should be the range.

Okay. And then, Ashish, the teach-out losses then go to zero in 2019, or is there still some residual expense in 2019 from leases et cetera?

Materially very little. I mean, there might be some ongoing leases like some utilities and that kind of stuff but materially they should be down, they should be all out.

[Operator Instructions] Okay. This concludes our question and answer session. I would like to turn the conference back over to Todd Nelson for any closing remarks.

Well, again, as I said earlier, we appreciate you joining us for the call. And we do look forward to our call next quarter. Thank you, again.

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