Perdoceo Education Corporation (PRDO) Q1 2020 Earnings Report, Transcript and Summary

Thank you for standing by. Welcome to the Perdoceo Education Corporation Q1 2020 Earnings Call. All participants will be in 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, Investor Relations. Please go ahead.

Thank you, Jesse. Good afternoon everyone and thank you for joining us for our first quarter 2020 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 Web site.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. Before I discuss the quarter, let me first acknowledge the unique challenges as well as the social and economic impact that the COVID-19 pandemic has presented to our communities.To that point, the health and wellbeing of our students, employees and communities is our top priority. Being a primarily online learning institution, most of our students were already taking classes online. Further, with the help of our scalable and innovative technology infrastructure, campus-based students are also now taking classes online.Additionally, we have transitioned to a remote work environment and provided our employees with the tools and resources necessary to work remotely. COVID-19-related costs and other impacts to us thus far, including costs of transitioned students and employees to remote environment, are not material to our operating results. We are also closely monitoring all aspects of our operations and will strive to serve our students well while promoting the health and wellbeing of our employees and communities.With that background, let us discuss the quarter. We entered 2020 with positive momentum at both universities, which resulted in first quarter results that came in ahead of our expectations. This highlights our execution against the objective of sustainable and responsible growth.Some key operational highlights include; first, growth in quarterly revenue and operating income versus the prior year quarter as we continue to prioritize investments in student-serving processes and initiatives that positively influence student experiences, retention and academic outcomes.Two, enrollment trends at both universities continue to be positive, reflecting sustained levels of prospective student interest, which was well served by our student support infrastructure. Three, our previously announced acquisition of substantially all of the assets of Trident University International was completed in early March. We’ll refer to this asset acquisition transition as the Trident acquisition for the remainder of today’s discussion.We have been working proactively on a smooth integration of Trident’s academic programs into AIU and are pleased to welcome their faculty, students, staff into our organization. The Trident acquisition enables the combined institution to continue serving existing and future students with a broader range of program offerings and resources, and is in accordance with our strategy to evaluate acquisitions of quality educational institutions and academic programs.And lastly, while transitioning students and employees to remote environment, we continued to strategically invest in our student-serving functions and looked to further enhance and improve our technological capabilities that enable our staff to better serve and support our students.I’ll expand further on some of the successes of the quarter shortly. Ashish will then cover more in more detail around the financials and provide an update of our 2020 outlook before I add some closing thoughts to end the call.Now to our operating performance for the first quarter. We reported net income of $29.1 million or $0.41 per diluted share, while adjusted earnings per diluted share, which excludes certain significant and non-cash items, was $0.42. Adjusted operating income was $40.8 million, a 23.7% increase from the prior year quarter, with the improvement primarily driven by revenue growth at our universities.We continue to focus on student retention, engagement and academic outcomes across our academic and support teams. And I believe that we are well positioned to serve and educate current and prospective nontraditional students, including adult learners. Both universities experienced enrollment growth for the quarter, with total student enrollment up 12.3%. At CTU, total enrollments as of March 31, 2020 increased 4.8%, primarily due to new enrollment growth of 16.8%.We are encouraged by these results that were supported by an increased level of efficiency within CTU’s student enrollment process. Employee tenure for various student support functions is increasing, and our teams are using technology to provide the most effective and relevant support to our students.CTU continues to maintain its corporate partnership program and is coordinating with our current partners to best serve their students during these uncertain times. Our dedicated team collaborates with our corporate partners to offer academic programs that center around the organization’s educational priorities, which makes these partnerships mutually beneficial.We have experienced improved efficiencies by CTU admission – academic and advisement teams, which have been augmented by advanced technology tools. With student experiences in mind, these teams have also focused on further improving core sequencing and orientation to promote greater student engagement and learning. Overall, we are pleased with the continued success of these various initiatives and investments as CTU continues to efficiently and effectively serve current and prospective students.Now turning to AIU. Total student enrollment as of March 31, 2020 increased 26% as compared to the prior year as a result of the Trident acquisition. As a reminder, quarterly enrollment results were significantly impacted by AIU’s academic calendar and the resulting number of enrollment days in any given quarter.There were approximately 31% less enrollment days at AIU in the first quarter of 2020 versus the prior year quarter. The negative impact of less enrollment days was partially offset with the positive impact of the Trident acquisition, and resulted in a 14.2% decline in new enrollments versus the prior year quarter.But, even after excluding this variability in enrollment days and the positive impact from Trident acquisition, we believe AIU continued to experience underlying organic growth in new student enrollments, which also contributed to revenue growth in the first quarter.We continue to invest in AIU’s admissions, advising and financial aid functions. Our graduate teams at AIU are well equipped to serve prospective student interest utilizing a holistic method to support students through the admissions and financial aid processes, and our financial aid teams continue to focus on getting students financially prepared before they start school.Increasing use of technology is enabling the advising teams to provide relevant support to our current students and we are seeing positive signs within our student engagement process. Overall, we are pleased with AIU’s progress and its efforts to effectively and efficiently integrate the Trident academic programs, students, faculty and staff into its operations.Even in the midst of transitioning our students and employees to a remote environment, technology, in general, continues to be a focus of our efforts to serve and educate students. We are expanding its use to help customize the enrollment outreach and learning processes to provide a better experience for our students. A student and faculty mobile app, data analytics using AI and machine learning and a customized student enrollment process are our current focus areas within technology.A note on the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and its positive impact on our students. Under the CARES Act, the Department of Education has provided funds for students to assist them with the financial challenges and disruptions they face in the sudden closing of the campus.These funds were to be awarded half to the students and have to the institution. However, both CTU and AIU will not be keeping any of these funds for the institution but have committed 100% of these funds to our students to assist them in light of the COVID-19 pandemic.To conclude, I’m extremely proud of the faculty and staff at both universities who have undertaken various measures and precautions to help keep our communities safe, while still delivering on their commitment to student support and education.Our faculty and advising teams have experienced increased engagement with current students and are closely working with those who have been directly or indirectly affected by the pandemic, providing them with the necessary flexibility and support as they were to complete their educational study.The hard work and dedication of our employees is helping us navigate these uncertain times while fulfilling our commitment to our students. These efforts are exemplified by our consistent operating performance, and we believe our universities are positioned to execute well against our objective of sustainable and responsible growth in 2020.A quick update on the letter from the U.S. Department of Veterans Affairs, or VA. We have provided the VA with detailed information about our current processes, which we believe should demonstrate to the VA that we are in compliance with their requirements, and that any necessary corrective action for any deficiency they have identified in their letter was previously taken. The VA has extended the period of their review by 30 days to June 7, 2020. We intend to engage in a dialogue with the VA during this period and are eager to resolve this matter quickly.With that, I’d like to hand the call over to Ashish for a more detailed review of our first quarter 2020 results, balance sheet and updated 2020 outlook, which now reflects the Trident acquisition, among other items. Ashish?

Thank you, Todd. I will review the first quarter 2020 results and then discuss our balance sheet and updated 2020 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, a quick comment on the year-over-year comparability. Beginning March 2, 2020, operating results for AIU will incorporate the Trident acquisition. As Todd mentioned, the first quarter results reflect the positive momentum coming into 2020. Total company operating income was $37.3 million, an improvement of $7.3 million or 24.5% as compared to an operating income of $30 million.We believe adjusted operating income, which excludes certain significant and non-cash items is more reflective of the underlying operating performance. This measure increased 23.7% to $40.8 million for the quarter and was above the high end of our outlook range of $37.5 to $39 million, even if we were to exclude the positive impact from the Trident acquisition.Net income for the quarter was $29.1 million or $0.41 per diluted share, while adjusted earnings per diluted share, which we believe is more reflective of the underlying operating performance, was up 16.7% to $0.42 per share.The improvement in operating performance was primarily due to the revenue growth at both universities, reflecting underlying enrollment growth that was well supported by our student-serving operations.Also benefiting our first quarter results was the Trident acquisition, which closed on March 2 as well as timing of certain operating expenses. Some of the cost items partially offsetting these positives were investments in marketing and student-serving functions and costs associated with our compliance monitoring efforts.Now on to more specific details around the quarter. Total company revenue increased by $13.1 million or 8.3% to $171 million as compared to the prior year quarter. As it relates to our segments, revenue at CTU was up $6.5 million or 6.7% to $103.6 million for the quarter, supported by positive enrollment trends, while operating income of $34.6 million was up 16.6%From an expense perspective, CTU continues to be diligent in prioritizing spend towards student-support initiatives with efficiencies across various administrative processes, offsetting incremental investments in marketing.Revenue at AIU increased 10.9% to $67.4 million for the quarter, supported by growth in underlying enrollment trends as well as the Trident acquisition. Partially offsetting the revenue growth was increased investments in marketing and student support processes.Also included in the first quarter results were certain restructuring and integration costs associated with the Trident acquisition. The resulting operating income of $9.4 million was up 12.8% from the prior year quarter.A quick note on bad debt expense for the company. We continue to invest resources to help students financially prepare for school so that they are more likely to complete their program of study. On that note, bad debt as a percentage of revenue is relatively flat as compared to the prior quarter and prior year quarter. While we still expect fluctuations, we are encouraged with these recent results.Moving to enrollment. Total student enrollments at CTU grew by 4.8%, supported by new enrollment growth of 16.8% versus the prior year. As Todd mentioned, this enrollment growth is reflective of the consistent levels of prospective student interest that are being well served by investments in our admissions and advising functions. Looking forward, we expect new enrollments at CTU to grow in the second quarter and for the full year of 2020.Total student enrollments at AIU increased 26% for the quarter due to the Trident acquisition. New enrollments decreased 14.2% for the quarter as a result of the academic calendar, which negatively impacted the number of enrollment days for the quarter.Excluding the impact of the Trident acquisition, AIU’s new student enrollments would have decreased 22.9% in a quarter with 31% less enrollment days than the prior year quarter. There tends to be a strong correlation between the new enrollments and the number of enrollment days in any given quarter, and we therefore believe AIU’s first quarter new enrollment results reflect underlying organic growth year-over-year.Recall that the academic calendar at AIU, specifically the number of enrollment days in any given quarter has a significant impact on the new student enrollments for that quarter. As a result of this timing impact, we expect new enrollments at AIU to show significant growth for the second quarter, primarily as a result of approximately 50% more enrollment days as well as the Trident acquisition.This increase is expected to more than offset the decline in new enrollments from the first quarter of 2020, such that on a combined basis, AIU is expected to show growth for the first half of 2020, even after excluding the positive impact from the Trident acquisition.Looking ahead, on a full year basis, AIU’s 2020 academic calendar is relatively comparable to 2019, with a consistent number of revenue and enrollment days for each year. And we expect AIU to experience enrollment growth for the full year 2020. Also for the third and fourth quarters of 2020, we expect enrollment days to be comparable for each quarter as compared to the respective prior year quarter.A quick update on corporate and other. This category includes residual operating losses associated with closed campuses. Operating losses associated with closed campuses were approximately $1 million in the first quarter as compared to $2.8 million in the prior year quarter, with the improvement primarily driven by lower professional fees associated with legacy legal matters.Now to income taxes. We recorded a provision for income taxes of $9.6 million for the current quarter, which resulted in an effective tax rate of 24.8%. The tax rate for the quarter was benefited by approximately 1.9% related to the release of tax reserves and the tax effect of stock-based compensation.For 2020, we expect our tax rate to be between 25.5% and 26.5%. And we are not assuming any material benefit related to the release of tax reserves and the tax effect of stock-based compensation.The full year estimated tax rate is expected to be negatively impacted due to changes in tax reserves and the tax effect of expenses that are not deductible for tax purposes. Separately, we ended 2019 with approximately $108.5 million of federal net operating loss carryforwards, which are available to offset future taxable income. As a result, specifically as it relates to 2020, we do not expect to pay any federal income taxes.Now let me spend a few minutes reviewing our balance sheet. We ended the quarter with $285.6 million of cash, cash equivalents, restricted cash and available-for-sale short-term investments, which will be referred to as cash balances for the remainder of today’s discussion. This represents a decrease of $8.6 million over year-end 2019.Key drivers of cash in the quarter are; positive cash flows from operating activities, which already reflect payments made in relation to the settlement of Oregon arbitration’s matter, were offset by cash outflows related to the Trident acquisition and the repurchase of approximately 1.3 million shares for a total of $17.3 million at an average price of $13.48 per share.Capital expenditures were approximately $1 million in the first quarter as compared to $0.5 million in the prior year quarter. For the full year of 2020, we foresee capital expenditures to be approximately 2% of revenues.We completed the acquisition of substantially all of the assets of Trident University International on March 2 and are diligently working on a seamless integration for the incoming students, faculty and staff. The final cash purchase price is expected to be approximately $44 million, which includes an estimate for working capital and is subject to final adjustments pursuant to the purchase agreement.We have already paid approximately $38 million through the first quarter of 2020. However, that amount includes $4 million deposited into an escrow account, which is reflected as restricted cash on our balance sheet. Overall, the company is executing well against its objective of sustainable and responsible growth with investments in student-serving initiatives and technology showing positive results.Finally, to our 2020 outlook, we are updating our outlook to reflect the accretive impact from the Trident acquisition and to incorporate known cost estimates related to restructuring and integration efforts. Further, the outlook does not contemplate any material impact from COVID-19 on our future operating results based on the indicators and trends we have observed to date, but includes known costs associated with the COVID-19 efforts.The updated full year 2020 outlook is as follows. Full year adjusted operating income to be in the range of $151 million to $155 million as compared to $134.3 million in 2019. This is consistent with our overall objective of sustainable and responsible growth. Adjusted diluted earnings per share is forecasted to range between $1.49 and $1.53 per share versus $1.37 in 2019.For the second quarter outlook, our second quarter outlook reflects the company’s expectation of growth in new student enrollments at CTU and AIU. AIU’s new enrollments are expected to show significant growth due to 50% more enrollment days in the second quarter of 2020 as well as the Trident acquisition.Further, the company expects adjusted operating income to be in the range of $38 million to $40 million versus $32.8 million in the prior year and adjusted earnings per diluted share to be in the range of $0.36 to $0.38 versus $0.34 in the prior year.Please refer to the earnings release filed today for important information about key assumptions and factors underlying this outlook, other expectations discussed on today’s call and the GAAP to non-GAAP reconciliations.With that, I will turn the call back over to Todd for his closing remarks. Todd?

Thanks, Ashish. Pleased with our first quarter operating results as we continue to execute on our strategy. While the current uncertainty presents a challenge to our communities and the world at large, we will continue to – our focus is on positively impacting student experiences, retention and academic outcomes, while focusing on the wellbeing of our students and employees.I believe we’re building a leadership position in online postsecondary education and we are well positioned to serve and educate current and prospective nontraditional students with a focus on adult learners. Thank you again for joining us today.And we’ll now open the call for any analyst questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Dan Moore with CJS Securities. Please go ahead.

Hi. Good afternoon. It’s Pete Lukas for Dan. I’ll start with a big picture question. Can you talk about what you’ve learned so far from Trident now that you’ve had the chance to get under the hood for the last several weeks, anything special stand out at you there?

Thanks. Hope everything is well with you and your family. Yes, the thing that’s probably has been most encouraging is the quality of their team, their staff, their faculty. We’re very encouraged by, again, their understanding of the industry and again their ability to continue to execute and operate in an integration-type setting. I think that’s always been a concern when you have two institutions coming together. But I do think that shows, again, the maturity and the experience of their team as well as that of AIU and Perdoceo, those support services. So thus far, we expected it but I didn’t think it would be going as well as it is. We’re optimistic as well that as we get later into the year, the ability to benefit from the breadth and depth of programs that they’ll bring to us. So thus far, we’re very encouraged.

That’s great. Congratulations again on that. And if you could just remind us what percentage of these students across the board, CTU, AIU, including Trident, have their education partially or fully funded by their employer? And are you seeing any measurable uptick or changes in that with the high unemployment there now?

We haven’t – I’ll let Ashish comment on that. I don’t think that we’ve disclosed any of that this quarter. We had last quarter, which we did at a percentage. But just in general, we’ve not to this point noticed any material change in our relationships with those corporations providing reimbursement. Obviously, we’ll continue to monitor that as the year goes on and as we see how long the pandemic lasts and the impact on that. But at this point, nothing meaningful as far as any change. Ashish, you want to add to that?

Sure. As Todd mentioned, we don’t disclose anything this quarter. But for year-end 2019, we did say roughly about 19% of enrollments at CTU come from such partnerships and AIU is much lower than that.

Great. Very helpful. Thank you. And then if in fact there were to become an issue in terms of the unemployment creating a problem, what other levers do you think could you still pull to prioritize profitability?

Well, again, I think that we have an enrollment staff and our ability then if we were to see maybe a pullback in some of those areas, the corporate areas, we would redeploy those resources in to areas that – other areas that are not in the corporate area, the reimbursement area. But again, those resources are still available to do that. But as far as we continue to work with those companies to see if there’s other things we can do to help. But again, at this point, very difficult to say depending on how long the situation goes.

Great. Thanks. And last one for me just one on the numbers question in terms of the guidance. It looks like adjusted operating income and adjusted EPS went up modestly, approximately $4 million operating income, and I think $0.04 to $0.05 adjusted EPS despite the addition of Trident, which I believe carried an 8 million to 10 million EBITDA on an annual basis. Are you building in some incremental headwinds or just do you think kind of being conservative?

Well, again, like I said, it’s only a partial year. So we don’t – you’re right. We don’t bring in the full year of that. That’s number one. Number two, there are some associated integration costs that you’d expect. And I think we want to be cautious, especially as we combine the two that we’re not too overly optimistic about the contribution this year. Ashish, you want to add to that?

No, I think that’s it. And also, as you know, as we mentioned, the outlook also incorporates some known costs associated with COVID. So once you take that into account, the fact that it’s a partial year. In addition, we have some integration costs, restructuring costs. I think that should account for the math there.

Very helpful. Thank you and congrats again on the quarter.

Thank you.

Thank you. The next question comes from Alex Paris with Barrington Research. Please go ahead.

Hi, guys. How are you?

Good. Hope everything’s well with you Alex and family?

Yes, everything is good here. Hope the same for you guys. I wanted to congratulate you on the beat and raise, quite rare in this environment over the last couple of weeks. I wanted to talk to you about the top of the funnel. You noted to the previous question that you haven’t seen much change from your existing relationships with corporate partners. What does the top of the funnel look like? One could argue with everybody being home, there’s more time to go to school online. One could argue in the long run, online is going to be more accepted. But there are people at home, worried about their jobs, worried about money, the kids are running around. Have you noticed any changes positive or negative to the top of the funnel in terms of inquiries, leads, and then the impact of your investments on conversion rates?

Yes. It’s interesting because, again, that’s such a good point you make. I do think that at least from my prior experience that in this type of environment, there tends to be a higher level of interest from prospective students, mostly because again there’s – I think there’s a certain amount of concern that we all feel and as a result I think people are trying to improve themselves, their marketability, their ability to get jobs, keep jobs, those kinds of things. And so typically, you would see that. I think from our lead flow, we haven’t seen any disruption, probably a little bit of an increase. But again, I would say the best way to say is consistent with a slight amount of improvement. And as far as, again, from a – you can see from a new student perspective, from the results this quarter, it was very encouraging. Again, the length and depth of obviously the challenge that the overall economy is going to face, it’s hard to predict where that’s going obviously, but I do think that with people, as you said, just time at home to focus on it, our ability to deliver the quality education wherever they are remotely, is certainly to our advantage and to their advantage as well. So again, hard to say how that will be throughout the rest of the year. But our hope is that life will get back to normal soon. But in the meantime, again, thus far, we’re seeing on that the top of the funnel, as you said, continues to be stable to encouraging.

Great. And then corporate students aside, anything noteworthy in stop-outs or dropouts since this COVID situation started versus your normal expectations?

Good question. Again, relatively stable. Again, from a retention perspective, I would say we’re encouraged by things. We haven’t really seen any negative impact. But let me just see if Ashish, if he would like to add to that.

No, I think nothing from my end. I think, as Todd mentioned, it’s relatively stable. And we are watching all trends very cautiously. But so far, nothing that jumps out.

And then the last question in that series of questions, how about the campus-based students? I realize it’s not a big number. It’s a small number. You’re 95% online across both universities. But those who have been forced to move fully online, anything noteworthy there, stop-outs, refund requests, anything like that? I have kids that go to traditional schools and in the 18 to 22-year-old range. And every parent I talk to says, hey, where’s my discount, assuming that there should be some discount associated with online, which is not the case. We all know that the costs are pretty comparable.

Yes, it’s interesting because you’re right. Over 95% of our students are being online already. It was not difficult to migrate those on-ground students to an online format. And Ashish, I’ve not seen any additional refund requests over normal, have you? Again, I did not look at that specifically, but have you?

No, not to our knowledge and I haven’t seen it either.

One of the nice things about it is that obviously would be the first area that as things get back a little bit more normal to be able to bring back those students. You know the states that we do have locations or campuses are probably states that have not been impacted as bad as some of the other states, for example, as you know, Georgia, Texas, and Colorado. Those are the only – we have four campuses in those three states. And so again, there the environment is probably a little bit more conducive when that time comes. But at this point, again, so far, the students have been engaged in the on-ground locations in an online environment.

Just to be clear. Have you announced that you’re returning to campus at any of these campuses? Have you set a date for that or are you still kind of watching it?

We have not. We have had some discussions with certain programs in our Atlanta school and have had obviously looking at a few things in Texas. But at this point, not a definitive date, no.

And sometimes – I think one of the ed tech companies that reported recently said something along the lines of crisis could sometimes create great opportunity. And there are already very strong long-term trends towards online. And this particular company said this should accelerate it, pull forward demand for online, which bodes well for Perdoceo, first off. But during this period of crisis, have any traditional universities reached out to you, given your expertise in online, given your strong shared services operation for help? And I know in the past, you’ve talked about maybe creating an online, a hybrid online program manager in the future. This could be just that opportunity maybe when the crisis is behind us to be able to offer those services on a fee-for-service basis to traditional universities going forward. Any conversations there or any new thoughts with regard to hybrid OPM for Perdoceo?

We have not had any discussions as a result of this to this point. I do think, as you said though, there are some opportunities here because, again, of our experience of managing a very large online operation with good academic outcomes. And I think as more traditional universities with large on-ground numbers, they’re going to need to not only look to having an online platform, which is most of them do, but how do you find a platform that accommodates a massive number of students and still produce the level of outcome that we’ve been able to as well as have faculty prepared and trained to teach in an online environment. So again, to date, have not had any discussions, but I do think that there will be some future opportunities because I think they’re seeing one of the – at least from things that we’ve seen that and as they’ve moved to online, some of the challenges that they’re now experiencing, I think it would make sense for them to look to working with a partner that understands how to deliver that for large numbers of students.

Great. Well, thank you again. Thanks for taking my questions and way to go on the beat and raise.

Thank you.

Thanks, Alex.

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

Thanks for taking my questions. Just real quick, how should we be thinking about revenue per student at AIU just given the Trident acquisition second half versus the prior year? And just I guess within this quarter, is the downtick reflective of just a partial contribution from Trident with the March close?

Ashish, do you want to address that?

Sure. Yes. So from a revenue per student I think, Greg, the best way to look at historical trends and as with AIU, you need to look at a couple of quarters together to normalize those trends. And yes, to your point, for this quarter the denominator, like will have total all these students at Trident, but you will only have one month of revenue. So that will have some noise in there. So you are spot on that.

Okay, great. And then also just as we think about integration risk with Trident, just given the calendar and also maybe a difference in schedule of credits, is that something we should – that you guys feel you’ve worked through or is that something that poses a little bit of integration risk over maybe the next quarter or two?

Well, they will keep their same calendar. Trident will, again, because their model is a little bit different and so we don’t want to disrupt that. As you know, it’s a much – it’s a smaller institution. So again, it will have an impact but not a significant impact. But as Ashish said, this coming quarter, there is a significant amount of upside as far as number of enrollment days, 50%. So obviously, we will expect a big number as far as a year-over-year improvement. And then the second half, that has been factored in. And there’s – again, as he said, Q3 and Q4 will have a similar number of enrollment days year-over-year, so it’ll be relatively stable. Again, the goal as we said as we continue to get larger, a larger amount of scale, to hopefully have more of those quarters that are very similar in number of enrollment days year-over-year. So again, I think short term, you don’t see much impact. But long term, I think that does really assist in our ability to have a more stable academic calendar for AIU.

That’s helpful. Thanks a lot.

Thank you.

Thank you, Greg.

Thank you. There are no further questions at this time. That does conclude today’s conference. Thank you for attending today’s presentation and you may now disconnect.

Thank you. Thank you for joining us.

Thank you.