Good afternoon, everyone. Thank you for joining today's Perdoceo Education Corporation Second Quarter Earnings Conference Call. My name is Dante and I'll be your operator for today's call. All lines will be mute during the presentation portion of the call with an opportunity for questions-and-answers at the end. I would now like to pass the conference over to our host, Mr. David Snyder with Investor Relations. Mr. Snyder?

Thank you, Dante. Good afternoon, everyone, and thank you for joining us for our second quarter 2022 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 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, 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 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 a 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 Andrew Hurst. Andrew?

Thank you, Davis. Good afternoon to everyone, and thank you for joining us. Overall, we are pleased with our operating results and continued progress during the quarter. I would like to thank our faculty, student support staff and all our other employees for their hard work, dedication and diligence in serving and educating our students. We continue to invest in technology upgrades and maintain appropriate levels of academic and student support services that we believe are positively impacting academic outcomes and student experiences. Second quarter operating results came in ahead of our expectations, in part due to better-than-expected improvements in student engagement, as overall macroeconomic and governmental responses generally wind down from the pandemic. Let me touch upon some of the key operational highlights from the quarter. First, while student engagement continues to show progress from the pandemic era lows, we continue to see some students pause their academic programs or decide not to begin classes, which impacted total enrollments for the end of the second quarter. We still expect total enrollments to be lower for the full year as compared to the prior year. Second, and as a reminder, beginning in the third quarter of 2021, we made adjustments to our marketing processes to further improve our focus on identifying prospective students who are more likely to succeed at one of our universities. While these adjustments will negatively impact total student enrollments during 2022, in the long run, we believe they should further enhance student experiences, retention and academic outcomes. Lastly, effective July 1, we completed the acquisition of substantially all of the assets and academic programs of California Southern University, originally accredited university. CalSouthern offers non-Title IV online associate, bachelors, masters and doctoral degree programs with a focus primarily in psychology, business management and risk management. Ashish will…

Thank you, Andrew. I will review our second quarter results and then discuss our balance sheet and the updated 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. Operating results for the AIU System and CTU reflect the two acquisitions completed during the third quarter of 2021. Also, the recent acquisition of CalSouthern will be included within the operating results of the AIU System beginning in the third quarter of 2022. With that said, let us begin with an overview of the operating and financial results. For the second quarter of 2022, total company operating income decreased by 5.6% to $33.9 million as compared to an operating income of $36 million in the prior year quarter. Adjusted operating income, which excludes certain significant and noncash items, which we believe is more reflective of the underlying operating performance was slightly lower at $41.9 million as compared to $42.3 million. This result exceeded the high end of our previous outlook range primarily due to better-than-expected student engagement and revenue for the quarter. Total revenue for the quarter was $167.7 million, or approximately 4.5% below prior year quarter, primarily driven by lower total student enrollments. However, most of the revenue decline was offset by reduced expenses within marketing and admissions as well as lower bad debt expense. Please note that the two acquisitions we completed in the third quarter of 2021 did not have a material impact on the adjusted operating income for the quarter and operate on a relatively cash-neutral basis. Net income for the quarter was $25.8 million compared to $26.6 million, equating to $0.37 per diluted share for both quarters.…

Thanks, Ashish. We are pleased with our second quarter operating results and remain focused on serving and educating our students to further enhance academic outcomes and student experiences. Now I'll turn the call back over to Davis for any questions. Davis?

Thank you, Andrew. That concludes our prepared remarks for today's call, and we will now take questions, and I will pass the call to our operator to provide our listeners with instructions on how to submit your questions.

Our first question comes from the line of one Alex Paris with Barrington Research.

First of all, congrats on the beat and raise. It's kind of uncommon in the second quarter across the market and particularly within the industry. And also, congratulations on the acquisition of CalSouthern. I had a couple of follow-ups with regard to that acquisition. You say it's non-Title IV. It's regionally-accredited. It's effective 7/1/22. Initial purchase price of $40 million and revenues on a trailing 12-month basis of $17.8 million. You would you care to give us an EBITDA estimate for that same period of time?

As you saw that, as Ashish said, it's relatively cash neutral. We -- if you want to add anything to it, Ashish, please feel free to. We're very pleased with the acquisition. It's really allows us to continue to add to the breadth and depth of our programs. And as you mentioned, regionally-accredited and non-Title IV. So Ashish, anything you want to add on that?

No, I think that is correct. And Alex, as we disclosed here, we do not expect that to be a material number for the remainder of 2022. That is on our adjusted operating income.

Okay. And given their name, they're based in Southern California. Where are they headquartered?

It's -- again, Ashish, do you have any of that information?

I mean it is in California. But as we mentioned, it is primarily online, so they operate pretty much across all states, and then that's a good addition to our academic programs, so we are very glad to have that part of our AI system.

And you mentioned psychology, business management and risk management in that order. Is that the order of importance or the order -- the most significant programs?

Yes. Psychology is the most significant.

Yes, that's correct. Yes, psychology being the largest one.

Got you. Any reason they're not Title IV participants? Not that that's a bad thing. That's actually kind of a good thing these days, but I'm just curious on why they've chosen not to participate in those programs.

No. It's by choice. And as far as there being any other reason, I think to your point, I think it's again, not accessing Title IV. I think it's a good opportunity for, hopefully, to keep the amount of debt that they accumulate in student loans at the minimum.

And how does their tuition stack up against AIU or CTU in term -- just orders of magnitude?

Ashish? Cost per credit hour, that sort of thing.

Yes. It is very comparable, Alex. You're right there, very comparable to what we offer at AIU and CTU.

Got you. All right. And then moving on, just a big picture question about the overall demand environment. Obviously, this quarter's results were a little bit better than expected, though still down year-over-year. You talked about some improvements in student engagement. You were talking about that last quarter as well. Any changes? And any momentum to speak about coming out of the quarter? Was June better than May, better than April? Or whatever color you can give there would be helpful.

Sure. It's just inquiry generation. We continue to feel good about that. We feel that there's again those potential students are out there. As we've said before, we've adjusted, to some degree, our marketing efforts there to maximize, again, we feel it's benefiting the students the most, potential students. And as we said, we're -- there have been some students who have delayed their starting of their programs because, again, we feel like some of the after-ending effects of the pandemic, but we're optimistic that, that rate of decrease should start to improve.

And then with the new marketing strategy being anniversaried here in the current quarter, we should think about that from a top of the funnel perspective. First of all, you're going to have more comparable marketing dollars year-over-year going forward in the third and fourth quarters. But also, you should have a similar top of funnel because one of the objectives of the marketing strategy change was to attract students that are more likely to succeed, which results mathematically in a smaller number. So am I thinking about that right?

That's correct. Anything, Ashish, you want to add to that?

Yes. So Alex, two things. You're absolutely correct in terms of comparability of the expenses, so the expenses will be comparable in the second half. And then to your point, it is focused on students that are more likely to succeed. But even that is comparative to prior year, so I would not necessarily comment in terms of whether they're bigger or smaller, but both expenses and the student metrics are comparable. And as we continue to gain efficiencies within our ecosystem, we should see improvements there.

Okay. And then -- that's all I have. I'll take my other questions off-line. Thank you so much and congratulations on the quarter and on the acquisition.

There are currently no more questions registered at this time. So I would like to pass the conference back over to management for any final and closing remarks.

All right. Thank you again for joining us today. We look forward to speaking with you again next quarter.

That concludes today’s Perdoceo Education Corporation second quarter earnings conference call. Thank you for your participation. You may now disconnect your line.