Q3 2020 Perdoceo Education Corp Earnings Call
Good afternoon and welcome he showed up at all see I Education Corporation, three Q 20 earnings Conference call. All participants will be in a listen only might should you need assistance play signal a conference specialist by pressing the stock a foolish buys there are after today's presentation there'll be an.
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To withdraw your question. Please press and then K place night. This event is being recorded I would now like to turn the conference over to Mister What Tech. Please go ahead.
Thank you good afternoon, everyone well. Thank you for joining us for a third quarter, 20th 20 earnings call with me on the call today is Todd Nelson, President and Chief Executive Officer nephews here Chief Financial Officer.
[noise] conference call is being webcast live within the Investor Relations section of per dose Dot Com Oh.
Webcast replay will also be available on our site and you can always contact the alpha our group or Investor Relations support.
Let me remind you that this afternoon the earnings release and remarks made today include forward looking statements as defined infection 20 on any of the securities exchange that cause 1934.
These statements are based on assumptions made by and information currently available to her dosia education and involve risks certainties that could cause actual future adults performance business, crosspost and opportunities to differ materially who knows expressing or imply by these things.
[laughter].
These arrests and uncertainties include but are not limited to those factors identified and for those who is annual report on form 10-K for the year ended December 31st 2019.
Subsequent filings with the Securities and Exchange Commission.
Excessively express required.
By the Securities.
Laws like company undertakes no obligation to update those factors or any forward looking statements to reflect future events developments or changed circumstances for any other reason.
In addition, today's remarks are pretty non-GAAP financial measures, which are intended to supplement but not substitute for the most directly comparable godmother's their earnings release that accompanies today's call contains financial and other quantitative information could be disgusted.
As well as the reconciliation of the gap to non-GAAP measures and is available within the Investor Relations page of the company's website, what's that I liked to turn the call over to Todd now some part.
We're developing and applying our AI technology across the students' academic life cycle, which enables us to efficiently serve prospective students as well as customized our outreach and engagement with current students to help them stay and succeed in school Fiveth the integration of Trident with their you continued to progress.
Yes, and we have been mindful to maintain the unique tradename academic model and experience, while realizing efficiencies within back office support functions. Overall, we are pleased with the broad range of educational programs offerings and resources brought by the Triton acquisition.
Now to our operating performance for the third quarter.
Reported net income of $39.9 million or 51 cents per diluted share while adjusted earnings per diluted share, which excludes certain significant non cash items was 35 cents. Adjusted operating income was $36.6 million, a 7% increase over the prior year quarter and was primarily.
Adjusted to the revenue growth for the quarter.
Quick comment on corporate partnerships, we continue to invest in the corporate partnership program at Cu in General these partnerships take time to develop but students participating. These programmes typically experienced higher retention over the course of the program. Overall, we are pleased with the progress we have made in this area and we will continue to make the necessary investments to support this.
Initiative.
Driven by the success of various initiatives and investments and supported by consistent levels of perspective prospective student interest.
We expect <unk> to experience, new and total student enrollment growth in the fourth quarter as compared to the prior year quarter.
Now on to AAU.
Effective today ARU implemented a university system model.
The American Intercontinental University system, which we will refer to as the au system or simply AAU.
<unk> system is comprised of two universities, our legacy American Intercontinental University and tried University international the system's structure provides a new framework for both to continue to serve their unique student populations, while benefiting from the best practices of a university system.
Tried this unique academic model and its master's and doctoral programs will continue with the <unk> system, providing a diversification of educational learning models and programs to better.
Students needs.
AAU system model as no impact on our financial statements and consistent with previous quarters of 2020.
<unk> segment will encompass the operation of American Intercontinental University and tried in University. However, because of trade is unique academic model. Some statements, we make regarding aaas methods and processes will not be applicable to Triton operating as part of the <unk> system.
As it relates to AI use operating performance total student enrollment as of the end of the quarter increased 37, 7% supported by new student enrollment growth of 29, 4% for the quarter. These results were positively impacted by the Trenton acquisition as well as organic growth that reflects consistent levels of perspective.
The student interest as a reminder, the academic calendar. They are you excluding training has often impacted year over year enrollment comparability. However, as previously sure. There was a comparable number of enrollment base in the third quarter versus the prior year quarter, and thus no impact on year over year enrollment comparability, we expect the same fourth quarter.
<unk> and full year.
From an operating perspective.
<unk> continues its students centric approach that focuses on proactive student engagement across all aspects of the students academic lifestyle.
Consistent with his students centric approach.
Regularly test various methods to enhance student retention of engagement admissions counselors are supporting students from the time they registered for school through the end of their first session. We believe this will help our adult learners transition to the school environment and ultimately lead to better academic success.
Teams are also testing and evaluated eastern retention model that is backed by data analytics and predictive modeling.
Choose a stephen characteristics, such as previous education experience degree preferences transfer credit et cetera. The.
Model is expected to provide timely information about students that enables a targeted intervention, which may benefit the students academic success.
Overall, we are pleased with Aau's operating performance and expect to see growth in AI used new and total student enrollments for the fourth quarter as compared to last year to.
To conclude I am very proud of it to be a part of the producing team who have undertaken various measures and precautions to continue delivering on their commitment to students important education.
We are executing well despite these challenging times and we believe our operating results reflect our commitment to educating and serving our students.
I would like to know hand, the call over to Ashish for a more detailed review of our third quarter and year to date 22, the results balance sheet and 2020 outlook Ashish.
Thank you Todd I will review the third quarter of 2020 results and then discuss our balance sheet and 2020 outlook before handing the call back to talk for his closing remarks.
All comparisons versus the comparative prior year period, unless otherwise stated.
Before I begin a quick reminder, about year over year compatibility.
Operating results for AAU now reflect the client acquisition commencing on March 2nd 2020.
Now for an overview of our third quarter results.
Revenue increased by nine 1% to $169 $1 million as compared to the prior year quarter.
Operating income for the quarter was $32.1 million, increasing 32% as compared to $24.3 million.
We believe adjusted operating income, which exclude certain significant and non-cash items is more reflective of the underlying operating performance.
This measure increased to $36.2 million for the quarter as compared to $34 million.
Net income was $39 $9 million or 56 cents per diluted share well adjusted earnings per diluted share, which we believe is more reflective of the underlying operating performance was 35 cents per share.
Let me quickly comment on one of the adjusting items for the quarter as it relates to earnings per share.
During the current quarter, we released a foreign tax valuation allowance in the amount of $16 million, which benefitted the gap earnings per share by 22 cents for the quarter.
I will provide more details on this EPS adjustment further in my remarks.
Back to adjusted operating income for the quarter.
The improvement versus prior year was primarily due to revenue growth at both <unk> and ARU, which reflects underlying enrollment growth that was well supported by our students serving operations.
Also benefiting or third quarter results versus the prior year was a quite an acquisition as.
As well as COVID-19 related savings associated with reduced employee insurance expenses.
Keeping C related expenses travel and events.
Partially offsetting these positives incremental investments in marketing and soon serving functions.
Cost associated with performance based stock compensation.
An increase bad that expense, which I will discuss more in a minute.
Now two hour segment results.
Revenue at <unk> was up $2.9 million or 3.1% to $99 million for the quarter, reflecting underlying enrollment growth, while operating income was $32 million as compared to $29 $9 million and the prior year quarter.
From an expense perspective, CCU continue to be diligent in prioritizing expenditures on students support initiatives.
Increased expenses within marketing and students serving functions.
Will partially offset with cost efficiencies.
Across various administrative processes and reduce expenses associated with the pandemic related savings.
At AAU revenue increased 18.9% to $70 million for the quarter supported by the <unk> acquisition.
Operating income for the quarter was five $5 million as compared to an operating income of seven $3 million and the prior year quarter.
Increased marketing expense to serve prospective swimming interest as well as bad that expense negatively impacted the current quarter operating income.
Note that the prior year bed desk was positively impacted by timing factors often associated with this expense.
Also impacting the quarter was amortization of definite life intangibles Netware established as part of the purchase price accounting related to the <unk> acquisition.
A quick note on bad debt.
Year to date that expense for the company as a percentage of revenue was slightly higher than prior year.
We continue to invest resources to help students financially prepared for school. So that they are more likely to complete the program of study.
While we still expect quarterly fluctuations we are pleased with what we perceive as destabilize Asian of bad that expense based on the current year to date results.
I also wanted to share that the departments education released a 2017 cohort default rates for both Colorado Technical University and American Intercontinental University.
We are pleased to report that both saw a reduction of 30 basis points and 40 basis points, respectively in the default rates versus the 2016 cohort.
This is the second consecutive year of improvement in the Cdr's.
Moving onto student enrollments.
Total student enrollments at situ grew by four 8% supported by new enrollment growth of five 2% as compared to the prior year quarter.
As Todd mentioned enrollment growth at CPU was supported by consistent levels of prospective student interest that we're well served by improved efficiency within our enrollment process.
Looking for we expect new and total enrollment at Cu to grow in the fourth quarter and for the full year 2020.
Total student enrollments at AAU were up 37, 7% with new enrollments, increasing 29, 4% for the quarter.
The positive impact of the <unk> acquisition as well as underlying organic growth contributor to the enrollment increase versus the prior year quarter.
Please note that for the third and fourth quarter as well as for the full year 2020, the academic calendar for American Intercontinental University.
Is relatively comparable to the respect two periods in 2019.
With a consistent number of revenue and enrollment days for each period.
With that said, we expect to see growth in new and total student enrollments for the fourth quarter and for the full year as compared to the respective prior year periods.
A quick update on corporate and other which includes residue will operating losses associated with close campuses.
Operating losses associated with close campuses, where zero point $4 million in the current quarter versus eight $2 million in the prior year quarter.
The prior year quarter included a legal settlement charge of seven $1 million for the Oregon arbitration matter.
Excluding operating losses associated with close campuses corporate and other costs increased primarily due to recognition of performance space stock compensation expenses.
Now onto income taxes.
We recorded a benefit from income taxes of seven $2 million for the third quarter.
During the quarter, we re evaluated the need for evaluation allowance against the portion of our foreign tax credit carryforward supported by an overall domestic loss account balance.
Based on the 2020 year to date taxable income and the expectation of continued profitability. We now expect to utilize this portion of the foreign tax credit carryforward.
To further elaborate we anticipate utilizing all of the 109 $7 million of federal net operating loss carryforwards in 2020.
And will then also be able to utilize the $16 million of our foreign tax credit carryforward by 2021.
The release of this valuation allowance benefited our current quarter tax rate by 49%.
Without assuming any further material benefit related to the tax effect of stock based compensation.
For the release of tax reserves, we expect our 2020 tax rate to be between 15 and 15, 5%.
Separately. This full your estimated tax rate is negatively impacted due to increases in tax reserves and the tax effect of expenses that are not deductible for tax purposes.
Based on the above.
While we still do not expect to pay any federal income taxes for 2020, we do anticipate being estimated federal income taxes, beginning with the first quarter of 2021.
Moving to the balance sheets.
We ended the quarter with 367 $7 million of cash cash equivalents restricted cash and short term investments, which will be referred to as cash balances for the remainder of today's discussion.
This cash Bella represents an increase of 73 $6 million over a year and December 31 2019.
Year to date positive cash flows from University operations were partially offset with cash outflows related to the client acquisition.
Payments related to the settlement of Oregon arbitration manner.
Annual and long term incentive payments and share repurchases.
Capital expenditures were approximately $4 million in the third quarter as compared to one $8 million and the prior quarter.
Capital expenditures for the current quarter included investments to support remote work rearrangement as well as upgrade store datacenter to further enhance the cyber security protections stability and capacity of our infrastructure and learning platforms.
For the full year 2020, we continue to expect capital expenditures to be approximately one 5% of revenues.
Also note that we completed the acquisition of substantially all of the assets of Trident University International on March 2nd this year and we made the final payment of five $7 million during the quarter.
That completes our financial obligation with the final purchase price of 43 $8 million of which $4 million remains in escrow to secure indemnification obligations of the cellar after closing.
Finally, our 2020 outlook please.
Please note that the outlook assumes no material impact to the fourth quarter operating results from the COVID-19 pandemic again, an assumption based on our experiences to date.
Full year of 2020 outlook is as follows.
We are updating are adjusted operating income outlook to be in the range of 154 million 255, $5 million as compared to $134.3 million in 2019, and our previous outlook of $151 million to $155 million.
Adjusted earnings per diluted share is to be in the range of $1.51 $2 53 per share versus dollars 37 in 2019.
In terms of our fourth quarter outlook.
The fourth quarter outlook is based on expected enrollment growth at both <unk> and AAU.
The company expects adjusted operating income to be in the range of $35.2 million to 36 $7 million versus 34 $6 million in the prior year quarter and adjusted earnings per diluted share to be in the range of 30% to 35.
Versus 30 sessions in the prior year quarter.
Let me conclude by commenting on a balanced approach to capital allocations.
We are focused on building a strong balance sheet, while prudently evaluating organic and inorganic projects and also returning capital to our shareholders.
As before the build our cash balances, we will continue to evaluate inorganic strategies, including the acquisition of high quality educational institutions hold programs, while emphasizing organic students serving investments at our universities and maintaining adequate liquidity.
Ultimately our goal is to deploy resources in the most effective and efficient manner that we believe will lead to increase shareholder value.
Please refer to our earnings release filed to date for important information about key assumptions and factors underlying this outlook and other expectation discussed on today's call as well as the gap to non-GAAP reconciliations.
With that I will turn the call back over to talk for his closing remarks Todd.
Thanks for Sheesh.
Well, we're on track to finish the year with strong performance.
Didn't experiences in academic outcomes remain our priority as we continue to operate during the uncertainty the pandemic.
Education for adult learners is more important now than ever and our investments and stood experiences retention and academic outcomes are allowing us to responsibly grow our business.
Thanks, again for joining us today, and we will now open the call for any analyst questions.
Thank you we will now begin the question and answer session to ask a question you may print star one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing the case so let's draw. Your question. Please press Star then K.
Your first question comes from Alex Paris from Barrington Research. Please go ahead.
Hi, guys. Thanks for taking my question.
One.
I just wanted to congratulate you on another earnings beaten Reyes.
Very busy day for education earnings today, we had Lorient, Australia or this morning for those Yo Grand Canyon and Kellam Tonight.
What was the name here a little bit.
What's that say, it's a busy day for you guys.
Oh yeah.
So.
I wanted to talk to you about.
Revenue revenue per student and your corporate initiatives.
<unk> B, both revenues were a little shy of consensus of course, you don't need guidance on revenue guidance on your knees and your top that uhm, so I'm assuming that.
Revenue per student.
Came into play here versus my estimate and on further assist me with that has something to do.
On your corporate initiatives.
Oh could you talk a little bit about that absolutely no you're spot on Alex and as you know as you as you build a budget for the year.
We are corporate partnerships are corporate students are ahead, I would say significantly where we thought they would be.
The dynamic of that as they yesterday, they generate less revenue per student.
They are EBITDA is actually a little bit higher again, because you don't have the level of marketing costs associated with that and the retention is better and so.
October I think it's simply that simple obviously as we go into next year's budget it'll be obviously will have more experience on that but it's actually even though again you suffer a little bit on a revenue per student is actually better for the overall EBITA the company, but more importantly, the retention of those students in so yeah.
That is the bulk of it right there.
Great and then just a follow on that particular question can you size it for us.
Any way.
Either now or annually for example, what percentage of your enrollment comes from these corporate partnerships either.
University or in the aggregate, yes, I think in particular for next year, we will have a better feel for that to be able to possibly do both are you in situ.
Last quarter. She so I don't have that number in front of me, but we gave that percentage for <unk> for corporate students was up over 20% was that yeah. I think what we have disclosed is.
As of December 2019, we typically do it on an annual basis, Alex we have about 19% of our total enrollments come from these corporate partnerships CPU and obviously they continued to grow as we've indicated.
And you didn't give AAU, but should I assume that as a less lesser number yes actually we did give me are you in there is a lesser number that is at five five ish percent.
Again as of December 31, 2019, but.
But keep in mind AAU did start that program a little bit later than situ. So we continue to ramp that up and we are seeing good progress there too and then say that for this year, we've seen significant growth percentage wise, there and we hope to see that continue.
Great and then.
He was just a big picture question given that we're all kind of focused on Fox News and C. N N right now about the election.
Given your many years in the industry through many different administrations, both Democratic and Republican.
What are your thoughts of the impact of a button when.
Your industry and produced specifically how would you position yourself.
Uhm.
So I guess, that's my first question.
And.
Salute appropriate question and what I've learned over several decades as you know in this industry is the key to having a successful education company is to always stay focused regardless of what administration is in the white house or who's in control of Congress as a focus on outcomes student outcomes and quality education.
HM.
And that's really what we have tried to do certainly since I've been hearing that existed before but we've really tried to enhance that as you listen to our calls over the last several years, that's been a major focus of ours and so we feel that we're very we're stronger from and outcomes and quality. Then we even were several years ago and so we're going to continue to focus on that.
Second is.
Whenever there's a change in administration, having a believer a strong balance sheet is very important and the reason being is if you. If you do need to make an adjustment because of something a new administration may do that's a little different the other the ability to to.
To invest in whatever is necessary for that to happen. So again as you know I believe our balance sheet is one of the stronger balance sheets in the industry and so again in addition to our quality and outcomes of the balance sheet and then a very robust compliance program and the reason that so important again because that typically tends to be where if there is a criticism of tends to be where.
Comes in as you know with our agreements with the SEC and the Multistate AG agreement, we have very robust compliance programs and so those four things are really.
Again, the major focus we've been in that way I think we're we're excited to work with whatever administration is there who represented department.
Because again I feel like where we provide a very needed service where.
Again about these types of outcomes and strength in a way that allows us to hopefully adjust to whatever that is it's it's hard to tell.
Second Trump administration or by administration, what direction, they may teeth, but if you're focused on the right things I think your ability to meet that need that's out there you are better positioned to do that.
Great. That's a good color I got a couple of specifics within that no too.
A couple of things that the experts are saying that Biden department of education might focus on is.
Implementing some of the things that were originally implemented under under Obama that had been rescinded under Trump.
One of which would be gainful employment my question there would be.
How did your programs at C. T U you stack up against the prior version of Gainful employment, and then I have a follow up sure well. Unfortunately honestly I don't have that information right right in front of me, but again back then when when it first was under the Obama administration.
As you know a regulatory change there we went through the process and if there were any programs that we felt.
Would not in any way meet that test. We then stopped enrolling students in that so that was a very key thing and we have not real started re enrolling in any program that we've got would not have passed that now several years have passed on again.
You need to watch that very carefully but that was a key decision on our part to not start those programs that we felt would not bode well under that now having said that they didn't they didn't <unk> just the Trump administration. They redid it and so that will be in place until the other and we feel obviously were.
You're welcome and complains with that and.
Whatever.
If there is a change there will certainly address that but that's our view of it is again you can only go maybe on what was happening in the prior administration and private base, what youre doing on that should there be a return to that if it's different in.
I guess, we'll see but every other university, but falls under that would be faced with the same situation.
Excellent. Thank you so very.
As I recall, you eliminated programs like culinary for example in new preparing for a for a Hillary administration.
Four years ago, and you never never change back you never reinstituted those programs or anything so presumably you're in good complaint with with G. E O. So therefore.
Holly Xilinx, absolutely, but again you you obviously, we will have to wait and see but that's why back to what I was saying earlier by focusing on quality of education, good outcomes investing in students services.
We would hope anyway that again those programs, where do we do provide are really benefiting the student and would hope any administration would be focused on what is good for the students versus.
Maybe some political agenda or something like that.
Absolutely alright, well. Good then that will suffice me for now thank you both and good luck in the queue.
Yeah.
Thank you and your next question comes from it again more from C. J S Securities. Please go ahead.
Good evening, it's Brendan from Cj's on for then.
Want to ask.
I just wanted to ask about the I guess your sense at this stage regarding the the overall covid impact on student enrollment.
And.
Guess I tried to tried to break out your crystal ball and you know what you think maybe it could be any longer term effects.
Yeah, I really got a very good question, because again with a lot of the numbers of cases going up or across the country. I think it's certainly unknown about when when will actually see it completely under control so having said that.
One of the things that has been very encouraging for US you know.
And again, it's very very saddened by would happen, but is that what we're encouraged by as we're able to really provide that quality education that producers good outcomes for the students in this type of an environment as you know we've had.
Much experience in providing quality online education, I think one of the challenges a lot of universities and certainly.
Those of us with your children or grandchildren, and the key to 12 environment, where they tried to transition into an online delivery.
It was not very high quality.
It was usually just some platform where they tried to offer what they did in the classroom online and that is not that is not produce the good quality outcomes necessary.
Provided a good education and so on.
Our ability to do that with years and years of experience has really been helpful and as a result, as we've mentioned we have very consistent.
Some interest as far as potential students we've.
We've also has you can see from our enrollment numbers. We've had success that are because I think we're really meeting a need that's out there for these students.
They are looking for a quality education too.
Help protect themselves so that when things do go back to normal you know that there'll be in a better position to you to get a better job or.
Promotion or those type of things, which is a reason.
Our students with both students who most of them in a degree completion mode and so again, we've you see from our enrollment numbers that there's I believe that's a reflection of demand, but it's also a reflection of.
We do a nice job educating the students providing them a quality education, I think where you feel the impact of Covid is probably a little bit and retention and a little bit and maybe see maybe some bad that because again many of your students are still facing the same challenges that others do as far as.
King ends meet.
You know having to be at home potentially watching children, while they're trying to work at home and so those things come into play and so we spent some time on the earlier part of the call talking about some of the things that we're doing to to really enhance and improve retention help our students and if we can if we can be more helpful. In any area yeah.
To help them be successful sustained class and graduated that's our focus and so.
Again, I think we've seen good results across the board, but I would say the only potential negative negative impact or any potential going forward really is is probably more so long again your ability to to help those students from our retention point of view.
Yeah on that on that topic of retention and you guys are talking about some earlier in the column I may have have you had to <unk> increase.
Increased spending meaningfully on sooner attention how would you describe that just because of the pandemic and then if you could speak to any meaningful caused specifically in Q3 that may have been elevated obviously, Walter a leather sheath commented, but it's.
As far as direct costs associated with that but where we saw some some investment would be obviously in our ability to have our employees have the correct technology and and tools necessary to work from home and there was some investment in that and the transition, but really that's been seamless pretty seamless I should say and relatively.
Moderate cost.
But as far as any retention efforts those retention efforts or something that are ongoing with our organization. So we budgeted those regardless, what we're just seeing as that tweaking some of those because some of their their their reasons, we're having to stop out a little different and so our ability to address that sometimes takes more inverse.
And Ah student advisement, those type of things, but.
Really the costs most of the costs associated with with getting our workforce working from home and I don't know if <unk>. If you had anything to add on that or not I think thats spot on there were two categories work from home is Todd alluded to and and the retention per se. It's an ongoing initiative, we continue to invest and data analytics retention tool.
<unk>, so it's not directly related anything to the pandemic, that's something that we obviously index on a on a regular basis to support of estimates.
Okay, and then also kind of this topic with with the online portion that you. Obviously you guys can transition to you know it turns into pretty wallner, essentially 100% online D C.
Longer term, what do you I guess, what you see in terms of campus locations and the need for those and is there any opportunity to consolidate space. What's your view on that.
Yeah, I'm actually really good question, let me just maybe talk about space for the second I think where there is some opportunity from a cost saving perspective.
Is less I mean, there's a little bit as it comes through our online.
We only have four campuses, they're but but where you do see some boots and some cost savings is consolidation of your space for employees. Because there are some what we've found is that a large percentage of our employees are actually we've seen some improvement in productivity. We've also in discussing with the managers. There are many of those that would prefer to continue to work from.
And since we've upgraded the technology I do think over time, we will see our our real estate costs going down.
Yeah, we don't want to get too aggressive to begin with but but we just we see that as a real opportunity for us now as far as students go.
We do have a few programs that we have sort of a offer back on ground and.
We've had some success with that and we will continue to go slowly at that.
Some programs are just offered better there we really didn't have any plans to be opening additional on ground campuses, so that really hasn't altered our our strategic direction or outlook that way.
I do believe you know going forward. If there is some opportunity there's nothing we wouldn't but we just didn't have any plans and so that really it hasn't altered our projections there at all.
Okay, great. Thank you I appreciate it thank you.
Thank you we have time for one further question. Please go ahead, Craig <unk> from <unk>.
Yeah, just I know there are some swings I think uhm, yeah, the Ah Ah difficult or an easy.
Oh, I'm, sorry difficult compare on Baghdad, and whatnot, but can you just talk a little bit about are there any call center gives you seeing within the AI you segment now that you're scaling up the number of students via try that.
Yes, Greg actually great question. In fact, we haven't had a lot of discussion about that but one of the real.
Exciting things that has happened over the last several months as we have found trying to be.
Even a better partner than what we thought we've found that their their employees, especially in the military and corporate area are very very experienced their programs are very conducive to that type of a student and so we think going forward there will be some consolidation.
I think that I don't know that wouldn't necessarily in any way reduce employees, but I think we probably would need to have fewer employees because of our ability to utilize some of their talent there.
And and second is that as we as you know obviously as you look at from a technology point of view from a.
Those corporate departments, we have seen some savings there and obviously, we will see some more but I would just say again the most meaningful synergy is I think that in time, it will really boost our both our corporate partnerships as well as our ability to serve more effectively.
Affectively the military.
Great. Thanks, a lot.
Thank you Greg.
Thank you. This concludes our question and answer session I would now like to turn the conference back over to Mister Nelson for any closing remarks well.
Well. Thank you again for joining US. We appreciate you taking the time and look forward to talking with you at the end of the fourth quarter. Thank.
Thank you very much.
Yeah.
That does conclude out conference for today. Thank you for participating you may now disconnect.
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