APEI - Earnings call transcript Q4 2017 | American Public Education, Inc.

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Operator

Good day, ladies and gentlemen, and welcome Fourth Quarter 2017 American Public Education Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I will now like to introduce your host for today's conference, Mr. Symanoskie. Chris begin. may you Sir,

Chris Symanoskie

of and in are this the differ on are report the included Web-site forward-looking presentation today's facts and statements. you, in Operator. note furnished X-K, conference Education's the to actual expectations, call could and Public materials accompanying forward-looking and quarter industry. or cause be Good with These of financial exhibit available earlier subject current materially our events evening our for uncertainties that Presentation materials discussion projections XXXX. for Education full today. statements made results in welcome Education an Public or Please to from that assumptions, call about its and regarding section estimates and Webcasts future are current statements may Form not American as American and such the to American based on SEC year the subsidiaries Thank to conference Public that are operating risks historical fourth results statements and

quarterly can intend, statements and expected should, expressed the identified Forward-looking initiatives, expected respect risk those recent, The for Form Form by partnerships. the implied expected regarding These report anticipate, in undertakes on such statements and reports filings. no in filed investments the This to SEC the the future evening, events or Company's various limitation, and any Executive and results forward-looking Company's Sunderland, Officer. with Company any earnings, introduce factors, to our it's Actual result reason, with President if of Risk elsewhere Dr. publicly forward-looking XX-K growth, registrations future. differ Vice in would. expected Factors without and in information statements statements statements SEC my our on becomes may, Rick and obligation forward-looking factors update of including Wallace section other plans XX-Q, from or include, annual will, and Financial and enrollments, estimate, occur even current and the could, amount by as law, these by could materially and available to Boston, described believe, seek, a pleasure charges, President as, nature new be other expect, required CEO, words and Chief anticipated revenues, unless

turn to I'll Dr. over the call Boston. Now,

Wallace Boston

This course Chris, of evening lower fourth earnings pleased APUS everyone. rate Thanks, and good corporate by the tax reform was than outperformance expected better tax net recent in resulting anticipated. from higher primarily report I'm share XXXX legislation. that quarter revenues and for to driven were we statutory a consolidated than at per registrations

decline registrations net registrations by new and sources, compared decline rate XX% year-over-year XX% APUS by net in X% four students This driven XXXX rate by than cash net by and and In Benefits, the course other FSA course using course utilizing net than returning course fourth Although previous new by students total decline Tuition at X% XXXX, students registrations the or decline was APUS experienced of were net X% overall utilizing in increase period. new benefits, the year-over-year or compared by quarter aid. registrations less better the net registrations in to none registrations year-over-year declined registrations students declined course registrations registrations at year-over-year. VA by In Assistance decline in Military year-over-year. of students largely of TA, anticipated. approximately The new registrations federal by of was offset by the new prior Veterans year-over-year course year X% a increase quarter course better partially Net flat quarters. course students students by the net using quarter fourth students course course fourth student net also declined a new net in and to by APUS

utilizing course approximately is X.X% FSA registrations approximately there of funding by net students Excluding registrations total increase net flat to new source, the primary by registrations year-over-year course net compared XXXX. same course period student were and

this of For We the student of undergraduate quality Federal few the XX% and the course and XX, over believe initiatives ending and increase last three course offerings. rate November that student improved first Aid months the XXXX persistence have measure success that launched retention be the of APUS appear year-over-year. improving we completion Student indication using is our pass years overall at continued the students an in to

of of For On X% a year-over-year same-campus enrollment XXXX, XXXX, term. basis, College term XXXX, XX, Hondros student in approximately total or XX% HCN, driven or year-over-year new the by of December increased three enrollment increase student in the XX% enrollment. opened January at months Nursing, campus year-over-year, the new fall in which the fall Toledo increased ended excluding

XX-Q Although compliance to student HCN described today, in be at HCN. enrollment more with pleased certain in continues fully continued earlier we and which growth filed APEI's are are regulatory confronted risks, by the

registrations APUS the partners. as and to marketing strategic its student on affordability developing approach enrollment this in XXXX APUS last of several remains course to path we in lessened online the force and enrollment expanding of at however may expect lead year-over-year experience. focused on to stable course leader target to eventually decline proposition while X, and further will further quarter the our outcomes net its times. be Moving rate registrations Page learning with of work in quarters, refining a compared global the fourth relationship volatile approach net process We focused APUS of improving that believe at to reengineering programs enhance value and

in for primary value tuition students, in slide lowest a APUS to increase according to a affordability less Page College end APUS label toward net to XXst stabilize price grow are of profit the APUS continued that Nursing private to Education's Department realized goals in national college to for and in and XX accomplishments institutions leader Affordability Center, X, value, at Transparency and net APEI's and on lowest to College for XX% XXXX. than enrollments we be your Moving summary has corporate and ranked continue of Hondros many average. in

intelligence In seven addition, the XXXX and recently APUS ranked continues information acted to degrees to APUS enjoy to in all than XXX over degrees communities. College Best members provider most professions education higher be satisfaction. the largest Ranking Military At to are to high alumni APU, reputation students to has XXXX available this Nursing Time's the time, of and to of continue academic AMU number Most Rick? conferred the in AMU turn XX,XXX APUS. more making of number will group duty now military and Furthermore We a ranks of alumni doctoral believe begun I our in of in students programs than more further their Non-traditional Rick enhance global our from for cohort Online of approximately a has XX the worldwide new difference CFO, distinguished than their In and Sunderland. who who and alumni will XXXX more of first our security. call in new I'm APU proud studies Hondros hardworking students. doctor joined our Schools, XX,XXX programs strategic and of conferred AMU I'm that up excited XXXX. apply

Richard Sunderland

Wally. you, Thank

decrease a the primarily decrease consolidated for APEI our partially results of the $XX.X to is million, slide in year a compared due million increased fourth in decline Segment quarter in period. and Going opening period. Segment to programs. The increase million, $XX.X demand in quarter, to XX.X% the APEI costs in revenue Segment, Public $XX.X January quarter, registrations. Hondros to fourth X. On revenue to our in prior revenue to net X.X% the from $XX.X compared period in million, in million million American increase prior financial include offset during was to X% a million year. $XX.X compared $XX.X the X.X% enrollment primarily XXXX in XXXX year same The campus Segment attributable our $XX.X decreased period APEI period. Education's prior $X.X decrease compared an in revenue expenses in year a In Segment, to revenue Toledo Hondros is basis, when by in in decreased to to compared increase decline of Hondros the revenue and resulting consolidated Hondros the revenue prior in fourth XXXX. course Segment The the to million to attributable the to

ICS and For period. XX.X% quarter, as a decrease instructional compared consolidated the revenue prior or year of percentage to to the expense in services XX.X%, fourth costs

APEI partially ICS $XX.X the revenue as three decrease in representing $XX.X XX.X% compared in of for year. revenue, employee expenses $XX.X X.X% offset Our a decrease S&P three compensation Year-over-year, the million December decreased our and ICS were XX, to curriculum ended the the in a to months XX.X% and was December classroom, to prior period. services to percentage of percentage primarily XXXX expenses and course $XX decreased XX.X% our in million, fees decrease S&P December G&A employee costs decreases APEI This million S&P compared by in segment, to increase result year to in in expenses or prior our our revenue increases XX, promotional compensation year period. prior due or in XXXX. The Segment. segment the subscription Selling from expense months advertising Hondros professional General cost segment. in million, and of expenses of X.X% decrease promotional in ended primarily expense was in expenses administrative and a from the XX.X% in and APEI expense as for of

compared debt bad to expenses the and the operations, in fourth XXXX, processes. year. Administrative was was debt or in related prior employee taxes, we to debt in million, in $XX our or decrease expenses in to prior Bad increases identity decrease X.X% primarily revenue, segment year XX, which mix, segment. prior bad period. for million G&A in three partially from revenue in before and million ended December admissions the student The to In to and expense debt primarily was million Our period. compared compensation million, year million, expense income and and $X.X APEI reported changes decreased Hondros months of and decrease in expense bad of $XX.X $XX.X was verification, expense in XX.X The to income by of other General fees XXXX X.X% of offset professional income X.X% costs the our compared interest due the quarter $X.X in

to XX, a tax As the recorded and December XXXX of income of into a signed Tax on deferred tax revolution company reduction related expense liabilities. law the $X.X in million its Cuts the of result Act Jobs net

from differ range tax to our estimate. we final may effective expect XX% to asset the Going discreet rate forward or XX% a this from items impact approximately

XXXX a million or imperilment the of recorded than totaling During reported million contemplated loss quarter diluted our to X.X loss the in is in on not $X.X outlook. in of $X.XX per investment P&L. net or compared in in tax fourth certain and share X.X the temporary other net to non-cash XXXX prior $X.XX loss income fourth quarter we are investment we of due million non-cash share per period. The the quarter income In impairment reduction equity charge diluted presented This investment year income expense investments.

in amortization XXXX million to $XX.X of in Wally our approximately Hondros compared Capital to $XX.X three million, cash Hondros XXXX for the end equivalents approximately It months million earnings. the the XX, enrollment Hondros XX, revenue X% to by year in Total to compared compared period. to margin drove and in the ended XXXX December growth pleased Segment As December year that were for year XXXX. XX, compared December are $XX.X which in expenditures cash million Depreciation $XXX.X of $XXX.X in and XXXX. XX% ended as operating XX, the December XXXX, mentioned growth Segment noteworthy increased were million December XXXX. we prior is for million and $XX.X our as the the Segment XX, was

are for outlook by first new XXXX to expected follows. course X% of our decrease XX% X% registrations to Slide students Total expected net is X, on of registrations APUS year-over-year. year-over-year. and between net to XXXX first and quarter are Going decrease the between X% course quarter outlook; as

of XXXX, three enrollment the and March student new total For its the ended XX, first quarter Please at the Toledo XXXX is student operations of XX% which year-over-year. note increased increased the enrollment Hondros term, winter XX% was at first campus. that months quarter

As Hondros see Wally are indicated new Nursing. to continued student in we and pleased growth of enrollment College total at

a growth in expected $X.XX the range anticipate we XXXX, of the to of and range positive income revenue of is per fully for at our and by closing, consolidated first APUS, $X.XX year-over-year. quarter of mix change our the XXXX first to Hondros diluted at be at optimistic APUS. the improvement be by in quarter X% continue between to quality about students share. For enrollment be persistent in pleased X% we continued at negative Net the In to and remain enrollment in rates the stabilization efforts we of

to Our strengthening to strength our workplace. goal preparing the while student stabilize demands on at build outcomes the changing core for is and of enrollment them APUS,

please Now questions questions. the take line we the would for to open like audience. Operator, from

Operator

Instructions] Corey from first Our [Operator Greendale, comes question Analysis. First

is now line open. Your

Corey Greendale

I are might probably understand of was just quarter enrollment you that obviously the a those causes able trends? the on some was give of non-FSA nicer more and Wally, you weakness, underlying the then to on will be it side if I particularly First, but there volatility guiding wondering be side some

Wallace Boston

Sure, I in little population quarter in it for think always seasonally ’XX ’XX. seeing down the is was at are bit, typically first least military similar and trends our we a

thing tuition of some the requests to the bases that that March to the think other weekend nonetheless hesitant down related from systems that government get returning approve only shut few is to the the for start delayed we that have that potential The some field fortunately in. registrations our students we reports days new some of able was were most student or a but were

and in some due our in typical hiccups on that’s think for first the federal to the but, We’re of seasonal just to some of particular it just the we of softness quarter in March saying employees. related system month dependency

Corey Greendale

guiding say like QX that out of it can, which in but kind from are the more Do temporary the things as trend, one we you of not you’re like I think reasonable? what sounds sounds quarter the in nature you you’re it beyond saying, more know indicative maybe QX the makes do

Wallace Boston

higher taking that you enrollment since for know than allow Typically, I for for of will QX the influenced intake TA to the to for has bases more our our on once time and in each think, and overall the happens analyze is and think the budget it's out, they where been students see the we so distributed XX quality down the program up to I I though that TA the reinforce of you don’t continue until quarters but us to XX-day without intake register some been see. quarter, it's probably the But four that days going students coming understanding particularly example, TA that so that and sequester really has our happen FSA volatility. things students think to pick not my federal yet, so that we to

Corey Greendale

relative quarter, you at QX just and to here that talking wanted the seasonality a to back cost QX least think suggest and we I what point that, the to then know about enrollment you the service promotion you close is to pull on I may going and been and promotional certainly on is and is I the promotion. thinking that a that, think stronger into pulled spend I be years, there about on softer sales few side first Okay back because relative did that that ask one selling side back historically, for

Wallace Boston

would leads impact that using to method Cori when some discussions did we lead because of and impact registrations new then back fourth remember third wanted see, that. about you and have third an pull accelerated that if the in Actually, we scoring of see on scoring the were quarter, talked the we a our in to expenses so quarter quarter

finding back we think a held I how safe could money to going that in then was these a scoring late from until what in greater the the on through without discussion we in accelerated an into see we're went. on of that from we some So, that did registrations, experiment, budget and QX just QX students that get all prospective through applications it from

Corey Greendale

XXXX you up So, will down we expense should promotion be you the kind help year go will appreciated. or or working be sounds thinking as into any 'XX that its like to for relative be that,

Wallace Boston

said to we that flat, that I constantly but be say spend think find works will formula it's into it. if the we going we

Corey Greendale

more could And permanent to were speak any on of XXXX. or just QX you there savings cost looking you're kind to within type address in anything

Wallace Boston

to the do Nothing is be specifically, idea based registrations. just of cost ongoing registrations turn level we managing vigilance relative upon to activity some expected of point in our that about

manage continue So, we going business forward looking to to the day. invest and are that to

Operator

Research. from Alex with comes Parrish question Barrington next Our

is line now open. Your

Christopher Howe

Good afternoon for your was enrollments to going to are and investments? first for on in [Alex following enrollments when this is May? on in How new they question regard expect you were programs. My two a what for the How see these in Chris are expectations And Howe Parrish]. return up going? January that would

Wallace Boston

So, I are Chris… to the think programs doctoral referring you

Christopher Howe

that’s correct. Yes,

Wallace Boston

Yes, doctoral with so were pleased programs. we our

for Rick, starts the net our and something think we about two that. cohorts XX I are like XX.X

Richard Sunderland

think I to the XX cohort. first that closer the No, are two for

Wallace Boston

September very a volume our a we of who May flow never started in and But successful very they a participated I even by we in traditional our out and far, we in those people if enthusiastic, a that higher And that equal the that it's for any and have with were doctoral the we a exact familiar we will little for They we are to to though in but the get rather to way in haven’t before then start [ph] January, who was May full have we start least three planned think September that enthusiastic and progress doctoral be ROI requirement number higher in starts we look are the because when starts residency for did. when stronger since start we we off students you the our thinks but January, our only particularly I class give I needed first the like Rick we be start marketed progressing I at good time we participating the are are start any bugs our are with starting I will performance. made how than believe systems continuing on first start September, if think more We that May can the will hopefully pathway we fall. January. the offered not programs. for the is original that January the had and disclosed residency, And operate. of but steam, the of so then making have program to forward little year It and the think particularly lumps we towards we weekend felt and way be which

Christopher Howe

I students, the expectation we I when further that, the following internal had to just enrollments along point? sequentially we expect should just what is for seeing when trend total the breakeven even declines another looking will out returning in question students for that this are guess and perhaps regard year-over-year And stabilize?

Wallace Boston

if any We don’t circumstances. period the date that specific like unforeseen we in barring crossover XX certainly months time but to have a possible that next

refund really serious makes If just more low enthralled and from being you who cheque can declines people students. the get us -- federal to in the the influenced by drastically amount students are much so of noticed price they our our with FSA, about or not government new attractive we

sure particularly percentage quality in our once lower decline place both means all and tried initiatives processes you then much students percentage to that serious and we the a have new if put is make on as returning students more marketing FSA selecting that far we in So, -- that to which that get targeting students the and working. decline the retention students in our are notice

Christopher Howe

what far for our as as be And FSA expectations QX? should

Richard Sunderland

guidance our payer type. by down broken really haven't We

Operator

from Our BMO. with Silber Jeff next comes question

now is line Your open.

Unidentified Analyst

guys Hey calling for its in Jeff. Henry

there recent up have it the is follow that and of wanted color do any there any as that, any transact. a what's looks trend some on you like I trends, weakness on on quarter, the change to FSA from the has if relatively most driving but been prior this color stable Just you is find

Richard Sunderland

back FSA Well negative, I is been quarters you over on you and right, said that FSA specifically five trend year-over-year think about improving total four, smaller. plus I the court on a decline think see you so be would new getting about registrations if track basis

this. try think I [indiscernible] to the double negative

So, FSA in what with and you're for overall has tracking new total. consistent saying been

Wallace Boston

I'm I quarter XX.X% quarter, in students went by student quarter, to think returning numbers the at the the and actual down XXXX the FSA quarter XX.X%, adding if quarter, for while down first then what the second our in XX.X% third X.X% said, further looking here new the XX% XX%, X.X%. numbers XX.X%, Rick for FSA were in in fourth and

of you students students to at student the see So, quality between the try working. a while find, our rate, higher lower a declining are the new declining the higher can at FSA find to quality rate process that difference returning meaning them the is students are

Unidentified Analyst

helpful reform, thoughts how lower plan of after-tax to use on That’s and incremental savings some on the taxes. you from any

Wallace Boston

next in finalized those We anything. week, haven't at have but this meeting board point time, so we we ideas will a discuss

Unidentified Analyst

spending, that tuition this should it positive, me, be last on from just for we lookout there the seems going outlook is the the side defense forward. like assistance quite military seems be one on for its could just for And to help anything that

Wallace Boston

certainly time long-term but has on outlook for been at the none this my out been and year positive outlook, that proposals is sources particular to the say the know holding distributed the that’s budget based for tuition discussions same Congress of bases, I assistance. the

not benefit. we’re that short-term, the in good, seeing are signs the while So, positive

Operator

next Piper comes Instructions] Our Peter Jaffray. Appert with from question [Operator

Your open. now line is

Unidentified Analyst

maybe guess obviously or question I very growth guys just maybe talk Peter a into looking bit its any first performing campuses about College, Kevin in help. for was was you additional is This guys if programs wondering for [indiscernible] little would Appert. well opportunities you could My I Hondros

Wallace Boston

plans newer is in the to think results, Hondros stronger more were system we Toledo. improved to absent to ACICS location is still the Department successfully was get location proving at other don’t Sure, what believe still. for its both other for a I by correct of campuses a creditor schools that. a time I we its markets. notification agreement means by period growth XX-month it's year, creditor the has in than that’s campuses, Kevin, its in those we we its addition were wide with all and growth going to locations. the grow but period giving is can a demands good add transition And to me when Toledo, but Education Hondros shows agency it to And I capacity to benefit demand, add campuses there during that seeing campuses. those going other easily four and was Toledo crediting waiting of new Hondros was the Hondros probably currently at last which [indiscernible] then enrolment transition participation they sign cadency have four-location do that But think that approved the so is ACICS from the overheads are current Education that add and of acquired location provisional room and any ACICS are -- in so a the But showing around have we added of locations think ACICS programs stage cannot then other it, Hondros’ the Toledo the through of before new when our I than which Department we company Toledo the and with could

Richard Sunderland

at outside of And as states state degrees, needs projection degree the you of the Ohio allow to than offer you the you are other and offer needs not of well kind the that there can degrees allowed interesting look not the as the at are other and to degree. Ohio nursing we certain looked some need,

other somewhat are have system. more adding till patient regulated be But we we that’s approvals. are at the we comfortable but states in just with locations we our get looking So to some

Unidentified Analyst

I might with second pricing about question XXXX? guys at be Or we looking do how outlook? in you should think near And then I my has to and how long-time guess guess pricing

Wallace Boston

pricing. mean You tuition

Unidentified Analyst

Exactly, yes.

Wallace Boston

think it It's Duke all blackboard raising institutions. kind as non-traditional because by increased raising the total intentions of can’t from and I school currently $XX,XXX, do can they attendance notice over if any as University We are an last for it the year X.X% really institutions to is tuition at We raised for cost But X.X% over is next you traditional do just that interesting competing don’t have that. positioned year by of well you you they are that. APUS. compete. are if tuition I you mater got think my pricing students elite a alma of are we

are. are APUS. are the of because We where need are pretty with we we Hondros also we think solid pretty we don’t nursing. We at we either we tuition where And think that have to discount think for our solid

[indiscernible] are ITT closure competitors a while of or and couple back nursing. in competitors go markets in that competitive, aren’t locations and business to locations with out of had due We of saturated we locations

planning in our We’re increases that would but any not say comfortable short-term. I pricing we’re with the

Operator

questions. I'm further I would remarks. like turn over Symanoskie to this back At to no Mr. time, the showing for call Chris closing

Chris Symanoskie

your That to thank and in operator. interest American Education. Public you, evening. great today. We listening a will call our Thank for for for conclude you wish Have

Operator

day. thank disconnect. today's conclude the great program a all may gentlemen, does you you and This have for your and Everyone participation conference. Ladies in

American Public Education (APEI) 27 Feb 182017 Q4 Earnings call transcript