APEI - Earnings call transcript Q1 2018 | American Public Education, Inc.

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the American Public Education First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Chris Symanoskie, Vice President of Investor Relations. sir. ahead, go Please

Chris Symanoskie

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

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

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

Wallace Boston

Thanks to we've Chris. results our highlights. Starting by our with our respect discussing I’ll operating off call made goals. and recent with strategic results progress the reviewing X today Slide recent begin and

report the additional Our Sunderland quarter quarter new at CFO of then company's XXXX, Rick will financial period. results second on X% outlook net and declined XX% registrations course the APUS on registrations total In the to for declined first provide students quarter XXXX. our year net compared course of prior first by perspective and the

in new by few well students by last utilizing students students although in pleased XXXX to largely period This The group distinction. especially of have student registrations regionally the by past of decline in institutions APUS TA. doctoral over registrations announcement launched at APUS year-over-year an students we of registrations pleased course that short-lived by registrations overall still the improving relates impacted utilizing of utilizing years new a by registrations driven in Security month part strengthening military March. received believe as weekend. continued new adversely this this year-over-year. student and year-over-year new Global students that net Center Strategic declined student persistence studies that of a Intelligence quality for appear ongoing. their is initiatives be we shutdown quality XX% enhance by this increase students. by by partially believe the TA follows VA overall success and Security mix as registrations I'm using reputation The offerings. start of course Veterans net in start were student net further retention have course We our second that of course XX% net as doctoral was our accreditations and Education. decline heels quarter new assistance was tuition course net at Agency, by during the the decline suggests sources in the our by experiencing academic of the decline in to on aid, National recognized Benefits. currently at Excellence are continued The of improvements the net cash in students NSA, Department the other by that that increase new of persistence students course by particular the registrations of students the the and APUS Cyber APUS course returning enrollment new lead X% a the by government began third-party rate We overall Defense in year-over-year by accredited also in by offset utilizing of Academic and I'm who and a designation, National second in However cohort decline registrations programs was of students and With APUS. new or students Homeland also course federal decline for DHS, net recognition our at the specialty Security, in Of course recent joins least registrations difference in We X% X% and students, of the returning students utilizing year-over-year net in believe in only

geographies onboarding targeted diligently and and of students message process at our number to foster engagement outreach service the to that student APUS hours We student greater are plan through of expanding prospective prospective to by processes by working and including implementing broaden improve among we customer increased an channels. even and affordability digital students our

in term March School winter Hondros enrollment. or year-over-year a new student ended approximately the XXXX, XXXX XX% For by at enrollment driven Nursing total months increase year-over-year of HCN increased or XX% three XX,

HCN Although Colleges an Independent the recognized that is Health of additional is Schools as ABHES, recognized creditor, and as by accrediting believe application process of to thousands take we by turn the each qualified accrediting restored or for at on We The programs. more has national its is the of ABHES Accrediting May agency HCN's indicated accreditation nursing Council a excited prospects, Education. the accreditation Department of agency and as seek of will and Bureau from also schools Department Accrediting HCN the was Schools recently remain in status continues for by undergraduate Education nursing broadly XXXX that away Education. it opportunity long-term nursing late education action about well healthcare HCN's applicants application meeting. a of year

of quarters, in plan. our course applicants requirements Over nursing This registrations around of APEI’s according our Association American to outlook belief future reflects met approximately access continued strategic net our may year-over-year. expects long-term the a second and at as last supports Nursing. admissions healthcare annually decade, In course the volatility of decision that nursing flat XX,XXX be APUS registrations. quarter who rejected focus to APUS education overall schools have net Colleges keep to

XXXX workforce strategic in quarter and to the in development emphasis, open anticipate In a focus we and student the new HCN's late HCN to XXXX learning, second campus revenue the strengthen time programs to net position in course expected as our increase completion revenue at outlook growth intend long-term to stabilization the and the HCN new result year-over-year several improved second APEI’s degree mission. Sunderland. I of a approvals. subject fulfill our to are competency based building over Rick? with At call registrations APUS quarter at CFO, will rates our recent our APUS consolidated combined Rick our this plan However, on APUS We at relationships institutional in increase for maintain well and to to we on competitive summary, as compared XXXX. and our turn launching of we benefits expand at regulatory At persistence time, enrollment while our plan successes. same to

Richard Sunderland

you, in prior to to $XX.X decline decline offset revenue year revenue our a million quarter Hondros primarily Thank period. to APEI period revenue segment financial first the million during costs Hondros to In compensation XXXX, segment APEI prior primarily program APEI same segment compensation the when both $X.X On year to quarter VRIF quarter reaching in revenue American and in retirement increase results an period our period. registrations. segment. March course to in Wally. compared in APEI in in X.X% include $XX.X additional the to compared $XX.X to is to costs employees the increase The months The decreased Hondros increased in the prior the in of XXXX. to decrease partially was employee $X.X year. revenue costs the compared $XX.X the decrease compared in during to net by segment The a consolidated first in and to period. to segment X.X% basis, Hondros is increased increasing force our million attributable base in revenue Education's eligibility reduction attributable prior was implemented increased segment to a including APEI million related million first decrease XXXX Public in in $XX.X in to due our million The XX% a million increased and X% consolidated revenue year expenses due compared or voluntary related XX, the $XX.X enrollments. in million the segment certain segment costs three stock ended our expenses primarily our

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

S&PE the decreases materials partially to or expense an segment. in prior was in APEI in in support X.X% compared costs in related ended increased S&PE XXXX. $XX.X our costs by the expenses VRIF increase compensation to were from increased to representing year. to the the and prior during period. an compared $XX.X percentage employee The employee Year-over-year, costs XX.X% advertising APEI expense result in is ICS as and primarily revenue the from administrative XX, XX.X% period. segment increase revenue due ICS to segment. APEI a of million instructional VRIF partially in or Hondros in XX, March increase revenue as for expense promotional in percentage our in Our APEI three months XXXX to March including an segment $XX.X APEI months compensation X.X% the our our ended costs a year the in XX.X% million decreases increase to primarily three to of The in of General and $XX.X costs increased materials year expense S&PE and a XX.X% of in increase offset million and segment prior of our million marketing segment offset by G&A Selling related

X.X% compensation G&A three XXXX XXXX debt was X.X% changes increase and admission or debt Our other expense based prior X.X% period. offset to The the compensation the for our ended period. student employee costs APEI XX, months expenses due the processes. bad changes to compared in million changes Depreciation to segment in in million primarily prior or verifications revenue increases $X.X in in $X.X VRIF to in and was increased to related revenue processes stock $XX.X G&A period. months for expense Bad March compared our ended The amortization eligible by bad to of $X.X million in additional three debt employees in expense decrease $XX.X and and million for partially the related primarily was year prior mix, the compared in to March costs in in was segment. retirement decreases million year year XX, of $X.X prior the in APEI million

the $X.X Our XXXX, million effective quarter and $X.X before during of prior income income net we quarter X, or expenses or diluted of $X.X tax first was share operations adjusted share, from or in year the of compared associated million not The XXXX income and our reported from $X.XX net excludes first the period. XXXX was the the measure $X.X income $X.XX approximately reported non-GAAP diluted million million applicable or per first of In the net quarter adjustment. first income for rate quarter of first million income share prior outlook. workforce April million for per Adjusted year period. approximately tax was was $X.XX taxes of the completed XXXX the interest quarter as income VRIF, contemplated of well substantially pretax as XX%. the in effect on net reduction quarter diluted of of with we in XXXX and per $X.X to XXXX In first $X.X

adjusted were please cash to we tables adjusted regarding today. GAAP reconciliation issued XXXX to cash year a approximately the were approximately three XX, For expenditures Capital compared as equivalents net prior and in income, XX, for additional compared million period. million March earlier of $XXX.X the XXXX. of information as $X.X months refer in ended release to financial $XXX.X million income March non-GAAP the net the earnings $X.X measure, Total XX, December XXXX in million to

and to pay from statements earlier For the with the compared severance voluntary and XXXX the XX, first $X.X months not during million reduction accounting second March Adjustments adoption estimated SEC. million expects XX, force, tax X, estimates. ASC months tax were adopted XXXX. using aggregate the quarterly our report more during of make to to the quarter no employee material approach. the related the connection The in ASC standards customers fully expects resulting retrospective extensions payment on or to of Effective Form company in estimated in In XXXX second company in of modified estimated described three the $X.X payments the payments filed the amount during $X.X with tax are from January contracts made quarter the ended to revenue FASB cost quarter million our aggregate in ended company XXX XX-Q we three codification financial of tax with today XXX XXXX. March

to X Slide outlook. second on quarter Going

Our to net is quarter XXXX to total are course expected is registrations you expected outlook approximately by and if be expect new course X% the for of follows; year-over-year. X% between second students registrations flat change as decrease in year-over-year. The

increased enrollment three X% June year-over-year. student is spring the new XX% at XX, and ending For enrollment Hondros total which increased months XXXX term the student

and the share. on steps appropriate closing, by XXXX, second XXXX as $X.XX show of location expand be I X% to of to by quality and net and take initiatives and year-over-year. margin XXXX should affordability. the Net in we at to total combined facilitate student diluted the Its address is range of For net goals. for the quarter Furthermore, mission shortage focus our Ohio. late our X% registrations consolidated and the to Congress revenue and help opening $X.XX and registrations a we're course campus to continues long-term to critical expected workforce income reach improvement. while am existing on the cost maintaining expect per In stabilize with of increase between nursing of in plans growth quarter new enable strategic us efforts control second to focused pleased We our encouraged fully we total stabilization believe APUS. future relationships emphasis will in APUS these

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

Operator

Jaffray. Appert [Operator comes Peter Piper Instructions] from question first And our with

ahead. go open. is Please line Your

Peter Appert

mentioned access gets trend positive seeing business, think strengthening shutdown the in hurt whether that’s that over the and issue you of by resolved Wally, been some the you back Can talk you recently. course TA territory base about the year? So TA the government business if to the

Wallace Boston

I optimistic will normal. that another of think to government we’re back short business the shutdown TA get

base some been but think Air there few first can't issue near yet resolution the been the bigger to at access we sometime hear and We the the hoping quarter I Force just was not systems predict days have but shutdown, same the with in positively the resolved. time for future, were impact has that. glitches the

Peter Appert

persistence. would can I Is way would informing that to that that pretty [indiscernible] forecast X some something improvement in numbers there confidence that XQ X the that's dramatic the give The require if registrations, think negative you in positive meaningfully? move

Wallace Boston

so done very our April close and look do – we finalizing and Well are monthly to is registrations at starts. May we we

look is the like, FSA simply or our or move that’s the have in course driver coming for taking forward from that's indicator it's big that rates going first students improve not programs So we that’s one their to course to increase completion pipeline students month what month June forecasting whether and our to was one bellwether legitimate that academic close complete were but least continued for essentially students complete really through and here. to program perspective continues had who were an the at students hopefully were actual intentions the and

Peter Appert

the And annualized cost, And terms number severance any then estimate expect for number other in end you in mentioned of Rick, from the XQ is can cost that one. cost of this? give you in million then two, savings the X.X you severance us

Richard Sunderland

the when was I VRIF is so reference quarter. April clear made to in the going to So with we’re completed be cost the let substantially The me and to that. making I cash X, on the quarter. was paying that that reference associated the second completed be recognized first

expected I'm Chris the of the the number? XX-Q terms believe - do In have X.X looking number, the you was that's I it for savings and in

Chris Symanoskie

X.X range. to X.X

Richard Sunderland

yes, I and the tell the be sorry ahead. the X.X, so go no, number. you would number find savings can – have don’t I and have that XX-Q in I that it

Peter Appert

find it. I’ll Okay,

expectation? Ohio the you additional Hondros be would the open that be in campus For would would

Wallace Boston

our that's have but applied. where researched we one haven’t and actually supplied is Actually case in announced it - we not formally expectation

for body provisional and So - we new until of taken to are Department our not with the allowed over of we’ve off to status approval get moved accrediting Education.

that announcement. formalize and status it, can So our make we get we’ll once

Richard Sunderland

it's savings annualized is X.X X.X. to year X.X is this the to on and XX, the Page So for X.X

Peter Appert

the to pursue campus had do pace And in momentum creditors up the expansion to Wally How really continuing once aggressively Hondros with the want on business that of some have you good capability openings? step then you you obviously.

Wallace Boston

as NCLEX state-by-state, been rate in as and a it’s in well most your is pursue, I tough accrediting you nice aggressive that is placement to both pass you're the well mean you as business body. on of rate Well monitored is that The nursing a regulated, probably word on have as much investment. our I the think states, - turnaround your regulated regulated as highly

you So generally can to student and you're be pushing the that after passing XX admitting both quality for days the aggressive pass the campus who make to placed XX then have within NCLEX, additions while right NCLEX. sure

quality. our to While I that, would do we to say we’ll like that maintain need

would So if year an I two aggressive were saying locations. adding be probably organically

Peter Appert

then the allocation terms thoughts expand? new cash your to lastly for of in which of any Wally or priorities incremental And balances continue

Wallace Boston

We look continue that opportunities for for to Peter.

Peter Appert

And M&A I in assume arena? that’s the mainly

Wallace Boston

Yes.

Peter Appert

And call interest? terms anything areas you’d areas of in focus of out of or particular

Wallace Boston

see the other think at we’re of stated been ancillary The interested employment. that the we’ve our and employment interest times point find healthcare with that no provider. APUS at tough healthcare scaled we more gainful this much some nursing nursing so if in look so then have we’ll try nicely and another that of there emphasis. healthcare online same I final perspective, reason regulations change in I in time real are time in might And in but we think a take at is to at its issued least haven’t the gainful our areas with

Operator

Alex Barrington next Parrish comes question Research. Our from with

Go ahead Your please. is line open.

Chris Howe

Alex the trend to numbers for kind for on FSA slow point returning do say student question This sitting and you you and to you I is at Chris the had didn't to of in continue a breakeven? close FSA. last get mention would reflecting back And surrounding was it, would hear the what you but expect what I Howe Parrish. call,

Wallace Boston

in students FSA X% were down FSA said that were So first returning the our XX.X% quarter, first the in students the quarter. we down only new

over the new even single a our as don't returning students we for you mix the believe off double numbers it and time a for has specifically, to is FSA our we decline that specific quite you in returning we’ve can I think out. itself still for the the because the impact see do gave I paid are balance diminished. that between will numbers that in from declining though FSA guidance with time shows students second returning overall, but new quarter in FSA transitioning digits, change And difference digit FSA students. believe got

Operator

Our with BMO next Jeff Markets. question comes Capital Silber from

open. is Your line

Henry Chien

for on offset look and TA? Henry payer like question calling curious the the of A some just Jeff. in is driving you growth, It’s growth could in what's that least Chien weakness that could eventually VA at

Wallace Boston

our reputation TA being a TA AMU, their of persist the to allowance. they is continue we they terms credit. active-duty market, career of institution Well XX% us both in degree their but important deemed close training in because career while students we needs degree, VA has unless military meeting weakness our the matchup hope love academic attending that military military. their a post online with the not to a don't actually a in we that for And Having for lives and brand recognizing military students, XXX% Congress reputation, that get the if let to is their generally you're friendly in degrees great of housing have permanent, with the only pretty you great

I'm the courses up number TA a for quicker route housing that of quarter, same that but at off that because So allowance grateful VA a we that always versus the for XX% lifetime drop in have student of time students the we anomaly. the know number

Henry Chien

the And key and what pass, for are the have side accreditation finalized on then campus, steps I I it regulatory of that on the of to know what new has expansion to Hondros the are be guess milestones sort you the the mentioned next you that?

Wallace Boston

really said at are. in of U.S. approval Education stated one our for have in all formal state to Toledo and campus new can't lifted go issue our applying while you lifted and and to can’t application they the Education not agreements campuses can't we get it every by reinstated I - school Department is a lifted a either. the accrediting and of body participation have that’s you accrediting the the with degrees, and that states that both they ACICS is new subject they of of of have them you Ohio agency other last Department add until one was that we our and that you're we lifted first where the to that approval we’re we two added accrediting And looking until provisional ACICS until them, lift well had our add the So and body. PPIF either we

is So lifted will able application make first once be the approval to the get The accrediting that last your you from we is our entity Education. body. with U.S. Department of

Henry Chien

terms a of actual campus is will itself in And that campus Greenfield the be this constructed? newly like

Wallace Boston

We parks. of typically our lease owner’s space from office

So brand-new but a it has a new us, that florist our building not in be I campus it be for will or but school. special-purpose brand is nursing mean for but a location may

Henry Chien

And of new be? campus might any size what this the idea on

Wallace Boston

think XX,XXX square Let's our approximately see, it's with feet. I location Toledo

I’d So similar size. will it assume be

Henry Chien

okay, so size, got Similar it, okay much. great. Thanks

Operator

for call would [Operator to Mr. remarks. turn Instructions] the further back no am I Symanoskie And showing over I questions. at this like closing time

Chris Symanoskie

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

Operator

the today's Ladies day. you may and you for disconnect. your participation in Everyone wonderful This have now gentlemen, thank conference. a concludes program

American Public Education (APEI) 8 May 182018 Q1 Earnings call transcript