APEI - Earnings call transcript Q2 2018 | American Public Education, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 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] And as a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Investor President, Vice Symanoskie, Relations. Chris begin. Sir, you may

Chris Symanoskie

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

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

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

Wallace Boston

our I Chris. will today begin call starting discussing Good performance by operating everyone. of evening our slide our Thanks with Page recent deck. X

second quarter Sunderland XX.X%, report financial declined second In XXXX. CFO, the students will XXXX, FSA or net using and course by registrations of then our on quarter quarter the for the prior APUS results year Student period. Our at of third Rick outlook to Aid Federal compared new

by APUS assistance students course XXXX, or total prior approximately benefits, net This course registrations X.X% Overall, by utilizing new X.X%, was X.X% X.X% net while course registrations new year-over-year. the students new course TA. in flat by year-over-year registrations military tuition of course and a quarter declined both net by in net net second students at increase and registrations utilizing X% were approximately registrations a by by new returning period. other in by registrations increase a year-over-year course sources, those students FSA driven However, year new to students utilizing cash increased year-over-year students net the by net compared excluding increase in utilizing increase Veteran’s course registrations and

to continued quality by over by we be stabilizing particularly success achieved course of improving persistence rates I we expected, believe aimed progress Although the goal believe contributed We student pleased student increases our last part and at enrollment expanding at in our the am the initiatives student in student that have future launched reengineering and in resulted conversion also this years registrations service can volatility from success. onboarding improvement the overall recent Furthermore, that net and was several our processes in offerings hours. APUS. in

ended June the increased new compared of recently of and three or to late plans student XXXX. medical XX% enrollment the the launch year-over-year approximately For its program campus year. College increased XX, or spring at enrollment XXXX, Cincinnati months HCN Nursing term HCN a at XXXX, Hondros laboratory technician X%, in to total prior announced

compared ended students. net in by on fall plan August pleased course team XX softness lower period attracting recently Accrediting XXXX, improved as that to to earned advertising making Force both XX As Independent about and in TA, and a the utilizing students prior or at to as excited or experienced all-important now In Colleges to of future. persistence third of for APUS the be healthcare education nationally the of and we peak military period belief June we will increased as of the our by the competition for enter continues on Council quarter and competition processing ABHES are we Health HCN X. and for the and nursing light registrations Bureau season, Accrediting by of We compared Education opportunity students. Schools conversion assistance accredited broadly quality in ACICS. progress the that year rates, a of as result prospective a is XXXX, APUS is National began institution better registrations remain Thus, strengthen result bright HCN’s as an the for well Schools increased Air well delays decision The prospects, into quarter Accreditation further to tuition recent July by the anticipate the be we a spend, of quality as portal it enrollment as more for of result increase at long-term second HCN a with civilian and students our the of

finding relating unfair On acts August Demand practices XXXX, an matters from the the deceptive Civil the CID to to by Commonwealth received enter of General of applicable a AOD we the and of legal APUS moment, AMU. payment or Assurance Attorney a inquiry. alleged to Discontinuance without a X, the AOD terms regulations. of agreed last to to Turning make Massachusetts, part, or year, Massachusetts the $XXX,XXX for to of company chose of resolve and doing into comply otherwise investigation to Attorney any or with APUS’s of an Investigative wrong to agreement admission on or General the or Pursuant

been We this are has pleased matter that resolved.

Page to Moving on X.

to years, several for affordability in remained last the our enrollment working future. the Over prepare while our commitment and have stabilize to we steadfast institution

efforts noting Although our work worth it’s have positive results. and not our is that yielded done

in an credits APUS Undergraduates growing our $XXX material also advancing in These AMU towards XX demand our working institutions combined in short, approximately than to we serves credits for costs are approximately goals and an expand differentiation support representing For turn strategic published efforts $X who receive who transfer average beginning in-state CFO, to in below hours us. example, We grants and tuition has Sunderland. students transfer workforce. average interest important they In to other in the address with helped communities. believe in just institutional help academic attributes undergraduate serve are at to the service APUS and despite Board's time, at undergraduate adults. apply Since and commitment degree the their of $XXX These of partners. to with national more value healthcare awarded to affordable average XX% quality of an reach to tuition eventually their helping provide XXXX, and military a in partnerships adults programs marketplace. to more paid over has in and of become to students. textbook competition, by APUS working than and the a degrees have APUS, XXXX, public I College call $XX,XXX to graduates. College public who provides awarded million course Rick At Since veteran necessary of our for price million growing applied graduated should collective our in point XXXX. differentiation high million professionals according is year leader this Rick? America’s education savings students Trends full-time strategic tuition will credit and remains Pricing Affordable students four interest by our our valuable complete low attributes, the believe us tuition has to serving fee professions. succeed to educational

Richard Sunderland

Thank you, Wally.

in was to professional and of in and in to as expense course APEI three a period. revenue of to compensation Hondros Cost decreased The million was ended million to of costs, segment. year the APEI segment, X.X% the APEI XX.X% ended from and Hondros year. million was in revenue, year Education’s $XX.X million, ended of additional months in a or expenses and as cost compensation prior six revenue Going our XX.X%, segment XX.X% due instructional or fees instructional and the to period. in increases and amortization compared the in quarter on XX.X% for in revenue in decrease our Consolidated months the American employee to reaching due increased XXXX to $X.X XXXX $XX.X revenue employee XX, our primarily was XXXX. promotional the stock-based decreases June in Depreciation $X.X compared certain X% X.X%, of percentage costs increase the X.X% decrease General compared administrative to expense $XX.X decrease of APUS The X. as for million decrease advertising XX, primarily June Selling of percentage increase increase in or expense XX.X%, a by million of by XXXX, to segment costs, revenue XX, second period. prior three XX.X% compared an segment bad compensation period. June whereas, to eligibility $X.X decrease net a cost employees million, increased to prior percentage increase June related student the partially consolidated and services to $X.X for million offset partially million decreased primarily enrollment, for segment, was and registrations. was retirement our debt were prior in revenue APEI Slide in compared to revenue XX, was to months due XXXX a and in year a the expenses XX.X% X% Hondros to The segment. three materials $X.X Public revenue ended our revenue in which expense revenue, year prior compared increased revenue to offset costs due $XX.X the months expense

rate compared XX.X%, XXXX quarter the Our effective of the to year. tax was prior in approximately during second XX.X%

six income and primarily million $X.X million the Tax million for XX, $X.XX of months diluted year share voluntary Capital outlook because $X.X over Act. from was Cash XX.X% prior XXXX, resulting XX, were towards the compared as compensation savings Cost the higher per cash $XX.X expenditures June and period. of approximately compared expense. June net We the previously prior ended $X.X or or range. in ended improvement the for and were per XXXX. in XX, was income are June the flow XXXX force diluted of share, per than XX, period, savings a $X.XX of our net XXXX completed the as operations tax due cash million reduction lower employee months representing from six April net to million, to tracking of lower XX equivalents XXXX bad ended earnings approximately million debt XXXX period. second months $XXX.X $XXX.X share year Xst June the top-end the $X costs estimated Our Total for payments in three the for announced to exceeded from year compared prior December million, XXXX, income quarter to expected

third quarter XXXX Going X, on outlook. to Slide

decrease course the outlook net of are expected year-over-year. year-over-year. decrease Our to XXXX and between follows: third Total are is new APUS course X% between expected quarter registrations XX% as net to by X% students X% registrations for and

or with of consolidated XXXX expect X% we our and for XXXX, to $XXX,XXX per XXXX, XX, of would no pursuing. be enrollments is decreased of Hondros For between million year-over-year. net $X.XX In share. quarter the income XX% approximately company new period X% three September Absent to associated to fully is quarter a factor, student The Net year-over-year. increased an term, by the ADN expected Toledo cohort increased fees which professional summer at at year-over-year, $X.XX decrease diluted second range the enrollment income included third X% have per revenue this while Hondros third the Campus. includes longer at months student acquisition new $X.X enrollment in X% its is prior total year share Consolidated student year-over-year start the in ending approximately that

by selling promotional second earlier, to enrollments In million commented we closing, the Hondros third expected expense the stabilize is Wally XXXX. continued with in and approximately of at the As XXXX, and total are efforts second growth the to quarter quarter to $X.X in at compared ongoing increase APUS. enrollment results, quarter our student of pleased

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

Operator

[Operator Our Analysis. of line the Greendale question First first Instructions] comes from of Corey

is line Your open.

Corey Greendale

good afternoon. Hey,

Wallace Boston

Hi, Corey.

Corey Greendale

of couple a clarifications. So,

Rick, in $XXX,XXX an said, you acquisition. So, cost includes QX with associated

hear to that Did pursue. not decided I You right?

Richard Sunderland

correct, Yes, that’s Corey.

Corey Greendale

is EPS included I in or the excluded? am say sorry, that guidance did you that

Richard Sunderland

the included It’s in EPS guidance.

Corey Greendale

new the was FSA given number first And beginning What of count missed Okay. the script. QX? students the in I at

Richard Sunderland

down was FSA XX.X%. New

Corey Greendale

you. Thank XX.X%.

sounds it the what issue of a Air to there Is way new you’d what that temporary that work Force. expect QX was the and to impacting that doing for estimating like, Air that's in of glitch? if any Force’s there students with So, kind was QX impact be

Wallace Boston

for Corey. enrollment. the of call, is Typically, military this Air try about to do TA didn’t XX% We Force our that

maybe number, mean, get could we back you. do that We you?. have to I So, don’t Rick

Richard Sunderland

well, No, impacted registrations, August certainly right. it’s

I then offset is in of and can’t TA be, is how registrations. our it it’s those September, total but be many going what point, there you. XX% to is come there register If and Wally’s going of if back to So to an tell

Corey Greendale

– is it or resolved ongoing it’s that was still and now? Okay,

Wallace Boston

It was was was periods down, It Rick? August week that on X. two resolved about

Richard Sunderland

Yes, weeks. over two little was it a just

Corey Greendale

Okay. And pricing then, generally. on I had a question

that just of in cost. which kind and So, more low institutional seem of the saw now a Q loan with maybe scholarships, side, offering Hondros to is offering start opposed scanned with the I which - Hondros program, into keeping would philosophy as

to why just, offer So the loan program? institutional decision

Richard Sunderland

I compliance. on think, we overly conservative tend to be

we we dotted and market to crossed t's long-term, wanted think, our needs. we that have see temporary for to just make And might is. the So, people who sure our what I i's have Corey,

Corey Greendale

does know, terms at in the in about terms student And for Okay. I Rick, revenue that, collectability, that a there question Hondros? accounting if is of – impact don’t per

Richard Sunderland

experience. anticipating to, obviously, We a are there got record we’ve But the to not it’s going build Corey. at payment looking

watching we'll be closely. that very So

Corey Greendale

terms of little give APUS in and say there is a at with the side. where obviously market the and raise tuition the pretty Okay. services gulf and a lot invest you all point, that things would marketing of differentiation lower you And on of between you wide sales is to us stuff. but, – student and bit, true most more Obviously, the if are are of the where in

excess So, but that the raise maybe sure just have this and know tuition somewhat philosophically - repeatedly, in markets that I you I prices up why comes to am not invest? civilian

Wallace Boston

times but a year. I Corey, at we of would this say, monthly, not that look couple

that, for done not XX% or you have rate we why and military our keep much same our includes numbers reasons population. those affiliated, we there the tuition all still veterans are at which When student spouses. of over of total the would put One military time together, XX%, is

we continue So, very It’s at look a good it. to point.

not just are to going make through have sure We that oblivious it’s initiatives. We the to worthwhile it.

Corey Greendale

you Thank Great. Okay.

Wallace Boston

Corey. Thanks,

Operator

Thank you.

of Our line Jaffray. Piper Peter next of comes question the Appert from

open. is line Your

Kevin Estok

in am for I Estok. Kevin is this guys, Hey Peter Appert.

Richard Sunderland

Kevin. Hi,

Kevin Estok

corporate I could you the will go percent Thank hi, color and first little forward going that the so, – channel partnerships. do enrollments be and if could through developing come my those helpful. total on to currently to you. question where also, of growth know give that a maybe that enrollment to has corporate percentage with wanted are how drive Just just you

Richard Sunderland

of think I comes our and other current about corporate it’s that cash half through partnerships.

as We the to get corporation. that sole – a I’ve is call will continue tough to any because this optimistic – before on unique area unique are grow. difficult be it’s though, provider to that it’s – pretty really very said to It is sliding, there

substantial prospective two, of try on are number we four where we just we to focus students. get one can three a So, that corporations or of

about that but, So, it’s other currently cash category. and half of

Kevin Estok

And All They’ve margins. are what encouraging. right, guess, wondering thank this to on second quarter very has bit with quite driving I margin And I leverage your do a Okay. question you. my improved and which the obviously was views going forward? is

Richard Sunderland

And like which we’ll I third quarter think, driving at we payroll. being have versus enrollment typically usually perspective. quarters the cost best the is for from and that then, which want in quarter, one looking we spend to quarters, always fourth a in seasonal ways our first improving other benefit at the quarter, leverage enrollment efficiencies the in with exception quarter into that, an higher is dip

Wallace Boston

So tracking are range as year. discussed I – said – end the think, is of it we is the comments, we it the really high towards my I in in that earlier

think quarter, call for I trends bad on materials, the having The that’s remained second instructional quarter as an have versus year. we books, the it well term debts. really longer it’s both, current positive as prior effect

debts where a to our it becomes additional a improvement. getting bad point are Although, meaningful

Kevin Estok

Okay, great. much. Thank you very

Operator

Thank comes Paris of of next from you. the Barrington Instructions] Research. [Operator Our line question Alex

open. is line Your

Chris Howe

for Alex Hi, this is afternoon. Howe, Paris. sitting Good Chris in

Richard Sunderland

Hi, Chris.

Chris Howe

about on some themselves of or student types or operational quarter successes and had type retention forward, are behind in just presenting and as question, what are forward? persistence of we different that student seeing moving moving either I going a past the things this challenges the you of think scenes are that

Richard Sunderland

those the are with on getting signs Well, using we the closer the some and getting student new are what lifetime improved are students. are even we value while finding is, decline, an lower good returning FSA number much returning much, to down, FSA is students the news is students we that, and

students focus our capable for off. of were think to on who our really recruitment I strategy is paying FSA student completing college So,

Wallace Boston

So, levers I think is multiple here. there

got students metrics conversion got once you’ve you and you’ve to applications success they rates where student become then So student. convert a

quarters And I excuse course so over first this pass reported five no at the first FSA students rate point, students two many the mean, is of we’ve FSA me. which – the latter for non-FSA,

ongoing we’ve And in multi-faceted conversion is enrollment strides process so, which The of resulted there. and rates. improved reengineering great made the has

students the student function rates are ready. marketing of reengineering that process higher delivering are success. is more of quality we identifying the the The college enrolling delivering is and better students on the enrollment So, is average, conversion that

two overall, of the getting And registrations. even opinion, say, so, that’s course driving it’s my those basically in combination to driving total the I’ll on net

Chris Howe

very helpful. how do Thank quantify to improving improvement that’s we is did an Okay, retention prior you year-over-year? a comparable metric And, just see further it’s even, versus internal basis, is you. how year? – I don’t and know, this retention moving year the on guess, how retention I next expect basis on can

Wallace Boston

a calculation We you from new and didn’t institutions categories. see in returning numbers But think, It’s student warehouse. measure category. payer own our in our tell Persistence in use seeing Retention different the we it. FSA the our And a participate data in We student in and HLC’s And use crediting other you a FSA improvements board, numbers metrics it the body, program as difference Civitas. numbers Academy. provide complicated retention, we that the specific across I continues in differently. we how improve. to But can between would the I are calculate we

processes analyze we going are to mentor, persist. and to to implement monitor students and on who have which recruit we So, in going multiple initiatives

Chris Howe

thank my Okay, for you questions. taking

Operator

to Chris turn to am this showing any I’d questions. Mr. you remarks. like for the at further time, and over Symanoskie Thank back conference no I closing

Chris Symanoskie

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

Operator

This your thank you participation in does conclude conference. and the Ladies gentlemen, today's program. for

You may now great a have day. Everyone disconnect.

American Public Education (APEI) 12 Aug 182018 Q2 Earnings call transcript