Earnings call transcript Q1 2023

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Operator

Thank you for standing by. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI reports first quarter 2023 results conference call. [Operator Instructions]

Ryan Koren, AVP Investor Relations and Relations Development.

conference. your begin may You

Ryan Koren

Thank you Education financial to Public everyone. operating good call to afternoon, conference XXXX Welcome discuss results. American and first and quarter

Chief are Joining and President Officer. Chief Officer; Senior Selden, call Strategy on Somers, Financial Rick today Steve President me President Executive the Chief and Vice Executive and Vice and Officer; Sunderland, Development Angela and Corporate

conference statements section today and this Materials under presentation facts historical APEI available statements assumptions, presentation expectations, call accompanying that APEI call on and forward-looking based and are its of for made projections. website. regarding The the events the the may subsidiaries be estimates current during not any and are

may, sometimes words and seek, Forward-looking would, anticipate, statements similar or by identified opposite be may should, plan, words. will, expect, like can, believe, could, estimate,

for include, pass statements and earnings to and Forward-looking for expectations limitation, and to and initiatives, regarding leadership rates enrollments, and reposition and improve without registrations future guidance demand. changes revenue, and University competition including with other Growth initiatives NCLEX other respect earnings company EBITDA, statements Rasmussen

with XX-K related in today's demands, our to and our regulatory and SEC today stock new to our subject effectiveness release, meet our our expressed preferred such the effectively risks and persist or succeed, and thereof; ability inability These our XX-Q attract filed to suspension by requirements our uncertainties XXXX, other of cause actual that elimination are to the described other changing acquisitions, filings. our the to market results press from risks conditions, market to and implied statements Forward-looking or statements. or disruption among students who include, those risks dependence inability Form markets, could into Form our presentation, on differ and things, assistance, materially challenges for and to economic debt expand of and are tuition accreditor likely market reduction, impacts programs

to non-GAAP our obligation any by measures no is to comparable statements the and to The update between required company publicly information. the use we This the directly financial reason in most financial Management reconciliation non-GAAP of of to as addition for undertakes to supplemental financial appendix in our regarding unless located our references provides forward-looking in not of prepared should presentation in GAAP or believes measures law. any A considered contains and that accordance our any presentation earnings measure substitute release. presentation with only a performance superior to information GAAP. information results for operations and investors be and financial non-GAAP useful

call will Angela ahead. now over Selden. go Angie, I the turn CEO, to our please

Angela Selden

including Thank profitability to themes, EBITDA you, in discuss XQ for exceeded Good key Throughout results more today's for call, you details $X Public of hear guidance about call 'XX. and our some afternoon, and delivered joining American Education. 'XX will thank XQ you its million Ryan. APEI adjusted

continue We headwinds at the University, months. in ongoing of been senior has XX last leadership which absence Rasmussen the one of to permanent address the

in evaluating on the education a a build brings She improvements and XQ Paula Paula announce President of business of University. Laureate her regarded including President We as value where key unlock experience and Education, Singer are and will as role has University team she the 'XX. at years of to reputation XX built to of and that accepted Rasmussen Online, CEO of leader. Laureate Rasmussen excited at be Walden operational highly started aspects

X,XXX highs in Hondros School deliver QX and X,XXX 'XX growth high with XQ Graduate all-time other XQ 'XX, education delivered USA, APUS, of for Each in students. units; APUS enrollment and students almost 'XX net then 'XX College of and and momentum. Nursing X-year XH will delivered our both X with Hondros a registrations

at each of place health We will leaders are in execute education leadership with our the growth X care to focus military of confident education for path long-term on career talent on profitability. units, have and and strategy and we our while APEI in setting a and proper that now learning

to Starting registrations with educator APUS' results. prior military details was active like year more net about strengthening continued during by APEI's the provide X% position. first first I'd increased period. over primarily Now driven quarter course performance, quarter #X This the APUS, duty strong

APUS. the to was in registrations duty substantial active to and increases, expect we by the compared course to of Army seeing year-over-year Overall 'XX range X% registrations. net year partly momentum strong Guard plus veteran total decline into be APUS' where prior revenue, cash period. compared continues at X%, all X% grew expect to we plus branches XXXX and X% 'XX, strong throughout total plus for Today, nonmilitary to period, Force Air the XQ the plus year-over-year including growth EBITDA military offset by prior and plus Coast at XX%. margins of Overall, during with see Armed year improving at in XQ X% registrations Services generation a

total compared year 'XX with period. and the all-time delivered X,XXX to students enrollment XQ a prior high Hondros, another At set record XX% increase

education, enrollment 'XX, of but or plus the to of above to to re-enroll XQ approximately reflects their X prior returned Hondros' to approximately COVID-related XXX strong who cases, after enrollment paused degree all due leading of efforts previously the XQ Hondros period. another to students all-time 'XX total Hondros pursuit their year-over-year high During continue in LPN Hondros many successful disruptions. XX% X,XXX had campuses growth, having year student our enrollment students an

XQ success which we 'XX on this Michigan the the strong LPN enrolling demand region, students that grow announce XXX a and during are for also as word-of-mouth back Hondros over rapidly in XXXX. XQ of enrolled the in XQ to strong nursing demonstrates we This to students need 'XX. programs with continue expect over campus and in 'XX enrolled XXX am campus, I pleased in Detroit opened been has to acute

serve of the campus portion Also more location its Dayton yesterday, Hondros relocated to larger market. newly Dayton opened central a to a

We down student. campus drive total initiatives may Hondros programs enrollment working per increase on are at and additional to which utilization cost launching campus, to each include increase

As we EBITDA XXXX growth, mentioned expansion at and increases last Hondros. we during margin expect revenue quarter,

Graduate than started of translated with increase School USA compared in which to the million XX% more solid enrollment revenue, year momentum, an over to XXXX has also $X prior period.

For XXXX, growth still high-teen year-over-year to percentage improved mid- EBITDA. revenue we expect adjusted and

education planned April continued a increases XH inflationary tuition at includes and at implemented Given and in increases. the Rasmussen and APEI's additional with increases fee we including structure, certain have implemented tuition at in the coming margin in of in increase the This pressures APUS took overall cost effect on revenue resulting in each select units, in 'XX. increases that meaningful Hondros months, January

recognize but students, the We are providing affordable, committed and believe education the and to pressures inflationary increases heightened high-quality to are both tuition our also reasonable. prudent

replenish will for progress earnings Singer Rasmussen growth the a XXXX we to rebuilding are announce these with to I'm goals enrollment As stated momentum previous of on year and long-term towards sustainable making President. that as be our at Paul leadership drive call, hiring and profitability. pleased of

to outcomes Rasmussen Rasmussen has Laureate deeply Rasmussen School great in brought and ability the for Vice talent assist and XX-year for for and believes finance in the to Paula veteran Nursing. the transformation, Education President create Paula as nearly industry leaders a the of Provost transformation its lead senior educational lead to veteran the teams to an of of mission, in Additionally, education nursing Associate students. and its X

its has these executives returning established goal expressed and Rasmussen out Paula executing new key Rasmussen excellence of This our X Together, team to team. is initiatives. on leadership priorities new round leadership with the and

Turning to Rasmussen enrollment.

of quarter segment, growth Online have which of third enrollment. Rasmussen's for We the total our over consecutive half represents seen Rasmussen

However, in over and decline. Twin XX% due Rasmussen's of the which represented on-ground Cities, to and tightened admissions enrollment nursing enrollment caps the declined Illinois policies enrollment

leadership the already growth mitigate challenges new place that put to nursing initiatives health several and success. The on increase campuses and are is with in initiative approved future to more has those to university fully One programs Rasmussen position for team allied both and utilize these enrollments campuses. help overall

capacity Rasmussen is has analysis on as campuses, being Our XX% today. what that to utilized compared more most has to student XX% shown

Additionally, of levers. and and on unique restructured operating segment value can with focus each model Online Rasmussen Rasmussen the its campuses, growth

us, from large of during educate their nursing COVID-XX are portion students X pre-licensure students began exclusively pandemic Even behind online. XQ program 'XX a chose we quarters to XQ when through the though still the educating who Rasmussen is 'XX,

Nursing courses, have a delivery and on the our nursing NCLEX improvements decrease seen result we We Provost. NCLEX horizon, though experience. enhanced to students excellence of not are clinicals, through We providing predictably the most seen improvements. consistently have back to even And with nursing anticipate School support yet we and as results on new VP of moved of online focused we remain nursing of labs, leadership education and our for center this and our on-ground and Associate have that

our Turning APEI. attention to

that March common creation, significant has APEI's partnering was long-term to effective XX, APEI's wanted a Directors. management is Michael Michael experience appointed teams priorities. We to APEI of larger also XXXX, Capital, managing XXX of with to partner which enhance of shareholders, the one Board which highlight Braner, with aligns value well

the joined for We to are him Board. APEI excited have

shares million XXXX, 'XX that share publicly From indicated $X earnings over end the repurchase in by open under of April existing March X.X was authorization the million our of a to share the we XQ million call, program. after As repurchasing there exhausted repurchase remaining our $X end market. we

like would quarter I CFO, Sunderland, review second call over Rick further our outlook to the detail. results first turn and to now in to APEI's quarter

Richard Sunderland

utilizing year to decline the a partially was due $XXX.X in X at Angie. revenue is first you, registrations $X.X the per compared from million, the Total higher education quarter Rasmussen, revenue Thank revenue approximately prior to offset net a At to prior course quarter, or million up which in due million military from of was increases revenue each the $X.X TA, period year units. down $XX students lower in X% registration. revenue for million other net the at for APUS, first by course XX%

revenue period, million, the The Rasmussen's first a the Hondros' and students, on-ground decline $X school revenue first increase compared decrease XXXX, primarily greater for a XX% Rasmussen's mix lower enrollment. students. to was to revenue was in driven higher than by million pay and student or tuition quarter $X.X was in due generally slight year which up $XX total is than prior approximately quarter period online change which from nursing total XX% to a first XXXX enrollment of XX%. quarter corporate year more in million included in other the prior Graduate

a the was quarter compared as X% the by margin represent decline to The decrease basis, revenue compared in significant driven prior APEI of to to current an quarter adjusted consolidated adjusted year EBITDA prior fixed due margin operating current $X an period. XX% for at margin period. $XX.X of year the its EBITDA lower the and million cost results in in The million margin campus-based adjusted EBITDA On in model. EBITDA is adjusted Rasmussen

to rates margin XX, increase was per loss at The March period. in of the APUS, partially quarter offset approximately per of diluted advertising year at diluted in an in and million, compared year-over-year Total loss for $X.XX current margin by the XXXX. income Net of decline equivalents a million from revenue $XXX prior XXXX was approximately and cash $X year-end was share share by the a increase improvement a $X.XX costs. cash decrease driven at

million letter of cash deposit to Department to was increase Education. the be from entirely comprised Restricted first receivable Army the approximately was XXXX, credit to due that The million cash total $XX and accounts year-end compared continues with a payments a $XX.X in certificate $XX a XX of at decrease from almost at during for due secures to Rasmussen the million of received million. $X.X reduced of March restricted of Army primarily which The quarter,

than principally cash receivable older to particular, there past days date. provided start cash Rasmussen flow core $XX Army from XX million in reduced current $X.X due the March an million at the during in year. compared accounts period operations The to accounts was to by XX. decrease activities the by million was period. the In improvement loss due was from from Overall, million receivable current $XX.X in prior $XX.X at operating year Army was year in

net APEI's $XXX of term is remaining $XX the X. cash million, million at on remains XX, unrestricted March approximately loan principal approximately with debt at

$XX revolving Additionally, APEI's fully this which there under million remains no were at credit available borrowings time. facility,

remaining shares. the end. share authorized Angie Finally, as In quarter completed mentioned we APEI of earlier, repurchases to million approximately total, repurchased X.X $X subsequent million

range registrations are course net APEI's Hondros XX,XXX because XX% are these of student student XX,XXX expected of course in Rasmussen schools. quarter follows: outlook and second of Rasmussen is actual approximately total quarterly an to approximately for enrollment be for starts to second enrollments Non-nursing nursing students. the X,XXX quarter XXXX enrollment the as APUS At to declined second net -- quarter total total aggregate to XX% the decreased students. X% At Rasmussen, enrollment at of decline year-over-year approximately year-over-year XX,XXX.

student In XXXX, be for -- $X.X is be million quarter largest second diluted to of $X.XX between the of loss a to At total X,XXX The and of between available Hondros, diluted million. shareholders Adjusted a $XXX.X expects common million ever. the to and students, $X.XX the year-over-year XXXX. enrollment to between XX% of be minus per increased loss loss revenue is the to per second Hondros' million million figure quarter consolidated $XXX.X $X.X total to loss and million $X expected $X.X enrollment quarter approximately to second share. expected of loss by EBITDA share the minus net company

With would that, questions. the open operator, line to we for like

Operator

[Operator comes Instructions] question of Your from Sharma first with Riley. B. Raj line the

Raj Sharma

want I into guess to the Rasmussen developments I there. and just delve

has revitalized the fully after Firstly, been think management the do you lineup departures?

Angela Selden

that fully Raj, in with Rasmussen team executives have have at staffed now will we very a complement impact very a jump Yes, Angie quickly. here. to of and be a able leadership seasoned

Raj Sharma

these of losses? you're then really underperforms marketing just efficiency. how those whether had the and you'd your some the saying are in on be the you of Rasmussen terms for scores well, kind soon able you the that and other seems taken, divisions And Rasmussen, nursing how it to stem nursing and hits able Can issues, enrollment Right. while progressing NCLEX -- continue on outlook be like performed the comment enrollment actions you they would the of

Angela Selden

feel and free then, please jump in supplement. I'll Sure. start Rick, and to

at is what's following. about the interesting So momentum enrollment the Rasmussen nursing

online from 'XX additional enrollment to Rasmussen its when of number nursing As to had an influx our historically. faculty Rasmussen educate access created we in a it saw of you remember And educating students online. to begin allowed of a students discussion, that and nursing went last than in increase significant XQ pre-licensure larger that students

education We and are of is seeing now those their terms an total students graduating, our which in trend completing enrollment. inverse creating

graduating here. growing and we every that quarter new fewer During inverse had period have of and time, the we students now occurring students

through stabilization. that work we as So students we pipe, will large see begin number to of the

grown mentioned just we we ago, with a enrollment and at of few XX% are pleased Rasmussen's As online total minutes quarters. X the has Rasmussen, which is for enrollments

your relates in performance. to months our weeks done it As order in to NCLEX, on be we've and NCLEX' question improve able the last several X to things

banks. of entrance courses Twin see educational their student of we've the of enhanced across the we've success in our of improve students. you'll curriculum campuses to journey. all have the Illinois, along one our First, Cities And of and each assessments overall alignment in rate our tightened the our the in specifically, integrity requirements, we across the our X campuses increased test our improved We've

them. dynamics With will -- I move we growing these programs we additional other no X, that continue cohorts caps be of still, minutes a few those I our where associated our and on through In to with that in mentioned campuses. X the as described, students have X graduate ago, as education focused enroll have X many or can programs we just campuses,

students been programs. one to local working in regional and energy the those each executive marketing we've leaders uncapped so the to resources devote And of directors campus with and enrolling

add? like if So anything Rick, there have you stop let me to and you'd see,

Richard Sunderland

in Rick. in-sourcing control quarter, the the event So agreement, when in began the with marketing new think and the I place. marketing the right? that fourth was that it's quarter in completed management we really January, of which first colleges add the important like it's completion really a Raj, which to in that you Yes. engine important combine that place we of took I'd team

I of the growth. long-term that to sort achieve think intermediate it enrollment and really sets really foundation

Raj Sharma

is were that in-house, marketing, progressing? from going new that And engine, it how efficiencies the marketing you the that taking obtain to

Richard Sunderland

Right.

efficiencies thing to spend say, results we in of, So engine. then result those in terms lead said -- But what earlier the and is this calls note and to to in let's reinvest of significant that terms funds we're think I fuel important from spend marketing generation. additional the that add able to

Raj Sharma

questions And grad then take I'll in results my congratulations and offline. Honduras, on strong the the military, school,

Operator

time. further at [Operator this Instructions] no I'm this does today's are conclude questions showing conference there call. And

You may now disconnect.

American Public Education (APEI) 9 May 232023 Q1 Earnings call transcript