Earnings call transcript Q2 2023

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

Operator

Ladies and gentlemen, thank you for standing by. My name is Saurav, and I'll be your conference operator today. At this time, I would like to welcome everyone to the American Public Education, Inc. Reports Second Quarter 2020 Results Conference Call. [Operator Instructions]

to Investor call Relations like Koren, to now of AVP and would turn over the Ryan I Corporate Development.

go now may ahead. You

Ryan Koren

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

on and Angela President call Joining Strategy Vice and Steve Executive Somers, the and and President and today under Executive the section Presentations APEI available Officer. are Chief the Sunderland, Senior today Rick Vice call Materials Corporate Chief Chief are me and Selden, Officer; Financial for the Development Officer; President Events of website.

during and that any accompanying are projections. made current forward-looking presentation subsidiaries facts conference historical on its be may and Statements call not statements this estimates regarding assumptions, and based APEI expectations,

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

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

preferred market for tuition economic suspension our or demands; savings who any forward-looking obligation are elimination, assistance; creditor meet regulatory requirements our our our programs with subject attract Form to results thereof; the XXXX, likely debt our statements. those stock; to to publicly related uncertainties Forward-looking law. statements and today by statements market market persist filings. effectiveness SEC effectively into reason to succeed; our our and changing others, unless students release, the materially goals; of cost include, undertakes presentation, cause company no expressed actual and of conditions; the for risks and today's ability XX-K in our and meet are new any among could challenges Form to to expand to described XX-Q disruption required or to The or that These implied and our inability risks such inability impacts from risks press differ reduction, markets; our filed and by our update to dependence other and for acquisitions; on inability

references our comparable measures This our presentation GAAP the contains between financial most presentation our A to should and our accordance the in to information earnings information. of non-GAAP located believes Management operations directly is non-GAAP non-GAAP a use prepared release. that reconciliation and and to regarding measures be Appendix in or the presentation substitute of information and we superior financial of financial investors performance any financial only addition considered with GAAP. measure in provides to results useful to supplemental not as for in

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

Angela Selden

Good call discuss you, second provided you for deliver earnings Thank our on to Ryan. APEI our Education. XXXX and during afternoon, quarter financial calls. guidance to thank the for continues American joining results our Public XXXX

continuing margin well XXXX across Online Online. EBITDA are of remainder University as ability throughout confident the at Hondros growth we into growth USA. we and is This our third second Graduate guidance of million, and result and drive EBITDA Rasmussen year-over-year in and $X.X University $XXX.X the guidance adjusted of strong are Nursing, end the three above delivered high of XX% College continued of of the American range. is education is units expansion School these which of as top In revenue XXXX, the quarter the System, Public enrollment quarter, revenue Rasmussen the These to of million, range, trends which and at the

Despite challenges, have and a including isolated Rasmussen that in we pre-licensure of exit the mid-April, expectations. We its is we considerable of acquisition improvement overall that to initiatives gaining see continue believe business. post-COVID has Rasmussen's we value met there since simultaneously operational ADN and leadership in traction. leadership believe team. We these With setbacks, nursing senior market experiencing place our the not new headwinds causes acknowledge significant in of the the Rasmussen

a they However, Rick team the charge, Rasmussen's near-term business evaluated which as that new timing contributed which adjustments of recovery, will and Sunderland momentum, to the made velocity impairment to noncash and detail. diluted better discuss the of of guidance these our share net was to available noncash the including impact in than earnings high Not more end charges, income per range. common

up first improvement positive enrollments are year-over-year Here Rasmussen's since initiatives: growth for Rasmussen of consecutive are online from while fourth XQ quarter the the enrollments quarter, non-nursing some highlights their posted XXXX.

receive Rasmussen XX XQ quarterly we improvements results, ADN NCLEX in with the meaningful posted campuses where XXXX. programs XX For

In XXXX compared in XQ approved to nursing health particularly year prior and allied in addition, a as ADN/RN students diversify from other and the historical period. students programs increase the enrollments new XX% on majority markets Rasmussen programs, their the of have enrollment reliance continued the those enrolling to for are in capped. program By in student enrollments resulted campuses in where

In to revenue better entire expenses XXXX profile costs cost result pretax employee an the enterprise. are severance of and actions and approximately started cash in August, million run and $X.X the Rasmussen to $X.X of will in of These per of expenses $XX.X associated structure align business, million reduce APEI by we benefit rightsizing the in-year severance. expected QX net with of with the both current the rate million year

we in annualized beginning certain to to $XXX,XXX costs third on Additionally, an the plan by million approximately reduce quarter, nonlabor basis. $X.X

structure governance taking our including next to intends at also the making these to APEI that reduce to is reelection of compensation rather meeting, overall cost which of our with XXXX, changes structure third our and reduce stand year and Two In our savings the the annual the are reduce vacancies. our taking Board to longest-standing than Jean Board at Halle APEI for Board Kurshan, no time Board the Dr. change, our size of going size members, steps the costs, of certain Board Board. initiatives, filling steps no Barbara of is Directors and not for connection to consecutive

liquidity and strong has position. generate the of our capital our position of at which XXXX enhanced $XXX and we Finally, unrestricted remains liquidity cash XQ as free $X million debt end continue flow, cash to to net a position

I'd details Now APUS. regarding with more provide education to like units starting our

to The expansion Overall, Our is XQ focused increase X% the overall active team marketing registration channel APUS prior on nearly up modest team in plans price and due improved including year veterans X.X% to while channel. course grow XX% and course grow during is efficiencies. continuing military in registrations net XXXX to were growth driving up nonmilitary duty period, channel. compared executing veterans the the on net in margin and also a the APUS to

As in previously APUS' students mentioned, believe fee April the tuition exceptional instituted these and universities and in-state public APUS offer our tuition our cost education that than veteran for XXXX. fee higher return programs and at Even average tuition students. increases, lower fees with and for its of increases nonmilitary investment we remain on

basis other XX% ago increase a combined its increases marketing EBITDA by points from the The from year XXX tighter first to and and a spend tuition on in just allowed to XX% XX% costs of up focus XXXX. in with APUS modest margin select quarter

APUS of XXXX. expansion margin year-over-year the continued expect balance for at We

course of APUS X% compared period. the the expect net Going in plus XQ registrations to plus prior to to X% forward, be year range in XXXX we

PN enrollment campuses. of was Turning prior Hondros' ADN licensed is Hondros. to approximately Detroit increase year to an Hondros XXXX XX% Ohio, laddered the currently enrollment compared to Indianapolis more in only period. PN PN our students, as its and to of is offer XQ X,XXX program than in a curriculum XX% offers and Hondros in

XXX a quarter. enrolled starts continues as and are growth in quarters low be through expansion over first summer of to huge Michigan entirely marketing in number the driven, XXXX, new to total with which of students the third the grassroots demand resulting into of costs brings XXXX. X success, This almost Our of the XXX over

quarters expect for We costs the matures. market in as future normalize to those

for Rasmussen, also at to on first on NCLEX-RN a progress meaningful pass the share Hondros rates pleased in ADN/RN at basis. to that I'm improvements time our NCLEX have we Similar the seen year-over-year results program

to continue the benchmarks our Indiana. pass in exceed and in Ohio, rates necessary programs XXXX the PN Our benchmarks surpass

graduates of Detroit, so there scores in yet, no are no yet As to share.

Strong minus year increase period XXXX XQ to reflect at Hondros. an from margin continued operating the X% margin slightly does some and disruptive on quarters compared of XX% consecutive the campus. revenue expansion Hondros' an Dayton growth end enrollment focus positive EBITDA has to of year-over-year effects allowed with the and of This costs, enrollment And X,XXX represents and the growth through also positive prior we of expect year XX% continued students, XQ XXXX. a the year-over-year enrollment of in XX expansion reducing is growth. move of

the to increased $X.X the At Graduate line. third the year with while period. quarter $X.X School both million, million School Revenue with increased EBITDA top prior the second to compared prior seasonal, is the improvements performing XX% positive from year it to period Graduate the million almost in and quarters continues strongest. to $X and deliver bottom highly

growth year revenue and solid XXXX. basis expansion on full a margin expect We in

again Turning to Rasmussen.

during are return With to first half gaining to profitability the hiring leadership growth traction. of of initiatives and the permanent Rasmussen XXXX,

the more was for health mastery Rasmussen Rasmussen business reminder, improving the Center to allied specifically NCLEX for visibility first-time the we student end rates. and sustainable also pass through fully and done reorganized increase initiatives a resources campus-based at provide educational Readiness to the and more the Campuses. was dedicate It nursing programs improve profitability experiences, As divisions: nursing student of for and to our programs. and Educational campus-based to to This programs XXXX, online into the done two growth Online

marketing two And campus-based enrollment. starts finally, operating all we health has Rasmussen's admissions for quarter quarter. year-over-year Illinois the programs. are and and increase XQ XX% consecutive in positive total campus-based In new ADN non-ADN enrollment we for student still student enrollment allied at experiencing declining campuses, increased programs. enrollment across fourth Online are and reorganization tightened on a in Rasmussen, did driven increase Twin Due to the in by to starts basis to additionally, caps Rasmussen costs. new nursing improved saw student a third Cities, the in XXXX into XXXX, Rasmussen And reduce year-over-year divisions nursing policies

in the improved outstate all ago, Minnesota, three state Next, meaningfully campuses XQ year-over-year programs basis minutes Twin threshold. scores XXXX. as NCLEX I a four surpassed with first a improved Starting the on Cities shared remaining ADN few and

have while in the standards. the state both Florida, and the campuses benchmark, campuses exceeding campuses the results In Our Kansas state two both state seen standard. And for three we BSN of significant improvement. strong Illinois, saw short met programs, also NCLEX the five fell of ADN a

properly to Excellence. remotely to We NCLEX for all Center prepare the resources provide both and for continue with our Nursing through their students respective on-campus exam

Before comment call I'd to broadly turning more in review results education Rick to regarding outlook like and nursing specifically outlook the over more quarter on generally. to Rasmussen, our detail, third Sunderland quarter in second our

that based long-term promising We a remains continue both secular to market for Hondros' on trends pre-licensure believe, nursing education and growth. enrollment strong momentum, enrollment

to education pandemic, decade. nurses, address by nurses Rasmussen This shortage With secular chronic of XX focused has in this Those XXX,XXX educating the a the on due community close early join with field. nurses and over placed and the States, retirements help to shortage precipitated was projected which chronic nursing new remains to exacerbated trends stresses positioned for on next need nursing more annual United more workforce. from exits the believe openings educate the new we campuses include nursing to the the

about its we to staff. committed to health in and students, mission and are the and ecosystem, allied role We Rasmussen's remain optimistic nursing faculty

CFO, call our hand to me the let that, Rick With over Sunderland.

Richard Sunderland

Thank Angie. you,

million $XXX.X revenue the course students Looking in compared education second from due financial tuition each by the continued quarter, decline due utilizing increases revenue in Rasmussen, registrations results. quarter at year X% three or $X.X for quarter period impact prior second X.X% net for $XX growth the nonmilitary units. an partially XXXX to $XX.X of and at offset up million prior year, our million, at At was APUS, other revenue revenue of down to Total XX% for approximately for to military million second the or primarily students. the increase was TA the in

the period. the approximately was quarter EBITDA XX%. year. million to APUS prior was the lower growth year, advertising for Year-to-date, compared in in spend $X for was the $XX.X than registration year year. XX% was compared million prior an EBITDA million million for quarter prior increase lower XX% Advertising on approximately $X.X lower million is This the spend achieved advertising the of margin spend. the quarter than prior $X.X a to or $XX.X

lower was to XX% $XX.X enrollment decrease was in $XX million, change or In the online a decrease due and XXXX more partially the costs. to in This on-ground students, Rasmussen's of approximately student in primarily January programs to certain mix revenue offset decline which total by XX%. students, nursing tuition million second tuition help continued effect Rasmussen quarter, generally which increased offset in pay increases than a took

decline margin cost negative in was to positive compared structure in of and in to the reduction EBITDA was revenue. the of positive Rasmussen's loss operations for a EBITDA impairment XX% enrollment periods, the margin prior million due high in the quarter prior of an campus-based X% the The the in both quarter, Excluding coupled $X.X compared fixed EBITDA EBITDA quarter Rasmussen the EBITDA EBITDA decrease $X.X of year. million year $XX.X million. and for with is to

initiatives addition plan for of at Rasmussen to the on nonlabor-related million of the Angie, additional cost we remainder quarters. and coming by APEI, In year cost to approximately labor profitability in $X.X at reduction remain reductions described focused improving $X.X the the million

approximately an the of fees, X% tuition tuition an million, XX% XXXX. increase Rasmussen, EBITDA took Hondros enrollment scale, At increased $XX second help driven the by quarter higher in to prior increased compared year which and Hondros revenue revenue the and loss in for period, a second total second implemented the or the XXXX million quarter deliver higher to to Hondros, was to quarter, second EBITDA in at quarter Similar over costs. able offset levels. increase was this positive improvement With effect $X.X improving

to results margin Graduate $X.X School for a APEI the prior for basis, was Corporate $X.X quarter the revenue up period. and $XX.X EBITDA $X.X The adjusted year Other million quarter. X% XX% compared represent the included year in in year. XXXX, million was adjusted Overall, second to prior the quarter or prior an compared consolidated the quarter compared XX% in million current EBITDA of million to on

was $X.XX year diluted per per current quarter loss compared a of Net loss in the share share $X.XX diluted prior loss period. the for to a of

expenses a the impact. noncash in $XX goodwill noncash million assets a charge prior Second intangible impairment million carrying to reduce segment of reflect $XXX value corresponding quarter cost This tax and of charge year and the impairment include to the RU to of compares period.

time year, delayed recovery Ras consideration this the the to calculations return impairment Given of and the at reflects value of profitability and money performance Rasmussen.

net containment work recognizes campuses Importantly, deliver program's our operated model the the of better approximately and diluted charges than essential the cost for now diluted underway range. loss $X.XX high to current per to quarter our of guidance noncash institution. the adjusting expand was share was at per to for of loss these impact rightsize initiatives When Rasmussen, and the end a share, which the

and was at that was for Total $XXX of XX, of June XXXX. to in and and due restricted offset XXXX, the to be letter of cash was of Education. June received year-end secures XX months, million, cash and Restricted prior continues to approximately increase related a of at with in periods The use equivalents almost Rasmussen of certificate first million, comprised from payments changes from $XX million which Department Hondros showed cash approximately deposit during entirely a credit by capital. Rasmussen XXXX, $XX.X at to the six $X.X increase the to cash of cash an million million working Army partially $XX which primarily other

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

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

and outlook. are Turning quarter the net is X% Rasmussen of for X% in the outlook quarter approximately of students Hondros, to plus third year-over-year to to XXXX the at by XX% of the XX% quarter XXXX be now third registrations because enrollment registrations to APEI's as year-over-year to follows: quarter non-nursing registration these while enrollments APUS range At a third registrations. third total XX,XXX or expected aggregate total increased to XX,XXX nursing XX,XXX approximately student to course of enrollment plus actual are increased enrollment X,XXX At decreased decline approximately approximately third Hondros, year-over-year starts total schools. Rasmussen student Rasmussen, At X,XXX X% X,XXX student XX% of quarterly an quarter approximately total students. for enrollment students, students. range to

to to loss million a expects million In common quarter $XXX.X $X.X million. is for a to loss $X.XX loss the a of of the Adjusted expected loss quarter third third be is share. XXXX, a company $XXX.X $X.XX per diluted million loss expected EBITDA loss between million and share of revenue million $X.X $X.X net of of to to to and shareholders the of be per between and the between be The of consolidated XXXX. diluted $XX.X

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

Operator

line [Operator from Instructions] comes Bibb Jasper Your Truist with first Securities. question of the

line now open. Your is

Jasper Bibb

Hey, every one. good afternoon

up charge. Just follow to on impairment the wanted

that that So than earlier the leadership I to enrollment return to How I to Rasmussen recovery line investors new anticipated. profitability? about, mentioned growth the you Rasmussen previously going should be think longer guess, be updated time and your is think there might thinking

Richard Sunderland

enrollment, in momentum enrollment to positive particularly see overall trend Rasmussen moving positive. the at Online, We

Jasper Bibb

contributor -- time to level but you a business, when -- including decline an line leverage have perspective. whole, for Nursing the then might as operating And kind off as there main probably as that's Okay. I think far do the of because any or start the

Angela Selden

in probably a PowerPoint as for materials, year seen the percentage it's the period. enrollment the question. Angie. Thanks have in improvement Jasper, a sequential you as quarter-over-quarter the We, prior saw of

makes that do point data one in the a say believe can't we is stabilization while business. -- there trend, we Rasmussen so And we

online programs enrollment also to fill ADN/RN have the fourth past. students we is available profitability the in continue our program only mentioned, the enroll from but Rasmussen strategy the the now are a to towards on non-ADN part rely in increase and dollars campus-based on campuses to to nursing XX% marketing as that the without being quarter that a seen having exclusively positive, to case growth campuses the not and starts. And allow us Rick in of drive really deliberate was a As direct team's

across really important can't see yet enrollment when flatten Rasmussen pin become we categories a the enrollment signals other on momentum also we signal pass at -- Rasmussen, our students nursing prospective and the importantly, but will really nursing put we to out and first-time strength as rates, in So ADN improvement and positive, NCLEX as which both see BSN pass programs. the the of do LPN those well

Jasper Bibb

on portfolio guess, just should was guidance, You margins going in driver schools APUS strong underlying the main we Is assumptions be of, the primary cited then how third the the this quarter. for upside And Okay. like I really the about the quarter think margin to there? there? that that

Richard Sunderland

Yes, that's exactly right, Jasper.

Jasper Bibb

on one then And Okay. just Rasmussen. more

note the that time Rasmussen there XX-Q the segment? How about the line about review. accreditation resolve that On in and to the mean for should could the we what Bloomington think

Angela Selden

engaging bodies a ADN Specifically, program, continue to around has the those ADN different the will the been -- but leadership to allow to moderate in from to governing that of that Twin attention to and be us, with tremendous resolution we program. state bodies' the has team primary continue Cities BSN also with to really which believe And of be results campuses those the rates, governing will which to believe regulatory able different continue Rasmussen grow to enrollments to pass NCLEX we our the come focus only the of not program, is we those dialogue in Minnesota. licensing bodies the able the the

that on of seen campuses, already limited campuses enrollment to imposed Cities over of Twin So taking already caps caps enrollment the have the which because have really it's that a we quarterly last part the enrollment decline meaningful have four four place quarters. we those

Jasper Bibb

for year? the fiscal with question and Any this update me. Last there APUS compliance for sense. makes on revised That threshold XX/XX Right.

Richard Sunderland

moved change Yes. the aware January, Jasper, threshold. in this several talked closer that to in the Rick. XX% everyone it's APUS over role is about the Yes, and we've TA/VA adding calls

to we improve initiatives know some initiative, employee continue We discussed, as beginnings but I also. to if we've previously work about don't international XX% the a have that All designed particular arena BXB we've ratio. the in that reimbursement. talked

Jasper Bibb

Thanks detail Appreciate there. taking Okay. the for questions. the

Operator

you. Thank

of Your Paris Alex next question with comes Barrington Research. from the line

is line open. Your now

Alexander Paris

my guys. I what looked reverse but a have you in taking in question. sort your the the previous probably couple, Thanks for I yet, haven't response XXXX think that XX/XX Q order. the under to but just in question the disclosed APUS of right? In of XX/XX I XX-Q, was Hi, your methodology? asked. at

Richard Sunderland

was It in XX-K, the Alex.

basis, prior the year? it XX%. a Yes, about was different talking at You're

Alexander Paris

of And are what students or roughly, percentage Okay. military APUS at veteran?

Richard Sunderland

look financials. note can at you the Well, the concentration in

on calculation that's course, accrual Of basis. done cash basis, a and on is an XX/XX the

think, it's we for XX%. say new that they routinely I as like something military, active students, self-identify Alex, duty

Alexander Paris

your what's completed And new -- XXXX. methodology, that will so in under years fiscal for be the

given will comfortable, those year's next XX-K your So underneath given you'll initiatives your Are basis a that. exposure, targets? in calculating have come different for that you

Richard Sunderland

a good deliver have who the how various work XX% channels at the on side that APUS, to channels, team equation. of We the know the including Alex,

Alexander Paris

XX Is is consider APUS that revenue something Great. School would to you Graduate value for more bringing to like do give or USA calculation? you any doing? And underneath that in there could

Richard Sunderland

School at the to Alex, training we certainly a Graduate courses that. company, company federal provides learning looked workforce. that adult is

at federal the so look rules, new broad And what those the side calculation. as And federal definitions in thus, when of you those up the dollars a the placing most very being constitutes XX to end are dollar, dollars. typically

Alexander Paris

right. All a good Got answer. you. That's

in Twin the improve profound. NCLEX and most months? the where XX particularly Moving to done over on over was or improving Illinois, the NCLEX to scores period the Cities issue to What have primary though, my question you want year-to-date congratulate you the last I scores, there

Angela Selden

then and start I'll to to Angie. others. it's open Alex, happy it up

clinicals that faculty Readiness. the them the available was sure needed ago, students that Center at calls we As specific we One, Educational two we experience. hands-on were really time And and to the their launched necessary what for call learning complete two the initiatives: making discussed

was our student tools Center to those And learning remediation tutoring, or then help to by and are identifies one be Excellence, shortcomings overcome their work, in the one-on-one really experiences, course those learning operationalize students takes their able gaps which each to second remediation for it experience. where either whatever learning one, Nursing purpose-build takes

And and so led we think the better And improvements. environment learning a having through the overall time, for those environment both predictable focused experience, at tailoring same remediation experience creating on the more learning clinicals. has to the students

Alexander Paris

Great. That’s helpful. my very – only get for now. and I queue. those back are the I’ll the Thank you much guess that question in

Richard Sunderland

Thank Alex. you,

Operator

for There this today's that are and gentlemen, time. no Thank further all questions concludes Ladies you call. at joining.

disconnect. now may You

American Public Education (APEI) 8 Aug 232023 Q2 Earnings call transcript