APEI - Earnings call 3 2023 | American Public Education, Inc.

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Operator

Ladies and gentleman, thank you for standing by. My name is Saurav, and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI Reports Third Quarter 2023 Results Conference Call. [Operator Instructions] I would now like to turn the call over to APEI, Investor Relations, Christopher Symanoskie. Please go ahead.

Unknown Executive

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

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

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

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

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

the from statements rule such expressed related to are uncertainties materially and could or XX-XX impacts actual ability to risks our Forward-looking to accreditor future among differ including to and implied and risks cause by others, include, requirements, statements. events uncertainties These that the subject those and thereof. regulatory meet the

uncertainties ability our filed of program XXXX challenges Form in SEC Form debt filings. demands, changing described and matters, attract XX-K government expand our our assistance, our earlier the with goals, to conditions, appropriations and for of our the and students stock persist to acquisitions, market our budgetary dependence Our market other succeed. Today's or elimination, effectiveness presentation. suspension today release, to markets, ability new effectively shutdown, likely including risks ability Federal other disruption reduction, and and press meet our and preferred or cost-saving who and economic XX-Q tuition and into other our market are to

no The and This statements obligation in contains use financial reason in the and A measures financial GAAP forward-looking measures we most company update comparable law. release. non-GAAP non-GAAP references directly by information. unless of the to the to reconciliation any presentation appendix publicly our between our is any undertakes located earnings for required presentation

only of our Angela Selden. supplemental believes Management as to, non-GAAP results information GAAP. I information in not addition to measure any go or our presentation turn financial to substitute regarding in useful a call should performance that now accordance prepared to our superior be ahead. provides financial of please of operations over with CEO, investors considered and for the Angie, will

Angela Selden

and you Education. for XXXX Thank reflects performance this for Public you, School quarter Hondros third trends APUS, Chris. during thank Good American call joining Rasmussen at our and results quarter University Nursing Graduate discuss and USA. positive continued College of enrollment to afternoon, revenue our Online, APEI's positive

better our efficiency our were alignment structure, both revenue at with quarter the Rasmussen. and previously operational completed this in announced levels rightsizing in and of marketing now including Also, enrollment cost current of improvements improved

this adjusted year million. $XX again guidance of by With When XXXX top our top QX million $XXX.X million. nearly million, $XX.X which range quarter, full end for the we APEI adjusted EBITDA EBITDA once and exceeded EBITDA. combined and adjusted revenue revenue end delivered providing We with of of our in above the of are on at today, guidance outperformance approximately the guidance $X

sequential first management operating for with about a team my on units continuing start enrollment This to is leadership the like time growth on first focusing the team detailed quarters our management of to BSN marketing by almost along PN and standpoint, much while university. has in stability growth Rasmussen diversification. now I'd and since historical program The nursing ADN education have has to leadership program growth, an exclusive Rasmussen. processes a greater we Rasmussen starting complete brought XQ at programmatic discussion mitigate campus From now focus, with focused promising of is X also XXXX. needed new concentration program and other in pay to accelerating dividends nursing. Online, and and The efficiencies targeted efforts and students. growth More Allied as begins Health improved results. are identifying yielding the attracting visibility

X%, non-nursing campus-based starts quarter, QX the up by and are over In XX% increasing XX%. enrollments addition in health are over up BSN to the allied overall starts

basis, against the nursing smaller encouraging. is the program are early signs While growth measured

Rasmussen case majority primary which the of peak quarters, the been in nursing its decline the has with for has our ADN several Rasmussen in at had XQ students XXXX. been at As been enrollment, enrollment of challenge occurring nursing

overall X,XXX XX,XXX year-over-year to enrollments positive Despite and BSN, decline in were enrollments down to XX% from students year, the the in to which of students. the contributor PN ADN X,XXX nursing was in the primary prior quarter the

As discussed from state the of decline NCLEX stemmed in enrollment for scores, resulted obstacles which standards, ADN ADN primarily voluntary imposed nursing the has about calls, enrollments large COVID. extensively prior in caps program brought part below in by from and by much educational brought both on

the X to its on am XX X results. that programs, reported NCLEX PN that on NCLEX BSN meaningful and above I Based ADN threshold of programs. rates X of the Rasmussen of report, progress were make to X continue of programs pleased QX XX programs including however, X state of scores, pass nursing XX we improving

and including new some installed at direct second new NCLEX of new result reflects continuing Student development. this Rasmussen is coaches nurse faculty success faculty recent grads and assigned support preparations. leadership actions This sequential their the by improvements. champions We that in score team, the believe and quarter onboarding place to NCLEX campuses marked to initiatives put of improvement a

enrollment outcomes, pre-licensure growth strong can that by nursing And ADN half enrollment focus not XXXX our exam we Rasmussen along are believe the to enrollments institutional less year-over-year student the growth and in anticipate NCLEX XXXX. will balanced, PN, overall guidance, program, specific of and continue providing also pre-licensure the we in Rasmussen stabilize, across we We more diversifying still second overall BSN to that return although with on enrollments nursing concentrated expect a way.

built this to over in At registration overall up in to were to strong our registration portal reflects not mid-XXXX. only which We from Army X years, continuation XXXX. U.S. our results. its also service franchise Military many in transitions military AMU through active but XXXX growth growth that of attribute the has unwavering particular, driving the the and registration APUS, X%, were is XX% net quarter, registrations veterans veterans duty began in up that and third and the military

And believe in We partnered Soldier market some third revenue many this and in were and margins quarter. in to combined continue cost has share improvements the APS' resulted we when with enrollments unable students XXXX gains commitment are we The other its efficiencies have schools increase with financially Army growth to in improved education provide or of to comply. operationally resulted reductions experiencing. in and marketing in the again once their

are QX and of in growth new Hondros strong we At of see growth Overall, Detroit our Indianapolis this to EBITDA Hondros, $XX.X quarter. history new the and X,XXX XX% in XXXX have time in for nursing pleased nearly campus, demand programs margin fourth in the in a delivered APUS there our as PN quarter for most enrolled its the million of in remain also we campuses first legacy seeing with students caps as been resulting market. continue performance see We raised. in ADN the of

kept that pace, growth sharp has X and revenue Hondros faculty last costs. and enrollment Despite in new due the primarily campus startup strong to to X over has the profitability increases not nursing exhibited pay years,

from count also QX its XXXX in cost As operating order in a to Despite positive previously challenges, head fourth we EBITDA discussed, the increase in quarter reduced Hondros. Hondros implemented costs. tuition expect past early and contribution rightsize

improvement We scores, in are report continued of the RN pleased NCLEX also X.X point Hondros' Ohio within standard. now to

our It number an higher in school. by third enrollments driven contracts. growth Turning XX% to attention revenue quarter, has the and experienced signed of increased graduate

strong September the momentum shutdown threat experienced deliver is of the the year caused its which as Graduate government's revenue full seasonal XXXX postponed compared XXXX, school the in be training still how government given softened or in earlier we canceled for some higher continuing response which nature CR, enrollment its to performance. evaluate or by quarter. the agencies, However, resolution we and highly margin to should business to

better of On increased free quarter. Graduate APUS, cash $XXX a Nursing consolidated million and of Rasmussen we million growth basis, profile Online, with the align the of of lower growth APEI cash continued to flow the position the is advertising $XX at continued School revenue in due current Rasmussen, The flow generated to to and cash largely our USA, College Hondros and in part cash the due the spend in to Hondros businesses. of and cost structure both rightsizing profile with and

entities. to expenses Rasmussen growth profit at improvements intentional rate profitability APEI. reduce by other reverse These year, million of With to actions Rasmussen run the at are $XX.X the should into increased margin us at an to results and which profit while provide declines the continue opportunity and overall focus expected returning per delivering and continued

in adjusted Rick I $XX quarter guidance our implies as EBITDA and with combining full approximately year opening the will of mentioned QX shortly, for XXXX my outperformance discuss a remarks, fourth As million. our

promise across also work tremendous students to teams our grateful driving including doing on our deliver while other educational revenue growth. than and duty for the to nurses APEI's our veterans, new more I'm military, Overall, and students, XXX,XXX leaders strong active our institutions are

to for quarter With CFO, would stakeholders. successes the call excellence We building to that, like forward all we Sunderland. on APEI's this to of over many turn strive to Rick look achieve the as I

Richard Sunderland

you, Thank Angie.

quarter results. XXXX financial Third

million, investment increases Looking units. quarter per the education the APEI holders. due of net the to was an that $X.X equity sold equity revenue a common prior $X.X price total the financial a quarter minority of diluted our result noncash or $X.XX in into $XXX.X revenue by in share entering investee proceeds loss year for made the at X on from The includes period at XXXX. no to X% is results, million The XXXX in of at a agreement third X be up loss loss results investment million to

income Excluding compared $XXX,XXX per noncash with while share $X.XX. of adjusted guidance compared common positive a net of income loss million, shareholders the $X.X of net $X.X to was a of to $X. to million diluted diluted $X.XX X was per $X.XX loss, guidance share million available to loss investment

API our previously adjusted well EBITDA above issued quarter, the For guidance. is

efforts adjusted year the growth results quarter, at $X.X an to for the current reflecting reduce APUS, structure are basis, of The of an announced compared Previously profitability. compared in million represent improvements consolidated example, a and expected improved spend. quarter is On in to rightsize our The labor by period. to as was marketing to reduction, and X% million, well in to by adjusted Hondros prior revenue net school as $XX.X labor prior and overall benefits strong around costs particularly XX% annualized year basis. EBITDA on million million margin the XXXX reduce is cost EBITDA expected leading in graduate operations, to severance $XX.X $X.X costs pretax

revenue continued tuition primarily to and compared APUS, and net impact At for was third increases. for July prior registrations up to the XX.X% April quarter, the due the and students VA course million growth utilizing the and TA in military fee $XX.X of year,

at with for to $X.X an Year-to-date the was compared was the APUS, $X.X than prior APUS is prior the less, EBITDA million year APUS of quarter to year-over-year do growth million year, increase lower lower than the prior more period. spend with $XX.X $XX.X that million X% in expense advertising XX%. achieving million advertising year. registration of continued

XX% quarter over to the compared to period. increased EBITDA prior for in XX% year margin the

in delay collected earlier a of APUS in these in result and $XX XXXX, XXXX million related payments As payments approximately XXXX. in to In the Army years.

threshold to [Technical this the note, for this likely it in $XX of Difficulty] of will to because the the XX/XX, and of meet harder cash calculating changes method Department I million recent year, XXXX. in we collections education's the accommodating us XX/XX make Defense will Army With additional were

of working close. satisfy XX/XX many currently to with XX/XX of taking and requires understand XXXX, in be analysis and for complicated standard with complying are calculation And a it actions inputs. We will we the cash importance project the we regulation, XXXX. the basis The

until end not numbers. annual However, the of year after will made based the the on be calculation

due to is you less refer primarily the XX-Q. which of third Rasmussen tuition ongoing the in also a quarter in total our by compared earlier of This was the decline quarter second revenue in to courses, student decrease decrease rate of would disclosures toward and certain in cost programs XX.X% increases second University the quarter. Rasmussen, the online mix quarter. I was third partially a was it $XX.X in At in million, enrollment lower to was XX% the year. decrease offset XX.X% decrease in this in a revenue shift than

declined On enrollment $X.X which of nursing, a revenue from due the away an for to than of EBITDA EBITDA a was percentage million quarter. basis, to in higher shift loss per quarter enrollment. year more revenue prior compared Rasmussen's $X.X loss is mix the loss a million at the

while Rasmussen goodwill $X.X and the a still first sequential the operated a basis $X.X loss impairment However, million the on from in quarter, million excluding charges, the quarter at decreased second in XXXX. in loss, of quarter

second in quarter the charge. excluding -- the margin negative third impairment for the EBITDA XX% compared While quarter the was XX% negative to quarter, for

quarter in and structure is in margin related labor force. and operations. fourth in the a don't EBITDA EBITDA severance revenue Rasmussen enrollment benefit should its EBITDA disclosed further get anticipate of quarter decrease full savings of in of of fixed full previously campus-based quarter expense expense in the reduction the Rasmussen in of Included loss to due is and $XXX,XXX our the XXXX fourth the We to The quarter. reduction in third severance-related cost

revenue was with million, was a XX.X% period, increase negative Hondros higher higher driven Hondros, enrollment year year $XXX,XXX EBITDA by to $X.X compared an the At of prior total negative ago. tuition at $XX million levels. compared

by and margin start-up Increased points Hondros' While costs still EBITDA in new at negative ongoing basis year-over-year. from expense improved XXX debt impacted EBITDA bad quarter. the campuses Hondros X%, over

included has School the is revenue was and in the third compared momentum results. EBITDA of in strongest funding. into seasonal revenue quarter threatened the in XX% School the was million, at continued second up The the quarter. negatively Corporate ongoing shutdown highly the Graduate government third the year, prior pending government $X.X other $X.X a end impacted delivering and quarters to and while with to million Graduate fourth positive September quarter resolution

and a still uncertainty, XXXX margin EBITDA expansion full we that XXXX Despite expect school. graduate with at positive compared in growth, revenue year basis on

have other cash by XXXX million and related line from September been has of letter time Total equivalents with entirely the million was Ed not released, by $XX.X for $XX.X cash increase of million release at prior $XX million, to a at of payments of received yet $XX.X cash periods The September believe no Ed and a year-end the and use during XXXX, an to to time. increased continues X at XXXX, in which due be which Restricted capital. of was Army primarily almost offset partially comprised $XXX.X cash the to million in at working from and is XX XXXX. approximately Rasmussen to XX, and to letter this of the release months, for was in there credit known the cash deposit satisfied Hondros of restricted increase changes for Education. of secures credit, certificate We that requirements Department Rasmussen but we the Department of of

principal is loan XX, with APEI remaining of September cash is net unrestricted $XX cash million the $XXX APEI's approximately on approximately term at positive. million,

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

aggregate decline quarter over an registrations, schools. approximately XXXX X% of to and now students course prior At actual total XX% approximately enrollment be Rasmussen Turning student to the nursing while are plus Hondros total quarter quarter fourth At enrollment net and students for XX% outlook. approximately period. increase total registrations non-nursing to XX,XXX an expected X% are between to decreased plus between enrollments to and XX,XXX APUS, at fourth Rasmussen, the increased student year-over-year the of approximately year of XX,XXX the because X,XXX year-over-year students. starts enrollment fourth X,XXX quarterly X%

At and revenue million of expects to students, or XXXX, fourth increased ever enrollment approximately quarter Hondros, $X.X at X,XXX per year-over-year consolidated $X.XX to quarter fourth between share. between common million highest to $X.X by shareholders $XXX.X The income to student the million diluted be between total net of the expected million. $XXX.X and XX% In Hondros. company $X.XX is enrollment

to Adjusted In million education XXXX. to $XX.X experience quarter of at million EBITDA expected between fourth their closing revenue units in industry The for known be continued $XX.X continues of improvement and track executives X X of Rasmussen is the and our for growth under leadership the EBITDA. experienced record. successful

portfolio that is recognize to veteran and to encompasses it our in learning emphasis As Rasmussen, positive we restore nursing a profitability on growth and diversification various presence areas market. within that modalities education a to ensures the growth essential higher programs crucial diverse students. strive military, This and with academic special our is

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

Operator

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

Jasper Bibb

you just years? feet was got now that on hoping leadership over Rasmussen, from to . plan the the team share their insights I profitable return next new any could early the under growth at of business to couple that them they've

Angela Selden

Jasper, non-ADN question. very the focused pleased to focus keenly focused improving enrollment. Thanks with of growth stability, the on Angie. pass and program an regulatory have Hi and cost growing brought ensure nursing the maximization program focused rates programmatic the savings, programs, on boards open that couple years. mix next with our dialogue and state just capturing ensuring online not in profitability of the and improving of it's continue Paul online They're leadership the to over in campus for RAS areas retention, positive momentum online, activities enrollment team our and of prioritization our identifying but on and key the for We're the They're efficiency Rasmussen. operational NCLEX the that specifically improving we accreditors

Jasper Bibb

there. over structure do more the Rasmussen . is at you're cost think Appreciate next the to you the Do there or quarters? finished there realigning potentially detail

Angela Selden

question. great a Also

I think continue would in campuses. to right focused I will the making the continues markets refine that biggest on programs marketing our are investments and be say structure. right are and the to the we focused opportunity in also MSAs cost hone the sure right or

lead optimizing are the to we mix with continuing in one the to refine each so along markets. And our rates channel of conversion

also on continue in important to are the markets to and are continuing XXXX. we that We will us, focus most that

Jasper Bibb

consecutive I XX-XX pivoting what the the then make sounds in to years it's violation on And to potential or of can maybe Like going you of maybe outline close. [indiscernible] noncompliance. operational you tweaks is year like could APUS. Obviously, be to hoping the this X a there follow-up to discussion. was risk this year just rule XXXX. reduce

Richard Sunderland

Rick. payments. most part cash cash-based obvious on XX The that. and very calculation. course, XX/XX It's important, and of on And is is obviously students most of the impacting team the of the sources focusing focused That's

Jasper Bibb

[indiscernible] should . XX%. the next the over Like margins impressive about is figure now forward? think And do how quarter, we super you margin of sustainable margins at couple cadence APUS of APUS the this a think going Or in quarters?

Richard Sunderland

Jasper, in think and level, I to flexibility a I it additional sustain to would at and business, going But we're it's Rick. to invest margins. that do opportunity look of growth margin we do in those say, lot provides that. that can areas

want we to said, As to related marketing spend to dollars. look at Rasmusen Angie our how we continue

for you thank efficiencies, quick think you in that, if you I will, some in cost area. that noted note, your

would growth those and we invest sustain levels. and can continue drive also dollars, those to margins business the look take We're like higher revenue we to we dollar growing where to with that savings at but fewer revenue to

Jasper Bibb

for question Last Yes. me.

outline function changes you maybe you're the improvement Just I It you all after seems that was maybe the of Rasmussen? marketing specifically, I'm in on there. like of hoping of tweaks interested that schools, the up made made in-source . point. at you've could were that portfolio but seeing across some maybe following

Angela Selden

ensuring for of in. levers would also of at plans question. looking those we start I by marketing are and Great rates campus the and Rasmussen campus, each saying investing different that bottom-up, by building conversion by we're marketing channel we're the markets channel that

some you have X. we And we results, the of investments in see investment test changes markets our potential in by have slowing our the resilience as markets can So we the momentum. the money most the have, of we down next or marketing prioritized some as quarter enrollment basically over where other saved have the for

that programs, we're our which be into new every admissions and we focused So lead which converting taking training them on are markets folks which students. precious and specifically really channels, also to sure

Jasper Bibb

Definitely makes sense.

Operator

comes line question final from B. Riley. Our of the of Sharma Raj

Rajiv Sharma

more scores bit you a second about caps, NCLEX know enrollment you the Could Rasmussen, talked improvement talk in self-imposed and about bit and changes, little growth about I really little -- a good half. been the the the the

in you profitability. could I when when do we Can talk on could know these those commentary, caps to but about resolution think lifted? a also addressed measures? that be profitability? Is think for also line And expect you there time . ADN do you your you see

Angela Selden

all I'm of to Yes, going there. into questions, but you your bundled try because you that answer question and [indiscernible] to several had may have

been results. score NCLEX [indiscernible] with campuses Vice XXXX with success There start preparation. our improvements. focused work the lot specifically a onboarding and program installed We've really let's nursing faculty student including of President Nursing, faculty has coaches at by So training. strengthening We're the done on pleased the of NCLEX

have graduated, as up know, implemented may not averages and strategies the remediation students with scores may new have was that already specific national for who we or exam, introduced NCLEX you for have April. in which the We know gone also

are overall, averages. So we against the national how are we with pacing pleased

lot NCLEX improvements improvements systematic really programs. made in of of pass us a been each see there's rates think at campuses I to been and So have overall help our operational our

enrollment caps. was second question Your about

ADN in experience Bloomington of a of of campus had that's caps. X% years, As our to I about represents continues that the now queue. enrollments the that in it less And than today, past we campus. enrollments, mentioned, believe was campus the talked self-imposed We in all concentration

Bloomington be score is did a scores. to working one in tirelessly can ADN the not programs are passing quarter. that NCLEX of X We that Unfortunately, have sure we improved the demonstrate

know to a continue enrolling students we we've will we more pass educational campus high-quality be exam. the that not students us an them sure allows we so Bloomington in the got until to are to for one end that and deliver that allow that And experience

it caps. enrollment As place other the relates Illinois, have where to we

discussed effect of last Illinois. It pleased allows in very January Illinois our takes probationary was to any As on perspective in remove, we're X with status be we from 'XX, for legislation enacted briefly our an call, that program from NCLEX years. recently removed

we to approvals. us believe program programs going So and to that, a continue with Illinois accreditation, us also -- state as enroll add to will result, help ADN And to that's in allow us the both to students new campuses. allow enroll our

question And profit, don't -- you don't remember but had what another third question I I the remember about was.

could you really it, it. if So appreciate I repeat

Rajiv Sharma

Sure, in you course. to be in half. know when nursing question I second you or us you was that Rasmussen year-on-year also next only be profitable -- were Yes. is up that would could mentioned and that going . Rasmussen? only tell then of Is enrollment my nonnursing

Angela Selden

ADN. except all So all we are seeing health. all of categories allied enrollment nursing improved in our in for In ADN for except

our So and growth seeing campus-based those all program. programs positive of are we're in our online

the ADN not that area of growing. the So Rasmussen yet is only remains

enrollment to growth. to see turn profitability that in following occurs, back that expect Certainly, upon we we profitability would when that expect an second to 'XX. make to still half depending we positive the question, see expect enrollment positive but And follow to to momentum. want it enrollment growth have that we we overall your sure As and in seasonality, take positive relates of

Rajiv Sharma

then there on you get to and quarter Hondros. And back We profitability [indiscernible] soon is that Hondros then were . on what were basis? just being holding not we and Hondros holding in profitable last any expectation sometime should in profitable segment -- What almost profitable this you quarter, is then a last question one. Is the achieving

Angela Selden

start Good let question. and I'll follow-on. you Rick, I'll then,

perspective As the a comments, Hondros that fourth the that profitability really be result, around spend And new the predictability I do focus we believe at We us that Hondros. and on as we offset head expect XXXX the we a campuses. cost opening of we profitable will to quarter. my mentioned savings enter sure in as in continued with want and can beyond from count the help marketing to be

thing faculty has in is pace to in grow we other that The last prior our years. to it had We the see where recalibrate that not salaries at expect the to will do I say that nursing year. continuing

We faculty we a challenges recruiting and the around experiencing same year saw are retaining not nursing ago. that

And believe so stabilization more what around we that faculty us to to that, nursing allow our going will are predictability costs be. create

Operator

There are like to over Investor further back at the I turn this call to time. Symanoskie, Relations. would no questions Christopher

Unknown Executive

you, our today. your Thank evening, conclude American operator. That Good in Public and will for your interest call participation for Thank everyone. you Education.

Operator

and call. ends that conference gentlemen, Ladies today's

disconnect. now may You

American Public Education (APEI) 7 Nov 232023 Q3 Earnings call transcript