APEI - Earnings call transcript Q2 2024 | American Public Education, Inc.

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Operator

Hello, and welcome to the American Public Education, Inc.'s Second Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Brian Prinovo, Investor Relations.

You may begin.

Brian Prinovo

Thank you, Sarah, and good afternoon, everyone. Welcome to American Public Education's conference call to discuss second quarter 2024 results.

Senior call Rick Angela and Officer. Sunderland, Officer; Steve the Chief President Chief on Chief and Officer; and Executive Executive Somers, me today Corporate Selden, are and Financial Strategy Joining and President Development Vice Vice President for available the section today Quarterly are APEI's website. call the Reports Materials in of estimates be and that are assumptions, not made conference and projections. call current subsidiaries Statements and statements any accompanying on facts its may considered during this presentation forward-looking based regarding APEI historical expectations,

Forward-looking differ expressed uncertainties results by statements risks could that and statements. are subject materially to cause actual such or to those from implied

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

and only information addition GAAP is investors that comparable supplemental with earnings be results accordance release. financial of and to regarding Rasmussen University other company financial information ability reconciliation in growth, prepared and regarding and of in demands financial the financial Forward-looking to references the registrations Management adjusted its to should to presentation between appendix to to presentation and the limitation, for satisfy as directly and most earnings should presentation considered or performance measures demands include, information. and measures useful provides for believes competition initiatives, repositioning and savings and located today's in revenue, without the non-GAAP A the other and guidance. non-GAAP and such our EBITDA of non-GAAP GAAP. with superior respect statements efforts. expectations a changing measure market This earnings use any contains operations -- we future enrollments, demand, including statements be not cost to substitute in

turn ahead. please call over Now Selden, to I'd APEI's CEO, go Angela like to the Angie,

Angela Selden

Call. Good you Second Brian. Thank for afternoon, Earnings Public XXXX American you, Quarter Education's thank and joining

co-secondary nurses, in educating APEI XXX,XXX X new campus-based provides largest and APEI, in you responders learners learners first career on approximately others, to For the country to those worldwide. federal annual adult to institutions and educating basis, an those in co-secondary the namely veterans, service are emphasis of our workforce. education new among learning an active-duty adult On and military, online the with

is mission those we prosperity purpose, call, others. service will today's detail power Our cover the more in to news potential good to and On following in highlights. to

seventh We year-over-year adjusted APEI's First, adjusted in EBITDA, Overall, or XXX exceeded saw which margin grew QX million. XX% grew primarily when and compared marked has to points Corporate. EBITDA APEI revenue to by events driven by 'XX. APEI's significant to EBITDA the both Rasmussen $XXX.X improvement operating a X.X% consecutive basis XXXX, X.X% Adjusted $XX.X to met where XQ million, year-over-year at this in expanded guidance. quarter APEI

$XXX million million Next, that this year and reiterating I'm quarter enrollment has million since between its in earlier to And are our XXXX signaled between pleased million. and positive guidance achieved and and our and $XXX in revenue EBITDA we report had Rasmussen as we $XX of revenue full first finally, adjusted acquisition $XX revenue year. year-over-year

for the Rasmussen Now back of to positive growth trajectory starting I'm and a and revenue units, about EBITDA. first more I'd provide enrollment made education pleased very and put with the like and stabilize to our detail with Rasmussen. we results on progress trajectory have

we earnings in XX,XXX, Second our quarter call just shared which were X%. enrollments, down last

markets, and the slightly Sciences time turn are while Wisconsin online in to we've decided towards year-over-year strengthen to today, footprint to in X new to in suspend and the continues More importantly, Rasmussen campuses, its as the business noteworthy XX,XXX our for it powered on enrollment small optimize grew margins. which sharing positive Health Nursing quarter profitability is particularly first enrollments, is third This students, in the to growth which which by been programs a campus basis we double-digit working. improve and operate

expect to $X.X but profitability. In and $X.X expected The enrollment quarter, growth in time for of important of think was with second reflected minus typically continued positive to EBITDA enrollments loss since is continue in and to positive that conjunction the million profit note prior negative is a XXXX, narrowed the the indicative business. acquisition which the minus in move us stronger also the campus X%, in territory Rasmussen don't up period. starts, the momentum XXXX. fourth picture in half, the quarter Rasmussen the it's -- growth quarter growth the for online into we sets to and growth in nearly the million to both start we XX% much corresponds While was with the continued where APEI's EBITDA of in first portions which from up was Rasmussen year-over-year in growth in Rasmussen Rasmussen in segment report I start year and revenue in revenue, path the also

student again the XX XX where year-to-date. NCLEX are In thresholds of we strong quarter, outcomes, programs produced terms the meeting second of in pass required rates

increased veterans, to registrations net Now students. higher mode at retention strong attention university increases. ] average turn I'd year-over-year, APUS. last to was revenue to fee and higher course tuition Revenue year's as well the In registrations as the due like API's registration overall [ serving our growth XQ from X.X% and APUS per returning reflecting online of overall military 'XX, in

faculty part-time EBITDA margin better and pay As APUS optimization in marketing invest strengthen invested its infrastructure IT its spend, has XXXX XQ for align implement was to year-over-year. slightly lower in faculty, curriculum, online increase a

at factors. enrollment previously to to quarter, would EBITDA remained similar those APUS 'XX we as the third ahead expect margins strong. Looking Hondros, same reported, XQ be given At

rates. remained to well. robust, and contributed programs year including for in also where continue also to Hondros comp nursing campus with NCLEX Starts program Demand Hondros with strong infrastructure be that in XQ and enrollment that some against but will one XQ enrollment still and its more consolidated a we cap adjusted the XX% and are 'XX, We Detroit margins to XX% one increasing ago. has year-over-year with Indianapolis, has now stabilization continue EBITDA pleased PN even at growth, and as limited relocated setbacks X,XXX to enrollment campus with 'XX, new despite improvement in delivering impact strong unexpected at with continued the new In we than APEI, revenue, remain we of saw Rasmussen, which Ohio growth expect growth pass a on both seeing. Overall, operate students, EBITDA in we Legacy a positive a location. enrollment performing exceptional at are temporary some of basis. we growth the the very ADN result in campuses and experienced location,

where enterprise I'd Before APEI's to as turning specificity the frame provide Rick we call are we're an CFO, like as Sunderland, some to where and over to headed.

With demand the stage lifted, the We in stabilization sight will our from growth we Department Rasmussen the and including that unit its footprint overstretched education roles restrictions see transform lives, setting in from beyond. improve for us our for impact of and Education care first are fourth system. of to to XXXX in to fundamentally over allow in advance years. vision negative clinical X of can careers nursing which continued margins health Once growth expand Rasmussen underway, -- positive the line expects to our quarter, in revenue for at expand also and the believe well campus the other time large enrollment Rasmussen that and addressing shifting communities.

benefits. nurses students, grow offering $X.X is Hondros for positions. reach and XXX,XXX remains continue of Rasmussen or veterans education of retirement nursing been education the education and GI XXX,XXX shortage exits Our higher of of at openings top in higher PN is U.S. X education tackle and is to to to a approximately pre-licensure educating AMU, minded Military for an workforce University APEI, billion Hondros the provider additional accessible service education which choice accelerator expected demand chronic have units million in year XXXX. market $XXX and anyone in of the distinctive adult XXXX, to for we out of the their diverse across campuses for on #X subjects. market, the carved nurses by students nationwide American education an focuses working the by each provider the military year College in. a to were training new state each pre-licensure amount thousands seeking built job employment Ohio. higher and Nursing At affordable #X nursing critical driving the increase and expected increasing has range significantly Both higher using and of X Overall, of factored are with Bill graduating named is an the students where when U.S.

is learn-to-earn me the that affordable, focus, that, proud experience Sunderland. educational students call We APEI's Rick let are enable on a return With over strong lifelong turn to investment. CFO, their APEI to

Richard Sunderland

in Total X.X% period. the $XXX.X the $X.X was quarter prior second revenue from you, up Angie. or Thank million, year million

and school, excluding to to a impairment growth the Second Cost quarter noncash and decline was in quarter graduate services expenses. costs year APUS, costs and our than to $XX value in $X.X second quarter cost period, for impairment reduce second million carrying severance marketing the which other technology a at of in decreased XXXX increased at or and intangible Hondros of leases, goodwill assets transition XXXX, XXXX included was loss the the primarily $X asset due the tax to and of quarter partially segment, and million offset Rasmussen, impact. guidance. Total approximately as corresponding compared information revenue technology on less and and the compared expenses intangible by $XX.X expenses million million increases RU charges goodwill second XX.X% in prior revenue and by which driven increased charge revenue

in loss asset diluted share adjusted improved $X.XX a loss million compared year which quarter, net significantly excludes impairment. and an prior the $XX quarter per and was intangible loss of of common Second goodwill $X.XX the to

to increased $XX.X year compared million EBITDA the period. adjusted quarter, the For in to prior million $X.X XX%

of net the $XX was million, margin XX% advertising increased increase registrations year compared costs. due to million and in prior year second and was APUS, Rasmussen, EBITDA change first an course of increased adjusted quarter X.X% and to tuition the of primarily X% third fee results to an second and compared the quarters in guidance student to quarter in the partially was was in a VA The lower an offset At the compared compared due per EBITDA a utilizing The of partially compensation prior prior online year. XX% to margin were registrations, in due by employee X.X% quarter. total increase revenue the second in At quarter enrollment. $XX as revenue X.X% in and to in technology, in second a XXXX, has by offset end X% to total, as an increases enrollment, an by APUS by increase The enrollment, driven X.X% students on year decline student year X.X% in driven as military increase which affiliated prior ground In enrollment decrease total benefits at a XXXX. compared period. represented in tuition the in increase by revenue quarter prior student to the to information X.X% of at margin high decrease

enrollment is and narrowed quarter, the period EBITDA loss to the EBITDA third quarters declines enrollment the impairment an on million million slightly. have this a XX% approximate goodwill the to year-over-year compared for each period second mentioned, increase. In XXXX revenue up Angie, of $X.X of after tuition for Hondros, the year-over-year prior up adjusting of lots enrollment quarter leases. second compared to and prior Rasmussen's to an improvement X to continued due $XX.X the representing in was quarter improved year in year's last million, $X.X total XX% At as As year's loss past growth

third enrollment the the consecutive quarter X,XXX to grew approximately Hondros X.X% for students, For total enrollment. record-setting quarter,

prior positive to graduate Contrast school, quarter, loss Corporate a in Revenue $X.X compared in compared and $X.X the period. included million $X.X loss million For the of to million period. of the $X.X EBITDA in prior Other year was in was year EBITDA million

prior $XX.X $X.X quarter, $X.X total restricted compared year-end cash the an cash cash, $XXX.X and period. loss of from graduate school equivalents XXXX, year in to XXXX. EBITDA EBITDA June For At the of was million, increase was XX, positive million million million

CapEx, as million For XXXX, adjusted flow, compared operations June was with June and million the APEI X million, net was million flow $XX from prior cash X Principal less $XXX at unrestricted cash to continues cash defined CapEx EBITDA free $XX.X be on for was $XX.X XX, term XX $XX.X months XX% to increased compared months year a ended of million ago. APEI's million positive. the $X.X to cash the first year. loan to

online year-over-year total enrollment student no HS changes growth to enrollment an to be represents At is there This XX,XXX third under are consolidated is of the aggregate ] late to third first increased approximately expected per attributable be loss to to compared quarter XX,XXX total positive spend softness to X- Adjusted because since Rasmussen, students. students, Appropriate quarter X,XXX enrollment compared a income the between loss has for enrollment quarter are are believe approximately to year and to third third between diluted XXXX, quarter $XX of net expects $XXX company a borrowings the Additionally, to to income of quarterly the X,XXX decreased $XXX of be is lag third typically course acquisition. are million quarter in and Rasmussen registrations between to student down X,XXX X-quarter year-over-year in XXXX adjustments prior APEI's revenue XX% of million expected marketing million million the flat between In quarter increase and between year-over-year which registration million. [ We of third or share. students. quarter correct slightly At XXXX, this total in of income actual the registrations. Hondros, approximately third registrations made slight largely $X.X quarter the and and a X,XXX marketing $X $X.XX these numbers. be expected spend The $X.XX is to ground to in to on minus students million X.X% the while starts to XXXX. decline. in X% EBITDA net shareholders At schools. Hondros, enrollment enrollments approximately of being of increased $X common to of and a when student of

year guidance anticipated is revenue million full in year of with range million. Our $XXX a to XXXX unchanged $XXX consolidated full

be in year. adjusted $XX full $XX million expect between We our EBITDA to the million to

low now offer to and remarks, fourth to our especially quarters second notable fourth The quarters tend we it third the Rasmussen question-and-answer in session. back in the seasonally which quarter. a to Angie? I begin quarter, ramping with in EBITDA as be after will pass adjusted closing increase will Angie, continues some

Angela Selden

and capitalize and market the are this and units. by on with to to education fundamentals increasing other investments and veterans. we online growth our had in to Market year-over-year military stabilized education numbers Rasmussen government high-demand military focus strategic continued on for benefits positioned the significant During strategy nursing, support higher increase markets enrollment our education stabilize and With have #X business quarter, our at we and to well like in our our sectors the execute active-duty position acquisition. and at growth. initiatives further encouraged grow improvement enrollment first since We're performance at continue APUS as profitability

XXXX to foundation execute on As have built begin ahead we its the in call to students like session. to of to can our continue to come. that, to business community's we milestones, our the I that back their And hand Operator? value and key I operator believe years move deliver a continue its that stakeholders for now to value and the would to to with question-and-answer value

Operator

Instructions] Riley. with from Thank line B. you, Rajiv the Angie. question first [Operator Your of comes Sharma

Rajiv Sharma

longer-term more getting -- What Rasmussen sort quarter. to now as capable relative some Where X% the you enrollment the little and But from this EBITDA really do had business in flat see when is? can half a Rasmussen. 'XX operation margins. this get bit, purchased of is where 'XX, be fiscal growth this on quarter were what wanted on not or the projected they these e almost in EBITDA you're capability what almost specifically flat original in margins, I in of improvement next second the to and can year-on-year of negative -- here. color the the is to understand the maybe the I to much could you get

Angela Selden

with Brad, That's parts question a thank you lengthy very to much for many question. that it. component

as EBITDA, cost XH So Rasmussen we the saying, year enrollment that, now turn positive on full as new EBITDA as And in We signaled, dollar let momentum adjusted in improvement a quarter excited XXXX corner meaningful than is We're about the exiting XXXX by effect to and colleges. the we believe on in agreement more We're that any and to adjusted fourth on XXXX. savings believe will to on will have our we and but certainly, have will with each of beyond. start that comments basis to believe a revenue. things with we on line you'd where me We're over of completion the IT of in of we positive And our the presently see result. our for sight to in adjusted covering of run it Several XXXX XXXX, very positive giving that. effect fixed â€˜XX turn not other see that the expect a the turn significant EBITDA we like a a to has and Steve rate third-party meaningful include that. guidance share? I'll

Steven Somers

In some to range. in add that just EBITDA around nursing going the there, fourth profitable in of we're in terms working I'll obviously be the to industry assets in quarter-to-quarter. We're and that similar XX-plus schools Rajiv, operate quarter. Angie signaled percent right? that general, context Yes, school improve the

to over I And would industry years to be as the about -- the that we margins think to think over X% next inside consistent. very you can then you I X to think half think So, we'll as right, X that as But expect I us still on look asked negative forward in the think positive the overall third time, it's the the XX% be to to the the reasonable for half and fourth about be well, a quarter itself. and basis, second quarter would quarter, you we second it quarter. XH third third fourth the get

of you zone. that I that and context So months last XX-plus trend little bit is directing in a -- gives been think in of sort has that around place for the the general

Rajiv Sharma

you could Is to the sort then those Got in that is it. see expected? a little down of overall bit And about trends And a little enrollment this do And seasonal? talk trends? flat APUS enrollment? where you

Angela Selden

I'll start, provide those more the have remarks, APUS. enrollment. And terms X-quarter to in segments Rick's marketing we Rick that fourth dial Raj, of certain and In then a in I'll 'XX did quarter detail. discuss turning of in the there's back investments see he investments lag of in decision into

marketing So, seeing future the in of course since expect the as which spend, we we enrollment QX, in for that approach quarters has are we reduction momentum been corrected return. to effect and that

it So, you more detail. over for Rick, turn going to I'm to

Richard Sunderland

that's Raj. And Yes, lag. that is exact, there

been. would comments, community. our active-duty expect we military functions. And We the That's veterans of business recently share the it's play function about strong numbers is the in or talked and will, the the out the over will X-quarter as market military course way quite X- affiliate we making expect a frankly, that strong they the have ever So, I in strength highest suggest now or in I making remain we if things remain that the we're my lag. been correction in just

X over The have will strength And mid-X. continued to there. so, resolve quarters we X marketing

Angela Selden

Yes.

marketing efforts margin us I think were help sensitivity spend. year that the say underway also now is understand the last what I'll optimization around that

lot our and thoughtful we And that that more segments so invest we channels certain we now a marketing can and against going forward. how be understand

we've tested we and build. something now veterans into so, in that, are. are And particular, boundaries been It's to leaning that momentum strength those we see growing wanting market. also seeing, and know where And we've in the

And veterans. so, the seeing we're pleased with we're quite with results

Operator

question next from of with Your Instructions] [Operator Sheldon Stephen line comes Blair. the William

Matthew Filek

Wondering to start to there, the the would helpful. assume any if for there's upper which have of I to quarter-over-quarter the for full the seasonality some XQ on particularly you talk guide, a You need with quarter on some Filek the towards range, out color Stephen. in could about guidance end wanted on one year to play that factors be guide. revenue Matt but push guidance. step-up fourth would know seems at the the additional I based of decent you play

Angela Selden

Yes, I'll turn it over to Rick.

Richard Sunderland

Angie can dollars what assisting it, on observed marketing improvement in that We're if then, a then year-over-year, could up $X spend a favorably the smaller call improvement a go accelerate commented would uptake you we've a the And strength right, typical if of got that piece it to federal course, an the to or fill could and a who's that to numbers, million workforce they've has go that seeing which very the the start and program And while new the lag relates QX range. to uptake I the to would And total go the I'll would Angie helpful the about or opposite Well, it new an drop reported in up. that -- certainly turn that school, be be We and Somers, as that And introducing push Steve the up to the resulting true as of quicker, of in on play impact indicator on results. then us of a course, against or range. a any accelerates, be obviously don't had how that in enrollment, up graduate build of Then is to revenue would registrations got then, slight observable think enterprise, a as we've be room things altering momentum range, at leading to overall out experience there here or $X allocation start back. been that who's strength million will higher it's push Rasmussen, continue. in strength have as program. you right? APUS, it talked down It's segments new and enrollment in Hondros, then spend, among will on they're We total ultimately down, pattern want medical program. between at itself a have got right? push could

Angie I'll pause and there so, let add the to And comments.

Angela Selden

So, good that's I that enrollments those I Rasmussen think also along in would segments play would passed across continue Hondros expect increases the we and our will we is a say in favorably APUS, assuming price The to the synopsis. pretty student revenue price and certain increases that last thing hold degradation overall that without full that for year.

Matthew Filek

helpful you is state with might when first-time I but had to have first you rates NCLEX those this I on of pass all you progress timing that remaining your another do initiatives nursing that but any exceed of programs resolving issues you sense it. estimate board NCLEX a on standards? continue have one on Got underway, on color. have time rate with the campuses. imagine call, scores. NCLEX of know That's any make rough And tougher I nursing variety pass completely at good then to

Angela Selden

with on faculty that an was operating that NCLEX upgrading not to the with have done that was Illinois, of in curriculum amount a curriculum testing. is The we paying we of the older next-gen attention version campus that are of campus significant Sure. renewing where we're the aligned

on in be will than remaining turn the NCLEX campuses. other that X believe Illinois we the scores so, And slower

state challenge the all but NCLEX the and results area our posting BSN an incredibly had that were of PN with our one -- the of of we happy ADN program, of for are which in that all standards, above now all X programs, them are we but past So, in us programs. been our we're

so, pleased improving very just incredible demonstrated and with ex the rate. terms very, pass And its that of we're [indiscernible] turn in

Steven Somers

Steve. is this Matt,

just me one comment to that. more add Let

before If X programs acquired higher are prior the you today terms back number that the business. is in was XX, that of passing of we than went the year-to-date out X years in it of now

a a obviously basis So, term, trend better are on improvement of in now longer well. but we've the made to on as a lot a we result near path

Matthew Filek

great Perfect. And the color. yes, That's there. progress great to continued see

Operator

of comes from the next question line Truist Securities. Your Bibb Jasper with

Jasper Bibb

think Hey any has already. I Apologies another call. a Rasmussen I nursing. help mentioned late Florida And update Illinois change â€“ answered I bit anything bill RU Steve, about last a everyone. if bit you wanted in there? also potentially on a on joined campuses little I from the there's from that just answer there the to last guess, with been quarter? any ask is there

Angela Selden

Sure.

Jasper, sure relative what campuses. you the to mean Florida So, exactly not I'm specifically

have campus with the start results, all NCLEX year-to-date I'll So, standard where program measurement we meeting combinations, state period. the for

you NCLEX So, mind? -- the very with Can that incredible Florida. turnaround here in doesn't pleased that we're very, in in we've repeat answer if specific is had that had you performance your question, there more something

Jasper Bibb

that's no, helpful. No,

basically really on triggered a a was. where of you old like was cohort sounded technical I [indiscernible] for that and going quarter, everything think some had there thing those last it

Angela Selden

combination Yes. and every We've results putting in through campus of pushing the been really happy with single the program green.

Jasper Bibb

mentioned in there relief was, a that -- on turnaround some the bill part And second think there. campus, Illinois question you little plan you could give of a longer bit Great. the Okay. was I a

I think a that might more you threshold. that the little bill to have afforded up to bit time relevant get

through update of works curious Just of legislature. in if there the kind kind or that's still their there's any

Angela Selden

still Yes, remains that in place.

was curriculum had to we the several importantly, mention, required or think been And relief major aggressively. campuses. including in period. them -- them be campuses, there. we measurement curriculum than did modernizing of call you our the to as end. Board with older of And the basically reason, We're of here, offering until a us to Nursing things working a so modernize operating a performance for a the we've Nursing I done were with to replacement of curriculum allow reason, our affords I other X us Illinois that the that Board certainly curriculum. We those of to that accelerate before joined work wait in X-year are had technical have very going And faculty revitalization aren't the version Illinois us allow the to We able in

our to is new And new the we to and campuses degree next-gen future. that curriculum we for new now significant improvements the exam. in attention curriculum allow will moving are So see from the the faculty, version our dedicated leadership version, of the the us that the in which confidence a nursing have high Illinois

Operator

question-and-answer over turn remarks. the like closing I'd call back concludes for Angie session. our This now to to

Angela Selden

We continue to If each answer forward we thank to Thank of who operational you, like growth our ongoing on more actions, we our firm, pace operator. be to to continuing of our conference I'd please for to to MZ earnings were progress update Group, look rapid unable you any call. and assist. you joining IR as happy than reach out execution. would our

Operator

this and your you conclude Ladies conference. Thank gentlemen, does for today's participation.

You wonderful a have and may day. now disconnect your lines,

American Public Education (APEI) 6 Aug 242024 Q2 Earnings call transcript