American Public Education(APEI) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - APEI's Q1 2024 revenue was $154 million, a 3% increase compared to Q1 2023, exceeding guidance [11][19] - Adjusted EBITDA for Q1 2024 was$ 17.1 million, representing a 143% increase year-over-year, and was 71% above the top end of guidance [11][20] - Adjusted EBITDA margin expanded by 600 basis points to 11% in Q1 2024, compared to 5% in Q1 2023 [12][20] Business Line Data and Key Metrics Changes - APUS saw a 9% revenue increase to $80.7 million in Q1 2024, driven by a 3% increase in net course registrations and tuition increases [21] - Rasmussen's revenue decreased by 7.5% to$ 53.1 million due to lower average enrollment, although the EBITDA loss improved by approximately 40% year-over-year [22] - Hondros reported a 25% revenue increase to $16.4 million, with total enrollment growing by 22% to approximately 3,300 students [23] Market Data and Key Metrics Changes - APUS net course registrations increased by 3% year-over-year to 99,000, the highest in eight years [12] - Rasmussen's enrollments showed a slight decrease of 2% in Q2 2024 compared to the previous year, with online enrollments increasing by 4% [25] - Hondros experienced a 10% increase in total student enrollment in Q2 2024, reaching approximately 3,300 students [26] Company Strategy and Development Direction - The company is focused on improving student retention and diversifying its nursing program offerings to achieve a balanced portfolio [10][14] - APEI is increasing its full-year 2024 guidance for revenue and adjusted EBITDA due to strong Q1 performance [12][26] - Investments are planned for modernizing curriculum at APUS and relocating campuses at Hondros to more favorable locations [38][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive enrollment growth at Rasmussen in the second half of 2024 and a return to positive EBITDA [15][55] - The company is optimistic about long-term success, driven by strong education units and a solid financial position [17] - Management highlighted the importance of improving NCLEX pass rates and student retention as key factors for future growth [35][53] Other Important Information - Total cash and cash equivalents increased to$ 153.2 million, with cash flow from operations rising by 63% year-over-year [24] - The company repurchased 251,000 shares of common stock for an aggregate purchase price of $2.8 million [24] Q&A Session Summary Question: What does getting Rasmussen back to total enrollment growth mean for segment EBITDA margins? - Management indicated that increasing enrollments would lead to breakeven or positive EBITDA due to the fixed cost nature of the campus-based business [30] Question: What were the drivers of the revenue per student increase at APUS? - The increase was attributed to a combination of mix, modest tuition increases, and the timing of course starts [32] Question: Are there any restrictions on enrolling new students at campuses on probation? - There are no restrictions on enrolling new students, and management is optimistic about improving NCLEX pass rates [34] Question: What are the critical investments planned for 2024? - Investments include campus relocations at Hondros and curriculum modernization at APUS, with a focus on technology infrastructure [38][40] Question: Is Rasmussen under control in terms of enrollment? - Management confirmed that enrollment trends are improving, and they expect positive growth in the second half of 2024 [48][55] Question: What is the status of accounts receivable collections with the Army? - There are some older amounts being cleaned up, but current billing and collections are functioning as designed [57][58] Question: Why were margins at the graduate school slightly worse year-on-year? - The decline was due to government budget delays affecting training dollars, but efforts are underway to close the revenue gap [61][62]