Summary of American Public Education (APEI) FY Conference Call Company Overview - **Company**: American Public Education, Inc. (APEI) - **Industry**: For-profit education, focusing on military personnel and nursing education - **Market Size**: The for-profit education industry is a $100 billion market and is expected to grow [6][24] Core Points and Arguments - **Leadership in Education**: APEI is the leading educator of active duty military personnel and veterans, significantly outpacing competitors like the University of Maryland Global Campus [7][24] - **Nursing Education**: APEI is the top producer of Associate Degree Nurses (ADN) and Licensed Practical Nurses (LPN) in the U.S., addressing a projected shortage of 200,000 nurses annually over the next decade [9][10] - **Financial Performance**: - Trailing twelve-month revenue: $635 million - Adjusted EBITDA: $76.5 million - Free cash flow: $51 million expected for the year [8][29] - **Enrollment Growth**: Positive year-over-year enrollment growth was reported, particularly in the nursing platform, with 9,400 enrolled nursing students [9][20] - **Acquisition of Rasmussen**: The acquisition of Rasmussen has stabilized and improved performance, with positive EBITDA and enrollment growth expected to continue [8][19] - **Regulatory Changes**: Recent lifting of growth restrictions on Rasmussen is anticipated to enhance future performance [19][24] Additional Important Insights - **Student Demographics**: Approximately 30% of APUS students return for a second degree, indicating high satisfaction and quality of education [13][25] - **Cost-Effectiveness**: APEI's tuition is often 30% lower than in-state tuition rates, making education more accessible [15][16] - **Department of Education Relations**: APEI has established a positive relationship with the Department of Education, which has recently released a $25 million letter of credit that was previously held in escrow [24][47] - **Market Trends**: Rising unemployment may lead to increased enrollments as individuals seek to improve their job prospects through education [37][40] - **Strategic Growth**: APEI plans to simplify operations by combining its institutions into a single system, which is expected to yield synergy benefits by 2026 [29][30] Conclusion American Public Education, Inc. is positioned strongly within the for-profit education sector, particularly in military and nursing education. The company is experiencing positive financial trends, enrollment growth, and favorable regulatory changes, which collectively suggest a robust outlook for future performance.

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify effective metrics for assessing momentum in stocks [2] Group 2: American Public Education (APEI) Analysis - APEI currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [3][4] - APEI's shares have increased by 0.48% over the past week, matching the performance of the Zacks Schools industry, and have risen 16% over the past month compared to the industry's 0.36% [6] - Over the last quarter, APEI shares have risen 26.42%, and 63.8% over the past year, significantly outperforming the S&P 500's gains of 2.37% and 14.4% respectively [7] Group 3: Trading Volume and Earnings Outlook - APEI's average 20-day trading volume is 260,522 shares, which serves as a bullish indicator when combined with rising stock prices [8] - In the past two months, 4 earnings estimates for APEI have been revised upwards, increasing the consensus estimate from $1.27 to $1.42, with no downward revisions for the next fiscal year [10]

Core Points - Dr. Nicholas Wernicki has been appointed as the new Dean of the Arts, Humanities, and Education School at American Public University System (APUS), effective May 22, 2025 [1][2] - Dr. Wernicki has extensive experience in academic leadership and workforce development, having held various roles at liberal arts colleges over the past decade [3] - He succeeds Dr. Michelle Newman, who served as Interim Dean, and joins a team of three other deans at APUS [4] Academic Background - Dr. Wernicki holds a Ph.D. in Philosophical and Theological Studies from Drew University, an M.Phil. in the same field, an M.A. in Liberal Studies from Villanova University, and a B.S. in Marketing from DeSales University [5] Institutional Overview - APUS has a 33-year history and a community of over 155,000 alumni from more than 80 countries, recognized for its innovative approach to online learning [6] - The institution is in the top 22% for students' return on educational investment among 4,396 colleges and universities nationwide, based on data from the Georgetown University Center on Education and the Workforce [6][8] - APUS is accredited by the Higher Learning Commission and is a wholly owned subsidiary of American Public Education, Inc. [7]

Company Overview - American Public Education, Inc. (Nasdaq: APEI) operates a portfolio of education companies that provide online and campus-based postsecondary education and career learning to over 125,000 students through four subsidiary institutions [1][2] - The institutions under APEI include American Public University System, Rasmussen University, Hondros College of Nursing, and Graduate School USA, focusing on transforming lives, advancing careers, and improving communities [2] Subsidiary Institutions - American Public University System (APUS) serves approximately 88,000 adult learners worldwide, primarily focusing on active-duty military and veteran students [3][8] - Rasmussen University, with a history of 125 years, serves around 14,600 students across 20 campuses in six states and online, offering programs in nursing, health sciences, business, technology, design, early childhood education, and justice studies [4] - Hondros College of Nursing is the largest educator of Practical Nursing (LPN) nurses in Ohio, serving approximately 3,700 students across eight campuses [5][8] - Graduate School USA provides training to the federal workforce, offering customized contract training to federal agencies and open enrollment programs for government professionals [6] Accreditation - APUS and Rasmussen University are accredited by the Higher Learning Commission (HLC), while Hondros College is accredited by the Accrediting Bureau of Health Education Schools (ABHES) and Graduate School USA is accredited by the Accrediting Council for Continuing Education & Training (ACCET) [7] Upcoming Events - The company will participate in the William Blair's 45th Annual Growth Stock Conference from June 3-5, 2025, in Chicago, IL, with CEO Angela Selden presenting on June 5th [9] - APEI will also attend the D.A. Davidson 1st Annual Technology + Consumer Conference from June 9-11, 2025, in Nashville, TN, where both CEO Angela Selden and CFO Rick Sunderland will be available for meetings with investors [9]

American Public Education, Inc.’s (APEI) shares have moved up 12.6% since it released its first-quarter 2025 results on May 12, 2025, significantly outperforming the Zacks Schools industry, the broader Zacks Consumer Discretionary sector and the S&P 500 Index. The detailed price performance is shown in the chart below.Image Source: Zacks Investment ResearchThe reported quarter’s adjusted earnings and total revenues topped the Zacks Consensus Estimate and grew year over year. Owing to the quarterly results a ...

Industry Overview - The Zacks Schools industry is experiencing a rebound driven by increased demand for career-focused programs in healthcare, skilled trades, cybersecurity, and IT, supported by a labor market that values job-ready skills and government initiatives promoting non-degree pathways [1][4] - The industry is addressing the critical shortage of healthcare workers through rigorous, workforce-aligned training programs [5] Trends Influencing the Industry - Digital innovation is a key driver of differentiation, with companies investing in adaptive learning tools and scalable online platforms to enhance engagement and support flexible learning for working adults [2][7] - There is a rising demand for workforce-oriented programs, particularly among adult learners and career switchers, as the labor market increasingly values job-ready skills over traditional degrees [4] - The sector is witnessing consolidation, with larger players acquiring niche or financially weaker institutions to expand offerings and improve scale [6] Financial Performance and Market Position - The Zacks Schools industry currently ranks 30 within the broader Zacks Consumer Discretionary sector, placing it in the top 12% of over 250 Zacks industries, indicating strong near-term prospects [10][11] - The industry's earnings estimates for 2025 have increased to $1.38 per share from $1.37 since April 2025, reflecting growing analyst confidence in the group's earnings growth potential [12] Enrollment and Revenue Growth - For-profit providers are expected to see enrollment and revenue growth in 2025, driven by demographic tailwinds, state and federal support for vocational education, and digital innovation [2] - Companies like Stride, Inc., Laureate Education, Inc., and American Public Education, Inc. are positioned to benefit from these trends, with significant enrollment growth reported [21][29][25] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings ratio of 16.86X, compared to the S&P 500's 21.81X and the sector's 19.73X, indicating potential undervaluation [17][20] Company Highlights - Stride, Inc. reported a 20% rise in total enrollment, with a 12.8% increase in General Education and a 32% increase in Career Learning [21] - American Public Education has seen a 60.2% stock increase over the past year, with earnings expected to grow 150.9% in 2025 [25] - Laureate Education's fully online programs account for about 20% of its student base, growing at three to four times the pace of face-to-face programs [28] - Perdoceo Education has benefited from a 10.6% enrollment increase at Colorado Technical University, driven by strong student engagement [32] - Lincoln Educational Services has achieved an 82.4% stock increase over the past year, supported by strong enrollment growth and operational efficiencies [36]

Core Insights - American Public Education, Inc. (APEI) reported strong first-quarter 2025 results, with adjusted earnings and total revenues exceeding expectations and showing year-over-year growth [1][2] - The performance was primarily driven by contributions from Rasmussen University (RU), American Public University System (APUS), and Hondros College of Nursing (HCN), while the Graduate School (GSUSA) segment experienced a revenue decline [1][2] Financial Performance - APEI's adjusted earnings per share (EPS) reached 41 cents, significantly surpassing the Zacks Consensus Estimate of 15 cents by 173.3%, compared to a loss of six cents per share in the same quarter last year [3] - Total revenues amounted to $164.6 million, exceeding the consensus mark of $162 million by 1.6% and growing 6.6% year over year, supported by net course registration growth and tuition increases [4] - Total costs and expenses rose 2% year over year to $152.3 million, driven by a 3.5% increase in instructional costs and an 8.5% rise in selling and promotional expenses [4] - Adjusted EBITDA increased by 24% year over year to $21.2 million, with an adjusted EBITDA margin of 13%, expanding 200 basis points from 11% [5] Segment Performance - APUS reported revenues of $83.9 million, a 4.1% increase from $80.7 million year over year, driven by net course registrations and tuition increases [6] - RU's revenues grew 11.5% year over year to $59.3 million, attributed to enrollment growth and tuition hikes, with total student enrollment increasing 7.4% to 14,500 [7][8] - HCN's revenues rose 7.5% year over year to $17.7 million, supported by student enrollment growth, although it reported a negative EBITDA margin of 1% [8][9] - GSUSA's revenues declined 11.9% year over year to $3.7 million, with a negative EBITDA margin of 57% [10] Cash and Debt Position - As of March 31, 2025, APEI had cash, cash equivalents, and restricted cash of $187.5 million, up from $158.9 million at the end of 2024 [11] - Net long-term debt slightly increased to $93.7 million from $93.4 million at the end of 2024 [11] Guidance and Outlook - For Q2 2025, APEI expects total revenues to increase by 4-5% year over year to $160-$162 million, with a projected loss per share between 13 cents and four cents [12] - Adjusted EBITDA for Q2 is anticipated to be between $11.5 million and $14 million, reflecting year-over-year growth of 6% to 28% [12] - The company revised its 2025 guidance, expecting total revenues to grow 4-6% year over year to $650-$660 million, with adjusted EBITDA projected between $77 million and $87 million [14]

Financial Performance - For the quarter ended March 2025, American Public Education (APEI) reported revenue of $164.55 million, up 6.6% year-over-year [1] - EPS for the quarter was $0.41, a significant improvement from -$0.06 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $161.94 million, resulting in a surprise of +1.61% [1] - The company delivered an EPS surprise of +173.33%, with the consensus EPS estimate being $0.15 [1] Key Metrics - Shares of American Public Education have returned +16.9% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3] Segment Performance - Rasmussen University (RU) reported revenues of $59.25 million, exceeding the average estimate of $57.19 million, representing a year-over-year change of +11.5% [4] - Hondros College, Nursing Programs (HCN) generated revenues of $17.68 million, slightly below the average estimate of $18.07 million, with a year-over-year change of +7.5% [4] - American Military & Public University (APUS) reported revenues of $83.95 million, surpassing the average estimate of $82.42 million, reflecting a year-over-year change of +4.1% [4]

Financial Data and Key Metrics Changes - The company reported total revenue of $164.6 million, an increase of 6.6% year-over-year [9][18] - Adjusted EBITDA increased by nearly 25% to $21.2 million, with an adjusted EBITDA margin expanding to 12.9% from 11% in the prior year [9][19] - Net income available to common shareholders was $7.5 million, compared to a net loss of $1 million in the prior year [9][19] Business Line Data and Key Metrics Changes - Rasmussen's revenue increased by 11.5% to $59.3 million, with online enrollment up 11.1% and on-ground enrollment up 3.2% [20][21] - APUS revenue rose to $83.9 million, a 4.1% increase, with net course registrations increasing by 3.5% [20] - Hondros reported a revenue increase of 7.5% to $17.7 million, with total enrollment up 10% [21] Market Data and Key Metrics Changes - Rasmussen's enrollment increased by 7% in Q1 and is expected to grow by 8% in Q2 [12][24] - APUS's second quarter registration guidance is projected to be between 93,500 to 96,100, representing a 4% to 7% increase compared to last year [25] Company Strategy and Development Direction - The company plans to consolidate its three degree-granting institutions into a single entity, which is expected to enhance operational efficiency and address the growing demand for nursing and clinical roles [10][26] - The company is focused on improving operating leverage through increased enrollment and disciplined cost management [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, citing strong enrollment trends and effective cost management strategies [16][26] - The company is maintaining its full-year revenue guidance of $650 million to $660 million, while increasing adjusted EBITDA guidance to between $77 million and $87 million [11][25] Other Important Information - The company intends to redeem its preferred shares, which is expected to save approximately $6 million in annual dividend expenses starting in 2026 [9][10] - Cash flow from operations was reported at $37 million, an increase from $20.7 million in the prior year [22] Q&A Session Summary Question: Impact of tuition assistance portal downtime on margins and enrollment - Management indicated that the impact was minimal, with registrations increasing by 3.5% in Q1 and guidance for Q2 showing improvement [29][31] Question: Guidance for graduate school EBITDA losses - Management stated that they are unable to provide specific guidance on graduate school losses but are confident in the overall adjusted EBITDA guidance [33][35] Question: Enrollment growth expectations for Rasmussen - Management noted that Rasmussen has seen four consecutive quarters of positive enrollment growth and does not foresee headwinds for the remainder of the year [41][42] Question: Revenue synergies from consolidation - Management has not provided specific revenue synergy numbers but highlighted the benefits of combining nursing programs across institutions [85][86] Question: Interest expense in Q2 - Management confirmed that the higher interest expense includes the preferred redemption premium [90] Question: Fixed versus variable costs at Rasmussen - Management indicated a 60% flow-through rate for revenue increases at Rasmussen, with potential for higher rates as optimization continues [100]

Financial Data and Key Metrics Changes - The company reported total revenue of $164.6 million, an increase of 6.6% year-over-year, driven by growth at Rasmussen, APUS, and Hondros [16][18] - Adjusted EBITDA for the first quarter was $21.2 million, a 25% increase from the prior year, with an adjusted EBITDA margin of 12.9%, up from 11% [17][18] - Net income available to common shareholders was $7.5 million, compared to a net loss of $1 million in the prior year [17][20] - The company raised its full-year adjusted EBITDA guidance by $2 million to a range of $77 million to $87 million [5][9] Business Line Data and Key Metrics Changes - Rasmussen experienced a positive adjusted EBITDA swing from a loss of $2.6 million in Q1 2024 to a profit of $2.4 million in Q1 2025, with revenue increasing by 11.5% to $59.3 million [6][18] - APUS reported revenue of $83.9 million, a 4.1% increase, with net course registrations up 3.5% year-over-year [18][20] - Hondros saw revenue growth of 7.5% to $17.7 million, with total enrollment increasing by 10% [19][20] Market Data and Key Metrics Changes - The company noted an 8% year-over-year enrollment improvement at Rasmussen for Q2 2025, continuing a trend of positive enrollment growth [6][10] - At Hondros, enrollment increased by 13.5% year-over-year for Q2 2025 [10][23] - APUS conferred over 13,500 associate's or bachelor's degrees, with 66% of graduates being active duty military or veterans [12] Company Strategy and Development Direction - The company is focused on simplifying operations and plans to consolidate its three degree-granting institutions into a single entity by the end of 2025 [8][25] - The strategy includes optimizing program offerings and expanding nursing programs to meet growing demand in healthcare [25] - The company aims to redeem its preferred shares, which will save approximately $6 million in annual dividend expenses starting in 2026 [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, citing strong enrollment trends and improved profitability [13][25] - The company acknowledged challenges in the Graduate School segment due to government budget uncertainties but maintained overall revenue guidance [9][24] - Management highlighted the effectiveness of marketing initiatives and the resilience of military and healthcare education sectors [52][53] Other Important Information - The company plans to sell two corporate buildings with anticipated net proceeds of over $20 million, expected to close in Q3 2025 [8][21] - Cash flow from operations was $37 million, significantly up from $20.7 million in the prior year [20] Q&A Session Summary Question: Impact of tuition assistance portal downtime on margins and enrollments - Management indicated that the impact was minimal, with registrations increasing by 3.5% in Q1 and guidance for 5.5% in Q2 [27][30] Question: Guidance for Graduate School EBITDA losses - Management stated that they cannot provide specific guidance on Graduate School losses but are confident in the overall adjusted EBITDA guidance [32][34] Question: Enrollment growth expectations for Rasmussen - Management noted that they do not provide individual institution guidance but are pleased with the momentum at Rasmussen [39][40] Question: Revenue synergies from consolidation - Management has not provided specific revenue synergy numbers but highlighted the benefits of combining nursing programs across institutions [82][83] Question: Interest expense in Q2 - Management confirmed that the higher interest expense includes the preferred redemption premium [88] Question: Fixed versus variable costs at Rasmussen - Management indicated a 60% flow-through of revenue increases to EBITDA, with potential for higher flow-through as optimization continues [96]