American Public Education, Inc. (NASDAQ:APEI) Q4 2021 Results Conference Call March 2, 2022 5:00 PM ET Company Participants Ryan Koren - AVP, IR Angela Selden - President, CEO Richard Sunderland - EVP, CFO Steve Somers - SVP, Chief Strategy and Corporate Development Officer Conference Call Participants Jasper Bibb - Truist Stephen Sheldon - William Blair Raj Sharma - B. Riley Operator Good evening, my name is Chris and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the ...

Student Enrollment and Programs - The company serves approximately 107,800 students through three subsidiary institutions, focusing on online and on-campus postsecondary education [129]. - As of September 30, 2021, approximately 8,500 students are pursuing nursing degrees at Rasmussen University, with about 90% enrolled in pre-licensure degree programs [135]. - APUS offers 130 degree programs and 112 certificate programs, focusing on fields relevant to today's job market [132]. - Hondros College of Nursing serves approximately 2,300 students across six campuses in Ohio and one in Indiana, addressing the nationwide supply-demand gap for nurses [136]. - Total enrollment at HCN for the three months ended September 30, 2021, increased to approximately 2,300, an 18.9% increase from approximately 2,000 in the prior year [181]. - HCN Segment revenue increased by $7.8 million, or 30.5%, to approximately $33.5 million for the nine months ended September 30, 2021, driven by a 32.3% increase in total student enrollment [223]. Financial Performance - Consolidated revenue for the three months ended September 30, 2021, increased to $98.2 million, a 24.2% increase from $79.1 million in the prior year period [177]. - For the nine months ended September 30, 2021, consolidated revenue rose to $264.8 million, reflecting a 12.3% increase from $235.9 million in the prior period [179]. - The net loss for the three months ended September 30, 2021, was $0.3 million, compared to a net income of $2.6 million for the same period in 2020, a decrease of $2.9 million [177]. - APUS Segment revenue for the three months ended September 30, 2021, decreased to $65.9 million, a decline of 5.4% from $69.7 million in the prior year [179]. - Net course registrations at APUS for the three months ended September 30, 2021, decreased to approximately 83,100, an 8.0% decline from approximately 90,300 in the prior year [179]. - The operating margins for HCN Segment improved to 4.0% for the nine months ended September 30, 2021, compared to negative 1.8% in the prior year [181]. - Net income decreased by $3.4 million, or 28.8%, to $8.4 million for the nine months ended September 30, 2021, compared to $11.8 million for the same period in 2020 [213]. Costs and Expenses - Total costs and expenses for the three months ended September 30, 2021, were $97.0 million, an increase of $21.2 million, or 27.9%, compared to $75.8 million for the same period in 2020 [194]. - Instructional costs and services expenses for the three months ended September 30, 2021, were $42.5 million, an increase of $11.5 million, or 36.9%, compared to $31.1 million for the same period in 2020 [195]. - Selling and promotional expenses for the three months ended September 30, 2021, were $23.5 million, an increase of $4.9 million, or 26.6%, compared to $18.5 million for the same period in 2020 [197]. - General and administrative expenses for the three months ended September 30, 2021, were $26.6 million, an increase of $4.0 million, or 17.8%, compared to $22.6 million for the same period in 2020 [198]. - Costs and expenses for the nine months ended September 30, 2021, were $250.9 million, an increase of $30.1 million, or 13.6%, compared to $220.8 million for the same period in 2020 [205]. - Instructional costs and services expenses increased by $14.2 million, or 15.6%, to $105.3 million for the nine months ended September 30, 2021, compared to $91.1 million for the same period in 2020 [206]. - Selling and promotional expenses rose by $6.6 million, or 12.2%, to $60.4 million for the nine months ended September 30, 2021, compared to $53.8 million for the same period in 2020 [206]. - General and administrative expenses increased by $10.3 million, or 15.7%, to $75.6 million for the nine months ended September 30, 2021, compared to $65.3 million for the same period in 2020 [207]. Acquisition and Investments - The acquisition of Rasmussen University was completed for an adjusted aggregate purchase price of $325.5 million in cash, with approximately $1.5 million and $5.0 million incurred in acquisition-related expenses for the three and nine months ended September 30, 2021, respectively [142]. - The company is pursuing regulatory approvals and other post-closing notices related to the acquisition of Rasmussen University to participate in Title IV programs [142]. - The company announced the acquisition of Graduate School USA for approximately $1.0 million, expected to close in the first quarter of 2022 [233]. - The acquisition of Rasmussen University involved a senior secured term loan facility of $175.0 million and a revolving loan facility of $20.0 million, with a portion of the acquisition funded by the term loan [230]. - The company anticipates spending between $6.0 million and $8.0 million in 2021 on its multi-year technology transformation program [226]. - Capital expenditures may increase due to technology investments, new campus openings, and strategic growth opportunities, with approximately $1.6 million and $5.6 million incurred in acquisition-related expenses for the three and nine months ended September 30, 2021, respectively [228]. Cash Flow and Financing - Cash and cash equivalents decreased by $86.2 million, or 37.9%, to $141.5 million at September 30, 2021, compared to $227.7 million at December 31, 2020 [224]. - Net cash provided by operating activities decreased to $0.6 million for the nine months ended September 30, 2021, compared to $44.7 million in the prior year, primarily due to the timing of the Rasmussen Acquisition [237]. - Net cash used in investing activities increased significantly to $331.3 million for the nine months ended September 30, 2021, primarily due to the Rasmussen Acquisition and increased capital expenditures [238]. - Net cash provided by financing activities was $244.5 million for the nine months ended September 30, 2021, compared to a net cash outflow of $15.7 million in the prior year, driven by the public offering and long-term debt proceeds [238]. - The company raised approximately $86.2 million from a public offering of 3,680,000 shares at $25.00 per share, with an additional $214 million available under a shelf registration statement for future offerings [229]. Regulatory and Compliance - The company relies on the effectiveness of its technology infrastructure to support its student body and maintain strong relationships with military students [124]. - The Department of Education announced a time-limited waiver for the Public Service Loan Forgiveness program, allowing borrowers to count all prior payments toward forgiveness until October 31, 2022 [155]. - The Department of Education plans to implement new rules regarding borrower defenses to repayment and public service loan forgiveness programs, with proposed rules expected before November 1, 2022 [148]. - The American Rescue Plan Act modifies the 90/10 Rule, requiring for-profit institutions to derive at least 10% of revenue from non-federal education assistance funds, effective for fiscal years beginning on or after January 1, 2023 [163]. - The company has a share repurchase authorization of up to $8.4 million remaining as of September 30, 2021, with no shares repurchased during the nine months ended September 30, 2021 [236]. - The company entered into an interest rate cap agreement to hedge $87.5 million of principal under its term loan, providing protection against increases in LIBOR above 2% [242]. Challenges and Market Conditions - The company experienced challenges related to the Army's transition to the ArmyIgnitED system, which adversely impacted registrations and revenue for the quarters ended June 30, 2021, and September 30, 2021 [133]. - The COVID-19 pandemic did not materially impact the company's results during the nine-month period ended September 30, 2021, but near-term demand for programs is moderating as the pandemic abates [130].

American Public Education, Inc. (NASDAQ:APEI) Q2 2021 Earnings Conference Call August 9, 2021 5:00 PM ET Company Participants Rick Sunderland - Chief Financial Officer Angela Selden - Chief Executive Officer Steve Somers - Senior Vice President, Chief Strategy and Corporate Development Officer Conference Call Participants Jasper Bibb - Truist Securities Stephen Sheldon - William Blair Greg Pendy - Sidoti Raj Sharma - B. Riley Operator Good day and thank you for standing by. Welcome to the American Public Ed ...

Financial Data and Key Metrics Changes - The company reported a 19% increase in consolidated revenue, driven by strong enrollment growth at APUS and Hondros College of Nursing [11][12] - Adjusted EBITDA increased by 87% to $15.9 million from $8.5 million, with an adjusted EBITDA margin improvement of 700 basis points to 18% from 11% [11][17] - Consolidated net income for the quarter rose to $8.1 million or $0.49 per diluted share, compared to net income of $2.4 million or $0.16 per diluted share in the prior year [16] Business Line Data and Key Metrics Changes - At APUS, revenue increased by 15%, while at Hondros, revenue surged by 48% compared to the prior year quarter [11] - Net course registrations at APUS increased by 10% year-over-year, primarily driven by active-duty military students and graduate student enrollments [8] - New and total student enrollment at Hondros increased by 45% year-over-year, attributed to operational initiatives and increased demand for nursing education [9] Market Data and Key Metrics Changes - The company noted that the Army's tuition assistance program disruption negatively impacted registrations, particularly affecting the Army segment, which represented about 17% of total revenue in 2020 [27][51] - Despite the disruption, total enrollment levels at APUS were higher than pre-COVID levels in 2019, with a 7% two-year compound annual growth rate [24] Company Strategy and Development Direction - The company aims to drive sustainable growth in core businesses, acquire and integrate Rasmussen University, and bolster digital transformation to enhance student experience [30] - The acquisition of Rasmussen University is expected to diversify revenue sources and capitalize on the growth in nursing and healthcare education [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the disruption in Army TA registrations is temporary and expects a recovery once the new registration portal is fully operational [24][26] - The company anticipates a slowdown in growth rates as the pandemic abates, with second quarter total net course registrations at APUS expected to decrease by 4% to 8% year-over-year [26] Other Important Information - The company completed a public offering of common stock, resulting in $86.2 million in net proceeds, and secured a $175 million term loan B to fund the acquisition of Rasmussen University [18] - Cash at March 31, 2021, was $320.8 million, up from $227.7 million at December 31, 2020 [18] Q&A Session Summary Question: Discussion on Army disruption issue - Management acknowledged they were informed of the Army's transition a few weeks before the February 11 start date, which coincided with the year-end earnings announcement [33] Question: Impact of past disruptions on Navy registrations - Management noted that during the Navy's funding suspension, they lost 100% of Navy registrations, while Army soldiers can still register under an exception to policy [37] Question: Community college funding impact from Biden's plan - Management sees community colleges as a pathway for students to complete their degrees at APUS, with positive momentum in Navy registrations despite the Navy community college announcement [39][40] Question: Technology disruption and enrollment surge - Management does not expect a surge in enrollments once the Army portal is operational, as students are unlikely to increase course loads immediately [42] Question: Competitive environment at Hondros - Management reported favorable momentum at Hondros due to limitations at community colleges and state institutions, allowing them to attract students unable to access nursing programs [45] Question: Military environment and market share impact - Management confirmed they are the number one provider of education to active-duty military, but specific rankings for Army soldiers are unclear due to the ongoing disruption [51] Question: Portal issues and cash flow impact - Management indicated that the portal's issues are related to data conversion, affecting cash flow due to delayed processing of tuition assistance [56][62]