American Public Education(APEI) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $149.7 million, down 3% from the prior year period due to a $9.6 million or 14% decline in revenue at Rasmussen, partially offset by increases in revenue in the other three education units [19] - Adjusted EBITDA was $7 million for Q1 2023, compared to $17.4 million in the prior year period, representing an adjusted EBITDA margin of 5% compared to 11% in the prior year [20] - Net loss per diluted share for Q1 2023 was $0.38, compared to income per diluted share of $0.28 in the prior year period [21] Business Line Data and Key Metrics Changes - APUS revenue was approximately $74 million for Q1 2023, up $0.9 million compared to the prior year due to higher net course registrations from military students [19] - Hondros' revenue for Q1 2023 was approximately $13 million, a 14% increase compared to the prior year period, driven by higher total enrollment [19] - Graduate School USA generated over $5 million in revenue, an increase of more than 60% compared to the prior year period [13] Market Data and Key Metrics Changes - Total active duty registrations at APUS grew by 7% during Q1 2023 compared to the prior year period, with all branches of the Armed Services seeing year-over-year increases [10] - Hondros set an all-time high total enrollment record with 2,700 students in Q1 2023, reflecting a 10% increase compared to the prior year period [11] - Rasmussen's total nursing student enrollment decreased 22% year-over-year to approximately 6,400 students in Q2 2023 [23] Company Strategy and Development Direction - The company aims to rebuild at Rasmussen to replenish leadership and drive enrollment momentum for long-term sustainable growth and profitability [14] - APEI is focused on leadership in military and health care education and career learning while setting a path for long-term growth and profitability [9] - The new leadership team at Rasmussen has established priorities and is executing on key initiatives to mitigate challenges and position the university for future growth [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing headwinds at Rasmussen, including the absence of permanent senior leadership over the last 12 months, but expressed confidence in the new leadership team's ability to unlock value [8] - The company expects strong revenue, substantial cash generation, and improving EBITDA margins throughout 2023 for APUS [10] - Management noted that despite inflationary pressures, tuition increases have been implemented to support revenue and margin growth in the second half of 2023 [13] Other Important Information - APEI completed the remaining authorized $8 million of share repurchases, repurchasing approximately 1.3 million shares [22] - The company has a remaining principal on the term loan of approximately $99 million and unrestricted cash of approximately $109 million, with net debt remaining at 0 [22] Q&A Session Summary Question: Has the management lineup at Rasmussen been fully revitalized after the departures? - Yes, the leadership team at Rasmussen is now fully staffed with seasoned executives [26] Question: What is the outlook for Rasmussen given the ongoing challenges? - Management noted that nursing enrollment momentum is being affected by the completion of students who began their education online during the pandemic, but they expect stabilization as these cohorts graduate [29] Question: How is the new marketing engine progressing? - Significant efficiencies in marketing spend have been achieved, allowing for reinvestment into the marketing engine [33]