American Public Education(APEI)2025-05-12 22:00Financial 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]