CHARLES TOWN, W.Va.,
May 7, 2019 /PRNewswire/ -- American
Public Education, Inc. (Nasdaq: APEI) – parent company of online
learning provider American Public University System (APUS) and
campus-based Hondros College of Nursing
(HCN) – announced financial results for the three months ended
March 31, 2019.
Selected Financial Data:
- First quarter 2019 consolidated revenue decreased 2% to
$73.4 million, compared to
$75.0 million in the same period of
2018.
- GAAP net income for the first quarter of 2019 decreased
to $1.0 million, or $0.06 per
diluted share, compared to net income of $4.6 million, or $0.28 per diluted share, in the same period of
2018.
- Adjusted net income for the first quarter of 2019 was
$5.3 million, or $0.32 per diluted share. Adjusted net
income for the first quarter of 2019 excludes a non-cash expense of
$5.9 million associated with a
reduction in the carrying value of goodwill for the Company's HCN
Segment, as well as the applicable tax effect of the adjustment.
For additional information regarding adjusted net income (a
non-GAAP measure), please refer to "GAAP to Adjusted Net Income
Reconciliation" in the financial tables that follow.
- APEI Segment revenue was $65.7
million or approximately flat compared to the first quarter
of 2018. APEI Segment income from operations before interest
income and income taxes increased 47% to $7.5 million, compared to $5.1 million in the first quarter of 2018.
- American Public Education's Board of Directors has authorized a
program to repurchase up to $35
million of the Company's common stock.
Registrations and Enrollment:
- Net course registrations at APUS increased 1% year-over-year in
the first quarter of 2019. Net course registrations by new students
increased by approximately 8% year-over-year in the first quarter
of 2019.1
- As of March 31, 2019, APUS
student enrollment decreased 2% to 81,200 students, compared to the
prior year. 2
- For the three months ended March 31,
2019, total student enrollment at HCN declined by 15%
year-over-year and new student enrollment decreased by
approximately 32% year-over-year.3
Financial Results:
Total consolidated revenue for the first quarter of 2019
decreased by 2% to $73.4
million, compared to total revenue of $75.0 million in the first quarter of 2018.
Consolidated income from operations before interest income and
income taxes in the first quarter of 2019 decreased to $1.4 million, compared to consolidated income
from operations before interest income and income taxes of
$6.2 million in the first quarter of
2018.
Consolidated income from operations before interest income and
income taxes in the three months ended March 31, 2019 includes
approximately $1.3 million in pre-tax
professional fees associated with the evaluation of an acquisition
and the prior year period includes $1.7
million in pre-tax expenses associated with the voluntary
reduction in force program announced on March 12, 2018.
Income from operations before interest income and income taxes
in our APEI Segment increased 47% to $7.5
million, compared to $5.1
million in the first quarter of 2018. The loss from
operations before interest income and income taxes in our HCN
Segment was $6.1 million during the
three months ended March 31, 2019, compared to income of
$1.0 million in the same period of
2018, primarily as a result of the goodwill impairment and a
decrease in revenue due to lower enrollment during the three months
ended March 31, 2019.
GAAP net income for the first quarter of 2019 decreased
to $1.0 million, or $0.06 per
diluted share, compared to net income of $4.6 million, or $0.28 per diluted share, in the same period of
2018. The weighted average diluted shares outstanding for the first
quarters of 2019 and 2018 were approximately 16.7 million and 16.5
million, respectively.
Adjusted net income for the first quarter of 2019 was
$5.3 million, or $0.32 per diluted share. Adjusted net
income for the first quarter of 2019 excludes a non-cash expense of
$5.9 million associated with a
reduction in the carrying value of goodwill for the Company's HCN
Segment as well as the applicable tax effect of the adjustment. For
additional information regarding adjusted net income (a non-GAAP
measure), please refer to "GAAP to Adjusted Net Income
Reconciliation" in the financial tables that follow.
Total cash and cash equivalents as of March 31, 2019 were approximately $215.9 million, compared to $212.1 million as of December 31, 2018. Capital expenditures were
approximately $1.6 million for the
three months ended March 31, 2019,
compared to $1.7 million in the prior
year period. Depreciation and amortization was $4.1 million for the three months ended
March 31, 2019, compared to
$4.5 million in the prior year
period.
Registrations and Enrollment:
American Public
University System1
|
|
|
|
For the three months
ended March 31,
|
2019
|
2018
|
%
Change
|
Net Course
Registrations by New Students
|
10,120
|
9,370
|
8%
|
Net Course
Registrations
|
84,300
|
83,300
|
1%
|
|
|
|
|
As of March
31,
|
|
|
|
APUS Student
Enrollment2
|
81,200
|
82,700
|
-2%
|
|
|
|
|
Hondros College of
Nursing3
|
|
|
|
For the three months
ended March 31,
|
2019
|
2018
|
%
Change
|
New Student
Enrollment
|
340
|
500
|
-32%
|
Total Student
Enrollment
|
1,700
|
2,000
|
-15%
|
|
|
|
|
|
|
|
|
1APUS
Net Course Registrations represent the approximate aggregate
number of courses for which students remain enrolled after the date
by which they may drop a course without financial
penalty.
|
2APUS
Student Enrollment represents the number of unique
active students, including those who take an approved leave of
absence for up to two years, who have reached the eighth day of
their first course or who have completed at least one course within
the last 12 months for which a grade was received.
|
3HCN Student Enrollment
represents the total number of students enrolled in a course after
the date by which students may drop a course without financial
penalty.
|
Share Repurchase Program:
American Public Education's Board of Directors has authorized a
program to repurchase up to $35
million of shares of the Company's common stock.
The share repurchase is subject to market conditions, applicable
legal requirements and other factors. The repurchases may be made
in open market transactions or privately negotiated transactions.
The authorization does not obligate the Company to acquire any
shares, and purchases may be commenced or suspended at any time
based on market conditions and other factors that the Company deems
appropriate.
Second Quarter 2019 Outlook:
The following statements are based on American Public
Education's current expectations. These statements are
forward-looking and actual results may differ materially. The
Company undertakes no obligation to update publicly any
forward-looking statements for any reason unless required by
law.
American Public Education anticipates second quarter 2019
consolidated revenues to decline between 6% and 2% year-over-year.
The Company expects consolidated net income of between
$0.25 and $0.30 per diluted share in the second quarter of
2019.
American Public Education also expects the following results
from its subsidiaries in the second quarter of 2019:
- At APUS, the change in total net course registrations is
expected to be between a 3% decrease and a 2% increase year-over-year and the change
net course registrations by new students is expected to be between
a 4% decrease and a 1% increase year-over-year. 1
- At HCN, total student enrollment decreased approximately 24%
year-over-year and new student enrollment decreased by
approximately 35% year-over-year for the three months ended
June 30,
2019.3
Non-GAAP Financial Measure ("Adjusted Net Income"):
This press release contains the non-GAAP financial measure of
adjusted net income for the three months ended March 31, 2019 that excludes a pretax, non-cash
expense of $5.9 million associated
with a reduction in the carrying value of goodwill for the
Company's HCN Segment as well as the applicable tax effect of the
adjustment. American Public Education believes that the use of
adjusted net income is useful because it allows investors to better
compare results to prior year periods.
This non-GAAP measure should not be considered in isolation or
as an alternative to measures determined in accordance with
generally accepted accounting principles in the United States (GAAP). The principal
limitation of adjusted net income is that it excludes expenses that
are required by GAAP to be recorded. In addition, non-GAAP measures
are subject to inherent limitations as they reflect the exercise of
judgment by management about which expenses are excluded.
American Public Education is presenting adjusted net income in
connection with its GAAP results and urges investors to review the
reconciliation of adjusted net income to the comparable GAAP
financial measures that is included in the tables following this
press release (under the caption "GAAP to Adjusted Net Income
Reconciliation") and not to rely on any single financial measure to
evaluate its business.
Webcast:
A live webcast of the Company's first quarter 2019 earnings
conference call will be broadcast today at 5:00 p.m. Eastern time. This call will be open to
listeners who log in through the Company's investor relations
website, www.apei.com.
A replay of the live webcast will also be available starting
approximately one hour after the conclusion of the live conference
call. The replay will be archived and available to listeners for
one year.
About American Public Education
American Public
Education, Inc. (NASDAQ: APEI) is a leading provider of higher
learning dedicated to preparing students all over the world for
excellence in service, leadership and achievement. The Company
offers respected, innovative and affordable academic programs and
services to students, universities and partner organizations
through wholly owned subsidiaries: American Public University
System and National Education Seminars Inc., which we refer to
in this press release as Hondros
College of Nursing. Together, these institutions serve
more than 80,000 adult learners worldwide and offer more than 200
degree and certificate programs in fields ranging from homeland
security, military studies, intelligence, and criminal justice to
technology, business administration, public health, nursing and
liberal arts. For additional information, please visit
www.apei.com.
Forward Looking Statements
Statements made in this
press release regarding American Public Education, Inc., or
its subsidiaries, that are not historical facts are
forward-looking statements based on current expectations,
assumptions, estimates and projections about American Public
Education, Inc. and the industry. These forward-looking
statements are subject to risks and uncertainties that could cause
actual future events or results to differ materially from such
statements. Forward-looking statements can be identified by words
such as "anticipate," "believe," "seek," "could," "estimate,"
"expect," "intend," "may," "should," "will" and "would." These
forward-looking statements include, without limitation, statements
regarding expected growth, expected registration and enrollments,
expected revenues, expected earnings, and plans with respect to
recent, current and future initiatives, investments and
partnerships. Actual results could differ materially from those
expressed or implied by these forward-looking statements as a
result of various factors, including the various risks described in
the "Risk Factors" section and elsewhere in the Company's Annual
Report on Form 10-K for the year ended December 31, 2018, Quarterly Report on Form 10-Q
for the period ended March 31, 2019,
and other filings with the SEC. The Company undertakes no
obligation to update publicly any forward-looking statements for
any reason, unless required by law, even if new information becomes
available or other events occur in the future.
American Public
Education, Inc.
|
Consolidated
Statement of Income
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
|
|
2018
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
73,441
|
|
|
$
|
74,967
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
27,915
|
|
|
|
29,686
|
|
Selling
and promotional
|
|
15,047
|
|
|
|
15,581
|
|
General
and administrative
|
|
19,065
|
|
|
|
18,888
|
|
Loss on
disposals of long-lived assets
|
|
126
|
|
|
|
128
|
|
Impairment of goodwill
|
|
5,855
|
|
|
|
—
|
|
Depreciation and amortization
|
|
4,051
|
|
|
|
4,522
|
|
Total
costs and expenses
|
|
72,059
|
|
|
|
68,805
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
1,382
|
|
|
|
6,162
|
|
Interest income,
net
|
|
1,053
|
|
|
|
493
|
|
Income before income
taxes
|
|
2,435
|
|
|
|
6,655
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
(63)
|
|
|
|
1,865
|
|
Equity investment
loss
|
|
(1,487)
|
|
|
|
(201)
|
|
Net
income
|
$
|
1,011
|
|
|
$
|
4,589
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
|
$
|
0.28
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
16,533
|
|
|
|
16,360
|
|
Diluted
|
|
16,662
|
|
|
|
16,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
March
31,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
65,721
|
|
|
$
|
65,668
|
|
Hondros
College of Nursing
|
$
|
7,747
|
|
|
$
|
9,299
|
|
Intersegment
Elimination1
|
$
|
(27)
|
|
|
$
|
—
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest income
(loss) and income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
7,522
|
|
|
$
|
5,130
|
|
Hondros College of Nursing
|
$
|
(6,146)
|
|
|
$
|
1,032
|
|
Intersegment
Elimination1
|
$
|
6
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
1Effective
January 1, 2019, the APEI Segment began charging the HCN Segment
for the value of courses taken by HCN Segment employees at American
Public University System. The intersegment revenue elimination is
the elimination of this intersegment revenue in
consolidation.
|
GAAP to Adjusted
Net Income Reconciliation:
|
The following table
sets forth the reconciliation of the Company's reported GAAP net
income to the calculation of adjusted net income for the three
months ended March 31, 2019 and 2018:
|
|
(In thousands, except
per share data)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
|
$
|
|
Per
Share
|
|
$
|
|
Per
Share
|
|
|
|
|
Net
income:
|
$
|
1,011
|
|
$
|
0.06
|
|
$
|
4,589
|
|
$
|
0.28
|
Add
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
|
5,855
|
|
|
0.35
|
|
|
—
|
|
|
—
|
Tax effect of
the non-GAAP adjustment
|
|
(1,615)
|
|
|
(0.10)
|
|
|
—
|
|
|
—
|
Adjusted net
income:
|
$
|
5,251
|
|
$
|
0.32
|
|
$
|
4,589
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of diluted
|
common
shares outstanding:
|
16,662
|
|
16,534
|
|
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SOURCE American Public Education, Inc.