CHARLES TOWN, W.Va.,
Nov. 12, 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 quarter ended September 30,
2019.
Third Quarter Highlights:
- In August 2019, after an
extensive search, APEI's Board of Directors named Angela Selden as the Company's chief executive
officer effective September 23,
2019.
- Consolidated revenue decreased 7% year-over-year to
$67.9 million.
- Net loss was $1.6 million, or
$0.10 per diluted share, compared to
net income of $5.5 million, or
$0.33 per diluted share, in the third
quarter of 2018.
- Adjusted net income was $1.8
million, or $0.11 per diluted
share. Adjusted net income for the third quarter of 2019 excludes
$2.8 million in employee compensation
costs for post-employment benefits that will be payable to the APUS
President upon retirement, and a non-cash expense of $1.5 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 adjustments. 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.
- Net course registrations and net course registrations by new
students at APUS decreased by approximately 5%
year-over-year.1
- APUS student enrollment decreased 2% to 80,700 students,
compared to the prior year.2
- For the three months ended December 31,
2019 (Fall Term), total student enrollment at HCN decreased
approximately 24% year-over-year and new student enrollment
decreased 20% year-over-year. However, compared to the third
quarter of 2019, new and total student enrollment increased 53% and
13%, respectively.
"APEI is a leader in minimizing the need for learners to
incur student debt in pursuit of a quality college education," said
Angela Selden, chief executive
officer of APEI. "My first 50 days at APEI have underscored my
belief in APEI's ability to build on its established legacy of
providing high-quality, affordable, relevant and flexible higher
education while working to minimize student debt."
Selden added, "As I continue to immerse myself in the APEI
business, I am committed to assessing and further
leveraging its core strengths. My near-term priority is to
work with our institutions to drive enrollment growth and to
provide learners with an affordable, career-relevant education that
improves the lives of their families, the economy and society. We
want to help put the American dream within reach."
Financial Results:
Total consolidated revenue for the third quarter of 2019
decreased by 7% to $67.9
million, compared to total revenue of $73.0 million in the third quarter of 2018. This
decrease was driven by a $2.6
million, or 4.1%, decrease in APEI Segment revenue and a
$2.4 million, or 26.8%, decrease in
HCN Segment revenue.
Consolidated loss from operations before interest income and
income taxes in the third quarter of 2019 was $2.9 million, compared to consolidated income
from operations before interest income and income taxes of
$6.9 million in the third quarter of
2018. Operating results for the three month period ended
September 30, 2019 include the following pretax items:
$2.8 million in employee compensation
costs for post-employment benefits that will be payable to the APUS
President upon retirement; a $1.6
million increase in advertising costs as compared to the
prior year period; a $1.5 million
non-cash impairment of goodwill; and $0.8
million in information technology costs related to the
evaluation of replacements or upgrades to our information
technology and learning management systems.
Net loss for the three months ended September 30, 2019 was $1.6 million, or
$0.10 per diluted share, compared to
net income of $5.5 million, or
$0.33 per diluted share, in the same
period of 2018. The weighted average diluted shares outstanding for
the third quarter of 2019 and 2018 were approximately 16.1 million
and 16.7 million, respectively.
Adjusted net income for the three months ended September 30, 2019 was $1.8 million, or $0.11 per diluted share. 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.
For the nine months ended September 30,
2019, total consolidated revenue decreased by 4% to
$211.9 million, compared to total
revenue of $220.8 million in the
prior year period. This decrease was driven by a $6.0 million, or 21.6%, decrease in HCN Segment
revenue and a $2.8 million, or 1.5%,
decrease in APEI Segment revenue.
Consolidated income from operations before interest income and
income taxes for the nine months ended September 30, 2019 was $4.1 million, compared to $21.1 million in the prior year period. This
decrease was driven by a $12.8
million decrease in HCN Segment loss from operations before
interest income and income taxes. The HCN Segment loss for the
period includes an aggregate of $7.3
million in non-cash goodwill impairment expenses. APEI
Segment income from operations before interest income and income
taxes decreased $4.2 million, or
22.5%, compared to the prior year. The APEI Segment income
for the period includes $2.8 million
in employee compensation costs for post-employment benefits that
will be payable to the APUS President upon retirement, a
$2.6 million increase in advertising
costs as compared to the prior year period; $1.4 million in professional fees associated with
the evaluation of an acquisition primarily recognized during the
three months ended March 31, 2019;
and $1.1 million in information
technology costs related to the evaluation of replacements or
upgrades to our information technology and learning management
systems.
Net income for the nine months ended September 30, 2019 was $4.3 million, or $0.26 per diluted share, compared to net income
of $16.5 million, or $1.00 per diluted share, in the prior year
period. The weighted average diluted shares outstanding for the
nine months ended September 30, 2019
and 2018 were approximately 16.5 million and 16.6 million,
respectively.
Adjusted net income for the nine months ended September 30, 2019 was $12.0 million, or $0.72 per diluted share. 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 September 30, 2019
were approximately $210.1 million,
compared to $212.1 million as of
December 31, 2018. Capital
expenditures were approximately $4.2
million for the nine months ended September 30, 2019, compared to $5.3 million in the prior year period.
Depreciation and amortization was $11.8
million for the nine months ended September 30, 2019, compared to $13.2 million in the prior year period.
During the three and nine months ended September 30, 2019, the Company repurchased
638,620 and 966,081 shares of common stock, respectively. At
September 30, 2019, there remains
$7.7 million available under the
share repurchase authorization announced on May 2, 2019.
Registrations and Enrollment:
American Public
University System1
|
|
|
|
For the three months
ended September 30,
|
2019
|
2018
|
%
Change
|
Net Course
Registrations by New Students
|
10,800
|
11,400
|
-5%
|
Net Course
Registrations
|
76,700
|
80,800
|
-5%
|
|
|
|
|
For the nine months
ended September 30,
|
2019
|
2018
|
%
Change
|
Net Course
Registrations by New Students
|
30,300
|
30,300
|
0%
|
Net Course
Registrations
|
236,900
|
241,000
|
-2%
|
|
|
|
|
As of September
30,
|
|
|
|
APUS Student
Enrollment2
|
80,700
|
82,200
|
-2%
|
|
|
|
|
Hondros College of
Nursing3
|
|
|
|
For the three months
ended September 30,
|
2019
|
2018
|
%
Change
|
New Student
Enrollment
|
345
|
485
|
-29%
|
Total Student
Enrollment
|
1,410
|
1,980
|
-29%
|
|
|
|
|
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. Excludes
students in doctoral
programs.
|
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.
|
Fourth 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 fourth quarter 2019
consolidated revenues to decrease between 7% and 3% year-over-year.
The Company expects diluted earnings per share to be between
$0.35 and $0.40 in the fourth quarter of 2019.
American Public Education expects the following results from its
subsidiaries in the fourth quarter of 2019:
- At APUS, the change in total net course registrations is
expected to be between a 2% decrease and a 2% increase
year-over-year and net course registrations by new students are
expected be between a 1% decrease and 3% increase
year-over-year.
- At HCN, total and new student enrollment decreased
approximately 24% and 20%, respectively, year-over-year for the
three months ended December 31, 2019.
However, compared to the third quarter of 2019, total and new
student enrollment increased 13% and 53%, respectively.
Non-GAAP Financial Measure ("Adjusted Net Income"):
This press release contains the non-GAAP financial measure of
adjusted net income for the three and nine months ended
September 30, 2019. 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.
For the three months ended September 30,
2019, adjusted net income excludes $2.8 million in employee compensation costs for
post-employment benefits that will be payable to the APUS President
upon retirement, and a non-cash expense of $1.5 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 adjustments.
For the nine months ended September 30,
2019, adjusted net income excludes non-cash expense of
$7.3 million associated with a
reduction in the carrying value of goodwill in the HCN Segment and
$2.8 million in employee compensation
costs for post-employment benefits in the APEI Segment that will be
payable to the APUS President upon retirement, as well as the
applicable tax effect of the adjustments. In addition, the
prior year period excludes approximately $1.7 million in pre-tax expenses associated with
the voluntary reduction in force program announced on March 12, 2018 as well as the applicable tax
effect of the adjustment.
These non-GAAP measures 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.
The Company 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 third 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.
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, earnings and expenses, plans with respect to
recent, current and future initiatives (including information
technology replacements and upgrades and their expected benefits),
and investments and partnerships.
Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements. Such risks and
uncertainties include, among others, risks related to: the
Company's dependence on the effectiveness of its ability to attract
students who persist in its institutions' programs; the Company's
ability to effectively market its programs; adverse effects of
changes the Company makes to improve the student experience and
enhance the ability to identify and enroll students who are likely
to succeed; the Company's ability to maintain strong relationships
with the military and maintain enrollments from military students;
the Company's ability to comply with regulatory and accrediting
agency requirements and to maintain institutional accreditation;
the Company's reliance on Department of Defense tuition assistance,
Title IV programs, and other sources of financial aid; the
Company's dependence on its technology infrastructure; strong
competition in the postsecondary education market and from
non-traditional offerings; and 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
September 30, 2019, and other filings
with the SEC. You should not place undue reliance on any
forward-looking statements. 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
|
|
|
September
30,
|
|
|
2019
|
|
|
2018
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
67,888
|
|
|
$
|
72,992
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
27,268
|
|
|
|
28,186
|
|
Selling
and promotional
|
|
15,873
|
|
|
|
14,139
|
|
General
and administrative
|
|
22,021
|
|
|
|
19,298
|
|
Loss on
disposals of long-lived assets
|
|
394
|
|
|
|
196
|
|
Impairment of Goodwill
|
|
1,481
|
|
|
|
—
|
|
Depreciation and amortization
|
|
3,764
|
|
|
|
4,289
|
|
Total
costs and expenses
|
|
70,801
|
|
|
|
66,108
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
(2,913)
|
|
|
|
6,884
|
|
Interest income,
net
|
|
1,019
|
|
|
|
774
|
|
(Loss) income before
income taxes
|
|
(1,894)
|
|
|
|
7,658
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(239)
|
|
|
|
1,848
|
|
Equity investment
income (loss)
|
|
17
|
|
|
|
(311)
|
|
Net (loss)
income
|
$
|
(1,638)
|
|
|
$
|
5,499
|
|
|
|
|
|
|
|
Net (loss) income per
common share:
|
|
|
|
|
|
Basic
|
$
|
(0.10)
|
|
|
$
|
0.33
|
|
Diluted
|
$
|
(0.10)
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
15,967
|
|
|
|
16,424
|
|
Diluted
|
|
16,121
|
|
|
|
16,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
September
30,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
61,217
|
|
|
$
|
63,849
|
|
Hondros
College of Nursing
|
$
|
6,696
|
|
|
$
|
9,143
|
|
Intersegment
Elimination1
|
$
|
(25)
|
|
|
$
|
—
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
247
|
|
|
$
|
6,233
|
|
Hondros
College of Nursing
|
$
|
(3,158)
|
|
|
$
|
651
|
|
Intersegment
Elimination1
|
$
|
(2)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2019
|
|
|
2018
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
211,889
|
|
|
$
|
220,757
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
83,908
|
|
|
|
86,839
|
|
Selling
and promotional
|
|
45,007
|
|
|
|
43,004
|
|
General
and administrative
|
|
59,209
|
|
|
|
55,780
|
|
Loss on
disposals of long-lived assets
|
|
524
|
|
|
|
882
|
|
Impairment of goodwill
|
|
7,336
|
|
|
|
—
|
|
Depreciation and amortization
|
|
11,758
|
|
|
|
13,158
|
|
Total
costs and expenses
|
|
207,742
|
|
|
|
199,663
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
4,147
|
|
|
|
21,094
|
|
Interest income,
net
|
|
3,207
|
|
|
|
1,928
|
|
Income before income
taxes
|
|
7,354
|
|
|
|
23,022
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
1,596
|
|
|
|
5,993
|
|
Equity investment
loss
|
|
(1,464)
|
|
|
|
(483)
|
|
Net
income
|
$
|
4,294
|
|
|
$
|
16,546
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.26
|
|
|
$
|
1.01
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
16,335
|
|
|
|
16,397
|
|
Diluted
|
|
16,487
|
|
|
|
16,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
Segment
Information:
|
September
30,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
190,386
|
|
|
$
|
193,209
|
|
Hondros
College of Nursing
|
$
|
21,584
|
|
|
$
|
27,548
|
|
Intersegment
Elimination1
|
$
|
(81)
|
|
|
$
|
—
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
14,358
|
|
|
$
|
18,532
|
|
Hondros
College of Nursing
|
$
|
(10,214)
|
|
|
$
|
2,562
|
|
Intersegment
Elimination1
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
1
Effective 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 and nine months ended September 30, 2019 and
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
2019
|
|
2018
|
|
$
|
|
|
Per
Share
|
|
$
|
|
|
Per
Share
|
|
|
|
|
Net (loss)
income:
|
$
|
(1,638)
|
|
|
$
|
(0.10)
|
|
$
|
5,499
|
|
|
$
|
0.33
|
Add
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
|
1,481
|
|
|
|
0.09
|
|
|
—
|
|
|
|
—
|
Compensation expense adjustment
|
|
2,814
|
|
|
|
0.17
|
|
|
—
|
|
|
|
—
|
Tax effect
of the non-GAAP adjustment
|
|
(835)
|
|
|
|
(0.05)
|
|
|
—
|
|
|
|
—
|
Adjusted net
income:
|
$
|
1,822
|
|
|
$
|
0.11
|
|
$
|
5,499
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of diluted
|
|
|
|
|
|
|
|
|
|
common
shares outstanding:
|
16,121
|
|
16,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
$
|
|
|
Per
Share
|
|
$
|
|
|
Per
Share
|
|
|
|
|
Net
income:
|
$
|
4,294
|
|
|
$
|
0.26
|
|
$
|
16,546
|
|
|
$
|
1.00
|
Add
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
|
7,336
|
|
|
|
0.44
|
|
|
—
|
|
|
|
—
|
Voluntary
reduction in force
|
|
—
|
|
|
|
—
|
|
|
1,714
|
|
|
|
0.10
|
Compensation expense adjustment
|
|
2,814
|
|
|
|
0.17
|
|
|
—
|
|
|
|
—
|
Tax effect
of the non-GAAP adjustment
|
|
(2,450)
|
|
|
|
(0.15)
|
|
|
(447)
|
|
|
|
(0.03)
|
Adjusted net
income:
|
$
|
11,994
|
|
|
$
|
0.72
|
|
$
|
17,813
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of diluted
|
|
|
|
|
|
|
|
|
|
common
shares outstanding:
|
16,487
|
|
16,628
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/american-public-education-reports-third-quarter-2019-results-300956647.html
SOURCE American Public Education, Inc.