CHARLES TOWN, W.Va.,
May 11, 2020 /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,
2020.
First Quarter Highlights:
- Consolidated revenue increased 1.6% year-over-year to
$74.6 million.
- Net income was $2.4 million, or
$0.16 per diluted share, compared to
net income of $1.0 million, or
$0.06 per diluted share, in the first
quarter of 2019.
- Net course registrations at APUS increased by approximately 1%
year-over-year.1
- APUS student enrollment increased 2% to 82,800 students,
compared to the prior year.2,3
Additional Highlights:
- For second quarter 2020, at APUS, net course registrations by
new students are expected to increase between 8% and 12%
year-over-year.
- For the three months ended June 30,
2020 (Spring Term), new student enrollment at HCN increased
56% year-over-year - a spring-term record for new student
enrollment - and total student enrollment increased 14%
year-over-year.4
- American Public Education anticipates second quarter 2020
consolidated revenue to increase between 8% and 12%, compared to
the prior year period. The Company expects diluted earnings per
share to be between $0.20 and
$0.25 in the second quarter of
2020.
- In response to COVID-19 pandemic, APEI has successfully
implemented its business continuity plan, which includes moving
nearly all employees to remote work and supporting learners so that
they may continue with their studies at APUS and HCN without
significant interruption.
"We are grateful that our operations have not suffered negative
impacts from pandemic-related issues thus far, ensuring that our
students' higher education journey can continue on schedule. I am
incredibly inspired by our faculty and staff who have managed to
move all operations – Hondros, APUS and
APEI - to remote working. Certainly our primary concern has
been and continues to be the health and safety of all employees and
students." said Angela Selden, Chief
Executive Officer of APEI.
"In these challenging times, we could not be more pleased with
momentum across all of our business units. Our institutions of
higher learning are well positioned financially and operationally
to serve current and prospective students, as well as visiting
students whose education may have been disrupted or those
considering alternative options for the fall," Selden added. "Our
unique capabilities, coupled with our affordability and culture of
service, will enable us to fulfill our mission with distinction and
carry us well into the future."
Financial Results:
Total consolidated revenue for the first quarter of 2020
increased by 1.6% to $74.6
million, compared to total revenue of $73.4 million in the first quarter of 2019. The
increase was driven by a $1.4
million, or 2.1%, increase in APEI Segment revenue and a
$0.2 million, or 2.7%, decrease in
HCN Segment revenue.
Consolidated income from operations before interest income and
income taxes in the first quarter of 2020 was $2.7 million, compared to consolidated income
from operations before interest income and income taxes of
$1.4 million in the first quarter of
2019. APEI Segment income from operations before interest income
and income taxes decreased by $3.9
million, compared to the prior year period. APEI Segment
income includes a $2.3 million
increase in pretax advertising costs as compared to the prior year
period and $0.9 million in pretax
costs related to APEI's information technology transformation
project. HCN Segment loss from operations before interest income
and income taxes decreased to $0.9
million, compared to a loss of $6.1
million in the prior year period.
Net income for the three months ended March 31, 2020 was $2.4 million, or
$0.16 per diluted share, compared to
net income of $1.0 million, or
$0.06 per diluted share, in the same
period of 2019. The weighted average diluted shares outstanding for
the first quarter of 2020 and 2019 were approximately 15.1 million
and 16.7 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 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.
Total cash and cash equivalents as of March 31, 2020 were approximately $196.8 million, compared to $202.7 million as of December 31, 2019. Capital expenditures were
approximately $1.9 million for the
three months ended March 31, 2020,
compared to $1.6 million in the prior
year period. Depreciation and amortization expense was $3.3 million for the three months ended
March 31, 2020, compared to
$4.1 million in the prior year
period.
Registrations and
Enrollment:
|
|
|
|
|
|
|
|
American Public
University System1
|
|
|
|
For the three months
ended March 31,
|
2020
|
2019
|
%
Change
|
Net Course
Registrations by New Students
|
10,100
|
10,100
|
0%
|
Net Course
Registrations
|
84,800
|
84,300
|
1%
|
|
|
|
|
As of March
31,
|
|
|
|
APUS Student
Enrollment2
|
82,8003
|
81,200
|
2%
|
|
|
|
|
Hondros College of
Nursing4
|
|
|
|
For the three months
ended March 31,
|
2020
|
2019
|
%
Change
|
New Student
Enrollment
|
444
|
340
|
31%
|
Total Student
Enrollment
|
1,570
|
1,730
|
-9%
|
|
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 are currently on an approved leave of
absence, who are currently in class or have completed a course
within the past 12 months. Excludes students in doctoral
programs.
|
3APUS
Student Enrollment as of March 31, 2020, includes 1,900
students whose last 8-week course started January 7, 2019 and ended
in early March 2019.
|
4HCN Student Enrollment
represents the approximate number of students enrolled in a course
after the date by which students may drop a course without
financial penalty.
|
Second Quarter 2020 Outlook:
The following statements are based on APEI'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 2020
consolidated revenue to increase between 8% and 12%, compared to
the prior year period. The Company expects diluted earnings per
share to be between $0.20 and
$0.25 in the second quarter of
2020.
American Public Education expects the following results from its
subsidiaries in the second quarter of 2020:
- At APUS, net course registrations by new students are expected
to increase between 8% and 12% year-over-year and net course
registrations are expected to increase between 6% and 10%
year-over-year.
- At HCN, new student enrollment increased approximately 56% and
total student enrollment increased approximately 14% year-over-year
for the three months ended June 30,
2020.
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. 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.
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 first quarter 2020 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, and future impacts of and the Company's response to
the COVID-19 pandemic.
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; impacts of the
COVID-19 pandemic; the Company's ability to effectively market its
institutions' 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,
2019, Quarterly Report on Form 10-Q for the period ended
March 31, 2020, 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
|
|
|
March
31,
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
74,616
|
|
|
$
|
73,441
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
29,230
|
|
|
|
27,915
|
|
Selling
and promotional
|
|
18,186
|
|
|
|
15,047
|
|
General
and administrative
|
|
21,003
|
|
|
|
19,065
|
|
Loss on
disposals of long-lived assets
|
|
166
|
|
|
|
126
|
|
Impairment of Goodwill
|
|
—
|
|
|
|
5,855
|
|
Depreciation and amortization
|
|
3,338
|
|
|
|
4,051
|
|
Total
costs and expenses
|
|
71,923
|
|
|
|
72,059
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
2,693
|
|
|
|
1,382
|
|
Interest income,
net
|
|
702
|
|
|
|
1,053
|
|
Income before income
taxes
|
|
3,395
|
|
|
|
2,435
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
974
|
|
|
|
(63)
|
|
Equity investment
loss
|
|
(1)
|
|
|
|
(1,487)
|
|
Net
income
|
$
|
2,420
|
|
|
$
|
1,011
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.16
|
|
|
$
|
0.06
|
|
Diluted
|
$
|
0.16
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
15,024
|
|
|
|
16,533
|
|
Diluted
|
|
15,116
|
|
|
|
16,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
March
31,
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
67,094
|
|
|
$
|
65,721
|
|
Hondros
College of Nursing
|
$
|
7,539
|
|
|
$
|
7,747
|
|
Intersegment
Elimination1
|
$
|
(17)
|
|
|
$
|
(27)
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
3,577
|
|
|
$
|
7,522
|
|
Hondros
College of Nursing
|
$
|
(885)
|
|
|
$
|
(6,146)
|
|
Intersegment
Elimination1
|
$
|
1
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.The APEI Segment
charges the HCN Segment for the value of courses taken by HCN
Segment employees at APUS. The intersegment elimination represents
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, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
$
|
|
|
Per
Share
|
|
$
|
|
|
Per
Share
|
|
|
|
|
Net
income:
|
$
|
2,420
|
|
|
$
|
0.16
|
|
$
|
1,011
|
|
|
$
|
0.06
|
Add
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
|
—
|
|
|
|
—
|
|
|
5,855
|
|
|
|
0.35
|
Tax effect of
the non-GAAP adjustment
|
|
—
|
|
|
|
—
|
|
|
(1,615)
|
|
|
|
(0.10)
|
Adjusted net
income:
|
$
|
2,420
|
|
|
$
|
0.16
|
|
$
|
5,251
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of diluted
|
|
|
|
|
|
|
|
|
|
|
common
shares outstanding:
|
|
15,116
|
|
16,662
|
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SOURCE American Public Education, Inc.