CHARLES TOWN, W.Va.,
March 10, 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 and twelve months ended December
31, 2019.
Fourth Quarter Highlights:
- Consolidated revenue decreased 3% year-over-year to
$74.4 million.
- Net income was $5.7 million, or
$0.37 per diluted share, compared to
net income of $9.1 million, or
$0.55 per diluted share, in the
fourth quarter of 2018.
- Net course registrations and net course registrations by new
students at APUS increased by approximately 1%
year-over-year.1
- APUS student enrollment decreased 1% to 81,000 students,
compared to the prior year.2
- For the three months ended March 31,
2020 (Winter Term), new student enrollment at HCN increased
approximately 31% year-over-year and total student enrollment
decreased 9% year-over-year.
"Our recent value-creation study revealed several promising
opportunities and further validated our belief that APEI's high ROI
on student educational investment can drive sustained enrollment
growth," said Angela Selden, chief
executive officer of APEI. "Our unique value proposition is
not widely known, making it one of higher education's best kept
secrets. But we intend to change that."
Selden added, "This year we will begin implementing a fresh new
marketing approach intended to maximize our potential to reach a
wider audience of learners who will discover that our affordability
is matched (or exceeded) only by the ability of APUS to provide a
flexible, relevant, high value education from the moment they
enroll and throughout their lives."
Financial Results:
Total consolidated revenue for the fourth quarter of 2019
decreased by 3% to $74.4
million, compared to total revenue of $76.9 million in the fourth quarter of 2018. This
decrease was driven by a $0.3
million, or 0.5%, decrease in APEI Segment revenue and a
$2.2 million, or 21.7%, decrease in
HCN Segment revenue.
Consolidated income from operations before interest income and
income taxes in the fourth quarter of 2019 was $8.6 million, compared to consolidated income
from operations before interest income and income taxes of
$11.4 million in the fourth quarter
of 2018. HCN Segment loss from operations before interest
income and income taxes decreased by $1.9
million, compared to the prior year period. APEI Segment
income from operations before interest income and income taxes
decreased by $0.9 million, compared
to the prior year period. APEI Segment income includes $1.0 million in pretax costs related to the
information technology transformation project.
Net income for the three months ended December 31, 2019 was $5.7 million, or
$0.37 per diluted share, compared to
net income of $9.1 million, or
$0.55 per diluted share, in the same
period of 2018. The weighted average diluted shares outstanding for
the fourth quarter of 2019 and 2018 were approximately 15.6 million
and 16.7 million, respectively.
For the twelve months ended December 31,
2019, total consolidated revenue decreased by 4% to
$286.3 million, compared to total
revenue of $297.7 million in the
prior year period. This decrease was driven by a $8.1 million, or 21.7%, decrease in HCN Segment
revenue and a $3.2 million, or 1.2%,
decrease in APEI Segment revenue.
Consolidated income from operations before interest income and
income taxes for the twelve months ended December 31, 2019 was $12.8 million, compared to $32.5 million in the prior year period. Net
income for the twelve months ended December
31, 2019 was $10.0 million, or
$0.62 per diluted share, compared to
net income of $25.6 million, or
$1.54 per diluted share, in the prior
year period. The weighted average diluted shares outstanding for
the twelve months ended December 31,
2019 and 2018 were approximately 16.3 million and 16.6
million, respectively.
Adjusted net income for the twelve months ended December 31, 2019 was $17.7 million, or $1.09 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 December 31, 2019 were approximately $202.7 million, compared to $212.1 million as of December 31, 2018. Capital expenditures were
approximately $7.3 million for the
twelve months ended December 31,
2019, compared to $9.4 million
in the prior year period. Depreciation and amortization expense was
$15.6 million for the twelve months
ended December 31, 2019, compared to
$17.5 million in the prior year
period.
During the three and twelve months ended December 31, 2019, the Company repurchased
450,223 and 1,416,304 shares of common stock, respectively. On
December 5, 2019, our Board approved
an additional authorization to repurchase up to $25.0 million of shares. At December 31, 2019, there remained $22.0 million available under the share
repurchase authorization.
Registrations and
Enrollment:
|
|
|
|
American Public
University System1
|
|
|
|
For the three months
ended December 31,
|
2019
|
2018
|
%
Change
|
Net Course
Registrations by New Students
|
9,900
|
9,800
|
1%
|
Net Course
Registrations
|
79,800
|
79,400
|
1%
|
|
|
|
|
For the twelve months
ended December 31,
|
2019
|
2018
|
%
Change
|
Net Course
Registrations by New Students
|
40,200
|
40,100
|
0%
|
Net Course
Registrations
|
316,700
|
320,300
|
-1%
|
|
|
|
|
As of December
31,
|
|
|
|
APUS Student
Enrollment2
|
81,000
|
81,400
|
-1%
|
|
|
|
|
Hondros College of
Nursing3
|
|
|
|
For the three months
ended December 31,
|
2019
|
2018
|
%
Change
|
New Student
Enrollment
|
530
|
660
|
-20%
|
Total Student
Enrollment
|
1,600
|
2,110
|
-24%
|
|
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.
|
First Quarter 2020 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 the change in first
quarter 2020 consolidated revenue to be between a 1% decline and a
3% increase compared to the prior year period. The Company expects
diluted earnings per share to be between $0.13 and $0.18 in
the first quarter of 2020.
American Public Education expects the following results from its
subsidiaries in the first quarter of 2020:
- At APUS, net course registrations by new students are expected
to be approximately flat and net course registrations are expected
to increase by approximately 1% compared to the prior year
period.
- At HCN, new student enrollment increased approximately 31% and
total student enrollment decreased approximately 9% year-over-year
for the three months ended March 31,
2020.
Non-GAAP Financial Measure ("Adjusted Net Income"):
This press release contains the non-GAAP financial measure of
adjusted net income for the twelve months ended December 31, 2019 and 2018. 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 twelve months ended December 31,
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 an aggregate non-cash expense of $7.3 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. 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 fourth 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 our new advertising and marketing
initiatives, expected growth, expected registration and
enrollments, expected revenues, earnings and expenses, plans with
respect to recent, current and future initiatives (including
advertising and marketing initiatives 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,
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
|
|
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
74,381
|
|
|
$
|
76,930
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
28,008
|
|
|
|
28,441
|
|
Selling
and promotional
|
|
15,021
|
|
|
|
14,038
|
|
General
and administrative
|
|
18,873
|
|
|
|
18,676
|
|
Loss on
disposals of long-lived assets
|
|
32
|
|
|
|
—
|
|
Impairment of Goodwill
|
|
—
|
|
|
|
—
|
|
Depreciation and amortization
|
|
3,838
|
|
|
|
4,343
|
|
Total
costs and expenses
|
|
65,772
|
|
|
|
65,498
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
8,609
|
|
|
|
11,432
|
|
Interest income,
net
|
|
701
|
|
|
|
987
|
|
Income before income
taxes
|
|
9,310
|
|
|
|
12,419
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
3,591
|
|
|
|
3,294
|
|
Equity investment
income (loss)
|
|
—
|
|
|
|
(32)
|
|
Net
income
|
$
|
5,719
|
|
|
$
|
9,093
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.37
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
15,379
|
|
|
|
16,424
|
|
Diluted
|
|
15,563
|
|
|
|
16,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
66,513
|
|
|
$
|
66,853
|
|
Hondros
College of Nursing
|
$
|
7,895
|
|
|
$
|
10,077
|
|
Intersegment
Elimination1
|
$
|
(27)
|
|
|
$
|
—
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
9,164
|
|
|
$
|
10,030
|
|
Hondros
College of Nursing
|
$
|
(554)
|
|
|
$
|
1,402
|
|
Intersegment
Elimination1
|
$
|
(1)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
286,270
|
|
|
$
|
297,687
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
111,916
|
|
|
|
115,280
|
|
Selling
and promotional
|
|
60,028
|
|
|
|
57,042
|
|
General
and administrative
|
|
78,082
|
|
|
|
74,456
|
|
Loss on
disposals of long-lived assets
|
|
556
|
|
|
|
882
|
|
Impairment of goodwill
|
|
7,336
|
|
|
|
—
|
|
Depreciation and amortization
|
|
15,596
|
|
|
|
17,501
|
|
Total
costs and expenses
|
|
273,514
|
|
|
|
265,161
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest
income and income taxes
|
|
12,756
|
|
|
|
32,526
|
|
Interest income,
net
|
|
3,908
|
|
|
|
2,915
|
|
Income before income
taxes
|
|
16,664
|
|
|
|
35,441
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
5,187
|
|
|
|
9,287
|
|
Equity investment
loss
|
|
(1,464)
|
|
|
|
(515)
|
|
Net
income
|
$
|
10,013
|
|
|
$
|
25,639
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.62
|
|
|
$
|
1.56
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
1.54
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
16,094
|
|
|
|
16,404
|
|
Diluted
|
|
16,255
|
|
|
|
16,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
Segment
Information:
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
256,899
|
|
|
$
|
260,062
|
|
Hondros
College of Nursing
|
$
|
29,479
|
|
|
$
|
37,625
|
|
Intersegment
Elimination1
|
$
|
(108)
|
|
|
$
|
—
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
23,522
|
|
|
$
|
28,561
|
|
Hondros
College of Nursing
|
$
|
(10,768)
|
|
|
$
|
3,965
|
|
Intersegment
Elimination1
|
$
|
2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
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 twelve
months ended December 31, 2019 and 2018:
|
|
(In thousands, except
per share data)
|
|
|
Twelve Months
Ended December 31,
|
|
2019
|
|
2018
|
|
$
|
|
|
Per
Share
|
|
$
|
|
|
Per
Share
|
|
|
|
|
Net
income:
|
$
|
10,013
|
|
|
$
|
0.62
|
|
$
|
25,639
|
|
|
$
|
1.54
|
Add
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
|
7,336
|
|
|
|
0.45
|
|
|
—
|
|
|
|
—
|
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:
|
$
|
17,713
|
|
|
$
|
1.09
|
|
$
|
26,906
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of diluted
|
|
|
|
|
|
|
|
|
|
common
shares outstanding:
|
16,255
|
|
16,634
|
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SOURCE American Public Education, Inc.