*DJ American Public Education 3Q Loss/Shr 10c >APEI

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*DJ American Public Education 3Q Loss $1.64M >APEI

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*DJ American Public Education 3Q Rev $67.9M >APEI

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Press Release: American Public Education Reports Third Quarter 2019 Results

American Public Education Reports Third Quarter 2019 Results

PR Newswire

CHARLES TOWN, W.Va., Nov. 12, 2019

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 System(1)
----------------------------------------------
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 Enrollment(2) 80,700 82,200 -2%

Hondros College of Nursing(3)
----------------------------------------------
For the three months ended September 30, 2019 2018 % Change
--------- -------- ---------
New Student Enrollment 345 485 -29%
Total Student Enrollment 1,410 1,980 -29%

(1) APUS 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.
------------------------------------------------------------------------------
(2) APUS 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.
------------------------------------------------------------------------------
(3) HCN 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.

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