American Public Education, Inc. · NASDAQ:APEI
American Public Education — Q3 2020 Earnings Presentation
21 slides from American Public Education's earnings presentation, Nov 9, 2020
Slide 1: Third Quarter 2020 Results
American Public Education, Inc. Third Quarter 2020 Results PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation regarding American Public Education, Inc. (“APEI”), or its subsidiaries, that are not historical facts are forward-looking statements based on current expectations, assumptions, estimates and projections about APEI and the industry. Forward-
Slide 3: Third Quarter 2020 and Recent Highlights
THIRD QUARTER 2020 AND RECENT HIGHLIGHTS Strength of APEI Platform Reflected by Fourth Consecutive Quarter of Enrollment Growth at APUS & HCN* APUS Net Course Registrations. Record Enrollment at Hondros. • New student registrations at APUS • New student enrollment increased 88% increased 25% yr/yr.
Slide 4: APUS Registration Growth
APUS REGISTRATION GROWTH Four Straight Quarters of Year-Over-Year New Start Growth Driven by Military and Veteran Students APUS Net Course Registrations by New Students 3Q20 Enrollment Highlights 16,000 25% ▪ Registration growth driven by Military/Veteran students 12,000 30% 13%* ▪ New registrations
Slide 5: Hondros Delivered Record Enrollment
HONDROS DELIVERED RECORD ENROLLMENT Strength in PN and ADN Programs Driving Consistent Growth Hondros New Student Enrollment 3Q20 Enrollment Highlights 800 ▪ Fourth consecutive quarters of start growth 34% 88% ▪ New Starts +88% to 649 600 ▪ Total Enrollment +39% to 1,954 57% 31% ▪ Highest PN starts
Slide 6: APEI Third Quarter 2020 Financial Summary
APEI THIRD QUARTER 2020 FINANCIAL SUMMARY 16.6% $4.2M 40.1% $25.3M Consolidated Net Income Cash Flow from Cash and Revenue Increase Operations Equivalents $79.1M $2.6M $44.7M $228.0M • Consolidated revenue increased by 16.6% to $79.1 • Cash flow from operations increased 40.1% to $44.7 million, comp
Slide 7: Third Quarter & YTD 2020 Results
THIRD QUARTER & YTD 2020 RESULTS APEI Delivered Yr/Yr Revenue and Adjusted EBITDA growth APEI Consolidated Revenue APEI Adjusted EBITDA 6% $250 11% ▪ APUS & HCN enrollment $35 growth drove 11% increase $30 $200 in consolidated revenue for the first three quarters of $25 $150 2020. $20 $33.0 $34.9 $2
Slide 8: Rasmussen Overview
RASMUSSEN OVERVIEW Leader in Nursing with a Strong Regulatory Track Record and Attractive Financial Profile PROFILE ENROLLMENT PROFILE ▪ 120 Year History – Founded in 1900 as a business skills school ▪ 18,200 student enrollment for women ▪ 7 Schools: Nursing, Health Sciences, Business, Education, ▪
Slide 9: Critical Need: Nursing RN's
#1 EDUCATOR OF PRE-LICENSURE NURSES (ADN/PN) IN A GROWING MARKET Rasmussen‘s ADN (RN) is its largest degree program and has shown strong historical growth Critical Need: Nursing RN’s Addressing the Need RN is a Top Growing Job Through 2029 10,000+ 2100 1600 2100 2100 1700 8200 6900 6200 5300 4300 20
Slide 10: Combined ~$165 Million in Nursing Revenue Creates Powerhouse
COMBINED ~$165 MILLION IN NURSING REVENUE CREATES POWERHOUSE Enhances competitive market position across several markets with large projected nursing shortages Rasmussen will add 24 Campuses Across Seven States and Online, Including Blended Learning and Competency-Based Education (CBE) + = Powerhous
Slide 11: Significant Growth Opportunities in Non-Nursing
SIGNIFICANT GROWTH OPPORTUNITIES IN NON-NURSING CBE and Differentiated Pricing Address Changing Market Demands, Supports HEROI™ Growth Opportunities: Rasmussen University’s ✓ Grow clinical-based health-sciences programs by leveraging Total Enrollment by Program: 18,000+ Learners (as of 4Q2020) Rasmu
Slide 12: A Strong Financial Record for Growth & Profitability
A STRONG FINANCIAL RECORD FOR GROWTH & PROFITABILITY Rasmussen financials driven largely by market demand for nursing and focus on operating efficiency Total Enrollment Total Revenues Net Income/Adjusted EBITDA In millions In millions $300 $40 20,000 $256 $40 18,197 18% 17,196 $250 $242 16,603 $228
Slide 13: Rasmussen University Accelerates APEI's Value Creation Strategy
RASMUSSEN UNIVERSITY ACCELERATES APEI’S VALUE CREATION STRATEGY Acquisition of Nursing Platform Amplifies Our Mission in Helping Learners Maximize HEROI TM APEI Resulting Mix will be: Positions APEI Profile to Rasmussen + Hondros = Growth, Scale and HEROITM $165M Powerhouse in One-Third Military/Vet
Slide 14: Enterprise Initiatives
ENTERPRISE INITIATIVES Synergies and New Capabilities Poised to Amplify APEI Mission of HEROITM • Focus on integration of Rasmussen • Implement shared services at Hondros and leverage new shared services through Rasmussen • Unlock $5M-$10M in potential synergies in each of the first three years • Fa
Slide 15: APEI Outlook
APEI OUTLOOK Fourth Quarter 2020 Approximate Y/Y Change APUS Net course registrations1 by new students +11% to +15% These statements are APUS Net course registrations1 +6% to +10% based on current expectations. HCN New student enrollment2 +34% These statements are forward-looking and HCN Student enr
Slide 16: Thank You
Thank You American Public Education, Inc. 16
Slide 17: Appendix
APPENDIX Three Months Ended September 30, 2020 2019 COSTS AND EXPENSES Instructional costs and services 39.3% 40.2% Selling and promotional 23.4% 23.4% General and administrative 28.5% 32.4% Loss on disposals of long-lived assets 0.5% 0.6% Impairment of goodwill — 2.2% Depreciation and amortization
Slide 18: Appendix: About the Transaction
APPENDIX: ABOUT THE TRANSACTION ✓ APEI acquires 100% ownership of Rasmussen University Transaction ✓ Purchase price is $329 million Structure - consisting of $300 million in cash plus $29 million in preferred shares ✓ APEI may substitute cash for preferred shares at the time of closing ✓ $175 millio
Slide 19: Appendix: Disclosures
APPENDIX: DISCLOSURES • Forward looking revenue statements are presented on an annual pro forma basis, assuming that the acquisition was effective as of January 1, 2021 • Nursing market data based on IPEDS and APEI Analysis American Public Education is presenting adjusted EBITDA in connection with i
Slide 20: Appendix: Disclosures (Continued)
APPENDIX: DISCLOSURES (CONTINUED) American Public Education is presenting adjusted EBITDA 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 table below (under the caption “GAAP
Slide 21: Appendix: Disclosures (Continued)
APPENDIX: DISCLOSURES (CONTINUED) American Public Education is presenting adjusted EBITDA 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 table below (under the caption “GAAP
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