Q4 2020 American Public Education Inc Earnings Call
Education fourth quarter 2020 results conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. The ask a question during the session you will need the press star one on the telephone.
Please be advised that today's conference is being recorded.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today.
Chris.
Vice President of Investor Relations. Thank you. Please go ahead.
Thank you operator.
And welcome to American public Education's fourth quarter, and full year conference call materials that accompany today's conference call are available in the events and presentations section of our website.
Please note that statements made in this conference call and in the accompanying presentation materials regarding American public education. Its subsidiaries, whereas most of the universities that are not historical facts may be forward looking statements based on current expectations assumptions estimates and projections about American public.
The issue in the industry.
These forward looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements.
Forward looking statements can be identified by words, such as anticipate believe seek could estimate expect.
And you May plan should will any of it.
Forward looking statements include without limitation statements regarding the benefits of the acquisition of Rosemont Sydney University debt.
Closing of the acquisition and its timing.
Expected growth expected registration and enrollment.
The expected revenues expected earnings income and EBITDA.
The expected financial results for Rasmuson University.
The expected capital structure net debt the ability to deliver a return on a learner's educational investment the ability to maintain an attractive risk profile and plans with respect to recent current and future initiatives.
Actual results could differ materially from those expressed or implied by these forward looking statements as a result of various factors, including the risks related to the effects of and Apis response to the COVID-19 pandemic the acquisition of <unk> most of the University and the risk factors described in the risk factors section.
And the elsewhere in the Companys annual report on form 10-K filed with the SEC today as well as the company's other SEC filings.
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.
This evening, it's my pleasure to introduce Angela Selden, our Chief Executive Officer, and Rick Sunderland, Our executive Vice President and Chief Financial Officer.
Also available for questions today, Steve Summers senior Vice President of strategy and corporate development.
Now I will turn the call over to Angela Selden Angy.
Thank you Kris and good evening everyone.
On a remarkable year and has been at ATI.
We entered the many important changes and launched several key initiatives.
These changes are creating energy of API and driving momentum inside the U S in Honduras.
At the heart of each of the.
The changes why the common theme that of providing a highly affordable higher education, leading to strong career outcomes.
At April <unk>.
Our mission is the adult learners on the path toward achieving their dream by driving down the cost of higher education, and helping them obtain degrees of risky to achieve their potential.
We call this higher education return on investment or H E R.
<unk>.
Beginning in late 2019, we set out to build of growth strategy around that Michigan.
Since then we've experienced the return to growth at both.
And on drug.
We've added dynamic new leadership across each of the three business units.
Launched an enterprise wide technology modernization and have begun to amplify our value proposition to a wider audience.
The 2020 results speak for themselves.
Strong new and total of course registration growth of <unk>.
And record enrollment and Hangzhou.
Further accelerating our growth strategy was the October 2020 announcement about our pending acquisition of racks within the University.
The acquisition of Rasmuson will nearly double <unk> revenue and will create a large scale platform to address the U S registered nursing shortage the.
The resulting API business will deliver over 100.
$65 million and pre licensure nursing education revenue, primarily by creating new registered nurses.
Today pretty well since your nursing education is roughly half of the 28 billion in total of nursing education.
It is estimated to grow to $60 billion over the next few years.
The acquisition will add a number one market position in pre licensure nursing.
For the two existing number one positions in active duty military and veterans education at <unk>.
Today.
Moving to page for the enrollment momentum that.
The began in 2019 continued for a fifth consecutive quarter with total net course registrations, increasing by 11% in the fourth quarter driven.
Driven by a robust 17% increase in new student registrations.
For all of 2020, net course registrations increased nearly 12% with new registrations growing at 18% for the year.
The momentum at Honduras was even more pronounced during 2020 as new leadership, along with key enrollment and upper Michel initiative for you.
The same impressive turnarounds in a very short period of time.
Both new and total student enrollment increased 34% year over year in the fourth quarter of 2020, while nursing starts for the full year were up a full 50% leading to an all time record enrollment of 2139 students at the end of 2020.
Mountain that we expect will continue into 'twenty, 'twenty, one and which our CFO, Rick Sunderland will discuss in more detail shortly.
Overall for full year Congress enrollment growth was 18% compared to 2019.
On page five contributors to the continued growth at a T. U S include increased.
The investment in marketing to the micro segments, where we believe a higher education return on investment value proposition resonate.
The implementation of our proprietary and self funded freedom grant, which eliminated out of pocket costs for active duty military students and graduate programs using ta.
Adding to the active duty undergraduate student population benefiting from the France since 2001.
Additional investments in technology to improve the student experience as well as increased student satisfaction and enrollment rate.
And tailwind from increased demand for online education caused by the COVID-19 pandemic.
We don't expect to repeat the full $10 million of incremental marketing that we invested in 2020, but plan to continue to be targeted and directing our marketing to the most productive segment in 2021.
Some of the momentum that we had in 2020 carried into the first quarter of this year and are expected to result in a sixth consecutive quarter of year over year gross and net course registrations at apus.
The turnaround in performance of Honduras that Harry Wilkins and his team have executed with student centric and purpose built to create new nurses while.
While some of the growth of 100 can be attributed to an increase in demand for nursing education and a change in the competitive landscape due in part to the day that Max.
We think much of the improvement was due to key initiatives like wanting the direct entry ADN program.
Implementing affordability grants with the limit student out of pocket cost for $200 per month.
The move to fully online admissions processes and improved transparency and conversion of prospective student through sales force automation.
Throughout the year with all of our marketing efficiency improved and had been seeing increased enrollment with lower marketing spend in recent months.
In addition, Honduras definitely shifted its academic coursework online during the pandemic and has managed to optimize its physical footprint for labs in practical terms in order to remain open and continue to serve our students while many competitors, including several public institutions.
<unk> nursing enrollment indefinitely.
The strong enrollment during both Q4, 'twenty and the full year or drove topline growth with fourth quarter consolidated revenues, increasing 16% compared to the prior year period, while the full year API revenue increased 12, 4% versus 2019.
At the U S fourth quarter, 2020 revenue increased 14% compared to the prior year period and full year revenues increased 11%.
The high gross revenue growth was even higher increasing 32% in the fourth quarter and 22% in the full year 2020 on the strength of its enrollment growth.
Moving to page seven with the return to growth in our core businesses and especially in Hangzhou, we turned our sights to expanding API portfolio and platform with a focus on nursing.
This effort resulted in the pending acquisition of Rasmussen University of regionally accredited institution with a 120 year history and a growing student population of over 18000.
Rasmussen as the nation's number one educator of pre licensure AVN nurses and will nearly double the overall revenue of API, giving.
Getting a P I scale of.
The national platform of nursing and synergy opportunities.
Nursing enrollment at Rasmussen has increased at a five year CAGR of 16% to over 8200 nursing students.
Upon completion of the acquisition and including hard drove a T E. I will collectively educate more than 10000 nurses through 32 campuses and of mine.
Beyond scale and gross Rasmussen shares the same DNA for student affordability and has a strong mission and cultural alignment with API.
Now I'd like to turn it over to our CFO, Rick Sunderland to provide a financial perspective.
Thank you Angie good evening as of now.
Also in October the API plans to acquire restaurants, and the University for $329 million. This acquisition will be funded by cash on the balance sheet, the $175 million term loan and $29 million in preferred stock, which may be replaced by cash at our option the.
The addition of restaurants since the API platform is expected to diversify <unk> revenue to approximately one third military and military affiliated one third of nursing and one third of online working adult.
Uh huh.
<unk> and restaurants on a solid regulatory track records and the history of strong student outcomes.
These three separately accredited and branded institutions will continue serving their respective audiences, while we work to leverage cost synergies share best practices and cross pollinate certain in demand programs.
As announced last week, a P. I closed an underwritten public offering of its common stock on March 1st.
<unk> sold three 680000 shares of <unk>.
Common stock, including the exercise in full by the underwriters of their option to purchase an additional 480000 shares.
Gross proceeds from the sales were 92 million before deducting the underwriting discounts and commissions and other operating expenses payable by a P E R. The.
The net proceeds of approximately $86 4 million from the offering add liquidity to the $228 million in cash and cash equivalents reported at December 31 2020.
After the anticipated closing of the retrofit acquisition net debt is expected to be approximately zero. However, this is subject to change post closing future liquidity is expected to be further supported by a $20 million revolving line of credit.
Going on to page nine.
As Andrew noted earlier, the continued net course registrations growth at Apus and enrollment growth of hydrous drove strong increases in revenue at both operating units for the fourth quarter of 2020 consolidated revenue increased 15, 5% as compared to the prior year period.
In our API segment of <unk> revenue increased 13, 5% in our HCN segment revenue increased 31, 8% compared to the prior year quarter and the.
The fourth quarter cost of expenses were $76 2 million, an increase of $10 4 million or 15, 8% compared to $65 8 million in the prior year period.
This increase was primarily due to increases in employee compensation costs advertising costs professional fees and information technology costs in our API segment and increases in employee compensation costs and the instructional materials costs in our HCN segment, partially offset by a decrease in advertising costs in our <unk>.
And bad debt expense in our API segment.
<unk> and structural cost of services expenses increased approximately $3 1 billion to $31 1 million.
And as a percentage of revenue decreased to 36, 2% compared to 37, 7% in the prior year period, the increase of instructional costs and services expenses was primarily due to increases in employee compensation costs and the structural material cost in both our API and HCN segments.
Selling and promotional expenses increased approximately $4 2 million to $19 2 million and as a percentage of revenue increased to 22, 4% compared to 22% in the prior year period the <unk>.
Increase in selling and promotional expenses was primarily due to increases in advertising costs and employee compensation costs in our API segment, partially offset by a decrease in advertising costs in our HCN segment.
General and administrative expenses increased approximately $3 9 million to $22 7 million and as the percentage of revenue increase of 26, 5% from 25, 5% in the prior year period the.
The increase in general and administrative expenses was primarily the result of increases in professional fees and information technology costs in our API segment.
In the fourth quarter of 2020 general and administrative expenses included $1 2 million in professional fees associated with the rest of us and acquisition of <unk>.
Fourth quarter consolidated bad debt expense was $1 zero million of one one percentage of revenue in 2020 compared to zero point of $9 million for one three percentage of revenue in 2019 dipped.
Depreciation and amortization expenses decreased approximately 0.8 million to $3 here of $1 million and as a percentage of revenue decreased to three five percentage of revenue from five 2% of revenue in the prior year period.
Operating income for the fourth quarter of 2020 increased by $1 1 million to $9 7 million compared to operating income of $8 6 million in the prior year period.
Consolidated net income for the quarter increased 25% to $7 1 million or <unk> 47 per diluted share compared to net income of $5 7 million or <unk> 37 per diluted share in the prior year period.
Adjusted EBITDA for the three months ended December 31, 2020, with Pete was $15 8 million compared to $13 4 million in the prior year period for the three months ended December 31, 2020, and 2019 adjusted EBITDA excludes non cash compensation expense loss on disposals of long lived assets.
And M&A related professional fees of.
A reconciliation of EBITDA and adjusted EBITDA to net income the comparable GAAP financial measure is included in the tables of our earnings release under the caption GAAP net income to adjusted EBITDA.
Going on to page 10.
For the full year 2020, consolidated revenue increased 12, 4% year over year to $321 8 million in our API segment <unk> revenue increased $11 2 million.
The increased 11, 2% year over year to $285 8 million and HCN segment revenue increased 22, 4% to $36 1 million.
For 2020 of cost of expenses include the following items on the pre tax basis of $10 4 million dollar increase in advertising costs in our API and <unk> segments, $5 6 million in information technology costs related to our information technology transformation program and five zero million in professional fees associated with <unk>.
TJ growth opportunities, including the restaurants of acquisition both on our API segment for.
For 2019 cost of expenses include the following on a pre tax basis.
<unk> $2 8 million in employee compensation costs for post employment benefits payable to the former Apus president upon his retirement and $2 1 million in information technology costs related to our information technology transformation program in our API segment, and a noncash impairment of goodwill of $7 3 million.
And in our HCN segment.
For the full year 2020, operating income increased 12.0 million to $24 8 million and net income increased $8 8 million the $18 8 million.
$1 25 per diluted share.
Cash flow from operations for the 12 months ended December 31, 2020 increased 16, 7% to $44 8 million compared to $38 4 million in the prior year period.
Capital expenditures of approximately $4 9 million for the 12 months ended December 31, 2020, compared to $7 3 million in the same period of 2019.
Total cash and cash equivalents as of December 31, 2020 were approximately $227 7 million compared to $202 7 million as of December 31, 2019.
Going on to page 11.
Apis the outlook for the first quarter of 2021 is as follows.
At Apus net course registrations by new students are expected to increase approximately 13% year over year and total net course registrations are expected to increase approximately 9% year over year. This will represent the sixth consecutive quarter of year over year registration growth at Apus and.
The Honduras, new and total enrollment is expected to increase by 45% year over year.
In the first quarter of 2021, we expect consolidated revenue to increase approximately 18% year over year with year over year increases in both of our API and HCN segments. The company expects net income to be between $6 4 million and $7 3 million and net income per diluted per.
Per diluted share to be between 39 and 44.
Adjusted EBITDA is expected to be between $13 8 million and $14 7 million in the first quarter of 2021.
A reconciliation of EBITDA and adjusted EBITDA to net income the comparable GAAP financial measure is included in the tables in our earnings release under the caption GAAP.
GAAP outlook net income two outlook adjusted EBITDA.
Now I will turn the call back over to Andy for closing comments.
Thank you Rick.
As you can see from our first quarter guidance.
Back to our momentum to continue into 2021 on.
Our priorities for 2021 includes building on our successful enterprise transformation.
Focusing on an effective integration of raskin from University and driving growth.
Especially in our core military veteran and nursing segment.
We believe there is ample room for growth in these markets, where we enjoy a defendable leadership position.
Our ongoing tests for the.
Modernization and anticipated in the integration of rasp of sent using our shared services platform are both expected to help us increase operating efficiency and drive growth through scale synergies and improve student outcomes.
The most important the all of these efforts are highly aligned with our mission to help learners of all backgrounds maximize their higher education return on investment or ROI.
We are working to build a high quality scale platform in higher education, one that is uniquely affordable flexible and increases.
We believe this focus will drive sustainable growth and operating leverage and help us maintain an attractive inhibitory profile.
To briefly comment on the recent 90 10 legislation we understand that the Senate version that is currently under consideration in the house for approval keeps the ratio at 90 10 versus shifting it to $85 15.
As we have shared based on the current 90 10 calculation methodology.
Currently meet the 90 10 ratio when our Ta and VA revenue are included in the 90 calculation.
We also understand that the first measurement year is currently proposed to be in 2023, which.
Which we believe gives us sufficient time to address any mix changes inorganically through acquisition or organically as required.
In closing by building durable institutions of higher education, we are creating momentum and energy focused on setting adult learners on the path toward achieving their dreams.
Providing them with the skills necessary to maximize the return on their higher education investment.
With that I'd like to ask the operator to please open the lines for questions.
As a reminder to ask the question will need to press star one on your telephone since all of you.
Question for per pound or husky.
Please standby, while we compile the Q&A roster.
Our first question comes from Stephen Sheldon with William Blair. Your line is open.
Alright. Thanks.
For the 18 U S. Can you talk about the strategy for how Youll continue to better serve active duty military and veterans.
Do you need to do the sustained improved growth there of about dynamics have you seen in terms of the per.
Learner engagement and of course has taken us and gross populations.
Thanks, Steven I'll start and then I'll ask Rick to continue the comment so.
So we're really excited about the active duty military segment for.
For a couple of the things that you called out first of which is as debt. We believe that there is room in the reimbursement that they currently enjoy to be able to take additional of course registration on what they do.
So we see organic growth from the student population that we currently serve.
Our marketing segmentation and the micro market work that we've done is identified population inside of the active duty military where we see increased persistence and retention and creates really great opportunities for us to continue to attract and serve.
That military population, let me turn it over to Rick and see if you have any additional questions or comments from the question.
Just a couple of things that Steven So number one we are seeing.
The momentum in terms of the number of courses that.
Our military and military affiliated.
Students are taking so.
We're building.
Some momentum there.
I would add.
By adding the relevance of courses that are meaningful to the active duty military and then having a broader of course curriculum that really serves the needs of everyone, including the veterans population.
We continue to be.
The very let's.
Let's say relevant in those populations the.
Other than the last item I would mention is we implemented what we're now calling of the freedom Grant of our graduate military students in January of of two.
2020, so that is really creating that eliminated out of pocket costs for that that population, which they previously independent small out of pocket costs. So that's really driving some momentum at the graduate military level and so we would expect to see that debt.
Yeah.
Got it that's really helpful.
Maybe just as a follow up clearly really strong growth acceleration over the last year I know, you're only providing guidance for the first quarter, but can you maybe frame at a high level, how you're thinking about growth over the remainder of the year, especially as the face some tougher comparisons starting on the second quarter for both.
The U S I kind of address.
Let me turn that question over to Rick.
Yes, so Steve we're going to stick with our one quarter metric, but I would say.
And the comps to get more challenging obviously youre going to have a more challenging comp in the second quarter, but the things that we're doing.
Just described.
Shortlist for the military.
Have enduring value and theyre going to continue.
To lift those registrations, whether it's at the current pace or.
Because some of that is in fact due to COVID-19, but we have great confidence that we're going to continue to see momentum at apus.
And registrations.
And then what can you say about Honduras, and Harry and his team.
Of $34 30 for the fourth quarter and up $45 45 in the first quarter and that Tvs copies of itself.
They really.
For the.
The acceleration of the enrollment growth starting in the fourth quarter of 19, so theyre already comping themselves in the fourth quarter and in the first quarter.
If I could just add that we also believe the.
The micro targeting that we're doing with the veterans community will show acceleration.
Because of the larger addressable kit and they typically will enroll in more of courses on an annual basis.
Dan some of our other segments and so on just the very attractive market and we're seeing some early momentum from our efforts on the battery market.
Great. Thank you.
Our next question comes from Greg opinion of Sidoti Your line is open.
Hey, Thanks for taking my question.
Just real quick on the <unk>, just given the momentum and continuing on into the first quarter, how should we be thinking about what is what is the capacity.
Are you going to eventually run into some capacity constraints.
On that Andre.
In terms of the question the total number of students.
Sure. Thanks. Thanks for the question of start and then Rick if there's anything you'd like to share.
So one of the you hate to hate to really say that anyone is benefiting from the impact of COVID-19, but one of the things that the.
The COVID-19.
Pandemic has done for Honduras is really driven a lot of operating efficiency in the delivery model both from the admissions and enrollment perspective, but also in terms of academic delivery. So even though we've had to move the labs and practical to CDC guidelines for social Buzz.
The thing as we've moved much of the academic work of course work on my mind is freed up the facilities to be able to use.
Them in <unk>.
Much more robust way for labs, and perhaps the comp.
Certainly as we continue to see enrollment momentum growing.
We have considered taking on additional temporary space in order to be able to conduct of labs and practical on.
For the students that are taking their coursework online and we don't see any restrictions right now on our ability to do that so we don't see any kind of cap in terms of enrollment growth.
That we would come to expect from Honduras, because of any kind of facility constraints.
Anything else from your perspective.
Yes that really addresses at the at the campus level and Greg as you know.
Got to begin offering courses in Akron, Ohio and April of this year.
And we're already looking at sites.
Southern Michigan.
The Detroit to open the campus in.
'twenty 'twenty two so we will sustain that momentum.
Utilizing the the <unk>.
Leverage we have in energy described as well as opening new campuses, which is expand the overall capacity of the scope.
That's very helpful. Thanks.
And your next question comes from Raj Sharma with B Riley Your line is open.
Hello.
Hi, congratulations guys.
On a solid quarter and some good guidance.
I just had a couple of questions on the new course registrations the debt.
Sort of a breakdown of military did better than the veterans of civilians.
Any color there.
Thanks for the question Ross and thanks for the accolade.
I'll share perspective on the interest level, and then I'll turn it over to Rick for any kind of additional commentary, we're seeing favorable momentum for our military affiliated.
And the associate degrees Bachelor and master's degree and we're seeing that same momentum in our active duty military and we're seeing a lot of interest on the non military students, particularly in our search for kids.
I can turn it over to Rick and you can add any other details you'd like to share based on the questions. Yes, no thats exactly right in general I don't have anything to add Thats net.
Comes where the interest at the highest level of interest is coming for them.
Thank you and then sort of is this is the outlook and the rise in the starts here largely you think of the walls of we improved marketing.
And some of the micro targeting that you were talking about LNG or or.
Is the uncertainty in the economy, playing any part here.
I think we think it's a combination of many factors.
Certainly the marketing we're trying to be very deliberate about the students that have the view that we see of high persistence and complete other.
Number two the.
On.
We see that the.
Served I believe 88% of our students are working adults and so we believe the career advancement is also of key seasons and how our student think about education, amplifying and accelerating their career.
And certainly the.
The.
Way in which we have addressed the out of pocket costs in particular for the <unk>.
Graduate students in the active duty military.
Has been a big contributor in in 2020 of that momentum.
Got it.
I may have missed the you would talk to Utah you spoke just briefly on the 90 10 week plus the reclassification of the.
So just just.
To confirm the numbers would including military and veterans would be under 90%.
That is assuming that the cash remains as it is calculated today applying the same methodology of the book today, Yes, we are under 90%.
Got it and then you out of there has been a lot of talk of.
By by the administration, making.
Making community cloud of dust free could you kind of touched upon it a little bit what the impact of that on your.
On starts and registrations would be.
Sure of Barrick.
Again, I'll turn for the record speed for any additional commentary.
Typically that community college student isn't necessarily our target market right again, 88% of the student or.
Adult learners, who are working adults and oftentimes the community college structure just doesn't work.
So.
Community College is typically orienting towards the younger student that has more availability and and so we we.
We will pay very careful attention to the idea of the community College.
But we also see often times that of two plus two progression where see the indirectly the community College work and then move to complete the four year degree.
The highly attractive progression to a per U S. In particular because of it on.
On line.
Possibility.
The satellites.
This is Rick that last point is really important that last point is really important the vast majority of first of all associates.
The associated periods as the minority.
Right.
But a lot of the vast majority of our students come in with transfer credit and the students that are the most successful are the ones that come in with at least nine transfer credits. So if you think about getting.
Solid experience at a community college proving your academic abilities, and then transferring those credits.
So I think it's the.
It's possibly a powerful combination so the I think there is really an argument to be made that if you really can increase.
Successful students at community colleges.
As of the online successor to that progression beyond community College could could possibly benefit so.
It really doesn't detract from us.
Actually be.
Some significant tailwind pushing us for it.
Got it. Thank you and then I have one last question on just you know.
Post the solutions ways of close to $80 million.
Close to $90 million of net proceeds how does any thoughts around the the change in the capital structure I know that when you announced rasmussen and you've been you've been talking a lot of you've been talking about taking on the amount of debt and the preferred is that you know would have enough cash to do most most of the fabs.
The action.
The largest part of the transaction and cash is that is that does that change your outlook on how you would finance the acquisition at all.
Yeah sure I'll take that no it doesn't.
<unk> committed with Macquarie capital to the $175 million in term loan b.
On.
We would have flexibility even without the capital raise to replace the preferred with cash which for which we're evaluating so we bolstered our ability to do that but what it really does is.
It just increases our liquidity right at all to.
To the extent.
The cash is there it will reduce our net debt.
Which we think is.
Good and it gives us the flexibility to look at other I would say smaller acquisitions, because there are things that we wanted to do.
I'll, let the engineers, Steve comment on that last piece.
No I don't we're still going to take the long term debt, we think it's a prudent amount of debt it's not excessive.
Gives us the flexibility to do all of the thanks.
But it doesn't give you the flexibility to perhaps lower the cost of capital on that debt.
In theory, it does raise more equity should translate to a better price on the pricing on that debt, but I guess, we'll see.
Well, thank you duct tape for thanks.
Thanks, a lot again, congratulations on good solid numbers on outlook.
Thank you Ross.
Again, if you would like to ask the question the star one on the telephone.
Our next question comes from Boston.
<unk> with Canaccord Genuity your line is open.
Alright, thanks for taking my questions.
You mentioned that the.
10 million of incremental marketing spend.
There's not likely to be replicated. This year. So can you talk about what level you do expect of it going back down to 2019 levels or the new mean, it would be sort of flat at this 2020 level and can you also talk about how you've spent that historically as it pertains to the mix between the Apu.
Each day.
In.
And what what the.
That might change to the condos and the Rasmussen under one roof.
You bet.
Thank you for the question on astounding the turn it over to Rick because he does have that historical perspective, and can talk about that net.
Great. So I mean, if you look back to <unk>.
Periods. Prior to 2020, we were we were in the kind of the 19, 20% of revenue range debt numbers jumped up too.
On the fourth quarter I think it was closer to 22%.
To answer your question, we're going to keep spending.
Two to produce.
The results right we're balancing.
Customer acquisition with lifetime value, we're looking for a return on net investment.
We said, we're not going to continue to spend the debt level, we're not going to regress to the earlier levels.
<unk>.
I would have to answer.
It's depending on what's going on in any particular quarter on over the course of the year, but we're not going to return ourselves to those prior levels for probably spend somewhere in between.
Got it. Thank you for that and can you maybe talk a little bit about.
The dynamics of the rest of the marketing funnel how.
How is the growth is trending and what your conversion of course registrations of new enrollments.
Been doing recently.
Great question, we have put a keen focus on every step.
Starting with the generation all the way through enrollment and then re enrollment persistence as you know our student can <unk> can enroll in a single of course at a time, so making sure that they had a great first course experience and the enroll as it is the big focus for us that we have.
Had a deep analysis across each step along that student acquisition I call. It supply chain to make sure that we are doing all of that we can do to maximize the conversion of every lease that comes into the top of the funnel and so we're really working to bring out.
Enrollment momentum from everything that we can and that is going to continue to be of.
Focus of improvement for for.
For <unk> through 2021.
Great. Thanks for the color.
There are no further questions at this time I'll turn the call back over to Chris for closing remarks.
Thank you operator that will conclude our call for today, we wish to thank you for listening and for your continued interest in American public education, Good evening everyone.
This concludes today's conference call you may now disconnect.
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