Q1 2024 American Public Education Inc Earnings Call
Operator: At this time, I would like to welcome everyone to the American Public Education Inc. first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Education, Inc. First quarter 2024 earnings conference call.
All lines have been placed on mute to prevent any background noise. After.
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Speaker Change: Thank you I would now like to turn the conference over to Brian Printable Investor Relations you may begin.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Brian Prenoveau, Investor Relations. You may begin.
Brian Prenoveau: Thank you, Operator, and good afternoon, everyone. Welcome to American Public Education's conference call to discuss first quarter 2024 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer; Rick Sunderland, Executive Vice President and Chief Financial Officer; and Steve Somers, Senior Vice President and Chief Strategy and Corporate Development Officer. Materials for the call today are available in the events and presentation section of APEI's website. Statements made during this conference call and any accompanying presentation regarding APEI and its subsidiaries that are not historical facts may be forward-looking statements based on current expectations, assumptions, estimates, and projections.
Brian: Thank you operator, hey, good afternoon, everyone and welcome to American Public Educations conference call to discuss first quarter 2024 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer, Rick Sunderland Executive Vice President and Chief Financial Officer, Steve <unk>.
Brian Prenoveau: Forward-looking statements may sometimes be identified by words like anticipate, believe, seek, estimate, expect, can, may, plan, potentially, project, should, will, would, and similar or opposite words. Forward-looking statements include, without limitation, statements regarding expectations for registrations and enrollments, revenue, earnings, and adjusted EBITDA, and other earnings guidance, repositioning Rasmussen University for growth, changing market demands and our ability to satisfy such demands, and other company initiatives, including with respect to future competition and demand cost savings efforts.
Speaker Change: <unk> senior Vice President and Chief strategy, and corporate development officer materials for the call today are available in the events and presentations section of <unk> website website.
Brian Prenoveau: 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. These include, among other risks, failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation and any actions taken to prevent or correct such failure, dependence on the effectiveness of the company's ability to attract students, who persist in its institutional programs, changing market demands, declines in enrollments at the company's education units, the enactment of legislation that adversely impacts the company or its education units, the inability to effectively brand or market its education units or their programs or expand into new markets, the inability to maintain strong relationships with the military, the loss or disruption of the ability to receive funds under tuition assistance programs or in reduction, elimination, suspension, or disruption of tuition assistance.
Statements made during this conference call and any accompanying presentation regarding API and its subsidiaries are not historical facts that are not historical facts may be forward looking statements based on current expectations assumptions estimates and projections forward looking statements may sometimes be identified by words like anticipate.
Believe seek could estimate expect can may.
Speaker Change: <unk> potentially project should will would and similar or opposite words forward. Looking statements include without limitation statements regarding expectations for registration in enrollments revenue earnings and adjusted EBITDA and other earnings guidance repositioning RASK recent University.
For growth changing market demands and our ability to satisfy such demands and other company initiatives, including with respect to future competition and demand cost savings efforts.
Speaker Change: 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.
Speaker Change: These include among other risks failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation and any actions taken to prevent or correct such failure.
And then on the effectiveness of the Companys ability to attract students.
Speaker Change: Persist is institutional programs changing market demands declines in enrollments at the company's education units.
Speaker Change: Enactment of legislation to adversely impacts the company or its education units inability to effectively brand or market, it's education units or their programs or expand into new markets.
Speaker Change: <unk> ability to maintain strong relationships with the military.
Speaker Change: Loss or disruption of the ability to receive funds under tuition assistance programs or the reduction elimination suspension or disruption of tuition assistance.
Brian Prenoveau: Adverse effects of changes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed. For example, a loss of eligibility to participate in Title IV programs or ability to process Title IV financial aid.
Speaker Change: The adverse effects of changes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed a lots of eligibility to participate in title four programs or ability to process title for financial aid economic and market conditions challenges with acquisitions matters related to indebtedness.
Brian Prenoveau: Economic and market conditions, challenges with acquisitions, matters related to indebtedness or preferred stock, companies' technology infrastructure, the inability to recognize the anticipated benefits of the company's cost savings efforts, and risks described in today's presentation, today's press release, APEI's Form 10-K for 2023, and other SEC filings. The company undertakes no obligation to update publicly any forward-looking statement for any reason unless required by law This presentation contains references to non-GAAP financial information. A reconciliation between the non-GAAP financial measures we use and the most directly comparable GAAP measures is located in the appendix to today's presentation and in the earnings release.
Speaker Change: Stock companies' technology infrastructure, the inability to recognize the anticipated benefits of the company's cost savings efforts and risks described in today's presentation. Today's press release <unk> Form 10-K for 2023 and other SEC filings. The company undertakes no obligation to update publicly any.
Speaker Change: Forward looking statements for any reason unless required by law. This presentation contains references to non-GAAP financial information a reconciliation between the non-GAAP financial measures. We use in the most directly comparable GAAP measures is located in the appendix to today's presentation and in the earnings release.
Brian Prenoveau: Management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors regarding its results of operations and should only be considered in addition to, and not as a substitute for or superior to, any measure of financial performance prepared in accordance with GAAP. Now, I'd like to turn the call over to APEI's CEO, Angela Selden. Angela, please go ahead.
Speaker Change: <unk> believes that the presentation of non-GAAP financial information provides useful supplemental information to investors regarding its results of operations and should only be considered in addition to and not as a substitute for or superior to any measure of financial performance prepared in accordance with GAAP now I would like to turn the call over to <unk>.
Speaker Change: <unk> CEO Angela Selden Angy.
Angela K. Selden: Please go ahead.
Angela K. Selden: Thank you, Brian. Good afternoon, and thank you for joining American Public Education's first quarter 2024 earnings call with the release of our first quarter results. This is now the fifth consecutive quarter where we have exceeded our adjusted EBITDA guidance and expectations. By delivering results from the hard work of the Rasmussen turnaround, we have put Rasmussen back on a trajectory for growth and positive EBITDA. This has included a strong focus on improving student retention, preparing students for success on MCLEX exams, and enrolling a more balanced mix of campus-based nursing and health education programs while reducing our concentration in the ADN program.
Angela K. Selden: Thank you Brian Good afternoon, and thank you for joining American public Educations first quarter 2024 earnings call.
Angela K. Selden: With the release of our first quarter results.
Angela K. Selden: This is now the fifth consecutive quarter, where we have exceeded our adjusted EBITDA guidance and expectations.
Angela K. Selden: Delivering result from the hard work of the Rasmussen turnaround, we have put rasmus and back on a trajectory for growth and positive EBITDA.
Angela K. Selden: This has included a strong focus on improving student retention.
Angela K. Selden: Pairing students for success on MPLX exam, and enrolling a more balanced mix of campus based nursing and health education programs, while reducing our concentration in the ADN program.
Angela K. Selden: At the same time, at both APUS and Honduras, we have delivered continued student enrollment growth and margin expansion. Overall, in this past year, by addressing the operational challenges at Rasmussen and right-sizing the cost structure across APEI, we have positioned APEI for long-term growth, driven by strong education units and an enterprise with a strong financial standing. Let me share some highlights from the quarter. APEI's first quarter 2024 revenue was $154 million, representing a 3% increase when compared to 1Q23 and ahead of the guidance range.
Angela K. Selden: At the same time at both <unk> and Hydro we have delivered continued student enrolment growth.
Angela K. Selden: And margin expansion.
Angela K. Selden: Overall in this past year by addressing the operational challenges at Rasmussen and right sizing the cost structure across API, we have positioned <unk> for long term growth driven by strong education unit and an enterprise with strong financial standing.
Speaker Change: Let me share some highlights from the quarter.
Speaker Change: <unk> first quarter 2024 revenue was $154 million.
Speaker Change: Representing a 3% increase when compared to <unk> 23, and ahead of the guidance range.
Angela K. Selden: We saw significant improvement in overall adjusted EBITDA, which totaled $17.1 million in the first quarter of 2024, representing a 143% increase over 1Q23. And notably, adjusted EBITDA for this quarter was roughly $7 million, or 71% above the top end of our guidance range.
Angela K. Selden: We saw a significant improvement in overall, adjusted EBITDA, which totaled $17 1 million in the first quarter of 2024, representing a 143% increase over <unk> 23.
Angela K. Selden: And notably the adjusted EBITDA for this quarter was roughly $7 million or 71% above the top end of our guidance range.
Angela K. Selden: Adjusted EBITDA margin expanded by 600 basis points in 1Q24 to 11% compared to 5% in 1Q23. Collectively, margin improvements are being driven by a combination of optimized marketing, improved retention, and the modest pricing actions and cost control initiatives implemented in 2023, including staffing realignments and reductions. With our strong first quarter performance, we are increasing our full year 2024 guidance for revenue and adjusted EBITDA, which Rick Sunderland, APEI's Chief Financial Officer, will detail in his commentary shortly.
Angela K. Selden: Adjusted EBITDA margin expanded by 600 basis points, and <unk>, 24% to 11% compared to 5% and <unk> 23.
Angela K. Selden: Collectively margin improvements are being driven by a combination of optimized marketing improved retention and modest pricing actions and cost control initiatives implemented in 2023.
Angela K. Selden: Including staffing realignments and reduction.
Speaker Change: With our strong first quarter outperformance, we are increasing our full year 2024 guidance for revenue and adjusted EBITDA with Rick Sunderland.
Speaker Change: <unk> Chief Financial Officer will detail in his comments shortly.
Angela K. Selden: With that in mind, I'd now like to spend some time sharing the progress of our education units, starting with our core online military and veteran segment, APUS. In 1Q24, overall net course registrations increased 3% year over year to 99,000 registrations, the most in eight years, reflecting the strong reputation upon which we continue to build and the compelling value proposition we offer. Active duty and veteran registrations delivered continued momentum with year-over-year growth, partially offset by lower non-military registrations.
Speaker Change: With that context, I'd now like to spend some time sharing the progress of our education units, starting with our core online military and veteran segment.
Angela K. Selden: In <unk> 'twenty for overall net course registrations increased 3% year over year to 99000 registrations. The most in eight years, reflecting the strong reputation upon which we continue to build and the compelling value proposition we offer.
Speaker Change: Active duty and veteran registrations delivered continued momentum with year over year growth, partially offset by lower non military registration.
Angela K. Selden: The overall increase in registrations in the quarter, combined with the impact of tuition and fee increases in 2023, resulted in a 9% increase in revenue at APUS. This solid revenue performance, coupled with cost containment and lower marketing spend, drove very strong bottom-line results for APUS, with EBITDA increasing 31% to $24.3 million, as compared with $18.5 million in 1Q23. EBITDA margin was 30% in the quarter compared with 25% in the prior year period.
Speaker Change: The overall increase in registrations in the quarter combined with the impact of tuition and fee increases in 2023 resulted in a 9% increase in revenue at <unk>.
Angela K. Selden: This solid revenue performance, coupled with cost containment and lower marketing spend drove very strong bottom line results for <unk>.
Angela K. Selden: With EBITDA, increasing 31% to $24 3 million as compared with $18 5 million in <unk> 23.
Angela K. Selden: EBITDA margin was 30% in the quarter compared with 25% in the prior year period.
Angela K. Selden: On a student success note, this week, at its 28th Annual Commencement, APUS will celebrate its over 16,700 graduates with Associates, Bachelor's, and Master's degrees. Turning to Rasmussen, I am very pleased with the progress we have made and continue to make with its stabilization and turnaround. First quarter enrollments, which we shared in our last earnings call, were $13,500, which was a 6% decrease from a year earlier.
Angela K. Selden: On a student's success note. This week at its 28th annual commencement Apus will celebrate its over 16700 graduates and associates bachelor's and master's degrees.
Angela K. Selden: Turning to <unk> I am very pleased with the progress we have made and continue to make with its stabilization and turnaround.
Angela K. Selden: First quarter enrollments, which we shared in our last earnings call were 13500, which was a 6% decrease from a year earlier.
Angela K. Selden: Today, we are sharing second quarter 2024 enrollments, which continue that improving trend with 13,600 students down just 2% from a year ago. This is now the fourth quarter in a row where total enrollment trends have continued to improve year over year. For the second quarter, Rasmussen's online enrollments increased 4% while campus-based nursing and health education enrollments declined by 9%. As has been the case for the last several quarters, the overall decline in enrollment has been driven predominantly by Rasmussen's campus-based ADN program, but those declines are moderating, and we are increasingly offsetting some of those declines with growth in our BSN and other campus-based health education
Angela K. Selden: Today, we are sharing second quarter 2020 for enrollment, which continue that improving trend with 13600 students down just 2% from a year ago.
Speaker Change: This is now the fourth quarter in a row, where total enrollment trends have continued to improve year over year.
Angela K. Selden: For the second quarter Rasmuson online enrollments increased 4%, while campus based nursing and health education enrollments declined by 9%.
Angela K. Selden: As has been the case for the last several quarters. The overall decline in enrollments has been driven predominantly by Rasmus is campus based AVN program, but those declines are moderating and we are increasingly offsetting some of those declines with growth in our BSN and other campus based health.
Angela K. Selden: Indication programs.
Angela K. Selden: Moving closer to our goal of having a much more balanced portfolio of nursing and campus-based health education offerings. Over time, the increase in BSN enrollments should also lead to higher average lifetime value per student because of the longer length of this program.
Angela K. Selden: Moving closer to our goal of having a much more balanced portfolio of nursing and campus based health education offerings.
Angela K. Selden: Over time, the increase in BSN enrollments.
Angela K. Selden: Also lead to higher average lifetime value per student because of the longer length of this program.
Angela K. Selden: Soon, as we move into positive enrollment territory for campus enrollment, the highly leveraged nature of the campus-based business should lead to improved profitability. In terms of student outcomes, we again produced strong NCLEX pass rates in the first quarter, where 20 of 24 programs at Rasmussen met the required threshold. Worth noting is that two of the four programs that did not meet the threshold had very low numbers of test takers this quarter, and which we think will move into passing territory as more students sit for the exam. While PASS rates are only officially evaluated by state nursing boards annually, we track progress quarterly.
Angela K. Selden: Soon as we move into positive enrollment territory for campus enrollments the highly leveraged nature of the campus based business should lead to improved profitability.
Angela K. Selden: In terms of student outcome, we again produced strong <unk> pass rates in the first quarter were 20 of 24 programs at Rasmussen, Matt the required thresholds.
Angela K. Selden: Worth noting is that two of the four programs that did not meet the threshold had very low numbers of test takers this quarter, and which we think will move into passing territory as more students sit for the exam.
Angela K. Selden: While pass rates are only officially evaluated by state nursing boards annually. We track progress quarterly we are pleased that this is the third quarter in a row, where the vast majority of our programs are meeting the state standards.
Angela K. Selden: We are pleased that this is the third quarter in a row where the vast majority of our programs are meeting the state standards. Overall, at Rasmussen, we continue to expect to achieve positive enrollment growth at some point in the second half of 2024 and a return to positive EBITDA, resulting in a stronger financial footing for the university exiting 2024 and into future years. Turning our attention to Hondros, as reported, one Q24 enrollment remains strong, showing a 22% increase when compared to one Q23.
Angela K. Selden: Overall at Rasmussen, we continue to expect to achieve positive enrollment growth at some point in the second half of 'twenty, four and a return to positive EBITDA.
Angela K. Selden: <unk> in stronger financial footing for the University exiting 'twenty four and into future years.
Angela K. Selden: Turning our attention to Handros as reported <unk> 24 enrollment remained strong showing a 22% increase when compared to <unk> 23.
Angela K. Selden: We also saw growth continue in 2Q24, with enrollment increasing another 10% year over year to 3,300 students, which we view as particularly encouraging given the comparison to a very strong enrollment quarter in 2Q23. Demand remains strong for its PN and ADN nursing programs, with the new Detroit campus performing very well. Legacy campuses also contributed to growth, including Indianapolis, where we still operate with enrollment caps as a new program despite exceptional NCLEX pass rates.
Angela K. Selden: We also saw growth continue in <unk> 'twenty, four with enrollment increasing another 10% year over year to 3300 students, which we view as particularly encouraging given the comparison to a very strong enrollment quarter in <unk> 23.
Angela K. Selden: Demand remains strong for its pn and ADN nursing program with the new Detroit campus performing very well.
Angela K. Selden: Legacy campuses also contributed to growth, including Indianapolis, where we still operate with enrollment cap as a new program. Despite exceptional <unk> pass rates.
Angela K. Selden: Starts at Hondros remain robust, and we remain very pleased with the growth that we are seeing. Also, in 3Q, Honduras will be relocating two of its Ohio campus locations and expect some temporary but limited impact on enrollment in those locations.
Angela K. Selden: Starts at <unk> remain robust and we remain very pleased with the growth that we're seeing.
Angela K. Selden: Also in <unk> Congress will be relocating two of its Ohio campus locations and expect some temporary but limited impact to enrollment in those locations.
Angela K. Selden: As for NCLEX pass rates, all programs at all Hondros campuses met the 1Q24 state benchmark. Overall, at APEI, our financial results continue to show significant improvement, and in particular, our return to adjusted EBITDA growth, which has exceeded our guidance for the last five quarters. With the stabilization of enrollment and continued improvement in EBITDA at Rasmussen coupled with strong top and bottom line performance at APUS and Hondros, we are now delivering positive growth in revenue, adjusted EBITDA, and margins across APEI.
Angela K. Selden: As for <unk> pass rates all programs at all hydro campuses met the <unk> 24 state benchmarks.
Angela K. Selden: Overall at API, our financial results continue to show significant improvement and in particular, our return to adjusted EBITDA growth, which has exceeded our guidance now for the last five quarters.
Angela K. Selden: With the stabilization of enrollment and continued improvement in EBITDA at Rasmussen, coupled with strong top and Bottomline performance at Apus in Honduras, we are now delivering positive growth in revenue adjusted EBITDA and margins across API.
Angela K. Selden: In summary, we are confident in our strong position to provide online and campus-based post-secondary education and career learning opportunities to large and growing addressable markets. The improvements we have implemented and the return of momentum we have delivered have re-energized leadership, faculty, and staff across the enterprise. We believe we are in a strong position to achieve long-term success, both operationally and financially, and, as always, guided by our vision, mission, and values that reward our students, employees, and stakeholders. With that, let me turn the call over to APEI's CFO, Rick Sunderland. Thank you, Angie.
Angela K. Selden: In summary, we are confident in our strong position to provide online and campus based post secondary education and career learning opportunities to large and growing addressable market.
Richard W. Sunderland: The improvements we have implemented and the return of momentum we have delivered have re energized leadership faculty and staff across the enterprise.
Richard W. Sunderland: We believe we are in a strong position to achieve long term success, both operationally and financially and as always guided by our vision mission and values that reward our students employees and stakeholders.
Angela K. Selden: With that let me turn the call over to <unk> CFO Rick Sunderland.
Richard W. Sunderland: Thank you, Angie. Total revenue in the first quarter was $154.4 million, up $4.7 million, or 3.2% from the prior period, and it exceeded our first quarter guidance. First quarter revenue growth was driven by increased revenue at APUS and Honduras, partially offset by revenue declines at Rasmussen and Graduate School. Total cost of expenses in the first quarter decreased 3.7% compared to the first quarter of 2023 and included a $2.9 million loss on leases at RASM.
Richard W. Sunderland: Total revenue
Richard W. Sunderland: Thank you Angie total revenue in the first quarter was $154 4 million up $4 7 million or three 2% from the prior year period and exceeded our first quarter guidance.
Richard W. Sunderland: First quarter revenue growth was driven by increased revenue in <unk> and <unk>, partially offset by revenue declines at Rasmussen and graduate school.
Richard W. Sunderland: Total cost of expenses in the first quarter decreased three 7% compared to the first quarter of 2023 and include a $2 9 million loss on leases at Rasmussen.
Richard W. Sunderland: This period over period reduction was primarily driven by lower selling and promotional costs in the first quarter as compared to the prior year. For the quarter, advertising and marketing support costs decreased $6.6 million. Prior year selling and promotional costs include $2.4 million in marketing transition service fees related to the termination of the collegiate marketing contract at Rasmussen. Appreciation and amortization expenses decreased year over year due to the full amortization of the Rasmussen Definite Live intangible assets in 2023. These decreases were partially offset by higher general and administrative costs.
Richard W. Sunderland: This period over period reduction was primarily driven by lower selling and promotional costs in the first quarter as compared to the prior year.
Richard W. Sunderland: For the quarter advertising and marketing support costs decreased $6 6 million.
Richard W. Sunderland: Prior year, selling and promotional costs include $2 4 million and marketing transition service fees related to the termination of the collegiate marketing contract at Rasmussen.
Richard W. Sunderland: Appreciation and amortization expenses decreased year over year due to the full amortization of Rasmussen definite live intangible assets in 2023.
Richard W. Sunderland: These decreases were partially offset by higher general and administrative costs.
Richard W. Sunderland: Current quarter general and administrative costs include $1.9 million in information technology transition service costs added back to adjusted EBITDA. Including these costs, general and administrative expenses increased less than 3% as compared to the prior period. First quarter diluted loss per common share was a loss of $0.06 compared to a loss of $0.38 in the prior quarter and again exceeded first quarter guidance. For the quarter, adjusted EBITDA was $17.1 million compared to $7 million in the prior year period.
Richard W. Sunderland: Current quarter General and administrative costs include $1 9 million in information technology transition service costs added back to adjusted EBITDA excludes.
Richard W. Sunderland: Excluding information technology trends as service costs general and administrative expenses increased less than 3% as compared to the prior year period.
Richard W. Sunderland: First quarter diluted loss per common share was a loss of <unk> <unk> compared to a loss of 38.
Richard W. Sunderland: In the prior quarter and again exceeded first quarter guidance.
Richard W. Sunderland: For the quarter adjusted EBITDA was $17 1 million compared to $7 million in the prior year period.
Richard W. Sunderland: The first quarter results exceeded guidance and represented an adjusted EBITDA margin of 11% compared to 4.7% in the prior quarter, reflecting revenue growth and lower operating expenses. We exceeded first quarter guidance primarily due to actual expenses being lower than forecasted, as follows: compensation and benefits costs were lower by $2 million.
Richard W. Sunderland: The first quarter results exceeded guidance and represented an adjusted EBITDA margin of 11% compared to four 7% in the prior year quarter, reflecting the revenue growth and lower operating expenses.
Richard W. Sunderland: We exceeded first quarter guidance, primarily due to actual expenses being lower than forecasted as follows.
Richard W. Sunderland: Compensation and benefits costs lower by $2 million.
Richard W. Sunderland: Advertising costs were $1 million lower than forecast, and $3 million of lower information technology and other general and administrative costs. At APUS, first quarter revenue increased 9% as compared to the prior year to $80.7 million due to a nearly 3% increase in net course registrations and roughly 6% due to tuition and fee increases implemented in the second and third quarters of last year. For the quarter, net course registrations increased 2.8% despite lower advertising and marketing support costs compared to the prior year quarter.
Richard W. Sunderland: Advertising costs at 1 million lower than forecast and $3 million of lower information technology, and other general and administrative costs.
Richard W. Sunderland: In total, the EBITDA margin at APUS increased 5% to 30% for the quarter. The increase in margin is primarily due to increased revenue and lower advertising and marketing support costs. At Rasmussen, first quarter revenue was $53.1 million, a decrease of 7.5% compared to the prior year due to lower average enrollment during the quarter, partially offset by tuition increases in the first quarter of 2023 and 2024. However, as Angie mentioned, the year-over-year enrollment decreases have narrowed for the past four quarters.
Richard W. Sunderland: First quarter revenue increased 9% as compared to the prior year to $80 7 million due to a nearly 3% increase in net course registrations and roughly 6% due to tuition fee increases implemented in the second and third quarters of last year.
Richard W. Sunderland: For the quarter net course registrations increased two 8%, despite lower advertising and marketing support costs compared to the prior year quarter in total EBITDA margin at Apus increased 5% to 30% for the quarter. The increase in margin is primarily due to increased revenue and lower advertising and marketing.
Richard W. Sunderland: Port costs.
Richard W. Sunderland: Hi, Rasmussen first quarter revenue was $53 1 million a decrease of seven 5% compared to the prior year due to lower average enrollment during the quarter, partially offset by tuition increases in the first quarter of 2023 and 2024 as Andy mentioned the year over year enrollment decreases.
Richard W. Sunderland: Have narrowed for the past four quarters.
Richard W. Sunderland: We continue on our path to show positive enrollment trends in late 2024. We again saw improvement in Rasmussen's EBITDA loss for the quarter. After adjusting for last year's marketing transition cost and this year's lease termination expense, Rasmussen's first quarter EBITDA loss was a loss of $2.6 million compared to an EBITDA loss in the prior year period of $4.5 million, an approximate 40% improvement year-over-year. The first quarter EBITDA loss improvement was driven by lower advertising costs and marketing support costs, as well as labor savings from the 2023 cost realignment
Richard W. Sunderland: Continue on our path to show positive enrollment trends in late 2024.
Richard W. Sunderland: We again saw improvement in racehorses EBITDA loss for the quarter after adjusting for last year's marketing transition cost.
Richard W. Sunderland: This year's lease termination expense first quarter Rasmussen EBITDA loss was a loss of $2 6 million compared to an EBITDA loss in the prior year period of $4 5 million, an approximate 40% improvement year over year the.
Richard W. Sunderland: First quarter EBITDA loss improvement was driven by lower advertising costs and marketing support costs as well as labor savings from the 2023 cost realignment at.
Richard W. Sunderland: At Honduras, first quarter revenue was $16.4 million, up 25% as compared to the prior year period due to continued growth in enrollments and the 2023 tuition increase. For the quarter, Honduras' total enrollment grew 22% to approximately 3,300 students, the second consecutive record-setting quarter for enrollment.
Richard W. Sunderland: <unk> first quarter revenue was $16 4 million up 25% as compared to the prior year period due to continued growth in enrollment in the 2023 tuition increase for the quarter, Honduras total enrollment enrollment grew 22% to approximately 3300 students the second consecutive <unk>.
Richard W. Sunderland: <unk> setting quarter for enrollments.
Richard W. Sunderland: The increased revenue, combined with effective cost management, delivered positive EBITDA of $300,000 for the first quarter, compared to an EBITDA loss of $1 million in the prior year period. Revenue at the graduate school, included in corporate and other, was $4.3 million compared to $5.2 million in the prior period, primarily due to lower enrollments in the quarter amid a slower start to the year, in part caused by delays in the approval of the U.S. federal budget.
Richard W. Sunderland: The increased revenue combined with effective cost management delivered positive EBITDA of 300000 for the first quarter compared to an EBITDA loss of $1 million in the prior year period.
Richard W. Sunderland: Revenue, we graduate school included in corporate and other was $4 3 million compared to $5 2 million in the prior year period, primarily due to lower enrollments in the quarter amid a slower start to the year in part caused by delays in approval of U S Federal budget.
Richard W. Sunderland: At March 31, 2024, total cash, cash equivalents, and restricted cash was $153.2 million, an increase of $8.9 million from year-end 2023. For the first quarter of 2024, cash flow from operations was $20.7 million, an increase of $8 million, or 63%, as compared to the prior year. CapEx for the quarter was $6.2 million. Free cash flow, defined as adjusted EBITDA less CapEx, was 10.8 million compared to 3.8 million a year ago. Principal and API's term loan at March 31 is unchanged from year end at $99 million. With unrestricted cash of $125 million, API continues to be net cash positive. Additionally, there are no borrowings under API's $20 million revolving credit facility, which remains fully available.
Richard W. Sunderland: At March 31, 2020 for total cash cash equivalents and restricted cash was $153 2 million an increase of $8 9 million from year end 2023.
Richard W. Sunderland: For the first quarter of 2024 cash flow from operations was $20 7 million, an increase of $8 million or 63% as compared to the prior year.
Richard W. Sunderland: Capex for the quarter was $6 2 million.
Richard W. Sunderland: Free cash flow defined as adjusted EBITDA less Capex was $10 8 million compared to $3 8 million a year ago.
Richard W. Sunderland: Principal and Apis term loan at March 31 is unchanged from year end at $99 million.
Richard W. Sunderland: With unrestricted cash of $125 million API continues to be net cash positive <unk>.
Richard W. Sunderland: Additionally, there are no borrowings under API $20 million revolving credit facility, which remains fully available.
Richard W. Sunderland: During the quarter, we repurchased 251,000 shares of common stock for an aggregate purchase price of $2.8 million. Turning now to the second quarter, the 2024 Outlook. APUS total net course registrations are expected to be between 89,500 and 92,200, an increase of between plus 1.5% and plus 4.5% over the prior year period. At Rasmussen and Honduras, second quarter student enrollments are actual because of the quarterly starts at these schools. At Rasmussen, second quarter total on-ground health care enrollment decreased 9% to approximately 6,200 students, while total online student enrollment increased 4% year-over-year to approximately 7,400 students for an aggregate enrollment of 13,600 students, which is a 2% decrease when compared to the second quarter of 2023. At Honduras, second quarter total student enrollment increased 10% year over year to approximately 3,300 students, the highest enrollment ever at Honduras
Richard W. Sunderland: During the quarter, we repurchased 251000 shares of common stock for an aggregate purchase price of $2 8 million.
Richard W. Sunderland: Turning now to the second quarter 2020 for outlook.
Richard W. Sunderland: Total net course registrations are expected to be between 89500 to 92200 registrations and increase of between plus one 5% and plus four 5% over the prior year period.
Richard W. Sunderland: Hi, Rasmussen in Honduras second quarter student enrollments are actual because of the quarterly starts at these schools.
Richard W. Sunderland: <unk> second quarter total on ground health care enrollment decreased 9% to approximately 6200 students while total online student enrollment increased 4% year over year to approximately 7400 students for an aggregate enrollment of 13600 students.
Richard W. Sunderland: Which is a 2% decrease when compared to the second quarter of 2023.
Richard W. Sunderland: At <unk> second quarter total student enrollment increased 10% year over year to approximately 3300 students the highest enrollment ever in Honduras.
Operator: In the second quarter of 2024, consolidated revenue is expected to be between $153 million and $155 million. The company expects net loss to common shareholders to be between a loss of $2 million and income of $800,000, or between a loss of $0.11 and a loss of $1.00 and positive five cents per diluted share. Adjusted EBITDA is expected to be between $8 million and $12 million for the second quarter of 2024. For the full year 2024, as Angie shared, we anticipate consolidated full year 2024 revenue in a range of $620 to $630 million.
Richard W. Sunderland: In the second quarter of 2024 consolidated revenue is expected to be between $153 million to $155 million.
Operator: The company expects net loss to common shareholders to be between a loss of $2 million and income of 800000 or between a loss of <unk> 11.
Operator: And positive <unk> <unk> per diluted share.
Operator: Adjusted EBITDA is expected to be between $8 million and $12 million for the second quarter of 2024.
Operator: For the full year 2024, as Andy shared we anticipate consolidated full year 2020 for revenue in a range of $620 million to $630 million. We're also increasing our adjusted EBITDA guidance and now expected to range between $60 million to $70 million for the full year 2020.
Operator: We are also increasing our adjusted EBITDA guidance and now expect it to range between $60 to $70 million for the full year 2024. Our CapEx estimate of between $17 and $20 million for the year is unchanged. With that, Operator, we would like to open the line for questions.
Operator: For our Capex estimate of between 17% and $20 million for the year is unchanged.
Operator: With that operator, we would like to open the line for questions.
Operator: Yes.
Operator: Okay.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the conversation. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the conversation. Your first question comes from the line of Jasper Bibb with True Securities. Please go ahead.
Speaker Change: Thank you.
Operator: Floor is now open for questions.
Speaker Change: Have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Jasper James Bibb: If you would like to withdraw your question simply press Star one again.
Jasper James Bibb: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Operator: Again press star one to join the queue Andrew.
Operator: And your first question comes from the line of Jasper Bibb with true Securities. Please go ahead.
Operator: Okay.
Operator: Okay.
Jasper James Bibb: Hey, good afternoon. With the goal of getting Rasmussen back to total enrollment growth in the back half of the year, how should we think about what that would mean for Segment E, the DOM margins there, if you're successful?
Jasper James Bibb: Hey, good afternoon.
Jasper James Bibb: The goal to get Rasmussen back to total enrollment growth in the back half of the year.
Jasper James Bibb: How should we think about what that would mean for segment EBITDA margins there if you're successful.
Richard W. Sunderland: Hey Jasper, it's Rick. As we've said before, the fixed cost nature of the campus-based business. I think we've previously said we expect RAS to get to break-even EBITDA by the end of the year. And so you see, reaching break-even enrollment, increasing enrollment, should result in, will result in, break-even or positive EBITDA.
Jasper James Bibb: Hey, Jasper trick.
Jasper James Bibb: As we've as we've said.
Richard W. Sunderland: Fixed cost nature of the campus space business.
Richard W. Sunderland: With wood.
Richard W. Sunderland: Have high accretion with increases in those enrollment right and I think I think we've previously said, we expect <unk> to get to breakeven EBITDA by the end of the year and so you see reaching breakeven enrollment increasing enrollment should result, and will result in.
Richard W. Sunderland: Breakeven or positive EBITDA.
Jasper James Bibb: Thanks, that makes sense. And then it seems like a good pickup in revenue for student APUS this quarter. You just sat by the drivers of that, whether it's pricing increases, mix, and any expectations for revenue for students over the balance.
Jasper: Thanks that makes sense and then.
Richard W. Sunderland: It seems like a good pickup in revenue per student at Apus This quarter.
Jasper James Bibb: Can you just outline the drivers of that whether it's pricing increases mix.
Speaker Change: Any expectations on revenue per student over the balance of the year.
Richard W. Sunderland: It's both mixed and the modest tuition increases, Jasper. There is also an impact on, if you just do a straight calculation of revenue per student, the timing of a start at APIS. The monthly start is the first Monday of each month, and so, you know, maybe earlier in the month with a first of the month start, you're going to see a little bit higher revenue per student than if that start is pushed off to the seventh day of the month, right? Whatever the day, the first day of the month is. So it's a combination of mixed price increases, as well as just the simple timing of those monthly starts.
Jasper James Bibb: It's.
Jasper James Bibb: It's both mix and the modest tuition increases Jasper. There is also an impact on if you just do a straight calculation of revenue per student of the timing of the start at Apus.
Richard W. Sunderland: The monthly started the first Monday of each month.
Richard W. Sunderland: So is that.
Richard W. Sunderland: Maybe earlier in the month.
Richard W. Sunderland: With the first of the month start youre going to see a little bit higher revenue per student in it.
Richard W. Sunderland: Start is pushed off to the seventh of the month right whatever the Dave The first day of the month is so it's a combination of mix.
Richard W. Sunderland: Price increases as well as just the simple timing of those monthly starts.
Angela K. Selden: That's helpful. Last question for me, I wanted to dig a bit more into the Florida Rasmussen programs that were put on probation in March. Could you outline for us, I guess, first of all, if that creates any restrictions on your ability to enroll new students at those campuses and just what you're doing kind of in response to that?
Speaker Change: That's helpful.
Speaker Change: Last question for me I wanted to dig a bit more into the Florida Rasmussen programs that were put on probation in March.
Angela K. Selden: Could you outline for US I guess first of all if that creates any restrictions on your ability to enroll new students at those campuses.
Angela K. Selden: Just what youre doing.
Speaker Change: Thanks for that.
Angela K. Selden: Hi Jasper, it's Angie. Thanks for the question, and you know that we've been paying careful attention over the last few months. I'm here to talk about our quarterly NCLEX pass rates because we want to show quarter over quarter improvement. What's interesting about those two campuses, and frankly, it's true of all of our campuses in Florida, is that if you were to exclude Q1 of 23, from the calculation for all of 2023, so doing 2Q through 4Q.
Angela K. Selden: Hi, Jeff Burt to Angie.
Speaker Change: Thanks for the question and you know that we've been paying careful attention over the last.
Angela K. Selden: Year, and a half around our quarterly <unk> pass rates, because we wanted to show quarter over quarter improvement.
Angela K. Selden: What's interesting about those two campuses and frankly is true of all of our campuses in Florida is that if you were to exclude Q1 of 'twenty three.
Angela K. Selden: From the calculation for all of 2023, so doing <unk> three to <unk>.
Angela K. Selden: Each of our Florida campuses would significantly pass. And so while modeling, we recognize that that's not how the state does the calculation, but the reason why I'm pointing this out is because we saw a significant number of laggard test takers taking the exam in 1Q23. Because there were concerns about what the next-gen NCLEX exam would bring, and those folks hadn't been educated under a next-gen curriculum. And so we saw a significant number of beyond 45-day test takers in Q1, and we do not see the results of that continuing in Q2 through Q4 of 23, nor in Q1 of 24.
Angela K. Selden: Each of our Florida campuses with significantly path.
Angela K. Selden: And so while modeling we recognize that that's not how the state does the calculation, but the reason why I'm pointing this out is because we saw a significant number of.
Angela K. Selden: Laggard test takers.
Angela K. Selden: Taking the exam and <unk> 23 <unk>.
Angela K. Selden: There were concerns about with the Nexgen and clicks exam would bring and those folks hadn't.
Angela K. Selden: <unk>.
Angela K. Selden: Then educated under our Nextgen curriculum.
Angela K. Selden: And so we saw a significant number of of.
Angela K. Selden: Beyond 45 day test takers in Q1, and we do not see the results.
Angela K. Selden: Results.
Angela K. Selden: Of that continuing in Q2 through Q4, 'twenty three nor in Q1 of 24, so and just to put a finer point on one of those two campuses.
Angela K. Selden: So, and just to put a finer point on one of those two campuses, Fort Myers actually missed the Florida benchmarks for the year by less than eight points, and in particular, Ocala, missed the benchmark by 0.3%. So we do not have any limits on our ability to enroll students in those programs, and we are very bullish about the continued improvements that we expect in our full-year 2024 NCLEX pass rates in Florida. So very helpful.
Angela K. Selden: Myers actually missed the Florida benchmark for the year by <unk>.
Angela K. Selden: Less than eight points and in particular Ocala.
Angela K. Selden: I missed the benchmark by three.
Angela K. Selden: 3%.
Angela K. Selden: So we do not have any limits on our ability to enroll students in those programs and we are very bullish about the continued improvements that we expect in our full year 2024, and <unk> pass rates in Florida.
Jasper James Bibb: So, very helpful contacts. Thanks.
Speaker Change: Very helpful context, Thank you.
Speaker Change: Thank you.
Jasper James Bibb: Okay.
Operator: Again, if you would like to ask a question, please press star one on your telephone keypad. And your next question comes from the line of Alex Paris with Barrington. Please go ahead.
Jasper James Bibb: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Operator: And your next question comes from the line of Alex Paris with Barrington. Please go ahead.
Alexander Peter Paris: Hi guys, thanks for taking my question. Congratulations on the beaten race. I thought maybe I would dig a little bit into the critical investments planned for 2024. You've sort of telegraphed that that would be the case. You have a higher cap expectation for the full year. I'm just wondering if you can review for us what are the relative or what are the investments per institution, Rasmussen, APUS, Hundros, and how are they coming along, and are they front-end loaded or back-end loaded or evenly spread?
Alexander Peter Paris: Hey, guys. Thanks for taking my question congratulations on the beat and raise.
Alexander Peter Paris: I thought maybe I would dig a little bit into critical investments planned for 2024.
Alexander Peter Paris: You've sort of telegraph that that would be the case.
Alexander Peter Paris: You have a higher capex expectation for the full year I'm. Just wondering if you can review for US what are the relative or what are the investments per institution Rasmussen Apu as Honduras.
Alexander Peter Paris: And how are they coming along and are they front end loaded or backend loaded or evenly spread.
Angela K. Selden: Hi Alex and Angie, I'll start and then I'll ask Rick to follow along if I've missed anything. Let's start with Condros because there are some important things happening there. We, as I mentioned in my comments, we have two campus moves happening at Condros, beginning in the third quarter of 24. Those are critical.
ANZ: Hi, Alex It's ANZ I'll start and then I'll ask Rick to follow along if I've missed anything.
Angela K. Selden: Let's start with <unk>.
Angela K. Selden: <unk> because there are some important things happening there we as I mentioned in my comments, we have two campus moves happening in Honduras.
Angela K. Selden: Beginning in the third quarter of 24.
Speaker Change: Those are critical when we bought con drove over 10 years ago, along with the purchase came 10 year leases with.
Angela K. Selden: When we bought Condros over 10 years ago, along with the purchase came 10-year leases with some premium lease payments to the previous owner of Condros. Those leases are expiring, and we are finding ourselves presented with a great opportunity to relocate to more favorable locations and at lower lease costs. So while we may see some very short-term overlap in expenditure or a modest disruption in enrollment as a result of the move, we've already seen from moves of other campuses in Honduras really meaningful improvements, Dayton being the most notable in 2024, where we've seen meaningful improvements in enrollment and margin expansion for that campus.
Angela K. Selden: Some premium lease payment to the previous owner of Hydra those leases are expiring.
Angela K. Selden: And we are finding ourselves.
Angela K. Selden: <unk> with a great opportunity to locate to more favorable locations.
Angela K. Selden: And at lower lease costs, so while we may see some very short term.
Angela K. Selden: Overlapping in expenditure.
Angela K. Selden: Or a modest disruption in enrollments as a result of the move we've already seen from moves of other campuses handros really meaningful improvements statements being the most notable in 2024.
Angela K. Selden: We have seen meaningful improvement in enrollment.
Angela K. Selden: And margin expansion for that campus.
Angela K. Selden: The second thing that we're investing in at Honduras is the MA program. We've talked about this in prior quarters, and that program is launching in Ohio in Q3, and we look forward to sharing more results about that program as we have this call upcoming in the next quarter. Turning our attention to APUS, there are investments that we had signaled in the prior quarter that we will continue to invest in throughout the rest of 2024 around modernizing the curriculum.
Angela K. Selden: The second thing that we're investing in at high growth is the MA program. We've talked about this in prior quarters and that program is launching in Ohio in Q3, and we look forward to sharing more results about that program as we.
Angela K. Selden: Had this call upcoming in the next quarter.
Angela K. Selden: Turning our attention to <unk> there are.
Angela K. Selden: Investments that we had signaled in the prior quarter that we will continue to invest in throughout the rest of 2024 around modernizing the curriculum.
Angela K. Selden: There's a focus on both Refreshing the content in some of our core programs, and at the same time, looking for ways to incorporate a more digital forward content and focus into the curriculum at APUS. So we're very excited about how that will help us attract different student segments into APUS in future quarters. Those are really the primary investment areas for the time being. Rick, unless I've missed anything that you would want to share.
Rick: There is a focus on both.
Angela K. Selden: Refreshing the content in some of our core programs and at the same time looking for ways to incorporate a more digital forward.
Angela K. Selden: Content and focus into the curriculum and <unk>. So we're very excited about how that will help us attract different student segments into apus in future quarters. Those are really the primary investment areas for the time being Rick unless I've missed anything that you would want to share.
Richard W. Sunderland: Yeah, I would just say in terms of timing, Alex, it's more weighted to 1H than it is to 2H. A lot of the CapEx is in the campus investments, as Angie just described. And with the...
Rick: I would just say in terms of timing, Alex it's more weighted to $1 <unk>.
Rick: A lot of the Capex is in the campus investments as you just described and with the.
Richard W. Sunderland: The Moves being completed early in the third quarter, we're going to see a disproportionate level of investment in 1-H. The other large investment is in information technology. We've talked in the past, and you can see in the queue, about the various moves that are being made related to IT infrastructure. We're going to be insourcing Collegius, and then various parts of the IT operations are being outsourced. So there is significant investment that's going on related to the technology infrastructure associated with the various phases of that project. So more heavily weighted to 1H, Alex, than 2H.
Rick: The moves being completed early in the third quarter.
Richard W. Sunderland: To see the disproportionate level of investment in one H.
Richard W. Sunderland: The other the other.
Richard W. Sunderland: Large investment as in information technology.
Richard W. Sunderland: Yes.
Richard W. Sunderland: We've talked in the past and you can see in the Q about the various moves that are being made related to infrastructure, we're going to be in sourcing.
Richard W. Sunderland: Collegiate and then various parts of the.
Richard W. Sunderland: Operations are being outsourced. So there is significant investment that's going on.
Richard W. Sunderland: The technology infrastructure associated with the.
Richard W. Sunderland: The various phases of that project.
Richard W. Sunderland: No.
Richard W. Sunderland: More heavily weighted to one H, Alex then to H.
Alexander Peter Paris: Good, super helpful. And then the question is, is CAPEX sort of peaking this year, or do you expect a similar level going forward?
Alex: Got it Super helpful. And then the question is is capex sort of peaking this year or do you expect a similar level going forward.
Richard W. Sunderland: Well, certainly with the campuses. We're not going to be moving campuses every year, so you're probably going to see some moderation because of that. And then on the technology side, probably similarly.
Alexander Peter Paris: Well certainly with the campuses.
Alexander Peter Paris: We're not going to be moving cabinets as every year we.
Richard W. Sunderland: We do so youre going to see probably a moderation.
Richard W. Sunderland: Because of that and then.
Richard W. Sunderland: On the technology side, probably similarly.
Richard W. Sunderland: You can see, and I think you commented on how it's up year over year. Last year, 23 was probably a little bit lower than normal simply because of the financial performance of both Rasmussen and Handro, so we probably pulled back on some of our capital investments. We're catching up this year in some ways. We're investing in new campuses, which is really important. So I would say you'd see some moderation on this year's numbers as you go forward.
Richard W. Sunderland: You can see and I think you commented, how it's up year over year.
Richard W. Sunderland: Last year 23 was probably.
Richard W. Sunderland: Probably a little bit lower than normal simply because of the financial performance of both Rasmussen and hydro So we probably pulled back on some of our capital investments.
Richard W. Sunderland: We're catching up this year in some ways, we're investing in new campuses, which is really important.
Richard W. Sunderland: So I would say you would see some moderation off of this year's number as you go forward.
Angela K. Selden: The one additional thing I would share as we look into the end of 24 and into 25 is that upon acceptance of the 2023 financial results for APEI, Rasmussen will no longer be subject to growth restrictions, and so, consequently, we will have the opportunity to look at opening campuses and investing in programs at Rasmussen, and so that could be a place where we decide to invest in future growth at Rasmussen.
unknown: The one
Speaker Change: The one additional thing I would share as we look into the end of Tony for and into 25 is that.
unknown: Upon acceptance of the.
unknown: 2023 financial results for API.
unknown: Rasmuson will no longer be subject to growth restrictions and so consequently, we will have the opportunity to look at opening campuses and investing in programs at Rasmussen.
unknown: And so that could be a place, where we decided to invest into future growth at <unk>.
Alexander Peter Paris: Great, that makes sense. And then I guess the last little bit of the cats and dogs, FAFSA. I obviously, the delays there, the big mess that's going on, you don't have the traditional 18 to 22 year old, you don't have the traditional semesters, usually, I mean, there might be exceptions there. What do you think your exposure is to FAFSA?
Speaker Change: Great that makes sense.
Speaker Change: And then I guess, just the last little other cats and dogs Faisel.
Alexander Peter Paris: Obviously, the delays there the business thats going on.
Alexander Peter Paris: Have the traditional 18 to 22 year old you don't have the traditional semesters usually.
Alexander Peter Paris: There may be exceptions, what do you think your exposure is to fashion.
Richard W. Sunderland: Alex, to date, this is Rick, it really hasn't been much of a headwind, particularly at APIS with their monthly starts. There's probably a minimal impact at Honduras and RAS, which have, to your point, a more traditional kind of quarterly cadence. But really, at this point, Alex, it hasn't been a significant matter at any of those schools.
Alexander Peter Paris: Absolutely Alex Alex to date this is Rick it really hasnt.
Richard W. Sunderland: <unk> been much of a.
Richard W. Sunderland: A headwind, particularly in apus with there.
Richard W. Sunderland: Monthly starts there's probably a minimal impact at Honduras.
Richard W. Sunderland: Ross whichever to your point, a more traditional kind of quarterly.
Richard W. Sunderland: But really at this point, Alex it hasnt been a significant matter at any of those schools.
Alexander Peter Paris: Good. That's helpful. I'll get back to you. Thanks, guys.
Speaker Change: Okay. That's helpful I'll get back. Thank you thanks, guys.
Speaker Change: Thank you.
Operator: Your next question comes from a line by Raj Sharma with B Riley. Please go ahead.
Alexander Peter Paris: Your next question comes from the line of Raj Sharma with B Riley. Please go ahead.
Raj Sharma: Yeah, thank you for taking my questions. Again, congratulations on really good results and the and the beat and raise. I wanted to kind of touch upon again Rasmussen and, and, and, you know, there were certain changes that were put in place, there was new management, you know, that was integrated into the operations, and enrollments were an issue. Would you characterize Rasmussen as under control in terms of, you know, enrollments, and then could you give some color on cost control?
Raj Sharma: Yes, Thank you for taking my questions.
Raj Sharma: Again, congratulations for really good results in the in the beat and raise.
Raj Sharma: I wanted to.
Raj Sharma: And to touch upon again Rasmussen.
Raj Sharma: There were certain changes that were put in place there with new management.
Raj Sharma: That was.
Raj Sharma: Integrated into.
Raj Sharma: The operations in enrollments.
Raj Sharma: An issue would you would you characterize <unk> newson as under control in terms of.
Raj Sharma: Enrollments and then could you give some color on.
Raj Sharma: On the cost control.
Raj Sharma: Address Nielsen.
Angela K. Selden: Sure. I'll start, Rick, and then certainly weigh in here for me.
Speaker Change: Sure I'll start Rick and then certainly weigh in here for me Nice day here for me Raj.
Angela K. Selden: Nice to hear from you, Raj. So, yes, the management team has now been in place for a year. First and foremost, there is clarity around the campus program combinations for all of our campus-based programs and the marketing investments that we're making to grow and reweight the mix so that we are growing both nursing and non-nursing on the campuses. So, that has been a keen focus for that management team, and the results are certainly paying off.
Speaker Change: Yes, the management team has now been in place for a year.
Angela K. Selden: First and foremost there is clarity around.
Angela K. Selden: The campus program combinations for all of our campus based programs and the marketing investments that we're making to grow and re weight. The mix. So that we are growing both.
Angela K. Selden: Nursing and non nursing on the campuses. So that has been a keen focus for that management team and the results are certainly paying off as you can see the continued improvement in the trends that we've seen on camp on the campus base.
Angela K. Selden: Enrollments.
Angela K. Selden: As you can see, the continued improvement in the trends that we've seen on campus-based enrollment. Certainly, online has seen significant improvement, and we've got positive online enrollments for this quarter, and that trend has continued for the last several quarters.
Angela K. Selden: Certainly online has seen significant improvement and we've got positive online enrollment for this quarter and that trend has continued for last several quarters.
Angela K. Selden: So the marketing is aligned now with our growth areas, and that has been a significant amount of work in partnership between the Rasmussen Management Team and the API Marketing Team, and so both are pleased with the progress that we've made there. As it relates to the cost structure, there was a significant amount of right-sizing of costs both at Rasmussen in the third and fourth quarter of last year as well as at APEI related to some of the services, particularly in IT and in marketing, that were being provided to Rasmussen.
Angela K. Selden: So the marketing is aligned now with our growth areas and that has been a significant amount of work in partnership between the Rasmussen management team and the API marketing team and so.
Angela K. Selden: Both are pleased with the progress that we've made there as it relates to the cost structure. There was a significant amount of.
Angela K. Selden: Right sizing of costs both at Rasmussen.
Angela K. Selden: The third and fourth quarter of last year as well as at API related to some of the services, particularly in <unk>.
Angela K. Selden: And in marketing that were being provided to <unk> one of the most notable is the relationship.
Angela K. Selden: One of the most notable is the IT relationship with the third-party outsourcer Collegius. We are in the final stages of migrating that IT infrastructure from the third party to APEI and its providers, and that will lead to a significant margin expansion for Rasmussen beginning in the fourth quarter of 2024, and certainly, we'll see the benefit of that for the entire year of 2025. I'll turn it over to Rick if he's got anything he wants to share.
Angela K. Selden: <unk> relationship with the third party Outsourcer collegiate we are in the final stages of migrating that.
Angela K. Selden: Yes.
Rick: Infrastructure from the third party too.
Rick: And its providers and that will lead to a significant.
Angela K. Selden: Margin expansion for for Rasmussen in beginning in the fourth quarter of 2024, and certainly we will see the benefit of that for the entire year of 2025.
Angela K. Selden: Alright over to Rick you've got just answer sure, Yes, Hey Raj.
Rick: Got a few things.
Richard W. Sunderland: S&P in total is down $7.5 million. Almost $6 million of that is at RAS. And you have the $2.4 million collegiate fee that didn't repeat.
Speaker Change: S&P in total is down $7 5 million.
Angela K. Selden: $6 million of that is it Ross you have the $2 4 million clearly just fee that didn't repeat.
Richard W. Sunderland: But marketing costs, advertising, and marketing support are down almost another $2 million. So we have to thank the marketing team for optimizing while delivering on what we consider a favorable enrollment trend at RASMUS. To Angie's point, just across the board, good cost control by the entire management team. So we applaud that, and particularly in the area of labor, probably leveraging off of some of the right-sizing that was done last year, but also continuing that cost focus. And one of my favorite terms is "trim while investing." So they are actually investing in areas like admission staff, which is important to drive the enrollment trend. So it's not all about reducing emissions.
Rick: Marketing costs advertising marketing support are down.
Richard W. Sunderland: Almost another $2 million. So we have to thank the marketing team for optimizing while delivering on.
Richard W. Sunderland: But we consider favorable enrollment trends at rasmuson.
Richard W. Sunderland: To <unk> point, just across the board good cost control by the entire management team. So we applaud that.
Richard W. Sunderland: Particularly in the area of labor.
Richard W. Sunderland: Probably leveraging off of some of the right sizing that was done last year, but also continuing that that cost focus.
Richard W. Sunderland: And one of my favorite term is trim, while investing so they are actually investing in areas like admission staff, which is important to drive the enrollment trend. So it's not all about reducing it's also about investing where it makes sense to deliver the results that we.
Richard W. Sunderland: It's also about investing where it makes sense to deliver the results that we expect to be seeing later this year and beyond. I'll just do one shout-out to the academic team who have been focused on, with the admissions and enrollment team, retention. There's been a significant improvement, in particular, in first term and second term retention in that partnership between those two teams. And as you know, if you don't have to source a new student to backfill for that revenue, you keep the students that you have and allow them to persist and graduate. Everybody wins. And so that has been a significant effort, and there's been meaningful improvement in retention at Rasmussen as a result.
Richard W. Sunderland: We expect to be seeing later this year and beyond.
Richard W. Sunderland: Ill just do one shout out to the academic team who has been focused on with the <unk>.
Richard W. Sunderland: Misses enrollment team on retention there has been a significant improvement in particular in first term and second term retention.
Richard W. Sunderland: That partnership between those two teams and as you know if you don't have the source of new student to backfill for that revenue you keep the students that you have and allow them to persist and graduate everybody wins and so that has been a significant effort and there has been meaningful improvement in retention of assets and as a result.
Angela K. Selden: Got it. That's really helpful. And then on the enrollment side on Rasmussen, I see enrollment really improving, you know, you can, you can see the improving enrollment trends. Would you say we are close to a bottom?
Speaker Change: Got it that's really helpful. And then on the enrollment side on RASK missing I see really improving you can even see an improving enrollment trends would you say we are close to a bottom.
Angela K. Selden: As we have signaled now for a few quarters, Raj, we do believe that we will, in the back half of 24, see enrollment trends turn positive. So, yes.
Angela K. Selden: As we have signaled now for a few quarters right. We do believe that we will in the back half of 'twenty four.
Angela K. Selden: See enrollment trends turn positive.
Angela K. Selden: Yes.
Raj Sharma: Right, got it. That's very helpful. And then on the AR collection side, are we all kind of current with respect to the art?
Speaker Change: Got it.
Angela K. Selden: Right.
Speaker Change: Got it.
Speaker Change: Very helpful and then on the.
Speaker Change: Our collection side.
Speaker Change: All right.
Raj Sharma: Okay.
Raj Sharma: With respect to the army.
Richard W. Sunderland: Raj, there remains an amount that is hung up in what I'll call the Go Army Edge of Transition.
Speaker Change: Raj there remains an amount that is hung up in what I'll call the <unk>.
Richard W. Sunderland: Army Ed transitioned so thats quite all of it is not a significant amount of money.
Richard W. Sunderland: So that's quite old. It's not a significant amount of money. We continue to work directly with the relevant parties at the Army to clean that up. So there is an amount. First of all, compared to the total, that is beyond that, let's call it 60 days, 90 days from start, which is how we measure our effectiveness from a collection side. The system is functioning as designed at this point.
Richard W. Sunderland: We continue to work directly with the relevant parties at the army to clean that up.
Richard W. Sunderland: So there is an amount.
Richard W. Sunderland: Small compared to the total that is beyond that let's call. It 60 days 90 days from start which is how we measure our effectiveness from a collection side the system is functioning.
Richard W. Sunderland: As as designed at this point.
Richard W. Sunderland: Billing Monthly, Collecting Monthly, and so it's really just the tail dollars associated with that transition. I mean, those amounts are from 21 and 22, right? They're not amounts that are getting generated now, right? No, no. We're collecting on the current billings, which is reflective of the system working, but there is still some cleanup to do, and we're diligently working to clean those up with the Army. So we're not engaged directly with the relevant parties at the Army that collect those older amounts.
Richard W. Sunderland: Billing monthly collecting monthly.
Richard W. Sunderland: And so it's really just the tail.
Richard W. Sunderland: Dollars associated with that turning those of those amounts are from 'twenty, one and 'twenty, two but theyre not.
Richard W. Sunderland: We are getting generated now don't know where collect we're collecting on the current billings.
Richard W. Sunderland: It is reflective of the system.
Richard W. Sunderland: Working.
Richard W. Sunderland: But there is still some cleanup to do and were diligently working to clean those up with the army right Theres still engage directly with the relevant parties at army collectors older amounts.
Raj Sharma: That's a great color. Thank you.
Richard W. Sunderland: That's great color. Thank you and just lastly on Grad School I know, it's a much smaller business.
Raj Sharma: Any sort of color on the.
Raj Sharma: The margins were slightly worse year on year.
Raj Sharma: And a reduction in revenue as any sort of plans or.
Raj Sharma: And just lastly, on grad school. I know it's a much smaller business. Any sort of color on the margins were slightly worse year on year due to a reduction in revenues, any sort of plans, or anything. Just some color.
Speaker Change: Just some color.
Angela K. Selden: Sure, so grad school, as we reported in our last earnings call, had been affected by the government's continuing resolution or the fact that the budget had not been passed, and many of the agencies who used their government funding for training dollars had to pause their training. Now that we're out from underneath that, there is a renewed focus from that team on both individual registrations by individual federal workers as well as group training that is now getting scheduled.
Raj Sharma: Sure.
Raj Sharma: So Grad school as we reported I think in our last earnings call.
Angela K. Selden: <unk> had been affected by the government's continuing resolution or the fact that the budget has not been passed in many of the agencies who.
Angela K. Selden: Used their government funding for training dollars had to pause their training. We are now with that we're out from underneath that.
Angela K. Selden: There is a renewed focus from that team on both individual registrations by individual federal workers as well as group training that is now getting scheduled. So there is a significant push to close that gap between now and the end of the year and.
Angela K. Selden: So there is a significant push to close that gap between now and the end of the year, and the entire graduate school and API team are leaning in to do what we can to close that gap in revenue for the remainder of the year. Great, thank you.
Angela K. Selden: <unk>.
Angela K. Selden: The entire both graduate school and API team are leaning in to do what we can do to close that gap in the revenue for the remainder of the year.
Raj Sharma: Great, thank you. Thank you for answering my questions. Again, congratulations on raising the guidance and the beaten race. I'll take it offline.
Speaker Change: Great. Thank you. Thank you for answering my questions again, congratulations on raising the guidance.
Raj Sharma: On the beat and raise I'll take it offline. Thank you.
Speaker Change: Thanks, very much Raj Thanks Raj.
Operator: There are no further questions at this time. Thank you, everyone, for your participation. This concludes today's conference call. You may now disconnect.
Speaker Change: There are no further questions at this time. Thank you everyone for your participation. This concludes today's conference call you may now disconnect.
Operator: Okay.
Operator:
Operator: Yeah.
Operator: Yes.
Operator: Sure.
Operator: Yeah.