Q3 2024 American Public Education Inc Earnings Call
Pam: Thank you for standing by. My name is Pam and I will be your conference operator today.
Speaker Change: At this time, I would like to welcome everyone to the American Public Education, Inc. Third Quarter 2024 Earnings Conference Call.
Speaker Change: All lines have been placed on mute to prevent any background noise. 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.
Speaker Change: If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Brian Prenoveau, Investor Relations. You may begin.
Brian Prenoveau: Thank you, Pam, and good afternoon, everyone. Welcome to the American Public Education's conference call to discuss third quarter 2024 results.
Brian Prenoveau: 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 Summers, Senior Vice President and Chief Strategy and Corporate Development Officer.
Brian Prenoveau: Materials for the call today are available in the events and presentation section of APEI's website.
Brian Prenoveau: Statements made today, 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 Prenoveau: Poor-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.
Brian Prenoveau: Forelooking statements may sometimes be identified by words like anticipate, believe, seek, could, estimate, expect, can, may, plan, potentially, reject, should, will, would, and similar or opposite words.
Brian Prenoveau: Forward-looking statements include, without limitation, statements regarding expectations for registration and enrollments.
Brian Prenoveau: 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 and cost savings efforts.
Brian Prenoveau: 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.
Brian Prenoveau: Management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors regarding its results of operations
Speaker Change: and should only be considered in addition to, 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.
Angela Selden: Thank you, Brian. Good afternoon, and thank you for joining American Public Education's third quarter 2024 earnings call. On today's call, we have four important areas to highlight.
Angela Selden: First, at APEI, on all key metrics, we have met or beat our third quarter 2024 guidance.
Overall, APEI revenues increased 1.5% year-over-year to $153 million.
Angela Selden: the fourth consecutive quarter of Year-over-Year Growth and within our guidance range.
Angela Selden: Adjusted EBITDA was above our guidance range at $12.9 million. Net income of $731,000 equaled 4 cents per diluted share and was at the high end of our guidance range.
Angela Selden: Second, in the third quarter of 2024, Rasmussen University posted its first year-over-year increase in total enrollment since the API acquisition.
Next, our fourth quarter 2024 outlook is very strong.
Angela Selden: APUS total net course registrations are expected to grow four to six percent when compared to last year.
at Rasmussen and Hongrove.
Angela Selden: Fourth quarter student enrollments are actual because of the quarterly starts at these schools.
Angela Selden: At Rasmussen, fourth quarter total enrollment increased 4% when compared to the fourth quarter of 23, and is our second consecutive quarter of overall positive year-over-year enrollment growth.
Angela Selden: And earlier this year, we signaled this positive turn and are pleased that it is occurring. At Hondros, fourth quarter total student enrollment increased 19% year over year to approximately 3,700 students.
And finally, because of these accomplishments and our overall progress.
Angela Selden: Full year 2024 revenue guidance is $620-$625 million, which is 3-4% greater than 2023.
Angela Selden: And full year adjusted even at guidance is 64 to 67 million dollars and 7 to 12 percent greater than 2023. Both are within the 2024 annual guidance range we've provided in 1Q24.
Angela Selden: Now, I'd like to provide more detail about the results and trajectory, starting first with APEI's Nursing and Healthcare Institutions.
Angela Selden: As discussed in previous calls, at Rasmussen, we have invested significant effort and resource to strengthen its foundation for long-term growth.
Angela Selden: These efforts are showing real dividends with continued improvement in student outcomes, increasing enrollment, and positive financial performance.
Angela Selden: 3Q24 was the first quarter that Rasmussen experienced positive year-over-year enrollment growth since API's acquisition. And now, in 4Q24, the trend has accelerated as enrollments are up 4% when compared to the fourth quarter of last year.
Angela Selden: Notably, this enrollment growth has occurred even with the enrollment impact of Rasmussen's voluntary campus closings in Wisconsin. We are further encouraged by the underlying strength in enrollment momentum.
Angela Selden: Beyond enrollment, we signaled that Rasmussen would be even up positive in the second half of 2024, and we affirmed that we are on track to deliver on that promise.
Angela Selden: In terms of student outcomes, Rasmussen again produced strong NCLEX pass rates, where year-to-date 23 of 25 programs are meeting the required state threshold.
Angela Selden: Additionally, Rasmussen received positive news regarding its campuses in Moorhead, Minnesota and Overland Park, Kansas, where both received six years continuing accreditation. And importantly, in Illinois,
Angela Selden: Our Romeoville campus, along with its off-campus instructional sites in Aurora-Naperville, Mokina-Kinley Park, and Rockford, received initial accreditation from the Accreditation Commission for Education and Nursing, or ACEN.
following reviews and applications.
Angela Selden: From the underlying strength in enrollment trends and rebounding bottom line financial performance to the continued improvement in student outcomes and accreditation results, we remain very optimistic about how Rasmussen is positioned for 2025 and beyond.
Richard Sunderland, Christopher Symanoskie,
Angela Selden: At Honduras, as previously reported, 3Q24 enrollment remained strong, with 10% growth versus third quarter of 2023.
Angela Selden: Fourth quarter enrollments in 2024 continue this trend, increasing more than 19% year-over-year to 3,700 students. This marks the 19th consecutive quarter that Handro's course posted year-over-year enrollment growth.
Angela Selden: Demand remained strong at Hondros for both the PN and ADN nursing programs, and we received welcome news at several of our campuses.
Angela Selden: Our Detroit, Michigan campus accreditation was affirmed in July, and in several Ohio campuses, we have improved overall retention above the 70% benchmark.
with the positive results of both Rasmussen and Hondros.
Angela Selden: Along with our efforts to simplify our healthcare platform, we underscore that these results reflect our continued belief that nursing and healthcare educational programs will meaningfully contribute to APEI's overall future growth.
Angela Selden: As we have previously shared, nursing and healthcare practitioners remain in high demand. It is estimated that there are over 200,000 nurses needed every year in this country.
Angela Selden: Our colleges educate approximately 10,000 nurses per year, so we expect significant growth as we continue to close the gap in the unmet market need.
Angela Selden: Now I'd like to turn our attention to API's online university serving the nation's military and veteran segment, APUS.
Angela Selden: In 3Q24, revenue at APUS was approximately 1% higher due to both the overall growth in registration as well as higher average revenue per registration due to modest tuition and fee increases implemented last year.
Angela Selden: As we mentioned last quarter, EBITDA margins at HUS declined modestly as the company has invested in 2024 to strengthen its online curriculum, IT infrastructure, and better align its marketing spend.
Angela Selden: In the fourth quarter, we are already experiencing increases in registration at APUS based on this work and expect 4Q24 registrations to grow 4 to 6% versus 4Q23.
Angela Selden: Additionally, we have seen some early returns on our extended family strategy to grow registration in our military families market.
Angela Selden: Overall at APEI, we have carved out distinctive market positions. American Military University, or AMU, is the number one provider of higher education to both the United States military and has been named the top choice nationwide for veterans using their GI Bill benefits.
Angela Selden: Both Hondrich and Rasmussen continued to tackle the chronic nursing shortage by graduating thousands of new nurses each year, where the demand for nurses is expected to grow significantly for the foreseeable future.
Angela Selden: Overall, with Rasmussen and Honduras delivering revenue growth, margin expansion, and student success, expansion of our nursing campus footprint in the coming years will allow us to strengthen our impact in addressing the large demand for nursing and other clinical roles in our overstretched healthcare system.
Angela Selden: We fundamentally believe in our vision that education can transform lives, advance careers, and improve communities.
Angela Selden: With higher education as one of the key factors in employment and advancement, we're proud of the value and affordability our programs provide to those in healthcare fields and military, veterans, and government employees.
Angela Selden: Each of our education units were purpose-built to deliver on that vision by attracting and educating service-minded students, offering accessible and affordable higher education and training across a diverse range of subjects.
Angela Selden: and our Learn to Earn focus enables students to experience a strong, lifelong return on their educational investment.
Angela Selden: With that, I will now turn the call over to APEI's CFO, Rick Sunderland. Thank you, Angie. Total revenue in the third quarter was $153.1 million, up $2.3 million, or 1.5% from the prior year period.
Rick Sunderland: Third quarter revenue growth was driven by increased revenue at HUS, Condros, and Rasmussen, partially offset by a revenue decline at graduate school. Revenue for the quarter was within our guidance range.
Rick Sunderland: Total cost of expenses in the third quarter increased $4.6 million, or 3.2%.
Rick Sunderland: compared to the third quarter of 2023. Included in the quarter-over-quarter increasing costs is $1.1 million in information technology transition services costs, which are added back to adjusted EBITDA.
Rick Sunderland: Excluding information technology transition services costs, total cost of expenses increased $3.5 million, or 2.4%, primarily driven by higher compensation costs, including variable comp and professional fees.
Rick Sunderland: In the third quarter, diluted income per common share was $0.04 compared to an adjusted income per diluted share of $0.02 in the prior quarter, which excludes a $5.2 million loss on equity investments.
Rick Sunderland: Third quarter adjusted EBITDA was $12.9 million, which is about the top end of the guidance range, and represented an adjusted EBITDA margin of 8.4%.
Rick Sunderland: At ACUS, third quarter revenue increased 0.8% as compared to the prior year to $77 million due to a 0.2% increase in net quartz registrations.
Rick Sunderland: driven by an increase in registration by military-affiliated students utilizing veterans benefits and tuition and fee increases in the second quarter of 2024.
Rick Sunderland: For the quarter, EBITDA margin was 29% compared to 30% in the prior year period.
Rick Sunderland: At Rasmussen, third quarter revenue was $52.6 million, an increase of 1% compared to the prior year due to stabilized enrollment and tuition increases effective in the first quarter of 2023 and 2024 for select programs.
Rick Sunderland: It is important to note that ISOC will report growth in total enrollment in the second half of 2024 as compared to the prior year.
Rick Sunderland: In the third quarter, Rasmussen's EBITDA improved to a loss of $4.5 million, compared to an EBITDA loss of $5.3 million in the prior year. As previously stated, we expect second half 2024 EBITDA at Rasmussen to be positive.
Rick Sunderland: At Honduras, third quarter revenue was up 12.8% to $15.5 million as compared to the prior year, period, due to continued enrollment growth.
Rick Sunderland: For the quarter, Congress total enrollment grew 10.4% to approximately 3,100 students.
Rick Sunderland: At Ponderos, David Dallas was $0.3 million in both the third quarter of 2024 and 2023. We expect the continued enrollment growth at Ponderos will lead to improved financial performance into 2025.
Rick Sunderland: Revenue at Graduate School, included in corporate and other, was $8 million, compared to $8.6 million in the prior year period. For the quarter, Graduate School EBITDA was $1.3 million, compared to EBITDA of $1.6 million in the prior year.
Rick Sunderland: At September 30, 2024, total cash, cash equivalents and restricted cash was $162.2 million, an increase of $17.9 million from year-end 2023.
Rick Sunderland: For the nine months ended September 30, 2024, cash flow from operations was $47.3 million, compared to $48.7 million in the prior year.
Rick Sunderland: CapEx for the nine months was $17.7 million, and free cash flow for the nine months, defined as adjusted EBITDA, less CapEx, was $23.2 million, compared to $24.4 million a year ago.
Rick Sunderland: Principal and API's term loan at September 30th was 96 million. With unrestricted cash of 135 million, API continues to be net cash positive. Additionally, there are no borrowings under API's 20 million dollar revolving credit facility, which remains fully available.
Turning now to the fourth quarter 2024 Outlook.
Speaker Change: APUS total net course registrations are expected to be between 94,400 to 96,100 registrations representing a 4% to 6% increase when compared to last year.
Speaker Change: At Rasmussen and Honduras, fourth quarter student enrollments are actual because of the quarterly starts at these schools.
Speaker Change: At Rasmussen, fourth quarter total online enrollment increased 9% to approximately 8,300 students, while total on-ground enrollment decreased 3% to approximately 6,300 students for an aggregate enrollment of approximately 14,600 students.
Speaker Change: This represents a 4% increase when compared to the fourth quarter of 2023, and is our second consecutive quarter of overall positive year-over-year enrollment growth at Rasmussen.
Speaker Change: In contrast, fourth quarter total student enrollment increased 19% year-over-year to approximately 3,700 students.
Speaker Change: In the fourth quarter of 2024, consolidated revenue is expected to be between $159 million and $164 million. The company expects net income to common shareholders to be between $9 million and $11 million.
for between $0.47 and $0.56 per diluted share.
Speaker Change: We are updating full-year guidance with anticipated consolidated full-year 2024 revenue in a range of $620 million to $625 million.
Speaker Change: We expect our adjusted EBITDA to be between $64 million and $67 million for the full year of 2024, and capital expenditures to be between $19 million and $22 million. This translates to free cash flow expectations for the full year of at least $42 million.
Speaker Change: Seasonally, the fourth quarter tends to see a notable increase in adjusted EBITDA, including as RAS blessing continues to improve in the fourth quarter.
Speaker Change: I will now pass it back to Angie to offer some closing remarks, after which we will begin our question and answer session.
Thank you, Rick.
Speaker Change: During the quarter, we continue to execute on our initiatives to grow enrollment at APUS.
Speaker Change: and Stabilize and Increase Profitability at Rasmussen and at Hondra. We're further encouraged by the performance at those two institutions as enrollment numbers, student outcomes, and financial performance continue to increase.
Speaker Change: Market Fundamentals continues to support our business strategy with increasing demand in higher education and the online education market, significant government education benefits for military veterans.
Speaker Change: With our number one market position in active duty military and veterans, and a focus on the high demand sectors like nursing, we are well positioned to capitalize on this growth.
Speaker Change: We continue to execute against our key milestones, and I believe that we have strengthened the foundation of a business that can deliver value to its students, stakeholders, and their communities for years to come.
Speaker Change: With that, I'd now like to hand the call back to the operator to begin our question and answer session. Operator.
Speaker Change: Thank you, Angie. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: If you are called upon to ask a 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.
Speaker Change: And your first question comes from Raj Sharma of B. Reilly Securities. Please go ahead.
and many more. Thank you. Thank you.
and many more. Thank you. Thank you.
Raj Sharma
Speaker Change: Hi, sorry about that. Thank you for taking my questions. Congratulations on the improvements that you had talked about earlier.
Speaker Change: I have a question on the profitability of APIS is so significantly higher than all the other divisions.
Speaker Change: You know, there's the loss of $42 million on EBITDA. I just want to understand again, is there fundamentally something different in the businesses
Speaker Change: And can the rest of the businesses, even though they are at a revenue run rate of 300 million, you know, can they ever
Speaker Change: Just your thoughts on that would be great. And then I've got just a follow-on question.
Rick Sunderland: Hey Raj, it's Rick. Thanks for the question. Let me start and then I'll let others add. Well, first of all, I'm a 40 million.
Speaker Change: You referenced, right, that includes corporate and other unallocated corporate, right? You can see that in the segment reporting.
Speaker Change: And so that doesn't in total reflect the other businesses, other than the fact that we do have a corporate element to our consolidated reporting. When you talk about the profit margin at APS and you're looking at the other businesses, those are different.
Speaker Change: operating models, right? You have the campus-based operations versus the fully online at Congress and the blended model at RAS. And I think we've talked in the past about
Speaker Change: not only the direction and the current momentum we see, but also what we could expect from those other campus-based businesses.
So, when you look back,
which is what you are referring to.
We were having a period of challenge at Rasmussen, right?
Speaker Change: And as we've demonstrated through this year, and I think you noted.
Speaker Change: The fact that the end of the year is performing in line with what we had previously described to the market, we're going to see improved margins. We are seeing improved margins, and you'll see improved margins in the fourth quarter, and we think that represents a good chopping off point.
Speaker Change: For 2025. So with that, I'll stop and let either Steve or Angie add to my answer.
Speaker Change: Raj, this is Steve. I think the other important point is you're kind of highlighting the differences in the EBITDA that there's a meaningful corporate and shared services expense. So, you know, that is a, that's an element of the other units are not as negative as sort of as you described. So I just want to point that part out.
Thank you. Thank you. Thank you.
Speaker Change: Yeah, thank you. I guess I got related on that. What, you know, the corporate costs, they seem to be, the run rate is about $30 million.
Speaker Change: Now, they seem to have gone up significantly from last year.
Am I looking at this correctly?
Speaker Change: So, Raj, we touched on the reasons for the increase. Of course, we have the technology transition service costs, which you add back. So, I don't know if you're looking at.
the segment reporting which would be before the add-backs.
Speaker Change: In that variable comp, you can find the year-over-year change and
Speaker Change: variable comp in node 2 of the 10Q. It's substantial 2.4 million.
Speaker Change: and that's mostly at the corporate level, right? And so we are investing in our people.
Right, we are performing.
Speaker Change: I think well against our expectations. I want to check your number. I can't do it here on the fly about the $30 million, but that to me seems high.
Speaker Change: But I can go back, Raj, and we can connect after the call or, you know, later. Oh, and the last thing, when you look at the segment we're reporting, Raj, you do have Graduate School USA reported in that segment, so you have to parse that out.
Speaker Change: I think you can get to what that number looks like when you go to the PowerPoint, and there's a split, if you will, of the EBITDA amongst all the units, and so you can get a sense between the revenue and the EBITDA of what the costs are in there related to graduate school. Sorry I didn't mention that earlier.
Speaker Change: Great, thank you. And then just one last question on, is there a
Speaker Change: an estimate on the EBITDA margin on Rasmussen and Q4. I know you've commented that it's going to be positive.
Thank you. Thank you.
Speaker Change: You have, you know, out of the overall EBITDA, what is the EBITDA margin on Rasmussen for Q4?
Speaker Change: Well, let me look at it this way. You know what the EBITDA and the EBITDA margin was in Q3, and we just said that for the second half of the year, it will be positive, right? So I don't, I don't know that I'm going to give out a specific percentage.
Speaker Change: But we have turned the corner, as we said earlier in the year, moving RAS from an EBITDA loss to an EBITDA positive, and the fourth quarter number
Speaker Change: Just to state the simple math, Raj, which you've done, I'm sure.
Speaker Change: you know, the profit number has to be greater than the...
Speaker Change: and the recording of the loss to output a favorable number for the second half of the year. I don't think, Ross, you haven't typically given, you know, I've talked about this when we were on the West Coast about specific guidance related to specific operating units.
Speaker Change: Got it. Thank you again for answering my questions and once again congratulations on the improvements in Rasmussen. I'll take it off. Thank you Raj.
Speaker Change: Your next question comes from Jasper Bibb with Truist Securities. Please go ahead.
Thank you.
Speaker Change: Hey, good afternoon, everyone. I saw the note in the Thank You about going back to $2.50 a credit hour for the military-rated APIS Master's programs.
Speaker Change: I was just hoping you could speak to the change in your pricing there and does that change have any implications for APIS revenue per student or margin in 25, the tuition increases that were put in place earlier this year?
Speaker Change: Yeah, Dr. Turek, let me start with that. So when you look at the distribution of degrees,
Dr. Turek: across the institution. Graduate level students are a very small segment, but predominant is at the bachelor's level, and then of course that carries to the military, which is the largest single student segment at APUS.
And so it's a relatively small population.
Dr. Turek: We had increased that graduate level price back in, that was earlier in the year, I believe it was April.
Dr. Turek: and thought that, you know, that population, that that would be acceptable.
Dr. Turek: We looked at it and we said, you know what, our DNA for the military is really no out-of-pocket costs.
Dr. Turek: Go back to Jim Etter, you know, who founded American Military University. Military students utilizing tuition assistance should be able to attend and complete with no out-of-pocket costs.
Dr. Turek: And we really felt like we needed to keep that as our core and our core value. So, we returned to that pricing level. To answer your specific question,
Dr. Turek: It doesn't have a big effect on revenue per student consolidated for APUS, either up or down, right? So you won't see a significant fluctuation because of that. Without all positive, Angie, do you want to add anything?
Angela Selden: I wouldn't add anything to that. I agree with what Rick had to say. Thank you.
Good question, Jasper. OK.
Yeah, sure.
Speaker Change: Again, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: And the next question comes from Stephen Sheldon with William Blair. Please go ahead.
Speaker Change: Hey everyone, you have Matt Filodon for Steve and Sheldon. Thank you for taking my questions.
Speaker Change: Looking into 2025, do you expect enrollment growth at Rasmussen to be roughly balanced between
Speaker Change: And secondly, can you provide some more detail on the EBITDA margins for an in-person enrollment compared to an online enrollment at Rasmussen?
Thanks, Matt. Hi, Sandy. Let me start and.
Speaker Change: We have signaled in the past a few earnings calls that we are seeing positive enrollment momentum at the reference in online business, and that has not changed. So we will expect to continue to see positive online growth in enrollment in 2025.
Speaker Change: We have seen the campus enrollments rebound. We're very pleased with
Speaker Change: the improvements that are occurring there and you know we do believe that a portion of that is tied to
Speaker Change: I'll turn the second question over to Rick or to Steve.
Speaker Change: Do you want to comment on how we might look at margin between the two businesses?
Yeah, I think given that the on-ground is heavily
Speaker Change: heavily fixed cost structure, right? We would expect to see a rebound in that. Matt, I think we've talked that over the next one to two years, we would see overall margins at
Rasmussen: Rasmussen moved to the five to ten percent range over that period of time and
Rasmussen: You know, we're at a we're at kind of a pivot point on the on ground moving from slightly negative enrollments to positive. So we would expect to see that.
Rasmussen: margin accelerate over time, whereas we're already in a positive situation with the online component of it. So
Rasmussen: I think it's more about seeing a normalization in the on-ground, and so in the short term, you might see a faster improvement in the on-ground as we grow our scale. But in general, I don't think that we're anticipating wide variances between the two populations.
And I would just add that the difference between
Rasmussen: The enrollment in Q3 and the enrollment in Q4 is showing the acceleration of our, even our contribution as the business has hit that inflection point and is growing in both the online and the campus-based businesses.
Speaker Change: Got it. Yeah, that's super helpful context. Thank you, Angie and Steve. And then had one on APUS. Last quarter, you talked about increasing marketing spend there to spur enrollment growth and was just curious if you could further elaborate on progress with that revised marketing strategy at APUS.
Sure, I'm happy to start and others can join.
Speaker Change: You know, we kind of up-leveled our marketing team and our marketing leadership last year. And one of the things that that team did was pay careful attention to our global market strategy, where are we spending our marketing dollars and increasing yield. And we see that really taking hold here as we signaled in the fourth quarter.
Speaker Change: are APUS net course registrations, we anticipate are gonna grow between four and 6%. So as those marketing improvements take hold, we really are seeing the corresponding effect now with APUS.
Speaker Change: in the fourth quarter. And so, we are very confident about...
those strategies and believe that we have found the balance.
Speaker Change: in terms of lead generation. And the second thing that we have done in this last two quarters at APUIS is also strengthen our admissions and enrollment processes.
We have added talent.
Speaker Change: to make sure we have sufficient workforce to be able to tackle all the additional needs that are coming in. And we have looked at our policies and our processes to make sure that each of our folks
Speaker Change: are well-trained to be able to do that in a high-quality way and be sure to answer the specific questions that each of our prospects are asking. And so we believe with that additional training and that additional workforce that we have been able to get after the weeds in a higher quality way. And we also believe that that's part of the four to 6%.
Speaker Change: Registration for us we're seeing in the fourth quarter when we don't anticipate that that's going to subside. And Matt, the only thing to add is that 46% is on a
Speaker Change: Pretty challenging comp. I think if you go to the fourth quarter of last year, registration growth at APUS was 4%, right? So we're not coming off an easy comp and we're putting up a really solid number in Q4.
Speaker Change: Great. Thank you, team, and nice work on the continued improvements.
Thank you.
Speaker Change: Your next question comes from Jasper Bibb, again, of Truist Securities. Please go ahead.
I don't know.
Speaker Change: Thanks for taking the follow-up. I just wanted to ask about the Honduras segment. The enrollment growth there has been really impressive. How do you think about
Speaker Change: may be, over a longer term period, bringing that segment up to a profitable
Speaker Change: margin or kind of the target mid-teens margin that you've outlined for Rasmussen given what you're doing from an enrollment perspective.
Speaker Change: Thanks Jeff for a great question and something to pay careful attention to.
Speaker Change: There are a few things that Pinebrook tackled this year, namely a few of its locations were getting end-of-life on their leases and needed to move. So there were some investments that needed to be made in order to be able to move to more favorable locations. We are seeing the positive enrollment growth that we talked about, 19% year-over-year, as a result of moving those what were 10-year leases to new, more favorable locations.
The second thing that we are
Continuing to focus on is
Speaker Change: adding both programs. So we talked in the earlier quarter about the launch of the MA program at some of the Ohio campuses.
and also I return our attention.
to 2025, you're looking at
Speaker Change: with potential for new campus locations and other new programs across some of the Hondros campuses. Overall, the key focus area for Hondros profitability is making sure that we are paying careful attention to student success.
And so we talked about, in my comments,
Speaker Change: The retention rate is several of our Ohio campuses being above the 70% benchmark and that
Speaker Change: in particular in a short-form course like a, like a, or excuse me, short-form program like an LPN program means a lot because that retention ensures that the students persist and complete, they graduate, they pass the NCLEX exam, and each quarter that they progress certainly is revenue we don't have to replace by spending marketing dollars and all the corresponding costs associated with it. So those are some of the key things that we've been focused on in Honduras, and we expect, we certainly expect EBITDA improvement at Honduras in 2025.
Speaker Change: Got it. Last one for me, also on Honduras, you mentioned some, you know, planned potential program expansions and campus expansions. Is there any way to frame where you're at from an enrollment perspective now versus the maximum capacity in the existing Honduras footprint? Like, how much more room do you have to grow within the existing footprint before, you know, layering on campus and program expansions?
Richard Sunderland, Steven Somers, Brian Prinovo,
Speaker Change: It's a good question, and we've been, as we've moved these locations, we've really been looking to optimize the footprint, make sure that we have the right mix.
of
Speaker Change: The way in which the space is configured so that we're building, purpose building to an optimal and profitable
Speaker Change: campus footprint. And so we expect that as we see the full effect of those campus moves take effect in 2025, that we expect to see improved profitability at those locations. And as we open new campuses, we...
Speaker Change: fully intend to apply that playbook to each of our new locations there.
and many more. Thank you. Thank you.
Got it. Thanks for the questions.
Speaker Change: There are no more questions. I will now turn the conference back over to Angela Selden for closing remarks.
Angela Selden: Thank you, Operator, and thanks to all of you today for joining our call.
As we conclude...
Angela Selden: I want to reiterate our commitment to driving growth and delivering value to our students, to our stakeholders, and to our communities.
Angela Selden: The positive trends in enrollment, financial performance, and student outcomes across our institutions are a testament to the hard work and dedication of all of our faculty and staff.
Angela Selden: I'm very appreciative of the outcomes that they have helped our students achieve.
Angela Selden: We are confident in our strategic direction and the opportunities ahead, and we look forward to updating you on our progress and our 2025 outlook on our next call.
Angela Selden: Thank you all for your continued support and for joining us today.
Speaker Change: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may disconnect. Thank you.
Thank you.