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American Public (APEI) Q2 Earnings Lag, Fall Y/Y, Stock Down

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American Public Education, Inc. (APEI - Free Report) reported lower-than-expected second-quarter 2021 results. The top and bottom lines missed the Zacks Consensus Estimate and declined on a year-over-year basis. All the significant metrics were in line with management’s respective guidance.

American Public’s shares fell 3.6% in the after-hours trading session on Aug 9, following tepid results.

APEI's CEO, Angela Selden, said, "While Army IgnitED started to process Tuition Assistance in the third week of July and we have begun to enroll students through that portal, the system does not yet appear to be operating at full capacity and the enrollment ramp has been slow. Despite this, we have taken several steps to shore up enrollment momentum and improve financial performance in the back half of 2021."

Delving Deeper

Adjusted earnings of 3 cents per share lagged the consensus estimate of 5 cents by 40% and decreased a whopping 93.3% on a year-over-year basis.

Total revenues of $78 million missed the consensus mark of $79 million by 0.9% and fell 5% from the year-ago period. The downside was mainly due to the outage of the Army's new tuition assistance registration portal — Army IgnitED — for the whole quarter. This was partially offset by strong contribution from Hondros. Enrollments at HCN continued to be at a record high level for the quarter.

For the quarter, total costs and expenses increased 4% year over year to $76 million. Adjusted EBITDA decreased 36% year over year to $9.9 million.

Segment Discussion

APEI: Revenues of $66.9 million declined 9% from the year-ago period. Within the APEI segment, American Public University System’s (“APUS”) student enrollment grew 7% from the comparable year-ago period to 89,100 at June-end. For the quarter, total net course registration slipped 8% from the year-ago period to 82,600.

HCN: Segment’s revenues rose 29.4% year over year to $11.1 million owing to improved enrollments. Total student enrollment at HCN increased 36% from the prior-year quarter to 2,380, marking the highest in the school’s history.

For the quarter, inter-segment elimination totaled $13 million.

Financials

At June-end, American Public had total cash and cash equivalents of $317 million compared with $227.7 million at 2020-end. Capital expenditure totaled $3 million for the first half compared with $2.9 million in the year-ago period.

Third-Quarter Guidance

The company expects total revenues to fall 4-7% year over year. In the year-ago period, revenues grew 16.6% year over year. It anticipates the bottom line within 0-5 cents per share, indicating a significant decline from the year-ago reported earnings of 18 cents. Adjusted EBITDA is anticipated within $6.5-$8.5 million.

At APUS, total net course registrations are likely to decline 8-13% year over year to 78,500-83,000. HCN’s total student enrollment is expected to grow more than 2,300 or 19% from the prior year.

Zacks Rank

American Public — which shares space with Strategic Education, Inc. (STRA - Free Report) , Adtalem Global Education Inc. (ATGE - Free Report) and Universal Technical Institute, Inc. (UTI - Free Report) in the Zacks Schools industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.