American Public Education Reports Third Quarter 2013 Results

  American Public Education Reports Third Quarter 2013 Results

Business Wire

CHARLES TOWN, W.Va. -- November 5, 2013

American Public Education, Inc. (NASDAQ: APEI) – parent company of online
learning provider American Public University System (APUS), which operates
through American Military University (AMU) and American Public University
(APU) – announced financial results for the quarter ended September 30, 2013.

Recent Highlights:

  *Third quarter 2013 revenues increased 6% to $81.8 million, compared to
    $77.1 million in the same period of 2012.
  *Income from operations before interest income and income taxes in the
    third quarter of 2013 was $17.5 million, compared to $17.5 million in the
    same period of 2012.
  *Net income for the third quarter of 2013 increased 1% to $10.9 million, or
    $0.61 per diluted share, compared to $10.8 million, or $0.60 per diluted
    share, in the same period of 2012.
  *Net course registrations ^ increased to approximately 105,200 in the third
    quarter of 2013, a year-over-year increase of 2%.
  *Net course registrations by new students in the third quarter of 2013 were
    approximately 22,100, a decrease of approximately 8% over the same period
    of 2012.
  *American Public Education, Inc. announced completion of the previously
    disclosed transaction to acquire 100% ownership interest in National
    Education Seminars, Inc., operating as Hondros College, Nursing Programs,
    for an aggregate purchase price of approximately $45 million in cash.

Financial Results:

Total revenues for the third quarter of 2013 increased 6% to $81.8 million,
compared to total revenues of $77.1 million in the third quarter of 2012.
Income from operations before interest income and income taxes in the third
quarter of 2013 was $17.5 million, which is the same as the prior year period.
Stock-based compensation expense reduced operating income by approximately
$1.0 million in the third quarter of 2013 and $0.9 million in the third
quarter of 2012.

Net income for the third quarter of 2013 was $10.9 million, or $0.61 per
diluted share, which includes $0.03 per diluted share in stock-based
compensation expense, net of tax. This compares to net income of $10.8
million, or $0.60 per diluted share for the third quarter of 2012, including
$0.03 per diluted share in stock-based compensation expense, net of tax. The
weighted average diluted shares outstanding for the third quarter of 2013 and
for the third quarter of 2012 were approximately 17.9 million and 18.0
million, respectively.

For the nine months ended September 30, 2013, total revenues were $246.5
million, an increase of 8% compared to total revenues of $227.5 million in the
same period of 2012. Income from operations before interest income and income
tax for the nine months ended September 30, 2013 increased 12% to $52.9
million, compared to $47.4 million in the same period of 2012. Stock-based
compensation expense reduced each period's operating income by $3.0 million
and $2.9 million, respectively.

Net income for the nine months ended September 30, 2013 increased to $33.0
million, or $1.84 per diluted share, which includes $0.10 per diluted share in
stock-based compensation expense, net of tax. This compares to net income of
$29.1 million, or $1.61 per diluted share, in the same period of 2012,
including $0.10 per diluted share in stock-based compensation expense, net of
tax. The weighted average diluted shares outstanding for the nine months ended
September 30, 2013 and 2012 were approximately 17.9 million and 18.1 million,
respectively.

Total cash and cash equivalents as of September 30, 2013 were approximately
$143.8 million with no long-term debt. Cash from operations for the nine
months ended September 30, 2013 was approximately $54.2 million, compared to
$34.5 million in the same period of 2012. Capital expenditures were
approximately $15.1 million for the three months ended September 30, 2013,
compared to $28.5 million in the prior year period. Depreciation and
amortization was $3.4 million for the three months ended September 30, 2013
and $2.8 million for the same period of 2012.

On November 1, 2013, the Company announced that it had acquired National
Education Seminars, Inc., operating as Hondros College, Nursing Programs
(“HCON”), in a stock purchase transaction. The Company acquired all of the
outstanding equity of HCON for an adjusted aggregate purchase price, subject
to post-closing working capital adjustments, of approximately $45.0 million.
The Company assumed no debt in the acquisition of HCON.

Net Course Registrations:                                     
For the three months ended September 30,     2013        2012        % Change
Net Course Registrations by New Students     22,100      24,000      -8%
Net Course Registrations                     105,200     103,000     2%
                                                                     
For the nine months ended September 30,      2013        2012        % Change
Net Course Registrations by New Students     59,000      64,100      -8%
Net Course Registrations                     314,300     296,900     6%
                                                                     

Note: Net course registrations represent the aggregate number of classes in
which students remain enrolled after the date by which they may drop the
course without financial penalty.

Fourth Quarter 2013 Outlook:

The following statements are based on current expectations. These statements
are forward-looking and actual results may differ materially. The Company
undertakes no obligation to update publicly any forward-looking statements for
any reason.

American Public Education anticipates fourth quarter 2013 net course
registrations by new students to decline between -9% and -5% year-over-year;
net course registrations to decline -7% and -3% year-over-year; and revenues
to decrease between approximately -9% and -5% over the prior year period. In
the fourth quarter of 2013, the Company expects net income to be between $0.50
and $0.54 per diluted share.

As previously announced in the Company’s Current Report on Form 8-K filed
October 15, 2013, American Public Education believes net course registrations
and financial results fourth quarter 2013 were adversely impacted by the
temporary suspension of the U.S. Department of Defense Tuition Assistance
program as a result of the recent U.S. government partial shutdown.

Webcast:

A live webcast of the Company’s third quarter earnings conference call will be
broadcast today at 5:00 p.m. Eastern time. This call will be open to listeners
who log in through the Company's investor relations website,
www.AmericanPublicEducation.com.

A replay of the live webcast will also be available starting approximately one
hour after the conclusion of the live conference call. The replay will be
archived and available to listeners for one year.

About American Public Education, Inc.

American Public Education, Inc. (NASDAQ: APEI) is a leading education services
provider founded to prepare adult learners for service and leadership in a
diverse global economy. The Company offers innovative and affordable
educational programs and services to students, universities and partner
organizations through wholly owned subsidiaries: American Public University
System (APUS) and Hondros College, Nursing Programs. These institutions serve
over 100,000 adult learners worldwide and offer more than 90 degree programs
in fields ranging from homeland security, military studies, intelligence, and
criminal justice to technology, business administration, public health,
nursing and liberal arts. For additional information, please visit
http://AmericanPublicEducation.com.

Forward Looking Statements

Statements made in this press release regardingAmerican Public Education,
Inc., or its subsidiaries,that are not historical facts are forward-looking
statements based on current expectations, assumptions, estimates and
projections aboutAmerican Public Education, Inc.and the industry. These
forward-looking statements are subject to risks and uncertainties that could
cause actual future events or results to differ materially from such
statements. Forward-looking statements can be identified by words such as
"anticipate", "believe", "could", "estimate", "expect", "intend", "may",
"should", "will" and "would". These forward-looking statements include,
without limitation, statements regarding expected growth, expected revenues
and expected earnings. Actual results could differ materially from those
expressed or implied by these forward-looking statements as a result of
various factors, including the various risks described in the "Risk Factors"
section and elsewhere in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2012, Quarterly Report on Form 10-Q for the quarter ended
September 30, 2013, and other filings with the SEC. The Company undertakes no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.


American Public Education, Inc.
Consolidated Statement of Income
(In thousands, except per share data)

                                                                 
                                                       Three Months Ended
                                                       September 30,
                                                       2013           2012
                                                       (Unaudited)
                                                                        
Revenues                                               $ 81,777      $ 77,122
Costs and expenses:
Instructional costs and services                         28,139         26,436
Selling and promotional                                  15,989         14,430
General and administrative                               16,766         15,978
Depreciation and amortization                           3,376        2,760
                                                                        
Total costs and expenses                                64,270       59,604
                                                                        
Income from operations before interest income and        17,507         17,518
income taxes
Interest income, net                                    77           30
                                                                        
Income before income taxes                               17,584         17,548
Income tax expense                                       6,612          6,724
Equity investment loss, net of taxes                    (61    )      -
                                                                        
Net income                                             $ 10,911      $ 10,824
                                                                        
                                                                        
Net Income per common share:
Basic                                                   0.62        $ 0.61
                                                                        
Diluted                                                 0.61        $ 0.60
                                                                        
Weighted average number of common shares:
Basic                                                   17,658       17,706
                                                                        
Diluted                                                 17,877       17,951
                                                                        


American Public Education, Inc.
Consolidated Statement of Income
(In thousands, except per share data)

                                                                
                                                     Nine Months Ended
                                                     September 30,
                                                     2013            2012
                                                     (Unaudited)
                                                                       
Revenues                                             $ 246,542      $ 227,516
Costs and expenses:
Instructional costs and services                       83,751          80,538
Selling and promotional                                48,573          43,276
General and administrative                             51,403          48,191
Depreciation and amortization                         9,895         8,131
                                                                       
Total costs and expenses                              193,622       180,136
                                                                       
Income from operations before interest income          52,920          47,380
and income taxes
Interest income, net                                  230           17
                                                                       
Income before income taxes                             53,150          47,397
Income tax expense                                     20,006          18,249
Equity investment loss, net of taxes                  (107    )      —
                                                                       
Net income                                           $ 33,037       $ 29,148
                                                                       
                                                                       
Net Income per common share:
Basic                                                 1.87         $ 1.64
                                                                       
Diluted                                               1.84         $ 1.61
                                                                       
Weighted average number of common shares:
Basic                                                 17,689        17,824
                                                                       
Diluted                                               17,943        18,104
                                                                       

Contact:

American Public Education, Inc.
Harry T. Wilkins, CPA
Executive Vice President and Chief Financial Officer
304.724.3722
or
Christopher L. Symanoskie
Vice President, Investor Relations
703.334.3880
 
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