American Public Education Q3 2024 Earnings Call Transcript

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Provided by Quartr
November 12, 2024

There are 8 speakers on the call.

Operator

Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Public Education, Inc. Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator

After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the conference over to Brian Preneveau, Investor Relations. You may begin.

Speaker 1

Thank you, Pam, and good afternoon, everyone. Welcome to the American Public Education's conference call to discuss Q3 2024 results. Joining me on the call today are Angela Seldin, 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. Materials for the call today are available in the Events and Presentations section of APEI's website. 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.

Speaker 1

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. Forward looking statements may sometimes be identified by words like anticipate, believe, seek, could, 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 registration 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 and cost savings efforts. 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.

Speaker 1

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, 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 API's CEO, Angela Silvan. Angela, please go ahead.

Speaker 2

Thank you, Brian. Good afternoon and thank you for joining American Public Education's Q3 2024 Earnings Call. On today's call, we have 4 important areas to highlight. First, at APEI on all key metrics, we have met or beat our Q3 2024 guidance. Overall, APEI revenues increased 1.5% year over year to $153,000,000 the 4th consecutive quarter of year over year growth and within our guidance range.

Speaker 2

Adjusted EBITDA was above our guidance range at $12,900,000 Net income of $731,000 equaled $0.04 per diluted share and was at the high end of our guidance range. 2nd, in the Q3 of 2024, Rasmussen University posted its 1st year over year increase in total enrollment since the API acquisition. Next, our Q4 2024 outlook is very strong. APUS total net course registrations are expected to grow 4% to 6% when compared to last year. At Rasmussen and Hondros, 4th quarter student enrollments are actuals because of the quarterly starts at these schools.

Speaker 2

At Rasmussen, 4th quarter total enrollment increased 4% when compared to the Q4 of 2023 and is our 2nd consecutive quarter of overall positive year over year enrollment growth. And earlier this year we signaled this positive turn and are pleased that it is occurring. At Hondros, 4th quarter total student enrollment increased 19% year over year to approximately 3,700 students. And finally, because of these accomplishments and our overall progress, full year 2024 revenue guidance is $620,000,000 to $625,000,000 which is 3% to 4% greater than 2023 and full year adjusted EBITDA guidance is $64,000,000 to $67,000,000 and 7% to 12% greater than 2023. Both are within the 2024 annual guidance range we provided in 1Q 2024.

Speaker 2

Now, I'd like to provide more detail about the results and trajectory starting to burst with APEI's nursing and healthcare institutions. As discussed in previous calls, at Rasmussen, we have invested significant effort and resource to strengthen its foundation for long term growth. These efforts are showing real dividends with continued improvement in student outcomes, increasing enrollment and positive financial performance. 3Q 2024 was the Q1 that Rasmussen experienced positive year over year enrollment growth since API's acquisition. And now in 4Q 2024, the trend has accelerated as enrollments are up 4% when compared to the Q4 of last year.

Speaker 2

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. Beyond enrollment, we signaled that Rasmussen would be EBITDA positive in the second half of twenty twenty four and we affirm that we are on track to deliver on that promise. 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 thresholds. Additionally, Rasmussen received positive news regarding its campuses in Morehead, Minnesota and Overland Park, Kansas, where both received 6 year continuing accreditation.

Speaker 2

And importantly, in Illinois, our Romeoville campus along with its off campus instructional site in Aurora, Naperville, Mokena, Tinley Park and Rockford received initial accreditation from the Accreditation Commission for Education and Nursing or ASIN following reviews and applications. 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. At HONGROS, as previously reported, 3Q 2024 enrollment remains strong with 10% growth versus Q3 of 2023. 4th 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 Hondros posted year over year enrollment growth.

Speaker 2

Demand remains strong at Hondros for both the PN and ABN Nursing programs and we received welcome news at several of our campuses. 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 at both Rasmussen and Hondros, 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 ATEI's overall future growth. 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.

Speaker 2

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. Now I'd like to turn our attention to ATI's online university serving the nation's military and veterans segment, APUS. In 3Q 2024, 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. As we mentioned last quarter, EBITDA margins at ACUS declined modestly as the company has impacted in 2024 to strengthen its online curriculum, IT infrastructure and better align its marketing spend. In the Q4, we are already experiencing increases in registration at AQS based on this work and expect 4Q 2024 registrations to grow 4% to 6% versus 4Q, 2023.

Speaker 2

Additionally, we have seen some early returns on our extended family strategy to grow registrations in our military families market. 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 benefit. Both Hondros and Rasmuson 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. Overall with Rasmussen and Hondros 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.

Speaker 2

We expect APUS to continue to grow at a steady rate where we can leverage our strong reputation and value proposition of return on educational investment with students. We fundamentally believe in our vision that education can transform lives, advance careers and improve communities. 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. 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. And our learn to earn focus enables students to experience a strong lifelong return on their educational investment.

Speaker 2

With that, I will now turn the call over to ATEI's CFO, Rick Sunderland.

Speaker 3

Thank you, Angie. Total revenue in the Q3 was 153,100,000 up $2,300,000 or 1.5 percent from the prior year period. 3rd quarter revenue growth was driven by increased revenue at HUS, Hondros and Rasmussen, partially offset by a revenue decline at graduate school. Revenue for the quarter was within our guidance range. Total cost of expenses in the 3rd quarter increased $4,600,000 or 3.2 percent compared to the Q3 of 2023.

Speaker 3

Included in the quarter over quarter increase in costs is $1,100,000 in information technology transition services costs, which are added back to adjusted EBITDA. Excluding information technology transition services costs, total cost and expenses increased $3,500,000 or 2.4 percent, primarily driven by higher compensation costs, including variable comp and professional fees. In the 3rd quarter, diluted income per common share was $0.04 compared to an adjusted income per diluted share of $0.02 in the prior year quarter, which excludes a $5,200,000 loss on equity investments. 3rd quarter adjusted EBITDA was $12,900,000 which is about the top end of the guidance range and represented an adjusted EBITDA margin of 8.4%. At HUS, 3rd quarter revenue increased 0.8% as compared to the prior year to $77,000,000 due to a 0.2% increase in net courts registrations, driven by an increase in registrations by military affiliated students utilizing veterans benefits and tuition and fee increases in the Q2 of 2024.

Speaker 3

For the quarter, EBITDA margin was 29% compared to 30% in the prior year period. At Rasmussen, 3rd quarter revenue was $62,600,000 an increase of 1% compared to the prior year due to stabilized enrollment and tuition increases effective in the Q1 of 2023 2024 for select programs. It is important to note, Grasshopper will report growth in total enrollment in the second half of twenty twenty four as compared to the prior year. In the Q3, Rasmussen's EBITDA improved to a loss of $4,500,000 compared to an EBITDA loss of $5,300,000 in the prior year. As previously stated, we expect second half twenty twenty four EBITDA at Rasmussen to be positive.

Speaker 3

At Hondros, 3rd quarter revenue was up 12.8 percent to $15,500,000 as compared to the prior year period due to continued enrollment growth. For the quarter, Hondros total enrollment grew 10.4% to approximately 3,100 students. At Hondros, the EBITDA loss was $300,000 in both the third quarter of 20242023. We expect the continued enrollment growth at Hondros will lead to improved financial performance into 2025. Revenue at graduate school included in corporate and other was $8,000,000 compared to $8,600,000 in the prior year period.

Speaker 3

For the quarter, graduate school EBITDA was $1,300,000 compared to EBITDA of $1,600,000 in the prior year. At September 30, 2024, total cash, cash equivalents and restricted cash was $162,200,000 an increase of $17,900,000 from year end 2023. For the 9 months ended September 30, 2024, cash flow from operations was $47,300,000 compared to $48,700,000 in the prior year. CapEx for the 9 months was $17,700,000 and free cash flow for the 9 months, defined as adjusted EBITDA less CapEx, was $23,200,000 compared to $24,400,000 a year ago. Principal on API's term loan at September 30 was $96,000,000 dollars with unrestricted cash of $135,000,000 API continues to be net cash positive.

Speaker 3

Additionally, there are no borrowings under API's $20,000,000 revolving credit facility, which remains fully available. Turning now to the Q4 2024 outlook. 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. At Rasmussen and Hondros, 4th quarter student enrollments are actual because of the quarterly starts at these schools. At Rasmussen, 4th 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 3

This represents a 4% increase when compared to the Q4 of 2023 and is our 2nd consecutive quarter of overall positive year over year enrollment growth at Rasmussen. At Ponderos, 4th quarter total student enrollment increased 19% year over year to approximately 3,700 students. In the Q4 of 2024, consolidated revenue is expected to be between $159,000,000 $164,000,000 The company expects net income to common shareholders to be between $9,000,000 $11,000,000 or between $0.47 $0.56 per diluted share. Adjusted EBITDA is expected to be between $23,000,000 $26,000,000 in the Q4 of 2024. We are updating full year guidance with anticipated consolidated full year 2024 revenue in a range of $620,000,000 to $625,000,000 We expect our adjusted EBITDA to be between 64,000,000 dollars 67,000,000 for the full year 2024 and capital expenditures to be between $19,000,000 $22,000,000 This translates to free cash flow expectations for the full year of at least 42,000,000 dollars Seasonally, the Q4 tends to see a notable increase in adjusted EBITDA, including as Rasmussen continues to improve in the Q4.

Speaker 3

I will now pass it back to Angie to offer some closing remarks, after which we will begin our question and answer session.

Speaker 2

Thank you, Rick. During the quarter, we continued to execute on our initiatives to grow enrollment at APUS and stabilize and increase profitability at Rasmussen and at Hondros. We're further encouraged by the performance at those two institutions as enrollment numbers, student outcomes and financial performance continue to increase. Market fundamentals continue to support our business strategy with increasing demand in higher education and the online education markets, significant government education benefits for military veterans. 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 2

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. With that, I'd now like to hand the call back to the operator to begin our question and answer session. Operator?

Operator

Thank you, Angie. We will now begin the question and answer session. And your first question comes from Raj Sharma of B. Riley Securities. Please go ahead.

Operator

Raj Sharma?

Speaker 4

Hi, sorry about that. Thank you for taking my questions. Congratulations on the improvements that you had talked about earlier. I have a question on the profitability of APUS is so significantly higher than all the other divisions. Last four quarters, on $314,000,000 of APUS, you had about $96,000,000 of EBITDA.

Speaker 4

And then the rest of the businesses, about $300,000,000 there's a loss of $42,000,000 on EBITDA. Just want to understand again, is this fund is there fundamentally something different in the businesses? And can the rest of the businesses, even though they are at a revenue run rate of $300,000,000 can they ever get closer to the APUS profitability? Just your thoughts on that would be great. And then I've got just a follow on question.

Speaker 3

Hey, Raj, it's Rick. Thanks for the question. Let me start and then I'll let others add. Well, first of all, in the 40,000,000 dollars you referenced, right, that includes corporate and other unallocated corporate, right? You can see that in the segment reporting.

Speaker 3

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.

Speaker 4

When you

Speaker 3

talk about the profit margin at APUS and you're looking at the other businesses, those are different operating models, right? You have the campus based operations versus the fully online at Hondros and the blended model at RAS. And I think we've talked in the past about 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 were referring to, we were having a period of challenge in Rasmussen, right? And as we demonstrated through this year, and I think you noted 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.

Speaker 3

We are seeing improved margins and you'll see improved margins in the 4th quarter. We think that represents a good jumping off point for 2025. So with that, I'll stop and let either Steve or Angie add to my answer.

Speaker 5

Raj, this is Steve. I think the other important point as you're kind of highlighting the difference is in the EBITDA is that there's a meaningful corporate and shared services expense. So that is a that's an element. So the other units are not as negative as sort of as you described. So I

Speaker 3

just want to point that part out.

Speaker 4

Yes. Thank you. Just I got related on that. What the corporate costs, they seem to be the run rate is about 30,000,000 dollars a year. Now they seem to have gone up significantly from last year.

Speaker 4

Am I looking at this correctly? Is there could you talk about the reason for the increase?

Speaker 3

So Raj, we touched on the reasons for the increase. Of course, we had the technology transition service costs, which we add back. So I don't know if you're looking at the segment reporting, which would be before the add backs. So there is an element to that, right? We touched upon in my remarks, I touched upon the year over year increase in costs, noting compensation with the cost increase.

Speaker 3

In that I said variable comp, you can find the year over year change in variable comp in Note 2 of the 10 Q, it's substantial $2,400,000 And then and that's mostly at the corporate level, right? And so we are investing in our people, right? We are performing, I think, well against our expectations. I want to check your number. I can't do it here on the fly about the $30,000,000 but that to me seems high.

Speaker 3

But I can go back, Raj, and we can connect after that caller later. And the last thing, when you look at the segment reporting, Raj, you do have Graduate School USA reported in that segment, so you have to parse that out. 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 until you can get a sense between the revenue and the EBITDA of what the costs are in there related to graduate school. Sorry to mention that earlier.

Speaker 4

Great. Thank you. And then just one last question on, is there an estimate on the EBITDA margin on Rasmussen in Q4? I know you commented that it was going to be positive. You have out of the overall EBITDA, what is the EBITDA margin on Rasmussen for Q4?

Speaker 3

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 know that I'm going to give out a specific percentage, but we have turned the corner, as we said earlier in the year, moving RAS from an EBITDA loss to EBITDA positive and the 4th quarter number just to state the simple math, Raj, which you've done, I'm sure, the profit number has to be greater than the 3rd quarter loss, right, to output a favorable number for the second half of the year, right? I think if you haven't typically given I've talked about this when we're on

Speaker 4

the West Coast about specific guidance related to specific operating units. Got it. Thank you again for answering my questions. And once again, congratulations on the improvements in rest of your business. I'll take it off.

Speaker 4

Thank you, Raj.

Speaker 2

Thank you, Raj.

Operator

Your next question comes from Jasper Bibb with Truist Securities. Please go ahead.

Speaker 6

Hey, good afternoon, everyone. I saw the note in the 10 Q about going back to $2.50 a credit hour for the military rate at APUS Masters Programs. I was just hoping you could speak to the change in your pricing there. And does that change have any implications for APUS revenue per student or margin in 25% the comp tuition increases that were put in place where we are this year?

Speaker 3

Yes. Chad, it's Rick. Let me start with that. So when you look at the distribution of degrees across the institution, graduate level students are a very small segment. The predominance is at the bachelor's level.

Speaker 3

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. We had increased that graduate level price back in that was earlier in the year, I believe it was April. And thought that, that population that would be acceptable. We looked at it and we said, you know what, our DNA for the military is really no out of pocket costs.

Speaker 3

Go back to Jim Adder, who founded American Military University, military students utilizing tuition assistance should be able to attend and complete with no out of pocket costs. 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, it doesn't have a big effect on revenue per student consolidated for AQS either up or down, right? So, you won't see a significant fluctuation because of that.

Speaker 3

With that, I'll pause to see if Angie wants to add anything.

Speaker 2

I wouldn't add anything to that. I agree with what Rick had to say. Thank you.

Speaker 3

Good questions, Yasberg. Okay.

Speaker 4

Yes, sure.

Operator

And the next question comes from Stephen Sheldon with William Blair. Please go ahead.

Speaker 7

Hey, everyone. You have Matt Filig on for Stephen Sheldon. Thank you for taking my questions. Looking into 2025, do you expect enrollment growth at rosmucent to be roughly balanced between in person and online enrollments or perhaps skewed more toward 1? And secondly, can you provide some more detail on the EBITDA margins for an in person enrollment compared to an online enrollment at rosomucin?

Speaker 2

Thanks, Matt. Hi, it's Angie. Let me start. And we have signaled in the past a few earnings calls that we are seeing positive enrollment momentum at the rest of the online business and that has not changed. So we will expect to continue to see positive online growth in enrollments in 2025.

Speaker 2

We have seen the campus enrollments rebound. We're very pleased with the improvements that are occurring there. And we do believe that a portion of that is tied to our improvements in NCLEX scores and the confidence that our students and prospects have in the nursing education we can offer them. And so we have a lot of confidence in the campus based enrollment growth at Rapisten in 2025. I'll turn the second question over to Rick or to Steve.

Speaker 3

Steve, you want to comment on how we might look at margin between the two businesses?

Speaker 5

Yes. I think given that the on ground is heavily heavily fixed cost structure, right, we would expect to see a rebound in that. Matt, I think we've talked that over the next 1 to 2 years, we would see overall margins at Rasmussen move to the 5% to 10% range over that period of time. And we're at kind of a pivot point on the on ground moving from slightly negative enrollments to positive. And so we would expect to see that margin accelerate over time, whereas we're already in a positive situation with the online component of it.

Speaker 5

So, I think it's more about seeing a normalization in the on ground. And so in the short term, you might see an improved faster improvement in the on ground as we grow our scale. And so but I in general, I don't think that we're anticipating wide variances between the 2 populations.

Speaker 3

Got

Speaker 2

it. And I would just add that difference between the enrollment in Q3 and the enrollment in Q4 is showing the acceleration of our EBITDA contribution as the business has hit that inflection point and is growing in both the online and the campus based businesses.

Speaker 7

Got it. Yes, 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.

Speaker 7

And I was just curious if you could further elaborate on progress with that revised marketing strategy at APUS. Sure.

Speaker 2

I'm happy to start and others can join. 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 we're spending our marketing dollars and increasing yield. And we see that really taking hold here as we signaled in the Q4. Our APUS net worth registrations we anticipate are going to grow between 4% 6%.

Speaker 2

So as those marketing improvements take hold, we really are seeing the corresponding effect now with APUS in the Q4. And so we are very confident about those strategies and believe that we have found the balance in terms of lead generation. Then the second thing that we have done in this last two quarters at APUS is also strengthened our admissions and enrollment processes. We have added talent to make sure we have sufficient workforce to be able to tackle all the additional leads that are coming in. And we have looked at our policies and our processes to make sure that each of our folks 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.

Speaker 2

And so we believe with that additional training and that additional workforce that we have been able to get after the leads in a higher quality way and we also believe that that's part of the 4% to 6% registration growth we're seeing in the Q4 and we don't anticipate that that's going to subside.

Speaker 3

And Matt, the only thing to add is that 4% to 6% is on a pretty challenging comp. I think if you go into the Q4 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 7

Great. Thank you, team and nice work on the continued improvements.

Speaker 2

Thank you.

Operator

Your next question comes from Jasper Bibb again of Truist Securities. Please go ahead.

Speaker 6

Just wanted to ask about the Hondros segment. The enrollment growth there has been really impressive. How do you think about maybe over a longer term period bringing that segment up to profitable margin or kind of the target mid teens margin that you've outlined for Rasmuson, given what you're doing from an enrollment perspective?

Speaker 2

Thanks, Jessica. Great question and certainly something we pay careful attention to. There are a few things that Pine Brook 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.

Speaker 2

The second thing that we are continuing to focus on is 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 as we turn our attention to 2025, we're looking at the 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 the retention rate at several of our Ohio campuses being above the 70% benchmark and that in particular in a short form course 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.

Speaker 2

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 Hondros and we expect we certainly expect EBITDA improvement at Hondros in 2025.

Speaker 6

Got it. Last one for me, also on Hondros, you mentioned some planned potential program expansions and campus expansions. Is there anywhere to frame where you're at from an enrollment perspective now versus the maximum capacity in the existing Hondros footprint? Like how much more room do you have to grow within the existing footprint before layering on campus and program expansions?

Speaker 2

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 the way in which the space is configured so that we're building a purpose building to an optimal and profitable 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 fully intend to apply that playbook to each of our new locations there.

Speaker 6

Got it. Thanks for taking the questions.

Operator

There are no more questions. I will now turn the conference back over to Angela Seldon for closing remarks.

Speaker 2

Thank you, operator, and thanks to all of you today for joining our call. As we conclude, I want to reiterate our commitment to driving growth and delivering value to our students, to our stakeholders, and to our communities. 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. I'm very appreciative of the outcomes that they have helped our students achieve. 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.

Speaker 2

Thank you all for your continued support and for joining us today.

Operator

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may disconnect. Thank you.

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Earnings Conference Call
American Public Education Q3 2024
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