American Public Education, Inc. APEI provided guidance for the second half and 2022. Its shares fell 1.32% in the after-hour trading session on Sep 22.
For second-half 2022, the company expects revenues to be within $295.6-$305.6 million and adjusted EBITDA between $21.1 million and $27.1 million.
For the year, it anticipates revenues within $600-$610 million and adjusted EBITDA between $53 million and $59 million. Pro-forma adjusted EBITDA is likely to be $70-76 million. In 2021, it reported revenues of $418.8 million and an adjusted EBITDA of $64.7 million.
American Public has been witnessing improvement in enrollment trend. At APUS, it witnessed growth in new and total student registrations in the third quarter. For the fourth quarter, enrollment in new students is expected to be up in the other two segments, backed by a shift to in-house marketing at Rasmussen and strong interest in programs/approvals for HCN’s new Detroit campus received for fall 2022 enrollment.
APEI is mitigating higher operating costs with its cost savings moves. For 2022, the company is likely to experience a $15.8 million decline in gross profit at RU, thanks to reduced tuition prices on certain masters and early childhood education programs, lower enrollments and higher education delivery costs. American Public would likely witness $4.7 million of incremental discretionary advertising costs implemented to drive increased student leads. Nonetheless, it is expected to generate $6 million in annual cost savings and $2 million in non-recurring marketing.
For the overall company, it is expected to generate $15 million of annual cost savings and one-time transition and integration items for GSUSA.
For second-half and 2022, APEI expects a net loss of approximately $2.65 million and $107.4 million; Income tax benefit of $1.95 million and $36.2 million; interest expense of $7.1 million and $13.8 million; Equity investment loss of $11,000; Depreciation and amortization of $16.6 million and $32.8 million. EBITDA is likely to be $19.07 million and negative $96.9 million for second-half and 2022.
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Shares of American Public have declined 63.9% in the past six months compared with the Zacks Schools industry’s 10% fall. APEI and other industry partners have been grappling with soft near-term demand for online education due to the abatement of the COVID-19 pandemic. The company is also witnessing increased costs and expenses.
Nonetheless, it has undertaken several initiatives to improve enrollment trends and student persistence rate. It has been benefiting from increased demand for online courses and nursing programs.
Zacks Rank & Key Picks
American Public currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better ranked stocks in the Zacks Consumer Discretionary sector are New Oriental Education & Technology Group Inc. EDU, PowerSchool Holdings, Inc. PWSC and Virco Mfg. Corporation VIRC.
New Oriental Education currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimates for this leading private education provider’s this year earnings reflects 204.8% year over year growth.
The Zacks Consensus Estimate for EDU’s fiscal 2023 earnings has been revised upward from 47 cents to 65 cents over the past 30 days.
PowerSchool currently has a Zacks Rank #2. The Zacks Consensus Estimates for this cloud-based software provider’s this year earnings reflects 23.8% year over year growth.
The Zacks Consensus Estimate for PWSC’s 2022 earnings has been revised upward from 76 cents to 78 cents over the past 60 days.
Virco currently holds a Zacks Rank #2. The Zacks Consensus Estimates for this leading furniture manufacturer’s this year earnings reflects 174.7% year over year growth.
The Zacks Consensus Estimate for VIRC’s fiscal 2023 earnings has been revised upward from 71 cents to 39 cents over the past seven days.
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