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AMERICAN PUBLIC EDUCATION, INC. Reports Operating Results (10-Q/A)

August 17, 2010 | About:
10qk

10qk

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AMERICAN PUBLIC EDUCATION, INC. (APEI) filed Amended Quarterly Report for the period ended 2010-06-30.

American Public Education, Inc. has a market cap of $458 million; its shares were traded at around $24.92 with a P/E ratio of 16.8 and P/S ratio of 3.1. APEI is in the portfolios of Lee Ainslie of Maverick Capital, Lee Ainslie of Maverick Capital, RS Investment Management, Ron Baron of Baron Funds, Pioneer Investments, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net course registrations increased 34% and 37% for the three and six month period ended June 30, 2010 over the three and six month period ended June 30, 2009, respectively. Our revenue increased from $35.7 million to $46.3 million, or by 30%, and $68.9 million to $93.6 million, or by 36%, for the three and six month period ended June 30, 2010 over the three month and six month period ended June 30, 2009, respectively. Operating margins increased to 25.4% from 24.6% and 26.6% from 25.4% for the three month and six month period ended June 30, 2010 over the three and six month period ended June 30, 2009, respectively.

Costs and Expenses. Costs and expenses for the three months ended June 30, 2010 were $34.5 million, an increase of $7.6 million, or 28%, compared to $26.9 million for the three months ended June 30, 2009. Costs and expenses as a percentage of revenues decreased to 74.7% for the three months ended June 30, 2010 from 75.3% for the three months ended June 30, 2009. This percentage decrease resulted from the factors described below as well as a $1.6 million reduction in compensation expense related to accrued incentive compensation payments for the year included in each of the respective expense categories. The reduction in compensation expense is primarily related to our expectation that we will not be required to pay the portion of our annual incentive plan tied to financial performance.

General and administrative expenses. Our general and administrative expenses for the three months ended June 30, 2010 were $7.5 million representing an increase of 23% from $6.0 million for the three months ended June 30, 2009. The increase in expense was a result of an increase in expenditures for stock-based compensation, recruiting, financial aid processing fees, and an increase in expenditures for technology, staffing, and facilities required to support a larger student body. General and administrative expenses as a percentage of revenues decreased to 16.1% for the three months ended June 30, 2010 from 16.9% for the three months ended June 30, 2009. The decrease was primarily due to efficiencies realized through a higher volume of students and the number of staff and related expenses increasing at a slower rate than enrollment.

Costs and Expenses. Costs and expenses for the six months ended June 30, 2010 were $68.7 million, an increase of $17.3 million, or 34%, compared to $51.4 million for the six months ended June 30, 2009. Costs and expenses as a percentage of revenues decreased to 73.4% for the six months ended June 30, 2010 from 74.6% for the six months ended June 30, 2009. This percentage decrease resulted from the factors described below as well as a $1.6 million reduction in compensation expense related to accrued incentive compensation payments for the year included in each of the respective expense categories. The reduction in compensation expense is primarily related to our expectation that we will not be required to pay the portion of our annual incentive plan tied to financial performance.

Instructional costs and services expenses. Our instructional costs and services expenses for the six months ended June 30, 2010 were $35.4 million, representing an increase of 31% from $27.1 million for the six months ended June 30, 2009. This increase was directly related to an increase in the number of classes offered due to the increase in net course registrations. Instructional costs and services expenses as a percentage of revenues were 37.8% for the six months ended June 30, 2010, compared to 39.4% for the six months ended June 30, 2009.

General and administrative expenses. Our general and administrative expenses for the six months ended June 30, 2010 were $15.1 million representing an increase of 25% from $12.1 million for the six months ended June 30, 2009. The increase in expense was a result of an increase in expenditures for stock-based compensation, recruiting, financial aid processing fees, and an increase in expenditures for technology, staffing, and facilities required to support a larger student body. General and administrative expenses as a percentage of revenues decreased to 16.1% for the six months ended June 30, 2010 from 17.6% for the six months ended June 30, 2009. The decrease was primarily due to efficiencies realized through a higher volume of students and the number of staff and related expenses increasing at a slower rate than enrollment.

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