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

August 08, 2012 | About:
10qk

10qk

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AMERICAN PUBLIC EDUCATION, INC. (APEI) filed Quarterly Report for the period ended 2012-06-30.

American Public Education, Inc. has a market cap of $474.1 million; its shares were traded at around $27.68 with a P/E ratio of 11.4 and P/S ratio of 1.8. American Public Education, Inc. had an annual average earning growth of 41.2% over the past 5 years.

Highlight of Business Operations:

Adjusted net course registrations increased 18% and 21% for the three and six month periods ended June 30, 2012 over the three and six month periods ended June 30, 2011. For the three and six month periods ended June 30, 2012, our revenue increased from $60.8 million to $74.5 million, or by 23%, and from $119.5 million to $150.4 million, or by 26%, over the comparable prior year periods. Operating margins decreased to 20.1% from 24.7% and to 19.9% from 23.6% for the three-month and six-month periods ended June 30, 2012 compared to prior year periods. Our margins were negatively affected in the three-month and six-month periods ended June 30, 2012 for the reasons discussed in the Results of Operations section below, including because of increases in bad debt expense, financial aid processing, technology spending and civilian marketing expenses.

Costs and Expenses. Costs and expenses for the three months ended June 30, 2012 were $59.6 million, an increase of $13.7 million, or 30%, compared to $45.9 million for the three months ended June 30, 2011. Costs and expenses as a percentage of revenues increased to 79.9% for the three months ended June 30, 2012 from 75.3% for the three months ended June 30, 2011.

General and administrative expenses. Our general and administrative expenses for the three months ended June 30, 2012 were $16.1 million representing an increase of 48% from $10.9 million for the three months ended June 30, 2011. The increase in expense was a result of an increase in expenditures for financial aid processing fees and expenditures for technology required to support the increase in civilian students and regulatory changes. In addition, bad debt expense increased as a percentage of revenue from 1.4% for the three months ended June 30, 2011 to 5.1% for the three months ended June 30, 2012, a change also attributable to our increase in civilian students. We believe that during the six month period ended December 31, 2011, we experienced a significant increase in students who enrolled solely for the purpose of obtaining Title IV funds. Because these students typically did not succeed academically, a portion of their funds needed to be returned to the Federal Government resulting in an increase in accounts receivable that is unlikely to be collected and a corresponding increase in our allowance for doubtful accounts. General and administrative expenses as a percentage of revenues increased to 21.6% for the three months ended June 30, 2012 from 17.9% for the three months ended June 30, 2011. This increase was primarily due to financial aid processing, bad debt expense and technology spending increases to manage the increase in civilian students and regulatory changes.

Costs and Expenses. Costs and expenses for the six months ended June 30, 2012 were $120.5 million, an increase of $29.0 million, or 32%, compared to $91.5 million for the six months ended June 30, 2011. Costs and expenses as a percentage of revenues increased to 80.1% for the six months ended June 30, 2012 from 76.4% for the six months ended June 30, 2011.

General and administrative expenses. Our general and administrative expenses for the six months ended June 30, 2012 were $32.2 million representing an increase of 50% from $21.4 million for the six months ended June 30, 2011. The increase in expense was a result of an increase in expenditures for financial aid processing fees and expenditures for technology required to support the increase in civilian students and regulatory changes. In addition, bad debt expense increased as a percentage of revenue from 1.2% for the six months ended June 30, 2011 to 4.8% for the six months ended June 30, 2012, a change also attributable to our increase in civilian students. We believe that during the six month period ended December 31, 2011, we experienced a significant increase in students who enrolled solely for the purpose of obtaining Title IV funds. Because these students typically did not succeed academically, a portion of their funds needed to be returned to the Federal Government resulting in an increase in accounts receivable that is unlikely to be collected and a corresponding increase in our allowance for doubtful accounts. General and administrative expenses as a percentage of revenues increased to 21.4% for the six months ended June 30, 2012 from 17.9% for the six months ended June 30, 2011. This increase was primarily due to financial aid processing, bad debt expense and technology spending increases to manage the increase in civilian students and regulatory changes.

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