American Public Education, Inc.

ladies and gentlemen thanks for standing by and welcome to the american public education fourth quarter 2020 results conference call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you will need to press star 1 on your telephone please do advise that today's conference is being recorded if you require any further assistance please press star zero I'd now like to hand the conference over to your speaker today. Vice President of industrial relations. Thank you. Please go ahead.

Thank you operator. Good evening and welcome to American public education's fourth quarter and full year conference call materials that accompany today's conference call are available in the events and presentation section of our website. Please note that statements made in this conference call and in the accompanying presentation materials regarding American public education, its subsidiaries, or Rasmussen University that are not historical facts may be forward-looking statements based on current expectations, assumptions, estimates, and projections about American public education 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, seek, could, estimate, expect, intend, may, plan, should, will, and would. Forward-looking statements include, without limitation, statements regarding the benefits of the acquisition of Rasmussen University, the closing of the acquisition and its timing, expected growth, expected registration and enrollments, expected revenues, expected earnings, income and EBITDA, expected financial results for Rasmussen University, the expected capital structure, net debt, the ability to deliver a return on learners' educational investment, the ability to maintain an attractive risk profile, and plans with respect to recent, current, and future initiatives. Actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risks related to the effects of and API's response to the COVID-19 pandemic, the acquisition of Rasmussen University, and the risk factors described in the risk factors section and elsewhere in the company's annual report on Form 10-K filed with the SEC today, as well as the company's other SEC filings. The company undertakes no obligation to update publicly any forward-looking statements for any reason, unless required by law, even if new information becomes available or other events occur in the future. This evening, it's my pleasure to introduce Angela Selden, our Chief Executive Officer, and Rick Sunderland, our Executive Vice President and Chief Financial Officer. Also available for questions today is Steve Summers, Senior Vice President of Strategy and Corporate Development. Now I'll turn the call over to Angela Seldon. Angie?

Thank you, Chris, and good evening, everyone. What a remarkable year it has been at APEI. We've introduced many important changes and launched several key initiatives. These changes are creating energy at APEI and driving momentum inside APUS and HONDRO. At the heart of each of these changes lies a common theme, that of providing a highly affordable higher education, leading to strong career outcomes. At APCI, our mission is to set adult learners on the path toward achieving their dreams by driving down the cost of higher education and helping them obtain degrees and skills to achieve their potential. We call this Higher Education Return on Investment, or HEROI. Beginning in late 2019, we set out to build a growth strategy around that mission. Since then, we've experienced a return to growth at both APUS and Hondros. We've added dynamic new leadership across each of the three business units, launched an enterprise-wide technology modernization, and have begun to amplify our value proposition to a wider audience. The 2020 results speak for themselves. strong new and total course registration growth at APUS and record enrollment at Hondros. Further accelerating our growth strategy was the October 2020 announcement about our pending acquisition of Rasmussen University. The acquisition of Rasmussen will nearly double APEI's revenues and will create a large-scale platform to address the U.S. registered nursing shortage. The resulting APEI business will deliver over $165 million in pre-licensure nursing education revenue, primarily by creating new registered nurses. Today, pre-licensure nursing education is roughly half of the $28 billion in total nursing education, which is estimated to grow to $60 billion over the next few years. The acquisition will add a number one market position in pre-licensure nursing to the two existing number one positions in active duty military and veterans education at APUS today. Moving to page four, the enrollment momentum at APUS began in 2019, continued for a fifth consecutive quarter with total MET course registrations increasing by 11% in the fourth quarter driven by a robust 17% increase in new student registrations. For all of 2020, net course registrations increased nearly 12%, with new registrations growing at 18% for the year. The momentum at Hondros was even more pronounced during 2020, as new leadership along with key enrollment and operational initiatives produced an impressive turnaround in a very short period of time. Both new and total student enrollment increased 34% year-over-year in the fourth quarter of 2020, while nursing starts for the full year were up a full 50%, leading to an all-time record enrollment of 2,139 students at the end of 2020. Momentum that we expect will continue into 2021, and which our CFO, Rick Sunderland, will discuss in more detail shortly. Overall, full-year Hondros enrollment growth was 18% compared to 2019. On page 5, contributors to the continued growth at APUS include increased investment in marketing to the micro-segments where we believe a higher education return on investment value proposition resonates. the implementation of our proprietary and self-funded Freedom Grant, which eliminated out-of-pocket costs for active duty military students in graduate programs using TA, adding to the active duty undergraduate student population benefiting from this grant since 2001, additional investments in technology to improve the student experience, as well as increased student satisfaction and enrollment rates, and tailwinds from increased demand for online education caused by the COVID-19 pandemic. We don't expect to repeat the full $10 million of incremental marketing that we invested in 2020, but plan to continue to be targeted in directing our marketing to the most productive segment in 2021. Some of the momentum that we had in 2020 carried into the first quarter of this year and are expected to result in a sixth consecutive quarter of year-over-year growth in net course registrations at APUS. The turnaround in performance at Hondros that Harry Wilkins and his team have executed was student-centric and purpose-built to create new nurses While some of the growth at Honduras can be attributed to an increase in demand for nursing education and a change in the competitive landscape due in part to the pandemic, we think much of the improvement was due to key initiatives like launching the direct entry ADN program, implementing affordability grants which limit student out-of-pocket costs to $200 per month. The move to fully online admissions processes and improved transparency and conversion of prospective students through Salesforce automation. Throughout the year, we saw our marketing efficiency improve and have been seeing increased enrollment with lower marketing spend in recent months. In addition, Hondros definitely shifted its academic coursework online during the pandemic and has managed to optimize its physical footprint for labs and practicums in order to remain open and continue to serve our students, while many competitors, including several public institutions, restricted nursing enrollment indefinitely. The strong enrollment during both Q420 and the full year drove top-line growth, with fourth quarter consolidated revenues increasing 16% compared to the prior year period. while full-year APEI revenue increased 12.4% versus 2019. At APUS, fourth quarter 2020 revenues increased 14% compared to the prior year period, and full-year revenues increased 11%. At Hondros, revenue growth was even higher, increasing 32% in the fourth quarter and 22% in the full year 2020. on the strength of its enrollment growth. Moving to page seven, with the return to growth in our core businesses, and especially at Hondros, we turned our sights to expanding APEI's portfolio and platform with a focus on nursing. This effort resulted in the pending acquisition of Rasmussen University a regionally accredited institution with a 120-year history and a growing student population of over 18,000. Rasmussen is the nation's number one educator of pre-licensure ADN nurses and will nearly double the overall revenue of APEI, giving APEI scale, a national platform in nursing, and synergy opportunities. Nursing enrollment at Rasmussen has increased at a five-year CAGR of 16% to over 8,200 nursing students. Upon completion of the acquisition and including Hondros, ATEI will collectively educate more than 10,000 nurses through 32 campuses and online. Beyond scale and growth, Rathmussen shares the same DNA for student affordability and has a strong mission and cultural alignment with APEI. Now I'd like to turn it over to our CFO, Rick Sunderland, to provide a financial perspective.