American Public Education (APEI) The 44th Annual William Blair Growth Stock Conference summary

Market positioning and strategy

• Operates four educational institutions serving over 125,000 adult learners annually.

• Holds leading positions in educating active duty military, veterans, and new nurses, with strong referral rates and a defensible market moat.

• Addresses a $100 billion higher education market expected to grow at least 10% over the next several years.

• Focuses on two main segments: public sector (military, federal workforce) and nursing/healthcare education.

• Nursing programs primarily create new nurses, targeting a persistent supply-demand gap in the healthcare sector.

Financial performance and outlook

• Delivered on financial projections for five consecutive quarters, with solid growth, positive margins, and strong free cash flow.

• Issued annual earnings guidance for the first time in 14 years, forecasting 3%-5% revenue growth and positive net income in 2024.

• Increased adjusted EBITDA guidance to $60-$70 million and maintains a strong balance sheet with $153 million in cash and no net debt.

• Free cash flow is expected to grow 50% to $46 million, a key but often overlooked strength.

• Executed a 10% stock buyback at an average price of $7, reflecting confidence in valuation.

Operational improvements and efficiency

• Split Rasmussen into campus-based and online businesses, improving transparency and reducing costs by $10 million.

• Brought marketing in-house, saving $7 million, and plans to complete IT transition by Q3 2024 for further savings.

• Operational changes are expected to drive higher incremental margins as enrollments recover.

• Growth restrictions on Rasmussen, imposed by the Department of Education, will be lifted at the end of 2024, enabling new campus openings and program expansions.