Ladies and gentlemen, thank you for standing by and welcome to the American Public Education Third Quarter 2019 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chris Symanoskie, Vice President, Investor Relations. Thank you. Please go ahead.

Thank you, Operator. Good evening and welcome to American Public Education's Discussion of Financial and Operating Results for the Third Quarter of 2019. Materials that accompany today's conference call are available in the Events and Presentations section of our website and are included as an exhibit to our current report on Form 8-K furnished with the SEC earlier today. Please note that statements made in this conference call and in the accompanying presentation materials regarding American Public Education or its subsidiary 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 risk 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, make, should, will and would. These forward-looking statements include without limitations statements regarding expected growth, expected registration and enrollment, expected revenues, expenses and earnings and plans with respect to recent, current and future partnerships, investments and initiatives, including efforts to rebuild the nursing platform as well as information technology replacement and upgrades. Actual results could differ materially from those expressed or implied by these forward-looking statements, as a result of various factors, including the risk factors described in the risk factor section and elsewhere in the company's most recent annual report on Form 10-K filed with the SEC, and 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 events occurred in the future. This evening, it’s my pleasure to introduce Angela Selden, our President and CEO and Rick Sunderland, our Executive Vice President and CFO. At this time I’d now like to call – turn the call over to Angela Selden. Angie?

Thank you, Chris and good evening everyone. It's a pleasure to speak with all of you. This evening I will comment at a high level on both the recent quarter and my first impressions after 50 days about the strength and opportunities at APEI. The skill gap and the high cost of higher education are creating a national crisis. Workers can no longer afford to learn the skills that employers need. According to Wiley Education Services annual survey, 64% of the 600 HR leaders surveyed said there is a skill gap in their company. Pair that with a $1.4 trillion outstanding student loan debt and these two forces are colliding to create unmatched opportunity for those positioned to provide today's workers with access to high quality, flexible and career-relevant degree programs and workforce training that is either affordable or debt-free. It is important for our key stakeholders to understand that my priority is to grow APEI's core business with an emphasis on addressing this national need for affordability to upscale America's workforce. While the third quarter results met or slightly exceeded the company's outlook, the performance does not reflect the strong foundation and the market potential for APEI. As we move forward, our primary focus will be to grow the core business through increased learner and course enrollments across all brands, and to accelerate our reach to provide affordable, accessible, relevant and high quality post-secondary education and training to new learner markets. In the third quarter of 2019, net course registrations by new and total learners at APUS declined 5% year-over-year. The decline was primarily driven by an 11.9% decline in net course registrations by new learners utilizing military tuition assistance or TA. The decline in net course registrations by new learners utilizing TA was largely impacted by the temporary…

Thank you, Angie, and good evening. Going on to Page 3, American Public Education's consolidated revenue for the three months ended September 30, 2019, decreased $5.1 million or 7% to $67.9 million, compared to $73 million in the prior-year period. APEI segment revenue decreased $2.6 million or 4.1% to $61.2 million, due primarily to the temporary exhaustion of Navy TA program funds during the period. HCN segment revenue decreased $2.4 million or 26.8% to $6.7 million, due to a decline in student enrollment. Total cost of expenses increased 7.1% to $70.8 million for the three months ended September 30, 2019. The results for the quarter reflect the following on a pre-tax basis, $2.8 million in employee compensation costs for post-employment benefits that will be payable to the APUS President upon retirement, a $1.6 million increase in advertising costs as compared to the prior-year period, a $1.5 million non-cash impairment of goodwill, and $800,000 in information technology costs related to the evaluation of replacements or upgrades of our technology and learning management systems, which by the way was approximately $400,000 lower than we anticipated. Consolidated bad debt expense for the third quarter of 2019 was $1.0 million or 1.5% of revenue, compared to $1.3 million or 1.7% of revenue in the prior-year period. APEI's consolidated net loss was $1.6 million or $0.10 per diluted share for the three months ended September 30 2019. However, adjusted net income for the third quarter of 2019 was $1.8 million or $0.11 per diluted share. Adjusted net income, a non-GAAP measure, excludes the $2.8 million in employee compensation costs in our APEI segment, and the $1.5 million impairment of goodwill in our HCN segment, as well as the applicable tax effect of the adjustments. Our core business continues to generate strong operating cash flow. Cash…

Thank you. [Operator Instructions] Our first question comes from Greg Pendy from Sidoti. Your line is open, please go ahead.

Hi, thanks for taking my question. Can you just kind of give us a little color on how we should think about the cadence quarterly in 2020 of the technology spend, is it going to be front-half loaded or back-half loaded, or just kind of distributed throughout the year? Thanks.

Yes, hey Greg. I think it will be equally distributed across the year really ramping up these activities in the fourth quarter to get a running start on January 1, and so you'll see the spend likely relatively equally distributed across the four quarters of the year.

Okay, that's helpful. And then can you just kind of give us a little bit of color on the marketing spend? I think it was targeting Hondros and kind of how that played out and how you're thinking about that going forward?

Right. So there was an increased spend, we reported $1.6 million year-over-year increase. That was $1.3 million at APUS, and the balance at Hondros. So Hondros was spending into – was spending into the fourth quarter. Of course, APUS was spending into the fourth quarter also. And we did see the benefits. You can see the sequential increase in enrollments at Hondros, I believe was up – new students were up 53%, total enrollment was up 13%. At APUS, you can see from our guidance at least mid-point to the top end, we're basically zero or slightly positive. And so we're seeing those benefits. Of course, the fourth quarter also saw the resumption of the Navy. And I think as we previously reported on the second quarter call, we were talking about the potential impact of the Navy. Navy was up year-over-year through that May time period. And so we're seeing strength in the TA and including the Navy, and we expect that to continue in the fourth quarter.

That's helpful, thanks a lot.

Thanks, Greg.

[Operator Instructions] There are no further questions at this time. I'll turn the call back over to Chris Symanoskie.

Thank you, Operator. That will conclude our call for today. We wish to thank you for listening and for your continued interest in American Public Education. Good evening.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.