Lincoln Educational Services Corporation (Nasdaq: LINC) today
announced financial and operating results for the first quarter
ended March 31, 2024, as well as recent business developments.
First Quarter 2024 Financial Highlights*
- Revenue grew 19.7% to $103.4 million
- Adjusted EBITDA tripled to $6.5 million
- Student starts increased 15.3%
- Ended quarter with 1,388 additional students, a 11.2% increase
in population
- Total liquidity of over $109 million; no debt outstanding
- Increasing guidance for full year Revenue, Adjusted EBITDA and
Adjusted Net Income
Recent Developments
- Classes commenced at our newest campus in East Point,
Georgia
- Entered into a 5-year agreement with Container Maintenance
Corporation (“CMC"), (Marine Repair Services), to provide
on-the-job training, to its technicians
- Entered into new $40 million credit facility with Fifth Third
Bank providing added flexibility to execute growth initiatives
*Note: The highlighted financial results exclude the
Transitional segment results of prior year. A reconciliation of
GAAP / non-GAAP measures is included in this release.
“We had an exceptionally strong start to 2024
and the momentum generated during the first quarter has continued,”
commented Scott Shaw, President & CEO. “The American public is
increasingly questioning the costs and value of a traditional
four-year college degree while the nation’s skills gap is stifling
growth and opportunity. Lincoln is capitalizing on these market
dynamics by providing innovative efficient student curricula that
provides opportunity to a growing number of graduates to enter
rewarding, in-demand careers. During the first quarter, the
successful execution of our strategies resulted in just over 15%
student start growth and nearly 20% revenue growth. This solid
first quarter performance allows us to increase our full year
guidance for revenue, adjusted EBITDA and adjusted net income.”
“During the quarter, we welcomed our inaugural
class of students to our newest campus in East Point, Georgia. In
addition, we began the buildouts of our new Nashville, Tennessee
and Levittown, Pennsylvania campuses, finalized the plans for our
new Houston campus, and made progress in identifying another new
campus location. At the same time, we continue to make progress
towards the roll out of nine replicated programs at existing
Lincoln campuses, as well as the full transition to our highly
scalable hybrid instructional learning model, or Lincoln 10.0, by
the end of the year.”
“Lincoln 10.0, is beginning to yield operating
leverage,” added Mr. Shaw. “We generated nearly 20% higher revenue,
while at the same time decreasing instructional costs as a
percentage of revenue. As 2024 unfolds, we are well positioned to
realize continued operating leverage as the transition is
completed.”
“We have continued to develop our existing corporate
partnerships as well as enter into new ones. Last week, we
announced a five-year, nearly $6.0 million agreement with CMC to
provide onsite employee training, our largest program of its type
to date. The combination of our Lincoln 10.0 model, our replicated
programs, our new and relocated campuses, and the addition of
on-site workforce skills training, and the increasing interest in
Lincoln programs from both employers and students have positioned
the Company for growth during the remainder of 2024 and into the
foreseeable future.”
2024 FIRST QUARTER FINANCIAL RESULTS
(Quarter ended March 31, 2024 compared to March 31,
2023)
- Revenue increased by $16.1 million, or 18.4%,
to $103.4 million. Included in the prior year is $0.9 million of
revenue related to the Transitional segment. Excluding this revenue
for comparability, revenue would have increased by $17.0 million,
or 19.7%. The primary reasons for the increase was an 11.9%
rise in average student population due to starting the year with
approximately 1,100 more students, or 9.0%, coupled with 15.3%
growth in student starts.
- Educational services and facilities expense
increased $4.9 million, or 12.9% to $43.0 million. Included in the
increase over the prior year are approximately $2.9 million of
one-time expenses for new campuses and campus relocation cost,
relating to the new Houston, Texas campus, in addition to the
relocation of our Nashville, Tennessee and Levittown, Pennsylvania
locations. Remaining expense increases were due to instructional
salaries and books and tools expenses resulting from higher
staffing levels driven by student population growth combined with
merit increases.
- Selling, general and administrative expense
increased $10.2 million, or 20.3% to $60.5 million. The majority of
the increase was due to higher administrative costs, which
increased $7.4 million due to several factors including an increase
in salary expense, driven in part by merit increases and population
growth, increased medical claims, and additional bad debt expense,
largely driven by revenue growth. In addition, marketing
investments were up $1.6 million, which helped drive our 15.3%
student start growth.
FIRST QUARTER SEGMENT RESULTS
Campus Operations SegmentRevenue increased
$17.0 million, or 19.7% to $103.4 million. Adjusted EBITDA
increased $6.5 million or 56.5% to $18.1 million, from $11.6
million in the prior year.
Transitional SegmentThe Somerville,
Massachusetts campus teach-out was completed in the fourth quarter
of 2023. In the prior year, the Somerville campus had revenue of
$0.9 million and operating expenses of $1.1 million.
Corporate and OtherThis category includes
unallocated expenses incurred on behalf of the entire Company.
Corporate and other expense were $12.8 million, up from $11.0
million in the prior year. Increased costs were primarily due to
additional salaries, performance based incentives and medical
benefits expense.
FULL YEAR 2024 OUTLOOKBased on 2024 first
quarter financial results, as well as the current quarter
performance to date, and the anticipated operating performance for
the remainder of the year, the Company is revising its financial
projections upwards for revenue, adjusted EBITDA, and adjusted net
income as outlined below:
|
|
|
|
|
|
|
|
|
|
|
2024 Guidance |
|
|
(Amounts in millions except for student starts) |
|
Low |
|
High |
|
Revenue |
|
$ |
418 |
- |
$ |
428 |
|
Adjusted EBITDA |
|
$ |
37 |
- |
$ |
42 |
1 |
Adjusted net income |
|
$ |
12 |
- |
$ |
17 |
1 |
Capital expenditures |
|
$ |
65 |
- |
$ |
70 |
|
Starts |
|
7% |
- |
12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
The guidance in this release includes references to non-GAAP
operating measures. A reconciliation to the midpoint of our
guidance can be reviewed below in the non-GAAP operating measures
at the end of this release. |
|
|
|
|
|
|
|
CONFERENCE CALL INFOLincoln will host a
conference call today at 10:00 a.m. Eastern Standard Time
to discuss results. To access the live webcast of the conference
call, please go to the Investor Overview section of Lincoln’s
website at http://www.lincolntech.edu. Participants may also
register via teleconference at Q1 2024 Lincoln Educational Services
Earnings Conference Call. Once registration is completed,
participants will be provided with a dial-in number containing a
personalized PIN to access the call. Participants are requested to
register at least 15 minutes prior to the start of the call.
An archived version of the webcast will be
accessible for 90 days at http://www.lincolntech.edu.
ABOUT LINCOLN EDUCATIONAL SERVICES
CORPORATION
Lincoln Educational Services Corporation is a
leading provider of diversified career-oriented post-secondary
education helping to provide solutions to America’s skills gap.
Lincoln offers career-oriented programs to recent high school
graduates and working adults in five principal areas of study:
automotive technology, health sciences, skilled trades, business
and information technology, and hospitality services. Lincoln has
provided the workforce with skilled technicians since its inception
in 1946 and currently operates 22 campuses in 13 states under 4
brands: Lincoln College of Technology, Lincoln Technical Institute,
Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts
and Sciences. For more information, please go to
www.lincolntech.edu.
FORWARD-LOOKING
STATEMENTSStatements in this press release and in oral
statements made from time to time by representatives of Lincoln
Educational Services Corporation regarding Lincoln’s business that
are not historical facts, including those made in a conference
call, may be “forward-looking statements” as that term is defined
in the federal securities law. The words “may,” “will,” “expect,”
“believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,”
and “continue,” and their opposites and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements are based on information available at the time those
statements are made and/or management’s good faith belief as of
that time with respect to future events, and are subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved, if at all.
Generally, these statements relate to business plans or strategies
and projections involving anticipated revenues, earnings, or other
aspects of the Company’s operating results. Such forward-looking
statements include the Company’s current belief that it is taking
appropriate steps regarding the pandemic and that student growth
will continue. The Company cautions you that these statements
concern current expectations about the Company’s future performance
or events and are subject to a number of uncertainties, risks, and
other influences, many of which are beyond the Company’s control,
that may influence the accuracy of the statements and the projects
upon which the statements are based including, without limitation,
impacts related to the COVID-19 pandemic or other epidemics or
pandemics; our failure to comply with the extensive regulatory
framework applicable to our industry or our failure to obtain
timely regulatory approvals in connection with acquisitions or a
change of control of our Company; our success in updating and
expanding the content of existing programs and developing new
programs for our students in a cost-effective manner or on a timely
basis; risks associated with cybersecurity; risks associated with
changes in applicable federal laws and regulations; uncertainties
regarding our ability to comply with federal laws and regulations,
such as the 90/10 rule and prescribed cohort default rates; risks
associated with the opening of new campuses; risks associated with
integration of acquired schools; industry competition; our ability
to execute our growth strategies; conditions and trends in our
industry; general economic conditions; and other factors discussed
in the “Risk Factors” section of our Annual Reports and Quarterly
Reports filed with the Securities and Exchange Commission. All
forward-looking statements are qualified in their entirety by this
cautionary statement, and Lincoln undertakes no obligation to
publicly revise or update any forward-looking statements, whether
as a result of new information, future events or otherwise after
the date hereof.
(Tables to Follow)(In Thousands)
|
Three Months Ended |
|
March 31, |
|
(Unaudited) |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
REVENUE |
$ |
103,366 |
|
|
$ |
87,284 |
|
COSTS AND EXPENSES: |
|
|
|
Educational services and facilities |
|
43,023 |
|
|
|
38,093 |
|
Selling, general and administrative |
|
60,492 |
|
|
|
50,307 |
|
Loss on sale of asset |
|
309 |
|
|
|
- |
|
Total costs & expenses |
|
103,824 |
|
|
|
88,400 |
|
OPERATING LOSS |
|
(458 |
) |
|
|
(1,116 |
) |
OTHER: |
|
|
|
Interest income |
|
698 |
|
|
|
467 |
|
Interest expense |
|
(567 |
) |
|
|
(25 |
) |
LOSS BEFORE INCOME TAXES |
|
(327 |
) |
|
|
(674 |
) |
BENEFIT FOR INCOME TAXES |
|
(113 |
) |
|
|
(565 |
) |
NET LOSS |
$ |
(214 |
) |
|
$ |
(109 |
) |
Basic |
|
|
|
Net loss per common share |
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
Diluted |
|
|
|
Net loss per common share |
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
Weighted average number of common shares outstanding: |
|
|
|
Basic |
|
30,301 |
|
|
|
30,039 |
|
Diluted |
|
30,301 |
|
|
|
30,039 |
|
|
|
|
|
Other data: |
|
|
|
|
|
|
|
Adjusted EBITDA (1) |
$ |
6,545 |
|
|
$ |
2,196 |
|
Depreciation and amortization |
$ |
2,964 |
|
|
$ |
1,253 |
|
Number of campuses |
|
22 |
|
|
|
22 |
|
Average enrollment |
|
13,678 |
|
|
|
12,387 |
|
Net cash used in operating activities |
$ |
(14,934 |
) |
|
$ |
(214 |
) |
Net cash provided by (used in) investing activities |
$ |
8,034 |
|
|
$ |
(3,249 |
) |
Net cash used in financing activities |
$ |
(3,594 |
) |
|
$ |
(2,335 |
) |
Selected Consolidated Balance Sheet Data: |
March 31, 2024 |
|
(Unaudited) |
|
|
Cash and cash equivalents |
$ |
68,554 |
Restricted cash |
|
1,221 |
Current assets |
|
118,749 |
Working capital |
|
58,867 |
Total assets |
|
355,163 |
Current liabilities |
|
59,882 |
Total stockholders' equity |
|
164,493 |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn
addition to disclosing financial results that are determined in
accordance with U.S. generally accepted accounting principles
(“GAAP”), the Company believes it is useful to present non-GAAP
financial measures that exclude certain significant items as a
means to understand the performance of its business. EBITDA,
adjusted EBITDA, adjusted net income and total liquidity are
measures not recognized in financial statements presented in
accordance with GAAP.
- We define EBITDA as income (loss) before interest expense (net
of interest income), provision (benefit) for income taxes,
depreciation and amortization.
- We define adjusted EBITDA as EBITDA plus stock compensation
expense and adjustments for items not considered part of the
Company’s normal recurring operations.
- We define adjusted net income as net income plus adjustments
for items not considered part of the Company’s normal recurring
operations.
- We define total liquidity as the Company’s cash and cash
equivalents, short-term investments and restricted cash.
EBITDA, adjusted EBITDA, adjusted net income, and total
liquidity are presented because we believe they are useful
indicators of the Company’s performance and ability to make
strategic investments and meet capital expenditures and debt
service requirements. However, they are not intended to represent
cash flows from operations as defined by GAAP and should not be
used as an alternative to net income (loss) as indicators of
operating performance or cash flow as a measure of liquidity.
EBITDA, adjusted EBITDA, adjusted net income and total liquidity
are not necessarily comparable to similarly titled measures used by
other companies.
The following is a reconciliation of net income (loss) to
EBITDA, adjusted EBITDA, adjusted net income, and total
liquidity:
|
|
Three Months Ended March 31, |
|
|
(Unaudited) |
|
|
Consolidated Operations |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
Net loss |
$ |
(214 |
) |
|
$ |
(109 |
) |
|
Interest income, net |
|
(131 |
) |
|
|
(442 |
) |
|
Benefit for income taxes |
|
(113 |
) |
|
|
(565 |
) |
|
Depreciation and amortization |
|
2,964 |
|
|
|
1,253 |
|
|
EBITDA |
|
2,506 |
|
|
|
137 |
|
|
Stock compensation expense |
|
1,059 |
|
|
|
812 |
|
|
New campus and campus relocation costs1 |
|
2,802 |
|
|
|
260 |
|
|
Severance and other one-time costs |
|
89 |
|
|
|
794 |
|
|
Program expansions |
|
89 |
|
|
|
- |
|
|
Transitional segment |
|
- |
|
|
|
193 |
|
|
Adjusted EBITDA |
$ |
6,545 |
|
|
$ |
2,196 |
|
|
|
|
|
|
1 |
Includes $450,000 of non-cash rent expense. |
|
|
|
|
Three Months Ended March 31, |
|
(Unaudited) |
|
Campus Operations |
|
Transitional |
|
Corporate |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
11,824 |
|
$ |
10,109 |
|
|
$ |
- |
|
$ |
(197 |
) |
|
$ |
(12,038 |
) |
|
$ |
(10,021 |
) |
Interest expense (income), net |
|
501 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(632 |
) |
|
|
(442 |
) |
Benefit for income taxes |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(113 |
) |
|
|
(565 |
) |
Depreciation and amortization |
|
2,773 |
|
|
1,099 |
|
|
|
- |
|
|
4 |
|
|
|
191 |
|
|
|
150 |
|
EBITDA |
|
15,098 |
|
|
11,208 |
|
|
|
- |
|
|
(193 |
) |
|
|
(12,592 |
) |
|
|
(10,878 |
) |
Stock compensation expense |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
1,059 |
|
|
|
812 |
|
New campus and campus relocation costs1 |
|
2,802 |
|
|
260 |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Severance and other one-time costs |
|
89 |
|
|
84 |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
710 |
|
Program expansions |
|
89 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Transitional segment |
|
- |
|
|
- |
|
|
|
- |
|
|
193 |
|
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
$ |
18,078 |
|
$ |
11,552 |
|
|
$ |
- |
|
$ |
- |
|
|
$ |
(11,533 |
) |
|
$ |
(9,356 |
) |
|
Three Months Ended |
|
March 31, |
|
(Unaudited) |
|
|
2024 |
|
|
|
2023 |
|
Net loss |
$ |
(214 |
) |
|
$ |
(109 |
) |
|
|
|
|
Non-recurring adjustments: |
|
|
|
New campus and campus relocation costs1 |
|
2,802 |
|
|
|
260 |
|
Severance and other one time costs |
|
89 |
|
|
|
973 |
|
Program expansions |
|
89 |
|
|
|
- |
|
Transitional segment |
|
- |
|
|
|
193 |
|
Total non-recurring adjustments |
|
2,980 |
|
|
|
1,426 |
|
Income tax effect |
|
(894 |
) |
|
|
(406 |
) |
Adjusted net income, non-GAAP |
$ |
1,872 |
|
|
$ |
911 |
|
|
As
of |
|
March 31, 2024 |
Cash and cash equivalents |
$ |
68,554 |
Restricted
cash |
|
1,221 |
Credit
facility |
|
40,000 |
Total Liquidity |
$ |
109,775 |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
Revenue: |
|
|
|
|
|
Campus Operations |
$ |
103,366 |
|
|
$ |
86,352 |
|
|
19.7 |
% |
Transitional |
|
- |
|
|
|
932 |
|
|
-100.0 |
% |
Total |
$ |
103,366 |
|
|
$ |
87,284 |
|
|
18.4 |
% |
|
|
|
|
|
|
Operating Income (loss): |
|
|
|
|
|
Campus Operations |
$ |
12,324 |
|
|
$ |
10,109 |
|
|
21.9 |
% |
Transitional |
|
- |
|
|
|
(197 |
) |
|
-100.0 |
% |
Corporate |
|
(12,782 |
) |
|
|
(11,028 |
) |
|
-15.9 |
% |
Total |
$ |
(458 |
) |
|
$ |
(1,116 |
) |
|
59.0 |
% |
|
|
|
|
|
|
Starts: |
|
|
|
|
|
Campus Operations |
|
3,967 |
|
|
|
3,440 |
|
|
15.3 |
% |
Total |
|
3,967 |
|
|
|
3,440 |
|
|
15.3 |
% |
|
|
|
|
|
|
Average Population: |
|
|
|
|
|
Campus Operations |
|
13,678 |
|
|
|
12,225 |
|
|
11.9 |
% |
Transitional |
|
- |
|
|
|
162 |
|
|
-100.0 |
% |
Total |
|
13,678 |
|
|
|
12,387 |
|
|
10.4 |
% |
|
|
|
|
|
|
End of Period Population: |
|
|
|
|
|
Campus Operations |
|
13,801 |
|
|
|
12,413 |
|
|
11.2 |
% |
Transitional |
|
- |
|
|
|
131 |
|
|
-100.0 |
% |
Total |
|
13,801 |
|
|
|
12,544 |
|
|
10.0 |
% |
|
|
|
|
|
|
Information included in the table below provides student starts
and population under the Campus Operations segment with a breakdown
by Transportation and Skilled Trade programs and Healthcare and
Other Professions programs. This information is not comparable to
the Company’s prior period segment reporting, which was performed
on a campus basis rather than a program basis.
|
|
|
|
|
|
Population by Program (Campus Operations
Segment): |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2024 |
|
2023 |
|
% Change |
Starts: |
|
|
|
|
|
Transportation and Skilled Trades |
2,682 |
|
2,263 |
|
18.5 |
% |
Healthcare and Other Professions |
1,285 |
|
1,177 |
|
9.2 |
% |
Total |
3,967 |
|
3,440 |
|
15.3 |
% |
|
|
|
|
|
|
Average Population: |
|
|
|
|
|
Transportation and Skilled Trades |
9,544 |
|
8,281 |
|
15.3 |
% |
Healthcare and Other Professions |
4,134 |
|
3,944 |
|
4.8 |
% |
Total |
13,678 |
|
12,225 |
|
11.9 |
% |
|
|
|
|
|
|
End of Period Population: |
|
|
|
|
|
Transportation and Skilled Trades |
9,639 |
|
8,488 |
|
13.6 |
% |
Healthcare and Other Professions |
4,162 |
|
3,925 |
|
6.0 |
% |
Total |
13,801 |
|
12,413 |
|
11.2 |
% |
|
|
|
|
|
|
The reconciliations provided below represent
managements best projection for the execution of our 2024 guidance.
These calculations are for illustrative purposes and will be
reviewed throughout 2024 to ensure accuracy and continued
relevance. Any revisions or modifications, if necessary, will be
made transparent and disclosed during the 2024 quarterly reviews.
Adjusted EBITDA and adjusted net income have been reconciled to the
midpoint of our guidance.
|
|
|
|
Reconciliation of Net Income to Adjusted EBITDA and
Adjusted Net Income - 2024 Guidance |
(Reconciled to the Mid-Point of 2024
Guidance) |
|
|
|
|
|
Adjusted |
|
EBITDA |
|
Net Income |
Net Income |
$ |
6,800 |
|
$ |
6,800 |
|
Interest expense, net |
|
700 |
|
|
- |
|
Provision for taxes |
|
3,100 |
|
|
- |
|
Depreciation and amortization |
|
11,200 |
|
|
- |
|
Depreciation1 |
|
2,500 |
|
|
- |
|
EBITDA |
|
24,300 |
|
|
- |
|
New campus and campus relocation costs2 |
|
8,700 |
|
|
8,700 |
|
Program expansions |
|
2,300 |
|
|
2,300 |
|
Stock compensation expense |
|
4,200 |
|
|
- |
|
Tax Effect |
|
- |
|
|
(3,300 |
) |
Total |
$ |
39,500 |
|
$ |
14,500 |
|
|
|
|
|
2024 Guidance Range |
$37,000 - $42,000 |
|
$12,000 - $17,000 |
|
|
|
|
1 Depreciation expense relates to new campuses and campus
relocations. |
|
|
|
|
2 New campus and campus relocation costs relate to the following
locations: |
East Point, Georgia |
|
|
|
Nashville, Tennessee |
|
|
|
Levittown, Pennsylvania |
|
|
|
Houston, Texas |
|
|
|
|
|
|
|
LINCOLN EDUCATIONAL SERVICES
CORPORATIONBrian Meyers, CFO973-736-9340
EVC GROUP LLCInvestor Relations: Michael
Polyviou, mpolyviou@evcgroup.com, 732-933-2755Media Relations: Tom
Gibson, 201-476-0322
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