Lincoln Educational Services Corporation (Nasdaq:LINC) today
reported financial results for the first quarter ended March 31,
2018. As of January 1, 2018 for the first time in several
years, the Company did not have any closing campus operations,
which would otherwise have been reported under the Transitional
segment. GAAP results include Transitional segment results
for the comparable period of 2017.
FIRST QUARTER FINANCIAL RESULTS HIGHLIGHTS:
- Excluding the Transitional segment, which includes closed
campuses, student starts increased by 2.2%. Both the
Transportation and Skilled Trades segment and Healthcare and Other
Professions (“HOPS”) segment starts exceeded the prior
year.
- Total revenue for the first quarter was $61.9 million compared
to $65.3 million in the prior year comparable quarter.
Excluding the Transitional segment from the prior year, revenue
would have increased by 1.5%, or $0.9 million.
- Educational services and facilities expense decreased by $2.2
million, or 6.8%, to $30.5 million for the three months ended March
31, 2018 from $32.7 million in the prior year comparable
period. The expense reductions were due to a $2.7 million
decrease relating to the Transitional segment, partially offset by
(a) increased facilities expense of $0.3 million mainly resulting
from higher winter-related common area maintenance charges and
utilities expense, and (b) higher books and tools expense of $0.3
million relating to laptops issued to new students for a growing
number of our program offerings.
- Selling general and administrative expense decreased by $0.8
million, or 2.1%, to $37.5 million for the three months ended March
31, 2018 from $38.3 million in the prior year comparable
period. The cost reductions were due to a $2.1 million
decrease related to the Transitional segment, partially offset by
(a) higher marketing investments of $1.1 million directed at future
start growth, and (b) higher administrative expenses of $0.5
million.
- Net interest expense for the three months ended March 31, 2018
decreased by $4.6 million, or 89.1% to $0.6 million from $5.2
million in the prior year comparable period primarily as a result
of the new credit facility of a previous term loan (and the
associated fees and expenses resulting from the termination), which
occurred on March 31, 2017. As a result of the termination
the Company anticipates savings of approximately $5 million for the
year.
- Net loss for the quarter was $6.9 million, or $0.28 per share,
compared to a net loss of $10.9 million, or $0.46 per share, in the
prior year comparable quarter.
“We’ve had a solid start to 2018,” said Scott Shaw, President
& CEO. “On a same school basis, we generated 1.5% revenue
growth and student start growth of 2.2%. We’ve also continued
to expand our corporate partnerships during 2018 with the addition
of Hussman, Johnson Controls and today we are announcing our first
partnership with Bridgestone Retail Operations. We believe
that this demonstrates that major corporations in industries
serviced by our graduates are increasingly turning to Lincoln to
fill a critical need for trained employees due to our track record
for preparing our students for careers in dynamic industries.”
“We are also pursuing program expansion plans where our
resources allow us to do so and our financial performance is
benefitting from the lower interest expense of the credit facility
entered into a year ago, as well as the cost reductions resulting
from campus closures as of December 31, 2017. The results we
have reported today are ahead of our internal plan for the first
quarter and are enabling us to reiterate our guidance for 2018,
which we first provided in late February.”
FIRST QUARTER SEGMENT FINANCIAL PERFORMANCE
For the three months ended March 31, 2018, the Company
reclassified the Marietta, Georgia campus from the Healthcare and
Other Professions segment, to the Transportation and Skilled Trades
segment. The change was made as the majority of the student
concentration is currently enrolled in skilled trades
programs. This change is deemed appropriate and in line with
our segment structure. Prior year numbers have been recast to
reflect the change for comparability.
Transportation and Skilled Trades
The Transportation and Skilled Trades segment revenue decreased
to $42.7 million for the three months ended March 31, 2018, as
compared to $43.2 million in the prior year comparable
period. The decrease in revenue was a result of a 2.2%
decrease in average population driven by a lower carry in
population of approximately 300 students. Partially
offsetting the reduction is a 1.3% increase in average revenue per
student.
Student starts for the quarter increased slightly compared to
the prior year comparable period.
Operating income was $0.7 million for the three months ended
March 31, 2018 as compared to $1.9 million in the prior year
comparable period.
Selling, general and administrative expenses increased by $0.6
million, or 2.8%, to $21.3 million for the three months ended March
31, 2018 from $20.8 million in the prior year comparable period due
to $0.5 million of additional marketing investments directed at
further increasing future start growth.
Healthcare and Other Professions
The HOPS segment revenue increased by $1.3 million, or 7.3% to
$19.1 million for the three months ended March 31, 2018 as compared
to $17.8 million in the prior year comparable period. The
increase in revenue was the result of a 4.6% increase in average
student population driven by an increased carry in population of
approximately 150 students and a 2.5% increase in average revenue
per student.
Student start results increased by 5.5% for the three months
ended March 31, 2018 from the prior year comparable
period.
Operating income for the three months ended March 31, 2018 was
$0.2 million compared to $0.3 million in the prior year comparable
period.
Selling general and administrative expenses increased by $1.0
million, or 13%, to $9.1 million for the three months ended March
31, 2018 from $8.1 million in the prior year comparable
period. The increase was primarily driven by two factors, (a)
a $0.6 million increase in marketing investment and (b) a $0.4
million increase in administrative expenses.
Transitional
There were no operations for the Transitional segment for the
three months ended March 31, 2018 as all of the campuses classified
in this segment were closed as of December 31, 2017. Revenue
and operating loss for the prior year comparable period were $4.3
million and $0.6 million, respectively.
Corporate and Other
This category includes unallocated expenses incurred on behalf
of the entire Company. Corporate and other expenses decreased
by $0.2 million, or 2.6%, to $7.2 million for the three months
ended March 31, 2018 from $7.4 million in the prior year comparable
period. The decrease in costs were primarily driven by
reductions in salaries and benefits expense of $0.4 million
partially offset by a loss on sale of assets of $0.1 million.
This loss related to catch-up depreciation expense in connection
with a building previously classified as held for sale during 2017
but was reclassified to held for use as of January 1, 2018.
2018 OUTLOOK
The Company is reiterating the guidance provided
on February 28, 2018 as follows:
- Revenue is expected to increase by low single digits, compared
to prior year, excluding the 2017 Transitional segment.
- Operating Income for 2018 is expected to be in the range of
breakeven and a loss of $3 million.
- Student starts are expected to increase by low single digits,
compared to prior year, excluding the 2017 Transitional
segment.
- Year-end population is expected to be greater than that of the
prior year.
CONFERENCE CALL INFO
Lincoln will host a conference call today at 10:00 a.m. Eastern
Daylight Time. The conference call can be accessed by going
to the IR portion of our website at www.lincolntech.edu. To access
the live webcast of the conference call, please go to the investor
relations section of Lincoln’s website
at http://www.lincolntech.edu. Participants can also listen to
the conference call by dialing 844-413-0946 (domestic) or
216-562-0456 (international) and providing access code 1593779.
Please log in or dial into the call at least 10 minutes prior to
the start time.
An archived version of the webcast will be accessible for 90
days at http://www.lincolntech.edu. A replay of the call will
also be available for seven days by calling 855-859-2056 (domestic)
or 404-537-3406 (international) and providing access code
1593779.
ABOUT LINCOLN EDUCATIONAL SERVICES
CORPORATION
Lincoln Educational Services Corporation is a provider of
diversified career-oriented post-secondary education and helping to
provide solutions to America’s skills gap. Lincoln offers recent
high school graduates and working adults degree and diploma
programs. The Company operates under three reportable
segments: Transportation and Skilled Trades, Healthcare and Other
Professions and Transitional. Lincoln has provided the nation’s
workforce with skilled technicians since its inception in 1946. For
more information, go to www.lincolntech.edu.
SAFE HARBOR
Statements 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 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 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,
projected or anticipated benefits from acquisitions or dispositions
to be made by the Company or projections involving anticipated
revenues, earnings or other aspects of the Company’s operating
results. 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. The events described in
forward-looking statements may not occur at all. Factors which may
affect the Company’s results include, but are not limited to, the
risks and uncertainties discussed in the Company’s Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K filed with the Securities and Exchange commission.
Any one or more of these uncertainties, risks and other influences
could materially affect the Company’s results of operations and
financial condition and whether forward-looking statements made by
the Company ultimately prove to be accurate and, as such, the
Company’s actual results, performance and achievements could
materially differ from those expressed or implied in these
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.
Important factors that could cause such differences include, but
are not limited to, our failure to comply with the extensive
regulatory framework applicable to our industry or our failure to
obtain timely regulatory approvals in connection with a change of
control of our Company or acquisitions; 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 changes in applicable federal laws and
regulations; uncertainties regarding our ability to comply with
federal laws and regulations regarding the 90/10 rule and 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 and quarterly reports. 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, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
REVENUE |
$ |
61,889 |
|
|
$ |
65,279 |
|
|
COSTS AND
EXPENSES: |
|
|
|
|
Educational services and facilities |
|
30,503 |
|
|
|
32,709 |
|
|
Selling,
general and administrative |
|
37,531 |
|
|
|
38,324 |
|
|
Loss
(gain) on sale of assets |
|
117 |
|
|
|
(26 |
) |
|
Total
costs & expenses |
|
68,151 |
|
|
|
71,007 |
|
|
OPERATING LOSS |
|
(6,262 |
) |
|
|
(5,728 |
) |
|
OTHER: |
|
|
|
|
Interest
income |
|
10 |
|
|
|
31 |
|
|
Interest
expense |
|
(572 |
) |
|
|
(5,182 |
) |
|
LOSS
BEFORE INCOME TAXES |
|
(6,824 |
) |
|
|
(10,879 |
) |
|
PROVISION FOR INCOME
TAXES |
|
50 |
|
|
|
50 |
|
|
NET LOSS |
$ |
(6,874 |
) |
|
$ |
(10,929 |
) |
|
Basic |
|
|
|
|
Net loss
per share |
$ |
(0.28 |
) |
|
$ |
(0.46 |
) |
|
Diluted |
|
|
|
|
Net loss
per share |
$ |
(0.28 |
) |
|
$ |
(0.46 |
) |
|
Weighted average number
of common shares outstanding: |
|
|
|
|
Basic |
|
24,138 |
|
|
|
23,609 |
|
|
Diluted |
|
24,138 |
|
|
|
23,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
data: |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1) |
$ |
(4,162 |
) |
|
$ |
(3,576 |
) |
|
Depreciation and
amortization |
$ |
2,100 |
|
|
$ |
2,152 |
|
|
Number of campuses |
|
23 |
|
|
|
28 |
|
|
Average enrollment |
|
10,214 |
|
|
|
11,090 |
|
|
Stock-based
compensation |
$ |
429 |
|
|
$ |
361 |
|
|
Net cash used in
operating activities |
$ |
(10,042 |
) |
|
$ |
(11,474 |
) |
|
Net cash used in
investing activities |
$ |
(468 |
) |
|
$ |
(806 |
) |
|
Net cash used in
financing activities |
$ |
(30,691 |
) |
|
$ |
(15,539 |
) |
|
|
|
|
|
|
Selected
Consolidated Balance Sheet Data: |
March 31, 2018 |
|
(Unaudited) |
|
|
Cash and
cash equivalents |
$ |
4,863 |
|
Current
assets |
|
37,855 |
|
Working
capital |
|
(8,646 |
) |
Total
assets |
|
116,871 |
|
Current
liabilities |
|
46,501 |
|
Long-term debt obligations, including current portion |
|
22,300 |
|
Total
stockholders' equity |
|
39,219 |
|
|
|
(1) Reconciliation of Non-GAAP Financial
Measures
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 and same school
basis revenue are measurements not recognized in financial
statements presented in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). We
define EBITDA as income (loss) before interest expense (net of
interest income), provision for income taxes, depreciation, and
amortization. We define same school basis revenue as Total
Company revenue less the Transitional segment revenue. EBITDA
and same school revenue are presented because we believe they are a
useful indicator of our performance and our ability to make
strategic acquisitions and meet capital expenditure and debt
service requirements. However, it is 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 an indicator of operating
performance or to cash flow as a measure of liquidity. EBITDA and
same school basis revenue are not necessarily comparable to
similarly titled measures used by other companies.
Following is a reconciliation of net income (loss) to EBITDA and
same school basis revenue:
|
Three Months Ended March
31, |
|
(Unaudited) |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
Net loss |
$ |
(6,874 |
) |
|
$ |
(10,929 |
) |
Interest
expense, net |
|
562 |
|
|
|
5,151 |
|
Provision
for income taxes |
|
50 |
|
|
|
50 |
|
Depreciation and amortization |
|
2,100 |
|
|
|
2,152 |
|
EBITDA |
$ |
(4,162 |
) |
|
$ |
(3,576 |
) |
|
|
|
|
|
|
Three Months Ended
March 31, |
|
(Unaudited) |
|
Transportation and Skilled Trades |
|
Healthcare and Other Professions |
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
675 |
|
$ |
1,917 |
|
|
$ |
243 |
|
|
$ |
314 |
|
Interest
expense, net |
|
- |
|
|
(18 |
) |
|
|
- |
|
|
|
- |
|
Provision
for income taxes |
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Depreciation and amortization |
|
1,884 |
|
|
1,965 |
|
|
|
54 |
|
|
|
1 |
|
EBITDA |
$ |
2,559 |
|
$ |
3,864 |
|
|
$ |
297 |
|
|
$ |
315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
(Unaudited) |
|
Transitional |
|
Corporate |
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
- |
|
$ |
(568 |
) |
|
$ |
(7,792 |
) |
|
$ |
(12,592 |
) |
Interest
expense, net |
|
- |
|
|
- |
|
|
|
562 |
|
|
|
5,169 |
|
Provision
for income taxes |
|
- |
|
|
- |
|
|
|
50 |
|
|
|
50 |
|
Depreciation and amortization |
|
- |
|
|
27 |
|
|
|
162 |
|
|
|
159 |
|
EBITDA |
$ |
- |
|
$ |
(541 |
) |
|
$ |
(7,018 |
) |
|
$ |
(7,214 |
) |
|
|
Three Months Ended
March 31, |
|
(Unaudited) |
|
|
|
|
|
|
|
|
%
Change |
|
|
|
|
|
|
|
|
|
Student
Starts |
|
Same
School |
|
Total Company |
|
Transitional
Segment |
|
Same school
Basis |
|
Basis |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Student
Starts |
2,786 |
|
2,857 |
|
- |
|
132 |
|
2,786 |
|
2,725 |
|
2.2 |
% |
|
|
Three Months Ended March
31, |
|
(Unaudited) |
|
|
|
|
|
|
|
Total |
|
Total |
|
%
Change |
|
Company |
|
Company |
|
Same School
Basis |
|
2018 |
|
2017 |
|
2018 |
Total
Company Revenue |
$ |
61,889 |
|
$ |
65,279 |
|
|
|
Less:
Transitional Revenue |
|
- |
|
|
(4,275 |
) |
|
|
Revenue
on Same School Basis |
$ |
61,889 |
|
$ |
61,004 |
|
|
1.5 |
% |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
(Unaudited) |
|
|
|
2018 |
|
2017 |
|
% Change |
|
|
Revenue: |
|
|
|
|
|
|
|
Transportation and
Skilled Trades |
$ |
42,747 |
|
|
$ |
43,159 |
|
|
-1.0 |
% |
|
|
Healthcare and Other
Professions |
|
19,142 |
|
|
|
17,845 |
|
|
7.3 |
% |
|
|
Transitional |
|
- |
|
|
|
4,275 |
|
|
-100.0 |
% |
|
|
Total |
$ |
61,889 |
|
|
$ |
65,279 |
|
|
-5.2 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
Income (Loss): |
|
|
|
|
|
|
|
Transportation and
Skilled Trades |
$ |
676 |
|
|
$ |
1,900 |
|
|
-64.4 |
% |
|
|
Healthcare and Other
Professions |
|
244 |
|
|
|
314 |
|
|
-22.3 |
% |
|
|
Transitional |
|
- |
|
|
|
(569 |
) |
|
100.0 |
% |
|
|
Corporate |
|
(7,181 |
) |
|
|
(7,372 |
) |
|
2.6 |
% |
|
|
Total |
$ |
(6,261 |
) |
|
$ |
(5,727 |
) |
|
-9.3 |
% |
|
|
|
|
|
|
|
|
|
|
Starts: |
|
|
|
|
|
|
|
Transportation and
Skilled Trades |
|
1,806 |
|
|
|
1,796 |
|
|
0.6 |
% |
|
|
Healthcare and Other
Professions |
|
980 |
|
|
|
929 |
|
|
5.5 |
% |
|
|
Transitional |
|
- |
|
|
|
132 |
|
|
-100.0 |
% |
|
|
Total |
|
2,786 |
|
|
|
2,857 |
|
|
-2.5 |
% |
|
|
|
|
|
|
|
|
|
|
Average
Population: |
|
|
|
|
|
|
|
Transportation and
Skilled Trades |
|
6,627 |
|
|
|
6,776 |
|
|
-2.2 |
% |
|
|
Healthcare and Other
Professions |
|
3,586 |
|
|
|
3,430 |
|
|
4.6 |
% |
|
|
Transitional |
|
- |
|
|
|
884 |
|
|
-100.0 |
% |
|
|
Total |
|
10,214 |
|
|
|
11,090 |
|
|
-7.9 |
% |
|
|
|
|
|
|
|
|
|
|
End of Period
Population: |
|
|
|
|
|
|
|
Transportation and
Skilled Trades |
|
6,736 |
|
|
|
6,945 |
|
|
-3.0 |
% |
|
|
Healthcare and Other
Professions |
|
3,748 |
|
|
|
3,539 |
|
|
5.9 |
% |
|
|
Transitional |
|
- |
|
|
|
774 |
|
|
-100.0 |
% |
|
|
Total |
|
10,484 |
|
|
|
11,258 |
|
|
-6.9 |
% |
|
|
|
|
|
|
|
|
|
|
LINCOLN EDUCATIONAL SERVICES CORPORATIONBrian
Meyers, CFO973-736-9340
EVC GROUP, Inc.Investor Relations: Doug Sherk,
dsherk@evcgroup.com; 415-652-9100Media Relations: Tom Gibson,
201-476-0322
Lincoln Educational Serv... (NASDAQ:LINC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lincoln Educational Serv... (NASDAQ:LINC)
Historical Stock Chart
From Apr 2023 to Apr 2024