PARSIPPANY, N.J., May 09, 2022 (GLOBE NEWSWIRE) — Lincoln Educational Services Corporation (Nasdaq: LINC) today, reported operating and financial results for the first quarter as well as recent business developments.
First Quarter 2022 vs First Quarter 2021 Financial Highlights and Recent Operating Developments
- Revenue of $82.6 million, up 5.8% compared to prior year
- Adjusted EBITDA* of $2.4 million, compared to $5.4 million in prior year
- Average student population up 4.4%
- Beginning period population up 6.0%
- Reiterating 2022 guidance for all metrics including student starts, revenue, Adjusted EBITDA, net income and capital expenditures
*See Use of “Non-GAAP Financial Information” below.
“Our first quarter performance reflects the strong demand for Lincoln’s programs despite an exceptionally tight labor market and significant wage inflation,” commented Scott Shaw, President & CEO. “While our number of enrolled students increased year over year, new student starts decreased slightly by less than 200 as compared to the year ago period, a shortfall that is expected to reverse in the second quarter. Our profitability for the quarter was consistent with our expectations as we increased marketing, program development and other investments to support our growth.”
“Despite the continuing challenges that the labor market and wage inflation create, we remain confident that we will achieve our full year growth objectives in line with our guidance. Our confidence is based on the strong demand for our graduates by employers, a growing number of corporate partnerships, the ability to access the population of high school graduates as the pandemic restrictions ease, execution of our growth initiatives and the successful strategies Lincoln employed during the period of low unemployment prior to the pandemic.”
“We expect to reach an even larger number of students upon effectuating current initiatives to make additional programs available at existing campuses and establish new campuses in markets that we have identified as being underserved. The closing of the sale of our existing Nashville campus, which we now expect to occur during Q3, will provide the opportunity to develop a purpose-built campus in Nashville that will service the needs of students, partners and employers for many years to come. We begin these initiatives to further expand our business from a position of financial strength, including over $65 million of cash on hand, our strong operating cash flow, and the addition of approximately $34 million in net cash proceeds from the sale of Nashville campus assuming consummation.”
“Concurrent with our campus and program expansion initiatives, we have increased our level of internal operational investments. Centralizing critical organizational infrastructure and functions will create long-term efficiencies and expedite the process of enrolling students so they can begin building their careers. As we celebrate our 75th year, I believe we are positioning Lincoln to achieve success for another 75 years as we graduate more students into high paying and fulfilling careers that are helping American industry close the immense skills gap.”
2022 FIRST QUARTER FINANCIAL RESULTS
(Quarter ended March 31, 2022 compared to quarter ended March 31, 2021)
- Revenue increased $4.6 million, or 5.8%, to $82.6 million from $78.0 million in the prior year comparable period. The main component of the increase was a 4.4% increase in average student population, driven by the higher beginning population of approximately 740 more students at the start of 2022 than in 2021. In addition, average revenue per student rose 1.3% over the prior year contributing to the revenue growth.
- Educational services and facilities expense increased $3.9 million, or 11.9%, to $36.2 million from $32.3 million in the prior year comparable period. Increased costs were primarily concentrated in instructional expense and facilities expense.
Instructional salaries increased mainly due to market adjustments and larger staffing levels, as a result of population growth, program expansion and return to normalized levels of in person instruction post-COVID-19 restrictions. Furthermore, consumable prices rose sharply because of the on-going inflation spike and supply-chain shortages.
Facility expenses increased with the addition of approximately $0.8 million of rent expense from the sale leaseback transaction relating to our Denver and Grand Prairie campuses consummated in the fourth quarter of 2021 and higher maintenance costs.
- Selling, general and administrative expense increased $7.1 million, or 17.8% to $46.7 million from $39.6 million. The year over year increase results from (a) the $3.0 million benefit to bad debt expense in 2021 from the forgiveness of accounts receivables from students impacted by COVID-19 provided for by the CARES Act, (b) additional marketing investments of $1.2 million, (c) $0.9 million related to stock compensation and severance expense, and (d) one-time expenses related to the initiatives to streamline operations of approximately $0.8 million.
- Benefit for income taxes of $0.6 million compared to a provision for income taxes of $1.2 million. The benefit in the current quarter was primarily due to a pre-tax book loss and an increase in a discrete item relating to restricted stock vesting.
FIRST QUARTER SEGMENT RESULTS
Transportation and Skilled Trades Segment
Revenue increased $3.1 million, or 5.6% to $58.8 million from $55.7 million in the prior year comparable period. The increase was driven by a 6.3% increase in average student population mainly due to starting the year with approximately 730 more students than in the prior year comparable period.
Adjusted EBITDA was $8.5 million compared to $11.8 million in the prior year. The current quarter includes $0.8 million of additional rent expense related to the sale leaseback transaction related to our Denver and Grand Prairie campuses.
Healthcare and Other Professions Segment
Revenue increased $1.5 million, or 6.5% to $23.8 million from $22.3 million in the prior year comparable period. The increase was primarily the result of a 5.3% increase in average revenue per student.
Adjusted EBITDA was $1.5 million compared to $2.3 million in the prior year.
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $8.9 million compared to $9.3 million in the prior year. The decrease in expense was primarily driven by reduction in incentive compensation, partially offset by stock compensation and severance expense.
FULL YEAR 2022 OUTLOOK
Based on currently available information and trends, the Company anticipates low double-digit start growth in the second quarter. The Company remains confident in its ability to achieve its 2022 goals and is reiterating its full year 2022 guidance as follows:
- Revenue in the range of $350 million to $365 million
- Student start growth in the range of 5% to 10%
- Adjusted EBITDA* in the range of $35.0 million to $40.0 million
- Net Income in the range of $17.0 million to $22.0 million
- Capital expenditures in the range of $7.0 million to $9.0 million
*See Use of “Non-GAAP Financial Information” below
The 2022 guidance excludes the impact of the contemplated consummation of the sale and relocation of the Nashville, Tennessee campus, which is under contract for sale subject to various closing conditions, as well as additional costs associated with a new potential campus. The outlook is based on, among other things, current enrollment trends and does not account for the impact from continuing COVID-19 issues or any new COVID-19 variants. Accordingly, this guidance may be revised as the year unfolds due to changes in student demand and other factors.
ABOUT LINCOLN EDUCATIONAL SERVICES CORPORATION
Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education helping to provide solutions to America’s skills gap. For 75 years, Lincoln has offered and continues to offer recent high school graduates and working adults degree and diploma programs. The Company operates under two reportable segments: Transportation and Skilled Trades and Healthcare and Other Professions. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolntech.edu.
