Lincoln Educational Services Corporation Reports Fourth Quarter & FY 2018 Results; Fifth Consecutive Quarter of Student Start Growth; Total Revenue and Same School Revenue Grew 4% and 7.5% Respectively During Fourth Quarter
- Total Student Starts increased 11.6%; Same School Student Starts up 12.1%; Transportation and Skilled Trades segment Student Starts up 6.6%; Healthcare and Other Professions segment Student Starts up 19.3%.
- Total Revenue of
$70.1 million ; Transportation and Skilled Trades$49.4 million ; Healthcare and Other Professions$19.6 million ; Transitional segment$1.1 million . Total Revenue and same school revenue increased 4%, or$2.7 million and 7.5%, or$4.8 million , respectively. - Achieved 2018 Guidance Metrics.
- Introduces Outlook for 2019 Including Revenue Growth and Student Starts Growth of 3% to 5%; Net income and EBITDA of approximately
$2 million , and$12 million , respectively, resulting fromHigher Carry in Population and Increased Student Starts. - Conference Call Today at 10 a.m. ET.
“Lincoln continues to deliver improved results for our students as well as our shareholders,” said
FOURTH QUARTER OPERATING AND FINANCIAL HIGHLIGHTS:
- Total revenue for the fourth quarter increased
$2.7 million , or 4.0%, to$70.1 million for the three months endedDecember 31, 2018 from$67.4 million in the prior year comparable period. Revenue on a same school basis increased by 7.5%, or$4.8 million . - Total student starts increased by 11.6%. Transportation and Skilled Trades segment starts up 6.6% and Healthcare and Other Professions segment starts up 19.3%. Same schools starts up 12.1% resulting from continued investments in marketing, enhanced high school programs and improved admissions process driving higher conversions from lead to start.
- Educational services and facilities expense increased by
$1 million , or 3.2%, to$31.2 million for the three months endedDecember 31, 2018 from$30.2 million in the prior year comparable period. The additional expense quarter over quarter was primarily driven by increased books and tools expense of$0.5 million and increased instructional expenses of$0.3 million . Increases in books and tools expense and instructional expenses were a result of increased student population. - Selling general and administrative expense increased to
$33.2 million for the three months endedDecember 31, 2018 , from$29.4 million in the prior year comparable period. The increase of$3.8 million was primarily driven by$2 million in costs incurred to close theLincoln College of New England campus (“LCNE”), which closed onDecember 31, 2018 ;$1.4 million of additional bad debt expense and$0.5 million of increased marketing investments.
Bad debt expense has increased due to higher accounts receivable balances. The increase in accounts receivables is mainly driven by higher revenue and student population, higher receivables from graduates due to internal loans with deferred payment plans and shifts in our program mix during the year from longer duration programs to shorter more condensed programs.
Marketing investments during the quarter endedDecember 31, 2018 were approximately$0.5 million higher than the prior year comparable period. While marketing investments have increased during 2018, the cost to obtain prospective students has remained essentially flat when compared to the prior year. Marketing dollars are providing a return on investment and are expected to yield start growth over the next several quarters.
- Operating income was
$5.8 million and$7.8 million for the three months endedDecember 31, 2018 and 2017, respectively. - Net income for the quarter decreased by
$2.2 million to $5 million , or$0.20 per share, from$7.7 million , or$0.31 per share, in the prior year comparable quarter.
FOURTH QUARTER SEGMENT FINANCIAL PERFORMANCE
Transportation and Skilled Trades Segment
Transportation and Skilled Trades segment revenue increased by
Student starts increased 6.6% for the three months ended
Operating income remained essentially flat at
Educational services and facilities expense increased by
Selling, general and administrative expenses increased by
Healthcare and Other Professions Segment
Healthcare and Other Professions segment revenue increased by
Student starts increased 19.3% for the three months ended
Operating income increased to
Educational services and facilities expense increased by
Selling general and administrative expense increased by
Transitional Segment
Transitional segment revenue was
Operating loss was
As of
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were
2018 FULL YEAR FINANCIAL RESULTS
Revenue increased
Transportation and Skilled Trades segment revenue was
Healthcare and Other Professions segment revenue was
Transitional segment revenue was
2019 OUTLOOK
Management is providing the following guidance for 2019:
- Revenue and student starts are expected to increase 3% to 5% when compared to prior year.
- Net income and EBITDA are projected to be approximately
$2 million and$12 million , respectively.
CONFERENCE CALL INFO
Lincoln will host a conference call today at
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 3246209.
ABOUT
SAFE HARBOR
Statements in this press release and in oral statements made from time to time by representatives of
(Tables to Follow)
(In Thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
REVENUE | $ | 70,113 | $ | 67,401 | $ | 263,200 | $ | 261,853 | ||||||||
COSTS AND EXPENSES: | ||||||||||||||||
Educational services and facilities | 31,203 | 30,230 | 125,373 | 129,413 | ||||||||||||
Selling, general and administrative | 33,156 | 29,401 | 141,244 | 138,779 | ||||||||||||
Loss (gain) on sale of assets | - | (4 | ) | 537 | (1,623 | ) | ||||||||||
Total costs & expenses | 64,359 | 59,627 | 267,154 | 266,569 | ||||||||||||
OPERATING INCOME (LOSS) | 5,754 | 7,774 | (3,954 | ) | (4,716 | ) | ||||||||||
OTHER: | ||||||||||||||||
Interest income | 6 | 9 | 31 | 56 | ||||||||||||
Interest expense | (678 | ) | (501 | ) | (2,422 | ) | (7,098 | ) | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 5,082 | 7,282 | (6,345 | ) | (11,758 | ) | ||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 50 | (424 | ) | 200 | (274 | ) | ||||||||||
NET INCOME (LOSS) | $ | 5,032 | $ | 7,706 | $ | (6,545 | ) | $ | (11,484 | ) | ||||||
Basic | ||||||||||||||||
Net income (loss) per share | $ | 0.21 | $ | 0.32 | $ | (0.27 | ) | $ | (0.48 | ) | ||||||
Diluted | ||||||||||||||||
Net income (loss) per share | $ | 0.20 | $ | 0.31 | $ | (0.27 | ) | $ | (0.48 | ) | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 24,533 | 24,025 | 24,423 | 23,906 | ||||||||||||
Diluted | 24,562 | 24,590 | 24,423 | 23,906 | ||||||||||||
Other data: | ||||||||||||||||
EBITDA (1) | $ | 7,885 | $ | 10,038 | $ | 4,467 | $ | 3,986 | ||||||||
Depreciation and amortization | $ | 2,131 | $ | 2,264 | $ | 8,421 | $ | 8,702 | ||||||||
Number of campuses | 22 | 23 | 22 | 23 | ||||||||||||
Average enrollment | 11,152 | 10,854 | 10,591 | 10,772 | ||||||||||||
Stock-based compensation | $ | 20 | $ | 272 | $ | 521 | $ | 1,220 | ||||||||
Net cash provided by (used in) operating activities | $ | 4,122 | $ | 5,286 | $ | (1,694 | ) | $ | (11,321 | ) | ||||||
Net cash (used in) provided by investing activities | $ | (480 | ) | $ | (980 | ) | $ | (2,349 | ) | $ | 10,707 | |||||
Net cash provided by (used in) financing activities | $ | 24,301 | $ | 35,782 | $ | (4,565 | ) | $ | 7,453 | |||||||
Selected Consolidated Balance Sheet Data: | December 31, 2018 | ||
(Unaudited) | |||
Cash and cash equivalents | $ | 17,571 | |
Current assets | 57,111 | ||
Working capital deficit | (7,470 | ) | |
Total assets | 146,038 | ||
Current liabilities | 64,581 | ||
Long-term debt obligations, including current portion | 48,769 | ||
Total stockholders' equity | 39,866 | ||
(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
Following is a reconciliation of net income (loss) to EBITDA and same school basis revenue:
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | 5,032 | $ | 7,706 | $ | (6,545 | ) | $ | (11,484 | ) | |||||
Interest expense, net | 672 | 492 | 2,391 | 7,042 | |||||||||||
Provision (benefit) for income taxes | 50 | (424 | ) | 200 | (274 | ) | |||||||||
Depreciation and amortization | 2,131 | 2,264 | 8,421 | 8,702 | |||||||||||
EBITDA | $ | 7,885 | $ | 10,038 | $ | 4,467 | $ | 3,986 | |||||||
Three Months Ended December 31, | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 8,913 | $ | 8,987 | $ | 3,718 | $ | 3,018 | ||||||||
Interest expense, net | 2 | 2 | 3 | 3 | ||||||||||||
Provision (benefit) for income taxes | - | - | - | - | ||||||||||||
Depreciation and amortization | 1,926 | 2,027 | 70 | 34 | ||||||||||||
EBITDA | $ | 10,841 | $ | 11,016 | $ | 3,791 | $ | 3,055 | ||||||||
Three Months Ended December 31, | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Transitional | Corporate | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net loss | $ | (3,099 | ) | $ | (1,223 | ) | $ | (4,500 | ) | $ | (3,076 | ) | ||||
Interest expense, net | - | - | 667 | 487 | ||||||||||||
Provision (benefit) for income taxes | - | - | 50 | (424 | ) | |||||||||||
Depreciation and amortization | 8 | 67 | 127 | 136 | ||||||||||||
EBITDA | $ | (3,091 | ) | $ | (1,156 | ) | $ | (3,656 | ) | $ | (2,877 | ) | ||||
Year Ended December 31, | |||||||||||||||
(Unaudited) | |||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 17,659 | $ | 17,812 | $ | 6,466 | $ | 3,933 | |||||||
Interest expense, net | 2 | (16 | ) | 3 | 3 | ||||||||||
Provision (benefit) for income taxes | - | - | - | - | |||||||||||
Depreciation and amortization | 7,568 | 7,976 | 250 | 72 | |||||||||||
EBITDA | $ | 25,229 | $ | 25,772 | $ | 6,719 | $ | 4,008 | |||||||
Year Ended December 31, | |||||||||||||||
(Unaudited) | |||||||||||||||
Transitional | Corporate | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (5,994 | ) | $ | (6,926 | ) | $ | (24,676 | ) | $ | (26,303 | ) | |||
Interest expense, net | - | - | 2,386 | 7,055 | |||||||||||
Provision (benefit) for income taxes | - | - | 200 | (274 | ) | ||||||||||
Depreciation and amortization | 18 | 96 | 585 | 558 | |||||||||||
EBITDA | $ | (5,976 | ) | $ | (6,830 | ) | $ | (21,505 | ) | $ | (18,964 | ) | |||
Three Months Ended December 31, | |||||||||||
(Unaudited) | |||||||||||
Total | Total | % Change | |||||||||
Company | Company | Same School Basis | |||||||||
2018 | 2017 | 2018 | |||||||||
Total Company Revenue | $ | 70,113 | $ | 67,401 | |||||||
Less: Transitional Revenue | (1,107 | ) | (3,187 | ) | |||||||
Revenue on Same School Basis | $ | 69,006 | $ | 64,214 | 7.5 | % | |||||
Year Ended December 31, | |||||||||||
(Unaudited) | |||||||||||
Total | Total | % Change | |||||||||
Company | Company | Same School Basis | |||||||||
2018 | 2017 | 2018 | |||||||||
Total Company Revenue | $ | 263,200 | $ | 261,853 | |||||||
Less: Transitional Revenue | (5,802 | ) | (16,884 | ) | |||||||
Revenue on Same School Basis | $ | 257,398 | $ | 244,969 | 5.1 | % | |||||
Three Months Months Ended December 31, | |||||||||||
(Unaudited) | |||||||||||
2018 | 2017 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 49,425 | $ | 47,044 | 5.1 | % | |||||
Healthcare and Other Professions | 19,581 | 17,171 | 14.0 | % | |||||||
Transitional | 1,107 | 3,186 | -65.3 | % | |||||||
Total | $ | 70,113 | $ | 67,401 | 4.0 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 8,914 | $ | 8,991 | -0.9 | % | |||||
Healthcare and Other Professions | 3,720 | 3,017 | 23.3 | % | |||||||
Transitional | (3,099 | ) | (1,222 | ) | -153.6 | % | |||||
Corporate | (3,781 | ) | (3,012 | ) | -25.5 | % | |||||
Total | $ | 5,754 | $ | 7,774 | 26.0 | % | |||||
Starts: | |||||||||||
Transportation and Skilled Trades | 1,138 | 1,068 | 6.6 | % | |||||||
Healthcare and Other Professions | 975 | 817 | 19.3 | % | |||||||
Transitional | - | 8 | -100.0 | % | |||||||
Total | 2,113 | 1,893 | 11.6 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,498 | 7,135 | 5.1 | % | |||||||
Healthcare and Other Professions | 3,513 | 3,200 | 9.8 | % | |||||||
Transitional | 142 | 519 | -72.6 | % | |||||||
Total | 11,153 | 10,854 | 2.8 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 6,988 | 6,626 | 5.5 | % | |||||||
Healthcare and Other Professions | 3,537 | 3,136 | 12.8 | % | |||||||
Transitional | - | 397 | -100.0 | % | |||||||
Total | 10,525 | 10,159 | 3.6 | % | |||||||
Year Ended December 31, | ||||||||||
(Unaudited) | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 185,263 | $ | 181,328 | 2.2 | % | ||||
Healthcare and Other Professions | 72,135 | 63,641 | 13.3 | % | ||||||
Transitional | 5,802 | 16,884 | -65.6 | % | ||||||
Total | $ | 263,200 | $ | 261,853 | 0.5 | % | ||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 17,661 | $ | 17,795 | -0.8 | % | ||||
Healthcare and Other Professions | 6,469 | 3,937 | 64.3 | % | ||||||
Transitional | (5,994 | ) | (6,926 | ) | 13.5 | % | ||||
Corporate | (22,090 | ) | (19,522 | ) | -13.2 | % | ||||
Total | $ | (3,954 | ) | $ | (4,716 | ) | 16.2 | % | ||
Starts: | ||||||||||
Transportation and Skilled Trades | 8,294 | 7,763 | 6.8 | % | ||||||
Healthcare and Other Professions | 4,023 | 3,673 | 9.5 | % | ||||||
Transitional | 140 | 363 | -61.4 | % | ||||||
Total | 12,457 | 11,799 | 5.6 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 7,042 | 6,961 | 1.2 | % | ||||||
Healthcare and Other Professions | 3,312 | 3,024 | 9.5 | % | ||||||
Transitional | 237 | 787 | -69.9 | % | ||||||
Total | 10,591 | 10,772 | -1.7 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 6,988 | 6,626 | 5.5 | % | ||||||
Healthcare and Other Professions | 3,537 | 3,136 | 12.8 | % | ||||||
Transitional | - | 397 | -100.0 | % | ||||||
Total | 10,525 | 10,159 | 3.6 | % | ||||||
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Source: Lincoln Educational Services Corporation