Lincoln Educational Services Corporation Earns Net Income of $1.3 million, Generates Eighth Consecutive Quarter of Student Start Growth During Third Quarter; Reiterates Full Year Guidance
- Total revenue increased 3.6% to
$72.6 million from Q3 2018; same school revenue up 4.8%. - Same school average student population rose 4.5% from Q3 2018.
- Same school student starts increased 3.4% from Q3 2018.
“We continued to execute to our strategic operating plan during the third quarter and are well positioned to achieve our goals, including profitability for the full year,” said
THIRD QUARTER 2019 COMPARED TO THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS:
- Total revenue for the third quarter increased to
$72.6 million , or 3.6%. Revenue on a same school basis increased by 4.8%. - Total student starts rose 2.7%, while same school student starts rose 3.4%. Transportation and Skilled Trades segment starts were up approximately 0.2% and Healthcare and Other Professions segment starts increased 12.1%. These increases mark two full years of consistent student start growth.
- Educational services and facilities expense decreased less than 1% to
$33.2 million . Excluding the Transitional segment, which had expense of$1.2 million , educational services and facilities expenses would have been$32.3 million in the prior year comparable quarter. The increase was primarily the result of increases in instructional salaries and benefits expense and books and tools expense resulting from a larger student population quarter over quarter. - Selling, general and administrative expense was
$37.5 million . Excluding the Transitional segment, which had expense of$1.5 million , SG&A expenses would have been$34.6 million in the prior year comparable quarter. The increase in SG&A was primarily driven by additional bad debt expense due in part by a larger student population in combination with a slight deterioration of historical repayment rates. Further contributing to increased costs were increases in salaries and benefits expense in addition to costs incurred in connection with the evaluation of strategic initiatives intended to increase shareholder value. The Company does not anticipate incurring any additional costs pertaining to these strategic initiatives going forward. - Operating income grew during the quarter to
$2.1 million from less than$0.1 million in the third quarter of 2018. - Net income for the quarter increased to
$1.3 million , or$0.05 per share, as compared to net loss of$0.6 million , or$0.02 per share.
THIRD QUARTER SEGMENT FINANCIAL PERFORMANCE
Transportation and Skilled Trades Segment
Transportation and Skilled Trades segment revenue increased by
Operating income increased to
Educational services and facilities expense was
Selling, general and administrative expense was
Healthcare and Other Professions Segment
Healthcare and Other Professions segment revenue increased 9.3% to
Operating income increased to
Educational services and facilities expense increased
Selling, general and administrative expense increased by
Transitional Segment
During the year ended
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were
NINE MONTH FINANCIAL RESULTS
Revenue was
Transportation and Skilled Trades segment revenue increased
Healthcare and Other Professions segment revenue increased to
Transitional segment revenue was zero and
2019 OUTLOOK
The Company is reiterating its full year 2019 guidance as follows:
- Revenue and student starts are expected to increase 3% to 5% from the prior year, excluding the Transitional segment.
- 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 3776467.
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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUE | $ | 72,594 | $ | 70,078 | $ | 199,427 | $ | 193,087 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Educational services and facilities | 33,211 | 33,488 | 92,940 | 94,169 | |||||||||||
Selling, general and administrative | 37,451 | 36,087 | 111,512 | 108,091 | |||||||||||
(Gain) loss on disposition of assets | (211 | ) | 427 | (211 | ) | 537 | |||||||||
Total costs & expenses | 70,451 | 70,002 | 204,241 | 202,797 | |||||||||||
OPERATING INCOME (LOSS) | 2,143 | 76 | (4,814 | ) | (9,710 | ) | |||||||||
OTHER: | |||||||||||||||
Interest income | 1 | 6 | 7 | 25 | |||||||||||
Interest expense | (754 | ) | (632 | ) | (2,141 | ) | (1,743 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | 1,390 | (550 | ) | (6,948 | ) | (11,428 | ) | ||||||||
PROVISION FOR INCOME TAXES | 50 | 50 | 244 | 150 | |||||||||||
NET INCOME ( LOSS) | $ | 1,340 | $ | (600 | ) | $ | (7,192 | ) | $ | (11,578 | ) | ||||
Basic | |||||||||||||||
Net loss per share | $ | 0.05 | $ | (0.02 | ) | $ | (0.29 | ) | $ | (0.47 | ) | ||||
Diluted | |||||||||||||||
Net loss per share | $ | 0.05 | $ | (0.02 | ) | $ | (0.29 | ) | $ | (0.47 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 24,563 | 24,533 | 24,551 | 24,387 | |||||||||||
Diluted | 24,608 | 24,533 | 24,551 | 24,387 | |||||||||||
Other data: | |||||||||||||||
EBITDA (1) | $ | 4,125 | $ | 2,178 | $ | 1,158 | $ | (3,421 | ) | ||||||
Depreciation and amortization | $ | 1,982 | $ | 2,102 | $ | 5,972 | $ | 6,289 | |||||||
Number of campuses | 22 | 23 | 22 | 23 | |||||||||||
Average enrollment | 11,254 | 10,897 | 10,750 | 10,405 | |||||||||||
Stock-based compensation | $ | 218 | $ | 20 | $ | 460 | $ | 501 | |||||||
Net cash provided by (used in) operating activities | $ | 5,889 | $ | 6,518 | $ | (4,893 | ) | $ | (5,816 | ) | |||||
Net cash used in investing activities | $ | (1,849 | ) | $ | (73 | ) | $ | (3,061 | ) | $ | (1,869 | ) | |||
Net cash provided by (used in) financing activities | $ | 728 | $ | (13 | ) | $ | (22,238 | ) | $ | (28,866 | ) | ||||
Selected Consolidated Balance Sheet Data: | September 30, 2019 | ||
(Unaudited) | |||
Cash and cash equivalents | $ | 11,757 | |
Current assets | 44,362 | ||
Working capital deficit | (23,762 | ) | |
Total assets | 161,737 | ||
Current liabilities | 68,124 | ||
Long-term debt obligations, including current portion, net of deferred financing fees | 26,902 | ||
Total stockholders' equity | 33,580 | ||
As of
(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 loss to EBITDA and same school basis revenue:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income (loss) | $ | 1,340 | $ | (600 | ) | $ | (7,192 | ) | $ | (11,578 | ) | |||
Interest expense, net | 753 | 626 | 2,134 | 1,718 | ||||||||||
Provision for income taxes | 50 | 50 | 244 | 150 | ||||||||||
Depreciation and amortization | 1,982 | 2,102 | 5,972 | 6,289 | ||||||||||
EBITDA | $ | 4,125 | $ | 2,178 | $ | 1,158 | $ | (3,421 | ) | |||||
Three Months Ended September 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 6,752 | $ | 6,331 | $ | 1,404 | $ | 830 | ||||||
Interest expense, net | - | - | - | - | ||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 1,748 | 1,892 | 111 | 68 | ||||||||||
EBITDA | $ | 8,500 | $ | 8,223 | $ | 1,515 | $ | 898 | ||||||
Three Months Ended September 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (1,865 | ) | $ | (6,816 | ) | $ | (5,896 | ) | |||
Interest expense, net | - | - | 753 | 626 | ||||||||||
Provision for income taxes | - | - | 50 | 50 | ||||||||||
Depreciation and amortization | - | 4 | 123 | 138 | ||||||||||
EBITDA | $ | - | $ | (1,861 | ) | $ | (5,890 | ) | $ | (5,082 | ) | |||
Nine Months Ended September 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 11,052 | $ | 8,746 | $ | 4,215 | $ | 2,748 | ||||||
Interest expense, net | - | - | - | - | ||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 5,324 | 5,642 | 291 | 180 | ||||||||||
EBITDA | $ | 16,376 | $ | 14,388 | $ | 4,506 | $ | 2,928 | ||||||
Nine Months Ended September 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (2,895 | ) | $ | (22,459 | ) | $ | (20,177 | ) | |||
Interest expense, net | - | - | 2,134 | 1,718 | ||||||||||
Provision for income taxes | - | - | 244 | 150 | ||||||||||
Depreciation and amortization | - | 11 | 357 | 456 | ||||||||||
EBITDA | $ | - | $ | (2,884 | ) | $ | (19,724 | ) | $ | (17,853 | ) | |||
Three Months Ended September 30, | ||||||||||
(Unaudited) | ||||||||||
Total | Total | % Change | ||||||||
Company | Company | Same School Basis | ||||||||
2019 | 2018 | 2019 | ||||||||
Total Company Revenue | $ | 72,594 | $ | 70,078 | ||||||
Less: Transitional Revenue | - | (821 | ) | |||||||
Revenue on Same School Basis | $ | 72,594 | $ | 69,257 | 4.8 | % | ||||
Nine Months Ended September 30, | ||||||||||
(Unaudited) | ||||||||||
Total | Total | % Change | ||||||||
Company | Company | Same School Basis | ||||||||
2019 | 2018 | 2019 | ||||||||
Total Company Revenue | $ | 199,427 | $ | 193,087 | ||||||
Less: Transitional Revenue | - | (4,695 | ) | |||||||
Revenue on Same School Basis | $ | 199,427 | $ | 188,392 | 5.9 | % | ||||
Three Months Months Ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 52,652 | $ | 51,008 | 3.2 | % | |||||
Healthcare and Other Professions | 19,942 | 18,249 | 9.3 | % | |||||||
Transitional | - | 821 | -100.0 | % | |||||||
Total | $ | 72,594 | $ | 70,078 | 3.6 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 6,752 | $ | 6,330 | 6.7 | % | |||||
Healthcare and Other Professions | 1,403 | 830 | 69.0 | % | |||||||
Transitional | - | (1,863 | ) | 100.0 | % | ||||||
Corporate | (6,012 | ) | (5,221 | ) | -15.2 | % | |||||
Total | $ | 2,143 | $ | 76 | 2719.7 | % | |||||
Starts: | |||||||||||
Transportation and Skilled Trades | 3,398 | 3,391 | 0.2 | % | |||||||
Healthcare and Other Professions | 1,381 | 1,232 | 12.1 | % | |||||||
Transitional | - | 30 | -100.0 | % | |||||||
Total | 4,779 | 4,653 | 2.7 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,635 | 7,453 | 2.4 | % | |||||||
Healthcare and Other Professions | 3,619 | 3,317 | 9.1 | % | |||||||
Transitional | - | 127 | -100.0 | % | |||||||
Total | 11,254 | 10,897 | 3.3 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 8,055 | 7,922 | 1.7 | % | |||||||
Healthcare and Other Professions | 3,960 | 3,637 | 8.9 | % | |||||||
Transitional | - | 173 | -100.0 | % | |||||||
Total | 12,015 | 11,732 | 2.4 | % | |||||||
Nine Months Ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 141,005 | $ | 135,838 | 3.8 | % | |||||
Healthcare and Other Professions | 58,422 | 52,554 | 11.2 | % | |||||||
Transitional | - | 4,695 | -100.0 | % | |||||||
Total | 199,427 | 193,087 | 3.3 | % | |||||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 11,051 | $ | 8,747 | 26.3 | % | |||||
Healthcare and Other Professions | 4,214 | 2,747 | 53.4 | % | |||||||
Transitional | - | (2,899 | ) | 100.0 | % | ||||||
Corporate | (20,079 | ) | (18,305 | ) | -9.7 | % | |||||
Total | $ | (4,814 | ) | $ | (9,710 | ) | 50.4 | % | |||
Starts: | |||||||||||
Transportation and Skilled Trades | 7,247 | 7,156 | 1.3 | % | |||||||
Healthcare and Other Professions | 3,368 | 3,048 | 10.5 | % | |||||||
Transitional | - | 140 | -100.0 | % | |||||||
Total | 10,615 | 10,344 | 2.6 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,169 | 6,891 | 4.0 | % | |||||||
Healthcare and Other Professions | 3,581 | 3,245 | 10.4 | % | |||||||
Transitional | - | 269 | -100.0 | % | |||||||
Total | 10,750 | 10,405 | 3.3 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 8,055 | 7,922 | 1.7 | % | |||||||
Healthcare and Other Professions | 3,960 | 3,637 | 8.9 | % | |||||||
Transitional | - | 173 | -100.0 | % | |||||||
Total | 12,015 | 11,732 | 2.4 | % | |||||||
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Source: Lincoln Educational Services Corporation