Lincoln Educational Services Corporation Reports First Quarter 2018 Results
- Same School Revenue Increases 1.5%, Same School Student Starts Increases 2.2%, Total Company Revenue
$61.9 million Company Announces Partnership with Bridgestone Retail Operations, Third Corporate Partnership Created in 2018- Company Reiterates 2018 Guidance
- Conference Call Today at 10 a.m. ET
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 endedMarch 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 endedMarch 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 onMarch 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
“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
FIRST QUARTER SEGMENT FINANCIAL PERFORMANCE
For the three months ended
Transportation and Skilled Trades
The Transportation and Skilled Trades segment revenue decreased to
Student starts for the quarter increased slightly compared to the prior year comparable period.
Operating income was
Selling, general and administrative expenses increased by
Healthcare and Other Professions
The HOPS segment revenue increased by
Student start results increased by 5.5% for the three months ended
Operating income for the three months ended
Selling general and administrative expenses increased by
Transitional
There were no operations for the Transitional segment for the three months ended
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses decreased by
2018 OUTLOOK
The Company is reiterating the guidance provided on
- 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
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
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 | ||||||||
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
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 | % | ||||||||
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Source: Lincoln Educational Services Corporation