Lincoln Educational Services Reports Solid Growth in the First Quarter; Increases Revenue and Earnings Guidance for 2023
First Quarter 2023 Financial Highlights and Recent Operating Developments*
- Revenues of
$86.4 million grew 6.9% - New student starts increased 6.4%
- Adjusted EBITDA of
$2.2 million - Increasing outlook for revenues and earnings for the full year
*Note: The highlighted financial results exclude the Transitional segment and results and guidance in this release, including the highlights above, include references to non-GAAP operating measures. A reconciliation of GAAP / non-GAAP measures is included in this release.
“Our efforts to build more scalable and higher return operations that benefit our students, our faculty, our corporate partners and our shareholders generated solid results during the first quarter,” said
2023 FIRST QUARTER FINANCIAL RESULTS
(Quarter ended
- Revenue increased
$5.6 million , or 6.9% to$86.4 million from$80.8 million in the prior year comparable period excluding the Transitional segment. The revenue increase is attributable to the Company’s new hybrid teaching model, which increases program efficiency and delivers accelerated revenue recognition in certain evening programs combined with a 9.0% increase in average revenue per student driven by tuition increases. While average student population benefitted from the 6.4% increase in new student starts excluding the Transitional segment, it remained below last year during the quarter due to the lower beginning population. - Educational services and facilities expense increased
$1.9 million , or 5.2% to$38.1 million from$36.2 million in the prior year comparable period. Increased costs were primarily concentrated in instructional and facilities expense. Instructional increases were driven primarily by salaries from higher staffing levels and merit increases. Facility expenses increased primarily due to additional rent expense from the newAtlanta, Georgia campus lease, which was executed at the end of the second quarter of 2022. Partially offsetting the additional costs was a decrease in expenses within the Transitional segment. - Selling, general and administrative expense increased
$3.6 million , or 7.8% to$50.3 million from$46.7 million in the prior year comparable period. Increased expense was driven by several factors including additional administrative costs due to increased salaries and benefits expense, increased investments in marketing initiatives and an increase in student services driven by costs associated with the centralization of the financial aid department. - Net interest income was
$0.4 million compared to net interest expense of less than$0.1 million in the prior year comparable period. The increase to net interest income reflects the investment of cash reserves into higher yielding short-term investments. - Benefit for income taxes was
$0.6 million for the three months endedMarch 31, 2023 , and 2022, respectively. The benefit for income taxes in both periods resulted from a pre-tax book loss and a discrete item relating to restricted stock vesting. The effective tax rate for the three months endedMarch 31, 2023 and 2022 was 28.3% and 28.2%, respectively prior to consideration of discrete items.
RECENT BUSINESS DEVELOPMENTS
Share Repurchase Program. During the first quarter, the Company repurchased approximately 104,000 shares of its common stock for approximately
New Accounting Pronouncement. On
FIRST QUARTER SEGMENT RESULTS
Based on trends in student demand and program expansions, there have been more cross-offerings of programs among the various campuses. Given this change, the Company has revised the way it manages the business, evaluates performance, and allocates resources, resulting in an updated segment structure. As of
Campus Operations Segment
Revenue increased
Transitional Segment
Revenue decreased
Corporate and Other
Corporate and other expenses were
FULL YEAR 2023 OUTLOOK
Based on the financial results achieved during the first quarter and the current outlook for the remainder of the year, the Company is increasing its financial guidance for Revenue, Adjusted EBITDA and Adjusted Net Income as follows:
- Revenue in the range of
$355 million to$365 million - Adjusted EBITDA* in the range of
$21 million to$25 million - Adjusted Net income* in the range of
$9 million to$12 million
The outlook for student start growth of 5% to 10% and capital expenditures in the range of
*The guidance in this release includes references to non-GAAP operating measures. A reconciliation of GAAP / non-GAAP measures can be found at the end of this release.
The 2023 guidance excludes the impact of the new
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.
ABOUT
FORWARD-LOOKING STATEMENTS
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 | |||||||
(Unaudited) | |||||||
2023 | 2022 | ||||||
REVENUE | $ | 87,284 | $ | 82,554 | |||
COSTS AND EXPENSES: | |||||||
Educational services and facilities | 38,093 | 36,196 | |||||
Selling, general and administrative | 50,307 | 46,684 | |||||
Total costs & expenses | 88,400 | 82,880 | |||||
OPERATING LOSS | (1,116 | ) | (326 | ) | |||
OTHER: | |||||||
Interest income | 467 | - | |||||
Interest expense | (25 | ) | (43 | ) | |||
LOSS BEFORE INCOME TAXES | (674 | ) | (369 | ) | |||
BENEFIT FOR INCOME TAXES | (565 | ) | (641 | ) | |||
NET (LOSS) INCOME | $ | (109 | ) | $ | 272 | ||
PREFERRED STOCK DIVIDENDS | - | 304 | |||||
LOSS AVAILABLE TO COMMON STOCKHOLDERS | $ | (109 | ) | $ | (32 | ) | |
Basic and Diluted | |||||||
Net loss per share | $ | (0.00 | ) | $ | (0.00 | ) | |
Weighted average number of common shares outstanding: | |||||||
Basic and Diluted | 30,039 | 25,721 | |||||
Other data: | |||||||
Adjusted EBITDA (1) | $ | 2,196 | $ | 2,757 | |||
Depreciation and amortization | $ | 1,253 | $ | 1,528 | |||
Number of campuses | 22 | 22 | |||||
Average enrollment | 12,387 | 12,884 | |||||
Stock-based compensation | $ | 812 | $ | 1,239 | |||
Net cash used in operating activities | $ | (214 | ) | $ | (14,367 | ) | |
Net cash used in investing activities | $ | (3,249 | ) | $ | (1,045 | ) | |
Net cash used in financing activities | $ | (2,335 | ) | $ | (2,296 | ) | |
Selected Consolidated Balance Sheet Data: | |||
(Unaudited) | |||
Cash and cash equivalents | $ | 40,280 | |
Restricted cash | 4,209 | ||
Short-term investments | 14,758 | ||
Current assets | 107,587 | ||
Working capital | 53,013 | ||
Total assets | 281,093 | ||
Current liabilities | 54,574 | ||
Total stockholders' equity | 135,254 | ||
LIQUIDITY
The Company ended the quarter with
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results that are determined in accordance with
- We define EBITDA as income (loss) before interest expense (net of interest income), provision (benefit) for income taxes, depreciation and amortization.
- We define Adjusted EBITDA as EBITDA plus stock compensation expense and adjustments for items not considered part of the Company’s normal recurring operations.
- We define Adjusted net income as net income plus adjustments for items not considered part of the Company’s normal recurring operations.
- We define Total liquidity as the Company’s cash and cash equivalents, short-term investments and restricted cash.
EBITDA, Adjusted EBITDA, Adjusted net income and total liquidity are presented because we believe they are useful indicators of the Company’s performance and ability to make strategic investments and meet capital expenditures and debt service requirements. However, they are 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 indicators of operating performance or cash flow as a measure of liquidity. EBITDA, Adjusted EBITDA, Adjusted net income and total liquidity are not necessarily comparable to similarly titled measures used by other companies.
The following is a reconciliation of net (loss) income to EBITDA, Adjusted EBITDA, Adjusted net income and total liquidity:
Three Months Ended |
|||||||
(Unaudited) | |||||||
Consolidated Operations | |||||||
2023 | 2022 | ||||||
Net (loss) income | $ | (109 | ) | $ | 272 | ||
Interest (income) expense, net | (442 | ) | 43 | ||||
Provision for income taxes | (565 | ) | (641 | ) | |||
Depreciation and amortization | 1,253 | 1,528 | |||||
EBITDA | 137 | 1,202 | |||||
Stock compensation expense | 812 | 1,239 | |||||
New campus start-up costs | 260 | - | |||||
Transitional segment | 193 | 56 | |||||
Severance and other one time costs | 794 | 260 | |||||
Adjusted EBITDA | $ | 2,196 | $ | 2,757 | |||
Three Months Ended |
||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Campus Operations | Transitional | Corporate | ||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
Net income (loss) | $ | 10,109 | $ | 8,614 | $ | (197 | ) | $ | (63 | ) | $ | (10,021 | ) | $ | (8,279 | ) | ||||||
Interest (income) expense, net | - | - | - | - | (442 | ) | 43 | |||||||||||||||
Provision for income taxes | - | - | - | - | (565 | ) | (641 | ) | ||||||||||||||
Depreciation and amortization | 1,099 | 1,391 | 4 | 7 | 150 | 130 | ||||||||||||||||
EBITDA | 11,208 | 10,005 | (193 | ) | (56 | ) | (10,878 | ) | (8,747 | ) | ||||||||||||
Stock compensation expense | - | - | - | - | 812 | 1,239 | ||||||||||||||||
New campus start-up costs | 260 | - | - | - | - | - | ||||||||||||||||
Transitional segment | - | - | 193 | 56 | - | - | ||||||||||||||||
Severance and Other one time costs | 84 | - | - | - | 710 | 260 | ||||||||||||||||
Adjusted EBITDA | $ | 11,552 | $ | 10,005 | $ | - | $ | - | $ | (9,356 | ) | $ | (7,248 | ) | ||||||||
Three Months Ended | |||||||
(Unaudited) | |||||||
2023 | 2022 | ||||||
Net (loss) income | $ | (109 | ) | $ | 272 | ||
One-time non-recurring adjustments: | |||||||
New campus start-up costs | 260 | - | |||||
Transitional segment | 193 | 56 | |||||
Severance and other one time costs | 973 | 260 | |||||
Total one-time non-recurring adjustments | 1,426 | 316 | |||||
Income tax effect | (406 | ) | (89 | ) | |||
Adjusted net income, non-GAAP | $ | 911 | $ | 499 | |||
GAAP effective income tax rate | 28.5% | 28.2% | |||||
As of | ||
Cash and cash equivalents | $ | 40,280 |
Restricted cash | 4,209 | |
Short-term investments | 14,758 | |
Total Liquidity | $ | 59,247 |
Three Months Ended |
||||||||||
2023 | 2022 | % Change | ||||||||
Revenue: | ||||||||||
Campus Operations | $ | 86,352 | $ | 80,782 | 6.9 | % | ||||
Transitional | 932 | 1,772 | -47.4 | % | ||||||
Total | $ | 87,284 | $ | 82,554 | 5.7 | % | ||||
Operating Income (loss): | ||||||||||
Campus Operations | $ | 10,109 | $ | 8,614 | 17.4 | % | ||||
Transitional | (197 | ) | (62 | ) | 217.7 | % | ||||
Corporate | (11,028 | ) | (8,878 | ) | -24.2 | % | ||||
Total | $ | (1,116 | ) | $ | (326 | ) | 242.3 | % | ||
Starts: | ||||||||||
Campus Operations | 3,440 | 3,234 | 6.4 | % | ||||||
Transitional | - | 119 | -100.0 | % | ||||||
Total | 3,440 | 3,353 | 2.6 | % | ||||||
Average Population: | ||||||||||
Campus Operations | 12,225 | 12,562 | -2.7 | % | ||||||
Transitional | 162 | 322 | -49.7 | % | ||||||
Total | 12,387 | 12,884 | -3.9 | % | ||||||
End of Period Population: | ||||||||||
Campus Operations | 12,413 | 12,639 | -1.8 | % | ||||||
Transitional | 131 | 335 | -60.9 | % | ||||||
Total | 12,544 | 12,974 | -3.3 | % | ||||||
Information included in the table below provides student starts and population under the Campus Operations segment with a breakdown by Transportation and Skilled Trade programs and Healthcare and Other Professions programs. This information is not comparable to the Company’s prior period segment reporting, which was performed on a campus basis rather than a program basis.
Population by Program (Campus Operations Segment): | ||||||
Three Months Ended |
||||||
2023 | 2022 | % Change | ||||
Starts: | ||||||
Transportation and Skilled Trades | 2,263 | 2,131 | 6.2 | % | ||
Healthcare and Other Professions | 1,177 | 1,103 | 6.7 | % | ||
Total | 3,440 | 3,234 | 6.4 | % | ||
Average Population: | ||||||
Transportation and Skilled Trades | 8,281 | 8,588 | -3.6 | % | ||
Healthcare and Other Professions | 3,944 | 3,974 | -0.8 | % | ||
Total | 12,225 | 12,562 | -2.7 | % | ||
End of Period Population: | ||||||
Transportation and Skilled Trades | 8,488 | 8,598 | -1.3 | % | ||
Healthcare and Other Professions | 3,925 | 4,041 | -2.9 | % | ||
Total | 12,413 | 12,639 | -1.8 | % | ||
973-736-9340
Investor Relations:
Media Relations:

Lincoln Educational Services Corporation