Lincoln Generates Double-Digit Student Start Growth, Higher Earnings and Positive Cash Flow from Operations During Second Quarter of 2020
Operational and Financial Highlights for the Quarter Ended
- Student starts up 15.2%; Transportation and Skilled Trades segment rose by 13.5% and Healthcare and Other Professions segment grew 18.8%.
- Ending population increase of 7.5% or 800 students, excluding approximately 700 students who are on a leave of absence.
- EBITDA of
$3.0 million delivered through cost management actions to address COVID-19, net income of$800,000 . - Cash-flow from operations of
$18.4 million and adjusted cash-flow from operations of$3.9 million excluding CARES Act impact. - Lower operating expenses resulting from cost management efforts and the impact of COVID-19.
- Revenues of
$62.5 million declined by only 1.7% due to success in maintaining a higher enrolled population through successful transition to remote learning. - All campuses reopened in the second quarter except for the
New Jersey campuses which reopened in July and theNew York campus which reopened in early August after the quarter end.
“Our second quarter results continue to demonstrate that Lincoln is successfully managing through many of the challenges presented by the COVID-19 pandemic,” said
SECOND QUARTER 2020 FINANCIAL RESULTS COMPARED TO SECOND QUARTER 2019
- Revenue was
$62.5 million , down 1.7% from$63.6 million despite the 11.0% increase in average student population for the quarter. The impact of COVID-19 has extended graduation dates for certain programs due to restricted access to externships sites and classroom labs. These restrictions have deferred$0.9 million in revenue to the second half of the year. In addition, non-tuition revenue was reduced$0.8 million due to credits issued to students for dorm and meal fees resulting from campus closures caused by COVID-19. The dorms are owned and operated by the Company. - Student starts increased 15.2%. As a result, the Company’s total ending population as of
June 30, 2020 grew 14.0% compared to the prior year. After excluding students who are on leave of absence as a result of the impact of COVID-19, the ending population grew 7.5% or approximately 800 students. - Educational services and facilities expense decreased 11.8% to
$26.2 million . Reduced costs were a result of several factors including facilities cost savings due to facility closure during the quarter as a result of actions taken to control transmission of COVID-19; renegotiation of lease terms at certain campuses reducing rent expense; and the reduction in instructional and books and tools expenses as a result of students completing their course remotely. - Selling general and administrative expense decreased 2.1% to
$35.2 million . The decrease was primarily driven by cost reductions in sales, student services, and marketing investments, partially offset by an increase in bad debt expense and salaries and benefits expense. - Operating income increased
$3.3 million during the quarter to$1.2 million from an operating loss of$2.1 million in the prior comparable period as a result of facilities closures due to COVID-19 in addition to management’s cost savings initiatives. - Net income increased to
$0.8 million , or$0.02 per diluted share, compared to a net loss of$3.1 million , or$0.12 per diluted share. - At quarter close, total available liquidity was approximately
$32.5 million consisting of cash and cash equivalents and restricted cash of$11.5 million , excluding amounts received under the CARES Act, and approximately$21.0 million available under the Company’s credit facility. Total debt outstanding under the credit facility as ofJune 30, 2020 was$18.1 million compared to$26.5 million as ofJune 30, 2019 .
SECOND QUARTER 2020 SEGMENT FINANCIAL RESULTS COMPARED TO SECOND QUARTER 2019
Transportation and Skilled Trades Segment
Revenue was
Operating income increased
Healthcare and Other Professions Segment
Revenue remained essentially flat at
Operating income increased
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses remained essentially flat at
SIX MONTHS ENDING
Total revenue increased by
Operating loss decreased by
CARES ACT FUNDS
Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the
The Company received
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 8246266.
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 | Six Months Ended | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUE | $ | 62,470 | $ | 63,569 | $ | 132,511 | $ | 126,833 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Educational services and facilities | 26,245 | 29,749 | 56,482 | 59,728 | |||||||||||
Selling, general and administrative | 35,162 | 35,913 | 76,310 | 74,062 | |||||||||||
(Gain) loss on disposition of assets | (97 | ) | - | (96 | ) | 1 | |||||||||
Total costs & expenses | 61,310 | 65,662 | 132,696 | 133,791 | |||||||||||
OPERATING INCOME (LOSS) | 1,160 | (2,093 | ) | (185 | ) | (6,958 | ) | ||||||||
OTHER: | |||||||||||||||
Interest income | - | 2 | - | 7 | |||||||||||
Interest expense | (327 | ) | (829 | ) | (682 | ) | (1,386 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | 833 | (2,920 | ) | (867 | ) | (8,337 | ) | ||||||||
PROVISION FOR INCOME TAXES | 50 | 144 | 100 | 194 | |||||||||||
NET INCOME (LOSS) | $ | 783 | $ | (3,064 | ) | $ | (967 | ) | $ | (8,531 | ) | ||||
Basic | |||||||||||||||
Net income (loss) per common share | $ | 0.02 | $ | (0.12 | ) | $ | (0.06 | ) | $ | (0.35 | ) | ||||
Diluted | |||||||||||||||
Net income (loss) per common share | $ | 0.02 | $ | (0.12 | ) | $ | (0.06 | ) | $ | (0.35 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 24,741 | 24,555 | 24,670 | 24,545 | |||||||||||
Diluted | 24,741 | 24,555 | 24,670 | 24,545 | |||||||||||
Other data: | |||||||||||||||
EBITDA (1) | $ | 3,034 | $ | (154 | ) | $ | 3,578 | $ | (2,969 | ) | |||||
Depreciation and amortization | $ | 1,874 | $ | 1,939 | $ | 3,763 | $ | 3,989 | |||||||
Number of campuses | 22 | 22 | 22 | 22 | |||||||||||
Average enrollment | 11,552 | 10,405 | 11,422 | 10,496 | |||||||||||
Stock-based compensation | $ | 325 | $ | 190 | $ | 617 | $ | 242 | |||||||
Net cash provided by (used in) operating activities | $ | 18,415 | $ | 140 | $ | 6,468 | $ | (10,782 | ) | ||||||
Net cash used in investing activities | $ | (1,688 | ) | $ | (573 | ) | $ | (2,975 | ) | $ | (1,212 | ) | |||
Net cash (used in) provided by financing activities | $ | (500 | ) | $ | 1,238 | $ | (16,169 | ) | $ | (22,966 | ) |
Selected Consolidated Balance Sheet Data: | |||
(Unaudited) | |||
Cash and cash equivalents * | $ | 23,342 | |
Restricted cash | 2,626 | ||
Current assets | 61,006 | ||
Working deficit | (7,565 | ) | |
Total assets | 194,901 | ||
Current liabilities | 68,571 | ||
Long-term debt obligations, including current portion, net of deferred financing fees | 18,121 | ||
Series A convertible preferred stock | 11,982 | ||
Total stockholders' equity | 42,062 | ||
* Includes |
|||
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, adjusted cash provided by (used in) operating activities, total liquidity and adjusted cash and cash equivalents are measures not recognized in financial statements presented in accordance with accounting principles generally accepted in
Following is a reconciliation of net income (loss) to EBITDA, adjusted cash provided by (used in) operating activities, total liquidity and adjusted cash and cash equivalents:
Three Months Ended |
Six Months Ended |
||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | 783 | $ | (3,064 | ) | $ | (967 | ) | $ | (8,531 | ) | ||||
Interest expense, net | 327 | 827 | 682 | 1,379 | |||||||||||
Provision for income taxes | 50 | 144 | 100 | 194 | |||||||||||
Depreciation and amortization | 1,874 | 1,939 | 3,763 | 3,989 | |||||||||||
EBITDA | $ | 3,034 | $ | (154 | ) | $ | 3,578 | $ | (2,969 | ) |
Three Months Ended |
|||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | Corporate | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
Net income (loss) | $ | 4,870 | $ | 2,484 | $ | 2,731 | $ | 1,839 | $ | (6,818 | ) | $ | (7,387 | ) | |||||||||
Interest expense, net | - | - | - | - | 327 | 827 | |||||||||||||||||
Provision for income taxes | - | - | - | - | 50 | 144 | |||||||||||||||||
Depreciation and amortization | 1,643 | 1,732 | 117 | 84 | 114 | 123 | |||||||||||||||||
EBITDA | $ | 6,513 | $ | 4,216 | $ | 2,848 | $ | 1,923 | $ | (6,327 | ) | $ | (6,293 | ) |
Six Months Ended |
|||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | Corporate | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
Net income (loss) | $ | 9,710 | $ | 4,300 | $ | 4,732 | $ | 2,811 | $ | (15,409 | ) | $ | (15,642 | ) | |||||||||
Interest expense, net | - | - | - | - | 682 | 1,379 | |||||||||||||||||
Provision for income taxes | - | - | - | - | 100 | 194 | |||||||||||||||||
Depreciation and amortization | 3,301 | 3,576 | 237 | 179 | 225 | 234 | |||||||||||||||||
EBITDA | $ | 13,011 | $ | 7,876 | $ | 4,969 | $ | 2,990 | $ | (14,402 | ) | $ | (13,835 | ) |
Three Months Ended |
|||||||||||
(Unaudited) | |||||||||||
2020 | 2019 | Increase/ (decrease) | |||||||||
Total cash provided by operating activities | $ | 18,415 | $ | 140 | $ | 18,275 | |||||
Less: undistributed Cares Act funds | (14,463 | ) | - | (14,463 | ) | ||||||
Adjusted cash provided by operating activities | $ | 3,952 | $ | 140 | $ | 3,812 | |||||
Six Months Ended |
|||||||||||
(Unaudited) | |||||||||||
2020 | 2019 | Increase/ (decrease) | |||||||||
Total cash provided by (used in) operating activities | $ | 6,468 | $ | (10,782 | ) | $ | 17,250 | ||||
Less: undistributed Cares Act funds | (14,463 | ) | - | (14,463 | ) | ||||||
Adjusted cash (used in) operating activities | $ | (7,995 | ) | $ | (10,782 | ) | $ | 2,787 |
(Unaudited) | |||||||||
Cash and cash equivalents | $ | 23,342 | $ | 23,644 | |||||
Restricted cash | 2,626 | - | |||||||
Total cash and cash equivalents and restricted cash | 25,968 | 23,644 | |||||||
Less: undistributed Cares Act funds | (14,463 | ) | - | ||||||
Reconciled cash and cash equivalents | 11,505 | 23,644 | |||||||
Add: availability under current credit line | 21,000 | 21,000 | |||||||
Total liquidity | $ | 32,505 | $ | 44,644 |
(Unaudited) | Increase/ (decrease) | ||||||||||
Cash and cash equivalents | $ | 23,342 | $ | 23,644 | $ | (302 | ) | ||||
Restricted cash | 2,626 | - | 2,626 | ||||||||
Total cash and cash equivalents and restricted cash | 25,968 | 23,644 | 2,324 | ||||||||
Less: undistributed Cares Act funds | (14,463 | ) | - | (14,463 | ) | ||||||
Adjusted cash and cash equivalents | $ | 11,505 | $ | 23,644 | $ | (12,139 | ) |
Three Months Ended |
|||||||||||
2020 | 2019 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 42,915 | $ | 44,028 | -2.5 | % | |||||
Healthcare and Other Professions | 19,555 | 19,541 | 0.1 | % | |||||||
Total | $ | 62,470 | $ | 63,569 | -1.7 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 4,870 | $ | 2,484 | 96.1 | % | |||||
Healthcare and Other Professions | 2,731 | 1,839 | 48.5 | % | |||||||
Corporate | (6,441 | ) | (6,416 | ) | -0.4 | % | |||||
Total | $ | 1,160 | $ | (2,093 | ) | 155.4 | % | ||||
Starts: | |||||||||||
Transportation and Skilled Trades | 2,302 | 2,028 | 13.5 | % | |||||||
Healthcare and Other Professions | 1,127 | 949 | 18.8 | % | |||||||
Total | 3,429 | 2,977 | 15.2 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,298 | 6,827 | 6.9 | % | |||||||
Healthcare and Other Professions | 4,254 | 3,578 | 18.9 | % | |||||||
Total | 11,552 | 10,405 | 11.0 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 7,826 | 7,195 | 8.8 | % | |||||||
LOA - COVID-19 | (463 | ) | - | ||||||||
Pro-forma Transportation and Skilled Trades | 7,363 | 7,195 | 2.3 | % | |||||||
Healthcare and Other Professions | 4,456 | 3,582 | 24.4 | % | |||||||
LOA - COVID-19 | (233 | ) | - | ||||||||
4,223 | 3,582 | 17.9 | % | ||||||||
12,282 | 10,777 | 14.0 | % | ||||||||
LOA - COVID-19 | (696 | ) | - | ||||||||
11,586 | 10,777 | 7.5 | % |
Six Months Ended |
|||||||||||
2020 | 2019 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 91,971 | $ | 88,354 | 4.1 | % | |||||
Healthcare and Other Professions | 40,540 | 38,479 | 5.4 | % | |||||||
Total | $ | 132,511 | $ | 126,833 | 4.5 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 9,708 | $ | 4,300 | 125.8 | % | |||||
Healthcare and Other Professions | 4,733 | 2,811 | 68.4 | % | |||||||
Corporate | (14,626 | ) | (14,069 | ) | -4.0 | % | |||||
Total | $ | (185 | ) | $ | (6,958 | ) | 97.3 | % | |||
Starts: | |||||||||||
Transportation and Skilled Trades | 4,022 | 3,849 | 4.5 | % | |||||||
Healthcare and Other Professions | 2,123 | 1,987 | 6.8 | % | |||||||
Total | 6,145 | 5,836 | 5.3 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,302 | 6,935 | 5.3 | % | |||||||
Healthcare and Other Professions | 4,120 | 3,561 | 15.7 | % | |||||||
Total | 11,422 | 10,496 | 8.8 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 7,826 | 7,195 | 8.8 | % | |||||||
LOA - COVID-19 | (463 | ) | - | ||||||||
Pro-forma Transportation and Skilled Trades | 7,363 | 7,195 | 2.3 | % | |||||||
Healthcare and Other Professions | 4,456 | 3,582 | 24.4 | % | |||||||
LOA - COVID-19 | (233 | ) | - | ||||||||
4,223 | 3,582 | 17.9 | % | ||||||||
12,282 | 10,777 | 14.0 | % | ||||||||
LOA - COVID-19 | (696 | ) | - | ||||||||
11,586 | 10,777 | 7.5 | % |
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Source: Lincoln Educational Services Corporation