Lincoln Reports Fourth Quarter and Full Year 2019 Financial Results
Conference call today at 10 a.m. ET
Fourth Quarter 2019 vs Fourth Quarter 2018 Highlights
- Total revenue increased 5.4%; same school revenue up 7.1%
- Same school average student population rose 6.2%
- Student starts increased 9.7%
- EBITDA of
$12.2 million increased 55% - Net income of
$9.2 million up 83% - Completed financing transactions that increased liquidity by over
$30 million and are expected to result in annualized interest savings of approximately$1.0 million
Full Year 2019 Financial Results achieved and exceeded guidance
- Total revenue grew 3.9%; same school revenue up 6.2%
- Same school student starts increased 5.0%
- Net Income of
$2.0 million - EBITDA of
$13.4 million
Introducing 2020 outlook for continued growth in student starts, revenue, EBITDA and operating income
“The fourth quarter was a strong finish to a very successful year for Lincoln. Key metrics such as revenue, student start growth, student graduation and placement rates and overall financial performance continued to demonstrate consistent growth. Our student starts and revenue have now grown for nine consecutive quarters,” commented
FOURTH QUARTER 2019 COMPARED TO FOURTH QUARTER 2018 FINANCIAL PERFORMANCE:
- Total revenue for the fourth quarter increased to
$73.9 million , or 5.4%. Revenue on a same school basis increased by 7.1%. - Total student starts rose 9.7%. Transportation and Skilled Trades segment starts were up approximately 14.3% and Healthcare and Other Professions segment starts increased 4.4%. This achievement
marks nine consecutive quarters of start growth for both segments. - Educational services and facilities expense decreased 2.1% to
$30.6 million . Excluding the Transitional segment, which had expense of$1.4 million in 2018, expenses increased$0.7 million , or 2.4%. This increase was mainly a result of the Company’s growing student population. - Selling, general and administrative expense was
$33.7 million . Excluding the Transitional segment, which had expense of$2.8 million in 2018, SG&A expenses increased$3.4 million quarter over quarter. The increase was primarily driven by bad debt expense and marketing. The additional marketing investments were made to capitalize on cost effective lead generating opportunities in high converting channels while also driving brand awareness. - Operating income grew during the quarter by 74.7% to
$10.1 million from$5.8 million . - Net income for the quarter increased by 82.9% to
$9.2 million , or$0.33 per diluted share, as compared to$5.0 million , or$0.20 per diluted share. - At
December 31, 2019 , the Company had cash and cash equivalents of$23.6 million and additional availability under the credit facility of over$20 million that could be used for general corporate purposes.
FOURTH QUARTER SEGMENT FINANCIAL PERFORMANCE
Transportation and Skilled Trades Segment
Transportation and Skilled Trades segment revenue increased by
Operating income increased to
Healthcare and Other Professions Segment
Healthcare and Other Professions segment revenue increased by
Operating income was
Transitional Segment
Throughout 2019, no operations were categorized in the Transitional segment. However, the financial information for the
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were
FULL YEAR FINANCIAL RESULTS
Total revenue increased by
Transportation and Skilled Trades segment revenue increased to
Healthcare and Other Professions segment revenue increased to
Transitional segment revenue was
In addition, although not expected to have a material impact on liquidity, as expected, we were notified by the
2020 OUTLOOK
The Company is providing the following guidance for 2020:
- Revenue and student starts are expected to increase 3% to 5%.
- EBITDA is projected to be between
$15.0 million to$17.0 million , which would be a 12% to 27% increase over 2019 EBITDA. - Operating income is expected to be between
$7.0 million to$9.0 million , which would represent a growth rate of 34% to 72% over 2019 operating income. - Capital expenditures are projected to be between
$6.5 million to$7.5 million .
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 4168358.
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 | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUE | $ | 73,915 | $ | 70,113 | $ | 273,342 | $ | 263,200 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Educational services and facilities | 30,555 | 31,203 | 123,495 | 125,373 | |||||||||||
Selling, general and administrative | 33,664 | 33,156 | 145,176 | 141,244 | |||||||||||
(Gain) loss on disposition of assets | (356 | ) | - | (567 | ) | 537 | |||||||||
Total costs & expenses | 63,863 | 64,359 | 268,104 | 267,154 | |||||||||||
OPERATING INCOME (LOSS) | 10,052 | 5,754 | 5,238 | (3,954 | ) | ||||||||||
OTHER: | |||||||||||||||
Interest income | 1 | 6 | 8 | 31 | |||||||||||
Interest expense | (823 | ) | (678 | ) | (2,963 | ) | (2,422 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | 9,230 | 5,082 | 2,283 | (6,345 | ) | ||||||||||
PROVISION FOR INCOME TAXES | 24 | 50 | 268 | 200 | |||||||||||
NET INCOME ( LOSS) | $ | 9,206 | $ | 5,032 | $ | 2,015 | $ | (6,545 | ) | ||||||
Basic | |||||||||||||||
Earnings (loss) per share | $ | 0.33 | $ | 0.21 | $ | 0.08 | $ | (0.27 | ) | ||||||
Diluted | |||||||||||||||
Earnings (loss) per share | $ | 0.33 | $ | 0.20 | $ | 0.08 | $ | (0.27 | ) | ||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 24,563 | 24,533 | 24,554 | 24,423 | |||||||||||
Diluted | 24,563 | 24,562 | 24,554 | 24,423 | |||||||||||
Other data: | |||||||||||||||
EBITDA (1) | $ | 12,196 | $ | 7,885 | $ | 13,353 | $ | 4,467 | |||||||
Depreciation and amortization | $ | 2,144 | $ | 2,131 | $ | 8,115 | $ | 8,421 | |||||||
Number of campuses | 22 | 22 | 22 | 22 | |||||||||||
Average enrollment | 11,692 | 11,152 | 10,985 | 10,591 | |||||||||||
Stock-based compensation | $ | 218 | $ | 20 | $ | 679 | $ | 521 | |||||||
Net cash provided by (used in) operating activities | $ | 5,881 | $ | 4,122 | $ | 988 | $ | (1,694 | ) | ||||||
Net cash used in investing activities | $ | (1,749 | ) | $ | (480 | ) | $ | (4,810 | ) | $ | (2,349 | ) | |||
Net cash provided by (used in) financing activities | $ | 18,758 | $ | 24,301 | $ | (3,480 | ) | $ | (4,565 | ) | |||||
Selected Consolidated Balance Sheet Data: | |||
(Unaudited) | |||
Cash and cash equivalents | $ | 23,644 | |
Current assets | 50,477 | ||
Working deficit | (6,728 | ) | |
Total assets | 194,763 | ||
Current liabilities | 57,205 | ||
Long-term debt obligations, including current portion, net of deferred financing fees | 34,028 | ||
Series A convertible preferred stock | 11,982 | ||
Total stockholders' equity | 43,148 | ||
On
(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 |
Year Ended |
||||||||||
(Unaudited) | (Unaudited) | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Net Income (loss) | $ | 9,206 | $ | 5,032 | $ | 2,015 | $ | (6,545) | |||
Interest expense, net | 822 | 672 | 2,955 | 2,391 | |||||||
Provision for income taxes | 24 | 50 | 268 | 200 | |||||||
Depreciation and amortization | 2,144 | 2,131 | 8,115 | 8,421 | |||||||
EBITDA | $ | 12,196 | $ | 7,885 | $ | 13,353 | $ | 4,467 | |||
Three Months Ended |
||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 10,927 | $ | 8,913 | $ | 3,373 | $ | 3,718 | ||||||
Interest expense, net | - | 2 |
- | 3 |
||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 1,913 | 1,926 | 117 | 70 | ||||||||||
EBITDA | $ | 12,840 | $ | 10,841 | $ | 3,490 | $ | 3,791 | ||||||
Three Months Ended |
||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (3,099 | ) | $ | (5,094 | ) | $ | (4,500 | ) | |||
Interest expense, net | - | - | 822 | 667 | ||||||||||
Provision for income taxes | - | - | 24 | 50 | ||||||||||
Depreciation and amortization | - | 8 | 114 | 127 | ||||||||||
EBITDA | $ | - | $ | (3,091 | ) | $ | (4,134 | ) | $ | (3,656 | ) | |||
Year Ended |
||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 21,979 | $ | 17,659 | $ | 7,588 | $ | 6,466 | ||||||
Interest expense, net | - | 2 |
- | 3 |
||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 7,236 | 7,568 | 408 | 250 | ||||||||||
EBITDA | $ | 29,215 | $ | 25,229 | $ | 7,996 | $ | 6,719 | ||||||
Year Ended |
||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (5,994 | ) | $ | (27,552 | ) | $ | (24,676 | ) | |||
Interest expense, net | - | - | 2,955 | 2,386 | ||||||||||
Provision for income taxes | - | - | 268 | 200 | ||||||||||
Depreciation and amortization | - | 18 | 471 | 584 | ||||||||||
EBITDA | $ | - | $ | (5,976 | ) | $ | (23,858 | ) | $ | (21,505 | ) | |||
Three Months Ended |
|||||||||
(Unaudited) | |||||||||
Total | Total | % Change | |||||||
Company | Company | Same School Basis | |||||||
2019 | 2018 | 2019 | |||||||
Total Company Revenue | $ | 73,915 | $ | 70,113 | |||||
Less: Transitional Revenue | - | (1,107 | ) | ||||||
Revenue on Same School Basis | $ | 73,915 | $ | 69,006 | 7.1 | % | |||
Year Ended |
|||||||||
(Unaudited) | |||||||||
Total | Total | % Change | |||||||
Company | Company | Same School Basis | |||||||
2019 | 2018 | 2019 | |||||||
Total Company Revenue | $ | 273,342 | $ | 263,200 | |||||
Less: Transitional Revenue | - | (5,802 | ) | ||||||
Revenue on Same School Basis | $ | 273,342 | $ | 257,398 | 6.2 | % | |||
Three Months Months Ended |
||||||||||
2019 | 2018 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 52,716 | $ | 49,425 | 6.7 | % | ||||
Healthcare and Other Professions | 21,199 | 19,581 | 8.3 | % | ||||||
Transitional | - | 1,107 | -100.0 | % | ||||||
Total | $ | 73,915 | $ | 70,113 | 5.4 | % | ||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 10,927 | $ | 8,914 | 22.6 | % | ||||
Healthcare and Other Professions | 3,373 | 3,720 | -9.3 | % | ||||||
Transitional | - | (3,099 | ) | 100.0 | % | |||||
Corporate | (4,248 | ) | (3,781 | ) | -12.4 | % | ||||
Total | $ | 10,052 | $ | 5,754 | 74.7 | % | ||||
Starts: | ||||||||||
Transportation and Skilled Trades | 1,301 | 1,138 | 14.3 | % | ||||||
Healthcare and Other Professions | 1,018 | 975 | 4.4 | % | ||||||
Transitional | - | - | - | |||||||
Total | 2,319 | 2,113 | 9.7 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 7,770 | 7,498 | 3.6 | % | ||||||
Healthcare and Other Professions | 3,922 | 3,513 | 11.6 | % | ||||||
Transitional | - | 142 | -100.0 | % | ||||||
Total | 11,692 | 11,153 | 4.8 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 7,349 | 6,988 | 5.2 | % | ||||||
Healthcare and Other Professions | 3,936 | 3,537 | 11.3 | % | ||||||
Transitional | - | - | - | |||||||
Total | 11,285 | 10,525 | 7.2 | % | ||||||
Year Ended |
||||||||||
2019 | 2018 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 193,722 | $ | 185,263 | 4.6 | % | ||||
Healthcare and Other Professions | 79,620 | 72,135 | 10.4 | % | ||||||
Transitional | - | 5,802 | -100.0 | % | ||||||
Total | 273,342 | 263,200 | 3.9 | % | ||||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 21,979 | $ | 17,661 | 24.4 | % | ||||
Healthcare and Other Professions | 7,588 | 6,469 | 17.3 | % | ||||||
Transitional | - | (5,994 | ) | 100.0 | % | |||||
Corporate | (24,329 | ) | (22,090 | ) | -10.1 | % | ||||
Total | $ | 5,238 | $ | (3,954 | ) | 232.5 | % | |||
Starts: | ||||||||||
Transportation and Skilled Trades | 8,548 | 8,294 | 3.1 | % | ||||||
Healthcare and Other Professions | 4,386 | 4,023 | 9.0 | % | ||||||
Transitional | - | 140 | -100.0 | % | ||||||
Total | 12,934 | 12,457 | 3.8 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 7,319 | 7,042 | 3.9 | % | ||||||
Healthcare and Other Professions | 3,666 | 3,312 | 10.7 | % | ||||||
Transitional | - | 237 | -100.0 | % | ||||||
Total | 10,985 | 10,591 | 3.7 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 7,349 | 6,988 | 5.2 | % | ||||||
Healthcare and Other Professions | 3,936 | 3,537 | 11.3 | % | ||||||
Transitional | - | - | - | |||||||
Total | 11,285 | 10,525 | 7.2 | % | ||||||
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Source: Lincoln Educational Services Corporation