Lincoln Educational Services Corporation Reports 11.6% Growth in Student Starts During Second Quarter; 2018 Guidance Raised
- Total Revenue of
$61.1 million ; Transportation and Skilled Trades Segment$42.1 million , Healthcare and Other Professions Segment$19.0 million . - Transportation and Skilled Trades Segment Student Starts up 7.5%; Healthcare and Other Professions Segment Student Starts up 21.1%.
- Ending Student Population on a Same School Basis at
June 30, 2018 Exceeds Comparable Prior Year Period by 350 Students. - Transportation and Skilled Trades Segment Operating Income Improved by
$1.0 million ; Healthcare and Other Professions Segment Increased$1.2 million . - Conference Call Today at 10 a.m. ET.
“The sales and marketing initiatives and investments we made beginning in the third quarter of last year have generated substantial returns during 2018 especially in student starts,” said
“Our team is continuing to fill a critical need for trained employees due to our track record for preparing our students for careers in dynamic industries,” Mr. Shaw continued. “Our skilled trades programs continue to have high demand, and we are continuing to rollout our new corporate partnerships with Hussmann, Johnson Control and Bridgestone Retail Operations. While the high rate of employment continues to provide us with a significant headwind, the opportunities we create through our programs for our students, and our new marketing strategies, are enabling us to return to growth.”
As of
SECOND QUARTER FINANCIAL RESULTS HIGHLIGHTS:
- Total student starts increased by 11.6%. Transportation and Skilled Trades segment starts were up 7.5% and Healthcare and Other Professions segment starts were up 21.1%. The improved start growth is primarily due to strong results from the Company’s sales team combined with results from marketing investments and initiatives to improve the students’ enrollment experience. The increase in student starts has eliminated the carry in population deficit and the Company is now ahead of prior year by about 350 students.
- Total revenue for the second quarter was
$61.1 million compared to$61.9 million in the prior year comparable quarter. Revenue on a same school basis increased by 3.2%, or$1.9 million . - Educational Services and facilities expense decreased by
$2.2 million , or 6.9% to$30.2 million for the three months endedJune 30, 2018 from$32.4 million in the prior year comparable period. The expense reductions were primarily due to the Transitional segment, which accounted for$2.1 million in the prior year and cost savings in facilities expense resulting from a reduction in square footage at one of the Company’s campuses. These cost savings were partially offset by an increase in spending on books and tools expense resulting from higher student population quarter over quarter. - Selling, general and administrative expenses decreased by
$1.1 million , or 3.0%, to$34.5 million for the three months endedJune 30, 2018 from$35.6 million in the prior year comparable period. The expense reductions were due to the Transitional segment, which accounted for$1.3 million in the prior year. - Net loss for the quarter decreased by
$2.7 million to $4.1 million , or$0.17 per share, from$6.8 million , or$0.28 per share, in the prior year comparable quarter.
SECOND QUARTER SEGMENT FINANCIAL PERFORMANCE
Transportation and Skilled Trades Segment
Transportation and Skilled Trades segment revenue was
Student starts for the quarter increased by 7.5% compared to the prior year comparable period, eliminating the majority of the carry-in population deficit.
Operating income increased by
Educational services and facilities expense decreased by
Selling, general and administrative expenses decreased by
Healthcare and Other Professions Segment
The Healthcare and Other Professions segment revenue increased by
Student starts increased by 21.1% for the three months ended
Operating income for the three months ended
Educational services and facilities expense increased by
Selling general and administrative expenses increased by
Transitional Segment
There was no revenue for the Transitional segment for the three months ended
There was no operating income or loss 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 increased by
SIX MONTH FINANCIAL RESULTS
Revenue was
Transportation and Skilled Trades segment revenue was
Healthcare and Other Professions segment revenue was
There was no revenue for the Transitional segment for the six months ended
On
Revenue, net loss and ending population as of
2018 OUTLOOK
The Company is updating its outlook for 2018 as follows:
- Management continues to expect that student starts for 2018 are expected to increase by low single digits compared to prior year and excluding the 2017 Transitional segment.
- Management continues to expect revenue to increase by low single digits, compared to prior year and excluding the 2017 Transitional segment.
- Operating Income for 2018 is now expected to range between income of
$1.0 million and a loss of$2.0 million . - 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 2174849.
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 | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
REVENUE | $ | 61,120 | $ | 61,865 | $ | 123,009 | $ | 127,144 | ||||||||
COSTS AND EXPENSES: | ||||||||||||||||
Educational services and facilities | 30,179 | 32,405 | 60,682 | 65,113 | ||||||||||||
Selling, general and administrative | 34,471 | 35,554 | 72,002 | 73,879 | ||||||||||||
(Gain) loss on sale of assets | (7 | ) | (63 | ) | 110 | (89 | ) | |||||||||
Total costs & expenses | 64,643 | 67,896 | 132,794 | 138,903 | ||||||||||||
OPERATING LOSS | (3,523 | ) | (6,031 | ) | (9,785 | ) | (11,759 | ) | ||||||||
OTHER: | ||||||||||||||||
Interest income | 8 | 9 | 19 | 40 | ||||||||||||
Interest expense | (539 | ) | (699 | ) | (1,112 | ) | (5,881 | ) | ||||||||
LOSS BEFORE INCOME TAXES | (4,054 | ) | (6,721 | ) | (10,878 | ) | (17,600 | ) | ||||||||
PROVISION FOR INCOME TAXES | 50 | 50 | 100 | 100 | ||||||||||||
NET LOSS | $ | (4,104 | ) | $ | (6,771 | ) | $ | (10,978 | ) | $ | (17,700 | ) | ||||
Basic | ||||||||||||||||
Net loss per share | $ | (0.17 | ) | $ | (0.28 | ) | $ | (0.45 | ) | $ | (0.74 | ) | ||||
Diluted | ||||||||||||||||
Net loss per share | $ | (0.17 | ) | $ | (0.28 | ) | $ | (0.45 | ) | $ | (0.74 | ) | ||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 24,486 | 23,962 | 24,313 | 23,787 | ||||||||||||
Diluted | 24,486 | 23,962 | 24,313 | 23,787 | ||||||||||||
Other data: | ||||||||||||||||
EBITDA (1) | $ | (1,435 | ) | $ | (3,907 | ) | $ | (5,597 | ) | $ | (7,484 | ) | ||||
Depreciation and amortization | $ | 2,088 | $ | 2,124 | $ | 4,188 | $ | 4,275 | ||||||||
Number of campuses | 23 | 28 | 23 | 28 | ||||||||||||
Average enrollment | 10,103 | 10,582 | 10,158 | 10,836 | ||||||||||||
Stock-based compensation | $ | 52 | $ | 294 | $ | 481 | $ | 654 | ||||||||
Net cash used in operating activities | $ | (2,292 | ) | $ | (8,037 | ) | $ | (12,334 | ) | $ | (19,511 | ) | ||||
Net cash used in investing activities | $ | (1,328 | ) | $ | (1,170 | ) | $ | (1,796 | ) | $ | (1,976 | ) | ||||
Net cash provided by (used in) financing activities | $ | 1,838 | $ | 2,710 | $ | (28,853 | ) | $ | (12,829 | ) | ||||||
Selected Consolidated Balance Sheet Data: | June 30, 2018 | ||
(Unaudited) | |||
Cash and cash equivalents | $ | 3,081 | |
Current assets | 36,655 | ||
Working capital | (11,076 | ) | |
Total assets | 115,795 | ||
Current liabilities | 47,731 | ||
Long-term debt obligations, including current portion | 24,292 | ||
Total stockholders' equity | 35,268 | ||
(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 June 30, | Six Months Ended June 30, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (4,104 | ) | $ | (6,771 | ) | $ | (10,978 | ) | $ | (17,700 | ) | |||
Interest expense, net | 531 | 690 | 1,093 | 5,841 | |||||||||||
Provision for income taxes | 50 | 50 | 100 | 100 | |||||||||||
Depreciation and amortization | 2,088 | 2,124 | 4,188 | 4,275 | |||||||||||
EBITDA | $ | (1,435 | ) | $ | (3,907 | ) | $ | (5,597 | ) | $ | (7,484 | ) | |||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | Transportation and Skilled Trades | Healthcare and Other Professions | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Net income (loss) | $ | 1,740 | $ | 786 | $ | 644 | $ | (571 | ) | $ | 2,416 | $ | 2,703 | $ | 887 | $ | (258 | ) | |||||||||||
Interest expense, net | - | - | - | - | - | (18 | ) | - | - | ||||||||||||||||||||
Provision for income taxes | - | - | - | - | - | - | - | - | |||||||||||||||||||||
Depreciation and amortization | 1,867 | 1,986 | 64 | 10 | 3,750 | 3,951 | 119 | 11 | |||||||||||||||||||||
EBITDA | $ | 3,607 | $ | 2,772 | $ | 708 | $ | (561 | ) | $ | 6,166 | $ | 6,636 | $ | 1,006 | $ | (247 | ) | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
Transitional | Corporate | Transitional | Corporate | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Net loss | $ | - | $ | (833 | ) | $ | (6,488 | ) | $ | (6,153 | ) | $ | - | $ | (1,401 | ) | $ | (14,281 | ) | $ | (18,744 | ) | |||||||
Interest expense, net | - | - | 531 | 690 | - | - | 1,093 | 5,859 | |||||||||||||||||||||
Provision for income taxes | - | - | 50 | 50 | - | - | 100 | 100 | |||||||||||||||||||||
Depreciation and amortization | - | 2 | 157 | 126 | - | 29 | 319 | 284 | |||||||||||||||||||||
EBITDA | $ | - | $ | (831 | ) | $ | (5,750 | ) | $ | (5,287 | ) | $ | - | $ | (1,372 | ) | $ | (12,769 | ) | $ | (12,501 | ) | |||||||
Three Months Ended June 30, | ||||||||||
(Unaudited) | ||||||||||
Total | Total | % Change | ||||||||
Company | Company | Same School Basis | ||||||||
2018 | 2017 | 2018 | ||||||||
Total Company Revenue | $ | 61,120 | $ | 61,865 | ||||||
Less: Transitional Revenue | (2,623 | ) | ||||||||
Revenue on Same School Basis | $ | 61,120 | $ | 59,242 | 3.2 | % | ||||
Three Months Months Ended June 30, | ||||||||||
(Unaudited) | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 42,085 | $ | 42,331 | -0.6 | % | ||||
Healthcare and Other Professions | 19,035 | 16,911 | 12.6 | % | ||||||
Transitional | - | 2,623 | -100.0 | % | ||||||
Total | $ | 61,120 | $ | 61,865 | -1.2 | % | ||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 1,740 | $ | 786 | 121.4 | % | ||||
Healthcare and Other Professions | 644 | (571 | ) | -212.8 | % | |||||
Transitional | - | (833 | ) | 100.0 | % | |||||
Corporate | (5,907 | ) | (5,413 | ) | -9.1 | % | ||||
Total | $ | (3,523 | ) | $ | (6,031 | ) | 41.6 | % | ||
Starts: | ||||||||||
Transportation and Skilled Trades | 1,959 | 1,823 | 7.5 | % | ||||||
Healthcare and Other Professions | 946 | 781 | 21.1 | % | ||||||
Transitional | - | - | 0.0 | % | ||||||
Total | 2,905 | 2,604 | 11.6 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 6,592 | 6,740 | -2.2 | % | ||||||
Healthcare and Other Professions | 3,511 | 3,263 | 7.6 | % | ||||||
Transitional | - | 579 | -100.0 | % | ||||||
Total | 10,103 | 10,582 | -4.5 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 6,975 | 7,028 | -0.8 | % | ||||||
Healthcare and Other Professions | 3,396 | 3,000 | 13.2 | % | ||||||
Transitional | - | 372 | -100.0 | % | ||||||
Total | 10,371 | 10,400 | -0.3 | % | ||||||
Six Months Ended June 30, | |||||||||||
(Unaudited) | |||||||||||
2018 | 2017 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 84,832 | $ | 85,490 | -0.8 | % | |||||
Healthcare and Other Professions | 38,177 | 34,756 | 9.8 | % | |||||||
Transitional | - | 6,898 | -100.0 | % | |||||||
Total | $ | 123,009 | $ | 127,144 | -3.3 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 2,416 | $ | 2,685 | -10.0 | % | |||||
Healthcare and Other Professions | 887 | (258 | ) | -443.8 | % | ||||||
Transitional | - | (1,401 | ) | 100.0 | % | ||||||
Corporate | (13,088 | ) | (12,785 | ) | -2.4 | % | |||||
Total | $ | (9,785 | ) | $ | (11,759 | ) | 16.8 | % | |||
Starts: | |||||||||||
Transportation and Skilled Trades | 3,765 | 3,619 | 4.0 | % | |||||||
Healthcare and Other Professions | 1,926 | 1,710 | 12.6 | % | |||||||
Transitional | - | 132 | -100.0 | % | |||||||
Total | 5,691 | 5,461 | 4.2 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 6,610 | 6,758 | -2.2 | % | |||||||
Healthcare and Other Professions | 3,548 | 3,346 | 6.0 | % | |||||||
Transitional | - | 731 | -100.0 | % | |||||||
Total | 10,158 | 10,836 | -6.3 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 6,975 | 7,028 | -0.8 | % | |||||||
Healthcare and Other Professions | 3,396 | 3,000 | 13.2 | % | |||||||
Transitional | - | 372 | -100.0 | % | |||||||
Total | 10,371 | 10,400 | -0.3 | % | |||||||
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Source: Lincoln Educational Services Corporation