Lincoln Educational Services Corporation Reports Seventh Consecutive Quarter of Student Start Growth and Improved Operating Performance During Second Quarter; Remains on Target to Achieve Full Year 2019 Profitability
Conference call today at 10 a.m. ET
- Total revenue increased 4% to
$63.6 million ; same school revenue up 6.6%. - Same school average student population rose approximately 5.8%.
- Same school student starts increased approximately 3.6%.
- Reiterates 2019 guidance.
“Lincoln has now delivered seven consecutive quarters of student start growth and with the solid momentum of our business we are positioned to extend this trend during the second half of 2019,” commented
SECOND QUARTER FINANCIAL RESULTS HIGHLIGHTS:
- Total revenue for the second quarter increased by
$2.5 million , or 4%, to$63.6 million . Revenue on a same school basis increased by 6.6%, or$3.9 million . - Total student starts rose 2.5%, while same school student starts rose 3.6%. Transportation and Skilled Trades segment starts were up approximately 3.5% and Healthcare and Other Professions segment starts increased 3.7%. These increases represent nearly two years of consistent student start growth.
- Educational services and facilities expense decreased by
$0.4 million , or 1.4%, to$29.8 million . The expense reductions were primarily due to the Transitional segment, which accounted for$1.2 million in cost savings partially offset by$0.8 million of increased instructional expenses related to our continued growth in student population in addition to increases in instructor salaries. - Selling general and administrative expense increased by
$1.4 million , or 4.2%, to$35.9 million . Excluding the Transitional segment, which had cost reductions of$1.1 million , selling, general and administrative expenses would have increased$2.6 million . This increase was primary driven by additional bad debt expense, marketing expense and sales expense. Increased bad debt expense was a result of a growing student population, which drove an increase in accounts receivable and the correlating bad debt expense. Marketing and sales increases were a result of initiatives implemented during the quarter designed to continue to drive start growth during the second half of the year. - Operating loss improved by
$1.4 million during the current quarter to$2.1 million from$3.5 million in the second quarter of 2018. - Net loss for the quarter decreased by
$1 million to $3.1 million , or$0.12 per share, as compared to$4.1 million , or$0.17 per share, for the prior year comparable period.
SECOND QUARTER SEGMENT FINANCIAL PERFORMANCE
Transportation and Skilled Trades Segment
Transportation and Skilled Trades segment revenue increased by
Operating income increased
Educational services and facilities expense increased
Selling general and administrative expense increased
Healthcare and Other Professions Segment
Healthcare and Other Professions segment revenue increased by
Operating income increased by
Educational services and facilities expense increased
Selling general and administrative expense increased by
Transitional Segment
During the year ended
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were
SIX MONTH FINANCIAL RESULTS
Revenue was
Transportation and Skilled Trades segment revenue increased
Healthcare and Other Professions segment revenue increased
Transitional segment revenue was zero and
2019 OUTLOOK
The Company is reiterating its full year 2019 guidance first provided on
- Revenue and student starts are expected to increase 3% to 5% from the prior year, excluding the Transitional segment.
- Net income and EBITDA are projected to be approximately
$2 million and$12 million , respectively.
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 2869606.
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) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUE | $ | 63,569 | $ | 61,120 | $ | 126,833 | $ | 123,009 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Educational services and facilities | 29,749 | 30,179 | 59,728 | 60,682 | |||||||||||
Selling, general and administrative | 35,913 | 34,471 | 74,062 | 72,002 | |||||||||||
Loss (gain) on disposition of assets | - | (7 | ) | 1 | 110 | ||||||||||
Total costs & expenses | 65,662 | 64,643 | 133,791 | 132,794 | |||||||||||
OPERATING LOSS | (2,093 | ) | (3,523 | ) | (6,958 | ) | (9,785 | ) | |||||||
OTHER: | |||||||||||||||
Interest income | 2 | 8 | 7 | 19 | |||||||||||
Interest expense | (829 | ) | (539 | ) | (1,386 | ) | (1,112 | ) | |||||||
LOSS BEFORE INCOME TAXES | (2,920 | ) | (4,054 | ) | (8,337 | ) | (10,878 | ) | |||||||
PROVISION FOR INCOME TAXES | 144 | 50 | 194 | 100 | |||||||||||
NET LOSS | $ | (3,064 | ) | $ | (4,104 | ) | $ | (8,531 | ) | $ | (10,978 | ) | |||
Basic | |||||||||||||||
Net loss per share | $ | (0.12 | ) | $ | (0.17 | ) | $ | (0.35 | ) | $ | (0.45 | ) | |||
Diluted | |||||||||||||||
Net loss per share | $ | (0.12 | ) | $ | (0.17 | ) | $ | (0.35 | ) | $ | (0.45 | ) | |||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 24,555 | 24,486 | 24,545 | 24,313 | |||||||||||
Diluted | 24,555 | 24,486 | 24,545 | 24,313 | |||||||||||
Other data: | |||||||||||||||
EBITDA (1) | $ | (154 | ) | $ | (1,435 | ) | $ | (2,969 | ) | $ | (5,597 | ) | |||
Depreciation and amortization | $ | 1,939 | $ | 2,088 | $ | 3,989 | $ | 4,188 | |||||||
Number of campuses | 22 | 23 | 22 | 23 | |||||||||||
Average enrollment | 10,405 | 10,103 | 10,497 | 10,158 | |||||||||||
Stock-based compensation | $ | 190 | $ | 52 | $ | 242 | $ | 481 | |||||||
Net cash provided by (used in) operating activities | $ | 140 | $ | (2,292 | ) | $ | (10,782 | ) | $ | (12,334 | ) | ||||
Net cash used in investing activities | $ | (573 | ) | $ | (1,328 | ) | $ | (1,212 | ) | $ | (1,796 | ) | |||
Net cash provided by (used in) financing activities | $ | 1,238 | $ | 1,838 | $ | (22,966 | ) | $ | (28,853 | ) |
Selected Consolidated Balance Sheet Data: | June 30, 2019 | ||
(Unaudited) | |||
Cash and cash equivalents | $ | 6,489 | |
Current assets | 40,178 | ||
Working capital deficit | (22,581 | ) | |
Total assets | 154,898 | ||
Current liabilities | 62,759 | ||
Long-term debt obligations, including current portion, net of deferred financing fees | 26,014 | ||
Total stockholders' equity | 31,868 |
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 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) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net loss | $ | (3,064 | ) | $ | (4,104 | ) | $ | (8,531 | ) | $ | (10,978 | ) | |||
Interest expense, net | 827 | 531 | 1,379 | 1,093 | |||||||||||
Provision for income taxes | 144 | 50 | 194 | 100 | |||||||||||
Depreciation and amortization | 1,939 | 2,088 | 3,989 | 4,188 | |||||||||||
EBITDA | $ | (154 | ) | $ | (1,435 | ) | $ | (2,969 | ) | $ | (5,597 | ) | |||
Three Months Ended June 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 2,484 | $ | 1,740 | $ | 1,839 | $ | 1,543 | ||||||
Interest expense, net | - | - | - | - | ||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 1,732 | 1,867 | 84 | 60 | ||||||||||
EBITDA | $ | 4,216 | $ | 3,607 | $ | 1,923 | $ | 1,603 | ||||||
Three Months Ended June 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (899 | ) | $ | (7,387 | ) | $ | (6,488 | ) | |||
Interest expense, net | - | - | 827 | 531 | ||||||||||
Provision for income taxes | - | - | 144 | 50 | ||||||||||
Depreciation and amortization | - | 4 | 123 | 157 | ||||||||||
EBITDA | $ | - | $ | (895 | ) | $ | (6,293 | ) | $ | (5,750 | ) | |||
Six Months Ended June 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 4,300 | $ | 2,416 | $ | 2,811 | $ | 1,917 | ||||||
Interest expense, net | - | - | - | - | ||||||||||
Provision for income taxes | - | - | - | - | ||||||||||
Depreciation and amortization | 3,576 | 3,750 | 179 | 112 | ||||||||||
EBITDA | $ | 7,876 | $ | 6,166 | $ | 2,990 | $ | 2,029 | ||||||
Six Months Ended June 30, | ||||||||||||||
(Unaudited) | ||||||||||||||
Transitional | Corporate | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Net loss | $ | - | $ | (1,030 | ) | $ | (15,642 | ) | $ | (14,281 | ) | |||
Interest expense, net | - | - | 1,379 | 1,093 | ||||||||||
Provision for income taxes | - | - | 194 | 100 | ||||||||||
Depreciation and amortization | - | 7 | 234 | 319 | ||||||||||
EBITDA | $ | - | $ | (1,023 | ) | $ | (13,835 | ) | $ | (12,769 | ) | |||
Three Months Ended June 30, | ||||||||
(Unaudited) | ||||||||
Total | Total | % Change | ||||||
Company | Company | Same School Basis | ||||||
2019 | 2018 | 2019 | ||||||
Total Company Revenue | $ | 63,569 | $ | 61,120 | ||||
Less: Transitional Revenue | - | (1,473 | ) | |||||
Revenue on Same School Basis | $ | 63,569 | $ | 59,647 | 6.6% | |||
Six Months Ended June 30, | ||||||||
(Unaudited) | ||||||||
Total | Total | % Change | ||||||
Company | Company | Same School Basis | ||||||
2019 | 2018 | 2019 | ||||||
Total Company Revenue | $ | 126,833 | $ | 123,009 | ||||
Less: Transitional Revenue | - | (3,874 | ) | |||||
Revenue on Same School Basis | $ | 126,833 | $ | 119,135 | 6.5% | |||
Three Months Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 44,028 | $ | 42,085 | 4.6 | % | ||||
Healthcare and Other Professions | 19,541 | 17,562 | 11.3 | % | ||||||
Transitional | - | 1,473 | -100.0 | % | ||||||
Total | $ | 63,569 | $ | 61,120 | 4.0 | % | ||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 2,484 | $ | 1,740 | 42.8 | % | ||||
Healthcare and Other Professions | 1,839 | 1,542 | 19.3 | % | ||||||
Transitional | - | (899 | ) | 100.0 | % | |||||
Corporate | (6,416 | ) | (5,906 | ) | -8.6 | % | ||||
Total | $ | (2,093 | ) | $ | (3,523 | ) | 40.6 | % | ||
Starts: | ||||||||||
Transportation and Skilled Trades | 2,028 | 1,959 | 3.5 | % | ||||||
Healthcare and Other Professions | 949 | 915 | 3.7 | % | ||||||
Transitional | - | 31 | -100.0 | % | ||||||
Total | 2,977 | 2,905 | 2.5 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 6,827 | 6,592 | 3.6 | % | ||||||
Healthcare and Other Professions | 3,578 | 3,243 | 10.3 | % | ||||||
Transitional | - | 268 | -100.0 | % | ||||||
Total | 10,405 | 10,103 | 3.0 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 7,195 | 6,975 | 3.2 | % | ||||||
Healthcare and Other Professions | 3,582 | 3,264 | 9.7 | % | ||||||
Transitional | - | 132 | -100.0 | % | ||||||
Total | 10,777 | 10,371 | 3.9 | % | ||||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue: | ||||||||||
Transportation and Skilled Trades | $ | 88,354 | $ | 84,832 | 4.2 | % | ||||
Healthcare and Other Professions | 38,479 | 34,303 | 12.2 | % | ||||||
Transitional | - | 3,874 | -100.0 | % | ||||||
Total | $ | 126,833 | $ | 123,009 | 3.1 | % | ||||
Operating Income (Loss): | ||||||||||
Transportation and Skilled Trades | $ | 4,300 | $ | 2,416 | 78.0 | % | ||||
Healthcare and Other Professions | 2,811 | 1,918 | 46.6 | % | ||||||
Transitional | - | (1,031 | ) | 100.0 | % | |||||
Corporate | (14,069 | ) | (13,088 | ) | -7.5 | % | ||||
Total | $ | (6,958 | ) | $ | (9,785 | ) | 28.9 | % | ||
Starts: | ||||||||||
Transportation and Skilled Trades | 3,849 | 3,765 | 2.2 | % | ||||||
Healthcare and Other Professions | 1,987 | 1,816 | 9.4 | % | ||||||
Transitional | - | 110 | -100.0 | % | ||||||
Total | 5,836 | 5,691 | 2.5 | % | ||||||
Average Population: | ||||||||||
Transportation and Skilled Trades | 6,935 | 6,610 | 4.9 | % | ||||||
Healthcare and Other Professions | 3,561 | 3,209 | 11.0 | % | ||||||
Transitional | - | 339 | -100.0 | % | ||||||
Total | 10,497 | 10,158 | 3.3 | % | ||||||
End of Period Population: | ||||||||||
Transportation and Skilled Trades | 7,195 | 6,975 | 3.2 | % | ||||||
Healthcare and Other Professions | 3,582 | 3,264 | 9.7 | % | ||||||
Transitional | - | 132 | -100.0 | % | ||||||
Total | 10,777 | 10,371 | 3.9 | % | ||||||
973-736-9340
Investor Relations:
Media Relations:
Source: Lincoln Educational Services Corporation