UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

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FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): February 26, 2020

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

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On February 26, 2020, Lincoln Educational Services Corporation. (the “Company”) issued a press release announcing financial results for the fourth quarter and year ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated in this Item 2.02 by reference.

 The information contained under this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Furthermore, the information contained under this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.  The furnishing of the information under this Item 2.02 in this Current Report is not intended to, and does not, constitute a determination or admission by the Company that the information contained under this Item 2.02 in this Current Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company.

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

Lincoln Reports Fourth Quarter and Full Year 2019 Financial Results

Conference call today at 10 a.m. ET

WEST ORANGE, N.J., February 26, 2020 -- Lincoln Educational Services Corporation (Nasdaq: LINC) today reported operating and financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 vs Fourth Quarter 2018 Highlights

Full Year 2019 Financial Results achieved and exceeded guidance

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 Scott Shaw, President and Chief Executive Officer.  “Our fourth quarter’s performance, which added an exclamation point to the year, has enabled the Company to enter the new-year with plenty of momentum and we are today introducing 2020 guidance.  We believe our significantly strengthened balance sheet and liquidity give us the resources to pursue strategies to accelerate growth and drive even greater performance over the next few years.  Our marketing initiatives are achieving substantial results in what has been traditionally a difficult operating environment for our industry, and our corporate partners are increasing their reliance on Lincoln to help them meet their workforce needs.”

 

FOURTH QUARTER 2019 COMPARED TO FOURTH QUARTER 2018 FINANCIAL PERFROMANCE:

 

 

 

 

 

 

 

 

FOURTH QUARTER SEGMENT FINANCIAL PERFORMANCE

 

Transportation and Skilled Trades Segment

 

Transportation and Skilled Trades segment revenue increased by $3.3 million, or 6.7%, to $52.7 million, as compared to $49.4 million in the prior year.  The increase in revenue is primarily due to a 3.6% increase in average student population including a 14.3% increase in student starts for the quarter.

Operating income increased to $10.9 million from $8.9 million in the prior year comparable period.  These improvements were marked by increased efficiencies and expense controls that delivered impressive operating leverage as over 60% of the increase in revenues for the quarter translated into operating income growth.  Included in these gains were increases in bad debt expense and marketing investments.  Additional marketing investments were initiated during the fourth quarter to better position the Company to achieve a strong first quarter in 2020.

 

Healthcare and Other Professions Segment

 

Healthcare and Other Professions segment revenue increased by $1.6 million, or 8.3%, to $21.2 million, as compared to $19.6 million in the prior year.  The increase in revenue was mainly due to an 11.6% increase in average student population, which is attributable to over two years of consistent start growth.

Operating income was $3.4 million for the three months ended December 31, 2019, compared to $3.7 million in the prior year comparable period.  The decline was partially due to higher instructor salaries and benefits expense incurred to remain competitive in current market conditions.  In addition, bad debt expense and higher marketing investments reduced the operating income margin for the quarter.  Additional marketing investments in the fourth quarter are expected to favorably impact starts in the first quarter of 2020.

 

Transitional Segment

Throughout 2019, no operations were categorized in the Transitional segment.  However, the financial information for the Southington, Connecticut campus, which was fully taught out as of December 31, 2018, was included in the Transitional segment for 2018.  Revenue was $1.1 million and operating loss was $3.2 million for the three months ended December 31, 2018.

 

Corporate and Other

This category includes unallocated expenses incurred on behalf of the entire Company.  Corporate and other expenses were $4.2 million for the three months ended December 31, 2019 as compared to $3.8 million in the prior year comparable period.

 

FULL YEAR FINANCIAL RESULTS

Total revenue increased by $10.1 million, or 3.9%, to $273.3 million, as compared to $263.2 million for 2018.  Operating income increased by $9.2 million, to $5.2 million compared to an operating loss of $4.0 million last year.  Educational services and facilities expense decreased by $1.9 million, or 1.5%, to $123.5 million for the year from $125.4 million in the prior year. Selling, general and administrative expense increased by $3.9 million, or 2.8%, to $145.2 million from $141.2 million in the prior year.

 

Transportation and Skilled Trades segment revenue increased to $193.7 million for the year ended December 31, 2019, a $8.5 million increase compared to $185.3 million in 2018.

 

Healthcare and Other Professions segment revenue increased to $79.6 million for the year ended December 31, 2019, a $7.5 million increase compared to $72.1 million in 2018.

 

Transitional segment revenue was $5.8 million in the year ended December 31, 2018.

 

2020 OUTLOOK

The Company is providing the following guidance for 2020:

 

 

 

 

CONFERENCE CALL INFO

 

Lincoln will host a conference call today at 10:00 a.m. Eastern Daylight Time.  To access the live webcast of the conference call, please go to the Investor Relations section of Lincoln’s website at http://www.lincolntech.edu. Participants can also listen to the conference call by dialing 844-413-0946 (domestic) or 216-562-0456 (international) and providing access code 4168358 . Please log in or dial into the call at least 10 minutes prior to the start time.

 

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 LINCOLN EDUCATIONAL SERVICES CORPORATION

 

Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education and helping to provide solutions to America’s skills gap.  Lincoln offers recent high school graduates and working adults degree and diploma programs.  The Company operates under three reportable segments: Transportation and Skilled Trades, Healthcare and Other Professions and Transitional. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolntech.edu.

 

SAFE HARBOR

 

Statements in this press release and in oral statements made from time to time by representatives of Lincoln Educational Services Corporation regarding Lincoln’s business that are not historical facts may be “forward-looking statements” as that term is defined in the federal securities law. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all.  Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions or dispositions to be made by the Company or projections involving anticipated revenues, earnings or other aspects of the Company’s operating results.  The Company cautions you that these statements concern current expectations about the Company’s future performance or events and are subject to a number of uncertainties, risks and other influences many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projects upon which the statements are based. The events described in forward-looking statements may not occur at all. Factors which may affect the Company’s results include, but are not limited to, the risks and uncertainties discussed in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.  Any one or more of these uncertainties, risks and other influences could materially affect the Company’s results of operations and financial condition and whether forward-looking statements made by the Company ultimately prove to be accurate and, as such, the Company’s actual results, performance and achievements could materially differ from those expressed or implied in these forward-looking statements. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, our failure to comply with the extensive regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with acquisitions or a change of control of our Company; our success in updating and expanding the content of existing programs and developing new programs for our students in a cost-effective manner or on a timely basis; risks associated with changes in applicable federal laws and regulations; uncertainties regarding our ability to comply with federal laws and regulations, such as the 90/10 rule and prescribed cohort default rates; risks associated with the opening of new campuses; risks associated with integration of acquired schools; industry competition; our ability to execute our growth strategies; conditions and trends in our industry; general economic conditions; and other factors discussed in the “Risk Factors” section of our Annual Reports and Quarterly Reports filed with the Securities and Exchange Commission.  All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date hereof.

 

(In Thousands)

On November 14, 2019, the Company entered into a new $60.0 million credit facility, $15.0 million of which is fully cash collateralized and raised $12.7 million in a private placement of convertible preferred stock.  Together the new credit facility and the private placement have increased the Company’s liquidity by more than $30.0 million and it is expected that the Company will realize annualized interest savings of approximately $1.0 million.  Additional liquidity available to the Company will be utilized for investments that are in the best interest of the students and shareholders.  Examples include but are not limited to introduction of new program offerings, expansion of successful programs into other campuses and potential growth initiatives.

 

 

LINCOLN EDUCATIONAL SERVICES CORPORATION

Brian Meyers, CFO

973-736-9340

EVC GROUP LLC

Investor Relations: Doug Sherk, dsherk@evcgroup.com, 415-652-9100

Media Relations: Tom Gibson, 201-476-0322

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