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): May 13, 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:

 

Item 2.02.

Results of Operations and Financial Condition.

On May 13, 2020, Lincoln Educational Services Corporation. (the “Company”) issued a press release announcing financial results for the first quarter ended March 30, 2020. 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.

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

99.1

Press release of Lincoln Educational Services Corporation dated May 13, 2020.

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.

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Lincoln Reports Strong Start to 2020 with 10.7% First Quarter Revenue Growth

Conference call today at 10 a.m. ET

Operational and Financial Highlights for the Quarter Ended March 31, 2020 vs. March 31, 2019

FIRST QUARTER 2020 COMPARED TO FIRST QUARTER 2019 FINANCIAL PERFORMANCE:

 

 

 

 

 

 

 

FIRST QUARTER SEGMENT FINANCIAL PERFORMANCE

 

Transportation and Skilled Trades Segment

 

Transportation and Skilled Trades segment revenue increased by $4.7 million, or 10.7%, to $49.1 million, during the quarter as compared to $44.3 million in the prior year comparable period.  The increase was the result of a 3.7% increase in average student population driven by starting the year with approximately 360 more students than in the prior year comparable period.  Further contributing to the additional revenue was a 6.3% increase in average revenue per student.

Operating income increased to $4.8 million from $1.8 million in the prior year comparable period driven by operating leverage of approximately 60% and an increase in student starts through February.  The Company successfully leveraged its large amount of fixed costs as population and revenue grew, there were minimal related incremental expenditures, resulting in more revenue contributing to operating income.

Healthcare and Other Professions Segment

 

Healthcare and Other Professions segment revenue increased by $2.0 million, or 10.8%, to $21.0 million, as compared to $18.9 million in the prior year comparable period.  The increase was the result of a 12.5% increase in average student population driven by starting the year with approximately 400 more students than in the prior year comparable period.

Operating income was $2.0 million for the three months ended March 31, 2020 compared to $1.0 million in the prior year comparable period.  This increase, similar to the Transportation and Skilled Trades segment was due to operating leverage of approximately 50% and an increase in student starts through February.

Corporate and Other

This category includes unallocated expenses incurred on behalf of the entire Company.  Corporate and other expenses were $8.2 million and $7.7 million for the three months ended March 31, 2020 and 2019, respectively.  The increase was primarily due to salaries and benefits expense and $0.7 million incurred as a result of the COVID-19 pandemic.  Partially offsetting these additional costs were nonrecurring strategic initiatives costs incurred in the prior year.  Salaries and benefits expense increased primarily due to the reinstatement of certain employee benefits.  During the quarter, additional costs were incurred as a result of the Company transitioning operations and educational delivery to distance learning due to the COVID-19 pandemic.  The Company has received notification that during the current year it will receive funds under the recently enacted CARES Act that may be used to partially offset these costs.

CARES Act Grant

Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Federal Government and Department of Education recognize that students are being adversely affected by the continued disruption caused by COVID-19.  Lincoln applied for and has been awarded a grant of approximately $27.4 million to help ensure the continued education of its students.  The majority of the grant will go to students to offset their additional expenses related to the disruption of school operations including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care and childcare.  The Company expects to distribute the majority of the student’s funds within 30 days of receipt of the funds.   Also, a portion of the funds are expected to be used to offset costs associated with significant changes to the delivery of instruction as a result of the COVID-19 pandemic.

“We are monitoring the evolving COVID-19 situation and, with the well-being of our students and staff as paramount, we have implemented plans to re-open seven campuses by June 1, with our Dallas-area campus re-opening this week,” continued Mr. Shaw. “Our primary objective with our re-openings is to allow students to complete or start their education in a safe environment for them and our staff. With campuses in 14 different states, our return will vary by state.  Over the longer term, given the dramatic rise in the unemployment rate, we anticipate demand for the skilled career training our programs provide will increase as it has in past economic downturns as the unemployed seek new paths to a better career.  In fact, we have recently seen a marked increase in new student leads for many of our programs. In addition, we have learned in this very short period of time new practices to serve and educate students that we will carry forward and which should enhance the student experience cost-efficiently. We expect these practices will facilitate our long-term growth strategies as well as further improve the return on investment for all students,” Mr. Shaw concluded.

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 1777844. 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 1777844.

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; the COVID-19 pandemic and its impact on our business and the U.S. and global economics; 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)

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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