Lincoln Educational Services Reports Strong Third Quarter Results; Third Quarter Net Income More than Doubles as Revenue Rises 8.5%; 15.3% Student Start Growth
Operational and Financial Highlights for the Third Quarter Ended September 30, 2020
(as compared to quarter ending September 30, 2019)
- 8.5% revenue growth with 10.1% and 7.9% growth for Healthcare and Other Professions Segment and Transportation and Skilled Trades Segments, respectively
- 15.3% increase in student starts with 10.6% and 17.2% increases for Healthcare and Other Professions Segment and Transportation and Skilled Trades Segment, respectively
- 9.6% increase in ending student population
- 36.3% increase in EBITDA to
$5.6 million - Net Income of
$3.5 million is more than double that of the prior year of$1.3 million - Cash provided by operating activities of
$3.8 million ;$6.8 million on an adjusted basis - Paid initial Series A preferred stock dividends of
$1.1 million for the period fromNovember 14, 2019 throughSeptember 30, 2020 - All campuses are currently open with in-person instruction undertaken in accordance with CDC and local authority safety guidelines
“Despite the continued challenges presented by the COVID-19 pandemic, Lincoln’s performance is beginning to demonstrate our growth potential as well as our operating leverage as we help a growing number of students acquire new skills for in-demand essential careers,” said
THIRD QUARTER FINANCIAL RESULTS
(Quarter ended September 30, 2020 compared to quarter ending
- Revenue increased
$6.2 million , or 8.5% to$78.8 million from$72.6 million . The increase is due to an 8.1% increase in average student population, driven by a 15.3% increase in student starts. Revenue growth was less than student population growth due to the continued impact of COVID-19 during the quarter. Restricted access to externship sites and classroom labs extended graduation dates for certain programs which deferred$0.4 million of revenue to the fourth quarter along with a$0.5 million decrease in non-tuition revenue. - Student start growth of 15.3% benefited from our ongoing investments in marketing as well as continuous evaluation and improvement of the admissions process. Increased efficiency is evidenced by a decline in the overall cost to obtain student starts while continuing growth. Lincoln has now experienced three years of consistent growth in student starts, with the only exception being the first quarter of 2020 which was impacted by COVID-19.
- Educational services and facilities expense increased
$1.0 million , or 3.1% to$34.2 million from$33.2 million in the prior year. The increase was driven by additional instructional expense and books and tools expense resulting from an increased student population combined with the return to in person instruction at all of our campuses either at the end of the second quarter or during the third quarter. - Selling general and administrative expense increased
$3.2 million , or 8.5% to$40.7 million from$37.5 million in the prior year. The increase was primarily driven by additional bad debt expense and marketing investments, partially offset by cost savings in sales and student services. - Operating income increased 79.2%, or
$1.7 million during the quarter to$3.8 million from$2.1 million in the prior year. - Net income increased to
$3.5 million , or$0.08 per diluted share, compared to$1.3 million , or$0.05 per diluted share in the prior year. - Cash flow from operations was
$3.8 million for the quarter;$6.8 million on an adjusted basis excluding CARES Act impact. - As of
September 30, 2020 , total debt outstanding under our credit facility was$18.3 , down$8.8 million from$27.1 million ; liquidity was approximately$37.1 million .
THIRD QUARTER SEGMENT RESULTS
Transportation and Skilled Trades Segment
Revenue increased
Healthcare and Other Professions Segment
Revenue increased
Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were
NINE MONTHS FINANCIAL RESULTS
(Period ended September 30, 2020 compared to
Total revenue increased by
CARES ACT FUNDS
Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the
The Company received an initial installment of
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 1857026.
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 | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUE | $ | 78,792 | $ | 72,594 | $ | 211,303 | $ | 199,427 | ||||||||
COSTS AND EXPENSES: | ||||||||||||||||
Educational services and facilities | 34,251 | 33,211 | 90,733 | 92,940 | ||||||||||||
Selling, general and administrative | 40,700 | 37,451 | 117,011 | 111,512 | ||||||||||||
Loss (gain) on disposition of assets | 1 | (211 | ) | (96 | ) | (211 | ) | |||||||||
Total costs & expenses | 74,952 | 70,451 | 207,648 | 204,241 | ||||||||||||
OPERATING INCOME (LOSS) | 3,840 | 2,143 | 3,655 | (4,814 | ) | |||||||||||
OTHER: | ||||||||||||||||
Interest income | - | 1 | - | 7 | ||||||||||||
Interest expense | (278 | ) | (754 | ) | (960 | ) | (2,141 | ) | ||||||||
Other income | - | - | - | - | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 3,562 | 1,390 | 2,695 | (6,948 | ) | |||||||||||
PROVISION FOR INCOME TAXES | 50 | 50 | 150 | 244 | ||||||||||||
NET INCOME (LOSS) | $ | 3,512 | $ | 1,340 | $ | 2,545 | $ | (7,192 | ) | |||||||
PREFERRED STOCK DIVIDENDS | 1,074 | - | 1,074 | - | ||||||||||||
INCOME (LOSS) AVAILABLE FOR DISTRIBUTION | $ | 2,438 | $ | 1,340 | $ | 1,471 | $ | (7,192 | ) | |||||||
Basic | ||||||||||||||||
Net income (loss) per common share | $ | 0.08 | $ | 0.05 | $ | 0.05 | $ | (0.29 | ) | |||||||
Diluted | ||||||||||||||||
Net income (loss) per common share | $ | 0.08 | $ | 0.05 | $ | 0.05 | $ | (0.29 | ) | |||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 24,822 | 24,563 | 24,721 | 24,551 | ||||||||||||
Diluted | 24,822 | 24,608 | 24,721 | 24,551 | ||||||||||||
Other Data: | ||||||||||||||||
EBITDA (1) | $ | 5,622 | $ | 4,125 | $ | 9,201 | $ | 1,158 | ||||||||
Depreciation and amortization | $ | 1,782 | $ | 1,982 | $ | 5,546 | $ | 5,972 | ||||||||
Number of campuses | 22 | 22 | 22 | 22 | ||||||||||||
Average enrollment | 12,165 | 11,254 | 11,379 | 10,750 | ||||||||||||
Stock-based compensation | $ | 670 | $ | 218 | $ | 1,287 | $ | 460 | ||||||||
Net cash provided by (used in) operating activities | $ | 3,754 | $ | 5,889 | $ | 10,222 | $ | (4,893 | ) | |||||||
Net cash used in investing activities | $ | (482 | ) | $ | (1,849 | ) | $ | (3,457 | ) | $ | (3,061 | ) | ||||
Net cash (used in) provided by financing activities | $ | (1,647 | ) | $ | 728 | $ | (17,816 | ) | $ | (22,238 | ) |
Selected Consolidated Balance Sheet Data: | ||||
(Unaudited) | ||||
Cash and cash equivalents * | $ | 26,520 | ||
Restricted cash | 1,073 | |||
Current assets | 66,844 | |||
Working deficit | (5,909 | ) | ||
Total assets | 205,816 | |||
Current liabilities | 72,753 | |||
Long-term debt obligations, including current portion, net of deferred financing fees | 17,667 | |||
Series A convertible preferred stock | 11,982 | |||
Total stockholders' equity | 45,295 | |||
* Includes |
As of
During the third quarter, the Company paid a
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, adjusted cash provided by (used in) operating activities, total liquidity, and reconciled net (debt) cash are measures not recognized in financial statements presented in accordance with accounting principles generally accepted in
Following is a reconciliation of net income (loss) to EBITDA, adjusted cash provided by (used in) operating activities, total liquidity, and reconciled net (debt) cash:
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(Unaudited) | (Unaudited) |
|||||||||||||||
2020 | 2019 | 2020 | 2019 |
|||||||||||||
Net income (loss) | $ | 3,512 | $ | 1,340 | $ | 2,545 | $ | (7,192 | ) | |||||||
Interest expense, net | 278 | 753 | 960 | 2,134 | ||||||||||||
Provision for income taxes | 50 | 50 | 150 | 244 | ||||||||||||
Depreciation and amortization | 1,782 | 1,982 | 5,546 | 5,972 | ||||||||||||
EBITDA | $ | 5,622 | $ | 4,125 | $ | 9,201 | $ | 1,158 |
Three Months Ended |
||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | Corporate | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net income (loss) | $ | 9,138 | $ | 6,752 | $ | 1,655 | $ | 1,404 | $ | (7,281 | ) | $ | (6,816 | ) | ||||||||||
Interest expense, net | - | - | - | - | 278 | 753 | ||||||||||||||||||
Provision for income taxes | - | - | - | - | 50 | 50 | ||||||||||||||||||
Depreciation and amortization | 1,561 | 1,748 | 106 | 111 | 115 | 123 | ||||||||||||||||||
EBITDA | $ | 10,699 | $ | 8,500 | $ | 1,761 | $ | 1,515 | $ | (6,838 | ) | $ | (5,890 | ) |
Nine Months Ended |
||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Transportation and Skilled Trades | Healthcare and Other Professions | Corporate | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net income (loss) | $ | 18,848 | $ | 11,052 | $ | 6,387 | $ | 4,215 | $ | (22,690 | ) | $ | (22,459 | ) | ||||||||||
Interest expense, net | - | - | - | - | 960 | 2,134 | ||||||||||||||||||
Provision for income taxes | - | - | - | - | 150 | 244 | ||||||||||||||||||
Depreciation and amortization | 4,862 | 5,324 | 343 | 291 | 341 | 357 | ||||||||||||||||||
EBITDA | $ | 23,710 | $ | 16,376 | $ | 6,730 | $ | 4,506 | $ | (21,239 | ) | $ | (19,724 | ) |
Three Months Ended |
||||||||||||
(Unaudited) | ||||||||||||
2020 | 2019 | Increase/ (decrease) | ||||||||||
Cash provided by operating activities | $ | 3,754 | $ | 5,889 | $ | (2,135 | ) | |||||
CARES Act impact | 3,003 | - | 3,003 | |||||||||
Adjusted cash provided by operating activities | $ | 6,757 | $ | 5,889 | $ | 868 | ||||||
Nine Months Ended |
||||||||||||
(Unaudited) | ||||||||||||
2020 | 2019 | Increase/ (decrease) | ||||||||||
Cash provided by (used in) operating activities | $ | 10,222 | $ | (4,893 | ) | $ | 15,115 | |||||
CARES Act impact | (11,460 | ) | - | (11,460 | ) | |||||||
Adjusted cash used in operating activities | $ | (1,238 | ) | $ | (4,893 | ) | $ | 3,655 |
(Unaudited) | |||
Cash and cash equivalents | $ | 26,520 | |
CARES Act impact | (10,387 | ) | |
Subtotal | 16,133 | ||
Add: availability under current credit line | 21,000 | ||
Total liquidity | $ | 37,133 | |
(Unaudited) | ||||
Current portion of credit agreement and term loan | $ | (2,000 | ) | |
Long-term credit agreement and term loan | (15,667 | ) | ||
Cash and cash equivalents | 26,520 | |||
Restricted cash | 1,073 | |||
Noncurrent restricted cash | - | |||
Net cash | 9,926 | |||
CARES Act impact | (11,460 | ) | ||
Reconciled net (debt) cash | $ | (1,534 | ) |
Three Months Ended |
|||||||||||
2020 | 2019 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 56,828 | $ | 52,652 | 7.9 | % | |||||
HOPS | 21,964 | 19,942 | 10.1 | % | |||||||
Total | $ | 78,792 | $ | 72,594 | 8.5 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 9,138 | $ | 6,752 | 35.3 | % | |||||
Healthcare and Other Professions | 1,654 | 1,403 | 17.9 | % | |||||||
Corporate | (6,952 | ) | (6,012 | ) | -15.6 | % | |||||
Total | $ | 3,840 | $ | 2,143 | -79.2 | % | |||||
Starts: | |||||||||||
Transportation and Skilled Trades | 3,982 | 3,398 | 17.2 | % | |||||||
Healthcare and Other Professions | 1,528 | 1,381 | 10.6 | % | |||||||
Total | 5,510 | 4,779 | 15.3 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 8,349 | 7,635 | 9.4 | % | |||||||
Leave of Absence - COVID-19 | (333 | ) | - | 100.0 | % | ||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 8,016 | 7,635 | 5.0 | % | |||||||
Healthcare and Other Professions | 4,286 | 3,619 | 18.4 | % | |||||||
Leave of Absence - COVID-19 | (137 | ) | - | 100.0 | % | ||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 4,149 | 3,619 | 14.6 | % | |||||||
Total | 12,635 | 11,254 | 12.3 | % | |||||||
Total Excluding Leave of Absence - COVID-19 | 12,165 | 11,254 | 8.1 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 8,811 | 8,055 | 9.4 | % | |||||||
Leave of Absence - COVID-19 | (67 | ) | - | 100.0 | % | ||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 8,744 | 8,055 | 8.6 | % | |||||||
Healthcare and Other Professions | 4,462 | 3,960 | 12.7 | % | |||||||
Leave of Absence - COVID-19 | (37 | ) | - | 100.0 | % | ||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 4,425 | 3,960 | 11.7 | % | |||||||
Total | 13,273 | 12,015 | 10.5 | % | |||||||
Total Excluding Leave of Absence - COVID-19 | 13,169 | 12,015 | 9.6 | % |
Nine Months Ended |
|||||||||||
2020 | 2019 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 148,799 | $ | 141,005 | 5.5 | % | |||||
HOPS | 62,504 | 58,422 | 7.0 | % | |||||||
Total | $ | 211,303 | $ | 199,427 | 6.0 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 18,848 | $ | 11,051 | 70.6 | % | |||||
Healthcare and Other Professions | 6,388 | 4,214 | 51.6 | % | |||||||
Corporate | (21,581 | ) | (20,079 | ) | -7.5 | % | |||||
Total | $ | 3,655 | $ | (4,814 | ) | 175.9 | % | ||||
Starts: | |||||||||||
Transportation and Skilled Trades | 8,004 | 7,247 | 10.4 | % | |||||||
Healthcare and Other Professions | 3,651 | 3,368 | 8.4 | % | |||||||
Total | 11,655 | 10,615 | 9.8 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,651 | 7,169 | 6.7 | % | |||||||
Leave of Absence - COVID-19 | (260 | ) | - | 100.0 | % | ||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 7,391 | 7,169 | 3.1 | % | |||||||
Healthcare and Other Professions | 4,176 | 3,581 | 16.6 | % | |||||||
Leave of Absence - COVID-19 | (188 | ) | - | 100.0 | % | ||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 3,988 | 3,581 | 11.4 | % | |||||||
Total | 11,827 | 10,750 | 10.0 | % | |||||||
Total Excluding Leave of Absence - COVID-19 | 11,379 | 10,750 | 5.9 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 8,811 | 8,055 | 9.4 | % | |||||||
Leave of Absence - COVID-19 | (67 | ) | - | 100.0 | % | ||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 8,744 | 8,055 | 8.6 | % | |||||||
Healthcare and Other Professions | 4,462 | 3,960 | 12.7 | % | |||||||
Leave of Absence - COVID-19 | (37 | ) | - | 100.0 | % | ||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 4,425 | 3,960 | 11.7 | % | |||||||
Total | 13,273 | 12,015 | 10.5 | % | |||||||
Total Excluding Leave of Absence - COVID-19 | 13,169 | 12,015 | 9.6 | % | |||||||
973-736-9340
Investor Relations: Michael Polyviou, mpolyviou@evcgroup.com, 732-933-2755
Media Relations:
Source: Lincoln Educational Services Corporation