QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Large accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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PART I.
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2 |
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Item 1.
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2
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3
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4
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5
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6
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7
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9
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Item 2.
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21 | |
Item 3.
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32
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Item 4.
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32
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PART II.
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32
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Item 1.
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32 | |
Item 1A.
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32 | |
Item 2.
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33
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Item 3.
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33
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Item 4.
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33
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Item 5.
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33
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Item 6.
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34
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35
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•
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compliance with the extensive existing regulatory framework applicable to our industry or our failure to timely obtain and maintain
regulatory approvals and accreditation;
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•
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compliance with continuous changes in applicable federal laws and regulations, including pending rulemaking by the U.S. Department of
Education;
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•
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the effect of current and future Title IV Program regulations arising out of negotiated rulemakings, including any potential reductions in
funding or restrictions on the use of funds received through Title IV Programs;
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•
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successful updating and expansion of the content of existing programs and developing new programs in a cost-effective manner or on a timely
basis;
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•
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uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 Rule and cohort default rates;
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•
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successful implementation of our strategic plan;
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•
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our inability to maintain eligibility for or to process federal student financial assistance;
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•
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regulatory investigations of, or actions commenced against, us or other companies in our industry;
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•
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changes in the state regulatory environment or budgetary constraints;
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•
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enrollment declines or challenges in our students’ ability to find employment as a result of economic conditions;
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•
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maintenance and expansion of existing industry relationships and develop new industry relationships;
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•
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a loss of members of our senior management or other key employees;
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•
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uncertainties associated with opening of new campuses and closing existing campuses;
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•
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uncertainties associated with integration of acquired schools;
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•
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industry competition;
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•
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the effect of any cybersecurity incident;
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•
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the effect of public health outbreaks, epidemics and pandemics including, without limitation, COVID-19 conditions and trends in our
industry;
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•
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general economic conditions; and
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•
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other factors discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.”
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Item 1. |
FINANCIAL STATEMENTS
|
June 30, | December 31, | |||||||
2024
|
2023
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
||||||||
Accounts receivable, less allowance for credit losses of $
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid income taxes and income taxes receivable
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||||||||
Prepaid expenses and other current assets
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|
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||||||
Assets held for sale
|
||||||||
Total current assets
|
|
|
||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $
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|
|
||||||
OTHER ASSETS:
|
||||||||
Noncurrent receivables, less allowance for credit losses of $
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|
|
||||||
Deferred finance charges
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||||||||
Deferred income taxes, net
|
|
|
||||||
Operating lease right-of-use assets
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||||||
Finance lease right-of-use assets
|
||||||||
Goodwill
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|
|
||||||
Other assets, net
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|
|
||||||
Pension plan assets, net
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||||||||
Total other assets
|
|
|
||||||
TOTAL ASSETS
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$
|
|
$
|
|
June 30, | December 31, | |||||||
2024
|
2023
|
|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Unearned tuition
|
$
|
|
$
|
|
||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Income taxes payable
|
|
|
||||||
Current portion of operating lease liabilities
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|
|
||||||
Current portion of finance lease liabilities
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|
|
||||||
Total current liabilities
|
|
|
||||||
NONCURRENT LIABILITIES:
|
||||||||
Long-term portion of operating lease liabilities
|
|
|
||||||
Long-term portion of finance lease liabilities
|
||||||||
Other long-term liabilities
|
||||||||
Total liabilities
|
|
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
REVENUE
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
COSTS AND EXPENSES:
|
||||||||||||||||
Educational services and facilities
|
|
|
|
|
||||||||||||
Selling, general and administrative
|
|
|
|
|
||||||||||||
Loss (gain) on sale of assets
|
( |
) | ( |
) | ||||||||||||
Impairment of goodwill and long-lived assets
|
||||||||||||||||
Total costs & expenses
|
|
|
|
|
||||||||||||
OPERATING (LOSS) INCOME
|
(
|
)
|
|
(
|
)
|
|
||||||||||
OTHER:
|
||||||||||||||||
Interest income | ||||||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(
|
)
|
|
(
|
)
|
|
||||||||||
(BENEFIT) PROVISION FOR INCOME TAXES
|
(
|
)
|
|
(
|
)
|
|
||||||||||
NET (LOSS) INCOME
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Basic
|
||||||||||||||||
Net (loss) income per common share
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Diluted | ||||||||||||||||
Net (loss) income per common share
|
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic
|
|
|
|
|
||||||||||||
Diluted
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Other comprehensive (loss) income
|
||||||||||||||||
Employee pension plan adjustments, net of taxes ()
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Comprehensive (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
Stockholders’ Equity
|
||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Common Stock
|
Paid-in
|
Retained
|
Comprehensive
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||
BALANCE - January 1, 2024
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net loss | - |
( |
) | ( |
) | |||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||
BALANCE - March 31, 2024
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|||||||||||||||||||
BALANCE - June 30, 2024
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Stockholders’ Equity
|
||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
|
Common Stock
|
Paid-in
|
Retained
|
Comprehensive
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||
BALANCE - January 1, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net cumulative effect from adoption of |
(a)( |
) | ( |
) | ||||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
||||||||||||||||||
Share repurchase
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||
BALANCE - March 31, 2023
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
||||||||||||||||||
Share repurchase
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net share settlement for equity-based compensation |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
BALANCE - June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Six Months Ended | ||||||||
June 30,
|
||||||||
2024
|
2023
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Finance lease amortization
|
||||||||
Amortization of deferred finance charges
|
||||||||
Deferred income taxes
|
|
|
||||||
Loss (gain) on sale of assets
|
( |
) | ||||||
Impairment of goodwill and long-lived assets
|
||||||||
Fixed asset donations
|
(
|
)
|
(
|
)
|
||||
Provision for credit losses
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories
|
|
|
||||||
Prepaid income taxes and income taxes payable
|
(
|
)
|
|
|||||
Prepaid expenses and current assets
|
|
(
|
)
|
|||||
Other assets, net
|
|
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
(
|
)
|
|
|||||
Accrued expenses
|
(
|
)
|
|
|||||
Unearned tuition
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
(
|
)
|
(
|
)
|
||||
Total adjustments
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
||||
Proceeds from sale of property and equipment
|
|
|
||||||
Proceeds from short-term investment
|
||||||||
Purchase of short-term investment
|
( |
) | ||||||
Net cash (used in) provided by investing activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payment of deferred finance fees
|
(
|
)
|
|
|||||
Finance lease principal paid
|
( |
) | ||||||
Share repurchase
|
( |
) | ||||||
Net share settlement for equity-based compensation
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(
|
)
|
|
|||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
|
|
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period
|
$
|
|
$
|
|
Six Months Ended | ||||||||
June 30,
|
||||||||
2024
|
2023
|
|||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$
|
|
$
|
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liabilities accrued for or noncash additions of fixed assets
|
$
|
|
$
|
|
||||
1. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2. |
NET LOSS (INCOME) PER COMMON SHARE
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30,
|
June 30, | |||||||||||||||
|
2024
|
2023
|
2024 | 2023 |
||||||||||||
Basic shares outstanding
|
|
|
||||||||||||||
Dilutive effect of stock options
|
|
|
||||||||||||||
Diluted shares outstanding
|
|
|
3. |
REVENUE RECOGNITION
|
Three Months Ended June 30, 2024
|
Six months ended June 30, 2024
|
|||||||||||||||||||||||
Campus
Operations
|
Transitional |
Consolidated
|
Campus
Operations
|
Transitional |
Consolidated
|
|||||||||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||||||||||
Services transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Services transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended June 30, 2023
|
Six months ended June 30, 2023
|
|||||||||||||||||||||||
Campus
Operations
|
Transitional |
Consolidated
|
Campus
Operations
|
Transitional |
Consolidated
|
|||||||||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||||||||||
Services transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Services transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
4. |
LEASES
|
|
|
Three Months Ended
June30,
|
Six Months Ended
June30,
|
|||||||||||||||
in thousands
|
Consolidated Statement of Operations Classification
|
2024
|
2023
|
2024 | 2023 | |||||||||||||
Operating Lease Cost
|
Selling, general and administrative
|
$
|
|
$
|
|
$ | $ | |||||||||||
Finance lease cost
|
|
|||||||||||||||||
Amortization of leased assets
|
Depreciation and amortization
|
|
|
|||||||||||||||
Interest on lease Liabilities
|
Interest expense
|
|
|
|||||||||||||||
Variable lease cost
|
Selling, general and administrative
|
|
|
|||||||||||||||
|
|
$
|
|
$
|
|
$ | $ |
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2024
|
2023
|
2024 | 2023 | |||||||||||||
Cash flow information:
|
||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities
|
||||||||||||||||
Operating Cash Flows - operating leases
|
$ | $ | $ | $ | ||||||||||||
Operating Cash Flows - finance leases |
$ | $ | $ | $ | ||||||||||||
Financing Cash Flows - finance leases
|
$ | $ | $ | $ | ||||||||||||
Non-cash activity:
|
||||||||||||||||
Lease liabilities arising from obtaining right-of-use assets
|
||||||||||||||||
Operating leases
|
$ | $ | $ | $ | ||||||||||||
Finance leases
|
$ | $ | $ | $ |
As of
June 30,
|
||||||||
2024
|
2023
|
|||||||
Weighted-average remaining lease term
|
|
|
||||||
Operating leases |
||||||||
Finance leases |
- |
|||||||
Weighted-average discount rate
|
||||||||
Operating leases |
% | % | ||||||
Finance leases |
% |
Operating Leases
|
Finance Leases
|
|||||||
Year ending December 31,
|
||||||||
2024 (excluding the six months ending June 30, 2024)
|
$
|
|
$ | |||||
2025
|
|
|||||||
2026
|
|
|||||||
2027
|
|
|||||||
2028
|
|
|||||||
2029
|
|
|||||||
Thereafter
|
|
|||||||
Total lease payments
|
|
|||||||
Less: imputed interest
|
(
|
)
|
( |
) | ||||
Present value of lease liabilities
|
$
|
|
$ |
5. |
GOODWILL AND LONG-LIVED ASSETS
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2024
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
-
|
|
|
|||||||||
Balance as of June 30, 2024
|
$
|
|
$
|
(
|
)
|
$
|
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2023
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
-
|
(
|
)
|
(
|
)
|
|||||||
Balance as of June 30, 2023
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
LONG-TERM DEBT
|
7.
|
STOCKHOLDERS’ EQUITY
|
Shares
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||||||
Nonvested Restricted Stock outstanding at December 31, 2023
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Canceled |
( |
) | ||||||
Vested
|
(
|
)
|
|
|||||
Nonvested Restricted Stock outstanding at June 30, 2024
|
|
$
|
|
Three Months Ended
|
Six Months Ended | |||||||||||||||
June 30,
|
June 30, |
|||||||||||||||
(in thousands, except share data)
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Total number of shares repurchased1
|
|
|
||||||||||||||
Total cost of shares repurchased
|
$
|
|
$
|
|
$ | $ |
8. |
INCOME TAXES
|
9. |
COMMITMENTS AND CONTINGENCIES
|
10. |
SEGMENTS
|
For the Three Months Ended June 30, |
||||||||||||||||||||||||
Revenue
|
Operating Income (Loss)
|
|||||||||||||||||||||||
2024
|
% of
Total
|
2023
|
% of
Total
|
2024
|
2023
|
|||||||||||||||||||
Campus Operations
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
||||||||||||
Transitional
|
|
|
%
|
|
|
%
|
|
(
|
)
|
|||||||||||||||
Corporate
|
|
% |
|
% |
(
|
)
|
|
|||||||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
(
|
)
|
$
|
|
For the Six
Months Ended June 30,
|
||||||||||||||||||||||||
Revenue
|
Operating income (Loss)
|
|||||||||||||||||||||||
2024
|
% of
Total
|
2023
|
% of
Total |
2024
|
2023
|
|||||||||||||||||||
Campus Operations
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
||||||||||||
Transitional
|
|
|
%
|
|
|
%
|
|
(
|
)
|
|||||||||||||||
Corporate
|
|
|
(
|
)
|
|
|||||||||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
(
|
)
|
$
|
|
Total Assets
|
||||||||
June 30,
2024
|
December 31, 2023
|
|||||||
Campus Operations
|
$
|
|
$
|
|
||||
Transitional
|
|
|
||||||
Corporate
|
|
|
||||||
Total
|
$
|
|
$
|
|
11.
|
FAIR VALUE
|
June 30, 2024
|
||||||||||||||||||||
Carrying
|
Quoted Prices
in Active
Markets for
Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||||||
Money market fund
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Total cash equivalents and short-term investments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2023
|
||||||||||||||||||||
Carrying
|
Quoted Prices
in Active
Markets for
Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||||||
Money market fund
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Treasury bill
|
|
|
|
|
|
|||||||||||||||
Total cash equivalents and short-term investments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
12.
|
STUDENT RECEIVABLES
|
As of June 30,
|
|||||||||||
2024
|
2023
|
||||||||||
Student
|
Student
|
||||||||||
Year
|
Receivables (1)
|
Year
|
Receivables (1)
|
||||||||
2024
|
$
|
|
2023
|
$
|
|
||||||
2023
|
|
2022
|
|
||||||||
2022
|
|
2021
|
|
||||||||
2021
|
|
2020
|
|
||||||||
2020
|
|
2019
|
|
||||||||
Prior
|
|
Prior
|
|
||||||||
Total
|
$
|
|
Total
|
$
|
|
(1)
|
|
June 30, 2024
|
June 30, 2023
|
||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||||
Year
|
Write-Offs
|
Write-Offs
|
Year
|
Write-Offs
|
Write-Offs
|
||||||||||||||
2024
|
$
|
|
$
|
|
2023
|
$
|
|
$
|
|
||||||||||
2023
|
|
|
2022
|
|
|
||||||||||||||
2022
|
|
|
2021
|
|
|
||||||||||||||
2021
|
|
|
2020
|
|
|
||||||||||||||
2020
|
|
|
2019
|
|
|
||||||||||||||
Prior
|
|
|
Prior
|
|
|
||||||||||||||
Total
|
$
|
|
$
|
|
Total
|
$
|
|
$
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cumulative effect of ASC 326
|
|
|
|
|||||||||||||
Adjusted beginning of period balance
|
|
|
|
|
||||||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Write-off’s
|
( |
) |
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Balance, at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Costs and expenses:
|
||||||||||||||||
Educational services and facilities
|
44.3
|
%
|
45.2
|
%
|
42.9
|
%
|
44.4
|
%
|
||||||||
Selling, general and administrative
|
56.2
|
%
|
58.5
|
%
|
57.4
|
%
|
58.0
|
%
|
||||||||
Loss (gain) on sale of assets
|
0.6
|
%
|
-34.9
|
%
|
0.4
|
%
|
-17.6
|
%
|
||||||||
Impairment of goodwill and long-lived assets
|
0.0
|
%
|
4.8
|
%
|
0.0
|
%
|
2.4
|
%
|
||||||||
Total costs and expenses
|
101.1
|
%
|
73.5
|
%
|
100.8
|
%
|
87.3
|
%
|
||||||||
Operating (loss) income
|
-1.1
|
%
|
26.5
|
%
|
-0.8
|
%
|
12.7
|
%
|
||||||||
Interest income, net
|
0.0
|
%
|
0.6
|
%
|
0.0
|
%
|
0.5
|
%
|
||||||||
(Loss) income from operations before income taxes
|
-1.1
|
%
|
27.1
|
%
|
-0.7
|
%
|
13.3
|
%
|
||||||||
(Benefit) provision for income taxes
|
-0.4
|
%
|
7.7
|
%
|
-0.3
|
%
|
3.5
|
%
|
||||||||
Net (loss) income
|
-0.7
|
%
|
19.5
|
%
|
-0.4
|
%
|
9.7
|
%
|
Three Months Ended June 30,
|
||||||||||||
2024
|
2023
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Campus Operations
|
$
|
102,914
|
$
|
88,213
|
16.7
|
%
|
||||||
Transitional
|
-
|
433
|
-100.0
|
%
|
||||||||
Total
|
$
|
102,914
|
$
|
88,646
|
16.1
|
%
|
||||||
Operating Income (loss):
|
||||||||||||
Campus Operations
|
$
|
9,630
|
$
|
4,169
|
131.0
|
%
|
||||||
Transitional
|
-
|
(482
|
)
|
-100.0
|
%
|
|||||||
Corporate
|
(10,746
|
)
|
19,828
|
-154.2
|
%
|
|||||||
Total
|
$
|
(1,116
|
)
|
$
|
23,515
|
-104.7
|
%
|
|||||
Starts:
|
||||||||||||
Campus Operations
|
4,953
|
4,411
|
12.3
|
%
|
||||||||
Total
|
4,953
|
4,411
|
12.3
|
%
|
||||||||
Average Population:
|
||||||||||||
Campus Operations
|
13,811
|
12,369
|
11.7
|
%
|
||||||||
Transitional
|
-
|
84
|
-100.0
|
%
|
||||||||
Total
|
13,811
|
12,453
|
10.9
|
%
|
||||||||
End of Period Population:
|
||||||||||||
Campus Operations
|
14,481
|
12,959
|
11.7
|
%
|
||||||||
Transitional
|
-
|
45
|
-100.0
|
%
|
||||||||
Total
|
14,481
|
13,004
|
11.4
|
%
|
• |
Revenue increased $14.7 million, or 16.7% to $102.9 million for the three months ended June 30, 2024 from $88.2 million in the prior year comparable period. The
primary reasons for this increase were an 11.7% rise in average student population resulting from entering the quarter with 11.2% more students combined with new student start growth of 12.3%. Further revenue growth was driven by an increase
in average revenue per student.
|
• |
Our educational services and facilities expense increased $6.0 million, or 15.3% to $45.5 million for the three months ended June 30, 2024 from $39.5 million in
the prior year comparable period. Included in the increase over the prior year are approximately $2.6 million of new campus and relocation costs relating to the East Point, Georgia campus; relocation costs associated with the Nashville,
Tennessee and Levittown, Pennsylvania campuses and costs associated with the new Houston, Texas campus. The remaining expense increases were due mostly to costs related to an increased student population, all of which are discussed above in
Consolidated Results of Operations.
|
• |
Our selling, general and administrative expense increased $6.8 million, or 16.9% to $47.1 million for the three months ended June 30, 2024, from $40.3 million in
the prior year comparable period. Included in the increase over the prior year were approximately $1.2 million of expenses primarily related to the recently opened East Point, Georgia campus. The remaining increase was driven by higher
administrative expenses, marketing investments and sales expense, all of which are discussed above in Consolidated Results of Operations.
|
• |
Revenue decreased $0.4 million, or 100.0% to zero for the three months ended June 30, 2024, from $0.4 million in the prior year comparable period.
|
• |
Total operating expenses decreased $0.9 million, or 100.0% to zero for the three months ended June 30, 2024, from $0.9 million in the prior year comparable
period.
|
Six Months Ended June 30,
|
||||||||||||
2024
|
2023
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Campus Operations
|
$
|
206,281
|
$
|
174,565
|
18.2
|
%
|
||||||
Transitional
|
-
|
1,364
|
-100.0
|
%
|
||||||||
Total
|
$
|
206,281
|
$
|
175,929
|
17.3
|
%
|
||||||
Operating Income (loss):
|
||||||||||||
Campus Operations
|
$
|
21,954
|
$
|
14,278
|
53.8
|
%
|
||||||
Transitional
|
-
|
(679
|
)
|
-100.0
|
%
|
|||||||
Corporate
|
(23,529
|
)
|
8,801
|
-367.3
|
%
|
|||||||
Total
|
$
|
(1,575
|
)
|
$
|
22,400
|
-107.0
|
%
|
|||||
Starts:
|
||||||||||||
Campus Operations
|
8,920
|
7,851
|
13.6
|
%
|
||||||||
Total
|
8,920
|
7,851
|
13.6
|
%
|
||||||||
Average Population:
|
||||||||||||
Campus Operations
|
13,745
|
12,297
|
11.8
|
%
|
||||||||
Transitional
|
-
|
123
|
-100.0
|
%
|
||||||||
Total
|
13,745
|
12,420
|
10.7
|
%
|
||||||||
End of Period Population:
|
||||||||||||
Campus Operations
|
14,481
|
12,959
|
11.7
|
%
|
||||||||
Transitional
|
-
|
45
|
-100.0
|
%
|
||||||||
Total
|
14,481
|
13,004
|
11.4
|
%
|
• |
Revenue increased $31.7 million, or 18.2% to $206.2 million for the six months ended June 30, 2024 from $174.5 million in the prior year comparable period. The
primary reasons for this increase were an 11.8% rise in average student population due to starting the year with approximately 9.0% or 1,100 more students, coupled with a 13.6% growth in student starts. Further revenue growth was driven by
an increase in average revenue per student.
|
• |
Our educational services and facilities expense increased $11.6 million, or 15.0% to $88.6 million for the six months ended June 30, 2024 from $77.0 million in
the prior year comparable period. Included in the increase over the prior year were approximately $4.2 million of new campus and relocation costs related to the East Point, Georgia campus; relocation costs associated with the Nashville,
Tennessee and Levittown, Pennsylvania campuses and costs associated with the new Houston, Texas campus. The remaining expense increases were due mostly to costs related to an increased student population, all of which are discussed above in
Consolidated Results of Operations.
|
• |
Our selling, general and administrative expense increased $16.1 million, or 20.4% to $95.1 million for the six months ended June 30, 2024, from $79.0 million in
the prior year comparable period. Included in the increase over the prior year were approximately $2.5 million of expenses primarily related to the recently opened East Point, Georgia campus. The remaining increase was driven by higher
administrative expenses, marketing investments and sales expense, with additional increases in student services resulting from a larger student population, all of which are discussed above in Consolidated Results of Operations.
|
• |
Revenue decreased $1.4 million, or 100.0% to zero for the six months ended June 30, 2024, from $1.4 million in the prior year comparable period.
|
• |
Total operating expenses decreased $2.0 million, or 100.0% to zero for the six months ended June 30, 2024, from $2.0 million in the prior year comparable period.
|
Six Months Ended
|
||||||||
June 30,
|
||||||||
2024
|
2023
|
|||||||
Net cash (used in) provided by operating activities
|
$
|
(6,599
|
)
|
$
|
10,403
|
|||
Net cash (used in) provided by investing activities
|
$
|
(3,007
|
)
|
$
|
12,823
|
|||
Net cash used in financing activities
|
$
|
(3,676
|
)
|
$
|
(2,945
|
)
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(a) |
None.
|
(b) |
None.
|
(c) |
On May 24, 2022, the Company announced that the Board of Directors had approved a share repurchase program for 12 months authorizing repurchases of up to $30.0
million of the Company’s Common Stock. On February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized an additional $10.0 million in repurchases, for an aggregate of up to
$30.6 million in additional repurchases. On May 7, 2024, the Company announced that its Board of Directors had authorized an extension of the share repurchase program for an additional twelve months through May 24, 2025. The Company did not
repurchase any additional shares in the three months ended June 30, 2024, as reflected in the table below, and has approximately $29.7 million remaining for additional repurchases under the program.
|
Period
|
Total Number of Shares
Purchased
|
Average Price
Paid per Share
|
Total Number of Shares Purchased
as Part of Publically Announced Plan
|
Maximum Dollar Value of Shares Remaining to be Purchased Under the Plan
|
||||||||||||
April 1, 2024 to April 30, 2024
|
-
|
$
|
-
|
-
|
$
|
29,663,667
|
||||||||||
May 1, 2024 to May 31, 2024
|
-
|
-
|
-
|
-
|
||||||||||||
June 1, 2024 to June 30, 2024
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
-
|
-
|
-
|
Item 3. |
DEFAULTS UPON SENIOR SECURITIES
|
(a) |
None.
|
(b) |
None
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
(a) |
None.
|
(b) |
None.
|
(c) |
During the six months ended June 30, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)
|
Item 6. |
EXHIBITS
|
Exhibit
Number
|
Description
|
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration
No. 333-123644) filed June 7, 2005.
|
|
3.2
|
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
3.2 of the Company’s Registration Statement on Form S-3 filed October 6, 2020).
|
|
3.3
|
Bylaws of the Company as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30, 2020).
|
|
10.1
|
Amendment to Credit Agreement, dated July 18, 2024, between Lincoln Educational Services Corporation and Fifth Third Bank, National Association (incorporated by
reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed July 23, 2024).
|
|
31.1*
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2*
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32**
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101*
|
The following financial statements from the Company’s 10-Q for the quarter ended June 30, 2024, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Condensed
Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity, (v)
Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
|
104
|
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).
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* |
Filed herewith.
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** |
Furnished herewith. This exhibit will not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
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LINCOLN EDUCATIONAL SERVICES CORPORATION
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Date: August 8, 2024
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By: /s/ Brian Meyers
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Brian Meyers
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Executive Vice President, Chief Financial Officer and Treasurer
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Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration
No. 333-123644) filed June 7, 2005.
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||
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
3.2 of the Company’s Registration Statement on Form S-3 filed October 6, 2020).
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||
Bylaws of the Company as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30, 2020).
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||
Amendment to Credit Agreement, dated July 18, 2024, between Lincoln Educational Services Corporation and Fifth Third Bank, National Association (incorporated by
reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed July 23, 2024).
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||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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||
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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||
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101*
|
The following financial statements from the Company’s 10-Q for the quarter ended June 30, 2024, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Condensed
Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity, (v)
Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
|
104
|
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
|
* |
Filed herewith.
|
** |
Furnished herewith. This exhibit will not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Lincoln Educational Services Corporation;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
Date: August 8, 2024
|
|
/s/ Scott Shaw
|
|
Scott Shaw
|
|
Chief Executive Officer
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Lincoln Educational Services Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
Date: August 8, 2024
|
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|
Chief Financial Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 8, 2024
|
|
/s/ Scott Shaw
|
|
Scott Shaw
|
|
Chief Executive Officer
|
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|
Chief Financial Officer
|