Lincoln Educational Services Corporation Generates $4.6 Million in Operating Income During Third Quarter 2015
- Total Revenue of
$79 million - Net Income of
$0.11 per share $14.1 Million in Cash Generated from Operations- Transportation & Skilled Trades Segment Operating Income Grows 71% vs. Q3’14
- Launches Plan to Focus Operations on Transportation & Skilled Trades Segment;
Divest Healthcare & Other Professions Segment
“During the third quarter, our team continued to improve Lincoln’s operating performance through the persistent implementation of our plan to return the Company to sustainable profitability while continuing to meet the needs of our students,” said
THIRD QUARTER RESULTS (CONTINUING OPERATIONS):
Revenue was
Operating income for the quarter was $4.6 million compared to an operating loss of
The Company’s educational services and facilities expenses decreased during the third quarter primarily due to a decrease of
Selling, general and administrative expenses decreased by
The third quarter’s net income from continuing operations improved to $2.6 million, or $0.11 per share, compared to a net loss of
The Company had $32.4 million of cash and cash equivalents at September 30, 2015 as compared to $12.3 million of cash and cash equivalents as of December 31, 2014.
As of September 30, 2015, total assets classified as assets held for sale were $44.8 million compared to
Segment Financial Performance
Transportation and Skilled Trades segment revenue for the 2015 third quarter decreased to
Healthcare and Other Professions segment revenue decreased by
Included in the Healthcare and Other Professions segment is the
On
The Transitional segment consists of the Fern Park, Florida campus where the Company ceased new student enrollment resulting in an operating loss for the third quarter of 2015 which was essentially flat at
NINE MONTH FINANCIAL RESULTS (CONTINUING OPERATIONS)
Revenue was
Transportation and Skilled Trades revenue was
The nine month period’s net loss from continuing operations improved by 79.0% to
2015 FULL YEAR GUIDANCE UPDATE:
Lincoln reaffirms guidance for the full year 2015 for the total Company as follows:
Revenue is expected to be approximately
Due to the Board of Director’s decision to divest Lincoln’s Healthcare and Other Professions business segment beginning in the fourth quarter of 2015, this segment is anticipated to be classified as discontinued operations, Lincoln is providing 2015 additional guidance as follows:
Reflecting the anticipated classification of the Healthcare and Other Professions segment as discontinued operations, the additional guidance is based on continuing operations from the Transportation and Skilled Trades segment and Corporate while excluding the Transitional segment and the previously merged
CONFERENCE CALL INFO
Lincoln will host a conference call today at 10:00 a.m. Eastern Daylight Time. The conference call can be accessed by going to the IR portion of our website at www.lincolnedu.com. Participants can also listen to the conference call by dialing 866-318-8615 (domestic) or 617-399-5134 (international) and citing code 67728323. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at http://www.lincolnedu.com. A replay of the call will also be available for seven days by calling 888-286-8010 (domestic) or 617-801-6888 (international) and providing access code 15560741.
About Lincoln Educational Services Corporation
Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education. 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 workforce with skilled technicians since its inception in 1946. Lincoln currently operates 31 campuses in 15 states under five brands: Lincoln College of Technology, Lincoln Technical Institute, Euphoria Institute of Beauty Arts and Sciences, Lincoln Culinary Institute and Lincoln College of New England. As of September 30, 2015, approximately 13,840 students were enrolled at Lincoln’s campuses.
SAFE HARBOR
Statements in this press release regarding Lincoln’s business that are not historical facts may be “forward-looking statements” that involve risks and uncertainties. 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. 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 a change of control of our company or acquisitions; our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis; risks associated with changes in applicable federal laws and regulations, including final rules that took effect during 2011 and other pending rulemaking by the U.S. Department of Education; uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 rule and 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 our annual report on Form 10-K for the year ended December 31, 2014. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in Lincoln’s annual report on Form 10-K for the year ended December 31, 2014. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to revise or update this news release to reflect events or circumstances after the date hereof.
(Tables to Follow)
LINCOLN EDUCATIONAL SERVICES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2015 | September 30, 2015 | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUE | $ | 79,046 | $ | 83,982 | $ | 228,159 | $ | 239,573 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Educational services and facilities | 39,026 | 42,440 | 114,572 | 124,879 | |||||||||||
Selling, general and administrative | 34,944 | 41,712 | 120,200 | 132,901 | |||||||||||
Loss (gain) on sale of assets | 228 | - | 188 | (61 | ) | ||||||||||
Impairment of goodwill and long-lived assets | 216 | 39,315 | 216 | 39,315 | |||||||||||
Total costs & expenses | 74,414 | 123,467 | 235,176 | 297,034 | |||||||||||
OPERATING INCOME (LOSS) | 4,632 | (39,485 | ) | (7,017 | ) | (57,461 | ) | ||||||||
OTHER: | |||||||||||||||
Interest income | 19 | 53 | 40 | 125 | |||||||||||
Interest expense | (2,216 | ) | (1,637 | ) | (5,570 | ) | (4,131 | ) | |||||||
Other income | 196 | 149 | 790 | 149 | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 2,631 | (40,920 | ) | (11,757 | ) | (61,318 | ) | ||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 50 | (5,556 | ) | 150 | (4,719 | ) | |||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 2,581 | (35,364 | ) | (11,907 | ) | (56,599 | ) | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | - | (2,717 | ) | - | (4,172 | ) | |||||||||
NET INCOME (LOSS) | $ | 2,581 | $ | (38,081 | ) | $ | (11,907 | ) | $ | (60,771 | ) | ||||
Basic | |||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.11 | $ | (1.55 | ) | $ | (0.51 | ) | $ | (2.48 | ) | ||||
Loss per share from discontinued operations | - | (0.12 | ) | - | (0.18 | ) | |||||||||
Net earnings (loss) per share | $ | 0.11 | $ | (1.67 | ) | $ | (0.51 | ) | $ | (2.66 | ) | ||||
Diluted | |||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.11 | $ | (1.55 | ) | $ | (0.51 | ) | $ | (2.48 | ) | ||||
Loss per share from discontinued operations | - | (0.12 | ) | - | (0.18 | ) | |||||||||
Net earnings (loss) per share | $ | 0.11 | $ | (1.67 | ) | $ | (0.51 | ) | $ | (2.66 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 23,230 | 22,843 | 23,140 | 22,789 | |||||||||||
Diluted | 23,270 | 22,843 | 23,140 | 22,789 | |||||||||||
Other data: | |||||||||||||||
Adjusted EBITDA (1) | $ | 8,527 | $ | 4,670 | $ | 4,716 | $ | (3,363 | ) | ||||||
Depreciation and amortization from continuing operations | $ | 3,483 | $ | 4,691 | $ | 10,727 | $ | 14,634 | |||||||
Number of campuses from continuing operations | 31 | 31 | 31 | 31 | |||||||||||
Average enrollment from continuing operations | 12,815 | 14,153 | 12,969 | 13,893 | |||||||||||
Stock-based compensation | $ | 106 | $ | 782 | $ | 886 | $ | 2,486 | |||||||
Net cash provided by operating activities | $ | 14,138 | $ | 16,220 | $ | 2,492 | $ | 1,321 | |||||||
Net cash provided by (used in) investing activities | $ | 59 | $ | (2,185 | ) | $ | (1,159 | ) | $ | (4,729 | ) | ||||
Net cash provided by (used in) financing activities | $ | 13,375 | $ | (8,092 | ) | $ | 18,790 | $ | 3,224 | ||||||
Selected Consolidated Balance Sheet Data: | September 30, 2015 | |||
(In thousands) | ||||
Cash and cash equivalents | $ | 32,422 | ||
Current assets | 106,629 | |||
Working capital | 42,501 | |||
Total assets | 221,908 | |||
Current liabilities | 64,128 | |||
Long-term debt and capital lease | 79,481 | |||
obligations, including current portion | ||||
Total stockholders' equity | 72,578 | |||
(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 Adjusted EBITDA are measurements not recognized in financial statements presented in accordance with accounting principles generally accepted in
Following is a reconciliation of net loss from continuing operations to EBITDA and Adjusted EBITDA:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income (loss) from continuing operations | $ | 2,581 | $ | (35,364 | ) | $ | (11,907 | ) | $ | (56,599 | ) | ||||
Interest expense, net | 2,197 | 1,584 | 5,530 | 4,006 | |||||||||||
Provision (benefit) for income taxes | 50 | (5,556 | ) | 150 | (4,719 | ) | |||||||||
Depreciation and amortization | 3,483 | 4,691 | 10,727 | 14,634 | |||||||||||
EBITDA | 8,311 | (34,645 | ) | 4,500 | (42,678 | ) | |||||||||
Impairment of goodwill and long-lived assets | 216 | 39,315 | 216 | 39,315 | |||||||||||
Adjusted EBITDA | $ | 8,527 | $ | 4,670 | $ | 4,716 | $ | (3,363 | ) | ||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Auto | Allied Health | Transitional | Corporate | |||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 10,217 | $ | 5,872 | $ | (1,219 | ) | $ | (38,925 | ) | $ | (559 | ) | $ | (653 | ) | $ | (5,858 | ) | $ | (1,658 | ) | ||||||||||
Interest expense, net | 364 | 321 | 557 | 508 | 99 | 100 | 1,177 | 655 | ||||||||||||||||||||||||
Provision (benefit) for income taxes | - | - | - | - | - | - | 50 | (5,556 | ) | |||||||||||||||||||||||
Depreciation and amortization | 2,180 | 2,943 | 1,057 | 1,400 | 68 | 122 | 613 | 226 | ||||||||||||||||||||||||
EBITDA | 12,761 | 9,136 | 395 | (37,017 | ) | (392 | ) | (431 | ) | (4,018 | ) | (6,333 | ) | |||||||||||||||||||
Impairment of goodwill and long-lived assets | 216 | 1,680 | - | 37,635 | - | - | - | - | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 12,977 | $ | 10,816 | $ | 395 | $ | 618 | $ | (392 | ) | $ | (431 | ) | $ | (4,018 | ) | $ | (6,333 | ) | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Auto | Allied Health | Transitional | Corporate | |||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | 17,169 | $ | 8,511 | $ | (4,496 | ) | $ | (42,956 | ) | $ | (1,995 | ) | $ | (1,853 | ) | $ | (22,585 | ) | $ | (20,301 | ) | ||||||||||
Interest expense, net | 1,265 | 906 | 1,743 | 1,567 | 298 | 290 | 2,224 | 1,243 | ||||||||||||||||||||||||
Provision (benefit) for income taxes | - | - | - | - | - | - | 150 | (4,719 | ) | |||||||||||||||||||||||
Depreciation and amortization | 6,714 | 9,210 | 3,225 | 4,324 | 208 | 380 | 1,016 | 720 | ||||||||||||||||||||||||
EBITDA | 25,148 | 18,627 | 472 | (37,065 | ) | (1,489 | ) | (1,183 | ) | (19,195 | ) | (23,057 | ) | |||||||||||||||||||
Impairment of goodwill and long-lived assets | 216 | 1,680 | - | 37,635 | - | - | - | - | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 25,364 | $ | 20,307 | $ | 472 | $ | 570 | $ | (1,489 | ) | $ | (1,183 | ) | $ | (19,195 | ) | $ | (23,057 | ) | ||||||||||||
REPORTABLE SEGMENT RESULTS:
Three Months Ended September 30, | |||||||||||
2015 | 2014 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 49,696 | $ | 51,272 | -3.1 | % | |||||
Healthcare and Other Professions | 29,086 | 31,874 | -8.7 | % | |||||||
Transitional | 264 | 836 | -68.4 | % | |||||||
Total | $ | 79,046 | $ | 83,982 | -5.9 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 10,592 | $ | 6,193 | 71.0 | % | |||||
Healthcare and Other Professions | (894 | ) | (38,566 | ) | 97.7 | % | |||||
Transitional | (460 | ) | (553 | ) | 16.8 | % | |||||
Corporate | (4,606 | ) | (6,559 | ) | 29.8 | % | |||||
Total | $ | 4,632 | $ | (39,485 | ) | 111.7 | % | ||||
Starts: | |||||||||||
Transportation and Skilled Trades | 3,158 | 3,428 | -7.9 | % | |||||||
Healthcare and Other Professions | 2,403 | 2,618 | -8.2 | % | |||||||
Transitional | - | 50 | -100.0 | % | |||||||
Total | 5,561 | 6,096 | -8.8 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,446 | 8,108 | -8.2 | % | |||||||
Healthcare and Other Professions | 5,307 | 5,846 | -9.2 | % | |||||||
Transitional | 62 | 199 | -68.8 | % | |||||||
Total | 12,815 | 14,153 | -9.5 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 7,852 | 8,312 | -5.5 | % | |||||||
Healthcare and Other Professions | 5,932 | 6,671 | -11.1 | % | |||||||
Transitional | 56 | 206 | -72.8 | % | |||||||
Total | 13,840 | 15,189 | -8.9 | % |
Nine Months Ended September 30, | |||||||||||
2015 | 2014 | % Change | |||||||||
Revenue: | |||||||||||
Transportation and Skilled Trades | $ | 136,987 | $ | 139,076 | -1.5 | % | |||||
Healthcare and Other Professions | 89,911 | 97,971 | -8.2 | % | |||||||
Transitional | 1,261 | 2,526 | -50.1 | % | |||||||
Total | $ | 228,159 | $ | 239,573 | -4.8 | % | |||||
Operating Income (Loss): | |||||||||||
Transportation and Skilled Trades | $ | 18,334 | $ | 9,417 | 94.7 | % | |||||
Healthcare and Other Professions | (3,443 | ) | (41,538 | ) | 91.7 | % | |||||
Transitional | (1,697 | ) | (1,563 | ) | -8.6 | % | |||||
Corporate | (20,211 | ) | (23,777 | ) | 15.0 | % | |||||
Total | $ | (7,017 | ) | $ | (57,461 | ) | 87.8 | % | |||
Starts: | |||||||||||
Transportation and Skilled Trades | 6,875 | 7,355 | -6.5 | % | |||||||
Healthcare and Other Professions | 5,289 | 5,959 | -11.2 | % | |||||||
Transitional | 31 | 172 | -82.0 | % | |||||||
Total | 12,195 | 13,486 | -9.6 | % | |||||||
Average Population: | |||||||||||
Transportation and Skilled Trades | 7,216 | 7,529 | -4.2 | % | |||||||
Healthcare and Other Professions | 5,649 | 6,163 | -8.3 | % | |||||||
Transitional | 104 | 201 | -48.3 | % | |||||||
Total | 12,969 | 13,893 | -6.7 | % | |||||||
End of Period Population: | |||||||||||
Transportation and Skilled Trades | 7,852 | 8,312 | -5.5 | % | |||||||
Healthcare and Other Professions | 5,932 | 6,671 | -11.1 | % | |||||||
Transitional | 56 | 206 | -72.8 | % | |||||||
Total | 13,840 | 15,189 | -8.9 | % |
Lincoln Educational Services Corporation Brian Meyers , CFO 973-736-9340EVC Group, Inc. Doug Sherk , dsherk@evcgroup.com; 415-652-9100Chris Dailey , cdailey@evcgroup.com; 646-445-4801Lincoln Educational Services Corporation