UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
___________________
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 6, 2009
___________________
Lincoln Educational Services
Corporation
(Exact
Name of Registrant as Specified in Charter)
___________________
|
New
Jersey
(State
or other jurisdiction
of
incorporation)
|
000-51371
(Commission
File Number)
|
57-1150621
(I.R.S.
Employer
Identification
No.)
|
|
200
Executive Drive, Suite 340
West
Orange, New Jersey 07052
(Address
of principal executive offices)
|
07052
(Zip
Code)
|
Registrant’s telephone number,
including area code: (973) 736-9340
Not
Applicable
(Former name or former address, if
changed since last report)
___________________
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:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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|
|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02
|
Results of Operations
and Financial Condition
|
On May 6, 2009, Lincoln Educational
Services Corporation (the “Company”) issued a press release announcing, among
other things, its results of operations for the first quarter ended March 31,
2009. A copy of the press release is furnished herewith as Exhibit
99.1 and attached hereto. The information contained under this Item
2.02 in this Current Report on Form 8-K, including the exhibit attached hereto,
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
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.
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Item
9.01
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Financial Statements
and Exhibits
|
|
(c)
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Exhibits
|
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99.1
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Press
release of Lincoln Educational Services Corporation dated May 6,
2009.
|
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.
| LINCOLN EDUCATIONAL SERVICES CORPORATION | ||||
| Date: May 6, 2009 | By: | /s/ Cesar Ribeiro | ||
| Name: | Cesar Ribeiro | |||
| Title: | Senior Vice President, Chief Financial | |||
| Officer and Treasurer | ||||
Exhibit
99.1
Lincoln
Educational Services Corporation Reports
Record
First Quarter Results
West Orange, New Jersey, May
6, 2009 – Lincoln Educational Services Corporation (Nasdaq: LINC) (“Lincoln”)
today reported record first quarter results.
Highlights:
First Quarter
- -
|
|
·
|
Record
revenue of $118.6 million for the first quarter of 2009, representing an
increase of 41.1% from $84.0 million for the first quarter of
2008.
|
|
|
·
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Diluted
EPS of $0.22 for the first quarter of 2009 as compared to $0.02 for the
first quarter of 2008.
|
|
|
·
|
Student
starts increased by 42.4% as compared to the first quarter of
2008. On a same school basis, student starts increased 35.1% as
compared to the first quarter of
2008.
|
|
|
·
|
Average
student population increased by 33.7% as compared to the first quarter of
2008. On a same school basis, average student population
increased 22.4% as compared to the first quarter of
2008.
|
|
|
·
|
The
acquisition of the Baran group of
schools.
|
2009 Guidance
- -
As a
result of the strong momentum we are experiencing we are raising our previously
issued guidance for 2009. We now expect:
|
|
·
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Revenue
of $505.0 million to $515.0 million, up 34% to 37% over
2008.
|
|
|
·
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Diluted
EPS of $1.25 to $1.30, representing growth of 60% to 67% over
2008.
|
|
|
·
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Increase
in same school student starts of 15% to 17% over
2008.
|
|
|
·
|
For
the second quarter of 2009, revenues of $120.0 million to $122.0 million,
representing an increase of approximately 41% to 43% over the second
quarter of 2008, and diluted EPS of $0.18 to $0.20. Guidance
for the second quarter of 2009 is based on an expected increase in same
school student starts of 19% to 22% over the same period in
2008.
|
Continued . .
..
Page 2 of 7
Comment
and Outlook
“We are
extremely pleased with our financial performance for the first quarter of 2009,”
said David Carney, Lincoln’s Executive Chairman. “The increase in
average student population resulted in operating margin increasing to 9.0% of
revenue versus 1.5% in the first quarter of 2008. We believe we have
built the foundation through our business model to allow our company to prosper
through economic cycles by offering a compelling set of program offerings to our
students. We expect this momentum to continue in the second quarter
as we began the quarter with approximately 4,500 more students on a same school
basis than we had on April 1, 2008. The investments we have made in our business
are producing strong results, which we expect to continue throughout the
year.”
Mr.
Carney concluded, “We continue to further diversify our offerings and to add
degree-granting programs, which we believe will drive our future
growth. To this end, we completed the acquisition of Clemens College
in April. We believe that Clemens College and Briarwood College, our
first two regionally accredited schools, will provide us with a catalyst to
expand our degree offerings, both on-ground and online. The
integration of these schools is progressing well, and we remain confident in our
ability to increase population and operating margins at these schools throughout
the year and expect them to become accretive in 2010. This will not
only allow us to address a broader market, but also provide a path for our
students to migrate from diploma to degree programs within the Lincoln
family.”
1st Quarter
2009 Operating Performance
Revenues
increased by $34.6 million, or 41.1%, to $118.6 million for the quarter
ended March 31, 2009 from $84.0 million for the quarter ended March 31,
2008. Approximately $11.6 million of this increase was a result of our
acquisition of Briarwood College on December 1, 2008 and the Baran group of
schools on January 20, 2009 (the “Acquisitions”). Excluding the
Acquisitions, the increase in revenues was primarily attributable to a 22.4%
increase in average student population, which increased to 22,597 for the
quarter ended March 31, 2009, from 18,459 for the quarter ended March 31,
2008. Revenues were also favorably impacted during the quarter by
tuition increases, which averaged between 3.0% and 3.5%. Average
revenue per student increased 5.5% for the quarter ended March 31, 2009 from the
quarter ended March 31, 2008 and was essentially flat with average revenue per
student from the quarter ended December 31, 2008.
Operating
income margin for the quarter ended March 31, 2009 increased to 9.0% from 1.5%
for the quarter ended March 31, 2008. The improvement in operating
income resulted from higher revenues due to the increase in our average student
population and improved capacity utilization at our schools.
Our
educational services and facilities expenses increased by $11.7 million, or
31.9%, to $48.3 million for the quarter ended March 31, 2009 from
$36.6 million for the quarter ended March 31, 2008. The Acquisitions
accounted for $6.4 million, or 5.5%, of this increase. Excluding the
Acquisitions, the increase in educational services and facilities expenses was
primarily due to instructional expenses which increased by $2.7 million, or
14.0%, and books and tools expenses, which increased by $1.9 million, or 43.5%,
respectively, over the same quarter in 2008. This increase was attributable to a
35.1% increase in student starts for the first quarter of 2009 as compared to
the first quarter in 2008 and the overall increase in student population and
higher tool sales during the first quarter of 2009 compared to the first quarter
of 2008. On a same school basis, we began 2009 with approximately
3,000 more students than we had on January 1, 2008 and, as of March 31, 2009,
our population on a same school basis was approximately 4,500 higher than as of
March 31, 2008. Educational services and facilities
Page 3 of 7
expenses
as a percentage of revenues decreased to 40.7% for the first quarter of 2009
from 43.6% for the first quarter of 2008.
Our
selling, general and administrative expenses for the quarter ended March 31,
2009 were $59.6 million, an increase of $13.5 million, or 29.2%, from $46.1
million for the quarter ended March 31, 2008. Approximately $6.4 million, or
47.4%, of this increase was attributable to the Acquisitions. Excluding the
Acquisitions, the increase in our selling, general and administrative expenses
for the quarter ended March 31, 2009 was primarily due to: (a) a $0.6 million,
or 16.1%, increase in student services; (b) a $1.4 million, or 8.1%, increase in
sales and marketing; and (c) a $5.0 million, or 20.3%, increase in
administrative expenses as compared to the quarter ended March 31,
2008.
The
increase in student services was primarily due to increases in compensation and
benefit expenses attributable to increased financial aid and career services
personnel as a result of the larger student population during the first quarter
of 2009 as compared to the first quarter of 2008. The increase
in administrative expenses during the first quarter of 2009 as compared to the
first quarter of 2008 was primarily due to: (a) a $2.3 million increase in
personnel costs, relating to annual compensation increases, increased incentive
compensation and increased cost of benefits provided to employees;
(b) a $1.9 million increase in bad debt expense; and (c) $0.7 million
of acquisition costs incurred in the first quarter of 2009 related to
our acquisition of the Baran group of schools in accordance with SFAS No. 141R.
As a percentage of revenues, selling, general and administrative expenses for
the first quarter of 2009 decreased to 50.3% from 54.9% for the first quarter of
2008.
For the
quarter ended March 31, 2009, including the Acquisitions, our bad debt expense
as a percentage of revenue was 6.1% as compared to 4.8% for the same quarter in
2008. This increase was primarily attributable to higher accounts
receivable due to an increase of 33.7% in average student population for the
first quarter of 2009 as compared to the first quarter of 2008. The
number of days sales outstanding at March 31, 2009 decreased to 21.7 days,
compared to 23.9 days at March 31, 2008. This decrease is primarily attributable
to our program to centralize the back office administration of our financial aid
department in an effort to improve the effectiveness and timeliness of our
financial aid processing. As of March 31, 2009, we had outstanding loan
commitments to our students of $23.6 million as compared to $24.8 million at
December 31, 2008. Loan commitments, net of interest that would be
due on the loans through maturity, were $16.2 million at March 31, 2009 as
compared to $17.0 million at December 31, 2008.
Net
income for the three months ended March 31, 2009 was $5.8 million, or $0.22 per
diluted share, as compared to $0.5 million or $0.02 per diluted share for the
three months ended March 31, 2008.
Balance
Sheet
At March
31, 2009, we had $15.2 million in cash and cash equivalents.
At March
31, 2009, we had $10.0 million outstanding under our credit
agreement. Long-term debt and capital lease obligations at March 31,
2009 of approximately $48.1 million includes $27.4 million of capital leases
assumed in connection with the acquisition of the Baran group of
schools.
At March
31, 2009, our stockholders’ equity was $196.3 million, compared to $174.9
million at December 31, 2008.
Page 4 of 7
Student
Metrics
|
Total
Company
Three
Months Ended
March
31,
|
Same
School
Three
Months Ended
March
31,
|
|||||||||||||||||||||||
|
2008
|
2009
|
Growth
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2008
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2009
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Growth
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|||||||||||||||||||
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Student
Starts
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5,629 | 8,017 | 42.4 | % | 5,629 | 7,605 | 35.1 | % | ||||||||||||||||
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Average
population
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18,459 | 24,681 | 33.7 | % | 18,459 | 22,597 | 22.4 | % | ||||||||||||||||
|
End
of period population
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18,600 | 25,588 | 37.6 | % | 18,600 | 23,144 | 24.4 | % | ||||||||||||||||
Conference
Call Today
Lincoln
will host a conference call today at 10:00 a.m. Eastern Standard
Time. The conference call can be accessed by going to the IR portion
of our website at www.lincolneducationalservices.com. Participants
can also listen to the conference call by dialing 866-314-4865 (domestic) or
617-213-8050 (international) and citing code 94704725. 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.lincolneducationalservices.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 citing code 38509024.
About
Lincoln Educational Services Corporation
Lincoln
Educational Services Corporation is a leading and diversified for-profit
provider of career-oriented post-secondary education. Lincoln offers
recent high school graduates and working adults degree and diploma programs in
five areas of study: automotive technology, health sciences, skilled trades,
business and information technology and hospitality services. Lincoln
has provided the workforce with skilled technicians since its inception in
1946. Lincoln currently operates 43 campuses in 17 states under 11
brands: Lincoln College of Technology, Lincoln Technical Institute, Nashville
Auto-Diesel College, Southwestern College, Euphoria Institute of Beauty Arts and
Sciences, Connecticut Culinary Institute, Americare School of Nursing, Baran
Institute of Technology, Engine City Technical Institute, Briarwood College and
Clemens College. Lincoln had a combined average enrollment of
approximately 24,680 students as of March 31, 2009.
Statements
in this press release regarding Lincoln's business which are not historical
facts may be "forward-looking statements" that involve risks and uncertainties.
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 Form 10-K for the year ended December 31, 2008. 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.
(Please
see financial attachments.)
Contacts:
|
Investors:
|
Press
or Media:
|
|
Chris
Plunkett/Brad Edwards
|
Jennifer
Gery
|
|
Brainerd
Communicators, Inc.
|
Brainerd
Communicators, Inc.
|
|
212-986-6667
|
212-986-6667
|
Page 5 of 7
LINCOLN EDUCATIONAL SERVICES
CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(In
thousands, except per share amounts)
|
Three
Months Ended March 31,
(Unaudited)
|
||||||||
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2009
|
2008
|
|||||||
|
REVENUES
|
$ | 118,599 | $ | 84,047 | ||||
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COSTS
AND EXPENSES:
|
||||||||
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Educational
services and facilities
|
48,299 | 36,629 | ||||||
|
Selling,
general and administrative
|
59,612 | 46,132 | ||||||
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(Gain)
loss on sale of assets
|
(2 | ) | 37 | |||||
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Total
costs and expenses
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107,909 | 82,798 | ||||||
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OPERATING
INCOME
|
10,690 | 1,249 | ||||||
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OTHER:
|
||||||||
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Interest
income
|
2 | 45 | ||||||
|
Interest
expense
|
(1,006 | ) | (504 | ) | ||||
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Other
income
|
8 | - | ||||||
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INCOME
BEFORE INCOME TAXES
|
9,694 | 790 | ||||||
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PROVISION
FOR INCOME TAXES
|
3,871 | 306 | ||||||
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NET
INCOME
|
$ | 5,823 | $ | 484 | ||||
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Earnings
per share - Basic -
|
$ | 0.23 | $ | 0.02 | ||||
|
Earnings
per share – Diluted -
|
$ | 0.22 | $ | 0.02 | ||||
|
Weighted
average number of common shares outstanding:
|
||||||||
|
Basic
|
25,704 | 25,660 | ||||||
|
Diluted
|
26,452 | 26,249 | ||||||
|
Other
data:
|
||||||||
|
EBITDA
(1)
|
$ | 15,947 | $ | 5,619 | ||||
|
Depreciation
and amortization
|
5,249 | 4,370 | ||||||
|
Number
of campuses
|
42 | 34 | ||||||
|
Average
enrollment
|
24,681 | 18,459 | ||||||
|
Stock
based compensation
|
537 | 558 | ||||||
|
Net
cash provided by operating activities
|
2,293 | 7,547 | ||||||
|
Net
cash used in investing activities
|
(27,041 | ) | (7,440 | ) | ||||
|
Net
cash provided by financing activities
|
24,734 | 2,011 | ||||||
Page 6 of 7
|
Selected
Consolidated Balance Sheet Data:
|
March
31,
|
|||
|
(In
thousands)
|
2009
|
|||
|
Cash
and cash equivalents
|
$ | 15,220 | ||
|
Current
assets
|
58,478 | |||
|
Working
capital/(deficit)
|
(28,497 | ) | ||
|
Total
assets
|
332,618 | |||
|
Current
liabilities
|
86,975 | |||
|
Long-term
debt and capital lease
Obligations,
including current portion
|
48,055 | |||
|
Total
stockholders’ equity
|
$ | 196,277 | ||
(1)
Reconciliation of Non-GAAP Financial Measures
EBITDA is
a measurement not recognized in financial statements presented in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”). We define EBITDA as income from continuing operations
before interest expense (net of interest income), provision for income taxes and
depreciation and amortization. EBITDA is presented because we believe
it is a useful indicator of our performance and our ability to make strategic
acquisitions and meet capital expenditure and debt service
requirements. It is not, however, intended to represent cash flows
from operations as defined by GAAP and should not be used as an alternative to
net income (loss) as an indicator of operating performance or to cash flow as a
measure of liquidity. EBITDA is not necessarily comparable to
similarly titled measures used by other companies. Following is a
reconciliation of income from continuing operations to EBITDA:
Page 7 of 7
|
Three
Months Ended March 31,
(Unaudited)
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
income
|
$ | 5,823 | $ | 484 | ||||
|
Interest
expense, net
|
1,004 | 459 | ||||||
|
Provision
for income taxes
|
3,871 | 306 | ||||||
|
Depreciation
and amortization
|
5,249 | 4,370 | ||||||
|
EBITDA
|
$ | 15,947 | $ | 5,619 | ||||
# #
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