Lincoln Educational Services(LINC) - 2022 Q2 - Quarterly Report

Form 10-Q Cover Page This quarterly report (Form 10-Q) for the period ended June 30, 2022, details LINCOLN EDUCATIONAL SERVICES CORPORATION's financial status - This is a Quarterly Report (Form 10-Q) filed by LINCOLN EDUCATIONAL SERVICES CORPORATION for the quarterly period ended June 30, 2022[2] - The registrant's common stock (LINC) is registered on The NASDAQ Stock Market LLC[3] - As of August 8, 2022, there were 26,819,501 shares of the registrant's common stock outstanding[4] Index to Form 10-Q This section provides a comprehensive table of contents for the Form 10-Q filing PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's analysis Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $285,416 | $295,299 | | Total Liabilities | $146,933 | $153,899 | | Total Stockholders' Equity | $126,501 | $129,418 | | Cash and cash equivalents | $66,985 | $83,307 | - Total assets decreased by $9.9 million from $295.3 million at December 31, 2021, to $285.4 million at June 30, 2022[8] - Total liabilities decreased by $7.0 million from $153.9 million at December 31, 2021, to $146.9 million at June 30, 2022[11] Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenue, operating income, and net income Condensed Consolidated Statements of Operations (in thousands) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | YoY Change | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | YoY Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Revenue | $82,142 | $80,464 | 2.1% | $164,697 | $158,461 | 3.9% | | Operating income | $396 | $3,452 | -88.5% | $70 | $9,472 | -99.3% | | Net income | $259 | $2,426 | -89.3% | $532 | $6,915 | -92.3% | | Net (loss) income per common share (Basic and diluted) | $(0.00) | $0.06 | -100% | $(0.00) | $0.19 | -100% | Condensed Consolidated Statements of Comprehensive Income This section presents the company's net income and other comprehensive income, reflecting total changes in equity Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $259 | $2,426 | $532 | $6,915 | | Other comprehensive income (loss) | $(10) | $(85) | $(40) | $(8) | | Comprehensive income | $249 | $2,341 | $492 | $6,907 | Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders%27%20Equity This section outlines changes in the company's equity, including common stock, preferred stock, and treasury stock - Stockholders' equity decreased from $129.4 million at December 31, 2021, to $126.5 million at June 30, 2022[11][21] - The company repurchased 414,963 shares at a cost of approximately $2.5 million during the six months ended June 30, 2022, which were subsequently canceled[21][91] - Treasury stock of 5,910,541 shares, valued at $82.9 million, was canceled, resulting in a reduction of common stock and treasury stock[21][91] Condensed Consolidated Statements of Cash Flows This section details cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | YoY Change (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------------------ | | Net cash (used in) provided by operating activities | $(9,992) | $1,067 | $(11,059) | | Net cash used in investing activities | $(1,192) | $(3,516) | $2,324 | | Net cash used in financing activities | $(5,138) | $(2,570) | $(2,568) | | Net decrease in cash and cash equivalents | $(16,322) | $(5,019) | $(11,303) | | Cash and cash equivalents — End of period | $66,985 | $33,007 | $33,978 | - Cash paid for interest decreased from $566 thousand in 2021 to $118 thousand in 2022, while cash paid for income taxes increased from $652 thousand to $1,206 thousand for the six months ended June 30[26] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information for the financial statements Note 1. Description of Business and Basis of Presentation This note describes the company's business, operating segments, and financial statement presentation - The Company operates 22 schools in 14 states, offering programs in automotive technology, skilled trades, healthcare services, hospitality services, and information technology[29] - The business is organized into two reportable segments: Transportation and Skilled Trades, and Healthcare and Other Professions (HOPS)[30] - The Company is currently assessing the impact of new accounting pronouncements, ASU 2021-08 (Business Combinations) and ASU 2020-06 (Convertible Instruments), on its financial statements[34][37] Note 2. Net (Loss) Income Per Common Share This note details the calculation of basic and diluted net (loss) income per common share Net (Loss) Income Per Common Share (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income allocated to common stockholders | $(45) | $1,630 | $(76) | $4,858 | | Basic and diluted net (loss) income per common share | $(0.00) | $0.06 | $(0.00) | $0.19 | - Potential common shares outstanding excluded from diluted EPS calculation due to anti-dilutive impact: 6,928,480 shares for Q2 2022 and 6,981,247 shares for YTD Q2 2022[46] Note 3. Revenue Recognition This note explains the company's policies for recognizing revenue from student contracts - Unearned tuition decreased from $25.4 million at December 31, 2021, to $21.7 million at June 30, 2022[49] - Revenue recognized for the six months ended June 30, 2022, that was included in the contract liability balance at the beginning of the year was $24.4 million[49] Timing of Revenue Recognition (in thousands) | Timing of Revenue Recognition | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :----------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Services transferred at a point in time | $4,973 | $6,348 | $9,763 | $11,200 | | Services transferred over time | $77,169 | $74,116 | $154,934 | $147,261 | | Total revenues | $82,142 | $80,464 | $164,697 | $158,461 | Note 4. Leases This note details the company's operating lease assets, liabilities, and new lease agreements Lease Metrics (in thousands) | Lease Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $4,700 | $3,800 | $9,300 | $7,600 | | Cash paid for operating lease liabilities | $4,665 | $3,829 | $9,320 | $7,037 | - A new 12-year lease for a school in Atlanta, Georgia, with total undiscounted payments of $12.2 million, is expected to commence in Q3 2022[53] Lease Term/Rate | Lease Term/Rate | June 30, 2022 | December 31, 2021 | | :---------------------- | :------------ | :---------------- | | Weighted-average remaining lease term | 11.35 years | 5.71 years | | Weighted-average discount rate | 7.36% | 10.93% | Note 5. Goodwill and Long-Lived Assets This note provides information on goodwill, long-lived asset impairments, and property sales - Goodwill balance was $14.5 million as of June 30, 2022, and December 31, 2021, entirely attributable to the Transportation and Skilled Trades segment[61] - No long-lived asset impairments were recorded for the three or six months ended June 30, 2022 or 2021[59] - A $0.7 million impairment on the Suffield, Connecticut property was recorded on December 31, 2021, which was subsequently sold in Q2 2022 for net proceeds of $2.4 million, resulting in a $0.2 million gain[60] Note 6. Long-Term Debt This note details the company's long-term debt, Credit Facility, and compliance with covenants - Zero debt outstanding under the Credit Facility as of June 30, 2022, and December 31, 2021[68] - Letters of credit outstanding totaled $4.0 million as of June 30, 2022, and December 31, 2021[68] - The maturity date of the revolving loan was extended to November 14, 2023, through a third amendment to the Credit Agreement on August 5, 2022[68] Note 7. Stockholders%27%20Equity This note outlines changes in stockholders' equity, including dividends, share repurchases, and treasury stock - Preferred stock dividends of $0.6 million were paid in cash for the six months ended June 30, 2022[73] - A share repurchase program of up to $30.0 million was authorized on May 24, 2022, for twelve months[91] - By June 30, 2022, the company repurchased 414,963 shares at a cost of approximately $2.5 million under the new program, with $27.5 million remaining authorized[91][225] - The Board of Directors authorized the cancellation of 5,910,541 shares of treasury stock, reducing treasury stock and common stock by $82.9 million[91] Note 8. Income Taxes This note presents the company's income tax provision or benefit and the effective tax rate Income Tax Provision (Benefit) (in thousands) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Provision (benefit) for income taxes | $102 | $729 | $(539) | $1,975 | | Effective tax rate | 28.3% | 23.1% | 28.2% | N/A | Note 9. Commitments and Contingencies This note discloses the company's involvement in legal proceedings, investigations, and claims - The CFPB is assessing whether the company is subject to its supervisory authority regarding student credit extensions and has requested information[95] - The Massachusetts AGO issued a civil investigative demand to Lincoln Technical Institute in Somerville, MA, investigating possible unfair or deceptive practices related to fee refunds and disclosures[96] Note 10. Segments This note provides financial information for the company's two reportable segments Segment Performance (in thousands) | Segment | 3 Months Ended June 30, 2022 Revenue | 3 Months Ended June 30, 2021 Revenue | 3 Months Ended June 30, 2022 Operating Income | 3 Months Ended June 30, 2021 Operating Income | | :--------------------- | :----------------------------------- | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Transportation and Skilled Trades | $57,973 | $56,965 | $7,094 | $11,256 | | Healthcare and Other Professions | $24,169 | $23,499 | $1,609 | $2,962 | | Corporate | - | - | $(8,307) | $(10,766) | | Total | $82,142 | $80,464 | $396 | $3,452 | Segment Performance (in thousands) | Segment | 6 Months Ended June 30, 2022 Revenue | 6 Months Ended June 30, 2021 Revenue | 6 Months Ended June 30, 2022 Operating Income | 6 Months Ended June 30, 2021 Operating Income | | :--------------------- | :----------------------------------- | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Transportation and Skilled Trades | $116,758 | $112,636 | $14,340 | $23,581 | | Healthcare and Other Professions | $47,939 | $45,825 | $2,916 | $5,911 | | Corporate | - | - | $(17,186) | $(20,020) | | Total | $164,697 | $158,461 | $70 | $9,472 | Note 11. Fair Value This note discusses the fair value of financial instruments and the interest rate swap - The interest rate swap, designated as a cash flow hedge for the Term Loan, was paid in full on October 29, 2021, upon repayment of the Term Loan[107] Interest Expense (in thousands) | Interest Expense | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest Rate Swap | $0 | $100 | $0 | $200 | Note 12. COVID-19 Pandemic and CARES Act This note details the impact of COVID-19 on operations and funds received under the CARES Act - The company received $27.4 million from the HEERF under the CARES Act, fully distributed by September 30, 2021[112] - An additional $24.4 million was allocated under CRRSAA and ARPA, with $14.8 million distributed to students by June 30, 2022[114] - The company deferred $2.3 million in FICA payroll taxes, with 50% repaid by January 3, 2022, and the remaining 50% due by January 3, 2023[112] Note 13. Property Sale Agreements This note describes significant property sale agreements, including the Nashville campus and sale-leasebacks - Contract to sell Nashville campus property for $34.5 million, with an expected closing within the next fifteen months, and the property is included in assets held for sale[115][116] - Sale-leaseback of Denver and Grand Prairie campuses closed on October 29, 2021, for $46.5 million[117] - The Denver and Grand Prairie sale-leaseback resulted in a $22.5 million gain on sale of assets and the recognition of $40.1 million in ROU assets and lease liabilities[117] Item 2. Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations This section provides management's perspective on the company's financial condition, operations, and regulatory updates General This section provides a general overview of the company's business, educational offerings, and segments - The Company provides career-oriented post-secondary education through 22 schools in 14 states, with programs in automotive technology, skilled trades, healthcare, hospitality, and IT[122] - Business is organized into two reportable segments: Transportation and Skilled Trades, and Healthcare and Other Professions (HOPS)[123] Critical Accounting Policies and Estimates This section outlines the key accounting policies and estimates impacting financial reporting - Critical accounting policies and estimates include revenue recognition, allowance for doubtful accounts, goodwill, long-lived assets, stock-based compensation, derivative instruments, borrowings, ROU assets, lease cost, income taxes, and employee benefit plans[125] Effect of Inflation This section discusses the impact of inflation on operations, expenses, and student behavior - Inflation has not had a material effect on operations, except for inflationary pressures on instructional expenses and student reluctance to incur additional debt or travel costs[126] Results of Continuing Operations This section analyzes the company's consolidated financial performance, including revenue, expenses, and net income Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 This section compares the company's financial performance for Q2 2022 to the prior year Consolidated Performance (in thousands) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | YoY Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenue | $82,142 | $80,464 | 2.1% | | Educational services and facilities expense | $36,106 | $33,694 | 7.2% | | Selling, general and administrative expense | $45,835 | $43,318 | 5.8% | | Operating income | $396 | $3,452 | -88.5% | | Net income | $259 | $2,426 | -89.3% | - Revenue increase was driven by a 1.2% increase in average student population[129] - Educational services and facilities expense increased due to higher instructional salaries (market conditions, staffing levels) and facility expenses (additional rent from sale-leaseback)[131][132] - Selling, general and administrative expense increased due to additional bad debt expense (decreased repayment rates), higher medical expenses, and one-time growth initiative expenses[133] Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 This section compares the company's financial performance for YTD Q2 2022 to the prior year Consolidated Performance (in thousands) | Metric | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | YoY Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenue | $164,697 | $158,461 | 3.9% | | Educational services and facilities expense | $72,302 | $66,037 | 9.5% | | Selling, general and administrative expense | $92,520 | $82,951 | 11.5% | | Operating income | $70 | $9,472 | -99.3% | | Net income | $532 | $6,915 | -92.3% | - Revenue increase was mainly due to a 2.8% increase in average student population[138] - Educational services and facilities expense increased due to higher instructional salaries (market conditions, staffing, return to in-person instruction), increased consumables prices, and higher facility expenses (additional rent, maintenance)[140][141] - Selling, general and administrative expense increased due to additional bad debt expense (lower repayment rates, prior year HEERF adjustment), higher medical expenses, stock compensation, and growth initiative expenses[142][143] Segment Results of Operations This section analyzes the financial performance of the company's two operating segments Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021 This section compares segment-level financial performance for Q2 2022 to the prior year Segment Performance (in thousands) | Segment Performance | 3 Months Ended June 30, 2022 Revenue | 3 Months Ended June 30, 2021 Revenue | YoY % Change Revenue | 3 Months Ended June 30, 2022 Operating Income | 3 Months Ended June 30, 2021 Operating Income | YoY % Change Operating Income | | :--------------------------------- | :----------------------------------- | :----------------------------------- | :------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------ | | Transportation and Skilled Trades | $57,973 | $56,965 | 1.8% | $7,094 | $11,256 | -37.0% | | Healthcare and Other Professions | $24,169 | $23,499 | 2.9% | $1,609 | $2,962 | -45.7% | | Corporate | - | - | N/A | $(8,307) | $(10,766) | 22.8% | Student Metrics | Student Metrics | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | YoY % Change | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total Starts | 3,852 | 3,703 | 4.0% | | Transportation and Skilled Trades Average Population | 8,315 | 8,014 | 3.8% | | Healthcare and Other Professions Average Population | 4,322 | 4,468 | -3.3% | - Corporate expenses decreased due to reduced incentive compensation and a $0.2 million gain from the sale of the Suffield, Connecticut property[158] Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021 This section compares segment-level financial performance for YTD Q2 2022 to the prior year Segment Performance (in thousands) | Segment Performance | 6 Months Ended June 30, 2022 Revenue | 6 Months Ended June 30, 2021 Revenue | YoY % Change Revenue | 6 Months Ended June 30, 2022 Operating Income | 6 Months Ended June 30, 2021 Operating Income | YoY % Change Operating Income | | :--------------------------------- | :----------------------------------- | :----------------------------------- | :------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------ | | Transportation and Skilled Trades | $116,758 | $112,636 | 3.7% | $14,340 | $23,581 | -39.2% | | Healthcare and Other Professions | $47,939 | $45,825 | 4.6% | $2,916 | $5,911 | -50.7% | | Corporate | - | - | N/A | $(17,186) | $(20,020) | 14.2% | Student Metrics | Student Metrics | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | YoY % Change | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total Starts | 7,205 | 7,251 | -0.6% | | Transportation and Skilled Trades Average Population | 8,417 | 8,016 | 5.0% | | Healthcare and Other Professions Average Population | 4,344 | 4,394 | -1.1% | - Corporate expenses decreased due to reduced incentive compensation and a $0.2 million gain from the sale of the Suffield, Connecticut property, partially offset by increased stock-based compensation and severance[164] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash from all activities Operating Activities This section analyzes cash flows generated from or used in the company's primary business operations - Net cash used in operating activities was $10.0 million for the six months ended June 30, 2022, compared to $1.1 million provided in the prior year, driven by working capital changes and decreased net earnings[170] Investing Activities This section details cash flows related to the acquisition and disposal of long-term assets - Net cash used in investing activities decreased to $1.2 million for the six months ended June 30, 2022, from $3.5 million in the prior year[171] - The decrease in cash used was driven by $2.4 million in net proceeds from the sale of the former Suffield, Connecticut campus[171] - Capital expenditures are expected to approximate 3% of revenues in 2022[175] Financing Activities This section outlines cash flows from debt, equity, and other financing transactions - Net cash used in financing activities increased to $5.1 million for the six months ended June 30, 2022, from $2.6 million in the prior year[176] - The increase in cash used was driven by the implementation of a share repurchase program during Q2 2022[176] Credit Facility This section provides an update on the company's credit facility, outstanding debt, and covenants - Zero debt outstanding under the Credit Facility as of June 30, 2022, and December 31, 2021[183] - The revolving loan maturity date was extended to November 14, 2023, via a third amendment on August 5, 2022[183] - The company was in compliance with all debt covenants as of June 30, 2022[183] Contractual Obligations This section details the company's financial commitments, including lease and loan obligations - No outstanding debt as of June 30, 2022[184] - Outstanding institutional loan principal commitments to active students totaled $30.0 million as of June 30, 2022[185] Regulatory Updates This section provides an overview of recent and proposed regulatory changes impacting operations Borrower Defense to Repayment Regulations This section discusses proposed DOE regulations and a class action settlement impacting student loan discharges - Proposed DOE regulations (July 13, 2022) would establish a new process for evaluating borrower applications for loan discharges, applying to all claims submitted or pending as of July 1, 2023, making it easier for borrowers to obtain discharges and for the DOE to recoup costs from institutions[188][189] - A proposed class action settlement (June 22, 2022) could lead to automatic loan discharges and refunds for students at listed institutions, including Lincoln's, without individual adjudication of borrower defense claims[195][198] - The company submitted a motion to intervene in the class action lawsuit to protect its interests, arguing against automatic discharges without adjudication and potential recoupment without due process[199] The %2290%2F10%20Rule%22 This section explains changes to the 90/10 rule, including federal funds and its expected impact - ARPA amended the 90/10 rule to include other "Federal funds" (e.g., veterans' benefits, which were ~7% of 2021 cash revenues) in the 90% calculation, expected to increase the company's 90/10 rule calculations[202] - Proposed regulations (July 28, 2022) confirm these changes apply to fiscal years ending on or after January 1, 2023, with final regulations expected by November 1, 2022, for a July 1, 2023, effective date[203][205][206] Negotiated Rulemaking This section outlines the DOE's rulemaking processes and anticipated timelines for new regulations - Proposed regulations on gainful employment, administrative capability, financial responsibility, eligibility certification, and ability to benefit are delayed until April 2023, with an earliest effective date of July 1, 2024[207] - Proposed regulations regarding the 90/10 rule and changes in ownership are expected to be published in 2022, potentially taking effect July 1, 2023[208] Compliance with Regulatory Standards and Effect of Regulatory Violations This section addresses the company's compliance with federal and state regulations and audit outcomes - Title IV Program compliance audits for 2020 at New Britain, Iselin, and Indianapolis institutions found alleged noncompliance, which were resolved, but serious findings were referred to a separate DOE office for potential adverse action[211] - An OIG audit of the Indianapolis institution regarding HEERF funds was resolved, with the DOE accepting responses to findings and imposing no liabilities or sanctions[212] School Acquisitions This section discusses the regulatory implications of school acquisitions, Title IV eligibility, and ownership rules - School acquisitions result in a change of ownership, suspending Title IV Program eligibility until recertification by the DOE, state education agencies, and accrediting commissions[214] - Proposed DOE regulations on changes in ownership, expected in 2022 and effective July 1, 2023, may expand requirements, potentially making future acquisitions more difficult[214] Change of Control This section explains how various transactions can trigger a change of control, impacting Title IV eligibility - A change of control can occur from corporate reorganizations or board changes, potentially affecting Title IV Program eligibility and discouraging stock transactions[215] - Proposed DOE regulations on ownership and control, expected in 2022 and effective July 1, 2023, could further influence future corporate decisions and stock market prices[215] Seasonality This section describes the seasonal fluctuations in the company's revenue, student population, and operating results - Revenue and operating results fluctuate seasonally, with lower student populations in Q1 and Q2, and larger class starts in Q3[216] - Expenses typically do not vary significantly with changes in student population and revenue[216] Item 3. Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, Lincoln Educational Services Corporation is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[217] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and absence of material internal control changes - Disclosure controls and procedures were deemed adequate and effective as of June 30, 2022[218] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[219] PART II. OTHER INFORMATION This part provides additional information on legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings The company is involved in ordinary course lawsuits, investigations, and claims, including CFPB and Massachusetts AGO assessments - The CFPB is assessing whether the company is subject to its supervisory authority based on activities related to student credit extensions[221] - The Massachusetts AGO issued a civil investigative demand to Lincoln Technical Institute in Somerville, MA, investigating possible unfair or deceptive practices regarding fee refunds and disclosures[223] Item 1A. Risk Factors The company reported no changes to the Risk Factors previously disclosed in its Form 10-K - No changes to the Risk Factors disclosed in the company's Form 10-K[224] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase program, including authorization and shares repurchased - A share repurchase program of up to $30.0 million was authorized on May 24, 2022, for twelve months[225] Share Repurchase Program | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Value of Shares Purchased (approx.) | Remaining Authorized (approx.) | | :-------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------- | :----------------------------- | | April 1, 2022 to June 30, 2022 | 414,963 | $6.12 | $2.5 million | $27.5 million | Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities[227] Item 4. Mine Safety Disclosure The company reported no mine safety disclosures - No mine safety disclosures[228] Item 5. Other Information This section includes an update on the third amendment to the Credit Agreement, extending the revolving loan maturity - On August 5, 2022, the company extended the maturity date of its revolving loan through November 14, 2023, via a third amendment to its Credit Agreement[229] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key corporate documents and financial statements - Key exhibits include amendments to the Certificate of Incorporation and Bylaws, the Second and Third Amendments to the Credit Agreement, CEO/CFO certifications, and financial statements in iXBRL format[230] SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the Form 10-Q - The report was signed on August 8, 2022, by Brian Meyers, Executive Vice President, Chief Financial Officer and Treasurer[235]