Lincoln Educational Services(LINC) - 2024 Q1 - Quarterly Results

Financial & Operational Highlights Lincoln Educational Services reported strong Q1 2024 financial and operational growth, including significant increases in student starts and revenue, tripling Adjusted EBITDA, and advancing strategic campus expansions Q1 2024 Financial Highlights (vs. Q1 2023) | Metric | Q1 2024 | Growth | | :--- | :--- | :--- | | Revenue | $103.4 million | +19.7% | | Adjusted EBITDA | $6.5 million | Tripled | | Student Starts | - | +15.3% | | End of Quarter Student Population | 13,801 | +11.2% | - Strategic Growth Initiatives: The company is actively expanding its physical footprint and program offerings, including new campuses in East Point, Georgia, Nashville, TN, Levittown, PA, and Houston[3] - A new 5-year, nearly $6.0 million agreement was signed with Container Maintenance Corporation (CMC) for on-site employee training, marking the company's largest program of its type[5] - A new $40 million credit facility with Fifth Third Bank was secured to support growth, complementing a total liquidity position exceeding $109 million with no outstanding debt[4][26] First Quarter 2024 Financial Results Q1 2024 revenue increased 19.7% to $103.4 million, driven by student population and start growth, while operating expenses rose due to investments in new campuses, staffing, and marketing Consolidated Statement of Operations Summary (Three Months Ended March 31) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $103,366 | $87,284 | | Total Costs & Expenses | $103,824 | $88,400 | | Operating Loss | ($458) | ($1,116) | | Net Loss | ($214) | ($109) | | Adjusted EBITDA | $6,545 | $2,196 | - Revenue growth was primarily driven by an 11.9% rise in average student population and 15.3% growth in student starts[8] - Educational services expenses included approximately $2.9 million in one-time costs for new and relocated campuses[8] - Selling, general and administrative (SG&A) expenses increased by $10.2 million, driven by higher administrative salaries, medical claims, bad debt, and a $1.6 million increase in marketing investments[8] Segment Performance The Campus Operations segment drove Q1 2024 performance with 19.7% revenue growth and 56.5% Adjusted EBITDA increase, while the Transitional Segment concluded and corporate expenses rose due to higher compensation Campus Operations Segment - Q1 2024 vs Q1 2023 | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $103.4 million | $86.4 million* | +19.7% | | Adjusted EBITDA | $18.1 million | $11.6 million | +56.5% | - The Transitional Segment, completed in Q4 2023, had no financial impact in Q1 2024, compared to $0.9 million in revenue and $1.1 million in expenses in Q1 2023[9] - Corporate and Other expenses increased by $1.8 million year-over-year, primarily due to higher salaries, performance incentives, and medical benefits[10] Consolidated Balance Sheet As of March 31, 2024, the company maintained a healthy balance sheet with $68.6 million in cash and equivalents, $355.2 million in total assets, and $164.5 million in total stockholders' equity Selected Balance Sheet Data (As of March 31, 2024, in thousands) | Account | Amount | | :--- | :--- | | Cash and cash equivalents | $68,554 | | Working capital | $58,867 | | Total assets | $355,163 | | Total stockholders' equity | $164,493 | Full Year 2024 Outlook Following strong Q1 results, Lincoln Educational Services raised its full-year 2024 guidance, projecting higher revenue, Adjusted EBITDA, and adjusted net income, with student start growth between 7% and 12% Updated Full Year 2024 Guidance | Metric (Amounts in millions) | Low | High | | :--- | :--- | :--- | | Revenue | $418 | $428 | | Adjusted EBITDA | $37 | $42 | | Adjusted net income | $12 | $17 | | Capital expenditures | $65 | $70 | | Student Starts Growth | 7% | 12% | Non-GAAP Financial Measures & Reconciliations The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Net Income to reflect core business performance, excluding non-recurring items, and provides reconciliations to GAAP equivalents for comprehensive financial insight - EBITDA is defined as net income before interest, taxes, depreciation, and amortization[23] - Adjusted EBITDA further excludes stock compensation and other non-recurring items such as new campus costs and severance[23] - Total Liquidity includes cash and cash equivalents, short-term investments, restricted cash, and available credit facilities[23][26] Q1 2024 Reconciliations Q1 2024 GAAP net loss of $0.214 million was reconciled to $6.5 million Adjusted EBITDA, with key adjustments for depreciation, new campus costs, and stock compensation, resulting in $1.9 million Adjusted Net Income and $109.8 million total liquidity Q1 2024 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Item | Amount | | :--- | :--- | | Net loss (GAAP) | ($214) | | Depreciation and amortization | $2,964 | | Stock compensation expense | $1,059 | | New campus and campus relocation costs | $2,802 | | Other adjustments | $89 | | Adjusted EBITDA (Non-GAAP) | $6,545 | Total Liquidity as of March 31, 2024 (in thousands) | Component | Amount | | :--- | :--- | | Cash and cash equivalents | $68,554 | | Restricted cash | $1,221 | | Credit facility | $40,000 | | Total Liquidity | $109,775 | 2024 Guidance Reconciliations The company provides a full-year 2024 guidance reconciliation, projecting a GAAP net income of $6.8 million to an Adjusted EBITDA of $39.5 million, with significant add-backs for depreciation, new campus costs, and stock compensation Reconciliation of 2024 Guidance (Midpoint, in thousands) | Item | Adjusted EBITDA | Adjusted Net Income | | :--- | :--- | :--- | | Net Income (GAAP) | $6,800 | $6,800 | | D&A and Interest | $14,400 | - | | New campus & relocation costs | $8,700 | $8,700 | | Program expansions | $2,300 | $2,300 | | Stock compensation expense | $4,200 | - | | Tax Effect | - | ($3,300) | | Total (Non-GAAP) | $39,500 | $14,500 | Supplemental Student Data The report details Q1 2024 student metrics, showing total student starts grew 15.3% to 3,967, primarily driven by an 18.5% increase in Transportation and Skilled Trades programs, with average student population up 11.9% Student Metrics by Program (Campus Operations, Q1 2024 vs Q1 2023) | Program Group | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | | Transportation & Skilled Trades | Starts | 2,682 | 2,263 | 18.5% | | | Avg. Population | 9,544 | 8,281 | 15.3% | | Healthcare & Other | Starts | 1,285 | 1,177 | 9.2% | | | Avg. Population | 4,134 | 3,944 | 4.8% | | Total | Starts | 3,967 | 3,440 | 15.3% | | | Avg. Population | 13,678 | 12,225 | 11.9% |