Lincoln Educational Services(US:LINC)2021-11-08 18:31Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $89.1 million, an increase of 13% compared to the prior year [40] - Operating income improved by nearly 50%, reaching $5.7 million, while adjusted EBITDA increased to $8.4 million [45][50] - Cash flow from operations more than doubled to $16.7 million from $6.8 million in the prior year [47] - Unrestricted cash position increased by approximately 200% year-over-year [10] Business Line Data and Key Metrics Changes - Student starts for Q3 2021 declined by only 80 students, a significant improvement from earlier expectations [13] - Average student population increased by 8.3%, driven by a 9-month start growth of 8.8% [40] - Healthcare and other professions saw a decline of 4.8% in starts, attributed to challenges in hiring instructors [56] Market Data and Key Metrics Changes - The company reported a strong demand for skilled graduates, particularly in the transportation sector, which is expected to see stronger growth compared to healthcare [58] - The company is expanding its corporate partnerships, including a new training program with Republic Services [26] Company Strategy and Development Direction - The company plans to open its first new campus in over a decade by the end of 2022 and has identified five additional markets for potential expansion [20] - A focus on enhancing existing programs and curricula to meet the latest industry demands, including a new automotive curriculum [22] - The company aims to leverage its strengthened balance sheet to pursue growth opportunities while maintaining financial flexibility [38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as rising costs from vendors and hiring difficulties, but expressed confidence in overcoming these issues [29][30] - The company expects to achieve 7% to 8% start growth for the full year, with strong demand continuing into Q4 [48] - Inflationary pressures are anticipated to be more permanent, leading to a slight tuition increase to cover rising costs [110] Other Important Information - The company completed a sale leaseback transaction for its Denver and Grand Prairie properties, significantly strengthening its balance sheet [36] - A second transaction for the Nashville facility is expected to close in Q1 2022, with an estimated gain of $29 million [39] Q&A Session Summary Question: Why was healthcare and other professions weaker? - Management noted challenges in hiring and retaining nursing instructors, impacting student enrollment [56] Question: Where do you expect greater starts growth between transportation or healthcare? - Management indicated stronger growth is expected on the transportation side [58] Question: How has retention been in recent quarters? - Retention levels have remained stable, with efforts to improve them ongoing [60] Question: What is the impact of inflationary cost pressures on marketing? - All expense categories are up, including cost per lead and cost per start [64] Question: What are the impediments to stock repurchase? - The board is focused on long-term growth opportunities and capital deployment rather than immediate stock buybacks [86][88]