Lincoln Educational Services Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 6, 2023

There are 8 speakers on the call.

Operator

Welcome to the Lincoln Educational Services Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Michael Polivio.

Operator

Please go ahead.

Speaker 1

Thank you, Crystal. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued its news release reporting financial results for the Q3 ended September 30, 2023. The release is available on the Investor Relations portion of the company's corporate website atwww.lincolntech.edu. Joining us today on the call are Scott Shaw, President and CEO and Brian Myers, Chief Financial Officer.

Speaker 1

Today's call is being recorded and is being broadcast live on the company's website and a replay of the call will be archived also on the company's website. Statements made by Lincoln's management on today's call regarding the company's business that are not historical facts may be forward looking statements as the term is identified in federal securities laws. The words may, will, expect, believe, anticipate, project, plan, intend, estimate and As well as similar expressions are intended to identify forward looking statements. Forward looking statements should not be read as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company's future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the company's control that may influence the accuracy of the statements and the projections upon which the segments And statements are based.

Speaker 1

Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10 ks and the quarterly report on Form 10 Q filed with the Securities and Exchange Commission. Forward looking statements are based on the information available at the time those statements are made and management's good faith believe as of the time with respect to future events. All forward looking statements are qualified in their entirety by this cautionary statement and Lincoln undertakes no obligation to publicly revise or update Any forward looking statements, whether as a result of new information, future events or otherwise, after the date thereof. Now, I would like to hand the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Speaker 2

Thanks, Michael, and good morning, everyone. Our transformative growth strategy continued to generate exceptional results during the Q3 as revenue increased 10.5%. After realizing 18% student start growth during our 2nd quarter, student start growth during the 3rd quarter surpassed 7%. These top line results exceeded our expectations and as Brian will review during his prepared remarks, we are increasing our guidance for the full year. Our top line growth was achieved through student growth, a 3 percentage point increase in average student population and a 6.8% increase in average revenue per student.

Speaker 2

The continued rollout of our hybrid instructional platform, which we call Lincoln 10.0 also contributed to increasing our average revenue per student growth. As we've discussed with you in the past, the hybrid model combines hands on learning at campus facilities, while delivering a greater component of classroom work through online instruction. It enables our students to work part time or manage other commitments while they pursue their Lincoln education and is specifically designed to help a higher percentage of students to graduate. The hybrid model also standardizes our programs Cross campuses with on campus time slots of morning, afternoon and evening courses and with consistent start dates that provides greater flexibility, efficiency and overall capacity at our existing campuses. The rollout of our hybrid model At most campuses coupled with adding existing proven programs at select campuses positions us to drive higher campus and company Profitability in the long term once we complete our transition in the model excuse me, our transition to the model in 2025.

Speaker 3

During the

Speaker 2

Q3, our exceptional student start growth was driven by the increased number of leads generated by our marketing programs. This lead generation is occurring across the board, both geographically as well as from a curriculum perspective and is accompanied by a healthy conversion rate of those leads. What we find particularly encouraging is that this lead generation student start growth is nearly all organic. There's little of any contribution from recently started programs since their launch dates were delayed due to later than expected regulatory approval. Once our recent initiatives start to contribute to student starts, We are very well positioned to continue student start growth.

Speaker 2

During the Q3, we saw a shift in the marketplace beginning to take hold. From both a geographic and curriculum perspective, we are experiencing increased demand for Lincoln's programs and this increased demand is occurring Despite a continued very low unemployment rate and exceptional GDP growth, it appears that more and more people are interested in There are a number of factors driving this increased interest. First, many people are questioning the value of a 4 year degree and the accompanying debt. Many students that eventually do graduate with a 4 year degree Don't have the marketable or applicable skills that today's employers demand. At Lincoln, we strive to provide strong ROI programs that lead Solid in demand careers and we deliver these programs in a supportive environment that focuses on graduating and placing students.

Speaker 2

Also, the careers we offer will most likely not be replaced by artificial intelligence or be offshore, adding security to a student's career decision. With our country's growing need for middle skills trades people, we feel good about our positioning and long term growth opportunities. We also believe that being aligned with industry also drives interest in our programs. For example, in the past year, we have launched 2 Tesla programs, 1 in Denver and the second in Columbia, Maryland. And in Nashville, we launched our 1st specialized training program for truck OEM Peterbilt.

Speaker 2

Both companies approached Lincoln since we are known for quality graduates and our ability to be a strong partner focused on helping our students while supporting each company's During the Q2 of 2024, we will start to layer on starts at our new Atlanta campus as well as the first programs developed under our replication strategy. Further out, our new lease in Nashville gives us twice the space that we have at the new Atlanta facility and when we open the new Nashville facility in the first half of twenty twenty five, it will include 2 new programs in addition to the current Nashville market offerings. During this quarter, we purchased a new facility In Levittown, Pennsylvania, which when opened during the first half of twenty twenty five, will house our programs serving the Philadelphia market. This new facility gives us the space to expand our offerings in Philadelphia beyond automotive to include HVAC, welding and electrical, and the facility has space to add additional programs or partnerships. Brian will review our strategy regarding the purchase of this And our near term plans during his comments.

Speaker 2

We remain on track to achieve our objective to develop 10 new programs under the replication strategy. Many of these programs are already in some stage of development and will begin enrolling during 2024. The remainder are planned to be opened during the first half of 2025. They all deploy the Lincoln 10.0 platform and we remain on target to realize our 3 year profitability goals for each of these 10 programs. At the same time, we continue to pursue our strategy of opening one new campus per year.

Speaker 2

Atlanta will come Atlanta will welcome our first classes during the Q2 of next year and last Friday we announced our plans to expand into the Houston, Texas market. Our first campus in Houston will be located in the heart of 1 of Houston's busiest commercial corridors and strategically located for both student convenience and maximum graduate exposure to area hiring managers. The new Houston campus will represent our 2nd campus in Texas and will allow us to take advantage of the country's 4th largest employment market. The new campus will feature an approximately 100,000 square foot training center offering career opportunities in the auto, diesel, welding, HVAC and electrical fields. Of the 2,400,000 jobs It's expected to become available nationwide in these industries by 2,032, over 290,000 of those jobs are projected to be in Texas.

Speaker 2

Over the next 2 years, as we layer on new campus openings and the program replication strategy, we consistently expand our opportunities to increase Overall student starts, while we remain focused on continuing the impressive organic start growth at existing programs. Our strategy and its successful execution fuels our long term optimism for Lincoln to repair increasing number of students for good paying, rewarding and essential careers while helping American corporations close their skills gap. Our new campuses program replication strategy, the Lincoln 10.0 platform and improving the efficiencies and effectiveness of our financial aid programs are requiring, as we have said in the past, increased investments during 2023. Some of these initiatives require us temporarily to double up on processes so that we maintain our high level of service. During the Q3, these investments were primarily recognized in SG and A expenses and supported our strong student start growth and higher lead generation.

Speaker 2

Brian will provide more details as well as the progress we have made on bringing these increases down during his Recently, the Department of Ed issued its long awaited updated rule on gainful employment. The rule establishes specific debt Income percentages that educational programs must achieve. The data used to establish the percentages won't be available until July 1 next year. We have some small programs that might be impacted by the rules implementation, which wouldn't come until 2 years after the July 1, 2024 data setting date. We expect that others with a larger presence in the curriculums most likely to be impacted by the rule setting will challenge the rule, which has been successfully done in the past.

Speaker 2

The bottom line is that we are required to take I'm sorry, the bottom line is that if we are required to take some action, We don't expect the action to have much impact on our EBITDA growth and the programs potentially impacted aren't part of our replication strategy or new campus development plans. 2023 is shaping up to be a very strong year for Lincoln and we are positioned to continue our growth in 2024 and beyond. We should start to see improvement in our operating efficiency by the second half of next year, but we expect to continue to make investments in replicating programs and opening up new campuses for the foreseeable future. The interest in our programs in the new hybrid teaching model is quite strong and employers continue to face increasing challenges when it comes to finding trained employees. At the same time, I noted earlier in my remarks how we are seeing an increased number of prospective students Looking for alternatives to 4 year college.

Speaker 2

Our strong graduation and placement rates provide excellent reference points and our balance sheet which has never been stronger Enabling Lincoln to expand our programs and locations, which will create long lasting benefits to our students, our graduates, Our instructors, our corporate partners and increasing returns to our shareholders. I also want to announce that we will be hosting a virtual Investor Day from our new Atlantic campus sometime in the first half of next year. More information on this event will be made available at the beginning of the New Year. Now, I'd like to turn the call over to Brian, so he can review some of our financial highlights during the quarter, as well as our increased guidance. Brian?

Speaker 4

Thanks, Scott. Good morning and thank you for joining our Q3 earnings call. Before I begin my prepared remarks with Veterans Day being celebrated in a few days, I'd like to take a moment to thank our veterans, our students, alumni and instructors who have sacrificed and served to protect our great nation. As Scott highlighted, we are very pleased with our significant progress made towards our long term strategic growth plan. With the addition of the Houston and Atlanta campuses, we'll be expanding our footprint to 23 campuses in 2025.

Speaker 4

Moreover, the relocation of our existing Philadelphia and Nashville campuses will enable us to expand our program offerings, Growing our student population and adding to our earnings. In terms of the Philadelphia campus relocation, as previously mentioned, we purchased a facility in Levittown, Pennsylvania to serve as the future campus location. We are now pursuing a sale leaseback agreement, which should enable us to recover our initial investment of 10,000,000 and reinvest the proceeds in the facility build out. Accordingly, as of quarter end, the purchase price of this facility is presented on the balance sheet as assets held for sale. Turning to the P and L results, which excludes the transitional segment, The preopening costs of our new Atlanta, Georgia campus and non recurring items.

Speaker 4

As a reminder, the transitional segment includes the Somerville, Massachusetts campus for which we have completed the successful teach out of the final students as of the end of October. We'll continue to incur some limited expenses through the end of the year. Revenue during the quarter increased 10.5 percent or $9,400,000 to $99,500,000 The increase in revenue was mainly driven by student start growth of 7.1% and average revenue per student growth of 7.3%. To expand on those drivers, the student stock growth was mainly derived from organic programs and the increase in average revenue per student was mainly attributed to the tuition increases combined with the acceleration revenue recognition, particularly for students enrolled in our evening programs under our new hybrid teaching model. Operating expenses were $96,000,000 in line with our expectations After adjustments for non recurring items detailed in our adjusted EBITDA calculation reflected in our Q3 earnings release.

Speaker 4

The main expense increases over the prior year were instructional expenses, largely due to our population growth and merit increases, Planned increases in marketing investments, which are generating greater returns as evidenced by our flat cost per start during the quarter And our higher bad debt expense due to higher student accounts receivable. We ended the quarter with higher levels Receivables due in part to our initiative to transition our financial aid process, which continues. Adjusted EBITDA was $6,100,000 compared to $7,400,000 after excluding non recurring items detailed in our Q3 earnings release. Although 2023 is slightly behind last year, we are pleased with this result as our growth has delivered performance that was slightly above our internal Given our high level investments this year. Diluted EPS was $0.07 based on 30,700,000 weighted average shares outstanding.

Speaker 4

Now turning to the balance sheet and cash flow. We ended the quarter with a strong balance sheet with approximately $70,000,000 of total cash and no debt outstanding. During the quarter, we earned approximately $900,000 of interest income and $1,900,000 for the 9 months. Cash used in operating activities was approximately $6,700,000 This quarter we experienced some delays And our cash collections leading to a higher accounts receivable balance and the previously mentioned increase in bad debt expense. In addition, our income tax payments materially increased in the Q3 compared to prior year.

Speaker 4

We paid nearly $4,000,000,000 more of income taxes this year Since we have fully utilized our federal NOLs to offset our taxable income. In terms of state NOLs, We have approximately $30,000,000 of gross NOLs to utilize in 2023 and beyond, which will reduce our future state tax liability. Capital expenditures during the quarter were $17,800,000 which includes $10,000,000 for the purchase of our Levittown, Pennsylvania facility. It also includes the build out of our new Atlanta campus. Lastly, we are updating our guidance to reflect our continued strong performance and Q4 business momentum.

Speaker 4

We're raising revenue outlook to be between $370,000,000 $375,000,000 We're raising the lower end of the range of adjusted EBITDA. We now expect a range between $24,000,000 to $26,000,000 We're raising Our adjusted income outlook to range between $12,000,000 $14,000,000 In terms of student starts, we're increasing our projections to range And lastly, we're refining our capital expenditures outlook to range between $30,000,000 $33,000,000 Capital expenditures guidance includes the New Atlanta build out, but excludes recently purchased facility in Levittown, Pennsylvania. In terms of stock based compensation, we expect it to be approximately $5,000,000 for the year and Q4 stock expense to be around 800,000 In conclusion, throughout the 1st 9 months of 2023, we have consistently achieved better than anticipated results across our key performance metrics. We remain focused on our key growth initiatives and I want to acknowledge the entire team's efforts and contributions in delivering another strong performance this past quarter. I'll turn the call back over to the operator so we can take your questions.

Speaker 4

Operator?

Operator

Thank you. You may rejoin the queue if needed. Please standby, we compile the Q and A roster. And our first question will come from Alex Paris from Barrington Research. Your line is open.

Operator

Please check that your line is not on mute. And Mr. Paris, if you'd like, you can please And our next question will come from Steven Frankel from Rosenblatt Securities. Your line is open.

Speaker 5

Good morning. I wonder Scott, if you could give us a little more color on the nice Momentum here in starts. Do you think this is reflecting the fact that students no longer feel some of those inflationary pressures that was Keeping people on the sidelines, or is there something else going on that you think is driving the changes?

Speaker 2

Thanks, Stephen, and good morning. I think it's a number of things. You are right. Last year during the summertime, gas prices were Quite high, which really impacts our students on a day to day basis. And while gas prices aren't as low as they've been maybe historically, It doesn't seem to be impacting students as much.

Speaker 2

There is still continued lots of talk about inflation, but I guess what I have to attribute it to is there just seems to be the stronger interest overall, as I mentioned, in our types of programs. And I think Based off of what I hear somewhat anecdotally as well as what I read out there, certainly the current generation is thinking Much more, speculatively, I guess, about college. And so I think there are more people interested in doing what we do, and I think more people are seeing value in working with their hands. And so I think there are a number of things that are frankly working in our favor and I anticipate That should continue for quite some time just because there is strong demand out there and you constantly are seeing articles about the need and demand for People that work with their hands. So a lot of things are certainly working in our favor, that's for sure.

Speaker 5

And then on the cost side, how are you doing in attracting and retaining staff?

Speaker 2

Yes. Good question. The good news is we're doing better. Our turnover in staff is down year over year. We are seeing frankly more applicants per person that we're looking for.

Speaker 2

So we think that bodes well. That means maybe the employment market It's softening for some, as we're seeing stronger demand and more interest and things have definitely stabilized from where they were.

Speaker 5

Okay. That's great for me. Thank you. I'll jump back in the queue.

Speaker 2

Thanks, Stephen.

Operator

Thank you. And our next question will come from Alex Paris from Barrington Research.

Speaker 4

Your line is

Operator

And Mr. Paris, we're unable to hear you. If you're able to disconnect and try dialing back in using the Call Me feature, we'll go to your And our next question is going to come from Eric Martinuzzi from Lake Street Capital Markets, your line is open.

Speaker 3

Hey, congrats on the good numbers and the strong outlook. I wanted to drill down on the new student starts. You talked about kind of just an overall appetite for folks questioning maybe the value of a 4 year degree. Just within your program, so I'm wondering if you could stratify into kind of the transportation and skilled trades versus Healthcare and other, are you seeing it equally across those 2 different categories?

Speaker 2

Yes. We are actually seeing this across kind of all of our programs. Obviously, some are stronger than others, but there's you don't see a difference between whether it's a healthcare program Or skilled trades program or automotive program. They're all up from last year, which is really Promising sign as well as geographically, we don't see any softening in any particular markets as well.

Speaker 3

And then as far as the centralized financial aid, just that conversion of enrollment to start, is that having some impact or not really?

Speaker 2

It's not having an impact on our starts. I mean, I think if anything, we started more students as we mentioned than we anticipated. So we still are working out some bugs in that area to make that more efficient. It's not nearly where we want it to be, but our objective is to make the whole Process around financial aid much more user friendly for our students and their families and we're going to continue to work in that direction.

Speaker 4

And Eric to highlight what Scott mentioned in our earnings release, we do disclose that transportation was up 7.6% and healthcare was up 5

Speaker 3

Okay. I

Speaker 4

appreciate the clarification there.

Speaker 3

The cash, Brian, we Finish out September at $70,000,000 You did say that that includes the $10,000,000 that was spent for Levittown, Would you expect to get that back and then turn that into investment in Levittown with the sales leaseback and that there's some Atlanta build out in there. But How do we think about kind of a normalized cash balance post the puts and takes for Levittown and Nashville Investments And remaining Atlanta investment.

Speaker 4

Right. So at year end, obviously, we're going to put out What our CapEx is going to be, which is going to be significant last year with the announcement with Houston and building out Nashville and Philadelphia. What I'll say is for the Q4, even with significant capital expenditures and like we mentioned that we're going to be looking to do a sale leaseback To get the purchase price for Philly, I think our cadence balance will be similar to the 9 months. So it will be approximately $70,000,000 we're anticipating even with the capital expenditures in the 4th quarter.

Speaker 3

Got it. Okay. And then, the tuition, I know it's probably planning stages for 2024, but you've benefited your revenue growth has benefited from tuition increase this year. What's the plan for next?

Speaker 4

We're looking at tuition increases right now. There will be tuition increases. It might not be across the board as it was in This year, we're looking by program, the ones that have significant enrollments with smaller gaps. So we're analyzing that today And we will have tuition increases. Probably it could be anywhere from 2% to 5%.

Speaker 3

Okay. Congrats again on the quarter. Thanks for taking my questions.

Speaker 2

Thank you.

Operator

And our next question will come from Raj Sharma from B. Riley. Your line is now open.

Speaker 6

Hi. Thank you for taking my questions. Again, solid performance. Congratulations. Thanks, Raj.

Speaker 6

Sure. I wanted to ask you about just sort of The overall operating margin, how should we look at given the Transition to the hybrid model, overall operating margin increase change going forward. Can you talk about that? What you see, what you expect? And also related to that, are the operating costs per quarter, We had higher costs per quarter this year.

Speaker 6

Are we tracking to your model? And should and what should we see that going forward?

Speaker 2

Sure. So I mean, certainly our objective is to move this company to a higher As we highlighted in this current year, we have some increased costs as we make some of the investments that we believe are necessary to help us achieve those goals. And with the new program replications and new campuses and as we increase our top line more, we will start seeing more drop to the bottom line, But you really aren't going to probably see significant amounts into the latter half of next year going into 2025. And so certainly from quarter to quarter, there could be some variances, but there's no reason why this company won't be in the mid teens from an EBITDA perspective in the coming years.

Speaker 4

And your other question, we are tracking towards our internal plan. Instructional was increased, but we were budgeted to increase. And the good news, a lot of that was due to our increased population and merit increases. And marketing, actually our marketing was down from our original budget simply because of delays in some of our program replications. Since it got delayed, we cut back the marketing there.

Speaker 4

But even though we were over for the year, we were on plan with that. And as I think I said in my prepared remarks, marketing is Still doing very well. We had flat course for start, so we're not paying a lot more for that we're not paying more for that incremental more students.

Speaker 6

And should we see the operating expenses again in the mid-90s going forward every quarter?

Speaker 3

Yes. We'll put

Speaker 4

out for next quarter our guidance. But yes, we're still transitioning to our high So we'll still have some quest there. So the savings won't be as material for 2024 and similar with our rollout Of our new financial aid model, we're probably not going to experience the savings in 2024 as well.

Speaker 6

Got it.

Speaker 2

And then just

Speaker 6

Following just moving on the 2 campuses, the Atlanta campus and then the Houston one, Could you talk about so we should start to see Q1, Q2 and the New Year would be the start of Atlanta Enrollments, can you give an idea of what sort of revenues and EBITDA contribution you're expecting from Atlanta? And then relative to that, The Houston, is that that's largely primarily only in auto and industrial school. And is that a similar sort of a top line and bottom line contribution?

Speaker 2

Yes. So basically both reflect the new model that we have for new campuses, Raj. So as we said and as we lay out in our investor presentation, these campuses should ramp up to low 20s in $1,000,000 of revenue And about $5,000,000 of EBITDA about 3 years or so after opening up 3 to 3.5 years after opening up. So we anticipate that to be the same. Yes, they are both focused on automotive and skilled trades.

Speaker 2

Basically these new models, these new campuses, We've taken the best of what we've got as far as highest profitable programs and greatest demand for those marketplaces. So they really should serve those areas well. And as we say, and as I just said, it will be low 20s in revenue and about 5,000,000 to $6,000,000 of EBITDA each once they're up and running.

Speaker 4

Right. And this week, we'll have a new Q3 investor presentation. You'll see the new updated Lanta model included in there for 2024. So 2024, it'll have minor It might have growth not growth, it might have not too robust revenue and it will have EBITDA losses, which will be added back The 1st year of opening in our adjusted EBITDA and Houston will have no revenue next year, that will open up in 2025.

Speaker 2

And I do want to add, Philadelphia is almost like a new campus. Today, Philadelphia, excuse me, is our only campus with one program and that's automotive. And we've been serving the field item market for over 60 years. When we move to the new facility and that starts up and running in the first half of twenty twenty five, We'll have the benefit of having an electrical program, an HVAC program and a welding program as well to complement the auto. And as I said, we've been in that market for 60 years, good name brand recognition and we know from our research that those 3 additional programs Are in strong demand.

Speaker 2

So it's almost that almost like opening up another new campus frankly in that marketplace.

Speaker 6

Great. Great. Thank you for answering my questions. I'll take this offline. Thank you.

Speaker 6

Good luck.

Speaker 2

Thanks. Appreciate it.

Operator

Thank you. Thank you. And I am showing no further questions from our phone lines. I'd like turn the conference back over to Scott Shaw for any closing remarks.

Speaker 2

Thank you, operator. We want to thank you for joining us today and for your continued interest and support. Our performance through the 1st 9 months of 2023 demonstrates that we are achieving our objectives and we remain steadfast on continuing our growth. We have a dedicated team and their efforts in pursuit of excellence allow us to help our students achieve their career goals. We look forward to

Speaker 1

Crystal, actually somebody did just pop in as Scott was

Speaker 2

Closing out. Is he still available?

Operator

Yes. One moment.

Speaker 7

Yes. I just

Operator

And pardon me, we do have a question from Robert Puopolo from EPIC Partners. Your line is open.

Speaker 7

Hi, Scott. Sorry about the last minute entry here. Congratulations, by the way. Excellent growth. Thank you.

Speaker 7

Two questions. First, as you look at Capital expenditures, sort of the guidance this year $30,000,000 to $33,000,000 Do you distinguish between Growth capital expenditures and maintenance CapEx, or can you? I expect Levittown would be growth, but And perhaps Atlanta too, but was curious if you could shed some light there.

Speaker 2

Sure. So typically, we look at 1% to 2% of revenue as far as what would be maintenance CapEx And all the rest is growth. So you can see that the vast majority of our CapEx this year as well as what will happen next year are all focused on growth opportunities, Which is why we feel really good about our growth opportunities in general because not only as we've mentioned getting good organic growth, But we're going to be able to add and replicate some of our most successful programs into other markets as well as enter new markets completely like Houston. So we believe these are really solid investments.

Speaker 4

Right. So added to $33,000,000 about $25,000,000 is really growth Related to the Lantherin program expansions.

Speaker 7

Great. Thank you. Follow-up question And perhaps I've missed it, but in previous quarters, there have been discussions about Stock repurchase plans and authorizations and so forth and how much had been purchased. Any updates as it relates to that?

Speaker 2

Yes, sure. The update was we didn't make any new purchases and As we continue to drive, I think performance, our objective is to drive stock price up through those initiatives. And so To the extent we see greater opportunity or the Board decides that there's an opportunity to buy back stock, we certainly will do that. But right now, we've been Using these resources to help fund,

Speaker 4

I believe a good solid growth for our company. And since we announced The plan, the repurchase plan, we repurchased 1,700,000 shares for a little over $10,000,000

Speaker 7

Super. Thank you very much.

Speaker 2

Great. Thank you.

Speaker 5

Thank you, Crystal.

Operator

Thank you.

Speaker 2

And thanks again, everyone. I still wish you have a happy Thanksgiving and a joyous holiday season. Thanks, everyone.

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Key Takeaways

  • Revenue for Q3 rose 10.5% year-over-year to $99.5 million, driven by 7.1% student start growth and a 6.8% increase in average revenue per student, prompting an upward revision of full-year guidance.
  • The ongoing rollout of the Lincoln 10.0 hybrid instructional platform enhanced capacity and flexibility across campuses and contributed to higher average revenue per student.
  • Organic marketing efforts fueled robust lead generation and student start growth, with minimal impact from newly approved programs, positioning the company for sustained enrollment gains.
  • Expansion initiatives include new campuses in Atlanta (Q2 2024) and Houston, the purchase and planned sale-leaseback of a Levittown, PA facility to expand the Philadelphia campus, and a program replication strategy targeting 10 new programs by 2025.
  • Elevated SG&A spending to support growth investments temporarily reduced adjusted EBITDA to $6.1 million in Q3 (versus $7.4 million a year ago), with management expecting operational efficiencies and higher profitability in the second half of 2024.
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Earnings Conference Call
Lincoln Educational Services Q3 2023
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