Lincoln Educational Services Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 11, 2024

There are 7 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Third Quarter 2024 Lincoln Educational Services 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 session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Michael Polibio. Please go ahead.

Speaker 1

Thank you, Michelle. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results and recent corporate developments for the Q3 9 months ended September 30, 2024. The release is available on the Investor Relations portion of the company's corporate website at www.lincoltech.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. A replay of the call will be archived 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 continue 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.

Speaker 1

The company cautions you that these statements reflect certain 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 and may influence the accuracy of the statement and projection upon which the segmented statements are based. 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 believes 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 statement, whether as a result of new information, future events or otherwise after the date they are out. One other housekeeping matter.

Speaker 1

During the Q and A portion of the call today, we would appreciate if questioners limit themselves to 2 questions and then re queue and ask any additional questions. In advance, we thank you for your cooperation. Now, I'd like to turn the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Speaker 2

Thank you, Michael, and good morning, everyone. Thank you for joining us today for our review of an exceptionally productive Q3 at Lincoln. Before I begin, I want to acknowledge today's date, Veterans Day, and extend our appreciation and gratitude for those who have to those who continue to serve in our armed forces. Lincoln Tech was founded by a veteran to help serve his fellow veterans acquire skills to reenter the workforce. We are proud to have graduated thousands of veterans of the U.

Speaker 2

S. Armed Forces and assisting servicemen, women and their families remains at the core of our mission as they have since our founding in 1946. Led by our double digit student start and revenue growth, our 3rd quarter financial results built on the strong momentum generated during the first half of the year. During the quarter, we continue to execute our key growth initiatives, including new campus development and program replication openings at existing campuses. We also neared completion of the 1st phase rollout of our Lincoln 10.0 hybrid teaching model, while laying the groundwork to begin implementing the platform at our nursing programs.

Speaker 2

We signed new corporate partnerships and expanded numerous existing ones, achieved 67% adjusted EBITDA growth and increased cash flow from operations. When combined with current trends, our results and progress have led to an increase in our guidance for the full year 2024, while increasing our confidence of continued growth in 2025. Brian will share more in his remarks. I've mentioned during previous calls how Lincoln is capitalizing on the nation's growing interest in skilled trades training as an alternative to the traditional 4 year college education. During the Q3, we saw more and more examples of this trend in media coverage and political leader discussion.

Speaker 2

Our marketing programs have become increasingly effective over the past year at capturing potential student interest in Lincoln and during the Q3 generated robust student lead levels exceeding our internal forecasts. We continue to successfully convert these leads to starts and in the Q3 student starts at campuses operating for more than a year grew 15%. When you add the 3rd quarter starts at our new Eastpoint campus, overall student starts grew an impressive 21%. The Lincoln 10.0 hybrid teaching model is proving to be a leading generator of interest in our programs while at the same time providing increased flexibility to our students who often need to balance work and life while earning their certificate or degree. We ended the quarter with more than a 13% increase in student population over last year and a 10% increase in this growth metric over the Q2, which is a highly positive operating trend for our company.

Speaker 2

We will complete the 1st major phase of the rollout of Lincoln 10.0 by the end of this year. At that time, the platform will be used to teach approximately 65% of our students. The success of 10.0 is truly transformational for Lincoln, our students and instructors. It enhances the student experience, enhances our instructors' ability to teach and increases our operating efficiencies. We believe Lincoln 10.0 has contributed to our start growth and strong corporate partnership activity and we are now ready to expand its deployment to more of our students.

Speaker 2

In the Q3, we decided to adopt the 10.0 hybrid teaching model approach for our nursing programs. The implementation should be completed by the middle of 2026 and when it is fully deployed, our transformational hybrid teaching model will serve approximately 80% of our total student population. We are very excited about the potential benefits Lincoln 10.0 will bring to our nursing programs, including reducing commutes for both students and instructors and increasing capacity to enable us to serve even more future nurses. Additionally, we expect to realize improved operating efficiencies and thus operating margins from these programs, which have tended to be lesser contributors to our financial performance as compared to our skilled trades programs. The success and scalability of Lincoln 10.0 has been a major factor behind the early outperformance of our new Eastpoint campus in Metropolitan Atlanta.

Speaker 2

For instance, after 2 quarters of operations, Eastpoint has enrolled 600 students and generated $5,000,000 in revenue, results that exceeded our internal plan. Furthermore, during the Q3, Eastpoint generated positive EBITDA, which again outperformed our expectations. To date, our student start costs at Eastpoint are significantly below our corporate average and the campus has exceeded our original expectations. These early results have given us even more confidence about the potential returns from our investments in new campuses. Currently, we are well into the construction of 3 campuses which will open in 2025.

Speaker 2

We are relocating the Nashville and Philadelphia campuses which will have the look and feel of our Eastpoint campus and will offer additional skilled trades programs. We expect to begin transferring students from the old campus in Nashville to the new one during the first half of twenty twenty five. Levittown, our new Philadelphia campus is currently scheduled to open in the Q3 of 2025 and our latest new campus in Houston is expected to open by the end of 2025. I'm pleased to announce that we are in what we believe are the final stages of negotiations for the leasing of a brand new facility serving the Metropolitan New York City area. Already have a campus in Whitestone, Queens, but this new campus will be on Long Island.

Speaker 2

We have a partnership with the Greater New York Dealers Association and we know that there is strong demand for technicians on Long Island. Also, since we added our electrical program several years ago to our Queens, New York campus, we know that there is strong demand and need for the skilled trades in this region. This campus is targeted for opening in late 2026 and will offer automotive, welding, HVAC and electrical. We will feature the same state of the art technology and teaching tools that we are deploying in Eastpoint and the other new campuses. We expect to be teaching all students at these new campuses through the Lincoln 10.0 hybrid teaching platform, thus realizing the same level of operating efficiencies we are experiencing in Eastpoint.

Speaker 2

Automotive classes at the new Metro New York campus will utilize the elective curriculum and integrated training equipment that has been such a hit at the Eastpoint campus. The cloud based e learning platform is the global leader in automotive training in high schools and colleges and Lincoln is currently the only school group in the United States to offer its full capabilities and benefits. Electude allows our instructors access to interactive and engaging foundational lessons, gamified formative and summative assessments, teaching resources, tools to build their own curriculum, analytical tools to identify learners' needs, and coursework in multiple languages. Moreover, their proprietary trainers seamlessly integrate with our curriculum and provide students with a clear understanding of all the major systems in a car. The technology utilizes the principle of discovery learning, which is how younger generations have become so adept in mastering today's applications.

Speaker 2

We have been so pleased with the results at Eastpoint, we are expanding its deployment to all of our automotive programs throughout the country. Another key component of our growth strategy is replicating 10 programs at existing campuses by the end of the Q1 of 2025. During the Q3, we opened HVAC programs at our Morristown and Shelton campus and expanded welding at our Melrose Park campus. During the Q4, we were on track to open additional welding booths in Denver, a new HVAC program in Indianapolis and electrical program in Moorestown. The programs open to date have generated strong interest with both students and employers.

Speaker 2

In keeping with the national trend toward alternatives to 4 year college education, we're also finding new interest in these programs from high school guidance counselors in the respective markets. We continue to expect these programs to generate an additional $1,000,000 each in profitability by the 3rd year of operation. The success of this effort to date has led to our team examining other opportunities to replicate successful high return programs at existing campuses as we move into the second half of twenty twenty five. Corporate partnerships continue to be an important driver to our growth and in late October, we announced 2 new employer specific training programs with Hyundai Motor of America and Genesis Motor of America. The program supplement Lincoln's automotive service technology programs across America and help students build skills on Hyundai Genesis equipment and systems while helping the employer build its technician workforce.

Speaker 2

Both are employer funded meaning our students will have no additional expense to pursue this supplemental training. In addition, we recently finalized terms to open our 3rd Tesla training center at our Melrose Park, Illinois campus. Meanwhile, our 5 year workforce development agreement with Container Maintenance Corporation has made strong progress over the summer and fall and has started training CMC employees at the company's CMC's Charleston, South Carolina facility. This partnership represented new scale and level for Lincoln by leveraging our curriculum and training resources to upscale CMC employees at its facilities. Over the 5 years, the agreement is expected to generate approximately $6,000,000 in revenue to Lincoln.

Speaker 2

Several other corporate partners have recently extended our working relationship in some cases for up to 5 years illustrating the continued pressures employers have to fill their skills gap as well as their satisfaction with the results generated from partnering with Lincoln. Meanwhile, discussions with potential new partners are quite active. With our outperforming student start growth, our expense spending has been higher, but we continue to see progress in operating efficiencies driven largely by Lincoln 10.0. Educational services and facilities expenses down as a percentage of revenue and we are generating higher returns from our marketing investments. We believe we are making progress to enhance operating leverage across our system and the application of Lincoln 10.0 to our nursing programs should be a significant contributor in the future.

Speaker 2

Overall, we remain on track to deliver our 2027 adjusted EBITDA objective laid out earlier this year and are increasing our net income guidance for this year as Brian will review in a moment. 1 month into the Q4, we continue to experience strong indications of interest from our employers and students. Looking ahead to 2025 and beyond, we are very well positioned to continue our growth trends as we layer on new campuses and new programs at existing campuses while continuing to drive efficiencies across our system. Lincoln 10.0 will be a key driver to these operating efficiencies as well multiple campuses in the same region which we are experiencing in Atlanta, Metropolitan New York and New Jersey. Now that the election is behind us, we look forward to working with the incoming administration to better serve all students and create a more level playing field among institutions.

Speaker 2

Given the high cost of higher education at all levels, it's imperative that students have accurate information about the likely outcomes for their area of study. At Lincoln Tech, we are committed to providing only high ROI programs that benefit students, their families and their communities and we continue to work to be a leading voice for middle skills learning in this country. The opportunities for Lincoln have never been greater. Employers continue to struggle to find technicians, electricians, welders and healthcare workers. Lincoln Tech trains the essential workers that allow us to live our lives in the manner to which we have grown accustomed.

Speaker 2

We see the need for what we do growing regardless of macroeconomic conditions or political agendas and have transformed our company into an exceptional provider of educational services meeting the needs of America's corporations as well as America's workforce. Finally, I'd like to note, I'll be meeting with investors over the coming weeks at various locations around the country. On November 21, I will be in Dallas at the IDEAS Conference and with Lake Street in San Francisco and Denver on December 10, 11. In addition, I will be with investors with Barrington in New York City on December 17 to educate investors about the enhanced valuation potential offered through our shares. Now I'll turn the call over to Brian Myers, so he can review some of our recent financial highlights and guidance.

Speaker 2

Brian?

Speaker 3

Thank you, Scott, and good morning, everyone. Thank you for joining our 3rd quarter earnings call. Turning into our financial results, I too would like to take a moment to honor Veterans Day and express our gratitude to all our students, instructors and alumni who served and continue to serve in the armed forces. Today, I will cover highlights of our financial performance, provide an update on key growth initiatives and review our raised guidance for 2024. In terms of campus performance, as Scott mentioned, the new East Point Georgia campus has delivered strong operational and financial performance since its opening in March of 2024.

Speaker 3

East Point's financial results during its 1st 7 months of operations exceeded our initial internal plan by a wide margin. As a result, we are pleased to report that the campus achieved positive EBITDA for the Q3. With the campus now profitable, the financial results for the campus are no longer included as an adjustment in our adjusted EBITDA calculation beginning with this Q3. Moreover, the campus is projected to continue to be profitable in the 4th quarter, further contributing to our overall growth and financial stability. The success of the new Eastpoint campus strengthens our confidence in our growth strategy and strong return on investment.

Speaker 3

Building on this momentum and as Scott outlined, we are excited about the upcoming relocation of our Nashville campus followed by the anticipated relocation of our Levittown and the opening of our Houston in the later half of twenty twenty five. While each of these projects represent a significant investment with total capital expenditures of around $75,000,000 between 2024 2025, we are confident that we can achieve similar results to those at our East Point campus driving our long term growth trajectory. Turning to our strong financial performance in the Q3. Total revenue for the quarter was $114,400,000 reflecting an increase of nearly 15% or $15,000,000 This growth was primarily driven by a 10.6% increase in average population fueled by our double digit start growth over the last 4 consecutive quarters. For additional context, Lincoln has now achieved start growth for 8 straight quarters starting with the Q4 in 2022.

Speaker 3

As a side note, the new East Point Georgia campus contributed $3,400,000 to this incremental revenue for the quarter. Our starts for the Q3 significantly outperformed prior year increasing by 21.1%. We ended the quarter with 1800 more students than last year's Q3, positioning us well for continued revenue growth in the Q4. While the overall 21% growth includes the new East Point Georgia campus, same campus start growth remained strong at over 15%, highlighting the sustained growth across our existing locations. In terms of operating expenses and overall operating expenses were $108,600,000 compared to $97,600,000 last year.

Speaker 3

The 11% overall increase is a result of our 10.6% growth in average student population, a $1,500,000 increase in depreciation as a result of higher level of capital investments and a number of one time items mainly related to growth initiatives. While we increased our marketing investments compared to prior year, our cost per site has declined, demonstrating efficiencies in our marketing spend. Our operating expenses were in line with our internal expectations and education and service and facility expense as a percentage of revenue had begun to decline as we experienced efficiencies and benefits from our higher population and our higher bread teaching model. Adjusted EBITDA was $10,200,000 for the Q3 compared to $6,100,000 in the prior year, representing a 67% increase. On a year to date basis, we have generated $23,100,000 of adjusted EBITDA compared to $10,800,000 last year, a 114% increase.

Speaker 3

Our balance sheet remains strong with total liquidity exceeding $90,000,000 with cash and cash equivalents of $54,000,000 Also, we continue to be debt free and ended the quarter with working capital of $42,000,000 During the Q3, we generated cash from operations of $5,600,000 compared to cash used of $6,800,000 in the prior year. Our CapEx was about $20,000,000 mainly related to the new campus initiatives discussed earlier, plus the build out of 10 programs, which consist of program applications and program expansions. Over the course of Q3, we successfully launched 3 programs with plans to roll out 3 additional programs in the Q4 and the remaining 4 programs in the first half of twenty twenty five. As a subsequent event note, the Board of Directors recently approved their strategic plan to divest our euphoria Institute campus in Las Vegas, Nevada. This decision aligns with our broader strategic goals of optimizing resources and focusing on Lincoln's core programs.

Speaker 3

Given that this campus is Lincoln's only location offering cosmetology and aesthetic programs, which lie outside our core programs, we believe it is better positioned with a cosmetology centered organization. The euphoria campus had an EBITDA loss in 2023 and continues to underperform this year. The forecast The forecast is to generate $7,000,000 of revenue with an EBITDA loss of above $1,000,000 We are working with a potential buyer and expect to have a signed asset purchase agreement in place shortly and the closing to be completed early next year. In terms of accounting, as of year end, we expect to report the net related assets as held for sale on the balance sheet and the operational results within the transitional segment. Shifting to the outlook for the full year of 2024.

Speaker 3

Based on the 1st 9 months strong financial performance and our growing student population with exceed which exceeded 15,800 at the end of the quarter combined with the current market demand, we feel confident in raising our total year guidance as follows: revenue ranging between $430,000,000 to $435,000,000 adjusted EBITDA in the range of $41,000,000 to 43,000,000 dollars adjusted net income ranging between $16,000,000 $18,000,000 even start growth of 13% to 15% and capital expenditures ranging between $50,000,000 to 55,000,000 dollars As a reminder, our full year financial guidance for adjusted EBITDA and adjusted net income excludes the new Eastpointe campus net operating losses incurred in the 1st two quarters before the campus became profitable. Pre opening costs related to new and relocating campuses, program expansions and non cash stock based compensation and one time non recurring items. Please note, we define new campus EBITDA adjustments as all pre opening costs plus quarterly net operating losses, if any within the 1st 4 quarters after opening. In summary, we are very pleased with our performance in date and look forward to building on the success going into next year. We are constantly exploring new opportunities to expand and drive efficiencies.

Speaker 3

Our long term vision and goal remains clear to achieve revenue of approximately 550,000,000 dollars and adjusted EBITDA of about $90,000,000 in 2027. We continue to demonstrate solid growth both organically and through our growth initiatives. We begin and we believe we will we are well positioned to reach this target. As always, a special thank you to our entire Lincoln team for their dedication and delivering exceptional education to our students and creating shareholder value. At this time, I'll turn the call back over to the operator for any questions.

Speaker 3

Operator?

Operator

Thank Our first question is going to come from the line of Alex Paris with Barrington Research. Your line is open. Please go ahead.

Speaker 4

Hi, guys. Thanks for taking my questions and congratulations on the beat and raise.

Speaker 2

Thanks, Alex.

Speaker 4

All right. So my two questions are going to be as follows. I want to talk about new campuses and then program applications. New campuses, you kind of did a good job overview providing an overview in the prepared comments. I'm curious about the announcement today, the Long Island campus plans.

Speaker 4

Maybe you can give us a little bit more color on that, how that came to pass and the regulatory framework within New York State?

Speaker 2

Sure. So, we're at the cusp of hopefully signing the lease for this new property. We started looking in Long Island just with the same methodology that we used in selecting the Eastpoint campus location also highlighted the need out in Long Island for another campus. And as I mentioned, we already have a partnership with the Greater New York Dealers Association. And so they have many members out there on Long Island.

Speaker 2

And so we've known for a long period of time that it's a long commute for those students to come to our Queens campus. And so there definitely was an untapped market. On top of that, just given where the skilled trades are and our ability to launch a new campus that's going to have welding, electrical and HVAC also was a very positive driver for us to select this location. So it's something that hopefully the lease will be signed within the next coming weeks, if not sooner, and we hope to have the school up and running within 24 months.

Speaker 4

Great. And then related, is there any special concerns with regard to New York State regulation of for profit post secondary education that we should be aware of?

Speaker 2

Well, there is there's always New York is a challenging state. If we were going in a de novo, I'd have more concern. Since we have been operating a campus there for 20 years, I do feel like we have an established relationship. With that said, as you highlight properly, it can be a challenging state to operate in and move forward. My expectation though that it's just a matter of timing, not a matter of whether it will happen or not.

Speaker 4

Got you. And then still related, your decision to close the Euphoria Institute in Las Vegas, that's not a big surprise that doesn't really fit with the transportation skilled trades and allied healthcare and nursing for that matter.

Speaker 2

Yes. So I'll just jump right in, Alex. So

Speaker 1

first of

Speaker 2

all, we're not closing it. It's going to have a new owner. As you just mentioned, it is a one off. It's our only cosmetology program. It's not an area that we're looking to invest in.

Speaker 2

As we look to hone our program offering, we had this in the works for quite some time trying to find the proper home for it. And we think that we've found someone and we again hopefully will be announcing very shortly the finalization of those plans. But they'll be able to work with a smaller organization that has other cosmetology schools, which I think will enable them to grow and prosper and be much more effective than being kind of an orphan school within the Lincoln system.

Speaker 4

But beginning in Q4, it will be part of transition campus for P and L reporting?

Speaker 2

Correct.

Speaker 5

And it

Speaker 3

will be held for sale in the balance sheet and we're looking to close on this in Q1 of next year.

Speaker 4

Great. I'll go back into the queue and let a few other people ask questions and maybe I'll have a follow-up. Thank you.

Speaker 2

Okay. Thanks, Alex.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Eric Martinuzzi with Lake Street Capital Markets. Your line is open. Please go ahead.

Speaker 5

Yes. Sunnyslide is the new Long Island campus. I think you said Eastpoint is 56,000 square feet. What square footage are we looking at for Long Island?

Speaker 2

Around 65,000, so a little bit larger than Eastpoint.

Speaker 5

Okay. All right. And then for the you talked about lead gen being robust. Is this a do you feel like you're getting smarter at lead gen or that there's an increase in macro demand?

Speaker 2

Well, certainly if I talk to my marketing people, we're getting smarter at lead gen. But I think it's like anything in life, it's a combination. Definitely, there's just much more interest by people. So that always helps. And we constantly are looking at every way we generate leads and are constantly evaluating the performance.

Speaker 2

So I think it's a bit of both. But I'd say probably the overall macro trend that's happening out there is definitely giving us a nice boost.

Speaker 1

Got it. Thanks for taking my questions.

Speaker 2

Yes, no problem.

Operator

Thank you. One moment for our next question. Our next question is going to come from the line of Steven Frankel with Rosenblatt Securities. Your line is open. Please go ahead.

Speaker 1

Good morning. Thank you. Tremendous performance on the skilled trades side of the business. Healthcare, you had strong double digit starts. But how should we think about the flattish population?

Speaker 1

Is this just a timing difference versus last year?

Speaker 2

Yes, it's timing of some of the starts. Also, as you may know that our one campus in Paramus, New Jersey is below benchmark. And so we had to stop enrolling some students for that program. Given that's current performance, we expect it to go back above benchmark in 2025. I feel very good about that.

Speaker 2

But in the interim that one campus, that's one of the 7 campuses that has nursing won't have starts. So that will, I'll say dampen some of the population. Populations are robust at the other campuses. So I'm not concerned there.

Speaker 1

Okay. And As well as

Speaker 3

one of our biggest declines on that side is that euphoria campus as well.

Speaker 1

Okay, great. That's helpful. Thank you. That's all the questions I had.

Speaker 2

No problem.

Operator

Thanks. Thank you. Our next question comes from the line of Raj Sharma with B. Riley. Your line is open.

Operator

Please go ahead.

Speaker 6

Yes. Thank you for taking my questions again. Congratulations on solid results and the raised guidance.

Speaker 2

Thanks, Raj.

Speaker 6

Yes. On lead levels, they are very strong, even despite unemployment rates are not that impacted yet. Is this can you talk a little bit about the general environment? What are you seeing this trend is looking to stay positive like this?

Speaker 2

I mean, I definitely think so. I mean, we're definitely seeing very strong interest. And as you say, and the fact is unemployment has not increased and yet we're seeing growth in our leads almost as if it were a high unemployment environment. I believe that really speaks to what many have been noticing and talking about and we certainly reiterate the fact that people realize that college isn't for everyone. There are a lot of solid job opportunities out there.

Speaker 2

We are a faster, cheaper way to get into the workforce than pursuing a lot of these 4 year degrees. And people, I think in general are looking to do something different. And as we say, all of our programs are essential workers. These are all jobs that people can feel good about. These are all jobs that require skills to be developed with your hands.

Speaker 2

These are all jobs that frankly AI is not going to take away. So we are in an area at the right time with the right programs in the right environment. So it's all moving very well for us.

Speaker 6

And thank you for that. That was really helpful. And then with the change in the administration and with the Trump win, traditionally, the party has been less onerous on you or on your industry. Do you foresee any changes in regulation? Do you foresee any changes in your SG and A in terms of the outlays for outlays that you've been making in lobbying?

Speaker 2

Yes. Well, our lobbying efforts and educate they're really education efforts will continue because as we know, administrations come and go. Certainly in the last Trump administration, a lot of the rules and regulations became less onerous. So I would anticipate that that's going to happen again. But we are doing everything geared around the long term regardless of who's in office.

Speaker 2

What we do hope could happen though in this administration is that a lot of the redundant and unnecessary rules and regulations are hopefully altered and ideally, although we want changes that are going to be more permanent. And at the end of the day, what we are looking for is simply a level playing field. Give every student the opportunity to assess what is a good program, where they can get a good return on their investment, and we will happily compete with anyone. It's just a matter of not being on a level playing field. But overall, I think that this is going to be a good period for us because hopefully, the administration will have less burdensome regulations like the bar defense for repayment.

Speaker 2

Certainly, if someone's been defrauded, they should be get their money back. But you just can't give people a blank check just to go after every school in the country just because you feel like you didn't get what was promised to you. So I think that there's hopefully going to be greater sensibility put into the rules and regulations. And certainly on the margin, it has to be beneficial to us. But as to whether or not I can say it's going to cut $1,000,000 of expense out, I definitely would not say that.

Speaker 6

Got it. Again, thank you for answering my questions. Excellent results and congratulations again. I'll take it offline. Thanks.

Speaker 2

Thanks, Raj. Thank

Operator

you. I'm showing no further questions at this time and I would like to turn the conference back over to Scott Shaw for any closing remarks.

Speaker 2

Thank you, operator, and thank you all for joining us today and hearing about our strong performance and healthy momentum. For over 78 years, Lincoln has delivered quality education and partnered with companies locally and nationally to develop a productive middle skills workforce. Our success is directly tied to the strength and commitment of our people. Take great pride in visiting our campuses and meeting with students, faculty, staff and employers. Their stories of transformation and success inspire all of us and I could not be more appreciative of everything that they do.

Speaker 2

The inflection point has definitely occurred as more and more people are seeking a quick cost effective path to enter the workforce and develop skills that can serve them a lifetime. Lincoln Tech is ready and able to meet this growing demand. Our programs are proven and constantly being updated to meet current industry needs. Our instructors are world class both in their knowledge and desire to help students. Our balance sheet is strong, which will enable us to expand into new markets and continually reinvest in our facilities to remain the leader in each market we serve.

Speaker 2

We're excited by the future and where we are going and I look forward to updating you in February. Until then, have a wonderful upcoming holiday season And once again, thank you to all of our veterans for their sacrifice and commitment to this country. I hope you all have a wonderful day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Powered by Quartr

Key Takeaways

  • Lincoln delivered double-digit growth in Q3 with 21% student start increase and a 13% rise in total student population, driving a 67% jump in adjusted EBITDA and prompting an upward revision of full-year guidance.
  • The Lincoln 10.0 hybrid teaching model reached its first phase rollout (65% of students) and is slated to expand into nursing programs by mid-2026, enhancing flexibility for learners and boosting operational efficiencies.
  • New campus development outperformed expectations: the East Point (Atlanta) campus achieved positive EBITDA within seven months, and three additional campuses are under construction for 2025, with a Long Island site targeted for late 2026.
  • Program replication and corporate partnerships are expanding, with 10 new skilled-trades programs to open by Q1 2025 and initiatives like Hyundai/Genesis training, a third Tesla center, and a $6 million workforce development deal with Container Maintenance.
  • Lincoln plans to divest its non-core Euphoria Institute cosmetology campus in Las Vegas to concentrate resources on its core skilled trades and healthcare education offerings.
AI Generated. May Contain Errors.
Earnings Conference Call
Lincoln Educational Services Q3 2024
00:00 / 00:00