Lincoln Educational Services Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 26, 2024

There are 7 speakers on the call.

Operator

Good day, and thank you

Speaker 1

for standing by. Welcome to the

Operator

Lincoln Educational Services 4th Quarter and Full Year 2023 Earnings and Full Year 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

Speaker 1

over to your speaker today, Michael Polivio, Investor Relations. Please go ahead.

Speaker 2

Thank you, Daniel. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued its news release reporting financial results for the Q4 full year ended December 31, 2023. The release is available on the Investor Relations portion of the company's corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, President and CEO and Brian Myers, Chief Financial Officer.

Speaker 2

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 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 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 statement and the projections upon which the segment and statements are based.

Speaker 2

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 belief as of the time with respect to future events. All forward looking statements are qualified in their entirety By this cautionary statement, Interlinking 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. Bob, please go ahead.

Speaker 1

Thanks, Michael, and good morning, everyone. This morning, we released our financial results for the 4th quarter and full year that reflect the strong operating and financial performance of our company. Our team is successfully executing our transformative growth strategies, which has led to increased student starts, retention, graduation and placement rates. At the same time, we are benefiting from the building interest in skilled trade careers despite continued record low unemployment as well as the ever present skills gap impacting Corporate America's ability to grow. As a result of these dynamics, we achieved all of our objectives during 2023 and our momentum has carried over into the 1st 2 months of 2024.

Speaker 1

For the full year, we achieved 10.3% same campus revenue growth and 11.4% same campus student start growth, which we believe exceeds our peer group's organic growth rate. During the Q4, same campus revenue growth was up 13.6%, while student starts grew 16%. We entered the New Year with a student population as approximately 1,000 students higher than at the beginning of 2023, which provides us with a platform for further growth in 2024. While we executed our capital investment strategy during 2023 to complete the build out of our new East Point campus in Atlanta to begin the build out of our new Houston campus to implement the relocation programs of our Nashville and Philadelphia campus as well as program extensions at 4 campuses, we finished the year with more than $80,000,000 in cash and no debt. In addition, we recently closed on a new expanded credit facility which can provide up to an additional $60,000,000 of availability.

Speaker 1

Lincoln is in the best financial condition of the company's recent history and extremely well positioned to execute our future capital investment plans for growth. Our exceptional 4th quarter top line growth is being driven by our strong student starts and the highest level of student retention in Lincoln's recent history and 5.4% increase in average revenue per student. Our hybrid instructional platform or Lincoln 10.0 is a key driver of this increase in average revenue per student and has been incorporated into approximately 3 quarters of our adaptable programs. While it will be the first half of twenty twenty five before Lincoln 10.0 is fully implemented, we do expect some bottom line efficiencies emerging during the second half of twenty twenty four in the form of lower instructional costs as a percentage of revenue. The new model combines hands on learning at campus facilities with a greater component of classroom work delivered through online instruction.

Speaker 1

The model enables our students to work part time or manage other commitments while pursuing their Lincoln education and is specifically designed to help a higher percentage of students to graduate. As I mentioned a few moments ago, during the Q4, Lincoln achieved our highest level of student retention in more than a decade, and we believe the biggest contributing factor to this development is the implementation of Lincoln 10.0. Another key factor behind our student start growth is the continued increase of leads generated by our marketing programs. This lead generation is occurring across the board, both geographically and from a curriculum perspective and is accompanied by a healthy conversion rate of these leads. In addition, we are achieving some lead generation leverage in markets where we have more than one campus.

Speaker 1

We recently began marketing for our new East Point, Georgia campus and have not only been pleasantly surprised by the demand for the new campus, but have also experienced an increase in interest in our Marietta campus, which is approximately 45 minutes north of Eastpoint depending on Atlanta traffic. The new Eastpoint campus is the first result of our strategy to open 1 new campus per year offering hands on training in the automotive and skilled trades fields. The campus has 56,000 square feet of training space including 15 automotive service space and up to 60 welding booths, labs, classrooms and work areas. We are now enrolling students for training in 4 essential skilled career paths with the 1st class commencing in March as planned. We are proud of the campus and we will be showcasing the facility during our in person Analyst Day on March 19.

Speaker 1

We believe that the Eastpoint campus is unique among trade schools. The facility capitalizes on the best ideas from all of our campuses, while elevating the experience with its sleek modern design. The labs and shops have the latest technology with lots of opportunities for hands on learning. We are also excited to be the 1st school in the nation to incorporate Elek2 training aids into our automotive program. We have partnered with Elek2 to develop our automotive curriculum since they are the world leader in automotive training education.

Speaker 1

The agenda for the Investor Day includes a debriefing of Lincoln 10.0 and how our transformative growth strategy positions Lincoln for increasing long term returns. Members of my management team will present an overview of operational I'm sorry, of operations and actions to drive growth and even better outcomes. I highly encourage you to attend. We have timed the events so that analysts and institutional investors can fly into Atlanta that morning, attend our event, tour the new facility and fly home in the late afternoon. For those that are unable to attend in person, we do anticipate webcasting some of the presentations and we'll provide that information as we get closer to the event.

Speaker 1

A key component of our growth strategy is to develop one new campus per year and as we announced last year, our 2nd greenfield site is in Houston, Texas. We remain on schedule to welcome our 1st classes at this campus, which is our 2nd in Texas in the Q1 of 2026. The campus is located in the heart of one of Houston's busiest commercial corridors and is strategically located for both student convenience and maximum graduate exposure to area hiring managers. 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 that are expected to become available nationwide in these industries by 2,032, over 290,000 of those jobs are projected to be in Texas.

Speaker 1

In addition to new campuses in Atlanta and Houston, we are relocating existing campuses in Nashville and Philadelphia to new locations that facilitate existing program expansion and our replication strategy. Over the next 2 years, as we layer on new campus openings in 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. I'm pleased by all the progress we have made and will continue to make. The need for our programs by employers has been with us for years and it now appears that student demand is growing to meet this need. From a new campus and program replication perspective, our biggest obstacle is receiving regulatory approvals in a timely manner.

Speaker 1

It seems that many governmental agencies whether at the state or national level are understaffed and the delay from one organization then creates a cascade of delays along the way. We have taken this new reality into our planning and so let me summarize for you the timing of our growth opportunities. In 2023, we replicated 4 programs. In 2024, we will replicate 6 programs and open the Eastpoint campus. And in 2025, we will replicate 6 to 8 programs.

Speaker 1

In the Q1 of 2026, we will open the Houston campus with a possible other new campus by the end of 2026. As other opportunities arise, we will certainly look to take advantage of them, But as of today, these are our program and campus openings. And just to reiterate, we expect each new program to generate annually on average $1,000,000 of additional EBITDA and each new campus on average to generate at least $6,000,000 of EBITDA after being open for 36 months. During the Q4 and during the 1st 2 months of 2024, we continue to learn of studies and surveys questioning the value of a 4 year degree and the accompanying debt. Many students that eventually graduate from a 4 year degree don't have the marketable or applicable skills that today's employers demand.

Speaker 1

At Lincoln, we strive to provide strong ROI programs that lead to solid in demand careers and we deliver these programs in a supportive environment that focuses on graduating and placing students. Also, the careers we offer will most likely not be replaced by artificial intelligence or moved offshore, adding security to a student's career decision. We continue to expand our corporate partnerships that play a key role in our graduate placement rate. Most recently, Peterbilt Trucks signed on to expand our partnership at the Nashville campus to our Denver campus, and we are in active negotiations with several existing partners to expand their programs to additional campuses as well. Additionally, we have established a partnership with Hyundai Genesis and we'll be offering students at 6 campuses opportunities for this advanced level training.

Speaker 1

Also to further expand our reach into the HVAC industry, we participated in a panel discussion at the recent AHR Expo, which brings together manufacturers and suppliers of all sizes and specialties to share ideas and showcase the future of HVACR technology. We discussed how Lincoln helps attract and train people for the industry and how we have partnered with major corporations to provide specialized training that meets their specific needs. The AHR Expo is the HVAC industry's largest place for OEMs, engineers, contractors, facility operators, architects, educators and other professionals to experience everything new and build the vital relationships that grow businesses and careers. We are discussing with several partners ways to build enrollments in their programs through student debt management, scholarships based on metric achievements and higher skilled level programs. We are also talking with institutions outside Corporate America to determine the feasibility of applying skilled trade training programs to non corporate organizations.

Speaker 1

Any student starts achieved over the long term from these discussions will layer on to the high single digit organic growth rate we believe we will achieve during 2024. 2023 was an excellent year for Lincoln. We exceeded all of our financial goals. Starts were up double digits, revenues were up double digits and EBITDA exceeded the top end of our guidance. We readied a new Greenfield campus, increased graduate placement rates and continue to have more demand from employers than we have students as our strong graduation and placement rates provide excellent reference points.

Speaker 1

Our balance sheet, which has never been stronger, is 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. We finished the year in excellent financial shape and are very well positioned to continue both our operating and financial momentum in 2024. Now I'd like to turn the call over to Brian, so he can review some of our recent financial highlights and present our guidance for 2024. Brian?

Speaker 3

Thanks, Scott. Good morning and thank you for joining our Q4 earnings call. As Scott mentioned, 2023 was another successful year. We exceeded all guidance metrics and achieved an impressive double digit growth in both student starts of 11.4% and revenue of 10.3% year over year. We finished the year with over 1,000 more students than last year and $80,000,000 in cash with no debt outstanding after investing over $40,000,000 in total capital expenditures.

Speaker 3

Our momentum has continued into 2024 and current visibility calls for continued growth, which is reflected in our guidance for 2024. To start, I'd like to recap our top 5 growth initiatives in 2023, which are shaping our operational landscape. While all these initiatives are significant and that they each entail an investment of over $10,000,000 we believe that each will deliver a strong ROI and advance our progress toward achieving our long term strategic goals. We are determined to drive innovation, greater efficiencies and higher financial returns. Our first two initiatives expand our footprint to 23 locations.

Speaker 3

First in our new East Point, Georgia East Point Campus in Georgia, which is set to welcome its 1st class in the coming weeks. In 2023, we incurred capital expenditures in excess of $10,000,000 to build a new state of the art facility providing students a superior educational experience and training. This campus as in all our new location was designed from the ground up to take advantage of the efficiencies of our new hybrid learning model. This allows us to deliver 4 of our core programs out of our 56,000 square foot facility. We will incur losses as the population ramps up in this 1st year, but expect the campus will be accretive to earnings in 2025 and second year of operations.

Speaker 3

2nd, in our new Houston, Texas campus, which is in the beginning pre construction phase and likely to open to students in early 2026, offering career opportunities in auto, welding, HVAC and electrical. We estimate that we'll incur capital expenditures of approximately $15,000,000 in 2024 for the build out of this 100,000 square foot campus. Our third initiative is our national campus relocation to a newer more efficient facility. The new 120,000 square foot facility will enable us to add 2 new programs, electrical and HVAC, while also expanding our industry partnerships. In 2024, we expect to invest around $20,000,000 in capital expenditures to build out this new location, which is expected to open in late 2025.

Speaker 3

The 4th initiative is our Philadelphia campus relocation to nearby Libertown, Pennsylvania. As discussed, we purchased this facility in September of last year and subsequently entered into a sale leaseback agreement announced in February this year. The sale and purchase transactions were essentially cost neutral. Our new campus will significantly expand our market presence from our only single program campus of 30,000 square feet to a 90,000 square foot Monin multi program campus. Accordingly, we expect to invest approximately $15,000,000 of capital expenditures to prepare this new location to open during the second half of twenty twenty five.

Speaker 3

Lastly, the 5th initiative is the expansion of our program offerings at our existing campuses to drive organic growth. In 2023, we initiated the build out of 7 program replication, mostly within the skilled trades and we expanded the capacity of 2 of our welding programs. While a couple of programs have been rolled out with a small number of starts in 2023, we continue to make progress with the remaining programs. But currently, we expect to see a benefit in student starts in the second half of twenty twenty four and see the new programs make a positive contribution to our bottom line in 2025. In total during 2023, we invested close to $10,000,000 in capital expenditures to implement these new programs and we'll continue to expand new programs in the current year.

Speaker 3

In summary, we are well into executing our growth strategies and have set out aggressive goals. Our team is working efficiently to execute on these projects simultaneously. Thank you to everyone for your hard work and commitment. Now turning to our Q4 performance. Please keep in mind to discuss financial results exclude preopening costs of our new Eastpoint campus, our campus pre relocation expenses and non recurring expenses in the transitional segment.

Speaker 3

The transitional segment is made up of a single campus in Somerville, Massachusetts, which was successfully taught out at the end of October and will no longer be part of our financial results going forward. Starting with the top line, revenue grew an impressive 13.6 percent or $12,300,000 to $102,500,000 The increase was due to growth in both average student population of 7.8% and average revenue per student of 5.4% compared to prior year. We are very pleased with our organic new student stock growth for the quarter, which increased an impressive 16%, outperforming our outperforming our initial expectation. Our student starts last year has positioned us to deliver strong revenue growth in 2024. We are entering the New Year with 1,000 more students than we had in the prior year, which will continue to the revenue acceleration in 2024.

Speaker 3

Operating expenses were $89,000,000 after adjusting for non recurring items detailed in our adjusted EBITDA calculation reflected in our Q4 earnings release. While expenses came in above our internal plan, the overage was mainly driven by instructional expenses resulting from population growth. In addition, performance based incentives increased based on our improved financial results. In terms of EBITDA, we ended the 4th quarter with adjusted EBITDA of approximately $16,000,000 after adjusting non recurring items detailed in our Q4 earnings release. Now turning to our balance sheet and cash flow.

Speaker 3

We continue to have a very strong balance sheet, which benefited from our business generating more than $22,000,000 in cash flow from operations during the Q4. As mentioned earlier, our year end cash balance was over $80,000,000 compared to $65,000,000 in the prior year. Moreover, at year end, we had working capital in excess of $60,000,000 Capital expenses for the full year were $41,000,000 including the purchase of Levittown, Pennsylvania facility for $10,000,000 The net total of 31,000,000 excluding Levittown is consistent with our guidance. Approximately 75% of the net $31,000,000 CapEx related to growth initiatives. In terms of liquidity, we now have more flexibility as we recently entered into a new 3 year $40,000,000 credit facility with 5th Third Bank.

Speaker 3

In addition, the agreement includes a $20,000,000 accordion option, which provides greater financial flexibility and funding should the company decide to pursue a sizable inorganic growth transaction. While we do not anticipate any reason to draw on the credit facility in the near term, access to the credit facility further enhances the company's financial strength, stability and ability to execute on growth opportunities. Lastly, in terms of the key regulatory compliance metrics, we project to be in very good standing with both our financial responsibility ratio and our 90.10 ratio. We project our 2023 financial responsibility composite score to be 3.0 the maximum achievable score and project the ninety-ten ratio to be approximately 81% compared to 75% in the prior year. The increase is the result of the new calculation rules, which became effective for 2023.

Speaker 3

The main rule change relates to veteran affairs benefits, which are now treated as federal funds and counted in the 90 side along with Title IV. While the change in the calculation methodology resulted in our ratio increasing by several percentage points, we expect to continue to be well under the 90 percent threshold. Now as we turn to 2024, the positive momentum generated during 2023 has carried over into the 1st 2 months of the New Year. Our full year guidance for adjusted EBITDA and adjusted net income will exclude the impact from 1, new campus and campus relocation costs, 2, program expansions and 3, non cash stock based compensation. We are forecasting 2024 revenues to range between $410,000,000 $420,000,000 adjusted EBITDA ranging between $35,000,000 $40,000,000 adjusted net income ranging between $10,000,000 $15,000,000 dollars student start growth ranging between 7% 12% and capital expenditures ranging between $65,000,000 $70,000,000 Our capital expenditures plan underscores the confidence we have in our growth initiatives.

Speaker 3

The largest components of the CapEx plans are the build out of the Houston, Texas campus and the relocation for Nashville and Philadelphia, which totaled around $50,000,000 for all three projects. We expect to fund these significant capital investments through the combination of our cash liquidity of $80,000,000 cash flow from operations generated in 2024 $10,000,000 of proceeds associated with Levittown, Pennsylvania facility sale leaseback completed in February. In terms of net interest expense, while we do not expect to have interest expense associated with borrowings, we project net interest expense of approximately $700,000 Total interest expense is projected to be 2,700,000 dollars Lincoln similar to others measure all new leases to determine the appropriate accounting treatment. As such, we have 2 new finance leases in 2024, resulting in $2,200,000 of interest expense. The remainder relates to fees associated with our new credit facility.

Speaker 3

This expense will be largely offset by approximately $2,000,000 of interest income. With that, I'll conclude my remarks by thanking our entire team, including our faculty and students for their outstanding efforts during 2023. We look forward to communicating our progress throughout 2024. And now I'll turn the call back over to the operator, so we can take your questions. Operator?

Operator

Thank you. Our first question comes from Alex Paris with Barrington Research. Your line is now open.

Speaker 4

Good morning, guys. Thanks for taking my question and congratulations on the big beat and the guidance above consensus expectations for 2024.

Speaker 1

Thanks, Alex. Thanks.

Speaker 4

I wanted to dive into the starts momentum a little bit because that was a significant outperformance in the quarter. I think starts were up 16% year over year excluding the transition segment came out at close to 3,200 new students versus our estimate of 2,850. And then if you look at it by field of study, transportation and skilled trades led it up about 21%, where healthcare and other professions were up 10%, 11%. You did a pretty good job, in my opinion, covering it in your prepared comments. But what other color could you offer us in terms of that just great momentum that leads us to above average guidance in 2024?

Speaker 1

Sure. Thanks, Alex. Well, we constantly daily are monitoring our leads that are coming in and we did strategically invest more then we take advantage of that. And so we did spend more in marketing in the Q4 than the prior year and I think that that frankly benefit us in the Q4 and frankly seems to be also generating increased demand in the Q1. So that's one thing that we're doing and we're constantly refining our marketing.

Speaker 1

We're constantly looking at getting out of lower return investments in marketing areas so that we can hopefully get the best returning leads as possible. And we have a new partner that we started with last year, which has certainly helped us achieve those objectives. And we anticipate frankly even more efficiencies in 2024 now that we've been working with them for a year. And then as we've mentioned, it does seem as if the world is waking up to the fact that these are great careers and there certainly is a lot more anecdotal evidence to suggest that. With that said though, we look at all of our starts in any number of ways and I can't say that the younger people are coming to us in any greater number than I'll say the older people.

Speaker 1

The average age of our student is around 25, 26 years old. And if I look at the makeup of our starts over the last 12 months, the percentage of each, I'll say age from 18, 19, 20 to 21 hasn't changed year over year. So while we know that high school students and parents are talking a lot more about, oh, maybe I don't need to go to college, we're kind of seeing that benefit across the board, frankly.

Speaker 4

That's very helpful. Thank you. And then let me just ask a quick question about guidance too before I get back in the queue. Guidance was better than expected versus consensus expectations. It looks like in that guidance, if you use the midpoint of guidance, we're expecting revenue acceleration and adjusted EBITDA margin expansion.

Speaker 4

But even at that, the adjusted EBITDA margin guidance is about 9% versus 7% in 2023, 200 basis points. But haven't you said in the past that you thought mid teens is a good target for adjusted EBITDA? And when do you think you'd get there?

Speaker 1

Yes, absolutely. We should be able to get to that 15% EBITDA level, and we anticipate, as you're seeing, some acceleration in some of that expansion of our profitability. And we think that as these new programs roll out, as we get the benefit of Lincoln 10.0, as we continue to refine our marketing, you will see hopefully an acceleration of that increase. So to get to 15%, it's not going to be in 2024, 2025, but I would anticipate shortly thereafter.

Speaker 4

Great. That's helpful. Thanks and congratulations again. I'll get back into the queue.

Speaker 1

Thanks, Alex.

Operator

Thank you. One moment for our next question. Our next question comes from Steven Frankel with Rosenblatt Securities. Your line is now open.

Speaker 5

Good morning and very impressive metrics all the way around. Could you detail for us what the graduation and placement rates were in 2023?

Speaker 1

Sure. So placement rates were around, let's say 82% and our graduation rates as we track them across the 70% threshold, so just around 70% as we look at how we are managing that. Our actual ACCSC graduation rates could be slightly less because they look at a different timeframe than what we're looking at. But anyway, we ended up at the 70% number, which is as you may recall a goal that I've set out for our company is to get 85% placement rate and 70% graduation rate.

Speaker 5

Okay. That's great. And the starts are very impressive. What do you think you're doing differently from a marketing perspective that's enabling you to gain this efficiency?

Speaker 1

Sure. Well, we know that, as I said, with this new partner, we're seem to be not seeing, we are achieving better, I'll say, purchasing of keywords. And we're also kind of narrowed down the scope of the number of keywords that we're buying, which is creating some efficiency. So we're in constant dialogue with our partner on this and we're looking at metrics all the time and we're also testing, but that's kind of the beauty of the Internet marketing. You can test different words or different styles of presenting things in one market to see if it's creating a difference and then when it does, then we look to replicate that in other markets.

Speaker 1

So it's working with a strong vendor and constantly being on top of things.

Speaker 5

Okay, great. Thank you very much. I'll jump back in the queue.

Speaker 1

Sure. Thanks, David.

Operator

Thank you. Our next question comes from Eric Martinucci with Lake Street Capital Markets. Your line is now

Speaker 6

open. Yes. I know we're not disclosing kind of a forecast on the new student starts by trade group, whether it's transportation, skilled trades or healthcare. But just curious to know if you're seeing the same demand trends, the two historic sides of the business. I think it's been about a seventy-thirty mix between transportation and skilled trades versus healthcare and other.

Speaker 1

Yes, I would say that transportation skilled trades still tend to be slightly stronger for us than healthcare. And I mean one of the exciting parts is, I'll just throw this out, our automotive business grew by 11% and we haven't opened any new auto programs. So that kind of shows you the underlying strength in these core careers that we're offering. But overall to your point, automotive and skilled trades is definitely slightly better than the healthcare sector at this point.

Speaker 6

Okay. All right. And then the your forecast for 2024, what's kind of the macroeconomic assumptions built in? Because historically, we've faced headwinds around interest rates, inflation, unemployment, is it an assumption that the status quo persists for the rest of the year?

Speaker 1

Yes. We're basically based off of what we're seeing already in the Q1. And yes, we assume that the economy will be the same. I think many people have been surprised at the strength of the economy. Unemployment still remains very low.

Speaker 1

So if that were to change, I could see that only benefiting us, meaning unemployment increases. But again, what's so exciting is the fact that we're able to get this type of growth in this low unemployment market, which to me suggests there's been a fundamental shift to our benefit taking place out there.

Speaker 6

Got it. Congrats on the quarter and the outlook.

Speaker 1

Thanks. Thank you.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Scott Schall, CEO for closing remarks.

Speaker 1

Thank you all for joining us today to listen to our strong performance and progress to date. At Lincoln, we all could not be more excited about all of our opportunities and our leadership position to continue to eliminate the skills gap. This most exciting could be what I will refer to as a renaissance of skilled trades. After decades of societal pressure to only go to college, we are seeing and hearing that more and more people are becoming aware of the robust and enduring careers available by working with your hands. For more than 75 years, Lincoln has been solely focused on providing the best hands on training possible and it's increasingly feeling that America is getting on board.

Speaker 1

I want to thank all of our instructors and staff for their steadfast commitment to our students and to our mission of changing lives. And I hope that you will join us on March 19th at our East Point, Georgia campus for our first ever Investor Day. I'm confident that you will walk away from the event with as much excitement as we have for Lincoln's future. Thank you all and have a great day.

Operator

This concludes today's conference call.

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Key Takeaways

  • Lincoln achieved 10.3% same-campus revenue growth and 11.4% student start growth in FY2023, with Q4 revenue up 13.6% and starts up 16% year-over-year.
  • The company finished 2023 with over $80 million in cash, no debt, and a newly expanded credit facility providing up to an additional $60 million of liquidity.
  • Lincoln 10.0, the new hybrid learning model, drove record student retention and a 5.4% increase in average revenue per student, with full rollout expected by H1 2025 and cost efficiencies emerging in H2 2024.
  • Growth plans include opening the East Point, GA campus in March 2024, a Houston campus in Q1 2026, and replicating 4–8 new programs per year through 2025.
  • 2024 guidance calls for $410–420 million in revenue, $35–40 million of adjusted EBITDA, 7–12% student start growth, and $65–70 million in capital expenditures.
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Earnings Conference Call
Lincoln Educational Services Q4 2023
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