Lincoln Educational Services Q2 Earnings Call Highlights

Key Points

• Strong second-quarter financial performance: Revenue rose 22.4% to $142.6 million, while Adjusted EBITDA increased 42.4% to $12.7 million. Average student population grew 14.5%, although student-start growth was limited to 1%.
• Enrollment challenges are expected to ease: Financial-aid issues, prior student-loan defaults and slower lead growth tied to AI-based search tools weighed on starts. Lincoln expects low-double-digit start growth in the third quarter, supported by improved conversion, high-school recruiting and better retention.
• Expansion and investment continue: Lincoln signed plans for new campuses in Maryland and Arizona, raised its 2026 capital-expenditure forecast to $95 million–$100 million, and reiterated full-year guidance of $590 million–$600 million in revenue and $76 million–$80 million in Adjusted EBITDA.

Lincoln Educational Services NASDAQ: LINC reported second-quarter revenue growth of 22.4% and Adjusted EBITDA growth of 42.4%, while reiterating its full-year financial and student-start outlook despite a slower-than-expected increase in student starts during the period.

Revenue for the quarter ended June 30 rose to $142.6 million, driven primarily by a 14.5% increase in average student population. The company said its ending student population increased by about 1,800 students, or 10% year over year, across its 22 campuses.

Adjusted EBITDA increased to $12.7 million from the prior-year quarter, while net income rose to $1.9 million from $1.5 million. Diluted earnings per share were $0.06 on approximately 31.4 million weighted average diluted shares outstanding.

Student starts slow, while retention improves

Lincoln said student starts grew 1% in the second quarter, below its expectations, even though enrollments increased about 9%. CEO and President Scott Shaw said the lower conversion of enrolled students into starts was influenced by several factors, including financial-aid processing and some prospective students being unable to access additional Title IV funding after defaulting on previous student loans.

The company also experienced slower lead-volume growth during the quarter as prospective students increasingly use artificial intelligence-based search tools to research education and career options. Shaw said Lincoln is modifying its website and digital communications to help large language models better identify the company’s programs, graduation outcomes and other differences relative to alternatives such as community colleges.

“Our product is so strong, and I believe our brand is so strong,” Shaw said during the question-and-answer session. “It’s an opportunity ahead of us.”

Management said lead volumes continued to grow during the second quarter, though at a slower rate, and it has seen signs of improvement entering the third quarter. Lincoln expects student starts to return to low-double-digit year-over-year growth in the third quarter, aided by stronger lead trends, enrollment conversion efforts and high-school recruiting.

August is expected to be the company’s largest start period in its history, according to Shaw. High-school starts are projected to increase more than 15% in the third quarter, with high-school students expected to account for roughly 40% of overall third-quarter starts.

Meanwhile, student attrition through June improved by approximately 150 basis points from the prior year. Shaw attributed the retention improvement to investments in student service advisors and initiatives intended to help students manage personal and logistical challenges while completing their programs.

Expansion plans include Maryland and Arizona campuses

Lincoln continued to advance new-campus development projects in Hicksville, New York, and Rowlett, Texas. The Hicksville location remains on track to begin enrolling students in the fourth quarter of 2026, while Rowlett is expected to begin enrollment in the first quarter of 2027.

The company also signed a lease for a 36,000-square-foot focused-program campus in Suitland, Maryland. The campus, which is planned to open in the fourth quarter of 2027, will initially offer electrical and electrical systems technology, as well as heating, ventilation and air conditioning programs.

Management estimates the Suitland project will require about $10 million of capital investment, compared with roughly $25 million for a traditional campus. At full ramp, the location is expected to generate more than $15 million in revenue and $5 million in Adjusted EBITDA, with a projected internal rate of return above 30%.

Shaw also said Lincoln is finalizing a lease for a 90,000-square-foot campus in Tempe, Arizona, its first location in the state. The campus is expected to open by the first quarter of 2028 and offer automotive, electrical, HVAC and welding programs for the greater Phoenix market.

The company is also pursuing relationships with corporations involved in building and maintaining data-center infrastructure. Shaw said demand for workers trained in electrical, HVAC and welding is rising as data centers are built and maintained to support artificial intelligence applications.

Liquidity increases as capital spending outlook rises

Lincoln said it generated $26.6 million of operating cash flow during the first six months of 2026, compared with cash used in operations of $8.1 million in the prior-year period. The company ended the quarter with $44.2 million in cash and $99 million of availability under its expanded credit facility, for total liquidity of $143.2 million. Debt outstanding under the facility was $26 million.

In April, Lincoln more than doubled its revolving credit facility capacity to $125 million. After the quarter ended, the company acquired the building housing its Melrose Park, Illinois, campus for $18.8 million. The acquisition was funded with $15 million in new mortgage financing, and CFO and Executive Vice President Brian Meyers said the mortgage payments are lower than the campus’ prior rent expense.

The company raised its full-year capital expenditure forecast to $95 million to $100 million from $70 million to $75 million. The revised outlook reflects the Melrose Park property acquisition and anticipated spending for the Suitland campus. Growth initiatives account for about 75% of planned capital expenditures, management said.

Full-year outlook maintained

Lincoln reiterated its 2026 guidance, including:

• Revenue of $590 million to $600 million.
• Adjusted EBITDA of $76 million to $80 million.
• Net income of $23 million to $26 million.
• Diluted EPS of $0.74 to $0.83.
• Student-start growth of 10% to 14%.

The company said its 2026 Adjusted EBITDA outlook includes approximately $10 million of losses from new campuses in pre-opening and first-year operations. Lincoln continues to target $850 million in revenue and $150 million in Adjusted EBITDA by 2030.

About Lincoln Educational Services (NASDAQ:LINC)

Lincoln Educational Services Corporation is a publicly traded provider of career-focused post-secondary vocational education in the United States. Operating under the Lincoln Tech and Lincoln Culinary Institute brands, the company delivers hands-on technical instruction across high-growth industries. Its mission centers on equipping students with practical skills and industry credentials designed to meet employer needs.

The company's program offerings span automotive technology, skilled trades, health sciences, information technology, culinary arts and public safety.

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