Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lincoln Educational Services Corp (LINC, Financial) reported a 16% increase in revenue for the second quarter, driven by a 12.3% rise in student starts.
- The company achieved an adjusted EBITDA of $6.2 million, more than 150% higher than the previous year.
- The new East Point, Georgia campus exceeded enrollment goals, contributing significantly to the company's growth.
- Lincoln 10.0, the company's hybrid instructional platform, is expected to cover 65% of students by year-end, improving operating efficiencies.
- The company has strong liquidity with over $100 million, no debt, and a robust working capital position.
Negative Points
- Healthcare program starts were down 6% in the quarter, attributed to timing issues, although growth is expected for the full year.
- The new Houston campus has experienced delays due to building permit issues, pushing its opening to the fourth quarter of 2025.
- Capital expenditures have been delayed, shifting about $20 million into 2025, leading to a reduction in CapEx guidance for the year.
- Despite increased marketing efforts, the cost per start has remained relatively flat, indicating potential challenges in achieving cost efficiencies.
- The company faces regulatory challenges and delays in campus expansions, impacting the timeline for new campus openings.
Q & A Highlights
Q: Can you clarify the updated targets for 2027 regarding revenue and adjusted EBITDA?
A: Scott Shaw, President and CEO, explained that the targets have been slightly increased to $550 million in revenue and $90 million in adjusted EBITDA due to the mid-range guidance adjustments. This is the first time these updated figures have been announced.
Q: What factors contributed to the higher-than-expected student starts in the second quarter?
A: Scott Shaw attributed the increase to strong demand for programs and effective execution. The company has seen continued success and raised its guidance, expecting student starts to grow by 10% to 11% for the year.
Q: How has the increased marketing spend impacted cost per lead or cost per start?
A: Scott Shaw noted that while marketing spend increased by $2 million year over year, the cost per start has remained relatively flat, with only a slight increase of 1% to 2%. The company continues to maintain its cost per start while driving growth.
Q: Why were healthcare starts down in the second quarter, and what is the outlook for the year?
A: Scott Shaw explained that the decline was due to timing issues with program starts, particularly in the LPN program. However, he expects healthcare starts to show positive growth for the full year.
Q: What is the status of the new Houston campus, and why has its opening been delayed?
A: Scott Shaw stated that the delay was due to longer-than-expected building permit approvals. The first student starts at the Houston campus are now anticipated in the fourth quarter of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
