Lincoln Educational Services Corporation Earns Net Income of $1.3 million, Generates Eighth Consecutive Quarter of Student Start Growth During Third Quarter; Reiterates Full Year Guidance
WEST ORANGE, N.J., Nov. 14, 2019 — Lincoln Educational Services Corporation (Nasdaq: LINC) today reported operating and financial results for the third quarter and nine months ended September 30, 2019.
- Total revenue increased 3.6% to $72.6 million from Q3 2018; same school revenue up 4.8%.
- Same school average student population rose 4.5% from Q3 2018.
- Same school student starts increased 3.4% from Q3 2018.
“We continued to execute to our strategic operating plan during the third quarter and are well positioned to achieve our goals, including profitability for the full year,” said Scott Shaw, President and CEO. “Our targeted marketing, expanding corporate partnerships, and engagement with the local communities in which our campuses operate have all contributed to eight consecutive quarters of year-over-year growth. These strategies are producing exceptional results for both our students and our corporate partners in the tightest labor market we have experienced in decades. We also continued to make progress on other operational plans and have laid the groundwork for select, high potential program expansion at existing campuses in the coming year.”
THIRD QUARTER 2019 COMPARED TO THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS:
- Total revenue for the third quarter increased to $72.6 million, or 3.6%. Revenue on a same school basis increased by 4.8%.
- Total student starts rose 2.7%, while same school student starts rose 3.4%. Transportation and Skilled Trades segment starts were up approximately 0.2% and Healthcare and Other Professions segment starts increased 12.1%. These increases mark two full years of consistent student start growth.
- Educational services and facilities expense decreased less than 1% to $33.2 million. Excluding the Transitional segment, which had expense of $1.2 million, educational services and facilities expenses would have been $32.3 million in the prior year comparable quarter. The increase was primarily the result of increases in instructional salaries and benefits expense and books and tools expense resulting from a larger student population quarter over quarter.
- Selling, general and administrative expense was $37.5 million. Excluding the Transitional segment, which had expense of $1.5 million, SG&A expenses would have been $34.6 million in the prior year comparable quarter. The increase in SG&A was primarily driven by additional bad debt expense due in part by a larger student population in combination with a slight deterioration of historical repayment rates. Further contributing to increased costs were increases in salaries and benefits expense in addition to costs incurred in connection with the evaluation of strategic initiatives intended to increase shareholder value. The Company does not anticipate incurring any additional costs pertaining to these strategic initiatives going forward.
- Operating income grew during the quarter to $2.1 million from less than $0.1 million in the third quarter of 2018.
- Net income for the quarter increased to $1.3 million, or $0.05 per share, as compared to net loss of $0.6 million, or $0.02 per share.