Lincoln Educational Services Corporation Q2 FY2025 earnings call

• Scott Shaw noted 22% student start growth, 15% revenue growth from current operations, and 68% increase in consolidated adjusted EBITDA. - Factors driving growth include increased interest in skilled trade training, Lincoln 10.0 hybrid teaching model providing flexibility, new and relocated campuses (East Point, Nashville, Levittown, Houston) with successful program expansions. - Focus on program replications at existing campuses, corporate partnerships, and high school share program to increase enrollment. - Health care programs are being restructured with new leadership, and efforts to improve nursing program at Paramus. - Plan to open two new campuses annually and fund expansion through operating cash flow.

In the second quarter, revenue was $116.5 million, a 15.1% increase year-over-year. Student starts grew nearly 22%, with revenue from current operations up 15%. Consolidated adjusted EBITDA increased 68% compared to the second quarter of the previous year. The transportation skill trades program saw a 32% increase in starts, while the healthcare and other professions program experienced an 8% decline in starts, largely due to the temporary pause in enrollment at the Paramus nursing program. Revenue contribution: Transportation skill trades contributed significantly to growth, while healthcare had a negative impact.

• Raised full-year guidance: Revenue expected $490M-$500M, adjusted EBITDA $60M-$65M, net income $13M-$18M, CapEx $75M-$80M, student start growth 12%-15%. - Q3 starts expected relatively flat due to high 2024 Q3 comparison, Q4 starts on pace with first half growth. - Guidance excludes stock-based compensation, one-time items, preopening costs, and net operating losses for new/relocated campuses.

Forward-looking statements are subject to uncertainties, risks, and influences beyond the company's control, as discussed in the Risk Factors section of the annual report on Form 10-K and quarterly report on Form 10-Q.

Q: Alex Paris asked about Q3/Q4 starts, stating Q3 expected relatively flat due to high 2024 Q3 comparison and Q4 on pace with first half growth.

A: Brian Meyers confirmed Q3 relatively flat and Q4 on pace with first half growth.

Q: Alex Paris inquired about Workforce Pell and its impact on Lincoln.

A: Scott Shaw stated Workforce Pell doesn't create major new opportunity but they'll take advantage if economically sensible.

Q: Alex Paris asked about updating long-term guidance.

A: Scott Shaw said they'll update guidance in November and hold Investor Day next year to set new targets.

Q: Rajiv Sharma asked about healthcare starts and capital allocation.

A: Scott Shaw mentioned healthcare segment not as profitable yet, but new leadership and restructured nursing program expected to drive growth later; Brian Meyers added health care schools except Paramus are profitable.

Q: Rajiv Sharma asked about military and veteran enrollment.

A: Scott Shaw said military represents less than 10% of students currently, and they'll reenroll veterans once degree granting in New Jersey is achieved.

Q: Griffin Boss asked about CapEx direction beyond 2025.

A: Brian Meyers said CapEx next year will be lower, mainly for Long Island campus, and another new location likely in latter half of 2026.

Q: Griffin Boss asked about revenue per student.

A: Brian Meyers explained it was affected by pro rata drop policy and timing of start in July 2025 instead of June 2024.

Q: Lars Munson asked about unit returns.

A: Brian Meyers mentioned East Point campus returned profitability in Q3 and expects good returns, Scott Shaw added CapEx investments will justify in 2026-2027.