Lincoln Educational Services Corporation Q4 FY2025 earnings call

• Lincoln Tech benefits from interest in skilled trades training as employer demand exceeds supply and traditional college education is questioned. - Achieved 15.7% student start growth for 13 consecutive quarters; core growth from same campus and same program was 4%. - Completed ambitious expansions in 2025: relocated Nashville, Philadelphia campuses and opened Houston campus; aim to initiate 2 new campus projects each year, with Hicksville, NY to open in Q4 2026 and Roulette, TX in Q1 2027. - Lincoln 10.0 hybrid teaching platform provides flexibility to students. - Expanded high school initiatives and corporate partnerships, like with New Jersey Transit and Johnson Controls.

Fourth quarter 2025: 15.7% student start growth; net income nearly doubled; adjusted EBITDA increased 51.7%; total student population and total revenue had double-digit increases over last year's fourth quarter. Full year 2025: Revenue grew 19.7% to $518.2 million; adjusted EBITDA rose 60% to $67.1 million. Transportation and Skilled Trades (about 80% of STAR population) had 23.4% stock growth in Q4; Healthcare and other professions (about 20%) saw a 2% decline in starts, with exit of culinary program in 2024 and resumption of nursing enrollments at Paramus.

2026 guidance: Revenue $580 million to $590 million; adjusted EBITDA $72 million to $76 million; net income $20 million to $23 million; diluted EPS $0.64 to $0.74; student start growth 8% to 13%; capital expenditures $70 million to $75 million. Adjusted EBITDA will reflect add-back of noncash stock-based compensation starting in 2026; depreciation expected to increase due to recent capital investments; net income expected to have growth in second half of 2026.

Factors that may affect results include uncertainties and risks discussed in the Risk Factors section of the annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC, such as those beyond the company's control influencing the accuracy of forward-looking statements and projections.

Q: Congrats on the strong finish to the year. Looking forward to Investor Day and the 5-year targets. Focused on demand, increased investment in high school initiatives. Can you go over that?

A: Historically about 20% of students from high school market, market more receptive now, investing more talent to recruit high school students, expect growth to ramp up.

Q: Prepared comments about increased investment in high school initiatives. Focused on demand, organic growth to new campuses and program replications. More color on health care and other professions. If exclude culinary and Paramus nursing, what's balance?

A: In 2026 health care sector expected to grow, reenrollment at Paramus campus, exited programs with weak ROI, all programs passed gainful employment threshold.

Q: 2026 outlook. Dive into puts and takes or assumptions baked into guide from organic perspective versus new campuses, continued hybrid learning rollout.

A: About half of 2025 growth from organic business, new campuses and programs give confidence in starts guidance, hybrid model efficiencies drive profitability.

Q: Last call mentioned East Point campus outperforming, incremental 15,000 square foot expansion. Update on timeline, any other opportunities with existing campuses or relocations?

A: New space at East Point to open later this year, Houston and Levittown campuses have unbuilt space for growth, looking at scaling back collision program at Grande Prairie to open space for electrical program.

Q: CapEx spend in 2027, due to conservatism on construction plans or favorable regulatory approvals?

A: Due to former, construction moving well, some expenses planned for 2026 occurred in 2025.

Q: Employer demand, any other anecdotes from recent conversations with employers?

A: Career services people out there, bringing on gentleman to build national relationships, people seeing more opportunity.

Q: Metrics for graduation rate and placement rate for 2025. Percentage of incoming students from high school, where initiatives take it, high school share program?

A: Graduation rate declined to about 67.5%, placement rate increased to 82.8%. About 20% of 2025 students from high school, expect higher. High school share program has about 150 students in NJ, interest from dozens of school districts, win-win for students.

Q: Jump back to build on guidance. Dig into how thinking about revenue guide, puts and takes, accounting for delta between revenue growth and starts range.

A: Raised tuition 1% to 3% a year, average revenue can fluctuate, very confident in achievable numbers, starts 8% range, world not fully certain but given current position, disappointed if at low end.

Q: Strong beat, guidance. Color on starts faring geographically and across auto, industrial or health care, consistent growth pattern?

A: Geographically opportunity across map, stronger interest in skilled trades automotive than health care side, narrowed focus to 9 programs, focus on quality, student recommend rate good.

Q: Bigger picture, EBITDA growth fantastic, where to trend, held back by nursing health care?

A: Anticipate EBITDA margins to continue grow 150 to 250 basis points a year, about 60% capacity utilization, still room for growth, margins to continue grow.