WEST ORANGE, N.J., Nov. 11, 2020 (GLOBE NEWSWIRE) -- Lincoln Educational Services Corporation (Nasdaq: LINC) today reported operating and financial results for the third quarter ended September 30, 2020 as well as recent business developments.

Operational and Financial Highlights for the Third Quarter Ended September 30, 2020
(as compared to quarter ending September 30, 2019)

• 8.5% revenue growth with 10.1% and 7.9% growth for Healthcare and Other Professions Segment and Transportation and Skilled Trades Segments, respectively
• 15.3% increase in student starts with 10.6% and 17.2% increases for Healthcare and Other Professions Segment and Transportation and Skilled Trades Segment, respectively
• 9.6% increase in ending student population
• 36.3% increase in EBITDA to $5.6 million
• Net Income of $3.5 million is more than double that of the prior year of $1.3 million
• Cash provided by operating activities of $3.8 million; $6.8 million on an adjusted basis
• Paid initial Series A preferred stock dividends of $1.1 million for the period from November 14, 2019 through September 30, 2020
• All campuses are currently open with in-person instruction undertaken in accordance with CDC and local authority safety guidelines

“Despite the continued challenges presented by the COVID-19 pandemic, Lincoln’s performance is beginning to demonstrate our growth potential as well as our operating leverage as we help a growing number of students acquire new skills for in-demand essential careers,” said Scott Shaw, President and Chief Executive Officer. “During the quarter, we grew student starts more than 15 percent, our second consecutive quarter of double-digit student start growth – a significant accomplishment in the current environment. In addition, we increased our student population, substantially reduced the number of students on leave of absence, increased graduation rates and began to implement program replications at several campuses that are expected to contribute to our results beginning in the summer of 2021. Financially, we increased cash flow from operations, significantly reduced our debt and more than doubled our net income. The quarter’s performance and the early momentum we are experiencing in the current fourth quarter puts us in an excellent position to exceed our original, pre-COVID objectives for 2020, which is strong proof of our team’s capabilities and operating execution.”

THIRD QUARTER FINANCIAL RESULTS
(Quarter ended September 30, 2020 compared to quarter ending September 30, 2019)

• Revenue increased $6.2 million, or 8.5% to $78.8 million from $72.6 million. The increase is due to an 8.1% increase in average student population, driven by a 15.3% increase in student starts. Revenue growth was less than student population growth due to the continued impact of COVID-19 during the quarter. Restricted access to externship sites and classroom labs extended graduation dates for certain programs which deferred $0.4 million of revenue to the fourth quarter along with a $0.5 million decrease in non-tuition revenue.
• Student start growth of 15.3% benefited from our ongoing investments in marketing as well as continuous evaluation and improvement of the admissions process. Increased efficiency is evidenced by a decline in the overall cost to obtain student starts while continuing growth. Lincoln has now experienced three years of consistent growth in student starts, with the only exception being the first quarter of 2020 which was impacted by COVID-19.
• Educational services and facilities expense increased $1.0 million, or 3.1% to $34.2 million from $33.2 million in the prior year. The increase was driven by additional instructional expense and books and tools expense resulting from an increased student population combined with the return to in person instruction at all of our campuses either at the end of the second quarter or during the third quarter.
• Selling general and administrative expense increased $3.2 million, or 8.5% to $40.7 million from $37.5 million in the prior year. The increase was primarily driven by additional bad debt expense and marketing investments, partially offset by cost savings in sales and student services.
• Operating income increased 79.2%, or $1.7 million during the quarter to $3.8 million from $2.1 million in the prior year.
• Net income increased to $3.5 million, or $0.08 per diluted share, compared to $1.3 million, or $0.05 per diluted share in the prior year.
• Cash flow from operations was $3.8 million for the quarter; $6.8 million on an adjusted basis excluding CARES Act impact.
• As of September 30, 2020, total debt outstanding under our credit facility was $18.3, down $8.8 million from $27.1 million; liquidity was approximately $37.1 million.

THIRD QUARTER SEGMENT RESULTS

Transportation and Skilled Trades Segment
Revenue increased $4.1 million, or 7.9%, to $56.8 million from $52.7 million in the prior year. The increase is due primarily to a 5.0% increase in average student population, driven by a 17.2% increase in student starts. The revenue increase was despite the continued impact of COVID-19, which caused a $0.4 million decrease in non-tuition revenue. Operating income increased 35.3% to $9.1 million from $6.8 million in the prior year comparable period.

Healthcare and Other Professions Segment
Revenue increased $2.1 million, or 10.1%, to $22.0 million from $19.9 million in the prior year. The increase quarter over quarter is due primarily to a 14.6% increase in average student population, driven by a 10.6% increase in student starts. The increases in revenue was despite the continued impact of COVID-19 during the third quarter that deferred $0.4 million of revenue to the fourth quarter as a result of extended graduation dates for certain programs and a $0.1 million decrease in non-tuition revenue. Operating income increased 17.9% to $1.7 million from $1.4 million in the prior year comparable period.

Corporate and Other
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $6.9 million, a $0.9 million increase compared to $6.0 in the prior year. Additional expenses were the result of several factors including increases in incentive compensation accrual due to financial performance, stipends provided to all employees due to the COVID-19 pandemic and increase in non-cash stock expense.

NINE MONTHS FINANCIAL RESULTS
(Period ended September 30, 2020 compared to September 30, 2019)

Total revenue increased by $11.9 million, or 6.0%, to $211.3 million, as compared to $199.4 million in the prior year comparable period. The Transportation and Skilled Trades segment revenue increased to $148.8 million a $7.8 million increase compared to $141.0 million in 2019. The Healthcare and Other Professions segment revenue increased to $62.5 million a $4.1 million increase compared to $58.4 million in 2019. Operating income increased to $3.7 million as compared to an operating loss of $4.8 million in the prior year comparable period.

CARES ACT FUNDS
Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Federal Government and Department of Education have demonstrated their recognition that students are being adversely affected by the continued disruption caused by COVID-19. Lincoln was awarded a grant of approximately $27.4 million to help ensure the continued education of its students. The majority of the funds have been disbursed to students to offset their additional expenses related to the disruption of school operations including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care and childcare.

The Company received an initial installment of $13.7 million for emergency grants to students. The Company has distributed $12.6 million to our students and expects to distribute the remainder over the next few months. The $1.1 million remaining to be distributed is included in restricted cash on the Company’s Condensed Consolidated Balance Sheet. As of September 30, 2020, the Company had received the second installment of $13.7 million which is intended for institutional costs directly related to the COVID-19 pandemic and additional emergency grants to students. As of September 30, 2020, the Company has utilized $3.3 million of these funds for permitted expenses which was netted against the expenses included in selling, general and administrative on the Condensed Consolidated Statement of Operations. The DOE also has published guidance regarding permitted and prohibited use of these funds and requirements for reporting the use of these funds. If the funds are not spent or accounted for in accordance with applicable requirements, we could be required to return funds or be subject to other sanctions.

ABOUT LINCOLN EDUCATIONAL SERVICES CORPORATION
Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education helping to provide solutions to America’s skills gap. Lincoln offers recent high school graduates and working adults degree and diploma programs. The Company operates under three reportable segments: Transportation and Skilled Trades, Healthcare and Other Professions and Transitional. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolntech.edu.