Transcript • May. 11, 2026 2:00 PM • Lincoln Educational Services (LINC)
Transcript
May. 11, 2026 2:00 PM
Lincoln Educational Services (LINC)
Brian: a strong return on investment. Partially offsetting this improvement are higher costs in books and tools, primarily driven due to increased laptop pricing. As we do not intend to pass these incremental costs on to students, the rise in laptop costs is expected to result in an incremental impact of approximately $750,000 per quarter for the remainder of the year. SG&A expenses also improved to 55% of revenue from 56.9%, supported by lower bad debt expense, which declined to 9.5% of revenue from 10.1%, reflecting stronger financial aid processing and cash collections. This was the fifth consecutive quarter in which we saw a reduction in bad debt expense as a percentage of revenue compared to the prior year. Adjusted EBITDA increased 84.7% to $15.5 million. As a reminder, our adjusted EBITDA no longer adds back the losses related to new campuses in their pre-opening and initial year of operations. We incurred new campus losses of $2.8 million in the first quarter. Total margin expanded to nearly 11% compared to 7% the prior year. On our revenue growth this quarter, we generated an incremental EBITDA margin of approximately 27%, which increased to roughly 40% excluding new campuses. Net income was $4.4 million, which more than doubled compared to prior year. EPS was $0.14 per diluted share based on approximately 31.3 million weighted average diluted shares outstanding. Net income margin benefited from a lower effective tax rate of approximately 22%, driven by a discrete tax benefit related to stock vesting. We expect the tax rate to normalize to around 9% in future quarters. Lastly, turning to the balance sheet, we also delivered an exceptional strong quarter, driven by solid capital structure and continued improvement in cash generation. Historically, the first quarter has been a period where we used cash from operations. However, this quarter marks the first time in many years that we generated positive operating cash flow during this period. Cash flow from operations totaled $4.6 million compared with the use of $8.4 million in the prior period, a $13 million increase compared to 2025. Now turning to our full-year guidance, our strong first quarter performance Higher student population and continued momentum gives us confidence to raise our outlook for the year. We now expect revenue of 590 to 600 million, adjusted EBITDA of 76 to 80 million, net income of 23 to 26 million, diluted EPS of 74 to 83 cents, student stock growth of 10% to 14%. Notably, the high end of our prior guidance now represents the low end of our updated outlook. As mentioned earlier, beginning in 2026, adjusted EBITDA no longer excludes pre-opening and first-year operating losses from new campuses. As a result, our guidance now includes approximately 10 million in new campus losses and excludes only non-cash stock-based compensation. Lastly, capital expenditure guidance remains unchanged at 70 to 75 million. Planned expenditures include Hicksville and Raleigh future campuses, program expansions, and ongoing maintenance investments. Growth initiatives accounted for approximately 65% of our total CapEx. During the first quarter, capital expenditures totaled approximately $15 million, coming in below plan due to the timing of certain expenditures shifting into the second quarter. When additional campus locations are announced, we will update our capital expenditure plans. Finally, I'd like to note that subsequent to quarter end, in April, we entered into an amendment to our credit facility that significantly enhanced our financial flexibility. In April, we increased our revolving line of credit from $60 million to $125 million, and in the process secured more favorable terms. The amended facility provides us with additional capacity and flexibility to support our growth strategy, including investments in new campuses and program expansions, while also positioning us to pursue future corporate development opportunities as they may arise. Prior to this amendment, we ended the first quarter with $72 million in total liquidity, with $16.7 million of cash, and just $5 million of debt outstanding. In closing, we are highly encouraged by our strong start to the year and remain focused on achieving our long-term 2030 objectives, including $850 million in revenue and $150 million of adjusted EBITDA, as outlined at our investor day in March. We thank our entire team for their continued commitment and strong execution. With that, I'll turn the call over to the operator for questions. Operator?
Operator: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1-1 again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. Please stand by while we compile the Q&A roster. And our first question will come from the line of Lou Corton with Northland Capital Markets. Your line is open.
Luke Horton: Yeah. Hey guys, thanks for taking the questions and congrats on a really nice quarter here to start the year. Just wanted to start off with the organic growth. You said about half of that 20% or 19 and a half student starts growth was organic in the quarter. I'm just wondering as you're thinking about the 2026 guidance, if you could give some details around assumptions for organic growth versus new campuses.
Scott Shaw: Sure. So, I mean, last year, if you look at the full year, about half of our growth was from organic means. This year, we anticipate probably about the same, Luke, as we look for the full years, about half of the growth could be from organic sources.
Luke Horton: Okay, got it. Obviously, on the skilled trade side, the programs like auto, HVAC, welding, and electrical continue to be some major contributors. Just wondering if there's any programs you guys don't offer that you've looked at getting into, maybe like an aviation or robotics-type programs.
Scott Shaw: Sure. Yeah, we're always looking for new opportunities. The one that everyone always throws out is plumbing. But plumbing is just there are very, very few schools out there doing it. And so, and we haven't heard from our employers that there's a huge need. Seems like that is satisfied through other means. But we are continuing to explore if there could be components that could be included in our program. But aviation is certainly a nice business, very similar to fixing cars and trucks, just larger vehicles. So that could be something. Not necessarily robotics, but in general, there's a whole area around megatronics, which is kind of a combination of electronics, it's hydraulics, it's pneumatics, it's PLCs. things that run factories or other sorts of equipment that need to be repaired and maintained to keep factories running and distribution centers running. So those are some of the things that we're looking at, whether or not they'll be full programs or maybe some sort of short program. We are looking for new opportunities to continue trying to solve the skills gap challenge that's out there.
Luke Horton: Okay, great. I'll leave it to those two questions. Thanks, guys, and congrats on the quarter. Thanks, Luke. Appreciate it.
Operator: One moment for our next question. And that will come from the line of Eric Martinuzzi with Lake Street Capital. Your line is open.
Eric Martinuzzi: It was good to see the hops starts turn positive at 5%. I think you said at the investor day that really your new campus focus was going to be on the skilled trades and transportation, is there any expectation that maybe some of the new facilities that you would be getting into would have expansion capabilities for healthcare and other?
Scott Shaw: Absolutely. I mean, just as a reminder, the new Levittown campus we just opened up has about 12,000 of undeveloped square feet that we could put something else in. Our new Houston campus also has about the same amount. So we do have some space in some of these newer facilities to add healthcare and or additional programs. And the overall, again, plan for healthcare is obviously we all know healthcare is a growing sector of the economy, huge need. What we're trying to do is make sure that our health care program is as profitable as possible before we expand it. And we actually made really good progress on that this quarter. For the first time, our nursing programs were profitable in the first quarter, frankly, since pre-COVID. So we are making progress. And once we achieve a level of profitability that we're comfortable with, we do hope to expand those programs into other campuses.
Eric Martinuzzi: And with the recovery at Paramus, are there milestones that the state of New Jersey is looking for you to hit, or is it just you've got the green light? Yeah.
Scott Shaw: Okay. Yeah, sorry about that. Yeah, we had the full green light. In fact, the graduation rate in Paramus is over 90% for the NCLEX exams. So, you know, as a company, we averaged, frankly, at 89.5 or 89.4% last year. So, we're safely well above the benchmark. And there's no other restrictions or notification that we need to give the state.
Eric Martinuzzi: Okay. You said grad rate, but I think you meant pass rate.
Scott Shaw: Yes. Thank you for clarifying that. You are correct. It's the NCLEX pass rate.
Eric Martinuzzi: Great. Nice job on the quarter and the outlook. That's it for me.
Scott Shaw: Thanks, Eric. Appreciate it.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1-1. Our next question will come from the line of Griffin Boss with B. Riley Securities. Your line is open.
Griffin Boss: Hi, good morning. Thank you for taking my questions. So, first, I just want to start off on the expanded credit facility, you know, that more than doubled as you discussed. Just curious, If that changes your calculus going forward when you gave your 2030 targets at the University, you talked about six potential new campus openings between 27 and 29, so two per year. But do you have any expectation that maybe you can add on to that, maybe do a third, fourth campus perhaps in any one of those years? Or are you still just trying to be methodical with two per year?
Scott Shaw: Well, yeah, we're still focused on two per year, but we do have the flexibility to add more to that. I think as we've said in the past, you know, we have searches going on in about a dozen different markets, and when we're able to find a facility that meets our needs, it's a little bit out of our control, but we do think we can basically almost find one every six months. But there could be opportunities that we find more that, you know, we could find them faster, in which case we do have greater flexibility to take advantage of that But the overall plan right now still remains about two a year.
Griffin Boss: Okay, understood. Thanks, Scott. And then just one other housekeeping for me, model related. You mentioned the timing for certain capex pushing to the second quarter. So is the expectation here in terms of cadence that 2Q might be the heaviest capex spend quarter and maybe kind of trailing off in 3Q and 4Q to get to that 70, 75 million target?
Brian: Yeah, exactly. It's probably almost half our CapEx spend right now we think is going to happen in Q2. Understood.
Griffin Boss: Okay, got it. Thanks, Brian, and thanks again, Scott. Appreciate it. Congrats on a great quarter.
Scott Shaw: Thanks. I look forward to the conference coming up.
Griffin Boss: Yeah, me too. Can't wait.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11. I'm showing no questions in the queue at this time. I would now like to turn, actually we do have a follow-up from Luke Horton with Northland Capital. Please go ahead.
Luke Horton: Yeah, hey guys, just wanted to jump back in here on student starts going into 2Q. I know last year there was kind of a cohort of students that was pushed into 2Q that will no longer be included. Could you just remind us of what to expect here for Q2 and Q3 starts as we lap the kind of weird calendar year from last year?
Brian: Go ahead, Brian. Right. So, if you remember last year, there was a start that occurred the first week of July that we moved into Q2 when we report. So, when we report Q2 next year, it'll be that the July 2025 start will be moved into Q2. So, it'll be apples and apples. comparison for Q2. So the start that occurred, I think it was like 2,700 students that happened in July. We're going to proform that, you know, into Q2 of 2025. And it's going to naturally occur this year at the end of June. And for the next five years, that start will always be in the second quarter.
Luke Horton: Okay. So you'll be reporting it out on an apples-to-apples basis. So no, shouldn't be any big surprises there. No. Correct. Okay. Thank you. No problem.
Operator: Thank you. I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Scott Shaw for any closing remarks.
Scott Shaw: Thank you, operator. And thank you all for joining us today as we reviewed our significant Q1 progress and increased our financial guidance for 2026. Lincoln is benefiting from both macro operating environment trends and our own consistent execution of growth initiatives at our existing campuses and new facilities. Our investments in our operations, our students, and our organization continue to create numerous opportunities to generate increasing levels of shareholder returns over several years. Of course, our success is only made possible by the commitment and dedication of our faculty and staff and the success of our students. I'd like to thank our shareholders for their support and our entire team for their dedication to achieving our goals. Thank you all again and have a great day.
Operator: this concludes today's program thank you all for participating you may now disconnect
