LINCOLN EDUCATIONAL SERVICES CORP Q1 FY2025 earnings call

• Lincoln 10.0 hybrid teaching model provides flexibility to students, enabling instructional, space, and organizational efficiencies, contributing to adjusted EBITDA growth. - New campus development: East Point campus opened in March 2024 and is profitable; 2025 plans include opening three new campuses, with Nashville campus relocated and Levittown and Houston campuses in progress. - Program replication: Electrical program launched at Lincoln, Rhode Island campus, and five additional programs scheduled; expanding high-demand programs. - Corporate partnerships: Interest from Corporate America remains strong but decision-making timelines lengthen due to economic uncertainty. - Demand trends: Strong and consistent demand for skilled trades training, driven by reshoring, skills gap, and trend of people seeking alternative to traditional college.

Excluding the transitional segment, in the first quarter of 2025, revenue grew 16% to $117.5 million and adjusted EBITDA grew 56% to $10.6 million. The transportation and skilled trade programs saw a robust 32.4% increase in starts. Within healthcare and other professions, total starts declined 6.3%, but excluding the impact of suspending enrollments in certain programs, HOPS programs achieved approximately 6% organic growth.

• Raised full-year financial guidance: Revenue expected to be $485 million - $495 million, adjusted EBITDA $58 million - $63 million, net income $10 million - $15 million, student start growth 10% - 14%. - Capital expenditures unchanged at $70 million - $75 million. - Note on start date shift in 2025 due to Lincoln 10.0 model, impacting Q2 starts but minimal effect on revenue cadence.

• Uncertainty in regulatory changes at the Department of Education, including ongoing bills and personnel changes. - Economic uncertainty affecting corporate partnership decision-making timelines. - Timing risks related to program approvals and campus openings.

Q: Discuss marketing efficiencies and demand in April/early May.

A: Scott Shaw states demand remains strong and consistent, with marketing costs showing improvement.

Q: Update on regulatory changes and program approvals.

A: Scott Shaw mentions being in good position regarding educational initiatives, staying in contact with Department of Ed, and anticipating timely approvals for programs like welding in Rhode Island.

Q: Healthcare start contraction details.

A: Scott Shaw discusses suspension of enrollments in massage therapy and culinary programs, with expectation of no more students in those programs by November, and update on nursing program pass rates at Paramus campus.

Q: EBITDA margins and growth expectations.

A: Scott Shaw mentions a 200 basis-point annual improvement in EBITDA margins.

Q: Demand sources and countercyclical nature.

A: Scott Shaw states demand not from layoffs, but from trend of people realizing value in skilled trades, reshoring, and workforce needs.

Q: CapEx cadence and new campus impact.

A: Brian Meyers says Q2 is a heavy CapEx quarter, and Scott Shaw discusses impact of Nashville relocation and future benefit of new campuses.

Q: East Point campus details.

A: Brian Meyers provides revenue and EBITDA info on East Point, including over $4 million revenue in Q1 and expectation of $6 million EBITDA by year four.

Q: Bad debt improvement.

A: Brian Meyers discusses improvement in bad debt due to new software system and better cash collections, expecting further improvement.