The U.S. labor current market included 315,000 employment last thirty day period, hitting a 20-month streak in strong work progress that’s powering an economic climate by means of ominously substantial inflation.
The unemployment fee ticked up a little to 3.7 p.c, in accordance to a monthly careers report introduced by the Bureau of Labor Figures on Friday. Some 344,000 a lot more people were being unemployed than in July, partly since much more employees rejoined the labor power, newly seeking for perform.
The August work opportunities gains ended up far decrease than the stellar July work progress, when half a million individuals found work. Even now, the labor market place stays an space of energy for the economic system, specifically as the Federal Reserve raises desire charges to rein in blistering inflation, which is weighing on the housing sector.
Money markets at first traded greater on Friday’s work opportunities information, as traders hoped the strong but not-much too-robust facts might steer the Federal Reserve towards milder desire price hikes. But the marketplaces traded decreased afterwards in the day.
The report was welcome news to President Biden, who has struggled in the polls most of this 12 months, with Us residents pissed off by inflation staying at 40-yr highs. The positions report combined with signals that inflation may well have peaked could signal that the financial state is on the street to security.
“We received far more very good news in August,” Biden claimed in responses at the White Household. “The terrific American employment device proceeds its comeback. American employees are back to perform, earning much more [in] manufacturing, creating an economic climate from the base up and the middle out. With today’s information, we have now designed approximately 10 million new jobs due to the fact I took business.”
Without a doubt, the financial system has more than recovered the 20million work opportunities lost in the course of the pandemic.
The most important gains were being in experienced and small business providers, which added 68,000 work opportunities final thirty day period, shooting earlier its pre-pandemic numbers. There was a significant work improve in computer system programs design, administration and complex consulting, and architectural and engineering expert services, whilst legal solutions misplaced 9,000 positions. This advancement can help quell chatter of a looming downturn, triggered by stories of layoffs this summer at tech and other blue chip organizations these types of as Snapchat, 3M, T-Cell and Bed Bathtub & Further than.
Work in health and fitness treatment rose by 48,000 work opportunities, with notable additions in doctors’ offices, hospitals, and nursing and household-care amenities. Retail trade included 44,000 positions, and manufacturing ongoing to trend up by 22,000 positions.
There was little change in leisure and hospitality after typical regular career gains of 90,000 in the initial 7 months of the calendar year. The field nevertheless stays under its pre-pandemic stages by 7 p.c.
“We want an orderly great-down and this was a Goldilocks report,” said Jeffrey Roach, main economist at LPL Financial. “These work gains weren’t much too warm or as well cold. They are hitting that softish landing we want to see.”
Regular hourly wages elevated by 10 cents, or .3 {ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, for personal-sector staff previous month, to $32.36 an hour, a slowdown in contrast with earlier every month gains. Over the past year, common hourly wages have elevated by 5.2 percent.
Ronnette Lark, 44, who functions in housekeeping at the Harrah’s On line casino in Atlantic Town a short while ago attained a $3-an-hour increase in her union agreement, bringing her up to $19 an hour. Before this 12 months, climbing charges experienced compelled her to slice snacks, beef and yogurt out of her funds, but the spend improve has meant that she can pay for a larger selection of foodstuff and to take her daughter out for summer functions.
“This elevate suggests a good deal,” Lark explained. “It means I could acquire my daughter out to [amusement parks] and a Trolls concert in Philadelphia. It implies this summertime was greater than last summer.”
The labor power participation level also ticked up by .3 {ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} final thirty day period, to 62.4 per cent, a signal that much more Us citizens are looking to return to function. But that determine remains beneath its February 2020 amounts, disheartening employers facing significant labor shortages.
“The work opportunities market is powerful. One particular factor that jumps out from this employment report is that we’ve found an uptick in labor participation, as well,” Labor Secretary Marty Walsh mentioned. “People are going to request: How prolonged are these sturdy reviews going to go on? If we can get much more participation from that workforce, that will assist us.”
Economists say the uptick in unemployment should not be a lead to for worry specified that more powerful labor drive participation could suggest a lot more employees are actively looking for employment.
“We see labor pressure participation coming back and that is a superior matter,” mentioned AnnElizabeth Konkel, senior economist at Indeed. “If we have expanding participation but not all folks have a career yet, that suggests unemployment will rise. My assumption is these persons again to participating will be capable to uncover positions speedily.”
And gals staff amongst 25 and 54 joined the labor power at a specially solid clip final thirty day period. Women in certain have confronted worries reentering the workforce given that the pandemic due to the fact of ever more inaccessible boy or girl treatment. The women’s workforce participation level, nonetheless, nonetheless lags behind pre-pandemic concentrations.
“Prime-age women of all ages noticed some of the greatest declines in workforce participation for the duration of the pandemic,” mentioned Julia Pollak, chief economist at Indeed, noting that final month’s raise could be a signal that trend is reversing. “Many, several women all through the state are on the margins amongst working and not operating, and what they make at perform hardly covers baby care that lets them to get the job done, so often there is no net advantage to them performing.”
July’s report stunned economists, with the economic climate including 528,000 employment (while that determine was formally revised down to 526,000), extra than double forecasters’ expectations. Past month’s additional tempered report reveals indications that the Fed is beginning to realize that tender landing.
In the meantime, other indicators, these kinds of as a drop in financial output and persistent better charges for just about every thing,paint a considerably less rosy picture, raising issues about how much for a longer time the warm job marketplace can final.
These mixed alerts have led some economists to forecast that personnel will ultimately confront a weaker career market place, especially if there is a economic downturn. And despite the fact that inflation eased a little bit when remaining higher in July and personnel have continued to see historic wage expansion this summer time, paychecks have not retained up with inflation, hitting small-earnings households the most difficult.
Industries that are more delicate to desire price raises, which include construction, durable goods production, mortgages and short term help services, will see a decline in employment initial if the labor market place weakens, economists say.
“When we prevent observing progress in individuals industries, that is when you believe the very first shoe is starting to fall. It hasn’t still,” mentioned Erica Groshen, an economics adviser at Cornell University and commissioner of the Bureau of Labor Statistics from 2013 to 2017.
The strength of the career sector this year has emboldened the Fed to get aggressive action to combat inflation. Speaking in Jackson Gap, Wyo., past 7 days, central lender Chair Jerome H. Powell claimed the Fed will not stop elevating fees right until inflation is far more less than management, even though he expects that will in all probability soften the labor current market and lead to “some pain” for homes and companies.
Booming jobs generation also has intended fierce level of competition among businesses for a minimal labor offer. There go on to be approximately two open employment for every position seeker, in accordance to the July career openings report, and personnel continued to quit their careers at an elevated amount in July, in a phenomenon dubbed the “Great Resignation.”
Craig Woodling, 39, give up his job delivering deals for an Amazon contractor in Orlando previous month. His co-staff experienced been quitting “left and appropriate,” he explained, and his manager was dissatisfied when he gave his see.
“It was mainly heat and the expectations of how substantially Amazon wanted us to produce,” Woodling stated. He added that the amount of offers he was delivering had surged to 400 a day throughout the pandemic, up from 220. “I’m about 40, at this point, so it is sporting my overall body out.”
Woodling reported he felt at ease quitting his $18-an-hour shipping task for the reason that of a labor market place with abundant chances. Furthermore, his spouse has a secure profits. Now that he’s making use of for work opportunities, he’s a lot less specified that he’ll be in a position to swiftly locate yet another, specially in the areas that he is wanting: radio, his enthusiasm, or info technology.
“I imagined it would be considerably less difficult to get a position once I give up, but that has not been the case,” Woodling mentioned. “Part of me would like to appear for shipping and delivery jobs that I did ahead of, but my spouse keeps reminding me that you don’t want to get in that discipline once more.”
The restricted labor market, mixed with higher inflation, also has fostered an surroundings ripe for union action, as employees battling to shell out for gas, food stuff and housing have more electric power to make collective calls for of companies struggling with popular labor shortages. The Nationwide Labor Relations Board has claimed a 56 p.c uptick in petitions for union elections in the to start with nine months of fiscal 2022 in comparison with the prior yr.
Individuals have the moment once more started off paying on services, aiding the sector increase despite inflationary pressures. In simple fact, financial activity in the U.S. company solutions sector has been escalating at any time considering the fact that the economic climate started out reopening just after the COVID-induced lockdown in 2020.
According to the newest report from the Institute of Source Administration (ISM) Expert services Report, organization action elevated yet again in June in the United States, reflecting the fundamental toughness in the financial state. Given this condition, small business providers shares like ZipRecruiter, Inc. (ZIP – Absolutely free Report) , Everi Holdings Inc. (EVRI – Totally free Report) , Avis Finances Team, Inc. (Car – Free of charge Report) and FactSet Analysis Devices Inc. (FDS – Free Report) are most likely to profit in the in close proximity to term.
Small business Companies Exercise Expands
According to the latest studying from the ISM, the solutions getting managers’ index (PMI) came up with a looking through of 57.1 in June. While the examining is .6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} lower than May’s looking through, companies action has now grown for 25 consecutive months, reflecting the strength in the overall economy. A looking through of just about anything above 50 indicates an maximize in provider activities.
June’s progress once once again reflects that inspite of soaring prices which are denting the confidence of individuals, they have been spending on products and services. Also, geopolitical tensions have been a growing induce of worry but that hasn’t impacted paying out on companies.
The Small business Activity Index came up with a looking at of 56.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, escalating 1.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} from the reading of 55.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} recorded in May. The Supplier Deliveries Index was 61.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, up .6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} from May’s studying of 61.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Also, the New Orders Index contracted to 55.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in June, down 2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} from May’s examining of 57.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. On the other hand, new orders jumped for the 25th straight month soon after two months of contraction and a prior extend of 128 months of expansion.
Services Sector Heading Robust
Above two-thirds of all financial action in the United States is in the products and services sector, and the economic system has been developing steadily for the preceding 25 months, indicating that factors are wanting up. Companies exercise has now expanded in 147 out of the past 149 months.
Because of to the COVID-induced shutdown, the financial system virtually came to a comprehensive halt in the course of the months of March and April 2020. Nevertheless, due to the fact then, the providers sector has ongoing to develop and has accomplished so each and every month.
A huge cause of problem around the past many months has been soaring costs and interest fees coupled with a labor shortage. At the exact same time, personalized money has been on the increase, enabling people today to commit.
In addition, throughout the peak of the pandemic, persons put in more on funds products as they had been doing work and finding out from property. Even so, people today have as soon as once more resumed paying out a lot more on expert services as the financial state proceeds to get better. This has been aiding the small business providers sector.
Also, dining establishments and other sites of recreation have begun to operate at entire capacity, which is further more supporting the services sector to develop. Hence, as the financial system more reopens, products and services action will go on to mature.
Our Options
We have shortlisted four company services shares that are probable to profit in the in close proximity to time period. Each individual of these stocks carries a Zacks Rank #1 (Sturdy Obtain) or 2 (Buy). You can see the finish checklist of today’s Zacks #1 Rank stocks in this article.
ZipRecruiter, Inc. offers employment products and services. ZIP features recruiting, employing, work boards, submitting, world wide web application, prospect screening, applicant tracking and job alerts providers. ZipRecruiter operates principally in the United States and the United Kingdom.
ZipRecruiter’s anticipated earnings expansion rate for the present-day year is additional than 100{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. The Zacks Consensus Estimate for existing-year earnings has enhanced 64.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} above the earlier 60 times. ZIP has a Zacks Rank #2.
Everi Holdings Inc. is a keeping enterprise, which operates via subsidiaries, Worldwide Cash Accessibility, Inc. and Multimedia Online games Keeping Corporation, Inc. EVRI’s segments contain Online games and Payments.
Everi Holdings’ expected earnings expansion fee for the current year is additional than 100{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. The Zacks Consensus Estimate for latest-year earnings has enhanced 3.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} above the earlier 60 days. EVRI carries a Zacks Rank #2.
Avis Price range Team, Inc. operates as a top vehicle rental operator in North The united states, Europe and Australasia, with an ordinary rental fleet of just about 650,000 cars. Automobile is a leading world company of mobility remedies through its a few most regarded models — Avis, Spending budget and Zipcar. Avis Budget Group has licensees in around 175 nations all over the environment.
Avis Spending plan Group’s envisioned earnings growth price for the present-day yr is 74.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. The Zacks Consensus Estimate for existing-calendar year earnings has improved 20.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over the past 60 times. Automobile athletics a Zacks Rank #1.
FactSet Research Programs Inc. is a primary provider of built-in monetary information and facts, analytical purposes and field-primary assistance for the world wide expenditure community. FDS presents facts to expense professionals like portfolio managers, prosperity administrators, analysis and functionality analysts, danger professionals, investigate professionals, investment investigation professionals, financial investment bankers, threat and overall performance analysts, wealth advisors and fixed earnings specialists as a result of its analytics, company, content and know-how.
FactSet Investigate Systems’ predicted earnings expansion rate for the present-day year is 19.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. The Zacks Consensus Estimate for recent-calendar year earnings has enhanced 3.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} above the past 60 times. FDS has a Zacks Rank #2.
2021 Operating and Financial Results Met or Exceeded Guidance
Conference Call Today at 10 a.m. ET
PARSIPPANY, N.J., Feb. 28, 2022 (GLOBE NEWSWIRE) — Lincoln Educational Services Corporation (Nasdaq: LINC) today, reported operating and financial results for the fourth quarter and full year ended December 31, 2021 as well as recent business developments.
Fourth Quarter 2021 Financial Highlights and Recent Operating Developments
Revenue of $87.8 million, up 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to prior year
Adjusted EBITDA* of $15.1 million, up 13.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over prior year
Average student population up 6.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}; ending population up 6.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} or 850 students
Consummated sale-leaseback transactions generate gain on sale of $22.5 million and net proceeds of $45.4 million, with approximately $17 million used to retire all outstanding debt
Net cash position of $83.3 million, up $62.5 million over prior year
Net income of $24.0 million
Full Year 2021 Results – Achieved or Exceeded Guidance
Student start growth of 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
Adjusted EBITDA* of $38.1 million
Adjusted pre-tax net income* of $27.1 million
*See Use of “Non-GAAP Financial Information” below.
“Strong execution, both during the fourth quarter and for the full year, allows Lincoln to enter 2022 in an extremely strong operating position with approximately 850 more students compared to the year-ago period. Additionally, the proceeds from the sale-leaseback transactions significantly improved our liquidity, giving us one of the strongest balance sheets in Lincoln’s 75-year history,” said Scott Shaw, President & CEO. “Our continued success, high graduate placement rates and a more favorable outlook for high school student starts compared to a year ago, gives us a high degree of confidence that we can achieve even greater results for years to come.
The expected proceeds of approximately $34.0 million from the contemplated sale of our Nashville, Tennessee property, assuming consummation, combined with our continuing strong cash flow provides the Company with even more financial resources to execute our near and long-term growth strategies. During 2022, we plan to begin the relocation of our Nashville campus to a new and more efficient facility in the Nashville area. Furthermore, we plan to expand our footprint through a new campus while continuing to invest in new programs. We are poised to execute these strategies to generate consistent, long-term growth while enhancing our ability to serve our growing student population as well as our corporate partners.”
2021 FOURTH QUARTER FINANCIAL RESULTS
(Quarter ended December 31, 2021 compared to quarter ended December 31, 2020)
Revenue increased $6.0 million, or 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $87.8 million from $81.8 million. The increase in revenue resulted from a 6.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in average population, driven by a 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in starts for the year.
Educational services and facilities expense increased $3.3 million, or 10.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $34.8 million from $31.5 million in the prior year comparable period. Increased costs were primarily concentrated in instructional expense, books and tools expense and facilities expense. In addition to increases resulting from higher student populations, instruction expense rose due to higher salaries as a consequence of inflationary pressures and instructor shortages, particularly in nursing programs. Facility expenses increased $0.6 million due to additional rent expense in the current quarter as a result of the sale-leaseback transactions.
Selling, general and administrative expense increased $1.6 million, or 4.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $40.8 million primarily due to an increase in benefits expense driven by an uptick in medical claims in the current year in combination with a slight increase in salaries.
Gain on sale of assets was $22.5 million recorded upon the consummation of the sale-leaseback transactions involving the Denver, Colorado and Grand Prairie, Texas campuses.
Operating income increased to $34.0 million in 2021, from $11.1 million in the prior year period. The increase was mainly driven by a $22.5 million gain resulting from the sale-leaseback transactions, partially offset by $0.6 million of additional rent expense related to the two campuses that were subject of the sale-leaseback transactions and a $0.7 million non-cash impairment charge to adjust the book value of a former campus facility, which closed about 10 years ago. Excluding the impact of the sale-leaseback transactions and the impairment charge as a one-time event, operating income would have increased $1.7 million, or 15.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Net interest expense increased $0.8 million, to $1.1 million from $0.3 million in the prior year comparable period. The additional expense was driven by the sale-leaseback transactions which included $0.5 million related to terminating the interest rate hedge early and $0.5 million non-cash write-off of deferred finance fees.
Net income of $24.0 million, or $0.73 per diluted share, compared to $46.0 million, or $1.44 per diluted share. In 2021, income tax provision was $12.5 million compared to $35.1 million tax benefit related to a full valuation allowance reversal in 2020.
Debt-free balance sheetas of December 31, 2021 after payoff of all outstanding debt in the fourth quarter compared to $17.8 million of borrowings in the prior year.
FOURTH QUARTER SEGMENT RESULTS Transportation and Skilled Trades Segment Revenue increased $4.3 million, or 7.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $62.9 million from $58.6 million in the prior year comparable period. The increase in revenue results from a 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} higher average student population, driven by the 9.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in student starts for the year.
Operating income improved to $16.6 million from $15.6 million in the prior year comparable quarter, driven mainly by revenue growth.
Healthcare and Other Professions Segment Revenue increased $1.7 million, or 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $24.9 million from $23.2 million in the prior year comparable quarter. The increase in revenue results from a 3.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} higher average student population, driven by the 4.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in student starts for the year, and a 3.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in average revenue per student in the current quarter.
Operating income was $4.1 million down slightly from $4.7 million in the prior year comparable quarter due primarily to higher instructional salaries.
Corporate and Other This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $8.5 million compared to $9.2 million after excluding the $22.5 million gain from sale-leaseback transactions, partially offset by a one-time non-cash impairment charge of $0.7 million in the current year.
YEAR-END FINANCIAL RESULTS (Period ended December 31, 2021 compared to December 31, 2020)
Total revenue increased by $42.2 million, or 14.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $335.3 million, compared to $293.1 million
Student starts grew by 1,081 or 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to 15,402 compared to 14,321
Transportation and Skilled Trades segment revenue increased by $33.1 million, or 16.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $240.5 million, compared to $207.4 million
The Healthcare and Other Professions segment revenue increased by $9.1 million, or 10.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $94.8 million, compared to $85.7 million
Adjusted EBITDA increased $14.2 million or 59{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $38.1 million, compared to $23.9 million
Operating income increased to $49.3 million as compared to $14.8 million
FULL YEAR 2022 OUTLOOK
Through the combination of cash generated from Lincoln’s strong operating performance and additional liquidity provided by the sale-leaseback transactions, Lincoln entered 2022 with over $80 million of net cash. In addition, the Company has availability under its credit agreement and anticipates increasing its cash position from the contemplated consummation of the sale of its Nashville, Tennessee campus. Lincoln will utilize this strong balance sheet to increase its level of investment in growth strategies and operating efficiencies.
Specific operating and financial guidance for the coming year is as follows:
Revenue in the range of $350 million to $365 million
Student start growth in the range of 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to 10{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
Adjusted EBITDA* in the range of $35.0 million to $40.0 million
Net Income in the range of $17.0 million to $22.0 million
Capital expenditures in the range of $7.0 million to $9.0 million
*See Use of “Non-GAAP Financial Information” below
The 2022 guidance excludes the impact of the contemplated consummation of the sale and relocation of the Nashville, Tennessee campus, which is under contract, as well as additional costs associated with a new potential campus. The outlook is based on, among other things, current enrollment trends and does not account for the impact from continuing COVID-19 issues or any new COVID-19 variants. Accordingly, as is always the case, the guidance may be revised as the year unfolds due to changes in student demand and other factors.
The Company is also providing additional information as to the progress of operations through 2022. This information represents management’s current expectations for the upcoming year and may be revised in-line with the developing business environment.
Revenue Pursuant to the Company’s seasonality patterns, it is anticipated that approximately 45{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of revenue will occur in the first half of the year. Student starts are expected to increase in the low single digits during the first quarter, with higher start growth in the remainder of the year.
Operating Expenses Operating expenses are expected to range in the low to mid $80 million level each quarter, with the third quarter’s expenses expected to reflect the high point of the year, consistent with the seasonality of the Company’s business. This higher level of operating expenses for the full year includes the addition of $3.2 million of rent expense resulting from the sale-leaseback transactions as well as $2.0 million of additional spending related to growth initiatives, efforts to streamline operations and development and implementation of improvements to Lincoln’s hybrid teaching model. First quarter operating expenses will show the largest increase year over year, as the first quarter of 2021 included a one-time $3.0 million benefit due to Care Act funds credited to student’s accounts.
Other Interest expense, depreciation and amortization and stock-based compensation expense are expected to be approximately $0.4 million, $6.6 million, and $4.5 million respectively, recognized evenly throughout the year. The effective tax rate for the year is projected to be 28.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
CONFERENCE CALL INFO Lincoln will host a conference call today at 10:00 a.m. Eastern Daylight Time to discuss results. To access the live webcast of the conference call, please go to the Investor Relations section of Lincoln’s website at http://www.lincolntech.edu. Participants can also listen to the conference call by dialing 844-413-0946 (domestic) or 216-562-0456 (international) and providing access code 2498132. Please log in or dial into the call at least 10 minutes prior to the start time.
A replay of the call will also be available for seven days by calling 855-859-2056 (domestic) or 404-537-3406 (international) and providing access code 2498132.
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. For 75 years, Lincoln has offered and continues to offer recent high school graduates and working adults degree and diploma programs. The Company operates under two reportable segments: Transportation and Skilled Trades and Healthcare and Other Professions. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolntech.edu.
SAFE HARBOR Statements in this press release and in oral statements made from time to time by representatives of Lincoln Educational Services Corporation regarding Lincoln’s business that are not historical facts, including those made in a conference call, may be “forward-looking statements” as that term is defined in the federal securities law. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Generally, these statements relate to business plans or strategies and projections involving anticipated revenues, earnings or other aspects of the Company’s operating results. Such forward-looking statements include the Company’s current belief that it is taking appropriate steps regarding the pandemic and that student growth will continue. The Company cautions you that these statements concern current expectations about the Company’s future performance or events and are subject to a number of uncertainties, risks and other influences many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projects upon which the statements are based including, without limitation, impacts related to the COVID-19 pandemic, our inability to close on the sale of our Nashville campus; our failure to comply with the extensive regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with acquisitions or a change of control of our Company; our success in updating and expanding the content of existing programs and developing new programs for our students in a cost-effective manner or on a timely basis; risks associated with changes in applicable federal laws and regulations; uncertainties regarding our ability to comply with federal laws and regulations, such as the 90/10 rule and prescribed cohort default rates; risks associated with the opening of new campuses; risks associated with integration of acquired schools; industry competition; our ability to execute our growth strategies; conditions and trends in our industry; the COVID-19 pandemic and its impact on our business and the U.S. and global economics; general economic conditions; and other factors discussed in the “Risk Factors” section of our Annual Reports and Quarterly Reports filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date hereof.
(Tables to Follow) (In Thousands)
Three Months Ended
Year-Ended
December 31,
December 31,
(Unaudited)
(Unaudited)
2021
2020
2021
2020
REVENUE
$
87,816
$
81,792
$
335,336
$
293,095
COSTS AND EXPENSES:
Educational services and facilities
34,788
31,463
138,931
122,196
Selling, general and administrative
40,762
39,188
168,923
156,199
(Gain) loss on disposition of assets
(22,479
)
15
(22,479
)
(81
)
Impairment of long-lived assets
700
–
700
–
Total costs & expenses
53,771
70,666
286,075
278,314
OPERATING INCOME
34,045
11,126
49,261
14,781
OTHER:
Interest expense
(1,142
)
(315
)
(2,015
)
(1,275
)
INCOME BEFORE INCOME TAXES
32,903
10,811
47,246
13,506
PROVISION (BENEFIT) FOR INCOME TAXES
8,939
(35,209
)
12,528
(35,059
)
NET INCOME
$
23,964
$
46,020
$
34,718
$
48,565
PREFERRED STOCK DIVIDENDS
304
304
1,219
1,378
INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
23,660
$
45,716
$
33,499
$
47,187
Basic and Diluted
Net income per share
$
0.73
$
1.44
$
1.04
$
1.49
Weighted average number of common shares outstanding:
Basic and Diluted
25,180
24,831
25,081
24,748
Other data:
Adjusted EBITDA (1)
$
15,136
$
13,380
$
38,065
$
23,867
Depreciation and amortization
$
1,520
$
1,854
$
7,140
$
7,400
Number of campuses
22
22
22
22
Average enrollment
13,599
12,796
12,899
11,729
Stock-based compensation
$
796
$
400
$
2,889
$
1,686
Net cash provided by operating activities
$
9,697
$
13,263
$
27,447
$
23,485
Net cash provided by (used in) investing activities
$
43,100
$
(2,026
)
$
37,848
$
(5,483
)
Net cash used in financing activities
$
(16,640
)
$
(804
)
$
(20,014
)
$
(18,620
)
Selected Consolidated Balance Sheet Data:
December 31, 2021
(Unaudited)
Cash and cash equivalents
$
83,307
Current assets
121,627
Working capital
55,745
Total assets
295,299
Current liabilities
65,882
Long-term debt obligations, including current portion, net of deferred financing fees
–
Series A convertible preferred stock
11,982
Total stockholders’ equity
129,418
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company believes it is useful to present non-GAAP financial measures that exclude certain significant items as a means to understand the performance of its business. EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are measures not recognized in financial statements presented in accordance with GAAP.
We define EBITDA as income (loss) before interest expense (net of interest income), provision (benefit) for income taxes, depreciation and amortization.
We define Adjusted EBITDA as EBITDA plus stock compensation expense and adjustments for items not considered part of the Company’s normal recurring operations.
We define reconciled net cash as our cash and cash equivalents and restricted cash less both the short and long-term portion under the Company’s credit agreement, and deferred financing fees.
We define Adjusted pre-tax income as pre-tax net income before gain on sale of assets, non-cash impairment charges and expenses incurred resulting from the consummation of the sale-leaseback transactions.
EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are presented because we believe they are useful indicators of our performance and our ability to make strategic acquisitions and meet capital expenditures and debt service requirements. However, they are not intended to represent cash flows from operations as defined by GAAP and should not be used as an alternative to net income (loss) as indicators of operating performance or cash flow as a measure of liquidity. EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are not necessarily comparable to similarly titled measures used by other companies.
Following is a reconciliation of net income (loss) to EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income:
