Lincoln Educational Services (LINC) Q2 2024 earnings summary

Executive summary

• Revenue grew 16.1% year-over-year to $102.9 million in Q2 2024, driven by a 12.3% increase in student starts and an 11.7% rise in average student population.

• Adjusted EBITDA reached $6.2 million, more than doubling year-over-year, while net loss was $0.7 million due to the absence of prior year one-time gains.

• Strong liquidity over $100 million, no debt, and working capital above $50 million support growth initiatives.

• The new East Point, Georgia campus exceeded enrollment goals and contributed significantly to top-line growth.

• Guidance for 2024 was raised, reflecting strong performance, positive outlook, and reduced capital expenditures due to timing shifts.

Financial highlights

• Q2 2024 revenue was $102.9 million, up from $88.6 million in Q2 2023, with adjusted EBITDA margin improving to 6.2% from 3.1% year-over-year.

• Net loss per share was $(0.02) basic and diluted, compared to $0.57 in Q2 2023, which included a $30.9 million gain on a property sale.

• Cash and cash equivalents at June 30, 2024 were $67 million, with no debt outstanding under the $40 million credit facility.

• SG&A expenses fell below 56.2% of revenue, down from 58.5% last year; educational services and facilities expenses as a percentage of revenue declined to 44.3%.

• Six-month revenue ended June 30, 2024 was $206.3 million, up 17.3% year-over-year.

Outlook and guidance

• 2024 revenue guidance raised to $423–$430 million; adjusted EBITDA to $39–$42 million; adjusted net income to $14–$17 million; student starts growth of 9–12%.

• Capital expenditures guidance for 2024 reduced to $45–$55 million due to timing shifts, with Houston campus spend moving to 2025.

• 2027 targets: revenue $551 million, adjusted EBITDA $91 million, net income ~$44 million, EPS ~$1.40, cash from operations ~$65 million.