Lincoln Educational Services (LINC) Q4 2009 earnings summary

Executive summary

• FY09 revenue, operating income, net income, diluted EPS and average enrollment reached records; operating leverage lifted margin as student volumes expanded.

• Student satisfaction was 98%; year-end enrollment stood at 29,340 across 43 campuses in 17 states.

Financial highlights

• Revenue rose 46.6% YoY to $552.5M; same-school revenue increased 31.5% to $494.6M.

• Operating income reached $88.3M vs. $35.6M; net income was $49.2M vs. $20.2M.

• Diluted EPS from continuing operations increased 133% to $1.82 from $0.78.

• Average enrollment rose 39% to 27,808; excluding acquisitions, revenue grew 31.5% and average enrollment 26.5%.

• Operating cash flow was $73.2M; cash and equivalents ended the year at $46.1M.

Outlook and guidance

• FY10 capital expenditures expected at 8%–9% of revenue, funded from operating cash flow and, if needed, credit-facility borrowings.

• Two new schools planned for 2010, with further start-up campuses contemplated; seven campuses were expanding and three relocating.

• FY10 plans include new and replicated programs across five verticals, more practical nursing offerings, renewable-energy programs and expanded degree options.

• Planned facility work includes Denver’s 215,000-square-foot site, expected to open in summer 2011; certain schools will move or add space in 2010.