Lincoln Educational Services (LINC) Q4 2021 earnings summary

Executive summary

• 2021 revenue grew 14.4% YoY, student starts rose 7.5%, and average enrollment increased 10.0% excluding COVID-19 leaves of absence; every campus generated positive EBITDA for the year.

• Year-end cash was $83.3M, more than double the prior-year level, strengthening liquidity and supporting planned campus and program growth.

Financial highlights

• Revenue increased 14.4% to $335.3M from $293.1M, driven by higher enrollment, the return to in-person instruction, and a 4.0% increase in average revenue per student.

• Operating income rose to $49.3M from $14.8M; net income was $34.7M vs. $48.6M and EPS was $1.04 vs. $1.49, with 2020 net income including a $35.1M tax benefit.

• 2021 included a $22.5M sale-leaseback gain and a $0.7M one-time, non-cash impairment charge; excluding both, corporate and other expenses were $36.4M.

• Bad debt expense benefited by ~$3.0M from COVID-related student account relief; excluding the adjustment, bad debt as a share of revenue would have been comparable with 2020.

Outlook and guidance

• Year-end enrollment was ~850 students above the year-ago level; management cited this larger headcount as support for continued 2022 growth.

• A new campus in an underserved market is planned for early 2023; hybrid learning implementation is underway and expected to take up to two years.

• 2022 capital expenditures are expected to approximate 2% of revenue, funded from operating cash flow and cash on hand.

• A $75M scholarship fund is planned over the next five years; the Nashville campus is intended to relocate to a newer, more efficient facility.