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Lincoln (LINC) Q1 Loss Narrower Than Expected, Revenues Top

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Zacks Equity Research
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Lincoln Educational Services Corporation’s LINC shares grew 9.8% on May 13, following narrower-than-expected earnings in first-quarter 2020. Its revenues also outpaced the Zacks Consensus Estimate.

Encouragingly, both the metrics improved on a year-over-year basis owing to a 6.6% increase in average student population, which was mainly attributed to student start growth of 13.9% in the first two months of the quarter, partially offset by impacts of the COVID-19 pandemic.

Notably, the company withdrew its full-year 2020 guidance due to uncertainty surrounding COVID-19. Nonetheless, seven of the company’s total campuses will re-open from Jul 1, pursuant to the recent State guidelines.

Delving Deeper

Lincoln reported net loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents. The reported figure was also narrower than the year-ago loss of 22 cents per share.

Lincoln Educational Services Corporation Price, Consensus and EPS Surprise

Lincoln Educational Services Corporation Price, Consensus and EPS Surprise
Lincoln Educational Services Corporation Price, Consensus and EPS Surprise

Lincoln Educational Services Corporation price-consensus-eps-surprise-chart | Lincoln Educational Services Corporation Quote

Total revenues during the quarter totaled $70 million, which topped the consensus mark of $67 million by 5.2% and grew 10.7% from the year-ago period. The upside was driven by a higher beginning population of approximately 760 students.

Total student starts declined 5% year over year. The double-digit starts growth in the initial part of the quarter was more than offset by COVID-19 impacts in March.

Notably, student starts grew 30% year over year in April.

Segment Details

Transportation and Skilled Trades’ revenues of $49.1 million grew 10.7% from the year-ago period. Average student population growth of 3.7% year over year supported the upside. Also, average revenue per student contributed 6.3% to the growth. However, starts declined 5.5% year over year in the quarter. EBITDA during the quarter came in at $6.5 million, up 77.6% from a year ago.

At the Healthcare and Other Professions segment, revenues increased 10.8% year over year to $21 million. Average population increased 12.5% from the prior-year quarter. Starts, however, declined 4% from the prior year. EBITDA in the segment was $2.1 million, almost double from the prior-year period.

Operating Highlights

Total costs and expenses during the quarter increased 4.8% year over year. Selling, general and administrative expenses — as a percentage of revenues — decreased 155 bps. EBITDA during the quarter was $0.5 million versus negative $2.8 million a year ago.


As of Mar 31, 2020, the company had total cash and cash equivalents of $9.7 million compared with $23.6 million at 2019-end. Total liquidity at the end of quarter was $30.7 million, including approximately $21 million available under the credit facility. Total debt outstanding under the credit facility was $19.3 million, down from $25.2 million as of Mar 31, 2019.

Cash used in operations was $11.9 million in the quarter, up from $10.9 million reported in the prior-year period.

As of Mar 31, 2020, it had 22 campuses, in line with the comparable year-ago period.

Zacks Rank & Peer Releases

Lincoln currently carries a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strategic Education, Inc. or SEI STRA — currently carrying a Zacks Rank #3 (Hold) — reported stellar results in first-quarter 2020, wherein earnings and revenues not only topped analysts’ expectations but also grew from the year-ago level. The uptick was mainly backed by strong top-line numbers, and margins in Strayer and Capella universities.

Adtalem Global Education Inc. ATGE, also holding a Zacks Rank #3, reported impressive earnings in third-quarter fiscal 2020. Its earnings not only topped the Zacks Consensus Estimate but also grew strongly on a year-over-year basis on the back of new student enrollments, employer partnerships and prudent cost management across the business.

American Public Education, Inc. APEI — also a Zacks #3 Ranked stock — reported mixed results in first-quarter 2020, wherein earnings missed the Zacks Consensus Estimate, while revenues beat the same. Notably, both the metrics were within management’s respective guided ranges. The company registered nearly 56% growth in new student enrollment and a 14% increase in total student enrollment for the second quarter.

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