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Lincoln (LINC) Q2 Earnings Top, Revenues Lag, EBITDA Up Y/Y

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Zacks Equity Research
·4 min read
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Lincoln Educational Services Corporation LINC posted better-than-expected earnings for second-quarter 2020. Encouragingly, the bottom line grew an impressive 116.7% year over year, backed by cost-saving initiatives. The company’s stock gained 1.5% on Aug 11, after the earnings release.

Scott Shaw, Lincoln’s president and chief executive officer said, “The uncertainty of the current economic landscape has also led to an alarmingly high unemployment rate, unlike any other period in modern times, due to its rapid onset.  I believe our past success during periods of higher unemployment positions Lincoln to help a growing number of students acquire new skills for in-demand essential careers.  As of today, each of our 22 campuses are open for limited in person instruction and more than 11,000 students are progressing towards a new career.  Despite the challenges presented by the pandemic, we are excited about the future prospects for our company.”

Delving Deeper

Lincoln reported earnings per share of 2 cents against the Zacks Consensus Estimate of a loss of 14 cents. In the year-ago quarter, it reported a loss of 12 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 for the quarter totaled $62.5 million, which lagged the consensus mark of $65 million by 3.8% and declined 1.7% from the year-ago period. Deferred revenues of $0.9 million owing to COVID-19-led extended graduation dates for certain programs and $0.8 million reduced non-tuition revenues offset the benefits of an 11% increase in average student population.

Total student starts improved 15.2% year over year. As of Jun 30, 2020, ending population grew 14% from the prior-year level. After excluding students on leave of absence, ending population grew 7.5% year over year.

Segment Details

Transportation and Skilled Trades’ revenues of $42.9 million declined 2.5% from the year-ago period. Average student population growth of 6.9% year over year was offset by the above-mentioned headwinds. Starts rose 13.5% year over year for the quarter, which contributed to 8.8% growth in quarter-end population. EBITDA for the quarter came in at $6.5 million, up 54.5% from a year ago.

At the Healthcare and Other Professions segment, revenues were almost flat with the year-ago period at $19.5 million. Average population increased 18.9% from the prior-year quarter. Starts also increased 18.8% from the prior year. Quarter-end population increased 24.4% from the year-ago level. EBITDA for the segment was $2.8 million, up 48.1% from the prior-year period.

Operating Highlights

Educational services and facilities expense for the quarter decreased 11.8% year over year. EBITDA for the quarter was $3 million versus negative $0.2 million a year ago.

Financials

As of Jun 30, 2020, the company had total cash and cash equivalents, as well as restricted cash of $11.5 million (excluding amounts received under the CARES Act) compared with $23.6 million at 2019-end. Total liquidity at quarter-end was $32.5 million, including approximately $21 million available under the credit facility.

Cash flow from operations was $18.4 million for the quarter, up from $0.14 million reported in the prior-year period. Adjusted cash flow from operations (excluding the CARES Act) was $3.95 million for the quarter compared with just $0.14 million a year ago.

Zacks Rank & Peer Releases

Lincoln, which shares space with Adtalem Global Education Inc. ATGE in the Zacks Schools industry, currently carries a Zacks Rank #3 (Hold). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strategic Education, Inc. or SEI STRA reported stellar results for second-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.

American Public Education, Inc. APEI reported impressive second-quarter 2020 results, wherein both the top and bottom lines topped the Zacks Consensus Estimate, as well as grew on a year-over-year basis. Notably, the metrics exceeded management’s respective guidance on the back of enrollment growth across the segments and the ongoing turnaround at Hondros.

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