Lincoln Educational Services Corporation LINC reported mixed results for third-quarter 2024. Its earnings missed the Zacks Consensus Estimate, but revenues topped the same.
Nonetheless, both metrics increased year over year, driven by a 10.6% increase in the average student population. This uptick resulted from four consecutive quarters of double-digit start growth and the recently opened East Point, GA campus, which generated $3.4 million in revenues in the third quarter.
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Shares of this diversified career-oriented post-secondary education provider gained 3.6% on Monday. Investors’ sentiments might have got a boost after the company raised its 2024 guidance.
Strong demand for its programs, impressive graduation and placement rates, new campus development strategy, and improving efficiencies position Lincoln well to achieve its long-term objectives. In 2027, LINC expects to generate approximately $550 million in revenues and $90 million in adjusted EBITDA.
Inside the Headlines
LINC reported adjusted earnings per share (EPS) of 13 cents, which missed the Zacks Consensus Estimate of 14 cents by 7.1% but rose 18.2% from the year-ago quarter.
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 of $114.4 million surpassed the consensus estimate of $111.1 million by 3% and increased 14.8% from the prior year.
Student starts grew 21.1% to 6,243 and quarter-end student population rose 13.3% to 15,887 from the year-ago quarter. Average population was 14,309 compared with 12,942 a year ago.
Selling, general and administrative expense increased 16.3% year over year to $63.3 million, mainly due to costs associated with new programs, new campuses and campus relocations. Also, costs associated with a larger student population and increased marketing investments, which helped drive student starts, were additional headwinds.
Adjusted EBITDA was $10.2 million, up 66.7% year over year.
Segment Details
Campus Operations Segment: The segment’s revenues increased 15% year over year to $114.4 million. Adjusted EBITDA increased 38.6% to $19.9 million from the prior year.
Transitional Segment: In the fourth quarter of 2023, the completed teach-out of its Somerville, MA, campus.
Financial Details
As of Sept. 30, 2024, LINC had total liquidity of $93.96 million, including cash and cash equivalents of $53.96 million.
Cash provided by operating activities was $5.6 million in the third quarter of 2024 versus net cash used in operating activities of $6.8 million in the year-ago period.
2024 Guidance Raised
LINC expects revenues between $430 and $435 million, up from previously guided range of $423-$430. Adjusted EBITDA is now expected to be in the $41-$43 million range, up from $39-$42 million expected earlier. Adjusted net income is likely to be within $16-$18 million compared with $14-$17 million anticipated previously. In 2023, the company reported revenues of $378.1 million, adjusted EBITDA of $26.5 million and adjusted net income of $14.8 million.
The company has also increased the low-end range for capital expenditures to $50-$55 million (earlier it projected $45-$55 million). Student Starts growth is also projected in 13-15% range, up from 9-12% expected earlier.
Zacks Rank
LINC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Releases
Adtalem Global Education Inc. ATGE posted better-than-expected results in first-quarter fiscal 2025. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.
ATGE raised its fiscal 2025 guidance, projecting revenues between $1.69 billion and $1.73 billion, reflecting confidence in sustained growth momentum.
Leggett & Platt, Inc. LEG reported lower-than-expected results for the third quarter of 2024. Adjusted earnings and sales missed the Zacks Consensus Estimate and declined year over year.
Legget believes that the weakness in demand will continue into the fourth quarter, based on which it lowered its 2024 sales and EPS guidance.
Mohawk Industries, Inc. MHK reported strong third-quarter 2024 results (ended Sept. 30). Its earnings surpassed the Zacks Consensus Estimate and improved from the prior year despite pricing pressures and a negative mix.
As global conflicts, political uncertainty and inflation are weighing on consumer confidence and discretionary spending around the world, MHK does not see an industry improvement this year. It also expects recent U.S. hurricanes to negatively impact its fourth-quarter sales by $25-$40 million.
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