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LINCOLN EDUCATIONAL SERVICES CORP (LINC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered double-digit top-line growth with revenue up 16.4% to $119.4M, adjusted EBITDA up 22% to $19.2M (16.1% margin), and diluted EPS of $0.22; student starts rose 9.6% and end-of-period population grew 14.1% .
  • 2025 outlook initiated: revenue $480–$490M, adjusted EBITDA $55–$60M, net income $8–$13M, capex $70–$75M, student starts +8–12%; management highlighted a June→July start shift (~2,300 starts) that will dampen Q2 starts but lift Q3; minimal revenue impact .
  • Strategic execution remained strong: first-phase Lincoln 10.0 hybrid platform completed (~65% of students), new campuses/relocations on track (Nashville opened welding this week; Levittown early Q3; Houston late 2025) and Long Island (Hicksville) lease signed for late 2026 .
  • Potential stock catalysts: above-trend 2025 EBITDA growth (36% at midpoint) and continued campus/program scaling; near-term quarterly cadence risk around start timing (Q2→Q3 shift) and nursing start constraints at Paramus pending board approval .

What Went Well and What Went Wrong

  • What Went Well

    • Strong Q4 finish: revenue +16.4% to $119.4M; adjusted EBITDA $19.2M; cash from operations $30.3M; liquidity ~ $98.1M; no debt; average population +13.7% .
    • Lincoln 10.0 hybrid platform completed phase one (65% of students) driving efficiency and enrollment; management reiterated path to ~$550M revenue and ~$90M adj. EBITDA by 2027. “We’ve completed implementation of the first phase of our hybrid teaching platform, Lincoln 10.0….” .
    • New campus strategy executing: East Point, GA outperformed (Q4 revenue contribution $4.4M), Nashville ahead of plan (welding live), Levittown early Q3, Houston late 2025; Hicksville, NY lease signed (late 2026) .

  • What Went Wrong

    • Mix headwinds in “Healthcare and Other Professions” starts in Q4 (–17.4%) due to program exits (cosmetology, culinary, massage) and Paramus nursing enrollment pause pending board; management does not budget Paramus nursing starts in 2025 .
    • Corporate/other costs increased (Q4 corporate and other expense –$13.8M vs –$12.0M; included –$1.2M loss on Summerlin sale); elevated expansion-related expense temporarily weighs on reported net income vs adjusted metrics .
    • Calendar shift of a large start from late June to early July 2025 (~2,300 starts) will depress Q2 starts and concentrate growth in Q3; minimal revenue impact but quarterly optics risk for traders .

Financial Results

Quarterly trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$102.9 $114.4 $119.4
Operating Income ($USD Millions)$(1.1) $5.8 $10.9
Net Income ($USD Millions)$(0.7) $4.0 $6.8
Diluted EPS ($)$(0.02) $0.13 $0.22
Adjusted EBITDA ($USD Millions)$6.24 $10.24 $19.23

YoY (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$102.5 $119.4
Operating Income ($USD Millions)$9.0 $10.9
Net Income ($USD Millions)$6.8 $6.8
Diluted EPS ($)$0.22 $0.22
Adjusted EBITDA ($USD Millions)$15.73 $19.23

Segment breakdown (Q4 YoY)

SegmentQ4 2023 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Op Inc ($M)Q4 2024 Op Inc ($M)
Campus Operations$100.37 $117.67 $21.60 $25.30
Transitional$2.15 $1.71 $(0.68) $(0.60)
Corporate & Other——$(11.96) $(13.77)
Total$102.52 $119.37 $8.96 $10.93

KPIs and program mix

KPIQ2 2024Q3 2024Q4 2024
Total Starts (Campus Ops)4,953 6,243 3,497 (Total)
Average Population (Total)13,811 14,309 15,904
End-of-Period Population (Total)14,481 15,887 15,138
Starts – Transportation & Skilled Trades3,648 4,700 2,366
Starts – Healthcare & Other Professions1,305 1,543 1,031

Notes: Management stated Q4 adjusted EBITDA margin was 16.1% (Adjusted EBITDA $19.2M on $119.4M revenue) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2025n/a$480–$490 New
Adjusted EBITDA ($M)FY 2025n/a$55–$60 New
Net Income ($M)FY 2025n/a$8–$13 New
Capital Expenditures ($M)FY 2025n/a$70–$75 New
Student Starts Growth (%)FY 2025n/a+8% to +12% New
Tax Rate (%)FY 2025n/a~30% New
Depreciation & Amortization ($M)FY 2025n/a~$21.5 New
Net Interest Expense ($M)FY 2025n/a~$(2.5) New
Diluted Shares (Millions)FY 2025n/a~31.1–31.4 (quarterly); ~31.3 (year) New

Additional cadence commentary: Q2 2025 starts will be lower with a large class shift to early July; combined Q2+Q3 starts projected to increase high-single digits; minimal revenue impact across quarters .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Lincoln 10.0 hybrid platformNearing completion; 65% of students; nursing to transition by mid-2026 -Phase one completed; 65% on platform; goal 95% by end of 2027 after nursing Scaling/efficiency improving
New campuses/relocationsNashville & Levittown 1H25; Houston Q4’25; Long Island in final lease talks - Nashville welding started; Levittown early Q3; Houston late 2025; Hicksville lease signed (late 2026) Execution ahead/on track
Corporate partnershipsCMC 5-year ~$6M; Hyundai/Genesis programs; Tesla expansion - Continued strong corporate demand; expanding partnerships; example CMC and others Robust pipeline
Program replication10 programs targeted by Q1’25; each ~$1M EBITDA by year 3 12 programs total (5 launched 2024; 7 in 1H25) Expanded plan
Healthcare/nursingLPN start timing; Paramus below benchmark paused; expect improvement in 2025 - Healthcare starts down in Q4 from exits/timing; Paramus meets pass-rate benchmarks but board approval outstanding; no Paramus starts budgeted for 2025 -Mixed; improving quality, timing risk
Regulatory/macroExpect less onerous environment post-election; continued demand for middle-skills “More level playing field” anticipated; DoE process expected to improve; ongoing engagement Constructive
2027 targetsRaised to ~$550M/$90M (from ~$540M/$88M) Reaffirmed confidence in $550M revenue and $90M adj. EBITDA by 2027 Reiterated

Management Commentary

  • Strategic message: “We had a very strong finish to 2024, achieving or exceeding all of our guidance metrics…Successful execution…resulted in strong double-digit growth across…revenue, student starts…adjusted EBITDA and cash generation…finished the year with nearly $60 million in cash, no debt and nearly $100 million of liquidity.” — Scott Shaw, CEO .
  • Platform and growth: “We’ve completed implementation of the first phase of our hybrid teaching platform, Lincoln 10.0…Nashville is opening its doors to its first welding class…we expect to replicate seven high in demand programs at existing campus during 2025 after launching five such programs during 2024.” .
  • Long-term ambition: “We are well positioned to achieve our target of $550 million in revenue and $90 million of adjusted EBITDA by 2027…” — Brian Meyers, CFO .
  • 2025 cadence: “We project revenue growth to be approximately 10% at the guidance midpoint…At the midpoint…adjusted EBITDA to increase 36%…higher growth rate…reflects the operating leverage of our business model.” — Brian Meyers .

Q&A Highlights

  • Campus timeline confirmations: Nashville ahead (welding live), Levittown early Q3, Houston late 2025; plan unchanged to slightly better .
  • Program replication count: 12 total (5 launched in 2024; 7 in 2025 1H); slight fluctuations versus prior informal counts .
  • Regulatory/process risk: Management expects less onerous rules and improving DoE blocking/tackling; engaged to address Title IV processing delays seen at East Point opening .
  • Mix/healthcare: Q4 healthcare/other starts down due to program exits and Paramus nursing pause; underlying like-for-like programs would have been up ~10% for the year without those items . Paramus pass rates now above benchmark; board decision timing likely year-end; no Paramus nursing starts assumed in 2025 plan .
  • Margin trajectory: 2027 adjusted EBITDA margin target ~16%; 2025 guide implies ~12% — management expects stair-step improvement through 2026–2027 as programs ramp .

Estimates Context

  • S&P Global consensus for Q4 2024 (revenue and EPS) was not available via our data access at time of analysis; the company does not disclose “vs consensus” in its materials. Given LINC’s 2025 guidance (revenue +~10% y/y at midpoint; adjusted EBITDA +~36%), Street estimates for FY 2025 may need upward revision if below these ranges .
  • Note: We attempted to retrieve S&P Global consensus but could not due to system limits during this session; therefore, we omit numerical estimate comparisons and anchor to company guidance and reported results.

Key Takeaways for Investors

  • Momentum intact: Q4 capped a year of 16% revenue growth and 60% adjusted EBITDA growth (to $42.3M) with strong liquidity and no debt—supportive of campus and program expansion through 2025–2027 .
  • 2025 setup: Guide implies ~10% revenue growth and ~36% adjusted EBITDA growth with operating leverage; expect quarterly cadence to favor H2 (Q3 strongest on start shift; Q4 highest EBITDA growth rate) .
  • Mix evolution: Skilled trades/transportation continue to drive starts; healthcare softness in Q4 tied to program exits and nursing timing should normalize with nursing quality improvements (Paramus pending) -.
  • Execution catalysts: On-time Levittown relocation and Houston opening, plus 7 program replications in 1H25, should add capacity and efficiency; Hicksville (Long Island) expands 2026 opportunity set .
  • Near-term trading angle: Q2 2025 starts optics will be weak (timing shift) with strength consolidated into Q3; revenue effect minimal—monitor headlines around quarterly start numbers to exploit sentiment swings .
  • Structural story: Lincoln 10.0 scaling to 95% of students by 2027 underpins productivity, retention and margins; continued corporate partnerships (Hyundai/Genesis, CMC, Tesla, Johnson Controls) support placement and demand -.
  • Risk checks: Regulatory execution at DoE (Title IV processing), healthcare program timing, and elevated growth capex ($70–$75M in 2025) could add volatility; balance sheet and liquidity mitigate funding risk .

Appendices: Additional Reference Tables

Q4 2024 operational drivers (YoY, quarter)

ItemQ4 2023Q4 2024YoY Commentary
Starts (Total)3,191 3,497 +9.6%; strength in skilled trades; healthcare down on exits/timing
Avg Population (Total)13,983 15,904 +13.7% driven by sustained start growth
End-of-Period Population (Total)13,270 15,138 +14.1%
Cash from Operations ($M)$21.95 $30.30 +38%
Liquidity ($M)—$98.12 Cash $59.27M + $38.84M credit facility

Non-GAAP reconciliation highlights (Q4 2024)

MetricQ4 2024Notes
Adjusted EBITDA ($M)$19.23 Adds back stock comp, new campus/relocation, program expansions, loss on Summerlin sale, etc.
Adjusted Net Income ($M)$9.52 Adjustments and tax effect per reconciliation

Press releases relevant to Q4 context: Long Island Hicksville campus lease (Dec 2024) ; Hyundai/Genesis and broader employer partnerships (Nov 2024) -.

Citations:

  • Q4 2024 8-K press release and tables
  • Q4 2024 earnings call transcript - -
  • Q3 2024 press release and transcript - -
  • Q2 2024 press release and transcript - -
  • Additional Q4-period press releases: Hicksville lease (Dec 16, 2024) ; partnerships (Johnson Controls; Hyundai/Genesis context in Q3 PR) -