Lincoln Educational Services Corporation (NASDAQ:LINC) Q2 2023 Earnings Call Transcript

Brian Meyers: Right. So there are onetime items in both our 2 key initiatives. One is our hybrid model that we’re still teaching out the old program while we’re teaching a new program. So there’s some costs associated with that as well. As well as there was in financial aid as we’re still transitioning, we still have many students –, many advisers at the school as well as corporate right now. We’re still transitioning what we call, I’ll say, reentries to be centralized and a few other areas. So as we’re doing that, there’s some additional cost in financially as well. But the one thing I would look at, there were some onetime items as well in our earnings release that we talked about that contributed to the — that overage.

Eric Martinuzzi: Okay. And then I know you talked about the end of 2025 for the full transition to hybrid. Remind me again, when is the financial aid consolidation [indiscernible] centralization.

Scott Shaw: Yes. Financial aid will be wrapped up by the end of this year as far as the fact that everyone will be on the new platform and will be staffed accordingly for delivering on this new platform; so by the end of this year.

Eric Martinuzzi: Got you. All right. And then the cash balance looks terrific. I know we’re setting aside $15 million to $20 million of that — $90 what was the number — $96 million or so. What else uses of cash, it looks like you bought a little bit of stock but just curious to know if there’s — if it’s pointed more towards acquisition opportunities, program investments, or share repurchases?

Brian Meyers: Well, hopefully, depending on the stock price, we’ll still support the stock. But a lot of it is due to our guidance is $35 million to $40 million in capital expenditures for the first 6 half — first 6 months of the year, we only spent $11 million. So it is going to ramp up. Our Atlanta campus is going to be spending in the neighborhood of about maybe another $9 million from now until the end of the year as well as new programs is probably going to be another $10 million as well. So a lot of that is, I’ll call, our initiatives — our growth initiatives we’ll be spending a lot of it on.

Operator: [Operator Instructions] Our next question comes from Raj Sharma with B. Riley.

Rajiv Sharma: Congratulations on really good results for Q2. Could you just explain a little bit more on the composition of the starts and the starts — they’re higher year-on-year significantly across nationally sort of the same trend and also young adults, high schoolers, kind of composition and…

Scott Shaw: Yes, sure. Thanks, Raj. Yes, so we’re seeing growth, as you just mentioned, kind of across the board in every state that we operate in. There’s a little bit stronger growth on programs around skilled trades in automotive than in health care. But as you know, that can fluctuate quarter-to-quarter. As far as the growth — as far as the makeup, I would say that for us, high schools for the first 6 months are about flat, frankly, with last year but it’s really in the adult market which is somewhat counterintuitive again, given the low unemployment rate but it’s really on the adult side that we’re seeing stronger growth than we had forecasted.

Rajiv Sharma: And nationally, too, you have the same sort of increased trends? Or is there some areas that are doing better?

Scott Shaw: No, there really isn’t any geography that tends to be better than the other. I mean, it seems to be really very, very broad.

Brian Meyers: And the good news is for Q2, all but two schools did have start growth; so majority of our schools that did have a nice start growth.