Q2 2021 Lincoln Educational Services Corp Earnings Call

August 9, 2021

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Q2.2021 Lincoln Educational services earnings Conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

In the once you require assistance during the conference. Please press Star then zero on your Touchtone phone.

As a reminder, this conference is being recorded.

I would now like to turn the call over to Mr. Michael poll of U. Please go ahead Sir.

Thank you Tiffany and good morning, everyone..1 of the market opened today Lincoln educational services issued its news release reporting financial results.

For the second quarter ended June 32021, the relief.

It's available on the Investor Relations portion of the company's corporate website at Www Dot Lincoln Tech the EU.

Joining me today on the call of our Scott Shaw, President and CEO and Brian Meyers Chief Financial Officer, today's call is being broadcast live on the company's website and a replay of the call will be archived on the company's website.

Statements made by Lincoln management on today's call 4 of the company's business that are non historical facts may be forward looking statements as the term is identified in federal Securities Laws Awards May will expect believe anticipate project plan intend estimate and continue as well as similar expressions are intended to.

Identify forward looking statements.

Payments should not be red with the guarantee of future performance of core results.

The company cautions you that these statements reflect current expectations about the company's future performance or events are subject to a number of uncertainties risks and.

Other influences many of which are beyond the company's control.

The influence the accuracy of the statements the end of projections upon which the segment and statements are based.

Factors that may affect the company's results include but are not limited to the risks and uncertainties discussed in the risk factors section of the annual report on form 10-K, and quarterly report on form 10-Q filed with the Securities and Exchange Commission.

The statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to the future events.

Forward looking statements are qualified in their entirety by this cautionary statement and Lincoln undertakes no obligation to publicly revise or update any forward looking statements, whether as a result of new information future events or otherwise after the date thereof.

Now I would like to turn the call over to Scott Shaw, our president and CEO of Lincoln Educational services. Scott. Please go ahead. Thank you Michael and good morning, everyone. Thank you for joining our call to discuss Lincoln educational services recent financial and operating performance advancement of.

Our financial results for the second quarter. It came in right as we expected from all perspectives with half of the year under our belt, we remain on target to achieve our goals and objectives for the full year. We grew student starts graduate placement and expanded our corporate partnerships each of our campuses generated positive EBITDA during the quarter.

And we stepped up investments to ensure future growth.

As we discuss our second quarter results with you today. It is important to bear in mind that this period compares with the second quarter of 2020, which was positively impacted by approximately 300 students starts delayed from Q1.2020. During the early days of COVID-19, Nevertheless, we generated a healthy 8%.

Student start growth during the quarter, excluding the impact of moving these 300 students into Q2 last year, our start growth would have been a healthy 19%.

During the quarter as the economy continued the reopening process demand for our graduates by employers increased as did the placement of our graduates into well paying positions with the rebounding economy and slowly rebuilding supply chain, there's even more pressure building within corporate America to identify new and innovative ways to recruit.

<unk> talent to which workforce to meet growing demand.

Given our proven track record of helping companies find as well as retain that talent. We are experiencing increased interest from corporations and forming partnerships to help them recruit and train personnel to help them narrow their skills gap and meet the increased demand for their goods and services.

During the quarter.

We continue to build our vital corporate partnerships.

Daimler trucks of North America, named our South Plainfield, New Jersey, and Denver campuses as 2 of their top schools for training and supporting students for diesel technology careers. We also expanded our of Mazda program to our Columbia, Maryland campus, our partnership with Mazda has grown over the past year, Despite COVID-19 and we're looking to expand.

To another campus in the near future.

Most of those developed a very comprehensive training and hiring package that addresses today's students wants and needs. Besides offering a strong wage along with discounts for tools and Mazda car payments. They also provide mentors after hiring so that new technicians are assured of gaining the skills to make them more valuable to the dealership.

And personally more successful.

On top of all of that they also provide up to $15000 in tuition reimbursement, which means that the typical Lincoln Tech graduate working from Mazda can be debt free in 3 years I believe the success of the Mazda partnership as well as our other partnerships demonstrate the value proposition that Lincoln delivers.

Another example of our ability to innovate of Lee meet the needs of our partners is the Lincoln's new partnership with can dig it designs, which is based in Salt Lake City, Utah.

Yes, you are hearing it here first we have partnered with date kindig. The star of the very successful motor trend television show Bitching rides.

Dave like many of these industry cannot find talent and instead of complaining about it Dave took action Lincoln and Dave of partner to develop a 6 week cash pay master skills custom car fabrication program to share some of Dave's experience with aspiring talent that is already in the industry and wants to advance there.

His skills the.

Program will be offered at our Denver campus and as soon as the state of Colorado approves the program, Dave and Lincoln will be out promoting the program for those who may not know Dave.

Many consider him to be the best designer and builder of custom retro Mod cars in the world when Dave brings the car back to life. He not only captures the nostalgia of the car, but also incorporates the latest technologies to deliver safety performance and convenience as cars cost well into the 6 figures if not more and he had the.

The multi year waiting list I look forward to sharing more about this program. Once it is approved we expect to have our first class start in Q1 of 2022.

When we show our prospective partners the customized programs, we've created with kindig at Johnson controls Huntsman in the food processing Association and then layer on the before and after recruitment and retention results achieved through of Lincoln partnership the case to work with us, especially in an operating environment, where it's become increasingly difficult to <unk>.

Find motivated train employees, well that case becomes exceptionally compelling.

We also continued the expansion of our existing programs during the quarter with the launch of of welding program at our Mahwah, New Jersey campus and the expansion of the welding program at our Indianapolis campus welding has been a big contributor to our recent growth and is now offered at 9 Lincoln campuses.

We also initiated the medical assistance program at the Indianapolis campus, which we reviewed with you during last quarter's call.

Its quite gratifying to see these new and expanded programs and partnerships take hold and become valued contributors as the countdown continues to our 70 <unk> anniversary in November the.

The Lincoln has always provided the training required for students seeking a central and high in demand careers and our nimble operating structure enables our team to swiftly modify curriculums and entire courses to reflect advances and skilled trade technologies and processes at the pace that our publicly funded peers are not able to match.

This structure is enabling Lincoln to react quickly to trends and employer needs as the economy reopens in the nation struggles to match of continually high unemployment rate with exceptional job opening in creation by employers.

As part of our efforts to Mark our 70 <unk> anniversary, we began implementing our program to increase the scholarship opportunities at Lincoln to $75 million over the next 5 years. We think is it is the fitting way to celebrate our 75 years of putting students first as well as being prudent stewards of our shareholders' investment.

This increased scholarship funding is helping to lessen our students' burden as a training for careers that should enable them to become productive contributors to our national economic well being in growth.

During the quarter, we continued to implement ways to improve the efficiencies at the campus level over the past several years, we've introduced a number of operating efficiencies to our campuses, which along with enrollment growth and reduced debt cost has enabled us to generate cash flow from our operations during the second quarter, the cash flow from operations of more than 9.

<unk> enabled Lincoln to build the cash position at quarter's end of $33 million.

We anticipate putting some of this cash to work to execute our internal growth strategies. For example, we are planning for our first new campus in over a decade, we have selected of market in our refining our list of locations with the goal of opening of campus before the end of next year. We also have identified 5 additional markets, where our partners have expressed.

Interest and are entering and we have determined that there are good growth prospects at.

At the same time, we are pursuing additional actions that would further expand our liquidity by unlocking value in our owned real estate and virtually eliminate our debt through non dilutive transactions. These.

These transactions would fund new program on campus development and provide additional financial strength to weather any potential interruptions to our operations like we experienced in March of 2020 due to Covid. Once completed these actions and our current operating of.

Operating trends put Lincoln into an excellent position to meet the training and skill development needs of our corporate partners and our students for another 75 years.

We enter the second half of 2021 with great momentum and expect to be able to announce the number of initiatives before the end of the third quarter.

As we look out over the remainder of 2021, the only challenge I see is our expected decline in student starts for Q3.

As we mentioned during our last call with investors back in May the pandemic shutdown of our high school campuses in most of our markets, which resulted in the denying us in person access to high school graduates considering this type of education. As a result, we had fewer high school enrollments and that is why our start guidance appeared low to many of you, especially given the strength in our.

The first quarter.

Now that the quarter is underway our forecast were fewer high school starts is materializing again. This decrease has already been factored into our guidance and so nothing changes there.

However, the team is disappointed to interrupt their 14 quarters of growth, but we expect to return to growth in Q4.

As we get into the fall, we do expect to pursue in person High School campus recruitment efforts combined with our exceptional track record, we expect that our in person efforts and our new market initiatives directed to this target market. We will turn the high school graduate students starts positive in 2022.

Our graduates continue to be in high demand.

If not even higher demand than in the past while businesses adjusted to the pandemic by scaling back on hiring or graduate placement is now running ahead of last year, and we expect to be at 2019 as record level in the coming quarters.

In short we had a very productive quarter and we are confident that we will achieve our guidance for the full year in just a moment, Brian will provide more details.

Just as we've been productive so as our board our board of directors has been quite active and helpful. In guiding us through the unique and unprecedented operating environment of the past year and of half. The board has been making a very focused effort at increasing the scope and diversity of our board. During the same period..1 result of that effort is the announcement today of a new board member of <unk>.

<unk> prior who is the chief human resource officer of Borgwarner, a 50000 employees worldwide manufacturing company, serving the automotive market, we believe that MS. Priors experience and success at Borgwarner will be beneficial to Lincoln is ongoing development and we look forward to working with her.

Now I would like to turn the call over to Brian for a review of our second quarter results and updated guidance Brian.

Thanks, Scott Good morning of thank you for joining us as Scott has mentioned Lincoln had a very solid second quarter. The start I'll share the top 5 financial highlights as a quick overview of the quarter.

Our average population for the quarter increased 16, 3% or approximately 17 hundreds of students net of students on leave of absence due to COVID-19, which we'll discuss shortly our stock growth was 19, 1% when adjusted for the shift in some 300 students starts scheduled for the last year's first quarter to the SEC.

Quarter, our stock growth stands at 18% through the first 6 months of the year building on the prior 3 years of stock growth that the company has achieved.

Third adjusted EBITDA improved 81% to $6.1 million, we generated cash flow from operations of $9.4 million during the quarter, which increased our available liquidity to $54 million from $32.5 million in the prior year quarter and lastly, our revenue increased by nearly.

30% to $85 million.

All of these metrics are indicators of our solid financial position of successful operation.

As a result of the better than expected financial performance during the second quarter I am pleased to report that we are refining our previously raised 2020 guidance to increase the low end the estimates for revenue adjusted EBITDA and pre tax income I'll provide more details on these on this after my review of the second quarter.

The 2020 financial results reflect the significant impact from the COVID-19, pandemic, which started in March last year.

As a result of certain financial of the operational comparison for the quarter compared to the year may be outsized.

Beginning with our solid topline results revenue for the quarter was $80.5 million up $18.18 million or 28, 8% over the prior year quarter. This was mainly driven by the 16, 3% increase in average student population. In addition to the normalization of the revenue stream.

Driven by the return to in person instruction at all of our campuses in the current year. The increase in average student population as of March 2021 is net of approximately 60 students on leave of absences.

Leave of absences, or eloise, mainly due to a lack of externships sites for our health care students as a direct result of COVID-19.

Last year, our average population for the second quarter was impacted by more than 800 students on leave of absence at the end of July the number of students of classified on Covid leave of absence had dropped significantly to below 10 students and we are thrilled to all of almost 100% of our student population has once again actively engaged in.

A leading their studies.

During the quarter, we enrolled over 3700, new students thoughts of course our campuses.

This represents a 19, 1% increase over prior year of PAH, removing approximately 300 students who do the later start dates from first quarter to the second quarter of 2020 due to the impact of Covid.

The unadjusted stock growth rate was 8% over the prior year quarter.

Our ending student population was up 11% or approximately 1300 students when compared to the prior year the.

The students again, our net of students that were classified a leave of absences as a result of COVID-19. This metric is of specific points.

<unk> as increases as the ending student population will continue to drive revenue growth during the second half of the year.

Now turning to our combined operating expenses for the transportation and healthcare segment during the quarter.

Education services and facility expenses increased $7.5 million or 28, 4% to $33.7 million.

The increases were primarily concentrated in instructional expenses and books since holds due to increases in our suite of population.

In combination with the shift in our structural environment as we went from an all remote curriculum in Q2.2020 to a hybrid model in Q2.2021.

Furthermore facility expenses increase from prior year due to last year's non recurring savings, including rent reductions from.

The reductions that were realized in 2020, driven by the temporary campus closures as a result of COVID-19.

Selling general and administrative expenses increased $3.8 million or 13, 3% to $32.5 million. The additional expenses were primarily driven by continued growth in our student population. In addition to the the normalization of operating expenses in the current year.

As students and staff returned to our campuses that were fully remote last year. During the second quarter also contributing to this year's increases are higher expense is reflected of the improved business climate as the country continues to reopen.

Corporate expenses for the quarter increased to $10.8 million from $6.4 million in the prior year. The additional expenses quarter over quarter was driven by several factors, including the normalization of operating expenses as mentioned previously in addition to of $1.5 million of increase in incentive compensation tied directly to <unk>.

The financial performance.

In regards to our bottom line, our consolidated operating income for the quarter improved by $2.3 million to $3.5 million.

Share to $1.2 million reported in Q2.2020.

Adjusted EBITDA increased to $6.1 million during the quarter from $3.4 million in the prior year comparable period the increase the.

The increase over prior years, primarily driven by our almost 30% revenue growth.

As a reminder of adjusted EBITDA is calculated as EBITDA plus the add back of non stock compensation expense.

Our income tax provision for the second quarter was 700000 or of 23, 1% effective tax rate compared to less than 100000 last year.

A year ago of deferred taxes.

Under a full valuation allowance, resulting in only minimal state taxes.

With the release of the valuation allowance in Q4.2020, we know of course federal tax expense, we do expect to utilize our federal Nols of $43 million and our state Nols of $77 million to offset taxable income in 2021.

As a result, we do not anticipate paying any federal income taxes, and the only nominal state income taxes for the year.

For the remainder of the year, we anticipate that our effective tax rate will be approximately 27%.

And finally net income tripled to $2.4 million in the current quarter compared to 800000 the prior year.

Now I would like to turn to the balance sheet highlights followed by a refined 2021 guidance.

First as a reminder, in the prior year, we had $14.5 million of Undistributed Cares Act funds on our balance sheet, consisting of $11.8 million in cash and cash equivalents and additional $2.6 million of restricted cash how's.

However for comparison purposes, the following balance sheet comparisons at quarter and exclude the cares Act funds received in the prior year.

We are pleased with the cash flow from operations during the quarter, which more than doubled to $9.4 million from $3.9 million.

The Companys total liquidity increased substantially 66% to $54 million made up of $33 million in cash and cash equivalents and $21 million of availability under our current credit facility.

We had a net net cash balance of $16 set of $16.7 million per the quarter compared to a net debt balance of $6.6 million at June 30 of 2020 to clarify our net debt and our net cash is catheter using our cash and cash equivalents balance less both short term and long term portion of the.

Of our credit facility, excluding the cares act funds from the prior year.

These financial results helped provide the capital resources.

To execute Lincoln's growth plans, while providing greater financial stability.

Finally, as mentioned previously as previously with better than expected financial performance through the first half of the year. We're refining the low end of the estimates for revenue pretax income and adjusted EBITDA to match, our improved financial position.

Annual revenue growth is now expected to be between 9% and 12% with previously provided guidance ranging from 7% and 12%.

Pretax income is now expected to be between $24 million and $27 million for.

For the year. This represents a 2 million of increase on previously provided low end guidance.

And adjusted EBITDA is now expected to be between 34 million of $37 million also representing a $2 million increase on previously provided the low end guidance.

<unk> continues to be projected between 5% and 10%.

And following.

We continue to expect our capital expenditures to be approximately 17, im sorry of approximately $7.5 million.

We look forward to commute communicated our progress towards achieving these goals for the remainder of 2000.22021 with you before.

Before I go I would like to take a moment to thank the entire Lincoln team, including our students for the continued hard work and dedication which continues to be a major factor behind our success I would also like to thank all of you for your time today and with that I'll turn the call back over to the operator, So we can take your questions operator.

Ladies and gentlemen at this time, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad again that of Star 1.

Of course for a moment to compile the Q&A roster.

And again that of Star 1.

Your first question comes from the line of Steven Frankel with Colliers.

Good morning, Scott. Thank you for letting me ask the question.

The dig into the pipeline around the adult starts I know you've made these comments on the high school population, but 1 of the what does the adult side of the equation look like in 1 of the pipeline out to Q4.

Sure.

While we continue to get more interest.

We've had in the prior year and so of the adult is definitely performing.

Obviously given the.

We're coming out with high schools much more strongly adult starts for Q3, though I would say it would probably be around flat to low digits and then as we look out to Q4 as I mentioned, we see growth again, given the pipeline.

And do you think Thats just the timing issue that has them only up.

Flattish the single digits year on year, what do you think contributes to that.

Sure I think there are a number of issues on some of our operational issues on our side, just making sure that we have all of the faculty for all of the classes that we want to operate some of it is timing of class starts.

But as I said the interest is still there we're still seeing good strong interest at a higher level than last year. So again I'm just.

We would expect that it is a lot of timing that's affecting our starts.

Okay, and what is the spike in the Delta.

Varian doing 2 starts in ex term ships on the healthcare side specifically.

Yes, I mean the.

Changes that keep happening.

Frustrating at times and certainly since we're in 14 different states. We have to look at 14 different ways of how we address the situation.

And every day, new rules and regs come out and so to date I mean since this is all relatively new.

As Brian mentioned, our <unk> of dropped almost down to nothing so we've been able to get the students back into the Externships, but recent rules of just come down were made by maybe our students may be required to be vaccinated in order to go into those Externships. That's just something I saw for example in Rhode Island.

Just last week, so to date it hasnt affected it but I am guessing there will be more restrictions, which could lead to some delay in those externships, but as of today I don't see it happening.

Okay and then.

On the cost side, Brian kind of what.

Normalized year over year expense growth for the back half that's baked into your guidance.

Right. So you folks.

For all of them.

For over a prior year.

I would say for Q3.

It will be.

Slightly up.

Due to some of our initiatives.

In Q4 will be similar to all of our Q4 of last year.

And then lastly, Scott maybe a little more color around.

This new campus and what you might offer there would you.

The offering of any new programs running slightly different as you build it.

I'm, sorry, Steve what I would say slightly up for Q3, we will be up based on our.

Of our population.

So we are projected to be up almost <unk>.

Over prior year several million dollars, but a lot of it is due to our continued popular.

And of our population and some interest.

As far as instructional what I was mentioning was more of the normalization. So we are looking to be up.

<unk>.

Approximately $5 million over last year, and so all of it is at corporate of $1 million due to our some of our initiatives that youll be hearing.

But it'll be up and in Q4.

Lots of getting a little bit normalize the it'll be slightly up in Q4, and mostly on the educational services facility side.

Okay. Thank you for the clarification. So answering your question on the new campus of the new campuses basically going to be most likely with an automotive and skilled trades and then we'll probably have 1 if not 2 healthcare programs in that campus that way, we attract the full range of potential people within the local <unk>.

Market and we're seeing great success with having our healthcare programs frankly also in our automotive schools and given the fact that we're moving to a blended format going forward. We are looking at being able to build the campus that's more efficient better utilization of space and so it will have.

Smaller footprint than what our typical campus would have today with the same number of programs.

Great. Thank you.

No problem Steve.

Thanks for your questions.

Your next question comes from the line of Austin <unk> with Canaccord.

Hi, Thanks for taking my questions.

In regards to your corporate partnerships are these partnerships like with Mazda.

Are they incremental cash starts.

Yes, well the kindig thing won't be counted as a start because of the program is so short most likely it's only a 6 week program. We're still working on the how that will rollout, but what's exciting about the kindig program is number of things wanted to bring greater visibility to our overall <unk>.

<unk> program to it is of cash per program and so whatever we can do to diversify away from total for is incrementally better for us and 3 we think that working with Dave ease of very creative individuals.

Could lead to other opportunities down the road.

As far as Mazda the attraction there is it's like all of our OEM relationships. We do think it helps to build the brand. We do believe it helps attract students and however, the reality is a lot of the students really understand the value proposition of these partnerships once they're with us.

So it's really add gives them of greater.

Job prospect at the end of the day to be honest with you need. These partnerships. So it's all positive it's all incremental it all helps the bottom line.

And we're very pleased and honored that these companies come to us because it does provide great career opportunities for the students.

Got it and can you talk about the remaining capacity of your existing campuses too.

Add programs like.

I'm curious how many that have the automotive programs.

Might you be opened.

Health care programs to vice versa.

Sure we've been adding about 4 to 5 programs of year over the last couple of years and I would anticipate we'd be able to do that over the next 2 years with programs.

And then as we move to our blended program, which will be fully rolled out in 24 months that should enable us to maybe have the additional capacity at some of these campuses.

I mean, certainly on the automotive program isn't something we'd be looking to expand at other campuses simply because of the footprint is too great, but adding health care programs are certain skilled trades programs.

The additional campuses is very much as.

The more doable I should say.

Okay. Thanks very much.

Austin look forward the chatting with you later in the week.

Your next question comes from the line of Raj Sharma with B Riley.

Hi, good morning, guys great quarter.

I wanted to get a little bit more color on the starts and understand that better what is or could talk about the makeup of your starts in terms of high school the high schoolers and the adults.

Any other sort.

Of the class.

Yes.

If you could talk about.

How the marketing.

So that was prevented in the high schoolers, but then I don't quite understand.

The process of the adults. If there is any digital marketing why the starts are being guided to flat to up 3%.

No no per I understand so in total.

So in total high school represents about 20% of our starts and about 60% of those high school starts come in the third quarter and so what we do is we have our guidance counselors going out to the high schools speaking the classes.

We have started that process frankly this month for next year's class and they go around and get the leads and then we know what kind of level of interest we are having for that program.

And so we knew that there was some softness in that program free.

<unk> 6 months ago, which is why we provided the guidance that we did and we just weren't quite sure how it all would play out given COVID-19 and all of the various states.

As it's playing out we will be down in our high school marketplace. This year, but again, that's really a function of the fact that we couldn't get into as many of the high schools as we had in the past and therefore get in front of as many students and once that turns around which we anticipate it will in 2022 as well as some additional initiatives, we would anticipate being able to grow the high school.

Market again on the adult side, it's basically about a 60 day window from the by the time, an adult typically reaches out to US and then starts with us and as I said enrollment leads from these adults have been increasing year over year of quarter over quarter and some of the timing issues of when the classes are starting.

As well as some of the challenges we've had and just making sure we have the faculty for each of these classes is slowing down our growth slightly in Q3, but again as we look to Q4, given what we're seeing we expect to be back to the growth mode again.

Great. Thanks, and then on the new campus.

Are you already talked about the courses that are being offered any sort of.

The indication on the region and also of the class size and what kind of Capex.

Are you targeting.

Sure.

I can say is that it's not in the state that we serve today. So it will be our 15th the state that we're entering.

And then as far as the Capex size it somewhat depends on what we're able to get the landlord to fund, but I would say it would be somewhere around would you say, Brian $10 million of expense.

For a campus that should be able to generate for us $15 million to $20 million in revenue.

Got it and then you also mentioned the real estate transaction could you.

Could you give some color around that.

What's the Shaw I don't want to Jinx us, but all I can say is that there's lots of interest in real estate financing. These days, we have properties that we've talked about before that we own and we're been very.

Pleased with the.

The potential opportunity to I'll say monetize those those properties in a very productive way for us.

Right I just wanted to get a sense of the market value of these properties and we might be sort of considering.

Well as we've shown and said that they're on the books for $30 million and they were appraised at $60 million.

So.

Got it.

I'll tell you that it's.

That should give you more than enough information.

The <unk> should be coming out during Q3.

The <unk>.

Publicly coming out we're anticipating very shortly.

Got it and then lastly, any sort of non backing the number of starts from <unk> or isn't apples to apples comparison.

In terms of Scott base.

It's pretty comparable.

Nothing I would say nothing too material.

A few here of there.

Got it. Thank you for asking the question again, congratulations on a good quarter I'll take this offline.

I appreciate that very much.

And again, ladies and gentlemen, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad again that of Star 1.

We'll pause for a moment to compile the Q&A roster.

And your next question comes from the line of Justin Putnam with Til Lam Im sorry to Lance of investment group.

Hey, good morning.

Good morning, Justin what adjusted.

I was curious we get maybe a little more.

Clarity of perspective on the high school start dynamic I mean first of all can you kind of quantify maybe the shortfall in Q1.

The percentage or number.

I have compared to maybe what you see the more normal year.

Sure No problem, we expect expect to be down around 400 students or so.

As the as a round number.

So.

As you move through this kind of really unusual period here.

When you look maybe into 2022 and beyond.

Do you feel like you said sort of like you can grow the high school population, but I just want to clarify that.

Above.

Of this low base or is this kind of.

Growth and pick up in addition to kind of this unusual year here with the 400 shortfall.

No I think.

In addition to that I think that we have definitely more opportunities in the high schools and I think as more and more high schoolers and their parents look at the value proposition of college.

That should bode well for us that more people are going to consider alternative ways to get into the workforce at a cheaper faster pace and we certainly offer that so IC definitely growth opportunities for us in the high school market in 2022 and beyond.

Okay.

Then the other side of the.

The equation the add back to the adult population I know you talked a little bit about this but.

That too was also impacted by a very unusual period of an unusual year.

The year and a half.

And you talked about how you see that evolving through the course of this year, but.

How does that look as you look further 2022 and beyond with that too is that kind of normalizes.

Historically the company has obviously benefited from these higher unemployment period and yes.

Now that's kind of.

Come down a little bit not quite as much of a tailwind, but there is a lot of underlying.

The dynamics that go with that such as this.

Or is not be able to meet there.

Employee of demand and so forth. So I was just.

I'm just curious how you see that playing out over.

More normalized periods of 2022 and beyond.

Sure well I am very confident in our ability to grow going forward simply because of some of the dynamics that you highlighted.

Again, we were pre pandemic when the unemployment was at a 50 year low we were able to grow and I don't anticipate that that changes post pandemic. The employers that are coming to us are generally just faced by this massive challenge of finding people.

<unk> spoken about before how there is fewer people in the highest high schools learning about the tech programs I think that during the great recession of lot of companies eliminated their training programs and got it frankly too far away from that mean.

The solution for industry going forward is definitely going to be of partnership I believe with people like us where we help retain and bring in students given the skills and then work with companies to get them placed and I think Thats also true for the adult market. So I really see frankly with each pass.

The week more and more opportunities for Lincoln going forward than less and.

Yes, sure there might be some variability quarter to quarter, but things remain extremely positive in my mind for what our opportunities are going forward.

Okay.

Ask that question also.

Usual year, but also from.

The longer term investors in the industry.

We've seen the counter cyclical nature of this industry.

I know of every.

Economic periods of different but all of.

And your thoughts on how that is evolving in this current 1.

Yeah, and I think that what is different going forward is there is so much more talked today about infrastructure of the need for infrastructure and as I mentioned before people just questioning the value of college that every every cycle is a little bit different and the good news I believe for US is that so many of those differences are points.

2 ways for Lincoln to capture more opportunity rather than less going forward.

Okay, great well, thanks for the perspective.

No problem. Thanks, Justin.

And again, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad again that of Star 1 we'll pause for a moment to compile the Q&A roster.

And again that of Star 1.

At this time and currently showing no further questions in queue I will now hand, the conference back over to Mr. Scott Shaw.

Thank you operator as always I want to thank our shareholders for your continued interest and support I also want to thank all of our faculty and staff for their unrelenting dedication to our students many of whom have faced great adversity due to the pandemic I'm very proud of the Lincoln Tech family I'm always uplifted by their stories of changing.

<unk> no matter the challenges or adversity, our students face we.

We had an excellent first half of the year and remain on track to achieve our goals. We are excited about the future and its potential as we continue to implement growth strategies and make the investments needed to expand opportunities for both our students and our shareholders. In the years ahead I believe we have a unique story to tell and as such we will be.

Participating at several conferences in the next few weeks, including the Canaccord annual growth conference being held this week as well as the Barrington fall Investor Conference and Colliers Institutional Investor Conference, which are being held on September 9th.

Brian and I look forward to sharing our 2021 third quarter results with you in November until then please stay safe by volume.

Ladies and gentlemen, thank you for participating. This concludes today's conference call you may now disconnect.

Okay.

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Yes.

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Yes.

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Ladies and gentlemen, thank you for standing by and welcome to the Q2.2021 Lincoln Educational services earnings Conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

If anyone should require assistance during the conference. Please press Star then zero on your Touchtone phone.

As a reminder of this conference is being recorded.

I would now like to turn the call over to Mr. Michael poll of U. Please go ahead Sir.

Thank you Tiffany and good morning, everyone..1 of the market opened today Lincoln educational services issued ex news release reporting financial results.

For the second quarter ended June 32021.

It's available on the Investor Relations portion of the company's corporate website at Www Dot Lincoln Tech Scott <unk>.

Statements made by of Lincoln's management on today's call 4 of the company's business or non historical facts may be forward looking statements as of the term of identified and better.

Total securities Laws words May will expect believe anticipate project plan intend estimate and continue as well as similar expressions are intended to identify forward looking.

The statements should not be read as Gary.

R&D of future performance or results the key.

Company cautions you that these statements reflect current expectations about the company's future performance or events are subject to a number of uncertainties risks and other influences many of which are beyond the company's control that may influence the accuracy of the statements and the projections upon which the segment and statements are based.

The statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to the future events.

All forward looking statements are qualified in their entirety by this cautionary statement and Lincoln undertakes no obligation to publicly revise or update any forward looking statements, whether as a result of new information future events or otherwise after the date thereof.

Now, let's turn the call over to Scott Shaw, our President and CEO of Lincoln Educational services. Scott. Please go ahead.

You Michael and good morning, everyone. Thank you for joining our call to discuss Lincoln educational services recent financial and operating performance advancements of our financial results for the second quarter. It came in right as we expected from all perspectives with half of the year under our belt, we remain on target to achieve our goals and objectives for the full year.

We grew student starts graduate placement and expanded our corporate partnerships each of our campuses generated positive EBITDA during the quarter and we stepped up investments to ensure future growth as.

Students start growth during the quarter, excluding the impact of moving these 300 students into Q2 last year, our start growth would have been a healthy 19%.

Train talent to its workforce to meet growing demand.

During the quarter.

We continue to build our vital corporate partnerships.

Daimler trucks of North America, named our South Plainfield, New Jersey, and Denver campuses as 2 of their top schools for training and supporting students for diesel technology careers. We also expanded our Mazda program to our Columbia, Maryland campus, our partnership with Martha has grown over the past year, Despite COVID-19 and we're looking to expand.

To another campus in the near future.

Martha has developed a very comprehensive training and hiring package that addresses today's students wants and needs. Besides offering a strong wage along with discounts for tools and Mazda car payments. They also provide mentors after hiring so net new technicians are assured of gaining the skills to make them more valuable to the dealership.

And personally more successful.

Another example of our ability to innovate of Lee meet the needs of our partners as Lincoln's New partnership with Kindig of designs, which is based in Salt Lake City, Utah.

Yes, you are hearing it here first we have partnered with Dave Kindig. The star of the very successful motor trend television show Bitching rides.

Skills the.

Program will be offered at our Denver campus and as soon as the state of Colorado approves the program, Dave and Lincoln will be out promoting the program for those who may not know Dave.

The multi year waiting list I look forward to sharing more about this program. Once it is approved we expect to have our first class start in Q1 of 2022.

When we show our prospective partners the customized programs, we've created with kindig at Johnson controls Huntsman in the food processing Association and then layer on the before and after recruitment and retention results achieved 2 of Lincoln partnership the case to work with us, especially in an operating environment, where it's becoming increasingly difficult to.

Find motivated trained employees well that case becomes exceptionally compelling.

We also initiated the medical assistance program at the Indianapolis campus, which we reviewed with you during last quarter's call.

Its quite gratifying to see these new and expanded programs and partnerships take hold and become valued contributors as the countdown continues to our 70 <unk> anniversary in November Lincoln.

This structure is enabling Lincoln to react quickly to trends and the employer needs as the economy reopens in the nation struggles to match of continually high unemployment rate with exceptional job opening in creation by employers.

As part of our efforts to Mark our 70 <unk> anniversary, we began implementing our program to increase the scholarship opportunities at Lincoln to $75 million over the next 5 years. We think it is of fitting way to celebrate our 75 years of putting students first as well as being prudent stewards of our shareholders' investment.

This increased scholarship funding is helping to lessen our students' burden as they train for careers that should enable them to become productive contributors to our national economic well being in growth.

During the quarter, we continued to implement ways to improve the efficiencies at the campus level over the past several years, we've introduced a number of operating efficiencies to our campuses, which along with enrollment growth and reduce that cost has enabled us to generate cash flow from our operations during the second quarter, the cash flow from operations of more than 9.

<unk>.

Enabled Lincoln to build the cash position at quarter's end of $33 million.

We anticipate putting some of this cash to work to execute our internal growth strategies. For example, we are planning for our first new campus in over a decade, we have selected our market and are refining our list of locations with the goal of opening of campus before the end of next year.

We also have identified 5 additional markets, where our partners have expressed an interest in or entering and we have determined that there are good growth prospects.

These transaction to fund New program on campus development and provide additional financial strength to weather any potential interruptions to our operations like we experienced in March of 2020 due to Covid. Once completed these actions and our current operating day.

Operating trends put Lincoln into an excellent position to meet the training and skill development needs of our corporate partners and our students for another 75 years.

We enter the second half of 2021 with great momentum and expect to be able to announce the number of initiatives.

For the end of the third quarter as we look out over the remainder of 2021, the only challenge I see is our expected decline in student starts for Q3.

As we mentioned during our last call with investors back in May of the pandemic shutdown of our high school campuses in most of our markets, which resulted in the denying us in person accessed the high school graduates considering this type of education. As a result, we had fewer high school enrollments and that is why our start guidance appeared low to many of you, especially given the strength in <unk>.

Our first quarter.

Now that the quarter is underway our forecast were fewer high school starts is materializing.

This decrease has already been factored into our guidance and so nothing changes. There. However, the team is disappointed to interrupt their 14 quarters of growth, but we expect to return to growth in Q4.

Our graduates continue to be in high demand.

If not even higher demand than in the past while business is adjusted to the pandemic by scaling back on hiring or graduate placement is now running ahead of last year and we expect to be at 2019 as record level in the coming quarters in short we had a very productive quarter and we are confident that we will achieve our guidance for the full year and <unk>.

The moment, Brian will provide more details.

Asia Pryor, who is the chief human resource officer of Borgwarner, a 50000 employee worldwide manufacturing company, serving the automotive market, we believe that MS. Priors experience and success at Borgwarner will be beneficial to Lincoln is ongoing development and we look forward to working with her.

Now I would like to turn the call over to Brian for a review of our second quarter results and updated guidance Brian.

Thanks, Scott Good morning, and thank you for joining us as Scott has mentioned Lincoln had a very solid second quarter to start I will share the top 5 financial highlights as a quick overview of the quarter.

Our average population for the quarter increased 16, 3% or approximately 1700 students net of students on leave of absence due to COVID-19, which will be the discuss shortly our stock growth was 19, 1% when adjusted for the shift in some 300 students starts scheduled for the last year's first quarter to the SEC.

Quarter, our stock growth stands at 18% through the first 6 months of the year building on the prior 3 years of stock growth that the company has achieved.

30% to $85 million.

All of these metrics are indicators of our solid financial position of successful operation as a result of the better than expected financial performance. During the second quarter I am pleased to report that we are refining our previously raised 2020 guidance to increase the low end of estimates for revenue adjusted EBITDA and pre tax income our provide.

More details on these on this after my review of the second quarter.

The 2020 financial results reflect the significant impact from the COVID-19, pandemic, which started in March last year.

As a result of certain financial of the operational comparison for the quarter compared to the year may be outsized.

Beginning with our solid topline results revenue for the quarter was 85 million of $18.18 million or 28, 8% over the prior year quarter. This was mainly driven by the 16, 3% increase in average student population. In addition to the normalization of the revenue stream.

Driven by the return to in person instruction at all of our campuses in the current year. The increase in average student population as of March 32021 is net of approximately 60 students on leave of absences.

Leave of absences, or eloise, mainly due to a lack of externships sites for our health care sales as a direct result of COVID-19.

Leading their studies.

During the quarter, we enrolled over 3700, new students thoughts across our campuses.

This represents a 19, 1% increase over prior year upon removing approximately 300 students who do the later start dates from first quarter to the second quarter of 2020 due to the impact of Covid.

The unadjusted stock growth rate was 8% over the prior year quarter.

Our ending student population was up 11% or approximately 1300 students when compared to the prior year.

The students again, our net of students that were classified a leave of absences as a result of COVID-19. This metric is the specific endpoints.

<unk> as increases as the ending student population will continue to drive revenue growth during the second half of the year.

Now turning to our combined operating expenses for the transportation and healthcare segment during the quarter.

Education services and facility expenses increased $7.5 million or 28, 4% to $33.7 million.

The increases were primarily concentrated in instructional expenses and books since holds due to increases in our suite of population.

In combination with the shift in our structural environment as we were from an all remote curriculum in Q2.2020 to a hybrid model in Q2.2021.

Furthermore facility expenses increase from prior year due to last year's non recurring savings, including rent reductions from.

The reductions that were realized in 2020, driven by the temporary campus closures as a result of COVID-19.

Selling general and administrative expenses increased $3.8 million or 13, 3% to $32.5 million. The additional expenses were primarily driven by continued growth in our student population. In addition to the normalization of operating expenses in the current year as students and staff written.

Turn to our campuses that were fully remote last year. During the second quarter also contributing to this year's increases are higher expense is reflected of the improved business climate as the country continues to reopen.

Corporate expenses for the quarter increased to $10.8 million from $6.4 million of the prior year. The additional expenses quarter over quarter was driven by several factors, including the normalization of operating expenses as mentioned previously in addition to of $1.5 million of increase in incentive compensation tied directly to <unk>.

The financial performance.

In regards to our bottom line, our consolidated operating income for the quarter improved by $2.3 million to $3.5 million compared to $1.2 million reported in Q2.2020.

Adjusted EBITDA increased to $6.1 million during the quarter from $3.4 million in the prior year comparable period the increase the.

The increase over prior years, primarily driven by our almost 30% revenue growth.

As a reminder, adjusted EBITDA is calculated as EBITDA plus the add back of non stock compensation expense.

Our income tax provision for the second quarter was 700000 or of 23, 1% of effective tax rate compared to less than 100000 last year.

A year ago of deferred taxes.

Under a full valuation allowance, resulting in only minimal state taxes.

With the release of the valuation of allowance in Q4.2020, we now report federal tax expense, we do expect to utilize our federal Nols of $43 million and our state Nols of $77 million to offset taxable income in 2021.

As a result, we do not anticipate paying any federal income taxes, and the only nominal state income taxes for the year.

For the remainder of the year, we anticipate that our effective tax rate will be approximately 27%.

And finally net income tripled to $2.4 million in their current quarter compared to 800000 in the prior year.

Now I would like to turn to the balance sheet highlights followed by our of refined 2021 guidance.

However for comparison purposes, the following balance sheet comparisons at quarter end the exclude the cares act funds received in the prior year.

We are pleased with the cash flow from operations during the quarter, which more than doubled to $9.4 million from $3.9 million.

The Companys total liquidity increased substantially 66% to $54 million made up of $33 million in cash and cash equivalents and $21 million of availability under our current credit facility.

We had a net net cash balance of 16 set of $16.7 million for the quarter compared to a net debt balance of $6.6 million at June 32020 to clarify our net debt and our net cash is catheter using our cash and cash equivalents balance less both short term and long term portion of the.

Of our credit facility, excluding the cares act funds from the prior year.

These financial results helped provide the capital resources.

To execute Lincoln's growth plans, while providing greater financial stability.

Annual revenue growth is now expected to be between 9% and 12% with previously provided guidance ranging from 7 and 12%.

Pretax income is now expected to be between $24 million and $27 million for.

For the year. This represents a 2 million of increase on previously provided the low end guidance.

And adjusted EBITDA is now expected to be between $34 million and $37 million also representing a $2 million increase on previously provided of lowering guidance.

<unk> starts continues to be projected between 5% and 10%.

And following.

We continue to expect our capital expenditures to be approximately 17, I'm sorry of approximately $7.5 million.

We will look forward to commute communicated our progress towards achieving these goals for the remainder of 2000.22021 with you before I go I would like to take a moment to thank the entire Lincoln team, including our students for the continued hard work and dedication which continues to be a major factor behind our success I would also like to.

Thank all of you for your time today and with that I'll turn the call back over to the operator, So we can take your questions operator.

Ladies and gentlemen at this time, if you would like to ask the question. Please press Star then the number 1 on your telephone keypad again that of Star 1.

Pause for a moment to compile the Q&A roster.

And again that of Star 1.

Your first question comes from the line of Steven Frankel with Colliers.

Good morning, Scott. Thank you for letting me ask the question.

Sure.

While we continue to get more interest than we've had in the prior year and so of the adult is definitely performing.

Obviously given the.

And do you think Thats just the timing issue that has them only up flattish the single digits year on year, what do you think contributes to that.

But as I said the interest is still there we're still seeing good strong interest at a higher level than last year. So again I'm just.

Would expect that it is a lot of timing that's affecting our starts.

Okay, and what is kind of the spike in the Delta.

Varian doing 2 starts in ex carrier ships on the healthcare side specifically.

Yes, I mean the.

Changes that keep happening are.

Frustrating at times and certainly since we're in 14 different states. We have to look at 14 different ways of how we address the situation and every day, new rules and regs come out and so to date. It since this is all relatively new.

As Brian mentioned, our <unk> of dropped almost down to nothing.

So we've been able to get the students back into the Externships, but recent rules of just come down where maybe by maybe our students may be required to be vaccinated in order to go into those Externships. That's just something I saw for example in Rhode Island, just last week, so to date it hasnt affected it.

But I am guessing there will be more restrictions, which could lead to some delay in those externships, but as of today I don't see it happening.

Okay and then.

On the cost side, Brian kind of what.

Normalized year over year expense growth for the back half of that's baked into your guidance.

Right. So you folks.

For over a prior year.

I would say for Q3.

It will be.

Slightly up.

Due to some of our initiatives.

In Q4 will be similar to all of our.

Our Q4 of last year.

Okay, and then lastly, Scott maybe a little more color around.

This new campus and what you might offer there would you.

The offering of any new programs running slightly different as you build it.

I'm, sorry, Steve what I would say slightly up from Q3, we will be up based on our <unk>.

Our population.

So we are projected to be up almost.

Over prior year several million dollars, but a lot of it is due to our continued popular.

Growth in our population and some interest.

Sure.

As far as instructional what I was mentioning was more of a normalization. So we are looking to be up.

<unk>.

Approximately $5 million over last year and some of it is at corporate of $1 million due to our some of our initiatives that youll be hearing.

But it'll be up and in Q4.

It's getting a little bit normalize the b, the it'll be slightly up in Q4, and mostly on the educational services facility side.

Okay. Thank you from the clarification. So answering your question on the new campus of the new campuses basically going to be most likely with an automotive and skilled trades and then we'll probably have 1 if not 2 healthcare programs in that campus that way, we attract the full range of potential people within the local.

Smaller footprint than what our typical campus would have today with the same number of programs.

Great. Thank you.

No problem Steve.

Thanks for your questions.

Yes.

Your next question comes from the line of Austin <unk> with Canaccord.

Hi, Thanks for taking my questions.

In regards to your corporate partnerships are these partnerships like with Mazda.

Are they incremental class starts.

Yes, well the kindig thing won't be counted as a start because of the program is so short most likely the it's only a 6 week program. We're still working on the how that will rollout, but what's exciting about the kindig program is.

Of things wanted to bring greater visibility to our overall collision program too.

2 it is a cash per program and so whatever we can do to diversify away from total for is incrementally better for us and 3 we think that working with Dave ease of very creative individuals.

This could lead to other opportunities down the road.

Partnerships once they're with us.

And so it really.

Gives them of greater.

Job prospect at the end of the day to be honest with you. These partnerships. So it's all positive it's all incremental it all helps the bottom line.

And we're very pleased and honored that these companies come to us because it does provide great career opportunities for the students.

Yeah.

Got it.

Can you talk about the remaining capacity of your existing campuses too.

Add programs like.

I'm curious.

How many that have the automotive programs.

Might you be opened health care programs to vice versa.

Sure we've been adding about 4 to 5 programs of year over the last couple of years and I would anticipate we'd be able to do that over the next 2 years with programs.

Then as we move to our blended program, which will be fully rolled out in 24 months that should enable us to maybe have the additional capacity at some of these campuses.

Certainly on the automotive program isn't something we'd be looking to expand at other campuses simply because of the footprint is too great, but adding health care programs. There are certain skilled trades programs.

The additional campuses is very much.

As more doable I should say.

Okay. Thanks very much.

<unk> margin look forward in the chatting with you later in the week.

Your next question comes from the line of Raj Sharma with B Riley.

Hi, good morning, guys great quarter.

I wanted to get a little bit more color on the starts and understand that better what is or could talk about the makeup of your starts in terms of high school the high schoolers and the adults.

Any other sort of class.

Yes.

You could if you could talk about.

How the marketing.

So the was prevented in the high schoolers, but then I don't quite understand.

The process of the adults. If there is any digital marketing why the starts are being guided to flat to up 3% from CTG.

Yes, no no per I understand so in total.

Actually have started that process frankly this month for next year's class and they go around and get the leads and then we know what kind of level of interest we are having for that program and so we knew that there was some softness in that program.

Frankly, 6 months ago, which is why we provided the guidance that we did and we just werent quite sure how it all would play out given COVID-19 and all of the various states.

As it's playing out we will be down in our high school marketplace. This year, but again, that's really a function of the fact that we couldnt get into as many of high schools as we had in the past and therefore get in front of as many students and once that turns around which we anticipate it will in 2022 as well as some additional initiatives, we would anticipate being able to grow the high school.

Great. Thanks, and then on the new campus.

Are you already talked about the courses that are being offered any sort of.

The indication of the region or and also of the class size and what kind of Capex.

Are you targeting.

Sure.

I can say is that it's not in the state that we serve today. So it will be our 15th state that we're entering.

And then as far as the Capex size it somewhat depends on what we're able to get the landlord to fund, but I would say it would be somewhere around would you say, Brian $10 million of expense.

For a campus that should be able to generate for us $15 million to $20 million in revenue.

Got it and then you also mentioned the real estate transaction could you.

Could you give some color around that.

The potential opportunity to I'll say monetize those those properties in a very productive way for us.

Right I just wanted to get a sense of the market value of these properties and we might be sort of consider it.

Well as we've shown and said that they're on the books for $30 million and they were appraised at $60 million.

So.

Got it.

I'll tell you that it's.

Well that should give you more than enough information.

Something should be coming out during Q3.

The.

The publicly coming out we're anticipating very shortly.

Got it and then lastly, any sort of non matching number of starts from <unk> or isn't apples to.

Apples comparisons.

In terms of the stock base.

It's pretty comparable.

Nothing I would say nothing too material.

<unk>.

A few here or there.

Got it.

You for asking the question again, congratulations on a good quarter I'll take this offline.

Thank you I appreciate that very much.

And again, ladies and gentlemen, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad again that of Star 1.

Pause for a moment to compile the Q&A roster.

And your next question comes from the line of Justin Putnam with Tillman Im sorry to Landstar investment group.

Hey, good morning.

Good morning, Justin what adjusted.

I was curious from getting maybe a little more.

Clarity of perspective on the high school start dynamic I mean first of all can you kind of quantify maybe the shortfall.

<unk>.

From a percentage or number of units.

And maybe what you see the more normal year.

Sure No problem, we expect expect to be down around 400 students or so.

As of the.

As a round number.

So.

As you move through this kind of really unusual period here.

And looking ahead into 2022 and beyond.

Do you feel like you said sort of like you can grow the high school population, but I just want to clarify that.

Above.

Of this low base or is this kind of.

Growth and pick up in addition to kind of this unusual year here with the 400 shortfall.

No I think.

In addition to that I think that we have definitely more opportunities in the high schools and I think as more and more high schoolers and their parents look at the value proposition of college.

Okay, then the other side of the.

The equation the add back of the adult population I know you talked a little bit about this but.

<unk> was also impacted by a very unusual period of an unusual year.

And of half.

And you've talked about how you see that come.

Following through the course of this year, but.

How does that look as you look further 2022 of them beyond that too.

Kind of normalizes.

The company has obviously benefited from these higher unemployment period and yes.

And now Thats kind of.

Come down a little bit not quite as much of a tailwind, but there is a lot of underlying.

The dynamics that go with that such as this.

Or if not be able to meet there.

Employee of demand and so forth. So I was just curious how you see that plan out of or.

The more normalized periods of 2022 and beyond.

Sure well I am very confident in our ability to grow going forward simply because of some of the dynamics that you highlighted.

I mean again, we were pre pandemic when the unemployment was at a 50 year low we were able to grow and I don't anticipate that that changes post pandemic. The employers that are coming to us are generally just faced by this massive challenge of finding people.

We all see the spoken about before of how Theres fewer people in the highest high schools learning about the tech programs I think that during the great recession of lot of companies eliminated their training programs and got it frankly too far away from that.

Mean, the solution for industry going forward is definitely going to be of partnership I believe with people like us where we help retain and bring in students given the skills and then work with companies to get them placed and I think Thats also true for the adult market. So I really see frankly with each pass.

The week more and more opportunities for Lincoln going forward than less and yes, sure there might be some variability quarter to quarter, but things remain extremely positive in my mind for what our opportunities are going forward.

Okay.

I asked that question also.

The unusual year, but also from the longer term investors in the industry.

We've seen the counter cyclical nature of this industry.

I know of every.

Economic periods of different.

Yes.

Also on how the is evolving in this current 1.

Yeah, and I think Thats what is different going forward is there is so much more talk today about infrastructure of the need for infrastructure and as I mentioned before people just questioning the value of college that every every cycle is a little bit different and the good news I believe for US is that so many of those differences are pointing to.

Ways for Lincoln to capture more opportunity rather than less going forward.

Okay, great well, thanks for the perspective.

Problem. Thanks, Justin.

And again, if you would like to ask the question. Please press Star then the number 1 on your telephone keypad again that of Star 1 we'll pause for a moment to compile the Q&A roster.

And again that the star 1.

At this time and currently showing no further questions in queue I will now hand, the conference back over to Mr. Scott Shaw.

Lies no matter the challenges or adversity, our students face.

Artist painting at several conferences in the next few weeks, including the Canaccord annual growth conference being held this week as well as the Barrington fall Investor Conference in Colliers Institutional Investor Conference, which are being held on September 9th.

Brian and I look forward to sharing our 2021 third quarter results with you in November until then please stay safe by volume.

Yeah.

Ladies and gentlemen, thank you for participating. This concludes today's conference call you may now disconnect.

Q2 2021 Lincoln Educational Services Corp Earnings Call

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