Q4 2021 Lincoln Educational Services Corp Earnings Call
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Good day, and thank you for standing by and welcome to the Q4 2021 Lincoln Educational services earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you'll need to press star one on your.
Telephone please be advised that this call is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your host today Michel apologies. Please go ahead.
Thank you Justin and good morning, everyone before the market opened today Lincoln educational services issued its news release reporting financial results for the fourth quarter and full year ended December 31 2021.
Relief is available on the Investor relations portion of the company's corporate website at Www Dot would contact us <unk> <unk>.
Joining us today on the call are Scott Shaw, our 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's management on today's call regarding the company's business that are not historical facts may be forward looking statements as term is identified in federal 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 statements forward looking statements should not be read as a guarantee of future performance or results.
The company cautions you that these statements reflect current expectations about the company's future performance or events and 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.
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 our quarterly report on Form 10-Q filed with Securities and Exchange Commission.
Forward looking statements are based on information available at the time those statements are made and management's good faith belief as of the time with respect for 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.
Sure events or otherwise after the date thereof.
Now I'd like to turn the call over to Scott Shaw, President and CEO of Lincoln Educational services. Scott. Please go ahead.
You Michael and good morning, everyone. Thank you for joining us today to review Lincoln's fourth quarter and full year performance in corporate development, we had a solid end to a successful year as we exceeded or performed at the high end of our previously stated outlook. Furthermore, we dramatically improved our liquidity by completing the sale leaseback of our Denver.
And Grand Prairie properties, giving us one of the strongest balance sheets in our 75 year history.
Lincoln We are now entering what we believe will be a period of growth and expansion. We currently have the non dilutive capital resources in place to fully execute our growth strategies for 2022, and beyond which I'll talk about shortly our positive Q4 students starts resulted in our fourth consecutive year of organic growth and <unk>.
Placement rates continued to be robust as demand for our highly skilled students remains extremely strong.
Our focus remains on providing our students with the best ROI on their educational investment while also providing industry with work ready talent that will help them thrive all in all <unk> 2021 was a strong year for Lincoln and we are excited by our opportunities for continued growth as we work to decrease the growing skills gap for her.
Hands on talent.
Financially our top line for the quarter grew more than 7%. In addition, operating income increased by more than 200% and we continued to generate significant cash from operations at each campus generated positive EBITDA for the quarter and full year as of December 31st our unrestricted cash position was up threefold.
Over the same period, a year ago, which includes the net proceeds from the sale leaseback transaction for the Denver in Grand Prairie campuses, our balance sheet is strong and will improve by approximately another $34 million when the sale of the Nashville campus closes sometime in Q2 as many of you know in the recent past our balance sheet <unk>.
Strained our ability to grow with that obstacle now behind us we can now complement the improving performance of our existing campuses with various projects designed to build long term growth specifically, we are adding programs at existing campuses, which drives greater operating leverage this year alone we plan to expand five programs and skilled.
Trades in health care, we expect to start the build out of our new Nashville campus, which will be funded from the sale of the existing campus, which we had previously previously stated will cost between 15 and $20 million. The campus will be physically smaller than the campus currently under contract to sell but will offer greater efficiencies.
Profitability and opportunities for additional programs that will enable us to better serve students in the local business needs and we are planning to open our first new campus in a market that we have identified is currently underserved we see many opportunities to enter new markets, especially in light of the heightened need for hands on talent created by the panel.
<unk> strong demand by corporate partners has only increased over the past 24 months and we are currently searching in several underserved markets for new campus locations.
Additionally, we will be launching other initiatives that offer greater efficiencies at the campus and corporate level to improve our bottom line. For example, we will dramatically reduce the number of course start dates which can range to over 150 today to just 15 by the end of 2023, and we have commenced the build out of our blended learning.
Model to streamline the learning experience both at the curriculum and campus level. It will take us upwards of two years to fully implement this plan across Lincoln's operations, but we've already launched our first program with more to follow shortly our goal is to improve the overall student experience, we have learned a tremendous amount about our.
<unk> and our capabilities as a result of the pandemic.
We know our students can and want to learn online, but they still prefer the hands on in person experience for which we are famous our new curriculum delivery will mean that students will be in our shops and labs, 70% of the time went on campus. We're also standardizing our curriculum across our platform which will.
Make us more efficient and scalable we are centralizing administrative functions have been proven to be more effectively done from our corporate office, thus freeing up campus staff to focus on supporting students and not on paperwork, we're creating three equal shifts in our day, which will enable us to better utilize our faculty and facilities while also shortened.
The time it takes to complete our night program, which will improve student outcomes. The landscape of growth opportunities is vast and by simplifying and standardizing our operations, we will be able to more rapidly capitalize on these opportunities.
Beyond these near to short term initiatives, we will continue to seek further expansion opportunities internally and externally, we believe a bigger footprint footprint remains critical to achieving our objective of building the nations highest quality hands on career school capable of serving the national needs of the fortune five.
<unk> as well as the local needs of your neighborhood automotive dealer hospital or electrical contractor. Our process has already identified several new markets each representing a significant growth opportunity in evaluating new markets, we evaluate student demand employer demand and competition. In addition, we seek input from our corn.
<unk> partners since they are constantly asking us to help them with their workforce needs. This close collaboration with industry demonstrates and confirms our importance to our partners, while emphasizing the value of developing innovative strategies to attract and train personnel to help their businesses grow we firmly believe aligning our interest with that of our core.
Partners gives us additional name recognition and a jumpstart on getting a foothold in a new market.
In addition, we see opportunities to offer lower cost shorter programs that our non title four funded and enable students to more rapidly enter the workforce, we knowing that that not everyone can dedicate a year to getting an education and so we are launching pilot programs to test market demand as well as employer acceptance. Moreover.
We continue to attract corporate demand for specialized training programs, both for new employees and existing employees and will be increasing our resources in this area.
To fund these various growth and efficiency measures, we expect to incur approximately $2 million of one time costs, which has been factored into our guidance that Brian will share shortly speak.
Speaking of strong partnerships in October we celebrated the opening of Republic services 76000 square foot training facility in Dallas for which we are the training provider. The first class of graduates is already back into the field, but the next class about to join them. The classes are staffed with instructors from our Grand Prairie, Texas campus and the curriculum was developed.
In part by Lincoln's Diesel Technology Advisory Committee and designed to meet republics needs for qualified diesel technicians.
In order to grow you need a strong foundation and Lincoln has clearly demonstrated our ability to grow no matter. The economic environment. We just concluded our fourth consecutive year of student growth revenue growth and given our high operating leverage strong profitability growth. We achieved this consistent performance during a period when we had the lowest unemployment rate in <unk>.
Ft years pre Covid and then we were faced with a world changing event of the pandemic, we had to temporarily shut down our campuses moved to 100% online education, and then safely reopen our campuses we had to reschedule thousands of students to follow CDC safety protocols, and we had to keep our operations serving our students despite the <unk>.
<unk> resignation and challenges in staffing due to the determination creativity and dedication of our people, we and our students prospered, while so many others had to retreat I'm proud to say that given our ability to keep our doors open we continued to serve our existing students, while enabling new students to commence their education.
Lee today, we have more than a 1000 additional students graduating this year and entering the workforce just one industry needs them and despite this growth we continue to have employers asking for more students than we currently have enrolled this speaks to my next point and that is the realities of our country's skills gap per hands on talent decades.
Stigmatising blue collar jobs, while pushing everyone into four year schools, whether they were interested in them or not have resulted in significant shortages of hands on workers and has saddled college students with unnecessary and excessive debt.
Along with these social issues is the fact that in general American companies have cut back on training and remain skeptical of their ROI in their training of entry level talent.
All of these factors and more create a tremendous opportunity for Lincoln Tech. We are positioned like no one else to help close the skills gap, we will build on our 75 years of experience in attracting and training motivated individuals and giving them the skills knowledge and experience to enter the workforce with confidence through a number of.
Industry partnerships, we have demonstrated the ability to create workforce ready talent that stays with the employer.
Thus, providing a clear ROI now that we have greater financial resources, we are making investments in people processes and our physical scale.
We will provide long term growth, we are making our programs more engaging by adding more hands on lessons greater use of simulations and adding gamification and other technologies, we are creating greater student value by offering blended learning, which lowers our students cost to attend school and provides increased schedule flexibility we are reducing our.
Cost by centralizing more functions and aligning our class schedules across all campuses, we have identified more than five markets for future expansion and are currently negotiating a lease on one and had been actively searching for locations at others. We continue to pursue acquisition opportunities that are both active in the market as well as privately.
And finally, we are exploring various short term training opportunities, both with CT corporate partners as well as consumer opportunities the need for training is immense and we have never seen so many opportunities to leverage our skills experience and talent to grow our business before I conclude.
I want to thank our faculty and staff for their unrelenting dedication their tireless efforts, especially over the past couple of years continue to propel Lincoln. So the recent industry acknowledgments are well deserved.
According to HVAC excellence, the nation's largest and oldest accrediting body for the HVAC industry Lincoln leads all educational institutions in the country with 36 certified Master HVAC Slash our educators in fact more than 25% of all certified master educators in the HVAC industry.
Are now employed by Lincoln also the National Center for construction Education, and research where N. C. C. E. R. Recently granted accreditation to our South Plainfield campus is welding program and TCR credentials career training programs related to the construction industry and lincolns welding and metal fabrication.
G program was verified as having met the foundation stringent requirements.
In summary, we achieved our 2021 operating objectives and entered 2022 with approximately 850 more students compared to the year ago level. This combined with the continued strong interest in lead generation gives us great confidence to achieve our 2022 goals, which Brian will share during his prepared remarks other.
Positive factors, including a better outlook for the high school students starts compared to a year ago will also contribute heavily to our success.
Also from a regulatory perspective, or 90, 10 further improved to $75 25, and our composite score should be three point out which is the highest level. One can achieve and lastly, we have a balance sheet that gives us greater flexibility and allows us to implement several growth initiatives simultaneously.
Now I'd like to turn the call over to Brian for a review of our fourth quarter and financial highlights and the introduction of our 2022 guidance, Brian . Thanks, Scott Good morning, and thank you for joining us I am pleased to share our robust fourth quarter financial results, which as Scott mentioned enable Lincoln to achieve a solid financial performance for the year and help us.
Or exceed all of the operating and financial targets and our 2021 guidance on today's call I'll be reviewing the significant items in our Q4 financial results, including the sale leaseback transaction, our topline performance operating expenses and conclude with our outlook for 2022.
First as previously discussed Lincoln is executing transaction to take advantage of the strong demand in the commercial real estate markets to monetize our own real estate. We successfully closed the first transaction during the fourth quarter the sale leaseback of our Denver, Colorado in Grand Prairie, Texas campuses produce cash proceeds.
Net of fees of over $45 million.
We utilized the proceeds to completely repay all outstanding debt of approximately $17 million and the edge forecast position.
Our strong cash flow in the fourth quarter combined with these transactions enabled Lincoln to finish the year with $83 million of cash, we anticipate adding to our solid financial position in 2022 through continuing strong cash flow combined with the anticipated proceeds from our Nashville, Tennessee campus discussed bike Scott.
Turning to the fourth quarter results solidly with our topline performance.
Revenue for the quarter increased 6 million or seven 4% to $87 8 million over the prior year.
The increase was the result of a six 3% increase in average.
Average population driven by students starts up seven 5% for the year sooner.
Students thoughts for the fourth quarter came in approximately 2700 up slightly compared to last year, while the quarters growth was two 1% these thoughts and compare it against 15% start growth in the prior year, which represents one of the strongest quarters of growth achieved in 2024.
Full year student starts increased seven 5% and our ending population was six 9% higher or approximately 850 soon it's more than the prior year. This metric is very important because the higher beginning population will help drive revenue growth and financial results for 2022.
Now turning to our consolidated operating expenses the first item.
To note is the sale leaseback transaction that resulted in a $22 $5 million gain.
With the closing of the sale leaseback, we incurred additional rent expense of 600000 during the quarter.
Fourth quarter operating expenses were also impacted by a $700000 noncash impairment charge, resulting from an adjustment to market value of our former campus facility that was closed several years ago and is now actively on the market.
These items total operating expenses for the quarter would be 75 million or six 1% increase over prior year. The increase in expenses quarter over quarter was driven by several factors, including one and structural increases in instructional expenses of approximately $2 million primarily.
In correlation with our largest student population.
Higher instructor instructional salaries due to the high demand, particularly at our nursing field and inflationary consumable cost most notably in our welding programs.
Secondly, administrative increases were driven by increased medical claims in combination with a slight increase in salaries.
Although our operating expenses increased for the quarter. They have decreased slightly as a percentage of revenue when compared to prior year.
In terms of our bottom line results.
Consolidated operating income improved by $1 7 million or 15, 2% to $12 8 million ethics Looney to gain and renting.
Rents, resulting from the sale leaseback transaction and the one time impairment charge.
And adjusted EBITDA increased by $1 8 million or 13, 1% to 15.1 billion. After the add back of the noncash stock compensation expense as well as the one time items mentioned previously related to the sale leaseback and impairment charges.
For more details please refer to the non-GAAP schedules on our Q4 earnings release.
A brief overview of our balance sheet as I highlighted earlier, we have a very strong cash position cash provided by operating activities for 2021 was $27 4 million and free cash flow totaled approximately $20 million.
Also as of the year and we are debt free.
Turning now to some full year highlights.
First revenue increased 14, 4% over prior year to 200.
$35 3 million exceeding both our initial guidance of 7% to 12%.
As well as our revised guidance of 12% to 14% growth over prior year second student starts increased seven 5% when compared to prior year, which is right in the midpoint of our updated guidance of 7% to 8% third we achieve achieved adjusted EBITDA of 38 one.
Million up 59, 5% over prior year this increase.
Exceeds initial projections of $29 million to $34 million as well as our refined guidance of 35 to 37 million and.
And finally, we realized adjusted pre tax income of 27, 1 million, which exceeds initial estimates of $19 million to $24 million as well as the revised guidance of $25 million to $27 million.
As a reminder for details on adjusted EBITA and adjusted pre tax income calculations. Please refer to the non-GAAP section of our Q4 earnings release.
So to conclude my my remarks, I would like to introduce our 2022 guidance. Please.
Please note our guidance excludes the impact of the potential sale of relocation of our Nashville, Tennessee campus as well as the additional costs associated with the planned new campus discussed by Scott earlier.
We will be providing additional detail on our new campus financial model and our Q4 investor presentation that will be available on our website later today.
Our outlook is based on our current enrollment trends and do not account for any potential impact results from the from new COVID-19 variance it in 2022.
We will continue to monitor the student demand and external factors and will update guidance if warranted.
As such in 2022, we anticipate revenue ranging between $350 million and $365 million.
Adjusted EBITDA, ranging between $35 million and $40 million net income ranging between $17 million and 22 million students start growth ranging between five and 10% and lastly capital expenditures range of between 7 million and $9 million with approximately 40% earmarked toward program expansion at various cam.
Francis.
In addition to the Guy that's I'll take a moment to share some additional color on how we see the year unfolding.
Consistent with our seasonality, we expect first half revenue to be approximately 45% with the remaining 55% recognized in the second half of the year.
We anticipate revenue growing each quarter over the prior quarter and 2022 students starts are expected to increase in low single digits. During the first quarter with subsequent increase expected for the remainder of the year in.
In terms of operating expenses, we anticipate expenses to be in the low to mid 80 million dollar Mark.
Per quarter in line with our historical seasonality, we expect Q3 to be the high point of the year in.
In comparison to prior year, we expect Q1 to show the largest jump year over year, mainly due to the comparison to last year. When the company had a one time benefit of 3 billion, resulting from cares act funds using credit students accounts.
Furthermore, a 2022 's operating expenses will also increase by $3 2 million to two additional rent expense, resulting from the sale leaseback transactions.
In addition, we plan to increase our investments throughout the year by roughly $2 million for growth initiatives efforts to streamline our operations and continued development of our new more efficient hybrid teaching model as mentioned by Scott previously.
In terms of adjusted EBITDA, We anticipate interest expense will be about 350000, our effective tax rate to be around 28, 5% and depreciation and amortization to be approximately $6 6 million spread evenly throughout the year.
Also adjusted EBITDA includes an add back of noncash stock based compensation of approximately $4 5 million, which is expected to be evenly recognized each quarter with a slight uptick in the in the first quarter of about 200000.
With that ill conclude my remarks by thanking our entire team, including all faculty and students for their outstanding effort.
During 2021, we look forward to commuting our progress throughout 2022, and now I'll turn the call back over to the operator, So we can take your questions operator.
Thank you and that's how reminder to ask a question you will need to press star one on your telephone to Redraw. Your question press the pound or hash scheme, we ask that you limit your questions to one and one follow up please standby, while we compile the Q&A roster.
First question from Alex Paris, with Barrington Research your question. Please.
Hi, guys congrats on a nice finish for the year.
My first question would be regarding the new and more efficient hybrid operating model.
Uh huh.
How does this compare to.
The operating model pre Covid and then how does it compare to the operating model currently.
And then the follow up but it's not quite a follow up with my second question is I'm curious about any lingering effects of Covid I, obviously COVID-19 has impacted results significantly over the last couple of years.
What COVID-19 impacts or you're dealing with on a go forward basis. Thank you.
Sure no problem. Thanks for the question, so basically before Covid, our classes, where 100% on ground taking place at our campuses students would come to the school basically 25% to 30 hours a week and if you were in a night time program.
Youre going fewer hours, a week and so it took a lot longer to close.
<unk> program going forward, what we're doing is about 25% to 30% of the student's education will now be done online off campus and which means as I highlighted in my comments when their on campus, they're basically going to be doing what they love to do which is the hands on work with our instructors and our lab.
And in our training facilities.
And what will happen is we'll have three equals shifts throughout the day. So we'll have a morning afternoon and evening shift all the same length, which means that our evening students will go through it a little slightly accelerated pace, which we think will benefit them, because frankly, they'll be able to complete their education sooner, which should help <unk>.
Rive up frankly, the graduation rates of those students as well and so it will create greater utilization of our facilities and be more efficient also for how we staff from our faculty perspective as well. So those are kind of the changes that will take place and we're doing it program by program.
And as you can imagine we have 14 different states, where they get state approval and accrediting approval and definitely will be completed we believe by the end of 2023, but our objective is hopefully to obviously get that done sooner simply because we just see lots of operating efficiencies, resulting from this change.
Your other question with regards to Covid me. Thank goodness, we were able to manage through Covid, I'll say surprisingly well and again I have to give a shout out to our faculty and staff for doing that.
The only lingering issue that we still have with Covid, which will eliminate itself on the assuming very shortly is with our nursing program as you're probably well aware a lot of clinical sites had to restrict the number of students. If they were allowing any students to come in and while those clinical sites have re opened.
Frankly, we just nursing as our I think our third largest program. We just have a large volume of nursing students. So we still have some nursing students that are I'll say, having completed their education as quickly as they would originally thought and that has delayed some of our.
Starts in our nursing program all of this is factored into our guidance, but I anticipate certainly by the let's say the third quarter, if not the second quarter of this year, we hope to be caught up on all of the clinical education and be back to our normal schedule for all of our nursing students.
Great. Thank you that's good color I appreciate it.
Your next question comes from Steven Frankel with cardiac your line is open.
Good morning could you give us details on the graduation and placement rates for the year.
Sure graduation rates were around 64% and placement rates were right around 80%.
And then what was that in.
Let's go back to normal times for since 2019.
Yeah. So placement is about the same and graduation was up to around 67% 67 to 68. So that's one area that kind of dropped down during COVID-19 .
And obviously an area that we've put a lot of attention on and we're already seeing signs of improvement in that area and just to remind you. All we have a goal of 70% graduation rate for our holding company as well as an 85% placement rate.
And currently given how strong the placement market is optimistically.
Anticipating that we could reach that level this year.
Great and then you've made some interesting comments about it.
Short term.
Pilot programs with corporate partners, maybe you could update us a little more detail on that as well.
Maybe an update on Mckinsey to get cash pay program that you announced a quarter or so ago.
Sure. So what I'll do is I'll talk about basically this in a more general standpoint Theres allowed this is.
I'll say research and development efforts, taking place until we have a lot more proven results that are scalable.
I don't want to distract you, but with that said, we see lots of opportunity in shorter programs. We know that we reach a lot of students, but we also know that not everyone comes to us that we reach and one of their biggest obstacles is the cost and the amount of time. So we're looking at developing shorter programs that will give stu.
And skills to be employed but will enable them to get into the workforce more quickly in some of those might be let's say business to consumer as we do today. Some of them are also with us.
Leveraging some of our relationships with our corporate partners and kind of expanding what we're doing with them today.
Bigger bolder area. So that's kind of what we're focused on from a shorter programs.
Perspective with regards to the kindig, we anticipate that that will start next quarter, we're waiting for the CFO .
The local town, but for whatever reason it seems to be taking a little bit longer than anticipated and we anticipate that we'll have our first class start as I said in that program in Q2.
And Thats a version of the shorter programs in that its non title for.
All cash in this case that the Kindig program is at an advanced level. So it's not for an entry level person, but for someone who is already has been out in the workforce working for a number of years and then wants to bring their skills to the next level.
Okay, great. Thanks, Scott.
Sure no problem. So thanks for your interest.
And thank you and our next question comes from Austin <unk> from Canaccord. Your line is now open.
Hi, Thanks for taking my question.
So I think the transportation and trade segment growth was driven entirely by the student population, where health care and other it was kind of a balance between population growth and revenue per student. So can you just talk about those two driver.
The two segments going forward, especially sort of in the context of inflation.
Sure so across the board, we do have annual increases in our tuition between 1% to 3% I think that the revenue increase on the nursing side with the health care side is more attributable to more students coming during the day than during the evening and that kind of accelerates.
Some of the revenue, which raises the average revenue per student, but on average we would anticipate the average revenue per student to be increasing at that 1% to three percentage points, but it could change due to mix in any particular time.
I hope that helps okay.
And just a quick follow up is there.
Is there an ability to raise above 3%.
Your student body and I guess the larger question is how do you feel that you know Lincoln compares to.
Other programs that are offered in the same markets.
Given the price point.
Yeah. Good question. So we definitely look at every market with every market is different and compare ourselves in particular to the other proprietary schools of is obviously our programs are always more expensive than the community College and we never tried to be the highest price person nor the lowest price person. So we tried.
To keep our tuitions kind of right there in the middle and at this stage I would say that there we have no interest in raising tuitions faster than 3%. Obviously there are some costs out there that currently are rising higher than that but we don't think it's in the best interest of our students.
To raise it more than what we've done already for this year.
Okay. Thanks very much.
No problem.
Thank you.
And if you'd like to ask a question that is star one again, if you'd like to ask a question that is star one and our next questions come from Raj Sharma from B Riley. Your line is now open.
Hello, Good morning, guys congratulations on solid results.
I had a quick.
Couple of questions can you give us some more color on.
On the starch the high school versus the young adults how were they in the fourth quarter, and then sort of going forward, how do you see them in the current quarter and any impacts.
You had talked about social shortening doing better for high schoolers first yep.
Yes, so first of all the vast vast majority of all of our high school students starts occur in the third quarter period or.
Actually in June and then the third quarter. So in the fourth quarter really don't have that many high school student starts.
Of note.
What we are seeing no as we build up for this coming June in third quarter numbers are more enrollments than we had last year, we have more access to high schools and so we're anticipating that to having a stronger high school turn out this coming summer, which is our big high school start period.
And any.
Indication on show rates and the level of interest that you're receiving.
Yeah. It's a good question and we look at that constantly and we do see some softness a little bit in our show rates, we have strong lead.
Enrollments, we sit well who has strong leads with good conversions to enrollments there has been a little softness in these students starting but that could be because they find other job opportunities in the strong market that exists out there, but overall, what we're still achieving is from a lead to start improving.
Proving metrics and from a cost perspective, our cost per start is flat to down year over year. When you look at both marketing and admissions and so that gives us greater encouragement to frankly invest more in both areas to help drive more growth going forward. So while the numbers change individually at different.
Aspect overall, we're achieving better results.
Great and then my second question is around the guidance.
<unk> for the year.
Just wanted to understand and be clean. It does not include any new campus contribution or any new not many new program contributions.
I understand it's the same store sales sort of organic.
Performance that you did you would expecting in fiscal 'twenty two and then the follow on question was then.
The use of <unk>.
Your cash on your balance sheet.
What.
Are there any sort of.
Any sort of color on if you can provide on the <unk>.
Lands to use that cash because you'll have a plenty of cash plus free cash flow during the year.
Okay.
Hi, Ross.
So to answer your first question the guidance excludes the new campus that Scott discussed that will hopefully signing a lease shortly on that so that the guidance excludes that as well as anything to do with the relocation and sale of Nashville.
As you know as we disclosed earlier, we would have a large gain on that as well so that the guidance excludes that.
As far as the use of cash.
The main uses for this year will be program expansion and the build out of these new campuses. As we mentioned are the midpoint is about $8 million of our capex, 40% of that is going to be used for new programs and then on top of that it'll be for the build out of our new school, which should be.
About $10 million to $15 million for the new school in Nashville will be a little bit more than that but we'll use the proceeds from Nashville to pay for that as well.
So as we mentioned in our comments.
We are opening up new campuses. We're currently negotiating a lease for the next one to open up and are looking for locations at several other markets. In addition, we do always also look at the acquisition marketplace to see what's out there. So as we highlighted we do have the wherewithal to do follow.
Many different paths right now as Brian highlighted is expanding the existing program getting our new campus up and running that we anticipate will occur certainly by the early part of 2023, and then hopefully I have other campuses on the way as well.
And to touch a little bit more one of your other questions about <unk>.
New programs as Scott mentioned, we have.
Some additional programs.
We're putting some additional programs in some campuses the spend will occur in the first and second quarter for that but we're not anticipating the open up we're trying to get them opening up earlier, but we're not anticipating them opening until Q in Q3 and Q4. So the starts will be minimal for this year.
Got it.
Great. Thank you.
Take it offline thanks a lot.
No problem Charlotte.
And thank you and again, if you'd like to ask a question that is star one again, if you'd like to ask a question that is star one one moment.
Questions.
And I am showing no further questions I would now like to turn the call back over to Scott Shaw for closing remarks.
Okay.
Thank you operator as always I want to thank our shareholders for your continued interest and support I also want to thank our students for their steadfast commitment many of whom have faced great adversity due to the pandemic our performance in 2021 positions us to meet our 2022 goals, both operationally and financially.
<unk> has never been brighter for Lincoln and we remain focused on business execution and fall flawlessly implementing our near and long term growth strategies, we have the resources to invest in those areas that generate positive student experiences and placement rates Lincoln is a compelling story as our results reflect.
Brian and I look forward to sharing our 2022 first quarter results with you in May until then stay safe.
Yeah.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
Okay.
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Okay.
Okay.
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