Q3 2022 Lincoln Educational Services Corp Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Hello, and thank you for standing by welcome to the Q3 2022, Lincoln educational services, earning call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question. During the session you will need to press star one one on your telephone.
I would now like to hand, the conference over to your speaker for today, Michael Paul If you you may begin.
Thank you Wanda and good morning, everyone. We're the market opened today Lincoln educational services issued its news release reporting financial results for the third quarter ended September 32022.
The release is available on the Investor Relations portion of the company's corporate website at Www Dot Lincoln Tech Doggy D U.
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.
Yeah.
Statements made by Lincoln Spanish been on today's call regarding the company's business that are not historical facts may be forward looking statements as determined as identified under 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 on fact.
Or is 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 the quarterly report on Form 10-Q filed with Securities and Exchange Commission.
Forward looking 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 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 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 welcome everyone earlier today, we reported our third quarter results that were right in line with the expectations. We laid out for you back in August we continue to invest in the various components of our growth strategy and began to see the initial top line contribution from our new hybrid teaching model or.
Our investments in growth opportunities, along with wage and compensation inflation has impacted our earnings but we do remain solidly profitable and expect this trend to continue.
In addition, enrollment congratulation rates remained strong across our 22 campuses and as we forecasted during our last call with you starts during the third quarter did decline by 500 students as compared to a year ago period.
Based on current trends and actual starts during October we continue to expect fourth quarter student starts to increase at a solid rate.
Brian will review all of our guidance for the full year during his remarks.
Two major initiatives that we have talked about throughout 2022, or the centralization and automation of our financial aid process and the rollout of our new hybrid curriculum.
Both initiatives will improve our students' experience and bring greater efficiencies to our company for example, the centralization and automation of our financial aid process should accelerate both the financial aid application and award process, leading to a better start rate and thus more students.
The centralization and automation of financial aid is an ongoing initiative requiring investment. However, it remains on schedule to be fully implemented by the end of 2022 and all signs are that we will realize a lowering of cost from this initiative during 2023.
Our new hybrid teaching model provides greater flexibility for both students and faculty.
Well once fully implemented lowering our operating costs.
Every program will be taught in the hybrid format, but all similar programs will be on a standardized calendar, which will assist with gaining efficiency across our campuses.
Moving welding culinary nursing and cosmetology to the hybrid model.
We are on track for this year's conversions and expect all remaining programs to be up and running by this time next year as we've discussed in the past this new model enables our students to work part time or manage other commitments, while they pursue their Lincoln education, which will enable a higher percentage of students to successfully complete their education.
When implemented it will also reduce our complexity and allow us to reduce expense in several key operational functions. We do expect to have approximately 40% of our programs converted to this new hybrid teaching model by the end of the year and all programs left to be converted by the end of 2023.
Once existing programs are concluded and a majority of students are in the new hybrid model, we should start to see additional savings and efficiencies in 2024 and beyond.
During the third quarter, we began to see the first tangible contributions in our top line performance from the new model, which provides certain classes and components digitally while others remain in the traditional classroom setting.
Ryan will provide a little more color when he reviews revenue during his remarks.
During our last call, we discussed three new corporate partnerships with industry leaders in electrical vehicle electric vehicle automotive paints and coatings and collision repair segments, we are especially pleased to be partnering with Tesla the world's leading electric vehicle manufacturer as we help them meet their growing technician needs as well as potentially work with them.
Other areas of the organization.
They like the quality of our students and the breadth of our program offerings and locations, especially our electrician program since they view themselves as much more than just a car company. The Tesla agreement has moved quickly to rollout we are enrolling our first class with Lincoln Tech and Tesla employees and will commence training in mid December at our Denver, Colorado.
Auto campus.
Our corporate partnership agreements help our partners still the urgent skills gap. They are experiencing in light of the nation's continued overall lower unemployment rate and increasingly more difficult search where employee training solutions required to continue their respective corporate growth while.
While there has been much talk in the financial media and government circles of the negative impact on job creation from rising interest rates. There is still is a shortage of workers for the type of essential skilled position Lincoln trains for our.
Our company has paved the way in terms of creating innovative customized training programs with our corporate partners and each year, a larger and larger percent of our students directly benefit from our partnerships.
Jason point, we recently celebrated the 20th graduating class from the Huntsman <unk> Center located within our Grand Prairie, Texas campus in effort to help fill a projected 385000 HVAC job openings nationwide by 2030 since 2018 Lincoln has helped hussman hire more than 200, new technicians occur.
Ross the country.
Another major component of our growth strategy is the initiative to identify and create new campuses and markets prioritized by our corporate partners as well as potential partners. During the third quarter, we announced the creation of a second campus in the Metropolitan Atlanta area, one of the fastest growing metropolitan areas in the country.
This new campus is strategically located in an area to serve students within the city limits as well as points south of downtown we've begun the work to open a new campus remain on schedule to do so during the third quarter of 2023.
We expect to invest around 600000 this year into the new campus and a total of $14 million in capital expenditures by the time, we open in about a year.
We continue to expect that within four years of its opening the 50 to 56000 square foot facility will be generating approximately $20 million in annual revenue and $5 million in annual EBITDA.
The campus is being designed to be more cost efficient than our existing campuses. Both in reduced square footage in personnel as we plan to benefit from our new hybrid curriculum as well as centralized services. The campus will focus on providing training programs in automotive technology electronic and electronic systems technology welding.
And heating ventilation and air conditioning technology.
As we previously noted is expected that these industries will create an estimated 84000 new jobs in Georgia by 2028.
Combined with our existing Marietta, Georgia campus North of Atlanta, Lincoln is positioning itself to be a major resource of train students to meet this expected demand.
The new Atlanta campus is the first result of our plan to develop a minimum of five new campuses nationally within next five years. Each campus is designed to serve our local metropolitan market with the vast majority of the students coming from within 30 miles of the school.
The curriculum will be based on our new hybrid teaching model and new technologies will be incorporated that enrich the learning environment and student experience, while giving our highly trained faculty tools to better track and monitor student success all to continue to drive our strong graduation and placement rates.
Based on employer demand for skilled employees in job growth projections nationwide. We have already identified 10, new markets, where we can open new automotive and skilled trades campuses as part of our long term strategic plan.
We plan to replicate the cost efficient design of the new Atlanta facility into the New Nashville campus. As we have previously reported our current facility in Nashville is under contract to be sold once that transaction closes. We will begin the process of transitioning our current operations to a new campus. We have identified a new site, but are waiting.
The closure of our current campuses sale before solidifying solidifying that transaction once we do close on our current campus sale, we will lease back the current facility until the Buildout of the new one is completed.
As we discussed on the last call the buyer of the Nashville property continues to pursue local agency approvals and continues to make the monthly nonrefundable payments to Lincoln under the purchase contract, which as of today total approximately $400000. At this point, we believe the transaction will close during the second quarter of 2023 for PERC.
<unk> price of $34 5 million.
Our efforts to identify new campus locations has led us to identify some new opportunities to enhance value at some of our existing campuses. In fact, we are working on a new lease that will enable us to add automotive electrical and HVAC to our Lincoln, Rhode Island campus. We are very excited by this recent development, which will enable us to leverage our existing manage.
<unk> team and market presence with three strong programs and give us our 14th auto program.
The Lincoln, Rhode Island location, not only serves the state of Rhode Island, but also the greater Boston Metropolitan region.
In addition to Lincoln, Rhode Island, we will also be adding skilled trades programs into other existing campuses further leveraging existing management teams and market presence, we will share numbers numbers and locations during our year end earnings call next year.
Meanwhile, our constant evaluation of campuses has led us to closing our Summerville, Massachusetts facility at the end of next year.
We were recently made aware of the building owners decision to demolish the building and subsequently conducted a search in the Boston Metropolitan region to move the campus, but were unsuccessful in finding the right location.
As we've done in the past with campus closures, we are providing our current students with the opportunity to complete their program of study through December 2023, and our staff will deliver all of the necessary student services, including employment assistance to graduate even after closing the campus offers medical assisting dental assisting.
And massage and serves approximately 250 students.
Brian will share more.
We will share some of the financial impact of this.
Disclosing during his remarks in a few minutes.
As we look to the end of 2022 and into 2023, we continue to face the headwinds of a low unemployment economy that is providing students with other job opportunities concerns over taking on debt in a rising interest rate environment and inflation impact on transportation costs in our operating expenses as I noted earlier, we generated growth.
In starts during October and expect positive growth for the fourth quarter. However, the decline in Q3 starts in earlier softness in Q2. It means our performance will be soft in the first half of next year, but as we opened a new campus and replicate programs. Our second half should show much better in performance, we will share much more detail.
During our year end call next year.
Our transition to the new hybrid teaching model has higher temporary expenses as it requires additional faculty to complete the education of students that are operating under the old model. While the new model has started also centralizing and adding some automation to our financial aid process also is temporary or rarely required.
<unk> people to be added to ensure no interruption to our business. In addition to incurring additional onetime costs. These two initiatives do generate some minor temporary inefficiencies in our business as the initiatives come to completion, the onetime costs will go away and further efficiencies should be achieved our financial aid initiative will.
To be completed by year end and our hybrid teaching model rollout should be done by this time next year.
We are very encouraged by the early results that we're getting from our campuses who have transitioned over to our new financial aid process and hybrid teaching model the student experience and our operating efficiency, both improve with these initiatives and Lincoln's ability to scale more rapidly will be increased once students do start we've done an excellent job of retaining them in placing them in high.
Ping rewarding careers Lincolns overall student retention rate continued to advance during the third quarter and graduate graduation placement rates also increased.
I noted earlier.
Demand for our highly skilled students remained extremely strong this demand along with our growing number of programs and corporate partnerships continues to generate strong interest in Lincoln training from prospective students.
These short term challenges, we continue to be quite optimistic that our strategic growth initiatives will generate consistent long term growth for all of our stakeholders I would like to turn the call over to Brian for a review of our third quarter financial results and outlook Brian . Thanks.
Thanks, Scott Good morning, and thank you for joining us before I begin with veterans day. Later this week I would like to take a moment to thank all of our veterans, both past and present for their service and commitment to the security of our Great Nation Veterans day is particularly important for us that Lincoln since so many of our students alumni and instructive served by have served in the military.
Sorry.
This morning, I'd like to share a few key operational developments and then review our third quarter financial results.
First a couple of actions that we've undertaken last week on November 4th the company terminated its $15 million credit facility, which had no debt outstanding.
And into this bank agreement several years ago, when the company's cash position and financial performance, where it meaningfully lower as a result, the bank agreement contained a number of provisions that place restrictions in terms of our flexibility to invest in both our growth initiatives as well as options for Treasury management investments.
Since the bank agreement was established operations have generated over $50 million of cash flow. In addition, we executed a sale leaseback transaction, which generated net proceeds of approximately 45 billion. Consequently, we are in a very strong cash position ending third quarter with nearly $7 billion of net cash.
Despite having increased our investments in growth and opportunities and initiated our stock repurchase program. The topics I will discuss shortly.
Terminating the agreement provides lincoln greater flexibility to pursue opportunities to invest our cash balances and higher yields short term investments.
Current and expected interest rates, we are implementing our cash management strategy to generate higher returns on our cash assets.
Lender will continue to manage our outstanding letters of credit of $4 million on a cash collateralized basis.
And in interest bearing account this account and our money market accounts used to manage our immediate term liquidity will now earn 3% interest annually.
Also as Scott mentioned, our board of Directors approved a plan to close our Summerville, Massachusetts campus.
In terms of the financial impact.
This campus has consistently been one of our smallest in terms of revenue and profitability for the nine months ended September 32022 campus revenues were $5 3 million, representing two 1% of total revenue with an operating loss of 200000.
As a result of the closure of the campus is not expected to have a significant financial impact on the company.
Beginning with our fourth quarter, the financial results for the Summerville campus, including a full year of 2022 performance will be reclassified to and reported under our transitional segment.
For the full year of 2022 campus revenue will be approximately $7 million with an EBITDA loss of 500000.
Moreover for 2023, we are projecting an EBITDA loss of approximately $3 million, which includes the additional expenses to complete the teach out of the students and the other closing cost the campus.
As an update on our share repurchase plan, which we began in may during the third quarter, we repurchased 668000 shares for $4 2 million and since the plant inception, we have repurchased close to one 1 million shares for $6 7 million as of the end of the quarter, we had 23.
$3 million remained remaining under our current share repurchase authorization.
Now turning to our financial results for the third quarter.
We achieved revenue growth of three 1% or $2 7 million to 91.8 million. The revenue growth was mainly mainly attributed to a five 9% increase in average revenue per student, which offset a two point 70 client average population.
The average population impacted by a nine 2% decrease in thoughts for the third quarter.
The higher revenue per student resulted from tuition increases combined with a more efficient program delivery through the implementation of our new hybrid teaching model the hybrid model delivers higher daily rates and certain programs as our overall duration can be shortened.
Particularly for our evening program.
We expect.
We expect that to continue rollout of our new hybrid learning model will result in additional efficiencies.
Our consolidated operating expenses were $86 9 million up four 3% over prior year. This increase is in line with our projections. It was driven by three three main areas one in structural cost increase largely due to higher staffing levels.
We are currently operating with higher staffing at several of our campuses have awards the hybrid teaching model as we provide instructions for both new and traditional models for an interim period of time.
<unk> expense went up due to the additional rent expense of 800000 in connection with the sale leaseback transaction completed in 2021.
Administrative expenses increased as a result of a couple of factors.
Salaries and benefit expenses due to salary increases and medical claims.
<unk> expense due to better align our cost structure in certain areas and one time items, including expenses to advance our growth and operational efficiencies totally approximately $2 million.
Our adjusted EBITDA for Q3 was $7 4 million, which includes add backs of noncash stock compensation severance and the rent expense for the Atlanta, Georgia campus.
For more details please refer to did not non-GAAP schedules in our Q3 earnings release.
And lastly ill.
My remarks by reiterating our full year guidance for 2022.
Revenue between $340 million and $350 million adjusted EBITDA between $25 million and $30 million net income ranging between $10 million 15 million students starts ranging from minus 3% to plus 3% and capital expenditures ranging from 8% to $11 million.
Our outlook for 2022 and beyond continues to be optimistic as we continue to stay on plan this year and see great growth opportunities and operational efficiencies in the horizon, we look forward to sharing more on our next call.
With that I want to thank our entire team for their continued effort and support now ill turn the call back over to the operator, So we can take your questions operator.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone please.
Standby, while we compile the Q&A roster.
Our first question comes from the line of Alex Paris with Barrington Your line.
Hi, guys. Thanks for taking my questions congratulations on the better than expected third quarter results.
Thanks sure.
Given the third quarter results were better than expected and you reiterated full year guidance.
The implied guidance for Q4 is pretty wide. So obviously, a $10 million range from $83 5 million to two.
To $93 5 million revenue.
You had said in your prepared comments that pretty much everything was in line with expectations for the third quarter.
Yeah.
With new student starts down nine 2%.
Was that in line with your expectations. It was a little bit lower than my ex the my point estimate.
Alright, So I think it was a little bit lower one item was we didn't have starts at our summerville campus in <unk>.
November and December November and December I'm, sorry at October and September So we postponed some starts there.
Sure.
But yes, it was slightly lower than our expectations due to the start rate as we've talked about previously gotcha. So that full year reaffirmed guidance suggests a big.
Kris and new student starts in the fourth quarter.
Greater than.
12%, 13% by my math.
What gives you confidence that starts will be up so strong in the fourth quarter I suspect part of it is the comp but.
Can you could you talk at all about your starts.
Experience in October .
Sure. So as Scott mentioned in his comments that thoughts were very strong for October .
Our anticipated growth for the fourth quarter, but the growth.
For our stock guidance, it will be towards a little bit of the lower end of the guidance right now we're anticipating hopefully there's an upside to about like 6% to 7% soft growth in Q4, and the one thing that I had.
Misspoke, what I talked about the full year guidance, it was a little bit higher because.
Summerville canvas that we'll close it was it.
September .
It was more in the fourth quarter that we had to take those starts out in November and December .
So just to be clear, we're reiterating our guidance as you just highlighted one item with regards to starts will be probably at the mid to lower end of our guidance.
Got you and then the full year guidance for starts just to be clear was negative 3% to positive 3%. So you are saying.
For the full year starts kind of flat, maybe slightly lower year over year to get to the numbers that you are guiding for.
Revenue and adjust our restaurants on Yelp.
Okay correct.
Thank you and then one other question.
I was thinking about the series a preferred stock nine 6% I believe you could force conversion as soon as last week November 4th what are your thoughts there.
I think it was the first time I believe it was November 14th and so we need 20 days of the stock price over the conversion price I think it's like $5 31, I think as of today, we're like 10 days into that so we are anticipating if we are if we are able to convert.
The.
We will convert at the earliest possible point, that's our thinking right now.
And then what would be the implication of that how many shares or how many common shares are covered by that conversion as I recall, it's something over 5 million shares yes.
Yes, it's $5 3 billion shares will be converted.
<unk> distributed to the shareholders.
And then obviously you won't have the $304000 of preferred dividends every quarter once that occurs.
Correct.
Got you.
Okay. Thanks that'll do it for me for now thank you.
Thanks, Alex.
Thank you please.
Please standby for our next question.
Our next question comes from the line of Steven Frankel with Rosenblatt Securities. Your line is open.
Good morning, Scott can we talk a little bit about price increases maybe you could help us understand how much of that was just the mechanics of moving to hybrid.
Learning versus actually raising tuition rates and to the extent that youre actually raising tuition rates kind of how much more headroom do you think you have in this environment.
Sure well the increase that we are experiencing isn't tied to TUI.
Tuition increases it's tied to the fact that our night program is now going to be in line with our day and afternoon programs in the new hybrid model. So historically, we've been teaching the same curriculum to our night time students, but over a longer period of time, which means you're earning less revenue per student per <unk>.
But in the new hybrid model there are going to be delivered at the same pace as the morning and afternoon classes, which means the acceleration there is that an acceleration as we make this transition.
To the to the hybrid model in greater revenue.
So it is not necessary the tuition increases that we put in place back in last January that's creating this.
<unk> great.
Great. Thanks for that clarification, there and then do we.
See that for the next three quarters or is this kind of a onetime effect.
So we should see that going into 2023 as well as you mentioned, we are anticipating tuition increases.
Of like 3% to 5% as well next year. So we should get the benefit of both going.
As more and more programs transition to a hybrid model.
It's the night program as well as it does shrink some other programs, but only by a month. So it should it does increase our monthly revenue as Scott said, so that should be with us I would say almost throughout 2023, and then it should flatten out.
Okay, and then with the changes in the online advertising market.
Due to the economy have you seen any meaningful reduction in your cost per lead.
Yes.
No we haven't seen anything due to I guess the economy, we're constantly looking at efficiencies and ways to lower our own cost.
We anticipate.
As we speak to our vendors as we are going through the budgeting process.
We're hoping to see some softness coming coming up but as of right now I can't say that we see necessarily softness and the cost per lead because of just overall pricing.
Anything that we see is I'd say, it's more driven by some of the strategies we have in place.
Okay and should we have an update on your cash pay.
Efforts.
Sure I mean, the shorter term programs.
In particular.
I would say that they are.
Very slow to materialize in some of our cash pay product programs that let's say are kindig program is definitely off to a slow start. However, I'm excited to report that next week. The program will be featured on Dave show. The whole show is dedicated to the program so anticipating that that will help.
Drive some interest in demand.
But basically the cash opportunities that we have are through our corporate partnerships now versus through any kind of.
Quarter term programs generating anything thats meaningful to us.
Okay, great. Thank you that's all the questions I have for now.
No problem.
Thank you.
Please standby for our next question.
Our next question comes from the line of Eric Martin Newsy with Lake Street. Your line is open.
Yes, I wanted to ask about the strategic thinking behind that closing of the Summerville campus.
I'm sure it wasn't done.
It was done after some deliberation im curious to know if you.
Put more into it do you feel like you could have gotten that to a growth trajectory our profitability profile where it.
It could have been sustainable or was it the cost of the.
Going after that just not something that we wanted to entertain.
Sure, Yes, it's really the latter I mean, we definitely look to see what we could do in that marketplace with the programs.
And to be.
Lately transparent our Lincoln, Rhode Island campus does overlap with our Summerville campus. So if you were to look at both campuses and put a 30 mile radius around them you would see a venn diagram of overlapping.
Opportunities there so it's not as if we're going to be leaving the marketplace, 100% and we have a more attractive I'll say facility and rent structure, and our Lincoln, Rhode Island, and as we look for programs and opportunities in the Boston market. It's just they just didnt avail themselves to something that was a track.
As a as attractive of just growing frankly, our Lincoln, Rhode Island campus.
Okay.
And as we look out to 2023, you have if we go back the past three quarters here and just kind of average it out we're talking about negative on the student starts in the first nine months of the year just curious if thats for the first half of 2023, you talked about the ramp up.
The impact of the the new students starts weighing on the front half should we be looking at negative revenue comps in the front half of 'twenty three.
Well.
We're not giving any guidance as of yet.
On that subject I mean, obviously, we will continue to have some of the benefit that we experienced this quarter as well. So I just we haven't refined it enough and we haven't given that publicly as of yet but to your point, Eric that are carrying population will be slightly down, but what it will be offsetting that is the what we just talked about tuition increase.
<unk> as well as the rate increases that we're experiencing in our new hybrid model, so what kind of offsets the other.
Other but we'll give out more guidance when we report our 2023 guidance, but those tuition increases those will be with new students.
Student starts.
There is a lagging effect of those yes.
Gotcha.
Okay and then.
The just looking kind of geographically on the students starts did you notice any geographic pockets of strength as you look across the 22 campuses.
We always had certainly have certain Kansas that always are performing maybe better than others, but overall when you looked at it.
Across campus and across programs. There was a decrease so there's definitely something broader taking place there so.
I would say that where we see opportunity is frankly, when we add new programs into campuses at those campuses. Even when there is some I'll say negative headwinds by adding the additional programs you're always able to <unk>.
Further penetrate that market and get some growth, but overall I would just say there was Jeff definitely decreased kind of across the board in the third quarter nothing stood out one way or the other.
Okay, and then lastly, your head count today or at the end of September what was the head count and where do you expect to finish out the year.
Youre, saying employee head count or students.
Head count employee head count operating expense.
Well.
I don't have that number in front of me typically, though our head count decreases a little bit between now and year end. We're typically at our peak population right now and population will lower a bit by year end just naturally the way that students graduate. So I don't have that number but we can get back to you with that but as we.
We did take out some headcount in the third quarter bolt at school and at corporate.
But I don't have those numbers handy, but.
Well thats, what youll see in our.
Add back to adjusted EBITDA, There was some and there will be some more for 7% in the fourth quarter as well.
Understand thanks for taking my questions.
No problem. Thank you.
Thank you.
I'm not showing any further questions in the queue. As a reminder to ask a question that would be star one on your telephone.
One moment please sandbox our next question.
Our next question comes from the line of Raj Sharma with B Riley Your line is open.
Yes. Thank you.
So.
Just starts.
It seems like it seems already already pointed out it seemed like there was the in <unk> looks to be a pretty substantial swing.
In starts growth to get to the minus three to plus three.
Starts.
Is that so is that correct.
And then.
Can you comment a little bit on the interest in programs, what's causing this general decline.
I know that you pointed out the tight labor markets.
Did you see any sort of changes in interest in programs a falloff in interest in programs or can you give more color.
Yes.
Sure. So again with regards to the guidance.
As it comes to starts it would be.
Negative 320 that it'd be focusing in on that range as.
As far as where the fourth quarter is going to come out as.
As far as program demand and interest.
As I kind of just.
Stated, it's really kind of across the board Raj there is nothing that really jumps out no one wants to become a nurse a more known wants to become an auto mechanic, there's kind of a weakness across the board and typically that does happen when unemployment is low.
And what we're hoping to experience.
Is the trend, which I think we've seen before at least recently I've seen where more people are opting for shorter faster ways to get into the workforce, regardless of the fact that there might be fewer people looking to make a change, but then we have to affect demand by looking to replicate and add more.
Programs into our campuses in our existing marketplaces to again get further penetration within existing market to give us that growth.
And we also anticipate that hopefully as we move to the hybrid model the flexibility that that gives students.
We will enable more students to start and as we have the financial aid process up and running smoothly again more students that know exactly how they're going to pay for their education or more likely to start their education. So there are a number of ways that we can help overcome the low unemployment rate and.
Again, we anticipate that those should be kicking in in 2023.
Got it and then again our interest is still very strong with our leads at enrollments. It's really the start rate that's lagging a little bit behind as we've mentioned previously.
Got it.
And just then on the new hybrid model.
Can you provide some color on how this new hybrid model is different from what had been.
Perhaps implemented at the beginning of excuse me at the beginning of Covid.
<unk> and <unk> and then we started there was a hybrid model.
How is this substantially different ore from what hasnt been in place for the last two years.
Sure well the Covid model was.
A reaction to being forced to go remotely so as a matter of putting things online just to be able to continue the student's education, which we ended up doing very well, which is why we were able to grow the population, but what we learned during that process is that certainly our students are very receptive to doing blended learning and then.
So we spent more time, okay. If we're going to enable all students to have blended learning going forward, how do we design something thats going to be optimal for us and optimal for them and so what the new model is basically students coming to us only four hours in a day compared to maybe five years.
Six hours in the day and the rest being learned online and so.
What it has enabled us to do as we kind of referenced with regards to the pickup in revenue as we have now created three equal sessions, a morning session and afternoon session and an evening session. All of the same length and that's advantageous to students because sometimes our students do switch between sessions reserve.
<unk> may change and then maybe go from an evening to a night and now when that happens there'll be no kind of change in our earnings per student one that takes place.
Also the way that it is structured we can better utilize our faculty members to the extent, we can populate students in the morning and afternoon. One in theory, one instructor can now teach two classes.
Students and so those are the efficiencies that we're hoping to gain as more programs rollout into this format and we are starting able to enroll students into these various times sections of the day right. So that will really help with our instructional efficiencies, but as well as we say.
And it is a lot of star start dates where in the past we might have had 100 start dates and now we're bringing it down to nine so that not only will create operating operational efficiencies in our business offers financial aid, but as well as marketing.
Got it got it got it. Thank you for answering my questions I'll take this offline. Thank you.
Sure. Thanks Raj.
Thank you.
I'm showing no further questions in the queue I would now like to turn the call back over to Scott Shaw for closing remarks.
Thanks, operator, and thank you all for joining us today I'm very pleased with our progress and excited by the numerous opportunities that we have for our company at our core we are improving our students' experience as evidenced by our improving graduation, and placement rates are major initiatives around financial aid and our hybrid model are progressing as planned.
<unk> and will result in efficiencies and even better student outcomes next year, we have the new Atlanta campus opening along with multiple program replications, which will enable us to better serve students and employers in several of our existing markets and finally, we remain focused on prudently investing our capital to maximize shareholder.
Holder value.
Want to thank the Lincoln team for their constant commitment to our students and as Brian mentioned in his remarks, we want to thank all the men and women, who have served and who continue to serve our country. As we look to celebrate veterans day. This Friday have a great day, and we look forward to speaking with you early next year Bye bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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