Q4 2022 Lincoln Educational Services Corp Earnings Call

February 27, 2023

Yeah.

Good day and thank you for standing by welcome to the Q4 2022, Lincoln Educational services earnings Conference call.

At this time all participants are in the listen only mode. After the speaker's presentation there'll be a question and answer Sir excuse me a question and answer session.

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I would now like to turn the conference over to Michael Yu. Please go ahead.

Thank you Lisa and good morning, everyone before the market opened today Lincoln educational services issued a news release reporting.

Actual results for the fourth quarter and full year ended December 31 2022.

Release is available on the Investor relations portion of the company's corporate website at Www Dot Lincoln Tech got it.

Joining us today on the call are 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's management on today's call regarding the company's business that are not historical facts may be forward looking statements as the term is identified in federal securities laws.

The 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.

In our 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 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 I'd like to call over to Scott Shaw, President and CEO Lincoln educational services.

Scott. Please go ahead.

Thank you Michael and welcome everyone. Despite continued historically low unemployment and persistent economic growth Lincoln established several positive trends throughout 2022 and generated four 7% same campus student start growth during the fourth quarter, we achieved strong financial results in the fourth quarter with both revenues and adjusted.

Did EBITDA growing in comparison to last year for the full year 2022, we achieved all guidance targets as the team continued to implement the new hybrid teaching model the centralized financial aid process and our two major growth initiatives.

We achieved a 500 basis point improvement in our graduation rate to 68, 8% of students and increase the graduate placement rate to 81, 6%. We enrolled the first class under our new partnership with Tesla launched a new career pathways program with Johnson controls signed two new corporate partnerships and are engaged in negotiations.

<unk> with two existing corporate partners to expand our programs with them.

Despite the operating.

An environment of high employment economy, and rising interest rates, we grew revenues four 5% and adjusted EBITDA by seven 4% and we finished the year with significant debt free non dilutive resources that are poised to grow in 2023, when we closed the sale of our Nashville campus. These resources.

Our enabling the implementation of our two major growth initiatives as well as extending and expanding the size of our share repurchasing program to a total of $40 million.

Over the past three years, we have transformed Lincoln's profitability and balance sheet now with the success achieved to date with our hybrid teaching model centralized financial aid and program expansions, we have the opportunity to accelerate our investments to build a more scalable and higher return business.

Key to this strategy as our new hybrid teaching model, which we began to implement at our campuses in 2022. This model delivers our programs with the hands on learning on campuses combined with a greater component of classroom work delivered through online instruction.

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 graduate.

The model also standardizes our programs across campuses with on campus time slight slots of morning afternoon and evening.

With consistent start dates that provides greater flexibility efficiency and overall capacity at our existing campuses.

The rollout of our hybrid model at most campuses, coupled with adding existing proven programs at select campuses will drive higher campus and company profitability.

We have already started the process to have 10, new program replication across our existing campuses over the next two years. This resulted in organic growth with the fastest and highest return on investment as we leverage our existing infrastructure campus management and market knowledge.

We anticipate that these 10, new programs will reach their full run rate after approximately three years of operation at which time each is expected to provide an average of $1 million and added profitability annually.

We expect to launch at least three programs before the year end with the remainder opening in 2024 programs. We are focused on include electrical HVAC welding automotive and medical assisting since these are all some of our most successful and in demand programs.

Pursuing this strategy requires a higher level of investment during 2023 in terms of both operating and capital expenditures.

Leading the transition to a hybrid <unk> model by the end of 2023 will result in increased.

And structural cost over the short term, but is expected to lead to greater efficiency beginning in 2020 for our investment in centralizing our financial aid process is extending into 2023, and we will also incur expenses associated with the initial launch of our new programs.

We are forecasting modest revenue growth for the full year based on our forecast for an increase in new student starts are between five and 10% and higher revenue per student R.

Our efforts to rollout or a hybrid teaching model complete the centralization of our financial aid process launched 10, new programs across our campuses and increased marketing spend to maximize our student start growth in a high employment economy will impact our profitability in the near term, resulting in a forecasted 2023 adjusted EBITDA of <unk>.

$19 million to $24 million.

We will also significantly increase our capital expenditures to $35 million to $40 million to advance our growth plans, including our new campus in Atlanta.

Balancing the capital expenditures spend it will be the anticipated closing of the sale of our Nashville campus in the second quarter is expected to result in approximately $35 million in gross proceeds and generate a significant net gain.

We expect the successful execution of our business transformation plans will lead to significantly higher profit margins beginning in 2024 with a more efficient and scalable platform to drive sustainable growth thereafter.

Continued strong demand for our programs combined with the efficiency and growth from these investments, including the early contribution from our new Atlanta, Georgia campus enable us to forecast that our adjusted EBITDA will approximately double from 2022 levels by 2025.

We also continue to evaluate additional locations as part of the plan to open five new campuses optimize for our new hybrid delivery model in the next five years.

These new campuses may include the relocation of current Lincoln campuses, such as Nashville.

The first new campus Underdevelopment is our second location in Atlanta, the build out of this campus is progressing as planned while some regulatory approvals are taking a bit longer than anticipated and our first classes. At this facility will begin by the first quarter of 2024, we continue to expect that within four years of its opening the 56000 <unk>.

Where foot facility will be generating approximately $20 million in annual revenue and $5 million in annual EBITDA.

We plan to replicate the cost efficient design of the new Atlanta facility into the New Nashville campus. The development of this campus will begin once the transaction to sell the existing Nashville facility closes, which we expect will be by the second quarter of this year as outlined in the sale agreement. We can remain at our existing location for up to 18 months, while we build.

The new campus.

I should note that all of our initiatives are predicated on the current environment of moderate economic growth high employment rates and no recession with that said, we are benefiting from a positive trend of individuals considering careers and skilled trades.

Our leads are increasing as our enrollments and once all the changes with our centralized financial aid processes are completed we should be able to better capitalize on this increased demand with even more new starts despite the challenging environment.

Good economic growth deteriorate, we are poised to benefit from such macro development and with our new hybrid model, we can efficiently scale up to meet higher levels of demand. However, our strategies are designed to foster growth even in a growing high employment economy.

At the top of this call I mentioned the successful launch of the Johnson controls Academy, a six week intensive training program focused on developing the next generation of building technicians.

The program based at our Columbia, Maryland campus was created to provide a pathway to employment at Johnson controls locations throughout the United States.

Johnson controls supports the students with onsite housing and relocation packages and plans to onboard approximately 130, new technicians or more each year.

Our hands on learning opportunity of the Academy builds upon Lincoln text electric electrical and electronic systems technician education for participants and prepares them for real life experience in the field. The launch of the Academy follows a five year partnership between Lincoln and Johnson controls and where it is.

Flooring other avenues through which we could expand the relationship.

The new partnership with Tesla began operations as quickly as we enrolled our first class in mid December at our Denver, Colorado campus. We also launched the BMW fast track program in Mahwah, New Jersey in Grand Prairie, Texas.

New corporate partnership was signed with Peterbilt trucks under which we will be offering a 12 week advanced training program for diesel students at our Denver campus, and we launched a partnership with Marriott International at our Marietta, Georgia campus to train HVAC and electrical students for careers with Marriott.

These agreements help our partners fill the urgent skills gap they are experiencing in light of the nation's continued overall low unemployment rate and increasingly more difficult search for employee training solutions required to continue their respective corporate growth.

Our company has paved the way in terms of creating innovative customized training programs with our partners and the percent of Lincoln students directly benefiting from our partnerships continues to grow.

As we look to 2023, we continue to face the headwinds of a low unemployment economy is providing students with other job opportunities concerns that we're taking on debt in a rising interest rate environment and inflation impact on rent food and transportation costs.

As I noted earlier, we generated same campus start growth of four 7% during the fourth quarter and overall, we believe we will grow student starts in the 5% to 10% range for the full year 2023 demand for highly skilled students remains extremely strong this demand along with our growing number of programs and corporate partner.

<unk> continues to generate strong interest in Lincoln training from prospective students. Despite the 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.

Finally, I would like to welcome Sylvia Young to our board of directors Sylvia brings deep knowledge and experience with over 35 years in the healthcare industry. This week, she retires from HCA healthcare after having been the CEO and president of HCA Healthcare's Continental Division since 2012 per division generates over $3 6 billion.

Dollars in revenue and serves over 2700 patients daily Sylvia his insights will support our initiatives around expanding our nursing and Allied health programs as we seek to lessen the skills gap in this important and growing sector of our economy.

Now I'd like to turn the call over to Brian for a review of our fourth quarter financial results and 2023 outlook Brian .

Thanks, Scott Good morning, everyone and thank you for joining US as Scott described we ended 2022 on a positive note with growth across starts revenue adjusted EBITDA in the fourth quarter meeting all our 2022 guidance metrics.

I'll begin my remarks by discussing recent operational developments, followed by an overview of our financial results and finally conclude with our financial outlook for 2023.

First as Scott mentioned, the Celeron Nashville, Tennessee campus for $34 5 million is moving forward as planned the local meetings and approvals have all taken place appointing the plan. While we continue to anticipate that this transaction will close in the second quarter.

Through December 31, we received 500000 of nonrefundable deposits.

Towards the purchase price and we are scheduled to receive an additional 700000 during the first quarter of 2023, we are pleased with progress.

And look forward to the campus relocation.

Second in November .

We're able to afford the conversion of all of our outstanding preferred stock into $5 4 million shares of common stock. We executed this transaction as soon as the third anniversary of the preferred stock investment had occurred since the price performance and volume of our common stock met all the applicable requirements as a result, the associated <unk>.

<unk> dividend six translating translating into a $1 2 million annual cash savings in 2023 and beyond.

Beginning with the first quarter of 2023, our EPS will be calculated using the standard common treasury stock method as opposed to the two class method, which we utilized for the past three years. We currently have $31 1 million outstanding common shares.

Third we continue to return capital to our shareholders through our stock repurchase plan during the fourth quarter, we repurchased 489000 shares for $2 7 million.

In total during 2022, we repurchased one 6 million shares with $9 4 million.

Subsequent to year end, our board of directors has extended the plan by one year through May 2024, and increase the total authorized amount to 40 million, resulting an available balance of $30 6 million for future repurchases.

Fourth and finally as previously announced in November our board of Directors approved the plan to close our Somerville, Massachusetts campus as a result of the landlord exercising its option to terminate the lease as of this December .

For 2022. This campus had revenue of $6 8 million, representing 2% of our total revenue with an operating loss of 400000, we anticipate that the closure of the of the school, including expenses associated with providing the approximately 200 to remaining students with the education sports and complete their training.

And the loss of approximately $2 million in 2023.

Our students are our priority and we are pleased to report that we expect all our current students to complete their education prior to the campus closure at the end of 2023.

For reporting purposes, the summerville campuses presented under the transitional segment in our financials beginning in the fourth quarter.

Now before I discuss the financial results. Please keep in mind that all of these results exclude the impact of the transitional segment.

Our revenue for the fourth quarter grew four 8% or $4 2 million to $90 2 million revenue increase mainly due to a six 8% increase in average revenue per student, which.

More than offset the decline in average student population of two 3% increase.

Increased average revenue per student was driven by tuition increases along with the rollout of our hybrid teaching model, which delivers higher daily rates and certain programs due to a reduction in the overall program late.

Notable in our evening program.

Another contributing factor to the revenue growth worth highlighting was our solid organic growth of four 7% during the quarter.

Our consolidated operating expenses were $77 6 million up 5% over prior year exclude the non cash impairment and gain on sale of assets in both years.

The increase in expenses was expected and along with our internal plans increases.

Increases in operating expenses.

Both notable in instructional costs, which increased largely due to higher staffing levels. We are currently operating with higher staffing at several of our campuses that help launch the hybrid teaching model as we provide instruction through both the new and traditional models. We anticipate the majority of our campus who will transition.

We'll be.

We will have transitioned by the end of 2023.

Also we're experiencing higher expenses across the board as inflation.

<unk> costs up in consumables.

Books and tools to mitigate cost increases we have added a procurement manager focused on expense controls.

Facility expenses increase as a result of additional rent expense in 2022 in connection with the sale lease back transaction executed in November of 2021 in combination with repairs and maintenance expense.

Administrative expenses increased due to several factors, including bad debt expense employee medical benefits due to higher claims.

Severance expense incurred to better align our cost structure and certain functions and startup costs related to our new Atlanta campus.

Partially offsetting the increase in administrative costs was a decrease in incentive compensation expense.

To clarify the 1 million noncash impairment resulted from a single underperforming campuses and plants have been implemented to adjust the program offering at this campus to drive increase in profitability.

Also startup costs related to our new Atlanta campus, we're close to 400000 in 2022 in line with our projections in 2023, we anticipate expenses associated with the opening of the campus will result in EBITDA loss of approximately $3 million.

As Scott noted, we now expect <unk> to begin in the first quarter of 2024.

Our adjusted EBITDA for Q4 was $15.

$7 million or seven 4% over prior year Sdd add back of noncash and nonrecurring items detailed in our non-GAAP schedules in our in our Q4 earnings release.

Turning to the balance sheet, our cash position at year end was strong with a total of $65 million in cash and cash equivalents.

Restricted cash and short term investments with no debt outstanding.

During Q4, we experienced a delay in title four receipts due to a system upgrade resulting at our ending cash balance being reduced by approximately $8 million.

These funds were subsequently collected in the first few weeks of 2023 looking.

Looking ahead. According to our internal plan, we anticipate that our cash balance to be approximately $85 million at the end of the second quarter. Although I'll note that this cash projection may vary depending on changes in capex spending and share repurchase investments.

To complement our cash balance and increase our total available liquidity. We are looking to add a new credit facility to have available for funding future growth initiatives if needed we anticipate sharing more details on our next earnings call.

As we reflect back on 2022.

Pivotal and progressive year for Lincoln, We've made significant investments focus on our financial aid services, great future efficiencies and savings while also improving the student experience.

In addition, we use the capital resources to redesign our programs to our hybrid learning model incurring additional temporary expenses.

Particularly in instructional salaries during the transitional phase.

While these investments reduced our profitability in 2022 and 2023, we believe that these key initiatives should deliver sizable returns beginning in 2024.

Our three year goal is to double our adjusted EBITDA from 2022 levels by 2025.

Now I would like to introduce our 2023 guidance, which excludes the impact of our new Atlanta campus and our transitional segment.

Revenues, ranging from $345 million and $360 million.

Adjusted EBITDA, ranging between 19 million and $24 million adjusted net income ranging from seven to 11 million students stock growth ranging from 5% to 10% and capital expenditures ranging from $35 million and $40 million with.

With approximately $30 million earmarked towards growth initiatives, including program expansions.

In addition to the guidance I will share a bit more insight into our outlook for 2023.

Consistent with our seasonality, we expect revenue to grow during the first half of the year and low single digits with slightly higher growth in the second half.

Operating expenses should be in the mid to low $80 million range with the exception of occurring in Q3, when the higher number of starts is expected to push total operating expenses in the mid to low $90 million range.

Interest income of approximately $1 million from short term investments spread evenly through the year.

Noncash stock based compensation expense of $2 5 million recognized evenly each quarter.

Depreciation and amortization of approximately $9 million with about 60% in the second half of the year and finally, our effective tax rate is expected to be around 28, 5%.

Please note adjusted adjusted EBITDA includes an add back of non cash stock compensation.

The Atlantic campus startup cost, our transitional segment and onetime expenses not consider part of our normal business operation and the gain and expenses associated with the national sale and relocation.

<unk> add back adjustments will be fact that it's back to arrive at adjusted net income.

As we progressed through the first quarter. We are pleased to report that thoughts are trending positively. According to plan and we're confident that we'll achieve our targets.

Lastly, as Scott mentioned to leverage our total campus infrastructure and better utilize our capacity, we will integrate some additional skilled trade programs into our health care campuses and similarly, we plan to integrate nursing and healthcare programs into our transportation and skilled trade campuses during 2023.

With this approach the majority of our campuses will become more blended making it more difficult to distinguish between the two segments.

As a result, we are currently evaluating our segment reporting for 2023 to determine whether transitioning to a single segment would be appropriate.

With that I'll conclude my remarks by thanking our entire team, including our faculty and students for their outstanding efforts.

2022, we look forward to commuting our progress throughout 2023, and now I will turn the call back over to the operator, So we can take your questions operator.

Yes.

Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone one moment, while we compile the Q&A roster.

Our first question is coming from Steven Frankel.

Rosenblatt Your line is open.

Good morning, Thank you.

So youre start growth looks very healthy.

Especially given the current environment, maybe you could give us some insight into.

How you get to that number on what's what's the pipeline look like and what.

Makes you believe you can accelerate from the current rate.

Somewhere in the mid single digits.

Sure.

Thanks, Steve.

While we had success last year in growing our enrollments, we grew them probably about 7% and as we highlighted before we are challenges more converting more of those enrollments into starts we believe that part of the issue is simply in how we're processing students and to the extent, we're able to process more.

Our students through our system.

Think that Thats, how we can capture more growth.

Thats certainly how we capture some of the growth in the fourth quarter of last year. So as we get past the centralization process completely we think that we can get some marginal improvement there and given that we continue to have strong pickup in our leads that's what gives us the confidence along with.

We rolled out some programs in Alaska.

Quarter that will get more benefit in the year that we're in today. So those are the things that are going to help us drive to get that 5% to 10% growth rate.

And any insight in the different co.

Cohorts young adult versus high school and military.

Sure so for US our high school in.

In 2022 was basically flat it was up maybe a dozen students or so and so our adult market was down overall, we were down with two 7%. So our adult market was down maybe two or three percentage points overall, and we kind of can see those considered we see those same trends, we see steady enrollment.

It's happening with some growth in the high school market.

And we anticipate getting growth this year as I said through execution on the adult side.

And military for Us is flat.

Okay and then just.

Just some clarification on the guidance.

I know theres, some puts and takes that.

Like the sale of Nashville, but.

Startup costs around the new campus.

Clarify for us how much that is and that you are backing out of your adjusted EBITDA target.

Sure as I mentioned in the remarks solid cost in 2023 would be approximately $3 million a lot of that is due to rent ad.

We'll still have to hire the people even though.

Slightly before year end and starting in the third quarter.

Some departments a little bit earlier, even though we're not going to have to start until the first quarter of 2020.

Okay, great I'll jump back into queue. Thank you.

Thanks, David Thanks, Steve.

Thank you and our next.

Next question.

As well if you would like to ask a question. Please press star one on your telephone.

Our next question will be coming from Eric Martinez Xu.

From Lake Street Your line is open.

Hey, congrats on the good Q4 results here I wanted to ask specifically about the investments youre, making in the hybrid education model.

Could you take us a layer deeper where are we investing on the capex side, where are we investing on the opex in support of the hybrid teaching model.

Sure on the hybrid side Theres really no capex of any note going into that it's really operationally, where we've had to spend a lot of time going into each state and getting all the approvals that we need at the state and accrediting level to switch to this new program and then as Brian highlighted we have had to hire some additional faculty member.

As they launched the new program and existing faculty members teach outs.

The existing program. So we have about some overlap in operating expenses.

Between 1 million to $2 million in the current year for the teach out.

Okay, and then back to Capex, what was Capex for 2022, I know you said, 35% to 40 for 'twenty three but what was the total for 2000.

For 2022, it was <unk>.

$9 million.

Okay, and then step up to 35 to 40 can you help parse that.

Okay.

Right.

Atlanta.

No no go ahead Brian .

It's about as I mentioned $29 million for growth initiatives that saw new programs as well as.

Some program expansions all answers, including in there I think it's approximately $13 million of that is for Atlanta.

The rest is really just for new programs and program expansions of the <unk>. So about half is Atlanta half as new programs and expansion right and that number does not include the natural relocation expense while not expense.

<unk> build out at once it closes in June .

I hope that answers in the second quarter.

Alright, and then given your guidance for 2023 coming up with the mid point.

It's about a one 2% growth for the total revenue.

You have roughly equivalent growth rates between the two segments transportation skilled at three 9%.

Health care and other 4%.

What are you assuming as far as the segment's growth rate for 'twenty three.

That's a good question I don't have can be one second let me see evidenced total let me see it bye bye.

Hey, guys.

If not I can definitely call you after this.

Anything significant by segment.

I would think it wouldnt be too different this year it will be more different next year.

Simply because a lot of the program expansions are all in the what would be considered today the transportation segment.

Uh-huh.

Okay.

Sorry about that Eric.

Yes, we will.

To get back to you on that Eric.

Okay.

That's my last question for me you talked about the regulatory approval timeline, having changed Atlanta.

Atlantic campus, pushing you into Q1 of 'twenty four can you enlighten me there.

Specifically with the timeline issue.

Well I guess.

Seeing across the board no matter what state we're in whether it's trying to get building permits or whether you're trying to get approvals at the state level or even sometimes through our creditor everyone seems to be chrome quote understaffed.

And so everything takes a little bit longer. So we're factoring in basically another quarter into all of our decision making processes because of that so it's nothing.

It seems to be nothing more than that people just don't seem to have enough people to do all the work that needs to get done right.

Okay, and Eric I'll add back to your other question about the two different segments a lot of reports that we're looking at now it takes.

And my last remarks about the segments that we are considering moving to one because we're co mingling a lot of them. So that's why it was one reason why I don't have the segments in front of me I'll get I'll get you that information, but going forward.

<unk>.

It might move to that one segment, we might disclose some of the information for the different auto.

Automotive and others, but it wont be it might not be as what we do today that's for sure.

Got it thanks for taking my questions.

No problem. Thank you.

Thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone one mono clean.

One moment, while we get ready for next question.

Our next question is coming from Alex Paris.

Barrington Research your line is open.

Hi, guys I, just have a couple of cats and dogs here.

In the guidance, Brian you said that the tax rate would be 28, 5% that was higher than I was modeling.

What is to account for the higher tax rate than it has been.

Recently and versus expectations.

So some of that is due to a little bit of lower income, but a lot of that's a discrete item that helps in the first quarter and a lot of that is due to what.

What our stock prices at so we really weren't taking that into account. So the first quarter it could be slightly lower due to the discreet items was.

Things vest versus the price that they were granted at.

That accounts for most of the.

The higher rates.

Okay. Thank you and then.

Yes.

And then early in the call Scott I think you mentioned the grad rate graduation rate and the replacement can you just go over that again I missed it.

Sure, we improved our graduation rate up to.

North of 68%.

About a 500 basis point improvement I think 68, 8% and our placement rate increased about two percentage points to 81, 6%.

That's great. Okay. Thank you I'll take the rest of my questions offline.

Okay, great. Thanks, Thanks Alice.

Thank you.

Thank you one moment, while we prepare for the next question.

Our next question is coming from Raj Sharma.

B Riley your line is now open.

Yes. Thank you.

<unk>.

Congratulations on good results in Q4.

I have a couple of questions first on the new programs currently to the 10 new programs.

With Atlanta Nashville already in progress.

What are so just wanted to clarify the additional expenses that are budgeted for the new programs I know you said $29 million of Capex.

What is the operating expense increase for the new programs.

And also can you talk about the potential revenue and profitability, we can assume when the new programs.

Just more color so I'll talk about the profitability.

Profitability for 2023, depending on the timing of the rolling out of these programs and a lot of them as Scott mentioned is going to be going into 2024. So I'll say the EBITDA is I would say under 100000 all loss for the rollout.

The rollout of the new programs. So it won't really be contributing this year, but it will be contributing in the future.

And as far as what.

I would say when the new programs reach capacity, we're hoping to add our EBITDA of about about $1 million for each new program should be adding all by $2025 1 million.

And what does that translate into revenues.

I would say it would be somewhere around let's say a $4 million level.

Got it.

And any additional.

Expenses entirely account for.

What are the additional expenses is that the operating increase from this year is about the increase you're seeing in the third quarter of.

About $10 million to $15 million.

For 2022, you're talking about.

Yes, you are saying looking.

Looking at expenses for 2023, what's driving the increases there yes.

Yes, just the delta between 2020 two.

Is that entirely.

Given by the new programs.

And is that mostly.

Yeah.

So most of them is for the new programs later in the year, but what's driving that as we said is we're continuing to rollout the hybrid teaching model. So we do have a lot of.

I'll call it double expenses as we teach the old program.

And we're teaching our new program.

So a lot of those are expenses are occurring this year as well as we do have additional expenses or should be done by the end of the year in our financial aid.

Because that is financially centralization, that's going through 2023, as well, but a lot of increase is mostly due to the instructional cost translating.

Transitioning to a hybrid model as well as we are making a greater investment in marketing as well So 2000 22023 rabbit.

Got it and then just moving onto the starts the starts youre projecting 5% to 10% Thats.

Is that same store skirts or does that include the contribution from new programs and new campuses.

It doesn't include a new campuses it doesn't grow whatever new programs, we launched last year, which we launched up two or three in the fourth quarter.

And then the rest of the growth is what we believe we can achieve through greater efficiencies of converting.

All the leads and enrollments that we're getting today.

Right. So just wanted to understand the composition of that you think that young adults, so probably going to be down the same theyre more in 'twenty two is that.

Is that under that I hear that correctly.

<unk> growth.

I just wanted to know.

Yes.

Yes, it's.

Good question. So again, our enrollments were up 7% last year. Our challenge was we couldnt convert enough of those into starts.

We were down overall about two 8% with all of that really being in the adult sector. Since the high school sector was flat going into 2023, we think the high school market is going to perform at a similar level that it did slightly up.

From 2022, but we are anticipating being more efficient and effective in converting our.

Our enrollments into starts which will enable us to achieve that 5% to 10 percentage rate.

Right that we're to anticipated part of that increase is due to two or three programs that did launch in the fourth quarter of 2022, but a lot of it is just due to improved conversions of enrollments into starts.

Okay.

Got it and then just lastly on.

The sales and national accounts.

The Nashville, Tennessee campus, so you're still confident that closes in Q2.

Any.

Any development on that front any new demand any changes.

Yes.

<unk>.

So that they have.

Our last major our guests town hearing is on March 7th I believe and so based off of everything that they have heard to date that should go well. So basically in about a weeks time that should hopefully give us. The final go ahead to start moving to a close of that of that sale.

As well as Raj I'll add we get a very large nonrefundable deposits in the month of March as well.

Got it.

Okay, great. Thank you for answering my questions I'll take it offline. Thank you again congratulations.

Thanks Raj.

Okay.

Thank you.

If you would like to ask a question. Please press star one on your telephone.

Monthly.

There are no more questions in the queue I would like to turn the call back over to Scott Shaw for final remarks.

Thank you operator, and thank you all for joining US today, we are all very excited and encouraged by our progress and opportunities I want to thank our great instructors and campus staff along with the corporate team for their dedication to our students everyone. At Lincoln Tech is working to be the leading career technical school in the country offering high ROI.

Careers are strong improvement in graduation, and placement rates along with complementary feedback from recent accreditation visits assures me that we're on the right track to achieve this objective.

Employers continue to express frustration with finding talent and continue to see growing needs for technicians of all kinds as baby boomers retire at Lincoln, We believe more families and career seekers are looking for shorter faster cheaper and more short path to employment as compared to college and a Lincoln Tech education is.

Recently, becoming a preferred choice our balance sheet is strong and should strengthen with the sale of Nashville.

And we have identified numerous programs in campus expansion opportunities and when the when the employment market does soften we will be there to retrain, the workforce with efficient campuses and engaging curriculum.

You again and look forward to updating you in May bye bye.

This concludes today's conference call. Thank you all for joining and enjoy the rest of your day.

The conference will begin shortly.

Lower Johan during Q&A, you can dial star one one.

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Good day and thank you for standing by welcome to the Q4 2022, Lincoln Educational services earnings Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer Sir excuse me a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message and advising your head is right to withdraw your.

A question. Please press star one again please.

Today's conference call is being recorded.

I would now like to turn the conference over to Michael <unk>. Please go ahead.

Thank you Lisa and good morning, everyone before the market opened today Lincoln educational services issued a news release reporting.

Actual results for the fourth quarter and full year ended December 31 2022.

The release is available on the Investor Relations portion of the company's corporate website at Www Dot Lincoln Tech done EDI.

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 Companys website.

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

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 in.

In our 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 management's good faith belief as of the time with respect to the future events.

Now I'd like to call over to Scott Shaw, President and CEO Lincoln educational services.

Scott. Please go ahead.

Good EBITDA growing in comparison to last year for the full year 2022, we achieved all guidance targets as the team continued to implement the new hybrid teaching model the centralized financial aid process and our two major growth initiatives.

We achieved a 500 basis point improvement in our graduation rate to 68, 8% of students and increased the graduate placement rate to 81, 6%. We enrolled the first class under our new partnership with Tesla launched a new career pathways program with Johnson controls signed two new corporate partnerships and are engaged in negotiations.

<unk> with two existing corporate partners to expand our programs with them.

Despite the.

Operating environment of high employment economy, and rising interest rates, we grew revenues four 5% and adjusted EBITDA by seven 4% and we finished the year with significant debt free non dilutive resources that are poised to grow in 2023, when we closed the sale of our Nashville campus. These re.

Sources are enabling the implementation of our two major growth initiatives as well as extending and expanding the size of our share repurchasing program to a total of $40 million.

Over the past three years, we have transformed Lincoln's profitability and balance sheet now with the success achieved to date with our hybrid teaching model centralized financial aid and program expansion, we have the opportunity to accelerate our investments to build a more scalable and higher return business.

While they pursue their Lincoln education, which will enable a higher percentage of students to graduate.

The model also standardizes our programs across campuses with on campus time slight slots of morning afternoon, and evening and with consistent start dates that provides greater flexibility efficiency and overall capacity at our existing campuses.

The rollout of our hybrid model at most campuses, coupled with adding existing proven programs at select campuses will drive higher campus and company profitability.

We expect to launch at least three programs before the year end with the remainder opening in 2024 programs. We're focused on include electrical HVAC welding automotive and medical assisting since these are all some of our most successful and in demand programs.

Pursuing this strategy requires a higher level of investment during 2023 in terms of both operating and capital expenditures.

Leading the transition to a hybrid <unk> model by the end of 2023 will result in increased.

Instructional cost over the short term, but is expected to lead to greater efficiency beginning in 2020 for our investment in centralizing our financial aid process is extending into 2023, and we will also incur expenses associated with the initial launch of our new programs.

We are forecasting modest revenue growth for the full year based on our forecast for an increase in new student starts of between 5% and 10% and higher revenue per student R.

$19 million to $24 million.

We will also significantly increase our capital expenditures to $35 million to $40 million to advance our growth plans, including our new campus in Atlanta.

We also continue to evaluate additional locations as part of the plan to open five new campuses optimize for our new hybrid delivery model in the next five years.

These new campuses may include the relocation of current Lincoln campuses, such as Nashville.

Where foot facility will be generating approximately $20 million in annual revenue and $5 million in annual EBITDA.

The new campus.

At the top of this call I mentioned the successful launch of the Johnson controls Academy, a six week intensive training program focused on developing the next generation of building technician.

The program based at our Columbia, Maryland campus was created to provide a pathway to employment at Johnson controls locations throughout the United States Johnson.

Johnson controls supports the students with onsite housing and relocation packages and plans to onboard approximately 130, new technicians or more each year.

Chip.

New corporate partnership was signed with Peterbilt trucks under which we will be offering a 12 week advanced training program for diesel students at our Denver campus, and we launched a partnership with Marriott International at our Marietta, Georgia campus, the train HVAC and electrical students for careers with Marriott.

These agreements help our partners still the urgent skills gap they are experiencing in light of the nation's continued overall low unemployment rate and increasingly more difficult search for employee training solutions required to continue their respective corporate growth.

As we look to 2023, we continue to face the headwinds of a low unemployment economy is providing students with other job opportunities.

Turns over taking on debt in a rising interest rate environment and inflation impact on rent food and transportation costs.

As I noted earlier we.

<unk> same campus start growth of four 7% during the fourth quarter and overall, we believe we will grow student starts in the 5% to 10% range for the full year 2023 demand for highly skilled students remains extremely strong this demand along with our growing number of programs and corporate partnerships continues to generate strong.

<unk> interest in Lincoln training from prospective students. Despite the 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.

And revenue and serves over 2700 patients daily.

Dolby is insights will support our initiatives around expanding our nursing and Allied health programs as we seek to lessen the skills gap in this important and growing sector of our economy.

Now I'd like to turn the call over to Brian for a review of our fourth quarter financial results and 2023 outlook Brian .

Thanks, Scott Good morning, everyone and thank you for joining us as Scott described we ended 2022 on a positive note.

Growth across start revenue adjusted EBITDA in the fourth quarter meeting all our 2022 guidance metrics I'll begin my remarks by discussing recent operational developments followed by an overview of our financial results and finally conclude with our financial outlook for 2023.

First as Scott mentioned, the Celeron Nashville, Tennessee campus for $34 $5 million is moving forward as planned the local meetings and approvals have all taken place appointing the plan. While we continue to anticipate that this transaction will close in the second quarter.

Through December 31, we received 500000 of nonrefundable deposit.

Towards the purchase price and we are scheduled to receive an additional 700000 during the first quarter of 2023, we are pleased with progress and look forward to the campus relocation.

Second in November .

Quarterly dividend six translating translating into a $1 2 million annual cash savings in 2023 and beyond beginning.

Third we continued to return capital to our shareholders through our stock repurchase plan during the fourth quarter, we repurchased 489000 shares for $2 7 million and in total during 2022, we repurchased one 6 million shares with $9 4 million.

Subsequent to year end, our board of directors extended the plan by one year through May 2024, and increase the total authorized amount to $40 million, resulting an available balance of $30 6 billion for future repurchases.

And finally as previously announced in November our board of Directors approved a plan to close our Summerville, Massachusetts campus as a result of the landlord exercising its option to terminate the lease as of this December for.

For 2022. This campus had revenue of $6 8 million, representing 2% of our total revenue with an operating loss of 401000, we anticipate that the closure of the of the school.

Including expenses associated with providing the approximately 200 to remaining students with the education sports and complete their training will result in a loss of approximately $2 million in 2023.

Our students are our priority. We are pleased to report that we expect all our current students to complete their education prior to the campus closure at the end of 2023.

Reporting purposes, the summerville campuses presented under the transitional segment in our financials beginning in the fourth quarter.

Now before I discuss the financial results. Please keep in mind that all of these results exclude the impact of the transitional segment.

Our revenue for the fourth quarter grew four 8% or $4 2 million to $90 2 million revenue increase mainly due to a six 8% increase in average revenue per student, which more than offset the decline in average student population of two 3%.

Notable in our evening program.

Another contributing factor to the revenue growth worth highlighting with our solid organic growth of four 7% during the quarter.

Our consolidated operating expenses were $77 6 million up 5% over prior year excluded the non cash impairment and gain on sale of assets in both years.

The increase in expenses was expected and in line with our internal plans increases.

Increases in operating expenses.

Both notable in instructional cost, which increased largely due to higher staffing levels. We are currently operating with higher staffing at several of our campuses that have launched the hybrid teaching model as we drive instruction through both the new and traditional models, we anticipate the majority of our campus who will transition.

We will be.

We will have transitioned by the end of 2023.

Also we're experiencing higher expenses across the board as inflation.

<unk> costs up in consumables.

Books and tools to mitigate cost increases we have added a procurement manager focused on expense controls.

Facility expense increased as a result of additional rent expense in 2022 in connection with the sale lease back transaction executed in November of 2021 in combination with repairs and maintenance expense.

Administrative expenses increased due to several factors, including bad debt expense employee medical benefits due to higher claims.

Severance expense incurred to better align our cost structure and certain functions and startup costs related to our new Atlanta campus.

Partially offsetting the increase in administrative costs was a decrease in incentive compensation expense.

To clarify the 1 million noncash impairment resulted from a single underperforming campus and plants have been implemented to adjust the program offering at this campus to drive increase in profitability.

Also startup costs related to our new Atlantic campus, we're close to 401000 2022 in line with our projections in 2023, we anticipate expenses associated with the opening of the campus will result in EBITDA loss of approximately $3 million.

As Scott noted, we now expect <unk> to begin in the first quarter of 2024.

Our adjusted EBITDA for Q4 was $15.

$7 million or seven 4% over prior year Sdd add back of noncash and nonrecurring items detailed in our non-GAAP schedules in our Q and our Q4 earnings release.

Turning to the balance sheet, our cash position at year end was strong with a total of $65 million in cash and cash equivalents restricted cash and short term investments with no debt outstanding.

During Q4, we experienced a delay in title four receipts due to a system upgrade resulting at our ending cash balance being reduced by approximately $8 million. These funds were subsequently collected in the first few weeks of 2023 looking.

As we reflect back on 2022.

It'll in progressive year for Lincoln, We've made significant investments focused on our financial aid services, great future efficiencies and savings while also improving the student experience.

In addition, we use the capital resources to redesign our programs to our hybrid learning model incurring additional temporary expenses.

Particularly in instructional salaries during the transitional phase.

While these investments reduced our profitability in 2022 and 2023, we believe that these key initiatives should deliver sizable returns beginning in 2024.

Our three year goal is to double our adjusted EBITDA from 2022 levels by 2025.

Now I would like to introduce our 2023 guidance, which excludes the impact of our new Atlantic campus and our transitional segment revenues.

Revenues, ranging from $345 million and $360 million.

Adjusted EBITDA, ranging between 19 million and $24 million adjusted net income ranging from $7 million to $11 million student start growth ranging from 5% to 10% and capital expenditures ranging from $35 million and $40 million with approximately $30 million earmarked towards growth initiatives.

Including program expansions.

In addition to the guidance I will share a bit more insight into our outlook.

Outlook for 2023.

Consistent with our seasonality, we expect revenue to grow during the first half of the year and low single digits with slightly higher growth in the second half.

Operating expenses should be in the mid to low $80 million range with the exception of occurring in Q3, when the higher number of slots is expected to push total operating expenses in the mid to low $90 million range.

Interest income of approximately $1 million from short term investments spread evenly through the year noncash stock based compensation expense of $2 5 million recognized equally each quarter depreciation and amortization of approximately $9 million with about 60% in the second half of the year and finally, our effective tax rate.

<unk> to be around 28, 5%.

Please note adjusted adjusted EBITDA includes an add back of non cash stock compensation.

<unk> add back adjustments will be fact that it's back to arrive at adjusted net income.

As we progressed through the first quarter. We are pleased to report that Clos are trending positively. According to plan and we're confident that we'll achieve our targets.

With this approach the majority of our campuses will become more blended making it more difficult to distinguish between the two segments.

As a result, we are currently evaluating our segment reporting for 2023 to determine whether transitioning to a single segment would be appropriate.

With that I'll conclude my remarks by thanking our entire team, including our faculty and students for their outstanding efforts. During 2022, we look forward to commuting our progress throughout 2023, and now I'll turn the call back over to the operator, So we can take your questions operator.

Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone one moment, while we compile the Q&A roster.

Our first question is coming from Steven Frankel.

Rosenblatt Your line is open.

Good morning, Thank you.

So youre start growth looks very healthy.

Especially given the current environment, maybe you could give us some insight into.

How you get to that number on what's what's the pipeline look like.

What.

Makes you believe you can accelerate from the current rate.

Somewhere in the mid single digits.

Sure.

Thanks, Steve.

Students through our system.

That's how we can capture more growth.

We rolled out some programs in Alaska.

Quarter that will get more benefit in the year that we're in today. So those are the things that I don't help us drive to get that 5% to 10% growth rate.

And any insight in the different co.

Cohorts young adult versus high school and military.

Sure So for US our high school in 2022 was basically flat it was up maybe a dozen students or so and so our adult market was down overall, we were down with two 7%. So our adult market was down maybe two or three percentage points overall, and we kind of can see those.

<unk> considered we see those same trends, we see steady enrollments are happening with some growth in the high school market and.

And we anticipate getting growth this year as I said through execution on the adult side.

And military for Us is flat.

Okay and then.

Just some clarification on the guidance.

I know theres, some puts and takes that.

The sale of Nashville, but.

Startup costs around the new campus could you.

Clarify for us how much that is and that you are backing out of your adjusted EBITDA target.

Sure as I mentioned in the remarks startup costs in 2023, it would be approximately $3 million a lot of that is due to rent them.

We'll still have to hire the people even though.

Slightly before year end and starting in the third quarter.

Some departments a little bit earlier, even though we're not going to have to start until the first quarter of 2024.

Okay, great I'll jump back into queue. Thank you.

Thanks, Steve Thanks, Steve.

Thank you.

Next question.

As well if you would like to ask a question. Please press star one on your telephone.

Our next question will be coming from Eric <unk> from Lake Street. Your line is open.

Hey, congrats on the good Q4 results here I wanted to ask specifically about the investments youre, making in the hybrid education model.

Could you take us a layer deeper where are we investing on the capex side, where are we investing on the opex in support of the hybrid teaching model.

Sure on the hybrid side, there is really no capex of any note going into that it's really operationally, where we've had to spend a lot of time going into each state and getting all the approvals that we need at the state and accrediting level to switch to this new program and then as Brian highlighted we have had to hire some additional faculty members.

As they launched the new program and existing faculty members teach outs.

The existing program. So we have about some overlap in operating expenses.

Between 1 million to $2 million in the current year for the teach out.

Okay, and then back to Capex, what was Capex for 2022, I know you said, 35% to 40 for 'twenty three but what was the total for 2000.

For 2022, it was <unk>.

$9 million.

Okay and that step up to 35 to 40 can you help parse that.

Well Youre right.

Ill Atlanta.

No no go ahead Brian .

It's about as I mentioned $29 million for growth initiatives that saw new programs.

As well as.

Some program expansions all answers, including in there I think it's approximately $13 million of that is for Atlanta.

<unk> is really just for new programs and program expansions of the <unk>. So about half is Atlanta half as new programs and expansions right and that number does not include the natural relocation expense while not expense.

Build out once it closes in June .

Within the segment.

Alright, and then given your guidance for 2023 coming up with the mid point.

It's about a one 2% growth for the total revenue.

You have roughly equivalent growth rates between the two segments transportation skilled at three 9%.

Health care and other 4%.

What are you assuming as far as the segment's growth rate for 2003.

That's a good question I don't have can be one second let me see I have it in total let me say bye bye.

Thanks, Michael.

If not I can definitely call you after this.

Anything significant by segment.

I would think it wouldnt be too different this year it'll be more different next year.

Simply because a lot of the program expansions are all in the what would be considered today the transportation segment.

Uh-huh.

Okay.

What about that Eric.

Yes, we will have to get back to you on that aircraft.

Yes.

That's fine and then last question for me you talked about the regulatory approval timeline Hasnt changed Atlanta.

Atlantic campus, pushing you into Q1 of 'twenty four can you enlighten me there.

Specifically with the timeline issue.

Well I guess.

We're seeing across the board no matter what state we're in whether it's trying to get building permits or whether it's trying to get approvals at the state level or even sometimes through our creditor everyone seems to be chrome quote understaffed.

And so everything takes a little bit longer. So we're factoring in basically another quarter into all of our decision making processes because of that so it's nothing.

But it seems to be nothing more than that people just don't seem to have enough people to do all the work that needs to get done right.

Okay, and I recall add back to your other question about the two different segments a lot of reports that we're looking at now it takes.

<unk>.

It might move to that one segment, we might disclose somebody information for the different.

Automotive and others, but it wont be it might not be as what we do today that's for sure.

Got it thanks for taking my questions.

No problem. Thank you.

Thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone one mono clean.

One moment, while we get ready for next question.

Our next question is coming from Alex Paris.

Barrington Research your line is open.

Hi, guys I, just have a couple of cats and dogs here.

In the guidance, Brian you said that the tax rate would be 28, 5% that was higher than I was modeling.

What is to account for the higher tax rate than it has been.

Recently and versus expectations.

So some of that is due to a little bit of lower income, but a lot of that discrete item that helps in the first quarter and a lot of that is due to.

What our stock prices at so we really weren't taking that into account. So the first quarter could be slightly low due to the discreet items was.

Things vest versus the price that they were granted at.

So that accounts for most of the.

The higher rates.

Okay. Thank you and then.

Yes.

And then early in the call Scott I think you mentioned the grad rate graduation rate and the Red placement can you just go over that again I missed it.

Sure, we improved our graduation rate up to.

North of 68%.

About a 500 basis point improvement I think at 68, 8% and our placement rate increased about two percentage points to 81, 6%.

That's great. Okay. Thank you I'll take the rest of my questions offline.

Okay, great. Thanks, Thanks al Thank.

Thank you.

Thank you one moment, while we prepare for the next question.

Our next question is coming from Raj Sharma.

B Riley your line is open.

Yes, Thank you again.

Congratulations on good results in Q4.

I have a couple of questions first on the new programs currently the 10 new programs.

With Atlanta, and Nashville already in progress.

Or so just wanted to clarify the additional expenses that are budgeted for the new programs I know you said $29 million of Capex.

What is the operating expense increase for the new programs.

And.

Also can you talk about the potential revenue and profitability, we can assume on the new programs.

Just more color so I'll talk about the.

Profitability for 2023, depending on the timing of the rolling out of these programs and a lot of them Scott mentioned is going to be going into 2024.

So I will say the EBITDA is I would say under 100000 all loss for the.

The rollout of the new program. So it won't really be contributing this year, but it will be contributing in the future.

And as far as what.

I would say when the new programs reach capacity, we're hoping to add our EBITDA of about $1 million for each new program should be adding on by $2025 1 million.

And what does that translate into revenues.

I would say it would be somewhere around let's say a $4 million level.

Got it.

And any additional.

Expenses entirely account for.

What are the additional expenses.

Is that the operating increase from this year is about the increase you're seeing in the third quarter.

About $10 million to $15 million.

For 2022, you're talking about.

You are saying looking.

Looking at expenses for 2023, what's driving the increases there yes.

Yes, just the delta between 'twenty, one 'twenty two.

Is that entirely driven by the new programs.

And is that mostly.

Great.

So most of them is for the new programs is later in the year, but what's driving that as we said is we continue to rollout the hybrid teaching model. So we do have a lot of.

I'll call it double expenses as we teach the old program and we're teaching the new program.

So a lot of those are expenses are occurring this year as well as we do have additional expenses or should be done by the end of the year in our financial aid.

Because that is financially centralization thats going through 2023 as well so a lot of the increase is mostly due to the instructional cost translating.

Transitioning to the hybrid model as well as we are making a greater investment in marketing as well for 2020 for 2023 rabbit.

Got it and then just moving onto the starts.

<unk> you are projecting 5% to 10%.

There is that same store cards or does that include the contribution from new programs and new campuses.

It doesn't include a new campuses it doesn't great whatever new programs, we launched last year, which we launched up two or three in the fourth quarter.

And then the rest of the growth is what we believe we can achieve through greater efficiencies of converting.

All the leads and enrollments that we're getting today.

Right. So just wanted to understand the composition of that do you think that young adults.

Nearly going to be.

Down the same they're more in 'twenty two as that.

Is that undid I hear that correctly.

<unk> growth.

I just wanted to know.

Yes.

Yes, good fair. It's a good question. So again, our enrollments were up 7% last year. Our challenge was we couldnt convert enough of those into starts obviously, we were down overall about two 8% with all of that really being in the adult sector. Since the high school sector was flat going into 2000.

Three we think the high school market is going to perform at a similar level that it did slightly up from 2022, but we're anticipating being more efficient and effective in converting our.

Our enrollments into starts which will enable us to achieve that 5% to 10 percentage rate growth rate that were anticipated part of that increase is due to two or three programs that did launch in the fourth quarter of 2022, but a lot of it is just due to improved <unk>.

<unk> of the enrollments into starts.

Got it and then just lastly on.

The sales and national accounts.

Nashville, Tennessee campus, so you're still confident that closes in Q2.

Any.

Any developments on that front any new demand any changes.

Yes.

So they have.

The last major August town hearing is on March 7th I believe and so based off of everything that they have heard to date that should go well. So basically in about a weeks time that should hopefully give us. The final go ahead to start moving to a close of that of that sale.

As well as Raj I'll add we get a very large nonrefundable deposits in the month of March as well.

Got it.

Okay, great. Thank you for answering my questions I'll take it offline. Thank you again congratulations.

Thanks Raj.

Okay.

Thank you.

If you would like to ask a question. Please press star one on your telephone.

Okay.

There are no more questions in the queue I would like to turn the call back over to Scott Shaw for final remarks.

Our strong improvement in graduation, and placement rates along with complementary feedback from recent accreditation visits assures me that we're on the right track to achieve this objective.

Employers continue to express frustration with finding talent and continue to see growing needs for technicians of all kinds as baby boomers retire at Lincoln, We believe more families and career seekers are looking for shorter faster cheaper and more assured past two employment as compared to college and a Lincoln Tech education is increase.

Recently, becoming a preferred choice our balance sheet is strong and should strengthened with the sale of Nashville.

You again and look forward to updating you in May bye bye.

This concludes today's conference call. Thank you all for joining and enjoy the rest of your day.

Q4 2022 Lincoln Educational Services Corp Earnings Call

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