Q1 2026 Lincoln Educational Services Corp Earnings Call

May 11, 2026

Operator: Good day, welcome to the Lincoln Educational Services Q1 2026 Earnings Call. At this time, all partiipants are now on not I would now like to hand the conference over to your speaker, Mr. Michael Polyviou. Please go ahead.

Speaker #1: After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speaker, Mr. Michael Polyviou. Please go ahead. Thank you, Sherri. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the first quarter ending March 31, 2026, as well as recent corporate developments.

Michael Polyviou: Thank you, Sherry. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for Q1 ending 31 March 2026, as well as recent corporate developments. The release is available on the investor relations portion of the company's corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, CEO and President, and Brian Meyers, Chief Financial Officer and Executive Vice President. Today's call is being recorded and is being broadcast live on the company's website. 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.

Speaker #1: The release is available on the Investor Relations portion of the company's corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, CEO and President, and Brian Meyers, Chief Financial Officer and Executive Vice President.

Speaker #1: Today's call is being recorded and is being broadcast live on the company's website. A replay of the call will be archived on the company's website.

Speaker #1: Statements made by Lincoln's management on today's call regarding the company's businesses that are not historical facts may be forward looking statements as the term is identified in the Federal Securities Laws.

Speaker #1: 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.

Michael Polyviou: 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. The company cautions you that these statements reflect certain 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 and may influence the accuracy of the statement and projection on which segmented statements are based. Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Speaker #1: Forward-looking statements should not be read as a guarantee of future performance. The company cautions you that these statements reflect certain expectations about the company's future performance or events and are subject to a number of uncertainties, risks, and other influences.

Speaker #1: Many of which are beyond the company's control, and may influence the accuracy of the statements and projections upon which the segmented statements are based.

Speaker #1: Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q, filed with the Securities and Exchange Commission.

Michael Polyviou: Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of the time with respect to future events. All forward-looking statements are qualified in their entirety by this cautionary statement. Lincoln undertakes no obligation to publicly revise or update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date thereof. One other housekeeping matter. During the Q&A portion of the call today, we would ask questioners to limit themselves to 2 questions and then re-queue to ask any additional questions. In advance, we thank you for your cooperation. Now I'd like to turn the call over to Scott Shaw, CEO and President of Lincoln Educational Services. Scott, please go ahead.

Speaker #1: Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of that time with respect to future events.

Speaker #1: All forward looking statements are qualified in their entirety by this cautionary statement in Lincoln undertakes no obligation to publicly revise or update any forward looking statement, whether as a result of new information, future events, or otherwise after the date thereof.

Speaker #1: One of the housekeeping matters during the Q&A portion of the call today—we would ask questioners to limit themselves to two questions and then re-queue to ask any additional questions.

Speaker #1: In advance, we thank you for your cooperation. Now I'd like to turn the call over to Scott Shaw, CEO and President of Lincoln Educational Services.

Speaker #1: Scott, please go ahead. Thank you, Michael, and good morning, everyone. Thank you for joining us today to recap our outstanding first quarter. As we reported during our Investor Day presentation on May 9th I'm sorry, March 19th, we expected a strong first quarter, and we did achieve 19.5% student start growth.

Scott Shaw: Thank you, Michael, and good morning, everyone. Thank you for joining us today to recap our outstanding Q1. As we reported during our Investor Day presentation on March 19, we expected a strong Q1, and we did achieve 19.5% student start growth. Fully half of this student start growth came from our organic operations, meaning those campuses and programs opened before 2025. We believe this metric is a solid proof point that Lincoln Tech is leading the way in an evolving skilled trades marketplace. As a recognized leader of education and training services for safe, in-demand, rewarding careers, we are clearly benefiting from the expanding interest across America in skilled trades training as employer demand for skilled workers continues to exceed supply.

Speaker #1: Fully half of this student start growth came from our organic operations, meaning those campuses and programs opened before 2025. We believe this metric is a solid proof point that Lincoln Tech is leading the way in an evolving skilled trades marketplace.

Speaker #1: As a recognized leader of education and training services for safe, in-demand, rewarding careers, we are clearly benefiting from the expanding interest across America in skilled trades training, as employer demand for skilled workers continues to exceed supply.

Speaker #1: Some of this interest is driven by the growing concerns about the negative impact of artificial intelligence on white-collar jobs, especially in the technology and finance fields.

Scott Shaw: Some of this interest is driven by the growing concerns about the negative impact of artificial intelligence on white-collar jobs, especially in the technology and finance fields. A greater contributor is the attention created by the robust salaries bringing you solidly into the middle class and ever-increasing employer opportunities. These factors are helping to drive the skilled trades and the placement of Lincoln Tech graduates in rewarding long-term careers like HVAC, electrical, automotive technician, welding, and healthcare. At Lincoln, we have focused our strategies on simplifying operations to maximize opportunities at both existing campuses and at new greenfield campuses. Our successful execution during Q1 led to 22.5% revenue growth, nearly 85% adjusted EBITDA growth, and more than doubling our net income.

Speaker #1: A greater contributor is the attention created by the robust salaries, bringing you solidly into the middle class, and ever-increasing employer opportunities. These factors are helping to drive the skilled trades and the placement of Lincoln Tech graduates in rewarding, long-term careers like HVAC, electrical, automotive technician, welding, and healthcare.

Speaker #1: At Lincoln, we have focused our strategies on simplifying operations to maximize opportunities at both existing campuses and at new Greenfield campuses. Our successful execution during the first quarter led to 22.5% revenue growth, nearly 85% adjusted EBITDA growth, and more than doubling our net income.

Speaker #1: Attesting to the improving efficiencies we are generating throughout our operations, we also generated cash from operations during the first quarter for the first time in 10 years.

Scott Shaw: Attesting to the improving efficiencies we are generating throughout our operations, we also generated cash from operations during Q1 for the first time in 10 years. Our financial performance, as well as the current trends in our business, are leading us to increase our 2026 guidance, which Brian will review in a few minutes. The campus relocations and openings executed in 2025 to address underserved markets are all meeting our expectations, and all the program expansions at existing campuses are contributing to our strong start growth. In February, we launched the most recent program expansion with the opening of electrical program at our South Plainfield, New Jersey campus. In addition, as we previously reported, we began re-enrolling new students at our Paramus nursing program in January, which contributed to overall healthcare starts increasing 5% after declining in Q4.

Speaker #1: Our financial performance, as well as the current trends in our business, are leading us to increase our 2026 guidance, which Brian will review in a few minutes.

Speaker #1: The campus relocations and openings executed in 2025 to address underserved markets are all meeting our expectations, and all the program expansions at existing campuses are contributing to our strong start growth.

Speaker #1: In February, we launched the most recent program expansion with the opening of the Electrical program at our South Plainfield, New Jersey campus. In addition, as we previously reported, we began re-enrolling new students at our Paramus Nursing program in January, which contributed to overall healthcare starts increasing 5% after declining in the fourth quarter.

Speaker #1: Our Hicksville, New York, and Raleigh, Texas, new campus development projects remain on schedule. Hicksville is scheduled to begin enrollment during the fourth quarter, while Raleigh should begin enrolling students in the first quarter of 2027.

Scott Shaw: Our Hicksville, New York and Rowlett, Texas new campus development projects remain on schedule. Hicksville is scheduled to begin enrollment during the Q4, while Rowlett should begin enrolling students in the Q1 of 2027. Our efforts to identify suitable locations to expand into other underserved US markets remains at a high pace, and we are hopeful we will be able to report additional greenfield location expansions when we report our Q2 results in early August. Our other growth initiatives continue to be implemented.

Speaker #1: Our efforts to identify suitable locations to expand into other underserved U.S. markets remains at a high pace, and we are hopeful we will be able to report additional Greenfield location expansions when we report our second quarter results in early August.

Speaker #1: Our other growth initiatives continue to be implemented. Negotiations with existing corporate partners to expand customized, tailored education and training programs are underway. We are constantly exploring new partnerships with a variety of corporate and governmental organizations, the most recent being the agreement we signed with New Jersey Transit, under which our workforce-linked division is providing diesel and electrical systems training to New Jersey Transit technicians at New Jersey maintenance facilities.

Scott Shaw: Negotiations with existing corporate partners to expand customized tailored education and training programs are underway, we are constantly exploring new partnerships with a variety of corporate and governmental organizations, the most recent being the agreement we signed with New Jersey Transit, under which our Workforce Link division is providing diesel and electrical systems training to New Jersey Transit technicians at New Jersey maintenance facilities. We also have several projects underway to build our High School Share program increased veteran enrollment, both of which are designed to generate longer-term results beginning in 2027. For instance, we have expanded investments in targeted high school initiatives that are leading to greater interest among students, parents, and school districts. At the same time, in further reflecting the evolving marketplace, high schools are reaching out to us to explore how to offer our skilled trades programs to their students.

Speaker #1: We also have several projects underway to build our high school starts and increase veteran enrollment, both of which are designed to generate longer-term results beginning in 2027.

Speaker #1: For instance, we have expanded investments in targeted high school initiatives that are leading to greater interest among students' parents and school districts. At the same time, in further reflecting the evolving marketplace, high schools are reaching out to us to explore how to offer our skilled trades programs to their students.

Speaker #1: Under what we call our high school share program, students attend Lincoln classes during their junior and senior years, and then continue after high school to gain their certificate in less time, which accelerates their entry into a rewarding career.

Scott Shaw: Under what we call our High School Share program, students attend Lincoln classes during their junior and senior years and then continue after high school to gain their certificate in less time, which accelerates their entry into a rewarding career. There are currently more than two dozen requested High School Share proposals under review by school districts, all of whom are keenly interested in offering quality skilled trades programs but are waiting to see if they have dollars in their budgets to fund the programs. This is another initiative that is likely to see progress as we move into 2027. Meanwhile, we are expanding our efforts to educate government officials on the benefits of our education and training to their constituents.

Speaker #1: There are currently more than two dozen requested high school share proposals under review by school districts, all of whom are keenly interested in offering quality skilled trades programs but are waiting to see if they have dollars in their budgets to fund the programs.

Speaker #1: This is another initiative that is likely to see progress as we move into 2027. Meanwhile, we are expanding our efforts to educate government officials on the benefits of our education and training to their constituents.

Speaker #1: For instance, in April, we were honored to host Secretary of Education Linda McMahon at our Shelton, Connecticut campus, where our HVAC, Electrical, LPN, and Medical Assistance students demonstrated some of the skills they have acquired while attending Lincoln Tech.

Scott Shaw: For instance, in April, we were honored to host Secretary of Education Linda McMahon at our Shelton, Connecticut campus, where our HVAC, electrical, LPN, and medical assistance students demonstrated some of the skills they have acquired while attending Lincoln Tech. The current administration is a huge proponent of skilled trade training and keen to understand how students can learn the in-demand, rewarding skills needed to close the skills gap in America. Our leadership and results for our students are helping governments at all levels understand the possibilities. At the state and regional level, we were also honored to host Connecticut Governor Ned Lamont at our New Britain campus, where he experienced Lincoln Tech's role in training electricians and HVAC technicians. In Maryland, we worked with the state to hold our third Career Quest.

Speaker #1: The current administration is a huge proponent of skilled trade training, and keen to understand how students can learn the in-demand rewarding skills needed to close the skills gap in America.

Speaker #1: Our leadership and results for our students are helping governments at all levels understand the possibilities. At the state and regional level, we were also honored to host Connecticut Governor Ned Lamont at our new Britain campus, where he experienced Lincoln Tech's role in training electricians and HVAC technicians.

Speaker #1: And in Maryland, we've worked with the state to hold our third Career Quest. You may recall last year we helped fund a high school career event that was attended by 500 high school students.

Scott Shaw: You may recall last year we helped fund a high school career event that was attended by 500 high school students. This year, the event attracted more than 1,700 students. Just another example of the expanding interest in skilled trades training for in-demand, rewarding, and safe careers and Lincoln Tech's leadership role in helping students achieve their goals. We believe our Lincoln 10.0 hybrid teaching platform continues to play a major role in our growth. The platform provides students flexibility to those needing to balance work and life while earning their certificate or degree. We've achieved this flexibility by combining hands-on learning at campus facilities with a component of classroom work delivered through online instruction, which reduces the time needed to complete many of our curriculums and accelerates our graduates to their highly rewarding careers.

Speaker #1: This year, the event attracted more than 1,700 students. Just another example of the expanding interest in skilled trades training for in-demand, rewarding, and safe careers, and Lincoln Tech's leadership role in helping students achieve their goals.

Speaker #1: We believe our Lincoln 10.0 hybrid teaching platform continues to play a major role in our growth. The platform provides students flexibility to those needing to balance work and life while earning their certificate or degree.

Speaker #1: We've achieved this flexibility by combining hands-on learning at campus facilities with a component of classroom work delivered through online instruction, which reduces the time needed to complete many of our curriculums and accelerates our graduates to their highly rewarding careers.

Speaker #1: We have realized instructional efficiencies, space efficiencies, and organizational productivity through Lincoln 10.0 during the first quarter, and fully anticipate this trend continuing throughout the remainder of the year.

Scott Shaw: We have realized instructional efficiencies, space efficiencies, and organizational productivity through Lincoln 10.0 during Q1 and fully anticipate this trend continuing throughout the remainder of the year. Our Lincoln 10.0 hybrid teaching platform continues to realize increasing levels of instructional efficiencies for the company, our instructors and our students, we are also investing some of the gains from these efficiencies in programs and processes to continuously drive improved student outcomes. For instance, we are providing emotional and life support to help students face the challenges they experience in pursuing a new career while holding down a job and/or raising a family. This service has positively impacted our student retention rate at our programs open for more than a year, helping to build on our already high graduation rates.

Speaker #1: While our Lincoln 10.0 hybrid teaching platform continues to realize increasing levels of instructional efficiencies for the company, our instructors, and our students, we are also investing some of the gains from these efficiencies in programs and processes to continuously drive improved student outcomes.

Speaker #1: For instance, we are providing emotional and life support to help students face the challenges they experience in pursuing a new career while holding down a job and/or raising a family.

Speaker #1: This service has positively impacted our student retention rate at our programs open for more than a year, helping to build on our already high graduation rates.

Speaker #1: The strong start to the year illustrates the substantial progress we have made towards achieving our objective of providing the best education and training for safe, rewarding, and in-demand careers.

Scott Shaw: The strong start to the year illustrates the substantial progress we have made towards achieving our objective of providing the best education and training for safe, rewarding, and in-demand careers. It has also enabled us to raise our guidance, which Brian Meyers will review in a moment. We now see achieving $600 million in revenue for the full year as a growing possibility. Our momentum, as well as the availability of resources from our recently increased credit facility, brings us another step closer to achieving our 2030 objectives laid out during our Investor Day presentation on 19 March of $850 million in revenue and $150 million of adjusted EBITDA as we continue to expand on our leadership position. After 80 years of providing high-quality, life-changing career education, we've amassed an unmatched combination of longevity, scale, and proven experience.

Speaker #1: It is also enabling us to raise our guidance, which Brian will review in a moment. We now see achieving 600 million in revenue for the full year as a growing possibility.

Speaker #1: Our momentum, as well as the availability of resources from our recently increased credit facility, brings us another step closer to achieving our 2030 objectives laid out during our investor day presentation on March 19th of $850 million in revenue and $150 million of adjusted EBITDA as we continue to expand on our leadership position.

Speaker #1: After 80 years of providing high-quality, life-changing career education, we have amassed an unmatched combination of longevity, scale, and proven experience. By continuing to execute our strategies to expand our network of schools and replicating our most in-demand programs at our existing campuses, we are providing a unique proven model to help America close its chronic and severe skills gap by meeting the growing demand for more talented men and women to enter the skilled trades.

Scott Shaw: By continuing to execute our strategies to expand our network of schools and replicating our most in-demand programs at our existing campuses, we are providing a unique, proven model to help America close its chronic and severe skills gap by meeting the growing demand for more talented men and women to enter the skilled trades. Before I turn the call over to Brian, I'd like to note we will be continuing our investor outreach efforts over the next few months by attending conferences and conducting non-deal roadshows with our covering analysts. Tomorrow, we'll be attending the Needham Technology, Media, and Consumer Conference in New York City. The following week, we will be attending the LD Micro Invitational and B. Riley Institutional Conference, both in Los Angeles. Next month, we will be attending the Rosenblatt Securities Conference, East Coast IDEAS Conference, and the Northland Securities Conference.

Speaker #1: Before I turn the call over to Brian, I'd like to note we will be continuing our investor outreach efforts over the next few months by attending conferences and conducting non-deal roadshows with our covering analysts.

Speaker #1: Tomorrow, we'll be attending the Needham Technology, Media, and Consumer Conference in New York City. The following week, we'll be attending the LD Micro Invitational and B.

Speaker #1: Reilly Institutional Conference, both in Los Angeles. Next month, we'll be attending the Rosenblatt Securities Conference, East Coast Ideas Conference, and the Northland Securities Conference.

Speaker #1: Additionally, we'll be doing a West Coast non-deal roadshow with Barrington Securities and a non-deal roadshow with Texas Capital in New York City at the end of June.

Scott Shaw: Additionally, we'll be doing a West Coast non-deal roadshow with Barrington Securities and a non-deal roadshow with Texas Capital in New York City at the end of June. I believe this level of activity reflects the rising interest in the Lincoln Tech story from investors attracted to our track record and growth profile. Now I'll turn the call over to Brian Meyers, so he can review the financial highlights for the Q4 and full year 2025 and our 2026 guidance. Brian?

Speaker #1: I believe this level of activity reflects the rising interest in the Lincoln Tech story from investors attracted to our track record and growth profile.

Speaker #1: Now I'll turn the call over to Brian Myers so he can review the financial highlights for the fourth quarter and full year 2025 and our 2026 guidance.

Speaker #1: Brian, thank you, Scott, and good morning, everyone. I'll first provide an overview of our financial results for the first quarter of 2026 and then turn to our updated outlook for the remainder of the year.

Brian Meyers: Thank you, Scott. Good morning, everyone. I'll first provide an overview of our financial results for Q1 2026 and then turn to our updated outlook for the remainder of the year. Our Q1 results exceeded internal expectations, driven by strong student stock growth and improved operating efficiency. This combination led to strong growth across all our key metrics and increased profitability, reflecting continued execution across the business and the scalability of our operating model. Our growth reflecting the continued momentum in our business and when combined with our Q1 performance, enables us to raise our full-year outlook across all key metrics. Beginning with student starts, we continue to see strong, sustained demand, with starts increasing by 19.5% in the quarter. This growth represents more than 5,500 new students starting across our 22 campuses.

Speaker #1: Our first quarter results exceeded internal expectations, driven by strong student start growth and improved operating efficiency. This combination led to strong growth across all of our key metrics and increased profitability.

Speaker #1: Reflecting continued execution across the business and the scalability of our operating model. Our growth reflecting the continued momentum in our business and when combined with our first quarter performance enables us to raise our full year outlook across all key metrics.

Speaker #1: Beginning with student starts, we continue to see strong sustained demand with starts increasing by 19.5% in the quarter. This growth represents more than 5,500 new student starting across our 22 campuses.

Speaker #1: As a result, our ending population increased by approximately 2,800 students almost 18% higher than prior year. As Scott mentioned, we are particularly proud of our continued organic growth, which accounted for about half of the total increase in student starts during the first quarter.

Brian Meyers: As a result, our ending population increased by approximately 2,800 students, almost 18% higher than prior year. As Scott mentioned, we are particularly proud of our continuing organic growth, which accounted for about half of the total increase in student starts during Q1. Our measurement of organic growth includes new campuses and programs and operations over 1 year. Looking at the composition of student growth, our transportation and skilled trades programs, representing approximately 80% of our total population, grew starts by nearly 24%. Meanwhile, our Healthcare and Other Professions Segment, which account for roughly 20% of the total population source starts increased by 5%. Revenue increased 22.5% to $144 million, marking 3 years of consecutive double-digit quarterly revenue growth.

Speaker #1: Our measurement of organic growth includes new campuses and programs in operations over one year. Looking at the composition of student growth, our transportation and skilled trades programs representing approximately 80% of our total population grew starts by nearly 24%.

Speaker #1: Meanwhile, our healthcare and other professionals programs which account for roughly 20% of the total population source starts increased by 5%. Revenue increased 22.5% to $144 million marking three years of consecutive double-digit quarterly revenue growth.

Speaker #1: The growth was largely driven by an 18.2% increase in average student population and a 3.6% increase in revenue per student. Operating expenses were $137.6 million compared to $114.1 million in the prior year quarter, and while in line and were in line with our expectations.

Brian Meyers: The growth was largely driven by an 18.2% increase in average student population and a 3.6% increase in revenue per student. Operating expenses were $137.6 million compared to $114.1 million in the prior year quarter and were in line with our expectations. The increased expense reflects both higher student population and our implementation of our ongoing growth initiatives. Education service and facility expenses increased from $47.4 million to $58.4 million. However, when excluding the $3.9 million increase in depreciation tied to our recent investments, these expenses were 35.4% of revenue as compared to 37.3% of revenue in the prior year quarter. The improvement was mainly driven by instructional efficiencies.

Speaker #1: The increased expense reflects both higher student population and our implementation of our ongoing growth initiatives. Education service and facility expenses increased from $47.4 million to $58.4 million.

Speaker #1: However, when excluding the $3.9 million increase in depreciation tied to our recent investments, these expenses were $35.4% of revenue as compared to $37.3% of revenue in the prior year quarter.

Speaker #1: The improvement was mainly driven by instructional efficiencies. In marketing and sales, while total spend increased cost per start excluding new schools slightly declined, reflecting a strong return on investment.

Brian Meyers: In marketing and sales, while total spend increased, cost per start, excluding new schools, slightly declined, reflecting a strong return on investment. Partially offsetting this improvement are higher costs in books and tools, primarily driven due to increased laptop pricing. As we do not intend to pass these incremental costs on to students, the rise in laptop costs is expected to result in an incremental impact of approximately $750,000 per quarter for the remainder of the year. SG&A expenses also improved to 55% of revenue from 56.9%, supported by lower bad debt expense, which declined to 9.5% of revenue from 10.1%, reflecting stronger financial aid processing and cash collections.

Speaker #1: Partially offsetting this improvement are higher costs in books and tools, primarily driven due to increased laptop pricing. As we do not intend to pass these incremental costs on to students, the rise in laptop costs is expected to result in an incremental impact of approximately $750,000 per quarter for the remainder of the year.

Speaker #1: SG&A expenses also improved to 55% of revenue from $56.9%, supported by lower bed debt expense, which declined to $9.5% of revenue from $10.1%, reflecting stronger financial aid processing and cash collections.

Speaker #1: This was the fifth consecutive quarter in which we saw a reduction in bed debt expense as the percentage of revenue compared to the prior year.

Brian Meyers: This was the fifth consecutive quarter in which we saw a reduction in bad debt expense as a percentage of revenue compared to the prior year. Adjusted EBITDA increased 84.7% to $15.5 million. As a reminder, our adjusted EBITDA no longer adds back the losses related to new campuses in their pre-opening and initial year of operations. We incurred new campus losses of $2.8 million in Q1. Total margin expanded to nearly 11% compared to 7% in the prior year. On our revenue growth this quarter, we generated an incremental EBITDA margin of approximately 27%, which increased to roughly 40% excluding new campuses. Net income was $4.4 million, which more than doubled compared to prior year. EPS was $0.14 per diluted share based on approximately 31.3 million weighted average diluted shares outstanding.

Speaker #1: Adjusted EBITDA increased 84.7% to $15.5 million. As a reminder, our adjusted EBITDA no longer adds back the losses related to new campuses in their pre-opening and initial year of operations.

Speaker #1: We incurred new campus losses of $2.8 million in the first quarter. Total margin expanded to nearly 11%, compared to 7% in the prior year.

Speaker #1: On our revenue growth this quarter, we generated incremental EBITDA margin of approximately 27%, which increased to roughly 40% excluding new campuses. Net income was $4.4 million, which more than doubled compared to the prior year.

Speaker #1: EPS was $0.14 per diluted share based on approximately 31.3 million weighted average diluted shares outstanding. Net income margin benefited from a lower effective tax rate of approximately 22%.

Brian Meyers: Net income margin benefited from a lower effective tax rate of approximately 22%, driven by a discrete tax benefit related to stock vesting. We expect the tax rate to normalize to around 9% in future quarters. Lastly, turning to the balance sheet. We also delivered an exceptional strong quarter driven by solid capital structure and continued improvement in cash generation. Historically, the first quarter has been a period where we use cash from operations. This quarter marks the first time in many years that we generated positive operating cash flows during this period. Cash flow from operations totaled $4.6 million compared with the use of $8.4 million in the prior period, a $13 million increase compared to 2025. Turning to our full-year guidance.

Speaker #1: Driven by a discrete tax benefit related to stock vesting, we expect the tax rate to normalize to around 9% in future quarters. Lastly, turning to the balance sheet, we also delivered an exceptionally strong quarter driven by a solid capital structure and continued improvement in cash generation.

Speaker #1: Historically, the first quarter has been a period where we used cash from operations. However, this quarter marks the first time in many years that we generated a positive operating cash flow during this period.

Speaker #1: Cash flow from operations totaled $4.6 million compared to compared with the use of $8.4 million in the prior period, a $13 million increase compared to 2025.

Speaker #1: Now turning to a full year guidance, our strong first quarter performance, higher student population, and continued momentum gives us confidence to raise our outlook for the year.

Brian Meyers: Our strong Q1 performance, higher student population, and continued momentum gives us confidence to raise our outlook for the year. We now expect revenue of $590 to 600 million, adjusted EBITDA of $76 to 80 million, net income of $23 to 26 million, diluted EPS of $0.74 to $0.83, student stock growth of 10% to 14%. Notably, the high end of our prior guidance now represents the low end of our updated outlook. As mentioned earlier, beginning in 2026, adjusted EBITDA no longer excludes pre-opening and first-year operating losses from new campuses. As a result, our guidance now includes approximately $10 million in new campus losses and excludes only non-cash stock-based compensation. Lastly, capital expenditure guidance remains unchanged at $70 to 75 million.

Speaker #1: We now expect revenue of $590 to $600 million, adjusted EBITDA of $76 to $80 million, net income of $23 to $26 million, diluted EPS of $0.74 to $0.83, and student start growth of 10% to 14%.

Speaker #1: Notably, the high end of our prior guidance now represents the low end of our updated outlook. As mentioned earlier, beginning in 2026, adjusted EBITDA no longer excludes pre-opening and first-year operating losses from new campuses.

Speaker #1: As a result, our guidance now includes approximately $10 million in new campus losses and excludes only non-cash stock-based compensation. Lastly, capital expenditure guidance remains unchanged at $70 to $75 million.

Brian Meyers: Planned expenditures include Hicksville and Rolla future campuses, program expansions, and ongoing maintenance investments. Growth initiatives accounted for approximately 65% of our total CapEx. During Q1, capital expenditures totaled approximately $15 million, coming in below plan due to the timing of certain expenditures shifting into Q2. When additional campus locations are announced, we will update our capital expenditure plans. Finally, I'd like to note that subsequent to quarter end, in April, we entered into an amendment to our credit facility that significantly enhanced our financial flexibility. In April, we increased our revolving line of credit from $60 million to $125 million, and in the process, secured more favorable terms.

Speaker #1: Planned expenditures include Hicksville and Raleigh future campuses, program expansions, and ongoing maintenance investments. Growth initiatives accounted for approximately 65% of our total CAPEX. During the first quarter, capital expenditures totaled approximately $15 million, coming in below plan due to the timing of certain expenditures shifting into the second quarter.

Speaker #1: When additional campus locations are announced, we will update our capital expenditure plans. Finally, I'd like to note that, subsequent to quarter-end in April, we entered into an amendment to our credit facility that significantly enhanced our financial flexibility.

Speaker #1: In April, we increased our revolving line of credit from $60 million to $125 million and, in the process, secured more favorable terms. The amended facility provides us with additional capacity and flexibility to support our growth strategy, including investments in new campuses and program expansions, while also positioning us to pursue future corporate development opportunities as they may arise.

Brian Meyers: The amended facility provides us with additional capacity and flexibility to support our growth strategy, including investments in new campuses and program expansions, while also positioning us to pursue future corporate development opportunities as they may arise. Prior to this amendment, we ended Q1 with $72 million in total liquidity, with $16.7 million of cash and just $5 million of debt outstanding. In closing, we are highly encouraged by our strong start to the year and remain focused on achieving our long-term 2030 objectives, including $850 million in revenue and $150 million of adjusted EBITDA, as outlined at our Investor Day in March. We thank our entire team for their continued commitment and strong execution. With that, I'll turn the call over to the operator for questions. Operator?

Speaker #1: Prior to this amendment, we ended the first quarter with $72 million in total liquidity with $16.7 million of cash and just $5 million of debt outstanding.

Speaker #1: In closing, we are highly encouraged by our strong start to the year and remain focused on achieving our long-term 2030 objectives, including $850 million in revenue and $150 million of adjusted EBITDA as outlined at our Investor Day in March.

Speaker #1: We thank our entire team for their continued commitment and strong execution. With that, I'll turn the call over to the operator for questions. Operator?

Speaker #1: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Due to time restraints, we ask that you please limit yourself to 1 question and 1 follow-up question. You may return to the queue. Please stand by while we compile the Q&A roster. Our first question will come from the line of Luke Horton with Northland Capital Markets. Your line is open.

Speaker #1: Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue.

Speaker #1: Please stand by while we compile the Q&A roster. Our first question will come from the line of Lou Corten with Northland Capital Markets.

Speaker #1: Your line is open.

Speaker #3: Yeah. Hey, guys. Thanks for taking the questions and congrats on a really nice quarter here to start the year. Just wanted to start off with the organic growth.

Luke Horton: Hey, guys. Thanks for taking the questions and congrats on a really nice quarter here to start the year. Just wanted to start off with the organic growth. You said about half of that 20%, or 19.5 student starts growth was organic in the quarter. Just wondering, as you're thinking about the 2026 guidance, if you could give some details around assumptions for organic growth versus new campuses.

Speaker #3: You said about half of that 20% or 19.5 student starts growth was organic in the quarter. Just wondering, as you're thinking about the 2026 guidance, if you could give some details around assumptions for organic growth versus new campuses.

Speaker #4: Sure. So, I mean, last year, if you look at the full year, about half of our growth was from organic means. This year, we anticipate probably about the same.

Brian Meyers: Sure. I mean, last year, if you look the full year, about half of our growth was from organic means. This year, we anticipate probably about the same, Luke, as we look for the full year. About half of the growth to be from our organic sources.

Speaker #4: Luke, as we look for the full year, about half of the growth could be from organic sources.

Speaker #3: Okay. Got it. And then obviously, on the skilled trade sides, the programs like auto, HVAC, welding, and electrical continue to be some major contributors.

Luke Horton: Okay, got it. Obviously on the skilled trade side, the programs like auto, HVAC, welding, and electrical, continue to be some major contributors. Just wondering if there is any programs you guys don't offer that you've looked at getting into, maybe like an aviation or robotics, type programs?

Speaker #3: Just wondering if there are any programs you guys don't offer that you've looked at getting into—maybe like an aviation or robotics-type program?

Speaker #4: Sure. Yeah. We're always looking for new opportunities. The one that everyone always throws out is plumbing, but plumbing is just they're very, very few schools out there doing it.

Scott Shaw: Sure. Yeah, we're always looking for new opportunities. The one that everyone always throws out is plumbing, but plumbing is just there are very, very few schools out there doing it. We haven't heard from our employers that there's a huge need. Seems like that is satisfied through other means. We are continuing to explore if there could be components that could be included in our program. Aviation is certainly a nice business, very similar to fixing cars and trucks, just larger vehicles. That could be something.

Speaker #4: And so and we haven't heard from our employers that there's a huge need. Seems like that is satisfied through other means. But we are continuing to explore if there could be components that could be included in our program.

Speaker #4: But aviation is certainly a nice business, very similar to fixing cars and trucks, just larger vehicles. So that could be something. Not necessarily robotics, but in general, there's a whole area around megatronics, which is kind of a combination of electronics.

Scott Shaw: Not necessarily robotics, but in general, there's a whole area around mechatronics, which is kind of a combination of electronics, it's hydraulics, it's pneumatics, it's PLCs, things that run factories or other sorts of equipment that need to be repaired and maintained to keep factories running and distribution centers running. Those are some of the things that we're looking at, whether or not they'll be full programs or maybe some sort of short program. We are looking for new opportunities to continue trying to solve this skills gap challenge that's out there.

Speaker #4: It's hydraulics. It's pneumatics. It's PLCs—things that run factories or other sorts of equipment that need to be repaired and maintained to keep factories running, and distribution centers running.

Speaker #4: So those are some of the things that we're looking at, whether or not there'll be full programs, or maybe some sort of short program.

Speaker #4: We are looking for new opportunities to continue trying to solve the skills gap challenge that's out there.

Speaker #3: Okay. Great. I'll leave it to those two questions. Thanks, guys. And congrats on the quarter.

Luke Horton: Okay. Great. I'll leave it to those two questions. Thanks, guys, and congrats on the quarter.

Speaker #4: Thanks, Luke. Appreciate it.

Scott Shaw: Thanks, Luke. Appreciate it.

Speaker #1: One moment, for our next question. And that will come from the line of Eric Martinuzzi with Lakestreet Capital. Your line is open.

Operator: One moment for our next question. That will come from the line of Eric Martinuzzi with Lake Street Capital. Your line is open.

Speaker #5: Yeah, it was good to see the HOPS starts turn positive at 5%. I think you said at the investor day that really your new campus focus was going to be on the skilled trades and transportation.

Eric Martinuzzi: Yeah, it was good to see the HOPS starts turn positive at 5%. I think you said at the investor day that really your new campus focus was gonna be on the skilled trades and transportation. Is there any expectation that maybe some of the new facilities that you would be getting into would have expansion capabilities for healthcare and other?

Speaker #5: Is there any expectation that maybe some of the new facilities that you would be getting into would have expansion capabilities for healthcare and other?

Speaker #4: Yeah. Absolutely. I mean, just as a reminder, the new Levittown campus we just opened up has about 12,000 of undeveloped square foot feet that we could put something else in.

Scott Shaw: Absolutely. I mean, just as a reminder, the new Levittown campus we just opened up has about 12,000 of undeveloped square foot, feet that we could put something else in. Our new Houston campus also has about the same amount. We do have some space in some of these newer facilities to add healthcare and/or additional programs. The overall, again, plan for healthcare is, obviously, we all know healthcare is a growing sector of the economy, huge need. What we're trying to do is make sure that our healthcare program is as profitable as possible before we expand it, and we actually made very good progress on that this quarter. For the first time, our nursing programs were profitable in Q1, frankly, since pre-COVID.

Speaker #4: Our new Houston campus also has about the same amount. So, we do have some space in some of these newer facilities to add healthcare and/or additional programs.

Speaker #4: And the overall, again, plan for healthcare is—obviously, we all know healthcare is a growing sector of the economy, huge need. What we're trying to do is make sure that our healthcare program is as profitable as possible before we expand it.

Speaker #4: And we actually made very good progress on that this quarter. For the first time, our nursing programs were profitable in the first quarter—frankly, since pre-COVID.

Speaker #4: So we are making progress. And once we achieve a level of profitability that we're comfortable with, we do hope to expand those programs into other campuses.

Scott Shaw: We are making progress, and once we achieve a level of profitability that we're comfortable with, we do hope to expand those programs into other campuses.

Speaker #5: And with the recovery of Paramus, are there milestones that the state of New Jersey is looking for you to hit, or is it just you've got the green light and you're—

Eric Martinuzzi: With the recovery of Paramus, are there milestones that the State of New Jersey is looking for you to hit, or is it just you've got the green light?

Scott Shaw: Oh, yeah.

Eric Martinuzzi: and you're-

Speaker #4: Yeah, yeah, sorry about that. Yeah, we had the full green light. In fact, the graduation rate in the NCLEX exams—so, as a company, we average, frankly, at 90, 89.5, or 89.4% last year.

Scott Shaw: Yeah.

Eric Martinuzzi: Okay.

Speaker #5: Okay.

Scott Shaw: Yeah, sorry about that. We had the full green light. In fact, the graduation rate in Paramus is over 90% for the NCLEX exams. You know, as a company, we average, frankly, at 90, 89.5% or 89.4% last year. We're safely well above the benchmark, and there's no other restrictions or notification that we need to give the state.

Speaker #4: So we're safely well above the benchmark. And there's no other restrictions or notification that we need to give the state.

Speaker #5: Okay. You said grad rate, but I think you meant pass rate.

Eric Martinuzzi: Okay. You said grad rate, but I think you meant pass rate.

Speaker #4: Yes, yeah. Thank you for clarifying that. You are correct—it's the NCLEX pass rate.

Scott Shaw: Yes. Yeah. Thank you for clarifying that. You are correct. It's the NCLEX pass rate.

Speaker #5: Great. Nice job on the quarter and the outlook. That’s it for me.

Eric Martinuzzi: Great. Nice job on the quarter and the outlook. That's it for me.

Speaker #4: Thanks, Eric. Appreciate it.

Scott Shaw: Thanks, Eric. Appreciate it.

Speaker #1: Thank you. As a reminder, if you would like to ask a question, please press star 1-1. Our next question will come from the line of Griffin Boss with B.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11. Our next question will come from the line of Griffin Boss with B. Riley Securities.

Speaker #1: Riley Securities. Your line is open.

Speaker #6: Hi. Good morning. Thank you for taking my questions. So first, I just want to start off on the expanded credit facility that more than doubled, as you discussed.

Griffin Boss: Hi, good morning. Thank you for taking my questions. First, I just wanna start off on the expanded credit facility, you know, that more than doubled as you discussed. Just curious, if that changes your calculus going forward when you it gave your 2030 targets at the investor. You talked about 6 potential new campus openings between 2027 and 2029, so 2 per year. Do you have any expectation that maybe you can add on to that and you know, maybe do a 3rd, 4th campus, perhaps, in any one of those years? Are you still just trying to be methodical with 2 per year?

Speaker #6: Just curious, if that changes your calculus going forward when you gave your 2030 targets at the investor you talked about, six potential new campus openings between 27 and 29, so two per year.

Speaker #6: But do you have any expectation that maybe you can add on to that to maybe do a third, fourth campus, perhaps, in any one of those years?

Speaker #6: Or are you still just trying to be methodical with two per year? Well, yeah. We're still focused on two per year, but we do have the flexibility to add more to that.

Scott Shaw: Well, yeah. We're still focused on 2 per year, but we do have the flexibility to add more to that. I think as we've said in the past, you know, we have searches going on in about 12 different markets. When we're able to find a facility that meets our needs is a little bit out of our control, but we do think we can basically almost find 1 every 6 months. There could be opportunities that we find more that, you know, we could find them faster, in which case we do have greater flexibility to take advantage of that. The overall plan right now still remains about 2 a year.

Speaker #6: I think, as we've said in the past, we have searches going on in about a dozen different markets. And when we're able to find a facility that meets our needs is a little bit out of our control, but we do think we can basically almost find one every six months.

Speaker #6: But there could be opportunities that we find more—that we could find them faster. In which case, we do have greater flexibility to take advantage of that.

Speaker #6: But the overall plan right now still remains about two a year. Okay. Understood. Thanks, Scott. And then just one other housekeeping for me, model-related.

Griffin Boss: Okay, understood. Thanks, Scott. Just one other housekeeping for me, model related. You mentioned the timing for certain CapEx pushing to the Q2. Is the expectation here in terms of cadence that Q2 might be the heaviest CapEx spend quarter, and maybe kinda trailing off in Q3 and Q4 to get to that $70 to 75 million target?

Speaker #6: You mentioned the timing for certain CapEx pushing to the second quarter. So, is the expectation here, in terms of cadence, that Q2 might be the heaviest CapEx spend quarter and maybe kind of trailing off in Q3 and Q4 to get to that $70–$75 million target?

Speaker #4: Yeah. Exactly. It's probably almost half our CapEx spend is right now we think is going to happen in Q2.

Brian Meyers: Yeah, exactly. It's probably almost half our CapEx spend is right now we think is gonna happen in Q2.

Speaker #6: Understood. Okay. Got it. Thanks, Brian. And thanks again, Scott. Appreciate it. Congrats on great quarter.

Griffin Boss: Understood. Okay, got it. Thanks, Brian, and thanks again, Scott. Appreciate it. Congrats on great quarter.

Speaker #4: Thanks. I look forward to the conference coming up.

Scott Shaw: Thanks. I look forward to the conference coming up.

Speaker #6: Yeah. Me too. Can't wait.

Griffin Boss: Yeah, me too. Can't wait.

Speaker #1: Thank you. As a reminder, if you would like to ask a question, please press *11. I'm showing no questions in the queue at this time.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one one. I am showing no questions in the queue at this time. Actually, we do have a follow-up from Luke Horton with Northland Capital. Please go ahead.

Speaker #1: I would now like to actually, we do have a follow-up from Luke Horton. With Northland Capital, please go ahead.

Speaker #7: Yeah. Hey, guys. Just wanted to jump back in here on student starts going into Q2. I know last year there was kind of a cohort of students that was pushed into Q2 that will no longer be included.

Luke Horton: Yeah. Hey, guys. Just wanted to jump back in here on student starts going into Q2. I know last year there was kind of a cohort of students that was pushed into Q2 that will no longer be included. Could you just remind us of what to expect here for Q2 and Q3 starts as we lap the kind of weird calendar year from last year?

Speaker #7: Could you just remind us of what to expect here for Q2 and Q3 starts, as we lap the kind of weird calendar year from last year?

Scott Shaw: Go ahead, Brian.

Speaker #4: Go ahead, Brian.

Scott Shaw: Go ahead, Brian.

Speaker #5: Right. So if you remember, last year there was a start that occurred the first week of July that we moved into Q2 when we report.

Brian Meyers: Right. If you remember last year, there was a start that occurred the first week of July that we moved into Q2 when we report. When we report Q2 next year, it will be that the July 2025 start will be moved into Q2. It will be apples and apples comparison for Q2. The start that occurred, I think it was like 2,700 students that happened in July. We are going to pro forma that into Q2 of 2025, and it is going to naturally occur this year at the end of June. For the next 5 years, that start will always be in Q2.

Speaker #5: So when we report Q2 next year, it'll be that the July 2025 start will be moved into Q2. So it'll be apples, and it'll be apples and apples.

Speaker #5: Comparison for Q2. So the start that occurred, I think it was like 2,700 students—that happened in July. We're going to pro forma that into Q2 of 2025.

Speaker #5: And it’s going to naturally occur this year at the end of June. And for the next five years, that’s not always being the second quarter.

Speaker #7: Okay, so you'll be reporting it out on an apples-to-apples basis. So no, there shouldn't be any big surprises there.

Luke Horton: Okay. You'll be reporting it out on an apples-to-apples basis. No.

Brian Meyers: Correct.

Luke Horton: Any big surprises there?

Speaker #5: No. Correct.

Brian Meyers: No. Correct.

Speaker #7: Okay. Thank you.

Luke Horton: Okay. Thank you.

Speaker #4: No problem.

Scott Shaw: No problem.

Speaker #1: Thank you. I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Scott Shaw for any closing remarks.

Operator: Thank you. I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Scott Shaw for any closing remarks.

Scott Shaw: Thank you, operator. Thank you all for joining us today as we reviewed our significant Q1 progress and increased our financial guidance for 2026. Lincoln is benefiting from both macro operating environment trends and our own consistent execution of growth initiatives at our existing campuses and new facilities. Our investments in our operations, our students, and our organization continue to create numerous opportunities to generate increasing levels of shareholder returns over several years. Of course, our success is only made possible by the commitment and dedication of our faculty and staff, and the success of our students. I'd like to thank our shareholders for their support and our entire team for their dedication to achieving our goals. Thank you all again. Have a great day.

Speaker #6: Thank you, operator. And thank you all for joining us today as we reviewed our significant Q1 progress and increased our financial guidance for 2026.

Speaker #6: Lincoln has benefited from both macro operating environment trends and our own consistent execution of growth initiatives at our existing campuses and new facilities. Our investments in our operations, our students, and our organization continue to create numerous opportunities to generate increasing levels of shareholder returns over several years.

Speaker #6: Of course, our success is only made possible by the commitment and dedication of our faculty and staff, and the success of our students. I'd like to thank our shareholders for their support and our entire team for their dedication to achieving our goals.

Speaker #6: Thank you all again, and have a great day.

Operator: This concludes today's program. Thank you all for participating. You may now disconnect.