Lincoln Educational Services 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Lincoln Educational Services reported strong second quarter 2026 results with 22.4% revenue growth to $142.6 million, 42.4% adjusted EBITDA growth to $12.7 million, and a 25% increase in net income to $1.9 million compared to the prior year quarter.
- The company’s average student population grew 14.5%, with total student population up approximately 10% year over year across 22 campuses.
- Student starts increased only 1% in the quarter due to a lower show rate, despite 9% enrollment growth, impacted by financial aid packaging delays and some students unable to start due to loan repayment requirements.
- Operating expenses rose 22.6% to $139.2 million, reflecting growth initiatives, higher depreciation from new facilities, and timing of booking tool expenses.
- Operating cash flow improved by $26.6 million for the six months ended June 30, 2026, compared to a use of $8.1 million in the prior year period.
- Capital expenditures totaled approximately $33.2 million year to date, with spending in the second quarter below plan due to permit and weather delays, shifting expenditures to the third quarter.
- The company acquired the Melrose Park, Illinois campus building for $18.8 million, funded by $15 million in mortgage financing, reducing cash outflows compared to prior rent expenses.
- Lincoln is developing new campuses in Hicksville, New York (opening Q4 2026), Rowlett, Texas (opening Q1 2027), Suitland, Maryland (focused program campus opening Q4 2027), and Tempe, Arizona (opening Q1 2028).
- The Suitland campus will require $10 million in capital investment, expected to generate $5 million EBITDA within three years, with a faster payback and higher IRR than traditional campuses.
- The company’s skilled trades programs represent about 60% of its student population, with 20% in healthcare and 20% in automotive, and skilled trades are the most profitable segment.
- Retention improved by approximately 150 basis points year over year, supported by enhanced student services and emotional and life support programs.
- The Melrose Park campus was recognized by USA Today as one of America’s top vocational schools for 2026, and the Grand Prairie, Texas campus was named a School of Excellence by the Accrediting Commission of Career Schools and Colleges.
- Lincoln’s high school recruiting efforts are expected to drive more than 15% growth in high school starts in Q3 2026, contributing to the company’s full-year student start growth guidance of 10% to 14%.
- The company’s Lincoln 10.0 hybrid teaching platform combines hands-on learning with online instruction, improving instructional efficiencies and student flexibility.
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Transcript
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Hello, and welcome to Lincoln Educational Services' second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to Michael Polyviou.
You may begin. Thank you, Tawanda.
Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the second quarter ending June 30, 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.
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 upon which the 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 in Form 10-K and the quarterly report in Form 10-Q filed with the Securities and Exchange Commission.
Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of the time with respect to future events. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking 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 call over to Scott Shaw, CEO and President of Lincoln Educational Services.
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