Lincoln Educational reports Q4 EPS 27c, consenus 26c

Reports Q4 revenue $91.8M, consensus $89.69M. Total student starts up 2.4%; same school student starts up 4.7%"Lincoln returned to student start growth during our fourth quarter and achieved strong financial results in its most profitable quarter with both revenues and Adjusted EBITDA growing in comparison to last year. In addition, student retention and placement rates continued their positive trends and our graduation rates reached a new company high. 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 investment to build a more scalable and higher return business," said Scott Shaw, President & CEO. "Key to this strategy is our new hybrid teaching model which we began to implement at our campuses in 2022. This model delivers our programs with all of the hands-on learning on our campuses with a greater component of classroom work delivered through online instruction. The model also standardizes our programs across campuses, on-campus timeslots with consistent start dates which provides greater flexibility and efficiencies. The roll-out of our hybrid model creates the opportunity to efficiently add over ten new program replications across our existing campuses over the next two years. This results in organic growth with the fastest and highest return on investment as we leverage our existing infrastructure, campus management and market knowledge. Upon reaching their full run-rate after approximately three years of operation, each of these ten programs is expected to provide an average of one million dollars in added profitability annually. Pursuing this strategy requires a higher level of investment during 2023 in terms of both operating and capital expenditures. Completing the transition to our hybrid teaching model by the end of 2023 will result in increased instructional costs over the short term, but is expected to lead to greater efficiency beginning in 2024. 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 and higher revenue per student. Our efforts to roll-out our hybrid teaching model, complete the centralization of our financial aid process, and launch eight new programs including program expansions across our campuses will depress our profitability resulting in a forecast for Adjusted EBITDA of $19 – $24 million for 2023. We will also significantly increase our capital expenditures to $35 – $40 million to advance our growth plans, including our new campus in Atlanta. The anticipated closing of the sale of our Nashville campus in the second quarter will result in approximately $35 million in gross proceeds and generate a significant net gain."