Lincoln Educational Services Corporation

Thank you for standing by. Welcome to Q1 2025 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 session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Michael Polivio. Please go ahead.

Thank you, Lisa. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results and recent corporate developments for the first quarter ended March 31, 2025. 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, President and CEO, and Brian Myers, Chief Financial Officer. 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 public statements as a 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 factor section of the annual report on Form 10-K and the quarterly report on Form 10-Q-5 of the Securities and Exchange Commission. Overlook 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 they're out. One other housekeeping matter. 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. In advance, we thank you for your cooperation. Now I'd like to call over Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Thank you, Michael. And good morning, everyone. And I hope you all had a nice Mother's Day yesterday. Thank you for joining us today for our review of Lincoln's very strong first quarter financial and operating performance. We've talked about the strategies we've put in place to generate consistent growth, including the Lincoln 10.0 hybrid teaching model, the new campus development program, replicating high-end demand programs at existing campuses, signing corporate partnerships, and consistently providing high-value training and skills to our students to prepare them for rewarding careers. During the first quarter of 2025, our financial results, excluding the transitional segment, illustrated the increasing returns we are realizing from these strategies as revenue grew 16% and adjusted EBITDA grew 56%. In addition, the results have enabled an increase in our full year financial guidance, as well as our confidence in achieving our objective of approximately 550 million in organically generated revenue and approximately 90 million in adjusted EBITDA in 2027. For the past two years, the Lincoln 10.0 hybrid teaching model has provided increased flexibility to our students who often need 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. The model enables our students to work part-time or manage other commitments while pursuing their Lincoln education and reduces the time needed to complete many of our curriculums, accelerating our graduates on to their highly rewarding careers. It is helping a higher percentage of our students to graduate and is attractive to our corporate partners who remain growth constrained by the lack of skilled employees. As the first phase of Lincoln 10.0 was implemented, we generated instructional efficiencies, space efficiencies, and organizational productivity. With the first phase completed, the efficiencies have increased, which contributed to our adjusted EBITDA growth as compared to last year's first quarter. Brian will provide more detail on the leverage we achieved from our operating expenses during the first quarter in a few moments. Our student starts at 21 campuses operating in the first quarter grew an exceptional 20% over the prior period and student starts have now increased at a double digit rate for six consecutive quarters. As I mentioned, we believe Lincoln 10.0 has played an important part in this growth. In addition, Our new East Point campus continues to contribute to our strong start growth, and our marketing programs continue to be increasingly effective at generating leads while lowering the cost of those leads. Lincoln is successfully meeting the consistently growing demand for educational alternatives to a traditional four-year college as employers continue to seek solutions to closing their workforce skills gap. Our new campus development strategy is designed to expand our model to underserved markets within the United States and during the first quarter generated substantial progress. The first new campus under our expansion strategy, East Point in metropolitan Atlanta, opened in March of 2024 and has demonstrated tremendous success in its first year of operation, becoming profitable well ahead of schedule. the strong performance of East Point has reinforced our confidence in our new campus program strategy, which includes the opening of three new campuses during 2025. The first of the 2025 openings took place in the first quarter as we completed the relocating of the Nashville campus to a state-of-the-art facility overlooking the city skyline. Rebranded as the Nashville Auto Diesel College, or NADC, The campus will expand its offerings to include new electrical and HVAC programs. NADC students and faculty have warmly embraced the new campus's 100 welding booths, the latest alignment racks from Hunter, brand new environmentally friendly spray booths from GFS, elect two training equipment, a Peterbilt training center, and much more. We will mark this exciting milestone on June 5th with a grand opening honoring NADC's historic position as a leading career technical college serving this country since World War I. This event will also exhibit the school's Hall of Fame room, recognizing the hundreds of graduates who have advanced into leadership positions throughout the automotive and diesel industry across the country. Meanwhile, our new campus in Levittown, PA, which will incorporate our current automotive program in Philadelphia, is nearing completion, and we remain on schedule to complete the move to this state-of-the-art facility this summer. The efficiency and additional space of the Levittown campus is enabling us to add another three programs in the market. We recently hosted local leaders at the campus, which generated a great deal of enthusiasm for the contributions Lincoln is making to the local community with this new facility. Our third new campus scheduled to open late 2025 is our Houston campus, which is our second in Texas, but first in the Houston market, which represents fast opportunities. The current schedule calls for us to begin our first classes in automotive, HVAC, electrical, and welding during the fourth quarter. Our fourth new campus is Hicksville, Long Island, is under development, and we anticipate it opening in the latter part of 2026. As always, we continue to explore other underserved markets to determine additional new campus opportunities for Lincoln, and we expect to announce additional new school openings before year end. Program replication at existing campuses is another of our key growth initiatives. During the first quarter, we opened an electrical program at our Lincoln Rhode Island campus and expansion of our welding program at our Denver campus. We have five additional programs scheduled to begin operation as the year progresses. Our efforts to enter into new corporate partnerships continued during the first quarter. The interest from corporate America in Lincoln as a solution to closing the workforce skills gap remains strong. However, decision-making timelines have lengthened primarily due to ongoing economic uncertainty. We continue to see resources being made available to students learning essential skills and training that enable us to live the life we have grown accustomed to. At the same time, our proven commitment to providing high ROI programs continues benefiting students, their families, and their communities. And our high graduation rate as well as graduate placement rate indicate we offer an excellent return on investment. I believe that Lincoln Tech is uniquely positioned to capture an increasing share of the growing skilled trades training market. For over 78 years, we've remained focused on delivering high-quality, life-changing career education, and no one else has our combination of longevity, scale, and proven experience. Our growth strategy is simple. We will continue to expand our network of schools by replicating our most in-demand programs at our existing campuses while building new campuses in new and existing markets. Despite the uncertainty that many face with the ever-changing economic landscape, our path forward is quite certain. Our country has an existing severe skills gap, which most likely will get worse before it gets better. There are major initiatives underway that will drive this increased demand for skilled workers. whether it's our Navy's need for 250,000 skilled workers over the next 10 years to build three new submarines a year, or the electric utility's dire need to build new sources of electric power to fuel rapidly expanding demand caused by AI and the move towards electrification in general, or the expected massive onshoring efforts of our manufacturing base by the current administration to create greater economic security and prosperity The demand for more talented men and women to enter the skilled trades will only increase, and Lincoln Tech will be there to meet that demand. The good news for Lincoln Tech and our country is the resurgent interest in the skilled trades. The press has labeled this generation the tool belt generation. We and others have had numerous stories on national and local TV highlighting the need for skilled workers, why more and more people are turning to the trades, and why schools like Lincoln Tech provide an excellent alternative to obtaining a four-year degree. Across the country, we are seeing increased demand by adults and high school students. The audiences and engagement with parents is growing, even among those communities with historically high number of students going to the traditional four-year colleges. The message is sticking, and it's being reflected in our results and rising interest. As we saw with the latest jobs report for April, employers continue to struggle to find technicians, electricians, welders, and healthcare workers, and through our lead generation programs, we have seen record level of interest in our curriculums. We continue to see the demand for what we do growing, regardless of macroeconomic conditions or political agendas, and have transformed our company into an exceptional provider of educational services meeting the needs of America's corporations, as well as America's workforce, as we continue to work to be a leading voice for middle skills learning in this country. Our increasing financial performance over the past several quarters has enabled us to put in place the financial resources to carry out our growth strategies, achieve our objectives, and generate increasing return to our shareholders. Finally, I'd like to note I'll be meeting with investors over the coming weeks at various locations around the country. These include the B. Reilly Annual Investor Conference in Marina del Rey, California on May 22nd, the IDEAS Conference on June 11th in New York, and the Northland Securities Virtual Conference on June 25th. Additionally, I will be in Portland, Oregon on June 17th and Denver on June 18th with a Barrington-hosted non-deal roadshow. The level of interest coincides with our performance, and I believe the successful execution of our growth strategy has the potential for further price appreciation as we continue to grow our student population and generate an increasing level of operating efficiencies. Now I'll turn the call over to Brian Myers so he can review some of our recent financial highlights and guidance. Brian.