Lincoln Educational Services Corporation

Good day and thank you for standing by. Welcome to the Lincoln Educational Services second quarter 2025 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 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 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Polivio. Please go ahead.

Thank you, Gigi. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the second quarter ended June 30, 2025, 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 is Scott Shaw, President and CEO, and Brian Myers, Chief Financial Officer. Today's call has been 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 Term is identified in federal securities laws. Awards 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 if 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 filed with the Securities and Exchange Commission. Overlook and 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 the cautionary statement. The Lincoln letter takes no obligation to publicly revise or update any forward-looking statement, either 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 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 to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Thank you, Michael, and good morning, everyone. Thank you for joining us today for our review of Lincoln's continued operational and financial momentum during the second quarter, which led to nearly 22% student start growth and about 15% revenue growth from our current operations. as well as a 68% increase in consolidated adjusted EBITDA over last year's second quarter. As a result of this performance, which follows an equally impressive first quarter, as well as current operating trends, we are increasing our guidance for the full fiscal year, as well as expanding some of our growth initiatives to capitalize on the growing demand for high-value career-focused skills training. Many factors are contributing to our dynamic top and bottom line growth, including on the macro level, the continued increased interest in skilled trade training as an alternative to the traditional four-year college education, a factor that we believe will be further stimulated by recent federal government actions impacting student loans. At the same time, our strategies and investments have positioned Lincoln to capitalize on market demand. For instance, We are focused on training our students for rewarding careers in fields where there is a chronic shortage of skilled employees, thus helping to fill the growth-inhibiting skills gap experienced by employers. Electrical, HVAC, automotive technician, welding, and nursing careers offer lifetime employment opportunities as well as professional advancement potential. Our team is doing an excellent job executing our growth plan. Our financial performance during the first half of 2025 reflects increasing returns from our investments in the Lincoln 10.0 hybrid teaching model, student start outperformance at our new and relocated campuses, execution of our program replication strategy at existing campuses, successful high school student initiatives, expanding corporate partnership relationships, and increased marketing efficiencies. Lincoln 10.0 is contributing to our start growth by providing 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, which reduces the time needed to complete many of our curriculums and accelerates our graduates to their highly rewarding careers. We continue to realize instructional efficiencies, space efficiencies, and organizational productivity through Lincoln 10.0, and Brian will provide more details on the leverage we achieve from our operating expenses during the second quarter in a few minutes. We continue to make investments in people and processes to ensure that we deliver an exceptional learning experience for our students. We want to be the best, and we want the best for our students. To achieve this goal, we are constantly evaluating new software, curriculum, and training aids. In addition, we want our instructors to have industry-recognized credentials that ensure they have the most up-to-date knowledge in their field so our students have an edge on their competition. With technology ever changing, we are constantly in pursuit of what will help our students master the skills they desire to become the technicians, welders, and healthcare providers that will lead the next generation of skilled hands-on professionals. As I noted at the beginning of my comments, student starts at our currently operating campuses grew nearly 22% in the second quarter. We continue to have growth at our existing campuses and programs, as well as from our new campuses and programs. At East Point, Total student starts at the 18th month mark of the campus's opening have achieved a level we expected to occur at the 36th month mark. Similarly, we are seeing strong results from our recently relocated Nashville campus, which we have rebranded Nashville Auto Diesel College. In October, we will be layering on electrical and HVAC programs at NADC, which we believe will further enhance growth. We held a grand opening of NADC on June 5th, which honored Nashville's historic position as a leading career technical college serving this country since World War I. Student start growth at existing campuses achieved an 18.3% growth rate, driven by the conversion of a higher number of leads generated by our marketing initiatives into student starts, as well as increased high school graduate enrollees. Our initiatives to increase high school student starts has led to growing interest from both the schools as well as parents and students, and we are devoting additional resources to further developing this important market segment. At the same time, high schools are reaching out to us to explore how to offer our skilled trades programs to their students. 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 rewarding careers. With students under constant challenge, our work with local high school boards is enabling the continuation of skilled trades training within the high schools while building our enrollment, and we are quite excited about the long-term potential of this initiative. In addition to East Point and Nashville, our current campus development programs include Levittown, Pennsylvania, Houston, Texas, and Hicksville, New York. In August, we completed the move of our highly successful Philadelphia automotive programs to the new Levittown campus, and we will be opening three replicated programs, including welding, HVAC, and electrical at this new facility in September. In Houston, we received final regulatory approval during the second quarter and are pleased to announce student enrollment for the first classes starting in October is underway, approximately one month earlier than we originally expected. Our most recently announced campus, Hicksville, New York, continues to target a late 2026 opening, and we expect to announce another new campus when we report our third quarter results to you in early November. We recently completed a thorough review of underserved markets for the types of high-value career training programs we deliver to students and believe there are at least a dozen other metropolitan areas for Lincoln to enter and realize returns similar to what we have generated in East Point and to date in Nashville. To seize on these opportunities for the next several years, we expect to increase the number of new campuses we develop each year to two and to fund this expansion through operating cash flow. With each new campus, our objective is to achieve 25 to 30 million in annualized revenue and 7 to 10 million of EBITDA by the fourth quarter of operation. Excuse me, by the fourth year of operation. Program replications at existing campuses and corporate partnerships remain key components of our growth strategy. I previously mentioned the opening schedule for replicated programs in both Nashville and Levittown. In addition, by year-end, we expect to have replicated or expanded a total of six programs across existing campuses, building on the five we completed in 2024. On the partnership front, corporate America continues to view Lincoln as a solution to closing the workforce skills gap, although decision-making timelines remain somewhat lengthened due to ongoing economic uncertainty. During the quarter, we did execute agreements to extend existing partnerships and recently expanded our relationship with Johnson Controls to their fire detection unit at our Denver campus. Another growth initiative with long-term ramification involves our healthcare programs. We recently brought on a seasoned professional to lead our nursing programs and have begun implementing changes to strengthen our instructional model and improve operating effectiveness. This review extends beyond implementing Lincoln 10.0. and we are quite excited about the long-term potential of this effort. Meanwhile, last quarter, we talked about our efforts to regain enrollment status at our Paramus Nursing Program. We have exceeded the graduation benchmark at this program for the past 12 months and are engaging with the State Board so that we can once again be a full contributor to the effort to address the significant LPN shortage in New Jersey. Just a brief note on the One Big Beautiful Bill Act. The most recent financial provision for us The most relevant financial provision for us is the introduction of annual and lifetime borrowing limits on Parent PLUS loans, which goes into effect on July 1, 2026. However, based on our current analysis, we do not expect it to have a material financial impact. And that's all I have to say on the one big, beautiful bill act. For nearly 80 years, Lincoln has remained focused on delivering high-quality, life-changing career education and no one else has our combination of longevity, scale, and proven experience. By continuing 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, we believe we are on track to exceed our objective of approximately $550 million in revenue and approximately $90 million of adjusted EBITDA in 2027. As I've discussed before, our country's existing severe skills gap will likely get worse before getting 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 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. Finally, I'd like to note we will be continuing our investor outreach with a non-deal roadshow scheduled for August 19th and 20th with Barrington in Portland, Oregon and Salt Lake City, respectively. and participating in the September investor conferences organized by B. Riley, Lake Street, and Barrington on September 10th, 11th, and 16th, respectively. These activities follow our June 16th NASDAQ event, where we had the honor of ringing the opening bell in celebration of the 20th anniversary of our NASDAQ listing. With our continued operational and financial momentum, investor interest in Lincoln builds, and we are gratified by our increased analyst coverage. Currently, six analysts are publishing on the company, which I believe is the highest number of analysts in our 20 years of being a publicly traded company. Now, I'll turn the call over to Brian Myers so he can review some of our recent financial highlights and guidance. Brian?