Core Insights - Lincoln Educational Services Corporation (NASDAQ:LINC) is identified as one of the top education stocks to invest in currently, with American Century Companies Inc. increasing its stake by purchasing 51,650 shares valued at $1,572,000, representing 0.31% ownership [1] - The company is viewed as a growth at a reasonable price (GARP) investment, with future monetary gains anticipated from expansion into new campuses and programs despite a reduction in net cash [2] - Historical performance shows LINC significantly outperformed the S&P 500, with a return of 205.20% compared to the S&P's 65.16%, and this trend is expected to continue as demand shifts towards more economical educational offerings due to AI impacts [3] - Founded in 1946 and based in New Jersey, Lincoln Educational Services Corporation provides career-oriented postsecondary education services aimed at enhancing student success for both working adults and high school graduates [4]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying stocks that can fulfill their growth potential is challenging due to associated risks and volatility [1] Group 1: Company Overview - Lincoln Educational Services Corporation (LINC) is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's real growth prospects beyond traditional metrics [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth investors [9] Group 2: Earnings Growth - The historical EPS growth rate for Lincoln Educational Services is 1.8%, but projected EPS growth for this year is expected to be 34.8%, significantly surpassing the industry average of 15.8% [4] Group 3: Cash Flow Growth - Year-over-year cash flow growth for Lincoln Educational Services is currently at 41%, which is substantially higher than the industry average of 8% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 22.9%, compared to the industry average of 10.5% [6] Group 4: Earnings Estimate Revisions - The current-year earnings estimates for Lincoln Educational Services have been revised upward, with the Zacks Consensus Estimate increasing by 4.9% over the past month [7] Group 5: Investment Potential - Lincoln Educational Services has achieved a Growth Score of A and a Zacks Rank 2 due to positive earnings estimate revisions, indicating it is a solid choice for growth investors [9]

Summary of Lincoln Educational Services (LINC) FY Conference Call Company Overview - **Company**: Lincoln Educational Services (LINC) - **Industry**: Skilled Trades Education - **Market Position**: Leader in skilled trades education with a focus on automotive, healthcare, and skilled trades programs [2][3] Key Points and Arguments Growth and Financial Performance - **Revenue Growth**: Revenue increased by 15% and starts were up 22% in the second quarter [6] - **Profitability**: Profitability is growing due to operational leverage; additional students in classrooms lead to increased margins [4] - **Debt Management**: Company finished the quarter with approximately $13 million in debt and plans to be debt-free by year-end [5] - **Liquidity**: Holds a $60 million credit facility with a $20 million accordion feature for potential acquisitions [5] Operational Strategy - **Blended Learning Model**: Transitioned to a blended learning model called Lincoln 10, incorporating AI to reduce costs and improve operational efficiency [6] - **New Facilities**: Recently opened new campuses in Nashville and Levittown, with plans for a Houston campus [7][8] - **Program Expansion**: New programs in HVAC and electrical trades are being introduced, with a focus on meeting market demand [8][9] Market Dynamics - **Skilled Trades Demand**: There is a significant skills gap in the market, with high demand for skilled tradespeople in sectors like healthcare, manufacturing, and construction [30][32] - **Student Demographics**: Average student age is 25, with a mix of working adults and high school graduates [26] - **Job Security**: The company emphasizes that skilled trades jobs are less likely to be replaced by AI, making them a stable career choice [18] Competitive Landscape - **Market Positioning**: Competes with community colleges and other trade schools, emphasizing superior hands-on training and customer service [33][20] - **Marketing Strategy**: Shifted to a digital marketing strategy, with 90% of marketing efforts focused on online platforms [59] Future Outlook - **Growth Projections**: Forecasting 13% growth in starts for the full year, with expectations for continued organic growth and potential acquisitions [42][44] - **Expansion Plans**: Plans to open additional campuses in high-demand areas, particularly in the South and West [24][25] Additional Important Insights - **Regulatory Environment**: The company operates in a highly regulated industry, with a focus on maintaining compliance with federal funding regulations [39] - **Student Financial Aid**: A significant portion of revenue comes from Pell Grants and Title IV loans, with a focus on serving underserved populations [48][49] - **Acquisition Strategy**: The company is open to acquisitions but is disciplined in its approach, focusing on programs that align with its core offerings [17][69] Conclusion - **Overall Position**: Lincoln Educational Services is well-positioned for growth in the skilled trades education sector, with a strong financial foundation, effective operational strategies, and a clear understanding of market demands and competitive dynamics [44][45]

Core Insights - The Zacks Schools industry is experiencing a rebound driven by increased demand for career-focused programs in healthcare, skilled trades, cybersecurity, and IT, supported by a labor market that values job-ready skills and government initiatives promoting non-degree pathways [1][2] - Digital innovation is a key differentiator, with institutions investing in adaptive learning tools and scalable online platforms to enhance engagement and support flexible learning for working adults [1][8] - The sector is undergoing consolidation as larger players acquire smaller institutions to broaden offerings and improve scale, with recent legislative changes like "Workforce Pell" expanding market opportunities for accredited programs [6][12] Industry Overview - The Zacks Schools industry includes for-profit education companies offering undergraduate, graduate, and specialized programs in various fields such as finance, healthcare, and technology [3] - The industry is focused on providing career-oriented programs that align with labor market needs, particularly in high-demand areas like nursing and cybersecurity [3][5] Trends Influencing Growth - There is a rising demand for workforce-oriented programs, particularly among adult learners and career switchers, as the labor market increasingly values job-ready skills over traditional degrees [4] - The healthcare sector is facing a significant shortage of skilled professionals, prompting educational institutions to design rigorous programs that meet workforce needs [5] - Digital transformation is driving interest in IT boot camps and tech-aligned certifications, where for-profit providers have established a scalable presence [4] Financial Performance and Market Position - The Zacks Schools industry has lagged the broader Zacks Consumer Discretionary sector but has outperformed the S&P 500 Composite over the past year, with a collective gain of 20.6% [16] - The industry's forward 12-month price-to-earnings ratio is currently at 15.32X, lower than the S&P 500's 22.76X, indicating potential value opportunities [19] Company Highlights - Grand Canyon Education has seen a 10% increase in total online enrollment and a 42.1% stock surge over the past year, with earnings for 2025 expected to grow by 12.8% [25] - Laureate Education's stock has rallied 76.6% over the past year, with a projected earnings growth of 28.2% for 2025 [28] - Stride has experienced a 107.8% stock increase, with fiscal 2026 earnings expected to grow by 5.2% [32] - Lincoln Educational Services has surged 59.5% in stock price, with a projected earnings growth of 19.6% for 2025 [34] - Perdoceo Education's stock has risen 44.7%, with earnings for 2025 expected to grow by 10% [39]

Core Insights - Lincoln Educational Services Corporation is experiencing strong demand for its programs, leading to significant revenue growth and increased student enrollment [2][3] - The company's growth strategy, including new campus developments and program replication initiatives, is expected to drive future growth [2] - Lincoln operates 22 campuses across 12 states, focusing on skilled trades, automotive, health sciences, and information technology [3] Company Overview - Lincoln Educational Services Corporation has been a leader in specialized technical training for over 75 years, addressing America's skills gap [3] - The company was incorporated in New Jersey in 2003 and has a history dating back to 1946 with the opening of its first campus [3] Upcoming Events - The company will participate in several investor conferences in the coming weeks, including the Midwest IDEAS Conference on August 27 and the B. Riley Securities Consumer & TMT Conference on September 10 [5]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Lincoln Educational Services Corporation (LINC) being highlighted as a strong candidate due to its favorable growth metrics and Zacks Rank [2][10]. Group 1: Earnings Growth - The historical EPS growth rate for Lincoln Educational Services is 1.8%, but projected EPS growth for this year is expected to be 19.6%, surpassing the industry average of 15.2% [5]. Group 2: Cash Flow Growth - Lincoln Educational Services has a year-over-year cash flow growth of 41%, significantly higher than the industry average of 8% [6]. - The company's annualized cash flow growth rate over the past 3-5 years is 22.9%, compared to the industry average of 10.5% [7]. Group 3: Earnings Estimate Revisions - The current-year earnings estimates for Lincoln Educational Services have been revised upward, with the Zacks Consensus Estimate increasing by 4.9% over the past month [9]. Group 4: Overall Assessment - Lincoln Educational Services holds a Zacks Rank of 2 (Buy) and a Growth Score of A, indicating its potential as a strong growth investment [10][11].

Core Viewpoint - Lincoln Educational Services Corporation (LINC) has experienced significant selling pressure, resulting in a 16.5% stock price decline over the past four weeks, but analysts anticipate improved earnings in the near future [1] Group 1: Technical Analysis - The Relative Strength Index (RSI) for LINC is currently at 29.79, indicating that the stock is in oversold territory and may be poised for a rebound as selling pressure exhausts [5] - RSI is a momentum oscillator that helps identify overbought or oversold conditions, with readings below 30 typically signaling an oversold stock [2][3] Group 2: Fundamental Analysis - There has been a consensus among sell-side analysts to raise earnings estimates for LINC, with a 4.9% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [7] - LINC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8]

Core Viewpoint - Lincoln Educational Services (NASDAQ: LINC) has experienced a 15% decline in stock price recently, yet it remains the largest holding in the author's portfolio, indicating a strong belief in the company's long-term value despite short-term volatility [1]. Company Summary - The company has been a focus of investment for several years, reflecting a commitment to its potential for value over growth [1]. - The author has a beneficial long position in LINC shares, indicating confidence in the company's future performance [2]. Industry Context - The author has a background in investment, having witnessed significant market events such as the dot-com bubble, which may provide insights into the current market dynamics affecting companies like LINC [1].

Group 1 - Lincoln Educational Services Corporation (LINC) reported quarterly earnings of $0.09 per share, exceeding the Zacks Consensus Estimate of $0.04 per share, and showing an increase from $0.06 per share a year ago, representing an earnings surprise of +125.00% [1] - The company posted revenues of $116.47 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.99%, and an increase from $102.91 million year-over-year [2] - Lincoln Educational Services has outperformed the S&P 500, with shares increasing about 50.1% since the beginning of the year compared to the S&P 500's gain of 8.6% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.15 on revenues of $129.27 million, and for the current fiscal year, it is $0.72 on revenues of $490.47 million [7] - The Zacks Industry Rank indicates that the Schools industry is currently in the top 12% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [8]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for June 30, 2025, reflect increased revenue, a shift to net income, asset growth driven by property investments, and a decrease in cash due to substantial capital expenditures and new long-term debt [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets grew to $447.3 million, primarily from property and equipment, while cash decreased and liabilities rose due to new long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $16,701 | $59,273 | | Total current assets | $79,629 | $111,252 | | Property, Equipment and Facilities, net | $149,142 | $103,533 | | Total Assets | $447,321 | $436,556 | | **Liabilities & Equity** | | | | Total current liabilities | $88,252 | $90,212 | | Long-term debt | $13,000 | $0 | | Total liabilities | $266,643 | $258,292 | | Total stockholders' equity | $180,678 | $178,264 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 saw a turnaround to $1.6 million net income on 13.2% revenue growth, with H1 2025 net income reaching $3.5 million on 13.4% revenue growth Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $116,474 | $102,914 | | Operating Income (Loss) | $2,878 | $(1,116) | | Net Income (Loss) | $1,554 | $(682) | | Diluted EPS | $0.05 | $(0.02) | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $233,980 | $206,281 | | Operating Income (Loss) | $6,292 | $(1,575) | | Net Income (Loss) | $3,499 | $(896) | | Diluted EPS | $0.11 | $(0.03) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 saw $8.1 million cash used in operations, $45.8 million in investing activities driven by capital expenditures, and $11.3 million from financing, resulting in a $42.6 million net cash decrease Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,079) | $(6,599) | | Net cash used in investing activities | $(45,772) | $(3,007) | | Net cash provided by (used in) financing activities | $11,279 | $(3,676) | | **Net Decrease in Cash** | **$(42,572)** | **$(13,282)** | - Capital expenditures significantly increased to **$46.3 million** in H1 2025 from $12.7 million in H1 2024, reflecting investments in campus growth initiatives[23](index=23&type=chunk)[159](index=159&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, accounting policies, and financial components, including a new credit facility, share repurchase program, and the absence of active transitional campuses - The company operates **21 campuses** in **12 states** and is expanding with two new campuses planned for Houston, TX (H2 2025) and Hicksville, NY (end of 2026)[26](index=26&type=chunk) - The business is organized into two segments: Campus Operations (continuing campuses) and Transitional (closed/sold campuses); as of June 30, 2025, no campuses were in the Transitional segment following the sale of the Summerlin campus on January 1, 2025[29](index=29&type=chunk)[84](index=84&type=chunk) - On March 11, 2025, the company amended its credit facility, increasing the principal amount from **$40.0 million to $60.0 million** and extending the maturity to March 7, 2028; as of June 30, 2025, **$13.0 million** was outstanding[65](index=65&type=chunk)[67](index=67&type=chunk) - The company's share repurchase program was extended through May 24, 2026, with approximately **$29.7 million** remaining for repurchases; no shares were repurchased in H1 2025[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Strong H1 2025 performance, driven by student growth and operational efficiency, is supported by a growth strategy involving new campuses and program expansion, though liquidity is impacted by capital expenditures and new regulatory changes [Business Strategy](index=26&type=section&id=Business%20Strategy) The business strategy focuses on geographic expansion, program replication, operational efficiency, facility utilization, and enhancing the hybrid teaching platform Planned Campus Openings and Relocations | Campus Location | Type | Status | Opening Date | | :--- | :--- | :--- | :--- | | East Point, GA | New Campus | Opened | March 2024 | | Nashville, TN | Campus Relocation | Opened | March 2025 | | Levittown, PA | Campus Relocation | Opened | August 2025 | | Houston, TX | New Campus | In Progress | Second half of 2025 | | Hicksville, NY | New Campus | In Progress | By the end of 2026 | - Strategic priorities include expanding the program portfolio with in-demand offerings, improving margins by centralizing operations, and completing the implementation of the Lincoln 10.0 hybrid teaching platform by year-end[116](index=116&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) H1 2025 revenue grew 13.4% to $234.0 million, driven by a 14.5% student population increase, leading to a significant operating income improvement to $6.3 million due to better margins Six Months Ended June 30, 2025 vs 2024 Key Metrics | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue (millions) | $234.0 | $206.3 | 13.4% | | Average student population | 15,742 | 13,745 | 14.5% | | Total new student starts | 10,531 | 8,920 | 18.1% | | Operating Income (Loss) (millions) | $6.3 | $(1.6) | 499.5% | - The Campus Operations segment saw an **80.1% increase in operating income to $41.0 million** for H1 2025, driven by a **15.5% revenue increase** from a **17.4% rise in average student population**[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Marketing efficiency improved, with cost per start declining **17.3%** in H1 2025 compared to the prior-year period[143](index=143&type=chunk) - Corporate expenses increased by **$11.2 million to $34.7 million** in H1 2025, driven by workforce expansion, higher medical claims, and increased performance-based incentive compensation[152](index=152&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity, primarily from Title IV aid, decreased due to $45.8 million in capital expenditures for campus expansion, necessitating a $13.0 million draw on the expanded credit facility - Cash and cash equivalents decreased to **$16.7 million** as of June 30, 2025, from $67.0 million as of June 30, 2024, mainly due to increased capital expenditures[153](index=153&type=chunk) - Capital expenditures for H1 2025 were **$46.3 million**, a substantial increase from $12.7 million in H1 2024, funding the relocation of two campuses and the buildout of two new campuses[159](index=159&type=chunk) - The company's credit facility was increased to **$60.0 million** and extended to 2028, providing financial flexibility for growth; **$13.0 million** was outstanding as of June 30, 2025[166](index=166&type=chunk)[168](index=168&type=chunk) [Regulatory Updates](index=35&type=section&id=Regulatory%20Updates) New DOE rulemaking and the OBBB Act, effective July 1, 2026, introduce changes to Title IV loan limits and accountability metrics, requiring company evaluation of potential impacts - The DOE is conducting negotiated rulemaking sessions which may lead to new regulations for Title IV programs[171](index=171&type=chunk)[172](index=172&type=chunk) - The OBBB Act, effective July 1, 2026, will introduce new Title IV loan limits and accountability metrics that could impact student enrollment and program eligibility[174](index=174&type=chunk)[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure were identified for the three months ended June 30, 2025 - No material changes in market risk exposure were identified for the quarter ended June 30, 2025[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures are effective as of June 30, 2025[180](index=180&type=chunk) - No material changes to internal control over financial reporting occurred during the most recently completed fiscal quarter[181](index=181&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) No material developments occurred in previously disclosed legal proceedings, and other routine legal matters are not expected to have a material adverse effect - No material developments have occurred in previously disclosed legal proceedings[183](index=183&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) No new or additional material risk factors were identified for the quarter ended June 30, 2025, beyond those previously disclosed - No new or additional risk factors were identified for the quarter ended June 30, 2025[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The share repurchase program was extended to May 24, 2026, with $29.7 million remaining, and no shares were repurchased in Q2 2025 - The company did not repurchase any shares in Q2 2025; the share repurchase program was extended to May 24, 2026, with **$29.7 million** remaining authorized for repurchases[190](index=190&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and iXBRL financial statements