Lincoln Educational Services Corporation · NASDAQ:LINC
Lincoln Educational Services — Investor Day (March 2024)
73 slides from Lincoln Educational Services's investor day presentation, Mar 19, 2024
Slide 1: Investor Day 2024
Investor Day 2024 Presented by: Scott Shaw President and CEO 3/19/2024
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation regarding Lincoln’s business that are not historical facts may be “forward-looking statements” that involve risks and uncertainties. Forward-looking statements should not be read as a guarantee of future performance or results and will not necess
Slide 3: Mission Statement
Mission Statement MISSION STATEMENT Lincoln’s mission is to provide superior education and training to our students for in- demand careers in a supportive, accessible learning environment, transforming students’ lives and adding value to their communities
Slide 4: Strong Regulatory Focus Enables Long Term Growth
Strong Regulatory Focus Enables Long Term Growth We always strive to do the right thing! Our students are our customers We are fully engaged with our regulators Accreditors Staff members volunteer time for reaccreditation visits A Campus President sits on the Board Very positive reaccreditation visi
Slide 5: Lincoln vs Community College Graduation Rate
Avg Grad Rate Avg Grad Rate Avg Grad Rate Avg Grad Rate Avg Grad Rate Community Colleges 33% Lincoln Campuses 63% Lincoln State Rank : #1 Colorado # of Community Colleges : 15 # of Lincoln Campuses : 1 New Jersey # of Community Colleges : 19 # of Lincoln Campuses : 6 Community Colleges 28% Lincoln C
Slide 6: Lincoln Vs Community College Graduation Rate
Lincoln Vs Community College Graduation Rate Indiana # of Community Colleges : 2 # of Lincoln Campuses : 1 Rhode Island # of Community Colleges : 1 # of Lincoln Campuses : 1 Avg Grad Rate Community Colleges 30% Lincoln Campuses 52% Lincoln State Rank : #1 Avg Grad Rate Community Colleges 26% Lincoln
Slide 7: Lincoln Tech Graduates Make A Difference
Lincoln Tech Graduates Make A Difference LEON KAPLAN For 40 years he had a radio show on KABC in Los Angeles called the Motorman HOMER HOGG VP of Truck Services at Travel Centers of America He has a radio show on Sirius XM called Maintenance Matters. He is on the Board of Directors of ASE and he Cha
Slide 8: Changing Lives
Changing Lives Shana Williford-Johnson is 2012 Medical Assisting graduate who become a critical care registered nurse Marcus Williford is a 2006 Electronic Systems Technician graduate is a supervisor at Comcast Devin Williford is 2011 Collision Repair & Refinishing who is thriving as a self- employe
Slide 9: Investment Opportunity: Skills Gap Leader
Employers cannot find enough technically trained employees and with the infrastructure bill passed demand for skilled workers should be even greater Lincoln is a leading, technical, hands-on educator and trainer serving high demand industries (transportation, skilled trades and healthcare) facing th
Slide 10: Financial Highlights – Total Company
Margin 16% 9% 7% 2023 2024 2027 Incremental margin of ~35% expected over the next 4 years $37.5M $26.5M $88M 2023 2024 2027 Adjusted EBITDA $415M $377M $540M 2023 2024 2027 Revenue Revenue is expected to grow by ~45% over the next 4 years, partially driven by the new campus openings and expansion of
Slide 11: Lincoln Tech's Vision
Lincoln Tech’s Vision TO BE THE LEADING CAREER TECHNICAL SCHOOL IN THE NATION BY OFFERING HIGH ROI PROGRAMS
Slide 12: How To Achieve Our Vision
How To Achieve Our Vision Focus on high ROI programs Exceed outcome goals of 70% graduation and 85% placement rates Simplify and streamline the operation to create a more scalable and efficient operation Offer affordable, accelerated programs Be partnered with companies The Lincoln Tech brand needs
Slide 13: Largest Provider of Automotive and Skilled Trade Graduates in the East
Lincoln Tech Largest Provider of Automotive and Skilled Trade Graduates in the East EAST WEST
Slide 14: Highly Fragmented Market
Highly Fragmented Market Automotive Diesel Heavy Equipment # Institutions w/Grads 782 # Institutions w/Grads 331 # Institutions w/Grads 57 2022 Grads 38,139 2022 Grads 10,762 2022 Grads 958 BLS Annual Demand 82,800 BLS Annual Demand 24,300 BLS Annual Demand 15,100 Lincoln Tech's share of Industry De
Slide 15: Renaissance Of The Skilled Trades
The education system became designed to send everyone to college Society believed that going to college would lead to a better life Blue collar jobs became stigmatized Renaissance Of The Skilled Trades Today the general public is looking for less expensive, faster ways to start a meaningful career t
Slide 16: Lincoln Tech Schools
Lincoln Tech Lincoln Tech SCHOOL OF AUTOMOTIVE & DIESEL SCHOOL OF SKILLED TRADES SCHOOL OF NURSING & HEALTHCARE
Slide 17: Programs By Campus
Programs By Campus* Auto Skilled Trades Healthcare Other Allentown, PA EEST LPN, MA CNST Columbia , MD Auto EEST, HVAC & Welding MA Culinary Denver, CO Auto, Diesel, Collision EEST, HVAC & Welding Possible East Point, GA Auto EEST, HVAC & Welding East Windsor, CT Auto, Diesel, Collision EEST, HVAC &
Slide 18: Experienced Management Team
Experienced Management Team Chad Nyce EVP, Chief Innovation Officer (4) Alexandra Luster EVP, General Counsel & Secretary (29) Peter Tahinos SVP of Marketing (9) Val Thomas SVP & Chief Information Officer (14) Stephen Ace SVP of Human Resources (16) Susan English SVP of Career Services & Industry Pa
Slide 19: Board Of Directors
Board Of Directors J. Barry Morrow Non-Executive Chairman, Lincoln Educational Services; Founder & Chief Executive Officer, BK Capital Group James J. Burke, Jr. Founder & Managing Partner, JJB Capital Partners LLC Kevin M. Carney Former Executive Vice President & Chief Financial Officer, Web.com Gro
Slide 20: Academics
ACADEMICS Presented by: Chad Nyce EVP & Chief Innovation Officer
Slide 21: Discussion Topics
Discussion Topics Uniquely Qualified Faculty Cutting-Edge Training Tools Efficient Instructional Model Program Portfolio Strategy
Slide 22: Uniquely Qualified Faculty
Uniquely Qualified Faculty Program Certification Faculty with Certification Transportation ASE Master Automotive & Light Truck Certification 85 ASE Master Medium-Heavy Truck Certification 22 ASE Master Collision Repair & Refinish Certification 15 ASE World Class Technician 11 Skilled Trades EEST Cra
Slide 23: Cutting Edge Training Tools: Augmented Reality Welding
Cutting Edge Training Tools Miller MobileArc Augmented Reality Welding System VIDEO
Slide 24: Cutting Edge Training Tools: Virtual Reality Paint Spraying
Cutting Edge Training Tools Sim Spray Virtual Reality Paint Spraying Trainer VIDEO
Slide 25: Cutting Edge Training Tools: Electude
Cutting Edge Training Tools Electude - Auto and Diesel Curriculum A Reimagined Way of Learning
Slide 26: Cutting Edge Training Tools: Electude Video
Cutting Edge Training Tools Electude - Auto and Diesel Curriculum VIDEO
Slide 27: Legacy Instructional Model
Legacy Instructional Model Legacy Instructional Model Limitations: Students required to go to school 5 days per week Faculty required to work 5 days per week A minimum of 2.5 instructors are required to tech 3 cohorts Facility inefficiencies (large number of dedicated classrooms plus a large cafeter
Slide 28: Efficient Instructional Model
Efficient Instructional Model Efficient Instructional Model Benefits: Students are required to go to school only 4 days per week (more time to work a PT job) Faculty are required to work only 4 days per week (less burn out) Fewer instructors are required to teach 3 cohorts More efficient facility ut
Slide 29: Efficient Instructional Model Rollout
Efficient Instructional Model Rollout 100% 75% 64% 48% % of Overall Students in 10.0 % of Students in 10.0 Offered Programs 2023 2024
Slide 30: Program Portfolio Strategy
Program Portfolio Strategy Current Programs Programs Removed Programs Added Transportation 23 -2 4 Skilled Trades 32 -3 22 Healthcare 26 -2 0
Slide 31: Admissions
Admissions Presented by: Jay Rasmussen SVP of Admissions, Group VP
Slide 32: Why Students Choose Lincoln Tech
Why Students Choose Lincoln Tech Nationally recognized and respected Practical hands-on training for high demand career fields Shorter length of curriculum means students enter the workforce sooner Skills acquired at Lincoln apply directly to their chosen career field High return on investment
Slide 33: We Train for Careers That Are In Demand
We Train for Careers That Are In Demand Based on market demand, we are replicating programs throughout our current footprint and at new locations. These programs have proven to have greater interest and increased employability, providing a higher return on investment for our students. *National figu
Slide 34: Populations We Currently Serve
Populations We Currently Serve Commuter Based Locations These locations have populations that primarily commute to attend Lincoln Tech Destination Locations These locations have populations with typically younger students that have relocated to attend Lincoln Tech. These include Denver, Grand Prairi
Slide 35: Our Student Trends
Our Student Trends High School Prospects that are currently in their last year of High School and those who have graduated within the current year 22% of our students are directly out of High School Adult Prospects that have graduated High School and are beyond their year of graduation account for 7
Slide 36: Demographics
Demographics Age 50% of our students are 21 years of age or younger Gender Male and female trends are remaining steady Ethnicity Hispanic populations have surpassed all other ethnic groups
Slide 37: Admissions Process
Inquiries enter the system from any one of our marketing sources. They are then assigned to our Admissions Support Center. ASC makes the first attempt at contact through a phone call and text messaging. If no contact, ASC then assigns it to a campus. If we make contact, the agent attempts to warm tr
Slide 38: Admissions – Corporate Structure
Admissions – Corporate Structure
Slide 39: Admissions – Teams
Admissions – Teams 7 High School Regional Directors 90 High School Representatives CAMPUS ADMISSIONS EMPLOYEES: 22 Local Directors 174 Admissions Representatives
Slide 40: New Student Starts Trending
New Student Starts Trending Start Trend We are averaging 5% over the last 5 years 2023 showed strong growth with a notable uptick in Q4 Market Conditions Looks to be moving in our direction Positive Media Exposure Traditional College is being reevaluated for the value proposition Inquiry Trends Have
Slide 41: Career Services & Industry Partnerships
CAREER SERVICES & INDUSTRY PARTNERSHIPS Presented by: Susan English SVP of Career Services & Industry Partnerships
Slide 42: Career Services & Industry Partnerships
Career Services & Industry Partnerships BOTH DIVISIONS PROVIDE ESSENTIAL RESOURCES FOR OUR STUDENTS AND OUR INDUSTRY PARTNERS Across the country, in the next ten years, there are projected to be more than 7.4 million* job openings in the Auto-Skilled Trades & Healthcare fields alone Ongoing Supply o
Slide 43: Career Services: Our Report Card
Career Services: Our Report Card Placement Growth* 2023 Program Performance 78 76 74 72 70 80 84 82 2013 2018 2023 97 89 88 87 85 84 82 82 82 80 79 79 Over the last 5 Years AN AVERAGE OF 85 DEDICATED CAREER SERVICES EMPLOYEES 37,000+ Graduates have found employment in their field 19,000+ Employers h
Slide 44: Student Resources
Student Resources Technology Products CAREER PREPARATION TOOLS Resume Builder Interview Simulator Mock Job Application Job Board Students receive daily job postings to their mobile devices Dedicated Employer Days Immediate Decision Days Career Fairs Mentoring Employer Engagement on Campus Profession
Slide 45: Employer Demand
Employer Demand Employer Pain Points Lack of Skilled Talent High Turnover Poor Workplace Communicat ion Skills How Employers are Partnering with Lincoln & Our Students Funding tuition balances for select students Providing scholarships Improving salary and benefit packages to be more competitive Too
Slide 46: Industry Partnership Division
Industry Partnership Division Employer – Funded Programs Custom build programs and services specific to the needs and products of a company Program candidates are LTI graduates/company employees Employer-Funded Student OEM Programs OEM Virtual and/or instructor led Training Students will take while
Slide 47: Student Programs
Student Programs Employee retention is higher Onboarding timeframes are shorter Technicians generate revenue faster Students gain advanced s entering the kills before workforce Value Proposition Independent Online Programs: Audi AEP Certificate Program Genesis Hyundai Stellantis - Mopar CAP 1 Toyota
Slide 48: Custom Program Development
Custom Program Development Program Staffing and Management Training Space Recruitment Services Retention Services OUR TEAM PROVIDES INDUSTRY SOLUTIONS, CUSTOM BUILT TO OUR PARTNER’S WORKFORCE NEEDS
Slide 49: Revenue Generated Through Partnerships
Revenue Generated Through Partnerships Johnson Controls Republic Services Hussmann Peterbilt ~$5,000,000 ~$8,000,000 ~$10,000,000 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 Revenue Projections 2023 2024 2025 Assumptions: Projected growth achieves budgeted targets All lega
Slide 50: Lincoln Tech: Collaborating With Our Partners
Lincoln Tech: Collaborating With Our Partners VIDEO
Slide 51: Marketing
Marketing Presented by: Peter Tahinos SVP Marketing
Slide 52: Marketing Strategy
Marketing Strategy Keys to Continued Growth Create greater efficiencies in lead generation Increase conversion rates Reduce cost per start Gradually eliminate the need for PPL/Affiliates Strategically increase Paid Social Media Position Lincoln as authority in industries we serve Top of funnel web c
Slide 53: Marketing Budget
YEAR MARKETING SPEND INCREASE OVER PY 2018 7.4% 2019 3.1% 2020 5.0% 2021 6.1% 2022 5.1% 2023 8.3% 2024* 9.3% Marketing Budget *Based on Projected Budget Growing paid search and paid social and shrinking third party affiliates Also driving more organic searches better SEO and blog content
Slide 54: Cost Per Start
Cost Per Start* *Based on starts generated by media spend; Excludes starts generated by field HS Teams
Slide 55: Lead Growth
2015 2016 2017 2018 2019 2020 2021 2022 2023 96,348 62% 103,587 69% 117,871 68% 127,299 69% 150,579 70% 161,199 80% 188,554 87% 208,439 90% 238,141 94% 49,959 32% 41,371 27% 50,555 29% 53,056 29% 59,773 28% 38,986 19% 26,875 12% 20,696 9% 13,103 5% TOTAL LEADS WEB VS. AFFILIATES 154,157 173,971 184,
Slide 56: Creative Strategy
Creative Strategy What We Want to Communicate Motivate students to follow their passion Proven alternative to 4-year colleges Lower investment / quicker route to employment Create awareness for program offerings Acquire in demand skills that can’t be exported or replaced by AI Leverage our partnersh
Slide 57: Lincoln Tech: Vital to Employers
Lincoln Tech: Vital to Employers VIDEO
Slide 58: Lincoln Tech: Committed To Our Students
Lincoln Tech: Committed To Our Students VIDEO
Slide 59: Traditional College: Not For Everyone
Traditional College: Not For Everyone VIDEO
Slide 60: Strategic Long Term Growth Plan
STRATEGIC LONG TERM GROWTH PLAN Presented by: Brian Meyers EVP, CFO & Treasurer
Slide 61: Real Estate Strategy
Real Estate Strategy - Monetized our real estate at a time of high value / low rates, significantly improving our liquidity Campuses Transaction Net Proceeds Q3 2021 Grand Prairie,TX Denver, CO Sale-Leaseback $45M Q2 2022 Suffield, CT Sold vacant property $2M Q2 2023 Nashville, TN Sale (in process o
Slide 62: Building On Our Strong Financial Track Record
Building On Our Strong Financial Track Record Final 2023 Guidance 2023 Actuals 2024 Guidance Revenue $370M to $375M $376.6 $410M to $420M Adjusted EBITDA1 $24M to $26M $26.5 $35M to $40M Adjusted Net Income1 $12M to $14M $14.8 $10M to $15M Starts +8% to +11% +11.4% +7% to +12% Capital Expenditures2
Slide 63: Strategic Growth Plan
Strategic Growth Plan S t a r ted f r o m a p o s i t ion o f s t r e n gth G r o w th b y e x p a nd ing o ur s t r o nges t p r o g r ams G r o w th f r o m e x p a nsio n t o ne w ma r k et s * 2024 represents the midpoint of guidance ** New Locations: Atlanta, Houston, Philadelphia (Levittown),
Slide 64: Base Growth
$375M $37.5M $52.5M 10% 12% $425M 2024 2027 Revenue Adjusted EBITDA Margin Base Growth Assumptions Tuition Increase 1% annually Start Growth 5% per year Incremental margin 28-32% * Graduation Rate flat to current Excluding $5M efficiencies from Lincoln Hybrid Learning Model (Lincoln 10.0) Base exclu
Slide 65: Investment: Programs
INVESTMENT Investing ~ $10M in capital expenditures between 2023 ($2M) and 2024 ($8M) PROGRAMS Expanding our strongest demand programs in Skilled Trade SUCCESS New programs are expected to reach full operations by Year 3 Allocating Capital To Highest Demand Programs Launching 7 new skilled trade pro
Slide 66: Growth By Expansion To New Markets
INVESTMENT Investing ~$80M in capital expenditures between 2023 ($15M), 2024 (~$50M), 2025 (~$15M) NEW CAMPUSES Lincoln will be opening 2 new campuses in Atlanta (March 2024) and Houston (Q1 2026) NEW LOCATIONS Lincoln plans on relocating 2 of its existing campuses in Nashville and Philadelphia Grow
Slide 67: Lincoln Hybrid Learning Model
Lincoln Hybrid Learning Model Expands capacity at existing campuses Efficiencies from Lincoln’s hybrid program (Lincoln 10.0) are expected to generate ~$5M in savings (~5% of current instructional payroll expense) Creating standard scheduling methodology across all campuses to drive further efficien
Slide 68: New Campus Pro-Forma
New Campus Pro-Forma Hybrid Learning Model State-of-the-art facilities ~60k – 80k square feet Facilities The Campus will offer a mix of Automotive and Skilled Trade Programs in the Hybrid Learning Model. Blended Programs CapEx: ~$20M ~$5.5M of EBITDA loss in years 0/1 Classes start ~2 years from lea
Slide 69: Summary
Summary Improved financial performance and real estate strategy provides ample growth capital Strong demand from students and employers continues to drive base business growth Making substantial investment in high return growth initiatives $30 million of capex last year (including Atlanta & new prog
Slide 70: Lincoln Tech – Growing for our Future
Lincoln Tech – Growing for our Future The nation’s middle skills gap is real and will only be getting worse in the short term which means opportunity for us Lincoln has years of experience in offering hands-on training in multiple career fields, and we are clearly a leader in a highly fragmented mar
Slide 71: Appendix
Appendix LINCOLN TEC
Slide 72: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information This presentation contains non-GAAP (Generally Accepted Accounting Principles) financial measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. Management chooses to disclose to investors these non-GAAP fi
Slide 73: Adjusted EBITDA And Net Income Reconciliation
Adjusted EBITDA And Net Income Reconciliation 2024 Guidance (Midpoint) 2023 Adjusted EBITDA Net Income EBITDA Net Income Net income $ 5,200 $ 5,200 $ 25,997 $ 25,997 Interest income, net 700 (2,281) 235 Provision for income taxes 2,000 9,642 - Depreciation and amortization 13,200 6,770 192 EBITDA 21
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