☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey | 57-1150621 | |
(State or other jurisdiction of incorporation or organization) | ( |
14 Sylvan Way, Suite A | 07054 | |
Parsippany, NJ | (Zip Code) | |
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, no par value per share | LINC | The NASDAQ Stock Market LLC |
Large accelerated filer ☐ | Accelerated filer ☒ | |
Non-accelerated filer ☐ | Smaller reporting company ☒ | |
Emerging growth company ☐ |
PART I. | 2 | |
Item 1. | ||
Item 2. | 24 | |
Item 3. | ||
Item 4. | ||
PART II. | 39 | |
Item 1. | 39 | |
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash and cash equivalents | $ | 69,619 | $ | 83,307 | $ | 66,356 | $ | 46,074 | ||||||||
Accounts receivable, less allowance of $27,364 and $26,837 at September 30, 2022 and December 31, 2021, respectively | 31,902 | 26,159 | ||||||||||||||
Restricted cash | 4,212 | 4,213 | ||||||||||||||
Short-term investments | 24,344 | 14,758 | ||||||||||||||
Accounts receivable, less allowance for credit losses of $31,742 and $28,560 at June 30, 2023 and December 31, 2022, respectively | 32,050 | 37,175 | ||||||||||||||
Inventories | 2,714 | 2,721 | 2,555 | 2,618 | ||||||||||||
Prepaid expenses and other current assets | 2,255 | 4,881 | 7,973 | 4,738 | ||||||||||||
Assets held for sale | 4,559 | 4,559 | - | 4,559 | ||||||||||||
Total current assets | 111,049 | 121,627 | 137,490 | 114,135 | ||||||||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $147,843 and $153,335 at September 30, 2022 and December 31, 2021, respectively | 23,842 | 23,119 | ||||||||||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $138,699 and $146,367 at June 30, 2023 and December 31, 2022, respectively | 32,508 | 23,940 | ||||||||||||||
OTHER ASSETS: | ||||||||||||||||
Noncurrent receivables, less allowance of $6,438 and $5,084 at September 30, 2022 and December 31, 2021, respectively | 21,864 | 20,028 | ||||||||||||||
Noncurrent receivables, less allowance for credit losses of $15,865 and $6,810 at June 30, 2023 and December 31, 2022, respectively | 15,341 | 22,734 | ||||||||||||||
Deferred income taxes, net | 23,644 | 23,708 | 25,210 | 22,312 | ||||||||||||
Operating lease right-of-use assets | 95,522 | 91,487 | 88,966 | 93,097 | ||||||||||||
Goodwill | 14,536 | 14,536 | 10,742 | 14,536 | ||||||||||||
Other assets, net | 819 | 794 | 1,161 | 812 | ||||||||||||
Total other assets | 156,385 | 150,553 | 141,420 | 153,491 | ||||||||||||
TOTAL ASSETS | $ | 291,276 | $ | 295,299 | $ | 311,418 | $ | 291,566 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Unearned tuition | $ | 22,744 | $ | 25,405 | $ | 22,928 | $ | 24,154 | ||||||||
Accounts payable | 16,242 | 12,297 | 16,844 | 10,496 | ||||||||||||
Accrued expenses | 10,038 | 15,669 | 12,347 | 8,653 | ||||||||||||
Income taxes payable | 514 | 1,017 | 6,095 | 2,055 | ||||||||||||
Current portion of operating lease liabilities | 10,313 | 11,479 | 10,408 | 9,631 | ||||||||||||
Other short-term liabilities | 32 | 15 | 40 | 31 | ||||||||||||
Total current liabilities | 59,883 | 65,882 | 68,662 | 55,020 | ||||||||||||
NONCURRENT LIABILITIES: | ||||||||||||||||
Pension plan liabilities | 1,250 | 1,607 | 638 | 668 | ||||||||||||
Long-term portion of operating lease liabilities | 91,999 | 86,410 | 87,653 | 91,001 | ||||||||||||
Total liabilities | 153,132 | 153,899 | 156,953 | 146,689 | ||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||
SERIES A CONVERTIBLE PREFERRED STOCK | ||||||||||||||||
Preferred stock, no par value - 10,000,000 shares authorized, Series A convertible preferred shares, 12,700 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 11,982 | 11,982 | ||||||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||||||
Common stock, no par value - authorized: 100,000,000 shares at September 30, 2022 and December 31, 2021; issued and outstanding: 26,255,580 shares at September 30, 2022 and 27,000,687 shares at December 31, 2021 | 51,784 | 141,377 | ||||||||||||||
Common stock, no par value - authorized 100,000,000 shares at June 30, 2023 and December 31, 2022, issued and outstanding 31,359,110 shares at June 30, 2023 and 31,147,925 shares at December 31, 2022. | 48,181 | 49,072 | ||||||||||||||
Additional paid-in capital | 32,814 | 32,439 | 46,874 | 45,540 | ||||||||||||
Treasury stock at cost - 0 and 5,910,541 shares at September 30, 2022 and December 31, 2021, respectively | - | (82,860 | ) | |||||||||||||
Retained earnings | 42,865 | 39,702 | 60,423 | 51,225 | ||||||||||||
Accumulated other comprehensive loss | (1,301 | ) | (1,240 | ) | (1,013 | ) | (960 | ) | ||||||||
Total stockholders’ equity | 126,162 | 129,418 | 154,465 | 144,877 | ||||||||||||
TOTAL LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY | $ | 291,276 | $ | 295,299 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 311,418 | $ | 291,566 |
Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
September 30, | September 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
REVENUE | $ | 91,813 | $ | 89,059 | $ | 256,510 | $ | 247,520 | $ | 88,646 | $ | 82,142 | $ | 175,929 | $ | 164,697 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||||
Educational services and facilities | 39,933 | 38,105 | 112,234 | 104,143 | 40,030 | 36,106 | 78,123 | 72,302 | ||||||||||||||||||||||||
Selling, general and administrative | 46,984 | 45,209 | 139,503 | 128,159 | 51,814 | 45,835 | 102,119 | 92,520 | ||||||||||||||||||||||||
Loss (gain) on disposition of assets | 16 | - | (178 | ) | 1 | |||||||||||||||||||||||||||
Gain on sale of assets | (30,933 | ) | (195 | ) | (30,933 | ) | (195 | ) | ||||||||||||||||||||||||
Impairment of goodwill and long-lived assets | 4,220 | - | 4,220 | - | ||||||||||||||||||||||||||||
Total costs & expenses | 86,933 | 83,314 | 251,559 | 232,303 | 65,131 | 81,746 | 153,529 | 164,627 | ||||||||||||||||||||||||
OPERATING INCOME | 4,880 | 5,745 | 4,951 | 15,217 | 23,515 | 396 | 22,400 | 70 | ||||||||||||||||||||||||
OTHER: | ||||||||||||||||||||||||||||||||
Interest income | 547 | - | 1,013 | - | ||||||||||||||||||||||||||||
Interest expense | (36 | ) | (292 | ) | (114 | ) | (874 | ) | (28 | ) | (35 | ) | (53 | ) | (77 | ) | ||||||||||||||||
INCOME BEFORE INCOME TAXES | 4,844 | 5,453 | 4,837 | 14,343 | ||||||||||||||||||||||||||||
PROVISION FOR INCOME TAXES | 1,300 | 1,614 | 761 | 3,589 | ||||||||||||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 24,034 | 361 | 23,360 | (7 | ) | |||||||||||||||||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 6,784 | 102 | 6,219 | (539 | ) | |||||||||||||||||||||||||||
NET INCOME | $ | 3,544 | $ | 3,839 | $ | 4,076 | $ | 10,754 | $ | 17,250 | $ | 259 | $ | 17,141 | $ | 532 | ||||||||||||||||
PREFERRED STOCK DIVIDENDS | 304 | 304 | 912 | 912 | - | 304 | - | 608 | ||||||||||||||||||||||||
INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 3,240 | $ | 3,535 | $ | 3,164 | $ | 9,842 | ||||||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||||||||||||||
Net income per common share | $ | 0.10 | $ | 0.11 | $ | 0.10 | $ | 0.30 | ||||||||||||||||||||||||
INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 17,250 | $ | (45 | ) | $ | 17,141 | $ | (76 | ) | ||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||||||
Net income (loss) per common share | $ | 0.57 | $ | (0.00 | ) | $ | 0.57 | $ | (0.00 | ) | ||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||||||||
Net income (loss) per common share | $ | 0.57 | $ | (0.00 | ) | $ | 0.57 | $ | (0.00 | ) | ||||||||||||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||||||||||||||||
Basic and diluted | 25,381 | 25,135 | 25,692 | 25,043 | ||||||||||||||||||||||||||||
Basic | 30,140 | 25,963 | 30,090 | 25,842 | ||||||||||||||||||||||||||||
Diluted | 30,397 | 25,963 | 30,333 | 25,842 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income | $ | 17,250 | $ | 259 | $ | 17,141 | $ | 532 | ||||||||
Other comprehensive loss | ||||||||||||||||
Employee pension plan adjustments, net of taxes (nil) | (5 | ) | (10 | ) | (53 | ) | (40 | ) | ||||||||
Comprehensive income | $ | 17,245 | $ | 249 | $ | 17,088 | $ | 492 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income | $ | 3,544 | $ | 3,839 | $ | 4,076 | $ | 10,754 | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Derivative qualifying as a cash flow hedge, net of taxes (nil) | - | 65 | - | 326 | ||||||||||||
Employee pension plan adjustments, net of taxes (nil) | (21 | ) | (134 | ) | (61 | ) | (403 | ) | ||||||||
Comprehensive income | $ | 3,523 | $ | 3,770 | $ | 4,015 | $ | 10,677 |
Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Treasury | Retained | Comprehensive | Preferred Stock | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Stock | Earnings | Loss | Total | Shares | Amount | ||||||||||||||||||||||||||||
BALANCE - January 1, 2023 | 31,147,925 | $ | 49,072 | $ | 45,540 | $ | - | $ | 51,225 | $ | (960 | ) | $ | 144,877 | - | $ | - | |||||||||||||||||||
Net cumulative effect from adoption of ASC 326 (a) | - | - | - | - | (7,943 | ) | - | (7,943 | ) | - | - | |||||||||||||||||||||||||
Net loss | - | - | - | - | (109 | ) | - | (109 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (48 | ) | (48 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 652,042 | - | 812 | - | - | - | 812 | - | - | |||||||||||||||||||||||||||
Share repurchase | (104,030 | ) | (556 | ) | - | - | - | - | (556 | ) | - | - | ||||||||||||||||||||||||
Net share settlement for equity-based compensation | (297,380 | ) | - | (1,779 | ) | - | - | - | (1,779 | ) | - | - | ||||||||||||||||||||||||
BALANCE - March 31, 2023 | 31,398,557 | 48,516 | 44,573 | - | 43,173 | (1,008 | ) | 135,254 | - | - | ||||||||||||||||||||||||||
Net income | - | - | - | - | 17,250 | - | 17,250 | - | - | |||||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (5 | ) | (5 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 61,257 | - | 2,576 | - | - | - | 2,576 | - | - | |||||||||||||||||||||||||||
Share repurchase | (61,034 | ) | (335 | ) | - | - | - | - | (335 | ) | - | - | ||||||||||||||||||||||||
Net share settlement for equity-based compensation | (39,670 | ) | - | (275 | ) | - | - | - | (275 | ) | - | - | ||||||||||||||||||||||||
BALANCE - June 30, 2023 | 31,359,110 | $ | 48,181 | $ | 46,874 | $ | - | $ | 60,423 | $ | (1,013 | ) | $ | 154,465 | - | $ | - |
Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Treasury | Retained | Comprehensive | Preferred Stock | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Stock | Earnings | Loss | Total | Shares | Amount | ||||||||||||||||||||||||||||
BALANCE - January 1, 2022 | 27,000,687 | $ | 141,377 | $ | 32,439 | $ | (82,860 | ) | $ | 39,702 | $ | (1,240 | ) | $ | 129,418 | 12,700 | $ | 11,982 | ||||||||||||||||||
Net income | - | - | - | - | 272 | - | 272 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (30 | ) | (30 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 528,121 | - | 1,239 | - | - | - | 1,239 | - | - | |||||||||||||||||||||||||||
Net share settlement for equity-based compensation | (268,654 | ) | - | (1,992 | ) | - | - | - | (1,992 | ) | - | - | ||||||||||||||||||||||||
BALANCE - March 31, 2022 | 27,260,154 | 141,377 | 31,686 | (82,860 | ) | 39,670 | (1,270 | ) | 128,603 | 12,700 | $ | 11,982 | ||||||||||||||||||||||||
Net income | - | - | - | - | 259 | - | 259 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (10 | ) | (10 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 78,829 | - | 491 | - | - | - | 491 | - | - | |||||||||||||||||||||||||||
Treasury stock cancellation | - | (82,860 | ) | - | 82,860 | - | - | - | - | - | ||||||||||||||||||||||||||
Share repurchase | (414,963 | ) | (2,538 | ) | - | - | - | - | (2,538 | ) | - | - | ||||||||||||||||||||||||
BALANCE - June 30, 2022 | 26,924,020 | $ | 55,979 | $ | 32,177 | $ | - | $ | 39,625 | $ | (1,280 | ) | $ | 126,501 | 12,700 | $ | 11,982 |
Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Treasury | Retained | Comprehensive | Preferred Stock | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Stock | Earnings | Loss | Total | Shares | Amount | ||||||||||||||||||||||||||||
BALANCE - January 1, 2022 | 27,000,687 | $ | 141,377 | $ | 32,439 | $ | (82,860 | ) | $ | 39,702 | $ | (1,240 | ) | $ | 129,418 | 12,700 | $ | 11,982 | ||||||||||||||||||
Net income | - | - | - | - | 272 | - | 272 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (30 | ) | (30 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 528,121 | - | 1,239 | - | - | - | 1,239 | - | - | |||||||||||||||||||||||||||
Net share settlement for equity-based compensation | (268,654 | ) | - | (1,992 | ) | - | - | - | (1,992 | ) | - | - | ||||||||||||||||||||||||
BALANCE - March 31, 2022 | 27,260,154 | 141,377 | 31,686 | (82,860 | ) | 39,670 | (1,270 | ) | 128,603 | 12,700 | 11,982 | |||||||||||||||||||||||||
Net income | - | - | - | - | 259 | - | 259 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (10 | ) | (10 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 78,829 | - | 491 | - | - | - | 491 | - | - | |||||||||||||||||||||||||||
Treasury stock cancellation | - | (82,860 | ) | - | 82,860 | - | - | - | - | - | ||||||||||||||||||||||||||
Share repurchase | (414,963 | ) | (2,538 | ) | - | - | - | - | (2,538 | ) | - | - | ||||||||||||||||||||||||
BALANCE - June 30, 2022 | 26,924,020 | 55,979 | 32,177 | - | 39,625 | (1,280 | ) | 126,501 | 12,700 | 11,982 | ||||||||||||||||||||||||||
Net income | - | - | - | - | 3,544 | - | 3,544 | - | - | |||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (21 | ) | (21 | ) | - | - | |||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | - | - | 637 | - | - | - | 637 | - | - | |||||||||||||||||||||||||||
Share repurchase | (668,440 | ) | (4,195 | ) | - | - | - | - | (4,195 | ) | - | - | ||||||||||||||||||||||||
BALANCE - September 30, 2022 | 26,255,580 | $ | 51,784 | $ | 32,814 | $ | - | $ | 42,865 | $ | (1,301 | ) | $ | 126,162 | 12,700 | $ | 11,982 |
Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Treasury | Retained | Comprehensive | Preferred Stock | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Stock | Earnings | Loss | Total | Shares | Amount | ||||||||||||||||||||||||||||
BALANCE - January 1, 2021 | 26,476,329 | $ | 141,377 | $ | 30,512 | $ | (82,860 | ) | $ | 6,203 | $ | (4,165 | ) | $ | 91,067 | 12,700 | $ | 11,982 | ||||||||||||||||||
Net income | - | - | - | - | 4,489 | - | 4,489 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (134 | ) | (134 | ) | - | - | |||||||||||||||||||||||||
Derivative qualifying as cash flow hedge | - | - | - | - | - | 211 | 211 | - | - | |||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 574,614 | - | 493 | - | - | - | 493 | - | - | |||||||||||||||||||||||||||
Net share settlement for equity-based compensation | (154,973 | ) | - | (962 | ) | - | - | - | (962 | ) | - | - | ||||||||||||||||||||||||
BALANCE - March 31, 2021 | 26,895,970 | 141,377 | 30,043 | (82,860 | ) | 10,388 | (4,088 | ) | 94,860 | 12,700 | 11,982 | |||||||||||||||||||||||||
Net income | - | - | - | - | 2,426 | - | 2,426 | - | - | |||||||||||||||||||||||||||
Preferred stock dividend | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (134 | ) | (134 | ) | - | - | |||||||||||||||||||||||||
Derivative qualifying as cash flow hedge | - | - | - | - | - | 49 | 49 | - | - | |||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 76,195 | - | 844 | - | - | - | 844 | - | - | |||||||||||||||||||||||||||
BALANCE - June 30, 2021 | 26,972,165 | 141,377 | 30,887 | (82,860 | ) | 12,510 | (4,173 | ) | 97,741 | 12,700 | 11,982 | |||||||||||||||||||||||||
Net income | - | - | - | - | 3,839 | - | 3,839 | - | - | |||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | (304 | ) | - | (304 | ) | - | - | |||||||||||||||||||||||||
Employee pension plan adjustments | - | - | - | - | - | (134 | ) | (134 | ) | - | - | |||||||||||||||||||||||||
Derivative qualifying as cash flow hedge | - | - | - | - | - | 65 | 65 | - | - | |||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | 6,267 | - | 756 | - | - | - | 756 | - | - | |||||||||||||||||||||||||||
BALANCE - September 30, 2021 | 26,978,432 | $ | 141,377 | $ | 31,643 | $ | (82,860 | ) | $ | 16,045 | $ | (4,242 | ) | $ | 101,963 | 12,700 | $ | 11,982 |
Nine Months Ended | Six Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income | $ | 4,076 | $ | 10,754 | $ | 17,141 | $ | 532 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 4,618 | 5,620 | 2,932 | 3,057 | ||||||||||||
Amortization of deferred finance charges | - | 136 | ||||||||||||||
Deferred income taxes | 64 | 3,636 | - | 64 | ||||||||||||
(Gain) loss on disposition of assets | (178 | ) | 1 | |||||||||||||
Gain on sale of assets | (30,933 | ) | (195 | ) | ||||||||||||
Impairment of goodwill and long-lived assets | 4,220 | - | ||||||||||||||
Fixed asset donations | (245 | ) | (2,050 | ) | (207 | ) | (145 | ) | ||||||||
Provision for doubtful accounts | 24,888 | 19,816 | ||||||||||||||
Provision for credit losses | 18,600 | 16,165 | ||||||||||||||
Stock-based compensation expense | 2,367 | 2,093 | 3,388 | 1,730 | ||||||||||||
(Increase) decrease in assets: | ||||||||||||||||
Accounts receivable | (32,467 | ) | (22,122 | ) | (16,923 | ) | (21,838 | ) | ||||||||
Inventories | 7 | (761 | ) | 63 | (361 | ) | ||||||||||
Prepaid income taxes and income taxes payable | (503 | ) | (729 | ) | 4,040 | (1,793 | ) | |||||||||
Prepaid expenses and current assets | 2,550 | 725 | (1,152 | ) | 345 | |||||||||||
Other assets, net | 329 | 274 | 1,194 | (84 | ) | |||||||||||
Increase (decrease) in liabilities: | ||||||||||||||||
Accounts payable | 3,800 | (186 | ) | 5,646 | 1,301 | |||||||||||
Accrued expenses | (5,631 | ) | (914 | ) | 3,694 | (4,782 | ) | |||||||||
Unearned tuition | (2,661 | ) | 1,238 | (1,226 | ) | (3,723 | ) | |||||||||
Other liabilities | (402 | ) | 219 | (74 | ) | (265 | ) | |||||||||
Total adjustments | (3,464 | ) | 6,996 | (6,738 | ) | (10,524 | ) | |||||||||
Net cash provided by operating activities | 612 | 17,750 | ||||||||||||||
Net cash provided by (used in) operating activities | 10,403 | (9,992 | ) | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Capital expenditures | (7,053 | ) | (5,252 | ) | (10,901 | ) | (3,582 | ) | ||||||||
Proceeds from sale of property and equipment | 2,390 | - | 33,310 | 2,390 | ||||||||||||
Net cash used in investing activities | (4,663 | ) | (5,252 | ) | ||||||||||||
Proceeds from short-term investment | 14,758 | - | ||||||||||||||
Purchase of short-term investment | (24,344 | ) | - | |||||||||||||
Net cash provided by (used in) investing activities | 12,823 | (1,192 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Payments on borrowings | - | (1,500 | ) | |||||||||||||
Dividend payment for preferred stock | (912 | ) | (912 | ) | - | (608 | ) | |||||||||
Share repurchase | (6,733 | ) | - | (891 | ) | (2,538 | ) | |||||||||
Net share settlement for equity-based compensation | (1,992 | ) | (962 | ) | (2,054 | ) | (1,992 | ) | ||||||||
Net cash used in financing activities | (9,637 | ) | (3,374 | ) | (2,945 | ) | (5,138 | ) | ||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (13,688 | ) | 9,124 | |||||||||||||
CASH AND CASH EQUIVALENTS —Beginning of period | 83,307 | 38,026 | ||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | 69,619 | $ | 47,150 | ||||||||||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 20,281 | (16,322 | ) | |||||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | 50,287 | 83,307 | ||||||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period | $ | 70,568 | $ | 66,985 |
Nine Months Ended | Six Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for: | ||||||||||||||||
Interest | $ | 132 | $ | 795 | $ | 94 | $ | 118 | ||||||||
Income taxes | $ | 1,216 | $ | 681 | $ | 2,169 | $ | 1,206 | ||||||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Liabilities accrued for or noncash additions of fixed assets | $ | 501 | $ | 2,684 | $ | 1,094 | $ | 591 |
1. | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
2. | NET INCOME (LOSS) PER COMMON SHARE |
Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
September 30, | September 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
(in thousands, except share data) | 2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Net income | $ | 3,544 | $ | 3,839 | $ | 4,076 | $ | 10,754 | $ | 17,250 | $ | 259 | $ | 17,141 | $ | 532 | ||||||||||||||||
Less: preferred stock dividend | (304 | ) | (304 | ) | (912 | ) | (912 | ) | - | (304 | ) | - | (608 | ) | ||||||||||||||||||
Less: allocation to preferred stockholders | (540 | ) | (582 | ) | (522 | ) | (1,629 | ) | ||||||||||||||||||||||||
Less: allocation to restricted stockholders | (155 | ) | (232 | ) | (153 | ) | (634 | ) | ||||||||||||||||||||||||
Net income allocated to common stockholders | $ | 2,545 | $ | 2,721 | $ | 2,489 | $ | 7,579 | ||||||||||||||||||||||||
Net income (loss) allocated to common stockholders | $ | 17,250 | $ | (45 | ) | $ | 17,141 | $ | (76 | ) | ||||||||||||||||||||||
Basic income per share: | ||||||||||||||||||||||||||||||||
Basic income (loss) per share: | ||||||||||||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Weighted average common shares outstanding | 25,381,447 | 25,135,381 | 25,692,094 | 25,043,357 | 30,140,221 | 25,962,617 | 30,090,113 | 25,842,456 | ||||||||||||||||||||||||
Basic income per share | $ | 0.10 | $ | 0.11 | $ | 0.10 | $ | 0.30 | ||||||||||||||||||||||||
Basic income (loss) per share | $ | 0.57 | $ | (0.00 | ) | $ | 0.57 | $ | (0.00 | ) | ||||||||||||||||||||||
Diluted income per share: | ||||||||||||||||||||||||||||||||
Diluted income (loss) per share: | ||||||||||||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Weighted average number of: | ||||||||||||||||||||||||||||||||
Common shares outstanding | 25,381,447 | 25,135,381 | 25,692,094 | 25,043,357 | 30,397,308 | 25,962,617 | 30,333,495 | 25,842,456 | ||||||||||||||||||||||||
Dilutive potential common shares outstanding: | ||||||||||||||||||||||||||||||||
Series A Preferred Stock | - | - | - | - | ||||||||||||||||||||||||||||
Unvested restricted stock | - | - | - | - | ||||||||||||||||||||||||||||
Dilutive shares outstanding | 25,381,447 | 25,135,381 | 25,692,094 | 25,043,357 | 30,397,308 | 25,962,617 | 30,333,495 | 25,842,456 | ||||||||||||||||||||||||
Diluted income per share | $ | 0.10 | $ | 0.11 | $ | 0.10 | $ | 0.30 | ||||||||||||||||||||||||
Diluted income (loss) per share | $ | 0.57 | $ | (0.00 | ) | $ | 0.57 | $ | (0.00 | ) |
Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
September 30, | September 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
(in thousands, except share data) | 2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
Series A Preferred Stock | 5,381,356 | 5,381,356 | 5,381,356 | 5,381,356 | - | 5,381,356 | - | 5,381,356 | ||||||||||||||||||||||||
Unvested restricted stock | 1,548,265 | 815,383 | 1,582,493 | 823,662 | - | 1,547,124 | - | 1,599,891 | ||||||||||||||||||||||||
6,929,621 | 6,196,739 | 6,963,849 | 6,205,018 | - | 6,928,480 | - | 6,981,247 |
3. | REVENUE RECOGNITION |
Three months ended September 30, 2022 | Nine months ended September 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||
Transportation and Skilled Trades Segment | Healthcare and Other Professions Segment | Consolidated | Transportation and Skilled Trades Segment | Healthcare and Other Professions Segment | Consolidated | Campus Operations | Transitional | Consolidated | Campus Operations | Transitional | Consolidated | |||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||||||||||||||||||
Services transferred at a point in time | $ | 6,059 | $ | 1,651 | $ | 7,710 | $ | 12,904 | $ | 4,570 | $ | 17,474 | $ | 5,895 | $ | 3 | $ | 5,898 | $ | 10,595 | $ | 12 | $ | 10,607 | ||||||||||||||||||||||||
Services transferred over time | 61,270 | 22,833 | 84,103 | 171,183 | 67,853 | 239,036 | 82,318 | 430 | 82,748 | 163,970 | 1,352 | 165,322 | ||||||||||||||||||||||||||||||||||||
Total revenues | $ | 67,329 | $ | 24,484 | $ | 91,813 | $ | 184,087 | $ | 72,423 | $ | 256,510 | $ | 88,213 | $ | 433 | $ | 88,646 | $ | 174,565 | $ | 1,364 | $ | 175,929 |
Three months ended September 30, 2021 | Nine months ended September 30, 2021 | Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Transportation and Skilled Trades Segment | Healthcare and Other Professions Segment | Consolidated | Transportation and Skilled Trades Segment | Healthcare and Other Professions Segment | Consolidated | Campus Operations | Transitional | Consolidated | Campus Operations | Transitional | Consolidated | |||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||||||||||||||||||
Services transferred at a point in time | $ | 6,203 | $ | 1,618 | $ | 7,821 | $ | 14,788 | $ | 4,234 | $ | 19,022 | $ | 4,886 | $ | 87 | $ | 4,973 | $ | 9,598 | $ | 165 | $ | 9,763 | ||||||||||||||||||||||||
Services transferred over time | 58,747 | 22,491 | 81,238 | 162,798 | 65,700 | 228,498 | 75,463 | 1,706 | 77,169 | 151,532 | 3,402 | 154,934 | ||||||||||||||||||||||||||||||||||||
Total revenues | $ | 64,950 | $ | 24,109 | $ | 89,059 | $ | 177,586 | $ | 69,934 | $ | 247,520 | $ | 80,349 | $ | 1,793 | $ | 82,142 | $ | 161,130 | $ | 3,567 | $ | 164,697 |
4. | LEASES |
Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
September 30, | September 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Operating cash flow information: | ||||||||||||||||||||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 4,382 | $ | 3,972 | $ | 13,702 | $ | 11,009 | $ | 4,278 | $ | 4,665 | $ | 8,196 | $ | 9,320 | ||||||||||||||||
Non-cash activity: | ||||||||||||||||||||||||||||||||
Lease liabilities arising from obtaining right-of-use assets | $ | 5,844 | $ | 1,220 | $ | 12,561 | $ | 4,421 | $ | - | $ | 73 | $ | 2,142 | $ | 6,717 |
As of | As of | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Weighted-average remaining lease term | 11.36 years | 5.49 years | 11.13 years | 11.35 years | ||||||||||||
Weighted-average discount rate | 7.21 | % | 10.77 | % | 6.92 | % | 7.36 | % |
Year ending December 31, | ||||||||
2022 (excluding the nine months ended September 30, 2022) | $ | 4,741 | ||||||
2023 | 16,167 | |||||||
2023 (excluding the six months ended June 30, 2023) | $ | 7,897 | ||||||
2024 | 16,780 | 17,373 | ||||||
2025 | 14,841 | 15,702 | ||||||
2026 | 12,416 | 13,334 | ||||||
2027 | 9,532 | 10,053 | ||||||
2028 | 9,959 | |||||||
Thereafter | 69,499 | 69,824 | ||||||
Total lease payments | 143,976 | 144,142 | ||||||
Less: imputed interest | (41,664 | ) | (46,081 | ) | ||||
Present value of lease liabilities | $ | 102,312 | $ | 98,061 |
5. | GOODWILL AND LONG-LIVED ASSETS |
Gross Goodwill Balance | Accumulated Impairment Losses | Net Goodwill Balance | ||||||||||
Balance as of January 1, 2022 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 | |||||
Adjustments | - | - | - | |||||||||
Balance as of September 30, 2022 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 |
Gross Goodwill Balance | Accumulated Impairment Losses | Net Goodwill Balance | ||||||||||
Balance as of January 1, 2023 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 | |||||
Adjustments | - | (3,794 | ) | (3,794 | ) | |||||||
Balance as of June 30, 2023 | $ | 117,176 | $ | (106,434 | ) | $ | 10,742 |
Gross Goodwill Balance | Accumulated Impairment Losses | Net Goodwill Balance | ||||||||||
Balance as of January 1, 2021 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 | |||||
Adjustments | - | - | - | |||||||||
Balance as of September 30, 2021 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 |
Gross Goodwill Balance | Accumulated Impairment Losses | Net Goodwill Balance | ||||||||||
Balance as of January 1, 2022 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 | |||||
Adjustments | - | - | - | |||||||||
Balance as of June 30, 2022 | $ | 117,176 | $ | (102,640 | ) | $ | 14,536 |
6. | LONG-TERM DEBT |
7. | STOCKHOLDERS’ EQUITY |
Shares | Weighted Average Grant Date Fair Value Per Share | Shares | Weighted Average Grant Date Fair Value Per Share | |||||||||||||
Nonvested restricted stock outstanding at December 31, 2021 | 1,743,846 | $ | 3.89 | |||||||||||||
Nonvested Restricted Stock outstanding at December 31, 2022 | 1,548,266 | $ | 5.18 | |||||||||||||
Granted | 606,950 | 7.21 | 751,240 | 6.10 | ||||||||||||
Canceled | - | - | (37,941 | ) | 6.15 | |||||||||||
Vested | (802,530 | ) | 4.18 | (862,890 | ) | 4.01 | ||||||||||
Nonvested restricted stock outstanding at September 30, 2022 | 1,548,266 | 5.18 | ||||||||||||||
Nonvested Restricted Stock outstanding at June 30, 2023 | 1,398,675 | 6.33 |
Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | |||||||||||||
Outstanding at December 31, 2021 | 81,000 | $ | 7.79 | 0.17 | $ | - | ||||||||||
Granted/Vested | - | - | - | - | ||||||||||||
Canceled | (81,000 | ) | 7.79 | - | - | |||||||||||
Outstanding at September 30, 2022 | - | - | - | - | ||||||||||||
Vested as of September 30, 2022 | - | - | - | - | ||||||||||||
Exercisable as of September 30, 2022 | - | - | - | - |
8. | INCOME TAXES |
9. | COMMITMENTS AND CONTINGENCIES |
10. | SEGMENTS |
For the Three Months Ended September 30, | For the Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Operating income (Loss) | Revenue | Operating Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||
2022 | % of Total | 2021 | % of Total | 2022 | 2021 | 2023 | % of Total | 2022 | % of Total | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Transportation and Skilled Trades | $ | 67,329 | 73.3 | % | $ | 64,950 | 72.9 | % | $ | 11,768 | $ | 11,842 | ||||||||||||||||||||||||||||||||||||
Healthcare and Other Professions | 24,484 | 26.7 | % | 24,109 | 27.1 | % | 1,180 | 1,833 | ||||||||||||||||||||||||||||||||||||||||
Campus Operations | $ | 88,213 | 99.5 | % | $ | 80,349 | 97.8 | % | $ | 4,169 | $ | 8,791 | ||||||||||||||||||||||||||||||||||||
Transitional | 433 | 0.5 | % | 1,793 | 2.2 | % | (482 | ) | (88 | ) | ||||||||||||||||||||||||||||||||||||||
Corporate | - | - | (8,068 | ) | (7,930 | ) | - | - | 19,828 | (8,307 | ) | |||||||||||||||||||||||||||||||||||||
Total | $ | 91,813 | 100.0 | % | $ | 89,059 | 100.0 | % | $ | 4,880 | $ | 5,745 | $ | 88,646 | 100.0 | % | $ | 82,142 | 100.0 | % | $ | 23,515 | $ | 396 |
For the Nine Months Ended September 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Operating income (Loss) | Revenue | Operating income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||
2022 | % of Total | 2021 | % of Total | 2022 | 2021 | 2023 | % of Total | 2022 | % of Total | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Transportation and Skilled Trades | $ | 184,087 | 71.8 | % | $ | 177,586 | 71.7 | % | $ | 26,108 | $ | 35,423 | ||||||||||||||||||||||||||||||||||||
Healthcare and Other Professions | 72,423 | 28.2 | % | 69,934 | 28.3 | % | 4,095 | 7,743 | ||||||||||||||||||||||||||||||||||||||||
Campus Operations | $ | 174,565 | 99.2 | % | $ | 161,130 | 97.8 | % | $ | 14,278 | $ | 17,406 | ||||||||||||||||||||||||||||||||||||
Transitional | 1,364 | 0.8 | % | 3,567 | 2.2 | % | (679 | ) | (150 | ) | ||||||||||||||||||||||||||||||||||||||
Corporate | - | - | (25,252 | ) | (27,949 | ) | - | - | 8,801 | (17,186 | ) | |||||||||||||||||||||||||||||||||||||
Total | $ | 256,510 | 100.0 | % | $ | 247,520 | 100.0 | % | $ | 4,951 | $ | 15,217 | $ | 175,929 | 100.0 | % | $ | 164,697 | 100.0 | % | $ | 22,400 | $ | 70 |
Total Assets | Total Assets | |||||||||||||||
September 30, 2022 | December 31, 2021 | June 30, 2023 | December 31, 2022 | |||||||||||||
Transportation and Skilled Trades | $ | 150,715 | $ | 156,531 | ||||||||||||
Healthcare and Other Professions | 36,263 | 33,959 | ||||||||||||||
Campus Operations | $ | 178,374 | $ | 190,473 | ||||||||||||
Transitional | 900 | 1,498 | ||||||||||||||
Corporate | 104,298 | 104,809 | 132,144 | 99,595 | ||||||||||||
Total | $ | 291,276 | $ | 295,299 | $ | 311,418 | $ | 291,566 |
11. | FAIR VALUE |
June 30, 2023 | ||||||||||||||||||||
Carrying | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||
Amount | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||
Cash equivalents: | ||||||||||||||||||||
Money market fund | $ | 23,709 | $ | 23,709 | $ | - | $ | - | $ | 23,709 | ||||||||||
Treasury bill | 5,043 | 5,043 | - | - | 5,043 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Treasury bill | 24,344 | 24,353 | - | - | 24,353 | |||||||||||||||
Total cash equivalents and short-term investments | $ | 53,096 | $ | 53,105 | $ | - | $ | - | $ | 53,105 |
December 31, 2022 | ||||||||||||||||||||
Carrying | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||
Amount | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||
Cash equivalents: | ||||||||||||||||||||
Money market fund | $ | 18,160 | $ | 18,160 | $ | - | $ | - | $ | 18,160 | ||||||||||
Treasury bill | 10,383 | 10,383 | - | - | 10,383 | |||||||||||||||
Short-term investments: | ||||||||||||||||||||
Treasury bill | 14,758 | 14,758 | - | - | 14,758 | |||||||||||||||
Total cash equivalents and short-term investments | $ | 43,301 | $ | 43,301 | $ | - | $ | - | $ | 43,301 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Interest Expense | ||||||||||||||||
Interest Rate Swap | $ | - | $ | 100 | $ | - | $ | 200 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Derivative qualifying as cash flow hedge | ||||||||||||||||
Interest rate swap income | $ | - | $ | 65 | $ | - | $ | 326 |
12. | COVID-19 PANDEMIC AND CARES ACT |
13. | Property Sale |
14. | STUDENT RECEIVABLES |
June 30, 2023 | ||||||||||||
Student | Three Months Ended | Six Months Ended | ||||||||||
Year | Receivables (1) | Write-Off’s (2) | Write-Off’s (2) | |||||||||
2023 | $ | 53,823 | $ | - | $ | - | ||||||
2022 | 20,331 | 7,916 | 14,246 | |||||||||
2021 | 8,865 | 939 | 2,027 | |||||||||
2020 | 3,935 | 210 | 385 | |||||||||
2019 | 2,662 | 178 | 387 | |||||||||
Thereafter | 1,545 | 96 | 159 | |||||||||
Total | $ | 91,161 | $ | 9,339 | $ | 17,204 |
(1) | Student receivables are presented gross and only relate to amounts owed directly from the individual student. These receivables do not include amounts owed relating to federal subsidy or from corporate partnerships. |
(2) | Write-off amounts included only relate to the three months and six months ended June 30, 2023. |
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2023 | 2023 | |||||||
Balance, beginning of period | $ | 46,599 | $ | 35,370 | ||||
Cumulative effect of ASC 326 | - | 10,841 | ||||||
Adjusted beginning of period balance | 46,599 | 46,211 | ||||||
Provision for credit losses | 10,347 | 18,600 | ||||||
Write-off’s | (9,339 | ) | (17,204 | ) | ||||
Balance, at end of period | $ | 47,607 | $ | 47,607 |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||
Educational services and facilities | 43.5 | % | 42.8 | % | 43.8 | % | 42.1 | % | 45.2 | % | 44.0 | % | 44.4 | % | 43.9 | % | ||||||||||||||||
Selling, general and administrative | 51.2 | % | 50.8 | % | 54.4 | % | 51.8 | % | 58.5 | % | 55.8 | % | 58.0 | % | 56.2 | % | ||||||||||||||||
Loss (gain) on sale of assets | 0.0 | % | 0.0 | % | -0.1 | % | 0.0 | % | ||||||||||||||||||||||||
Gain on sale of assets | -34.9 | % | -0.2 | % | -17.6 | % | -0.1 | % | ||||||||||||||||||||||||
Impairment of goodwill and long-lived assets | 4.8 | % | 0.0 | % | 2.4 | % | 0.0 | % | ||||||||||||||||||||||||
Total costs and expenses | 94.7 | % | 93.6 | % | 98.1 | % | 93.9 | % | 73.5 | % | 99.5 | % | 87.3 | % | 100.0 | % | ||||||||||||||||
Operating income | 5.3 | % | 6.4 | % | 1.9 | % | 6.1 | % | 26.5 | % | 0.5 | % | 12.7 | % | 0.0 | % | ||||||||||||||||
Interest expense, net | 0.0 | % | -0.3 | % | 0.0 | % | -0.4 | % | ||||||||||||||||||||||||
Income from operations before income taxes | 5.3 | % | 6.1 | % | 1.9 | % | 5.8 | % | ||||||||||||||||||||||||
Provision for income taxes | 1.4 | % | 1.8 | % | 0.3 | % | 1.4 | % | ||||||||||||||||||||||||
Interest income, net | 0.6 | % | 0.0 | % | 0.5 | % | 0.0 | % | ||||||||||||||||||||||||
Income (loss) from operations before income taxes | 27.1 | % | 0.4 | % | 13.3 | % | 0.0 | % | ||||||||||||||||||||||||
Provision (benefit) for income taxes | 7.7 | % | 0.1 | % | 3.5 | % | -0.3 | % | ||||||||||||||||||||||||
Net income | 3.9 | % | 4.3 | % | 1.6 | % | 4.3 | % | 19.5 | % | 0.3 | % | 9.7 | % | 0.3 | % |
Three Months Ended September 30, | ||||||||||||
2022 | 2021 | % Change | ||||||||||
Revenue: | ||||||||||||
Transportation and Skilled Trades | $ | 67,329 | $ | 64,950 | 3.7 | % | ||||||
Healthcare and Other Professions | 24,484 | 24,109 | 1.6 | % | ||||||||
Total | $ | 91,813 | $ | 89,059 | 3.1 | % | ||||||
Operating Income (loss): | ||||||||||||
Transportation and Skilled Trades | $ | 11,768 | $ | 11,842 | -0.6 | % | ||||||
Healthcare and Other Professions | 1,180 | 1,833 | -35.6 | % | ||||||||
Corporate | (8,068 | ) | (7,930 | ) | -1.7 | % | ||||||
Total | $ | 4,880 | $ | 5,745 | -15.1 | % | ||||||
Starts: | ||||||||||||
Transportation and Skilled Trades | 3,585 | 3,976 | -9.8 | % | ||||||||
Healthcare and Other Professions | 1,344 | 1,454 | -7.6 | % | ||||||||
Total | 4,929 | 5,430 | -9.2 | % | ||||||||
Average Population: | ||||||||||||
Transportation and Skilled Trades | 8,748 | 8,863 | -1.3 | % | ||||||||
Leave of Absence - COVID-19 | - | (9 | ) | 100.0 | % | |||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 8,748 | 8,854 | -1.2 | % | ||||||||
Healthcare and Other Professions | 4,076 | 4,326 | -5.8 | % | ||||||||
Leave of Absence - COVID-19 | - | (2 | ) | 100.0 | % | |||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 4,076 | 4,324 | -5.7 | % | ||||||||
Total | 12,824 | 13,189 | -2.8 | % | ||||||||
Total Excluding Leave of Absence - COVID-19 | 12,824 | 13,178 | -2.7 | % | ||||||||
End of Period Population: | ||||||||||||
Transportation and Skilled Trades | 9,298 | 9,473 | -1.8 | % | ||||||||
Healthcare and Other Professions | 4,288 | 4,533 | -5.4 | % | ||||||||
Total | 13,586 | 14,006 | -3.0 | % |
Three Months Ended June 30, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Revenue: | ||||||||||||
Campus Operations | $ | 88,213 | $ | 80,349 | 9.8 | % | ||||||
Transitional | 433 | 1,793 | -75.9 | % | ||||||||
Total | $ | 88,646 | $ | 82,142 | 7.9 | % |
Operating Income (loss): | ||||||||||||
Campus Operations | $ | 4,169 | $ | 8,791 | -52.6 | % | ||||||
Transitional | (482 | ) | (88 | ) | 447.7 | % | ||||||
Corporate | 19,828 | (8,307 | ) | 338.7 | % | |||||||
Total | $ | 23,515 | $ | 396 | 5838.1 | % |
Starts: | ||||||||||||
Campus Operations | 4,411 | 3,742 | 17.9 | % | ||||||||
Transitional | - | 110 | -100.0 | % | ||||||||
Total | 4,411 | 3,852 | 14.5 | % |
Average Population: | ||||||||||||
Campus Operations | 12,369 | 12,326 | 0.3 | % | ||||||||
Transitional | 84 | 311 | -73.0 | % | ||||||||
Total | 12,453 | 12,637 | -1.5 | % |
End of Period Population: | ||||||||||||
Campus Operations | 12,959 | 12,704 | 2.0 | % | ||||||||
Transitional | 45 | 298 | -84.9 | % | ||||||||
Total | 13,004 | 13,002 | 0.0 | % |
Nine Months Ended September 30, | ||||||||||||
2022 | 2021 | % Change | ||||||||||
Revenue: | ||||||||||||
Transportation and Skilled Trades | $ | 184,087 | $ | 177,586 | 3.7 | % | ||||||
Healthcare and Other Professions | 72,423 | 69,934 | 3.6 | % | ||||||||
Total | $ | 256,510 | $ | 247,520 | 3.6 | % | ||||||
Operating Income (loss): | ||||||||||||
Transportation and Skilled Trades | $ | 26,108 | $ | 35,423 | -26.3 | % | ||||||
Healthcare and Other Professions | 4,095 | 7,743 | -47.1 | % | ||||||||
Corporate | (25,252 | ) | (27,949 | ) | 9.6 | % | ||||||
Total | $ | 4,951 | $ | 15,217 | -67.5 | % | ||||||
Starts: | ||||||||||||
Transportation and Skilled Trades | 8,346 | 8,824 | -5.4 | % | ||||||||
Healthcare and Other Professions | 3,788 | 3,857 | -1.8 | % | ||||||||
Total | 12,134 | 12,681 | -4.3 | % | ||||||||
Average Population: | ||||||||||||
Transportation and Skilled Trades | 8,527 | 8,312 | 2.6 | % | ||||||||
Leave of Absence - COVID-19 | - | (16 | ) | 100.0 | % | |||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 | 8,527 | 8,296 | 2.8 | % | ||||||||
Healthcare and Other Professions | 4,254 | 4,414 | -3.6 | % | ||||||||
Leave of Absence - COVID-19 | - | (44 | ) | 100.0 | % | |||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19 | 4,254 | 4,370 | -2.7 | % | ||||||||
Total | 12,781 | 12,726 | 0.4 | % | ||||||||
Total Excluding Leave of Absence - COVID-19 | 12,781 | 12,666 | 0.9 | % | ||||||||
End of Period Population: | ||||||||||||
Transportation and Skilled Trades | 9,298 | 9,473 | -1.8 | % | ||||||||
Healthcare and Other Professions | 4,288 | 4,533 | -5.4 | % | ||||||||
Total | 13,586 | 14,006 | -3.0 | % |
• | Educational services and facilities expense increased $4.2 million, or 12.0% to $39.5 million for the three months ended June 30, 2023 from $35.3 million in the prior year comparable period. Increased costs were primarily concentrated in instructional, facilities expense and books and tools expense. |
o | Instructional expenses increased $1.6 million driven by several factors including higher staffing levels resulting from increased student starts, merit salary increases for instructors and the transition to the Company’s hybrid teaching model. |
o | Facilities expense increased by approximately $1.3 million, driven by several factors including additional rent expense of $0.3 million resulting from the new Atlanta, Georgia campus lease, and the sale of our Nashville, Tennessee property. Additional costs included an increase in utility expense resulting from higher usage and inflation in addition to increases in real estate taxes. |
o | Books and tools increased $1.3 million, driven by the 17.9% increase in student starts quarter-over-quarter. |
Six Months Ended June 30, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Revenue: | ||||||||||||
Campus Operations | $ | 174,565 | $ | 161,130 | 8.3 | % | ||||||
Transitional | 1,364 | 3,567 | -61.8 | % | ||||||||
Total | $ | 175,929 | $ | 164,697 | 6.8 | % |
Operating Income (loss): | ||||||||||||
Campus Operations | $ | 14,278 | $ | 17,406 | -18.0 | % | ||||||
Transitional | (679 | ) | (150 | ) | 352.7 | % | ||||||
Corporate | 8,801 | (17,186 | ) | 151.2 | % | |||||||
Total | $ | 22,400 | $ | 70 | 31900.0 | % |
Starts: | ||||||||||||
Campus Operations | 7,851 | 6,976 | 12.5 | % | ||||||||
Transitional | - | 229 | -100.0 | % | ||||||||
Total | 7,851 | 7,205 | 9.0 | % |
Average Population: | ||||||||||||
Campus Operations | 12,297 | 12,444 | -1.2 | % | ||||||||
Transitional | 123 | 317 | -61.2 | % | ||||||||
Total | 12,420 | 12,761 | -2.7 | % |
End of Period Population: | ||||||||||||
Campus Operations | 12,959 | 12,704 | 2.0 | % | ||||||||
Transitional | 45 | 298 | -84.9 | % | ||||||||
Total | 13,004 | 13,002 | 0.0 | % |
• | Educational services and facilities expense increased $6.4 million, or 9.0% to $77.0 million for the six months ended June 30, 2023 from $70.6 million in the prior year comparable period. Increased costs were primarily concentrated in instructional, facilities expense and books and tools expense. |
o | Instructional expenses increased $3.2 million driven by several factors including higher staffing levels resulting from increased student starts, merit salary increases for instructors and the transition to the Company’s hybrid teaching model. |
o | Facilities expense increased by approximately $1.6 million, driven by several factors including additional rent expense of $0.5 million resulting from the new Atlanta, Georgia campus lease, and the sale of our Nashville, Tennessee property. Additional costs included an increase in utility expense resulting from higher usage and inflation in addition to increases in real estate taxes |
o | Books and tools increased $1.6 million, driven by the 12.5% increase in student starts year-over-year. |
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Net cash provided by operating activities | $ | 612 | $ | 17,750 | ||||
Net cash used in investing activities | (4,663 | ) | (5,252 | ) | ||||
Net cash used in financing activities | (9,637 | ) | (3,374 | ) |
Six Months Ended | ||||||||
June 30, | ||||||||
2023 | 2022 | |||||||
Net cash provided by (used in) operating activities | $ | 10,403 | $ | (9,992 | ) | |||
Net cash provided by (used in) investing activities | 12,823 | (1,192 | ) | |||||
Net cash used in financing activities | (2,945 | ) | (5,138 | ) |
• | Gainful Employment: The proposed regulations would replace prior gainful employment regulations, rescinded by the DOE in 2019, that required each of our educational programs to achieve threshold rates in at least one of two debt measure categories. See our Form 10-K at “Business – Regulatory Environment – Gainful Employment.” The proposed regulations would establish rules for annually evaluating each of our educational programs based on the calculation of debt-to-earnings rates (an annual debt-to-earnings rate and a discretionary debt-to-earnings rate) and a median earnings measure. The DOE would calculate these rates and measures under complex regulatory formulas outlined in the proposed regulations and using data such as student debt (including not only Title IV loans but also certain private loans and extensions of credit), student earnings data, and comparative median earnings data for young working adults with only a high school diploma or GED. If one or more of our educational programs were to yield debt-to-earnings rates or a median earnings measures that do not comply with regulatory benchmarks for two of three consecutive years, we would lose Title IV eligibility for each of the impacted educational programs. The proposed regulations also would require us to provide warnings to current and prospective students for programs in danger of losing of Title IV eligibility (which could deter prospective students from enrolling and current students from continuing their respective programs). The regulations also require providing certifications and reporting data to the DOE and providing required student disclosures related to gainful employment. |
• | Financial Responsibility: The DOE’s proposed financial responsibility regulations include an expanded list of mandatory and discretionary triggering events that could result in the DOE determining that an institution lacks financial responsibility and must submit to the DOE a letter of credit or other form of acceptable financial protection and accept other conditions on the institution’s Title IV Program eligibility. See our Form 10-K at “Business – Regulatory Environment – Financial Responsibility Standards.” |
• | Administrative Capability: The DOE assesses the administrative capability of each institution that participates in Title IV Programs under a series ofseparate standards. Failure to satisfy any of the standards may lead the DOE to find the institution ineligible to participate in Title IV Programs or to place the institution on provisional certification as a condition of its participation. See our Form 10-K at “Business – Regulatory Environment – Administrative Capability.” Newly proposed rules would add more standards related to topics such as the provision of adequate financial aid counseling and career services, ensuring the availability of clinical and externship opportunities, the disbursement of Title IV funds in a timely manner, compliance with high school diploma requirements, preventing misrepresentations, complying with gainful employment requirements and avoiding significant negative actions with a federal, state, or accrediting agency. |
• | Certification Regulations: The proposed regulations expand the grounds for placing institutions on provisional certification, expand the types of conditions the DOE may impose on provisionally certified institutions and expand the number of requirements contained in the institution’s program participation agreement with the DOE (including, among other requirements, an obligation to comply generally with state consumer protection laws). The DOE typically provides provisional certification to an institution following a change in ownership resulting in a change of control and also may provisionally certify an institution for other reasons including, but not limited to, noncompliance with certain standards of administrative capability and financial responsibility. The DOE provisionally certified all of our institutions based on findings in recent audits of each institution’s Title IV Program compliance that the DOE alleges identified deficiencies related to DOE regulations regarding an institution’s level of administrative capability. An institution that is provisionally certified receives fewer due process rights than those received by other institutions in the event the DOE takes certain adverse actions against the institution, is required to obtain prior DOE approvals of new campuses and educational programs and may be subject to heightened scrutiny by the DOE. Provisional certification makes it easier for the DOE to revoke or decline to renew our Title IV eligibility if the DOE under the current administration chooses to take such an action against us and other provisionally certified for-profit schools without undergoing a formal administrative appeal process. See our Form 10-K at “Business – Regulatory Environment – Regulation of Federal Student Financial Aid Programs.” |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
Item 1. | LEGAL PROCEEDINGS |
Item 1A. | RISK FACTORS |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) | None. |
(b) | None. |
(c) |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publically Announced Plan | Maximum Dollar Value of Shares Remaining to be Purchased Under the Plan | ||||||||||||
July 1, 2022 to July 31, 2022 | 104,519 | $ | 6.52 | 104,519 | $ | 26,780,002 | ||||||||||
August 1, 2022 to August 31, 2022 | 260,833 | 6.43 | 260,833 | 25,102,459 | ||||||||||||
September 1, 2022 to September 30, 2022 | 303,088 | 6.06 | 303,088 | 23,266,594 | ||||||||||||
Total | 668,440 | 6.28 | 668,440 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publically Announced Plan | Maximum Dollar Value of Shares Remaining to be Purchased Under the Plan | ||||||||||||
April 1, 2023 to April 30, 2023 | 58,875 | $ | 5.49 | 58,875 | $ | 29,675,533 | ||||||||||
May 1, 2023 to May 31, 2023 | 2,159 | 5.50 | 2,159 | 29,663,667 | ||||||||||||
June 1, 2023 to June 30, 2023 | - | - | - | - | ||||||||||||
Total | 61,034 | 5.49 | 61,034 |
Item 3. | DEFAULTS |
(a) | None. |
(b) | None |
Item 4. | MINE SAFETY DISCLOSURES |
Item 5. | OTHER INFORMATION |
(a) |
(b) | None. |
(c) | None. |
Exhibit Number | Description |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005. |
3.2 | Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-3 filed October 6, 2020). |
3.3 | Bylaws of the Company as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30, 2020). |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101* | The following financial statements from |
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). |
* | Filed herewith. |
** | Furnished herewith. This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
LINCOLN EDUCATIONAL SERVICES CORPORATION | |||
Date: | By: | /s/ Brian Meyers | |
Brian Meyers | |||
Executive Vice President, Chief Financial Officer and Treasurer |
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005. | |
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-3 filed October 6, 2020). | |
Bylaws of the Company as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30, 2020). | |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101* | The following financial statements from |
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |