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Lincoln Educational Services (LINC)

Lincoln Educational Services Corporation is a leading provider of diversified career-oriented post-secondary education. Lincoln offers recent high school graduates and working adults career-oriented programs in five principal areas of study: automotive technology, health sciences, skilled trades, business and information technology, and hospitality services. Lincoln has provided the workforce with skilled technicians since its inception in 1946.

Company profile

Ticker
LINC
Exchange
CEO
Scott Shaw
Employees
Incorporated
Location
Fiscal year end
SEC CIK
Subsidiaries
Lincoln Technical Institute, Inc. • New England Acquisition LLC • Nashville Acquisition, LLC • Euphoria Acquisition, LLC • LTI Holdings, LLC • LCT Acquisition, LLC • NN Acquisition, LLC ...
IRS number
571150621

LINC stock data

Analyst ratings and price targets

Last 3 months
Current price
Average target
$8.25
Low target
$8.00
High target
$8.50
Barrington Research
Maintains
Outperform
$8.50
9 Aug 22
Lake Street
Initiated
Buy
$8.00
30 Jun 22

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

8 Aug 22
10 Aug 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21 Dec 20 Dec 19 Dec 18
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
5 May 22 Bartholdson John A. Common Stock Grant Acquire A No No 6.66 9,009 60K 38,531
5 May 22 Burke James J JR Common Stock Grant Acquire A No No 6.66 9,009 60K 154,455
5 May 22 Kevin M Carney Common Stock Grant Acquire A No No 6.66 9,009 60K 30,479
5 May 22 Harbour Ronald Edward Common Stock Grant Acquire A No No 6.66 9,009 60K 53,564
5 May 22 Morrow J Barry Common Stock Grant Acquire A No No 6.66 15,766 105K 242,885
65.9% owned by funds/institutions
13F holders Current Prev Q Change
Total holders 67 59 +13.6%
Opened positions 15 7 +114.3%
Closed positions 7 6 +16.7%
Increased positions 29 23 +26.1%
Reduced positions 11 18 -38.9%
13F shares Current Prev Q Change
Total value 128.77M 137.51M -6.4%
Total shares 17.95M 18.44M -2.7%
Total puts 0 0
Total calls 0 0
Total put/call ratio
Largest owners Shares Value Change
Heartland Advisors 2.12M $15.13M 0.0%
TALANTA Investment 1.88M $13.78M 0.0%
Alyeska Investment 1.62M $11.58M +4.9%
Vanguard 1.42M $10.19M +15.5%
Punch & Associates Investment Management 1.24M $8.87M +0.2%
Royce & Associates 1.2M $8.59M +27.2%
Juniper Investment 894.26K $6.39M +1.6%
Renaissance Technologies 850.28K $6.08M +12.4%
Uniplan Investment Counsel 620.51K $4.44M +38.7%
RBF Capital 563.8K $4.1M 0.0%
Largest transactions Shares Bought/sold Change
Paradice Investment Management 293.68K -1.27M -81.2%
Nantahala Capital Management 0 -1M EXIT
Royce & Associates 1.2M +257.29K +27.2%
Vanguard 1.42M +191.28K +15.5%
Uniplan Investment Counsel 620.51K +173.28K +38.7%
First Eagle Investment Management 315.87K +164.68K +108.9%
Assenagon Asset Management 214.71K +136.93K +176.0%
Marshall Wace 142.36K +111.15K +356.1%
Renaissance Technologies 850.28K +93.5K +12.4%
Acadian Asset Management 300.86K +85.14K +39.5%

Financial report summary

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Risks
  • Public health outbreaks, epidemics and pandemics such as the COVID-19 pandemic can have far-reaching and negative impacts on world economies. The pandemic caused by COVID-19 has had a significant impact on the U.S. economy which has continued through 2021 and could have a materially adverse impact on our business, results of operations, financial condition and/or cash flows.
  • Our failure to comply with the extensive regulatory requirements for participation in Title IV Programs and school operations could result in financial penalties, restrictions on our operations and loss of external financial aid funding, which could affect our revenues and impose significant operating restrictions on us.
  • If we fail to demonstrate “administrative capability” to the DOE, our business could suffer.
  • Congress and the DOE may make changes to the laws and regulations applicable to, or reduce funding for, Title IV Programs, which could reduce our student population, revenues or profit margin.
  • We could be subject to liabilities, letter of credit requirements, and other sanctions under the DOE’s Borrower Defense to Repayment Regulations.
  • The DOE has changed its regulations, and may make other changes in the future, in a manner which could require us to incur additional costs in connection with our administration of the Title IV Programs, affect our ability to remain eligible to participate in the Title IV Programs, impose restrictions on our participation in the Title IV Programs, affect the rate at which students enroll in our programs, or otherwise have a significant impact on our business and results of operations.
  • If we or our eligible institutions do not meet the financial responsibility standards prescribed by the DOE, we may be required to post letters of credit or our eligibility to participate in Title IV Programs could be terminated or limited, which could significantly reduce our student population and revenues.
  • We are subject to fines and other sanctions if we make incentive payments to individuals involved in certain recruiting, admissions or financial aid activities, which could increase our cost of regulatory compliance and adversely affect our results of operations.
  • If our schools do not maintain their state licensure and accreditation, they may not participate in Title IV Programs, which could adversely affect our student population and revenues.
  • Our institutions would lose eligibility to participate in Title IV Programs if the percentage of their revenues derived from those programs exceeds 90%, which could reduce our student population and revenues.
  • Our institutions would lose eligibility to participate in Title IV Programs if their former students defaulted on repayment of their federal student loans in excess of specified levels, which could reduce our student population and revenues.
  • We are subject to sanctions if we fail to correctly calculate and timely return Title IV Program funds for students who withdraw before completing their educational program, which could increase our cost of regulatory compliance and decrease our profit margin.
  • We are subject to sanctions if we fail to comply with the DOE’s regulations regarding prohibitions against substantial misrepresentations, which could increase our cost of regulatory compliance and decrease our profit margin.
  • All of our institutions are provisionally certified by the DOE which may make them more vulnerable to unfavorable DOE action and place additional regulatory burdens on its operations.
  • Regulatory agencies or third parties may conduct compliance reviews, bring claims or initiate litigation against us. If the results of these reviews or claims are unfavorable to us, our results of operations and financial condition could be adversely affected.
  • Our business could be adversely impacted by additional legislation, regulations, or investigations regarding private student lending because students attending our schools rely on private student loans to pay tuition and other institutional charges.
  • Changes in the executive branch of our federal government as a result of the outcome of elections or other events could result in further legislation, appropriations, regulations and enforcement actions that could materially or adversely affect our business.
  • Adverse publicity arising from scrutiny of us or other for-profit postsecondary schools may negatively affect us or our schools.
  • Our success depends in part on our ability to update and expand the content of existing programs and develop new programs in a cost-effective manner and on a timely basis.
  • Our financial performance depends in part on our ability to continue to develop awareness and acceptance of our programs among high school graduates and working adults looking to return to school.
  • An increase in interest rates could adversely affect our ability to attract and retain students.
  • A substantial decrease in student financing options, or a significant increase in financing costs for our students, could have a significant impact on our student population, revenues and financial results.
  • We cannot predict our future capital needs, and if we are unable to secure additional financing when needed, our operations and revenues would be adversely affected.
  • We may not be able to retain our key personnel or hire and retain the personnel we need to sustain and grow our business.
  • Strikes by our employees may disrupt our ability to hold classes as well as our ability to attract and retain students, which could materially adversely affect our operations. In addition, we contribute to multiemployer benefit plans that could result in liabilities to us if these plans are terminated or we withdraw from them.
  • System disruptions to our technology infrastructure could impact our ability to generate revenue and could damage the reputation of our institutions.
  • We are subject to privacy and information security laws and regulations due to our collection and use of personal information, and any violations of those laws or regulations, or any breach, theft or loss of that information, could adversely affect our reputation and operations.
  • Changes in U.S. tax laws or adverse outcomes from examination of our tax returns could have an adverse effect upon our financial results.
  • The current holders of our Series A Preferred Stock, Juniper Investment Company Inc. and Talanta Investment Group, Inc., with their affiliates, beneficially own approximately 18% and 7%, respectively, of our outstanding common stock on an “as converted basis.” As such, each holder of Series A Preferred Stock possesses significant voting power over the common stock, and there can be no assurance that their interests will align with the interests of the other common shareholders.
  • We have an obligation to pay dividends on our shares of Series A Preferred Stock.
  • The Series A Preferred Stock is perpetual.
  • We may not be able to force the conversion of the Series A Preferred Stock.
  • Registration of the Conversion Shares may cause overhang.
  • Shareholders of Series A Preferred Stock may transfer their shares after November 13, 2020 without our approval.
  • In the event of certain changes of control, holders of Series A Preferred Stock shall be entitled to receive a liquidation preference.
  • Our principal shareholder owns a significant percentage of our capital stock and is able to influence certain corporate matters.
  • Anti-takeover provisions in our amended and restated certificate of incorporation, our bylaws and New Jersey law could discourage a change of control that our shareholders may favor, which could negatively affect our stock price.
  • The trading price of our common stock may continue to fluctuate substantially in the future.
Management Discussion
  • Revenue.  Revenue increased $42.2 million, or 14.4% to $335.3 million for the year ended December 31, 2021 from $293.1 million in the prior year.  The increase in revenue was the result of a 10% increase in average student population, driven by student start growth of 7.5% in combination with starting the year with approximately 1,000 more students than in the prior year comparable period.  Further contributing to the increase was the normalization of our revenue stream driven by the return to in-person instruction at all of our campuses as well as a 4.0% increase in average revenue per student.
  • The prior year financial results reflect the unprecedented impact from the COVID-19 pandemic which started in March of 2020.  As a result, certain financial and operational comparisons year over year may be distorted as a result of the impact of COVID-19.
  • Educational services and facilities expense.   Our educational services and facilities expense increased $16.7 million, or 13.7% to $138.9 million for the year ended December 31, 2021 from $122.2 million in the prior year.  Increased costs were mainly concentrated in instructional expense, books and tools expense and facilities expense.  Instructional expense increases were primarily driven by a larger average student population, up 10%, which also drove increases in books and tools expense.  Also contributing to the increase in instructional expenses were increased instructor salaries driven by inflationary pressure and widespread instructor shortages in addition to increases in consumable supplies, primarily in our welding programs.  Facility expense increases were driven by additional rent expense due to the elimination of one-time rent reductions in the prior year resulting from campus closures due to COVID-19 in combination with additional rent expense in the current year as a result of the sale leaseback transaction consummated during the fourth quarter of 2021.

Content analysis

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability
H.S. junior Avg
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Removed: cover, enroll, false, lose, military, month, pretax, target