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
|
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Large accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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PART I.
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FINANCIAL INFORMATION
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Item 1.
|
1
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1
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||
3
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4
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5
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6
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8
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Item 2.
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24
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Item 3.
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39
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Item 4.
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39
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PART II. |
OTHER INFORMATION | 39 |
Item 1.
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39
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Item 1A.
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41
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Item 2.
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41
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Item 3.
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42
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Item 4.
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42
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Item 5.
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42
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Item 6.
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42
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44
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Item 1. |
Financial Statements
|
September 30, | December 31, | |||||||
2022
|
2021
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, less allowance of $
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Assets held for sale
|
||||||||
Total current assets
|
|
|
||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $
|
|
|
||||||
OTHER ASSETS:
|
||||||||
Noncurrent receivables, less allowance of $
|
|
|
||||||
Deferred income taxes, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Goodwill
|
|
|
||||||
Other assets, net
|
|
|
||||||
Total other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
September 30, | December 31, | |||||||
2022
|
2021
|
|||||||
LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Unearned tuition
|
$ |
|
$ |
|
||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Income taxes payable
|
|
|
||||||
Current portion of operating lease liabilities
|
|
|
||||||
Other short-term liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
NONCURRENT LIABILITIES:
|
||||||||
Pension plan liabilities
|
|
|
||||||
Long-term portion of operating lease liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SERIES A CONVERTIBLE PREFERRED STOCK
|
||||||||
Preferred stock,
|
|
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock at cost -
|
|
(
|
)
|
|||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
TOTAL LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY
|
$
|
|
$
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
REVENUE
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
COSTS AND EXPENSES:
|
||||||||||||||||
Educational services and facilities
|
|
|
|
|
||||||||||||
Selling, general and administrative
|
|
|
|
|
||||||||||||
Loss (gain) on disposition of assets |
( |
) | ||||||||||||||
Total costs & expenses
|
|
|
|
|
||||||||||||
OPERATING INCOME
|
|
|
|
|
||||||||||||
OTHER:
|
||||||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
INCOME BEFORE INCOME TAXES
|
|
|
|
|
||||||||||||
PROVISION FOR INCOME TAXES
|
|
|
|
|
||||||||||||
NET INCOME
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
PREFERRED STOCK DIVIDENDS
|
|
|
|
|
||||||||||||
INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic and diluted
|
||||||||||||||||
Net income per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic and diluted
|
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive income (loss)
|
||||||||||||||||
Derivative qualifying as a cash flow hedge, net of taxes ()
|
|
|
|
|
||||||||||||
Employee pension plan adjustments, net of taxes ()
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Comprehensive income
|
$
|
|
$
|
|
$
|
|
$
|
|
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
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividend
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
BALANCE - March 31, 2022
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||||
Net income | - | - | ||||||||||||||||||||||||||||||||||
Preferred stock dividend | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock
|
||||||||||||||||||||||||||||||||||||
Treasury stock cancellation
|
- | ( |
) | - | ||||||||||||||||||||||||||||||||
Share repurchase
|
( |
) | ( |
) | ( |
) | - | |||||||||||||||||||||||||||||
BALANCE - June 30, 2022 | ( |
) | ||||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividends
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Share repurchase | ( |
) | ( |
) | ( |
) | - | |||||||||||||||||||||||||||||
BALANCE - September 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
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
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividend | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Derivative qualifying as cash flow hedge
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
BALANCE - March 31, 2021
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||||||||
Net income | - | - | ||||||||||||||||||||||||||||||||||
Preferred stock dividend
|
- | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Derivative qualifying as cash flow hedge | - | - | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | ||||||||||||||||||||||||||||||||||||
BALANCE - June 30, 2021 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividends | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Derivative qualifying as cash flow hedge | - | - | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
BALANCE - September 30, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
Nine Months Ended | ||||||||
September 30,
|
||||||||
2022
|
2021
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Amortization of deferred finance charges
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
(Gain) loss on disposition of assets |
( |
) | ||||||
Fixed asset donations
|
(
|
)
|
(
|
)
|
||||
Provision for doubtful accounts
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories
|
|
(
|
)
|
|||||
Prepaid income taxes and income taxes payable
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and current assets
|
|
|
||||||
Other assets, net
|
|
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
|
(
|
)
|
|||||
Accrued expenses
|
(
|
)
|
(
|
)
|
||||
Unearned tuition
|
(
|
)
|
|
|||||
Other liabilities
|
(
|
)
|
|
|||||
Total adjustments
|
(
|
)
|
|
|||||
Net cash provided by operating activities
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
||||
Proceeds from sale of property and equipment
|
|
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments on borrowings
|
|
(
|
)
|
|||||
Dividend payment for preferred stock
|
(
|
)
|
(
|
)
|
||||
Share repurchase |
( |
) | ||||||
Net share settlement for equity-based compensation
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(
|
)
|
|
|||||
CASH AND CASH EQUIVALENTS —Beginning of period
|
|
|
||||||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
|
$
|
|
Nine Months Ended | ||||||||
September 30,
|
||||||||
2022
|
2021
|
|||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$
|
|
$
|
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liabilities accrued for or noncash additions of fixed assets
|
$
|
|
$
|
|
1. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2. |
NET INCOME PER COMMON SHARE
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(in thousands, except share data)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Less: preferred stock dividend
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Less: allocation to preferred stockholders
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Less: allocation to restricted stockholders
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net income allocated to common stockholders
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic income per share:
|
||||||||||||||||
Denominator:
|
||||||||||||||||
Weighted average common shares outstanding
|
|
|
|
|
||||||||||||
Basic income per share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted income per share:
|
||||||||||||||||
Denominator:
|
||||||||||||||||
Weighted average number of:
|
||||||||||||||||
Common shares outstanding
|
|
|
|
|
||||||||||||
Dilutive potential common shares outstanding:
|
||||||||||||||||
Series A Preferred Stock
|
|
|
|
|
||||||||||||
Unvested restricted stock
|
|
|
|
|
||||||||||||
Dilutive shares outstanding
|
|
|
|
|
||||||||||||
Diluted income per share
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(in thousands, except share data)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Series A Preferred Stock
|
|
|
|
|
||||||||||||
Unvested restricted stock
|
|
|
|
|
||||||||||||
|
|
|
|
3. |
REVENUE RECOGNITION
|
|
Three months ended September 30, 2022
|
Nine months ended September 30, 2022
|
||||||||||||||||||||||
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
|||||||||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||||||||||
Services transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Services transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three months ended September 30, 2021
|
Nine months ended September 30, 2021
|
|||||||||||||||||||||||
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
|||||||||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||||||||||
Services transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Services transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
4. |
LEASES
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Operating cash flow information:
|
||||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Non-cash activity:
|
||||||||||||||||
Lease liabilities arising from obtaining right-of-use assets
|
$
|
|
$
|
|
$
|
|
$
|
|
As of | ||||||||
September 30,
|
||||||||
2022
|
2021
|
|||||||
Weighted-average remaining lease term
|
|
|
||||||
Weighted-average discount rate
|
|
%
|
|
%
|
Year ending December 31,
|
||||
2022 (excluding the nine months ended September 30, 2022)
|
$
|
|
||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Present value of lease liabilities
|
$
|
|
5. |
GOODWILL AND LONG-LIVED ASSETS
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
|
-
|
|
|||||||||
Balance as of September 30, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
|
-
|
|
|||||||||
Balance as of September 30, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
LONG-TERM DEBT
|
7.
|
STOCKHOLDERS’ EQUITY
|
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|||||||
Nonvested restricted stock outstanding at December 31, 2021
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Canceled
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Nonvested restricted stock outstanding at September 30, 2022
|
|
|
Shares
|
Weighted
Average Exercise
Price Per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||||||
Outstanding at December 31, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Granted/Vested
|
|
|
- |
|
||||||||||||
Canceled
|
(
|
)
|
|
- |
|
|||||||||||
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,
|
||||||||||||||||||||||||
Revenue
|
Operating income (Loss)
|
|||||||||||||||||||||||
2022
|
% of
Total
|
2021
|
% of
Total
|
2022
|
2021
|
|||||||||||||||||||
Transportation and Skilled Trades
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
||||||||||||
Healthcare and Other Professions
|
|
|
%
|
|
|
%
|
|
|
||||||||||||||||
Corporate
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
For the Nine
Months Ended September 30,
|
||||||||||||||||||||||||
Revenue
|
Operating income (Loss)
|
|||||||||||||||||||||||
2022
|
% of
Total
|
2021
|
% of
Total |
2022
|
2021
|
|||||||||||||||||||
Transportation and Skilled Trades
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
||||||||||||
Healthcare and Other Professions
|
|
|
%
|
|
|
%
|
|
|
||||||||||||||||
Corporate
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
Total Assets
|
||||||||
September 30,
2022
|
December 31, 2021
|
|||||||
Transportation and Skilled Trades
|
$
|
|
$
|
|
||||
Healthcare and Other Professions
|
|
|
||||||
Corporate
|
|
|
||||||
Total
|
$
|
|
$
|
|
11.
|
FAIR VALUE
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Interest Expense
|
||||||||||||||||
Interest Rate Swap
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Derivative qualifying as cash flow
hedge
|
||||||||||||||||
Interest rate swap income
|
$
|
|
$
|
|
$
|
|
$
|
|
12. |
COVID-19 PANDEMIC AND CARES ACT
|
13.
|
Property Sale
Agreements
|
14.
|
Subsequent
EventS
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Costs and expenses:
|
||||||||||||||||
Educational services and facilities
|
43.5
|
%
|
42.8
|
%
|
43.8
|
%
|
42.1
|
%
|
||||||||
Selling, general and administrative
|
51.2
|
%
|
50.8
|
%
|
54.4
|
%
|
51.8
|
%
|
||||||||
Loss (gain) on sale of assets
|
0.0
|
%
|
0.0
|
%
|
-0.1
|
%
|
0.0
|
%
|
||||||||
Total costs and expenses
|
94.7
|
%
|
93.6
|
%
|
98.1
|
%
|
93.9
|
%
|
||||||||
Operating income
|
5.3
|
%
|
6.4
|
%
|
1.9
|
%
|
6.1
|
%
|
||||||||
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
|
%
|
||||||||
Net income
|
3.9
|
%
|
4.3
|
%
|
1.6
|
%
|
4.3
|
%
|
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
|
%
|
• |
Revenue increased $2.4 million, or 3.7% to $67.3 million for the three months ended September 30, 2022 from $64.9 million in the prior year comparable period. Revenue increased due to the 4.9% increase in
average revenue per student, driven by tuition increases and the greater efficiency through the hybrid delivery as detailed in the consolidated results of operations.
|
• |
Educational services and facilities expense increased $0.9 million, or 3.6% to $27.7 million for the three months ended September 30, 2022 from $26.8 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to higher staffing levels in addition to expenses incurred in connection with the transition to our new hybrid
teaching model. Facility expense increases were the result of approximately $0.8 million of additional rent expense relating to our Denver and Grand Prairie campuses, which are now leased following the consummation of the sale leaseback
transaction of these campuses in the fourth quarter of 2021. Partially offsetting the additional costs were reductions in books and tools expense.
|
• |
Selling, general and administrative expense increased $1.4 million, or 5.6% to $27.8 million for the three months ended September 30, 2022 from $26.4 million in the prior year comparable period. Increased costs
were related to additional spending in student services and career services as staffing levels were increased to accommodate an increasing number of students graduating and to assist with placements of graduates.
|
• |
Revenue increased by $0.4 million, or 1.6% to $24.5 million for the three months ended September 30, 2022 from $24.1 million in the prior year comparable period. Revenue increased due to the 7.7% increase in
average revenue per student, driven by tuition increases and the greater efficiency through the hybrid delivery as detailed in the consolidated results of operations.
|
• |
Educational services and facilities expense increased $0.9 million, or 7.5% to $12.2 million for the three months ended September 30, 2022 from $11.3 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to higher staffing levels in addition to expenses incurred in connection with the transition to our new hybrid
teaching model. Facility expense increases were primarily due to additional spending for common area maintenance quarter over quarter.
|
• |
Selling, general and administrative expense remained essentially flat at $11.1 million and $10.9 million for each of the three months ended September 30, 2022 and 2021, respectively.
|
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
|
%
|
• |
Revenue increased $6.5 million, or 3.7% to $184.1 million for the nine months ended September 30, 2022 from $177.6 million in the prior year comparable period. The increase in revenue was primarily driven by a
2.8% increase in average student population mainly due to a higher beginning of period population in the current year of approximately 730 students.
|
• |
Educational services and facilities expense increased $5.1 million, or 7.2% to $76.5 million for the nine months ended September 30, 2022 from $71.4 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to higher staffing levels in addition to expenses incurred in connection with the transition to our new hybrid
teaching model. Further contributing to the increase were current market conditions, program expansion and the return to normalized levels of in-person instruction post COVID-19 restrictions. In addition, consumables prices rose sharply
driven by on-going inflation and supply chain shortages. Facility expense increases were the result of approximately $2.4 million of additional rent expense relating to our Denver and Grand Prairie campuses following the consummation of
the sale leaseback transaction of these campuses in the fourth quarter of 2021. Partially offsetting the additional facility costs are reductions in depreciation expense.
|
• |
Selling, general and administrative expense increased $10.7 million, or 15.0% to $81.4 million for the nine months ended September 30, 2022 from $70.7 million in the prior year comparable period. The increase
was primarily driven by additional bad debt expense, salary expense in sales and increased spending in student services and career services as discussed in the consolidated results of operations above.
|
• |
Revenue increased $2.5 million, or 3.6% to $72.4 million for the nine months ended September 30, 2022 from $69.9 million in the prior year comparable period. The revenue increase was driven by a 6.4%
increase in average revenue per student which more than offset a 2.7% decline in the average student population for the quarter. Average student population declined as a result of the 1.8% decline in new student starts for the year.
The higher revenue per student resulted from tuition increases combined with more efficient program delivery through the roll-out of the Company’s new hybrid teaching model. The hybrid model delivers higher daily revenue rates in
certain programs as their overall duration can be shortened.
|
• |
Educational services and facilities expense increased $3.0 million, or 9.0% to $35.7 million for the nine months ended September 30, 2022 from $32.7 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to higher staffing levels in addition to expenses incurred in connection with the transition to our new hybrid
teaching model. Further contributing to the increase were current market conditions, program expansion and the return to normalized levels of in-person instruction post COVID-19 restrictions. Facility expense increases were primarily
due to additional spending for common area maintenance year over year.
|
• |
Selling, general and administrative expense increased $3.2 million, or 10.8% to $32.6 million for the nine months ended September 30, 2022 from $29.4 million in the prior year comparable period. The increase was
primarily driven by additional bad debt expense, salary expense in sales and increased spending in student services and career services as discussed in the consolidated results of operations above.
|
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
|
)
|
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) |
Issuer Purchases of Equity Securities.
|
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
|
Item 3. |
DEFAULTS ON SENIOR SECURITIES
|
(a) |
None.
|
(b) |
None
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
(a) |
On November 4, 2022, the Company terminated the Company’s existing Credit Agreement, dated as of November 14, 2019, as amended (the “Credit Agreement”), with its lender, Webster Bank, National Bank,
as successor-by-merger to Sterling National Bank (the “Lender”). The Credit Agreement, as originally entered into, provided for various loans but, pursuant to certain amendments, had been modified such that only the Revolving Loan in the
principal amount of $15.0 million remained in place. The Company was not in default under the Credit Agreement nor did it have any amounts outstanding thereunder other than standby letters of credit. The
Credit Agreement would have matured on November 14, 2023. Upon the termination of the Credit Agreement, all security interests and pledges granted to the secured parties thereunder were terminated and released. Among the issues
considered in the determination to terminate the Credit Agreement were the Company’s strong cash position, the elimination of certain fees associated with the Credit Agreement, including the .50% unused credit fee, as well as the
elimination of affirmative and negative covenants. The Company’s standby letters of credit with the Lender in the aggregate amount of $4.0 million remain in place with the Lender provided that they are cash collateralized.
|
(b) |
None.
|
Item 6. |
EXHIBITS
|
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).
|
10.1*
|
Lincoln Educational Services Corporation Severance and Retention Policy.
|
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 Lincoln Educational Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i)
Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’
Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
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: November 7, 2022
|
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).
|
|
Lincoln Educational Services Corporation Severance and Retention Pay Policy.
|
|
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 Lincoln Educational Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i)
Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’
Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
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.
|