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Lincoln Educational Services Corporation Reports Fourth Quarter and Full Year 2016 Results; Achieves All 2016 Guidance Metrics

  • Total Company Q4 Revenue of $72.6 Million; Total Company Full Year Revenue of $285.6 Million
  • Q4 Revenue from Continuing Operations of $50.3 Million; $196.9 Million for Full Year
  • Year-End Cash, Cash Equivalents and Restricted Cash of $47.7 Million
  • Q4 Transportation and Skilled Trades Segment Net Income Up 14.9 % to $9.3 million ; Q4 Segment Student Starts Increase 2.3%  
  • Q4 Healthcare and Other Professions Segment (excluding closed schools) Student Starts Up 6.3%
  • Provides Preliminary 2017 Outlook
  • Conference Call Today at 10 a.m. ET

WEST ORANGE, N.J., March 01, 2017 (GLOBE NEWSWIRE) -- Lincoln Educational Services Corporation (Nasdaq:LINC) today reported financial results for the fourth quarter and full year ended December 31, 2016.  

/EIN News/ -- “Our financial results for the fourth quarter and full year help illustrate the increasing level of consistent progress our team is generating for our students, corporate partners and shareholders,” commented Scott M. Shaw, President and CEO.  “For our students, we continued to invest in our curriculum and launched several new transportation and skilled trades programs.  Our enhanced curriculum and expanded programs provide our students with the potential to earn a higher return on their investment from their Lincoln education through higher paying entry level jobs and we believe contributed to an increase in segment student starts during the fourth quarter.”

“We continued to make consistent progress with our corporate partners, as we executed new programs with Audi, Volkswagen and Mini and increased the training programs offered through a number of established partnerships including Fiat Chrysler.  For our shareholders, our increasing level of consistent progress was demonstrated through the achievement of all 2016 guidance metrics and improved financial performance.  We believe we are well positioned in 2017 to build on the past year's achievements and continue the march towards sustained profitability.”

“Our team has continued to invest in the assets classified as discontinued operations while we continue the strategic process to maximize the shareholder value of these assets,” continued Mr. Shaw.  “The Healthcare and Other Professions Segment of our discontinued operations generated a 6.3 percent increase in student starts excluding closed schools during the quarter demonstrating the potential of these schools.  During the quarter, we did close our Henderson (Green Valley), Nevada campus which is included in discontinued operations and announced the closing of our Northeast Philadelphia, Pennsylvania, Center City Philadelphia, Pennsylvania, and our West Palm Beach, Florida campuses which have been classified into our Transitional Segment.  We anticipate the teach-out of all of our Transitional Segment campuses to be completed during 2017, which should significantly reduce our Transitional Segment and Total Operational Losses.”

FOURTH QUARTER RESULTS (CONTINUING OPERATIONS):

Revenue from continuing operations for the fourth quarter was $50.3 million compared with $52.6 million in the fourth quarter of 2015.  This represents a $2.3 million, or 4.2% decrease in revenue for the quarter.  The primary cause for this decrease was due to the Transitional Segment which accounted for 91.2% of the revenue decline.

       
     Three Months Ended December 31,   
     (Unaudited)   
(In Thousands)     2016       2015    
Operating (Loss) Income   $   (91 )   $   5,877    
Transitional Segment Losses       3,915         56    
Impairment Charges       1,387         -     
Adjusted Operating Income (a)   $   5,211     $   5,933    
           
(a) Please refer to the Reconciliation of Non-GAAP Financial Measures      
           

Operating loss for the three months ended December 31, 2016 was $0.1 million.  Excluding the transitional segment operating loss of $3.9 million and a one-time impairment charge of $1.4 million, operating income would have been $5.2 million.  For the three months ended December 31, 2015 operating income was $5.8 million. Excluding the Transitional Segment operating loss of $0.1 million, operating income would have been $5.9 million. 

The Company’s educational services and facilities expenses from continuing operations decreased by $0.8 million, or 3.4% to $22.5 million for the three months ended December 31, 2016 from $23.3 million in the prior year comparable period.  This was due to a decrease in instructional expenses primarily as a result of a reduction in the number of instructors and other related costs resulting from lower average student population primarily attributed to the teach-out of the Company’s Fern Park, Florida campus which was completed in the first quarter of 2016.  In addition, sales, marketing and other related costs to attract potential students were reduced as a result of the planned closures of the Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; and West Palm Beach, Florida campuses which are expected to be fully taught out during 2017.  Educational services and facilities expenses, as a percentage of revenue, increased slightly to 44.8% from 44.4%. 

Selling, general and administrative expenses from continuing operations increased by $1.7 million, or 7.6% to $23.5 million for the three months ended December 31, 2016 from $21.8 million in the prior year comparable period.  The increase in expense was primarily due to favorable workers compensation adjustments made in the prior year resulting from better claims history and an increase in legal expense.  As a percentage of revenues, selling, general and administrative expense increased to 46.6% in the fourth quarter of 2016 from 41.5% in the prior year comparable quarter.  

           
     Three Months Ended December 31,   
     (Unaudited)   
(In Thousands)     2016       2015    
Net Income from continuing operations   $   84     $   3,878    
Transitional Segment Losses       3,915         154    
Gain from Finance Obligation       (1,678 )       -     
Impairment Charges       1,387         -     
Adjusted Net Income from Continuing Operations (a)   $   3,708     $   4,032    
           
(a) Please refer to the Reconciliation of Non-GAAP Financial Measures      
           

The fourth quarter’s net income from continuing operations was $0.1 million, or $0.0 per share.  Excluding a net loss incurred by the Transitional Segment of $3.9 million, a $1.7 million gain relating to the modification of the Company’s finance obligation and a one-time non-cash impairment charge of $1.4 million, we would have reported net income of $3.7 million for the fourth quarter of 2016.  Net loss for the three months ended December 31, 2015 was $3.9 million.  Excluding a net loss incurred in our Transitional Segment of $0.1 million, net income would have been $4.0 million.   

FOURTH QUARTER SEGMENT FINANCIAL PERFORMANCE

Transportation and Skilled Trades

Transportation and Skilled Trades segment revenue was $46.6 million for the three months ended December 31, 2016, compared to $46.8 million in the comparable quarter in 2015.

Student start results increased by 2.3% to 940 from 919 for the three months ended December 31, 2016 as compared to the prior year comparable period.  Segment student population as of December 31, 2016 was 6,700 versus 6,617 as of December 31, 2015, which met management’s expectations provided in February 2016. Operating income for the three months ended December 31, 2016 increased to $9.4 million from $8.4 million in the prior year comparable period.

Transitional

The Transitional segment revenue was $3.7 million for the three months ended December 31, 2016 as compared to $5.7 million in the prior year comparable period mainly attributable to the closing of the Fern Park, Florida campus and the suspension of new student enrollment at the Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; and West Palm Beach, Florida campuses during 2016.

Corporate and Other

Corporate expense increased by $3.0 million to $5.5 million for the three months ended December 31, 2016 from $2.5 million for the prior year comparable period.  The increase was primarily due to a $1.4 million impairment charge recognized for the Company’s vacant corporate property in the fourth quarter of 2016 in combination with favorable workers compensation adjustments made in the prior year resulting from better claims history and an increase in legal expense.

2016 FINANCIAL RESULTS (CONTINUING OPERATIONS)

Revenue was $196.9 million for the year ended December 31, 2016 versus $208.3 million for the year ended December 31, 2015.  This represents an $11.3 million, or 5.5% decrease in revenue year over year.  The decrease in revenue can be attributed to two main reasons.  The first is due to our transitional segment which accounted for 47.7% of the total revenue decline.  The second is a product of lower carry-in population which has been one of the main contributing factors to the declines in revenue over the past several years.  On a continuing basis, Lincoln is starting 2017 with approximately 300 fewer students than on January 1, 2016.  Excluding the Transitional Segment, the Company is starting the year with approximately 100 or 1.25% more students than on January 1, 2016.    

           
     Year Ended December 31,   
     (Unaudited)   
(In Thousands)     2016       2015    
Operating (Loss) Income   $   (5,163 )   $   5,949    
Transitional Segment Losses       6,334         1,685    
Impairment Charges       1,387         216    
Adjusted Operating Income (a)   $   2,558     $   7,850    
           
(a) Please refer to the Reconciliation of Non-GAAP Financial Measures      
           

Operating loss for the year ended December 31, 2016 was $5.2 million.  Excluding the loss from the Transitional segment of $6.3 million and a one-time impairment charge of $1.4 million, the Company’s operating income would have been $2.6 million.  Operating income for the year ended December 31, 2015 was $6.0 million.  Excluding the Transitional segment loss of $1.6, and an impairment charge of $0.2 million, Lincoln would have reported operating income of $7.8 million.  The primary reason for the $5.2 million decrease in operating income was due to a decline in revenue as a result of starting 2016 with approximately 600 fewer students than on January 1, 2015.  Excluding our Transitional Segment, our student population as of December 31, 2016 was up 1.3% year over year.

Educational services and facilities expense remained essentially flat at $94.9 million for the year ended December 31, 2016 when compared to the prior year comparable period.    

Selling, general and administrative expense decreased by $2.3 million, or 2.1%, to $103.1 million for the year ended December 31, 2016 from $105.4 million in the prior year.  This
decrease was primarily the result of $1.8 million in reduced costs relating to our Transitional Segment, and $0.8 million in reduced salaries.  Partially offsetting the decrease is an increase in marketing expenses. The increase in marketing expense was the result of additional spending made in an effort to reach more potential students, expand brand awareness, and increase enrollments.

Transportation and Skilled Trades revenue was $177.9 million for the year ended December 31, 2016, versus $183.8 million in the prior year.  This decrease was primarily the result of a 5.3% decline in average student population, which decreased to approximately 6,900 from 7,200 in the prior year.  The decrease in average population was a result of starting 2016 with approximately 600 fewer students than on January 1, 2015.  The revenue decline from a lower population was slightly offset by a 2.2% increase in average revenue per student due to a shift in program mix. 

Transitional segment revenue was $19.0 million for the year ended December 31, 2016, versus $24.4 million in the prior year.  Revenue declines are primarily due to the closure of the Fern Park, Florida campus in the first quarter of 2016 and the suspension of new student enrollments in 2016 relating to the Center City Philadelphia, Pennsylvania; Northeast Philadelphia, Pennsylvania; and West Palm, Florida campuses.     

DISCONTINUED OPERATIONS

           
     Year Ended December 31,   
     (Unaudited)   
(In Thousands)     2016       2015    
Net Loss from Discontinued Operations   $   (23,806 )   $   (3,491 )  
Impairment Charges       17,465         -     
Closed Campuses during 2016       6,861         2,646    
Adjusted Net Income (Loss) from Discontinued Operations (a) $   520     $   (845 )  
           
(a) Please refer to the Reconciliation of Non-GAAP Financial Measures      
           

Net loss from discontinued operations was $23.8 million for the year ended December 31, 2016.    Our disposal group assets held for sale are required to be measured at the lower of carrying value or fair value less cost to sell.  As a result of our consideration of offers received on our disposal group held for sale, we concluded that an impairment charge of $17.5 million was required, comprised of a $9.9 million goodwill and indefinite-life intangible asset impairment and a $7.6 million impairment relating to long-lived assets. The Healthcare and Other Professions Segment operations are included in the loss from discontinued operations line on the Statement of Operations.

Excluding the $17.5 million impairment charge and $6.9 million in losses incurred for closed campuses the Company would have reported net income of $0.5 million for the year ended December 31, 2016.  In 2015, the Company reported a net loss of $3.5 million.  Excluding $2.6 million in losses incurred for closed campuses the net loss would have been $0.8 million.  This represents a $1.3 million increase in net income year over year which reinforces management’s commitment to invest in assets classified as discontinued operations and strategically continue to maximize shareholder value.

During the year ended 2016, the Company continued to evaluate methods for lowering fixed costs and improving the overall student experience of its discontinued operations.  As a result, Lincoln decreased the square footage at one campus; relocated another campus to a more modern facility; and made a strategic decision to close the Henderson (Green Valley), Nevada campus as of December 31, 2016.  In addition, the Company made the strategic decision to teach-out the Northeast Philadelphia, Pennsylvania, Center City Philadelphia, Pennsylvania, and West Palm Beach, Florida campuses which are expected to be fully taught-out during 2017.    The Company continues to pursue the disposition of the discontinued operations. 

BALANCE SHEET INFORMATION
The Company had $47.7 million of cash, cash equivalents and restricted cash at December 31, 2016 ($26.7 million of restricted cash at December 31, 2016) as compared to $61.0 million of cash, cash equivalents and restricted cash as of December 31, 2015 ($22.6 million of restricted cash at December 31, 2015). This decrease is primarily the result of a net loss during the year ended December 31, 2016; $11.5 million of campus closing costs; $0.7 million loan modification fee paid to the Company’s lender in connection with an amendment of a new term loan agreement resulting in more favorable covenants; and $0.7 million in severance paid during the year ended December 31, 2016.

As of December 31, 2016, total net assets classified as assets held for sale net of liabilities held for sale were $13.2 million (net of liabilities of $11.6 million) compared to $32.0 (net of liabilities of $12.3 million) at December 31, 2015.  This decrease was primarily attributable to a $17.5 million impairment charge relating to our disposal group assets which are classified as held for sale.

DISCONTINUED OPERATIONS

On November 3, 2015, the Board of Directors approved a plan for the divestiture of the Company’s schools included in the Healthcare and Other Professions business segment.  In December 2015, the Board of Directors approved a plan to cease operations of the remaining school in this segment located in Hartford, Connecticut.  That school closed in the fourth quarter of 2016.  In addition, in the fourth quarter of 2016, the Board of Directors approved plans to cease operations at our schools in Henderson (Green Valley), Nevada; Center City Philadelphia, Pennsylvania; Northeast Philadelphia, Pennsylvania and West Palm Beach, Florida.  The Henderson, Nevada campus closed in the fourth quarter of 2016.  Divestiture of the Company’s Healthcare and Other Professions business segment marks a strategic shift in business strategy.  The results of operations of the 15 campuses included in Healthcare and Other Professions business segment are reflected as discontinued operations in the consolidated financial statements.  The Center City Philadelphia, Pennsylvania; Northeast Philadelphia, Pennsylvania and West Palm Beach, Florida campuses, which were previously included in the Healthcare and Other Professions segment are now included in the Transitional segment except the West Palm Beach, Florida properties which remain held-for-sale.  Implementation of the plan would result in the Company’s operations focused solely on the Transportation and Skilled Trades segment.

2017 OUTLOOK

The Company provided the following guidance for 2017:

  • The Company expects to achieve operating income companywide including discontinued operations, with the exception of closed campuses.
  • The Company expects to achieve low single digit revenue growth in the Transportation and Skilled Trades segment.  
  • In addition, the Company anticipates completing the teach-out of Northeast Philadelphia, Center City Philadelphia, and West Palm Beach campuses.            

CONFERENCE CALL INFO

Lincoln will host a conference call today at 10:00 a.m. Eastern Standard Time.  The conference call can be accessed by going to the IR portion of our website at www.lincolnedu.com. To access the live webcast of the conference call, please go to the investor relations section of Lincoln’s website at http://www.lincolnedu.com. Participants can also listen to the conference call by dialing 844-413-0946 (domestic) or 216-562-0456 (international) and providing access code 69923401. Please log in or dial into the call at least 10 minutes prior to the start time.

An archived version of the webcast will be accessible for 90 days at http://www.lincolnedu.com. A replay of the call will also be available for seven days by calling 855-859-2056 (domestic) or 404-537-3406 (international) and providing access code 69923401.

ABOUT LINCOLN EDUCATIONAL SERVICES CORPORATION

Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education and helping to provide solutions to America’s skills gap. Lincoln offers recent high school graduates and working adults degree and diploma programs.  The Company operates under two reportable segments: Transportation and Skilled Trades, and Transitional. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolnedu.com.

SAFE HARBOR

Statements in this press release and in oral statements made from time to time by representatives of Lincoln Educational Services Corporation regarding Lincoln’s business that are not historical facts may be “forward-looking statements” as that term is defined in the federal securities law. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all.  Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions or dispositions to be made by the Company or projections involving anticipated revenues, earnings or other aspects of the Company’s operating results.  The Company cautions you that these statements concern current expectations about the Company’s future performance or events and are subject to a number of uncertainties, risks and other influences many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projects upon which the statements are based. The events described in forward-looking statements may not occur at all. Factors which may affect the Company’s results include, but are not limited to, the risks and uncertainties discussed in the Company’s Annual Report on Form 10-K, Quarterly Reports on From 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange commission.  Any one or more of these uncertainties, risks and other influences could materially affect the Company’s results of operations and financial condition and whether forward-looking statements made by the Company ultimately prove to be accurate and, as such, the Company’s actual results, performance and achievements could materially differ from those expressed or implied in these forward-looking statements. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, our failure to comply with the extensive regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with a change of control of our Company or acquisitions; our success in updating and expanding the content of existing programs and developing new programs for our students in a cost-effective manner or on a timely basis; risks associated with changes in applicable federal laws and regulations; uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 rule and cohort default rates; risks associated with the opening of new campuses; risks associated with integration of acquired schools; industry competition; our ability to execute our growth strategies; conditions and trends in our industry; general economic conditions; and other factors discussed in the “Risk Factors” section of our annual and quarterly reports. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date hereof.

(Tables to Follow)

         
   Three Months Ended     Year Ended   
   December 31,     December 31,   
   (Unaudited)     (Unaudited)   
    2016       2015       2016       2015    
                 
REVENUE $   50,348     $   52,552     $   196,910     $   208,256    
COSTS AND EXPENSES:                
Educational services and facilities     22,549         23,336         94,922         94,970    
Selling, general and administrative     23,473         21,807         103,129         105,380    
Loss on sale of assets     515         1,550         120         1,741    
Impairment of goodwill and long-lived assets     3,902         -          3,902         216    
Total costs & expenses     50,439         46,693         202,073         202,307    
OPERATING (LOSS) INCOME     (91 )       5,859         (5,163 )       5,949    
OTHER:                
Interest income     14         12         155         52    
Interest expense     (1,467 )       (1,901 )       (6,001 )       (5,727 )  
Other income     1,678         -          6,711         109    
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES     134         3,970         (4,298 )       383    
PROVISION FOR INCOME TAXES     50         92         200         242    
INCOME (LOSS) FROM CONTINUING OPERATIONS     84         3,878         (4,498 )       141    
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES     (18,711 )       4,679         (23,806 )       (3,491 )  
NET( LOSS) INCOME $   (18,627 )   $   8,557     $   (28,304 )   $   (3,350 )  
Basic                
  Income (loss) per share from continuing operations $   0.00     $   0.17     $   (0.19 )   $   0.01    
  (Loss) income per share from discontinued operations     (0.80 )       0.20         (1.02 )       (0.15 )  
  Net (loss) income per share $   (0.79 )   $   0.37     $   (1.21 )   $   (0.14 )  
Diluted                
  Income (loss) per share from continuing operations $   0.00     $   0.17     $   (0.19 )   $   0.01    
  (Loss) income per share from discontinued operations     (0.80 )       0.20         (1.02 )       (0.15 )  
  Net (loss) income per share $   (0.79 )   $   0.37     $   (1.21 )   $   (0.14 )  
Weighted average number of common shares outstanding:                
  Basic     23,514         23,247         23,453         23,167    
  Diluted     23,514         23,347         23,453         23,227    
                 
                 
Other data:                
                 
Adjusted EBITDA (1) $   7,936     $   8,621     $   16,425     $   16,621    
Depreciation and amortization from continuing operations $   2,447     $   2,762     $   10,975     $   10,347    
Number of campuses     28         31         28         31    
Average enrollment from continuing operations     7,983         8,375         7,725         8,395    
Stock-based compensation $   354     $   242     $   1,442     $   1,127    
Net cash provided by (used in) operating activities $   3,406     $   11,845     $   (6,107 )   $   14,337    
Net cash used in investing activities $   (1,539 )   $   (608 )   $   (2,182 )   $   (1,767 )  
Net cash  (used in) provided by financing activities $   (43 )   $   (5,239 )   $   (9,067 )   $   13,551    
                 


Selected Consolidated Balance Sheet Data:    
  (In thousands)  December 31, 2016  
     
Cash and cash equivalents  $   21,064    
Restricted cash   26,651    
Current assets     66,297    
Working capital     (2,033 )  
Total assets     163,207    
Current liabilities     68,330    
Long-term debt including current portion     41,957    
Total stockholders' equity     72,391    
     

(1) Reconciliation of Non-GAAP Financial Measures

The Company believes it is useful to present non-GAAP financial measures that exclude certain significant items as a means to understand the performance of its business.  EBITDA, Adjusted EBITDA, Total Revenue, Adjusted Operating Income, Adjusted Net Income from Continuing Operations, and Adjusted Net Income (Loss) from Discontinued Operations are measurements not recognized in financial statements presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  We define EBITDA as income (loss) from continuing operations before interest expense (net of interest income), provision for income taxes and depreciation and amortization.  Adjusted EBITDA includes non-cash charges related to impairment of goodwill and long-lived assets.  EBITDA and Adjusted EBITDA are presented because we believe it is a useful indicator of our performance and our ability to make strategic acquisitions and meet capital expenditure and debt service requirements.  It is not, however, intended to represent cash flows from operations as defined by GAAP and should not be used as an alternative to net income (loss) as an indicator of operating performance or to cash flow as a measure of liquidity.  EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures used by other companies. Total Revenue includes revenue from continuing operations and revenue from discontinued operations. Adjusted Operating Income includes Operating Income (Loss), Transitional Segment losses, and non-cash charges related to Impairment of goodwill and long-lived assets.  Adjusted Net Income from Continuing Operations includes Net Income (Loss) from Continuing Operations, Transitional Segment Losses, Other Income, and non-cash charges related to the impairment of goodwill and long-lived assets.   Adjusted Net Income (Loss) from Discontinued Operations includes non-cash charges related to the impairment of goodwill and long-lived assets and costs associated with closed schools within the Healthcare and Other Professions Segment.

Following is a reconciliation of net loss from continuing operations to EBITDA, Adjusted EBITDA, and Total Revenue:

   Three Months Ended December 31,     Year-Ended December 31,         
   (Unaudited)     (Unaudited)         
                       
    2016     2015     2016       2015          
                       
Net income (loss) from continuing operations $   84   $   3,878   $   (4,498 )   $   141          
Interest expense, net     1,453       1,889       5,846         5,675          
Provision for income taxes     50       92       200         242          
Depreciation and amortization     2,447       2,762       10,975         10,347          
EBITDA     4,034       8,621       12,523         16,405          
Impairment of goodwill and long-lived assets     3,902       -       3,902         216          
Adjusted EBITDA $   7,936   $   8,621   $   16,425     $   16,621          
                   
                       
   Three Months Ended December 31, 
  (Unaudited)
  Auto   Transitional   Corporate
    2016     2015     2016       2015       2016       2015  
                       
Net income (loss) from continuing operations $   9,303   $   8,094   $   (3,915 )   $   (154 )   $   (5,304 )   $   (4,062 )
Interest expense, net     58       348       -          98         1,395         1,443  
Provision for income taxes     -        -        -          -          50         92  
Depreciation and amortization     2,259       2,448       9         88         179         226  
EBITDA     11,620       10,890       (3,906 )       32         (3,680 )       (2,301 )
Impairment of goodwill and long-lived assets     -        -        2,515         -          1,387         -   
Adjusted EBITDA $   11,620   $   10,890   $   (1,391 )   $   32     $   (2,293 )   $   (2,301 )
                       
   Year-Ended December 31, 
  (Unaudited)
  Auto   Transitional   Corporate
    2016     2015     2016       2015       2016       2015  
                       
Net income (loss) from continuing operations $   21,182   $   25,263   $   (6,399 )   $   (2,072 )   $   (19,281 )   $   (23,050 )
Interest expense, net     96       1,614       65         396         5,685         3,665  
Provision for income taxes     -        -        -          -          200         242  
Depreciation and amortization     9,601       9,162       694         379         680         806  
EBITDA     30,879       36,039       (5,640 )       (1,297 )       (12,716 )       (18,337 )
Impairment of goodwill and long-lived assets     -        216       2,515         -          1,387        -  
Adjusted EBITDA $   30,879   $   36,255   $   (3,125 )   $   (1,297 )   $   (11,329 )   $   (18,337 )
                       


                   
     Three Months ended December 31,     Year-Ended December 31,   
     (Unaudited)     (Unaudited)   
      2016     2015     2016     2015  
Revenue from continuing operations   $   50,348   $   52,552   $   196,910   $   208,256  
Revenue from discontinued operations     22,220     25,391     88,649     97,846  
Total Revenue   $   72,568   $   77,943   $   285,559   $   306,102  
                   


     
REPORTABLE SEGMENT RESULTS (Unaudited):    
             
  Three Months Ended December 31,  
    2016       2015     % Change  
Revenue:            
Transportation and Skilled Trades $   46,640     $   46,835     -0.4 %  
Transitional      3,708         5,717     -35.1 %  
Total $   50,348     $   52,552     -4.2 %  
             
Operating Income (Loss):            
Transportation and Skilled Trades $   9,361     $   8,443     10.9 %  
Transitional      (3,913 )       (56 )   6887.5 %  
Corporate     (5,539 )       (2,528 )   119.1 %  
Total $   (91 )   $   5,859     -101.6 %  
             
Starts:            
Transportation and Skilled Trades   940       919     2.3 %  
Transitional      88       117     -24.8 %  
Total     1,028         1,036     -0.8 %  
             
Average Population:            
Transportation and Skilled Trades   7,236       7,305     -0.9 %  
Transitional    747       1,070     -30.2 %  
Total     7,983         8,375     -4.7 %  
             
End of Period Population:            
Transportation and Skilled Trades   6,700       6,617     1.3 %  
Transitional    595       928     -35.9 %  
Total     7,295         7,545     -3.3 %  
             


     
REPORTABLE SEGMENT RESULTS (Unaudited):    
             
  Year Ended December 31,   
    2016       2015     % Change  
Revenue:            
Transportation and Skilled Trades $   177,882     $   183,821     -3.2 %  
Transitional      19,028         24,435     -22.1 %  
Total $   196,910     $   208,256     -5.4 %  
             
Operating Income (Loss):            
Transportation and Skilled Trades $   21,278     $   26,778     -20.5 %  
Transitional      (6,334 )       (1,689 )   -275.0 %  
Corporate     (20,107 )       (19,140 )   -5.1 %  
Total $   (5,163 )   $   5,949     186.8 %  
             
Starts:            
Transportation and Skilled Trades   7,626       7,794     -2.2 %  
Transitional      838       1,227     -31.7 %  
Total   8,464       9,021     -6.2 %  
             
Average Population:            
Transportation and Skilled Trades   6,852       7,238     -5.3 %  
Transitional    873       1,157     -24.5 %  
Total   7,725       8,395     -8.0 %  
             
End of Period Population:            
Transportation and Skilled Trades   6,700       6,617     1.3 %  
Transitional    595       928     -35.9 %  
Total   7,295       7,545     -3.3 %  
             
LINCOLN EDUCATIONAL SERVICES CORPORATION
                    Brian Meyers, CFO
                    973-736-9340
                    
                    EVC GROUP, INVESTOR RELATIONS:
                    Doug Sherk, dsherk@evcgroup.com; 415-652-9100
                    Dave Schemelia, dave@evcgroup.com; 646-445-4800

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