Lincoln Educational Services Corporation Reports Third Quarter Results

WEST ORANGE, N.J., Nov. 3, 2010 (GLOBE NEWSWIRE) -- Lincoln Educational Services Corporation (Nasdaq:LINC) (Lincoln), a leading provider of diversified career-oriented post-secondary education, today reported third quarter results.

Third Quarter 2010 Highlights

• Revenue grew 12.7 percent to $167.2 million from $148.4 million in the prior-year quarter.
• Operating income rose 34.1 percent; operating profit margin improved to 19.4 percent from 16.3 percent in the prior-year quarter.
• Diluted earnings per share grew 52.0 percent to $0.76. Diluted earnings per share included $0.05 from stock repurchases during the quarter.
• Average student population rose 10.6 percent.
• Student starts were down 8.8 percent in part impacted by actions to raise outcomes.

Comment

"We are very pleased with our third quarter performance which produced record revenues, margins and earnings per share," said Shaun McAlmont, Lincoln's President and Chief Executive Officer. "During the third quarter, we repurchased approximately $47 million of our common stock as we continue to evaluate ways to increase shareholder value. In recognition of the strong cash flows Lincoln generates and due to the confidence we have in our business, our Board of Directors has authorized a new annual dividend of $1 per share, to be paid quarterly. Both actions reflect our continued commitment to deliver value to our shareholders."

"Lincoln remains steadfast in fulfilling its mission of ensuring that each and every student has the opportunity to receive the highest possible return on his or her educational investment. We are managing the company based on the assumption that some version of the Department of Education's proposed regulations will be enacted in 2011. While we believe that these rules will have an impact on our profitability, at this time, we do not believe that their enactment will pose a significant threat to our overall educational model, as the majority of our campuses offer programs that are short in length, incur manageable debt levels and lead to viable technical careers. Based on what we know today, our analysis of the potential impact of these regulations on our model has led us to take the following actions:

• We are managing the business in order to reduce the number of Ability to Benefit students ("ATB"), so that they account for no more than 10 percent of our overall population in order to improve overall graduation, default and repayment rates.
• We are making adjustments to some of our programs in order to reduce student debt and improve related debt to income ratios.
• We will be implementing programs designed to improve student graduation rates over the coming quarters.  In addition, overall company goals and accountability for all layers of management will be further tied directly to our students' outcomes.
• We will continue to pursue our growth initiatives, including online programs, program expansions, new campuses, and attractive acquisition opportunities.

We continue to monitor the Department of Education's proposed rulemaking as well as the Congressional review of our industry.  While it is difficult to predict their precise impact on our students and our company, we believe that our strategies and initiatives will position us well for the future."