Good day, and thank you for standing by. Welcome to the Lincoln Educational Services Second Quarter 2025 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Polyviou. Please go ahead. Thank you, Gigi. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the second quarter ended June 30, 2025, as well as recent corporate developments. The release is available on the Investor Relations portion of the company's corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, President and CEO; and Brian Meyers, Chief Financial Officer. Today's call is being recorded and is being broadcast live on the company's website. A replay of the call will be archived on the company's website. Statements made by Lincoln's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as the term is identified in federal securities laws. The word may, will, expect, believe, anticipate, project, plan, intend, estimate and continue as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance. The company cautions you that these statements reflect certain 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 and may influence the accuracy of the statement and projection upon which the segmented statements are based. Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of the time with respect to future events. All forward-looking statements are qualified in their entirety by the cautionary statement, 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 thereof. One other housekeeping matter. During the Q&A portion of the call today, we would ask questioners to limit themselves to two questions and then requeue to ask any additional questions. In advance, we thank you for your cooperation. Now I'd like to turn the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Thank you, Michael, and good morning, everyone. We're glad you could join us for a review of Lincoln's ongoing operational and financial progress during the second quarter, which resulted in nearly 22% growth in student starts and roughly 15% revenue growth from our current operations, alongside a 68% increase in consolidated adjusted EBITDA compared to last year's second quarter. Due to this strong performance, following an equally impressive first quarter and current operating trends, we are raising our guidance for the entire fiscal year and expanding certain growth initiatives to take advantage of the increasing demand for high-value, career-focused skills training. Several factors are driving our robust growth in both top and bottom lines, including, on a macro level, a growing interest in skilled trade training as an alternative to traditional four-year college education—a trend we believe will be further encouraged by recent federal actions affecting student loans. Moreover, our strategies and investments have positioned Lincoln to respond effectively to market demand. For example, we are committed to training our students for rewarding careers in fields experiencing a chronic shortage of skilled workers, which helps address the skills gap that limits growth for employers. Careers in electrical, HVAC, automotive technology, welding, and nursing provide not only lifetime employment opportunities but also professional advancement prospects. Our team is executing our growth plan excellently. Our financial performance during the first half of 2025 reflects returns from our investments in the Lincoln 10.0 hybrid teaching model, strong student starts at our new and relocated campuses, the implementation of our program replication strategy at existing campuses, successful initiatives targeting high school students, the expansion of corporate partnerships, and improved marketing efficiencies. Lincoln 10.0 supports our growth in starts by offering flexibility to students who need to balance work and life while pursuing their certificates or degrees. We've achieved this balance by integrating hands-on learning at campus locations with online instruction, which shortens the time needed to finish many of our programs and accelerates our graduates into fulfilling careers. We continue to see efficiencies in instruction, space, and organizational productivity through Lincoln 10.0, and Brian will detail the operational leverage we've gained from our expenses during the second quarter shortly. We are also investing in people and processes to ensure we provide an outstanding learning experience for our students. We aim to be the best and provide the best for our students. To this end, we are continually assessing new software, curricula, and training materials. Additionally, we want our instructors to have industry-recognized qualifications to ensure they possess the latest knowledge in their fields, giving our students an edge in the job market. With technology continually evolving, we tirelessly pursue what will help our students acquire the skills necessary to become the technicians, welders, and healthcare providers that will form the next generation of skilled professionals. As mentioned earlier, student starts at our currently operating campuses increased nearly 22% in the second quarter. We are experiencing growth at our existing campuses and programs, as well as from our new locations. At East Point, total student starts reached an expected level at the 18-month mark of the campus's opening, which we initially projected for the 36-month mark. Likewise, we are seeing strong results from our relocated Nashville campus, now rebranded as Nashville Auto-Diesel College. In October, we will introduce electrical and HVAC programs at NADC, which should further boost growth. We held a grand opening for NADC on June 5, honoring Nashville's legacy as a premier career technical college since World War I. Student starts at existing campuses grew at an 18.3% rate, driven by converting a higher number of leads generated from our marketing initiatives into student enrollments, along with an uptick in high school graduate enrollments. Our efforts to increase high school student enrollments are attracting interest from schools, parents, and students, prompting us to dedicate more resources to this vital market segment. Concurrently, high schools are reaching out to explore how to incorporate our skilled trades programs for their students. Under our high school share program, students attend Lincoln classes during their junior and senior years and can continue after graduation to earn their certificates more quickly, expediting their entry into rewarding careers. Our collaboration with local high school boards is enabling the continued skilled trades training within high schools while boosting our enrollment, and we are enthusiastic about the long-term prospects of this initiative. Besides East Point and Nashville, our current campus development efforts are focused on Levittown, Pennsylvania; Houston, Texas; and Hicksville, New York. In August, we completed relocating our successful Philadelphia automotive programs to the new Levittown campus, where we plan to open three replicated programs—welding, HVAC, and electrical—in September. In Houston, we received final regulatory approval during the second quarter and are pleased to report that student enrollment for the first classes starting in October is already underway, about a month ahead of our initial timeline. Our newest campus in Hicksville, New York, is targeting a late 2026 opening, and we expect to announce another new campus when we provide our third quarter results in early November. We recently conducted a comprehensive review of underserved markets for our high-value career training programs and identified at least a dozen metropolitan areas where Lincoln can expand and achieve returns similar to those we have seen in East Point and Nashville. To capitalize on these opportunities over the coming years, we plan to increase the number of new campuses we open each year to two, funded through our operating cash flow. With each new campus, we aim to generate $25 million to $30 million in annual revenue and $7 million to $10 million in EBITDA by the fourth year of operation. Replicating programs at existing campuses and fostering corporate partnerships will remain crucial to our growth strategy. I previously outlined the schedule for opening replicated programs in Nashville and Levittown. By year-end, we expect to have replicated or expanded six programs across our existing campuses, building on the five we completed in 2024. On the corporate partnership front, businesses continue to see Lincoln as a solution to address the workforce skills gap, though decision-making timelines are somewhat prolonged due to ongoing economic uncertainties. During this quarter, we executed agreements to extend existing partnerships and recently expanded our collaboration with Johnson Controls for their fire detection unit at our Denver campus. Another growth initiative with significant long-term implications involves our healthcare programs. We recently appointed an experienced professional to oversee our nursing programs and have begun implementing improvements to enhance our instructional model and operational efficiency. This review goes beyond implementing Lincoln 10.0, and we are excited about the long-term potential of these improvements. Last quarter, I mentioned our efforts to regain enrollment status at our Paramus nursing program. We have surpassed the graduation benchmark for this program for the past year, and we are in talks with the state board to regain full participation in addressing the notable LPN shortage in New Jersey. On a brief note regarding the One Big Beautiful Bill Act, the relevant financial provision for us is the introduction of borrowing limits on Paramus loans, effective July 1, 2026. However, based on our current analysis, we do not anticipate a significant financial impact. That's all I have to say about the One Big Beautiful Bill Act. For nearly 80 years, Lincoln has been dedicated to delivering high-quality, life-changing career education, with no one else matching our combination of longevity, scale, and proven experience. By expanding our school network through replicating our most in-demand programs at existing campuses and establishing new ones in both existing and new markets, we believe we are on track to surpass our goal of approximately $550 million in revenue and about $90 million in adjusted EBITDA by 2027. As I've mentioned before, the existing severe skills gap in our country is likely to worsen before it improves. Major initiatives are underway that will drive a greater demand for skilled workers, whether it’s our Navy's requirement for 250,000 skilled workers over the next decade to build three submarines annually, or the urgent need for electric utilities to develop new sources of power to meet rapidly increasing demand driven by AI and the shift toward electrification overall, or the anticipated significant onshoring of our manufacturing base by the current administration for greater economic security and prosperity. The need for more talented individuals to enter skilled trades will only grow, and Lincoln Tech will be there to meet that demand. Finally, I want to mention that we will continue our investor outreach with a non-deal roadshow planned for August 19 and 20 in Portland, Oregon, and Salt Lake City, and will also participate in investor conferences by B. Riley, Lake Street, and Barrington on September 10, 11, and 16, respectively. These efforts follow our NASDAQ event on June 16, where we celebrated our 20th anniversary of being listed on NASDAQ by ringing the opening bell. With our continuing operational and financial momentum, investor interest in Lincoln is growing, and we are pleased to see increased analyst coverage. Currently, six analysts are providing coverage on the company, which may be the highest number we’ve had in our 20 years as a public company. Now, I will hand the call over to Brian Meyers to review some of our recent financial highlights and guidance.

Thanks, Scott, and good morning, everyone. I'm pleased to share our second quarter results, which exceed our internal forecast, reflecting the strong momentum in our business. This performance was driven by robust stock growth and improved operating efficiencies, resulting in increased profitability. Before we dive into the numbers, a couple of reminders on our year-over-year comparisons. First, the financial comparisons in my remarks exclude the Transitional segment, which consists of our former Summerlin Las Vegas campus sold in late 2024. Second, as previously communicated during the first quarter's earnings call, as a result of a shift under our Lincoln 10.0 academic calendar, the start class that took place in the last week of June 2024 shifted to July 1 in 2025. This was a one-time scheduling adjustment stemming from this year's calendar, and we expect to return to our typical June start schedule in 2026. For comparison purposes, our Q2 reported population start figures include the class start on July 1, which accounted for 2,764 students. Revenue for the quarter was $116.5 million, representing a 15.1% increase over the prior year. The increase was primarily driven by our strong stock growth during the first half of the year. In terms of Q2, we had another solid performance as we grew an average student population by about 19%. We ended the quarter with about 17,100 students compared to 14,200 in the prior year, representing a 21% increase in population. Student starts for the quarter were approximately 5,900, representing about 22% growth over the prior year. Now diving deeper into the composition of our start growth. We saw a 32% increase in starts across our transportation skilled trades program, driven by continued strong demand and successful program additions and expansions; excluding the programs launched in 2024 and 2025, we still achieved 23% organic growth. As expected, our healthcare and other professions program experienced an 8% decline in starts. The decline was largely due to the temporary pause in enrollment in our nursing program at the Paramus New Jersey campus. Additionally, as noted last quarter, we discontinued underperforming programs as part of our plan to optimize our campus operation with the higher student interest and employee demand programs; excluding the impact from these factors, our HOPS program delivered modest organic growth for Q2. As Scott mentioned earlier, we remain highly focused on improving the financial performance of our HOPS programs. With added personnel, dedicated resources, we are confident that these efforts will drive meaningful improvements and position the programs for long-term growth. Turning to expenses. Total operating expenses were $113.6 million, up from $101.8 million in the prior year. The increase was primarily tied to higher direct costs associated with supporting a larger student base, as well as expenses related to growth initiatives. From a profitability standpoint, our adjusted EBITDA grew by 56%, reaching $10.5 million, up from $6.7 million. Since our transitional Summerlin campus had a $0.5 million EBITDA loss last year, our total consolidated adjusted EBITDA growth increased 68%. This improvement reflects the operating leverage generated by several key initiatives. These include efficiencies from our Lincoln 10.0 education model, a 13% reduction in marketing cost per start, and a continuing decline in bad debt expense as a percentage of revenue. Net income for the quarter was $1.6 million or $0.05 per diluted share. Adjusted net income was $2.7 million or $0.09 per diluted share based on approximately 31.3 million diluted shares outstanding. As a reminder, given the seasonality of our business, we typically generate the majority of our annual profitability in the second half of the year. Now turning to the balance sheet. We ended the quarter with $63.7 million in total liquidity. Our ending cash balance and cash from operations were affected by a few timing-related factors during the quarter. First, we experienced a temporary slowdown in Title IV drawdowns driven by a spike in verification selections by the Department of Education. This initiative was announced in early June and impacted institutions across the industry. As a result, our financial aid team, like many others, faced processing delays as they worked with students to gather additional documentation needed to clear eligibility. Second, as noted earlier, the academic calendar change on the Lincoln 10.0 impacted not only start timing but also the timing of Title IV disbursements. Specifically, some disbursements for both new and continuing students that would have occurred in late Q2 were pushed to Q3. As a result, we expect strong cash collections in the second half of the year, driven by both the timing shift in disbursements and our seasonality. We remain focused on executing on our key capital projects. Total capital expenditures were approximately $58 million for the six months of the year with $46 million reflected on the cash flow statement. The majority of our quarterly spend was tied to two campus relocations and continued build-out of our future Houston campus, which remains on track to open in the fourth quarter of this year. Based on our current plans, we are raising our full-year CapEx guidance by $5 million, bringing it to $75 million to $80 million. This increase is driven by growth initiatives, including our decision to take on additional space at a selected campus due to significant demand in the market. Looking ahead to the remainder of 2025, based on our strong second quarter performance and positive trends, we are raising our full-year guidance. We now expect revenue ranging from $490 million to $500 million; adjusted EBITDA in the range of $60 million to $65 million; net income ranging from $13 million to $18 million; capital expenditures ranging from $75 million to $80 million; student start growth of 12% to 15%. In terms of student starts for the second half of the year, we expect Q3 starts to be relatively flat given the comparison to last year's strong performance, which saw over 20% growth. That said, we anticipate Q4 starts to align more closely with the growth trends we've seen in the first half of the year. As a reminder, our guidance excludes stock-based compensation, one-time nonrecurring items, preopening costs, and net operating losses for newly opened or relocated campuses. You'll find more detailed guidance information on our earnings release, which was filed earlier today. In conclusion, based on our 2025 performance to date and our improved outlook for the year, driven by the momentum across our three core growth drivers: one, new relocated campuses; two, program expansions; and three, our growing organic demand at our existing base, we believe we're on track to exceed our 2027 financial objective of $550 million in revenue and $90 million in adjusted EBITDA that we established last year. And with that, I'll turn the call over to the operator for questions.

Our first question comes from Alex Paris from Barrington Research.

Congrats on the beat and raise. I was just trying to decide my two questions. I think I'm going to start with the last one first. Brian, you had just said that second half starts, you give a little color about what to expect in Q3, Q4. Did you say relatively flat starts in the third quarter? And then what did you say for the fourth quarter?

Yes, relatively flat for Q3 because if you remember, in Q3 of 2024, we had 20% growth. So it's a very high comparison. So it should be very modest growth, relatively flat. And Q4 will be on pace with what we did in the first half of the year, which I think was like 18% to 20%.

And you were talking to on the adjustment of that start because if you include that July 1 start, I would think starts to be up significantly year-over-year?

Yes, it would be up meaningfully.

Yes, but since we counted that in the second to make it apples-to-apples. And just for your own benefit, Alex, I mean, we budgeted the third quarter to be flat. So everything is on track for how we budgeted the full year.

And it flows with also how we budgeted for marketing expenses as well.

Got you. Yes, I do recall you telegraphing that on the last call. Then a follow-up question on the One Big Beautiful Bill. You talked about the lending limits, which should have no material impact on Lincoln, but there are some other positive things in there, I would think, from your perspective. First of all, Pell is funded. There was some talk, at least the House version of the bill, that they would increase or reduce eligibility, and that's not occurred. So funding is intact. The projected shortfall for next year has been made up for and then the introduction of Workforce Pell. So I'm curious about your thoughts on Workforce Pell and what does that create additional opportunity for Lincoln?

Yes. We don't think it really creates that much more opportunity for us. I mean, we've looked at some short-term programs, and there might be a few, but I don't view it as a major initiative for us, I mean, to be honest. When we've looked at some of those things as long as you don't have to advertise for them, they make economic sense for us. But to the extent we need to advertise to make people aware of these programs, we find that it doesn't make as much economic sense for us. So if something comes around, where we do see an opportunity, we'll certainly take advantage of it, but we're kind of focused on our core business right now.

Great. And then I will just cheat here and tag one little one. You talked about exceeding your long-term targets, which were given in early 2023. And that's really not so long term anymore. We're talking about fiscal 2027. When will you update and issue new long-term guidance?

Well, we'll probably update the guidance we have in November, and then we'll end up doing an Investor Day next year, in which case we'll set out new targets for us.

Our next question comes from the line of Luke Horton from Northland Capital Markets.

Congratulations on a strong quarter and a solid start. I understand that the transportation side was robust, and there was an additional start counted on July 1, which contributes to the adjustment that results in a flat third quarter. Could you please discuss the status of the health care starts and whether they are progressing as expected?

Sure. First, I want to clarify that the counting of the July 1 starts is not an additional start for the second quarter; it is simply to ensure that the number of starts is equal for 2024 and 2025. Regarding our health care segment, it is currently less profitable than our skilled trades segment. Because of this, we haven't invested as heavily in expanding health care until we can improve its profitability. We have recently brought in new leadership for this segment, and we expect to see positive changes soon. Although health care is not growing at the same pace as skilled trades, this is primarily due to our increased marketing investment in skilled trades, which is yielding better returns. That said, I believe health care will become a significant growth driver for us, particularly in 2026 and 2027.

Right. And Raj, I'll just add, even though health care was down by almost 8%, that included not having starts this year for our Paramus Nursing Program. As Scott was saying, we're optimistic that might come back shortly. And also, we researched out some underperforming programs such as culinary and massage therapy. So when you carve that out, our organic growth did grow slightly less than 3%. So we did have some organic growth on the same program basis.

Could you provide more insight into the health care aspect? It seems it's not profitable because you haven't reached breakeven capacity utilization of campuses, and your competitors are experiencing significant growth opportunities in this segment. Are you considering allocating capital or expanding in this area organically?

Yes, the answer is absolutely yes regarding organic growth. The key point is that our nursing program, as it’s currently structured, focuses on providing quality education to ensure our students can pass the NCLEX exams. During the pandemic, nursing salaries increased significantly, leading us to hire staff at higher wages to maintain education quality. Now that salary pressures have eased, we are restructuring. Our health care nursing program is not currently on the Lincoln 10.0 calendar, which means we operate with two shifts for nursing. Once we transition to a blended format, we'll be able to implement three shifts, significantly improving the program's economics and our capacity to meet local market demands. The growth limitations are primarily on the health care side compared to medical and dental assisting, but we expect to see good growth once we complete the restructuring. Additionally, we are pursuing degree-granting status in Connecticut, New York, and New Jersey. Achieving this status will allow us to leverage our LPN program and introduce an RN program, which is our longer-term goal. This is a major component of the health care industry, and most of our LPNs are working towards becoming RNs. This combination will create a robust and profitable health care offering.

And Raj, I'll just want to add one thing for the health care schools. They are all profitable except for our Paramus campus because of the reason they discontinued nursing. But so the campuses are all projected to be profitable by year-end, and it's because, as Scott mentioned, MA and a lot of them do have skilled trade programs as well in those campuses. So the campuses themselves are strong.

Right. And then just one last question. Regarding military and veteran enrollment, you mentioned increasing outreach to these communities in the past. With the recent contribution from the Department of Defense and Tuition Assistance, does that affect you? What are your medium-term goals for this segment in terms of total enrollment percentage? Are there any specific programs in place?

Sure. Today, military students make up less than 10% of our total enrollment. One of the challenges we face is that as we transition to Lincoln 10.0, which is a blended program, we cannot offer a blended certificate program to military veterans without them having a degree. In some areas, we've actually stopped serving military students, but we're still seeing growth despite that because of the limitations of offering a blended program. Full-time campus attendance is required, which results in higher operational costs. For example, in New Jersey, where we don’t yet have degree-granting programs, we've decided not to enroll military students to avoid inefficiencies. We have submitted our application to establish degree-granting programs in New Jersey, and we expect to receive approval soon. Once we can graduate students from these programs, we will be able to reenroll veterans, which I believe will significantly boost our growth. It's important to note that Lincoln Tech was originally founded to support veterans, and we are eager to return to that core mission.

Our next question comes from Luke Horton from Northland Capital Markets.

Congrats again on a really nice quarter here. Nice beat and raise again. Just wanted to see if we could get a sense for kind of what programs are driving these strong student starts, if you could kind of rank those? And then also just particularly on the East Point campus, sounds like that's effectively moving twice as fast as initial expectations from an enrollment perspective. So if you could kind of call out what programs there are also driving this outperformance?

So I'll just start with the second first. At East Point, all four programs, again, just to remind you, it's auto, HVAC, electrical, and welding, we're all doing well and are strong. And frankly, those are our four highest growing programs out there, and it's kind of across the board. Probably on the skilled trade side, more than automotive is seeing more growth. But I'm happy with the growth that we have across the board.

And Scott, just to add to that, we've made significant investments in updating our fleet of vehicles for our automotive program, which in turn has led to increased interest.

Yes, for sure. That’s a huge factor.

Got it. You mentioned plans to open two new campuses each year. I'm curious about the program mix. Will it be similar to the automotive, HVAC, and electrical programs, or will there be a greater focus on skilled trades compared to automotive? How do you view this for the new campuses?

Yes, good question. No, we anticipate opening like an East Point, so it will have an auto component plus the skilled trades. With that said, we have looked at locations that may not have an auto. And the only reason why that is, our auto program requires a higher ceiling height, and you can put a skilled trades program into, frankly, a traditional office building, whereas I couldn't necessarily put an auto program into a traditional office building unless I maybe tear out a floor, which just adds to expense. So we have explored potentially having a skilled trades only program. But all the markets that we've done our research in, there is demand for auto as well. So as of right now, the plan is auto, HVAC, electrical, and welding, but it may be tweaked depending on the individual local markets.

Our next question comes from Eric Martinuzzi from Lake Street Capital Markets.

Yes, I wanted to dive in on the marketing efficiency. Are you doing anything different than 90 days ago? Or is it just the more the demand, the reaction of the demand to the marketing?

It's a good question and one I'm trying to get my hands around. As I probably have said in the past, I certainly want to give credit to our marketing folks as well as our admissions folks as they make it all happen. But when I see consistently kind of across-the-board improvements, particularly also in some of our conversion rates with our admissions folks, I have to believe that there is greater overall receptivity. So our messaging is getting out there. We're attracting those that are interested in finding a very high-value rewarding career, but they are, I'd say, even more interested, which helps create the success that we're getting. So I think the overall awareness in the marketplace and the demand by young people to look for something that's very tangible, which is what we offer. As an aside, I guess it was interesting. I was at a conference recently where they were talking about AI, and they were talking about how, even though we think this younger generation is so digital, I guess there are fewer people looking to date online and looking for more face-to-face interactions. And I think in general, if I were to extrapolate on that, I think in general, that's one of the rewards of the careers that we offer. People find it very concrete and real what they are able to do once they enter the skilled trades. And so I think all these things are helping drive greater awareness, greater interest, and then needless to say, a greater number of students in our campuses.

And Eric, I would want to touch on that. Over the last few years, we've really focused on refining our messaging and targeting our advertising more effectively, which has led to these results as well.

It's a combination of both.

At this time, I would like to turn the conference back over to Scott Shaw for closing remarks.

Thank you, operator, and thank you all for joining us today as we reviewed our continued progress, growth, and increased financial guidance for the full year. As more and more people, both high school graduates and adults, seek a time-efficient, cost-effective path to develop skills that can serve them a lifetime, interest in our programs continues to grow. We are well positioned to grow through the expansion of our footprint in existing campus development. With our student start growth, new campus development, and increasing level of operating efficiencies, we believe we have numerous opportunities to generate increasing levels of shareholder returns over several years. Our success is only made possible by the commitment and dedication of our faculty and staff who, day in and day out, are engaging with our students to motivate, educate, and inspire them to reach their potential. At Lincoln Tech, we know our success is directly linked to our student success, and we will continue to share with the world that middle-skills careers like the ones we offer lead to rewarding, productive, and fulfilling careers that our nation desperately needs. I'd like to thank our shareholders for their support and our entire team for their dedication to achieving our goals. I hope to see you during my time on the road visiting shareholders, employers, and politicians as I share the Lincoln Tech story. Thank you all again, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.