Good day, and welcome to the Lincoln Educational Services First Quarter 2026 Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Michael Polyviou. Please go ahead.

Thank you, Sherry. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the first quarter ended March 31, 2026, 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, CEO and President; and Brian Meyers, Chief Financial Officer and Executive Vice President. 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 that term is identified in federal securities laws. The words 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 statements and projections on which those 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 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 thereof. Now I'd like to turn the call over to Scott Shaw, CEO and President of Lincoln Educational Services. Scott, please go ahead.

Thank you, Michael, and good morning, everyone. Thank you for joining us today to recap our outstanding first quarter. As we reported during our Investor Day presentation on March 19, we expected a strong first quarter, and we did achieve 19.5% student start growth. Fully half of the student start growth came from our organic operations, meaning those campuses and programs opened before 2025. We believe this metric is a solid proof point that Lincoln Tech is leading the way in an evolving skilled trades marketplace. As a recognized leader of education and training services for safe, in-demand, rewarding careers, we are clearly benefiting from the expanding interest across America in skilled trades training as employer demand for skilled workers continues to exceed supply. Some of this interest is driven by the growing concerns about the negative impact of artificial intelligence on white-collar jobs, especially in the technology and finance fields. A greater contributor is the attention created by the robust salaries, bringing you solidly into the middle class and ever-increasing employer opportunities. These factors are helping to drive the skilled trades and the placement of Lincoln Tech graduates in rewarding long-term careers like HVAC, electrical, automotive technician, welding and health care. At Lincoln, we have focused our strategies on simplifying operations to maximize opportunities at both existing campuses and at new greenfield campuses. Our successful execution during the first quarter led to 22.5% revenue growth, nearly 85% adjusted EBITDA growth and more than doubling our net income. Attesting to the improving efficiencies we are generating throughout our operations, we also generated cash from operations during the first quarter for the first time in 10 years. Our financial performance as well as the current trends in our business are leading us to increase our 2026 guidance, which Brian will review in a few minutes. The campus relocations and openings executed in 2025 to address underserved markets are all meeting our expectations, and all the program expansions at existing campuses are contributing to our strong start growth. In February, we launched the most recent program expansion with the opening of an electrical program at our South Plainfield, New Jersey campus. In addition, as we previously reported, we began reenrolling new students at our Paramus nursing program in January, which contributed to overall health care starts increasing 5% after declining in the fourth quarter. Our Hicksville, New York and Roulette, Texas new campus development projects remain on schedule. Hicksville is scheduled to begin enrollment during the fourth quarter, while Roulette should begin enrolling students in the first quarter of 2027. Our efforts to identify suitable locations to expand into other underserved U.S. markets remains at a high pace and we are hopeful we will be able to report additional greenfield location expansions when we report our second quarter results in early August. Our other growth initiatives continue to be implemented. Negotiations with existing corporate partners to expand customized, tailored education and training programs are underway and we are constantly exploring new partnerships with a variety of corporate and governmental organizations, the most recent being the agreement we signed with New Jersey Transit under which our WorkforceLink division is providing diesel and electrical systems training to New Jersey Transit technicians at New Jersey maintenance facilities. We also have several projects underway to build our high school starts and to increase veteran enrollment, both of which are designed to generate longer-term results beginning in 2027. For instance, we have expanded investments in targeted high school initiatives that are leading to greater interest among students, parents and school districts. At the same time and further reflecting the evolving marketplace, high schools are reaching out to us to explore how to offer our skilled trades programs to their students under what we call our high school share program: students attend Lincoln classes during their junior and senior years and then continue after high school to gain their certificate in less time, which accelerates their entry into a rewarding career. There are currently more than two dozen requested high school share proposals under review by school districts, all of whom are keenly interested in offering quality skilled trades programs but are waiting to see if they have dollars in their budgets to fund the programs. This is another initiative that is likely to see progress as we move into 2027. Meanwhile, we are expanding our efforts to educate government officials on the benefits of our education and training to their constituents. For instance, in April, we were honored to host Secretary of Education Linda McMahon at our Shelton, Connecticut campus where our HVAC, electrical, LPN and medical assistant students demonstrated some of the skills they have acquired while attending Lincoln Tech. The current administration is a huge proponent of skilled trade training and keen to understand how students can learn the in-demand, rewarding skills needed to close the skills gap in America. Our leadership and results for our students are helping governments at all levels understand the possibilities. At the state and regional level, we were also honored to host Connecticut Governor Ned Lamont at our New Britain campus where we demonstrated Lincoln Tech's role in training electricians and HVAC technicians. And in Maryland, we worked with the state to hold our third Career Quest. You may recall last year, we helped fund a high school career event that was attended by 500 high school students. This year, the event attracted more than 1,700 students. Just another example of the expanding interest in skilled training— in-demand, rewarding and safe careers—and Lincoln Tech's leadership role in helping students achieve their goals. We believe our Lincoln 10.0 hybrid teaching platform continues to play a major role in our growth. The platform provides students flexibility to those needing to balance work and life while earning their certificate or degree. We've achieved this flexibility by combining hands-on learning at campus facilities with a component of classroom work delivered through online instruction which reduces the time needed to complete many of our curriculums and accelerates our graduates to their highly rewarding careers. We have realized instructional efficiencies, space efficiencies and organizational productivity through Lincoln 10.0 during the first quarter and fully anticipate this trend continuing throughout the remainder of the year. While our Lincoln 10.0 hybrid teaching platform continues to realize increasing levels of instructional efficiencies for the company, our instructors and our students, we are also investing some of the gains from these efficiencies in programs and processes to continuously drive improved student outcomes. For instance, we are providing emotional and life support to help students face the challenges they experience in pursuing a new career while holding down a job and/or raising a family. This service has positively impacted our student retention rate at our programs opened for more than a year, helping to build on our already high graduation rates. The strong start to the year illustrates the substantial progress we have made towards achieving our objective of providing the best education and training for safe, rewarding and in-demand careers — it has also enabled us to raise our guidance, which Brian will review in a moment. We now see achieving $600 million in revenue for the full year as a growing possibility. Our momentum as well as the availability of resources from our recently increased credit facility brings us another step closer to achieving our 2030 objectives laid out during our Investor Day presentation on March 19 of $850 million in revenue and $150 million of adjusted EBITDA as we continue to expand on our leadership position. After 80 years of providing high-quality, life-changing career education, we've amassed an unmatched combination of longevity, scale and proven experience. By continuing to execute our strategies to expand our network of schools and replicating our most in-demand programs at our existing campuses, we are providing a unique, proven model to help America close its chronic and severe skills gap by meeting the growing demand for more talented men and women to enter the skilled trades. Before I turn the call over to Brian, I'd like to note we will be continuing our investor outreach efforts over the next few months by attending conferences and conducting non-deal road shows with our covering analysts. Tomorrow, we'll be attending the Needham Technology, Media and Consumer Conference in New York City. The following week, we will be attending the LD Micro Invitational and B. Riley Institutional Conference both in Los Angeles. Next month, we will be attending the Rosenblatt Securities Conference, East Coast IDEAS Conference and the Northland Securities Conference. Additionally, we will be doing a West Coast non-deal roadshow with Barrington Securities and a non-deal roadshow with Texas Capital in New York City at the end of June. I believe this level of activity reflects the rising interest in the Lincoln Tech story from investors attracted to our track record and growth profile. Now I'll turn the call over to Brian Meyers, so he can review the financial highlights for the first quarter of 2026 and our 2026 guidance. Brian?

Thank you, Scott, and good morning, everyone. I'll first provide an overview of our financial results for the first quarter of 2026 and then turn to our updated outlook for the remainder of the year. Our first quarter results exceeded internal expectations driven by strong student start growth and improved operating efficiency. This combination led to strong growth across all our key metrics and increased profitability, reflecting continued execution across the business and the scalability of our operating model. Our growth reflects the continued momentum in our business and when combined with our first quarter performance enables us to raise our full year outlook across all key metrics. Beginning with student starts, we continue to see strong sustained demand with starts increasing by 19.5% in the quarter. This growth represents more than 5,500 new students starting across our 22 campuses. As a result, our ending population increased by approximately 2,800 students, almost 18% higher than prior year. As Scott mentioned, we are particularly proud of our continued organic growth, which accounted for about half of the total increase in student starts during the first quarter. Our measurement of organic growth includes new campuses and programs in operation over 1 year. Looking at the composition of student growth, our transportation and skilled trades programs, representing approximately 80% of our total population, grew starts by nearly 24%. Meanwhile, our health care and other professional programs, which account for roughly 20% of the total population, saw starts increase by 5%. Revenue increased 22.5% to $144 million, marking three years of consecutive double-digit quarterly revenue growth. The growth was largely driven by an 18.2% increase in average student population and a 3.6% increase in revenue per student. Operating expenses were $137.6 million compared to $114.1 million in the prior year quarter and were in line with our expectations. The increased expense reflects both higher student population and our implementation of our ongoing growth initiatives. Education service and facility expenses increased from $47.4 million to $58.4 million. However, when excluding the $3.9 million increase in depreciation tied to our recent investments, these expenses were 35.4% of revenue as compared to 37.3% of revenue in the prior year quarter. The improvement was mainly driven by instructional efficiencies. In marketing and sales, while total spend increased, cost per start excluding new schools slightly declined, reflecting a strong return on investment. Partially offsetting this improvement are higher costs in books and tools primarily driven by increased laptop pricing as we do not intend to pass these incremental costs on to students. The rise in laptop cost is expected to result in an incremental impact of approximately $750,000 per quarter for the remainder of the year. SG&A expenses also improved to 55% of revenue from 56.9%, supported by lower bad debt expense which declined to 9.5% of revenue from 10.1%, reflecting stronger financial aid processing and cash collections. This was the fifth consecutive quarter in which we saw a reduction in bad debt expense as a percentage of revenue compared to the prior year. Adjusted EBITDA increased 84.7% to $15.5 million. As a reminder, our adjusted EBITDA no longer adds back the losses related to new campuses in their preopening and initial year of operations. We incurred new campus losses of $2.8 million in the first quarter. Total margin expanded to nearly 11% compared to 7% in the prior year. On our revenue growth this quarter, we generated an incremental EBITDA margin of approximately 27%, which increased to roughly 40% excluding new campuses. Net income was $4.4 million, which more than doubled compared to prior year. EPS was $0.14 per diluted share based on approximately 31.3 million weighted average diluted shares outstanding. Net income margin benefited from a lower effective tax rate of approximately 22%, driven by a discrete tax benefit related to stock vesting. We expect the tax rate to normalize to around 9% in future quarters. Lastly, turning to the balance sheet. We also delivered an exceptionally strong quarter driven by a solid capital structure and continued improvement in cash generation. Historically, the first quarter has been a period where we use cash from operations. However, this quarter marks the first time in many years that we generated positive operating cash flow during this period. Cash flow from operations totaled $4.6 million compared with the use of $8.4 million in the prior period, a $13 million improvement compared to 2025. Now turning to our full year guidance. Our strong first quarter performance, higher student population and continued momentum gives us confidence to raise our outlook for the year. We now expect revenue of $590 million to $600 million, adjusted EBITDA of $76 million to $80 million, net income of $23 million to $26 million, diluted EPS of $0.74 to $0.83, and student start growth of 10% to 14%. Notably, the high end of our prior guidance now represents the low end of our updated outlook. As mentioned earlier, beginning in 2026, adjusted EBITDA no longer excludes preopening and first-year operating losses from new campuses. As a result, our guidance now includes approximately $10 million in new campus losses and excludes only non-cash stock-based compensation. Lastly, capital expenditure guidance remains unchanged at $70 million to $75 million. Planned expenditures include Hicksville and Roulette future campuses, program expansions and ongoing maintenance investments. Growth initiatives accounted for approximately 65% of our total CapEx. During the first quarter, capital expenditures totaled approximately $15 million, coming in below plan due to the timing of certain expenditures shifting into the second quarter. When additional campus locations are announced, we will update our capital expenditure plans. Finally, I'd like to note that subsequent to quarter end, in April, we entered into an amendment to our credit facility that significantly enhanced our financial flexibility. In April, we increased our revolving line of credit from $60 million to $125 million, and the process secured more favorable terms. The amended facility provides us with additional capacity and flexibility to support our growth strategy, including investments in new campuses and program expansions while also positioning us to pursue future corporate development opportunities as they may arise. Prior to this amendment, we ended the first quarter with $72 million in total liquidity with $16.7 million of cash and just $5 million of debt outstanding. In closing, we are highly encouraged by our strong start to the year and remain focused on achieving our long-term 2030 objectives including $850 million of revenue and $150 million of adjusted EBITDA as outlined at our Investor Day in March. We thank our entire team for their continued commitment and strong execution. With that, I'll turn the call over to the operator for questions. Operator?

Our first question will come from Luke Horton of Northland Capital Markets.

Congrats on a really nice quarter here to start the year. Just wanted to start off with the organic growth. You said about half of that or 19.5% student starts growth was organic in the quarter. Just wondering, as you're thinking about the 2026 guidance, if you could give some details around assumptions for organic growth versus new campuses?

Sure. So I mean, last year, if you look at the full year, about half of our growth was from organic means. This year, we had anticipated probably be about the same, Luke. As we look for the full year, it's about half of the growth could be from organic sources.

Okay. Got it. And then, obviously, on the skilled trade side, the programs like auto, HVAC, welding and electrical continue to be some major contributors. Just wondering if there's any programs you guys don't offer that you've looked at getting into, maybe like aviation or robotics-type programs?

Sure. Yes, we're always looking for new opportunities. The one that everyone always throws out is plumbing, but plumbing has very, very few schools out there doing it, and we haven't heard from our employers that there's a huge unmet need— it seems like that is satisfied through other means. We continue to explore if there could be components that could be included in our programs. Aviation is certainly an interesting business—very similar to fixing cars and trucks, just larger vehicles; that could be something. Not necessarily robotics, but in general there's a whole area around mechatronics, which is a combination of electronics, hydraulics, pneumatics, and PLCs—things that run factories or other sorts of equipment that need to be repaired and maintained to keep factories running and distribution centers running. So those are some of the things that we're looking at, whether or not they'll be full programs or maybe some sort of short program. We are looking for new opportunities to continue trying to solve the skills gap challenge that's out there.

One moment for our next question. And that will come from the line of Eric Martinuzzi with Lake Street Capital.

It was good to see the HOPS starts turned positive at 5%. I think you said at the Investor Day that really your new campus focus was going to be on the skilled trades and transportation. Is there any expectation that maybe some of the new facilities that you would be getting into would have expansion capabilities for health care and other programs?

Absolutely. Just as a reminder, the new Levittown campus we just opened has about 12,000 square feet of undeveloped space that we could put something else in. Our new Houston campus also has about the same amount. So we do have some space in some of these newer facilities to add health care and/or additional programs. And the overall plan for health care is, obviously, health care is a growing sector of the economy with huge need. What we're trying to do is make sure that our health care program is as profitable as possible before we expand it, and we actually made really good progress on that this quarter. For the first time, our nursing programs were profitable in the first quarter, frankly, since pre-COVID. So we are making progress. And once we achieve a level of profitability that we're comfortable with, you do hope to expand those programs into other campuses.

And was the recovery of Paramus—are there milestones that the State of New Jersey is looking for you to hit? Or is it just you've got the green...?

Yes, we had the full green light. In fact, the NCLEX pass rate in Paramus is over 90%. As a company, we averaged 89.4% last year, so we're safely well above the benchmark and there's no other restrictions or notifications that we need to give the state.

Our next question will come from the line of Griffin Boss with B. Riley Securities.

So first, I just want to start off on the expanded credit facility that more than doubled as you discussed. Just curious if that changes your calculus going forward. When you gave your 2030 targets to the investor, you talked about six potential new campus openings between '27 and '29, so two per year. Do you have any expectation that maybe you can add on to that and maybe do a third campus perhaps in any one of those years? Or are you still just trying to be methodical with two per year?

Well, yes, we're still focused on two per year, but we do have the flexibility to add more. As we've said in the past, we have searches going on in about a dozen different markets. Once we're able to find a facility that meets our needs, the timing is a little bit out of our control, but we do think we can basically find one every six months, and there could be opportunities we find faster. In that case, we do have greater flexibility to take advantage of that. But the overall plan right now still remains about two a year.

Okay. Understood. And then just one other housekeeping for me, model related. You mentioned the timing for certain CapEx pushing to the second quarter. So is the expectation here in terms of cadence that Q2 might be the heaviest CapEx spend quarter and maybe kind of trailing off in Q3 and Q4 to get to that $70 million to $75 million target?

Yes, exactly. It's probably almost half of our CapEx spend that we think is going to happen in Q2.

I'm showing no questions in the queue at this time. I would now like to turn to a follow-up from Luke Horton with Northland Capital.

Just wanted to jump back in here on student starts going into Q2. I know last year there was kind of a cohort of students that was pushed into Q2 that will no longer be included. Could you just remind us of what to expect here for Q2 and Q3 starts as we lap the kind of odd calendar shift from last year?

Go ahead, Brian.

Right. So if you remember last year, there was a start that occurred in the first week of July that we moved into Q2 when we report. When we report Q2 this year, we will pro forma that July 2025 start into Q2 of 2025, so it will be apples-to-apples for Q2. The start that occurred was roughly 2,700 students that happened in July, and we're going to pro forma that into Q2 of 2025; it naturally occurs this year at the end of June. For the next several years, timing may vary, so it can be tough to always be in the second quarter.

Okay. So you'll be reporting it out on an apples-to-apples basis. So no, it shouldn't be any big surprises there?

No. Correct. No problem.

I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Scott Shaw for any closing remarks.

Thank you, operator, and thank you all for joining us today as we reviewed our significant Q1 progress and increased our financial guidance for 2026. Lincoln is benefiting from both macro operating environment trends and our own consistent execution of growth initiatives at our existing campuses and new facilities. Our investments in our operations, our students and our organization continue to create numerous opportunities to generate increasing levels of shareholder returns over several years. Of course, our success is only made possible by the commitment and dedication of our faculty and staff and the success of our students. I'd like to thank our shareholders for their support and our entire team for their dedication to achieving our goals. Thank you all again, and have a great day.

This concludes today's program. Thank you all for participating. You may now disconnect.