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    LINC
    Earnings call· Jun 2026(Q2 FY26)

    LINCOLN EDUCATIONAL SERVICES Q2 FY26 earnings call LINC

    Aug 10, 2026 Source

    Executive summary

    Lincoln Educational Services Q2 FY26 — Strong Revenue and EBITDA Growth Despite Soft Student Starts

    Lincoln Educational Services delivered robust Q2 FY26 financial results, driven by strong revenue and adjusted EBITDA growth, and improved student retention. While student starts were softer than anticipated due to conversion challenges and external factors like loan defaults, management is actively addressing lead generation and conversion processes. The company remains confident in its full-year guidance, supported by encouraging early Q3 trends and strategic investments in new campuses and high school recruiting, positioning it for continued expansion towards its 2030 objectives.

    Highlights

    5

    • Revenue increased 22.4% to $142.6 million in Q2 FY26, marking over three consecutive years of double-digit quarterly growth.

    • Adjusted EBITDA grew 42.4% to $12.7 million in Q2 FY26, with margin expansion despite increased investments.

    • Net income increased 25% to $1.9 million in Q2 FY26.

    • Operating cash flow improved by $22 million in Q2 FY26, totaling $26.6 million for the first half of the year.

    • Student attrition improved by approximately 150 basis points compared to the prior year, supporting student population growth of 10%.

    Concerns

    3

    • Student start growth slowed to 1% in Q2 FY26, lower than expected, due to a lower conversion rate from enrolled students to actual starts.

    • A portion of the Q2 FY26 start softness was attributed to students defaulting on prior loans, making them ineligible for further financial aid.

    • Lead generation was impacted by changes in AI search algorithms, requiring website adjustments to better highlight Lincoln Tech's offerings.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year Revenue
    $590M-$600M
    high materiality
    High
    Full-year Adjusted EBITDA
    $76M-$80M
    high materiality
    High
    Full-year Net Income
    $23M-$26M
    medium materiality
    High
    Full-year Diluted EPS
    $0.74-$0.83
    high materiality
    High
    Full-year Student Start Growth
    10%-14%
    high materiality
    High
    Full-year Capital Expenditures
    $95M-$100M
    high materiality
    High
    Q3 Student Starts Growth
    low double-digit year-over-year growth
    medium materiality
    High
    Q3 High School Starts Growth
    up more than 15%
    medium materiality
    High
    Suitland Campus EBITDA
    $5M
    medium materiality
    High
    2030 Revenue Target
    $850M
    high materiality
    High
    2030 Adjusted EBITDA Target
    $150M
    high materiality
    High

    Operational metrics

    21
    Student population
    1,800 students10% YoY increase
    Q2 FY26

    Growing student population driving strong revenue growth.

    Average student population growth
    14.5%
    Q2 FY26

    Primary driver for revenue increase.

    Student attrition improvement
    150 bpscompared with prior year
    through June

    Favorable retention trends kept student population in line with expectations.

    Cost per start
    —
    Q2 FY26

    Higher due to lower start volume.

    New campus losses
    $3.1Mvs $1.3M in prior year quarter
    Q2 FY26

    Included in adjusted EBITDA calculation, no longer added back.

    Capital expenditures
    $33.2M
    YTD

    Spending below plan in Q2 due to timing of permits and weather-related delays.

    Total liquidity
    $143.2M
    Q2 FY26 end

    Strong financial position.

    Debt outstanding
    $26M
    Q2 FY26 end

    Under the credit facility.

    Suitland campus IRR
    over 30%
    projected

    For the focused program campus model.

    Suitland campus revenue at full ramp
    $50M
    at full ramp

    Projected for the focused program campus model.

    Suitland campus capital investment
    $10Mless than half of traditional campus build-out
    estimated

    For the focused program campus model.

    Traditional campus capital investment
    $25M
    estimated

    For comparison with focused program campus model.

    Traditional campus revenue at full ramp
    $30M
    at full ramp

    For comparison with focused program campus model.

    Traditional campus EBITDA at full ramp
    $10M
    at full ramp

    For comparison with focused program campus model.

    Capital expenditures for growth initiatives
    75%
    planned

    Underscores continued focus on expanding capacity and supporting future enrollment.

    High school students as % of overall starts
    40%
    Q3 FY26

    Expected contribution to overall starts in Q3.

    Tuition increases
    2%-3%
    historically

    Average tuition increases across programs.

    Credit facility capacity
    $125Mmore than doubled
    expanded

    Significantly increased financial flexibility.

    Melrose Park mortgage financing
    $15M
    July 2026

    Used to fund the acquisition of the Melrose Park, Illinois campus property.

    East Point campus capacity expansion
    15,000 sq ft
    next 30 days

    To accommodate continued robust growth at the campus.

    Graduation rate goal
    70%
    target

    Company's goal for student success.

    Industry KPIs

    5
    MetricValueDetails
    EPS$0.06USD
    Revenue$142.6MUSD
    Net income$1.9MUSD
    Adjusted EBITDA ebita$12.7MUSD
    Cash investments balance$44.2MUSD

    Product announcements

    5
    ProductTypeDetails
    Hicksville, NY Campusexpansion
    Rowlett, TX Campusexpansion
    Suitland, MD Campuslaunch
    Tempe, AZ Campusexpansion
    High School Share Program Proposalsroadmap

    Deals & partnerships

    4
    Melrose Park, IL CampusAcquisition of the building housing the Melrose Park, Illinois campus, which was previously leased.$18.8M

    Completed subsequent to quarter end in July. Secured an important long-term CapEx asset.

    Credit Facility LendersAmendment to credit facility, significantly increasing revolving credit facility capacity.$125M

    Amended in April 2026.

    Johnson ControlsLongtime partner, now collaborating on training for building and maintenance of data centers.

    Supports the growing demands of AI organizations.

    Several corporations involved in AI organizationsAdvancing discussions for providing exceptionally trained skilled trade employees for AI data center infrastructure.

    Employees trained in electrical, HVAC, and welding are needed to build and maintain data centers.

    Risks & headwinds

    3
    Student Loan Defaults Impacting StartsQ2 FY26, initial wave expected to lessen over time

    A few percentage points of students could no longer start due to inability to get financial aid.

    Mitigation: Management is enhancing financial aid packaging and communication with students; assumes the initial wave of defaults will be the biggest impact.

    AI Search Impact on Lead GenerationQ2 FY26, ongoing

    Lead volume slowed down a bit in Q2 FY26.

    Mitigation: Optimizing website and digital communications for large language models to better recognize and highlight Lincoln Tech's differentiation and outcomes; expecting improvement in H2 FY26.

    Timing of Capital ExpendituresQ2 FY26, shifted to Q3 FY26

    Q2 FY26 capital expenditures were below plan.

    Mitigation: Primarily due to timing of permits and weather-related delays, but no significant delays to new campus openings are anticipated.

    What to watch in Q3 FY26

    5

    Student Start Growth

    Q3 FY26
    Current1% in Q2 FY26
    TargetLow double-digit YoY growth

    Why it matters

    Verifies the effectiveness of management's actions to improve conversion rates and lead generation, crucial for full-year guidance.

    We currently expect student starts to return to low double-digit year-over-year growth in the third quarter, supported by improved lead trends, our investment in high school recruitment and strong enrollment conversion metrics.

    Q&A highlights

    6

    How is Lincoln Tech performing in high school recruiting compared to competitors, what is the trend in skilled trades vs. automotive, and is the company seeing impact from direct employer hiring/training programs?

    Scott Shaw stated that Lincoln Tech invested in high school recruiting last year, expecting strong August starts, with high school students making up about 40% of Q3 starts. He noted a continuous shift towards skilled trades (60% of population), which are more profitable. He has not seen a material impact from employer apprenticeship models, but is seeing strong employer demand for graduates, including new partnerships with AI organizations.

    “today, when you look at our population, we're about 60% skilled trades, 20% health care and 20% automotive. And our skilled trades, I mean, we've been doing sealed trades for 80 years. HVAC started back in 1946. So I think we have a really good handle on the trades and our trades are, frankly, our most profitable business.”

    asked by Alexander Paris · answered by Scott Shaw

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights

    Lincoln Educational Services reported strong Q2 FY26 financial results, with revenue increasing 22.4% to $142.6 million, adjusted EBITDA growing 42.4% to $12.7 million, and net income up 25% to $1.9 million. The company also saw a $22 million improvement in operating cash flow for the quarter and expanded its credit facility, bolstering liquidity for growth initiatives.

    02

    Student Start Dynamics and Mitigation

    While enrollments grew approximately 9% in Q2 FY26, student start growth slowed to 1%, primarily due to a lower conversion rate from enrolled students to actual starts. This was partly attributed to students defaulting on prior loans and challenges with financial aid processing. Management is implementing actions to improve conversion, including enhanced financial aid packaging and increased student contact, with early Q3 performance showing encouraging trends.

    03

    Strategic Campus Expansion

    The company is actively expanding its campus network, with new facilities in Hicksville, NY (Q4 FY26 enrollment) and Rowlett, TX (Q1 FY27 enrollment) on schedule. A new "focused program campus" model was introduced with the Suitland, MD location (Q4 FY27 opening), requiring a lower capital investment ($10 million vs. $25 million for traditional campuses) and projected to generate $5 million in EBITDA within three years. A new 90,000 sq ft campus in Tempe, AZ is also planned for Q1 FY28.

    04

    High School Recruiting and AI Search Optimization

    Investments in high school recruiting are yielding positive results, with Q3 high school starts expected to be up more than 15%. The company is also addressing challenges posed by evolving AI search tools, optimizing its website and digital communications to ensure prospective students receive comprehensive information about Lincoln Tech's offerings and outcomes, which management believes will improve lead generation.

    05

    Industry Recognition and Employer Partnerships

    Lincoln Tech continues to receive third-party recognition, with its Melrose Park, IL campus included in USA TODAY's America's top vocational schools for the second consecutive year, and the Grand Prairie, TX campus named a School of Excellence. The company is advancing discussions with corporations involved in AI data center infrastructure, aiming to provide skilled trade employees for both construction and maintenance, highlighting strong employer demand for its graduates.

    06

    Operational Efficiencies and Student Support

    The Lincoln 10.0 hybrid teaching platform continues to drive instructional efficiencies, allowing for reinvestment into expanded programs, processes, and staffing. The company has also enhanced emotional and life support services for students, which is positively impacting retention rates, contributing to a 150 basis point improvement in attrition year-over-year.

    AI-generated summary of the company’s earnings call. Not investment advice.