Lincoln Educational Services Corporation (LINC) Q4 2025 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2025 Lincoln Educational Services Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to Michael Polyviou, please go ahead.

Thank you, Michelle. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued new to recording financial results for the fourth quarter and full year ended December 31, 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, CEO and President; and Brian Meyers, Chief Financial Officer and Executive Vice President. Today's call will be recorded and is being broadcast live on the company's website, and a replay of the call will be archived on the company's website as well. 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 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 us 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 they influence the accuracy of the statement and projection upon which the segmented savings 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. One other housekeeping matter. [Operator Instructions] Now I'd like to turn the call over to Scott Shaw, CEO and President. Scott, please go ahead.

Thank you, Michael, and good morning, everyone. Thank you for joining us today to recap our exceptional fourth quarter and full year operating and financial performance as well as introduce our guidance for 2026. Lincoln Tech is riding the building interest across America and skilled trades training as employer demand for skilled workers continues to exceed supply and the public's questioning of the value of the traditional 4-year college education continues to grow. In addition, concerns about the negative impact of artificial intelligence on white collar jobs, the growing awareness of the robust salaries that solidly bring you into the middle class and ever-increasing employer opportunities have fostered demand for training in the skilled trades. While we read about tens of thousands of jobs being eliminated by major corporations around the country, the placement of Lincoln Tech graduates in rewarding long-term careers like HVAC, electrical, automotive technician Welding and health care has hit recent highs and shows no signs of letting up. At Lincoln, we have focused our strategies on maximizing our opportunities in this increasingly receptive environment. The successful execution of these strategies has resulted in solid growth throughout our core operations while new programs at existing campuses and new greenfield campuses have expanded our growth. Together, these factors led us to exceed our financial guidance for 2025 and have set the stage for consistent long-term growth and shareholder returns in the years ahead. During the fourth quarter of 2025, we achieved 15.7% student start growth, and we have now grown student starts for 13 consecutive quarters. While the new campus openings and program replications at existing campuses meaningfully contributed to the overall increase student starts at our programs operating for more than 1 year, grew by 4% on a same campus and same program basis. This core growth was a major contributor to our near doubling of net income and a 51.7% increase in adjusted EBITDA during the fourth quarter. We also generated double-digit increases in total student population and total revenue over last year's fourth quarter. During 2025, we completed the most ambitious expansion in our company's recent history. We relocated our Nashville, Tennessee campus, which has been operating for more than 100 years to a new state-of-the-art facility at Tapa Hill over -- looking the city. Once our existing automotive technician and welding programs were relocated to the new campus, we introduced our HVAC and electrical programs to the Nashville market and renamed the campus, the Nashville Auto-Diesel College. This impressive facility will host our upcoming Investor Day in less than a month on March 19. We also relocated our Philadelphia campus and its highly successful automotive technician program to a new facility in Levittown, Pennsylvania, which is just as impressive as our Nashville campus. This 90,000 square foot building now houses newly opened HVAC electrical and welding programs as well as the automotive program and provides Lincoln Tech with ample space to grow over the coming years to help Pennsylvania employers meet demand for skilled workers. Ten days ago, we celebrated the campuses initial success in classes with a grand opening attended by local and regional government and corporate leaders. Our third campus opening during 2025 occurred in our newest market, Houston, Texas, where facility matching those in Nashville and Levittown began classes in late September. The Houston campus is our second greenfield expansion during the past decade and adds to our presence in the Texas market where some 240,000 new jobs demanding skilled trades training are expected to be created over the next 6 years. We held the grand opening of the Houston campus last Wednesday, and like all the campuses opened in 2025, the initial enrollments are meeting or exceeding expectations and are expected to be a major contributor to our continued start growth in 2026. Our new campus development efforts were expanded during 2025, and we now aim to initiate 2 new campus projects each year. In 2026, we are focusing on developing new campuses in Hicksville, New York and Roulette, Texas. Hicksville is on schedule to open during the fourth quarter of this year, while Roulette is expected to begin classes in the first quarter of 2027. Both campuses will provide HVAC, electrical, automotive technician and welding training programs and expand Lincoln's presence in growing metropolitan locations. In the case of Hicksville, it's Metropolitan New York where we have a very successful automotive technician and electrical program in Queens. In the case of Rallette, it's Metropolitan Dallas, where our Grand Prairie campus has been one of our most successful operations. The adding of a second campus in an underserved growing metropolitan market has been a most successful strategy for Lincoln, first executed at our East Point campus in Atlanta, which opened in 2024. The demand for our programs at East Point exceeded our initial expectations. And in 2025, we signed a lease to build out an additional 10,000 square feet of space at that facility. We expect to complete this expansion in 2026. In addition to new campuses, we have successfully executed the bulk of our program replication strategy at existing campuses. However, in January 2026, we opened an electrical program at our Plainfield, New Jersey campus, which was the 12th replication at an existing campus during the past 2 years. Like new campuses, these replications are significant contributors to our 15% start growth during 2025 and our outlook for continued start growth in 2026. However, I want to emphasize that our core business is also very strong with approximately half of this year's growth coming from campuses and programs that have been open for more than a year. We believe our Lincoln 10.0 hybrid teaching platform is also playing a major role in this growth by providing flexibility to our students who often need to balance work in life while earning their certificate or degree. We have 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 and organizational productivity through Lincoln 10.0 and anticipate this trend continuing during 2026. Meanwhile, we continue to evaluate opportunities to expand into other underserved U.S. markets and build on our core operations growth. For instance, we've 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 shift in mindset, 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 year of high school, and then continue after high school to gain their certificate in less time, which accelerates their entry into a rewarding career. Our corporate partnerships are also important sources of additional profitability and hiring opportunities for our students. A couple of weeks ago, we signed an agreement with New Jersey Transit under which our workforce Link division will provide diesel and electrical systems training to New Jersey transit technicians at New Jersey maintenance facilities. In addition, we expanded our highly successful partnership with Johnson Controls, with a new initiative that will provide technicians for their growing data center AI business and container Maintenance Corporation also reached out to expand training to even more of their workforce. Landing new accounts while expanding existing relationships clearly demonstrates Lincoln Tech's ability to deliver high ROI training to employers desperate to grow their workforce. The opportunity ahead for our workforce link division is to effectively communicate the value proposition that we provide so we can meaningfully capture more business. Our 2026 guidance illustrates our confidence in continuing the growth trends at both existing and recently launched operations going forward. We now believe we could approach the $600 million revenue level for the full year. We have made great strides during 2025 at reducing our bad debt levels. This progress, along with our other operating efficiencies being realized throughout our operations presents the opportunity to build on the exceptional adjusted EBITDA growth we experienced during the past year while further enhancing the Lincoln student experience. We have established a standard of excellence within our programs that meet or exceed all regulatory standards, and we've continued to build our student placement rate in rewarding long-term careers. Our outlook for the year ahead is robust, and we look forward to presenting a full 5-year road map during our Investor Day at our new Nashville campus on March 19. For nearly 80 years, Lincoln has remained focused on delivering high-quality life-changing career education and no one else has our 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 well positioned 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. Finally, I'd like to note aside from the Investor Day on March 19, we will be continuing our investor outreach efforts and continue to attend conferences and do non-deal road shows with our covering analysts. Now I'll turn the call over to Brian Meyers, so he can review the financial highlights for the fourth quarter and full year 2025 and our 2026 guidance. Brian?

Thank you, Scott, and good morning, everyone. From a financial perspective, Lincoln achieved many milestones during 2025. Our performance has positioned the company to achieve strong growth and increasing profitability as reflected in our 2026 guidance in our long-term outlook. As Scott said in his remarks, we had an excellent finish to an already strong year we outperformed our most recent guidance for revenue, net income and adjusted EBITDA while meeting start guidance with 15.2% growth year-over-year. I'll provide more detail on these results, but first, I'll start with our fourth quarter performance. As a reminder, comparisons to the prior year will exclude the Transitional segment, which consists of our former [ Summerlin ] Las Vegas campus sold in late 2024. We Fourth quarter revenue grew by $25.2 million or 21.4% and to $142.9 million. This growth was driven by a 17% increase in average student population and a 3.7% increase in revenue per student. We enrolled nearly 4,000 new students during Q4, representing stock growth of 15.7% and extending our track record of consistent year-over-year growth to 13 consecutive quarters. An important contributor to our overall stock growth in the quarter and throughout the year was our organic growth in starts, which accounted for approximately 4% of the growth. This excludes new campuses and program expansions launched in 2024 and 2025 and highlights the strong demand for our existing programs. Average student population grew 17% and year-end population increased nearly 15% to 17,000, representing over 2,200 more students than the prior year. This is one of several factors positioning us for another strong year of growth in 2026. Diving into the quarter's stock growth. Transportation and Skilled Trades, which represents about 80% of our STAR population generated stock growth of 23.4%, including strong organic growth of approximately 7.5%. Healthcare and other professions represents approximately 20% of our population, and we saw our thoughts in this programs declined 2%, which was in line with our expectations. This reflects our strategic decision to exit our culinary program in December of 2024. We are pleased to report that enrollments for nursing students at Paramus resumed last month the ported new nursing starts at Paramus was another main factor, reducing starts in the HOPS programs last year. Excluding the culinary program, Hotstar showed moderate growth as we continue to focus on strengthening our core offerings. Turning to expenses. Total operating expenses were $125.1 million, up $19 million, in line with expectations, reflecting higher costs to support our largest student population and growth initiatives. Depreciation expense increased $3.5 million due to our recent high level of growth-related capital investments in campus facilities. Excluding depreciation, Education service and facility expenses improved to 33% of revenue from 34.7%, reflecting instructional efficiencies from a hybrid teaching model. SG&A expenses also demonstrated operating leverage improving to 49.8% of revenue from 51.6%. This improvement was supported in part by lower bad debt expense as a percentage of revenue, which declined to 10.9% from 13.1%, reflecting enhancements to our financial process and stronger collections. Adjusted EBITDA increased 51.2% to $29.1 million including the Transitional segment. This growth demonstrates the strong operating leverage we are building with EBITDA margin expanding more than 400 basis points to 20.4%. Lastly, net income increased over 70% up to $12.7 million or $0.40 per diluted share adjusted net income increased to $15.8 million or $0.50 per diluted share on 31.4 million diluted shares outstanding. Now our full year results. Revenue grew 19.7% to $518.2 million, driven by a 17.9% growth in average student population. Total starts grew to approximately $21,000, up 15.2% with organic stock growth accounting for more than half of this increase. Adjusted EBITDA rose 60% to $67.1 million, including the Transitional segment and adjusted net income increased 64% to $28.4 million. Consistent with our seasonality, the fourth quarter was our strongest cash-generating quarter. Operating cash flow totaled $59.3 million, more than double the prior year. We ended the year with nearly $29 million in cash and approximately $90 million in total liquidity with no debt outstanding. Capital expenditures for 2025 totaled $88 million, of which $86.6 million is reflected on the statement of cash flow. Approximately 70% of total CapEx related to growth initiatives. We exceeded our CapEx guidance due to opportunities to accelerate construction activity at campuses under development, shifting spend from 2026 into 2025 while maintaining original campus opening time lines and budgets. As part of our CapEx growth projects, we completed 2 campus relocations, which included the launch of a total of 5 new programs additionally completed 2 program expansions and added 4 new programs at our existing campuses. Within 3 years, we expect each of these programs to generate on average around $1 million in incremental EBITDA, contributing significantly to future profitability. Looking ahead, based on our current trends and visibility we are providing the following guidance for 2026, revenue of $580 million to $590 million adjusted EBITDA of $72 million to $76 million; net income, $20 million to $23 million, diluted EPS $0.64 to $0.74 student stock growth of 8% to 13%, capital expenditures ranging from $70 million to $75 million. Let me provide some additional context around our guidance. Historically, we excluded preopening costs as well as net operating losses during the first year of operations from new campuses as well as prelaunch expenses from program replications from adjusted EBITDA. Beginning in 2026, we will no longer make those adjustments. Adjusted EBITDA will reflect only the add-back of noncash stock-based compensation. Historically, these excluded expenses totaled approximately $10 million in both 2024 and 2025. And we estimate to incur a similar amount of $10 million of expenses related to new campuses and program development in 2026 as we continue to invest in our growth initiatives especially our new campus openings in Hicksville, Long Island and Rolet, Texas. While we will no longer exclude these investment expenses from our calculation of adjusted EBITDA, we will continue to provide investors with our expected levels of these expenses along with the actual amounts incurred each quarter. We believe this added transparency will help investors better understanding our operating results and the profitability of our active campuses. All of our key financial metrics are expected to grow at a healthy pace in 2026. Revenue is expected to grow approximately 13% following the same seasonality as 2025. Starts are expected to generate high single-digit to low double-digit growth over the prior year period in each quarter. Adjusted EBITDA growth is expected to be approximately 30% for 2026. Consistent with our seasonality, project to generate the highest adjusted EBITDA in the fourth quarter. The higher growth rate for adjusted EBITDA compared to our projected revenue growth reflects the operating leverage of our business model. Net income is projected to grow a little bit, a little more modestly by approximately 7.5% year-over-year trailing adjusted EBITDA growth due to significant increases in depreciation expense. Depreciation is projected to increase to $33 million from $20.8 million in 2025. We anticipate total depreciation expense to be fairly even each quarter through the year. This increase reflects capital investments made in recent years reflect related to new campuses, campus relocations, new programs and program expansions -- over the past 3 years, these initiatives have accounted for the vast majority of our $185 million in net capital expenditures. As new campus open and program scale, these investments will mature and begin generating returns, allowing net income growth to more closely align with our adjusted EBITDA performance. For the full year, we expect net income in the first half of the year to be comparable or slightly down from the prior year, mostly due to depreciation with growth in the second half of the year. We anticipate the fourth quarter to be our strongest quarter of the year, a majority of our overall improvement. Regarding capital expenditures, we expect the majority of spend to occur in the first half of the year with approximately 70% allocated to growth initiatives, including new campuses and program expansions the remaining capital will be focused on enhancing our facilities, classrooms and training equipment to further improve the student experience. While capital spending will remain at a robust level of $70 million to $75 million in 2026 and is now comparable to our adjusted EBITDA and operating cash flow, both of which have grown significantly. As a result, although we expect to utilize our credit facility during the year, based on our current announced campus expansion plans to date, we anticipate finished 2026 with no debt outstanding once again. Net interest expense is expected to be approximately $5 million, primarily driven by increased borrowings. In terms of timing, we anticipate expenses to be relatively evenly distributed throughout the year with slightly higher levels in the second and third quarters. Our income tax provision is expected to be approximately 29% of pretax income. Lastly, we forecast our diluted weighted average common shares outstanding to range from $31.1 million to $31.4 million for the quarter and approximately $31.2 million for the year. In closing, we are proud of our 2025 performance and enter 2026 with strong momentum and confidence in our continued strength of our business. As Scott mentioned, we will be sharing our 5-year outlook at our Investor Day on March 19, our newly relocated Nashville, Tennessee campus. I want to thank our Lincoln team for their dedication and commitment to delivering exceptional education while creating long-term value for both students and shareholders. Now I'll turn the call over to the operator for questions. Operator?

[Operator Instructions] And our first question will come from Alex Perez with Barrington Research.

Congrats on the strong finish to the year. Looking forward to Investor Day and the 5-year targets.

Thanks, Alex. So are we. .

Great. I'll focus my questions on demand, which continues to be very strong across the board from organic growth to new campuses and program replications. You made some allusion in your overall -- your prepared comments about increased investment in your high school initiatives. Can you maybe go over that with us a little bit?

Sure. Historically, we've been getting about 20% of our students from the high school market. And even though we've been doing that, but there have always been high schools that have been, I'll say, hesitant to let us in to talk to their students. . And over the last 24 months, that has been changing. And so as the market is being far more receptive and as we're hearing more comments from high school parents and guidance counselors, that the trades really are important to them and their students. We're basically investing and putting more talent out there to go out to more high schools to recruit more high school students. I think it's the right time. The mood is right, and we're going to lean into that as much as possible. And I'm anticipating that we'll start getting more growth. We did grow our high school business this year. It will grow again next year. But I think the real kickers will come, frankly, in 2027 and 2028. Building high school teams is a long-term investment play -- as you know, you're meeting with students, you're meeting with guidance counselors in the fall and the spring and waiting for those students to then start in the summer. And we've already made good progress, and we've established some new relationships but I really anticipate that, that's going to really ramp up much more so, as I said, 12 months and 24 months from now.

That makes sense, and that's great color. I appreciate that. And then my follow-up question, I guess, would be just looking at the results by program, as you said in the prepared comments, transportation and skilled trades were up 23% in the quarter and the year, down in the quarter and the year for health care and other professions. I think you called out culinary program in 2024, which was eliminated and Paramus wasn't able to enroll new nursing students for a while. Maybe just a little bit more color on health care and other professions. If you exclude those 2, what is the balance of the health care and other professional business doing right now?

Yes. Thanks, Alex. And good points. So yes, well, first of all, in 2026, we expect that the health care sector will be growing as you mentioned, we are able to now reenroll at our Paramus campus. So we'll be able to grow and enroll students at all 7 of our LPN campuses and kind of somewhat put that in perspective. We closed out 2025 with maybe 40 students in our LPN program at Paramus. And before we were stopped from enrolling students there, we had over 250 students at that campus. So I'm anticipating that, that's going to start ramping up again, which is going to help us grow our health care sector. Also, as you mentioned, we did exit -- we've been exiting over the last couple of years. Programs that we know just don't provide the strongest ROI. And so we exited well, everything basically in the hospitality area, which includes culinary. While we had great employers, as I've said in the past, whether it's Disney, Marriott, in various chains coming to hire are chefs. They just don't pay a lot. And the recent data that came out from the department in January that kind of highlighted it's their version of gainful employment. I'm happy to say that all of our programs clearly passed the threshold, and that's due to the fact that, frankly, we just exited those programs that didn't do well, such as cosmetology and culinary but we're really poised for more growth. We've taken all the right moves, so it puts us in a good position. And like I said, we're leaning into high school, we're also going to continue to lead into the skilled trades in automotive. We just continue to see interest in demand from employers and students in both of those areas.

That's great. If I were to have a third question, that would have been my last one, the earnings test. And you said, just to be clear, that all your programs pass the threshold?

That is correct. That is correct. .

Our next question will come from Luke Horton with Northland Capital.

Congrats on a really, really strong end of the year here. Just wanted to start with sort of the 2026 outlook. If you could dive into some of the some of the puts and takes or assumptions baked into that guide from an organic perspective versus new campuses, continued hybrid learning rollout? Just kind of your thoughts around the 26 guide? .

Sure. I'll start off, Brian, then you can fill in anything. We expect to see continued trends that we've experienced, as we mentioned, in 2025, about half of our growth was from organic business. So that's growing existing programs at our existing campuses. I anticipate that, that's going to continue, maybe not at the same level that it did this year, just as the numbers keep getting bigger and bigger, but it will be meaningful. And then second of all, we do see the prospect of all the programs that we've put in place and the new campuses that we're opening. So that really gives us the confidence to give you this guidance for starts. And I'm anticipating that trends continue, we'll certainly be at the middle to the high end of that range. And then as you know, that's what drives everything else. It drives the revenue. And given the efficiencies we have with our hybrid model and given where we are with the number of students in the classroom as we continue to increase those student teacher ratios as we continue to increase the density at our campuses, those additional dollars do drop to the bottom line. And so we're using about a 30% number of additional revenue dropping to the bottom line, and that's what gives you the profitability. And that just flows through the income statement. I don't know, Brian, anything else?

Yes, you just about covered everything. The only thing I'll add is for the new campus is, let's say, Houston as well as our long -- our new Long Island campus that's come in the fourth quarter. Revenue for them is about 10%. And as I mentioned in my prepared remarks, they are anticipated to have losses that and some new programs of approximately about $10 million. So it's really not for 2026, adding to our profitability.

Okay. Got it. That's very helpful. And then just my follow-up would be on last call, you had mentioned that the East Point campus after outperforming expectations, you announced that incremental like 15,000 square foot expansion which could add about 500 student capacity. I guess any update on that time line? And I guess, are you guys seeing any other opportunities to do this with existing campuses or -- or is there any relocation opportunities like you've done with Nashville and Philadelphia?

Sure. I'll take that. So the new space will open up later this year. So we'll start getting incremental bodies, students from that. So that's really going to help maybe a little bit in the fourth quarter of this year, but really more so in 2027 for the East Point campus. I'll also just tell you that at both the Houston campus and the Leverton campus that we opened up in both of those facilities, we have about 10,000 to 15,000 square feet of space that we haven't yet built out so we can see what resonates in those markets to either grow our existing programs or to add new programs down the line. As I mentioned last time at our Melrose campus, we did close out our collision program, which opened up space. Our collision program at that time had maybe 60 students or so in it. and we were able to close that down at 40 more welding booths to that location at an HVAC program as well as our third Tesla training center. I can tell you that we are looking at doing a similar type of operation like that at our Grande Prairie campus, where we're going to scale back our collision program there to open up more space frankly, to continue to grow our electrical program. So there are select opportunities out there, and we just constantly just kind of look at the marketplace and see where the demand is, and we'll make adjustments accordingly. If that helps you.

Yes. No, super helpful. Makes sense. And looking forward to that Investor Day here next month. Look forward to seeing you there.

And the next question is going to come from Eric Martinuzzi with Lake Street.

Yes. I wanted to dive a little deeper on the CapEx spend here in 2027. You mentioned that it was essentially a pull forward of some of the spend that was planned for 2020. And was wondering if that was due to just sort of conservatism on the construction plans that you guys had in place or maybe a more favorable, more responsive regulatory approvals?

Yes. It'd be on the former side, I mean sometimes it's tough to gauge when certain things are going to get done and when certain permits are coming in. But the good news is that construction is moving along quite well. And yes, some of the expenses that we were thinking were going to happen this year occurred in 2025. And that sets our -- frankly, our Hicksville campus up to be in a good position to help contribute to us in the fourth quarter of this year.

Okay. And you talked about the employer demand being healthy, specifically calling out New Jersey Transit and Johnson Controls. Just curious if you had any other anecdotes from recent conversations with employers as far as incremental demand versus, say, 6 months ago?

Yes. No. Well, I would just say kind of across the board, Eric. Our career services people are out there all the time. We've actually also brought on a gentleman to help us build more national relationships and all I can say is that people are seeing more opportunity and not less as we continue to penetrate each market and get deeper into it. And so that really is very encouraging to us. because at the end of the day, as you know, our students are coming to us as they want to get a good solid career. And from everything that we're seeing, it's certainly not abating in any which way.

Got it.

And the next question will come from Steven Frankel with Rosenblatt.

Could you start by giving us the metrics for graduation rate and placement rate for 2025?

Sure. So our graduation rate, as we track it did decline by about 200 basis points to about 67.5%, if I'm not mistaken, and our placement rate increased by about 250 basis points to 82.8%, if I'm not mistaken.

Yes. Okay. Two quick questions there. One, in '25, what percentage of the incoming students came from high school? And where do you think these initiatives will take it? And then you talked about an interesting high school share program? How many locations is that currently ongoing today? .

Sure, Stephen. So again, about 20% of 2025 students basically came right out of high school and came to our schools where that's going to go. I know it's going to go higher. I don't have specific numbers because we're also going to be increasing our base. But I wouldn't be surprised if we start seeing it, let's say, in the mid- depending on how successful we are, but also is reflective of how much we continue to grow our adult market, which remains very robust for us. with regard to the high school share program. Right now, it's a -- I'll say this. We have about let's say, about 150 students in that program, and that's mainly in New Jersey since we have strong relationships there. However, we did bring on someone to help us grow this. And I can tell you that we literally have interest from dozens and dozens of school districts around the country as to what will materialize. It's hard to say. These school districts are very difficult to, I'll say, work with, and they're not necessarily quick to work with us. but we love the idea because as you probably know or may know, 20% of people in community colleges are in high school. They're doing dual enrollment. So we said, well, why can't we do the same thing with the trades and so for the students that we're serving today, if they start with us in -- I'm sorry, in their junior year they'll graduate having completed more than 50% of our program, which means if they were to enroll with us, they can continue their education, graduate in half the time with half the debt. It's kind of a win-win situation. So it's a wonderful opportunity. It's still in its infancy, but we're certainly going to push it as much as we can because I think it's a win-win for everyone.

[Operator Instructions] Our next question will come from Griffin Boss with B. Riley Securities.

Very solid results and guidance, and I appreciate the level of detail you provided today. So just 1 for me, I want to jump back to build on what Luke asked earlier regarding the guidance. Can you just kind of dig into how you're thinking about the revenue guide? Because if you look at the low end of the revenue guide implies about 12% year-over-year growth, really, really solid. But then you look at starts and you got that wide 8% to 13% range. So kind of what are the puts and takes there in terms of, let's say, you hit the low end of the revenue guide 580, you got 12% growth and starts or 8% or something, what's accounting for the delta there? I mean, are you anticipating 3% tuition increase for the year, which makes up that other 3% to 4% kind of?

Well, as we said in the past, we raised our tuition around 1% to 3% a year. We definitely want to stay at that level and not raise it more. If you look at our average revenue, that can fluctuate a little bit more than that, again, somewhat depending on program mix, but overall, I mean, you kind of -- you obviously did the math, you look at the numbers. There will be -- we feel very good about what we anticipate we'll be able to achieve -- we put numbers out there that we think are very achievable for us. And I think as far as the starts go, certainly 8%, I'll say this, I'd be very disappointed if we end up at that level. But the world is never fully certain as you look to the future. But it's certainly given where we are today, that certainly seems like that would be something meaningful without the change for us to be at that low level. I don't know, Brian, anything else you want to say.

The only thing I'll add, Griffin, is our -- we have a very robust carrying population that we're getting really good benefits from. I think it was like in my remarks, 2,200 more students were signed a year. So that really sets us up for a very strong -- but also, we're also looking at scholarships. Scholarships, when we give us our internal scholarships out, they do start at a higher rate we might be looking to reduce that a little bit as well that we should get a boost from revenue as well.

Got it. Okay. Great color. Scott. And again, really pleased to see the solid results and looking forward to continuable in March has.

And the next question comes from Rajiv Sharma with Texas Capital.

Congratulations on a strong beat. And yes, also a really good guidance. Now my question is, you continue to grow your enrollments exceeding competitors in the space, the starts growth. Can you give us any color on how the starts are faring geographically and also across auto, industrial or health care, sort of are you seeing a consistent growth pattern here? And do you expect to see that going on?

Yes. So I mean, good question. Certainly, geographically, we see opportunity kind of across the map. Certainly, our map, I can't say there's one area that's consistently better than another. So that's good for us. As far as programs go, there's certainly a stronger interest, I'll say, in the skilled trades in automotive than for us in the health care side of our business. But we're just -- I mean I don't know Raj, how to explain it, but all I can say is we've narrowed our focus to really be in about 9 different programs. Our goal is to really be the best in each of those programs. I think as we continue to concentrate and focus both from an academic standpoint, a curriculum development standpoint. It's giving us, I believe, short term and I'm hoping even long-term success and I hope that, that's going to also help frankly, our whole operation. It builds, we believe, stronger relationships and opportunities with the employers. That helps our students. It could help us, as I mentioned, with our workforce link division. But we're trying to be very thoughtful, very concentrated focused on quality, focused on ensuring students have the skills that they need and making the learning environment as attractive as possible. I will tell you, we had good growth in our student recommend rate for telling their friends, why don't you come to Lincoln. That's the best form of advertising we could have. And those are things that we're going to continue to foster because, a, we want to be the best and b, it helps our business thrive.

Yes. Great. And then just sort of bigger picture, the EBITDA growth has been fantastic. And you're getting about 13% EBITDA margins. Where overall, where can you expect those to trend to, and are those being held back, held down by your nursing health care-related I guess, promise and x of that, is that -- how do you see those trending? .

Well, as in our guidance and how we see things operating, I mean, I would anticipate that our EBITDA margins should continue to grow at the 150 to 250 basis points a year as we continue to grow our business. We get great operating leverage kind of across the board. We obviously have a lot of fixed costs. But once you have that faculty member, once you have that classroom, and as long as you have additional capacity, driving more people into it is what drives those margins, and we still have a lot of room for growth. We're probably about around 60% of capacity utilization. And as I've said to people in the past, that doesn't assume that we open up more capacity by doing weekends or other shifts that could add more capacity. So I anticipate the margins to continue to grow -- and I forget there was maybe another part to your question, but that's kind of the exciting part about where we see our future. revenue strong operating performance is strong and we anticipate our business is going to grow meaningfully at the top line, but even faster at the bottom line.

Great. Yes. And then just lastly, really looking forward to seeing you all at the Nashville campus. Would it be too much to expect Nashville campus performance to match what you guys did at East Point.

Well, I think that -- the difference is this, the East Point campus is truly a local serving campus. So it's all adults in high school students from that geography. Our Nashville camp is our most unique campus in that. It is certainly serving the local market, but it will also serve a much larger universe. So it enroll students from, I believe, it's 9 or 11 neighboring states. And so that campus is much more focused on the high school market. And that is one of the areas that we're going to be really growing our high school market. So I anticipate that the national campus can become certainly as profitable as the East Point campus but the pace at which that happens will be a little bit different because as we've mentioned with the high school program, you do a lot of work, you grow it in the summer, you do a lot of work, and then you grow it again in the next summer. Versus the East Point every month as we enroll new students, we're able to constantly build that population base. So I hope that helps you there.

Yes. Great. I'll end it there and again, congratulations on fantastic results.

Thank you I am showing no further questions at this time. I would now like to turn the call 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 and set forth financial guidance for 2026. Lincoln is benefiting from both macro operating environment trends, changes in public policy 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 creates 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 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. And I hope to see our analysts and investors at our Investor Day on March 19. Thank you all again, and have a great day.

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