Lincoln Educational Services Corporation (LINC) Q3 2026 Earnings Call Transcript

Operator: Thank you for standing by and welcome to the Lincoln Educational Services Third Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I would like to introduce your host for today's program, Doug Sherk of the EVC Group. Please go ahead, sir.

Doug Sherk: Thank you, Jonathan. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued a news release reporting financial results for the third quarter and first nine months of 2026, ending September 30th, 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, President Chief Executive Officer, and Brian Meyers, Executive Vice President, Chief Financial Officer, and Treasurer. 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 words may, will, expect, believe, anticipate, project, plan, intend, estimate, trend, 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 influences, many of which are beyond the company's control and may influence the accuracy of the statement and projection upon which the 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 available information 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 statement, 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 would like to turn the call over to Scott Shaw, President Chief Executive Officer of Lincoln Educational Services.

Scott Shaw: Thank you, Doug, and good morning, everyone. Thank you for joining us today as we review our strong third quarter financial and operating performance and provide an update on recent business developments that position us to continue our growth for the remainder of the year and into the future. Before I begin my comments about our quarter, I would like to wish everyone a happy Veterans Day, which is this Wednesday, November 11th. Lincoln was founded to help World War II veterans returning home transition into civilian careers. Today, we'd like to commemorate our legacy by thanking our past and current military members and their families for their service and sacrifice and wishing them all a happy Veterans Day. Last month, we celebrated Lincoln's 80th anniversary of providing superior education and training services for safe, in-demand, rewarding careers. As we did back in 1946, Lincoln continues to lead the way in an evolving skilled trades marketplace. Today, we are benefiting from the expanding interest across America as the demand for skilled workers exceeds supply. To meet the demand, we are expanding our programs at existing campuses and developing new campuses. We have focused our strategies on simplifying operations to maximize graduate opportunities in the electrical, HVAC, automotive, welding, and healthcare fields. These careers are in high demand and are expected to remain in high demand for many years despite the effects of artificial intelligence deployment throughout American enterprises. Our third quarter performance illustrates the success of our established model. We regained our student start growth momentum by generating a 14.2% increase over the prior year period. This growth resulted from our team successfully responding to a rapidly evolving marketing environment, increasing our conversion of leads to starts, examining new channels, benefiting from investments in our high school channel, and consistently exploring ways to increase large language model inclusion of our differentiation and superior outcomes for skilled trades and in-demand career training and education. Demand for our high return on investment training and education programs remains strong as corporations and organizations throughout America continue to search for ways to close their seemingly chronic employee skills gap, which is inhibiting their growth. We believe the demand for our programs is also benefiting from Americans increasingly turning to the skilled trades to provide stable, rewarding long-term careers. Our strong student starts, as well as the increase in our average student population, led to solid double-digit revenue growth for the quarter. By continuing to realize operating efficiencies from our Lincoln 10.0 hybrid teaching platform and other initiatives, we generated a substantial increase in cash generated from operating activities, a 22.5% increase in operating income, and more than 30% growth in adjusted EBITDA. And we returned capital to our shareholders through the purchase of approximately 870,000 shares of our common stock during the third quarter. Our decision to repurchase shares and our board's recent decision to increase the authorization to a total of $70 million reflects our confidence in Lincoln Tech's long-term growth prospects and our belief that our stock represents an attractive investment opportunity. The increased authorization combined with our strong liquidity position and expected cash flow generation provides us with the ability to continue investing in our growth initiatives while also returning capital to shareholders. Brian will provide more detail on the repurchases and our capital allocation strategy in his remarks. The Lincoln 10.0 hybrid teaching platform continues to provide flexibility to students needing to balance work and 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. While our Lincoln 10.0 hybrid teaching platform is realizing instructional efficiencies for the company, our instructors, and our students, we are also continuing to invest some of the gains from these efficiencies in programs and processes to continuously drive improved student outcomes, which we believe is positively impacting our student retention rate at our programs open for more than a year. Our strong cash generation and enhanced liquidity through an expanded credit facility provides ample resources to fund these initiatives, as well as new campus development and program expansions. During the third quarter, we completed the development of our new Hicksville, New York campus, which will start its first class this month. The 65,000 sq ft state-of-the-art campus in the heart of Long Island is offering specialized career training in automotive, welding, HVAC, and electrical and electronics, and is the second Lincoln campus in New York, as well as the 11th in the greater New York, Connecticut, and New Jersey tri-state area. During the quarter, we also continued the development of our Rowlett, Texas campus and initiated the development of our first Arizona campus in Tempe. We also initiated the development of our first focus program campus in the metropolitan Washington, D.C. area. Located in Suitland, Maryland, the 36,000 sq ft facility will initially offer electrical and electrical systems technology and HVAC programs to address the high demand for employees trained in these fields from data center and other employers in the region. The focus program concept is enabling Lincoln to develop the Suitland campus for an estimated $10 million investment compared to the $25 million investment we need to make when creating a traditional build-out. The campus is expected to serve approximately 500 students and generate some $15 million in annual revenues and $5 million in EBITDA when fully ramped up. We have also recently completed expansion of two other highly successful campuses. At our East Point, Georgia campus, we added 15,000 sq ft to serve an additional 300 students, bringing the total facility capacity to approximately 70,000 sq ft. The East Point campus continues to excel in all aspects of its operations, and together with our Marietta campus, illustrates the marketing leverage and efficiencies we can achieve in markets with more than one location. Our other expansion took place at the Melrose Park, Illinois campus, where we ended our auto collision program, introduced our HVAC program, created our third Tesla training center, expanded our welding program, and bought the facility. The successful transition means our average student population at Melrose Park has grown to the point where the campus is now the second largest in the Lincoln system, and we have achieved this growth while reducing our facility cost. Some of our recent operating highlights at existing campuses include the teaching out of the collision program at our Grand Prairie campus, where we expect to expand other programs as we've done in Melrose Park, continued strong growth in high school starts throughout our system, consistent graduation and job placement rates, and positive reaccreditation visits at a number of our campuses. Our efforts to revitalize our healthcare programs continue to generate results as student starts and graduation rates are realizing positive trends. We also made further progress in reducing our bad debt as a percentage of revenues, as well as improving our financial aid processing, which has played a key role in resuming double-digit start growth. As I mentioned at the beginning of my comments, we also improved our lead conversion rate as compared to historical levels, and despite higher lead generation costs, maintained a relatively flat overall student acquisition cost during the third quarter. Our business development team continues to examine underserved markets across the U.S. that would benefit from Lincoln's proven career development programs. We also continue to explore partnerships with organizations to bring high value-added career training that plays a critical role in reducing the skills gap. During the quarter, we celebrated the 500th graduate of our Johnson Controls Academy and expanded our WorkforceLinc division's collaboration with CMC Corporation. In addition, WorkforceLinc formed a new partnership with the engineering firm ABB, a global leader in electrification and automation, which will support ABB in building a nationwide recurring source of electrical and electronic technician candidates. A major focus of the effort is to develop skilled employees to serve the maintenance needs of the nation's growing number of data centers. Overall, it's been a very productive quarter for Lincoln Tech, which is reflected in the company's financial performance momentum. As we look ahead to the remainder of the year, we're encouraged by our start to the fourth quarter. The need for employees trained in the skilled trades, automotive, and healthcare fields continue to expand at robust rates, and Lincoln Tech is providing a unique, proven education and training model to meet the demand for our talented men and women to enter stable, rewarding careers that can last a lifetime. We are continuously working to increase the visibility of our outcomes and differentiation from other less successful training models, and our third quarter performance and outlook for the full year increases our confidence in achieving our 2030 financial objectives of approximately $850 million in revenue and $150 million in EBITDA. Before I turn the call over to Brian, I'd like to note that we will be continuing our investor outreach efforts over the next few months. We have an exciting story to share as demand remains strong, so we plan to attend conferences, conduct non-deal roadshows with our covering analysts, along with other events such as campus tours. We will be in Dallas attending the Southwest IDEAS Conference on November 18th, in Minneapolis and Chicago on November 23rd and 24th, respectively, with Lake Street, and in New York City with Barrington in early December. Additionally, we will be attending the Northland Virtual Conference on December 16th and the Needham Annual Growth Conference in New York City on January 12th and 13th. Now I'll turn the call over to Brian Meyers so he can review the financial highlights for the third quarter and first nine months of 2026 and review our guidance. Brian?

Brian Meyers: Thank you, Scott, and good morning, everyone. I'll begin with a few recent developments, including our capital allocation priorities and recent share repurchase activity before reviewing our third quarter 2026 financial results and provide an update on our outlook for the remainder of the year. In 2022, our board established a share repurchase program as a way to return capital to shareholders when we believe repurchases are an attractive use of capital, consistent with our overall capital allocation priorities. First and foremost, we invest in the business, which we continue to do, and I'll cover in more details when I review our expansion activities and capital investments. Second, we maintain a strong balance sheet. At the end of the quarter, we had more than $135 million of liquidity. Third, we seek to return excess capital to shareholders over time. As Scott mentioned, during the quarter, we repurchased approximately 871,000 shares of common stock for a total cost of approximately $21 million. Given our strong liquidity, cash flow generation, the board has extended the share repurchase program through May 2028 and increased the authorization by $30 million, bringing the remaining capacity to over $37 million. The timing and amounts of any future repurchase will depend on market conditions, share price, our capital needs, and other factors. The program does not obligate us to acquire any particular number of shares and may be modified, suspended, or discontinued at any time. In November, we also amended our revolving credit facility to provide greater flexibility, including supporting future share repurchases, which I'll discuss in more detail later in my remarks. Now let's turn to the third quarter financial results. As a reminder, as we have noted in prior earnings calls, there was a shift in our academic calendar last year that resulted in the start class that typically occurs in late June moving to July 1st, 2025. To provide a meaningful comparison, as in prior quarters, we have adjusted the third quarter 2025 student starts to exclude those July 1st starts and treat them as if they occurred in last year's second quarter. Our discussions today will compare third quarter 2026 starts with those adjusted numbers. We delivered strong financial and operating results in the third quarter, highlighted by solid growth in student starts, revenue, adjusted EBITDA, net income, and continued adjusted EBITDA margin expansion. Demand for our programs remains strong as reflected in our student start growth of 14.2%. Our ending student population grew by approximately 2,100 students, or 11% year-over-year, providing a solid foundation for continued revenue growth. Organic student starts increased by nearly 5%, reflecting continued demand for our programs. Our measurement of organic growth includes new campuses and programs that were in place for more than one year. The additional start growth over prior year came from our program expansions and our new Houston campus, which continues to grow its student population. As Scott discussed, actions we implemented to improve conversion from leads to enrollment to start gain traction during the third quarter, contributing to student start growth and also benefiting our student acquisition cost. Cost per start for the quarter remained relatively flat despite elevated lead costs, reflecting the benefits of improved lead conversion. This performance exceeded our expectations. Our strong student start volume and our efforts to improve enrollment conversions offset the higher spend in the quarter, and we are encouraged by this progress. However, we do expect that cost per start will be elevated above prior year levels in the near term as these initiatives continue. Year-to-date, student starts had increased 1,864 or 11%. Based on current enrollment trends, we expect this performance to continue, which supports our outlook for the full year student start growth of 10%-12%. Third quarter revenue increased 12.6% to $159.2 million, driven primarily by a 10.9% increase in our average student population. This marks our 14th consecutive quarter of double-digit year-over-year revenue growth. Turning to profitability. Operating expenses for the quarter were consistent with our expectations. Corporate expenses were relatively flat, while campus-level expenses increased in line with our revenue growth, supporting our larger student population and continued growth initiatives. This expense growth was primarily offset by favorable bad debt expense, which continues as a percentage of revenue below prior year levels, reflecting our continued focus on collections and managing credit losses. Adjusted EBITDA increased 30.8% to $17.4 million, with our adjusted EBITDA margin expanding by 150 basis points to approximately 11%. This improvement reflects operating leverage from our larger student population. As a reminder, beginning in 2026, our calculation of adjusted EBITDA no longer adds back pre-opening and first-year operating losses from new campuses. During the quarter, we incurred $2 million in new campus losses compared to $2.7 million the prior year quarter. These costs are fully reflected in our reported adjusted EBITDA, highlighting our ability to deliver strong earnings growth while continuing to invest in our campus expansion strategies. Net income increased 24% to $4.7 million compared to $3.8 million the prior year quarter. Diluted earnings per share were $0.15 based on approximately 31.4 million weighted average diluted shares outstanding. Turning to capital expenditures. We continue to invest in future business opportunities. Year-to-date spending totaled approximately $69.6 million, of which $67.4 million is reflected in our statement of cash flows, with the remainder accrued but not yet paid. Third quarter capital expenditures of approximately $36.4 million were in line with our expectations, including $17.4 million related to the purchase of our previously leased Melrose Park campus. We continue to expect full-year capital expenditures of $95 million-$100 million, consistent with our previously communicated outlook. Turning now to our balance sheet and financing activities. We continue to generate strong operating cash flow during the quarter, supported by our growing student population, improved operating performance, and effective management of cash collections. Cash flow from operations totaled $34.9 million in the third quarter, an increase of $11 million compared to the prior year quarter. Year-to-date operating cash flow reached $61.5 million compared to $15.8 million in the prior year, representing an improvement of nearly $46 million. This increase reflects our improved operating performance, continued focus on working capital management. We ended the third quarter with $20.6 million in cash and $115 million available in our revolving credit facility, providing total liquidity of $135.6 million. At quarter end, we had $10 million outstanding under the credit facility. During the quarter, we also completed the purchase of our previously leased Melrose Park campus, financed primarily with a $15 million mortgage loan. This transaction reduced our ongoing facility costs while providing us with a long-term control of the property. In November, we amended our $125 million revolving credit facility. The amendment expands our flexibility for future share repurchases, provided that we maintain total liquidity of more than $25 million following any repurchase. The amendment also adds a daily borrowing option that can be repaid at any time without penalty. In addition to our existing borrowing options, this lets us manage cash balances and borrowing costs more effectively. Together, these changes enhance our ability to employ capital, supporting our campus expansion initiatives while maintaining the flexibility to return capital to shareholders through our share repurchase program. Turning to our full-year outlook. Based on our year-to-date results, current trends, we are raising our revenue guidance, narrowing our student start growth range, and reiterating our guidance for adjusted EBITDA, net income, diluted EPS, and capital expenditures. We now expect revenue of $600 million-$605 million, up from $590 million-$600 million, adjusted EBITDA of $76 million-$80 million, net income of $23 million-$26 million, diluted EPS of $0.74-$0.83, capital expenditures of $95 million-$100 million, and student start growth of 10%-12%, narrowed from 10%-14%. As I mentioned earlier, beginning in 2026, our calculation of adjusted EBITDA no longer excludes pre-opening and first-year operating losses from new campuses. Accordingly, our guidance continues to include approximately $10 million in losses at our new campuses, which remain in line with our expectations. Non-cash stock-based compensation continues to be our only expense add-back to the calculation this year. Growth initiatives represent approximately 75% of our planned capital expenditures, underscoring our continued focus on expanding capacity and supporting future enrollment growth. We'll continue to update our capital expenditure outlook as we announce additional campus locations. In closing, our strong year-to-date performance reinforces our confidence in achieving our long-term financial objectives. Before we open the call for questions, I'd like to echo Scott's appreciation for the veterans throughout the Lincoln community and thank them for their services. I also want to recognize our entire team for their continued dedication to providing a high-quality education and strong outcome to our students. With that, I'll turn the call over to the operator for questions. Operator?

Operator: Certainly. Ladies and gentlemen, we would like to ask you to please limit yourself to one question and one follow-up. You may get back in the queue as time allows. Our first question comes on the line of Alex Paris from Barrington Research. Your question, please.

Alex Paris: Hi, guys. Thanks for taking my question, and thanks for the beat and limited raise. It is quite a change from some of the other education reports we had seen earlier last week and the week before, which has kind of driven down stock prices. I wanted to dig into starts guidance a little bit, just starts in general as well as starts guidance. You narrowed the guidance from 10%-14% growth for the full year to 10%-12%. I think most of the analysts that publish starts numbers were at the low end, including me anyway. The question is, what is going on with starts? Then within starts, let us talk about high school, because we had pretty big expectations for high school this time around.

Scott Shaw: Sure, Alex, and thanks for the question. I mean, we are in many regards no different than others in that certainly the marketplace has changed with the searches taking place and maybe Google not being as effective. But we have a number of channels that we are deploying or utilizing or tapping into, which obviously turned into a really strong performance in the third quarter. As we also mentioned, we are getting better with our conversions, we are getting better with our financial aid process, we are getting better in connecting with the enrollments that we have. I will just say this, compared to the second quarter, we have overcome those challenges, and that is what has helped lead us into a strong third quarter. We will continue down this path of finding improvements, trying to find new channels of opportunity, expanding our social media presence, while continuing to invest and make changes so that these large language models just do not focus solely on cost, but also will highlight what we know are those strong benefits of a Lincoln Tech education, such as better graduation rates, good return on investment, and the like. As you mentioned, we have made investments in our high school sales team, and they performed well for us. They were at double digits growth, which is what we wanted, and we anticipate, frankly, next year to be more robust than this year, because as you also probably know, investing in high school takes time. But we have a really well-trained group of individuals that are committed to helping students. They're out there as we speak, going to those high schools, introducing the skilled trades. To the high school channel, we don't get any of the distractions that, I guess, exist out there with these large language models, because we can clearly demonstrate where the value is by coming to Lincoln Tech, and both the high school students and their parents can resonate very strongly with that message. The landscape is constantly changing. We're constantly adapting to that landscape, and I'm just really pleased by the performance that our team is achieving.

Alex Paris: I guess that my follow-up would be, since you referred to it, you have a number of channels that you're tapping. So, high school is part of that, military is part of that, corporate alliances are part of that. Could you break down either total revenue or starts by those various channels, just ballpark at least?

Scott Shaw: Yeah. So, I mean, in aggregate, high school is about 20% of our starts, a little bit higher than that. Obviously, in the third quarters, that's where the bulk of the high school students come in. Military is still small for us. While we reference the fact that we started as 100% military back in 1946, we're only about 6% right now. But we've made investments also in our military channel that we anticipate seeing some benefits from, frankly, in 2027. So, it would be nice to bring that back up to hopefully double digits in the next 24 months. Then from a corporate standpoint, I still believe that that's a huge, really untapped opportunity for us and an area that we are going to put more resources behind. I think that once we tap into that fully, that will really help support our growth beyond just reaching the adults that we do through our existing marketing channels. So, we're just going to continue to find the people where they are, because we know from talking to employers that they have not let up on the need for what we're doing. So, it's really just trying to get our message out there to as many people as possible.

Alex Paris: Great. Thanks for the additional color, guys. I'll get back in the queue.

Scott Shaw: Thanks, Alex.

Operator: Thank you. Our next question comes from the line of Eric Wold from Texas Capital Securities. Your question, please.

Eric Wold: Thanks. Good morning.

Scott Shaw: Morning.

Eric Wold: Two quick questions, I guess. First off, what are you seeing in terms of the cost per lead increase compared to last year? How is that running? Is it still up 20-ish percent? Then what are you finding is the best way to kind of navigate around that in terms of which channels, like social media, are kind of proving the most effective around that?

Scott Shaw: Sure. Yeah, we're still seeing cost per lead up at that level, Eric, around the 20% level, and that's what we're going to be forecasting going forward. We're hoping that that will lessen in time, but as of right now, that's certainly the world we're living in. We're looking then for other channels. One of the great channels that we've had good success is our own students. We just did our student satisfaction surveys. We got the best results that we've had in years, and we're constantly reaching out to our students and say, "Hey, is there someone else, a friend of yours, a cousin, or someone that could benefit from the Lincoln Education just like you are?" That's a very low-cost, I'll say, source of enrollments and leads. We'll constantly look at where is the best value for us to put our time and energy. As I mentioned earlier, we are putting more into social media. We've recently ensured that every campus, or at least 95% of our campuses, have someone solely dedicated to be on social media, because we know that's where our students are spending a lot of time, and our campuses really have a lot of rich material that is very attractive to people. We're increasing those efforts as well. Again, however we can get out our message is what we're going to pursue, and as the markets change, we'll constantly reallocate our resources accordingly.

Eric Wold: Perfect. Then, follow-up question. I know there's been a big focus on kind of your pre-qualifying, vetting your prospective students ahead of time around the kind of financial aid issues and default issues. Any sense of kind of the number of students or kind of a percentage of students that kind of come looking to enroll and ultimately are unable to because of past financial aid issues?

Scott Shaw: Yeah, I don't have that number, but I can tell you, in general, I mean, it's not something that is of such magnitude that people are viewing that as a headwind for us. I am sure that the number is probably larger than I would like, simply because there's so many people that could benefit from an education. But if they've unfortunately not kept up with their payments, that certainly limits what they can do going forward. But in short, it's not popping up to me at my level as far as being any kind of resistance to our future growth.

Eric Wold: Perfect. Thank you.

Scott Shaw: Yep.

Operator: Thank you. Our next question comes from the line of Steven Frankel from Rosenblatt Securities. Your question, please.

Steven Frankel: Good morning, and thank you. Scott, could you talk about show rates? That was one of the factors in last quarter's disappointing start rate. Maybe how show rates changed in Q3 and what you're doing going forward to make sure that they're going in the right direction.

Scott Shaw: Yeah. Well, obviously, we were a little bit surprised in Q2. We obviously didn't want to repeat that. So, we stepped up a number of initiatives. One is just more engagement by our admissions folks with students that are enrolled, just to make sure that they remember the value opportunity and why they selected us and why they want to change their life, and just staying in front of those students so that more of them do start. We definitely had more students start who were enrolled with us. Similarly, it's also with financial aid. The sooner that the students know how much it's going to cost them and how they're going to pay for the education, the more comfortable they are. Last year, I'm sorry, last quarter, we did have more people than the prior year go through financial aid. This quarter, in third quarter, we had even more people. With the admissions folks supporting that initiative and keeping those students engaged in the process seems to have translated into our start rate was up, frankly, a couple of hundred basis points, which is very impactful.

Steven Frankel: That's great. Then on this ABB effort that you're going to be doing around data centers, could you talk to us about what specifically is in this training that's not in your traditional electrical or HVAC training?

Scott Shaw: Sure. So, in this case, we are actually just helping ABB find people who are graduating from our organization to then enroll at ABB and start their program. It's not requiring, frankly, any additional training by us of our students. It's more finding students that are willing and able to move to locations that ABB has. So, it's really a partnership in placement services for ABB.

Steven Frankel: Great. Thank you so much.

Scott Shaw: Surely.

Operator: Thank you. Our next question comes from the line of Eric Martinuzzi from Lake Street Capital Markets. Your question, please.

Eric Martinuzzi: Yeah. I appreciate the upward revision on the revenue side. We didn't get the flow-through, though, to the adjusted EBITDA. Is that back to your comment, Scott, regarding the increased cost of student acquisition?

Scott Shaw: Yeah. I mean, we're no different than anyone else out there. I mean, costs are up kind of across the board in any number of categories. It could be marketing, it could be laptop costs, it could be, frankly, even medical costs. So certain costs are up there, as well as we're continuing, as I mentioned in my remarks, making investments to enhance our experience for our students so that more of them can graduate. We remain about 200 basis points ahead in our retention of our students, and we think that that is almost one of the most important metrics that we're looking to drive up. So, we do have some additional investments in that area that are taking place. But, again, though, you did still see good margin improvement overall for our business. The business model remains the same as we get greater concentration of students at each campus, their profitability increases, for sure.

Eric Martinuzzi: You talk about investments. I see the repurchase program you were very active in in the third quarter. Just curious to know, should we anticipate something similar given the share prices at which you were purchasing in Q3 or similar to where we are now? Or is there a, this was opportunistic and we pounced on it, but you guys aren't lacking for places to deploy capital, whether it's building acquisition, new campus investments, debt service. So, what's the-

Scott Shaw: Yep

Eric Martinuzzi: ongoing kind of tempo for repurchases?

Scott Shaw: Sure. I mean, again, it is, we're going to continue to evaluate it. As Brian mentioned in his remarks, and as you just mentioned, we do have a number of growth initiatives underway. And so when we see opportunity and we feel that we have enough liquidity out there to take advantage of it, we and the board will continue to make those decisions. There's nothing written in stone, but as we mentioned, we increased the size of it so that we do have greater flexibility and can take advantage of it when the market seemingly seems to go in a direction that I just don't understand at times.

Eric Martinuzzi: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Luke Horton from Northland Capital Markets. Your question, please.

Luke Horton: Yeah. Hey, guys. Thanks for taking the questions. Congrats on the quarter.

Scott Shaw: Sure.

Luke Horton: Nice to see starts back up double digits here. If we rewind to last quarter, I know there was a lot of uncertainty kind of following the AI search disruptions. I guess, could you just give us a sense of how you feel today versus a few months ago when you reported last quarter, how you feel about that channel? I know you're making some investments in other channels like social media, et cetera, but this one specifically, I guess, how do you feel now versus a few months ago, and any sort of percentage of leads that are coming through an AI search platform that you could help give us some clarity on?

Scott Shaw: Sure. I mean, I'm definitely feeling better simply because our performance is better. It just reassures me that our organization can pivot and we aren't, I'll say, a one-trick pony. We can find other ways to get students. To your primary question, it's still a challenging environment out there because of these AI models. We're certainly not back to anywhere close to where we were six to nine months ago. But I do feel that we are getting a better handle on it, and frankly, the market's probably getting a better handle on it. We're all learning more and figuring out ways how to enhance our presence with these large language models. But it still remains a bit of a challenge. I'm not going to deny that.

Luke Horton: Okay. Fair enough. Then just kind of switching over to program expansions. You made several over the last couple years. I guess, are there any campuses still left that don't have the core kind of HVAC, electrical, welding courses that you're looking for additional program expansions here in the near term?

Scott Shaw: Yeah. There are no more really for the HVAC and electrical that have, I'll say, space readily available at this moment. I'll just also share this because it's something we're doing. We are expanding our heavy equipment program, which is kind of a spinoff of our diesel program, into Denver and into Grand Prairie, simply because with our increased investment in high school, we believe that there's a good opportunity for high school students who seem to, at least at our Nashville campus, that program is robust with them. And so as we enhance our high school marketing efforts at our other campuses, we think we have an opportunity to grow that program, certainly with the high school workforce. But as far as other replications, it'll probably be more likely that we'll be replicating some of our healthcare programs in the future once we, I'll say, fully stabilize and get the earnings level that we want from our LPN program, with also that expectation that we are going to continue to pursue the opportunity to have an RN program. And I think that once we have the two, an LPN and RN program, that will become a very attractive replication opportunity for us.

Brian Meyers: The one thing I will add is, as Scott mentioned, at some of our locations, space is at a premium. What we are looking at certain programs that have a little bit lower interest and swapping them out with a higher interest program. Obviously, there will be a slight teach-out associated with that, so we are modeling that out today, but there are several campuses that we might be doing that in the future.

Luke Horton: Okay. Got it. Well, thanks for taking the questions, guys.

Scott Shaw: Yep. Thank you.

Luke Horton: Thanks.

Operator: Thank you. Once again, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. This does conclude the question and answer session of today's program. I would like to hand the program back to Scott Shaw for any further remarks.

Scott Shaw: Thank you, operator, and thank you all for joining us today as we reviewed our strong progress. While Lincoln is benefiting from both macro operating environment trends and our own consistent execution of growth initiatives at our existing campuses and new facilities, we are also demonstrating our ability to react quickly and successfully to changing dynamics within the market. The need for skilled trade professionals continues to expand, as does the interest of prospective students to enter a skilled trades profession. 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 the dedication to achieving our goals. Thank you all again, and have a great day.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.