QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
|
|
|
(Zip Code)
|
|
(Address of principal executive offices)
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
|
|
Non-accelerated filer ☐
|
Smaller reporting company
|
|
Emerging growth company
|
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
1
|
|
1
|
||
3
|
||
4
|
||
5
|
||
6
|
||
8
|
||
Item 2.
|
23
|
|
Item 3. |
32 | |
Item 4.
|
32
|
|
PART II.
|
32
|
|
Item 1.
|
32
|
|
Item 1A. |
Risk Factors |
32 |
Item 2. |
32 | |
Item 3. | Defaults Upon Senior Securities |
33 |
Item 4. | 33 | |
Item 5. |
Other Information |
33 |
Item 6.
|
33
|
|
34
|
Item 1. |
Financial Statements
|
March 31,
2022
|
December 31,
2021
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, less allowance of $
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Assets held for sale
|
||||||||
Total current assets
|
|
|
||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $
|
|
|
||||||
OTHER ASSETS:
|
||||||||
Noncurrent receivables, less allowance of $
|
|
|
||||||
Deferred income taxes, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Goodwill
|
|
|
||||||
Other assets, net
|
|
|
||||||
Total other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
March 31,
2022
|
December 31,
2021
|
|||||||
LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Unearned tuition
|
$ |
|
$ |
|
||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Income taxes payable
|
|
|
||||||
Current portion of operating lease liabilities
|
|
|
||||||
Other short-term liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
NONCURRENT LIABILITIES:
|
||||||||
Pension plan liabilities
|
|
|
||||||
Long-term portion of operating lease liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SERIES A CONVERTIBLE PREFERRED STOCK
|
||||||||
Preferred stock,
|
|
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock at cost -
|
(
|
)
|
(
|
)
|
||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
TOTAL LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY
|
$
|
|
$
|
|
Three Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
REVENUE
|
$
|
|
$
|
|
||||
COSTS AND EXPENSES:
|
||||||||
Educational services and facilities
|
|
|
||||||
Selling, general and administrative
|
|
|
||||||
Total costs & expenses
|
|
|
||||||
OPERATING (LOSS) INCOME
|
(
|
)
|
|
|||||
OTHER:
|
||||||||
Interest expense
|
(
|
)
|
(
|
)
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(
|
)
|
|
|||||
(BENEFIT) PROVISION FOR INCOME TAXES
|
(
|
)
|
|
|||||
NET INCOME
|
$
|
|
$
|
|
||||
PREFERRED STOCK DIVIDENDS
|
|
|
||||||
(LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
(
|
)
|
$
|
|
|||
Basic and diluted
|
||||||||
Net (loss) income per common share
|
$
|
(
|
)
|
$
|
|
|||
Weighted average number of common shares outstanding:
|
||||||||
Basic and diluted
|
|
|
Three Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
Net income
|
$
|
|
$
|
|
||||
Other comprehensive income (loss)
|
||||||||
Derivative qualifying as a cash flow hedge, net of taxes ()
|
|
|
||||||
Employee pension plan adjustments, net of taxes ()
|
(
|
)
|
(
|
)
|
||||
Comprehensive income
|
$
|
|
$
|
|
Stockholders’ Equity
|
||||||||||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-in
|
Treasury
|
Retained
|
Accumulated
Other
Comprehensive
|
Series A
Convertible
Preferred Stock
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stock
|
Earnings
|
Loss
|
Total
|
Shares
|
Amount
|
||||||||||||||||||||||||||||
BALANCE - January 1, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividend
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Derivative qualifying as cash flow hedge
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
BALANCE -March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
Stockholders’ Equity
|
||||||||||||||||||||||||||||||||||||
|
Common Stock
|
Additional
Paid-in
|
Treasury
|
Retained
|
Accumulated
Other
Comprehensive
|
Series A
Convertible
Preferred Stock
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stock
|
Earnings
|
Loss
|
Total
|
Shares
|
Amount
|
||||||||||||||||||||||||||||
BALANCE - January 1, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Preferred stock dividend | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Derivative qualifying as cash flow hedge
|
-
|
|
|
|
|
|
|
-
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
BALANCE - March 31,
2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
Three
Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Amortization of deferred finance charges
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Fixed asset donations
|
(
|
)
|
(
|
)
|
||||
Provision for doubtful accounts
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories
|
|
(
|
)
|
|||||
Prepaid income taxes and income taxes payable
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and current assets
|
(
|
)
|
(
|
)
|
||||
Other assets, net
|
(
|
)
|
|
|||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
(
|
)
|
(
|
)
|
||||
Unearned tuition
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
(
|
)
|
|
|||||
Total adjustments
|
(
|
)
|
(
|
)
|
||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
||||
Proceeds from sale of property and equipment
|
|
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments on borrowings
|
|
(
|
)
|
|||||
Dividend payment for preferred stock
|
(
|
)
|
(
|
)
|
||||
Net share settlement for equity-based compensation
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(
|
)
|
(
|
)
|
||||
CASH AND CASH EQUIVALENTS —Beginning of period
|
|
|
||||||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
|
$
|
|
Three
Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$
|
|
$
|
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liabilities accrued for or noncash additions of fixed assets
|
$
|
|
$
|
|
1. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2. |
NET (LOSS) INCOME PER COMMON SHARE
|
Three
Months Ended
March 31,
|
||||||||
(in thousands, except share data)
|
2022
|
2021
|
||||||
Numerator:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Less: preferred stock dividend
|
(
|
)
|
(
|
)
|
||||
Less: allocation to preferred stockholders
|
(
|
)
|
(
|
)
|
||||
Less: allocation to restricted stockholders
|
(
|
)
|
(
|
)
|
||||
Net (loss) income allocated to common stockholders
|
$
|
(
|
)
|
$
|
|
|||
Basic (loss) income per share:
|
||||||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
|
|
||||||
Basic (loss) income per share
|
$
|
(
|
) |
$
|
|
|||
Diluted (loss) income per share:
|
||||||||
Denominator:
|
||||||||
Weighted average number of:
|
||||||||
Common shares outstanding
|
|
|
||||||
Dilutive potential common shares outstanding:
|
||||||||
Series A Preferred Stock
|
|
|
||||||
Unvested restricted stock
|
|
|
||||||
Dilutive shares outstanding
|
|
|
||||||
Diluted (loss) income per share
|
$
|
(
|
) |
$
|
|
Three Months Ended
March 31,
|
||||||||
(in thousands, except share data)
|
2022
|
2021
|
||||||
Series A Preferred Stock
|
|
|
||||||
Unvested restricted stock
|
|
|
||||||
|
|
3. |
REVENUE RECOGNITION
|
Three months ended March 31, 2022
|
||||||||||||||||
|
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
|||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||
Services transferred
at a point in time
|
$
|
|
$
|
|
$
|
|
||||||||||
Services transferred
over time
|
|
|
|
|||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
Three months ended March 31, 2021
|
||||||||||||||||
|
Transportation
and Skilled
Trades Segment
|
Healthcare
and Other
Professions
Segment
|
Consolidated
|
|||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||
Services transferred
at a point in time
|
$
|
|
$
|
|
$
|
|
||||||||||
Services transferred
over time
|
|
|
|
|||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
4. |
LEASES
|
Three Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
Operating cash flow information:
|
||||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$
|
|
$
|
|
||||
Non-cash activity:
|
||||||||
Lease liabilities arising from obtaining right-of-use assets
|
$
|
|
$
|
|
As of
March 31,
|
||||||||
2022
|
2021
|
|||||||
Weighted-average remaining lease term
|
|
|
||||||
Weighted-average discount rate
|
|
%
|
|
%
|
Year ending December 31,
|
||||
2022 (excluding the three months ended March 31, 2022)
|
$
|
|
||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Present value of lease liabilities
|
$
|
|
5. |
GOODWILL AND LONG-LIVED ASSETS
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
|
-
|
|
|||||||||
Balance as of March 31, 2022
|
$
|
|
$
|
(
|
)
|
$
|
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Adjustments
|
|
-
|
|
|||||||||
Balance as of March 31, 2021
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
LONG-TERM DEBT
|
7.
|
STOCKHOLDERS’ EQUITY
|
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|||||||
Nonvested restricted stock outstanding at December 31, 2021
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Canceled
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Nonvested restricted stock outstanding at March 31, 2022
|
|
|
Shares
|
Weighted
Average
Exercise Price
Per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||||||
Outstanding at December 31, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Granted/Vested
|
|
|
- |
|
||||||||||||
Canceled
|
(
|
)
|
|
- |
|
|||||||||||
Outstanding at March 31, 2022
|
|
|
-
|
|
||||||||||||
Vested as of March 31, 2022
|
|
|
-
|
|
||||||||||||
Exercisable as of March 31, 2022
|
|
|
-
|
|
8. |
INCOME TAXES
|
9. |
COMMITMENTS AND CONTINGENCIES
|
10. |
SEGMENTS
|
For the Three Months Ended March 31,
|
||||||||||||||||||||||||
Revenue
|
Operating (loss) income
|
|||||||||||||||||||||||
2022
|
% of
Total
|
2021
|
% of
Total
|
2022
|
2021
|
|||||||||||||||||||
Transportation and Skilled Trades
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
$
|
|
||||||||||||
Healthcare and Other Professions
|
|
|
%
|
|
|
%
|
|
|
||||||||||||||||
Corporate
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
(
|
)
|
$
|
|
Total Assets
|
||||||||
March 31,
2022
|
December 31, 2021
|
|||||||
Transportation and Skilled Trades
|
$
|
|
$
|
|
||||
Healthcare and Other Professions
|
|
|
||||||
Corporate
|
|
|
||||||
Total
|
$
|
|
$
|
|
11. |
FAIR VALUE
|
Three Months Ended
|
||||||||
March 31, | ||||||||
2022
|
2021
|
|||||||
Interest Expense |
|
|||||||
Interest Rate Swap
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31, | ||||||||
2022
|
2021
|
|||||||
Derivative qualifying as cash flow hedge |
|
|||||||
Interest rate swap income
|
$
|
|
$
|
|
|
12. |
COVID-19 PANDEMIC AND CARES ACT
|
13.
|
Property Sale
Agreements
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
||||
Costs and expenses:
|
||||||||
Educational services and facilities
|
43.8
|
%
|
41.5
|
%
|
||||
Selling, general and administrative
|
56.5
|
%
|
50.8
|
%
|
||||
Total costs and expenses
|
100.4
|
%
|
92.3
|
%
|
||||
Operating (loss) income
|
-0.4
|
%
|
7.7
|
%
|
||||
Interest expense, net
|
-0.1
|
%
|
-0.3
|
%
|
||||
(Loss) income from operations before income taxes
|
-0.4
|
%
|
7.4
|
%
|
||||
(Benefit) provision for income taxes
|
-0.8
|
%
|
1.6
|
%
|
||||
Net income
|
0.3
|
%
|
5.8
|
%
|
Three Months Ended March 31,
|
||||||||||||
2022
|
2021
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Transportation and Skilled Trades
|
$
|
58,784
|
$
|
55,670
|
5.6
|
%
|
||||||
Healthcare and Other Professions
|
23,770
|
22,326
|
6.5
|
%
|
||||||||
Total
|
$
|
82,554
|
$
|
77,996
|
5.8
|
%
|
||||||
Operating (Loss) Income:
|
||||||||||||
Transportation and Skilled Trades
|
$
|
7,245
|
$
|
12,324
|
-41.2
|
%
|
||||||
Healthcare and Other Professions
|
1,307
|
2,949
|
-55.7
|
%
|
||||||||
Corporate
|
(8,878
|
)
|
(9,254
|
)
|
4.1
|
%
|
||||||
Total
|
$
|
(326
|
)
|
$
|
6,019
|
-105.4
|
%
|
|||||
Starts:
|
||||||||||||
Transportation and Skilled Trades
|
2,178
|
2,339
|
-6.9
|
%
|
||||||||
Healthcare and Other Professions
|
1,175
|
1,209
|
-2.8
|
%
|
||||||||
Total
|
3,353
|
3,548
|
-5.5
|
%
|
||||||||
Average Population:
|
||||||||||||
Transportation and Skilled Trades
|
8,519
|
8,032
|
6.1
|
%
|
||||||||
Leave of Absence - COVID-19
|
-
|
(15
|
)
|
100.0
|
%
|
|||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19
|
8,519
|
8,017
|
6.3
|
%
|
||||||||
Healthcare and Other Professions
|
4,365
|
4,409
|
-1.0
|
%
|
||||||||
Leave of Absence - COVID-19
|
-
|
(90
|
)
|
100.0
|
%
|
|||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19
|
4,365
|
4,319
|
1.1
|
%
|
||||||||
Total
|
12,884
|
12,441
|
3.6
|
%
|
||||||||
Total Excluding Leave of Absence - COVID-19
|
12,884
|
12,336
|
4.4
|
%
|
||||||||
End of Period Population:
|
||||||||||||
Transportation and Skilled Trades
|
8,570
|
8,212
|
4.4
|
%
|
||||||||
Leave of Absence - COVID-19
|
-
|
(19
|
)
|
100.0
|
%
|
|||||||
Transportation and Skilled Trades Excluding Leave of Absence - COVID-19
|
8,570
|
8,193
|
4.6
|
%
|
||||||||
Healthcare and Other Professions
|
4,404
|
4,532
|
-2.8
|
%
|
||||||||
Leave of Absence - COVID-19
|
-
|
(79
|
)
|
100.0
|
%
|
|||||||
Healthcare and Other Professions Excluding Leave of Absence - COVID-19
|
4,404
|
4,453
|
-1.1
|
%
|
||||||||
Total
|
12,974
|
12,744
|
1.8
|
%
|
||||||||
Total Excluding Leave of Absence - COVID-19
|
12,974
|
12,646
|
2.6
|
%
|
• |
Revenue increased $3.1 million, or 5.6% to $58.8 million for the three months ended March 31, 2022 from $55.7 million in the prior year comparable period. The increase in revenue was driven by a 6.3%
increase in average student population mainly driven by a higher beginning of period population in the current year of approximately 730 students.
|
• |
Educational services and facilities expense increased $2.6 million, or 12.0% to $24.5 million for the three months ended March 31, 2022 from $21.9 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to market adjustments and larger staffing levels, as a result of population growth, program expansion and the return
to normalized levels of in-person instruction post COVID-19 restrictions. In addition, consumables prices rose sharply driven by the on-going inflation spike impacted and supply-chain shortages. Facility expenses increased as a result of
approximately $0.8 million of additional rent expense from the sale leaseback transaction relating to our Denver and Grand Prairie campuses consummated in the fourth quarter of 2021 and higher maintenance costs.
|
• |
Selling, general and administrative expense increased $5.6 million, or 25.9% to $27.0 million for the three months ended March 31, 2022 from $21.4 million in the prior year comparable period. The increase
was primarily driven by additional bad debt expense and marketing investments, which are all discussed in more detail above in the consolidated results of operations.
|
• |
Revenue increased $1.5 million, or 6.5% to $23.8 million for the three months ended March 31, 2022 from $22.3 million in the prior year comparable period. The increase in revenue was primarily the result of
a 5.3% increase in average revenue per student.
|
• |
Educational services and facilities expense increased $1.2 million, or 11.8% to $11.6 million for the three months ended March 31, 2022 from $10.4 million in the prior year comparable period. Increased costs
were primarily concentrated in instructional expense and facilities expense. Instructional salaries increased mainly due to market adjustments and larger staffing levels, as a result of population growth, program expansion and the return
to normalized levels of in-person instruction post COVID-19 restrictions. Increased facilities expense was the result of additional spending for common area maintenance quarter over quarter.
|
• |
Selling, general and administrative expenses increased $1.9 million, or 20.7% to $10.8 million for the three months ended March 31, 2022 from $8.9 million in the prior year comparable period. The increase
was primarily driven by additional bad debt expense and marketing investments, which are all discussed in more detail above in the consolidated results of operations.
|
Three Months Ended
March 31,
|
||||||||
2022
|
2021
|
|||||||
Net cash used in operating activities
|
$
|
(14,367
|
)
|
$
|
(8,299
|
)
|
||
Net cash used in investing activities
|
(1,045
|
)
|
(1,219
|
)
|
||||
Net cash used in financing activities
|
(2,296
|
)
|
(1,766
|
)
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Item 3. |
DEFAULTS ON SENIOR SECURITIES
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
Item 6. |
EXHIBITS
|
Exhibit
Number
|
Description
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005.
|
3.2
|
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on
Form S-3 filed October 6, 2020).
|
3.3
|
Bylaws of the Company as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30, 2020).
|
31.1*
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32**
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101*
|
The following financial statements from Lincoln Educational Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i)
Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity,
(v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
* |
Filed herewith.
|
** |
Furnished herewith. This exhibit will not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.
|
LINCOLN EDUCATIONAL SERVICES CORPORATION
|
|||
Date: May 9, 2022
|
By:
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005.
|
|
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on
Form S-3 filed October 6, 2020).
|
|
3.3 |
Bylaws of the Company, as amended on March 8, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed April 30 2020).
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101*
|
The following financial statements from Lincoln Educational Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i)
Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity,
(v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
* |
Filed herewith.
|
** |
Furnished herewith. This exhibit will not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.
|
1. |
I have reviewed this quarterly report on Form 10-Q of Lincoln Educational Services Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
Date: May 9, 2022
|
|
/s/ Scott Shaw
|
|
Scott Shaw
|
|
Chief Executive Officer
|
1. |
I have reviewed this quarterly report on Form 10-Q of Lincoln Educational Services Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
Date: May 9, 2022
|
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|
Chief Financial Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 9, 2022
|
||
/s/ Scott Shaw
|
||
Scott Shaw
|
||
Chief Executive Officer
|
||
/s/ Brian Meyers
|
||
Brian Meyers
|
||
Chief Financial Officer
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
CURRENT ASSETS: | ||
Accounts receivable, allowance | $ 27,545 | $ 26,837 |
PROPERTY, EQUIPMENT AND FACILITIES - accumulated depreciation and amortization | 150,597 | 153,335 |
OTHER ASSETS: | ||
Noncurrent receivables, allowance | $ 4,513 | $ 5,084 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 27,260,154 | 27,000,687 |
Common stock, shares outstanding (in shares) | 27,260,154 | 27,000,687 |
Treasury stock, shares (in shares) | 5,910,541 | 5,910,541 |
Series A Convertible Preferred Stock [Member] | ||
SERIES A CONVERTIBLE PREFERRED STOCK | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 12,700 | 12,700 |
Preferred stock, shares outstanding (in shares) | 12,700 | 12,700 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
REVENUE | $ 82,554 | $ 77,996 |
COSTS AND EXPENSES: | ||
Educational services and facilities | 36,196 | 32,344 |
Selling, general and administrative | 46,684 | 39,633 |
Total costs & expenses | 82,880 | 71,977 |
OPERATING (LOSS) INCOME | (326) | 6,019 |
OTHER: | ||
Interest expense | (43) | (285) |
(LOSS) INCOME BEFORE INCOME TAXES | (369) | 5,734 |
(BENEFIT) PROVISION FOR INCOME TAXES | (641) | 1,245 |
NET INCOME | 272 | 4,489 |
PREFERRED STOCK DIVIDENDS | 304 | 304 |
(LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ (32) | $ 4,185 |
Basic | ||
Net (loss) income per common share (in dollars per share) | $ 0.00 | $ 0.13 |
Diluted | ||
Net (loss) income per common share (in dollars per share) | $ 0.00 | $ 0.13 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 25,720,960 | 24,888,615 |
Diluted (in shares) | 25,720,960 | 24,888,615 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ 272 | $ 4,489 |
Other comprehensive income (loss) | ||
Derivative qualifying as a cash flow hedge, net of taxes (nil) | 0 | 211 |
Employee pension plan adjustments, net of taxes (nil) | (30) | (134) |
Comprehensive income | $ 242 | $ 4,566 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Other comprehensive income (loss) | ||
Derivative qualifying as a cash flow hedge, taxes | $ 0 | $ 0 |
Employee pension plan adjustments, taxes | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Loss [Member] |
Total |
Preferred Stock [Member]
Series A Convertible Preferred Stock [Member]
|
---|---|---|---|---|---|---|---|
BALANCE at Dec. 31, 2020 | $ 141,377 | $ 30,512 | $ (82,860) | $ 6,203 | $ (4,165) | $ 91,067 | $ 11,982 |
BALANCE (in shares) at Dec. 31, 2020 | 26,476,329 | 12,700 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | $ 0 | 0 | 0 | 4,489 | 0 | 4,489 | $ 0 |
Preferred stock dividend | 0 | 0 | 0 | (304) | 0 | (304) | |
Employee pension plan adjustments | 0 | 0 | 0 | 0 | (134) | (134) | 0 |
Derivative qualifying as cash flow hedge | 0 | 0 | 0 | 0 | 211 | 211 | 0 |
Stock-based compensation expense | |||||||
Restricted stock | $ 0 | 493 | 0 | 0 | 0 | 493 | $ 0 |
Restricted stock (in shares) | 574,614 | 0 | |||||
Net share settlement for equity-based compensation | $ 0 | (962) | 0 | 0 | 0 | (962) | $ 0 |
Net share settlement for equity-based compensation (in shares) | (154,973) | 0 | |||||
BALANCE at Mar. 31, 2021 | $ 141,377 | 30,043 | (82,860) | 10,388 | (4,088) | 94,860 | $ 11,982 |
BALANCE (in shares) at Mar. 31, 2021 | 26,895,970 | 12,700 | |||||
BALANCE at Dec. 31, 2021 | $ 141,377 | 32,439 | (82,860) | 39,702 | (1,240) | 129,418 | $ 11,982 |
BALANCE (in shares) at Dec. 31, 2021 | 27,000,687 | 12,700 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | $ 0 | 0 | 0 | 272 | 0 | 272 | $ 0 |
Preferred stock dividend | 0 | 0 | 0 | (304) | 0 | (304) | 0 |
Employee pension plan adjustments | 0 | 0 | 0 | 0 | (30) | (30) | 0 |
Derivative qualifying as cash flow hedge | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation expense | |||||||
Restricted stock | $ 0 | 1,239 | 0 | 0 | 0 | 1,239 | $ 0 |
Restricted stock (in shares) | 528,121 | 0 | |||||
Net share settlement for equity-based compensation | $ 0 | (1,992) | 0 | 0 | 0 | (1,992) | $ 0 |
Net share settlement for equity-based compensation (in shares) | (268,654) | 0 | |||||
BALANCE at Mar. 31, 2022 | $ 141,377 | $ 31,686 | $ (82,860) | $ 39,670 | $ (1,270) | $ 128,603 | $ 11,982 |
BALANCE (in shares) at Mar. 31, 2022 | 27,260,154 | 12,700 |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Business Activities— Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high
school graduates and working adults. The Company, which currently operates 22 schools in 14 states, offers programs in automotive technology, skilled trades (which include HVAC, welding and computerized numerical control and electronic systems technology, among
other programs), healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and
information technology. The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names. Most of the campuses serve
major metropolitan markets and each typically offers courses in multiple areas of study. Five of the campuses are destination
schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally or
regionally accredited and are eligible to participate in federal financial aid programs by the U.S. Department of Education (the “DOE” or the “Department”) and applicable state education agencies and accrediting commissions which allow students
to apply for and access federal student loans as well as other forms of financial aid.
The Company’s business is organized into two
reportable business segments: (a) Transportation and Skilled Trades, and (b) Healthcare and Other Professions (“HOPS”).
Liquidity—As of March 31, 2022, the Company had cash and cash equivalents of $65.6 million compared to $83.3 million at December 31, 2021. The decrease in cash position
from year end was the result of several factors including the seasonality of our business and a decrease in accrued expenses driven by the payment of incentive compensation.
Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in
accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain information and footnote disclosures normally included in annual financial statements have been omitted
or condensed pursuant to such regulations. These financial statements, which should be read in conjunction with the December 31, 2021 audited consolidated financial statements and notes thereto and related disclosures of the Company included in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“Form 10-K”), reflect all adjustments, consisting of
normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for such periods. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2022.
The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Use of Estimates in the Preparation of
Financial Statements – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, the Company evaluates the estimates
and assumptions, including those used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate lease cost, revenue recognition, bad debts, impairments, useful lives of
fixed assets, income taxes, benefit plans and certain accruals. Actual results could differ from those estimates.
New Accounting
Pronouncements – In October 2021, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This amendment
introduces the requirement for an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with the requirements of FASB Accounting Standards Codification (“ASC”) “Topic 606,
Revenue from Contracts with Customers”, rather than at fair value. The Company is currently assessing the impact that this ASU will have on its condensed consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and
exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is
intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” which clarifies that certain optional expedients and
exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company
has evaluated the ASU and has determined that there is no impact on its condensed consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts
in an Entity’s Own Equity”. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU removes
separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature and hence most of the instruments will be accounted for as a single model (either debt or equity). The
ASU also states that entities must apply the if-converted method to all convertible instruments for calculation of diluted EPS and the treasury stock method is no longer available. An entity can use either a full or modified retrospective approach
to adopt the ASU’s guidance. ASU No. 2020-06 is effective for the Company as a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For convertible instruments that include a
down-round feature, entities may early adopt the amendments that apply to the down-round features if they have not yet adopted the amendments in ASU 2017-11. The Company is currently assessing the impact that this ASU will have on its condensed
consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. The ASU and the subsequent modifications are identified as ASC Topic 326. The standard requires an entity to
change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05 and
ASU 2019-11 to provide additional guidance on the credit losses standard. In November 2019, FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging
(Topic 815), and Leases (Topic 842)”. This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years. Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842):
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)” ASU 2020-02 adds a SEC paragraph pursuant to
the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to FASB Codification Topic 326 and also updates the SEC section of the Codification for the change in the effective date of Topic 842. Early adoption is permitted. We are
currently assessing the impact that these ASUs will have on our condensed consolidated financial statements and related disclosures.
Income Taxes – The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”). This
statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates
for years in which taxes are expected to be paid or recovered.
In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not
unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC
740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax
assets, the Company considers, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be
implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns.
Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation,
statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.
During the three months ended March 31, 2022 and 2021, the Company did not recognize any interest and penalties expense associated with uncertain tax positions.
Derivative Instruments—The Company records the fair value of derivative instruments as either assets or liabilities on the condensed consolidated balance sheet. The accounting for gains and losses resulting from changes in fair
value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.
All qualifying hedging activities are documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes
to future cash. The Company utilizes the change in variable cash flows method to evaluate hedge effectiveness quarterly. We record the fair value of the qualifying hedges in other long-term liabilities (for derivative liabilities) and other assets
(for derivative assets). All unrealized gains and losses on derivatives that are designated and qualify for hedge accounting are reported in other comprehensive income (loss) and recognized when the underlying hedged transaction affects earnings.
Changes in the fair value of these derivatives are recognized in other comprehensive income. The Company classifies the cash flows from a cash flow hedge within the same category as the cash flows from the items being hedged.
|
NET (LOSS) INCOME PER COMMON SHARE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET (LOSS) INCOME PER COMMON SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET (LOSS) INCOME PER COMMON SHARE |
The Company presents basic and diluted (loss) income per common share using the
two-class method which requires all outstanding Series A Preferred Stock and unvested restricted stock that contain rights to non-forfeitable dividends and therefore participate in undistributed income with common shareholders to be included in
computing (loss) income per common share. Under the two-class method, net (loss) income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed (loss)
income is then allocated to common stock and participating securities, based on their respective rights to receive dividends. Series A Preferred Stock and unvested restricted stock contain non-forfeitable rights to dividends on an if-converted
basis and on the same basis as common shares, respectively, and are considered participating securities. The Series A Preferred Stock and unvested restricted stock are not included in the computation of basic (loss) income per common share in
periods in which we have a net loss, as the Series A Preferred Stock and unvested restricted stock are not contractually obligated to share in our net losses. However, the cumulative dividends on Series A Preferred Stock for the period decreases
the income or increases the net loss allocated to common shareholders unless the dividend is paid in the period. Basic (loss) income per common share has been computed by dividing net (loss) income allocated to common shareholders by the
weighted-average number of common shares outstanding. The basic and diluted net income amounts are the same for the three months ended March 31, 2022 and 2021 as a result of the anti-dilutive impact of the potentially dilutive securities.
The following is a reconciliation of the numerator and denominator of the diluted net (loss) income per share computations for the periods presented
below:
The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares
outstanding as they were anti-dilutive:
|
REVENUE RECOGNITION |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION |
Substantially all of our revenues are considered to be revenues from our contracts with
students. The related accounts receivable balances are recorded in our condensed consolidated balance sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior
periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from our schools only to the extent that it is probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Unearned tuition represents contract liabilities primarily related to our tuition revenue. We have elected not to provide disclosure about transaction prices
allocated to unsatisfied performance obligations if original contract durations are less than one-year, or if we have the right to
consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date in accordance with ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. We have assessed
the costs incurred to obtain a contract with a student and determined them to be immaterial.
Unearned tuition in the amount of $21.2 million and $25.4 million is recorded in the current liabilities section of the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively. The change in this contract liability balance
during the three-month period ended March 31, 2022 is the result of payments received in advance of satisfying
performance obligations, offset by revenue recognized during that period. Revenue recognized for the three-month period ended March 31, 2022 that was included in the contract liability balance at the beginning of the year was $21.8 million.
The following table depicts the timing of revenue recognition:
|
LEASES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset as to which the
Company has the right to control its use in determining whether the contract contains a lease. An operating lease right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent
its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating
leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on
a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The
operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of one year to 20 years. Lease terms may include options to extend the lease term used in determining the
lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term for operating leases.
See Note 13 which discusses the sale leaseback transaction relating to the Company’s Denver and Grand Prairie campuses which closed on October 29,
2021.
Our operating lease cost for the three months ended March 31, 2022 and 2021 was $4.7 million and $3.7 million, respectively. Our variable lease cost for the
three months ended March 31, 2022 and 2021 was less than $0.1 million. The net change in ROU asset and operating lease liability is
included in other assets in the condensed consolidated cash flows for the three months ended March 31, 2022 and 2021.
Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
As of March 31, 2022, there were no new
leases and 1 lease modification that resulted in noncash re-measurement of the related ROU asset and operating lease liability of $6.6 million relating to one of our campuses.
Weighted-average remaining lease term and discount rate for our operating leases is as follows:
Maturities of lease liabilities by fiscal year for our operating leases as of March 31, 2022 are as follows:
|
GOODWILL AND LONG-LIVED ASSETS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND LONG-LIVED ASSETS |
The Company reviews the carrying value of its long-lived assets and identifiable intangibles for possible impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable. For other long-lived assets, including right-of-use lease assets, the Company evaluates assets for recoverability when there is an indication of potential impairment. If the
undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value.
When we perform the quantitative impairment test for long-lived assets, we examine estimated future cash flows using Level 3 inputs. These cash flows
are evaluated by using weighted probability techniques as well as comparisons of past performance against projections. Assets may also be evaluated by identifying independent market values. If the Company determines that an asset’s carrying value
is impaired, it will record a write-down of the carrying value of the asset and charge the impairment as an operating expense in the period in which the determination is made. During the three months ended March 31, 2022 and 2021 there were no long-lived asset impairments.
On December 31, 2021, as a result of impairment testing it was determined that there
was an impairment of our property in Suffield, Connecticut of $0.7 million. The impairment was the result of an assessment of
the current market value, obtained via 3rd party engagement, as compared to the current carrying value of the assets. The carrying value for the Suffield, Connecticut property of approximately $2.9 million. The fair value estimate provided indicated that the current value of the property was approximately $2.2 million. As such, the aforementioned $0.7 million impairment was recorded
and the assets carrying value reduced.
The carrying amount of goodwill at March 31, 2022 and 2021 is as follows:
As of each of March 31, 2022 and 2021, the goodwill balance of $14.5 million is related to the Transportation and Skilled Trades segment.
|
LONG-TERM DEBT |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
LONG-TERM DEBT [Abstract] | |||
LONG-TERM DEBT |
Credit Facility
On November 14, 2019, the Company entered into a senior secured credit agreement (the “Credit Agreement”) with its lender, Sterling National Bank
(the “Lender”), providing for borrowing in the aggregate principal amount of up to $60 million (the “Credit Facility”). Initially, the
Credit Facility was comprised of four facilities: (1) a $20 million senior secured term loan maturing on December 1, 2024 (the “Term
Loan”), with monthly interest and principal payments based on 120-month amortization with the outstanding balance due on the maturity
date; (2) a $10 million senior secured delayed draw term loan maturing on December 1, 2024 (the “Delayed Draw Term Loan”), with monthly interest payments for the first 18
months and thereafter monthly payments of interest and principal based on 120-month amortization and all balances due on the maturity
date; (3) a $15 million senior secured committed revolving line of credit providing a sublimit of up to $10 million for standby letters of credit maturing on November 13, 2022 (the “Revolving Loan”), with monthly payments of interest only; and (4) a $15 million senior secured
non-restoring line of credit maturing on January 31, 2021 (the “Line of Credit Loan”).
At the closing of the Credit Facility, the Company entered into a swap transaction with the Lender for 100% of the principal balance of the Term Loan maturing on the same date as the Term Loan. Under the terms of the Credit Facility accrued interest on each loan is payable monthly in arrears with the Term Loan and the Delayed Draw Term Loan bearing interest at a floating interest rate based on the then one-month London Interbank Offered Rate (“LIBOR”) plus 3.50% and subject to a LIBOR interest rate floor of 0.25% if there is no
swap agreement. Revolving Loans bear interest at a floating interest rate based on the then LIBOR plus an indicative spread determined by the Company’s leverage as defined in the Credit Agreement or, if the borrowing of a Revolving Loan is to be
repaid within 30 days of such borrowing, the Revolving Loan will accrue interest at the Lender’s prime rate plus 0.50% with a floor of 4.0%. Line of
Credit Loans will bear interest at a floating interest rate based on the Lender’s prime rate of interest. Letters of credit issued under the Revolving Loan reduce, on a dollar-for-dollar basis, the availability of borrowings under the Revolving
Loan. Letters of credit are charged an annual fee equal to (i) an applicable margin determined by the leverage ratio of the Company less (ii) 0.25%,
paid quarterly in arrears, in addition to the Lender’s customary fees for issuance, amendment and other standard fees. Borrowings under the Line of Credit Loan are secured by cash collateral. The Lender receives an unused facility fee of 0.50% per annum payable quarterly in arrears on the unused portions of the Revolving Loan and the Line of Credit Loan.
In addition to the foregoing, the Credit Agreement contains customary representations, warranties and affirmative and negative covenants (including
financial covenants that (i) restrict capital expenditures, (ii) restrict leverage, (iii) require maintaining minimum tangible net worth, (iv) require maintaining a minimum fixed charge coverage ratio and (v) require the maintenance of a minimum
of $5 million in quarterly average aggregate balances on deposit with the Lender, which, if not maintained, will result in the
assessment of a quarterly fee of $12,500), as well as events of default customary for facilities of this type. The Credit Agreement
also limited the payment of cash dividends during the first twenty-four months of the agreement to $1.7 million but an amendment to the Credit Agreement entered into on November 10, 2020 raised the cash dividend limit to $2.3 million in such
period to increase the amount of permitted cash dividends that the Company can pay on its Series A Preferred Stock.As further discussed below, the Credit Facility was secured by a first priority lien in favor of the Lender on substantially all of the personal
property owned by the Company, as well as a pledge of the stock and other equity in the Company’s subsidiaries and mortgages on parcels of real property owned by the Company in Colorado, Tennessee and Texas, at which three of the Company’s schools are located, as well as a former school property owned by the Company located in Connecticut.
On September 23, 2021, in connection with entering into the agreements relating to the sale leaseback transaction for the Company’s Denver, Grand
Prairie and Nashville campuses (collectively, the “Property Transactions”), the Company and certain of its subsidiaries entered into a Consent and Waiver Letter Agreement (the “Consent Agreement”) to the Company’s Credit Agreement with its
lender. The Consent Agreement provides the Lender’s consent to the Property Transactions and waives certain covenants in the Credit Agreement, subject to certain specified conditions. In addition, in connection with the consummation of the
Property Transactions, the Lender released its mortgages and other liens on the subject-properties upon the Company’s payment in full of the outstanding principal and accrued interest on the Term Loan and any swap obligations arising from any
swap transaction. Upon the consummation of the Property Transaction on October 29, 2021 the Company paid the Lender approximately $16.7
million in repayment of the Term Loan and the swap termination fee and no further borrowings may be made under the Term Loan or
the Delayed Draw Term Loan.
As of March 31, 2022, and December 31, 2021, the Company had zero debt outstanding under the Credit Facility for both periods and was in compliance with all debt covenants. As of March 31, 2022, and December 31, 2021, letters of credit in the
aggregate outstanding principal amount of $4.0 million and $4.0 million, respectively, were outstanding under the Credit Facility.
|
STOCKHOLDERS' EQUITY |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY |
Common Stock
Holders of our common stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. The Company has not declared or paid any cash dividends on our common stock since the Company’s Board of Directors discontinued our quarterly cash dividend program in February 2015. The Company has no
current intentions to resume the payment of cash dividends to holders of common stock in the foreseeable future.
Preferred Stock
On November 14, 2019, the Company raised gross proceeds of $12.7 million from the sale of 12,700 shares of its newly designated Series A
Convertible Preferred Stock, no par value per share (the “Series A Preferred Stock”). The Series A Preferred Stock was designated by the
Company’s Board of Directors pursuant to a certificate of amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment”). The liquidation preference associated with the Series A Preferred Stock was $1,000 per share at December 31, 2021. Upon issuance each share of Series A Preferred Stock was convertible at $2.36 per share of common stock (as may be adjusted pursuant to the Charter Amendment, the “Conversion Price”) into 423,729 shares of common stock (the number of shares into which the Series A Preferred Stock is convertible at any time, the “Conversion Shares”). The Company incurred issuance costs of $0.7 million as part of this transaction.
The description below provides a summary of certain material terms of the Series A Preferred Stock:
Stock Securities Purchase Agreement.
The Series A Preferred Stock was sold by the Company pursuant to a Securities Purchase Agreement dated as of November 14, 2019 (the “SPA”) among the
Company, Juniper Targeted Opportunity Fund, L.P. and Juniper Targeted Opportunities, L.P. (together, the “Juniper Purchasers”) and Talanta Investment, Inc. (“Talanta,” together with the Juniper Purchasers, the “Investors”). Among other things, the
SPA includes covenants relating to the appointment of a director to the Company’s Board of Directors to be selected solely by the holders of the Series A Preferred Stock.
Dividends. Dividends on the Series A Preferred Stock (“Series A Dividends”), at the initial annual rate of 9.6% is to be
paid, in arrears, from the date of issuance quarterly on each December 31, March 31, June 30 and September 30 with September 30, 2020
being the first dividend payment date. The Company, at its option, may pay dividends either (a) in cash or (b) by increasing the number of Conversion Shares by the dollar amount of the dividend divided by the Conversion Price. The dividend rate
is subject to increase (a) 2.4% per annum on the fifth anniversary of the issuance of the Series A Preferred Stock and (b) by 2% per annum but in no event above 14%
per annum should the Company fail to perform certain obligations under the Charter Amendment. The Series A Preferred Stock is not currently redeemable and may not become redeemable in the future. As a result, the Company is not required to
re-measure the Series A Preferred Stock and does not accrete changes in the redemption value. For the three months ended March 31, 2022, and the year ended December 31, 2021, we paid $0.3 million and $1.2 million, respectively, in cash dividends
on the outstanding shares of Series A Preferred Stock rather than increasing the number of Conversion Shares. Dividends are included in the condensed consolidated balance sheets within additional paid-in-capital when the Company maintains an
accumulated deficit.
Holders of Series A Preferred Stock Right to
Convert into Common Stock. Each share of Series A Preferred Stock, at any time, is convertible into a number of shares of common stock equal to (i) the sum of (A) $1,000 (subject to adjustment as provided in the Charter Amendment) plus (B) the dollar amount of any declared Series A Dividends not paid in cash
divided by (ii) the Conversion Price ($2.36 per share subject to anti-dilution adjustments) as of the applicable Conversion Date (as
defined in the Charter Amendment). At all times, however, the number of Conversion Shares that can be issued to any holder of Series A Preferred Stock may not result in such holder and its affiliates owning more than 19.99% of the total number of shares of common stock outstanding after giving effect to the conversion (the “Hard Cap”), unless prior shareholder
approval is obtained or no longer required by the rules of the principal stock exchange on which the Company’s common stock trades.
Mandatory Conversion.
If, at any time following November 14, 2022, the volume weighted average price of the
Company’s common stock equals or exceeds 2.25 times the Conversion Price (currently $5.31 per share) for a period of 20 consecutive trading days and
during this period the average trading volume exceeds 20,000 shares of common stock, the Company may, at its option and subject to the
Hard Cap, require that any or all of the then outstanding shares of Series A Preferred Stock be automatically converted into Conversion Shares.
Redemption. Beginning November 14, 2024, the Company may redeem all or any of the Series A Preferred Stock for a cash price equal to the greater of (“Liquidation Preference”) (i) the sum of $1,000 (subject to adjustment as provided in the Charter Amendment) plus the dollar amount of any declared Series A Dividends not paid in cash and (ii) the value of the
Conversion Shares were such Series A Preferred Stock converted (as determined in the Charter Amendment) without regard to the Hard Cap.
Change of Control. In the event of certain changes of control, some of which are not in the Company’s control, as defined in the Charter Amendment as a “Fundamental Change” or a “Liquidation” (as defined in the Charter
Amendment), the holders of Series A Preferred Stock shall be entitled to receive the Liquidation Preference, unless such Fundamental Change is a stock merger in which certain value and volume requirements are met, in which case the Series A
Preferred Stock will be converted into common stock in connection with such stock merger. The Company has classified the Series A Preferred Stock as mezzanine equity on the condensed consolidated balance sheet based upon the terms of a change of
control which could be outside the Company’s control.
Voting. Holders of shares of Series A Preferred Stock are entitled to vote with the holders of shares of common stock and not as a separate class, at any annual or special meeting of shareholders of the Company, on an as-converted basis, in
all cases subject to the Hard Cap. In addition, a majority of the voting power of the Series A Preferred Stock must approve certain significant actions of the Company, including (i) declaring a dividend or otherwise redeeming or repurchasing any
shares of common stock and other junior securities, if any, subject to certain exceptions, (ii) incurring indebtedness, except for certain permitted indebtedness and (iii) creating a subsidiary other than a wholly-owned subsidiary.
Additional Provisions. The Series A Preferred Stock is perpetual and, therefore, does not have a maturity date. The conversion price of the Series A Preferred Stock is subject to anti-dilution protections if the Company
affects a stock split, stock dividend, subdivision, reclassification or combination of its common stock and certain other economically dilutive events.
Registration Rights Agreement. The Company also is a party to a Registration Rights Agreement (“RRA”) with the holders of the Series A Preferred Stock. The RRA provides for unlimited demand registration rights, of which there can be two underwritten offerings each for at least $5
million in gross proceeds, and piggyback registration rights, with respect to the Conversion Shares. In addition, the RRA obligated the Company to register “for the shelf” the resale of the Conversion Shares through the filing of a registration
statement to such effect (the “Resale Shelf Registration Statement”) and have such Resale Shelf Registration Statement declared effective by the Securities and Exchange Commission (the “SEC”). The SEC declared the Resale Shelf Registration
Statement effective on October 16, 2020.
Restricted Stock
The Company currently has three
stock incentive plans: a Long-Term Incentive Plan (the “LTIP”), a Non-Employee Directors Restricted Stock Plan (the “Non-Employee Directors Plan”) and the Lincoln Educational Services Corporation 2020 Incentive Compensation Plan (the “2020
Plan”).
2020 Plan
On March 26, 2020, the Board adopted the 2020 Plan to provide an incentive to certain directors, officers, employees and consultants of the Company
to align their interests in the Company’s success with those of its shareholders through the grant of equity-based awards. On June 16, 2020, the shareholders of the Company approved the 2020 Plan. The 2020 Plan is administered by the Compensation
Committee of the Board, or such other qualified committee appointed by the Board, who will, among other duties, have full power and authority to take all actions and to make all determinations required or provided for under the 2020 Plan. Pursuant
to the 2020 Plan, the Company may grant options, share appreciation rights, restricted shares, restricted share units, incentive stock options and nonqualified stock options. The Plan has a duration of 10 years.
Subject to adjustment as described in the 2020 Plan, the aggregate number of common shares available for issuance under the 2020 Plan was 2,000,000 shares.
LTIP
Under the LTIP, certain employees have received awards of restricted shares of common
stock based on service and performance. The number of shares granted to each employee is based on the amount of the award and the fair market value of a share of common stock on the date of grant. The 2020 Plan makes it clear that there
will be no new grants under the LTIP effective as of the date of shareholder approval, June 16, 2020. The 2020 Plan also states that the shares available under the 2020 Plan will be two million shares plus the number of shares remaining available under the LTIP. As no shares remain available under the LTIP there can be no additional grants under the LTIP.
Grants under the LTIP remain in effect according to their terms. Therefore, those grants are subject to the particular award agreement relating thereto and to the LTIP to the extent that the prior plan provides rules relating to those grants. The
LTIP remains in effect only to that extent.
Non-Employee Directors Plan
Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock
on the date of the Company’s annual meeting of shareholders. The number of shares granted to each non-employee director is based on the fair market value of a share of common stock on that date. The restricted shares vest on the first anniversary
of the grant date. There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares.
For the three months ended March 31, 2022 and 2021, the Company completed a net share settlement for 268,654 and 154,973 restricted shares, respectively, on behalf
of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP. The net share settlement was in connection with income taxes incurred on restricted shares that vested and were
transferred to the employees during 2021 and/or 2020, creating taxable income for the employees. At the employees’ request, the Company has paid these taxes on behalf of the employees in exchange for the employees returning an equivalent value of
restricted shares to the Company. These transactions resulted in a decrease of $2.0 million and less than $1.0 million for each of the three months ended March 31, 2022 and 2021, respectively, to equity on the condensed consolidated balance sheets as the cash
payment of the taxes effectively was a repurchase of the restricted shares granted in previous years.
The following is a summary of transactions pertaining to restricted stock:
The restricted stock expense for the three months ended March 31, 2022 and 2021 was $1.2 million and $0.5 million, respectively. The unrecognized
restricted stock expense as of March 31, 2022 and December 31, 2021 was $8.0 million and $4.4 million, respectively. As of March 31, 2022, outstanding restricted shares under the Prior Plan had aggregate intrinsic value of $11.0 million.
Stock Options
The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the
Black-Scholes option pricing model. The following is a summary of transactions pertaining to stock options:
As of March 31, 2022, there was no unrecognized pre-tax compensation expense.
|
INCOME TAXES |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
INCOME TAXES [Abstract] | |||
INCOME TAXES |
The benefit for income taxes for the three months ended March 31, 2022 was $0.6 million, or 173.7% of pretax
loss compared to a provision for income taxes for the three months ended March 31, 2021 of $1.2 million, or 21.7% of pretax income. The benefit for the three months ended March 31, 2022 was due primarily to a pre-tax book loss and a discrete item relating
to restricted stock vesting, while the provision in the prior year was due to the release of the valuation allowance as of December 31, 2020. The effective tax rate for the three months ending March 31, 2022 was 28.2%.
|
COMMITMENTS AND CONTINGENCIES |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES |
In the ordinary conduct of its business, the Company is subject to certain lawsuits, investigations and claims, including, but not limited to, claims
involving students or graduates and routine employment matters. Although the Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company does not believe that any currently
pending legal proceedings to which it is a party will have a material adverse effect on the Company’s business, financial condition, and results of operations or cash flows.
In December 2021, we received a letter from the Consumer Financial Protection Bureau (“CFPB”) stating that the CFPB is assessing whether we are
subject to CFPB’s supervisory authority based on our activities related to certain extensions of credit to our students and requesting certain information. The letter states that the CFPB has the authority to supervise certain entities in the
private education loan market and certain other consumer financial products and services. We have provided the requested information to the CFPB and are waiting for the CFPB to respond.
|
SEGMENTS |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS |
We operate our business in two
reportable segments: (a) the Transportation and Skilled Trades segment; and (b) the Healthcare and Other Professions segment. Our reportable segments have been determined based on a method by which we now evaluate performance and allocate resources.
Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each
segment to more effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. Our operating segments are described below.
Transportation and Skilled Trades – The Transportation and Skilled Trades segment offers academic programs mainly in the career-oriented disciplines of transportation and skilled trades (e.g. automotive, diesel, HVAC, welding and
manufacturing).
Healthcare and Other Professions – The Healthcare and Other Professions segment offers academic programs in the career-oriented disciplines of health sciences, hospitality and business and information technology (e.g. dental assistant, medical
assistant, practical nursing, culinary arts and cosmetology).
The Company also utilizes the Transitional segment on a limited basis solely when and if it closes a school.
We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the
caption “Corporate,” which primarily includes unallocated corporate activity.
Summary financial information by reporting segment is as follows:
|
FAIR VALUE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE |
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the
reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers:
Level 1: Defined
as quoted market prices in active markets for identical assets or liabilities.
Level 2: Defined
as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant
assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Defined
as unobservable inputs that are not corroborated by market data.
The carrying amounts reported on the condensed consolidated balance sheet for Cash and cash equivalents approximate fair value because they are highly liquid.
The carrying amounts reported on the condensed consolidated balance sheet for Prepaid expenses and other current assets, Accrued expenses and Other short-term liabilities
approximate fair value due to the short-term nature of these items.
Qualifying Hedge Derivative
On November 14, 2019, in connection with its Credit Facility, the Company entered into an interest rate swap for the Term Loan with a notional amount
of $20 million which expires on December 1, 2024. On October 29, 2021 the Term Loan was repaid and the interest rate swap was paid in full.
The loan had a 10-year straight line
amortization. A principal amount of $0.2 million was paid monthly. This interest rate swap converted the floating interest rate Term Loan
to a fixed rate, plus a borrowing spread. The interest rate was variable based on LIBOR plus 3.50% and the Company’s fixed rate is 5.36%. The Company designated this interest rate swap as a cash flow hedge to hedge exposure resulting from the interest rate risk. The purpose of the
hedge was to reduce the variability of the interest rate based on LIBOR. The Company managed this exposure within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and
the Company does not use derivatives for speculative trading purposes.
The following summarizes the financial statement classification and amount of interest expense recognized on hedging instruments:
The following summarizes the effect of derivative instruments designated as hedging instruments in Other Comprehensive Income:
|
COVID-19 PANDEMIC AND CARES ACT |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
COVID-19 PANDEMIC AND CARES ACT [Abstract] | |||
COVID-19 PANDEMIC AND CARES ACT |
The Company began seeing the impact of the global COVID-19 pandemic on its business in early March 2020 and some effects of the pandemic have continued. The spread of
COVID-19 has had an unprecedented impact on higher educational institutions across the country, including our schools, and has led to the closure of campuses and the transition of academic programs from in-person instruction to online, remote
learning and back. The impact for the Company primarily related to transitioning classes from in-person, hands-on learning to online, remote learning which resulted in, among other things, additional expenses. Further, related to this
transition, some students were placed on leave of absence as they could not complete their externships and some students chose not to participate in online learning. As a result, certain programs were extended due to restricted access to
externship sites and classroom labs which did not have a material impact on our consolidated financial statements. In accordance with phased re-opening as applied on a state-by-state basis, all of our schools have now re-opened and the majority
of the students who were on leave of absence or had deferred their programs returned to school to finish their programs.
In response to the COVID-19 pandemic, in 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law providing a $2 trillion federal economic
relief package of financial assistance and other relief to individuals and businesses impacted by the pandemic. Among other things, the CARES Act includes a $14 billion higher education emergency relief fund (“HEERF”) for the DOE to distribute
directly to institutions of higher education. The DOE has allocated funds to each institution of higher education based on a formula contained in the CARES Act. The formula is heavily weighted toward
institutions with large numbers of Pell Grant recipients. The DOE allocated $27.4 million
to our schools distributed in two equal installments and required them to be utilized by
April 30, 2021 and May 14, 2021, respectively. As of September 30, 2021, the Company had distributed the full $13.7 million of its first installment as emergency grants to students and has utilized the full $13.7
million of its second installment. Proceeds from the second installment for permitted expenses were primarily utilized to either offset original expenses incurred or to reduce student accounts receivable driving
a decrease in bad debt expense, both uses resulted in a decrease in our selling, general and administrative expenses. Institutions are required to use at least half of the HEERF funds for emergency grants to students for expenses related
to disruptions in campus operations (e.g., food, housing, etc.). The law requires institutions receiving funds to continue to the greatest extent practicable to pay its employees and contractors during the period of any disruptions or closures
related to the COVID-19 emergency which the Company has done. The Company was also permitted to defer payment of FICA payroll taxes through January 1, 2021 and did so but, pursuant to requirements of the deferment, repaid 50% of the deferred
payments by January 3, 2022, and will need to repay the remaining 50% by January 3, 2023. As of March 31, 2022, the Company had deferred payments of $2.3
million included in accrued expenses in the condensed consolidated balance sheet.
In December 2020, the Consolidated Appropriations Act, 2021 was enacted which included the Coronavirus Response and Relief Supplemental
Appropriations Act, 2021 (“CRRSAA”). CRRSAA provided an additional $81.9 billion to the Education Stabilization Fund including $22.7 billion for the HEERF, which were originally created by the CARES Act in March 2020. The higher education
provisions of the CRRSAA are intended in part to provide additional financial assistance benefitting students and their postsecondary institutions in the wake of the spread of COVID-19 across the country and its impact on higher educational
institutions. In March 2021, the $1.9 trillion American Rescue Plan Act of 2021 (“ARPA”) was signed into law. Among other things, the ARPA provides $40 billion in relief funds that
will go directly to colleges and universities with $395.8 million going to for-profit institutions. The DOE has allocated a total of $24.4
million to our schools from the funds made available under CRRSAA and ARPA. As of March 31, 2022, the Company has drawn down and distributed to our students $14.8 million of these allocated funds. The remainder of the funds are on hold by the DOE and will be distributed to the students upon release. Failure to comply with requirements for the
usage and reporting of these funds could result in requirements to repay some or all of the allocated funds and in other sanctions.
|
PROPERTY SALE AGREEMENTS |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 | |||
PROPERTY SALE AGREEMENTS [Abstract] | |||
PROPERTY SALE AGREEMENTS |
Property Sale Agreement -
Nashville, Tennessee Campus
On September 24, 2021, Nashville Acquisition, LLC, a subsidiary of
the Company (“Nashville Acquisition”), entered into a Contract for the Purchase of Real Estate (the “Nashville Contract”) to sell the property located at 524 Gallatin Road, Nashville, Tennessee, at which the Company operates its Nashville campus,
to SLC Development, LLC, a subsidiary of Southern Land Company (“SLC”), for an aggregate sale price of $34.5 million, subject to
customary adjustments at closing. The Company intends to relocate its Nashville campus to a more efficient and technologically advanced facility in the Nashville metropolitan area but has not yet determined a location.
During the due diligence period, SLC has the right to terminate the
Nashville Contract for any reason at its discretion; therefore, there can be no assurance that the sale will be consummated on a timely basis or at all. Upon closing, Nashville Acquisition would be permitted to occupy the property and continue to
operate the Nashville campus on a rent-free basis for a leaseback period of 12 months, and, thereafter, will have the option to extend
the leaseback period for one 90-day term and three additional 30-day terms pursuant to a lease agreement currently being negotiated by the
parties. The parties have since agreed to an extension of the date of the due diligence period through July 2022 and the closing of the transaction is expected to occur in the third quarter of 2022. The Nashville property is included in assets
held for sale in the condensed consolidated balance sheet as of March 31, 2022.
Sale Leaseback
Transaction - Denver, Colorado and Grand Prairie, Texas Campuses
On September 24, 2021, Lincoln Technical Institute, Inc. and LTI
Holdings, LLC, each a wholly-owned subsidiary of the Company (collectively, “Lincoln”), entered into an Agreement for Purchase and Sale of Property for the sale of the properties located at 11194 E. 45th Avenue, Denver, Colorado 80239 and 2915
Alouette Drive, Grand Prairie, Texas 75052, at which the Company operates its Denver and Grand Prairie campuses, respectively, to LNT Denver (Multi) LLC, a subsidiary of LCN Capital Partners (“LNT”), for an aggregate sale price of $46.5 million, subject to customary adjustments at closing. Closing of the sale occurred on October 29, 2021. Concurrently with consummation of the sale,
the parties entered into a triple-net lease agreement for each of the properties pursuant to which the properties are being leased back to Lincoln Technical Institute, Inc. for a twenty-year term at an initial annual base rent, payable quarterly in advance, of approximately $2.6 million for the first year with annual 2.00% increases thereafter and includes four subsequent five-year renewal
options in which the base rent is reset at the commencement of each renewal term at then current fair market rent for the first year of each renewal term with annual 2.00% increases thereafter in each such renewal term. The lease, in each case, provides Lincoln with a right of first offer should LNT wish to sell the property. The Company has provided a guaranty of the financial
and other obligations of Lincoln Technical Institute, Inc. under each lease. The Company evaluated factors in ASC Topic 606, Revenue Recognition, to conclude that the transaction qualified as a sale. This included analyzing the right of first offer clause to determine
whether it represents a repurchase agreement that would preclude the transaction from being accounted for as a successful sale. At the consummation of the sale, the Company recognized a gain on sale of assets of $22.5 million. Additionally, the Company evaluated factors in ASC Topic 842, Leases, and concluded that the newly created leases met the definition an operating lease. The Company also recorded ROU Asset and lease liabilities of $40.1 million. The sale leaseback transaction provided the Company with net proceeds of approximately $45.4 million with the proceeds partially used for the repayment of the Company’s
outstanding term loan of $16.2 million and swap termination fee of $0.5 million.
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Business Activities |
Business Activities— Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high
school graduates and working adults. The Company, which currently operates 22 schools in 14 states, offers programs in automotive technology, skilled trades (which include HVAC, welding and computerized numerical control and electronic systems technology, among
other programs), healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and
information technology. The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names. Most of the campuses serve
major metropolitan markets and each typically offers courses in multiple areas of study. Five of the campuses are destination
schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally or
regionally accredited and are eligible to participate in federal financial aid programs by the U.S. Department of Education (the “DOE” or the “Department”) and applicable state education agencies and accrediting commissions which allow students
to apply for and access federal student loans as well as other forms of financial aid.
The Company’s business is organized into two
reportable business segments: (a) Transportation and Skilled Trades, and (b) Healthcare and Other Professions (“HOPS”).
|
Liquidity |
Liquidity—As of March 31, 2022, the Company had cash and cash equivalents of $65.6 million compared to $83.3 million at December 31, 2021. The decrease in cash position
from year end was the result of several factors including the seasonality of our business and a decrease in accrued expenses driven by the payment of incentive compensation.
|
Basis of Presentation |
Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in
accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain information and footnote disclosures normally included in annual financial statements have been omitted
or condensed pursuant to such regulations. These financial statements, which should be read in conjunction with the December 31, 2021 audited consolidated financial statements and notes thereto and related disclosures of the Company included in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“Form 10-K”), reflect all adjustments, consisting of
normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for such periods. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2022.
The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
|
Use of Estimates in the Preparation of Financial Statements |
Use of Estimates in the Preparation of
Financial Statements – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, the Company evaluates the estimates
and assumptions, including those used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate lease cost, revenue recognition, bad debts, impairments, useful lives of
fixed assets, income taxes, benefit plans and certain accruals. Actual results could differ from those estimates.
|
New Accounting Pronouncements |
New Accounting
Pronouncements – In October 2021, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This amendment
introduces the requirement for an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with the requirements of FASB Accounting Standards Codification (“ASC”) “Topic 606,
Revenue from Contracts with Customers”, rather than at fair value. The Company is currently assessing the impact that this ASU will have on its condensed consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and
exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is
intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” which clarifies that certain optional expedients and
exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company
has evaluated the ASU and has determined that there is no impact on its condensed consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts
in an Entity’s Own Equity”. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU removes
separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature and hence most of the instruments will be accounted for as a single model (either debt or equity). The
ASU also states that entities must apply the if-converted method to all convertible instruments for calculation of diluted EPS and the treasury stock method is no longer available. An entity can use either a full or modified retrospective approach
to adopt the ASU’s guidance. ASU No. 2020-06 is effective for the Company as a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For convertible instruments that include a
down-round feature, entities may early adopt the amendments that apply to the down-round features if they have not yet adopted the amendments in ASU 2017-11. The Company is currently assessing the impact that this ASU will have on its condensed
consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. The ASU and the subsequent modifications are identified as ASC Topic 326. The standard requires an entity to
change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05 and
ASU 2019-11 to provide additional guidance on the credit losses standard. In November 2019, FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging
(Topic 815), and Leases (Topic 842)”. This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years. Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842):
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)” ASU 2020-02 adds a SEC paragraph pursuant to
the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to FASB Codification Topic 326 and also updates the SEC section of the Codification for the change in the effective date of Topic 842. Early adoption is permitted. We are
currently assessing the impact that these ASUs will have on our condensed consolidated financial statements and related disclosures.
|
Income Taxes |
Income Taxes – The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”). This
statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates
for years in which taxes are expected to be paid or recovered.
In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not
unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC
740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax
assets, the Company considers, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be
implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns.
Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation,
statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.
During the three months ended March 31, 2022 and 2021, the Company did not recognize any interest and penalties expense associated with uncertain tax positions.
|
Derivative Instruments |
Derivative Instruments—The Company records the fair value of derivative instruments as either assets or liabilities on the condensed consolidated balance sheet. The accounting for gains and losses resulting from changes in fair
value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.
All qualifying hedging activities are documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes
to future cash. The Company utilizes the change in variable cash flows method to evaluate hedge effectiveness quarterly. We record the fair value of the qualifying hedges in other long-term liabilities (for derivative liabilities) and other assets
(for derivative assets). All unrealized gains and losses on derivatives that are designated and qualify for hedge accounting are reported in other comprehensive income (loss) and recognized when the underlying hedged transaction affects earnings.
Changes in the fair value of these derivatives are recognized in other comprehensive income. The Company classifies the cash flows from a cash flow hedge within the same category as the cash flows from the items being hedged.
|
NET (LOSS) INCOME PER COMMON SHARE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET (LOSS) INCOME PER COMMON SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator of Diluted Net (Loss) Income Per Share Computations |
The following is a reconciliation of the numerator and denominator of the diluted net (loss) income per share computations for the periods presented
below:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share |
The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares
outstanding as they were anti-dilutive:
|
REVENUE RECOGNITION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depicts Timing of Revenue Recognition |
The following table depicts the timing of revenue recognition:
|
LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information and Non-cash Activity Related to Operating Leases |
Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Remaining Lease Term and Discount Rate |
Weighted-average remaining lease term and discount rate for our operating leases is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Lease Liabilities |
Maturities of lease liabilities by fiscal year for our operating leases as of March 31, 2022 are as follows:
|
GOODWILL AND LONG-LIVED ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill |
The carrying amount of goodwill at March 31, 2022 and 2021 is as follows:
|
STOCKHOLDERS' EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions Pertaining to Restricted Stock |
The following is a summary of transactions pertaining to restricted stock:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions Pertaining to Option Plans |
The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the
Black-Scholes option pricing model. The following is a summary of transactions pertaining to stock options:
|
SEGMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information by Reporting Segment |
Summary financial information by reporting segment is as follows:
|
FAIR VALUE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Financial Statement Classification and Amount of Interest Expense Recognized on Hedging Instruments |
The following summarizes the financial statement classification and amount of interest expense recognized on hedging instruments:
|
|||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments Designated as Hedging Instruments in Other Comprehensive Income |
The following summarizes the effect of derivative instruments designated as hedging instruments in Other Comprehensive Income:
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2022
USD ($)
Segment
School
Campus
State
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Business Activities [Abstract] | ||||
Number of schools | School | 22 | |||
Number of states in which schools operate across the United States | State | 14 | |||
Number of campuses treated as destination schools | Campus | 5 | |||
Number of reportable operating segments | Segment | 2 | |||
Liquidity [Abstract] | ||||
Cash, cash equivalents and restricted cash | $ 65,599 | $ 26,742 | $ 83,307 | $ 38,026 |
Income Taxes [Abstract] | ||||
Interest and penalties expense | $ 0 | $ 0 |
GOODWILL AND LONG-LIVED ASSETS (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
GOODWILL [Abstract] | ||||
Impairment of long-lived assets | $ 0 | $ 0 | ||
Impairment of property amount | $ 700 | |||
Carrying value of property amount | 2,900 | |||
Fair value estimate current value of property | 2,200 | |||
Impairment carrying value reduced | 700 | |||
Changes in carrying amount of goodwill [Abstract] | ||||
Gross Goodwill Balance | 117,176 | 117,176 | 117,176 | $ 117,176 |
Accumulated Impairment Losses | (102,640) | (102,640) | (102,640) | (102,640) |
Net Goodwill Balance | 14,536 | 14,536 | $ 14,536 | $ 14,536 |
Adjustments | $ 0 | $ 0 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
INCOME TAXES [Abstract] | ||
(Benefit) Provision for income taxes | $ (641) | $ 1,245 |
Pretax (loss) income percentage | (173.70%) | 21.70% |
Effective income tax rate | 28.20% |
FAIR VALUE, Qualifying Hedge Derivative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Nov. 14, 2019 |
|
Term Loan [Member] | |||
Derivative [Abstract] | |||
Amortization period | 10 years | ||
Amount of principal payment | $ 200 | ||
Interest Rate Swap [Member] | |||
Fair Value, Outstanding Derivative [Abstract] | |||
Notional amount | $ 20,000 | ||
Interest Rate Swap [Member] | Term Loan [Member] | |||
Derivative [Abstract] | |||
Fixed rate | 5.36% | ||
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | |||
Classification and Amount of Interest Expense Recognized on Hedging Instruments [Abstract] | |||
Interest expense | $ 0 | $ 100 | |
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments Designated As Hedging Instruments In Other Comprehensive Income [Abstract] | |||
Interest rate swap income | $ 0 | $ 211 | |
LIBOR [Member] | Interest Rate Swap [Member] | Term Loan [Member] | |||
Derivative [Abstract] | |||
Variable rate | 3.50% |
COVID-19 PANDEMIC AND CARES ACT (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Mar. 31, 2022
USD ($)
Intallment
|
Sep. 30, 2021
USD ($)
|
|
COVID-19 [Abstract] | ||
Total amount expected to be received under CARES Act | $ 27.4 | |
Number of installments used to allocated funds to schools | Intallment | 2 | |
Emergency grants available in first installment under CARES Act | $ 13.7 | |
Utilized amount of permitted expenses | $ 13.7 | |
Deferred payments under CARES Act | $ 2.3 | |
DOE allocated amount to schools | 24.4 | |
Emergency grants distributed to students under CRRSAA and ARPA Act | $ 14.8 |
PROPERTY SALE AGREEMENTS, Property Sale Agreement (Details) - Property Sale Agreement [Member] $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 24, 2021
USD ($)
|
Mar. 31, 2022
Term
|
|
Property Sale Agreement [Abstract] | ||
Sale price of agreement | $ | $ 34.5 | |
Rent-free basis for a lease-back period | 12 months | |
Option to extend lease-back period | 90 days | |
Number of additional lease-back terms | Term | 3 | |
Period of additional option to extend lease-back | 30 days |
PROPERTY SALE AGREEMENTS, Sale-Leaseback Transaction (Details) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Oct. 29, 2021
USD ($)
Option
|
Mar. 31, 2022
USD ($)
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
Sep. 24, 2021
USD ($)
|
|
Sale-Leaseback Transaction [Abstract] | |||||
Right of use assets | $ 95,377 | $ 91,487 | |||
Lease liabilities | 101,775 | ||||
Net proceeds amount | $ 9 | $ 0 | |||
Colorado/Texas Sale Agreement [Member] | |||||
Sale-Leaseback Transaction [Abstract] | |||||
Sale price of sale-leaseback transaction | $ 46,500 | ||||
Lease agreement term | 20 years | ||||
Initial annual base rent | $ 2,600 | ||||
Percentage of annual increase of rent | 2.00% | ||||
Number of subsequent renewal options | Option | 4 | ||||
Period of subsequent renewal options | 5 years | ||||
Gain on sale of assets | $ 22,500 | ||||
Right of use assets | 40,100 | ||||
Lease liabilities | 40,100 | ||||
Net proceeds amount | 45,400 | ||||
Repayments of term loan | 16,200 | ||||
Swap termination fee | $ 500 |
*!:MD9 X^#A'J5$RT@/\KSF"/4S- +&CWF.\]H!!XWWOT-5MY,^V^
M115*!\LE^Y!J -8_>' \-B![\=S ]ESL5640#I(7OL90VL9,@L>F?48G"_H9
ML^L6^Y)=@VU@L5 HQ/%<9F7C&A,8)X7A$I3AAH6QAF57C_?V-NDX8WX#EY-ML^G@SDQ<+B[N%
R=>R5UQ
MBZARO"@EOGF@YENF9A^ZKQ:[XDO'E/3HBH6]MF:I@C%>!5M_N;J>1RM/P J_
MM\BA"/&0AF>L' H@6"Y60#Z=!NW$6E*:P]/DGXB0B\N^"VO'R.?\GB>@F,[/'M.*N!VY_N6,2>G%L#=]%?8\.;?
M/G%Q +;7+*I$@_+8*S_7J./(% Y=?&X9]/%4@H[/),VPR*>]7=SWN?!#B'L*
M@]XLEHB3->\,UP6)[V9@J+.N'4+%K13XE'\$Y#NHX1LL%J=K>B(3Y)JGY8-!
MR\9/@D'VO*E&1BQ"$N7A8O^M-U,KC:9\>\.*!0^3@*G@>UXJ3M_WRQ6ZG\H?
MCITTX?"
ST(2@,:"EJYG#FS(7CP]JZ:Y\3!7%;:../1GD(Y8O)Q*
VB_T/M.IETD1OT.FX0=0]FIY,P#/JN[_5(MW_M
MAE$/=7J8M7$$(/+2!$$B59=F ;2+)N-X=-
M MN[/10]T-+((D*1*DG'VW_?(64K*9!XT6,OXM?,FS>/FN'\J/2S:0$L^=X)
M:19A:VU_'<>F:J%CYDKU(/&D4;IC%I=Z'YM> ZN]4R=BFB23N&-