Lincoln Educational Services Q4 2012 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeffrey Silber - BMO Capital Markets - Analyst : Shaun, in your prepared remarks you talked a little bit about some of the leading indicators that give you some confidence that the second half of the year will be better. Can you give us a little bit more color on that? I know some of it has to do with the comps, but, considering the visibility in the space and considering what's been going on, what gives you the confidence that this second half will see starts hopefully going up?

Question: Jeffrey Silber - BMO Capital Markets - Analyst : Okay, great. Appreciate the color. Actually, the next one's for Cesar. Cesar, in looking at your guidance, you guided for the year for revenues to be down slightly, but EPS to be roughly flat. Which expense line items are we going to see some of the positive leverage?

Question: Jeffrey Silber - BMO Capital Markets - Analyst : All right. And what tax rate should we be using for modeling?

Question: Jeffrey Silber - BMO Capital Markets - Analyst : Okay. Great. Thanks so much.

Question: David Chu - BofA Merrill Lynch - Analyst : So, in your guidance for starts in the first quarter, is that a -- from continuing operations perspective or including campus closures?

Question: David Chu - BofA Merrill Lynch - Analyst : Okay. Can you help us for modeling purposes -- give us the starts and average enrollment for Q1 through Q3 2012 excluding the campus closures.

Question: David Chu - BofA Merrill Lynch - Analyst : Both, please.

Question: David Chu - BofA Merrill Lynch - Analyst : And sorry. That was average enrollment or starts? companies.

Question: David Chu - BofA Merrill Lynch - Analyst : Can we get average enrollment as well.

Question: David Chu - BofA Merrill Lynch - Analyst : And lastly, revenue?

Question: David Chu - BofA Merrill Lynch - Analyst : Okay. Great. And lastly how should we think about revenue per student for 2013?

Question: David Chu - BofA Merrill Lynch - Analyst : Okay. Thank you.

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Just continuing on the RPS question, Cesar, the guidance is clear, but could you talk qualitatively about the factors that are affecting revenue per student from your perspective.

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Yes, the 2% to 3% versus about a 5% increase in this past year, so what's underneath that?

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Okay. And then -- go ahead. Sorry.

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Okay. And then I think that I heard Shaun say that the certificate programs are not counted in the enrollment numbers but obviously impacting revenues. So would that not be a factor that would help to lift the revenue per student.

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Got it. So not a meaningful uptick there. And then the other one, I [pause it] this is more of a mundane question, but I -- I follow your full year guidance, but it --. I find in my models to get to your EPS guidance for the first quarter, I have to lean pretty heavily on the cost side of the equation in the first quarter. So I wondered if you can maybe sort of talk a little bit about what -- I mean, not that you're responsible for my model, but maybe you could talk qualitatively about what the cost dynamic is like through the year, particularly with the SG&A line and whether there's anything we should be paying attention to in terms of how those costs are spread out.

Question: Trace Urdan - Wells Fargo Securities, LLC - Analyst : Got it. Okay. Thank you very much.

Question: Jeff Meuler - Robert W. Baird & Company, Inc. - Analyst : Shaun, you talked obviously a lot about strategy and what the organization's going to look like. And as a part of that you laid out these four different models that are currently effectively operating within the organization. You also mentioned I think it's 48 or something like that current total campuses and said that those are under continual reassessment. As you think about what this organization looks like over the next two to three years, how many of those existing campuses get restructured into one of the four models that you laid out, and how extensive of a process is that? How many more do you think would be potential closures? Just how you're thinking about leveraging those four successful campus models?

Question: Jeff Meuler - Robert W. Baird & Company, Inc. - Analyst : Okay. And then just to follow up on your question or your statement that in your view the main issue at this point is affordability. If you could just expand on that, is it -- I'm assuming you're not saying that you don't think the value propositions there given you have the good student outcomes you highlighted. On the affordability side is it because of the increased cash component from when you restructured some of the programs? Is it just a sticker shock issue relative to what a community college costs? If you could just expand on that comment.

Question: Jeff Meuler - Robert W. Baird & Company, Inc. - Analyst : Okay. And then just finally, in -- barring any future decisions on campuses, have all of the adjustments in terms of moving things into disco ops been made at this point, you were trying to give us the numbers. But just wondering if those numbers may change as additional things could get moved into disco ops as school closures are completed or something like that, as the year unfolds.

Question: Jeff Meuler - Robert W. Baird & Company, Inc. - Analyst : Perfect. Thanks, guys.