Lincoln Educational Services Corporation (LINC) Earnings Call Transcript & Summary

Good day and thank you for standing by. Welcome to the Lincoln Educational Services Investor Day Conference. Please be advised that today's conference is being recorded. Webcast participants have the preference in advance for [ attending ] today's presentation. Note several slides being presented today have accompanying videos and these can be accessed in a download feature at the top right of your screen. The videos are numbered to the appropriate slide number and the company encourages you to play the video when the slide is being discussed. After the speakers have concluded the presentation, there will be a question-and-answer session [Operator Instructions]. I would now like to turn the conference over to Scott Shaw, President and CEO of Lincoln Educational Services. Mr. Shaw, please proceed.

Thank you, operator, and good afternoon, and welcome to everyone. We're very excited to be here today to have our first Investor Day in Lincoln Tech's public history. We're sitting today in our new brand -- our brand-new Eastpoint facility, and it's representative of Lincoln Tech today and moving forward. This facility is designed for our new Lincoln 10.0 model as fewer classrooms with larger labs because when students come to our schools going forward, they'll be spending most of their time in the lab. It's also a bright cheery modern facility, and we believe very inspirational. Again, we are very much into the skilled trades and very proud of all of our students and what we do, and we want them to be proud and encouraged to be successful career people going forward. With me today are a number of my executives, I will give a quick overview, not so quick, about half hour overview of our company, will be followed by Chad Nyce, who will talk about our academics, our Lincoln 10.0 program and some of our other program offerings. He'll be followed by Jay Rasmussen, who is in charge of our admissions, and he will explain to you how we counsel students and bring them into our school. Jay will be followed with -- by Susan English and she's the one who helps get students their careers and leave our schools as well as partner with industry. Susan will be followed by Peter Tahinos, who is in charge of marketing, we'll share with you how we build our brand. And finally, and probably most importantly to most of you, we'll be having Brian Meyers to give you the financials. So with that, I will give you a quick introduction, safe harbor, which I'm sure you've all read. And I'd like to start off with the mission statement because this is really the core of who we are and what we do. And in our mission statement, there are a lot of key words here. First is we do want to provide a superior education. Quality is most important to us, and we want to make sure that our students are getting the best opportunity possible. We also are going to be in demand careers. So there are lots of opportunities out there. We could focus, for example, on CNA. It's an in-demand career, but it's not going to have the second part. It's not going to give you a good return on investment. We want to give students an opportunity to really get a lifelong career and something that can really establish them and support them and their families, and that's what we'll be focused on. Next is supportive and accessible. And this is really what differentiates us from a community college. We want to make sure that students can succeed and survive. Most community colleges and most colleges in general, have a philosophy of sink or swim. And our philosophy is everyone who comes into the door really wants to get a job. And we want to ensure that they do get that job. And sometimes life gets in the way. And so we have to be very attentive to their needs and try to meet them where they are most comfortable. So we will always provide a supportive environment. And when I say accessible, what I'm referring to is the fact that you can start your program as soon as you want. So every 30 days, we have a new program that's available, our new model says that you come in the morning, afternoon or evening. The objective here is, again, to treat our students as customers and make sure that they can have a good experience. Finally, we are in the business of changing lives. And we are very proud of that, and I'll share with you some of the successful graduates that we've had. But everyone who comes to this school wants to make their life better, and we believe that we add a lot of value to the communities in which we serve. Lots of presentations probably wouldn't start off on this. This usually is in the appendix, but I want to start off on the regulatory front. It's very important for us at Lincoln to always be compliant. At the end of the day, everyone hears the negative stories about for-profit education. These are businesses that might have had a good business model, but didn't stay true to their mission. Their mission is to be compliant. So we're very much engaged with all three stakeholders. So with our creditors, our faculty and our staff often go out on visits to help them go to other schools to make sure that they're compliant. It's a good experience for our people. They get to learn new things along the way. We also have one of our campus presidents on the Board of our [ creditor ], and we remain very engaged with them. From a state level, we also remain engaged. We're in 13 different states. Our relationship with the states aren't all equal, but we certainly have very strong relationships, which help us build our business. So for example, in the state of Connecticut, several years ago, they wanted to do a career fair, which brought all the schools together in the state, and we were one of the sponsors of that and it was done by the governor. We said that's a great idea. So now we're kind of replicate that in the state of Maryland. And in April -- April 29, we'll be having a career far down in Maryland. Also because of our relationship with the states, when there are problems in the state, they often come to us to help them. So most recently in Connecticut, a nursing school ran into trouble, and they reached out to us to help them teach out the students. So we had over 150 students come from Stone Academy that we taught out. Finally, is the Department of Ed and there, their basic regulations we're very compliant. 90-10, we're at 81%. Cohort default rate is negligible as they stop requiring students to repay their loans. But even before that, we were equal to all the nonprofits out there. And finally, their financial responsibility, we have a very strong, in fact, the highest score you can have, which is 3.0, which is fantastic. I've also said that we have better outcomes than the community colleges. And these next two slides just give you a little more detail about that. This is all from the college scorecard, so anyone can gather it. And what it's showing you is a state that we're in, we're in 13 different states or 12 different states, there a number of community colleges that have graduates and how many schools we have. It then shows you what our graduation rate is. So for example, in Colorado, we have a 63% graduation rate and the community colleges in Colorado on average have a 33% graduation rate. Now there are a number of schools in Colorado and some of them could be better than us. But as you can see on this chart, out of the states that we're in, 10 of them, we are the #1 school in that state. If you look at Illinois, for example, we're the #4 school, but that shows you that there are 44 other community colleges that are behind us. The point of this is just to show you that we do have a better product than what the community college has, and we want to continue to strengthen that product. As I said, we changed people's lives and Lincoln has been around for 78 years. And in that process, we've had over 300,000 graduates or approaching that very quickly. And a number of our graduates have gone on to be very, very successful. These are just a handful of those graduates just again to show you the power of education and how we change people's lives. Pat Gelsinger came to us. We gave him a scholarship as a high school student. He ended a graduating from us. We got hired by Intel, developed some of the first chips. And today, he's the CEO of Intel. Carlton Rose is on my board today. She graduated from our Indianapolis campus, started putting boxes in the back of UPS trucks ended up overseeing every signal vehicle in UPS' fleet around the world. Bodal Wilson went to our Nashville campus, he ended up in Hall of Fame, his engine that he built still has the fastest speed at the Daytona 500. Leon Kaplan is someone who's had a show for 40 years. maybe Raj, you had you show in Los Angeles. It's every Sunday morning. And again, he's going within the industry and Homerhog as a person who has been on the Board of ASC and is deeply involved in the transportation. However, this next slide is really more representative of most of our students. Here's a family that came to Lincoln Tech. Marcus Wilford, who's on the far left, graduated as an EST student his brother heard about his success, he graduated a few years later as a collision repair student. His sister heard about both of their successes came to us. She graduated as a medical assistant and then went on to become a nurse. And then she met the love of her life, who is Marlow, who also graduated here same year as an ESG student. So again, these are the types of lives that we change in the careers that people get. So this slide is on our -- has always been our investor deck, and I just want to go through it with a little more detail. I think everyone is well aware of the skills gap that exists out there. It's in the paper every day. There are more jobs there are people unemployed. And even within that sector, there's even -- it's hard to find people that can work in the skilled trades. And that's a great thing for us. That just means our opportunity is out there. We've been doing this for 78 years. We haven't just come into this field, and we feel very comfortable that we can take advantage of this. As I'm going to share with you in more detail, we are a leader. We're either #1 or #2 in each of our local markets. And depending on where you are in the United States, we're either #1 or 2. And we want to build on that and eventually be #1 across the United States. Growth, and this is probably the most exciting part of our opportunity right now. Typically, career schools do very well when the unemployment rate is high. What's unusual is that we're doing very well with unemployment still below 4%. And I think that this is a permanent change for the near term, whereby more people are questioning the value of college. And we don't need too many more people to be questioning to drive growth for us. So we're seeing really strong organic growth today. with unemployment still being low as well as we have these plans that we are sharing with you about replicating programs, opening new campuses, which will further accelerate our growth. Profitability, we'll be sharing with you how, even if you look at our estimates for this year, you can see that as our revenues grow, our profits are growing stronger. We've spent the last 2 years restructuring our business, looking for ways to become more efficient and now we're going to start capitalizing on that. And as our revenues grow, our bottom line is going to grow at a faster rate. Balance sheet. We have a very strong balance sheet, which is going to enable us to take advantage of these growth opportunities and investment opportunities. So we ended the year with $80 million worth of debt. We have a credit facility that can be as large as $60 million, and we'll be generating free cash flow in a year or 2 to fund all of our future investments. And then finally, we are going to increase our efficiencies, and this is multiple reasons why. One, we want to become bigger in order to become bigger and scalable. We have to have a simpler operation. Two, simpler operations will make us more compliant, which, as I said from the first slide is the strength of Lincoln Tech and will remain a strength to always be as compliant as possible. And then third, obviously, is will create greater efficiencies and drive higher margins. This slide is probably the slide that you're all most interested in. And everything I just said is going to translate into this opportunity for us. We see great growth in our revenues, greater growth in our EBITDA and therefore, growth in our margin. We anticipate doubling our EBITDA margin from last year to 2027. We see good growth at 35% over the next couple of years driving our EBITDA up. This should be a really good time for Lincoln Tech. The stars are aligning in a great way for us. We're going to get that growth, as we've mentioned in the past, for replicating programs, which each should generate about $1 million of profitability from opening up new campuses. We only do 1 or 2 a year. Each should generate a minimum of about $5 million of EBITDA. And so from the efficiencies that I mentioned will also drive up our EBITDA numbers. Our vision is to be the nation's best technical school offering high return on investments. So we will continue to open up new campuses and continue to strengthen the core of what we do. So we'll do that exactly by making sure that we're only doing high return on investment programs, the ones that will certainly pass gainful employment and pass it by a very large margin. We're also going to continue to focus on the quality of our students and the experience that they get, and we have a goal of getting into a 70% graduation rate, which we more or less achieved last year and 85% placement rate. and we'll probably look to raise that as we go forward. As I said, we need to become more scalable, and that's the efficiencies that we're getting by simplifying and standardizing our programs across our campuses in creating the new business model that Chad will be sharing with you. We always have to be affordable and offer accelerated programs. While we aren't free, that is for sure, our programs are affordable. The average student lease was about $14,000 worth of debt, which is a manageable number, not anything like what you read about the papers of hundreds of thousand dollars' worth of debt. And our programs are accelerated because our students want to get in and out. It also differentiates us from the community colleges, and we're going to continue to build on that. All of this success is bringing to us more industry partners. And Susan will talk more about that. But for example, Tesla came to us because of our scale and our quality. Johnson Controls came to us because of our scale and our quality. As we continue to roll out new campuses and increase our scale, I'm anticipating that even more companies will come to us. And finally, we need to ensure and Lincoln Tech already means this, but we need to ensure that we always have quality career education that results in employment. That's why students come to us. We're a career school. They want to get their careers launched as quickly as possible, and we do that effectively today, and we will continue to do that. Here, you've seen this chart before. But again, if you look at those that are graduated with an automotive or skilled trades post-secondary degree, we're the largest provider of those people, so that's a little bit west of the Mississippi, but basically east of the Mississippi. We obviously are opening up a new school in Georgia, which will further strengthen that, but we'll also be opening up the new school in Houston, and we expect to look less in South as we open up new campuses. Now what's exciting, again, is that we operate in a very highly fragmented market. If you look at -- and you aggregate for these six programs, Lincoln basically has about a 2.2% market share. which means if we doubled our size, we only have 5% and we quadrupled our size, we had basically a 10% market share. So this chart shows you the number of graduates that all schools provide in each of these fields -- it also shows you what the BLS data is for how many new people are needed. And then it shows you what percent given our graduates of that need, we're satisfying. So you can see it's all around 2% overall. We've also -- you can also see that for each of these programs, we're either #1 or #2 in the country, providing these programs. As I mentioned before, I think this is an exciting time for Lincoln. I think that people have finally woken up to the fact that while college is needed for many people, it's not needed for everyone. And so we had this philosophy for many, many years, send everyone to college, everyone needs to go to college. Guidance counselors are foreseeing and pushing people to go to college, whether they want to or not, frankly. And I think COVID has frankly lift the veil so to speak, and people became much more questioning of college because they were doing it remotely. And then given all the talk about student debt, they're questioning, why should I go to college, if I have all this debt? So I think that this is the good time for Lincoln. I think that people are realizing that skilled trades is a very viable path skilled trades is not going to be at least the ones we offer replaced by AI or offshore. Skilled trades remained employed during the pandemic, that's why they're now called a central workers. And people are feeling, I think, much more positive about these fields and with so many more people questioning the value of college and looking at ways to get into the workforce, in a more efficient and effective way, I think Lincoln will benefit from that going forward. So these are the areas that we are focused on and will be focused in for the near term. We changed from being a two-segment company to a one-segment company, as I'll share with you how we are replicating these programs across campuses regardless of what the industry is. But as long as it's in one of these three buckets, so we have the school of automotive in diesel, which includes automotive, diesel, collision heavy equipment. We have skilled trades, which is electrical, HVAC welding and a small CNC program, which I'll talk about shortly. And then we also have the school of nursing and health care with the major programs there being LPN and medical assisting. This chart is our page. It's a little complicated. There's a lot on it. There's a lot going on here. So first, everything that's in black. Those are new programs that we are launching in the next 24 months, either because we're replicating those programs, opening up a new campus or relocating a campus. So for example, in Philadelphia, today, it's our only solo disciplined campus. We have a new facility, about 90,000 square feet. In that facility, we'll have auto electrical, HVAC and welding. So we'll be able to expand our marketplace, our penetration within Philadelphia, where we've been for 60 years with programs that we know are in big demand. I also have there, you can see in looking at Philadelphia, that health care could possibly go into that facility. We have about 10,000 to 18,000 extra square feet in that facility for either future growth or for introducing a partner or possibly introducing health care. And so wherever it says possible in the health care area or locations where we have additional space where we could add health care. The other column, these are the programs that we're not necessarily investing in for the future. And some of them are strong programs, others are weak, and we'll probably be teaching them out, such as massage therapy. Not something critical to who we are and what we do. But C&C, I'll just mention, it's a very frustrating program. It's our probably most effective for getting placements, strong drug, job demand, strong interest by employers good paying wages, but we struggle to get students into that program. So we're evaluating what we do with that program going forward. But this provides you with a road map of where we're going and what we have today, and Chad will share a little bit more about this coming up. I'm very fortunate to have a very talented management team. If you see there, you can see there's lots of years of experience. The average number of years with Lincoln is 19. So we've been through multiple cycles. We've been through the good times, the bad times, and everyone is very much committed to going forward in a very robust way, which is very exciting for me. And then this is my Board of Directors, six of the eight -- up to six of the eight new Board members -- or I'm sorry, the six of the eight Board members who are not myself, six of them have been with me for only 4 years. So we've been able to bring in a lot of new talent a lot more diversity. And as we announced earlier, Barry Moore, our Chairman, is stepping down John Bartelson, will take over the chairmanship and we have an active search going on for new board members and we really have some, I'll say, exciting talent, I think that we'll have a choice to select from to bring on to our company. So with that, I'll turn it over to Chad Nyce, who will talk to you about academics and program.

Right. Thank you, Scott. Thanks, everybody, for coming to the new Lincoln Tech East Point campus. So this is the future of Lincoln Tech that you're looking at. I'm the Chief Innovation Officer for Lincoln Tech. My colleagues have actually given me a different title. It's kind of unofficial. So I'm the leader of Fun and Discomfort. So that is my unofficial title at the company. As you saw from the slide previous, I'm one of the most junior people on the senior leadership team, but excited to joined Lincoln Tech, I was with the Strayer University and Strategic Ed for about 14 years. So I really have a huge passion for this particular space, mainly because my dad was a collision repair technician. So I grew up in a household of car people. So love education and have a huge passion for the trades. So what I get the pleasure of talking to you guys about is being able to brag about our faculty and what makes them so unique. I'm going to show you and talk to you about some of the cutting-edge tools, learning tools that we put into our curriculum. The piece, I think you're probably going to be the most interested about is our new efficient education model, which allowed us to staff faculty more efficient, and make sure that our students are always in front of our best possible faculty members. And then the last thing I'm going to elaborate a little bit more on is the program portfolio strategy that Scott was talking about. So as far as our faculty is concerned, a lot of competitors in our industry, whether it's in the trade school space or even the traditional higher ed for-profit space typically use a lot of adjunct faculty members. And here at Lincoln Tech, we don't do that, and I'll explain the anomaly in health care. We use mainly full-time faculty. And it's really because, in traditional higher education, when you're hiring faculty, there's lots of people out there who are, let's say, professional teachers, whether they teach full-time or part-time. In our space, we are essentially hiring people who are experts, who are technical experts, but they are not teachers. So what I always explain to faculty when they come to a place like Lincoln Tech, when you join Lincoln Tech as a faculty member, you might be an expert HVAC technician, but you're actually -- you're not making a job change. You're making a career change. Just because you have a lot of technical knowledge, does not mean you can teach and translate that into engaging classroom environments and things like that. So we mainly like to have full-time faculty because it takes a long time to teach people how to teach and be really good at teaching and manage classrooms and manage conflict and keep students engaged. I always say that a faculty's job, especially in our space, is that an edu-tainer so kind of a word I made up a bunch of years back. because we live in a world with so much distraction. If you're not keeping students engaged, they will not learn and they will not absorb the information. So are the days that you can just stand up in front of a classroom and a pioneer knowledge to all the students. And whoever takes your brilliance in is a great student and whoever doesn't, doesn't. Those days are gone. We have to do things to keep students engaged because it's the only way they're going to learn. And then the -- oh, I wanted to explain the anomaly in health care. Health care is a little bit different because in, like our nursing program, we have to do -- our nurses have to do clinical rotations or externships as we call them. And the Boards of nursing dictate a very tight ratio, a 10:1 ratio, and it's only 10 hours a week. So it doesn't make sense to hire a full-time person to have a student load of 10 people. So we use a lot of adjuncts in our health care program as it relates to our externships. So that's why that full-time faculty ratio looks very different than our skilled trades and transportation area. And really, the skilled trades area, the reason why that's not higher, you'll probably see that go up over time is that's the area when I talk about our portfolio strategy and our expansion strategy. That's the area that we are pressing on the hardest to add Skilled Trades programs. So we're in kind of a massive hiring frenzy. And as much as we'd love there to be unlimited full-time people out there that are experts and could be great teachers, that's just not the case, and it takes a little while. And then the table below, which I'm not going to go into excruciating detail is just us bragging about the credentials that our faculty have and how many of them have them. These are some of the highest credentials you can get as an educator in these fields. And we're very proud of the fact that we have probably amassed some of the largest groups of senior tenured faculty with very high credentials. So now I want to switch gears and talk about some of the fun and sexy stuff in our classrooms and some of the things we've brought into play. So virtual reality is not new to the world, and it's definitely not new to education. But it's a very useful tool in the right circumstances. So things like augmented reality and virtual reality are most useful for two types of applications: one, highly repetitive applications, things that require like muscle memory. So for example, welding to learn how to hold the welding torch, painting a car is all muscle memory. And they're also useful for very expensive and very dangerous applications, for example, underwater welding, right? You don't just get a bunch of students, suit them up in a scuba suit and say, "Right, jump in there with the fire torch and let's see what you can do". Pilot who fly planes, right? They don't just stick you in the 777 and be like, hey, good luck up there. Because those are highly dangerous and costly activities. So on the welding side, we use an augmented reality system that was designed by Miller, who's our welding partner. And what we found by using this is students start out using this augmented reality welder because it teaches them the basics of welding and the basics of how to position your hand and kind of create that muscle memory. But it also does it in a way that's environmentally friendly and cheaper because welding material steel, like everything else has gone dramatically up in cost, all the welding wires, the gases we use, these things are expensive consumables. So if we can teach people the basics of welding without burning through all those consumables, it's a much more efficient way to do it. And quite frankly, it's a safer way, right, because you're not actually -- there's no flames when you're using this. So it's a safer way to teach people. And I would say it's more environmentally friendly. But any time you're burning anything, you're emitting gases. And I get it, some of those gases get clean, but you're emitting gas and it creates pollution. So now I want to play this. It's a very short 1-minute video that just shows you how this technology works, and then we'll move on to some other things. That's not our augmented reality. Somehow you got a menu there. [Presentation]

So we missed some of the best stuff with that menu up there, but you can -- you can replay the videos, they're up on the website. But basically, what you didn't see in this is what the person sees when they're welding. And it's a very gamified experience. It scores your weld, so you can have contests and class and see if we can lay down the biggest weld. Actually, where the best weld -- actually, it was the funniest thing when we first started introducing technology like this, the people that were most scared to use it were our faculty. Why? Because it actually grades your welds. And when you actually lay down a well, there isn't something that grades it because you're the faculty member, but this machine will grade your weld. So a lot of our senior factory are like, "No, that's for the kids. I'm good. I don't need to use that." But over time, they've really learned that it's become a very useful tool. We also use this when after students are out there and they're welding if they're, let's say, burning through tips too fast or doing things like that, we'll send them back to the augmented welder and say, your muscle memory is not right, like go back and train on this and then come back into the welding shop and let's try it again. The next technology I want to talk about is in our automotive collision program. So this is a company called SimSpray. It's a full virtual reality spraying system. So you put on the goofy goggles and you got a spray thing in your hand and you're in this virtual world when you put this on and you can look around and you're in a spray booth and it allows you to select the type gun you want to use and what panel you want to spray and what paint you want to use, whether it's waterborne or solvent-borne paints. And same thing, it scores how well you lay down paint. Did you put it on too thick? Were there runs? Is it too thin? So it's a very gamified experience and students just love it because it's just fun. It's kind of what they're used to doing at home is games. So this is a longer video, I'm not going to play all 3 minutes. I'll play a little piece of this. He's going to fast forward a little, but you'll get a flavor for kind of what this virtual reality system does. So they select the garage. They like the gun, select the part they want to spray the color they choose to spray the air pressure because that's important, depending on what type of paint you're spraying. Now you're kind of in the paint booth looking around, there's our scoreboard up there and then you just start laying down paint and it scores it and tells you how well you're doing. Same thing just like we saw in welding when I introduced this to the instructors, they were all like, no, I'm good. I don't -- I know how to paint and I don't need to use this system. Can you just fast forward a bunch. You can't? That's Just go to the next slide. Okay. That's fine. Yes, we'll go to the next slide. All right. Then the last piece of technology I want to talk to you about is a partnership we have with Electude. So Electude is a company that is based out of the Netherlands. They focus on mainly electrical, auto and diesel curriculum. And a couple of years ago, as we started talking to Electude and looking at what they have, and I'll explain exactly what's different with their curriculum versus anything we have here in the states, Scott and I took a trip over to the Netherlands and Germany and spent quite a bit of time going to different tech tools over there because we wanted to understand how do other countries do it and what technologies are they using that may be different than what is used here in the United States. And actually, a lot of the way that this current facility you're sitting in is designed are different things that we saw over there that brought back here to say, hey, that's a better way of setting up this facility. So what makes Electude different is in America, traditional curriculum around whether it's auto, diesel or whatever, you would have a book or in today's world online, you would read a bunch of stuff about the theory, you would then maybe sit in a classroom or hear from an instructor telling you about the theory of something and then you go out in the shop and do it. Well, there's a big gap between just learning the theory of something going out to a car where every system is actually hit. So if you're trying to explain students like how an electric seat motor works, you learn the theory, let's say, in the traditional world, then you got out in the classroom -- or sorry, you go out in the shop and you start to work on the car, but you can't see the components. You see it switched into the seat. You see the wires going to the switches, but you don't see the relays. You don't see where the power sources is. It's hard to understand how that stuff works if you can't see it outside the car. So what Electude did is they created a series of physical trainers, which you'll see when you tour our facility, we're the first in the United States to have anything like this. Nobody else has it in the states. What they've done is they've taken every single system, every single major system out of a car and put them in these small trainers that's fully integrated with the curriculum. So yes, there's still a little bit of theory that you'll learn about the way, let's say, ohm's law and how electricity works in a car, then you'll physically pull a trainer off a wall that you'll see here in our facility, and these are small trainers, and you'll sit down with the trainer, with your computer right there and the computer will ask you to do different things on that trainer so you can understand how that system actually works. And then once you learn that, and it's all discovery and trial and error, and that's what students like, right? They like the discovery. They don't like to sit there and lecture to me. Let me play. Let me discover, let me figure this out. And then once they master that, then we take them out in the shop where the system is hitting, but now they understand how it works. And now they understand how to diagnose and troubleshoot it. So in a very different way of learning. And like I said, there isn't anything like this out of any of the publishers here in the United States. So if you can -- oh, sorry, I'm the one flipping the slides. I was going to flip to the next slide. So I'll just show you the short little Electude training video. This video doesn't necessarily have the trainers that you'll see out here, but you'll see them when you go out, but you'll get the gist of why is so different than anything that exists here in the States. [Presentation]

All right. Great. Now I'm going to move on to an area that I think most of you will be most interested in, not that, that other stuff wasn't interesting, but I think this area will interest you, for sure. So as Scott and Brian have talked about publicly for quite some time, Lincoln Tech, really prior to COVID, but COVID definitely accelerated it, completely overhauled kind of our learning platform and how we think about learning. So in order to tell you where we're at, I need to show you where we were and where most tools like ours were prior to COVID. So we would typically have three shifts a day in, let's say, this is an example of a typical 1,200 hour program like our automotive program or electrical program or HVAC, they're all very similar. And students would come to school 5 days a week for 6.5 hours. So Monday through Friday, 6.5 hours to get a half hour break. There will be a morning shift and afternoon shift and then you have an evening shift and the evening shift because we were already running to 10:00 p.m. at night, you have to run until 1 in the morning to get 6 hours out of that. Students in the evening would take twice as long to graduate. So in this model, there's a bunch of limitations. One is everybody has got to come to school 5 days a week. Now on the surface, you'd say, well, why is that a problem? Like because historically, people think about tech schools as having very large populations of high school students. And while we do have a decent size population of high school students, that is not the majority of the Lincoln Tech students. The majority of our students are working adults. They are people that are 20 to 30 years old, they have kids. They have a job, they have responsibilities. So they need to work. And any time we can give them so that they can actually hold a job while they're coming to school is time that they can spend doing that and earn money that they can be in school. So going to school 5 days a week, when you have a life and responsibilities, it's actually a big deal. And conversely, especially as the labor market got tighter and tighter, a lot of our technicians, you can basically have unlimited over time. If you're in HVAC tech, you work 100 a week every week, you can have big money. So trying to attract people to come to a Lincoln Tech, where we don't use unlimited amounts of over time and spend exorbitant amounts of money. It's a big sell, right? And -- but if we had something where they didn't have to come and teach to work 5 days a week, that might be more intriguing to that. In this model, you would need at minimum 2.5 instructors to teach three cohorts of students. But most likely, if you did it the way Lincoln did it, we probably need three instructors because what I explained about with full-time faculty. And then the other thing you need is you need a lot of dedicated classrooms because the cadence in this model was everybody comes to school at 7:00 a.m. They're all sitting in these dedicated classrooms, let's say, for 2, 2.5 hours, learning the theory of stuff and then everybody goes out into the shop, so that required us to have lots of dedicated classrooms that only get used for a couple of hours each shift, and that's just inefficient. And then the other thing it required us to do because students were here for 6.5 hours with a break, well most times, they were going to eat a meal, so you need to have cafeterias or large gathering areas, which are also areas that trouble can break out. So not having those things was really a genesis for our new, what you probably have heard us call Lincoln 10.0. So the new model is this. Students basically come to school 4 hours a day for 4 days a week, and the rest of the time, they're learning online. So they're learning asynchronous lead through online modules which instructors interact with them if they have questions or things like that. So the benefits here is that in the previous model, you have an instructor being what we call on-platform AK teaching for 30 hours for just one cohort, now we can have an instructor to each two cohorts. So instead of being on platform or teaching 30 hours a week, now we're asking you to teach 32 hours a week, but the difference is you can teach 50 students, not 25 and to use an example. And in this model, theoretically, you could only use 1.5 instructors to teach the same three cohorts of students or if you do it the way we typically do it, let's say it's two, but it's not three. The other benefits are students rolling Class 4 days a week. They have more time to hold a part-time job. They have Fridays off. Attracting faculty becomes easier because everybody, especially post-COVID seems to want to work less days in the office. So this is a very attractive model for that. And then as far as the facility efficiency, which is what you see here, you don't see tons and tons of dedicated classrooms. We have generic classrooms like the one you're sitting in that can be interchanged and used for electrical or auto or any of our programs, welding, et cetera, et cetera. So the footprint becomes a lot smaller. The footprint of this school is about 58,000 square feet, and the average legacy Lincoln Tech campus would be -- yes, 80,000-plus square feet. So it's a much more efficient model for teaching. It's a much more efficient use of capital. It's a cheaper overhead model to operate. And you can put as many students in this campus, as you could, one of our 80,000 square foot or 100,000 square foot or 120,000 square foot campuses. So where are we with the rollout of Lincoln 10.0 or this new instructional model. So as Scott was talking about there, which I'll talk about in a minute, there's a group of programs that are our core programs that we intend to just always offer and get better, and better, and better at teaching them. So of the programs that we have decided to put in this model about -- well, right now, 75% at the end of last year, 75% of our students who could be in this model are in the model. By the end of this year, 100% of our students who could be in this model will be in this model. Now if you look at it as a percent of all of our students, so programs like massage or culinary, which are programs that we probably won't keep long term. The percentage of students that are -- at Lincoln Tech that are in a 10.0 program at the end of last year was just less than half. And by the end of this year, it will be, call it, 2/3 and that percentage is only going to go up because as we continue, the programs we're replicating and adding or all this new model program. And the program that we're looking to potentially teach out or get out of, they're non-10.0. So this percentage is just going to go up and up, and we'll be able to capture more and more synergies as that rolls out. And then the last piece I wanted to talk about, which is just our program portfolio strategy. And I can sum it up as our strategy is to simplify the number of programs we offer, meaning the different types of programs but offer more programs of the ones that we know are most in demand, high-quality outcomes, strong financially for Lincoln Tech. So over the next few years, we'll be potentially removing 19 programs, but we'll be adding back 26. And you can see by vertical where it's at. So this whole group of others that Scott talked about, that stuff will probably move away from. Because it's small, less in demand, not necessarily core to who we are and what we do. But where we're adding a lot back is the stuff that we're world-class at doing. It's core to what we do. that are highly successful programs that are highly in demand and they're programs that we can be financially successful teaching. So with that, I'm going to turn it over to Jay to talk about emissions.

All right. Thank you, Chad. Good afternoon, everyone, and welcome get started and talk a little bit about the admissions and admissions process. I'm Jay Rasmussen. I'm the SVP of Admissions and Group Vice President. I currently run all of our admissions. And I also run eight of our campus locations and one of them is here. Let's talk a little bit about why students choose Lincoln Tech. There's a lot of reasons why students choose to go to our schools and our programs. My son actually was one of them, and he took that CNC program, and we have a hard time finding student because I believe in that program. there are incredible opportunities there. But we are nationally recognized and respected by our students. Our students also get practical hands-on training for high demand fields. Chad mentioned that hands-on training that they get where our students learn best. These programs are shorter in length. The curriculum means that the students get out into the workforce faster and they're looking for an intense time frame. A lot of our students, as Chad has mentioned, are adult students and they are transitioning from career to career. They're not happy with life and where they're at, and they're looking to go to someplace else. They want to do that quickly and improve their lives. Skills acquired at Lincoln applied directly to the chosen career field. We don't teach things that don't apply to what a student needs to do this well. If we're going to fix cars, we're going to fix cars. We're going to stick in that lane. We're going to do machining manufacturing. We're sticking that lane. And they get a high return on their investment because it's a shorter time frame, because of the cost of the program relatively to other schools and locations, our students will graduate and be able to earn more money faster, hopefully, helping them their families. We trained for, like I said, our careers are in high demand. And by 2023, the Department of Labor is projecting 7.4 million openings in the fields we train. Now as you can see, the openings and the top four blocks there, those are the ones that we are looking to replicate as a company and either put them in our existing footprint or put them in brand new greenfield locations. Based on market demand replicating these programs throughout our current footprint has proven to have high results and great results for us. And employability for our students, obviously, is great in these areas. We'll talk about that in a minute. So in the map below we currently see where our students come from. And obviously, Scott had showed you that we are #1 on the eastern side of the country. east of the Mississippi. We have two types of locations, though, that service these students. So we have community-based locations. These locations have traditionally adult populations that are within a 30, 40, 50-mile radius for those that appreciate a good drive or can. And then we have destination locations. These locations have populations that will have a higher population or density of high school students that are relocating to go get the college experience per se. And these students will typically live off-campus. And they're in these locations, Denver, Grand Prairie, Indy [Houston] and our Nashville. Tell you a little bit about our student trends. First, want to explain a little bit. We use our high school students. We use the word adult student, now if we already defined it. Our high school student, as our definition, these are prospects that are currently in their last year of high school and those who have graduated within their current year of graduation. So student that graduates in 2024 will be considered a high school student in our definition until December or January 1, of '25. We have approximately about 22% of our students are considered high school students in that definition. Our adult students, these are prospects that have graduated and are beyond that year of graduation. And currently, about 78% of our population is the adult students. We also have about 5% of our students are veterans. Obviously, a lot of our veterans get out the military and they are with [indiscernible] with myself. They're looking to get a career and answer. They're looking to change some of their skill set that may not directly equate to the civilian world. And we enjoy servicing them. I'll talk a little bit about how we do that a little more. About 70% of our students are currently employed while they're attending school, either part-time or full-time, and about 27% of them have dependence of their own to care for while they're going to school. So about 50% of our students, around the age 21. The gender for our current programs has remained pretty much flat, somewhere between about 34% female, to about 65% male and hasn't changed in 4 years. Ethnicity of our students, Hispanic populations have passed all other ethnic groups at this time, and they are the highest at Lincoln Tech. Let's talk about our life cycle for a second. So you saw a slide similar to this with Scott. This is about our life cycle. So how admissions works is marketing will generate us an inquiry or lead, comes from multiple different channels. That lead comes into our system, and it's sorted and assigned immediately to ASC. ASC is our admission support center. The Admission Support Center will make initial attempt for contact within minutes of us receiving inquiry from a prospect. Now they have a couple of things that could happen. One is they don't get anybody. It's too late to call. we don't make contact. If we don't make contact, that inquiry is set right to a campus for assignment to the campus that they've applied for information or requested information for. If they do make contact and we pick up the phone, we get a student on the line, they will attempt to warm transfer to their permanent rep moving forward. And then if I can't do that, let's say that the call center is in operation longer than our campuses are, for instance, because they're out in Denver, they get somebody on the line, they can also book an appointment for the next day or the day after for to just come and attend. We believe that it's important to contact them as soon as they're interested to discuss their options. Campus staff. Once the inquiry then ends up with a campus or the rep has an appointment with one of these prospects, that rep is going to be assigned to that student permanently unless they decide to change campuses. So we want to establish a bond there. The rep will also interview the prospect to ensure and determine eligibility for our program. We want to make sure that the student understands the commitment that it takes to go to school. They want to understand that they're going to have to have hard work and homework and there is a cost to attendance, et cetera. We want to make sure that if we have obstacles within that student slug that we address them. We ask them do you have a car for instance, and they say, no, I don't. I'm borrowing moms today. That's going to be a problem coming back and forth to school, 4 days a week. So we ensure that they have transportation or whatever that obstacle could be in their life. Once we're done with the student and we help them apply to our program, we'll then put them through the financial aid process. Students, most of our students, this is the most intimidating piece. How am I going to pay for my education. They don't know. A lot of them are first-time school goers in their family, so they have no one to ask, how do you pay for this? How does it work? How do you get a loan? Can I borrow money? Can I borrow money, et cetera. So they don't know and they don't understand what financial aid means, simple definition, right? They think financial aid is just free money. It's not all the money is put together, right? So we take students in the process of financial aid. We help them understand what that commitment is. And then once they're done with financial aid, the rep will then ensure that what they committed to, they can do. Sitting there in financial aid and they go, yes, I can make a $500 payment. They go back to the rep and I say, you sure you're okay with us. I don't know if I can do that. So we ensure that what they've committed to, they can actually adhere to. Once they go to their starts caretaking, our caretaking process is going to be 3 days, student walks in today wants to go to school tomorrow, it could be 12 months for a high school student that applies a year early. So we caretake our students. Based on the length of that time, our care take changes. Some of the processes will happen slower and some of the process will happen faster. High school student for instance, will delay doing financially. -- until January of the year, they're going to attend school. No need to do it earlier if they've applied in September. So we adjust our time frame in how we handle our student and how we communicate to them. After that, we get to orientation in start. Obviously, this is the best part for our students. This is the day they've arrived at the place where they're going to finally change their lives. They're going to make an impact. They're going to do what they want to do. And so many of them will tell us, I love automotive, I love electrical. I don't like what I'm doing over here, and I want to go and be a better person over here. So admissions will then hand them off to education for the remainder of the program. So we believe in admissions, though, that through this process of all that interaction that we have, we build a lifetime bond with our students and a superior relationship. And I think that based on that and our actual care and compaction for their successes, because it's not about students that apply to our program. It's about students that get employed with Susan's team. That's what's important to us. We take pride in that, and we think that's what defines us over others. Let me tell you a little bit about my team. So my team has 5 areas. There's a training and development division in charge of, obviously, training and developing future leaders as well as how we do things with how the process is and how it works. We have a national admissions team. That national team, they handle long-range students. So we have two customers, some customers come within a 50-mile radius and students will be dealt with a little bit differently than students coming hundreds of miles or thousands of miles to go to school. It's also a rep mindset. They think that, well, that one's too far, they'll never make it. You'd be surprised with people will do to be successful. We have a veteran outreach program that's to service our veterans, and we look for veterans that are transitioning and see how we can assist them with that transition. Reporting and obviously, analytics is here. We've been doing a lot of work on that, so we can understand our student where they come from. What the processes are, how long it takes, what are they looking for, et cetera. And then we have the support center, which I talked about, the support center is basically our hotline. It's our operator. It's live chat. It's also lead assignment, lead flow initial contact. They have a lot of the beginning parts of our business. This is what the ground looks like. So we have 22 local directors of admissions. We have 174 admissions representative at those locations. We have 7 high school regional directors and 90 high school representatives. These high school regionals and these high school representatives, they work at a wider territory, obviously, looking for some of those high school students to educate them on what the offerings are at Lincoln Tech. They'll actually go into high school. They'll talk to students, they'll actively engaged with students and families and inform them about our programs. So here's our new students trending. I'm proud to say that we've been trending for the last 5% over the last 5 years. You can see we had some really strong years, 12% in 2020, 8% in '21. We took a small dip in '22, but '23 is 11%. And we also saw a marked uptick in Q4 of 2023. Market conditions, Scott mentioned this earlier, I'd like to mention this as well. I believe that market conditions are moving in our favor. The positive news that we get online and on media and television and news, et cetera, it used to be, that's where they go over here. They're not talking about whether students should actually go to a 4-year institution or not. Is the value there is $200,000 worth in education anymore? Or should we go someplace else and invest our dollars in a skill set of that I can use for the rest of my life. So traditional column is being evaluated by students. And I think some of them are moving our way because it's an easy choice to be an essential worker. And so everyone else has put out of business for a long time. Inquiry trends, they've exceeded expectations. They're off the charts, and you can see a big spike last year over the prior year. and they spiked again in the last quarter and they spiked in '24. This has exceeded all of our expectations, and we first saw this spike in August of 2022. And we are -- we believe that we're going to continue to see this spike in interest at our level. And we believe actually in Q1, we're going to go to 15%. So with that, that's my last slide. I will turn this over to my colleague, Susan English. Susan.

Right. Hi, everybody. I'm in charge of the First Services and Industry Partnership division. My name is Susan English, and I am the most senior person on our team. This is actually my 40th year with Lincoln. We talked about the fact that there's a huge job demand over the next 10 years. 7.5 million jobs will become available. And both my teams are essentially prepared with resources to help support both the skilled talent as well as the personalized workforce services that are really truly beneficial to both our students and our employers. We've enjoyed about 8% growth over the last 10 years, and our average programs are in place somewhere between 80% and 90%. So we're really enjoying strong placement rates at this time. We have about 37,000 graduates that have found employment in their field with about 19,000 employees and an average of 85 dedicated career services employees have done that over the last 5 years. These are student resources that we provide our students, they prepare students for resume builder, their interviews, mock job applications. In addition, we have a job board that actually pushes out Jobless tons on a daily basis, sends it to their smart devices. We have employers that are constantly engaged on campus for events like mentoring our students, players come in and they help our students with their interviews and they are coaching them on what job is, what their life is going to be like on their job. We also have immediate decision days where students are actually hired right on the spot and dedicated employer days. Additionally, we provide about 18 career services courses on professional development training. They can be offered both blended through Blended Learning online and on ground. Employer pain points are known by everybody. I think we've all experienced it, right? We have a lack of skilled talent, high turnover, and basically, [indiscernible] workplace communication. That's the -- that's what's killing players today. They just don't have that steady demand by the steady supply of talent. So they're working with our schools to help fund tuition balances in some cases. And others, they provide scholarships, they're working on improving salary and benefit packages. And that's something that I'm really proud of is how close they are working with us to identify exactly what it is they need to be more competitive in the marketplace. They provide tools and equipment donations. And by the end of this year, we're going to formalize an early hire program that will launch probably in September, October to actually help employers hire more of our graduates by offering benefits to our students. The industry partnership division is called the workforce link division. I'm very proud of what we've done, sorry, Scott is in the way. I'm very proud of the work that we've done in this team. we support both student programs, OEM programs and employer funded programs. The student OEM programs are relationships that we have with different OEMs throughout the country that allow our students to take virtual training specific to their products and services. Most of those programs are at no additional cost to our students. And because the students can take those programs while they're attending Lincoln they have those additional advanced skills on top of, obviously, what we supply. My team on the Workforce Link side does actually manage the employer-funded programs that I'll talk about in just a minute. And these are programs that are custom built with products and services specific to companies with large demands of employer needs. So workforce training needs, new talent. So they're usually national and sometimes global companies. And again, this is work that we're very proud of. And it's funded through employers. This is a sampling of some of the programs that are -- is our student programs. And again, as I mentioned before, students gain advanced skills before entering the workforce. So it does make them marketable. It makes them more in demand. It makes them more attractive to employers. So they can take -- if they choose to take BMW course, is why they're going to school. Volkswagen, Toyota, Mazda and many others, and this is just some of them. For the employers, what companies like Mazda are telling us is that retention is higher when our students are placed with their companies after taking these courses, they see more students that are staying with their companies. They have onboarding time frames that are much shorter. So if the student goes into a position with Mazda, they won't have to be an outboarding program before they can essentially start doing their jobs. Technicians are generating revenue much faster, which has become a huge issue for companies today, mainly because the older generation is actually retiring. So they're losing all of that talent that can generate revenue at a much higher pace, again, giving our students a leg up by just taking some additional training at no cost typically to them. The other part of the Workforce Link Division is the part that I was mentioning before that we actually manage every aspect of -- my team manages every aspect of these relationships. And this is a sampling of some of those partners that we're currently working with. PTI is a Peterbilt program, the Tesla opportunity that we support on our campuses. Republic Services, which is more of an apprenticeship program, Johnson Controls, again, an advanced training program. TechX you're going to hear a little bit about that in just a minute. And our PIP program, which is a really unique program because this is the first time that we built a contract with an association who is actually funding the training for us to provide training to our graduates, that allow them to go into manufacturing jobs or actually sales role when they graduate, making very high salaries. So the services and products that right now we're offering all or some of these services to these companies is actually a custom program development. We will design programs custom to what their needs are. So if their need is, hey, I need new talent that understands our equipment and understands our services and how our company works where we'll build a program that meets that need. If it is just, look, our workforce needs to be trained. We don't want to invest in that kind of a program, then we'll build a workforce training program. And about 90% of the training that we build for our partners is actually hands on. We not only will build the programs for them, but we'll staff them and we'll manage them. We'll provide recruitment services and most -- in every program we have here recruitment services is one of them. And very frequently because we have a national on ground, we have national schools available, we can provide training space as well. One of the newer programs that I'm super, super proud of that's still in its infancy as retention services because I can't tell you the number of conversations we're having with employers with their retention, their technician retention has become a critical point for them. And so we've built a network of talent that actually gets to know the students who there in the training programs that we provide. And when those students actually graduate and go to work for one of these companies or others, we'll follow those students for a year. And in one of the global companies that we work with, we actually increased their retention to 97% within the first year, and they were about 82% within the first year. So I think the -- I think it's working. We have now contracted with the second company that service as well. And this is exactly where I see the division going where we just continue to understand what the challenges are with industry, and we continue to be creative and resourceful using the resources that we have at Lincoln, but also some of the new resources we have with our talent on the team. Last year, we generated through partnerships we generated about $5 million in revenue. This year, I anticipate we'll be somewhere in the neighborhood of about $8 million. And then by next year, we'll have doubled our last year's revenue, I am projecting it to be at least $10 million or more I think we'll see exponential growth during next year. We have added to our business development team, and they are incredibly busy. There's just a phenomenal opportunity out there in industry today for these types of relationships. And I truly believe that the relationship between industry and education is exactly where we need to be going in the next decade. So lastly, I'd like to just play a video for you of the relation of some of the partners that I was just talking to you about and how they view the relationship with our team and the work we're doing. [Presentation]

Okay. That's really it for me. So I think in closing, one of the points I wanted to just make is that placement is very strong. We're very proud, as Scott said, of our compliant -- the compliant reviews that we have from our creditor, from our partners. And I see this growing division, this employer paid training division to do nothing but add additional resources for our partner for our placement. So it's really a 360-degree relationship. So thank you. I think I'm going to hand off to our Senior Vice President of Marketing.

Here I am. That's me. Good afternoon. How's everyone doing today. I'm Peter Tahinos, I'm the Senior Vice President of Marketing. And as I like to say, I have the easiest job of the company because everyone is a marketing expert, and I get input from everyone. So it makes my job a lot easier. And similar to Jay, my oldest son actually graduated from Lincoln Tech in the auto program. But he graduated well before I started working here. So as a marketer, I saw what it did -- what Lincoln Tech did for my son. And it's easy to market something you believe in, and that's why I'm here, and I've been here for about 10 years. As you've heard earlier today, the stars are lining up for Lincoln Tech. We have Job demand in the fields that we train for is growing exponentially. As Scott said, our market share is only about 2%. So there's a tremendous upside in terms of our future. And there is a shift as far as the perception of college and what it can do for you and the value it provides. So all those things are contributing to a significant amount of momentum. We're coming off a successful 2023. And if you saw our press release this morning, that success seems to be carrying over into 2024. So we're very bullish about what's going on in the industry. So we want to keep it going. So the keys to continued growth. We want to create greater efficiencies in lead generation. Our lead flow over the last 18 months has been tremendous. It's made Jay's job a lot easier, I think, from an admissions perspective. but they're doing a great job with that. So the way we want to do that is increase our conversion rates. One of the things -- and that's from lead to enrollment and ultimately, to start. We're in the process or we've just launched a new CRM system that will make the job of the admissions reps a lot easier because they see the activity as we communicate prospective students, follow them through from lead to enrollment to start and there's activities that it triggers so the admissions reps can communicate effectively with the prospective students. The other thing we're trying to do is obviously reduce our cost per start, keep our costs in line. The way we're doing that is CPLs, making sure our cost per lead is minimized. And also introduce more better converting leads, not just the quantity of leads, but the quality of leads that we generate. We're also gradually looking, speaking on quality of leads to eliminate our pay per lead, our affiliates, the leads that we're getting through third-party aggregators. We started that process, I'd say, about 4 or 5 years ago, and we continue to lessen our reliance on those type of leads, converting more leads to the leads that come to our website. We're also looking to strategically increase our paid social media, whether you like it or not social media, especially for our younger demographic is huge. That's where they get their information. That's where they get their news. But from a paid social perspective, we're seeing more leads come through that channel. And also they are converting at a much better rate than we've seen in the past. So we are strategically gradually increasing our involvement in paid social media, while at the same time, working on our organic social media. We also want to position Lincoln as an authority in the industries that we serve. By doing that, what we're doing is we're introducing more content at the top of the funnel. We're creating blog articles. We're doing more podcasts. We're writing articles that are promoted through our website, but really to position Lincoln as an expert in these industries that we serve. And also, we're looking to do more how-to videos and public service type things. And that's also going to not only help from an SEO perspective and make us more visible to the search engines, but it's also going to help us build our brand in terms of positioning Lincoln as an authority. We also want to, at the same time, Chad talked about some of our instructors and their achievements in the field. We want to start promoting those acquisitions as well. And that's going to help the brand overall and help our SEO as well. And we want to successfully launch new campuses. This is the first campus we launched in, what, 15, 16 years. We're focusing -- we're kind of using this as a blueprint moving forward. Chad talked about some of the new campuses that we're looking to explore. Again, lead flow here has been positive. We're very encouraged by the results that we've seen to this point in time. We just started our first class literally last week, but we're very optimistic at the results here. And then also, Chad talked about our existing programs, our core programs, the auto, the skilled trades, some of the health care courses. Those are the areas we want to focus on. And just this past year, 2023, we launched our medical assistant program in Columbia, Maryland, we introduced our electrical program in Grande Prairie and saw positive results in each of those cases. So that's what we're seeing as far as maintaining that growth that we've experienced so far this in the last 18 months. Obviously, it helps to have a budget. And we've increased our spend over the last 6 or 7 years significantly. Again, most of that increase in spend has been in the paid social and paid search areas, Google searches and whatnot. That's where our growth is coming. Those are the better converting leads. At the same time, as I mentioned earlier, we're reducing our reliance on those affiliates -- those third-party affiliate leads that convert traditionally convert anywhere from 2% to 4%. Because, again, we have less control over the content. They're just more top of funnel. People are just starting their search and tend to use those areas. So again, we're also, as I said, beefing up our SEO in terms of the blogs, the articles and those kinds of things where it's going to help our lead. So it's not just a matter of spending our way into greater leads. It's being more efficient with our leads. And this is a chart that shows our cost per start over the last 7 years. And even though our investment in marketing spend has increased, our cost per start has maintained and actually is trending downward. So we're being a lot more efficient with our dollars and a lot more efficient with our media channels. Our CPLs, our cost per lead in paid search and paid social have been coming down over the last, again, 12 to 18 months. So we're seeing savings there. So we're spending a little bit more, getting better efficiencies and that's creating a significant amount of lead flow. Speaking of lead flow, you see this chart that basically shows our growth over the last 9 years. So the key is we went from 154,000 leads, in fact, in 2015 total to 253,000 this past year. But the bigger impression here is the mix of our web leads versus our affiliate leads. In 2015, our revenue accounted for 62% of our total leads and 32% of our affiliate leads. And today, we're at 94% are coming through our website through paid search, paid social and only about 5% are coming through affiliates. So again, better converting leads, not just the quantity but the quality of those leads. So in terms of our messaging, that's evolving as well. Our creative strategy of what we want to communicate, again, and you'll see this as a theme in our advertising and our creative that we're developing. We want to motivate students to follow their passion, not just to go through the motions of going to college because that's the expectation, we want them to follow what their interests are, what their passion is. We are a proven alternative to 4-year traditional colleges. We want to communicate that as well. It represents -- we represent a lower investment and a quicker route to employment. If you talk to our students and you ask them why they came to Lincoln Tech is they want to go to work. They want to go on to the field and make money, that's their priority. And we can do that a lot cheaper and a lot quicker than going through a traditional 4-year college. We also need to continue to create awareness for our programs. In many markets, we're known for our automotive program. People are still not aware of all the other variety of skilled trades and health care opportunities that we do offer at the same time. So we need to continue to do that. We also want to acquire -- or they want to acquire skills that can't be exported as Jay or Chad said. And they won't be replaced by artificial intelligence. That's sort of the buzzword these days, as anybody is afraid that their jobs are going away because of artificial intelligence. So our jobs and our skills cannot be replaced, cannot be exported. So that's obviously another communication point we want to make with our prospective students. We also want to leverage our partnerships to Susan's point, in her presentation, use those partnerships to leverage, create awareness, and drive more students into our campuses. We also want to engage with employers. As you know, we're a highly regulated industry. There are things our employers can say about jobs and opportunities and pay that we can't really talk about. So I think that's important to engage with our employers. And then also to profile successful graduates. Scott highlighted a couple big names, but also the Williams family and some of the success that they have had, we want to highlight those graduates. So I'm going to play a couple of videos for you. The first one is really a series of employers and what they have to say about Lincoln Tech. So hopefully, our volume is okay. [Presentation]

So it's fulfilling to see our employers appreciate what we do and how big a role we play in their companies in terms of the number of employees that they hire. I also want to play a quick video. This is a bit shorter. It really talks to -- hearing from our students, our graduates, and what they have to say about their program at Lincoln Tech. [Presentation]

So again, always nice to hear good things from our students, our graduates. I want to play one more very short video for you. This is a new commercial that we just shot about 1.5 weeks ago. And again, it kind of talks to the fact that not everyone has to go to traditional college and there are opportunities in the trades. [Presentation]

Anyway, thank you for your time today, and I'll turn it over to our CFO, Mr. Meyers.

Thanks, Pete. Good afternoon, everybody. I'm Brian Meyers. I'm the CFO. I've been with Lincoln for 20 years now. So I thought -- good place that Scott was talking about some financing developments that we had over the recent years and to have the capital resources to execute on some of our -- and to accelerate some of our growth strategies and initiatives and program expansions and adding new programs and adding new campus locations. The first thing that we really needed to do is execute and monetize some of our own real estate, which we did in mainly 2 transactions. We generated $80 million for these 2 transactions. In the first transaction we did back in Q3 of 2021 was to sell leaseback of the Grand Prairie and Denver. We generated over $45 million of proceeds. And the one thing I wanted to mention is, since then, we use some of those proceeds to pay off our loans. And since then, we didn't have any outstanding loan balance since Q3 of 2021. And most recently, I'll add that in Q4, we purchased a building to relocate our new Philadelphia school for $10 million. And this quarter, we did a sale leaseback to get back that $10 million as well in the loan proceeds. Our real estate transactions did help us strengthen our balance sheet along with our improved financial performance. And since 2020, we generated $75 million of operating cash flow, which allowed Lincoln to enter 2024 in a very strong position with $80 million of cash with no debt outstanding. In addition, we executed on a new credit facility in this quarter, which further added to our liquidity. We have no intention of using this credit facility in the next few years, but it's there if inorganic growth initiative comes up. As well as it has an accordion feature of an additional $20 million if we wanted to add on some more availability. So all these transactions, the real estate, the balance sheet [ users ], we're very well positioned to kick off 2024 with our growth initiatives. So we had a very strong year for 2023. We exceeded all our financial metrics. And we're forecasting to have another strong year for 2024, using the midrange. We're looking to increase revenue over 10% as well as increasing EBITDA, our adjusted EBITDA over 40%. And talking about starts, last year, we had a very strong start growth of over 11%, we're forecasting to be 7% to 12% for 2024. And I want to highlight, this morning we released that in Q1, as planned, we had a very strong quarter where we're forecasting our stock growth to be about 15%, which we're not revising guidance because that is our plan. So we're not revising guidance at this point. We're forecasting to have significant capital expenditures of $70 million, which I'll walk you through. Most of that is for our future growth initiatives. So again, we're starting off 2024 in a strong position right now with [ starting north with ] $120 million of cash and availability. And this plan, I just want to walk you through for a second. So when you look at 2024 base, that is only 19 campuses. It excludes Atlanta, two campuses that we're relocating, our Philadelphia, our Nashville. That for this model is included in new programs. So we carved it out there. So that's why it's starting with $375 million of revenue versus our midpoint of $415 million, the difference is mainly our Nashville and our Philadelphia campus that's included in the new campus locations. And adjusted EBITDA, the $37.5 million, that is our midpoint of our guidance, and we didn't need to really adjust that because we do have some lessons in Nashville that I'll talk about, but it's offset by some gains in Philadelphia. So we were able to start out with the same midpoint range of $37.5 million. And as Scott mentioned, we're going to have very strong revenue growth in 2027, we're forecasting to have $540 million in revenue, which is a 45% increase from 2024 and more than doubling our adjusted EBITDA to $88 million. And this model only takes new programs that are currently underway. So it's 7 new programs. You'll see that in the future slide when I walk you through each of the steps. And the new campus locations, it only takes into account the ones where we sign the lease right now. So anything future, and I know Chad talked about, we're going to be adding new programs between 2025 and 2026 and 2027. But for this model, it only takes into account the ones that are currently underway. Our base growth, our pace growth assumptions. So again, the $375 million is only our 19 campuses. For 2027, we're forecasting revenue to go up over 10% to $425 million, and our adjusted EBITDA increased 40% to $52.5 million. And again, this excludes the two campus relocations and [indiscernible] campus. And I'll walk you through these -- the assumptions that went into this model because I think it's important because these are very, I'll call it, modest conservative assumptions that we have. Tuition increases that went into this is only 1%. We've been averaging over 2% to 5% each year. Our student stock growth is 5%. Last year, we had over 11%. We're forecasting 7% to 12%. And Q1, we're forecasting to be 15%. So that stock growth is very doable. Our incremental revenue for this model is 28% to 32%. The one thing I'll note, it takes out the efficiencies for the hybrid learning model that you heard from Chad a little bit, and I'll walk you through that as well. Including that, it does get us to the 40% incremental margins that we talked about on some calls as well. And we're anticipating flat graduation rates. In reality, our retention and graduation rates are increasing. So in one area, let's say, starts for some reason, are down. Tuition increases can make up for it and vice versa. So I think this is very achievable. So allocating capital to our highest demand. We're launching right now 7 new skill trade programs. 6 will be launched this year and one will be launched in Q1 of 2025. We're going to be spending $10 million to launch these programs. And by 2027, they should be producing $10 million worth of EBITDA. So there's a really nice return. And on these new programs, it does have a 40% margin on this. And the margins are a little bit -- usually a little bit higher for new programs, simply because we don't need to take out more space, but some of these new programs, we did take on more space. But in the future, some of the new programs that we even have a higher profit margin than this. And again, this is just the 7 new programs. We're going to be launching more in 2025, 2026 and beyond. And as far as adjusted EBITDA, I just want to add. The year that we launched our new program, we will add that back to adjusted EBITDA for that 1 year. The second year regardless on how the new programs performing and it should be profitable. It will not be added back into adjusted EBITDA any longer. And also because I'm talking a lot about 2027, when we get to 2027, it's very clean adjusted EBITDA. The only thing that we will be adding back is the noncash stock compensation expense. For this model, there's no other add-backs other than that. So talking about our -- the new markets. We're going to be spending $80 million to launch 2 new campus, this being 1 of them, which started this month and 2 campus relocations. By 2027, these campuses should be generating $90 million worth of revenue and $20 million worth of EBITDA. Again, Atlanta launch this year, this month. Levittown is relocating, and we're scheduling that to be relocated in Q2. And you heard earlier that this is our only single discipline campus, and we'll be adding 3 new skilled trade programs to that campus. Our Nashville campus, which we're scheduled to relocate in Q3 of 2025. The one thing I want to note about Nashville is that in 2024, our budget, it's scheduled to lose $2 million. In 2027, we're projecting that to earn more than $5 million. And the reason why it was losing money at a loss to $2 million is because it was for sale. So when it was for sale, it took a little bit longer, and we'll look to relocate it. If it wasn't for sale, we would have made investments into that campus, the returns to profitability. But that's why in 2024 it's forecasted to lose some money. And in Q1 of 2026, we're forecasted to open up our new Houston campus as well, which with the same programs as this campus. Our adjusted EBITDA, you'll see it on another screen, another slide a little bit clearer. But we'll add back to adjusted EBITDA preopening costs before school is open, we'll add back the preopening expenses and the first year it opens. Add that back to adjusted EBITDA. The second year it opens will no longer add it back to adjusted EBITDA. And the one thing I want to note, two of the schools are Houston School and our Levittown school. By 2027, it is not fully ramped up. By 2028, these 2 schools together, we'll be earning another $5 million of EBITDA. So by 2027, it's not a full capacity, it's forecasted to be at full capacity in 2028. So if we went out a little bit more, those 2 schools would be generating approximately $5 million more of EBITDA. I won't spend much time on this. Chad will walk us through the hybrid learning model. It does increase our capacity and for new campuses, now we can have a little bit smaller footprint. And it has a more efficient delivery model, which will require less instructors. So we are forecasting in the model for 2027, a minimum of $5 million savings from this. And you heard from Chad how we can get there. And it does help create standardized scheduling across all campuses. It also standardizes our design and improved student experience. And we are seeing stronger student retention for these programs versus our legacy programs as well. So it is doing quite well. So this model is -- if we add on an additional campus right now, we only have the four, and we are currently looking at new locations right now. So this is, I'll say, the new model for our campus locations, which will cost us about $20 million in CapEx, it will be between -- I think this is slightly under 60,000 square feet. We're going to be working anywhere between 60,000 and 80,000 square feet. Again, we'll spend $20 million. And by year 5, we should be generating $5 million worth of EBITDA. And here, you can see the preopening. It is taking us 2 years to open up these schools. So the preopening expenses before the school opens up and has starts, we add that back to adjusted EBITDA. In year 1, we are back. By year or 2, regardless of how that school is performing, and it should be profitable, we'll no longer be adding that back to adjusted EBITDA. So in summary, we have financial performance in real estate is providing the capital for all of our growth initiatives. We continue to have strong demand for students and employers that's driving our base business, our base growth. We're making substantial investment in high-return growth initiatives -- this year with that $70 million in CapEx. We're going to get some efficiencies from a hybrid learning model. And beyond what was announced, we will be continuing to invest in growth opportunities. And we are expected by the end of this year, expected to enter 2025 with about $70 million in cash and availability and that's after spending about $70 million in CapEx. I'll turn it back over to Scott for closing remarks.

So I think everyone knows at this point that the skills gap is real. Everyone talks about it, which is a good thing for us. I think that you've learned that Lincoln Tech is certainly a leader in the local market as well as the national market. We expect to expand our footprint on that. We are very much focused on providing quality education. We want our students to be engaged. We want them to be successful. We want them to graduate and get jobs. We've done that for 78 years, and we're going to continue to do that over the next 78 years. We're very much focused on compliance in order to be effective and being here for the long term, one has to be part of our DNA, and we will continue to do that. We understand that our students are different than what goes to -- knows that go to a traditional community college. And we're going to continue to invest and make sure that we provide the right customer service, make it as easier students to enroll to get through school, and we will support them along the way and using more and more technology to help them get placed in the highest earning job that they can get placed into. As we continue to build out our model, it will create greater scale and efficiencies. And as Susan mentioned, I think it will attract even more industries to partner with us. I think industry and education need to partner more going forward in order to solve the skills gap and we're very much -- we're already seeing lots of signs of more companies being inclined do that. Part of the reason why our new campuses are going to be a little bit larger than this campus is we do want to give a little extra space for those future industry partners that we hope to work with. And if we don't use the industry partners, we could use it for health care to drive more profitability into each local market. We have a strong balance sheet. That's the good news. We have lots of opportunity. We'll utilize that balance sheet to take advantage of those opportunities. And then as everyone knows, well-run schools do generate cash going forward, and we'll use that cash to continue to invest to enhance the programs as well as open up more programs around the country to better serve the employers that are out there. And we will continue to push this message that I think is finally hitting everyone, that college isn't for everyone. And if you want to get into the workforce quickly with a good paying job going to a trade school like Lincoln Tech is a very good decision. So I guess we'll open it up, Michael, for questions.

[Operator Instructions] So [ Rob ], do you want to go first?

Yes. Just -- thank you for putting up the numbers and [indiscernible] excellent. Just sort of recap on the base you're assuming in terms of the new campuses, you get from 2024 base revenue, $375 million, you get to $540 million, and you get to $88 million in EBITDA. How much in CapEx do you need from now next year through '27?

Sure. I'll let Brian...

That's $70 million for those 2, we'll be spending in this year in 2024 for new programs, $8 million and for our new campuses will be spending $50 million.

So $50 million plus $8 million, that will be this year and then next year.

Next year, the $50 million for the new campuses and new programs -- it will be all set this year. 27 new programs.

For the ones that are in this model, but we'll be launching additional programs beyond what's here. And each new program of the replication is about $1 million each of expenditure.

Right. But your 2027 number does not...

Correct. Just...

That will take $50 million plus $8 million $58 million and then next year, $15 million CapEx that's it.

Well, we have also maintenance CapEx. So on top of that. It's about 2% of revenue.

$8 million.

Yes, $8 million to $10 million.

And a corresponding question, Brian. You said that you'll end '24 or start 2025 with $70 million in cash and availability. Is that $30 million in cash and $40 million of availability that works out.

It all depends on the timing of our capital expenditures.

But tell us about how acquisitions might play in that. What -- using the profile and something that you'd like to acquire...

Well, we are constantly looking at acquisitions. As of right now, we've just seen much better opportunities expanding and using our dollars to open up new campuses and replicate. As far as what we're looking for, we're looking for a school group that, first of all, is going to have good compliance. We don't need to pick up someone else's mess. We're looking for school groups that are going to be additive to the programs that we're offering. So it could be a school group that's in a different market than where we are today with the same programs that we might acquire to accelerate that or it might be a program that slightly different than what we're offering, but we know related fields such as aircraft maintenance as an example. So those are things that we're looking for. But as of right now, certainly, over the next 24 months, we're very much focused on executing the plan that you have in front of you. But we continue to look. And if we see the right thing, we will definitely move forward. And that's why we have the credit facility.

On the webcast, Scott, team, what are the parameters in selecting new campuses, new locations from this point?

Sure. So we've engaged a third party to help us with that. That looks at a lot of data from the standpoint of industry demand for employment in the fields that we offer, consumer demand from Google searches, competition demand, how many people are graduating in these fields and then some other metrics. And in that selection process, Atlanta ended up being #1 or #2, I forget, and Houston was #2. So that's why we started with those 2 markets. But on that list, we have about 15 different locations that popped up that were looking for new campuses. But we're very much encouraged because, as Pete mentioned, this campus has started off strongly. So we think our methodology is very sound. And what's also good is, we have another campus in this marketplace, and we're not cannibalizing anything. In fact, if anything, that campus is growing. So with the additional resources of more marketing in this one market, we're actually going to see growth in our existing campus as well as its new panels.

Will that address what the follow-up of what you experiencing already here in Atlanta with new campus locations.

Yes. No, it's been strong. It's very encouraging. The students that come through really -- the quality of this facility resonates with them. They really feel like this is some pace special. They see that it's high tech. They see that they're going to have fun here. And so that's working well. And then as I said, I think just getting the word out and promoting these programs more in this marketplace is helping our campus up in Marietta.

You got a question, let's shift away from some of the 2027 targets. But if we go on starts for this year, 15% for Q1. I know you ended 2023 strong in automotive, maybe break out some of the growth you're seeing in Q1. How we should expect like kind of the linearity of starts over 2024. And then [ a story ] about that.

So it is a strong first quarter. We were budgeting a strong first quarter. As you know, from looking at our historicals, we do have a stronger second half at least as far as volume goes. So we still anticipate a good high school market, our high school season working ahead of schedule. But I would say that if you were to look at last year's quarters to our projected quarters, you have to -- I haven't done it myself. You had to play around by quarter to see what the growth should be, but we'll definitely have more growth in absolute numbers in the second half than the first half. And then needless to say, if the momentum we see continues, we obviously will this summer look to maybe look to change our guidance.

And then I guess -- so there's a lot of -- you guys mentioned a lot that guys are shifting away from these 4 new public universities. That's a question in college. So if we think about starts, I don't know if you keep any data on it, but like how many guys are [indiscernible] who come in and maybe they become a lead potential student. How many of these leads have maybe 1 or 2 years under their belt at like a public school or I need to change my career path and they're looking at Lincoln? Just like kind of the guys questioning coming to a trade.

I don't have the exact numbers, but anecdotally, I would say, maybe Jay has a different perspective, about 10% of our students have probably looked or tried something else for some period of time. And then I've decided that wasn't the right thing for them. I don't know, Jay, if you have a different...

Yes. I say 10% of our students will try that and find out [indiscernible] they want. And it's like high school to begin with and not even on the college inside again, so they end up...

But I'll tell you invariably when you talk to students, many of them will say, I didn't know that this opportunity existed. So there are lots of people that just do even know that career schools are a viable opportunity in which they have known about, especially a lot of our adult students that are coming through.

I just want a follow-up to Brian's response. Regarding the 2027 numbers, the $540 million in revenue, 16% margin at the net margin whether or not [indiscernible].

For that we can't provide these kind of number of shares, you see that. I don't have that right now, we'll certainly report.

Will be in the future.

Yes. Well, the specific question of $2.50 per share.

We haven't gone through that analysis deep enough to support that.

Paying taxes so that it take the chunk out. But we can walk through that and maybe we put out the investor presentation we can add that.

Elementary question. So you have a lead, you have an application, you have a start. And then actually before they start you have financial aid packaging. So what does that look like on a student basis. He or she is enrolling. How long -- let's say, automotive -- how long is the program? What's it going to cost in total and where are those funds going to come from? And I'm presuming it several different sources.

So basically, our programs cost about $25 an hour, and the program length varies from about 720 to about 1,500. We add in books and tools and things of that nature. Probably, I guess, welding is maybe $24,000 with everything included. Automotive or diesel is probably around $36,000. Nursing, I think, might be about $38,000. All of our students for the most part are getting Title IV funding. We do have some cash payers. We encourage cash paying as much as possible, but most of our students are taking out loans, 70% of our students are receiving Pell Grant of some form or another. And we also do provide about 25% of our students with some credit from Lincoln Tech itself.

So an institutional loan, right?

And scholarships, too, we also provide over $15 million to $20 million for the scholarship.

They're taking whatever they can get from Title IV, which includes those brands. And to the extent there is a gap, that's what you're...

Correct. Certain students have saved up or have resources or the family has resources, some might get a third-party loan from someone else. But if someone still has a gap, it's still committed to come and get their education. We think that the motivation is high enough and we'll extend credit to those individuals as well.

And that's why you have a 10%, 11% provision for institutional loans primarily.

All of that is from the [indiscernible] that we are entitled for that there will be maintenance or still an academic progress and we are able to pull that fund they drop. So we see that total package that we have a receivable from a new school, it is difficult...

Got you. And then once you finish your automotive provision, I use that as an example, do you want to get your ASC certification, right?

Yes and no. I mean different dealerships have different philosophies on that. Some still very much like it. Others don't see the value in it per se, but all of our students have gone through a program that enables them to sit for those exams and take those tests.

But they take it on their own or once they get their job, you're helping them prepare for that.

Yes. Our curriculum is designed to help them be successful. They do need some more on the job training in order to take some of those exams. Yes, we definitely prepare them for that.

Last but related question on that topic. You have a new provider of automotive curriculum.

Correct.

Who is the prior provider? Are you paying more or less or the same with the new provider? You said you're the first in the U.S. to use this curriculum. Is it exclusive or not exclusive?

It's not exclusive. Other schools, high schools even are using the curriculum. The cost, if I remember, that there was a wash or the same or wasn't anything significantly better or worse. But what we liked was the content. It deals with today's students, as Chad said, it's gamification, exploration, just like you don't get manuals with a lot of the tech these days. You got to figure it out yourself. Struggle at times. But younger people seem to do quite well like that. And so it just makes it more engaging for them. And now we're coupling it. We've had this curriculum for 2 years, maybe. And now we're finally getting the training aids that will help, I think, accelerate and really make it that much more engaging for students and we'll really be able to capitalize on the curriculum as it was meant to be delivered, frankly.

Yes, I was going to ask for -- with the new Lincoln 10.0, you don't need as much classroom space you have more. You plan to discuss how you're working on reconsidering [indiscernible] that may happen classroom space.

Well, we're freeing up classroom space, we can add more programs. So like, for example, at Indianapolis, we just added a medical system. Again, one of the reasons why we're going to 1 segment. As we roll out Lincoln 10.0, we now have empty classrooms that we can populate with new students. And so we're looking for what is the right program to go into those locations to maximize the square footage.

The way to think about it is very similar to the retail model, right? You're trying to maximize the revenue per square footage, just like a way a retailer we do. So any amount of space we can free up, we're going to take one of our programs that doesn't exist. And that campus, we're going to watch it right in there because all your overheads already paid essentially paper, you just get spread over a larger revenue base. So we can maximize the revenue portfolios something we focus on.

Well, maximizing profitability per square...

Ultimately profitable. Fair point. Well, these involve logic -- just looking big bags on the wrong space, because that will...

We have time for a couple more questions [ top of the arrow ] on the webcast. What percentage of students are unaged starting [indiscernible] starting on, kind of this actually, a little bit the last 12 months. What percentage of those will still end up putting new to the start window?

We have -- the only program where we have limitations is on nursing. Otherwise -- and welding because welding have a physical booth. But we are not out of capacity at any location, I would say, because we can always open up a weekend shift. We have school slots available, Friday, Saturday, Sunday. So overall capacity utilization for us is probably around the 50% level, if not lower over a whole network of programs. And wherever we do see capacity constraints, will add. So for example, we've been growing our welding program. We expanded in 2 locations last year. It's expanding in, I think, maybe 2 locations this year. So where we do run out of space, programs in demand and we can better serve that marketplace, then we'll make that investment.

Very good. Any additional questions inside here? The last question from webcast. Have you learned any employer in Atlanta that you're going to deploy at [indiscernible]?

Yes. This facility was probably made too efficient, too tight. We're going to add a few more offices and some additional student space to our future locations. And as I also said, we will be adding additional capacity to enable partners to come to our locations and help further drive Susan's business. So this program or this campus right here, it's about 58,000 square feet. The buildings that we're looking at are somewhere between 60,000 to 90,000 square feet going forward.

Very good. Scott, there are no more questions. Please come to close.

Thank you all for coming. I appreciate it. Those that are here physically, I think we'll have a good time going through the tour, see the nice fancy array that we have in the shop. The shop is designed to be just like a BMW, Ferrari and Maserati shop, lots of glass, very clean, it's very sexy. It really appeals to the students that come through as well as you get to see all of our very thing well-equipped shops. So thank you all for joining us today, and we look forward to having you at our next Investor Day.