Good day and thank you for standing by and welcome to the Q4 2021 Lincoln Educational Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that this call is being recorded.

I would now like to hand the conference over to your host today, Michael Polyviou. Please go ahead..

Thank you, Justin and good morning, everyone. Before the market opened today, Lincoln Educational Services issued it's news release reporting financial results for the fourth quarter and full year ended December 31, 2021. The release is available on the Investor Relations portion of the company's corporate website at www.lincolntech.edu.

Joining us today on the call are Scott Shaw, President and CEO; and Brian Meyers, Chief Financial Officer. Today's call is being broadcast live on the company's website and a replay of the call will be archived on the company's website.

Statements made by Lincoln's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as term is identified in Federal Securities laws.

The words may, will, expect, believe, anticipate, project, plan, intend, estimate and continue as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results.

The company cautions you that these statements reflect current expectation about the company's future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the company's control that may influence the accuracy of the statements and the projections upon which the segment and statements are based.

Factors that may affect the company's results include but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Forward-looking statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to the future events.

All forward-looking statements are qualified in their entirety by this cautionary statement and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date they're up.

Now I would like to turn the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead..

Thank you, Michael and good morning, everyone. Thank you for joining us today to review Lincoln's fourth quarter and full year performance and corporate developments. We had a solid end to a successful year as we exceeded or performed at the high end of our previously stated outlook.

Furthermore, we dramatically improved our liquidity by completing the sale leaseback of our Denver and Grand Prairie properties, giving us one of the strongest balance sheets in our 75-year history. At Lincoln, we are now entering what we believe will be a period of growth and expansion.

We clearly have the non-dilutive capital resources in place to fully execute our growth strategies for 2022 and beyond which I'll talk about shortly.

Our positive Q4 student starts resulted in our fourth consecutive year of organic growth and graduate placement rates continue to be robust as the demand for our highly skilled students remains extremely strong.

Our focus remains on providing our students with the best ROI on their educational investment, while also providing industry with work-ready talent that will help them thrive. All in all, 2021 was a strong year for Lincoln and we are excited by our opportunities for continued growth as we work to decrease the growing skills gap for hands-on talent.

Financially, our top line for the quarter grew more than 7%. In addition, operating income increased by more than 200% and we continue to generate significant cash from operations as each campus generated positive EBITDA for the quarter and full year.

As of December 31, our unrestricted cash position was up threefold over the same period a year ago which includes the net proceeds from the sale-leaseback transaction for the Denver and Grande Prairie campuses.

Our balance sheet is strong and will improve by approximately another $34 million when the sale of the Nashville campus closes sometime in Q2. As many of you know, in the recent past, our balance sheet constrained our ability to grow.

With that obstacle now behind us, we can now complement the improving performance of our existing campuses with various projects designed to build long-term growth. Specifically, we are adding programs at existing campuses which drives greater operating leverage. This year alone, we plan to expand five programs in skilled trades and health care.

We expect to start the build-out of our new Nashville campus which will be funded from the sale of the existing campus which we have previously stated will cost between $15 million and $20 million.

The campus will be physically smaller than the campus currently under contract to sell but will offer greater efficiencies, profitability and opportunities for additional programs that will enable us to better serve students and the local business needs.

And we are planning to open our first new campus in a market that we have identified as currently underserved. We see many opportunities to enter new markets, especially in light of the heightened need for hands-on talent created by the pandemic.

Strong demand by corporate partners has only increased over the past 24 months and we are currently searching in several underserved markets for new campus locations. Additionally, we will be launching other initiatives that offer greater efficiencies at the campus and corporate level to improve our bottom line.

For example, we will dramatically reduce the number of course start dates which can range to over 150 today to just 15 by the end of 2023 and we have commenced the build-out of our blended learning model to streamline the learning experience, both at the curriculum and campus level.

It will take us upwards of two years to fully implement this plan across Lincoln's operations but we've already launched our first program with more to follow shortly. Our goal is to improve the overall student experience. We have learned a tremendous amount about our students and our capabilities as a result of the pandemic.

We know our students can and want to learn online but they still prefer the hands-on in-person experience for which we are famous. Our new curriculum delivery will mean that students will be in our shops and labs 70% of the time when on campus. We are also standardizing our curriculum across our platform which will make us more efficient and scalable.

We are centralizing administrative functions that have been proven to be more effectively done from our corporate office, thus freeing up campus staff to focus on supporting students and not on paperwork.

We are creating three equal shifts in our day which will enable us to better utilize our faculty and facilities while also shortening the time it takes to complete our night program which will improve student outcomes. The landscape of growth opportunities is vast.

And by simplifying and standardizing our operations, we will be able to more rapidly capitalize on these opportunities. Beyond these near to short-term initiatives, we will continue to seek further expansion opportunities internally and externally.

We believe a bigger footprint remains critical to achieving our objective of building the nation's highest quality hands-on career school capable of serving the national needs of the Fortune 500, as well as the local needs of your neighborhood automotive dealer, hospital or electrical contractor.

Our process has already identified several new markets each representing a significant growth opportunity. In evaluating new markets, we evaluate student demand, employer demand and competition. In addition, we seek input from our corporate partners since they are constantly asking us to help them with their workforce needs.

This close collaboration with industry demonstrates and confirms our importance to our partners while emphasizing the value of developing innovative strategies to attract and train personnel to help their businesses grow.

We firmly believe aligning our interest with that of our corporate partners gives us additional name recognition and a jump start on getting a foothold in a new market. In addition, we see opportunities to offer lower cost, shorter programs that are non-Title IV funded and enable students to more rapidly enter the workforce.

We know that not everyone can dedicate a year to getting an education. And so we are launching pilot programs that test market demand as well as employer acceptance. Moreover, we continue to attract corporate demand for specialized training programs, both for new employees and existing employees and will be increasing our resources in this area.

To fund these various growth and efficiency measures, we expect to incur approximately $2 million of onetime costs which has been factored into our guidance that Brian will share shortly.

Speaking of strong partnerships, in October, we celebrated the opening of Republic Services 76,000 square foot training facility in Dallas, for which we are the training provider. The first class of graduates is already back into the field with the next class about to join them.

The classes are staffed with instructors from our Grand Prairie Texas campus and the curriculum was developed in part by Lincoln's Diesel Technology Advisory Committee and designed to meet Republic's needs for qualified diesel technicians.

In order to grow, you need a strong foundation and Lincoln has clearly demonstrated our ability to grow no matter the economic environment. We just concluded our fourth consecutive year of student growth, revenue growth and given our high operating leverage, strong profitability growth.

We achieved this consistent performance during a period when we had the lowest unemployment rate in 50 years pre-COVID and then we were faced with a world-changing event of the pandemic. We had to temporarily shut down our campuses, moved to 100% online education and then safely reopen our campuses.

We had to reschedule thousands of students to follow CDC safety protocols and we had to keep our operations, serving our students despite the great resignation and challenges in staffing. Due to the determination, creativity and dedication of our people, we and our students prospered, while so many others had to retreat.

I'm proud to say that given our ability to keep our doors open, we continue to serve our existing students while enabling new students to commence their education. Consequently, today, we have more than 1,000 additional students graduating this year and entering the workforce just when industry needs them.

And despite this growth, we continue to have employers asking for more students than we currently have enrolled. This speaks to my next point and that is the realities of our country's skills gap for hands on talent.

Decades of stigmatizing blue-collar jobs while pushing everyone into four year schools, whether they were interested in them or not, has resulted in significant shortages of hands-on workers and has saddled college students with unnecessary and excessive debt.

Along with these social issues is the fact that, in general, American companies have cut back on training and remain skeptical of their ROI in their training of entry-level talent. All of these factors and more create a tremendous opportunity for Lincoln Tech. We are positioned like no one else to help close the skills gap.

We will build on our 75 years of experience in attracting and training motivated individuals and giving them the skills, knowledge and experience to enter the workforce with confidence.

Through a number of our industry partnerships, we have demonstrated the ability to create workforce-ready talent that stays with the employer, thus providing a clear ROI. Now that we have greater financial resources, we are making investments in people, processes and our physical scale that will provide long-term growth.

We are making our programs more engaging by adding more hands-on lessons, greater use of simulations and adding gamification and other technologies. We are creating greater student value by offering blended learning which lowers the students cost to attend school and provides increased schedule flexibility.

We are reducing our cost by centralizing more functions in aligning our class schedules across all campuses. We have identified more than five markets for future expansion and are currently negotiating a lease on one and have been actively searching for locations at others.

We continue to pursue acquisition opportunities that are both active in the market as well as privately negotiated. And finally, we are exploring various short-term training opportunities, both with corporate partners as well as consumer opportunities.

The need for training is immense and we have never seen so many opportunities to leverage our skills, experience and talent to grow our business. Before I conclude, I want to thank our faculty and staff for their unrelenting dedication.

Their tireless efforts, especially over the past couple of years continued to propel Lincoln, so the recent industry acknowledgments are well deserved.

According to HVAC excellence, the nation's largest and oldest accrediting body for the HVAC industry, Lincoln leads all educational institutions in the country, with 36 certified Master HVAC/R educators. In fact, more than 25% of all certified master educators in the HVAC industry are now employed by Lincoln.

Also, the National Center for Construction, Education & Research or NCCER recently granted accreditation to our South Plainfield campuses welding program.

NCCER Credentials career training programs related to the construction industry and Lincoln's welding and metal fabrication technology program was verified as having met the foundation's stringent requirements. In summary, we achieved our 2021 operating objectives and entered 2022 with approximately 850 more students compared to the year ago level.

This combined with the continued strong interest and lead generation give us great confidence to achieve our 2022 goals which Brian will share during his prepared remarks. Other positive factors, including a better outlook for the high school student starts compared to a year ago will also contribute heavily to our success.

Also, from a regulatory perspective, our 90-10 further improved to 75-25 and our composite score should be 3.0 which is the highest level one can achieve. And lastly, we have a balance sheet that gives us greater flexibility and allows us to implement several growth initiatives simultaneously.

I'd now like to turn the call over to Brian for a review of our fourth quarter and financial highlights and the introduction of our 2022 guidance.

Brian?.

Thanks, Scott. Good morning and thank you for joining us. I am pleased to share our robust fourth quarter financial results which, as Scott mentioned, enable Lincoln to achieve a solid financial performance for the year and help us meet or exceed all of the operating and financial targets in our 2021 guidance.

On today's call, I'll be reviewing the significant items in our Q4 financial results, including the sale leaseback transaction, our top line performance, operating expenses and conclude with our outlook for 2022.

First, as previously discussed, Lincoln is executing a transaction to take advantage of the strong demand in the commercial real estate markets to monetize our own real estate. We successfully closed the first transaction during the fourth quarter.

The sale leaseback of our Denver, Colorado and Grand Prairie Texas campuses produced cash proceeds net of fees of over $45 million. We utilized the proceeds to completely repay all outstanding debt of approximately $17 million and ahead to our cash position.

Our strong cash flow in the fourth quarter, combined with these transactions enabled Lincoln to finish the year with $83 million of cash. We anticipate adding to our solid financial position in 2022 through a continuing strong cash flow combined with the anticipated proceeds from our Nashville Tennessee campus discussed by Scott.

Turning to the fourth quarter results, starting with our top line performance. Revenue for the quarter increased $6 million or 7.4% to $87.8 million over the prior year. The increase was a result of a 6.3% increase in average population driven by student starts, up 7.5% for the year.

Student starts for the fourth quarter came in approximately 2,700, up slightly compared to last year. While the quarter's growth was 2.1%, these thoughts are compared against 15% stock growth in the prior year which represents one of the strongest quarters of growth achieved in 2020.

Full year student starts increased 7.5% and our ending population was 6.9% higher or approximately 850 units more than the prior year. This metric is very important because the higher beginning population will help drive revenue growth and financial results for 2022. Now, turning to our consolidated operating expenses.

The first item to note is the sale leaseback transaction that resulted in a $22.5 million gain. With the closing of the sale leaseback, we incurred additional rent expense of $600,000 during the quarter.

Fourth quarter operating expenses were also impacted by a $700,000 noncash impairment charge resulting from an adjustment to market value of a former campus facility that was closed several years ago and is now actively on the market.

Excluding these items, total operating expenses for the quarter would be $75 million or a 6.1% increase over prior year.

The increase in expenses quarter-over-quarter was driven by several factors, including one, instructional -- increase in instructional expenses of approximately $2 million, primarily in correlation with our largest student population.

Higher instructional salaries due to high demand, particularly in our nursing field and inflationary consumable costs, most notably in our welding programs; second, administrative increases were driven by increased medical claims in combination with a slight increase in salaries.

Although our operating expenses increased for the quarter, they have decreased slightly as a percentage of revenue when compared to prior year.

In terms of our bottom line results, consolidated operating income improved by $1.7 million or 15.2% to $12.8 million, after excluding the gain and rent resulting from the sale-leaseback transaction and the onetime impairment charge.

And adjusted EBITDA increased by $1.8 million or 13.1% to $15.1 million after the add-back of the noncash stock compensation expense as well as the onetime items mentioned previously related to the sale-leaseback and impairment charges. For more detail, please refer to the non-GAAP schedules on our Q4 earnings release.

As a brief overview of our balance sheet, as I highlighted earlier, we have a very strong cash position. Cash provided by operating activities for 2021 was $27.4 million and free cash flow totaled approximately $20 million. Also, as of the year-end, we are debt free. Turning now to some full year highlights.

First, revenue increased 14.4% over prior year to $335.3 million, exceeding both our initial guidance of 7% to 12% as well as our revised guidance of 12% to 14% growth over prior year; second, student starts increased 7.5% when compared to prior year which is right in the midpoint of our updated guidance of 7% to 8%; third, we achieved adjusted EBITDA of $38.1 million, up 59.5% over prior year.

This increase exceeds initial projections of $29 million to $34 million as well as our refined guidance of $35 million to $37 million. And finally, we realized adjusted pretax income of $27.1 million which exceeds initial estimates of $19 million to $24 million as well as the revised guidance of $25 million to $27 million.

As a reminder, for details on adjusted EBITDA and adjusted pretax income calculations, please refer to the non-GAAP section of our Q4 earnings release. To conclude my remarks, I would like to introduce our 2022 guidance.

Please note, our guidance excludes the impact of the potential sale and relocation of our Nashville Tennessee campus, as well as additional costs associated with the planned new campus as discussed by Scott earlier.

We will be providing additional detail on our new campus financial model on our Q4 investor presentation that will be available on our website later today. Our outlook is based on our current enrollment trends and do not account for any potential impact results from new COVID-19 variance in 2022.

We'll continue to monitor the student demand and external factors and will update guidance if warranted.

As such, in 2022, we anticipate revenue ranging between $350 million and $365 million, adjusted EBITDA ranging between $35 million and $40 million, net income ranging between $17 million and $22 million, student stock growth ranging between 5% and 10%.

And lastly, capital expenditures range between $7 million and $9 million, with approximately 40% earmarked toward program expansion at various campuses. In addition to the guidance, I'll take a moment to share some additional color on how we see the year unfolding.

Consistent with our seasonality, we expect first half revenue to be approximately 45% with the remaining 55% recognized in the second half of the year. We anticipate revenue growing each quarter over the prior quarter in 2022.

Student starts are expected to increase in low single digits during the first quarter with subsequent increase expected for the remainder of the year. In terms of operating expenses, we anticipate expenses to be in the low to mid $80 million mark per quarter, in line with our historical seasonality, we expect Q3 to be the high point of the year.

In comparison to prior year, we expect Q1 to show the largest jump year-over-year, mainly due to the comparison to last year when the company had a onetime benefit of $3 million resulting from CARES Act funds used in credit students accounts.

Furthermore, 2022's operating expenses will also increase by $3.2 million due to additional rent expense resulting from the sale-leaseback transactions.

In addition, we plan to increase our investments throughout the year by roughly $2 million for growth initiatives, efforts to streamline our operations and continued development of a new, more efficient hybrid-teaching model as mentioned by Scott previously.

In terms of adjusted EBITDA, we anticipate interest expense will be about $350,000, our effective tax rate to be around 28.5% and depreciation and amortization to be approximately $6.6 million spread evenly throughout the year.

Also, adjusted EBITDA includes an add-back of noncash stock-based compensation of approximately $4.5 million which is expected to be evenly recognized each quarter with a slight uptick in the first quarter of about $200,000.

With that, I'll conclude my remarks by thanking our entire team, including our faculty and students for their outstanding efforts, starting 2021. We look forward to commuting our progress throughout 2022. And now, I'll turn the call back over to the operator so we can take your questions.

Operator?.

First question is from Alex Paris with Barrington Research. Your question, please..

Hi guys, congrats on the nice finish for the year. My first question will be regarding the new and more efficient hybrid operating model.

How does this compare to the operating model pre-COVID? And then how does it compared to the operating model currently? And then the follow-up -- it's not quite a follow-up, it's my second question is I'm curious about any lingering effects of COVID.

Obviously, COVID has impacted results significantly over the last couple of years, what COVID impacts are you dealing with on a go-forward basis?.

Sure. Yes. No problem. Thanks for the question. So basically, before COVID, our classes were 100% on ground, taking place at our campuses, students would come to the school basically 25 to 30 hours a week. And if you're in a nighttime program, you're going fewer hours a week and so it took you a lot longer to complete a nighttime program.

Going forward, what we're doing is about 25% to 30% of the students' education will now be done online, off-campus which means, as I highlighted in my comments, when they're on campus, basically going to be doing what they love to do which is the hands-on work with our instructors in our labs and in our training facilities.

And what will happen is we'll have three equal shifts throughout the day.

So we'll have a morning, afternoon and evening shift, all the same length which means that our evening students will go through at a little slightly accelerated pace which we think will benefit them because, frankly, they'll be able to complete their education sooner which would help drive up, frankly, the graduation rates of those students as well.

And so it will create greater utilization of our facilities and will be more efficient also for how we staff from a faculty perspective as well. So those are kind of the changes that will take place. And we're doing it program by program. And as you can imagine, we have 14 different dates.

We then get state approval and crediting approval and it definitely will be completed, we believe, by the end of 2023 but our objective is hopefully to obviously get that done sooner simply because we just see lots of operating efficiencies resulting from this change.

For your other question with regards to COVID, I mean, thank goodness, we were able to manage through COVID, I'll say, surprisingly well. And again, I have to give a shout out to our faculty and staff for doing that.

The only lingering issue that we still have with COVID which will eliminate itself, I'm assuming very shortly, is with our nursing program. As you're probably well aware, a lot of clinical sites had to restrict the number of students if they are allowing any students to come in.

And while those clinical sites have reopened, frankly, we just -- nursing is I think our third largest program, we just have a large volume of nursing students.

So we still have some nursing students that are, I'll say, having completed their education as quickly as they would have originally thought and that has delayed some of our starts in our nursing program. All of this is factored into our guidance.

But I anticipate certainly by the, let's say, the third quarter, if not the second quarter of this year, we hope to be caught up on all the clinical education and be back to our normal schedule for all of our nursing students..

Great, thank you. That's good color. I appreciate it..

Your next question comes from Steven Frankel with Collier. Your line is open..

Hi, good morning.

Could you give us details on the graduation and placement rates for the year?.

Sure. Graduation rates were around 64% and placement rates were right around 80%..

And then what was that in -- let's go back to normal times versus 2019?.

Yes. So placement is about the same and graduation was up to around 67%, 67% to 68%. So that's one area that's kind of dropped down during COVID and obviously, an area that we've put a lot of attention on and we're already seeing signs of improvement in that area.

And just remind you all, we have a goal of 70% graduation rate for our whole company as well as an 85% placement rate. And currently, given how strong the placement market is optimistically anticipating that we could reach that level this year..

Great. And then you made some interesting comments about some short-term pilot programs with the corporate partners.

Maybe you could update us with a little more detail on that as well as maybe an update on the Kindig It cash pay program that you announced a quarter or so ago?.

Sure. So what I'll do is I'll talk about basically this in a more general standpoint, because a lot of this is I'll say, research and development efforts taking place until we have a lot more proven results that are scalable. I don't want to distract you. But with that said, we see lots of opportunity in shorter programs.

We know that we reach a lot of students but we also know that not everyone comes to us that we reach. And one of the biggest obstacles is the cost and the amount of time. So we're looking at developing shorter programs that will give students skills to be employed but will enable them to get into the workforce more quickly.

And some of those might be let's say, business to consumer, as we do today. Some of them are also with leveraging some of our relationships with our corporate partners and kind of expanding what we're doing with them today in a bigger, bolder area. So that's kind of what we're focused on from a shorter program perspective.

With regards to the Kindig, we anticipate that, that will start next quarter. We're waiting for the CFO from the local town but for whatever reason, it seems to be taking a little bit longer than anticipated and we anticipate that we'll have our first class start, as I said, in that program in Q2.

And that's a version of the shorter programs in that it's non-Title IV, all cash. In this case, that the Kindig program is at an advanced level. So it's not for an entry-level person but for someone who's already has been out in the workforce, working for a number of years and he wants to bring their skills to the next level..

Okay, great. Thanks, Scott..

Sure. No problem, Steve. Thanks for your interest..

Thank you. And our next question comes from Austin Moldow from Canaccord. Your line is now open..

Hi, thanks for taking our question. So I think the Transportation and Trade segment growth was driven, I think, entirely by the student population where health care and other was kind of the balance between population growth and revenue per student.

So can you just talk about those two drivers for the two segments going forward, especially sort of in the context of inflation?.

Sure. So across the board, we do have annual increases in our tuition between 1% to 3%. I think that the revenue increase on the nursing side or the healthcare side is more attributable to more students coming during the day than during the evening and that kind of accelerates some of the revenue which raises the average revenue per student.

But on average, we would anticipate the average revenue per student to be increasing at that 1 to 3 percentage points but it could change due to mix in any particular time. I hope that helps..

Okay. And just a quick follow-up; is there -- is there an ability to raise above 3% with your student body.

And I guess the larger question is, how do you feel that Lincoln compares to other programs that are offered in the same markets, given the price point currently?.

Yes, good question. So we definitely look at every market, with every market is different and compare ourselves, in particular to the other proprietary schools because obviously, our programs are always more expensive than the community college. And we never tried to be the highest priced person.

We're the lowest price person; so we try to keep our tuitions kind of right there in the middle. And at this stage, I would say that they're -- we have no interest in raising tuitions faster than 3%.

Obviously, there are some costs out there that currently are rising higher than that but we don't think it's in the best interest of our students to raise it more than what we've done already for this year..

Great. Thanks very much..

No problem. Thanks, Austin..

Thank you. And our next question comes from Raj Sharma from B. Riley. Your line is now open..

Hello, good morning, guys. Congratulations on solid results. I had a couple of questions.

Could you give us some more color on the starts, the high school versus the young adults, how were they in the fourth quarter? And then sort of going forward, how do you see them in the current quarter? And any impacts? You had talked about social marketing doing better for high schools first. Yes..

Yes. So first of all, the vast, vast majority of all of our high school student starts occur in the third quarter period, actually in June and then the third quarter. So in the fourth quarter, we really don't have that many high school student starts of note.

What we are seeing, though, as we build up for this coming June and third quarter numbers, are more enrollments than we had last year. We have more access to high schools. And so we're anticipating as having a stronger high school turnout this coming summer which is our big high school starting period..

Got it.

And any indication on show rates and the level of interest that you're receiving?.

Yes, that's a good question. And we look at that constantly. And we do see some softness a little bit in our show rates. We have strong lead enrollments. We have strong leads. We have good conversion to enrollments. There has been a little softness in the students starting.

That could be because they find other job opportunities and the strong market that exists out there. But overall, what we're still achieving is from a lead to start improving metrics and from a cost perspective, our cost per start is flat to down year-over-year when you look at both marketing and admissions.

And so that gives us greater encouragement to, frankly, invest more in both areas to help drive more growth going forward. So while the numbers change individually at different aspects, overall, we're achieving better results..

Great. And then my second question is around the guidance. The guidance for the year, I just want to understand and be clear, it does not include any new campus contribution, any new -- not any new program contributions. I want to understand.

It's the same-store sales sort of organic performance that you are expecting in fiscal '22? And then the follow-on question is then the use of your cash on your balance sheet, what -- are there any sort of color on -- if you can provide on the plans to use that cash because you have plenty of cash plus free cash flow during the year?.

Raj, so to answer your first question, the guidance excludes the new campus that Scott discussed that we're hopefully signing a lease shortly on that. So the guidance excludes that as well as anything to do with the relocation and sale of Nashville. As you know, as we disclosed earlier, we would have a launch gain on that as well.

So the guidance excludes that. As far as the use of cash, the main uses for this year will be program expansion and the build-out of these new campuses. As we mentioned, our -- the midpoint is about $8 million of our CapEx. 40% of that is going to be used for new programs.

And then on top of that, it will be for the build-out of our new school which should be about $10 million to $15 million for the new school and Nashville will be a little bit more than that but we'll use the proceeds from Nashville to pay for that as well..

So as we mentioned in our comments, we are opening up new campuses. We're currently negotiating a lease for the next one to open up and are looking for locations at several other markets. In addition, we do always also look at the acquisition marketplace to see what's out there.

So as we highlighted, we do have the wherewithal to do follow many different paths right now. As Brian highlighted, is expanding the existing program, getting our new campus up and running that we anticipate will occur certainly by the early part of 2023 and then hopefully have other campuses on the way as well..

And to touch a little bit more on one of your other questions about new programs, as Scott mentioned, we're having some additional programs while putting some additional programs in some campuses. The spend will occur in the first and second quarter for that but we're not anticipating to open up. We're trying to get them opening up earlier.

But we're not anticipating them opening until Q3 and Q4, so the starts to be minimal for this year..

Got it. Got it. Great, thank you. I'll take it offline. Thanks a lot..

No problem. Sure, Raj..

And, thank you. And I am showing no further questions. I would now like to turn the call back over to Scott Shaw for closing remarks..

Thank you, operator. As always, I want to thank our shareholders for your continued interest and support. I also want to thank our students for their steadfast commitment, many of whom have faced great adversity due to the pandemic. Our performance in 2021 positions us to meet our 2022 goals, both operationally and financially.

The future has never been brighter for Lincoln and we remain focused on business execution and flawlessly implementing our near- and long-term growth strategies. We have the resources to invest in those areas that generate positive student experiences and placement rates. Lincoln is a compelling story as our results reflect.

Brian and I look forward to sharing our 2022 first quarter results with you in May until then, stay safe..

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