Good day, ladies and gentlemen, and welcome to the Lincoln Educational Services Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to turn the conference over to our host of today's call, Mr. Doug Sherk, you may begin.

Thank you, Tonia, good morning, everyone. Before the opening of the market today, Lincoln Educational Services issued via news release its second quarter 2016 financial results. The release is available on the Investor Relations portion of the company's corporate website at www.lincolntech.edu. Today's call is being broadcast live on the company's website and a replay of this call will also be archived on the company's website. Statements during today's call made by management of Lincoln Educational Services Corporation regarding Lincoln’s business that are not historical facts may be forward-looking statements that turn to define the federal securities law. The words may, will, expect, believe, anticipate, projected plan of tend to estimate and continue and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved if at all. Generally these statements relate to business strategies and business plans, projected our anticipated benefits from acquisitions or depositions to be made by the company or projections involving anticipated revenues, earnings or other aspects of the company’s operating results. The company cautions you that these statements contain current expectations about the company’s future performance or events and are subject to a number of uncertainties risk and other influences, many of which are beyond the company’s control. That may influence the accuracy of the statements and the projects upon which the statements are based. The events described in forward-looking statements may not occur at all. Factors which may affect the company’s results include, but are not limited to the risk and uncertainties discussed in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports…

Thank you, Doug, and good morning everyone. Thank you for joining our second quarter 2016 conference call. With me today is Brian Meyers, Lincoln's Chief Financial Officer. I will begin the call by reviewing our recent operational highlights and strategic initiatives progress. Brian will then walkthrough our financial highlights and details for the quarter as well as a review of our outlook for the remainder of the year. And we’ll take questions from analysts and investors. Overall I would describe our operating and financial performance during the second quarter as very encouraging. Our organization made and continuous to make one month into the third quarter, solid progress towards achieving several key objectives and increasing the value of our enterprise. Here are some of our accomplishments. Since we last spoke with you in early May, we have stabilized students starts compared to prior year and generate our first modest student start increase during the past two years from our transportation skill trade segment. Second, by managing our cost and lowering our fixed expenses we’ve reduced our losses by 50%, even with lower revenues. Third, we’ve unlocked value within our real estate by signing a definitive agreement to sell our primary Florida facility which held as our healthcare and culinary programs. Fourth, we remained focused on our students’ success and continue to make investments that will enhance their experience. We’ve completed the rollout of our new automotive and diesel curriculum which incorporates videos, interactive exercises and we then require every student to have a laptop. And fifth, with strong demand from industry for our graduates, our placement rates are tracking ahead of last year. So despite the challenging economic and regulatory environment, and the distractions caused by our divesture effort, we continue to move forward in a positive way. I’m thankful to…

Thank you, Scott, and good morning everyone. I’ll begin my comments this morning on the financial performance of our continued operations which is comprised over our transportation and skill trade segment, our transitional segment and our corporate and other segment. The transitional segment refers to operation that close or being faced out. So we consist our firm part Florida campus which was fully toured out as of the end of the first quarter of 2016 in the Hartford, Connecticut campus which is on scheduled to be fully toured out by the end of this year. Each school previously mentioned employees a gradual process that enables the school to continue to operate well current [indiscernible], complete their courses study and is important to note that the Hartford campus is no longer enrolling new students. Revenue from continuing operations for the quarter was $41.9 million versus $44.7 million in the prior year comparable period. The decrease was a result of 2016 with approximately 800 fewer students than on January 1, 2015, which led to a 9.6% decline in average student population to approximately 6,600 as of June 30, 2016 from 7,300 for the prior year quarter. As a sign note, our transitional segment accounted for approximately 50% of the revenue decline from the prior year period. This decrease in revenue was partially offset by 3.5% increase in average student revenue for a student for the three months ended June 30, 2016 due to a shift in program mix. As Scott mentioned, we did have a slight increase in students’ starts from our transportation and skill trades for the second quarter. As soon as it starts it appear to have stabilize with the increase to 1,936 versus 1,930 for the second quarter of 2015. With that in mind, we’re expecting to finish the…

Certainly. [Operator Instructions] And our first question comes from Alex Paris of Barrington Research. Your line is open.

Good morning, guys.

Good morning, Alex.

Good morning.

Congratulations on the quarter. It’s nice to see that transportation segment make the turn I had forecasted slight declining had a very, very slight increase but still do you think that will be sustained going forward that you – I mean I think almost mathematically it has to be sustained in order to get to the 6,600 students that you started the year with, right?

Yes, I guess the question is of timing in those quarters means tough to know exactly what will happen in the next quarters, but yes you were right, we are anticipating some growth overall as well as just some improved retention in other things that will help get us to that population number.

Okay. You mentioned Scott the – one of your initiatives for 2017 is to expand the high school admission team because you’ve had good results so far this year. I realized this is sort of the prime recruiting time for high school in the summer leading up to the fall. How do you measure those good results at this juncture, is that leads, is it conversations, is it conversions, is it applications?

Yeah.

And then also related to that, what is the size of the high school admissions for this year versus last year?

Sure, good questions. So we’ve had some high school starts already in the second quarter and the starts that we’ve experienced have been greater than the prior year. As we look to basically our largest starts come in August and September and we’re seeing some good indications there. So when I say that is performing well I’m looking at something that’s going to be let’s say flat overall for the year, but when I look at what are our opportunity is and how we have do markets to go into I can increase our rep force which we’ve already hired up for and go into new markets and grab more market share and get greater penetration. And basically we’ve increased the rep force from about 75 reps up to about 85 reps for next year. So that should give us a good bump given all the other changes we’ve made in our high school sales force, so I think that will be a good source of opportunity for us, just put in context as just the transportation and skill trade segment, the high school represents about 30% of our total starts in that segment.

Okay, good. So 75 going to 85 for next year, how does that 75 compared to last year, is it similar number?

It’s down a little bit.

Okay, thank you for that. And then a question on the sale of the Florida facility. Florida is one of 17 facilities, 17 schools, but as I recall it’s the only one that you own the rest release, is that correct?

That’s correct, within that segment.

Yeah. And then given your comments that you had been hopeful to sell them in one transaction, this transaction obviously suggest that it’s going to be as you said more than one transaction. It’s taken eight months to get to this point or so since you announced it.

Yes.

Is part of the length of that trying to get it done on all one transaction now coming to the realization that it’s going to be more than one transaction? And then with that signal maybe a faster closing of the balance of the schools?

Yeah, it’s really hard to predict but certainly your first statement is correct and that what we’re trying to sell it as one property, one group, it was more challenging. And as kind of got indications in prospect we could sense which campuses were most in demand. I mean as you know there is some difficulties out there in the financing market that still remains good interest. Most of all though what’s the good news is that segments performing better than it performed last year, so we continued to deliver and find ways to attract more students and create value there. So the good news from my perspective is that whole segments performing a lot better than it did last year and we’ll continue to look at opportunities to figure out ways to maximize the value.

And then how large was the Florida facility in terms of enrollment? Healthcare in total you had 3,700 students at the end of last year?

Yeah, so the – that facility currently only has about 400 students and probably about 100 and – as I’m looking at the wrong one Brian?

No, no you’re right.

Yeah, so 400 students and probably about 125 of those are in the automotive HVAC programs which is what we’re keeping.

All right. So where will those automotive students be taught after your lease term expires I mean next year, you have another facility for them to move to?

They are already in another facility, we have multiple facilities at that location.

And we own the other facility as well. It’s a smaller facility.

Okay, all right, got you.

So basically what we’re doing is teaching out some programs and keeping other programs. But at the same time selling off some of the real estate for those affiliated with those programs that we’re teaching out.

And then I would assume the balance of the schools the other 16 which are not owned but leased were either be sold as a business or taught out because of no reasonable buyer for that business?

That is all possibility.

Okay, that’s helpful. Thank you very much. I’ll get back in the queue.

Okay, thanks Alex.

And our next question comes from Doug Ruth of Lenox Financial Services. Your line is open.

Brian and Scott, congratulations on getting the students starts to increase, that was a tremendous achievement for you.

Thanks Doug, we appreciate it.

The Indianapolis campus was really challenged last quarter, how is that doing at this time?

Well, it’s still a little bit challenged. We have new leadership in the admissions area which is providing some stability but obviously it’s tough to turn this around within three months. But I think that were certainly on our way in the right direction.

Okay, so it’s moving into right direction.

Correct.

The term loan that you have, what is the size of that?

Well, right now it’s approximately $44 million.

Okay, so it’ll drop down to $34 million if the real estate sale goes through?

Correct.

And then can you give us – I think you gave us a little bit of broad, but could you maybe give us a little more color on the – what is the interest in the other healthcare properties and what is the sort of the general status of the state of the industry?

Sure. I don’t really go into too many specifics Doug, but what I can tell you is that first of all the schools are performing well which you can see from the results. There is definitely interest in the schools but I think as you also can be aware of the ability of individuals to get financing is challenging. And therefore things take a little bit longer and maybe we originally thought but again there are good schools, good assets performing well and so I’m confident of their long-term value and liability.

Okay. When you look at the skill trade and transportation segment, do you see any pockets of strength there that any area that you seem to be having more success with?

No, there is really nothing that really stands out as far as really dragging it down or making it more successful. I mean the areas that do poke up or really all around I think management and making sure you have the right teams in place, but I can’t say there is one pocket of the country performing particularly better or worse than another or one program particularly performing that much better or worse than another.

Okay, well you made really good progress. Congratulations on that and then thank you for hosting the call today.

Thank you, Doug.

Sure, thanks Doug.

And then I’m showing no further questions at this time. I’d now like to turn the call back over to management.

Great. Thank you all for your continued interest and support in Lincoln. We continue to manage to maximize our results in the short-term while letting the foundation for long-term growth. I thank all of my fellow employees for their dedication and determination to serve our students and deliver the quality education and opportunity that has sustained Lincoln for more than 70 years. I’m sure that there’ll be bumps in the road ahead but I’m confident that Lincoln is positioned to stay on course. Thank you again, I look forward to updating you during our third quarter call. Have a great day.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day.