Universal Technical Institute Reports Fiscal Year 2019 Third Quarter Results

SCOTTSDALE, Ariz., Aug. 8, 2019 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of transportation technician training, reported financial results for the fiscal 2019 third quarter ended June 30, 2019.

• New student starts, excluding Norwood, MA campus, up 11.9% for the quarter and 13.0% year-to-date
• Full year 2019 guidance raised, including expected operating cash flow of $12 million or greater and expected adjusted free cash flow of $10 million or greater

"During the third quarter of 2019, we generated strong revenue growth, delivered our fourth consecutive quarter of year-on-year start growth and, for the second quarter in a row, our average student population was up compared to the prior year," said Kim McWaters, UTI's President and Chief Executive Officer. "We are making consistent progress toward building a profitable business, and our significant momentum is the direct result of UTI's multi-year Transformation Plan.

"Over the past 18 months, we have redesigned core business processes, leveraged technology and analytics to efficiently attract more qualified potential students, successfully opened a new campus, expanded our welding programs, and further differentiated our industry-leading student value proposition. Even in a time of historically low unemployment, when people are far less likely to consider post-secondary education, these initiatives are producing results. We do not know when the macro trends will turn, but it is clear that we are building a business that can thrive in any market environment.

"We had 5.1% more students in school at the end of the third quarter of 2019 compared to the prior year, driving revenues 5.5% higher. Our focus on durable changes to our cost structure reduced operating expenses by 8.3%.

"Based on our top- and bottom-line performance, we are raising 2019 guidance across the board. We believe revenue will continue to increase -- driven by new student starts and a higher average student population -- and also expect to deliver further additional operating efficiencies. The combination should generate significant improvement to cash flow and operating results in 2020."

Operating Results for the Three-Month Period Ended June 30 2019 Compared to 2018

• New student starts, excluding the Norwood, MA campus, were up 11.9%; new student starts, including the Norwood, MA campus, were up 8.7%.
• Revenues increased 5.5% to $79.0 million compared to $74.9 million, driven by higher average full-time enrollment.
• Operating expenses decreased by 8.3% to $79.5 million compared to $86.7 million, primarily due to lower contract and professional services expense and advertising expense, which was partially offset by an increase of $0.4 million in direct costs from the Bloomfield, NJ campus.
• Operating loss was $0.5 million, compared to $11.8 million.
• Net loss was $0.4 million, compared to $11.7 million.
• Adjusted operating loss was $0.3 million, compared to $8.4 million. (See "Use of Non-GAAP Financial Information" below.)
• Adjusted EBITDA gain was $4.5 million, compared to an adjusted EBITDA loss of $4.0 million.

Operating Results for the Nine-Month Period Ended June 30 2019 Compared to 2018

• New student starts, excluding the Norwood, MA campus, were up 13.0%; new student starts, including the Norwood, MA campus, were up 11.4%.
• Revenues increased 3.0% to $243.8 million compared to $236.7 million, driven by higher average full-time enrollment, net of a decrease in industry training revenue.
• Operating expenses decreased 1.5% to $257.1 million compared to $260.9 million due to cost structure changes across multiple functions and categories, offset by $3.3 million of direct costs related to the growing student population at the Bloomfield, NJ campus, and $1.4 million of one-time costs for the Norwood, MA campus closure.
• Operating loss was $13.2 million, compared to $24.2 million.
• Net loss was $13.3 million, compared to $21.7 million, which included a $3.0 million tax benefit.
• Adjusted operating loss was $7.5 million, compared to $17.0 million.
• Adjusted EBITDA gain was $6.6 million, compared to an adjusted EBITDA loss of $3.7 million.
• Cash flow used in operating activities was $7.1 million, improving $15.3 million.
• Adjusted free cash flow was negative $7.2 million, improving $16.3 million.

Raised 2019 Outlook

• New student starts, excluding the Norwood, MA campus, is expected to grow in the high single digits in fiscal 2019.
• Fiscal 2019 average student population is anticipated to increase in the low single digits as a result of the transformation and growth initiatives.
• Full year 2019 revenue is expected to range between $327 million and $331 million, compared to $317 million in fiscal 2018, reflecting the expected increase in the average student population.
• Operating expenses are expected to range between $336 million and $341 million, compared to $352.2 million in fiscal 2018. The decrease in operating expenses are driven across multiple expense categories.
• Operating loss is expected to range between $8 million and $12 million. Adjusted operating loss is expected to range between $3 million and $7 million.
• Operating cash flow is expected to be $12 million or greater, adjusted free cash flow is expected to be $10 million or greater, and the ending cash balance is expected to grow $2 million or more from year-end 2018.
• Net loss is expected to range between $8 million and $12 million. Adjusted EBITDA is now expected to range between $14 million and $17 million, compared to between $9 million and $15 million as detailed in the company's prior guidance.
• Capital expenditures are expected to range between $6 million and $7 million.

Conference Call

Management will hold a conference call to discuss the 2019 third quarter results on Thursday, August 8^th at 1:30 p.m. PDT (4:30 p.m. EDT). This call can be accessed by dialing 412-317-6790 or 844-881-0138.  Investors are invited to listen to the call live at http://uti.investorroom.com/.  Please access the website at least 10 minutes early to register, download and install any necessary audio software.  A replay of the call will be available on the Investor Relations section of UTI's website for 90 days or the replay can be accessed through August 22, 2019 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10133554.

Use of Non-GAAP Financial Information

This press release and the related conference call contains non-GAAP (Generally Accepted Accounting Principles) financial measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures.  Management chooses to disclose to investors these non-GAAP financial measures because they provide an additional analytical tool to clarify the results from operations and help to identify underlying trends.  Additionally, such measures help compare the company's performance on a consistent basis across time periods.  Management defines adjusted EBITDA as net loss before interest expense, interest income, income taxes, depreciation, amortization and adjusted for items not considered as part of the company's normal recurring operations. Management defines adjusted operating loss as loss from operations, adjusted for items that affect trends in underlying performance from year to year and are not considered normal recurring cash operating expenses.  Management defines free cash flow as net cash  used in operating activities less capital expenditures.  Management defines adjusted free cash flow as net cash used in operating activities less capital expenditures, adjusted for items not considered as part of the company's normal recurring operations.  Management chooses to disclose any campus adjustments as direct costs (net of any corporate allocations).  Management utilizes adjusted figures as performance measures internally for operating decisions, strategic planning, annual budgeting and forecasting.  For the periods presented, this includes consulting fees incurred as part of the company's transformation initiative, startup costs related to the Bloomfield, NJ campus, and the teach out and closure of the Norwood, MA campus.  To obtain a complete understanding of the company's performance, these measures should be examined in connection with net loss, operating loss and net cash used in operating activities, determined in accordance with GAAP, as presented in the financial statements and notes thereto included in the annual and quarterly filings with the Securities and Exchange Commission.  Since the items excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be an alternative to net loss, operating loss or net cash used in operating activities as a measure of the company's operating performance or liquidity.  Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring. Other companies, including other companies in the education industry, may calculate non-GAAP financial measures differently than UTI does, limiting their usefulness as a comparative measure across companies.  A reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP measures are included below.

Information reconciling forward-looking adjusted EBITDA, adjusted operating income and adjusted free cash flow to the most directly comparable GAAP financial measure is unavailable to the company without unreasonable effort. The company is not able to provide a quantitative reconciliation of adjusted EBITDA, adjusted operating income or adjusted free cash flow to the most directly comparable GAAP financial measure because certain items required for such reconciliation are uncertain, outside of the company's control and/or cannot be reasonably predicted, including but not limited to the provision for (benefit from) income taxes. Preparation of such reconciliation would require a forward-looking statement of income (loss) and statement of cash flows prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the company without unreasonable effort.

Safe Harbor Statement

All statements contained herein, other than statements of historical fact, are "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such statements are based upon management's current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect the company's actual results include, among other things, changes to federal and state educational funding, changes to regulations or agency interpretation of such regulations affecting the for-profit education industry, possible failure or inability to obtain regulatory consents and certifications for new or expanding campuses, potential increased competition, changes in demand for the programs offered by UTI, increased investment in management and capital resources, the effectiveness of the recruiting, advertising and promotional efforts, changes to interest rates and unemployment, general economic conditions of the company and other risks that are described from time to time in the company's public filings. Further information on these and other potential factors that could affect the financial results or condition may be found in the company's filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date of this press release. Except as required by law, the company expressly disclaims any obligation to publicly update any forward-looking statements whether as a result of new information, future events, changes in expectations, any changes in events, conditions or circumstances, or otherwise.

About Universal Technical Institute, Inc.

With more than 220,000 graduates in its 53-year history, Universal Technical Institute, Inc. (NYSE: UTI) is the nation's leading provider of technical training for automotive, diesel, collision repair, motorcycle and marine technicians, and offers welding technology and computer numerical control (CNC) machining programs. The company has built partnerships with industry leaders, outfits its state-of-the-industry facilities with current technology, and delivers training that is aligned with employer needs. Through its network of 13 campuses nationwide, UTI offers post-secondary programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NASCAR Tech). The company is headquartered in Scottsdale, Arizona. For more information, visit uti.edu.

Company Contact:
Scott Yessner
Interim Chief Financial Officer
Universal Technical Institute, Inc.
(623) 445-0977

Investor Relations Contact:
Moriah Shilton
LHA Investor Relations
(415) 433-3777
[email protected]

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SOURCE Universal Technical Institute, Inc.