Universal Technical Institute Reports Fiscal Year 2024 Second Quarter Results

Raised Fiscal 2024 Guidance for New Student Starts, Revenue and Profitability

Introducing Initial Revenue and Profitability Projections for Fiscal 2025

PHOENIX, May 8, 2024 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), a leading workforce solutions provider of transportation, skilled trades and healthcare education programs, reported financial results for the fiscal 2024 second quarter ended March 31, 2024. Universal Technical Institute, Inc. operates in two reportable segments, Universal Technical Institute (UTI) and Concorde Career Colleges (Concorde), and together with its segments and subsidiaries is referred to as the "Company," "we," "us" or "our."

• Revenue of $184.2 million representing 12.4% growth versus the prior year period, with UTI and Concorde achieving 14.7% and 8.2% growth versus the prior year period, respectively.
• Total new student starts of 5,480 representing 18.5% growth versus the prior year period, with UTI and Concorde achieving 19.6% and 17.2% growth versus the prior year period, respectively.
• Net income of $7.8 million and adjusted EBITDA⁽¹⁾ of $22.6 million, both increasing considerably versus the prior year period.
• Full year guidance raised for new student starts, revenue, net income, diluted earnings per share and adjusted EBITDA⁽¹⁾.
• Initial projections for fiscal 2025 indicate revenue of nearly $800 million and adjusted EBITDA margin of approximately 15%, representing at least 100 basis points of adjusted EBITDA⁽¹⁾ margin expansion versus fiscal 2024.

"We maintained our momentum in the second quarter, demonstrating strong market demand across our growing program footprint," said Jerome Grant, CEO of Universal Technical Institute. "We generated double-digit start growth in both divisions, including contributions from our newest programs. The next phases of our program expansions have remained on or ahead of schedule, with the recent launches of two new Concorde dental hygiene programs and the forthcoming launches of four new heating, ventilation, air conditioning, and refrigeration programs in our UTI division. Across our organization, we remain focused on supporting the growth of these new programs and driving optimization initiatives across the company.

"In addition to our progress with growth and optimization, we expect to continue advancing our organic diversification initiatives in the second half of fiscal 2024 and beyond. This work includes the consideration of expanding our campus footprint into new geographies; continuing to expand the reach of our existing programs and explore the addition of new program offerings to our portfolio; and continuing to add new industry relationships to our partner base. In addition, we continue to evaluate potential inorganic growth opportunities to enhance our multi-divisional foundation. Leveraging these strategic pathways, we aim to continually strengthen our position as a leading workforce solutions provider."

Financial Results for the Three-Month Period Ended March 31, 2024 Compared to 2023

• Revenues increased 12.4% to $184.2 million compared to $163.8 million primarily due to the growth in both UTI and Concorde new student starts.
• Operating expenses rose by 9.6% to $173.0 million, compared to $157.9 million primarily due to an increase in expenses associated with new program launches at both UTI and Concorde.
• Operating income increased 88.1% to $11.2 million, compared to $5.9 million.
• Net income increased 123.8% to $7.8 million, compared to $3.5 million.
• Basic and diluted EPS were $0.14, both compared to $0.04.
• Adjusted EBITDA⁽¹⁾ increased 17.8% to $22.6 million, compared to $19.2 million.

UTI

• Revenues of $123.3 million, an increase of $15.8 million, or 14.7%, from the prior period revenues of $107.6 million, due to growth in new student starts.
• Operating expenses were $105.2 million compared to $97.8 million. The increase was primarily due to expenses incurred during the current year for new program launches during the last two fiscal quarters in 2023 and in 2024.
• Adjusted EBITDA⁽¹⁾ was $24.4 million compared to $17.4 million.
• New student starts increased from the prior year by 19.6%, and average undergraduate full-time active students increased by 10.3%.

Concorde

• Revenues of $60.9 million, an increase of $4.6 million, or 8.2%, from the prior period revenues of $56.3 million due to growth in new student starts.
• Operating expenses were $57.6 million compared to $50.1 million. The increase was primarily due to higher revenues from higher student starts and additional expenses incurred during the current year related to new program launches.
• Adjusted EBITDA⁽¹⁾ was $5.4 million compared to $8.4 million.
• New student starts increased from the prior year by 17.2%, and average undergraduate full-time active students increased by 8.9%.

"During the second quarter, we performed at or above our expectations across our key metrics, delivering double-digit year-over-year growth in revenue, profitability, and new student starts," said Troy Anderson, CFO of Universal Technical Institute. "This quarter represents our first fiscal period with a full quarter year-over-year comparison for Concorde, which has continued to outperform expectations with strong growth in both new student starts and revenue. The double digit revenue and new student start growth in the UTI division benefited from the 14 new programs we launched over the past year as well as overall positive performance across the other programs and campuses.

"Based on our current momentum and strategic execution, we are raising our fiscal year 2024 new student start, revenue and profitability guidance. Additionally, given the visibility we have into the remainder of the year and the strength of our underlying operating model, we are introducing initial projections for fiscal year 2025, where we are estimating revenue of nearly $800 million and adjusted EBITDA margin expansion of at least 100 basis points versus fiscal 2024, further building upon the margin expansion we are expecting this year. These longer-term projections reflect continued progress with our announced program expansions, consistent operational execution, and ramping of our growth and optimization investments, and we expect to make additional headway on each of these fronts throughout the next fiscal year." 

Financial Results for the Six-Month Period Ended March 31, 2024 Compared to 2023⁽²⁾

• Revenues increased 26.4% to $358.9 million compared to $283.8 million primarily due to the growth in UTI new student starts and the inclusion of two additional months of revenue for Concorde⁽²⁾.
• Operating expenses rose by 22.0% to $333.4 million, compared to $273.4 million primarily due to the inclusion of two additional months of expenses for Concorde⁽²⁾.
• Operating income increased 144.5% to $25.4 million, compared to $10.4 million.
• Net income increased 196.6% to $18.2 million compared to $6.1 million.
• Basic and diluted EPS were $0.32 and $0.31 compared to $0.07 and $0.07, respectively.
• Adjusted EBITDA⁽¹⁾ increased 40.2% to $47.1 million compared to $33.6 million.

UTI

• Revenues of $238.7 million, an increase of $25.6 million, or 12.0%, from the prior period revenues of $213.1 million, due to higher student starts.
• Operating expenses were $205.5 million compared to $189.9 million. The increase was primarily due to expenses incurred during the current year for new program launches during the last two fiscal quarters of 2023 and in 2024.
• Adjusted EBITDA⁽¹⁾ was $46.0 million compared to $37.6 million.
• New student starts increased from the prior year by 18.5%, and average undergraduate full-time active students increased by 8.1%.

Concorde⁽²⁾

• Revenues of $120.2 million, an increase of $49.5 million, or 70.0%, from the prior period revenues of $70.7 million due to the inclusion of two additional months of revenue during the current year, along with growth in new student starts.
• Operating expenses were $109.8 million compared to $65.2 million. The increase was due to the inclusion of two additional months of expenses during the current year and additional expenses related to higher average undergraduate students and program launches.
• Adjusted EBITDA⁽¹⁾ was $14.2 million compared to $8.3 million.
• New student starts increased from the prior year by 81.6%, and average undergraduate full-time active students increased by 7.7%.

Balance Sheet and Liquidity

At March 31, 2024, the Company's total available cash liquidity was $145.1 million which includes $29 million available from its revolving credit facility. Capital expenditures ("capex") for the quarter and year-to date period were $6.0 million and $9.8 million, respectively. The primary driver of capex is the program expansion investments for both UTI and Concorde.

For the Company's most recent investor presentation and quarterly financial supplement, please see its investor relations website at https://investor.uti.edu.

Updated Fiscal 2024 Financial Outlook

Conference Call

Management will hold a conference call to discuss the financial results for the fiscal 2024 second quarter ended March 31, 2024, on Wednesday, May 8, 2024, at 4:30 p.m. ET.

To participate in the live call, investors are invited to dial (844) 881-0138 (domestic) or (412) 317-6790 (international). A live webcast of the call will be available via the Universal Technical Institute, Inc. investor relations website at https://investor.uti.edu. Please go to the website at least 10 minutes early to register, download and install any necessary audio software. The conference call webcast will be archived for fourteen days at https://investor.uti.edu. Alternatively, the telephone replay can be accessed through May 22, 2024, by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering passcode 1518270.

Use of Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company also discloses certain non-GAAP financial information in this press release and may similarly disclose non-GAAP financial information on the related conference call. These financial measures are not recognized measures under GAAP and are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.  The Company discloses these non-GAAP financial measures because it believes that they provide investors an additional analytical tool to clarify its results of operations and identify underlying trends. Additionally, the Company believes that these measures may also help investors compare its performance on a consistent basis across time periods. Additional details on our non-GAAP measures and the tables reconciling these measures to the most directly comparable GAAP measure are provided below.

Adjusted EBITDA: The Company defines adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation and amortization, adjusted for stock-based compensation expense and items not considered normal recurring operations. 

Adjusted Free Cash Flow: The Company defines adjusted free cash flow as net cash provided by (used in) operating activities less capital expenditures, adjusted for items not considered normal recurring operations.

Management utilizes adjusted figures as performance measures internally for operating decisions, strategic planning, annual budgeting and forecasting.  For the periods presented, our adjustments for items that management does not consider to be normal recurring operations include:

• Acquisition-related costs: We have excluded costs associated with both potential and announced acquisitions to allow for comparable financial results to historical operations and forward-looking guidance.
• Integration-related costs for completed acquisitions: We have excluded integration costs related to business structure realignment and new programs for recent acquisitions to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
• One-time costs associated with new campus openings: During fiscal 2022, we opened new campus locations in Austin, Texas and Miramar, Florida. We continued to incur one-time costs during fiscal 2023 for the campus opening as we completed the build-out of the remaining programs in the new facilities. We disclose any campus adjustments as direct costs (net of any corporate allocations). Outfitting a new campus requires significant facility improvements and modifications, and the purchase of technical equipment and training aids necessary for teaching our programs, the combination of which requires a significant investment by the Company which would not be considered part of normal recurring operations.
• Restructuring charges: In December 2023, we announced plans to consolidate the two Houston, Texas campus locations to align the curriculum, student facing systems, and support services to better serve students seeking careers in in-demand fields. As part of the transition, the MIAT Houston campus, acquired in November 2021, will begin operating under the UTI brand and implement a phased teach-out agreement starting in May 2024. Both facilities will remain in use post-consolidation.
• Costs related to the purchase of our campuses: We lease the majority of our campus locations. Over the past three years due to shifts within the real estate environment, we have been presented with the opportunity to purchase three of our campus locations. These purchases are significant capital expenditures and not considered part of normal recurring operations.

To obtain a complete understanding of our performance, these measures should be examined in connection with net income (loss) and net cash provided by (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 ("SEC").  Because the items excluded from these non-GAAP measures are significant components in understanding and assessing our financial performance under GAAP, these measures should not be considered to be an alternative to net income (loss) or net cash provided by (used in) operating activities as a measure of our 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 define and calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure across similarly titled performance measures presented by other companies. A reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP measures is provided below and investors are encouraged to review the reconciliations.

Forward Looking Statements

All statements contained in this press release and the related conference call, other than statements of historical fact, are "forward-looking" statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements which address our expected future business and financial performance, may contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," "will," the negative form of these expressions or similar expressions. Examples of forward-looking statements include, among others, statements regarding (1) the Company's expectation that it will meet its fiscal year 2024 guidance for new student start growth (decline), revenue growth, net income, diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash Flow; (2) the Company's expectation that it will continue to expand its value proposition and build a business that can grow in low-to-mid single digits with potential upside, regardless of the economic environment; and (3) the Company's expectation that it will succeed in new program launches next year. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could affect our actual results include, among other things, failure of our schools to comply with the extensive regulatory requirements for school operations; our failure to maintain eligibility for federal student financial assistance funds; the effect of current and future Title IV Program regulations arising out of negotiated rulemakings, including any potential reductions in funding or restrictions on the use of funds received through Title IV Programs; the effect of future legislative or regulatory initiatives related to veterans' benefit programs; continued Congressional examination of the for-profit education sector; our failure to maintain eligibility for or the ability to process federal student financial assistance; regulatory investigations of, or actions commenced against, us or other companies in our industry; changes in the state regulatory environment or budgetary constraints; our failure to execute on our growth and diversification strategy, including effectively identifying, establishing and operating additional schools, programs or campuses; our failure to realize the expected benefits of our acquisitions, or our failure to successfully integrate our acquisitions.; our failure to improve underutilized capacity at certain of our campuses; enrollment declines or challenges in our students' ability to find employment as a result of macroeconomic conditions; our failure to maintain and expand existing industry relationships and develop new industry relationships; our ability to update and expand the content of existing programs and develop and integrate new programs in a timely and cost-effective manner while maintaining positive student outcomes; a loss of our senior management or other key employees; failure to comply with the restrictive covenants and our ability to pay the amounts when due under the Credit Agreement; the effect of our principal stockholder owning a significant percentage of our capital stock, and thus being able to influence certain corporate matters and the potential in the future to gain substantial control over our company; the effect of public health pandemics, epidemics or outbreak, including COVID-19, and other risks that are described from time to time in our 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 SEC. Any forward-looking statements made by us in this press release and the related conference call are based only on information currently available to us and speak only as of the date on which it is made.  We expressly disclaim any obligation to publicly update any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, changes in expectations, any changes in events, conditions or circumstances, or otherwise.

Social Media Disclosure

Universal Technical Institute, Inc uses its websites (https://www.uti.edu/, https://concorde.edu, and https://investor.uti.edu/) and LinkedIn pages (https://www.linkedin.com/school/universal-technical-institute/ and https://www.linkedin.com/school/concorde-career-colleges/) as channels of distribution of information about its programs, its planned financial and other announcements, its attendance at upcoming investor and industry conferences, and other matters. Such information may be deemed material information, and the Company may use these channels to comply with its disclosure obligations under Regulation FD. Therefore, investors should monitor the company's website and its social media accounts in addition to following the company's press releases, SEC filings, public conference calls, and webcasts.

About Universal Technical Institute, Inc.

Universal Technical Institute, Inc. (NYSE: UTI) was founded in 1965 and is a leading workforce solutions provider of transportation, skilled trades and healthcare education programs, whose mission is to serve students, partners, and communities by providing quality education and support services for in-demand careers across a number of highly-skilled fields. The Company is comprised of two divisions: Universal Technical Institute ("UTI") and Concorde Career Colleges ("Concorde"). UTI operates 16 campuses located in 9 states and offers a wide range of transportation and skilled trades technical training programs under brands such as UTI, MIAT College of Technology, Motorcycle Mechanics Institute, Marine Mechanics Institute and NASCAR Technical Institute. Concorde operates across 17 campuses in 8 states and online, offering programs in the Allied Health, Dental, Nursing, Patient Care and Diagnostic fields. For more information, visit www.uti.edu or www.concorde.edu, or visit us on LinkedIn at @UniversalTechnicalInstitute and @Concorde Career Colleges or on X (formerly Twitter) @news_UTI or @ConcordeCareer.

Company Contact:
Troy R. Anderson
Chief Financial Officer
Universal Technical Institute, Inc.
(623) 445-9365

Media Contact:
Susan Aspey
Vice President, Corporate Affairs & External Communications
Universal Technical Institute, Inc.
(202) 549-0534
[email protected]

Investor Relations Contact:
Matt Glover or Jackie Keshner
Gateway Group, Inc.
(949) 574-3860
[email protected]

(Tables Follow)

Financial Summary by Segment and Consolidated

During fiscal 2023, in coordination with the integration of Concorde, we began to reassess our operating model to determine the organizational structure that would best help the Company achieve future growth goals and optimally support the business. Beginning in fiscal 2024, we have executed an internal reorganization to fully transition our operating and reporting model to support a multi-divisional business. As part of the internal reorganization, each of the reportable segments now have dedicated accounting, finance, information technology, and human resources teams. Additionally, human resources and information technology costs that benefit the entire organization are now allocated across UTI, Concorde and Corporate each period based upon relative headcount. As a result, additional costs have moved from Corporate into the UTI segment and to a lesser extent the Concorde segment as resources were redirected to support the segment's objectives. Due to these changes in allocation methodology, the prior year segment amounts have been recast for comparability to the current year presentation. 

SOURCE Universal Technical Institute, Inc.