UNIVERSAL TECHNICAL INSTITUTE INC Q1 FY2025 earnings call

• Top line performance exceeded expectations across both divisions. On Concorde, higher investments in marketing and admissions led to strong student start performance, and they plan to continue investing in these areas. On UTI, strong first two starts were due to FAFSA delays shifting students, and remaining starts performed as planned. - In Q1, UTI completed unification of 2 Houston campuses for operational efficiencies. - Concorde continues growth with plans to launch 10 cash pay short course programs in 2025, new nursing program in Jacksonville set to launch mid-fiscal 2025, and Dallas nursing program capacity increase on track. - Partnership with Heartland Dental for co-branded campus on track to open in early fiscal 2026. - UTI has HVACR programs ramping across campuses, plans to open 3 campuses in 2026 (subject to reg approval), and added Tesla to advanced training programs with Long Beach campus offering Tesla's start program for collision repair. - Recognized Canton campus as Veteran-friendly institution. - Making progress on CFO search with expanded talent pool.

Revenue for the quarter grew over 15% year-over-year to $201.4 million. Average full-time active students increased 11% year-over-year to 25,062 students. Net income increased $22.2 million with diluted earnings per share of $0.40. Adjusted EBITDA improved 45% year-over-year to $35.5 million. Total new student starts increased year-over-year by over 22% for the quarter. Concorde contributed $70 million, an increase of 17.9% over the prior year quarter while the UTI division contributed $131.5 million, an increase of 14% over the prior year quarter. Average full-time active students for Concorde increased 16.4% year-over-year, with new student starts up 26%, while UTI had an 8% increase in average full-time active students year-over-year and new student starts grew 19% year-over-year.

• Raised revenue guidance for fiscal 2025 to between $810 million and $820 million, reflecting approx 11% year-over-year growth at midpoint. - Adjusted EBITDA guidance raised to between $122 million and $126 million. - New student starts guidance raised to between 28,500 and 29,500. - Net income guidance raised to a range of $54 million to $58 million with diluted earnings per share projected between $0.96 and $1.04. - Anticipate double-digit growth in Q2 for starts, mid- to low single digit growth thereafter; revenue growth expected in upper single digits in Q2 and double-digit in remaining quarters. - Adjusted EBITDA expected to normalize throughout the year as strategic initiative investments are made. - Adjusted free cash flow guidance raised to between $60 million and $65 million.

• Factors that may cause actual results to differ materially from forward-looking statements, including those discussed in earnings release and SEC filings. - Regulatory changes could impact operations and growth plans. - Uncertainty around the timing and outcome of strategic initiatives and M&A activities.

Q: Alex Paris asked about the third new campus, whether it's a UTI campus and details on its location.

A: Jerome Grant said it's a UTI campus, and they are close to announcing it but need to get a couple of things across the finish line before exact location.

Q: Eric Martinuzzi asked about Q2 revenue expectations and expense snapback.

A: Christine Kline said it's in the neighborhood, and Christine Kline also said about $10 million more in expenses quarter-over-quarter.

Q: Mike Grondahl asked about specific marketing efforts at Concorde and macro environment impact.

A: Jerome Grant talked about continuing to turn the dial in marketing with agencies, and said the macro environment is healthy with better conversations about trades vs 4-year schools.

Q: Steven Frankel asked about M&A price expectations and outcome issue.

A: Jerome Grant said there may be a few transactions, they are hearing more reasonable multiples now and are focused on targets with great outcomes.

Q: Jasper Bibb asked about expense cadence and margin trending.

A: Jerome Grant and Christine Kline discussed that deferred expenses are around $5-6 million and margins will have a contour throughout the year with low-double digits in second and third quarters and upper teens in fourth quarter.