Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Universal Technical Institute Inc (NYSE:UTI) reported a 15% year-over-year revenue growth, reaching $201.4 million.
• The company saw a significant 22% increase in new student starts, indicating strong demand for its programs.
• Adjusted EBITDA improved by 45% year-over-year, showcasing effective cost management and operational efficiency.
• UTI is expanding its program offerings and campus footprint, including a new nursing program and a partnership with Tesla for a collision repair program.
• The company raised its fiscal 2025 guidance, expecting consolidated revenue between $810 and $820 million, reflecting an 11% increase year-over-year.

Negative Points

• There were delays in some strategic initiatives, pushing planned expenses from the first quarter into the second quarter.
• The company faces growth restrictions on opening new Concord campuses until 2027 due to merger conditions.
• The impact of California wildfires caused slight disruptions in attendance, although operations were not significantly affected.
• UTI is experiencing regulatory uncertainties, particularly concerning the Department of Education's future policies.
• The company anticipates increased expenses related to strategic investments and campus expansions, which may impact short-term profitability.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Sign with UTI.

Q: Is the new campus in Atlanta the first one in Georgia for UTI? A: Yes, it is a completely Greenfield expansion for us. We see a lot of opportunity and job growth in that area, and we believe we have found a fantastic location. This will be an optimized, comprehensive set of UTI products, including auto, diesel, and full skill trades. - Jerome Grant, CEO

Q: Can you provide more details on the third campus planned for 2026? A: The third campus will be a UTI campus. We are not able to open any Concord campuses until 2027 due to growth restrictions from the merger. We are close to announcing the exact location and will provide details soon. - Jerome Grant, CEO

Q: How should we think about the respective new enrollment growth rates for UTI and Concord segments in the new guidance? A: The overachievement in Q1 was proportionate. UTI's enrollment increase was partly due to students moving from the fourth quarter to the first quarter because of FAFSA delays. Concord is expected to see a larger organic increase as we continue to test demand elasticity in the healthcare space. - Jerome Grant, CEO

Q: What are the price expectations like in the M&A landscape? Are sellers' expectations reasonable? A: We are hearing more reasonable numbers now. Our focus is on ensuring that any target has great outcomes, as we have built a reputation for high execution levels. We want to avoid diluting our shareholders or our outcomes. - Jerome Grant, CEO

Q: How are employers engaging with your students, and is there competition among them? A: We are bringing employers into the process earlier, such as Tesla's involvement in our Long Beach campus. This approach gives students confidence in job prospects and increases competition among employers, which helps drive wage growth. - Jerome Grant, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.