Universal Technical Institute Inc

Hello, and welcome to the Universal Technical Institute Fiscal Third Quarter 2021 Earnings Conference Call. With us today are Jerome Grant, Chief Executive Officer, and Troy Anderson, Chief Financial Officer. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press more than one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President of Corporate Finance. Mr. Kempton, please go ahead.

Thank you, Operator. Before we begin, we want to remind everyone that today's call will contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Please carefully review today's press release for additional information and important disclosures about forward-looking statements. 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. As a reminder, the section entitled Forward-Looking Statements in today's press release also applies to everything discussed during this conference call. During today's call, we'll refer to adjusted net income or loss, adjusted EBITDA, and adjusted free cash flow, which are non-GAAP financial measures. Adjusted net income or loss is net income or loss adjusted for items that affect trends and underlying performance from year to year and are not considered normal recurring operations, including the income tax effect on the adjustments utilizing the effective tax rate. Adjusted EBITDA is net income or 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. Adjusted free cash flow is net cash provided by or used in operating activities less capital expenditures adjusted for items not considered as part of the company's normal recurring operations. Management internally uses adjusted net income or loss adjust to EBITDA, and adjust to free cash flow as performance measures, and those figures will be discussed on today's call. As a reminder, we have provided reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements in today's press release, and we encourage you to carefully review those reconciliations. It is now my pleasure to turn our call to our CEO, Jerome Graham.

Thank you, Matt. Good afternoon, everyone, and thank you all for joining us today. First, I'd like to express my gratitude to our students and staff for their ongoing efforts and diligence during this quarter. All of our campuses were fully operational this quarter and have returned to normal class densities. It's my sincere hope that I'll be able to retire this particular reminder shortly as we emerge from the pandemic. You see, being fully open and operational is our natural state and not something I'd like to regularly update our stakeholders on going forward. Though it feels like a long time ago, it was just a little over a year ago that the COVID-19 pandemic basically shut down much of our economy and that of the world as well. As a reminder, a quick review, for most of this quarter last year, all of our campuses were closed for hand-on instruction. Metrics such as student withdrawal rates, leaves of absence, CARES Act funds, and student progression rates were either introduced into our reporting or increased substantially, temporarily becoming the focus of our business health for some. For UTI and our management team, however, these were just short-term, though critical, challenges to address. Our financial strength, track record for success, and industry-leading outcomes continue to be the foundational pillars we are building upon even through COVID-19. Our focus is, and always will be, on raising the bar for ourselves, and our students. With that in mind, we've been innovating by developing a new blended learning delivery model over the past several years. The timetable and approach for this work was adapted and accelerated in response to the pandemic as we quickly adjusted our plan, moving to roll out this innovative model across all of our facilities last spring. We also put new laptop computers in the hands of many of our students, and rapidly adapted to the unprecedented environment that confronted us and all individuals, families, and businesses across the country. It's been quite a year, and then some. But as communities and families and individuals, and as a company focused on critical needs for education, we embrace the challenge to raise the stakes on the critical services we provide. Turning to this year's fiscal third quarter, we performed quite well relative to our own expectations during the quarter, and we continue to distance ourselves from the challenges we face during the most difficult waves of the pandemic. I'm pleased to say that we achieved year-over-year revenue growth of 54% during the quarter and start growth of nearly 39%, and produced net income totaling $3 million. More importantly, it was another quarter of providing strong educational and employment outcomes for our students and filling the skills gap by supplying our technicians to our employment partners and the broader market. This is all coming together at a time when the educational needs, outcomes, and requirements in postsecondary education are becoming an increasing focus around the country. Impressively, despite the challenges of the past year, Today, we're in a position where many of the most important metrics of our business are rivaling what was seen in 2019, prior to the onset of COVID. For example, our average student population during the most recent quarter was 900 more students than in 2019. Not only did we repair the damage done and address the challenges of the past year, but we're coming out better and stronger than we went in. bringing forward innovation while also making progress on important growth and diversification plans. Though there will eventually be many consensus takeaways from this unique period we have all been living through this past year, one seemingly universal takeaway already is that this pandemic accelerated trends that were already in place but perhaps not moving as quickly as they could. For UTI, that acceleration has focused on the introduction of our innovative blended learning model across all of our campuses that I mentioned earlier, as well as substantially advancing the growth and diversification strategy that our management team, in collaboration with our board of directors, has begun putting into place. This pandemic certainly exposed the skills and training gaps that exist across the country in terms of education. It also awakened many workers in lower paying and lower skilled jobs. Today, more than ever before, we are seeing that prospective students are keenly focused on getting ready for a tomorrow that has great, high paying, stable careers, not merely jobs. From UTI standpoint, this is where preparation meets opportunity in the form of our new learning model. At the heart of the advancement in our approach to education and training is meeting students where they are and advancing and broadening the technology skills they need, which are being increasingly sought after by prospective employers. Though neither of our core constituencies, students and employers, asked us to develop this model, the feedback from students, families, and our corporate partners has been enthusiastic. From a company standpoint, in addition to the benefits that our students and employment partners gain from the new approach, it enables UTI to deliver more programs through the same footprint and increase the capacity and capabilities of our offerings. To explain how we are beginning to capitalize on this newfound efficiency, I'd like now to turn briefly to our growth and diversification strategy. Earlier this year, we announced three initial steps in this strategy. These were the launch of two additional welding programs in our existing campus network, our plan to open the first two of our true blended learning-oriented campuses in Austin and Miami, and the agreement to acquire MIAT, School of Technology. We're pleased to say that all three of these actions are still going according to plan. As a reminder, the MIAT acquisition is supposed to close by the end of calendar 2021, and both of our new campuses, as well as our eighth and ninth welding programs, are progressing towards launching on schedule in fiscal 2022. Additionally, the associated plan and timing to expand an initial set of four MIAT programs across nine of the UTI campuses remains unchanged pending a successful close. We continue to meet with the MIAT management team, and these meetings have increased our enthusiasm about the combination. We could not be more excited to welcome their team on board. As Troy and I mentioned in our report last quarter, these actions are merely the initial stages of our growth and diversification strategy. Although we have no announcements today, we're keenly focused on exploring additional opportunities for growth. Now, before handing the call over to Troy, I think it's especially important to revisit our core value proposition given the nationwide labor shortages, inflation, and other areas concerning the broader economy and how this foundation ties directly to our growth strategy. Our value proposition really lies within the high demand skills that we can provide for our students. These skills are ultimately a tool to give students a career with a viable growth path and not just minimum wage job with a paycheck. We see these sorts of outcomes coming true all the time for our students. Our graduates are leaving UTI with a strong technical skill set and are prepared to begin building a lifelong stable career with significant upside potential. This is only one reason why we feel comfortable with our trajectory despite the unprecedented trends we're seeing in the labor market today. We know that there's always going to be a place for our graduates who leave UTI with the high demand technical skills that we offer. America simply cannot function without them. These outcomes and opportunities for our graduates are why we're very confident in the platform we've built and we believe we can generate core campus start growth annually in the low to mid single digits, no matter the economic environment. Building upon that platform, we plan to continue expanding our portfolio of high demand program offerings while we also continue to assess new geographic markets in need of our services. We're not only confident in our big picture goals, but given the current trends we're seeing and strength of our base business, and assuming no major COVID-19-related interruptions, we also have continued confidence in our ability to execute on our business as it is today. And therefore, we're reaffirming our previously outlined guidance for the fiscal year. We also remain confident in the longer-term projections we provided in the last call for 2022 and beyond. With that said, I'll now turn the call over to Troy for an in-depth discussion of our operating performance, our guidance, and a view into the future. Troy? Thank you, Jerome.