Universal Technical Institute Inc

Good day and welcome to the Universal Technical Institute's fiscal fourth quarter 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist 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 star, then one on your touchtone phone. 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 Kempfen, Vice President of Corporate Finance. Please go ahead.

Hello and thank you for joining us. With me today are CEO Jerome Grant and CFO Trey Anderson. During the call today, we'll update you on our fiscal fourth quarter and fiscal year 2021 business highlights, financial results, and vision for the future. Then we will open the call for your questions. 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 in underlying performance from year to year and are not considered normal recurring operations, including the income tax effect on the adjustments utilizing 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, adjusted EBITDA, and adjusted free cash flow as performance measures. And those figures will be discussed in today's call. As a reminder, we have provided reconciliations of these non-GAAP measurements to the most correctly 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 the call to our CEO, Jerome Grant.

Jerome Grant Thank you, Matt. I'd like to begin today's call by welcoming all the members of the MIAT team to UTI. Having completed the acquisition in early November, we couldn't be more excited about the future of UTI and what MIAT brings to this company. I'll share a bit more about MIAT in just a few minutes. I'd also like to thank our students and staff for their ongoing efforts and dedication during this quarter. These efforts allowed all of our campuses to operate uninterrupted, remaining open and fully operational during this entire period. We closed out fiscal 2021 on a strong note, delivering excellent results that build on the momentum we demonstrated throughout a year that was initially hindered by the lingering effects of the COVID-19 pandemic. It's worth noting that throughout this pandemic, especially as we entered the start of the most recent school year, many sources are reporting enrollment declines across higher education, be it public or private, four-year programs or community college. Yet at UTI, we continued to see strong and growing interest throughout the year. While we did see some interruption earlier in the pandemic, we are now servicing the largest student population since the fourth quarter of 2015. Importantly, while there was considerable uncertainty heading into this past year, we had the confidence to set guidance which we met or exceeded for the year across each measure. I'm very proud of our ability to follow through on our commitments to the investor community as well as our students. For investors, we believe that the strength in our base business sets us up very well for 2022 and beyond as we continue to execute on our growth and diversification strategy. For students, we maintained a key focus on outcomes, namely completing our course programs and moving on to jobs within industries and with employers that are eager for their skills. That's our mission on behalf of our students and their families. I also want to take a minute here to highlight some of what we accomplished in fiscal 2021. Specifically, I'd like to focus in four areas, partnerships, new programs, new campuses, and innovation. Regarding our employer partnership programs, which are another critical and key differentiator at UTI for our students, we expanded our partnership portfolio considerably throughout the year, building on important relationships, forging new ones, and expanding the reach of existing programs. Within our existing corporate partnership structure, we extended our Dahmer Truck program to the East Coast, adding the DTNA Finish First program to our Orlando campus. We launched the first-of-its-kind diesel technician training program at Fort Bliss for U.S. service members through a close partnership with Premier Truck Group, which is part of the Penske Automotive Group. With BMW, another longtime partner of UTI, we announced that we'll be adding the Fast Track program to several of our locations. And, at Fort Bragg, North Carolina, we added a second BMW On Base program, thus further expanding our direct offerings and relationship with the U.S. military service members. As far as new programs, we continued to expand our welding program, including newly established programs in Bloomfield, New Jersey and Lisle, Illinois. And we also have two planned launches for this highly sought after program in 2022, with the first being at our NASCAR Technical Institute campus in Mooresville, North Carolina. We launched our first ever agricultural manufacturing training program, partnering with industry leader AGCO. This past year, we announced our intention to open two new blended learning focused campuses in Austin, Texas and Miramar, Florida. I'm pleased to report that work on both of these sites is progressing well. Both are on or below budget and will open as scheduled in 2022. Finally, we recently unveiled an initial step in our EV strategy with the announcement of our first official EV curriculum, which includes partnership with major industry players like Ford, Toyota, and Volvo. Expanding into EV as the transportation industry evolves aligns our curriculum in a manner that we believe will be of crucial importance to the future. While we have many students who go on to work in the EV industry, we are very pleased to offer a curriculum specifically geared towards an area that's projected to grow for many years to come. Our partnerships with industry leaders, as well as our engagement with the U.S. military services and high schools across the country, are critical bookends to our services, and we will be continuing to add these going forward as we grow this company and the vital education we provide. As far as financials for 2021, Troy will shortly give you a deep dive into a more complete view of our financials and overall performance for this quarter and the fiscal year. He'll also discuss our fiscal 2022 guidance. But first, I'd like to highlight just a few things. We delivered strong top and bottom line performance during the fourth quarter and the full year 2021, with revenue growing 27.7% for the quarter and 11.4% for the year. Adjusted EBITDA grew 88.5% for the quarter and 133% for the fiscal year. Student starts grew 6.8% for the quarter and an impressive 15.5% for the year. These figures were all in line or ahead of the fiscal 2021 guidance we gave the market just a year ago. We also saw strong full-year, double-digit growth for our two largest channels, high school and the adult learners, and approximately 10% growth in the military channel. For our fiscal 2022 guidance, we're setting the bar consistent with what we've been communicating for the past few quarters, with a revenue growth rate in the low to mid-20s and adjusted EBITDA margin in the low teens. With strong results in 2021 and a bright outlook for 2022 and beyond, we're continuing to focus on both evolving and transforming our business. We are accelerating the rollout of our blended learning model, continuing to rationalize our real estate footprint, and we're maintaining a steadfast focus on optimizing our cost structure for the future, all while continuing to gain momentum towards the execution of our growth and diversification strategy. The bottom line is we didn't stand still and merely focus on recovering from COVID-related impacts. We improved our business model and focused on building our company for the future, and we are a much stronger company as a result. We're investing prudently both ahead of and in conjunction with the expected growth, but it's important to note that these investments will be leveraged and allow us to more efficiently scale our business going forward. As I've outlined in the past, Our growth and diversification strategy has many critical elements to it, including our investments in new campuses, program expansions, and strategic acquisitions like MIAT. The MIAT acquisition gives us an outstanding opportunity to further evolve the curriculum nationwide and include offerings in growing fields that we believe will continue to be bolstered by technological advances and the focus on global sustainability. This includes programs in aviation, wind power, robotics, and much more. These industry-aligned, high-value programs are already offered at MIAT in both Canton, Michigan and Houston, Texas, and we will work expeditiously to make them available across our UTI campuses. Now, as we move into fiscal 2022, there's a lot of important work to be done with respect to the MIAT transaction. including welcoming the MIAT team to UTI, identifying operating efficiencies, leveraging the UTI national marketing and admissions team to drive growth into the two MIAT campuses, and completing the planning and approvals necessary to begin offering MIAT programs at an initial group of UTI campuses in 2023. Yet, as I've noted in the past quarters as we discussed the MIAT acquisition, we're just getting started. Looking ahead, with respect to our growth and diversification strategy, we're being very purposeful in our approach in ensuring we're optimizing the sequencing as much as possible while continuing to prioritize current student outcomes. Prior to 2019, the company had seen many years of decline in students, revenue, and profitability. And in 2019, we were just returning to growth through our transformation, which included meaningful changes to the way we managed and operated our business. And now, after launching our growth and diversification strategy and navigating an array of COVID-related headwinds, we are back on a strong trajectory towards meaningful growth. We believe that all we have done so far sets us up to deliver strong growth in fiscal 2022 and beyond. while continuing to provide top-notch education, outcomes, and career opportunities for our students. I'll now hand the call over to Troy for an in-depth discussion of our operating performance and fiscal 2022 alpha. Troy?