Universal Technical Institute Inc

Good day and welcome to the Universal Technical Institute's fourth quarter fiscal 2022 earnings conference 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 a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President of Corporate Finance. Please go ahead.

Hello, and thank you for joining us. With me are CEO Jerome Grant and CFO Troy Anderson. During the call today, we'll update you on our fourth quarter and fiscal year 2022 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're 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, relevant factors that could cause actual results to differ materially from the forward-looking statements are listed in the press release and our SEC filings. And 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 will 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 the effective tax rate. Adjusted EBITDA is net income or loss before interest expense, interest income, income taxes, depreciation, amortization. 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 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. We encourage you to carefully review those reconciliations. It is now my pleasure to turn the call to our CEO, Jerome Grant.

Thank you, Matt. Good morning, everyone. And thank you for joining us today. And thank you to our faculty and students for enabling us to continue to operate seamlessly for another quarter and in fiscal 2022 as a whole. This past year was a pivotal year for UTI as we significantly expanded the reach and breadth of our program offering, positioning the company as a workforce solutions provider for a wide range of skills, careers, and fields going forward. We made significant progress on executing on our long-term strategy and entered 2023 with strong momentum despite enduring the less than favorable macroeconomic backdrop which has provided no shortage of uncertainties and challenges for us to manage through. Some highlights for the year include the addition of two MIT campuses and their eight new programs early in 22, while making significant progress on the planning and rollout activities for the initial MIT program expansions in 2023. Opening two new UTI campuses in the second half of the year in Miramar, Florida and Austin, Texas. both initially launching with our automotive, diesel, and welding programs, and with additional space available for MIT expansions, launching two new welding programs in Mooresville, North Carolina, and Exton, Pennsylvania, expanding our industry-aligned training relationships with key manufacturer partners, including Volvo and BMW, and continuing to execute on our electric vehicle strategy, both in our core curriculum and with several of our industry partners. Revenue for the year was up 25% to approximately $419 million, while adjusted EBITDA was up 72% to approximately $56 million, while New Student Start grew 2.7% for the year. All of these major metrics are either in line or at the high end of our most recent guidance. Troy will provide more color on both the year and the quarter with his comments in just a few minutes. As I touched on earlier, 2022 was not without challenges, with the effects that Omicron had earlier in the year and then worsening of the macroeconomic environment later in the year, creating some real and persistent headwinds with respect to enrollments in 2022. Specifically, in our adult channel, prospective students have been navigating the challenges stemming from record inflation levels, which directly affect the affordability of both education and the very basics of life. While interest in our program remains strong, these difficulties negatively impacted both the student enrollment and start rates, most notably in our third and fourth quarters. Though the microeconomic backdrop remains unpredictable, and while many believe we are headed for a recession, given the Federal Reserve's intention to slow down the economy to bring inflation under control, it's worth noting that we're starting to see some modest improvements in our year-over-year adult population enrollment performance. While we have opportunity for further improvement, we're pleased with the interest in our programs, pace of new student enrollments, and overall progress we're making in 2023. Further, as noted last quarter, we've taken proactive steps to mitigate challenges in the adult channel by adding admissions resources to our high school and military channels, which have been less impacted by the macro factors. We've also enhanced our support programs to further assist students as they work through the financial barriers associated with challenges such as relocating in order to start their path to a stable and rewarding career. Importantly, our outcomes remain strong. We recently submitted our annual accreditor outcomes reporting, and I'm happy to report we had another year of at least a 60% graduation rate and at least an 80% in-field job placement rate on an overall average basis. Our strong student outcomes along with our healthy capital structure positions us well to make continued progress executing against our growth initiatives and reaching the fullest potential of our growth and diversification strategy. Turning our attention to 2023, I'd first like to formally welcome the faculty, staff, and students from Concord Career Colleges to the company. As announced earlier this month, we closed the Concord acquisition on December 1st, which was ahead of our expectations. We sincerely appreciate the Department of Education's timely pre-acquisition review, which enabled us to complete this transaction within a relatively short period of time. With Concord now added to our group of schools, this coming year is set to be another productive one and is expected to surpass 2022 for us in terms of milestones we achieve. Beyond the acquisition, which I will speak to more in a minute, we'll also see growth from our organic initiatives. Most notably, we'll be introducing 15 new programs on 10 campuses across the UTI footprint, including programs in aviation, HVAC, robotics, industrial maintenance, and wind energy technician training. The first program launch is on target for March of 2023, with all but one of the remaining programs expected to be launched by the end of the fourth quarter. We also will see the continued enrollment ramp and maturation of our two new UTI campuses in Florida and Texas, bringing both of those campuses nearly to their full run rate potential exiting the year. Currently, we have approximately 550 active students attending these two campuses. The addition of Concord Career Colleges greatly expands our program offerings and total addressable market, setting the stage for the next chapter of our growth story. Not only does this move provide us with approximately 8,000 students on 17 campuses across eight states, but it allows us to tap into a completely new student demographic and provide a wider range of highly in-demand educational offerings and workforce solutions. Concord has more than 20 program offerings spanning across dental, healthcare diagnostics, nursing, and a variety of other critical healthcare professions. From a program format perspective, they offer courses in hybrid, in-person, and in some cases fully online. The acquisition, coupled with the current Universal Technical Institute offerings, allows the company to more broadly address the nation's skill gap with a diverse set of workforce solutions. It will provide opportunities to help more adults reenter the workforce, provide high school and first-time college students with new career paths, and allow veterans the opportunity to pursue a rewarding career in a rapidly expanding healthcare industry. We're also very optimistic with the positive trends in healthcare as an industry, as we expect to add more than 2.6 million new jobs over the next decade due to attrition in the workforce, along with an aging population that's expected to drive increased demand for healthcare services. Looking ahead, we're very excited to integrate Concord into our financial reporting and overall operating model, though it will be run as separately as a healthcare education division alongside Universal Technical Institute. We intend to be cautious with our integration activities and ensure that any steps we take will bolster operational efficiency, student experience, and or our future financial performance. Including Concord for 10 months, we are establishing our fiscal 2023 guidance, which includes revenue from $595 to $610 million, adjusted EBITDA from $58 to $62 million, new student starts from $22,000 to $23,500. Troy will get into more of the details on a full year outlook and segment performance shortly. From an investment standpoint, 2023 will be focused on execution with respect to the integration of Concord and our other ongoing organic initiatives in order to ensure that the proper foundation is in place as we plan for incremental new initiatives in 2024 and beyond. Through our two completed acquisitions paired with our campus and program expansions, learning model innovations and our real estate rationalization, we have essentially delivered on or have a clear line of sight towards the completion of all strategic initiatives that we've previously announced. As a result, I'm happy to announce that we now expect to deliver in excess of $700 million in revenue and adjusted EBITDA approaching $100 million in fiscal 2024, and thus achieving one of our key milestones a full year sooner than we previously projected. And once again, I'll note that our current outlook is not the endpoint of our pursuit for further growth. We are expanding the vision and roadmap for our company going forward, and our entry into the healthcare space opens up significantly more entry points to new workforce solutions opportunities, which will allow us to expand the breadth and scope of our growth and diversification strategy. We believe that the continued growth from our expanded core business, with the benefits we will receive from the strategic investments we made in 2022 and are making in 2023, set us up to deliver strong growth in subsequent fiscal years. I'd now like to turn the call over to Troy to discuss our results from the quarter and full fiscal year. Troy?