Universal Technical Institute Inc

Good afternoon, and welcome to the Universal Technical Institute first quarter fiscal 2023 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 your telephone keypad. 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, Corporate Finance. Please go ahead.

Hello, and thank you for joining us. With me today are our CEO, Jerome Grant, and CFO, Troy Anderson. During the call today, we'll update you on our first quarter 2023 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 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. for items not considered as part of the company's normal recurring operations, along with non-cash stock-based compensation expense. 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 afternoon, everyone, and thank you all for joining us today. I'd like to begin by thanking our faculty, staff, and students for their continued hard work and commitment during the quarter. Before we get into discussing any results for the quarter, I'd like to take a moment to orient you on our new multi-divisional reporting structure following the acquisition of Concord Career Colleges in December. Along those lines, please also note that our results for the first quarter include one month of results for Concord. Post acquisition, we now report our results in two business segments, UTI, which includes the transportation, skilled trades, and energy offerings, and Concord, which is the acquired Concord Healthcare Education business. You will see this reporting structure reflected in our press release and our 10Q filings. Troy will get into more details around the financial results in a moment, but I'll provide a brief overview of some of the key updates across the two segments. Now, let's turn our attention to the business. First, we're pleased with the results of both segments during the quarter, as each division performed in line with our expectations. and reflects solid overall operating performance, diligent expense management, and execution against our key priorities. Our consolidated first quarter revenue was $120 million, adjusted EBITDA of $14.4 million, and new student starts were $2,310, all of which were consistent with our expectations for the quarter and our guidance for 2023. While there have not been significant changes to our business since we last spoke just two months ago, Our team has been busy as we focus on executing the initiatives currently in place. Within UTI, overall interest in our programs has continued to be strong. However, as we've noted previously, the dramatic chunk in inflation in the second half of our last fiscal year had a significant impact on our adult population. While the rate of inflation appears to be normalizing, which is encouraging, this continues to impact our prospective adult student population. We are, however, seeing signs of moderation in the levels of decline in this channel relative to what we experienced in the second half of the last fiscal year. We're optimistic that this improving trend will continue due to both stabilizing macro factors and, more pointedly, the proactive actions we are taking internally to drive performance improvements across the activities that are within our control. And we continue refining our program offerings and identifying further opportunities to mitigate some of this impact. Examples of such actions we are taking include establishing dedicated teams focused on supporting both local and relocating students for the adult channel, assisting prospective students through an enhanced call center team, as well as continuing to refine our financial and overall support for both local and relocating students. Turning to our high school and military channels, as previously mentioned, over the last several quarters, we've been strategically investing in these channels, adding more admissions resources and enhancing our tools and processes to better serve these market segments. We're broadening our reach and more deeply penetrating the better performing markets with the intent of improving the overall performance of both of these channels. These initiatives and additional resources are now in place and operating well, and we expect that these actions will begin to yield improved performance over the coming quarters. As mentioned last quarter, we are initially targeting to launch 15 new programs, most of which came to us by way of the MIT acquisition, beginning in 23 and continuing into 24 with the first launch of wind and energy programs at our Rancho Cucamonga campus in the coming months. The programs remain on track to launch as planned, subject to regulatory approval, and we are encouraged by the level of interest we're seeing as we begin to more actively market these programs. These new programs will have a modest impact on student starts and revenue in fiscal 2023, and we expect that they will have a greater impact in fiscal 2024 and beyond. We continue to see enrollment growth at our new campuses in Austin, Texas, and Miramar, Florida, which opened in May and August of last year, respectively. The two campuses now have over 650 students combined, and we remain optimistic that both markets will meet the expectations we had set before their openings. Moving to our healthcare education division, Concord's performance for December was in line with our expectations. The integration of Concord continues to progress as planned since the acquisition closed on December 1st of last year, and it has been great to meet and work with the Concord students and staff over the last few months. We continue to see high levels of engagement and talent across the team, and great enthusiasm for them with respect to being a key part of the strategic plan of our combined companies. Concord also has a number of program expansions and new programs in the work. all of which will further broaden its educational offerings to provide promising career paths for students and provide workforce solutions to help meet the job demand needs across the healthcare industry. While we're focused on the integration of Concord in fiscal 23, our first priority is ensuring that this process is smooth and seamless from a student perspective, making sure that there are no disruption to Concord's operations. Therefore, As we've indicated last quarter, our initial focus will be in critical areas to meet the requirements of being part of a public company, like financial reporting, internal controls, compliance, and IT security. We intend to be cautious with broader integration activities and ensure that any steps we take will bolster operational efficiency, student experience, and or our financial performance. As for our 2023 guidance, the positive performance in the first quarter bolsters our confidence in delivering on our expectations for the full year. We are reiterating our full year guidance. Revenue from $595 to $610 million. Adjusted EBITDA from $58 million to $62 million. And total new super starts between $22,000 and $23,500. As a company, We are in a much different place than we were a year ago in terms of how we're strategically approaching and executing through a fluid macro environment. As I noted earlier, we've taken several actions to mitigate the impact that specific economic headwinds like inflation are having on our student population. We expect gradual improvement in performance in the near term with acceleration in the back half of the year as we begin to see the benefits of the initiatives we've put into place. We believe that the continued growth from our expanded core business, with the benefits we will see from strategic investments we've made and initiatives we have put into place, will allow us to accomplish the objectives we have set for this year and set us up to drive further growth in 2024 and beyond. As a reminder, by delivering on our plans for fiscal 23, and with the decisions we've made and the pieces we've put into place to date, we expect to deliver in excess of $700 million in revenue. and adjusted EBITDA approaching $100 million in fiscal 2024. I'd now like to turn the call over to Troy to discuss our results from the quarter in more detail. Troy?

Thank you, Jerome. We reported positive financial and operational performance during the quarter, delivering on our expectations for both the top and bottom lines and exceeding analyst expectations. Before I start, I will reiterate that all of our results include Concord for one month In a less stated otherwise, the year-over-year comparisons are on an as-reported basis, thus the prior period does not include Concord. As we referenced on our last call when we set our guidance, and as Jerome indicated in his comments, with the Concord acquisition closed, we now have two reporting segments, UTI and Concord, in a corporate unallocated cost reporting unit. Jerome previously described the makeup of the two segments. The corporate unallocated costs reflect certain resources and third-party costs that are generally not directly controllable or in support of the segments. Moving to our performance in the quarter, as far as student metrics, total new student starts were 2,310. UTI starts were consistent with the prior year period, and Concord delivered 336 starts in December. Overall UTI starts reflect growth in high school, offsetting a decline in militaries, adult roughly even versus the prior year. Concord had one core program start in December, thus a measurably lower start number than you'll see in subsequent quarters. For reference, core starts occur each month, and most quarters have one large clinical start with some smaller clinical starts in between. Revenue on a consolidated basis increased 14.2% versus the prior year quarter to $120 million, primarily driven by Concord's $14.4 million contributions. UTI's revenue of $105.6 million was slightly above the prior year period, with a 2% increase in average revenue per student, offsetting a 1.6% decrease in average undergraduate full-time enrollment. Note for Concord that December is one of the lowest revenue months of the year given seasonality and phasing of their clinical programs. The lower revenue had a negative impact on profitability in the month as well. Consolidated net income during the quarter was $2.6 million, and adjusted net income was $5.3 million, which is down approximately $10 million versus the prior year. The year-over-year decrease in adjusted net income was in line with our expectations, as UTI produced exceptionally strong profitability in the prior year period, given timing and mix of revenue and cost, and the slower start growth in UTI's adult channel in the back half of fiscal 2022 pressured revenue and thus profitability in the quarters. Other factors impacting profitability in the quarter included planned increases in expenses for UTI and corporate unallocated associated with the new campuses and programs launched last year, investments in the admissions channels and other areas as part of our growth and diversification strategy, a measurably higher effective tax rate due to the valuation allowance reversal last year, and increased net interest expense. Finally, the lower profitability also reflects the negative contribution from Concord for December. Diluted earnings per share was $0.02 in the quarter versus $0.25 in the prior year period. Total shares outstanding as of the end of the quarter were $33.925 million. Adjusted EBITDA was $14.4 million, down $6.2 million overall versus the prior year. UTI contributed $23.3 million in the quarter, which was partially offset by $8.8 million of corporate unallocated costs and a slight loss from conference. UTI decreased $5.3 million year-over-year, while corporate unallocated costs are up $0.8 million, with most of the same causals for both as I outlined for the adjusted net income. Note our adjustments are similar to prior quarters, with the addition of stock-based compensation, as I explained on our last call with our 2023 guidance. Moving to the balance sheet and cash flow, as of the end of the quarter, the company's total available liquidity was $162.2 million, Operating cash flow of $2.8 million increased $0.3 million over the prior year, and adjusted free cash flow of $2.6 million improved to $6.1 million versus the prior year, driven primarily by lower capital expenditures. CapEx in the quarter was $6.8 million, and mostly for UTI for the final phases of the build-outs of the new Austin, Texas, and Miramar, Florida campuses in the initial stages of this year's new program rollouts. I also want to briefly recap the balance sheet impacts of the close of the Concord acquisitions The base purchase price was $50 million. There were $1.3 million of net adjustments, total net cash consideration paid at $48.7 million. Additionally, Concord had $31.8 million of cash on their balance sheet at the closing, for a net cash outlay of approximately $17 million. In conjunction with the acquisition, we recorded goodwill of $10.1 million and intangible assets of $4.8 million. Currently, and as of the end of the quarter, we maintain the previously disclosed $90 million draw from the revolving credit facility, which we established in November of 2022. We also have used $1.8 million of revolver capacity for a letter of credit, leaving approximately $8 million of additional liquidity available to us. Please be sure to review our press release, financial supplement, and investor presentation, which have all been updated for the most current, consolidated, and segment details about our actual results, our strategic roadmap, and our guidance. We continue to make significant progress as we execute on our growth and diversification strategy and our building for the future of the company. We believe we have set ourselves up well to drive increased shareholder value in 2023 and beyond. And as Jerome stated, we are reiterating our fiscal 2023 guidance across all key metrics and continue to be confident about our 2024 expectations. I would also add that we don't see any material change to our pacing expectations for 2023 with growth and new student starts, revenue, and profitability all skewed to the back half of the year. With that, I want to thank our team, our students, and our partners for their efforts and ongoing support, and again welcome the Concord team to the company. I'll now turn the call over to Jerome for closing remarks.

Thank you, Troy. To briefly summarize, we are pleased with the performance this quarter. Interest in our programs across transportation, skilled trades, and energy, as well as healthcare, remain high. The macro environment continues to create challenges for our adult job-changing population, but we are taking proactive steps to mitigate these headwinds. Both UTI and Concord are performing to our expectations, and therefore we're reaffirming our guidance for the year and continue to see 2024 as a step-change year for the company. And finally, while our primary focus this year will be on execution of our existing initiative, and effectively integrating Concord, we will remain opportunistic and continue to research and explore new potential growth avenues as they arise. I'd now like to turn the call over to the operator for Q&A. Operator?

We will now begin the question and answer session. Excuse me. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Our first question is from Eric Martinuzzi with Lake Street. Please go ahead.

Congratulations on the, I guess, one partial quarter for Concord under your belt and one full one for UTI into the new fiscal year. It looks like good results. I'm curious to know just a couple of questions on Concord. You're two months in here in the ownership. You had talked about an expectation of 5% to 10% growth at Concord on a 12-month pro forma basis. Is that still the assumption?

Hi, Eric. It's Troy, and thanks for your comments and your question. Yeah, I'd say it's, you know, in the mid to upper single digits on a like-for-like basis, and everything has been proceeding as expected. Our engagement with them is very high, and we're happy to have them part of the team. They're performing well.

Okay, and I noticed you didn't include the The new student starts at Concord. Obviously, you didn't own them in the month of December of 2021, but do you have that available? How does the 336 new students compare to the year prior?

I actually do not have that in front of me, Eric, but we can follow up if needed.

Okay, no problem. And then for the investments at UTI, Obviously, we've got a couple of things we're focused on. The discretionary side, you've invested in advertising, you've invested in your admissions resources. Can you comment on those two areas? Are we getting the advertising we want at the price we want? Are we getting the admission resources at the campuses?

Well, let me break it into two pieces. Number one, from a marketing standpoint, one of the comments we made was that interest remained quite high. We're thrilled with the inquiry volume that we've seen to date coming in the right timeframe from the right sources. So we think we're getting the bang for the buck out of our marketing investments. As far as the admissions investments, You know, much of that ramping up, whether it was adding additional resources to the high schools or in the military, all happened towards the end of the summer. And we see from leading indicators in terms of number of presentations and leads generated and things along that they're operating quite well. So we're, you know, we're feeling good about what we've done in those spaces.

Okay, and then just on the UTI business, one of the major headwinds you had in 2022, FY22, was a double-digit decline in your new student starts for adult learners. I saw that that looked like it was relatively flat. I think that was in Troy's prepared remarks. What's the expectation for 2023 for adult new student starts?

Well, as we said when we started the year, we still believe that the adult channel will be down this year. As you said, as reported at the last half of last year, it was down significant double digits due to the high inflationary period, et cetera, and those economic headwinds. We are seeing moderation in that, which is really great to see. It's not down in that double-digit range anymore. But, you know, we're not projecting that it'll come back to a positive sense in 2023. But our expectations for the year, what we budgeted, what we're projecting, took into account that we believe that that segment would still be down.

Yeah, just a point of clarification, Eric. financial supplement in the roughly flat adult was all in so that the double-digit decline was same store. But when you put in MIT and the new campuses and the like, it's roughly flat.

Yeah, I'm glad you reminded me of that. And then last question, we saw pretty strong employment numbers in the most recent jobs report. Those employment figures have been relatively encouraging. Are you seeing any change in kind of the pipeline, you know, just across the board on the adult side? You know, the inflationary pressures, the employment environment, wage inflation, some color there would be appreciated.

Well, let me break that into three buckets. Number one, you know, we are seeing moderation in the, you know, in the macro environment in terms of inflation. et cetera. We think that's contributing to, you know, the uptake in the adult population. The second thing in terms of unemployment, I actually just looked it up this morning, is that the number of that population is 18 to 24-year-old male. And, you know, that unemployment number has been on the rise over the last few months. I think it's around 7.8% right now, which is actually higher than 2019 pre-pandemic levels. We don't know if that will hold on, but so I think we're seeing some of the folks in our demographic are looking for more stable long-term careers and that's affecting us as well. And then as we said in the statement, you know, we've taken quite a few steps in terms of mitigation of the issues and to address it, whether it's how we work with adult job changers through the enrollment process, setting up a call center to stay with them through that process, looking at how we can support those who need to relocate in an enhanced way. As you've probably read out there, rent is up pretty significantly across the country in most of the major metropolitan areas, and so we're We're working to bend a knee, if it were, to help people over the hump until they're settled and both working and going to school in locations that they relocate to. So the combination of those three things, we think, is why we're beginning to see that positive movement in the adult sector.

Got it. Thanks for taking my questions, and good luck in Q2. Hey, thanks.

Thanks, Eric. The next question is from Steve Frankel with Rosenblatt. Please go ahead.

Good afternoon, Troy and Jerome. Could we get a little more color on your high school recruiting pipeline and your confidence level in being able to execute on that growth plan for the back half of the year?

It's a great question. I mean, we watch a lot of leading indicators when it comes to – When it comes to that right now, you know, most of the kids are making their decisions into February, March, and April of what they're going to do when they graduate in May, June, or May and into late June on the East Coast. And, you know, number one, with more resources in there, we're getting to more schools. And the indicator around that is the number of presentations we're seeing. Our reps do presentations, which are digital, and we can tell where they are and how many of those presentations are happening. And And, you know, we're great. It looks great from a presentation standpoint. And, you know, the corollary to that is the number of interested students they have in Leeds, which is on the rise as we would expect with the resources that we added.

Okay.

And then by the time we get to the next conference call, you have a pretty good handle on what the enrollment looks like.

Yeah, we will. And again, you're hitting right in the hot period here. There's a lot of presentations that happen October, November, December, January as schools are helping their students think about what they're going to do when they graduate in May and June. And so the setup's looking good, and you're right, in about three months we'll have a pretty clear picture of the pipeline of what's coming through in high school.

And just, if you may, a little more clarity on kind of the slope of the decline in the same-store adult pipeline, kind of where are we now versus three and six months ago in terms of the slope of the decline?

Yeah, Steve, this is Troy. We were seeing it wasn't consistent quarter to quarter, but in the back half of the year, we were about a 20%. Same store decline. You know, we saw some pressure in Q2 as well coming out of Omicron last winter, which seems like a long time ago. And we were, you know, single digit, or I'm sorry, for starts, we were in the teens. But enrollments, more importantly, because those starts are a function of enrollments that really happened in the prior quarter. which when we're still seeing some of that elevated pressure, so enrollments were also down in that same range, 20 plus percent. And so the Q1 starts while they were better. Again, some of the mitigating actions Jerome talked about helping, although maybe we didn't have all the enrollments we wanted, we were getting more students to start. So therefore, we saw some benefit on the start rate or the percentage year-over-year decline on the on starts, which those mitigations will help us as we continue to move forward. More importantly, the enrollments were more in the single digits of year-over-year decline, so a measurable improvement there. Now, one quarter is not a trend, but again, we have a substantial number of mitigations that we've been working on and transformations within our admissions organization, really across all three channels, but adult in particular, given the pressure that we saw there last year. So we're encouraged by what we're seeing. And we're going to continue working at it. And as Jerome said, for the full year, we don't expect growth out of that channel. We do expect to see some repair, improvement as we get into the back half of the year. But on a full year basis, we don't expect to see growth there.

Okay. And just to drill down on the first MIT, MIAT program in one of your legacy campuses, When do you expect that to begin enrolling students?

Yeah, so in Jerome's remarks, he commented about we're preparing to launch as soon as toward the end of Q2, if not early Q3. We are waiting regulatory approval for all of them, but we're moving forward as if we'll get the approvals in time and we'll make adjustments as needed. That's not a process we control, but all of the Applications are in, and they've been in for a good bit of time now, so we're starting to expect to see some movement there, and then that will dictate the ultimate start dates. But we're moving forward to be ready to launch as quickly as we can late in Q2 or early Q3. That's the first program.

The rest of them are scheduled for Q4 and beyond. Thank you. All right. Thanks, Steve. Thank you.

Again, if you have a question, please press star then one. The next question is from Raj Sharma with B. Riley. Please go ahead.

Hi. Thank you for taking my questions. I wanted to kind of go back to the starts projections for the year. And I just wanted to understand. So the guidance that you've given for starts for fiscal 23, If we kind of, if I take out the core UTI and MIAT of up around, you know, 5% plus starts year on year, how are you building that? I mean, I know that it's back half, kind of back half loaded. So my question is, what is the composition of that given the fact that unemployment is still high in your demographic, but you're projecting an improvement in adults, but that's going to be flat. So the balance is coming of, you know, balance of the growth and starts is coming from high schoolers. And then military, you know, given that it was kind of weaker in the first quarter, how does that shape up? And then I have a similar question on court.

Thank you. Okay. Yeah, thanks, Raj. This is Troy. We do have a bridge in our investor presentations with same material that we had last quarter with starts and revenue and adjusted EBITDA. High school and military will drive the bulk of the growth. That will ramp in the year. We are still ramping the new campuses that we launched last year. Military, we added reps in the first part really throughout Q1, so the benefit of that really has not been materialized yet in the numbers. And as you noted and we said in the past, it can be a little bit volatile quarter to quarter, just based on the flow of prospective students there. But having more reps in that space will certainly help as we get in the back half of the year. And then the program expansions. Again, we're pending regulatory approval there, but in our guidance, we're assuming A bit of a lift relative to those with a number of those programs launching in the fourth quarter. And, you know, of course, high school will contribute some to that, just given the nature of the fourth quarter and that we'll have a number of high school students coming out. But, you know, adult will contribute to those program expansions as well.

Right. So, you know, I see the bridge, Coy, the bridge doesn't give numbers, but I just kind of wanted, I see that if the core UT and MIT are going to be up 5%, you're saying that despite the unemployment situation staying bad for the adults, you see all these programs helping, you know, improving the decline on young adults and the balances all coming from high school and military programs. And what is the, for the Concord starts that you have in the year, what does that sort of represent in their year-on-year growth?

Yeah, I'll work it backwards. The Concord is similar to the revenue question earlier, is mid, you know, slightly upper mid single-digit growth on a like-for-like basis. Again, a partial year, so the 7,500 to 8,000 range that we're referencing there is representative of just having the 336 in December. So you'll see 2,000 plus the next two quarters and 3,000 in the fourth quarter. So those will ramp as well. The new campuses, don't forget, we didn't get a full high school benefit of the new campuses in 22. Miramar first class was in August. So really, we missed the high school season for all intents and purposes for Miramar. So that alone, you know, would be a lift. And Austin was, again, launched in May. So we really didn't get a chance to build as much of an enrollment book there as we would expect normally. So there's just a number of things as you think about 23 versus 22 that, you know, we're either in flight or not in place at all that are building this year. And again, the broader macro environment at least stabilizing. We're not economists, so we're not calling one way or the other what direction it's going. But people are looking for change. High school students need to figure out what the next step in their life is. And so the steady demand is there. The inquiry flow is there.

Thank you. So on the interests that Jerome was talking about, How does that compare to last year, and is that higher in any particular segment versus the other?

Well, I mean, most of our – if you think about the way we drive lead generation, most of the lead generation for the high school market is driven by presentations done by the high school reps. they aren't media-driven. Media-driven leads in the high school is a very small population of where they are. And frankly, they tend to be students who are in class on their iPhones in the middle of a presentation that'll click on our website, et cetera, along those lines. And so one of the things I said around that piece of lead generation was that our presentations and therefore the leads associated with them are up nicely. We don't usually give out numbers for lead generation, but they're up nicely. And then also on the adult side where it's primarily driven by media leads, we're seeing them go exactly the way we modeled them to get the outcome we're looking for. I say outcome in the adult market because as we said before and what we said last year is we don't think the adult market will be an increase on the same store basis. It just won't be that 20% decline that Troy was talking about. And that's coming true. I think the difference between the third and fourth quarter of last year and the first quarter of this year are two of the other factors we talked about in the adult population, which was conversion rate of those leads. So people going through the process of understanding What's the commitment they make to us? What is the cost of the commitment? Can we get them a job during school? And so we're seeing some improvement along those lines. And then the show rate, the number of people who sign a contract, go through the financial aid process, and then come to school on the first day. We're seeing some healthy improvement on our show rates as well from the adult population. And those are the signs that we're talking about of growth. of improvement of the behavior of those in that, you know, 20 to 25 age category.

Got it. That's very helpful. Can you talk at all, give any color on the cadence for second quarter, the March quarter, the seasonality in terms of, you know, should we expect a similar sort of a performance on starts? I mean, outside of the Concord edition, a much bigger edition.

Um, we, you know, we expect, uh, some building as we get through the year. Again, the back half is really where you'll see a notable difference. And I'm speaking of the UTI business there. Again, Concord with one month, uh, in the numbers is, is not going to be meaningful. Uh, but comparison quarter over quarter that, you know, you'll see over probably roughly 2000, if not a little bit more, uh, for Concord and then, um, You know, we should see some modest growth versus the flattish that we were for UTI in Q2.

Got it. Got it. And then just lastly, on the military, it seemed weak in the first quarter. Any sort of color there?

It's the timing of the investment there. You know, that channel is, again, it's more of a ground game like the high school channel. The difference is typically they're experienced military recruiters or who we hire as our recruiters. They have base access already, and they know who to talk to and where to go very quickly. It's just a matter of training them on our offerings. The high school ramp process is a little bit different. There's a lot more relationship building that occurs, especially if you hire somebody who's not been a recruiter in the space before. So really, I think it's just a timing aspect, predominantly relative to when we made the investment in those resources and them ramping up. We should see some improvement there. And as I mentioned earlier, there's just tends to be a little more volatility in that channel. It's just going to ebb and flow a little bit. It's roughly half of the people that we define that based upon their funding source, not necessarily that they're a direct transition out of the military. So somebody could be really an adult job changer who's been out of the military for a few years. They just have GI Bill benefits that they're leveraging for their education. So their dynamics are going to be more like the adult dynamics as far as their decision making, but they have funding available to them, which makes it an easier decision for them versus the other half being a direct transition out of military. And again, that's more of an ebb and flow can be a little bit more of an elongated timeline. They're making plans ahead of their transition out of the military. There's other dynamics that come into play there.

Great, great. Thank you. Thank you for taking my questions. I'll take this offline. Thank you.

Great.

Thanks, Raj. Thank you, Raj.

This concludes our question and answer session. I would like to turn the conference back over to Jerome Grant for any closing remarks.

Thank you, Operator, and thank you, everyone, for joining us today. We look forward to speaking with you all in about three months and answering any questions you have between now and then. So thanks a lot for joining us, and have a great evening.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.