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?