Universal Technical Institute Inc

Good day, and welcome to the Universal Technical Institute Q4 and full year 2023 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 a 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 Kempton, Vice President of Corporate Finance. Please go ahead.

Hello and welcome to Universal Technical Institute's fiscal fourth quarter and full year 2023 earnings call. Joining me today are CEO Jerome Grant and CFO Trey Anderson. Following our prepared remarks, we will open the call for your questions. A replay of this call, its transcript, and our investor presentation will be archived on the investor relations section of our website at investor.uti.edu, along with our earnings release issued earlier today and furnished to the SEC. During this call, we may make comments that contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which, by their nature, address matters that are in the future and are uncertain. These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. These factors include, but are not limited to, those discussed in our earnings release and SEC filings. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments, except as required by law. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of fiscal 2022. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to and not as a substitute for the company's reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today's call are reconciled in our earnings press release to the most directly comparable GAAP measure. For more information regarding definitions of our non-GAAP measures, please see our earnings release and investor presentation. With that, I will turn the call over to Jerome Grant, CEO of Universal Technical Institute, for his prepared remarks. Jerome?

Thank you, Matt. Good afternoon, everyone. Fiscal 2023 was a very strong year for the company. We're grateful that you are able to take the time out of your afternoon so that we can share several highlights with you. First, I'll briefly go over our results for the year and comment on the progress of our multi-year growth and diversification strategy. Following that, I'll share highlights of our Concord and UTI divisional performance and focus in 2023. Next, since superior student and employment outcomes are central to everything we do, I'll spend a few moments sharing some of the accomplishments and recognitions we achieved this past year. From there, we'll look ahead to 2024. I will both share our formal guidance for the year and outline our areas of focus. At the conclusion of my comments, I'll turn the call over to Troy Anderson, our CFO, to dig in a bit deeper on both numbers and metrics. With that, let's begin with the 2023 results. We outperformed expectations throughout the fiscal year, demonstrating the strength of our ongoing growth and diversification strategy, the effectiveness of our operating model, our team's ability to execute, and the flexibility we now have as a multidivisional company. I'd like to thank our faculty, staff, and students for their ongoing dedication and hard work, and for delivering this fine performance in fiscal 2023. For the full year, we exceeded the high end of our guidance across all key financial metrics, delivering $607.4 million in revenue and $64.2 million in adjusted EBITDA, And we performed in line with our ambitious expectations as far as new student starts, reaching 22,613 for the year. Over the past several years, we've consistently delivered on the financial goals we established for our diversified workforce solutions platform. As we emerged from the pandemic in 2021, we hit the accelerator on our multi-year growth and diversification goals. As outlined when we first announced our acquisition of MIAT two years ago, And then again, when we shared the news about the Concord acquisition last May, broadening our transportation and skilled trades offering and entering the healthcare space will significantly propel our growth and diversification efforts forward, as well as our overall financial trajectory, all while maintaining our core focus on supporting strong student and employment outcomes in high-demand areas. With our performance this year, and with the initiatives already underway, we believe we are well positioned to maintain our momentum into fiscal year 2024. I'd like to commend both our Concord and UTI divisional leadership teams for their execution and collaboration over the past year in achieving the results and in building robust and efficient foundation for future growth. Let's now turn to a few highlights from each of the divisions in 2023. Starting with Concord, We've seamlessly integrated all critical supporting functions and those related to key public company requirements. With the majority of this process behind us, we'll continue to optimize the organizational model and execute on additional integration and synergy opportunities in the years ahead. It's important to underscore that all of this fine work occurred while ensuring the business continues to grow. Demand for Concord's programs has remained strong throughout the year, And in September, we began starting students in one of Concord's new programs, a cardiovascular sonography program in Florida. We also recently launched an online respiratory therapy program, as we continue to look at further opportunities to rapidly expand the division's online programming. Concord's other planned new program launches are on track for the fiscal year 2024, with three new programs launching in November. These include diagnostic medical sonography program and another cardiovascular sonography program, as well as the first of three planned dental hygiene programs. We're working diligently to launch the remaining dental hygiene programs during the fiscal year and are making very good progress towards completing the respective regulatory approvals. As a quick update, entering fiscal year 2024, we had a change in Concord's leadership. I've appointed Concord's Chief Operating Officer, Kevin Prenn, to the interim divisional president role. I'd like to thank Concord's former CEO, Jamie Frazier, for her efforts and support in leading the Concord team through the closing of the acquisition and the initial integration efforts. We sincerely wish her well. We have tremendous confidence in Kevin and the Concord leadership team, their ability to capitalize on the momentum they have established, and their ability to achieve the divisional's financial and operational goals for fiscal 2024 and beyond. Moving to the UTI division, we experienced accelerating year-over-year start growth throughout the year, culminating in 9% growth in the fourth quarter. We expect that trend to continue for at least the first half of 2024, if not beyond. This performance reflects the fact that we delivered on our two main growth drivers for the year, our planned new program launches and Scaling, our two newest campus in Austin, Texas, and Miramar, Florida. We launched 13 of the 14 planned new UTI programs across eight campuses in 2023. We expect to launch the remaining aviation, airframe, and power plant technician program at the UTI Miramar campus very soon, following the completion of the Federal Aviation Administration certification process, which unfortunately has been delayed beyond our control. We have seen strong demand for these programs as well as continued high demand overall across the program portfolio. We started approximately 230 students across these programs in the fourth quarter and believe we will see 1,000 or more new student starts in fiscal 2024. As we have outlined during past calls, these initial program launches are merely the first wave of bringing these in-demand aviation, skilled trades, and energy programs that came to us through the MIAT acquisition to the UTI footprint. We have initiated efforts to launch three more heating, ventilation, and air conditioning programs in fiscal 2024, and a fourth new HVAC program early in fiscal 2025. Turning to the Austin and Miramar campuses, which launched in 2022, the two campuses now have nearly 1,100 students combined, and they are continuing to ramp nicely. Based on this trajectory, we remain highly confident that both campuses will continue to perform in line or above our long-term view with respect to their markets. As an example of this, at our most recent Career Day open house in Miramar, we recorded extremely strong attendance from both students and employers alike. This signals that the local job market is quite robust and values our graduates. We will continue scaling these campuses and identify future expansion opportunities, leveraging capacity available in each location, as well as considering new locations to offer our in-demand programs. Now, superior outcomes are at the center of our school's missions. As a great example of the quality of our programs and partnerships, Concord Schools and Employment Partners recently received top industry distinction in two states. First, Concord was named School of the Year by the California Association of Private Post-Secondary Schools in early October. And in Texas, Concord's Dallas campus received the same distinction from the 200-member Career Colleges and Schools of Texas Association, or CCST. Further, the CCST also awarded the Innovator of the Year Award to one of Concord's Dallas Online Success Coaches, Connie Tiffido. Congratulations, Connie. We're very proud of these awards, and they recognize Concord's commitment to excellence in student training and outcomes. Now, alongside these recognitions, two of Concord's longtime dental employment partners, Pacific Dental Services and Heartland Dental, received Employer of the Year Awards, from the same California and Texas associations, respectively. Both Pacific Dental Services and Heartland Dental, as part of their ongoing partnerships with Concord, have worked closely with us to offer scholarships and various on-the-job opportunities designed to help students achieve careers as dental professionals. These innovative collaborations mirror the partnerships we have historically leveraged in our UTI division, and we will continue expanding these relationships and our network of healthcare industry partners over time. Moving to 2024, our strong execution throughout the fiscal year 2023 has allowed us to enter 2024 on confident footing. As we look to the fiscal year ahead, we're pleased to share with you today our formal full-year guidance targets. Revenue will be between $705 million and $715 million. We expect adjusted EBITDA to be between $98 million and $102 million And new student starts will be between 24,500 and 25,500, which represents an impressive growth rate of between 8 and 13 percent. As we introduce these ranges, I'd like to reemphasize that much of the foundation required to achieve these targets has been laid over the past two years. Our work in the year ahead of us involves continued execution, delivering against these objectives, and building upon the sustainable strategic progress we've made. Our key focus areas for 2024 all support our broader revenue, profitability, and cash generation objectives, while also continuing to support strong student outcomes. These include further ramping our newest UTI campuses to help them reach their fullest potential, driving greater enrollment, revenue, and profit growth from both our 2023 and 2024 new program launches in both divisions, enhancing the yield of our marketing and admissions investment to continue optimizing lead generation and inquiry conversion, and continuing to optimize our workforce strategies, hiring practices, and facilities utilization to maximize operating costs and capital efficiencies, which in turn will drive continued program and margin expansion. I am proud of our execution over the past year and our positioning for greater growth in the year ahead. I'd now like to turn the call over to Troy to review our fourth quarter and full year 2023 financial results, as well as provide additional detail on our 2024 expectations. Troy?