Universal Technical Institute Inc

Good day, and welcome to the Universal Technical Institute second quarter 2024 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 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 Second Quarter 2024 Earnings Call. Joining me today are CEO Jerome Grant and CFO Troy Anderson. Following our prepared remarks, we will open a 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 and 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 on 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 2023. 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, financial supplement, and investor presentations. 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. We carried our operational momentum into the second quarter of 2024. Across our key metrics, we performed consistent with, and in most cases, better than our expectations. We had 5,480 new student starts in the quarter, which is an 18.5% increase. and our second quarter revenue grew 12.4% to 184.2 million. Both of these were above our expectations. For profitability, net income was 7.8 million, diluted earnings per share was 14 cents, and adjusted EBITDA increased 17.8% to 22.6 million, all right in line with our expectations. Our performance through the first half of fiscal 24 continues to demonstrate the strength of our execution on our growth, diversification, and optimization strategy. I'd like to thank our divisional and corporate teams for their continued leadership, as well as our faculty, staff, partners, and students for their hard work and commitment. As another point of pride, we were prominently featured in a recent Wall Street Journal article, How Gen Z is Becoming the Tool Belt Generation. The article highlights one of our welding graduates as a case study for young workers' increased interest in trade professions, or what we refer to as skilled collar jobs. This trend has received more visibility of late, including a recent study funded by the Gates Foundation that found that students are both increasingly skeptical about the ROI of a traditional four-year college education and are becoming more aware of their alternatives to college. As traditional higher education enrollments decline and as an older generation of skilled tradespeople retire, we believe we are optimally positioned to address the rising demand for technical training among the new generation of workers. Our advantage also extends to the healthcare fields we serve, which has experienced even greater job demand momentum. According to the U.S. Bureau of Labor Statistics, job growth in healthcare support occupations is projected to outpace all other occupational groups, growing at an estimated 15.4% between 2022 and 2032. So, as we welcome and train the next generation of students in both divisions, facilitating superior graduation rates and employment outcomes remains core to our growth strategy. I'd now like to review some the recent performance and highlights by division. Starting with our healthcare division, Kevin Prane and his Concord division have continued to outperform our growth expectations with student start growth of approximately 17% and revenue growth of 8%. Concord's newest program rollouts came in ahead of schedule as the necessary regulatory approvals for the two planned dental hygiene programs were obtained in February and the programs officially started in April. Combined, these programs had approximately 50 students in their first cohorts. Concord also continues to make progress with the expansion of its San Diego dental hygiene program, which remains on track to launch later this year. As Troy will discuss later in the call, START performance also benefited from our new phlebotomy and sterile processing technician programs. Market demand remains impressive for Concord's growing core and clinical program offerings. For the division more broadly, Kevin and his team have continued to identify and execute on optimization and efficiency opportunities, as well as evaluate other growth avenues such as expanded online offerings and additional program expansions. The team at Concord is also focused on deepening and expanding their partnership network. These relationships not only benefit graduates' employment opportunities, but also enhance the accessibility and affordability of Concord's programs. One great partner example is Marquee Companies, a fifth-generation family-owned senior living healthcare company based in Portland, Oregon. For the last three years, Marquee has partnered with Concord to meet the growing demand for workers. Marquee subsidizes tuition for its employees who want to upskill to become vocational or practical nurses with tuition subsidies ranging from 25% to 100% based on the student's commitment to stay with the company. We appreciate Marquis' generous support of our students and look forward to making additional partnership progress. The UTI division also had a strong quarter, with year-over-year student start and revenue growth of approximately 20% and 15% respectively. From a program standpoint, Tracy Lorenz and her team are making great progress on the second phase of the division's program expansions. Two of the four heating, ventilation, air conditioning, and refrigeration program expansions, which we announced last fall, are now enrolling students at the Avondale and Long Beach campuses. These classes are expected to begin in June and July, respectively. As for UTI's other two HVAC program expansions, the Bloomfield campus is now enrolling students, with the first cohort expected to start in September. while the Sacramento campus is on track to start its first cohort of students early next year pending regulatory approval. The other 14 new programs, which were launched primarily in late fiscal 2023, have continued to grow nicely, with over 550 combined new student starts between Q4 last year and Q2 this year. Market demand for these new programs continues to build, and we remain confident in having at least 1,000 new students start in these programs this fiscal year. As we've also discussed on previous calls, the most recent program launches are just the first step towards expanding the MIT-sourced aviation, skilled trades, and energy programs across the UTI division footprint. The unification process of UTI's divisions to Houston operations into a single campus remains on track to complete later this calendar year, with the phase transition process now underway. The Houston unification project is a prime example of our strategic focus on optimization, which is designed to drive greater operating efficiencies while enhancing the student experience and outcomes. The UTI team has also grown the division's extensive partnership base, During the second quarter, UTI announced a new partnership with Hawaiian Airlines and continued to expand its employment program partners. The division has also announced a five-year renewal of alliance with Interstate Batteries, a leading automotive replacement battery brand, and the exclusive battery provider to all UTI automotive, diesel, and marine technician training programs across our footprint. We appreciate this long-running alliance and look forward to building on the division's industry relationship for years to come. Turning to our expectations for the balance of 2024 and thoughts on fiscal 2025, we are announcing positive adjustments to our starts, revenue, and profitability guidance for 2024. For new student starts, based on our results to date and expectations for the upcoming quarters, we now feel confident in increasing our prior range to between 25,500 and 26,500 starts for this fiscal year. We also expect to generate between $720 million and $730 million in revenue and between $102 million and $104 million in adjusted EBITDA for the fiscal year. Troy will provide additional layers of commentary on these adjustments and expected quarterly phasing for the second half of the year. With our confidence in our strategy and solid execution in 2024, We've developed our initial projections for fiscal 2025. Based upon our currently announced program expansions, low to mid single digit baseline student start growth, and currently planned optimization initiatives, we're estimating 2025 revenue of nearly $800 million, with approximately 10% year-over-year growth, and adjusted EBITDA margin of approximately 15%, which represents at least 100 basis points in margin expansion. With our robust and proven multi-divisional model, we are well positioned for continued growth, diversification, and optimization. I'd now like to turn the call over to Troy to review our financial results and our guidance in more depth. Troy? Thank you, Jerome.