Universal Technical Institute Inc

Good day, and welcome to the Universal Technical Institute's fourth quarter and full year 2024 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 touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President in Corporate Finance. Please go ahead.

Hello and welcome to Universal Technical Institute's fiscal fourth quarter and full year 2024 earnings call. Joining me today are our CEO, Jerome Grant, and interim CFO, Christine Klein. 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 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 had a very strong year which was in no small part motivated by our relentless dedication to building a future-ready workforce solutions provider and enhancing our program offerings to meet the demand in critical industries. As we continue to execute on our growth, diversification, and optimization strategy, We delivered improvements across all key metrics in our fiscal 2024 and continue to meet or exceed our expectations. For that accomplishment, I'd like to take a moment to sincerely thank our divisional and corporate teams, along with our partners and students for their exceptional efforts and their dedication to delivering strong results time and time again. Momentum continues to build as revenues for the fiscal year grew roughly 21% year over year to $733 million. Average full-time active students increased 10% year over year for the fiscal year. Net income increased to $42 million with diluted earnings per share of 75 cents. Adjusted EBITDA improved an impressive 60% to $103 million. Total new student starts increased year over year by roughly 19% for the fiscal year. These start results exceeded the upper end of our guidance for the year and were driven by strong year-over-year start growth for both the Concord and UTI divisions. Our ability to achieve this growth in 2024 was largely due to our ongoing commitment to three core expansion initiatives, which include the following. Number one, increasing the capacity of our current programs on campuses, such as adding dental hygiene operatories at Concord. and additional welding booths at UTI. Number two, adding programs from our current portfolio to more of our existing campus locations. Two great examples of this were the addition of the aviation program at Long Beach and HVACR at Avondale this past year. And number three, launching brand new in-demand programs that we do not currently offer. In addition, we're focused on optimizing our workforce and facilities to support both future program and margin growth and to improve the efficiency of our operations. We also adjusted our marketing and admissions investments to accelerate lead generation and convert inquiries. Overall, we're proud of the meaningful growth we delivered across the board and our ability to consistently achieve or outperform our guidance. We're also pleased with the continued positive recognition for both our industry and company in national media outlets. For example, CNBC recently published two articles highlighting the increasing number of individuals who are choosing blue-collar or what we call skilled-collar jobs over traditional college paths. Both stories emphasize the financial stability and fulfilling careers these trades offer. This is a trend that appears to be accelerating in pace. Several of our UTI and Concord graduates were featured in these articles, showcasing their success in our role as a vital resource for equipping students with the necessary skills to thrive in in-demand industries. There is certainly a positive and growing sentiment for schools like UTI and Concord across the macro environment. This demand for skilled colored workers and the promise of a balanced playing field for our industry in Washington, combined with our excellent student outcomes, gives us added confidence to reach our long-term targets. Turning to our division-specific highlights for 2024, our Concord division continues to deliver strong results with robust year-over-year growth. In the division's first full fiscal year under our ownership, Concord has certainly surpassed our overall growth expectations. We saw strong growth across all Concord's programs, including clinical, core, and our new shorter cash pay programs as they continue to ramp. This growth is resulting from our increase in marketing investments throughout the year and effectiveness of our admissions team. As far as Concord's program expansion strategies, the Dallas nursing program capacity increase is still anticipated to begin in fiscal 2025. This effort will increase our capacity by an additional 60 students. Increasing the capacity of our dental hygiene program in San Diego is also progressing well. And finally, Our new nursing program in Jacksonville, Florida also remains on track to launch in mid-fiscal 2025. Turning now to partnerships, as we mentioned last quarter, we expanded Concord's longstanding partnership with Heartland Dental with the plan to construct a new co-branded campus. This campus, which will initially be launched on a non-Title IV cash pay basis, will serve as a training center for dental assistants and dental hygienists. and will feed directly into more than 1,700 Heartland locations nationwide. When conference growth restrictions are lifted, which is targeted for mid-2026, we will transition to also offering Title IV funding as well. This partnership not only helps satisfy the significant and increasing demand for trained dental hygienists and dental assistants, it also further optimizes our costs because Heartland is funding the construction of the campus, including initial supplies, and durable equipment, as well as providing students with financial support. To reiterate, we anticipate this campus will add more than $4 million in run rate revenue, as well as contribute to Concord's EBITDA margin expansion as it ramps. We look forward to keeping you updated as this partnership progresses and as we are able to launch additional campuses together over the next five years. Now, on to our UTI division. The UTI division also continued to deliver consistent year-over-year growth, driven by expanded programs and increasing market demand for skilled collar workers. Reflective of this market traction and our growth strategy, UTI generated a double-digit year-over-year revenue increase in 2024. UTI starts have steadily increased throughout the year, and we expect this momentum to continue in 2025, with the first two large UTI starts in this new fiscal year performing quite well. Our HVACR programs continue to ramp nicely across campuses in Avondale, Long Beach, and now Bloomfield, with the program in Sacramento set to begin in the coming months, pending regulatory approvals. The 14 programs we launched in 2023 as part of synthesizing and expanding the MIT-sourced aviation, skilled trades, and energy programs across the UTI campuses are continuing to perform well. And the unification of the MIT Houston and UTI operations are on track to be finalized this quarter. As we previously stated, by mid-2025, our MIT Canton and Houston campuses, the Motorcycle Mechanics Institute, Marine Mechanics Institute, and NASCAR Technical Institute campuses will all be known as UTI. These brand consolidations will help us enhance our operational efficiencies, as well as leverage the renowned Universal Technical Institute name to further our outreach to potential students and industry partners. As part of our commitment to prepare graduates for industry with ever-changing technology requirements, we recently added our EV programs to our Avondale and Orlando campuses. These new courses are the same EV and hybrid training that are already available in our three California campuses. The enhanced curriculum is now part of the core automotive program on five UTI campuses with further rollouts planned. Additionally, with respect to our EV strategy, we updated our Forward Fact and BMW Fast Track manufacturer-specific advanced training program instances, or MSATs, to include the EV curriculum. All seven UTI campuses offering BMW Fast Track and all nine campuses offering the Ford FACT program are now teaching the new EV curriculum using the latest EV vehicles provided to us by BMW and Ford. Collectively, our relationships with both BMW and Ford are decades long. In fact, we recently celebrated 25 years of our Ford program, which graduated more than 29,000 students since its inception. Finally, Underscoring our commitment to the highest standards of quality, I'd like to mention that both Dallas and Sacramento campuses were named Schools of Excellence by the Accrediting Commission of Career Schools and Colleges. This is ACCSC's highest honor, and only 19 schools earned this award for the 2023-2024 accrediting period. These accolades reinforce our dedication to excellence in education and our positive impact on the communities we serve. Building on this great work being done by both of our divisions, I'll now introduce our fiscal 2025 guidance, which Christine will discuss in more detail in just a bit. Revenue is expected to be between 800 and $815 million, reflecting 10% year-over-year growth. We now anticipate adjusted EBITDA to be between $120 and $124 million, and we expect new student starts to be ranging from 28,000 to 29,000. With fiscal 2024 now concluded, we are officially entering phase two of our multi-year North Star strategy. I'd like to take a moment to reiterate what this entails. Starting in fiscal 2025, we previously announced that we plan to launch a minimum of six new programs each year on Concord and or UTI campuses. subject to the required regulatory approvals. We also outlined our plan to open at least two new campuses annually, beginning in fiscal 2026. To that point, I'm pleased to announce that we are finalizing our next three planned campus locations targeted for launch in 2026. One will be our first Concord Heartland campus in Fort Myers, Florida. The second is a skilled trade and aviation campus in a Greenfield City. And the third will be an optimized UTI campus with a comprehensive set of program offerings in a state that is new to UTI. We are also happy to announce that we plan to launch nine full length program expansions across our existing campus footprint and 10 cash paid short courses are lined up to launch on the Concord campuses in 2025. We look forward to sharing more precise details on these campuses and programs in the very near future. We expect these initiatives will serve as the fuel for our previously announced compound annual revenue growth rate target of approximately 10% between 2024 and fiscal 2029, with an adjusted EBITDA margin for the company approaching 20% by the end of fiscal 2029, as our optimization efforts mature further. You can find more information on this strategy in our investor deck and on our website. We're also continuing to opportunistically evaluate and pursue strategic acquisitions. We would, of course, adjust these longer-term targets as appropriate if a transaction is completed. With that, I'll turn the call over to Christine Klein, our interim CFO, to review our fiscal 2024 financials. Christine?