Universal Technical Institute Inc

Good afternoon and welcome to the Universal Technical Institute's Q1 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please send your 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 and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Matt Kempton, VP, Corporate Finance and Investor Relations. Sir, please go ahead.

Hello and welcome to Universal Technical Institute's Fiscal First Quarter 2025 earnings call. Joining me today are CEO Jerome Grint 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 the earnings release and SEC filings. These statements do not guarantee future performance, and therefore under-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 2024. 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 release to a most directly comparable GAAP measure. For more information regarding definitions of our non-GAAP measures, Please see our earnings release, financial supplement, 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, and thank you for joining us to discuss our results for the first quarter of 2025. As we continue to execute on our growth, diversification, and optimization strategy, we delivered another quarter of our performance by exceeding expectations across all key metrics. For this, I want to sincerely thank our divisional and corporate teams along with our partners and students for their exceptional efforts and dedication to delivering strong results time and time again. With that, let's jump into the results for the quarter. Revenue for the quarter grew over 15% year-over-year to $201.4 million. Average full-time active students increased 11% year-over-year to 25,062 students. Net income increased $22.2 million with diluted earnings per share of 40 cents. Adjusted EBITDA improved an impressive 45% year-over-year to $35.5 million. Total new student starts increased year-over-year by over 22% for the quarter. So, what's driving these strong results? First, top-line performance exceeded our expectations across both divisions. On the Concord side, we continued to make higher strategic investments in our marketing and admissions efforts, which led to very strong student start performance for the quarter. we will continue investing in our Concord marketing and admissions teams to continue to improve results. On the UTI side, our first two starts for the quarter were exceptionally strong, which we believe was primarily the result of deferrals from the fourth quarter due to FAFSA delays. As the quarter progressed, our remaining starts performed according to plan. Looking at the bottom line, in addition to our overall achievement on revenue, we did not spend as much as we initially expected to on some specific transformation initiatives planned in the quarter. This was a result of shifting some of these into the second quarter. That said, we do anticipate our initiative spend increasing in the second quarter and then normalizing throughout the rest of the year. Overall, we're very happy with the results we're reporting today, and we remain confident in our ability to deliver both year-over-year top and bottom-line growth throughout the balance of 2025. Now, I want to briefly take a moment to express how incredibly proud we are of our students, faculty, and staff for their unwavering dedication to supporting those impacted by the California wildfires. Their efforts, whether through organizing food drives, spearheading fundraising initiatives, or volunteering their time, truly exemplify the values we hold as an organization. This collective commitment to making a difference highlights the strength of our community and our shared purpose of coming together to help those in need during these difficult times. For the most part, we had limited impact to our Southern California campuses during this tragic event. While there was a slight dip in attendance during the most challenging periods due to significant disruptions in commuter patterns, we're pleased to report that this did not impact operations. Our thoughts remain with those who are affected, and we will continue to support our community through these challenging times. From a regulatory standpoint, we are encouraged that the new administration has expressed an interest in reducing regulatory burden and believe any changes that fairly compare schools of all types based on outcomes will contribute to the more favorable regulatory environment for us. While the specifics regarding the Department of Education remain unclear, I'm hopeful that the administration will focus on student outcomes and helping schools expand in areas where employment demand is extremely high. That said, our attention remains firmly on the factors within our control, and we are unwavering in our commitment to achieving strong student outcomes. Lastly, before diving into each division's details, we're making great progress on our CFO search. Our elevated company profile has certainly expanded the available talent pool, and we're highly confident in finding an exceptional candidate for the role. We look forward to providing an update in the coming months. Turning to divisional specific highlights for the quarter, the Concord division continues to deliver strong results with consistent year-over-year growth. The positive top line results are primarily due to our marketing investments as we continue to focus on maximizing the performance of our healthcare division. Moreover, the increasing effectiveness of our admissions team remains a key driver of growth across the division as well. As for Concord's program expansion strategies, we remain on track to launch 10 cash pay short course programs across the Concord campuses in 2025. Our new nursing program in Jacksonville, Florida, also remains on track to launch in mid-fiscal 2025. And the Dallas nursing program capacity increase is still on track to begin in fiscal 2025, which will increase our capacity by an additional 60 students. Turning to our partnerships, as we noted last quarter, we're progressing on Concord's partnership with Heartland Dental to construct a new co-branded campus. This project is still on track to open in early fiscal 2026 and will initially launch as a non-Title IV campus for dental assistants and hygienists. When Concord's growth restrictions are lifted, we plan to seek approval to offer Title IV funding as well. As a reminder, we anticipate this campus will add more than $4 million in annual run rate revenue, as well as contribute to Concord's EBITDA margin expansion as it scales. We look forward to keeping you updated on this partnership as it progresses. Now, onto our UTI division. The UTI division also continued to deliver year-over-year growth driven by expanded programs and increasing market demand for skilled collared workers. Our HVACR programs continue to ramp nicely across our campuses in Avondale, Long Beach, and Bloomfield. As we discussed on our last call, of the nine full-length programs we're launching this year across both divisions, we expect eight of those to be on existing UTI campuses. Also, as previously discussed, we plan to open three campuses in 2026, subject to regulatory approval, of course. With the upcoming Concord-Heartland co-branded campus marking the first of these, we're pleased to have recently announced the second location, which will be a fully optimized UTI campus with a comprehensive set of program offerings in the northern suburbs of Atlanta, pending regulatory approval. From an optimization standpoint in Q1, we completed the unification of two separate Houston campuses into a single consolidated campus. This strategic move was designed to drive operational efficiencies, reduce overhead, and create more streamlined learning environment for our students. The consolidation is part of a broader effort to optimize UTI campuses for greater success in delivering quality education. This was a significant project that required a big lift from our team and will ultimately deliver an enhanced margin profile for the combined campus. I'm very proud of what we were able to accomplish in this front and appreciate all who were involved. We also still anticipate that by the middle of the fiscal year, our MIAT Canton Campus, along with Motorcycle Mechanics Institute, Marine Mechanics Institute, and NASCAR Technical Institute campuses, will all officially operate under the Universal Technical Institute brand. I also want to highlight our Canton Campus for being recognized by the Michigan Veterans Affairs Agency as a veteran-friendly institution. The agency's award reflects our commitment to supporting veterans by providing conducive environment for their education and career transition. Turning now to partnerships, just this morning, we were excited to share that we've added Tesla to our successful manufacturer-specific advanced training programs. Beginning in the spring, UTI's Long Beach campus will offer Tesla's START program for collision repair. We continue to expand our partnerships across the two divisions, and this collaboration is a testament to our commitment to innovation and ensuring that our programs remain relevant and impactful in today's evolving landscape. Building on all this great work being done by both of our divisions, I'm happy to report that we are raising our guidance ranges for fiscal 2025. We now expect to generate consolidated revenue between $810 and $820 million, reflecting approximately 11% increase year-over-year. We now anticipate adjusted EBITDA between $122 and $126 million, and we are raising our expectations for new student starts to be from 28,500 to 29,500. Christine will provide more details on our fiscal 2025 guidance in just a bit. As we continue into 2025, I want to remind everyone that we are officially in phase two of our multi-year North Star strategy. I'd like to take a moment to reiterate just what this entails. As previously communicated, we are committed to launching a minimum of six new programs each year across Concord and or UTI campuses, pending the necessary regulatory approvals. Additionally, we've outlined plans to open at least two new campuses annually starting in 2026. It's worth noting, We announced nine new programs in 2025 and three new campuses in 2026, which demonstrates we are on track to meet or exceed both objectives and will continue to work diligently towards their successful completion. Further details on this strategy can be found on our investor deck on our website. We're proud of the substantial growth we've achieved across both divisions, and we believe we are well positioned for continued success in the quarters and years to come. With that, I'll turn the call over to Christine Klein, our interim CFO, to review the first quarter financial results. Christine?

Thank you, Gerald. We've kicked off fiscal 2025 with another quarter of strong results across the board. For the first quarter, average full-time active students increased 11.1% year-over-year to 25,062 students. New student starts increased 22.3% year-over-year to 5,313 starts, exceeding our expectations. The Concord division drove a 16.4% increase in average full-time active students compared to Q1-24. New student starts increased 26% in the first quarter, which was primarily the result of investments we've made within the division to bolster our marketing and admissions efforts and improve performance by Concord marketing and admissions teams. The UCI division generated an 8% increase year-over-year in average full-time active students for the quarter, while new student starts grew 19% year-over-year in the first quarter. Contributing to this growth was the impact of start deferrals from the fourth quarter primarily due to FAFSA delays, which shifted several students into the first two starts of the first quarter. We experienced more normalized levels of growth throughout the remainder of the quarter. Turning to our financial performance, first quarter revenue on a consolidated basis increased 15.3% year-over-year to $201.4 million. Concord contributed $70 million, an increase of 17.9% over the prior year quarter, while the UCI division contributed $131.5 million, an increase of 14% over the prior year quarter. From a profitability standpoint, consolidated net income for the first quarter was $22.2 million, or $0.40 per diluted share. Adjusted EBITDA for the first quarter was $35.5 million, a year-over-year increase of nearly 45%. As Jerome discussed earlier, we shifted some of our strategic initiatives planned for the first quarter into the second quarter, which led to lower-than-anticipated spend for the period. This change in expense timing, combined with the growth in average full-time active students and revenue overachievement, drove outperformance on our bottom line. As we remain committed to our ongoing strategic initiatives planned for this year, we do still expect to spend those investment dollars throughout the remainder of the fiscal year. At the end of the quarter, we had 54.4 million shares outstanding. Total available liquidity at the end of the quarter was $246 million, including $74 million of remaining capacity on our revolving credit facility. We also paid down an additional $5 million on our revolver in the first quarter, ending with positive net working capital of $28.5 million. First quarter 2025 operating cash flow was $23 million and adjusted free cash flow was $18.9 million. Year-to-date capital expenditures were $3.3 million, which was below our original expectations due to timing. However, we still expect to spend approximately $55 million in total capex this year. Building on our consistent execution and the strong momentum so far this year, we are raising the guidance ranges we set for fiscal 2025. Starting with revenue, we are raising our expectations to between $810 and $820 million for fiscal 2025, or approximately 11% year-over-year growth at the midpoint. This reflects the Q1 increase in average full-time active students from the program additions across both divisions, with total new student starts in fiscal 2025 now expected to range between $28,500 and $29,500. Following this higher revenue growth in Q1, we now expect growth in the upper single digits in Q2, followed by double-digit growth in the remaining quarters. For starts, we anticipate double-digit growth in Q2, with mid- to low-single-digit start growth each quarter thereafter. For fiscal 2025, we are raising our net income expectations to a range of $54 to $58 million, with diluted earnings per share projected between $0.96 and $1.04. We expect 2025 full-year adjusted EBITDA to now range between $122 and $126 million, or around a 20% year-over-year increase at the midpoint. While we are pleased with our adjusted EBITDA performance this quarter, the bulk of the outperformance is attributed to the in-year timing of our various initiative investments. Consequently, we anticipate that adjusted EBITDA will normalize throughout the year as we make these strategic initiative investments. Further, we still expect to incur the necessary growth expenses to drive our North Star strategy during fiscal 2025 and 2026. We anticipate 2025 full-year adjusted free cash flow to now range between $60 and $65 million, which continues to assume approximately $55 million in CapEx spend. We still expect the bulk of our cash generation and year-over-year growth to materialize in the fourth quarter, consistent with our historical cadence. Looking further ahead, I'll also reiterate our collective excitement as we enter phase two of our North Star Strategy this fiscal year. We're executing on our growth investments for fiscal 2025 and, as discussed previously, expect to see those investments increase in the next few years as we continue to add new programs and campuses. It's important to reiterate that as we advance through the next few years of our growth strategy and continue to strategically invest at both Concord and UTI, both our CapEx and strategic investments will grow materially. As always, in addition to this earnings call transcript, we encourage everyone to review our press release, financial supplement, and investor presentation, as well as the 10Q once it is filed. These materials include the most current information on our consolidated and segment actual results, our strategic roadmap, and our guidance. Thank you to our students, team, partners, and investors for their ongoing support. I'll now turn the call back over to Jerome for closing remarks. Thank you, Christine.

Looking ahead, we're excited to continue this next phase of our journey. In addition to continuing our relentless focus on execution, optimization, and driving student outcomes, our organic growth initiatives continue to revolve around, one, working towards expanding our campus footprint into greenfield geographies, two, broadening the reach of existing programs and adding new in-demand offerings, and three, growing our partner network and deepening industry relationships. Inorganically, Our efforts remain focused on opportunistically exploring strategic acquisition opportunities with an emphasis on enhancing our presence in healthcare with in-demand programs that will complement our Concord portfolio. As we've moved into the post-election environment, I'm pleased to report that we've seen a notable uptick in activity on the M&A front, and we're excited about the increase in opportunities that have been presented to us. As I noted earlier, we're proud of what we've accomplished once again this quarter and remain excited about the future. The demand for skilled professionals is growing, and we are well positioned to continue driving momentum and supporting the next generation of skilled collared talents. We have a strong plan in place, a notable track record of execution, and a very healthy financial profile to continue delivering shareholder value in the years ahead. We appreciate your ongoing support and look forward to sharing more about our exciting progress. As always, we're happy to host campus tours and provide a closer look at the impactful initiatives we're pursuing. So please feel free to reach out if you'd like to visit.

I'd now like to turn the call over to the operator for Q&A. Operator?

Ladies and gentlemen, at this time, we'll begin the question and answer session. If you would like to ask a question, please press star and then 1 using a touch-tone telephone. If you have other questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then 1 to join the question queue.

We'll pause momentarily to assemble the roster. Our first question today comes from Alex Paris from Barrington Research. Please go ahead with your question. Thank you, and thank you for taking my questions, and a hearty congratulations on the strong start to the new fiscal year. Thanks, Alex. Yeah, thanks. First question on new campuses.

So just to be clear, the first one was the co-branded campus with Heartland. The second campus was just announced, I think it was this morning, Atlanta.

I just wanted, is that the first campus that you guys are going to have in Georgia? It is. Okay, so it's not a new campus, but it's a new state expansion as well.

Yeah, it's completely greenfield for us. You know, we see a lot of opportunity, job growth. The demographics are great in that area, and we found what we believe is a fantastic location. So we're really looking forward to it. As we said in the prepared remarks, this will be an optimized, comprehensive set of UTI products, auto, diesel, and the full-scale trades complement.

Great. So my question is the third, which is not yet announced.

Is that targeted to be a UTI campus, Concord, or you're just not telling us yet? Well, it's a UTI campus, as we've also outlined in our past notes. We're not going to be able to open any Concord campuses likely until 2027 due to the growth restrictions from the merger that we had. So these first two in 26 are UTI campuses. Of course, the Heartland-Concord co-branded campus is able to open because it is a non-Title IV entity initially. Gotcha. And the third campus, would that be a greenfield state or would that be an additional campus in an existing state? Well, you hold tight there. We're pretty close to being able to announce it. We'd like to, you know, get a couple things across the finish line before we put an exact location in, but we won't keep you waiting much longer, Alex. Okay, thank you. And then a question about the North Star II strategy.

You've given us targets for fiscal 2029, which, among other things, includes about 600 basis points of adjusted EBITDA margin expansion.

from roughly 14% last year to nearly 20% in fiscal 2029. I gotta assume, you know, with this level of new campus activity, as well as this level of program expansions, that that expansion won't necessarily be linear. Am I right on that? No, it definitely won't be the new year. There will be a contour to the expansion. You'll see more strategic investment in 25, 26, and 27 as we are beginning to invest in the 26, 27, 28 campuses. And they then become, you know, accretive. in 27, 28, and 29, so you'll see a bit of a bend in terms of our EBITDA trajectory in 26 moving into 27, but then as these tranches of campuses and programs take off, that's when you really see the acceleration, 28, 29. Great, that makes sense. And then last question is sort of what you were saying towards the end of the call, the M&A, the M&A pipeline, the activity approach direction. You said you're looking primarily on the health care side, primarily to add to the Concord offerings. What other cover can you offer us that you're looking for, allied health care, nursing, graduate programs? Yes. As I said on previous calls, the Concord acquisition got us a strong portfolio of allied health, meaning non-nursing healthcare disciplines and programs, and dental. And what we didn't get was a lot of nursing students. Well, nursing only on two of our campuses at the 17th. One of the things we've also said is that we'd like to be a larger player in the nursing markets. That's a primary focus. It doesn't mean that any of the targets that we've looked at don't have allied health along with nursing, but the primary focus would be, in a sense, to fill out the portfolio across all of the healthcare fields. Of course, as you know, the largest and fastest growing really is nursing. We're kind of particularly focused there right now.

Great. That's good, Carter. Thanks a lot, Jerome, and I'll get back in the kitchen. Sure. Thank you, Alex. Our next question comes from Eric Martinuzzi from Lake Street. Please go ahead with your question.

Yeah, I wanted to follow up on the Atlanta new campus investment. I was thinking in the 100,000 square foot was sort of a footprint that you guys were targeting for these new ETI locations, and I saw Atlanta at 150,000. Was that just the space that was available and within the right area, or was that roughly the goal all along?

No, the goal is to be somewhere around, you know, 110,000, 115,000 square feet is what we see as our new optimized campus. And what we mean by optimized is a campus that not only has the transportation, auto, diesel, and welding in it, but also has the rest of what came to us by way of the MIT acquisition. So the electronic suite of four programs as well as, welding, HVAC, aviation, et cetera. So you see all of that in that square footage. You're right. The inventory of space available, this place is a little larger. But if you look at it, what it gives us an opportunity to do is take advantage of increasing capacity in some of these skilled trades areas where we're already seeing that we're seeing very, very high demand. And it also gives us the opportunity potentially to put some of our manufacturer-specific programs in. which aren't in the original optimized model. We're really excited about the location and the opportunity in this new state, and I think we're going to fill that space nicely.

Okay.

And then on the guide, based on your comments, Christine, for the second quarter you talked about upper single digits, so I just did – Quick math, I'm using an 8% number, but I was coming out with roughly $199 million, which is slightly above the Q2 consensus. Is that in the ballpark where you were targeting?

No, I think a little bit lower than that. We're close. Okay.

All right, so 7% would be $197, and we're still in the neighborhood then. Yeah, that's in the neighborhood. Okay, and then the expense, I just want to make sure I've got this sized up. In Q1, you guys came in at operating expense of, I think it was $174. I overshot in my own model. I think I was at $179, but that outlook for Q2, what's the... you know, the snapback in the investments that you held off on in Q1, can you size that either percent margin-wise or raw dollar-wise for Q2?

I'd say about quarter over quarter, it'd be about $10 million more. Got it. Okay. Thanks for taking my question. Sure. Thank you. Our next question comes from Mike Grondahl from Northland Securities. Please go ahead with your question.

Hey, guys. Thanks, and congrats on another nice quarter. I wanted to dig into new starts a little bit. You know, at Concord, they were up 26%. And you guys called out marketing efforts and admission efforts. You've called that out for a couple quarters now, and I know you're kind of turning the dial up there. Can you talk a little bit about what you're doing specifically and maybe how much more is left? Yeah, well...

You're exactly right, which is we're continuing to turn the dial in collaboration with the marketing organization, the agencies we use at Concord, looking for more innovative ways to reach out to more students in those local markets. And we're seeing, as you can see from the results this last quarter, we're continuing to see nice results out of it. hauling the hard pack is a really difficult thing to do, right? Because we're going to continue to invest and we're going to continue to invest more aggressively in it, you know, continuing to look for that. So two things will happen. One, we will start to see some diminishing returns somewhere along the line. Remember, health care is a very local industry. a very local endeavor. Students don't tend to travel more than 10 to 20 miles to go to a healthcare school, and so there's going to be some population demographics that may start to see some bending in terms of that. And then there are some areas that have caps. where we're not allowed to enroll more students in it, and we're approaching that. That doesn't mean we won't then subsequently work on, once we're reaching the caps, on increasing the caps, because the demand for these graduates is still very, very high. And so, you know, we're going to keep turning the dials, as you called it, and You know, I can't tell you exactly where we hit the bend, but we will. And then also, you know, there's cap issues. So we'll have to play one quarter by each. Got it.

And then, Jerome, you know, from time to time, you've talked a little bit about the macro environment. And, gosh, if we go back two years, the trades, kind of had some headwind against them. And maybe starting early 24, more positive articles about trades versus four-year schools. You know, I think about that time you described the macro as maybe more neutral. Has that neutral become a tailwind yet? Or I guess I'd love to hear kind of your update on how you feel about the macro and kind of trades versus four-year schools. How about this?

We're playing in a very healthy environment right now, right? Whether I'm feeling the wind on my back on that is a day-to-day occurrence, but the friction is clearly subsided. It's a healthy environment. We're having great conversations with students, weighing the differences between potentially a four-year liberal arts education and getting to work within a year, making a good wage. And there's been a lot of positive press in the direction of people being more practical and thinking about these vocations as a great alternative. And the demand for these, as we call skilled car workers, continues to increase. And so we're having much better conversations. Our lead flow is quite high. with what our lead flow is this year, even, you know, at the investment levels in which we expected to make rather than increase investment levels. And I think you can also tell by increasing the investment levels in that lead flow that we're sensing that we have an opportunity to really take advantage of some trends in the market.

We're doing that. Yeah, definitely. Okay. Hey, thanks a lot. Our next question comes from Steven Frankel from Rosenblatt. Please go ahead with your question.

Thanks. Looking at that M&A landscape that's out there, I appreciate the comments that have been picked up. What are the price expectations like of the sellers? Are there any reasonable expectations out there, or do you think there's going to be a bit of a back-and-forth process to get to the kind of multiples that you're comfortable paying?

Well, you know, I guess my point of view on it is my bet is there will be a few transactions over the next year. And, you know, I understand that it takes a while with the regulatory environment, no matter who's in charge, to move transactions over the finish line. My gut would be that there will be a couple of transactions this year. Our participation in that really does have a lot to do with a couple of things. One would be those multiples, and frankly, we're hearing more reasonable numbers now that we're out there. We're still, you know, never totally satisfied with what you hear, but we're hearing more reasonable numbers. And the second thing that we're maniacally focused on is that the target needs to have really great outcomes. that, you know, we've built up a reputation of executing at a high level, over 70% graduation rates, 85% employment rates. These are very good numbers, and we want to make sure that two things. One, we're not diluting our shareholders by pricing, getting priced out of a market.

And number two, that we're not diluting our outcomes, which we think is significantly what drives our business. That makes sense.

And then on that outcome issue, where are you today in employers jostling each other to get in front of your students? Are we still in an environment where you're seeing better offers, better tuition reimbursement, things like that from potential employers, or has that settled?

We are. One of our main strategies has actually been to bring the employers into the process much earlier and, and, and, join with our students during their educational process. One good example of that is Tesla coming into our Long Beach campus with their collision repair program. They are paying for the students to go through those programs and taking collision repair graduates through their finishing program. that bringing them down into the process with them is doing two things. One, it's giving students more confidence that they're going to get a job, and it's also increasing the competition among our employers because they're, you know, frankly afraid that the good ones will be gone by the time the end of the process is there.

And so that's all helping wages grow. That's great. Thank you so much. Once again, if you would like to ask a question, please press star and 1.

Our next question comes from Jasper Bibb from Truist. Please go ahead with your question.

Good afternoon, everyone. I wanted to ask how we should think about the respective new enrollment growth rates for UTI and Concord segments in the new guide. Does that assume Concord continue to outperform UTI, or how would you frame those relative growth rates?

Yeah, I think proportionally, if you look at the overachievement in Q1, it was proportionate. Now, one of the things we called out was that the UTI enrollment increase, Bruce, is our expectations. It had a lot to do with people moving from the fourth quarter to the first quarter because of FAFSA delays and frustrations around that. And as I said, we're seeing pretty much UTI is operating to plan. And again, we've owned UTI for 60 years. There's a lot more predictability around what UPI is doing. While we're continuing to, you know, to turn the dials on, you know, testing how much elasticity there is in the demand in the healthcare space. And so as we projected, we see a probably larger increase organically on the Concord side while we continue to do that.

Thanks for that. And then to confirm something from an earlier question, the expense that was supposed to hit in one queue that was deferred out of the quarter was $10 million, and we're expecting that should all hit in the second quarter, maybe beyond that clarification. Just how should we think about the cadence of margins over the next couple quarters implied in the guidance?

but it's probably maybe $10 to $15 million.

But that's not everything that pushed. We expected to spend more in the second quarter. It's, you know, probably only closer to $5 or $6 million of the money that deferred out of the first and into the second. So second quarter was going to be higher anyway.

Yeah.

And it's... even higher because of the timing of the expenses that we didn't get going in Q1 that we're already focused on right now in Q2 and into Q3.

Okay, so the approved expense was $5 to $6 million and the sequential increase is $10 to $15.

Okay. Yeah, that makes sense. Oh, go ahead. Yeah, I was just following up. Is there any color on how we should think about margins in the third and fourth quarter, or how you see that trending over the balance of the year?

Christine, I'll hand around one for you. Contour the margins throughout the year, or Matt.

Yeah, they drop. They'll be, you know, in terms of even margins, probably no double digits for second and third quarters, and then you'll see our seasonal jump in the fourth quarter where we'll be upper teams is what we'd expect.

Okay, great. Thank you. Thanks, Jasper. Thanks for calling. Appreciate it. And, ladies and gentlemen, with that, we'll be concluding today's question and answer session.

I'd like to turn the conference call back over to Jerome Gramp, CEO, for closing remarks.

Thank you very much, Operator. We appreciate everyone's attention and taking their precious time out of their day to listen to us.

We are looking forward to once again reporting three months from now, so thank you very much. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.