Universal Technical Institute Inc

Good day and welcome to the Universal Technical Institute's second quarter 2025 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 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 and Investor Relations. Please go ahead.

Hello and welcome to Universal Technical Institute's fiscal second quarter 2025 earnings call. Joining me today are our CEO, Jerome Graham, and CFO, Bruce Schumann. 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 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 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 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 second quarter of 2025. Over the past few months, I've heard from many of you, which is great. as we pride ourselves on keeping the lines of communication open with the investment community. With everything going on in Washington, many of you were interested in how we're responding to the changes already made and potential changes in the regulatory environment. So, before I get into our strong Q2 results, I'd like to start today's call by briefly sharing my views on recent regulatory developments and the broader macro environment we're operating in. Despite our initial cautious outlook for both the 2025 top and bottom line heading into the presidential election and recent developments across the higher education regulatory landscape that may suggest otherwise, I'm pleased to share that we've not experienced any disruptions to our operations or growth trajectory. As a matter of fact, the lines of communication with the new leadership team within the Department of Education have only strengthened since the inauguration. Our expansion plans remain firmly on track, and depending on how circumstances evolve, we may actually be positioned to accelerate the growth of our Concord and UTI divisions. We certainly will share specific news on that front as plans take shape. With respect to tariffs, we expect impacts, if any, to be minimal for us, but we'll keep monitoring for changes. From a macro environment perspective, demand for skilled labor, particularly across the trades and healthcare, also continue to strengthen in this environment. The ongoing supply and demand imbalance in these critical sectors and improving dialogue in favor of trade schools over traditional four-year degrees is generating additional tailwind for our business. Employers continue to voice their urgent need for well-trained professionals, and our campus network and program offerings are increasingly aligned with that demand. With that, let's move to the results for the quarter. We maintained strong operational momentum throughout the second fiscal quarter of 2025, continuing to deliver results that exceeded our expectations. We executed with discipline and consistency, staying focused on our growth, diversification, and optimization strategy, while navigating dynamic macro environment and prioritizing outcomes for our students. Given the broader uncertainty in the market, we were conservative with our estimates and deliberate with our spending throughout the quarter. As a result, and in conjunction with the favorable environment for our graduates, both revenue and adjusted EBITDA significantly outperformed forecasts. Revenue for the second quarter increased nearly 13% year over year to $207.4 million. Average full-time active students grew over 10% year over year to 24,604 students with the new student starts growing more than 21% year over year. Net income increased 47% to $11.4 million with diluted earnings per share of 21 cents. Adjusted EBITDA grew approximately 28% year over year to $28.9 million. We are pleased with the strong results we are sharing today. They serve as a powerful proof point of our business model's strength and resilience, reinforcing our confidence in achieving our long-term goals. We remain firmly committed to delivering both year over year top and bottom line growth throughout the second half of 2025. Now to our division specific highlights for the quarter. Starting with Concord, the division continued to deliver robust year over year growth driven by sustained marketing investments and the effectiveness of our admissions team, as well as strong program demand. Our marketing and admissions investments in Concord continue to generate very strong conversion rates, driving new student starts. We're continuing to test the elasticity of the Concord model, and we've yet to find the ceiling on how far we can push ROI. Regarding Concord's program expansion strategies, our previously announced initiatives remain on track, including the launch of a brand new nursing program in Jacksonville, Florida in mid-fiscal 2025, our Dallas nursing program capacity expansion, which is set to add 60 additional students later this year, and the 10 non-Title IV short course programs rolling out across the Concord campuses in 2025. With optimization in mind, we're relocating our Aurora, Colorado campus to Denver. This is part of our ongoing plan to enhance operations, expand programs, and improve margin. The new campus will occupy 60,000 square feet and will open in February of 2026. This reimagined space will include new simulation lab for students to gain hands-on experience with real-life medical scenarios, as well as additional space earmarked for other high-demand programs, as well as a larger dental hygiene clinic. Shifting to our partnerships, I'm pleased to announce that we broke ground on our new co-branded Heartland Dental Campus in Fort Myers, Florida, last month. This first of its kind campus, set to open in early fiscal 2026, will train up to 190 dental hygienists and assistants annually. As previously mentioned, this campus will begin as a non-Title IV campus with plans to apply for Title IV funding once Concord's growth restrictions are lifted. We expect this location to contribute more than $4 million in annual revenue as the campus scales. Turning to our UTI division, The UTI division maintains strong year-over-year improvements, largely as a result of program expansions, the immense market demand for skilled college workers, and our strong lead conversions. Building the foundation for UTI's continued success are our ongoing expansion efforts. This quarter, we made exciting progress on our program expansion initiatives. As we previously announced, we have eight full-length programs launching across UTI campuses this year. In March, We added our HVACR program to our UTI Orlando campus and most recently launched our Electrical, Electronics, and Industrial Technology or EEIT program at UTI's Exton and Mooresville campuses. This new 12-month EEIT program will train students for entry-level careers in low voltage electronics and high voltage electrical systems for certain residential and commercial construction applications. This program also includes the maintenance of industrial technology, including industrial robotics, hydraulics, and mechanical systems. By expanding our portfolio with in-demand programs, we're continuing to reach even more students in high demand employment areas. Additionally, as part of our North Star Strategies phase two, we plan to open three campuses in 2026, subject to regulatory approval. These are the Heartland Concord co-branded campus, A fully optimized UTI campus with a comprehensive set of program offerings in Atlanta and, most recently, we announced the last of the three campuses in 2026, our inaugural skilled trades focused UTI campus in San Antonio, Texas. The San Antonio campus will offer programs in high demand skilled trades, including HVACR, welding, and electrical technologies. aligning with our strategy to diversify our educational offerings and meet the evolving needs of the workforce. This expansion marks a significant step in broadening our program offerings beyond our traditional transportation-focused training. We anticipate that this campus will open in the first half of fiscal 2026. When fully ramped, this campus should contribute upwards of $23 million in revenue with significant margin contribution. Our optimization efforts are also progressing well. We expect our MIT Canton campus, along with the Motorcycle Mechanics Institute, Marine Mechanics Institute, and NASCAR Technical Institute campuses to officially operate under the Universal Technical Institute brand in the coming months. With the sustained robust performance across both divisions, our conservative spending, and a favorable macro environment, I'm pleased to announce that we are raising our fiscal 2025 guidance ranges once again. We now anticipate generating consolidated revenue between $825 and $835 million, reflecting approximately 13% year-over-year growth. We now expect adjusted EBITDA between $124 and $128 million, and we now expect new student starts to be between $29,000 and $30,000. Bruce Schumann, our new Chief Financial Officer, will walk through our updated fiscal 2025 guidance in depth in just a moment. Bruce recently joined as CFO, bringing deep experience from high growth multi-site organizations and a proven track record for leading financial operations through transformative periods. His leadership will be critical as we pursue significant growth and profitable opportunities driven by rising demand for skilled trades and healthcare professionals across the US. We're excited to have Bruce on board and on the call with me today and look forward to his partnership in advancing our strategy. We also promoted Todd Hitchcock to Chief Operating Officer. Todd has been instrumental in every phase of our transformation, including developing and driving the North Star Strategy focused on growth, diversification, and optimization. His leadership and operational alignment, shared services, and campus performance has been key to our success. In his expanded role, Todd will strengthen our market position as we scale to meet the growing workforce demands. Supporting these efforts, Adrian Dutray recently joined as Chief Information Officer to lead the build out of a modern technology and data platform, further enhancing our operational visibility and the student experience. I'm thrilled that our team's now fully in place to execute on phase two of our North Star Strategy with great focus and precision. With that in mind, I'd like to take a few moments to reiterate what phase two of our North Star Strategy entails, both operationally and financially. Operationally, we remain committed to launching at least six new programs each year across Concord and or UTI campuses, pending regulatory approval. In addition, we plan to open at least two new campuses annually, beginning in fiscal 2026. We've already announced nine new programs for fiscal 2025 and three campuses for fiscal 2026, demonstrating that we're not only on track to meet our objectives, but positioned to exceed them. Financially, this organic strategy should result in revenue exceeding $1 billion by the end of 2029 and adjusted EBITDA margins approaching 20%. As we mentioned on our last call, it's important to note that our EBITDA margins will reflect increased investment in fiscal years 2026 and 2027. These strategic investments are expected to temporarily moderate margin growth before new campuses and programs begin to scale, ramping margin expansions significantly in Fiscals 2028 and 2029. With that, I'll turn the call over to Bruce, our CFO, to review our second quarter financial results. Bruce?