Universal Technical Institute, Inc. Q3 FY2025 earnings call

• Regulatory environment is conducive to skilled trades education, with support from policymakers and the administration. The One Big Beautiful Bill Act creates opportunities for Pell eligibility for some short courses, aiding entry into full-time programs.
• Q3 results: Revenue up 15% to $204.3M, net income up 114% to $10.7M, adjusted EBITDA up 37% to $25.3M. Average full-time active students up 13% to 23,757, new student starts up 3%.
• Milestones: UTI's 60th anniversary, ringing the NYSE opening bell, media coverage highlighting value of skilled trades.
• Concorde division: Strong performance driven by demand in allied health, ongoing program initiatives like expanding nursing programs and opening new campuses. UTI division: Growth in full-time students, program expansions like HVACR and aviation, with new campuses planned.
• Lifting of growth restrictions on Concorde: Satisfied Department of Education requirements, enabling acceleration of Concorde's program and campus growth starting FY2026.

For the third quarter, consolidated revenue grew 15.1% year-over-year to $204.3 million. The Concorde division contributed $72.8 million, a 20.7% increase year-over-year, with average full-time active students up 18.8% and new student starts up 9.1%. The UTI division contributed $131.5 million, a 12.2% increase year-over-year, with average full-time active students up 8.9% and new student starts down 3% year-over-year. Revenue contribution: Concorde was 35.6% of total revenue ($72.8M / $204.3M), UTI was 64.4% ($131.5M / $204.3%).

• Raised low end of fiscal 2025 consolidated revenue guidance to $830 million to $835 million (14% midpoint growth year-over-year) and new student starts to 29,500 to 30,000.
• Fiscal 2025 net income expected $56M to $60M, diluted EPS $1 to $1.08; adjusted EBITDA $124M to $128M; adjusted free cash flow $62M to $68M.
• North Star Strategy Phase II aims for over $1 billion in yearly revenue and ~$200M in adjusted EBITDA by FY2029, with Concorde's growth acceleration expected to drive stronger ramp from FY2028.

Factors that may cause actual results to differ from forward-looking statements, including regulatory changes, market conditions, and other uncertainties discussed in earnings release and SEC filings. Additionally, investments in expansion may temporarily moderate margin growth in the near term.

Q: Mike Grondahl asked about Concorde's growth in 3-5 years and faculty hiring readiness.

A: Concorde's growth is accelerated with growth restrictions lifted, site selection and program portfolios are advanced. Faculty hiring and site development are progressing as negotiations with the administration have moved forward.

Q: Raj Sharma asked about UTI's readiness around faculty hiring and Q4 starts.

A: UTI has advanced site selection for first campuses, program portfolio was built assuming 2027 launches, Q4 starts are expected strong as 50% of UTI starts come in Q4 with high school students primarily in auto/diesel.

Q: Jasper Bibb asked about student interest in Q4 and Concorde capacity.

A: High school students in Q4 are primarily in auto/diesel, Concorde was approaching caps on programs, growth restrictions lifting will help raise caps and expand capacity.

Q: Bruce Goldfarb asked about consolidating UTI and Concorde systems.

A: Work is underway to align ERP, SIS, LMS, and CRM systems, a multiyear process to achieve efficiencies.