Universal Technical Institute, Inc. Q4 FY2025 earnings call

Key Points

• Launched North Star strategy in 2020 focused on growth, diversification, and optimization. Fiscal 2025 was the first year of phase two, with revenue surpassing raised guidance, adjusted EBITDA $126.5 million, and new student starts up over 10%.
• Operationally, launched 19 new programs across divisions, enhanced operational foundation by aligning brands and optimizing campuses. Fiscal 2026 operational priorities include expanding campus footprint, launching new programs at scale, and growing student base while maintaining quality.
• Plan to open 3 new campuses in 2026: Heartland Dental co-branded campus in Fort Myers, UTI Atlantic campus, and UTI San Antonio campus. Expect to launch ~20 new programs in 2026.

In fiscal 2025, the Concord division contributed $293.8 million, a 19.3% year-over-year increase, with average full-time active students up 14.5% and new student starts up 14.5%. The UTI division contributed $541.8 million, an 11.4% year-over-year increase, with average full-time active students up 8% and new student starts up 7.9%. For the full year, consolidated revenue grew 14% to $835.6 million, exceeding the guidance range.

Fiscal 2026 Guidance

• Revenue expected between $905 million and $915 million, ~9% year-over-year growth at midpoint.
• New student starts range between 31,500 and 33,000.
• Net income expected $40 million to $45 million, diluted earnings per share $0.71 to $0.80.
• Baseline adjusted EBITDA expected to exceed $150 million, but reported adjusted EBITDA range $114 million to $119 million due to ~$40 million in growth investments (campus expansions and program development).
• Adjusted EBITDA growth expected to be strongly negative in first two quarters of 2026, improving in later quarters.

Risks

• Temporary impact of Department of Education's ID verification measures causing slowdown in cash collection, but expected to be a short-term drag on free cash flow and already seeing improvement as the quarter starts.

Q: Jasper Bibb asked about start growth differential between UTI and Concord segments and campus openings annually.

A: Bruce Schuman said start growth profile would be similar per segment, and Jerome Grant clarified campus openings are between the two divisions, 2-5 per year.

Q: Jasper Bibb asked about cash impact of Department of Ed's ID verification on front-end productivity.

A: Bruce Schuman said no impact on front end, was a temporary slowdown in cash collection.

Q: Mike Grondahl asked about high school recruiting efforts, tuition increases, and campus openings.

A: Jerome Grant said high school recruiting efforts will be balanced with adult marketing, tuition increase expected 2-3%, and campus openings are prudently aggressive to solve skilled trades shortage.

Q: Griffin Boss asked about adjusted EBITDA growth starting in 2027 and CapEx cadence.

A: Bruce Schuman said marginal growth in adjusted EBITDA in 2027 is over 2026 numbers, and CapEx was a timing issue in 2025 with cash CapEx ~$42 million.

Q: Griffin Boss asked about revenue potential of new campuses.

A: Jerome Grant said Salt Lake City campus would behave like Atlanta, ~$40-$45 million revenue at peak, and Concord campuses ~$20-$25 million revenue.

Q: Raj Sharma asked about start breakdown by demographics and Department of Education impacts.

A: Jerome Grant said skilled trades appeal to older audience, and Department of Education changes are not expected to cause disruption, with approval process streamlined and collaborative.