Colleen Weldin Investor Relations Universal Technical Institute, Inc. (623) 445-0993
Universal Technical Institute Reports Record Revenue of $105.6 Million, Net Income of $6.0 Million and Student Start Growth of 22% for Second Quarter 2010
PHOENIX, ARIZ. – May 3, 2010 – Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, reported results for the second quarter ended March 31, 2010. Net revenues for the second quarter ended March 31, 2010 were $105.6 million, an 18.5 percent increase from $89.1 million for the second quarter of the prior year. Net income for the second quarter ended March 31, 2010 was $6.0 million, or 25 cents per diluted share, as compared to a net loss of $0.1 million, or no earnings per diluted share, for the second quarter of the prior year. Net revenues for the six months ended March 31, 2010 were $209.2 million, a 16.7 percent increase from $179.2 million for the six months ended March 31, 2009. Net income for the six months ended March 31, 2010 was $15.3 million, or 63 cents per diluted share, as compared to net income of $2.2 million, or 9 cents per diluted share, for the six months ended March 31, 2009.
“I am very pleased with another strong quarter of financial results and continued strength in student metrics. We achieved record revenues for an individual quarter and a 22 percent year over year growth in students starting school, marking our 8th consecutive quarter of student start growth,” said Kimberly McWaters, president and chief executive officer.
Student Metrics
Three Months Ended
Six Months Ended
March 31,
March 31,
2010
2009
Growth
2010
2009
Growth
Total starts
4,135
3,381
22.3
%
7,985
6,700
19.2
%
Average undergraduate full-time student enrollment
18,241
15,457
18.0
%
18,472
15,835
16.7
%
End of period undergraduate full-time student enrollment
18,251
15,391
18.6
%
18,251
15,391
18.6
%
Average capacity utilization
71.6
%
63.1
%
849bps
72.5
%
64.7
%
785bps
Second Quarter Operating Performance For the second quarter of fiscal 2010, net revenues were $105.6 million, an 18.5 percent increase from $89.1 million for last year’s second quarter. The increase in net revenues primarily relates to an increase in average undergraduate full-time student enrollment, an increase in tuition rates, and a decrease in tuition discounts. Net revenues for the second quarter of fiscal 2010 and 2009 excluded $2.5 million and $1.8 million, respectively, of tuition revenue related to students participating in our proprietary loan program. Additionally, there was a decrease in revenue from our industry training programs.
Educational services and facilities expense increased $2.7 million, or 5.5 percent to $51.6 million for the three months ended March 31, 2010, from $48.9 million in the three months ended March 31, 2009. This increase was due to higher compensation and benefits expense related to an increase in the number of employees in the financial aid and other student support departments which was to support the needs of the growing student population.
Selling, general and administrative expense increased $3.7 million, or 9.2 percent to $44.2 million for the three months ended March 31, 2010, from $40.4 million for the three months ended March 31, 2009. The increase was due to an increase in compensation and benefits expense related to the increase in sales force representatives, and an increase in advertising expense.
Operating income and margin for the second quarter of fiscal 2010 was $9.9 million and 9.4%, respectively, compared to an operating loss of $0.2 million and 0.2%, respectively, in the same period last year.
Liquidity
Cash, cash equivalents and investments totaled $98.8 million at March 31, 2010, compared to $97.2 million at Dec. 31, 2009 and $85.1 million at Sept. 30, 2009. At March 31, 2010, shareholders’ equity totaled $129.2 million as compared to $106.7 million at Sept. 30, 2009.
Cash flow provided by operations was $24.5 million for the six months ended March 31, 2010, compared with $14.1 million for the six months ended March 31, 2009. This increase is primarily attributable to the increase in net income and an increase in deferred revenue, partially offset by a decrease in accounts payable and accrued expenses.
Proprietary Loan Program
There is $30 million of credit currently authorized under the proprietary loan program. As of March 31, 2010, UTI committed to provide loans to students for approximately $21.1 million and of that amount there was approximately $19.6 million in loans outstanding. At March 31, 2009, there was approximately $7.5 million in loans outstanding. Since the inception of the program, we have not recognized revenue or interest in the amounts of approximately $14.2 million through March 31, 2010 and $3.7 million through March 31, 2009.
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Conference Call
Management of Universal Technical Institute will hold a conference call to discuss the fiscal 2010 second quarter results today at 1:30 p.m. Phoenix Time (4:30 p.m. Eastern Time). This call can be accessed by dialing 412-858-4600 or 800-860-2442. Investors are invited to listen to the call live athttp://uti.investorroom.com/. Please access the web site at least 15 minutes early to register, download and install any necessary audio software. A replay of the call will be available on the Investor Relations section of UTI’s Web site for 60 days or the replay can be accessed through May 14, 2010 by dialing 412-317-0088 or 877-344-7529 and entering pass code 439553#.
About Universal Technical Institute
Universal Technical Institute, Inc. is the leading provider of post-secondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. We offer undergraduate degree, diploma and certificate programs at 10 campuses across the United States, and manufacturer-specific training programs, both student paid at our campuses and manufacturer or dealer sponsored at dedicated training centers. Through our campus-based school system, we offer specialized post-secondary education programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NTI). We routinely post important information about us on our investor relations web site athttp://uti.investorroom.com/.
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Safe Harbor Statement
All statements contained herein, other than statements of historical fact, could be deemed “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management’s current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect our actual results include, among other things, changes to federal and state educational funding, possible failure or inability to obtain regulatory consents and certifications for new or expanding campuses, potential increased competition, changes in demand for the programs offered by UTI, increased investment in management and capital resources, the effectiveness of our recruiting, advertising and promotional efforts, changes to interest rates and unemployment, general economic conditions and other risks that are described from time to time in our public filings. Further information on these and other potential factors that could affect our financial results or condition may be found in our filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events, changes in expectations, any changes in events, conditions or circumstances, or otherwise.
Use of Non-GAAP Financial Information
This press release and the related conference call contain non-GAAP financial measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. Management uses, and chooses to disclose to investors, these non-GAAP financial measures because (i) such measures provide an additional analytical tool to clarify our results from operations and help to identify underlying trends in its results of operations; (ii) as to the non-GAAP earnings measures, such measures help compare our performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the management in its own evaluation of performance and are utilized in financial and operational decision-making processes, such as budgeting and forecasting. Exclusion of items in our non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring. Other companies, including other companies in the education industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure across companies.
(Tables Follow)
3
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended
Six Months Ended
March 31,
March 31,
2010
2009
2010
2009
(In thousands, except per share amounts)
Net Revenues
$
105,631
$
89,125
$
209,153
$
179,246
Operating expenses:
Educational services and facilities
51,593
48,898
100,520
96,640
Selling, general and administrative
44,154
40,430
83,693
79,220
Total operating expenses
95,747
89,328
184,213
175,860
Income (loss) from operations
9,884
(203
)
24,940
3,386
Other income (expense):
Interest income
74
59
122
138
Interest expense
—
(9
)
(4
)
(21
)
Other income
116
72
251
143
Total other income
190
122
369
260
Income (loss) before income taxes
10,074
(81
)
25,309
3,646
Income tax expense (benefit)
4,028
(1
)
9,983
1,422
Net income (loss)
$
6,046
$
(80
)
$
15,326
$
2,224
Earnings per share:
Net income per share – basic
$
0.25
$
0.00
$
0.64
$
0.09
Net income per share – diluted
$
0.25
$
0.00
$
0.63
$
0.09
Weighted average number of shares outstanding:
Basic
23,957
24,529
23,891
24,812
Diluted
24,497
24,529
24,401
25,154
4
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31,
September 30,
2010
2009
($’s in thousands)
Assets
Current assets:
Cash and cash equivalents
$
49,354
$
56,199
Investments, current portion
42,390
25,142
Receivables, net
12,485
14,892
Deferred tax assets
6,584
7,452
Prepaid expenses and other current assets
10,864
10,480
Total current assets
121,677
114,165
Investments, less current portion
7,053
3,806
Property and equipment, net
85,018
81,168
Goodwill
20,579
20,579
Other assets
3,528
3,633
Total assets
$
237,855
$
223,351
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
41,397
$
47,276
Deferred revenue
50,484
48,175
Accrued tool sets
4,789
4,276
Income tax payable
—
1,794
Other current liabilities
39
25
Total current liabilities
96,709
101,546
Deferred tax liabilities
871
3,086
Deferred rent liability
5,558
5,593
Other liabilities
5,491
6,428
Total liabilities
108,629
116,653
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.0001 par value, 100,000,000 shares authorized,
28,986,435 shares issued and 24,116,209
shares outstanding at March 31, 2010 and
28,641,006 shares issued and 23,770,780
shares outstanding at September 30, 2009
3
3
Preferred stock, $0.0001 par value, 10,000,000 shares authorized,
0 shares issued and outstanding
—
—
Paid-in capital
148,015
140,813
Treasury stock, at cost, 4,870,226 shares at March 31, 2010
and September 30, 2009
(76,506
)
(76,506
)
Retained earnings
57,714
42,388
Total shareholders’ equity
129,226
106,698
Total liabilities and shareholders’ equity
$
237,855
$
223,351
5
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
March 31,
2010
2009
(In thousands)
Cash flows from operating activities:
Net income
$
15,326
$
2,224
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
8,834
8,826
Bad debt expense
2,979
3,667
Stock-based compensation
3,341
2,697
Deferred income taxes
(319
)
(2,774
)
Loss on disposal of property and equipment
80
706
Changes in assets and liabilities:
Receivables
441
263
Prepaid expenses and other current assets
(411
)
(988
)
Other assets
79
45
Accounts payable and accrued expenses
(4,672
)
2,667
Deferred revenue
2,309
(3,308
)
Income tax payable (receivable)
(3,732
)
(191
)
Accrued tool sets and other current liabilities
527
157
Other liabilities
(282
)
94
Net cash provided by operating activities
24,500
14,085
Cash flows from investing activities:
Purchase of property and equipment
(14,567
)
(8,448
)
Proceeds from disposal of property and equipment
1
6
Purchase of investments
(25,755
)
—
Proceeds received upon maturity of investments
4,874
-
Net cash used in investing activities
(35,447
)
(8,442
)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee plans
3,314
(134
)
Payment of payroll taxes on stock-based compensation through shares withheld
(523
)
-
Excess tax benefit from stock-based compensation
1,311
1
Purchase of treasury stock
—
(16,935
)
Net cash provided by (used in) financing activities
4,102
(17,068
)
Net decrease in cash and cash equivalents
(6,845
)
(11,425
)
Cash and cash equivalents, beginning of period
56,199
80,878
Cash and cash equivalents, end of period
$
49,354
$
69,453
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
March 31,
September 30,
2010
2009
($’s in thousands)
Cash and cash equivalents
$
49,354
$
56,199
Investments, current portion
42,390
25,142
Investments, less current portion
7,053
3,806
Total cash, cash equivalents and investments
$
98,797
$
85,147
# # #
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