Exhibit 99.1
UNIVERSAL TECHNICAL INSTITUTE, INC. REPORTS 17% NET REVENUE GROWTH AND
12% OPERATING INCOME IMPROVEMENT FOR THE FIRST QUARTER OF FISCAL 2006,
EXCLUDING EQUITY BASED COMPENSATION EXPENSE
PHOENIX, February 8, 2006 - Universal Technical Institute, Inc. (NYSE: UTI), a
provider of technical education training, today announced financial results for
the first quarter of fiscal 2006, ended December 31, 2005.
FISCAL 2006 FIRST QUARTER OPERATING PERFORMANCE
Net revenues for the first quarter of fiscal 2006 were $85.5 million, a 16.6%
increase from $73.3 million for the same quarter last year. The significant
growth drivers during the first fiscal quarter were higher average student
enrollment and tuition increases.
Income from operations for the first quarter of fiscal 2006 was $17.3 million
excluding equity based compensation expense of $1.0 million as compared to $15.5
million for the first quarter of fiscal 2005, which did not include equity based
compensations expense. The year over year increase relates primarily to growth
in overall revenue and efficiencies in selling, general and administrative
expenses, excluding stock based compensation expense. The increase in income
from operations was partially offset by expansion costs during the quarter at
the company's new Norwood, MA campus and Sacramento, CA campus.
Income from operations for the first quarter of fiscal 2006 was $16.3 million
compared to $15.5 million for the first quarter of fiscal 2005. Fiscal 2006
includes equity based compensation expense of $1.0 million.
Operating margin for the first quarter of fiscal 2006, excluding equity based
compensation expense was 20.2%, compared to 21.1% for the same period last year.
Operating losses associated with the expansion of Norwood, MA and Sacramento, CA
were $2.3 million during the first quarter of fiscal 2006. Operating losses
associated with the expansion of Exton, PA, Norwood, MA and Sacramento, CA were
$1.1 million during the first quarter of fiscal 2005.
Operating margin for the first quarter of fiscal 2006 including equity based
compensation expense was 19.0%, as compared to 21.1% for the same period last
year. Fiscal 2006 includes equity based compensation expense of approximately
$1.0 million.
Net income for the first quarter of fiscal 2006 was $10.9 million, excluding
equity based compensation expense, or $0.38 per diluted share, a 10.8% increase
from net income of $9.8 million, or $0.35 per diluted share, for the same
quarter in fiscal 2005.
Net income for the first quarter of fiscal 2006, including equity based
compensation expense was $10.3 million, or $0.36 per diluted share as compared
to net income of $9.8 million, or $0.35 per diluted share, for the same quarter
in fiscal 2005.
"We are pleased to report another quarter of steady growth and expansion as we
begin fiscal 2006," said Kimberly McWaters, President and Chief Executive
Officer of Universal Technical Institute, Inc. "This year began with the opening
of our Sacramento, CA campus and the expansion of our Diesel program to Exton,
PA. We also continued to grow our Norwood, MA student population reaching
approximately 500 students in school after seven months of operation. As UTI
continues to grow we remain focused on process improvement that creates
efficiencies throughout our company. We are continuing to build a foundation
focused on creating and sustaining operational excellence."
BALANCE SHEET
At December 31, 2005, the company had $79.8 million in cash and cash equivalents
compared with $52.0 million at the end of fiscal 2005.
At December 31, 2005, the company had shareholders' equity of $107.3 million,
compared with shareholders' equity of $95.7 million at the end of fiscal 2005.
Cash flow provided by operations was $15.7 million for the quarter ended
December 31, 2005 compared with $21.5 million for the first quarter of fiscal
2005. Cash flow provided by operations in the period ended December 31, 2004
included a non-recurring change of $10.4 million related to the release of
restricted cash that collateralized a letter of credit with the Department of
Education.
STUDENT ENROLLMENT DATA
Average undergraduate enrollment for the three months ended December 31, 2005
was 17,427 students, an increase of 12.3% from 15,525 students for the same
period a year ago.
Undergraduate enrollment at the end of the first quarter of fiscal 2006 was
16,533 students, compared with 14,809 students at the end of the first quarter
of fiscal 2005.
BUSINESS OUTLOOK
The following statements are based on Universal Technical Institute, Inc.'s
current expectations. These statements are forward-looking, and actual results
may differ materially as a result of factors more specifically referenced below.
The company undertakes no obligation to update these expectations.
FISCAL YEAR ENDING SEPTEMBER 30, 2006
The company is targeting a 19% to 21% increase in net revenue for the year
ending September 30, 2006 as compared to the prior year. The company is
targeting net income margins, excluding the estimated impact of equity based
compensation, for fiscal 2006 ranging from 11.5% to 12.0%. The company is
targeting net income margins, including the impact of equity based compensation
for fiscal 2006, ranging from 10.5% to 11.0%. The ranges include the anticipated
impact of the recent gulf coast hurricanes. The above guidance is unchanged from
the fiscal 2005 fourth quarter and year end call held on December 12, 2005.
In addition, the company adopted Statement of Financial Accounting Standards No.
123(R) effective October 1, 2005. SFAS No. 123(R) requires the company to
recognize equity based compensation expense for all stock option and other
equity-based awards. Prior to its adoption of SFAS No. 123(R), the company
accounted for stock-based awards to employees in accordance with Accounting
Principles Board Opinion No. 25.
As a result of the company's adoption of SFAS No. 123(R), the company's press
release includes certain financial measures that may be deemed "non-GAAP
financial measures" under rules of the Securities and Exchange Commission. These
non-GAAP financial measures are provided to enhance the reader's overall
understanding and provide greater comparability of the company's interim and
annual financial performance for fiscal 2006. This information should be
considered in conjunction with the company's financial results prepared in
accordance with GAAP.
FISCAL YEAR ENDING SEPTEMBER 30, 2007
Looking further ahead, the company expects to sustain revenue growth in the 20%
range. The company anticipates this growth will come from three primary sources:
o Enrollment percentage growth in the mid to high teens per year;
o Program extension and new elective growth; and
o Tuition increases of approximately 3% to 5% per year.
In years where the company is adding 2,000 or fewer additional seats it is
expected that net income margins will improve slightly. During periods of more
aggressive growth, net income margin improvement may slow or there could be
slight margin compression for short time-frames. The timing of expansion related
expenses in most cases will be incurred prior to generating revenue.
CONFERENCE CALL
Management of Universal Technical Institute, Inc. will hold a conference call to
discuss its fiscal 2006 first quarter results today at 3:00 p.m. Mountain time
(5:00 p.m. Eastern). Investors are invited to listen to the call live at
www.uticorp.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 website and
will be archived for 90 days.
ABOUT UNIVERSAL TECHNICAL INSTITUTE
Universal Technical Institute, Inc. is a provider of technical education
training for students seeking careers as professional automotive, diesel,
collision repair, motorcycle and marine technicians. The company offers
undergraduate degree, diploma and certificate programs at ten campuses across
the United States, and manufacturer-sponsored advanced programs at 20 dedicated
training centers. Through its campus-based school system, Universal Technical
Institute, Inc. offers specialized technical 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).
Statements in this press release concerning the future business, operating
results and financial condition of the company are "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 the company's actual results include changes to
federal and state educational funding, construction delays for new or expanding
campuses, 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 the company, increased investment
in management and capital resources, and the effectiveness of the company's
recruiting, advertising and promotional efforts. Further information on these
and other potential factors that could affect the company's financial results or
condition may be found in the company's filings with the Securities and Exchange
Commission, all of which are incorporated herein by reference. The company
undertakes no obligation to publicly update any forward-looking statements
whether as a result of new information, future events or otherwise.
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
THREE MONTHS ENDED
DECEMBER 31,
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2005 2004
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Net Revenues $ 85,512 $ 73,336
Operating expenses:
Educational services and facilities 40,102 33,353
Selling, general and administrative 29,159 24,507
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Total operating expenses 69,261 57,860
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Income from operations 16,251 15,476
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Other (income) expense:
Interest income (762) (258)
Interest expense 16 41
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Total other expense (746) (217)
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Income from continuing operations and before income taxes 16,997 15,693
Income tax expense 6,732 5,865
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Net income available to common shareholders $ 10,265 $ 9,828
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Earnings per share:
Net income per share - basic $ 0.37 $ 0.35
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Net income per share - diluted $ 0.36 $ 0.35
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Weighted average number of common shares outstanding:
Basic 27,984 27,797
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Diluted 28,468 28,479
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OTHER DATA:
Depreciation and amortization $ 3,239 $ 2,201
Number of campuses 10 8
Average undergraduate enrollment 17,427 15,525
FOR THE PERIOD ENDED
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DECEMBER 31, SEPTEMBER 30,
2005 2005
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BALANCE SHEET DATA:
Cash and cash equivalents $ 79,816 $ 52,045
Current assets $ 113,157 $ 103,698
Working capital $ 19,495 $ 13,817
Total assets $ 215,734 $ 200,608
Total long-term debt $ - $ -
Total debt $ 4 $ 6
Total shareholders' equity $ 107,339 $ 95,733