UTI - Earnings call transcript Q4 2018 | Universal Technical Institute, Inc.

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Operator

Good day, everyone, and welcome to the UTI Fourth Quarter and Full Year Fiscal 2018 Earnings Conference Call. [Operator Instructions] At this time, all participants are in listen-only mode, and after today's prepared remarks, we’ll open the lines for questions.

As a reminder, today's conference call is being recorded. A replay of the call will be available at www.uti.edu or through December 13, 2018, by dialing 412-317-0088 or 877-344-7529 and entering passcode 10125966. At this time, I'd like to turn the conference call over to Ms. of Public President Technical for Vice Institute. Kent, Communications Affairs and Universal Jody go Please, ahead.

Jody Kent

and joining Chief thanks With Hello, Financial you. Thank for are Scott Interim McWaters, Officer. and me us Kim President Officer; and Executive Yessner, Chief today afternoon. this

call vision on fiscal During the Then will for and the today, fourth financial our call update business questions. open XXXX future. year highlights, we'll for results quarter you the our full and your our we

that safe harbor in except by also Before you discussed this questions. historical to we the we well amended remind release to everyone during statement everything of forward-looking and defined begin, call news Securities today's as applies to answers refer as Securities XXXX call, by XXXX. contain UTIs management today's comments the Section The for may XXA of must including comments as information, initial of of Section conference Act Exchange for statements the Act I'll topic. release on that XXE

During free Management operating free non-GAAP measures cash over is income flow free from today's flow the depreciation Kim income capital net less It and internally. flow, EBITDA and now of taxes, call exclusive to cash and to EBITDA, to representing is are amortization, turn measures. cash which utilizes and performance we'll EBITDA pleasure activities expenditures. refer call, cash interest, as my McWaters.

Kimberly McWaters

for XXXX Good joining Thank a today. and year you us you, Jody. for afternoon, thank everyone, transformative was UTI.

into start expected the in in single past for That with growth the XX% digit the start to starts with QX full quarter. increased years, growth high for carried has mid accelerating year. New time first the be and eight in student range to momentum over XXXX

that loss expansion activities from invest to operating full program, our for welding result between year, planned free fiscal million, $XX million anticipated cash we will of XXXX be growth We Based to EBITDA $XX further flows beyond. $XX operating XXXX. to we positive the $X months, and with in exit onetime impressive and between and positioned past an on believe and start $X the for growth an will of for the range We million expect costs in believe, of will in we which million. million cash admissions and and support flow of continue marketing successes XX XXXX positive unadjusted the

opened more analysis real estate with of validated transformative The and strong XXXX, improved operations and coming growth the year identified from in from with Bloomfield, XXX% growth Motorcycle grew consulting graduates, perspective, growth The of our our firm, top-tier launched campus efficiency significant proposition welding student increasing our the of the programs evaluation The which saw success footprint and this I'm and that within cost accretive fiscal strategic for Bloomfield, our strategies. serve broad the new to with a in in area to starts expansion of our transformation and the the early investing year-over-year program Jersey support marking growth new majority the our we campus Avondale, demonstrating Turning student the the fourth XXXX, student highly and Jersey, site to was quarter, Arizona; with focus footprint, by compared as in during offerings campuses with quarter. initiatives, the newest of New student our in New transformation start start new X.X% discuss X.X% first drive today's back to campus achieving metro newest to increasing key second prior welding marketing, leveraging evidenced we successfully graduation in existing program opening campus in our From plan across pleased year, plan identified with Under our of concert starts the on better balance profitable a the full Early growth we in efforts in support drove student to comprehensive focus from business our we campuses growth. starts particularly start start the QX thesis, program with our with call, XX% of investments and implementation and service continuing new majority XXXX, drive the a will strategic fiscal student three new our the and transformation admissions successes process In rate. value campuses in and brand. rationalize for of starts. growth context the our growing the years. selective during strength new tactical eight for investments and the into demand organization differentiated students opportunities Avondale. within our sustained again, the growth students. based, implemented each

number a expertise During leveraging at rapidly that able void internal six tested value avoid the The realized planned we of and while transformation, consultants to and our we of - tactics the capability. accelerated first pace sooner results from had could evaluate additional months of which by costs consultant agreement. implement the and than building initiatives, invested were we specific consulting confirm terminating the could and our

of associated our representative to discuss the detail plan. three some transformation Now like workstreams I'd with additional

First, marketing workstream update. the

steady page and website tracked number and our through search. have media implemented generated our the our website we inquiries to shifted we direct new improvements from inquiry and our of mix, As website

search education Associates, in In firm & in fact, fastest a August, UTI education, consulting Gray on for leading strategy focused higher April space. growth that reported the the through brand had

and and the XX% increase grew conversion brand search paid the rate improved uti.edu quarter, year-over-year from XX%. our During fourth

UTIs students, sources. at our awareness rate rebuild who of very because X other go or to enrollments is the search the prospective inquiry Our direct uti.edu work times brand, brand important to to for convert specifically

XXXX. of highest During fiscal compared fiscal were during XX% sources the media XX% our XXXX, nearly brand from inquiries generated converting to

workstream full year. applications This the for student application in new the quarter X.X% years seeing for for the year-over-year admissions full Consolidated is X.X% year five year. year-on-year first we grew the growth an and are update. Second, that

XX.X% high High tools, quarter, student to roles applications year. is, school and new result field fourth part, During the school for year-over-year, implementing simplify and in messaging to increase programs clarify applications student increased accountability. our by full to the the initiatives up admissions new designed of which were X.X%

student applications adult the New quarter, the in fourth unemployment rate. pressure X.X% from decreased by low year-over-year continued reflecting

full year, grew for However, the applications adult X.X%.

services the for applications but grew lastly, for year-over-year full X.X% update support ended military year. an New X.X% the student down up workstream. our on And quarter

grew XXX tracking our made improvement a driven delivered our prior start that In and campus as we've fiscal QX student rate high XXX and school of the workstream largest, in 'XX. foundation segment, five In we fourth solid the support progress in significant through services XXXX to show new for quarter best-in-class our driving XX.X% representing basis improved through processes. through year, summary, show footprint. gain show to a rate fourth believe our student quarter in we've across compared continued point seen basis laid Our the we Overall, points start our growth a student student plan, the rate is strongest school engagement affordability improvement. in we High improvement by the outreach, XXX starts solutions, compared years. starts growth transformation

highly investing is initiative new strategic second campuses. accretive in Our

in is Jersey August, campus, third our campus. which New metro opened Bloomfield, Our

results strong with already is We plan. Bloomfield's are ahead initial very it of pleased operational as tracking

to operate live at campuses relocate in are know very have an and education metro to we metro cycle. The students Our at up to to economic pursuing that point students skills pursue campus to in one are We leave who likely home, more most of a are attractive able make they give transformative and job, while not changes when do the work training. new model home any is business their city. important can profitably to

two to metro by California will Long four. in results Texas accretive in the breakeven months will Bloomfield's flow XX campuses and similar and and expect Beach, cash be earnings year Dallas, We to other be first our

strategic metro underutilized in initiative offering the reduces campuses cost student and to expanded important legacy to of transforming existing Our space is and footprint it our or associated our effectively the new optimize business profitable starts. better growth and rationalize them drives an third plays This our campuses, rent part into space improvements key as capacity. at utilize and programs in

Cucamonga, We campus training metro and continue to the execute campus feet, with Rancho now XXXX auto, where a is the approximately diesel, manufacturer against one XXX,XXX square at this advanced downsizing strategy program. of in size and typical welding offers

to continue the and reduce of approximately we consolidate we'll In square feet. the campus, XX,XXX Houston addition, size

'XX. efforts $X.X expected $X by be estate rate We rightsized to to Total started real of December. expect between all in we savings the million starting fiscal from it million optimization year are last run range to

for undertaking in currently review the estate particular, short in expiration are term. the we coming leases addition, In careful real our up of holdings, another

with rationalization such programs, and our and mentioned, industry market is technical utilizing I training from students. As complement competencies also welding existing CNC core address new and that machining, demand programs space both about as

welding Avondale program experiencing to which particular, the at from program new beginning calendar expect our in a students demand offer early campus, And of Dallas, for January programs, in are We welding in strong our welding opened XXXX. XXXX. we

now third on through continued footprint, Looking like our new drive continue results. metro real turn rationalization the the to Jersey successful XXXX, expanding for transformation starts call footprint. campus New efficiencies ahead in in Scott? Scott implementing across upon our to of Bloomfield, a estate I'd the our and focus our of we over of will our to financial discussion student plan campus launch driving

Scott Yessner

grow new We've construct transform existing leveraged and year a admissions add to capital was marketing XXXX new programs campus metro a organic position multiple Fiscal Kim. cash value. investment operations, our long-term to our and and campuses costs. strategies in Thanks, strong of reduce to and

expensed a most income capitalized with XXXX portion these organic investments, lesser were our costs sheet. significant statement on with a the through of portion in As balance

the drive investments and which quarter start shortly. As impact successful These and demonstrating with operating of in new improving results, new flow XXXX New highly outlook I Bloomfield, results, cash investments started Kim the mentioned, programs. our launch the campus will fourth share student Jersey will these

fiscal outlook, our XXXX fourth quarter and our financial business XXXX metrics discussing results. I'll Before and review

in our quarter from coming student the opened compared campuses a which XXXX. press X.X% start balance total new X,XXX our to from August. More for starts newest the were starts of year with than the fourth up October increased for legacy to prior fourth growth student XX fiscal in XXXX release, the noted compared As in students. Bloomfield, in half our of Overall, the campus new X.X% came quarter

same the million quarter compared fourth last revenue to period to year the million prior year, for $XX.X of XXXX For period. the compared was fiscal $XX.X

for our negative to was million the loss year $XX.X student $XX.X revenue of million revenue expense. the average in per admissions New share $XX.X the student or year for million launches, million available the $X.XX quarter The year-to-date was expenses, million year-over-year or variance X.X% average to EBITDA up prior to share period. the resulted $X.X population, prior compared diluted and were increases the $X.X attributable increase was for versus Net million the compared million to revenue period. $X.XX operating the to year prior loss the operating variable in period. planned consulting to year. Netting loss quarter Total in with positive $X.X While year compared and X.X% quarter per from decline for loss million decrease diluted $XX.X services, a compensation expenses shareholders in primarily program a per compared prior for campus $X.X graduate-based Bloomfield, distribution the the of prior increase the for in for operating period. operating was a the Jersey advertising was common

population, share the operating and to prior a initiatives and in XX, year unadjusted offset prior $XX.X year from launch the million $XX.X This investment to campus result period. services, to per $X.X goodwill EBITDA the costs Bloomfield and a by the excuse million new X.X% student an compared was student. consultant and the XXXX, increase period. prior loss million X.X% For the or not cost $XXX.X the the decrease share million to variance prior the of for million loss $XXX.X million million - compared cost, of compared September $X.X to per common in of to million to compared compared resulting related of the fee. million year expenses the million. revenue to for expenses nonrecurring to revenue $X.XX of $XXX were was was Total we revenues operating average professional a program negative is expenses. transformation year in transformation Net compared in XXXX, prior and the shareholders year-over-year XXXX loss for million XXXX. in same period, buildout year campus advertising, a a $X.X available million revenue $XXX.X due to million, was for impairment ended operating optimization a period which EBITDA million diluted distribution $X.XX Bloomfield for the $XX.X an programs admissions from the $X.X period. in new planned accounting non-strategic the or was intangibles compensation in increased marketing and of period. was have was Of loss fee was cost for for XXXX campus the expense increase an $XXX.X adjusted The launches, related increases of increase and and business cost and onetime and program $XX.X services expect - $XXX.X Shareholder's the to year Operating increase, to to $XX.X consulting transformation the me, million, $X.X for consulting equity positive with in the offsetting

Our of loss. $XX.X approximately early resulted X, million adoption October as on in recognition XXXX, revenue the the standard new in offsetting a increase accounting operating non-cash equity of of

position, $XX.X XXXX. at including XXXX, million year at XX, XX, investments compared $XX.X at cash to strong end June Our remained September million

at admissions loan and do primarily bank or campus was not marketing expansions. time. transformation a not not year-end our in do of and did have - We deployed we and Bloomfield line this cash at the Our have and term investment credit outstanding through strategy program

year. programs like our to I'd the extract new Bloomfield our in our XXXX to launches investment student new outlook for reductions drive transformation share for carried XXXX. fiscal outlook to student cost new successful fiscal starts in The and and to Next, forward growth our in XXXX population, campus efforts of and

along operating UTI the Our strong improve investment to balance flow position, positioned have sheet cash with cash XXXX, and XXXX. in in and our results

single to fiscal XXXX, mid the grow and new expect low student to single average in in starts digit to for we grow guidance digits For high student population in the the XXXX.

reducing to compared are $XXX We average $XXX expected million between $XXX costs, marketing the increase expect broad million to population. million reflecting 'XX, campus The are campus million. driven between in range savings operating in XXXX and fiscal revenue $XXX investments million decrease management. footprint the savings expenses from expenses XXXX cost $XXX to in full XXXX, year in expected and and and expense range to in operating related student in Operating efficiencies

largely We expect welding of million. be an growth to of start is payment million to final to the transformation to $X million expected operating $XX of planned for announced loss the expansion company's in in the between EBITDA, $X unadjusted $XX is million and further XXXX. consultant range the and $XX positive result unadjusted, due million, support This investment October program.

cash be our near to free ending XXXX. expect balance with in of We cash XXXX, that year-end of positive flow

million XXXX $XX that, deployment growth strategy expenditures. between few operating a our financial for cash believe we Free position I'll and less range capital are from Capital and flow disciplined turn ratio. will exit positioned to beyond. it strong year back is in expected activities and to continue million. our regulatory With impressive thoughts. Our We high-ROI capital cash over supports in to Kim XXXX for final cash a $X expenditures ability the investment

Kimberly McWaters

skilled I'd marketing, support growth. new implemented tremendous initiatives for our industry meet would continued as providing other for the are today. working questions. for take to to more also time, of thank to us and I'd for admissions our and successfully created that for the call I'd and achieve support particular, opening partners reimbursement their everyone got New UTI in for we being congratulate student and make together and services And team employers like the in budget a a to foundation that and entire on ahead thank open efforts Bloomfield, all I XXXX, partners demand at support to UTI we the employers to Jersey together Operator? I plan. fiscal schooling forward work and In talent. to start to like where tuition Scott. you, to like Thank recruitment on and process to moment our like with now student team greater affordable viable success industry for look In their student XXXX. we

Operator

[Operator Instructions] your first Appert our go from Jaffray. And question from Peter today comes Please with Piper question. ahead

Peter Appert

Thank you. Good afternoon.

on start Kim. the that, is improvement Congratulations impressive. So

have noteworthy, changes if the but more You color I'm just think, gave key the on a it's how the - this detail and terms in can how dramatic in drivers, driven this improvement drives wondering have any what and lot of inflection of sustainability of been. offer confidence been improvement. there's you has that your driving I that And the

Kimberly McWaters

a - that's it's question. Well, great

number entire the I of of think, it initiatives is the across a front end funnel.

broader underperforming on uti.edu most on radio, our And being focused so measure brand little to correct television difficult the of a create out effort, our employment visibility really mix opportunity that willing community, of more in away as and of our and search. in and the investment interest reflected gave in and - by we being And ways I statistics and brand being more, is which moving awareness as to build from digital training our to I our getting is has top the billboards, sources. just mentioned, more our the was brand initially, driven type creating on some terms of And to with move on opportunities. about funnel, marketing the of focused awareness

we at previously. times for the a comes in student that those are rate every X better inquiries channel, of sources what than some converting So saw that digital through

admissions at improvement more only we converting higher not getting seeing higher rate. a we're also because so them are quality, And we're

So first, marketing our of on investment. there marketing optimization improvement and and focus the the

had was to the tool, the Second to and admissions our process and accountability, performance leadership, team, they it easier, a the to an both management and our standpoint focusing representatives that on simplify training, improve reward really job their improvement a the ensuring the standpoint. from make and

think, we help first I students - but coming their who reality. that So then raise a of again, admissions - school, they hands lot need day and about making have a to and marketing

was in the decision. measure period being been decisions things could us matters out to that I a those to and teams in our on many invested so dashboards show time. rate value company and the those basic the informed as of that were of certain different contact, based aid capability different and things And contact, build start our that making that possible financially team removed make able what some really would in everything I transformation of help of or so efforts proud the then in accomplish day, the we we barriers certain we data improving times that student a short business And and to admissions real reps. are - points our outreach It's collective on that a help of And that school. dashboards that able the focus and - relatively to think students make effort show would we reps we I'm of instructors, to that investment programs, as our our the as that And we've ask to But much as across as we came entire help add last, many as could. make their is been seeing.

Peter Appert

do, inquiry you improved media there of you a Kim, that. Thank terms of as great. that's flow? in Is shifting Yeah, mix think, more to for driver

Kimberly McWaters

dashboards event things of is our at fact will could in now, of we got television digital invest channels, have got optimized, feel sources what be or like But especially we've we to list like I and continue that necessarily, to we'll the marketing to those. priorities, Given optimization always expand. top our given like terms the And great we in invest. that new really feel but these I not optimize continue

on We're progress. about - I now we made great think just the see. data optimization it's we based now that So continued

Peter Appert

changes, markets? in from in Any perspective, your it. dynamics competitive Got Kim, the

Kimberly McWaters

of colleges past college and You a think in students know, we their or of competitive And what they're technical choosing I or student pressure I'd year, competing cost another a convenient. found superior colleges. did good school. that say UTI we this from effectively the that continued we to which bit quite the But we very research way very to also effective over we preferences because who community strong also community understanding of with examples understand markets community see and are, in great in a have and ways were are

that bottom the And rates. a how our and good that you'd a say, line in key employment you our was when So competition that is to understanding one what of effectively. to elements And education. perspective, transformation our was of and explain put for investment it graduation the rates compete helps good and I'd get really

right I our continues - be to we one we that number job is now that, say so see right real a competitor competitor to And And now. would market. that continue the but

we're what do tomorrow. getting - right their they they're the well but what make our job messaging as students entire want food life So is trying fast themselves a line is not to check And certain with now. good today for in if as that even need to again,

And we long-term continue of will technical to communicate the short training. and benefits both so

Peter Appert

that student - if know but you per quantitative a students there's you of don't reimbursement student offer measurable rather. getting student, in been of in not of measure of what has percent change I mentioned are the can mentioned per tuition students Has level these Kim, cost terms revenue programs? Right. programs. or - there percent or in or that Scott revenue a on maybe of impact the the terms enrollments terms or support Or per

Scott Yessner

sure, Scott. Absolutely, is Yes. this Peter,

or - we from stages quarter. something of support number And had the so XX% students in That where form that our student ability the the when best transformation serve in to challenge. of grant of was percentage a increased is the of found analyzing in the some XX% mentioned, the to Kim we're first students. We cases number get how as a day, to to receiving the of

And our resources for them. lever and teams organized create our so we to marketing and ourselves, sales financial that

spend felt - more support, but in the that did the for we we student that company the little over like and a the was the So for but quarter for million return worth $X to the well it. - return

Peter Appert

the UTI, support So XX% percentage getting refers not that from correct? the to students directly of industry Scott partners, from are tuition

Scott Yessner

That's correct.

Peter Appert

Okay. And what portion reimbursement of students are getting are - or point? by covered what this portion of tuition fees at

Kimberly McWaters

We sponsoring fees percentage reimbursement on of a that of don't it's subsequent the just that who are something are by graduation. the tuition employers is because have are really to We it. percentage covered reporting

Peter Appert

it. Got

Kimberly McWaters

So that between it's and the more because of little the in the terms quantify employer. student to one difficult is a amount

Peter Appert

that, Sure, of you Kim, of a as it. got But you've specific see seen do some driver the improvement recently?

Kimberly McWaters

to and and the education well a engaged in might believe they do much because side, we've that like help get talk our to industry expose and training if is them they would about and and on families get that able they look willing to trying - pay their that, them school what what they're career do they're to graduate. key offers a paid so that in teachers students field especially our driver, I to what

work And student. the industry in school and And high pleased with so to and parent team market message a for powerful out the field as I'm and the our success think hear very as really well for days. a I they'd with had a teacher that's

Peter Appert

one And then item. just last

in positive With potential to the terms new inflection flow, back what's the of openings? thought further cash process campus

Kimberly McWaters

have we The openings. new - year, next any don't

we that. to I good continue to investment, at XXXX, beyond. XXXX in we'll going that returns, markets able high about there very and and obviously, we've through number be to And Bloomfield expect, opportunities from we'll of life as those are talk already We the continue look and identified. on bring would are to But work

Scott Yessner

advantage Peter, be opportunities. the this take is company to emphasize And that to positioned we also just Scott. high-ROI have of these able Sure. I'd

starts and masteration And along so sales sheet models [ph] can the capability, our cash of we and marketing campus we our very with the like student balance be the with metro feel delivery and of the and opportunistic. our

And months. so evaluated will that's Kim be, next something the said, to XX like XX over that

Peter Appert

right. All Great.

folks. Okay, it. thank you, Appreciate

Kimberly McWaters

you. Thank

Operator

remarks. gentlemen, back for closing and questions. time, I'd at ladies And over this management like the to call turn showing I'm additional to no conference any

Kimberly McWaters

to like we results for a few to thank it. everyone the a here. get reporting forward us we you have we'll And look day. first to for great in date thank in our your Universal joining closer And today. months Institute. Technical as interest I'd And Again, quarter announce

Operator

that conference does for Ladies and today's presentation. gentlemen, do conclude We call. thank you today's joining

You disconnect may your now lines.

Universal Technical Institute (UTI) 29 Nov 182018 Q4 Earnings call transcript