UTI - Earnings call transcript Q2 2020 | Universal Technical Institute, Inc.

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Operator

Good day and welcome to the UTI Fiscal Second Quarter 2020 Earnings Call. [Operator Instructions] And after their each prepared remarks, we'll open the line for question. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Jody Kent, Vice President of Communications and Public Affairs for Universal Technical Institute. ahead. go Please

Jody Kent

for CEO, thanks With today me Hello Grant joining and our Jerome CFO, are and us. Troy Anderson.

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

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

income or we'll adjusted expenses. affect items operations, are not operating non-GAAP that call, refer loss, year-to-year and cash adjusted cash or operating considered income loss underlying trends income operating are normal and adjusted to loss flow, recurring or free today's is from measures. which performance and from EBITDA for During adjusted Adjusted

adjusted income performance will loss, on part is amortization EBITDA items company's provided as adjusted call. normal the and income Adjusted and those considered and recurring cash of operations. less recurring considered uses expense, before cash figures company's or is expenditures, Adjusted be as items Management adjusted for by not discussed in the internally part normal and capital operating not adjusted adjusted today's as of measures for operations. the flow EBITDA used free taxes, income free or interest income, cash activities interest flow net depreciation, loss net operating

campus. we operating fiscal the Massachusetts fiscal through such student starts, Norwood, excluding will third quarter as XXXX and Starting and applications with report our metrics of XXXX,

it previously, XXXX, fiscal the is quarter stopped believe fully accepting fiscal so As end of year the and shared we XXXX its exclude student before applications impact. of in we have new appropriate will to Norwood second close

now call It to turn Grant. is the pleasure my to Jerome

Jerome Grant

everyone thank all afternoon, you, today. and you joining Good us for Thank Jody.

to want like first continue professionals for responders with thoughts thank quality are front I'd effort their technical known also most our which highest the we're I medical First, our tireless crisis. working team to provide affected acknowledge on pandemic; lines. by to that during this the including and those the for to

last and in to your to the appreciate notable a like have the number I'd you who Finally, investors UTI call our of working welcome investment with update. future. forward look sincerely interest to joined us and new in We since

of technical of UTI new As for welding and and know marine those technicians leading many you for you training provider nation's programs. CNC control, numerical computer call, the machining also repair, collision of motorcycle technology and diesel, are to and we automotive who offer is the

network XX forward. COVID-XX complemented going and our offer nationwide us a online training, the we and new UTI in during of to campuses, where by its allows quality have education hands-on training offer serve students We state-of-the-industry will pandemic labs, which

a solid times by and landscapes Our and sheet UTI flexibility. seen our history, supported financial is In balance student to has ability and adapt its demand increased XX-year executive economic regulatory newly proven team excellent that management charge and to leading assembled hardship. in changing is financial has of

preparing positioning and how to more first, crisis, quarter discuss for on near-term the the the future. like I'd review later, COVID-XX we're approaching but for the company the add I'll recent that and

quarter, continued momentum. the results were we In and positive demonstrated second

X.X% improved Total Norwood we're X.X% excluding year-over-year, to year-over-year up revenues points. of our XXX Troy our winding included which an and million. the will $XX.X adjusted million, Contracts student a X.X% more down EBITDA our later starts increased results was $XX.X were, of $XX.X campus, income, million quarter financial the was and details operations. little $X.X income Net rate for New million. call. benefit get in where grew tax show basis into

Roger quarter. Indeed, began marketing strategy, admission also it Brochick, transitioned Strategic welcome XX-years than as new insightful departments, of George to guidance resource bolstered executive President and And busy the at new changed Executive Penske leaders was up we IT he Group, board after and directors. board heading more and officers. to a the our and legal search off functions and counsel. with pleased We our leadership for Vice We're commercial Automotive Development our well, of our wish Penske human corporate team

move program impact December will secondary weeks business last can two our began We and to also were expanding marketing Like B. equity to that forward of implementing in led to for students us we see raised optimizing pivot many offering new million with February, In as in and successfully quickly help long-term. pandemic pandemic offering feel in and new to challenges, we primary face productivity the who Even initiatives; of of the serve and we the growth admissions the the our campuses, COVID-XX in response, innovations that maximizing of the in by our continue our a changes and Riley improvement including campuses. FBR, the the able brought many through business welding $XX.X and many investors. our led the model and March. businesses, pandemic

unprecedented home implemented model education of this all safety online. to CDC-guided quickly situation, our strict, and at to office response in-person precautions and In campuses transitioned our we our

we protocols was first implemented and CDC. the identified, operational As the threat immediately by recommended remained

local we XX online. students to to March in-person As and our on all up operational mandate first our at issue of to platform running. wave governors than two online within we campuses XX transitioned we and were classroom transitioned and and and businesses, week, following learning all and orders and The schools classes weeks, fully the less began officials closings suspended of

with many the team weeks. online the currently X,XXX of Today, education who progressing months proud directly many, over enrolled, normally over dedicated online efforts, into schools we more including platform, We're would execute. through type platform than their to many their and over XXX students, of the have have transition this extraordinary the several as students past XX,XXX started curriculum take

Our online students. lectures them new continue transition virtual consists and support virtual the The for give the curriculum one-on-one reviews has and opportunities engage we office curriculum through hours. online demonstrations instructor-led successful and opens to and and students our classroom of and been company to

more on However, do the crisis uncertainty students COVID-XX we and disruption of means created by leave absence. have

those that education to master their continues. meet while are training, online need now to resuming so by to We hands-on important are in-person beginning practice students' and skills success,

guidelines -- we are students local our directives, have staff and for To align protect class and we and and social the our state and and schedules modifying sizes distancing. with CDC safety

format not As Ft. California labs the week Florida's of and are Avondale, of and Arizona, Houston Long in Beach, this our operating campuses Dallas, Mooresville, XXth today, modified Arizona, resume and May North Carolina far Phoenix, Worth campuses face-to-face and should behind.

are to this we transportation future. revised durable and you of is now jobs to we field. feeling virus our our where marketing opportunities Broadly, the come the feel in the and also for potential you We've economic focus message technicians students impact in we're message because you, on want the to UTI the for to here skilled the for is,

from the generation our consumption broadcast focus and our cut year our sports in March time target live $X now, target right social paying prior were half off, through environment, million audiences than activity. broadcast internal where down. our on by which have order It's evidenced our and pre-COVID we to are is demographic spending among this better In intensified media TV, Inquiries of media. to is no inquiry budget with lead Now, their first our our expectations. beat the optimize

expectations. did The see full similar accelerating seen first the to month through since first of year our then. and solidly we in a mid-March April, above of in April While we've improvement the half significant dip prior March, an week performed internal

been also and have exclusively which face-to-face shifted and online students model, through our We other meetings, and has tours connecting events. with now their admissions virtual parents are almost

virtual telephone averaged April, a our day. in admission to example, in For interview, reps addition XX interviews

talk impressed we people, and teaching in us meet whom come the who reps want the education number to facilities. by of have Our increase offer many noticed have admissions our with away with an -- of technical and the virtually,

visit chance campuses you If tour where I and for see our of one investor to you a had our invite go website, in haven't yourself. person yet, to to you virtual a can take

education for it were economic begins our period emerging by recovery. our of students bodes we're to the While been at means process our can a to easy country this crisis they school last especially in and our proud quarter, are transition, as has into crisis to start. from are Today, and work ways above the moves point. no This where the now, well who greatly from it, students people, of new majority introduce of to student keep the finding innovative year fourth through benefit enrollments and where the

we're fewer school educational with required This of active them employees. and as furlough as Employees our able to our on to all transitioning very students some decisions, modifying the of we've student But forward expense including the campuses continues and benefits to soon currently our of population reduce look reopen model, cost. recover. and and our XXX actions overall back furlough of decisive some online to we in bringing taken to continue difficult full receive approximately

and we're believe which UTI keenly bring to unique, and student the but retention, students. new focused recovers transition to held students and students offer preservation. serve it innovation, online delivering of ways both COVID-XX, and education, from and to continue will sum industry-aligned now, So, partners world There find strength value our in and be to our us to and our to deeply course commitment allowed our continuing grow up, cash effective to in on challenges our for as will right an industry safe model we

insight the for call like Troy financials to return to over deeper and after I'll turn metrics, which now our and some I'd post-COVID-XX. to of provide student discussion thoughts a

Troy Anderson

Thank you, Jerome.

that that release. investor standard a prepared website, comments to Before details, our into is note our provides details presentation, additional our I supplement the along with we've that to posted I'll created press in jump financial investor

expectations noted, Jerome COVID-XX and the impacted, pre-COVID performed mid-March the pandemic, for fiscal from in the we XXXX by well which $X second results, our quarter our of As approximately starting million for revenue solid to lowered quarter. they our million but majority $X.X were posted

the steps a of categories the $X.X is revenue supplies, profitability employee such enterprise impact differential, approximately LOAs, the so travel, for profitability student services to taking impact like the leaves to that the was We by and variable as reduced in million. contract the discretionary revenue absence, on partially spend $X.XX furloughs due costs, across The quarter and offset we have and or discussed. primarily mitigate campus impact to temporary timing million

their continue recover optimization the stringently on me opportunities We're and fully we managing to cover remarks, more prepared return half cash my also a education, working our first, As expect in our terms student results. second LOA I'll detail quarter number and cover in of students this profit. on payment associated but metrics and later with revenue to let first fronts. financial vendors,

For show X.X% in by year-to-date. quarter of quarter year-to-date points half. is X.X% and start year-over-year. higher second half student the starts first basis and and XXX enrollments, by and X.X% improvement student the three same-store were and metrics, the the starts all year-over-year QX This X,XXX of We growth the and In in first which saw X.X% across driven quarter higher is the increased all in new XXXX, were growth quarter. by channels in in in were rate

positive continue engagement student yield to from results our grant and very strategies. marketing, We

to to impact I'll in per student, student to by turn average Revenue partially a LOAs financial driven results. XXXX X.X% student now second due on higher population, first million a the $X.X offset I caused and in quarter previously. million the by our quarter decrease increased the mentioned few to revenue highlights that $XX.X million, half the $X

half last half half quarter Average half down XXXX. ended XXXX when first slightly the the were first positive quarter students First the X.X% program. from second complete of to students increased are has student. approximately students of X,XXX at approximately the who the since labs and higher of XXXX, need with time the up per LOA, other to X,XXX to the currently to This is XXX active versus year-over-year for remaining to X.X% only hands-on revenue active XXX compared another fiscal primarily of million their approximately versus $XXX the There approximately LOA students, on graduate year, for X,XXX on revenue students. first due We same with year.

expect we and that elect their feedback overall and based gathered as to over return coming our on we months, to-date, dates the While stabilized. majority significant will we cannot these further a certain, resume hands-on campuses their situation COVID-XX be students we scheduled education upon labs resume would have the of

$XX.X the straight quarter a million, revenue decrease prior-year points costs a benefit revenue quarter. was primarily The our plan savings. end costs basis to related as expenses expense the Operating as related revenue. reduced were X.X% lower decreased benefits, XX growing year-over-year quarter Headcount fifth for while decrease to by Compensation in XXX down percent XXst, compensation a March and is of quarter in the declines, of XX% of and due year-over-year. year-over-year as headcount of X,XXX the of of result to and of and versus

higher standard the look occupancy you costs, due in with this at P&L build-to-suit Also continue line offset to leases. depreciation year, costs the the treatment for lower by lease note, of see of items, year-over-year fiscal you to impact the implementation change when

XXXX million half year over $XXX.X of expenses down X.X% are First year.

increased beginning of We're COVID, the incurred as month. offset of duration continuing as throughout campus expenses the available also COVID opportunities Specific rate crisis, all operations the details in so the cost costs online our support quantifying and the to with March run and through disrupted two we to in well afforded understand March, we we supplies weeks appropriate can cost to from related transition learning impacts, CARES ensure and last the impacts related cleaning Act. have better and

introduction the online the enables curriculum costs about our think efficiency significant on campuses, opportunities. we structure our our of and employee-related As cost

Our learning is higher. typically online is typical ratio a student-to-on-campus ratio while instructor XX:X, much

the be on X:X. ratio we to As labs hands-on as we student-to-instructor near will resume the in begin our campuses some will term, have inefficiencies,

over maintain However, current integrate classroom efficiencies our look online will permanently with with other we'll we time, through this component a remote more and along we blended to learning model, develop for operation. the

loss EPS million QX shares for income transferred million $X.XX. of outstanding reflects of translating had the of to million, We Net $XX.X the stock for income net QX was $XX.X XX.X the treasury income and X.X shares a end benefit basic Act. and our which quarter, from prior-year net as operating equity diluted carry from the resulting tax basic $XX.X million the improved quarter back included within February CARES offering. million from revisions

refunds timeframe, we the expect the the Assuming refund request a in able by of the year. to is process IRS receive to fiscal would reasonable cash the end

flow million, half half and $XX.X working first cash timing. our management, up profitability year also the net $XX.X million XXXX income year million tax First increased is and $XX.X in improved well of the capital over income as year-over-year $X.X includes of benefit. as Operating XXXX million for cash reflects

the and moment adjusted consultant campus with Norwood reflect a our our closure As with associated in while our campus associated I reminder FY transformation costs termination 'XX, reflect costs with transition, that spend a our 'XX they the on and quick Norwood for the agreement CEO with adjustments of FY results, closure.

$XX.X $X a was the $XXX,XXX, for million QX, of year-over-year $X.X in improvement. was million half to year-over-year $XX.X half, standard for QX increase Both the fiscal year-over-year $XX and and per implementation million impact, half quarter million year-over-year results leasing due first year. improvement. include negative an $X.X a income and the for XXXX, increase Adjusted Adjusted first year-over-year million million this $X.X million the the EBITDA operating million quarter a first $X.X the

the first $X.X cash rightsizing slightly half the million of Adjusted balance February up first million reflects year. Capex XXXX to we was of sheet spending. significantly was and free and of XXXX, diversification expansion million Through spend in prior for our enable versus half the flow for increased prior growth, $X.X scale. $X.X steps investments, strategy associated equity our year the versus long-term Exton, our Pennsylvania with other program the strengthened further and raise, facility our welding and

Our consist held-to-maturity benefits. and of securities. of was cash XXst $XX.X short-term as equivalent million which These securities March available high-quality bonds cash $XXX.X provide incremental includes liquidity million and of unrestricted Treasury us corporate million, $XX.X and yield of and

opportunities and In are addition from of working cost management Act. preservation, to the CARES I've potential there further cash the actions operational capital resulting mentioned, and efficiencies applicability

we As the through COVID-XX. by for and crisis, of the a impacted used funds The Education's in costs least these during $XX Relief funds portion we arisen to announced a needed Fund. to as operations that of million Emergency grant the Higher grant to XX% this curriculum investments infrastructure company emergency intends guidelines, education use at financial will to Education approximately to receive time. previously, have expect result of Act also Per the funds CARES of and be aid students to our Department needs these students' COVID-XX support offset

We offset. better can what clarity retention additional leverage guidelines expecting to will Department and on Education costs also investments from of for credit. that used be to funds are may the There opportunities employee give be grant these us us the

by We guidelines are updated late potential IRS currently week last reviewing applicability. for the the released

not with From to perspective, payroll approximately $X million electing tax our defer of to for the benefit payments XXXX programs, not our Protection out completely April cash are beneficial due starting deem other through rule calendar for are it size the doing quarterly a are we so cash eligible expect but of $X.X Note, end million. and XXXX to do currently Program, if we or loan applying not necessary. we any Payroll a and

in-person schedule, our campus for at the to of of instruction running prior estate to campus. were real Norwood closure, briefly the efforts, footprint we optimization the Turning suspension ahead

students' those are before this campus still year, fully delays and end hands-on the to the of We fiscal the dependent timing graduation the resuming of date. upon campus pushing to closed potential have labs

on track by and completion Our June headquarters downsizing XXth. for relocation remains

million action will this $X.X approximately annually. previously, noted As save

and longer-term for are incorporate will efficiency something number we discussions. learning and is on landlords actively us opportunities into We these The the across new future introduction our engaged of may blended consolidation opportunities a discussions. with the of have campuses rightsizing afford environment also and in these

details to expect these more We actions on in coming have quarters. the

announced XXnd, fiscal XXXX. update withdrawn we As for our April on we have business our guidance in

post-COVID-XX Act online the of closely of labs from then noted returning we can resuming multiple business. I've cost key associated engagement that today, in campuses; of and we QX and As to The demand. hands-on touched and continued are COVID-XX on curriculum; students timing impact opportunities CARES are our the variables five at LOAs; there potential related students timing variables recovery our with tracking, student

from Assuming of our are open LOAs, end by of of student current a for full-year we quarter that fiscal the would portion estimate be fiscal significant revenue the estimate flat negative realized third COVID-XX return all 'XX. primarily FY roughly this the material quarter. scenario, labs in of campuses new In to the hands-on without we the and LOAs impact be overall type third could

or However, we QX our to if financial see these a are overall in and QX we expectations deterioration result fiscal COVID-XX, of into the any see case, an as greater the extending negative of then year. current not likely impact start impacts will

Under also, million students, IV range we burn they the existing given fully the to have under lowest-revenue $XX we business impact third funds of scenario, the estimate heightened in quarter, we million year. QX. could measurable hands-on current Regarding we look recover delay in $XX cash fiscal as will cash QX Title seasonality cash could in this same our and quarter, is COVID QX to in and due that their will be for receipt the our normally the of between This us quarter until cash, in in the it scenario, and labs. a consume quarter that expect QX net expected be The user. we the the complete would

look fourth we we cash understand total our see and the can will factors generate while more quarter, complete However, cash view along before starts, of how liquidity most flow full-year need from to with a out, the a QX we how of perspective. year these normally will in play

not flow We cash will minimize these scenarios Note, guidance. any profitability revised be considered should estimates to and to continue only and working around are impacts under potential scenario.

within by have campuses last a our which marketing that leading started points in fact We the a at into As COVID-XX, student are gap online were months is given to able up the of our pacing admissions resuming the over start few momentum the caused students several regained out ahead percentage XXX are make by and FY indicators, 'XX year activity. we goal of of encouraged we for we to of original our very and we've not few the We new enrollments. are still hands-on and directly with April. curriculum question, labs

attract We to circumstances. given will also macroeconomic looking a broader students, be of audience potential the

students student financial all employees. the as of and working ensuring other the emerge UTI's across diligently be and the to minimize safety discussed maintained that agenda are Success the cash as and the dimensions retention long-term disruption. side COVID-XX We I've ensure will of possible while and preservation possibly stronger growth impacts, health on our near-term even on can could company

for closing, overcoming want in over past the challenge months, all of put two UTI our amazing efforts I employees them. commend Before of every to front their

a fortunate to advantages. have talented is one are of dedicated key and our competitive which workforce, We such

turn I'll Jerome. the that, call over back to With

Jerome Grant

Thank you, Troy.

proposition our train team like the times we facing be support fewer technicians UTI remain ability this confident today, weak and value the what drives education we and time, we entry-level to and of this uncertain interest competing provides. in skills continue jobs attract As wages, that will that in needs. the our In student to available which through are offer students trade there technical economy, industry

has student the to the need serve and leverage and campuses, where incremental profitably, to XX% fixed-cost the the structure, our this margin. rapidly grow each have and financial in We thanks to XX% infrastructure resources additional

blended capacity. have We the have to business we flexible and and and further gained new drive by seeing potential timelines dynamic admissions recently, marketing done speed model a and using, to we've which anticipate and are increase more could work the accelerate benefits Thanks upside. approaches learning that we

example, Dallas per format for efficient terms is blended help students of in reach them real The starts. the and for past. the capacity, classroom offering program students, and in us for length, the format, particular in help used learning to number staggered new more could currently in-person is have not of whom can the and instruction. forward, did teacher work as instruction Online help footprint at us It space moving increase help Bloomfield a reevaluate in will allow our would lab significant also estate new

We ahead, longer-term deliberately opportunities. on and inorganic being are moving while identifying cautious organic growth

Now, in on the length, with none an updates long. lead these very opportunities be turnaround immediate as appropriate vary times We on and to some can providing that forward look those.

over turn for operator like now to Q&A. I'd the the call to Operator?

[Operator Instructions] ahead. First comes Please Martinuzzi from question Eric Lake Street. of go

Eric Martinuzzi

to at -- level you've mentioned it's a the Appreciate different ratios, want provided and the about to student operational what before. the at the little of back the you campuses, doing see I bit get the used detail detail make, get specific than what you changes Houston campuses more and way to teaching? do in teacher-student in-person to but you're about and Dallas least back had understood I you a Thanks. two actually to something it there couple open. in have those start good of that's

Jerome Grant

much. question. It's All Jerome Great right, thank here. very you

concepts a the around it that's associate the other in-classroom of hands all, curriculum working me diesel on, either very transmissions, etc, is of talking class, context our about in at engines, about of where lab, the instruction, important. First and front this, doing some on XX% is a demonstration so the let is the work hands-on put auto or teacher XX%

online labs. leaving first opportunity important XX% to it's so, was was And understand that into open what the get the we the back that to classroom, the took in

first And ones to next the instruction. campuses opening, I'm need Dallas opening that of lab our all and so, all talking will the hands-on about be Houston week, then will and be serve of

that a room in the is Our We've together, etc. at of engine, X:X than more is project with under teacher have Generally lab working a stay a students modified CDC XX three instruction teacher-to-student normal in ratio. having guidelines speaking, people a an of what you'll ratio a X:XX. on to a not to lab

the class. you'll the one in So, student each of have instructor engines the at and

that, to in able In order to about running a at together labs able to in be able certain do we're lab. get midnight to -- until clock and create to the starting X'o we're bring to the the be more morning we're to throughput run to through capacity people our

And do the come seven in will the that and concepts when three than along were then that the labs students take expect online all lab. catch curriculum, weeks on so, finished, and they'll online you're we for up move longer weeks your normal with the last their no in and

Eric Martinuzzi

So, for if a side. in correct, auto think instance normal the I I'm on curriculum, XX weeks,

still XX that saying weeks? weeks XX we're You're becomes XX in and graduating

Jerome Grant

in a a right? notes, quizzes, the etc. those or listening they've the so No, that three sequence regular half graduate students in through course as classroom, someone That's in What of through done and replicated moved we're saying the have And we've course to we've taking is you last seven talk, progressed timeframe. still weeks week what online, -- so, four three week sequences, of a about curriculum.

in classroom, them expect in caught that or be back three through will bringing within three to the three four lab up and sequences to or them in week it's completely Now same labs and But virtual we weeks. up all their whether it caught we're face go the be time, same timeframe.

Troy Anderson

this Yes. is Eric, Troy.

forward. the the timeline curriculum and both having the in throughout to that other they the that that, reference lab catch-up, and able in be and doing online, really beauty entire virtual also going component lab is can they're back online the that, all go they'll so while be of time, content, throughout The fully immersed throughout

Eric Martinuzzi

believe states? Texas campuses As can't far be as in state-by-state, what you're other is there any across the in to that doing replicated reason the

Jerome Grant

all next get other. to are Well, little open same format. Arizona, labs further will going be campuses exact in We've Carolina the our from Every and redesigned it to our the a get each that motorcycle week. a North following following and one that as apart of week California then open that some will will be next within will open Orlando be same in Arizona and cadence, the our them two or can will we our campuses campus week of we machinery believe when

Eric Martinuzzi

and campaign students, there a on kind far LOA those the who LOA, you for then, beyond as students? doing email, are Right that? them, or active outreach an like as effort Is Okay. to just what email engage are something of

Troy Anderson

outreach there's the been they've So, effort period that LOA. time on ongoing active been an throughout

them We've salesforce, So, to reengaged the throughout have been every services been school. for and the well. them and individually. their which helping in LOAs campuses emails assigned of yes, on the brought going first, student And texts pretty each them of And with also, them there that are contact reentry of their have one our reschedule also week it's into six each people and seven period. the each been campus exchanged the or have

Eric Martinuzzi

wanted prepared and to the back then, right All Okay. I remarks scenarios. regarding circle go to the back --

So, I'm to QX QX we're having to, guidance, confuse QX, in start? of that the flat impacts comment kind what not come on and sort but the traditional able 'XX, the assuming of FY the robust then are negative scenario your with going trough in to potentially about versus revenues barriers strong

Troy Anderson

moved from enrollment Jerome Well, we're still touched We've admissions virtually. process engaged that. actively perspective. on our an entire

with students, And continue future online our prospective on a happening so, what's well keeping already happening up openings, what's enrolled, on date, to date engaged, the with as highly campus students, to them curriculum, as we're with still etc. have who but start

really, enrolled, mean, of critical comfortable So, were on a for We have students already start of we keeping enrolling be activity -- certainly, in and QX start, future time. year. really. them element engaged we but ahead don't the year QX our And, a date, enrollment this where people even is and remainder alone a we're it's I time the as finishing and start. at we finish then getting can essentially for enrollments, our fact, still slightly last now, we're let said, who

had previously. we the did got side, a a everything face-to-face just little time a mid-March second more we've bit a convert little have, and it the inquiry through bit to week the to on probably So, disruption virtual April, process oriented -- of was to of admissions side call very because or it we first than and there,

But marketing is out operations here of think both help execute. to open, and the the we need to admissions just then, only of just keep coming the the And And going I for us. think campuses aspects side tremendous I have labs, momentum resume April and having progressing.

Eric Martinuzzi

been Okay, I'll it as me. amount for that you through, that to of go a you've challenge fly, the It good and sort it as like the habits rewiring chunk the covers detail well. to of, of virtual. taking this the I provided, on executed level substantial have effort decades-old appreciate of microphone. release But and had you've looks business had well a

Jerome Grant

you you. much, Thank Thank very Eric.

Operator

of Please Raj Instructions] comes you. B. FBR. from Sharma Riley ahead. Our next Thank [Operator question go

Raj Sharma

of Is were just We Hi, good good on. on couple around to. that questions guess all timeline, -- missed and campuses a and thinking still, fully starts? how online the that weeks good two March and back timeline, And the the a return had mid-May, a these back come afternoon, instruction many that, about the And LOAs we back of a are for mid-May guys. I I mid-May revoke that revenues, all in that a campuses? we of back guess I only being a few of have were still Is the clarifications. to that LOAs return LOAs X,XXX impacts assumed quarter. and in-class come open the

Operator

can Yes, you me? hear

Raj Sharma

me? hear you can Yes,

Operator

Yes, go ahead, sir.

Raj Sharma

Difficulty] [Technical

Operator

Instructions] [Operator

Troy Anderson

and us? you is We connection We've our some This Can Jerome. Troy hear rejoined for the line. lost reason.

Operator

can off. hear has I you. dropped Raj

back like sir. this he know. time, join final ahead go remarks, I with he make But in, If does if any off closing so at all is you you the will line, let would to remarks,

Jerome Grant

a operator. some technical Unfortunately, Thanks have difficulties. lot, we Okay.

will tend take I have a close lines you get have of the we of lot this just then think I'll questions well. I virtual I'm sure talk if think and timeframe. any -- to conference going as to to you ahead overwhelmed we're and during to But go time individually and a lot commuting

and the the So, COVID-XX proud at in half as and soon fiscal we're we today in made XXXX closing, of can we're to and the students response We're of our we're instructors safely our of our the crisis. work encouraged lab back our with campuses, as learning hands-on possible. excited seeing resuming platform pleased for interest get blended our so all progress first about to instruction by

indicators doing and marketing our interest that Leading leads we're generating revised well show strategy. in very through admissions

which and to of only continue the this through students technical known. part capturing that's we interest, demonstrated puzzle However, our trade how high-quality track how the we're we're education starts by enrollment for and progress

investor third look the do analysts, with to and reporting our from and progress note: throughout to the quarter successes on year One intend road-shows fireside virtual covering non-deal fourth chats, and forward host as final support and our fiscal we and progresses.

day. everyone, for and Oh may have have your joined. you, and us Raj Thank rest of a joining great

Operator

Raj Yes, back have the line. we on do

Raj Sharma

hear you me now? can Yes,

Jerome Grant

Yes, sorry, Raj.

Raj Sharma

SO Hey, how are Good no you. afternoon. worries.

So, about you and to -- Is question still just expecting I be that we to timeline? that was, timeline the that touch campuses functional, the even, my what is is so in I -- with talking all were revenues. fully somewhere two wanted one a mid-May. open what good restrictions? Is areas are upon, know initially, COVID

Troy Anderson

about Well, clearly, their specific week, to states and the businesses we'll XX%. various geographies. the have through upon we're in But, next situations approaches they and address dependent reopening as their jurisdictions

students website. each. are Chicago, a We to leaves then, New which have with areas. the on for of and Pennsylvania some have that and us table We We thereafter actually hit shortly primarily our the hope harder Florida and added percentage Jersey of really,

have also we So we in and Sacramento Rancho and -- California.

and we're early sooner again, But, those we May mentioned June. the looking [Technical of expect or – Difficulty] like are end first think there'll probably then three don't and an sometime we So I more probably

Jerome Grant

expectations of, to baked the into those Troy just talking -- those been that through June about. clear, May models And has are and be into are

Raj Sharma

Yes, right.

to two related it's guess I So, things.

So my -- the is correct? reopen, is go that key these And gating the is campuses that to come item back. come fact, dramatically up they'll that understanding, chances back that is these for when LOAs the

Jerome Grant

risks gating perception are hands-on people's education. and with when health is say out factors right? I into the the the of And get we gating second two the the going would the Yes, campuses associated reengaging, factor world open and resume

Raj Sharma

exactly. Right,

Jerome Grant

big two issues. the are Those

Raj Sharma

Right.

other you open the words... the That's to midnight. labs relative morning XX:XX to said from In the prior in be -- what would timings now, that So were to X:XX COVID?

Troy Anderson

online around we Depending the We've until on campuses X:XX, or running X:XX the that we places we do or with in that for either that were execute campus. were two all wasn't what until can designated can a there gone XX:XX, they in three-session campus, previously they labs of spaces that if some more to, running a into equipment -- simultaneously used, on brought depending morning move about we We've being the also space X:XX nine we so people that's were the was we've so got with. Well, so if if not reconfigured three, lab. sessions were classroom in a that morning to because labs equipment lab. about in the

Raj Sharma

within their -- work so we saying could complete then of they they what students return, if be return, when out you're complete three that Right, lab they can and control, as these weeks. could

Troy Anderson

Yes, get they up. can caught

so -- Pennsylvania open XX caught depending again, in of more on June three Illinois, all can the get it all if get Jersey, that tools now, about and May, before the on into open, nine don't you're opening up schools asterisk students Right within talking or weeks. very take New when because, and it we may them or we the five of -- the All to feel we very, can they weeks start, up. caught we June, of four confident them get until month get is, online weeks to that that like are the

Raj Sharma

Got it.

And that, open the this of June, we that that underlying is be the flat or? on might don't until fiscal Troy, know, end revenues, for So, assumption I the you revenues mentioned the to last.

Troy Anderson

May I the Well, line we that have obviously June. week campuses, we're week. opening of and to this and next here it's mean, sight

We have certain expectations around the others.

of the we into a about have is student process, it's exit that return here visibility June. date so been date. So, minutes part leave and direct talking a of a do timeline absence, we've last the assumes, return essentially, handful the takes what currently into that the last an -- go We of do date. when It's those few campuses scheduled

always we visibility can that, have that. change into they but Now, do

of have them to And and dates when talked have ongoing sure, we're we again, schedule of also, And outreach them about the June. to labs, and as majority in significant return them May etc. are with getting in for kind effort a -- significant we earlier, make those their back understanding,

got we've we're that of going essentially of whoever get assumes, to the back end all by June. So,

by QX normal. open of June more campuses have We the and end looks,

Raj Sharma

helpful. very that's Well, Right.

the my about bit cuts driving quarter what the a impacted -- impact in just quarterly know the of talked that around of the furloughs. of -- or cost how quite and cost rate So, questions next you you've of is are next I this employee the is and run quarter? couple of give a is how down, much sense you how cost Can Obviously, much the kind cuts. that of much rate -- run

Troy Anderson

Yes, of total. the mentioned I quarter. furloughed, employees X,XXX XX% mean, XXX cost employees revenue about the we the said, in -- our in Jerome is, like labor

campus skewed they Now, in toward just more were variability the our operations, operations again, there. the more given

to level. cost of XX% or campus talking campus the of the you're XX% about XX% from So cost perspective, the at so a

We lot has travel's a right, variable hundred few have gone --- essentially spend away. of thousand a a month,

the our we work think all your Supplies, day, got lot there's the about you've a expense buy to people have variable building every with students, things as so X,XXX to well. doing do of that

If But on thought don't timing, I different number Difficulty] me now I'm have opening or asked than have of, campuses ago. question today, week a that the have I given four quite Monday would wouldn't side you few depends have I to [Technical that and a we you align with revenue side. the on better because the two think, we cost of So, right? a lot a levers, try it

Raj Sharma

are cost thinking them there that? bringing I be, COVID-related, update some Alright that, know know the that there you increases were around or around some online. of with Is offset to CARES expected and And that or Act. by hopefully, those any I more with,

Troy Anderson

some with pretty coming the out that Education be of Department advised enhanced will significantly guidelines, being we're Yes, imminently.

CARES between what time, and point broad a allowed guidelines in and Act communications lot very subsequent are clearly, was Secretary the explicitly this allowed. DeVos. issued some by But the there at at of so, were grey time not And initial that in in of explicitly there's then

we're But funds, next again, we obviously kind mode data, waiting So, week. getting the for what then, the issue a student be that. further as definition for soon believe those, to process on funds the in eligible. And the collecting institutional We're through little on potentially all working around bit pause based paused, and the being will guidance. then, we're able we're upon of as the that, grants, of

Raj Sharma

the And that question. well, that's That's so outside of Act. $XX -- just allowed, of that's CARES benefit, The last IRS the this NOL the carryback has million related, NOL the just and it's right? the but

Troy Anderson

Correct.

Raj Sharma

part of this. not That's

Troy Anderson

That's correct, yes.

'XX. filed 'XX that XXXX, be 'XX $X was is that year So, back, back million and will we'll able 'XX which yet. the to June filing the tax that to back of carry 'XX we million But approximately carry in carry to the other haven't years $X and be 'XX and be tax we'll and -- the

Raj Sharma

you And that? get to expect do when

Troy Anderson

for filed and so actually – back we the end 'XX the already of carry April at refund we Well, the

Raj Sharma

helpful. That's

Troy Anderson

depends both We process... expect to fiscal by that a its end and backlog the little them IRS obviously its to and on of get of but of the ability the bit year,

Raj Sharma

account, whenever that it wire so Right, is. hits your

Troy Anderson

Yes.

Raj Sharma

Got it.

Okay [indiscernible].

Troy Anderson

what control then and we what don't we facilitate control. expediting we'll We're [indiscernible]

Raj Sharma

Thank be you. you. Great. Thank I'll offline.

Troy Anderson

Great.

Raj Sharma

Thanks.

Jerome Grant

Thank you.

Operator

Mr. That Grant turn over any session. back to remarks. I'll concludes other our if question-and-answer call there's the Jerome closing

Jerome Grant

you, little Thank anticlimactic. feel I made like them. A I've operator. already

for in you you very been call all much. you thank some of technical who answering kind enough patience and to again the So, more forward all here. We have glitches to those soon. I say, to just your for talk Thank questions will through we'll look

Operator

presentation. Conference is now concluded. for attending Thank you today’s

You may now disconnect.

Universal Technical Institute (UTI) 10 May 202020 Q2 Earnings call transcript