Q2 2020 Earnings Call
[music].
Welcome to the <unk> fiscal second quarter 2020 earnings call.
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<unk> <unk> at this time, all participants are in listen only mode and after that east prepared remarks.
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You might or today's conference calls being recorded.
This time I like the part of the conference over to Miss Jody can Vice President of Communications and public Affairs for Universal Technical Institute. Please go ahead.
Hello, and thanks for joining us with me today, our CEO to your own grant as CFO Troy I understand during the call today, we'll update you on our fiscal second quarter 2020 business highlights our financial results and our vision for the future. Then we will open the call for your question before we begin we must remind every.
One that except for historical information.
Today's call May contain forward looking statements as defined by section 20, Onee of the Securities Exchange Act of 1934.
And section 27, a other Securities Act of 1933, I'll refer you to today's news release for your T. <unk> comments on that topic Safe Harbor statement in the release also applies to everything discussed during this conference call. During today's call refer to adjusted operating income or loss adjusted EBITDA and adjusted free cash flow.
What's your non-GAAP measures adjusted operating income or loss income or loss from operations adjusted for items that affect trends and underlying performance from year to year and are not considered normal recurring cash operating expenses.
Adjusted EBITDA is net income or loss before interest expense interest income income taxes, depreciation amortization and adjusted for items not considered as part of the company's normal recurring operation I.
Adjusted free cash flow is net cash provided by are used in operating activities less capital expenditures adjusted for items not considered as part of the company's normal recurring operation.
Management uses adjusted operating income in loss adjusted EBITDA and adjusted free cash flow as performance measures internally and those will be the figures discussed on today's call.
Starting with a third quarter fiscal 2019 and through fiscal 2020, we will report operating metrics such a student applications and starts excluding our Norwood, Massachusetts campus as we've shared previously Norwood stopped accepting new student applications in the second quarter fiscal 2019 and will fully close before the end of fiscal year.
2020, so we believe it as appropriate to exclude its impact. It is now my pleasure to turn the call over to Jerome grants.
Thank you Jody.
Good afternoon, everyone and thank you all for joining US today first I want to acknowledge that our fox or with those most affected by the pandemic, including first responders and medical professionals working on the front lines.
I'd also like to thank our team for their tireless effort to continue to provide the highest quality technical training for which we are now during this crisis.
Finally, I'd like to welcome to the call a notable number of new investors, who have joined US since our last update we sincerely appreciate your interest in investment Yutai and look forward to working with you in the future.
As many of you know and for those of you are new to the call utilize the nation, leading provider of technical training for automotive diesel collision repair motorcycle and marine technicians.
And we also offer welding technology and computer numerical control CNC machining programs.
We have a nationwide network of 13 campuses, where we offer hands on training and state of the industry labs complemented by our new online training, which allows us to offer quality education during the cold and 19 pandemic and will serve yutai in its students going forward.
Our newly assembled executive management team is leading that charge and is supported by solid balance sheet and excellent financial flexibility.
I'll add more on that later, but first I'd like to discuss the recent quarter and review how we're approaching the cobot 19 crisis preparing for the near term and positioning the company for the future.
In the second quarter results were positive and we demonstrated continued momentum.
New student starts were up 6.6% year over year, excluding our Norwood campus, where we're winding down operations.
Contracts for the quarter grew 4.5% year over year, and our show rate improved 100 basis points.
Total revenues increased 1.2% to $82.7 million net income, which included an income tax benefit of $10.8 million was $10.1 million and adjusted EBITDA was $3.1 million.
Trial will get into more details of our financial results a little later in the call.
Indeed, it was a busy quarter.
We bolstered our executive leadership team with new leaders heading up our corporate strategy in legal departments changed our marketing at emission functions and began search for new chief commercial and human resource officers.
We're also pleased to welcome George Broach, It executive Vice President strategic development of Penske Automotive group to our board of directors and we wish Roger Penske well as you transition off the board after more than 20 years of insightful guidance and counsel.
Even in the face of the pandemic as many challenges we continue to move forward with our growth in improvement initiatives, including expanding our welding program to new campuses, optimizing admissions and marketing and maximizing the productivity of our campuses.
In February we successfully raised $49.5 million in a primary EQT primary equity offering led by B. Riley FBR, who also led to December secondary offering and brought in many new investors.
Like many businesses, we began to feel the impact of cobot 19 pandemic in the last two weeks of March.
We were able to quickly pivot the business model in response implementing changes that will help see us through the pandemic and innovations that conserve our students and our business for the long term.
In response to this unprecedented situation, we implemented strict CDC guided safety precautions that all of our campuses and our home office and quickly transitioned our in person education model to online.
As a threat was first identified we remained operational and immediately implemented protocols represent record recommended by the CDC.
As governors and local officials began to issue orders and mandate closings of schools and businesses. We suspended all in person classes at our 13 campuses on March 19, and transition transitioned all classroom learning to online.
The following week, we transitioned our first wave of students to the online platform and within less than two weeks were fully operational and up and running.
We're proud of the dedicated team and their extraordinary efforts as this type of curriculum transition would normally take many schools. Many many months to execute.
Today, we have over 11000 students enrolled with more than 8000 currently progressing very education through the online platform, including over 500 students who have started directly into the online platform over the past several weeks.
Our online curriculum consists of instructor led lectures and demonstrations and we continue to engage students and give them one on one support through virtual classroom reviews and virtual office hours.
The transition to the online curriculum has been successful and opens new opportunities for the company and our students. However, the uncertainty and disruption created by Cobot 19 crisis means we do have more students on leave of absence.
We are now beginning to meet those students need to practice and master hands on skills that are so important to their success by resuming in person training while online education continues.
To protect our students in staff and aligned with the CDC guidelines and state and local directive we have model, we're modifying our class sizes and schedules for safety and social distancing.
As of today, Dallas Fort worth in Houston campuses are operating in this modified format and our Avondale, Arizona, Phoenix, Arizona Long Beach, California, more and more as go North Carolina campuses should resume face to face labs. The week of May 11th and Florida is not far behind.
We've also revised our marketing message to focus on the durable opportunities for skilled technicians in the transportation field broadly our message potential students feeling the economic impacted the virus is we feel for you. We are here for you and we want you to come to you because this is where the jobs are now and in the future.
Now with no live sports on TV broadcast media consumption, among our target target demographic is down.
In order to optimize our lead generation in this environment, we cut $2 million from our broadcast budget and have intensified our focus to where our target audiences are spending their time right now which is social media.
It's paying off evidenced by our inquiry activity.
Inquiries pre coded through the first half of March were better than the prior year prior year and beat our internal expectations. While we did see a significant dip in mid March through the first week in April we've seen an accelerating improvement. Since then the full month of April perform similar to the first half of March solidly above prior year.
And our internal expectations.
We also have shipped our admissions model, which has been almost exclusively face to face and are now connecting with students and their parents through online meetings virtual tours and other events. For example in April in addition to telephone interview, our admission reps at averaged 80 virtual interviews a day.
Our admissions reps have noticed an increase in the number of people who want to talk and meet with us virtually many many of whom have come away with the impressed by the technical education, we offer and our teaching facilities.
If you Havent had a chance to visit one of our campuses in person yet I invite you to go to our Investor website, where you could take a virtual tour and see for yourself.
While it by no means has been easy transition we're proud of the work to keep the students in school through the crisis and are finding innovative ways to introduce our education to people, who can greatly benefit from it, especially now as our country begins to process of emerging from the crisis and moves into a period of economic recovery.
Today, New student enrollments are above where they where last year at this point this bodes well for a fourth quarter, where the majority of our students start.
But with fewer students currently active in school overall and the expense of transitioning online and modifying our educational model. We've taken some decide to fight decisive actions to reduce costs.
This required some very difficult decisions, including the furlough of approximately 280 of our employees.
Employees on furlough continue to receive full benefits and we look forward to bringing them back as soon as we're able to reopen all of our campuses and our student population continues to recover.
So to sum it up right now we're keenly focused on student retention continuing to grow and bring in new students and cash preservation.
There are of course will be challenges as the world recovers from Cobot 19, but we believe are deeply held commitment to delivering value for both our students and industry partners and our strength in innovation, which allowed us to transition to an online model and find safe and effective ways to offer our unique industry aligned education will continue to serve Utah.
Right.
And our students.
I'd now like to turn the call over to Troy for a deeper discussion of our financials and student metrics after which I'll refer returned to provide some insight and thoughts postcode 19.
Thank you Jerome before I jump into details I'll note that we've created a financial supplement that has posted to our investor website, along with our standard investor presentation that provides additional details to our prepared comments in the press release.
As Jim noted, we performed well for the majority of our fiscal 2022nd quarter and posted solid results, but they were impacted starting in mid March by the cobot, 19, pandemic, which lowered our revenue approximately $2.5 million to $3 million from our pre coveted expectations for the quarter.
The revenue impact is primarily a timing differential due to the temporary student leads of absence or la is we have discussed.
We partially offset the revenue impact on profitability by taking steps to mitigate costs, such as the employee furloughs and reduced variable and discretionary spend across the enterprise for categories like travel contract services and campus supplies. So that the profitability impact in the quarter was approximately $1.25 million to $1.7 million.
As students on Elway return to continue their education, we fully expect to recover the associated revenue and profit.
We're also stringently managing payment terms with our vendors are working cash optimization opportunities on a number of fronts.
Ill cover this in more detail later in my prepared remarks, but first let me cover our second quarter in first half student metrics and financial results.
Pursuit of metrics, new student starts in the second quarter increased 6.6% Europe year over year and were 2093 in the quarter.
The first half of 2020 starts were higher by 7.1% year over year.
We saw start growth across all three channels in the quarter and year to date.
This is all same store growth in is driven by enrollments, which were higher by 4.5% in Q2, and 5.1% year to date and show rate improvement of 100 basis points in the quarter and in first half.
We continue to yield very positive results from our marketing student engagement in drift in grants strategies.
I'll now turn to a few highlights on our second quarter in first half 2020 financial results.
Revenue increased 1.2% 82.7 million driven by higher revenue per student, partially offset by a decrease in the average student population due to the student yellow ways that caused the 2.5 to 3 million impacting the quarter I mentioned previously.
First half 2020 revenue $170 million is up 3.1% versus the first half of fiscal 2019, due primarily to higher revenue pursuit.
Average students for the quarter were down 3.1% year over year and slightly positive for the first half of the year when compared to the first half of 2019.
We ended the second quarter was 7373 active students.
This is since increased to approximately 8300 active students.
With another approximately 600 students on elway, who only need to complete the remaining hands on labs to graduate from the program.
There are approximately 2500 other students currently on elway versus approximately 300 at the same time last year.
While we cannot be certain based upon their scheduled return dates and feedback we have gathered to date, we would expect that a significant majority of these students will elect to resume their education over the coming month as we resume hands on labs.
On our campuses in the overall cobot 19 situation further stabilizes.
Operating expenses decreased by 4.7% to 83.2 million for our fifth straight quarter of year over year expense declines while growing revenue.
The year over year decrease in the quarter is primarily due to lower costs related to compensation and benefits as a result of reduced headcount and benefit plan savings.
Compensation and related cross costs were 52% of revenue in the quarter and down 450 basis points as a percent of revenue year over year.
Head Count was 1645 as of March 30, Onest, a decrease of 70 versus the end of the prior year quarter.
Also of note when you look the PNM line items, you continue to see the impact that the lease standard implementation this fiscal year with higher year over year occupancy costs offset by lower depreciation costs due to the change in treatment for build to suit leases.
First half 2020 expenses of 166.2 million or down 6.4% year over year.
Specific to Covis, we incurred expenses from increased cleaning and related supplies throughout March as well as costs related to our online learning transition and disrupted campus operations in the last two weeks of the month.
We are quantifying all the cobot cost impacts beginning in March and continuing through the duration of the crisis. So we can better understand run rate impacts and also ensure we have appropriate details to support available cost offset opportunities afforded with the care Zack.
As we think about our cost structure in our employee related costs on our campuses.
The introduction of the online curriculum enable significant efficiency opportunities.
Our student to on campus instructor ratio is typically 27 to one while the typical online learning ratio is much higher.
As we begin to resume hands on labs on our campuses in the near term, we will have some inefficiencies as a student to instructor ratio will be nine to one.
However, we will maintain a blended model with online learning for the classroom component and we'll look to integrate this were permanently over time, along with other efficiencies we develop to our current remote operations.
Net income for Q2 was $10.1 million translating the basic and diluted EPS of 18 cents.
We had 32.7 million basic shares outstanding as of the ended the quarter, which reflects the 6.8 million shares transferred from Treasury stock for our February equity offerings.
Q2, net income improved $15.4 million from the prior year quarter and included a 10.8 million income tax benefit, resulting from net operating loss carry back revisions within the cares that.
Assuming the IRS is able to process the refund request and at reasonable timeframe, we would expect to receive the cash refunds by the end of the fiscal year.
First half 2020, net income was 14.8 million up 27.8 million year over year and also includes the income tax benefit.
Operating cash flow $10.9 million. The first half of 2020 increased $8.1 million year over year and reflects our improved profitability and cash management as well as working capital timing.
As I spend a moment on our adjusted result, a quick reminder, that our adjustments or fytwenty reflect costs associated with the Norwood campus closure and with our CEO transition, while and Fynineteen. They reflect cost associated with the termination of our transfer transformation consulting agreement and with an over campus closures.
Adjusted operating income for the quarter was point $5 million, a 4.7 million increase year over year.
And 7 million for the first half of 2020, a 14.2 million year over year improvement.
Adjusted EBITDA was 3.1 million in Q2 to 2.3 million year over year increase and 13.1 million for the first half and $11 million year over year improvement.
Both the Q2 in first half results include the 1.3 million per quarter negative year over year impact due to the leasing standard implementation this fiscal year.
Adjusted free cash flow was 6.7 million for the first half of 2020, an increased 3.7 million versus the prior year.
Capex was 5.2 million for the first half of 2020 up slightly versus the prior year and reflect spend associated with with our wedding program expansion investments the Exton, Pennsylvania facility Rightsizing in other spending.
Through our February equity raise we significantly strengthened our balance sheet to enable further steps in our long term strategy of growth diversification in scale.
Our available liquidity as of March 30, Onest was 118.1 million, which includes 76.6 million of unrestricted cash and cash equivalents.
And 41.5 million of short term held to maturity securities.
These consist of Treasury securities and high quality corporate bonds and provide us incremental yield benefits.
In addition to the cash preservation operational and cost efficiencies in working capital management actions I've mentioned.
There are further opportunities, resulting from potential applicability of the care Zack.
As we announced previously we expect to receive approximately 33 million in grant funds through the cares Act higher education emergency really fun.
Per the department of Education guidelines at least 50% of these funds we used a grant emergency financial aid to students impacted by Cobot 19.
The company also intends to use a portion of these funds to offset costs that have arisen as a result of the Coca 19 crisis.
For the operations and infrastructure investments needed to support our students education and curriculum needs. During this time.
We are expecting additional guidelines from the department of education that will give us better clarity on what costs and investments. These grant funds can be used to offset.
There may also the opportunities for us to leverage the employee retention credit. We're currently reviewing the updated guidelines released by the IRS late last week for potential applicability.
From a cash perspective, we are electing to defer our payroll tax payments starting with April 2020 through the end of calendar 2020, and expect to quarterly cash benefit of approximately $1.52 million.
No we're not eligible for the payroll protection program due to our size and are not currently applying for any other loan programs, but do not completely rule out doing so if we deem that beneficial are necessary.
Turning briefly to our real estate footprint optimization efforts for the North campus closure, we were running ahead of schedule prior to the suspension of in person instruction that the campus.
We are still pushing that the campus fully close before the end of this fiscal year dependent upon the timing of the campus resuming hands on labs and potential delays to those students graduation date.
Our headquarters relocation and downsizing remains on track for completion by June Thirtyth.
As noted previously this action will save approximately 1.3 million annually.
We also have longer term opportunities across a number of our campuses for consolidation and Rightsizing and are actively engaged with landlords on these discussion.
The introduction of the blended learning environment may afford us new efficiency opportunities in the future in is something we will incorporate into these discussions.
We expect to have more details on these actions in the coming quarters.
As we announced in our business update on April 22nd we have withdrawn our guidance for fiscal 2020, as we noted then and I've touched on today there are multiple variables related to cope with 19 that can impact our business.
The five key variables. We are closely tracking continued engagement of students in the online curriculum timing of resuming hands on labs at our campuses.
Timing of students returning familiar ways potential cost recovery opportunities associated with the cares Act in Q4 and post cobot 19 student demand.
Assuming by the end of the third fiscal quarter all of our campuses are open for hands on labs in a significant portion of the current student La is return without material new Ela ways.
We estimate that the overall negative impact from Cobot 19 would primarily be realized in the fiscal third quarter.
In this type of scenario, we estimate full year revenue could be roughly flat to fight 19.
However, if any of these are not the case, where we see deterioration in our current Q4 start expectations as a result of Covidien team.
Then we will likely see negative financial impacts extending into Q4 in overall greater impact of the fiscal year.
Regarding cash as we look to the third quarter under the same scenario, we expect we will be a measurable cash user.
The seasonality of our business would normally have is consumed cash in the quarter. Given Q3 is our lowest revenue quarter in the fiscal year.
This will be heightened in the quarter due to the expected Q3 cobot impact.
And also the delay in receipt of title for funds for existing students until they complete their current hands on labs.
Under this scenario, we estimate that the net cash burn in Q3 could range between 25 million in $35 million and that we could fully recovered in Q4.
However, while we normally generate most of our full year cash flow in the fourth quarter, we will need to see how these factors play out along with a more complete view of Q4 starts before we can understand how the year, we'll look from a cash in total liquidity perspective.
We will continue working to minimize impacts to profitability and cash flow under any scenario.
No. These are only estimates around potential scenarios and should not be considered revised guidance.
As a leading indicators, we're very encouraged by the fact, we were able to start over 500 students directly into the online curriculum in April.
We started resuming hands on labs at several of our campuses.
And that we are pacing ahead of last year and our within a few percentage points of our original goal for 520, new student enrollment.
During the class in order to to create the capacity to be able to do that we're starting to run our our labs at about six o'clock in the morning, and we're running through midnight to get the to get the throughput to be able to until we're able to bring more people together in it in a certain lab.
And so we expect that all the students that we're on line for the last seven weeks will catch up on their labs are no longer than three weeks and then they'll move along in the normal curriculum with take your concepts online and when you're finished come in and do the lab.
So for instance in a normal curriculum 51 weeks.
On the outside you're saying that 51 week's becomes 54, and we're still graduating and 54 weeks.
Oh, we're saying is still graduate in in the regular timeframe, what we've done so.
Three week course sequences about a week and a half of that course, he acquaintances in a classroom listening to someone talk taking notes quizzes et cetera, that's what we've replicated online.
And so students have progressed through three or four of those in the last seven weeks as they move through and they moved through the curriculum now we're bringing them back in to go through their three or four labs sequences and we expect them to be completely caught up within three weeks, but the same classroom thing face time, whether it's virtual or.
Or in the labs and it'll all it'll all be caught up in a three week time frame.
Yea or destroy the other beauty of having the online component is that throughout that while they're doing the lab catch up there will also be able to go back and reference the the virtual curriculum throughout that entire time. So they they really can be a fully immersed in all the content both in the lab and.
And and online throughout that timeline.
Going forward.
Hmm.
As far as state by state is there any reason to believe that what you're doing in Texas can't be replicated across the campus is in the other states.
Well I the the the campuses that'll open next week, and Arizona, California, and North Carolina are all going to be following the exact same format. So you know we redesigned our labs to to get some of our machinery a little further apart from each other every one of them will be following the the same cadence as well.
Our motorcycle campuses in Orlando, when we can get old it open and we believe that will be within a week or two and then our Arizona campus that'll open next week.
Okay.
And then as far as the the students who are on L. away. What are you doing to engage them beyond just kind of email.
Email campaign or something like that Howard.
Is there an active outreach effort for those.
So there's been an ongoing active outreach effort throughout the time period that they've they've been on our way. So first yes, there have been taxing emails that have been exchanged with each and every one of them throughout the six or seven week period. We've also reengaged to sales force, which which brought them in to contact them.
Individually and also our students services people on each of the campuses have been assigned the elouise for each of their campus and are are helping them reschedule their their re entry into the school.
And it's going pretty well.
Okay.
Right and then I wanted to go back circle back to their prepared remarks regarding the scenarios. So I'm not gonna come to the scenario, where the guidance, but your your comment about potentially flat revenues versus that point 19, assuming we're able to.
Just sort of trough to negative.
The the negative impacts.
Two three and then come in strong on cue for what are the barriers to having.
For a bunch of traditional Q4 stars.
Well, we're you know where it's still actively engage from enrollment perspective, you know we moved our entire admissions process virtually drove touched on that and so we're still highly engaged you know with with prospective students as well as students who have already enrolled but on a future Stargate to continue.
Keeping them up to date on on what's happening with the online curriculum, what's happening with our campus openings et cetera, So certainly getting the students who I've already enrolled but on a future start date of comfortable and in in keeping them engaged is is a critical element and then you know finishing our.
Enrollment activity for the remainder of the year and really it's time I mean, as we said we're essentially we're we're slightly ahead of where we were at this time last year.
And we don't finish our and romance really we can still being rolling people now in fact for for even a accuse restart let alone queue for starts. So we've we've got a little bit of time to and we did have you know a disruption there you know calling mid March through the first or second week of April probably a little bit more on the admission side in the increase side.
Just because you know we have to convert everything the virtual and it was it was very face to face oriented process previously, but but both both aspects of the admissions then the marketing side have tremendous momentum coming out of April and I think we just need we need to execute and I think having the campuses open a resume.
<unk> here for the labs is is only going to help US and then you know just keep progressing.
Okay that covers it for me release, the microphone, but I I appreciate the the level of detail you provided as well with the amount of effort that you've had to go through sort of on the fly rewiring a.
Decades old.
Habits.
Taking a good chunk of this business virtual.
Substantial challenge and it looks like you you'd executed.
Thank you. Thank you very much here.
Thank you again, if you have a question please press start <unk>.
Our next question comes from.
Sharma I'll be rally F.B.R. Please go ahead.
I good afternoon, guys. So.
I have a couple of questions on the revenues just a few classifications that we have <unk>.
That.
The l. away, where around 2500, and and we only missed about two weeks in the <unk> quarter and.
I guess, we were thinking made me and look return back to his that's still a good time line amid main return.
Back to all the campus is being open and in class instruction.
That starts and that I guess, Dan impacts Oh, how many of these elouise come back online.
Oh come back.
And and revoke the L.A.'s and.
Awfully on.
Is that a good time line the mid May still for all the campus.
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Again, if you have a question. Please press start then one.
We we've rejoined the line we software connected to somebody Troy <unk>.
Yeah, I can hear you Rogers dropped off if you would like to make final remarks, if p. does joined back in I will let you all know with it. This time he just off the line. So go ahead with any closing remarks or.
Okay.
Thanks, a lot operator, Unfortunately, we have some technical difficulties I think a lot of a conference lines tend to get over overwhelmed. It. During this so virtual commuting time frame, but I think I'll. Just go ahead and clothes and if you have any I'm sure. We're gonna have time to talk to a lot of you individually and we will.
Questions that as well so in closing we're pleased with the progress we need in the first half of 2020 and proud of our response to the Kobe <unk> keep prices.
We're encouraged by your interests were seeing today for our blended learning platform and we're excited about resuming hands on lab instruction at all of our campuses. So instructors and are students you get back to work safely as soon as possible.
Leading indicator show that we're doing very well generating interest and leads through our revised marketing strategy.
That's only part of the puzzle and we continue to track Oh, we're capturing this interest demonstrated by enrollment dark.
How're student's progress to the high quality technical trade education for which were no.
One final no. We do you intend to host virtual investor in non Geo Roche shows fireside chat with support from our covering analyst through fiscal third and fourth quarter and look forward to recording on our progress successes as the year progressive.
Thank you everyone for joining a.
I have a great rubbing your day Oh.
Ross Me doing [laughter], yes, we do have rocked back on the line go ahead so right.
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No way Hey, how are you. Good afternoon. So the two areas and wanted to touch upon a one is revenues do I know that my question was what what is what time line are you seeing all the chances to be fully open and functional even you know with <unk> <unk>.
Is that initially we were talking about somewhere made me is that it's still a good timeline.
Well, yeah clearly.
Ah depending upon.
The various states the jurisdictions and and their approach is to reopening businesses <unk> as they address in specific.
Oh situations in their geography, but you know.
Next week, we'll have about 60% we have a table on our website, we we actually added that yeah.
Well reach right.
We hope that Florida.
Shortly thereafter in that yeah really that leads us.
Primarily with New Jersey, and Pennsylvania, and Chicago, which are some of the harder hit area. So we and <unk> you also Sacramento and ranch out in California. So we we probably expect those tutor and then the first three I mentioned are probably looking.
More like it into bag sometime early June, but but again, we're playing we don't pick up and just to be clear those are those expectations. So you know through May and June our fate ended models that that choice to talk yeah.
Right. So I guess is related to to things too so the t. gaining item for D.L. ways to come back.
Is the fact, you know when these campuses we open the chances go up dramatically that they all come back.
And that is my understanding done that is is that correct.
Yeah, I would say the two dating backers are when we get the campuses open that and and resume the a hands on.
Education, and the second Gaiting factor is People's perception of the health risks associated with going out in the world and <unk> right.
Those are the same exact figures.
Right. So now you said that they didn't labs is would be open from six in the morning, 12 midnight that are relative to what one with the timing prior to <unk>.
<unk>, depending on the campus. If we were running if we were running two sessions or three.
They were either eight in the morning until about five or eight in the morning until about yeah.
So depending if there were three session campus. We've also reconfigure the campuses to to you know move equipment around places. So that we can do for lab simultaneously with nine people in in in a laugh you know we've got all the classroom space that was not being used because.
That's what we bought online with where we brought some of the equipment into there. So that we can execute aren't laughs and basically said previously wasn't designated for a lot.
Right.
We can control you were saying that.
<unk> as one of these students return it in return than they can be completely can complete there's a lot more.
Yeah, they can get caught Connie well all of them all the schools at again the asterisk on that is depending on when we get it open because you know New Jersey, Pennsylvania in Illinois, If we don't get them open until June.
Or you know in into June you're talking about more like you know nine to 12 weeks of online before they can start so it may take them four or five week you get caught up right now all the schools that are opening in the Boston may feel very very competent that we can get all of a suit the students brought up within three weeks.
Yeah, so on the revenues.
<unk> you know the revenues.
Might be flat to laugh.
Under the assumption underlying data is that we don't open until the end of June or.
Well it it may into it I mean, we obviously have line of sight to the campuses yeah that that we're opening here. This weekend next week.
We have certain expectations around the others. So the timeline we've been talking about here. The last few minutes is what's that assumes that you know those last the guy cancel campuses go into June you know, we do you know with with a student take to leave of absence. It's it's an extra day and a return date. It's it's a part of the process. So we do have direct visit.
<unk> into the currently scheduled return date now they can always change that but but we do have the ability to that it.
Then again to significant majority of those have returned dates and danger and and and we're also as we talked about earlier 15 outreach effort ongoing with that does that make sure you know we have.
Or getting them back and understanding you know kind of winter schedule them for their lab to settle Oh, yeah. All of that as soon yeah. We've essentially got whoever we're going to get back by the end you. We have campuses opened by the end of.
And <unk> no more normal.
Right well, that's very helpful. As it might just my next the couple of questions is around the <unk>.
Obviously.
I know that you talked about quite a bit of the pets in the employee for clothes and you kind of.
Give it sounds the what's the one rate how much of that is you know impact how much of the cost quarterly run rate is impacted and how much are you driving down.
You know in this quarter of the next quarter.
Yeah, I mean, yeah, yeah, we are labor costs.
You said about 52% of revenue in the quarter, you know <unk> 280 or.
Employees Furloughed, you know 1600 and 45 employees in total now again, there were skewed Board Board our campus operation just given that the variability more in the operations there so you're talking about 20%.
So the costs you know from a campus perspective 20, 25% of the costs of the campus level, we had a lot of variables and you know travel yeah. A few hundred thousand a month right. It's it's just gone away supplies you to think about all the things you Gotta fight out.
Thousand people in your building every day.