Q2 2021 Universal Technical Institute Inc Earnings Call
Hello, and welcome to the Universal Technical Institute fiscal second quarter 2021 earnings Conference call with US today are Jerome Grant Chief Executive Officer Tony.
Tony Anderson, Chief Financial Officer.
Please note today's event is being recorded.
I'd now like to turn the conference over to Matt Kempton, Vice President of corporate Finance Mr. Kimpton Me. Please go ahead.
Thank you operator.
What we begin we want to remind everyone that today's call will contain forward looking statements within the meaning of the safe Harbor provisions of the U S. Private Securities Litigation Reform Act by 295.
Please carefully review today's press release for additional information and important disclosures about forward looking statements.
Because forward looking statements relate to the future theyre subject to inherent uncertainties risks and changes in circumstance that are difficult to predict and many of which are outside of our control.
Our actual results and financial condition may differ materially from those indicated in the forward looking statements.
Therefore, you should not rely on any of these forward looking statements.
As a reminder, the section entitled forward looking statements in today's press release also applies to everything discussed during this conference call.
During today's call, we will refer to adjusted net income or loss adjusted EBITDA and adjusted free cash flow, which are non-GAAP financial measures adjusted.
Net income or loss as net income or loss adjusted for items that affect trends in underlying performance from year to year and are not considered normal recurring operations, including the income tax effect on the adjustments utilizing the effective tax rate.
Adjusted EBITDA as net income or loss before interest expense interest income income taxes, depreciation amortization and adjustments for items not considered as part of the company's normal recurring operations.
Adjusted free cash flow as net cash provided by or used in operating activities less capital expenditures adjusted for items not considered as part of the company's normal recurring operations.
Management internal uses adjusted operating income or loss adjusted EBITDA and adjusted free cash flow as performance measures and those figures will be discussed on today's call.
As a reminder, we have provided reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements of today's press release.
I encourage you to carefully review those reconciliations.
It is now my pleasure to turn the call to our CEO Jerome Grant.
Thank you Matt Good afternoon, everyone and thank you all for joining us today to.
To begin I'd.
I'd like to again, thank our faculty and staff for their tremendous work during this quarter and applaud the efforts of all of our students.
As a company we're proud to announce that we had a very successful quarter, while executing on some of the first important steps in our growth and diversification strategy.
All of our campuses were fully operational and we started 20 405 students in the second quarter, which represents nearly 15% increase over the prior year quarter.
Importantly, we maintain our focus on supporting our students their families and our teachers as we emerge from the pandemic and while maintaining strong educational and employment outcomes.
We performed better than we expected during the quarter and remain confident in our previously outlined 2021 guidance, which will set us up exceptionally well for fiscal 2022.
So I will go into more detail on our quarterly performance in 'twenty, one guidance as well as give you. Some initial thoughts for 2022 and beyond in just a few minutes.
As far as student demand, we continue to see strong prospective student interest in our programs, which both fueled our double digits start growth in Q2 and provides critical insight into the projected performance for the balance of the year.
We're also seeing tangible results from our more targeted advertising strategy that we discussed last quarter.
With Q2 media inquiries growing 14% year over year.
As a reminder, we have begun to allocate more resources towards advertising to potential students living within the commuting distance of our campuses. This strategy further drives the efficiency and effectiveness of our campaigns by reducing the number of students who must relocate to begin their studies.
Mind, you this momentum I'm, referring to heading towards our next fiscal year is entirely separate from an additive to the additional strategic actions, we have announced thus far which will bear fruit in 2022.
These actions include the new state of the industry blended learning oriented campuses that will be opening in 2022 in Austin, Texas in Miami, Florida, as well as real estate rationalization projects in Orlando, Florida, Sacramento, California in Avondale, Arizona.
These projects should produce substantial financial benefit in fiscal 'twenty two.
More significantly for 2022 and beyond our recently announced agreement to acquire M. I a T College of technology represents an important early step in our growth and diversification strategy.
Want to spend a few minutes outlining in more detail. How these steps we took this quarter fit into our vision and make sure that everyone understands that these actions are merely the beginning of our strategy.
The addition of M. I T to the U T. I family represents an excellent strategic fit for a number of reasons first as a standalone acquisition M. I a T improves U T is already strong financial position.
The schools to campuses in Canton, Michigan, and Houston, Texas have a robust growth profile with respect to student starts revenue EBITDA and outstanding outcomes in terms of both graduation and employment rates.
Like U T I M. I, a T is a well respected and industry aligned provider of technicians in their area of focus.
Upon successful closure of the acquisition, we will gain nearly immediate access to the M. I a T accredited and certified high demand programs and credentials in such fields as aviation maintenance renewable energy robotics and H P. A C that are not currently offered at UTI.
We believe the dish and <unk> of the M. I a T programs across the U T I footprint will be as if not more successful than the typical welding program expansion you've come to expect from us.
To that end, we plan to start with the launch of M. I a T programs at at least nine campuses within our U T I network and possibly introduce diesel program at the Canton M. I T campus.
We are diligently preparing ahead of the closing to make sure. We can roll these out as soon as we get proper regulatory approval I.
I would note that we currently do not anticipate any regulatory challenges to closing this deal as scheduled.
As we have extensive experience launching highly successful new programs within our existing network.
We are confident in our ability to do so quickly with proper execution.
To be clear and to underscore the important value proposition to investors with respect to this transaction. The M. I a T acquisition goes well beyond simply adding two new campuses to our geographic footprint.
It adds an entire new array of programs that will allow us to move beyond transportation and more broadly into other high demand skilled trades.
Our plans should more than double this business within just a few years after close.
Turning to other key steps, we took this quarter to advance our growth and diversification strategy. We recently announced the launch of two new campuses in Austin in Miami in 2022.
Although organic in nature. These are no less important and in addition to the proven financial benefits will accrue from adding these locations they provide to more opportunities for us to bring M. I a T programs into our footprint rapidly.
This will most certainly enhance the already impressive returns we derived from launching new campuses.
We chose these two locations Austin in Miami based on our proprietary location and program evaluation model for long term student and employer demand.
These two campuses will be the first to to be launched using the purely blended learning model, which will not only allow for higher margins than our successful Metro campus, but will also provide us with the flexibility to utilize additional space for additional programs.
These announcements alone set us up to grow the top line in excess of 10% compound annual growth rate through 2025, and expand our adjusted EBITDA margin to over 20%.
But I want to make it clear that these are merely baseline goals tied to the first steps in our growth and <unk> vacation strategy.
Although these first steps could lead to the company nearly doubling revenues by 2025 as compared to 2020, we.
We are actively exploring additional inorganic and organic avenues for student revenue and EBITDA growth and our strong financial position and solid cash generation will enable us to continue to pursue additional opportunities even as we progress on those we already announced.
This strategy. It is core is really about expanding utis value proposition of training our students for great careers in high demand fields by diversifying both geographically and in our program offerings, we're able to expand our addressable market and provide more students with high quality industry aligned education.
In areas, where the demand significantly outstrips the supply of highly trained and certified workers.
In a different era high school graduates could obtain these types of good jobs debt paid them, a wage that enable them to pursue and afford a middle class lifestyle, but for the most part that's just no longer the case and it hasnt been for some time.
Feeling today's acute skills gap more often than not requires training and industry credentials. This is our focus and our mission as a company.
An excellent example of the mission and action is San Diego Native Stephanie morale US. Stephanie recently graduated from 36 week welding technology program at our Rancho Cucamonga campus just outside of Los Angeles. She came to UTI after completing high school and upon graduating from UTI went directly to work.
General dynamics in San Diego Daphne.
Stephanie says she chose UTI because she wanted to focused education that would lead to and I quote easily getting a job and making good money.
And of course, she was also keenly interested in doing something she could be proud of Stephanie uses or welding skills to build and maintain ships for the U S. Military at General dynamics Nasco shipyard in San Diego Harbor.
She says the reason she loves her job is because she's doing something important to help protect our country Steph.
Stephanie told US he is proud to be a woman in the welding industry and that she wants to inspire more women to become certified welding technicians, especially her 11 year old twin sisters. She wants to show them that they can achieve whatever they aspire to do.
We believe that a high value industry align technical education in fields like welding, where there's strong demand for trained talent delivers immense value for our graduates like Stephanie for employers, who hire them and for our country.
Speaking to the broader needs of our country.
We're often asked which administration or party is better for our business and how we think about what many presumed to be our competition across the country, namely community colleges.
Well of course, we stay current on potential regulatory and other changes in our industry.
We don't really focus on which party is in power or which post secondary education approach benefits more or less as a result as.
As we realize that filling the drastic need for people with technical skills is a group effort.
We welcome the stepped up efforts our government is indicating it will take to help bridge the gap between high school education levels provided across the U S and the specific technical requirements that employers increasingly require at all levels.
We need and want community colleges to succeed because they help to address the broader critical need debt we have in this country.
The value we bring to our students. We believe is both unique and non partisan.
While we are fully aware that the global pandemic has caused some less than favorable results for our company over the past few quarters, we feel that our commitment to students and engagement efforts.
Third with the growth and diversification strategy will propel this business into its next chapter with tremendous amount of momentum.
As we have noted in the past we're confident that we built a core business that grows at low to mid single digits in any economy and the strategy. We are now executing on is designed to build upon that organic growth.
An opportunity that we believe is substantial.
I'll now hand, the call over to Troy for his in depth discussion of our operating performance 2021 guidance and our initial thoughts on fiscal 'twenty, two and beyond Troy.
Thank you Jerome it's Jerome mentioned, we executed well operationally and against our strategy this quarter and delivered results that surpassed our expectations.
I'll spend a few minutes discussing the quarter results and then discuss our fiscal 2021 guidance and our strategic roadmap for the next several years.
Continued effectively converting strong prospective student interest.
With 2405, new student starts during the quarter.
This marks the second consecutive quarter of double digit start growth of 14, 9% increase versus the prior year quarter with growth across all three channels.
Show rate for the quarter exceeded our expectations by 50 basis points, but decreased 150 basis points year over year.
Year to date through the second quarter. The show rate is roughly flat year over year, a very positive outcome considering the show rate during the first half of fiscal 2020 was not impacted by the pandemic.
We expect consistent year over year improvement in show rate as we move forward.
Scheduled new student starts were $18, 3% higher than the prior year quarter. The same increase we saw last quarter.
Scheduled new student starts for the third quarter are currently pacing measurably higher year over year than we've seen in the last two quarters.
Momentum continues to build for the fourth quarter as we refine our marketing messaging and high school access efforts all of which further builds confidence for our fiscal 2021 expectations.
Average active students increased 10, 8% during the period as compared to the same quarter last year.
Average active student year over year growth will be elevated the next few quarters, given our front end strength combined with the COVID-19 impacts we saw on the second half of last year.
Our growing student base positions us very well to meet our fiscal 2021 guidance and for strong organic growth in fiscal 2022.
For the second quarter total revenue was $77 7 million down six 1% versus the prior year quarter with the decrease primarily attributable to revenue per student.
While down year over year, we reduced the revenue declined by more than half relative to last quarter.
Revenue per student increased measurably relative to last quarter as expected and.
And we were pleased to see it modestly above where it was two quarters ago.
As discussed last quarter, we have many initiatives underway to support our students that are beginning to normalize the pace at which students are completing the curriculum.
Thus driving enhanced educational outcomes and improving revenue per student.
This will continue to be a focus for us and is a key element for achieving our guidance.
Many of our students have come a long way since the pandemic initially inhibited their coursework last year.
I'm proud to say that hasn't the most recent course rotation the number of students fully caught up with their labs stood at 93% as compared to 84% at the time of our last earnings call.
As a result deferred revenue for the quarter was only 800000 versus 2 million last quarter.
Recall that we originally deferred approximately $11 million in the third quarter of fiscal 2020, when we saw the greatest COVID-19 impact on student course progression.
Operating expense for the quarter decreased four 6% to $79 4 million.
With the largest driver being a $2 4 billion decrease in occupancy costs as a result of the actions we have taken the past year, including the Norwood campus closure, the downsizing of our Sacramento campus and our headquarters facility.
And the Avondale campus purchase.
Note in the quarter, we incurred approximately 800000 of acquisition related costs that we are adjusting out in our non-GAAP measures.
Overall, we are confident in our ability to continue creating operating leverage across the business to a real estate rationalization efforts optimization of our blended learning model and other cost efficiency and productivity improvements.
Operating loss for the quarter was $1 7 million compared to a loss of <unk> 5 million in the prior year.
Largely due to lower revenue, while adjusted EBITDA was $2 8 million compared to $3 1 million in Q2 of 2020.
The minimal adjusted EBITDA declined despite lower revenue and higher average students versus the prior year highlights the efficiencies, we're gaining in our operating model and the effectiveness of our cost management efforts.
Net loss for the quarter was $1 5 million compared to net income of $10 1 million in the prior year quarter.
No. Prior year net income includes the $10 8 million income tax benefit was the result of revised net operating loss carry back regulations under the cares Act.
Basic and fully diluted loss per share were both nine.
With $32 million 814000 common shares outstanding as of the end of the quarter.
Going forward, we will be reporting adjusted net income as opposed to adjusted operating income and our non-GAAP measures.
As we believe this will be a better performance indicator for our business given our expected profitability and the impact of our strategic initiatives.
For this quarter, our adjusted net loss was <unk> 8 million compared to adjusted net income was <unk> 3 million in the prior period, which excludes the cares act income tax benefit.
Turning to the balance sheet and cash flow available.
Available liquidity as of March 31 was $78 5 million, which includes $59 million of unrestricted cash and cash equivalents and $19 5 million of short term held to maturity securities.
Cash flow has been strong in the first half of the year as we are returning to more consistent student matriculation patterns and fund flows.
And our expected Capex is weighted to the second half of the year.
Year to date adjusted free cash flow increased by $3 7 million versus the prior year to $10 4 million and <unk>.
Cash from operations increased $6 6 million to $17 5 million.
As another note we continue to explore potential financing opportunities for the Avondale campus to further increase our deployable capital and will update you on additional information becomes available on this topic.
Our fiscal 2021 guidance with.
With half the year completed continued front end strength.
And improving operating performance our confidence has only increased.
As a reminder for fiscal 2021, we anticipate year over year, and new student start and revenue growth of 10% to 15%.
Adjusted EBITDA of $30 million to $35 million and adjusted free cash flow of 20 to 25 million.
From a revenue pacing perspective, the guidance applies delivering revenue in excess of $80 million in the third quarter and in excess of $95 million in the fourth quarter.
We are pivoting our prior net income guidance to adjusted net income of $14 million to $19 million, which will adjust out the impact of acquisition related expenses strategic investments and other nonrecurring items.
As Jerome mentioned, it's also important we spend a few minutes on our strategic roadmap.
With the announcements over the past few months regarding the initial steps in executing our growth and diversification strategy. We've provided an outline of the expected impact both from our base business in the announced initiatives.
The announcements include the ongoing expansion of our welding program.
New campuses in Austin in Miami optimized around our blended learning model, which we expect to launch in fiscal 2022.
And the definitive agreement to acquire MAA T, which we.
To close by the end of fiscal 2021.
In summary, assuming successful execution of these initiatives within the timelines we would announce.
Including closing the <unk> acquisition, we estimate that the aggregate impact of these actions coupled with the trajectory of our base business would result in an average annual revenue growth rate exceeding 10% over the next several years.
Thus positioning the company to deliver annual revenue solidly over 500 million by fiscal 2025.
With adjusted EBITDA margin in excess of 20 per cent.
It's important to note that this is not guidance, but represents what we believe to be a conservative view of the future of the business incorporating these specific initiatives.
Breaking it down into the key components to the base business, which includes the welding expansions. We estimate we will see double digit revenue growth in fiscal 2022, given the momentum we expect to carry out of fiscal 2021, and the full year benefit of operating in a more pre COVID-19 like environment.
We then expect growth rates to normalize in the low to mid single digits going forward, excluding any counter cyclical upside.
Adjusted EBITDA margin for the base business should also be expanding throughout this time horizon.
For the Austin in Miami campuses in our strategic update we published a pro forma view of their financials, which reflects their estimated direct revenue and EBITDA contribution.
Both begin ramping in fiscal 2022, and combined they should generate approximately $36 million of revenue in fiscal 2023 and.
On reach approximately $46 million in combined revenue by fiscal 2025.
Note. This only includes the auto diesel and welding programs that we plan to initially launch at these campuses.
We also expect them to deliver very healthy direct EBITDA margins, which we estimate will exceed 60% by fiscal 2023, reflecting the expected operating efficiencies associated with our blended learning model.
Or am I E T as a standalone entity revenue growth as average 20% per year over the last five years generating approximately 25 billion on revenue in 2020, and $3 5 million of adjusted EBITDA.
Given the existing trajectory and the highly realizable growth synergy opportunities through cross selling and program expansion.
We believe we can more than double this revenue stream by fiscal 2024.
And continue growing from there.
We would also expect on more than double adjusted EBITDA margins for this business given operating leverage and cost synergies.
With the combination of the base business strength, the new campuses launching in fiscal 2022.
And the MAA T acquisition closing by the end of fiscal 2021.
We would expect to see the overall fiscal 2022 revenue growth rate in the low to mid twenties and adjusted EBITDA margin in the low teens.
Fiscal 2023 should also be a double digit revenue growth year and show further margin expansion as we get the benefit of the new campuses ramping and the growth synergies with NIH.
We will continue monitoring the progress of the various initiatives and our base business performance and expect to provide formal FY 2022 guidance and our FY 2021 fourth quarter earnings call later this year.
The organic growth investments, we were making along with the pending <unk> acquisition, our foundational pillars to our overall growth and diversification strategy.
Importantly, as Jerome emphasize these are our initial steps and we remain actively engaged in evaluating further opportunities to execute on and to move us further down this path.
With that I want to thank the UTI team for their focus and dedication and delivering a quality education and strong outcomes for our students and for the strong financial and operational results. They delivered this quarter I'll now turn the call back over to Jerome for closing remarks.
Thank you Troy.
Before we address your questions I'd like to quickly discuss our recent announcement appointing Congresswoman Loretta Sanchez to our board of directors, which became effective may for it we're very excited to welcome Loretta to the board.
She is a former Democratic Congresswoman debt represented a majority Republican County in Southern California for 10 consecutive terms that achievement alone should tell you something about Loretta the tenacity passion creativity and innovative approach she brings to our work.
She held numerous important committee assignments during her years in Congress.
<unk> senior member of House Armed Services Committee, the joint Economic Committee and is a founding member of the House Homeland Security Committee.
She also served five years as a member of the House Education and Labor Committee.
Florida is a passionate advocate for higher education working to ensure that access to all types of quality higher education is available for students and returning adults. She believes that people need choices to be able to prepare for their future job opportunities. Loretta is also had multiple family members who work is.
Auto technicians and have seen firsthand the value of schools such as UTI.
She is excited to be part of the company and to engage in our efforts to help address the growing skills deficit, we face in this country and the important work that our programs educators business partners and others plays and providing opportunities to meet critical needs. We look forward to working with you Loretta.
In closing.
We're pleased with the solid results we delivered this quarter and are even more excited about the momentum we're taking into the back half of the fiscal year and beyond our.
Our students are doing a fine job of navigating the new normal and making good progress towards reaching their career goals.
We are proud of their dedication and resiliency.
But again repeat what the overall feel should be for 22.
Yes, hi, Steve destroy and thanks for the question.
The when we think about 22, we carry a lot of momentum out of 21 with our start performance through the air are improving metrics overall and and we get the full year benefit of operating in a more.
My words pre COVID-19 like environment, and so that combined with the campus launches in the M. I T acquisition.
That successfully closing by the end of the year. We believe we should see growth rates on the low to mid twenties and margins in the in the in the low teens for next year. That's again on a preliminary basis, but that's that's how we see a chicken out so far.
Okay, great that's that sounds pretty good at it could you remind us what the EBITDA margins look like it M I T.
Yeah four.
Calendar 20 their calendar your company they had three and a half million of adjusted EBITDA on $25 million revenue, it's about 14%.
And again, our number two by the way just for clarification was the margin I was referencing was adjusted EBITDA.
Okay, and where their margins materially different than 21.
Well they've been on.
Their growth has been driven by both program expansion as well as of marketing improved marketing efforts and.
So the the programs come with some cost to implement so they've been.
Expanding their margins over the last several years in conjunction with their their growth trajectory and as the programs they've launched over the last few years I've matured.
Okay and then.
On the show right, who would've thought by now we would've been seeing a material improvement over last June and you didn't seem to imply that.
And your comments, what what's going on on the show right.
And when do you think that starts to normalized.
Sure Yeah, when we when we projected this year originally we started we looked at 19.
And 21st half of 20, the first half of 20 was not affected from a show eight perspective was not affected.
By COVID-19.
And so when we when we looked at this year, we had to start with well how are we jumping off from the latter part of last year and.
And then we looked at at 19 for the back half of the year and more 19 and 20 for the front half of the year, but we we were pleasantly surprised Q1 was much stronger than we expected I think we talked about it was 350 basis points.
Better and so we were actually better this quarter by 50 basis points on our expectation, while still down year over year, our our assumption was share rates would gradually get better throughout the year. We started off strong in Q1 because of the carryover of students who differed out of Q4.
But we think we're on the right trajectory and we see continued positive momentum through the rest of the year.
Okay.
Perfect.
And.
One of the issues you brought up last quarter was not just students being behind but.
<unk> <unk>.
Feeling feeling in your coursework.
How have you done in monitoring the student can getting them back passing on your courses.
Yes, we we talked about that in the context of.
Quarter ended 12, 31, and with the COVID-19 spite going on and some of the churn we were seeing in the student based on that we've talked about the many initiatives we have on the way our references.
In this quarter as well, we're seeing the yield frankly from those initiatives I'm entering the conversion to blackboard for hours.
Curriculum delivery.
Gives us more integrated.
Way to manage student performance.
Monitoring at risk students five day labs.
A lot of different initiatives, where we're really heightening, our student engagement model and bringing them through the curriculum and we're seeing benefits of that we've had much lower leaves of absence, we've had much lower withdraw. So we think we're definitely on the other side of of some of the challenges coming out of the.
Latter part of last year and the first part of this year and and getting that gives us a lot of confidence as we look at the back half of the year and achieving or guidance.
Okay, Great and one on one last one how many of your current or projected campus locations are reasonably close to 80 regionally airplane on our airline hub, where am I a T could could make a difference in filling that skills gap.
Well I think it is Jerome here.
Can you see first of all on.
It's important to understand that Emma.
Organization is about a third airline.
Mechanics, and two thirds of the other skilled areas just to understand name Si Babe.
They have a broad set of skills that they they they engage on on their campus and we're proud to have them heading towards being part of the family.
We have a number of locations in mine.
For aviation.
The Asian demand is is high and it isn't necessarily how close they are to an airport is of what city day or in which has airports and it both.
Private airports as well as commercial because of course.
Line technicians work on on both time.
So there are a number of our major cities have quite robust opportunity in aviation, but it's important to understand also that.
Other other skills and the.
Group would would be also great high demand skills, you've heard the government talk about the infrastructure plan, adding wind farms off the coast in Florida and California.
There are a large supplier of.
When technicians on their two campuses and we can see that moving very very quickly into our campuses as well, especially in the areas of of high demand robotics Hvac's, there's a number of very high demand areas that.
There were keen to bring across our footprint.
Our next question comes from Ross Sharma.
Really please go ahead.
Hi, Good afternoon, guys. Thank you for taking my questions.
Dinner on to Hey, how are you.
I just wanted to keep the fiscal 22 numbers that you just talk about they seem very <unk>.
<unk> exciting so I guess, there's a lot of interest there, but I missed some of it and I'm glad that Steve repeated those earlier, so physical twenty-two you're looking too low to mid twenties growth rate and then low teens margins and these are the day. These don't include any cross.
Selling a M b I T.
Programs across you'll 12 campuses.
In fiscal 22.
We would we don't assume where will probably be our baseline assumption, let me start there for M eighties.
Close by the end of this fiscal year and again that is subject to.
Department of that approval and then.
Most of 22, if not all of 22 would be getting the appropriate approvals and doing implementations and things like that so the yield from.
There may be some.
Minimal.
Cross sell yield, but really it starts primarily in twenty-three and beyond.
Alright, and so then what gives you confidence on the EBITDA margins is that just and buying so all those EBITDA margins low teams that you're talking about 22 did exclusive of any operational losses from the tune campuses alright.
Correct. It's adjusted EBITDA, We did I will point you to we provided some additional clarification on the guidance and the non-GAAP schedule. So you can see the impact of the FY 21.
Campus implementation costs acquisition costs that we've adjusted out things like that so would you would see a similar format 422, once we rolled that out.
Got it and so on this year's guidance on 30 to 35 also excludes any operational losses from new.
That is correct campuses slash programs got it yeah.
And then just be campuses, it's just the campus the welding programs that we roll out or absorbed in our.
In our EBITDA results were not adjusting nose out and that's not significant.
The campuses is really what we're adjusting out.
Right and then on the remaining half of this you clearly you maintaining guidance you and you had mentioned what the Q3 and two four numbers you're looking at.
Could you repeat those again you would think yeah, maybe on the 80 million.
Correct greater than 80 in greater than 95.
Those gives you to the low end of the range and so.
Obviously, we have a range but.
Right third third quarter, we start with eight in fourth quarter would start start with a nine and be above 95.
Got it and then just one last question if you could.
When you look on the average quarterly tuition.
<unk> student and I know that sequentially it should proving.
It has been improving could you you know.
Kind of talk about where do you expect this number to go to the high was around the high back in the force the fourth quarter of 2019.
The trend is definitely looking up this quarter.
And it hasn't quite made it back to the pre COVID-19 level clearly when do you expect that you expect that the.
The second half of this year.
Have been <unk> caught up.
Yeah, I think Q4 will look a lot more like free COVID-19 level and then we'd be again is absent some major setback.
We would expect 22 to be pretty much fully normalized at that point will free COVID-19 levels.
And then we basically what you would see on our revenue per student free COVID-19 was on <unk>.
Honest increase each year.
No single digit increase each year, just tied to more of our tuition pricing changes on a year to year basis, and so we would we left off at 8080 100 per quarter, I think we'll probably get pretty close to that if not there by fourth quarter. This year, and then B b, there and beyond and 22.
Got it got it in any any update on the share buyback that you had mentioned you might implement.
Well, we did yes, we did get the authorization from the board back on December refreshed authorization, if you will for 35 million.
We that's certainly a capital allocation option as we evaluate our go forward plans that clearly from the announcements over the last few months and what we've talked about today, we've been prioritizing growth and diversification investments but.
There is an authorization out there and it's something for us to continue considering.
Right. So I think this is in line with whatever projects higher higher higher.
<unk>.
And that's how you're making the decisions, but otherwise you you could you.
You could implement a share buyback if you saw it fit.
We could it is subject to the series a preferred shareholder consent. So that is still one step we would have to go through to execute any buyback, but yes, we we could.
Okay. Thank you.
Great. Thank you goodbye, thanks for taking our questions. Thanks.
Our next question comes from Jacob Stephan with Link Street capital markets. Please go ahead.
Hi, This is Jacob on for Martin Newsy, Thanks for taking my questions.
Hi, Jacob.
Hello, just wanted to start with the welding program that's what.
What kind of man are you seeing.
We've seen very consistent results each time, we've launched a welding program. We just launched R. Lyle campus here in this quarter February relaunched Houston.
And may have all year long beach in August of last year, and we pretty consistently fill those or near fill them.
After we start and we built him out of a specific size roughly 20 to 25 students can start every six weeks and we generally are <unk>.
75% plus or minus.
Full on any given start date, so we see good demand there.
Great.
Uhm switching over to the.
On my a T acquisition.
Or you can see any challenges with the closing timeline believe September.
It was kind of a target for that.
No we don't anticipate any <unk>.
Road blocks of hurdles in.
Finishing on that timeline.
Okay Alright.
So student makeup labs I know that was a big.
Good point in the last quarter.
Are you.
Have you guys recognize all of that revenue or.
Can you just give a little bit more color on that.
Yeah, the deferral as of the end of the quarter was 800000.
We have $2 million last quarter original deferral was $11 million.
So were we.
We are cleared obviously the vast majority of that and I would expect based on the progress we've continued to make even since the end of the quarter.
We would likely see that go away or at the end of this quarter certainly by the end of the year.
Great. Thank you for taking my questions.
Okay. Thanks. Thanks.
Again, if you would like to ask a question. Please press R N one.
Our next question comes from Austin mold, though with Canaccord. Please go ahead.
But that pacing, but it has slowed down a bit.
After that point.
And back to only 18%.
And we are seeing.
Even stronger at this point in time, it's a leading indicator often I guess, we've been trying to be fairly transparent on some of the leading indicators given all the noise over the last few quarters.
But.
It's directional it's not but.
But nowhere near baked at that point.
Gotcha.
Can you speak a little bit to the different channels within that and then particularly.
Sure.
How youre outlook factors in high school contracts.
Yes, I mean, we're seeing across all of our high school.
Yes, I mean, we're seeing strength across all the channels.
High School has been surprisingly strong in the first half of the year.
Some of that was carryover out of last year. Some of that is just delayed decisions.
We're seeing good strength in adult good strength in military.
And our overall mix I would say, we're not expecting dramatically different we are assuming a little bit more adult than maybe we normally would.
Just given some of our current trends and again some of that delayed behavior that we're seeing.
At a high school, but.
I would say it's dramatically changed your own would you anything to add John Thank you.
You're right on okay.
Okay.
Okay, and then last question on <unk>.
Can you talk a little about what marketing looks like once you.
Complete that acquisition in terms of how your total advertising spend will be augmented and I'm a little curious if MAA.
Was able to achieve.
Even more attractive cost per start given there on some really high growth fields or just kind of what their cost per start is anticipated to be under under your roof.
Yes, I mean, we're not going to get into too. Many details just yet on some of the underlying metrics on on <unk> I would say broadly speaking.
They do market more locally to their campuses. They don't really have a relocation program they accommodated on.
More of a.
Exception basis, and so that's one of the opportunities for us from a from a marketing perspective is to bring them into our broader marketing footprint in the broader channels that we have access to the price points, we have access to.
Given given the scale that we have relative to them.
And we will continue.
We are excited about driving more students into their campuses right as well as.
As Jerome talked about bringing those programs into our campuses.
Potentially putting diesel in their Michigan.
Michigan campus on all of that will fold into our overall marketing strategy.
As we as we go forward.
Also let me just one comment would be I mean, we have a significantly more developed high school channel.
Even though the demographics of the student.
That would take one of their programs.
The same as ours and as I've said in the past when we talked about acquisitions.
Acquisitions that would bring more skilled trades into our footprint as well as potentially accentuate what they could do on their campuses as that.
We're collecting.
Nearly a quarter million leads from high schools a year and.
A lot of those 18 to 24 year olds, just arent car people.
But they may be interested in renewable energy robotics, non destructive testing or.
HVA C and it gives us more of an opportunity to convert those leads.
With their two campuses and then also.
As we bring their programs across our footprint. So we see some upside there.
Okay. Thank you.
Sure Great. Thanks Austin.
Once again, if you would like to ask a question. Please press Star then one.
This concludes the question and answer session I would like to turn the conference back over to Jerome Grant for any closing remarks.
Thank you operator I appreciate your help today and thank you everyone for dialing into this quarters earnings call. We as a management team look forward to continue to execute on our strategy and share our progress with the investment community. So thanks again for joining I hope you have a great afternoon or evening wherever you are calling in.
And this concludes our call. Thank you.
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