Q4 2023 Universal Technical Institute Inc Earnings Call
Good day and welcome to the Universal Technical Institute Q4, and full year 2023 earnings call. All participants will be in listen only mode should you need assistance.
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I would now like to turn the conference over to Matt Kempton Vice President of corporate Finance. Please go ahead.
Hello, and welcome to Universal Technical Institute's fiscal fourth quarter and full year 2023 earnings call.
Joining me today are CEO, Jerome Grant and CFO Troy Anderson.
Following our prepared remarks, we will open the call for your questions. A replay of this call is transcripts and our investor presentation will be archived on the Investor Relations section of our website at Investor <unk>, UGI and thought EU, along with our earnings release issued earlier today and furnished to the SEC.
During this call we may make comments that contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995, which by their nature address matters that are in the future and are uncertain.
These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements.
These factors include but are not limited to those discussed in our earnings release and SEC filings.
These statements do not guarantee future performance and therefore undue reliance should not be placed upon them.
We do not intend to update these forward looking statements as a result of new information or future developments, except as required by law.
Please note unless otherwise stated all comparisons in this call will be against our results for the comparable period of fiscal 2022.
The information presented today also includes non-GAAP financial measures. These should be viewed in addition to and not as a substitute for the company's reported results prepared in accordance with U S. GAAP.
All non-GAAP financial measures referenced in today's call are reconciled in our earnings press release to the most directly comparable GAAP measure.
For more information regarding definitions of our non-GAAP measures. Please see our earnings release and Investor presentation.
With that I will turn the call over to Jerome Grant CEO of Universal Technical Institute for his prepared remarks Jerome.
Thank you Matt good afternoon, everyone.
Fiscal 2023 was a very strong year for the company. We're grateful that you are able to take the time out of your afternoon. So that we can share several highlights with you.
Following that I'll share highlights of our Concord, and UTI divisional performance and focus in 2023.
Next since superior student and employment outcomes are central to everything we do I'll spend a few moments sharing some of the accomplishments and recognitions we achieved this past year.
From there we'll look ahead to 2024 I will share our formal guidance for the year and outline our areas of focus.
At the conclusion of my comments I'll turn the call over to Troy Anderson, our CFO to dig in a bit deeper on both numbers and metrics.
With that let's begin with the 2023 results, we outperformed expectations throughout the fiscal year, demonstrating the strength of our ongoing growth and diversification strategy. The effectiveness of our operating model our teams ability to execute and the flexibility. We now have as a multi divisional company.
I'd like to thank our faculty staff and students for their ongoing dedication and hard work and for delivering the spine performance in fiscal 2023.
For the full year, we exceeded the high end of our guidance across all key financial metrics, delivering $607.4 million in revenue and $64 $2 million and adjusted EBITDA.
And we performed in line with our ambitious expectations as far as new students starts reaching 22613 for the year.
Over the past several years, we've consistently delivered on the financial goals, we established for our diversified workforce solutions platform.
As we emerge from the pandemic in 2020, one we hit the accelerator on our multi year growth and diversification goals.
As outlined when we first announced our acquisition of M. I a T. Two years ago, and then again when we shared the news about the Concord acquisition last may broadening our transportation and skilled trades offering and entering the health care space will significantly propel our growth and diversification efforts forward.
As well as our overall financial trajectory.
All while maintaining our core focus on supporting strong student and employment outcomes in high demand areas.
With our performance this year and with the initiatives already underway. We believe we are well positioned to maintain our momentum into fiscal year 2024.
I'd like to commend, both our Concord and UTI divisional leadership teams for their execution and collaboration over the past year in achieving the results and in building robust inefficient foundation for future growth.
Let's now turn to a few highlights from each of the divisions in 2023.
Starting with Concord, we seamlessly integrated all critical supporting functions and those related to key public company requirements with the majority of this process behind US we will continue to optimize the organizational model and execute on additional integration and synergy opportunities in the years ahead.
It's important to underscore that all of this fine work occurred while ensuring the business continues to grow.
Demand for Congress programs has remained strong throughout the year and in September we began starting students in one of Concord, new programs, a cardiovascular sonography program in Florida.
We also recently launched an online respiratory therapy program as we continue to look at further opportunities to rapidly expand the division's online programming.
Conchords other planned new program launches are on track for the fiscal year 2024, with three new programs launching in November.
These include diagnostic medical Synagro fee program and another cardiovascular sonography program as well as the first of three planned dental hygiene programs.
We're working diligently to launch the remaining dental hygiene programs during the fiscal year and are making very good progress towards completing the respective regulatory approvals.
As a quick update entering fiscal year 2024, we had a change in Congress leadership I've appointed Congress, Chief operating officer, Kevin Pran to the interim divisional president role.
I'd like to thank Congress, former CEO, Jamie Frazier for her efforts and support and leading the Concord team through the closing of the acquisition and the initial integration efforts, we sincerely wish you well.
We have tremendous confidence in Kevin in the Concord leadership team their ability to capitalize on the momentum they have established and their ability to achieve the divisional financial and operational goals for fiscal 'twenty 'twenty four and beyond.
Moving to the U T I division, we experienced accelerating year over year start growth throughout the year, culminating in 9% growth in the fourth quarter.
We expect that trend to continue for at least the first half of 'twenty 'twenty four if not beyond <unk>.
This performance reflects the fact that we delivered on our two main growth drivers for the year, our planned new program launches and scaling our two newest campus in Austin, Texas and Miramar, Florida.
We launched 13 of the 14 plan new UTI programs across eight campuses in 2023, we expect to launch the remaining aviation airframe and power plant technician program at the UTI Miramar campus very soon following the completion of the Federal Aviation administration certification process, which unfortunately.
<unk> has been delayed beyond our control.
We have seen strong demand for these programs as well as continued high demand overall across the program portfolio. We started approximately 230 students across these programs in the fourth quarter and believe we will see 1000 or more new students starts in fiscal 2024.
As we have outlined during past calls. These initial program launches are merely the first wave of bringing these in demand aviation skilled trades and energy programs that came to us through the M. I a T acquisition to the U T I put print.
We have initiated efforts to launch three more heating ventilation and air conditioning programs in fiscal 2024, and a fourth new HVAC program early in fiscal 2025.
Turning to the Austin in Miramar campuses, which launched in 2022. The two campuses now have nearly 1100 students combined and they are continuing to ramp nicely.
Based on this trajectory we remain highly confident that both campuses will continue to perform in line or above our long term view with respect to their markets.
As an example of this at our most recent career day open house in Miramar, We recorded extremely strong attendance from both students and employers alike. This signals that the local job market is quite robust and values our graduates.
We will continue scaling these campuses and identified future expansion opportunities leveraging capacity available in each location as well as considering new locations to offer are in demand programs.
Now superior outcomes are at the center of our schools missions.
It's a great example of the quality of our programs and partnerships.
Concord schools and employment partners recently received top industry distinction in two states.
First Concord was named school of the year by the California Association of private post secondary schools in early October and.
And in Texas, Concord, Dallas campus received the same distinction from the 200 member career colleges and schools of Texas Association or Ccs T.
Further the Ccs T also awarded the innovator of the year Award to one of Congress Dallas online success coaches Connie <unk>. Congratulations Cai, we're very proud of these awards and they recognize conchords commitment to excellence and student training and outcomes now alongside these recognitions.
<unk> Congress longtime dental employment partners Pacific Dental services, and Heartland dental received employer of the year Awards from the same California, and Texas associations, respectively, Both Pacific Dental services and Heartland dental as part of their ongoing partnerships with Concord have worked closely with us to offer scholarships and very.
On the job opportunities designed to help students achieve careers as dental professionals.
These innovative collaborations mirrored the partnerships, we've historically leveraged our UTI division and we will continue expanding these relationships and our network of health care industry partners over time.
Moving to 2024, our strong execution throughout the fiscal year 2023 has allowed us to enter 2024 on confident footing.
As we look to the fiscal year ahead, we are pleased to share with you today, our formal full year guidance targets revenue will be between $705 million and $715 million, we expect adjusted EBITDA to be between $98 million and $102 million.
As we introduce these ranges I'd like to reemphasize that much of the foundation required to achieve these targets has been laid over the past two years.
Our work in the year ahead of US involves continued execution delivering against these objectives and building upon the sustainable strategic progress we've made.
Our key focus areas for 2024, all support our broader revenue profitability and cash generation objectives. While also continuing to support strong student outcomes. These include further ramping our newest UTI campuses to help them reach their fullest potential.
Driving greater enrollment revenue and profit growth from both our 2023 and 'twenty 'twenty four new program launches in both divisions.
Enhancing the yield of our marketing and admissions investment to continue optimizing lead generation and inquiry conversion.
And continuing to optimize our workforce strategies hiring practices and facilities utilization to maximize operating cost and capital efficiencies, which in turn will drive continued program and margin expansion.
I am proud of our execution over the past year and our positioning for greater growth in the year ahead, I would now like to turn the call over to Troy to review, our fourth quarter and full year 2023 financial results as well as provide additional detail on our 2024 expectations Troy.
Thank you Jerome I am happy to report that our revenue profitability and cash flow performance exceeded expectations for both the fourth quarter and full year.
We saw positive contributions from a number of areas that drove the upside versus our expectations.
Including another strong performance in the quarter from the Congress.
As a reminder, our reported results include both consolidated and segment views as well as corporate unallocated costs.
Please also note that unless stated otherwise the year over year comparisons are on an as reported basis as contributions from Concord only reflected from the acquisition date of December 1st 2022 and forward.
To summarize our operational performance, we recorded $10 368 total new student starts during the quarter.
In 2000, 2613 total new student starts for the full year.
Solidly in the middle of our guidance range.
As we previously shared Q4 is a seasonally high star quarter for both of our divisions.
Concord is too large starts for their clinical programs versus one in the other quarters and the number of students starting in core programs is also higher.
On the UGI side, the majority of the high School channel starts occur in the fourth quarter and high school overall contributed approximately 45% of the total UTI division starts for the year.
UTI starts were up year over year, 9% in the fourth quarter and 6% for the full year.
Within the UTI divisions overall year over year start growth. We are pleased to have driven growth in every quarter during the year.
And the second consecutive quarter of same campus St program start growth.
For both divisions, we see this momentum continuing into fiscal year 2024 supported by our proactive grant programs New program offerings and other initiatives designed to better support and engage with prospective students.
Moving to our financial performance fourth quarter revenue on a consolidated basis increased 53, 9% to $173 million driven by the $55 million contribution from Concord, and four 2% year over year growth for UGI.
For the full year consolidated revenue increased 45% to $607 4 million, which was above the high end of our previously revised guidance range.
The UTI Division contributed $429 3 million in two 5% year over year growth.
<unk> contributed $178 1 million for the 10 months following the closing of the acquisition.
From a profitability standpoint consolidated net income for the fourth quarter was $6 7 million or <unk> 10 per diluted share.
For the year was $12 3 million or <unk> 13 per diluted share.
At the end of the quarter, we had $34 1 million shares outstanding.
Adjusted net income for the fourth quarter was $8 4 million for the year was $22 3 million, which was above the high end of our previously raised guidance range.
Our 2023 net income performance reflects the higher effective tax rate that resulted from last year's valuation allowance reversal.
Along with the impact of certain discrete items during the year.
We expect to see a similar effective tax rate in fiscal 2024.
Adjusted EBITDA for the fourth quarter was $19 2 million and was $64 2 million for the full year, which exceeded the top end of our previously raised guidance range.
On both the divisional and corporate levels, our focus on expense management and driving continuous operating efficiencies is reflected in our overall profitability performance.
Total available liquidity at the end of the quarter was 159 7 million.
Including $8 2 million of remaining revolver capacity.
Total debt was approximately $162 million, while net debt was approximately $11 million.
Our full year operating cash flow and adjusted free cash flow were both $49 1 million representing year over year improvements of $3 1 million and $14 2 million respectively.
The fourth quarter is a seasonally strong quarter for cash generation and we over achieved our expectations, which helped us exceed the high end of our previously raised adjusted free cash flow guidance for the year.
Total capital expenditures for the year were $56 7 million or <unk>.
99% decrease relative to fiscal 2022.
The primary drivers of our Capex for the year include the 26 million purchase of the three primary buildings associated land UTI Orlando campus.
The completion of the UTI Austin in Miramar campus still apples.
Concord program expansion and maintenance capex associated with equipment facilities curricular and other items.
It is important to note, we consistently manage our maintenance capex to approximately 2% of revenue, which is a relatively modest amount.
Given the strength of our execution throughout fiscal 2023.
Well as the current visibility and momentum we are carrying forward, we have a high degree of confidence in the formal guidance ranges, we are providing for fiscal 2024.
I'll highlight that the revenue and adjusted EBITDA ranges are consistent with if not in the upside of the 2024 projections, we have previously communicated.
Underscoring the visibility and predictability with one building into our business model over the past several years.
For revenue, we expect to generate between 705 and $715 million for the fiscal year were 16% to 18% year over year growth.
The growth is driven by the full year of contribution from Concord, along with greater contributions from recent and forthcoming program expansions.
The strong new student start performance this past year and organic new student start growth during the year from both divisions.
While we expect to generate strong revenue growth each quarter, we are anticipating particular year over year strength in the first quarter as we record a full quarter contribution from Concord with.
Of the remaining quarters, we expect revenue growth in the upper single digits to low double digits, driven by the ramping program expansion and the momentum in student start growth across both divisions throughout 2023 and continuing into 2024.
We expect full year, adjusted EBITDA to range between $98 million and $102 million, which is more than 50% year over year growth.
The growth reflects the significant revenue increase including the full year Concord contribution.
Increased yield from our new campus and program expansion investments and overall improved operating leverage from our fixed and selling general and administrative costs.
With our current visibility, we anticipate generating solid growth each quarter.
The strongest growth and profitability overall in the second half of the year.
Note that since we first announced our acquisition of Concord, We've outlined we intend to expand their adjusted EBITDA margins ultimately into the mid teens.
Following our initial focus in investment related to integration and public company readiness, we expect.
To approach double digit margins for the division in fiscal 2024.
And drive additional margin expansion from there.
Yeah.
For fiscal 2024, we're replacing adjusted net income as a guidance metric and are introducing GAAP net income and GAAP earnings per share guidance. As we believe these metrics are better suited to our sustained and expanding profitability profile.
For net income, we expect a range of 34 million to $38 million tripling, our fiscal 2023 GAAP net income.
For diluted earnings per share, we expect a range of 53.
To <unk> 58 per share.
From a quarterly phasing perspective, we currently anticipate measurable year over year growth for both metrics every quarter and overall in the back half of the year, particularly the fourth quarter driven by the seasonal strength in both divisions.
We expect full year adjusted free cash flow to range between 62 million to $66 million.
With our historical cadence, we expect the bulk of the cash generation in year over year growth to come in the fourth quarter.
No we expect fewer adjustments this year given the lower growth investment activity currently planned for the year. The unadjusted free cash flow will also be very strong.
Finally, alongside these financial expectations, we expect total new student starts to range between 24500 to 25500, where total year over year growth of approximately 8% to 13%.
We expect robust start performance in Q1, as we benefit from Concord full quarter contribution comp.
Complemented by continued strong start growth in UGI from both the program expansions and St campus scene program growth.
Thereafter, we expect continued double digit growth in the second quarter, and then stabilization in the low to mid single digits in the third and fourth quarters as we complete the initial ramping of our prior program and campus growth investments.
As well as mature the grants and other enhancements, we have been implementing and refining over the past year or so.
Included in these expectations is annual seasonality within the Concorde clinical programs were certain programs that fewer start opportunities in fiscal 2024 than they did in fiscal 2023.
To expand on drones earlier comments our performance on each of these fronts over the next year largely built upon continuing our solid operational execution and ramping initiatives, we already have in place.
We expect to continue scaling the newest UGI division campuses and the newly launched programs in both divisions driving greater growth as they reach maturity.
Further we aim to launch additional programs rolling out expanded offerings within both divisions during the year.
We're also targeting margin expansion through increasing our operating leverage with specific focus on optimizing our labor force and facilities utilization across both divisions.
With the current strength of our balance sheet and the implementation of various growth investments over the past few years, we remain focused on ramping the yield of these investments and staying flexible and identifying further strategic areas to deploy capital to support growth in 2024 and beyond.
We encourage everyone to review our press release financial supplement and Investor presentation. As these materials include the most current information on our consolidated and segment actual results, our strategic roadmap and our guidance, including our non-GAAP reconciliation tables and bridges between our 2023 performance and the 2024 guidance ranges.
We announced today.
We very much appreciate your ongoing commitment and support from our team students and partners as we continue executing on our growth and diversification strategy.
Now I'll turn the call back over to Jerome for closing remarks.
Thank you Troy as we close today's call I want to briefly review our progress against our growth and diversification strategy, but first I'd be remiss, if I didn't highlight that by achieving our fiscal 2024 guidance, we'll have more than doubled the revenue from fiscal 2021 and nearly tripled adjusted EBIT.
The four pillars of this successful strategy have included new campuses program expansions inorganic growth and business model extensions.
In the past fiscal year alone, we swiftly ramped our two newest UTI division campuses launched 13, New UTI division programs and two new health care programs.
And acquired and integrated Concord career colleges, which will serve as a cornerstone for our newly formed healthcare Division.
Our outperformance throughout 2023 demonstrates the consistency of our execution on our foundational strategy as well as delivery against the objectives, we set for the company over the past several years.
By exceeding our financial targets launching key program expansions and propelling new student growth across both divisions, we will have generated robust and strong momentum for 2024.
In 2024, we will continue to execute on our strategy of growth and diversification along with a key focus on optimization by both UTI and conquer divisions to drive greater margin expansion, we aim to optimize our workforce and facilities utilization to improve overall operating leverage our growth expectation.
We will take full advantage of the platform we strengthened in 2023.
We will continue ramping our two newest UTI division campuses in Austin in Miramar.
As well as the start growth for our newly launched <unk> forthcoming programs across the UTI and conquer divisions.
Like to conclude by emphasizing that our current position is not the end point of our company's growth strategy.
As we've demonstrated through acquiring Concord, our entry into the healthcare space expanded our ability to deliver new workforce solution opportunities in high growth sectors.
Our extensive program and corporate partnership network and our commitment to positive student outcomes gives us the flexibility to deepen our footprint and pursue further diversification pathways for growth.
Wed like to thank our team and shareholders for their support and we look forward to executing on the next phases of our growth plans in fiscal 2024 and beyond I'd now like to turn the call over to the operator for Q&A operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys. It had any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.
Our first question comes from Eric Martin Newsy with Lake Street. Please go ahead.
Hey, congratulations on the terrific finish to a strong year I wanted to ask about the outlook for 2024, and just get a better understanding of the the growth drivers there it looks like in the slide deck.
Outlined four different <unk>.
Drivers the full year of Concord.
Kind of.
The program expansions UTI organic and then Concord organic.
<unk>.
Is it kind of a.
Parsing that $103 million Delta what are the bigger driver is if you could kind of stack rank them for me.
Yes, sure Eric destroy thanks, Thanks for the question and for joining the call.
We've tried to make those proportional obviously theres not numbers on the page.
They are bridging to the mid point you said there are approximate from.
Contribution perspective, but you named the four categories.
Ill start side certainly the full year of Concord, we only have the December month last year. So we get a we get a clinical start which we didn't get last year in November plus against two more core charge. So that is a that's a pretty good sized contributor there and then the program expansion the UGI organic are roughly equivalent.
And their contribution year drove actually commented on that it is.
In his prepared remarks, we did approximately 230 starts on the UTI program expansions.
<unk>.
At much smaller number on the Concorde program expenses in 'twenty, three and then.
We'll get we're expecting maybe around a 1000 or so plus or minus out of the UGI side and again the Concorde programs have much more extended start dates between then.
And theyre smaller cohorts so.
50 to 100 and probably in those and then the organic is frankly pretty modest.
Low ish low to mid single digit type growth out of both UTI Concord.
Okay, Let me start sides and revenue revenue that flows with that fairly consistently and then and then EBITDA. You know you see youll see some differentiation there mainly because of the operating leverage that bodes Rome and I commented on.
As you know coming out of 'twenty two into 'twenty three we had some pressure on our operating leverage given given the 22 star performance and we get a bit of the opposite impact plus we've been driving efficiencies in our operating operations. This year.
So we see much more leverage on the upside from from the growth profile.
Got it Okay, and then on the the macro environment Jerome.
We're still not talking about.
I guess.
Supportive employment picture, it's still less than 4% on the unemployment numbers here sure.
You guys are kind of not kind of you are outperforming so do you consider the macro kind of.
Returning to supportive or is it still neutral in and you guys are kind of powering through despite.
Inflation and interest rates.
Well the.
The numbers that Troy just outlined for you the organic growth numbers et cetera really.
0.2, a posture of saying, we're not looking for any big tailwind yeah.
Yet.
From a macroeconomic standpoint, it's too too soon to predict anything along those lines, but I think as we've said in some of our last quarterly update we are.
Are not seeing as strong a headwinds as we've seen in the past a combination of I think people settling into the new normal as I've said, it before and really starting to think about what's a durable.
Career path that may be in <unk>.
Recession or inflation proof as they as they move forward and so you know.
As we've also said neither Troy, our IR economists don't claim to be.
And the numbers that we put out we think.
Our.
Rationale, but not overly exuberant about any big repair in the economy throughout the.
Throughout the year.
Got it thanks for taking my questions.
Thanks, Eric.
The next question comes from Raj Sharma with B Riley. Please go ahead.
Yes. Thank you for taking my question. Some of my questions were already answered if you could give me give us a little bit more color.
Hum.
I know you broken down the students starts in terms of young adults would you expect the same.
Sort of performance to continue in fiscal 'twenty four.
Our high schoolers versus young adults.
Yes, I think Bob geographic programs.
Yeah.
Troy can give you a little more color on some of the numbers, but I think.
Sort of.
Thematic Lee you know as we came into the second half of 2023.
The tide turn on on growth in the UTI side of the business, we've seen pretty steady growth on the concrete side.
The demographic, they're being at 25 to 30 year old <unk>.
<unk> who's been out in the World has made some decisions as making irrational decision following through on on those and and also the health care opportunities are are are extraordinary.
We saw a turn in the in the second half of 2023.
We're we're into November on the first quarter and were feeling very very good about what we're seeing in the first quarter in terms of continued steady growth.
I think as I said to Eric on the last call you know I don't see any.
Exponential tailwind that's that that's behind us that would that would.
Give us something beyond what we've put in the numbers right now, but we're very comfortable what we're seeing in the numbers based on what we saw in the third quarter, the fourth quarter and now as we're projecting through the first quarter 'twenty four.
Yes, Raj destroy the mix I did comment on high school, specifically, 45% of the total interest for UTI.
Military is always in that 15 ish, 13% to 15 ish range.
And adult makes up the difference in any given year, we might have a plus or minus a few points of swing frankly, mainly between high school and adult as but we don't expect anything dramatic there we've talked throughout the year and coming out of last year about investments, we've made and in high school from a field Rep resource.
Respected we have some new leadership, there as well and so we are expecting.
And even stronger performance in high school and 24 that we had in 'twenty three and we've been transforming the adult side as well we've talked about.
Leveraging call center capabilities more we've talked about the logo versus re lo and the shorter start times.
And so again I think we have different things going on in the different channels net net not a material change probably in the overall mix, but that's a good tailwind.
From a capability and performance perspective coming out of 'twenty three 'twenty four.
Got it great. Thank you for that and then just.
Moving on could you comment on the regulatory impact in and maybe the 90 10, what numbers you're exiting with.
And also any impact there would be on UTI Concord of gainful employment.
Update sure.
Sure Yeah. This is Troy.
The 90 10 again, we're in the high <unk> on an aggregate basis and is measured at the <unk> or the school level, but when you aggregate it all up.
In the high <unk>.
Concord campuses.
Our R&D eighties.
But they don't have a very high military percentage. So again it is switching from 23, the new rule goes into effect for us for fiscal 'twenty, four where the military contribution will now count.
In the in the 90.
But we don't expect any of our schools to touch the wire on 90 and in only one or two again on the Concorde side, even being in the upper <unk>. So we're very comfortable in the 90 10 profile.
The gainful we've done those rules are just and finalized the first reporting period as it will be next summer.
We don't see any material risk frankly really any risk at all.
If there is a very small niche program, probably mainly on the Concorde side, but we're not concerned about anything we were seeing on the on the gainful side and again, we continue to focus on graduation rates and employment rates and we just finished our AC CSC reporting cycle, which is the primary.
Credit or across both Concord, and UTI in and once again, we have consistently strong.
Performance.
There never always 100% perfect.
We're consistently strong in and we think that record.
Stance against anybody in the industry.
Got it great. Thank you for answering my questions I'll take it offline. Thank you.
Thanks Rajiv.
The next question comes from Alex Paris, with Barrington Research. Please go ahead.
Hi, guys. Congrats on the strong finish to the fiscal year.
Hey, Thanks, Alex Thanks for thanks for joining us.
Oh, yes for sure.
So a lot of my questions have been asked and answered, but I have a couple of follow ups from previous questions. So so with regard to starts enrollment revenue.
You said that youre not getting much of a <unk>.
<unk> at this point from rising unemployment, because there isn't really risen significantly at this point.
But it's less of a headwind thats good to hear.
I'm wondering.
To what extent do you attribute your strong growth too.
Prospective students evaluating alternatives to four year colleges. This has been a trend that's been noted in the press.
Are you seeing.
Some lift from that.
Well I mean, we're we're thrilled to see the press engage.
On the notion that college isn't for everyone.
It's something that we try to get the message out as strongly as we can to it.
Hence give people permission to choose something other than a traditional four year degree if they are not so inclined to move move down that path.
Anecdotally, we don't have hard evidence because it's really it's really tough to track when you're talking to a prospect are you trying to decide between us and going to a four year school, but we are seeing.
Anecdotally more students that from a profile standpoint traditionally may not have chosen.
Our two year school or a tech school.
Talking about socioeconomic backgrounds fast qualification backgrounds et cetera. So there's start there's starting to be a little bit of a of a hint out there that.
People are seeing these high demand <unk>.
Skills areas for what they are which is really solid long term careers. So it's.
It's good to see that the message is starting to flow through the other thing I would add Alex is as we brought in and again I'll use cardboard is very broad.
Offering portfolio and now as we brought in the UTI.
Portfolio that we've always said, we're talking to hundreds of thousands of prospective students lead generation every year.
But historically UGI only had a handful of programs to offer them now as we broaden that portfolio.
There's more for us to talk to prospective students about and supports our growth trajectory.
Okay.
Thank you for that are the.
Enrollment counselors.
Brought.
Together or are they separate between UTI and Canaccord and does an enrollment counselor at one or the other institution has the ability to cross sell.
Other.
That's great question, we have not brought them together I think one of the things you've heard from us over the last few quarters is that.
Our collaboration or operational integration strategies that are being explored for Concord and UTI were not something we engaged on last year last year, we engaged on.
Regulatory issues controls back end HR benefits things along those lines that would not disrupt the trajectory of the business in 2023 as we've.
As we turn the page into 2024, we're spending significantly more time talking about collaboration ideas.
There is a large population of the admissions enrollments that are in rate.
Enrollment counselors that that we wouldn't look at that collaboration because you know that many of them are very local on the campus taking people who are touring specific campuses for specific reasons and of course.
That would that would keep them separate but as you take a look at how we may Rick may want to represent healthcare in the high schools are in the military that's something we're taking a very serious look at right now.
Specifically, the military which has got a.
I think a great opportunity for us to be significantly more aggressive in the way, we we represent healthcare professions as a as people rotate out of the military.
That makes sense that's helpful. I appreciate that color.
And then a question on inflation and its impact on fiscal 2023.
Looks like inpatient inflation has peaked and it is receding.
What's your experience within the UTI in Concord with inflationary pressures salaries the ability to add.
Instructors etcetera.
Well.
Two things one I think one of the things we've commented on and continue to continue to comment on is I think the the sort of peaking and beginning to subside a bit of the inflationary pressures has created sort of a.
Posture of the new normal out here.
I was watching the news this morning, and they were talking about how gas had gone down to $3.39 a gallon here in Phoenix and they were high fiving. Each other about it were just a few years ago that would've been something you didn't do so the new normal I think is really out there and we're really seeing that in our prospects where people are like listen.
Being an Amazon driver isn't a career and I really want to look at something that's that's durable good pay great demand and so I understand that I'm paying more for all of these things, but this is something I want to get out get on within my life.
And so what we've really seen is more people who in the past meaning.
22% and 23 were saying to assign to lob to do this but I just can't afford it.
Now, saying, it's time to get on right and so.
Have we seen a huge rush no no we haven't but but the conversations certainly have changed with the with the prospects.
And I'll tell you.
I think maybe you are also.
Asking about our cost structure, but just quick comment there.
We've commented on in prior calls the on the health care side, it's more of a dynamic of the just the supply and demand of health care workers.
Of the Concorde instructors in particular are our active health care workers and their adjuncts promote teaching perspective, so that does put a little bit of extra pressure on the copper side of that is different than the UGI side.
But generally speaking we are not having trouble staffing we have actually seen a little bit less pressure this past year as well as in some more of the enterprise state functions finance et cetera.
Definitely seeing some some pullback in packaging a lot of resumes for some of the physicians were posting here recently, so moving in the right direction there.
Great to hear and then the last question is.
Related to your series a preferred stock as I recall.
You are able to force conversion, if the V WAF equals or exceeds.
$8 33, a share for 20 consecutive days it seems like we almost get there repeatedly and we don't quite get there where do we stand now when would you expect that that would be this was a great earnings reports, so I don't think youre going to backtrack.
And then once converted whats the dilution thought there'll be 20 million more shares but of course, you don't have the preferred dividend any longer.
Sure and then destroyed.
I mean, certainly given the trading we saw exiting the last window.
Throughout the in between period and notebook momentum we're carrying here into.
Out of this earnings release and into the next window, which opens on Monday.
We're optimistic that we will achieve the company trigger it is 20 consecutive trading days within an open window volume weighted average share price above a 133 or above.
And.
We're.
Knock on wood, we'll get there in this window.
The overall dynamics, though.
On an EPS perspective, we don't.
Because of the way, we calculate our EPS, we're doing around the two class method the converted shares are already.
We're basically unfortunately net income between converted shares unconverted that common shares in the unconverted shares already so there is really no meaning.
Meaningful impact on EPS other than the preferred dividend it will be a little over 20 million shares.
That would convert so we go to $54 million in change in total outstanding shares, but it doesn't really.
You get to the same number of different in a different formula.
EPS perspective.
Okay.
Great. Thank you both very much congratulations on the quarter and I will take the rest of my questions offline.
Thank you thanks, Alex.
This concludes our question and answer session I would like to turn the call.
Over to Mr. Grant for any closing remarks.
Well. Thank you very much for joining US everyone. This concludes our call for this quarter I want to wish everyone, a safe healthy and happy holiday season, and we look forward to following up with many of you over the next couple of days.
And if not we will talk to you again in late February.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.