Q1 2024 Universal Technical Institute Inc Earnings Call

Good day and welcome to the Universal Technical Institute's first quarter 2024 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the sparky followed by zero after.

Operator: Good day, and welcome to the Universal Technical Institute's first quarter 2024 earnings call. All participants will be in listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on a touch-tone phone.

Today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Matt Kempton Vice President of corporate fine.

Operator: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Thompson, Vice President of Corporate Finance. Please go ahead.

Please go ahead.

Matt Thompson: Hello, welcome to Universal Technical Institute's Fiscal Perk Quarter 2024 Earnings Call. Joining me today are CEOs Jerome Grant and CFO Troy Anderson. Following our prepared remarks, we will open the call to your questions. A replay of this call, its transcript, and our investor presentation will be archived on the investor relations section of our website at investor.uti.edu, 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 Security Litigation Reform Act of 1995, which, by their nature, address matters that are in the future and are uncertain. Such 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 given. These factors include, but are not limited to, those discussed in our earnings release from SEC Finance. However, these statements do not guarantee future performance, and therefore undue reliance should not be placed on them.

Hello, and welcome to Universal Technical Institute's fiscal first quarter 2024 earnings call. Joining me today are our CEO Jerome Grant and CFO Troy Anderson.

Following our prepared remarks, we will open the call for your questions.

A replay of this call transcript in our Investor presentation will be archived on the Investor Relations section of our website at Investor Dot UTI got 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.

Matt Thompson: 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 column will be against our results for the comparable period of fiscal 2023. This information presented today also includes non-GAAP financial notes. These should be viewed in addition to, and not as a substitute for, the company's reported goals for tearing the cords of UFGAP. All non-GAAP financial measures referenced in today's call are reconciled in our earnings press release to the most correctly comparable gap measure. For more information regarding definitions of our non-GAAP measures, please see our on-aisle release and in-vessel presentation. With that, I will turn the call over to Jerome Grant, CEO of the Universal Technical Institute, for his prepared remarks. Thank you, Matt. Good afternoon, everyone.

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 2023.

This information presented today also includes non-GAAP financial measures.

He 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.

Jerome A. Grant: Our momentum continued into the first quarter of 2024 as the company's financial performance continued to exceed expectations. We achieved $174.7 million in revenue and $24.5 million in adjusted EBITDA. Student cards for 4346, which was right in line with our expectations. Troy will spend some time in just a few minutes going a bit deeper into these impressive numbers.

Our momentum continued into the first quarter of 2024 as the company's financial performance has continued to exceed expectations.

We achieved $174 $7 million in revenue and $24 $5 million and adjusted EBITDA.

Students starts were $43 46.

Which was right in line with our expectations Troy will spend some time in just a few minutes going a bit deeper into these impressive numbers.

Jerome A. Grant: These results underscore the consistency with which we have delivered on our financial promises over the past several years. We have also made rapid progress on our growth and diversification objectives, and we have entered this fiscal year as a robust, multi-divisional company, poised for continued growth, and with each division priding itself on maintaining a strong track record of superior student graduation rates and employment outcomes. Our excellent performance is made possible by the dedication of our faculty, staff, and students across Concord and the UPI Division, along with support from our corporate. I'd like to thank them for their tireless commitment as we continue executing on our growth objectives and expanding the training and employment opportunities we provide our students across in-demand industries. As a key corporate update, I'd like to highlight that, effective December 2023, we satisfied the conditions that allowed us to fully convert our In connection with the transaction, Coliseum Capital Management's co-founder and managing partner, Chris Shackleton, was appointed as a Class III director to our board.

These results underscore the consistency with which we have delivered on our financial promises over the past. Several years. We have also made rapid progress on our growth and diversification objectives and we have entered this fiscal year as a robust multi divisional company poised for continued growth and with each division.

Adding themselves on maintaining a strong track record of superior student graduation rates and employment outcomes.

Our excellent performance is made possible by the dedication of our faculty staff and students across Concord, and the U T I Division.

Along with support from our corporate teams I'd like to thank them for their tireless commitment as we continue executing on our growth objectives, and expanding the training and employment opportunities we provide our students across in demand industries.

As a key corporate update I'd like to highlight that effective December 'twenty two 'twenty three we satisfied the conditions that allowed us to fully convert our outstanding series a preferred stock into common stock.

In connection with the transaction Coliseum capital management's cofounder and managing partner, Chris Shackleton was appointed as a class III director to our board.

Jerome A. Grant: Troy will review the milestones more fully later in the call, but we would like to thank CRIPS and Coliseum for their support when we most needed it and their continued investment in partners. We also have continued to strengthen our corporate and divisional leadership. As we announced last month, we recently appointed Carolyn Frank as our first Corporate Chief Human Resource Officer.

Troy will review the milestones more fully later in the call.

But we would like to thank Chris and Coliseum for their support when we most need it and their continued investment in partnership.

We also have continued to strengthen our corporate and divisional leadership teams as we announced last month, we recently appointed Carolyn Frank as our first corporate Chief Human Resource Officer.

Carolyn brings tremendous experience in building and managing human resource organizations, including <unk>.

Jerome A. Grant: Carolyn brings tremendous experience in building and managing human resource organizations, including Finance of America and Guild Mortgage Company, both New York Stock Exchange-listed companies. I'm confident that she will contribute at a very high level to our mission, and I'm proud to welcome her to the company. I'm also happy to announce that Kevin Prane has been appointed the president of Concord Career College.

Finance of America, and Guild mortgage company, both New York Stock Exchange listed company.

I'm confident that she will contribute at a very high level to our mission and I'm proud to welcome her to the company.

I'm also happy to announce that Kevin Crane has been appointed the president of Concord career colleges.

Jerome A. Grant: Since accepting this interim appointment in September, Kevin has made resounding contributions to both the division and our corporate leadership. With Kevin at the helm, I'm confident that the CONQR division will quickly reach its fullest potential. We look forward to our continued work with Kevin and progressing Concord's divisional goal. Now, let's turn our attention to both the performance and notable highlights for each of our divisions, starting with Tom. In the first quarter, we continue to make progress with new health care program rollouts. As we announced in December, we launched a cardiovascular sonography program and a diagnostic medical sonography program in Orlando, a dental hygiene program in Jacksonville, and another cardiovascular sonography program in San Bernardino. This brings us to five new CONCORD programs launched in the past six months, as we had previously launched an online respiratory therapy program in late fiscal 2023. Market demand for our health care programs remains strong through the first quarter.

Since accepting this interim appointment in September Kevin has made resounding contributions to both the division and our corporate leadership team with.

With Kevin at the helm I'm confident that the Concord Division will quickly reach its fullest potential.

We look forward to our continued work with Kevin and progressing Conchords divisional goals.

Let's turn our attention to both the performance and notable highlights for each of our divisions starting with Concord.

In the first quarter, we continued to make progress with new health care program Rollouts.

As we announced in December we launched a cardiovascular sonography program and a diagnostic medical Sonography program in Orlando and a dental hygiene program in Jacksonville.

And another cardiovascular sonography program in San Bernardino.

This brings us just five new Concord programs launched in the past six months as we had previously launched an online respiratory therapy program in late fiscal 2023.

Market demand for our health care programs remained strong through the first quarter. We also continue to work towards launching two other dental hygiene programs. This year.

Jerome A. Grant: We also continue to work towards launching two other dental hygiene programs this year, where we have maintained our progress by completing their necessary regulatory approval. In addition, we're in the process of expanding the capacity of our Dental Hygiene Program in San Diego County. We also remain focused on driving additional operational and organizational efficiencies with income, along with executing on further integration and synergy opportunities, while optimally supporting our current and incoming healthcare students. Our work to fine-tune the divisional infrastructure gives our healthcare offerings an even greater platform for growth. In the UTI division, we've continued to accelerate our year-over-year start growth in Q1 and ramp up our newest programs. Significantly, we have now launched the aviation program at UCI's Miramar campus, which was the final launch from our 14 planned new programs last year.

Where we have maintained our progress by completing the necessary regulatory approvals.

In addition, we're in the process of expanding the capacity of our dental hygiene program and our San Diego campus.

We also remain focused on driving additional operational and organizational efficiencies within conquer along with executing on further integration and synergy opportunities while opt in we supporting our current and incoming health care students.

Our work to fine tune the divisional infrastructure gives our health care offerings, and even greater platform for growth.

In the U T. I Division, we've continued to accelerate our year over year start growth in Q1 and ramp our newest programs significantly.

We have now launched the aviation program in U T I's Miramar campus, which was the final launch from our 14 planned new programs last year.

Jerome A. Grant: Demand for these newest programs has remained strong, with almost 400 combined student starts across the 14 programs over the last two quarters. We're encouraged by the early returns from these programs, and we're making good progress growing the enrollments and pipeline. We anticipate at least 1,000 new student starts for these programs this fiscal year.

Demand for these newest programs has remained strong with almost 400 combined students starts across the 14 programs over the last two quarters. We're encouraged by the early returns from these programs and we're making good progress growing the enrollments in pipeline.

We anticipate at least 1000, new students starts with these programs this fiscal year.

Jerome A. Grant: The division's most recent program launches are just our first steps towards expanding the MIT-sourced aviation, skill trades, and energy programs more broadly across the UTI campus footprint. We continue to evaluate additional program expansion opportunities in the UPI division. In fact, we've already started the second phase of the program expansions, and at present, we're on track to launch three additional heating, ventilation, and air conditioning programs this year, with a fourth ACAC program expected to launch in early fiscal 2025. In another strategic step related to the MIT acquisition, we recently announced our plans to consolidate the UTI Division's Houston operations into a single campus. Through this transition, the MIIT Houston campus will start operating under the UTI brand and implement a phased transition beginning this May.

The division's most recent program launches are just our first steps towards expanding the M. I T source aviation skilled trades and energy programs more broadly across the U T. I campus footprint, we continue to evaluate additional program expansion opportunities in the U T. I Division in fact, we've already started the second phase of the pre.

Graham expansions and at present, we are on track to launch three additional heating ventilation and air conditioning programs. This year with a fourth HVAC program expected to launch in early fiscal 2025.

In another strategic step related to the M. A T acquisition, we recently announced our plans to consolidate the UTI divisions Houston operations into a single campus.

Through this transition the M. I a T. Houston campus will start operating under the U T I brand and implementing a phased transition beginning this may.

Jerome A. Grant: The consolidation is meant to streamline operations and standardize our educational delivery model in Houston through aligning our campuses' curriculum, student-facing systems, and their educational and career support services to better serve students seeking careers in in-demand fields. This process will also help future students complete certain programs more quickly and strengthen UTI's position as a dominant provider of career and technical education solutions in the Houston market, a market in which we've operated for over 40 years. We're working to ensure that current MIT students have a seamless and positive experience through the transition, and we expect the transition process to be fully completed in early Fiscal 2025. Our division-level initiatives all support our core commitment to driving superior student outcomes across diversified, in-demand fields. We deliver on this commitment not only through expanding our program offerings and optimizing our campuses but also through prioritizing top-quality industry partnerships and instruction. In both divisions, our industry partners continue to invest in our programs and students. For example, Standard Motor Products, or SMP, is a long-time UTI division partner that manufactures and distributes premium automotive and truck parts.

The consolidation is meant to streamline operations and standardize our educational delivery model in Houston through aligning our campuses curriculum student facing systems and their educational and career support services to better serve students seeking careers Indian demand feels this process will also help future.

Students complete certain programs more quickly and strengthened uti's position as the dominant provider of career and technical education solutions in the Houston market a market in which we've operated for over 40 years.

We're working to ensure that the current M. I T students have a seamless and positive experience through the transition and we expect the transition process to be fully completed in early fiscal 2025.

Our division level initiatives, all support our core commitment to driving superior student outcomes across diversified in demand fields.

We deliver on this commitment not only through expanding our program offerings and optimizing our campuses, but also through prioritizing top quality industry partnerships and instruction.

In both division our industry partners continue to invest in our programs and students for example standard motor products or S. N. P is a longtime UTI division partner that manufactures and distributes premium automotive and truck box S. M. P's products are deeply integrated into the hands on portion of our.

Jerome A. Grant: SMP's products are deeply integrated into the hands-on portion of our automotive and diesel programs. S&P recently extended its partnership with UTI to provide a product allowance at our UTI campuses, an investment of up to $80,000 per year. In addition, we recently secured a partnership with the United Service Organizations, commonly known as the USO. This partnership will offer specialized training programs and resources to help military personnel with their transition to civilian life and careers in transportation, motorsports, renewable energy, and the aviation industry. In terms of our healthcare partnerships, we announced last week that our partners at Jefferson Dental and Orthodontics recently donated two cutting-edge ITERO inter-oral 3D scanners to the conference Dallas and San Antonio campuses. ITERO 3D scanners use a handheld wand to capture thousands of images of patients' mouths in just seconds.

The motive and diesel programs SMP recently extended its partnership with UTI to provide a product allowance at our UTI campuses and investment of up to $80000 per year.

In addition, we recently secured a partnership with the United Service organizations, commonly known as the U S. L. This partnership will offer specialized training programs and resources to help military personnel with their transition to civilian life and careers and transportation Motorsports renewable energy and aviation industry.

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In terms of our health care partnerships, we announced last week that our partners at Jefferson Dental and Orthodontics recently donated to cutting edge I chair of inter or all three D scanners to Congress, Dallas and San Antonio campuses.

<unk> three D scanners use a handheld one capture thousands of images of patients mouth in just seconds and this enhanced visualization enables higher quality dental services and patient experiences through using the scanners in their clinical work our dental students will access innovative state of the industry.

Jerome A. Grant: And this enhanced visualization enables higher quality dental services and patient experience. Through using the scanners in their clinical work, our dental students will access innovative, state-of-the-industry technology that prepares them for the future of dentistry. We extend deep gratitude to our partners at Jefferson Dental for their generous donations and dedication to our students. Also, at Concord, Heartland Dental, one of the top dental service organizations in the nation, with more than 1,700 supported practices nationwide, recently extended their commitment to provide scholarship offerings to students in our dental hygiene program. This is the third year that Heartland has invested in our dental hygiene students. Now looking ahead to 2024, we continue to have high confidence in the trajectory of our student starts and the guidance we set in November of 24,500 to 25,500 starts.

G that prepares them for the future of dentistry.

We extend deep gratitude to our partners at Jefferson dental for their generous donation and dedication to our students.

Also at Concord, Heartland dental one of the top dental service organizations in the nation with more than 1700 supported practices nationwide recently extended their commitment to provide scholarship offerings to students in our dental hygiene program. This is the third year that Heartland has invested in our dental hygiene students.

Now looking ahead to 'twenty 'twenty four we continue to have high confidence in the trajectory of our students starts and the guidance. We set in November of 24500 to 25500 starts.

Jerome A. Grant: That said, with the strength of our first quarter results and continued progress on our growth, diversification, and optimization strategies, we are raising our full-year revenue and profitability guidance for fiscal 2024. Notably, we now expect to generate annual revenue between $710 million and $720 million, and it's estimated EBITDA of between $100 million and $103 million. Troy will cover these updates in more detail in just a few moments.

That said with the strength of our first quarter results and continued progress on our growth diversification and optimization strategy. We are raising our full year revenue and profitability guidance for fiscal 2024, notably we now expect to generate annual revenue between $710 million and seven.

$20 million and adjusted EBITDA of between $100 million and $103 million.

Troy will cover these updates in more detail in just a few moments.

Troy R. Anderson: To support our broader revenue and profitability and cash generation objectives, we also continue to drive on our key operational focus areas for 2024, which include increasing enrollment revenue and profit growth from our fiscal 23 and 24 program launches. Ramping the yield of our marketing and admissions investments to further optimize lead generation and inquiry conversion in both divisions, and continuing to optimize our workforce strategies, hiring practices, and facility utilization to drive greater capital and operating costs, both of which propel our program and market. Our focus in these areas will also give us an even greater foundation from which to drive strong student outcomes. We've already laid much of the foundation over the past two years, and we expect to make additional progress throughout fiscal 2024. I'd now like to turn the call over to Troy to review our first quarter financial results. Troy said:

To support our broader revenue and profitability and cash generation objectives. We also continued to drive on our key operational focus areas for 2024, which include increasing enrollment revenue and profit growth from our fiscal 'twenty, three and 'twenty four program launches.

Ramping the yield of our marketing and admissions investments to further optimize lead generation and inquiry conversion in both divisions.

And continuing to optimize our workforce strategies hiring practices and facility utilization to drive greater capital and operating cost efficiencies, both of which propel our program and margin expansion.

Our focus in these areas will also give us an even greater foundation from which to drive strong student outcomes. We've.

We've already laid much of the foundation over the past two years and we expect to make additional progress throughout fiscal 2024.

I'd now like to turn the call over to Troy to review, our first quarter financial results Troy.

Troy R. Anderson: Thank you, Jerome. We outperformed our revenue and profitability expectations once again in the first quarter, reflecting a robust full-quarter contribution from Common Core and new student growth in both divisions. Consistent with last year's presentation, our results include both consolidated and segmented views, as well as corporate unallocated costs. Unless stated otherwise, the earlier comparisons remain on an as-reported basis.

Thank you Jerome we outperformed our revenue and profitability expectations. Once again in the first quarter, reflecting a robust full quarter contribution from Concord, and new student start growth in both divisions.

Consistent with last year's presentation. Our results include both consolidated and segment views as well as corporate unallocated costs.

Unless stated otherwise the year over year comparisons remain on an as reported basis and the year ago period. Only includes one month of Concord contributions from the acquisition date of December one 2022.

Troy R. Anderson: The year-ago period only includes one month of common core contributions from the acquisition date of December 1st, 2022, to summarize our operational... We recorded 4,346 total new student scores, which was in line with our expectations and reflects year-over-year start growth across both divisions. In the UTI division, SCARC increased 17.2% year-over-year, and we continue to see improved same-campus, same-program growth consistent with the past The divisional chart growth also reflects contributions from our most recent programmers and Jerome R. Economy. On a pro forma basis, Concord core scars grew a healthy 14.4%, with total scars growing 12.5%.

To summarize our operational performance, we recorded 4346 total new student starts which was in line with our expectations and reflects year over year start growth across both divisions.

In the UTI Division starts increased 17, 2% year over year, and we continue to see improved St. Kansas same program growth consistent with the past few quarters.

The divisional start growth also reflects contributions from our most recent program expansions as Jerome already commented on.

On a pro forma basis comfort core starts grew a healthy 14, 4% with total starts growing 12, 5%.

Troy R. Anderson: Core Starts reflected additional marketing investments and continued success with the grant programs implemented last year. However, clinical scar growth rates are highly variable on both quarter-over-quarter and year-over-year basis due to varying program requirements and Available Starts, which can be limited by programmatic accreditation. Moving to our preamble, our first quarter revenue of $174.7 million on a consolidated basis exceeded our expectations, increasing 45.6% versus the prior year. The full quarter of Concord contributed 59.3 million, which increased 44.9 million versus the prior year, while the UCI division saw 9.3% year-over-year growth. From a profitability standpoint, consolidated net income for the first quarter was $10.4, or $0.17 per dilute share. Well, I just need to dial a 24.5.

The core starts reflected additional marketing investments and continued success with the great programs implemented last year.

No political start growth rates are highly variable on both a quarter over quarter and year over year basis due to varying program lengths and available starts which can be limited by programmatic accreditation standards.

Moving to our financial performance, our first quarter revenue of $174 7 million on a consolidated basis exceeded our expectations, increasing 45, 6% versus the prior year.

The full quarter of Concord contributed $59 3 million, which increased $44 9 million versus the prior year.

While the UTI division saw a nine 3% year over year growth.

From a profitability standpoint consolidated net income for the first quarter was $10 4 million or 17 cents per diluted share.

While adjusted EBITDA was $24 5 million.

Troy R. Anderson: These all reflect measurable year-over-year growth due to the full quarter contribution from Comfort, along with improved operating leverage for cost efficiencies as we generate yields for our growth investments and optimization. Note, our ESA-DAW adjustments are largely consistent with last year's. Compared with last year, we expect less of an impact from new opportunities and program start-up costs and a limited impact of acquisition-related costs. Set for a new item this year is restructuring costs related to UTI and MIET Houston campus consolidations. To the extent there are costs for this, they will be recognized at the period of their occurrence. And Jerome mentioned, in December, we satisfied the conditions that allowed us to fully convert the outstanding Series A first stock into common stock. Houston Creek, our total number of common shares outstanding is 19.3 million shares.

These all reflect measurable year over year growth due to the full quarter contribution for comfort.

Along with improved operating leverage and cost efficiencies as we generate yields from our growth investments and optimization efforts.

Our EBITDA adjustments are largely consistent with last fiscal year.

Versus last year, we expect less of an impact from new campus and program startup costs and limited impact of acquisition related costs.

A potential new item this year's restructuring costs related to the UTI antibodies Houston, Kansas consolidation efforts.

To the extent there are costs for this they will be recognized in the period they recur.

As Jerome mentioned in December we satisfied the conditions that allowed us to fully convert the outstanding series a preferred stock into common stock.

This increased our total common shares outstanding by $19 3 million shares.

Immediately prior to the conversion we purchased 33300 shares of series a preferred stock convertible into 1 million shares of common stock owned by Coliseum, and an affiliate for $11 3 million.

Troy R. Anderson: Immediately prior to the conversion, we purchased 33,300 shares of Securities Aid referred stocks convertible into 1 million shares of common stock owned by Coliseum and an affiliate for $11.3 million. Through the repurchase, their combined ownership percentage post-conversion is below 25%, thus eliminating the need for further regulatory approval. As of December 31st, 2023, we had 53.7 million shares of Common Stock outstanding.

Through the repurchase their combined ownership percentage post conversion is below 25%, thus eliminating the need for further regulatory approval.

As of December 31, 2023, we had $53 7 million shares of common stock outstanding.

Troy R. Anderson: Of note, given the partial quarter with the preferred shares in place, our earnings per share calculation for the first quarter reflects the two-class method we had used previously, with the associated effects of the preferred dividend and the earnings allocations of the participating securities. Going forward, our year-to-date and full-year EPR calculations will also reflect the two class sets, while the remaining quarters will reflect the more traditional, basic, and diluted EPS calculations.

Of note given the partial quarter with the preferred shares in place our earnings per share calculation for the first quarter reflects the two class method we've used previously.

With the associated effects of the preferred dividend and the earnings allocation to participating securities.

Going forward, our year to date and full year EPS calculations will also reflect the two class method, while the remaining quarters will reflect the more traditional basic and diluted EPS calculations.

We saw a favorable effective tax rate in the quarter versus more recent quarters in the year ago period due to the impact of various discrete items.

Troy R. Anderson: We saw a favorable effective pass rate in the quarter versus more recent quarters and a year ago due to the impact of various screen items. Following these benefits through the four-year, we now expect a four-year effective tax rate of approximately 27% versus our initial 30% expectation. Total available liquidity at the end of the quarter was $123.6 million, which includes the $90 million drawdown of our revolving credit facility.

And these benefits through the full year, we now expect our full year effective tax rate of approximately 27%.

Versus our initial 30% expectation.

Total available liquidity at the end of the quarter was $143 6 billion.

Which includes the $90 million drawdown of our revolving credit facility.

We ended the quarter with excess networking capital.

Our target going forward is to maintain a modest level of net working capital.

As such we will be actively managing the amount of the draw we have against the revolver to achieve this target.

And minimize interest expense as much as possible.

Total debt was approximately 162 million, while net debt was approximately $18 million.

Troy R. Anderson: We ended the quarter with excess net working capital, while our target going forward is to maintain a modest level of net working capital. As such, we will be actively managing the amount of withdrawal we have against the revolver to achieve this target and minimize Interest Expenses once it's possible. Total debt was approximately $162 million, while net debt was approximately $8 billion. Our first quarter operating capital was 10.8 million. An adjuncted pre-capsule treatment lasts 10.2 minutes.

Our first quarter operating cash flow was $10 8 million and adjusted free cash flow was $10 2 million.

Cash capex of $3 8 million for the quarter was a bit lighter than we expected due to spend timing.

We still expect approximately $30 million of Capex for the full year.

Consistent with our guidance. We currently have lower levels of new growth investment activity planned for fiscal 2024 relative to recent prior years as we continue to anticipate having fewer adjustments and expect to generate strong unadjusted free cash flow for the fiscal year.

With our positive first quarter performance and current visibility into the remainder of the year, we are raising our revenue and profitability guidance ranges for fiscal 2024.

Troy R. Anderson: Our cash cut back to $3.8 million for the quarter was a bit lighter than we expected due to the holiday season, but we still expect approximately 30 million visitors for the full year. Consistent with our guidance, we currently have lower levels of new growth investment activity planned for fiscal 2024 relative to recent prior years, and thus we continue to anticipate having fewer adjustments. They expect to generate strong, unadjusted free cash flows for the fiscal year.

Our updated guidance ranges are as follows.

Revenue of $710 million to $720 million, an increase of $5 million.

Net income of $36 million to $40 million, an increase of 2 million.

Diluted earnings per share of <unk> 67 to 72 cents an increase of 14.

With approximately 10 cents driven by the combined impact of the preferred conversion and repurchase.

Troy R. Anderson: With our positive first quarter performance and current disabilities for the remainder of the year, we are raising our Revenue and Profitability Guidance Ranges for Fiscal 2024. Our updated guidance ranges are as follows: revenue of $710 to $720 million, an increase of $5 million; going from $36 to $40 million, an increase of $2 million. Diluted earnings per share of 67 to 72, an increase of $0.14 with approximately $0.10 driven by the combined impact of the preferred conversion and repurchase.

And adjusted EBITDA of $100 million to $103 million, which increases the bottom end by $2 million and narrowed the range by $1 million.

We continue to have high confidence in our prior adjusted free cash flow guidance of $62 million to $66 million.

As well as our prior new student start guidance of 24500 to 25500.

As always we will evaluate our guidance throughout the year as we gain further insight into our actual and expected performance and make adjustments as appropriate.

In terms of revenue phasing, we continue to expect upper single digit to low double digit revenue growth over the remaining quarters.

Expectations are driven by the ongoing ramp of our recent program expansions and student start growth momentum in both divisions.

Troy R. Anderson: And it's up to you to dial 100 to 103 million, which increases the bottom end by 2 million and narrows the range by 1 million. We continue to have high confidence in our prior adjusted free cash flow guidance of $62.56, as well as our priority dispute discouragement items of $24,500 to $25,500. As always, we will evaluate our guidance throughout the year as we gain further insight into our actual and expected performance and make adjustments as the program progresses. In terms of revenue base, we continue to expect upper single-digit to low double-digit revenue growth over the remaining quarters. These expectations are driven by the ongoing ramp of our recent program extension. For new student starts, we continue to expect double-digit growth in the second quarter and then stabilization in the low-to-mid single digits in the second half of the year as we complete the initial rent phase of our prior new program, to mature the proactive grant enhancements and other issues we put in place in fiscal 2023.

Our new student starts we continue to expect double digit growth in the second quarter, and then stabilization in the low to mid single digits in the second half of the year as we complete the initial ramp phase of our prior new program investments and mature the proactive great enhancements and other initiatives, we put in place fiscal 2023.

Moving to adjusted EBITDA, we continue to expect solid growth each quarter with higher growth and profitability in the second half of the year given the revenue growth higher yields from our program expansion investments and greater operating leverage for SG&A and fixed costs.

Our GAAP net income and diluted EPS, we expect significant year over year growth each quarter.

Given the improvement in overall profitability and the relatively smaller numbers in the prior year, along with the benefits of the preferred share conversion.

As we look ahead across both divisions, we will be focused on optimizing their cost structures and facility and resource utilization and driving increased yield from the growth investments. We've made in the past few years.

We will also continue working to identify additional growth opportunities, where we can efficiently deploy capital and further our growth and diversification objectives.

We encourage everyone to review our press release financial supplement and Investor presentation.

Troy R. Anderson: Moving to adjusted EBITDA, we continue to expect solid growth each quarter, with higher growth and profitability in the second half of the year, given the revenue growth, higher yields from our program expansion reduction, and Greater Operating Leverage for NC&A at Fixed Cost. For gap-dead income in diluted EGS, we expect significant year-over-year growth each quarter, given the improvement in overall profitability and the relatively smaller number in the priority, along with the benefits of the preferred share agreement. As we look ahead, across both divisions, we will be focused on optimizing their cost structure.

These materials include the most current information on our consolidated and segment actual results, our strategic roadmap and our guidance.

I'd like to thank our team students and partners for their continued support as we progress further into 2024.

I'll now turn the call back over to Jerome for closing remarks.

Thank you Troy as our first quarter performance demonstrates we've continued to deliver on and exceed expectations across our key financial metrics, while expanding the top quality training and career opportunities we facilitate for our students in high growth markets.

Troy R. Anderson: Facility and Resource Utilization, and driving increased yield from the growth in that we've made in the past few years. We will also continue working to identify additional growth opportunities where we can efficiently deploy capital to further our growth and diversification objectives. We encourage everyone to review our press release, financial supplement, and investor presentation. These materials include the most current information on our consolidated and segmented actual results, our strategic roadmap, and our guidance. I'd like to thank our team, students, and partners for their continued support as we progress further into 2024. I'll now turn the call back over to Jerome for closing remarks. Thank you, Troy.

Our execution has remained strong and consistent over the past several years.

Giving us much of the runway needed to achieve our updated fiscal year 'twenty 'twenty four targets.

We are at least a year ahead of our originally stated plan and our revised targets exceed even this long term view.

They are a testament to the robust multi divisional foundation, we get built and continue to refine.

Upon this foundation, we will continue providing premier diversified career pathways for our students, but I'd, even a greater scale and caliber.

Over the coming quarters, we will be working to ramp the most recent program launches in both divisions enhance the yield of our marketing and admissions and investments and optimize our workforce and facilities utilization to drive greater margin expansion and improved operating leverage.

Jerome A. Grant: As our first quarter performance demonstrates, we've continued to deliver on and exceed expectations across our key financial metrics while expanding the top quality training and career opportunities we facilitate for our students in high growth markets. Our execution has remained strong and consistent over the past several years, giving us much of the runway needed to achieve our updated fiscal year 2024 target. We are at least a year ahead of our originally stated plan, and our revised targets exceed even this long term. They are a testament to the robust multidivisional foundation we have built and continue to refine upon this foundation.

This work enhances the benefits of the initiatives, we put into place over the past year as well as the overall strength and efficiency of our growing platform.

In closing I'd like to reemphasize that this is not the end point of our growth trajectory.

We have conquered as the cornerstone of our health care operations and remain focused on ramping our presence and offerings for this rapidly growing industry as well as our expanding program offerings and corporate partnerships across both of our businesses.

Operator: We will continue providing premier, diversified career pathways for our students, but at even greater scale and caliber. Over the coming quarters, we will be working to ramp the most recent program launches in both divisions, enhance the yield of our marketing and admissions investments, and expand our and Optimize Our Workforce and Facilities Utilization to Drive Greater Margin of and Improved Operating This work enhances the benefits of the initiatives we've put into place over the past year, as well as the overall strength and efficiency of our growing platform. In closing, I'd like to reemphasize that this is not the end point of our growth trajectory. We have conquered it as the cornerstone of our healthcare operations and remain focused on ramping up our presence and offerings for this rapidly growing industry, as well as our expanding program offerings and corporate partnerships across both of our platforms.

These focus areas make us well positioned to evaluate further pathways towards deepening and diversifying our footprint.

We are proud of our progress and we look forward to continuing and building on our momentum for U T I, Inc. In fiscal 'twenty 'twenty four 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.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Our first question comes from Mike Grondahl with Northland Securities. Please go ahead.

Operator: These focus areas make us well-positioned to evaluate further pathways towards deepening and diversifying our footprint. We are proud of our progress, and we look forward to continuing and building on our momentum for UTI, Inc. 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 1 on your touch-tone phone.

Hey, guys. Thanks.

You know Jerome could you maybe highlight you know what is working on the marketing side and some of those investments you've made.

Whether that's high school military just maybe expand on that a little bit like what's working on the marketing side and kind of.

Getting people into school sure well a couple of things.

Operator: If you are using a speakerphone, please pick up your handset before pressing any buttons. At any time, if your question has been addressed and you would like to withdraw your question, please press star then. Our first question comes from Mike Vrondale with Northland Securities. Please go ahead.

Our.

Our adult population, which includes military yes.

Interest has driven demand our demand is driven through.

Digital means and.

We've begun to use more.

Jerome A. Grant: Hey guys, thanks. You know, Jerome, could you maybe highlight, you know, what is working on the marketing side in some of those investments you've made, you know, whether that's high school, military, just maybe, you know, expand on that a little bit, like what's working on the marketing side. Jody Kent, Jerome Grant, Eric Martinuzzi, Rajiv Sharma, Troy Anderson, Universal Technical Institute Inc., Sure

Sophisticated tools, along with our social media vendors and Google.

That's doing a much better job of utilizing new AI tools to to isolate the population that's most likely to be interested in and where we are so the way we combed interest nowadays whether it's geographically.

By age.

Hi.

Social media preferences and things along those lines as I was actually just giving us a better quality leads which is great to see and also helping us.

Jerome A. Grant: Well, a couple things. Our adult population, which includes the military, demand is driven through digital means. And we've begun to use more sophisticated tools, along with our social media vendors and Google doing a much better job of utilizing new AI tools to isolate the population that's most likely to be interested in where we are. So the way we pinpoint interest nowadays, whether it's geographically, by age, by social media preferences, and things along those lines, is actually giving us a better quality lead, which is great to see. And also helping us, you know, discern between those that are less likely to convert and those that are more likely to convert, which helps our reps spend more time with those that are more likely to convert.

Discern between those that are less likely to convert and those that are that are more likely to convert which helps our reps.

Spend more time with those that are more likely to convert and so.

We're seeing a.

An uptick in conversion based off of.

Our ability to better identify those that are more likely to look into transportation and skilled trades or in the health and the health care field.

And then one of the things we talked about at the beginning of the year is that we've significantly increased our presence this year in the high schools and so.

In the high school organizations a lot of the demand has driven most of the demand is actually driven by our reps.

<unk> into the high schools and doing career presentations.

Jerome A. Grant: And so, you know, we're seeing an, you know, uptick in conversion based on our ability to better identify those that are more likely to look into transportation and skilled trade or in the healthcare fields. And then one of the things we talked about at the beginning of the year is that we significantly increased our presence here in the high schools. And so in the high school organizations, a lot of the demand is driven, most of the demand is actually driven by our reps going into the high schools and doing career presentations, I think three or four days a week, five, six presentations a day, and generating interest off of that.

Three or four days a week five six presentations, a day and generating interest off of that and so.

In 2023, we added.

About 15 reps in the high school channel and they are hitting their stride in their second year, they're relationships are stronger they know more about the schools they know more about.

The faculty and administration at those schools, and we're seeing that would be significantly more effective.

And frankly doing a lot more presentations, which is generating a lot more leads so those are the things that I think are probably.

Jerome A. Grant: And so, you know, in 2023, we added, you know, about 15 reps in the high school channel, and they're hitting their stride in their second year. Their relationships are stronger, they know more about the schools, they know more about the faculty and the administration of those schools, and we're seeing them be significantly more effective. And frankly, doing a lot more presentations, which is generating a lot more demand. So those are the things that I think are probably, you know, turning things positively in our direction in criminal defense. I got it.

Turning now turning things, possibly our direction from a lead generation.

Got it and then just one more question.

You've done a bunch of expansions.

Concord at U T I D.

There, maybe one at each that really sticks out or one or two at each that you know it is.

It's just done so well any color there.

Yes, there is well on the.

On the.

Jerome A. Grant: And then, just one more question. We've done a bunch of expansions at Concord and UTI. There may be one that really sticks out, or one or two at each that, you know, it has just done so well, any color of it. Yeah, on the Universal Technical Institute Division side of the aisle, I think the HVAC programs actually are operating the way we traditionally talked about in terms of welding, which is they're filling up pretty much right away. And again, I think, you know, there's a lot of demand out there for HVAC technicians. People understand what an HVAC technician does. And therefore, there's less, you know, market knowledge that needs to be put in, less teaching and learning that has to happen about what the career is.

Universal Technical Institute Division side of the aisle I think the the.

The HVAC programs actually are operating the way traditionally we've talked about in terms of welding, which is they are filling up pretty much right away.

Is that.

And again I think you know the.

There's a lot of demand out there for HVAC technicians people understand what an HVAC technician does.

And therefore theres less.

Market knowledge that needs to be put in less teaching and learning that has to happen about what the career is and so we're really happy to see what's happened with the first <unk> implementations and that's why we decided to accelerate more of them.

Jerome A. Grant: And so, you know, we're really happy to see what happened with the first HVAC implementations. And that's why we decided to accelerate more are on the UCI campus. In second place, I think, aviation.

On the UTI campuses in in second place I think.

Aviation.

The need for aviation taxes also.

Very very strong and so our aviation programs out have done very very well and and you know in most cases exceeded our expectations for the additional cohorts that have started in the group.

Jerome A. Grant: The need for aviation tax is also very, very strong. And so our aviation programs have done very, very well and, in most cases, exceeded our expectations for the initial cohorts that started in the group. On the healthcare side, Concord is very, very strong in the dental field. And so it's a reason why we decided to move forward aggressively with implementing some dental hygiene programs that had been approved prior to the acquisition, go ahead and invest in and get them in on the campuses because dental hygiene programs sell out very quickly. The action has to be quite selective in who we put into them because we have a limited number of seats, and therefore, we then start creating waiting lists for the next cohorts that are coming along.

On that on the health care side.

Yes.

Concord is very very strong and in the dental fields.

And so it's a reason why we decided to move forward aggressively with.

Implementing.

Some dental hygiene programs that had been approved prior to the acquisition is go ahead and invest and get them in on the campuses that dental hygiene programs sell out very quickly.

We actually have to be quite selective in who we put into them because we have a limited number of seats and and and therefore, we then start creating waiting lists for the next call.

Cohorts that are coming on so those two rate right. There H D C and dental with aviation closely behind I think are the.

Jerome A. Grant: So those two right there, HVAC and dental, with aviation closely behind, I think are the Shining Stars so far. Not to say that the other programs are not doing well. They are. They're just smaller.

Shining star so far not to say that the other programs are not done.

Doing well they are.

They're just smaller and in some cases like robotics or wind energy, we spend a lot more time.

Jerome A. Grant: And in some cases, like robotics or wind energy, we spend a lot more time letting the market know what this discipline is, because people really don't realize that there's someone who climbs up that window and fixes it on the inside. So, I hope that answers your question. Yeah, it does. Hey, thank you guys. Thanks a lot.

No.

Letting the market know what this discipline is because people really don't realize that there is someone who climbs up that windmill and.

Fixes that.

Fixes that on the inside so I hope that answered your question yes.

Hey, Thank you guys.

Thanks, a lot.

Our next question comes from Steve Frankel with Rosenblatt. Please go ahead.

Operator: The next question comes from Steve Frankel with Rosenblatt. Please go ahead. Good afternoon, and thanks for the opportunity to ask a couple of questions. So one of the trends that have been going on for a while that's been benefiting you is employers sort of battling for the, Jody Kent, Jerome Grant, Eric Martinuzzi, Rajiv Sharma, Troy Anderson, Universal Technical Institute Inc. Questions? Eric Martinuzzi, Jerome Grant, Rajiv Sharma, Troy Anderson, Universal Technical Institute Inc. Great question.

Good afternoon, and thanks for the opportunity to ask questions.

So.

One of the trends that has been going on for a while that's been benefiting you is employers really battling for these.

Sutent and upping their offers in terms of things like tuition reimbursement given where we are in terms of the overall employment market as that battle turn the other way or do you still see the stakes getting higher for someone to get to the table at UTI.

It's a great question.

Jerome A. Grant: If anything, in many of the areas on the UTI side of the equation, the demand seems to be growing. If you look at BLS projections over the next... 10 to 15 years, the demand for people in the transportation skill trades and energy is even growing. And so, you know, one of the things that we've commented on in the past that we're most proud of is this TRIP program that we put into place. Prior to putting that into place, we really didn't have an organized way of sort of registering what the employment community would be offering the students. And these TRIP agreements, right, how much are you going to pay, how much tuition reimbursement, are there any other benefits like sign-on bonuses And so, those agreements help us rank order that compel the nature of people that are gaining access to our students. They also allow the employment community to understand what the landscape of, because these are not private documents, these are something we make public to all of the students and the employers, so they can see it too, what their competitors are offering.

If anything in many of the in many of the areas.

On the UTI side of the equation the demand is even growing.

If you look at BLS projections over the next two.

10 to 15 years is that demand for people on the transportation skilled trades and energy.

It's even growing and so you know one of the things that we've commented on in the past that we're most proud of is this trip program that we put into places that prior to putting that into place. We really didn't have an organized way.

<unk>.

Registering a what the employment community would be offering our students in the strip agreements right now unless you're going to pay how much tuition reimbursement are there any other benefits like sign on bonuses or in some cases autos and things along those lines and so those agreements help us rank order the compelling nature of.

People that are are.

Gaining access to our students they also.

Allow the employment community to understand what the landscape. Because these are private documents. These are something we make public to all of the students and the employers and see it to what their competitors are offering and so what we see is people in order to get more favorable position of accessing our graduates are are putting together more competitive offers in.

Jerome A. Grant: And so, what we see is people, in order to get a more favorable position in accessing our graduates, are putting together more competitive offers, and that's what we want to do for our graduates. We want to give them a very high-quality, industry-aligned education, and then we want to give them the best jobs that we possibly can. And so, these TRIP agreements, I think, are a great example of things that are actually heightening the competition between those who are gaining access to our students on that side of the aisle. This is good for Concord, because prior to affiliating with them last year, they did a very, very good job of cultivating local opportunities for their graduates. And, as you know from what we've been talking about, health care opportunities dwarf transportation trades And so, now we're starting to evolve the Concord organization with some of that same organizational structure, and we expect that we'll see some of the same results out of them. That's fantastic.

That's you know that's what we want to do for our graduates we want to give them a very high quality industry aligned education, and then we want them to get them. The best jobs that we possibly can and so these trip agreements I think are a great example of things that are actually heightening the competition between those who are gaining access to our to our <unk>.

That's on that side on that side of now this is upside for for comfort because prior to us owning them last year.

Good day, they did a very very good job of cultivating local opportunities for their graduates and as you know from what we've been talking about health care opportunities.

They dwarf transportation trades and energy in terms of the magnitude of need out there on the market and so now we're starting to evolve the Concord organization with some of that same organization and we expect that we'll see some of the same results out of that.

And that's fantastic and then.

Troy R. Anderson: And then, you know, another challenge, especially when inflation was at its peak, was convincing students to relocate. The incentives that you were offering worked and kind of changed the capacity situation at those big campuses like Orlando. Yeah, hey Steve, this is Troy.

Another challenge, especially when inflation was what it was at its peak with convincing students to relocate.

Have the incentives that you were offering worked and kind of.

Change the capacity situation it does big campuses like Orlando.

Yeah, Hey, Steve This is Troy.

Troy R. Anderson: Here, look, we're still seeing, I would say it's been moderated in the last few quarters. So we haven't seen it turn. So we're still seeing really strong progress on the local side, continuing to penetrate more deeply in the local space, especially with the new program offerings, helping to drive that relocation. We're making good progress. We're generating leads. And again, I think it's stabilized.

Look we're still seeing a I.

Moderated the last few quarters.

So we haven't seen it turn so we're still seeing really strong progress on the local side continuing to penetrate more deeply in the local space, especially with the new program offerings are helping to drive that relocation.

Where we're making good progress we're generating the leads and again I think it's stabilized, but some of the campuses, where we have a much higher relocation concentration. We're still we're still trying to work with those students to find the right mix of things to.

Troy R. Anderson: But some of the campuses where we have a much higher relocation concentration, we're still trying to work with those students to find the right mix of things to bring the most students possible to those campuses. Okay, and then the last one, at least relative to the way I modeled it, the revenue per head at the core UTI or the legacy UTI business was a little lower than I thought. Was there anything that led to that that you would call out?

To bring the most students possible in there.

Okay, and then the last one at least relative to the way I've modeled it.

Revenue per head in the core U T I or the legacy <unk> business was a little lower than I thought was there anything.

Okay.

We'll add to that that you would call out.

Troy R. Anderson: Well, we traditionally have a Q1 dip because the holidays were closed for a week in December. So that may be an apology if we didn't convey that in any of our prior conversations. But we do see a dip, and then it bounces back up, and you see your kind of traditional, you know, growth trajectory: two points of growth based upon tuition escalation. Thank you. The next question comes from Raj Sharma with B. Reilly. Please go ahead.

Well, we have a traditionally Q1 dips because of the holidays.

We are closed for a week in December.

So that may.

Paul Geez, if we didn't convey that in any of our prior conversations but.

But we do see a dip and then it bounces back up and you see your kind of traditional <unk>.

Growth trajectory, a few points of growth based upon tuition escalations.

Okay perfect I just wanted to make sure those were still in place for for the rest of the year. Thank you yeah, Yeah sure no problem.

Thanks, Steve.

The next question comes from Raj Sharma with B Riley. Please go ahead.

Yeah. Thank you for taking my questions and great solid performance in the quarter.

Operator: Yeah, thank you for taking the questions and for your great solid performance in the quarter. I wanted to understand the starts better. They are slightly higher than expected, from my understanding. Are most of the starts gained that you expect to be here in the second half? So, yeah, Rajiv, Troy, the guidance we gave back in November was we would have very strong growth in the first half of the year, double digits, and then we would see that moderate in the back half of the year. I commented on that in my prepared remarks. That is still our expectation.

I wanted to understand better the starts.

D R.

Slightly higher than expected.

My understanding is most of the starts gain that you expect to see you in the second half.

Still so.

Yeah Raj this is Troy.

So the guidance we gave back in November was we would have very strong growth first half of the year.

Double digits and in.

And then we would see that moderate in the back half of the year I commented on that in my prepared remarks that is still our expectation.

Troy R. Anderson: So, you know, again, 17 percent for UTI in the quarter, about half of that new programs and half of that same campus, same programs, and then, of course, Concord, I commented on a pro forma basis. This will be the last quarter where there's a partial quarter, but that was 12 percent, a little over 12 percent on a pro forma basis, so good growth there as well, but as we get in the back half of the year, we'll start flapping over or anniversarying some of the improvements we implemented last year as far as grant programs, some of the marketing initiatives, and, of course, the program expansions on the UTI side, so that Great And then just across the board, the student stars, the high school, and the adults were pretty consistent. Military activity was higher than usual. Is that an anomaly, or is that just small numbers? It is a missed call number.

So 17% for UTI in the quarter about half of that new programs at half of that.

Same campus St programs and then.

Course, Concord I commented on a pro forma basis. This will be the last quarter, where there was a partial quarter, but.

That was <unk>.

<unk> percent little over 12% on a pro forma basis. So good good growth there as well, but as we get into back half of the year, we will start lapping.

Lapping over or Anniversarying over some of the.

Improvements, we implemented last year here as far as grant programs.

Some of the marketing initiatives.

And of course, the program expansions on the UGI side. So that's why we expect to see something more in the in the low to mid single digit range in the back half of the year.

Yeah.

Great and then just across the board with student starts at high school in adults were pretty consistent military with higher than usual is that an anomaly or is that just small numbers.

Showing the ability of small numbers.

Yeah, Yeah. It is a bit of small numbers. We also have talked about some of the improvements drove hit all the old High school previously staffing in high School, we had done the same thing in military.

Troy R. Anderson: Yeah, yeah, it's a bit of a small number. We also have talked about some of the improvements from high school previously, the staffing in high school. We have done the same thing in the military. It's a smaller team, a much smaller team, but it's about two dozen now.

It's a smaller team much smaller team but.

But it's about two dozen now we increase that almost by 50% are including some of the attrition that we had seen over the last year or two so that's a pretty fully staffed team. We also centralized our financial aid support.

Troy R. Anderson: We increased that almost by 50 percent, including some of the attrition that we had seen over the last year or two. So, that's a pretty fully-staffed team. We also centralized our financial aid support for our prospective military students to make that process much more streamlined and efficient.

For our perspective military students.

Make that process much more streamlined and efficient. So you had the reps and in our core group of financial aid Representatives working together across the whole portfolio of prospective students and we're seeing the benefits of those actions are in the military growth rate it will bounce around a bit from quarter to quarter again because of our.

Troy R. Anderson: So, you have the reps and a core group of financial aid representatives working together across the whole portfolio of prospective students, and we're seeing the benefits of those actions in the military growth. It will bounce around a bit from quarter to quarter, again, because of smaller numbers, but we have been very pleased with the military growth, certainly in the last couple of quarters. A great thing.

Smaller numbers, but when you have been very pleased with the military growth certainly the last several quarters.

Great. Thanks, and then just on the numbers I know that starts would be low to mid in the second half, but there is a big jump in.

Troy R. Anderson: And then just on the numbers, I know the stars will be low to mid-second half, but there's a big jump in the top line and also, especially EBITDA, in the second half of the first quarter. Q1 there was a big beat on EBITDA too. There is, and I see this, you know, operating expenses are 400 basis points lower than last year. Most of these gains in EBITDA are coming from operating leverage, then.

And the top line and also and especially EBITDA in the second half.

The first quarter of Q1, there was a big beat on EBITDA to where is it and I see that the operating expenses.

400 basis points about lower than last year.

Most of these gains in EBITDA are coming from operating leverage done.

Yeah, it was about half and half versus our expectations.

Troy R. Anderson: Yeah, it was about half and half versus our expectations; about half of the benefit was revenue, and the other half was expense, mostly timing. We didn't ramp up expenses quite as fast as we thought we would. We had some initiatives that were going to start later in the year than we were thinking when we came into the year. So there's a little bit of push associated with the expense side, and some of that was just timing on the ramp, which is why we were able to increase our guidance because we'll flow through some of that net benefit for the year. The top line, keep in mind, again, there's a tail, we have students in school for a year, and so the strong growth we exited last year with and the strong growth that we have in the first half of this year will continue to benefit the top line over the next few quarters. Whereas, you know, let's say you start seeing growth, let's say it starts in the 3-5% range, just in a low I got it.

About half of the benefit was revenue and the other half was expense.

Mostly timing, we didnt ramped expenses quite as fast we thought we would we add some initiatives that were.

We're gonna start later in the year than we were thinking when we came into the year. So there's a little bit of push are associated with the expense side and.

That was just a timing on ramp which is why we were able to increase our guidance because we will will flow through some of that net benefit for the year. The top line keep in mind again Theres a tail we had to start this quarter, but that students in school for for a year and so the strong growth we exited last year.

With the strong growth that we have in the first half of this year will continue to benefit the top line.

Over the next few quarters, whereas.

Once we start.

Seeing growth, let's say, let's say starts are in the 3% to 5% range just in a low to mid single digit.

General type of Guy then all things being equal that revenue would normalize to that plus any rate.

Differential that we have based on the tuition rate Escalations editor.

Got it and it just it seemed like the overall increase in the EBITDA guidance for the year seem conservative given the big beat in Q1.

Troy R. Anderson: It just seemed like the overall increase in the EBITDA guidance for the years seemed conservative given the big break in Q1. Yeah, and again, some of that is just moving some of the expenses around in the timing of the year. We have a little bit of shuffling of revenue around just based on as we reproject the year, some of the start cadence, and being able to flow through, you know, a portion of the Q1 beat. So, you know, look, we're early in the year; we would normally update our guidance, frankly, in the first quarter; normally, it would be the second or third quarter. But given the strong beat and just given our outlook for the year, we're comfortable doing that, and we'll continue to monitor it through the year and make other adjustments, you know, as we see appropriate. I got it. And then just my last question is on the regulatory front, and the composite score is, you know, what where does the composite score stand now? And is there a target that you'd like to achieve?

Yeah to get some of that is just moving some of the expenses around the timing of the year, we have a little bit of.

Shuffling of revenue around just based on as we as we project the year some of the start cadence.

And.

Being able to flow through.

A portion of the Q won't be.

So look we're it's early in the year, we wouldnt normally update our guidance frankly in the first quarter normally it would be second or third quarter, but.

But given the strong beat and just given our outlook for the year, we're comfortable doing that and we will continue to monitor through the year and make other adjustments as we see appropriate.

Got it and then just my last question is on the regulatory front end.

Composite score is what where does the composite score stand now and is there a.

Target that you'd like to achieve and does that kind of the number.

Troy R. Anderson: And does that kind of number, and I guess the attempts are always to try to improve that number, and does that play into you know how you would think about capital allocation and financing of any specific acquisition in the future? Yeah. Thank you. Thank you. Thank you.

I guess the attempt to always try to improve that number and does that play into you know how you would.

Think about capital allocation and financing.

Any specific acquisition in the future.

Yes, it was just trying to get refocused.

Troy R. Anderson: Yeah, we focus heavily on regulatory metrics. We are very purposeful about staying above any thresholds that, you know, cause issues in terms of any of our reporting with the Department of Education, any of our creditors, so student outcomes are also very important. As far as deposit scores are concerned, what's interesting about that is, as you know, and maybe just for general education for those listening, it's a scale of 0 to 3, but 1.5 and above, it's basically pass-fail. You get no benefit out of a 1.51 relative to a 3.

Sure.

We focused heavily on regulatory metrics.

Our very purposeful about staying above any thresholds that cause issues in terms of.

Any of our reporting with the department of education in any of our creditors. So student outcomes are also very important as far as composite score.

It's interesting about that is as you know and maybe just for general education for those listening. It's it is a scale of zero to three mm, but one that five and above.

It's basically passed out there as you get no benefit out of a $1 five one relative to a three it's just you are just you are above one five period end of story.

Troy R. Anderson: You're above 1.5, period, end of story. So, we're not managing to get to a 3. I mean, if we get a 3, that's great. There's a lot of math and elements to the equation that drive the deposit score. We're above 1.5, we're comfortably above 1.5, and we'll continue to manage above 1.5. We did dip relative to the prior year because of the acquisition of Concord. Again, there are a lot of variables that go into the math around that.

So we're not managing to get two or three I mean, if we get a three that's right. There's there's a lot of math and elements to the equation.

That drive the composite score were above one that five we're comfortably above one that fiber will continue to manage above.

Above all that want that five.

We did dip relative to the prior year because of the acquisition of Concord again, Theres a lot of variables that go into the math around that.

Troy R. Anderson: So, you know, we were above a 2, and we were a 1.6 last year. We would most likely be above a 2 again this year as kind of a temporary lift, but again, no impact because above 1.5, you're clear of any potential implications with the Department of Ed. So, that's really the primary metric to look at, but we take it very seriously, and we manage our business to ensure that we're delivering on that. Thank you for answering my questions. I'll take it.

So we were above the two we were at one six.

This last year, we would most likely be above the two again this year as it kind of a temporary blip, but again no impact because above one that five is theirs.

There are clear of any potential implications with the department of Ed.

So that's really the primary metric and we look at but we take it very seriously and we manage our business to ensure that we.

We're delivering that.

Great. Thank you for answering my questions I'll take it.

Thank you congratulations again.

Operator: Thank you. Congratulations. Thank you.

Thanks.

Yeah.

The next question comes from Eric Martin Newsy with Lake Street. Please go ahead.

Operator: The next question comes from Eric Martinuzzi with Lake Street. Please go ahead. Yeah, I wanted to make sure I understood the upward revision to the fiscal 24, obviously with no change in the new student starts versus coming down to sort of the installed base of students outperforming. So I was just curious, is this a little bit better revenue per student, maybe than you were originally thinking? Or better retention in the student population? What's the driver of revenue without the change in new students? Yes, Troy.

Yeah, I wanted to make sure I understood the upward revision to the fiscal 'twenty four obviously with the no change in the new student starts is coming down to sort of the installed base of students outperforming. So I was just curious is this a.

A little bit better revenue per student maybe than you originally thinking or better retention in the student population.

The driver on the revenue without the change in new student starts.

Troy R. Anderson: Eric, thanks. This is Troy. Yeah, I think it's a little bit more the population, better performance in the population. Starts were pretty much in line with our expectations. As you said, we're comfortable with the full-year guidance range we've given previously. Again, early in the year, 4,300 starts out of 25,000 midpoints. So we have a lot of work to do to lay in the other 21,000 starts for the year, but we feel very confident in that. And so, just a bit better monetization coming out of Q4 into Q1, a little bit better persistence and lower attrition on the installed base, as you said. And we continue to feel good about the performance for the remainder of the year around that. And then on the use of cash priorities, you guys have a lot of different directions you can go in. Obviously, M&A has been a key driver of the business, but where do you stack up? I don't know if you even have the ability to post the convertible preferred, the conversion of, you know, share purchases. But you've got new programs, new campuses, M&A, FIBACS. Help me understand these, Jack Reinhart.

Yeah sure Thanks since Detroit.

Yes, I think it's a it's a little bit more of the population better performance on the population starts were pretty much in line with our expectations. As you said, where we're comfortable with the full year guidance range, we had given previously.

Early in the year 4300 starts out of the 25000 mid points that we have a lot of a lot of work to do to lay in the other 21000 starts for the year, but we feel very confident in that and so just a bit better monetization out of the coming out of Q4 into Q1, a little bit better persistence in it and.

Lower attrition on the installed base as you said and we continue to feel good about the performance for the remainder of the year around that.

Okay, and then can you.

Use of cash priorities you guys have a lot of different directions. It can go in obviously M&A has been a key driver of the business, but where do you stack rank I don't know if you even have the ability post the convertible preferred.

Conversion of share repurchases, but you've got new programs new campuses M&A buyback helped me understand the stack rank there.

Troy R. Anderson: Yeah, our bias is to continue down the path of the growth and diversification initiatives we've been embarking upon the last few years, you know, right at the tail end of the work we've done the last few years with the program expansions, new campuses, et cetera. We have a few more program expansions, as Jerome commented on earlier, planned for this year, and we're working on what the next round of decisions might be As Jerome said, these are prepared remarks. You know, we're not at the end of our journey. We're building a foundation, and we have a playbook in place, and we're going to continue looking for opportunities to grow and expand, which could be a combination of organic and inorganic initiatives. Keep in mind that a lot of our cash flow, most of our cash flow is generated in the fourth quarter, so that $62 to $66 million adjusted free cash flow guidance, the majority of that is coming in the fourth quarter, so we don't actually have the cash today.

Yeah, our our bias is to.

Continuing down the path of the growth and diversification initiatives, we've been embarking upon the last few years.

We're at the tail end of the work we've done in the last few years with the program expansion new campuses et cetera, we have a few more program expansion just as Jerome commented on earlier planned for this year and <unk>.

We're working on what the next round of decisions might be.

As Jerome said in his prepared remarks, we're not the end of at the end of our journey. We were building a foundation and we have a playbook in place and we're going to continue looking for opportunities to grow and expand.

Which could be a combination of organic and inorganic.

Initiatives keep in mind, a lot of our cash flow most of our cash flow is generated in the fourth quarter.

And so that 62 to 66 million.

Adjusted free cash flow guidance. The majority of that is coming in the fourth quarter. So we don't actually have the cash today. When we have we are and I commented on our working capital position in my prepared remarks, and we will be managing the revolver down from the $90 million as we progressed through the year and start building up the organic cash.

Troy R. Anderson: I commented on our working capital position in my prepared remarks, and we'll be managing the revolver down from $90 million as we progress through the year and start building up the organic cash but still expect to have some draw on the revolver even as we exit the year, absent any new decisions around that. So right now, we're executing on our plan for this year, probably nothing. We have about $30 million in capex in that plan, and probably nothing. Any new decisions we make would really materially impact cash this year. They would probably lead more into next year and beyond, and our bias is definitely towards continuing on the growth and diversification strategy. At some point, we'll have a consistent, steady stream of cash flow, strong cash flow, and above and beyond what we would need to continue investing in the business, and we'll look at what that broader capital allocation policy might be around return to shareholders and other aspects. I got it.

But still expect to have some draw on the revolver, even as we exited exit the year absent any new decisions around that so right.

Right now we're executing on our plan for this year, probably nothing we have about 30 million of Capex in that plan and probably nothing any new decisions, we make what would really material impact cash. This year, they will probably bleed more into next year and beyond and our bias is definitely towards continuing on the growth and diversification strategy at some point, we'll have a.

Our consistent steady stream of.

The cash flow strong cash flow and above and beyond what we would need to continue investing in the business and we'll look at that what that broader capital allocation policy might be around a return to shareholders and other other aspects.

Got it congrats on the strong quarter and good outlook.

Operator: Congratulations on the strong quarter and good out. Great, thank you. The next question comes from Alex Parris with Barrington Research. Please go ahead.

Great. Thank you.

Yeah.

The next question comes from Alex Paris, with Barrington Research. Please go ahead.

Operator: Hi guys, thanks for taking my question and congrats on the beaten race. Most of my questions have been asked and answered, but I'll use my time to kind of... dive into Concord a little bit more. You've owned it for more than a year now.

Hi, guys. Thanks for taking my question and congrats on the beat and raise.

Most of my questions have been asked and answered, but so I'll use my time to kind of.

Dive into Concord, a little bit more.

You've owned it for more than a year now you bought it on December one of 2022, you have said before you know step one and the acquisition is to first do no harm.

Operator: You bought it on December 1st, 2022. You have said before, you know, step one in the acquisition is to first do no harm. And there were some integration activities during the first 12 months. First question, now what, in terms of integration?

And there was some integration activities.

During the first 12 months.

First question now what in terms of integration.

Troy R. Anderson: And then the second and related question is, where can margins go on that business? I think at the time of acquisition, margins were rounded. Yes, thanks Alex and Troy. So, we're still making great progress last year. We're super pleased with the acquisition and the performance of the Concord team. Jerome commented on Kevin Crane and him being now the division president, named the fiscal division president.

And then the second and related question is where can margins go on that business I think at the time of acquisition.

<unk> were around 8%.

Yes. Thanks Al This is Troy.

So we're still we've made great progress last year, we're super pleased with the acquisition and the performance of the Concorde 14 drew.

<unk> commented on Kevin Crane and being now.

Division President named officially the Division President and haven't missed a beat there. So we're really really excited and pleased with the performance of the team.

Troy R. Anderson: And having this be there, so we're really, really excited and pleased with the performance of the team. The integrations this year are now starting to get into things like payroll and benefits and some of the other financial systems and some of the organizational. You'll see references in our press release and in the queue about some of the alignments we've done organizationally and the expense allocations associated with that. So, we're now really getting into the plumbing of the organization and really more the finance organization, the IT organization, HR, some of the more central supports that have functioned. So, we're doing that kind of work, but that's more background work at this point.

On the integration this year are now starting to get into things like payroll and benefits and.

Some of the other financial systems and some of the organizational you'll see referenced in our press release and in the Q about some realignments, we've done organizationally and.

The expense allocations associated with that so we're now really getting into the plumbing of the organization and I'm really more of the finance organization. The organization HR some of those more central support type functions. So we're doing that kind of work, but thats more background work at this point.

And so really it's now helping them to drive.

Troy R. Anderson: And so, really, it's now helping them to drive a growth mindset and an optimization mindset throughout that organization, which they're embracing wholeheartedly and are bringing great ideas to the table. And we're going to feed into the second part of your question, which is that we continue to believe wholeheartedly, and the team does as well, that that can be a mid-team's margin business. This year, we'll be approaching 10%; maybe 10% was 8% or 9% before we bought them in last year. And so, over the next three years, maybe, we'll get solidly into the teams and continue to look to drive higher from there. But there's an optimization.

Really a growth mindset.

And an optimization mindset throughout that organization, which they are embracing wholeheartedly and bringing great ideas to the table, which then feeds into the second part of your question, which is we continue to believe wholeheartedly in that that the team does as well that are that.

That can be a mid teens margin business. This year would be approaching 10% maybe touch 10%.

<unk> was 8%, 9% before we bought down in last year and so over the next two three years, maybe we'll get we'll get solidly into the teens and we'll continue to look to drive higher from there, but theres optimizations, there's leverage from growth, which they really didn't have a growth profile previously modest.

Troy R. Anderson: There's leverage from growth, which they really didn't have a growth profile. We've seen modest growth, but now we're really taking advantage of the opportunities in the market there with some additional marketing dollars and just changing the strategy around marketing and program expansions. And so, a combination of leverage that we believe is available and readily available to really drive that business forward, both from a growth and margin expansion perspective. Yeah, I'll just make a couple of comments because Troy, you know, really think about unlocking the growth potential of Concord. There are a couple of things that Troy mentioned, which were, you know, during the selling process, you don't usually spend tons of money on your marketing, et cetera. And so, unleashing the upside from a marketing and demand generation standpoint is going very, very well. You know, number two, the program expansions; those were something that weren't being invested in during the selling process.

Growth, but now we are really taking advantage of the opportunities in the market. There was some additional marketing dollars and just a change in strategy around marketing the program expansions.

And so a combination of levers that we.

We believe our available and readily available to really drive that business forward, both from a growth and margin expansion perspective, yes, I'll just make a couple of comments as Troy.

Troy.

Okay.

Most of it when you really think about unlocking the growth potential of Concord. There are a couple of things that Troy mentioned, which was you know during the selling process, usually you don't spend tons of money on your marketing et cetera, and so on unleashing the upside from a from a marketing and demand generation standpoint is going very very well.

No.

Number two the program expansion. So those were something that weren't being invested during the selling process, but now that we've taken control we accelerated.

Jerome A. Grant: But now that we've taken control, we've accelerated the six programs that we put into place this year and into the beginning of next year. The last couple of things I'd point out would be, you know, we're beginning to work very collaboratively with the Concord leadership team in two other areas. One place where UTI has really differentiated itself in the market, which is industry alignment and B2B relationships, is that we really believe in unlocking the power of relationships with, you know, folks like Heartland or, you know, that we mentioned in the speech and, you know, taking off from places like tuition reimbursement and scholarship programs to deeper partnerships, the kind of things we do at UTI, B2B relationships, training relationships, things along those lines.

The six programs that we put into place this year and into the beginning of next year.

The last couple of things I'd point to would be.

We are beginning to work very collaboratively with the Concord leadership team in two other areas one place where UTI is really differentiated itself in the market which is.

Industry alignment and BW relationships is that we really believe unlocking the power of relationships with.

That we mentioned in the speech and.

Taking from taking.

Taking off from places like tuition reimbursement and scholarship programs to deeper partnerships the kind of things we do at UTI BTB relationships training relationships things along those lines. Those are things that we're excited about moving forward over the next year and then the last place where I think is a significant amount of upside and a differentiator there.

Jerome A. Grant: Those are things that we're excited about moving forward with over the next year. And then the last place, where I think there's a significant amount of upside and a differentiator that Concord will have as well, is in the acceleration of growth within their online program. Prior to the acquisition, Compass did a great job filling their campuses and really focused on the local community and the programs that were taught on each individual campus and strong outcomes, strong employer connections, really deep embedding into the community, but not particularly strong in online. And we believe that there is a significant amount of upside for them over the next 24 to 36 months, and we're going to really focus on that with them as well. Great, that's a very thorough answer. I appreciate the additional color. And then I guess my last question would be about inorganic growth.

Concord, well will have as well.

As in.

Acceleration of growth within their online programs is that.

Prior to the acquisition copper did a great job filling their campuses and really focused on the local community and the programs that were taught on each individual campus and a strong outcome strong employer connections really deep embedding into the community, but not particularly strong in online and.

We believe that.

A significant amount of upside for them over the next 24 to 36 months and we're going to we're going to really focus on that with them as well.

Great. That's a very thorough answer I appreciate the additional color.

And then I guess my last question would be inorganic growth M&A, you've been very successful with M&A over the last few years the acquisition of M. I, a T and kind of court have been home runs in my opinion.

Jerome A. Grant: M&A, you've been very successful with M&A over the last few years, the acquisition of MIAT and Concord of Bent Home Runs, in my opinion. Didn't talk much about it in the prepared comments, but I assume these things take a while to close anyway, but what are your thoughts with regard to M&A and where would you target M&A? Well, you're right.

Didn't talk much about it in the prepared comments.

I assume these things take a while to close anyway, but.

What's your thoughts with regard to M&A, and where would you target M&A.

Well, you're right we didn't talk about a lot in our prepared speech, because we've got nothing to announce today and so therefore.

Jerome A. Grant: We didn't talk about a lot in our prepared speech because we've got nothing to announce today. And so, therefore, you know, we're not going to talk a lot about it. We have made it clear in the past that we're not done. We are looking at places that, whether it's geographies or program areas, we think we can accomplish through M&A as well. You know, in just one example, in the health care area, we were incredibly blessed with allied health and dental in the CONCRET acquisitions. But a very small number of those students and a small number of campuses are actually in nursing.

Not going to talk about them, but we have made it clear in the past that.

We're not done we are looking in.

In places that.

Whether it's geographies or.

Our program areas.

We think we can accomplish through through M&A as well.

And just one example in the health care area, we were incredibly blessed with Allied health and dental in the Concord acquisition, but a very small number of their students and small number of campuses are actually of nurses and so therefore, that's an area of research where we can we can look at participating more deeply in the.

Jerome A. Grant: And so, therefore, that's an area of research where we can look at participating more deeply in the health care arena. So, you know, we are excited about CONCRET as a cornerstone acquisition in health care, and we're likely to look to be more aggressive in that space. On the UTI side of the equation, as we've said in the past, when we look at new locations, we also – or programs in that we're not teaching in the location, we also look at inorganic means of entering a market so that we don't have to start up from the very beginning. It takes about 18 months to get a campus from, you know, from a warehouse to a campus.

And the health care Arena so.

We are we are excited about conquer and as the cornerstone acquisition in health care, and we will likely look to be more aggressive.

In that space on the UGI side of the.

Equation as we've said in the past is when we look at new at new locations, we also or or or programs in that we're not teaching and allocation. We also look at.

Jerome A. Grant: And so we'll also look in terms of geography and new program areas to continue to proliferate, you know, a broader band of in-demand skills. And when we have something to announce, you guys will be the first to know. That's great. Well, again, thank you very much for your time and congratulations on the strong start to the new fiscal year. Thanks. Thanks a lot.

And so we'll also look in terms of geography, and new program areas to continue to proliferate.

Broader band of in demand skills.

And when we have something to announce you guys will be the person up.

That's great well again, thank you very much for your time and congrats on the strong start to the new fiscal year.

Hey, thanks, Thanks, Ralph.

Jerome A. Grant: This concludes our question and answer session. I would like to turn the conference back over to Jerome Grant for any closing remarks. Hey, thanks a lot, Dave. I'd like to thank everyone who came today. As always, Troy and I are going to be available for follow-up questions over the next few days. We look forward to speaking with many of you during that time. And once again, we look forward to your audience once again in May when we present our second quarter fiscal results. So, thanks. Thanks, everybody. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

This concludes our question and answer session I would like to turn the conference back over to Jerome Grant for any closing remarks.

Hey, Thanks, a lot Dave.

I'd like to thank everyone, who attended today's always Troy and I are going to be available for follow up questions over the next few days, we look forward to speaking with many of you over that time period and once again.

We look forward to.

Your audience once again in May when we do our second quarter fiscal results. So thanks.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.