Q1 2025 Universal Technical Institute Inc Earnings Call

Operator: Good afternoon and welcome to the Universal Technical Institute's Q1 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Good afternoon, and welcome to the Universal Technical Institutes Q1, 'twenty 25 earnings Conference call.

All participants will be in a listen only mode.

If you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then 1 using a touch-tone telephone. To draw your questions, you may press star and two. Please also note today's event is being recorded.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press Star and then one using a touchtone telephone withdraw.

Draw your questions you May press star two.

Please also note today's event is being recorded.

Matthew Kempton: At this time, I'd like to turn the floor over to Matt Kempton, VP Corporate Finance and Investor Relations.

Speaker Change: At this time I'd like to turn the floor over to Matt Kempton VP corporate finance and Investor Relations. Sir. Please go ahead.

Matthew Kempton: Sir, please go ahead. Hello and welcome to Universal Technical Institute's fiscal first quarter 2025 earnings call. Joining me today are our CEO Jerome Grant, the interim CFO Christine Kline.

Speaker Change: Hello, and welcome to Universal Technical Institute's fiscal first quarter 2025 earnings call. Joining me today are our CEO Jerome grant the interim CFO Kristina fun.

Matthew Kempton: Following our prepared remarks, we will open the call for 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.

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

Speaker Change: Replay of this call its transcripts and our investor presentation will be archived on the Investor Relations section of our website at Investor <unk> E. T. I doubt idiot, along with our earnings release issued earlier today and furnished to the SEC.

Matthew Kempton: During this call, we may make comments that contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which, by their nature, address matters that are in the future and are uncertain. These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. These factors include, but are not limited to, those discussed in our earnings release and SEC filings. These statements do not guarantee future performance, and therefore undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments, except as required by law.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: We do not intend to update these forward looking statements as a result of new information or future developments, except as required by law.

Matthew Kempton: Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of fiscal 2024. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to, and not as a substitute for, the company's reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today's call are reconciled in our earnings release. to the most directly comparable gap measure. For more information regarding definitions of our non-GAAP measures, please see our earnings release, financial supplement, and investor presentation.

Speaker Change: Please note unless otherwise stated all comparisons in this call will be against our results for the comparable period of fiscal 2024. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to and not as a substitute for the company's reported results prepared in accordance with U S. GAAP.

Speaker Change: All non-GAAP financial measures referenced in today's call are reconciled in our earnings release.

Speaker Change: To the most directly comparable GAAP measures.

Speaker Change: For more information regarding definitions of our non-GAAP measures. Please see our earnings release financial supplement and Investor presentation.

Jerome Grant: With that, I will turn the call over to Jerome Grant, CEO of Universal Technical Institute, for his prepared remarks. Thank you, Matt. Good afternoon, everyone, and thank you for joining us to discuss the results for the first quarter of 2025. As we continue to execute on our growth, diversification, and optimization strategy, we delivered another quarter of our performance by exceeding expectations across all key metrics. For this, I want to sincerely thank our divisional and corporate teams, along with our partners and students, for their exceptional efforts and dedication to delivering strong results time and time again.

Speaker Change: With that I will turn the call over to Jerome Grant CEO of Universal Technical Institute for his prepared remarks Sheryl.

Speaker Change: Thank you Matt Good afternoon, everyone and thank you for joining us to discuss our results for the first quarter of 2025.

Speaker Change: As we continue to execute on our growth diversification and optimization strategy, we delivered another quarter of outperformance by exceeding expectations across all key metrics for this I want to sincerely, thank our divisional and corporate teams along with our partners and students for their exceptional efforts and dedication to delivering strong results.

Speaker Change: And time again.

Jerome Grant: With that, let's jump into the results for the quarter. Revenue for the quarter grew over 15% year-over-year to $201.4 million. Average full-time active students increase 11% year over year to 25,062 students. Net income increased $22.2 million with diluted earnings per share of $0.40. adjusted EBITDA improved an impressive 45% year-over-year to $35.5 million. Total new student starts increased year-over-year by over 22% for the quarter.

Speaker Change: With that let's jump into the results for the quarter.

Speaker Change: Revenue for the quarter grew over 15% year over year to $201 $4 million.

Speaker Change: Average fulltime active students increased 11% year over year to 25062 students net income increased $22.2 million with diluted earnings per share of 40 cents.

Speaker Change: Adjusted EBITDA improved an impressive 45% year over year to $35 $5 million.

Speaker Change: Total new student starts increased year over year by over 22% for the quarter. So what's driving these strong results first topline performance exceeded our expectations across both divisions on the Concord side, we continued to make higher strategic investments in our marketing and admissions efforts, which led to.

Jerome Grant: So what's driving these strong results? First, top-line performance exceeded our expectations across both divisions. On the Concord side, we continued to make higher strategic investments in our marketing and admissions efforts, which led to very strong student start performance for the quarter. We will continue investing in our Concord marketing and admissions teams to continue to improve results. On the UTI side, our first two starts for the quarter were exceptionally strong, which we believe was primarily the result of deferrals from the fourth quarter due to FAFSA delays. As the quarter progressed, our remaining starts performed according to plan.

Speaker Change: Very strong students start performance for the quarter, we will continue investing in our Concord marketing and admissions teams to continue to improve results.

Speaker Change: The U T I side, our first two starts for the quarter were exceptionally strong.

Speaker Change: Which we believe was primarily the result of deferrals from the fourth quarter due to fast for delays.

Speaker Change: The quarter progressed, our remaining starts performed according to plan.

Jerome Grant: Looking at the bottom line, in addition to our overachievement on revenue, we did not spend as much as we initially expected to on some specific transformation initiatives planned in the quarter. This was a result of shifting some of these into the second. That said, we do anticipate our initiative spend increasing in the second quarter and then normalizing throughout the rest of the year.

Speaker Change: Looking at the bottom line. In addition to our over achievement on revenue, we did not spend as much as we initially expected to on some specific transformation initiatives planned in the quarter.

Speaker Change: This was a result of shifting some of these into the second quarter.

Speaker Change: That said, we do anticipate our initiative spend increasing in the second quarter and then normalizing throughout the rest of the year.

Jerome Grant: Overall, we're very happy with the results we're reporting today, and we remain confident in our ability to deliver both year-over-year top and bottom-line growth throughout the balance of 2025.

Overall, we're very happy with the results we're reporting today and we remain confident in our ability to deliver both year over year top and bottom line growth throughout the balance of 2025.

Jerome Grant: Now, I want to briefly take a moment to express how incredibly proud we are of our students, faculty, and staff for their unwavering dedication to supporting those impacted by the California wildfires. Their efforts, whether through organizing food drives, spearheading fundraising initiatives, or volunteering their time, truly exemplify the values we hold as an organization. This collective commitment to making a difference highlights the strength of our community and our shared purpose of coming together to help those in need during these difficult times. For the most part, we had limited impact to our Southern California campuses during this tragic event.

Speaker Change: Now I want to briefly take a moment to express how incredibly proud we are of our students faculty and staff for their unwavering dedication to supporting those impacted by the California wildfires.

Speaker Change: Their efforts whether through organizing food drives spearheading fund raising initiatives or volunteering their time truly exemplify the values, we hold as an organization.

Speaker Change: This collective commitment to making a difference highlights the strength of our community and our shared purpose of coming together to help those in need during these difficult times.

Speaker Change: For the most part we had limited impact to our southern California campuses. During this tragic event.

Jerome Grant: While there was a slight dip in attendance during the most challenging periods due to significant disruptions in commuter patterns, we're pleased to report that this did not impact operations.

Speaker Change: While there was a slight dip in attendance during the most challenging periods due to significant disruptions and commuter patterns. We're pleased to report that this did not impact operations.

Jerome Grant: Our thoughts remain with those who are affected, and we will continue to support our community through these challenging times.

Speaker Change: Our thoughts remain with those who are affected and we will continue to support our communities through these challenging times.

Jerome Grant: From a regulatory standpoint, we are encouraged that the new administration has expressed an interest in reducing regulatory burden and believe any changes that fairly compare schools of all types based on outcomes will contribute to the more favorable regulatory environment for us. While the specifics regarding the Department of Education remain unclear, I am hopeful that the administration will focus on student outcomes and helping schools expand in areas where employment demand is extremely high. That said, our attention remains firmly on the factors within our control, and we are unwavering in our commitment to achieving strong student outcomes.

Speaker Change: From a regulatory standpoint, we are encouraged that the new administration has expressed any interest in reducing regulatory burden and believe any changes that fairly compare schools of all types based on outcomes will contribute to the more favorable regulatory environment for us.

Speaker Change: While the specifics regarding the department of education remain unclear I'm hopeful that the administration will focus on student outcomes and helping schools expand in areas, where employment demand is extremely high.

Speaker Change: That said our attention remains firmly on the factors within our control and we are unwavering in our commitment to achieving strong student outcomes.

Jerome Grant: Lastly, before diving into each division's details, we're making great progress on our CFO survey. Our elevated company profile has certainly expanded the available talent pool, and we're highly confident in finding an exceptional candidate for the role.

Speaker Change: Lastly, before diving into each divisions details, we're making great progress on our CFO search are elevated company profile has certainly expanded the available talent pool and we're highly confident in finding exceptional candidate for the role we look forward to providing an update in the coming months.

Jerome Grant: We look forward to providing an update in the coming months.

Jerome Grant: Turning to divisional-specific highlights for the quarter. The Concord Division continues to deliver strong results with consistent year-over-year growth. The positive top-line results are primarily due to our marketing investments, as we continue to focus on maximizing the performance of our health care departments. Moreover, The increasing effectiveness of our admissions team remains a key driver of growth across the division as well. As for Concord's program expansion strategies, we remain on track to launch 10 cash pay short course programs across the Concord campuses in 2025. Our new nursing program in Jacksonville, Florida, also remains on track to launch in mid-fiscal 2025.

Speaker Change: Turning to divisional specific highlights for the quarter.

Speaker Change: The Cocker Division continues to deliver strong results with consistent year over year growth. The positive top line results are primarily due to our marketing investments as we continue to focus on maximizing the performance of our health care Division.

Speaker Change: Moreover.

Speaker Change: The increasing effectiveness of our admissions team remains a key driver of growth across the division as well.

Speaker Change: As for Congress program expansion strategies, we remain on track to launch 10 cash pay short course programs across the Concord campuses in 2025.

Speaker Change: Our new nursing program in Jacksonville, Florida also remains on track to launch in mid fiscal 2025, and the Dallas Nursing program capacity increase is still on track to begin in fiscal 'twenty 25, which will increase our capacity by an additional 60 students.

Jerome Grant: And the Dallas nursing program capacity increase is still on track to begin in fiscal 2025, which will increase our capacity by an additional 60 students. Turning to our partnerships, as we noted last quarter, we're progressing on Concord's partnership with Heartland Dental to construct a new co-branded campus. This project is still on track to open in early fiscal 2026 and will initially launch as a non-Title IV campus for dental assistants and hygienists. When Concord's growth restrictions are lifted, we plan to seek approval to offer Title IV funding as well. As a reminder, we anticipate this campus will add more than $4 million in annual run rate revenue, as well as contribute to Concord's EBITDA margin expansion as it scales.

Speaker Change: Turning to our partnerships as we noted last quarter, we're progressing on Congress partnership with Heartland dental to construct a new Cobranded campus. This project is still on track to open in early fiscal 2026 and will initially launch as our non title four campus for dental assistance and hijacked.

Speaker Change: When Congress growth restrictions are lifted we plan to seek approval to offer title for funding as well.

Speaker Change: As a reminder, we anticipate this campus will add more than $4 million in annual run rate revenue as well as contribute to Congress EBITDA margin expansion as it scales. We look forward to keeping you updated on this partnership as it progresses.

Jerome Grant: We look forward to keeping you updated on this partnership as it progresses.

Jerome Grant: Now, on to our UTI video. The UTI division also continued to deliver year-over-year growth driven by expanded programs and increasing market demand for skilled collared workers. Our HVACR programs continue to ramp nicely across our campuses in Avondale, Long Beach, and Bloomfield. As we discussed on our last call, of the nine full-length programs we're launching this year across both divisions, we expect eight of those to be on existing UTI camps. Also, as previously discussed, we plan to open three campuses in 2026, subject to regulatory approval, of course. With the upcoming Concord-Heartland co-branded campus marking the first of these, we're pleased to have recently announced the second location, which will be a fully optimized UTI campus with a comprehensive set of program offerings in the northern suburbs of Atlanta, pending regulatory approval.

Speaker Change: Now onto our UTI Division.

Speaker Change: The U T. I Division also continued to deliver year over year growth driven by expanded programs and increasing market demand for skilled the collared workers.

Speaker Change: Our HVAC our programs continue to ramp nicely across our campuses in Avondale long Beach in Bloomfield.

Speaker Change: As we discussed on our last call of the nine full length programs. We're launching this year across both divisions, we expect eight of those to be on existing UTI campuses.

Speaker Change: Also as previously discussed we plan to open three campuses in 2026 subject to regulatory approval of course.

Speaker Change: With the upcoming Concord Heartland co branded campus, marking the first of these we're pleased to have recently announced the second location, which will be a fully optimized UTI campus with a comprehensive set of program offerings and the northern suburbs of Atlanta pending regulatory approval.

Jerome Grant: From an optimization standpoint in Q1, we completed the unification of two separate Houston campuses into a single consolidated. This strategic move was designed to drive operational efficiencies, reduce overhead, and create a more streamlined learning environment for our students. The consolidation is part of a broader effort to optimize UTI campuses for greater success in delivering quality education. This was a significant project that required a big lift from our team and will ultimately deliver an enhanced margin profile for the combined campus.

From an optimization standpoint in Q1, we completed the unification of two separate Houston campuses into a single consolidated Kansas.

Speaker Change: This strategic move was designed to drive operational efficiencies reduce overhead and create more streamlined learning environment for our students.

Speaker Change: The consolidation is part of a broader effort to optimize UTI campuses for greater success in delivering quality education.

Speaker Change: This was a significant project that required a big lift from our team and will ultimately deliver an enhanced margin profile for the combined campus I'm very proud of what we were able to accomplish in this front and appreciate all who were involved.

Jerome Grant: I'm very proud of what we were able to accomplish in this front and appreciate all who were involved. We also still anticipate that by the middle of the fiscal year, our MIAT Kempton campus, along with Motorcycle Mechanics Institute, Marine Mechanics Institute, and NASCAR Technical Institute campuses, will all officially operate under the Universal Technical Institute brand. I also want to highlight our Canton campus for being recognized by the Michigan Veterans Affairs Agency as a veteran-friendly institution. The agency's award reflects our commitment to supporting veterans by providing conducive environment for their education and career transition.

Speaker Change: We also still anticipate that by the middle of the fiscal year, our MAA T. Canton campus, along with motorcycle Mechanics Institute Marine Mechanics Institute NASCAR Technical Institute campuses will all officially operate under the Universal Technical Institute brand.

Speaker Change: I also want to highlight our canton campus for being recognized by the Michigan Veterans Affairs Agency is a veteran friendly institution. The agencies award reflects our commitment to supporting veterans by providing conducive environment for their education and career transition.

Jerome Grant: Turning now to partnerships, just this morning, we were excited to share that we've added Tesla to our successful manufacturer-specific advanced training program. Beginning in the spring, UTI's Long Beach campus will offer TESLA's START program for collision-proofing. We continue to expand our partnerships across the two divisions, and this collaboration is a testament to our commitment to innovation and ensuring that our programs remain relevant and impactful in today's evolving landscape.

Speaker Change: Turning now to partnerships. Just this morning, we were excited to share that we've added Tesla to our successful manufacturer specific advanced training programs bigger.

Speaker Change: Beginning in the spring U T I's long Beach campus will offer Tesla start program for collision repair.

Speaker Change: We continue to expand our partnerships across the two divisions and this collaboration is a testament to our commitment to innovation and ensuring that our programs remain relevant and impactful in today's evolving landscape.

Jerome Grant: Building on all this great work being done by both of our divisions, I'm happy to report that we are raising our guidance ranges for fiscal 2025. We now expect to generate consolidated revenue between $810 and $820 million, reflecting approximately 11% increase year-over-year. We now anticipate adjusted EBITDA between $122 million and $126 million. And we are raising our expectations for new student starts to be from 28,500 to 29,500.

Speaker Change: Building on all this great work being done by both of our divisions I'm happy to report that we are raising our guidance ranges for fiscal 2025.

Speaker Change: We now expect to generate consolidated revenue between 810 and $820 million, reflecting approximately 11% increase year over year.

Speaker Change: We now anticipate adjusted EBITDA between 122 and $126 million.

Speaker Change: And we are raising our expectations for new student starts to be from 28000 529500, Chris.

Christine Kline: Christine will provide more details on our fiscal 2025 guidance in just a bit.

Speaker Change: Christine will provide more details on our fiscal 2025 guidance in just a bit.

Christine Kline: As we continue into 2025, I want to remind everyone that we are officially in phase two of our multi-year North Star strategy. I'd like to take a moment to reiterate just what this entails. As previously communicated, we are committed to launching a minimum of six new programs each year across Concord and or UTI campuses, pending the necessary regulatory approvals. Additionally, we've outlined plans to open at least two new campuses annually starting in 2026. It's worth noting we announced nine new programs in 2025 and three new campuses in 2026, which demonstrates we are on track to meet or exceed both objectives and will continue to work diligently towards their successful completion.

As we continue into 2025 I want to remind everyone that we are officially in phase two of our multiyear Northstar strategy.

I'd like to take a moment to reiterate just what this entails.

Speaker Change: As previously communicated we are committed to launching a minimum of six new programs each year across Concord, and or UTI campuses pending the necessary regulatory approvals. Additionally, we've outlined plans to open at least two new campuses annually starting in 2026.

Speaker Change: It's worth, noting we announced nine new programs in 2025, and three new campuses in 2026, which demonstrates we are on track to meet or exceed both objectives and we will continue to work diligently towards their successful completion.

Christine Kline: Further details on this strategy can be found on our investor deck on our website.

Speaker Change: Further details on this strategy can be found in our investor deck on our website overall.

Christine Kline: Overall, we are proud of the substantial growth we've achieved across both divisions, and we believe we are well-positioned for continued success in the quarters and years to come.

Speaker Change: Overall, we're proud of the substantial growth we've achieved across both divisions and we believe we are well positioned for continued success in the quarters and years to come.

Christine Kline: With that, I'll turn the call over to Christine Kline, our Interim CFO, to review the first quarter financial results. Christine?

Speaker Change: With that I'll turn the call over to Christine Klein, our interim CFO to review the first quarter financial results Kristine.

Christine Kline: Thank you, Troy. We kicked off fiscal 2025 with another quarter of strong results across the board. For the first quarter, average full-time active students increased 11.1 percent year-over-year to 25,062 students. New student starts increased 22.3% year-over-year to 5,313 starts, exceeding our expectations. The Concord Division drove a 16.4% increase in average full-time active students compared to Q1-24. New student starts increased 26% in the first quarter, which was primarily the result of investments we've made within the division to bolster our marketing and admissions efforts and improve performance by Concord Marketing and Admissions team. The UCI division generated an 8% increase year-over-year in average full-time active students.

Christine Klein: We kicked off fiscal 2025 with another quarter of strong results across the board for.

Christine Klein: For the first quarter average fulltime actress increased 11, 1% year over year to 25062 students.

Christine Klein: New student starts increased 22, 3% year over year to 5313 start exceeding our expectations.

Christine Klein: The Concorde Division drove a 16, 4% increase in average fulltime active students compared to Q1 'twenty four.

Christine Klein: New student starts increased 26% in the first quarter, which was primarily the result of investments we've made and the division to bolster our marketing and admissions efforts and improved performance by Concorde marketing and admissions team.

Christine Klein: Do you see our division generated an 8% increase year over year and average fulltime active students for the quarter, while new student starts grew 19% year over year in the first quarter.

Christine Kline: For the quarter, while new student starts grew 19% year-over-year in the first quarter. Contributing to this growth was the impact of start deferrals from the fourth quarter, primarily due to FAFSA delays, which shifted several students into the first two starts of the first quarter.

Christine Klein: Contributing to this growth was the impact of start deferrals from the fourth quarter, primarily due to the fact that delayed which shifted several students into the first two starts at the first quarter.

Christine Kline: we experienced more normalized levels of growth throughout the remainder of the quarter. Turning to our financial performance, first quarter revenue on a consolidated basis increased 15.3% year-over-year to $201.4 million. Concord contributed $70 million, an increase of 17.9% over the prior year quarter, while the UTI Division contributed $131.5 million, an increase of 14% over the prior year quarter. From a profitability standpoint, consolidated net income for the first quarter was $22.2 million or $0.40 per diluted share. adjusted EBITDA for the first quarter was $35.5 million, a year-over-year increase of nearly 45%. As Jerome discussed earlier, we shifted some of our strategic initiatives planned for the first quarter into the second quarter, which led to lower-than-anticipated spend for the period.

Christine Klein: We experienced more normalized levels of growth throughout the remainder of the quarter.

Christine Klein: Turning to our financial performance first quarter revenue on a consolidated basis increased 15, 3% year over year to 201 4 million.

Christine Klein: Concord contributed 70 million an increase of 17, 9% over the prior year quarter, while the U T. I Division contributed 131 5 million an increase of 14% over the prior year quarter.

Christine Klein: From a profitability standpoint consolidated net income for the first quarter with $22 2 million or <unk> 40 per diluted share.

Christine Klein: Adjusted EBITDA for the first quarter was $35 5 million a year over year increase of nearly 45%.

Christine Klein: And Sharon discussed earlier, we shifted some of our strategic initiatives planned for the first quarter into the second quarter, which led to lower than anticipated spend for the period.

Christine Kline: This change in expense timing, combined with the growth in average full-time active students and revenue overachievement, drove outperformance on our bottom line. As we remain committed to our ongoing strategic initiatives planned for this year, we do still expect to spend those investment dollars throughout the remainder of the fiscal year. At the end of the quarter, we had 54.4 million shares outstanding. Total available liquidity at the end of the quarter was $246 million, including $74 million of remaining capacity on our revolving credit facility. We also paid down an additional $5 million on our revolver in the first quarter, ending with positive net working capital of $28.5 million.

Christine Klein: This change in expense timing combined with the growth in average fulltime active students in revenue over achievement drove outperformance on our bottom line.

Christine Klein: As we remain committed to our ongoing strategic initiatives planned for this year, we do still expect to spend those investment dollars throughout the remainder of the fiscal year.

Christine Klein: At the end of the quarter, we had 54.4 million shares outstanding total available liquidity at the end of the quarter with 246 million, including 74 million of remaining capacity on our revolving credit facility.

Christine Klein: We also paid down an additional $5 million on our revolver in the first quarter ending with positive net working capital of $28 5 million.

Christine Kline: First quarter 2025 operating cash flow was $23 million and adjusted free cash flow was $18.9 million. Year-to-date capital expenditures were $3.3 million, which was below our original expectations due to timing. However, we still expect to spend approximately $55 million in total CapEx this year.

Christine Klein: First quarter 2025, operating cash flow was 23 million and adjusted free cash flow was $18 9 million.

Christine Klein: Year to date capital expenditures were $3 3 million, which was below our original expectations due to timing. However, we still expect to spend approximately $55 million in total capex this year.

Christine Kline: Building on our consistent execution and the strong momentum so far this year, we are raising the guidance ranges we set for fiscal 2025. Starting with revenue, we are raising our expectations to between $810 and $820 million for fiscal 2025, or approximately 11% year-over-year growth at the midpoint. This reflects the Q1 increase in average full-time active students from the program additions across both divisions, with total new student starts in fiscal 2025 now expected to range between $28,500 and $29,500. Following this higher revenue growth in Q1, we now expect growth in the upper single digits in Q2, followed by double-digit growth in the remaining quarters.

Christine Klein: Building on our consistent execution and the strong momentum so far this year, we are raising the guidance ranges, we set for fiscal 2025.

Christine Klein: Starting with revenue, we are raising our expectations to between 810, and 820 million for fiscal 2025, or approximately 11% year over year growth at the midpoint.

Christine Klein: This reflects the Q1 increase in average fulltime active students from the program additions across both divisions with total new student starts in.

Christine Klein: In fiscal 2025, now expected to range between 28000 529500.

Christine Klein: Following this higher revenue growth in Q1, we now expect growth in the upper single digits in Q2.

Christine Klein: All led by double digit growth in the remaining quarters.

Christine Kline: For starts, we anticipate double-digit growth in Q2 with mid- to low-single-digit start growth each quarter thereafter. For fiscal 2025, we are raising our net income expectations to a range of $54 to $58 million with diluted earnings per share projected between $0.96 and $1.04. We expect 2025 full-year adjusted EBITDA to now range between $122 million and $126 million, or around a 20% year-over-year increase at the midpoint. While we are pleased with our adjusted EBITDA performance this quarter, the bulk of the outperformance is attributed to the in-year timing of our various initiative investments. Consequently, we anticipate that adjusted EBITDA will normalize throughout the year as we make these strategic initiative investments.

Speaker Change: For a start we anticipate double digit growth in Q2 with mid to low single digit start growth each quarter thereafter.

Speaker Change: For fiscal 2025, we are raising our net income expectation to a range of 54 to 58 million with diluted earnings per share are projected between 96 cents and the dollar for.

Speaker Change: We expect 2025 full year adjusted EBITDA to now range between 122 and $126 million or around 20% year over year increase at the midpoint.

Speaker Change: While we are pleased with our adjusted EBITDA performance this quarter the bulk of the outperformance is attributed to the in your timing of our various initiatives investments.

Speaker Change: Consequently, we anticipate that adjusted EBITDA will normalize throughout the year as we make these strategic initiative investments.

Christine Kline: Further, we still expect to incur the necessary growth expenses to drive our North Star strategy during fiscal 2025 and 2026. We anticipate 2025 full-year adjusted free cash flow to now range between $60 and $65 million, which continues to assume approximately $55 million in CapEx spend. We still expect the bulk of our cash generation and year-over-year growth to materialize in the fourth quarter, consistent with our historical cadence.

Further we still expect to incur the necessary growth expenses to drive our North star strategy during fiscal 2025 and 2026.

Speaker Change: We anticipate 2025 full year adjusted free cash flow to now range between 60, and 65 million, which continues to assume approximately 55 million in capex spend.

Speaker Change: We still expect the bulk of our cash generation and year over year growth to materialize in the fourth quarter consistent with our historical pattern.

Christine Kline: Looking further ahead, I'll also reiterate our collective excitement as we enter Phase 2 of our North Star Strategy this fiscal year. We're executing on our growth investments for fiscal 2025 and, as discussed previously, expect to see those investments increase in the next few years as we continue to add new programs and campuses. It's important to reiterate that as we advance through the next few years of our growth strategy and continue to strategically invest at both Concord and UTI, both our CapEx and strategic investments will grow materially.

Speaker Change: Looking further ahead I'll also reiterate our collective excitement as we enter phase two of our North Star strategy This fiscal year.

Speaker Change: We're executing on our growth investments for fiscal 2025, and as discussed previously expect to see those investments increased in the next few years as we continue to add new programs and campuses.

Speaker Change: It's important to reiterate that as we advance through the next few years of our growth strategy and continue to strategically invest adult Concord in UTI, both our capex and strategic investments will grow materially.

Christine Kline: As always, in addition to this earnings call transcript, we encourage everyone to review our press release, financial supplement, and investor presentation, as well as the 10-Q once it is filed. These materials include the most current information on our consolidated and segment actual results, our strategic roadmap, and our guidance.

Speaker Change: As always in addition to this earnings call transcript, we encourage everyone to review our press release.

Speaker Change: Financial supplement and Investor presentation, as well as the 10-Q once it is filed.

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

Christine Kline: Thank you to our students, team, partners, and investors for their ongoing support.

Speaker Change: Thank you to our students.

Speaker Change: Team partners and investors for their ongoing support I'll now turn the call back over to Jerome for closing remarks.

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

Jerome Grant: Thank you, Christine. Looking ahead, we're excited to continue this next phase of our journey. In addition to continuing our relentless focus on execution, optimization, and driving student outcomes, our organic growth initiatives continue to revolve around, one, working towards expanding our campus footprint into greenfield geographies, two, broadening the reach of existing programs and adding new in-demand offerings. and three, growing our partner network and deepening industry relationships.

Jerome Grant: Thank you Christine looking.

Looking ahead, we're excited to continue this next phase of our journey.

Jerome Grant: In addition to continuing our relentless focus on execution optimization and driving student outcomes, our organic growth initiatives continue to revolve around one working towards expanding our campus footprint into greenfield geographies to broadening the reach of existing programs and adding new in demand offering.

Jerome Grant: <unk>.

Jerome Grant: And three growing our partner network and deepening industry relationships.

Jerome Grant: in organically. Our efforts remain focused on opportunistically exploring strategic acquisition opportunities with an emphasis on enhancing our presence in healthcare with in-demand programs that will complement our Concord portfolio. As we've moved into the post-election environment, I'm pleased to report that we've seen a notable uptick in activity on the M&A Prime, and we're excited about the increase in opportunities that have been presented to us.

Jerome Grant: Inorganically or.

Jerome Grant: Our efforts remain focused on opportunistically exploring strategic acquisition opportunities with an emphasis on enhancing our presence in health care within demand programs that will complement our concord portfolio.

Jerome Grant: As we've moved into the post election environment I am pleased to report that we've seen a notable uptick in activity on the M&A front and we're excited about the increase in opportunities that have been presented to us.

Jerome Grant: As I noted earlier, we're proud of what we've accomplished once again this quarter and remain excited about the future. The demand for skilled professionals is growing and we are well positioned to continue driving momentum and supporting the next generation of skilled collared talent. We have a strong plan in place, a notable track record of execution, and a very healthy financial profile to continue delivering shareholder value in the years ahead. We appreciate your ongoing support and look forward to sharing more about our exciting progress.

Jerome Grant: As I noted earlier, we're proud of what we've accomplished once again this quarter and remain excited about the future. The demand for skilled professionals is growing and we are well positioned to continue driving momentum in supporting the next generation of skilled collared talents.

Jerome Grant: We have a strong plan in place a notable track record of execution and a very healthy financial profile to continue delivering shareholder value in the years ahead.

Jerome Grant: We appreciate your ongoing support and look forward to sharing more about our exciting progress as always we're happy to host campus tours and provide a closer look at the impactful initiatives. We're pursuing so please feel free to reach out if you'd like to visit.

Jerome Grant: As always, we're happy to host campus tours and provide a closer look at the impactful initiatives we're pursuing, so please feel free to reach out if you'd like to visit.

Operator: I'd now like to turn the call over to the operator for Q&A. Ladies and gentlemen, at this time, we'll begin the question and answer session. If you would like to ask a question, please press star and then one using a touchtone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster.

Jerome Grant: I'd now like to turn the call over to the operator for Q&A operator.

Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.

Speaker Change: I would like to ask a question. Please press star and then one using a touchtone telephone too.

To withdraw your question you May press Star two.

Speaker Change: If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Once again that is star and then wanted to join the question queue, we'll pause momentarily to assemble the roster.

Alexander Paris: Our first question today comes from Alex Paris from Barrington Research. Please go ahead with your question.

Speaker Change: Our first question today comes from Alex Paris from Barrington Research. Please go ahead with your question.

Jerome Grant: Thank you and thank you for taking my questions and a hearty congratulations on the strong start to the new fiscal year. Thanks, Alex. Yeah, thanks.

Alex Paris: Thank you and thank you for taking my questions and a hearty congratulations on the strong start to the new fiscal year.

Speaker Change: Thanks, Alex.

Jerome Grant: First question on new campuses. So just to be clear, the first one was the co-branded campus with Heartland.

Speaker Change: Yeah. Thanks first question a new campuses.

Speaker Change: So just to be clear the first one was the co brand a campus with Hartland. The second campus was just announced I think it was this morning Atlanta.

Jerome Grant: The second campus was just announced, I think it was this morning, Atlanta.

Jerome Grant: I just want to, is that the first campus that you guys are going to have in Georgia? It is. Okay, so it's not only a new campus, but it's a new state expansion as well. Yeah, it's it's completely greenfield for us. You know, we see a lot of opportunity, job growth. The demographics are great in that area. And we found what we believe is a fantastic location. So we're really looking forward to it.

Speaker Change: I just wanted to is that the first campus that you guys are gonna have in in Georgia.

Speaker Change: It is.

Speaker Change: Okay. So it's it's a not only a new campus, but it is a new state expansion as well.

Speaker Change: It's it's completely greenfield for us, we'd see a lot of opportunity job growth.

Speaker Change: The demographics are great in that area and we found what we believe is a fantastic location. So we're really looking forward to it as a as we said in the in the prepared remarks. This will be a optimized comprehensive set of of UTI products auto diesel.

Jerome Grant: As we said, in the in the prepared remarks, this will be a, you know, optimized comprehensive set of UTI products, auto, diesel, and, and the full skill trades complement.

Speaker Change: And in the full skill trade software.

Jerome Grant: Great.

Jerome Grant: So, my question is the third, which is not yet announced. Is that targeted to be a UTI campus, Concord, or you're just not telling us yet? Well, it's a UTI campus, as we've also outlined in our past notes. We're not going to be able to open any Concord campuses, likely, until 2027, due to the growth restrictions from the merger that we had. So, these first two in 26 are UTI campuses.

Speaker Change: Right.

Speaker Change: So my question is the third which is not yet announced Ah is is that are targeted to be a U T. I a campus kind of cord or are we just don't you're just not telling us yet well if it's it's a it's a UTI campuses. We've also outlined in our past knows we're not going to be able to open any concord campuses likely until 2027.

Speaker Change: Due to the growth restrictions.

Speaker Change: From the merger that we have so these first two and 26.

Speaker Change: Our UTI campuses of course see the heartland.

Jerome Grant: Of course, the Heartland-Concord co-branded campus is able to open because it is a non-Title IV entity initiative.

Speaker Change: Concord Cobranded campus.

Speaker Change: <unk> is able to open because it is a non title for entity initiative.

Jerome Grant: Gotcha.

Jerome Grant: And the third campus, would that be a Greenfield state or would that be an additional campus in an existing state? Well, hold tight there. We're pretty close to being able to announce it. We'd like to, you know, get a couple things across the finish line before we put an exact location in, but we won't keep you waiting much longer, Alex.

Speaker Change: Gotcha, and then the third campus would that be a greenfield state or would that be a it is an additional campus in existing states.

Speaker Change: The whole type there, we're pretty close to being able to announce it we'd like to get a couple of things across the finish line before we put an exact location and but.

Speaker Change: Well, we won't keep you waiting much longer hours.

Jerome Grant: Okay, thank you. And then a question about the North Star 2 strategy. You've given us targets for fiscal 2029, which, among other things, includes about 600 basis points of adjusted EBITDA margin expansion from roughly 14% last year to nearly 20% in fiscal 2029. I got to assume, you know, with this level of new campus activity, as well as this level of new program expansions, that that expansion won't necessarily be linear. Am I right on that?

Speaker Change: Okay. Thank you and then.

Speaker Change: And then a question about the north star to strategy.

Speaker Change: You've given you've given us targets for our.

Speaker Change: Fiscal 2029, which among other things includes about 600 basis points of adjusted EBIT margin expansion from roughly 14% last.

Speaker Change: Last year to nearly 20% in fiscal 'twenty 'twenty nine.

Speaker Change: I got to assume you know with this level of new campus activity.

Speaker Change: As well as this level of new program expansions.

Speaker Change: That that expansion won't necessarily be linear.

Speaker Change: Am I right on that but yeah.

Jerome Grant: No, it definitely won't be the new year. There'll be a contour to the expansion. You'll see more strategic investment in 25, 26, and 27 as we are beginning to invest in the 26, 27, 28 campuses. And they then become, you know, accretive in 27, 28, and 29. So you'll see a bit of a bend in terms of our EBITDA trajectory in 26 moving into 27. But then as these tranches of campuses and programs take off, that's when you really see the acceleration. Great, that makes sense.

Speaker Change: It definitely won't be they know you're there there'll be a contour it should the expansion you'll see more a more strategic investment in 'twenty five 'twenty six 'twenty seven as we are are beginning to invest in the the the 26 27 and 28 campuses and they then be.

Speaker Change: You know accretive in 27, 28, and 29, so you'll see a bit of a band in terms of our EBITDA projection trajectory in 'twenty six moving into 'twenty seven but that has as the these tranches of campuses and programs take off that's when you really see the acceleration.

Speaker Change: 829.

Jerome Grant: And then last question is sort of what you were saying towards the end of the call, the M&A, the M&A pipeline, the activity post-election. You said you're looking primarily on the health care side, primarily to add to the Concord offerings.

Speaker Change: Great that makes sense and then last question is sort of what you were saying towards the end of the call. The M&A the M&A pipeline the activity post election.

Speaker Change: You said Youre looking primarily on the health care side.

Speaker Change: They're really to add to the kind of court offerings. What other color can you offer us there you're looking for Allied health care and nursing graduate programs.

Jerome Grant: What other color can you offer us there? Are you looking for allied health care, nursing, other programs? Well, as I said on, Alex, it's a great question. As I said on previous calls is that, you know, the Concord acquisition got us a strong portfolio of allied health, meaning non-nursing health care disciplines and programs, and dental. And what we didn't get was a lot of nursing students, well, nursing only on two of our campuses of the 17. And so one of the things we've also said is that, you know, we'd like to be a larger player in the nursing markets.

Speaker Change: As I said on Alex Great question as I've said on previous calls is is that you know the Concord acquisition got us a strong portfolio of Allied health, meaning non nursing and health care.

Speaker Change: Disciplines with programs and dental.

Speaker Change: And what we didn't get was a lot of nursing students well nursing only on two of our campuses at the 17th and so while one of the things. We've also said is is that you know we'd like to be a larger player in the nursing buckets and so you know that's that's our primary focus it doesn't mean that any of the targets that we've looked at don't have Allied health.

Jerome Grant: And so, you know, that's a primary focus. It doesn't mean that any of the targets that we've looked at don't have allied health along with nursing, but the primary focus would be in a sense to fill out the portfolio across all of the health care fields. And of course, as you know, the largest and fastest growing really is nursing. And so we're paying particular focus there right now.

Along with nursing, but but the primary focus would be in a sense to fill out the portfolio across all of the health care field and of course as you know the largest and fastest growing really is is nursing and so we're paying a particular focus there right now.

Jerome Grant: Great. That's good color.

Speaker Change: Great. That's good color. Thanks, Thanks, Hilla, Jerome and I will get back in the queue.

Alexander Paris: Thanks a lot, Jerome, and I'll get back in the queue.

Eric Martinuzzi: Thanks, y'all. Our next question comes from Eric Martinuzzi from Lake Street. Please go ahead with your question.

Alex Paris: Thanks, Alex.

Speaker Change: Our next question comes from Eric Martin Newsy from Lake Street. Please go ahead with your question.

Eric Martinuzzi: Yeah, I wanted to follow up on the Atlanta new campus investment. I thought I was thinking in the 100,000 square foot was sort of the footprint that you guys were targeting for these new UTI locations and Atlanta at 150,000. Was that just that was the space that was available and it was in the right area? Or was that the roughly the goal all along?

Yeah, I wanted to follow up on the Atlanta, New campus investment.

Speaker Change: I was thinking in the 100000 square foot was sort of a footprint that you guys were targeting for these new U T. I locations in Atlanta at 150000 was that just that was the space that was available and if it isn't the right area or was that roughly the goal all along.

Jerome Grant: Now, the goal was to be somewhere around, you know, 110, 115,000 square feet is what we see as our new optimized campus. What we mean by optimized is a campus that not only has the transportation, auto, diesel, and welding in it, but also has the rest of what came to us by way of the MIT acquisition. So, the electronic suite of four programs, as well as, you know, welding, HVAC, aviation, etc. So, you see all of that in that square footage. You're right. The inventory of space available, this place is a little larger, but when you, if you look at it, what it gives us an opportunity to do is take advantage of increasing capacity in some of these skilled trades areas where we're already seeing that we're seeing very, very high demand.

Speaker Change: No. Our goal is to be somewhere around 110, 115000 square feet is what we see as our new optimized campus. What do you mean by Optimizes. He was a campus that not only has the transportation auto diesel and welding in it but also has the rest of what came to us by way of the M. I T.

Speaker Change: Acquisition, so the electronic suite of four four programs as well as a welding HVAC aviation et cetera. So.

Speaker Change: You see all of that.

Speaker Change: That in that square footage, you're right the inventory of space available. This places a little larger but when you. If you look at it what it gives us an opportunity to do is is take advantage of of increasing capacity in some of these skilled trades areas, where we're already seeing that where we're seeing very very high.

Jerome Grant: And it also gives us the opportunity, potentially, to put some of our manufacturer-specific programs in, which aren't in the original optimized model. We're really excited about the location and the opportunity in this new state, and I think we're going to fill that space nicely.

Speaker Change: Man and it also gives us the opportunity potentially to put some of our manufacturer specific programs in.

Speaker Change: Which arent in the in the original optimized model, we're real excited about the the location and the opportunity in the in this new state and I think.

Speaker Change: We're going to fill that space nicely.

Eric Martinuzzi: Okay, and then on the guide, based on your comments, Christine, for the second quarter you talked about upper single digits, so I just did quick math. I'm using an 8% number, but I was coming out with roughly 199 million, which is slightly above the Q2 consensus. Is that in the ballpark where you were targeting?

Speaker Change: Okay, and then on the guide.

Speaker Change: Just on your comments Christine for the second quarter, you talked about upper single digits. So I just did a.

Speaker Change: Quick math on.

Speaker Change: Using an 8% number but I was coming out with roughly a $199 million, which is slightly above the Q2 consensus is that in the ballpark where you're targeting.

Christine Kline: No, I think a little bit lower than that. We're close. Okay. All right. So 7% would be 197 and we're still in the neighborhood. Yeah. Here you go.

Speaker Change: No I think a little bit lower than that.

Speaker Change: Well close okay.

Speaker Change: Okay Alright.

Speaker Change: 7% would be a 197 and we're still in the neighborhood then yeah.

Speaker Change: Okay.

Christine Kline: And we have around 260 people. Okay, and then the expense. I just want to make sure I've got this sized up. In Q1, you guys came in at an operating expense of, I think it was $174. I overshot in my own model. I think I was at $179, but that outlook for Q2, what's the, you know, the snapback in the investments that you held off on in Q1? Can you size that either percent margin-wise or raw dollar-wise for Q2? I'd say about quarter over quarter, it'd be about $10 million more.

Speaker Change: Kind of a neighborhood by neighborhood.

Speaker Change: Okay, and then the expense I just wanted to make sure I've got this size. It up in Q1, you guys came in and operating expense of a I think it was 174 I overshot in my own model I think I was at 179, but that.

Speaker Change: <unk> outlook for Q2, what's the.

Speaker Change: The snapback.

Speaker Change: The investments that you held off on in Q1 can you size that either a percent margin wise or raw dollar wise for Q2.

Speaker Change: I'd say about quarter over quarter, it would be about 10 million more.

Speaker Change: Got it.

Christine Kline: Okay, thanks for taking my question. Sure.

Speaker Change: Okay. Thanks for taking my question.

Mike Grondahl: Take care. Our next question comes from Mike Grondahl from Northland Securities. Please go ahead with your question.

Speaker Change: Sure sure.

Speaker Change: Our next question comes from Mike Grondahl from Northland Securities. Please go ahead with your question.

Mike Grondahl: Hey guys, thanks and congrats on another nice quarter. Um, I wanted to dig into new starts a little bit. You know, at Concord they were up 26%. And you guys called out marketing efforts and admission efforts. You've called that out for a couple quarters now, and I know you're kind of turning the dial up there. Can you talk a little bit about what you're doing specifically and maybe how much more is left? Yeah, well, You're exactly right, which is we're continuing to turn the dial in collaboration with the marketing organization, the agencies we use at Concord, looking for more innovative ways to reach out to more students in those local markets.

Mike Grondahl: Hey, guys, thanks, and congrats on another nice quarter.

Mike Grondahl: I wanted to smack into new new starts a little bit you know at Concord, They were up 26%.

Mike Grondahl: And you guys called out marketing efforts and admission efforts.

Mike Grondahl: You've called that out for a couple of quarters now and I know you're kind of turning the dial up there can you talk a little bit about what you're doing specifically in <unk> and maybe how much more is left.

Mike Grondahl: Yeah well.

Mike Grondahl: You're exactly right, which is we're continuing to turn the dial in collaboration with the marketing organization and the agencies, we use it at at Concord looking for more innovative ways to reach out to more students in those local local markets and we're seeing as you can see from the results. This last quarter, we're continuing to see nice results.

Jerome Grant: And we're seeing, as you can see from the results this last quarter, we're continuing to see nice results out of it. So calling the hard pack is a really difficult thing to do, right, because we're going to continue to invest, and we're going to continue to invest more aggressively in it, you know, continuing to look for that. So two things will happen. One, we will start to see some diminishing returns somewhere along the line. Remember, healthcare is a very local, a very local endeavor. Students don't tend to travel more than 10 to 20 miles to go to a healthcare school, and so there's going to be some population demographics that may start to see some bending in terms of that.

Mike Grondahl: Out of it.

Mike Grondahl: You know.

Mike Grondahl: Yeah.

Mike Grondahl: Calling the hard pack is a really difficult thing to do right because we're going to continue to to invest and we're going to continue to invest more aggressively in it you know continuing to look for that so two things will happen. One we will start to see some diminishing returns somewhere along the line remember health care is a very local.

Mike Grondahl: Local endeavor students don't tend to travel more than 10 to 20 miles to go to a health care school and so there's there's going to be some population demographics that may that may start to see some bending in terms of that and then there are some some areas that have cats, where we're not allowed to enroll more students in.

Jerome Grant: And then there are some areas that have caps where we're not allowed to enroll more students in it, and we're approaching that. That doesn't mean we won't then subsequently work on once you're reaching the caps on increasing the caps, because the demand for these graduates is still very, very high. And so, you know, we're going to keep turning the dials, as you called it, and, you know, I can't tell you exactly where we hit the bend, but we will. And then also, you know, there's this cap issue, so.

Mike Grondahl: We're approaching that that doesn't mean, we won't then subsequently work on once you're reaching the caps on increasing the caps because the demand for these these graduate is still very very high.

Mike Grondahl: And so you know we're going to we're going to keep turning the dials as you as you called it.

Mike Grondahl: And you.

Mike Grondahl: You know I can't tell you exactly where we were we hit that then but but we will and then also you know there's this check this cap issue so.

Mike Grondahl: We'll have to play it one quarter by got it.

Mike Grondahl: Well, we'll have to play a one quarter by by age.

Jerome Grant: Got it and then Jerome you know from time to time.

Jerome Grant: And then, Jerome, you know, from time to time. You've talked a little bit about the macro environment, and gosh, if we go back two years, the trades kind of had some headwind against them, and maybe starting early 24, more positive articles about trades versus four-year schools. You know, I think about that time you described the macro as maybe more neutral. Has that neutral become a tailwind yet? Or I guess I'd love to hear kind of your update on how you feel about the macro and kind of trades versus four-year schools. How about this? We're playing in a very healthy environment right now, right?

Mike Grondahl: You've talked a little bit about the macro environment and gosh, if we go back two years.

Mike Grondahl: Trades kind of had some headwind against them.

Mike Grondahl: And maybe starting early 'twenty four more.

Mike Grondahl: Positive articles about trades versus four year schools.

Mike Grondahl: You know I think about that time, you describe the macro is maybe more neutral.

Mike Grondahl: Has that neutral become a tailwind yet or I guess I'd love to hear kind of your update on how you feel about the macro and kind of trades versus four year school.

Mike Grondahl: How about this where we're playing in a very healthy environment right now right.

Jerome Grant: You know, whether I'm feeling the wind or my back on that is a day-to-day occurrence. But, you know, the friction is clearly subsided. It's a healthy environment. We're having great conversations with students, weighing the differences between potentially a four-year liberal arts education and getting to work within a year, making a good wage. And there's been a lot of positive press in the direction of people being more practical and thinking about these vocations as a great alternative. And the demand for these, as we call skilled collar workers, continues to increase. And so, you know, we're having much better conversations.

Mike Grondahl: Wet weather.

Mike Grondahl: No.

Mike Grondahl: Whether I'm feeling the wind up my or buy back on that is is a day to day is a day to day occurrence, but but you know the friction is clearly it's clearly subsided. It's a healthy environment, we're having great conversations with students are weighing the differences between potentially a four year Liberal Arts education and.

Mike Grondahl: Getting to work within a year, making a good wage and there's been a lot of positive press in the direction of people being more practical and thinking about about the these.

Mike Grondahl: Vocations as.

Mike Grondahl: A great alternative and the demand for these as we called skilled collar workers continues to increase and so we're having much better conversations our lead flow is quite high.

Jerome Grant: Our lead flow is quite high. We're thrilled with where our lead flow is this year, even, you know, at the investment levels in which we expected to make rather than increase investment levels. And I think you can also tell by increasing the investment levels in that lead flow that we're sensing that we have an opportunity to really take advantage of some trends in the market. Yeah, definitely.

Mike Grondahl: We're thrilled with where where our lead flow is this year, even you know at the investment levels in which we expected to make rather than increased investment levels and I think you can also tell by the by by increasing the investment levels in that lead flow that we're sensing that we have an opportunity to really take advantage of of some trends.

Mike Grondahl: The market, where we're doing that.

Mike Grondahl: Okay. Hey, thanks a lot.

Speaker Change: Yeah definitely okay, hey, thanks, a lot.

Mike Grondahl: Sure.

Mike Grondahl: Sure.

Steven Frankel: Our next question comes from Steven Frankel from Rosenblatt.

Speaker Change: Our next question comes from Steven Frankel from Rosenblatt. Please go ahead with your question.

Steven Frankel: Please go ahead with your question. Thanks, Jerome, looking at that M&A landscape that's out there, it does, I appreciate the comments that have been picked up. What are the price expectations like of the sellers? Are there any reasonable expectations out there or do you think there's going to be a bit of a back and forth process to get to the kind of multiples that you're comfortable paying? Well, you know, I guess my point of view on it is my bet is there will be a few transactions over the next year. And, you know, I understand that it takes a while with the regulatory environment, no matter who's in charge, to move transactions over the finish line.

Mike Grondahl: Thanks.

Mike Grondahl: I'm looking at that M&A landscape that's out there. It does I appreciate the comments that activity has picked up.

Mike Grondahl: What are the price expectations like the seller do you are there any reasonable expectations out there or do you think there's going to be a bit of a back and forth process to get to the kind of multiples that you are comfortable paying.

Mike Grondahl: Well you know I guess my my point of view on it is my my Bad is there will be a few transactions over the next year and you know I understand that it takes a while with the regulatory environment no matter who's in charge to two to move transactions over the over the finish line my gut would be that there will be a couple of transactions. This year are part.

Jerome Grant: My gut would be that there will be a couple of transactions this year. Our participation in that really does have a lot to do with a couple of things. One would be those multiples, and frankly, we're hearing more reasonable numbers now that we're out there. We're still, you know, never totally satisfied with what you hear, but we're hearing more reasonable numbers. And the second thing that we're maniacally focused on is that the target needs to have really great outcomes. that, you know, we've built up a reputation of executing at a high level, over 70% graduation rates, 85% employment rates.

Mike Grondahl: Dissipation and that really does have a lot to do with a couple of things.

Mike Grondahl: One would be those multiples and frankly, we're hearing more reasonable numbers now that we're out there we're still.

Mike Grondahl: Never totally satisfied with what you hear but we're hearing more reasonable numbers in the second thing that we're maniacally focused on is that the target needs to have really great outcomes.

Mike Grondahl: But you know we've built up a reputation of executing at a high level.

Mike Grondahl: We're 70% graduation rates 85 per cent employment rates. These are very good numbers and we want to make sure that two things one we're not diluting our shareholders by pricing getting priced out of out of our.

Jerome Grant: These are very good numbers, and we want to make sure that two things. One, we're not diluting our shareholders by pricing, getting priced out of a market. And number two, that we're not diluting our outcomes, which we think is significantly what drives our business.

Mike Grondahl: Out of out of our market and number two that we're not diluting our outcomes, which we think is significantly what drives our business.

Jerome Grant: That makes sense. And then on that outcome issue. Where are you today in employers jostling each other to get in front of your students? Are we still in an environment where you're seeing? Federal Offers. better tuition reimbursement, things like that from potential employers, or has that settled? We are. And again, one of our main strategies has actually been to bring the employers into the process much earlier and join with our students during their educational process. One good example of that is Tesla coming into our Long Beach campus with their collision repair program. They are paying the students to go through those programs and taking collision repair graduates through their finishing program.

Speaker Change: Okay that makes sense and then on that outcome issue.

Speaker Change: Where are you today and employers jostling each other to get in front of your students are we still in an environment, where you're seeing.

Speaker Change: Better offers.

Speaker Change: Or tuition reimbursement and things like that from potential employers or has that settled we are if you get one of our main strategies has actually been to bring the employers into the process much earlier and and enjoying with our students during their educational process. One. Good example of that is Tesla coming into our long Beach campus.

Speaker Change: There collision repair program they are paying for students to go through those programs and and and taking collision repair graduates through they're finishing up.

Speaker Change: Our program.

Jerome Grant: that bringing them down into the process with them is doing two things. One, it's giving students more confidence that they're going to get a job, and it's also increasing the competition among our employers because they're, you know, frankly afraid that the good ones will be gone by the time the end of the process is there. And so that's all helping wages grow.

Speaker Change: That's bringing them down into the process with with them is doing two things once it's giving students more confidence that they're going to get a job and it's also increasing the competition among our employers because they're you know frankly afraid that the good ones will be gone by the time the end of the processes there and so that's all helping our wages grow.

Jerome Grant: That's great.

Speaker Change: That's great. Thank you so much.

Operator: Thank you so much. Once again, if you would like to ask a question, please press star and 1.

Speaker Change: Once again, if you would like to ask a question. Please press star and one our next question comes from Jasper Bibb from <unk>. Please go ahead with your question.

Jasper Bibb: Our next question comes from Jasper Bibb from Churus.

Jasper Bibb: Please go ahead with your question.

Jerome Grant: Hey, good afternoon, everyone. I wanted to ask how we should think about the respective new enrollment growth rates for UTI and Concord segments in the new guide. Does that assume Concord continue to outperform UTI, or how would you frame those relative growth rates? Yeah, I think you know proportionately if you look at the overachievement in Q1 it was it was proportionate. Now one of the things we called out was that the UTI enrollment increased versus our expectations had a lot to do with people moving from the fourth quarter to the first quarter because of FAFSA delays and frustrations around that and as I said we're seeing you know pretty much UTI is operating to plan and again we've owned UTI for 60 years.

Jasper Bibb: Hey, good afternoon, everyone wanted to ask how we should think about the respective new enrollment growth rates for UTI and corporate segments in the new guide.

Jasper Bibb: Does that assume Concord continue to outperform U T I or how would you frame those relative growth rates.

Jasper Bibb: Yeah I think.

Jasper Bibb: Proportionately if you look at the over achievement in Q1. It was it was proportionate now one of the things we called out was that the U T. I D. U T. I enrollment increase Bruce is our expectations had a lot to do with people moving from the fourth quarter to the first quarter, because the Bachelor delays and frustration around mass and as I've said.

Jasper Bibb: Third we're seeing.

Jasper Bibb: You know pretty much UTI is operating to plan.

Jasper Bibb: And again, we've owned U T I for 60 years.

Jerome Grant: There's a lot more predictability around what UTI is doing while we're continuing to you know to turn the dials on you know testing how much elasticity there is in the demand in the health care space and so as we projected we see a probably larger increase organically on the Concord side while we continue to do that.

Jasper Bibb: There's a there's a lot 65, there's a lot more there's a lot more predictability around what UTI is doing well, we're continuing to you know to.

Jasper Bibb: Turning the dials on on.

Jasper Bibb: Testing, how much elasticity there isn't the demand in the health care space and so as.

Jasper Bibb: As we projected we see.

Probably larger increase on the organically on the Concord side, while we continue to do that.

Jerome Grant: Thanks for that. And then to confirm something from an earlier question, the expense was supposed to hit in one cue that was deferred out of the quarter. 10 million, and you're expecting that should all hit in the second quarter, maybe beyond that clarification. Just how should we think about the cadence of margins over the next couple quarters implied in the guide? So it's probably maybe $10 million to $15 million. But that's not everything that pushed. We expected to spend more in the second quarter. It's probably only closer to $5 million or $6 million of the money that deferred out of the first and into the second.

Jasper Bibb: Thanks for that and then to confirm something from earlier question.

Jasper Bibb: The expense was supposed to hit in <unk> that was deferred out of the quarter was $10 million and youre expecting that should all hit in the second quarter, maybe beyond that clarification, just how should we think about the cadence of margins over the next couple of quarters implied in the guide.

Jasper Bibb: But it's it's probably maybe $10 million to $15 million and but that's not everything that pushed we expected to spend more in the second quarter.

Jasper Bibb: It's.

Jasper Bibb: Probably only closer to five or $6 million of the money that that deferred out of the first and into the second so second quarter was gonna be higher anyway, yeah, and and it's even higher because of the timing of the expenses that we didn't get going in Q1 that we're already we're already focused on right now in Q2 and into Q3.

Christine Kline: So second quarter was going to be higher anyway. And it's even higher because of the timing of the expenses that we didn't get going in Q1 that we're already focused on right now in Q2 and into Q3. Okay, so the deferred expense is $5 to $6 million and the sequential increase is $10 to $15. Okay. Yeah, that makes sense.

Jasper Bibb: Okay. So the deferred expenses five to 6 million in the second yeah, yeah. Okay, Yeah, yeah that makes sense and really sad.

Christine Kline: And really, as we said on the call, Oh, go ahead. Yeah, I was just following up any color on how we should think about margins in the third and fourth quarter. How do you see that trending over the balance of the year? Christine will handle that one for you. Contour of the Margins throughout the year, or Matt? Yeah, they drop. They'll be, in terms of even margins, probably low double digits for second and third quarters. And then you'll see our seasonal jump in the fourth quarter will be upper teens is what we'd expect.

Speaker Change: Oh go ahead.

Speaker Change: Yeah I was just following up and any color on how we should think about margins in the third and fourth quarter.

Speaker Change: How do you see that trending over the balance of the year.

Speaker Change: Christine I'll handle that one for you.

Speaker Change: Contour the margins throughout the year or Matt yeah. They they dropped them there'll be you know in terms of EBITDA margins.

Speaker Change: Probably low double digits for the second third quarters, and then you will see our seasonal jump in the fourth quarter will be.

Upper teens is what we'd expect.

Jasper Bibb: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Operator: All right, thanks Jasper. Thanks for calling. Appreciate it.

Speaker Change: Alright, Thanks, Jasper Thanks, Paul I appreciate it.

Jerome Grant: And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the conference call back over to Jerome Grant, CEO, for closing remarks. Thank you very much, Operator. We appreciate everyone's attention and taking their precious time out of their day to listen to us. We are looking forward to once again reporting three months from now.

Speaker Change: And ladies and gentlemen, with that we will be concluding today's question and answer session I'd like to turn the conference call back over to Jerome Grant CEO for closing remarks.

Speaker Change: Thank you very much operator, we appreciate everyone's attention and taking their precious time out of their day to listen to us.

Speaker Change: We are looking forward to once again reporting three months from now so thank you very much.

Jerome Grant: So, thank you very much.

Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for...

Speaker Change: Ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining.

Operator: You may now disconnect your line.

Speaker Change: May now disconnect your lines.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].