Q2 2025 Universal Technical Institute Inc Earnings Call

Speaker Change: Good day and welcome to the Universal Technical Institute's second quarter 2025 earnings call. All participants will be in listen only mode. Should union assistance please signal a conference specialist by pressing the star key solid by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker Change: Do you ask a question you may press star than one on your telephone keypad? To withdraw your question, please press star then two

Please note, this event is being reported.

Speaker Change: I would now like to turn the conference over to Matt Kempton, Vice President, Corporate Finance, and Investor Relations.

Please go ahead.

Speaker Change: Hello and welcome to Universal Technical Institute's Fiscal Second Corps 2025 earnings call. Joining me today are our CEO Jerome Grant and CFO Bruce Schumann. Following our prepared remarks, we will open the call for your questions.

Speaker Change: A replay of this call is 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 in furnished to the SEC

Speaker Change: During his 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.

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 in SEC filings.

Speaker Change: These statements do not guarantee future performance, and therefore under-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.

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.

Speaker Change: These should be viewed in addition to, and not as a substitute for, the company's reported results prepared in accordance with US gap.

Speaker Change: All non-GAAP financial measures referenced in today's call are reconciled in an earnings press 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 in investor presentation.

Speaker Change: With that, I will turn the call over to Jerome Grant, CEO of Universal Technical Institute for

Jerome Grant: Thank you, Matt, good afternoon everyone, and thank you for joining us to discuss our results for the second quarter of 2025.

Jerome Grant: Over the past few months, I've heard from many of you, which is great, as we pride ourselves on keeping the lines of communication open with the investment community.

Jerome Grant: With everything going on in Washington, many of you were interested in how we're responding to the changes already made and potential changes in the regulatory environment.

Jerome Grant: So, before I get into our strong Q2 results, I'd like to start today's call by briefly sharing my views on recent regulatory developments and the broader macro environment we're operating in.

Jerome Grant: Despite our initial cautious outlook for both the 2025 top and bottom line heading into the presidential election,

Jerome Grant: and recent developments across the Higher Education Regulatory Landscape that may suggest otherwise, I'm pleased to share that we've not experienced any disruptions to our operations or growth trajectory.

Jerome Grant: As a matter of fact, the lines of communication with the new leadership team within the Department of Education have only strengthened since the inauguration.

Jerome Grant: Our expansion plans remain firmly on track, and depending on how circumstances evolve, we may actually be positioned to accelerate the growth of our Concord and UTI divisions.

Jerome Grant: We certainly will share specific news on that, Troy, as plans take shape.

Jerome Grant: With respect to tariffs, we expect impact if any to be minimal for us, but we'll keep monitoring for changes.

Jerome Grant: From a macro-environment perspective, demand for skilled labor, particularly across the trades and healthcare, also continue to strengthen in this environment.

Jerome Grant: The ongoing supply and demand imbalance in these critical sectors and improving dialogue in favor of trade schools over traditional four-year degrees is generating additional tailwind for our business.

Jerome Grant: Employers continue to voice their urgent need for well-trained professionals and our campus network and program offerings are increasingly aligned with that demand.

With that, let's move to the results for the quarter.

Jerome Grant: We maintain strong operational momentum throughout the second fiscal quarter of 2025, continuing to deliver results that exceeded our expectations.

Jerome Grant: while navigating dynamic macro-environment and prioritizing outcomes for our students.

Jerome Grant: Given the broader uncertainty in the market, we were conservative with our estimates and deliberate with our spending throughout the quarter.

Jerome Grant: As a result, and in conjunction with the favorable environment for our graduates, both revenue and adjusted EBITDA significantly outperform forecast.

Jerome Grant: Revenue for the second quarter increased nearly 13% year-over-year to $207.4 million.

Jerome Grant: Average full-time active students grew over 10% year-over-year to 24,604 students with the new student starts growing more than 21% year-over-year.

Jerome Grant: Net income increased 47% to $11.4 million with diluted earnings per share of 21 cents.

Adjusted EBITDA grew approximately 28% year over year to 28.9 million.

Jerome Grant: We are pleased with the strong results we are sharing today. They serve as a powerful proof point of our business model's strength and resilience reinforcing our confidence in achieving our long-term goals.

Jerome Grant: We remain firmly committed to delivering both year over year top and bottom line growth throughout the second half of 2025.

Jerome Grant: Now, to our division-specific highlights for the quarter. Starting with Concord, the division continued to deliver robust year-over-year growth, driven by sustained marketing investments and the effectiveness of our admissions team, as well as strong program demand.

Jerome Grant: Our Marketing and Admissions investments in Concord continue to generate very strong conversion rates, driving new students starts.

Jerome Grant: We're continuing to test the elasticity of the Concord model and we've yet to find the ceiling and how far we can push ROI.

regarding Conqueror's Program Expansions Strategies.

Jerome Grant: Our previously announced initiatives remain on track, including the launch of a brand new nursing program in Jacksonville, Florida in mid-fiscal 2025, our Dallas nursing program capacity expansion, which is set to add 60 additional students later this year.

Jerome Grant: and the ten non-title four short course programs rolling out across the conquered campuses in 2025.

Jerome Grant: With optimization in mind, we're relocating our Aurora Colorado campus to Denver. This is part of our ongoing plan to enhance operations, expand programs, and improve margin. The new campus will occupy 60,000 square feet and will open in February of 2026.

Jerome Grant: This reimagined space will include new simulation lab for students to gain hands-on experience with real-life medical scenarios, as well as additional space earmarked for other high-demand programs, as well as a larger dental hygiene clinic.

Jerome Grant: Shifting to our partnerships, I'm pleased to announce that we broke ground on our new co-branded Heartland Dental Campus in Fort Myers, Florida last month.

Jerome Grant: This first-of-its-kind campus, set to open in early fiscal 2026, will train up to 190 dental hygienists and assistants annually. As previously mentioned, this campus will begin as a non-title for campus with plans to apply for Title IV funding once concrete growth restrictions are lifted.

Jerome Grant: We expect this location to contribute more than $4 million in annual revenue as the campus scales.

Jerome Grant: Turning to our UTI division, the UTI division maintains strong year-over-year improvements, largely as a result of program expansions, the immense market demand for skilled colored workers and our strong lead conversions.

Jerome Grant: Building the foundation for UTI's continued success are our ongoing expansion efforts.

Jerome Grant: This quarter, we made exciting progress on our program expansion initiatives.

Jerome Grant: As we previously announced, we have eight full-length programs launching across UTI campuses this year.

Jerome Grant: In March, we added our HVACR program to our UTI or Lando campus and most recently launched our Electrical Electronics and Industrial Technology or EIT program at UTI's Extin and Morseville campuses.

Jerome Grant: This new 12-month EIT program will train students for entry-level careers in low-voltage electronics and high-voltage electrical systems for certain residential and commercial construction applications.

Jerome Grant: This program also includes the maintenance of industrial technology, including industrial robotics, hydraulics, and mechanical systems.

Jerome Grant: by expanding our portfolio with in-demand programs were continuing to reach even more students in high-demand employment areas.

Additionally,

Jerome Grant: As part of our North Star Strategies Phase 2, we plan to open three campuses in 2026, subject to regulatory approval.

Jerome Grant: These are the Heartland Concord Co-branded Campus, a fully optimized UTI Campus with a comprehensive set of program offerings in Atlanta. And most recently, we announced the last of the three campuses in 2026, our inaugural Skill Trades focused UTI Campus in San Antonio, Texas.

Jerome Grant: Aligning with our strategy to diversify our educational offerings and meet the evolving needs of the workforce. This expansion marks a significant step in broadening our program offerings beyond our traditional transportation focused training.

Jerome Grant: We anticipate that this campus will open in the first half of fiscal 2026. When fully ramped, this campus should contribute upwards of $23 million in revenue, which significant margin of contribution.

Jerome Grant: Our optimization efforts are also progressing well. We expect our MIAT Canton campus, along with the Motorcycle Mechanics Institute, Marine Mechanics Institute, and NASCAR Technical Institute campuses to officially operate under the Universal Technical Institute brand in the coming months. [inaudible]

Jerome Grant: with the sustained robust performance across both the visions, our conservative spending, and a favorable macro-environment, I'm pleased to announce that we are raising our fiscal 2025 guidance ranges once again.

Jerome Grant: We now anticipate generating consolidated revenue between $825 and $835 million, reflecting approximately 13% year-over-year growth.

Jerome Grant: We now expect adjusted EBITDA between $124 and $128 million and we now expect new student starts to be between $29,000 and $30,000.

Speaker Change: Bruce Schuman, our new chief financial officer, will walk through our updated fiscal 2025 guidance in depth in just a moment.

Speaker Change: His leadership will be critical as we pursue significant growth and profitable opportunities.

Speaker Change: Driven by rising demand for skilled trades and healthcare professionals across the U.S.

Speaker Change: We're excited to have Bruce on board and on the call with me today and look forward to his partnership in advancing our strategy.

Speaker Change: We also promoted Todd Hitchcock to Chief Operating Officer. Todd has been instrumental in every face of our transformation, including developing and driving the North Star strategy focused on growth, diversification, and optimization.

Speaker Change: His leadership in operational alignment, shared services, and campus performance has been key to our success.

Speaker Change: In his expanded role, Todd will strengthen our market position as we scale to meet the growing workforce demands.

Speaker Change: Supporting these efforts, Adrian DeTray recently joined as Chief Information Officer to lead the build-out of a modern technology and data platform. Further enhancing our operational visibility and the student experience.

Speaker Change: I'm thrilled that our teams now fully in place to execute on phase two of our North Star strategy with great focus and precision.

Speaker Change: With that in mind, I'd like to take a few moments to reiterate what phase two of our North Star strategy entails, both operationally and financially.

[inaudible]

Speaker Change: Operationally, we remain committed to launching at least six new programs each year across Concord and or UTI campuses, pending regulatory approval. In addition, we plan to open at least two new campuses annually, beginning in fiscal 2026.

Speaker Change: We've already announced nine new programs for Fiscal 2025 and three campuses for Fiscal 2026, demonstrating that we're not only on track to meet our objectives but position to exceed them.

Speaker Change: Financially, this organic strategy should result in revenue exceeding $1 billion by the end of 2020-29 and adjusted EBITDA margins approaching 20 percent.

Speaker Change: As we mentioned on our last call, it's important to note that our EBITDA margins will reflect increase investment in fiscal year's 2026 and 2027.

Speaker Change: These strategic investments are expected to temporarily moderate margin growth before new campuses and programs begin to scale, ramping margin expansions significantly in Fiscal's 2020-28 and 20-29.

Speaker Change: With that, I'll turn the call over to Bruce, our CFL, to review our second quarter financial results. Bruce?

Bruce Schuman: Thank you, Jerome. It's a pleasure to be here with you all on my inaugural earnings call with UTI. I am thrilled to be part of a company that plays such an important role in providing the US economy with the skilled workforce solutions that are critical for growth.

Speaker Change: I look forward to partnering with Jerome and the leadership team to help drive the next phase our North Star strategy.

With that, let's dive into our second quarter results.

Speaker Change: Q2 marks another quarter of consistent execution as we outperformed our expectations and delivered strong growth.

Speaker Change: For the second quarter, average full-time active students increased 10.3% year over year to 24,604 students.

Speaker Change: The new student starts increased 21.4% year-over-year to 6,650 starts exceeding our expectations.

Speaker Change: The Concert Division drove a 15.5% increase in average full-time active students compared to Q224, while new student starts rose 15.9% year over year in the second quarter.

Speaker Change: These increases were driven by further investments in concord's marketing and admissions and the effectiveness of those teams.

Speaker Change: The UTI Division generated a 7% increase year-over-year in average full-time active students for the quarter.

New Student Starts grew 26.4% year over year in the second quarter.

Speaker Change: The year-over-year increase is largely due to robust demand for skilled color workers and strong lead conversion rates.

Speaker Change: Turning to our financial performance, second quarter revenue on a consolidated basis increased 12.6% year-over-year to 207.4 million dollars.

Speaker Change: Concorde contributed 73.2 million, an increase of 20.3% over the prior year quarter, while the UTI Division contributed 134.2 million, an increase of 8.8% over the prior year quarter.

Speaker Change: From a profitability standpoint, consolidated net income for the second quarter was $11.4 million or 21 cents per

Speaker Change: Adjusted EBITDA for the second quarter was $28.9 million, a year-over-year increase of 27.8%.

Speaker Change: As Jerome mentioned earlier, we were deliberate in our spending throughout the quarter, which health drive out performances in all key financial metrics.

Speaker Change: Included in these results is $400,000 of growth investment spend primarily on our program expansions.

Speaker Change: At the end of the quarter, we had 54.4 million shares outstanding, and total available liquidity at the end of the quarter was $235 million, including 40 million of short-term investments and 99 million of remaining capacity on our revolving credit facility.

Speaker Change: During the second quarter, we paid down an additional $25 million on our revolver, ending with a positive networking capital of $13.4 million.

Speaker Change: Year-to-date operating cash flow was $22.2 million, and adjusted free cash flow was $8 million.

Speaker Change: Year-to-date capital expenditures were $14.3 million, as we continue to progress our program expansion and new campus initiatives across both divisions.

Speaker Change: Fueled by our strong second quarter performance and ongoing execution on our strategic priorities, we are raising our fiscal 2025 guidance ranges across all key metrics.

Speaker Change: Starting with revenue, we now expect to generate between $825 and $835 million of revenue for fiscal 2025, or approximately 13% year-over-year growth at the midpoint.

Speaker Change: This reflects the strong growth in average full-time active students from program expansions and deliberate investments we've made this year.

Speaker Change: Total new student starts in fiscal 2025 are expected to range between 29,000 and 30,000

Speaker Change: Regarding the balance of the year, we anticipate both Q3 and Q4 revenue growth rates to be in line with our full year guidance of about 13%.

Speaker Change: For starts, due to increasingly tougher comparable periods, we expect Q3 growth in the mid-to-upper single digits and Q4 likely closer to low single-digit growth.

Speaker Change: Adjusted events of margins by quarter should follow a similar pattern as last year due to the seasonality in our business.

Thank you very much.

Speaker Change: For fiscal 2025, we are raising our net income expectations to a range of $56 to $60 million with diluted earnings per share projected between $1 and $1.8.

Speaker Change: We anticipate full-year adjusted evita to now range between $124 and $128 million, or around the 23% year-over-year increase at the midpoint.

Speaker Change: We now expect 2025 full-year adjusted free cash flow to reigns between $62 and $68 million, which continues to assume approximately $55 million in CapEx spend.

Speaker Change: Consistent with our historical cadence, we still anticipate the bulk of our catch generation and year-over-year growth to occur in the fourth quarter.

Speaker Change: Looking ahead, we are entering an exciting phase of investment to fuel our next chapter of growth.

Speaker Change: As Jerome mentioned, I want to reiterate that while our investments for Phase 2 of the North Star strategy are expected to generate significant returns over the next five years.

Speaker Change: Our margin expansion over that timeframe will not be linear.

Speaker Change: As new campuses ramp and program expansions are built out, we anticipate EBITDA growth in fiscal 2026 and into 2027 will slow as a result of the associated growth investments.

Speaker Change: As these initiatives scale, we expect to build meaningful momentum, setting the stage for significant EBITDA growth acceleration into fiscal 2028 and 2029.

Speaker Change: We are confident these strategic investments will unlock even greater growth opportunities and further strengthen the scalability of the broader UTI model.

Speaker Change: In addition to today's earnings call transcript, we encourage everyone to review our press release, financial supplement, investor presentation, and the upcoming 10Q filing.

Speaker Change: These materials provide the latest updates on our consolidated and segment results, strategic initiatives, and guidance.

Speaker Change: Thank you to our team members, partners, students, and investors for your continued support.

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

Jerome Grant: Thank you, Bruce. Our team continues to execute on growth, diversification, and optimization as part of our North Star strategy.

Jerome Grant: While favorable macro trends, particularly the ever rising demand for skilled trades and healthcare professionals, provide a solid foundation to build upon it's our execution, operational rigor, and commitment to student outcomes that are driving our success.

Looking ahead, our growth initiatives remain sharply focused.

Jerome Grant: Organically, we're one, growing our campus footprint into Greenfield locations, two, expanding the reach of our existing programs and adding new in-demand offerings, and three, deepening industry relationships and broadening our partner network.

Jerome Grant: Inorganically, we continue to pursue strategic acquisitions that will enhance our educational reach geographically and complement our portfolio with a particular focus on healthcare.

with Strong Momentum, a fully aligned leadership team.

Jerome Grant: and a clear proven strategy, UTI's exceptionally well-positioned to continue to drive sustainable growth and long-term value creation.

Jerome Grant: Our healthy financial profile, extraordinary outcomes, and consistent execution, give us confidence in our ability to continue delivering meaningful stakeholder returns into the years ahead.

Jerome Grant: We appreciate your continued support and look forward to keeping you updated on our progress.

Jerome Grant: As always, we encourage you to visit our campuses to see firsthand the impactful initiatives we're driving.

Speaker Change: Please, don't hesitate to reach out if you'd like to schedule a tour. And now I'd like to turn the call over to the operator for Q&A. Operator?

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you use your speaker phone, please pick up your handset before pressing the keys.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then to. At this time, we will pause momentarily to assemble our roster.

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

Mike Grondahl: Hey guys, thanks and congrats on a really nice quarter. Two kind of quick questions. One.

Speaker Change: Very strong new starts. Any campuses or programs to really call out BUM?

in there because of that performance. And then secondly,

Speaker Change: You mentioned in the press release, taking advantage of favorable tailwinds.

Speaker Change: I can think of trades over four-year colleges, job demand, the administration, maybe just highlighting what you see as those tailwinds just to make sure I understand them. Thank you.

Jerome Grant: Well, thanks, Mike. Jerome here. Thanks for joining. Why don't we take those questions in reverse. First of all, the things that are fueling what we're seeing some pretty impressive lead generation.

Speaker Change: You actually pretty much answered the question with the points you made.

Speaker Change: for what's driving it, is that there's significantly more energy being focused right now on the notion that four-year colleges aren't necessarily for everyone.

Speaker Change: and that message is resonating with parents, and we're hearing it when we're talking to parents, if you understand that...

Speaker Change: For just about everything we do in both divisions, the parents are involved in this decision because most of our students are [inaudible]

are um...

Speaker Change: You know, the American auto industry and things along those lines and so that's again what we believe and what we're hearing is fueling heightened interest in the skilled collared areas.

Speaker Change: and then finally, your first question, which was, you know, are there any particular areas? Well, we've continued to put an increase of marketing investment in the healthcare side pretty much across the board. There's particular strength in our clinical courses.

Speaker Change: in our clinical courses. That's one thing to highlight. And then on the UTI side, I think highlighting the skill traits.

Speaker Change: You know, the cornerstone of UTI has always been the auto diesel curriculum and it's still holding strong and moving along nicely, but...

Speaker Change: You know, our program expansions tend to specifically be around proliferating much more in the way of skill trades on the legacy UTI campuses.

Speaker Change: and what we're seeing is those are filling faster than our models. We are seeing that the interest is higher, more local and more adult, which is actually good for mature decision-making and the ability to start faster, and those would be the things I'd highlight for what we're seeing.

Thanks for that and congratulations again.

Thanks, Mike.

Speaker Change: Our next question comes from Jasper Bibb with Truist. Please go ahead.

Jasper Bibb: I heard the enrollment and revenue comments for the second half, just I guess curious how that enrollment growth breaks out for UTI and Concord at the segment level in the third and fourth quarter and I guess was the increase in new start guidance driven by one segment or you ended up out performing a plan at both schools.

Jasper Bibb: Well, I mean the nature of looking at the 3rd and 4th quarter has something you do with the mix and then also something to do with you know. So.

Jasper Bibb: Well, we've been saying quarter by quarter with with Concord, which is, you know, we'll continue to in on the Concord side We'll continue to invest in in looking for the upside but

Jasper Bibb: We can see as we're approaching our capacities on the clinical courses that...

Jasper Bibb: High School is by and large pretty much over now and therefore right now what we're working on is in a sense shepherding the high school population that have always already committed into their seats in June , July , August and September .

Jasper Bibb: And the last question I had was about where we were seeing the biggest bright spots and maybe the upside surprises that we're seeing on the UTI side and it tends to be around the skill trades.

Jasper Bibb: Welding, etc., HVAC, and the skill traits tend to...

Jasper Bibb: Len themselves to more of our quote-quote adult population, or those that have already left high school year to three years ago, usually engaged in the skilled trades area, whereas a lot of kids coming out of high school are very much...

Jasper Bibb: I'm a car person. I want to fix cars. That's not to say that auto diesel isn't doing well. It's just, you know, not seeing as big of those increases as we see in the skilled trades and so the combination of that being very much about about high school. So, I'm going to go ahead and see what I can do.

Jasper Bibb: and the work we've done over the last now year and we're lapping ourselves in high school is why we believe that the trajectory is as we outline high single digits and mid-single digits in the fourth quarter.

So get to your question.

Speaker Change: Yeah, that's helpful. And then on the comments around higher growth investments in 26 and 27, maybe driving solar EBITDA growth versus 2029, I think that EBITDA triggered in your five-year plan is about

Speaker Change: 24 and 25.

Speaker Change: But with opening three new campuses in 'twenty six we haven't even announced the program expansions in 'twenty six and then beginning the investment in the campuses that we will be announcing 427, you see a significantly more strategic investment than you saw in 'twenty four 'twenty five and we want to make sure people are and.

Speaker Change: The other the other point on that is we are no longer adjusting that strategic investment out of our non-GAAP measures.

Speaker Change: Because.

Speaker Change: So how we're working with the SEC rulemaking et cetera that we will note in our messages what the strategic investment want but it won't be it won't be piled into our adjusted EBITDA had as it was in the past and so we still are confident that over that that the the period of 2025 through 2029, you'll see.

Speaker Change:

Speaker Change: An average growth rate in double digits as as we've said before and that we believe we still will be approaching a 20% margin at the end of that period of time, but as we did in the last quarter what were sit what we're signaling is you'll see higher strategic investment in 'twenty, six 'twenty, seven which will limit the the.

Speaker Change: The percentage growth rates of of our adjusted EBIT number until those campuses built in 'twenty 'twenty six 'twenty seven come to scale in 'twenty eight 'twenty nine and then the trajectory moves forward.

Speaker Change: And Jessica this is Bruce the other quick thing I would add to that is if you look at the revenue component of kind of that five year CAGR. We do expect the revenue piece to be roughly linear it's really be at the EBIT side, excuse me, where youre going to kind of see that bend in the curve. If you will kind of slower growth rate 'twenty six 'twenty seven youll see kind of accelerated EBIT.

Speaker Change: Growth 2029, and we still feel confident in that ultimate kind of 20% marker by 29.

Speaker Change: I appreciate it.

Speaker Change: Two questions guys.

Speaker Change: Our next question comes from Bruce Goldfarb with Lake Street Capital markets. Please go ahead.

Speaker Change: Jerome Bruce Congratulations on the great results and thanks for taking my questions.

Speaker Change: Sure.

Speaker Change: Could you comment on trends in employer demand for both transportation and skilled trades graduates and health care graduates.

Speaker Change: Sure.

Speaker Change: First of all.

Speaker Change: Transportation is something that's been a known quantity to UTI for 60 years and so.

Speaker Change: Generally speaking if you think about sort of the accuracy of reading trends moving forward that would be the place where we probably have the most dependability over the years because of our ingrained position in and in the transportation trade area.

Speaker Change: And therefore, what we're seeing is steady.

Speaker Change: Consistent and growing but not explosive.

Speaker Change: The growing demand in the in the transportation area.

Speaker Change: As we've said before there's still are three or four jobs wherever UTI transportation graduate on the job Board and we project that we'll continue to be so if not grow because of the graying population of that workforce over the next over the next.

Speaker Change: 10 years.

Speaker Change: Skilled trades is actually something that's somewhat new to U T. I remember, we bought <unk>, which got us into HB AC in the electrical areas in wind energy and aviation and some of the other areas that we hadn't been before and we're just now proliferating them into the.

Speaker Change: 14 legacy UTI campuses.

Speaker Change: Along with the two M E T campuses were.

Speaker Change: Where are we.

Speaker Change: <unk> already merged Houston, and where we plan on bringing auto diesel into the canton campus anyway.

Speaker Change: So you know, our our projections and estimates as we moving in.

Speaker Change: Are always what we believed to be rational what we can see in the data that we're putting out over it and what I'm signaling here is that they are every bit of what we saw if not better.

Speaker Change: And what we're hearing people say is.

Speaker Change: We're getting a lot more demand if we're for welders, if we're gonna be building ships and planes etcetera and in the U S.

Speaker Change: We can't get enough electrical workers to keep up with.

Speaker Change: Data centers that are being built and things along those lines and that.

Speaker Change: HVAC techs are in very very high demand so.

Speaker Change: We're happy with what we're seeing the trajectory the demand and in skilled trades. It's.

Speaker Change: Somewhat outpacing our initial estimates of what we expected to see and we've got room form and where we're building our facilities to have room for them as we move forward and we're happy to we're happy to see that that demand is robust.

Speaker Change: On the healthcare side.

Speaker Change: It isn't so much are getting to know.

Speaker Change: What the demand side of healthcare is as is actually getting to know what this great engine that we bought in Concord can do to meet that demand, we've always known that the supply and demand curve in healthcare is significantly out of out of whack and that.

Speaker Change: It's even stronger than it is in the in the transportation skilled trades and enter energy Division.

Speaker Change: Our our upside has been our ability to continue to work closely with the marketing and admissions organizations in on.

Speaker Change: Concord campuses too to find more people to help fill some of that to help fill some of that demand and so no surprises in terms of health care of how big the demand is.

Speaker Change: But.

Speaker Change: We're thrilled with what we're seeing in our ability to go out and capture more of that with with bringing more people into our campuses.

Speaker Change: Thank you catch your question Okay. Yeah. Thank you.

Awesome, Thanks for joining.

Speaker Change: Wait a couple more quick.

Speaker Change: Okay.

Speaker Change: Okay could you comment on the level of activity in your corporate development efforts and also seller attitudes versus.

Speaker Change: What was versus six months ago.

Speaker Change: Probably.

Speaker Change: Probably comparable to maybe a little less activity out there you know if.

Speaker Change: If you think about it people are seeing what we're seeing.

Speaker Change: Which is demand becoming robust more focus on the skilled trades more focus on on health care more focus on four year colleges aren't necessarily what what what what you'd want doesn't mean that there arent opportunities that are out there.

Speaker Change: But.

Speaker Change: The number of for sale signs.

Speaker Change: Probably has a little a little smaller than than what we would've expected.

Speaker Change: It makes sense and then in terms of marketing spend what is the plan for marketing spend is it there or is it going to be more level or targeted for certain quarters.

Speaker Change: Over the next several groups I mean, we're going to.

Speaker Change: We're going to continue to invest do you see some really nice kind of ROI, especially on our Concord marketing spend very good return very good lead conversion will continue that it's a little bit the program dependent but you will see us ramp marketing as we feel like Theres a good ROI to do so.

Speaker Change: Great. Thank you and congrats again.

Speaker Change: Hey, Thanks I appreciate it.

Griffin: Our next question comes from Griffin with B Riley. Please go ahead.

Griffin: Hi, good evening, Thanks for taking my questions I had.

Speaker Change: Appreciate the the level of detail you provide in the prepared remarks and the Q&A. So just one from me if I could just drill down into this EBITDA trajectory I guess, what I'm hearing with regard to that in the next couple of years. It comes down to the magnitude between Opex investment and Capex investment.

Speaker Change: I guess I'm hearing is there's going to be significantly higher opex investment in 'twenty six 'twenty seven and I guess on that education services expense line is there any way you can handicap that for us what that Opex investment is looking like this year.

Speaker Change: And then what it would look like going forward and more of our investment heavy year like 'twenty six 'twenty seven.

Speaker Change: Yeah. Thanks, Chris This is Bruce I don't really have a guide for 'twenty six yet we're still working on that I'll put it maybe in perspective for you second half of this year. We put this in our supplement to we have about $6 million of growth Opex very focused on campus build out. Some early hiring we have to do very focused on that kind of northstar.

Speaker Change: Phase two strategy.

Speaker Change: We do have some pretty significant capex as well we were public about we have a $55 million capex spend for this year, we still have about 40 of that to spend and 70% of that is fully focused on growth investments new campus build out program expansions that are mission critical to make sure our 26th growth stays on track.

Speaker Change: And we look forward to sharing that with you as soon as we can so hopefully that puts into perspective for you.

Speaker Change: Yeah, Yeah, that's great. Thanks, a lot for the detail I appreciate it and congrats on a great quarter.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Our next question comes from Raj Sharma, with Texas Capital Bank. Please go ahead.

Raj Sharma: Hi, Thank you for taking my questions great great quarter, Great continued results.

Speaker Change: My question My Thanks, Ron My first question.

Raj Sharma: Is on starts.

Speaker Change: Are the gains in starts purely from better marketing grade lead gens like you like you commented or would you attribute any two higher uncertainty.

Raj Sharma: Or beginning to see any.

Raj Sharma: Increased uncertainty in in an impacted economy.

Raj Sharma: I don't I can't put my button on an impacted economy right now I think you know we've called recession, how many times over the last number of years without any employment suite ships to it whatsoever and and so.

Raj Sharma: You know I don't I don't believe that that what we've seen is any negative or positive economic factors affecting it I think that the lion's share of what youre seeing in the upside of the of the starts which we're thrilled to see and we've got room for more.

Raj Sharma: Is the increased investment that we're making in Concord to help them reach their fullest potential and get up to those full caps in terms of their clinical courses and then as that sort of migrates its way down to their core courses like medical assisting et cetera.

Raj Sharma: That that's that's one place where you're really seeing it and then on the UTI side really around the skill trades right is that you go into the skilled trades market you put all of these programs onto the onto the UTI campuses, you projected trajectory and in the markets based on the best information and intelligence that you have.

Raj Sharma: And the outperformance.

Raj Sharma: Performance on those is really what's driving the upside that we're seeing in the earlier part of the year here for UTI in terms a bit more.

Raj Sharma: More HVA see filling welding all the welding parts you noticed that one of our new tenants two expansions is capacity expansion.

Raj Sharma: We're increasing the capacity in several of our campuses right now by adding more welding booths et cetera.

Raj Sharma: Because we're seeing more more driving demand in the trades.

Speaker Change: Alright, so largely from the demand supply the gap and your great execution on the marketing side, you still haven't seen any.

Speaker Change: Any from sort of the potential rise in unemployment or or a weakening economy. That's that's fantastic.

Speaker Change: The young adult starts would really high our military up a lot of anything in particular going on there.

Speaker Change: On the military side.

Speaker Change: Well I mean, we've ramped our presence on the military from 16 to I think 26 recruiters and we're in the second full year of that ramping and and that's as we said before when you when that really takes shape bright you you have the ability to really to really.

Speaker Change: Ramp that we've had an increased effort on the veteran population, meaning people who have been out of the military for more than a year, but but are accessing their Gi Bill I would tell you that it's it's.

Speaker Change: Somewhat shocking and extraordinary how many of our veterans don't know that they have the Gi Bill and so we've had some concerted effort of getting more information about about what those benefits really are and how they and their families can take advantage of it and we're seeing the upside along that our group is doing a great job on.

Speaker Change: On that front and we're continuing to add adult reps on the Concord site as.

Speaker Change: As the lead flow continues to outstrip.

Speaker Change: You know, our our expectations through the investment that were.

Speaker Change: Putting in there.

Speaker Change: Great and then just sit on.

Speaker Change: The Concord restrictions they end.

In 2026.

Speaker Change: Any plans there what do you are teeing up too and you also commented that you could possibly be speeding.

Speaker Change: Those.

Speaker Change: <unk> growth plans or bringing them forward a little bit more could you comment on that.

Speaker Change: What could those be.

Speaker Change: We're ready to go.

Speaker Change: We are.

Speaker Change: Our real estate team N R R.

Speaker Change: Program and and campus launch teams have been formed and are on the starting line ready to go.

Speaker Change: And so.

Speaker Change: One thing we want to do is we want to.

Speaker Change: We want to leverage the stronger relationships, we have with the department of Ed just education to get those conversations going so that you know we're ready when the growth restrictions are lifted and if if it's possible for them to be earlier, we will continue to press on that so.

Speaker Change: And as I said in the call.

Speaker Change: We think that the new department of education, although smaller.

Speaker Change: Is working in a significantly more efficient and communicative fashion and that were <unk>.

Speaker Change: Generally happy what were seeing in the communication, we're having with them.

Speaker Change: Great.

Speaker Change: Just one last question I promise.

Speaker Change: The guidance right the ryzen got amazing guidance and appears conservative in the results.

Speaker Change: Given that you have a full time active students across all programs.

They are already in their seats.

Speaker Change: The second half starched won't.

Speaker Change: It won't affect the fiscal 'twenty five year results much.

Speaker Change: And my sense is that the greater any greater cost than new programs campuses won't either I guess my question is what could go wrong here or keep you from achieving the.

Speaker Change: The low end of your guidance here.

Speaker Change: Given that you have the business model that you know all the seats are in place.

Speaker Change: And giving you a feel very recently.

Speaker Change: We feel very confident comfortable and confident in our new guidance.

Speaker Change: Ranges that we put out there you've hit a lot of the points yourself, there, meaning you've kind of answered some of your own questions.

Speaker Change: As you as you as you laid that out again I think what we tried to explain was that we've also been working very very hard to get more of our high school population into the third quarter from the fourth quarter.

Speaker Change: Which slant towards auto diesel and also monetize them more throughout the year, which is which is good to see.

Speaker Change: But we were just signaling that we likely won't see those same robust double digit growth rates in that in that period, because it does slant significantly to the high school population.

Speaker Change: Right.

Speaker Change: Thank you so much for your color.

Speaker Change: It offline again, great great results congratulations.

Speaker Change: Great. Thanks, Raj and good to hear from you.

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

Speaker Change: Thank you very much operator, and I'd like to thank everyone for attending today as always Bruce Matt and I are available for follow up questions over the next few days and we look forward to speaking with our investors and analysts as we report our third quarter 2025 results in.

Speaker Change: In August.

Speaker Change: Have a great evening and thank you for your time and joining us bye bye.

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