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Universal Technical Institute Reports Fiscal Year 2015 Second Quarter Results

SCOTTSDALE, Ariz., April 30, 2015 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported revenues for the second quarter ended March 31, 2015 of $91.2 million, a 3.7 percent decrease from $94.7 million for the second quarter of the prior year.  Net income for the second quarter ended March 31, 2015 increased to $0.6 million, or 2 cents per diluted share, compared to net loss of $1.6 million, or a loss of 7 cents per diluted share, for the second quarter ended March 31, 2014.

Revenues for the six months ended March 31, 2015 were $186.9 million, a 2.5 percent decrease from $191.8 million for the six months ended March 31, 2014. Net income for the six months ended March 31, 2015 was $3.6 million, or 15 cents per diluted share, compared to  $0.1 million, or 0 cents per diluted share, for the six months ended March 31, 2014.

"We are pleased to report continued improved financial results largely driven by operating efficiencies," said Kim McWaters, chairman and CEO. "Our focus on rebuilding our student population remains a top priority.  While down relative to last year, starts in the quarter were slightly better than our expectation. Preparations necessary to open our new campus in Long Beach are on track and our work to increasingly engage with employers in our technician recruitment efforts is accelerating.  We continue to believe these initiatives will positively impact student enrollment in the future."

Student Metrics


Three Months Ended March 31,


Six Months Ended March 31,


2015


2014


2015


2014


(Rounded to hundreds)

Total starts

2,700


3,100


4,500


5,300

Average undergraduate full-time student enrollment

13,400


14,700


14,000


15,000

End of period undergraduate full-time student enrollment

12,900


14,300


12,900


14,300

Second Quarter Operating Performance

Revenues for the second quarter of 2015 were $91.2 million, a 3.7 percent decrease from $94.7 million for last year's second quarter. Tuition excluded $5.7 million and $6.6 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenues when payments are received.

Operating income and margin for the second quarter of 2015 were $2.4 million and 2.6% percent, respectively, compared to operating loss and margin of $1.6 million and 1.7 percent, respectively, in the same period last year. The increases in operating income and margin were related to decreases in  compensation costs, advertising expense and bad debt expense, partially offset by the decrease in revenues.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2015 was $7.8 million compared to $4.2 million in the same period last year. See "Use of Non-GAAP Financial Information" below.

Six Month Operating Performance

Revenues for the six months ended March 31, 2015 were $186.9 million, a 2.5 percent decrease from $191.8 million for the six months ended March 31, 2014. Tuition excluded $11.4 million and $12.8 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenues when payments are received.

Operating income and margin for the six months ended March 31, 2015 were $8.0 million and 4.3 percent, respectively, compared to $1.4 million and 0.8 percent, respectively, for the six months ended March 31, 2014. The increases in operating income and margin were related to decreases in compensation costs, contract services expense and bad debt expense, partially offset by the decrease in revenues and an increase in advertising expense.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the six months ended March 31, 2015 was $18.9 million compared to $13.1 million for the six months ended March 31, 2014. See "Use of Non-GAAP Financial Information" below.

Liquidity

Cash, cash equivalents and investments totaled $74.6 million at March 31, 2015, compared to $96.1 million at September 30, 2014.  At March 31, 2015, shareholders' equity totaled $128.0 million as compared to $133.2 million at September 30, 2014.  We paid cash dividends of $0.10 per common share on December 19, 2014 and March 31, 2015 totaling approximately $4.9 million

Pursuant to the previously announced share repurchase plan, we purchased 748,000 shares during the six months ended March 31, 2015 at an average price per share of $8.15 and a total cost of approximately $6.1 million.

Cash provided by operating activities was $8.7 million for the six months ended March 31, 2015 compared to $16.1 million for the six months ended March 31, 2014.

2015 Outlook

Although we have had a strong first half, our guidance for the full year ending September 30, 2015 remains relatively unchanged.  We expect revenue to decline approximately 3 to 4%, however, excluding the impact of pre-opening costs of our new campus, we expect to see year over year growth in operating income.  We expect new student starts as well as our average student population to be down for the full year in the mid-single digits.  We expect to see year over year growth in both new student applications and starts in the second half with all of that growth occurring in the fourth quarter.  Capital expenditures are expected to be approximately $35.0 million in 2015. Due to the seasonality of our business and normal fluctuations in student populations, we would expect volatility in our quarterly results.

Conference Call

Management will hold a conference call to discuss the 2015 second quarter results on Friday, May 1 at 10:00 a.m. PDT (1:00 p.m. EDT). This call can be accessed by dialing 412-858-4600 or 800-860-2442.  Investors are invited to listen to the call live at http://uti.investorroom.com/ .  Please access the website at least 15 minutes early to register, download and install any necessary audio software.  A replay of the call will be available on the Investor Relations section of UTI's website for 60 days or the replay can be accessed through May 13, 2015 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10064029.

Use of Non-GAAP Financial Information

This press release and the related conference call contains non-GAAP (Generally Accepted Accounting Principles) financial measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. Management chooses to disclose to investors, these non-GAAP financial measures because they provide an additional analytical tool to clarify the results from operations and helps to identify underlying trends.  Additionally, such measures help compare the Company's performance on a consistent basis across time periods. To obtain a complete understanding of the Company's performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the financial statements and notes thereto included in the annual and quarterly filings with the Securities and Exchange Commission.  Since the items excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be an alternative to net income as a measure of the Company's operating performance or profitability.  Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring. Other companies, including other companies in the education industry, may calculate non-GAAP financial measures differently than UTI does, limiting their usefulness as a comparative measure across companies.  A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are included below.


Safe Harbor Statement

All statements contained herein, other than statements of historical fact, are "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, as amended.  Such statements are based upon management's current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements.  Factors that could affect the Company's actual results include, among other things, changes to federal and state educational funding, changes to regulations or agency interpretation of such regulations affecting the for-profit education industry, possible failure or inability to obtain regulatory consents and certifications for new or expanding campuses, potential increased competition, changes in demand for the programs offered by UTI, increased investment in management and capital resources, the effectiveness of the recruiting, advertising and promotional efforts, changes to interest rates and unemployment, general economic conditions of the Company and other risks that are described from time to time in the Company's public filings.  Further information on these and other potential factors that could affect the financial results or condition may be found in the Company's filings with the Securities and Exchange Commission.  The forward-looking statements speak only as of the date of this press release.  Except as required by law, the Company expressly disclaims any obligation to publicly update any forward-looking statements whether as a result of new information, future events, changes in expectations, any changes in events, conditions or circumstances, or otherwise.

About Universal Technical Institute, Inc.

Headquartered in Scottsdale, Arizona, Universal Technical Institute, Inc. (NYSE: UTI) is the leading provider of post-secondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. With more than 190,000 graduates in its 50-year history, UTI offers undergraduate degree and diploma programs at 11 campuses across the United States, as well as manufacturer-specific training programs at dedicated training centers. Through its campus-based school system, UTI provides specialized post-secondary education programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NASCAR Tech). For more information visit www.uti.edu .

(Tables Follow)


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)



Three Months Ended March 31,


Six Months Ended March 31,


2015


2014


2015


2014


(In thousands, except per share amounts)

Revenues

$     91,235


$      94,711


$   186,915


$   191,751

Operating expenses:








  Educational services and facilities

48,143


50,777


95,973


101,851

  Selling, general and administrative

40,690


45,546


82,940


88,454

     Total operating expenses

88,833


96,323


178,913


190,305

Income (loss) from operations

2,402


(1,612)


8,002


1,446

Other (expense) income:








  Interest expense, net

(481)


(491)


(980)


(623)

  Equity in earnings of unconsolidated affiliate

136


127


254


208

  Other income

133


105


245


379

     Total other expense, net

(212)


(259)


(481)


(36)

Income (loss) before income taxes

2,190


(1,871)


7,521


1,410

Income tax expense (benefit)

1,635


(251)


3,872


1,323

Net income (loss)

$          555


$       (1,620)


$       3,649


$           87

Other comprehensive income (net of tax):








Equity interest in investee's unrealized gains on hedging derivatives, net of taxes(1)

6



17


Comprehensive income (loss)

$          561


$       (1,620)


$       3,666


$            87









Earnings per share:








Net income (loss) per share - basic

$         0.02


$         (0.07)


$         0.15


$            —

Net income (loss) per share - diluted

$         0.02


$         (0.07)


$         0.15


$            —

Weighted average number of shares outstanding:








  Basic

24,463


24,661


24,647


24,653

  Diluted

24,551


24,661


24,741


24,888

Cash dividends declared per common share

$         0.10


$          0.10


$         0.20


$         0.20

 


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



March 31, 2015


Sept. 30, 2014

Assets

(In thousands)

Current assets:




  Cash and cash equivalents

$         16,367


$         38,985

  Restricted cash

8,199


6,544

  Investments, current portion

48,244


45,906

  Receivables, net

9,864


12,118

  Deferred tax assets, net

4,485


7,470

  Prepaid expenses and other current assets

17,521


16,509

    Total current assets

104,680


127,532

Investments, less current portion

10,006


11,257

Property and equipment, net

113,376


106,927

Goodwill

20,579


20,579

Deferred tax assets, net

12,694


11,923

Other assets

10,533


9,851

    Total assets

$       271,868


$       288,069





Liabilities and Shareholders' Equity




Current liabilities:




  Accounts payable and accrued expenses

$          37,335


$         38,827

  Deferred revenue

40,680


46,365

  Accrued tool sets

3,810


3,806

  Construction liability

6,172


1,252

  Financing obligation, current

648


5,234

  Income tax payable


4,336

  Other current liabilities

2,362


2,515

    Total current liabilities

91,007


102,335

Deferred rent liability

11,633


10,323

Financing obligation

32,138


32,478

Construction liability


Other liabilities

9,085


9,741

    Total liabilities

143,863


154,877





Commitments and contingencies






Shareholders' equity:




  Common stock, $0.0001 par value, 100,000,000 shares authorized, 30,897,896 shares issued and 24,137,317 shares outstanding as of March 31, 2015 and 30,838,460 shares issued and 24,825,881 shares outstanding as of September 30, 2014

3


3

  Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding


  Paid-in capital

176,538


174,376

  Treasury stock, at cost, 6,760,579 shares as of March 31, 2015 and 6,012,579 as of September 30, 2014

(96,888)


(90,769)

  Retained earnings

48,335


49,582

  Accumulated other comprehensive income

17


    Total shareholders' equity

128,005


133,192

Total liabilities and shareholders' equity

$       271,868


$       288,069

 


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Six Months Ended March 31,


2015


2014



Cash flows from operating activities:




Net income

$

3,649


$

87

Adjustments to reconcile net income to net cash provided by operating activities:




  Depreciation and amortization

8,859


9,861

  Amortization of assets subject to financing obligation

931


620

  Amortization of held-to-maturity investments

931


1,235

  Bad debt expense

307


1,974

  Stock-based compensation

2,198


3,106

  Excess tax benefit from stock-based compensation


(7)

  Deferred income taxes

2,214


(157)

  Equity in earnings of unconsolidated affiliate

(254)


(208)

  Training equipment credits earned, net

(697)


(601)

  (Gain) loss on disposal of property and equipment

(41)


150

Changes in assets and liabilities:




  Restricted cash: Title IV credit balances

242


284

  Receivables

2,616


128

  Prepaid expenses and other current assets

(214)


(1,230)

  Other assets

(640)


(190)

  Accounts payable and accrued expenses

(742)


(1,147)

  Deferred revenue

(5,685)


3,617

  Income tax payable/receivable

(5,005)


(1,292)

  Accrued tool sets and other current liabilities

(150)


242

  Deferred rent liability

58


(725)

  Other liabilities

158


400

  Net cash provided by operating activities

8,735


16,147

Cash flows from investing activities:




  Purchase of property and equipment

(16,215)


(5,488)

  Proceeds from disposal of property and equipment

3


5

  Purchase of investments

(24,425)


(33,132)

  Proceeds received upon maturity of investments

22,407


26,057

  Return of capital contribution from unconsolidated affiliate

228


  Restricted cash: proprietary loan program

(1,950)


944

  Net cash used in investing activities

(19,952)


(11,614)

Cash flows from financing activities:




  Payment of cash dividend

(4,896)


(4,934)

  Payment of financing obligation

(350)


(167)

  Payment of payroll taxes on stock-based compensation through shares withheld

(36)


(58)

  Excess tax benefit from stock-based compensation


7

  Purchase of treasury stock

(6,119)


(410)

  Net cash used in financing activities

(11,401)


(5,562)

Net (decrease) increase in cash and cash equivalents

(22,618)


(1,029)

Cash and cash equivalents, beginning of period

38,985


34,596

Cash and cash equivalents, end of period

$

16,367


$

33,567

 


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)


Reconciliation of Net Income to EBITDA



Three Months Ended Dec. 31,


Six Months Ended March 31,


2015


2014


2015


2014


(In thousands)

Net income

$       555


$   (1,620)


$      3,649


$           87

Interest expense, net

481


491


980


623

Income tax expense

1,635


(251)


3,872


1,323

Depreciation and amortization

5,133


5,543


10,390


11,061

EBITDA

$    7,804


$     4,163


$    18,891


$    13,094

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

SELECTED SUPPLEMENTAL INFORMATION

(UNAUDITED)


Selected Supplemental Financial Information



Three Months Ended March 31,


Six Months Ended March 31,


2015


2014


2015


2014


(In thousands)

Salaries expense

$    37,593


$    40,575


$    75,790


$      80,343

Employee benefits and tax

7,167


8,308


14,841


16,043

Bonus expense

1,755


(495)


3,894


1,091

Stock-based compensation

1,325


1,763


2,198


3,106

Total compensation and related costs

$    47,840


$    50,151


$    96,723


$    100,583









Occupancy expense

$      9,574


$      9,689


$    19,165


$      19,830

Depreciation and amortization expense

$      5,133


$      5,543


$    10,390


$      11,061

Bad debt expense

$       (627)


$         641


$         307


$        1,974

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/universal-technical-institute-reports-fiscal-year-2015-second-quarter-results-300075417.html

SOURCE Universal Technical Institute, Inc.

For further information: John Jenson, Vice President, Corporate Controller, Universal Technical Institute, Inc., (623) 445-0821
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