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Universal Technical Institute Reports Fiscal Year 2011 Fourth Quarter and Year-End Results

SCOTTSDALE, Ariz., Nov. 29, 2011 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported net revenues for the fourth quarter ended Sept. 30, 2011 of $111.4 million, a 6.6 percent decrease from $119.2 million for the fourth quarter of the prior year.  Net income for the fourth quarter ended Sept. 30, 2011 was $6.0 million, a decrease of 17.5 percent from $7.2 million for the fourth quarter of the prior year.  Earnings per share for the fourth quarter ended Sept. 30, 2011 was 24 cents per diluted share as compared to 29 cents per diluted share for the fourth quarter ended Sept. 30, 2010.

Net revenues for the year ended Sept. 30, 2011 were $451.9 million, a 3.7 percent increase from $435.9 million for the year ended Sept. 30, 2010.  Net income for the year ended Sept. 30, 2011 was $27.2 million, a decrease of 5.5 percent as compared to net income of $28.8 million for the year ended Sept. 30, 2010.  Earnings per share for the year ended Sept. 30, 2011 was $1.10 per diluted share as compared to $1.18 per diluted share for the year ended Sept. 30, 2010. The reduction in workforce announced on June 30, 2011, which resulted in severance costs of $4.3 million (pre-tax) impacted earnings per share by approximately 11 cents for the year ended Sept. 30, 2011. See "Use of Non-GAAP Financial Information" below.

Return on equity for the trailing four quarters ended Sept. 30, 2011 was 21.4 percent compared to 25.6 percent for the trailing four quarters ended Sept. 30, 2010.

"Beyond implementing significant changes driven by new regulations, our focus for 2011 centered on improving our marketing and admissions effectiveness, completing the launch of our new blended learning automotive and diesel curriculum and strengthening graduate employment rates while achieving desired operating efficiencies," said Kim McWaters, chief executive officer.  "We are pleased these efforts enabled us to achieve record revenues and double-digit operating margins for the year, but not without some very difficult decisions to align our cost structure with current and anticipated student populations."

"In our fourth quarter, we experienced year over year declines in new student starts, however, at a lower rate of decline than in our third quarter," McWaters said.  "We remain focused on finding solutions to the problems we believe are driving these declines, namely the general economic conditions and their impact on the desire and ability of prospective students to obtain funding for their education."

"While we believe the economic conditions will continue to pressure student population growth in the short term, we are confident that the foundation laid in 2011 for greater efficiencies, improved cost control and sustained educational excellence, will position us for growth in the future," said McWaters.

Student Metrics

 

Three Months Ended

 

Twelve Months Ended

September 30,

 

 

September 30,

 

 

 

2011

 

2010

 

 

 

2011

 

2010

 

 

(Rounded to hundreds)

 

Total starts

6,500

 

7,600

 

 

 

16,200

 

19,500

 

Average undergraduate full-time student enrollment

17,300

 

19,500

 

 

 

18,500

 

18,600

 

End of period undergraduate full-time student enrollment

18,500

 

21,000

 

 

 

18,500

 

21,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Operating Performance

For the fourth quarter of 2011, revenues were $111.4 million, a 6.6 percent decrease from $119.2 million for last year's fourth quarter.  The decrease in revenues primarily relates to a decrease in average undergraduate full-time student enrollment of 11.0 percent partially offset by an increase in tuition rates.  During the fourth quarter of 2011 and 2010, tuition excluded $1.9 million and $2.2 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenue when payments are received.                

Operating income and margin for the fourth quarter of 2011 was $10.2 million and 9.1 percent, respectively, compared to operating income and margin of $11.8 million and 9.9 percent, respectively, in the same period last year.  The decrease in operating income is primarily attributable to the decrease in revenues in the current quarter.   

For the three months ended Sept. 30, 2011, the Dallas/Ft. Worth, Texas campus, which opened in June 2010, had revenues of $3.5 million and incurred $3.9 million in operating expenses, which includes $1.8 million in corporate allocations.  For the three months ended Sept. 30, 2010, the Dallas/Ft. Worth, Texas campus had revenues of $1.1 million and incurred $4.2 million in operating expenses, which includes $1.5 million in corporate allocations. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2011 was $16.8 million compared to $18.4 million in the same period last year.  See "Use of Non-GAAP Financial Information" below.

Fiscal 2011 Operating Performance

Revenues for the year ended Sept. 30, 2011 were $451.9 million, a 3.7 percent increase from $435.9 million for the year ended September 30, 2010.  The increase in revenues primarily relates to an increase in tuition rates, partially offset by an increase in tuition scholarships.  The increase in revenues is also attributable to an increase in average undergraduate full-time student enrollment during the first three quarters of the year.  During 2011 and 2010, tuition excluded $7.0 million and $9.7 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenue when payments are received.

Operating income and margin for the year ended Sept. 30, 2011 were $45.1 million and 10.0 percent, respectively, compared to $46.6 million and 10.6 percent, respectively, for the year ended Sept. 30, 2010.  The decrease in operating income and margin are related to approximately $4.3 million of severance costs associated with the reduction in our workforce in June 2011 as well as increases in salaries and benefits expense, depreciation expense, occupancy expense and advertising expense, partially offset by the increase in revenues and a decrease in bonus expense. 

For the year ended Sept. 30, 2011, the Dallas/Ft. Worth, Texas campus had revenues of $10.9 million and incurred $14.4 million in operating expenses, which includes $6.4 million in corporate allocations.  For the year ended Sept. 30, 2010, the Dallas/Ft. Worth, Texas campus had revenues of $1.2 million and incurred $8.3 million in operating expenses, which includes $3.5 million in corporate allocations.

Net income for the year ended Sept. 30, 2011 was $27.2 million, or $1.10 per diluted share, as compared to net income of $28.8 million, or $1.18 per diluted share, for the year ended Sept. 30, 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the year ended Sept. 30, 2011 was $71.1 million compared to $67.8 million for the year ended Sept. 30, 2010.  See "Use of Non-GAAP Financial Information" below.

Liquidity

Cash, cash equivalents and investments totaled $109.6 million at Sept. 30, 2011, compared to $81.1 million at Sept. 30, 2010.  At Sept. 30, 2011, shareholders' equity totaled $142.1 million as compared to $108.4 million at Sept. 30, 2010. 

Cash flow provided by operating activities was $26.5 million and $58.1 million for the three months and year ended Sept. 30, 2011, respectively, compared with $29.9 million and $67.5 million for the three months and year ended Sept. 30, 2010.

2012 Outlook

We expect the rate of decline experienced in 2011 in both applications and new student starts to slow in the first half of the year before potentially improving in the second half of the year.  However, given our current enrollment levels, the macro-economic headwinds and the challenging regulatory environment we operate in, we anticipate the average student population for 2012 to decline by a rate in the low teens.  We expect these lower levels of enrollments will result in a mid to high single digit decline in revenue in 2012.   Given these trends, we are focused on efficiencies and managing costs, but do not anticipate reaching the same level of operating margins as was achieved in 2011.  Furthermore, we plan on making our proprietary loan program more accessible to our current and prospective students and increase the number of need based scholarships in 2012 creating potential improvement in our show rates which would positively impact revenue.  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 2011 fourth quarter results today at 2:30 p.m. MST (4:30 p.m. EST). 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 December 7, 2011 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10007024.

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 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.

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. 

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 150,000 graduates in its 46-year history, UTI offers undergraduate degree, diploma and certificate 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 (NTI). To learn more about UTI and its training services, log on to www.uti.edu.

 

 (Tables Follow)


 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2011

 

2010

 

 

2011

 

 

2010

 

 

 

 

 

(In thousands, except per share amounts)

Revenues

 

$    111,358

 

$ 119,243

 

$ 451,900

 

$ 435,921

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Educational services and facilities

 

53,951

 

58,345

 

223,469

 

212,577

 

Selling, general and administrative

 

47,251

 

49,145

 

183,326

 

176,794

 

 

Total operating expenses

 

101,202

 

107,490

 

406,795

 

389,371

Income from operations

 

10,156

 

11,753

 

45,105

 

46,550

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income, net

 

53

 

55

 

252

 

250

 

Other (expense) income

 

(54)

 

123

 

291

 

479

 

 

Total other income (expense), net

 

(1)

 

178

 

543

 

729

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

10,155

 

11,931

 

45,648

 

47,279

Income tax expense

 

4,204

 

4,715

 

18,410

 

18,451

Net income

 

$       5,951

 

$    7,216

 

$   27,238

 

$   28,828

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Net income per share – basic

 

$         0.24

 

$      0.30

 

$      1.12

 

$       1.20

Net income per share – diluted

 

$         0.24

 

$      0.29

 

$      1.10

 

$       1.18

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

24,598

 

24,233

 

24,427

 

24,041

 

 

Diluted

 

24,833

 

24,514

 

24,740

 

24,511

 

 

 

 

 

 

 

 

 

 

 

Special cash dividend declared per common share

 

-

 

-

 

-

 

$1.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

 

 

 

2011

 

2010

 

 

 

 

(In thousands)

Assets

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$ 53,670

 

$ 48,974

 

Investments, current portion

 

50,052

 

28,528

 

Receivables, net

 

11,205

 

19,253

 

Deferred tax assets

 

7,837

 

8,840

 

Prepaid expenses and other current assets

 

10,709

 

9,836

 

 

Total current assets

 

133,473

 

115,431

Investments, less current portion

 

5,830

 

3,596

Property and equipment, net

 

100,377

 

99,040

Goodwill

 

20,579

 

20,579

Other assets

 

5,328

 

3,853

                Total assets

 

$ 265,587

 

$ 242,499

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 35,905

 

$ 53,906

 

Deferred revenue

 

61,394

 

63,276

 

Accrued tool sets

 

4,723

 

5,066

 

Income tax payable

 

2,032

 

-

 

Other current liabilities

 

642

 

66

 

 

Total current liabilities

 

104,696

 

122,314

 

Deferred tax liabilities

 

2,443

 

933

 

Deferred rent liability

 

11,799

 

5,621

 

Other liabilities

 

4,534

 

5,239

 

 

Total liabilities

 

123,472

 

134,107

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Common stock, $0.0001 par value, 100,000,000 shares authorized,

 

 

 

 

 

 

29,560,276 shares issued and 24,690,050

 

 

 

 

 

 

shares outstanding at September 30, 2011 and

 

 

 

 

 

 

29,148,585 shares issued and 24,278,359

 

 

 

 

 

 

shares outstanding at September 30, 2010

 

3

 

3

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized,

 

 

 

 

 

 

0 shares issued and outstanding

 

-

 

-

 

Paid-in capital

 

156,497

 

150,012

 

Treasury stock, at cost, 4,870,226 shares at September 30, 2011

 

 

 

 

 

 

and September 30, 2010

 

(76,506)

 

(76,506)

 

Retained earnings

 

62,121

 

34,883

 

 

Total shareholders' equity

 

142,115

 

108,392

Total liabilities and shareholders' equity

 

$ 265,587

 

$ 242,499

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2011

 

2010

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$           27,238

 

$       28,828

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

 

 

 

 

Depreciation and amortization

24,842

 

19,888

 

Amortization of held-to-maturity investments

1,195

 

1,367

 

Bad debt expense

8,279

 

6,520

 

Stock-based compensation

6,279

 

5,894

 

Excess tax benefit from stock-based compensation

(1,081)

 

(1,788)

 

Deferred income taxes

2,513

 

(3,541)

 

Loss on disposal of property and equipment

957

 

341

Changes in assets and liabilities:

 

 

 

 

Receivables

(840)

 

(9,886)

 

Prepaid expenses and other current assets

(1,110)

 

(462)

 

Other assets

(1,486)

 

(261)

 

Accounts payable and accrued expenses

(15,567)

 

6,037

 

Deferred revenue

(1,882)

 

15,101

 

Income tax payable (receivable)

3,279

 

(1,130)

 

Accrued tool sets and other current liabilities

233

 

831

 

Deferred rent liability

6,178

 

28

 

Other liabilities

(955)

 

(286)

 

 

Net cash provided by operating activities

58,072

 

67,481

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of property and equipment

(29,098)

 

(37,196)

 

Proceeds from disposal of property and equipment

64

 

5

 

Purchase of investments

(89,538)

 

(41,570)

 

Proceeds received upon maturity of investments

64,585

 

36,641

 

 

Net cash used in investing activities

(53,987)

 

(42,120)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Payment of cash dividends

-

 

(36,333)

 

Proceeds from issuance of common stock under employee plans

1,269

 

4,083

 

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

(1,739)

 

(2,124)

 

Excess tax benefit from stock-based compensation

1,081

 

1,788

 

 

Net cash provided by (used in) financing activities

611

 

(32,586)

Net increase (decrease) in cash and cash equivalents

4,696

 

(7,225)

Cash and cash equivalents, beginning of period

48,974

 

56,199

Cash and cash equivalents, end of period

$           53,670

 

$          48,974

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Twelve Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2011

 

2010

 

 

 

 

2011

 

2010

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$       5,951

 

$     7,216

 

$   27,238

 

$    28,828

Interest income, net

 

(53)

 

(55)

 

(252)

 

(250)

Income tax expense

 

4,204

 

4,715

 

18,410

 

18,451

Depreciation and amortization

 

6,661

 

6,548

 

25,731

 

20,803

          EBITDA

 

$     16,763

 

$   18,424

 

$   71,127

 

$    67,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Earnings Per Share Impact of Severance Costs Related to June 2011

Reduction In Workforce

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

September 30,

 

 

 

 

 

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

 

$   27,238

 

$    28,828

Severance costs

 

 

4,265

 

-

Less: tax effects of severance costs

 

 

(1,664)

 

-

   Net income, adjusted for severance costs

 

 

$   29,839

 

$    28,828

 

 

 

 

 

$        1.18

Diluted earnings per share, as reported

 

 

$       1.10

 

 

Diluted earnings per share, adjusted for severance costs

 

 

$       1.21

 

$        1.18

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

24,740

 

24,511

 

 

 

 

 

 

 

 

 

 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

SELECTED SUPPLEMENTAL FINANCIAL INFORMATION

(UNAUDITED)

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

September 30,

 

September 30,

 

 

2011

 

2010

 

2011

 

2010

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

Salaries expense

 

$     42,362

 

$     40,754

 

$   167,882

 

$   153,620

Employee benefits and tax

 

8,281

 

7,892

 

35,424

 

32,406

Bonus expense

 

1,139

 

7,268

 

11,029

 

20,399

Stock-based compensation

 

1,508

 

1,204

 

6,279

 

5,894

Total compensation and related costs

 

$     53,290

 

$     57,118

 

$  220,614

 

$   212,319

 

 

 

 

 

 

 

 

 

Occupancy expense

 

$     10,142

 

$     10,299

 

$    39,925

 

$     38,719

Bad debt expense

 

$       2,829

 

$       1,937

 

$      8,279

 

$       6,520

Depreciation expense

 

$       6,659

 

$       6,546

 

$    25,722

 

$     20,793

 

 

 

SOURCE Universal Technical Institute, Inc.

For further information: John Jenson, Vice President, Corporate Controller of Universal Technical Institute, Inc., +1-623-445-0821
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