PR Newswire | Aug 2, 2021 04:06PM EDT

08/02 15:05 CDT

Universal Technical Institute Reports Fiscal Year 2021 Third Quarter Results PHOENIX, Aug. 2, 2021

PHOENIX, Aug. 2, 2021 /PRNewswire/ --Universal Technical Institute, Inc.(NYSE: UTI), the leading provider of transportation technician training, reported financial results for the fiscal 2021 third quarter ended June 30, 2021.

* New student starts in the third quarter increased 38.8% from the prior year quarter, while average active students increased 19.1%. * Revenue of $83.8 million in the third quarter, an increase of 53.8% compared to the prior year quarter. * Net income of $3.0 million compared to a net loss of $13.3 million and adjusted EBITDA* of $7.2 million compared to an adjusted EBITDA loss* of $8.8 million. * Management reaffirms fiscal year 2021 guidance given strong front-end demand and ongoing operating improvements.

"We delivered exceptionally strong double-digit growth across our key operating metrics this quarter and returned to profitability as the dramatic impacts from the pandemic, which inhibited our business in the comparable quarter last year, have largely diminished," said Jerome Grant, UTI's Chief Executive Officer. "Notably, our active student population and revenue have rebounded and exceed fiscal 2019 pre-pandemic levels. We are very optimistic for the future of the business and look forward to closing out 2021 positively and bringing our momentum forward into our next fiscal year."

Grant continued, "Over the past several years we have built a platform that should enable us to consistently grow our core business, regardless of the economic environment. Additionally, our blended learning model provides essential flexibility for our students and teaches them in-demand technology skills that employers are looking for, all while providing additional efficiencies for our business. This platform and innovative teaching model, coupled with our ongoing growth and diversification initiatives, will allow us to continue to expand our value proposition and help us reach our ultimate goal of providing significantly more students the opportunity to pursue careers in high-demand fields."

Financial Results for the Three-Month Period Ended June 30, 2021 Compared to 2020

* New student starts increased 38.8% reflecting strong front-end demand across all channels and the prior year period impacts from the COVID-19 pandemic. * Revenues increased 53.8% to $83.8 million compared to $54.5 million. The increase is primarily a result of new student start growth, elevated student leaves of absence in the prior year due to the onset of the pandemic, and the timing of students progressing through the lab make-up process which resulted in a revenue deferral of $10.8 million in the prior year period. * Operating expenses increased by 18.2% to $80.7 million, compared to $68.3 million. The increase is primarily due to maintaining full operations during the current year period while in the prior year period operations were limited because of the pandemic and as a result labor and student related expenses were decreased accordingly. * Operating income was $3.1 million, compared to an operating loss of $13.8 million. * Net income was $3.0 million, compared to a net loss of $13.3 million. Adjusted net income* was $3.3 million compared to adjusted net loss* of $11.8 million. * Basic and diluted income (loss) per share (EPS) were $0.03 compared to $(0.45). * Adjusted EBITDA* was $7.2 million, compared to an adjusted EBITDA* loss of $8.8 million.

"We saw continued recovery and further acceleration across our base business this quarter, which positions us well to meet our guidance for this fiscal year and to achieve our longer-term expectations. We are preparing for new campus launches next year and are optimistic about the timing regarding our pending acquisition of the MIAT College of Technology." said UTI Chief Financial Officer Troy Anderson. "Additionally, as supported by our growing liquidity position, we remain active in exploring additional growth opportunities to further drive value for our students, shareholders, and industry partners. I am confident in our plans and what our team will accomplish going forward."

Balance Sheet and Liquidity

At June 30, 2021, UTI's total available liquidity was $103.1 million including short-term, held-to-maturity securities. During the quarter, the company completed the financing of its Avondale, Arizona campus, yielding proceeds of $31.2 million. The campus was purchased in December 2020 for $45.2 million.

Financial Results for the Nine-Month Period Ended June 30, 2021 Compared to 2020

* New student starts increased 24.6%. * Revenues increased 5.9% to $237.6 million compared to $224.4 million. Similar to the three months ended, the overall increase is primarily due to new student start growth, a higher number of students on leave of absence in the prior year due to the onset of the pandemic during the period and the timing of students progressing through the lab make-up process including the related $10.8 million revenue deferral as of June 30, 2020. * Operating expenses increased by 0.4% to $235.4 million, compared to $234.5 million. * Operating income was $2.2 million, compared to an operating loss of $10.0 million. * Net income was $2.5 million, compared to $1.6 million. Adjusted net income* was $3.6 million, compared to an adjusted net loss* of $4.5 million. The prior year net income included a $10.8 million income tax benefit resulting from the application of revised net operating loss carryback regulations from the CARES Act. * Basic and diluted EPS were $(0.04) compared to $(0.08). * Adjusted EBITDA* was $14.3 million, compared to $4.3 million. * Operating cash flow provided $14.8 million, compared to an operating cash flow use of $10.1 million. * Adjusted free cash flow* provided cash of $5.0 million, compared to a use of cash of $16.2 million.

*See "Use of Non-GAAP Financial Information" below.

Student Metrics

Three Months Ended Nine Months Ended

June 30, June 30,

2021 2020 2021 2020

Total new student starts 2,532 1,824 6,864 5,511

Average undergraduate full-time active 10,797 9,068 11,28010,218 students

End of period undergraduate full-time 10,583 9,774 10,5839,774 active students

For UTI's most recent investor presentation and quarterly financial supplement, please see the "Events" section of its investor relations website at https://investor.uti.edu.

Conference Call

Management will hold a conference call to discuss the financial results for the fiscal 2021 third quarter ended June 30, 2021, on Monday, August 2, 2021, at 4:30 p.m. ET.

To participate in the live call, investors are invited to dial (844) 881-0138 (domestic) or (412) 317-6790 (international). A live webcast of the call will be available via the Universal Technical Institute investor relations website at https://investor.uti.edu. Please go to the website at least 10 minutes early to register, download and install any necessary audio software. The conference call webcast will be archived for fourteen days at https://investor.uti.edu or the telephone replay can be accessed through August 16, 2021, by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and entering passcode 10158745.

Use of Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles ("GAAP"), UTI also discloses certain non-GAAP financial information in this press release and may similarly disclose non-GAAP financial information on the related conference call. These financial measures are not recognized measures under GAAP and are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. UTI discloses these non-GAAP financial measures because it believes that they provide investors an additional analytical tool to clarify its results of operations and identify underlying trends. Additionally, UTI believes that these measures may also help investors compare its performance on a consistent basis across time periods. In the quarter ended March 31, 2021, UTI introduced Adjusted Net Income (Loss) as a new non-GAAP measure replacing Adjusted Operating Income, which it believes is a better performance indicator of UTI's business given its expected profitability and the impact of multiple strategic initiatives. Additional details on this measure are provided below and the tables reconciling this measure to the most directly comparable GAAP measure.

Adjusted EBITDA

UTI defines adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization and adjusted for items not considered as part of the company's normal recurring operations.

Adjusted Free Cash Flow

UTI defines adjusted free cash flow as net cash provided by (used in) operating activities less capital expenditures, adjusted for items not considered as part of the company's normal recurring operations.

Adjusted Net Income (Loss)

UTI defines adjusted net income (loss) as net income (loss), adjusted for items that affect trends in underlying performance from year to year and are not considered normal recurring operations, including the income tax effect on the adjustments utilizing the effective tax rate.

UTI discloses any campus adjustments as direct costs (net of any corporate allocations). Management utilizes adjusted figures as performance measures internally for operating decisions, strategic planning, annual budgeting and forecasting. For the periods presented, this includes acquisition-related costs for both announced and potential acquisitions, costs related to the purchase of our Avondale, Arizona campus, start-up costs associated with the Austin, TX and Miami, FL campus openings, the income tax benefit recorded as a result of the CARES Act, severance expenses due to the CEO transition, and costs related to the teach-out and closure of the Norwood, MA campus. To obtain a complete understanding of UTI's performance, these measures should be examined in connection with net income (loss) and net cash provided by (used in) operating activities, 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 ("SEC"). Because the items excluded from these non-GAAP measures are significant components in understanding and assessing UTI's financial performance under GAAP, these measures should not be considered to be an alternative to net income (loss) or net cash provided by (used in) operating activities as a measure of UTI's operating performance or liquidity. 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 define and calculate non-GAAP financial measures differently than UTI does, limiting their usefulness as a comparative measure across similarly titled performance measures presented by other companies. A reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP measures is provided below and investors are encouraged to review the reconciliations.

Forward Looking Statements

All statements contained in this press release and the related conference call, other than statements of historical fact, are "forward-looking" statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements which address UTI's expected future business and financial performance, may contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," "will," the negative form of these expressions or similar expressions. Examples of forward-looking statements include, among others, statements regarding (1) UTI's expectation that it will meet its fiscal year 2021 guidance for new student start growth (decline), revenue growth, net income, Adjusted EBITDA and Adjusted Free Cash Flow; (2) expectation that it will continue to expand its value proposition and build a business that can grow in low-to-mid single digits with potential upside, regardless of the economic environment; (3) UTI's expectation that it will succeed in new campus launches next year; and (4) UTI's expectation of the successful and timely closing of the MIAT acquisition,. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on UTI's current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of UTI's control. UTI's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could affect UTI's actual results include, among other things, impacts related to the COVID-19 pandemic, 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 modified campuses or instruction, potential increased competition, changes in demand for the programs UTI offers, increased investment in management and capital resources, failure to comply with the restrictive covenants and UTI's ability to pay the amounts when due under the Credit Agreement with Fifth Third Bank, National Association, the effectiveness of UTI student recruiting, advertising and promotional efforts, changes to interest rates and unemployment, general economic and political conditions, the adoption of new accounting standards, and other risks that are described from time to time in UTI'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 SEC. Any forward-looking statements made by UTI in this press release and the related conference call are based only on information currently available to UTI and speak only as of the date on which it is made. UTI expressly disclaims any obligation to publicly update any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, changes in expectations, any changes in events, conditions or circumstances, or otherwise.

Social Media Disclosure

Universal Technical Institute (UTI) uses its websites ( https://www.uti.edu/ and https://investor.uti.edu/) and LinkedIn page ( https://www.linkedin.com/school/universal-technical-institute/) as channels of distribution of information about its programs, its planned financial and other announcements, its attendance at upcoming investor and industry conferences, and other matters. Such information may be deemed material information, and UTI may use these channels to comply with its disclosure obligations under Regulation FD. Therefore, investors should monitor the company's website and its social media accounts in addition to following the company's press releases, SEC filings, public conference calls, and webcasts.

About Universal Technical Institute, Inc.

Founded in 1965 and with more than 225,000 graduates in its history, Universal Technical Institute, Inc. (NYSE: UTI) is the nation's leading provider of technical training for automotive, diesel, collision repair, motorcycle and marine technicians, and also offers welding technology and computer numerical control (CNC) machining programs. The company has built partnerships with industry leaders, outfits its state-of-the-industry facilities with current technology, and delivers training that is aligned with employer needs. Through its network of 12 campuses nationwide, UTI offers post-secondary 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). The company is headquartered in Phoenix, Arizona.

For more information, visit www.uti.edu. Like UTI on www.facebook.com/UTI or follow UTI on Twitter @UTITweet, @MMITweet, and @NASCARTechUTI.

Company Contact:Troy R. AndersonChief Financial OfficerUniversal Technical Institute, Inc.(623) 445-9365

Media Contact:Mark BrennerVice President, Corporate Affairs & External CommunicationsUniversal Technical Institute, Inc.(623) 445-0872

Investor Relations Contact:Robert Winters or Wyatt TurkAlpha IR Group(312) 445-2870UTI@alpha-ir.com

(Tables Follow)

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)



Three Months Ended June 30,Nine Months Ended June 30,

2021 2020 2021 2020

Revenues $ 83,768 $54,483 $ 237,602$ 224,434

Operating expenses:

Educational services 42,238 32,476 122,049 118,261 and facilities

Selling, general and 38,478 35,786 113,387 116,197 administrative

Total operating 80,716 68,262 235,436 234,458 expenses

Income (loss) from 3,052 (13,779) 2,166 (10,024) operations

Other income:

Interest (expense) (119) 216 (60) 896 income, net

Other income 153 316 508 (13) (expense), net

Total other income, 34 532 448 883 net

Income (loss) before 3,086 (13,247) 2,614 (9,141) income taxes

Income tax (expense) (86) (21) (78) 10,699 benefit

Net income (loss) $ 3,000 $(13,268)$ 2,536 $ 1,558

Preferred stock 1,313 1,309 3,938 3,941 dividends

Net income (loss) available for $ 1,687 $(14,577)$ (1,402)$ (2,383) distribution



Earnings per share:

Net income (loss) per$ 0.03 $(0.45) $ (0.04) $ (0.08) share - basic

Net income (loss) per$ 0.03 $(0.45) $ (0.04) $ (0.08) share - diluted



Weighted average number of shares outstanding:

Basic 32,821 32,607 32,746 28,871

Diluted 33,036 32,607 32,746 28,871

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and per share amounts)

(Unaudited)



June 30, 2021September 30, 2020

Assets

Cash and cash equivalents $102,856 $ 76,803

Restricted cash 11,924 12,116

Held-to-maturity investments 250 38,055

Receivables, net 25,611 35,411

Notes receivable, current portion 5,441 5,184

Prepaid expenses 7,409 6,121

Other current assets 8,395 6,489

Total current assets 161,886 180,179

Property and equipment, net 117,490 72,743

Goodwill 8,222 8,222

Notes receivable, less current portion 29,952 27,609

Right-of-use assets for operating leases 147,596 144,663

Other assets 9,864 8,565

Total assets $475,010 $ 441,981

Liabilities and Shareholders' Equity

Accounts payable and accrued expenses $50,659 $ 51,891

Dividends payable 1,313 -

Deferred revenue 41,993 40,694

Accrued tool sets 3,454 3,148

Operating lease liability, current portion 19,999 23,666

Long term debt, current portion 918 129

Other current liabilities 2,009 2,112

Total current liabilities 120,345 121,640

Deferred tax liabilities, net 674 674

Operating lease liability 138,999 134,089

Long-term debt 30,065 131

Other liabilities 7,730 8,925

Total liabilities 297,813 265,459

Commitments and contingencies

Shareholders' equity:

Common stock, $0.0001 par value, 100,000 shares authorized, 32,907 and 32,730 shares3 3 issued

Preferred stock, $0.0001 par value, 10,000 shares authorized; 700 shares of Series A Convertible Preferred Stock issued and - - outstanding, liquidation preference of $100 per share

Paid-in capital - common 141,787 141,002

Paid-in capital - preferred 68,853 68,853

Treasury stock, at cost, 82 shares (365) (365)

Retained deficit (32,729) (32,971)

Accumulated other comprehensive income (352) - (loss)

Total shareholders' equity 177,197 176,522

Total liabilities and shareholders' equity $475,010 $ 441,981

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Nine Months Ended June 30,

2021 2020

Cash flows from operating activities:

Net income $2,536 $1,558

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 10,470 8,821

Amortization of right-of-use assets for operating11,856 18,163 leases

Bad debt expense 1,025 1,138

Stock-based compensation 1,186 1,509

Deferred income taxes - 345

Training equipment credits earned, net 504 503

Unrealized loss on derivative contract (352) -

Other (losses) gains, net (330) 8

Changes in assets and liabilities:

Receivables 6,093 (13,917)

Prepaid expenses (4,906) (1,591)

Other assets (773) 40

Notes receivable (956) 1,115

Accounts payable and accrued expenses (1,693) 12,494

Deferred revenue 1,299 (9,973)

Income tax receivable 2,522 (11,070)

Accrued tool sets and other current liabilities 1,122 1,030

Operating lease liability (13,546) (19,264)

Other liabilities (1,274) (1,026)

Net cash provided by (used in) operating 14,783 (10,117) activities

Cash flows from investing activities:

Purchase of held-to-maturity securities - (41,562)

Proceeds from maturities of held-to-maturity 37,401 9,761 securities

Purchase of property and equipment (54,245) (7,190)

Proceeds from insurance policy - 1,566

Proceeds from disposal of property and equipment 6 48

Return of capital contribution from 226 190 unconsolidated affiliate

Net cash used in investing activities (16,612) (37,187)

Cash flows from financing activities:

Proceeds from term loan 31,150 -

Debt issuance costs related to the term loan (272) -

Proceeds from equity offering - 49,137

Payment of preferred stock cash dividend (2,625) (2,632)

Payments on term loan and finance leases (162) (68)

Payment of payroll taxes on stock-based (401) (527) compensation through shares withheld

Net cash provided by financing activities 27,690 45,910

Change in cash, cash equivalents and restricted 25,861 (1,394) cash

Cash and cash equivalents, beginning of period 76,803 65,442

Restricted cash, beginning of period 12,116 15,113

Cash, cash equivalents and restricted cash, 88,919 80,555 beginning of period

Cash and cash equivalents, end of period 102,856 59,956

Restricted cash, end of period 11,924 19,205

Cash, cash equivalents and restricted cash, end $114,780 $79,161 of period

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION

(In thousands)

(Unaudited)



Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA



Three Months Ended June 30,Nine Months Ended June 30,

2021 2020 2021 2020

Net (loss) income $3,000 $(13,268) $2,536 $1,558

Interest expense 119 (216) 60 (896) (income), net

Income tax expense 86 21 78 (10,699) (benefit)

Depreciation and 3,619 3,259 10,470 9,831 amortization

EBITDA $6,824 $(10,204) $13,144 $(206)

Acquisition related 251 - 1,040 - costs

Start-up costs associated with 79 - 79 - Austin, TX and Miami, FL campus openings

Severance expense due - - - 1,531 to CEO transition

Norwood, MA campus - 1,356 - 2,939 EBITDA

Adjusted EBITDA, $7,154 $(8,848) $14,263 $4,264 non-GAAP

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow



Nine Months Ended June 30,

2021 2020

Net cash provided by (used in) operating activities, as $14,783 $(10,117) reported

Purchase of property and equipment (54,245) (7,190)

Free cash flow, non-GAAP (39,462) (17,307)

Adjustments:

Purchase of Avondale, Arizona campus 45,240 -

Income tax refund received from CARES tax benefit (2,739) -

Acquisition related costs paid 949 -

Cash outflow for Austin, TX and Miami, FL start-up costs 365 -

Cash outflow for Austin, TX and Miami, FL purchase of 407 - property and equipment

Severance payment due to CEO transition 215 1,078

Cash outflow associated with Norwood, MA campus operating - 31 activities

Adjusted free cash flow, non-GAAP $4,975 $(16,198)

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION

(In thousands)

(Unaudited)



Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)



Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 3,000 $ (13,268) $ 2,536 $ 1,558

Add back: Income tax 86 21 78 (10,699) expense (benefit)

Income (loss) 3,086 (13,247) 2,614 (9,141) before income taxes

Adjustments:

Acquisition related251 - 1,040 - costs

Start-up costs associated with 79 - 79 - Austin, TX and Miami, FL campus openings

Severance expense - - - 1,531 due to CEO transition

Norwood, MA campus - 1,430 - 3,169 operating loss

Adjusted income (loss)3,416 (11,817) 3,733 (4,441) before income taxes

Income tax effect: (95) (19) (111) (100) (expense) benefit

Adjusted net income (loss), $ 3,321 $ (11,836) $ 3,622 $ (4,541) non-GAAP



GAAP effective income 2.8 % (0.2) % 3.0 % (2.3) % tax rate^(1)

The GAAP effective income tax rate for the nine months ended June 30, 2020(1) has been adjusted to remove the impact of the income tax benefit recorded as a result of the CARES Act.

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

SELECTED SUPPLEMENTAL INFORMATION

(In thousands)

(Unaudited)



Selected Supplemental Financial Information



Three Months Ended June 30,Nine Months Ended June 30,

2021 2020 2021 2020

Salaries expense $ 33,768 $ 29,577 $98,484 $96,785

Employee benefits and5,700 5,482 16,738 18,161 tax

Bonus expense 5,088 4,777 12,544 12,298

Stock-based (596) 553 1,261 1,560 compensation

Total compensation $ 43,960 $ 40,389 $129,027 $128,804 and related costs



Advertising expense $ 10,388 $ 9,045 $30,010 $30,062

Occupancy expense, 7,946 9,907 24,186 29,310 net of subleases

Depreciation and 3,619 3,259 10,470 9,831 amortization

Contract services 1,874 1,391 6,083 5,293 expense

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SOURCE Universal Technical Institute, Inc.