UNIVERSAL TECHNICAL INSTITUTE INC

Previous wording

Universal Technical Institute (“UTI”): UTI operates 16 campuses located in nine states and offers a wide range of degree and non-degree transportation and skilled trades technical training programs under brands such as Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute, NASCAR Technical Institute, and MIAT College of Technology (“MIAT”). UTI also offers manufacturer specific advanced training programs, which include student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. Lastly, UTI provides dealer technician training or instructor staffing services to manufacturers. UTI works closely with multiple original equipment manufacturers and industry brand partners to understand their needs for qualified service professionals.

Current wording

Universal Technical Institute (“UTI”): UTI operates 15 campuses located in nine states and offers a wide range of degree and non-degree transportation and skilled trades technical training programs under brands such as Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute, NASCAR Technical Institute, and MIAT College of Technology (“MIAT”). UTI also offers manufacturer specific advanced training programs, which include student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. Lastly, UTI provides dealer technician training or instructor staffing services to manufacturers. UTI works closely with multiple original equipment manufacturers and industry brand partners to understand their needs for qualified service professionals.

Previous wording

Concorde Career Colleges (“Concorde”): Concorde operates across 17 campuses in eight states, offering degree, non-degree, and continuing education programs in the allied health, dental, nursing, patient care and diagnostic fields. The Company has designated campuses that offer degree granting programs as “Concorde Career College” where allowed by state regulation. The remaining campuses are designated as “Concorde Career Institute.” Concorde believes in preparing students for their health care careers with practical, hands-on experiences including opportunities to learn while providing care to real patients. Prior to graduation, students will complete a number of hours in a clinical setting or externship, depending upon their program of study.

Current wording

Concorde Career Colleges (“Concorde”): Concorde operates across 17 campuses in eight states, offering degree, non-degree, certificate and continuing education programs in the allied health, dental, nursing, patient care and diagnostic fields. The Company has designated campuses that offer degree granting programs as “Concorde Career College” where allowed by state regulation. The remaining campuses are designated as “Concorde Career Institute.” Concorde believes in preparing students for their health care careers with practical, hands-on experiences including opportunities to learn while providing care to real patients. Prior to graduation, students will complete a number of hours in a clinical setting or externship, depending upon their program of study.

Previous wording

Overview of the Three and Nine Months Ended June 30, 2024

Current wording

Overview of the Three Months Ended December 31, 2024

Previous wording

For the nine months ended June 30, 2024, the increase in UTI new student starts, average undergraduate full-time active students and end of period students was primarily due to the successful rollout of 14 new programs across nine campuses during the fourth quarter of fiscal 2023 and into fiscal 2024, and increased student demand at a majority of the remaining UTI campuses. Concorde rolled out seven new programs at three campuses during the same time period, and also rolled out new cash pay “short courses” at a number of campuses. These program rollouts, along with high demand for its existing programs resulted in increases in new student starts, average undergraduate full-time active students and end of period students compared to the prior year.

Current wording

For the three months ended December 31, 2024, the increase in consolidated total and segment new student starts, average full-time active students and end of period full-time active students was primarily due to new program rollouts and increased student demand for existing programs across both segments as compared to the prior year. In the UTI segment, increases to our student population during the three months ended December 31, 2024 were driven by the successful launch of three new HVAC and refrigeration programs launched in the second half of fiscal 2024. The Concorde segment benefited from the launch of five new programs at three campuses during fiscal 2024, and the introduction of new cash pay “short programs” at a number of campuses.

Previous wording

Our ability to start new students can be influenced by various factors including: impacts of the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt to fund their education; unemployment rates; competition; adverse media coverage, legislative, or regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry, which can cast the aggregate “for-profit” education industry in a negative light; and pandemics and or other national, state or local emergencies as declared by various government authorities.

Current wording

Our ability to start new students can be influenced by various factors including: the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt to fund their education; unemployment rates; competition; adverse media coverage, legislative, or regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry, which can cast the aggregate “for-profit” education industry in a negative light; and pandemics and or other national, state or local emergencies as declared by various government authorities.

Previous wording

Revenues for the three months ended June 30, 2024 were $177.5 million, an increase of $24.2 million, or 15.8%, from the comparable period in the prior year. UTI revenues increased by approximately $16.3 million, or 16.1%, and Concorde revenues increased by approximately $7.9 million, or 15.0%. Both segment increases were primarily driven by the higher average undergraduate full-time active students as previously noted.

Current wording

Revenues for the three months ended December 31, 2024 were $201.4 million, an increase of $26.7 million, or 15.3%, from the comparable period in the prior year. UTI revenues increased by approximately $16.1 million, or 14.0%, and Concorde revenues increased by approximately $10.6 million, or 17.9%. Both segment increases were primarily driven by the higher average full-time active students.

Previous wording

Total income from operations was $7.4 million and $32.9 million during the three and nine months ended June 30, 2024, respectively, compared to $0.7 million and $11.1 million for the three and nine months ended June 30, 2023, respectively. The increase for the three-month period was primarily driven by the increased revenues from the larger student population. The increase for the nine-month period was due to the inclusion of two additional months of revenue for Concorde as compared to the prior year period. Additionally, productivity improvements and proactive cost actions have been a key part of our operating model for the past several years, and we continue to identify and execute on optimization opportunities throughout our operations in both segments.

Current wording

Total income from operations was $27.5 million during the three months ended December 31, 2024, compared to $14.2 million for the three months ended December 31, 2023. The increase for the three months ended December 31, 2024 was primarily driven by the increased revenues from the larger student population. Additionally, productivity improvements and proactive cost reductions have been a key part of our operating model for the past several years, and we continue to identify and execute on optimization opportunities throughout our operations in both segments.

Previous wording

Our business strategy has three key tenets: (i) to grow the business by more deeply penetrating existing target markets and adding new markets; (ii) to diversify the business by adding new locations, programs, and offerings that maximize the lifetime value of our students; and (iii) to continually optimize the business by constantly enhancing operational efficiency.

Current wording

Our business strategy, internally known as our “North Star strategy,” has three core tenets: (i) to grow the business by more deeply penetrating existing target markets and adding new markets; (ii) to diversify the business by adding new locations, programs, and offerings that maximize the lifetime value of our students; and (iii) to continually optimize the business by constantly enhancing operational efficiency.

Previous wording

During the nine months ended June 30, 2024, we executed the following as part of our business strategy:

Current wording

During the three months ended December 31, 2024, we executed the following as part of our business strategy:

Previous wording

Revenues for the three months ended June 30, 2024 were $177.5 million, an increase of $24.2 million, or 15.8%, as compared to revenues of $153.3 million for the three months ended June 30, 2023.

Current wording

Revenues for the three months ended December 31, 2024 were $201.4 million, an increase of $26.7 million, or 15.3%, as compared to revenues of $174.7 million for the three months ended December 31, 2023.

Previous wording

Revenues for UTI for the three months ended June 30, 2024 were $117.1 million compared to $100.9 million in the prior period. Revenue increased primarily due to a 13.0% increase in average undergraduate full-time active students during the quarter.

Current wording

Revenues for UTI for the three months ended December 31, 2024 were $131.5 million compared to $115.4 million in the prior period. Revenue increased primarily due to a 19.0% increase in new student starts and an 8.0% increase in average full-time active students from the prior period.

Previous wording

Revenues for Concorde for the three months ended June 30, 2024 were $60.3 million compared to $52.4 million in the prior period. Revenues increased primarily due to a 14.0% increase in average undergraduate full-time active students during the quarter.

Current wording

Revenues for Concorde for the three months ended December 31, 2024 were $70.0 million compared to $59.3 million in the prior period. Revenues increased primarily due to a 26.0% increase new student starts and a 16.4% increase in average full-time active students from the prior period.

Previous wording

Educational services and facilities expenses were $95.3 million for the three months ended June 30, 2024, as compared to $88.4 million for the three months ended June 30, 2023. This increase was primarily due to the increased student volumes during the period and costs associated with execution of our business strategies.

Current wording

Educational services and facilities expenses were $100.1 million for the three months ended December 31, 2024, as compared to $92.4 million for the three months ended December 31, 2023. This increase was primarily due to the increased student volumes during the period and costs associated with execution of our business strategies, partially offset by cost savings from our operational initiatives.

Previous wording

Supplies, maintenance and student expense increased by $8.6 million for the nine months ended June 30, 2024 primarily due to the increased cost of student housing in support of relocating students.

Current wording

Supplies, maintenance and student expense decreased by $2.7 million for the three months ended December 31, 2024, primarily due to a decrease of $2.9 million in student housing expenses.

Previous wording

Depreciation expense increased by $0.9 million for the three months ended June 30, 2024, primarily due to capital expenditures related to new equipment for the program expansions during the fourth quarter of fiscal 2023 and throughout 2024.

Current wording

Depreciation and amortization expense increased by $0.5 million for the three months ended December 31, 2024, primarily due to capital expenditures related to new equipment for the program expansions.

Previous wording

Compensation and related costs increased by $2.7 million for the three months ended June 30, 2024, primarily due to instructors and other personnel hired to support overall student growth and the launch of additional programs during the current year.

Current wording

Compensation and related costs increased by $4.4 million for the three months ended December 31, 2024, primarily due to instructors and other personnel hired to support overall student growth and the launch of additional programs.

Previous wording

Other educational services and facilities expense increased during the three months ended June 30, 2024 by $0.6 million primarily due to higher expense for training aids in the current period.

Current wording

Other educational services and facilities expense increased during the three months ended December 31, 2024 by $0.6 million primarily due to higher expense for teaching aids in the current period.

Previous wording

Selling, general and administrative expenses for the three months ended June 30, 2024 were $74.7 million, as compared to $64.2 million for the three months ended June 30, 2023. This increase was primarily due to costs associated with our business strategies.

Current wording

Selling, general and administrative expenses for the three months ended December 31, 2024 were $73.8 million, as compared to $68.1 million for the three months ended December 31, 2023. This increase was primarily due to costs associated with our business strategies.

Previous wording

Advertising and marketing expense remained relatively flat year over year. UTI advertising and marketing expense as a percentage of revenues decreased to 11.2% for the three months ended June 30, 2024 as compared to 13.2% in the prior year.

Current wording

Advertising and marketing expense remained relatively flat year over year. UTI advertising and marketing expense as a percentage of revenues decreased to 10.4% for the three months ended December 31, 2024 as compared to 11.6% in the prior year.

Previous wording

Advertising and marketing increased year over year by $0.3 million. Concorde advertising and marketing expense as a percentage of revenues for the three months ended June 30, 2024 and 2023 was 10.1% and 11.0%, respectively.

Current wording

Advertising and marketing increased year over year by $1.3 million. Concorde advertising and marketing expense as a percentage of revenues for the three months ended December 31, 2024 and 2023 was 10.5% and 10.3%, respectively.

Previous wording

Professional fees and contract services increased by $1.2 million for the three months ended June 30, 2024 primarily due to higher accounting and legal expenses of $0.6 million and higher contract services expense of $0.4 million.

Current wording

Professional fees and contract services increased by $1.2 million for the three months ended December 31, 2024 primarily due to higher legal expenses of $1.1 million.

Previous wording

Income tax expense for the three months ended June 30, 2024 was $1.8 million, or 26.2% of pre-tax income, compared to an income tax benefit of $0.1 million, or 11.2% of pre-tax loss, for the three months ended June 30, 2023. The effective income tax rate for the three months ended June 30, 2024 differed from the federal statutory rate of 21% primarily due to non-deductible executive compensation, federal research and development tax credits and state and local income and franchise taxes. The effective income tax rate for the three months ended June 30, 2023 differed from the federal statutory rate of 21% primarily due to non-deductible executive compensation, transaction costs and state and local income and franchise taxes. See Note 14 of the notes to the condensed consolidated financial statements herein for additional details.

Current wording

Income tax expense for the three months ended December 31, 2024 was $5.4 million, or 19.5% of pre-tax income, compared to $3.2 million, or 23.3% of pre-tax income, for the three months ended December 31, 2023. The effective income tax rate for the three months ended December 31, 2024 differed from the federal statutory rate of 21% primarily due to non-deductible executive compensation, stock-based compensation expense, federal research and development tax credits and state and local income and franchise taxes. The effective income tax rate for the three months ended December 31, 2023 differed from the federal statutory rate of 21% primarily due to non-deductible executive compensation, federal research and development tax credits and state and local income and franchise taxes. See Note 11 of the notes to the condensed consolidated financial statements herein for additional details.

Previous wording

As of June 30, 2024, no shares of Series A Convertible Preferred Stock, (the “Series A Preferred Stock”) remained outstanding and all rights of the holders to receive future dividends have been terminated due to the combination of the repurchase and conversion of all outstanding preferred shares as of December 18, 2023. See Note 17 of the notes to the condensed consolidated financial statements herein for additional details on the conversion of our Series A Preferred Stock.

Current wording

As of December 31, 2024, no shares of Series A Convertible Preferred Stock, (the “Series A Preferred Stock”) remained outstanding and all rights of the holders to receive future dividends have been terminated due to the combination of the repurchase and conversion of all outstanding preferred shares as of December 18, 2023. See Note 18 included in our 2024 Annual Report on Form 10-K for additional details on the conversion of our Series A Preferred Stock.

Previous wording

Pursuant to the Certificate of Designations of the Series A Preferred Stock (the “CoD”), we recorded a preferred stock cash dividend of $1.3 million for the three months ended June 30, 2023.

Current wording

Pursuant to the Certificate of Designations of the Series A Preferred Stock, we recorded a preferred stock cash dividend of $1.1 million for the three months ended December 31, 2023.

Previous wording

Income (loss) available for distribution refers to net income (loss) reduced by dividends on our Series A Preferred Stock. As a result of the foregoing, we reported income available for distribution of $5.0 million for the three months ended June 30, 2024 and a loss available for distribution of $1.8 million for three months ended June 30, 2023.

Current wording

Income available for distribution refers to net income reduced by dividends on our Series A Preferred Stock. As a result of the foregoing, we reported income available for distribution of $22.2 million for the three months ended December 31, 2024 and income available for distribution of $9.3 million for three months ended December 31, 2023.

Previous wording

Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends.

Current wording

Series A Preferred Stock was considered a participating security because, in the event that we paid a dividend or make a distribution on the outstanding common stock, we should also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends.

Previous wording

As noted above, no shares of the Series A Preferred Stock remain outstanding and all rights of the holders to receive future dividends have been terminated as of the December 18, 2023 conversion date. As such, there is no income allocated to participating securities for the three months ended June 30, 2024. For the three months ended June 30, 2023, there was a net loss and therefore no income was allocated to participating securities for this period.

Current wording

As noted above, no shares of the Series A Preferred Stock remain outstanding and all rights of the holders to receive future dividends have been terminated as of the December 18, 2023 conversion date. As such, there was no income allocated to participating securities for the three months ended December 31, 2024. For the three months ended December 31, 2023, there was $2.9 million of income allocated to participating securities.

Previous wording

We had net income of $5.0 million and a net loss of $1.8 million available to common shareholders for the three months ended June 30, 2024 and 2023, respectively.

Current wording

We had net income of $22.2 million and $6.4 million available to common shareholders for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Our earnings before interest income, income taxes, depreciation and amortization (“EBITDA”) for the three and nine months ended June 30, 2024 were $14.8 million and $54.8 million, respectively, compared to $7.4 million and $30.2 million for the three and nine months ended June 30, 2023, respectively. We define EBITDA as net income (loss), before interest (income) expense, income tax expense (benefit), and depreciation and amortization.

Current wording

Our earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the three months ended December 31, 2024 were $35.4 million, compared to $21.4 million for the three months ended December 31, 2023. We define EBITDA as net income (loss), before interest (income) expense, income tax expense (benefit), and depreciation and amortization.

Previous wording

EBITDA reconciles to net income (loss), as follows (in thousands):

Current wording

EBITDA reconciles to net income, as follows (in thousands):

Previous wording

Based on past performance and current expectations, we believe that our cash flows from operations, cash on hand and investments, and revolving credit facility will satisfy our working capital needs, capital expenditures, commitments and other liquidity requirements associated with our existing operations, as well as announced program expansions over the next 12 months and beyond. Our cash position is available to fund strategic long-term growth initiatives, including opening additional campuses in new markets and the creation and expansion of new programs in existing markets where we continue to optimize utilization of our campus facilities.

Current wording

Based on past performance and current expectations, we believe that our cash flows from operations, cash on hand and investments, and the Revolving Credit Facility will satisfy our working capital needs, capital expenditures, commitments and other liquidity requirements associated with our existing operations, as well as announced growth, diversification and optimization initiatives throughout the fiscal year and beyond. Our cash position is available to fund strategic long-term growth initiatives, including opening additional campuses in new markets and the creation and expansion of new programs in existing markets where we continue to optimize utilization of our campus facilities.

Previous wording

Our aggregate cash and cash equivalents were $115.5 million as of June 30, 2024, a decrease of $36.0 million from September 30, 2023 due primarily to net repayments of $23.0 million to the revolving credit facility and the $11.5 million used to repurchase our Series A preferred shares. We also had available liquidity under our revolving credit facility of $33.0 million as of June 30, 2024.

Current wording

Our aggregate cash and cash equivalents were $172.0 million as of December 31, 2024, an increase of $10.1 million from September 30, 2024 due primarily to cash provided by operating activities of $23.0 million, offset by cash used for purchases of property and equipment of $3.3 million, net repayments of $5.0 million to the revolving credit facility and payment of payroll taxes on stock-based compensation of $4.3 million. We also had available liquidity under the Revolving Credit Facility of $74.0 million as of December 31, 2024.

Previous wording

We believe that additional strategic uses of our cash resources may include consideration of additional strategic acquisitions and organic growth initiatives, the purchase of real estate assets, subsidizing funding alternatives for our students, and the repurchase of common stock, among others. To the extent that potential acquisitions are large enough to require financing beyond cash from operations, and cash and cash equivalents, or we need capital to fund operations, new campus openings or expansion of programs at existing campuses, we may enter into additional credit facilities, issue debt or issue additional equity.

Current wording

We believe that uses of our cash resources may include consideration of additional strategic acquisitions and organic growth initiatives, the purchase of real estate assets, subsidizing funding alternatives for our students, and the repurchase of common stock, among others. To the extent that potential acquisitions are large enough to require financing beyond cash from operations, and cash and cash equivalents, or we need capital to fund operations, new campus openings or expansion of programs at existing campuses, we may enter into additional credit facilities, issue debt or issue additional equity.

Previous wording

As of June 30, 2024, we had $137.7 million of long-term debt outstanding, which is comprised of two term loans, a finance lease and a revolving credit facility. Of the $137.7 million outstanding, $28.6 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% and a tranche rate adjustment of 0.046% over the seven-year term secured in connection with the Avondale, Arizona campus property purchased in December 2020. Approximately $37.1 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% over the seven-year term, secured in connection with the Lisle, Illinois campus property. For each of the term loans, a derivative interest rate swap is in place that fixes the interest rate on 50% of the loan at a market rate at the time the derivative was initiated. Approximately $5.0 million relates to a finance lease for a campus within our Concorde segment. The remaining $67.0 million relates to funds drawn from the $100.0 million revolving credit facility that was secured in connection with the Concorde acquisition. See Note 12 of the notes to the condensed consolidated financial statements herein for additional details on the term loans and the revolving credit facility.

Current wording

As of December 31, 2024, we had $120.4 million of long-term debt outstanding, which is comprised of two term loans, a finance lease and a revolving credit facility. Of the $120.4 million outstanding, $28.2 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% and a tranche rate adjustment of 0.046% over the seven-year term secured in connection with the Avondale, Arizona campus property purchased in December 2020. Approximately $36.7 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% over the seven-year term, secured in connection with the Lisle, Illinois campus property. For each of the term loans, a derivative interest rate swap is in place that fixes the interest rate on 50% of the loan at a market rate at the time the derivative was initiated. Approximately $4.5 million relates to a finance lease for a campus within our Concorde segment. The remaining $51.0 million relates to funds drawn from the $125.0 million revolving credit facility that was initially secured in connection with the Concorde acquisition. See Note 9 of the notes to the condensed consolidated financial statements herein for additional details on the term loans and the Revolving Credit Facility.

Previous wording

We currently do not pay a cash dividend on our common stock. A final cash dividend payment of $1.1 million was paid to Series A Preferred Stock holders of record as of December 18, 2023 during the three months ended December 31, 2023 as a result of the conversion of the Series A Preferred Stock. See Note 17 of the notes to the condensed consolidated financial statements herein for additional details on the conversion of our preferred stock.

Current wording

We currently do not pay a cash dividend on our common stock.

Previous wording

Our net cash provided by operating activities was $18.4 million for the nine months ended June 30, 2024, compared to net cash used of $4.7 million for the nine months ended June 30, 2023.

Current wording

Our net cash provided by operating activities was $23.0 million for the three months ended December 31, 2024, compared to $10.8 million for the three months ended December 31, 2023.

Previous wording

Net income, after adjustments for non-cash items, for the nine months ended June 30, 2024 provided cash of $70.5 million. The non-cash items included $21.6 million for depreciation and amortization expense, $16.5 million for amortization of right-of-use assets for operating leases, $5.7 million for stock-based compensation expense, and $5.1 million for bad debt expense.

Current wording

Net income, after adjustments for non-cash items, for the three months ended December 31, 2024 provided cash of $38.4 million. The non-cash items included $8.0 million for depreciation and amortization expense, $5.6 million for amortization of right-of-use assets for operating leases, $2.1 million for provision for credit losses expense and $0.7 million for stock-based compensation expense.

Previous wording

Changes in operating assets and liabilities used cash of $52.2 million primarily due to the following:

Current wording

Changes in operating assets and liabilities used cash of $15.4 million primarily due to the following:

Previous wording

•The change in deferred revenue used cash of $19.8 million and was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relation to completion of their program at June 30, 2024 as compared to September 30, 2023.

Current wording

•The change in deferred revenue used cash of $4.2 million and was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relation to completion of their program at December 31, 2024 as compared to September 30, 2024.

Previous wording

•The decrease in accounts payable and accrued expenses used cash of $13.9 million primarily related to the timing of payments to vendors and for payroll and bonus accruals.

Current wording

•The change in accounts payable and accrued expenses used cash of $3.8 million primarily related to the timing of payments to vendors and for payroll and bonus accruals.