UNIVERSAL TECHNICAL INSTITUTE INC

Note 1 - Nature of the Business

Universal Technical Institute, Inc., which together with its subsidiaries is referred to as the “Company,” “we,” “us” or “our,” was founded in 1965 and is a leading workforce solutions provider serving students, partners, and communities nationwide. The Company offers high-quality education and training programs and support services for in-demand careers through itstwo reportable segments (also referred to as “divisions”): Universal Technical Institute and Concorde Career Colleges. We offer the majority of our programs in a hands-on learning model through labs and clinical placements, as well as classroom delivery and blended delivery models. Our reporting structure is as follows:

Universal Technical Institute (“UTI”): UTI operates 15 campuses located innine states and offers a wide range of degree and non-degree transportation and skilled trades technical training programs. 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.

Concorde Career Colleges (“Concorde”): Concorde operates across 18 campuses ineight states and online, 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 healthcare careers with practical, hands-on experiences including opportunities to learn while providing care to real patients. Prior to graduation, students must complete a certain number of hours in a clinical setting or externship, depending upon their program of study.

“Corporate” includes corporate related expenses that are not allocated to the UTI or Concorde reportable segments. Additional information about our reportable segments is presented in Note 15.

Our primary source of revenues is currently tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965, as amended (“HEA”), as well as from various veterans’ benefits programs. For further discussion, see Note 2 on “Summary of Significant Accounting Policies - Concentration of Risk” and Note 24 on “Government Regulation and Financial Aid” included in our 2025 Annual Report on Form 10-K.

Note 2 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K.

The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

There have been no material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in Note 2 of our 2025 Annual Report on Form 10-K.

Segment Recast

As part of Phase II of our North Star growth strategy and to support our new campus growth initiatives, we have further refined our operating model to best pursue future growth goals and support the business. In furtherance of the foregoing, we have centralized the operations of our accounting, finance, information technology, human resources, and real estate departments to leverage economies of scale and create efficiencies to support our continued growth. Due to this centralization, we have adjusted our allocation methodology to allocate the majority of the Corporate segment’s costs to the UTI and Concorde segments based upon a percentage of revenue. Due to these changes in allocation methodology, and the new segment disclosure requirements we adopted in our 2025 Annual Report on Form 10-K, the segment disclosures in Note 15 for the three months ended December 31, 2024 have been recast from the prior year presentation for comparability to the current year presentation.

Note 3 - Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) and the SEC periodically issue new accounting standards or disclosure requirements in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded the following new accounting standard updates (“ASU”) or SEC rules apply to us.

Effective in Fiscal 2026

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. This ASU will be effective for our Form 10-K for fiscal 2026. We are currently evaluating the impact this ASU may have on our financial statement disclosures.

Effective in Fiscal 2027

In July 2025, the FASB issued ASU 2025‑05, Financial Instruments – Credit Losses (Topic 326‑20): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of current accounts receivable and current contract assets. Entities are required to disclose whether they elected the practical expedient and, if applicable, the cut‑off date for evaluating subsequent collections. This new guidance is effective on a prospective basis for annual periods beginning after December 15, 2025 and interim reporting periods beginning after December 15, 2026. Early adoption is permitted in both interim and annual financial statements that have not yet been issued. We are currently evaluating the impact this ASU may have on our financial statement disclosures.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Improvements to Hedge Accounting, which provides additional flexibility in hedge designations and expands the types of risk management strategies eligible for hedge accounting. The guidance is effective on a prospective basis for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact this ASU may have on our financial statements and related disclosures.

Effective in Fiscal 2028

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses, which requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations, as well as disclosures about selling expenses. As clarified in ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the effective date, this new guidance is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. We are currently evaluating the impact this ASU may have on our financial statement disclosures.

Effective in Fiscal 2029

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic

350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes the prescriptive “project stage” model and requires capitalization once management authorizes funding and completion is probable. Entities must also assess whether significant development uncertainty exists. The amendments are effective prospectively for fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact this ASU may have on our financial statement disclosures.

Note 4 - Revenue from Contracts with Customers

Nature of Goods and Services

Revenues across the UTI and Concorde segments consist primarily of student tuition and fees derived from the programs we provide after reductions are made for discounts and scholarships that we sponsor and for refunds for students who withdraw from our programs prior to specified dates. We apply the five-step model outlined in Accounting Standards Codification (“ASC”)Topic 606, Revenue from Contracts with Customers. Tuition and fee revenue is recognized ratably over the term of the course or program offered.

In addition to revenue from tuition and fees, UTI and Concorde derive supplemental revenues from sales of textbooks and program supplies and other revenues from dealer technician training and staffing services to manufacturers. All of these revenues are recognized as the transfer of goods or services occurs. Deferred revenue represents the excess of tuition and fee payments received as compared to tuition and fees earned and is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months.

All of our revenues are generated within the United States. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent across our various programs for both the UTI and Concorde segments. See Note 15 for disaggregated segment revenue information.

The following table provides information about receivables and deferred revenue resulting from our enrollment agreements with students:

(1) Receivables include tuition receivables, retail installment contract receivables and notes receivable, both current and long term.

During the three months ended December 31, 2025, the deferred revenue balance included decreases for revenues recognized during the period and increases related to new students who started their training programs during the period.

Note 5 - Investments

During 2025, we invested a portion of our cash and cash equivalents in short-term investments which primarily consisted of corporate and government bonds with a minimum credit rating of A. We had the ability and intention to hold these investments until maturity and therefore classified these investments as held-to-maturity, which are recorded at amortized cost. In October 2025, we purchased additional investments in corporate and government bonds with a minimum credit rating of A, which we classified as available-for-sale to provide future liquidity to support our strategic growth initiatives. These available-for-sale investments are recorded at market value. All held-to-maturity investments with a maturity of less than one year and all investments designated as available-for-sale are presented as “Short-term investments,” while held-to-maturity investments with maturities of greater than one year are presented in “Other assets” on our condensed consolidated balance sheets.

The amortized cost, gross unrealized gains or losses, and fair value of investments classified as held-to-maturity and available-for-sale at December 31, 2025 and September 30, 2025 were as follows:

Investments are exposed to various risks, including interest rate, market and credit risk. As a result, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported in the condensed consolidated financial statements.

Note 6 - Fair Value Measurements

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers:

Level 1: Defined as quoted market prices in active markets for identical assets or liabilities.

Level 2: Defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Defined as unobservable inputs that are not corroborated by market data.

Any transfers of investments between levels occurs at the end of the reporting period. Assets measured or disclosed at fair value on a recurring basis consisted of the following:

(1) Money market funds and other highly liquid investments with maturity dates less than 90 days are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheets as of December 31, 2025 and September 30, 2025.

(2) See Note 5 for further discussion on the corporate and government bonds.

(3) Notes receivable relate to UTI’s proprietary loan program and are reflected as “Notes receivable, current portion” and “Notes receivable, less current portion” in our condensed consolidated balance sheets as of December 31, 2025 and September 30, 2025.

(4) The Credit Facility and Term Loans bear interest at rates commensurate with market rates, and therefore, the respective carrying values approximate fair value (Level 2).

Note 7 - Property and Equipment, net

Property and equipment, net consisted of the following:

Depreciation expense related to property and equipment was $8.5 million for the three months ended December 31, 2025, and $7.8 million for the three months ended December 31, 2024.

Note 8 - Intangible Assets

The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that are subject to amortization as of December 31, 2025:

The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that are subject to amortization as of September 30, 2025:

Amortization expense was $0.4 million for the three months ended December 31, 2025, and $0.2 million for the three months ended December 31, 2024.

Future intangible asset amortization expense is expected to be as follows:

The remaining weighted average useful lives shown are calculated based on the net book value and remaining amortization period of each respective intangible asset. Amortization is computed using the straight-line method based on estimated useful lives of the related assets. Our indefinite-lived intangible assets are reviewed at least annually for impairment as of August 1, or more frequently if there are indicators of impairment. There were no indicators of impairment for our indefinite-lived intangible assets as of December 31, 2025.

Note 9 - Leases

As of December 31, 2025, we have facility leases at 31 of our 33 operating campuses, andtwo non-campus locations under non-cancelable operating or finance leases. As part of our strategic growth initiatives, during the three months ended December 31, 2025, we signed lease agreements for the following new campus locations: UTI Salt Lake City, Utah; Concorde Atlanta, Georgia; and Concorde Houston, Texas. These campuses are expected to open during fiscal 2027 pending regulatory approvals. Additionally, we signed a lease to relocate the Concorde North Hollywood, California campus to Burbank, California with the relocation slated to be complete during fiscal 2027. As of December 31, 2025, these leases, which have not yet commenced and which relate to properties that we have not yet taken possession, will have total minimum lease payments of approximately $73.9 million over a range of 10.5 to 15 years.

Some of our leases contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 5 to 20 years and expire at various dates through 2037. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease certain portions of unused building space to third parties, which as of December 31, 2025, resulted in minimal income. All leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets.

The components of lease expense during the three months ended December 31, 2025 and 2024 were as follows:

(1) Excludes the expense for short-term leases, which was not significant for the three months ended December 31, 2025 and 2024.

Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):

(1) The finance lease assets and liabilities as of December 31, 2025 and September 30, 2025 consisted ofone facility lease. The finance lease asset is recorded net of accumulated amortization of $2.8 million and $2.6 million as of December 31, 2025 and September 30, 2025, respectively.

Maturities of lease liabilities were as follows:

Note 10 - Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

Note 11 - Debt

(1) Interest on the Revolving Credit Facility (as defined below) accrues at an annual rate equal to Daily Term SOFR plus a margin of 1.85%.

(2) Interest on the Avondale Term Loan (as defined below) accrues at a rate equal to one-month Term SOFR plus 2.0% and a tranche adjustment of 0.046%.

(3) Interest on the Lisle Term Loan (as defined below) accrues at a rate equal to one-month Term SOFR plus 2.0%.

(4) The finance lease is related to a facility lease with an annual interest rate of 6.02% that matures in 2029. See Note 9 for additional details on our finance lease.

(5) The unamortized debt issuance costs relate to the Avondale Term Loan and the Lisle Term Loan.

(6) The Revolving Credit Facility, Avondale Term Loan, Lisle Term Loan and finance leases bear interest at rates commensurate with market rates, and therefore, the respective carrying values approximate fair value (Level 2).

Revolving Credit Facility

On November 18, 2022, we entered into a $100.0 million senior secured revolving credit facility with Fifth Third Bank (the “Credit Facility” or “Revolving Credit Facility”), which included a $20.0 million sub facility available for letters of credit. On September 26, 2024, we amended the Credit Facility to increase the commitment amount to $125.0 million, extend the maturity date to November 30, 2027, and provide for the option to request an increase of up to an additional $25.0 million, which may be granted at the lender’s discretion. Advances made under the Credit Facility bear interest at an annual rate equal to (i) the Term SOFR rate, (ii) the Daily Simple SOFR rate, or (iii) the Base Rate (i.e., the greater of 3.5% and the lender’s prime rate). In each case that a SOFR rate is selected, an applicable margin that varies from 1.85% up to 2.35%, based on our then-current total leverage ratio, is applied.

During the three months ended December 31, 2025, we made payments on the Credit Facility of $20.0 million and we received proceeds of $35.0 million. In July 2025, we issued a letter of credit for $19.6 million, with an expiration date of June 30, 2026, to the U.S. Department of Education (“ED”) in order to lift the core growth restrictions imposed on Concorde and UTI campuses as a result of our acquisition of Concorde. The remaining availability under the Credit Facility as of December 31, 2025 was $70.4 million, and the sub facility available for letters of credit was $0.4 million.

In January 2026, we used cash on hand to repay $35.0 million outstanding on the Credit Facility, which increased the availability under the Credit Facility to $105.4 million. It is likely that we will borrow from the Credit Facility in future periods based on future working capital or other needs.

Avondale Term Loan

In connection with the Avondale, Arizona building purchase in December 2020, we entered into a credit agreement with Fifth Third Bank (the “Avondale Lender”) on May 12, 2021 in the maximum principal amount of $31.2 million with a maturity ofseven years (the “Avondale Term Loan”). The Avondale Term Loan bears interest at the rate of Term SOFR plus 2.0% and a tranche rate adjustment of 0.046%. Principal and interest payments are due monthly. The Avondale Term Loan is secured by a first priority lien on our Avondale, Arizona property, including all land and improvements. Additionally, we entered into an interest rate swap agreement with the Avondale Lender. See Note 12 for further discussion on the interest rate swap.

Lisle Term Loan

On April 14, 2022, our consolidated subsidiary, 2611 Corporate West Drive Venture LLC (the “Borrower”), entered into a new Loan Agreement (“Lisle Loan Agreement”) with Valley National Bank (the “Lisle Lender”), to fund the acquisition and retire the prior loan agreement with Western Alliance Bank, via a term loan in the original principal amount of $38.0 million with a maturity ofseven years (the “Lisle Term Loan” and together with the Avondale Term Loan, the “Term Loans”). The Lisle Term Loan bears interest at a rate of one-month Term SOFR plus 2.0%. The Lisle Term Loan is secured by a mortgage on the Lisle, Illinois campus and is guaranteed by the Company. In connection with the Lisle Term Loan, we entered into an interest rate swap agreement. See Note 12 for further discussion on the interest rate swap.

Debt Covenants for our Credit Facility and Term Loans

We are subject to certain customary affirmative and negative covenants under the Revolving Credit Facility and the Term Loans, including, without limitation, certain reporting obligations, certain limitations on restricted payments, limitations on liens, encumbrances and indebtedness and various financial covenants, including debt service coverage ratios. As of December 31, 2025, we were in compliance with all financial debt covenants.

Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2025 and for each fiscal year through the period ended September 30, 2030, and thereafter were as follows at December 31, 2025:

Note 12 - Derivative Financial Instruments

In the normal course of business, our operations are exposed to market risks, including the effect of changes in interest rates. We may enter into derivative financial instruments to offset these underlying market risks.

On March 31, 2023, we entered into a new interest rate swap agreement, effective April 3, 2023, with the Avondale Lender that effectively fixes the interest rate we pay on 50% of the principal amount of the Avondale Term Loan at 1.45% for the entire loan term (the “Avondale Swap”). The Avondale Swap was designated as an effective cash flow hedge for accounting and tax purposes.

On April 14, 2022, in connection with the Lisle Term Loan described in Note 11, we entered into an interest rate swap agreement with the Lisle Lender that effectively fixes the interest rate on 50% of the principal amount of the Lisle Term Loan at 4.69% for the entire loan term, orseven years (the “Lisle Swap”). On April 14, 2022, the Lisle Swap was designated as an effective cash flow hedge for accounting and tax purposes.

Of the net amount of the existing gains that are reported in “Accumulated other comprehensive income” as of December 31, 2025, we estimate that $0.4 million will be reclassified to “Interest expense” within the next twelve months. As of December 31, 2025, the notional amounts of the Avondale Swap and Lisle Swap were approximately $13.6 million and $17.9 million, respectively. As of September 30, 2025, the notional amounts of the Avondale Swap and Lisle Swap were approximately $13.7 million and $18.0 million, respectively.

Fair Value of Derivative Instruments

The following table presents the fair value of our Avondale Swap and Lisle Swap (Level 2) which are designated as cash flow hedges and the related classification on the condensed consolidated balance sheets as of December 31, 2025 and September 30, 2025:

Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Operations and Accumulated Other Comprehensive Income

The table below presents the effect of cash flow hedge accounting for our Avondale Swap and Lisle Swap on the condensed consolidated statement of operations and “Accumulated other comprehensive income” for the three months ended December 31, 2025 and 2024:

Note 13 - Income Taxes

Our income tax expense for the three months ended December 31, 2025 was $3.4 million, or 20.9% of pre-tax income, compared to $5.4 million, or 19.5% of pre-tax income, for the three months ended December 31, 2024. The effective income tax rate for the three months ended December 31, 2025 differed from the federal statutory rate of 21% primarily due to non-deductible executive compensation, stock-based compensation expense and state and local income and franchise taxes. 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 compensation, federal research and development tax credits and state and local income and franchise taxes.

As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2025, we continued to maintain a valuation allowance related to certain federal and state attributes, which are not expected to be utilized prior to expiration.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We continue to evaluate the effects of the new tax legislation as part of our quarterly procedures, and the impacts effective as of the reporting date have been reflected.

Note 14 - Commitments and Contingencies

Legal

In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current or former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claims. We are not currently a party to any material legal proceedings, but note that legal proceedings could, generally, have a material adverse effect on our business, cash flows, results of operations or financial condition.

Note 15 - Segment Information

We operate our business intwo reportable segments: (i) the UTI segment; and (ii) the Concorde segment. Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. “Corporate” includes corporate related expenses that are not allocated to the UTI or Concorde reportable segments and is included to reconcile segment results to the consolidated financial statements.

These segments are organized by key market segments to enhance operational alignment to more effectively execute our

strategic plan. Our reportable segments reflect the manner in which Jerome Grant, our Chief Executive Officer and the chief

operating decision-maker (“CODM”), evaluates performance and allocates resources. The CODM evaluates segment

performance based on operating results. When making decisions to allocate resources, the CODM analyzes segment revenue

and operating expenses which are directly attributable to the costs to serve and educate students. The CODM uses revenue

and income from operations for each segment in the budgeting and forecasting processes.

As previously discussed in Note 2, the segment disclosures for the three months ended December 31, 2024 have been recast from the prior year presentation for comparability to the current year presentation.

Summary information by reportable segment is as follows:

(1) Other expenses include employee-related, travel and entertainment expenses.

(2) Corporate support primarily includes costs for information technology, human resources, accounting and finance support services.

Note 16 - Government Regulation and Financial Aid

As discussed in our 2025 Annual Report on Form 10-K, our institutions participate in a range of government-sponsored student assistance programs. The most significant of these is the federal student aid programs administered by the ED pursuant to Title IV of the HEA, commonly referred to as the Title IV Programs. Generally, to participate in the Title IV Programs, an institution must be licensed or otherwise legally authorized to operate in the state where it is physically located, be accredited by an accreditor recognized by ED, be certified as an eligible institution by ED, offer at least one eligible program of education, and comply with other statutory and regulatory requirements.

Each of our institutions holds the state or other authorizations required to operate and offer postsecondary education programs, and to recruit in the states in which it engages in recruiting activities. In addition, our institutions are accredited by ED-recognized accreditors: all of the UTI institutions and 13 of the Concorde institutions are accredited by the Accrediting Commission of Career Schools and Colleges, while the remaining three Concorde institutions are accredited by the Council on Occupational Education. ED will certify an institution to participate in the Title IV programs only after the institution has demonstrated compliance with the HEA and ED’s extensive regulations regarding institutional eligibility. An institution must also demonstrate its compliance to ED on an ongoing basis. As of December 31, 2025, management believes the Company and its institutions are in compliance with the applicable regulations in all material respects. See “Part I, Item 1. Regulatory Environment” and “Part I, Item 1. State and Accreditor Approvals” in our 2025 Annual Report on Form 10-K for a detailed discussion of the regulatory environment in which the Company operates.

Because the Company operates in a highly regulated industry, it, like other industry participants, may be subject from time to time to investigations, claims of non-compliance, or lawsuits by governmental agencies or third parties, which allege statutory violations, regulatory infractions, or common law causes of action. There can be no assurance that regulatory agencies or third parties will not undertake investigations or make claims against the Company, or that such claims, if made, will not have a material adverse effect on the Company’s business, results of operations or financial condition.