Universal Technical Institute Reports Fiscal Year 2012 Third Quarter Results

SCOTTSDALE, Ariz., Aug. 2, 2012 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported revenues for the third quarter ended June 30, 2012 of $99.6 million, an 8.6 percent decrease from $108.9 million for the third quarter of the prior year.  Net income for the third quarter ended June 30, 2012 was $1.0 million, or 4 cents per diluted share, compared to $4.0 million, or 16 cents per diluted share, for the third quarter ended June 30, 2011. 

Revenues for the nine months ended June 30, 2012 were $312.3 million, an 8.3 percent decrease from $340.5 million for the nine months ended June 30, 2011. Net income for the nine months ended June 30, 2012 was $7.4 million, or 30 cents per diluted share, compared to $21.3 million, or 86 cents per diluted share, for the nine months ended June 30, 2011.

Return on equity for the trailing four quarters ended June 30, 2012 was 9.1 percent compared to 21.2 percent for the trailing four quarters ended Sept. 30, 2011.

"Our third quarter is typically the most challenging of the year, and this quarter was no exception," said Kim McWaters, chief executive officer.  "While we believe that macro-economic conditions will continue to pressure student population growth in the short term, we are focused on strategies for building new student enrollment as we are seeing signs of increased demand for quality technicians. Efficient cost management remains a priority in balance with ensuring quality educational outcomes for our students."

Student Metrics


Three Months Ended


Nine Months Ended

June 30,



June 30,




2012


2011




2012


2011



(Rounded to hundreds)


Total starts

2,700


2,700




9,400


9,600


Average undergraduate full-time student enrollment

15,300


17,200




16,800


18,800


End of period undergraduate full-time student enrollment

14,500


16,200




14,500


16,200














Third Quarter Operating Performance

For the third quarter of 2012, revenues were $99.6 million, an 8.6 percent decrease from $108.9 million for last year's third quarter.  The decrease in revenues primarily related to a decrease in average undergraduate full-time student enrollment of 10.8 percent.  The decrease was partially offset by an increase in tuition rates.  During the third quarter of 2012 and 2011, tuition excluded $3.8 million and $1.7 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenues when payments are received.

Operating income and margin for the third quarter of 2012 were $1.5 million and 1.5 percent, respectively, compared to operating income and margin of $6.7 million and 6.2 percent, respectively, in the same period last year.  The decrease in operating income was primarily attributable to the decrease in revenues and an increase in advertising and legal expenses.  We anticipate our advertising expense will be in the range of 10% - 11% of revenue for the year ending September 30, 2012.  The decrease was partially offset by a decrease in compensation expense, training aids expense and supplies and maintenance.   

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2012 was $7.6 million compared to $13.2 million in the same period last year.  See "Use of Non-GAAP Financial Information" below.

Nine Month Operating Performance

Revenues for the nine months ended June 30, 2012 were $312.3 million, an 8.3 percent decrease from $340.5 million for the nine months ended June 30, 2011.

Operating income and margin for the nine months ended June 30, 2012 were $11.9 million and 3.8 percent, respectively, compared to $34.9 million and 10.3 percent, respectively, for the nine months ended June 30, 2011. The decreases in operating income and margin were related to the decreases in revenues and an increase in advertising and legal expenses, partially offset by a decrease in compensation expense, training aids expense and supplies and maintenance.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the nine months ended June 30, 2012 was $31.0 million compared to $54.4 million for the nine months ended June 30, 2011. See "Use of Non-GAAP Financial Information" below.

Liquidity

Cash, cash equivalents and investments totaled $104.0 million at June 30, 2012, compared to $109.6 million at Sept. 30, 2011.  At June 30, 2012, shareholders' equity totaled $147.4 million as compared to $141.4 million at Sept. 30, 2011.  On March 30 and June 29, 2012, we paid cash dividends of $0.10 per share to common stockholders of record as of March 15 and June 18, 2012, respectively.  The aggregate payment was approximately $4.9 million.  At the discretion of our Board of Directors, we intend to pay a dividend quarterly in future periods.

Pursuant to the previously announced share repurchase plan, we purchased 125,800 shares of stock during the nine months ended June 30, 2012 at an average price of $12.99 for a total cost of approximately $1.6 million.  We did not make any purchases during the three months ended June 30, 2012.

Cash flow used in operating activities was $6.3 million for the three months ended June 30, 2012, and cash flow provided by operating activities was $9.2 million for the nine months ended June 30, 2012, compared with cash provided by operating activities of $2.7 million and $31.6 million for the three months and nine months ended June 30, 2011, respectively.

2012 Outlook

For the remainder of 2012, we expect to continue to be impacted by the macro-economic headwinds, ongoing student financing challenges and our lower student populations as we entered the year. We expect student starts for the remainder of 2012 to be relatively flat with the number of starts during the same period in the prior year. We continue to expect average student populations for the full year to decline as compared to the prior year, resulting in a mid to high single digit decline in revenues in 2012 and an overall decline in operating margins compared to 2011.  Given these trends and the higher fixed component in our admissions cost structure as a result of regulatory changes, we are focused on efficiencies, managing costs and other opportunities to improve operating margins during the remainder of the year. 

Conference Call

Management will hold a conference call to discuss the 2012 third quarter results today at 1:30 p.m. PDT (4:30 p.m. EDT). This call can be accessed by dialing 412-317-6789 or 877-317-6789.  Investors are invited to listen to the call live at http://uti.investorroom.com/.  Please access the website at least 15 minutes early to register, download and install any necessary audio software.  A replay of the call will be available on the Investor Relations section of UTI's website for 60 days or the replay can be accessed through August 12th, 2012 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10016842.

Safe Harbor Statement

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

Use of Non-GAAP Financial Information

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

About Universal Technical Institute, Inc.

Headquartered in Scottsdale, Arizona, Universal Technical Institute, Inc. (NYSE: UTI) is the leading provider of post-secondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. With more than 160,000 graduates in its 47-year history, UTI offers undergraduate degree, diploma and certificate programs at 11 campuses across the United States, as well as manufacturer-specific training programs at dedicated training centers. Through its campus-based school system, UTI provides specialized post-secondary education programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NTI). To learn more about UTI and its training services, log on to www.uti.edu.

 (Tables Follow)

 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)













Three Months Ended


Nine Months Ended






June 30,


June 30,






2012


2011


2012


2011






(In thousands, except per share amounts)


Revenues


$    99,601


$ 108,934


$ 312,268


$  340,542














Operating expenses:











Educational services and facilities


52,621


57,990


157,775


169,518



Selling, general and administrative


45,462


44,238


142,633


136,075




Total operating expenses


98,083


102,228


300,408


305,593


Income from operations


1,518


6,706


11,860


34,949














Other income:











Interest income, net


63


56


213


199



Other income


6


90


372


345




Total other income


69


146


585


544














Income before income taxes


1,587


6,852


12,445


35,493


Income tax expense


574


2,816


5,021


14,206


Net income


$      1,013


$   4,036


$   7,424


$   21,287














Earnings per share:










Net income per share – basic


$      0.04


$     0.16


$     0.30


$       0.87


Net income per share – diluted


$      0.04


$     0.16


$     0.30


$       0.86














Weighted average number of shares outstanding:












Basic


24,694


24,462


24,693


24,370




Diluted


24,835


24,765


24,825


24,688














Cash dividends declared per common share


$      0.10


-


$     0.20


-




 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)












June 30,


September 30,





2012


2011





(In thousands)

Assets





Current assets:






Cash and cash equivalents


$             58,524


$            53,670


Investments, current portion


33,566


50,052


Receivables, net


13,370


11,205


Deferred tax assets, net


6,680


8,279


Prepaid expenses and other current assets


12,921


10,709



Total current assets


125,061


133,915

Investments, less current portion


11,896


5,830

Property and equipment, net


89,812


100,377

Goodwill


20,579


20,579

Deferred tax assets, net


4,075


-

Other assets


6,232


5,328

                Total assets


$           257,655


$          266,029






Liabilities and Shareholders' Equity





Current liabilities:






Accounts payable and accrued expenses


$             39,324


$            36,895


Deferred revenue


44,494


61,394


Accrued tool sets


4,525


4,723


Income tax payable


2,021


2,032


Other current liabilities


880


640



Total current liabilities


91,244


105,684


Deferred tax liabilities, net


-


2,443


Deferred rent liability


12,975


11,799


Other liabilities


6,071


4,680



Total liabilities


110,290


124,606






Commitments and contingencies










Shareholders' equity:






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







30,045,114 shares issued and 24,731,987







shares outstanding at June 30, 2012 and







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







shares outstanding at September 30, 2011


3


3


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







0 shares issued and outstanding


-


-


Paid-in capital


167,158


156,497


Treasury stock, at cost, 5,313,127 shares at June 30, 2012 and







4,870,226 shares at September 30, 2011


(83,713)


(76,506)


Retained earnings


63,917


61,429



Total shareholders' equity


147,365


141,423

Total liabilities and shareholders' equity


$           257,655


$          266,029

 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


















Nine Months Ended









June 30,









2012


2011



(In thousands)


Cash flows from operating activities:





Net income

$            7,424


$           21,287


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






Depreciation and amortization

18,064


18,409



Amortization of held-to-maturity investments

1,415


789



Bad debt expense

4,446


5,450



Stock-based compensation

5,388


4,771



Excess tax benefit from stock-based compensation

(159)


(795)



Deferred income taxes

(5,202)


3,793



Loss on disposal of property and equipment

101


921


Changes in assets and liabilities:






Receivables

(6,611)


(422)



Prepaid expenses and other current assets

(2,250)


(1,189)



Other assets

(910)


(1,398)



Accounts payable and accrued expenses

2,595


(17,645)



Deferred revenue

(16,900)


(5,967)



Income tax payable/receivable

(11)


(1,641)



Accrued tool sets and other current liabilities

42


9



Deferred rent liability

1,176


4,886



Other liabilities

621


359




Net cash provided by operating activities

9,229


31,617













Cash flows from investing activities:






Purchase of property and equipment

(6,952)


(26,003)



Purchase of investments

(49,312)


(57,555)



Proceeds received upon maturity of investments

58,317


39,545




Net cash provided by (used in) investing activities

2,053


(44,013)













Cash flows from financing activities:






Payment of cash dividends

(4,936)


-



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

(412)


(922)



Proceeds from issuance of common stock under employee plans

399


690



Excess tax benefit from stock-based compensation

159


795



Purchase of treasury stock

(1,638)


-




Net cash (used in) provided by financing activities

(6,428)


563


Net  increase (decrease) in cash and cash equivalents

4,854


(11,833)


Cash and cash equivalents, beginning of period

53,670


48,974


Cash and cash equivalents, end of period

$           58,524


$           37,141













 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)

Reconciliation of Net Income to EBITDA




Three Months Ended


Nine Months Ended



June 30,


June 30,



2012


2011


2012


2011



(In thousands)










Net income


$        1,013


$     4,036


$     7,424


$   21,287

Interest income, net


(63)


(56)


(213)


(199)

Income tax expense


574


2,816


5,021


14,206

Depreciation and amortization


6,043


6,425


18,810


19,070

                  EBITDA


$        7,567


$   13,221


$   31,042


$   54,364












 

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES


SELECTED SUPPLEMENTAL FINANCIAL INFORMATION


(UNAUDITED)










Three Months Ended


Nine Months Ended




June 30,


June 30,




2012


2011


2012


2011




(In thousands)












Salaries expense


$    41,421


$     44,113


$    123,547


$   125,520


Employee benefits and tax


8,320


10,027


26,227


27,143


Bonus expense


1,697


2,170


7,376


9,890


Stock-based compensation


1,607


1,256


5,388


4,771


Total compensation and related costs


$     53,045


$     57,566


$   162,538


$   167,324












Occupancy expense


$       9,707


$       9,784


$     29,164


$     29,783


Bad debt expense


$       1,302


$       1,649


$       4,446


$       5,450


Depreciation and amortization expense


$       6,043


$       6,425


$      18,810


$     19,070


Legal services expense


$         846


$          192


$       1,849


$          818
















SOURCE Universal Technical Institute, Inc.



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