2014

Universal Technical Institute Reports Fiscal Year 2013 Second Quarter Results

SCOTTSDALE, Ariz., April 30, 2013 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported revenues for the second quarter ended March 31, 2013 of $95.1 million, a 10.5 percent decrease from $106.2 million for the second quarter of the prior year.  Net loss for the second quarter ended March 31, 2013 was $0.9 million, or a loss of 4 cents per diluted share, compared to net income of $1.9 million, or 8 cents per diluted share, for the second quarter ended March 31, 2012. 

Revenues for the six months ended March 31, 2013 were $193.5 million, a 9.0 percent decrease from $212.7 million for the six months ended March 31, 2012. Net income for the six months ended March 31, 2013 was $2.6 million, or 11 cents per diluted share, compared to $6.4 million, or 26 cents per diluted share, for the six months ended March 31, 2012.

Return on equity for the trailing four quarters ended March 31, 2013 was 3.6 percent compared to 6.2 percent for the trailing four quarters ended Sept. 30, 2012.

"Due to current conditions, we have made choices that balance cost containment with 'return to growth' initiatives which negatively impacted second quarter financial results," said Kim McWaters, chief executive officer.  "While the next few quarters will continue to be challenging, I am encouraged that we have seen some early indications of improved student interest and internal efficiencies.  Our manufacturer partners continue to increase their demand for graduates and as their demand increases, supply of students should follow."

Student Metrics






Three Months Ended


Six Months Ended

March 31,



March 31,




2013


2012




2013


2012



(Rounded to hundreds)


Total starts

2,900


3,400




5,600


6,700


Average undergraduate full-time student enrollment

15,000


16,700




15,700


17,400


End of period undergraduate full-time student enrollment

14,400


16,300




14,400


16,300














Second Quarter Operating Performance

For the second quarter of 2013, revenues were $95.1 million, a 10.5 percent decrease from $106.2 million for last year's second quarter.  The decrease in revenues primarily related to a decrease in average undergraduate full-time student enrollment of 10.2 percent.  The decrease was partially offset by an increase in tuition rates.  During the second quarter of 2013 and 2012, tuition excluded $5.2 million and $3.7 million, respectively, related to students participating in the Company's proprietary loan program which will be recognized as revenues when payments are received.

Operating loss and margin for the second quarter of 2013 were $1.9 million and (2.0) percent, respectively, compared to operating income and margin of $3.0 million and 2.8 percent, respectively, in the same period last year.  The operating loss was primarily attributable to the decrease in revenues and was partially offset by decreases in compensation and advertising expense.   

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2013 was $4.2 million compared to $9.5 million in the same period last year.  See "Use of Non-GAAP Financial Information" below.

Six Month Operating Performance

Revenues for the six months ended March 31, 2013 were $193.5 million, a 9.0 percent decrease from $212.7 million for the six months ended March 31, 2012.

Operating income and margin for the six months ended March 31, 2013 were $4.1 million and 2.1 percent, respectively, compared to $10.3 million and 4.9 percent, respectively, for the six months ended March 31, 2012. The decreases in operating income and margin were related to the decrease in revenues, partially offset by decreases in compensation and advertising expense.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the six months ended March 31, 2013 was $16.3 million compared to $23.5 million for the six months ended March 31, 2012. See "Use of Non-GAAP Financial Information" below.

Liquidity

Cash, cash equivalents and investments totaled $94.3 million at March 31, 2013, compared to $101.7 million at Sept. 30, 2012.  At March 31, 2013, shareholders' equity totaled $141.4 million as compared to $146.1 million at Sept. 30, 2012.  On Dec. 21, 2012, and March 29, 2013, we paid cash dividends of $0.10 per share to common stockholders of record as of Dec. 7, 2012 and March 15, 2013, respectively.  The aggregate payment was approximately $4.9 million.  Our Board of Directors evaluates dividends quarterly.

Pursuant to the previously announced share repurchase plan, we purchased 556,100 shares of stock during the six months ended March 31, 2013 at an average price of $9.61 for a total cost of approximately $5.4 million.  We did not make any purchases during the three months ended March 31, 2013.

Cash flow provided by operating activities was $9.2 million and $7.6 million for the three months and six months ended March 31, 2013, respectively, compared with cash provided by operating activities of $10.0 million and $15.6 million for the three months and six months ended March 31, 2012, respectively.

2013 Outlook

Given the time required for new initiatives to take hold and the increasing lag between students applying for school and starting school, we expect new student starts to be down in the third quarter of 2013, before possibly showing year over year improvement in the fourth quarter.  We anticipate full year new student starts for 2013 to be down by the mid to high single digits, resulting in a lower average student population for the year.  These lower levels of enrollment will most likely result in a high single digit decline in revenue in 2013.  While we expect significantly lower expenses in the second half of the year, we still believe we will record an overall decline in operating margin and net income compared to 2012.

Conference Call

Management will hold a conference call to discuss the 2013 second quarter results today at 1:30 p.m. PDT (4:30 p.m. EDT). This call can be accessed by dialing 412-858-4600 or 800-860-2442.  Investors are invited to listen to the call live at http://uti.investorroom.com/.  Please access the website at least 15 minutes early to register, download and install any necessary audio software.  A replay of the call will be available on the Investor Relations section of UTI's website for 60 days or the replay can be accessed through May 14th, 2013 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10027834.

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 (NASCAR Tech). To learn more about UTI and its training services, log on to www.uti.edu.

 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED INCOME STATEMENTS


(UNAUDITED)






Three Months Ended


Six Months Ended




March 31,


March 31,




2013


2012


2013


2012




(In thousands, except per share amounts)


Revenues


$   95,075


$ 106,240


$ 193,516


$  212,667














Operating expenses:











Educational services and facilities


50,456


53,422


100,148


105,154



Selling, general and administrative


46,558


49,803


89,301


97,171




Total operating expenses


97,014


103,225


189,449


202,325


Income (loss) from operations


(1,939)


3,015


4,067


10,342














Other income:











Interest income, net


72


58


119


150



Other income


245


213


364


366




Total other income


317


271


483


516














Income (loss) before income taxes


(1,622)


3,286


4,550


10,858


Income tax expense (benefit)


(702)


1,354


1,908


4,447


Net income (loss)


$      (920)


$   1,932


$   2,642


$   6,411














Earnings per share:










Net income (loss) per share – basic


$      (0.04)


$     0.08


$     0.11


$       0.26


Net income (loss) per share – diluted


$      (0.04)


$     0.08


$     0.11


$       0.26














Weighted average number of shares outstanding:












Basic


24,396


24,692


24,581


24,692




Diluted


24,396


24,845


24,651


24,826














Cash dividends declared per common share


$      0.10


$      0.10


$     0.20


$      0.10



















 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)





March 31,


Sept. 30,





2013


2012





(In thousands)

Assets





Current assets:






Cash and cash equivalents


$      28,536


$     45,665


Restricted cash


2,107


104


Investments, current portion


50,794


51,455


Receivables, net


12,040


14,910


Deferred tax assets, net


5,751


7,977


Prepaid expenses and other current assets


14,354


14,873



Total current assets


113,582


134,984

Investments, less current portion


14,959


4,533

Property and equipment, net


92,133


91,939

Goodwill


20,579


20,579

Deferred tax assets, net


6,910


5,576

Other assets


8,932


10,547

                Total assets


$   257,095


$   268,158






Liabilities and Shareholders' Equity





Current liabilities:






Accounts payable and accrued expenses


$     31,530


$     40,865


Deferred revenue


46,725


52,564


Accrued tool sets


4,224


4,264


Income tax payable


-


744


Other current liabilities


1,848


1,003



Total current liabilities


84,327


99,440


Deferred rent liability


12,484


12,946


Construction liability


10,747


2,421


Other liabilities


8,119


7,266



Total liabilities


115,677


122,073






Commitments and contingencies










Shareholders' equity:






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







30,301,316 shares issued and 24,414,289







shares outstanding at March 31, 2013 and







30,222,132 shares issued and 24,891,205







shares outstanding at September 30, 2012


3


3


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







0 shares issued and outstanding


-


-


Paid-in capital


169,937


166,970


Treasury stock, at cost, 5,887,027 shares at March 31, 2013 and







5,330,927 shares at September 30, 2012


(89,288)


(83,924)


Retained earnings


60,766


63,036



Total shareholders' equity


141,418


146,085

Total liabilities and shareholders' equity


$   257,095


$    268,158

 



UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

















Six Months Ended









March 31,









2013


2012



(In thousands)


Cash flows from operating activities:





Net income

$     2,642


$     6,411


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






Depreciation and amortization

11,349


12,276



Amortization of held-to-maturity investments

919


1,025



Bad debt expense

2,620


3,144



Stock-based compensation

3,005


3,781



Excess tax benefit from stock-based compensation

-


(159)



Deferred income taxes

521


(2,338)



Net training equipment credits earned

(881)


(941)



Loss on disposal of property and equipment

62


70


Changes in assets and liabilities:






Receivables

940


(3,204)



Prepaid expenses and other current assets

1,511


(1,065)



Other assets

(707)


(711)



Accounts payable and accrued expenses

(8,112)


3,667



Deferred revenue

(5,839)


(6,358)



Income tax payable/receivable

(1,291)


(1,627)



Accrued tool sets and other current liabilities

805


(29)



Deferred rent liability

(462)


1,152



Other liabilities

534


473




Net cash provided by operating activities

7,616


15,567













Cash flows from investing activities:






Purchase of property and equipment

(4,160)


(3,515)



Proceeds from disposal of property and equipment

42


-



Purchase of investments

(44,046)


(41,297)



Proceeds received upon maturity of investments

33,362


37,502




Net cash used in investing activities

(14,802)


(7,310)













Cash flows from financing activities:






Payment of cash dividends

(4,912)


(2,463)



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

(62)


(103)



Proceeds from issuance of common stock under employee plans

395


399



Excess tax benefit from stock-based compensation

-


159



Purchase of treasury stock

(5,364)


(1,638)




Net cash used in financing activities

(9,943)


(3,646)


Net (decrease) increase in cash and cash equivalents

(17,129)


4,611


Cash and cash equivalents, beginning of period

45,665


53,670


Cash and cash equivalents, end of period

$   28,536


$   58,281













 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)









Reconciliation of Net Income (Loss) to EBITDA







Three Months Ended


Six Months Ended





March 31,


 March 31,



2013


2012


2013


2012



(In thousands)

Net income (loss)


$        (920)


$     1,932


$     2,642


$   6,411

Interest income, net


(72)


(58)


(119)


(150)

Income tax expense (benefit)


(702)


1,354


1,908


4,447

Depreciation and amortization


5,909


6,244


11,894


12,767

                  EBITDA


$        4,215


$   9,472


$   16,325


$   23,475































 

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

SELECTED SUPPLEMENTAL FINANCIAL INFORMATION

(UNAUDITED)









Three Months Ended


Six Months Ended




March 31,


March 31,




2013


2012


2013


2012




(In thousands)


Salaries expense


$ 39,858


$ 41,916


$ 79,586


$ 82,128


Employee benefits and tax


9,459


9,564


16,636


17,906


Bonus expense


381


1,992


2,535


5,679


Stock-based compensation


1,560


2,099


3,005


3,781


Total compensation and related costs


$     51,258


$     55,571


$   101,762


$    109,494












Occupancy expense


$      9,830


$      9,680


$    19,664


$     19,457


Bad debt expense


$      1,076


$       1,411


$      2,620


$       3,144


Depreciation and amortization expense


$      5,909


$       6,244


$    11,894


$     12,767


Legal services expense


$         465


$          386


$        784


$       1,003

















 

SOURCE Universal Technical Institute, Inc.



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