UNIVERSAL TECHNICAL INSTITUTE, INC. 
By SCOTTSDALE, Ariz., Jan. 31, 2013 /PRNewswire/-- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported revenues for the first quarter ended Dec. 31, 2012 of $98.4 million, a 7.5 percent decrease from $106.4 million for the first quarter of the prior year. Net income for the first quarter ended Dec. 31, 2012 was $3.6 million, or 14 cents per diluted share, compared to $4.5 million, or 18 cents per diluted share, for the first quarter ended Dec. 31, 2011.
Return on equity for the trailing four quarters ended Dec. 31, 2012 was 5.5 percent compared to 6.2 percent for the trailing four quarters ended Sept. 30, 2012.
"For the past several quarters, we, like the rest of the industry, have faced real challenges in attracting new students, and in having them start school. While we expect those trends to continue through much of 2013, our fundamental business is strong," said Kim McWaters, chief executive officer. "We have a plan in place to better reach our students in a confusing and competitive marketplace, to strengthen key processes, and to continue to make investments to generate profitable growth. As this plan takes hold, we hope to see improved student starts in the fourth quarter of this year."
Student Metrics
Three Months Ended
December 31,
2012 2011
---- ----
(Rounded to
hundreds)
Total starts 2,700 3,300
Average undergraduate full-time
student enrollment 16,500 18,300
End of period undergraduate full-
time student enrollment 15,200 17,300
First Quarter Operating Performance
For the first quarter of 2013, revenues were $98.4 million, a 7.5 percent decrease from $106.4 million for last year's first quarter. The decrease in revenues primarily related to a decrease in average undergraduate full-time student enrollment of 9.8 percent. The decrease was partially offset by an increase in tuition rates. During the first quarter of 2013 and 2012, tuition excluded $5.8 million and $2.6 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 first quarter of 2012 were $6.0 million and 6.1 percent, respectively, compared to operating income and margin of $7.3 million and 6.9 percent, respectively, in the same period last year. The decrease in operating income 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 first quarter of 2013 was $12.1 million compared to $14.0 million in the same period last year. See "Use of Non-GAAP Financial Information" below.
Liquidity
Cash, cash equivalents and investments totaled $89.3 million at Dec. 31, 2012, compared to $101.7 million at Sept. 30, 2012. At Dec. 31, 2012, shareholders' equity totaled $143.4 million as compared to $146.1 million at Sept. 30, 2012. On Dec. 21, 2012, we paid a cash dividend of $0.10 per share to common stockholders of record as of Dec. 7, 2012. The aggregate payment was approximately $2.5 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 556,100 shares of stock during the quarter ended Dec. 31, 2012 at an average price of $9.61 for a total cost of approximately $5.4 million.
Cash flow used in operating activities was $1.6 million for the three months ended Dec. 31, 2012, compared with cash provided by operating activities of $5.6 million for the three months ended Dec. 31, 2011.
2013 Outlook
With slightly worsening macroeconomic pressure, the time required for new initiatives to take hold and the lag between students applying for school and starting school increasing, we expect new student starts to be down for much of 2013, before possibly showing year over year improvement in the fourth quarter. While that trend would prove positive for 2014, we do anticipate full year new student starts for 2013 to be down mid to high single digits resulting in a lower average student population this year. These lower levels of enrollment will most likely result in a high single digit decline in revenue in 2013 and an overall decline in operating margin and net income compared to 2012.
Conference Call
Management will hold a conference call to discuss the 2013 first quarter results today at 2:30 p.m. MST (4:30 p.m. EST). 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 February 8(th), 2013 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10023737.
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.
(Tables Follow)
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS(UNAUDITED)
Three Months Ended
December 31,
------------
2012 2011
---- ----
(In thousands, except per
share amounts)
Revenues $98,441 $106,427
Operating expenses:
Educational
services and
facilities 49,692 51,732
Selling,
general and
administrative 42,743 47,368
Total operating expenses 92,435 99,100
------ ------
Income from operations 6,006 7,327
----- -----
Other income:
Interest
income, net 47 92
Other income 119 153
Total other income 166 245
--- ---
Income before income taxes 6,172 7,572
Income tax expense 2,610 3,093
----- -----
Net income $3,562 $4,479
====== ======
Earnings per share:
Net income per share - basic $0.14 $0.18
===== =====
Net income per share - diluted $0.14 $0.18
===== =====
Weighted average number of shares
outstanding:
Basic 24,761 24,693
====== ======
Diluted 24,814 24,802
====== ======
Cash dividend declared per common share $0.10 -
===== ===
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Dec. 31, Sept. 30,
2012 2012
---- ----
(In thousands)
Assets
Current assets:
Cash and cash
equivalents $30,197 $45,665
Investments,
current portion 52,092 51,455
Receivables, net 10,900 14,910
Deferred tax
assets, net 6,424 7,977
Prepaid expenses
and other
current assets 15,815 14,977
Total current assets 115,428 134,984
Investments, less current portion 7,040 4,533
Property and equipment, net 92,459 91,939
Goodwill 20,579 20,579
Deferred tax assets, net 4,570 5,576
Other assets 11,065 10,547
------ ------
Total assets $251,141 $268,158
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
and accrued
expenses $31,186 $40,865
Deferred revenue 43,249 52,564
Accrued tool sets 4,381 4,264
Income tax
payable - 744
Other current
liabilities 1,472 1,003
Total current liabilities 80,288 99,440
Deferred rent
liability 12,598 12,946
Construction
liability 7,354 2,421
Other liabilities 7,530 7,266
Total liabilities 107,770 122,073
------- -------
Commitments and contingencies
Shareholders' equity:
Common stock,
$0.0001 par
value,
100,000,000
shares
authorized,
30,250,370 shares issued and
24,363,343
shares outstanding at December 31,
2012 and
30,322,132 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 168,528 166,970
Treasury stock,
at cost,
5,887,027 shares
at December 31,
2012 and
5,330,927 shares at September 30,
2012 (89,288) (83,924)
Retained earnings 64,128 63,036
Total shareholders' equity 143,371 146,085
------- -------
Total liabilities and shareholders' equity $251,141 $268,158
======== ========
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Dec. 31,
--------
2012 2011
---- ----
(In thousands)
Cash flows from operating activities:
Net income $3,562 $4,479
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,722 6,293
Amortization of held-to-maturity investments 412 537
Bad debt expense 1,544 1,733
Stock-based compensation 1,445 1,682
Deferred income taxes 2,427 77
Training equipment credits earned (445) (478)
Loss on disposal of property and equipment - 23
Changes in assets and liabilities:
Receivables 2,587 (1,172)
Prepaid expenses and other current assets (443) (1,643)
Other assets (520) (332)
Accounts payable and accrued expenses (8,361) 1,375
Deferred revenue (9,315) (7,302)
Income tax payable/receivable (866) (120)
Accrued tool sets and other current liabilities 586 (96)
Deferred rent liability (348) 363
Other liabilities 422 152
Net cash (used in) provided by operating activities (1,591) 5,571
------ -----
Cash flows from investing activities:
Purchase of property and equipment (2,756) (1,498)
Proceeds from disposal of property and equipment 24 -
Purchase of investments (21,975) (16,770)
Proceeds received upon maturity of investments 18,419 10,148
Net cash used in investing activities (6,288) (8,120)
------ ------
Cash flows from financing activities:
Payment of cash dividends (2,470) -
Payment of payroll taxes on stock-based compensation through shares
withheld (17) (54)
Proceeds from issuance of common stock under employee plans 262 -
Purchase of treasury stock (5,364) -
Net cash used in financing activities (7,589) (54)
------ ---
Net decrease in cash and cash equivalents (15,468) (2,603)
Cash and cash equivalents, beginning of period 45,665 53,670
------ ------
Cash and cash equivalents, end of period $30,197 $51,067
======= =======
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIESRECONCILIATION OF GAAP FINANCIAL INFORMATION
TO NON-GAAP FINANCIAL INFORMATION(UNAUDITED)
Reconciliation of Net Income to EBITDA
Three Months Ended
December 31,
------------
2012 2011
---- ----
(In thousands)
Net income $3,562 $4,479
Interest income, net (47) (92)
Income tax expense 2,610 3,093
Depreciation and amortization
5,985 6,523
----- -----
EBITDA $12,110 $14,003
======= =======
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
SELECTED SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED)
Three Months Ended
December 31,
2012 2011
---- ----
(In thousands)
Salaries expense $39,728 $40,212
Employee benefits and tax 7,177 8,342
Bonus expense 2,154 3,687
Stock-based compensation 1,445 1,682
Total compensation and related costs $50,504 $53,923
------- -------
Occupancy expense 9,834 9,777
Bad debt expense 1,544 1,733
Depreciation expense 5,985 6,523
Legal services expense 319 617
SOURCE Universal Technical Institute, Inc.
