Troy Anderson: Yes. Our bias is to continue down the path of the growth case and initiatives we’ve been embarking upon the last few years. We’re at the tail end of the work we’ve done the last few years with the program expansions, new campuses, et cetera. We have a few more program expansions, as Jerome commented on earlier, planned for this year. And we’re working on what the next round of decisions might be. As Jerome said in his prepared remarks, We’re not the end at the end of our journey. We’re building a foundation and we have a playbook in place and we’re going to continue looking for opportunities to grow and expand, which could be a combination of organic and inorganic initiatives. Keep in mind, a lot of our cash flow.
Most of our cash flow is generated in the fourth quarter. So that $62 million to $66 million adjusted free cash flow guidance. The majority of that is coming in the fourth quarter, so we don’t actually have the cash today. And I commented on our working capital position in my prepared remarks and we’ll be managing the revolver down from the $90 million as we progress through the year and start building up the organic cash, but still expect to have some draw on the revolver even as we exit the year absent any new decisions around that. So, right now, we’re executing on our plan for this year, probably nothing we have about $30 million in CapEx in that plan and probably nothing any new decisions we make would really materially impact cash this year.
They would probably bleed more into next year and beyond, and our bias is definitely were continuing on the growth and diversification strategy. At some point, we’ll have a consistent steady stream of cash flow, strong cash flow and above and beyond what we would need to continue investing in the business and we’ll look at that, what that broader capital allocation policy might be around return to shareholders and other aspects.
Operator: The next question comes from Alex Paris with Barrington Research.
Alex Paris: Most of my questions have been asked and answered, but, so I’ll use my time to kind of dive into Concord a little bit more. You’ve owned it for more than a year now. You bought it on December 1, 2022. You have said before, step one in the acquisition is to first do no harm. And there were some integration activities during the first 12 months. First question, now what in terms of integration? And then the second and related question is, where can margins go on that business? I think at the time of acquisition margins were around 8%.
Troy Anderson: Yes. Thanks, Alex. This is Troy. So, we’re still, we made a great progress last year. We’re super pleased with the acquisition end the performance of the Concord team, Jerome commented on Kevin Crane and him being now the Division President, named officially the Division President and haven’t missed a beat there. So we’re really excited and pleased with the performance of the team. The integration this year are now starting to get into things like payroll and benefits and some of the other financial systems and some of the organizational, you’ll see reference in our press release and in the queue about some realignments we’ve done organizationally and the expense allocation is associated with that. So we’re now really getting into the plumbing of the organization and really more the finance organization, the IT see organization, HR, some of those more central support type functions.
So we’re doing that kind of work, but that’s more background work at this point. And so really it’s now helping them to drive really a growth mindset and then optimization mindset throughout that organization, which they’re embracing wholeheartedly and are bringing great ideas to the table, which then feeds into the second part of your question, which is we continue to believe wholeheartedly and that the team does as well that, that can be a mid-teens margin business. This year, it would be approaching 10%, maybe touch 10%, was 8% or 9% before we bought them in last year. And so over the next 2, 3 years maybe we’ll get solid at the end of the teams and continue to look to drive higher from there. There’s optimizations, there’s leverage from growth, which they really didn’t have a growth profile previously modest growth, but now we’re really taking advantage of the opportunities in the market there with some additional marketing dollars and just change in strategy around marketing, the program expansions.
And so a combination of levers that we believe are available and readily available to really drive that business forward both from a growth and margin expansion perspective.
Jerome Grant: I’ll just make a couple of comments because Troy hit on most of it. When you really think about unlocking the growth potential of Concorde. There are a couple of things that Troy mentioned, which was during a selling process, usually you don’t spend tons of money on your marketing, et cetera. And so unleashing the upside from a marketing and demand generation standpoint is going very, very well. Number 2, the program expansions, those were something that weren’t being invested during the selling process. But now that we’ve taken control. We accelerated the 6 programs that we put into place this year and into the beginning of next year. The last couple of things I’d point to would be, we’re beginning to work very collaboratively with the Concorde leadership team in 2 other areas.
One, a place where UTI has really differentiated itself in the market, which is industry alignment and B2B relationships is that we really believe unlocking the power of relationships with folks like Heartland or that we mentioned in the speech and taking off from places like tuition reimbursement and scholarship programs, the deeper partnerships, the kind of things we do at UTI, B2B relationships, training relationships, things along those lines. Those are things that we’re excited about moving forward over the next year. And then the last place where I think is a significant amount of upside and the differentiated that Concorde will have as well is in acceleration of growth within their online programs. Is that prior to the acquisition, Concorde did a great job filling their campuses and really focused on the local community and the programs that were taught on each individual campus and strong outcomes, strong employer connections, really deep embedding into the community, but not particularly strong in online.
