Universal Technical Institute, Inc. (NYSE:UTI) Q2 2024 Earnings Call Transcript

Steven Frankel: Good afternoon. You mentioned a couple cash pay programs at Concorde. Could you give us a little more details on that, and what kind of opportunities might you have on the UTI side, to create some cash pay programs there as well?

Troy Anderson: Yes, I’ll add some. This is Troy. Steve, thanks for the question. The cash pay programs on the Concorde side, phlebotomy, sterile processing, they’re really a subset of the of the MA program, the medical assistant program and there’s demand for that in the market. They’re two to four month programs, few thousand dollars. Usually employers may participate in that, or it’s a quick start for somebody to get into the medical workforce. And so, we’ve seen some demand for that in a number of different markets continuing to look for more demand. So that’s something the Concorde team and again back to the other question about the growth restrictions, something the Concorde team came up with as a way to generate some growth in lieu of a Title IV Department of Ed certified program.

It’s an accredited program so through our accreditors, but it doesn’t require Department of Ed, because we’re not requiring Title IV funding for it. So, we’ll continue looking at opportunities to expand those within the Concorde footprint. On the UTI side, we’re looking at different ways to try something similar. Nothing imminent by any means but we’ve considered some other type of programs whether a short welding program, an evening or a weekend, a few weekends — for a few months and get somebody into the workforce again on a quicker basis, but we’re working through some things like that on that side as well.

Steven Frankel: Okay. And then done a great job building this start pipeline. What are you doing to make sure these students get to graduation?

Troy Anderson: Well our persistence, attrition persistence, there’s a number of different metrics that are used even within our own institutions, but across the industry has been trending very positively. So, we’re seeing upticks in retaining students and graduating students. And yes, we’re not talking five and 10 percentage points, but 50 basis points makes a difference. That’s a few hundred more students a year that are finishing the program, and of course support us from a financial performance perspective. So a lot of focus on outcomes. That’s what we’ve always said. We start and end with outcomes first and foremost and between getting them started, getting them through as quickly as possible. So pass rates, we’re not having that a lot of retakes, things along those lines.

Keeping them in schools, they’re not out on LOAs, and the like. So they can get out in the workforce faster, and then the employment side and continuing our focus all the way through that life cycle.

Jerome Grant: Yes the other point, I’ll make is our blended learning model which is at full ramp across the UTI curriculum has already been in place or was in place at Concorde also mandates that the students are actually only in our building for about three hours a day doing their lab work, because the didactic learning is all online. That flexibility is allowing students to be able to keep their jobs while they’re in school. Do their work asynchronously at other times, and I think one of the things we’re hearing is that this sort of welcome approach that gives flexibility, is allowing more students who may have needed to back out, because of financial pressures or life happens types of things staying in the game, because they now have — more hours of the day they can use for other things like work. So, I think that’s helping with our retention rates as well.

Steven Frankel: Okay. And one of the trends you talked a lot about last year was the employer’s kind of battling each other, to get on campus to recruit, and really fighting to get in front of those students by offering better terms, better tuition reimbursement, things like that. Where are, we in that cycle today, or is that less of a factor or are you still able to command these kind of terms from potential employers?

Jerome Grant: So, I think demand for our graduates has never been higher. And so — there continues to be a significant deficit, between the number of open jobs out there and the number of graduates across the industry. And so, that demand really drives the behavior of the employment community. And so, we’re seeing the packages that are being put in front of our graduates continue to look better and better every year. We’ve started these same programs on the Concorde side, and that’s helping get it more organized for access to the graduates. And I think that will help, let those packages tick up as well.

Steven Frankel: Perfect, thank you so much. I’ll jump back in the queue.

Jerome Grant: Thanks Steve.

Operator: The next question comes from Mike Grondahl with Northland Securities. Please go ahead.

Mike Grondahl: Hi guys thanks. First question is just about the 2025 kind of outlook. Is there anything embedded in that for new geographies or new campuses? If so just curious you know roughly how much. And then if you could just remind us kind of the economics the investment of a new campus and kind of how that grows?

Troy Anderson: Yes thanks for the question Mike. This is Troy. We tried to be fairly clear and I’m glad you asked the question so we can make sure we get it here in the Q&A as well. It’s all existing programs in already in operation as well as programs that we have announced that we’re planning along. So primarily the four remaining HVACR programs now that we have the dental hygiene programs with Concorde already started. There’ll be a small amount on the San Diego expansion that we’ve talked about, but so really it’s those — beyond what we already have it’s the four HVACR programs. And then just the lift we carry out of this year and the next year with the start growth that we’ve seen. And the ramp of those programs.

Jerome Grant: But to be clear, we we’ve yet to announce a new program launch portfolio for 2025 yet. And so that would be additive.

Troy Anderson: Yes and potentially geographies in addition to that, which segues to the second part of your question on the economics. We did add a slide in our investor presentation it’s in the appendix that shows a campus economics and program economics for both UTI and Concorde. We’ve talked a lot about dental hygiene with Concorde as that’s been the program. They primarily been expanding and so we showed an illustrative example there along with the welding or HVACR program since that’s what we’ve been launching mainly with UTI here more recently. So but a campus is current format and historically the UTI format was auto diesel welding and maybe a manufacturer program about a $25 million year run rate revenue generating between $10 million to $12 million dollars in direct EBITDA contribution about a $15 million dollar capital investment.