Universal Technical Institute Reports Fiscal Year 2013 Fourth Quarter and Year-End Results PR Newswire SCOTTSDALE, Ariz., Dec. 3, 2013 SCOTTSDALE, Ariz., Dec. 3, 2013 /PRNewswire/ --Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, today reported revenues for the fourth quarter ended September30, 2013 of $95.8 million, a 5.4 percent decrease from $101.3 million for the fourth quarter of the prior year. Net income for the fourth quarter ended September30, 2013 was $0.9 million, or 4 cents per diluted share, compared to $1.6 million, or 6 cents per diluted share, for the fourth quarter ended September30, 2012. Severance costs of $1.6 million (pre-tax), primarily related to the announced retirement of our Chairman of the Board, impacted diluted earnings per share by approximately 3 cents for the quarter. Revenues for the year ended September 30, 2013 were $380.3 million, an 8 percent decrease from $413.6 million for the year ended September 30, 2012. Net income for the year ended September 30, 2013 was $3.8 million, or 15 cents per diluted share, compared to $9.0 million, or 36 cents per diluted share, for the year ended September 30, 2012. Return on equity for the trailing four quarters ended September30, 2013 was 2.7 percent compared to 6.2 percent for the trailing four quarters ended Sept. 30, 2012. "We were pleased to see new student start growth in the fourth quarter in excess of 9%," said Kim McWaters, chief executive officer. "Despite the economic headwinds throughout the year, we successfully generated more quality inquiries at a lower cost, grew applications across all student segments and improved our consolidated graduate employment rate by 300 basis points to 85%. We expanded training programs with Mercedes Benz and Porsche and added two new manufacturer partners with GM and Peterbilt.As we look to 2014, our focus is on rebuilding our student population, continuing to improve our student outcomes and delivering enhanced operating results." Student Metrics Three Months Ended Twelve Months Ended Sept. Sept. 30, 30, 2013 2012 2013 2012 (Rounded to hundreds) Total starts 6,900 6,300 15,000 15,700 Average undergraduate 14,600 15,600 15,000 16,500 full-time student enrollment End of period undergraduate 16,300 17,000 16,300 17,000 full-time student enrollment New student starts increased by approximately 9.5% for the fourth quarter ended September30, 2013 compared with the same quarter last year, due toan increase in the number of students scheduled to start and one additional start date during the quarter. We anticipate new student starts to be up slightly for the six months ending December 31, 2013. Fourth Quarter Operating Performance For the fourth quarter of 2013, revenues were $95.8 million, a 5.4 percent decrease from $101.3 million for last year's fourth quarter. The decrease in revenues primarily related to a decrease of 6.4 percent in average undergraduate full-time student enrollment. The decrease was partially offset by an increase in revenue per student. During the fourth quarter of 2013 and 2012, tuition excluded $4.1 million and $4.0 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 fourth quarter of 2013 were $1.4 million and 1.5 percent, respectively, compared to operating income and margin of $2.3 million and 2.2 percent, respectively, in the same period last year. The decreases were primarily attributable to the decrease in revenues and were partially offset by decreases in compensation and advertising expense. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2013 was $7.1 million compared to $8.4 million in the same period last year. See "Use of Non-GAAP Financial Information" below. Year Operating Performance Revenues for the year ended September 30, 2013 were $380.3 million, an 8percent decrease from $413.6 million for the year ended September 30, 2012. Operating income and margin for the year ended September 30, 2013 were $5.9 million and 1.6 percent, respectively, compared to $14.1 million and 3.4percent, respectively, for the year ended September 30, 2012. The decreases in operating income and margin were related to the decrease in revenues, partially offset by decreases in compensation and advertising expense. The severance costs related to the retirement of the Chairman of the Board of Directors impacted diluted earnings per share by approximately 4 cents for the year. Earnings before interest, taxes, depreciation and amortization (EBITDA)for the year ended September 30, 2013 was $29.8 million compared to $39.5 million for the year ended September 30, 2012. See "Use of Non-GAAP Financial Information" below. Liquidity Cash, cash equivalents and investments totaled $97.4 million at September30, 2013, compared to $101.7 million at Sept. 30, 2012. At September30, 2013, shareholders' equity totaled $138.8 million as compared to $146.1 million at Sept. 30, 2012. We paid cash dividends of $0.10 per common share quarterly for an aggregate payment of approximately $9.8 million. We purchased 561,400 shares of stock during the year ended September 30, 2013 at an average price per share of $9.62 for a total cost of approximately $5.4 million pursuant to the previously announced share repurchase plan. During the three months ended September 30, 2013, we purchased an immaterial number of shares. Cash flow provided by operating activities was $21.4 million for the three months ended September 30, 2013, compared to $9.3 million for the three months ended September 30, 2012. Cash provided by operating activities was $26.7 million for the year ended September 30, 2013 compared to $18.5 million for the year ended September 30, 2012. 2014 Outlook In line with our previous guidance, we expect new student start growth over the six month period ending December 31, 2013. The growth we experienced in new student starts during the fourth quarter of 2013 should offset the decline we now anticipate for the first quarter of 2014, due primarily to one less start date. For the year ending September 30, 2014, we expect high single digit growth in applications and yet with the time lag for conversions, we expect relatively flat new student starts. With a focus on persistence and helping students overcome macro-economic headwinds with increased use of scholarships and smaller tuition increases, we expect a low single digit level of revenue growth. Despite these challenges, with a continuation of our focus on efficiencies and student outcomes, we believe we will be able to achieve meaningful growth in operating results. Conference Call Management will hold a conference call to discuss the 2013 fourth 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 December 14, 2013 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10037253. 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. 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. 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 170,000 graduates in its 48-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). For more information visit www.uti.edu. (Tables Follow) UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) ThreeMonthsEnded Sept. 30, Twelve Months Ended Sept. 30, 2013 2012 2013 2012 (In thousands, except per share amounts) Revenues $ 95,798 $ 101,284 $ 380,268 $ 413,552 Operating expenses: Educational services 50,252 54,204 199,540 211,979 and facilities Selling, general and 44,142 44,825 174,799 187,458 administrative Total operating 94,394 99,029 374,339 399,437 expenses Income from 1,404 2,255 5,929 14,115 operations Other income: Interest income, net 54 89 234 302 Other income 194 173 655 545 Total other income, 248 262 889 847 net Income before income 1,652 2,517 6,818 14,962 taxes Income tax expense 780 909 3,008 5,930 Net income $ 872 $ 1,608 $ 3,810 $ 9,032 Earnings per share: Net income per share $ 0.04 $ 0.06 $ 0.16 $ 0.37 - basic Net income per share $ 0.04 $ 0.06 $ 0.15 $ 0.36 - diluted Weighted average number of shares outstanding: Basic 24,479 24,764 24,515 24,711 Diluted 24,746 25,014 24,704 24,937 Cash dividends declared per common $ 0.10 $ 0.10 $ 0.40 $ 0.30 share UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) Sept. 30, 2013 Sept.30, 2012 Assets (In thousands) Current assets: Cash and cash equivalents $ 35,657 $ 45,665 Restricted cash 5,748 104 Investments, current portion 57,531 51,455 Receivables, net 11,406 14,910 Deferred tax assets, net 7,452 7,977 Prepaid expenses and other current assets 15,553 14,873 Total current assets 133,347 134,984 Investments, less current portion 4,188 4,533 Property and equipment, net 103,070 91,939 Goodwill 20,579 20,579 Deferred tax assets, net 8,835 5,576 Other assets 9,444 10,547 Total assets $ 279,463 $ 268,158 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $ 39,229 $ 40,865 Deferred revenue 46,890 52,564 Accrued tool sets 3,971 4,264 Income tax payable 79 744 Other current liabilities 2,192 1,003 Total current liabilities 92,361 99,440 Deferred rent liability 11,932 12,946 Construction liability 27,632 2,421 Other liabilities 8,768 7,266 Total liabilities 140,693 122,073 Commitments and contingencies Shareholders' equity: Common stock, $0.0001 par value, 100,000,000 shares authorized, 30,535,847 shares issued and 24,643,520 shares outstanding as of 3 3 September 30, 2013 and 30,222,132 shares issued and 24,891,205 shares outstanding as of September30, 2012 Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and — — outstanding Paid-in capital 171,087 166,970 Treasury stock, at cost, 5,892,327 shares as of September 30, 2013 and 5,330,927 as of (89,346) (83,924) September30, 2012 Retained earnings 57,026 63,036 Total shareholders' equity 138,770 146,085 Total liabilities and shareholders' equity $ 279,463 $ 268,158 UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Twelve Months Ended Sept. 30, 2013 2012 (In thousands) Cash flows from operating activities: Net income $ 3,810 $ 9,032 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,156 23,819 Amortization of held-to-maturity investments 2,023 1,757 Bad debt expense 4,762 5,790 Stock-based compensation 6,224 6,492 Excess tax benefit from stock-based — (159) compensation Deferred income taxes (3,793) (8,490) Training equipment credits earned, net (1,926) (1,127) Loss on disposal of property and equipment 184 203 Changes in assets and liabilities: Receivables (1,258) (10,109) Prepaid expenses and other current assets 1,486 (3,520) Other assets (1,223) (1,227) Accounts payable and accrued expenses (700) 3,037 Deferred revenue (5,674) (8,830) Income tax payable/receivable (665) (1,288) Accrued tool sets and other current liabilities 896 (96) Deferred rent liability (1,014) 1,147 Other liabilities 1,445 2,078 Net cash provided by operating activities 26,733 18,509 Cash flows from investing activities: Purchase of property and equipment (9,352) (11,342) Proceeds from disposal of property and 54 6 equipment Purchase of investments (111,848) (92,503) Proceeds received upon maturity of investments 104,094 90,640 Proceeds from note receivable — 615 Investment in joint venture — (4,000) Restricted cash (3,709) — Net cash used in investing activities (20,761) (16,584) Cash flows from financing activities: Payment of cash dividends (9,820) (7,425) Payment of payroll taxes on stock-based (1,263) (1,365) compensation through shares withheld Proceeds from issuance of common stock under 525 550 employee plans Excess tax benefit from stock-based — 159 compensation Purchase of treasury stock (5,422) (1,849) Net cash used in financing activities (15,980) (9,930) Net decrease in cash and cash equivalents (10,008) (8,005) Cash and cash equivalents, beginning of period 45,665 53,670 Cash and cash equivalents, end of period $ 35,657 $ 45,665 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 Twelve Months Ended Sept. 30, Sept. 30, 2013 2013 2013 2012 (In thousands) Net income $ 872 $ 1,608 $ 3,810 $ 9,032 Interest (54) (89) (234) (302) income, net Income tax 780 909 3,008 5,930 expense Depreciation and 5,499 6,021 23,251 24,831 amortization EBITDA $ 7,097 $ 8,449 $ 29,835 $ 39,491 Reconciliation of Earnings Per Share Impact of Severance Costs ThreeMonthsEnded Sept. 30, Twelve Months Ended Sept. 30, 2013 2012 2013 2012 (In thousands) Net income , $ 872 $ 1,608 $ 3,810 $ 9,032 as reported Severance 1,558 1,905 1,558 1,905 costs Less: tax effects of (608) (743) (608) (743) severance costs Net income, adjusted for $ 1,822 $ 2,770 $ 4,760 $ 10,194 severance costs Diluted earnings per $ 0.04 $ 0.06 $ 0.15 $ 0.36 share, as reported Diluted earnings per share, $ 0.07 $ 0.11 $ 0.19 $ 0.41 adjusted for severance costs Diluted weighted 24,746 25,014 24,704 24,937 average shares outstanding UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES SELECTED SUPPLEMENTAL INFORMATION (UNAUDITED) Selected Supplemental Financial Information Three Months Ended Twelve Months Ended Sept. Sept. 30, 30, 2013 2012 2013 2012 (In thousands) Salaries expense $ 41,729 $ 42,480 $ 160,272 $ 166,027 Employee 7,295 8,187 32,152 34,414 benefits and tax Bonus expense 761 463 3,725 7,839 Stock-based 1,788 1,104 6,224 6,492 compensation Total compensation and $ 51,573 $ 52,234 $ 202,373 $ 214,772 related costs Occupancy $ 10,135 $ 10,063 $ 39,690 $ 39,227 expense Bad debt expense $ 1,083 $ 729 $ 4,762 $ 5,175 Depreciation and amortization $ 5,499 $ 6,021 $ 23,251 $ 24,831 expense Legal expense $ 1,028 $ 718 $ 2,431 $ 2,639 Graduate Employment Rate Twelve Months Ended Sept. 30, 2012 2011 Graduate employment rate 85% 82% Graduates 12,200 13,600 Graduates available for employment 11,400 12,800 Graduates employed 9,600 10,500 The employment calculation is based on all graduates, including those that completed manufacturer specific advanced training programs, from October 1, 2011 to September 30, 2012 and October 1, 2010 to September 30, 2011, respectively, excluding graduates not available for employment because of continuing education, military service, health, incarceration, death or international student status. SOURCE Universal Technical Institute, Inc. Website: http://www.uti.edu Contact: John Jenson, Vice President, Corporate Controller, Universal Technical Institute, Inc., (623) 445-0821
Universal Technical Institute Reports Fiscal Year 2013 Fourth Quarter and Year-End Results
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