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Universal Technical Institute Reports Fiscal Year 2013 Fourth Quarter and Year-End Results

  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
 
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