Universal Technical Institute Reports Record Revenue of $107.5 Million, Net Income of $6.3 Million and Student Start Growth of 35% for Third Quarter 2010
PHOENIX, Aug. 3 /PRNewswire-FirstCall/ -- Universal Technical Institute, Inc. (NYSE: UTI), the leading provider of automotive technician training, reported results for the third quarter ended June 30, 2010. Revenues for the third quarter ended June 30, 2010 were $107.5 million, a 22.4 percent increase from $87.9 million for the third quarter of the prior year. Net income for the third quarter ended June 30, 2010 was $6.3 million, or 25 cents per diluted share, as compared to net income of $1.9 million, or 8 cents per diluted share, for the third quarter of the prior year.
Return on equity(1) for the trailing four quarters ended June 30, 2010 was 26.4 percent compared to 11.3 percent for the trailing four quarters ended Sept. 30, 2009.
"This was an exciting quarter for UTI as we opened our eleventh campus and launched our new blended learning curriculum," said Kimberly McWaters, president and chief executive officer. "It was a solid quarter of record revenues, 20 percent growth in average enrollment and 35 percent growth in students starting school in the third quarter."
Student Metrics |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
June 30, |
June 30, |
||||||||||
2010 |
2009 |
2010 |
2009 |
||||||||
(rounded to hundreds) |
|||||||||||
Total starts |
4,000 |
2,900 |
12,000 |
9,600 |
|||||||
Average undergraduate full-time student enrollment |
17,900 |
14,800 |
18,300 |
15,500 |
|||||||
End of period undergraduate full-time student enrollment |
17,600 |
14,300 |
17,600 |
14,300 |
|||||||
(1) Return on equity is calculated as the sum of net income for the trailing four quarters divided by the average of the trailing five quarters total shareholders' equity balances.
Third Quarter Operating Performance
For the third quarter of fiscal 2010, revenues were $107.5 million, a 22.4 percent increase from $87.9 million for last year's third quarter. The increase in revenues primarily relates to an increase in average undergraduate full-time student enrollment and an increase in tuition rates. During the third quarter of fiscal 2010 and 2009, tuition revenue recognized by the Company did not include $2.4 million and $2.5 million, respectively, because that portion of student's tuition was funded by the Company's proprietary loan program. These amounts will be recognized when collected. Additionally, there was a decrease in revenue from the industry training programs.
Educational services and facilities expense increased $6.4 million, or 13.5 percent to $53.7 million for the three months ended June 30, 2010, from $47.3 million in the three months ended June 30, 2009. This increase was due to higher compensation and benefits expense related to an increase in the number of instructors and employees in the financial aid and other student support departments to support the needs of the growing student population.
Selling, general and administrative expense increased $6.4 million, or 17.0 percent to $44.0 million for the three months ended June 30, 2010, from $37.6 million for the three months ended June 30, 2009. The increase was due to an increase in advertising expense and an increase in compensation and benefits expense related to the increase in sales force representatives and employees to support the growth in average undergraduate student enrollment.
Operating income and margin for the third quarter of fiscal 2010 was $9.9 million and 9.2 percent, respectively, compared to operating income and margin of $3.0 million and 3.4 percent, respectively, in the same period last year.
Earnings before interest, tax, depreciation and amortization (EBITDA) for the third quarter of fiscal 2010 was $14.9 million compared to $7.5 million in the same period last year. See "Use of Non-GAAP Financial Information" below.
Nine Month Operating Performance
Revenues for the nine months ended June 30, 2010 were $316.7 million, an 18.6 percent increase from $267.1 million for the nine months ended June 30, 2009.
Operating income and margin for the nine months ended June 30, 2010 were $34.8 million and 11.0 percent, respectively, compared to operating income and margin of $6.4 million and 2.4 percent, respectively, for the nine months ended June 30, 2009. The increase is related to the increase in revenues, partially offset by increases in compensation and benefits and advertising expense.
Net income for the nine months ended June 30, 2010 was $21.6 million, or 88 cents per diluted share, as compared to net income of $4.1 million, or 17 cents per diluted share, for the nine months ended June 30, 2009.
Earnings before interest, tax, depreciation and amortization (EBITDA) for the nine months ended June 30, 2010 was $49.4 million compared to $20.3 million for the nine months ended June 30, 2009. See "Use of Non-GAAP Financial Information" below.
Liquidity
Cash, cash equivalents and investments totaled $98.8 million at June 30, 2010, compared to $85.1 million at Sept. 30, 2009. At June 30, 2010, shareholders' equity totaled $100.5 million as compared to $106.7 million at Sept. 30, 2009. The board of directors declared a special cash dividend on UTI common stock of $1.50 per share on June 8, 2010 which totaled $36.3 million and was paid on July 16, 2010 to common shareholders of record as of July 6, 2010.
Cash flow provided by operations was $37.6 million for the nine months ended June 30, 2010, compared with $18.5 million for the nine months ended June 30, 2009. This increase is primarily attributable to the increase in net income and an increase in deferred revenue, partially offset by an increase in receivables and the timing of income tax payments.
Proprietary Loan Program
There is $30 million of credit currently authorized under the proprietary loan program. As of June 30, 2010, UTI had committed to provide loans to students for approximately $23.6 million and of that amount there was approximately $20.3 million in loans outstanding. At June 30, 2009, there was approximately $11.0 million in loans outstanding. Since the inception of the program, tuition revenue recognized by the Company did not include $16.4 million through June 30, 2010 and $6.4 million through June 30, 2009 because that portion of the student's tuition was funded by the proprietary loan program. These amounts will be recognized when collected.
New UTI Dallas/Ft. Worth Campus
On June 21, 2010, UTI opened a new campus in Dallas/Ft. Worth, Texas with its first class of 96 students. Approximately $16.0 million has been invested in the building and land purchase, building improvements and equipment through June 30, 2010, with approximately $6.8 million of that investment occurring during the nine months ended June 30, 2010. Costs related to the start up of this campus are expensed as incurred. The Company incurred approximately $2.4 million and $4.0 million in operating expenses during the three months and nine months ended June 30, 2010, respectively, related to the opening of the campus. The Company anticipates incurring approximately $7.0 million in total during 2010 and that this campus will become profitable within 9 to 15 months.
Conference Call
Management will hold a conference call to discuss the fiscal 2010 third quarter results today at 2:00 p.m. PDT (5:00 p.m. EDT). 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 web site 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 Web site for 60 days or the replay can be accessed through August 11, 2010 by dialing 412-317-0088 or 877-344-7529 and entering pass code 442530#.
Safe Harbor Statement
All statements contained herein, other than statements of historical fact, are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. 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 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 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 the non-GAAP (Generally Accepted Accounting Principles) financial measure EBITDA, which is intended to supplement, but not substitute for, the most directly comparable GAAP measure. Management chooses to disclose to investors, this non-GAAP financial measure because it provides an additional analytical tool to clarify the results from operations and helps to identify underlying trends. Additionally, such measure helps compare the Company's performance on a consistent basis across time periods. To obtain a complete understanding of the Company's performance this measure 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 this measure are significant components in understanding and assessing financial performance under GAAP, this measure 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 measure to the most directly comparable GAAP measure is included below.
About Universal Technical Institute, Inc.
Headquartered in Phoenix, 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. During the past 45 years, UTI has graduated more than 130,000 students. The organization 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 (NTI).
For more information about Universal Technical Institute, Inc. and its training programs, visit www.uti.edu.
(Tables Follow) |
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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
June 30, |
June 30, |
||||||||||
2010 |
2009 |
2010 |
2009 |
||||||||
(In thousands, except per share amounts) |
|||||||||||
Revenues |
$ 107,525 |
$ 87,852 |
$ 316,678 |
$ 267,098 |
|||||||
Operating expenses: |
|||||||||||
Educational services and facilities |
53,712 |
47,307 |
154,232 |
143,947 |
|||||||
Selling, general and administrative |
43,956 |
37,579 |
127,649 |
116,799 |
|||||||
Total operating expenses |
97,668 |
84,886 |
281,881 |
260,746 |
|||||||
Income from operations |
9,857 |
2,966 |
34,797 |
6,352 |
|||||||
Other income: |
|||||||||||
Interest income |
80 |
43 |
202 |
181 |
|||||||
Interest expense |
(3) |
(16) |
(7) |
(37) |
|||||||
Other income |
105 |
64 |
356 |
207 |
|||||||
Total other income |
182 |
91 |
551 |
351 |
|||||||
Income before income taxes |
10,039 |
3,057 |
35,348 |
6,703 |
|||||||
Income tax expense |
3,753 |
1,134 |
13,736 |
2,556 |
|||||||
Net income |
$ 6,286 |
$ 1,923 |
$ 21,612 |
$ 4,147 |
|||||||
Earnings per share: |
|||||||||||
Net income per share – basic |
$ 0.26 |
$ 0.08 |
$ 0.90 |
$ 0.17 |
|||||||
Net income per share – diluted |
$ 0.25 |
$ 0.08 |
$ 0.88 |
$ 0.17 |
|||||||
Weighted average number of shares outstanding: |
|||||||||||
Basic |
24,146 |
23,626 |
23,976 |
24,451 |
|||||||
Diluted |
24,730 |
23,953 |
24,511 |
24,836 |
|||||||
Special cash dividend declared per common share |
$ 1.50 |
- |
$ 1.50 |
- |
|||||||
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
|||||||
June 30, |
September 30, |
||||||
2010 |
2009 |
||||||
($'s in thousands) |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ 59,034 |
$ 56,199 |
|||||
Investments, current portion |
33,027 |
25,142 |
|||||
Receivables, net |
19,143 |
14,892 |
|||||
Deferred tax assets |
8,153 |
7,452 |
|||||
Prepaid expenses and other current assets |
10,935 |
10,480 |
|||||
Total current assets |
130,292 |
114,165 |
|||||
Investments, less current portion |
6,722 |
3,806 |
|||||
Property and equipment, net |
94,547 |
81,168 |
|||||
Goodwill |
20,579 |
20,579 |
|||||
Other assets |
3,561 |
3,633 |
|||||
Total assets |
$ 255,701 |
$ 223,351 |
|||||
Liabilities and Shareholders' Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable and accrued expenses |
$ 47,333 |
$ 47,276 |
|||||
Dividends payable |
36,333 |
- |
|||||
Deferred revenue |
53,901 |
48,175 |
|||||
Accrued tool sets |
5,092 |
4,276 |
|||||
Income tax payable |
- |
1,794 |
|||||
Other current liabilities |
21 |
25 |
|||||
Total current liabilities |
142,680 |
101,546 |
|||||
Deferred tax liabilities |
1,638 |
3,086 |
|||||
Deferred rent liability |
5,512 |
5,593 |
|||||
Other liabilities |
5,415 |
6,428 |
|||||
Total liabilities |
155,245 |
116,653 |
|||||
Commitments and contingencies |
|||||||
Shareholders' equity: |
|||||||
Common stock, $0.0001 par value, 100,000,000 shares authorized, |
|||||||
29,085,590 shares issued and 24,215,364 |
|||||||
shares outstanding at June 30, 2010 and |
|||||||
28,641,006 shares issued and 23,770,780 |
|||||||
shares outstanding at September 30, 2009 |
3 |
3 |
|||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, |
|||||||
0 shares issued and outstanding |
- |
- |
|||||
Paid-in capital |
149,292 |
140,813 |
|||||
Treasury stock, at cost, 4,870,226 shares at June 30, 2010 |
|||||||
and September 30, 2009 |
(76,506) |
(76,506) |
|||||
Retained earnings |
27,667 |
42,388 |
|||||
Total shareholders' equity |
100,456 |
106,698 |
|||||
Total liabilities and shareholders' equity |
$ 255,701 |
$ 223,351 |
|||||
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||||
Nine Months Ended |
||||||||||
June 30, |
||||||||||
2010 |
2009 |
|||||||||
(In thousands) |
||||||||||
Cash flows from operating activities: |
||||||||||
Net income |
$ 21,612 |
$ 4,147 |
||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||
Depreciation and amortization |
13,559 |
13,092 |
||||||||
Amortization of held-to-maturity investments |
1,133 |
- |
||||||||
Bad debt expense |
4,583 |
5,048 |
||||||||
Stock-based compensation |
4,690 |
3,630 |
||||||||
Excess tax benefit from stock-based compensation |
(1,786) |
(195) |
||||||||
Deferred income taxes |
(2,149) |
(3,370) |
||||||||
Loss on disposal of property and equipment |
160 |
727 |
||||||||
Changes in assets and liabilities: |
||||||||||
Receivables |
(6,821) |
2,439 |
||||||||
Prepaid expenses and other current assets |
(752) |
(650) |
||||||||
Other assets |
36 |
128 |
||||||||
Accounts payable and accrued expenses |
(813) |
1,441 |
||||||||
Deferred revenue |
5,726 |
(8,067) |
||||||||
Income tax receivable |
(1,999) |
(473) |
||||||||
Accrued tool sets and other current liabilities |
812 |
422 |
||||||||
Other liabilities |
(379) |
143 |
||||||||
Net cash provided by operating activities |
37,612 |
18,462 |
||||||||
Cash flows from investing activities: |
||||||||||
Purchase of property and equipment |
(26,555) |
(14,411) |
||||||||
Proceeds from disposal of property and equipment |
1 |
35 |
||||||||
Purchase of investments |
(33,702) |
(17,287) |
||||||||
Proceeds received upon maturity of investments |
21,382 |
- |
||||||||
Net cash used in investing activities |
(38,874) |
(31,663) |
||||||||
Cash flows from financing activities: |
||||||||||
Proceeds from issuance of common stock under employee plans |
3,917 |
261 |
||||||||
Payment of payroll taxes on stock-based compensation through shares withheld |
(1,606) |
(1,049) |
||||||||
Excess tax benefit from stock-based compensation |
1,786 |
195 |
||||||||
Purchase of treasury stock |
- |
(16,935) |
||||||||
Net cash provided by (used in) financing activities |
4,097 |
(17,528) |
||||||||
Net increase (decrease) in cash and cash equivalents |
2,835 |
(30,729) |
||||||||
Cash and cash equivalents, beginning of period |
56,199 |
80,878 |
||||||||
Cash and cash equivalents, end of period |
$ 59,034 |
$ 50,149 |
||||||||
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP FINANCIAL INFORMATION TO NON-GAAP FINANCIAL INFORMATION (UNAUDITED) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
June 30, |
June 30, |
|||||||||||
2010 |
2009 |
2010 |
2009 |
|||||||||
($'s in thousands) |
||||||||||||
Net income |
$ 6,286 |
$ 1,923 |
$ 21,612 |
$ 4,147 |
||||||||
Interest income, net |
(77) |
(27) |
(195) |
(144) |
||||||||
Income tax expense |
3,753 |
1,134 |
13,736 |
2,556 |
||||||||
Depreciation and amortization |
4,934 |
4,510 |
14,254 |
13,695 |
||||||||
EBITDA |
$ 14,896 |
$ 7,540 |
$ 49,407 |
$ 20,254 |
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SOURCE Universal Technical Institute, Inc.
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