New student starts were up 11.2 percent for the fiscal second quarter and 12.7 percent year to date.
Universal Technical Institute, Inc. (NYSE: UTI) reported revenues increased 1.3 percent to $81.7 million, driven by higher average full-time enrollment in its fiscal 2019 second quarter ended March 31. The increase occurred despite one less earning day compared to the prior year period.
Operating expenses for the quarter decreased by 2.4 percent to $87.3 million, primarily due to lower compensation and related costs and contract and professional services expense. This decline was partially offset by $1.25 million in one-time costs related to the Norwood, Massachusetts campus exit and $1.3 million in direct costs from the Bloomfield, New Jersey campus that did not occur in the prior year period. UTI expects the Norwood, Massachusetts campus exit to result in an improvement in annual pre-tax net income, EBITDA and cash flows of between $4 million and $5 million starting in 2021.
The company reported an operating loss was $5.6 million, compared to an operating loss of $8.8 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $0.8 million.
“The continued success of our Transformation Plan helped drive growth in new student starts and our average student population for the fiscal second quarter. New student start growth was 11.2 percent, with half of the growth coming from our new Bloomfield, New Jersey campus. Multiple quarters of student start growth drove our average student population higher than the year before,” stated Kim McWaters, UTI’s President and Chief Executive Officer. “For the six-month period ending March 31, 2019, we generated $2.8 million in cash flow from operations and $3.0 million in adjusted free cash flow through new student start growth, improved operating efficiencies and continued rationalization of our campus footprint. Based on our progress year to date, we are reaffirming our 2019 guidance and remain well-positioned for 2020.”
Six-Month Period Results
- Revenues increased 1.8 percent to $164.8 million, driven by higher average full-time enrollment. The increase was net of a decrease in industry training revenue and slightly higher tuition discounts compared to the prior year period.
- Operating expenses increased 1.9 percent to $177.6 million, due to $1.25 million of one-time costs for the Norwood, Massachusetts campus closure and $1.7 million in higher transformation consultant fees due to a one-time exit cost realized in October 2018. The growing student population at the Bloomfield, New Jersey campus added $2.9 million of direct costs year over year.
- Operating loss was $12.8 million, compared to an operating loss of $12.4 million.
- Net loss was $12.9 million, compared to a net loss of $10.0 million (includes $2.9 million tax benefit).
- Adjusted operating loss was $7.2 million, compared to an adjusted operating loss of $8.7 million.
- Adjusted EBITDA was $2.1 million, compared to Adjusted EBITDA of $0.3 million.