Universal Technical Institute, Inc. (NYSE:UTI) Q2 2019 Earnings Conference Call Transcript

May 10, 2019 • 11:00 am ET

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Universal Technical Institute, Inc. (NYSE:UTI) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day and welcome to the UTI Fiscal Second Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, today's conference is being recorded. A replay of the call will be available at www.uti.edu or through May 24th, 2019, by dialing 412-317-0088 or 877-344-7529 and entering passcode 10130240.

At this time, I'd like to turn the conference over to Ms. Jody Kent, Vice President of Communications and Public Affairs for Universal Technical Institute. Please go ahead.

Executive
Jody Kent

Hello, and thanks for joining us. With me today are Kim McWaters, President and Chief Executive Officer; and Scott Yessner, Interim Chief Financial Officer. During the call today, we'll update you on our fiscal second quarter 2019 business highlights, our financial results and our vision for the future. Then we will open the call for your questions.

Before we begin, we must remind everyone that, except for historical information, today's call may contain forward-looking statements as defined by Section 21E of the Securities and Exchange Act of 1934 and Section 27A of the amended Securities Act of 1933. I will refer you to today's news release for UTI's comments on that topic. The safe harbor statement in the release also applies to everything discussed during this conference call, including initial comments by management as well as answers to questions.

During today's call, we'll refer to adjusted operating loss, adjusted EBITDA and adjusted free cash flow, which are non-GAAP measures. Adjusted operating loss is loss from operations adjusted for items not considered normal recurring operating expenses. Adjusted EBITDA is net income before interest, income taxes, depreciation, amortization, adjusted for items not considered normal recurring operating expenses. Adjusted free cash flow is cash from operating activities less capital expenditures adjusted for items not considered normal recurring operating expenses. Management utilizes adjusted operating loss, adjusted EBITDA and adjusted free cash flow as performance measures internally, and those will be the figures discussed on today's call.

It is now my pleasure to turn the call to Kim McWaters. Please go ahead, Kim.

Executive
Kimberly McWaters

Thank you, Jody. Good morning, everyone, and thank you for joining us today. I'm pleased to report another strong quarter of solid year-over-year start growth. During our second quarter fiscal 2019, new student starts grew 11.2% compared to the prior year. This is the strongest growth in Q2 starts that we've seen since 2016. Total new student starts were 2,022, an increase of 203. The start growth was driven by the continued and consistent progress made under our multi-year transformation plan and our new campus and program growth initiatives. Approximately 50% of the quarter start growth was attributable to our Bloomfield, New Jersey campus with the remainder coming from our same school campuses.

After three consecutive quarters of strong start growth, in March, we achieved another major milestone when our average student population grew for the first time in eight years. This is a key inflection point that we have been working toward. Growth in our average student population is a key driver of revenue growth and profitability