Universal Technical Institute, Inc. (NYSE:UTI) Q4 2019 Earnings Conference Call - Final Transcript

Dec 02, 2019 • 04:30 pm ET

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Universal Technical Institute, Inc. (NYSE:UTI) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Troy R. Anderson

fiscal 2020. Another item of note, we expect to see a higher mix of starts in Q3 of fiscal 2020 versus fiscal 2019, due to a start date shift between July and June.

With our continued start growth, we expect a 1% to 2% year-over-year increase in our average student population. We expect the second consecutive year of revenue growth with total revenue ranging between $338 million and $345 million. This equates to year-over-year revenue growth of 2% to 4% and includes an estimated 100 basis points to 150 basis points net negative impact from the Norwood campus exit.

For operating expenses, we will see the flow-through of our fiscal 2019 cost improvement actions, in addition to incremental improvements, resulting in operating expenses ranging between $330 million and $335 million. The higher revenue and lower cost structure drive our operating income expectation of between $8 million and $13 million and adjusted operating income of between $13 million and $18 million, both very measurable improvements over fiscal 2019. Pre the new lease standard, operating expenses would be an estimated $1.6 million lower, while operating income and adjusted operating income would be an estimated $1.6 million higher.

Adjusted EBITDA is expected to range between $26.5 million and $31.5 million. Pre the new lease standard adjusted EBITDA would be an estimated $5.2 million higher, or $31.7 million to $36.7 million. Adjusted EBITDA, adjusted operating income and adjusted free cash flow for fiscal 2020, reflect adjustments for the negative impacts associated with the Norwood campus exit and approximately $1.5 million of costs related to our CEO transition.

As a result of the improvements in profitability and continued focus on efficient use of our cash, operating cash flow is expected to range from $28 million to $33 million. Capital expenditures are expected to range between $8 million and $9.5 million. Adjusted free cash flow is expected to range from $23.5 million to $28.5 million. This strong cash generation supports the company's ability to continue a disciplined capital deployment strategy focused on high ROI investments, including identifying new growth opportunities and strength in its regulatory financial ratios.

One additional comment about fiscal 2020, the Norwood campus teach-out and facility exit are proceeding as planned. We expect to complete the teach-out and vacate the facility during the fourth quarter. I'm excited about our plans for fiscal 2020, and the opportunities that lie ahead of us. I'm also very encouraged by the efforts from everyone across the UTI team to drive continuous improvements in our financial and operating performance, as well as their passion for supporting our students and industry partners.

With that, I'll now turn the call back over to Jerome.

Executive
Jerome A. Grant

Thank you, Troy. In closing, I'd like to thank everyone on the phone today for their continued support, and welcome new faces and interest. Both Troy and I are committed to expanding UTi's engagement with Wall Street community. As part of this, in the near term, we're planning meetings with investors and analysts. Please reach out