Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Universal Technical Institute Inc (UTI, Financial) reported a 21% year-over-year revenue growth, reaching $733 million for fiscal 2024.
- The company saw a 10% increase in average full-time active students year-over-year.
- Net income rose to $42 million with diluted earnings per share of $0.75.
- Adjusted EBITDA improved by 60% to $103 million.
- Total new student starts increased by approximately 19% year-over-year, exceeding the upper end of guidance.
Negative Points
- The company faces potential challenges with regulatory changes, such as the new 90/10 rule affecting military funding calculations.
- There are concerns about the impact of state-level regulatory actions, especially in blue states, which may increase lobbying costs.
- Some Concorde programs, like massage therapy, are close to the gainful employment regulation line due to the exclusion of tip income.
- The fiscal 2025 guidance for new student starts appears conservative compared to the robust growth seen in 2024.
- The company anticipates approximately $8 million in growth investments related to its North Star Strategy, which may impact short-term profitability.
Q & A Highlights
Q: Jerome, can you correlate the macro tailwinds from fall '24 to previous years?
A: In fall '22, enrollments were down due to inflation concerns. By fall '23, things improved as people adjusted to the new normal. In 2024, we've seen increased interest in skilled trades as viable professions, benefiting from trends like declining traditional college enrollments and rising interest in certificate programs.
Q: Can you update us on the marketing funnel and lead generation investments?
A: We've accelerated investments in Concorde's marketing and admissions, testing elasticity and seeing great results. We added more funds in Q4 to boost Q1 and Q2, already witnessing positive outcomes for both UTI and Concorde.
Q: What is driving the upside in the 2025 revenue guidance?
A: The increase is due to both a bullish outlook on Concorde's growth and the launch of 9 full-length programs and 10 short courses, exceeding our initial expectations.
Q: How do you view the impact of the recent election on UTI's fundamentals?
A: We focus on outcomes, not politics. While the election may suggest a more favorable regulatory environment, our priority remains on delivering superior student outcomes and maintaining strong operational performance.
Q: How will the EBITDA margin expansion in fiscal '25 be distributed across UTI and Concorde?
A: Concorde is expected to see stronger margin expansion due to less investment in new campuses compared to UTI. We've been working on improving Concorde's margins since acquisition, and those efforts will continue to pay off.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
