Universal Technical Institute, Inc. (UTI) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate a positive outlook. The company is expanding with new campuses and programs, showing strong initial demand. Marketing investments are yielding positive results, and there is optimism about future growth. While margins are slightly pressured due to growth investments, this is not seen as a structural issue. CapEx plans are robust, supporting expansion, and there is strong interest in the Heartland model. Despite some lack of clarity on specific cohort sizes and partner initiatives, the overall sentiment is positive, supporting a prediction of a 2% to 8% stock price increase.
Key Financial Performance
Revenue Revenue for the first quarter grew 10% to $221 million. This growth was attributed to strong operational and financial footing, disciplined execution, and increased student enrollment.
Adjusted EBITDA Baseline adjusted EBITDA was nearly $35 million, including over $7 million in growth investments. Reported adjusted EBITDA was $27 million. The growth investments were related to launching and scaling new campuses and programs.
Average Full-Time Active Students Average full-time active students increased 7% year-over-year to 26,858. This growth was driven by sustained demand for programs and optimized campus utilization.
New Student Starts Total new student starts grew roughly 3% year-over-year to 5,449. This was in line with broader market expectations and reflects strong demand for educational programs.
Concorde Division Revenue Concorde division contributed $78 million in revenue, an increase of 11.5% over the prior year quarter. This growth was driven by sustained demand for programs, particularly across Nursing and Allied Health.
UTI Division Revenue UTI division contributed $142.8 million in revenue, an increase of 8.6% over the prior year quarter. This growth reflects continued strength across the division's program suite and employer demand.
Net Income Consolidated net income for the first quarter was $12.8 million or $0.23 per diluted share. This reflects the company's strong financial performance and disciplined execution.
Liquidity Total available liquidity at the end of the quarter was $233.2 million, including $69.2 million of short-term investments and $70.4 million of remaining capacity on the revolving credit facility.
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Operating Highlights
New Campuses: Opened a co-branded campus in Fort Myers, Florida, which exceeded expectations with programs filling to capacity within 2 weeks. Preparing to open campuses in San Antonio and Atlanta, with strong initial student interest.
Program Launches: Launching over 20 new programs in 2026, including HVACR, aviation maintenance, and electrical programs. Concorde campuses to launch 10 new programs in high-demand areas like radiation technology and surgical technology.
Geographic Expansion: Expanding geographic footprint with new campuses in high-demand regions like San Antonio and Atlanta. Future campuses planned for Salt Lake City, Houston, Atlanta, and Phoenix metropolitan areas.
Student Growth: Average full-time active students increased by 7.2% year-over-year to 26,858. New student starts grew by 2.6% to 5,449.
Revenue Growth: Revenue for Q1 2026 grew 10% to $221 million. Full-year revenue expected to grow approximately 9% year-over-year to $905-$915 million.
Operational Efficiency: Optimizing 33 facilities to enhance operations and improve margins. Expanding capacity for popular programs like aviation, HVACR, and welding.
North Star Strategy: Focused on disciplined execution of a growth strategy, including launching new campuses and programs, optimizing existing facilities, and addressing workforce shortages.
Regulatory Engagement: Actively participating in regulatory discussions to accelerate skilled labor workforce development. Evaluating collaborative expansion opportunities with large-scale employers.
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Risk or Challenges
Regulatory Approvals: The company’s expansion plans, including opening new campuses and launching new programs, are contingent on securing various regulatory approvals. Delays or denials in these approvals could hinder growth.
Growth Investments: Significant upfront investments in new campuses and programs are expected to contract net income and adjusted EBITDA in the near term, particularly in Q2 and Q3 of fiscal 2026. This could impact financial performance if returns on these investments are delayed or lower than expected.
Program Capacity Constraints: Popular programs such as aviation, HVACR, and welding are experiencing capacity constraints, with waitlists building. Failure to expand capacity could limit enrollment growth and revenue potential.
Economic Uncertainty: The company’s financial performance and enrollment growth could be adversely affected by broader economic uncertainties, which may impact student demand and employer partnerships.
Geographic Expansion Risks: The company’s plans to open campuses in new regions, such as Atlanta and Salt Lake City, carry risks related to market demand, operational execution, and achieving projected enrollment and revenue targets.
Healthcare Portfolio Expansion: Efforts to expand the healthcare portfolio through acquisitions or new programs may face challenges in integration, regulatory compliance, and alignment with market demand.
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Guidance & Outlook
Revenue Expectations: For fiscal 2026, revenue is expected to be between $905 million and $915 million, reflecting approximately 9% year-over-year growth at the midpoint. Revenue growth is anticipated to accelerate in fiscal 2027, with a long-term target of more than $1.2 billion by fiscal 2029, representing roughly a 10% revenue CAGR through that period.
Adjusted EBITDA Projections: Baseline adjusted EBITDA for fiscal 2026 is anticipated to be approximately $156 million, with reported adjusted EBITDA expected to range between $114 million and $119 million. Adjusted EBITDA is projected to approach $220 million by fiscal 2029.
Net Income and Earnings Per Share: Net income for fiscal 2026 is expected to be between $40 million and $45 million, with diluted earnings per share of $0.71 to $0.80. Net income is expected to contract in Q2, improve slightly in Q3, and grow in Q4.
New Student Starts: New student starts for fiscal 2026 are anticipated to be between 31,500 and 33,000, with low to mid-double-digit starts growth in Q2 and mid- to high single-digit growth in the remaining quarters.
Capital Expenditures: Annual capital expenditures are planned to be $100 million or more to support new campuses and program expansions.
Campus Expansion Plans: The company plans to open a minimum of 2 and up to 5 new campuses annually over the next several years, pending regulatory approval. Fiscal 2026 campuses include Fort Myers, San Antonio, and Atlanta, with additional campuses planned for fiscal 2027 in Salt Lake City, Houston, Atlanta, and Phoenix.
Program Launches: Between 12 and 20 new programs are planned to launch annually across UTI and Concorde divisions during Phase 2 of the North Star Strategy. Fiscal 2026 will see over 20 new programs, including HVACR, aviation maintenance, and electrical suite programs.
Long-Term Financial Framework: The company targets adjusted EBITDA margin expansion and significant growth in fiscal 2028 and 2029, with marginal EBITDA dollar growth emerging in 2027.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide additional color on the starts for UTI and Concorde, and the impact of marketing investments?
A:Starts came in as expected, with UTI showing stronger growth and Concorde being flat due to a high comparison from the previous year. Investments were made in UTI ahead of new campus launches in Atlanta and San Antonio, which are showing positive signs. Over 300 students are ready to start in San Antonio, and Atlanta is also showing positive initial signs.
Q:What is the status of investments in high school recruitment?
A:A number of high school representatives were added in the fall, focusing on juniors and seniors. The payoff from this investment is expected in the May-July period, with the pipeline filling well.
Q:Can you confirm the CapEx expectations for the year and beyond?
A:CapEx for the year is expected to be $100 million, with $24 million spent year-to-date, of which $19 million was growth CapEx. For 2027, CapEx is also expected to be at least $100 million, potentially slightly higher.
Q:What is the funding model for the Heartland Fort Myers campus?
A:The campus now operates like other campuses, with students having access to government loans, Pell grants, and other support programs. Title IV funding approval was received within 72 hours, indicating efficient communication with the Department of Education.
Q:How are state-level regulatory approvals progressing?
A:State-level approvals are slower compared to federal approvals, with some states meeting only once every six months. However, timelines for Fort Myers, Atlanta, and San Antonio campuses are on track.
Q:What caused the margin pressure at Concorde in the quarter?
A:The margin pressure was due to growth investments, not structural issues. Both Concorde and UTI experienced a slight decline in EBITDA margins due to these investments.
Q:What gives confidence in the reacceleration of starts for the year?
A:Momentum is building with new programs and campus expansions, such as Dallas and San Antonio. The second quarter is expected to show strong growth due to these factors.
Q:What are the expected start cohort sizes for San Antonio and Atlanta?
A:The initial cohorts are small, but the fourth quarter typically accounts for half of the year's starts. Over 20 new programs are launching this year, contributing to growth.
Q:What is the trend in marketing yields and student acquisition costs?
A:Marketing efficiency is improving due to AI-driven technology and better targeting. Marketing costs as a percentage of revenue have increased slightly due to new campus openings, but this is seen as a positive investment.
Q:What is the update on adjusted free cash flow expectations for fiscal 2026?
A:The adjusted free cash flow expectation remains at $20 million to $25 million, driven by $100 million in CapEx, of which $75 million is growth CapEx.
Q:Is there interest in expanding the Heartland model to other locations?
A:There are active conversations about expanding the Heartland model, but no new locations have been announced yet. The first two cohorts at Fort Myers sold out, indicating strong demand.
Q:Are there any new partner initiatives on the UTI side?
A:The Heartland model has generated interest from major manufacturers and employers on the UTI side. Business development efforts are ongoing, but no new initiatives have been announced.
Q:What is the breakdown of starts between high school students and adults?
A:Approximately 35% of UTI students come directly from high school, 15% from the military, and the rest are adults who delayed their education. Most starts in the first three quarters are from the adult population.
Q:Are there concerns about regulatory changes if Democrats win the midterms?
A:No significant concerns were expressed. The company has operated well under the Biden administration, with strong graduation and job placement rates keeping it above regulatory scrutiny.
Q:How are San Antonio and Atlanta performing in terms of marketing and demand?
A:Incremental marketing investments were made, and initial enrollment signals are positive. Growth OpEx was focused on these campuses, and the yield from investments is satisfactory.
Q:What is the outlook for the macro environment for trade schools versus 4-year colleges?
A:The cultural shift towards valuing trade education is ongoing, driven by high demand for skilled tradespeople. This trend is expected to continue, but changes will be gradual.
Q:What is the update on acquisitions?
A:The focus has been on executing the aggressive growth plan, and there is limited inventory in the market as other players see similar opportunities for growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the size of initial start cohorts for San Antonio and Atlanta, only stating they are small. Additionally, no new partner initiatives or Heartland locations were announced, despite ongoing discussions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Antonio month
Atlanta Phoenix
CFO detail
City Concorde
Concorde Houston
Concorde acquisition
Concorde campus
Conference event
Dallas campus
Demand expectation
Finance Hello
Florida Demand
HVACR San
HVACR UTI
HVACR aviation
Heartland evaluation
Heartland service
Hello Universal
UTI program
approach
auto diesel
aviation maintenance
baseline investment
consistency
example
legacy
portfolio
program UTI
program campus
rate scale
return year
run rate
shortage
student interest
student run
success
technology program
week
UTI Transcript
Universal Technical Institute, Inc. (UTI) Q1 2026 Earnings Call Transcript
Positive2-5
The earnings call summary and Q&A indicate a positive outlook. The company is expanding with new campuses and programs, showing strong initial demand. Marketing investments are yielding positive results, and there is optimism about future growth. While margins are slightly pressured due to growth investments, this is not seen as a structural issue. CapEx plans are robust, supporting expansion, and there is strong interest in the Heartland model. Despite some lack of clarity on specific cohort sizes and partner initiatives, the overall sentiment is positive, supporting a prediction of a 2% to 8% stock price increase.
Universal Technical Institute, Inc. (UTI) Q4 2025 Earnings Call Transcript
Positive11-19
The earnings call indicates strong financial performance with revenue and net income exceeding guidance, and positive growth in student starts. The Q&A section provided clarifications without raising major concerns, and guidance was raised. Despite a slight miss in free cash flow, the overall sentiment is positive due to robust demand and strategic expansion plans. The market is likely to react positively over the next two weeks, especially with optimistic guidance and expansion plans.
Universal Technical Institute, Inc. (UTI) Q3 2025 Earnings Call Transcript
Positive8-6
The earnings call highlights strong financial performance, with a 37% YoY EBITDA growth and robust revenue increases in both Concorde and UTI divisions. The Q&A section indicates potential for future growth through accelerated campus expansions and program launches. While EBITDA margin expansion may be muted due to investments, the optimistic guidance for Q4 and beyond, along with strategic capital deployment, suggests a positive outlook. The lack of detailed guidance on buybacks and M&A is a minor concern but does not overshadow the overall positive sentiment.
Universal Technical Institute, Inc. (NYSE:UTI) Q2 2025 Earnings Call Transcript
Positive5-8
The earnings call revealed strong financial performance with revenue and net income growth, optimistic guidance, and strategic investments in marketing and program expansion. The addition of Tesla as a partner is a positive catalyst. Despite some vagueness in management's responses during the Q&A, the overall sentiment remains positive due to the company's strong market positioning and demand for skilled labor. The stock is likely to react positively, especially if it's a small-cap stock, due to the strong financial results and optimistic outlook.
UTI Slides
UTI Report
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