SCOTTSDALE, Ariz.,
March 22, 2018
/PRNewswire/ -- Universal Technical
Institute, Inc. (NYSE: UTI), the leading provider of
transportation technician training, today announced a multi-year
transformation plan designed to generate approximately $30 million of incremental operating income in
fiscal 2020. Developed to drive new student starts, completions and
enhance student success, the Plan is expected to be implemented
over 12 to 18 months, with significant benefits to UTI's financial
performance starting in fiscal 2019.
Kim McWaters, UTI's President and
Chief Executive Officer, said, "In November
2017, following the successful completion of our Financial
Improvement Plan that reduced costs by $40
million, we launched a comprehensive evaluation of our
business, with a focus on growing new student starts and rebuilding
our student population. The analysis, driven by a team of external
education industry experts, validated the strong demand for our
graduates, our student value proposition and the strength of our
differentiated brand. The process also identified significant
opportunities for growth with selective tactical investments in
marketing, admissions and student service strategies."
"Our Transformation Plan will build upon the traction we are
already seeing in core areas of our business and be incremental to
current growth initiatives, including new, smaller campuses and
program expansions. We believe the Plan will maximize UTI's market
leadership position, differentiating us from existing and emerging
sources of vocational education and better serve prospective
students who are pursuing increasingly valuable technician
trades."
To help UTI realize its market opportunity, the company engaged
a consulting organization with a strong track record of partnering
with education sector clients to deliver short- and long-term
value, as well as sustainable growth. UTI structured the
engagement so that a portion of the consultant's compensation is
linked to UTI reaching its transformation targets. The terms of the
consulting agreement, including the associated fees, are described
in a Form 8-K filed by UTI on March 22,
2018.
"Our Board has approved the Transformation Plan and management
will leverage our consulting partner's industry expertise, breadth
of top-tier talent and history of successful business
transformations to act quickly and capitalize on the opportunity in
front of us," McWaters said.
The Transformation Plan will also include an incremental
internal net investment of approximately $4
million for additional marketing campaigns and new resources
in marketing, admissions and support services in fiscal 2018. The
incremental costs associated with the Transformation Plan are not
anticipated to negatively impact UTI's compliance with the
composite score requirements imposed by the Department of
Education.
Based upon the Transformation Plan investments during this year
of transition, UTI is updating its 2018 outlook:
- Student starts are still expected to grow in the low-single
digits.
- Average student population is still expected to be down in the
mid-single digits.
- Revenue is still expected to range between $310 million and $320
million.
- Operating expenses are now expected to range between
$348 million and $353 million, including roughly $4 million in consulting fees and approximately
$4 million for incremental marketing
and internal resources. This compares to previous guidance of
between $340 million and $345 million.
- An operating loss is now expected between $28 million and $33
million, versus the company's previous expected loss of
between $20 million and $25 million.
- EBITDA is still expected to be negative.
- Capital expenditures are still expected to be between
$24 million and $25 million.
Use of Non-GAAP Financial Information
This press
release contains non-GAAP (Generally Accepted Accounting
Principles) financial measures, which are intended to supplement,
but not substitute for, the most directly comparable GAAP measures.
Management chooses to disclose to investors these non-GAAP
financial measures because they provide an additional analytical
tool to clarify the results from operations and helps to identify
underlying trends. Additionally, such measures help compare
the Company's performance on a consistent basis across time
periods. Management also utilizes EBITDA as a performance measure
internally. To obtain a complete understanding of the Company's
performance these measures should be examined in connection with
net income (loss), determined in accordance with GAAP, as presented
in the financial statements and notes thereto included in the
annual and quarterly filings with the Securities and Exchange
Commission. Since the items excluded from these measures are
significant components in understanding and assessing financial
performance under GAAP, these measures should not be considered an
alternative to net income as a measure of the Company's operating
performance or profitability. Exclusion of items in the
non-GAAP presentation should not be construed as an inference that
these items are unusual, infrequent or non-recurring. Other
companies, including other companies in the education industry, may
calculate non-GAAP financial measures differently than UTI does,
limiting their usefulness as a comparative measure across
companies.
Safe Harbor Statement
All statements contained herein,
other than statements of historical fact, are "forward-looking"
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and Section 27A of the Securities Act of 1933,
as amended. Such statements, including those regarding the intended
effects of investments in our transformational efforts, are based
upon management's current judgments. Those statements are
subject to a number of uncertainties that could cause actual
performance and results to differ materially from the results
discussed in the forward-looking statements. There is no assurance
that the efforts described herein will produce the performance
improvements we are seeking. None of the statements regarding our
potential future financial performance are intended as guidance,
and they should not be viewed as such. Factors that could affect
the Company's actual results include, among other things, changes
to federal and state educational funding, changes to regulations or
agency interpretation of such regulations affecting the for-profit
education industry, possible failure or inability to obtain
regulatory consents and certifications for new or expanding
campuses, potential increased competition, changes in demand for
the programs offered by UTI, increased investment in management and
capital resources, the effectiveness of the recruiting, advertising
and promotional efforts, changes to interest rates and
unemployment, general economic conditions of the Company and other
risks that are described from time to time in the Company's public
filings. Further information on these and other potential factors
that could affect the financial results or condition may be found
in the Company's filings with the Securities and Exchange
Commission. The forward-looking statements speak only as of the
date of this press release. Except as required by law, the Company
expressly disclaims any obligation to publicly update any
forward-looking statements whether as a result of new information,
future events, changes in expectations, any changes in events,
conditions or circumstances, or otherwise.
About Universal Technical
Institute, Inc.
With more than 200,000 graduates in
its 52-year history, Universal Technical
Institute, Inc. (NYSE: UTI) is the nation's leading provider
of technical training for automotive, diesel, collision repair,
motorcycle and marine technicians, and offers welding technology
and computer numerical control (CNC) machining programs. The
company has built partnerships with industry leaders, outfits its
state-of-the-industry facilities with current technology, and
delivers training that is aligned with employer needs. Through its
network of 12 campuses nationwide, UTI offers post-secondary
programs under the banner of several well-known brands, including
Universal Technical Institute (UTI),
Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI)
and NASCAR Technical Institute (NASCAR Tech). The company is
headquartered in Scottsdale,
Arizona. For more information, visit uti.edu.
Company Contact:
Bryce
Peterson
Chief Financial Officer
Universal Technical Institute, Inc.
(623) 445-0993
Investor Relations Contact:
Kirsten Chapman
LHA Investor Relations
(415) 433-3777
UTI@lhai.com
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SOURCE Universal Technical
Institute, Inc.