Universal Technical Institute Q3 Earnings Call Highlights

Key Points

• Third-quarter results improved: Revenue rose 7.2% year over year to $218.9 million, while average active students increased 5.8% and new starts climbed 10.9% to 6,342. Concorde revenue grew 11.1%, and UTI starts increased 23%.
• Fiscal 2026 guidance was reduced because UTI’s high school auto-diesel starts are tracking below expectations and students are shifting faster toward shorter skilled-trades programs, which generate less revenue and profit per student. Management attributed about 70% of the baseline adjusted EBITDA reduction to the high school shortfall and 30% to the program mix shift.
• Expansion remains a long-term focus: UTI plans additional campuses in Salt Lake City, Houston and Phoenix, raised expected fiscal-year capital spending to about $110 million, and reiterated its fiscal 2029 targets of more than $1.2 billion in revenue and adjusted EBITDA approaching $220 million.

Universal Technical Institute NYSE: UTI reported higher third-quarter revenue, student enrollment and new student starts, while lowering its fiscal 2026 outlook to reflect softer-than-expected fourth-quarter starts from its UTI division’s high school channel and a faster-than-anticipated shift toward shorter skilled-trades programs.

Revenue rose 7.2% year over year to $218.9 million in the fiscal third quarter, supported by enrollment growth across the company’s UTI and Concorde divisions. Consolidated net income was $2.3 million, or $0.04 per diluted share. Baseline adjusted EBITDA totaled $27.2 million, while reported adjusted EBITDA was $18.2 million after $9 million of strategic growth investments.

“The third quarter was another strong quarter for Universal Technical Institute and reinforces our confidence in both the environment for job demand for our students as well as student interest in our program offerings,” CEO Jerome Grant said.

Enrollment Growth Led by UTI Starts

Total average full-time active students increased 5.8% to 25,131, while new student starts rose 10.9% to 6,342. The UTI division drove much of the starts increase, with starts up 23% year over year, according to Grant. UTI average active students increased 4%, while Concorde average active students increased 8.5%, helped by demand in dental programs.

Concorde starts were softer during the quarter because of fewer clinical starts compared with the prior-year period, CFO Bruce Schuman said. He noted that start timing can vary based on academic calendars and program cohort schedules and that the effect had been included in the company’s prior outlook.

Concorde revenue increased 11.1% to $80.9 million, while UTI revenue rose 5% to $138 million.

Management cited continued employer shortages across transportation, skilled trades and healthcare occupations. Grant said job openings listed on UTI campus job boards for automotive and diesel technicians exceed the number of graduates the company produces by more than two times. He also cited momentum in programs for electricians, HVACR technicians, welders, industrial maintenance professionals and radiology technicians.

High School Execution and Program Mix Pressure Outlook

Despite strong lead generation, UTI’s fourth-quarter high school starts, which are primarily tied to automotive and diesel programs, are tracking below the company’s initial expectations. Grant said UTI lead flow is up more than 15% year over year, but the company did not reach all prospective students because it did not have enough admissions representatives in the field.

“It’s not a capacity issue,” Grant said in response to an analyst question. “Frankly, it was an execution issue in terms of the number of reps we had in the field on a persistent basis.”

The company said it has increased admissions staffing dedicated to the high school channel by about 20%. Grant later said the field team had operated at roughly 140 representatives during the year and had grown to more than 170, with additional hiring planned. Management expects the added staffing to improve lead conversion and help the company re-engage prospective students who did not enroll.

UTI also said student interest in skilled-trades programs has exceeded expectations. While management characterized that demand as strategically positive, the programs generally are shorter in duration than automotive and diesel programs, resulting in less revenue per student and somewhat lower profitability.

Schuman said approximately 70% of the reduction in baseline adjusted EBITDA expectations is tied to the high school auto-diesel starts shortfall, with about 30% tied to the faster program-mix shift toward skilled trades. He said the company intends to increase skilled-trades capacity and review pricing opportunities, which management believes can support margins over time.

Updated Fiscal 2026 Guidance

For fiscal 2026, Universal Technical Institute now expects:

• Revenue of $893 million to $900 million, representing approximately 7% year-over-year growth at the midpoint.
• Net income of $32 million to $36 million.
• Diluted earnings per share of $0.57 to $0.64.
• Baseline adjusted EBITDA exceeding $135 million.
• Reported adjusted EBITDA of $100 million to $103 million, reflecting approximately $35 million of growth investments.
• Total new student starts of 31,900 to 32,300.

The revised outlook primarily reflects expected fourth-quarter performance. Management said it still expects full-year starts to fall within its original overall range, but a weaker-than-expected fourth quarter has a disproportionate effect on revenue and profitability because of the company’s normal seasonal patterns and investment timing.

Schuman said the company expects fiscal 2027 revenue growth to exceed fiscal 2026 growth and is targeting modest EBITDA growth next year, followed by more meaningful EBITDA expansion in fiscal 2028 and 2029. The company did not issue formal fiscal 2027 guidance.

Campus Expansion and Enterprise Integration

Management reiterated its fiscal 2029 objectives of more than $1.2 billion in revenue and adjusted EBITDA approaching $220 million. The company said its recently opened campuses are performing ahead of initial expectations. The UTI Atlanta campus, which began operations in July, is tracking 30% ahead of expectations, while UTI San Antonio is tracking roughly 40% ahead of its launch model.

The company is preparing to open additional fiscal 2027 campuses in Salt Lake City, Houston and the Phoenix metropolitan area. It plans to open at least two and as many as five campuses annually, while replicating 12 to 20 programs per year across legacy UTI and Concorde campuses.

Universal Technical Institute also said it has completed the transition to one enterprise operating model for its UTI and Concorde brands. Grant said the company will retain the separate customer-facing brands while seeking to simplify back-office operations, student acquisition efforts, systems and processes. Management expects the initiative to create efficiencies and potential cost synergies over time, though it did not quantify the expected financial benefit.

At the end of the quarter, the company had $181 million in available liquidity, including short-term investments and remaining revolving credit facility capacity. Year-to-date capital expenditures were $85.4 million, and management raised its expected fiscal-year capital spending to approximately $110 million as it accelerates investments to support campus and program launches.

About Universal Technical Institute (NYSE:UTI)

Universal Technical Institute, Inc NYSE: UTI is a leading provider of post-secondary education for students pursuing careers as professional automotive, diesel, collision repair, motorcycle and marine technicians, as well as in welding and CNC machining. The company designs and delivers hands-on training through a blend of classroom instruction and experiential lab work, preparing graduates for entry-level positions in the transportation, manufacturing and energy sectors. UTI's curriculum emphasizes industry-recognized credentials and proprietary coursework developed in collaboration with original equipment manufacturers (OEMs) to ensure alignment with evolving employer needs.

Through a network of campus locations across the United States and select centers in Canada, Universal Technical Institute offers diploma and certificate programs ranging from 36 to 74 weeks in length.

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