Universal Technical Institute Inc · NYSE:UTI
Universal Technical Institute — 2009 Credit Suisse 11th Annual Global Services Conference
35 slides from Universal Technical Institute's conference presentation, Feb 24, 2009
Slide 1: 2009 Credit Suisse 11th Annual Global Services Conference
2009 Credit Suisse 11th Annual Global Services Conference February 23, 2009 UNIVERSAL TECHNICAL INSTITUTE
Slide 2: Safe Harbor
Safe Harbor This presentation may include predictions, estimates or other information that may be considered forward looking under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on UTI's last data reported and have not been updated to ref
Slide 3: UTI at a Glance
UTI at a Glance Founded in 1965 Leading brands in technical education Training programs Auto Diesel Collision Repair Motorcycle/Marine 10 campuses in 8 states FY2008 average enrollment approx. 14,900 FY2008 revenues of $343.5 million
Slide 4: Projected Technician Demand
Projected Technician Demand Industry size: 772,675 14% growth by 2016 Annual new openings: 26,500 Overall market growth of 12% - 14% by 2016 Annual new job openings of 43,600 Key Statistics Automotive Diesel Industry size: 274,876 12% growth by 2016 Annual new openings: 9,100 CRRT Industry size: 182
Slide 5: Contrary to Popular Belief...
Contrary to Popular Belief... Technician demand is NOT driven by the number of new car dealerships and light vehicle sales.
Slide 6: And, in fact...
And, in fact... Dealer Service & Parts Revenue is NOT driven by the number of new car dealerships or light vehicle sales.
Slide 7: Known for our Industry Relationships
Known for our Industry Relationships 1990 1995 2000 2005 Today Harley-Davidson Kawasaki American Honda Honda Marine Suzuki Yamaha BMW Harley-Davidson Kawasaki American Honda Honda Marine Suzuki Yamaha Harley-Davidson Kawasaki American Honda Honda Marine Suzuki Yamaha BMW Mercedes-Benz Jaguar Ford Po
Slide 8: Dealer Consolidation is Not A New Trend
Dealer Consolidation is Not A New Trend 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 New Car Dealerships 25150 25025 25000 24825 24200 23500 22950 22850 22800 22750 22700 22600 22400 22250 22150 21800 21725 21650 21640 21495 21200 2070
Slide 9: Light Vehicle Sales Compared to Total Dealer Service and Parts Revenue
Light Vehicle Sales Compared to Total Dealer Service and Parts Revenue 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 US Light Vehicle Sales 15597 16958 17402 17178 16848 16676 16913 16997 16561 16154 13247 Dealer Service and Parts Revenue 62.93 63.56 67.66 73.83 80.1 83.11 85.35 85.48
Slide 10: What Does Drive Technician Demand and Dealer Parts & Service Revenue?
What Does Drive Technician Demand and Dealer Parts & Service Revenue? 1. Number of units in operation 2. Age of vehicles in use 3. Number of miles driven
Slide 11: Vehicles in Use Compared to Total Dealer Service and Parts Revenue
Vehicles in Use Compared to Total Dealer Service and Parts Revenue 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Vehicles in Use 182 182 186 189 193 198 201.070397 205.042639 209.509161 213.299313 216.682936 221.027121 225.882103 231.398281 238.697097 244.02175
Slide 12: Annual Miles Driven Compared to Total Dealer Service and Parts Revenue
Annual Miles Driven Compared to Total Dealer Service and Parts Revenue 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Annual Miles Driven 2.56 2.63 2.68 2.75 2.8 2.86 2.89 2.96 2.99 3 2.99 Dealer Service and Parts Revenue 62.93 63.56 67.66 73.83 80.1 83.11 85.35 85.48 85.16 80.45 83.35 Sourc
Slide 13: Service and Parts Revenue Generally Grows Despite Economic Fluctuations
Service and Parts Revenue Generally Grows Despite Economic Fluctuations 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 % Change GDP 0.062 0.053 0.06 0.059 0.032 0.034 0.047 0.066 0.063 0.061 0.048 0.034 Dealer Service and Parts Revenue 62.93 63.56 67.66 73.83 80.1 83.11 85.35 85.48 85.1
Slide 14: Service & Parts is Growing in Importance
Service & Parts is Growing in Importance 2001 2002 2003 2004 2005 2006 2007 % of Dealer Operating Profit 0.48 0.48 0.46 0.57 0.585 0.77 0.81 Source: NADA Data 2002-2008 As light vehicle sales and profitability decline, service and parts increase as a percentage of total dealer operating profits.
Slide 15: Average Dealership Trends
Average Dealership Trends First 11 Months of 2008 $ Amount Millions % Change Vs 11 Mos 2007 Total Revenue $26.62 -12.7% Gross Profit 3.82 -8.8% Expenses 3.51 -4.1% Net Profit Before Tax $0.31 -42.0% Revenue Sources New Vehicle Revenue $15.23 -14.4% Used Vehicle Revenue 7.65 -15.2% Service & Parts Re
Slide 16: An Early Forecast for 2009
An Early Forecast for 2009 2009 Forecast % Change From 2008 Light Vehicle Sales $12.7 Million -3.8% Dealer Parts & Service Revenue +3% (a) Source: Paul Taylor (NADA) quoted in Automotive News (1/25/09) and USA Today (2/9/09). While the early forecast may not hold true given the volatility in the ind
Slide 17: What About the Students?
What About the Students? Strong interest despite negative industry news Value proposition remains intact Needs to keep employment options open
Slide 18: Recent Progress
Recent Progress
Slide 19: Opportunities to Increase Capacity Utilization
Opportunities to Increase Capacity Utilization Strengthen marketing efforts in local markets to attract students who have a higher propensity to show Expand existing programs to other campuses Incorporate programs that compliment our current verticals Consider new programs not within our current ver
Slide 20: Key Operating Metrics Continue to Improve
Key Operating Metrics Continue to Improve Improved lead generation Leads have improved year over year since March 2008 FY09 Q1 leads increased 82% FY09 Q1 cost per lead decreased 27% Campus Sales -young adult recruiting Since January 2008, campus contracts have steadily improved FY09 Q1 campus contr
Slide 21: Improved Lead Generation & Efficiency
Improved Lead Generation & Efficiency FY07Q1 FY07Q2 FY07Q3 FY07Q4 FY08Q1 FY08Q2 FY08Q3 FY08Q4 FY09Q1 YOY Change in Cost Per Lead 0.39 0.23 -0.02 0.05 -0.2 0.27 -0.1 -0.33 -0.27 YOY Change in Leads Generated 0.204 0.165 -0.088 -0.194 -0.273 -0.131 0.407 0.333 0.816 The effectiveness of our advertisin
Slide 22: Students Signing Contracts Increasing
Students Signing Contracts Increasing FY07Q1 FY07Q2 FY07Q3 FY07Q4 FY08Q1 FY08Q2 FY08Q3 FY08Q4 FY09Q1 Contracts 8514 8972 5869 6101 7554 8425 7111 7830 9033 Average Admission Rep Headcount 279 273 259 246 251 256 262 287 307 For FY09Q1, productivity levels remained constant as compared to prior year
Slide 23: Consistently Improving Student Starts
Consistently Improving Student Starts FY08Q1 FY08Q2 FY08Q3 FY08Q4 FY09Q1 starts -0.115 -0.082 0.005 0.049 0.062 We began achieving year-over-year start growth in FY08Q3 after nearly two years of declines and expect that trend to continue. FY08Q1 FY08Q2 FY08Q3 FY08Q4 Percent of FY Starts 20.7% 18.7%
Slide 24: Average Undergraduate Enrollment
Average Undergraduate Enrollment FY07Q1 FY07Q2 FY07Q3 FY07Q4 FY08Q1 FY08Q2 FY08Q3 FY08Q4 FY09Q1 FY 2007 17265 16389 14630 15464 16576 15092 13452 14689 16323 We narrowed the gap in average students from 1,300 in FY08Q2 to 250 in FY09Q1. FY07Q1 FY07Q2 FY07Q3 FY07Q4 FY08Q1 FY08Q2 FY08Q3 FY08Q4 FY09Q1
Slide 25: Business Priorities
Business Priorities
Slide 26: Key Metrics to Drive Revenue
1-4 Months 1-12 Months 12-18 Months Key Metrics to Drive Revenue Contract Lead Start Graduation Contract to Start Times: 50% Scheduled to Start Within 6 Months 75% Scheduled to Start Within 9 Months 90% Scheduled to Start Within 12 Months Field Contracts Tend to be 2-3 Months Longer It can take up t
Slide 27: Efficiencies Gained Through Show Rate
Efficiencies Gained Through Show Rate Assumptions: 20% growth in students scheduled to start in FY09 50% show rate in FY08 We can still report start growth even if we do not achieve the efficiencies we would like with improved show rates.
Slide 28: Operating Margins - Power of Leverage
Operating Margins - Power of Leverage Illustration, not a Forecast Assumes FY09Q1 Cost Structure & Revenue Rates
Slide 29: Improved Affordability
Improved Affordability UTI Loan Program Loans at reasonable interest rates and terms UTI bears all credit and collection risk No meaningful P&L or balance sheet impact Through 12/31/08, we are committed to provide $7.4 million in loans and have $5.1 million in loans outstanding Economic Stimulus Pla
Slide 30: Fiscal 2009 Outlook
Fiscal 2009 Outlook Student contract growth percentage in low teens Student starts growth percentage to range from high single to low double digits Growth in average undergraduate full- time student enrollment during second or third quarter Year-over-year improvement in capacity utilization Due to s
Slide 31: Summary
Summary Superior business strategy / relationships Strong value proposition Overcoming challenging external environment Show rates impact timing, not achievability of return to double-digit operating margins UTI is an enduring brand due to its compelling value proposition for both students and indus
Slide 32: Universal Technical Institute
Universal Technical institute, Ine
Slide 33: Appendix
Appendix
Slide 34: Financial Performance
Financial Performance ($ in millions, except for enrollment data and EPS) We will continue to invest in the business to continue to drive more leads, contracts and starts despite margin pressure and quarterly volatility.
Slide 35: Student Sources of Funding
Approximately 80% of our revenues come from Title IV funding or cash payments. Student Sources of Funding FY 2008 Breakdown by % of Revenue FFELP - Federal Loans & Pell Grants Cash / Credit Cards Private Alt. Loans Discount Alt. Loans CTG & Other East 0.64 0.163 0.074 0.016 0.037 * As a result of th
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