Universal Technical Institute Inc · NYSE:UTI
Universal Technical Institute — Investor Presentation (December 2019)
35 slides from Universal Technical Institute's investor presentation, December 2019
Slide 1: FY19 Company Presentation
FY19 Company Presentation December 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation may contain forward-looking statements regarding events or future financial performance. These statements are only predictions and the actual events or results may differ materially. For important factors that could cause actual results to differ materially fr
Slide 3: Providing State-of-the-Industry Technology and Training
Providing State-of-the-Industry Technology and Training 3
Slide 4: Leading Provider of Skilled Transportation Technicians
Leading Provider of Skilled Transportation Technicians NYSE: UTI 1For 2018, UTI had 8,117 total graduates. 7,709 were available for employment and 6,664 were employed within one year of their graduation date, for a total UTI employment rate of 86%. See UTI’s 10-K for additional information. 2Septemb
Slide 5: UTI Investment Rationale
UTI Investment Rationale New management team ready for innovation Attractive student value proposition borne of competitive advantages Evolved strategy fueling revenue and student population growth Optimized for any macro economic cycle with counter cyclical upside Improved operations and strong bal
Slide 6: Demand for UTI Graduates Far Exceeds Supply
Demand for UTI Graduates Far Exceeds Supply 123,000 50,000 Auto/Diesel/CRRT technicians 2018 Graduates Annual Need4 1Source: https://subscribers.wardsintelligence.com/analysis/world-vehicle-population-rose-46-2016, 2Federal Highway Administration, Office of Highway Policy Information, Highway Statis
Slide 7: More Market Share than Three Closest Competitors
More Market Share than Three Closest Competitors 13% 5% UTI 2% graduates more 1% Lincoln Tech 2% UNOH (NFP) Auto/Diesel techs Wyotech (NFP) 59% than any other 7% Other not-for-profit school in the country. Other for-profit 4-year colleges Community colleges 11% Source: IPEDS, provisional 2017-2018 c
Slide 8: Delivering Higher 10-year Median Earnings
Delivering Higher 10-year Median Earnings $45,200 $45,488 47% Increase $30,830 1 Community colleges UTI Liberal arts colleges Source: The College Scorecard. See Appendix for details and calculation methodology. UTI cannot guarantee employment 8 or salary. 1UTI of Arizona OPEID.
Slide 9: Impressive Training Facilities Nationwide
Impressive Training Facilities Nationwide 9
Slide 10: State-of-the-industry Equipped Labs Attract Students
State-of-the-industry Equipped Labs Attract Students 10
Slide 11: Well Positioned National Campus Network
Well Positioned National Campus Network Existing capacity to increase students and opportunity to add campuses NATIONAL FOOTPRINT • 13 campuses • 9 states • 2.2M SF • Located in high demand job markets • Easy access to major population Metro-Commuter campus format In teach-out; estimated closure Fal
Slide 12: Industry Partnerships that Deliver Value
Industry Partnerships that Deliver Value 86% graduate industry employment rate1 PARTNERS STUDENTS UTI • Efficient hiring source • Pipeline to jobs • Current technology and tools • Lowers costs • Better jobs and higher • Increased marketing impact starting wages2 • Techs who are ready to work • Lower
Slide 13: Strategic Initiatives Deliver Significant Achievements
Strategic Initiatives Deliver Significant Achievements Improved Results Student Starts and Population: • First average student growth in FY19 since FY10 • New student starts1 in FY19: • Up 5 consecutive qtrs through FYQ42019 Strategic Initiatives • 11.5% growth YOY Executed Transformation Plan • 4.5
Slide 14: Evolving Strategy to Better Reach and Engage Students
Evolving Strategy to Better Reach and Engage Students HIGH SCHOOL GRADS VETERANS ADULT LEARNERS 52% 9% 39% 1 1 1 UP 15.6% IN FY19 UP 7.7% IN FY19 UP 7.4% IN FY19 Added reps and enhanced Assisting veterans, working Optimizing traditional and marketing to better represent to regain access and digital
Slide 15: Metro Campus Model Delivering Results
Metro Campus Model Delivering Results Adapting to changing student expectations DALLAS, TX 2010 LONG BEACH, CA 2015 BLOOMFIELD, NJ 2018 Campus Profile • ~100,000 SF • IRR 35%+ • Average student capacity of at least 750 • Accretive to earnings in 18 months • ~$10-$15M capital investment • Cumulative
Slide 16: New, Differentiated Programs Driving Student Starts
New, Differentiated Programs Driving Student Starts WELDING CNC MACHINING • High demand for technicians • High demand for technicians • 36-week program in Rancho Cucamonga, CA, • 36-week program at NASCAR Technical Institute Avondale, AZ, and Dallas, TX • Only CNC school affiliated with Roush Yates
Slide 17: Optimizing Destination Campuses for Efficiency
Optimizing Destination Campuses for Efficiency Completed In Process Evaluation BLOOMFIELD, NJ* 1 Enhance utilization of existing space with LONG BEACH, CA* DALLAS, TX* Welding FY19 Programs RANCHO Welding FY17, new programs CUCAMONGA, CA Optimize SF FY18 MOORESVILLE, NC CNC FY17 Optimize SF 2 Optimi
Slide 18: Transformation Yielding Strong Improvements
Transformation Yielding Strong Improvements ($ in millions, except for student data) Actual Guidance ASC 842 Impact Revenue Adjusted Operating Income (Loss)1 Adjusted EBITDA1 $26.5 - $31.5 $338.0 - $345.0 $5.2 $13.0- $18.0 $1.6 $331.5 $17.0 $317.0 $(1.7) $(7.8) $(25.7) 2018A 2019A 2020G 2018A 2019A
Slide 19: FYQ4 2019 Performance Reflects Financial Turn in Business
FYQ4 2019 Performance Reflects Financial Turn in Business ($ in millions, except for 3 Months Ended student data and EPS) Q4’19 Q3’19 Q2‘19 Q1’19 Q4’18 Q3‘18 Q2’18 Q1’18 Adjusted new student starts1 6,437 1,682 1,963 1,480 5,829 1,503 1,768 1,266 Y/Y growth/(decline) 10.4% 11.9% 11.0% 16.9% 9.0% (13
Slide 20: FY 2020 Guidance
FY 2020 Guidance FY19 Actuals FY 2020 Guidance Student start growth (excluding 11.5% Up 2.5% – 4.5% Norwood, MA) Average population growth 2.5% Up 1.0% – 2.0% Revenue(1) $331.5M $338.0M – $345.0M Operating expense $339.3M $330.0M – $335.0M Operating income (loss) $(7.8)M $8.0M – $13.0M Adjusted oper
Slide 21: Appendix
UNIVERSAL ] TECHNICAL | INSTITUTE APPENDIX
Slide 22: Seasoned Management Team with New Leadership
Seasoned Management Team with New Leadership Jerome Grant, CEO Troy Anderson, EVP & CFO Business transformation, growth Financial strategy, FP&A, strategy, product development, accounting, treasury, tax and business development compliance Sherrell Smith, EVP Campus Piper Jameson, Eric Severson, Oper
Slide 23: Highly Qualified Board of Directors
Highly Qualified Board of Directors Robert DeVincenzi David Blaszkiewicz Jerome Grant Non-Executive Chairman, President and Chief Chief Executive Officer, Universal Technical Institute; Executive Officer, Universal Technical Principal, Lupine Ventures; Invest Detroit Institute Former President and C
Slide 24: Long History of Entering and Executing in New Markets
Long History of Entering and Executing in New Markets PHILADELPHIA, PA MARKET ENTRY(a) DALLAS/FORT WORTH, TX MARKET ENTRY(b) 1200 650 600 1000 550 800 500 Completions Completions 450 600 400 400 350 300 200 250 0 200 2016-Prelim 2010 2011 2012 2013 2014 2015 2016-Prelim 2005 2006 2007 2008 2009 2010
Slide 25: Metro Campuses Deliver Positive Financial Results
Metro Campuses Deliver Positive Financial Results Long Beach, CA Bloomfield, NJ Pro-forma Y1 Y2 Y3 Y4 Y5 Y1 Y2 Y3 Y4 Y5 cash flows ($m)(a) FY15A FY16A FY17A FY18A FY19A FY18A FY19A FY20P FY21P FY22P Revenue $0.7 $12.2 $18.3 $20.9 $22.4 $0.6 $10.9 $17.7 $19.2 $19.7 EBITDA contribution(b) (3.6) 2.9 9.
Slide 26: Welding Financials – Avondale, AZ
Welding Financials – Avondale, AZ Welding pro-forma cash flows ($m)(a) FY17A FY18A FY19A FY20P FY21P Revenue $0.0 $1.2 $3.4 $3.2 $3.1 EBITDA contribution(b) (0.1) 0.5 2.4 2.2 2.1 Capital expenditures(c) (0.4) (1.1) (0.0) 0.0 0.0 Pre-tax cash flow $(0.5) $(0.6) $2.4 $2.2 $2.1 Perpetuity IRR 80%+ • 1s
Slide 27: Statements of Income (Loss)
Statements of Income (Loss) ($ in thousands, except per share amounts) 12 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 12 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 9/30/19 9/30/19 6/30/19 3/31/19 12/31/18 9/30/18 9/30/18 6/30/18 3/31/18 12/31/17 Revenues $331,504 $87,666 $79,042 $81,746 $83,050 $316,965 $80,256 $74,890
Slide 28: Balance Sheet and Cash Flow Summary
Balance Sheet and Cash Flow Summary ($ in thousands) At: 9/30/19 9/30/18 9/30/19 9/30/18 9/30/17 Cash & cash equivalents $ 65,442 $ 58,104 Net cash provided by (used in) $21,746 $(13,353) $1,146 operating activities Restricted cash* 15,113 14,055 Purchase of property and Current assets 118,104 116,7
Slide 29: Impact of the New Leasing Standard
Impact of the New Leasing Standard • UTI’s 2020 Guidance includes the estimated Summary of the Financial Statement Impact(1) impact of the new leasing accounting standard Opening Balance Sheet Impact • UTI adopted the new standard effective 10/1/19 Net Increase in Net Increase in Net Increase in • K
Slide 30: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information This presentation contains non-GAAP (Generally Accepted Accounting Principles) financial measures, which are intended to supplement, but not substitute for, the most directly comparable GAAP measures. Management chooses to disclose to investors these non-GAAP fi
Slide 31: EBITDA Reconciliation
EBITDA Reconciliation ($ in thousands) 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 9/30/19 6/30/19 3/31/19 12/31/18 9/30/18 6/30/18 3/31/18 12/31/17 Net income (loss), as reported $ 5,477 $ (365) $ (5,263) $ (7,717) $ (11,001) $ (11,713) $ (8,833) $ (1,135) Interest expense, net 458 444
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) 3 Mos. 3 Mos. 12 Mos. 12 Mos. 9/30/19 9/30/18 9/30/19 9/30/18 EBITDA $ 10,153 $ (6,361) $ 11,355 $ (16,738) Non-recurring consulting fees for transformation initiative(1) -- 1,641 4,224 5,776 Start-up costs associated with Bloomfield, NJ campus -- 507
Slide 33: Adjusted Free Cash Flow
Adjusted Free Cash Flow ($ in thousands) 12 Mos. 12 Mos. 9/30/19 9/30/18 Cash flow provided by (used in) operating activities, as reported $ 21,746 $ (13,353) Purchase of property and equipment (6,453) (20,606) Non-recurring consulting fees for transformation initiative(1) 3,950 6,050 Cash outflow a
Slide 34: Adjusted Operating Income (Loss)
Adjusted Operating Income (Loss) ($ in thousands) 3 Mos. 3 Mos. 12 Mos. 12 Mos. 9/30/19 9/30/18 9/30/19 9/30/18 Income (loss) from operations, as reported $ 5,438 $ (11,051) $ (7,802) $ (35,275) Non-recurring consulting fees for transformation initiative(1) -- 1,641 4,224 5,776 Start-up costs associ
Slide 35: Thank You
UNIVERSAL ] TECHNICAL | INSTITUTE THANK YOU
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