Universal Technical Institute Inc · NYSE:UTI

Universal Technical Institute — Q1 2021 Earnings Presentation

43 slides from Universal Technical Institute's earnings presentation, Feb 4, 2021

1. Slide 1: Universal Technical Institute Investor Presentation

   Universal Technical Institute Investor Presentation February 4, 2021 2021 Universal Technical Institute, Inc. All rights reserved.

2. Slide 2: Forward-Looking Statements

   Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created by such Act. These statements are based on our management’s current beliefs, expectations and assump

3. Slide 3: Leading Provider of Skilled Transportation Technicians

   Leading Provider of Skilled Transportation Technicians 55 12K+ YEARS STUDENTS 35+ 225K+ MANUFACTURING GRADUATES SINCE 1965 BRAND PARTNERS 4,600+ INCENTIVE & TUITION 84% EMPLOYMENT RATE1 REIMBURSEMENT EMPLOYER LOCATIONS $300.8M $114.9M Fiscal Year 2020 2 CASH AND INVESTMENTS3 NYSE: UTI 1For 2019, UTI

4. Slide 4: State-of-the-Industry Technology and Training

   State-of-the-Industry Technology and Training PAGE 4

5. Slide 5: Impressive Training Facilities Nationwide

   Impressive Training Facilities Nationwide Notes: Excludes the Norwood, MA campus which was closed on July 31, 2020; Orlando campus currently consists of the 3 buildings shown PAGE 5

6. Slide 6: Investment Thesis Highlights

   Investment Thesis Highlights Strengthened management team well down the path of executing Company strategic and transformation plans with strong results Attractive student value Evolved strategy fueling proposition which includes EBITDA and student blended learning model population growth Optimized

7. Slide 7: Potential Capital Deployment Opportunities to Drive Long Term Growth

   Potential Capital Deployment Opportunities to Drive the Company’s Long Term Growth Management and Board will prudently allocate capital across defined categories each representing estimated 25%+ IRR opportunities, and also consider return of capital to shareholders NEW PROGRAM CAMPUSES EXPANSIONS IN

8. Slide 8: Transformation Initiatives Delivered Significant Achievements

   Transformation Initiatives Delivered Significant Achievements THE PRESENT 2 Significantly Improved Results Student Starts and Population in FY19: Financial Improvement in FY19: • First average student growth in FY19 since • First YOY revenue growth since 2011 FY10 • $3.7M EBITDA contribution from Bl

9. Slide 9: Transformation Yielded Strong Improvements

   Transformation Yielded Strong Improvements ($ in millions, except for student data) Revenue Adj Op Income(Loss)1 Adjusted EBITDA1 $12.5 $28.0 $336.7 $331.5 $17.0 $(1.7) $317.0 $(25.7) $(7.8) FY 2018 FY 2019 Q2 FY20 TTM* FY 2018 FY 2019 Q2 FY20 TTM* FY 2018 FY 2019 Q2 FY20 TTM* Adjusted Free Cash Flo

10. Slide 10: UTI Student Lifecycle

    UTI Student Lifecycle ~271k Media Workable Leads Additional leads generated through field admissions teams ~25k Enrollments ~11k Starts ~8k Graduates* ~7k Employed in Field *All data is trailing twelve months as of September 30, 2020 and includes pro-forma adjustment PAGE 10 for graduates delayed in

11. Slide 11: Evolving Strategy to Better Reach and Engage Students

    Evolving Strategy to Better Reach and Engage Students HIGH SCHOOL GRADS VETERANS ADULT LEARNERS 32% 1 52% 17% 1 1 Added reps and enhanced Assisting veterans, working to Optimizing traditional and marketing to better represent regain access and digital advertising to generate high-value, technical ed

12. Slide 12: Metro Campus Investments Deliver Results

    Metro Campus Investments Deliver 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 • Cumulati

13. Slide 13: Differentiated Programs Driving Student Starts

    Differentiated Programs Driving Student Starts WELDING CNC MACHINING • High demand for technicians • High demand for technicians • 36-week program in Rancho Cucamonga, CA, Avondale,AZ, • 36-week program at NASCAR Technical Institute and Dallas, TX, all running at or near capacity • Only CNC school a

14. Slide 14: Optimizing Real Estate Footprint for Efficiency

    Optimizing Real Estate Footprint for Efficiency Completed In Process Evaluation Total Sq. Ft BLOOMFIELD, NJ* Welding FY21 102,000 LONG BEACH, CA* Welding FY20 137,000 1 Enhance utilization of DALLAS, TX* 2 Welding FY19 95,000 existing space with new RANCHO Welding FY17, Programs Programs 148,000 pro

15. Slide 15: Demand for Auto/Diesel Technicians Far Exceeds Industry Supply

    Demand for Auto/Diesel Technicians Far Exceeds Industry Supply 100,000 ~1.0M TECHNICIAN JOB OPENINGS BY 20293 50,000 260M+ 1.3B+ VEHICLES IN THE VEHICLES ON THE UNITED STATES2 ROAD WORLDWIDE1 Auto/Diesel/CRRT technicians 2018 Graduates Annual Need4 1Source: https://subscribers.wardsintelligence.com/

16. Slide 16: Well Positioned National Campus Network

    Well Positioned National Campus Network Available capacity to increase students plus additional market opportunities to add rapidly accretive campuses Overview: • 12 Campuses in 8 States • Total of ~2.1M SF • Located in high demand job markets • Easy access to major population Welding Program Expans

17. Slide 17: Industry Partnerships that Deliver Value

    Industry Partnerships that Deliver Value 84% graduate industry employment rate1 PARTNERS STUDENTS UTI • Efficient hiring source • Pipeline to jobs • Current technology and tools • Lowers costs • Better jobs and higher starting wages2 • Increased marketing • Techs who are ready to impact work • Tuiti

18. Slide 18: Current Unemployment Scenario Comparison

    Current Unemployment Scenario Comparison 2019 – 2020 trends are very different than 2007 – 2010 2020 Unemployment Claims* 2007 2008 2009 2010 2019 2020 25.0% 7,000,000 6,000,000 20.0% 5,000,000 20 - 24 Male Unemployment % Rate Initial Unemployment Claims 15.0% 4,000,000 3,000,000 10.0% 2,000,000 5.0

19. Slide 19: Prior Recessionary Impact – Student Data

    Prior Recessionary Impact – Student Data 2008 – 2011 Student Starts Students at Period End Avg # Students Unemployment Rate 21,500 19.0% 20,750 17.0% 20,000 Male 20-24 Annual Unemployment Rate 19,250 15.0% 18,500 13.0% Students 17,750 11.0% 17,000 16,250 9.0% 15,500 7.0% 14,750 14,000 5.0% 2008 2009

20. Slide 20: Prior Recessionary Impact – Financial Data

    Prior Recessionary Impact – Financial Data 2008 – 2011 Revenue EBITDA Margin % $475,000 17.0% 16.0% $450,000 15.0% $425,000 14.0% $400,000 Annual Revenue ($000s) 13.0% EBITDA Margin % $375,000 12.0% $350,000 11.0% 10.0% $325,000 9.0% $300,000 8.0% $275,000 7.0% $250,000 6.0% 2008 2009 2010 2011 PAGE

21. Slide 21: FY 2021 Guidance

    FY 2021 Guidance * ($ in millions, except for student data) New Student Start Growth (Decline)1 Revenue Growth Adjusted EBITDA2 10% - 15% 10% - 15% $30 - $35 11.5% 4.6% $17.0 $14.0 (9.3)% (2.4)% 2019 2020 2021 2019 2020 2021 2019 2020 2021 Net Income Adjusted Free Cash Flow2,3 $14 - $19 $20 - $25 $2

22. Slide 22: Industry Leader with a Strong Value Proposition for Students and Shareholders

    Industry Leader with a Strong Value Proposition for Students and Shareholders PAGE 22

23. Slide 23: Appendix

    APPENDIX

24. Slide 24: Talented Management Team with New Leadership

    Talented Management Team with New Leadership Jerome Grant, CEO Troy Anderson, EVP & CFO Sherrell Smith, EVP Campus Operations & Services Eric Severson, Lori Smith, Todd Hitchcock, SVP Chief Strategy & SVP Admissions SVP Chief Information Officer Transformation Officer Chris Kevane, Sonia Mason, SVP

25. Slide 25: Highly Qualified Board of Directors

    Highly Qualified Board of Directors Robert DeVincenzi David Blaszkiewicz George Brochick Non-Executive Chairman, President and Chief Executive Vice President Universal Technical Institute; Executive Officer, of Strategic Development, Principal, Lupine Ventures; Former Invest Detroit Penske Automotiv

26. Slide 26: UTI’s FY 2020 COVID-19 Response

    UTI’s FY 2020 COVID-19 Response Health and safety of students and employees a top priority, rapid and innovative solutions implemented to overcome the many challenges we have faced Students Employees Marketing & Financials Admissions • CDC protocols for safety • CDC protocols for safety • Introduced

27. Slide 27: UTI CARES Funds Uses

    UTI CARES Funds Uses UTI is using its CARES Act Higher Education Emergency Relief Fund (HEERF) allocation to support students and provide them a safe, quality education. CARES Act HEERF funding is helping our students stay in school, continue their educations and move toward graduation and career su

28. Slide 28: Long-Term Growth: New Campuses

    Exploring Additional Opportunities For Long-Term Growth: New Campuses NEW CAMPUSES − Metro Campus & Micro Metro Campus expansion strategy based on primary and secondary research aligned to Designated Market Areas (DMA) − Typical full Metro campus capital Investment range from $10M to $15M, Micro wil

29. Slide 29: Long-Term Growth: Program Expansion

    Exploring Additional Opportunities For Long-Term Growth: Program Expansion PROGRAM EXPANSIONS − Leverage existing campus footprint to add new, high demand programs − Continued expansion in welding through the introduction to additional campuses each year which represent high ROI investment opportuni

30. Slide 30: Long-Term Growth: Inorganic Growth

    Exploring Additional Opportunities For Long-Term Growth: Inorganic Growth INORGANIC GROWTH − Acquisition pipeline in development and expanding − Initial targets under review would be immediately accretive − Targets could range from new regions, program expansion, scale opportunities and business div

31. Slide 31: Long-Term Growth: Business Model Extensions

    Exploring Additional Opportunities For Long-Term Growth: Business Model Extensions BUSINESS MODEL EXTENSIONS − Multiple strategic initiatives have been identified that would allow for a diversification strategy − Diversification strategies designed to reduce the reliance Title IV as a funding source

32. Slide 32: Illustrative Metro Campus Results – Long Beach, CA and Bloomfield, NJ

    Illustrative Metro Campus Results – Long Beach, CA and Bloomfield, NJ Long Beach, CA Bloomfield, NJ Pro-forma Y1 Y2 Y3 Y4 Y5 Y1 Y2 Y3 Y4 Y5 Financials FY15A FY16A FY17A FY18A FY19A FY18A FY19A FY20A FY21P FY22P Revenue $0.7 $12.2 $18.3 $20.9 $22.4 $0.6 $10.9 $14.6 $20.5 $21.1 EBITDA contribution (3.

33. Slide 33: Illustrative Welding Financials – Avondale, AZ

    Illustrative Welding Financials – Avondale, AZ Pro-forma financials ($m) FY17A FY18A FY19A FY20A FY21P Revenue $0.0 $1.2 $3.4 $3.3 $3.2 EBITDA contribution(b) (0.1) 0.5 2.4 2.5 2.4 Capital expenditures(c) (0.4) (1.1) (0.0) 0.0 0.0 Pre-tax cash flow(a) $(0.5) $(0.6) $2.4 $2.5 $2.3 Perpetuity IRR 80%+

34. Slide 34: Compliance Statistics

    Compliance Statistics

35. Slide 35: UTI Department of Education Regulatory Metrics

    UTI Department of Education Regulatory Metrics The Department of Education uses the following three regulatory metrics when assessing for-profit school performance: 90/10: Regulation that governs for-profit higher education capping the percentage of revenue that a school can receive from federal fin

36. Slide 36: Summary of UTI Annual Report Data Submitted to ACCSC

    Summary of UTI Annual Report Data Submitted to the Accrediting Commission of Career Schools and Colleges (ACCSC) Total Students Completion Students Available Total Employment Total Grads Avail. For Grad. Percentage for Employment Employed Percentage Avondale, AZ 1,810 1,380 76.2% 1,169 1,013 86.7% R

37. Slide 37: Department of Education Regulatory Metrics

    Department of Education Regulatory Metrics Federal Funding by Classification ($ in millions) Avondale Houston MMI Avondale Houston MMI FY 2020 (10/1/19 – 9/30/20) Consolidated Consolidated OPEID1 OPEID2 OPEID3 OPEID1 OPEID2 OPEID3 Amounts Title IV 73.2 60.6 45.1 178.8 Proportions 82.1% 85.5% 80.1% 8

38. Slide 38: Non-GAAP Information

    Non-GAAP Information

39. Slide 39: 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

40. Slide 40: Adjusted Operating Income (Loss) Reconciliation

    Adjusted Operating Income (Loss) Reconciliation ($ in thousands) Actual Actual Actual Actual 12 Mos. TTM* 12 Mos. 12 Mos. 9/30/20 Q2 FY20 9/30/19 9/30/18 Income (loss) from operations, as reported $ (3,871) $ 8,738 $ (7,802) $ (35,275) Non-recurring consulting fees for transformation initiative(1) −

41. Slide 41: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation ($ in thousands) Projected Actual Actual Actual Actual 12 Mos. 12 Mos. TTM* 12 Mos. 12 Mos. 9/30/21 9/30/20 Q2 FY20 9/30/19 9/30/18 Net income (loss) $14,000 – 19,000 $8,008 $19,938 ($7,868) ($32,682) Interest (income) expense, net 200 (1,142) 222 1,729 1,885 Income ta

42. Slide 42: Adjusted Free Cash Flow Reconciliation

    Adjusted Free Cash Flow Reconciliation ($ in thousands) Projected Actual Actual Actual Actual 12 Mos. 12 Mos. TTM* 12 Mos. 12 Mos. 9/30/21 9/30/20 Q2 FY20 9/30/19 9/30/18 Cash flow provided by (used in) operating activities $34,700 – 44,700 $ 11,032 $ 29,835 $ 21,746 $ (13,353) Purchase of property

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    INIVERSAL TECHNICAL INSTITUTE PAGE 43

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