Hello, and welcome to Universal Technical Institute's Second Quarter 2016 Conference Call. [Operator Instructions] At this time, all participants are in a listen only mode. And after today’s presentation, we’ll open the lines for questions. As a reminder, today's conference call is being recorded. A replay of the call will be available for 60 days at www.uti.edu, or through May 12, 2016 by dialing 412-317-0088 or 877-344-7529 and entering pass code 10085599. At this time, I would like to turn the conference over to Mr. John Jenson, Vice President and Corporate Controller of Universal Technical Institute. Please go ahead.

Hello and thanks for joining us. With me today are Kim McWaters, Chairman and CEO, and Eugene Putnam, President and CFO. During today's call, we will review the results of our second quarter and then open the line for your questions. Before we begin, we must remind everyone that, except for historical information, today's call may contain forward-looking statements as defined by Section 21E of the Securities and Exchange Act of 1934 and Section 27A of the amended Securities Act of 1933. I will refer you to today's news release for UTI's comments on that topic. The safe Harbor statement in the release also applies to everything discussed during this conference call, including initial comments by management as well as answers to your questions. During today's call, we will make reference to EBITDA, which is a non-GAAP measure representing net income exclusive of interest, income taxes, depreciation and amortization. The schedule provided in the earnings release reconciles EBITDA to the nearest corresponding GAAP measure, net income or loss. And now I would like to turn the call over to Kim McWaters, our Chairman and Chief Executive.

Thank you, John, and hello, everyone. While we continue to feel positive about our long-term outlook for our business, our second quarter results were not what we wanted and certainly don't reflect our work to combat the tough realities of the current operating climate. UTI has been in business for more than 50 years. We have weathered many kinds of economic cycles and we know there is a direct correlation between unemployment and new student starts. This quarter, we saw a further decline in the unemployment rate for males aged 18 to 24, which means many young men, the demographic we primarily serve, are still choosing employment over education. The fact is that in today's job market most can currently get some type of job without going to school. Add that to the hostile and unprecedented regulatory environment and the constant barrage of negative news about our sector and you have a set of challenges that are very difficult to overcome. But because we have been through these cycles before, we believe that things will turn around. We firmly believe that at some point people will tire of the low wage, low skill jobs they settled for as we came out of the recession and begin to look for something more challenging and rewarding. At some point, we believe the cycle will turn in our favor. And at some point, employers growing in systems on education that produces work ready graduates, combined with the glimmers of a positive shift in public perception of technical careers and training, will translate into new student growth. But we know we cannot simply wait for these things to happen. We must deal with the current reality while we continue to transform our business for the future. That transformation has actually already begun with our…

Thanks, Kim. We ended the quarter with an operating loss of 5.8 million as compared to operating income of 2.4 million in the same quarter last year. During the first half of 2016 our operating loss was 8 million as compared to operating income of 8 million in the first half of 2015. Second quarter and year to date operating income was negatively impacted by initial operating losses for our Long Beach campus of 800,000 and 2.2 million respectively. We began this quarter with approximately 1,100 fewer students than we had at the same time last year. And with the decline in our show rate of 280 basis points, starts decreased by 400 students this quarter as compared to last year. The combination of the lower beginning student population and lower new student starts led to an overall decline in average student population of approximately 9% versus last year. The lower student populations were partially offset by higher average revenue per student but still led to a revenue decline -- to revenues of 88.2 million in the quarter representing a decline of 3.3%. Average tuition per student was up from $6,800 to $7,200. And tuition excluded 4.6 million related to our loan program compared to 5.7 million in the second quarter of 2015. Just as a reminder, we recognize revenue from that program only when we receive payment. For the first half of 2016 revenues were approximately 178 million which was down 4.8% compared to 187 million for the same period last year. Tuition excluded $10.3 million related to our loan program compared to 11.4 million in last year's first half. Advertising expense was 11.7 million this quarter which is consistent with the same quarter in the prior year. As a percentage of revenue, advertising expense was 13.3% for the…

Thank you. We will now begin the question-and-answer session [Operator Instructions]. Our first question is from Peter Appert of Piper Jaffray. Please go ahead.

Hi, this is actually Stephen in for Peter. I just have a quick question about enrollment and pricing. It seems that the labor market in general has been getting better, can you give us any color on why the weakness for UTI? And secondly, what is the Company doing in terms of pricing? And what is the outlook for revenue per student in the future?

So, I will take the first part of the question, Stephen. The reality is this business is countercyclical. So as the labor market improves that mix creates a headwind and makes it more challenging for students to consider training and its career path at this time. And it has been a trend that we have been experiencing for the last five years I would say coming out of the recession. So, a way that we are trying to counter that is by engaging employers out in the field in and around our campuses to bring the opportunities that this career path offers students and help them understand what this type of training will yield for them as a technician in the short- and the long-term. What is better is that the need for technicians is so strong that employers are willing to participate and help cover the cost of education for our students, which is a good transition into the second part of your question around pricing. We have continued to look at our programs and the pricing relative to others in the environment and we have also looked at our students' preference for programs. We do have quite a wide range of programs offered at various price points and yet our students still choose to take the more comprehensive programs at a higher cost. To help students counter the challenges and obstacles that they have to overcome just in the transition, a light transition to get an education, we have targeted scholarships that are based on need and merit to help those students who need it most. So I'd say the combination of offering a wide variety of programs at different price points, targeted scholarships to help students most in need, and certainly the engagement of employers and industry in supporting the cost of education through tuition reimbursement is something that we believe is addressing the cost and affordability issues that continue to be top of mind for students.

And I just have another question. In the past UTI has been expanding by opening new campuses. I assume is that currently on hold right now?

I wouldn't say it is on hold, Stephen. We have not, as we have talked about in the past, we expect to announce a new campus sometime in calendar year 2016. Obviously we have not done that yet, but we are continuing site selection and evaluation of some sites, it is just a tad premature. But I would hope within the next six to nine months that we do announce where our next location will be that would hopefully open sometime late 2017.

[Operator Instructions] At this time we are not showing any additional questions. So I would like to turn the conference back over to Kim McWaters for any closing remarks.

Thank you. We appreciate your time and interest in Universal Technical Institute and we look forward to our second quarter earnings call which is currently scheduled for August 4, 2016. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.