Good day, and welcome to the Universal Technical Institute's Second Quarter Fiscal Year 2022 Earnings Conference Call. All participants will be in listen-only mode. . After today's presentation, there will be an opportunity to ask questions. . Please note, this event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President of Corporate Finance. Please go ahead.

Hello, and thank you for joining us. With me today are our CEO, Jerome Grant; and CFO, Troy Anderson. During the call today, we'll update you on our second quarter fiscal year 2022 business highlights, financial results and vision for the future. Then we will open the call for your questions. Before we begin, we want to remind everyone that today's call contains forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Please carefully review today's press release for additional information and important disclosures about forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. As a reminder, relevant factors that could cause actual results to differ materially from the forward-looking statements are listed in the press release and our SEC filings and the section entitled Forward-Looking Statements in today's press release also applies to everything discussed during this conference call. During today's call, we will refer to adjusted net income or loss, adjusted EBITDA and adjusted free cash flow, which are non-GAAP financial measures. Adjusted net income or loss is net income or loss adjusted for items that affect trends and underlying performance from year-to-year and are not considered normal recurring operations, including the income tax effect on the adjustments utilizing the effective tax rate. Adjusted EBITDA is net income or loss before interest expense, interest income, income taxes, depreciation, amortization and adjusted for items not considered as part of the company's normal recurring operations. Adjusted free cash flow is net cash provided by or used in operating activities less capital expenditures, adjusted for items not considered as part of the company's normal recurring operations. Management internally uses adjusted net income or loss, adjusted EBITDA and adjusted free cash flow as performance measures and those figures will be discussed on today's call. As a reminder, we have provided reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements in today's press release, and we encourage you to carefully review those reconciliations. It is now my pleasure to turn the call to our CEO, Jerome Grant.

Thank you, Matt. Good afternoon, everyone, and thank you all for joining us today. To start, I'd like to thank our students and staff for their continued commitment and hard work during the quarter, as we continue to navigate COVID obstacles with resilience and effectiveness to ensure our campuses continue to operate as seamlessly as possible. I'd also like to take a moment to express my appreciation to both our long-time investors, as well as a fair number of new investors joining us today. As always, we appreciate your support. Today, I'll provide a few highlights from the quarter, cover our recently announced agreement to acquire Concorde Career Colleges and provide an update on our key strategic initiatives before turning the call over to Troy, who will take you through our financial results and guidance in detail. As far as results, I'm pleased to report that we have delivered another strong top and bottom line performance this quarter, driven by higher average student population as well as higher overall revenue per student on a year-over-year basis. Revenue was $102.1 million, which is a 31% growth rate for the quarter compared to the year ago period and adjusted EBITDA of $10.9 million represents a growth rate of approximately 300% versus the comparable period a year ago. This past quarter, solid revenue for student results represented a stronger-than-expected bounce back from the COVID-19-related revenue for student persistence issues we experienced a year ago. Results from our recent acquisition of MIAT are also included in this quarter's results for the full period and have contributed in no small part to our performance. While the effects on our business of COVID-19 and the ongoing set of variants have continued to receive this quarter, the most recent variant did have some impact on our start…

Thank you, Jerome. As Jerome mentioned, we delivered positive financial and operational performance for the quarter. I will spend a few minutes covering our quarterly results, and then I'll comment on the Concorde acquisition, and we'll close out by reviewing our fiscal 2022 guidance and longer-term strategic road map expectations. Second quarter total revenue was $102.1 million compared to $77.7 million from the prior year second quarter, representing a 31.4% increase. The growth reflects a 13.6% increase in average students, including MIAT, and also an approximately 16% increase in average revenue per student, which was 7,900 in the quarter. Both average student and revenue per student were better than we expected for the quarter. Our second quarter adjusted EBITDA was $10.9 million versus $2.8 million a year ago. The year-over-year increase in adjusted EBITDA was driven by the increased revenue per student, as well as our continued focus on cost efficiencies across our operations. Adjustments for the quarter were mostly consistent with the first quarter and primarily reflects our new campus startup costs, along with acquisition and integration-related costs. A new item this quarter was lease accounting adjustments related to our facility optimization projects, including the Lisle campus purchase. These are mainly noncash adjustments other than a lease termination payment during the quarter related to our Orlando campus. From a student metrics perspective, we continue to see growth in the front-end of the business with media inquiries up year-over-year and non-media field inquiries up significantly given the much improved high school access this year. For new student starts in the quarter, we were down 5.4% versus fiscal 2021, though we expected a lower year-over-year performance this quarter versus last quarter. That said, the Omicron impacts in November through February, both in terms of delayed decisions by students, as well as…

Thank you, Troy. In closing, we're pleased with the strong results we've delivered this quarter and are excited about the momentum we're taking into the back half of fiscal '22 and beyond. Our family of brands is expanding and we're thrilled to have the opportunity to impact the lives and careers of more students than ever before, while providing workforce solutions to some of the most in-demand industries at the 21st century. We'll remain acutely focused on positive student outcomes and setting our students up for meaningful careers. We've been executing consistently against our growth and diversification strategy with several significant moves over the last year. However, the addition of Concorde is the first move to diversify our business beyond transportation, skilled trades and energy and will likely not be our last. The most important message you need to understand regarding our strategy and the steps we've taken so far is that we're just getting started. Financially, we remain well positioned to capitalize on opportunities we find to continue to execute on our growth and diversification strategy, and we'll be ready to do so. I'd now like to turn the call over to the operator for Q&A. Operator?

The first question comes from Raj Sharma with B. Riley. Please go ahead.

Thank you for taking the questions. Congratulations on a really good quarter and also this acquisition. I have a couple of questions starting with the starts, the second half starts, how do you foresee them? And if you could kind of give some color on the current quarter, was it purely COVID? Or was it also an impact of a very tight labor market and college enrollment has dropped in 4-year colleges for the last quarter, is -- could you give some color on how the high schoolers versus young adults were impacted and what the factors are and how that impacts you in the second half?

Sure. Yes. Thanks, Raj. This is Troy. And we feel really good about the second half of the year of -- 2 new campuses coming online, high school, you talked about. We have seen, as we commented on last quarter, significantly improved access and are looking at, we feel like a pretty strong bounce back in high school in the fourth quarter, in particular, we're actually up on high school even on a year-to-date basis on small numbers. Again, a lot of our high school coming in the fourth quarter. So look, we feel very positive double-digit in the back half of the year, the guide at 8% to 12% on a full year basis and a lot of confidence around that. As far as Q2, again, we knew that we were -- we would see lower performance in Q2 than we saw in Q1. We were seeing some of the leading indicators from Omicron in particular, picking up in in December and into January and at the time we did our last call, first week of February, it continued through February a bit, both in terms of delayed decisions and as well as we saw some conversion rate impacts with staff availability and being able to respond to leads and inquiries in a timely fashion. So, it was just a little bit of a bit of everything in there that put some downward pressure on our expectations there, but we've seen continued front-end strength with media inquiries and again, have a lot of positivity about the back half of the year.

And then can you talk a little bit about Concorde. Their EBITDA margins currently, I know that you mentioned is 5% year-on-year growth for last year. But when you project out fiscal '25, the overall EBITDA margins you're assuming 20%. Is that an improvement we're expecting on the Concorde side? Is there any -- you didn't mention any significant cost synergies or -- on Concorde and where is this overall EBITDA improvement coming from?

Sure. Yes. There's opportunity to drive some margin improvement over the next several years. Concorde in their modeling shows that. We think there's some opportunity to even enhance that further both with growth. They have some program expansions currently underway. They've been making some investments in the last two years and including this year, and we'll see benefits of that over the coming years, as well as we do expect to see some cost efficiency. But again, we're very -- they will operate very independently and maintain the majority of what they have today, and we'll be very purposeful to the extent that we look at anything that we integrate beyond some of the half to halves around financial reporting and security, IT security, some of those types of things. So, it's a combination of, I would say, growth and just leverage on costs and maybe some additional efficiencies. Our prior UTI-only longer-term view was in excess of 20% margin. So, we don't think we'll get all the way to 20% on Concorde stand-alone, but we do think measurable improvement over current levels.

And then any sort of indications on what we should think of ongoing revenue growth for Concorde and sort of starts, any sort of color on that? How starts have been last year and what should be baked-in going forward?

Yes. I think we'll hold on getting into a lot of details on that until we get further down the path. They've again, made some investment here in the last few years driving some program expansion. It's a model not dissimilar from what we've been saying about UTI. There's opportunity for steady, consistent organic growth given there's the growth in the health care sector overall, where they're focused in the health care sector, by the way, which are growing areas and are not impacted by some of the macro factors or is heavily impacted by some of the macro factors we're seeing another nursing in particular. But -- so reasonable kind of steady growth on an organic basis and then opportunities for incremental growth from program expansions and optimizations.

Congratulations again on a very discount multiple paid for an acquisition. I'll take my questions off-line.

The next question comes from Mark Hagan with Lake Street Capital Markets. Please go ahead.

Thanks for taking my questions. Mark, here in -- sitting in for Eric Martinuzzi. I know you mentioned it in your prepared remarks, but I was wondering if you had any more details you could provide around how the staffing and equipment’s allocating are going at the two new campuses in Austin and Miramar?

I'm sorry, how the -- I missed the question.

How the campuses are progressing with Austin and Miramar.

Well, yes, as we said, we're -- we did -- as we said last quarter, we did have a delay due to some supply chain issues with Austin, getting the campus open, which pushed it from last quarter to this quarter, which, by the way, had an effect on last quarter starts. We're ready to open in our next course cycle. And we're happy that the students that were delayed have stuck with us and are moving forward. And so going forward, we'll have starts every 3 weeks, just like the rest of the UTI system and its full speed ahead in Austin. As far as Miramar, Miramar continues to be on track to open in the fourth quarter. And we have high confidence in that as well. The demand we've seen down in South Florida has been strong and we're really excited what we're seeing there. We're also excited to start thinking about bringing some of the MIAT programs into both Austin and Miramar in 2023, not originally in the plans that we had out because we were doing the planning around that, but we saved space in those locations for those programs as well. So, we see two really successful launches there.

Great, thank you. That’s it for me. Well done.

This concludes our question-and-answer session. I would like to turn the conference back over to Jerome Grant for any closing remarks.

Well, just briefly, everyone, thank you very much for your time and attention. This concludes our conference call for this quarter, and we look forward to speaking with you all over the next couple of days and into the next quarter. Thank you.

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