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Date: May 7th, 2008
Author: Career College News
Universal Technical Institute reports second quarter results for fiscal 2008
Universal Technical Institute, Inc. (NYSE: UTI), a provider of technical education training, today announced financial results for the second quarter and six months ended March 31, 2008.
Second Quarter Operating Performance
Net revenues for the second quarter of fiscal 2008 were $88.2 million, a 3.8 percent decrease from $91.7 million for the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 was $1.9 million, or 7 cents per diluted share, as compared to $6.1 million or 22 cents per diluted share for the second quarter of fiscal 2007.
The decrease in net revenues primarily relates to a decline in average undergraduate student enrollment partially offset by higher tuition prices.
Operating income for the second quarter of fiscal 2008 was $2.3 million as compared with $9.5 million for the second quarter of fiscal 2007. The overall decrease in operating income reflects increased professional and contract services costs, occupancy costs, advertising costs and bad debt expense. These higher costs were partially offset by a decrease in compensation and benefits.
Operating margin for the second quarter of fiscal 2008 decreased to 2.6 percent from 10.3 percent for the second quarter of fiscal 2007. Net income margin for the second quarter of fiscal 2008 decreased to 2.2 percent from 6.7 percent for the second quarter of fiscal 2007 for the same reasons previously described, partially offset by higher interest income in the current period.
“Our financial results reflect the accumulation of several quarters of insufficient student contracts and starts. This shortfall negatively impacted our average student population, revenue and income. At the same time, the quarter marked an inflection point for steady improvement in a number of leading indicators. And, the trend continues. While it will take time for the progress to be fully reflected in our business results, I am excited about the positive momentum on which we can build,” said Kimberly McWaters, President and Chief Executive Officer of UTI.
Six Month Operating Performance
Net revenues for the first six months of fiscal 2008 were $178.2 million, a 1.7 percent decrease, compared with $181.2 million for the first six months of fiscal 2007. This decrease primarily relates to a decline in average undergraduate student enrollment partially offset by an additional earning day during the period and higher tuition prices.
Operating income in the first six months of fiscal 2008 was $11.6 million compared with $20.0 million for the first six months of fiscal 2007 with the decrease primarily attributable to higher occupancy costs, professional and contract services costs and bad debt expense. These higher costs were partially offset by a decrease in compensation and benefits and advertising costs. Advertising costs were lower during the first six months of fiscal 2008 as a result of our planned decrease in spending during our first quarter due to implementing improvements in our sales processes and testing our new advertising campaign that we rolled out during second quarter. During the first quarter of the prior year we chose to spend heavily on advertising, however, due to competing media messages during the holiday and political advertising seasons, the spending proved to be ineffective. Operating margin for the first six months of fiscal 2008 was 6.5 percent compared with 11.0 percent for the first six months of fiscal 2007.
Net income for the first six months of fiscal 2008 declined to $8.4 million, or 32 cents per diluted share, compared with $13.0 million, or 48 cents per diluted share, for the first six months of fiscal 2007. Net income margin for the first six months of fiscal 2008 was 4.7 percent, a decrease of 250 basis points, compared with 7.2 percent for the first six months of fiscal 2007 for the same reasons previously described and was partially offset by higher interest income in the current period.
Balance Sheet and Cash Flow
At March 31, 2008, cash and cash equivalents were $75.0 million compared with $75.6 million at September 30, 2007 and $40.4 million at March 31, 2007. At March 31, 2008, shareholders’ equity was $106.3 million compared with $124.5 million at September 30, 2007. Pursuant to the previously announced share repurchase plan, we purchased 1,886,300 shares of stock during the six months ended March 31, 2008 at a total cost of approximately $29.5 million.
Cash flow provided by operations was $6.1 million for the six months ended March 31, 2008, compared with $16.7 million for the six months ended March 31, 2007. Read full story.
About Universal Technical Institute
Universal Technical Institute is a provider of technical education training for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. The company offers undergraduate degree, diploma and certificate programs at 10 campuses across the United States, and manufacturer-sponsored advanced programs at 18 dedicated training centers. Through its campus-based school system, Universal Technical Institute offers specialized technical education programs under the banner of several well-known brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NTI).
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