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Universal Technical Chalks Out Financial Improvement Plan


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Universal Technical Institute, Inc. (UTI - Analyst Report) , a leading provider of transportation technician training in the U.S., recently announced a Financial Improvement Plan to generate higher operating income and EBITDA levels in 2017.

Plan Details

Universal Technical has been reporting a low rate of enrollment for several quarters now, similar to private education company DeVry Education Group Inc. (DV - Analyst Report) , due to regulatory changes and intense competition in the higher education industry. Thus, in order to deal with the situation and drive growth, Universal Technical has decided to implement cost-saving initiatives, flatten the organization and reorganize its business processes.

Universal Technical expects the plan to rake in $25 million to $30 million in annualized cost savings and record a severance charge of approximately $4 million in the fiscal quarter ending Sep 30, 2016.

The company believes that in spite of a cutback in its workforce, changes in marketing strategy, admissions structure and several business process initiatives will continue to deliver good quality education and service to students and industry customers. Management anticipates this scheme to drive value for all of Universal Technical’s stakeholders and believes that it will lend the company the financial stability and organizational alignment to tap in on opportunities.

FY16 View Intact

Universal Technical reaffirmed its fiscal 2016 guidance as provided during the third-quarter earnings conference call. It expects new student starts and average student population to decrease in the low double-digit range. Revenues are expected to decline about 6–7%.Capital expenditure is expected in the range of $8.0 million to $9.0 million.

Universal Technical currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in this industry include Lincoln Educational Services Corporation (LINC - Snapshot Report) and Capella Education Co. (CPLA - Analyst Report) .

Lincoln Educational Services expects full-year fiscal 2016 earnings to increase 88% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Capella Education – a Zanks Rank #2 (Buy) company – projects full-year 2016 earnings growth of 3.44%.

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