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Universal Technical's (UTI) Q4 Loss In Line, Revenues Miss

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Universal Technical Institute, Inc. (UTI - Free Report) recently reported fiscal fourth-quarter 2018 results, wherein loss of 49 cents per share was in line with the Zacks Consensus Estimate. However, quarterly revenues of $80.3 million missed the consensus mark of $81.3 million by 1.3%.

Loss incurred during the fiscal fourth quarter was wider than the year-ago level of 8 cents. Also, revenues declined 1.3% from the prior-year quarter, attributable to a 2.1% reduction in average student population.

Universal Technical Institute Inc Price, Consensus and EPS Surprise


Nevertheless, total starts rose 8.5% year over year to 6,022 during the quarter. This year-over-year growth was recorded for the first time in eight years.

Operating Highlights

Operating expenses of $91.3 million grew 10.8% from a year ago due to a rise in compensation and related costs, along with advertising, contract services and student expenses. Operating loss in the quarter was $11.1 million compared with $1.1 million in the prior-year quarter.

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) were $(6.4) million compared with $3.9 million in the year-ago period.


The company had cash and cash equivalents of $58.1 million as of Sep 30, 2018 compared with $50.1 million on Sep 30, 2017.

Net cash used in operations came in at $13.5 million in 2018 compared with $10 million recorded a year ago.

Fiscal 2018 Highlights

Universal Technical incurred fiscal 2018 loss of $1.51 per share, which was in line with the Zacks Consensus Estimate. However, revenues of $317 million missed the consensus mark of $318.1 million by 0.3%.

Revenues in fiscal 2018 decreased 2.3% year over year due to a 4.3% decline in average student population. Loss widened to $1.51 per share from 54 cents in fiscal 2017. Total starts slightly increased to 10,705 from the prior-year level of 10,573.

The company’s operating expenses in fiscal 2018 came in at $352.2 million, up 8% from a year ago. Operating loss was $32.7 million compared with $8.1 million in fiscal 2017.

EBITDA in the fiscal year was $(16.7) million compared with $17.9 million a year ago.

Fiscal 2019 Outlook

Universal Technical expects mid-high single digit new student starts growth across its existing campuses, including the new Bloomfield, NJ campus. The average student population is likely to rise in low-single digits.

Fiscal 2019 revenues are expected in the range of $322-$332 million. Operating expenses are projected in the range of $337-$347 million.

Universal Technical expects to incur operating loss between $10 and $15 million, due to investments in marketing and admissions to support start growth along with the expansion of its welding program. EBITDA is anticipated in the range of $5-$11 million.

Capital expenditure for fiscal 2019 is likely to be between $8 million and $10 million.

Share Price Performance

Universal Technical has outperformed its industry so far this year. The stock has gained around 16.7% against its industry’s collective decline of 14.2% in the said period.

Zacks Rank & Key Picks

Universal Technical currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry are K12 Inc. (LRN - Free Report) , RYB Education, Inc. (RYB - Free Report) and Adtalem Global Education Inc. (ATGE - Free Report) . While K12 and RYB Education sport a Zacks Rank #1 (Strong Buy), Adtalem carries a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank stocks here.

K12’s earnings per share are expected to increase 11.8% in 2018.

RYB Education is expected to record an EPS growth rate of 195.5% next year.

Adtalem has an expected earnings growth rate of 2.5% for the current year.

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