Alex Paris

Alex Paris with Barrington Research inquired about the consolidated student starts, specifically the stronger growth in the UTI division versus flat growth in Concorde, and the impact of shifting marketing dollars to UTI adult and high school segments. He also asked for clarification on capital expenditure expectations for fiscal years 2026 and 2027.

Answer

CEO Jerome Grant confirmed that Q1 starts were in line with guidance, attributing Concorde's flat growth to a high comparable quarter last year and increased investment in UTI ahead of new campus launches. He noted strong initial enrollments for San Antonio and Atlanta. CFO Bruce Schuman added that UTI starts showed broad-based mid-single-digit growth across channels and reiterated the $100 million CapEx expectation for fiscal 2026, with a similar quantum expected for 2027, primarily for growth initiatives.

Alex Paris asked about the consolidated student starts, specifically the stronger growth on the UTI side and flat growth on the Concorde side, and the impact of shifting marketing dollars to UTI adult and high school segments. He also inquired about CapEx expectations for the current and upcoming fiscal years.

Answer

CEO Jerome Grant confirmed starts were in line with guidance, noting Concorde's high prior-year Q1 compare. He explained increased investment in UTI marketing ahead of new campus launches (San Antonio, Atlanta) and the addition of high school reps, with payoffs expected next fall. CFO Bruce Schuman added that UTI starts were strong across all channels and confirmed CapEx expectations of $100 million for fiscal 2026 (with $19 million growth CapEx in Q1) and at least $100 million for fiscal 2027.

Alex Paris with Barrington Research inquired about the initial impact of a partial government shutdown on H&R Block's operations and early tax season trends, including e-file opening and potential shifts in assisted versus DIY filing due to the One Big Beautiful Bill Act. He also asked about pricing expectations for both channels.

Answer

President and CEO Curtis Campbell stated no material impact from the government shutdown, citing H&R Block's extensive experience. He noted it was too early for definitive tax season trends but reaffirmed the expectation of 1% industry growth and a tailwind for assisted filing due to increased complexity from the One Big Beautiful Bill Act. Campbell also confirmed expectations for low single-digit price increases across assisted and DIY services.

Alex Paris with Barrington Research inquired about the initial impact of the IRS e-file opening, potential effects of a partial government shutdown, early tax season trends, and whether the One Big Beautiful Bill's complexity would alter expectations for assisted vs. DIY market share and pricing.

Answer

President and CEO Curtis Campbell stated no material impact from the government shutdown, noting H&R Block's 70 years of experience. He highlighted early season confidence, strategic initiatives like Second Look and AI-enabled tax pro assistance, and confirmed expectations for a 1% industry growth and a tailwind for assisted filing due to increased complexity from the One Big Beautiful Bill. He also affirmed low single-digit price increases for both assisted and DIY.

Alex Paris asked about the return to historical withdrawal trends, the continued strength of demand as measured by applications, and the feedback from school and program partners regarding the platform issues and remediation efforts.

Answer

CEO James Rhyu confirmed that January month-to-date withdrawal rates returned to normal levels. He characterized demand as strong, similar to last year's record volumes, even with less aggressive marketing. Rhyu noted that partners, despite initial frustration, understood the shared mission and expressed faith in Stride's ability to resolve issues, with record turnout at a recent partner summit.

Alex Paris inquired about the stabilization of withdrawal trends, asking if they have returned to historical norms after elevated attrition, and sought clarification on the continued robustness of demand as measured by application volumes. He also asked about the company's relationship with school and program partners following the platform issues, and the effectiveness of remediation efforts.

Answer

CEO James Rhyu confirmed that January month-to-date withdrawal rates returned to normal levels, which is positive news. He also stated that demand, measured by application volumes, remains strong and similar to last year's record-breaking levels, even with reduced marketing spend. Regarding partner relations, Mr. Rhyu noted that while partners were frustrated, they largely understood the shared mission and expressed faith in Stride's ability to resolve issues, as evidenced by strong attendance at a recent partner summit.

Alex Paris of Barrington Research Associates sought clarification on the New Mexico contract situation, asking if the students from the terminated Gallup McKinley contract had migrated to the new multi-district program and whether that program was pre-existing. He also asked about the potential impact of the 'one big beautiful bill' on Stride's business.

Answer

CEO James Rhyu confirmed that the 'vast, vast, vast majority' of families from the previous program reregistered with Stride's new partner schools, resulting in 'no hole to fill' from the contract change. He explained Stride stood by the families and teachers, which strengthened their position. Regarding the legislative bill, Rhyu stated that any administration that favors school choice is aligned with Stride's mission and generally favorable for the company.

Inquired about the outlook for tariffs in the second half, the status of moving manufacturing out of China, the Q2 ending backlog figure, and requested more detail on the Career and Technical Education (CTE) market opportunity, including the split between K-12 and community colleges.

Answer

The tariff situation remains volatile, but the impact is being mitigated by moving production of the Inspire product to Thailand, with benefits expected in Q3/Q4. The Q2 ending backlog was $7.3 million. The CTE business is growing, with bookings mix increasing to 35% in Q2. The focus is on career exploration, healthcare, manufacturing, and automotive, primarily within the K-12 segment currently, but with expansion opportunities in community colleges.

Alex Paris asked about the anticipated tariff impact for the second half of the year, the status of moving manufacturing out of China, the quarter-end backlog figure, and sought more detail on the Career and Technical Education (CTE) market opportunity, including the split between K-12 and community colleges.

Answer

CFO Erick DeOliveira stated the tariff situation remains volatile but the company intends to pass costs through, which may cause some margin compression. He also provided the Q2 ending backlog figure of $7.3 million. CEO Paul Kellenberger confirmed that the core Inspire product is now manufactured in Thailand, with benefits expected later in the year, and noted that CTE business is currently concentrated in high schools but expanding in community colleges.

Alex Paris of Barrington Research Associates inquired about the second-half student start guidance, the potential opportunities from the 'One Big Beautiful Bill' and Workforce Pell, and the timeline for updating long-term financial targets.

Answer

CFO Brian Meyers clarified that Q3 starts are expected to be flat against a tough prior-year comparison, while Q4 should align with H1's strong growth. CEO Scott Shaw stated that Workforce Pell does not present a major opportunity and that the company is focused on its core business. Shaw also noted that updated long-term guidance would likely be provided in November, with a formal Investor Day planned for the following year.