Raj Sharma

Raj Sharma inquired about the geographic and program-specific (auto, industrial, healthcare) starts growth patterns, asking if a consistent growth pattern is observed. He also asked about the expected trend of EBITDA margins, considering current levels and potential impacts from nursing/healthcare parameters, and whether the Nashville campus performance could match East Point.

Answer

Scott Shaw, President and CEO, stated that geographically, opportunities are consistent across their map. Program-wise, there's stronger interest in skilled trades and automotive than healthcare. He anticipates EBITDA margins to continue growing at 150-250 basis points annually due to operating leverage and increased capacity utilization (currently around 60%). Regarding Nashville, he explained it serves a broader regional market and high school segment, making its growth pace different from East Point, which is a local-serving campus, but expects it to become equally profitable.

Raj Sharma asked for color on the geographic and program-specific trends in starts growth, particularly across automotive, industrial, and healthcare. He also inquired about the expected trend for EBITDA margins, currently around 13%, and whether they are being held back by nursing/healthcare-related parameters. Finally, he asked if the Nashville campus performance is expected to match East Point's.

Answer

President and CEO Scott Shaw noted consistent geographic opportunity across their map, with stronger interest in skilled trades and automotive compared to healthcare. He emphasized the company's focus on being the best in nine core programs, which builds stronger employer relationships and student recommend rates. He anticipates EBITDA margins to grow 150-250 basis points annually due to operating leverage and increased student density, with current capacity utilization around 60%. Regarding Nashville, he explained that while it can become as profitable as East Point, the pace will differ because Nashville serves a broader regional market and focuses more on the high school segment, which has a longer growth cycle compared to East Point's local, monthly enrollment build.

Raj Sharma from Texas Capital asked for an update on healthcare program starts, the reasons for their lower profitability, and the company's strategy for the military and veteran student segment.

Answer

CEO Scott Shaw explained that healthcare programs are currently less profitable due to higher costs and have received less marketing investment, but new leadership is focused on a turnaround. He detailed plans to improve nursing program economics by implementing the Lincoln 10.0 model and seeking degree-granting status to offer RN programs. Shaw also noted that veteran enrollment is temporarily lower in some markets because blended programs require degree-granting authority, which they are actively pursuing.

Raj Sharma from Texas Capital Bank inquired about the fiscal 2025 EBITDA guidance, asking what growth-related operating expenses are excluded. He also asked about the primary drivers of student demand, questioning whether it was counter-cyclical or driven by secular trends like the skills gap.

Answer

CFO Brian Meyers confirmed the adjusted EBITDA guidance excludes pre-opening costs and operating losses from new campuses, as detailed in the earnings release. Executive Scott Shaw stated the long-term plan assumes 200 basis points of annual margin improvement. Shaw emphasized that current demand is not from a cyclical downturn but from a strong secular trend, citing a 'fundamental shift' of interest towards skilled trades driven by reshoring, infrastructure needs, and the perceived job security of hands-on work versus roles threatened by AI.

Raj Sharma from Texas Capital Bank sought further understanding of GEO Group's 2026 guidance, which he perceived as conservative compared to a quarter ago, asking about incorporated startup expenses. He also inquired why there were no new facility activations in Q4, questioning if government shutdowns or year-end factors were at play, and whether GEO's idle facilities should be reactivated sooner given ICE's detention goals and GEO's favorable history.

Answer

CEO Mark Suchinski reiterated that the guidance reflects ongoing startup expenses for West Coast facilities and the absence of Skip Tracing contract revenue in Q1, emphasizing a balanced and prudent approach with expected normalization and margin expansion in the latter half of 2026. Executive Chairman George Zoley confirmed no new awards in Q4, attributing the slowdown to the government shutdown and the conceptualization of the warehouse initiative. He affirmed active discussions with ICE regarding GEO's high-security, high-quality idle facilities and anticipates more activations and activity in 2026.

Raj Sharma from Texas Capital Bank sought further clarification on the perceived conservatism of GEO Group's 2026 financial guidance, particularly regarding startup expenses and potential new activations. He also inquired about the reasons for the absence of new facility activations in Q4 2025 and whether GEO Group anticipates a continued pace of reactivations for its idle facilities, given ICE's detention goals and GEO's favorable history.

Answer

CFO Mark Suchinski reiterated that ongoing startup expenses, especially on the West Coast, contribute to initial headwinds in 2026, with normalization and margin expansion expected in the latter half. Executive Chairman George Zoley confirmed no new awards in Q4 2025, attributing it to the government shutdown and the conceptualization of the warehouse initiative, but emphasized active discussions with ICE regarding GEO Group's high-security idle facilities and the expectation of more activations and activity in 2026.

Raj Sharma of Texas Capital questioned the dynamics behind the stable Q3 and Q4 outlook for ICE monitoring and supervision, asked for the financial contribution from newly ramping facilities in Q2, and inquired when those facilities would reach mature margin profiles.

Answer

Executive Chairman George Zoley explained the stable ISAP outlook is due to ICE's intense focus on maximizing detention capacity through the end of the year. CFO Mark Suchinski declined to provide facility-specific contributions but reiterated the 25-30% margin target for owned facilities once fully ramped. He projected the recently activated facilities should reach normal, recurring operational profitability by the fourth quarter of 2025.

Raj Sharma of B. Riley Securities questioned the potential timeline to return to peak ISAP monitoring levels of 370,000 participants, whether higher Q1 G&A expenses would persist, and the number of net new beds assumed in the full-year guidance.

Answer

CEO Dave Donahue stated that a return to higher ISAP levels is directly correlated to congressional budget approval, which he anticipates will provide clarity in the second half of the year after the current focus on detention. CFO Mark Suchinski explained that while G&A costs should tick down, the significant second-half profitability improvement will be driven by revenue growth from new activations. He reiterated that guidance includes the roughly 2,800 beds from the Delaney Hall and Northlake contracts, with another 6,000-7,000 beds available in the idle portfolio.

Raj Sharma asked about the absence of new reactivations in Q4 2025, inquiring if it was due to government shutdown or year-end factors, and also touched upon discussions regarding warehouses for detention.

Answer

Patrick Swindle, CoreCivic's President and CEO, clarified that no new contracts were entered in Q4, with pacing driven by bed demand. He emphasized CoreCivic's strong position with 7,000 idle beds and an additional 5,000 beds available within existing facilities.

Raj Sharma of Texas Capital Bank inquired about the absence of new reactivations in Q4, asking if it was due to a government shutdown or year-end factors, and also touched on discussions about warehouses.

Answer

CoreCivic CEO Patrick Swindle clarified that no new contracts were signed in Q4, attributing the pacing of additional capacity to bed demand rather than external factors. He emphasized CoreCivic's strong position with 7,000 idle beds and an additional 5,000 beds immediately available within existing facilities.

Raj Sharma of Texas Capital inquired about the future of the electronic monitoring (ISAP) business and CoreCivic's capacity to compete for it. He also asked about the current EBITDA contribution from newly reactivated facilities and their timeline to reach mature margins.

Answer

CEO Damon Hininger and President & COO Patrick Swindle reiterated that ICE's clear priority is detention, not monitoring, for the foreseeable future. They confirmed CoreCivic is well-prepared to compete for the ISAP contract but does not expect a shift in ICE's focus soon. The executives declined to provide facility-specific economics but noted that facilities like South Texas would be fully ramped in Q4, contributing to the company's projected $400M+ EBITDA run rate.

Raj Sharma asked whether the 16% year-over-year revenue increase was primarily driven by tight consumer conditions or elevated gold prices, and if this organic growth pace is expected to continue. He also sought clarification on how scrapping is managed and modeled, specifically if it's purely gold price-related or an allocated percentage. Lastly, he inquired if Cash Converters might be the next acquisition target and if EZCORP has a planned annual M&A target.

Answer

CEO Lachlan Given stated that while elevated gold prices are a tailwind, the primary driver of revenue growth is EZCORP's internal operational execution and serving customers. He expressed confidence in continued organic growth through store improvements, incentivizing teams, and digital initiatives. CFO Tim Jugmans explained that scrapping is primarily an inventory management tool for aged or unsellable items, not a profit manipulation strategy, and is not directly tied to daily gold price fluctuations. Lachlan Given clarified that EZCORP does not have a planned annual M&A target, evaluating opportunities on their merits. He noted that Cash Converters, in which EZCORP holds a significant stake, is strategic but a relatively small part of EZCORP's business, with a different model including unsecured lending, and they are currently content with their ownership position.

Raj Sharma inquired about the potential for EZCORP to acquire Cash Converters and whether the company has a predetermined annual M&A target.

Answer

CEO Lachlan Given stated that EZCORP does not have a planned annual M&A target, evaluating each opportunity individually. Regarding Cash Converters, he noted their strong performance, EZCORP's participation in their rights issue to maintain its 43.x% ownership, and their simple M&A strategy of buying back franchisees. He highlighted that Cash Converters, while strategic and providing recognized earnings and dividends, is a relatively small part of EZCORP and operates a different business model with significant unsecured lending.

Raj Sharma asked about the observed changes in the business due to digital initiatives, specifically if they serve a younger, more stressed cohort or lead to more layaways, and whether the company tracks economic indicators like delinquencies or relies on store traffic/online flow. He also inquired about the U.S. pawn segment's inventory growth outpacing PLO growth and the resulting decrease in inventory turnover.

Answer

CEO Lachlan Given stated that the company primarily focuses on operating initiatives in stores rather than macro metrics. He highlighted genuine changes from digital initiatives, such as phenomenal growth in online extensions and payments, which improve customer service and store efficiency. He also noted customer growth, loyalty, and retention through the rewards program as major outcomes. Regarding inventory, Lachlan Given explained that the growth is partly due to more purchases and longer-term layaways, acknowledging it as an opportunity to increase turns through incentive programs and talent investment. CFO Tim Jugmans added that a majority of the inventory increase is jewelry, which sells slower, and the company prioritizes long-term growth by selling gold in stores rather than immediate scrapping, also mentioning the impact of the 10-month layaway program.

Raj Sharma inquired about the observed changes in the business due to digital initiatives, such as serving a younger demographic or increasing layaways, and whether the company tracks economic indicators or primarily relies on store traffic. He also asked for an explanation regarding the U.S. pawn segment's inventory growth outpacing PLO growth and the resulting decrease in inventory turnover.

Answer

CEO Lachlan Given stated the company focuses on operational initiatives, not just macro metrics. He highlighted significant growth in online extensions/payments, improved store efficiency, and enhanced customer loyalty through digital marketing and the rewards program. Regarding inventory, Given acknowledged it as an opportunity to improve turns, driven by increased purchases and longer-term layaways. CFO Tim Jugmans added that the inventory increase is largely due to jewelry, which sells slower, and the impact of the 10-month layaway program.

Raj Sharma of Texas Capital Bank sought details on the acquisition strategy, including geographic focus and size, and capital return priorities like dividends. He also asked about the divergence in retail margins between the U.S. and LatAm, the sensitivity of scrap revenue to gold prices, and EZCORP's competitive standing in Latin America.

Answer

CEO Lachlan Given stated the acquisition focus is balanced between the U.S. and Latin America, with opportunities ranging from single stores to large chains, and reiterated that scale is the priority over dividends. CFO Tim Jugmans explained that LTVs are constantly adjusted based on market dynamics, contributing to margin performance. He also noted that while scrap margins would decline if gold prices stabilize, the underlying customer need for cash persists regardless of the gold price.

Raj Sharma from Texas Capital Bank asked for clarification on the potential shares outstanding after the convertible note takeout, the performance of the Founders Group (Simple), and whether there were plans to use the off-balance-sheet vehicle structure for other growth initiatives.

Answer

Chief Financial Officer Timothy Jugmans directed the question on share count to the earnings presentation, noting 6.5 million shares are associated with the 2025 converts. Executive Lachlan Given reported that the Founders Group (Simple) is performing very well, seeing strong trends similar to EZCORP's core business. He clarified that the off-balance-sheet structure was designed specifically for the Simple transaction and is not a vehicle intended for other partnerships, though EZCORP will continue to assess its long-term strategic relationship with Simple.

Raj Sharma asked for clarification on EBITDA margins, noting they appeared slightly lower year-over-year even after adjusting for growth OpEx. He also inquired about the consistent performance of older versus newer campuses and the breakdown of student demographics (young adults vs. high school students). Finally, he asked about concerns regarding potential DOE or regulatory changes if Democrats take the midterms, particularly for new school approvals.

Answer

CFO Bruce Schuman clarified that the vast majority of the year-over-year decline in EBITDA margins is due to growth investments, and the underlying base business is still expanding margins. CEO Jerome Grant added that the baseline adjusted EBITDA is projected to grow from $133 million (without growth investments) to $156 million this year, indicating core business margin growth. CEO Jerome Grant explained that Austin and Miramar are no longer considered 'new' and are performing well, while new campuses are just coming online. He noted that about 35% of UTI students come directly from high school (mostly enrolling in fall), 15% from military, and the balance are adults, with Q1-Q3 starts primarily from the adult population. CEO Jerome Grant expressed no concern about potential DOE or regulatory changes, stating that approvals are departmental, not legislative, and UTI's strong student outcomes (70% graduation, 85% job placement) position it well regardless of administration.

Raj Sharma from Texas Capital Bank asked about the slight decline in EBITDA margins, even after adjusting for growth OpEx, and sought color on the consistent performance of old versus new campuses. He also inquired about the breakdown of young adult versus high school students and expressed concern about potential DOE or regulatory changes if there are political shifts.

Answer

CFO Bruce Schuman clarified that the vast majority of the year-over-year EBITDA margin decline is due to growth investments, with the underlying base business still expanding margins. CEO Jerome Grant explained that Austin and Miramar are no longer considered "new" and are performing above models, while new campuses are just coming online. He noted that approximately 35% of UTI students come directly from high school (primarily enrolling in the fall), 15% from military, and the balance are adults. CEO Jerome Grant expressed no concern about DOE or regulatory changes due to political shifts, emphasizing that UTI's strong student outcomes (70% graduation, 85% job placement) position it above regulatory scrutiny, regardless of administration.

Raj Sharma, Senior Analyst at Texas Capital, inquired about the projected breakdown of 2026 student starts by demographic and the contribution from new campuses/programs, current employment trends across programs, and the potential impact of the Department of Education being disbanded.

Answer

Jerome Grant, CEO, explained that the diversification of UTI campuses into skilled trades attracts an older, more local student demographic, leading to faster starts and higher show rates, while high school resources will be added for new campuses. He noted that employment demand is intensifying across all programs, citing increased B2B inquiries and strong demand in transportation and industrial maintenance. Regarding the Department of Education, Jerome Grant, CEO, stated that Title IV funding is perpetually funded and FAFSA issues are resolved, with no anticipated disruption if moved. He added that the approvals entity, expected to move under the Department of Labor, is currently operating with streamlined, collaborative processes, leading to rapid PPA agreement signings.

Raj Sharma from Texas Capital asked about Universal Technical Institute's operational readiness for Concord's accelerated growth, including faculty hiring and site development. He also sought clarification on the expected strength of Q4 student starts and inquired about capital allocation priorities beyond organic campus expansion.

Answer

CEO Jerome Grant affirmed that UTI is well-prepared for Concord's growth, having already worked on site selection and program portfolios. He confirmed strong Q4 visibility supports the raised student starts guidance. On capital allocation, both CEO Jerome Grant and CFO Bruce Schuman stressed that the primary focus is on organic growth through new campuses and programs, with Schuman highlighting the significant CapEx budget dedicated to these initiatives.

An analyst from Texas Capital Bank, on behalf of Raj Sharma, asked if student start gains were related to economic uncertainty, inquired about the drivers of military student growth, and questioned if the raised guidance was conservative.

Answer

CEO Jerome Grant attributed the start gains to targeted marketing and strong program demand, not economic factors. He noted military growth is due to an expanded recruiting team and better outreach to veterans about GI Bill benefits. He expressed confidence in the new guidance, explaining that while pulling starts forward from Q4 to Q3 helps monetization, it creates tougher comparisons that justify the projected growth rates.

Raj Sharma of Texas Capital inquired about the growth outlook for the military business, specifically seeking clarity on the $100 million in new DoD tuition assistance. He also asked about the reasons for Rasmussen's sequential margin decline and the expected operating leverage from Rasmussen and Hondros as they reach breakeven.

Answer

CFO Richard Sunderland explained the $100M in tuition assistance is authorized over four years and signals elevated DoD commitment to education, positioning APUS well. He attributed Rasmussen's Q2 margin dip to the end of a one-time Q1 vendor discount and annual Q2 salary increases. CEO Angela Selden confirmed that significant EBITDA flow-through of over 75% is now occurring at Rasmussen and is expected to continue with enrollment growth, with no major fixed G&A increases planned.

Raj Sharma asked about Rasmussen's cost structure and EBITDA flow-through potential, the stability of overall OpEx levels in 2025, the reason for Hondros' lower EBITDA despite revenue growth, and any potential working capital impact from the recent military portal outage.

Answer

CEO Angela Selden stated that Rasmussen is seeing about 60% flow-through on incremental revenue, which could improve with further optimization. She noted OpEx will include targeted marketing investments to fuel growth, offset by technology savings from AI initiatives later in the year. The Hondros EBITDA dip was attributed to a program mix shift to shorter LPN programs. CFO Richard Sunderland confirmed the recent Air Force portal outage was a minor maintenance issue with no impact on invoicing or collections.

Inquired about the financial structure of the My Home Group acquisition, the outlook for future agent growth and M&A, the assumptions behind the projected $100 million revenue contribution, and the potential impact of recent interest rate cuts.

Answer

The My Home Group acquisition was primarily stock-based with minimal cash, a structure preferred for future deals. The company is confident in achieving 25% agent growth starting in Q1 2025, driven by a strong M&A pipeline. The projected $100 million in revenue from My Home Group is based on their higher-than-average agent productivity and transaction values in the Arizona market. The company is not speculating on interest rate impacts and is instead focused on executing its growth strategy.

Raj Sharma from B. Riley followed up on the AR financing, asking how it would affect the marketing budget, what level of enrollment growth could be expected, the timing for the release of the $1.5 million in collateral, and revenue projections for the pre-licensure program teach-out.

Answer

CEO Michael Mathews stated the plan is to increase marketing spend to an annualized rate of $7-8 million, or about $2 million per quarter, starting in Q4 after the AR facility is secured. He projected this would lead to 1,500-1,800 new enrollments per quarter by the second half of fiscal 2024. Mathews confirmed the $1.5 million cash release is 'imminent' and provided pre-licensure revenue estimates of approximately $11 million for fiscal 2023, dropping to $3-4 million in fiscal 2024. CFO Matt LaVay added that the total student body should see an inflection point and begin growing in the second half of fiscal 2024.

Raj Sharma of B. Riley sought to quantify the revenue impact from reduced marketing spend, asked for clarification on total restructuring savings, and questioned the drivers behind enrollment declines at both AU and USU, as well as the status of the AR financing.

Answer

CFO Matt LaVay projected an approximate 5% quarterly reduction in the aggregate student body while in maintenance spend mode, with revenue expected to follow a similar trend. He confirmed the combined savings figures from G&A and marketing reductions and explained the enrollment drop was an expected outcome of the prior quarter's marketing cuts. Regarding the AR financing, LaVay stated the company is still in the early stages of the process.