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UT

UNIVERSAL TECHNICAL INSTITUTE INC (UTI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered double‑digit top‑line growth and profitability expansion: revenue $204.3M (+15.1% YoY), diluted EPS $0.19 (+111%), and adjusted EBITDA $25.3M (+37%) as enrollment momentum continued across both divisions .
  • Against S&P Global consensus, UTI posted a revenue and EPS beat; EBITDA was above estimates as well. The company raised the low end of FY25 ranges for revenue ($830–$835M) and new student starts (29,500–30,000); adjusted EBITDA and FCF were reaffirmed .
  • A key catalyst: Department of Education lifted core growth restrictions on Concorde, allowing program and campus growth to accelerate one year ahead of plan. Management reiterated long‑term targets of ~$1B revenue and ~$200M adj. EBITDA by FY2029, increasing confidence in North Star Phase II .
  • Near‑term watch items: timing-driven softness in UTI starts in Q3 (one fewer start instance), with management pointing to a strong Q4 intake and reaffirmed earnings/FCF outlook .

What Went Well and What Went Wrong

What Went Well

  • Lifting of Concorde growth restrictions accelerates program and campus expansion by a year; management expressed heightened confidence in North Star Phase II execution and long‑term targets .
    Quote: “With the core growth restrictions now lifted on Concorde…we are positioned to accelerate…one year ahead of plan” .
  • Broad-based growth: revenue +15.1% YoY to $204.3M; adjusted EBITDA +37% to $25.3M; net income +113.9% to $10.7M, supported by 12.7% growth in average full‑time active students .
  • Guidance raise: low end of FY25 revenue and starts increased; liquidity remains strong at $236.9M (cash/CE $70.7M; ST investments $47.2M; revolver availability $119.0M), supporting expansion initiatives .

What Went Wrong

  • UTI starts declined 3% YoY due to one fewer start instance; Q3 timing was “too early” to capture more high school starters, though management expects stronger Q4 intake (roughly half of UTI starts occur in Q4) .
  • Operating expenses rose 11.8% YoY to $190.1M, driven by scaling costs for program and campus launches; income from operations margin was 6.9% in Q3 (vs. 4.2% in Q3’24, but below Q1/Q2 levels) .
  • Management flagged potential 2026 EBITDA pressure as growth investments (no longer adjusted out of adj. EBITDA) accelerate post‑restriction lifting; margin expansion may be muted near‑term before re‑accelerating into FY2028–FY2029 .

Financial Results

Consolidated Financials vs Prior Year and Prior Quarters

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$177.5 $201.4 $207.4 $204.3
Net Income ($USD Millions)$5.0 $22.2 $11.4 $10.7
Diluted EPS ($USD)$0.09 $0.40 $0.21 $0.19
Adjusted EBITDA ($USD Millions)$18.4 $35.5 $28.9 $25.3
Income from Operations Margin %4.2% 13.6% 8.1% 6.9%

Segment Breakdown (Q3 2025 vs Q3 2024)

Segment MetricQ3 2024Q3 2025
UTI Revenue ($USD Millions)$117.1 $131.5
Concorde Revenue ($USD Millions)$60.3 $72.8
UTI Adjusted EBITDA ($USD Millions)$20.7 $26.5
Concorde Adjusted EBITDA ($USD Millions)$5.9 $8.1

KPIs (Q3 2025 vs Q3 2024)

KPIQ3 2024Q3 2025
Total New Student Starts5,567 5,721
UTI New Student Starts2,916 2,829
Concorde New Student Starts2,651 2,892
Avg. Full-Time Active Students (Total)21,079 23,757
Avg. FT Active Students (UTI)13,041 14,205
Avg. FT Active Students (Concorde)8,038 9,552

Results vs S&P Global Consensus (Quarterly)

MetricQ2 2025 ConsensusQ2 2025 ActualSurpriseQ3 2025 ConsensusQ3 2025 ActualSurprise
Revenue ($USD)$196.63M*$207.45M Beat$200.01M*$204.30M Beat
Primary EPS ($USD)$0.122*$0.21 Beat$0.110*$0.19 Beat
EBITDA ($USD)$22.09M*$22.62M Beat$21.55M*$22.62M Beat

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q2 Update)Current Guidance (Q3 Update)Change
New Student StartsFY 202529,000–30,000 29,500–30,000 Raised low end
Revenue ($USD Millions)FY 2025$825–$835 $830–$835 Raised low end
Net Income ($USD Millions)FY 2025$56–$60 $56–$60 Maintained
Diluted EPS ($USD)FY 2025$1.00–$1.08 $1.00–$1.08 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$124–$128 $124–$128 Maintained
Adjusted Free Cash Flow ($USD Millions)FY 2025$62–$68 $62–$68 Maintained

Non‑GAAP note: Beginning FY2025, “growth investments” tied to program/campus expansion are no longer added back in adj. EBITDA/FCF, affecting YoY comparability .

Earnings Call Themes & Trends

TopicQ1 2025 (Prev.)Q2 2025 (Prev.)Q3 2025 (Current)Trend
North Star Phase II strategyRaised FY25 guidance; emphasized Phase II scaling and leadership build-out .Raised guidance again; ahead of growth targets with announced programs/campuses .Confidence increased; long‑term targets reiterated; accelerated Concorde expansion post‑restriction lift .Strengthening execution visibility
Regulatory environment & Pell eligibility for short coursesNot highlighted in Q1 release.Not highlighted in Q2 release.CEO cited supportive federal backdrop and Pell prospects for short courses via “One Big Beautiful Bill Act” .Constructive policy tailwinds
Concorde growth restrictionsNot highlighted.Not highlighted.DoE lifted core growth restrictions; expansion pulled forward by a year .Accelerated growth runway
UTI starts timing/mixFAFSA delays shifted starts into Q1; boosted Q1 growth .Starts strong; enrollment momentum continued .Q3 softness due to one fewer start instance; strong Q4 intake expected (high school cohort seasonality) .Timing effects normalizing
Systems integration (ERP/SIS/LMS/CRM)Not highlighted.Not highlighted.Multi‑year systems alignment underway under new CIO; efficiencies expected over time .Medium‑term optimization

Management Commentary

  • “Revenue grew over 15% year‑over‑year…with adjusted EBITDA increasing more than 37% and average full‑time active students growing nearly 13%” .
  • “With the core growth restrictions now lifted on Concorde, we are entering a pivotal stage…positioned to accelerate Concorde’s program and campus expansions one year ahead of plan” .
  • FY25 outlook reaffirmed/raised: “We now expect to generate between $830 and $835 million in revenue, and between 29,500 and 30,000 new student starts…We continue to expect a strong Q4” .
  • Long‑term targets: “North Star Strategy Phase II outlines achieving over $1 billion in yearly revenue and approaching $200 million in Adjusted EBITDA by fiscal 2029” .

Q&A Highlights

  • Concorde acceleration: management targeting “another half a dozen or so, maybe more programs” in 2026; a “couple of more campuses” over the five‑year plan with timing dependent on approvals; revised FY26 guidance expected in November .
  • 2026–2027 EBITDA path: margin expansion may be muted as growth investments now flow through adj. EBITDA; 2025 included ~$6M second‑half investment not adjusted out .
  • Starts dynamics: Q3 softness tied to one fewer start; high school intake heavily Q4‑weighted; Q4 starts tracking to raised guidance range .
  • Capital deployment: focus on organic growth via campus/program launches; FY25 capex ~$55M supporting 2026 execution .
  • Systems integration: ERP/SIS/LMS/CRM alignment is a multi‑year (3–4 year) effort to drive efficiency .

Estimates Context

  • Q3 2025 results beat S&P Global consensus on revenue ($200.0M* est. vs $204.3M actual) and EPS ($0.11* est. vs $0.19 actual); EBITDA was above consensus ($21.6M* est. vs $22.6M actual). Management raised the low end of FY25 revenue and starts while reaffirming adj. EBITDA/FCF, suggesting potential upward estimate revisions for FY25 revenue/starts and Q4 metrics .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Concorde growth unlock is a tangible upside catalyst: expansion pulled forward one year should drive incremental starts/revenue beginning FY2026, with near‑term investment effects on margins properly disclosed (no longer adjusted) .
  • The beat‑and‑raise quarter with reaffirmed profitability/FCF and strong liquidity underpins continued execution into a seasonally strong Q4 intake cycle .
  • Enrollment momentum remains broad‑based: Concorde new starts +9.1% and UTI average students +8.9% in Q3; watch Q4 high school‑driven intake for upside to starts within the updated range .
  • Near‑term trading: headline positives (guidance raise; DoE restriction lift) could support sentiment; monitor subsequent disclosures on FY2026 growth investments and any color on margin cadence .
  • Medium‑term thesis: North Star Phase II targets ($1B revenue/$200M adj. EBITDA by FY2029) look increasingly credible given regulatory tailwinds, program/campus pipeline, and industry demand for skilled trades/healthcare .
  • Risk checks: regulatory changes, program approval timing, and start seasonality remain variables; management visibility and disclosures (financial supplement/10‑Q) mitigate some uncertainty .

Additional relevant press releases this quarter:

  • Launch of four new electrical programs (EEIT/EIMT/ERAT/EWTT), reinforcing program expansion under North Star strategy .
  • Concorde planned relocation from Aurora to Denver (new 60k sq ft campus; expanded simulation/dental hygiene clinic) in early FY2026 .
  • Heartland Dental scholarships expanded (partnership deepening across Concorde dental programs) .