Universal Technical Institute, Inc.
) fourth-quarter fiscal 2013 adjusted earnings of 7 cents per
share lagged the Zacks Consensus Estimate of 10 cents by 30%.
Earnings also declined 36.4% from the prior-year quarter earnings
of 11 cents due to lower top-line growth and weak margins. The
adjusted earnings exclude severance cost of $1.6 million related
to the retirement of its board chairman.
Net revenue of $95.8 million missed the Zacks Consensus Estimate
of $97 million by 1.2% and declined 5.4% from the prior-year
quarter due to a decline in enrollments. However, average revenue
per student improved 1.5%.
Quarter in Detail
The mechanical training institute reported a 6.4% decline in
average undergraduate full-time enrollment to 14,600 in the
fourth quarter. Total student starts improved 9.5% to 6,900 in
the quarter, driven by a higher number of applications and an
additional start date in the quarter. Total student starts in the
fourth quarter lies at the higher end of the management guidance
of mid- to upper-single digit. Moreover, military student starts
grew 11.0% and high school starts grew 2.1%.
Enrollment has been trending down consistently over the past few
quarters as a result of macroeconomic headwinds; sluggish demand
due to reluctance in taking loans and continued challenges in
obtaining student financing; changing regulatory requirements;
increased price sensitivity and affordability concerns; and
Though these macro challenges continue, the auto/transportation
market is rebounding, which in turn is increasing market demand
for skilled auto technicians. Accordingly, the company witnessed
improved student applications in the quarter.
Operating margin for the fourth quarter of fiscal 2013 declined
70 basis points from the prior year quarter to 1.5% due to a
decline in revenues, partially offset by a drop in compensation
and advertising expense.
Earnings for the fiscal year declined 47.2% to 19 cents from 36
cents in the prior year. Fiscal 2013 revenues declined 8% year
over year to $380.3 million.
Cash, cash equivalents and investments totaled $97.4 million as
of Sep 30, 2013 compared to $87.4 million as of Jun 30, 2013.
In the first quarter of 2014, the company expects new student
starts to decline, worse than prior expectations of flat numbers.
For fiscal 2014, the company expects flat new student starts
despite an expected high single-digit increase in number of
applications due to time lag for conversions. The company expects
low single digit revenue growth for fiscal 2014 on the back of
increased number of scholarships and smaller increase in tuition
Universal Technical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the education sector include
New Oriental Education & Technology Group
Capella Education Company
TAL Education Group
). While New Oriental Education carries a Zacks Rank #1 (Strong
Buy), Capella and TAL Education hold a Zacks Rank #2 (Buy).
CAPELLA EDUCATN (CPLA): Free Stock Analysis
NEW ORIENTAL ED (EDU): Free Stock Analysis
UNIVL TECH INST (UTI): Free Stock Analysis
TAL EDUCATN-ADR (XRS): Free Stock Analysis
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