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Universal Technical Swings to Loss in Q1, Cuts Sales Outlook

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Universal Technical Institute, Inc.UTI , the automotive technician training company, reported disappointing first-quarter fiscal 2016 results.

Universal Technical posted an adjusted loss of 3 cents per share in first-quarter fiscal 2016, which compared unfavorably with the Zacks Consensus Estimate of earnings of 3 cents. In the year-ago quarter, the company had generated earnings of 12 cents per share.

Earnings were adjusted to exclude the negative impact of the opening of the Long Beach campus during the quarter.

Universal Technical Institute Inc. (UTI) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Quarter in Detail

In spite of marginally surpassing the Zacks Consensus Estimate of $89 million, revenues of $89.8 million fell 6.2% from the prior-year quarter due to lower total enrollment.

The top line, however, excluded revenues of $5.7 million related to the loan program during the quarter. The company intends to include this amount in the forthcoming quarters as students pay back their debt.

Universal Technical reported an 8.2% drop in average undergraduate full-time enrollments in the first quarter. The decline in total enrollment was due to a lower student population at the beginning of the quarter and weak student starts. Student starts declined 5.3% in the quarter.

Universal Technical's enrollments have been sluggish for several quarters now, due to regulatory challenges, and changes and competition in the higher education industry. However, revenue per student improved 3% in the quarter.

Excluding the costs related to the Long Beach campus, operating loss was $0.8 million. In the prior-year quarter, the company had reported operating income of $5.6 million. The weak performance was due to lower enrollments.

Fiscal 2016 Outlook

Given its present enrollment scenario, Universal Technical cut its guidance for starts and revenues for fiscal 2016. The company, however, maintained its guidance for total enrollment and capital expenditure.

Universal Technical expects fiscal 2016 student starts to decrease in the low-to-mid single digits, compared to the prior guidance of low single-digit growth. Total enrollment is expected to decline in the mid-to-high single digits.

Revenues are expected to decline about 3-5%, which is worse than the prior expectation of a 2% decrease.

In fiscal 2016, the company intends to ramp up its investments in order to drive students starts growth, which is expected to hurt profits. Capital expenditure is expected in the range of $19.5 million to $20.5 million.

Universal Technical carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the education industry include Lincoln Educational Services Corporation LINC , Bridgepoint Education, Inc. BPI and K12, Inc. LRN . All three companies have a Zacks Rank #2 (Buy).

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UNIVL TECH INST (UTI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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