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Universal Technical (UTI) Reports Q4 Loss, Enrollment Down

Zacks

Universal Technical Institute, Inc. UTI reported loss of 8 cents per share in the fourth quarter of fiscal 2017. The Zacks Consensus Estimate was pegged at earnings of 3 cents per share. The reported loss was, however, narrower than the year-ago figure of a loss of 42 cents per share.

Revenues & Enrollment

Revenues of $81.3 million in the fourth quarter decreased 6.4% from $86.9 million in the prior-year quarter. The decrease was due to 8.5% decline in its average student enrollment.

Apart from that, the company’s proprietary loan program wherein students participated amounted to $2.9 million in the quarter compared with $4.2 million in the prior-year quarter.

Universal Technical reported a 6.2% drop in average undergraduate full-time enrollments both in the quarter and the year.

However, total starts remained flat year over year during the quarter and decreased 6.2% in fiscal 2017.

Universal Technical Institute Inc Price, Consensus and EPS Surprise

Universal Technical Institute Inc Price, Consensus and EPS Surprise | Universal Technical Institute Inc Quote


Operating Highlights

Operating expenses contracted 10.5% to $82.4 million on lower compensation expenses and improved operating efficiencies following the implementation of the Financial Improvement Plan.

The company reported operating loss of $1.1 million compared with an operating loss of $5.2 million in the prior-year quarter. The improvement mirrors significant cost reductions and solid contribution of $0.9 million of operating income from the Long Beach campus.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.9 million against a loss of $0.9 million in the prior-year quarter.

Fiscal 2017 Highlights

The company’s revenues were $324.3 million, decreasing 6.6% year over year on a decline of 9.2% in average student enrollment.

For the full year, the company incurred loss of 54 cents per share compared with a loss of $2.02 a year ago.

Financials

The company had cash and cash equivalents, and investments of $97.9 million as of Sep 30, 2017 compared with $120.7 million as of Sep 30, 2016. The decline can be attributed to collateral requirements for surety bonds renewed in fiscal 2017 and changes in working capital.

Fiscal 2018 Guidance

Universal Technical expects new student starts growth in the low-single digits (weighing toward the back half of the year).

The average student population is likely to decline by mid-single digits. Revenues are expected to be in the $310-$320 million range for the year compared with $324 million in fiscal 2017.

Operating expenses is expected to range between $340 million and $345 million, reflecting an increase of $14-$19 million from fiscal 2017.

Universal Technical expects to incur operating loss between $20 million and $25 million and negative EBITDA.

Capital expenditures are expected to be approximately between $24 million and $25 million for the year ending Sep 30, 2018. This includes approximately $11 million from New Jersey campus that is expected to open in fall of 2018; and approximately $4 million to expand welding program to two additional campuses.

Zacks Rank & Peer Release

Universal Technical currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

A few better-ranked stocks from the Zacks Schools Industry are American Public Education, Inc. APEI, Bright Horizons Family Solutions Inc. BFAM and Grand Canyon Education, Inc. LOPE.

American Public Education, a Zacks Rank #1 stock, has witnessed upward movement in earnings estimate revisions by 5.9% for the year.

Bright Horizons, a Zacks Rank #2 (Buy) company, has an expected EPS growth rate of 22.4% for this year.

Grand Canyon, also a Zacks Rank #2 stock, is expected to register earnings growth of 21.9% this year.

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