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Universal Technical (UTI) Reports Wider-Than-Expected Q3 Loss


Universal Technical Institute, Inc. UTI recently reported fiscal third-quarter 2018 results.

Adjusted loss of 52 cents per share in the fiscal third quarter was wider than the Zacks Consensus Estimate of 48 cents and the year-ago quarter’s 21 cents.

Quarterly revenues of $74.9 million beat the consensus mark of $74 million by 1.2%. However, revenues declined 1.8% from the prior-year quarter due to a 5.1% drop in average student enrollment.

Total starts dropped 12.7% year over year to 1,548 during the quarter.

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 rose 9.7% to $86.7 million, driven by an increase in contract services, advertising, goodwill and intangible asset impairment expense, compensation and occupancy costs.

Operating loss in the quarter was $11.8 million compared with $2.8 million in the prior-year quarter.

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) were $(7.2) million compared with $2.1 million a year ago.


The company had cash and cash equivalents of nearly $60 million as of Jun 30, 2018 compared with $50.1 million on Sep 30, 2017.

Net cash used in operations came in at $22.4 million in the first nine months of 2018 compared with $29.8 million recorded in the comparable period last year.

Fiscal 2018 Outlook

UTI expects new student starts growth in mid-single digits year over year. The average student population is likely to decline in mid-single digits.

Revenues are expected in the range of $315-$320 million for the fiscal.

Operating expenses are projected in the range of $352-$354 million.

UTI expects to incur operating loss between $32 million and $36 million, as well as projects a negative EBITDA.

Capital expenditures are expected between $23 million and $24 million for the fiscal.

Share Price Performance

UTI has outperformed its industry so far this year. The stock has gained around 28.8% against its industry’s collective decline of 0.4% in the said period.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the same space are Bridgepoint Education, Inc. BPI, Strategic Education, Inc. STRA and RYB Education, Inc. RYB. While Bridgepoint and Strategic Education sport a Zacks Rank #1 (Strong Buy), RYB Education carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bridgepoint Education and Strategic Education’s earnings for 2018 are expected to grow 8.5% and 52.4%, respectively. RYB Education’s earnings for 2019 are anticipated to grow 141.2%.

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