Universal Technical Institute Q3 FY2026 Earnings Call - Guidance Trimmed on High School Conversion Miss, Skilled Trades Momentum and Long-Term Targets Hold

Conference Operator: Good day. Welcome to the Universal Technical Institute third quarter 2026 earnings conference call. Today, all participants will be in a listen-only mode. Should you need any assistance during today’s call, please signal for a conference specialist by pressing the star key, followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that today’s event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President, Corporate Finance and Investor Relations. Please go ahead.

Matt Kempton, Vice President, Corporate Finance and Investor Relations, Universal Technical Institute: Hello. Welcome to Universal Technical Institute’s fiscal third quarter 2026 earnings call. Joining me today are our CEO, Jerome Grant, and CFO, Bruce Schuman. Following our prepared remarks, we will open the call for your questions. A replay of this call, its transcript, and our investor presentation will be archived on the investor relations section of our website at investor.uti.edu, along with our earnings release issued earlier today and furnished to the SEC. During this call, we may make comments that contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which, by their nature, address matters that are in the future and are uncertain. These statements reflect management’s current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements.

These factors include, but are not limited to, those discussed in our earnings release and SEC filings. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments, except as required by law. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of fiscal 2025. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to, and not as a substitute for, the company’s reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today’s call are reconciled in our earnings press release to the most directly comparable GAAP measure.

For information regarding definitions of our non-GAAP measures, please see our earnings release, financial supplement, and investor presentation. With that, I will turn the call over to Jerome Grant, CEO of Universal Technical Institute, for his prepared remarks. Jerome?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Thank you, Matt. Good afternoon, everyone, and thank you for joining us. The third quarter was another strong quarter for Universal Technical Institute and reinforces our confidence in both the environment for job demand for our students as well as student interest in our program offerings. Despite some shorter-term challenges we will discuss, we remain extremely confident in the strength of our long-term North Star strategy. Driven by the strength of our new campuses and programs, as well as stronger than expected interest in our skilled trade programs, we exceeded expectations for new student starts this quarter, generating 11% year-over-year growth, with a particularly strong contribution from UTI division, which increased 23% year-over-year. Average full-time active students increased 6%, reflecting continued enrollment growth across both UTI and Concorde divisions. Revenue grew 7% year-over-year to $219 million. Baseline adjusted EBITDA for the third quarter was $27 million.

Our SEC reported adjusted EBITDA for the quarter was $18 million due to $9 million in strategic growth investments. These results continue to validate the strategy we’ve been executing over the past several years and reinforce that the underlying demand environment remains exceptionally healthy. Across the industries we serve, employers continue to face significant shortages of skilled workers. Whether we’re speaking with automotive dealers, manufacturers, healthcare systems, electrical contractors, or industrial employers, the message is consistent. Demand for qualified skilled graduates continues to far exceed the available supply. That sustained supply and demand imbalance has created a durable and attractive backdrop for our business. We are seeing particularly strong momentum across skilled trades where infrastructure investment, domestic manufacturer, energy projects, and data center construction continue to drive demand for electricians, HVACR techs, welders, industrial maintenance professionals, and other skilled workers.

Nearly every week, you will read articles in major print and digital publications such as The Wall Street Journal, The New York Times, Forbes, and Bloomberg Businessweek about both the increasing demand for and accelerating interest in the trades. These trends further reinforce that the investments we’ve made to expand our skilled trades offerings were the right strategic decision. The demand for skilled healthcare workers also remains quite strong, with providers continuing to face staffing shortages across many of the disciplines we serve. We’re seeing particularly strong momentum in our radiology technician programs, where enrollment and demand have ramped rapidly. Now, at the same time, employer demand for transportation technicians remains exceptionally robust. For example, there are more than twice as many open positions on our campus job boards than the number of automotive or diesel graduates we produce.

The Bureau of Labor Statistics is projecting tens of thousands of job openings in this space. Several years ago, we made the decision to expand beyond transportation because we believed that the long-term workforce education opportunity was much broader. Today, we have the programs, campuses, and employer relationships in place to meet that evolving student demand. As students increasingly gravitate towards our skilled trades offering, our newer campuses, capacity expansions of skilled trades offering, and recently launched programs continue to outperform both our plan and market expectations. These results further validate the diversification strategy we’ve been executing throughout North Star. Because we move aggressively and invested ahead of where the student demand is moving, we are well-positioned to capture those opportunities while continuing to support the needs of our employer partners in all industries we serve.

While we’ve had strong year-to-date results and the overall demand environment remains exceptionally healthy, we have unfortunately seen some near-term softness in our UTI division’s high school channel relative to our original expectations. Specifically, fourth quarter UTI high school starts, which are primarily weighted towards auto and diesel programs, are tracking below our initial outlook. This year’s UTI division lead flow is up over 15%, and candidly, we simply did not get to all the prospective students who expressed interest. We view this as a near-term opportunity to improve execution, especially within this channel. We are proactively taking steps to strengthen our engagement with prospective students and improve conversion through the enrollment process. To address this summer, we are increasing our admission staffing dedicated to the high school channel by approximately 20%. We’ve largely completed this initiative, putting us on strong footing heading into fiscal 2027.

These staffing additions will improve our conversion and better serve the needs of our employer partners. As previously noted, we also experienced stronger than expected student interest in our skilled trades offerings. As a result, we saw more enrollment growth than originally anticipated in these programs, which are shorter in duration, delivering marginally less revenue and profit than some of our other offerings like automotive and diesel. We are continuously refining our pricing strategies and strengthening the value proposition across our portfolio to ensure our programs remain aligned with employer needs, evolving student demand, and long-term market opportunities. Collectively, these actions position us to more optimally balance enrollment opportunities across the portfolio, improve execution, and enhance profitability over time. Although these efforts won’t materially change the financial outcome for fiscal 2026, they reinforce our confidence in the opportunities ahead and strengthen our outlook as we enter fiscal 2027.

With that backdrop, let me provide some additional context on our full-year outlook. Entering 2026, as we communicated with you throughout the year, we expected a strong fourth-quarter contribution from the UTI high school channel. As I mentioned, those new student starts are coming in softer than anticipated. As a result, this, and to a smaller degree, the faster than expected increase in student interest in our skilled trades programs over transportation offering are impacting our fiscal 2026 expectations. Let me make this clear. This is only about our near-term financial outlook. While we are updating our fiscal 2026 financial guidance, we’re really adjusting expectations for Q4 2026. We now anticipate generating consolidated revenue between $893 million and $900 million, reflecting approximately 7% year-over-year growth.

Baseline adjusted EBITDA is now expected to exceed $135 million and reported adjusted EBITDA to between $100 million and $103 million due to approximately $35 million of growth investments. We’re also tightening the range of our new student starts, which are now expected to be between 31,900 and 32,300. I want to emphasize that these fiscal 2026 adjustments in no way whatsoever alter our confidence in the result of the financial targets we’ve outlined for Phase Two of our North Star strategy. We remain confident in both our medium and long-term projections, which means we are still firmly on track to exceed $1.2 billion in revenue and approach $220 million in adjusted EBITDA in 2029. Bruce will walk through our updated guidance in more detail, but we remain confident in North Star financial targets and the significant long-term opportunity in front of us.

The objective of the second phase of our North Star strategy was to build a larger, more diversified workforce education platform with a durable growth engine. This quarter is another proof point that that strategy is working. Our new campuses continue to outpace expectations. For example, the first start at our newly launched UTI Atlanta campus in July performed exceptionally well, tracking 30% ahead of expectations. Additionally, the strength of UTI San Antonio, which opened in the spring, has not slowed. To date, new student starts are tracking roughly 40% ahead of the launch model. The early strong performance of both UTI San Antonio and UTI Atlanta gives us confidence these locations have the potential to ramp to scale faster and perhaps above their projected mature run rates of approximately 800 and more than 1,500 students annually, respectively.

Looking ahead, we continue to make excellent progress on our fiscal 2027 campus pipeline. Construction and planning activities are advancing as expected, and we recently announced the campus presidents for our new UTI campus in Salt Lake City and our new Concord campuses in both Houston and the Phoenix metropolitan areas. These new locations represent another significant opportunity to expand reach into attractive and underserved markets. Our comprehensive UTI campus in Salt Lake City, like Atlanta, is designed to support approximately 1,500 students While each of the new Concord campuses to open in Houston, Atlanta, and Glendale, Arizona, are expected to serve roughly 600 students each. With all three of our new fiscal 2026 campuses now open and four campuses getting ready to launch in fiscal 2027, we remain firmly on track with our North Star operational targets.

To reiterate, we plan to open a minimum of two and up to five new campuses annually while replicating 12-20 new programs annually across the legacy UTI and Concord campuses each fiscal year. With respect to program replications, this year, we’re on track to launch more than 20 new programs across UTI and Concord, making fiscal 2026 one of the most active years for program replications in our history. At the UTI division, we’ve continued to build on the red-hot demand for our skilled trades offerings while strengthening our position in aviation with 12 new programs on existing UTI campuses across HVACR, our electrical suite, and aviation maintenance in 2026. Most recently, we completed the nationwide rollout of our electric vehicle and hybrid curriculum and added HVACR to the UTI Lisle campus.

On the Concord side, we set out to launch 10 program replications this year, and as of today, we’ve actually successfully launched 12 programs across the healthcare campuses. These programs include dental assistant, diagnostic medical sonography, pharmacy technician, radiology technician, and surgical technician. Over the last several years, we have successfully executed the first two pillars of the North Star strategy, growth and diversification. We’ve fundamentally transformed Universal Technical Institute from a primarily transportation-focused education company into a diversified workforce education platform serving transportation, the skilled trades, healthcare, and the dental markets. A major catalyst in that transformation was our acquisition of Concord Career Colleges, which unlocked an entirely new market as we made our entrance into healthcare and broadened our addressable market.

From the beginning, we took a deliberate approach to integration, preserving the strengths and brands of both organizations while creating infrastructure needed to support a larger, more diversified company. That approach has worked brilliantly and has enabled us to expand our campus footprint, launch dozens of new programs, increase student capacity, and establish a stronger enterprise. As we continue to scale, we’ve reached the important inflection point where we believe we can better leverage the capabilities we’ve built across the organization. As I mentioned last quarter, we’re increasingly operating as one enterprise with two highly respected brands serving distinct markets. The North Star strategy, as we’ve repeatedly shared with you, has three components: growth, diversification, and optimization. To date, the third leg of the North Star has been focused on optimizing how we operate behind the scenes by unifying supporting capabilities and simplifying operations.

In the culmination of a year-long strategic initiative, as of the end of July, we are now operating all of our programs within both of our brands under one enterprise operating model. This is an important planned step in the evolution of our company. By unifying the capabilities we’ve developed across both UTI and Concord brands, we can simplify how we operate, improve student acquisition, and better align our resources behind the highest return opportunities across our businesses. Many of these opportunities ahead are enterprise-wide. Whether it’s adapting to change in the digital marketing landscape, leveraging the power of artificial intelligence to enhance student acquisition, deepening employer partnerships, or supporting future campus expansion, we believe a more unified approach will allow us to move faster and execute more effectively. What does not change in this unification is the strength of our customer-facing brands.

UTI and Concord have tremendous brand equity in their respective markets, and we will continue to preserve what makes each institution unique while leveraging the capabilities we’ve cultivated. One area where this is particularly relevant is student acquisition. Students are increasingly using AI tools earlier in their research process, which is changing where inquiries originate and how prospective students engage with our brands. Our acquisition strategy has never depended on a single source of lead. We have built a diversified model that spans paid search, social, organic discovery, admissions outreach, referrals, nurture campaigns, and other digital offline channels. That diversification has allowed us to adapt as search behaviors evolve. We’re already seeing the resilience of our results. At Concord, total marketing leads increased 22% year-over-year, while UTI total inquiries increased 18%, demonstrating continued healthy demand across the portfolio, even as students increasingly discover us through different channels.

We are also continuing to strengthen our position by creating more authoritative content, optimizing our media investments, expanding third-party validation through employer relationships and earned media, and enhancing how we measure performance as AI-driven discovery continues to evolve. We believe these efforts, combined with our strong brand and employer partnerships, position us well to efficiently continue attracting prospective students regardless of how they choose to begin their search. Another strong area of opportunity is expanding our B2B partnerships. While each employer has unique needs, employers across the industries we serve are facing common challenges. They need more qualified talent, and they need solutions that help them recruit, train, and retain talent more effectively. We believe our platform positions us to play even a larger role in how we can help employers address these workforce challenges.

We continue to pursue opportunities to create customized workforce solutions that expand the talent pipeline for new employer partners while deepening our relationships with our existing partners. For example, we’re working with several of our current transportation and skilled trades partners that need to hire hundreds of additional workers annually. A number of these partners are facing rising costs due to limited supply of qualified talent and are evaluating having UTI expand their bespoke training curriculum across additional campuses while supporting recruitment and student services. We’re currently in conversation with a major electric vehicle manufacturer regarding this topic. Another potential partner, a leading multinational company focused on electrification and industrial automation, also has limited internal training capacity due to the number of facilities available to support its month-long onboarding process.

This company is exploring a new broader partnership with UTI to spur recruitment, training, and onboarding while leveraging our campuses to create additional capacity. We’re also evaluating similar opportunities with major airlines and defense contractors that are facing increasing pressure to attract and retain the talent necessary to fulfill contract obligations. Finally, we continue to work with Heartland to address the significant demand for dental hygienists. We’re currently discussing three additional co-branded Concord campuses that would build on the success of Fort Myers location with Concord recruiting, training, and placing students into Heartland locations nationwide. While each of these opportunities is unique, they all reinforce the same point. Employers increasingly view Universal Technical Institute as a trusted workforce partner capable of helping them solve critical talent challenges. We look forward to sharing more specific details on these opportunities as they continue to develop.

As we look ahead, our confidence in the business continues to strengthen as our North Star strategy moves forward. As demonstrated by the performance of our new campuses and programs, we have built a durable and repeatable growth platform supported by strong demand, disciplined execution, a healthy balance sheet, and meaningful long-term tailwinds across the workforce education. Moving forward, we’ll continue to optimize our existing campuses and program portfolio to further improve campus-level performance, enhance conversion retention, and drive same-store growth, leverage our proven campus launch model to expand into attractive new markets while adding high-demand programs and increasing capacity in areas where demand is strongest, and deepen and diversify our strategic partnerships with employers and industry leaders. Now, before I wrap up, I’d like to highlight the recognition our organization continues to receive.

Earlier this year, we were added to the S&P SmallCap 600 index, an important milestone that reflects the significant progress we’ve made scaling and diversifying the company. Additionally, this fall, three of our UTI campuses will once again be recognized as ACCSC School of Excellence, underscoring our continued commitment to educational quality, student outcomes, and operational excellence. These accomplishments reinforce the strength of our platform, the dedication of our people, the significant progress we’ve made, and most notably, the immense opportunity that remains ahead. I want to thank our students, instructors, campus team, and employees for their hard work and commitment. Their passion for serving students and supporting our employer partners is what makes these results possible. We’re proud of our performance this quarter and remain focused on executing on our strategy and creating long-term value for our students, employer partners, and shareholders.

With that, I’ll turn the call over to Bruce, our CFO, to review our third-quarter financials and provide you with additional details on our guidance. Bruce?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Thank you, Jerome. As Jerome discussed, our third quarter results reflect a business that continues to execute well operationally while we also invest to support the long-term opportunity outlined in our North Star Phase Two strategy. In the third quarter, total average full-time active students grew 5.8% year-over-year to 25,131, while total new student starts increased 10.9% to 6,342. This growth was driven by continued strength across our newly launched programs and campuses, with the UTI division contributing significantly to the increase. Concorde starts were softer, driven by fewer clinical starts in the quarter relative to the comparable year. As we’ve mentioned in the past, start instances can vary based on academic calendars and the timing of program cohorts, and this impact was known and included in our Q3 outlook.

The Concorde division grew average full-time active students 8.5% year-over-year for the third quarter, reflecting continued strength in our dental programs. The UTI division increased average full-time active students 4% year-over-year, driven by continued momentum across new campuses and program expansions, as well as strong demand for skilled trades offerings. Third quarter revenue on a consolidated basis increased 7.2% to $218.9 million. Concorde contributed $80.9 million, an increase of 11.1% over the prior year quarter, while the UTI division contributed $138 million, an increase of 5% over the prior year quarter. Turning to profitability, consolidated net income for the third quarter was $2.3 million, or $0.04 per diluted share, which was consistent with our expectations outlined last quarter. Baseline adjusted EBITDA for the third quarter was $27.2 million. Including $9 million in growth investments, our SEC reported adjusted EBITDA for the quarter was $18.2 million.

At the end of the quarter, we had 55 million shares outstanding. Total available liquidity at the end of the quarter was $181 million, including short-term investments and remaining capacity on our revolving credit facility. Year-to-date capital expenditures were $85.4 million or approximately 85% of our originally targeted spend for the year. In an effort to capitalize on the momentum we’re seeing in the business and to ensure on-time launches of our fiscal year 2027 initiatives, we’ve accelerated some of our CapEx spend and now expect to execute on approximately $110 million of capital expenditures this year. Now turning to our full-year outlook. As Jerome discussed, the underlying fundamentals of the business remain healthy. Employer demand continues to exceed available graduate supply, student interest remains strong, and our newer campuses and recently launched programs continue to perform at or above our expectations.

We also believe it’s important to balance that confidence with appropriate expectations for the remainder of the current year based on what we’re now seeing. Due to the challenge in our high school starts in Q4 and the more muted impact of our program mix, we now expect consolidated revenue to range from $893 million-$900 million for fiscal 2026, or approximately 7% year-over-year growth at the midpoint. Net income is now anticipated to be between $32 million and $36 million, with diluted earnings per share of $0.57-$0.64. Baseline adjusted EBITDA is now expected to exceed $135 million and reported adjusted EBITDA to be between $100 million and $103 million due to approximately $35 million of growth investments. We are also tightening the range for total new student starts, which are now expected to be between 31,900 and 32,300.

Let me provide some additional context around what’s driving the revised outlook. First, most importantly, as Jerome emphasized, this is not an underlying demand issue. In fact, inquiries are up solidly in both divisions. We exceeded our expectations for new student starts during the quarter, and we continue to expect to finish the year squarely in the range of our original start expectations. The primary driver, as Jerome outlined, is lower than anticipated fourth quarter new student starts specific to our UTI division’s high school channel, primarily in the auto diesel program. To a lesser extent, we’re seeing some impact of UTI’s portfolio mix due to the incredibly strong starts performance in the skilled trades, which are shorter and drive less revenue compared to other offerings.

As we’ve shared with you since first releasing our fiscal 2026 guidance last November, based on our normal seasonality as well as the timing of our growth investments this year, we expected Q4 to have an outsized impact on the year. Because our new student starts in the fourth quarter are not coming in as strong as we’d initially expected, revenue and profitability are impacted, and we’ve therefore aligned our outlook to reflect a still strong and very profitable but more measured Q4. Further, we continue to maintain confidence in the long-term earnings power of the business and in our trajectory toward our fiscal 2029 targets. Second, fiscal 2026 represents the largest investment year to date in our North Star Phase Two. We’ve intentionally accelerated investments in campus expansions and new programs.

The early results we’re seeing across these initiatives only reinforce our conviction that expanding access to the programs we offer is the best use of capital for our students, employer partners, and investors. Nothing in our updated fiscal 2026 outlook changes our confidence in the long-term financial framework we’ve established for North Star Phase Two, nor in the underlying building blocks to get there. We continue to maintain confidence in delivering more than $1.2 billion in revenue by fiscal 2029, and adjusted EBITDA approaching $220 million that year. As we move into fiscal 2027, we continue to expect revenue growth higher than fiscal 2026 and are targeting modest EBITDA growth with more meaningful EBITDA expansion in fiscal 2028 and 2029. Supporting new campus and program launches, we continue to plan for $100 million or more of annual capital expenditures.

Importantly, looking ahead, we remain confident in our long-term outlook outlined in North Star Phase Two of our North Star strategy. With the results we’re seeing, we are emboldened that the investments we are making today are strengthening the foundation for sustained growth and long-term value creation. We also remain focused on executing with discipline, managing our investments thoughtfully, and positioning the company to continue to deliver revenue growth, margin expansion, and shareholder value. In addition to this earnings call transcript, we encourage everyone to review our press release, financial supplement, investor presentation, and upcoming 10-Q filing. These materials include the latest updates on our consolidated and segment results, strategic initiatives, and guidance. As always, thank you to our students, team, partners, and investors for your ongoing support. I’d now like to turn the call over to the operator for Q&A. Operator

Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster. Today’s first question comes from Jasper Bibb with Truist. Please go ahead.

Jasper Bibb, Analyst, Truist: Hey, good afternoon, guys. You mentioned, I think in the fourth quarter, the high school leads were up 15% year-over-year on UTI, but it sounds like the starts are going to be flat, maybe down in the fiscal fourth quarter for the high school channel. I guess, just to clarify, do you think this is a capacity problem on your end if some leads maybe drop on the floor, for lack of a better term, or a conversion problem, and how does that inform some of the changes it sounds like you’re making?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Thanks, Jasper. It’s a great question. It’s not a capacity issue. We do have some capacity issues associated with the skilled trades programs, which are growing at a significantly faster pace than we originally planned. We’re working very fast to increase capacity for those courses. Frankly, it was an execution issue in terms of the number of reps we had in the field on a persistent basis. We were not able to get to all of the students that were inquiring, and frankly, that’s what’s making it fall short. As we said in the call, we’ve already taken steps in the last month or two to remediate that, and we’re loaded now with our reps, and we’ve actually added 20% to the field this year so that it’s not replicated again in 2027.

Jasper Bibb, Analyst, Truist: Okay. Yeah. Thanks for the answer. I think as you look back to last year, I think the high school channel was a little bit weaker than expected in auto diesel in fiscal 2025 too. I guess maybe, are you seeing anything different in the student behavior that’s made the productivity of the high school channel or the enrollment cycle a little weaker or less predictable than it’s been historically over the past few years?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Well, as I said, the weakness we outlined was more about the volume of reps we had in the field to be able to process the leads that we had. The change we’re seeing in behavior is, traditionally, the high school students have been all about auto diesel. Right? They’re 16, 17 years old, they just got their first car, and all they want to do is fix cars. We believe that because of a significant increase in the amount of press that’s out there around the opportunities in places like welding, electronics, HVAC technicians, et cetera, that people are seeing, and younger people are seeing that as an opportunity to hit where the trend is going. I’m going to go help build data centers or industrial automation or things along those lines.

What we didn’t get right in our mix shift this year is just how many of the students were going to choose these skilled trades over auto diesel. The demand for auto diesel is still quite high and projected to become even higher. What we’re seeing, though, is that, I think because of a lot of the energy that’s out there in the market about onshoring and data centers and manufacturing being in the U.S., et cetera, that the message has gotten more down into what traditionally was really just an auto diesel group that, "Hey, I want to be a welder," or, "I want to be an HVAC tech. I can make good money. Frankly, I can get through school faster." That mix shift we did not have right this year.

Jasper Bibb, Analyst, Truist: Makes sense. Last one for me. I know you said the fiscal 2029 targets won’t be impacted by this, but you build there off 2027 and 2028. I mean, just to kind of confirm 2027 expectations in the context of the plan, would it be, I guess, fair to say that maybe total enrollment or total revenue might need to recalibrate for a lower starting point on enrollment going into the year? Then on the comment about modest EBITDA dollar growth for 2027, is that going to be off the new $100 million-$103 million baseline?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Hey, Jasper, this is Bruce. Let me address that. Overall, I can tell you we feel very confident about 2027. Yes, there will be a little bit of carry and impact from the high school miss directly, but there are so many offsets with the incredible demand we’re seeing on the skilled trade side. Frankly, we have been building capacity for the last several quarters now in 2026. You’re going to really see that better capacity utilization start to flow through in 2027. We’re going to lean in further to capacity in 2027 in general in the skilled trade. No, we don’t expect to come off our guidance, especially on EBITDA for 2027. We feel very good about how our forward-looking year in 2027 is shaping up.

Jasper Bibb, Analyst, Truist: Thanks.

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Yes.

Conference Operator: The next question is from Luke Horton with Northland Securities. Please proceed.

Luke Horton, Analyst, Northland Securities: Hey, guys. Thanks for taking the questions. Just wanted to touch back on kind of the softer high school enrollment starts. Were you guys alluding to this kind of relating to the increasing usage of AI search as causing some top of the funnel disruptions? Was that what led to the softer high school, or are those two separate instances?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: No, not at all. You’re familiar with most of how high school works. Most of how high school works is not at all dependent on AI search whatsoever. We have had 160 some reps out in the field. They do presentations in front of students who inquire off a QR code on the board for the presentation or an inquiry card, and those are followed up on manually. What I’m saying is that throughout the year, we were running at a deficit of the number of reps that were necessary to get to the number that we were expecting out of them. It was really not a strategy issue. It’s really not an AI issue. It was an execution issue, and we’ve rectified it. That’s more of what we saw there.

The other piece we saw, it’s about a 70/30 mix of the deficit, is we did not believe going into the year that this many high school students were going to choose to go into the skilled trades, because they hadn’t before. That dynamic has shifted, and skill trades are shorter, are cheaper, are marginally less profitable, although we’re working on that. That’s another point in which that affected the high school channel. What we said about AI, just as a point, is that type of search is a part of how people find us. Because of the number of diversified channels that people use to find us, we are not seeing the effects in the AI disruption that you are seeing from people who are heavily weighted towards search technologies.

Not really much to do at all with the high school channel and rather muted when it comes to UTI. As a matter of fact, our search volume is up, as we said, 18% for UTI, 23% for Concorde. That’s because our marketing departments have done such a great job of pivoting into these other channels if they have seen any headwinds in the AI space.

Luke Horton, Analyst, Northland Securities: Okay. Got it. No, that’s helpful. Just shifting gears on the unified UTI and Concorde being under one enterprise operating model, are there any expected cost synergies or efficiency gains that you guys want to call out, or any sort of timeframe where you expect those to materialize or anything significant there?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Yeah. We’ve begun the process of the unification, most recently in July, as we had been planning throughout the year. Just to reiterate, when we bought Concorde, we specifically did not look at integrating the operating functions or the customer acquisition functions because we believed that in the first three years, we could make significant progress in moving Concorde from a $185 million company with single-digit EBITDA to a $300 million company with double-digit EBITDA. We were very successful at doing that. Now that we’ve reached sort of a standard operating model of program expansions, campus launches, capacity increases, there’s much more similar about the two units than there were separate. That’s why we made the choice earlier this year to begin the process now. Sure, over time, there definitely will be synergies, right?

Some of the duplications we lived with for three years will be taken out of the system. What we really think is that it’s going to allow us to move faster and more efficiently in things like the customer acquisition process. A single investment in AI technologies and systems like CRMs, student information systems, communication systems, all of that will allow us to move more efficiently and effectively. Yeah, we will see synergies, and we’ll lay that out to you over time. We really believe it’s going to have a simplification effect on the company by merging systems and processes and technologies moving forward.

Luke Horton, Analyst, Northland Securities: Got it. That’s helpful. Thanks, Jerome.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Sure.

Conference Operator: The next question is from Steven Frankel with Rosenblatt. Please proceed.

Steven Frankel, Analyst, Rosenblatt: Good afternoon, and thank you. Just to revisit this high school issue one more time. Maybe parse out for us how much of the shortfall is your staffing issue versus mix shift to the students that you did get choosing to be in skilled trades? One other aspect, are any of these students gettable over a period of time? Do you have email campaigns or other outbound ways to maybe pull them back into the funnel?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Yeah, sure, Steven. I can maybe take the first part of that. Jerome can take the second part. Let me bridge you between two data points. The adjusted EBITDA numbers we had had in our guide originally was north of $155. We’re now saying that baseline EBITDA is going to be about $135, just north of that. That $20 million delta, 70%, roughly, Steven, is directly related to the auto diesel high school starts miss for all the reasons Jerome just outlined. About 30% is the mix piece. Remember, that mix thing is something that’s not an accident or This is a very good thing for the company. We’re intentionally driving this mix shift as a critical part of our strategy over the next three years. It just happened a little faster than we anticipated.

That’s what we’re sort of working through, and we have good plans to address that for 2027. That’s the mix shift on your first part of your question. I can let Jerome take the second piece.

Steven Frankel, Analyst, Rosenblatt: If they’re gettable, the ones-

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Oh, yeah. Absolutely. In the staffing up we’ve done over the last month and a half, as we saw the trend begin to happen, step one early in the year is to go back to those that did not convert and see if we can’t get them in in the first quarter of next year. Right? Absolutely, the basket of non-converting leads is larger this year, and we have 20% more staff that we’ve handed them to. We have expectations that they’ll begin to rally in the first quarter.

Steven Frankel, Analyst, Rosenblatt: Okay, great. One more funnel-related question. Everybody talks about AI search, kind of raising your cost because you’ve got to do a lot of other things that you described. What’s going on in your cost per lead?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Well, in general, cost per lead has been relatively stable overall. If you look at just our marketing advertising spend, Steven, as a % of revenue, we’re actually down a little bit sequentially versus last quarter, up a little versus prior year as we really focus on new campus and new program launches. We’ve not seen a very material impact in cost per lead at this point.

Steven Frankel, Analyst, Rosenblatt: Okay, great. Thank you.

Conference Operator: Our next question comes from Eric Martinuzzi with Lake Street. Please go ahead.

Eric Martinuzzi, Analyst, Lake Street: Yeah. Jerome, I wanted to follow up on your reps in the field number. You said you’re at 160. Is that you were at 160 and you’re going to 192, or you were at 130 something, and you went to 160?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: It’s somewhere in between. Right? We were more in the range of 140-ish throughout the year, running at somewhat of a deficit. Team believed they could catch up, and they didn’t. We’re adding to that again, another ten or so to that as well.

Eric Martinuzzi, Analyst, Lake Street: Okay. As we stand here today, we’re at roughly 150-ish, and that is sufficient to-

Jerome Grant, Chief Executive Officer, Universal Technical Institute: 170-ish. A little over 170.

Eric Martinuzzi, Analyst, Lake Street: Oh, okay. All right. As far as ramping those field reps, is it pretty cut and dry recipe that you can have somebody, or is there a training timeline that takes place?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Well, a brand-new rep is not as productive as a, say, two or three-year rep. That’s when they hit their stride. They don’t have the relationships with counselors, with schools, et cetera, to be able to do that. That’s in our expectation for next year, but it’s mitigated by the increase in head count as well. Yeah, a seasoned rep is going to have more success than someone who’s been there a year or so. We’ve got that built into our plan, and we’ll share that with you in November when we set guidance for next year.

Eric Martinuzzi, Analyst, Lake Street: Okay. I was wondering if there was any. Obviously, Atlanta’s a new campus. You opened it in July. Was there any tell in the student shift that you enrolled? You said, obviously, you were ahead of plan. You said 30% ahead. Did you see, was that also, was the mix shift evident in Atlanta?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Not really. The reason is that when you think about the timeline in which you are able to start recruiting to a new campus, when you’ve been approved by Ed for Title IV funding, your state approvals, et cetera, that timeline wasn’t long enough for us to be counting on many high school kids to come in in July. In our numbers, we didn’t expect that many high school kids to come in. That being said, we had already, as we told you on our last call, we had already increased the capacity from the original model and our skilled trades by 50% in the bigger areas because our anticipation was that we were going to get more interest in skilled trades initially, because it’s also initially mostly an adult population that you get in your initial cohorts. We were right.

We’re getting about what we expected to get out of auto diesel from the adult population. A longer sale, easier to bring that, or easier to identify and bring that person through. We also are glad that we started the capacity increases there early because when we’re talking about 30% upside, a lot of that did come out of skilled trades.

Eric Martinuzzi, Analyst, Lake Street: Got it. I just wanted to, Bruce, if you could recap that FY 2027. I know it was in guidance, but just sort of color. I think you said FY 2027, that the anticipated revenue is greater than FY 2026. You’ve guided to $893-$900. Something in excess of that would be the expectation for 2027. I wanted to make sure I understood the adjusted EBITDA, the modest expansion commentary there. Is that the $100-$103 new range, modest expansion from that?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: First of all, Eric, a couple things. We have not guided 2027 yet.

Eric Martinuzzi, Analyst, Lake Street: Yeah.

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: I’ll just give you sort of some general contours. Like I said in my prepared remarks, our revenue growth will be higher in 2027 versus 2026. I think in general, where we had sort of pegged EBITDA before that modest growth, versus our additional guide, we’re going to be where we feel kind of comfortable with that as where analysts have us right now. We have not guided 2027. We’re still working on it, but we feel very strong about the plan in general.

Eric Martinuzzi, Analyst, Lake Street: Got you. Thanks for taking my question.

Conference Operator: The next question is from Eric Wold with Texas Capital. Please go ahead.

Eric Wold, Analyst, Texas Capital: Thanks. Good afternoon. Just a couple quick questions, again, back on the high school kind of headwind you had in the quarter. I guess, when you talk, obviously, the mix shift towards the skilled trade versus auto diesel, what’s kind of a good average in terms of what that revenue delta would be between those two programs as that mix shift continues? I know that’s something you kind of talked about you’d planned on, but it kind of came a little bit earlier. Then is that something you feel that you can adjust pricing around if that demand is moving in one way versus another? You can take advantage of that and price into it, or is that not possible for one reason or another, competitively or something else?

Bruce Schuman, Chief Financial Officer, Universal Technical Institute: Yeah, Eric, thanks. I’ll take that. The way to think about the pricing, that average revenue per student for UTI that we disclose, it looks very similar across all of our skilled trades programs. The big difference is program length. Some of our skilled trades programs are nine months or so versus kind of a 51 weeks to a full year for auto diesel. That’s kind of the differential. From a margin perspective, again, we don’t disclose detailed margins, but there’s a small margin differential between skilled trades and auto diesel. We feel, again, very comfortable. All the capacity expansions we’ve made this year, you’re going to see those really get to full capacity. We’ll have better utilization in 2027, so margins will improve just on that alone, we’re going to look at everything, pricing optimization in the skilled trades as well.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Yeah, let me just put a cap on that, which is we talked about the things that we’re doing to look at the skilled trades program. There’s two that sort of are immediately actionable. One is, the more capacity you create, the more margin you create on a given campus. We’re working much more aggressively on building capacity in the skilled trades in our existing campuses. That will drive margin expansion for the skilled trades. The second point is there is absolutely pricing power. When you’ve got this much demand and you’re selling out many of your cohorts, we do have the ability to reevaluate our price points in here.

Not in any crazy matter of fact or anything like that, but if we’re getting a couple of points in price, you may be able to get a couple more. That’s where I see that now. Those two things are actually actionable.

Eric Wold, Analyst, Texas Capital: Perfect. Well, thank you.

Conference Operator: As a reminder, if you do have a question, please press star then one. The next question is from Griffin Boss with B. Riley Securities. Please go ahead.

Griffin Boss, Analyst, B. Riley Securities: Hey, good afternoon. Thanks for taking my questions. I hate to beat a dead horse, I do hope you appreciate we want to fully understand this. On the high school side, I just want to make sure I’m clear here. One, you said demand for skilled trades is trending much higher than you anticipated, but I think you also said demand for auto diesel is also very robust, right? It’s not just a shift from auto diesel to skilled trades. The demand for both is robust?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Yes. That is true.

Griffin Boss, Analyst, B. Riley Securities: Yeah.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Right.

Griffin Boss, Analyst, B. Riley Securities: Okay.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: The thing is that we were articulating in the mix is that, if traditionally 5% of the students picked going into one of the skilled trades and 95% go into auto diesel, that is no longer that way. There’s a significant shift to the number of them that are saying, "Well, I’ll be a welder," or, "I’ll be an electrical worker," or, "I’ll be a HVAC tech." That shift we did not anticipate moving as quickly as it did. Then the other issue which we outlined about the skilled trades is we simply did not have enough conversations with enough of the leads because we were not running at an optimal staffing level the entire year. We believed we could catch it up. The team did. That, not a strategy error, but really an execution issue.

Griffin Boss, Analyst, B. Riley Securities: On that last point, were the prospects per rep, it was what? Too high or higher than it has been historically that you were not able to catch up in a way that you have in years past?

Jerome Grant, Chief Executive Officer, Universal Technical Institute: No, it was reps per prospect. The lead count is robust. Yes, we are happy with what we’re seeing overall in the both digital and non-digital lead count, meaning there definitely is a tailwind around going into the trades and to the transportation areas as well as healthcare. You see the numbers in healthcare. The issue is that we needed more bodies in the field more persistently to be able to have those conversations, and we did not.

Griffin Boss, Analyst, B. Riley Securities: Got it. Okay. Yeah, understood. Just wanted to shift gears one more from Mary. Separately, I was hoping if you could share for us what % of your student body are military affiliated, so veterans or active duty that could be relying on tuition assistance. Just an area that I was hoping we’d get more context on.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: That’s pretty clear. It’s about 15% of UTI. Right? You’re going to ask me to do the math overall. I’m going to have trouble with that.

Griffin Boss, Analyst, B. Riley Securities: No worries. That’s fine. That’s helpful.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Right. 15% of UTI. Very small population in Concorde. Quite frankly, the unification that we’re moving on now, which we didn’t do in the first three years, actually brings healthcare into our military sales channel’s book bag, for lack of a better word. We see that actually as a significant opportunity to be able to work with the military on transitioning soldiers out into the healthcare areas. It’s frankly just something we didn’t put any energy into because Concorde wasn’t putting energy into it prior to the acquisition.

Griffin Boss, Analyst, B. Riley Securities: Understood. Yeah, that’s awesome. Thanks, Jerome. Appreciate the context.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Sure.

Conference Operator: This does conclude our question and answer session. I would now like to turn the conference back over to Jerome Grant for any closing remarks.

Jerome Grant, Chief Executive Officer, Universal Technical Institute: Thank you, operator. I’d like to also thank everyone who attended today. As always, Bruce, Matt, and I are available for follow-up questions. We encourage everyone, if you have an opportunity to visit one of our campuses. If you’re interested in doing that, please let us know, and we’d be happy to host you. We look forward to speaking with you, our investors and analysts, when we report our fiscal fourth quarter and full-year results for 2026 in November. Thanks again, and have a great evening.

Conference Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may now disconnect your lines, and thank you for your participation.