Universal Technical Institute G.research Microcap Symposium Investor Presentation May 18, 2021 2021 Universal Technical Institute, Inc. All rights reserved. Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as am ...

Financial Data and Key Metrics Changes - Total revenue for the quarter was $77.7 million, down 6.1% year-on-year, primarily due to a decrease in revenue per student [24] - Operating loss for the quarter was $1.7 million, compared to a loss of $0.5 million in the prior year, largely due to lower revenue [27] - Adjusted EBITDA was $2.8 million, compared to $3.1 million in Q2 of 2020, highlighting efficiencies in the operating model despite lower revenue [27] - Net loss for the quarter was $1.5 million, compared to net income of $10.1 million in the prior year quarter [27] - Available liquidity as of March 31 was $78.5 million, including $59 million of unrestricted cash and cash equivalents [29] Business Line Data and Key Metrics Changes - The company started 2,405 students in the second quarter, representing a nearly 15% increase over the prior year quarter [8] - Average active students increased by 10.8% during the period compared to the same quarter last year [24] - Show rates for the quarter exceeded expectations by 50 basis points but decreased 150 basis points year-on-year [23] Market Data and Key Metrics Changes - The company continues to see strong prospective student interest, with media inquiries growing 14% year-on-year [10] - Scheduled new student starts were 18.3% higher than the prior year quarters, indicating strong demand [23] Company Strategy and Development Direction - The company is executing a growth and diversification strategy, including the acquisition of MIT College of Technology and the opening of new campuses in Austin and Miami [11][12] - The acquisition of MIT is expected to enhance the company's financial position and expand its program offerings into high-demand skilled trades [12][15] - The company aims for a compound annual growth rate of over 10% through 2025 and to expand adjusted EBITDA margin to over 20% [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving previously outlined 2021 guidance and indicated strong momentum heading into fiscal 2022 [9][30] - The company is focused on filling the skills gap in the U.S. and believes that its educational offerings provide immense value for graduates and employers [20][21] - Management noted that the pandemic has caused challenges but remains optimistic about the company's growth trajectory and operational improvements [21] Other Important Information - The company appointed Congresswoman Loretta Sanchez to its Board of Directors, effective May 4, which is expected to enhance its advocacy for higher education [38][39] - The company is exploring potential financing opportunities for the Avondale campus to increase deployable capital [29] Q&A Session Summary Question: What is the expected growth rate and margin profile for fiscal '22? - Management anticipates growth rates in the low to mid-20s and margins in the low teens for fiscal '22, driven by strong performance and the full-year benefit of operating in a more normalized environment [44] Question: What are the EBITDA margins at MIT? - MIT had $3.5 million of adjusted EBITDA on $25 million in revenue for calendar '20, reflecting a margin of about 14% [45] Question: What is the status of the show rate? - The show rate is expected to improve gradually throughout the year, with management seeing positive momentum [47] Question: How is the company addressing students who are behind in their coursework? - The company has implemented various initiatives to mentor students and improve engagement, resulting in lower leaves of absence and withdrawals [48] Question: What is the expected revenue for Q3 and Q4? - Management expects revenue to exceed $80 million in Q3 and $95 million in Q4 [55] Question: What is the outlook for average quarterly tuition per student? - The company expects Q4 to resemble pre-COVID levels, with a gradual increase in revenue per student anticipated in fiscal '22 [58] Question: Is there an update on the share buyback? - The company has received board authorization for a $35 million share buyback, which remains a consideration alongside growth investments [59]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 86-0226984 ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 (IRS Employer Identification No.) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 4225 East Windrose D ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended December 31, 2020, detailing financial position, operating results, cash flows, and significant accounting policies [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2020, total assets were $434.6 million, a slight decrease from $442.0 million, primarily driven by a reduction in cash and cash equivalents due to a property purchase, partially offset by an increase in net property and equipment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 | Sep 30, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $44,212 | $76,803 | | Total current assets | $130,561 | $180,179 | | Property and equipment, net | $116,637 | $72,743 | | Total assets | $434,587 | $441,981 | | **Liabilities & Equity** | | | | Total current liabilities | $112,486 | $121,640 | | Total liabilities | $256,281 | $265,459 | | Total shareholders' equity | $178,306 | $176,522 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended December 31, 2020, revenues decreased to $76.1 million, operating income fell sharply to $0.8 million, and the company reported a net loss available for distribution of $0.2 million, resulting in a basic and diluted loss per share of ($0.01) Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Revenues | $76,125 | $87,234 | | Income from operations | $775 | $4,254 | | Net income | $1,083 | $4,684 | | Net (loss) income per share - basic | $(0.01) | $0.07 | | Net (loss) income per share - diluted | $(0.01) | $0.07 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended December 31, 2020, net cash provided by operating activities was $7.8 million, while net cash used in investing activities was a significant $37.2 million, primarily due to a property purchase, resulting in a quarter-end cash balance of $59.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,783 | $7,124 | | Net cash used in investing activities | $(37,249) | $(1,719) | | Net cash used in financing activities | $(210) | $(497) | | **Change in cash, cash equivalents and restricted cash** | **$(29,676)** | **$4,908** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations for the financial statements, covering the impact of COVID-19, significant property acquisitions, share repurchase authorizations, and the utilization of CARES Act and HEERF funds - The company is a leading provider of postsecondary technical education for automotive, diesel, collision repair, motorcycle, and marine technicians, with a majority of students relying on **federal financial aid programs (Title IV)**[26](index=26&type=chunk)[27](index=27&type=chunk) - Due to COVID-19, the transition to a blended learning model led to delays in student lab work completion, resulting in approximately **$2.0 million in deferred revenue** as of December 31, 2020[41](index=41&type=chunk) - The company purchased the land and building for its Avondale, Arizona campus for approximately **$45.2 million** during the quarter[47](index=47&type=chunk) - A new share repurchase plan authorized on December 10, 2020, allows for the repurchase of up to **$35.0 million of common stock**, with no shares repurchased during the quarter[71](index=71&type=chunk) - The company utilized the remaining **$0.9 million** of institutional HEERF funds from the CARES Act and anticipates an additional **$16.8 million** in student grants under HEERF II[101](index=101&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **12.7% revenue decrease** attributed to COVID-19 impacts on student progression, offset by expense controls and strategic initiatives, while maintaining a strong liquidity position despite a significant campus acquisition [Overview of Operations and Business Strategy](index=27&type=section&id=Overview%20of%20Operations%20and%20Business%20Strategy) Despite the COVID-19 pandemic, the company saw increased enrollment and new student starts, but revenue declined due to delays in student lab progression, while strategic actions included new technician programs, campus acquisitions, and consolidations Key Operational Metrics (Q1 FY2021 vs Q1 FY2020) | Metric | Change | | :--- | :--- | | Average undergraduate full-time enrollment | +1.8% | | New student starts | +20.9% | - Key strategic initiatives included: - Launching the Premier Truck Group Technician Skills Program at Fort Bliss - Expanding the Daimler Trucks North America (DTNA) Finish First program to the Orlando campus - Purchasing the Avondale, Arizona campus for approximately **$45.2 million** with plans to consolidate the MMI Phoenix campus into it - Announcing the consolidation of the UTI and MMI Orlando campus facilities[115](index=115&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenue for the quarter decreased by 12.7% to $76.1 million due to COVID-19 impacts on student progression, partially offset by reductions in educational services and facilities expenses and SG&A expenses, though operating income still fell significantly Comparison of Operating Results (in thousands) | Item | Q1 FY2021 | Q1 FY2020 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $76,125 | $87,234 | (12.7)% | | Educational services and facilities | $39,331 | $42,876 | (8.3)% | | Selling, general and administrative | $36,019 | $40,104 | (10.2)% | | Income from operations | $775 | $4,254 | (81.8)% | - The revenue decrease was primarily due to the timing of student lab work completion and lower average revenue per student, driven by the pace of program progression and course retakes due to **COVID-19 impacts**[118](index=118&type=chunk) - EBITDA, a non-GAAP measure, was **$4.3 million** for the quarter, compared to **$7.8 million** in the prior-year period[131](index=131&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $44.2 million in cash and $27.9 million in investments, despite a significant decrease in cash primarily due to the $45.2 million purchase of the Avondale, Arizona campus Liquidity Position (in millions) | Item | Dec 31, 2020 | Sep 30, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $44.2 | $76.8 | | Short-term held-to-maturity investments | $27.9 | $38.1 | - The primary use of cash was the purchase of the Avondale, Arizona campus for approximately **$45.2 million**, funded with available operating cash[137](index=137&type=chunk)[144](index=144&type=chunk) - Net cash provided by operating activities was **$7.8 million**, an increase from **$7.1 million** in the prior year period, primarily due to favorable changes in working capital such as a decrease in receivables[142](index=142&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure since the end of the previous fiscal year on September 30, 2020 - There have been **no material changes** to the company's market risk since September 30, 2020[151](index=151&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on management's evaluation, the company's disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal control over financial reporting except for new controls related to ASC 326 adoption - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of December 31, 2020[152](index=152&type=chunk) - No significant changes were made to internal controls over financial reporting, except for new controls related to the adoption of **ASC 326 (Financial Instruments—Credit Losses)**[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various ordinary course legal proceedings, for which it cannot currently estimate the potential range of loss, and an adverse outcome could materially affect the business - The company is subject to ordinary course legal proceedings and cannot currently estimate the potential range of loss for pending claims[156](index=156&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Investors are directed to the 2020 Annual Report on Form 10-K for a comprehensive understanding of risk factors that could materially affect the company's business, financial condition, or operating results - The report refers to the risk factors detailed in the **2020 Annual Report on Form 10-K** for a comprehensive understanding of potential risks[157](index=157&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the quarter - No unregistered sales of equity securities or use of proceeds occurred during the quarter[158](index=158&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Asset Purchase and Sale Agreement for the Avondale, AZ property, CEO and CFO certifications, and XBRL data files - Exhibits filed include: - **Asset Purchase and Sale Agreement** for the Avondale, AZ campus - **CEO and CFO certifications** (Sections 302 and 906 of Sarbanes-Oxley Act) - **XBRL Instance Document** and related taxonomy files[163](index=163&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ______ Commission File Number 1-31923 UNIVERSAL TECHNICAL INSTITUTE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdictio ...

Universal Technical Institute, Inc. (NYSE:UTI) Q4 2020 Results Earnings Conference Call November 18, 2020 4:30 PM ET Company Participants Jody Kent - Vice President, Communications and Public Affairs Jerome Grant - Chief Executive Officer Troy Anderson - Chief Financial Officer Conference Call Participants Steven Frankel - Colliers Eric Martinuzzi - Lake Street Alex Paris - Barrington Research Austin Moldow - Canaccord Operator Good afternoon. And welcome to Universal Technical Institute Fiscal Fourth Quart ...

Financial Data and Key Metrics Changes - Total revenues decreased by 31.3% year-over-year to $54.5 million, primarily due to a higher number of students on leave of absence (LOA) and lower revenue per student [32][55] - Net loss for the quarter was $13.3 million, translating to a basic and diluted EPS loss of $0.45, compared to a net loss of $0.4 million in the prior year quarter [63][64] - Adjusted EBITDA loss was $8.8 million, compared to an adjusted EBITDA of $4.5 million in the prior year quarter [65] Business Line Data and Key Metrics Changes - New student starts increased by 8.4% year-over-year, totaling 1,824 in the third quarter, driven by military and high school channels [50][51] - Job placement rates for graduates remained above 80%, with the 2019 graduate cohort at 82% [14] Market Data and Key Metrics Changes - Scheduled enrollments in Q3 were 20.2% higher than the previous year, although the show rate declined by 400 basis points [52] - Active students increased to approximately 9,900 by the end of July, reflecting a positive trend in LOA returns [54] Company Strategy and Development Direction - The company continues to invest in its students, facilities, and partnerships, focusing on supporting students through economic uncertainty [19][23] - Strategic initiatives include program expansions, new campus locations, and selective acquisitions to drive growth [37][38] - The company is adapting its marketing and admissions strategies to a more digital approach, resulting in increased media inquiries and engagement [26][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unique challenges posed by the pandemic-induced recession but also highlighted opportunities for growth in technical training demand [29][76] - The company is optimistic about future student demand, with enrollments for Q4 running above pre-pandemic targets [28][49] - Management emphasized the importance of flexibility and support for students during this period [35][40] Other Important Information - The company has distributed over $13.6 million in CARES Act funding to more than 8,700 students to provide financial aid during the pandemic [21] - Operating expenses decreased by 14.1% year-over-year to $68.3 million, reflecting significant reductions in labor costs and variable campus expenses [59][60] Q&A Session Summary Question: Revenue decrease in June quarter - Management attributed the revenue decrease to higher LOAs and timing of student progression through lab makeup processes [82][83] Question: Revenue projection for the year - Management indicated that while Q4 should look better than Q3, they cannot provide specific guidance [86][87] Question: Impact of COVID-19 on campus operations - Management confirmed that campuses have remained open as essential services, with no reversals on social distancing rules [99] Question: Student engagement and reticence - Management noted that the majority of delays in student engagement are due to reticence related to COVID-19 concerns [132]

Financial Performance - Revenues for the three months ended June 30, 2020 were $54.5 million, a decrease of $24.6 million, or 31.1%, compared to $79.0 million for the same period in 2019[142] - Operating loss for the three months ended June 30, 2020 was $13.8 million, compared to a loss of $0.5 million in the prior year period[142] - Revenues for the nine months ended June 30, 2020 were $224.4 million, a decrease of $19.4 million, or 8.0%, compared to $243.8 million for the same period in 2019[167] - The net loss available for distribution for the three months ended June 30, 2020 was $14.6 million, compared to $1.7 million for the same period in 2019[164] - The net loss available for distribution for the nine months ended June 30, 2020 was $2.4 million, down from $17.3 million for the same period in 2019[181] - EBITDA for the nine months ended June 30, 2020 was negative $0.2 million, compared to $1.2 million for the same period in 2019[182] Enrollment and Student Metrics - Average undergraduate full-time enrollment decreased by 8.3% to 9,068 for the three months ended June 30, 2020, primarily due to higher student leaves of absence related to COVID-19[141] - The company started 1,824 new students during the three months ended June 30, 2020, an increase of 8.4% from the prior year comparable period[141] - Average full-time student enrollment decreased by 3.3% due to a higher number of students going on leave of absence related to the COVID-19 crisis[167] - The consolidated graduate employment rate for fiscal 2019 graduates as of June 30, 2020 was 2.9% lower than the rate at the same time in the prior year[146] Expenses and Cost Management - Educational services and facilities expenses were $32.5 million for the three months ended June 30, 2020, a decrease of $10.3 million from $42.8 million in the same period in 2019[152] - Educational services and facilities expenses were $118.3 million for the nine months ended June 30, 2020, a decrease of $16.1 million compared to $134.4 million for the same period in 2019[168] - Selling, general and administrative expenses for the nine months ended June 30, 2020 were $116.2 million, a decrease of $6.5 million compared to $122.7 million for the same period in 2019[174] - Compensation and related costs decreased by $3.9 million for the three months ended June 30, 2020[154] - Compensation and related costs decreased by $8.1 million for the nine months ended June 30, 2020[169] - Salaries expense decreased by $0.7 million for the nine months ended June 30, 2020, primarily due to lower headcount[179] - Employee benefits and tax decreased by $1.7 million for the nine months ended June 30, 2020, attributed to lower headcount and lower cost per employee[179] - Bonus expense increased by $4.0 million for the nine months ended June 30, 2020, due to projected performance against bonus plan metrics[179] Revenue Recognition and Deferred Revenue - The company deferred revenue of $10.8 million during the three months ended June 30, 2020, due to students delaying in-person labs and graduation dates[143] - The company recognized $5.8 million on an accrual basis related to revenues and interest under its proprietary loan program for the nine months ended June 30, 2020, compared to $4.7 million for the same period in 2019[167] Tax and Financial Aid - The effective income tax rate for the three months ended June 30, 2020 was 0.2% of pre-tax loss, compared to 9.3% for the same period in 2019[162] - The income tax benefit for the nine months ended June 30, 2020 was $10.7 million, or 117.0% of pre-tax loss, compared to an income tax expense of $0.3 million, or 1.9% of pre-tax loss for the same period in 2019[179] - The company received approximately $33.0 million in HEERF funds under the CARES Act, with $16.5 million allocated for emergency financial aid grants to students[191] Cash Flow and Financing Activities - Cash and cash equivalents were $60.0 million as of June 30, 2020, a decrease of $5.5 million from September 30, 2019[186] - Cash provided by financing activities was $45.9 million during the nine months ended June 30, 2020, primarily from the net proceeds of a public offering[198] - Cash used in investing activities was $37.2 million for the nine months ended June 30, 2020, primarily for the purchase of held-to-maturity investments[196] Strategic Initiatives and Future Outlook - The company has transitioned to a blended training model combining online instruction with in-person labs to meet health and safety guidelines[143] - The company plans to expand into new geographic markets and offer new programs, including associate level degree programs at additional campus locations[148] - The transition to a blended training model may impact future new student enrollments, graduations, and student attrition[201] Accounting and Market Risk - There were no significant changes in critical accounting policies during the nine months ended June 30, 2020[202] - No material changes to market risk have occurred since September 30, 2019[204]

__________________________________________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ______ Commission File Number: 1-31923 UNIVER ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company achieved **$4.7 million** net income, reversing a **$7.7 million** loss, with asset growth driven by ASC 842 adoption [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects significant changes due to the adoption of ASC 842, increasing total assets and liabilities Balance Sheet Highlights (unaudited) | Balance Sheet Item | Dec 31, 2019 (In thousands) | Sep 30, 2019 (In thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $70,533 | $65,442 | +$5,091 | | Total current assets | $116,601 | $118,104 | -$1,503 | | Right-of-use asset | $142,869 | $— | +$142,869 | | **Total assets** | **$382,061** | **$270,526** | **+$111,535** | | Total current liabilities | $116,974 | $96,844 | +$20,130 | | Lease liability | $130,813 | $— | +$130,813 | | **Total liabilities** | **$255,788** | **$156,238** | **+$99,550** | | **Total shareholders' equity** | **$126,273** | **$114,288** | **+$11,985** | - The significant increase in **Total Assets** and **Total Liabilities** is primarily due to the adoption of the new lease accounting standard ASC 842, resulting in the recognition of a **$142.9 million Right-of-use asset** and a corresponding **$156.7 million total Lease liability** (current and non-current portions)[13](index=13&type=chunk)[31](index=31&type=chunk) [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) The company achieved profitability in the quarter, driven by revenue growth and reduced operating expenses Income Statement Summary (unaudited) | Metric | Three Months Ended Dec 31, 2019 (In thousands) | Three Months Ended Dec 31, 2018 (In thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $87,234 | $83,050 | +5.0% | | Total operating expenses | $82,980 | $90,255 | -8.1% | | **Income (loss) from operations** | **$4,254** | **($7,205)** | **+$11,459** | | **Net income (loss)** | **$4,684** | **($7,717)** | **+$12,401** | | Net income (loss) per share - basic | $0.07 | ($0.36) | +$0.43 | | Net income (loss) per share - diluted | $0.07 | ($0.36) | +$0.43 | - The company achieved profitability with a **net income of $4.7 million**, a significant improvement from a **$7.7 million net loss** in the prior-year quarter, driven by a **5.0% increase in revenue** and an **8.1% decrease in operating expenses**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly improved year-over-year, primarily due to higher net income Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended Dec 31, 2019 (In thousands) | Three Months Ended Dec 31, 2018 (In thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,124 | $4,410 | | Net cash used in investing activities | ($1,719) | ($2,710) | | Net cash used in financing activities | ($497) | ($428) | | **Net increase in cash, cash equivalents and restricted cash** | **$4,908** | **$1,272** | - Cash from operating activities increased to **$7.1 million** from **$4.4 million** year-over-year, primarily driven by higher net income, adjusted for non-cash items like depreciation and amortization of the new right-of-use asset[20](index=20&type=chunk)[137](index=137&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail new lease accounting impact, postemployment benefits, segment performance, and regulatory environment - The company adopted the new lease accounting standard, ASC 842, on October 1, 2019, resulting in the recognition of a **$148.6 million operating lease Right-of-Use (ROU) asset** and a **$163.0 million operating lease liability** on the balance sheet, and a net increase in stockholders' equity of approximately **$9.1 million**[31](index=31&type=chunk)[33](index=33&type=chunk) - Postemployment benefits of **$1.5 million** were incurred during the quarter related to the retirement of President and CEO Kimberly J. McWaters[47](index=47&type=chunk) Segment Revenues and Operating Income (unaudited) | Segment | Revenues (Q1'20 vs Q1'19, in thousands) | Income (Loss) from Operations (Q1'20 vs Q1'19, in thousands) | | :--- | :--- | :--- | | Postsecondary education | $83,320 vs $79,224 | $4,601 vs ($6,231) | | Other | $3,914 vs $3,826 | ($347) vs ($974) | | **Consolidated** | **$87,234 vs $83,050** | **$4,254 vs ($7,205)** | - The company is subject to extensive government regulation, particularly regarding federal student financial aid programs under Title IV, with recent regulatory changes effective July 1, 2020, and a planned campus closure reportable to the Department of Education (ED)[88](index=88&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **5.0% revenue growth** to enrollment and tuition, improving operating income and maintaining strong liquidity [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Revenue growth, driven by enrollment and tuition increases, combined with reduced operating expenses, significantly improved profitability - Revenues increased by **$4.2 million (5.0%) YoY**, driven by a **3.3% increase** in average full-time student enrollment and tuition hikes of up to **3.0%**[114](index=114&type=chunk) - Educational services and facilities expenses decreased by **$2.8 million YoY**, primarily due to a **$1.7 million reduction** in compensation costs from lower headcount and new benefit plans, and a **$0.8 million decrease** in depreciation following the adoption of ASC 842[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **$4.4 million YoY**, largely due to a **$4.0 million consultant termination fee** recognized in the prior-year period that did not recur[120](index=120&type=chunk)[122](index=122&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) EBITDA reconciliation provides insight into the company's operational performance before non-cash and financing impacts EBITDA Reconciliation (unaudited) | Metric | Three Months Ended Dec 31, 2019 (In thousands) | Three Months Ended Dec 31, 2018 (In thousands) | | :--- | :--- | :--- | | Net income (loss) | $4,684 | ($7,717) | | Interest income | ($336) | ($403) | | Interest expense | $— | $814 | | Income tax expense | $84 | $133 | | Depreciation and amortization | $3,342 | $4,258 | | **EBITDA** | **$7,774** | **($2,915)** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, with increased cash and sufficient operating cash flow to meet future needs - The company's cash and cash equivalents increased by **$5.1 million** during the quarter to **$70.5 million** as of December 31, 2019[132](index=132&type=chunk) - Management believes cash flow from operations and cash on hand are sufficient to satisfy working capital needs, capital expenditures, and liquidity requirements for the next 12 months[132](index=132&type=chunk) - Net cash provided by operating activities was **$7.1 million** for the quarter, an increase from **$4.4 million** in the prior year period[137](index=137&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure since September 30, 2019 - There have been no material changes to the company's market risk since September 30, 2019[145](index=145&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective, with internal control changes implemented for the new lease accounting standard - The CEO and CFO concluded that disclosure controls and procedures were effective as of December 31, 2019[147](index=147&type=chunk) - Changes in internal control over financial reporting were implemented during the quarter related to the adoption of the new lease accounting standard, ASC 842[148](index=148&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is periodically subject to various legal proceedings in the ordinary course of business, with outcomes currently not estimable - The company is subject to lawsuits, investigations, and other claims in the ordinary course of business, where the ultimate outcome may have a material adverse effect, but a reasonable estimate of loss cannot currently be made[151](index=151&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The company refers investors to the risk factors discussed in its 2019 Annual Report on Form 10-K, noting no material changes[152](index=152&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the stock repurchase program, but shares were repurchased to settle employee tax liabilities - No shares were repurchased under the company's **$25.0 million stock repurchase program** during the quarter, with future repurchases requiring approval from Series A Preferred Stock holders[154](index=154&type=chunk) - In December 2019, **67,967 shares** were repurchased at an average price of **$5.61 per share** to settle employee tax liabilities on vested stock awards[156](index=156&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) The report includes required exhibits, such as CEO and CFO certifications and XBRL data files - Key exhibits filed with the report include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL formatted financial statements[158](index=158&type=chunk)