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Universal Technical Institute(UTI) - 2025 Q3 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements The report contains forward-looking statements subject to various risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied91011 - Key risk factors include compliance with regulatory requirements, shifts in higher education laws, ability to maintain federal student financial assistance, execution of growth and diversification strategy, and macroeconomic conditions12 Part I. Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Universal Technical Institute, Inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, recent pronouncements, and specific financial line items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | September 30, 2024 | Change | % Change | | :-------------------- | :------------ | :----------------- | :----- | :------- | | Assets | | | | | | Cash and cash equivalents | $70,672 | $161,900 | $(91,228) | -56.3% | | Total current assets | $185,180 | $221,951 | $(36,771) | -16.6% | | Total assets | $740,759 | $744,575 | $(3,816) | -0.5% | | Liabilities | | | | | | Total current liabilities | $185,025 | $204,963 | $(19,938) | -9.7% | | Long-term debt | $70,942 | $123,007 | $(52,065) | -42.3% | | Total liabilities | $433,972 | $484,344 | $(50,372) | -10.4% | | Shareholders' Equity | | | | | | Total shareholders' equity | $306,787 | $260,231 | $46,556 | 17.9% | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, presenting revenues, expenses, and net income Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $204,298 | $177,458 | $613,174 | $536,329 | | Total operating expenses | $190,146 | $170,012 | $554,691 | $503,460 | | Income from operations | $14,152 | $7,446 | $58,483 | $32,869 | | Net income | $10,663 | $4,985 | $44,262 | $23,161 | | Net income per share - basic | $0.20 | $0.09 | $0.82 | $0.40 | | Net income per share - diluted | $0.19 | $0.09 | $0.80 | $0.39 | - Revenues increased by 15.1% for the three months ended June 30, 2025, and by 14.3% for the nine months ended June 30, 2025, compared to the prior year periods18 - Net income more than doubled for both the three-month and nine-month periods ended June 30, 2025, compared to the prior year periods18 Condensed Consolidated Statements of Other Comprehensive Income This section details components of comprehensive income beyond net income, such as unrealized gains or losses on financial instruments Condensed Consolidated Statements of Other Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $10,663 | $4,985 | $44,262 | $23,161 | | Unrealized loss on interest rate swaps, net of taxes | $(251) | $(6) | $(92) | $(539) | | Comprehensive income | $10,412 | $4,979 | $44,170 | $22,622 | Condensed Consolidated Statements of Shareholders' Equity This section tracks changes in the company's equity over time, reflecting net income, stock-based compensation, and share transactions - Total shareholders' equity increased from $260.2 million at September 30, 2024, to $306.8 million at June 30, 2025, primarily driven by net income and stock-based compensation1624 - Retained earnings significantly increased from $38.5 million at September 30, 2024, to $82.8 million at June 30, 20251624 Condensed Consolidated Statements of Cash Flows This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $40,226 | $18,361 | | Net cash used in investing activities | $(78,273) | $(16,508) | | Net cash used in financing activities | $(56,026) | $(39,661) | | Change in cash, cash equivalents and restricted cash | $(94,073) | $(37,808) | | Cash, cash equivalents and restricted cash, end of period | $73,399 | $119,116 | - Operating cash flow more than doubled year-over-year, reaching $40.2 million for the nine months ended June 30, 202529 - Significant cash was used in investing activities ($78.3 million) primarily for held-to-maturity investments and property and equipment purchases29 Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1 - Nature of the Business This note describes the company's business as a workforce solutions provider in transportation, skilled trades, and healthcare education - Universal Technical Institute, Inc. is a workforce solutions provider offering transportation, skilled trades, and healthcare education programs through two reportable segments: UTI and Concorde33 - UTI operates 15 campuses in nine states, focusing on transportation and skilled trades, including manufacturer-specific training Concorde operates 17 campuses and online, offering allied health, dental, nursing, patient care, and diagnostic programs3334 - Primary revenue source is student tuition and fees, largely funded by federal financial aid programs (Title IV) and veterans' benefits36 Note 2 - Basis of Presentation This note explains the preparation of the unaudited interim financial statements in accordance with GAAP and Form 10-Q instructions - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, including normal and recurring adjustments37 - No material changes in significant accounting policies or estimates from the 2024 Annual Report on Form 10-K39 Note 3 - Recent Accounting Pronouncements This note outlines recently issued accounting standards updates and their potential impact on the company's financial reporting - ASU 2023-07 (Segment Reporting) is effective for fiscal 2025 10-K and Q1 2026 10-Q, requiring enhanced segment disclosures41 - ASU 2023-09 (Income Taxes) is effective for fiscal 2026 10-K, enhancing income tax disclosures42 - ASU 2025-05 (Financial Instruments – Credit Losses) is effective for annual periods beginning after December 15, 2025, introducing a practical expedient for credit loss measurement on receivables43 - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, requiring additional disclosure of income statement expenses44 Note 4 - Revenue from Contracts with Customers This note details the company's revenue recognition policies, primarily from student tuition and fees, and related contract balances - Revenues primarily consist of student tuition and fees, recognized ratably over the course or program term, after discounts, scholarships, and refunds45 - Supplemental revenues come from textbook/supply sales and training/staffing services, recognized as goods/services are transferred46 Receivables and Deferred Revenue (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------- | :------------ | :----------------- | | Receivables | $87,347 | $72,080 | | Deferred revenue | $67,043 | $92,538 | Note 5 - Investments This note describes the company's investments in short-term corporate and government bonds, classified as held-to-maturity - In February 2025, the company invested in short-term corporate and government bonds, classified as held-to-maturity, with a minimum credit rating of A49 Investment Portfolio (in thousands) | Investment Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Market Value | | :----------------------------- | :------------- | :--------------------- | :---------------------- | :-------------------------- | | Corporate and government bonds due in less than 1 year | $47,162 | $2 | $(20) | $47,144 | | Corporate and government bonds due in more than 1 year | $5,566 | $3 | $— | $5,569 | Note 6 - Fair Value Measurements This note explains the company's use of a three-tier fair value hierarchy for measuring financial assets and liabilities - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) to rank the quality and reliability of information used for fair value measurements53 Fair Value Measurements (in thousands) | Asset/Liability | June 30, 2025 Fair Value | Level 1 | Level 2 | Level 3 | | :----------------------------- | :----------------------- | :------ | :------ | :------ | | Money market funds | $51,964 | $51,964 | $— | $— | | Corporate and government bonds | $52,713 | $52,713 | $— | $— | | Notes receivable | $46,518 | $— | $— | $46,518 | | Revolving credit facility and term loans | $70,001 | $— | $70,001 | $— | Note 7 - Property and Equipment, net This note provides details on the company's property and equipment, including gross amounts, accumulated depreciation, and net book value Property and Equipment, net (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :---------------------- | :------------ | :----------------- | | Property and equipment, gross | $467,236 | $473,001 | | Less: Accumulated depreciation and amortization | $(199,519) | $(208,204) | | Property and equipment, net | $267,717 | $264,797 | - Depreciation expense was $8.1 million for the three months and $23.8 million for the nine months ended June 30, 202555 Note 8 - Leases This note details the company's lease arrangements for facilities, including lease expenses and liabilities, and new campus leases - The company has facility leases at 29 of 32 operating campuses and two non-campus locations, with new leases recorded for future campuses in Fort Myers, Atlanta, and Denver during the nine months ended June 30, 20255663 Lease Expense (in thousands) | Lease Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating lease expense | $8,428 | $7,603 | $23,693 | $22,862 | | Total net lease expense | $11,395 | $10,561 | $32,343 | $31,207 | Lease Liabilities (in thousands) | Lease Liabilities | June 30, 2025 | September 30, 2024 | | :------------------------------- | :------------ | :----------------- | | Operating lease liabilities, current portion | $18,733 | $22,210 | | Operating lease liabilities (non-current) | $168,508 | $146,831 | | Total lease liabilities | $191,318 | $173,809 | Note 9 - Accounts Payable and Accrued Expenses This note provides a breakdown of the company's accounts payable and various accrued expenses at specific reporting dates Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :---------------------- | :------------ | :----------------- | | Accounts payable | $22,840 | $26,273 | | Accrued compensation and benefits | $45,398 | $35,660 | | Total accounts payable and accrued expenses | $91,278 | $83,866 | Note 10 - Debt This note details the company's debt instruments, including revolving credit facilities, term loans, and finance leases, along with covenant compliance Debt (in thousands) | Debt Type | Interest Rate | Maturity Date | June 30, 2025 Carrying Value | September 30, 2024 Carrying Value | | :----------------------- | :------------ | :------------ | :----------------------------- | :-------------------------------- | | Revolving Credit Facility | 6.14% | Nov 2027 | $6,000 | $56,000 | | Avondale Term Loan | 6.37% | May 2028 | $27,726 | $28,390 | | Lisle Term Loan | 6.32% | Apr 2029 | $36,275 | $36,929 | | Finance lease | 6.02% | Jan 2029 | $4,077 | $4,768 | | Total debt, net | | | $73,764 | $125,704 | - The company repaid $50.0 million net on the Revolving Credit Facility during the nine months ended June 30, 2025, and further repaid $6.0 million in July 202568195 - A $19.6 million letter of credit was issued in July 2025 to the ED to lift core growth restrictions on Concorde and MIAT campuses, reducing Revolving Credit Facility availability69182 - The company was not in compliance with the Quick Ratio covenant (0.62 vs. required 0.65) as of June 30, 2025, but obtained a waiver from Fifth Third Bank73183 Note 11 - Derivative Financial Instruments This note describes the company's use of interest rate swap agreements to manage interest rate risk, designated as cash flow hedges - The company uses interest rate swap agreements (Avondale Swap and Lisle Swap) to fix interest rates on 50% of the principal amounts of its term loans, designated as effective cash flow hedges76 Interest Rate Swaps (in thousands) | Interest Rate Swaps | June 30, 2025 Fair Value | September 30, 2024 Fair Value | | :--------------------------------- | :----------------------- | :---------------------------- | | Other current assets | $486 | $497 | | Other assets | $615 | $726 | | Total fair value of assets designated as hedging instruments | $1,101 | $1,223 | - An estimated $0.5 million from accumulated other comprehensive income related to interest rate swaps will be reclassified to interest expense within the next twelve months77 Note 12 - Income Taxes This note presents the company's income tax expense, effective tax rates, and factors causing deviations from the federal statutory rate Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax expense (in thousands) | $3,689 | $1,772 | $14,453 | $7,699 | | Effective income tax rate | 25.7% | 26.2% | 24.6% | 24.9% | - The effective tax rate differed from the 21% federal statutory rate primarily due to non-deductible executive compensation, stock-based compensation, R&D tax credits, and state/local taxes80 - The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its annual results for fiscal 202582 Note 13 - Restructuring Costs This note outlines costs associated with the consolidation of UTI's Houston campuses, including student financing and employee termination expenses - UTI consolidated two Houston campus locations, completing the transition during Q1 fiscal 2025, reducing UTI campuses from 16 to 1584 - Total estimated restructuring costs are $1.2 million, with $0.2 million incurred through June 30, 2025, primarily for student financing, employee termination, and tools858687 - A remaining potential cost of up to $1.0 million relates to federal loan discharges88 Note 14 - Commitments and Contingencies This note discloses the company's exposure to various legal proceedings, investigations, and regulatory matters in the ordinary course of business - The company is periodically subject to lawsuits, arbitrations, investigations, and regulatory proceedings in the ordinary course of business89 - No material legal proceedings are currently pending, but adverse outcomes could materially affect business, cash flows, results of operations, or financial condition90 Note 15 - Shareholders' Equity This note details changes in shareholders' equity, including preferred stock conversion and common stock repurchase plan information - As of June 30, 2025, no shares of Series A Convertible Preferred Stock remain outstanding, following a repurchase of 33,300 shares and conversion of remaining shares into 19,296,843 common shares on December 18, 20239293 - The company has a $35.0 million share repurchase plan authorized in December 2020, but no shares have been repurchased under this plan during the nine months ended June 30, 2025 or 202494 Note 16 - Earnings per Share This note provides the calculation of basic and diluted earnings per share, reflecting net income and weighted average shares outstanding Earnings per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income available to common shareholders (in thousands) | $10,663 | $4,985 | $44,262 | $19,209 | | Weighted average basic shares outstanding (in thousands) | 54,412 | 53,805 | 54,260 | 47,956 | | Basic income per share | $0.20 | $0.09 | $0.82 | $0.40 | | Diluted income per common share | $0.19 | $0.09 | $0.80 | $0.39 | - The two-class method for EPS calculation is no longer applicable after the preferred stock conversion on December 18, 20239599 Note 17 - Segment Information This note presents financial data for the company's two reportable segments, UTI and Concorde, detailing revenues and operational income - The company operates in two reportable segments: Universal Technical Institute (UTI) and Concorde Career Colleges (Concorde), with 'Corporate' expenses unallocated99 Segment Performance (Three Months Ended June 30, 2025, in thousands) | Metric | UTI | Concorde | Consolidated | | :-------------------- | :--------------- | :-------------------- | :------------------------ | | Revenues | $131,463 | $72,835 | $204,298 | | Income (loss) from operations | $19,870 | $5,929 | $14,152 | | Net income (loss) | $18,583 | $5,890 | $10,663 | Segment Performance (Nine Months Ended June 30, 2025, in thousands) | Metric | UTI | Concorde | Consolidated | | :-------------------- | :--------------- | :-------------------- | :------------------------ | | Revenues | $397,169 | $216,005 | $613,174 | | Income (loss) from operations | $66,762 | $26,006 | $58,483 | | Net income (loss) | $63,090 | $25,892 | $44,262 | Note 18 - Government Regulation and Financial Aid This note discusses the regulatory environment, including participation in federal student aid programs and the impact of recent legislative changes - Institutions participate in federal student aid programs (Title IV of HEA) and other federal sources, requiring state authorization, accreditation, and ED certification103104 - The recently enacted OBBBA revised Title IV Programs, conditioning eligibility on earnings benchmarks and potentially limiting funding, with an unknown impact at this time105 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial performance, condition, and liquidity, covering student metrics, operational results, and strategic execution Company Overview This section provides an overview of Universal Technical Institute, Inc. as a leading workforce solutions provider in specialized education - Universal Technical Institute, Inc. is a leading workforce solutions provider in transportation, skilled trades, and healthcare education, utilizing a blended learning model108 - All campuses are accredited and eligible for federal student financial assistance under Title IV Programs and other federal sources112 Overview of the Three and Nine Months Ended June 30, 2025 This section summarizes key financial and student enrollment trends for the recent three and nine-month periods, highlighting growth drivers Student Metrics | Student Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | % Change | | :------------- | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Consolidated Total new student starts | 5,721 | 5,567 | 2.8% | 17,684 | 15,393 | 14.9% | | Consolidated Average full-time active students | 23,757 | 21,079 | 12.7% | 24,474 | 21,987 | 11.3% | | Consolidated End of period full-time active students | 22,369 | 20,128 | 11.1% | 22,369 | 20,128 | 11.1% | - Increases in student metrics were driven by new program rollouts and increased student demand across both UTI and Concorde segments114 - Consolidated revenues increased by 15.1% to $204.3 million for the three months and 14.3% to $613.2 million for the nine months ended June 30, 2025, primarily due to higher average full-time active students116117 - Income from operations significantly increased to $14.2 million (3 months) and $58.5 million (9 months), driven by increased revenues and ongoing operational efficiency improvements118 Business Strategy This section outlines the company's 'North Star strategy' focused on growth, diversification, and operational efficiency through new campuses and programs - The 'North Star strategy' focuses on three core tenets: growing the business by penetrating existing and new markets, diversifying by adding new locations/programs, and optimizing operational efficiency119 - Strategic executions include announcing new UTI campuses in Atlanta and San Antonio (opening 2026), a new Concorde co-branded campus in Fort Myers (opening early fiscal 2026), and expanding programs like Tesla's START Collision Repair, HVACR, and Battery Hybrid Electric Vehicle/EV courses122 - New partnerships with FirstCall Mechanical and Loftin Equipment Company were established for early employment programs for students122 Regulatory Environment This section discusses the highly regulated industry, particularly government-sponsored student assistance programs and recent legislative impacts - The company operates in a highly regulated industry, subject to government-sponsored student assistance programs, primarily Title IV of the HEA121103 - Recent amendments to the HEA under the OBBBA may impact program eligibility and Title IV funding, with the full effect currently unknown121105 Results of Operations: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 This section provides a detailed comparison of revenues, expenses, and profitability for the three-month periods, analyzing key drivers Results of Operations (Three Months Ended June 30, in millions) | Metric | 3M Ended June 30, 2025 | 3M Ended June 30, 2024 | % of Revenues 2025 | % of Revenues 2024 | | :----- | :--------------------- | :--------------------- | :----------------- | :----------------- | | Revenues | $204.3 million | $177.5 million | 100.0% | 100.0% | | Educational services and facilities | $105.6 million | $95.3 million | 51.7% | 53.7% | | Selling, general and administrative | $84.5 million | $74.7 million | 41.4% | 42.1% | | Income from operations | $14.2 million | $7.4 million | 6.9% | 4.2% | | Net income | $10.7 million | $5.0 million | 5.2% | 2.8% | - UTI revenues increased by 12.2% to $131.5 million, and Concorde revenues increased by 20.7% to $72.8 million, both driven by higher average full-time active students126127 - Educational services and facilities expenses increased due to higher student volumes and business strategy execution, partially offset by operational cost savings128 - Selling, general and administrative expenses increased primarily due to costs associated with business strategies, including higher advertising and marketing, and increased provision for credit losses135137139 Results of Operations: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024 This section provides a detailed comparison of revenues, expenses, and profitability for the nine-month periods, analyzing key drivers Results of Operations (Nine Months Ended June 30, in millions) | Metric | 9M Ended June 30, 2025 | 9M Ended June 30, 2024 | % of Revenues 2025 | % of Revenues 2024 | | :----- | :--------------------- | :--------------------- | :----------------- | :----------------- | | Revenues | $613.2 million | $536.3 million | 100.0% | 100.0% | | Educational services and facilities | $308.2 million | $285.2 million | 50.3% | 53.2% | | Selling, general and administrative | $246.5 million | $218.3 million | 40.2% | 40.7% | | Income from operations | $58.5 million | $32.9 million | 9.5% | 6.1% | | Net income | $44.3 million | $23.2 million | 7.2% | 4.3% | - UTI revenues increased by 11.6% to $397.2 million, and Concorde revenues increased by 19.7% to $216.0 million, driven by increases in new student starts and average full-time active students147148 - Educational services and facilities expenses increased due to higher student volumes and new program launches, partially offset by a $5.2 million decrease in student housing expenses for UTI149152 - Selling, general and administrative expenses increased due to headcount growth, increased advertising and marketing, and a $5.2 million increase in the provision for credit losses for Concorde156158160163 Non-GAAP Financial Measures This section presents non-GAAP financial measures like EBITDA, providing additional insights into the company's operational performance Non-GAAP Financial Measures (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $10,663 | $4,985 | $44,262 | $23,161 | | EBITDA | $22,616 | $14,842 | $83,058 | $54,784 | - EBITDA is presented as a non-GAAP measure to supplement GAAP results, clarify operations, identify trends, and compare performance consistently175 Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations and fund operations, detailing cash flows, debt, and available capital - The company believes current cash flows, cash on hand ($70.7 million as of June 30, 2025), short-term investments, and the Revolving Credit Facility ($119.0 million available) will meet liquidity needs177178 - Strategic uses of cash may include acquisitions, real estate purchases, student funding alternatives, and common stock repurchases179180 - Long-term debt outstanding was $74.1 million as of June 30, 2025, including term loans, a finance lease, and the Revolving Credit Facility181 - Net cash provided by operating activities was $40.2 million for the nine months ended June 30, 2025, a significant increase from $18.4 million in the prior year189 - Cash used in investing activities was $78.3 million, primarily for held-to-maturity investments ($54.6 million) and property and equipment ($25.5 million)193 - Cash used in financing activities was $56.0 million, mainly due to net payments on the Revolving Credit Facility ($50.0 million)195 Seasonality and Trends This section discusses the seasonal fluctuations in the company's operating results due to changes in student enrollment patterns - Operating results fluctuate seasonally due to changes in student population, with UTI typically having lower student populations in Q3 (summer) and higher in Q4197 - Concorde generally sees higher student populations in January and August-October for core programs, and February for clinical programs197 Critical Accounting Policies and Estimates This section confirms no significant changes to critical accounting policies and estimates from the prior annual report - No significant changes in critical accounting policies and estimates during the nine months ended June 30, 2025, from those disclosed in the 2024 Annual Report on Form 10-K198 Recent Accounting Pronouncements This section refers to Note 3 for detailed information on recently issued accounting pronouncements - Information regarding recent accounting pronouncements is detailed in Note 3 of the condensed consolidated financial statements199 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's market risk exposure during the nine months ended June 30, 2025, as compared to the disclosures in the 2024 Annual Report on Form 10-K - No material changes in market risk exposure during the nine months ended June 30, 2025200 Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely201 - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025202 - Management acknowledges that control systems provide only reasonable, not absolute, assurance and have inherent limitations, including potential for error, fraud, or management override203 Part II. Other Information Item 1. Legal Proceedings This section states that while the company is periodically subject to legal matters, no material proceedings are currently pending - The company is periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings, or other claims204 - No material legal proceedings are currently a party to, but cannot predict with certainty the ultimate resolution of potential claims204 Item 1A. Risk Factors This section notes no material changes to risk factors, except for the potential impact of the One Big Beautiful Bill Act on Title IV Programs - No material changes to risk factors from the 2024 Annual Report on Form 10-K, except for the impact of the One Big Beautiful Bill Act (OBBBA)205206 - The OBBBA revised Title IV Programs, potentially conditioning program eligibility on earnings benchmarks and limiting funding, with an unknown impact on student population, revenues, and profit margin206 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds during the period - None to report207 Item 3. Defaults upon Senior Securities This section confirms that there were no defaults upon senior securities to report during the period - None to report208 Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company's operations - Not applicable209 Item 5. Other Information This section reports no adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025211 Item 6. Exhibits This section lists the exhibits filed with the report, including certifications and XBRL interactive data files - Includes certifications of CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and XBRL interactive data files212 Signatures This section confirms the report's official signing by the Executive Vice President and Chief Financial Officer and the Vice President and Chief Accounting Officer - The report was duly signed on August 7, 2025, by Bruce Schuman, Executive Vice President and Chief Financial Officer, and Christine C.S. Kline, Vice President and Chief Accounting Officer216217218