Hello and welcome to Universal Technical Institute's First Quarter 2016 Conference Call. [Operator Instructions] At this time, all participants are in a listen-only-mode and after today's presentation we'll open up the lines for questions. As a reminder, today's conference call is being recorded. A replay of the call will be available for 60 days at www.uti.edu or through February 15, 2016 by dialing 412-317-0088 or 877-344-7529 and entering the passcode 10079-751. At this time, I would like to turn the conference call over to Mr. John Jenson, Vice President and Corporate Controller of Universal Technical Institute. Please go ahead.

Hello and thanks for joining us. With me today are Kim McWaters, Chairman and CEO, and Eugene Putnam, President and CFO. During today's call, we will review the results of our first quarter and then we'll take your questions. Before we begin, we must remind everyone that except for historical information, today's call may contain forward-looking statements as defined by Section 21-E of the Securities Exchange Act of 1934 and Section 27-A of the Amended Securities Act of 1933. I'll refer you to today's news release for UTIs comments on that topic. The Safe Harbor statement in the release also applies to everything discussed during this conference call, including initial comments by management, as well as answers to your questions. During today's call, we'll make reference to adjusted EBITDA, which is a non-GAAP measure representing net income, exclusive of interest, income taxes, depreciation and amortization. The schedule provided in the earnings release reconciles EBITDA to the nearest corresponding GAAP measure, net income, or loss. And now I'd like to turn the call over to Kim McWaters, our Chairman and Chief Executive Officer. Kim?

Thank you, John. Hello, everyone, and thanks for joining us on the call today. In a moment, Eugene will walk you through the details of our first quarter results. But first, I’d like to provide a bit of context for the quarter. As we mentioned on our last earnings call, we operate in a very difficult environment with continued economic and regulatory headwinds. This is clearly apparent in our enrolment trends and business results for the past several years as external forces have proved strong than our internal forces. While we know that 2016 financial results will reflect the cumulative effect of these negative forces from prior years, it also reflects our belief in our future and the essential investments required to create it. For the quarter, we have an operating loss of $2.2 million, driven by lower student populations at our campuses, as well as the opening of our new Long Beach campus, which accounted for $1.4 million of the loss. Clearly, our financial results were not what any of us would like, but they were in line with our expectations given our commitment to invest in the business and grow our student population despite depressed student enrolment and revenues at this time. Against that backdrop, we are focused on implementing the strategies we believe can return us to growth, while managing the business as cost efficiently as possible without negative consequence to our educational quality, our student outcomes, and new student growth. To that end, we continue to partner and align our educational programs with leading OEMs to strengthen the overall value proposition for our students. Last quarter, we renewed agreements with four of those OEMs, including BMW, Ford, Porsche, and Volvo. We are so pleased that many more of our industry partners and employers are helping perspective students and their families, recognize the value of the UTI education and manage the affordability concerns and that diversion that can keep them from coming to school. Nissan North America pledged an additional $250,000 in scholarship funding to the UTI Foundation to support our Nissan Automotive technical training program. And more than 2,400 UTI employer locations throughout the country are now offering tuition reimbursement and/or others centers to UTI graduates that they hire. We’ve increased the number of participating tuition reimbursement and incentive program employers by 209% year-over-year. Through testimonials, student outreach, and participating with us at on-campus events and career fares, our industry partners and employers continue to work directly with us to promote the good jobs and career opportunities available in the transportation industry. While we believe we are gaining some traction with these initiatives, we have yet to reimburse enrollment trends. The trends are certainly less worst than we saw year-over-year but we’ve seen that we have not been able to reach the goals we set for ourselves in terms of new student applications and new student start growth. During the quarter, our advertising initiatives drove a slight 2.5% year-over-year increase in the number of enquiries. This is positive given that multiple industry sources reported double digit declines in enquiries for career school brands during the quarter. Still our new student applications were down 3% for the quarter, reflecting either a lack of willingness or the ability of adult perspective students to ask on their interest and pursue UTI education over a job or simply sitting on the couch. This decline also reflects the challenges we have faced with our military in veteran recruitment efforts. Overall base access and declining numbers of transitioning service members are the primary drivers behind fewer military applications and military new student starts. Regaining full base access is like to be a long road, but we’re making progress, working with key congressional leaders and committee members. We believe several of them are beginning to understand the strong demand for our graduates and how our UTI education can help veterans transition to successful civilian careers. We’re seeing increasing support from both sides of the isle, and that support is starting to translate into action. This week several of our advocates and congress hand a bipartisan letter to the Department of Defense asking that the Department allow schools with strong ethics, regulatory compliance and student outcomes, to get back on military basis to give us the opportunity to education veterans about the career opportunities available in the transportation industry. We want our nation peers to be able to make educated and informed decisions about their future. In addition to our progress on the military front, our work with high school teachers, administrators and councilors, is beginning to shift perceptions in some districts once close to all four profit schools have opened their doors to UTI. I want to be clear that building these relationships is a long term investment, but we believe that we are on the right track as gaining access to students is of critical importance to all of our stakeholders. There is no doubt that we will be operating in a tough environment throughout 2016, but know that we are laser focused on reversing the trends as quickly as possible. We continue to believe that we will not only survive this cycle but we will be stronger for it and position well for the future. With that, I’ll turn it over to Eugene for a closer look at our first quarter results.

Thanks Kim. We ended the quarter with an operating loss of $2.2 million as compared to operating income $5.6 million in last year. First quarter operating income was negatively impacted by initial operating losses for our Long Beach campus of $1.4 million. We began the quarter with approximately 1,300 fewer students than we have the same time last year. With a slight decline in our show rate of 120 basis points, starts decreased by 100 students this quarter as compared to the prior year, but were higher than our plan for the quarter. The combination of the lower beginning student population and lower new student starts led to an overall decline in average student population of approximately 8% versus last year. The lower student population partially offset by higher average revenue per student led to revenues of $89.9 million for the quarter, which were down 6.2% from last year. The average revenue per student was up from 6,600 to 6,800. Tuition excluded $5.7 million relating to our proprietary loan program during each period. As a reminder, we recognize revenue for this program when we receive payment. Advertising expense was $10.4 million for the quarter, up slightly from $10.1 million last year. And as a percentage of revenue, advertising expense was 11.6% for this quarter versus 10.6% last year. We generated $2.9 million in EBITDA in Q1 compared to $11.1 million last year. Our first quarter net loss was $1.7 million or $0.07 per diluted share compared to net income or $3.1 million or $0.12 per diluted share last year. The income tax benefit for the quarter was $900,000 or roughly 36% of pretax loss compared to a provision of 2.2% or 42% of pretax income last year. The impact of non-cash adjustments to the deferred tax asset related to stock based compensation this quarter was less than $100,000. It’s likely we will continue to experience variability in income tax expense depending on the price of our common stock and the timing of expiration, exercise, investing of past stock based compensation awards. Assuming our stock price remains relatively consistent with its current trading range, the impact of any adjustments to the deferred tax asset and related income tax expense for the year is expected to be in the range of $1.4 million to $1.7 million. Moving to our balance sheet, we had cash, cash equivalents and investments of roughly $52.5 million at the end of first quarter compared to $59 million at year-end. During the quarter, we invested $2.6 million in fixed assets compared to about $3.7 million last year. And during the quarter, we paid cash dividends of $0.02 per share on both October 5th and December 18th, so a total of about $1 million during the quarter. While are continuing our efforts to manage the business efficiently and to reduce cost where appropriate, we believe our talented growth, includes bringing our education to reach more students to markets. As Kim mentioned, we opened our new campus in Long Beach, California in August and student enrolment is ahead of our pace and ahead of our original plans. We’re very pleased with the initial performance at Long Beach and expected to be accretive to earnings within this fiscal year. This reinforces our strategy to open more locally focused campuses in select markets in the coming years. As part of our commitment to dealer and industry training, we’re pleased to announce that we have acquired an investment interest in a company that provides comprehensive technician development programs and shop operation services. This investment completed earlier this week also includes horizons to certain intellectual property, including learning system infrastructure, training curriculum and content. We also continue to offer scholarships to proprietary loan program and are successfully approaching more employers and OEM partners to assist ensuring the UTI opportunity with potential students. This quarter we extended approximately $8.3 million in loans under our program compared to $7.2 million last year. The average individual loan amount under the program during the was about $4,700, and we recorded approximately $1.5 million in revenue and interest from cash payments received, which was up from $1.1 million last year. In addition to offering this program, we continue to offer more merit based and need based scholarships as well as tuition discounts for certain groups of students, specifically our military veterans. At the end of the quarter, approximately 35% of students in school were benefiting from a UTI scholarship or discount, and these scholarships and discounts decreased revenue by 3.4% during the quarter. Our consolidated employment rate felt slightly during the last year at this time. The rate has improved slightly for our Marine program, while the rate is declining for auto and diesel and collision repair. While demand for our graduates remained very strong, the rate decline is due to some internal operational challenges that resulted in an employment verification backlog as opposed to students actually getting jobs, and that backlog is currently being worked through. We continue to see growth in our overall starting wages for our graduates, reflecting the increased demand for our students. Of the first quarter 2016 graduates, approximately 53% of students in auto diesel programs have manufacture specific training. As many of you know, typically, these students with manufacture specific training find employment quicker and have the potential to earn a higher starting wage. Additionally, our employers and industry partners benefit by hiring grads with higher levels of training and who were better equipped to go right to work. Finally, let me take a minute to talk about our outlook for the remainder of the fiscal year. For the year ended September 30th, we expect new student starts to be down and below the mid single digits, and expect our average student population to be down in the mid to high single digits as a percentage comparing with the year-ended September 30, 2015. While our annual tuition increases will slightly offset the decline in average students, we still expect revenue to decline approximately 3% to 5%. To support future student growth, we will continue to invest in growth opportunities during the year, which will result in lower operating income and minimum levels of the EBITDA this year. Capital expenditures are expected to be in the range of $19.5 million to $20.5 million during the year. And as always, we’ll remind you that due to seasonality of our business and normal fluctuations in student populations, we would expect to see volatility in our quarterly results. And with that, I think we’re now ready to open the line for any questions that might be out there, operator?

We will now begin the question-and-answer session [Operator Instructions]. The first question comes from Peter Appert of Piper Jaffray. Please go ahead.

So I think Eugene last quarter you had talked about expectation of minimal levels of EBITDA this year in terms of your guidance. Is it still how you are thinking?

I actually figure I maybe I ran through it too quickly, but I think I did say and it's in the press release. Yes, we still expect minimal levels of EBITDA for the full year.

So in terms of the sequential change in terms of your expectations of start cost, I think you’re talking about upload single digit last quarter, now we’re talking about down low to mid single digits. Anything you’d call out in particular in terms of changed dynamics that might account for deterioration in the outlook?

I think since we spoke last quarter, we’ve seen continued pressure in our military channel. That impacts us in a couple ways. Obviously it takes longer for military students now to start school. Any time you have a longer period between the signing of an enrolment agreement and students starting to school, that creates pressure on show rates, because we know live events happen and the commitment is not as strong as it is when there is a shorter period of time. And I think the other factor is as our military enrolments stabilize in terms of the percentage when they have been growing in the past what that has caused is they have been the greatest, the highest, rate of show rate and as that mix changes a little bit, that put some pressure on show rates. So, I think since 60-90 days ago, we’ve seen two changes that have led to the softening of the guidance; one is, some pressure on that show rate, specifically within the military channel; and two, the enrolments as Kim spoke to, while doing better than last year have not led it to the level that we wanted in the first quarter of this year. Now there is still opportunity for us to recover some of that. But as we look at our crystal ball right now, we haven’t seen the building and the pipeline to the extent that we had hoped to 90 days ago.

And then I know, I should know this, but I’ve forgotten. In terms of the access to military basis, what’s changed there?

Well, what changed, there was some guidance that came out relative to one of our, not direct competitors, but was just say the largest four profit institution in the country and that caused a tightening through executive order and Department of Defense regulations and interpretations of when and how you can get on military basis. Now, we have worked diligently to overcome some of that and we’ve had success with some of that. But it is still on a year-over-year and even quarter-on-quarter basis a struggle to get our ability to explain the potential careers and the value of those careers to potential students that are exiting the military. It's a shame but that’s the way the regulations are right now.

So you’re interpreting it, I’d say, that it's a blanket ban as opposed to something specific to UTI?

It is clearly not something specific to UTI, back then as I said, I think we are through our good outcomes having some success in getting some access, but it's not as good as it was.

And then last thing, in terms of the plans beyond Long Beach, what’s the time frame in terms of your thought process on another new location?

I think the earliest that would be, would be the summer, in terms of an opening would be the summer of 2017. Obviously, depending upon what state you’re going through and what the regulatory process is for approval of that, some states take longer than others. But from a whiteboard planning purposes, I’d say summer, late summer or 2017 with some type of announcement from us given guidance to that in summer 2016.

And should we assume that you would need to see some better stabilization in terms of the underlying fundamentals of the existing business before you would go forward with new locations?

Not necessarily. I think if we continue to see what we’re seeing with Long Beach, which is our most recent one, that would prove out the hypothesis that in getting education closer to the students and closer to employer demand continues to work, we continue to believe that that’s the case though, while I would certainly like to see the stabilization and growth in the legacy campuses. I wouldn’t necessarily say that that’s an absolute requirement prior to moving forward.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Kim McWaters, Chairman and CEO, for any closing remarks.

Thank you. Thank you, Peter for your questions and to all of those listening. We appreciate your time and interest in the Universal Technical Institute and we look forward to our second quarter earnings call, which is currently scheduled for April 28th, and we will update you then. For now, have a great day. Thanks.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.