Good day, and welcome to UTI Fiscal Year 2018 Third Quarter Earnings Call. [Operator Instructions] At this time, all participants are in listen-only mode, and after today's prepared remarks, we will open the lines for questions. As a reminder, today's conference call is being recorded. A replay of the call will be available for at www.uti.edu or through August 19, 2018, by dialing 412-317-0088 or 877-344-7529 and entering the passcode 10123024. At this time, I'd like to turn the conference over to Ms. Jody Kent, Vice President of Communications and Public Affairs for Universal Technical Institute. Please go ahead.

Hello, and thanks for joining us. With me today are Kim McWaters, President and Chief Executive Officer; and Scott Yessner, Interim Chief Financial Officer. During the call today, we'll update you on our fiscal third quarter 2018 business highlights, our financial results, and our vision for the future. Then we will open the call for 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 21E of the Securities Exchange Act of 1934 and Section 27A of the Amended Securities Act of 1933. I’ll refer you to today's news release for UTI's 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 questions. During today's call, we'll refer to 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. It is now my pleasure to turn the call over to Kim McWaters.

Thank you, Jody. Good afternoon everyone, and thank you for joining us today. During today's call, we will discuss our third quarter results and provide an update on our multi-year Transformation Plan and other key strategic initiatives. But first, I would like to congratulate and thanks to many hardworking and dedicated UTI team members on the successful launch of our new Bloomfield New Jersey Campus. We are excited and ready to welcome our first class of auto diesel students next Monday, August 13th. Student interest in the new campus remain strong and applications to-date are tracking ahead of plan. Turning now to the third quarter, starts in the third quarter fell short of expectations in a quarter heavily geared toward the adult population, while we were disappointed, it is important to note that the impact of our Transformation Plan on students scheduled in the third quarter was relatively limited capping our ability to mitigate the effects of a tight labor market. In an environment, where unemployment is at historic lows results in Q3 demonstrated the importance of a Transformation Plan aimed at guiding the student journey and demonstrating the value of UTI education. Q4 is off to a healthier start as high school students making up a larger share of total starts in the quarter, continue to show improving trend. Moreover, this is the first quarter where we should see the impact of our Transformation Plan. I would now like to provide an update on our Transformation Plan, which will be integral to the UTI’s long-term growth and success. As a reminder, during the first quarter of our year, we engaged the top tier consulting firm to complete an independent review and diagnostic of our business. The conclusion was, there were significant opportunity for UTI to transform its business to grow and regain market share, despite continued economic regulatory and competitive pressures. The transformation call for incremental investment in advertising and certain staffing, as well as additional expertise and capability to execute the plan for which we ultimately engaged McKinsey. Through 2019, McKinsey is working with us to help build our internal capability and capacity to execute the transformation for sustained improvement. The range of incremental investment to launch and implement transformation over drive during fiscal 2018, was approximately $8 million to $10 million. Since launching the Transformation Plan in our second quarter, we have been focused on key opportunities to improve marketing, admissions and the student experience from point of enquiries through graduation. We have five key work streams to support our Transformation Plan, one of which is cost reduction and investment optimization. We have made good progress in this area, and we’ll update on expense savings over the next two quarters. For now I’d like to discuss the four other work streams and share a few examples of strategies that are working and some that did not. Let’s start with marketing, the first work stream. Our goal for marketing is to rebuild our brand awareness through an increased investment in top of funnel advertising, including, television, radio and event marketing, to improve our website and landing page performance and to improve efficiencies in paid digital channels. Our work to rebuild UTI’s brand awareness is very important, because perspective students who go direct to uti.edu or search specifically for our brand, convert to enrollments at 4 times the rate of other enquiry sources. I am pleased with our efforts and results thus far. At the end of our first quarter, we launched a new website and landing pages, that have performed very well. By the end of the second quarter, we had substantially eliminated underperforming digital advertising sources. By the middle of our third quarter, we began increasing our top of funnel advertising investment to rebuild our brand awareness. As we implemented our new website and shifted our media mix, we have tracked steady enquiry improvements from our website, year-over-year. As a point of comparison, in October we had roughly 9% year-over-year enquiry growth from uti.edu. In June, we had 49% growth year-over-year. In fact, in June, Gray Associates a higher education consulting firm, reported that UTI had the fastest growth in brand search among all other schools that they track. Again, these enquiries convert to enrollments at 4 times the rate of other sources. Another area, where we have seen improved results in lower funnel digital sources, such as paid social. We significantly reduced our spend and reliance upon low converting digital sources and consequently reduced the number of enquiries, while improving conversion rates and actually growing applications from the digital marketing channel. As a result of these changes, today, nearly 40% of our media enquiries are generated from the highest quality sources, compared to 30% during fiscal 2017. To wrap up marketing, I am pleased with the transformation so far. We have dialed in our digital spin and mix and are now very focused on the right creative messaging and media mix to drive greater brand awareness and interest in our programs. Let’s look at admissions next, the second work stream. Our goal for admissions is to improve overall productivity across each of our admission schemes, high school, adult and military. We are accomplishing this largely through improve training materials and process improvement. Enhance coaching and performance management, with some structural and leadership changes. From our efforts, on a consolidated basis, applications grew 6.5% in the third quarter, both high school and adult applications grew year-over-year, while military lag 6% behind. Adult applications grew 4%, largely driven by our new program offerings and improved media mix and improved conversion rates. High school applications were up 10.7% as a result of a 7.7% increase in headcounts and a 2.7% improvement productivity, as well as an increase in media enquiries. All key performance indicators for the high school team year-to-date have been positive on a year-over-year basis. This is the first year in five years that we are seeing year-on-year application growth. Applications are a critical leading indicator the pipeline for future starts. Next, I'd like to provide an update on the third work stream enroll-to-show, where we are working to improve the student experience our show rates. Our goal for this work stream is to improvement through best-in-class student support services. To-date, we have implemented extended service hours, more personalized student contact and cross-functional support for enrolled students to improve our outreach and engagement with the students and their families. And we are now tracking many critical key performance indicators. Initially certain efforts have been heavily focused on relocating high school students given our potential to positively impact this large population in Q4. In addition, during the third quarter, we piloted a variety of grand and relocation assistance programs to help students who face unique affordability challenges. Some programs worked very well, while others did not. The testing of different programs likely cost us some student starts during the quarter. The programs that worked are being fully implemented in Q4, while the underperforming programs have been discontinued. Since last year, we have continue to focus on the population eligible for various grants and scholarships based on where we see benefit to the student and incremental improvement for the business. These programs are meant to help those students who would otherwise not come to school. As we tested many variables there were some instances where we imposed too many restrictions with negative consequence. To truly understand what works, we were willing to test the point of failure. We will continue to apply what we've learned in Q4 and beyond. As we look to Q4, we have more students scheduled to start school in the fourth quarter than we had this time last year. We still expect to enroll more students for our late August and September starts that if our pacing continues at the same rate, we will be in a positive position. We do anticipate start growth in this quarter, which should support flat to slight growth for the full year. As a reminder, over 50% of our starts for the year occur in the fourth quarter, specifically 40% of our starts occur in August and September. So it is somewhat difficult to predict exactly where we will finish the full year. That said I am encouraged by July results. The last area of focus and fourth work stream is student persistence and completion. For student persistence we are trending favorable to the prior year of 79 basis points. Key initiatives to support improving our persistence and completion rates are professional development and training for our instructors. We are evaluating all courses where we have low student success rates to improve curriculum and provide better instruction to our students. We're particularly focused on persistence in the first five courses as students acclimate to their education and social environment. We're utilizing a new dashboard to track student persistence in these critical courses and have rolled out best practices engaging student services, education and employment to best support students during this critical period. Further, we have implemented parent orientations to better support high-school students and began piloting peer mentoring programs. We're very encouraged with leading indicators and believe we have yet to realize the growing benefit of these efforts. Just as exciting as transformation overdrive is the opening of our third metro campus in Bloomfield, New Jersey. As I said we'll start our first classes on Monday August 13th. The campus is being met with very positive feedback from not only perspective students and our industry and employer partners, but also by the larger community. From elected officials down to the local neighbors. Our metro campuses are very attractive to students who are able to live and work at home, while pursuing skills training. We know that students are more likely to pursue an education when they do not have to give up their job, leave home and relocate to a new city. The metro campus business model is one of the most important transformative changes we can make to operate profitably at any point in an economic cycle. We expect Bloomfield’s results will be similar to our other two metro campuses in Dallas Texas and Long Beach, California and will be accretive to earnings in the first 18 months and cash flow breakeven by year four. We also continue to right size our larger campuses. In July, we amended our lease in Rancho Cucamonga to reduce our footprint by approximately 40,000 square feet. The campus is now just under 150,000 square feet. The size of a metro campus that offers auto diesel welding and one manufacture specific training program. We also extended the campus lease through September 30, 2031, as we believe Rancho Cucamonga’s demographics are supportive of continued UTI education and growth. Rancho Cucamonga is an area with a growing potential student population the majority of whom live within commuter distance or less than 50 miles away. And we have a history of strong employment outcomes in the area and continued strong demand from employers. In addition, we continue to consolidate the Houston campus into our currently owned buildings. This process will be complete by the end of the calendar year, allowing us to exit the last remaining lease building in Houston. This will reduce the campus by approximately 50,000 square feet. Total run rate savings from all of the real estate optimization efforts we started last year are expected to range between to $2.5 million to $3 million starting in fiscal 2019. Before turning the call over, I want to comment on the regulatory landscape. We are pleased with the administration’s focused on rolling back regulations constraining our sector. And we’re optimistic about the changes to the borrower’s defense to repayment regulations and the forthcoming announcements about the gainful employment rules. More than anything, we are proud of UTI student outcomes and remain committed to delivering success for both our students and industry customers. Towards that end, I want to congratulate our teams at the Norway Massachusetts and Sacramento California campuses, who each received School of Excellence Award for 2017-2018 in July from our National Accreditor via Accrediting Commission of Career Schools and Colleges. The Norwood and Sacramento campuses join eight other UTI campuses recognized as Schools of Excellence by ACCSE since 2014. Our Sacramento Campus was also recently selected as Best in Class by the Bureau for Private Postsecondary Education, California’s regulator a Private Postsecondary Education, which is the unit of the California Department of Consumer Affairs. I’m consistently proud of our teams and their focus on delivering high value education and fulfilling careers to our students. I’d like now to introduce and then turn the call over to Scott Yessner, our Interim Chief Financial Officer for a review of our financials. Scott joined UTI in May. He has a strong financial services background and brings to UTI 25 years of financial management experience. Including helping publicly traded companies generate value transformation though strategy, business reengineering and corporate development. We appreciate his full engagement at UTI and the value he has provided to the business and our transformation thus far, Scott.

Thanks, Kim and good afternoon. Our operating results are primarily driven by investment in the transformation strategy and business expansion in the Bloomfield Campus. I’ll start with a review of our third quarter business metrics and then discuss our financial results for the third quarter. Total starts were 1,548 down 226 stats or 12.7% versus the prior year, driven primarily by declines in the adult channels. As Kim described in her remarks, the transformation strategy would have a limited affect in the third quarter and the low unemployment rate environment continues to pressure the adult student channel. Our average student enrollment for the third quarter was 9,484, compared to 9,990 last year, which represents a 5.1% decline. At the end of the third quarter, about 44% of the students in schools were benefitting from a UTI scholarship, discount or institutional grant as compared to about 40% in the third quarter last year. The year-over-year increase was primarily driven by our institutional grant initiative. These scholarships and discounts reduce revenue by an additional $285,000 this quarter, compared to the prior year. We have tested new grant and affordability programs during the initial stage of the transformation strategy and will be more broadly deployed in future quarters. For the third quarter fiscal 2018 compared to the same quarter of last year revenue was $74.9 million compared to $76.3 million for the prior year period. While the year-over-year revenue variance resulted from a 5.1% decrease in the average student population, the year-to-date average revenue per student of $22,804 is up 2.7% versus prior year, primarily driven by the 2017 tuition increase and improvements in our employer sponsored programs. Total operating expenses were $86.7 million, compared to $79 million for the prior year period. The increase was primarily due to planned increases in contract services, advertising and graduate-based admissions variable compensation expenses, along with a $1.2 million impairment of goodwill intangibles related to non-strategic business. Graduate-based variable compensation is in the last year of a three year bridge transition to variable compensation for the admission sales force. At the end of the admissions compensation bridge period in January 2019, the salary bridge will be removed reducing admission salary expense by an estimated $2 million in fiscal 2019. In the transformation strategy as Kim mentioned earlier, costs reduction and investment optimization is a key work stream. We’ve made good progress and will update on expense savings over the next two quarters. Netting the decline in revenue and the increase in operating expenses, our operating loss for the quarter was $11.8 million compared to the operating loss of $2.8 million for the prior year period. Our net loss for the quarter was $11.7 million compared to a net loss of $3.9 million for the prior year period. In the quarter we recorded a preferred stock dividend of $1.3 million in both periods, which was related to a $70 million capital raise in June 2016. Net loss available for distribution to common shareholders was $13 million or $0.52 per diluted share for the quarter compared to a net loss of $5.2 million or $0.21 per diluted share for the prior year period. And EBITDA was negative $7.2 million in the quarter compared to positive $2.1 million for the prior year period. Now, looking at the year-to-date results, for the nine months ended June 30, 2018, compared to the same period in 2017 revenue was $236.7 million, compared to $242.9 million for the prior year period. The year-over-year revenue variance resulted from 5.2% decrease in our average student population. Total operating expenses were $260.9 million, compared to $243.6 million for the prior year period. The increase was primarily attributable to planned increases in contract services, advertising, compensation expense, along with an impairment of goodwill and intangibles of non-strategic business and increased professional accounting services expenses. Operating loss was $24.2 million, compared to an operating loss of $0.7 million for the prior year period. Net loss available for distribution to common shareholders was $25.6 million or $1.02 per diluted share, compared to a loss of $11.3 million or $0.46 for the prior year period. EBITDA was negative $10.4 million, compared to a positive $14.1 million for the prior year period. And then lastly our early adoption of the new accounting standard of revenue recognition resulted in a non-cash increase to equity of approximately $37.2 million as of October 1, 2017. On our balance sheet, we had cash, cash equivalents and investments of $56.2 million at June 30, 2018, compared to $97.9 million at September 30, 2017. The decrease in cash was primarily attributable to our investment in the transformation strategy and business expansion in Bloomfield Campus. We are reaffirming some and adjusting other elements of our previously provided fiscal 2018 outlook. While fourth quarter starts are expected to grow mid-single-digits year-over-year, full year 2018 students starts are expected to be at or near 2017 levels. Average student population is still expected to be down in the mid-single-digit, revenue is expected to range between $315 million and $320 million, operating expenses are expected to range between $352 million and $354 million and operating loss is expected to be between $32 million and $36 million. But EBITDA is still expected to be negative, capital expenditures are expected to be between $23 million and $24 million. With that, I’ll turn it back over to Kim for a few final thoughts.

Thank you, Scott. We are encouraged by our transformation work and the traction that we have seen in the past couple of quarters, building leading indicators such as more and better enquiries, higher conversion rates and application growth. We expect to build on this momentum in the fourth quarter, which is seasonally the strongest quarter for starts, and will be the first quarter where the positive benefits of our Transformation Plan begin to impact our operating results. And while we continue to face strong macroeconomic headwinds, I am optimistic that we are heading in the right direction with our transformation to deliver sustainable profitable growth for UTI. The fourth quarter will be a further proof point of the success of our go-to-market and engagement strategies, that will set the foundation for financial progress, starting in 2019 and beyond. I’d now like to open up the call for your questions. Operator?

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

Thank you, good afternoon. Scott I think, I heard you say that the 44% discount rate might go up next year, did I hear correctly? And can you -- if so can you just expand on that?

Yes, so this is Scott. Just to characterize it that as Kim described in her remarks we have been testing out different programs to support our students in enrollments, students that would normally enroll. The relative amount of our grants and support programs differs widely. And so, at this time we couldn’t project that it would go up, but it is part of our strategy to help our students enroll in school and be supported in that process. So, Kim do you have anything to add?

Yes, I just wanted to clarify that the 44% is in reference to the percentage of students in school receiving a scholarship or grant, not the percent of the grant or scholarship. And that has increased from 40% to 44% on a year-over-year basis.

Right, understood. Okay. So how do I think about that in terms of implications for revenue per student going forward?

Yes, this is Scott. So, just to provide a directional comment on that. Our scholarship and grant strategies are incrementally beneficial to the company. And so we do analyze each of our programs for efficiency for our student and for our investors and company. And so in -- while I can’t give a specific answer on that we do expect appropriate return to the company and an appropriate for the student.

Yes, and I think we can give you a little more color at the end of Q4, as we have seen all of these various programs take root. But, -- I think that we have got -- I am trying to think of the best way to articulate it with the balance in terms of increased start growth, the right program mix, new programs that it will not be significantly different than what we are seeing. But we will give you more information to help on your models, once we have the fourth quarter behind us.

Okay, thanks Kim. And then on the -- so the application flows is encouraging for sure, in terms of the better numbers and obviously flowing through to the expectation around starts for the fourth quarter. I guess, military continues to be relatively weak, anything specific you can talk about there that’s relevant?

I think it’s kind of the same story, in terms of access on the basis as well as fewer students or perspective students to talk to, given reinvestment and bonuses being offered. I will say that we have -- we continue to gain ground in terms of military starts. So some of the enroll-to-show efforts are helping with this channel in terms of show rate and start growth. But we still felt pressure from an application standpoint inside of the quarter.

Right. Okay. And then Kim, can you talk a little about the non-auto programs. Remind me how big they are at this point, and how you view them in the strategic evolution of the company?

Yes. So I need to follow-up with you on the specifics in terms of size. I can't recall if we disclosed that, but I will verify that. But just they're relatively small and that CNC is a 200 students. The welding campus programs can accommodate that amount of students on an average basis. So they're ramping up and they're performing well. So currently we have two welding programs one at Rancho Cucamonga, one an Avondale and we are targeting our third to open in January at Dallas. And we've been very pleased with the welding growth. And actually have been pleased with the show rate and interest more so for our CNC program. So I think the strategy in terms of program diversification is definitely helping in terms of excess capacity and attracting a new student mix. But they are relatively small in comparison to -- for auto and diesel programs.

Got it, understood. And then can you remind me how big is Bloomfield at capacity?

Bloomfield I'd say it's roughly going to be 650 average students when it’s fully ramped. And so the capacity is probably slightly higher than that especially if we can fully optimize the space and sessions. But that's what we would project in terms of a run rate once it is up and running.

Got it, understood. And then I know you obviously haven't given any guidance for fiscal 2019 at this point. But given the trajectory and the application flow the expectation of a inflection to positive starts in the fourth quarter are you comfortable enough at this point to talk about the possibility of getting back to positive enrollment growth in fiscal 2019?

Well, I think we're comfortable stating that we would expect to see start growth in 2019 given the combination of our new campus, the new programs and certainly all of the efforts around our Transformation Plan. So we would expect to see start growth in 2019 absolutely.

Okay. But no comment yet on enrollment growth.

I'm sorry, in terms of the average population?

Yes.

I think we should get back to you in Q4. Because it should -- I mean, that should grow based on our starts, but I think we can be more specific as to when we expect that in Q4.

Yes, great. Alright. I think that covers it for me. So thanks very much.

Thank you.

Thank you.

[Operator Instructions] Seeing that there are no further questions in the queue. This concludes the question-and-answer session. I would now like to turn the conference back to Kim McWaters for any closing remarks.

Well, I just like to thank everyone for tuning into our call today. We look forward to updating you for our Q4 and year-end results late-November early December. And have a great day. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.