Hello and welcome to the UTI Fiscal First Quarter 2020 Earnings Call. [Operator Instructions] At this time all participants are in a listen-only mode, and after today’s prepared remarks we will open the lines for questions. As a reminder, today's call is being recorded.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 our CEO Jerome Grant; and CFO Troy Anderson. During the call today, we'll update you on our fiscal first quarter 2020 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 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. During today's call, we'll refer to adjusted operating income or loss, adjusted EBITDA and adjusted free cash flow, which are non-GAAP measures. Adjusted operating income or loss is income or loss from operations, adjusted for items that affect trends in underlying performance from year-to-year and are not considered normal recurring cash operating expenses.Adjusted EBITDA is net income or loss before interest expense, interest income, income taxes, depreciation, amortization and adjusted for items not considered as part of the company's normal recurring operations.Adjusted free cash flow is net cash provided by or used in operating activities less capital expenditures, adjusted for items not considered as part of the company's normal recurring operations. Management uses adjusted operating income and loss, adjusted EBITDA and adjusted free cash flow as performance measures internally, and those will be the figures discussed on today's call.Starting with the third quarter of fiscal 2019 and through fiscal 2020, we will report operating metrics such as student applications and starts, excluding our Norwood, Massachusetts campus. As we have shared previously, Norwood stopped accepting new student applications in the second quarter of fiscal 2019, and will fully close before the end of fiscal year 2020. So we believe it is appropriate to exclude its impact.It is now my pleasure to turn the call to Jerome Grant.

Thank you, Jody. Good afternoon, everyone, and thank you all for joining us today. I particularly like to welcome the notable number of new investors and analysts who have joined us since our last update. We sincerely appreciate your interest and investment in UTI and look forward to working with you in the future.In the first quarter of 2020, UTI delivered excellent results across all of our key metrics, demonstrating the success of our strategy to improve operating performance and pivot the business towards its next phase of growth.In the first quarter revenue was up 5% compared to last year. New student starts, we're 1,594 which represents a 7.7% increase over Q1 2019. New enrollments grew 3.3% and we generated higher revenue per student. That solid top line growth coupled with our success in optimizing costs generated first quarter operating income of $4.3 million, net income of $4.7 million and adjusted EBITDA of $10.1 million.Behind those results, our innovative dedicated team worked aggressively to deliver on our three-pronged strategy of building new profitable campuses and offering new programs, transforming marketing admissions, and our student journey and optimizing our cost structure with a keen focus on rationalizing our real estate footprint.All three of these strategic elements are designed not only to further drive shareholder value creation, but also to enhance the Company's value proposition to our students, thereby positioning the company for the long-term success across any phase of the economic cycle.While we made progress on each of these focus areas in the first quarter, I'd like to highlight two recent accomplishments in particular that fall into the areas of offering new and enhanced programs. The growth of our welding program and the expansion of our partnership with Volvo, based on the initial success of our first three welding technology programs in Dallas Texas, Rancho Cucamonga California, and Avondale Arizona, and recognizing the job market where demand far exceeds the supply.We are accelerating the geographic expansion of this program. We're on schedule to open our previously announced Houston welding program in April and earlier this week we announced we'll launch our fifth welding program at our Long Beach campus in August. With at least one more location in our sites for 2021 welding will be available at a minimum of six UTI campuses. Once each welding program is fully ramped, they typically yield 150 to 200 incremental starts a year, which is roughly 1.5% of our current start total.Our second major accomplishment in the first quarter was our new agreement with Volvo Car Corporation. As part of our work to build innovative programs in partnership with industry, we will integrate Volvo's advanced and electrified vehicles in order to enhance our core automotive curriculum. The agreement puts state-of-the-art industry technology into the hands of our students and lets Volvo showcase their leading edge products across 11 of our campuses.It's also an innovative way to promote Volvo service automotive factory education, or a SAFE program which is exclusively offered at UTI’s campus in Avondale Arizona at no cost to students who are accepted into the program.Turning to the second prong of our strategy transformation, we're building on the progress we've made in the past two years and are continuing to refine and optimize our marketing and admission strategies with the goal of finding the most efficient and effective ways to engage new students.We're now generating more than 50% of our inquiries from our highest converting media channels such as uti.edu and we're exploring and implementing new technology that will increase the efficiency of our lead generation, lower costs and further increase our show rates.We're implementing new business analytics systems, which are giving us significantly more insight into how prospective students learn about UTI and how they interact with us online.With this greater depth of understanding, we can optimize the performance of our campaigns and drive a greater return on our marketing investment. In addition, we're successfully engaging and tracking the behavior of our target audiences using social media. As social media channels evolve and offer more advertising opportunities, we're testing new channels and seeing positive results.In one instance, we began to test in November because there was a new advertising opportunity and saw immediate traction for UTI brand and inquiries at a lower than expected cost per lease.Now we're looking to expand the use of that social media channel for additional programs offered by UTI such as motorcycle as the fiscal year progresses. Events and programs are a powerful way to attract new students. Our recent national open house event had nearly 2,000 attendees including both prospective students and their influencers and generated more than a 100 enrollments on that day alone.Based on our success with previous national open houses, we expect more enrollments coming directly from this event in the coming weeks and months. Our early employment initiative, which we launched last year in Arizona is expanding to our Exton campus later this month.From there we'll move on to Sacramento with plans to roll the program out across all the UTI campuses by the end of 2021. This program which blends proven postsecondary skills education with on the job apprenticeship type training is aimed at developing talent pipelines for our employer partners and giving students the inside track on rewarding long-term careers.Under the early employment initiative, students can apply for jobs with participating local employers just as soon as they enroll. Employers registered with the program can screen, hire and train students as they start school, give them on the job experience while they complete their education.Graduates who have met the employer's criteria are offered full time jobs and will get their school expenses paid for and reimbursed along with other incentives. At Exton, there will be more than 30 employment positions available this winter.As we announced in January, we're looking to align our senior leadership team with the goals of streamlining and optimizing interactions with students from lead generation through graduation. Continuing to approve our strong student outcomes while becoming more efficient and both innovating and deepening our industry partnerships.Our new Chief Strategy and Transformation Officer Todd Hitchcock is leveraging his industry experience and leading our growth strategy development as well as our work to identify and leverage new opportunities for UTI.In addition, we're redefining our student outreach strategy with marketing admissions set to reside under a Chief Commercial Officer. A national search is underway and going well. I'd like to spend just a few minutes discussing our industry partnerships, which are fundamental, longstanding element of UTI’s successful education model and brand differentiation.UTI is unique for its 10 automotive and five diesel manufacturer specific advanced training programs. We call them MSATs, which we develop and offer in collaboration with our industry partners. In just a few months after completing their core certification, our students can get the brand specific training and industry recognized certifications that can often take core certification graduates more than two or three years to achieve out in the field.These programs help meet employers strong need for specialized skill talent and help students build their careers more quickly. On February 4, we're proud to celebrate our 20th anniversary of our partnership with Ford Motor Company, a partnership that exemplifies our enduring relationship with industry.In fiscal 2020, we're expanding our industry strategy and focus and working to deepen industry relationships in a more proactive, innovative and productive ways. Our new agreement with Volvo is just one example. Our industry partnerships are also helping us to reach and train more military veteran technicians who are increasingly in demand.We're pleased with the progress of our BMW on base program in Camp Pendleton in California, which trains students in the last few months before their military service ends to go directly to work for BMW dealers as they transition to civilian life.Now we're working with BMW on a second on-base training program. Additionally, with Penske premier truck group, we will launch a new on-base diesel career skills program at Fort Bliss, Texas this spring. This will be the first on-base diesel career skills program in the history of the U.S. army.In just a few moments, Troy will share with you an update on the third prong of our strategy, which is optimizing our cost structure with a keen focus on real estate rationalization.In all we feel good about the business and our prospects for 2020 and we remain intently focused on delivering both our promises for this year and the next phase of growth for UTI. This business has plenty of room to scale and with the full support of our board, the management team is continuing to evaluate further organic and inorganic opportunities for growth, and examining adjacent markets where we can leverage our core capabilities to serve more students and more industry partners.I'd now like to turn the call over to Troy for a discussion of our financial results then I’ll come back and close with a few final thoughts. Troy?

Thank you, Jerome. With our Q1 results, we're starting the year on a very positive note. First quarter revenue of $87.2 million was up 5% compared to the prior year first quarter. This was primarily driven by an average full time enrollment increase of 3.3% and a revenue per student increase of 1.6%. Regarding our key student metrics, first quarter new students starts were up 7.7% with both high school and adults segments showing strong growth.Adults starts have grown year-over-year for five consecutive quarters, which is especially notable given continued strength in the economy. Military was down slightly in the quarter after a significant uptick in starts in Q1 of fiscal 2019 where we had benefited from additional military reps and other improvements. We feel very positive about the opportunity and our progress overall in the military channel, but face challenges around base access retention efforts from the armed forces and strong demand for veterans from employers.First quarter new student applications increased 3.7% year-over-year with growth driven by high-school and military. The increase in applications reflects our enhanced marketing mix, more rep generated leads and increased productivity and continued refinement of our grant programs. Our show rate improved 90 basis points in Q1.Improvements were driven by broad-based efforts including refinements to grants and student contact strategies and increase effectiveness across our campus operations. In addition to driving revenue growth, we're also maintaining focus on optimizing our cost structure.In the first quarter operating expenses decreased 8.1% year-over-year, driven by reduced expenses for contract and professional services, advertising and compensation related expenses. We ended the quarter with head count of approximately 1,650 down 120 versus last year's quarter and 20 versus the end of fiscal 2019. The year-over-year reduction reflects improved efficiency in our operations throughout the last 12 months and we are also seeing reductions from the Norwood exit as we gradually ramp down operations at the campus.In addition to lower head count, we had expense reductions due to changes to our benefit plans for fiscal 2020. For advertising, we will see different spend timing than last year, although we expect the overall full year spend to be relatively flat year-over-year.Lastly, first quarter of 2020 included $1.5 million of severance costs related to our CEO transition, while the first quarter of 2019 included the $4 million transformation consultant termination fee.In the first quarter, as a result of the increased revenue and improved cost structure, operating income was $4.3 million, which was an $11.5 million improvement over last year's operating loss. Net income was $4.7 million, which was a $12.4 million improvement over the last year's net loss.Though we had basic and fully diluted EPS of $0.07, basic shares were 25.7 million while fully diluted shares were 47.1 million. Adjusted operating income was $6.6 million which was a $9.5 million improvement over the prior year quarter and adjusted EBITDA for the quarter was $10.1 million compared to the prior year adjusted EBITDA of $1.4 million.Our adjusted operating results exclude the costs associated with our CEO transition. The impact of the Norwood exit and costs associated with our transformation consultant engagement that ended in the first quarter of FY19.Turning to cash, we delivered operating cash flow of $7.1 million in the first quarter and adjusted free cash flow of $7 million both increased year-over-year due to our improve profitability with some offset from working capital timing.CapEx was $1.8 million in the quarter, a $1 million decrease in the prior year quarter primarily due to phasing of investment spend. We ended the quarter with a strong balance sheet including $70.5 million of unrestricted cash an increase of $5.1 million from September 30 and we had no debt. With our strong balance sheet and continued cash flow improvement we have the financial resources to fund our operations in near term investments.As Jerome mentioned, with the support of our board we continue to examine a variety of opportunities to support long-term growth, scale our business and maximize returns for all our stakeholders. We have proven models we can opportunistically deploy with our Metro campuses and welding program expansions. And in addition are considering variations of these and other adjacent opportunities where we can leverage our core capabilities.In that regard, we filed it and will soon have effective a general purpose $100 million shelf registration statement. This will provide us flexibility as we explore options for growth and determine potential capital needs going forward.Before covering our 2020 guidance and real estate rationalization efforts let me take a few minutes and highlight the key changes associated with our implementation of the new lease accounting standard, which was effective this quarter.Our 10-Q has the full disclosures, so I'll be brief. Upon adoption, we had a net asset increase of $116.1 million, which was a gross increase of $148.6 million for the right of use asset that was partially offset by decreases to property and equipment and other assets mainly for derecognition of assets associated with two build-to-suit leases.A net liability increase of $107 million, which was a gross increase of $163 million for the current and long term lease liabilities, partially offset by elimination of the deferred financing obligation, deferred rent liabilities and other liabilities. An equity increase of $9.1 million due to the derecognition of the two build-to-suit leases and the difference between the assets and liabilities associated with them.The changes to our December 31, balance sheet when comparing it to September 30, are largely driven by the net impact of the lease standard change and the related Q1 amortization. You'll also notice impacts of the lease accounting standard on our cash flow statement.These include new line items for the amortization of the right-of-use asset and the lease liability as well as the elimination of the amortization of assets subject to deferred financing and the deferred rent liability. As a result of this adoption and specifically the elimination of the two build-to-suit leases, we are now recognizing rent expense where in prior years we had interest and depreciation and amortization expenses.This negatively impacts operating income by approximately $1.6 million and EBITDA by $5.2 million for the fiscal year. These impacts are roughly evenly spread throughout the year and were reflected in our fiscal 2020 guidance as we discussed on our last call.As far as 2020 guidance goes, we are reaffirming all elements of our full year guidance except for CapEx. With the announced expansion of our welding programs, we now have six programs implemented or planned through fiscal 2021, while the incremental startup cost of approximately $850,000 for the two new programs falls within our prior operating expense and profitability guidance ranges there will be additional implementation CapEx of $3.9 million that falls outside of our initial CapEx guidance range. Given this, we are raising our CapEx guidance range to between $11.5 million and $13.5 million.A few of the key data points from our fiscal 2020 guidance include new students starts that are expected to grow between 2.5% and 4.5%. A second consecutive year of revenue growth with total revenue ranging between $338 million and $345 million or growth of 2% to 4% which includes a 100 basis point to 150 basis point headwind from the Norwood exit.Operating income expected to range between $8 million and $13 million and adjusted operating income ranging between $13 million and $18 million. Adjusted EBITDA, expected to range between $26.5 million and $31.5 million, which includes the $5.2 million net negative impact due to the new lease accounting standard. Adjusted free cash flow expected to range from $23.5 million to $28.5 million.While our focus is on delivering the full year results, I want to remind you about the historical quarterly seasonality of our business. As more than 50% of our starts occur in the fourth quarter, we typically see peaks in average students and revenue in our fiscal Q1 and Q4. Revenue is also affected by the number of earnings days in those two quarters. As Q4 has the most earnings days, while Q1 has the least earnings days due to the holiday season, the net of this translate to relatively higher revenue in those two quarters and Q3 being the lowest revenue quarter.On an operating income basis, given the quarterly revenue flows, we expect the majority of our profit and thus cash flow to be generated in Q1 and Q4. This year we also have a few students start date differences that will affect the quarterly year-over-year upticks on start growth.Most notably Q2 has one less start date and a start that occurred in Q4 last year will be in Q3 this year. You should expect the year-over-year growth rates across the quarters to reflect these shifts. All in all, while the quarterly flows are uneven, we have significant visibility into our expected business performance which increases further as each day passes.We have a high degree of confidence in our ability to deliver against all the elements of our full-year guidance, including the incremental new welding program implementation costs. I also wanted to give a quick update on our efforts to rationalize our real estate footprint. In the quarter, we completed the 71,000 square foot reduction of space at our Exton, Pennsylvania campus. The rightsizing at Exton will generate approximately $1.8 million of annual run rate savings without compromising our ability to serve students and industry partners in Pennsylvania and surrounding States.With the completion of the Exton right-sizing, we have achieved over $4.5 million of annualized real estate cost improvements. Additionally, we have signed a new lease for our corporate headquarters. We are relocating to a nearby location and downsizing by 18,000 square feet, which will save approximately $1.3 million annually after we complete the move at the end of the third quarter. This will increase our cumulative real estate cost savings to almost $6 million annually.We continue to optimize our existing facilities including opening new programs like welding and increasing utilization overall. We're also working on several longer term opportunities for incremental efficiencies and cost reductions throughout our real estate footprint and we'll provide further updates on these efforts as new information becomes available.I would like to close by congratulating the UTI team for delivering a solid start to fiscal 2020. More importantly, while we remain focused on and committed to delivering near term results, we are also laying the groundwork for the next phase of our growth with an eye toward maximizing long-term returns for all our stakeholders.With I'll now turn the call back over to Jerome.

Thanks Troy. It's clear that this company has set a solid foundation for significant growth opportunity and we're continuing to refine our strategies, but what has and will always drive us is the exceptional potential of our students and the commitment of our team. We're driven by students like Ricky who was part of our first automotive class at our newest campus in Bloomfield, New Jersey.Ricky shared with us that he's from a first generation immigrant family. He was raised in a Spanish speaking household and when he came to UTI he became the first in his family to get an education beyond high school. Ricky excelled in our core auto program, took the Ford FACT advanced training program and just two weeks before he graduated got his dream job at a Ford dealership near his house.Now I tell you this story not just because it illustrates the power of our industry partnerships or why we're building metro model campuses that let students go to school near their home, but because we believe that our team's passion, our genuine care for our students and their lives is a true competitive advantage.In a world where higher education is under fire and college graduates often struggle to find good jobs in their fields of study, those differentiators set UTI apart. And as we build on those significant fundamental competitive advantages, we're confident we can change more student lives, support our industry partners with the talent they need and deliver more value to our shareholders.I'd now like to turn the call over to the operator for Q&A. Operator?

Yes, thank you. [Operator Instructions] And the first question comes from Raj Sharma with B. Riley FBR.

Hi, good afternoon guys. Thanks for taking my questions. And congratulations on a really good quarter. I just wanted to ask a few questions on the welding. So the welding going to the six programs would then compromise about 7.5% of starts. Is that right for the year?

Hi Roger, this is Troy and thanks for the question. Each welding program will roughly equate to, add 12,000-ish start per year, is about 1.5% of starts. They can fluctuate obviously year to year, but where they're all designed around the same size. So if we have six programs ultimately and nothing else changed, that would be roughly 9%, but they're incremental starts, right, they are new starts. So we would be growing total starts with that.

Now is the tuition rate for those different than the average? And so I'm just trying to estimate sort of a revenue impact from these additional two programs.

Yes. So those are shorter programs. They are 36 week programs and they're going to be lower than say, the core auto program or a diesel program or obviously if you start adding in the electives. So they're going to be in the low, low twenties. And the core programs are in the – our average overall is about 30,000 31,000 per student.

Got it. And then my other question is on operating expenses, now what is a good sort of run rate for OpEx that we should model? Is this the $83 million is that a good sort of steady run rate? And I know that you've – I see that some of the real estate rationalizations are ahead of schedule. Is that right for the Exton and also for the corporate? Is that, is that sort of reduction? How should we think about that in terms of the run rate that we're seeing today?

Yes, I mean we, if you look at right where we are today this quarter we printed roughly $83 million, as you said. We were about $82 million last quarter. So we're in sort of that run rate place. It fluctuates a little bit with our student fluctuations as we have staffing, to meet that. And then things like the real estate improvements, would be bringing that down. We have some other things coming back in with some additional expenses, as we make some investments back in the business, like the welding programs.So it's, there's some puts and takes, but we're probably at a about our run rate, in this low eighties range.

And that accounts for the rationalizations of real estate that are sort of ahead to schedule.

Well, Exton was maybe a little bit ahead of schedule, but yeah, maybe a few months. It wasn't dramatically. The headquarters move will be later in the year. So we won't see much benefit from that, in the quarter we’ll have some move expenses and things like that, that will mute any run rate benefit. But the go-forward benefits are absolutely, will be there. But yes, so I'd say we're roughly, at a run rate place.

Got it. Okay. So I'll stop my questions and I'll be in the queue. Thanks.

Great. Thanks.

Thank you. And then that's the question comes from Austin Moldow with Canaccord.

Hi, thanks for taking my questions. First one is on the welding program. Can you talk about what's required to fill those seats? And when you open these new programs, what kinds of advertising and marketing or is there just, such a supply and demand balance where the seats basically like fill themselves?

Well, they don't just fill themselves. We do have a launch strategy associated with any new program we put onto campus. The demand is very high though. And request even from within our core auto population to continue on and potentially take a welding program on top of core auto is there as well. We have a sort of highly geographic specific digital strategy that surrounds our campuses, both on social media paid search, paid social, which we have the op around our welding launches and so that's been in place as we've been starting to write enrollments to Houston and we'll do it later this year as we approached the start date for Long Beach.

Got it. So can you talk through 2020 guidance? I know it was left unchanged, but it sounds like the welding programs are incremental. So can you just walk us through, how you think about revenue and EBITDA in terms of incremental marketing that's happening here and what's changed from the last time you reported and today where you're reaffirming that?

Yes. This is Troy. Thanks Austin. Just to be clear, the Houston program was part of our fiscal 2020 plan. So that was incorporated in our original guidance, the two new programs, Long Beach and then the second program location to be finalized in first half of 2021, those would be incremental. The timing of the Long Beach program will not affect revenue, meaningfully at all. It's a month and a half on, and it will be ramping, during that timeline.So minimal, revenue impact from a guidance perspective, the cost to implement the $850,000 I quoted is the operating expense side and that includes some modest amount of incremental marketing, advertising as well as obviously all the different work we have to do. And then the CapEx is $3.9 million. So our, within our operating expense, as we looked out, the rest of the year, we looked at our Q1 performance we felt like we had enough room in our profitability range and our OpEx range that we could accommodate that. And then, but from a CapEx perspective, our original guide was only 8 to 9.5. And that was discreet investments, so the $3.9 million is 100% additive essentially to that guidance.

Got it. And my last question is on the outlook for campuses. You talked about your real estate rationalization but can you talk about the potential for building new metro campuses and how your current balance sheet kind of factors into – your thoughts about that and the flexibility it might give you?

Well we're encouraged by the results in the first quarter and remain on track to achieve what we want to achieve in 2020. And, I think as I've mentioned to a number of our investors who've asked that sort of question along the way is that the turning of the business as we approach 2020 gives us the opportunity to think about geographic expansion beyond programs. We've got nothing to announce, or no specifics on any, on any new campuses, but we're now in a position where we can start thinking more expansively about our growth agenda and we'll share with you what we can when we can.

Okay, great. Thanks very much for taking my questions.

Sure. Thanks.

Thank you. [Operator Instructions] All right, this does conclude our question-and-answer session, so I would like to turn it the floor back over to Jerome Grant for any closing comments.

Thanks a lot. In closing, we're excited about what lies ahead for UTI and look forward to reporting on our progress and successes as the year progresses. In that regard Troy and I have been broadening our company's engagement with the investment community to multiple touch points throughout the year.As an example Troy and I will be presenting at the Sidoti Conference in New York City on March 26 and B Riley Conference in May in Beverly Hills. We're also planning investor road shows and site-based investor visits. We look forward to continuing our discussions across all of these events. Thank you everyone for joining us and have a great rest of your day.

Thank you. The conference has now concluded. Thank you for attending today's presentation, you may now disconnect your lines.