0001261654-26-000006
SEC filingRevenue grew 9.6% to $220.8M on 7.2% student growth, but operating income fell 42.9% due to strategic growth expenses.
For the three months ended December 31, 2025, Universal Technical Institute reported consolidated revenues of $220.8 million, a 9.6% increase from $201.4 million in the same period last year. This growth was fueled by a 7.2% rise in average full-time active students to 26,858, with new program launches and campus expansions driving enrollment. However, operating income plummeted 42.9% to $15.7 million from $27.5 million, reflecting a sharp margin compression. Operating margin fell to 7.1% of revenue from 13.6%, primarily due to strategic growth expenses for new campuses and programs expected to launch over the next several years. Total operating expenses increased 18.0% to $205.2 million, outpacing revenue growth. Educational services and facilities expenses rose 10.3% to $110.4 million, driven by higher compensation, occupancy, and supplies to support expanded student volumes. Selling, general and administrative expenses surged 28.3% to $94.7 million, led by a 20.4% increase in compensation and a 59.4% jump in other SG&A, including a $5.7 million rise in provision for credit losses. Net income decreased to $12.8 million from $22.2 million, with EBITDA dropping to $24.5 million from $35.4 million.
UTI segment revenues increased 8.6% to $142.8 million, supported by a 5.7% increase in average full-time active students to 16,347. Operating income for UTI fell to $15.9 million from $22.5 million, as expenses grew faster than revenue. Compensation and benefits rose $4.9 million, advertising $2.1 million, and general operations $4.0 million. UTI’s operating margin contracted to approximately 11.1% from 17.1%.
Concorde segment revenues grew 11.5% to $78.0 million, with average full-time active students up 9.5% to 10,511. Operating income declined to $3.8 million from $6.8 million. Compensation and benefits increased $4.1 million, advertising $1.9 million, and general operations $1.9 million. Concorde’s operating margin narrowed to about 4.9% from 9.7%. Corporate segment expenses rose to $4.0 million from $1.9 million, driven by higher compensation and general operations.
Management outlined several strategic initiatives under Phase II of the North Star strategy, including new campuses in Salt Lake City, Houston, and Atlanta, all expected to open in 2027. UTI is expanding its Dallas campus to add aviation and HVACR programs, while Concorde plans to relocate its North Hollywood campus to a larger facility in Burbank. These investments are anticipated to boost capacity and drive future revenue growth. The company expects to continue incurring elevated strategic expenses in the near term as these initiatives ramp up. No specific quantitative guidance was provided, but management remains focused on growth, diversification, and operational optimization to improve long-term profitability.
As of December 31, 2025, the company held $93.6 million in cash and cash equivalents, $3.9 million in restricted cash, and $69.2 million in short-term investments, for a total liquidity position of $166.7 million. Total assets stood at $834.0 million, up from $826.1 million at September 30, 2025. Shareholders' equity increased to $335.9 million from $328.1 million, driven by net income of $12.8 million. Total debt (net of issuance costs) was $101.4 million, including $35.0 million drawn on the Revolving Credit Facility. Deferred revenue, a key liability, was $88.6 million, slightly down from $91.5 million at year-end.
The most significant commitment disclosed in the Notes is $73.9 million in total minimum lease payments for four new campus leases that have not yet commenced (UTI Salt Lake City, Concorde Atlanta, Concorde Houston, and relocation of Concorde North Hollywood to Burbank). These leases have terms ranging from 10.5 to 15 years. Additionally, the company has $19.6 million in letters of credit issued to the U.S. Department of Education. No other material purchase commitments or contractual obligations were disclosed in the Notes.
No share repurchases or dividends were reported during the quarter. Capital expenditures totaled $22.2 million, representing 10.1% of revenue, primarily for campus expansion and equipment. The company increased net debt by $14.3 million, borrowing $35.0 million on the Revolving Credit Facility while repaying $20.0 million on that facility and $0.7 million on term loans and finance leases. Subsequent to quarter-end, the company repaid the entire $35.0 million outstanding on the Credit Facility, increasing availability to $105.4 million.
The company operates two reportable segments: Universal Technical Institute (UTI) and Concorde Career Colleges. For the three months ended December 31, 2025, UTI generated $142.8 million in revenue (up 8.6% YoY) and $15.9 million in income from operations (11.1% margin). Concorde generated $78.0 million in revenue (up 11.5% YoY) and $3.8 million in income from operations (4.9% margin). Corporate expenses were $4.0 million, resulting in consolidated income from operations of $15.7 million. All revenues are generated within the United States.
Operating cash flow (CFO) of $3.1 million was significantly below net income of $12.8 million, reflecting a low-quality earnings conversion. The primary drag came from large working capital outflows: receivables increased $7.3 million, prepaid expenses and other current assets rose $12.4 million, and accounts payable/accrued liabilities decreased $12.1 million. These swings overwhelmed the positive adjustments from depreciation ($8.9M) and stock-based compensation ($2.6M).
Capital expenditures surged to $22.2 million, more than six times the prior-year level of $3.3 million, indicating heavy investment in property and equipment. This capex intensity far exceeded CFO, resulting in a negative free cash flow of approximately $19.2 million (CFO minus capex). The company funded the gap through financing activities, drawing $35 million from its revolving credit facility and repaying $20 million, for net proceeds of $15 million. Other financing uses included $7.5 million for payroll taxes on stock-based compensation via shares withheld.
No share repurchases or dividends were disclosed. The overall cash position declined by $36.7 million, ending at $97.5 million (including restricted cash). The supplemental schedule notes $3.2 million in training equipment obtained in exchange for services, a non-cash investing activity.