Universal Technical Cuts Outlook as Costs Outpace Revenue
Quarterly revenue rose 7.2% to $218.9 million as spending on expansion weighed on profit.
Universal Technical Institute (UTI) cut its fiscal-year outlook after the career-training provider’s expenses grew nearly twice as fast as revenue and quarterly net income fell 79%.
Revenue growth accelerated slightly from the prior quarter, while profitability remained under pressure from strategic investments. Operating expenses rose 13.4%, compressing operating margin to about 1.5% from 6.9% a year earlier, though operating income improved sequentially to $3.2 million from $0.3 million.
Fiscal third-quarter revenue increased from $204.2 million a year earlier, with growth edging up from 6.7% in the second quarter but remaining below the first quarter’s 9.6% pace. Diluted earnings declined to $0.04 a share from $0.19, while net income dropped to $2.3 million from $10.7 million.
Adjusted earnings before interest, taxes, depreciation and amortization fell 28% to $18.2 million, reflecting $9.0 million of strategic growth investments. The decline moderated from 51% in the prior quarter, and adjusted EBITDA increased about 29% sequentially.
Enrollment trends diverged across the company’s schools. New-student starts rose 11%, driven by a 23% increase at the UTI segment, while Concorde starts declined 1.4%. Concorde still posted the stronger active-student growth and increased revenue 11%, compared with 5% at UTI; Concorde net income rose to $3.1 million as UTI net income fell to $5.0 million.
Universal Technical now expects fiscal 2026 revenue of $893 million to $900 million, down from its previous range of $905 million to $915 million. Adjusted EBITDA guidance stands at $100 million to $103 million, compared with $114 million to $119 million previously, while diluted-EPS guidance was reduced to $0.57 to $0.64 from $0.71 to $0.80.
The company also expects adjusted free cash flow ranging from a $20 million loss to breakeven, replacing its prior forecast for positive $20 million to $25 million. Adjusted free cash flow was negative $65.6 million through nine months as capital spending accelerated, compared with positive $15.0 million a year earlier.
Universal Technical began the first phase of a three-year restructuring in May and recorded $1.1 million of related costs during the quarter. Fourth-quarter high-school starts in Auto and Diesel were tracking below plan, while its new Atlanta campus opened with initial starts about 30% above expectations.