Bank of America 2008 Smid Cap Conference UNIVERSAL TECHNICAL INSTITUTE 1 March 26, 2008
Safe Harbor This presentation may include predictions, estimates or other information that may be considered forward looking under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on UTI’s last data reported and have not been updated to reflect any changes that may have occurred since our last reporting date. Any forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Factors that could affect the company’s actual results include changes to federal and state educational funding, construction delays for new and expanded campuses, possible failure or inability to obtain regulatory consents and certifications for new campuses, potential increased competition, changes in demand for the programs offered by the company, increased investment in management and capital resources, the effectiveness of the company’s recruiting, advertising and promotional efforts, changes to interest rates, and low unemployment. Further information on these and other potential factors that could affect the company’s financial results may be found in the company’s filings with the Securities and Exchange Commission. 2
UTI at a Glance Founded in 1965 Leading brands in technical education FY2007 Average enrollment approx. 15,900 Training programs Auto Diesel Collision Repair Motorcycle/Marine FY2007 revenues of $353.4 million 3
Trends Driving Technician Demand Industry size & growth (1) 1.3 million technicians 43,600 annual new openings Evolving technologies Increased focus on parts & service (2) 11.9% auto dealer revenue 77.0% auto dealer operating profits 17.2% of service sales is warranty repair Source: (1) BLS Employment Outlook Summary, November 2007 (2) www.nada.org/nadadata, 2007 Productive technicians drive profitability. UTI is the leading supplier of 4 skilled, entry-level technicians to industry.
What do Students Learn at UTI? How to fix a V-ROD engine . . . . . . and become a Harley-Davidson technician. UTI’s Motorcycle Mechanics Institute has supplied Harley-Davidson with 5 technicians since the early 1980’s.
What do Students Learn at UTI? How to build a race car chassis . . . . . . and become a NASCAR technician. Today, approximately, 18% of NASCAR Tech graduates accept 6 employment in racing-related industries.
What do Students Learn at UTI? How to get under the hood of a big rig . . . . . . and become a heavy-duty diesel technician. Diesel and industrial technology programs are offered at UTI locations in 7 AZ, CA, IL, MA, PA, TX.
What do Students Learn at UTI? How to work on hybrid vehicles . . . . . . and become a Toyota credentialed technician. The Toyota elective is currently offered at the Illinois Campus. Expansion 8 of the program is planned for California and Pennsylvania in Q2 FY 08.
What do Students Learn at UTI? How to perform a wheel alignment . . . . . . and become an Audi credentialed technician. Audi is one of 7 graduate level training programs offered free, through OEM 9 sponsorship, to UTI’s top graduates.
Where do They Learn? NORWOOD SACRAMENTO EXTON GLENDALE HEIGHTS RANCHO CUCAMONGA PHOENIX AVONDALE MOORESVILLE HOUSTON ORLANDO Sacramento opens during Q1 FY 06. We recruit and place students in all 50 states, enabling us to serve the 10 needs of our industry customers nationwide.
Why do Students Choose UTI? Because of our quality reputation and unique relationships with industry leaders. • Relationships provide students with: An enhanced educational experience Potential tuition reimbursement / sponsorship Access to better career opportunities Increased earning potential UTI has built relationships with more than 20 OEM’s which allows us to 11 provide better opportunities for our students.
What is an Industry Relationship? • Original equipment manufacturer provides: Proprietary curriculum & equipment Instructor training and certification Training vehicles • Two types Elective – student paid Graduate – OEM paid Based on our relationships, UTI is best prepared to serve the needs of 12 OEM’s, employers and our students.
UTI has Steadily Built Relationships Over Time 1990 1995 2000 2005 2007 • Harley-Davidson • Harley-Davidson • Harley-Davidson • Harley-Davidson • Harley-Davidson • Kawasaki • Kawasaki • Kawasaki • Kawasaki • Kawasaki • American Honda • American Honda • American Honda • American Honda • American Honda • Honda Marine • Honda Marine • Honda Marine • Honda Marine • Honda Marine • Suzuki • Suzuki • Suzuki • Suzuki • Suzuki • Yamaha • Yamaha • Yamaha • Yamaha • Yamaha • BMW • BMW • BMW • BMW • Mercedes-Benz • Mercedes-Benz • Mercedes-Benz • Volvo-Penta • Volvo-Penta • Volvo-Penta • Jaguar • Jaguar • Jaguar (discontinued) • Ford • Ford • Ford • Porsche • Porsche • Porsche • Volkswagen • Volkswagen • Volkswagen • NASCAR • NASCAR • NASCAR • Mercury Marine • Mercury Marine • Mercury Marine • International • International • International • Audi • Audi • Audi Motorcycle • Volvo • Volvo • Volvo Automotive • Toyota • Toyota • Nissan Marine • Cummins • Freightliner Diesel • BMW Motorcycle UTI has developed industry relationships in all of the verticals it serves; 13 yet opportunity for further development remains.
Who is Missing from Our List? Automotive Diesel / Industrial Chrysler Caterpillar General Motors John Deere Honda PACCAR (Kenworth/Peterbilt) Hyundai Volvo-Mack Significant opportunity exists to develop new relationships with 14 industry leaders.
How the Competition Stacks up to UTI Community Colleges UTI LINC WYO Audi BMW Cummins Ford Freightliner Harley-Davidson Honda Motorcycle Honda Marine International Kawasaki Mercedes-Benz Mercury Marine NASCAR Nissan Porsche Suzuki Toyota Volkswagen Volvo Volvo-Penta Yamaha * Jaguar discontinued in 2006 The depth and breadth of our industry relationships are unmatched. 15
Leading Supplier of Motorcycle Technicians Elective Course Mix – FY 2007 4% 4% 18% 18% 29% 29% 16% 16% 13% 13% 20% 20% 16 100% of MMI graduates have manufacturer-specific training.
Auto / Diesel Electives Benefit Students & UTI ($ in millions) 2,500 $15 2,000 Incremental Revenues $10 1,500 Graduates 1,000 $5 500 Revenue 0 $0 2000 2001 2002 2003 2004 2005 2006 2007 Program Start Date CRRT Automotive *Nissan and International Truck programs were established in late FY2006 and mid-FY2007, respectively. Cummins’ accreditation is pending. Therefore, there are no graduates from these programs in the years depicted. OEM branded electives drive profitable revenue growth over time. 17 Many elective programs have yet to mature.
UTI Is The Primary and Often Sole Provider of Graduate Level Training Graduate Percentage by Brand FY 2007 8% 8% 15% 15% Must qualify Free tuition 13% 13% 16% 16% Employment commitment 2% 2% 90% UTI grads 8% 8% 38% 38% Students who want graduate level training must eventually come 18 through UTI. BMW is the only exception.
Industry Orientation Improves Employment Quality Strong Student Value Where Auto Techs Work* Where UTI Graduates Work** Proposition $41,140 (2) $34,188 (1) 29% 29% $23,428 (1) 49% 51% 49% 51% 71% 71% Auto H.S. College Technician Dealers Other Automotive Dealerships Other Graduate Graduate Dealer * Bureau of Labor Statistics reported in 2006 ** UTI automotive graduates FY2006 (1) Mean earnings for 18-24 year old age group as reported by the U.S. Census Bureau for 2006 (2) Mean annual wage for all employed automotive technicians as reported by the U.S Dept. of Labor, May 2006 Average auto tech working at a dealer earns 75% more than the 19 average high school graduate.
RECENT CHALLENGES 20
The Perfect Storm Increased seating capacity • Increased available seats by 36.8% since FY04 The economic cycle • Strong correlation between unemployment rates and UTI’s annual start growth rate • Strong labor market negatively impacts student recruitment efforts Affordability • Average tuition is $23,000 • Annual tuition increases and climbing interest rates • Increase in funding gap – up to 50% “unfunded” Internal execution challenges • Marketing and lead generation • Sales force practices • Financial aid processes 21
Implications of The Perfect Storm ($ in millions, except for enrollment data and EPS) Fiscal Year Ended September 30, 3 Months Ended 2004 2005 2006 2007 12/31/2006 12/31/2007 Average enrollment 13,076 15,390 16,291 15,856 17,265 16,576 Growth 23.7% 17.7% 5.9% -2.7% -0.9% -4.0% Net revenues $255.1 $310.8 $347.1 $353.4 $89.5 $90.0 Growth 29.9% 21.8% 11.7% 1.8% 4.7% 0.6% Operating income $50.1 $55.8 $40.7 $23.8 $10.5 $9.3 Margin 19.6% 17.9% 11.7% 6.7% 11.8% 10.3% Capacity Utilization 70.2% 69.9% 64.9% 62.2% 68.8% 66.1% Diluted EPS $1.04 $1.26 $0.97 $0.57 $0.26 $0.24 22 Significant operating leverage exists with improved utilization rates.
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