UNIVERSAL TECHNICAL INSTITUTE 1 March 26, 2008 Safe Harbor This - - PowerPoint PPT Presentation

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Bank of America 2008 Smid Cap Conference

March 26, 2008

UNIVERSAL TECHNICAL INSTITUTE

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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

• n 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

• f 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.

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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

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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

Productive technicians drive profitability. UTI is the leading supplier of skilled, entry-level technicians to industry.

Source: (1) BLS Employment Outlook Summary, November 2007

(2) www.nada.org/nadadata, 2007

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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 technicians since the early 1980’s.

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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 employment in racing-related industries.

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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 AZ, CA, IL, MA, PA, TX.

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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

• f the program is planned for California and Pennsylvania in Q2 FY 08.

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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 sponsorship, to UTI’s top graduates.

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HOUSTON RANCHO CUCAMONGA ORLANDO GLENDALE HEIGHTS NORWOOD MOORESVILLE EXTON PHOENIX AVONDALE SACRAMENTO

Where do They Learn?

Sacramento opens during Q1 FY 06.

We recruit and place students in all 50 states, enabling us to serve the needs of our industry customers nationwide.

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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 provide better opportunities for our students.

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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 OEM’s, employers and our students.

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UTI has Steadily Built Relationships Over Time

1990 1995 2000 2005 2007

• Harley-Davidson
• Kawasaki
• American Honda
• Honda Marine
• Suzuki
• Yamaha
• BMW
• Harley-Davidson
• Kawasaki
• American Honda
• Honda Marine
• Suzuki
• Yamaha
• Harley-Davidson
• Kawasaki
• American Honda
• Honda Marine
• Suzuki
• Yamaha
• BMW
• Mercedes-Benz
• Volvo-Penta
• Jaguar
• Ford
• Porsche
• Volkswagen
• NASCAR
• Mercury Marine
• International
• Audi
• Volvo
• Harley-Davidson
• Kawasaki
• American Honda
• Honda Marine
• Suzuki
• Yamaha
• BMW
• Mercedes-Benz
• Volvo-Penta
• Jaguar
• Ford
• Porsche
• Volkswagen
• NASCAR
• Mercury Marine
• International
• Audi
• Volvo
• Toyota
• Harley-Davidson
• Kawasaki
• American Honda
• Honda Marine
• Suzuki
• Yamaha
• BMW
• Mercedes-Benz
• Volvo-Penta
• Jaguar (discontinued)
• Ford
• Porsche
• Volkswagen
• NASCAR
• Mercury Marine
• International
• Audi
• Volvo
• Toyota
• Nissan
• Cummins
• Freightliner
• BMW Motorcycle

UTI has developed industry relationships in all of the verticals it serves; yet opportunity for further development remains.

Motorcycle Automotive Diesel Marine

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Who is Missing from Our List?

Chrysler General Motors Honda Hyundai Automotive Diesel / Industrial

Significant opportunity exists to develop new relationships with industry leaders.

Caterpillar John Deere PACCAR (Kenworth/Peterbilt) Volvo-Mack

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How the Competition Stacks up to UTI

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

UTI LINC WYO Community Colleges *Jaguar discontinued in 2006

The depth and breadth of our industry relationships are unmatched.

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Leading Supplier of Motorcycle Technicians

100% of MMI graduates have manufacturer-specific training.

18% 18% 16% 16% 13% 13% 20% 20% 29% 29% 4% 4%

Elective Course Mix – FY 2007

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500 1,000 1,500 2,000 2,500 2000 2001 2002 2003 2004 2005 2006 2007

Auto / Diesel Electives Benefit Students & UTI

*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.

($ in millions)

OEM branded electives drive profitable revenue growth over time. Many elective programs have yet to mature.

$15 $0 $5 $10 Graduates Incremental Revenues

Revenue

Program Start Date

CRRT Automotive

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Graduate Percentage by Brand FY 2007

Students who want graduate level training must eventually come through UTI. BMW is the only exception.

8% 8% 13% 13% 2% 2% 38% 38% 8% 8% 16% 16% 15% 15%

UTI Is The Primary and Often Sole Provider of Graduate Level Training

Must qualify Free tuition Employment commitment 90% UTI grads

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Average auto tech working at a dealer earns 75% more than the average high school graduate.

Industry Orientation Improves Employment Quality

Dealers Other

Automotive Dealerships Other

Where Auto Techs Work* Where UTI Graduates Work**

71% 71% 29% 29% 51% 51% 49% 49%

* Bureau of Labor Statistics reported in 2006 ** UTI automotive graduates FY2006

H.S. Graduate Auto Technician Dealer College Graduate

$23,428 (1) $41,140 (2) $34,188 (1)

(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

Strong Student Value Proposition

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RECENT CHALLENGES

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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

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Implications of The Perfect Storm

($ in millions, except for enrollment data and EPS)

Significant operating leverage exists with improved utilization rates.

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 Fiscal Year Ended September 30, 3 Months Ended

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How Are We Addressing Issues?

Excess seating capacity

• Increased local market penetration
• Improved show and persistence rates
• Rationalizing facilities

The economic cycle – we are countercyclical

• Modified advertising messages
• Macro-economic trends moving in our favor

– Higher unemployment rates – Lower interest rates

Affordability

• Expanded lenders both FFEL and private
• Secured sub-prime lender
• Provided need based scholarships
• Issued RFP for additional loan providers

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How Are We Addressing Issues?

Internal execution challenges

• Marketing & lead generation

– Launched new national advertising campaign and website – Utilized more short form advertising – Increased local event marketing

• Sales Force Practices

– Replaced senior management – Implemented decentralized reporting structure – Rolled out sales training

• Financial Aid Processes

– Outsourced front-end financial aid processes – Developed financial aid and future student services training

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Approximately 80% of our revenues come from Title IV funding or cash payments.

Lending Programs

Meet Gap With Cash Payments 22.8% Require Some Discount

• Alt. Loan

10.3% Require Some Private Alt. Loan 24.7% Fully Funded Through FFELP & PELL 42.2%

FY 2007 Breakdown by % of Revenue CY 2007 Breakdown by % of Students

FFELP - Federal Loans & Pell Grants 62.8% CTG & Other 5.8% Discount Alt. Loans 2.3% Private Alt. Loans 11.8% Cash / Credit Cards 17.3%

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Key Metrics to Drive Revenue

Contract Lead Start Graduation

1-4 Months 1-12 Months 12-18 Months

Priorities

• 1. Increasing starts and improving show rates
• 2. Increasing the number of contracts
• 3. Increasing the quantity and improving the quality of leads

It can take up to 36 months for students to move through the revenue cycle.

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Short Term Business Strategies

Optimize sales & marketing Enhance student funding options Rationalize capacity and cost structure Improve customer service Strengthen human capital Evaluate best uses of balance sheet

Significant efforts are underway; however, the full benefit of these initiatives is yet to be realized.

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Summary

Superior business strategy / relationships Strong value proposition Overcoming challenging external environment Focused on execution Stronger, more efficient and effective organization

UTI is an enduring brand due to its compelling value proposition for both students and industry.

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APPENDIX

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Student Start History

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year FY2004 FY2005 FY2006 FY2007 FY2008

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Average Undergraduate Student Enrollment

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

1 Q F Y 4 2 Q F Y 4 3 Q F Y 4 4 Q F Y 4 1 Q F Y 5 2 Q F Y 5 3 Q F Y 5 4 Q F Y 5 1 Q F Y 6 2 Q F Y 6 3 Q F Y 6 4 Q F Y 6 1 Q F Y 7 2 Q F Y 7 3 Q F Y 7 4 Q F Y 7 1 Q F Y 8

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Available Capacity and Utilization

5,000 10,000 15,000 20,000 25,000 30,000 1QFY04 2QFY04 3QFY04 4QFY04 1QFY05 2QFY05 3QFY05 4QFY05 1QFY06 2QFY06 3QFY06 4QFY06 1QFY07 2QFY07 3QFY07 4QFY07 1QFY08 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

• Max. Total Seats

Capacity Utilization

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Maximum Total Seats By Campus

9/30/2004 9/30/2005 9/30/2006 9/30/2007 12/31/2007 Avondale, AZ 3,180 3,420 3,420 3,060 2,490 Exton, PA 1,920 1,920 2,420 2,420 2,420 Glendale Heights, IL 2,250 2,400 2,400 2,340 2,340 Houston, TX 2,740 3,160 3,160 3,160 3,160 Mooresville, NC 1,920 1,920 1,920 1,920 1,920 Norwood, MA

• 1,920

1,920 1,920 1,920 Rancho Cucamonga, CA 2,100 2,640 2,640 2,640 2,640 Sacramento, CA

• 1,800

2,100 2,100 MMI – Orlando, FL 2,415 2,545 3,330 3,520 3,520 MMI – Phoenix, AZ 2,100 2,100 2,100 2,400 2,580 18,625 22,025 25,110 25,480 25,090

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