UNIVERSAL TECHNICAL INSTITUTE

Transcription

1 BMO Capital Markets Back To School Conference UNIVERSAL TECHNICAL INSTITUTE 1 September 11, 2007

2 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 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

3 UTI at a Glance Founded in 1965 Leading brands in technical education Average enrollment approx. 14,600 Training programs Auto Diesel Collision Repair Motorcycle/Marine FY2006 revenues of $347.1 million 3

4 Trends Driving Technician Demand Industry size & growth 1.3 million technicians 54,400 annual new openings Evolving technologies Increased focus on parts & service 11.9% auto dealer revenue 77.0% auto dealer operating profits 17.2% of service sales is warranty repair 4 Productive technicians drive profitability. UTI is the leading supplier of skilled, entry-level technicians to industry.

5 What do Students Learn at UTI? How to fix a V-ROD engine and become a Harley-Davidson technician. 5 UTI s Motorcycle Mechanics Institute has supplied Harley-Davidson with technicians since the early 1980 s.

6 What do Students Learn at UTI? How to build a race car chassis and become a NASCAR technician. 6 Today, approximately, 15% of NASCAR Tech graduates accept employment on NASCAR race teams.

7 What do Students Learn at UTI? How to get under the hood of a big rig and become a heavy-duty diesel technician. 7 Diesel and industrial technology programs are offered at UTI locations in AZ, CA, IL, MA, PA, TX.

8 What do Students Learn at UTI? How to work on hybrid vehicles and become a Toyota credentialed technician. 8 The Toyota elective is currently offered at the Illinois Campus. Expansion of the program is planned for California and Pennsylvania in Q2 FY 08.

9 What do Students Learn at UTI? How to perform a wheel alignment and become an Audi credentialed technician. 9 Audi is one of 7 graduate level training programs offered free, through OEM sponsorship, to UTI s top graduates.

10 Where do They Learn? NORWOOD SACRAMENTO EXTON RANCHO CUCAMONGA GLENDALE HEIGHTS AVONDALE PHOENIX MOORESVILLE HOUSTON ORLANDO Sacramento opens during Q1 FY We recruit and place students in all 50 states, enabling us to serve the needs of our industry customers nationwide.

11 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 11

12 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 12 Based on our relationships, UTI is best prepared to serve the needs of OEM s, employers and our students.

13 UTI has Steadily Built Relationships Over Time Harley-Davidson Kawasaki American Honda Honda Marine Suzuki Yamaha Motorcycle Automotive Marine Diesel Harley-Davidson Kawasaki American Honda Honda Marine Suzuki Yamaha BMW 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 Ford Porsche Volkswagen NASCAR Mercury Marine International Audi Volvo Toyota Nissan Cummins Freightliner *Jaguar discontinued in UTI has developed industry relationships in all of the verticals it serves; yet opportunity for further development remains.

14 How the Competition Stacks up to UTI Audi BMW Cummins Ford Freightliner Harley-Davidson Honda Motorcycle Honda Marine International Jaguar* Kawasaki Mercedes-Benz Mercury Marine NASCAR Nissan Porsche Suzuki Toyota Volkswagen Volvo Volvo-Penta Yamaha UTI LINC WYO Community Colleges *Jaguar discontinued in The depth and breadth of our industry relationships are unmatched.

15 Who is Missing from Our List? Automotive Chrysler General Motors Honda Hyundai Diesel / Industrial Caterpillar John Deere PACCAR (Kenworth/Peterbilt) Volvo-Mack 15 Significant opportunity exists to develop new relationships with industry leaders.

16 Leading Supplier of Motorcycle Technicians Elective Course Mix FY % 3% 32% 15% 13% 19% % of MMI graduates have manufacturer-specific training.

17 Auto / Diesel Electives Benefit Students & UTI ($ in millions) 2,500 $15 2,000 Graduates 1,500 1,000 $10 $5 Incremental Revenues 500 Revenue $0 Program Start Date *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. 17 OEM branded electives drive profitable revenue growth over time. Many elective programs have yet to mature.

18 UTI Is The Primary and Often Sole Provider of Graduate Level Training Graduate Percentage by Brand FY 2006 Must qualify 11% 14% Free tuition Employment commitment 90% UTI grads 15% 3% 30% 4% 15% 8% *Jaguar discontinued in Students who want graduate level training must eventually come through UTI. BMW is the only exception.

19 Industry Orientation Improves Employment Quality Where Auto Techs Work* Where UTI Graduates Work** Strong Student Value Proposition $40,330 (2) 72% 28% 48% 52% $22,367 (1) $32,175 (1) Dealers Other Automotive Dealerships Other H.S. Graduate Auto Technician Dealer College Graduate * Bureau of Labor Statistics reported in 2004 ** UTI automotive graduates FY2005 (1) Mean earnings for year old age group as reported by the U.S. Census Bureau for 2005 (2) Mean annual wage for all employed automotive technicians as reported by the U.S Dept. of Labor, May Average auto tech working at a dealer earns 80% more than the average high school graduate.

20 20 WHAT HAPPENED?

21 The Perfect Storm Increased capacity The economic cycle Tuition affordability Internal execution challenges 21

22 Impact of Economic Cycle 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% % 11.50% 11.00% 10.50% 10.00% 9.50% 9.00% 8.50% 8.00% 7.50% 7.00% UTI Start Growth Rate Unemployment Rate (a) (b) UTI start growth rate is for the fiscal year. Unemployment rate is for men years old for the month of March (midpoint of UTI fiscal year). Source: BLS 22 There is a strong correlation between the unemployment rate for year old males and UTI s annual start growth rate.

23 The Affordability Challenge Average tuition is $23,000 Sticker Shock reaction Annual increases of 5% Program length compounds problem Interest rates have increased Title IV rates doubled in 5 years Private loan rates can exceed 15% Funding gap has grown up to 50% unfunded 23 Recent UTI research, suggests the cost of tuition and the inability for students to finance tuition is the #1 reason for students not starting school.

24 The Execution Challenges Marketing Lead Generation Evolving student customer profile Changing media landscape Volume at lowest cost mentality Sales Force Practices More efficient, less effective techniques Structure & policies driven by internal needs Financial Aid Processes Transactional vs. customer service orientation Complicated process discourages students Finance options not always feasible 24 UTI continues to focus on improved execution, despite a challenging macro-environment.

25 Implications of The Perfect Storm ($ in millions, except for enrollment data and EPS) Fiscal Year Ended September 30, 9 Months Ended /30/06 6/30/07 Average enrollment 13,076 15,390 16,291 16,324 15,998 Growth 23.7% 17.7% 5.9% 7.7% -2.0% Net revenues $255.1 $310.8 $347.1 $258.3 $266.4 Growth 29.9% 21.8% 11.7% 13.9% 3.1% Operating income $50.1 $55.8 $40.7 $34.5 $25.7 Margin 19.6% 17.9% 11.7% 13.3% 9.6% Capacity utilization 70.2% 69.9% 64.9% 66.1% 62.7% EPS $1.04 $1.26 $.97 $.81 $ Significant operating leverage exists with improved utilization rates.

26 Short Term Business Strategies Optimize marketing & sales Solve the affordability challenge Simplify FA processes / focus on service Reinvent cost structure Improve utilization / rationalize facilities Strengthen people capability 26 Significant efforts are underway; however, the full benefit of these initiatives is yet to be realized.

27 Summary Superior business strategy Strong value proposition Challenging external environment Focused on execution Stronger, more efficient and effective organization 27 UTI is an enduring brand due to its compelling value proposition for both students and industry.

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