Universal Technical Outshines – Analyst Blog

Universal Technical Institute Inc. (UTI) recently reported second-quarter 2010 results that topped the Zacks Consensus Estimate on the heels of strong enrollment and increased operating margins, which have boosted the bottom-line.

 

The quarterly earnings of 25 cents a share outshone the Zacks Consensus Estimate of 19 cents, increasing substantially from break-even achieved in the prior-year quarter. Universal Technical’s quarterly earnings topped the Zacks Consensus Estimate by 31.6%. The company’s earnings surprised history for the four quarters (including the reported quarter), and varies between 31.6% and 300%, with four quarter average being 113%.

 

The educational institute, which provides professional automotive, diesel, collision repair, motorcycle and marine programs, reported that enrollment averaged 18,241 (up 18% year-on-year) in the quarter. Average capacity utilization jumped 849 basis points year-over-year to 71.6% in the quarter.

 

Higher education sees a countercyclical market in an economic recession when post-secondary enrollments tend to rise as both unemployed and employed workers return to school to re-skill themselves and existing students remain in school longer, compelled by the intensely competitive job market.

 

Net revenue for the quarter climbed 18.5% year-over-year to $105.6 million, reflecting a rise in average undergraduate full-time student enrollment, increase in tuition fees and less tuition discounts.

 

Operating income jumped to $9.9 million in the quarter from a loss of $0.2 million posted in the year-ago quarter, whereas the operating income margin surged to 9.4% from an operating margin loss of 0.2% in the prior-year quarter.

 

Universal Technical Institute ended the quarter with cash and cash equivalents of $49.4 million and shareholders’ equity of $129.2 million. Operating cash flow for a six-month period was $24.5 million.