Good day, and welcome to the Universal Technical Institute Second Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President of Corporate Finance. Please go ahead.

Hello, and welcome to Universal Technical Institute's Fiscal Second Quarter 2024 Earnings Call. Joining me today are CEO, Jerome Grant; and CFO, Troy Anderson. Following our prepared remarks, we will open the call for your questions. A replay of this call, its transcript, and our investor presentation will be archived on the Investor Relations section of our website at investor.uti.edu, along with our earnings release issued earlier today and furnished to the SEC. During this call, we may make comments that contain forward-looking statements as defined in the Private Securities and Litigation Reform Act of 1995, which by their nature address matters that are in the future and are uncertain. These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. These factors include, but are not limited to those discussed in our earnings release and SEC filings. These statements do not guarantee future performance and, therefore, undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments, except as required by law. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of fiscal 2023. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to and not as a substitute for the company's reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today's call are reconciled in our earnings press release to the most directly comparable GAAP measure. For more information regarding definitions of our non-GAAP measures, please see our earnings release, financial supplement, and investor presentation. With that, I will turn the call over to Jerome Grant, CEO of Universal Technical Institute, for his prepared remarks. Jerome?

Thank you, Matt. Good afternoon, everyone. We carried our operational momentum into the second quarter of 2024. Across our key metrics, we performed consistent with, and in most cases, better than our expectations. We had 5,480 new student starts in the quarter, which is an 18.5% increase. And our second quarter revenue grew 12.4% to $184.2 million. Both of these were above our expectations. For profitability, net income was $7.8 million. Diluted earnings per share was $0.14, and adjusted EBITDA increased 17.8% to $22.6 million, all right in line with our expectations. Our performance through the first half of fiscal '24 continues to demonstrate the strength of our execution on our growth, diversification, and optimization strategy. I'd like to thank our divisional and corporate teams for their continued leadership, as well as our faculty, staff, partners, and students for their hard work and commitment. As another point of pride, we were prominently featured in a recent Wall Street Journal article, 'How Gen Z Is Becoming the Toolbelt Generation.' The article highlights one of our welding graduates as a case study for young workers' increased interest in trade professions, or what we refer to as skilled collar jobs. This trend has received more visibility lately, including a recent study funded by the Gates Foundation that found that students are both increasingly skeptical about the ROI of a traditional 4-year college education and are becoming more aware of their alternatives to college. As traditional higher education enrollments decline, and as an older generation of skilled tradespeople retire, we believe we are optimally positioned to address the rising demand for technical training among the new generation of workers. Our advantage also extends to the healthcare fields we serve, which have experienced even greater job demand momentum. According to the U.S. Bureau of Labor Statistics, job growth in healthcare support occupations is projected to outpace all other occupational groups, growing at an estimated 15.4% between 2022 and 2032. So, as we welcome and train the next generation of students in both divisions, facilitating superior graduation rates and employment outcomes remains core to our growth strategy. I'd now like to review the recent performance and highlights by division. Starting with our healthcare division, Kevin Prehn and his Concorde division have continued to outperform our growth expectations, with student start growth of approximately 17% and revenue growth of 8%. Concorde's newest program rollouts came in ahead of schedule as the necessary regulatory approvals for the 2 planned dental hygiene programs were obtained in February and the programs officially started in April. Combined, these programs had approximately 50 students in their first cohorts. Concorde also continues to make progress with the expansion of its San Diego dental hygiene program, which remains on track to launch later this year. As Troy will discuss later in the call, performance also benefited from our new phlebotomy and sterile processing technician programs. Market demand remains impressive for Concorde's growing core and clinical program offerings. For the division more broadly, Kevin and his team have continued to identify and execute on optimization and efficiency opportunities, as well as evaluate other growth avenues, such as expanded online offerings and additional program expansions. The team at Concorde is also focused on deepening and expanding their partnership network. These relationships not only benefit graduates' employment opportunities but also enhance the accessibility and affordability of Concorde's programs. One great partner example is Marquis Companies, a fifth-generation family-owned senior living healthcare company based in Portland, Oregon. For the last 3 years, Marquis has partnered with Concorde to meet the growing demand for workers. Marquis subsidizes tuition for its employees who want to upskill to become vocational or practical nurses, with tuition subsidies ranging from 25% to 100% based on the student's commitment to stay with the company. We appreciate Marquis' generous support of our students and look forward to making additional partnership progress. The UTI division also had a strong quarter, with year-over-year student start and revenue growth of approximately 20% and 15% respectively. From a program standpoint, Tracy Lorenz and her team are making great progress on the second phase of the division's program expansions. 2 of the 4 heating, ventilation, air conditioning, and refrigeration program expansions, which we announced last fall, are now enrolling students at the Avondale and Long Beach campuses. These classes are expected to begin in June and July respectively. As for UTI's other 2 HVAC program expansions, the Bloomfield campus is now enrolling students, with the first cohort expected to start in September, while the Sacramento campus is on track to start its first cohort of students early next year, pending regulatory approval. The other 14 new programs, which were launched primarily in late fiscal 2023, have continued to grow nicely, with over 550 combined new student starts between Q4 last year and Q2 this year. Market demand for these new programs continues to build, and we remain confident in having at least 1,000 new student starts in these programs this fiscal year. As we've also discussed on previous calls, the most recent program launches are just the first step towards expanding the MIAT sourced aviation, skilled trades and energy programs across the UTI division footprint. The unification process of UTI's division's 2 Houston operations into a single campus remains on track to be completed later this calendar year, with the phase transition process now underway. The Houston unification project is a prime example of our strategic focus on optimization, which is designed to drive greater operating efficiencies while enhancing the student experience and outcomes. The UTI team has also grown the division's extensive partnership base. During the second quarter, UTI announced a new partnership with Hawaiian Airlines and continued to expand its employment program partners. The division has also announced a 5-year renewal of an alliance with Interstate Batteries, a leading automotive replacement battery brand and the exclusive battery provider to all UTI automotive, diesel, and marine technician training programs across our footprint. We appreciate this long-running alliance and look forward to building on the division's industry relationship for years to come. Turning to our expectations for the balance of 2024 and thoughts on fiscal 2025. We are announcing positive adjustments to our starts, revenue, and profitability guidance for 2024. For new student starts, based on our results to date and expectations for the upcoming quarters, we now feel confident in increasing our prior range to between 25,500 and 26,500 starts for this fiscal year. We also expect to generate between $720 million and $730 million in revenue and between $102 million and $104 million in adjusted EBITDA for the fiscal year. Troy will provide additional layers of commentary on these adjustments and expected quarterly phasing for the second half of the year. With our confidence in our strategy and solid execution in 2024, we've developed our initial projections for fiscal 2025. Based on our currently announced program expansions, low to mid-single-digit baseline student start growth, and currently planned optimization initiatives, we're estimating 2025 revenue of nearly $800 million, with approximately 10% year-over-year growth and an adjusted EBITDA margin of approximately 15%, which represents at least 100 basis points in margin expansion. With our robust and proven multi-divisional model, we are well-positioned for continued growth, diversification, and optimization. I'd now like to turn the call over to Troy to review our financial results and our guidance in more depth. Troy?

Thank you, Jerome. We continue to deliver positive operational and financial performance through the second quarter, meeting or exceeding expectations across our key metrics. As an important reminder, this marks the first quarter with a full year-over-year comparison for Concorde since we closed the acquisition in December 2022. For new student starts, we saw double-digit year-over-year growth from both divisions during the quarter, where we delivered 5,480 total starts, representing 18.5% growth, which was above our expectations. The UTI Division delivered 2,840 new student starts and grew 19.6%. Same campus, same program growth was a big contributor, and we continue to see the benefits from our new program launches. The Concorde division delivered 2,640 new student starts and grew 17.2%. We also saw strong same-campus same-program growth with Concorde, with a modest contribution from the recent new program launches, as the start cohorts are smaller and less frequent than those of the UTI programs. Technical starts grew 24.9%, while core starts grew 12.4%. Both reflect the benefits of increased marketing investments and grant programs. Additionally, as Jerome mentioned, our core program start growth includes contributions from the phlebotomy and sterile processing technician programs, which are shorter cash pay programs we are working to expand across the Concorde campus footprint. We look ahead to the third and fourth quarters. I'm sure many of you have heard about the Department of Education's FAFSA simplification initiative and recent challenges with the implementation. We are keeping a watchful eye on these developments and doing everything we can to support our students, as we jointly navigate through the new process. This is particularly important for our incoming high school students. Turning to our financial results. Revenue on a consolidated basis was $184.2 million, which also exceeded our expectations and reflects an increase of 12.4% year-over-year. The UTI division's revenue of $123.3 million increased 14.7%, and Concorde's revenue of $60.9 million increased 8.2%. Consolidated net income was $7.8 million, which more than doubled versus the prior year quarter. This translated to $0.14 of diluted earnings per share, which now reflects the full benefit of the December 2023 preferred share conversion. At the end of the second quarter, we had 53.8 million total shares outstanding. Adjusted EBITDA was $22.6 million, an increase of 17.8% year-over-year. Overall, our profitability performance was in line with our expectations and continues to reflect the improved operating leverage associated with our growth in students and revenue, as well as cost efficiencies as we generate higher yields from our growth investments and optimization efforts. As of the end of the second quarter, our total available liquidity was $145.1 million, which includes $29 million of available capacity from our revolving credit facility. As I noted last quarter, we are now managing the revolver to maintain a modest level of positive working capital at the end of each quarter, which translated to a net paydown of $19 million for the quarter. We continued to pace ahead of last year in terms of operating and adjusted free cash flow generation, which reflects our improved profitability and lower level of growth investments in CapEx spend. Year-to-date, operating cash flow was $8.3 million, and adjusted free cash flow was $3.7 million. Year-to-date capital expenditures were $9.8 million. Our CapEx spend has been running lighter than planned during the first half of the year, and we expect it to be higher in the second half. Overall, we believe we have ample liquidity to fund continued organic growth initiatives, such as additional program expansions and new campuses. As Jerome mentioned, we are positively adjusting our new student start, revenue, and profitability guidance for fiscal year 2024, reflecting our current visibility and continued confidence in our execution. The updated guidance ranges are as follows: total new student starts of 25,500 to 26,500, a 1,000 start increase to the midpoint; total revenue of $720 million to $730 million, which increases the midpoint by $10 million; net income of $37 million to $41 million, an increase of $1 million to the midpoint; diluted earnings per share of $0.68 to $0.73, an increase of $0.01 at the midpoint; total adjusted EBITDA of $102 million to $104 million, which narrows the range and increases the midpoint by $1.5 million. This translates to an adjusted EBITDA margin of 14.2% at the midpoint, or roughly 350 basis points of margin expansion versus last year. We remain highly confident in our prior adjusted free cash flow guidance of $62 million to $66 million, which includes total CapEx spend of approximately $30 million. We will continue to evaluate our guidance throughout the remainder of the year as we gain further insight into our actual and expected performance and make adjustments accordingly. As far as phasing expectations over the next 2 quarters, for new student starts, we expect low to mid-single-digit growth each quarter, slowing from what we've seen in the first 2 quarters as we begin to lap the many initiatives in the UTI program expansions we implemented last year, with a smaller relative impact from both the UTI and Concorde new program expansions launching this year. For revenue, we expect low double-digit growth each quarter, reflecting the ongoing ramp of our recent program expansions and the student start growth momentum we are seeing in both divisions. As a reminder on seasonality, we typically see revenue decrease from the second to third quarter, and then measurably increase in the fourth quarter as a result of higher start volumes and growth in the student population. This is more pronounced for UTI than it is for Concorde. For net income, diluted earnings per share and adjusted EBITDA, we continue to expect significant year-over-year growth each quarter, with third quarter profitability down relative to the second quarter, similar to revenue, and the fourth quarter being the highest profitability quarter for the year by far. Since our last earnings call, we've spent time evaluating the trajectory of the business as well as potential new growth investments over the next few years. While we don't have anything to announce on the latter point just yet, we are sharing our initial projections for fiscal year 2025, which Jerome also touched upon. In that regard, we currently estimate revenue of nearly $800 million for the year, representing approximately 10% growth, and we estimate adjusted EBITDA margin of approximately 15%, or at least 100 basis points of margin expansion versus fiscal 2024. These projections reflect the momentum we expect to carry out of fiscal 2024, based on our updated guidance, our currently completed and announced program expansions, ongoing baseline new student start growth of low to mid-single digits, and increasing the yield on our growth and optimization investments, as we gain further operating leverage and enhance the efficiency of our operational infrastructure. While not considered official guidance, we feel it is important to provide a longer-term view to the investment community along with the rationale behind it. We expect to provide formal fiscal 2025 guidance in November, along with our fiscal 2024 results, consistent with our normal cadence. As always, we encourage everyone to review our press release, financial supplement, and investor presentation, as well as the 10-Q once it is filed, as these materials include the most current information on our consolidated and segment actual results, our strategic roadmap, and our guidance. We are excited about our performance for the first half of the year and believe we are entering the second half of fiscal 2024 on very sound footing. I would like to thank our team, students, partners, and investors for their continued engagement and support. I'll now turn the call back over to Jerome for closing remarks.

Thank you, Troy. In the coming quarters, we intend to make additional progress on our 3 strategic tenets, growth, diversification, and optimization. We're actively pursuing organic initiatives in 3 primary ways. First, we are continuing to consider the expansion of our campus locations into new geographies. We are also continuing to expand the geographic reach of our existing programs, as well as exploring adding new in-demand program offerings to our portfolio. And finally, we'll continue to add new partner relationships across our programs. From an inorganic perspective, we remain active opportunistically in pursuing additional strategic M&A targets. As we discussed previously, we intend to bolster our healthcare presence, as well as program offerings to complement our current Concorde business. Although we have nothing to announce today, we believe our current and future diversification pathways will strengthen our industry leadership, especially as market demand continues to grow across our fields. And of course, in the second half of 2024, we'll continue driving the key operational focus areas that you've come to expect. These include ramping the most recent campus and program launches in both divisions to drive enrollment, revenue, and profitability growth, enhancing the yield of our marketing and admissions investments to optimize lead generation and inquiry conversion, and optimizing our workforce and facilities utilization to drive greater program availability, margin expansion, and improved operating leverage. To date, our company's strategic progress has enhanced our capabilities as a leading workforce solutions provider, all while maintaining our focus on facilitating superior outcomes for an expanding range of in-demand fields. We look forward to providing further updates on our exciting trajectory over the coming quarters. And I'd now like to turn the call over to the operator for Q&A.

The first question comes from Alex Paris with Barrington Research.

Nice job on the quarter and on the guidance. So my first question is just a big picture within your operations. What's driving demand? We had headwinds, headwinds of COVID, headwinds of inflation, but those headwinds have apparently eased. Would you call it a tailwind at this point?

Well, I'd say we're seeing momentum build. I think there's been a great deal of positive press about the ROI of skilled trades, especially as we enter the summer months, and people are making decisions about directions post high school. And so, we're seeing an environment that feels more favorable to considering alternatives like ours. And that's what we're hearing in the conversations and clearly that's what we're seeing in the numbers.

I'm hearing the same thing. Now as I recall on the fourth quarter call, we discussed that you significantly increased your presence in the high school market by adding field reps and you did something similar, although it's a smaller sales force in military. How has that been ramping?

It's ramping well. As we said, this is the second year. So we've added the resources in high school last fall of 2022, and they really catch their stride as they move into their second year. They've got their relationships with counselors, with the teachers, with the students and begin to catch their stride. So we're seeing them do exactly what we needed them to do. Military is having a very good year, and we added 6 new military recruiters on the bases at that same time in 2022, and they're coming through quite nicely for us.

Yes, Alex, this is Troy. You can see in our financial supplement where we have the breakout on the new student start details, both military and high school. Actually, all 3 of the channels were double-digits really the last 2 quarters in a row. So just strong performance across the board.

Yes, strongly double-digit. High teens, low 20s, I see that. And then just for orders of magnitude, what is the size of the high school rep group, and what is the size of the military rep group?

We've got 24 recruiters in the military group that cover both transitioning service people as well as veterans, and then we've got in the low 150s, 152, 153 high school representatives.

And then, I just wanted to follow up a little bit on the corporate partnerships. On the UTI side, you've always had a lot of really high-quality corporate partnerships. Sounds like you're adding and renewing those as well. What are the initiatives over on the Concorde side? As I recall, I don't believe they had as developed corporate partnerships than UTI did?

Yes, I mean, UTI is an impressive group, OEM relationships, over 6,000 employer partners. On the Concorde side, their B2B partnerships were really around clinical placements and relationships with hospitals and dental centers, and things along those lines for clinical placements. But they weren't really as far along in terms of B2B relationships, for training relationships, upskilling relationships. Scholarship relationships was one of them we mentioned in there. And so, we've been adding resources on the Concorde side to focus on some of those things that have made UTI great for all these years.

And the next question comes from Eric Martinuzzi with Lake Street.

Yes, the 1,000 new student start bump up here. You talked about a little bit better on the new program timing. But just trying to bridge that upward revision to the new student starts. Is it more around just helping macro demand? Is it more around new program accelerated launches? What's just pick that apart?

Sure, this is Troy. Our inquiry flow has remained strong, and we've been focusing on improving conversion rates related to that flow. We've consistently seen robust lead generation and have concentrated our marketing efforts on utilizing various tools to enhance high-quality inquiry generation. With our investment in marketing for Concorde, we've received a positive response, contributing significantly to our growth. Therefore, a large part of the improvement can be attributed to better performance on the Concorde side due to increased marketing efforts, alongside overall enhanced conversion as we move through the year.

Given the inflationary pressures, although inflation initially posed a challenge for new student starts, I want to shift the focus to the impact of these pressures on the business. It seems that at the midpoint, we would anticipate approximately a 20% to 25% incremental margin from the additional $75 million of revenue projected between FY '24 and FY '25. It appears that good margin expansion is being considered, and I am curious if you believe that the inflationary pressures and cost structure will not present a challenge.

We have discussed this in previous calls as well. We haven't observed a significant impact from inflation on the instructor workforce. The effects tend to be more prevalent in healthcare, due to the larger number of adjunct workers and the pressure on wages in that sector. We've noted some moderation in support organizations, such as finance and IT, compared to last year or the year before, as we've expanded those areas alongside the company. Overall, we haven't experienced much pressure on our commodities. There were minor instances of increased costs, particularly during spikes in inflation, such as with welding supplies. Generally, given our cost structure, most of which is labor-related followed by marketing expenses and facilities, we haven't seen much pressure. We continue to make investments, and we have taken that into account for our future projections for next year, but we haven't included any significant excess inflationary pressure.

Okay. And the last question is on the Concorde expansion of the existing footprint. I think there was some Department of Ed hurdles, not hurdles, but anniversaries you needed to celebrate with sort of post-acquisition that you needed to own it for 12 months or so, prove that you're a responsible owner and then you could invest in growing the number of students at given campuses. Are we at that point yet?

All right, well, let me sharpen that a bit, is that we are absolutely growing the number of students at the Concorde campuses. One of the reasons for the momentum we're seeing is that we're seeing some extremely positive response to increased investment in marketing and admissions, and so, Concorde's doing quite well in terms of their growth on their campuses. What we aren't able to do due to the growth restrictions imposed by the Department of Education post-merger, which is a standard operating practice in a merger, is we're not allowed to open a new campus and we're not allowed to start new programs that weren't previously approved before the merger. And so, what that really means is, you won't see a new Concorde campus until late '26 or '27 when those growth restrictions are scheduled to be lifted. But in the meantime, we're working very diligently on filling those Concorde classes beyond where they had been filled before. You talk about margin expansion, and we've said this in the past, the fastest way to margin expansion is to fill more seats in a classroom, right, that are that may be empty. And so, we're working very hard to continue to expand those margins by expanding the representation in each classroom.

Yes, congrats on the quarter and the bright outlook for this year and '25.

And the next question comes from Raj Sharma with B. Riley.

Solid results that exceed expectations. Can you explain the growth pattern of new starts, which was in the high teens in the first half and is projected to be in the mid-single-digits in the second half? What is causing this decline? Is it related to the new program ramps that occurred in the first half and are not continuing in the second half?

Yes, correct Raj. This is Troy. A few factors. One is we do start to lap the UTI program expansions that started launching in July of last year. We'll still have some growth there on a year-over-year basis as they launch throughout the quarter and of course the first set of starts aren't usually as robust. We try and temper those a little bit just to work out some of the kinks. We also have just some seasonality effect of the Concorde clinical programs as far as the number of starts available given the programmatic accreditors and the frequency of starts that we can have within a given clinical program. And so, we have some fluctuation with that on a year-over-year basis and across the quarters. And then we implemented a number of initiatives. Jerome talked earlier about the reps in both military and high school hitting their stride. Again, we're now coming to the end of year 2, so we're getting to a point where they're still driving increased productivity, but it's less on a relative basis than it was earlier in the year. We had implemented some pretty major changes in our adult lead flow and enrollment process that really was throughout 2023. So again, as we get into the back half of the year, that's a much more mature process. And so, just a number of different factors, frankly, that kind of all roll together, that we are getting a lift in the front half of the year because of those things still generating significantly more year-over-year and that becomes more normalized in the back half of the year.

And then for the fiscal '25 guidance, are you assuming mid-single-digit starts?

Yes, our core projection, just clarification on that, our baseline start growth, we've always said we believe we can generate low to mid-single-digit growth rate in starts, in any given environment. And so that's always our baseline starting point. We do have a little bit of flow-through on the new programs that would be a bit incremental to that and we're launching for UTI, HVAC, our programs here in this latter part of the year and into next year the dental hygiene programs that we touched upon in our prepared remarks, launching. And those are by the way only one start a year. And as we mentioned about 50 starts per year, so not huge drivers, but so we have some of that flow-through from the new programs in addition to the baseline growth, but not significant.

The final point is that, as previously mentioned, it typically takes around 36 months for new campuses to reach their full potential, with Miramar and Austin expected to reach that milestone by 2025. This is key to our projected double-digit revenue growth and at least 100 basis points of margin expansion.

Great, that's really helpful. And then just, what is causing the EBITDA margin to expand next year? Is that purely operating leverage?

It's all about operating leverage. We have previously focused on growth and diversification, and now we are emphasizing growth, diversification, and optimization. We have continually worked on optimizing our operating model, but we are now enhancing our efforts through workforce optimization, achieving greater efficiency and productivity from our workforce, as well as improving space utilization to allow for future program expansions. This also contributes to optimizing educational delivery. Therefore, it's a mix of operating leverage and increased efficiency as we grow, scale, and enhance optimization across our operations, both at UTI and Concorde. Furthermore, with the Concorde acquisition, which had an 8% margin initially, we expect it to reach about 10% this year, and we aim to drive this towards the mid-teens by leveraging growth and applying the consistent practices we have already established at UTI concerning centralization and improved efficiency. This is also playing a role in this expansion.

The next question comes from Steve Frankel with Colliers.

You mentioned a couple of cash pay programs at Concorde. Could you give us a little more details on that, and what kind of opportunities might you have on the UTI side, to create some cash pay programs there as well?

Yes, I'll provide some details. This is Troy. Thank you for the question, Steve. The cash pay programs on the Concorde side, specifically in phlebotomy and sterile processing, are actually part of the Medical Assistant program. There is demand for these in the market. They typically last 2 to 4 months and cost a few thousand dollars. Employers often participate, making it a quick entry point for individuals into the medical workforce. We are seeing demand for this in various markets and are actively seeking more opportunities. The Concorde team developed this approach to generate growth since it does not require Department of Education certification. It is an accredited program, but it doesn't need Title IV funding. We will keep exploring ways to expand these programs within the Concorde network. On the UTI side, we are also seeking to implement similar programs. While nothing is imminent, we are considering options like a short welding program that could be offered on evenings or weekends for a few months, allowing individuals to enter the workforce more quickly. We are actively working on these initiatives as well.

Okay. And then, done a great job building the start pipeline. What are you doing to make sure these students get to graduation?

Our attrition persistence has been trending very positively. We're seeing increases in student retention and graduation rates. Even small improvements, like 50 basis points, can lead to a few hundred more students completing the program each year, which positively impacts our financial performance. We maintain a strong focus on outcomes, prioritizing getting students started and through the program as quickly as possible. We're seeing good pass rates with fewer retakes and keeping students engaged so they can enter the workforce faster. Our commitment to supporting students continues throughout their entire journey.

Yes, the other point I'll make is our blended learning model which is at full ramp across the UTI curriculum has already been in place or was in place at Concorde, also mandates that the students are actually only in our building for about 3 hours a day doing their lab work because the didactic learning is all online. That flexibility is allowing students to be able to keep their jobs while they're in school, do their work asynchronously at other times. And I think one of the things we're hearing is that this sort of welcome approach that gives flexibility is allowing more students who may have needed to back out because of financial pressures or life happens types of things, staying in the game because they now have more hours of the day they can use for other things like work. So I think that's helping with our retention rates as well.

Okay. And one of the trends you talked a lot about last year was the employers kind of battling each other to get on campus to recruit and really fighting to get in front of those students by offering better terms, better tuition reimbursement, things like that. Where are we in that cycle today? Is that less of a factor or are you still able to command these kinds of terms from potential employers?

So I think demand for our graduates has never been higher. And so there continues to be a significant deficit between the number of open jobs out there and the number of graduates across the industry. And so, that demand really drives the behavior of the employment community. And so, we're seeing the packages that are being put in front of our graduates continue to look better and better every year. We've started these same programs on the Concorde side, and that's helping get it more organized for access to the graduates, and I think that will help let those packages tick up as well.

The next question comes from Mike Grondahl with Northland Securities.

First question is just about the 2025 kind of outlook. Is there anything embedded in that for new geographies or new campuses? If so, just curious roughly how much? And then if you could just remind us kind of the economics, the investment of the new campus and kind of how that grows?

Thank you for your question, Mike. This is Troy. We aimed to provide clarity, and I appreciate you bringing it up so we can address it in this discussion. We are focusing on existing programs as well as those we have announced that are in the pipeline. Specifically, there are four remaining HVACR programs, in addition to the dental hygiene programs that we are already executing with Concorde. There will also be a minor element related to the San Diego expansion that we have previously discussed. Essentially, beyond our current offerings, we are looking at those four HVACR programs and the growth we anticipate from this year into next, alongside the ramp-up of those programs.

But to be clear, we've yet to announce a new program launch portfolio for 2025 yet. And so that would be additive.

Yes, we may expand into additional geographies. Regarding the economics, we included a slide in our investor presentation in the appendix that details campus and program economics for both UTI and Concorde. We've frequently discussed the dental hygiene program at Concorde, which has seen significant expansion, and we provided an illustrative example along with the welding and HVACR programs that we are launching primarily with UTI recently. Historically, UTI's campus format has focused on auto diesel welding and related manufacturing programs, generating about $25 million in annual revenue, with direct EBITDA contributions between $10 million to $12 million, necessitating a capital investment of around $15 million and a ramp-up period of 3 to 4 years. Dental hygiene programs are comparatively expensive to implement because we build the clinical lab on campus rather than conducting clinicals at a provider's site. This means we employ dentists and construct the dental operatories, which requires an investment of a few million dollars and about 7,500 square feet of space, leading to a revenue run rate of approximately $4 million to $5 million. The HVACR program generates around $2.5 million in revenue, while dental hygiene has a margin of about 40%, yielding approximately $2 million, and HVACR also has a similar margin with a much lower investment of about $600,000 and a smaller footprint of 4,000 square feet.

Thanks for pointing that out. And then had just one follow-up question, and it's maybe for Jerry. You've talked about with Concorde some online programs, online effort. I think you hired someone to head that up. How is that progressing and how should we think about the growth coming out of that?

Sure. We're making good progress, but it's not as simple as just hiring someone and instantly having a hundred online courses. We're currently in the early stages of identifying easier opportunities to market the existing courses that may not be well represented in the market, and we're beginning to see some improvement there. We're also focusing on internal efforts that will yield results over the next three years, such as redesigning and adapting courses for a better online experience. Additionally, we're rethinking our admissions marketing and support models to effectively manage a larger online campus.

This concludes our question-and-answer session. I would like to turn the conference back over to Jerome Grant for any closing remarks.

Thank you very much for joining us today. I appreciate you taking the time out of your schedule to be here. We look forward to reporting to you again in three months. Troy and I are available for questions and answers over the next few days and throughout the quarter. We aim to maintain transparency and ensure that all your questions are answered. Have a great afternoon. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.