Good day, and welcome to the Universal Technical Institute, Inc. Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Kempton, Vice President of Corporate Finance and Investor Relations. Please go ahead.

Hello, and welcome to Universal Technical Institute, Inc.'s Fiscal Second Quarter 2026 Earnings Call. Joining me today are our CEO, Jerome Grant, and CFO, Bruce Schuman. 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 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; therefore, 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 2025. 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, Inc., for his prepared remarks. Jerome?

Thank you, Matt. Good afternoon, everyone, and thank you for joining us. Before I dive into the details of our second quarter results, I want to take a moment to give you some insight into how we are thinking about the business right now. The first half of the year has played out quite well and, in some areas, better than we originally anticipated. As always, a huge thank you to our team, industry partners, and over 26,000 active students for driving these strong outcomes. Demand is strong, our model is working, and we have exceptionally clear visibility into the returns on our strategic North Star investments. We are seeing increasing validation that these investments are driving the outcomes we expected. Building on what has been a strong start to the year, we saw key leading indicators come in at or above our expectations, further reinforcing our confidence in the trajectory of our business. We delivered another quarter of strong operational performance supported by sustained demand across both of our divisions and continued execution against our North Star strategy. Total new student starts increased 14% year over year in the quarter with meaningful contributions from both divisions. The UTI division delivered approximately 15% growth while the Concord division grew 13%, highlighting the consistency and durability of demand across both our trades and health care. Average full-time active students grew 7%, reflecting continued momentum as we scale both new and existing campuses. Core growth and program expansion translated into continued top line strength, with revenue of $221 million, up nearly 7% year over year. Our baseline adjusted EBITDA came in at $25 million. Including approximately $11 million of growth investments, our reported adjusted EBITDA was just over $14 million, in line with expectations. Our performance in the first half of the year has reinforced our confidence in our full year outlook, and as such, we are reaffirming our guidance on all metrics. Bruce will walk you through the guidance in more detail shortly. We believe this reaffirmed strong outlook for 2026 reflects our confidence in the performance of the business while also setting us up well for the final three years of this phase of our North Star strategy. It is not just the macro demand environment that gives us this confidence, but also how we are executing against a model that is proving to be both repeatable and scalable. Our campus launch playbook continues to deliver consistent results that are trending in line or ahead of our expectations. At UTI San Antonio, which opened in March, each of the first two starts exceeded our plan by nearly 60%. Based on early performance, we now expect the campus to ramp to scale at or better than originally modeled with a projected mature run rate of approximately 800 students. In Atlanta, we are preparing to launch our first UTI campus in the state. This campus is expected to serve over 1,500 students at scale. We are already seeing great traction with strong interest and early enrollments pacing well in preparation for the planned start in July. Although these are exciting results in 2026, more importantly, they are early leading indicators critical to ensuring the success of this multiyear strategy. They validate not only demand, but also our ability to foster and fill campuses more efficiently than originally modeled, giving us increased confidence looking at our broader new campus pipeline. Looking ahead to fiscal 2027, we remain on track with our four previously announced locations across the country and are excited to see those launch next year. These campuses include a comprehensive UTI campus in Salt Lake City, expected to serve 1,500 students, as well as Concord campuses in Houston, Atlanta, and the Phoenix metro area, each with projected run rates of approximately 600 students. Throughout all of this, the North Star operational targets we have previously outlined remain unchanged. We plan to open a minimum of two and up to five new campuses annually, as well as launch 12 to 20 new programs across the UTI and Concord divisions each fiscal year. In fiscal 2026, we will have opened three new campuses and are on track to launch 20 new programs with at least 10 coming from each division. On the UTI side, we have two campuses and 12 programs lined up this year. The new programs span HVACR, aviation maintenance, and our electrical suite, which includes industrial maintenance, robotics and automation, and wind turbine technology. Most recently, the UTI Sacramento campus graduated its first HVACR class in January, and the UTI Austin campus successfully delivered its first EV courses in February. On the Concord side, we have opened one new campus, and across our existing campuses, we will launch at least 10 new programs in 2026, including high-demand fields such as radiation technology, surgical technology, and diagnostic medical sonography. Beyond program replications in new campuses, we are also continuing to focus on optimizing our existing footprint. As you may recall, we recently expanded the UTI Dallas campus to serve an additional 100 students and incorporate HVACR, aviation, and electrical programs in addition to auto, diesel, and welding. Since launching last quarter, all of the program enrollments and starts have exceeded expectations, and the second half of the year looks to be just as promising. In addition to expanding capacity for popular programs such as aviation, HVACR, welding, and dental hygiene at legacy campuses, we are increasingly focused on how the UTI and Concord divisions can collaborate more closely across areas such as marketing, admissions, and operations. Through cross-brand collaborations fueled by rapid AI technology advancements, we believe we can potentially unlock incremental margin expansion in the coming years while simultaneously enhancing execution across the company. And while on the topic of artificial intelligence, I want to focus on some extremely important opportunities ahead of us. As many of you know from the stories in the media each quarter as U.S. jobs data is published, we are in the early stages of a generational shift in the labor market. Driven in large part by artificial intelligence, the longstanding dynamic between white-collar and skilled-collar job opportunities has been disrupted. AI is reshaping the economy, but not only in the way many initially expected. As white-collar work becomes increasingly automated, especially at the entry levels, demand for trades and health care professions is accelerating. Beyond this shift, it is important to realize that there are also new AI-enabling opportunities and roles essential to building, maintaining, and operating the infrastructure that supports this new economy. From data centers and energy systems to advanced manufacturing and health care, the physical and technical workforce required to support AI-driven growth is expanding rapidly. This is exactly where we are positioned. Not only are we training students for today’s jobs, we are preparing them for the future AI-enabled workforce that is being built right now. Importantly, we believe that this trend is not cyclical; it is structural. We believe this dynamic will continue to drive demand for our programs for years to come. Supported by both powerful macroeconomic tailwinds and long-term partnerships, the opportunity in front of us continues to expand. We maintain strong relationships with leading industry partners, for example, a nearly 30-year partnership with Porsche. This quarter, we reached a memorable milestone with them. As of February, UTI has now graduated over 1,000 technicians from the Porsche training centers we run that are serving more than 200 Porsche stores nationwide. We also recently announced a new three-year partnership with Fuji Auto, who will provide professional-grade equipment for the collision repair and aviation programs on UTI campuses across the U.S. Long-standing industry partnerships are a cornerstone of the success of our graduates and our company, and we continue to pursue additional such opportunities across automotive, aviation, health care, and other high-demand industries. Similarly, we are actively exploring potential B2B opportunities with military programs, state workforce initiatives, and employers to help address critical labor shortages across the economy. As we look ahead, our confidence in the business continues to strengthen as our North Star moves into full implementation mode. We have built a durable and repeatable growth engine, supported by strong demand, disciplined execution, a very healthy balance sheet, and meaningful long-term macro tailwinds. Organically, we will continue to optimize our campuses and program portfolio, drive operational excellence, and expand both capacity and program offerings to meet demand. At the same time, we will continue to evaluate inorganic opportunities that align with our strategy, particularly in health care, where we see significant long-term potential. Our priorities remain focused on executing our North Star strategy with discipline, as well as deploying capital with purpose to position the divisions to deliver sustained growth and value. And we are already starting to discuss what 2029 and onwards looks like for the company. We will share more on that as our plans unfold. With that, I will turn the call over to Bruce, our CFO, to review our second quarter financials and provide additional details on our guidance. Bruce?

Thank you, Jerome. I will start by saying we are pleased with how the business has performed through the first half of the year. The results we are reporting today reflect a strong start to fiscal 2026, with solid revenue growth, continued momentum in enrollments, and leading indicators across the business that remain very encouraging. In the second quarter, total average full-time active students grew 7.2% year over year to 26,385, while total new student starts increased 13.8% to 7,569, in line with the expectations we outlined last quarter and reflective of recently launched new campuses and programs starting to ramp. The Concord division grew average full-time active students 10.2% year over year for the second quarter, driven by consistent demand trends across our dental and allied health programs. Within the UTI division, average full-time active students grew 5.3% year over year, reflecting steady performance across the program portfolio, underpinned by strong demand and recently optimized campus capacity. Turning to our financial performance, second quarter revenue on a consolidated basis increased 6.7% to $221.4 million. Concord contributed $78.7 million, an increase of 7.5% over the prior year quarter, while the UTI division contributed $142.7 million, an increase of 6.3% over the prior year quarter. Shifting to profitability, consolidated net income for the second quarter was $400,000, or $0.01 per diluted share, which was in line with the outlook we shared last quarter. Baseline adjusted EBITDA for the second quarter was $25.1 million. Including $11 million in growth investments, our SEC-reported adjusted EBITDA for the quarter was $14.1 million. At the end of the quarter, we had 55 million shares outstanding. Total available liquidity at the end of the quarter was $202.4 million, including short-term investments and remaining capacity on our revolving credit facility. Year-to-date capital expenditures were $52.7 million, or approximately half of our expected spend for the year. Turning to our full-year outlook, based on our performance in the first half and the visibility we have into the second half, we are pleased to reaffirm our fiscal 2026 outlook. We continue to expect consolidated revenue to range from $905 million to $915 million for fiscal 2026, or approximately 9% year-over-year growth at the midpoint. As I shared last quarter, we expect mid to high single-digit revenue growth in Q3 as we saw in Q2. Q4 is still anticipated to be the highest revenue growth quarter in the low to mid double-digit range. Net income is anticipated to be between $40 million and $45 million, with diluted earnings per share of $0.71 to $0.80. As I also shared in prior quarters, the net income contraction in Q2 will improve in Q3, though we still expect year-over-year contraction. In Q4, we expect strong net income growth. Our baseline adjusted EBITDA is anticipated to exceed $150 million. Including approximately $40 million in growth investments, our SEC-reported adjusted EBITDA is expected to be $114 million to $119 million. Similar to net income, as we make our significant growth investments this year, the adjusted EBITDA contraction in Q2 will improve in Q3; we still expect year-over-year contraction. In Q4, we expect robust year-over-year adjusted EBITDA growth. Total new student starts are expected to be between 31,500 and 33,000. We anticipate high single-digit growth in the remaining quarters as our base business performs and our growth initiatives continue to ramp. Looking at the broader North Star financial framework, our expectations remain unchanged. We continue to target more than $1.2 billion in revenue by fiscal 2029 with a 10% CAGR throughout that period, and adjusted EBITDA approaching $220 million in that year. Beginning in fiscal 2027, we expect revenue to accelerate and are targeting modest EBITDA dollar growth and more meaningful EBITDA margin expansion in fiscal 2028 and 2029. To support the new campuses and programs driving this growth, we continue to plan for $100 million or more of annual capital expenditures. Overall, we view the first half of the year as a strong start, reflecting solid execution, improving demand trends, and continued progress against our North Star strategy, giving us increased confidence in the repeatability and durability of our model. We are investing from a position of strength with clear visibility into the path ahead. The actions we are taking in 2026 are intended to support faster scaling, higher utilization, and stronger long-term returns, including predictable and sustainable cash flows and increasing profits for years to come. At the same time, we are creating additional opportunities to expand margins through increased operational efficiency and greater leverage as the company further grows, reinforcing our confidence in delivering on both our fiscal 2026 guidance and our longer-term financial objectives. In addition to this earnings call transcript, we encourage everyone to review our press release, financial supplement, investor presentation, and upcoming 10-Q filing. These materials include the latest updates on our consolidated and segment results, strategic initiatives, and guidance. Thank you to our students, team, partners, and investors for your ongoing support. I would now like to turn the call over to the operator for Q&A. Operator? We will now open the call for questions.

If you are using a speakerphone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. Our first question comes from Mike Grondahl with Northland Securities. Please go ahead.

Hey, guys. Congratulations on the progress. Maybe the first one for Jerome. You talked about data centers a little bit more this call. Are you seeing incremental opportunities there? And are you able to start new programs? How are you responding to that, and what are you seeing? And then maybe one for Bruce. When you were talking about UTI’s enrollment up 5.3% year over year, you mentioned recently optimized campus capacity. Could you explain that a little bit? And can you speak to whether you expanded capacity a couple percent over the last six months, or is there any way to quantify that?

I think the example we gave was to highlight that the sources of job opportunities for the students in the programs we already teach are growing, and in some cases accelerating. Data centers need welders, electronics technicians, and building automation specialists—skills that we have. If you have listened to some of the folks in the AI space talking about what is holding them back, it is not technology. It is their ability to get these places open because they cannot find enough workers. What we are seeing from a job standpoint is a stronger diversification of employers that are coming to the table and looking for our skilled trades workers.

Sure, Mike. Optimization has been a core foundational pillar we have been talking about for quite a while, and we continue to optimize capacity—looking for space in legacy campuses to put program replications like HVAC, welding, and aviation, using some of our legacy campuses to roll that out. That work continues and is improving our margin outlook. If you look at our core business last year, we delivered roughly 100 basis points of expansion. We would have delivered similar if it were not for the growth investments. More than half of that comes from the optimization pillar of our strategy. That is the best way I can explain it.

Our next question comes from Raj Sharma with Texas Capital. Please go ahead.

Hi. Congratulations on the execution, and thank you for taking my questions. I was just trying to understand: revenues were up about 7% year over year, operating expenses were up 16%, and even if I take out the growth OpEx of $11 million, OpEx was still up about 10%. Was that all the increase in advertising? And then I know you reaffirmed the fiscal guidance. Is it fair to assume that you are looking for starts growth to perhaps be higher for the year given your first half performance? I know that does not impact the current year numbers, but just to clarify. And finally, any new opportunities that could expand your current growth plan, or do you think you are set for now until you get to the next North Star strategies?

Hey, Raj. I can address that. A lot of it is timing as we execute the full year. I would remind you the vast majority of the margin contraction was from the growth investments. There were a few other things: timing, our medical, for example, was up a little higher than planned, and we chose to invest a bit more in marketing to make sure we are on track for our second-half revenue and starts. But it is really timing. We have offsets for that in Q3, and we feel very confident in the full-year profitability we guided to.

On starts, as a leading indicator, we are very happy with what we are seeing, primarily the overachievement of the new campuses and the new programs we are putting into place. Yes, that monetizes mostly over 2027 and beyond. We have a lot of confidence that this will continue. Will San Antonio continue to sit at 60% higher than what we had in the model? Not likely, but it is a very strong start, and we think it will continue to move past our models, as will the programs we are moving on. We feel confident that starts will not fall below and could be in the top part of the range. On opportunities, remember we are in 2026, two years into a five-year strategy, set up primarily as an organic strategy of two to five campuses a year and 12 to 20 new programs a year, with modest same-store growth of 2% to 5%. We are expressing a high level of confidence in executing the plan as is. Anything beyond that would be upside. There are a lot of great conversations going in the B2B space right now. I would not count out opportunities during this five-year timeframe that could have upside impact. Nothing to announce today, but many employers and manufacturers are seeing the same supply-demand problem growing, not shrinking, and that brings them to the table for constructive conversations. We feel good that some of that will come in line during this plan period, not after.

The next question will come from an Analyst with Lake Street. Please go ahead.

Just a two-parter here. San Antonio looks like you have a terrific start there—up 60% versus your internal expectations. Anything different you did there in terms of go-to-market or advertising that you could share? And second, that is a high standard San Antonio has set. What kind of demand trends are you seeing at the new Atlanta campus, and would you put that on par with San Antonio?

I will answer in reverse. We are really happy with what we are seeing in Atlanta. We do not like to talk about pre-start numbers because we want to make sure that we get people comfortably in their seats and moving forward. But the trends we are seeing in terms of contract pace for the timeline—remember, we still have until July to get this open—make us confident that Atlanta is going to be a winner for us. When we report in August, we will have solid numbers for you, and we are optimistic about what we will see there. Texas has been a very strong market for us. Austin blew away our projections quickly, and our thoughts about San Antonio were that could happen again. We did not want to get ahead of ourselves, but what we are seeing is quite true: there is strong demand in Texas for what UTI is bringing. When we are picking new sites—Salt Lake City is coming up, followed by subsequent sites—we think about the same metrics: can we see a way to beat our models, and might we be able to ramp the fastest? So far, we are happy with what we are seeing with the first two—San Antonio and Atlanta.

Up next, we have Jasper Bibb with Truist. Please go ahead.

Hey, good afternoon, everyone. A quick clarification: I heard high single-digit growth in starts in the next two quarters. I think you had guided to mid to high single-digit growth for those quarters on the last call. Should we think the year ends up at the upper end of the range on starts?

Yes, that is correct. That is how we are thinking about how the year is shaping up.

Makes sense. Then some of your online education peers have talked about the consumer shift to GenAI over search and algorithm changes at Google impacting the top of the funnel on student acquisition. Starts are obviously strong for you, but are you seeing something similar and how are you managing through that?

That is one of the reasons we wanted to underscore the collaboration between the two divisions, specifically in areas like acquisition and marketing. There is a significant shift in how people are searching for opportunities. Much in the same way TV moved to streaming very fast for 18- to 24-year-olds, information is moving rapidly to AI engines from traditional search. We want to be on the leading edge of capturing that as those advertising platforms harden over the next months and years. We are ensuring our digital organizations work in unison so we do not overspend researching these things between the two divisions, and so each can take advantage of the opportunities by beginning to invest in these areas. We feel well positioned to get the most out of that transition.

Last one for me. You mentioned ongoing discussions for B2B partnerships and potentially opportunities with the military or state workforce development programs too. Are you seeing a broadening in the types of B2B partnerships coming to you and potentially a different structure versus, say, what you already did with the Heartland campus?

The short answer is yes. There is a broadening of who is approaching us, whether it is municipalities, parts of the military tied to onshoring activity, hospital chains, and others thinking they should act in concert with larger partners like us. The incoming is on the rise and broadening. Two years ago, we were not getting calls from construction companies opening data centers around the country looking for HVAC techs, welders, electricians, and building automation specialists. Now we are. These are opening doors for us to look at training models in unique and innovative ways. These things take time. Nothing to announce specifically, but we are staffed up and diligently focused on it because we think these will be opportunities over the next couple of years.

Our next question comes from Steve Frankel with Rosenblatt. Please go ahead.

Good afternoon. Thank you for the opportunity. Maybe give us an update on what kind of incentives employers are offering these days—tuition payback, working while you are going to school, etc. Does that pace continue to climb with more people trying to do that, or in the current economy have they backed away?

They have not backed away. There is a lot of conversation around student debt and leaving college with large student loan balances. Even in the trades, there is press around graduates coming out with debt. The programs we started in auto and diesel a number of years back have gotten us to a point where somewhere in the neighborhood of 6,000 employers nationwide are offering incentive packages for our graduates. Those are continuing to proliferate as we expand into the skilled trades. This is a new concept to HVAC, electronics, and aviation companies, and the TRIP agreements, as we call them, are something we are working to broaden across the entire portfolio. We are seeing good responses. Employers are not backing away from incentives because the problem is getting more acute.

Any early learnings from Heartland that would lead to changes in the way you might do the next one?

Heartland is a case where you have an employer who has become a strong partner, has a big problem, and is willing to co-invest to solve that problem around the country. The time it takes to get others on the same page is usually tied to them wanting to see outcomes from partnerships we already have. Heartland is very happy, the cohorts we started were very strong, and we anticipate doing similar deals with other partners very soon.

Lastly, any early peek into what you think the high school class is going to look like this year?

High school looks good. High school students tend to gravitate toward automotive and diesel—you just got your driver’s license and may not know much about HVAC or welding. It is primarily focused in auto, and we are seeing strong returns. We feel very strong about our guidance and coming in within the range we have. Half of our starts on the UTI side come in the fourth quarter, and it is mostly high school. We want to make sure those come in as strong as the leading indicators show.

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

Thank you, operator. Just some brief remarks. First, I would like to thank everyone who attended today. As always, Bruce, Matt, and I are available for follow-up questions. We encourage as many of you as possible to come out and visit one of our campuses. If you are interested, please let us know. We would be happy to host you. We look forward to speaking with you on our fiscal third quarter investors call in August. Thanks, and have a great evening.

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