Universal Technical Institute saw an increase in net revenues in its fiscal 2011, but experienced decreases in net income, operating income and enrollment. All four figures were negative in the fourth quarter.
Year-over-year, net revenues for UTI were up 3.7 percent to $451.9 million. Net income dropped 5.5 percent to $27.2 million, and operating income was down 3.2 percent to $45.1 million. The operating margin was 10 percent. The cause of the revenue increase was cited as an increase in tuition rates, partially offset in tuition scholarships and an increase in average undergraduate full-time student enrollment during the first three quarters of the year.
For the fourth quarter, net revenues were down 6.6 percent to $111.4 million, and net income decreased 17.5 percent from the year-ago quarter to $6 million. The decrease in revenues was attributed to a decrease in average undergraduate full-time student enrollment partially offset by an increase in tuition rates. Operating income was down 13.5 percent to $10.2 million, and the operating margin was 9.1 percent.
“Beyond implementing significant changes driven by new regulations, our focus for 2011 centered on improving our marketing and admissions effectiveness, completing the launch of our new blended learning automotive and diesel curriculum and strengthening graduate employment rates while achieving desired operating efficiencies," CEO Kim McWaters said. "We are pleased these efforts enabled us to achieve record revenues and double-digit operating margins for the year, but not without some very difficult decisions to align our cost structure with current and anticipated student populations.”
Average undergraduate full-time student enrollment was 17,300 for the fourth quarter, 2,200 students less than the 2010 fourth quarter. For the year, it was down 100 students to 18,500. Total starts were also down 1,100 students for the quarter to 6,500, and they were down by 3,300 students for the year to 16,200.
"In our fourth quarter, we experienced year over year declines in new student starts, however, at a lower rate of decline than in our third quarter. We remain focused on finding solutions to the problems we believe are driving these declines, namely the general economic conditions and their impact on the desire and ability of prospective students to obtain funding for their education,” McWaters said. “While we believe the economic conditions will continue to pressure student population growth in the short term, we are confident that the foundation laid in 2011 for greater efficiencies, improved cost control and sustained educational excellence will position us for growth in the future.”
In 2012, UTI expects the rate of decline in applications and new student starts to slow in the first half before potentially improving in the second half. However, the institute expects the average student population to decrease by a rate in the low teens, and it expects the anticipated decrease in enrollment to contribute to mid- to high-single-digit decline in revenue for the year.