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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
 
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _____ to ______
Commission File Number: 1-31923

 UNIVERSAL TECHNICAL INSTITUTE, INC.
(Exact name of registrant as specified in its charter)
Delaware86-0226984
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
4225 East Windrose Drive, Suite 200
Phoenix, Arizona 85032
(Address of principal executive offices, including zip code)

(623) 445-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol Name of each exchange on which registered
Common Stock, $0.0001 par valueUTINew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   þ    No ¨  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
 Accelerated filer þ     
Non-accelerated filer ¨  
 Smaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  þ
At May 1, 2024, there were 53,801,456 shares outstanding of the registrant's common stock.



UNIVERSAL TECHNICAL INSTITUTE, INC.
INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024
 
  Page
  Number



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain forward-looking statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (“Securities Act”), which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. From time to time, we also provide forward-looking statements in other materials we release to the public as well as verbal forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions (including the negative form of such expressions) intended to identify forward-looking statements, although not all forward looking statements contain these identifying words. Forward-looking statements are based on our current expectations and assumptions, do not strictly relate to historical or current facts, any of which may not prove to be accurate. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Important factors that could cause actual results to differ from those in our forward-looking statements include, without limitation:

failure of our schools to comply with the extensive regulatory requirements for school operations;
our failure to maintain eligibility for federal student financial assistance funds;
the effect of current and future Title IV Program regulations arising out of negotiated rulemakings, including any potential reductions in funding or restrictions on the use of funds received through Title IV Programs;
the effect of future legislative or regulatory initiatives related to veterans’ benefit programs;
continued Congressional examination of the for-profit education sector;
our failure to maintain eligibility for or the ability to process federal student financial assistance;
regulatory investigations of, or actions commenced against, us or other companies in our industry;
changes in the state regulatory environment or budgetary constraints;
our failure to execute on our growth and diversification strategy, including effectively identifying, establishing and operating additional schools, programs or campuses;
our failure to realize the expected benefits of our acquisitions, or our failure to successfully integrate our acquisitions;
our failure to improve underutilized capacity at certain of our campuses;
enrollment declines or challenges in our students’ ability to find employment as a result of macroeconomic conditions;
our failure to maintain and expand existing industry relationships and develop new industry relationships;
our ability to update and expand the content of existing programs and develop and integrate new programs in a timely and cost-effective manner while maintaining positive student outcomes;
a loss of our senior management or other key employees;
failure to comply with the restrictive covenants and our ability to pay the amounts when due under the Credit Agreement;
the effect of our principal stockholder owning a significant percentage of our capital stock, and thus being able to influence certain corporate matters and the potential in the future to gain substantial control over our company;
the effect of public health pandemics, epidemics or outbreak, including COVID-19; and
risks related to other factors discussed in our 2023 Annual Report on Form 10-K filed with the SEC on December 1, 2023 (the “2023 Annual Report on Form 10-K”).

The factors above are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. We cannot guarantee that any forward-looking statement will be realized. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should
ii

underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. Among the factors that could cause actual results to differ materially are the factors discussed under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should bear this in mind as you consider forward-looking statements.

Also, these forward-looking statements represent our estimates and assumptions only as of the date of the document containing the applicable statement. Except as required by law, we undertake no obligation to update or revise forward looking statements, whether as a result of new information, future events or otherwise. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q, including the documents that we incorporate by reference herein, by these cautionary statements. You are advised, however, to consult any further disclosures we make on related subjects in our reports and filings with the Securities and Exchange Commission (“SEC”).




iii

PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and per share amounts)
(Unaudited)

March 31,
2024
September 30,
2023
Assets
Cash and cash equivalents$116,099 $151,547 
Restricted cash4,446 5,377 
Receivables, net24,294 25,161 
Notes receivable, current portion6,163 5,991 
Prepaid expenses12,200 9,412 
Other current assets7,032 7,497 
Total current assets170,234 204,985 
Property and equipment, net263,538 266,346 
Goodwill28,459 28,459 
Intangible assets, net18,627 18,975 
Notes receivable, less current portion34,909 30,672 
Right-of-use assets for operating leases169,626 176,657 
Deferred tax asset, net4,556 3,768 
Other assets12,139 10,823 
Total assets$702,088 $740,685 
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses$70,079 $69,941 
Deferred revenue67,599 85,738 
Operating lease liability, current portion22,841 22,481 
Long-term debt, current portion2,600 2,517 
Other current liabilities3,323 4,023 
Total current liabilities166,442 184,700 
Deferred tax liabilities, net663 663 
Operating lease liability158,448 165,026 
Long-term debt139,317 159,600 
Other liabilities4,605 4,729 
Total liabilities469,475 514,718 
Commitments and contingencies (Note 16)
Shareholders’ equity:
Common stock, $0.0001 par value, 100,000 shares authorized, 53,884 and 34,157 shares issued
5 3 
Preferred stock, $0.0001 par value, 10,000 shares authorized; 0 and 676 shares of Series A Convertible Preferred Stock issued and outstanding, liquidation preference of $100 per share
  
Paid-in capital - common216,359 151,439 
Paid-in capital - preferred 66,481 
Treasury stock, at cost, 82 shares
(365)(365)
Retained earnings14,684 5,946 
Accumulated other comprehensive income 1,930 2,463 
Total shareholders’ equity232,613 225,967 
Total liabilities and shareholders’ equity$702,088 $740,685 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)


Three Months EndedSix Months Ended
March 31,March 31,
 2024202320242023
Revenues$184,176 $163,820 $358,871 $283,824 
Operating expenses:
Educational services and facilities97,488 86,930 189,897 148,338 
Selling, general and administrative75,496 70,941 143,551 125,089 
Total operating expenses172,984 157,871 333,448 273,427 
Income from operations11,192 5,949 25,423 10,397 
Other (expense) income:
Interest income1,427 1,805 3,402 2,628 
Interest expense(2,184)(2,637)(5,055)(4,060)
Other income (expense), net119 126 333 451 
Total other expense, net(638)(706)(1,320)(981)
Income before income taxes10,554 5,243 24,103 9,416 
Income tax expense (Note 14)
(2,767)(1,763)(5,927)(3,288)
Net income$7,787 $3,480 $18,176 $6,128 
Preferred stock dividends (1,251)(1,097)(2,528)
Income available for distribution$7,787 $2,229 $17,079 $3,600 
Income allocated to participating securities (833)(2,855)(1,348)
Net income available to common shareholders$7,787 $1,396 $14,224 $2,252 
Earnings per share (Note 18):
Net income per share - basic$0.14 $0.04 $0.32 $0.07 
Net income per share - diluted$0.14 $0.04 $0.31 $0.07 
Weighted average number of shares outstanding (Note 18):
Basic53,757 33,999 45,048 33,901 
Diluted54,770 34,553 46,050 34,477 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(In thousands)
(Unaudited)


Three Months EndedSix Months Ended
March 31,March 31,
 2024202320242023
Net income$7,787 $3,480 $18,176 $6,128 
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swaps, net of taxes353 (538)(533)(664)
Comprehensive income$8,140 $2,942 $17,643 $5,464 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)

Common StockPreferred StockPaid-in
Capital - Common
Paid-in
Capital - Preferred
Treasury StockRetained EarningsAccumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance as of September 30, 202334,157 $3 676 $ $151,439 $66,481 (82)$(365)$5,946 $2,463 $225,967 
Net income— — — — — — — — 10,389 — 10,389 
Issuance of common stock under stock-based compensation plans538 — — — — — — — — — — 
Shares withheld for payroll taxes(178)— — — (2,054)— — — — — (2,054)
Stock-based compensation— — — — 1,482 — — — — — 1,482 
Preferred stock dividends— — — — — — — — (1,097)— (1,097)
Preferred share repurchase— — (33)— — (3,275)— — (8,341)— (11,616)
Preferred stock conversion19,297 2 (643)— 63,204 (63,206)— — — —  
Unrealized loss on interest rate swaps, net of taxes— — — — — — — — — (886)(886)
Balance as of December 31, 202353,814 $5  $ $214,071 $ (82)$(365)$6,897 $1,577 $222,185 
Net income— — — — — — — — 7,787 — 7,787 
Issuance of common stock under stock-based compensation plans74 — — — — — — — — — — 
Shares withheld for payroll taxes(4)— — — (65)— — — — — (65)
Stock-based compensation— — — — 2,353 — — — — — 2,353 
Unrealized gain on interest rate swaps, net of taxes— — — — — — — — — 353 353 
Balance as of March 31, 202453,884 $5  $ $216,359 $ (82)$(365)$14,684 $1,930 $232,613 




4

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)
(In thousands)
(Unaudited)

Common StockPreferred StockPaid-in
Capital - Common
Paid-in
Capital - Preferred
Treasury StockRetained (Deficit) EarningsAccumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance as of September 30, 202233,857 $3 676 $ $148,372 $66,481 (82)$(365)$(1,307)$2,213 $215,397 
Net income— — — — — — — — 2,648 — 2,648 
Issuance of common stock under stock-based compensation plans223 — — — — — — — — — — 
Shares withheld for payroll taxes(73)— — — (525)— — — — — (525)
Stock-based compensation— — — — 1,169 — — — — — 1,169 
Preferred stock dividends— — — — — — — — (1,277)— (1,277)
Unrealized loss on interest rate swap, net of taxes— — — — — — — — — (126)(126)
Balance as of December 31, 202234,007 $3 676 $ $149,016 $66,481 (82)$(365)$64 $2,087 $217,286 
Net Income— — — — — — — — 3,480 — 3,480 
Issuance of common stock under stock-based compensation plans175 — — — — — — — — — — 
Shares withheld for payroll taxes(33)— — — (223)— — — — — (223)
Stock-based compensation— — — — 2,113 — — — — — 2,113 
Preferred stock dividends— — — — — — — — (1,251)— (1,251)
Unrealized loss on interest rate swap, net of taxes— — — — — — — — — (538)(538)
Balance as of March 31, 202334,149 $3 676 $ $150,906 $66,481 (82)$(365)$2,293 $1,549 $220,867 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended March 31,
 20242023
Cash flows from operating activities:
Net income $18,176 $6,128 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization14,186 11,994 
Amortization of right-of-use assets for operating leases10,952 10,073 
Bad debt expense3,189 2,071 
Stock-based compensation3,835 3,282 
Deferred income taxes(314)2,479 
Training equipment credits earned, net962 47 
Unrealized loss on interest rate swap(533)(664)
Other losses (gains), net83 (196)
Changes in assets and liabilities:
Receivables(1,533)(3,895)
Prepaid expenses(4,469)(898)
Other assets(1,088)2,709 
Notes receivable(4,409)(579)
Accounts payable, accrued expenses and other current liabilities(2,140)(16,446)
Deferred revenue(18,139)(9,554)
Operating lease liability(10,139)(10,745)
Other liabilities(274)(121)
Net cash provided by (used in) operating activities8,345 (4,315)
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired (16,973)
Purchase of property and equipment(9,759)(38,641)
Proceeds from maturities of held-to-maturity securities 29,000 
Net cash used in investing activities(9,759)(26,614)
Cash flows from financing activities:
Proceeds from revolving credit facility20,000 90,000 
Payments on revolving credit facility(39,000) 
Debt issuance costs related to the revolving credit facility (484)
Payments on term loans and finance leases(1,246)(715)
Payment of preferred stock cash dividend(1,097)(2,528)
Preferred share repurchase(11,503) 
Payment of payroll taxes on stock-based compensation through shares withheld(2,119)(748)
Net cash (used in) provided by financing activities(34,965)85,525 
Change in cash, cash equivalents and restricted cash(36,379)54,596 
Cash and cash equivalents, beginning of period151,547 66,452 
Restricted cash, beginning of period5,377 3,544 
Cash, cash equivalents and restricted cash, beginning of period156,924 69,996 
Cash and cash equivalents, end of period116,099 120,579 
Restricted cash, end of period4,446 4,013 
Cash, cash equivalents and restricted cash, end of period$120,545 $124,592 
6


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
(Unaudited)
Six Months Ended March 31,
20242023
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds$6,185 $306 
Interest paid5,476 3,496 
Supplemental schedule of noncash investing and financing activities:
Training equipment obtained in exchange for services$302 $343 
Depreciation of training equipment obtained in exchange for services270 394 
Change in accrued capital expenditures during the period(1,768)1,964 
Conversion of Series A Preferred Stock63,206  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



7


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Note 1 - Nature of the Business
Universal Technical Institute, Inc., which together with its subsidiaries is referred to as the “Company,” “we,” “us” or “our,” was founded in 1965 and is a leading workforce solutions provider of transportation, skilled trades and healthcare education programs, whose mission is to serve students, partners, and communities by providing quality education and support services for in-demand careers across a number of highly-skilled fields. We offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs. We have two reportable segments as follows:
Universal Technical Institute (“UTI”): UTI operates 16 campuses located in nine states and offers a wide range of degree and non-degree transportation and skilled trades technical training programs under brands such as Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute (“MMI”), NASCAR Technical Institute, and MIAT College of Technology (“MIAT”). UTI also offers manufacturer specific advanced training programs, which include student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. Lastly, UTI provides dealer technician training or instructor staffing services to manufacturers. UTI works closely with multiple original equipment manufacturers and industry brand partners to understand their needs for qualified service professionals.
Concorde Career Colleges (“Concorde”): Concorde operates across 17 campuses in eight states and online, offering degree, non-degree, and continuing education programs in the allied health, dental, nursing, patient care and diagnostic fields. The Company has designated campuses that offer degree granting programs “Concorde Career College;” where allowed by state regulation. The remaining campuses are designated as “Concorde Career Institute.” Concorde believes in preparing students for their healthcare careers with practical, hands-on experiences including opportunities to learn while providing care to real patients. Prior to graduation, students will complete a number of hours in a clinical setting or externship, depending upon their program of study. We acquired Concorde on December 1, 2022. See Note 4 on “Acquisitions” for additional information.
“Corporate” includes corporate related expenses that are not allocated to the UTI or Concorde reportable segments. Additional information about our reportable segments is presented in Note 19.
Our primary source of revenues is currently tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965, as amended (“HEA”), as well as from various veterans’ benefits programs. For further discussion, see Note 2 on “Summary of Significant Accounting Policies - Concentration of Risk” and Note 19 on “Government Regulation and Financial Aid” included in our 2023 Annual Report on Form 10-K.

Note 2 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending September 30, 2024. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2023 Annual Report on Form 10-K.
The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
8


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Other than described below, there have been no material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in Note 2 of our 2023 Annual Report on Form 10-K.

Segment Recast

During fiscal 2023, in coordination with the integration of Concorde, we began to reassess our operating model to determine the optimal structure to achieve future growth goals and support the business. In furtherance of the foregoing, we executed an internal reorganization of our operations to fully transition our operating and reporting model to support a multi-divisional business. Each of the reportable segments now has dedicated accounting, finance, information technology, and human resources teams. Additionally, certain human resources and information technology costs that benefit the entire organization are now allocated across the UTI, Concorde and Corporate segments each period based upon relative headcount. As a result, additional costs have moved from the Corporate segment into the UTI segment and to a lesser extent the Concorde segment, as resources were redirected to support each segment’s objectives. Due to these changes in allocation methodology, the segment disclosures in Note 19 for the three and six months ended March 31, 2023 have been recast from the prior year presentation for comparability to the current year presentation.

Note 3 - Recent Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) and the SEC periodically issue new accounting standards or disclosure requirements in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded the following new accounting standard updates (“ASU”) or SEC rules apply to us.
Effective in Fiscal 2025
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied retrospectively. This ASU will be effective for our Form 10-K for fiscal 2025 and our Form 10-Q for the first quarter of fiscal 2026. We are currently evaluating the impact this ASU may have on our financial statement disclosures.
Effective in Fiscal 2026
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. This ASU will be effective for our Form 10-K for fiscal 2026. We are currently evaluating the impact this ASU may have on our financial statement disclosures.
Effective in Fiscal 2027
In March 2024, the SEC issued final rules to enhance public company disclosures related to the risks and impacts of climate-related matters. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules, if adopted, include requirements to disclose Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements, when material. Disclosure requirements will begin phasing in for our Form 10-K for fiscal 2027. We are currently evaluating the impact this rule may have on our financial statement disclosures.
9


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Note 4 - Acquisitions
Concorde Career Colleges
On December 1, 2022, we completed the acquisition of Concorde. Concorde operates 17 campuses across eight states with approximately 7,600 students, and offers its programs via in-person, hybrid and online formats. Concorde offers more than 20 programs across the allied health, dental, nursing, patient care, and diagnostic fields. The acquisition expands our portfolio of offerings into the higher-growth healthcare arena and creates the opportunity to bring workforce educational solutions to a broader array of students and employers.
Under the terms of the Stock Purchase Agreement (the “Purchase Agreement”), dated May 3, 2022, by and among the Company, Concorde, Liberty Partners Holdings 28, L.L.C., a Delaware limited liability company, and Liberty Investment IIC, LLC, a Delaware limited liability company (each a “Seller,” and collectively, the “Sellers”); and Liberty Partners L.P., a Delaware limited partnership, in its capacity as a representative of the Sellers, we acquired all of the issued and outstanding shares of capital stock of Concorde for a base purchase price of $50.0 million, less $1.9 million of net adjustments including the post-closing working capital adjustment, for total cash consideration paid of $48.1 million. As a result of the transactions contemplated by the Purchase Agreement, Concorde is now a wholly-owned subsidiary of the Company. We funded the consideration paid for Concorde by the Credit Facility entered into on November 18, 2022. See Note 12 for further details on the Credit Facility.
In connection with the acquisition, we incurred total transaction costs of $5.3 million, of which $3.0 million was incurred during the year ended September 30, 2022 and $2.3 million was incurred during the year ended September 30, 2023. These costs are included in “Selling, general and administrative” expenses in the condensed consolidated statements of operations for the applicable period.
Allocation of the purchase price
Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our valuation estimates of the fair values as of the acquisition date. As of December 1, 2023, the fair value and purchase price allocation are considered final.
The final allocation of the purchase price at December 1, 2022 is summarized as follows:
Assets acquired:
Cash and cash equivalents$30,064 
Restricted cash1,689 
Accounts receivable, net6,800 
Prepaid expenses2,957 
Other current assets827 
Property and equipment23,238 
Right-of-use assets for operating leases71,153 
Goodwill11,600 
Intangible assets5,400 
Deferred tax assets5,112 
Other assets4,997 
Total assets acquired$163,837 
10


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Less: Liabilities assumed
Accounts payable and accrued expenses$15,482 
Deferred revenue20,145 
Operating lease liability, current portion10,011 
Long-term debt, current portion (1)
807 
Other current liabilities208 
Long-term debt (1)
5,468 
Operating lease liability63,582 
Total liabilities assumed115,703 
Net assets acquired$48,134 
(1)    Long-term debt consists of one lease classified as a finance lease under ASC 842.
Since September 30, 2023, we further adjusted the purchase price allocation by approximately $0.1 million for income taxes receivable and approximately $0.6 million for deferred income taxes due to completing and filing the final stub period income tax return for Concorde, which resulted in a $0.7 million adjustment to property and equipment. These adjustments did not have a material impact on the financial statements since the date of acquisition.
The amount allocated to goodwill of $11.6 million represents the acquired assembled workforce. None of the goodwill is expected to be deductible for tax purposes. Factors that contributed to a purchase price resulting in the recognition of goodwill include Concorde’s strategic fit into our growth and diversification strategy, which is focused on offering a broader array of high-quality, in-demand workforce education solutions which both prepare students for a variety of careers in fast-growing fields and help close the country's skills gap by leveraging key industry partnerships.
The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our condensed consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the property and equipment was estimated using the cost and market approaches as of the valuation date. The fair value of the leases were estimated using the income and market approaches to determine if there was any favorable or unfavorable terms in place.
The intangible assets acquired, which primarily consist of the accreditations and regulatory approvals, trademarks and trade names, and curriculum, were valued using different valuation techniques depending upon the nature of the intangible asset acquired, all of which are considered level 3 as defined in Note 6. The accreditations and regulatory approvals were valued using the multi-period excess earnings method (“MPEEM”) under the income approach. The MPEEM is a variation of discounted cash-flow analysis. Rather than focusing on the whole entity, the MPEEM isolates the cash flows that can be associated with a single intangible asset and measures fair value by discounting them to present value. The trademarks and trade names were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. The curriculum was valued using the cost approach.
The table below presents the final summary of the intangible assets acquired and the useful lives of these assets:
Intangible AssetUseful lifeAmount
Accreditations and regulatory approvalsIndefinite$3,500 
Trademarks and trade names10 years500 
Curriculum5 years1,400 
     Total$5,400 
See Note 8 and Note 9 and for additional details on goodwill and intangible assets.
11


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Student receivables
When financial assets are acquired in connection with a business combination, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination. Financial assets acquired with evidence of such credit deterioration are referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date. The student receivables acquired in the Concorde acquisition were reviewed to determine if any had experienced a more-than-insignificant deterioration in credit quality since origination. Student receivables of approximately $2.3 million met the established criteria to indicate a more-than insignificant deterioration in credit quality and were identified as PCD assets. Using our best estimate of projected losses over the term of the contracts, we calculated an allowance for credit losses on these PCD assets of approximately $1.0 million.
Pro forma financial information
The following unaudited pro forma financial information summarizes our results of operations as though the acquisition occurred on October 1, 2022:
Six Months Ended
March 31, 2023
Revenue$319,845 
Net income5,919 
The unaudited pro forma financial information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets and the finance lease asset had been applied from October 1, 2022, with the related tax effects. The unaudited pro forma financial information also includes adjustments to reflect the additional interest expense on the new Credit Facility issued to fund the acquisition (see Note 12 for further details on the Credit Facility). Lastly, the unaudited pro forma financial information includes adjustments to reflect the reduction in depreciation expense assuming the fair value adjustments to property and equipment assets had been applied from October 1, 2022.
This unaudited pro forma financial information is for informational purposes only. It does not reflect the integration of the business or any synergies or incremental costs that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on October 1, 2022. In addition, the unaudited pro forma financial information amounts are not indicative of future operating results.

Note 5 - Revenue from Contracts with Customers
Nature of Goods and Services
Revenues across the UTI and Concorde segments consist primarily of student tuition and fees derived from the programs we provide after reductions are made for discounts and scholarships that we sponsor and for refunds for students who withdraw from our programs prior to specified dates. We apply the five-step model outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts from Customers. Tuition and fee revenue is recognized ratably over the term of the course or program offered.
In addition to revenue from tuition and fees, UTI and Concorde derive supplemental revenues from sales of textbooks and program supplies and other revenues, which includes revenues from dealer technician training and staffing services to manufacturers. All of these revenues are recognized as the transfer of goods or services occurs. Deferred revenue represents the excess of tuition and fee payments received as compared to tuition and fees earned and is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months.
All of our revenues are generated within the United States. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent across our various programs for both the UTI and Concorde segments. See Note 19 for disaggregated segment revenue information.
12


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
The following table provides information about receivables and deferred revenue resulting from our enrollment agreements with students:
March 31, 2024September 30, 2023
Receivables (1)
$64,559 $59,863 
Deferred revenue67,599 85,738 
(1)     Receivables includes tuition receivables, retail installment contract receivables and notes receivable, both current and long term.
During the six months ended March 31, 2024, the deferred revenue balance included decreases for revenues recognized during the period and increases related to new students who started their training programs during the period.

Note 6 - Fair Value Measurements

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers:

Level 1:    Defined as quoted market prices in active markets for identical assets or liabilities.
Level 2:    Defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:    Defined as unobservable inputs that are not corroborated by market data.

Any transfers of investments between levels occurs at the end of the reporting period. Assets measured or disclosed at fair value on a recurring basis consisted of the following:
  Fair Value Measurements Using
 March 31, 2024Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Money market funds(1)
$24,563 $24,563 $ $ 
Notes receivable(2)
41,072   41,072 
Total assets at fair value on a recurring basis$65,635 $24,563 $ $41,072 
Revolving credit facility and term loans(3)
137,155  137,155  
Total liabilities at fair value on a recurring basis$137,155 $ $137,155 $ 

13


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
  Fair Value Measurements Using
 September 30, 2023Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Money market funds(1)
$29,687 $29,687 $ $ 
Notes receivable(2)
36,663   36,663 
Total assets at fair value on a recurring basis$66,350 $29,687 $ $36,663 
Revolving credit facility and term loans(3)
156,991  156,991  
Total liabilities at fair value on a recurring basis$156,991 $ $156,991 $ 
(1) Money market funds and other highly liquid investments with maturity dates less than 90 days are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheets as of March 31, 2024 and September 30, 2023.
(2) Notes receivable relate to UTI’s proprietary loan program and are reflected as “Notes receivable, current portion” and “Notes receivable, less current portion” in our condensed consolidated balance sheets as of March 31, 2024 and September 30, 2023.
(3) The Credit Facility and Term Loans bear interest at rates commensurate with market rates, and therefore, the respective carrying values approximate fair value (Level 2).

Note 7 - Property and Equipment, net
Property and equipment, net consisted of the following:
March 31, 2024September 30, 2023
Land$25,601 $25,601 
Buildings and building improvements164,325 160,920 
Leasehold improvements89,462 87,525 
Training equipment112,448 110,292 
Office and computer equipment37,472 37,251 
Curriculum development 3,570 2,478 
Software developed for internal use13,103 12,573 
Vehicles1,406 1,406 
Right-of-use assets for finance leases5,603 5,603 
Construction in progress7,246 9,061 
460,236 452,710 
Less: Accumulated depreciation and amortization(196,698)(186,364)
Total$263,538 $266,346 
Depreciation expense related to property and equipment was $7.0 million and $13.8 million for the three and six months ended March 31, 2024, and $6.6 million and $11.7 million for the three and six months ended March 31, 2023, respectively.

14


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Note 8 - Goodwill

Our goodwill balance of $28.5 million as of March 31, 2024 and September 30, 2023, respectively, represents the acquired assembled workforce and the excess of the cost of an acquired business over the estimated fair values of the assets acquired and liabilities assumed.

The goodwill balance by reportable segment as of March 31, 2024 and September 30, 2023 was:
UTI$16,859 
Concorde11,600 
Total$28,459 
Goodwill is reviewed at least annually for impairment, which may result from the deterioration in the operating performance of the acquired businesses, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. Our goodwill is tested annually for impairment as of August 1 and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There were no indicators of goodwill impairment as of March 31, 2024.

Note 9 - Intangible Assets
The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that are subject to amortization as of March 31, 2024:
Gross Carrying ValueAccumulated AmortizationNet Book ValueWeighted Average Remaining Useful Life (Years)
Accreditations and regulatory approvals$16,300 $— $16,300 Indefinite
Trademarks, trade names and other1,942 (848)1,094 4.89
Curriculum1,800 (567)1,233 3.49
Total$20,042 $(1,415)$18,627 4.15
The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that are subject to amortization as of March 31, 2023:
Gross Carrying ValueAccumulated AmortizationNet Book ValueWeighted Average Remaining Useful Life (Years)
Accreditations and regulatory approvals$16,300 $— $16,300 Indefinite
Trademarks, trade names and other1,942 (513)1,429 5.51
Curriculum1,800 (207)1,593 4.47
Total$20,042 $(720)$19,322 4.96
Amortization expense was $0.2 million and $0.3 million for the three and six months ended March 31, 2024, and $0.2 million and $0.3 million for the three and six months ended March 31, 2023, respectively.
15


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Future intangible asset amortization expense is expected to be as follows:
Fiscal Year
Remainder of 2024$348 
2025677 
2026660 
2027337 
202897 
Thereafter208 
Total$2,327 
The remaining weighted average useful lives shown are calculated based on the net book value and remaining amortization period of each respective intangible asset. Amortization is computed using the straight-line method based on estimated useful lives of the related assets. Our indefinite-lived intangible assets are reviewed at least annually for impairment as of August 1, or more frequently if there are indicators of impairment. There were no indicators of impairment for our indefinite-lived intangible assets as of March 31, 2024.

Note 10 - Leases
As of March 31, 2024, we have facility leases at 29 of our 33 campuses and three non-campus locations under non-cancelable operating or finance leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 5 to 20 years and expire at various dates through 2036. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease certain portions of unused building space to third parties, which as of March 31, 2024, resulted in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets.
Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases. The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.”
The components of lease expense during the three and six months ended March 31, 2024 and 2023 were as follows:
Three Months Ended March 31,Six Months Ended March 31,
Lease Expense2024202320242023
Operating lease expense(1)
$7,597 $8,273 $15,259 $13,977 
Finance lease expense:
Amortization of leased assets227 127 454 325 
Interest on lease liabilities79 35 161 122 
Variable lease expense2,476 2,307 4,837 4,257 
Sublease income(33)(25)(65)(57)
Total net lease expense$10,346 $10,717 $20,646 $18,624 
(1)    Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three and six months ended March 31, 2024 and 2023.
16


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):
LeasesClassificationMarch 31, 2024September 30, 2023
Assets:
Operating lease assetsRight-of-use assets for operating leases$169,626 $176,657 
Finance lease assets
Property and equipment, net(1)
4,391 4,846 
Total leased assets$174,017 $181,503 
Liabilities:
Current
   Operating lease liabilitiesOperating lease liability, current portion$22,841 $22,481 
   Finance lease liabilities
Long-term debt, current portion(1)
887 844 
Noncurrent
   Operating lease liabilitiesOperating lease liability158,448 165,026 
   Finance lease liabilitiesLong-term debt4,304 4,757 
Total lease liabilities$186,480 $193,108 
(1)     The finance lease assets and liabilities as of March 31, 2024 and September 30, 2023 consisted of one facility lease. Finance lease assets are recorded net of accumulated amortization of $1.2 million and $0.8 million as of March 31, 2024 and September 30, 2023, respectively.
Lease Term and Discount RateMarch 31, 2024September 30, 2023
Weighted-average remaining lease term (in years):
   Operating leases7.577.91
   Finance lease4.835.33
Weighted average discount rate:
   Operating leases4.86 %4.76 %
   Finance lease6.02 %6.02 %
Six Months Ended March 31,
Supplemental Disclosure of Cash Flow and Other Information20242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$10,139 $10,745 
Financing cash flows from finance leases410 304 
Non-cash activity related to lease liabilities:
   Lease assets obtained in exchange for new operating lease liabilities (1)
$3,921 $149 
(1) During the six months ended March 31, 2024, Concorde renewed the campus lease for the San Antonio, Texas campus.

17


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Maturities of lease liabilities were as follows:
As of March 31, 2024
Years ending September 30,Operating LeasesFinance Lease
Remainder of 2024$14,312 $585 
202530,148 1,193 
202630,509 1,229 
202728,874 1,266 
202826,747 1,304 
2029 and thereafter85,892 439 
Total lease payments216,482 6,016 
Less: interest(35,193)(825)
Present value of lease liabilities181,289 5,191 
Less: current lease liabilities(22,841)(887)
Long-term lease liabilities$158,448 $4,304 

Note 11 - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
March 31, 2024September 30, 2023
Accounts payable$17,658 $14,438 
Accrued compensation and benefits28,971 36,332 
Accrued tool sets4,743 4,096 
Other accrued expenses18,707 15,075 
Total accounts payable and accrued expenses$70,079 $69,941 

Note 12 - Debt
March 31, 2024September 30, 2023
Interest RateMaturity Date
Carrying Value of Debt(6)
Carrying Value of Debt(6)
Revolving Credit Facility(1)
7.78 %Nov 2025$71,000 $90,000 
Avondale Term Loan(2)
7.37 %May 202828,825 29,251 
Lisle Term Loan(3)
7.33 %Apr 202937,330 37,740 
Finance lease(4)
6.02 %Various5,191 5,601 
Total debt142,346 162,592 
Debt issuance costs presented with debt (5)
(429)(475)
Total debt, net141,917 162,117 
Less: current portion of long-term debt(2,600)(2,517)
Long-term debt$139,317 $159,600 
(1)     Interest on the Revolving Credit Facility (as defined below) accrues at a rate equal to one-month Term SOFR plus a margin of 2.0% and a lender specific spread of 0.10-0.15% or a Prime Rate as set by the lender.
(2)    Interest on the Avondale Term Loan (as defined below) accrues at a rate equal to one-month Term SOFR plus 2.0% and a tranche adjustment of 0.046%.
(3)    Interest on the Lisle Term Loan (as defined below) accrues at a rate equal to one-month Term SOFR plus 2.0%.
18


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
(4)    The finance lease is related to a facility lease with an annual interest rate of 6.02% that matures in 2029. See Note 10 for additional details on our finance lease.
(5)    The unamortized debt issuance costs as of March 31, 2024 relate to the Avondale Term Loan and the Lisle Term Loan.
(6)    The Credit Facility, Term Loans and finance leases bear interest at rates commensurate with market rates, and therefore, the respective carrying values approximate fair value (Level 2).
Revolving Credit Facility
On November 18, 2022, we entered into a $100.0 million senior secured revolving credit facility with Fifth Third Bank, a national banking association (the “Credit Facility” or “Revolving Credit Facility”), which includes a $20.0 million sub facility that is available for letters of credit. The Credit Facility has a term of three years, unless earlier terminated pursuant to the terms and conditions set forth in the credit agreement.
This agreement provides that borrowings under the Credit Facility will amortize on an interest-only basis during its term with principal able to be borrowed, re-paid and re-borrowed throughout the term of the Credit Facility and with the outstanding principal due and payable at maturity. In executing the Credit Facility, we incurred $0.5 million in debt issuance costs which are included in “Other assets” on the condensed consolidated balance sheets as of March 31, 2024. On November 28, 2022, we drew $90.0 million from the Credit Facility in support of the closing of the Concorde acquisition at an interest rate of 6.54%. In December 2022, a $1.8 million letter of credit was issued on the Credit Facility.
During the three months ended March 31, 2024, we made payments on the Credit Facility of $39.0 million and we received proceeds of $20.0 million at a fixed base interest rate of 8.5%. During the three months ended March 31, 2024, our $1.8 million letter of credit expired, resulting in $29.0 million in availability under the Credit Facility at period end.
In April 2024, we used cash on hand to pay $20.0 million on the Credit Facility, which increased the availability under the Credit Facility to $49.0 million. It is likely that we will borrow from the Credit Facility in future periods based on future working capital or other needs.
Avondale Term Loan
In connection with the Avondale, Arizona building purchase in December 2020, we entered into a credit agreement with Fifth Third Bank, national banking association (the “Avondale Lender”) on May 12, 2021 in the maximum principal amount of $31.2 million with a maturity of seven years (the “Avondale Term Loan”). Originally, the Avondale Term Loan bore interest at the rate of LIBOR plus 2.0%. On April 3, 2023, we executed an amendment for our Avondale Term Loan to convert the stated rate from LIBOR to SOFR. The Avondale Term Loan bears interest at the rate of Term SOFR plus 2.0% and a tranche rate adjustment of 0.046%.
Principal and interest payments are due monthly. The Avondale Term Loan is secured by a first priority lien on our Avondale, Arizona property, including all land and improvements. Additionally, we entered into an interest rate swap agreement with the Avondale Lender. See Note 13 for further discussion on the interest rate swap.
Lisle Term Loan
On April 14, 2022, our consolidated subsidiary, 2611 Corporate West Drive Venture LLC (the “Borrower”), entered into a new Loan Agreement (“Lisle Loan Agreement”) with Valley National Bank (the “Lisle Lender”), to fund the acquisition and retire the prior loan agreement with Western Alliance bank, via a term loan in the original principal amount of $38.0 million with a maturity of seven years (the “Lisle Term Loan” and together with the Avondale Term Loan, the “Term Loans”). The Lisle Term Loan bears interest at a rate of one-month Term SOFR plus 2.0%. The Lisle Term Loan is secured by a mortgage on the Lisle, Illinois campus and is guaranteed by the Company. In connection with the Lisle Term Loan, we entered into an interest rate swap agreement. See Note 13 for further discussion on the interest rate swap.
Debt Covenants for our Credit Facility and Term Loans
We are subject to certain customary affirmative and negative covenants in connection with our Credit Facility and Term Loans, including, without limitation, certain reporting obligations, certain limitations on restricted payments, limitations on
19


UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
liens, encumbrances and indebtedness and a debt service coverage ratio covenant. Events of default under the Credit Facility, Avondale Term Loan and the Lisle Term Loan include, among others, the failure to make payments when due, breach of covenants, and breach of representations or warranties. For further discussion of our debt covenants, see Note 14 on “Debt” included in our 2023 Annual Report on Form 10-K. As of March 31, 2024, we were in compliance with all Credit Facility and term loan debt covenants.
Debt Maturities
Scheduled principal payments due on our debt for the remainder of 2024 and for each year through the period ended September 30, 2028, and thereafter were as follows at March 31, 2024:
MaturityRevolving Credit Facility & Term LoansFinance LeaseTotal
Remainder of 2024$837 $434 $1,271 
20251,763 932 2,695 
202672,836 1,027 73,863 
20271,909 1,128 3,037 
202826,610 1,237 27,847 
Thereafter33,200 433 33,633 
Subtotal137,155 5,191 142,346 
Debt issuance costs presented with debt(429)